DISPUTE SETTLEMENT: DISPUTE DS269

European Communities — Customs Classification of Frozen Boneless Chicken Cuts


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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Current status  back to top

 

Key facts  back to top

Short title:
Complainant:
Respondent:
Third Parties:
Agreements cited:
(as cited in request for consultations)
Request for Consultations received:
Panel Report circulated: 30 May 2005
Appellate Body Report circulated: 12 September 2005
Article 21.3(c) Arbitration Report circulated: 20 February 2006

  

Summary of the dispute to date  back to top

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

Consultations

Complaint by Brazil.

On 11 October 2002, Brazil requested consultations with the European Communities concerning EC Commission Regulation No. 1223/2002 (“Regulation No. 1223/2002”), of 8 July 2002, which provides a new description of frozen boneless chicken cuts under the EC Combined Nomenclature (“CN”) code 0207.14.10. According to Brazil, this new description includes a salt content to the product that did not exist before and subjects the imports of these products to a higher tariff than that applicable to salted meat (CN code 0210) in the EC’s Schedules under the GATT 1994.

Brazil submits that Regulation No. 1223/2002 automatically forces products that were previously imported under CN code 0210.99.39, and subject to an ad valorem tariff rate of 15.4%, to be classified under CN code 0207.14.10, and subject to a higher tariff rate of 102.4 €/100kg/net. This tariff rate of 102.4 €/100kg/net is in excess of the tariff rate for salted meat (CN code 0210) provided for in the EC’s Schedules under the GATT 1994.

As a result of this measure, Brazil considered that its commerce has been accorded treatment less favourable than that provided in the EC Schedules, in contravention of the obligations of the EC under Articles II and XXVIII of the GATT 1994. In addition, Brazil claimed that the application of this measure by the EC nullifies and impairs, within the meaning of Article XXIII:1, benefits accruing to Brazil directly or indirectly under the GATT 1994.

On 25 October 2002, the United States requested to join the consultations.

On 25 March 2003, Thailand requested consultations with the EC on the same matter. According to Thailand, the measure at issue is inconsistent with the EC’s obligations under Articles II:1(a) and II:1(b) of the GATT 1994 and its Schedule of Concessions. On 3 and 10 April 2003 respectively, Brazil and the United States requested to join the consultations. The EC informed the DSB that it had accepted the request of Brazil to join the consultations.

On 19 September 2003, Brazil requested the establishment of a panel. At its meeting on 2 October 2003, the DSB deferred the establishment of a panel.

 

Panel and Appellate Body proceedings

Further to a second request to establish a panel by Brazil, the DSB established a panel at its meeting on 7 November 2003. Chile, China, Thailand and the United States reserved their third-party rights.

On 27 October 2003, Thailand requested the establishment of a panel. At its meeting on 7 November 2003, the DSB deferred the establishment of a panel. On 21 November 2003, further to a second request by Thailand for the establishment of a panel, the DSB established a single panel, pursuant to an agreement between the parties and in accordance with Article 9.1 of the DSU. The Members which had reserved their third party rights in the panel established at the request of Brazil were also considered as third parties in the single panel. In addition, Brazil, Columbia and Chile reserved their third-party rights in the single panel.

On 17 June 2004, Brazil and Thailand requested the Director-General to compose the panel. On 28 June 2004, the Director-General composed the panel. On 14 July 2004, Chile informed the Panel that it did not want to participate as third-party in these panel proceedings. On 14 September 2004, Colombia informed the Panel that it did not want to participate as third-party in these panel proceedings.

On 19 November 2004, the Chairman of the Panel informed the DSB that it would not be able to complete its work in six months due to the complexity of the case and the sensitivity of the legal and factual questions that have been raised, and that the Panel hoped to complete its work by the end of March 2005.

On 30 May 2005, the Panel report was circulated to Members. The Panel found that the measure at issue is inconsistent with the EC’s obligations under Articles II:1(a) and II:1(b) of the GATT 1994, because the products at issue were covered by the concession contained in heading 02.10 and yet, the measure at issue resulted in the imposition of customs duties on the product at issue in excess of the duties provided for in respect of the concession contained in heading 02.10, by classifying the products at issue under the concession contained in heading 02.07.

On 13 June 2005, the European Communities notified its decision to appeal to the Appellate Body certain issues of law covered in the Panel Reports and certain legal interpretations developed by the Panel in these reports.  On 27 June 2005, Brazil notified its decision to appeal to the Appellate Body certain issues of law covered in the Panel Reports and certain legal interpretations developed by the Panel in these reports.  On 11 August 2005, the Chairman of the Appellate Body informed the DSB that due to the time required for completion and translation of the Report, the Appellate Body would not be able to circulate its Report by 12 August 2005, and that it estimated that the Appellate Body Report in this appeal would be circulated to WTO Members no later than 12 September 2005.

On 12 September 2005, the Appellate Body circulated its Report to Members. The Appellate Body essentially upheld the procedural and substantive conclusions of the Panel, such that it found that the European Communities’ measures to be WTO-inconsistent, although the Appellate Body relied on different reasoning. However, the Appellate Body reversed the Panel’s finding that the European Communities’ practice, between 1996 and 2002, of classifying the products at issue as salted meat constitutes “subsequent practice in the application of the treaty which establishes the agreement of the parties regarding its interpretation” under Article 31(3)(b) of the Vienna Convention on the Law of Treaties.

At its meeting on 27 September 2005, the DSB adopted the Appellate Body Report and the Panel Report as modified by the Appellate Body report.

 

Implementation of adopted reports

At the DSB meeting on 18 October 2005, the European Communities announced its intention to implement the DSB’s recommendations and rulings in this case and said that it would need a reasonable period of time to do so.

On 22 November 2005, Brazil requested that the reasonable period of time be determined through binding arbitration pursuant to Article 21.3(c) of the DSU. On 9 December 2005, Thailand requested that the reasonable period of time be determined through binding arbitration pursuant to Article 21.3(c) of the DSU.  By joint letter dated 9 December 2005 from Brazil and the European Communities, and joint letter dated 13 December 2005 from the European Communities and Thailand, Mr James Bacchus was requested to act as arbitrator.  On 14 December 2005, Mr Bacchus informed Brazil, the European Communities and Thailand that he accepted the appointments to serve as arbitrator and that he proposed to conduct both proceedings simultaneously.

On 20 February 2006, the Arbitrator decided the reasonable period of time for implementation would be nine months and therefore would expire on 27 June 2006.

At the DSB meeting on 19 June 2006, the European Communities said that they were in the process of adopting a Regulation which would fully implement the DSB recommendations and rulings. The European Communities said they would present a more detailed status report as soon as the Regulation was adopted and entered into force. At the DSB meeting on 19 July 2006, the European Communities said that they had fully implemented the DSB recommendations and rulings by adopting Commission Regulation (EC) No 949/2006 on 27 June and implementing it on the same day. However, Brazil and Thailand said they were still assessing the scope and effects of the amending Regulation and that they would follow closely the EC's implementation actions. On 14 July 2006, Thailand and the European Communities informed the DSB of an Understanding regarding procedures under Articles 21 and 22 of the DSU. On 26 July 2006, Brazil and the European Communities informed the DSB of an Understanding regarding procedures under Articles 21 and 22 of the DSU.

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