Post on 16-Oct-2020
In the World Trade Organization
Before the Appellate Body
EUROPEAN COMMUNITIES – MEASURES PROHIBITING THE
IMPORTATION AND MARKETING OF SEAL PRODUCTS
(AB-2014-1, 2 / DS400, DS401)
Other Appellant Submission
by the European Union
Geneva, 29 January 2014
EC – Seal Products Other Appellant Submission
(AB-2014-1, 2 / DS400, DS401) by the European Union
________________________________________________________________________________________
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TABLE OF CONTENTS
1. INTRODUCTION AND EXECUTIVE SUMMARY ........................................................... 1
1.1. The Panel erred by finding that the EU Seal Regime is a technical
regulation within the meaning of the TBT Agreement.................................. 1
1.2. The Panel erred by finding that the IC exception bears no "rational
relationship" to the primary objective of the EU Seal Regime .................... 2
1.3. The Panel erred by finding that the EU Seal Regime is inconsistent with
Article 2.1 TBT Agreement because the IC exception is not designed and
applied even-handedly .................................................................................. 2
1.4. The Panel erred by finding that the IC exception diminishes the
contribution of the EU Seal Regime to its public morals objective .............. 5
1.5. The Panel made an erroneous interpretation of Articles I:1 and III:4 of the
GATT 1994 ................................................................................................... 5
1.6. The Panel's finding that the EU Seal regime is inconsistent with Article I:1
of the GATT is in error because the Panel failed to consider whether the IC
exception involves a legitimate regulatory distinction ................................. 6
1.7. Subsidiarily, the Panel erred by finding that the IC exception is not justified
under Article XX(a) GATT because it fails to meet the requirements of the
chapeau ........................................................................................................ 6
1.8. Subsidiarily, the Panel erred by finding that the European Union had failed
to establish a prima facie case for its claim that the IC exception is justified
under Article XX(b) GATT............................................................................ 7
2. THE PANEL ERRED BY FINDING THAT THE EU SEAL REGIME IS A TECHNICAL
REGULATION WITHIN THE MEANING OF THE TBT AGREEMENT ........................... 7
2.1. BACKGROUND ................................................................................................ 8
2.1.1. Measure at issue .............................................................................. 8
2.1.2. Summary of the parties' arguments before the Panel ................. 9
2.1.2.1 Complainants ........................................................................ 9
2.1.2.2 The European Union........................................................... 10
2.1.3. Summary of the Panel's findings................................................. 11
2.2. LEGAL ARGUMENT ........................................................................................ 13
2.2.1. The Panel errs in the interpretation and application of Annex 1:1 of the TBT Agreement ........................................................... 13
2.2.1.1 Legal standard .................................................................... 13
2.2.1.2 The Panel errs in interpreting the terms "applicable
administrative provisions" under Annex 1:1 of the TBT
Agreement and fails to apply Annex 1:1 of the TBT
Agreement correctly to the EU Seal Regime ..................... 15
EC – Seal Products Other Appellant Submission
(AB-2014-1, 2 / DS400, DS401) by the European Union
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2.2.1.3 The Panel errs in interpreting the terms "product
characteristics" under Annex 1:1 of the TBT Agreement and
fails to apply Annex 1:1 of the TBT Agreement correctly to
the EU Seal Regime............................................................ 19
2.2.1.4 In applying its interpretation of Annex 1:1 of the TBT
Agreement to the facts the Panel does not make a holistic
assessment of the measure .................................................. 23
2.3. CONCLUSION ................................................................................................ 27
3. THE PANEL ERRED BY FINDING THAT THE IC EXCEPTION BEARS NO "RATIONAL
RELATIONSHIP" TO THE PRIMARY OBJECTIVE OF THE EU SEAL REGIME .......... 28
3.1. Background ................................................................................................ 28
3.1.1. The Parties' arguments before the Panel ......................................... 28
3.1.2. The Panel's findings ........................................................................ 31
3.2. Legal argument ........................................................................................... 32
3.2.1. The Panel made an erroneous interpretation of the notion of "public
morals" ............................................................................................ 32
3.2.2. The Panel failed to conduct an objective assessment of the evidence
before it ........................................................................................... 35
3.2.2.1 The opinion polls referenced in Canada's Royal Commission
Report ................................................................................ 35
3.2.2.2 Public consultation ............................................................. 39
3.3. Conclusion .................................................................................................. 40
4. THE PANEL ERRED BY FINDING THAT THE EU SEAL REGIME IS INCONSISTENT
WITH ARTICLE 2.1 TBT AGREEMENT BECAUSE THE IC EXCEPTION IS NOT
DESIGNED AND APPLIED EVEN-HANDEDLY ............................................................ 40
4.1. Background ................................................................................................ 41
4.1.1. Summary of the parties' arguments before the Panel ..................... 41
4.1.1.1 Canada ................................................................................ 41
4.1.1.2 The European Union........................................................... 42
4.1.2. Summary of the Panel's findings .................................................... 43
4.2. Legal argument ........................................................................................... 50
4.2.1. The Panel's errors in the interpretation and application of Article 2.1
of the TBT Agreement.................................................................... 52
4.2.1.1 Legal standard: assessing even-handedness under Article 2.1
of the TBT Agreement........................................................ 54
4.2.1.2 The Panel's errors in the interpretation and application of
Article 2.1 of the TBT Agreement ..................................... 63
The IC exception is designed and applied in an even-handed manner 4.2.1.2.1and, thus, does not reflect discrimination against Canadian imports .. 65
EC – Seal Products Other Appellant Submission
(AB-2014-1, 2 / DS400, DS401) by the European Union
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The Panel's reliance on the de facto exclusivity of the IC exception to 4.2.1.2.2Greenland where the Inuit hunts bears the greatest similarities to
commercial characteristics of commercial hunts does not show lack of
even-handedness ................................................................................. 71
4.2.1.3 Conclusion .......................................................................... 79
4.2.2. Panel's errors under Article 11 of the DSU .................................... 80
4.2.2.1 Legal standard under Article 11 of the DSU ...................... 82
4.2.2.2 The Panel erred when finding that "the text of the IC
exception, its legislative history, and the actual application
of the IC exception, cast serious doubt on the even-
handedness of the design and application of the IC
exception" ........................................................................... 83
Text of the IC exception ..................................................................... 83 4.2.2.2.1
Legislative history of the IC exception ............................................... 84 4.2.2.2.2
(a) COWI 2010 Report ................................................................. 85
(b) European Parliament Report (Exhibit JE-4) ............................ 90
(c) COWI 2008 Report ................................................................. 90
(d) Conclusion ............................................................................... 91
The application of the IC exception .................................................... 91 4.2.2.2.3
Conclusion .......................................................................................... 92 4.2.2.2.4
4.2.2.3 The Panel erred when finding that "the degree of the
commercial aspect of [Greenland's] hunts is comparable to
