REPERTORY OF APPELLATE BODY REPORTS

TRIMs Agreement

T.8A.1 General   back to top

T.8A.1.1 China — Publications and Audiovisual Products, para. 227
(WT/DS363/AB/R)
 

The close relationship between restrictions on entities engaged in trade and GATT obligations relating to trade in goods has also been recognized in previous GATT panel and WTO panel and Appellate Body reports, where measures that did not directly regulate goods, or the importation of goods, have nonetheless been found to contravene GATT obligations. Thus, for example, restrictions imposed on investors, wholesalers, and manufacturers, as well as on points of sale and ports of entry, have been found to be inconsistent with Article III:4 or Article XI:1 of the GATT 1947 or 1994. In addition, the Illustrative List in Annex 1 to the Agreement on Trade-Related Investment Measures (the “TRIMs Agreement”) sets out a number of requirements imposed on enterprises that are deemed to be inconsistent with either Article III:4 or Article XI:1 of the GATT 1994, and Article 3 of the TRIMs Agreement states that all exceptions under the GATT 1994 apply, as appropriate, to the provisions of the TRIMs Agreement. These considerations suggest that measures that restrict the rights of traders may violate GATT obligations with respect to trade in goods.
 

T.8A.1.2 Canada — Renewable Energy / Canada — Feed-in Tariff Program, paras. 5.5–5.6
(WT/DS412/AB/R, WT/DS426/AB/R)
 

Both the national treatment obligations in Article III:4 of the GATT 1994 and the TRIMs Agreement, and the disciplines in Article 3.1(b) of the SCM Agreement, are cumulative obligations. Article III:4 of the GATT 1994 and the TRIMs Agreement, as well as Article 3.1(b) of the SCM Agreement, prohibit the use of local content requirements in certain circumstances. These provisions address discriminatory conduct. …
 

… We note that the TRIMs Agreement deals specifically with investment measures related to trade in goods or TRIMs. It does not regulate anything else. Domestic content requirements are one type of TRIM regulated under the TRIMs Agreement. One of the examples in the Illustrative List annexed to the TRIMs Agreement refers specifically to requirements relating to “the purchase or use by an enterprise of products of domestic origin or from any domestic source, whether specified in terms of particular products, in terms of volume or value of products, or in terms of a proportion of volume or value of its local production”. …
 

T.8A.1.3 Canada — Renewable Energy / Canada — Feed-in Tariff Program, para. 5.32
(WT/DS412/AB/R, WT/DS426/AB/R)
 

We do not find the European Union’s reliance on the language of the Punta del Este negotiating mandate to be persuasive. Looking at the TRIMs Agreement as a whole, we consider that the “further” provisions that it contains mainly clarify the application of Articles III and XI of the GATT 1994 to a specific set of measures — namely, TRIMs. In doing so, however, there is little, if any, indication that the provisions of the TRIMs Agreement were intended to override rights recognized in the GATT, such as the right provided in Article III:8(a). On the contrary, several provisions of the TRIMs Agreement — particularly the initial clause of Article 2.1, and Articles 3 and 4 — would seem to reflect reiterative attempts to safeguard rights recognized in the GATT, rather than to override them.
 

T.8A.2 Article 2.1 and the relationship with the GATT 1994   back to top

T.8A.2.1 Canada — Renewable Energy / Canada — Feed-in Tariff Program, para. 5.20
(WT/DS412/AB/R, WT/DS426/AB/R)
 

Article 2.1 of the TRIMs Agreement prohibits Members from applying a TRIM — that is, an investment measure related to trade in goods — “that is inconsistent with the provisions of Article III or Article XI of the GATT 1994”. The cross-reference in the latter part of Article 2.1 to Article III of the GATT 1994 is unqualified. We understand this to be a reference to Article III of the GATT 1994 in its entirety, including Article III:4. Thus, as the Panel explained, a measure that is inconsistent with Article III:4 of the GATT 1994 would also be a TRIM that is incompatible with Article 2.1 of the TRIMs Agreement. Importantly, the cross-reference to Article III also includes paragraph 8(a) of that provision. … a measure that falls within the scope of paragraph 8(a) cannot violate Article III of the GATT 1994. This, in turn, means that a Member applying such a measure would not violate Article 2.1 of the TRIMs Agreement. …
 

T.8A.2.2 Canada — Renewable Energy / Canada — Feed-in Tariff Program, para. 5.27
(WT/DS412/AB/R, WT/DS426/AB/R)
 

… The opening clause of Article 2.1 reads: “Without prejudice to other rights and obligations under GATT 1994”. This language suggests that the provision is not intended to curtail other rights that Members have under the GATT 1994. The right to discriminate in government purchases — subject to the conditions and requirements of Article III:8(a) — is one such right recognized in the GATT 1994. …
 

T.8A.3 Article 2.2, the Illustrative List, and the relationship with the GATT 1994 and the SCM Agreement   back to top

T.8A.3.1 Canada — Renewable Energy / Canada — Feed-in Tariff Program, paras. 5.21–5.22
(WT/DS412/AB/R, WT/DS426/AB/R)
 

The issue that … we need to resolve in this appeal, concerns the relationship between, on the one hand, Article 2.2 and the Illustrative List of the TRIMs Agreement and, on the other hand, Articles III:4 and III:8(a) of the GATT 1994. …
 

Article 2.2 refers to the obligation of national treatment provided for in paragraph 4 of Article III of the GATT 1994, as well as the obligation of general elimination of quantitative restrictions provided for in paragraph 1 of Article XI of the GATT 1994. Article 2.2 also refers to an illustrative list of TRIMs that is found in the Annex to the TRIMs Agreement. The term “illustrative” indicates that the examples in the list do not constitute a closed list. In other words, there can be other types of TRIMs that are inconsistent with the national treatment obligation in Article III:4 and the obligation of general elimination of quantitative restrictions in Article XI:1 of the GATT 1994. The use of the term “include” in paragraph 1 of the Illustrative List further supports this understanding.
 

T.8A.3.2 Canada — Renewable Energy / Canada — Feed-in Tariff Program, para. 5.26
(WT/DS412/AB/R, WT/DS426/AB/R)
 

In our view, Article 2.2 provides further specification as to the type of measures that are inconsistent with Article 2.1. The operative part of Article 2.2 is the reference to the Illustrative List, which provides examples of measures that are inconsistent with the national treatment obligation. While Article 2.2 and the Illustrative List focus on the specific provisions where such obligation is reflected — that is, Article III:4 of the GATT 1994 — we do not believe it responds to the question of whether such measures are inconsistent with Article III of the GATT 1994 in its entirety. Where a measure falls within the scope of Article III:8(a), the measure is not inconsistent with Article III overall. Thus, we agree with the Panel that Article 2.2 and the Illustrative List must be understood as clarifying to which TRIMs the general obligation in Article 2.1 applies. Furthermore, we understand the absence of a reference to Article III:8(a) of the GATT 1994 in Article 2.2 of the TRIMs Agreement and in the Illustrative List as indicating that these provisions are neutral as to the applicability of the former provision. This results in a harmonious interpretation of Articles 2.1 and 2.2 of the TRIMs Agreement and Articles III:4 and III:8(a) of the GATT 1994. By contrast, the interpretation advocated by the European Union would result in different obligations for those TRIMs that fall within the Illustrative List and those that do not.
 

T.8A.3.3 Canada — Renewable Energy / Canada — Feed-in Tariff Program, para. 5.28
(WT/DS412/AB/R, WT/DS426/AB/R)
 

The European Union argues that the Panel’s interpretation … “largely nullifies the effects of Article 2.2 and of the Illustrative List in relation to the general obligation in Article 2.1”. Under the Panel’s interpretation, Article 2.2 and the Illustrative List continue to provide examples of TRIMs that involve discrimination and that are inconsistent with the national treatment obligation in Article III:4, and consequently would violate the obligation in Article 2.1 of the TRIMs Agreement. … We agree that the Panel’s interpretation means that a limited set of measures that fall both within one of the examples of the Illustrative List of the TRIMs Agreement and Article III:8(a) of the GATT 1994 ultimately would not be found to be inconsistent with Article III:4 of the GATT 1994 and Article 2.1 of the TRIMs Agreement. Yet, we do not see this as nullifying the effects of Article 2.2 and the Illustrative List. Rather, it is a result of interpreting Article 2.2 and the Illustrative List harmoniously with the other provisions of the TRIMs Agreement and with Article III of the GATT 1994. In any event, the broader subset of TRIMs that fall within the Illustrative List and do not qualify for derogation under Article III:8(a) of the GATT 1994 remains inconsistent with the national treatment obligation in Article III:4 of the GATT 1994 and Article 2.1 of the TRIMs Agreement.
 

T.8A.3.4 Canada — Renewable Energy / Canada — Feed-in Tariff Program, para. 5.29
(WT/DS412/AB/R, WT/DS426/AB/R)
 

… It would appear that the reasoning set out above in relation to Articles 2.1 and 2.2 of the TRIMs Agreement and Article III:4 of the GATT 1994 would apply mutatis mutandis to the relationship between Articles XI:1 and XI:2 of the GATT 1994. Nevertheless, we need not determine this issue conclusively in this case because we have already determined that the application of Article III:8(a) of the GATT 1994 is not precluded where the challenged measure falls within the scope of Article 2.2 and paragraph 1(a) of the Illustrative List of the TRIMs Agreement.
 

T.8A.3.5 Canada — Renewable Energy / Canada — Feed-in Tariff Program, para. 5.33
(WT/DS412/AB/R, WT/DS426/AB/R)
 

For the reasons stated above, we consider that the Panel correctly rejected the European Union’s argument that Article III:8(a) of the GATT 1994 is not applicable to measures that fall within the scope of Article 2.2 of the TRIMs Agreement and the Illustrative List annexed thereto. Therefore, we uphold the Panel’s finding, in paragraph 7.121 of the Panel Reports, that “Paragraph 1(a) of the Illustrative List in the Annex to the TRIMs Agreement d[id] not obviate the need for [the Panel] to undertake an analysis of whether the challenged measures are outside of the scope of application of Article III:4 of the GATT 1994 by virtue of the operation of Article III:8(a) of the GATT 1994”. …
 

T.8A.3.6 Canada — Renewable Energy / Canada — Feed-in Tariff Program, para. 5.94
(WT/DS412/AB/R, WT/DS426/AB/R)
 

… The Panel in this case has made a finding of violation of Article III:4 of the GATT 1994. It is true that this finding of violation rests on an assessment of the measures at issue under the Illustrative List of TRIMs annexed to the TRIMs Agreement, and in particular on paragraph 1(a). While it is not said in so many words, paragraph 1(a) is an instance in which an imported product is treated less favourably than a like domestic product. Understood in this manner, it is not obvious what a stand-alone finding of violation of Article III:4 of the GATT 1994 would add to a finding of violation of Article III:4 that is consequential to an assessment under the Illustrative List of the TRIMs Agreement.
 

T.8A.3.7 Canada — Renewable Energy / Canada — Feed-in Tariff Program, paras. 5.208–5.209
(WT/DS412/AB/R, WT/DS426/AB/R)
 

In Canada — Aircraft and in its later jurisprudence, the Appellate Body did not equate the notions of “benefit” and “advantage”. The Appellate Body’s interpretation of “benefit” in Article 1.1(b) of the SCM Agreement clearly suggests that, while benefit involves some form of advantage, the former has a more specific meaning under the SCM Agreement. “Benefit” is linked to the concepts of “financial contribution” and “income or price support”, and its existence requires a comparison in the marketplace. The same cannot be said about an “advantage” within the meaning of the TRIMs Agreement. Paragraph 1 of the Illustrative List of the TRIMs Agreement simply refers to TRIMs that are necessary to obtain an advantage. The concept of “advantage” in the TRIMs Agreement has to be interpreted in the context of this Agreement and, without entering into the merit of such an interpretation, it seems to us that “advantage” under the TRIMs Agreement may take other forms than a “financial contribution” or a “benefit” under the SCM Agreement. In any event, a finding of an “advantage” under the TRIMs Agreement does not require a comparison with a benefit benchmark in the relevant market, as required for a benefit analysis under the SCM Agreement.
 

Thus, while we do not exclude that certain measures that provide an advantage within the meaning of paragraph 1 of the Illustrative List of the TRIMs Agreement may also confer a benefit within the meaning of Article 1.1(b) of the SCM Agreement, it is conceivable that a measure that confers an advantage within the meaning of paragraph 1 of the Illustrative List of the TRIMs Agreement be found not to confer a benefit within the meaning of Article 1.1(b) of the SCM Agreement.
 

T.8A.4 Article 3 — Exceptions   back to top

T.8A.4.1 Canada — Renewable Energy / Canada — Feed-in Tariff Program, para. 5.27
(WT/DS412/AB/R, WT/DS426/AB/R)
 

… Article 3 of the TRIMs Agreement, entitled “Exceptions”, provides contextual support for our interpretation. It states that “[a]ll exceptions under GATT 1994 shall apply, as appropriate, to the provisions of this Agreement”. As the title and text of Article 3 indicate, this provision refers to “exceptions”. The Panel and the participants have characterized Article III:8(a) as a “scope” provision. Even though Article III:8(a) is not one of the exceptions that “apply, as appropriate”, to the TRIMs Agreement, Article 3 further suggests that the provisions of the TRIMs Agreement are not intended to constrain other rights that Members have under the GATT 1994.
 


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