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XII. Article XI back to top
A. Text of
Article XI
Article XI: General Elimination of Quantitative Restrictions
1.
No prohibitions or restrictions other than duties, taxes or other
charges, whether made effective through quotas, import or export
licences or other measures, shall be instituted or maintained by any
contracting party on the importation of any product of the territory of
any other contracting party or on the exportation or sale for export of
any product destined for the territory of any other contracting party.
2.
The provisions of paragraph 1 of this Article shall not extend to
the following:
(a) Export prohibitions or restrictions temporarily applied to
prevent or relieve critical shortages of foodstuffs or other products
essential to the exporting contracting party;
(b) Import and export prohibitions or restrictions necessary to the
application of standards or regulations for the classification, grading
or marketing of commodities in international trade;
(c) Import restrictions on any agricultural or fisheries product,
imported in any form, necessary to the enforcement of governmental
measures which operate:
(i) to restrict the quantities of the like domestic product permitted
to be marketed or produced, or, if there is no substantial domestic
production of the like product, of a domestic product for which the
imported product can be directly substituted; or
(ii) to remove a temporary surplus of the like domestic product, or,
if there is no substantial domestic production of the like product, of a
domestic product for which the imported product can be directly
substituted, by making the surplus available to certain groups of
domestic consumers free of charge or at prices below the current market
level; or
(iii) to restrict the quantities permitted to be produced of any
animal product the production of which is directly dependent, wholly or
mainly, on the imported commodity, if the domestic production of that
commodity is relatively negligible.
Any contracting party applying restrictions on the importation of any
product pursuant to subparagraph (c) of this paragraph shall give public
notice of the total quantity or value of the product permitted to be
imported during a specified future period and of any change in such
quantity or value. Moreover, any restrictions applied under (i) above
shall not be such as will reduce the total of imports relative to the
total of domestic production, as compared with the proportion which
might reasonably be expected to rule between the two in the absence of
restrictions. In determining this proportion, the contracting party
shall pay due regard to the proportion prevailing during a previous
representative period and to any special factors which may have
affected or may be affecting the trade in the product concerned.
B. Text of Ad Article XI
Ad Articles XI, XII, XIII, XIV and XVIII
Throughout Articles
XI, XII, XIII,
XIV and
XVIII, the terms “import
restrictions” or “export restrictions” include restrictions made
effective through state-trading operations.
Ad Article XI: Paragraph 2 (c)
The term “in any form” in this paragraph covers the same products
when in an early stage of processing and still perishable, which compete
directly with the fresh product and if freely imported would tend to
make the restriction on the fresh product ineffective.
Paragraph 2, last subparagraph
The term “special factors” includes changes in relative
productive efficiency as between domestic and foreign producers, or as
between different foreign producers, but not changes artificially
brought about by means not permitted under the Agreement.
C. Interpretation and Application of Article XI
1. General
(a) Status of Article XI in GATT
395. The Panel on
Turkey
— Textiles, in a finding not reviewed by
the Appellate Body, elaborated on the systemic significance of Article
XI in the GATT framework. The Panel first stressed that Article XI was a
reflection of the preference of the GATT system for tariffs over quotas
among forms of border protection; it then considered the historical
evolution of quantitative restrictions since the early years of GATT and
emphasized the effort of the Uruguay Round to establish mechanisms to
phase-out quantitative restrictions in the sectors of agriculture and
textiles and clothing:
“The prohibition on the use of quantitative restrictions forms one
of the cornerstones of the GATT system. A basic principle of the GATT
system is that tariffs are the preferred and acceptable form of
protection. Tariffs, to be reduced through reciprocal concessions, ought
to be applied in a non-discriminatory manner independent of the origin
of the goods (the ‘most-favoured-nation’ (MFN) clause). Article
I,
which requires MFN treatment, and Article
II, which specifies that
tariffs must not exceed bound rates, constitute Part I of
GATT. Part II
contains other related obligations, inter alia to ensure that Members do
not evade the obligations of Part I. Two fundamental obligations
contained in Part II are the national treatment clause and the
prohibition against quantitative restrictions. The prohibition against
quantitative restrictions is a reflection that tariffs are GATT’s
border protection ‘of choice’. Quantitative restrictions impose
absolute limits on imports, while tariffs do not. In contrast to MFN
tariffs which permit the most efficient competitor to supply imports,
quantitative restrictions usually have a trade distorting effect, their
allocation can be problematic and their administration may not be
transparent.
Notwithstanding this broad prohibition against quantitative
restrictions, GATT contracting parties over many years failed to respect
completely this obligation. From early in the GATT, in sectors such as
agriculture, quantitative restrictions were maintained and even
increased to the extent that the need to restrict their use became
central to the Uruguay Round negotiations. In the sector of textiles and
clothing, quantitative restrictions were maintained under the Multifibre
Agreement (further discussed below). Certain contracting parties were
even of the view that quantitative restrictions had gradually been
tolerated and accepted as negotiable and that Article XI could not be
and had never been considered to be, a provision prohibiting such
restrictions irrespective of the circumstances specific to each case.
This argument was, however, rejected in an adopted panel report EEC — Imports from Hong
Kong.(590)
Participants in the Uruguay Round recognized the overall detrimental
effects of non-tariff border restrictions (whether applied to imports or
exports) and the need to favour more transparent price-based, i.e.
tariff-based, measures; to this end they devised mechanisms to phaseout
quantitative restrictions in the sectors of agriculture and textiles and
clothing. This recognition is reflected in the GATT 1994 Understanding
on Balance-of-Payments Provisions(591), the Agreement on Safeguards
(592),
the Agreement on Agriculture where quantitative restrictions were
eliminated(593) and the Agreement on Textiles and Clothing (further
discussed below) where MFA derived restrictions are to be completely
eliminated by 2005.”(594)
(b) Burden of proof
396. In
India — Quantitative Restrictions, the Panel examined
whether the Indian import licensing system was inconsistent with Article
XI and, in case of inconsistency, whether it was justified by Article
XVIII. Referring to the Appellate Body Report on US — Wool Shirts and
Blouses and the Appellate Body Report on EC — Hormones, the Panel
stated on the issue of the burden of proof under Article
XI:
“In all instances, each party has to provide evidence in support of
each of its particular assertions. This implies that the United States
has to prove any of its claims in relation to the alleged violation of
Article XI:1 and XVIII:11. Similarly, India has to support its assertion
that its measures are justified under Article
XVIII:B. We also view the
rules stated by the Appellate Body as requiring that the United States
as the complainant cannot limit itself to stating its claim. It must
present a prima facie case that the Indian balance-of-payments measures
are not justified by reference to Articles XI:1 and
XVIII:11 of GATT 1994.(595) Should the United States do so, India would have to respond in
order to rebut the claim.”(596)
(c) Reference to GATT practice
397. With respect to GATT practice on this subject-matter.
2. Article XI:1
(a) General
398. In
Canada — Periodicals, the Panel found a complete ban on
imports of a certain product to be inconsistent with Article XI:1 of
GATT:
“Since the importation of certain foreign products into Canada is
completely denied under Tariff Code 9958, it appears that this provision
by its terms is inconsistent with Article XI:1 of GATT
1994.”(597)
399. In
India — Autos, India had argued that since
Article XI of
the GATT 1994 dealt with border measures and the disputed Public Notice
No. 60 did not deal with any such measure, it could not violate Article
XI. However, the Panel found that as it required acceptance of the
so-called “trade balancing condition” it imposed a restriction on
imports and therefore was inconsistent with Article XI:1 of the
GATT
1994:
“[I]n determining whether Public Notice No. 60 is inconsistent with
Article XI:1 of the GATT 1994, the Panel recalls its earlier analysis of
the trade balancing condition as contained in the previous section.
First, it recalls its conclusion that Public Notice No. 60, as a
governmental measure requiring manufacturers to accept certain
conditions in order to be allowed to import restricted automotive kits
and components, constituted a ‘measure’ within the meaning of
Article XI:1. This conclusion remains relevant to this analysis and the
Panel confirms its earlier conclusion in this respect.
Second, in order to establish whether Public Notice No. 60, in
itself, can be considered to be inconsistent with Article
XI:1, it has
to be established that it constitutes a ‘restriction … on
importation’ within the meaning of that provision. The Panel recalls
in this respect its earlier conclusion that the trade balancing
condition, as contained both in Public Notice No. 60 and in the MOUs
signed thereunder, constituted a restriction on importation contrary to
Article XI:1 in that it effectively limits the amount of imports that a
manufacturer may make by linking imports to commitment to undertake a
certain amount of exports. Under such circumstance, an importer is not
free to import as many restricted kits or components as he otherwise
might so long as there is a finite limit to the amount of possible
exports.
…
The Panel therefore concludes that Public Notice No. 60 in itself, to
the extent that it requires the acceptance of the trade balancing
condition in order to gain the advantage of importing the restricted
products, imposes a restriction on imports and is inconsistent with
Article XI:1 of the GATT 1994.”(598)
(b) “prohibitions or restrictions … on the importation of any
product”
(i) Scope
400. The Panel on
US — Shrimp found that the United States violated
Article XI by imposing an import ban on shrimp and shrimp products
harvested by vessels of foreign nations where such exporting country had
not been certified by United States’ authorities as using methods not
leading to the incidental killing of sea turtles above certain levels.
The Panel stated with reference to the term “prohibitions or
restrictions” as follows:
“[T]he US statutory provision in question] expressly requires the
imposition of an import ban on imports from non-certified countries. We
further note that in its judgement of December 1995, the CIT directed
the US Department of State to prohibit, no later that 1 May 1996, the
importation of shrimp or products of shrimp wherever harvested in the
wild with commercial fishing technology which may affect adversely those
species of sea turtles the conservation of which is the subject of
regulations of the Secretary of Commerce. Furthermore, the CIT ruled
that the US Administration has to apply the import ban, including to
TED-caught shrimp, as long as the country concerned has not been
certified. In other words, the United States bans imports of shrimp or
shrimp products from any country not meeting certain policy conditions.
We finally note that previous panels have considered similar measures
restricting imports to be ‘prohibitions or restrictions’ within the
meaning of Article XI.(599)”(600)
401. The Panel on
EC — Asbestos examined the WTO-consistency of a
French ban on the manufacture, import and export, and domestic sales and
transfer of certain asbestos and asbestos-containing products. In this
context, the question arose whether the French measure fell under the
scope of Article III or Article
XI. The Panel’s findings on this issue
were not appealed and thus were not reviewed by the Appellate Body. The
complainant, Canada, argued that this case was not addressed by the
interpretative Note Ad Article
III. Specifically, Canada was arguing
that the interpretative Note Ad Article
III only applies if the measure
is applicable to the imported product and to the domestic product.
However, in Canada’s view, the explicit import ban did not apply to
the domestic product because the domestic product was of course not
imported. Moreover, since France neither produced nor mined asbestos
fibres on its territory, the ban on manufacturing, processing, selling
and domestic marketing was, in practical terms, equivalent to a ban on
importing chrysotile asbestos fibres. The Panel first indicated,
contrary to Canada’s claim, that the Note
Ad Article
III applied to
this case, stating:
“[T]he word ‘comme’ in the French text of Note
Ad Article
III [‘and’
in the English text] implies in the first place that the measure applies
to the imported product and to the like domestic product.(601) The Panel
notes in this connection that the fact that France no longer produces
asbestos or asbestos-containing products does not suffice to make the
Decree a measure falling under Article XI:1. It is in fact because the
Decree prohibits the manufacture and processing of asbestos fibres that
there is no longer any French production. The cessation of French
production is the consequence of the Decree and not the reverse.
Consequently, the Decree is a measure which ‘applies to an imported
product and to the like domestic product’ within the meaning of Note
Ad Article
III.
Secondly, the Panel notes that the words ‘any law, regulation or
requirement […] which applies to an imported product and [‘comme’
in the French text] to the like domestic product’ in the Note
Ad Article
III could also mean that the same regime must apply to the
imported product and the domestic product.(602) In this case, under the
Decree, the domestic product may not be sold, placed on the domestic
market or transferred under any title, possessed for sale, offered or
exported. If we follow Canada’s reasoning, products from third
countries are subject to a different regime because, as they cannot be
imported, they cannot be sold, placed on the domestic market,
transferred under any title, possessed for sale or offered. Firstly, the
regulations applicable to domestic products and foreign products lead to
the same result: the halting of the spread of asbestos and
asbestos-containing products on French territory. In practice, in one
case (domestic products), they cannot be placed on the domestic market
because they cannot be transferred under any title. In the other
(imported products), the import ban also prevents their marketing.”(603)
402. In this regard, the Panel rejected Canada’s argument that an
identical measure must be applied to the domestic product and the like
imported product if the measure applicable to the imported product is to
fall under Article III:
“We note that the relevant part of the English text of
Note Ad Article III reads as follows: ‘Any […] law, regulation or
requirement […] which applies to an imported product and to the like
domestic product’.(604) The word ‘and’ does not have the same
meaning as ‘in the same way as’, which can be another meaning for
the word ‘comme’ in the French text. We therefore consider that the
word ‘comme’ cannot be interpreted as requiring an identical measure
to be applied to imported products and domestic products if Article III
is to apply.
We note that our interpretation is confirmed by practice under the
GATT 1947. In United States — Section 337 of the Tariff Act of 1930(605), the Panel had to examine measures specifically applicable to
imported products suspected of violating an American patent right. In
this case, referring to Note Ad Article
III, the Panel considered that
the provisions of Article III:4 did apply to the special procedures
prescribed for imported products suspected of violating a patent
protected in the United States because these procedures were considered
to be ‘laws, regulations and requirements’ affecting the internal
sale of the imported products, within the meaning of Article III of the
GATT. It should be noted that in this case the procedures examined were
not the same as the equivalent procedures applicable to domestic
products.(606)”(607)
403. In the context of the issue whether the French asbestos ban fell
under Article III or Article
XI, Canada cited the GATT Panel Report on
Canada — Provincial Liquor Boards (EEC). Canada quoted this report in
support of its proposition that even if the French measure was an
internal measure within the meaning of Article III and
Note Ad Article III, this did not prevent the French decree from also falling under the
scope of Article XI. Specifically, Canada pointed out that in the
aforementioned case, the Panel had refrained from making a ruling on
Article III:4; Canada argued that this confirmed the non-applicability
of Article III:4 to the part of an internal measure dealing with the
treatment of imported products. The Panel was unconvinced by this
argument and pointed out that the case quoted by Canada concerned
restrictions made effective through state-trading operations:
“We note that in paragraph 4.24 of the Report, the Panel
[Canada
— Provincial Liquor Boards (EEC)] considered that according to the
Note Ad Articles XI, XII, XIII, XIV and XVIII, restrictions made
effective through state-trading operations were ‘import restrictions’
or ‘export restrictions’. It considered that, in the case of
enterprises enjoying a monopoly of both importation and distribution in
the domestic market, the distinction normally made between restrictions
affecting the importation of products and restrictions affecting
imported products lost much of its significance since both types of
restriction could be made effective through decision by the monopoly. In
this case, the Decree did not institute a monopoly on the import or
distribution of asbestos and like products, so the
Note Ad Articles XI, XII, XIII, XIV and XVIII is not relevant to settlement of this matter.
As regards Canada’s reference to paragraph 4.26 of the
aforementioned report(608), we consider that it does not substantiate
Canada’s position in this case either. In this paragraph, the Panel
refrains from ruling on a violation of Article
III:4. It appears to do
so, however, for reasons of legal economy because it simultaneously
recognizes that Article III:4 could apply to state-trading transactions.
Contrary to Canada’s assertion, this paragraph does not confirm the
non-applicability of Article III:4 to the part
of an internal measure
dealing with the treatment of imported products. At the most, it could
confirm the application of both provisions. Nevertheless, as explained
in the preceding paragraph, the Panel found that Article XI:1 applied,
referring to the
Note Ad Articles XI, XII, XIII, XIV and XVIII. This
Note only applies to state-trading transactions. In the present case,
however, there is no question of a measure applied in the context of
state-trading activities.”(609)
(c) “prohibitions or restrictions … on the exportation or sale
for export of any product”
404. In
Argentina — Hides and Leather, the European Communities
argued that Argentina’s measure was inconsistent with Article XI:1 by
authorizing the presence of domestic tanners’ representatives in the
customs inspection procedures for hides destined for export operations,
and thus, imposing de facto restrictions on exports of hides.(610) The
Panel noted:
“There can be no doubt, in our view, that the disciplines of
Article XI:1 extend to restrictions of a de facto nature.(611) It is also
readily apparent that Resolution 2235, if indeed it makes effective a
restriction, fits in the broad residual category, specifically mentioned
in Article XI:1, of ‘other measures’.”(612)
405. Citing the Panel Report on
Japan — Film, the Panel on
Argentina — Hides and Leather went on to state:
“It is well-established in GATT/WTO jurisprudence that only
governmental measures fall within the ambit of Article
XI:1. This said,
we recall the statement of the panel in Japan — Measures Affecting
Consumer Photographic Film and Paper to the effect that:
‘[P]ast GATT cases demonstrate that the fact that an action is
taken by private parties does not rule out the possibility that it may
be deemed governmental if there is sufficient governmental involvement
with it. It is difficult to establish bright-line rules in this regard,
however. Thus, that possibility will need to be examined on a
case-by-case basis.’(613)
We agree with the view expressed by the panel in Japan —
Film.
However, we do not think that it follows either from that panel’s
statement or from the text or context of Article XI:1 that Members are
under an obligation to exclude any possibility that governmental
measures may enable private parties, directly or indirectly, to restrict
trade, where those measures themselves are not trade-restrictive.(614)”(615)
406. The Panel on
Argentina — Hides and Leather had to determine,
inter alia, whether the presence of representatives of the domestic hide
tanning industry in the Argentine customs inspection procedures for
hides destined for export was an export restriction. The Panel discussed
the relevance of the actual trade effect of the measure and found that
although actual trade effects did not have to be proven in order to
establish a violation of Article XI:1, trade effects carried weight, as
an evidentiary matter, for establishing the existence of a de facto
restriction
“[A]s to whether Resolution 2235 makes effective a restriction, it
should be recalled that Article XI:1, like Articles
I, II and III of the
GATT 1994, protects competitive opportunities of imported products, not
trade flows.(616) In order to establish that Resolution 2235 infringes
Article XI:1, the European Communities need not prove actual trade
effects. However, it must be borne in mind that Resolution 2235 is
alleged by the European Communities to make effective a de facto rather
than a de jure restriction. In such circumstances, it is inevitable, as
an evidentiary matter, that greater weight attaches to the actual trade
impact of a measure.
Even if it emerges from trade statistics that the level of exports is
unusually low, this does not prove, in and of itself, that that level is
attributable, in whole or in part, to the measure alleged to constitute
an export restriction. Particularly in the context of an alleged de
facto restriction and where, as here, there are possibly multiple
restrictions,(617) it is necessary for a complaining party to establish a
causal link between the contested measure and the low level of exports.(618) In our view, whatever else it may involve, a demonstration
of causation must consist of a persuasive explanation of precisely how
the measure at issue causes or contributes to the low level of exports.”(619)
(d) “restrictions made effective through state-trading operations
“
407. The Panel on
India — Quantitative Restrictions, in examining
the contested Indian measures, addressed the phrase “restrictions made
effective through state-trading operations”. In its analysis, which
was subsequently not reviewed by the Appellate Body, the Panel
emphasized that the fact that imports were effected through
state-trading operations did not per se mean that imports were being
restricted:
“In analyzing the US claim, we note that violations of
Article XI:1
can result from restrictions made effective through state trading
operations. This is made very clear in the
Note Ad Articles XI, XII, XIII, XIV and XVIII, which provides that ‘Throughout
Article XI, XII; XIII;
XIV; and XVIII, the terms “import restrictions” or “export
restrictions” include restrictions made effective through
state-trading operations.’ It should be noted however, that the mere
fact that imports are effected through state trading enterprises would
not in itself constitute a restriction. Rather, for a restriction to be
found to exist, it should be shown that the operation of this state
trading entity is such as to result in a restriction.(620)
As noted above, the United States has shown in some instances that
there have been zero imports of products reserved to state trading
enterprises by India. We note, however, that canalization per se will
not necessarily result in the imposition of quantitative restrictions
within the meaning of Article XI:1, since an absence of importation of a
given product may not always be the result of the imposition of a
prohibitive quantitative restriction. For instance, the absence of
importation of snow ploughs into a tropical island cannot be taken as
sufficient evidence of the existence of import restrictions, even if the
right to import those products is granted to an entity with exclusive or
special privileges.”(621)
408. The Panel on
Korea — Various Measures on Beef, in a finding
not reviewed by the Appellate Body, examined various practices of the
Korean state trading agency for beef — an agency which held both an
importation and a distribution monopoly — and discussed the Ad Note to
Article XI in the following terms:
“[I]n the special case where a state-trading enterprise possesses
an import monopoly and a distribution monopoly, any restriction it
imposes on the distribution of imported products will lead to a
restriction on importation of the particular product over which it has a
monopoly. In other words, the effective control over both importation
and distribution channels by a state-trading enterprise means that the
imposition of any restrictive measure, including internal measures, will
have an adverse effect on the importation of the products concerned. The
Ad Note to Article XI therefore prohibits a state-trading enterprise
enjoying monopoly right over both importation and distribution from
imposing any internal restriction against such imported products.”(622)
409. In
EC — Asbestos, the Panel referred to
Note Ad Articles XI, XII, XIII, XIV and XVIII in its rejection of Canada’s argument that
the measure at issue was subject to Article XI:1
as well as Article III:4. See
paragraph 403 above.
(e) Bonding requirements
410. In
US — Certain EC Products, the measures at issue were
increased bonding requirements imposed by the United States on imports
from the European Communities. The increased bonding requirements were
imposed in order to secure the future collection of additional import
duties which were only later authorized by the Dispute Settlement Body
under Article 22.6 of the DSU. While the majority of the Panel found
that this bonding requirement constituted a duty or charge under Article
II, one panelist found that this measure fell under Article
XI of GATT:
“Any bonding requirements to cover the payment of tariffs above
their bound levels cannot be viewed as a mechanism in place to secure
compliance with WTO compatible tariffs and constituted, therefore,
import restrictions for which there was no justification. The actual
trade effects of the 3 March Measure, which are reflected on the charts
contained in paragraph 2.37 of this Panel Report, confirm its
restrictive nature and effect. One Panelist found, therefore, that the 3
March Measure constituted a ‘restriction’, contrary to Article XI of
GATT, rather than a duty or charge under Article
II.”(623)
(f) Licensing requirements
411. In
India — Quantitative Restrictions, the Panel, in a finding
not reviewed by the Appellate Body, held that Article XI:1
had a broad
scope and covered discretionary or non-automatic import licensing
requirements:
“[T]he text of Article XI:1
is very broad in scope, providing for a
general ban on import or export restrictions or prohibitions ‘other
than duties, taxes or other charges’. As was noted by the panel in
Japan — Trade in Semi-conductors, the wording of Article XI:1
is
comprehensive: it applies ‘to all measures instituted or maintained by
a [Member] prohibiting or restricting the importation, exportation, or
sale for export of products other than measures that take the form of
duties, taxes or other charges.’(624) The scope of the term ‘restriction’
is also broad, as seen in its ordinary meaning, which is ‘a limitation
on action, a limiting condition or regulation’.
Under the GATT 1947, panels have examined whether import and export
licensing systems are restrictions under Article XI:1. For example, in a
case involving a so-called ‘SLQ’ regime, which concerned products
subject in principle to quantitative restrictions, but for which no
quota amount had been set either in quantity or value, permit
applications being granted upon request, the panel noted ‘that the SLQ
regime was an import licensing procedure which would amount to a
quantitative restriction unless it provided for the automatic issuance
of licences’.(625) A similar conclusion was reached in the
above cited
Japan — Trade in Semi-conductors, where the panel found that ‘export
licensing practices by Japan, leading to delays of up to three months in
the issuing of licences for semi-conductors destined for contracting
parties other than the United States, had been non-automatic and
constituted restrictions on the exportation of such products
inconsistent with Article XI’.(626) These reports are consistent with
the ordinary meaning noted above, as discretionary or non-automatic
licensing systems by their very nature operate as limitations on action
since certain imports may not be permitted. Thus, in light of the terms
of Article XI:1 and these adopted panel reports, we conclude that a
discretionary or non-automatic import licensing requirement is a
restriction prohibited by Article XI:1.”(627)
412. In
Korea — Various Measures on Beef, the Panel, in a finding
not reviewed by the Appellate Body, rejected the United States’ claim
that “Korea’s regulatory regime [on beef imports], and thus its
licensing system, by granting exclusive authority to [certain Korean
agencies] to import beef, effectively establishes a non-automatic import
licensing system in violation of Article XI:1
…”. The Panel held
that discretionary licensing used in conjunction with a quantitative
restriction does not necessarily provide an additional level of
restriction to the quantitative restriction:
“[W]here a quota is in place, the use of a discretionary licensing
system need not necessarily result in any additional restriction. Where
a discretionary licensing system is implemented in conjunction with
other restrictions, such as in the present dispute, the manner in which
the discretionary licensing system is operated may create additional
restrictions independent of those imposed by the principal restriction.
Since this issue was not considered in the India — Quantitative
Restrictions report, that case does not provide authority for the
proposition that a discretionary licensing system, used in conjunction
with a quantitative restriction, necessarily provides some additional
level of restriction over and above the inherent restriction on access
created through the imposition of a quantitative restriction.”(628)
(g) Reference to GATT practice
413. For GATT practice on this subject-matter.
3. Notification requirements
414. At its meeting on 31 October 1995, the Committee on Market
Access adopted two Decisions relating to non-tariff measures: (1)
Notification procedures of quantitative restrictions, and (2) Reverse
notification on non-tariff measures.(629) At its meeting on 24 June 1997,
the Committee further adopted a format for the submissions of
notifications of quantitative restrictions.(630)
D. Relationship with Other Articles
1. Article I
415. In
US — Shrimp, exercising judicial economy, the Panel did not
examine a claim under Article I (and
Article XIII) after having found a
violation of Article XI. See paragraphs 421 and 446
below.
2. Article II
416. In
US — Certain EC Products, the majority of the Panel found
the increased bonding requirements imposed on imports in order to secure
the collection of additional import duties to be a duty or charge under
Article II. One panelist found the measure at issue to be a restriction
within the meaning and scope of Article XI. See paragraph 410
above.
3. Article III
417. In
Korea — Various Measures on Beef, the Panel examined the
United States’ claim that the prohibition of cross-trading between
end-users in respect of beef was inconsistent with GATT Articles III and
XI. After finding that this prohibition was contrary to
Article III:4 of GATT, the Panel exercised judicial economy with respect to the claim
that the same measure also violated Article XI of
GATT.(631)
418. In
EC — Asbestos, the Panel rejected Canada’s argument that
the French ban on the manufacture, importation and exportation, and
domestic sales and transfer of certain asbestos products was subject to Article XI:1
as well as Article III:4. See paragraphs 401-403
above.
419. In
India — Autos, the Panel recalled the Panel Report on
Canada — FIRA regarding the differing scopes of Article III and
XI of
GATT 1994. See paragraphs 295-296
above.
4. Article VI
420.
In US — 1916 Act (Japan), after finding a violation of Article
VI, the Panel held that in the case before it, Article
VI addressed the
“basic feature” of the measure at issue more directly that Article
XI; however, the Panel stated explicitly that this did not mean that
Article VI applied to the exclusion of Article XI:1. Nevertheless, the
Panel found that it was entitled to exercise judicial economy and
decided not to review the claims of Japan under Article
XI.(632)
5. Article XIII
421. The Panel on
US — Shrimp, in an exercise of judicial economy,
did not examine a claim under GATT Articles I and
XIII after having
found a violation of Article XI. See paragraph 446 below. Also, in
India
— Quantitative Restrictions, exercising judicial economy, the Panel
did not examine a claim under GATT Article XIII after having found a
violation of Article XI. See paragraph 447 below.
6. Article XVII
422. Exercising judicial economy, the Panel on
Korea — Various
Measures on Beef did not examine claims regarding certain practices of
the Korean state trading agency for beef under Articles III:4 and
XVII,
after it had found that this practice was inconsistent with Articles XI
and II:1(a). See paragraph 481 below.
423. The interpretation and application of
Note Ad Article XI, XII,
XIII, XIV and XVIII, which clarifies that the terms “import
restrictions” or “export restrictions” used in these Articles
include “restrictions made effective through state-trading operations”,
was discussed in India — Quantitative Restrictions and Korea — Various Measures on
Beef. See the excerpt(s) referenced in paragraphs
407-408 above.
7. Reference to GATT practice
424. With respect to GATT practice on this subject-matter.
E. Relationship with other WTO Agreements
1. SPS Agreement
425. In
Australia — Salmon, the Panel examined the Canadian claim
that the import prohibition of uncooked salmon was inconsistent with
Article XI of the GATT as well as with several provisions of the
SPS Agreement. After finding that the Australian measure was inconsistent
with the requirements of the SPS Agreement, the Panel did not find it
necessary to also examine the measure in the light of Article
XI.(633)
2. Anti-Dumping Agreement
426. The Panel on
US — 1916 Act (Japan), after finding that the
measure at issue was inconsistent with provisions of the Anti-Dumping
Agreement (and Article VI of the
GATT), did not find it necessary to
address the same measure also in the light of Article
XI. See also
paragraph 420 above.
XIII. Article XII
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A. Text of Article XII
Article XII: Restrictions to Safeguard the Balance of Payments
1. Notwithstanding the provisions of
paragraph 1 of Article XI, any
contracting party, in order to safeguard its external financial position
and its balance of payments, may restrict the quantity or value of
merchandise permitted to be imported, subject to the provisions of the
following paragraphs of this Article.
2. (a)
Import restrictions instituted, maintained or intensified by a
contracting party under this Article shall not exceed those necessary:
(i) to forestall the imminent threat of, or to stop, a serious
decline in its monetary reserves, or
(ii) in the case of a contracting party with very low monetary
reserves, to achieve a reasonable rate of increase in its reserves.
Due regard shall be paid in either case to any special factors which
may be affecting the reserves of such contracting party or its need for
reserves, including, where special external credits or other resources
are available to it, the need to provide for the appropriate use of such
credits or resources.
(b)
Contracting parties applying restrictions under sub-paragraph (a)
of this paragraph shall progressively relax them as such conditions
improve, maintaining them only to the extent that the conditions
specified in that sub-paragraph still justify their application. They
shall eliminate the restrictions when conditions would no longer justify
their institution or maintenance under that sub-paragraph.
3. (a) Contracting parties undertake, in carrying out their domestic
policies, to pay due regard to the need for maintaining or restoring
equilibrium in their balance of payments on a sound and lasting basis
and to the desirability of avoiding an uneconomic employment of
productive resources. They recognize that, in order to achieve these
ends, it is desirable so far as possible to adopt measures which expand
rather than contract international trade.
(b) Contracting parties applying restrictions under this Article may
determine the incidence of the restrictions on imports of different
products or classes of products in such a way as to give priority to the
importation of those products which are more essential.
(c) Contracting parties applying restrictions under this Article
undertake:
(i) to avoid unnecessary
damage to the commercial or economic interests of any other contracting
party;
(ii) not to apply restrictions so as to prevent unreasonably the
importation of any description of goods in minimum commercial quantities
the exclusion of which would impair regular channels of trade; and
(iii) not to apply restrictions which would prevent the importations
of commercial samples or prevent compliance with patent, trade mark,
copyright, or similar procedures.
(d) The contracting parties recognize that, as a result of domestic
policies directed towards the achievement and maintenance of full and
productive employment or towards the development of economic resources,
a contracting party may experience a high level of demand for imports
involving a threat to its monetary reserves of the sort referred to in
paragraph 2 (a) of this Article. Accordingly, a contracting party
otherwise complying with the provisions of this Article shall not be
required to withdraw or modify restrictions on the ground that a change
in those policies would render unnecessary restrictions which it is
applying under this Article.
4. (a)
Any contracting party applying new restrictions or raising the
general level of its existing restrictions by a substantial
intensification of the measures applied under this Article shall
immediately after instituting or intensifying such restrictions (or, in
circumstances in which prior consultation is practicable, before doing
so) consult with the Contracting Parties as to the nature of its balance
of payments difficulties, alternative corrective measures which may be
available, and the possible effect of the restrictions on the economies
of other contracting parties.
(b)
On a date to be determined by them, the Contracting Parties
shall review all restrictions still applied under this Article on that
date. Beginning one year after that date, contracting parties applying
import restrictions under this Article shall enter into consultations of
the type provided for in sub-paragraph (a) of this paragraph with the
Contracting Parties annually.
(c)
(i) If, in the course of consultations with a contracting party
under sub-paragraph (a) or (b)
above, the Contracting Parties find that
the restrictions are not consistent with provisions of this Article or
with those of Article XIII (subject to the provisions of
Article XIV),
they shall indicate the nature of the inconsistency and may advise that
the restrictions be suitably modified.
(ii) If, however, as a result of the consultations, the Contracting
Parties determine that the restrictions are being applied in a manner
involving an inconsistency of a serious nature with the provisions of
this Article or with those of Article XIII (subject to the provisions of
Article XIV) and that damage to the trade of any contracting party is
caused or threatened thereby, they shall so inform the contracting party
applying the restrictions and shall make appropriate recommendations for
securing conformity with such provisions within the specified period of
time. If such contracting party does not comply with these
recommendations within the specified period, the Contracting Parties may
release any contracting party the trade of which is adversely affected
by the restrictions from such obligations under this Agreement towards
the contracting party applying the restrictions as they deter mine to be
appropriate in the circumstances.
(d)
The Contracting Parties shall invite any contracting party which
is applying restrictions under this Article to enter into consultations
with them at the request of any contracting party which can establish a
prima facie case that the restrictions are inconsistent with the
provisions of this Article or with those of Article XIII (subject to the
provisions of Article XIV) and that its trade is adversely affected
thereby. However, no such invitation shall be issued unless the
Contracting Parties have ascertained that direct discussions between the
contracting parties concerned have not been successful. If, as a result
of the consultations with the Contracting Parties, no agreement is
reached and they determine that the restrictions are being applied
inconsistently with such provisions, and that damage to the trade of the
contracting party initiating the procedure is caused or threatened
thereby, they shall recommend the withdrawal or modification of the
restrictions. If the restrictions are not withdrawn or modified within
such time as the Contracting Parties may prescribe, they may release the
contracting party initiating the procedure from such obligations under
this Agreement towards the contracting party applying the restrictions
as they determine to be appropriate in the circumstances.
(e) In proceeding under this paragraph, the
Contracting Parties shall have due regard to any special external
factors adversely affecting the export trade of the contracting party
applying the restrictions.
(f)
Determinations under this paragraph shall be rendered
expeditiously and, if possible, within sixty days of the initiation of
the consultations.
5. If there is a persistent and widespread application
of import
restrictions under this Article, indicating the existence of a general
disequilibrium which is restricting international trade, the Contracting
Parties shall initiate discussions to consider whether other measures
might be taken, either by those contracting parties the balance of
payments of which are under pressure or by those the balance of payments
of which are tending to be exceptionally favourable, or by any
appropriate intergovernmental organization, to remove the underlying
causes of the disequilibrium. On the invitation of the Contracting
Parties, contracting parties shall participate in such discussions.
B. Text of Ad Article XII
Ad Article XII
The Contracting Parties shall make provision for the utmost secrecy
in the conduct of any consultation under the provisions of this Article.
Paragraph 3 (c)(i)
Contracting parties applying restrictions shall endeavour to avoid
causing serious prejudice to exports of a commodity on which the economy
of a contracting party is largely dependent.
Paragraph 4 (b)
It is agreed that the date shall be within ninety days after the
entry into force of the amendments of this Article effected by the
Protocol Amending the Preamble and Parts II and
III of this Agreement.
However, should the Contracting Parties find that conditions were not
suitable for the application of the provisions of this sub-paragraph at
the time envisaged, they may determine a later date; Provided that such
date is not more than thirty days after such time as the obligations of
Article VIII, Sections 2, 3 and 4, of the Articles of Agreement of the
International Monetary Fund become applicable to contracting parties,
members of the Fund, the combined foreign trade of which constitutes at
least fifty per centum of the aggregate foreign trade of all contracting
parties.
Paragraph 4 (e)
It is agreed that paragraph 4 (e) does not add any new criteria for
the imposition or maintenance of quantitative restrictions for balance
of payments reasons. It is solely intended to ensure that all external
factors such as changes in the terms of trade, quantitative
restrictions, excessive tariffs and subsidies, which may be contributing
to the balance of payments difficulties of the contracting party
applying restrictions, will be fully taken into account.
C. Understanding on the Balance-of-Payments Provisions of the General
Agreement on Tariffs and Trade 1994
[The text of the Understanding on the Balance-of-Payments Provisions
of the General Agreement on Tariffs and Trade 1994 can be found at
Section C following the text of Article XVIII
below.]
D. Interpretation and Application of Article XII
1. BOP Understanding
427. With respect to the interpretation and application of the
Understanding on the Balance-of-Payments Provisions of the General
Agreement on Tariffs and Trade 1994, see paragraphs 508-509 and
515-516
below.
E. Relationship with other Articles
1. Article XVII
428. The interpretation and application of the note
Ad Article XI,
XII, XIII, XIV and XVIII, which clarifies that the terms “import
restrictions” or “export restrictions” used in these Articles
include “restrictions made effective through state-trading operations”,
was discussed by the Panels on India — Quantitative Restrictions and
on Korea — Various Measures on Beef. See paragraphs 407-408
above.
2. Article XVIII
429. In
India — Quantitative Restrictions, the Panel explained the
relationship between Articles XII and XVIII:B in clarifying the function
of Article XVIII:B. See paragraph 488
below.
3. Reference to GATT practice
430. With respect to GATT practice on
Article XII.
XIV. Article XIII
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A. Text of Article XIII
Article XIII: Non-discriminatory Administration of Quantitative Restrictions
1. No prohibition or restriction shall be applied by any contracting
party on the importation of any product of the territory of any other
contracting party or on the exportation of any product destined for the
territory of any other contracting party, unless the importation of the
like product of all third countries or the exportation of the like
product to all third countries is similarly prohibited or restricted.
2. In applying import restrictions to any product, contracting
parties shall aim at a distribution of trade in such product approaching
as closely as possible the shares which the various contracting parties
might be expected to obtain in the absence of such restrictions and to
this end shall observe the following provisions:
(a) Wherever practicable, quotas representing the total amount of
permitted imports (whether allocated among supplying countries or not)
shall be fixed, and notice given of their amount in accordance with
paragraph 3 (b) of this Article;
(b) In cases in which quotas are not practicable, the restrictions
may be applied by means of import licences or permits without a quota;
(c) Contracting parties shall not, except for purposes of operating
quotas allocated in accordance with subparagraph
(d) of this
paragraph,
require that import licences or permits be utilized for the importation
of the product concerned from a particular country or source;
(d)
In cases in which a quota is allocated among supplying countries the
contracting party applying the restrictions may seek agreement with
respect to the allocation of shares in the quota with all other
contracting parties having a substantial interest in supplying the
product concerned. In cases in which this method is not reasonably
practicable, the contracting party concerned shall allot to contracting
parties having a substantial interest in supplying the product shares
based upon the proportions, supplied by such contracting parties during
a previous representative period, of the total quantity or value of
imports of the product, due account being taken of any special factors
which may have affected or may be affecting the trade in the product. No
conditions or formalities shall be imposed which would prevent any
contracting party from utilizing fully the share of any such total
quantity or value which has been allotted to it, subject to importation
being made within any prescribed period to which the quota may relate.
3.
(a)
In cases in which import licences are issued in connection
with import restrictions, the contracting party applying the
restrictions shall provide, upon the request of any contracting party
having an interest in the trade in the product concerned, all relevant
information concerning the administration of the restrictions, the
import licences granted over a recent period and the distribution of
such licences among supplying countries; Provided that there shall be no
obligation to supply information as to the names of importing or
supplying enterprises.
(b)
In the case of import restrictions involving the fixing of
quotas, the contracting party applying the restrictions shall give
public notice of the total quantity or value of the product or products
which will be permitted to be imported during a specified future period
and of any change in such quantity or value. Any supplies of the product
in question which were en route at the time at which public notice was
given shall not be excluded from entry; Provided that they may be
counted so far as practicable, against the quantity permitted to be
imported in the period in question, and also, where necessary, against
the quantities permitted to be imported in the next following period or
periods; and Provided further that if any contracting party customarily
exempts from such restrictions products entered for consumption or
withdrawn from warehouse for consumption during a period of thirty days
after the day of such public notice, such practice shall be considered
full compliance with this subparagraph.
(c)
In the case of quotas allocated among supplying countries, the
contracting party applying the restrictions shall promptly inform all
other contracting parties having an interest in supplying the product
concerned of the shares in the quota currently allocated, by quantity or
value, to the various supplying countries and shall give public notice
thereof.
4. With regard to restrictions applied in accordance with
paragraph 2 (d) of this Article or under paragraph 2
(c) of Article
XI, the
selection of a representative period for any product and the appraisal
of any special factors affecting the trade in the product shall be made
initially by the contracting party applying the restriction; Provided
that such contracting party shall, upon the request of any other
contracting party having a substantial interest in supplying that
product or upon the request of the CONTRACTING PARTIES, consult promptly
with the other contracting party or the CONTRACTING PARTIES regarding
the need for an adjustment of the proportion determined or of the base
period selected, or for the reappraisal of the special factors involved,
or for the elimination of conditions, formalities or any other
provisions established unilaterally relating to the allocation of an
adequate quota or its unrestricted utilization.
5. The provisions of this Article shall apply to any tariff quota
instituted or maintained by any contracting party, and, in so far as
applicable, the principles of this Article shall also extend to export
restrictions.
B. Text of Ad Article XIII
Ad Article XIII: Paragraph 2 (d)
No mention was made of “commercial considerations” as a rule for
the allocation of quotas because it was considered that its application
by governmental authorities might not always be practicable. Moreover,
in cases where it is practicable, a contracting party could apply these
considerations in the process of seeking agreement, consistently with
the general rule laid down in the opening sentence of paragraph
2.
Paragraph 4
See note relating to “special factors” in connection with the
last subparagraph of paragraph 2 of Article XI.
C. Interpretation and Application of Article XIII
1. General
(a) Scope of application
431. In
EC — Bananas III, the Appellate Body reviewed the Panel’s
finding that the EC import regime for bananas was inconsistent with
Article XIII in that the European Communities allocated tariff quota
shares to some Members without allocating such shares to other Members.
The European Communities claimed that “there [were] two separate EC
import regimes for bananas, the preferential regime for traditional ACP
bananas and the erga omnes regime for all other imports of bananas”
and argued that “the non-discrimination obligations of Article
I:1,
X:3(a) and XIII of GATT 1994 and Article
1.3 of the Licensing Agreement apply only within each of these separate regimes.”(634) Rejecting this
argument, the Appellate Body applied Article XIII to the whole import
regime as follows:
“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.”(635)
(b) Object and purpose
432. In
EC — Bananas III, the Panel, in a finding not reviewed by
the Appellate Body, held that the object and purpose of Article XIII:2
is to minimize the impact of quantitative restrictions on trade flows:
“In light of the terms of Article
XIII, it can be said that the
object and purpose of Article XIII:2 is to minimize the impact of a
quota or tariff quota regime on trade flows by attempting to approximate
under such measures the trade shares that would have occurred in the
absence of the regime. In interpreting the terms of Article
XIII, it is
important to keep their context in mind. Article XIII is basically a
provision relating to the administration of restrictions authorized as
exceptions to one of the most basic GATT provisions the general ban on
quotas and other non-tariff restrictions contained in Article XI.”(636)
2. Article XIII:1
433. In
EC — Bananas III, the Appellate Body found a violation of
Article XIII:1 in the European Communities’ import regime for bananas,
stating as follows:
“[A]llocation to Members not having a substantial interest must be
subject to the basic principle of nondiscrimination. 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.”(637)
434. With respect to GATT practice on this subject-matter.
3. Article XIII:2
(a) Chapeau
435. In
US — Line Pipe, the Panel established that because the
safeguard measure investigation was not based on historical trade
patterns, and did not reflect an intent of approaching the shares that
the members could have been expected to obtain in the absence of the
measure, there was a violation of the chapeau of Article
XIII:2. The
Panel held:
“[I]n our view, Korea is correct to argue that a Member would
violate the general rule set forth in the chapeau of Article XIII:2 if
it imposes safeguard measures without respecting traditional trade
patterns (at least in the absence of any evidence indicating that the
shares a Member might be expected to obtain in the future differ, as a
result of changed circumstances, from its historical share). Trade flows
before the imposition of a safeguard measure provide an objective,
factual basis for projecting what might have occurred in the absence of
that measure.
There is nothing in the record before the Panel to suggest that the
line pipe measure was based in any way on historical trade patterns in
line pipe, or that the United States otherwise ‘aim[ed] 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 line pipe measure. Instead, as noted by Korea, ‘the in quota
import volume originating from Korea, the largest supplier historically
to the US market, was reduced to the same level as the smallest — or
even then non-existent — suppliers to the US market (9,000 short tons)’.(638)
For this reason, we find that the line pipe measure is inconsistent with
the general rule contained in the chapeau of Article
XIII:2.”(639)
436. In
EC — Bananas III, the Appellate Body found a violation of
Article XIII:2 in respect of the European Communities’ import regime
for bananas and, more specifically, in respect of the treatment granted
to countries which had concluded with the European Communities the
so-called Banana Framework Agreement (BFA). A quota share not utilized
by one of the BFA countries could, at the joint request of all BFA
countries, be transferred to another BFA country. No equivalent
regulation existed with respect to banana exporting countries that were
not part of the BFA. The Panel found that this aspect of the measure was
inconsistent with the requirement to approximate, in the administration
of a quantitative restriction, the relative trade flows which would
exist in the absence of the measure at issue:
“Pursuant to these reallocation rules, a portion of a tariff quota
share not used by the BFA country to which that share is allocated may,
at the joint request of the BFA countries, be reallocated to the other
BFA countries. … [T]he 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.”(640)
437. In
EC — Poultry, Brazil challenged the European Communities’
calculation of the tariff quota shares because imports from China — at
that time not a Member of the WTO — had been included in this
allocation of tariff quota shares. The Panel, in a finding expressly
endorsed by the Appellate Body(641), found that nothing in
Article XIII required the calculation of tariff quota shares only on the basis of
imports from WTO Members:
“We note that Article XIII carefully distinguishes between Members
(‘contracting parties’ in the original text of GATT 1947) and ‘supplying
countries’ or ‘source’. There is nothing in Article XIII that
obligates Members to calculate tariff quota shares on the basis of
imports from Members only.(642) If the purpose of using past trade
performance is to approximate the shares in the absence of the
restrictions as required under the chapeau of Article
XIII:2, exclusion
of a non-Member, particularly if it is an efficient supplier, would not
serve that purpose.
This interpretation is also confirmed by the use in
Article XIII:2(d)
of the term ‘of the total quantity or value of imports of the product’
without limiting the total quantity to imports from Members.
The conclusion above is not affected by the fact that the TRQ in
question was opened as compensatory adjustment under Article XXVIII
because Article XIII is a general provision regarding the
non-discriminatory administration of import restrictions applicable to
any TRQs regardless of their origin.”(643)
(b) Article XIII:2(a)
438. Regarding the question of whether tariff quotas were subject to
the disciplines set out in Article XIII:2(a), the Panel on
US — Line Pipe, in a finding not reviewed by the Appellate Body, held that they do
constitute “quotas” within the meaning of Article XIII:2(a):
“Irrespective of whether or not tariff quotas constitute ‘quotas’
within the meaning of Article XIII:2(a), tariff quotas are necessarily
subject to the disciplines contained in Article XIII:2(a)
as a result of
the express language of Article XIII:5. Thus,
Article XIII:2(a) must
have meaning in the context of tariff quotas. We believe that, in
respect of tariff quotas, Article XIII:2(a)
requires Members to fix,
wherever practicable, the total amount of imports permitted at the lower
tariff rate.(644)”(645)
(c) Article XIII:2(d)
(i) Allocation of import quotas to Members who have no “substantial
interest”
439. The Panel on
EC — Bananas III addressed the question whether
country-specific shares can also be allocated to Members that do not
have a substantial interest in supplying the product and, if so, what
the specific method of allocation should be. The Panel, in an finding
not addressed by the Appellate Body, answered this question in the
affirmative, but emphasized that any allocation to Members not having a
substantial interest in supplying the product at issue would have to
comply with the principle of non-discrimination:
“As to the first point, we note that the first sentence of
Article
XIII:2(d) refers to allocation of a quota ‘among supplying countries’.
