INTRODUCTION

On 20 May 1999, Canada, pursuant to Article 22.2 of the DSU, requested the Dispute Settlement Body (“DSB”) to authorize the suspension of the application to the European Communities (“EC”) and its member States of tariff concessions covering trade in an amount of CDN$ 75 million per year. In a letter dated 2 June 1999, the EC objected to the level of suspension proposed by Canada and requested that the matter be referred to arbitration. In its submissions, the EC quantified the level of trade impairment caused by the hormone ban on Canadian bovine meat and meat products at a maximum of CDN$ 3,537,769. The EC also asked that the arbitrators request Canada to submit a list with pro-posed suspension of concessions equivalent to the level of nullification or impairment, once this level had been determined by the arbitrators.

At its meeting of 3 June 1999, the DSB - referring to both the Canadian and the EC request -noted that, pursuant to Article 22.6 of the DSU, the matter shall be referred to arbitration. Article 22.6 provides as follows: