4.709  The European Communities agrees that the time limits set out in the DSU are not "legally binding" in the sense that they affect neither the obligations under Article 23 of the DSU nor the validity of the act of the judicial organs subject to the time limits. On this issue, the European Communities would like to draw the Panel's attention to the following.

4.710  The European Communities points out that the arbitrators' decision on the EC banana regime was submitted on 9 April 1999. According to Article 22.6 of the DSU, their work should have been completed on 3 March 1999, that is 60 days after 1 January 1999, the date on which the implementation period accorded to the European Communities expired. The arbitrators explained in their decision that this delay did not have any impact on the validity of that decision:

"On the face of it, the 60-day period specified in Article 22.6 does not limit the jurisdiction of the Arbitrators ratione temporis. It imposes a procedural obligation on the Arbitrators in respect of the conduct of their work, not a substantive obligation in respect of the validity. In our view, if the time-period of Article 17.5 and Article 22.6 of the DSU were to cause the lapse of the authority of the Appellate Body or the Arbitrators, the DSU would have explicitly provided so. Such a lapse of jurisdiction is explicitly foreseen, e.g. in Article 12.12 of the DSU which provides that "if the work of the Panel has been suspended for more than 12 months, the authority for establishment of the Panel shall lapse³⁷⁷

4.711  The European Communities notes that the Arbitrators thus considered that the DSU provisions imposing time limits relate exclusively to their work and not to the substantive validity of its result. They expected the DSB to authorize the suspension of concessions and other obligations on the basis of their decision even though it had been made available after the time limits foreseen in Article 22.6. The DSB authorized the suspension on 19 April 1999, thereby indicating that its jurisdiction to grant such an authorization is not time-bound.

4.712  The European Communities further argues that in domestic law, a "provision in a statute, rule of procedure, or the like, which is a mere direction or instruction ... involving no invalidating consequences for its disregard ... as in the case of a statute requiring an officer to prepare and deliver a document ... before a certain day" is considered to be a "directory" provision.³⁷⁸ The case of the arbitration decision on the EC banana regime demonstrates, that the arbitrators, and the DSB perceived the time limits set out in Article 22.6 of the DSU to be of a "directory" nature whose disregard does not change the substantive rights and obligations of Members.

4.713  In the view of the European Communities, the directory nature of the time limits is reflected in the practice under the DSU. The median time period that lapsed between the establishment of the Panels and the adoption of the reports has been 13 months and 28 days, which is well within the target set out in Article 20 of the DSU and the time frame foreseen in Sections 301-310. However, this median covers periods from 11 months and 6 days to 21 months and 5 days.³⁷⁹ It would be wrong to attribute the delays referred to in the question to inefficiencies in the conduct of the proceedings. In some cases, the issues involved in the proceedings were simply too complex to be resolved within the standard time limits; in other cases, the Panels required more time to obtain expert advice. The delays were thus necessary to ensure due process for the parties to the proceedings.

4.714  The United States rejects the EC argument that the non-application of statutory time-frames would render them WTO-consistent because that is not a relevant issue in this dispute. The European Communities has failed first to establish that Sections 301-310 mandate WTO-inconsistent actions, so it is irrelevant whether they are not applied in a given case.   The USTR has more than adequate statutory discretion to comply with WTO rules without ignoring the statute.

4.715  The United States further adds that Article 21.4 of the DSU supports the US view that the European Communities has erroneously claimed that panels may extend their proceedings by three, rather than two, months. Article 21.4 provides:

"Except where the panel or the Appellate Body has extended, pursuant to paragraph 9 of Article 12 or paragraph 5 of Article 17, the time of providing its report, the period from the date of establishment of the panel by the DSB until the date of determination of the reasonable period of time shall not exceed 15 months unless the parties to the dispute agree otherwise. Where either the panel or Appellate Body has acted to extend the time of providing its report, the additional time taken shall be added to the 15-month period, provided that unless the parties to the dispute agree that there are exceptional circumstances, the total time shall not exceed 18 months".³⁸⁰

4.716  The United States points out that Article 21.4 sets forth the maximum period from panel establishment to determination of the reasonable period of time, a period 90 days longer than the period from panel establishment to adoption of the panel and Appellate Body reports.³⁸¹ Subtracting 90 days from each of the time frames in Article 21.4 yields a maximum period from panel establishment to adoption of the panel and Appellate Body reports as 12 months if the panel and Appellate Body have not extended the time for issuing their reports and 15 months if they have. Since Article 17.5 clearly provides 30 days for the Appellate Body to extend the time for issuing its report, this leaves at most two months for the panel to extend the time to circulate its report (assuming no time between issuance and circulation).