that of the commercial hunts", and that "the Inuit hunt [in
Greenland] bears the greatest similarities to the commercial
characteristics of commercial hunts" .................................. 92
The level of development in the commercial aspect of Greenlandic seal 4.2.2.3.1hunts ................................................................................................... 93
The volume of sealskins traded in Greenland ..................................... 94 4.2.2.3.2
The allegedly integrated nature of the seal product industries in 4.2.2.3.3Greenland, Canada, and Norway ........................................................ 98
The Panel also provided incoherent reasoning when noting that these 4.2.2.3.4three elements "indicate that the purpose of seal hunts in Greenland
has characteristics that are closely related to that of commercial hunts"
102
Conclusion ........................................................................................ 103 4.2.2.3.5
4.2.2.4 Conclusion ........................................................................ 104
4.3. Conclusion ................................................................................................ 104
5. THE PANEL ERRED BY FINDING THAT THE IC EXCEPTION DIMINISHES THE
CONTRIBUTION OF THE EU SEAL REGIME TO ITS PUBLIC MORALS OBJECTIVE 105
5.1. Background .............................................................................................. 105
5.1.1. The Parties' arguments before the Panel ....................................... 105
5.1.2. The Panel's findings ...................................................................... 106
5.2. Legal argument ......................................................................................... 106
5.3. Conclusion ................................................................................................ 107
EC – Seal Products Other Appellant Submission
(AB-2014-1, 2 / DS400, DS401) by the European Union
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6. LEGAL ERROR IN THE INTERPRETATION OF ARTICLES I:1 AND III:4 OF THE
GATT 1994 .......................................................................................................... 107
6.1. Summary of the Panel's findings .............................................................. 107
6.2. Legal argument ......................................................................................... 108
6.3. Conclusion ................................................................................................ 115
7. THE PANEL'S FINDING THAT THE EU SEAL REGIME IS INCONSISTENT WITH
ARTICLE I:1 GATT IS IN ERROR BECAUSE THE PANEL FAILED TO CONSIDER
WHETHER THE IC EXCEPTION INVOLVES A LEGITIMATE REGULATORY
DISTINCTION ........................................................................................................ 116
8. SUBSIDIARILY, THE PANEL ERRED BY FINDING THAT THE IC EXCEPTION IS NOT
JUSTIFIED UNDER ARTICLE XX(A) GATT BECAUSE IT FAILS TO MEET THE
REQUIREMENTS OF THE CHAPEAU ....................................................................... 117
9. SUBSIDIARILY, THE PANEL ERRED BY FINDING THAT THE EUROPEAN UNION HAD
FAILED TO ESTABLISH A PRIMA FACIE CASE FOR ITS CLAIM THAT THE IC
EXCEPTION IS JUSTIFIED UNDER ARTICLE XX(B) GATT .................................. 118
9.1. Background .............................................................................................. 119
9.1.1. The EU's arguments before the Panel ........................................... 119
9.1.2. The Panel's finding ....................................................................... 120
9.2. Legal argument ......................................................................................... 120
9.3. Conclusion ................................................................................................ 122
10. CONCLUSION AND RELIEF REQUESTED ............................................................... 122
EC – Seal Products Other Appellant Submission
(AB-2014-1, 2 / DS400, DS401) by the European Union
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TABLE OF CASES CITED
Short Title Full Case Title and Citation
Australia – Salmon
Appellate Body Report, Australia – Measures Affecting Importation of
Salmon, WT/DS18/AB/R, adopted 6 November 1998, DSR 1998:VIII,
p. 3327
Brazil – Retreaded Tyres
Appellate Body Report, Brazil – Measures Affecting Imports of Retreaded
Tyres, WT/DS332/AB/R, adopted 17 December 2007, DSR 2007:IV,
p. 1527
China – Publications and
Audiovisual Products
Panel Report, China – Measures Affecting Trading Rights and Distribution
Services for Certain Publications and Audiovisual Entertainment Products,
WT/DS363/R and Corr.1, adopted 19 January 2010, as modified by
Appellate Body Report WT/DS363/AB/R, DSR 2010:II, p. 261
Dominican Republic –
Import and Sale of
Cigarettes
Appellate Body Report, Dominican Republic – Measures Affecting the
Importation and Internal Sale of Cigarettes, WT/DS302/AB/R, adopted 19
May 2005, DSR 2005:XV, p. 7367
EC – Asbestos
Appellate Body Report, European Communities – Measures Affecting
Asbestos and Asbestos-Containing Products, WT/DS135/AB/R, adopted 5
April 2001, DSR 2001:VII, p. 3243
EC – Asbestos
Panel Report, European Communities – Measures Affecting Asbestos and
Asbestos-Containing Products, WT/DS135/R and Add.1, adopted 5 April
2001, as modified by Appellate Body Report WT/DS135/AB/R,
DSR 2001:VIII, p. 3305
EC – Bananas III
Appellate Body Report, European Communities – Regime for the
Importation, Sale and Distribution of Bananas, WT/DS27/AB/R, adopted
25 September 1997, DSR 1997:II, p. 591
EC – Fasteners (China)
Appellate Body Report, European Communities – Definitive Anti-Dumping
Measures on Certain Iron or Steel Fasteners from China,
WT/DS397/AB/R, adopted 28 July 2011, DSR 2011:VII, p. 3995
EC – Hormones
Appellate Body Report, EC Measures Concerning Meat and Meat Products
(Hormones), WT/DS26/AB/R, WT/DS48/AB/R, adopted 13 February
1998, DSR 1998:I, p. 135
EC – Sardines
Appellate Body Report, European Communities – Trade Description of
Sardines, WT/DS231/AB/R, adopted 23 October 2002, DSR 2002:VIII, p.
3359
EC and certain member
States – Large Civil Aircraft
Appellate Body Report, European Communities and Certain Member
States – Measures Affecting Trade in Large Civil Aircraft,
WT/DS316/AB/R, adopted 1 June 2011, DSR 2011:I, p. 7
Japan – Alcoholic Beverages
II
Appellate Body Report, Japan – Taxes on Alcoholic Beverages,
WT/DS8/AB/R, WT/DS10/AB/R, WT/DS11/AB/R, adopted 1 November
1996, DSR 1996:I, p. 97
Philippines – Distilled
Spirits
Appellate Body Reports, Philippines – Taxes on Distilled Spirits,
WT/DS396/AB/R / WT/DS403/AB/R, adopted 20 January 2012
US – Clove Cigarettes Appellate Body Report, United States – Measures Affecting the Production
and Sale of Clove Cigarettes, WT/DS406/AB/R, adopted 24 April 2012
US – Continued Zeroing
Appellate Body Report, United States – Continued Existence and
Application of Zeroing Methodology, WT/DS350/AB/R, adopted
19 February 2009, DSR 2009:III, p. 1291
EC – Seal Products Other Appellant Submission
(AB-2014-1, 2 / DS400, DS401) by the European Union
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Short Title Full Case Title and Citation
US – COOL
Appellate Body Reports, United States – Certain Country of Origin
Labelling (COOL) Requirements, WT/DS384/AB/R / WT/DS386/AB/R,
adopted 23 July 2012
US – Gambling
Panel Report, United States – Measures Affecting the Cross-Border Supply
of Gambling and Betting Services, WT/DS285/R, adopted 20 April 2005,
as modified by Appellate Body Report WT/DS285/AB/R, DSR 2005:XII,
p. 5797
US – Softwood Lumber V
Appellate Body Report, United States – Final Dumping Determination on
Softwood Lumber from Canada, WT/DS264/AB/R, adopted 31 August
2004, DSR 2004:V, p. 1875
US – Tuna II (Mexico)
Appellate Body Report, United States – Measures Concerning the
Importation, Marketing and Sale of Tuna and Tuna Products,
WT/DS381/AB/R, adopted 13 June 2012
US – Upland Cotton
(Article 21.5 – Brazil)
Appellate Body Report, United States – Subsidies on Upland Cotton –
Recourse to Article 21.5 of the DSU by Brazil, WT/DS267/AB/RW,
adopted 20 June 2008, DSR 2008:III, p. 809
US – Wheat Gluten
Appellate Body Report, United States – Definitive Safeguard Measures on
Imports of Wheat Gluten from the European Communities,
WT/DS166/AB/R, adopted 19 January 2001, DSR 2001:II, p. 717
EC – Seal Products Other Appellant Submission
(AB-2014-1, 2 / DS400, DS401) by the European Union
________________________________________________________________________________________
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1. INTRODUCTION AND EXECUTIVE SUMMARY
1. Pursuant to Article 16.4 and Article 17 of the DSU and Rule 23 of the Working
Procedures for Appellate Review, the European Union appeals to the Appellate
Body certain issues of law and certain legal interpretations developed by the Panel
in European Communities – Measures Prohibiting the Importation and Marketing
of Seal Products (WT/DS400/R, WT/DS401/R) (Panel Report).
1.1. THE PANEL ERRED BY FINDING THAT THE EU SEAL REGIME IS A TECHNICAL REGULATION WITHIN THE MEANING OF THE TBT AGREEMENT
2. The European Union appeals the Panel's conclusion that the EU Seal Regime is a
technical regulation within the meaning of Annex 1.1 of the TBT Agreement.1
3. This conclusion is in error for the following reasons: 1) the Panel wrongly
interpreted the terms "applicable administrative provisions" and wrongly
concluded that the exceptions under the EU Seal Regime constitute applicable
administrative provisions;2 2) the Panel wrongly established the scope of products
characteristics under Annex 1:1 of the TBT Agreement, which led it to erroneously
conclude that the criteria under the exceptions lay down product characteristics3;
and 3) the Panel failed to make a holistic assessment of the measure at issue4 and,
thus, wrongly found that the measure as a whole is a "technical regulation" within
the meaning of Annex 1:1 of the TBT Agreement.5
4. Reversal of the Panel's conclusion that the EU Seal Regime is a technical
regulation would dispose of Canada's and Norway's claims under the TBT
Agreement. Accordingly the European Union requests the Appellate Body to find
that the Panel's findings and conclusions with regards to Articles 2.1, 2.2, 5.1.2 and
5.2.1 of the TBT Agreement are moot and of no legal effect.
1 See e.g. Panel report, para. 7.111. See also the conclusion under para. 8.2.a) of both reports.
2 See e.g. Panel report, para. 7.108.
3 See Panel report, para. 7.110.
4 Panel report, para. 7.100, 7.106, footnote 153.
5 See Panel report, paras. 7.111, 7.125.
EC – Seal Products Other Appellant Submission
(AB-2014-1, 2 / DS400, DS401) by the European Union
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1.2. THE PANEL ERRED BY FINDING THAT THE IC EXCEPTION BEARS NO "RATIONAL RELATIONSHIP" TO THE PRIMARY OBJECTIVE OF THE EU SEAL REGIME
5. The European Union also appeals the Panel's finding, as part of its analysis under
Articles 2.1 and 2.2 of the TBT Agreement and under Article XX(a) of the GATT
1994, that "the IC exception does not bear a rational relationship to the objective
of addressing the moral concerns of the public on seal welfare".6
6. This finding is in error because it is based on an incorrect interpretation of the
notion of "public morals", according to which a Member invoking that a measure
pursues a public morals objective would have to show that such measure is
supported by a majority of its population.
7. Furthermore, the European Union submits in the alternative that, in reaching its
conclusion that the EU public does not support the IC exception the Panel failed to
make an objective assessment of the evidence before it, as required by Article 11
DSU. Specifically, the Panel relied upon the following factual evidence: 1) the
results of two opinion polls analysed in Canada's Royal Commission Report on
Sealing7; and 2) the results of a public consultation conducted by the EU
Commission as part of the preparation of its proposal to the EU legislators.8 Yet
this evidence lends no support to the Panel's appealed finding.
8. In view of these errors, the European Union requests the Appellate Body to reverse
this finding.
1.3. THE PANEL ERRED BY FINDING THAT THE EU SEAL REGIME IS INCONSISTENT WITH ARTICLE 2.1 TBT AGREEMENT BECAUSE THE IC EXCEPTION IS NOT
DESIGNED AND APPLIED EVEN-HANDEDLY
9. The European Union also appeals the Panel's finding that the IC exception "is not
designed and applied in an even-handed manner" and that, consequently, "the IC
exception of the EU Seal Regime is inconsistent with the European Union's
obligations under Article 2.1 of the TBT Agreement as the European Union has
failed to demonstrate that the detrimental impact caused by the IC exception on
6 See e.g. Panel report, para. 7.275.
7 See e.g. Panel report, footnote 676.
8 See e.g. Panel report, footnotes 652 and 676.
EC – Seal Products Other Appellant Submission
(AB-2014-1, 2 / DS400, DS401) by the European Union
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Canadian seal products stems exclusively from a legitimate distinction".9 The
Panel made a reversible error when finding that, as currently designed and applied,
the IC exception lacked even-handedness because it was not equally available to
all Inuit or indigenous communities.10
10. This finding is in error because the Panel misinterpreted and misapplied Article 2.1
of the TBT Agreement when examining the even-handedness in the design and
application of the IC exception.11
The Panel misinterpreted the essence of the
substantive analysis that must be conducted when assessing the even-handedness
of the IC exception, i.e., whether the measure is reasonable, impartial and
harmonious, having regard to the objective it pursues. In this case, the IC
exception seeks to protect the economic and social interests of the Inuit and other
indigenous communities engaged in seal hunting. Such hunting, while also having
a commercial aspect, the extent of which varies from community to community, is
conducted primarily for subsistence purposes. The IC exception is designed by
identifying the key elements defining those hunts for subsistence purposes
conducted by Inuit and other indigenous communities. The IC exception is also
applied in a neutral manner, where all Inuit and indigenous communities engage in
seal hunting for subsistence purposes have access to the EU market through the IC
exception and the relevant conformity assessment procedures.
11. Rather than considering whether the IC exception was designed and applied in a
reasonable, impartial and harmonious manner, having regard to its objective (i.e.,
the protection of the interest of the Inuit and other indigenous communities
traditionally engaged in seal hunting for subsistence purposes), the Panel wrongly
conducted the analysis of the even-handedness of the IC exception by focussing on
the effects of the measure in a particular period of time, while ignoring the
passivity of the relevant Canadian (and Canadian Inuit) authorities and operators.
The Panel also wrongly focused on the alleged similarities of Greenland's hunts to
the commercial hunts. Those similarities, however, were irrelevant for assessing
even-handedness, in view of the Panel's earlier finding that the Inuit hunts are
9 See e.g. Panel Report, para. 7.319.
10 Panel Report, paras. 7.317 and 7.318.
11 Panel Report, para. 7.317.
EC – Seal Products Other Appellant Submission
(AB-2014-1, 2 / DS400, DS401) by the European Union
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conducted primarily for subsistence purposes and can be legitimately distinguished
from the commercial hunts.12
In this respect, the Panel gave predominance to
factors that were not inherent or permanent and that did not flow from the IC
exception.
12. Furthermore, the European Union submits in the alternative that this finding was
based on several material inaccuracies leading to erroneous factual determinations
as well as incoherent reasoning, contrary to the Panel's duties under Article 11 of
the DSU. Specifically, the European Union challenges the Panel's finding that "the
IC exception is available de facto exclusively to Greenland"13
based on "the text of
the IC exception, its legislative history, and the actual application of the IC
exception".14
These three elements on which the Panel based its conclusion about
the lack of even-handedness in the design and application of the IC exception were
incorrectly assessed by the Panel, contrary to its obligations under Article 11 of the
DSU. The European Union also challenges the Panel's findings that "the degree of
the commercial aspect of [Greenland's] hunts is comparable to that of the
commercial hunts",15
and that "the Inuit hunt [in Greenland] bears the greatest
similarities to the commercial characteristics of commercial hunts".16
Those
findings were made on the basis of an incorrect assessment of the facts. The Panel
lacked sufficient basis to make such findings and provided incoherent reasoning,
contrary to Article 11 of the DSU.
13. The European Union submits that these errors are material, leading to the
conclusion that the Panel's reasoning and ultimate conclusion cannot stand.
Consequently, the European Union requests the Appellate Body to find that the
Panel failed to make an objective assessment of the matter, contrary to Article 11
of the DSU, when finding that the IC exception was not currently designed and
applied in an even-handed manner.17
12 Panel Report, paras. 7.288 and 7.289.
13 Panel Report, paras. 7.314 – 7.317.
14 Panel Report, para. 7.317.
15 Panel Report, para. 7.313.
16 See e.g. Panel Report, para. 7.317.
17 See e.g. Panel Report, paras. 7.317 and 7.319.
EC – Seal Products Other Appellant Submission
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14. In view of these fundamental errors, or any combination thereof, the European
Union requests the Appellate Body to reverse the Panel's finding that the
distinction made by the IC exception between IC and commercial hunts based on
the purpose of the hunt "is not designed and applied in an even-handed manner"
and, thus, that "the IC exception of the EU Seal Regime is inconsistent with the
European Union's obligations under Article 2.1 of the TBT Agreement as the
European Union has failed to demonstrate that the detrimental impact caused by
the IC exception on Canadian seal products stems exclusively from a legitimate
distinction".18
1.4. THE PANEL ERRED BY FINDING THAT THE IC EXCEPTION DIMINISHES THE CONTRIBUTION OF THE EU SEAL REGIME TO ITS PUBLIC MORALS OBJECTIVE
15. The European Union appeals the Panel's finding, as part of its analysis under
Article 2.2 of the TBT Agreement and Article XX(a) of the GATT 1994, that the
IC exception "diminishes" the contribution of the EU Seal Regime to its public
morals objective.19
16. This finding is in error because it is premised on the Panel's earlier erroneous
finding that the IC exception bears no "rational relationship" to the public morals
objective pursued by the EU Seal Regime. Accordingly, the European Union
requests the Appellate Body to reverse this finding.
1.5. THE PANEL MADE AN ERRONEOUS INTERPRETATION OF ARTICLES I:1 AND III:4 OF THE GATT 1994
17. The European Union appeals the Panel's finding that it "do[es] not consider that
the legal standard with respect to the non-discrimination obligation under
Article 2.1 of the TBT Agreement 'equally applies' to claims under Articles I:1 and
III:4 of the GATT 1994"20
. The European Union submits that the Panel's finding
constitutes an erroneous interpretation of Articles I.1 and III:4 of the GATT 1994
because it is contrary to established Appellate Body jurisprudence on Article III:4
18 Panel Report, para. 7.319. See also the conclusion under paragraph 8.2 (b) with regard to the
complaint by Canada (DS 400).
19 See e.g. Panel report, para. 7.460. See also Panel report, paras. 7.447-7.448, 7.451-7.452, 7.466 and
7.638.
20 See e.g. Panel Report, para. 7.586.
EC – Seal Products Other Appellant Submission
(AB-2014-1, 2 / DS400, DS401) by the European Union
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of the GATT 1994, fails to take into account the context of Article III:1 of the
GATT 1994, is incoherent with the interpretation of Article 2.1 of the TBT
Agreement and renders Article 2.1 of the TBT Agreement irrelevant. Therefore,
the European Union requests the Appellate Body to reverse that finding.
1.6. THE PANEL'S FINDING THAT THE EU SEAL REGIME IS INCONSISTENT WITH ARTICLE I:1 OF THE GATT IS IN ERROR BECAUSE THE PANEL FAILED TO
CONSIDER WHETHER THE IC EXCEPTION INVOLVES A LEGITIMATE REGULATORY
DISTINCTION
18. The European Union also appeals the Panel's application of its erroneous
interpretation of Article I:1 of the GATT 1994 in reaching its finding that the EU
Seal Regime is inconsistent with Article I:1 of the GATT 1994.21
Accordingly the
European Union requests the Appellate Body to reverse that finding.
1.7. SUBSIDIARILY, THE PANEL ERRED BY FINDING THAT THE IC EXCEPTION IS NOT JUSTIFIED UNDER ARTICLE XX(A) GATT BECAUSE IT FAILS TO MEET THE
REQUIREMENTS OF THE CHAPEAU
19. Were the Appellate Body to uphold the Panel's finding that the IC exception is
inconsistent with Article I:1 of the GATT 1994, the European Union appeals the
Panel's finding that the IC exception is not justified under Article XX(a) of the
GATT 1994 because it fails to meet the requirements of the chapeau.22
20. The Panel's analysis of the even-handedness of the IC exception under Article 2.1
of the TBT Agreement contained several legal errors.23
Should the Appellate Body
reverse the Panel's finding that the IC exception "is not designed and applied in an
even-handed manner" and, thus, that "the IC exception of the EU Seal Regime is
inconsistent with the European Union's obligations under Article 2.1 of the TBT
Agreement as the European Union has failed to demonstrate that the detrimental
impact caused by the IC exception on Canadian seal products stems exclusively
from a legitimate distinction",24
the European Union requests the Appellate Body
21 See e.g. Panel Report, para. 7.600. See also the conclusion under para. 8.3 a) with regard to both
complaints (DS 400 and DS 401).
22 See Panel Report, para. 7.650. See also the conclusion under para. 8.3 d) with regard to both
complaints (DS 400 and DS 401).
23 See para. 9 above.
24 Panel Report, para. 7.319.
EC – Seal Products Other Appellant Submission
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to also reverse the Panel's finding under the chapeau of Article XX(a) of the
GATT 1994. The European Union further requests the Appellate Body to complete
the analysis under the chapeau of Article XX(a) of the GATT 1994 and find, on
the basis of the considerations made before, that the IC exception is not "applied in
a manner which would constitute a means of arbitrary or unjustifiable
discrimination between countries where the same conditions prevail, or a disguised
restriction on international trade" and, accordingly, that the IC exception meets the
requirements under Article XX(a) of the GATT 1994, including its chapeau.
1.8. SUBSIDIARILY, THE PANEL ERRED BY FINDING THAT THE EUROPEAN UNION HAD FAILED TO ESTABLISH A PRIMA FACIE CASE FOR ITS CLAIM THAT THE IC
EXCEPTION IS JUSTIFIED UNDER ARTICLE XX(B) GATT
21. Finally, in the event that the Appellate Body were to 1) uphold the Panel's finding
that the EU Seal Regime is inconsistent with Article I:1 of the GATT 1994; and 2)
reverse the Panel's finding that the EU Seal Regime falls within the scope of
GATT Article XX(a), the European Union appeals the Panel's finding that "the
European Union has failed to establish a prima facie case for its claim under
Article XX(b) [of the GATT]".25
The European Union submits that in reaching this
conclusion the Panel failed to fulfil its duty to conduct an objective assessment of
the matter as required by Article 11 of the DSU. Accordingly, the European Union
requests the Appellate Body: 1) to reverse the Panel's finding that the European
Union failed to establish a prima facie case under GATT Article XX(b); and 2) to
complete the analysis under GATT Article XX(b) and find that the EU Seal
Regime is justified under that provision.
2. THE PANEL ERRED BY FINDING THAT THE EU SEAL REGIME IS A TECHNICAL REGULATION WITHIN THE MEANING OF THE TBT AGREEMENT
22. The European Union appeals the Panel’s findings on issues of law and legal
interpretations that serve as the basis for the conclusion that the EU Seal Regime is
a technical regulation within the meaning of Annex 1.1 of the TBT Agreement.26
25 See e.g. Panel report, para. 7.640 and para. 8.3 e) of the conclusions and recommendations in both
WT/DS400 R and WTDS401/R.
26 Panel report, para. 7.111.
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23. The European Union submits that the Panel erred in its interpretation of Annex 1.1
of the TBT Agreement, as well as in its application of said provision to the facts,
and hence wrongly concluded that the EU Seal Regime constitutes a technical
regulation within the meaning of Annex 1:1 of the TBT Agreement.
2.1. BACKGROUND
2.1.1. Measure at issue
24. The EU Seal Regime provides for a General Ban on the placing on the market of
seal products. In the case of imported products, the General Ban is applied at the
point of importation. The General Ban is subject to three exceptions: the IC
exception, the MRM exception and the Travellers exception.
25. Article 3.1 of the Basic Regulation sets forth the General Ban together with the
main exception (the IC exception). In turn, the Travellers exception and the MRM
exception are stipulated in Article 3.2 a) and 3.2 b), respectively.
26. The IC exception allows the placing on the market of seal products "where the seal
products result from hunts traditionally conducted by Inuit and other indigenous
communities and contribute to their subsistence" (Article 3(1) of the Basic
Regulation). Article 3(1) of the Implementing Regulation further sets out that the
hunts must be conducted by "communities which have a tradition of seal hunting
in the community and in the geographical region", that the products of the hunt
must be "at least partly used, consumed or processed within the communities
according to their traditions" and that the hunts must "contribute to the subsistence
of the community".
27. The MRM exception allows the placing on the market of seal products "where the
seal products result from by-products of hunting that is regulated by national law
and conducted for the sole purpose of the sustainable management of marine
resources" under the condition that it is "on a non-profit basis" and "[t]he nature
and quantity of the seal products shall not be such as to indicate that they are being
placed on the market for commercial reasons" (Article 3(2)(b) of the Basic
Regulation). Article 5(1) of the Implementing Regulation further provides that the
seal products must result from hunts "conducted under a national or regional
natural resources management plan which uses scientific population models of
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marine resources and applies the ecosystem-based approach", and which "do not
exceed the total allowable catch quota established in accordance with [such] plan"
and "the by-products of which are placed on the market in a non-systematic way
on a non-profit basis".
28. The Travellers exception allows the importation of seal products "where it is of an
occasional nature and consists exclusively of goods for the personal use of
travellers or their families" provided that "[t]he nature and quantity of such goods
shall not be such as to indicate that they are being imported for commercial
reasons" (Article 3(2)(a) of the Basic Regulation). Article 4 of the Implementing
Regulation further specifies that the seals products must be "either worn by the
travellers, or carried in their personal luggage", "contained in the personal property
of a natural person transferring his normal place of residence from a third country
to the Union" or "acquired on site in a third country by travellers and imported by
those travellers at a later date, provided that, upon arrival in the Union territory,
those travellers present to the customs authorities of the Member State concerned
[certain] documents".
29. Conformity with the Indigenous Communities and Marine Resources Management
exceptions is determined on the basis of an "attesting document". In accordance
with Article 7.1 of the Implementing Regulation such documents can only be
issued by entities included on the list of "recognised bodies".
2.1.2. Summary of the parties' arguments before the Panel
2.1.2.1 Complainants
30. The Complainants argued before the Panel that the EU Seal Regime lays down
product characteristics in both positive and negative form. The complainants
explained that if a product meets the requirements of the IC, MRM, or Travellers
exceptions, it may possess the characteristic of containing seal. Conversely, if the
product does not meet such requirements, then it may not contain seal.27
The
complainants alleged that in determining whether the EU Seal Regime lays down
27 Canada's first written submission, para. 363; Norway's first written submission, para. 499;
complainants' responses to Panel question No. 127.
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product characteristics, it is not necessary for the exceptions themselves to
prescribe product characteristics.28
31. The complainants further argued that because products falling within one of the
three exceptions must satisfy certain administrative requirements set out in the
Implementing Regulation in order be able to benefit from the exceptions, the EU
Seal Regime also sets forth "applicable administrative provisions" within the
meaning of Annex 1.1 of the TBT Agreement.29
2.1.2.2 The European Union
32. The European Union argued that the EU Seal Regime needs to be examined as a
whole and that a conclusion about the proper legal nature of the measure cannot be
made based on one of its elements only. In response to the allegations by the
complainants, the European Union argued that when the general rule is a ban, the
exceptions are part of what defines the scope of the ban. Their exact content,
nature and purpose therefore critically inform the proper legal character of the
measure as a whole.
33. The European Union explained that the EU Seal Regime prohibits the placing on
the market of products which consist exclusively of seal, such as "pure" seal meat,
oil, blubber, organs and fur skins, whether processed or not.30
The European Union
noted that this prohibition under the EU Seal Regime is similar to the prohibition
of asbestos fibres "as such" in the measure at issue in EC – Asbestos, which the
Appellate Body found did not constitute a technical regulation.
34. As regards products containing seal and other ingredients ("mixed" products), the
European Union argued that it would be inappropriate for the Panel to limit its
analysis to the fact that the EU Seal Regime lays down intrinsic characteristics in
the negative form, by providing that all products may not contain seal. The
determination of whether the EU Seal Regime lays down product characteristics
should also take into account the exceptions, because it is the permissive elements,
28 See, e.g. Norway's second written submission, para. 145.
29 Canada's first written submission, paras. 364-365; Norway's first written submission, paras.
502-503.
30 European Union's first written submission, para. 213.
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together with the prohibition, that determine the situations where seal products
may be placed on the European Union market.31
35. The European Union explained that what is decisive for the characterization of the
EU Seal Regime is that none of the three exceptions lays down product
characteristics. The IC exception concerns the type of hunters, the traditions of
their communities, and the purpose of the hunt, but not the intrinsic or related
features of the products, such as their composition or presentation.32
The MRM
exception imposes requirements relating to the size of the hunt, the intensity and
purpose of the hunt, and the marketing conditions of the products. In the European
Union's view, none of these conditions sets out intrinsic or related features of the
products.33
The European Union argued that the EU Seal Regime differs in that
sense from the measure in EC – Asbestos, where the exceptions themselves
referred to particular characteristics intrinsic to the product.34
36. With respect to the question whether the EU Seal Regime prescribes applicable
administrative provisions, the European Union argued that Annex 1:1 addresses
only those administrative provisions that apply to "product characteristics or their
related PPMs". Given that the procedural requirements set out in the Implementing
Regulation are not related to any product characteristics or their related PPMs,
such provisions do not constitute "applicable administrative provisions" within the
meaning of Annex 1:1.35
2.1.3. Summary of the Panel's findings
37. In considering whether the EU Seal Regime qualified as a “technical regulation”,
the Panel applied the three-tier test established by the Appellate Body.
38. The parties did not contest and the Panel found that the EU Seal Regime applied to
an identifiable group of products36
and that compliance with the measure was
31 European Union's first written submission, para. 216.
32 European Union's first written submission, para. 220; response to Panel's Question No. 127.
33 European Union's first written submission, para. 221.
34 European Union's first written submission, para. 224.
35 European Union's first written submission, paras 229-234.
36 Panel report, para. 7.117.
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mandatory37
. With regard to the condition that the measure lays down product
characteristics or their related process and production methods, including
applicable administrative provisions, the Panel explained that the final decision on
the character of the measure must be based on the measure as a whole, "taking into
account, as appropriate, the prohibitive and permissive elements that are part of
it"38
.
39. The Panel found that the prohibition on seal containing products under the EU Seal
Regime lays down a product characteristic in the negative form by requiring that
all products not contain seal.39
The Panel noted that such conclusion is not affected
by the fact that the prohibition of seals "in their natural state" might not, in itself,
prescribe or impose any "characteristics".40
40. The Panel found that the EU Seal Regime sets out, through its exceptions, the
"applicable administrative provisions with which compliance is mandatory" for
products with certain objective "characteristics".41
First, the exceptions define the
scope of the prohibition in the EU Seal Regime, albeit implicitly.42
Second, the
nature of the exceptions is to allow products containing seal on the EU market,
subject to compliance with strict administrative requirements. Additionally, the
Panel considered that the scope of the exceptions is determined under the EU Seal
Regime based on a set of criteria. These criteria under the exceptions identify,
according to the Panel, the seal products that are allowed to be placed on the
European Union market. The Panel explains that the criteria define the categories
of seal that can be used as an input for such products; only seals obtained from the
specific type of hunter and/or the qualifying hunts may be used in making final
products. In the Panel’s view, these criteria constituted "objectively definable
features" of the seal products that are allowed to be placed on the EU market and
consequently lay down particular "characteristics" of the final products.
