Quantitative Restrictions

Q.1.1 General elimination of quantitative restrictions — Article XI:1 of the GATT 1994   back to top

Q.1.1.1 China — Raw Materials, para. 320
(WT/DS394/AB/R, WT/DS395/AB/R, WT/DS398/AB/R)
 

… Article XI of the GATT 1994 is entitled “General Elimination of Quantitative Restrictions”. The Panel found that this title suggests that Article XI governs the elimination of “quantitative restrictions” generally. We have previously referred to the title of a provision when interpreting the requirements within the provision. In the present case, we consider that the use of the word “quantitative” in the title of the provision informs the interpretation of the words “restriction” and “prohibition” in Article XI:1 and XI:2. It suggests that Article XI of the GATT 1994 covers those prohibitions and restrictions that have a limiting effect on the quantity or amount of a product being imported or exported.
 

Q.1.2 Exclusions from the scope of Article XI:1 — Article XI:2 of the GATT 1994   back to top

Q.1.2.1 China — Raw Materials, para. 319
(WT/DS394/AB/R, WT/DS395/AB/R, WT/DS398/AB/R)
 

Article XI:2 refers to the general obligation to eliminate quantitative restrictions set out in Article XI:1 and stipulates that the provisions of Article XI:1 “shall not extend” to the items listed in Article XI:2. Article XI:2 must therefore be read together with Article XI:1. Both Article XI:1 and Article XI:2(a) of the GATT 1994 refer to “prohibitions or restrictions”. The term “prohibition” is defined as a “legal ban on the trade or importation of a specified commodity”. The second component of the phrase “[e]xport prohibitions or restrictions” is the noun “restriction”, which is defined as “[a] thing which restricts someone or something, a limitation on action, a limiting condition or regulation”, and thus refers generally to something that has a limiting effect.
 

Q.1.2.2 China — Raw Materials, para. 321
(WT/DS394/AB/R, WT/DS395/AB/R, WT/DS398/AB/R)
 

… we note that the words “prohibition” and “restriction” in [Article XI:2(a)] are both qualified by the word “export”. Thus, Article XI:2(a) covers any measure prohibiting or restricting the exportation of certain goods. Accordingly, we understand the words “prohibitions or restrictions” to refer to the same types of measures in both paragraph 1 and subparagraph 2(a), with the difference that subparagraph 2(a) is limited to prohibitions or restrictions on exportation, while paragraph 1 also covers measures relating to importation. We further note that “duties, taxes, or other charges” are excluded from the scope of Article XI:1. Thus, by virtue of the link between Article XI:1 and Article XI:2, the term “restrictions” in Article XI:2(a) also excludes “duties, taxes, or other charges”. Hence, if a restriction does not fall within the scope of Article XI:1, then Article XI:2 will also not apply to it.
 

Q.1.2.3 China — Raw Materials, para. 323
(WT/DS394/AB/R, WT/DS395/AB/R, WT/DS398/AB/R)
 

… the term “temporarily” in Article XI:2(a) of the GATT 1994 is employed as an adverb to qualify the term “applied”. The word “temporary” is defined as “[l]asting or meant to last for a limited time only; not permanent; made or arranged to supply a passing need”. Thus, when employed in connection with the word “applied”, it describes a measure applied for a limited time, a measure taken to bridge a “passing need”. As we see it, the definitional element of “supply[ing] a passing need” suggests that Article XI:2(a) refers to measures that are applied in the interim.
 

Q.1.2.4 China — Raw Materials, paras. 324–325
(WT/DS394/AB/R, WT/DS395/AB/R, WT/DS398/AB/R)
 

Turning next to consider the meaning of the term “critical shortage”, we note that the noun “shortage” is defined as “[d]eficiency in quantity; an amount lacking” and is qualified by the adjective “critical”, which, in turn, is defined as “[o]f, pertaining to, or constituting a crisis; of decisive importance, crucial; involving risk or suspense”. The term “crisis” describes “[a] turning-point, a vitally important or decisive stage; a time of trouble, danger or suspense in politics, commerce, etc.” Taken together, “critical shortage” thus refers to those deficiencies in quantity that are crucial, that amount to a situation of decisive importance, or that reach a vitally important or decisive stage, or a turning point.
 

… context lends further support to this reading of the term “critical shortage”. In particular, the words “general or local short supply” in Article XX(j) of the GATT 1994 provide relevant context for the interpretation of the term “critical shortage” in Article XI:2(a). We note that the term “in short supply” is defined as “available only in limited quantity, scarce”. Thus, its meaning is similar to that of a “shortage”, which is defined as “[d]eficiency in quantity; an amount lacking”. Contrary to Article XI:2(a), however, Article XX(j) does not include the word “critical”, or another adjective further qualifying the short supply. We must give meaning to this difference in the wording of these provisions. To us, it suggests that the kinds of shortages that fall within Article XI:2(a) are more narrowly circumscribed than those falling within the scope of Article XX(j).
 

