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REPERTORY OF APPELLATE BODY REPORTS

GATS


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Article I: Scope of application — Measures affecting trade in services. See also GATT 1994: Relationship between the GATT 1994 and the GATS (G.2.2)
Schedules
Article XVI — Market access


G.1.1 Article I: Scope of application — Measures affecting trade in services. See also GATT 1994: Relationship between the GATT 1994 and the GATS (G.2.2)     back to top

G.1.1.1 EC — Bananas III, para. 220
(WT/DS27/AB/R)

 

… we note that Article I:1 of the GATS provides that “[t]his Agreement applies to measures by Members affecting trade in services”. In our view, the use of the term “affecting” reflects the intent of the drafters to give a broad reach to the GATS. The ordinary meaning of the word “affecting” implies a measure that has “an effect on”, which indicates a broad scope of application. This interpretation is further reinforced by the conclusions of previous panels that the term “affecting” in the context of Article III of the GATT is wider in scope than such terms as “regulating” or “governing”. We also note that Article I:3(b) of the GATS provides that “ ‘services’ includes any service in any sector except services supplied in the exercise of governmental authority” (emphasis added), and that Article XXVIII(b) of the GATS provides that the “ ‘supply of a service’ includes the production, distribution, marketing, sale and delivery of a service”. There is nothing at all in these provisions to suggest a limited scope of application for the GATS. …

 

G.1.1.2 EC — Bananas III, para. 221
(WT/DS27/AB/R)

 

… the GATS applies to the supply of services. It provides, inter alia, for both MFN treatment and national treatment for services and service suppliers. Given the respective scope of application of the two agreements, they may or may not overlap, depending on the nature of the measures at issue. Certain measures could be found to fall exclusively within the scope of the GATT 1994, when they affect trade in goods as goods. Certain measures could be found to fall exclusively within the scope of the GATS, when they affect the supply of services as services. There is yet a third category of measures that could be found to fall within the scope of both the GATT 1994 and the GATS. These are measures that involve a service relating to a particular good or a service supplied in conjunction with a particular good. In all such cases in this third category, the measure in question could be scrutinized under both the GATT 1994 and the GATS. However, while the same measure could be scrutinized under both agreements, the specific aspects of that measure examined under each agreement could be different. …

 

G.1.1.3 Canada — Autos, paras. 151-152
(WT/DS139/AB/R, WT/DS142/AB/R)

 

… Similarly, here, the fundamental structure and logic of Article I:1, in relation to the rest of the GATS, require that determination of whether a measure is, in fact, covered by the GATS must be made before the consistency of that measure with any substantive obligation of the GATS can be assessed.

 

… We find, therefore, that the Panel should have inquired, as a threshold question, into whether the measure is within the scope of the GATS by examining whether the import duty exemption is a measure “affecting trade in services” within the meaning of Article I. In failing to do so, the Panel erred in its interpretative approach.

 

G.1.1.4 Canada — Autos, para. 155
(WT/DS139/AB/R, WT/DS142/AB/R)

 

With these treaty provisions in mind, we believe that at least two key legal issues must be examined to determine whether a measure is one “affecting trade in services”: first, whether there is “trade in services” in the sense of Article I:2; and, second, whether the measure in issue “affects” such trade in services within the meaning of Article I:1.

 

G.1.1.5 Canada — Autos, para. 165
(WT/DS139/AB/R, WT/DS142/AB/R)

 

We do not consider this statement of the Panel to be a sufficient basis for a legal finding that the import duty exemption “affects” wholesale trade services of motor vehicles as services, or wholesale trade service suppliers in their capacity as service suppliers. The Panel failed to analyse the evidence on the record relating to the provision of wholesale trade services of motor vehicles in the Canadian market. It also failed to articulate what it understood Article I:1 to require by the use of the term “affecting”. Having interpreted Article I:1, the Panel should then have examined all the relevant facts, including who supplies wholesale trade services of motor vehicles through commercial presence in Canada, and how such services are supplied. It is not enough to make assumptions. Finally, the Panel should have applied its interpretation of “affecting trade in services” to the facts it should have found.

 

G.1.1.6 Canada — Autos, para. 166
(WT/DS139/AB/R, WT/DS142/AB/R)

 

The European Communities and Japan may well be correct in their assertions that the availability of the import duty exemption to certain manufacturer beneficiaries of the United States established in Canada, and the corresponding unavailability of this exemption to manufacturer beneficiaries of Europe and of Japan established in Canada, has an effect on the operations in Canada of wholesale trade service suppliers of motor vehicles and, therefore, “affects” those wholesale trade service suppliers in their capacity as service suppliers. However, the Panel did not examine this issue. The Panel merely asserted its conclusion, without explaining how or why it came to its conclusion. This is not good enough.

 

G.1.1.7 Canada — Autos, para. 167
(WT/DS139/AB/R, WT/DS142/AB/R)

 

For these reasons, we believe that the Panel has failed to examine whether the measure is one “affecting trade in services” as required under Article I:1 of the GATS. The Panel did not show that the measure at issue affects wholesale trade services of motor vehicles, as services, or wholesale trade service suppliers of motor vehicles, in their capacity as service suppliers. Nonetheless, we continue our analysis of the issues raised on appeal under Article II:1, and examine whether, in the terms of that provision, the measure accords treatment “no less favourable” to like services and service suppliers of other Members.

 

G.1.1.8 US — Gambling, paras. 120-123
(WT/DS285/AB/R, WT/DS285/AB/R/Corr.1)

 

The question before us, therefore, is whether an alleged “total prohibition” on the cross-border supply of gambling and betting services constitutes a measure that may be challenged under the GATS. The DSU provides for the “prompt settlement” of situations where Members consider that their benefits under the covered agreements “are being impaired by measures taken by another Member”. Two elements of this reference to “measures” that may be the subject of dispute settlement are relevant. First, as the Appellate Body has stated, a “nexus” must exist between the responding Member and the “measure”, such that the “measure” — whether an act or omission — must be “attributable” to that Member. Secondly, the “measure” must be the source of the alleged impairment, which is in turn the effect resulting from the existence or operation of the “measure”.

 

Similarly [Article 4.2 of the DSU] contemplates that “measures” themselves will “affect” the operation of a covered agreement. Finally, we note that this distinction between measures and their effects is also evident in the scope of application of the GATS, namely, to “measures by Members affecting trade in services”.

 

We are therefore of the view that the DSU and the GATS focus on “measures” as the subject of challenge in WTO dispute settlement. To the extent that a Member’s complaint centres on the effects of an action taken by another Member, that complaint must nevertheless be brought as a challenge to the measure that is the source of the alleged effects.

 

G.1.1.9 US — Gambling, para. 180
(WT/DS285/AB/R, WT/DS285/AB/R/Corr.1)

 

We move … to examine the context provided by the structure of the GATS itself.… To us, the structure of the GATS necessarily implies two things. First, because the GATS covers all services except those supplied in the exercise of governmental authority, it follows that a Member may schedule a specific commitment in respect of any service. …

 
G.1.2 Schedules     back to top

G.1.2.1 INTERPRETATION OF SCHEDULES

G.1.2.1.1 US — Gambling, para. 160
(WT/DS285/AB/R, WT/DS285/AB/R/Corr.1)

 

In the context of the GATS, Article XX:3 explicitly provides that Members’ Schedules are an “integral part” of that agreement. Here, too, the task of identifying the meaning of a concession in a GATS Schedule, like the task of interpreting any other treaty text, involves identifying the common intention of Members. … we consider that the meaning of the United States’ GATS Schedule must be determined according to the rules codified in Article 31 and, to the extent appropriate, Article 32 of the Vienna Convention.

 

G.1.2.1.2 US — Gambling, para. 166
(WT/DS285/AB/R, WT/DS285/AB/R/Corr.1)

 

We have three reservations about the way in which the Panel determined the ordinary meaning of the word “sporting” in the United States’ Schedule. First, to the extent that the Panel’s reasoning simply equates the “ordinary meaning” with the meaning of words as defined in dictionaries, this is, in our view, too mechanical an approach. Secondly, the Panel failed to have due regard to the fact that its recourse to dictionaries revealed that gambling and betting can, at least in some contexts, be one of the meanings of the word “sporting”. Thirdly, the Panel failed to explain the basis for its recourse to the meanings of the French and Spanish words “déportivos” and “sportifs” in the light of the fact that the United States’ Schedule explicitly states, in a cover note, that it “is authentic in English only”.

 

G.1.2.1.3 US — Gambling, para. 167
(WT/DS285/AB/R, WT/DS285/AB/R/Corr.1)

 

Overall, the Panel’s finding concerning the word “sporting” was premature. In our view, the Panel should have taken note that, in the abstract, the range of possible meanings of the word “sporting” includes both the meaning claimed by Antigua and the meaning claimed by the United States, and then continued its inquiry into which of those meanings was to be attributed to the word as used in the United States’ GATS Schedule.

 

G.1.2.1.4 China — Publications and Audiovisual Products, para. 362
(WT/DS363/AB/R)

 

The Panel considered the sector heading itself and found that the meaning of the term “audiovisual” (“pertaining to both hearing and vision”) suggested that services scheduled under this heading (such as “Sound recording distribution services”), unless otherwise specified, relate to the production, distribution, projection, or broadcasting of content that is “sensed by the user through the faculties of hearing or vision”. Such context does not, in itself, rule out the possibility that China could have scheduled commitments concerning services related only to physical products under such a heading.

 

G.1.2.1.5 China — Publications and Audiovisual Products, para. 364
(WT/DS363/AB/R)

 

We observe that the reference to audiovisual “products” in the scheduled market access limitation can encompass both physical and non-physical sound recordings, because, as the Panel found, the term “product” is used to refer to both tangible and intangible goods, as well as services. Thus, China’s commitment on “Sound recording distribution services” does not specify whether it is limited to the distribution of physical goods, but it does include a market access limitation on the distribution of audiovisual “products” that refers to both tangibles and intangibles. Such commitment might have expressly indicated that it relates only to the distribution of tapes, videocassettes, CDs, digital video discs (“DVDs”), and/or other physical media, but it does not.

 

G.1.2.1.6 China — Publications and Audiovisual Products, para. 365
(WT/DS363/AB/R)

 

Regarding the reference to “motion pictures”, we observe that it is not disputed that this term refers to non-physical content that can be embedded in physical products. China’s mode 3 market access commitment covers “audiovisual products”, excluding “motion pictures”, thus implying that motion pictures would otherwise be included within the category of audiovisual products. Moreover, China undertakes an additional commitment on the importation of motion pictures for theatrical release under the heading “Audiovisual Services”. Therefore, we consider that the reference to motion pictures under “Audiovisual Services” in China’s GATS Schedule supports the view that the term “audiovisual products” is used to refer to both tangible and intangible products and that the term “Sound recording distribution services” also refers to both tangible and intangible products. This also supports the view that this entry covers the electronic distribution of sound recordings.

 

G.1.2.1.7 China — Publications and Audiovisual Products, para. 369
(WT/DS363/AB/R)

 

We agree with this reasoning of the Panel. The fact that the entry “Videos, (… ) distribution services” applies to intangible products represents relevant context suggesting that the entry “Sound recording distribution services”, which is subject to the same market access and national treatment limitations in the four modes of supply, should also be interpreted as applying to intangible products. We note that the entry “Videos, (… ) distribution services” includes “entertainment software”, which is also a reference to content that can be incorporated into physical products or transmitted electronically. In our view, this provides further contextual support for interpreting “Sound recording distribution services” as referring to content in both physical and non-physical form, and thus extending to the electronic distribution of sound recordings.

 

G.1.2.1.8 China — Publications and Audiovisual Products, para. 372
(WT/DS363/AB/R)

 

We therefore agree with the Panel’s observation that, had China’s relevant entry “Sound recording distribution services” under “Audiovisual Services” been intended to cover exclusively the distribution of audiovisual products in physical form, “there would have been no need to insert [this entry and the entry ‘Video (… ) distribution services’] under a sector other than Distribution Services, where the distribution of physical goods are generally covered in China’s Schedule”. This alone does not demonstrate that this entry also covers the electronic distribution of sound recordings. However, we recognize the contextual relevance of the fact that the entry “Sound recording distribution services” has been inscribed under the sector concerned with audiovisual content, “Audiovisual Services”, as opposed to the sector “Distribution Services”, which covers the distribution of physical goods in China’s GATS Schedule. This, in our view, provides contextual support for an interpretation of the entry “Sound recording distribution services” as extending also to the distribution of non-physical products.

 

G.1.2.1.9 China — Publications and Audiovisual Products, para. 374
(WT/DS363/AB/R)

 

We observe that the meaning of terms used in specific commitments inscribed in Members’ Schedules is also informed by the rules in the GATS itself that govern the scheduling of such commitments. Thus, in US — Gambling, the Appellate Body examined “the context provided by the structure of the GATS itself” in interpreting the relevant entry in the United States’ GATS Schedule under Article 31 of the Vienna Convention.

 

G.1.2.1.10 China — Publications and Audiovisual Products, para. 376
(WT/DS363/AB/R)

 

The provisions of the GATS itself, insofar as they concern the scheduling of specific commitments, also provide relevant context for the interpretation of specific commitments. Article I defines “trade in services” as the supply of a service through the four modes of supply. The GATS distinguishes four modes of supply, but does not provide for further distinctions between forms of delivery. Article XXVIII(b) of the GATS defines the “supply of a service” as including “the production, distribution, marketing, sale and delivery of a service”. Article XX of the GATS requires each Member to set out in a Schedule the specific commitments it undertakes and to specify by sector any limitations, conditions, or qualifications on market access and national treatment, and any additional commitments. Members undertake specific commitments in sectors or subsectors and according to the four modes of supply. The GATS also allows Members to circumscribe the scope of their commitments by qualifying the scope of sectors or subsectors inscribed in the Schedule, by including or excluding modes of supply, and by listing limitations, qualifications, or conditions on market access and national treatment.

 

G.1.2.1.11 China — Publications and Audiovisual Products, para. 377
(WT/DS363/AB/R)

 

We observe that, unless a sector is included in a Schedule, it is not subject to specific commitments. However, having included a sector or subsector and having specified commitments for one or more modes of supply in its Schedule, a Member undertakes to liberalize “the production, distribution, marketing, sale and delivery” of the service(s) falling within that sector or subsector and mode(s) of supply, unless it has specified otherwise by inserting conditions, limitations, or qualifications in the Schedule. This implies that, in the absence of specific limitations, conditions, or qualifications, the meaning of “Sound recording distribution services” is not limited to the physical delivery of sound recordings. Rather, this entry would encompass distribution in electronic form.

 

G.1.2.1.12 China — Publications and Audiovisual Products, para. 379
(WT/DS363/AB/R)

 

The definition of “supply of a service” in Article XXVIII(b) of the GATS would not in itself exclude the possibility of drafting a Schedule entry in a way that covers only the distribution of physical goods. However, the interpretative question in this dispute is whether China’s entry has been formulated in such a way. It is clear that the term “distribution” as used in Article XXVIII(b) of the GATS refers to the distribution of something intangible — services. We agree with the Panel that this is relevant context in interpreting the meaning of the term “distribution” in China’s entry “Sound recording distribution services” in its GATS Schedule, and that Article XXVIII(b) of the GATS lends support to an interpretation of the term “distribution” in the relevant entry in China’s Schedule as covering the distribution of both tangible and intangible products.

 

G.1.2.1.13 China — Publications and Audiovisual Products, para. 393
(WT/DS363/AB/R)

 

… At the same time, we observe that none of the objectives listed in the GATS preamble provides specific guidance as to the correct interpretation to be given to China’s GATS Schedule entry “Sound recording distribution services”.