4.717  The United States also notes that, with the exception of also erroneously assuming that panels may extend their proceedings by three months, the time frames set forth by Thailand in its oral statement match those described by the United States regarding the maximum period permitted under the DSU. Based on its error, Thailand stated that the period was 19 months, rather than 18 months. However, even this is longer than may be assumed for purposes of this dispute, since regularly held DSB meetings generally occur monthly and since the United States could, if necessary, request DSB meetings to ensure that time frames are met.

4.718  In response to the Panel's question as to the relevance, to the parties' discussion on DSU timeframes, of the following arguments: (1) most DSU timeframes do not seem to be legally binding and are determined case by case not by the claiming party but by the panel, Appellate Body or even the defendant; �(2) of the 22 cases were a panel and/or Appellate Body report has been adopted, 12 cases required more than 18 months for reports to get adopted, the United States notes that the time frames in Article 21.4 do appear to be legally binding, since they provide that the time frames "shall not exceed 18 months". The consequences of any failure to meet these time frames is less clear.

4.719  The United States argues that in any event, for purposes of deciding this dispute, the time frames in the DSU are, in the end, not relevant, nor is the fact that these time frames have been exceeded in many cases. Because the USTR is free, under Section 304, not to make a determination that a violation has occurred, she is not required to make a determination inconsistent with Article 23.2(a). Sections 301-310 do not mandate any DSU violations.

4.720  The United States further claims that on the other hand, were it incorrectly assumed that Section 304 actually does mandate a determination that a violation has occurred, the time frames in the DSU would remain relevant, though the actual performance of panels in complying with these time frames would not. This is because this dispute involves an examination of whether the mere existence of Sections 301-310 violates WTO rules. In determining whether the legislation mandates a violation of DSU Article 23, certain assumptions must be made because no specific case applying Sections 301-310 is within the terms of reference of this Panel. For example, the timing of the Section 304(a)(1) determination would be relevant if – contrary to the ordinary meaning of Section 304(a)(1) and the requirement in that provision and the commitment on Statement of Administrative Action page 365 to base the determination on adopted panel and Appellate Body findings – it were assumed that Section 304 actually does mandate a determination that a violation has occurred. The question then would be whether such a determination must be made before panel and Appellate Body findings can be adopted. The European Communities assumed for purposes of this analysis that panels and the Appellate Body will extend their proceedings as authorized under the DSU, and that DSB meetings will be held on the last possible day authorized under the DSU. The United States pointed out that while it is reasonable to assume that panels will extend their proceedings as authorized under the DSU, it is not reasonable to assume that the United States would not take steps to request DSB meetings at earlier times. Moreover, the United States explained above that the EC's calculations of DSU time frames were in error.

4.721  According to the United States, in other words, both the United States and the European Communities assume that panel would comply with DSU time frames. This is a proper assumption for purposes of this dispute. Despite the actual record of panel compliance with DSU time limits, it cannot, for purposes of this dispute, be assumed that these panels will fail to comply with their obligations. It is remarkable enough that the European Communities believes it may establish its prima facie case based on adverse assumptions concerning the choices the USTR will actually make in a given case. It should not be permitted to assume that panels as well will disregard their obligations under the DSU.

4.722  The United States claims that nevertheless, the DSU time frames remain relevant to the Panel's analysis. This dispute does not involve the application of Sections 301-310 in the context of a specific WTO dispute. There are therefore no established facts as to when and how the USTR made specific determinations, nor are there established facts as to when and how a panel and Appellate Body issued their reports. Assumptions must be made. It is not appropriate to assume that panels and the Appellate Body will not comply with DSU time frames, any more than it is appropriate to make any other assumption adverse to the United States in this case.

4.723  The United States points out that the European Communities argues at pages 31-32 of its answers to Panel questions that DSU time frames are irrelevant because they are merely "directory" in nature. The European Communities states:

"In domestic law, a 'provision in a statute, rule of procedure, or the like, which is a mere direction or instruction ... involving no invalidating consequences for its disregard ... as in the case of a statute requiring an officer to prepare and deliver a document ... before a certain day' is considered a 'directory' provision.³⁸² . . . [The disregard of time limits] of a 'directory' nature . . . does not change the substantive rights and obligations of Members" .

4.724  The United States goes on to state that the European Communities raises this point with respect to DSU time frames, arguing that because they are directory, they are irrelevant to the Panel's analysis in this case. While the United States disagrees that DSU time frames are irrelevant to this dispute, it notes that if the EC's argument were accepted, that argument would apply equally to the time frames in Section 301. The "domestic law" referred to in the EC quotation is US law,³⁸³ and the principle would apply equally to Section 301 time frames. There are no "invalidating consequences" provided for in Sections 301-310 if the USTR misses her deadlines. Nevertheless, like panels, the USTR takes her deadlines seriously. However, if the panel accepts the EC's arguments that DSU time frames are irrelevant, that same conclusion must be applied to those in Section 301. In that case, the EC complaint fails because even if it were incorrectly assumed that Section 304(a)(1)(A) mandates a determination that US agreement rights have been denied, it would not be possible to conclude that the law mandates that such a determination be made prior to DSB adoption of panel and Appellate Body findings to that effect.

4.725  The United States contends that assuming that the Panel chooses to analyze the time frames in Sections 301-310 against those in the DSU (and has not already concluded that Section 304 neither mandates a determination that US agreement rights have been denied, nor precludes any such determination after the DSB has adopted panel and Appellate Body findings), that analysis reveals that Section 301 time frames do not require a determination before the time established in the DSU for adoption of panel or Appellate Body findings. The United States already explained in response to Panel question 9 that Article 21.4 provides further support for the US position that the maximum period from panel establishment to adoption of panel and Appellate Body findings is 15 months. That provision establishes a firm deadline of 18 months from panel establishment to determination of the reasonable period of time, a period which includes 90 days for the determination of the reasonable period.³⁸⁴

4.726  The United States argues that the EC's explanation that it "assumed that the Panel is composed shortly after it has been established" ignores the fact that the time limit in DSU Article 12.9 is nine months from panel establishment to circulation to Members. Combining this with the maximum period of 60 days for appeal or adoption of the panel report (DSU Article 16.4), the maximum 90 day period for Appellate Body proceedings (DSU Article 17.5), and the maximum period for DSB adoption of 30 days (DSU Article 17.14), yields a maximum period from panel establishment to adoption of panel and Appellate Body findings of 15 months, as the United States has argued. 

4.727  The United States notes that the European Communities disputes the fact that a panel may be established within one month.  The United States disagrees with the EC's interpretation of the footnote to Article 6.1 as being limited to the second meeting at which a panel meets to consider establishment, and further notes that Thailand concurs in the US conclusion that a panel may be established within a month of completion of the 60 day consultation period.

4.728  In the view of the United States, when the one month period for establishing a panel is added to the 60 day consultation period (DSU Article 4.7) and the maximum fifteen month period from panel establishment to DSB adoption of panel and Appellate Body findings, the total is 18 months, allowing the USTR to make a determination on the date provided for in Section 304(a)(2)(A) based on adopted panel and Appellate Body findings in all cases. 

4.729  However, the United States has observed that, even this overstates the amount of time for panel and Appellate Body proceedings that may be assumed for purposes of this dispute.  This is because DSB meetings generally occur on a monthly basis, so it may not be assumed that it will take all of 60 or 30 days for an appeal to be filed or an Appellate Body report to be adopted, and because the US may request meetings at earlier times.  In response, the European Communities asserts that the Panel may not take into account the fact that the United States may request DSB meetings at a time earlier than those established by time limits, unless the United States can show that the USTR pursues a "systematic policy" of shortening procedural time frames through such requests.

