PROCEDURAL BACKGROUND

This proceeding was initiated by the European Communities, as complaining party against the United States.

On 4 March 1999, the European Communities requested consultations with the United States under Article XXII:1 of the General Agreement on Tariffs and Trade 1994 (“GATT”) and Article 4 of the Understanding on Rules and Procedures Governing the Settlement of Dispute (“DSU”) with regard to the US decision, effective as of 3 March 1999, to withhold liquidation on imports from the European Communities of a series of products (listed in the Annex to the document WT/DS165/1), together valued at over $500 million on an annual basis, and to impose a contingent liability for 100 per cent duties on each individual importation of affected products as of this date. The European Communities claimed that according to information provided by the United States Trade Representative (“USTR”), this measure includes administrative provisions which foresee, among other things, the posting of a bond to cover the full potential liability.

On 11 May 1999, the European Communities requested the establishment of a panel pursuant to Article 6 of the DSU (WT/DS165/8).

In its panel request, the European Communities claims that: