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> EC — Bananas III, para. 161
> EC — Bananas III, para. 163
> EC — Bananas III, para. 190
> EC — Bananas III, para. 200
> EC — Poultry, para. 93
> EC — Poultry, para. 100
> EC — Poultry, para. 106
> EC — Bananas III (Article 21.5 — Ecuador II) / EC — Bananas III (Article 21.5 — US), paras. 334–338
> EC — Bananas III (Article 21.5 — Ecuador II) / EC — Bananas III (Article 21.5 — US), paras. 340–341, 343, 345–346
… allocation to Members not having a substantial interest must be subject to the basic principle of non-discrimination. When this principle of non-discrimination is applied to the allocation of tariff quota shares to Members not having a substantial interest, it is clear that a Member cannot, whether by agreement or by assignment, allocate tariff quota shares to some Members not having a substantial interest while not allocating shares to other Members who likewise do not have a substantial interest. To do so is clearly inconsistent with the requirement in Article XIII:1 that a Member cannot restrict the importation of any product from another Member unless the importation of the like product from all third countries is “similarly” restricted.
… the reallocation of unused portions of a tariff quota share exclusively to other BFA countries, and not to other non-BFA banana-supplying Members, does not result in an allocation of tariff quota shares which approaches “as closely as possible the shares which the various Members might be expected to obtain in the absence of the restrictions”. Therefore, the tariff quota reallocation rules of the BFA are also inconsistent with the chapeau of Article XIII:2 of the GATT 1994.
… The essence of the non-discrimination obligations is that like products should be treated equally, irrespective of their origin. As no participant disputes that all bananas are like products, the non-discrimination provisions apply to all imports of bananas, irrespective of whether and how a Member categorizes or subdivides these imports for administrative or other reasons. If, by choosing a different legal basis for imposing import restrictions, or by applying different tariff rates, a Member could avoid the application of the non-discrimination provisions to the imports of like products from different Members, the object and purpose of the non-discrimination provisions would be defeated. It would be very easy for a Member to circumvent the non-discrimination provisions of the GATT 1994 and the other Annex 1A agreements, if these provisions apply only within regulatory regimes established by that Member.
… 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.
… As the European Communities did not seek an agreement with Thailand, the other contracting party having a substantial interest in the supply of frozen poultry meat to the European Communities at that time, the Oilseeds Agreement cannot be considered an agreement within the meaning of Article XIII:2(d) of the GATT 1994.
… We see nothing in Article XXVIII to suggest that compensation negotiated within its framework may be exempt from compliance with the non-discrimination principle inscribed in Articles I and XIII of the GATT 1994. …
We agree with the Panel that the calculation of shares must be based on the total imports of the product in question — whether those imports originate from Members or non-Members. Otherwise, it would not be possible to comply with the requirement in the chapeau of Article XIII:2 that:
In applying import restrictions to any product, Members shall aim at a distribution of trade in such product approaching as closely as possible the shares which the various Members might be expected to obtain in the absence of such restrictions. …
T.2.8 EC — Bananas III (Article 21.5 — Ecuador II) / EC — Bananas III (Article 21.5 — US), paras. 334–338 back to top
(WT/DS27/AB/RW2/ECU, WT/DS27/AB/RW/USA, WT/DS27/AB/RW2/ECU/Corr.1, WT/DS27/AB/RW/USA/Corr.1)
We begin our analysis by considering the relationship between Article XI of the GATT 1994 on “General Elimination of Quantitative Restrictions” and Article XIII on “Non-discriminatory Administration of Quantitative Restrictions”. Article XI:1 contains a general prohibition on quantitative restrictions. Article XI:2 provides for exceptions to the general prohibition in Article XI:1. A quantitative restriction that is lawful by reason of an exception under Article XI:2 must nevertheless satisfy the requirements of Article XIII in respect of its non-discriminatory administration.
In contrast to quantitative restrictions, tariff quotas do not fall under the prohibition in Article XI:1 and are in principle lawful under the GATT 1994, provided that quota tariff rates are applied consistently with Article I. Members are required, in accordance with Article II, to provide treatment no less favourable than that bound in their Schedules of Concessions. Accordingly, in-quota and out-of-quota tariffs must not exceed bound tariff rates, and import quantities made available under the tariff quota must not fall short of the scheduled amount. In addition, tariff quotas are, under the terms of Article XIII:5, made subject to the disciplines of Article XIII.
Article XIII has a dual function. It regulates the non-discriminatory administration of quantitative restrictions and also subjects the application of tariff quotas to these disciplines. Although the language of XIII:1 is facially more easily applied to quantitative restrictions, the text must be interpreted so as to ensure that the provisions of Article XIII are also applied to tariff quotas.
We interpret Article XIII:1 and XIII:2 in the following way. Applying Article XIII:1 to a tariff quota requires that the word “restriction” be read as a reference to a tariff quota. Article XIII:1 is then rendered thus: no tariff quota shall be applied by a Member on the importation of any product of the territory of any other Member, unless the importation of the like product of all third countries is similarly made subject to the tariff quota. The application of the tariff quota is thus on a product-wide basis. The principle of non-discriminatory application captured by Article XIII:1 requires that, if a tariff quota is applied to one Member, it must be applied to all; and, consequently, the term “similarly restricted” means, in the case of tariff quotas, that imports of like products of all third countries must have access to, and be given an opportunity of, participation. If a Member is excluded from access to, and participation in, the tariff quota, then imports of like products from all third countries are not “similarly restricted”.
Article XIII:2 regulates the distribution of the tariff quota among Members. The chapeau of Article XIII:2 requires that the tariff quota be distributed so as to serve the aim of a distribution of trade approaching as closely as possible the shares that various Members may be expected to obtain in the absence of the tariff quota. In this way, all Members producing the like product are afforded access to, and competitive opportunities under, the tariff quota in a manner that mimics their comparative advantage vis-à-vis other Members who would participate under the quota. Thus, while Article XIII:1 establishes a principle of non-discriminatory access to and participation in the overall tariff quota, the chapeau of Article XIII:2 stipulates a principle regarding the distribution of the tariff quota in the least trade-distorting manner. The provisions of Article XIII:2(a)–(d) are specific instances of authorized forms of allocation when a Member chooses to allocate shares of the tariff quota. Article XIII:2(d) allows for the case where a quota is allocated among supplying countries, either by way of agreement or, where this is not reasonably practicable, by allotment to Members having a substantial interest in supplying the product concerned, and in accordance with the proportions supplied by those Members during a previous representative period, taking due account of “special factors”. In other words, Article XIII:2(d) is a permissive “safe harbour”; compliance with the requirements of Article XIII:2(d) is presumed to lead to a distribution of trade as foreseen in the chapeau of Article XIII:2, as far as substantial suppliers are concerned. It follows from this analysis that a tariff quota is not per se unlawful because it fails to adhere to the disciplines of Article XIII. Rather, the administration of the tariff quota is unlawful if it is applied in a manner that does not comply with the requirements of Article XIII.
T.2.9 EC — Bananas III (Article 21.5 — Ecuador II) / EC — Bananas III (Article 21.5 — US), paras. 340–341, 343, 345–346 back to top
(WT/DS27/AB/RW2/ECU, WT/DS27/AB/RW/USA, WT/DS27/AB/RW2/ECU/Corr.1, WT/DS27/AB/RW/USA/Corr.1)
The tariff quota also fails to meet the requirements regarding distribution and allocation in Article XIII:2. The exclusion of non-ACP suppliers from the tariff quota is not aimed “at a distribution of trade … approaching as closely as possible the shares which the various Members might be expected to obtain in the absence of [the] restrictions”, as required by Article XIII:2. On the contrary, the exclusion of non-ACP suppliers is not aimed at a distribution of trade that affords access to, and competitive opportunities under, the tariff quota to all supplying Members reflecting their comparative advantage; nor does the exclusion of non-ACP suppliers respect the “safe harbour” allocation requirements in Article XIII:2(d) based upon the representative proportions of Members having a substantial interest in the supply of bananas to the European Communities. Allocating the entire tariff quota exclusively to ACP countries, and reserving no shares to non-ACP suppliers, cannot be considered to be based on the respective shares of ACP and non-ACP supplier countries in the European Communities’ banana market. As a result, the exclusion of non-ACP suppliers from the tariff quota of 775,000 mt reserved for ACP countries is inconsistent with the requirements of Article XIII:1, the chapeau of Article XIII:2, and Article XIII:2(d) of the GATT 1994. Our conclusion is not altered by the fact that imports from non-ACP suppliers are subject to an MFN tariff only under the EC Bananas Import Regime.
The European Communities argues that, for Article XIII:1 to apply to a tariff quota, it must be shown that it imposes a “restriction” on the “aggrieved Members”, in this case, the non-ACP supplier countries. We note that the text of Article XIII:1 expressly refers to “prohibition or restriction” applied “by any Member” on the importation of “any product” of the territory of “any other Member”. We reject, therefore, the European Communities’ argument that, because there was no restriction on the quantities of bananas that Ecuador and the other MFN countries could export to the European Communities, “the first condition for the application of Article XIII:1 (i.e., the imposition of a quantitative restriction on the imports coming from the aggrieved Member) [was] not satisfied”. Therefore, the ACP duty-free tariff quota is subject to the requirements of Article XIII:1, regardless of the Members upon which the restriction is imposed.
We consider that the notion of “non-discrimination” in the application of tariffs under Article I:1 and the notion of non-discriminatory application of a “prohibition or restriction” under Article XIII are distinct, and that Article XIII ensures that a Member applying a restriction or prohibition does not discriminate among all other Members. Article I:1, which applies to tariffs, and Article XIII:1, which applies to quantitative restrictions and tariff quotas, may apply to different elements of a measure or import regime. Article XIII adapts the MFN-treatment principle to specific types of measures, that is, quantitative restrictions, and, by virtue of Article XIII:5, tariff quotas. Tariff quotas must comply with the requirements of both Article I:1 and Article XIII of the GATT 1994. This, in our view, does not make Article XIII redundant in respect of tariff quotas: if a Member imposes differential in-quota duties on imports of like products from different supplier countries under a tariff quota, Article I:1 would be implicated; if that Member fails to give access to or allocate tariff quota shares on a non-discriminatory basis among supplier countries, the requirements of Articles XIII:1 and XIII:2 would apply. In the absence of Article XIII, Article I would not provide specific guidance on how to administer tariff quotas in a manner that avoids discrimination in the allocation of shares.
In our view, therefore, the preferential in-quota tariff rate falls within the scope of Article I:1, while the application and the distribution of the tariff quota must comply with the non-discrimination requirements of Article XIII as well, regardless of the applicable in-quota and out-of-quota duty rates, and regardless of which Members may be considered to be “aggrieved”. This is also the case when preferential in-quota tariff treatment is reserved for a group of Members such as the ACP countries.
Having said that, we note our disagreement with the Panel’s overly broad interpretation of the term “restriction” in Article XIII:1 as “[a]ny benefit accorded to fresh bananas of only some Members presumably affect[ing] the competitive opportunities of like bananas imported from other Members” considering that “[b]y its very nature … a benefit reserved for some Members generally represents a disadvantage for other Members”. Such a broad reading of the term “restriction” in Article XIII would mean that even a simple tariff preference without a limitation would lead to dissimilar restrictions within the meaning of Article XIII, thus confounding the function and coverage of Article I and Article XIII. Such an interpretation would also ignore the fact that Article XIII is concerned with the non-discriminatory administration of tariff quotas, and does not prohibit them as such.
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