 

G.1.2.1.14 China — Publications and Audiovisual Products, para. 394
(WT/DS363/AB/R)

 

The principle of progressive liberalization is reflected in the structure of the GATS, which contemplates that WTO Members undertake specific commitments through successive rounds of multilateral negotiations with a view to liberalizing their services markets incrementally, rather than immediately and completely at the time of the acceptance of the GATS. The scheduling of specific commitments by service sectors and modes of supply represents another manifestation of progressive liberalization. In making specific commitments, Members are not required to liberalize fully the chosen sector, but may limit the coverage to particular subsectors and modes of supply and maintain limitations, conditions, or qualifications on market access and national treatment, provided that they are inscribed in their Schedules. We do not consider, however, that the principle of progressive liberalization lends support to an interpretation that would constrain the scope and coverage of specific commitments that have already been undertaken by Members and by which they are bound.

 

G.1.2.1.15 China — Publications and Audiovisual Products, para. 395
(WT/DS363/AB/R)

 

Neither are we persuaded that, if the Panel had based its analysis on the meanings of the terms “sound recording” and “distribution” at the time of China’s accession to the WTO — that is, 2001 — it would have reached a different conclusion on the interpretation of the entry “Sound recording distribution services” in China’s GATS Schedule. The term “sound recording” can be used to refer to “recorded content”, irrespective of how it is distributed. We have already considered above that the GATS, which entered into force in 1995, contemplates in Article XXVIII(b) the distribution of services — that is, of intangibles. This lends support to interpreting the meaning of “distribution” as applying to both tangible and intangible products, and would equally have done so in 2001, and at the time the Panel interpreted the entry “Sound recording distribution services” in China’s GATS Schedule.

 

G.1.2.1.16 China — Publications and Audiovisual Products, para. 396 and footnote 705
(WT/DS363/AB/R)

 

More generally, we consider that the terms used in China’s GATS Schedule (“sound recording” and “distribution”) are sufficiently generic that what they apply to may change over time. In this respect, we note that GATS Schedules, like the GATS itself and all WTO agreements, constitute multilateral treaties with continuing obligations that WTO Members entered into for an indefinite period of time, regardless of whether they were original Members or acceded after 1995.705

 

G.1.2.1.17 China — Publications and Audiovisual Products, para. 397
(WT/DS363/AB/R)

 

We further note that interpreting the terms of GATS specific commitments based on the notion that the ordinary meaning to be attributed to those terms can only be the meaning that they had at the time the Schedule was concluded would mean that very similar or identically worded commitments could be given different meanings, content, and coverage depending on the date of their adoption or the date of a Member’s accession to the treaty. Such interpretation would undermine the predictability, security, and clarity of GATS specific commitments, which are undertaken through successive rounds of negotiations, and which must be interpreted in accordance with customary rules of interpretation of public international law.

G.1.2.2 RELEVANCE OF THE CENTRAL PRODUCT CLASSIFICATION (CPC), SERVICES SECTORAL CLASSIFICATION LIST (W/120) AND SCHEDULING GUIDELINES

G.1.2.2.1 US — Gambling, para. 175
(WT/DS285/AB/R, WT/DS285/AB/R/Corr.1)

 

We note that Article 31(2) refers to the agreement or acceptance of the parties. In this case, both W/120 and the 1993 Scheduling Guidelines were drafted by the GATT Secretariat rather than the parties to the negotiations. It may be true that, on its own, authorship by a delegated body would not preclude specific documents from falling within the scope of Article 31(2). However, we are not persuaded that in this case the Panel could find W/120 and the 1993 Scheduling Guidelines to be context. Such documents can be characterized as context only where there is sufficient evidence of their constituting an “agreement relating to the treaty” between the parties or of their “accept[ance by the parties] as an instrument related to the treaty”.

 

G.1.2.2.2 US — Gambling, paras. 176, 178
(WT/DS285/AB/R, WT/DS285/AB/R/Corr.1)

 

We do not accept, as the Panel appears to have done, that, simply by requesting the preparation and circulation of these documents and using them in preparing their offers, the parties in the negotiations have accepted them as agreements or instruments related to the treaty. Indeed, there are indications to the contrary. As the United States pointed out before the Panel, the United States and several other parties to the negotiations clearly stated, at the time W/120 was proposed, that, although Members were encouraged to follow the broad structure of W/120, it was never meant to bind Members to the CPC definitions, nor to any other “specific nomenclature”, and that “the composition of the list was not a matter for negotiations”. Similarly, the Explanatory Note that prefaces the Scheduling Guidelines itself appears to contradict the Panel in this regard, as it expressly provides that, although it is intended to assist “persons responsible for scheduling commitments”, that assistance “should not be considered as an authoritative legal interpretation of the GATS”.

 

 

… therefore, the Panel erred in categorizing W/120 and the 1993 Scheduling Guidelines as “context” for the interpretation of the United States’ GATS Schedule. …

 

G.1.2.2.3 US — Gambling, para. 179
(WT/DS285/AB/R, WT/DS285/AB/R/Corr.1)

 

… the United States’ Schedule … makes no reference to CPC codes. The Schedule does, however, refer to W/120 in two instances, apparently in order to make clear that the United States’ commitment corresponds to only part of a subsector listed in W/120. This suggests that, at least for some of its entries, the United States also expressly referred to W/120 in order to define the content of a Schedule entry and, thereby, limit the scope of its specific commitment. …

 

G.1.2.2.4 US — Gambling, para. 180
(WT/DS285/AB/R, WT/DS285/AB/R/Corr.1)

 

We move … to examine the context provided by the structure of the GATS itself. … To us, the structure of the GATS necessarily implies two things. First, because the GATS covers all services except those supplied in the exercise of governmental authority, it follows that a Member may schedule a specific commitment in respect of any service. Secondly, because a Member’s obligations regarding a particular service depend on the specific commitments that it has made with respect to the sector or subsector within which that service falls, a specific service cannot fall within two different sectors or subsectors. In other words, the sectors and subsectors in a Member’s Schedule must be mutually exclusive. In the context of the United States’ Schedule, this means that, notwithstanding the broad language used in sector 10 — for example, “recreational services”, “sporting”, and “entertainment services” — gambling and betting services can only fall — if at all — within one of those service categories.

 

G.1.2.2.5 US — Gambling, para. 181
(WT/DS285/AB/R, WT/DS285/AB/R/Corr.1)

 

… Article 22.3(f) of the DSU provides that, for purposes of suspending concessions, “sector’ means … (ii) with respect to services, a principal sector as identified in the current ‘Services Sectoral Classification List’ which identifies such sectors”. A footnote adds that “[t]he list in document MTN.GNS/W/120 identifies eleven sectors.” This reference confirms the relevance of W/120 to the task of identifying service sectors in GATS Schedules, but does not appear to assist in the task of ascertaining within which subsector of a Member’s Schedule a specific service falls.

 

G.1.2.2.6 US — Gambling, para. 182
(WT/DS285/AB/R, WT/DS285/AB/R/Corr.1)

 

… other Members’ Schedules constitute relevant context for the interpretation of subsector 10.D of the United States’ Schedule. At the same time, as the Panel rightly acknowledged, use of other Members’ Schedules as context must be tempered by the recognition that “[e]ach Schedule has its own intrinsic logic, which is different from the US Schedule.”

 

G.1.2.2.7 US — Gambling, para. 183
(WT/DS285/AB/R, WT/DS285/AB/R/Corr.1)

 

… the United States’ Schedule, like the Schedules of nearly all Members, generally follows the structure, and adopts the language, of W/120. These structural and linguistic similarities lead us to conclude, contrary to the United States submission, that the absence of references to CPC codes does not mean that words used in the United States’ Schedule must have a different meaning and scope than the same words used in the Schedules of other Members.

 

G.1.2.2.8 US — Gambling, para. 186
(WT/DS285/AB/R, WT/DS285/AB/R/Corr.1)

 

… we find it significant that the entries made by many Members in sector 10 of their Schedules contain text additional to the text found in the headings and sub-headings used by the United States (and used in W/120). Such Members disaggregated their entries beyond the five subsectors identified in W/120 as falling within sector 10. There is a broad range of ways in which this was accomplished. … This context indicates that Members seeking to distinguish the commitments they were making regarding gambling and betting services from other commitments they were making in subsector 10.D used specific language and/or CPC codes to indicate this distinction. …

 

G.1.2.2.9 US — Gambling, paras. 192-193
(WT/DS285/AB/R, WT/DS285/AB/R/Corr.1)

 

… in order for “practice” within the meaning of Article 31(3)(b) to be established: (i) there must be a common, consistent, discernible pattern of acts or pronouncements; and (ii) those acts or pronouncements must imply agreement on the interpretation of the relevant provision.

 

… Although the 2001 Guidelines were explicitly adopted by the Council for Trade in Services, this was in the context of the negotiation of future commitments and in order to assist in the preparation of offers and requests in respect of such commitments. As such, they do not constitute evidence of Members’ understanding regarding the interpretation of existing commitments. Furthermore, as the United States emphasized before the Panel, in its Decision adopting the 2001 Guidelines, the Council for Trade in Services explicitly stated that they were to be “nonbinding” and “shall not modify any rights or obligations of the Members under the GATS”. Accordingly, we do not consider that the 2001 Guidelines, in and of themselves, constitute “subsequent practice” within the meaning of Article 31(3)(b) of the Vienna Convention.

 

G.1.2.2.10 US — Gambling, paras. 196-197
(WT/DS285/AB/R, WT/DS285/AB/R/Corr.1)

 

… this appeal does not raise the question whether W/120 and the 1993 Scheduling Guidelines constitute “supplementary means of interpretation, including the preparatory work of the treaty and the circumstances of its conclusion”. Both participants agree that they do, and we see no reason to disagree.

 

… a proper interpretation pursuant to the principles codified in Article 31 of the Vienna Convention does not yield a clear meaning as to the scope of the commitment made by the United States in the entry “Other recreational services (except sporting)”. Accordingly, it is appropriate to have recourse to the supplemental means of interpretation identified in Article 32 of the Vienna Convention. These means include W/120, the 1993 Scheduling Guidelines, and a cover note attached to drafts of the United States’ Schedule.

 

G.1.2.2.11 US — Gambling, paras. 199-200
(WT/DS285/AB/R, WT/DS285/AB/R/Corr.1)

 

… W/120 does not, however, contain any explicit indication of: (i) whether the reference to Group 964 necessarily incorporates a reference to each and every sub-category of Group 964 within the CPC; or (ii) how W/120 relates to the GATS Schedules of individual Members.

 

… W/120 sets out a much more aggregated classification list than the one found in the CPC. … the CPC’s level of disaggregation was one of the very reasons it was selected as a basis for a sectoral classification list. As the CPC is a decimal system, a reference to an aggregate category must be understood as a reference to all of the constituent parts of that category. …

 

G.1.2.2.12 US — Gambling, paras. 203-207
(WT/DS285/AB/R, WT/DS285/AB/R/Corr.1)

 

The Scheduling Guidelines thus underline the importance of using a common format and terminology in scheduling, and express a clear preference for parties to use W/120 and the CPC classifications in their Schedules. At the same time, the Guidelines make clear that parties wanting to use their own subsectoral classification or definitions — that is, to disaggregate in a way that diverges from W/120 and/or the CPC — were to do so in a “sufficiently detailed” way “to avoid any ambiguity as to the scope of the commitment”. The example given in the Scheduling Guidelines illustrates how to make a positive commitment with respect to a discrete service that is more disaggregated than a service subsector identified in W/120. It is reasonable to assume that the parties to the negotiations expected the same technique to be applied to exclude a discrete service from the scope of a commitment, when the commitment is made in a subsector identified in W/120 and the excluded service is more disaggregated than that subsector.

 

In our view, the requisite clarity as to the scope of a commitment could not have been achieved through mere omission of CPC codes, particularly where a specific sector of a Member’s Schedule, such as sector 10 of the United States’ Schedule, follows the structure of W/120 in all other respects, and adopts precisely the same terminology as used in W/120. … W/120 and the 1993 Scheduling Guidelines were prepared and circulated … for the express purpose of assisting those parties in the preparation of their offers. These documents undoubtedly served, too, to assist parties in reviewing and evaluating the offers made by others. They provided a common language and structure which, although not obligatory, was widely used and relied upon. In such circumstances, and in the light of the specific guidance provided in the 1993 Scheduling Guidelines, it is reasonable to assume that parties to the negotiations examining a sector of a Schedule that tracked so closely the language of the same sector in W/120 would — absent a clear indication to the contrary — have expected the sector to have the same coverage as the corresponding W/120 sector. This is another way of stating that, as the Panel observed, “unless otherwise indicated in the Schedule, Members were assumed to have relied on W/120 and the corresponding CPC references”.

 

Accordingly, the above excerpt from the 1993 Scheduling Guidelines, together with the linguistic similarities between the two subsectors, provide strong support for interpreting subsector 10.D of the United States’ Schedule as corresponding to subsector 10.D of W/120, notwithstanding the absence of CPC codes in the United States’ Schedule. …

 

… another element of the preparatory work of the GATS suggests that the United States itself understood the Scheduling Guidelines in this way and sought to comply with them in the drafting of its GATS Schedule. Several drafts of the United States’ Schedule included [a] cover note [which confirms] …

 

… that the United States used W/120 and sought to follow the 1993 Scheduling Guidelines. …

 

Article XIV. See General Exceptions: Article XIV of GATS (G.4)

 
G.1.3 Article XVI — Market access      back to top

G.1.3.1 GENERAL

G.1.3.1.1 US — Gambling, para. 214
(WT/DS285/AB/R, WT/DS285/AB/R/Corr.1)

 

Article XVI of the GATS sets out specific obligations for Members that apply insofar as a Member has undertaken “specific market access commitments” in its Schedule. The first paragraph of Article XVI obliges Members to accord services and service suppliers of other Members “no less favourable treatment than that provided for under the terms, limitations and conditions agreed and specified in its Schedule”. The second paragraph of Article XVI defines, in six sub-paragraphs, measures that a Member, having undertaken a specific commitment, is not to adopt or maintain, “unless otherwise specified in its Schedule”. The first four sub-paragraphs concern quantitative limitations on market access; the fifth sub-paragraph covers measures that restrict or require specific types of legal entity or joint venture through which a service supplier may supply a service; and the sixth sub-paragraph identifies limitations on the participation of foreign capital.

 

G.1.3.1.2 US — Gambling, para. 215
(WT/DS285/AB/R, WT/DS285/AB/R/Corr.1)

 

… the relevant entry for mode 1 supply in the market access column of subsector 10.D of the United States’ Schedule reads “None”. In other words, the United States has undertaken to provide full market access, within the meaning of Article XVI, in respect of the services included within the scope of its subsector 10.D commitment. …

G.1.3.2 ARTICLE XVI:1 — RELATION TO PARAGRAPH 2

G.1.3.2.1 US — Gambling, para. 256
(WT/DS285/AB/R, WT/DS285/AB/R/Corr.1)

 

Antigua conditionally appeals [the Panel’s finding that the restrictions on market access that are covered by Article XVI are only those listed in paragraph 2 of this Article]. … Having upheld the Panel’s interpretation of sub-paragraphs (a) and (c) of Article XVI:2 and dismissed this ground of the United States’ appeal, it follows that the condition on which this aspect of Antigua’s appeal is made is not satisfied, and we need not consider it further. We thus leave the issue of the relationship between the first and second paragraphs of Article XVI to another day.

G.1.3.3 ARTICLE XVI:2 — CHEPEAU

G.1.3.3.1 US — Gambling, para. 233
(WT/DS285/AB/R, WT/DS285/AB/R/Corr.1)

 

… the chapeau to Article XVI:2 … contemplates circumstances in which a Member’s Schedule includes a commitment to allow market access, and points out that the function of the sub-paragraphs in Article XVI:2 is to define certain limitations that are prohibited unless specifically entered in the Member’s Schedule. Plainly, the drafters of sub-paragraph (a) had in mind limitations that would impose a maximum limit of above zero. Similarly, Article II:1(b) of the GATT 1994 prohibits Members from imposing duties “in excess of” the bound duty rate. Such bound duty rate will usually be above zero. Yet this does not mean that Article II:1(b) does not also refer to bound rates set at zero.

 

G.1.3.3.2 China — Publications and Audiovisual Products, para. 387
(WT/DS363/AB/R)

 

As we have considered above, while certain elements of context clearly support the Panel’s interpretation of “Sound recording distribution services” as extending to the electronic distribution of sound recordings, other elements considered by the Panel are consistent with or do not contradict such an interpretation of the scope of this commitment. On balance, we are persuaded that the analysis of a number of contextual elements supports the interpretation of China’s commitment on “Sound recording distribution services” as including the electronic distribution of sound recordings.

 

G.1.3.3.3 China — Publications and Audiovisual Products, para. 388
(WT/DS363/AB/R)

 

We further note that the Panel did not regard any of the specific elements it reviewed under Article 31 of the Vienna Convention as in and of itself “conclusive” as to the question of whether “Sound recording distribution services” should be interpreted as encompassing electronic distribution. Rather, the Panel was careful to distinguish among: elements that support such an interpretation; elements that are consistent with the interpretation; and elements that offer no guidance. In this regard, we consider that China’s claim, that each of the interpretative elements reviewed by the Panel is “inconclusive” with respect to the interpretation of “Sound recording distribution services”, overlooks the nature of the interpretative exercise to be undertaken under Article 31 of the Vienna Convention.

G.1.3.4 ARTICLE XVI:2(A) — “LIMITATIONS ON THE NUMBER OF SERVICE SUPPLIERS”

G.1.3.4.1 US — Gambling, para. 225
(WT/DS285/AB/R, WT/DS285/AB/R/Corr.1)

 

Article XVI:2(a) … refers to restrictions “on the number of service suppliers”, as well as to “numerical quotas”. These words reflect that the focus of Article XVI:2(a) is on limitations relating to numbers or, put differently, to quantitative limitations.

 

G.1.3.4.2 US — Gambling, para. 226
(WT/DS285/AB/R, WT/DS285/AB/R/Corr.1)

 

… dictionary definitions … suggest a degree of ambiguity as to the scope of the word “form”. For example, “form” covers both the mode in which a thing “exists”, as well as the mode in which it “manifests itself”. This suggests a broad meaning for the term “form”.

 

G.1.3.4.3 US — Gambling, para. 227
(WT/DS285/AB/R, WT/DS285/AB/R/Corr.1)

 

The words “in the form of” in sub-paragraph (a) relate to all four of the limitations identified in that provision. It follows, in our view, that the four types of limitations, themselves, impart meaning to “in the form of”. … a “numerical quota” within Article XVI:2(a) appears to mean a quantitative limit on the number of service suppliers. The fact that the word “numerical” encompasses things which “have the characteristics of a number” suggests that limitations “in the form of a numerical quota” would encompass limitations which, even if not in themselves a number, have the characteristics of a number. Because zero is quantitative in nature, it can, in our view, be deemed to have the “characteristics of” a number — that is, to be “numerical”.

 

G.1.3.4.4 US — Gambling, paras. 230-231
(WT/DS285/AB/R, WT/DS285/AB/R/Corr.1)

 

… [the definitions of a “monopoly supplier of a service” in Article XXVII(h) and of “exclusive service suppliers” in Article VIII:5] suggest that the reference, in Article XVI:2(a), to limitations on the number of service suppliers “in the form of monopolies and exclusive service suppliers” should be read to include limitations that are in form or in effect, monopolies or exclusive service suppliers.

 

… it is not clear that “limitations on the number of service suppliers … in the form of … the requirements of an economic needs test” must take a particular “form”. Thus, this fourth type of limitation, too, suggests that the words “in the form of” must not be interpreted as prescribing a rigid mechanical formula.

 

G.1.3.4.5 US — Gambling, para. 232
(WT/DS285/AB/R, WT/DS285/AB/R/Corr.1)

 

This is not to say that the words “in the form of” should be ignored or replaced by the words “that have the effect of”. Yet, at the same time, they cannot be read in isolation. Rather, when viewed as a whole, the text of sub-paragraph (a) supports the view that the words “in the form of” must be read in conjunction with the words that precede them — “limitations on the number of service suppliers” — as well as the words that follow them, including the words “numerical quotas” (emphasis added). Read in this way, it is clear that the thrust of sub-paragraph (a) is not on the form of limitations, but on their numerical, or quantitative, nature.

 

G.1.3.4.6 US — Gambling, paras. 236-238
(WT/DS285/AB/R, WT/DS285/AB/R/Corr.1)

 

… examination of the words of Article XVI:2(a) read in their context and in the light of the object and purpose of the GATS suggests that the words “in the form of” do not impose the type of precisely defined constraint that the United States suggests. Yet certain ambiguities about the meaning of the provision remain. The Panel, at this stage of its analysis, observed that any suggestion that the “form” requirement must be strictly interpreted to refer only to limitations “explicitly couched in numerical terms” leads to “absurdity”. In either circumstance, this is an appropriate case in which to have recourse to supplementary means of interpretation, such as preparatory work.

 

… the 1993 Scheduling Guidelines … setout an example of the type of limitation that falls within the scope of sub-paragraph (a) of Article XVI:2 … That example is: “nationality requirements for suppliers of services (equivalent to zero quota)”. This example confirms the view that measures equivalent to a zero quota fall within the scope of Article XVI:2(a).

 

… limitations amounting to a zero quota are quantitative limitations and fall within the scope of Article XVI:2(a).

