INTRODUCTION

On 8 October 2003, Honduras requested consultations with the Dominican Republic pursuant to Article 4 of the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU) and Article XXII:1 of the General Agreement on Tariffs and Trade 1994 (the GATT 1994) concerning certain measures by the Dominican Republic affecting the importation and internal sale of cigarettes. The request was circulated to Members on 13 October 2003.

Consultations were held on 4 November 2003, but did not lead to a mutually satisfactory resolution of this matter.

On 8 December 2003, Honduras requested the Dispute Settlement Body (“DSB”) to establish a Panel pursuant to Articles 4.7 and 6 of the DSU and Article XXIII:2 of the GATT 1994. On 9 January 2004, the DSB established the Panel with the following terms of reference:

On 17 February 2004, the parties agreed to the following composition of the Panel:

Chile, China, El Salvador, the European Communities, Guatemala, Nicaragua and the United States reserved their respective right to participate in the Panel proceedings as third parties.

The Panel met with the two parties on 11 May and continued on 12 May 2004 after the third parties’ meeting. The Panel met again with the parties on 29 and 30 June 2004.

Chile, China, El Salvador, the European Communities, Guatemala, and Nicaragua presented third-party submissions before the first substantive meeting of the Panel. These countries, as well as the United States, made oral statements during the first substantive meeting of the Panel. El Salvador and Nicaragua made joint submissions and a joint oral statement at the first substantive meeting.