37 Panel report, para. 7.124.
38 Panel report, para. 7.101.
39 Panel report, para. 7.106.
40 Panel report, footnote 153.
41 Panel report, para. 7.108.
42 Panel report, para. 7.110.
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41. The Panel exercised judicial economy with respect to the complainants claim that
the EU Seal Regime lays down PPMs.43
2.2. LEGAL ARGUMENT
42. The European Union submits that the Panel's finding that the EU Seal Regime
constitutes a technical regulation within the meaning of Annex 1:1 of the TBT
Agreement is tainted with several errors.
43. First, the Panel wrongly interpreted the terms "applicable administrative
provisions" and wrongly concluded that the exceptions under the EU Seal Regime
constitute applicable administrative provisions.44
Second, the Panel wrongly
established the scope of products characteristics under Annex 1:1 of the TBT
Agreement, which led it to conclude that the criteria under the exceptions lay
down product characteristics.45
Third, the Panel failed to make a holistic
assessment of the measure at issue46
and, thus, wrongly found that the measure as
a whole is a "technical regulation" within the meaning of Annex 1:1 of the TBT
Agreement.47
2.2.1. The Panel errs in the interpretation and application of Annex 1:1 of the TBT Agreement
2.2.1.1 Legal standard
44. Article 1.2 of the TBT Agreement provides that for the purposes of the TBT
Agreement the meanings of the terms given in Annex 1 apply. Annex 1:1 of
the TBT Agreement defines a "technical regulation" as a:
Document which lays down product characteristics or their
related processes and production methods, including the
applicable administrative provisions, with which compliance is
mandatory. It may also include or deal exclusively with
terminology, symbols, packaging, marking or labelling
requirements as they apply to a product, process or production
method.
43 Panel report, para. 7.112.
44 See e.g. Panel report, para. 7.108.
45 See e.g. Panel report, para. 7.110.
46 Panel report, para. 7.100, 7.106, footnote 153.
47 Panel report, paras. 7.111, 7.125.
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45. According to the interpretation which the Appellate Body developed in EC –
Asbestos48
and summarised in EC – Sardines, a document must meet three criteria
to fall within this definition:
First, the document must apply to an identifiable product or group
of products. The identifiable product or group of products need
not, however, be expressly identified in the document. Second, the
document must lay down one or more characteristics of the
product. These product characteristics may be intrinsic, or they
may be related to the product. They may be prescribed or imposed
in either a positive or a negative form. Third, compliance with the
product characteristics must be mandatory.49
46. These three criteria apply cumulatively. This follows from the wording of Annex
1:1 of the TBT Agreement as interpreted by the Appellate Body50
.
47. With regard to the method of analysis, the Appellate Body held in EC – Asbestos
that:
[T]he proper legal character of the measure at issue cannot be
determined unless the measure is examined as a whole. (…) We,
therefore, conclude that the measure at issue is to be examined as
an integrated whole, taking into account, as appropriate, the
prohibitive and the permissive elements [of the measure].51
48. In US – Tuna, the Appellate Body added that:
[T]he determination of whether a particular measure constitutes a
technical regulation must be made in the light of the
characteristics of the measure at issue and the circumstances of
the case. In some cases, this may be a relatively straightforward
exercise. In others, the task of the panel may be more complex.52
49. In sum, a document fulfilling the second criterion for a technical regulation needs
to prescribe ("lay down"), in positive or negative form, one of three types of
subject matter: (1) "product characteristics" which encompass (a) intrinsic features
and qualities to the product, such as a product's composition, size, shape, colour,
texture, hardness, tensile strength, flammability, conductivity, density, or viscosity,
and (b) related "characteristics", such as the means of identification, the
48 Appellate Body Report, EC – Asbestos, paras. 66-70. 49 Appellate Body Report, EC – Sardines, para. 176 (emphasis in the original). 50 See Appellate Body Report, EC – Asbestos, paras. 66-70; Appellate Body Report, EC – Sardines,
para. 176 ("… we set out three criteria that a document must meet to fall within the definition of
'technical regulation' in the TBT Agreement", emphasis in the original). 51 Appellate Body Report, EC – Asbestos, para. 64. 52 Appellate Body Report, US – Tuna II (Mexico), para. 188 (footnote omitted).
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presentation and the appearance of a product53
; (2) "processes and production
methods" which are "related" to such product characteristics; or (3) "administrative
provisions" which are "applicable" to such product characteristics or their related
processes and production methods. The analysis of whether a document prescribes
such subject matter needs to examine the measure as an integrated whole, taking
into account, as appropriate, the prohibitive and the permissive elements.54
This
means that a measure cannot be characterized as laying down "product
characteristics" on the basis of its prohibitive elements alone. If that measure not
only contains a ban but also exceptions, these permissive elements have to be
taken into account as well in order to determine whether the measure "as an
integrated whole" qualifies as a "technical regulation". Furthermore, the
determination of whether the measure constitutes a technical regulation must be
made in the light of the characteristics of the measure at issue and the
circumstances of the case.55
2.2.1.2 The Panel errs in interpreting the terms "applicable administrative provisions" under Annex 1:1 of the TBT
Agreement and fails to apply Annex 1:1 of the TBT
Agreement correctly to the EU Seal Regime
50. The Panel considered that the EU Seal Regime "sets out, through its exceptions,
the 'applicable administrative provisions with which compliance is mandatory' for
products with certain objective 'characteristics'".56
51. In reaching this finding the Panel did not set out its interpretation of what would be
considered as "applicable administrative provisions", but limited itself to quoting
from the report by the Appellate Body in EC-Asbestos:
53 Appellate Body Report, EC – Asbestos, para. 67. 54 Appellate Body Report, EC – Asbestos, para. 64. 55 Appellate Body Report, US – Tuna II, para. 188. 56 Panel Report, para. 7.108.
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Further, the Appellate Body considered that, through its
exceptions, the measure in EC - Asbestos set out the "'applicable
administrative provisions, with which compliance is mandatory'
for products with certain objective 'characteristics'".154 On this
question, the Appellate Body relied on the panel's finding that the
marketing criteria applying to products falling under the
exceptions "relate to the characteristics of one or more given
products or processes or production methods relating to them".155
According to these criteria, products containing chrysotile
asbestos could be marketed provided that there was no substitute
fibre available (i) that presented less occupational health risk to
workers than chrysotile fibre; and (ii) that met all technical
guarantees of safety appropriate to the use. The panel noted that
such requirements had to be read in conjunction with
administrative provisions requiring a statement and supporting
documents to attest that the criteria of the exceptions were
satisfied.57
______________________________
154 Appellate Body Report, EC – Asbestos, para. 74 (quoting Panel Report,
para. 8.69). The panel in that dispute found that:
[A]rticle 2 of the Decree sets out the criteria for marketing the products
identified in the Decree and not solely the criteria for excluding products from
the market. The second sentence in Article 3.I of the Decree completes these
criteria. In our view, the marketing criteria in Article 2.I of the Decree relate to
the characteristics of one or more given products or processes or production
methods relating to them. This is particularly true of the second subparagraph on
the technical guarantees of safety appropriate to use … We also note that
Article 2.II and Article 3 in particular cover the administrative provisions
applicable to the technical regulations. (Panel Report, EC – Asbestos,
paras. 8.68-8.69, (cross-referencing para. 8.1 of the Panel Report)).
155 Panel Report, EC – Asbestos, para. 8.69.
52. The Panel considered that the factual circumstances of the measure at issue in
EC - Asbestos were similar to those that characterise the EU Seal Regime and
concluded:
Similarly, we find that the EU Seal Regime sets out, through its
exceptions, the "applicable administrative provisions with which
compliance is mandatory" for products with certain objective
"characteristics". First, the exceptions define the scope of the
prohibition in the EU Seal Regime, albeit implicitly. Second, the
nature of the exceptions is to allow products containing seal on
the EU market, subject to compliance with strict administrative
requirements. Finally, the scope of the exceptions is determined
under the Regime based on a set of criteria.58
53. While the interpretation of "applicable administrative provisions" under Annex 1:1
of the TBT Agreement has not been explicitly set out, the Panel seems to assume
57 Ibid. para. 7.107 (footnotes original).
58 Ibid, para. 7.108.
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that any document containing administrative provisions relating to identifiable
products constitutes a technical regulation. In the view of the European Union,
such an interpretation runs contrary to the customary rules of treaty
interpretation.59
Specifically, the European Union submits that the Panel wrongly
concluded that the requirement that the administrative provisions be "applicable
pertains to the "products" and not, to "product characteristics or their related
processes and production methods".
