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DISPUTE SETTLEMENT: DISPUTE DS231

European Communities — Trade Description of Sardines

This summary has been prepared by the Secretariat under its own responsibility. The summary is for general information only and is not intended to affect the rights and obligations of Members.

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The summary below was up-to-date at
See also: One-page summary of key findings of this dispute

Appellate Body and Panel Reports Adopted

Complaint by Peru.

On 20 March 2001, Peru requested consultations with the EC concerning Regulation (EEC) 2136/89 which, according to Peru, prevents Peruvian exporters to continue to use the trade description “sardines” for their products.

Peru submitted that, according to the relevant Codex Alimentarius standards (STAN 94-181 rev. 1995), the species “sardinops sagax sagax” are listed among those species which can be traded as “sardines”. Peru, therefore, considered that the above Regulation constitutes an unjustifiable barrier to trade, and, hence, in breach of Articles 2 and 12 of the TBT Agreement and Article XI:1 of GATT 1994. In addition, Peru argues that the Regulation is inconsistent with the principle of non-discrimination, and, hence, in breach of Articles I and III of GATT 1994.

Further to Peru’s request, the DSB established a Panel at its meeting on 24 July 2001. Canada, Chile, Colombia, Ecuador, Venezuela and the US reserved their third-party rights. On 31 August 2001, Peru requested the Director-General to determine the composition of the Panel. On 11 September 2001, the Panel was composed. On 11 March 2002, the Panel informed the DSB that it would not be able to issue its report within 6 months, due to the complexity of the matter and scheduling constraints. The Panel expects to complete its work by end of April 2002. On 3 May 2002, the parties to the dispute requested the Panel to suspend its proceedings, pursuant to Article 12.12 of the DSU, until 21 May 2002. On 6 May 2002, the Panel agreed to this request.

The Panel Report was circulated to Members on 29 May 2002. The Panel concluded that the EC Regulation was inconsistent with Article 2.4 of the TBT Agreement.

On 28 June 2002, the EC notified its decision to appeal to the Appellate Body certain issues of law covered in the in the Panel report and certain legal interpretations developed by the Panel.

On 26 September 2002 the report of the Appellate Body was circulated. The Appellate Body:

• found that the condition attached to the withdrawal of the Notice of Appeal of 25 June 2002 was permissible, and that the appeal of the EC, commenced by the Notice of Appeal of 28 June 2002, was admissible;
   
• found that the amicus curiae briefs submitted were admissible but their contents did not assist in deciding the appeal;
   
• upheld the Panel’s finding, in paragraph 7.35 of the Panel Report, that the EC Regulation is a “technical regulation” under the TBT Agreement;
   
• upheld the Panel’s findings, in paragraph 7.60 of the Panel Report, that Article 2.4 of the TBT Agreement applies to measures that were adopted before 1 January 1995 but which have not “ceased to exist”, and, in paragraph 7.83 of the Panel Report, that Article 2.4 of the TBT Agreement applies to existing technical regulations, including the EC Regulation;
   
• upheld the Panel’s finding, in paragraph 7.70 of the Panel Report, that Codex Stan 94 is a “relevant international standard” under Article 2.4 of the TBT Agreement;
   
• upheld the Panel’s finding, in paragraph 7.112 of the Panel Report, that Codex Stan 94 was not used “as a basis for” the EC Regulation within the meaning of Article 2.4 of the TBT Agreement;
   
• reversed the Panel’s finding, in paragraph 7.52 of the Panel Report, that, under the second part of Article 2.4 of the TBT Agreement, the burden of proof rested with the EC to demonstrate that Codex Stan 94 is an “ineffective or inappropriate means for the fulfilment of the legitimate objectives pursued” by the EC through the EC Regulation, and found, instead, that the burden of proof rested with Peru to demonstrate that Codex Stan 94 is an effective and appropriate means to fulfil those “legitimate objectives”, and, upheld the Panel’s finding, in paragraph 7.138 of the Panel Report, that Peru has adduced sufficient evidence and legal arguments to demonstrate that Codex Stan 94 is not “ineffective or inappropriate” to fulfil the “legitimate objectives” of the EC Regulation;
   
• rejected the claim of the EC that the Panel did not conduct “an objective assessment of the facts of the case”, as required by Article 11 of the DSU;
   
• rejected the claim of the EC that the Panel made a determination, in paragraph 7.127 of the Panel Report, that the EC Regulation is trade-restrictive, and, declared moot and without legal effect the two statements, in paragraph 6.11 and in footnote 35 of the Panel Report, on the trade-restrictive character of the EC Regulation; and
   
• found it unnecessary to complete the analysis under Article 2.2 of the TBT Agreement, Article 2.1 of the TBT Agreement, or Article III:4 of the GATT 1994.

Therefore, the Appellate Body upheld the Panel’s finding, in paragraph 8.1 of the Panel Report, that the EC Regulation is inconsistent with Article 2.4 of the TBT Agreement.

The Appellate Body recommended that the DSB request the EC to bring the EC Regulation, as found in its and in the Panel Report, as modified by its Report, to be inconsistent with Article 2.4 of the TBT Agreement, into conformity with EC’s obligations under that Agreement.

On 23 October 2002, the DSB adopted the Appellate Body Report and the Panel Report, as modified by the Appellate Body Report.

Implementation Status of Adopted Reports

At the DSB meeting of 11 November 2002, the EC stated that it was working towards implementing the rulings and recommendations of the DSB in a manner consistent with its obligations under WTO rules, in particular, Article 2.4 of the TBT Agreement. However, the EC stated that in order to be able to achieve this it would need a reasonable period in which to bring its measures into conformity with its obligations under the TBT Agreement, especially given that implementation would entail the repeal of a statutory measure. To that end, the EC was willing to consult with Peru, pursuant to Article 21.3 of the DSU, in order to achieve agreement on the reasonable period of time needed for implementation of the DSB’s rulings and recommendations.

On 19 December 2002, Peru and the EC informed the DSB that they had agreed that the reasonable period of time for the EC to implement the recommendations and rulings of the DSB, will expire on 23 April 2003. On 14 April 2003, the parties informed the DSB that they had reached an agreement to extend the reasonable period of time until 1 July 2003.

Mutually Agreed Solutions notified under Article 3.6 of the DSU

On 25 July 2003, the European Communities and Peru informed the DSB that they had reached a mutually agreed solution pursuant to Article 3.6 of the DSU.

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