4.730 The United States argues that the European Communities does not explain why it may disregard the "systematic policy" of monthly DSB meetings which can be expected to shorten the time frames from 18 months.³⁸⁵ Leaving that aside, the European Communities forgets that to meet its burden in this case, it must show that Sections 301-310 "do not allow" the USTR to comply with DSU procedures, that is, that it would not, in a given case, be possible for the USTR to take steps to ensure compliance with the DSU. The European Communities thus may not assume that the USTR will not act to shorten time frames. Further, to establish that it would not be possible for the United States to comply with DSU rules, the European Communities would have to explain why, under US law, it would not be possible for the USTR to request consultations prior to initiating a Section 302 investigation, as she has, in fact, done in the past. The European Communities may not base its claim on adverse assumptions about the choices that the USTR, the panel, the Appellate Body and the WTO Secretariat (in scheduling DSB meetings) will make in a concrete case.

4.731 The United States argues that the time frames in Sections 301-310 are entirely compatible with those in the DSU. Even if the Panel were to ignore the EC's concession that the USTR need not determine that US trade agreement rights have been denied, the USTR may – indeed, must – base her determination on adopted panel and Appellate Body findings in each and every WTO case.

4.732 The European Communities contendsthat in order to hide this fundamental inconsistency in its defence, the United States has engaged in an attempt to play down the importance of this case, even though, in its view, it is more than likely to constitute a turning point in the history of the World Trade Organization. The United States seems rather more interested in distracting the Panel's attention from the central legal issues of this case by alleging unsupported political links with other entirely separate dispute settlement procedures. This attitude is not in line with the explicit prohibition under Article 3.10, last sentence, of the DSU according to which "complaints and counter-complaints should not be linked".

4.733 The European Communities repeats once more that any reference in this case to previous dispute settlement procedures is made only within the limited (but procedurally important) purpose of providing evidence in support of the EC's main claim in this case, i.e. that Sections 301-310 are as such in breach of numerous substantive obligations under the WTO Agreements.

4.734  The European Communities further indicates that likewise and in the same spirit, it would continue to abstain from what it perceives as slightly too energetic comments from our US counterparts as, for example, that the logic of the EC's case is "hard to follow" or that interpretations proposed by the European Communities "make up obligations out of thin air and aspirations" or that a given interpretation is based on "fanciful, results driven constructions" or that an assertion is "bold" or that a given claim is "pure fantasy".

4.735  The European Communities rather draws the attention of the Panel to the presentation by the United States of the legal situation of this case, in general, and of its domestic legislation, in particular.  The European Communities indicates that it has the impression that, as this Panel procedure advances, the description by the United States of the legal issues under scrutiny of this Panel add up to the "intricate maze" of Sections 301-310 (as Professor Hudec defined them) with the aim of rendering the contours of these issues less and less discernible.

4.736  In order to illustrate this assertion, the European Communities refers to some telling examples from the US arguments:

"In paragraph 35, when addressing the issue of the relevance of the WTO panel report on Japan - Varietals the US states that '[t]he rationale of paragraph 1 of Annex B – publication of SPS measures – cannot be equated with that of WTO Agreement Article XVI:4 – to ensure that domestic laws permit compliance with international obligations'. However, the language of paragraph 1 of Annex A of the SPS Agreement, when combined with the language of the provisions governing SPS measures, is parallel and comparable to the language of Article XVI:4 of the Marrakech Agreement that plainly states that '[e]ach Member shall ensure the conformity of its laws, regulations or administrative procedures …'".

The confusion operated by the United States between the terms "ensure the conformity", one of the fundamental issues of this case, and the terms "ensure that domestic laws permit compliance" seems by no means accidental.

4.737  The European Communities also cites the US assertion that

"[N]evertheless, the DSU time frames remain relevant to the Panel's analysis. This dispute does not involve the application of Sections 301-310 in the context of a specific WTO dispute.  There are therefore no established facts as to when and how the Trade Representative made specific determinations, nor are there established facts as to when and how a panel and Appellate Body issued their reports. Assumptions must be made …".

4.738  The European Communities points out that in answering only 20 days ago to a question from the Panel, the United States expressed an opposite view:

"In any event, for purposes of deciding this dispute, the time frames in the DSU are, in the end, not relevant, nor is the fact that these time frames have been exceeded in many cases".

4.739  The European Communities points out that the contradiction is further revealed where the United States added:

"… It is remarkable enough that the EC believes it may establish its prima facie case based on adverse assumptions concerning the choices the USTR will actually make in a given case".

4.740  The European Communities argues that the issue here is that, according to the text of Sections 301-310, when the United States seeks redress of a violation of WTO obligations, its determinations and subsequent actions must be made and implemented even when the WTO proceedings on which such a determination or action could be based have not been completed. The mandatory deadlines in Sections 301-310 thus clearly violate Article 23 (and the related Articles 21 and 22) of the DSU.

4.741  The European Communities further recalls the US argument that

"[T]here are no 'invalidating consequences' provided for in Sections 301-310 if the Trade Representative misses her deadlines. Nevertheless, like panels, the USTR takes her deadlines seriously".

4.742  In the view of the European Communities, while it does not discuss the seriousness of the USTR in this or other matters, this statement needs nevertheless to be compared with the apparently irreconcilable statement made by the United States to the effect that the could not exclude a judiciary control over the way the USTR implements Sections 301-310 in concrete cases.

4.743  The European Communities points out that the text of Sections 301-310, on its face, is clear in the sense that it imposes not only "serious" deadlines, but mandatory deadlines. In practice, the European Communities is still in the dark on what is the official and definitive interpretation of the US government of the text of Sections 301-310 dealing with deadlines, in particular Section 306 (b) (2) and 304 (a) (2).

4.744  The European Communities reiterates that a text of law that imposes WTO-inconsistent behaviours upon the executive by the use of express terms like "shall" and "Mandatory Action" within certain express time-limits defined as "the earlier of" or "no later than" falls within the description of mandatory legislation developed by the GATT 1947 panel practice.

4.745  The United States responds that the issue in this dispute is not whether certain actions under Sections 301-310 may be characterized as "mandatory".  It is whether the law mandates violations of WTO rules.  A law may mandate walks in the park, but unless walks in the park are WTO-inconsistent, this fact would not be relevant in a WTO dispute.  The European Communities has the burden of adducing evidence and arguments that Sections 301-310 do, in fact, mandate a violation of WTO rules.  The European Communities has claimed that Sections 301-310 mandate violations by requiring determinations that a violation has occurred prior to completion of dispute settlement proceedings and action without DSB authorization.  The United States has rebutted those claims.  If the European Communities believes that the mere use of the word "mandatory" and "discretionary" in Sections 301-310 violates WTO rules, it should explain why this is so.  The United States could then respond.

³⁷⁷ Footnote 7 of the Arbitrators' award.

³⁷⁸ Black's Law Dictionary (Sixth Edition).

³⁷⁹ The United States refers to the table entitled "WTO Dispute Settlement Timeframes - Panels Established and Composed - 1 January 1995 and 30 April 1999" in the informal Secretariat Note circulated as Job No. 2330 on 22 April 1999.

³⁸⁰ DSU Art. 21.4 (emphasis added).

³⁸¹ DSU Art. 21.3 (the period for determining the reasonable period of time through arbitration is 90 days from the adoption of the panel and Appellate Body reports).

³⁸² Black's Law Dictionary (Sixth Edition) (citation in original).

³⁸³ Black's Law Dictionary is a US publication, and citations provided in the definition of "directory" are to US court opinions.  See Black's Law Dictionary, 5^th ed., at 414.

³⁸⁴ See DSU Art. 21.4.

³⁸⁵ Nor does the European Communities explain why it may disregard the Trade Representative's "systematic policy" of basing Section 304 determinations on WTO proceedings.  See Statement of Administrative Action at 365-66, reprinted in H.R.  Doc. No. 103-316, at 1034-35 (US Exhibit 11)