54. The European Union submits that Annex 1:1 of the TBT Agreement only
addresses those administrative provisions which apply to product characteristics or
their related processes and production methods. Already the term "applicable" in
the wording of Annex 1:1 of the TBT Agreement indicates that only administrative
provisions which apply to the subject matters mentioned in the first part of the
definition may qualify a document as a technical regulation.
55. This is further supported by the context. The reference to "applicable
administrative provisions" immediately follows the mention of "product
characteristics or their related processes and production methods". The linkage to
these two categories of subject matter is expressed by the conjunctive term
"including". Had the drafters of the TBT Agreement intended to qualify
documents laying down any administrative provision applying to products as
technical regulations, they could have chosen the following wording: "Document
which lays down product characteristics or their related processes and production
methods or administrative provisions relating to products …". The fact that they
did not indicates that Annex 1:1 of the TBT Agreement addresses only those
administrative provisions which apply to product characteristics or their related
processes and production methods.
56. The alternative interpretation that any administrative provisions relating to
products are covered would also appear to be over-inclusive and, thus, to go
against the object and purpose of the TBT Agreement. Documents laying down
59 The European Union recalls that under Article 3.2 of the DSU, panels are bound to interpret
provisions of the covered agreements in accordance with the customary rules of interpretation of
public international law, including as reflected in Article 31 of the Vienna Convention on the Law
of Treaties (“Vienna Convention”). Under Article 31 of the Vienna Convention, the ordinary
meaning of treaty terms must be ascertained in their context and in the light of the object and
purpose of the treaty.
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administrative provisions relating to products would comprise laws and regulations
on issues as diverse as drivers' licences for cars or customs procedures and
requirements for import and export of goods. In the view of the European Union,
the legal regime for "technical regulations" set out in the TBT Agreement is
clearly not meant to deal with such types of measures.
57. Consequently, whereas the procedural requirements set out in the Implementing
Regulation may be considered as administrative provisions, they do not constitute
"applicable administrative provisions" within the meaning of Annex 1:1 of the
TBT Agreement.
58. First, it is clear that the procedural provisions of the Implementing Regulation do
not directly pertain to the what the Panel considered as a product characteristic laid
down in the negative form, namely that the products must not contain seal. As
explained, if the mere fact that the procedural provisions regulates trade in seal
products were sufficient to consider them as "applicable" to the product
characteristic or process and production method within the meaning of Annex 1:1
of the TBT Agreement, a myriad of other administrative provisions that apply to
seal products before they can be put on the EU market would fall within the scope
of the TBT Agreement (customs regulations, tax regulations etc.). Such a result
would be absurd.
59. Second, as will be explained in greater detail below (under subheading 2.2.1.3),
since the Panel erroneously concluded that the criteria under the exceptions
themselves lay down product characteristics, it would be incorrect to conclude that
they can be considered as "applicable administrative provisions" on that basis as
well. In the view of the European Union, it is precisely in this respect, that the
exceptions under the EU Seal Regime differ from the procedural provisions
relating to the exceptions of the asbestos Decree in EC - Asbestos which the
Appellate Body found to constitute "applicable administrative provisions" within
the meaning of Annex 1:1 of the TBT Agreement60. The difference in
EC - Asbestos is that the relevant exceptions under the measure at issue in that case
did lay down product characteristics. In contrast to the present case, the Appellate
60 Appellate Body Report, EC – Asbestos, para. 73.
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Body in EC - Asbestos could therefore conclude that the procedural provisions
applied to product characteristics.
60. In sum, the European Union submits that the Panel erred in interpreting
"applicable administrative provisions" under Annex 1:1 of the TBT Agreement
and consequently wrongly concluded that the EU Seal Regime "sets out, through
its exceptions, the 'applicable administrative provisions with which compliance is
mandatory' for products with certain objective 'characteristics'".
2.2.1.3 The Panel errs in interpreting the terms "product characteristics" under Annex 1:1 of the TBT Agreement
and fails to apply Annex 1:1 of the TBT Agreement
correctly to the EU Seal Regime
61. The European Union further submits that the Panel failed to apply the customary
rules of treaty interpretation correctly in interpreting the terms "product
characteristics" under Annex 1:1 of the TBT Agreement. Instead of interpreting
the treaty terms in light of the legal issue before it, the Panel relied on only a
fragment of the Appellate Body's analysis in EC - Asbestos, which dealt with the
ordinary meaning of the terms "product characteristics", and on this basis
developed an interpretation divorced from context and contrary to the object and
purpose of the Treaty, as well as its negotiating history.
62. As a result of this interpretative error the Panel also erred in its application of the
law to the facts and wrongly concluded that the criteria under the exceptions under
the EU Seal Regime lay down product characteristics.
63. In its analysis the Panel seems to have relied on the ordinary meaning of the terms
"product characteristics", as set out by the Appellate Body in EC – Asbestos. To
recall, the Appellate Body in EC – Asbestos interpreted the requirement that the
document lay down product characteristics as follows:
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The heart of the definition of a "technical regulation" is that a
"document" must "lay down" – that is, set forth, stipulate or
provide – "product characteristics". The word "characteristic"
has a number of synonyms that are helpful in understanding the
ordinary meaning of that word, in this context. Thus, the
"characteristics" of a product include, in our view, any objectively
definable "features", "qualities", "attributes", or other
"distinguishing mark" of a product. Such "characteristics" might
relate, inter alia, to a product's composition, size, shape, colour,
texture, hardness, tensile strength, flammability, conductivity,
density, or viscosity. In the definition of a "technical regulation"
in Annex 1.1, the TBT Agreement itself gives certain examples of
"product characteristics" – "terminology, symbols, packaging,
marking or labelling requirements". These examples indicate that
"product characteristics" include, not only features and qualities
intrinsic to the product itself, but also related "characteristics",
such as the means of identification, the presentation and the
appearance of a product. In addition, according to the definition
in Annex 1.1 of the TBT Agreement, a "technical regulation" may
set forth the "applicable administrative provisions" for products
which have certain "characteristics". Further, we note that the
definition of a "technical regulation" provides that such a
regulation "may also include or deal exclusively with terminology,
symbols, packaging, marking or labelling requirements".
(emphasis added) The use here of the word "exclusively" and the
disjunctive word "or" indicates that a "technical regulation" may
be confined to laying down only one or a few "product
characteristics".61
64. The European Union does not put into question the Appellate Body's analysis62
that according to the ordinary meaning of the text, product characteristics can
cover not only intrinsic characteristics, but also characteristics related to a product.
Establishing the ordinary meaning, however, is but the first step of the
interpretative process. What the Panel overlooked is that ordinary meaning of
treaty terms is immediately and intimately linked with context, and must further be
taken in conjunction with all other relevant elements under the customary rules of
treaty interpretation.
65. In relaying on the afore mentioned excerpt from the Appellate Body Report in
EC - Asbestos, the Panel concluded that "objectively definable features" of a
product constitute particular "characteristics" of a product. According to the Panel,
criteria such as the one established under the Implementing Regulation concerning
61 Appellate Body Report, EC – Asbestos, para. 67. 62 Ibid.
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the "type of the hunter and/or the qualifying hunts"63
constitute "objectively
definable features" of a product and as a result "product characteristics" for the
purposes of Annex 1:1 of the TBT Agreement.