This could be read to imply that an allocation may also be made to
Members that do not have a substantial interest in supplying the
product. If this interpretation is accepted, any such allocation must,
however, meet the requirements of Article XIII:1 and the general rule in
the chapeau to Article
XIII:2(d). Therefore, if a Member wishes to
allocate shares of a tariff quota to some suppliers without a
substantial interest, then such shares must be allocated to all such
suppliers. Otherwise, imports from Members would not be similarly
restricted as required by Article XIII:1.(646) As to the second point, in
such a case it would be required to use the same method as was used to
allocate the country-specific shares to the Members having a substantial
interest in supplying the product, because otherwise the requirements of
Article XIII:1 would also not be met.
…
In so far as this in practice results in the use of an ‘others’
category for all Members not having a substantial interest in supplying
the product, it comports well with the object and purpose of Article
XIII, as expressed in the general rule to the chapeau to Article
XIII:2.
When a significant share of a tariff quota is assigned to ‘others’,
the import market will evolve with the minimum amount of distortion.
Members not having a substantial supplying interest will be able, if
sufficiently competitive, to gain market share in the ‘others’
category and possibly achieve ‘substantial supplying interest’
status which, in turn, would provide them the opportunity to receive a
country-specific allocation by invoking the provisions of Article
XIII:4. New entrants will be able to compete in the market, and likewise
have an opportunity to gain ‘substantial supplying interest’ status.
For the share of the market allocated to Members with a substantial
interest in supplying the product, the situation may also evolve in
light of adjustments following consultations under Article
XIII:4. In
comparison to a situation where country-specific shares are allocated to
all supplying countries, including Members with minor market shares,
this result is less likely to lead to a long-term freezing of market
shares. This is, in our view, consistent with the terms, object and
purpose, and context of Article XIII.”(647)
440. The Panel on
EC — Bananas III (Article 21.5 — Ecuador)
examined the consistency with Article XIII of the European Communities’
regime for imports of bananas, as revised by the European Communities in
response to the DSB’s recommendation. In this revised regime, bananas
could be imported under the MFN tariff-rate quota on the basis of past
trade performance by exporting countries during the past representative
period from 1994 to 1996, while bananas from traditional ACP supplier
countries could be imported up to a collective amount which was
originally set to reflect the overall amount of the pre-1991 best-ever
export by individual traditional ACP suppliers. The Panel found the
revised regime to be inconsistent with Article
XIII:2(d):
“[F]or traditional ACP supplier countries the average exports
during the three-year period from 1994 to 1996 were collectively at a
level of approximately 685,000 tonnes, which is only about 80 per cent
of the 857,700 tonnes reserved for traditional ACP imports under the
previous as well as under the revised regime. In contrast, the MFN
tariff quota of 2.2 million tonnes (autonomously increased by 353,000
tonnes) has been virtually filled since its creation (over 95 per cent)
and there have been some out-of-quota imports. Thus, the allocation of
an 857,700 tonne tariff quota for traditional banana imports from ACP
States is inconsistent with the requirements of Article
XIII:2(d) because the EC regime clearly does not aim at a distribution of trade
approaching as closely as possible the shares which various Members
might be expected to obtain in the absence of restrictions.”(648)
(ii) Allocation of tariff/import quotas to non-Members
441. In
EC — Poultry, the Appellate Body upheld the Panel’s
finding that the European Communities acted consistently with Article
XIII in calculating a tariff-rate quota share for a Member based upon
the total quantity of imports including those from non-Members.(649) See
also paragraph 437 above. Brazil claimed upon appeal that the Panel had
also made a finding with respect to the allocation of tariff-rate quota
shares to a non-Member, and the participation of non-Members in the “others”
category of a tariff-rate quota. Brazil claimed that the Panel erred
because it had failed to recognize that the allocation of quota shares
is always intended exclusively for Members. The Appellate Body found
that the Panel statements which Brazil claimed to constitute the
findings it was appealing did not amount to findings or developed legal
interpretations on these two issues. As a result, the Appellate Body
concluded that a consideration of these questions would be outside its
mandate under Article 17.6 of the DSU. In regard to the two
aforementioned issues, the Panel had stated:
“We note in this regard that in the Banana III case, the panel made
the following observation (which was not affected by the subsequent
appeal): ‘The consequence of the foregoing analysis is that Members
may be effectively required to use a general “others” category for
all suppliers other than Members with a substantial interest in
supplying the product. The fact that in this situation tariff quota
shares are allocated to some Members, notably those having a substantial
interest in supplying the product, but not to others that do not have a
substantial interest in supplying the product, would not necessarily be
in conflict with Article XIII:1. While the requirement of
Article XIII:2(d) is not expressed as an exception to the requirements of Article XIII:1, it may be regarded, to the extent that its practical
application is inconsistent with it, as lex specialis in respect of
Members with a substantial interest in supplying the product concerned’.
See panel reports on European Communities — Regime for the
Importation, Sale and Distribution of Bananas, op. cit., para. 7.75. The
quoted passage, particularly the use of the phrase ‘all suppliers
other than Members with a substantial interest in supplying the product’
(emphasis added), indicates that the Banana III panel did not take the
view that allocation of quota shares to non-Members under Article
XIII:2(d) was not permitted.”(650)
442. The Panel on
EC — Bananas III, in a finding not addressed by
the Appellate Body, examined how the accession to the WTO of a supplying
country impacted upon the consistency of a pre-existing quantitative
restriction with Article XIII:2.
“The general rule in the chapeau to Article XIII:2 indicates that
the aim of Article XIII:2 is to give to Members the share of trade that
they might be expected to obtain in the absence of a tariff quota. There
is no requirement that a Member allocating shares of a tariff quota
negotiate with non-Members, but when such countries accede to the WTO,
they acquire rights, just as any other Member has under Article XIII
whether or not they have a substantial interest in supplying the product
in question.
[A]lthough the EC reached an agreement with all Members who had a
substantial interest in supplying the product at one point in time,
under the consultation provisions of Article
XIII:4, the EC would have
to consider the interests of a new Member who had a substantial interest
in supplying the product if that new Member requested it to do so.(651)
The provisions on consultations and adjustments in Article XIII:4 mean
in any event that the BFA could not be invoked to justify a permanent
allocation of tariff quota shares. Moreover, while new Members cannot
challenge the EC’s agreements with Colombia and Costa Rica in the BFA
on the grounds that the EC failed to negotiate and reach agreement with
them, they otherwise have the same rights as those Complainants who were
GATT contracting parties at the time the BFA was negotiated to challenge
its consistency with Article XIII. Generally speaking, all Members
benefit from all WTO rights.”(652)
443. With respect to GATT practice concerning the allocation of
quota.(653)
D. Relationship with other Articles
1. Article I
444. In
EC — Bananas III, the European Communities argued that even
though the Lomé waiver mentioned explicitly only GATT Article I:1 in
respect of the allocation of country-specific tariff quotas for bananas
to certain countries, a violation of Article XIII in respect of its
tariff regime for bananas was also covered by the Lomé waiver, due to
the inherent substantive link between Articles
I and XIII. While the
Panel agreed with the European Communities’ argument, the Appellate
Body rejected it.(654) See the Chapter on the
WTO Agreement,
Section X.B.3(i).
2. Article II
445. The Panel on
EC — Bananas III discussed the relationship
between GATT Articles II and XIII. See paragraphs 110-111
above.
3. Article XI
446. The Panel on
US — Shrimp found that the United States violated
Article XI by imposing an import ban on shrimps and shrimp products
harvested by vessels of foreign nations, where such exporting country
had not been certified by United States’ authorities as using methods
not leading to the incidental killing of sea turtles above a certain
level. The Panel, in a finding not reviewed by the Appellate Body, then
exercised judicial economy with respect to the claim concerning Article
XIII.(655)
447. The Panel on
India — Quantitative Restrictions, in a finding
not reviewed by the Appellate Body, stated that “[w]ith regard to the
claim of violation of Article XIII of GATT 1994, since the resolution of
the claims under Articles XI and XVIII:B
may make it unnecessary to
resolve that claim, we will defer consideration of this issue.”(656) The
Panel ultimately did not address Article XIII.
4. Article XXVIII
448. In
EC — Poultry, the Appellate Body addressed a complaint
against the allocation of tariff quotas for certain poultry products by
the European Communities, and rejected Brazil’s appeal that Articles I
and XIII of GATT were not applicable to the allocation of tariff quota
resulting from the negotiation under GATT Article XXVIII. The Appellate
Body, after having confirmed its finding in EC — Bananas III(657),
stated that “the concessions contained in Schedule LXXX pertaining to
the tariff-rate quota for frozen poultry meat must be consistent with
Article I and XIII of the GATT 1994.”(658) The Appellate Body opined
that Article XXVIII does not dispense with the non-discrimination
principle inscribed in Articles I and
XIII of GATT 1994, and considered
the negotiating history of Article XXVIII:
“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. As the Panel observed, this interpretation is, furthermore,
supported by the negotiating history of Article XXVIII. Regarding the
provision which eventually became Article
XXVIII:3, the Chairman of the
Tariff Agreements Committee at Geneva in 1947, concluded:
‘It was agreed that there was no intention to interfere in any way
with the operation of the most-favoured-nation clause. This Article is
headed ‘Modification of Schedules’. It refers throughout to
concessions negotiated under paragraph 1 of Article
II, the Schedules,
and there is no reference to Article
I, which is the
Most-Favoured-Nation Clause. Therefore, I think the intent is clear:
that in no way should this Article interfere with the operation of the
Most-Favoured-Nation Clause.’(659)
Although this statement refers specifically to the MFN clause in
Article I of the GATT, logic requires that it applies equally to the
non-discriminatory administration of quotas and tariff-rate quotas under
Article XIII of the GATT 1994.”(660)
5. Reference to GATT practice
449. With respect to GATT practice concerning the relationship of
Article XIII with other Articles.
