INTRODUCTION

On 11 January 2002, India requested consultations with the United States pursuant to Article 4 of the Understanding on Rules and Procedures Governing the Settlement of Disputes (hereafter the “DSU”), Article XXII of the General Agreement on Tariffs and Trade 1994 (hereafter the “GATT 1994”), Article 7 of the Agreement on Rules of Origin (hereafter the “RO Agreement”) … regarding section 334 of the United States Uruguay Round Agreements Act of 1994 (hereafter “section 334”) and section 405 of the United States Trade and Development Act of 2000 (hereafter “section 405”) and the customs regulations implementing these provisions.

Consultations were held in Geneva on 7 and 28 February and 26 March 2002, but did not lead to a mutually satisfactory resolution of the matter.

On 7 May 2002, India requested the Dispute Settlement Body (hereafter the “DSB”) to establish a panel pursuant to Article 6 of the DSU, Article XXIII of the GATT 1994 and Article 8 of the RO Agreement. India's panel request referenced the rules of origin for textiles and apparel products set out in section 334 and the Statement of Administrative Action accompanying the Uruguay Round Agreements Act (hereafter the “URAA”), the subsequent modifications made by section 405 of the Trade and Development Act, the customs regulations implementing these Acts as well as the administration of these Acts and regulations, as the measures at issue. India claimed that the United States’ rules of origin for textiles and apparel products were inconsistent with paragraphs (b), (c), (d) and (e) of Article 2 of the RO Agreement.

At its meeting on 24 June 2002, the DSB established a Panel pursuant to the request of India, in accordance with Article 6 of the DSU. The Panel was established with standard terms of reference. The terms of reference are the following: