On 8 November 2004, the European Communities filed a request for consultations with the United States asserting that the United States should have removed its retaliatory measures since the EC has removed the measures found to be WTO-inconsistent in the EC — Hormones case.
The Appellate Body upheld the Panels' finding that the European Communities had not established a violation of DSU Arts. 23.1 and 3.7 as a result of a breach of Art. 22.8, because it was not established that the measure found to be inconsistent with the SPS Agreement in the EC – Hormones dispute had been removed.
The Appellate Body reversed the Panels' finding that Canada and the United States had breached DSU Art. 23.1 by maintaining the suspension of concessions after the notification of Directive 2003/74/EC. It also reversed the Panels' finding that Canada and the United States had breached Art. 23.2(a) by making a unilateral determination that Directive 2003/74/EC is WTO-inconsistent.
The Appellate Body found that when the parties disagree whether the implementing measure achieves compliance, both parties have a duty to engage in WTO dispute settlement procedures, and that the proper procedure for this purpose is compliance proceedings under Art. 21.5.
The Appellate Body reversed the Panels' findings that the import ban relating to oestradiol-17ß was not based on a risk assessment as required by Art. 5.1 of SPS, and that the provisional import ban relating to the other five hormones did not meet the requirements of Art. 5.7 of SPS. However, the Appellate Body was unable to complete the analysis and therefore made no findings as to the consistency or inconsistency of the definitive and provisional import bans with Arts 5.1 and 5.7.
Because it had been unable to complete the analysis as to whether Directive 2003/74/EC has brought the European Communities into substantive compliance within the meaning of Article 22.8 of the DSU, the Appellate Body found that the recommendations and rulings adopted by the DSB in EC — Hormones remain operative.
The Appellate Body found that the Panels failed to comply with Art. 11 in the consultations with certain scientific experts.