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WTO ANALYTICAL INDEX: DISPUTE SETTLEMENT UNDERSTANDING Understanding on Rules and Procedures Governing the Settlement of Disputes |
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> Article 1 |
Members hereby agree as follows: Article 1: Coverage and Application 1. The rules and procedures of this Understanding shall apply to disputes brought pursuant to the consultation and dispute settlement provisions of the agreements listed in Appendix 1 to this Understanding (referred to in this Understanding as the "covered agreements"). The rules and procedures of this Understanding shall also apply to consultations and the settlement of disputes between Members concerning their rights and obligations under the provisions of the Agreement Establishing the World Trade Organization (referred to in this Understanding as the "WTO Agreement") and of this Understanding taken in isolation or in combination with any other covered agreement.
2. The rules and procedures of this Understanding shall apply subject to such special or additional rules and procedures on dispute settlement contained in the covered agreements as are identified in Appendix 2 to this Understanding. To the extent that there is a difference between the rules and procedures of this Understanding and the special or additional rules and procedures set forth in Appendix 2, the special or additional rules and procedures in Appendix 2 shall prevail. In disputes involving rules and procedures under more than one covered agreement, if there is a conflict between special or additional rules and procedures of such agreements under review, and where the parties to the dispute cannot agree on rules and procedures within 20 days of the establishment of the panel, the Chairman of the Dispute Settlement Body provided for in paragraph 1 of Article 2 (referred to in this Understanding as the "DSB"), in consultation with the parties to the dispute, shall determine the rules and procedures to be followed within 10 days after a request by either Member. The Chairman shall be guided by the principle that special or additional rules and procedures should be used where possible, and the rules and procedures set out in this Understanding should be used to the extent necessary to avoid conflict.
1. In Brazil - Desiccated Coconut, the Appellate Body defined the term "covered agreements" as follows: "The 'covered agreements' include the WTO Agreement, the Agreements in Annexes 1 and 2, as well as any Plurilateral Trade Agreement in Annex 4 where its Committee of signatories has taken a decision to apply the DSU. In a dispute brought to the DSB, a panel may deal with all the relevant provisions of the covered agreements cited by the parties to the dispute in one proceeding."(1) 2. In India - Patents (US), the Appellate Body examined the Panel's interpretation of various provisions of the TRIPS Agreement and noted that "as one of the covered agreements under the DSU, the TRIPS Agreement is subject to the dispute settlement rules and procedures of that Understanding".(2) 3. The Appellate Body in EC - Poultry considered the relationship between Schedule LXXX of the European Communities and the so-called "Oilseeds Agreement", which had been negotiated by the European Communities and ten other contracting parties, including Brazil. As a part of its agreement with Brazil, a "global" tariff-rate quota had been introduced by the European Communities and subsequently incorporated into the European Communities' Schedule LXXX. Subsequently, in the context of the interpretation of the European Communities' Schedule, the question of the relationship between Schedule LXXX and the Oilseeds Agreement arose. The European Communities argued that Schedule LXXX superseded and terminated the Oilseeds Agreement because the WTO Agreement was a later treaty relating to the same subject matter in accordance with Article 59.1 of the Vienna Convention; alternatively, the European Communities argued that the Oilseeds Agreement only applied to the extent compatible with Schedule LXXX, pursuant to Article 30.3 of the Vienna Convention. The Appellate Body stated: "In our view, it is not necessary to have recourse to either Article 59.1 or Article 30.3 of the Vienna Convention, because the text of the WTO Agreement and the legal arrangements governing the transition from the GATT 1947 to the WTO resolve the issue of the relationship between Schedule LXXX and the Oilseeds Agreement in this case. Schedule LXXX is annexed to the Marrakesh Protocol to the General Agreement on Tariffs and Trade 1994 (the 'Marrakesh Protocol'), and is an integral part of the GATT 1994. As such, it forms part of the multilateral obligations under the WTO Agreement. The Oilseeds Agreement, in contrast, is a bilateral agreement negotiated by the European Communities and Brazil under Article XXVIII of the GATT 1947, as part of the resolution of the dispute in EEC - Oilseeds. As such, the Oilseeds Agreement is not a 'covered agreement' within the meaning of Articles 1 and 2 of the DSU. Nor is the Oilseeds Agreement part of the multilateral obligations accepted by Brazil and the European Communities pursuant to the WTO Agreement, which came into effect on 1 January 1995. The Oilseeds Agreement is not cited in any Annex to the WTO Agreement. Although the provisions of certain legal instruments that entered into force under the GATT 1947 were made part of the GATT 1994 pursuant to the language in Annex 1A incorporating the GATT 1994 into the WTO Agreement, the Oilseeds Agreement is not one of those legal instruments."(3) 4. The Appellate Body in Guatemala - Cement I examined the Panel's interpretation of the relationship between Article 17 of the Anti-Dumping Agreement and the rules and procedures of the DSU. See also paragraph 7 below. In this context, the Appellate Body made the following general statement about Article 1.1 of the DSU: "Article 1.1 of the DSU establishes an integrated dispute settlement system which applies to all of the agreements listed in Appendix 1 to the DSU (the 'covered agreements'). The DSU is a coherent system of rules and procedures for dispute settlement which applies to 'disputes brought pursuant to the consultation and dispute settlement provisions of' the covered agreements. The Anti-Dumping Agreement is a covered agreement listed in Appendix 1 of the DSU; the rules and procedures of the DSU, therefore, apply to disputes brought pursuant to the consultation and dispute settlement provisions contained in Article 17 of that Agreement."(4) 5. In India - Quantitative Restrictions, India appealed the Panel's conclusion that the Panel was competent to review the justification of India's balance-of-payments (BOP) restrictions under Article XVIII:B of the GATT 1994. India argued that the Panel had erred by failing to give proper consideration to the "institutional balance" embodied in the WTO Agreement; according to India, BOP measures were within the exclusive competence of the BOP Committee and the General Council. India claimed that in view of the competence of the BOP Committee and the General Council with respect to balance-of-payments restrictions under Article XVIII:12 of GATT 1994 and the BOP Understanding, the Panel erred in finding that the competence of panels to review the justification of balance-of-payments restrictions is "unlimited". The Appellate Body ruled: "We note that Appendix 1 to the DSU lists 'Multilateral Agreements on Trade in Goods', to which the GATT 1994 belongs, among the agreements covered by the DSU. A dispute concerning Article XVIII:B is, therefore, covered by the DSU. ... Appendix 2 does not identify any special or additional dispute settlement rules or procedures relating to balance-of-payments restrictions. It does not mention Article XVIII:B of the GATT 1994, or any of its paragraphs. The DSU is, therefore, fully applicable to the current dispute."(5) (a) "special or additional rules and procedures" 6. The Appellate Body in Guatemala - Cement I also stated that special and additional rules within the meaning of Article 1.2 of the DSU apply only in the case of "inconsistency" or a "difference" between these rules and the provisions of the DSU: "Article 1.2 of the DSU provides that the 'rules and procedures of this Understanding shall apply subject to such special or additional rules and procedures on dispute settlement contained in the covered agreements as are identified in Appendix 2 to this Understanding.' (emphasis added) It states, furthermore, that these special or additional rules and procedures 'shall prevail' over the provisions of the DSU '[t]o the extent that there is a difference between' the two sets of provisions (emphasis added) Accordingly, if there is no 'difference', then the rules and procedures of the DSU apply together with the special or additional provisions of the covered agreement. In our view, it is only where the provisions of the DSU and the special or additional rules and procedures of a covered agreement cannot be read as complementing each other that the special or additional provisions are to prevail. A special or additional provision should only be found to prevail over a provision of the DSU in a situation where adherence to the one provision will lead to a violation of the other provision, that is, in the case of a conflict between them. An interpreter must, therefore, identify an inconsistency or a difference between a provision of the DSU and a special or additional provision of a covered agreement before concluding that the latter prevails and that the provision of the DSU does not apply."(6) (ii) Article 17 of the Anti-Dumping Agreement 7. In examining the relationship between Article 17 of the Anti-Dumping Agreement and the rules and procedures of the DSU, the Panel on Guatemala - Cement I found that Article 17 of the Anti-Dumping Agreement "provides for a coherent set of rules for dispute settlement specific to anti-dumping cases ... that replaces the more general approach of the DSU". However, the Appellate Body disagreed with the Panel and held: "Article 17.3 of the Anti-Dumping Agreement is not listed in Appendix 2 of the DSU as a special or additional rule and procedure. It is not listed precisely because it provides the legal basis for consultations to be requested by a complaining Member under the Anti-Dumping Agreement. Indeed, it is the equivalent provision in the Anti-Dumping Agreement to Articles XXII and XXIII of the GATT 1994, which serve as the basis for consultations and dispute settlement under the GATT 1994, under most of the other agreements in Annex 1A of the Marrakesh Agreement Establishing the World Trade Organization (the 'WTO Agreement'), and under the Agreement on Trade-Related Aspects of Intellectual Property Rights (the 'TRIPS Agreement'). ... Clearly, the consultation and dispute settlement provisions of a covered agreement are not meant to replace, as a coherent system of dispute settlement for that agreement, the rules and procedures of the DSU. To read Article 17 of the Anti-Dumping Agreement as replacing the DSU system as a whole is to deny the integrated nature of the WTO dispute settlement system established by Article 1.1 of the DSU.
For these reasons, we conclude that the Panel erred in finding that Article 17 of the Anti-Dumping Agreement 'provides for a coherent set of rules for dispute settlement specific to anti-dumping cases ... that replaces the more general approach of the DSU'."(7) 8. In US - Hot-Rolled Steel, the Appellate Body interpreted Articles17.6(i) and 17.6(ii) of the Anti-Dumping Agreement with reference to Articles 3.2 and 11 of the DSU. See paragraphs 76 and 300 below. (iii) Article 4.7 of the SCM Agreement 9. In Australia - Automotive Leather II (Article 21.5 - US), both parties argued that Article 4.7 of the SCM Agreement should be read consistently with Article 19.1 of the DSU. The Panel concluded that Article 19.1 of the DSU is not the basis of the recommendation in a case involving prohibited subsidies. The Panel stated: "Rather, the recommendation to 'withdraw the subsidy' is required by Article 4.7 of the SCM Agreement, which is a special or additional rule or procedure on dispute settlement, identified in Appendix 2 to the DSU. It is Article 4.7 which we must interpret and apply in this dispute. In this respect, we note Article 1.2 of the DSU...Thus, to the extent that 'withdraw the subsidy' requires some action that is different from 'bring the measure into conformity', it is that different action which prevails."(8)
II. Article 2 back to top Article 2: Administration 1. The Dispute Settlement Body is hereby established to administer these rules and procedures and, except as otherwise provided in a covered agreement, the consultation and dispute settlement provisions of the covered agreements. Accordingly, the DSB shall have the authority to establish panels, adopt panel and Appellate Body reports, maintain surveillance of implementation of rulings and recommendations, and authorize suspension of concessions and other obligations under the covered agreements. With respect to disputes arising under a covered agreement which is a Plurilateral Trade Agreement, the term "Member" as used herein shall refer only to those Members that are parties to the relevant Plurilateral Trade Agreement. Where the DSB administers the dispute settlement provisions of a Plurilateral Trade Agreement, only those Members that are parties to that Agreement may participate in decisions or actions taken by the DSB with respect to that dispute.
2. The DSB shall inform the relevant WTO Councils and Committees of any developments in disputes related to provisions of the respective covered agreements.
3. The DSB shall meet as often as necessary to carry out its functions within the time-frames provided in this Understanding.
4. Where the rules and procedures of this Understanding provide for the DSB to take a decision, it shall do so by consensus.(1)
(footnote original) 1 The DSB shall be deemed to have decided by consensus on a matter submitted for its consideration, if no Member, present at the meeting of the DSB when the decision is taken, formally objects to the proposed decision.
10. With respect to the functions of the DSB, see paragraph 136 of the Chapter on the WTO Agreement. 2. Rules of procedures for the DSB 11. At the meeting of 10 February 1995, the DSB in accordance with Article IV:3 of the WTO Agreement, adopted the Rules of Procedure contained in PC/IPL/9. The DSB follows the rules of procedure for meetings of the General Council(9), except as otherwise provided in the DSU or in document WT/DSB/9. 12. When there is a reference to the terms "date of circulation" or "issuance to all Members" or "issuance to the Members" in the DSU and its additional and special rules, the date to be used is the date printed on the WTO document to be circulated with the assurance of the Secretariat that the date printed on the document is the date on which this document is effectively put in the pigeon holes of delegations in all three working languages. This practice will be used on a trial basis and be subject to revision when necessary.(10) 4. Communications with the DSB 13. At its meeting on 31 May 1995, the DSB agreed that, for reasons of efficiency, communications under the DSU or any other covered agreements should always be sent to the Secretariat with a copy to the Chairman.(11) 14. At its meeting of 27 September 1995, the DSB agreed(12) to the following practice concerning the expiration of time-periods: "When, under the DSU (and its special or additional rules and procedures), a time-period within which a communication must be made or action taken by a Member to exercise or preserve its rights expires on a non-working day of the WTO Secretariat, any such communication or action will be deemed to have been made or taken on the WTO non-working day if lodged on the first working day of the WTO Secretariat following the day on which such time-period would normally expire."(13) 15. At its meeting on 3 December 1996, the DSB adopted the Rules of Conduct for the Understanding on Rules and Procedures Governing the Settlement of Disputes.(14) (15) 16. With a communication, dated 20 January 1997, from the Chairman of the Appellate Body addressed to the Chairman of the Dispute Settlement Body, and circulated to Members for information, "the Appellate Body confirms that the Rules of Conduct have been directly incorporated into the Working Procedures for Appellate Review. Accordingly, the Rules of Conduct, as adopted by the Dispute Settlement Body, are made a part of, and supersede Annex II of, the Working Procedures for Appellate Review."(16) 17. At its meeting on 25, 28 and 29 January and 1 February 1999, and in accordance with Section IX of the Rules of Conduct, which provides for a periodic review of the rules, the DSB agreed to continue to apply the current Rules of Conduct.(17) (18) 7. Negotiations on the amendment of the DSU 18. With respect to the negotiations on the improvement of the DSU at the Special Session of the DSB further to the Doha mandate, see paragraphs 84-84 of the Chapter on the WTO Agreement.
III. Article 3 back to top Article 3: General Provisions 1. Members affirm their adherence to the principles for the management of disputes heretofore applied under Articles XXII and XXIII of GATT 1947, and the rules and procedures as further elaborated and modified herein.
2. The dispute settlement system of the WTO is a central element in providing security and predictability to the multilateral trading system. The Members recognize that it serves to preserve the rights and obligations of Members under the covered agreements, and to clarify the existing provisions of those agreements in accordance with customary rules of interpretation of public international law. Recommendations and rulings of the DSB cannot add to or diminish the rights and obligations provided in the covered agreements.
3. The prompt settlement of situations in which a Member considers that any benefits accruing to it directly or indirectly under the covered agreements are being impaired by measures taken by another Member is essential to the effective functioning of the WTO and the maintenance of a proper balance between the rights and obligations of Members.
4. Recommendations or rulings made by the DSB shall be aimed at achieving a satisfactory settlement of the matter in accordance with the rights and obligations under this Understanding and under the covered agreements.
5. All solutions to matters formally raised under the consultation and dispute settlement provisions of the covered agreements, including arbitration awards, shall be consistent with those agreements and shall not nullify or impair benefits accruing to any Member under those agreements, nor impede the attainment of any objective of those agreements.
6. Mutually agreed solutions to matters formally raised under the consultation and dispute settlement provisions of the covered agreements shall be notified to the DSB and the relevant Councils and Committees, where any Member may raise any point relating thereto.
7. Before bringing a case, a Member shall exercise its judgement as to whether action under these procedures would be fruitful. The aim of the dispute settlement mechanism is to secure a positive solution to a dispute. A solution mutually acceptable to the parties to a dispute and consistent with the covered agreements is clearly to be preferred. In the absence of a mutually agreed solution, the first objective of the dispute settlement mechanism is usually to secure the withdrawal of the measures concerned if these are found to be inconsistent with the provisions of any of the covered agreements. The provision of compensation should be resorted to only if the immediate withdrawal of the measure is impracticable and as a temporary measure pending the withdrawal of the measure which is inconsistent with a covered agreement. The last resort which this Understanding provides to the Member invoking the dispute settlement procedures is the possibility of suspending the application of concessions or other obligations under the covered agreements on a discriminatory basis vis-à-vis the other Member, subject to authorization by the DSB of such measures.
8. In cases where there is an infringement of the obligations assumed under a covered agreement, the action is considered prima facie to constitute a case of nullification or impairment. This means that there is normally a presumption that a breach of the rules has an adverse impact on other Members parties to that covered agreement, and in such cases, it shall be up to the Member against whom the complaint has been brought to rebut the charge.
9. The provisions of this Understanding are without prejudice to the rights of Members to seek authoritative interpretation of provisions of a covered agreement through decision-making under the WTO Agreement or a covered agreement which is a Plurilateral Trade Agreement.
10. It is understood that requests for conciliation and the use of the dispute settlement procedures should not be intended or considered as contentious acts and that, if a dispute arises, all Members will engage in these procedures in good faith in an effort to resolve the dispute. It is also understood that complaints and counter-complaints in regard to distinct matters should not be linked.
11. This Understanding shall be applied only with respect to new requests for consultations under the consultation provisions of the covered agreements made on or after the date of entry into force of the WTO Agreement. With respect to disputes for which the request for consultations was made under GATT 1947 or under any other predecessor agreement to the covered agreements before the date of entry into force of the WTO Agreement, the relevant dispute settlement rules and procedures in effect immediately prior to the date of entry into force of the WTO Agreement shall continue to apply.(2)
(footnote original) 2 This paragraph shall also be applied to disputes on which panel reports have not been adopted or fully implemented.
12. Notwithstanding paragraph 11, if a complaint based on any of the covered agreements is brought by a developing country Member against a developed country Member, the complaining party shall have the right to invoke, as an alternative to the provisions contained in Articles 4, 5, 6 and 12 of this Understanding, the corresponding provisions of the Decision of 5 April 1966 (BISD 14S/18), except that where the Panel considers that the time-frame provided for in paragraph 7 of that Decision is insufficient to provide its report and with the agreement of the complaining party, that time-frame may be extended. To the extent that there is a difference between the rules and procedures of Articles 4, 5, 6 and 12 and the corresponding rules and procedures of the Decision, the latter shall prevail.
(a) "security and predictability" 19. The Appellate Body in Japan - Alcoholic Beverages II examined whether the Japanese tax measure governing the taxation of alcoholic beverages violated Article III:2 of GATT 1994. After concurring with the Panel's finding that the Liquor Tax Law was not in compliance with Article III:2, the Appellate Body made the following general statement about WTO rules and the concept of "security and predictability": "WTO rules are reliable, comprehensible and enforceable. WTO rules are not so rigid or so inflexible as not to leave room for reasoned judgements in confronting the endless and ever-changing ebb and flow of real facts in real cases in the real world. They will serve the multilateral trading system best if they are interpreted with that in mind. In that way, we will achieve the 'security and predictability' sought for the multilateral trading system by the Members of the WTO through the establishment of the dispute settlement system."(19) 20. In US - Section 301 Trade Act, the Panel examined the European Communities' argument that Section 301 is inconsistent with Article 23 of the DSU as well as various articles of GATT 1994. In its examination, the Panel discussed the importance of the concept of "security and predictability" and stated: "Providing security and predictability to the multilateral trading system is another central object and purpose of the system which could be instrumental to achieving the broad objectives of the Preamble. Of all WTO disciplines, the DSU is one of the most important instruments to protect the security and predictability of the multilateral trading system and through it that of the market-place and its different operators. DSU provisions must, thus, be interpreted in the light of this object and purpose and in a manner which would most effectively enhance it. In this respect we are referring not only to preambular language but also to positive law provisions in the DSU itself."(20) 21. In Chile - Alcoholic Beverages, Chile claimed that the Panel's findings on the issues of "not similarly taxed" and "so as to afford protection" - which had found Chile to be in violation of its WTO obligations under Article III:2 of GATT 1994 - compromised the security and predictability of the multilateral trading system, as provided for in Article 3.2 of the DSU. Chile also claimed that the Panel had added to the rights and obligations of WTO Members under the WTO Agreement, contrary to Article 19.2 of the DSU. The Appellate Body rejected this argument. See paragraph 74 below. (b) "clarify the existing provisions" 22. In US - Wool Shirts and Blouses, the Appellate Body examined whether a complaining party is entitled to a finding on each of the legal claims it makes to a panel. The Appellate Body stated: "Given the explicit aim of dispute settlement that permeates the DSU, we do not consider that Article 3.2 of the DSU is meant to encourage either panels or the Appellate Body to 'make law' by clarifying existing provisions of the WTO Agreement outside the context of resolving a particular dispute. A panel need only address those claims which must be addressed in order to resolve the matter in issue in the dispute."(21) 23. In EC - Poultry, the Appellate Body held that just as much as a panel is not required to address every legal claim made by a party, neither does it have an obligation to address every argument made by a party. See paragraph 246 below. (c) "customary rules of interpretation of public international law" (i) Article 31 of the Vienna Convention: General rule of interpretation 24. The Appellate Body in US - Gasoline stated that the "general rule of interpretation", contained in Article 31(22) of the Vienna Convention had attained the status of customary or general international law. The Appellate Body added that WTO law was not to be "read in clinical isolation from public international law": "The 'general rule of interpretation' set out above has been relied upon by all of the participants and third participants, although not always in relation to the same issue. That general rule of interpretation has attained the status of a rule of customary or general international law. As such, it forms part of the 'customary rules of interpretation of public international law' which the Appellate Body has been directed, by Article 3(2) of the DSU, to apply in seeking to clarify the provisions of the General Agreement and the other 'covered agreements' of the Marrakesh Agreement Establishing the World Trade Organization (the 'WTO Agreement'). That direction reflects a measure of recognition that the General Agreement is not to be read in clinical isolation from public international law."(23) 25. In connection with applying the "customary rules of interpretation of public international law", the Appellate Body in Japan - Alcoholic Beverages II stated: "Article 31 of the Vienna Convention provides that the words of the treaty form the foundation for the interpretative process: 'interpretation must be based above all upon the text of the treaty'."(24) 26. The Panel on US - Section 301 Trade Act held that "the elements referred to in Article 31 - text, context and object-and-purpose as well as good faith - are to be viewed as one holistic rule of interpretation rather than a sequence of separate tests to be applied in a hierarchical order."(25) In contrast, the Appellate Body in US - Shrimp adopted the following approach: "A treaty interpreter must begin with, and focus upon, the text of the particular provision to be interpreted. It is in the words constituting that provision, read in their context, that the object and purpose of the states parties to the treaty must first be sought. Where the meaning imparted by the text itself is equivocal or inconclusive, or where confirmation of the correctness of the reading of the text itself is desired, light from the object and purpose of the treaty as a whole may usefully be sought."(26) 27. In India - Patents (US), the Appellate Body emphasized that the principles of treaty interpretation "neither require nor condone" the importation into a treaty of "words that are not there" nor of "concepts that were not intended": "The duty of a treaty interpreter is to examine the words of the treaty to determine the intentions of the parties. This should be done in accordance with the principles of treaty interpretation set out in Article 31 of the Vienna Convention. But these principles of interpretation neither require nor condone the imputation into a treaty of words that are not there or the importation into a treaty of concepts that were not intended....These rules must be respected and applied in interpreting the TRIPS Agreement or any other covered agreements....Both panels and the Appellate Body must be guided by the rules of treaty interpretation set out in the Vienna Convention, and must not add to or diminish rights and obligations provided in the WTO Agreement."(27) 28. In EC - Hormones, the Appellate Body paraphrased its statement from India - Patents(US), referenced in paragraph 27 above, in the following terms: "The fundamental rule of treaty interpretation requires a treaty interpreter to read and interpret the words actually used by the agreement under examination, not words the interpreter may feel should have been used."(28) 29. The Panel on Canada - Pharmaceutical Patents held that in the case of the TRIPS Agreement, the context of certain TRIPS provisions to which the Panel could have recourse for interpretative purposes also encompassed provisions of the international agreements on intellectual property incorporated into the TRIPS Agreement, such as the Berne Convention of 1971: "The Panel noted that, in the framework of the TRIPS Agreement, which incorporates certain provisions of the major pre-existing international instruments on intellectual property, the context to which the Panel may have recourse for purposes of interpretation of specific TRIPS provisions, in this case Articles 27 and 28, is not restricted to the text, Preamble and Annexes of the TRIPS Agreement itself, but also includes the provisions of the international instruments on intellectual property incorporated into the TRIPS Agreement, as well as any agreement between the parties relating to these agreements within the meaning of Article 31(2) of the Vienna Convention on the Law of Treaties. Thus, as the Panel will have occasion to elaborate further below, Article 9(2) of the Berne Convention for the Protection of Literary and Artistic Works (1971) (hereinafter referred to as the Berne Convention) is an important contextual element for the interpretation of Article 30 of the TRIPS Agreement."(29) (ii) Article 31(3)(b) of the Vienna Convention: Subsequent practice Panel Reports 30. In Japan - Alcoholic Beverages II, the Panel found that "panel reports adopted by the CONTRACTING PARTIES constitute subsequent practice in a specific case". Article 31(3)(b) of the Vienna Convention states that "any subsequent practice in the application of the treaty which establishes the agreement of the parties regarding its interpretation" is to be "taken into account together with the context" in interpreting the terms of the treaty. In reversing the Panel's findings on this issue, the Appellate Body considered "subsequent practice" to mean a "concordant, common and consistent" sequence of acts: "Article 31(3)(b) of the Vienna Convention states that 'any subsequent practice in the application of the treaty which establishes the agreement of the parties regarding its interpretation' is to be 'taken into account together with the context' in interpreting the terms of the treaty. Generally, in international law, the essence of subsequent practice in interpreting a treaty has been recognized as a 'concordant, common and consistent' sequence of acts or pronouncements which is sufficient to establish a discernable pattern implying the agreement of the parties regarding its interpretation. An isolated act is generally not sufficient to establish subsequent practice; it is a sequence of acts establishing the agreement of the parties that is relevant."(30) (31) Practice amongst Members 31. In Chile - Price Band System, Argentina had argued before the Panel that Chile's price band system was a measure "of the kind which has been required to be converted into ordinary customs duties" and which, by the terms of Article 4.2 of the Agreement on Agriculture (see paragraphs 21-30 of the Chapter on the Agreement on Agriculture) Members are required not to maintain. As regards the interpretation of the phrase "measures which have been required to be converted into ordinary customs duties", Chile contended that it was "highly relevant" that no country that had had a price band system in place before the conclusion of the Uruguay Round had actually converted it into ordinary customs duties. The Appellate Body looked into the possibility that this practice could be considered "subsequent practice" pursuant to Article 31(3)(b) of the Vienna Convention and therefore a practice relevant to the interpretation of Article 4.2. The Appellate Body referred to its definition of "subsequent practice" in its Report in Japan - Alcoholic Beverages II (see paragraph 30 above) and noted that neither the Panel record nor the submissions of the parties suggested that there was a discernible pattern of acts or pronouncements implying an agreement among WTO Members on the interpretation of Article 4.2. The Appellate Body thus concluded that this practice of some Members alleged by Chile did not amount to a "subsequent practice" within the meaning of Article 31(3)(b) of the Vienna Convention..(32) (iii) Article 32 of the Vienna Convention: Supplementary means of interpretation General Status of Article 32 32. Japan - Alcoholic Beverages II, the Appellate Body recalled its statement in US - Gasoline that there is a need to achieve clarification by reference to the fundamental rule of treaty interpretation set out in Article 31(1) of the Vienna Convention and that this general rule "has attained the status of a rule of customary or general international law".(33) The Appellate Body then went on to state in Japan - Alcoholic Beverages II that Article 32 of the Vienna Convention(34), which deals with the role of supplementary means of interpretation, "has also attained the same status."(35) When to resort to Article 32 33. In Canada - Dairy, the Appellate Body, disagreeing with the Panel, considered that a certain notation in Canada's Schedule was not clear and thus, it was "appropriate to turn to 'supplementary means of interpretation' pursuant to Article 32 of the Vienna Convention."(36) Circumstances of the conclusion of a treaty Negotiating History 34. The Appellate Body in EC - Computer Equipment found that the "circumstances of [the] conclusion" of a treaty, which is a supplementary means of interpretation under Article 32 of the Vienna Convention, permits in certain cases the examination of the historical background against which the treaty was negotiated: "The application of these rules in Article 31 of the Vienna Convention will usually allow a treaty interpreter to establish the meaning of the term. However, if after applying Article 31 the meaning of the term remains ambiguous or obscure, or leads to a result which is manifestly absurd or unreasonable, Article 32 allows a treaty interpreter to have recourse to:
'... supplementary means of interpretation, including the preparatory work of the treaty and the circumstances of its conclusion.'
With regard to 'the circumstances of [the] conclusion' of a treaty, this permits, in appropriate cases, the examination of the historical background against which the treaty was negotiated."(37) 35. In US - Export Restraints, the Panel recalled the decision of the Appellate Body in Japan - Alcoholic Beverages II (see paragraph 30 above) and stated that "pursuant to Article 32 of the Vienna Convention, negotiating history can thus be invoked as a supplementary means of interpretation, to confirm a conclusion reached on the basis of a textual and contextual analysis of a treaty."(38) 36. In Egypt - Steel Rebar, the Panel referred to the negotiating history of Annex II of the Anti-Dumping Agreement as confirmation of its views that the provisions of this Annex that address what information can be used as facts available "have to do with ensuring the reliability of the information used by the investigating authority": "It is clear that the provisions of Annex II that address what information can be used as facts available (which, along with the other provisions of Annex II, "shall be observed") have to do with ensuring the reliability of the information used by the investigating authority. This view may further be confirmed, as foreseen in Article 32 of the Vienna Convention on the Law of Treaties(39), by the negotiating history of Annex II. In particular, this Annex was originally developed by the Tokyo Round Committee on Anti-Dumping Practices, which adopted it on 8 May 1984 as a "Recommendation Concerning Best Information Available in Terms of Article 6:8".(40) During the Uruguay Round negotiations, the substantive provisions of the original recommendation were incorporated with almost no changes as Annex II to the AD Agreement. A preambular paragraph to the original recommendation, which was not retained when Annex II was created, in our view, provides some insight into the intentions of the drafters concerning its application. This paragraph reads as follows:
The authorities of the importing country have a right and an obligation to make decisions on the basis of the best information available during the investigation from whatever source, even where evidence has been supplied by the interested party. The Anti-Dumping Code recognizes the right of the importing country to base findings on the facts available when any interested party refuses access to or does not provide the necessary information within a reasonable period, or significantly impedes the investigation (Article 6:8). However, all reasonable steps should be taken by the authorities of the importing countries to avoid the use of information from unreliable sources.
To us, this preambular language conveys that the full package of provisions in the recommendation, applicable in implementing Article 6:8 of the Tokyo Round Anti-Dumping Code, was intended, inter alia, to ensure that in using facts available (i.e., in applying Article 6:8), information from unreliable sources would be avoided."(41) Customs classification practice 37. The Appellate Body in EC - Computer Equipment, further considered that the classification practice of the European Communities was part of the "circumstances of the conclusion" of the WTO Agreement and that this may be used as a supplementary means of interpretation: "In the light of our observations on 'the circumstances of [the] conclusion' of a treaty as a supplementary means of interpretation under Article 32 of the Vienna Convention, we consider that the classification practice in the European Communities during the Uruguay Round is part of 'the circumstances of [the] conclusion' of the WTO Agreement and may be used as a supplementary means of interpretation within the meaning of Article 32 of the Vienna Convention."(42) 38. With respect to the question whether the classification practice of one country, existing at the time of tariff negotiation, was relevant for the interpretation of a country's Schedule of concessions, the Appellate Body, in EC - Computer Equipment, emphasized that while of limited value, such unilateral practice was not irrelevant; also, the Appellate Body found that where such unilateral practice of one Member was inconsistent, it could not be considered relevant: "We note that the Panel examined the classification practice of only the European Communities, and found that the classification of LAN equipment by the United States during the Uruguay Round tariff negotiations was not relevant. The purpose of treaty interpretation is to establish the common intention of the parties to the treaty. To establish this intention, the prior practice of only one of the parties may be relevant, but it is clearly of more limited value than the practice of all parties. In the specific case of the interpretation of a tariff concession in a Schedule, the classification practice of the importing Member, in fact, may be of great importance. However, the Panel was mistaken in finding that the classification practice of the United States was not relevant. ... Then there is the question of the consistency of prior practice. Consistent prior classification practice may often be significant. Inconsistent classification practice, however, cannot be relevant in interpreting the meaning of a tariff concession."(43) Agreements between Members 39. In EC - Poultry, the Appellate Body found that a bilateral agreement between two WTO Members could serve as "supplementary means" of interpretation for a provision of a covered agreement: "[T]he Oilseeds Agreement may serve as a supplementary means of interpretation of Schedule LXXX pursuant to Article 32 of the Vienna Convention, as it is part of the historical background of the concessions of the European Communities for frozen poultry meat."(44) "In dubio mitius" 40. In EC - Hormones, the Appellate Body referred to "the interpretative principle of in dubio mitius" as a supplementary means of interpretation "widely recognized in international law". It there stated that "the principle of in dubio mitius applies in interpreting treaties, in deference to the sovereignty of states. If the meaning of a term is ambiguous, that meaning is to be preferred which is less onerous to the party assuming an obligation, or which interferes less with the territorial and personal supremacy of a party, or involves less general restrictions upon the parties."(45) 41. In US - Shrimp, the Appellate Body held that the chapeau of Article XX was "but one expression of good faith" and also reflected the notion of "abus de droit": "The chapeau of Article XX is, in fact, but one expression of the principle of good faith. This principle, at once a general principle of law and a general principle of international law, controls the exercise of rights by states. One application of this general principle, the application widely known as the doctrine of abus de droit, prohibits the abusive exercise of a state's rights and enjoins that whenever the assertion of a right 'impinges on the field covered by [a] treaty obligation, it must be exercised bona fide, that is to say, reasonably.'(46) An abusive exercise by a Member of its own treaty right thus results in a breach of the treaty rights of the other Members and, as well, a violation of the treaty obligation of the Member so acting. Having said this, our task here is to interpret the language of the chapeau, seeking additional interpretative guidance, as appropriate, from the general principles of international law."(47) 42. The application of the pervasive principle of good faith in the context of the obligation to engage in dispute settlement procedures in good faith in an effort to resolve a dispute pursuant to Article 3.10 of the DSU, was considered by the Appellate Body in US - FSC (see paragraph 84 below). 43. In US - Hot-Rolled Steel, the Appellate Body noted that the pervasive principle of good faith "informs the provisions of the Anti-Dumping Agreement, as well as the other covered agreements."(48) 44. In US - Export Restraints(49), the Panel mentioned the decision of the Appellate Body in US - Gasoline which referred to "a fundamental rule of treaty interpretation [which] has received its most authoritative and succinct expression in [Article 31.1 of] the Vienna Convention on the Law of Treaties ('Vienna Convention')"(50), i.e. good faith. 45. In EC - Computer Equipment, the Appellate Body examined whether the Panel had erred in interpreting the meaning of a tariff concession in the European Communities Schedule in light of the "legitimate expectations" of an exporting Member (see Section on legitimate expectations, paragraphs 68-71 below). The Appellate Body disagreed with the Panel's finding that the tariff concession of a Member may be determined on the basis of the "legitimate expectation" of just one (namely the exporting) Member and emphasized that it was rather the common intention of the parties that should be ascertained. The Appellate Body stated: "[W]e do not agree with the Panel that interpreting the meaning of a concession in a Member's Schedule in the light of the 'legitimate expectations' of exporting Members is consistent with the principle of good faith interpretation under Article 31 of the Vienna Convention. Recently, in India - Patents, the panel stated that good faith interpretation under Article 31 required 'the protection of legitimate expectations'. We found that the panel had misapplied Article 31 of the Vienna Convention....
The purpose of treaty interpretation under Article 31 of the Vienna Convention is to ascertain the common intentions of the parties. These common intentions cannot be ascertained on the basis of the subjective and unilaterally determined 'expectations' of one of the parties to a treaty. Tariff concessions provided for in a Member's Schedule - the interpretation of which is at issue here - are reciprocal and result from a mutually-advantageous negotiation between importing and exporting Members. A Schedule is made an integral part of the GATT 1994 by Article II:7 of the GATT 1994. Therefore, the concessions provided for in that Schedule are part of the terms of the treaty. As such, the only rules which may be applied in interpreting the meaning of a concession are the general rules of treaty interpretation set out in the Vienna Convention."(51) (v) Principle of effective treaty interpretation 46. The Appellate Body in US - Gasoline considered the principle of effective treaty interpretation (ut res magis valeat quam pereat)(52) as "one of the corollaries of the 'general rule of interpretation' in the Vienna Convention". In particular, the Appellate Body stated: "One of the corollaries of the 'general rule of interpretation' in the Vienna Convention is that interpretation must give meaning and effect to all the terms of a treaty. An interpreter is not free to adopt a reading that would result in reducing whole clauses or paragraphs of a treaty to redundancy or inutility.(53)"(54) 47. In application of the principle of effective treaty interpretation as defined in paragraph 46 above, the Appellate Body in US - Gasoline found that the Panel had erroneously applied the same standard of discrimination to Article III:4 of GATT 1994 and to the chapeau of Article XX of GATT 1994. The Appellate Body held that to do so would be to effectively deprive the chapeau of its meaning and found that such an approach would be contrary to the principle of giving "meaning and effect to all the terms of a treaty": "The enterprise of applying Article XX would clearly be an unprofitable one if it involved no more than applying the standard used in finding that the baseline establishment rules were inconsistent with Article III:4. That would also be true if the finding were one of inconsistency with some other substantive rule of the General Agreement. The provisions of the chapeau cannot logically refer to the same standard(s) by which a violation of a substantive rule has been determined to have occurred. To proceed down that path would be both to empty the chapeau of its contents and to deprive the exceptions in paragraphs (a) to (j) of meaning ... One of the corollaries of the 'general rule of interpretation' in the Vienna Convention is that interpretation must give meaning and effect to all the terms of a treaty. An interpreter is not free to adopt a reading that would result in reducing whole clauses or paragraphs of a treaty to redundancy or inutility."(55) 48. In Japan - Alcoholic Beverages II, the Appellate Body referred to its ruling in US - Gasoline (see paragraph 46 above) and indicated that "a fundamental tenet of treaty interpretation flowing from the general rule of interpretation set out in Article 31 is the principle of effectiveness (ut res magis valeat quam perea)".(56) The Appellate Body concluded that "Article III:1 constitutes part of the context of Article III:2, in the same way that it constitutes part of the context of each of the other paragraphs in Article III. Any other reading of Article III would have the effect of rendering the words of Article III:1 meaningless, thereby violating the fundamental principle of effectiveness in treaty interpretation."(57) 49. In US - Underwear, the Appellate Body invoked the principle of effective interpretation to sustain its conclusion that the common, day-to-day, implication which arises from the language of Article 6.7 of the Agreement on Textiles and Clothing is that a restraint is to be applied in the future, after the consultations, should these prove fruitless and the proposed measure not withdrawn.(58) 50. In Korea - Dairy, the Appellate Body recalled the principle of effective treaty interpretation as it had defined it in US - Gasoline (see paragraph 24 above 29 above) and concluded that: "In light of the interpretive principle of effectiveness, it is the duty of any treaty interpreter to 'read all applicable provisions of a treaty in a way that gives meaning to all of them, harmoniously.'(59) An important corollary of this principle is that a treaty should be interpreted as a whole, and, in particular, its sections and parts should be read as a whole.(60) Article II:2 of the WTO Agreement expressly manifests the intention of the Uruguay Round negotiators that the provisions of the WTO Agreement and the Multilateral Trade Agreements included in its Annexes 1, 2 and 3 must be read as a whole."(61) 51. In Korea - Dairy, the Appellate Body applied the principle of effective treaty interpretation to the relationship between the Agreement on Safeguards and Article XIX of GATT 1994 and concluded that "having said that all of the provisions of a treaty must be given meaning and legal effect, we believe that the clause in Article XIX:1(a) - 'as a result of unforeseen developments and of the effect of the obligations incurred by a Member under this Agreement, including tariff concessions ...' - must have meaning".(62) The Appellate Body therefore disagreed with the Panel on the latter's conclusion whereby the clause in Article XIX:1(a) of GATT 1994 - "as a result of unforeseen developments and of the effect of the obligations incurred by a Member under this Agreement, including tariff concessions ... does not add conditions for any measure to be applied pursuant to Article XIX but rather serves as an explanation of why an Article XIX measure may be needed".(63) 52. The same issue as referenced in paragraph 51 above, arose in Argentina - Footwear (EC). In this case, the Appellate Body also considered whether the Panel had reached a correct conclusion concerning the relationship between the Agreement on Safeguards and Article XIX of GATT 1994. The Appellate Body agreed with the Panel that "Article XIX of GATT and the Safeguards Agreement must a fortiori be read as representing an inseparable package of rights and disciplines which have to be considered in conjunction". However, the Appellate Body reversed the Panel's finding that the "express omission of the criterion of unforeseen developments in the [Agreement on Safeguards] (which otherwise transposes, reflects and refines in great detail the essential conditions for the imposition of safeguard measures provided for in Article XIX of GATT) must ... have meaning"(64). The Appellate Body held: "[A] treaty interpreter must read all applicable provisions of a treaty in a way that gives meaning to all of them, harmoniously. And, an appropriate reading of this 'inseparable package of rights and disciplines' must, accordingly, be one that gives meaning to all the relevant provisions of these two equally binding agreements."(65) 53. In Canada - Dairy, the Appellate Body made it clear that a treaty interpreter cannot lightly assume that a WTO Member intended no specific purpose when inscribing a term in its schedule. "In interpreting the language in Canada's Schedule, the Panel focused on the verb 'represents' and opined that, because of the use of this verb, the notation was no more than a 'description' of the 'way the size of the quota was determined'. The net consequence of the Panel's interpretation is a failure to give the notation in Canada's Schedule any legal effect as a 'term and condition'. If the language is merely a 'description' or a 'narration' of how the quantity was arrived at, we do not see what purpose it serves in being inscribed in the Schedule. The Panel, in other words, acted upon the assumption that Canada projected no identifiably necessary or useful qualifying or limiting purpose in inscribing the notation in its Schedule. The Panel thus disregarded the principle of effectiveness in its interpretive effort."(66) 54. In US - Section 211 Appropriations Act, the Appellate Body disagreed with the Panel's view that the words "in respect of " in Article 2.1 of the TRIPS Agreement have the effect of "conditioning" Members' obligations under the Articles of the Paris Convention (1967) incorporated into the TRIPS Agreement, with the result that trade names are not covered. In reference to its previous rulings in US - Gasoline (see paragraph 46 above) and Japan - Alcoholic Beverages II (see paragraph 48 above) concerning the principle of effective interpretation, the Appellate Body considered that to "adopt the Panel's approach would be to deprive Article 8 of the Paris Convention (1967), as incorporated into the TRIPS Agreement by virtue of Article 2.1 of that Agreement, of any and all meaning and effect".(67) (vi) Article 33 of the Vienna Convention: Plurilingual treaties 55. In India - Quantitative Restrictions, the Panel, when examining the meaning of certain terms in the Ad Note to Article XVIII:11 of the GATT 1994, noted that its interpretation was consistent with the Spanish and French versions of the Agreement.(68) 56. In EC - Asbestos, the Panel considered that "[a]s the WTO Agreement is a treaty with authentic texts in three languages, it is ... important to bear in mind the spirit underlying the provisions of Article 33(69)".(70) The Appellate Body also referred to the different authentic languages and examined the term "similar" as compared to "produits similaires" and "productos similares" since both French and Spanish versions of the WTO Agreements, "together with the English version, are equally authentic.(71) "(72) 57. In Chile - Price Band System, the Panel, when attempting to define the term "ordinary customs duty", had found that the dictionary meanings of the English term, on the one hand, and the French and Spanish corresponding terms, on the other hand, differed in the way they defined "ordinary". The Appellate Body, which disagreed with the Panel's interpretation of this term, noted that the Panel had interpreted the French and Spanish versions of the term "ordinary customs duty" to mean something different from the ordinary meaning of the English version of that term. In this regard, the Appellate Body stated that "[i]t is difficult to see how, in doing so, the Panel took into account the rule of interpretation codified in Article 33(4)(73) of the Vienna Convention whereby "when a comparison of the authentic texts discloses a difference of meaning ..., the meaning which best reconciles the texts ... shall be adopted." (emphasis added)."(74) (vii) Presumption against conflict GATT 1994 and the Annex 1A Agreements 58. In EC - Bananas III, given the existence of claims raised under GATT 1994, the Licensing Agreement and the TRIMs Agreement, the Panel was required to consider the interpretative interrelationship of these three agreements. In so doing, it first referred to the General Interpretative Note to Annex 1A of the WTO Agreement, which provides that in the event of conflict between a provision of the GATT 1994 and another Agreement of Annex 1A, the provision of the other Agreement prevails. Noting that both the Licensing Agreement and the TRIMs Agreement are agreements in Annex 1A to WTO Agreement, the Panel, in a finding not reviewed by the Appellate Body, concluded that, in the case before it, "no conflicting, i.e. mutually exclusive, obligations arise from the provisions of the three Agreements ... ".(75) See paragraphs 322-330 below. Issue of lex specialis / conflict 59. In Indonesia - Autos, Indonesia argued that the measures under examination were subsidies and therefore the SCM Agreement, being lex specialis, was the only "applicable law" (to the exclusion of other WTO provisions). The Panel recalled that a presumption against conflict existed in public international law: "We recall the Panel's finding in Indonesia - Autos, a dispute where