G.1.3.5 ARTICLE XVI:2(C) — “LIMITATIONS ON THE TOTAL NUMBER OF SERVICE OPERATIONS”

G.1.3.5.1 US — Gambling, para. 245
(WT/DS285/AB/R, WT/DS285/AB/R/Corr.1)

 

… we are not persuaded that the key to the interpretation of this particular provision is to be found in a careful dissection of the use of commas within its grammatical structure. Regardless of which language version is analysed, and of the implications of comma placement (or lack thereof), all three language versions are grammatically ambiguous. All three can arguably be read as identifying two limitations on the total number of service operations or on the total quantity of service output. All three can also arguably be read as identifying three limitations on the total number of service operations or on the total quantity of service output. The mere presence or absence of a comma in Article XVI:2(c) is not determinative of the issue before us.

 

G.1.3.5.2 US — Gambling, para. 246
(WT/DS285/AB/R, WT/DS285/AB/R/Corr.1)

 

We find it more useful, and appropriate, to look to the language of the provision itself for its meaning. Looking at the provision generally, we see that the first clause of sub-paragraph (c) deals with the target of the limitations covered by that provision. There are two such types of limitations: on the number of service operations; and on the quantity of service output. Both are quantitative in nature. The second part of the provision provides more detail as to the type of limitations — relating to those service operations or output — that fall within sub-paragraph (c). These are: “designated numerical units in the form of quotas or the requirement of an economic needs test”. The second part of the provision clearly modifies the first part of the provision (service operations, service output). Yet certain elements of the second part apply differently to the two elements of the first part. For example, in its ordinary sense, the term “numerical units” is more naturally used to refer to “output” than to “operations”.

 

G.1.3.5.3 US — Gambling, para. 247
(WT/DS285/AB/R, WT/DS285/AB/R/Corr.1)

 

In our view, by combining, in sub-paragraph (c), the elements of the first clause of Article XVI:2(c) and the elements in the second part of the provision, the parties to the negotiations sought to ensure that their provision covered certain types of limitations, but did not feel the need to clearly demarcate the scope of each such element. On the contrary, there is scope for overlap between such elements: between limitations on the number of service operations and limitations on the quantity of service output, for example, or between limitations in the form of quotas and limitations in the form of an economic needs test. That sub-paragraph (c) applies in respect of all four modes of supply under the GATS also suggests the limitations covered there under cannot take a single form, nor be constrained in a formulaic manner. Nonetheless, all types of limitations in sub-paragraph (c) are quantitative in nature, and all restrict market access. For these reasons, we are of the view that, even if sub-paragraph (c) is read as referring to only two types of limitations, as contended by the United States, it does not follow that sub-paragraph (c) would not catch a measure equivalent to a zero quota.

 

G.1.3.5.4 US — Gambling, para. 248
(WT/DS285/AB/R, WT/DS285/AB/R/Corr.1)

 

… we consider it useful to resort to supplementary means of interpretation. The market access obligations set forth in Article XVI were intended to be obligations in respect of quantitative, or “quantitative-type”, measures. The difficulties faced by the negotiating parties concerned not whether Article XVI covered quantitative measures — for it was clear that it did — but rather how to “know where the line should be drawn between quantitative and qualitative measures”.

 

G.1.3.5.5 US — Gambling, para. 250
(WT/DS285/AB/R, WT/DS285/AB/R/Corr.1)

 

The strict interpretation of Article XVI:2(c) advanced by the United States would imply that only limitations that contain an express reference to numbered units could fall within the scope of that provision. Under such an interpretation, sub-paragraph (c) could not cover, for example, a limitation expressed as a percentage or described using words such as “a majority”. It is neither necessary nor appropriate for us to draw, in the abstract, the line between quantitative and qualitative measures, and we do not do so here. Yet we are satisfied that a prohibition on the supply of services in respect of which a full market access commitment has been undertaken is a quantitative limitation on the supply of such services.

G.1.3.6 ARTICLE XVI:2 — MEASURES DIRECTED AT CONSUMERS

G.1.3.6.1 US — Gambling, paras. 253-254
(WT/DS285/AB/R, WT/DS285/AB/R/Corr.1)

 

Antigua also appeals the Panel’s findings that certain measures that prohibit consumers from purchasing cross-border gambling services are not caught by either sub-paragraph (a) or sub-paragraph (c) of Article XVI:2. The Panel applied its analysis of these provisions to find that four state laws directed at persons who engage in gambling — that is, to consumers of gambling services as opposed to suppliers of gambling services — had not been shown to be inconsistent with the United States’ market access commitments.

 

… Having held that the Panel was not entitled to make findings on any of the eight state laws, including with respect to the four state laws directed at consumers rather than suppliers of gambling services, we need not, in resolving this appeal, consider the merits of Antigua’s appeal of the Panel’s findings with respect to restrictions on service consumers as opposed to service suppliers.

 

Article II. See MFN Treatment, Article II of the GATS (M.2.2)

 

Article XVII. See National Treatment, Article XVII of the GATS (N.1.13)

 

705. We consider such reading of the terms in China’s GATS Schedule to be consistent with the approach taken in US — Shrimp, where the Appellate Body interpreted the term “exhaustible natural resources” in Article XX(g) of the GATT 1994 (Appellate Body Report, US — Shrimp, paras. 129 and 130).     back to text

We observe that the International Court of Justice, in Costa Rica v. Nicaragua, found that the term “comercio” (“commerce”), contained in an 1858 “Treaty of Limits” between Costa Rica and Nicaragua, should be interpreted as referring to both trade in goods and trade in services, even if, at the time of the conclusion of the treaty, such term was used to refer only to trade in goods (International Court of Justice, Judgment, Case concerning the Dispute regarding Navigational and Related Rights (Costa Rica v. Nicaragua), 13 July 2009).


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