INTRODUCTION

The European Communities and the United States appeal from certain issues of law and legal interpretations in the Panel Report, United States – Import Measures on Certain Products from the European Communities (the “Panel Report”). The Panel was established under the Understanding on Rules and Procedures Governing the Settlement of Disputes (the “DSU”) to consider a complaint relating to measures taken by the United States with respect to certain imports from the European Communities.

The background to this dispute is set out in detail in the Panel Report. On 25 September 1997, the Dispute Settlement Body (the “DSB”) adopted the reports of the panel and the Appellate Body in European Communities – Regime for the Importation, Sale and Distribution of Bananas (“European Communities – Bananas”). The DSB recommended that the European Communities bring its banana import regime into conformity with its obligations under the Marrakesh Agreement Establishing the World Trade Organization (the “WTO Agreement”). On 1 January 1999, the period of time for implementation, established under Article 21.3(c) of the DSU, expired. At the DSB meeting of 2 February 1999, the United States alleged that the European Communities had failed to bring its banana import regime into compliance with the recommendations and rulings of the DSB in this dispute, and requested authorization to suspend the application of concessions or other obligations in accordance with Article 22.2 of the DSU. At the same meeting, the European Communities requested that the level of the suspension of concessions or other obligations proposed by the United States be referred to arbitration by the original panelists, in accordance with Article 22.6 of the DSU.

In accordance with the 60-day time-frame provided for in Article 22.6 of the DSU, the decision of the arbitrators appointed under Article 22.6 was to be circulated on 2 March 1999. On that date, the arbitrators informed the United States and the European Communities that they were unable to circulate their decision, and requested additional information from the parties. On 4 March 1999, the Director of the Trade Compliance Division of the United States Customs Service issued a memorandum entitled “European Sanctions”, in which he instructed Customs Area and Port Directors to take certain action with respect to designated products imported from the European Communities, with effect from 3 March 1999.