'In considering Indonesia's defence that there is a general conflict between the provisions of the SCM Agreement and those of Article III of GATT, and consequently that the SCM Agreement is the only applicable law, we recall first that in public international law there is a presumption against conflict. This presumption is especially relevant in the WTO context(76) since all WTO agreements, including GATT 1994 which was modified by Understandings when judged necessary, were negotiated at the same time, by the same Members and in the same forum. In this context we recall the principle of effective interpretation pursuant to which all provisions of a treaty (and in the WTO system all agreements) must be given meaning, using the ordinary meaning of words.'"(77) 60. As regards the presumption against conflict when in relation to special or additional rules and procedure, see paragraphs 6-8 above. (viii) Non-retroactivity of treaties 61. In Brazil - Desiccated Coconut, the Appellate Body discussed Article 28 of the Vienna Convention(78), i.e. the provision containing the general principle of non-retroactivity of treaties: "The fundamental question in this case is one of the temporal application of one set of international legal norms, or the successor set of norms, to a particular measure taken during the period of co-existence of the GATT 1947 and the Tokyo Round SCM Code with the WTO Agreement. Article 28 of the Vienna Convention contains a general principle of international law concerning the non-retroactivity of treaties. ... Article 28 states the general principle that a treaty shall not be applied retroactively 'unless a different intention appears from the treaty or is otherwise established'. Absent a contrary intention, a treaty cannot apply to acts or facts which took place, or situations which ceased to exist, before the date of its entry into force."(79) 62. In EC - Hormones, the Appellate Body examined the Panel's finding that the SPS Agreement should apply to the European Communities measures that were enacted before the entry into force of the WTO Agreement on 1 January 1995 because the measures continued to exist after that date and the SPS Agreement does not indicate any intention to limits its application to measures enacted after the entry into force of the WTO Agreement. The Appellate Body stated: "We agree with the Panel that the SPS Agreement would apply to situations or measures that did not cease to exist, such as the 1981 and 1988 Directives, unless the SPS Agreement reveals a contrary intention. We also agree with the Panel that the SPS Agreement does not reveal such an intention. The SPS Agreement does not contain any provision limiting the temporal application of the SPS Agreement, or of any provision thereof, to SPS measures adopted after 1 January 1995. In the absence of such a provision, it cannot be assumed that central provisions of the SPS Agreement, such as Articles 5.1 and 5.5, do not apply to measures which were enacted before 1995 but which continue to be in force thereafter. If the negotiators had wanted to exempt the very large group of SPS measures in existence on 1 January 1995 from the disciplines of provisions as important as Articles 5.1 and 5.5, it appears reasonable to us to expect that they would have said so explicitly. Articles 5.1 and 5.5 do not distinguish between SPS measures adopted before 1 January 1995 and measures adopted since; the relevant implication is that they are intended to be applicable to both."(80) 63. In Canada - Patent Term, the Appellate Body stated that Article 70.1 of the TRIPS Agreement excludes obligations in respect of "acts which occurred" before the date of the application of the TRIPS Agreement but does not exclude rights and obligations in respect of continuing situations. The Appellate Body in noting that its interpretation did not lead to a retroactive application of the TRIPS Agreement stated: "Article 28 of the Vienna Convention covers not only any 'act', but also any 'fact' or 'situation which ceased to exist'. Article 28 establishes that, in the absence of a contrary intention, treaty provisions do not apply to 'any situation which ceased to exist' before the treaty's entry into force for a party to the treaty. Logically, it seems to us that Article 28 also necessarily implies that, absent a contrary intention, treaty obligations do apply to any 'situation' which has not ceased to exist - that is, to any situation that arose in the past, but continues to exist under the new treaty. Indeed, the very use of the word 'situation' suggests something that subsists and continues over time; it would, therefore, include 'subject matter existing ... and which is protected', such as Old Act patents at issue in this dispute, even though those patents, and the rights conferred by those patents, arose from 'acts which occurred' before the date of application of the TRIPS Agreement for Canada.
This interpretation is confirmed by the Commentary on Article 28, which forms part of the preparatory work of the Vienna Convention: ... We note that Article 28 of the Vienna Convention is not applicable if 'a different intention appears from the treaty or is otherwise established'. We see no such 'different intention' in Article 70. Despite some differences in wording and structure from Article 28, we do not see Article 70.1 as in any way establishing 'a different intention' within the meaning of Article 28 of the Vienna Convention."(81) 64. In Turkey - Textiles, the Panel noted that in public international law, Turkey could be held responsible for the measures taken by the customs union between Turkey and the European Communities. The Panel noted and quoted the separate opinion of Judge Shahabuddeen's in the Nauru case before the ICJ: "'[T]he [International Law Commission] considered, that where States act through a common organ, each State is separately answerable for the wrongful act of the common organ. That view, it seems to me, runs in the direction of supporting Nauru's contention that each of the three States in this case is jointly and severally responsible for the way Nauru was administered on their behalf by Australia, whether or not Australia may be regarded as technically as a common organ. ...'.(82) (Emphasis added.)"(83) 65. The Panel also noted the International Law Commission's commentaries to the adopted report: "A similar conclusion is called for in cases of parallel attribution of single course of conduct to several States, as when the conduct in question has been adopted by an organ common to a number of States. According to the principles on which the articles of chapter II of the draft are based, the conduct of the common organ cannot be considered otherwise than as an act of each of the States whose common organ it is. If that conduct is not in conformity with an international obligation, then the two or more States will concurrently have committed separate, although identical, internationally wrongful acts. It is self-evident that the parallel commission of identical offences by two or more States is altogether different from participation by one of those States in an internationally wrongful act committed by the other.(84) (Emphasis added.)"(85) 66. In US - Section 301 Trade Act, although it eventually held that a statute "which ... reserves the right for the Member concerned to do something which it has promised not to do under Article 23.2(a)" was a violation of Article 23.2(a) read together with Article 23.1 (see paragraph 553 below), the Panel made the following general statement on State responsibility: "[U]nder traditional public international law, legislation under which an eventual violation could, or even would, subsequently take place, does not normally in and of itself engage State responsibility. If, say, a State undertakes not to expropriate property of foreign nationals without appropriate compensation, its State responsibility would normally be engaged only at the moment foreign property had actually been expropriated in a given instance."(86) 67. In US - Cotton Yarn, the Appellate Body referred to the rules of general international law on state responsibility as supporting its conclusions on the reasons why a comparative analysis is needed as part of the attribution of serious damage analysis under Article 6.4, second sentence of the Agreement on Textiles and Clothing. The Appellate Body indicated that "[its] view is supported further by the rules of general international law on state responsibility, which require that countermeasures in response to breaches by states of their international obligations be commensurate with the injury suffered."(87) 68. In Japan - Alcoholic Beverages II, the Appellate Body held that adopted panel reports create legitimate expectations among WTO Members. See paragraph 72 below. 69. The Appellate Body in India - Patents (US) held that the principles of treaty interpretation "neither require nor condone" the importation into a treaty of "words that are not there" or "concepts that were not intended". See paragraph 27 above. The Appellate Body made this statement while reversing the Panel's finding that "[t]he protection of legitimate expectations of Members regarding the conditions of competition is a well-established GATT principle, which derives in part from Article XXIII"(88) and that, when interpreting the text of the TRIPS Agreement, "the legitimate expectations of WTO Members concerning the TRIPS Agreement must be taken into account".(89) The Appellate Body disagreed with the Panel that the legitimate expectations of Members and private rights holders concerning conditions of competition must always be taken into account in interpreting the TRIPS Agreement and stated that the concept of "reasonable expectations" belonged to the domain of non-violation complaints. The Appellate Body also criticized "the Panel's invocation of the 'legitimate expectations' of Members relating to conditions of competition [which] melds the legally distinct bases for 'violation' and 'non-violation' complaints under Article XXIII of the GATT 1994 into one uniform cause of action": "The doctrine of protecting the 'reasonable expectations' of contracting parties developed in the context of 'non-violation' complaints brought under Article XXIII:1(b) of the GATT 1947. Some of the rules and procedures concerning 'non-violation' cases have been codified in Article 26.1 of the DSU. 'Non-violation' complaints are rooted in the GATT's origins as an agreement intended to protect the reciprocal tariff concessions negotiated among the contracting parties under Article II.(90) In the absence of substantive legal rules in many areas relating to international trade, the 'non-violation' provision of Article XXIII:1(b) was aimed at preventing contracting parties from using non-tariff barriers or other policy measures to negate the benefits of negotiated tariff concessions. Under Article XXIII:1(b) of the GATT 1994, a Member can bring a 'non-violation' complaint when the negotiated balance of concessions between Members is upset by the application of a measure, whether or not this measure is inconsistent with the provisions of the covered agreement. The ultimate goal is not the withdrawal of the measure concerned, but rather achieving a mutually satisfactory adjustment, usually by means of compensation.
... the only cause of action permitted under the TRIPS Agreement during the first five years after the entry into force of the WTO Agreement is a 'violation' complaint under Article XXIII:1(a) of the GATT 1994. This case involves allegations of violation of obligations under the TRIPS Agreement. However, the Panel's invocation of the 'legitimate expectations' of Members relating to conditions of competition melds the legally-distinct bases for 'violation' and 'non-violation' complaints under Article XXIII of the GATT 1994 into one uniform cause of action. This is not consistent with either Article XXIII of the GATT 1994 or Article 64 of the TRIPS Agreement. Whether or not 'non-violation' complaints should be available for disputes under the TRIPS Agreement is a matter that remains to be determined by the Council for Trade-Related Aspects of Intellectual Property (the 'Council for TRIPS') pursuant to Article 64.3 of the TRIPS Agreement. It is not a matter to be resolved through interpretation by panels or by the Appellate Body."(91) 70. In EC - Computer Equipment, the Appellate Body examined whether the Panel had erred in interpreting the meaning of a tariff concession in the European Communities Schedule in light of the "legitimate expectations" of an exporting Member. The Appellate Body disagreed with the Panel's finding that the tariff concession of a Member may be determined on the basis of the "legitimate expectation" of just one (namely the exporting) Member and emphasized that it was rather the common intention of the parties which should be ascertained. See paragraph 45 above. 71. With respect to the issue of "legitimate expectations" under non-violation complaints, see Chapter on GATT 1994, paragraphs 557-564. (xi) Status of adopted GATT/WTO Panel and Appellate Body Reports 72. In Japan - Alcoholic Beverages II, the Appellate Body held that "[a]dopted panel reports are an important part of the GATT acquis": "Article XVI:1 of the WTO Agreement and paragraph 1(b)(iv) of the language of Annex 1A incorporating the GATT 1994 into the WTO Agreement bring the legal history and experience under the GATT 1947 into the new realm of the WTO in a way that ensures continuity and consistency in a smooth transition from the GATT 1947 system. This affirms the importance to the Members of the WTO of the experience acquired by the CONTRACTING PARTIES to the GATT 1947 - and acknowledges the continuing relevance of that experience to the new trading system served by the WTO. Adopted panel reports are an important part of the GATT acquis. They are often considered by subsequent panels. They create legitimate expectations among WTO Members, and, therefore, should be taken into account where they are relevant to any dispute. However, they are not binding, except with respect to resolving the particular dispute between the parties to that dispute. In short, their character and their legal status have not been changed by the coming into force of the WTO Agreement."(92) 73. In US - Shrimp (Article 21.5 - Malaysia) the Appellate Body referred to its ruling in Japan - Alcoholic Beverages II (see paragraph 72 above) and considered that the same reasoning applied to Appellate Body reports: "[W]e note that in our Report in Japan - Taxes on Alcoholic Beverages, we stated that:
Adopted panel reports are an important part of the GATT acquis. They are often considered by subsequent panels. They create legitimate expectations among WTO Members, and, therefore, should be taken into account where they are relevant to any dispute.
This reasoning applies to adopted Appellate Body Reports as well. Thus, in taking into account the reasoning in an adopted Appellate Body Report - a Report, moreover, that was directly relevant to the Panel's disposition of the issues before it - the Panel did not err. The Panel was correct in using our findings as a tool for its own reasoning. Further, we see no indication that, in doing so, the Panel limited itself merely to examining the new measure from the perspective of the recommendations and rulings of the DSB."(93) (d) "add to or diminish the rights and obligations" 74. In Chile - Alcoholic Beverages, Chile argued before the Appellate Body that the Panel's findings under Article III:2 of GATT 1994 in connection with "not similarly taxed" and "so as to afford protection" added to the rights and obligations of Members in contravention of Articles 3.2 and 19.2 of the DSU. The Appellate Body stated: "In this dispute, while we have rejected certain of the factors relied upon by the Panel, we have found that the Panel's legal conclusions are not tainted by any reversible error of law. In these circumstances, we do not consider that the Panel has added to the rights or obligations of any Member of the WTO. Moreover, we have difficulty in envisaging circumstances in which a panel could add to the rights and obligations of a Member of the WTO if its conclusions reflected a correct interpretation and application of provisions of the covered agreements. Chile's appeal under Articles 3.2 and 19.2 of the DSU must, therefore, be denied."(94) 75. In US - Certain EC Products, the Appellate Body ruled that the purpose of dispute settlement is only to preserve the rights and obligations of Members: "[W]e observe that it is certainly not the task of either panels or the Appellate Body to amend the DSU or to adopt interpretations within the meaning of Article IX:2 of the WTO Agreement. Only WTO Members have the authority to amend the DSU or to adopt such interpretations. Pursuant to Article 3.2 of the DSU, the task of panels and the Appellate Body in the dispute settlement system of the WTO is "to preserve the rights and obligations of Members under the covered agreements, and to clarify the existing provisions of those agreements in accordance with customary rules of interpretation of public international law." (emphasis added) Determining what the rules and procedures of the DSU ought to be is not our responsibility nor the responsibility of panels; it is clearly the responsibility solely of the Members of the WTO."(95) (e) Relationship with other Agreements Article 17.6(ii) 76. In US - Hot-Rolled Steel, the Appellate Body looked into the first sentence of Article 17.6(ii) of the Anti-Dumping Agreement, which provides that the Panel "shall" interpret the provisions of the Anti-dumping Agreement "in accordance with customary rules of interpretation", and considered that it echoed closely Article 3.2 of the DSU (see paragraph 514 of the Chapter on the Anti-Dumping Agreement).(96) (a) "measures taken by another Member" 77. See the excerpts from the reports of the panels and Appellate Body referenced in paragraphs 151-158 below. 78. With respect to Article 3.7, see paragraphs 302 and 441 below. (a) Presumption of "nullification or impairment" 79. In EC - Bananas III, the European Communities appealed the Panel's finding that "the infringement of obligations by the European Communities under a number of WTO agreements, are a prima facie case of nullification or impairment of benefits in the meaning of Article 3.8 of the DSU". The Appellate Body observed that the European Communities, in its appeal, attempted to "rebut the presumption of nullification or impairment on the basis that the United States has never exported a single banana to the European Community, and therefore, could not possibly suffer any trade damage." The Appellate Body stated: "[W]e note that the two issues of nullification or impairment and of the standing of the United States are closely related....[T]wo points are made that the Panel may well have had in mind in reaching its conclusions on nullification or impairment. One is that the United States is a producer of bananas and that a potential export interest by the United States cannot be excluded; the other is that the internal market of the United States for bananas could be affected by the EC bananas regime and by its effects on world supplies and world prices of bananas....They are...relevant to the question whether the European Communities has rebutted the presumption of nullification or impairment.
So, too, is the panel report in United States- Superfund, to which the Panel referred. In that case, the panel examined whether measures with 'only an insignificant effect on the volume of exports do nullify or impair benefits under Article III:2 ...'. The panel concluded (and in so doing, confirmed the views of previous panels) that:
'Article III:2, first sentence, cannot be interpreted to protect expectations on export volumes; it protects expectations on the competitive relationship between imported and domestic products. A change in the competitive relationship contrary to that provision must consequently be regarded ipso facto as a nullification or impairment of benefits accruing under the General Agreement. A demonstration that a measure inconsistent with Article III:2, first sentence, has no or insignificant effects would therefore in the view of the Panel not be a sufficient demonstration that the benefits accruing under that provision had not been nullified or impaired even if such a rebuttal were in principle permitted.'(97)
The panel in United States - Superfund subsequently decided 'not to examine the submissions of the parties on the trade effects of the tax differential' on the basis of the legal grounds it had enunciated. The reasoning in United States - Superfund applies equally in this case."(98) 80. In Turkey - Textiles, Turkey argued that even if its quantitative restrictions on imports of textile and clothing products from India were in violation of WTO law, India had not suffered any nullification or impairment of its WTO benefits within the meaning of Article 3.8 of the DSU. Turkey pointed out that that imports of textile and clothing from India had actually increased since the Turkish measures at issue had entered into force. The Panel, in a finding not reviewed by the Appellate Body, rejected this argument: "We are of the view that it is not possible to segregate the impact of the quantitative restrictions from the impact of other factors. While recognizing Turkey's efforts to liberalize its import regime on the occasion of the formation of its customs union with the European Communities, it appears to us that even if Turkey were to demonstrate that India's overall exports of clothing and textile products to Turkey h |