E. Relationship with other WTO Agreements
1. Agreement on Agriculture
450. In
EC — Bananas III, the European Communities argued that, in
light of the meaning and intent of Articles 4.1 and
21.1 of the
Agreement on Agriculture, it was permitted, with respect to market
access concessions, to act inconsistently with the requirements of
Article XIII of the GATT 1994. The Panel concluded that the Agreement on
Agriculture did not permit the European Communities to act
inconsistently with Article XIII. The Appellate Body confirmed the Panel’s
finding:
“[W]e do not see anything in Article 4.1 to suggest that market
access concessions and commitments made as a result of the Uruguay Round
negotiations on agriculture can be inconsistent with the provisions of
Article XIII of the GATT 1994. There is nothing in Articles 4.1 or
4.2,
or in any other article of the Agreement on Agriculture, that deals
specifically with the allocation of tariff quotas on agricultural
products. If the negotiators had intended to permit Members to act
inconsistently with Article XIII of the GATT 1994, they would have said
so explicitly. The Agreement on Agriculture contains several specific
provisions dealing with the relationship between articles of the
Agreement on Agriculture and the GATT 1994. For example, Article 5 of
the Agreement on Agriculture allows Members to impose special safeguards
measures that would otherwise be inconsistent with Article XIX of the
GATT 1994 and with the Agreement on Safeguards. In addition, Article 13
of the Agreement on Agriculture provides that, during the implementation
period for that agreement, Members may not bring dispute settlement
actions under either Article XVI of the GATT 1994 or
Part III of the
Agreement on Subsidies and Countervailing Measures for domestic support
measures or export subsidy measures that conform fully with the
provisions of the Agreement on Agriculture. With these examples in mind,
we believe it is significant that Article 13 of the
Agreement on
Agriculture does not, by its terms, prevent dispute settlement actions
relating to the consistency of market access concessions for
agricultural products with Article XIII of the GATT
1994. As we have
noted, the negotiators of the Agreement on Agriculture did not hesitate
to specify such limitations elsewhere in that agreement; had they
intended to do so with respect to Article XIII of the GATT
1994, they
could, and presumably would, have done so. We note further that the
Agreement on Agriculture makes no reference to the Modalities document(661) or to any ‘common understanding’ among the negotiators
of the Agreement on Agriculture that the market access commitments for
agricultural products would not be subject to Article XIII of the GATT
1994.”(662)
2. Agreement on Safeguards
451. The Panel on
US — Line Pipe held, in a statement not reviewed
by the Appellate Body, that Article XIII does apply to tariff quota
safeguard measures. In the Panel’s view, if this were not the case,
quantitative criteria regarding the availability of lower tariff rates
could be introduced in a discriminatory manner inconsistently with the
objectives set out in the preamble of the Safeguards
Agreement:
“[I]t is the paucity of disciplines governing the application of
tariff quota safeguard measures in Article 5 of the Safeguards Agreement
(663) that supports our interpretation of
Article XIII. If
Article XIII did not apply to tariff quota safeguard measures, such
safeguard measures would escape the majority of the disciplines set
forth in Article 5. This is an important consideration, given the
quantitative aspect of a tariff quota. For example, if Article XIII did
not apply, quantitative criteria regarding the availability of lower
tariff rates could be introduced in a discriminatory manner, without any
consideration to prior quantitative performance.(664) In our view, the
potential for such discrimination is contrary to the object and purpose
of both the Safeguards Agreement, and the WTO Agreement. In this regard,
the preamble of the Safeguards Agreement refers to the ‘need to
clarify and reinforce the disciplines of GATT 1994’ in the context of
safeguards. We consider that the ‘disciplines of GATT 1994’ surely
include those providing for non-discrimination. In any event ‘the
elimination of discriminatory treatment in international trade relations’
is referred to explicitly in the preamble to the WTO
Agreement. We
further note that the preamble of the Safeguards Agreement also mentions
that one of the objectives of the Safeguards Agreement is to ‘establish
multilateral control over safeguards and eliminate measures that escape
such control’. We are of the view that non-application of Article XIII
in the context of safeguards would result in tariff quota safeguard
measures partially escaping the control of multilateral disciplines.
This result would be contrary to the objectives set out in the preamble
of the Safeguards Agreement.”(665)
452. The Panel on
US — Line Pipe, in a statement not reviewed by
the Appellate Body, highlighted the importance of respecting traditional
trade patterns when imposing safeguards measures:
“In our view, Korea is correct to argue that a Member would violate
the general rule set forth in the chapeau of Article XIII:2 if it
imposes safeguard measures without respecting traditional trade patterns
(at least in the absence of any evidence indicating that the shares a
Member might be expected to obtain in the future differ, as a result of
changed circumstances, from its historical share). Trade flows before
the imposition of a safeguard measure provide an objective, factual
basis for projecting what might have occurred in the absence of that
measure.”(666)
Footnotes:
590. (footnote original) Panel Report on EEC
— Imports Restrictions.
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591. As an example, the footnote to this
sentence refers to paras. 2 and 3 of the GATT 1994 Understanding on the
Balance-of-Payments Provisions, which both, according to the Panel, “provide
that Members shall seek to avoid the imposition of new quantitative
restrictions for balance-of-payments purposes.”
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592. (footnote original) The Agreement on
Safeguards also evidences a preference for the use of tariffs. Article 6
provides that provisional safeguard measures “should take the form of
tariff increases” and Article 11 prohibits the use of voluntary export
restraints.
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593. (footnote original) Under the Agreement
on Agriculture, notwithstanding the fact that contracting parties, for
over 48 years, had been relying a great deal on import restrictions and
other non-tariff measures, the use of quantitative restrictions and
other non-tariff measures was prohibited and Members had to proceed to a
“tariffication” exercise to transform quantitative restrictions into
tariff based measures.
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594. Panel Report on
Turkey — Textiles and
Clothing, paras. 9.63-9.65.
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595. (footnote original) Appellate Body Report on
Australia — Salmon, paras. 257-259.
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596. Panel Report on India — QR, para. 5.119.
The
Panel on US — Shrimp also allocated the burden of proof to the
complainant, referring to the Appellate Body Report
on US — Wool Shirts and Blouses.
Panel Report on US — Shrimp, para. 7.14. Further,
the Panel on
Argentina — Hides and Leather followed this practice.
Panel Report on Argentina — Hides and
Leather, paras. 11.11-11.14.
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597. Panel Report on
Canada — Periodicals, para. 5.5.
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598.
Panel Report on India — Autos, 7.318-7.322.
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599. (footnote original) See Panel Report on
US — Tuna (EEC), para. 5.17-5.18, and Panel Report on US — Tuna
(Mexico), para. 5.10. Speaking of the relevance for panels of previous
reports, the Appellate Body has stated, with respect to adopted panel
reports:
“Adopted panel reports are an important part of the
GATT acquis. They are often considered by subsequent panels. They create
legitimate expectations among WTO Members, and, therefore, should be
taken into account where they are relevant to any dispute”. (Appellate Body Report on
Japan — Alcoholic
Beverages II, p. 14)
Regarding unadopted panel reports, the Appellate Body
agreed with the panel in the same case that:
“a panel could nevertheless find useful guidance in
the reasoning of an unadopted panel report that it considered to be
relevant”. (Appellate Body Report on
Japan — Alcoholic
Beverages II,
p. 15)
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600.
Panel Report on US — Shrimp, para 7.16.
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601. (footnote original) Le Nouveau Petit
Robert, op. cit., p. 411.
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602. (footnote original) “In the same way
as”, “to the same extent as” are among the alternative meanings
for the word “comme” in the French text (Le Nouveau Petit Robert,
op. cit., p. 411). [In the English text the word is “and”].
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603. Panel Report on
EC — Asbestos, paras.
8.91-8.92.
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604. (footnote original) Emphasis added. In
the place of “and” and “comme”, the Spanish version uses the
conjunction “y” (“et” in French).
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605. (footnote original) See the Report of
the Panel in US — Section 337.
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606. (footnote original) The Panel gave the
grounds for its decision in para. 5.10 as follows:
“The fact that Section 337 is used as a means for
the enforcement of United States Patent Law at the border does not
provide an escape from the applicability of Article
III:4; the
interpretative Note to Article III states that any law, regulation or
requirement affecting the internal sale of products that is enforced in
the case of the imported product at the time or point of importation is
nevertheless subject to the provisions of Article
III. Nor could the
applicability of Article III:4
be denied on the ground that most of the
procedures in the case before the Panel are applied to persons rather
than products, since the factor determining whether persons might be
susceptible to Section 337 proceedings or federal district court
procedures is the source of the challenged products, that is whether
they are of United States origin or imported. For these reasons, the
Panel found that the procedures under Section 337 come within the
concept of ‘laws, regulations and requirements’ affecting the
internal sale of imported products, as set out in Article III of the
General Agreement.”
back to text
607. Panel Report on
EC — Asbestos, paras.
8.94-8.95.
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608. (footnote original) “The Panel
considered that it was not necessary to decide in this particular case
whether the practices complained of were contrary to Article
III:4 because it had already found that they were inconsistent with Article
XI. However, the Panel saw great force in the argument that Article
III:4 was also applicable to state-trading enterprises at least when the
monopoly of the importation and monopoly of the distribution in the
domestic markets were combined, as was the case of the provincial liquor
boards in Canada. This interpretation was confirmed a contrario by the
wording of Article III:8(a).”
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609. Panel Report on
EC — Asbestos, paras.
8.97-8.98.
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610. With respect to this measure in the light
of Article X, see para. 382 of this
Chapter.
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611. (footnote original) See the Panel Report
on Japan — Semi-Conductors, paras. 105-109. In other contexts, see
the Appellate Body Report on
EC
— Bananas III, paras. 232-234,
citing EEC — Imports of Beef; Spain — Unroasted Coffee, and
Japan
— SPF Dimension Lumber.
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612. Panel Report on Argentina — Hides and
Leather, para. 11.17.
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613. (footnote original) Panel Report on
Japan — Film, para. 10.56.