Q.1.2.5 China — Raw Materials, para. 326
(WT/DS394/AB/R, WT/DS395/AB/R, WT/DS398/AB/R)
 

For Article XI:2(a) to apply, the shortage, in turn, must relate to “foodstuffs or other products essential to the exporting Member”. Foodstuff is defined as “an item of food, a substance used as food”. The term “essential” is defined as “[a]bsolutely indispensable or necessary”. Accordingly, Article XI:2(a) refers to critical shortages of foodstuffs or otherwise absolutely indispensable or necessary products. By including, in particular, the word “foodstuffs”, Article XI:2(a) provides a measure of what might be considered a product “essential to the exporting Member” but it does not limit the scope of other essential products to only foodstuffs.
 

Q.1.2.6 China — Raw Materials, para. 327
(WT/DS394/AB/R, WT/DS395/AB/R, WT/DS398/AB/R)
 

Article XI:2(a) allows Members to apply prohibitions or restrictions temporarily in order to “prevent or relieve” such critical shortages. The word “prevent” is defined as “[p]rovide beforehand against the occurrence of (something); make impracticable or impossible by anticipatory action; stop from happening”. The word “relieve” means “[r]aise out of some trouble, difficulty or danger; bring or provide aid or assistance to”. We therefore read Article XI:2(a) as providing a basis for measures adopted to alleviate or reduce an existing critical shortage, as well as for preventive or anticipatory measures adopted to pre-empt an imminent critical shortage.
 

Q.1.2.7 China — Raw Materials, para. 328
(WT/DS394/AB/R, WT/DS395/AB/R, WT/DS398/AB/R)
 

… Article XI:2(a) must be interpreted so as to give meaning to each of the concepts contained in that provision. At the same time, we must take into account that these different concepts impart meaning to each other, and thus define the scope of Article XI:2(a). For example, whether a shortage is “critical” may be informed by how “essential” a particular product is. In addition, the characteristics of the product as well as factors pertaining to a critical situation, may inform the duration for which a measure can be maintained in order to bridge a passing need in conformity with Article XI:2(a). Inherent in the notion of criticality is the expectation of reaching a point in time at which conditions are no longer “critical”, such that measures will no longer fulfil the requirement of addressing a critical shortage. Accordingly, an evaluation of whether a particular measure satisfies the requirements of Article XI:2(a) necessarily requires a case-by-case analysis taking into consideration the nexus between the different elements contained in Article XI:2(a).
 

Q.1.2.8 China — Raw Materials, paras. 330–331
(WT/DS394/AB/R, WT/DS395/AB/R, WT/DS398/AB/R)
 

… a measure applied “temporarily” in the sense of Article XI:2(a) is a measure applied in the interim, to provide relief in extraordinary conditions in order to bridge a passing need. It must be finite, that is, applied for a limited time. Accordingly, we agree with the Panel that a restriction or prohibition in the sense of Article XI:2(a) must be of a limited duration and not indefinite.
 

The Panel further interpreted the term “limited time” to refer to a “fixed time-limit” for the application of the measure. To the extent that the Panel was referring to a time-limit fixed in advance, we disagree that “temporary” must always connote a time-limit fixed in advance. Instead, we consider that Article XI:2(a) describes measures applied for a limited duration, adopted in order to bridge a passing need, irrespective of whether or not the temporal scope of the measure is fixed in advance.
 

Q.1.2.9 China — Raw Materials, para. 334
(WT/DS394/AB/R, WT/DS395/AB/R, WT/DS398/AB/R)
 

… we have some doubts as to the validity of the Panel’s concern that, if Article XI:2(a) is not interpreted as confined to measures of limited duration, Members could “resort indistinguishably to either Article XI:2(a) or to Article XX(g) to address the problem of an exhaustible natural resource”. Members can resort to Article XX of the GATT 1994 as an exception to justify measures that would otherwise be inconsistent with their GATT obligations. By contrast, Article XI:2 provides that the general elimination of quantitative restrictions shall not extend to the items listed under subparagraphs (a) to (c) of that provision. This language seems to indicate that the scope of the obligation not to impose quantitative restrictions itself is limited by Article XI:2(a). Accordingly, where the requirements of Article XI:2(a) are met, there would be no scope for the application of Article XX, because no obligation exists.
 

Q.1.2.10 China — Raw Materials, para. 337
(WT/DS394/AB/R, WT/DS395/AB/R, WT/DS398/AB/R)
 

We do not agree with China that … the Panel presumed that a shortage of an exhaustible non-renewable resource cannot be “critical” within the meaning of Article XI:2(a). The Panel noted instead, correctly in our view, that the reach of Article XI:2(a) is not the same as that of Article XX(g), adding that these provisions are “intended to address different situations and thus must mean different things”. Articles XI:2(a) and XX(g) have different functions and contain different obligations. Article XI:2(a) addresses measures taken to prevent or relieve “critical shortages” of foodstuffs or other essential products. Article XX(g), on the other hand, addresses measures relating to the conservation of exhaustible natural resources. We do not exclude that a measure falling within the ambit of Article XI:2(a) could relate to the same product as a measure relating to the conservation of an exhaustible natural resource. It would seem that Article XI:2(a) measures could be imposed, for example, if a natural disaster caused a “critical shortage” of an exhaustible natural resource, which, at the same time, constituted a foodstuff or other essential product. Moreover, because the reach of Article XI:2(a) is different from that of Article XX(g), an Article XI:2(a) measure might operate simultaneously with a conservation measure complying with the requirements of Article XX(g).