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WTO ANALYTICAL INDEX: GATT 1994 General Agreement on Tariffs and Trade 1994 |
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> General
Agreement On Tariffs And Trade 1994
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Article IV: Special Provisions relating to Cinematograph Films If any contracting party establishes or maintains internal quantitative regulations relating to exposed cinematograph films, such regulations shall take the form of screen quotas which shall conform to the following requirements:
(a) Screen quotas may require the exhibition of cinematograph films of national origin during a specified minimum proportion of the total screen time actually utilized, over a specified period of not less than one year, in the commercial exhibition of all films of whatever origin, and shall be computed on the basis of screen time per theatre per year or the equivalent thereof;
(b) With the exception of screen time reserved for films of national origin under a screen quota, screen time including that released by administrative action from screen time reserved for films of national origin, shall not be allocated formally or in effect among sources of supply;
(c) Notwithstanding the provisions of subparagraph (b) of this Article, any contracting party may maintain screen quotas conforming to the requirements of subparagraph (a) of this Article which reserve a minimum proportion of screen time for films of a specified origin other than that of the contracting party imposing such screen quotas; Provided that no such minimum proportion of screen time shall be increased above the level in effect on April 10, 1947;
(d) Screen quotas shall be subject to negotiation for their limitation, liberalization or elimination.
No jurisprudence or decision of a competent WTO body. 314. With respect to GATT practice concerning Article IV.
VI. Article V back to top Article V: Freedom of Transit 1. Goods (including baggage), and also vessels and other means of transport, shall be deemed to be in transit across the territory of a contracting party when the passage across such territory, with or without transshipment, warehousing, breaking bulk, or change in the mode of transport, is only a portion of a complete journey beginning and terminating beyond the frontier of the contracting party across whose territory the traffic passes. Traffic of this nature is termed in this article “traffic in transit”.
2. There shall be freedom of transit through the territory of each contracting party, via the routes most convenient for international transit, for traffic in transit to or from the territory of other contracting parties. No distinction shall be made which is based on the flag of vessels, the place of origin, departure, entry, exit or destination, or on any circumstances relating to the ownership of goods, of vessels or of other means of transport.
3. Any contracting party may require that traffic in transit through its territory be entered at the proper custom house, but, except in cases of failure to comply with applicable customs laws and regulations, such traffic coming from or going to the territory of other contracting parties shall not be subject to any unnecessary delays or restrictions and shall be exempt from customs duties and from all transit duties or other charges imposed in respect of transit, except charges for transportation or those commensurate with administrative expenses entailed by transit or with the cost of services rendered.
4. All charges and regulations imposed by contracting parties on traffic in transit to or from the territories of other contracting parties shall be reasonable, having regard to the conditions of the traffic.
5. With respect to all charges, regulations and formalities in connection with transit, each contracting party shall accord to traffic in transit to or from the territory of any other contracting party treatment no less favourable than the treatment accorded to traffic in transit to or from any third country.
6. Each contracting party shall accord to products which have been in transit through the territory of any other contracting party treatment no less favourable than that which would have been accorded to such products had they been transported from their place of origin to their destination without going through the territory of such other contracting party. Any contracting party shall, however, be free to maintain its requirements of direct consignment existing on the date of this Agreement, in respect of any goods in regard to which such direct consignment is a requisite condition of eligibility for entry of the goods at preferential rates of duty or has relation to the contracting party’s prescribed method of valuation for duty purposes.
7. The provisions of this Article shall not apply to the operation of aircraft in transit, but shall apply to air transit of goods (including baggage). Ad Article V: Paragraph 5 With regard to transportation charges, the principle laid down in paragraph 5 refers to like products being transported on the same route under like conditions.
No jurisprudence or decision of a relevant WTO body. 315. With respect to GATT practice concerning Article V.
VII. Article VI back to top Article VI: Anti-dumping and Countervailing Duties 1. The contracting parties recognize that dumping, by which products of one country are introduced into the commerce of another country at less than the normal value of the products, is to be condemned if it causes or threatens material injury to an established industry in the territory of a contracting party or materially retards the establishment of a domestic industry. For the purposes of this Article, a product is to be considered as being introduced into the commerce of an importing country at less than its normal value, if the price of the product exported from one country to another
(a) is less than the comparable price, in the ordinary course of trade, for the like product when destined for consumption in the exporting country, or,
(b) in the absence of such domestic price, is less than either
(i) the highest comparable price for the like product for export to any third country in the ordinary course of trade, or
(ii) the cost of production of the product in the country of origin plus a reasonable addition for selling cost and profit.
Due allowance shall be made in each case for differences in conditions and terms of sale, for differences in taxation, and for other differences affecting price comparability.
2. In order to offset or prevent dumping, a contracting party may levy on any dumped product an anti-dumping duty not greater in amount than the margin of dumping in respect of such product. For the purposes of this Article, the margin of dumping is the price difference determined in accordance with the provisions of paragraph 1.
3. No countervailing duty shall be levied on any product of the territory of any contracting party imported into the territory of another contracting party in excess of an amount equal to the estimated bounty or subsidy determined to have been granted, directly or indirectly, on the manufacture, production or export of such product in the country of origin or exportation, including any special subsidy to the transportation of a particular product. The term “countervailing duty” shall be understood to mean a special duty levied for the purpose of offsetting any bounty or subsidy bestowed, directly, or indirectly, upon the manufacture, production or export of any merchandise.
4. No product of the territory of any contracting party imported into the territory of any other contracting party shall be subject to anti-dumping or countervailing duty by reason of the exemption of such product from duties or taxes borne by the like product when destined for consumption in the country of origin or exportation, or by reason of the refund of such duties or taxes.
5. No product of the territory of any contracting party imported into the territory of any other contracting party shall be subject to both anti-dumping and countervailing duties to compensate for the same situation of dumping or export subsidization.
6. (a) No contracting party shall levy any anti-dumping or countervailing duty on the importation of any product of the territory of another contracting party unless it determines that the effect of the dumping or subsidization, as the case may be, is such as to cause or threaten material injury to an established domestic industry, or is such as to retard materially the establishment of a domestic industry.
(b) The CONTRACTING PARTIES may waive the requirement of subparagraph (a) of this paragraph so as to permit a contracting party to levy an anti-dumping or countervailing duty on the importation of any product for the purpose of offsetting dumping or subsidization which causes or threatens material injury to an industry in the territory of another contracting party exporting the product concerned to the territory of the importing contracting party. The CONTRACTING PARTIES shall waive the requirements of subparagraph (a) of this paragraph, so as to permit the levying of a countervailing duty, in cases in which they find that a subsidy is causing or threatening material injury to an industry in the territory of another contracting party exporting the product concerned to the territory of the importing contracting party.
(c) In exceptional circumstances, however, where delay might cause damage which would be difficult to repair, a contracting party may levy a countervailing duty for the purpose referred to in subparagraph (b) of this paragraph without the prior approval of the CONTRACTING PARTIES; Provided that such action shall be reported immediately to the CONTRACTING PARTIES and that the countervailing duty shall be withdrawn promptly if the CONTRACTING PARTIES disapprove.
7. A system for the stabilization of the domestic price or of the return to domestic producers of a primary commodity, independently of the movements of export prices, which results at times in the sale of the commodity for export at a price lower than the comparable price charged for the like commodity to buyers in the domestic market, shall be presumed not to result in material injury within the meaning of paragraph 6 if it is determined by consultation among the contracting parties substantially interested in the commodity concerned that:
(a) the system has also resulted in the sale of the comm odity for export at a price higher than the comparable price charged for the like commodity to buyers in the domestic market, and
(b) the system is so operated, either because of the effective regulation of production, or otherwise, as not to stimulate exports unduly or otherwise seriously prejudice the interests of other contracting parties. Ad Article VI: Paragraph 1 1. Hidden dumping by associated houses (that is, the sale by an importer at a price below that corresponding to the price invoiced by an exporter with whom the importer is associated, and also below the price in the exporting country) constitutes a form of price dumping with respect to which the margin of dumping may be calculated on the basis of the price at which the goods are resold by the importer.
2. It is recognized that, in the case of imports from a country which has a complete or substantially complete monopoly of its trade and where all domestic prices are fixed by the State, special difficulties may exist in determining price comparability for the purposes of paragraph 1, and in such cases importing contracting parties may find it necessary to take into account the possibility that a strict comparison with domestic prices in such a country may not always be appropriate. Paragraphs 2 and 3 1. As in many other cases in customs administration, a contracting party may require reasonable security (bond or cash deposit) for the payment of anti-dumping or countervailing duty pending final determination of the facts in any case of suspected dumping or subsidization.
2. Multiple currency practices can in certain circumstances constitute a subsidy to exports which may be met by countervailing duties under paragraph 3 or can constitute a form of dumping by means of a partial depreciation of a country’s currency which may be met by action under paragraph 2. By “multiple currency practices” is meant practices by governments or sanctioned by governments. Paragraph 6 (b) Waivers under the provisions of this subparagraph shall be granted only on application by the contracting party proposing to levy an anti-dumping or countervailing duty, as the case may be.
(a) Investigation initiated before entry into force of WTO Agreement 316. In Brazil — Desiccated Coconut, the Appellate Body upheld the Panel’s finding that Article VI of GATT 1994 does not apply to countervailing duty measures imposed as a result of an investigation initiated pursuant to an application made before the entry into force of the WTO Agreement. Having found that pursuant to Article 28 of the Vienna Convention on the Law of Treaties, “[a]bsent 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”, the Appellate Body based its finding on the interpretation of Article 32.3 of the SCM Agreement, which sets forth that “the provisions of this Agreement shall apply to investigations … initiated pursuant to applications have been made on or after the date of entry into force for a WTO Agreement of the WTO Agreement”. The Appellate Body stated that “[i]f Article 32.3 is read in conjunction with Articles 10 and 32.1 of the SCM Agreement, it becomes clear that the term ‘this Agreement’ in Article 32.3 means ‘this [SCM] Agreement and Article VI of the GATT 1994’.”(477) With reference to Articles 10 and 32.1 of the SCM Agreement, the Appellate Body went on to state: “From reading Article 10, it is clear that countervailing duties may only be imposed in accordance with Article VI of the GATT 1994 and the SCM Agreement. A countervailing duty being a specific action against a subsidy of another WTO Member, pursuant to Article 32.1, it can only be imposed ‘in accordance with the provisions of GATT 1994, as interpreted by this Agreement’. The ordinary meaning of these provisions taken in their context leads us to the conclusion that the negotiators of the SCM Agreement clearly intended that, under the integrated WTO Agreement, countervailing duties may only be imposed in accordance with the provisions of Part V of the SCM Agreement and Article VI of the GATT 1994, taken together.”(478) 317. After making the finding quoted in paragraph 316 above, the Appellate Body referred to the omission of note 2 to the preamble of the Tokyo Round SCM Code, which states “[w]herever in this Agreement there is reference to ‘the terms of this Agreement’ or the ‘articles’ or ‘provisions of this Agreement’ it shall be taken to mean, as the context requires, the provisions of the General Agreement as interpreted and applied by this Agreement”, from the SCM Agreement. The Preamble, together with footnote 2, had not been retained in the new SCM Agreement. The Philippines argued that this omission was evidence that the term “this Agreement” in Article 32.3 was to be understood to refer only to the SCM Agreement. The Appellate Body was unconvinced: “This note related to a provision in the preamble to the Tokyo Round SCM Code which demonstrated the Tokyo Round signatories’ desire ‘to apply fully and to interpret the provisions of Articles VI, XVI and XXIII’ of the GATT 1947. The preamble was not retained in the new text of the SCM Agreement. Consequently, the note also disappeared. The SCM Agreement contains a set of rights and obligations that go well beyond merely applying and interpreting Articles VI, XVI and XXIII of the GATT 1947. The title to the SCM Agreement was also modified in this respect. Like the Panel, ‘we do not consider that the exclusion of this provision from the SCM Agreement sheds much light on the question before us’.(479)”(480) 318. In further support of its view that the term “this Agreement” referred to both the SCM Agreement and Article VI of the GATT 1994, the Appellate Body cited the following finding of the Panel, with the understanding that “the Panel’s reference to ‘SCM Agreements’ in this paragraph referred to the SCM Agreement and the Tokyo Round SCM Code”:(481) “Article VI of GATT 1947 and the Tokyo Round SCM Code represent, as among Code signatories, a package of rights and obligations regarding the use of countervailing measures, and Article VI of GATT 1994 and the SCM Agreement represent a new and different package of rights and obligations, as among WTO Members, regarding the use of countervailing duties. Thus, Article VI and the respective SCM Agreements impose obligations on a potential user of countervailing duties, in the form of conditions that have to be fulfilled in order to impose a duty, but they also confer the right to impose a countervailing duty when those conditions are satisfied. The SCM Agreements do not merely impose additional substantive and procedural obligations on a potential user of countervailing measures. Rather, the SCM Agreements and Article VI together define, clarify and in some cases modify the whole package of rights and obligations of a potential user of countervailing measures.”(482) 319. In this regard, the Appellate Body noted that “[t]he fact that Article VI of the GATT 1947 could be invoked independently of the Tokyo Round SCM Code under the previous GATT system(483) does not mean that Article VI of GATT 1994 can be applied independently of the SCM Agreement in the context of the WTO.”(484) The Appellate Body went on to state that “[t]he authors of the new WTO regime intended to put an end to the fragmentation that had characterized the previous system”(485), referring to the preamble and Article II:2 of the Marrakesh Agreement. Further, the Appellate Body stated that “… the Uruguay Round negotiators expressed an explicit intention to draw the line of application of the new WTO Agreement to countervailing duty investigations and reviews(486) at a different point in time from that for other general measures.(487)”(488) 320 In addition, the Appellate Body rejected the Philippines’ argument that that “the transitional decisions(489) [of the Tokyo Round SCM Code signatories] recognize the right of WTO Members to invoke WTO norms even in situations involving elements that occurred prior to the entry into force of the WTO Agreement.”(490) The Appellate Body opined that “[a]t the time the Tokyo Round SCM Code signatories agreed to these decisions, they were fully cognizant of the implications of the operation of Article 32.3 of the SCM Agreement.”(491) 321. Lastly, the Appellate Body noted that its finding on the scope of Article VI of GATT 1994 would not result in leaving Members without a right of action against those countervailing duty measures which are not covered by Article 32.3 of the SCM Agreement.(492) Rather, the Decision on Consequences of Withdrawal from or Termination of the Tokyo Round SCM Code, adopted by the Tokyo Round Subsidies and Countervailing Measures Committee, extended dispute settlement under the Tokyo Round SCM Code for two years, one year beyond the legal termination of the Tokyo Round SCM Code which occurred on 31 December 1995. (b) Anti-dumping measures other than antidumping duties 322. In US — 1916 Act, the Appellate Body reviewed the Panels’ finding that the United States’ 1916 Antidumping Act was inconsistent with Article VI, and rejected the United States’ appeal to the Panels’ finding that the Act was to counteract “dumping” and thus, fell under the scope of Article VI. The Appellate Body considered that the issue depended on “whether Article VI regulates all possible measures Members can take in response to dumping.”(493) In answering this question, the Appellate Body noted that “Article VI of the GATT 1994 must be read together with the provisions of the Anti-Dumping Agreement”(494) and referred to the text of Article 1 of the Anti-Dumping Agreement; specifically, the Appellate Body stated that “[s]ince ‘an anti-dumping measure’ must, according to Article 1 of the Anti-Dumping Agreement, be consistent with Article VI of the GATT 1994 and the provisions of the Anti-Dumping Agreement, it seems to follow that Article VI would apply to ‘an anti-dumping measure’, i.e., a measure against dumping.”(495) The Appellate Body went on to state that “the scope of application of Article VI is clarified, in particular, by Article 18.1 of the Anti-Dumping Agreement”(496), and indicated that “… Article VI is applicable to any ‘specific action against dumping’ of exports, i.e., action that is taken in response to situations presenting the constituent elements of ‘dumping’”: “[T]he ordinary meaning of the phrase ‘specific action against dumping’ of exports within the meaning of Article 18.1 is action that is taken in response to situations presenting the constituent elements of ‘dumping’. ‘Specific action against dumping’ of exports must, at a minimum, encompass action that may be taken only when the constituent elements of ‘dumping’ are present. Since intent is not a constituent element of ‘dumping’, the intent with which action against dumping is taken is not relevant to the determination of whether such action is ‘specific action against dumping’ of exports within the meaning of Article 18.1 of the Anti-Dumping Agreement.
footnote 24 to Article 18.1 of the Anti-Dumping Agreement states:
‘This is not intended to preclude action under other relevant provisions of GATT 1994, as appropriate.’
We note that footnote 24 refers generally to ‘action’ and not, as does Article 18.1, to ‘specific action against dumping’ of exports. ‘Action’ within the meaning of footnote 24 is to be distinguished from ‘specific action against dumping’ of exports, which is governed by Article 18.1 itself.
Article 18.1 of the Anti-Dumping Agreement contains a prohibition on the taking of any ‘specific action against dumping’ of exports when such specific action is not ‘in accordance with the provisions of GATT 1994, as interpreted by this Agreement’. Since the only provisions of the GATT 1994 ‘interpreted’ by the Anti-Dumping Agreement are those provisions of Article VI concerning dumping, Article 18.1 should be read as requiring that any ‘specific action against dumping’ of exports from another Member be in accordance with the relevant provisions of Article VI of the GATT 1994, as interpreted by the Anti-Dumping Agreement.
We recall that footnote 24 to Article 18.1 refers to ‘other relevant provisions of GATT 1994’ (emphasis added). These terms can only refer to provisions other than the provisions of Article VI concerning dumping. footnote 24 thus confirms that the ‘provisions of GATT 1994’ referred to in Article 18.1 are in fact the provisions of Article VI of the GATT 1994 concerning dumping.
We have found that Article 18.1 of the Anti-Dumping Agreement requires that any ‘specific action against dumping’ be in accordance with the provisions of Article VI of the GATT 1994 concerning dumping, as those provisions are interpreted by the Anti-Dumping Agreement. It follows that Article VI is applicable to any ‘specific action against dumping’ of exports, i.e., action that is taken in response to situations presenting the constituent elements of ‘dumping’.”(497) 323. The Appellate Body on US — 1916 Act rejected the United States’ argument that the term “may” in Article VI:2 indicates that Members may choose to impose other types of anti-dumping measures than anti-dumping duties, in which case they are not bound by the rules of Article VI, stating as follows: “[I]t is not obvious to us, based on the wording of Article VI:2 alone, that the verb ‘may’ also implies that a Member is permitted to impose a measure other than an antidumping duty.
We believe that the meaning of the word ‘may’ in Article VI:2 is clarified by Article 9 of the Anti-Dumping Agreement on the ‘Imposition and Collection of Anti-dumping Duties’. Article VI of the GATT 1994 and the Anti-Dumping Agreement are part of the same treaty, the WTO Agreement. As its full title indicates, the Anti-Dumping Agreement is an ‘Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994’. Accordingly, Article VI must be read in conjunction with the provisions of the Anti-Dumping Agreement, including Article 9. … In light of this provision, the verb ‘may’ in Article VI:2 of the GATT 1994 is, in our opinion, properly understood as giving Members a choice between imposing an antidumping duty or not, as well as a choice between imposing an anti-dumping duty equal to the dumping margin or imposing a lower duty. We find no support in Article VI:2, read in conjunction with Article 9 of the Anti-Dumping Agreement, for the United States’ argument that the verb ‘may’ indicates that Members, to counteract dumping, are permitted to take measures other than the imposition of anti-dumping duties.”(498) 324. The Appellate Body further elaborated upon this jurisprudence in US — Offset Act (Byrd Amendment). With regard to the term “specific” in the phrase “specific action against dumping or a subsidy”, the Appellate Body made reference to its report in US — 1916 Act (see paragraph 322 above) and further specified that “the measure must be inextricably linked to, or have a strong correlation with, the constituent elements of dumping or of a subsidy. Such link or correlation may, as in the 1916 Act, be derived from the text of the measure itself.”(499) With regard to the specific measure at issue in US — Offset Act (Byrd Amendment), the Appellate Body agreed with the Panel’s finding that the Offset Act was a specific action related to dumping as defined in Article VI:1 of the GATT 1994 and Article 18.1 of the Anti-Dumping Agreement: “It is clear from the text of the CDSOA [the Offset Act], in particular from Section 754(a) of the Tariff Act(500), that the CDSOA offset payments are inextricably linked to, and strongly correlated with, a determination of dumping, as defined in Article VI:1 of the GATT 1994 and in the Anti-Dumping Agreement, or a determination of a subsidy, as defined in the SCM Agreement. The language of the CDSOA is unequivocal. First, CDSOA offset payments can be made only if anti-dumping duties or countervailing duties have been collected. Second, such duties can be collected only pursuant to an anti-dumping duty order or countervailing duty order. Third, an anti-dumping duty order can be imposed only following a determination of dumping, as defined in Article VI:1 of the GATT 1994 and in the Anti-Dumping Agreement. Fourth, a countervailing duty order can be imposed only following a determination that exports have been subsidized, according to the definition of a subsidy in the SCM Agreement. In the light of the above elements, we agree with the Panel that ‘there is a clear, direct and unavoidable connection between the determination of dumping and CDSOA offset payments’, and we believe the same to be true for subsidization. In other words, it seems to us unassailable that CDSOA offset payments can be made only following a determination that the constituent elements of dumping or subsidization are present. Therefore, consistent with the test established in US — 1916 Act, we find that the CDSOA is ‘specific action’ related to dumping or a subsidy within the meaning of Article 18.1 of the Anti-Dumping Agreement and of Article 32.1 of the SCM Agreement.”(501) 325. In US — Offset Act (Byrd Amendment), the Appellate Body further rejected the United States’ argument, that an action that falls within the scope of footnote 24 of the Anti-Dumping Agreement cannot be characterized as a “specific action” within the meaning of Article 18.1 of the Anti-Dumping Agreement and therefore would not be prohibited. The Appellate Body made reference to its interpretation of footnote 24 in US — 1916 Act (see paragraph 322 above), where it found that “action” in the sense of footnote 24 has to be distinguished from “specific action against dumping” as in Article 18.1 of the Anti-Dumping Agreement(502) and continued to say: “The United States’ reasoning is tantamount to treating footnotes 24 [of the Anti-Dumping Agreement] and 56 [of the SCM Agreement] as the primary provisions, while according Articles 18.1 [of the Anti-Dumping Agreement] and 32.1 [of the SCM Agreement] residual status. This not only turns the normal approach to interpretation on its head, but it also runs counter to our finding in US — 1916 Act. In that case, we provided guidance for determining whether an action is specific to dumping (or to a subsidy): an action is specific to dumping (or a subsidy) when it may be taken only when the constituent elements of dumping (or a subsidy) are present, or, put another way, when the measure is inextricably linked to, or strongly correlates with, the constituent elements of dumping (or of a subsidy). This approach is based on the texts of Article 18.1 of the Anti-Dumping Agreement and of Article 32.1 of the SCM Agreement, and not on the accessory footnotes. Footnotes 24 and 56 are clarifications of the main provisions, added to avoid ambiguity; they confirm what is implicit in Article 18.1 of the Anti-Dumping Agreement and in Article 32.1 of the SCM Agreement, namely, that an action that is not ‘specific’ within the meaning of Article 18.1 of the Anti-Dumping Agreement and of Article 32.1 of the SCM Agreement, but is nevertheless related to dumping or subsidization, is not prohibited by Article 18.1 of the Anti-Dumping Agreement or Article 32.1 of the SCM Agreement.”(503) 326. With regard to the term “against” in the phrase “specific action against dumping or a subsidy”, the Appellate Body agreed with the Panel that “there is no requirement that the measure must come into direct contact with the imported product, or entities connected to, or responsible for, the imported good such as the importer, exporter or foreign producer” and further agreed with the Panel that the test should focus on dumping or subsidization “as practices”. The Appellate Body further specified that for determining the meaning of “against” in the present context: “[I]t is necessary to assess whether the design and structure of a measure is such that the measure is ‘opposed to’, has an adverse bearing on, or, more specifically, has the effect of dissuading the practice of dumping or the practice of subsidization, or creates an incentive to terminate such practices. In our view, the CDSOA [Offset Act] has exactly those effects because of its design and structure. The CDSOA effects a transfer of financial resources from the producers/exporters of dumped or subsidized goods to their domestic competitors. This is demonstrated by the following elements of the CDSOA regime. First, the CDSOA offset payments are financed from the anti-dumping or countervailing duties paid by the foreign producers/exporters. Second, the CDSOA offset payments are made to an ‘affected domestic producer’, defined in Section 754(b) of the Tariff Act as ‘a petitioner or interested party in support of the petition with respect to which an anti-dumping duty order, a finding under the Antidumping Act of 1921, or a countervailing duty order has been entered’ and that ‘remains in operation’. In response to our questioning at the oral hearing, the United States confirmed that the ‘affected domestic producers’ which are eligible to receive payments under the CDSOA, are necessarily competitors of the foreign producers/exporters subject to an anti-dumping or countervail order. Third, under the implementing regulations issued by the United States Commissioner of Customs (‘Customs’) on 21 September 2001, the ‘qualifying expenditures’ of the affected domestic producers, for which the CDSOA offset payments are made, ‘must be related to the production of the same product that is the subject of the related order or finding, with the exception of expenses incurred by associations which must relate to a specific case.’ Fourth, Customs has confirmed that there is no statutory or regulatory requirement as to how a CDSOA offset payment to an affected domestic producer is to be spent, thus indicating that the recipients of CDSOA offset payments are entitled to use this money to bolster their competitive position vis-à-vis their competitors, including the foreign competitors subject to anti-dumping or countervailing duties. All these elements lead us to conclude that the CDSOA has an adverse bearing on the foreign producers/exporters in that the imports into the United States of the dumped or subsidized products (besides being subject to anti-dumping or countervailing duties) result in the financing of United States competitors — producers of like products — through the transfer to the latter of the duties collected on those exports. Thus, foreign producers/exporters have an incentive not to engage in the practice of exporting dumped or subsidized products or to terminate such practices. Because the CDSOA has an adverse bearing on, and, more specifically, is designed and structured so that it dissuades the practice of dumping or the practice of subsidization, and because it creates an incentive to terminate such practices, the CDSOA is undoubtedly an action ‘against’ dumping or a subsidy, within the meaning of Article 18.1 of the Anti-Dumping Agreement and of Article 32.1 of the SCM Agreement.” 327. The Appellate Body on US — Offset Act (Byrd Amendment) rejected the United States’ argument that contrary to US — 1916 Act, the language of the Offset Act does not refer to the constituent elements of dumping and clarified that the finding in US — 1916 Act was not to be interpreted as to “require that the language of the measure include the constituent elements of dumping”. On the contrary, the test established in US — 1916 Act “is met not only when constituent elements of dumping are ‘explicitly built into’ the actions at issue, but also where … they are implicit in the express conditions for taking such action.”(504) 328. With respect to the further treatment of this subject-matter under GATT 1947. 329. In Brazil — Desiccated Coconut, the Panel considered that Article VI of GATT 1994 does not apply, in isolation from the SCM Agreement, to countervailing duty cases where the investigation has been initiated pursuant to an application made before the entry into force of the WTO Agreement. The Panel’s finding and reasoning were subsequently upheld by the Appellate Body. See paragraphs 316-321 above. The Appellate Body, however, found it unnecessary to address one particular reason the Panel had given for its finding, namely that if Article VI were to apply independently from the SCM Agreement, Members might be subject to “a package of rights and obligations that were potentially more onerous than those to which they were subject under Article VI in conjunction with the Tokyo Round SCM Code when they initiated the investigation.”(505) The Panel noted that the Tokyo Round SCM Code did not only impose additional obligations on a contracting party imposing countervailing duties, but also clarified and added some rights for such contracting party, such that certain obligations imposed by Article VI in conjunction with either the Tokyo Round SCM Code or the SCM Agreement were less stringent and easier to meet than obligations imposed by Article VI in isolation.(506) In this regard, the Panel also rejected the argument by the Philippines that Article VI of GATT 1994, as opposed to Article VI of GATT 1947, could be interpreted in the light of the Tokyo Round SCM Code and practice of the Code signatories; the Philippines were arguing that this interpretation would avoid the risk that Members would, through the application of Article VI of GATT 1994 in isolation, be subject to obligations beyond those imposed by Article VI of GATT 1947 in conjunction with the Tokyo Round SCM Code. The Panel noted: “[W]e do not consider that it would be appropriate to interpret Article VI of GATT 1994 in light of the Tokyo Round SCM Code. Article 31:3(a) of the Vienna Convention on the Law of Treaties (‘the Vienna Convention’), which is generally held to reflect customary principles of international law regarding treaty interpretation, provides that ‘any subsequent agreement between the parties to a treaty regarding its interpretation or the application of its provisions’ may be taken into account when interpreting a treaty. The Tokyo Round SCM Code may constitute such a subsequent agreement among Tokyo Round SCM Code signatories regarding the interpretation of Article VI of GATT 1947. However, Article II:4 of the WTO Agreement provides that the GATT 1994 is ‘legally distinct’ from the GATT 1947. While GATT 1994 consists of, inter alia, ‘decisions of the CONTRACTING PARTIES to GATT 1947,’ the Tokyo Round SCM Code is not a ‘decision’ of the CONTRACTING PARTIES. Thus, the Tokyo Round SCM Code does not represent a subsequent agreement regarding interpretation of Article VI of GATT 1994. For the Panel to conclude to the contrary would in effect convert that Code into a ‘covered agreement’ under Appendix 1 of the DSU. If such an approach were followed, WTO Members that were Tokyo Round Code signatories would find that their Code obligations were now enforceable under the WTO dispute settlement system.
Article XVI:1 of the WTO Agreement provides that, ‘[e]xcept as otherwise provided under this Agreement or the Multilateral Trade Agreements, the WTO shall be guided by the decisions, procedures and customary practices followed by the CONTRACTING PARTIES to GATT 1947 and the bodies established in the framework of GATT 1947’. We recognize that the Pork [i.e. US — Canadian Pork] Panel had indicated, in passing, that the Tokyo Round SCM Code represents ‘practice’ under Article VI of GATT 1947. Article 31.3(b) of the Vienna Convention provides that there may be taken into account, when interpreting a treaty, ‘[a]ny subsequent practice in the application of the treaty which establishes the agreement of the parties regarding its interpretation’. Article 31.3 clearly distinguishes between the use of subsequent agreements and of subsequent practice as interpretive tools. The Tokyo Round SCM Code is, in our view, in the former category and cannot itself reasonably be deemed to represent ‘customary practice’ of the GATT 1947 CONTRACTING PARTIES. In any event, while the practice of Code signatories might be of some interpretive value in establishing their agreement regarding the interpretation of the Tokyo Round SCM Code (and arguably through Article XVI:1 of the WTO Agreement in interpreting provisions of that Code that were carried over into the successor SCM Agreement), it is clearly not relevant to the interpretation of Article VI of GATT 1994 itself; rather, only practice under Article VI of GATT 1947 is legally relevant to the interpretation of Article VI of GATT 1994.”(507) 330. The relationships between Article VI, and the Tokyo Round SCM Agreement and the SCM Agreement were discussed by the Appellate Body in Brazil — Desiccated Coconut. See paragraphs 316-319 above. 331. In US — 1916 Act (EC), the Panel examined whether the US 1916 Antidumping Act was consistent with Article VI, and emphasized the “close link” between Article VI and the Anti-Dumping Agreement: “The official title of the Anti-Dumping Agreement is ‘Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994’. This agreement is essential for the interpretation of Article VI. Articles 1 and 18.1 confirm the close link between Article VI and the Anti-Dumping Agreement. Moreover, as was recalled by the Appellate Body in the Brazil — Coconut case, the WTO Agreement is a single treaty instrument which was accepted by the WTO Members as a single undertaking. As a result, Article 18.1 of the Anti-Dumping Agreement is part of the context of Article VI since Article 31.2 of the Vienna Convention provides that ‘the context for the purpose of the interpretation of a treaty shall comprise, […] the text [of the treaty], including its preamble and annexes …’. We are therefore not only entitled to consider Articles 1 and 18.1 of the Anti-Dumping Agreement even though the European Communities did not mention those provisions as part of its claims in its request for establishment of a panel, but we are also required to do so under the general principles of interpretation of public international law.(508)”(509) 332. With respect to the finding of the Appellate Body in Brazil — Desiccated Coconut concerning the relationship between the SCM Agreement and GATT Article VI as referenced in paragraph 316 above, see the Chapter on the WTO Agreement, Section III.B.1(a), which deals with the issue of the “single undertaking”. 333. In Brazil — Desiccated Coconut, the Appellate Body referred to the SCM Agreement in the context of clarifying the scope of Article VI. See the excerpts referenced in paragraphs 316 and 318 above. 4. Challenge against a law as such under Article VI 334. In US — 1916 Act, the Appellate Body rejected the United States’ argument that the Panels had no jurisdiction to consider the claims that the Act as such was inconsistent with Article VI. Noting that the complainants had brought their claims of inconsistency with Article VI of the GATT 1994 and the Anti-Dumping Agreement pursuant to Article XXIII of the GATT 1994 and Article 17 of the Anti-Dumping Agreement, the Appellate Body explained: “Articles XXII and XXIII of the GATT 1994 serve as the basis for consultations and dispute settlement under the GATT 1994 and, through incorporation by reference, under most of the other agreements in Annex 1A to the WTO Agreement.(510) According to Article XXIII:1(a) of the GATT 1994, a Member can bring a dispute settlement claim against another Member when it considers that a benefit accruing to it under the GATT 1994 is being nullified or impaired, or that the achievement of any objective of the GATT 1994 is being impeded, as a result of the failure of that other Member to carry out its obligations under that Agreement.
Prior to the entry into force of the WTO Agreement, it was firmly established that Article XXIII:1(a) of the GATT 1947 allowed a Contracting Party to challenge legislation as such, independently from the application of that legislation in specific instances. While the text of Article XXIII does not expressly address the matter, panels consistently considered that, under Article XXIII, they had the jurisdiction to deal with claims against legislation as such.(511) In examining such claims, panels developed the concept that mandatory and discretionary legislation should be distinguished from each other, reasoning that only legislation that mandates a violation of GATT obligations can be found as such to be inconsistent with those obligations. We consider the application of this distinction to the present cases in section IV(B) below.
Thus, that a Contracting Party could challenge legislation as such before a panel was well-settled under the GATT 1947. We consider that the case law articulating and applying this practice forms part of the GATT acquis which, under Article XVI:1 of the WTO Agreement, provides guidance to the WTO and, therefore, to panels and the Appellate Body. Furthermore, in Article 3.1 of the DSU, Members affirm ‘their adherence to the principles for the management of disputes heretofore applied under Articles XXII and XXIII of GATT 1947’. We note that, since the entry into force of the WTO Agreement, a number of panels have dealt with dispute settlement claims brought against a Member on the basis of its legislation as such, independently from the application of that legislation in specific instances.(512)”(513) 335. In this connection, in US — 1916 Act, the Appellate Body examined whether challenge against a law as such is permissible under the Anti-Dumping Agreement. See the Chapter on the Anti-Dumping Agreement, Section XVII.B.1(b). 336. In Guatemala — Cement I, the Appellate Body discussed the specificity requirements for the terms of reference under Article 17.4 of the Anti-Dumping Agreement. See the Chapter on the Anti-Dumping Agreement, Section XVII.B.5(a). 337. In US — 1916 Act, in discussing the United States’ appeal to the Panels’ finding that the Act was to counteract “dumping” and thus, fell under the scope of Article VI, the Appellate Body noted as follows: “[U]nder Article VI:1 of the GATT 1994 and Article 2 of the Anti-Dumping Agreement, neither the intent of the persons engaging in ‘dumping’ nor the injurious effects that ‘dumping’ may have on a Member’s domestic industry are constituent elements of ‘dumping’.”(514) 338. In US — 1916 Act (EC), the Panel stated that “Article VI:1 of the GATT 1994 requires the establishment of material injury or a threat thereof.”(515) (a) Permissible responses to dumping 339. In US — 1916 Act, the Appellate Body interpreted Article VI:2 in addressing the question of whether Members may choose to impose other types of antidumping measures than anti-dumping duties. The Appellate Body stated that “Article VI, and, in particular, Article VI:2, read in conjunction with the Anti-Dumping Agreement, limit the permissible responses to dumping to definitive anti-dumping duties, provisional measures and price undertakings.”(516) See also paragraph 323 above, with respect to the discussion concerning the term “may” contained in Article VI:2. Further, the Panel on US — 1916 Act (Japan) discussed this issue taking into consideration preparatory works of the WTO Agreement.(517) (b) Methodology of investigation 340. In EC — Tube or Pipe Fittings the issue arose whether Article VI:2 of the GATT 1994 prescribes a certain methodology for the investigation of dumping under the Anti-Dumping Agreement. In this particular case, the European Communities used a period of investigation of one year in its investigation of imports from Brazil. Towards the end of this year, the Brazilian Real was devalued by 42 per cent. Brazil argued that the devaluation of the Real had “eliminated dumping by the Brazilian exporter” and that the Commission had failed to consider whether dumping existed “in the present”. The Panel concluded that events occurring during the period of investigation did not require investigation authorities to reassess a determination. The Appellate Body upheld the Panel’s finding and rejected Brazil’s argument that Article VI:2 of the GATT 1994 required investigation authorities to “anticipate the level of anti-dumping duty that is strictly necessary to prevent dumping in the future [by making] a reasonable assumption for the future on the basis of the data collected in the [Period of Investigation]”. According to the Appellate Body, the words “in order to offset or prevent dumping” in Article VI:2 of the GATT 1994 do not prescribe the selection of a particular methodology in the anti-dumping investigation. “We are unable to see an obligation flowing from the opening phrase of Article VI:2 of the GATT 1994 to Article 2 of the Anti-Dumping Agreement that the determination of dumping must be based on the standard of a ‘reasonable assumption for the future’, or that this, in turn, would require that a particular methodology be chosen under Article 2.4.2.”(518)
341. The Panel on Brazil — Desiccated Coconut found that because Article VI of GATT 1994 did not constitute applicable law for the purposes of the dispute, the claims made under Article I (and II) of GATT 1994, which were derived from claims of inconsistency with Article VI of GATT 1994, could not succeed.(519) The Appellate Body on Brazil — Desiccated Coconut confirmed this finding.(520) 342. The Panel on Brazil — Desiccated Coconut found that because Article VI of GATT 1994 did not constitute applicable law for the purposes of the dispute, the claims made under Article II (and I) of GATT 1994, which were derived from claims of inconsistency with Article VI of GATT 1994, could not succeed.(521) The Appellate Body on Brazil — Desiccated Coconut confirmed this finding.(522) 343. In US — 1916 Act (EC) and US — 1916 (Japan), exercising judicial economy, the Panel found that the United States’ 1916 Act was inconsistent with Article VI of the GATT 1994. However, the Panel did not also examine the EC claim that it was inconsistent with Article III of GATT 1994. See paragraph 288 above. 344. In US — 1916 Act (Japan), exercising judicial economy, the Panel did not examine a claim under Article XI of GATT 1994, after having found a violation of Article VI. See paragraph 420 below. 345. As the complainant had not established a prima facie case of a violation of Articles 2.1 and 2.2 of the Anti-Dumping Agreement, the Panel on US — 1916 Act (EC) stated that “[t]he fact that we found a violation of Article VI:1 of the GATT 1994 is not as such sufficient to conclude that Articles 2.1 and 2.2 of the Anti-Dumping Agreement have been breached, in the absence of more specific arguments and evidence.”(523) 346. In US — 1916 Act (Japan), the Panel was faced with the question whether it could make findings under Article VI, without, at the same time, making a finding under a provision of the Anti-Dumping Agreement or whether “the link between Article VI and the Anti-Dumping Agreement is such as to make impossible a finding under Article VI only”. The Panel referred to the findings of the Panel on India — Quantitative Restrictions and of the Appellate Body in Brazil — Desiccated Coconut and distinguished these two cases from the issue before it. The Panel then concluded that it could “make findings under Article VI without, at the same time, having to make findings under the provisions of the Anti-Dumping Agreement, and vice-versa”: “Regarding the relationship between Article VI and the Anti-Dumping Agreement and, in particular, the question whether we could make findings regarding Article VI independently from the Anti-Dumping Agreement, we note that the issue addressed by the panel and the Appellate Body in Brazil — Desiccated Coconut, to which the United States refers, must be differentiated from the one before us. In Brazil — Desiccated Coconut, the question was one of application of Article VI of the GATT when the WTO Agreement on Subsidies and Countervailing Measures did not apply. In the present case, the issue is whether the Panel can make findings in relation to Article VI only or whether the link between Article VI and the Anti-Dumping Agreement is such as to make impossible a finding under Article VI only.
We note that the panel in the India — Quantitative Restrictions on Imports of Agricultural, Textile and Industrial Products(524) case did not make findings under Article XVIII:11 of the GATT 1994 in isolation from the Understanding on Balance-of-Payments Provisions of the GATT 1994. Likewise, we have no intention to address Article VI in isolation from the Anti-Dumping Agreement. In the present case, the complainant has made claims based on the violation of provisions of Article VI and the Anti-Dumping Agreement. In our opinion, if the panel in Brazil — Desiccated Coconut confirmed that Article VI and the Agreement on Subsidies and Countervailing Measures were an ‘inseparable package of rights and obligations’, this is because the solution proposed by the complainant would have led to apply Article VI in total disregard of the Agreement on Subsidies and Countervailing Measures. Such a solution cannot even be considered in our case. Article VI and the Anti-Dumping Agreement are part of the same treaty: the WTO Agreement. In application of the customary rules of interpretation of international law, we are bound to interpret Article VI of the GATT 1994 as part of the WTO Agreement and, pursuant to Article 31 of the Vienna Convention, the Anti-Dumping Agreement forms part of the context of Article VI. This implies that we must look at Article VI and the Anti-Dumping Agreement as part of an ‘inseparable package of rights and obligations’ and that Article VI should not be interpreted in a way that would deprive either Article VI or the Anti-Dumping Agreement of meaning.(525) However, this obligation does not prevent us from making findings in relation to Article VI only, as the panel did in its report on India — Quantitative Restrictions.
We conclude that we can make findings under Article VI without, at the same time, having to make findings under the provisions of the Anti-Dumping Agreement, and vice-versa. However, the fact that Article VI and the Anti-Dumping Agreement represent an inseparable package of rights and disciplines requires that we interpret each of the provisions invoked by Japan in its claims in conjunction with the other relevant provisions of this ‘inseparable package’, so as to give meaning to all of them.”(526) 347. Also, the Panel on US — 1916 Act (EC) explained its exercise of judicial economy with respect to Article 3 as follows: “Since we found above that the 1916 Act violated Article VI:1 by not providing for an injury test compatible with the terms of that Article and since Article 3 simply addresses in more detail the requirement of ‘material injury’ contained in Article VI:1, we do not find it necessary to make specific findings under Article 3 and therefore exercise judicial economy, as we are entitled to do under GATT panel practice and WTO panel and Appellate Body practice.”(527) 2. Tokyo Round Agreement on Interpretation and Application of Articles VI, XVI and XXIII of the General Agreement on Tariffs and Trade 348. The Panel on Brazil — Desiccated Coconut discussed the legal relevance of the Tokyo Round Agreement on Interpretation and Application of Articles VI, XVI and XXIII of the General Agreement on Tariffs and Trade to Article VI of the GATT 1994. See paragraphs 317-321 above. 349. In the Brazil — Desiccated Coconut dispute, the Panel was faced with the question “whether Article VI creates rules which are separate and distinct from those of the SCM Agreement, and which can be applied without reference to that Agreement, or whether Article VI of GATT 1994 and the SCM Agreement represent an inseparable package of rights and disciplines that must be considered in conjunction.”(528) In phrasing this issue, the Panel on Brazil — Desiccated Coconut made clear that the SCM Agreement did not supersede Article VI of GATT 1994 as the basis for the WTO discipline of countervailing measures. The Panel stated: “It is evident that both Article VI of GATT 1994 and the SCM Agreement have force, effect, and purpose within the WTO Agreement. That GATT 1994 has not been superseded by other Multilateral Agreements on Trade in Goods … is demonstrated by a general interpretive note to Annex 1A of the WTO Agreement. The fact that certain important provisions of Article VI of GATT 1994 are neither replicated nor elaborated in the SCM Agreement further demonstrates this point. Thus, the question for consideration is not whether the SCM Agreement supersedes Article VI of GATT 1994.”(529) 350. The Appellate Body on Brazil — Desiccated Coconut confirmed the statement by the Panel that the SCM Agreement did not supersede Article VI of GATT 1994(530), and stated: “The relationship between the GATT 1994 and the other goods agreements in Annex 1A is complex and must be examined on a case-by-case basis. Although the provisions of the GATT 1947 were incorporated into, and became a part of the GATT 1994, they are not the sum total of the rights and obligations of WTO Members concerning a particular matter. For example, with respect to subsidies on agricultural products, Articles II, VI and XVI of the GATT 1994 alone do not represent the total rights and obligations of WTO Members. The Agreement on Agriculture and the SCM Agreement reflect the latest statement of WTO Members as to their rights and obligations concerning agricultural subsidies. The general interpretative note to Annex 1A was added to reflect that the other goods agreements in Annex 1A, in many ways, represent a substantial elaboration of the provisions of the GATT 1994, and to the extent that the provisions of the other goods agreements conflict with the provisions of the GATT 1994, the provisions of the other goods agreements prevail. This does not mean, however, that the other goods agreements in Annex 1A, such as the SCM Agreement, supersede the GATT 1994.”(531) 351. The Appellate Body on Brazil — Desiccated Coconut, in addressing the issue of the scope of Article VI of the GATT 1994, noted that “[t]he relationship between the SCM Agreement and Article VI of GATT 1994 is set out in Articles 10 and 32.1 of the SCM Agreement.”(532) See paragraph 316 above. With respect to the Appellate Body’s other findings on this issue, see the excerpts referenced in the Chapter on the SCM Agreement, Section X.B.3. 352. In Brazil — Desiccated Coconut, the Appellate Body further touched on the relationship between Article VI of the GATT 1994 and the SCM Agreement in clarifying the scope of Article VI. See paragraphs 318-319 above.
VIII. Article VII back to top Article VII: Valuation for Customs Purposes 1. The contracting parties recognize the validity of the general principles of valuation set forth in the following paragraphs of this Article, and they undertake to give effect to such principles, in respect of all products subject to duties or other charges or restrictions on importation and exportation based upon or regulated in any manner by value. Moreover, they shall, upon a request by another contracting party review the operation of any of their laws or regulations relating to value for customs purposes in the light of these principles. The CONTRACTING PARTIES may request from contracting parties reports on steps taken by them in pursuance of the provisions of this Article.
2. (a) The value for customs purposes of imported merchandise should be based on the actual value of the imported merchandise on which duty is assessed, or of like merchandise, and should not be based on the value of merchandise of national origin or on arbitrary or fictitious values.
(b) “Actual value” should be the price at which, at a time and place determined by the legislation of the country of importation, such or like merchandise is sold or offered for sale in the ordinary course of trade under fully competitive conditions. To the extent to which the price of such or like merchandise is governed by the quantity in a particular transaction, the price to be considered should uniformly be related to either (i) comparable quantities, or (ii) quantities not less favourable to importers than those in which the greater volume of the merchandise is sold in the trade between the countries of exportation and importation.
(c) When the actual value is not ascertainable in accordance with subparagraph (b) of this paragraph, the value for customs purposes should be based on the nearest ascertainable equivalent of such value.
3. The value for customs purposes of any imported product should not include the amount of any internal tax, applicable within the country of origin or export, from which the imported product has been exempted or has been or will be relieved by means of refund.
4. (a) Except as otherwise provided for in this paragraph, where it is necessary for the purposes of paragraph 2 of this Article for a contracting party to convert into its own currency a price expressed in the currency of another country, the conversion rate of exchange to be used shall be based, for each currency involved, on the par value as established pursuant to the Articles of Agreement of the International Monetary Fund or on the rate of exchange recognized by the Fund, or on the par value established in accordance with a special exchange agreement entered into pursuant to Article XV of this Agreement.
(b) Where no such established par value and no such recognized rate of exchange exist, the conversion rate shall reflect effectively the current value of such currency in commercial transactions.
(c) The CONTRACTING PARTIES, in agreement with the International Monetary Fund, shall formulate rules governing the conversion by contracting parties of any foreign currency in respect of which multiple rates of exchange are maintained consistently with the Articles of Agreement of the International Monetary Fund. Any contracting party may apply such rules in respect of such foreign currencies for the purposes of paragraph 2 of this Article as an alternative to the use of par values. Until such rules are adopted by the Contracting Parties, any contracting party may employ, in respect of any such foreign currency, rules of conversion for the purposes of paragraph 2 of this Article which are designed to reflect effectively the value of such foreign currency in commercial transactions.
(d) Nothing in this paragraph shall be construed to require any contracting party to alter the method of converting currencies for customs purposes which is applicable in its territory on the date of this Agreement, if such alteration would have the effect of increasing generally the amounts of duty payable.
5. The bases and methods for determining the value of products subject to duties or other charges or restrictions based upon or regulated in any manner by value should be stable and should be given sufficient publicity to enable traders to estimate, with a reasonable degree of certainty, the value for customs purposes. Ad Article VII Paragraph 1 The expression “or other charges” is not to be regarded as including internal taxes or equivalent charges imposed on or in connection with imported products. Paragraph 2 1. It would be in conformity with Article VII to presume that “actual value” may be represented by the invoice price, plus any non-included charges for legitimate costs which are proper elements of “actual value” and plus any abnormal discount or other reduction from the ordinary competitive price.
2. It would be in conformity with Article VII, paragraph 2 (b), for a contracting party to construe the phrase “in the ordinary course of trade … under fully competitive conditions”, as excluding any transaction wherein the buyer and seller are not independent of each other and price is not the sole consideration.
3. The standard of “fully competitive conditions” permits a contracting party to exclude from consideration prices involving special discounts limited to exclusive agents.
4. The wording of subparagraphs (a) and (b) permits a contracting party to determine the value for customs purposes uniformly either (1) on the basis of a particular exporter’s prices of the imported merchandise, or (2) on the basis of the general price level of like merchandise. No jurisprudence or decision of a relevant WTO body. 353. With respect to GATT practice concerning Article VII.
IX. Article VIII back to top Article VIII: Fees and Formalities connected with Importation and Exportation 1. (a) All fees and charges of whatever character (other than import and export duties and other than taxes within the purview of Article III) imposed by contracting parties on or in connection with importation or exportation shall be limited in amount to the approximate cost of services rendered and shall not represent an indirect protection to domestic products or a taxation of imports or exports for fiscal purposes.
(b) The contracting parties recognize the need for reducing the number and diversity of fees and charges referred to in subparagraph (a).
(c) The contracting parties also recognize the need for minimizing the incidence and complexity of import and export formalities and for decreasing and simplifying import and export documentation requirements.
2. A contracting party shall, upon request by another contracting party or by the CONTRACTING PARTIES, review the operation of its laws and regulations in the light of the provisions of this Article.
3. No contracting party shall impose substantial penalties for minor breaches of customs regulations or procedural requirements. In particular, no penalty in respect of any omission or mistake in customs documentation which is easily rectifiable and obviously made without fraudulent intent or gross negligence shall be greater than necessary to serve merely as a warning.
4. The provisions of this Article shall extend to fees, charges, formalities and requirements imposed by governmental authorities in connection with importation and exportation, including those relating to: (a) consular transactions, such as consular invoices and certificates;
(b) quantitative restrictions;
(c) licensing;
(d) exchange control;
(e) statistical services;
(f) documents, documentation and certification;
(g) analysis and inspection; and
(h) quarantine, sanitation and fumigation. Ad Article VIII 1. While Article VIII does not cover the use of multiple rates of exchange as such, paragraphs 1 and 4 condemn the use of exchange taxes or fees as a device for implementing multiple currency practices; if, however, a contracting party is using multiple currency exchange fees for balance of payments reasons with the approval of the International Monetary Fund, the provisions of paragraph 9 (a) of Article XV fully safeguard its position.
2. It would be consistent with paragraph 1 if, on the importation of products from the territory of a contracting party into the territory of another contracting party, the production of certificates of origin should only be required to the extent that is strictly indispensable.
354. In Argentina — Textiles and Apparel, the Panel addressed an Argentine ad valorem tax on imports of 3 per cent, called a “statistical tax”, described by Argentina as designed to cover the cost of providing a statistical service in the form of a reliable database for foreign trade operators. The Panel found that this statistical tax was inconsistent with the substantive requirements of Article VIII:1(a) of GATT 1994. (Argentina subsequently did not appeal this finding, but claimed that the Panel had failed to take properly into account a relevant obligation by Argentina towards the IMF.) The Panel emphasized that an ad valorem tax, by its very design, is not “limited in amount to the approximate cost of services rendered”, as required by Article VIII:1(a): “The meaning of Article VIII was examined in detail in the Panel Report on United States — Customs User Fee.(533) The panel found that Article VIII’s requirement that the charge be ‘limited in amount to the approximate cost of services rendered’ is ‘actually a dual requirement, because the charge in question must first involve a “service” rendered, and then the level of the charge must not exceed the approximate cost of that “service”’.(534) According to the panel report, the term ‘services rendered’ means ‘services rendered to the individual importer in question’.(535) In the present case Argentina states that the service is not rendered to the individual importer, or to the specific importer associated with a particular operation, but to foreign trade operators in general and foreign trade as an activity per se.
An ad valorem duty with no fixed maximum fee, by its very nature, is not ‘limited in amount to the approximate cost of services rendered’. For example, high-price items necessarily will bear a much greater tax burden than low-price goods, yet the service accorded to both is essentially the same. An unlimited ad valorem charge on imported goods violates the provisions of Article VIII because such a charge cannot be related to the cost of the service rendered. For example, in the Customs User Fee report, the panel examined the consistency with Article VIII of 0.22 and 0.17 per cent ad valorem customs merchandise processing fees with no upper limits. The panel concluded that ‘the term “cost of services rendered” … in Article VIII:1(a) must be interpreted to refer to the cost of the customs processing for the individual entry in question and accordingly that the ad valorem structure of the United States merchandise processing fee was inconsistent with Article VIII:1(a) to the extent that it caused fees to be levied in excess of such costs’(536).”(537) 355. In support of its finding that an ad valorem tax could not be said to be commensurate with the “cost of services rendered”, the Panel on Argentina — Textiles and Apparel refered to the Report of the Working Party on Accession of the Democratic Republic of the Congo.(538) The Panel also rejected Argentina’s argument that its tax had been enacted for “fiscal purposes”: “Argentina’s statistical tax is levied on an ad valorem basis with no ceiling. As described in paragraph 6.70 above, Argentina’s tax is clearly not related to the cost of a service rendered to the specific importers concerned. The tax as assessed on many goods is not in proportion to the cost of any service rendered. The tax purportedly raises revenue for the purpose of financing customs activities related to the registration, computing and data processing of information on both imports and exports. While the gathering of statistical information concerning imports may benefit traders in general, Article VIII bars the levying of any tax or charge on importers to support the related costs ‘for the individual entry in question’ since it will also benefit exports and exporters.(539)
As to Argentina’s argument that it was collecting this tax for ‘fiscal’ purposes in the context of its undertakings with the IMF, we note that not only does Article VIII of GATT expressly prohibit such measures for fiscal purposes but that clearly a measure for fiscal purposes will normally lead to a situation where the tax results in charges being levied in excess of the approximate costs of the statistical services rendered.”(540) 356. Argentina did not appeal the findings of the Panel on Argentina — Textiles and Apparel, quoted in paragraphs 354-355 above. However, before the Appellate Body, Argentina argued that the Panel erred in law in failing to take account Argentina’s obligations to the IMF in the Panel’s interpretation of Article VIII. Specifically, Argentina claimed that a “Memorandum of Understanding” between Argentina and the IMF included an “undertaking” or an “obligation” on the part of Argentina to collect a specified amount in the form of a statistical tax. Argentina pointed to a statement in the aforementioned memorandum according to which the fiscal measures to be adopted by Argentina include “… increases in import duties, including a temporary 3 per cent surcharge on imports”. Argentina also argued that paragraph 10 of the Agreement between the IMF and the WTO(541) and paragraph 5 of the so-called Declaration on Coherence(542) require that the imposition on governments of “cross-conditionality or additional conditions” must be avoided. The Appellate Body found that Argentina had failed to demonstrate an “irreconcilable conflict between its ‘Memorandum of Understanding’ with the IMF and its obligations under Article VIII of GATT”: “[T]the Panel does not appear to have been convinced that Argentina had a legally binding agreement with the IMF at all. From the panel record in this case, it does not appear possible to determine the precise legal nature of this Memorandum on Economic Policy, nor the extent to which commitments undertaken by Argentina in this Memorandum constitute legally binding obligations. We note that page 7 of the Memorandum on Economic Policy refers to “a temporary 3 percent surcharge on imports”, which is not necessarily the same thing as the 3 per cent statistical tax levied on imports. Argentina did not show an irreconcilable conflict between the provisions of its “Memorandum of Understanding” with the IMF and the provisions of Article VIII of the GATT 1994. We thus agree with the Panel’s implicit finding that Argentina failed to demonstrate that it had a legally binding commitment to the IMF that would somehow supersede Argentina’s obligations under Article VIII of the GATT 1994.”(543) 357. The Panel on US — Certain EC Products examined the consistency with several GATT provisions of the increased bonding requirements imposed by the United States on imports from the European Communities in order to secure the collection of additional import duties that were only later authorized by the DSB. The Panel considered that the costs relating to the bonding requirements upon importation could not constitute the “approximate cost of services rendered” in the sense of Article VIII: “The meaning of Article VIII was examined in the adopted Panel Report on United States — Customs Users Fee(544) and in the adopted Appellate Body and Panel Reports on Argentina — Textiles. It was found that Article VIII’s requirement that the charge be ‘limited in amount to the approximate cost of services rendered’ is ‘actually a dual requirement, because the charge in question must first involve a “service” rendered, and then the level of the charge must not exceed the approximate cost of that “service”.’(545) The term ‘services rendered’ means ‘services rendered to the individual importer in question.’(546)
Although very briefly in its rebuttals, the United States argued that bonding requirements could be viewed as a form of fee for services rendered (the services being the ‘early release of merchandise’) and therefore should benefit from the carve-out of Article II:2(c) of GATT, the United States has not submitted any data on the second requirement. There is no evidence that what was required from importers represented any such approximate costs of any service. It is also difficult to understand why the costs of such service would have suddenly increased on 3 March (did the United States provide more services to importers on 3 March?), and then only for listed imports from the European Communities.”(547) 358. With respect to GATT practice concerning Article VIII:1. 359. In Argentina — Textiles and Apparel, the Appellate Body agreed that that there is nothing in the Agreement between the IMF and the WTO, the Declaration on the Relationship of the World Trade Organization with the International Monetary Fund or the so-called Declaration on Coherence(548) which justifies a conclusion that a Member’s commitments to the IMF shall prevail over its obligations under Article VIII of the GATT 1994.(549) See Chapter on the WTO Agreement, Section IV.B.5(iii). 2. Agreement between the IMF and the WTO 360. In Argentina — Textiles and Apparel, the Appellate Body agreed that that there is nothing in the Agreement between the IMF and the WTO, the Declaration on the Relationship of the World Trade Organization with the International Monetary Fund which justifies a conclusion that a Member’s commitments to the IMF shall prevail over its obligations under Article VIII of the GATT 1994.(550) See Chapter on the WTO Agreement, Section IV.B.5(iii). 361. In Argentina — Textiles and Apparel, the Appellate Body agreed that that there is nothing in the Declaration on the Contribution of the World Trade Organization to Achieving Greater Coherence in Global Economic Policymaking (Declaration on Coherence) which would justify a conclusion that a Member’s commitments to the IMF shall prevail over its obligations under Article VIII of the GATT 1994.(551) See Chapter on the WTO Agreement, Section IV.B.5(iii).
X. Article IX back to top Article IX: Marks of Origin 1. Each contracting party shall accord to the products of the territories of other contracting parties treatment with regard to marking requirements no less favourable than the treatment accorded to like products of any third country.
2. The contracting parties recognize that, in adopting and enforcing laws and regulations relating to marks of origin, the difficulties and inconveniences which such measures may cause to the commerce and industry of exporting countries should be reduced to a minimum, due regard being had to the necessity of protecting consumers against fraudulent or misleading indications.
3. Whenever it is administratively practicable to do so, contracting parties should permit required marks of origin to be affixed at the time of importation.
4. The laws and regulations of contracting parties relating to the marking of imported products shall be such as to permit compliance without seriously damaging the products, or materially reducing their value, or unreasonably increasing their cost.
5. As a general rule, no special duty or penalty should be imposed by any contracting party for failure to comply with marking requirements prior to importation unless corrective marking is unreasonably delayed or deceptive marks have been affixed or the required marking has been intentionally omitted.
6. The contracting parties shall co-operate with each other with a view to preventing the use of trade names in such manner as to misrepresent the true origin of a product, to the detriment of such distinctive regional or geographical names of products of the territory of a contracting party as are protected by its legislation. Each contracting party shall accord full and sympathetic consideration to such requests or representations as may be made by any other contracting party regarding the application of the undertaking set forth in the preceding sentence to names of products which have been communicated to it by the other contracting party. No jurisprudence or decision of a competent WTO body. 362. With respect to GATT practice concerning Article VIII:1.
XI. Article X back to top Article X: Publication and Administration of Trade Regulations 1. Laws, regulations, judicial decisions and administrative rulings of general application, made effective by any contracting party, pertaining to the classification or the valuation of products for customs purposes, or to rates of duty, taxes or other charges, or to requirements, restrictions or prohibitions on imports or exports or on the transfer of payments therefor, or affecting their sale, distribution, transportation, insurance, warehousing inspection, exhibition, processing, mixing or other use, shall be published promptly in such a manner as to enable governments and traders to become acquainted with them. Agreements affecting international trade policy which are in force between the government or a governmental agency of any contracting party and the government or governmental agency of any other contracting party shall also be published. The provisions of this paragraph shall not require any contracting party to disclose confidential information which would impede law enforcement or otherwise be contrary to the public interest or would prejudice the legitimate commercial interests of particular enterprises, public or private.
2. No measure of general application taken by any contracting party effecting an advance in a rate of duty or other charge on imports under an established and uniform practice, or imposing a new or more burdensome requirement, restriction or prohibition on imports, or on the transfer of payments therefor, shall be enforced before such measure has been officially published.
3. (a) Each contracting party shall administer in a uniform, impartial and reasonable manner all its laws, regulations, decisions and rulings of the kind described in paragraph 1 of this Article.
(b) Each contracting party shall maintain, or institute as soon as practicable, judicial, arbitral or administrative tribunals or procedures for the purpose, inter alia, of the prompt review and correction of administrative action relating to customs matters. Such tribunals or procedures shall be independent of the agencies entrusted with administrative enforcement and their decisions shall be implemented by, and shall govern the practice of, such agencies unless an appeal is lodged with a court or tribunal of superior jurisdiction within the time prescribed for appeals to be lodged by importers; Provided that the central administration of such agency may take steps to obtain a review of the matter in another proceeding if there is good cause to believe that the decision is inconsistent with established principles of law or the actual facts.
(c) The provisions of subparagraph (b) of this paragraph shall not require the elimination or substitution of procedures in force in the territory of a contracting party on the date of this Agreement which in fact provide for an objective and impartial review of administrative action even though such procedures are not fully or formally independent of the agencies entrusted with administrative enforcement. Any contracting party employing such procedures shall, upon request, furnish the CONTRACTING PARTIES with full information thereon in order that they may determine whether such procedures conform to the requirements of this subparagraph. 363. In EC — Poultry, the Appellate Body rejected Brazil’s claim that the retroactive application of transitional safeguard measures under the Agreement on Textiles and Clothing was prohibited by Article X. The Appellate Body briefly discussed the scope of Article X as follows: “Article X relates to the publication and administration of ‘laws, regulations, judicial decisions and administrative rulings of general application’, rather than to the substantive content of such measures.(552) …
Thus, to the extent that Brazil’s appeal relates to the substantive content of the EC rules themselves, and not to their publication or administration, that appeal falls outside the scope of Article X of the GATT 1994.”(553) 364. In US — Hot-Rolled Steel, the Panel was confronted with an alleged violation of Article X:3(a). However, before addressing this question the Panel ruled, in a preliminary finding not reviewed by the Appellate Body, that the anti-dumping measure did not constitute a measure “of general application” within the meaning of Article X:1. The Panel held: “[F]inally, we have been presented with arguments alleging violation of Article X:3(a) of GATT 1994 which relate to the actions of the United States in the context of a single anti-dumping investigation. We doubt whether the final anti-dumping measure before us in this dispute can be considered a measure of ‘general application’. In this context, we note that Japan has not even alleged, much less established, a pattern of decision-making with respect to the specific matters it is raising which would suggest a lack of uniform, impartial and reasonable administration of the US anti-dumping law. While it is not inconceivable that a Member’s actions in a single instance might be evidence of lack of uniform, impartial, and reasonable administration of its laws, regulations, decisions and rulings, we consider that the actions in question would have to have a significant impact on the overall administration of the law, and not simply on the outcome in the single case in question. Moreover, we consider it unlikely that such a conclusion could be reached where the actions in the single case in question were, themselves, consistent with more specific obligations under other WTO Agreements.”(554) 365. In US — Underwear, the Appellate Body agreed with the following finding of the Panel on the term “of general application”:(555) “We note that Article X:1 of GATT 1994, which also uses the language ‘of general application’, includes ‘administrative rulings’ in its scope. The mere fact that the restraint at issue was an administrative order does not prevent us from concluding that the restraint was a measure of general application. Nor does the fact that it was a country-specific measure exclude the possibility of it being a measure of general application. If, for instance, the restraint was addressed to a specific company or applied to a specific shipment, it would not have qualified as a measure of general application. However, to the extent that the restraint affects an unidentified number of economic operators, including domestic and foreign producers, we find it to be a measure of general application.”(556) 366. In EC — Poultry, the Appellate Body reviewed the Panel’s finding that certain import licensing of the European Communities on certain poultry products was not inconsistent with Article X because “the information which Brazil claims the EC should have made available concerns a specific shipment, which is outside the scope of Article X of GATT.”(557) In upholding the Panel’s finding, the Appellate Body discussed the term “of general application” as follows: “Article X:1 of the GATT 1994 makes it clear that Article X does not deal with specific transactions, but rather with rules ‘of general application’. It is clear to us that the EC rules pertaining to import licensing set out in Regulation 1431/94 are rules ‘of general application’. … … … Although it is true, as Brazil contends, that any measure of general application will always have to be applied in specific cases, nevertheless, the particular treatment accorded to each individual shipment cannot be considered a measure ‘of general application’ within the meaning of Article X. The Panel cited the following passage from the panel report in United States — Restrictions on Imports of Cotton and Man-made Fibre Underwear:
‘The mere fact that the restraint at issue was an administrative order does not prevent us from concluding that the restraint was a measure of general application. Nor does the fact that it was a country-specific measure exclude the possibility of it being a measure of general application. If, for instance, the restraint was addressed to a specific company or applied to a specific shipment, it would not have qualified as a measure of general application. However, to the extent that the restraint affects an unidentified number of economic operators, including domestic and foreign producers, we find it to be a measure of general application.’”(558)
We agree with the Panel that “conversely, licences issued to a specific company or applied to a specific shipment cannot be considered to be a measure ‘of general application’ within the meaning of Article X.”(559) 367. In Japan — Film, the Panel, referring to the Panel Report on US — Underwear referenced in paragraph 364 above, interpreted the term “of general application” as follows: “[I]t stands to reason that inasmuch as the Article X:1 requirement applies to all administrative rulings of general application, it also should extend to administrative rulings in individual cases where such rulings establish or revise principles or criteria applicable in future cases. At the same time, we consider that it is incumbent upon the United States in this case to clearly demonstrate the existence of such unpublished administrative rulings in individual matters which establish or revise principles applicable in future cases.”(560) (ii) Reference to GATT practice 368. For GATT practice on this subject-matter. 369. In US — Underwear, the Appellate Body described the policy underlying Article X:2 as pertaining to transparency and due process: “Article X:2, General Agreement, may be seen to embody a principle of fundamental importance — that of promoting full disclosure of governmental acts affecting Members and private persons and enterprises, whether of domestic or foreign nationality. The relevant policy principle is widely known as the principle of transparency and has obviously due process dimensions. The essential implication is that Members and other persons affected, or likely to be affected, by governmental measures imposing restraints, requirements and other burdens, should have a reasonable opportunity to acquire authentic information about such measures and accordingly to protect and adjust their activities or alternatively to seek modification of such measures.”(561) 370. The Panel on US — Underwear was called on to find whether a Member is entitled, when taking transitional safeguard measures under Article 6 of the ATC, to backdate the application of such measures to the date of publication of its request for consultations. The Panel opined that Article 6.10 of the ATC, the relevant provision, was “silent” as to this question and turned to Article X of the GATT. The Panel concluded that “if the importing country publishes the proposed restraint period and restraint level after the request for consultations, it can later set the initial date of the restraint period as the date of the publication of the proposed restraint”.(562) Upon review, the Appellate Body disagreed with the Panel’s finding that Article 6.10 of the ATC was “silent” as to whether a transitional safeguard measure could be backdated or not and found that Article 6.10 prohibited such backdating. With respect to the Panel’s finding that Article X of GATT permitted such backdating, the Appellate Body held that prior publication of a measure, as required under Article X of GATT, could not, in and of itself, justify the retroactive effect of a restrictive governmental measure: “[W]e are bound to observe that Article X:2 of the General Agreement, does not speak to, and hence does not resolve, the issue of permissibility of giving retroactive effect to a safeguard restraint measure. The presumption of prospective effect only does, of course, relate to the basic principles of transparency and due process, being grounded on, among other things, these principles. But prior publication is required for all measures falling within the scope of Article X:2, not just ATC safeguard restraint measures sought to be applied retrospectively. Prior publication may be an autonomous condition for giving effect at all to a restraint measure. Where no authority exists to give retroactive effect to a restrictive governmental measure, that deficiency is not cured by publishing the measure sometime before its actual application. The necessary authorization is not supplied by Article X:2 of the General Agreement.”(563) 371. In US — Shrimp, the Appellate Body ruled that that the lack of transparency of the disputed legislation was contrary to the spirit of Article X:3. The Appellate Body held: “[T]he provision of Article X:3 of the GATT 1994 bear upon this matter. In our view, Section 609 falls within the “laws, regulations, judicial decisions and administrative rulings of general application” described in Article X:1. Inasmuch there are due process requirements generally for measures that are otherwise imposed in compliance with WTO obligations, it is only reasonable that rigorous compliance with the fundamental requirements of due process should be required in the application and administration of a measure which purports to be an exception to the treaty obligations of the member imposing the measure and which effectively results in a suspension pro hac vice of the treaty rights of other members.
It is also clear to us that Article X:3 of the GATT 1994 establishes certain minimum standards for transparency and procedural fairness in the administration of trade regulations which, in our view, are not met here. The non-transparent and ex parte nature of the internal governmental procedures applied by the competent officials in the Office of Marine Conservation, the Department of State, and the United States National Marine Fisheries Service throughout the certification processes under Section 609, as well as the fact that countries whose applications are denied do not receive formal notice of such denial, nor of the reasons for the denial, and the fact, too, that there is no formal legal procedure for review of, or appeal from, a denial of an application, are all contrary to the spirit, if not the letter, of Article X:3 of the GATT 1994.”(564) 372. In EC — Bananas III, the Panel rejected the EC argument that Article X:3 applies only to internal measures, but not to licensing regulations for tariff quotas. In its finding, the Panel referred to Article X:1 and held that it “defines the coverage of Article X:3(a)”.(565) 373. In EC — Bananas III, the Appellate Body examined the European Communities’ appeal against the Panel’s finding that the imposition of different import licensing systems on like products imported from different Members was inconsistent with Article X:3(a). In upholding the Panel’s finding, the Appellate Body defined the scope of paragraph 3(a) by drawing a distinction between laws, regulations, decisions and rulings themselves and their administration: “The text of Article X:3(a) clearly indicates that the requirements of ‘uniformity, impartiality and reasonableness’ do not apply to the laws, regulations, decisions and rulings themselves, but rather to the administration of those laws, regulations, decisions and rulings. The context of Article X:3(a) within Article X, which is entitled ‘Publication and Administration of Trade Regulations’, and a reading of the other paragraphs of Article X, make it clear that Article X applies to the administration of laws, regulations, decisions and rulings. To the extent that the laws, regulations, decisions and rulings themselves are discriminatory, they can be examined for their consistency with the relevant provisions of the GATT 1994.”(566) 374. The Appellate Body on EC — Poultry confirmed the above line of interpretation and found that “to the extent that Brazil’s appeal relates to the substantive content of the EC rules themselves, and not to their publication or administration, that appeal falls outside the scope of Article X of the GATT 1994. The WTO-consistency of such substantive content must be determined by reference to provisions of the covered agreements other than Article X of the GATT 1994.”(567) 375. The Panel on Argentina — Hides and Leather rejected Argentina’s argument that Article X:3(a) only applies in situations when there is discrimination in treatment with respect to, for example, exports to two or more Members. The Panel stated: “In our view, there is no requirement that Article X:3(a) be applied only in situations where it is established that a Member has applied its Customs laws and regulations in an inconsistent manner with respect to the imports of or exports to two or more Members.
Furthermore, Article X:3(a), by its terms, calls for a uniform, impartial and reasonable administration of trade-related regulations. Nowhere does it refer to Members or products originating in or destined for certain Members’ territories, as is explicitly contained in other GATT 1994 Articles such as I, II and III. Indeed, Article X:1 requires the prompt publication of trade-related regulations ‘so as to enable governments and traders to become acquainted with them.’ Similarly, Article X:3(b) requires Members to provide for domestic review procedures relating to customs matters to which normally only private traders, not Members would have access.(568) These references undercut Argentina’s argument that Article X can only apply in situations where there is discrimination between WTO Members.”(569) 376. Further, in Argentina — Hides and Leather, the Panel disagreed with Argentina’s argument that a violation of Article X:3(a) can be found not in the substance of a regulation but in its administration. The Panel was reviewing an Argentine measure which authorized the presence of representatives of certain industrial associations during customs controls of bovine raw hides and certain other hides before export. The Panel found that Article X:3(a) applied to the measure at issue, because it did not contain “substantive Customs rules for enforcement of export laws”, but rather “provide[d] for a certain manner of applying those substantive rules”: “If the substance of a rule could not be challenged, even if the rule was administrative in nature, it is unclear what could ever be challenged under Article X. First, there is no requirement in Article X:3(a) that it apply only to ‘unwritten’ rules. Again, this would be contrary to that provision’s own language linking it to Article X:1. Second, such an approach would also likely run counter to the other aspect of the Appellate Body’s holding in European Communities — Poultry regarding Article X, to the effect that it applies to rules of general application and not to specific shipments.(570) Looking only to individual Customs officers’ enforcement actions, rather than measures such as Resolution 2235, as Argentina implies, would almost certainly require a review of a specific instance of abuse rather than the general rule applicable.(571) This would effectively write Article X:3(a) out of existence, which we cannot agree with.(572)
Thus, we are left with a situation where we have a written provision, Resolution 2235, and we need to determine whether this Resolution is substantive or administrative. In our view it is administrative in nature and therefore properly subject to review under Article X:3(a). Resolution 2235 does not establish substantive Customs rules for enforcement of export laws. Argentina has pointed out that those are contained primarily in the Customs Code (Law No. 22415), Resolution (ANA) No. 1284/95 and Resolution (ANA) No. 125/97.(573) Rather, Resolution 2235 provides for a means to involve private persons in assisting Customs officials in the application and enforcement of the substantive rules, namely, the rules on classification and export duties. Resolution 2235 does not create the classification requirements; it does not provide for export refunds; it does not impose export duties. It merely provides for a certain manner of applying those substantive rules. This measure clearly is administrative in nature.”(574) 377. In US — Corrosion-Resistant Steel Sunset Review, Japan argued that the United States’ sunset review laws were administrative in nature and consequently could be challenged under Article X:3(a) of the GATT 1994. Japan had asserted that the United States’ administration of its sunset review laws was inconsistent with Article X:3(a) as the United States legislation mandated self-initiation of sunset reviews without sufficient evidence. Japan also claimed that the United States’ administration of sunset review laws was not uniform with different approaches with regard to Article 11.2 reviews and sunset reviews being taken. The Panel ruled, in a finding not reviewed by the Appellate Body, that Japan’s allegations under Article X:3(a) related to United States laws and regulations rather than its administration and accordingly was not within the scope of Article X:3(a): “On the first point, i.e. self-initiation of sunset reviews without any, or sufficient, evidence, Japan argues that the US statute and regulations, which mandate such self-initiation, are ‘unreasonable’ because they allow the DOC to disregard the substantive requirements for the initiation. Japan further submits that such self-initiation renders the administration of US law ‘partial’ because it favours the US domestic industry. We note that Japan made a substantive claim challenging both the US law as such and its application in this particular sunset review regarding self-initiation of sunset reviews without sufficient evidence. We recall our finding above that self-initiation of sunset reviews under Article 11.3 is not subject to the evidentiary requirements of Article 5.6. This indicates that the substantive content of this aspect of US law, i.e. evidentiary standards applicable to the self-initiation of sunset reviews, can be, and in fact has in this case been, challenged by Japan. Therefore, deriving guidance from the ruling of the Appellate Body, in EC — Poultry, we find that this aspect of US law cannot be challenged under Article X:3(a) of GATT 1994 because it relates to the substance rather than the administration of US law.
With regard to the second ‘as such’ allegation of Japan, i.e., different approaches taken by the United States regarding Article 11.2 and 11.3 reviews, even assuming that this argument legitimately falls within the scope of application of Article X:3(a), we understand that Japan has based its “as such” allegations here exclusively upon the Sunset Policy Bulletin. We have found above that the Sunset Policy Bulletin is not challengeable as such under the WTO Agreement. We therefore examine no further Japan’s ‘as such’ allegations relying solely on the Sunset Policy Bulletin.
We therefore conclude that the administration of the US sunset review law as such was not inconsistent with Article X:3(a) of GATT 1994.”(575) 378. In US — Corrosion-Resistant Steel Sunset Review Japan argued that the application of the US laws and regulations with regard to the sunset reviews was unreasonable and partial, and hence inconsistent with Article X:3(a). Japan based its contention on that less information was required from United States domestic producers compared with exporters. The Panel recalled WTO case law that matters relating to the substantive nature of laws and regulations go beyond the scope of Article X:3(a): “Japan further argues that the fact that not as much information is requested from domestic producers renders the administration of US law partial.
The nature and quantity of the information that will be in the possession of foreign exporters and producers will necessarily differ from the information possessed by the domestic industry, and this information will be used for different purposes by the investigating authority. This is because generally, in investigations (and reviews), foreign exporters will be the main source of information regarding the dumping, or likelihood of continuation or recurrence of dumping, component of the determination that must be made, while domestic producers will possess more information relevant to the injury component of the determination that must be made. Consequently, we find that this aspect of Japan’s claim also falls outside the scope of Article X:3(a).”(576) 379. In US — Hot-Rolled Steel, the Panel pointed out that, for a Member’s action to violate Article X:3(a) that action should have a significant impact on the overall administration of that Member’s law and not simply on the outcome of the single case in question.(577) (ii) “administer in a uniform, impartial and reasonable manner” 380. In Argentina — Hides and Leather, the Panel explained the nature of the obligation under Article X:3(a) by distinguishing between transparency between WTO Members and transparency with respect to individual traders: “In applying these tests, it is important to recall that we are not to duplicate the substantive rules of the GATT 1994. Thus, for example, the test generally will not be whether there has been discriminatory treatment in favor of exports to one Member relative to another. Indeed, the focus is on the treatment accorded by government authorities to the traders in question. This is explicit in Article X:1 which requires, inter alia, that all provisions ‘shall be published promptly in such a manner as to enable governments and traders to become acquainted with them.’ (emphasis added). While it is normal that the GATT 1994 should require this sort of transparency between Members, it is significant that Article X:1 goes further and specifically references the importance of transparency to individual traders.”(578) 381. In Argentina — Hides and Leather, the Panel addressed the concept of “uniformity” with respect to the requirement in Article X:3(a) that laws and regulations shall be administered “in a uniform, impartial and reasonable manner”. The Panel opined “that this provision should not be read as a broad anti-discrimination provision.” Rather, the Panel read this requirement to stipulate “uniform administration of Customs laws and procedures between individual shippers and even with respect to the same person at different times and different places”: “The term ‘uniform’ appears in the GATT 1994 only with respect to administration of Customs laws. Article VII:2(b) provides that when assessing Customs valuation on the basis of ‘actual value’ variations may exist based on quantities provided that such prices are uniformly related to quantities in other transactions.
In addition to the term appearing in paragraph 3(a) of Article X, it also appears in paragraph 2 of that Article requiring uniform practices for certain changes in applying Customs laws. Finally, Ad Article I, paragraph 4, provides for uniform practices in re-application of tariff classifications and imposition of certain new classifications at the time of the provisional applications of the GATT 1947.
It is obvious from these uses of the terms that it is meant that Customs laws should not vary, that every exporter and importer should be able to expect treatment of the same kind, in the same manner both over time and in different places and with respect to other persons. Uniform administration requires that Members ensure that their laws are applied consistently and predictably and is not limited, for instance, to ensuring equal treatment with respect to WTO Members. That would be a substantive violation properly addressed under Article I. This is a requirement of uniform administration of Customs laws and procedures between individual shippers and even with respect to the same person at different times and different places.
We are of the view that this provision should not be read as a broad anti-discrimination provision. We do not think this provision should be interpreted to require all products be treated identically. That would be reading far too much into this paragraph which focuses on the day to day application of Customs laws, rules and regulations. There are many variations in products which might require differential treatment and we do not think this provision should be read as a general invitation for a panel to make such distinctions.”(579) 382. In Argentina — Hides and Leather, the Panel addressed an argument put forward by the European Communities based on the interpretation of the terms “impartial”, contained in Article X:3(a). The European Communities argued that the Argentine measure authorizing the presence of representatives of domestic industrial associations at customs controls of bovine raw hides and certain other hides before export, persons which according to the European Communities were “partial and interested”, was not an impartial application of the relevant custom rules. The Panel agreed with the European Communities: “Much as we are concerned in general about the presence of private parties with conflicting commercial interests in the Customs process, in our view the requirement of impartial administration in this dispute is not a matter of mere presence of representatives [of the relevant industrial associations] in such processes. It all depends on what that person is permitted to do. In our view, the answer to this question is related directly to the question of access to information as part of the product classification process as discussed in the previous Section. Our concern here is focussed on the need for safeguards to prevent the inappropriate flow of one private person’s confidential information to another as a result of the administration of the Customs laws, in this case the implementing Resolution 2235.
Whenever a party with a contrary commercial interest, but no relevant legal interest, is allowed to participate in an export transaction such as this, there is an inherent danger that the Customs laws, regulations and rules will be applied in a partial manner so as to permit persons with adverse commercial interests to obtain confidential information to which they have no right.
While this situation could be remedied by adequate safeguards, we do not consider that such safeguards presently are in place. Therefore, Resolution 2235 cannot be considered an impartial administration of the Customs laws, regulations and rules described in Article X:1 and, thus, is inconsistent with Article X:3(a) of the GATT 1994.(580) 383. With respect to the same Argentine measure, described in paragraph 381 above, the European Communities was also claiming that the requirement of “reasonableness” under Article X:3(a) was infringed. The Panel on Argentina — Hides and Leather again agreed with the European Communities: “[W]e must conclude that a process aimed at assuring the proper classification of products, but which inherently contains the possibility of revealing confidential business information, is an unreasonable manner of administering the laws, regulations and rules identified in Article X:1 and therefore is inconsistent with Article X:3(a).”(581) 384. In US — Stainless Steel, the Panel rejected Korea’s claim that the United States violated Article X:3(a) by departing from its own established policy with respect to the determination of the prices of local sales which are to be compared to alleged dumping exports. The Panel held that Article X:3(a) was not “intended to function as a mechanism to test the consistency of a Member’s particular decisions or rulings with the Member’s own domestic law and practice”: “We note at the outset of our examination that we have grave doubts as to whether Article X:3(a) can or should be used in the manner advocated by Korea. As the United States correctly points out, the WTO dispute settlement system ‘serves to preserve the rights and obligations of Members under the covered agreements, and to clarify the existing provisions of those agreements’.(582) It was not in our view intended to function as a mechanism to test the consistency of a Member’s particular decisions or rulings with the Member’s own domestic law and practice; that is a function reserved for each Member’s domestic judicial system,(583) and a function WTO panels would be particularly ill-suited to perform. An incautious adoption of the approach advocated by Korea could however effectively convert every claim that an action is inconsistent with domestic law or practice into a claim under the WTO Agreement.
In any event, we do not consider that the DOC in this investigation committed the ‘unprecedented departure’ from ‘established policy’ alleged by Korea such that its behaviour was either non-uniform or unreasonable. In our view, the requirement of uniform administration of laws and regulations must be understood to mean uniformity of treatment in respect of persons similarly situated; it cannot be understood to require identical results where relevant facts differ. Nor do we consider that the requirement of reasonable administration of laws and regulations is violated merely because, in the administration of those laws and regulations, different conclusions were reached based upon differences in the relevant facts.”(584) (iii) Reference to GATT practice 385. With respect to GATT practice on this subject-matter. (i) “the date of this Agreement” 386. With respect to GATT practice concerning the phrase “the date of this Agreement”. 387. In EC — Bananas III, the Appellate Body explained the relationship between Article X and other GATT provisions. See the excerpt referenced in paragraph 373 above. This finding of the Appellate Body was also cited by the Panel on Argentina — Hides and Leather.(585) 388. In Indonesia — Autos, the Panel examined whether a series of measures taken by Indonesia to develop its domestic automobile industry was inconsistent with Article X as well as Articles I and III. After having found that the Indonesian National Car Programme violated “the provisions of Article I and/or Article III of GATT”, the Panel did not consider it necessary to examine Japan’s claims under Article X of GATT.(586) 389. In Argentina — Hides and Leather, the Panel rejected Argentina’s argument that Article X:3(a) only applies in situations when there is discrimination in treatment with respect to, for example, exports to two or more Members. See the excerpt referenced in paragraph 374 above. 390. In Indonesia — Autos, the Panel discussed the relationship between Articles III and X. See the excerpt referenced in paragraph 388 above. 391. With respect to GATT practice in the context of the relationship between Article X of GATT and other Articles.
392. In EC — Bananas III, the Appellate Body reviewed the Panel’s finding that the EC import licensing system on imports of bananas was in violation of Article X as well as Article 1.3 of the Licensing Agreement. The Appellate Body stated that “the provisions of Article X:3(a) of the GATT 1994 and Article 1.3 of the Licensing Agreement have identical coverage”: “Article X:3(a) of the GATT 1994 applies to all ‘laws, regulations, decisions and rulings of the kind described in paragraph 1’ of Article X, which includes those, inter alia, ‘pertaining to … requirements, restrictions or prohibitions on imports …’. The EC import licensing procedures are clearly regulations pertaining to requirements on imports and, therefore, are within the scope of Article X:3(a) of the GATT 1994. As we have concluded, the Licensing Agreement also applies to the EC import licensing procedures. We agree, therefore, … that both the Licensing Agreement and the relevant provisions of the GATT 1994, in particular, Article X:3(a), apply to the EC import licensing procedures. In comparing the language of Article 1.3 of the Licensing Agreement and of Article X:3(a) of the GATT 1994, we note that there are distinctions between these two articles. The former provides that ‘the rules for import licensing procedures shall be neutral in application and administered in a fair and equitable manner’. The latter provides that each Member shall ‘administer in a uniform, impartial and reasonable manner all its laws, regulations, decisions or rulings of the kind described in paragraph 1 of [Article X]’.
We attach no significance to the difference in the phrases ‘neutral in application and administered in a fair and equitable manner’ in Article 1.3 of the Licensing Agreement and ‘administer in a uniform, impartial and reasonable manner’ in Article X:3(a) of the GATT 1994. In our view, the two phrases are, for all practical purposes, interchangeable. We agree, therefore, … that the provisions of Article X:3(a) of the GATT 1994 and Article 1.3 of the Licensing Agreement have identical coverage.
Although Article X:3(a) of the GATT 1994 and Article 1.3 of the Licensing Agreement both apply, the Panel, in our view, should have applied the Licensing Agreement first, since this agreement deals specifically, and in detail, with the administration of import licensing procedures. If the Panel had done so, then there would have been no need for it to address the alleged inconsistency with Article X:3(a) of the GATT 1994.”(587) 393. In US — DRAMS, Korea, the complainant, claimed that a particular United States anti-dumping duty order was in violation of Article X of GATT as well as several Articles of the Anti-Dumping Agreement. Having already found a violation of Article 11.2 of the Anti-Dumping Agreement, the Panel exercised judicial economy with respect to Articles I and X of the GATT 1994.(588) 394. In US — Stainless Steel, Korea, the complainant, argued that the United States violated Article X:3(a) of GATT as well as Article 2.4.1 of the Anti-Dumping Agreement by performing an unnecessary “double conversion” in calculating the prices of certain local sales which are to be compared to the alleged dumping exports. After having found a violation of Article 2.4.1 in this regard, the Panel exercised judicial economy with respect to Korea’s claim under Article X:3(a).(589)
Footnotes:
477.
Appellate Body Report on Brazil — Desiccated Coconut, p. 17.
Appellate Body later noted that Article 18.3 of the
Anti-Dumping
Agreement is an identical provision to
Article 32.3 of the SCM Agreement.
Appellate Body Report on Brazil — Desiccated Coconut, fn.
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