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614. (footnote original) As we understand it, Article XI:1
does not incorporate an obligation to exercise “due
diligence” in the introduction and maintenance of governmental
measures beyond the need to ensure the conformity with Article XI:1
of
those measures taken alone.
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615. Panel Report on Argentina — Hides and
Leather, para. 11.18.
back to text
616. (footnote original) See the Appellate Body Reports on
Japan — Alcoholic
Beverages II, at p.16; Korea — Alcoholic
Beverages, at paras. 119-120 and 127.
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617. (footnote original) For example, it will
be recalled that in the present case there is an export duty on raw
hides which has not been challenged.
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618. (footnote original) The Appellate Body
in EC — Poultry similarly required of the complaining party in that
case a demonstration of a causal relationship between the imposition of
an EC licensing procedure and the alleged trade distortion. See the Appellate Body Report on
EC — Poultry, at paras. 126-127. While this
interpretation related to a claim under the Agreement on Import
Licensing Procedures, it is not apparent why the logic should be any
different in the case of a claim under Article XI:1 of the GATT
1994.
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619. Panel Report on Argentina — Hides and
Leather, paras. 11.20-11.21. In this line, the Panel did not find an
export restriction made effective by the measure at issue. See Panel Report on Argentina — Hides and
Leather, paras. 11.22-11.55.
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620. (footnote original) Panel Report on Korea — Various Measures on Beef, para 115: “The mere existence of
producer-controlled import monopolies could not be considered as a
separate import restriction inconsistent with the General Agreement. The
Panel noted, however, that the activities of such enterprises had to
conform to a number of rules contained in the General Agreement,
including those of Article XVII and Article XI:1”.
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621. Panel Report on
India — Quantitative
Restrictions, paras. 5.134-5.135.
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622. Panel Report on Korea — Various Measures on Beef, para. 751.
back to text
623. Panel Report on
US — Certain EC Products, para. 6.61.
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624. (footnote original) GATT Panel Report on
Japan — Semi-Conductors, para. 104.
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625. (footnote original) GATT Panel Report on
EEC — Import Restrictions, para. 31. See also Panel Report on EEC — Minimum Import
Prices, para. 4.9.
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626. (footnote original) GATT Panel Report on
Japan — Semi-Conductors, para. 118.
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627. Panel Report on
India — Quantitative
Restrictions, paras. 5.129-5.130.
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628. Panel Report on Korea — Various Measures on Beef, para. 782.
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629. G/MA/M/3, para. 3. The text of the adopted
decisions can be found in
G/L/59 and G/L/60.
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630. G/MA/M/10,
para. 3. The text of the
approved format can be found in G/MA/NTM/QR/2.
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631. Panel Report on Korea — Various Measures on Beef, para. 705.
back to text
632.
Panel
Report on US — 1916 Act (Japan), para. 6.281
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633. Panel Report on
Australia — Salmon,
para. 8.185. With respect to judicial economy in general, see Chapter on
the DSU, Section XXXVI.F.
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634.
Appellate Body Report on
EC
— Bananas III, para. 189.
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635.
Appellate Body Report on
EC
— Bananas III, para. 190.
back to text
636. Panel Report on
EC — Bananas III, para.
7.68.
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637.
Appellate Body Report on
EC
— Bananas III, para. 161.
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638. Korea’s first written submission, para.
155.
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639.
Panel Report on
US — Pipe Line, paras.
7.53-7.55.
back to text
640.
Appellate Body Report on
EC
— Bananas III, para. 163.
back to text
641.
Appellate Body Report on
EC — Poultry,
para. 106.
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642. (footnote original) We note in this
regard that in the Banana III case, the panel made the following
observation (which was not affected by the subsequent appeal): “The
consequence of the foregoing analysis is that Members may be effectively
required to use a general ‘others’ category for all suppliers other
than Members with a substantial interest in supplying the product. The
fact that in this situation tariff quota shares are allocated to some
Members, notably those having a substantial interest in supplying the
product, but not to others that do not have a substantial interest in
supplying the product, would not necessarily be in conflict with Article XIII:1. While the requirement of
Article
XIII:2(d) is not expressed as
an exception to the requirements of Article XIII:1, it may be regarded,
to the extent that its practical application is inconsistent with it, as
lex specialis in respect of Members with a substantial interest in
supplying the product concerned”. See Panel Reports on EC — Bananas
III, para. 7.75. The quoted passage, particularly the use of the phrase
“all suppliers other than Members with a substantial interest in
supplying the product” (emphasis added), indicates that the Banana III
panel did not take the view that allocation of quota shares to
non-Members under Article
XIII:2(d) was not permitted.
back to text
643. Panel Report on EC — Poultry, paras. 230-232.
back to text
644. (footnote original) The obligation
cannot extend to fixing the total amount of permitted imports at the
higher tariff rate, because that would effectively undermine the
distinction between tariff quotas and quantitative restrictions.
back to text
645.
Panel Report on US — Line Pipe, para.
7.58.
back to text
646. (footnote original) In this regard, we
note with approval the statement by the 1980 Chilean Apples panel:
“[I]n keeping with normal GATT practice, the Panel
considered it appropriate to use as a ‘representative period’ a
three-year period previous to 1979, the year in which the EC measures
were in effect. Due to the existence of restrictions in 1976, the Panel
held that that year could not be considered as representative, and that
the year immediately preceding 1976 should be used instead. The Panel
thus chose the years 1975, 1977, 1978 as a ‘representative period’”.
Panel Report on “EEC Restrictions on Imports of
Dessert Apples — Complaint by Chile”, adopted on 10 November 1980,
BISD 27S/98, 113, para. 4.8. In the report of the “Panel on Poultry”,
issued on 21 November 1963, GATT Doc. L/2088, para. 10, the panel
stated: “[T]he shares in the reference period of the various exporting
countries in the Swiss market, which was free and competitive, afforded
a fair guide as to the proportion of the increased German poultry
consumption likely to be taken up by United States exports”. See also
Panel Report on “Japan — Restrictions on Imports of Certain
Agricultural Products”, adopted on 22 March 1988, BISD 35S/163, 226-227,
para. 5.1.3.7.
back to text
647. Panel Report on
EC — Bananas III
(Article 21.5 — Ecuador), paras. 7.73 and 7.76.
back to text
648. Panel Report on EC — Bananas III, para.
6.28.
back to text
649. Appellate Body Report on
EC — Poultry,
para. 108.
back to text
650. Panel Report on EC — Poultry,
para. 230,
footnote 140.
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651. (footnote original) While the provisions
of Article XIII:4 on consultations and adjustments seem to be primarily
aimed at adjustments to quota shares allocated pursuant to Article
XIII:2(d), second sentence, they also apply in the case where agreements
were reached pursuant to Article
XIII:2(d), first sentence, with Members
having a substantial interest in supplying the product concerned. In
addition, in so far as a new Member has a substantial interest in
supplying that product, its share of the “others” category can be
viewed, for purposes of Article XIII:4, as a provision established
unilaterally relating to the allocation of an adequate quota.
back to text
652. Panel Report on EC — Bananas III, paras.
7.91-7.92.
back to text
653. In this regard, in EC — Poultry, Brazil
argued that the EC allocation of licences to imports of poultry products
from East European countries was inconsistent with Article
XIII, citing
GATT Panel Report on EEC — Newsprint. The Panel rejected this
argument, stating as follows:
“There is some similarity between the Newsprint
case and the present case regarding this specific issue. As in the
Newsprint case, the purpose of the poultry TRQ is to allow specified
quantities (15,500 tonnes) of imports into the EC duty-free which would
otherwise be dutiable. However, there are three important factual
differences. First, in the Newsprint case, EFTA suppliers were accorded
duty-free access to the EEC market without restriction. In the present
case, imports from Hungary and Poland under the Interim Agreements are
still dutiable. Second, in the Newsprint case, the level of the MFN
duty-free quota was reduced in order to make room for preferential
access while in the present case no such reduction has occurred. Third,
in the Newsprint case, the EFTA agreement was concluded after the
opening of the MFN quota whereas in this case the Interim Agreements
preceded the opening of the poultry TRQ.
Thus, the present case lacks the basis that led to
the conclusion by the Newsprint panel. We also note that before making
the statement cited in paragraph 237
above, the Newsprint panel stated
that ‘the Panel could find no GATT specific provision forbidding such
action’. If Brazil had intended to claim a violation of Article XIII:2
on this specific issue, at a minimum, it should have elaborated on the
nature of preferences accorded to poultry products imported from East
Europe and should have tied it to inter alia ‘any special factors
which may have or may be affecting the trade in the product’ referred
to in Article
XIII:2(d). It has not done so.”
Panel Report on EC — Poultry,
paras. 238-239.
back to text
654. Appellate Body Report on
EC
— Bananas III, paras. 183-187.
back to text
655.
Panel Report on US — Shrimp, para. 7.22.
With respect to judicial economy in general, see Chapter on the DSU,
Section XXXVI.F.
back to text
656. Panel Report on
India — Quantitative
Restrictions, para. 5.17.
back to text
657. Appellate Body Report on
EC — Poultry,
para. 98, citing Appellate Body Report on
EC
— Bananas III, para. 154,
which is referenced in para. 84 of this
Chapter.
back to text
658. Appellate Body Report on
EC — Poultry,
para. 99.
back to text
659. (footnote original) EPCT/TAC/PV/18, p.
46.
back to text
660. Appellate Body Report on
EC — Poultry,
para. 100.
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661. Modalities for the Establishment of
Specific Binding Commitments Under the Reform Programme,
MTN.GNG/MA/
W/24, 20 December 1993.
back to text
662. Appellate Body Report on
EC
— Bananas III, para. 157.
back to text
663. (footnote original) See section below.
back to text
664. (footnote original) The same concern
does not arise in respect of tariff measures — which also appear not
to be covered by all Article 5 disciplines — because tariff measures
affect all exporting Members equally.
back to text
665.
Panel Report on US — Line Pipe, para.
7.49
back to text
666.
Panel Report on US — Line Pipe, para. 7.54. back to text
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