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VI. Article IV back to top
A. Text of Article IV
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.
B. Interpretation and Application of Article IV
430.
See also Article III:10.
431.
On GATT practice concerning Article IV.
VII. Article V
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A. Text of Article V
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).
B. Text of Note Ad Article V
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.
C. Interpretation and Application of
Article V
1. General
(a) “traffic in transit”
432.
In Colombia — Ports of Entry, the dispute concerned
in part legislation authorizing restrictions on entry of certain
textiles, apparel and footwear arriving from Panama, which could only be
entered at Bogota airport or Barranquilla seaport. Such goods could be
shipped through any Colombian port if they were “subjected to
trans-shipment” and/or were goods submitted for trans-shipment that do
not have Colombia as their final destination.(622) Non-compliance
with the obligation to enter and import goods from Panama exclusively at
Bogota airport or Barranquilla seaport would subject the goods to
seizure and forfeiture.
433.
The Panel analysed claims under Articles
V:2 and V:6 regarding these restrictions. It noted that
Article V:1 and
the second sentence of Article V:2 are based on corresponding provisions
in the 1921 Barcelona Convention and Statute on Freedom of Transit; the
Panel also analysed the drafting history of Article
V.(623)
2. Article V:2
(a) “There shall be freedom of transit”
434.
Responding to the argument that the ports
of entry measure described in paragraph 432 above was outside the scope
of Article V, the Panel in Colombia — Ports
of Entry concluded that
“In light of the ordinary meaning of freedom and
the text of Article V:2 … the provision of ‘freedom of transit’
pursuant to Article V:2, first sentence requires extending unrestricted access via the most convenient routes
for the passage of goods in international transit whether or not the
goods have been trans-shipped, warehoused, break-bulked, or have changed
modes of transport. Accordingly, goods in international transit from any
Member must be allowed entry whenever destined for the territory of a
third country. Reasonably, in the Panel’s view, a Member is not
required to guarantee transport on necessarily any or all routes in its
territory, but only on the ones ‘most convenient’ for transport
through its territory.”(624)
435.
The Panel found the measure violated
Article V:2 because “the right to proceed in international transit
under the [provision for goods ‘subjected to transshipment’] is
conditioned on whether goods arriving from Panama or the CFZ are
trans-shipped, and not on whether the goods have a country other than
Colombia as their final destination. The applicable definition of ‘trans-shipment’
in Colombian law indicates that goods must be transferred between means
of transportation that will be used to remove the goods from Colombia.
As such, goods must be trans-shipped in order to proceed as traffic in
transit, in plain contravention of the definition given to the term of
art ‘traffic in transit’ in Article V:1.”(625) The Panel
found that the fact that there is no road connecting Panama and
Colombia, and the lack of practicality of goods arriving by land through
Ecuador, were not sufficient to rebut this finding of violation.(626)
(b) “No distinction shall be made”
436.
The Panel in Colombia — Ports of Entry observed:
“In spite of the absence of an explicit
reference to traffic in transit in this second sentence of Article
V:2,
the Panel believes that it is sufficiently clear from its text that the
MFN obligation in the second sentence is closely related to the
obligation to extend freedom of transit, in the first sentence. In the
Panel’s view, the second sentence complements and expands upon the
obligation to extend freedom of transit, stating additionally that
distinctions must not be made based on the nationality, or place of
origin, departure, entry, exit or destination of the vessel transporting
goods. Moreover, both obligations form part of the same textual
provision.”(627)
437.
Also:
“As noted, the first sentence in Article V:2
addresses freedom of transit for goods in international transit. As a
complement to this protection, the Panel considers that Article
V:2,
second sentence further prohibits Members from making distinctions in
the treatment of goods, based on their origin or trajectory prior to
arriving in their territory, based on their ownership, or based on the
transport or vessel of the goods. Accordingly, the Panel concludes that
Article V:2, second sentence requires that goods from all Members must
be ensured an identical level of access and equal conditions when
proceeding in international transit.”(628)
438.
Regarding the ports of entry measure
described in paragraph 432 above, the Panel found: “in light of the
fact that only goods arriving from Panama or the CFZ are subject to the
requirements under the Article 4 exemption, while goods originating in
or departing from a Member other than Panama are permitted to proceed in
international transit … Colombia makes distinctions based on the place
of origin or departure of textiles, apparel and footwear arriving from
Panama or the CFZ in violation of the second sentence of Article
V:2.”(629)
3. Article V:5
439.
In Colombia — Ports of Entry, the Panel discussed the
relative scope of paragraphs 5 and 6 of Article V:
“Article V:5 extends MFN protection to ‘traffic
in transit’ ‘[w]ith respect to all charges,
regulations and formalities in connection with
transit’ (emphasis added). In accordance with the Ad Note
to this provision, MFN protection extends to ‘like products being
transported on the same route under like conditions’ in relation to
transportation charges. Setting aside transportation charges, the
protection under Article V:5 broadly extends to all regulations and
formalities for all ‘traffic in transit’. As Article V:6 extends MFN
protection broadly to ‘treatment’ (i.e. ‘Each contracting party
shall accord to products which have been in transit through the
territory of any other contracting party treatment no less favourable
…’), an interpretation that Article V:6 governs treatment extended
to ‘traffic in transit’ would overlap with the broad protection
already ensured by Article V:5.”(630)
4. Article V:6
(a) Scope of paragraph 6
440.
The Panel in Colombia — Ports of Entry analysed the
scope of Article V:6, observing that “the central issue is whether
Article V:6 extends MFN obligations to Members whose territory is the
ultimate destination of the good in transit, or whether the obligation
only extends to Members whose territory a good passes through
intermediately in route to a final destination elsewhere.”(631)
Responding to Colombia’s argument that the ports of entry measure
described in paragraph 432 above was outside the scope of
Article V:6
because it did not apply to goods submitted for trans-shipment, the
Panel further noted that Article V:6 refers not to “traffic in transit”
but to “products which have been in transit through
the territory of any other contracting party.”(632) The Panel
further observed that “.… the ordinary meaning of products which ‘have
been in transit’ remains unclear” and would require
clarification based on the context of Article V:6.(633)
441.
Examining the context of Article V:6, the
Panel rejected Colombia’s argument that the scope of all of Article
V is informed by its title and Article V:1. Focusing on the second
sentence of Article V:6, the Panel observed:
“the second sentence permits a Member to
maintain any direct consignment requirements that existed in 1947,
whenever those direct consignment requirements were a mandatory
condition for entry of the goods at
preferential rates of duty or related to the Member’s prescribed
method of customs duty valuation. Requirements related to the direct
consignment of goods have previously been discussed in a 1981 Note by
the [GATT] Secretariat.(634) In that Note, the Secretariat
indicated that direct consignment rules for goods require that a product
must be transported directly from the place of production to its
preferential destination in order to be eligible for origin treatment.
Moreover, the Note explains (as relevant at that point in time) that a
good under direct consignment could only be transported through
territory other than that of its origin or final destination, if
justified for geographical reasons, and if the goods in question have
remained under customs surveillance and have not entered into the
commerce of the transit country.
Though not binding on Members’ rights and
obligations, the Panel considers the Secretariat’s commentary
consistent with the view that the second sentence of Article V:6 is
intended to clarify that, in complying with requirements of the first
sentence of Article V:6, a Member is nevertheless permitted to maintain
any direct consignment requirements that existed in 1947 (when
commitments among Members were negotiated) without violating the
obligation in the first sentence. In other words, Article
V:6, first
sentence requires Members to extend MFN treatment to all goods that have
been in international transit, except with respect to specific,
pre-existing direct consignment commitments.
In light of the fact that direct consignment
requirements are discussed in the context of being a prerequisite for
the eligibility for entry of goods at preferential rates of duty or that
relate to that Member’s method of valuation for duty purposes, the
Panel thus considers that both the first and second sentences of Article
V:6 apply to a Member’s territory which serve as the final destination
of the goods.
… Article V:2 extends MFN protection to goods in
transit through Member countries, while Article V:6 extends MFN
protection from discrimination based on the geographic course of goods
in transit upon reaching their final destination.”(635)
442.
The Panel concluded that “the
obligations in Article V:6, first and second sentences apply to Members
whose territory is the final destination for goods in international
transit.”(636)
(b) Obligations under paragraph 6
443.
As for the substantive obligation
concerned, the Panel in Colombia — Ports
of Entry considered:
“[T]he obligation in Article V:6 first sentence
is straightforward: all treatment extended to goods that were
transported from their place of origin to their destination without
going through the territory of other contracting party, must be extended
to goods that have been transported from their place of origin, and
passed through the territories of such other contracting countries as
‘traffic in transit’ prior to reaching their final destination. Such
‘treatment’ must strictly be ‘no less favourable’. As the
comparison is made based on a hypothetical, identical set of goods, i.e.
the passage of a good that was shipped from its origin via its actual
route through one or more Member countries prior to arrival at its final
destination is compared to the hypothetical passage of that good
directly from its place of origin to its final destination, no like
product analysis is required.”(637).
(c) “date of this Agreement”
444.
Article XXVI:1 provides that “the date
of this Agreement shall be 30 October 1947.” This date applies for the
obligations under Article V:6 of the original contracting parties to the
GATT 1947; the former dependent territories of the original contracting
parties which, after attaining independence or commercial autonomy,
succeeded to contracting party status under Article
XXVI:5(c); and
Chile. For contracting parties that acceded in 1948–1951, the date
used was 24 March 1948. For all accessions to the GATT 1947 thereafter,
the accession protocol provided that the “date of this Agreement”
for the purposes of Article V:6 was the date of the protocol of
accession or (where the acceding government had previously acceded
provisionally) the date of the protocol of provisional accession.(638)
These accession protocol provisions are incorporated in the GATT 1994 by
virtue of paragraph 1(b)(ii) of the GATT 1994 incorporation text. See
further under Article XXVI:1 below.
5. Relationship with other GATT
provisions
445.
In Colombia — Ports of Entry, the Panel addressed the
relationship between the MFN obligations in Article V:6 and
Article I:1:
“[T]he Panel would like to address Colombia’s
argument that adherence to Panama’s interpretation of MFN obligations
in Article V:6 would essentially undo the explicit limitation of MFN
protections set forth in Article I:1 of the GATT
1994. As explained
above, Article V:6 requires a Member to treat a good shipped from its
origin via its actual route through one or more Member countries prior
to arrival at its final destination, identically had that same good
hypothetically passed from its place of origin to its final destination
without traversing a particular territory in question. In contrast,
Article I:1 of the GATT 1994 broadly ensures that any advantage extended
to a product of a particular origin must be extended immediately and
unconditionally to the like product originating in or destined for the
territories of all other Members. Thus, Article I:1 ensures MFN
treatment to like products of all origins, whereas Article V:6 ensures
MFN treatment based on its transit trajectory regardless of the
existence of a like product of a different origin. In the Panel’s
view, the obligations in these two provisions are not the same and
should not be treated as redundant.”(639)
6. GATT practice
446.
See GATT
Analytical Index.
VIII. Article VI
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A. Text of Article VI
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 antidumping 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 commodity 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.
B. Text of Note Ad Article VI
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.
C. Interpretation and Application of Article VI
1. Scope and applicability of Article VI
(a) Subject matter applicability
447.
In US — 1916 Act, the EC and Japan
brought a dispute concerning the US Antidumping Act of 1916 (“1916 Act”),
a US statute providing for penalties of imprisonment, fines or the award
of treble damages against importers who had sold foreign-produced goods
in the United States at prices “substantially less” than the prices
at which the same products are sold in a relevant foreign market, if the
importation or sale was done with the intent of destroying or injuring a
US industry, of preventing establishment of a US industry, or of
restraining or monopolizing trade or commerce in such articles in the
United States. The Appellate Body confirmed the Panels’ finding that
Article VI applied to the 1916 Act. The Appellate Body observed:
“Whether Article VI of the GATT 1994 is
applicable to the 1916 Act depends on whether Article VI regulates all
possible measures Members can take in response to dumping. If Article VI
regulates only the imposition of
anti-dumping duties and neither prohibits nor regulates other measures
which Members may take to counteract dumping, then, since the 1916 Act
does not provide for anti-dumping duties, Article VI would not apply to
the 1916 Act.”(640)
448.
The Appellate Body further noted that “Article
VI:1 of the GATT 1994 must be read together with the provisions of the Anti-Dumping
Agreement”(641) 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.”(642)
449.
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”(643),
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.”(644)
“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.
… 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’.”(645)
450.
The Appellate Body commented on this finding in its later report
on US — Offset
Act (Byrd Amendment):
“The criterion we set out in US — 1916 Act
for specific
action in response to dumping is not whether the constituent elements of
dumping or of a subsidy are explicitly referred to in the measure at
issue, nor whether dumping or subsidization triggers the application of
the action, nor whether the constituent elements of dumping or of a
subsidy form part of the essential components of the measure at issue.
Our analysis in US — 1916
Act focused on the strength of the link between the measure
and the elements of dumping or a subsidy. In other words, we focused on
the degree of correlation between the scope of application of the
measure and the constituent elements of dumping or of a subsidy. … we
did not require that the language of the measure include the constituent
elements of dumping or of a subsidy. … we required that the
constituent elements of dumping (or of a subsidy) be ‘present’,
which in our view can include cases where the constituent elements of
dumping and of a subsidy are implicit in the measure. …”(646)
(b) Temporal applicability
451.
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 Article 32.3 of the
SCM Agreement, which provides that “the provisions of this Agreement
shall apply to investigations … initiated pursuant to applications
which have been made on or after the date of entry into force 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’.”(647) 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.”(648)
2. Article VI:1
(a) Definitional nature and elements of
paragraph 1
452.
In US — Zeroing (Japan), the Appellate Body
reversed a finding that “simple zeroing” in original investigations
was consistent with Article VI:1,
and declined to make a finding of inconsistency,
remarking that:
“Article 2.1 of the Anti-Dumping
Agreement and Article VI:1 of the GATT 1994 are definitional
provisions. They set out a definition of ‘dumping’ for the purposes
of the Anti-Dumping Agreement and
the GATT 1994. The definitions in Article 2.1
and Article VI:1 are no
doubt central to the interpretation of other provisions of the Anti-
Dumping Agreement, such as the obligations relating to, inter
alia, the calculation of margins of dumping, volume of dumped
imports, and levy of anti-dumping duties to counteract injurious
dumping. But, Article 2.1
and Article VI:1, read in isolation, do not
impose independent obligations. …”(649)
453.
The Appellate Body in US — Stainless Steel (Mexico) found
that the definition of dumping is consistent throughout Article
VI; that
this definition is carried into the Anti-Dumping Agreement by Article 2.1
of that agreement; that the term “margin of dumping” is also
consistent in Article VI:2 and the Anti- Dumping Agreement; that
Article VI:1 and Article 2.1
“address the pricing practice of an exporter”;
and that “dumping” and “margin of dumping” are exporter-specific
concepts.
“The term ‘margin of dumping’ is defined in Article VI:2
of the GATT 1994 as the difference between the ‘export
price’ and the ‘normal value’ (that is, ‘the domestic price’
of the like product in the exporting country) determined in accordance
with Article VI:1. Article VI:2
further clarifies that the ‘margin of
dumping’ is in respect of the dumped ‘product’. The ‘margin of
dumping’ thus measures the ‘degree’ — as used in Article 5.1 of
the Anti-Dumping Agreement — or
the ‘magnitude’ — as used in Article 3.4 of the Anti-Dumping
Agreement — of dumping. As the ‘margin of dumping’ is
only a measure of dumping, it also
has the same meaning throughout the Anti-Dumping
Agreement by virtue of Article 2.1.
The elements of the definition of ‘dumping’
contained in Article VI:1 of the GATT 1994 and
Article 2.1 of the Anti-Dumping Agreement — namely, that ‘dumping’ occurs when
a product is ‘introduced into the
commerce of another country’ at an
‘export price’ that is less than
the ‘comparable price for the like product in the exporting
country’ — suggest to us that Article
VI:1 of the GATT
1994 and Article 2.1 of the Anti-Dumping
Agreement address the pricing practice of an exporter.
Article 2.2 of the Anti-Dumping Agreement as
well as Article VI:1(b) of the GATT 1994 also point in the same
direction because they indicate that, if sales of the like product in
the domestic market of the exporting country do not permit a proper
comparison, the comparison may be made with the price at which the
product is exported to an appropriate third country. Similarly, Article
2.3 of the Anti-Dumping Agreement allows
the ‘export price’ to be constructed in cases where it appears to
the authorities that the export price is
unreliable.
The context found in various other provisions of
the Anti-Dumping Agreement confirms
that ‘dumping’ and ‘margin of dumping’ are exporter-specific
concepts. …”(650)
To sum up the above analysis, it is clear from
Articles VI:1 and VI:2 of the GATT 1994 and the various provisions of
the Anti-Dumping Agreement that: (a) ‘dumping’ and ‘margin of
dumping’ are exporter-specific concepts; ‘dumping’ is
product-related as well, in the sense that an anti-dumping duty is a
levy in respect of the product that is investigated and found to be
dumped; (b) ‘dumping’ and ‘margin of dumping’ have the same
meaning throughout the Anti-Dumping Agreement; (c) an individual margin
of dumping is to be established for each investigated exporter, and the
amount of anti-dumping duty levied in respect of an exporter shall not
exceed its margin of dumping; and (d) the purpose of an anti-dumping
duty is to counteract ‘injurious dumping’ and not ‘dumping’ per
se. It must be stressed that, under the Anti-Dumping Agreement, the
concepts of ‘dumping’, ‘injury’, and ‘margin of dumping’ are
interlinked and that, therefore, these terms should be considered and
interpreted in a coherent and consistent manner for all parts of the
Anti-Dumping Agreement.
Based on the above analysis, we disagree with the
proposition that importers ‘dump’ and can have ‘margins of dumping’.
Dumping arises from the pricing practices of exporters as both normal
values and export prices reflect their pricing strategies in home and
foreign markets. The fact that ‘dumping’ and ‘margin of dumping’
are exporter-specific concepts under the Anti-Dumping Agreement is not
altered by the fact that the export price may be the result of
negotiation between the importer and the exporter. Nor is it altered by
the fact that it is the importer that incurs the liability to pay
anti-dumping duties.”(651)
(b) Irrelevance of “intent” in determining
dumping
454.
In US — 1916 Act, the Appellate Body noted
that:
“[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’.”(652)
3. Note 2 Ad Article VI:1
455.
In US — Anti-Dumping and Countervailing Duties
(China), the Appellate Body considered issues regarding the
concurrent application of anti-dumping duties calculated under a
non-market economy (NME) methodology and of countervailing duties. The
Appellate Body characterized Note 2 Ad Article
VI:1 as an “exceptional method for the calculation of normal value”:
“Article VI:1(a) of the GATT
1994,
like Article 2.1 of the Anti-Dumping Agreement,
provides that the usual method for calculating normal value will be
based on the comparable price for the like product in the exporter’s
domestic market. Thus, in anti-dumping investigations, normal value will
typically be based on domestic sales prices and any domestic subsidy
will have no impact on the calculation of the dumping margin.
Nonetheless … [t]he second Ad Note
to Article VI:1, which provides the legal basis for the use of surrogate
values for NMEs in anti-dumping investigations … authorizes recourse
to exceptional methods for the calculation of normal value in
investigations of imports from NMEs. In case of domestic subsidization,
it is only in these exceptional situations that there is any possibility
that the concurrent application of anti-dumping and countervailing
duties on the same product could lead to ‘double remedies’.”(653)
456.
In EC — Fasteners, the EU argued
that Section 15 of the Protocol of Accession of China allows the EU to
treat China as a non-market economy (NME) for the purpose of applying
Article 9(5) of the EU’s Basic Anti-Dumping Regulation and “permits
a flexible application of the rules”. China responded that Section 15
was only a temporary and limited derogation from the rules.(654)
The Panel and the Appellate Body agreed that Section 15 derogates only
from the rules on determining normal value, not other rules such as
those on determining export prices or individual versus country-wide
margins and duties. The Appellate Body remarked concerning Note 2 Ad Article
VI:1:
“Section 15 of China’s Accession
Protocol contains a similar acknowledgment of the difficulties in
determining price comparability as the one contained in the second Ad
Note to Article VI:1 of the GATT 1994, in respect of imports
from China. The second Ad Note to
Article VI:1 recognizes that, in the cases of imports from countries
where the State has a complete or substantially complete monopoly of
trade and where all domestic prices are fixed by the State, importing
Members may determine that a comparison with domestic prices in such a
country may not be appropriate due to special difficulties in
determining price comparability. This provision allows investigating
authorities to disregard domestic prices and costs of such an NME in the
determination of normal value and to resort to prices and costs in a
market economy third country. Article 2.7 of the Anti-Dumping
Agreement states that Article 2 is without prejudice to the
second Ad Note to Article VI:1 of
the GATT 1994, and thus incorporates the second Ad Note to Article VI:1 into the Anti-Dumping
Agreement.
…
… paragraph 15(a) of China’s
Accession Protocol places the burden on the Chinese producers clearly to
show that market economy conditions prevail in the industry producing
the like product with respect to its manufacture, production, and sale.
If such a showing is made, the importing Member shall use Chinese prices
and costs in determining price comparability. Like the second Ad Note to
Article VI:1 of the GATT 1994, paragraph 15(a) of
China’s Accession Protocol permits importing Members to derogate from
a strict comparison with domestic prices or costs in China, that is, in
respect of the determination of the normal value. This is indicated by
the text of paragraph 15(a), which, in respect of the determination of
price comparability, refers to ‘Chinese prices
or costs’ or ‘a methodology that is not based on a strict comparison
with domestic prices or costs in
China’.
We do not consider that the
references in paragraph 15(a)(i) and (ii) to producers having to show
that ‘market economy conditions prevail … with regard to the
manufacture, production and sale’
of a product means that paragraph 15(a) permits any derogations also
with respect to the determination of export prices. We reach this
conclusion because, when producers are not able to show that market
economy conditions prevail (including with regard to the sale of the product), paragraph 15(a) makes it clear that all an
importing WTO Member is allowed to do as a consequence is to ‘use a
methodology that is not based on a strict comparison with domestic
prices or costs in China’.
… paragraph 15(a) contains special
rules for the determination of normal value in anti-dumping
investigations involving China. Paragraph 15(d) in turn establishes that
these special rules will expire in 2016 and sets out certain conditions
that may lead to the early termination of these special rules before
2016.
In our view, therefore, Section 15 of
China’s Accession Protocol does not authorize WTO Members to treat
China differently from other Members except for the determination of
price comparability in respect of domestic prices and costs in China,
which relates to the determination of normal value. We consider that,
while Section 15 of China’s Accession Protocol establishes special
rules regarding the domestic price aspect of price comparability, it
does not contain an open-ended exception that allows WTO Members to
treat China differently for other purposes under the Anti-Dumping
Agreement and the GATT 1994, such as the determination of
export prices or individual versus country-wide margins and duties.”(655)
457.
In a footnote to this
passage, the Appellate Body further discussed Note 2 Ad Article VI:1 and Section 15 of China’s Accession Protocol:
“The second Ad Note
to Article VI:1 of the GATT 1994 reads as follows:
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 Members 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.
We observe that the second Ad Note to Article VI:1 refers to a ‘country which has a
complete or substantially complete monopoly of its trade’ and ‘where
all domestic prices are fixed by the State’. This appears to describe
a certain type of NME, where the State monopolizes trade and sets all
domestic prices. The second Ad Note
to Article VI:1 would thus not on its face be applicable to lesser forms
of NMEs that do not fulfil both conditions, that is, the complete or
substantially complete monopoly of trade and the fixing of all prices by
the State.
Furthermore, the reference in the second Ad Note to
Article VI:1 to a strict ‘comparison with domestic
prices’ not always being ‘appropriate’ provides flexibility only
in respect of the determination of normal value. The recognition of
special difficulties in determining price comparability in the second Ad
Note to Article VI:1 does not mean that importing Members may
depart from the provisions regarding the determination of export prices
and the calculation of dumping margins and anti-dumping duties set forth
in the Anti-Dumping Agreement and in the GATT 1994. While the second Ad
Note to Article VI:1 refers to difficulties in determining
price comparability in general, the text of this provision clarifies
that these difficulties relate exclusively to the normal value side of
the comparison. This is indicated by the operative part in the third
sentence of this provision, which only allows importing Members to
depart from a ‘strict comparison with domestic prices’.”(656)
458.
See also in the Chapter on
the Anti-Dumping Agreement regarding US — Shrimp (Viet Nam), in which Viet Nam
brought a claim regarding antidumping calculations and the United States
pointed to paragraphs 254 and 255 of Vietnam’s Accession Working Party
Report. The Panel noted these provisions and found that they only affect
calculation of normal value, but do not modify any other provisions of
the Anti-Dumping Agreement.
459.
See also the GATT
Analytical Index, concerning the circumstances of
the insertion of Note 2 Ad Article
VI:1 in 1955, and provisions in the accession protocols of Poland and
Romania regarding NME antidumping procedures.
4. Article VI:2
(a) “a contracting party may levy … an
antidumping duty”: Permissible responses to dumping
460.
In US — 1916 Act, the Appellate Body
interpreted Article VI:2 in conjunction with Article 18.1
of the Anti-
Dumping Agreement, addressing the question of whether Members may choose
to impose other types of anti-dumping measures than anti-dumping duties.
The Appellate Body stated:
“[T]he verb ‘may’ in Article VI:2
of the
GATT 1994 is, in our opinion, properly understood as giving Members a
choice between imposing an anti-dumping duty or
not, as well as a choice between imposing an anti-dumping
duty equal to the dumping margin or imposing a lower duty. …”(657)
“… Article VI of the GATT 1994 and the Anti-Dumping
Agreement apply to ’specific action against dumping’.
Article VI of the GATT 1994, 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. Therefore, the 1916
Act is inconsistent with Article VI:2 and the Anti-Dumping
Agreement to the extent that it provides for ‘specific
action against dumping’ in the form of civil and criminal proceedings
and penalties.”(658)
461.
In US — Offset Act (Byrd Amendment),
the Appellate Body referred to this finding in holding that “As CDSOA
offset payments are not definitive anti-dumping duties, provisional
measures or price undertakings, we conclude, in the light of our finding
in US — 1916 Act,
that the CDSOA is not ‘in accordance with the provisions of the GATT
1994, as interpreted by’ the Anti-Dumping
Agreement.”(659)
462.
See also the GATT
Analytical Index, concerning the
permissible scope of measures against dumping or subsidization under
GATT 1947, including the preparatory work of the GATT on this issue.
(b) Methodology of investigation
(i)
No
obligation to choose a particular methodology
463.
In EC — Tube or Pipe Fittings the
Panel examined whether Article VI:2 prescribes a certain methodology for
the investigation of dumping. In the anti-dumping investigation at
issue, the EC authorities had used a period of investigation of one
year, during which the Brazilian currency was devalued by 42 per cent.
Brazil argued that the devaluation had eliminated any dumping 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 the authorities to reassess their
determination. The Appellate Body upheld the Panel’s finding and
rejected Brazil’s argument that Article VI:2
of the GATT 1994 required
investigating 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 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.”(660)
(ii) Price comparisons and
zeroing
464.
In US — Zeroing (EC), the Appellate
Body considered the application of the dumping margin calculation
methodology known as “zeroing”.(661) The Appellate Body
reversed the Panel’s finding that the application of zeroing in the
administrative reviews at issue was not inconsistent with Article 9.3 of
the Anti-Dumping Agreement or Article VI:2. The Appellate Body explained
that Article 9.3 and Article VI:2
require investigating authorities to
ensure that the total amount of anti-dumping duties collected on all
entries of a product from a given exporter or foreign producer shall not
exceed the margin of dumping established for that exporter or foreign
producer. The Appellate Body found instead that in the administrative
reviews at issue in this case, the United States acted inconsistently
with this requirement because, by disregarding the results of
comparisons for which the export price of specific transactions exceeded
the average normal value, it assessed anti-dumping duties in excess of
the foreign producers’ or exporters’ margins of dumping:
“We move now to the question of whether the
zeroing methodology applied by the USDOC in the administrative reviews
at issue is consistent with Article 9.3
of the Anti-Dumping Agreement and Article VI:2 of the GATT
1994. It
follows from our analysis that, in order to make this determination, it
is necessary to compare the antidumping duties collected on all entries
of the subject product from a given exporter or foreign producer with
that exporter’s or foreign producer’s margin of dumping for the
product as a whole. We recall that, if a margin of dumping is calculated
on the basis of multiple comparisons made at an intermediate stage, it
is only on the basis of aggregating all these intermediate results that
an investigating authority can establish margins of dumping for the
product as a whole. Therefore, the margins of dumping with which the
assessed anti-dumping duties have to be compared under Article 9.3
of
the Anti-Dumping Agreement and Article VI:2
of the GATT 1994 are foreign producers’ or exporters’
margins of dumping that reflect the results of all of the multiple
comparisons carried out at an intermediate stage of the calculation.
Furthermore, we recall that, in the administrative
reviews at issue, the USDOC assessed the anti-dumping duties according
to a methodology in which, for each individual importer, comparisons
were carried out between the export price of each individual transaction
made by the importer and a contemporaneous average normal value. The
results of these multiple comparisons were then aggregated to calculate
the anti-dumping duties owed by each individual importer. If, for a
given individual transaction, the export price exceeded the
contemporaneous average normal value, the USDOC, at the aggregation
stage, disregarded the result of this individual comparison. Because
results of this type were systematically disregarded, the methodology
applied by the USDOC in the administrative reviews at issue resulted in
amounts of assessed anti-dumping duties that exceeded the foreign
producers’ or exporters’ margins of dumping with which the
anti-dumping duties had to be compared under Article 9.3
of the Anti-Dumping
Agreement and Article VI:2 of the GATT
1994. Accordingly, the
zeroing methodology, as applied by the USDOC in the administrative
reviews at issue, is inconsistent with Article 9.3
of the Anti-Dumping
Agreement and Article VI:2 of the GATT
1994.”(662)
465.
In US — Stainless Steel (Mexico), the Appellate
Body found regarding price comparisons and zeroing, in relation to Article VI:2:
“[U]nder Article VI:2
and Article 9.3, the
margin of dumping established for an exporter in accordance with Article
2 operates as a ceiling for the
total amount of antidumping duties that can be levied on the entries of
the subject merchandise from that exporter.
We see no basis in Article VI:2
of the GATT 1994
or in Articles 2 and 9.3 of the Anti-Dumping
Agreement for disregarding the results of comparisons where
the export price exceeds the normal value when calculating the margin of
dumping for an exporter. …”(663)
“In our analysis, we have been mindful of the
standard of review provided in Article 17.6(ii) of the Anti-Dumping
Agreement. However, we consider that Article VI:2
of the GATT
1994 and Article 9.3 of the Anti-Dumping
Agreement, when interpreted in accordance with the customary
rules of interpretation of public international law as required by the
first sentence of Article 17.6(ii) of the Anti-Dumping
Agreement, do not admit of another interpretation as far as
the issue of zeroing raised in this appeal is concerned.”(664)
466.
In US — Continued Zeroing, the Appellate Body
pointed to the need for consistent treatment of price comparisons in
original investigations and in reviews:
“We fail to see a textual or contextual basis in
the GATT 1994 or the Anti-Dumping Agreement for
treating transactions that occur above normal value as ‘dumped’, for
purposes of determining the existence and magnitude of dumping in the
original investigation, and as ‘non-dumped’, for purposes of
assessing the final liability for payment of anti-dumping duties in a
periodic review. If, as a consequence of zeroing, the results of certain
comparisons are disregarded only for purposes of assessing final
liability for payment of anti-dumping duties in a periodic review, a
mismatch is created between the product considered ‘dumped’ in the
original investigation and the product for which anti-dumping duties are
collected. This is not consonant with the need for consistent treatment
of a product at the various stages of anti-dumping duty proceedings.”(665)
467.
Concerning GATT practice in respect of Article VI:2, see also
the GATT Analytical Index .
5. Article VI:3
(a) Relationship between
Paragraph 3 and the
SCM Agreement
468.
In Brazil — Desiccated Coconut, the Appellate Body
observed:
“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 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.”(666)
(b) Permissible responses to
subsidization
469.
In US — Offset Act (Byrd Amendment),
the Appellate Body found that there are only four permissible responses
to a countervailable subsidy, under the GATT and the SCM Agreement:
“In our view, Article VI:3 of the GATT 1994 and
Part V of the SCM Agreement encompass
all measures taken against
subsidization. To be in accordance with the GATT 1994, as interpreted by
the SCM Agreement, a response to
subsidization must be either in the form of definitive countervailing
duties, provisional measures or price undertakings, or in the form of
multilaterally-sanctioned countermeasures resulting from resort to the
dispute settlement system.”(667)
470.
See also paragraph 462 above.
(c) Calculation of subsidies
471.
The Appellate Body Report on US — Countervailing Measures on Certain EC
Products set out the principle that the investigating
authorities must determine the amount of subsidies before imposing
countervailing duties:
“[U]nder Article VI:3 of the GATT
1994,
investigating authorities, before imposing countervailing duties, must
ascertain the precise amount of a subsidy attributed to the imported
products under investigation. In furtherance of this obligation, Article
10 of the SCM Agreement provides
that Members must ‘ensure’ that duties levied for the purpose of
offsetting a subsidy are imposed only ‘in accordance with’ the
provisions of Article VI:3 of the GATT 1994 and the SCM
Agreement. Moreover, Article 19.4 of the SCM
Agreement, consistent with the language of Article VI:3 of
the GATT 1994, requires that ‘[n]o
countervailing duty shall be levied on any imported product
in excess of the amount of the subsidy found to
exist’. … In sum, these provisions set out the obligation
of Members to limit countervailing duties to the amount and duration of
the subsidy found to exist by the investigating authority.”(668)
472.
In US — Softwood Lumber IV, the US authorities
conducting a countervailing duty investigation of softwood lumber from
Canada had failed to conduct a “pass-through” analysis to examine
whether subsidies provided to timber harvesters were passed through in
their sales of logs to unrelated sawmills and lumber remanufacturers.
The Appellate Body upheld the Panel’s finding that Article
VI:3, and
Articles 10 and 32 of the SCM
Agreement, require a pass-through analysis
in respect of such log sales:
“Because Article VI:3 permits offsetting,
through countervailing duties, no more than the ‘subsidy determined to
have been granted … directly or indirectly, on the manufacture [or]
production … of such product’,
it follows that Members must not impose duties to offset an amount of
the input subsidy that has not passed
through to the countervailed processed products. It is only the amount
by which an indirect subsidy granted to producers of inputs flows
through to the processed product, together with the amount of subsidy
bestowed directly on producers of the processed product, that may be
offset through the imposition of countervailing duties. …”(669)
“… where countervailing duties are used to
offset subsidies granted to producers of input products, while the
duties are to be imposed on processed products,
and where input producers and downstream processors operate at arm’s
length, the investigating authority must establish that the
benefit conferred by a financial contribution directly on input
producers is passed through, at least in part, to producers of the
processed product subject to the investigation.”(670)
6. Note 1 Ad Article VI:2–3
473.
In US — Shrimp (Thailand)/US — Customs
Bond Directive, Thailand and India each argued that an
enhanced Customs bonding requirement applied by the US, to ensure
collection of anti-dumping and countervailing duties imposed on shrimp,
was “specific action against dumping” inconsistent with Article 18.1
of the Anti-Dumping Agreement. The Panel found that the measure was
inconsistent with Article 18.1
because it was specific to dumping, it
acted “against” dumping, and it had not been taken in accordance
with the provisions of the GATT 1994 as interpreted by the Anti-Dumping
Agreement. On appeal, the main issue was whether the application of the
enhanced bond requirement to subject shrimp was in accordance with the
GATT 1994 — specifically, whether it was consistent with Note 1 Ad Article VI:2–3 to apply this bonding requirement not just
during an anti-dumping investigation, but afterward.
474.
The Appellate Body found
that the Ad Note authorizes taking
security against the risk of nonpayment of duties, and that the “final
determination” referred to includes the duty assessment process in the
US retrospective duty assessment system:
“The obligation that is intended to be secured
under the Ad Note is the ‘payment
of anti-dumping or countervailing duty’. In other words, the Ad Note recognizes the right of WTO Members to take reasonable
security against the risk of non-payment of an anti-dumping or
countervailing duty that is lawfully established. This risk might exist
during the period of an original investigation, and a provisional
measure in the form of a security may be taken in accordance with
Article 7 of the Anti-Dumping Agreement to
protect against this risk. In a retrospective duty assessment system,
this risk might also exist after the anti-dumping duty order has been
imposed, arising from the difference between the amount collected at the
time of import entry and the final liability assessed in an assessment
review. The Ad Note also suggests
that the reasonable security envisaged by it fulfils the same function
as the securities taken ‘in many other cases in customs administration’.
As the United States points out, in most other cases in customs
administration, security is required upon entry of merchandise when
there is some uncertainty about the actual amount of liability that may
be lawfully owed by the importer. Such a security is intended to provide
a protection against the non-payment risk that might arise from the
differences between the amount collected at the time of importation and
the liability that may be finally determined. Accordingly, we are of the
view that the term ‘final determination’ in the Ad Note includes
the
determination that is made to assess the final liability for payment of
anti-dumping duties under Article 9.3.1 in a retrospective duty
assessment system. The ‘facts’ are those that are necessary to be
determined in order to assess properly the amount of final liability of
the duty in accordance with the Anti-Dumping
Agreement.”(671)
475.
The Appellate Body then
found that in the US retrospective system, after an anti-dumping order
has been imposed, the “existence” of dumping is no longer “suspected”,
but that the Ad Note authorizes
taking security until the magnitude of liability for antidumping duties
is determined:
“[T]he term ‘dumping’ in the Ad Note covers both the existence
of
dumping and the amount or margin of
dumping . … [in the US retrospective system] dumping remains “suspected”
within the meaning of the Ad Note as
regards its magnitude for the import
entries occurring after the anti-dumping duty order is imposed. …
For these reasons, we find that the Ad Note authorizes the taking of a reasonable security after the
imposition of an anti-dumping duty order, pending the determination of
the final liability for payment of the anti-dumping duty. …”(672)
476.
The Appellate Body went on
to find that the taking of security did not constitute an impermissible
fourth category of response to dumping:
“Generally speaking, a security is accessory or
ancillary to the principal obligation that it guarantees. A security
that is taken to guarantee the obligation to pay anti-dumping or
countervailing duties is intrinsically linked to that obligation. Thus,
taking security for the full and final payment of duties should be
viewed as a component of the imposition and collection of anti-dumping
or countervailing duties. Therefore, a reasonable security taken in
accordance with the Ad Note for
potential additional antidumping duty liability does not necessarily, in
and of itself, constitute a fourth autonomous category of response to
dumping.”(673)
477.
Finally, the Appellate Body
examined whether the application of the enhanced bond requirement was a
“reasonable” security within the meaning of the Ad Note. It outlined the following general considerations:
“In our view, a two-step approach is necessary
to assess the ‘reasonableness’ of a security such as the EBR. The
first step involves a determination of the ‘likelihood’ of an
increase in the margin of dumping of an exporter as a result of which
there will be a significant
additional liability to be secured. This determination should
have a rational basis and be supported by sufficient evidence. The
second step involves a determination of the ‘likelihood of default’
on the part of importers in respect of whom such additional liability is
likely to arise…. Taking security from an importer who may have no
additional liability to pay or from an importer who presents no risk of
default, as revealed by available and pertinent evidence, would
obviously be unreasonable. Finally, security requirements that impose
excessive additional costs on the importers may convert the security
into an impermissible specific action against dumping.”(674)
7. Article VI:4
478.
In EC — Tube or Pipe Fittings,
Brazil argued that an EC countervailing duty determination violated
Article VI:4. An exporter had obtained a refund of indirect taxes borne
in Brazil by inputs used to produce the exported product, but the EC
denied an allowance for the refund because the exporter had not
demonstrated that the refund was for internal taxes. The Panel examined
the issue in relation to Article VI:4 and Article 2.4.2 of the
Anti-Dumping Agreement and concluded that the facts in the record showed
that the export prices used had already netted out the indirect taxes,
and the record did not otherwise support Brazil’s claim.(675)
479.
See also items (g) and (h)
of the Illustrative List of Export Subsidies in Annex I of the SCM
Agreement, as well as Annex II of the SCM Agreement (Guidelines on the
Consumption of Inputs in the Production Process). Regarding GATT
practice under
Article VI:4.
8. Article VI:5
480.
In US — Anti-Dumping and Countervailing Duties
(China), the Panel and Appellate Body considered a claim that
concurrent application of anti-dumping duties calculated under a
non-market economy (NME) methodology and of countervailing duties
resulted in a double remedy for the subsidies concerned.
“As the Panel explained, the dumping margin
calculated under an NME methodology ‘reflects not only price
discrimination by the investigated producer between the domestic and
export markets (“dumping”)’, but also ‘economic distortions that
affect the producer’s costs of production’, including specific
subsidies to the investigated producer of the relevant product in
respect of that product. An anti-dumping duty calculated based on an NME
methodology may, therefore, ‘remedy’ or ‘offset’ a domestic
subsidy, to the extent that such subsidy has contributed to a lowering
of the export price.(676) Put differently, the subsidization is
‘counted’ within the overall dumping margin. When a countervailing
duty is levied against the same imports, the same domestic subsidy is
also ‘counted’ in the calculation of the rate of subsidization and,
therefore, the resulting countervailing duty offsets the same subsidy a
second time. Accordingly, the concurrent imposition of an anti-dumping
duty calculated based on an NME methodology, and a countervailing duty
may result in a subsidy being offset more than once, that is, in a
double remedy. Double remedies may also arise in the context of domestic
subsidies granted within market economies when anti-dumping and
countervailing duties are concurrently imposed on the same products and
an unsubsidized, constructed, or third country normal value is used in
the anti-dumping investigation. ”(677)
481.
The Panel had interpreted
the reference to “export subsidization” in Article VI:5 as support
for its findings that SCM Articles 19.3 and
19.4 do not address the
issue of double remedies. The Appellate Body reversed the Panel, holding
that:
“Article VI:5 prohibits the concurrent
application of antidumping and countervailing duties to compensate for
the same situation of dumping or
export subsidization. In our view, the term ‘same situation’ is
central to an understanding of the rationale underpinning the
prohibition contained in Article VI:5, which in turn sheds light on the
reason why, in the case of domestic subsidies, an express prohibition is
absent.
We recall that, in principle, an export subsidy
will result in a pro rata reduction in the export price of a product,
but will not affect the price of domestic sales of that product. That
is, the subsidy will lead to increased price discrimination and a higher
margin of dumping. In such circumstances, the situation of subsidization
and the situation of dumping are the ‘same situation’, and the
application of concurrent duties would amount to the application of ‘double
remedies’ to compensate for, or offset, that situation. By comparison,
domestic subsidies will, in principle, affect the prices at which a
producer sells its goods in the domestic market and in export markets in
the same way and to the same extent. Since any lowering of prices
attributable to the subsidy will be reflected on both sides of the
dumping margin calculation, the overall dumping margin will not be
affected by the subsidization. In such circumstances, the concurrent
application of duties would not compensate for the same situation,
because no part of the dumping margin would be attributable to the
subsidization. Only the countervailing duty would offset such
subsidization.
To the extent that these assumptions hold true,
then the presence, in Article VI, of an express prohibition on the
concurrent application of duties to counteract the ‘same situation’
of dumping or export subsidization,
along with the absence of an express prohibition in connection with
situations of domestic subsidization,
appears logical — at least when normal value is calculated on the
basis of domestic sales prices. We note that Article VI:1(a) of the GATT
1994, like Article 2.1 of the Anti-Dumping
Agreement, provides that the usual method for calculating
normal value will be based on the comparable price for the like product
in the exporter’s domestic market. Thus, in anti-dumping
investigations, normal value will typically be based on domestic sales
prices and any domestic subsidy will have no impact on the calculation
of the dumping margin. Nonetheless, Article
VI:1(b), like Article 2.2 of
the Anti-Dumping Agreement, sets out
exceptional methods for the calculation of normal value, which are not
based on actual prices in the exporter’s domestic market.
The second Ad Note to Article VI:1,
which provides the legal basis for the use of surrogate values for NMEs
in anti-dumping investigations, also authorizes recourse to exceptional
methods for the calculation of normal value in investigations of imports
from NMEs. In case of domestic subsidization, it is only in these
exceptional situations that there is any possibility that the concurrent
application of anti-dumping and countervailing duties on the same
product could lead to ‘double remedies’.”(678)
9. Article VI:6
(a) Article VI:6(a): material injury
482.
In US — 1916 Anti-Dumping Act, the Panel agreed
with Japan that the measure at issue (described in paragraph 447
above)
violated Article VI:6(a), because this law contained no requirement
similar to “material injury” within the meaning of Article
VI. The
Panel observed:
“We note that Article VI:1 of the GATT 1994
requires the existence of material injury or a threat thereof to an
established industry or material retardation of the establishment of a
domestic industry. The 1916 Act does not refer to material injury or
threat of material injury or material retardation of the establishment
of a domestic industry but to the intent of,
inter alia, ‘destroying or
injuring an industry in the United States, or of preventing the
establishment of an industry in the United States’… .
For these reasons, we find that the 1916 Act, to
the extent that it provides for the identification of an ‘intent’ on
the part of the defendant rather than for the actual injury requirements
of Article VI, is not compatible with Article VI:1 of the GATT
1994. We
note that Article VI:6(a) does not, in substance, contain additional
obligations with respect to the existence of material injury, threat of
injury or material retardation of the establishment of a domestic
industry. However, from the terms of Article
VI:6(a), it seems to us
that the objective of that paragraph is to require a determination by the authorities of the importing Member that dumping is
such as to cause material injury, threat thereof or material
retardation. Having regard to the evidence before us, we do not consider
that Japan has established a prima facie case
of violation of Article VI:6(a) based on the fact that the 1916 Act
would not provide for a determination by
the US authorities.”(679)
483.
In Mexico — Olive Oil, the EC challenged
countervailing duties imposed on imports of olive oil. At the time of
the application for these duties, Fortuny, the company submitting the
application, did not produce olive oil, and it was not a producer of
olive oil during the period of investigation; Mexico imposed these
duties based on material retardation of the establishment of a domestic
industry. The EC claimed that the duties violated Article 16.1 of the
SCM Agreement and consequently Article VI:6 of the GATT. The Panel
opined:
“By its own terms, Article 16.1 provides a
definition of the term ‘domestic industry’ ‘for the purposes of
this Agreement’, i.e., the definition applies to the entire SCM
Agreement. As such, this term must be given a consistent
meaning throughout the SCM Agreement including
for the purposes of the term ‘domestic industry’ as used in Article
11.4 … The definition in Article
16.1, therefore, also informs the
meaning of the term ‘domestic industry’ as used in Article VI:6(a)
of the GATT 1994, and an enterprise
or group of enterprises that qualifies as a ‘domestic industry’
within the meaning of Article 16.1 of the SCM
Agreement will also constitute the domestic industry for the
purposes of Article VI:6(a) of the GATT 1994.”(680)
484.
The Panel found that “Article
16.1 does not require that an enterprise or group of enterprises seeking
countervailing remedies must actually produce output around the date of
filing of an application or during the subsidy POI to be considered a
‘producer’ or ‘producers’ and therefore part of or the entire
‘domestic industry’ within the meaning of that Article”,(681)
and that the Mexican authorities had reached a reasoned and adequate
determination that Fortuny was in fact a producer of a domestic like
product. (682) The Panel consequently rejected the EC claim under
Article VI:6(a).(683)
485.
Regarding GATT practice
under Article VI:6.
(b) Article VI:6(b) and
(c): Anti-dumping and
countervailing duties based on material injury to the industry in a
third country
486.
See the GATT
Analytical Index, on the background to the
addition of these provisions to the GATT in 1955, and on practice under
the GATT 1947. See also Article 14 of the Anti-Dumping Agreement on
anti-dumping action on behalf of a third country.
487.
The provisions of Article VI:6(b) or (c)
have never been invoked since they entered into effect in 1957 and no
waiver of Article VI:6(a) has ever been requested.
10. Relationship with other GATT provisions
(a) Article I
488.
The Panel in 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.(684) The Appellate
Body in Brazil — Desiccated
Coconut confirmed this finding.(685)
(b) Article II
489.
The Panel in 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.(686) The Appellate
Body in Brazil — Desiccated
Coconut confirmed this finding.(687)
(c) Article III
490.
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 400 above.
(d) Article XI
491.
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 641 below.
11. Relationship with other WTO
Agreements
(a) Anti-Dumping Agreement
492.
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 in 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.”(688)
493.
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 in 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”:
“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.
…
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.(689) 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.”(690)
494.
Also, the Panel in 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.”(691)
(b) SCM Agreement
495.
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.” (692) In phrasing this issue, the Panel in 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.”(693)
496.
The Appellate Body in Brazil — Desiccated Coconut confirmed
the statement by the Panel that the SCM Agreement did not supersede
Article VI of GATT 1994(694), 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.”(695)
497.
The Appellate Body in 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.”(696) With respect to the Appellate Body’s
other findings on this issue, see the excerpts referenced in the Chapter
on the SCM Agreement.
IX. Article VII
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A. Text of Article VII
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.
B. Text of Note Ad Article VII
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.
C. Interpretation and Application of Article VII
498.
See the Chapter on the Agreement on Implementation of Article
VII of the GATT 1994 (Customs Valuation Agreement). On GATT practice
concerning Article VII.
X. Article VIII
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A. Text of Article VIII
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.
B. Text of Note ad Article VIII
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.
C. Interpretation and Application of Article VIII
1.
Article
VIII:1(a)
499.
In Argentina — Textiles
and Apparel, the Panel addressed a 3 per cent ad
valorem “statistical tax” on imports, described by
Argentina as designed to cover the cost of providing trade statistics.
The Panel found that this statistical tax was inconsistent with Article
VIII:1(a). (Argentina did not appeal this finding, but claimed that the
Panel had failed to take properly into account Argentina’s IMF
obligations.) The Panel emphasized that an ad
valorem tax, by 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.(697) 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”’.(698) According to the panel report, the
term ‘services rendered’ means ‘services rendered to the
individual importer in question’.(699) 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’(700).”(701)
500.
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.(702)
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.”(703)
501.
The Panel in US — Certain
EC Products examined increased bonding requirements imposed
by the United States on imports from the European Communities on 3 March
1999, in order to secure the collection of additional import duties that
were authorized by the DSB on a later date. The Panel considered that
Article VIII:1 could not provide a justification for the costs relating
to the bonding requirements:
“The meaning of Article VIII was examined in the adopted Panel
Report on United States — Customs
Users Fee(704) 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”.’(705) The term ‘services
rendered’ means ‘services rendered to the individual importer in
question.’(706)
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.”(707)
502.
The Panel in China — Raw
Materials examined an Article VIII:1(a) claim in relation to
China’s auctioning of export quotas for certain minerals, under which
enterprises seeking to export must pay a bid-winning price, equal to the
bid price multiplied by the bid quantity, for the right to export under
the quota. The Panel first considered the meaning of Article VIII:1(a)
and concluded:
“Article VIII:1(a) applies to fees and charges imposed ‘on or in
connection with importation or exportation’ and requires that such
fees and charges are solely applied in exchange for a ‘service
rendered’. As such fees, charges, formalities or requirements that are
typically imposed when providing customs-related documentation,
certification and inspection, and statistical matters are covered.”(708)
503.
Regarding the charge at issue, the Panel concluded that “the
bid-winning price collected by China in connection with quota allocation
does not constitute a ‘fee or charge of whatever character … imposed
… in connection with … exportation’ within the meaning of Article
VIII:1(a). In particular, the Panel finds that the collection of the
bid-winning prices does not amount to the imposition of a fee or charge
on or in connection with exportation.(709) Finally, we observe
that a finding otherwise would mean that all quota allocation through
bidding or auctioning would be prohibited.”(710) The Panel
observed:
“[T]he bid-winning price is initially a proposal submitted by an
enterprise. The actual price is determined and assigned to the applicant
enterprise at a point well before the exporter enters into a binding
commitment to export the good subject to a quota… . In the Panel’s
view, this type of arrangement does not amount to the imposition of a
fee or charge on or in connection with exportation.”(711)
“ … the bid-winning fee is a price offered in expectation of a
future return… . a bid-winning price approach generally allows a more
efficient allocation of quotas than would be possible through quota
allocation based on request, or based on historical quota allocation
proportions, or on some arbitrary basis… . The bidding process
described above determines the enterprises that will be permitted to
export, but it does not affect the price ultimately received by the
seller for the goods. Rather it is the total volume permitted for export
that generally will determine the export price in the market.
Finally, it is clear that the assessed bid-winning price is not in
any way related to the approximate cost of a service rendered… . By
their very nature, prices submitted through bidding are variable, which
would always violate the requirement in Article VIII:1(a) that fees must
approximate the cost of a particular service rendered — in this case,
the allocation of a quota.”(712)
504.
In recent years, Working Party Reports on the accession of new
WTO Members have included commitments regarding conformity with Article
VIII:1(a) in respect of the right to trade. For instance, the Working
Party Report on the Accession of the Kyrgyz Republic included the
following paragraph:
“The representative of the Kyrgyz Republic confirmed that from the
date of accession, the Kyrgyz Republic would ensure that all of its laws
and regulations relating to the right to trade in goods, and all fees,
charges or taxes levied on such rights would be in full conformity with
its WTO obligations, including Articles
VIII:1(a), XI:1 and III:2 and
4
of the GATT 1994 and that it would also implement such laws and
regulations in full conformity with these obligations. The Working Party
took note of these commitments.”(713)
2.
GATT
practice
505.
See GATT Analytical Index.
3.
Relationship
with other GATT provisions
(a) Article II:1(b) and recording of changes in Schedules pursuant to
Understanding on Article II:1(b)
506.
In Argentina — Textiles
and Apparel, Argentina argued that the 3 per cent ad
valorem statistical tax was included in its Schedule LXIV,
and was therefore not in violation of GATT rules. The Panel cited
paragraph 1 of the Understanding on the Interpretation of Article II:1(b), providing that recording in a Schedule “does not change the
legal character of ‘other duties or charges’”, paragraph 5
providing that such recording “is without prejudice to their
consistency with rights and obligations under GATT 1994 other than those
affected by paragraph 4. All Members retain the right to challenge, at
any time, the consistency of any ‘other duty or charge’ with such
obligations”, and the provisions in paragraph 6 ensuring the right to
dispute settlement. The panel held as follows:
“The provisions of the WTO Understanding on the Interpretation of
Article II:1(b) of GATT 1994, dealing with ‘other duties and charges’,
make clear that including a charge in a schedule of concessions in no
way immunizes that charge from challenge as a violation of an applicable
GATT rule… . This provision is consistent with GATT and WTO
jurisprudence dealing with conflicts between non-tariff provisions
included in the Member’s Schedules and general GATT and WTO rules.
Therefore, we consider that the fact that Argentina’s statistical
tax is included in its Schedule is not a defence to its inconsistency
with the provisions of Article VIII of GATT.”(714)
4.
Relationship with other WTO Agreements
507.
In Argentina — Textiles
and Apparel, the Appellate Body responded to an argument by
Argentina that the Panel’s interpretation of Article VIII should have
taken into account a Memorandum of Understanding between Argentina and
the IMF providing for fiscal measures to be adopted including “…increases
in import duties, including a temporary 3 per cent surcharge on imports”.
The Appellate Body ruled that:
“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.”(715)
508.
A communication from the World Customs Organization discussed
the obligations in the WCO instruments and their relation to Article
VIII.(716)
XI. Article IX
back to top
A. Text of Article IX
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.
B. Interpretation and Application of Article IX
509.
See GATT Analytical Index.
XII. Article X
back to top
A. Text of Article X
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 there for, 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.
B. Interpretation and Application of Article X
1. General
510.
In EC — Poultry,
the Appellate Body described 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… .
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.”(717)
511.
The Panel in EC — Selected
Customs Matters observed as follows:
“The title as well as the content of the various provisions of
Article X of the GATT 1994 indicate that that Article, at least in part,
is aimed at ensuring that due process is accorded to traders when they
import or export.”
2.
Article
X:1
(a) “Laws, regulations, judicial decisions and administrative
rulings”
512.
In Dominican Republic — Import
and Sale of Cigarettes, the Panel examined a claim regarding
failure to publish average-price surveys of cigarettes conducted by the
Dominican Republic Central Bank, used to determine the retail selling
price for cigarettes and the tax base for the application of the
Selective Consumption Tax on cigarettes. In a finding not appealed, the
Panel determined that these surveys were subject to Article
X:1:
“[T]he establishment of the tax base for cigarettes, and not the
surveys in themselves, may be considered as an administrative ruling of
general application. Once the Dominican Republic authorities had
determined the tax base for cigarettes at a specific amount, that ruling
would be applicable for the importation of all cigarettes within the
description, until a new tax base had been set. The Central Bank
average-price surveys would be a part of the administrative ruling.
Indeed, an essential part, since under the Dominican Republic
legislation, the tax base for cigarettes would be obtained through the
surveys.
In order to become acquainted with the process of establishing the
tax base for the application of the Selective Consumption Tax on
cigarettes, governments and traders would be entitled to obtain
information on the results of the survey, as well as on the methodology
used in order to conduct the survey.”(718)
513.
In EC — IT
Products, the Panel examined a claim under Article X:1
regarding a CNEN (an explanatory note to the EU’s Customs
Nomenclature).
“Substantively, and when read as a whole within the context of
Article X:1, the phrase ‘laws, regulations, judicial decisions and
administrative rulings’ reflects an intention on the part of the
drafters to include a wide range of measures that have the potential to
affect trade and traders.(719) A narrow interpretation of the
terms ‘laws, regulations, judicial decisions and administrative
rulings’ would not be consistent with this intention, and would also
undermine the due process objectives of Article X …
Based on the foregoing, we observe that the ordinary meanings of the
terms ‘laws, regulations, judicial decisions and administrative
rulings’ indicates that the instruments covered by Article X:1 range
from imperative rules of conduct to the exercise of influence or an
authoritative pronouncement by certain authoritative bodies.
Accordingly, we consider that the coverage of Article X:1 extends to
instruments with a degree of authoritativeness issued by certain
legislative, administrative or judicial bodies. This does not mean,
however, that they have to be ‘binding’ under domestic law. Hence,
the fact that CNENs are not legally binding under EC law does not
preclude them from being contemplated by the terms ‘laws, regulations,
judicial decisions [or] administrative rulings’ under Article
X:1.
However, whether a particular measure has a degree of authoritativeness
such that it would be properly characterized as ‘laws, regulations,
administrative rulings or judicial decisions’ requires a case-by-case
assessment of the particular factual features of the measure at issue.”(720)
“… it is clear that CNENs are important in enabling the European
Communities to maintain a uniform application of the Common Customs
Tariff within its territory. Although the European Communities has noted
that CNENs do not ‘preclude the exercise of discretion’ by member
State customs authorities, it is apparent that there is a clear
expectation that such discretion will be exercised in a certain fashion
and that infringement proceedings may apply in instances where such
discretion is not so exercised. The Panel also finds it relevant that
CNENs are issued by the Commission, a body with undisputed authority
within the EC for ensuring the uniform application of the Customs Code
Tariff, and with the power to challenge interpretations not consistent
with its own… . Moreover, the Panel notes that BTIs will cease to be
valid where they are no longer compatible ‘at Community level’ with
‘the explanatory notes [ … ] adopted for the purposes of
interpreting the rules’. In these circumstances, the Panel considers
that CNENs have a degree of authoritativeness such that they may be
properly characterized as a ‘law, regulation, administrative ruling or
judicial decision’ as those terms are used in Article
X:1. The fact
that CNENs are not ‘legally binding’ under EC law does not diminish
this conclusion.
In our view, the transparency and due process purpose of
Article X:1
would be defeated if CNENs, which evidently play a key role in EC
classification practice, were not be covered by the obligations in
Article X:1… .”(721)
514.
In Thailand — Cigarettes
(Philippines), the Panel examined claims under Article X:1
regarding publication of rules affecting the effective tax rate on
cigarettes. During the panel proceedings the Thai Excise Department
explained its methodology for calculating the minimum retail sales
prices (MRSPs) for imported and domestic cigarettes; the Panel found
that this methodology applied “prospectively and generally” to all
potential sales of cigarettes, and therefore fell within the scope of
Article X:1.(722) The Panel noted:
“[W]e are not saying that every statement that a party makes in a
panel proceeding falls within the scope of Article
X:1. The factual
circumstances of this case, particularly the absence of written rules
and Thailand’s detailed explanation of such rules for the first time
in this proceeding, confirm that what Thailand itself alleges to be its
general methodology for determining the MRSPs must be considered as a
rule of general application within the meaning of Article
X:1.”(723)
515.
In Thailand — Cigarettes
(Philippines), the Panel rejected a claim under Article X:1
that Thailand was required to publish the methodology and data for
determining “ex factory prices”, an element for determining the MRSP
for cigarettes. The Panel found that:
“[t]he ex factory price, as a general concept … is the result of
an internal decision-making process, conducted on a firm-by-firm basis.
Therefore, unless it can be shown, by supporting evidence, that a
government is somehow involved in determining the ex factory price of
certain goods, the ex factory price cannot be characterized as an
administrative ruling of general application under Article X:1 as it is
a business decision made by an individual company.(724)
… While [the Thai Tobacco Monopoly, TTM] is a state enterprise,
that does not in itself constitute a proof that the Thai government
determines ex factory prices of TTM’s cigarettes. Neither are we
presented with evidence suggesting that this is the case or TTM is bound
by guidelines or rules imposed by the Thai administration in making its
ex factory price determination… .”(725)
516.
In Thailand — Cigarettes
(Philippines), the Panel considered a claim regarding failure
to publish the procedures for release of guarantees deposited by
importers for excise and other internal taxes. Aside from the laws
concerning a right to the release of these guarantees, the Philippines
asserted, but did not provide evidence, that separate unpublished
procedures for obtaining release of guarantees exist and were not
published. The Panel concluded that “the Philippines did not discharge
its burden of proving the existence of the specific procedural rules
generally applied to the release of guarantees within the meaning of
Article X:1”,(726) noting that “as the Philippines itself
acknowledges, if its own claim pertains to the absence of the specific procedural rules generally applicable to the
release of guarantees for the internal taxes, such a claim should have
been brought more properly under Article X:3(a).”(727)
517.
In China — Raw
Materials, the Panel examined a claim under Article X:1 that
China did not publish the total amount of the export quota for zinc; in
at least one year, there had been an export prohibition on zinc. The
Panel found that China’s failure to set a quota amount was a “law,
regulation, judicial decision or administrative ruling”.(728)
(b) “of general application”
518.
In US — Underwear,
the Appellate Body upheld the Panel’s interpretation of the term “of
general application”:(729)
“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.”(730)
519.
In Japan — Film,
the Panel, referring to the finding in US — Underwear immediately above,
interpreted the term “of general application” as follows:
“[I]nasmuch 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.”(731)
520.
In EC — Poultry,
the Appellate Body upheld the Panel’s finding that import licensing of
particular shipments by the European Communities 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.”(732)
“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. [Referring to the finding in US — Underwear
cited
immediately above] … 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.”(733)
521.
In US — Hot-Rolled
Steel, in examining a claim of violation of Article
X:3(a),
the Panel ruled that the anti-dumping measure at issue did not
constitute a measure “of general application” within the meaning of Article X:1:
“[W]e 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.”(734)
522.
In EC — Selected
Customs Matters, the Panel found that:
“‘[L]aws, regulations, judicial decisions and administrative
rulings of general application’
described in Article X:1 of the GATT 1994 are laws, regulations,
judicial decisions and administrative rulings that apply to a range of
situations or cases, rather than being limited in their scope of
application”.(735)
523.
In EC — IT
Products, examining the measure in paragraph 513
above, the
Panel found that “the CNEN amendments at issue in this dispute are of
‘general application’ within the meaning of Article X:1
of the GATT 1994. This is so because the application of a CNEN is not limited to a
single import or a single importer. Rather, the objective of the CNEN is
to ensure the uniform application of the Common Customs Tariff to all
products falling under a specific CN code upon importation
into the European Communities.”(736)
524.
In Thailand — Cigarettes
(Philippines), the Panel examined an Article X:1
claim in
relation to the data used to calculate the MRSPs, a key factor
determining the effective tax rate on cigarettes. The Panel found:
“[D]ata necessary for determining an MRSP, such as the c.i.f.
price, customs duties, and internal taxes and marketing costs, are
essentially company-specific, rather than generally applicable to all
companies. We also note that the Philippines acknowledges that these
four specific items are business-derived confidential data, which are by
definition company-specific. As such, the data used for such components
of the MRSP cannot be considered as rules generally and prospectively
applicable.”(737)
525.
In China — Raw
Materials, the Panel found that China’s Export Quota
Administration Measures, including their allocation rules, fell within
the scope of Article X:1.(738) The Panel also found that the
measure discussed at paragraph 517 (failure to set an export quota
amount for zinc) was “of general application” because it affects any
enterprise wishing to export zinc quota.(739)
(c) “made effective”
526.
In EC — IT
Products, the Panel examined the meaning of “made effective”
and whether and when the CNEN amendments at issue were “made effective”:
“[W]e are of the view that the term ‘made effective’ under
Article X:1 of the GATT 1994 also covers measures that were brought into
effect, or made operative, in practice and is not limited to measures
formally promulgated or that have formally ‘entered into force’. We
see no basis to adopt the more restrictive view proposed by the European
Communities, which considers that ‘made effective. under Article X:1
refers to measures formally adopted under its domestic system, i.e.,
adoption by the Commission. This being so, in circumstances where the
relevant measure has been ‘made effective’, the requirement to
publish promptly will arise regardless of its formal adoption or whether
it remains a ‘draft’ measure under the Member’s municipal legal
order.”(740)
527.
The Panel then found that “in the particular circumstances of
this case, the cumulative effect of the votes in the Customs Code
Committee, the relevant BTIs [classification rulings] and the Second
Statement by the Chair [that ‘as soon as an opinion has been voted,
Member States can issue BTIs for the products concerned’] are such
that the measures at issue were ‘made effective’ within the meaning
of Article X:1”(741) and that they were made effective at the
latest, at the time of the October 2007 statement of the Chair.(742)
(743)
528.
In China — Raw
Materials, the Panel found that China’s failure to set a
quota for zinc had been “made effective” as there were no exports of
zinc.(744)
(d) “pertaining to the classification … of products for customs
purposes, or to requirements … on imports or exports or on the
transfer of payments therefor, or affecting their sale, distribution …
or other use”
529.
In EC — IT
Products, the Panel determined that the CNEN in paragraph 513
above pertained to the classification of customs products.(745)
(e) “shall be published “
530.
In Dominican Republic — Import
and Sale of Cigarettes, examining the claim in paragraph 512
above, the Panel found:
“[U]nder its Article X:1
obligations, the Dominican Republic should
have either published the information related to the Central Bank
average-price surveys of cigarettes or, alternatively, publish[ed] its
decision to not conduct these surveys and to resort to an alternative
method, in such a manner as to enable governments and traders to become
acquainted with the method it would use in order to determine the tax
base for the Selective Consumption Tax on cigarettes.”(746)
531.
In EC — IT
Products, the Panel found generally regarding publication:
“Article X:1 addresses the due process notion of notice by
requiring publication that is prompt and that ensures those who need to
be aware of certain laws, regulations, judicial decisions and
administrative rulings of general application can become acquainted with
them.”(747)
532.
In Thailand — Cigarettes
(Philippines), the Panel considered a claim regarding failure
to publish the methodology for determining MRSPs (an element of the tax
rate for cigarettes), discussed at paragraph 514 above. Thailand
admitted that it did not publish its methodology as such. The Panel
rejected Thailand’s argument that listing eight elements of the MRSP
in each published MRSP notice constituted compliance with Article X:1,
finding:
“The listing of the components consisting of the MRSP would not
enable importers to become acquainted with the detailed rules pertaining
to the general methodology within the meaning of Article X:1. We are of
the view that for importers to become acquainted with the methodology
for determining the MRSP, it is important for them to become familiar
with, for instance, how the information they provide is processed. Also,
they need to be informed on how Thai Excise determines the marketing
costs where the information provided by importers is not accepted.”(748)
(f) “promptly”
533.
Regarding promptness of publication, the Panel in EC — IT Products found:
“the meaning of prompt is not an absolute concept, i.e. a pre-set
period of time applicable in all cases. Rather, an assessment of whether
a measure has been published ‘promptly’, that is ‘quickly’ and
‘without undue delay’, necessarily requires a case-by-case
assessment. Accordingly, we will look at the time span between the
moment the CNEN amendments were ‘made effective’ and the time they
were ‘published’, and assess whether this is prompt in light of the
facts of the case.”(749)
534.
The Panel then found that in the circumstances of the case and
in light of the nature of the measures at issue, publication in the EU
Official Journal eight months later than the measure was made effective
was not “prompt”, but that the measures were posted on the EU
Comitology website prior to the latest date on which they “became
effective” in the sense of Article X:1.(750)
(g) “in such a manner as to enable governments and traders to
become acquainted with them”: website publication
535.
In EC — IT
Products, the Panel found that publication of the measure at
issue among other documents on the EU Comitology website did not meet
the requirements of Article X:1:
“While Article X:1 requires that measures be ‘published’,
Article X:2 refers to measures having been ‘officially published’.
The absence of the adverb ‘officially’ in Article X:1, which is
present in
Article X:2, clarifies that the publication of the relevant
measure does not need to be in an ‘official’ publication in order to
satisfy Article X:1.
…
… if measures are to be published ‘in such a manner as to enable
governments and traders to become acquainted with them’, it follows
that they must be generally available through an appropriate medium
rather than simply making them publicly available.(751)
…
… it is clear from a textual analysis of Article X:1
that it is not
any manner of publication that would satisfy the requirement, but only
those that would give power to or supply governments and traders with
knowledge of the particular measures that is ‘adequate’ so that
traders and Governments may become ‘familiar’ with them, or ‘known’
to them in a ‘more or less complete’ way.
In our view, making the minutes of the Customs Code Committee, with
draft CNENs attached, available on the Comitology website does not meet
this standard. In particular, we note that there is nothing in the
minutes, or the draft CNENs attached, that would supply traders and
governments with adequate knowledge of measures that are or would be
applied in trading with the EC member States. Indeed, the publication of
the respective reports of the Customs Code Committee meetings merely
provided the text of the CNEN amendments, specifying that these were ‘drafts’.
In addition, the documents contain placeholders for the reference number
of the measure, e.g. ‘(2006/C … ../..)’ in the first case and ‘(2007/C
… ../..)’ in the second case. In light of this, the Panel finds
that, in the circumstances described above, posting the draft CNEN on
the Comitology website does not constitute publication ‘in such a
manner as to enable governments and traders to become acquainted with
them’.”(752)
536.
In Thailand — Cigarettes
(Philippines), the Panel considered a claim regarding failure
to sufficiently publish the general rules relating to the right to the
release of guarantees deposited by importers for excise and other
internal taxes. The Panel evaluated the provisions in the Customs Act
and the notices of assessment given to importers, and concluded:
“[D]espite Thailand’s acknowledgment that ‘in essence,
guarantees are to be refunded on the final assessment of the goods’,
the relevant documents referred to by Thailand in this dispute do not
clearly indicate a definite right to the release of guarantees for the
internal taxes upon final assessment of the goods. In such
circumstances, importers will not be able to become acquainted with the
exact nature of the right they have in respect of the release of
guarantees for the internal taxes within the meaning of Article X:1.”(753)
537.
In China — Raw
Materials, the Panel found that by failing to publish
promptly its decision not to authorize an export quota for zinc in such
manner as to enable governments and traders to become acquainted with
it, China had violated Article X:1 of the GATT
1994.(754)
(h) “confidential information”
538.
In Thailand — Cigarettes
(Philippines), the Panel examined the application of Article X:1
obligations in relation to confidential data used to calculate MRSPs,
a key factor determining the effective tax rate on cigarettes. The Panel
had found that these data were not within the scope of administrative
rulings of general application, but it further found:
“Thailand essentially argues that given that the third sentence of
Article X:1 provides that the provisions of Article X:1
shall not
require any WTO Member to disclose confidential information, Thailand is
not obliged to publish the data used for determining the MRSPs because
such data are confidential information. The Philippines also appears to
accept Thailand’s position as it acknowledges that data such as the
c.i.f. price, internal taxes, the marketing costs, even in indexed
format, are confidential information. In our understanding, the
Philippines’ sole remaining argument in this connection is that a
non-confidential version of an administrative ruling still must be
published. We, however, do not find such an obligation in the text of Article X:1.”(755)
(i) GATT practice
539.
For GATT practice in respect of Article X:1.
3.
Article
X:2
(a) General
540.
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.”(756)
541.
In US — Underwear,
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 applying import quotas with respect to imports
during a period starting before the quota’s publication date:
“[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.”(757)
542.
In US — Anti-Dumping
Measures on Oil Country Tubular Goods, Mexico claimed that
the US Department of Commerce (USDOC) violated
Article X:2 because it
imposed conditions on a producer of oil country tubular goods (OCTG) for
termination of the anti-dumping duty, in advance of the official
publication of such conditions. Mexico argued that the use of the
commercial quantities threshold requirement constituted a change in the
USDOC’s practice and administration of the law that was not notified
to WTO Members in advance of its application, in violation of
Article X:2. After noting that
Article X:2 precludes retroactive application of
a measure, the Panel commented that compliance with this obligation and
subsequent questions of alleged violation, would “depend on the timing
of the publication of a measure, and its enforcement in particular
circumstances affecting the rights ofWTO Members.” The Panel concluded
that the disputed regulations were published prior to being enforced in
the administrative reviews in question:
“As stated above, the legal instrument that introduced the
commercial quantities requirement was duly published, and came into
effect with respect to administrative reviews initiated on the basis of
requests made more than one month subsequent to that publication. As of
the date of publication, notice had clearly been given of the substance
of the regulation, and of which cases would be affected by the
regulation. Thus, exporters, including the Mexican exporters involved in
the administrative reviews of OCTG, had notice as to the requirements
imposed by USDOC for requests for revocation based on three years of no
dumping, including the commercial quantities requirement. In support of
its argument, Mexico refers to a case in which the requirement was not
applied, without noting that the administrative review in question was
initiated based on a request made prior to the effective date of
the regulation.”(758)
(b) “measure of general application”
543.
In EC — IT
Products, the Panel examined a claim that the EC had breached
Article X:2 by applying the CNEN amendments described in paragraph 513
above before their publication in the EU Official Journal. Relying on
its finding under Article X:1 (see paragraph 523
above), the Panel in EC
— IT Products found that the
CNEN amendments were a “measure of general application” in the sense
of
Article X:2. Comparing Articles X:1 and X:2, the Panel found:
“Article X:2 refers simply to ‘measure’ and hence encompasses
an even broader category — namely, any act or omission by a WTO
Member. It follows therefore that the drafters intended to include a
broad range of measures that have the potential to affect trade and
traders.”(759)
(c) “effecting an advance in a rate of duty or other charge on
imports under an established and uniform practice”
544.
The Panel in EC — IT
Products, evaluating a claim under
Article X:2 on the CNEN
amendments described in paragraph 513 above, found that “Article X:2
of the GATT 1994 covers measures of general application that ‘cause’
an ‘increase’ in a rate of duty”(760) and that “the term
‘effecting’ does not necessarily require that the measures at issue
be the sole or single cause for the advance in rate of duty. However, it
must be shown that it goes beyond mere influence and there must be a
demonstrable link between the measures at issue and the advance.”(761)
The Panel then found that these amendments were “of the type that they
are intended to have a certain effect, namely, an increase in a rate of
duty”(762) because “the CNEN amendments at issue entailed a
change in classification practices for some EC member States with the
practical consequence that certain STBCs became dutiable. We therefore
consider that, at least in some instances, as a result of the CNEN
amendments at issue, some EC member States were required to change their
classification practices in such a way that effected an advance in rate
of duty. Hence, we conclude that the CNEN amendments at issue effect an
advance in rate of duty and as such fall within the measures
contemplated by
Article X:2.”(763)
545.
The same Panel interpreted the scope of
Article X:2 as applying
to circumstances where “the ‘advance in a rate of duty’ must be
‘under an established and uniform practice’”.(764) The
Panel further found that “‘uniform practice’, in its context,
refers to the similar application of a measure in the customs territory
of a Member. Accordingly, ‘uniform practice’ means that the customs
authorities of the EC member States apply the measures at issue
similarly and consistently throughout the customs territory of the
European Communities.”(765) Summing up, the Panel found:
“[U]nder
Article X:2, measures must be of a type that effect an
advance in a rate of duty under an established and uniform practice,
which means that the advance in a rate of duty must be applied (‘practice’)
in the whole customs territory (‘uniform’) and its application
should be on a secure basis (‘established’).”(766)
546.
The Panel then found that these criteria were met in the case of
the CNEN at issue because these were designed to ensure uniform tariff
treatment throughout the customs territory of the EC.(767)
(d) Enforcement before official publication
547.
The Panel in EC — IT
Products, evaluating a claim under
Article X:2 on the CNEN
amendments described in paragraph 513 above, found that “proof that a
measure has been applied would establish that it was enforced”(768)
and that “even a single instance of enforcement of a measure before
its official publication could amount to a violation of
Article X:2,
depending on the facts of the case”.(769) Based on BTIs (member
State classification rulings) issued after (and referring to) a CNEN
amendment, and pre-dating the official publication of this CNEN
amendment in the Official Journal, the Panel found a breach of
Article X:2 because the CNEN amendment was enforced by member States to
determine tariff classification prior to official publication.(770)
4.
Article
X:3
(a) General
548.
In US — Shrimp,
the Appellate Body ruled that the lack of transparency of the disputed
legislation was contrary to the spirit of Article
X:3. The Appellate
Body held:
“[T]he provisions 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 as 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.”(771)
(b) Article X:3(a)
(i) General
549.
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)”.(772)
550.
In Thailand — Cigarettes
(Philippines), the Panel set out its general views on Article
X:3(a):
“To establish a violation of Article
X:3(a), a complaining party
must … show that the responding Member administers the legal instruments of the kind described in
Article X:1 in
a manner that is non-uniform, partial and/
or unreasonable.
The obligations of uniformity, impartiality and reasonableness are
legally independent and the WTO Members are obliged to comply with all
three requirements. (773) This means that, as the Panel in Dominican
Republic — Import and Sale of
Cigarettes noted, a violation of any of the three obligations
will lead to a violation of the obligations under Article
X:3(a).
In this regard, it is important to recall the Appellate Body’s
observation that Article X:3 of the GATT 1994 establishes certain
minimum standards for transparency and procedural fairness in the
administration of trade regulations.(774)”(775)
(ii) “shall administer”
551.
In EC — Bananas
III, the Appellate Body upheld 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):
“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.”(776)
552.
The Appellate Body in EC — Poultry confirmed the above line of interpretation and found:
“[T]o 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.”(777)
553.
The Panel in Argentina — Hides
and Leather rejected Argentina’s argument that the
reference to uniformity in Article X:3(a) merely requires
nondiscriminatory treatment as between the goods of 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.(778)
These references undercut Argentina’s argument that Article X
can only
apply in situations where there is discrimination between WTO Members.”(779)
554.
In Argentina — Hides
and Leather, the Panel examined a claim regarding an
Argentine measure authorizing representatives of the domestic leather
industry to attend pre-export customs checks on raw hides. 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.(780) 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.(781) This would effectively write
Article X:3(a) out
of existence, which we cannot agree with.(782)
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… . 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.”(783)
555.
In US — Corrosion-Resistant
Steel Sunset Review, Japan argued that the US’s 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 US’s 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 US’s administration of sunset review laws
was not uniform, because it took different approaches with regard to
Article 11.2 reviews and sunset reviews. The Panel ruled that Japan’s
Article X:3(a) claims related to the substance of US laws and
regulations rather than their administration, and were therefore outside
the scope of Article X:3(a):
“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.”(784)
556.
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.(785)
557.
The Appellate Body in EC — Selected
Customs Matters also discussed the difference between
substantive and administrative measures, and its impact on proof
required for claims under Article X:3:
“The statements of the Appellate Body in EC — Bananas III
and EC — Poultry do not
exclude, however, the possibility of challenging under Article
X:3(a) the substantive content of a legal instrument that regulates the
administration of a legal instrument of the kind described in Article X:1. Under
Article X:3(a), a distinction must be made between the legal
instrument being administered and the legal instrument that regulates
the application or implementation of that instrument. While the
substantive content of the legal instrument being administered is not
challengeable under Article X:3(a), we see no reason why a legal
instrument that regulates the application or implementation of that
instrument cannot be examined under Article
X:3(a) if it is alleged to
lead to a lack of uniform, impartial, or reasonable administration of
that legal instrument.
This distinction has implications for the type of evidence required
to support a claim of a violation of Article
X:3(a). If a WTO Member
challenges under Article X:3(a) the substantive content of a legal
instrument that regulates the administration of a legal instrument of
the kind described in Article X:1, it will have to prove that this
instrument necessarily leads to a lack of uniform, impartial, or
reasonable administration. It is not sufficient for the complainant
merely to cite the provisions of that legal instrument. The complainant
must discharge the burden of substantiating how and why those provisions
necessarily lead to impermissible administration of the legal instrument
of the kind described in Article X:1.”(786)
558.
The Panel in Thailand — Cigarettes
(Philippines) summed up the case law regarding Article
X:3(a), and commented:
“In sum, the guidance provided by the Appellate Body suggests that
Article X:3(a) dictates the disciplines governing the administration of the legal instruments of the kind described in
Article X:1. The scope of administration that is subject to a challenge under
Article X:3(a) includes both the manner in which the legal instruments
of the kind falling under Article X:1 are applied or implemented in
particular cases as well as a legal instrument that regulates such
application or implementation. Further, administrative processes leading
to administrative decisions may also be included in the scope of the
term ‘administer’ and hence Article X:3(a). However, to the extent
that a claim of violation under Article X:3(a)
is based on an
administrative process, the complainant must demonstrate how and why
certain features of the administrative processes necessarily lead to a
lack of uniform, impartial, or reasonable administration
of a legal instrument of the kind described in Article X:1.
As a final note, we are mindful of the Appellate Body’s statement
that as allegations that the conduct of a WTO Member is biased or
unreasonable are serious under any circumstances, such allegations
should not be brought lightly, or in a subsidiary fashion.(787)
The Appellate Body therefore cautioned that ‘a claim under Article
X:3(a) of the GATT 1994 must be supported by solid evidence; the nature
and the scope of the claim, and the evidence adduced by the complainant
in support of it, should reflect the gravity of the accusations inherent
in claims under Article X:3(a) of the GATT 1994’. Overall, our
examination of the Philippines’ claims under Article
X:3 requires us
to exercise a balanced judgment between the traders’ fundamental right
to procedural fairness and the sovereign right afforded to the Member
governments in managing the manner in which they administer their own
laws and regulations.”(788)
559.
In Thailand — Cigarettes
(Philippines), the Panel examined a claim that Thailand
administered its customs laws in a partial and unreasonable manner,
because the Thai government had appointed government officials (the
Director of Excise, the Director of Customs, the Director of Revenue or
other Ministry of Finance officials) to the position of Director of the
Thai Tobacco Monopoly (TTM), or to the TTM board, and these persons
served at the same time in both the Ministry and TTM. The Panel
considered whether these appointments constituted “administration”
in the sense of Article X:3(a):
“Considered against the standard of ‘administration’ under
Article X:3(a) as set out by the Appellate Body, we understand that the
appointment of dual function officials as TTM directors may not be an application
of the Thai customs and fiscal laws and regulations because
it is not an act of applying the
substance of the customs and tax provisions. Nonetheless the broad scope
of administrative processes falling within the scope of Article
X:3(a) suggests that the appointment of government officials to the director
position of TTM (the only domestic company competing against imported
cigarettes in the Thai market) may well be considered as part of the
administrative process leading to the application and implementation of
the customs and fiscal measures insofar as these government officials
are sufficiently involved in applying or implementing the Thai customs
and tax laws.”(789)
560.
In Thailand — Cigarettes
(Philippines), the Panel examined a claim regarding
determination of certain internal taxes on the basis of a guarantee
value, instead of a declared transaction value, and regarding lack of an
automatic refund mechanism for excess taxes paid. The Panel determined
that this claim was improperly brought under Article
X:3(a) as it
concerned substantive issues to be dealt with under other WTO
provisions.(790)
Temporal scope and limitations on the panel’s terms of reference
561.
In EC — Selected
Customs Matters, the Appellate Body upheld a Panel finding
that the steps and acts of administration that pre-date or post-date the
establishment of a panel may be relevant as evidence in determining
whether or not a violation of Article X:3(a)
of the GATT 1994 exists at
the time of establishment.
“Evidence in support of a claim challenging measures that are
within a panel’s terms of reference may predate or post-date the
establishment of the panel. A panel is not precluded from assessing a
piece of evidence for the mere reason that it pre-dates or post-dates
its establishment.(791) In this case, the United States was not
precluded from presenting evidence relating to acts of administration
before and after the date of Panel establishment. A panel enjoys a
certain discretion to determine the relevance and probative value of a
piece of evidence that pre-dates or post-dates its establishment.”(792)
(iii) “in a uniform, impartial and
reasonable manner”
General
562.
In US — Stainless
Steel (Korea), 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 to be compared to allegedly dumped 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”:
“[W]e 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’.(793) 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,(794) 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.”(795)
563.
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 favour of exports to one Member relative to another.
Indeed, the focus is on the treatment accorded by government authorities
to the traders in question.”(796)
564.
In US — Hot-Rolled
Steel, the Panel held that violations of Article
X:3(a) require a significant impact on the Member’s overall administration of
its 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
actions in the single case in question were, themselves, consistent with
more specific obligations under other WTO Agreements”.(797)
565.
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),
because the US authorities demanded less information from United States
domestic producers than from foreign 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).”(798)
“uniform”
566.
The Appellate Body in EC — Selected
Customs Matters found that Article X:3(a)
of the GATT 1994
does not require uniformity of administrative processes:
“…In its broadest sense, an administrative process may be
understood as a series of steps, actions, or events that are taken or
occur in relation to the making of an administrative decision. Given
this broad definition of administrative process, it appears to us that Article
X:3(a) of the GATT 1994 does not contemplate uniformity of
administrative processes. In other words, non-uniformity or differences
in administrative processes do not, by themselves, constitute a
violation of Article X:3(a). This Article contains an obligation to
administer in a uniform manner legal instruments of the kind described
in Article X:1 — laws, regulations, judicial decisions, and
administrative rulings of general application pertaining to the subject
matters set out in that provision. We agree with the Panel that the term
‘administer’ in Article X:3(a) refers to putting into practical
effect, or applying, a legal instrument of the kind described in Article X:1. Thus, under
Article X:3(a), it is the application of a legal
instrument of the kind described in Article X:1
that is required to be
uniform, but not the processes leading to administrative decisions, or
the tools that might be used in the exercise of administration.”(799)
567.
In China — Raw
Materials, the Panel found that a system under which export
quotas were allocated according to “operation capacity” by 32 local
departments in charge of foreign trade, which were not provided with any
guidelines or standards (so that each would have to interpret the
operation capacity criterion as it sees fit) constituted non-uniform
administration inconsistent with Article X:3(a). The Panel stated: “there
is a very real risk that in the absence of any definition or
standardization of an understanding of what ‘operation capacity’
means that similar exporters in terms of size, experience, and other
factors may be treated differently depending on which of 32 dispersed
local offices deals with their application. Under such circumstances it
could well be assumed that one exporter could well find its application
rejected while another exporter of equal description would succeed.”(800)
The Panel concluded:
“[T]he lack of any definition, guidelines or standards in how the
32 Local Departments in charge of Foreign Trade should apply the
potentially critical operation capacity criterion constitutes relevant
evidence in establishing non-uniform administration of the operation
capacity criterion. Moreover, the Panel is persuaded that the lack of
any definition, guidelines or standards poses a very real risk that this
criterion will be administered differently depending on which Local
Department handles the quota application.
Consequently, the Panel concludes that the lack of any definition,
guidelines or standards in how the operation capacity criterion should
be applied poses a very real risk to the interests of relevant parties
such that this necessarily leads to non-uniform administration
inconsistently with Article X:3(a) of the GATT
1994.”(801)
568.
See also below concerning the relationship between Article
X:3(a) and Article I.
“Impartial”
569.
In Argentina — Hides
and Leather, the Panel examined an Argentine measure
authorizing representatives of the domestic leather industry to be
present when hides are checked before exportation, and found that it
violated Article X:3:
“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 downstream
consuming industry] 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.”(802)
570.
In Thailand — Cigarettes
(Philippines), the Panel examined a claim that the dual
appointment of Thai government officials to posts in the management of
the Thai Tobacco Monopoly (TTM) constituted partial administration of
laws and regulations. The Panel found that based on the evidence, dual
appointment constitutes an administrative process leading to
administration of Thai customs and fiscal laws and regulations. (803)
The Panel found that the Philippines had not proved that the features
relating to the appointment of certain government officials as TTM
directors necessarily led to a lack of impartial administration of the
Thai customs and fiscal rules:
“In the light of the Appellate Body’s guidance concerning a claim
under Article X:3(a) based on an administrative
process, our task is to examine whether the Philippines has
demonstrated how and why the features of the administrative process at
issue, namely certain Thai government officials’ dual role as TTM
directors, necessarily leads to a lack of impartial administration. We
are also mindful of the Appellate Body’s statement that given the
gravity of the accusations inherent in claims under Article
X:3(a), a
complaining party must support its claim with solid evidence.
… Based on the ordinary meaning … impartial
administration would appear to mean the application or
implementation of the relevant laws and regulations in a fair, unbiased
and unprejudiced manner.
Argentina — Hides and Leather is
the only WTO dispute to date in which the impartiality requirement under
Article X:3(a) was addressed. In that dispute, the feature of the
administrative process at issue was the presence of a private party with
conflicting commercial interests in the customs process. The panel
considered that the consistency of the customs process with the
impartiality requirement of Article X:3(a) would depend on what that
party is permitted to do. The panel found that the answer to this
question was related directly to the question of access to information
as part of the product classification process. It was the view of the
panel that whenever a party with a contrary commercial interest, but no
relevant legal interest, is allowed to participate in the customs
process, 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. The panel nevertheless considered that this
situation could be remedied by adequate safeguards to prevent an
inappropriate flow of one private person’s confidential information to
another as a result of the administration of the implemented customs law
at issue.
Following the approach of the Panel in Argentina
— Hides and Leather, we
consider that the relevant question is what these dual function
government officials arguably with an interest to promote TTM’s profit
level are permitted to do… .
… the Philippines points to instances where in its view partial
administrative decisions were taken under the authority or with the
active contribution of these dual function government officials. In
these instances, the Philippines has cited to a number of decisions that
did not necessarily reflect the commercial interests of [a competing
importer], which were made while dual government officials were serving
as TTM directors… .
We agree that at a theoretical level, evidence of this kind, if
properly substantiated, would help demonstrate that the administrative
process at issue necessarily leads to a lack of an impartial
administration. This is particularly so given that the allegation under Article
X:3(a) of a Member government’s biased administration requires
the presentation of solid evidence. For example, therefore, a pattern of
decisions would tend to show a lack of impartial administration.(804)
… unless it can be shown that these determinations are made because of
the very presence of the government officials serving also as TTM
directors, we are not in a position to find that the appointment of dual
function officials led to a partial administration of customs and tax
rules. Moreover, it is also questionable whether these determinations
can be considered consistent enough to show a pattern of decisions
amounting to a partial administration of customs laws and regulations.
… We recognize that financial bonuses for TTM directors are indeed
related to TTM’s net profit results… . financial incentives could
indicate that the dual function officials may be motivated to maximize
TTM’s profit level. However, we are not presented with solid evidence
suggesting that the existence of such motivation itself would
necessarily lead to an administration of the customs and tax rules which
would favour TTM’s cigarettes.(805)
…
… Based on the hierarchy of norms as commonly established in
states, and in the absence of any convincing argument or evidence
presented by the Philippines to prove otherwise, we find that the Thai
Civil Service Act and the Criminal Code are the legal instruments that
provide ethical disciplines to be respected by government officials
including those with a dual function as TTM directors.
Finally, the Philippines argues that Thailand does not apply the Thai
Civil Service Act to TTM … We, however, consider the parties’
arguments on this point irrelevant to our consideration of the
impartiality requirement. This is because, even if the Thai Civil
Service Act were to apply to TTM so as to prohibit the appointment of
government officials to TTM, whether Thailand complied with its own
domestic law is not relevant for the purpose of this dispute.
… In reaching this conclusion, we are mindful of the seriousness of
the allegation concerning a sovereign government’s administration of
its laws and regulations. We recognize that there may be situations
where a government’s measure or act is so egregiously flawed that the
unfairness inherent in such a measure or act may be sufficient to
demonstrate an impartial administration without the need to illustrate
it with a concrete example(s) of decisions resulted from the concerned
administration. However, under the circumstances of this dispute, we do
not find that the appointment of government officials as TTM directors,
considered in the light of the implemented safeguards present, amounted
to such a situation.
At the same time, however, we wish to emphasize that the principle of
transparency and procedural fairness that permeates the obligations
under Article X:3(a) and consequently the trading system in general must
be respected by the Members with utmost effort… . In the light of the
unusual factual circumstances in Thailand that certain government
officials in charge of customs and tax determinations also serve on the
board of directors for TTM, the only domestic competitor against
imported cigarettes, it would be only prudent for Thailand to ensure
that the administration of its customs and fiscal laws is carried out in
a transparent and impartial manner.”(806)
571.
In China — Raw
Materials, the Panel, considering the measure described in
paragraph 567 above, was not convinced that the lack of definition of
any guidelines or standards for administration would necessarily lead to
partial administration inconsistent with Article
X:3(a).(807)
572.
The Panel in China — Raw
Materials also examined a claim that the involvement of the
China Chamber of Commerce of Metals, Minerals and Chemicals Importers
and Exporters (CCCMC) in administering the export quotas on various raw
materials created an inherent conflict of interest because an exporter
must share sensitive business information with an entity that represents
its competitors and potential customers. The Panel opined that “[t]he
mere sharing of confidential information will not necessarily result in
partial administration. This would be the case only if those persons who
receive the confidential commercial information are able to use it in a
manner that is contrary to the interests of those providing the
information”.(808) Because the Panel concluded that members of
the CCCMC Secretariat did not participate in deciding which applicant
exporters were awarded a part of the export quota, the Panel concluded
that it did not need to consider whether the members of the CCCMC
Secretariat are persons with adverse commercial interests, or whether
adequate safeguards are in place to prevent the inappropriate flow of
confidential information.(809)
“Reasonable”
573.
In Argentina — Hides
and Leather, the Panel also ruled that the measure described
in paragraph 569 above was not “reasonable”:
“…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).”(810)
574.
The Panel in Dominican Republic — Import and Sale of Cigarettes found
that the Dominican Republic had administered its Selective Consumption
Tax in an unreasonable manner inconsistent with Article
X:3(a), because
the tax authorities disregarded the actual price of domestic cigarettes
when determining the tax base for imports, in a manner not supported by
the domestic rules in force at the time:
“…the obligation under Article
X:3(a) of the GATT is that Members
administer the provisions covered by that Article in a uniform manner,
in an impartial manner, and in a reasonable manner. These are not
cumulative requirements. A Member may thus act in a breach of its
obligations under Article X:3(a) of the GATT, if it administers the
provisions in an unreasonable manner, even if there is no evidence that
that Member has also administered the provisions in a non-uniform manner
or in a partialized manner… .
…
By its own admission, it is clear that the Dominican Republic did not
clearly support its determination of the tax base for the application of
the Selective Consumption Tax on imported cigarettes on any one of the
three methodologies contained in the legislation in force at the time.
Furthermore, the Dominican Republic authorities disregarded the actual
retail selling price of cigarettes to determine the ‘nearest similar
product on the domestic market’. The Dominican Republic has argued
that the decision to disregard the retail selling price was taken based
on the value declared at customs by the importer. In its own words, ‘[t]he
authorities of the Dominican Republic relied on several factors,
including the declared customs value of the imported cigarettes,
whenever there was evidence that the pricing policies of the importer
alone could not be relied on to determine the nearest similar product in
the domestic market’. However, there is no evidence that the decision
was based on any particular provision of the Dominican Republic law in
force at the time. Indeed, the Dominican Republic legislation does not
appear to grant discretion to the authorities to deviate from the
methods described, nor does it grant discretion to disregard retail
selling prices and to favour customs-declared values. There is
furthermore no evidence that the Dominican Republic authorities notified
the importers about the alleged discrepancy between the customs value
and the selling price information, nor about the motivation for its
decision to disregard retail selling prices.
The Panel thus finds that the manner in which the Dominican Republic
administered the provisions governing the Selective Consumption Tax, in
particular with respect to the determination of the tax base for the
application of the tax on cigarettes, and the use in this regard of the
‘nearest similar product on the domestic market’, was unreasonable.
The fact that the Dominican Republic authorities did not support its
decisions regarding the determination of the tax base for imported
cigarettes by resorting to the rules in force at the time and that they
decided to disregard retail selling prices of imported cigarettes, is
not ‘in accordance with reason’, ‘having sound judgement’, ‘sensible’,
‘within the limits of reason’, nor ‘articulate’.”(811)
575.
In Thailand — Cigarettes
(Philippines), the Panel, in a finding not reviewed by the
Appellate Body, examined a claim of unreasonable administration and
found that the Philippines had not established that the features of
Thailand’s granting selected customs and tax officials with a dual
function as TTM directors necessarily lead to an unreasonable
administration of the Thai customs and tax laws and regulations within
the meaning of Article X:3(a):
“[G]ranting dual function officials the power to make customs and
fiscal decisions concerning cigarettes, both imported and domestic, as
well as access to confidential information on imported cigarettes would
appear to constitute an act of inappropriate and/or
not sensible administration unless
there is a particular rationale that can explain the concerned act.
Thailand nonetheless points out that granting dual positions to
selected government officials promotes legitimate administrative
objectives: (i) they ‘have expertise relevant to the management of a
state-owned enterprise’ importing tobacco and collecting the related
taxes; (ii) they can ‘play a role in ensuring that TTM
itself complies efficiently’ with the Thai legislation; and
(iii) they are making sure that TTM’s activities are consistent with
Thai public health policy (TTM Board includes an individual of the
Ministry of Health).
A sovereign state has the discretion and authority to structure its
government and manage and administer its own laws and regulations as it
deems fit… . we are not in a position to second guess the specific
needs of the Thai government in assigning selected customs and tax
officials with a dual role as a director of a state enterprise, TTM. We
therefore recognize that the Thai government officials serving as DG
Excise, DG Revenue, DG Commerce may indeed be well equipped to apply
their expertise in laws and regulations relating to customs and internal
taxes to the management of TTM.
The Philippines argues that, even though those objectives were
legitimate, other avenues were available to reach identical results. We
agree … However, as noted above, it is our view that Thailand, as a
sovereign state, may administer its laws and regulations in the way it
considers most appropriate in the particular circumstances in which it
is situated. It should be noted though, that a WTO Member’s discretion
to administer its own laws must be exercised in a manner consistent with
its obligations under the WTO Agreement. Our task is, therefore, not to
find the best administrative means to achieve a Member’s goal.”(812)
576.
In Thailand — Cigarettes
(Philippines), the Panel also examined a claim that delays in
Customs appeals of customs valuation determinations resulted in
unreasonable administration of the Thai customs laws under Article
X:3(a). The Panel observed that “Although we do not consider that the
obligation for a WTO Member to administer its laws and regulations in a
reasonable manner under Article X:3(a) sets a specific time limit for
administrative review processes, such as the BoA review in this dispute,
a review process taking over 7 years, particularly compared to the
average time taken for other similar claims (i.e. 2.5 years), would
appear to be, at least in the abstract sense, rather unusual.”(813)
The Panel found as follows:
“The overall length of the administrative process, combined with
less-than-prompt actions (for example requesting information from [the
importer]) taken by the BoA, also tends to show prejudice caused to
other Member governments and traders under Article
X:3(a). The overall
delays shown throughout the course of the review process therefore are
‘not appropriate or proportionate’
considered against the nature of the circumstances concerned. We
therefore find that the concerned delays in the BoA review process
resulted in the administration of the Thai customs law in an unreasonable
manner and are in violation of Article
X:3(a) of the GATT 1994.”(814)
577.
In China — Raw
Materials, examining the measure described at paragraph 567
above, the Panel found that “ there is a very real risk that in the
absence of any definition or standardization of an understanding of what
‘operation capacity’ means that similar exporters in terms of size,
experience, and other factors may be treated differently depending on
which of 32 dispersed local offices deals with their application. Under
such circumstances it could well be assumed that one exporter could well
find its application rejected while another exporter of equal
description would succeed.”(815)
“…the lack of any definition, guidelines or standards in how the
32 Local Departments in charge of Foreign Trade should apply the
potentially critical operation capacity criterion constitutes relevant
evidence in establishing unreasonable administration of the operation
capacity criterion. Moreover, the Panel is persuaded that the lack of
any definition, guidelines or standards poses a very real risk that this
criterion will be administered differently depending on which Local
Department handles the quota application.
Consequently, the Panel concludes that the lack of any definition,
guidelines or standards to guide how the operation capacity criterion
should be applied poses a very real risk to the interests of relevant
parties such that this necessarily leads to unreasonable administration
inconsistently with Article X:3(a) of the GATT
1994.”(816)
578.
In China — Raw
Materials, the Panel also considered and rejected a claim
that the involvement of the CCCMC(817) in export quota
administration would necessarily lead to unreasonable administration in
violation of Article X:3(a). The Panel found that the documents required
to be submitted to the CCCMC were relevant to the CCCMC’s task of
evaluating eligibility of quota applicants, and that the claimants had
not “demonstrated that the features leading to the involvement of the
CCCMCin export quota administration pose a very real risk to the
interests of relevant parties such that this necessarily results in
unreasonable administration of the export quotas inconsistently with Article
X:3(a).”(818)
579.
On GATT practice in respect of Article X:3(a).
(c) Article X:3(b)
(i) “prompt review and correction”
580.
The Panel in EC — Selected
Customs Matters stated:
“[A] due process theme underlies Article X
of the GATT 1994. In the
Panel’s view, this theme suggests that an aim of the review provided
for under Article X:3(b) of the GATT 1994 is to ensure that a trader who
has been adversely affected by a
decision of an administrative agency has the ability to have that adverse
decision reviewed.”(819)
581.
The Panel in Thailand — Cigarettes
(Philippines) examined a claim of violation of Article X:3(b)
related to the delays referred to in paragraph 576
above. In a finding upheld by
the Appellate Body, the Panel determined that “the excessive delays
that have been caused in the … appeals before the BoA (the
prerequisite step necessary to even reach the Thai Tax Court) are so
significant in terms of their duration and frequency that these specific
instances can be considered as an indication of the capacity for delays
in the system. Therefore, we conclude that Thailand failed to maintain
an independent tribunal for the prompt review of customs value
determinations inconsistently with Article
X:3(b).”(820):
“[T]he due process objective reflected in Article
X:3 of the GATT
1994 suggests that ‘prompt review and correction’ is to be
understood as review and correction of administrative action that is
performed in a quick and effective manner and without delay. What is
quick or performed without delay depends on the context and particular
circumstances, including the nature of the specific type of action to be
reviewed and corrected. Whether a system does or does not ensure prompt
review thus cannot be determined in the abstract. We therefore agree
with the Panel that the nature of the specific administrative action at
issue informs the meaning of the word ‘prompt’ in the particular
circumstances of a Member’s domestic system.
… The reference to ‘correction’ indicates that
Article X:3(b)
requires more than mere declaratory action or ex
post review of whether administrative action conforms to
domestic law or not. Compliance with the obligation to maintain
tribunals or procedures for the ‘correction’ of administrative
action relating to customs matters requires that Members ensure that
their system of review provides for the relevant administrative action
to be set right.
Finally, we note that Article
X:3(b) does not prescribe one
particular type of review or correction of administrative action
relating to customs matters. Instead it refers to ‘judicial, arbitral
or administrative tribunals or procedures’. This suggests that there
are a variety of ways in which a Member may comply with the obligation
of maintaining tribunals or procedures for prompt review and correction
of administrative action relating to customs matters, provided that, inter
alia, such tribunals and procedures are independent of the
agencies entrusted with administrative enforcement as required by the
second sentence of Article X:3(b).”(821)
582.
The Panel in Thailand — Cigarettes
(Philippines) also found that Thailand acted inconsistently
with Article X:3(b) by failing to maintain or institute independent
review tribunals or process for the prompt review of decisions on
guarantees required to be posted by importers to secure the payment of
import duties; appeal was only available after issuance of notice of
final assessment. Moreover, there was no timetable for issuance of such
notices. Upholding the Panel decision, the Appellate Body observed that
“the review system maintained by Thailand imposes delays that are
essentially coextensive with the lifetime of a guarantee’s security
function”(822) and found as follows:
“[T]he character of a guarantee is relevant in determining what can
be regarded as ‘prompt’ with respect to the review of guarantee
decisions. As set out above, a ‘guarantee’ is defined as ‘[s]omething
given or existing as security, such as to fulfil a future engagement or
a condition subsequent’. This definition clarifies a key element of a
guarantee, namely, its relation to a future event. A guarantee is tied
to, but distinct from, the fulfilment of an engagement or condition in
the future. Accordingly, a guarantee is effective as a security from the
time it is given up to the time when the engagement or condition is
fulfilled. Once the future condition is fulfilled, the guarantee no
longer serves as a security.
We also recall our above consideration that the due process objective
reflected in Article X:3 of the GATT 1994 suggests that ‘prompt review
and correction’ is to be understood as review and correction of
administrative action that is performed in a quick and effective manner
and without delay. It follows that the mechanism for the review of
administrative action relating to customs matters must permit review to
be timely and effective. In the particular circumstances of a guarantee,
which is effective as a security from the time it is given until the
time when the engagement or condition is fulfilled, we consider that,
for a review to be considered timely and effective, it must at least be
possible to challenge the guarantee during the time it serves as a
security. This is so because it is during the period of time that a
guarantee is required that importers are most affected by the guarantee
decision.”(823)
(ii) “administrative action relating
to customs matters”
583.
In Thailand — Cigarettes
(Philippines), the Panel examined a claim under Article
X:3(b) regarding the alleged absence of a right to appeal against the
amount of a guarantee for payment of customs duties. In a finding upheld
by the Appellate Body, the Panel suggested that “‘administrative
action relating to customs matters’ in Article X:3(b) of the GATT 1994
includes a wide range of acts applying legal instruments having a
rational relationship with customs matters, which clearly includes valuation
of goods being imported”(824) and that “the term
‘administrative action relating to customs matters’ in Article
X:3(b) is not necessarily limited to final administrative
determinations where the so-called intermediary actions taken prior to
final determinations result in an immediate adverse effect on traders.”(825)
The Panel and the Appellate Body concluded that the imposition of a
guarantee is an “administrative action relating to customs matters”
within the meaning of Article X:3(b).(826)
(iii) “Such tribunals or procedures
shall be independent of the agencies entrusted with administrative
enforcement”
584.
The Panel in EC — Selected
Customs Matters noted that “in some WTO Members,
administrative action relating to customs matters may be reviewed by the
same administrative authority that originally took the action… . Such
review would not qualify under Article X:3(b) of the GATT 1994 because,
in such case, the reviewing body is not independent of the
administrative authority whose decision is the subject of review.”(827)
It defined “independent” in the context of Article X:3(b) as “free
of control or influence from the administrative agencies whose decisions
are the subject of review, [so as to act] with freedom in institutional
and practical terms from interference by the agencies whose decisions
are being reviewed”.(828)
585.
The Appellate Body in EC — Selected
Customs Matters found that Article X:3(b) does not require
that first instance review decisions must govern the practice of all the
agencies entrusted with administrative enforcement throughout the
territory of a particular WTO Member:
“[W]e are of the view that Article X:3(b) of the GATT 1994 requires
a WTO Member to establish and maintain independent mechanisms for prompt
review and correction of administrative action in the area of customs
administration. However, neither text nor context nor the object and
purpose of this Article require that the decisions emanating from such
first instance review must govern the practice of all agencies entrusted with administrative enforcement throughout
the territory of a particular WTO Member.”(829)
586.
In Thailand — Cigarettes
(Philippines), the Panel found that “Members may have a
system under which an initial appeal of an administrative action must be
made to an authority within the agency entrusted with enforcement prior
to an independent body. We do not therefore consider that the existence
of interposing steps prior to an independent review in itself is a
systemic flaw that prevents Thailand from maintaining procedures for the
prompt review of administrative
actions under Article X:3(b).”(830)
(d) Article X:3(c)
(i) “the date of this Agreement”
587.
Article XXVI:1 provides that “the date of this Agreement shall
be 30 October 1947.” This date applies for the obligations under Article
X:3 of the original contracting parties to the GATT 1947; the
former dependent territories of the original contracting parties which,
after attaining independence or commercial autonomy, succeeded to
contracting party status under Article
XXVI:5(c); and Chile. For
contracting parties that acceded in 1948–1951, the date used was 24
March 1948. For all accessions to the GATT 1947 thereafter, the
accession protocol provided that the “date of this Agreement” for
the purposes of Article X:3 was the date of the protocol of accession or
(where the acceding government had previously acceded provisionally) the
date of the protocol of provisional accession.(831) These
accession protocol provisions are incorporated in the GATT 1994 by
virtue of paragraph 1(b)(ii) of the GATT 1994 incorporation text. See
further under Article XXVI:1 below.
588.
On GATT practice concerning the phrase “the date of this
Agreement” in Article X:3.
5.
Relationship
with other GATT provisions
(a) General
589.
In EC — Bananas
III, the Appellate Body explained the relationship between Article X
and other GATT provisions. See the excerpt referenced in
paragraph 551 above. This finding of the Appellate Body was also cited
by the Panel in Argentina — Hides
and Leather.(832)
(b) Article I
590.
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.(833)
591.
In Argentina — Hides
and Leather, the Panel addressed the concept of “uniformity”
with respect to Article X:3(a), stating that this provision goes beyond
Article I to require “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… .
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.”(834)
(c) Article III
592.
In Indonesia — Autos,
the Panel discussed the relationship between Articles III and
X. See the
excerpt referenced in paragraph 590 above.
(d) GATT practice
593.
On GATT practice regarding the relationship between Article X
of
GATT and other Articles.
6.
Relationship
with other WTO Agreements
(a) Licensing Agreement
594.
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.”(835)
(b) Anti-Dumping Agreement
595.
In US — DRAMS,
Korea, the complainant, claimed that a particular United States
anti-dumping duty order violated 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.(836)
596.
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).(837)
Footnotes:
622. Panel Report, Colombia — Ports
of Entry, paras. 7.219–7.223, 7.374–7.375. back to text
623. Panel Report, Colombia — Ports
of Entry, paras. 7.394–7.3965. back to text
624. Panel Report, Colombia — Ports
of Entry, para. 7.401. back to text
625. Panel Report, Colombia — Ports
of Entry, para. 7.418. back to text
626. Panel Report, Colombia — Ports
of Entry, para. 7.422. back to text
627. Panel Report, Colombia — Ports
of Entry, para. 7.397. back to text
628. Panel Report, Colombia — Ports
of Entry, para. 7.402. back to text
629. Panel Report, Colombia — Ports
of Entry, para. 7.430. back to text
630. Panel Report, Colombia — Ports
of Entry, para. 7.468. back to text
631. Panel Report, Colombia — Ports
of Entry, para. 7.445. back to text
632. Panel Report, Colombia — Ports
of Entry, para. 7.453. back to text
633. Panel Report, Colombia — Ports
of Entry, para. 7.454. back to text
634. Reference in original to GATT document CG.W.18/W.48.
back to text
635. Panel Report, Colombia — Ports
of Entry, para. 7.465–7.467. back to text
636. Panel Report, Colombia — Ports
of Entry, para. 7.475. back to text
637. Panel Report, Colombia — Ports
of Entry, para. 7.477. back to text
638. GATT Analytical Index,
p. 216. back to text
639. Panel Report, Colombia — Ports
of Entry, footnote 783 to para. 7.477. back to text
640. Appellate Body Report, US — 1916 Act, para. 109.
back to text
641. Appellate Body Report, US — 1916 Act,
para. 118. back to text
642. Appellate Body Report, US — 1916 Act,
para. 120. back to text
643. Appellate Body Report, US — 1916 Act,
para. 121. back to text
644. Appellate Body Report, US — 1916 Act,
para. 122. back to text
645. Appellate Body Report, US — 1916 Act,
paras. 124–126. The Panel,
which reached the same conclusion on the scope of Article VI:2,
discussed the object and purpose of the GATT 1994, of the Anti-Dumping
Agreement, or of the WTO Agreement, and the preparatory work for Article VI:2. Panel Report, US — 1916
Act (Japan), paras. 6.223–6.229; Panel Report, US — 1916 Act (EC), paras. 6.200–6.203.
back to text
646. Appellate Body Report, US — Offset Act (Byrd Amendment), para. 244.
back to text
647. Appellate Body Report, Brazil — Desiccated Coconut, p. 17. The
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, Brazil — Desiccated Coconut, fn. 23.
back to text
648. Appellate Body Report, Brazil — Desiccated Coconut, p. 16.
back to text
649. Appellate Body Report, US — Zeroing (Japan), para. 140.
back to text
650. Appellate Body Report, US — Stainless Steel (Mexico), paras. 85–87.
back to text
651. Appellate Body Report, US — Stainless Steel (Mexico), paras. 94–95.
back to text
652. Appellate Body Report, US — 1916 Act,
para. 107. back to text
653. Appellate Body Report, US — Anti-Dumping and Countervailing Duties (China),
para. 569. back to text
654. Appellate Body Report, EC — Fasteners, para. 284.
back to text
655. Appellate Body Report, EC — Fasteners, paras. 285–290.
back to text
656. Appellate Body Report, EC — Fasteners, footnote 460 to para. 285.
back to text
657. Appellate Body Report, US — 1916 Act,
para. 116. back to text
658. Appellate Body Report, US — 1916 Act,
para. 137. back to text
659. Appellate Body Report, US — Offset Act (Byrd Amendment), para. 265.
back to text
660. Appellate Body Report, EC — Tube or Pipe Fittings, para. 76.
back to text
661. Zeroing may be described as the practice of calculating an amount
of dumping on the basis of one or more comparisons of normal
value(s) with export price(s) that are below normal value, while simply
treating as undumped (and thus representing a zero amount of dumping)
export prices that are above normal value. To arrive at a margin of dumping, the amount of dumping is divided by the total
value of all export price transactions (both above and below normal
value). back to text
662. Appellate Body Report, US — Zeroing (EC), paras. 132–133.
back to text
663. Appellate Body Report, US — Stainless Steel (Mexico), paras. 102–103.
back to text
664. Appellate Body Report, US — Stainless Steel (Mexico), para. 136.
back to text
665. Appellate Body Report, US — Continued Zeroing, para. 285.
back to text
666. Appellate Body Report, Brazil — Desiccated Coconut, p. 16.
back to text
667. Appellate Body Report, US — Offset Act (Byrd Amendment), para. 273.
back to text
668. Appellate Body Report, US — Countervailing Measures on Certain EC Products,
para. 139. back to text
669. Appellate Body Report, US — Softwood Lumber IV, para. 141.
back to text
670. Appellate Body Report, US — Softwood Lumber IV, para. 146.
back to text
671. Appellate Body Report, US — Shrimp (Thailand)/US
— Customs
Bond Directive, para. 221. back to text
672. Appellate Body Report, US — Shrimp (Thailand)/US
— Customs
Bond Directive, paras. 226–227. back to text
673. Appellate Body Report, US — Shrimp (Thailand)/US
— Customs
Bond Directive, para. 231. back to text
674. Appellate Body Report, US — Shrimp (Thailand)/US
— Customs
Bond Directive, para. 258. back to text
675. Panel Report, EC — Tube
or Pipe Fittings, paras. 7.152–7.167. back to text
676. (footnote original)
Panel Report, para. 14.70. The potential for double remedies is even
greater in the context of export subsidies, which benefit only exported
goods and therefore presumably lower the export price. (Ibid.,
footnote 972 to para. 14.72) back to text
677. Description in Appellate Body Report, US — Anti-Dumping and Countervailing Duties (China), para. 543.
back to text
678. Appellate Body Report, US — Anti-Dumping and Countervailing Duties (China),
paras. 567–569. back to text
679. Panel Report, US — 1916
Anti-Dumping Act (Japan), paras. 6.252–6.253. back to text
680. Panel Report, Mexico — Olive
Oil, para. 7.190. back to text
681. Panel Report, Mexico — Olive
Oil, para. 7.205. back to text
682. Panel Report, Mexico — Olive
Oil, para. 7.214. back to text
683. Panel Report, Mexico — Olive
Oil, para. 7.216. back to text
684. Panel Report, Brazil — Desiccated
Coconut, para. 281. back to text
685. Appellate Body Report, Brazil — Desiccated Coconut, p. 21.
back to text
686. Panel Report, Brazil — Desiccated
Coconut, para. 281. back to text
687. Appellate Body Report, Brazil — Desiccated Coconut, p. 21.
back to text
688. Panel Report, US — 1916 Act (EC), para. 6.209.
back to text
689. (footnote original)
Appellate Body Report on Brazil — Desiccated
Coconut, paras. 74 and 81–83. back to text
690. Panel Report, US — 1916
Act (Japan), paras. 6.92–6.94. back to text
691. Panel Report, US — 1916 Act (EC), para. 6.211. See also Panel Report, US — 1916
Act (Japan), para.
6.254. back to text
692. Panel Report, Brazil — Desiccated
Coconut, para. 227. back to text
693. Panel Report, Brazil — Desiccated
Coconut, para. 227. back to text
694. Appellate Body Report, Brazil — Desiccated Coconut, p. 14.
back to text
695. Appellate Body Report, Brazil — Desiccated Coconut, p. 14.
back to text
696. Appellate Body Report, Brazil — Desiccated Coconut, p. 16.
back to text
697. (footnote original)
Panel Report on US — Customs
User Fee. back to text
698. (footnote original)
Panel Report on US — Customs
User Fee, para. 69. back to text
699. (footnote original)
Panel Report on US — Customs
User Fee, para. 80. back to text
700. (footnote original)
Panel Report on US — Customs
User Fee, para. 86. back to text
701. Panel Report, Argentina — Textiles
and Apparel, paras. 6.74–6.75. The Panel also referred to
the GATT Working Party Report, Accession of the
Democratic Republic of the Congo (BISD 18S/89, para. 5). back to text
702. (footnote original)
Panel Report on US — Customs
User Fee, paras. 84–86. back to text
703. Panel Report, Argentina — Textiles
and Apparel, paras. 6.77–6.78. back to text
704. (footnote original)
Panel Report on US — Customs
User Fee. back to text
705. (footnote original)
Panel Report on US — Customs
User Fee, para. 69. back to text
706. (footnote original)
Panel Report on US — Customs
User Fee, para. 80. back to text
707. Panel Report, US — Certain
EC Products, paras. 6.69–6.70. back to text
708. Panel Report, China — Raw
Materials, para. 7.839. back to text
709. (Footnote original) The
Panel notes that this method of allocation is economically desirable and
is not otherwise prohibited under the GATT 1994 or WTO Agreement. back to text
710. Panel Report, China — Raw
Materials, para. 7.851. back to text
711. Panel Report, China — Raw
Materials, para. 7.847. back to text
712. Panel Report, China — Raw
Materials, paras. 7.849–7.850. back to text
713. WT/ACC/KGZ/26, para. 30.
back to text
714. Panel Report, Argentina — Textiles
and Apparel, paras. 6.81–6.82. back to text
715. Appellate Body Report, Argentina — Textiles and Apparel, paras. 69–70.
See also the discussion on relations between the WTO and the IMF in the
Chapter on the WTO Agreement, and below under Article
XV. back to text
716. G/C/W/407. back to text
717. Appellate Body Report, EC — Poultry, para. 115 (also referring to
the Appellate Body Report, EC — Bananas III, para. 200, referred to in para. 551 below).
back to text
718. Panel Report, Dominican Republic — Import and Sale of Cigarettes, paras.
7.406–7.407. back to text
719. (footnote original) In US — Corrosion-Resistant Steel Sunset Review,
the Appellate Body similarly found that the expression “laws,
regulations and administrative procedures” in Article 18.4 of the
Anti-Dumping Agreement seemed to encompass the entire body of generally
applicable rules, norms and standards adopted by Members in connection
with the conduct of anti-dumping proceedings. (Appellate Body Report on US
— Corrosion Resistant Steel Sunset Review,
para. 87). back to text
720. Panel Report, EC — IT
Products, paras. 7.1026–7.1027. back to text
721. Panel Report, EC — IT
Products, paras. 7.1029–7.1030. back to text
722. Panel Report, Thailand — Cigarettes
(Philippines), para. 7.773. back to text
723. Panel Report, Thailand — Cigarettes
(Philippines), para. 7.779. back to text
724. Panel Report, Thailand — Cigarettes
(Philippines), para. 7.826. back to text
725. Panel Report, Thailand — Cigarettes
(Philippines), paras. 7.826–7.827. back to text
726. Panel Report, Thailand — Cigarettes
(Philippines), para. 7.849. back to text
727. Panel Report, Thailand — Cigarettes
(Philippines), para. 7.848. back to text
728. Panel Report, China — Raw
Materials¸ para. 7.803. back to text
729. Appellate Body Report, US — Underwear, p. 21.
back to text
730. Panel Report, US — Underwear,
para. 7.65. back to text
731. Panel Report, Japan — Film,
para. 10.388. back to text
732. Panel Report, EC — Poultry,
para. 269. back to text
733. Appellate Body Report, EC — Poultry, paras. 111 and 113.
back to text
734. Panel Report, US — Hot-Rolled
Steel, para. 7.268. back to text
735. Panel Report, EC — Selected
Customs Matters, para. 7.116. back to text
736. Panel Report, EC — IT
Products, para. 7.1034. back to text
737. Panel Report, Thailand — Cigarettes
(Philippines), para. 7.806. back to text
738. Panel Report, China — Raw
Materials, paras. 7.732–7.736. back to text
739. Panel Report, China — Raw
Materials, para. 7.804. back to text
740. Panel Report, EC — IT
Products, para. 7.1048. back to text
741. Panel Report, EC — IT
Products, para. 7.1068. back to text
742. Panel Report, China — Raw
Materials, para. 7.805. back to text
743. Panel Report, EC — IT
Products, para. 7.1069. back to text
744. Panel Report, China — Raw
Materials, para. 7.805. back to text
745. Panel Report, EC — IT
Products, para. 7.1036. back to text
746. Panel Report, Dominican Republic — Import and Sale of Cigarettes, para.
7.414. back to text
747. Panel Report, EC — IT
Products, para. 7.1015. In footnote 1312 to this paragraph,
the Panel cited the passage from US — Underwear in
paragraph 540 below, and stated that “We consider that
this statement, although addressing
Article X:2, is equally applicable
to Article X:1.” back to text
748. Panel Report, Thailand — Cigarettes
(Philippines), para. 7.773. back to text
749. Panel Report, EC — IT
Products, para. 7.1074. back to text
750. Panel Report, EC — IT
Products, paras. 7.1076–7.1077. back to text
751. (footnote original) In
other words, if a “medium” makes measures generally available to the
public in such a manner as to “enable governments and traders to
become acquainted with them”, we consider that such medium should be
regarded as “appropriate” and that publishing on that medium would
fall within “published” a used in Article X:1.
back to text
752. Panel Report, EC — IT
Products, paras. 7.1082, 7.1084 (also citing the Panel
Report, Chile — Price
Band System, para. 7.127), 7.1086–7.1087. back to text
753. Panel Report, Thailand — Cigarettes
(Philippines), para. 7.860. back to text
754. Panel Report, China — Raw
Materials, paras. 7.806–7.807. back to text
755. Panel Report, Thailand — Cigarettes
(Philippines), para. 7.819. back to text
756. Appellate Body Report, US — Underwear, p. 21.
back to text
757. Appellate Body Report, US — Underwear, p. 21.
back to text
758. Panel Report, US — Anti-Dumping
Measures on Oil Country Tubular Goods, para. 7.185. back to text
759. Panel Report, EC — IT
Products, para. 7.1097. back to text
760. Panel Report, EC — IT
Products, para. 7.1106. back to text
761. Panel Report, EC — IT
Products, para. 7.1105. back to text
762. Panel Report, EC — IT
Products, para. 7.1107. back to text
763. Panel Report, EC — IT
Products, para. 7.1110. back to text
764. Panel Report, EC — IT
Products, para. 7.1116. back to text
765. Panel Report, EC — IT
Products, para. 7.1119. back to text
766. Panel Report, EC — IT
Products, para. 7.1120. back to text
767. Panel Report, EC — IT
Products, para. 7.1121. back to text
768. Panel Report, EC — IT
Products, para. 7.1129. back to text
769. Panel Report, EC — IT
Products, para. 7.1131. back to text
770. Panel Report, EC — IT
Products, paras. 7.1132–7.1135. back to text
771. Appellate Body Report, US — Shrimp, paras. 182–183.
back to text
772. Panel Report, EC — Bananas
III, para. 7.206. Also, Panel Report, EC — Bananas III,
para. 7.225. back to text
773. (footnote original)
Panel Report on Argentina — Hides
and Leather, para. 11.86. back to text
774. (footnote original)
Appellate Body Report on US — Shrimp,
para. 183. The Appellate Body also underlined that “inasmuch as 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 …” ( Appellate Body Report, US — Shrimp, para. 182) (emphasis
added). back to text
775. Panel Report, Thailand — Cigarettes
(Philippines), paras. 7.866–7.868. back to text
776. Appellate Body Report, EC — Bananas,
para. 200. See also Panel
Report, US — Corrosion-Resistant
Steel Sunset Review, para. 7.289. back to text
777. Appellate Body Report, EC — Poultry, para. 115.
back to text
778. (footnote original) In
fact, Article X:3(b), in its second sentence, uses the word “importer”.
back to text
779. Panel Report, Argentina — Hides
and Leather, paras. 11.67–11.68. back to text
780. (footnote original) In EC — Poultry, the Appellate Body
further stated that Article X is relevant only to measures “of general
application” and not to the particular treatment of each individual
shipment. See Appellate Body Report on EC — Poultry, paras. 111 and 113.
back to text
781. (footnote original) We
make this statement arguendo and do
not imply agreement with Argentina’s implicit assumption of no
violation in such instances. back to text
782. (footnote original) See
Appellate Body Reports on US — Gasoline,
p. 23; Japan — Alcoholic
Beverages II, p. 12; Argentina — Footwear (EC), para. 81.
back to text
783. Panel Report, Argentina — Hides
and Leather, paras. 11.71–11.72. back to text
784. Panel
Report, US — Corrosion-Resistant
Steel Sunset Review, para. 7.293. back to text
785. Panel Report, US — Hot-Rolled
Steel, para. 7.268. See also, Panel
Report, US — Corrosion-Resistant
Steel Sunset Review,
para. 7.307. back to text
786. Appellate Body Report, EC — Selected Customs Matters, paras. 200–201.
See also paragraphs 551–552 of this Chapter.
back to text
787. (footnote original)
Appellate Body Report on US — Oil
Country Tubular Goods Sunset Reviews, para. 217. back to text
788. Panel Report, Thailand — Cigarettes
(Philippines), paras. 7.873–7.874. back to text
789. Panel Report, Thailand — Cigarettes
(Philippines), para. 7.886. back to text
790. Panel Report, Thailand — Cigarettes
(Philippines), paras. 7.982–7.988. back to text
791. (footnote original)
However, we recall that, in US — Cotton
Yarn, the Appellate Body stated (when reviewing a textile
safeguards determination) that a Member cannot be expected to examine
“evidence that did not exist and that, therefore, could not possibly
have been taken into account when the Member made its determination… .
Consequently, a panel must not consider evidence which did not exist at
that point in time.” (Appellate Body Report,
US — Cotton
Yarn, paras. 77 and
78 (original emphasis; footnote omitted)) We also note the Appellate
Body’s statement in EC — Sardines that “[t]he interim review stage is not an appropriate time
to introduce new evidence.” (Appellate Body Report on EC — Sardines, para. 301)
back to text
792. Appellate Body Report, EC — Selected Customs Matters, para. 188.
back to text
793. (footnote original) DSU Article
3.2. back to text
794. (footnote original) It
is for this reason that both Article X:3(b) of GATT
1994 and Article 13 of the AD
Agreement require Members to maintain appropriate judicial,
arbitral or administrative tribunals or procedures. back to text
795. Panel Report, US — Stainless
Steel, paras. 6.50–6.51. back to text
796. Panel Report, Argentina — Hides
and Leather, para. 11.76. back to text
797. Panel Report, US — Hot-Rolled
Steel, para. 7.268. back to text
798. Panel
Report, US — Corrosion-Resistant
Steel Sunset Review, paras. 7.305–7.306. back to text
799. Appellate Body Report, EC — Selected Customs Matters, para. 224.
back to text
800. Panel Report, China — Raw
Materials, para. 7.743. back to text
801. Panel Report, China — Raw
Materials, paras. 7.751–7.752. back to text
802. Panel Report, Argentina — Hides
and Leather, paras. 11.99–11.101. back to text
803. See paragraph 559 above.
back to text
804. (footnote original)
Panel Report on US — Hot
Rolled Steel, para. 7.268. back to text
805. (footnote original) In
addition, we note that the Appellate Body has recognized that the good
faith principle has an implication for the Panels’ interpretation of
the Members obligations. (Appellate Body Report on US — Offset Act (Byrd Amendment),
para. 297). The Panel in Canada — Continued
Suspension also found that one aspect of the good faith
principle applied to the context of WTO disputes was to grant members a
presumption of WTO consistency in the application of their domestic
laws:
“It is implicit from the duty to perform treaty obligations in good
faith that a party to an international agreement should be deemed to
have acted in good faith in the performance of its treaty obligations.
More generally, even though Article 26 provides for an obligation and
not a presumption, pacta sunt servanda is
but only one expression of the principle of good faith. Good faith is a
general principle of international law that governs all reciprocal
actions of States. We are therefore inclined to agree with the European
Communities that every party to an international agreement must be
presumed to be performing its obligation under that agreement in good
faith.” (Panel Report on Canada — Continued
Suspension, para. 7.317)
In the absence of solid evidence to prove the contrary, there is no
reason to assume that TTM directors, who are Thai government officials,
would act in contradiction to their WTO obligations. back to text
806. Panel Report, Thailand — Cigarettes
(Philippines), paras. 7.903–7/905, 7.907–7.910. back to text
807. Panel Report, China — Raw
Materials, paras. 7.753–7.755. back to text
808. Panel Report, China — Raw
Materials, para. 7.783. back to text
809. Panel Report, China — Raw
Materials, para. 7.785. back to text
810. Panel Report, Argentina — Hides
and Leather, para. 11.94. back to text
811. Dominican Republic — Import
and Sale of Cigarettes, paras. 7.383, 7.387–7.388. back to text
812. Panel Report, Thailand — Cigarettes
(Philippines), paras. 7.921–7.925. back to text
813. Panel Report, Thailand — Cigarettes
(Philippines), para. 7.954. back to text
814. Panel Report, Thailand — Cigarettes
(Philippines), para. 7.969. back to text
815. Panel Report, China — Raw
Materials, para. 7.743. back to text
816. Panel Report, China — Raw
Materials, paras. 7.745–7.746. back to text
817. See paragraph 572. back to text
818. Panel Report, China — Raw
Materials, paras. 7.794–7.796. back to text
819. Panel Report, EC — Selected
Customs Matters, para. 7.536. back to text
820. Panel Report, Thailand — Cigarettes
(Philippines), para. 7.1015. back to text
821. Appellate Body Report, Thailand — Cigarettes (Philippines), paras. 203–205.
back to text
822. Appellate Body Report, Thailand — Cigarettes (Philippines), para. 221.
back to text
823. Appellate Body Report, Thailand — Cigarettes (Philippines), paras. 219–220.
back to text
824. Panel Report, Thailand — Cigarettes
(Philippines), para. 7.1029; Appellate Body Report, Thailand — Cigarettes (Philippines),
para. 202. back to text
825. Panel Report, Thailand — Cigarettes
(Philippines), para. 7.1035. back to text
826. Panel Report, Thailand — Cigarettes
(Philippines), para. 7.1053; Appellate Body Report, Thailand — Cigarettes (Philippines),
para. 216. back to text
827. Panel Report, EC — Selected
Customs Matters, fn. 894. back to text
828. Panel Report, EC — Selected
Customs Matters, para. 7.520. back to text
829. Appellate Body Report, EC — Selected Customs Matters, para. 303.
back to text
830. Panel Report, Thailand — Cigarettes
(Philippines), para. 7.1014. back to text
831. GATT Analytical Index,
p. 216. back to text
832. Panel Report, Argentina — Hides
and Leather, para. 11.60. back to text
833. Panel Report, Indonesia — Autos,
para. 14.152. back to text
834. Panel Report, Argentina — Hides
and Leather, paras. 11.81–11.84. back to text
835. Appellate Body Report, EC — Bananas III, paras. 203–204.
back to text
836. Panel Report, US — DRAMS,
para. 6.92. back to text
837. Panel Report, US — Stainless Steel,
para. 6.55. back to text
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