66. The European Union submits that stopping interpretation at establishing the
ordinary meaning, as the Panel did here, manifestly lead to the erroneous result,
whereby virtually anything that bares any relation to a product – no matter how
indirect and distant that relation may be – could be construed as a product
characteristic and be thus potentially considered a technical regulation subject to
the disciplines of the TBT Agreement.
67. The European Union submits that such an expansive reading of "product
characteristics" renders (at least in part) redundant the inclusion of "related process
or production methods" in the text of the definition technical regulations under
Annex 1:1 of the TBT Agreement. This result is problematic in more than one
respect. First, such a reading of "product characteristics" would partially overlap
with the scope of "process or production methods" (PPMs). Second, and perhaps
even more troublesome, since only the PPMs related to a product are considered to
be covered by the TBT Agreement, adopting an interpretation which would
subsume PPMs into product characteristics, would effectively do away with the
limitation of the scope for PPMs covered by the TBT Agreement to product related
or incorporated PPMs.
68. In the view of the European Union an over expansive reading of product
characteristics also goes contrary to the object and purpose of the TBT Agreement.
The European Union recalls that the TBT Agreement was designed to elaborate on
the disciplines of Article III of the General Agreement for a very specific subset of
measures (technical regulations, standards and conformity assessment procedures).
The term "technical regulation" is not so broad as to cover all government
regulatory actions affecting products.
69. As the Appellate Body acknowledged in EC - Asbestos, the scope of the TBT
Agreement is to be considered limited to certain measures and does not cover all
internal measures covered by Article III:4 of the GATT 1994:
63 Panel report, para. 7.110. The European Union notes that a more accurate description of the criteria
under the exceptions to the EU Seal regime can be found in paras 7.19 to 7.24 of the report.
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We note, however – and we emphasize – that this does not mean
that all internal measures covered by Article III:4 of the GATT
1994 "affecting" the "sale, offering for sale, purchase,
transportation, distribution or use" of a product are, necessarily,
"technical regulations" under the TBT Agreement. Rather, we rule
only that this particular measure, the Decree at stake, falls within
the definition of a "technical regulation" given in Annex 1.1 of
that Agreement.64
70. This intent to circumscribe the scope of the TBT Agreement is also clearly
reflected in the negotiating history of the agreement.65
Indeed, WTO Members
only agreed to expand the scope of the Agreement on Technical Barriers to Trade
to process or production methods related to product characteristics during the
Uruguay round negotiations.66
71. The European Union submits that if terms "product characteristics" are interpreted
in accordance with the customary rules of treaty interpretation, it becomes
apparent that conditions, like the ones imposed under the EU Seal Regime, do not
concern the intrinsic characteristics or features that are related to the products.
72. First, the IC exception allows the placing on the market of seal products "where
the seal products result from hunts traditionally conducted by Inuit and other
indigenous communities and contribute to their subsistence"67
. This exception
concerns the identity of the hunters, the traditions of their communities and the
purpose of the hunt, none of which can be considered as intrinsic or related
features of the products, such as their composition or presentation.
73. Second, the MRM exception allows the placing on the market of seal products
"where the seal products result from by-products of hunting that is regulated by
national law and conducted for the sole purpose of the sustainable management of
marine resources" under the condition that it is "on a non-profit basis" and "[t]he
nature and quantity of the seal products shall not be such as to indicate that they
64 Appellate Body report, EC-Asbestos, para. 77.
65 See G/TBT/W11, in particular para. 131.
66 Notably, they also only agreed to extend the scope to "related" process and production methods and
not all process and production methods.
67 Article 3(1) of the Basic Regulation. Article 3(1) of the Implementing Regulation further sets out
that the hunts must be conducted by "communities which have a tradition of seal hunting in the
community and in the geographical region", that the products of the hunt must be "at least partly
used, consumed or processed within the communities according to their traditions" and that the
hunts must "contribute to the subsistence of the community".
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are being placed on the market for commercial reasons".68
This exception concerns
the size, intensity and purpose of the hunt and the marketing conditions (i.e. non-
profit and non-systematic) of the products. Similarly to the IC exception, these
conditions do not set out any intrinsic or related features of the products.
74. Finally, the Travellers exception allows the importation of seal products "where it
is of an occasional nature and consists exclusively of goods for the personal use of
travellers or their families" provided that "[t]he nature and quantity of such goods
shall not be such as to indicate that they are being imported for commercial
reasons".69
Here, the exception concerns the use of the products and the
circumstances of their importation, but none of their intrinsic or related features.
2.2.1.4 In applying its interpretation of Annex 1:1 of the TBT Agreement to the facts the Panel does not make a
holistic assessment of the measure
75. Three main components of the EU Seal Regime are relevant of the purpose of the
analysis on the applicability of the TBT Agreement, namely: (i) the ban on
products consisting exclusively of seal, whether processed or not; (ii) the ban on
products containing seal and other ingredients; (iii) the exceptions to the ban on all
seal products.
76. The Parties to this dispute, as well as the Panel seem to agree with the Appellate
Body in EC - Asbestos 70
that the proper legal character of the measure at issue
cannot be determined unless the measure is examined as a whole. In this respect
the Panel reasoned:
68 Article 3(2)(b) of the Basic Regulation. Article 5(1) of the Implementing Regulation further
provides that the seal products must result from hunts "conducted under a national or regional
natural resources management plan which uses scientific population models of marine resources
and applies the ecosystem-based approach", and which "do not exceed the total allowable catch
quota established in accordance with [such] plan" and "the by-products of which are placed on the
market in a non-systematic way on a non-profit basis".
69 Article 3(2)(a) of the Basic Regulation. Article 4 of the Implementing Regulation further specifies
that the seals products must be "either worn by the travellers, or carried in their personal luggage",
"contained in the personal property of a natural person transferring his normal place of residence
from a third country to the Union" or "acquired on site in a third country by travellers and imported
by those travellers at a later date, provided that, upon arrival in the Union territory, those travellers
present to the customs authorities of the Member State concerned [certain] documents".
70 Appellate Body report, para. 64.
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A panel may have to examine different components of a measure
separately in order to make a holistic analysis of the measure's
legal character. However, the final decision on the character of
the measure must be based on the measure as a whole, "taking
into account, as appropriate, the prohibitive and permissive
elements that are part of it".71
77. The Appellate Body in EC - Asbestos did not provide any general guidance as to
the weight that should be ascribed to legal characterisation of the various
components of a measure, when a measure is composed of multiple components
not all of which meet the criteria for technical regulation, in determining whether
the measure as a whole should be considered a technical regulation.72
Nor did it
conclude that it is sufficient for one component to meet the criteria for a technical
regulation for a measure as a whole to be considered a technical regulation.
78. Despite that, at the outset of its analysis and after referring to a passage of the
report of the Appellate Body in EC-Asbestos73
, the Panel explained:
In our view, the Appellate Body's analysis of the measure at issue
in EC – Asbestos does not suggest that for a measure consisting of
a ban and certain exceptions to qualify as a technical regulation,
both the prohibition and the exceptions must individually lay
down product characteristics or their related PPMs.74
79. The European Union fails to see how such a general conclusion on the
interpretation of the definition of technical regulation could have been reached
based on a very fact specific conclusion of the Appellate Body in EC - Asbestos.
The European Union thus submits that the Panel incorrectly applied Appellate
Body jurisprudence in suggesting in para. 7.100 of the Panel report that any given
measure can as a whole be considered as a technical regulation, simply because
one of its components meets the criterion for a technical regulation.
80. Contrary to what para. 7.100 seems to suggest, it is clear from subsequent
Appellate Body jurisprudence that the determination of whether the measure
constitutes a technical regulation must be made in the light of the characteristics of
71 Panel's report, para. 7.101, footnote omitted.
72 In EC-Asbestos only one part of the ban, namely the ban concerning asbestos fibres, was considered
by the Appellate Body as not laying down product characteristics, whereas the other components of
the measure had been found to lay down mandatory product characteristics with respect to
identifiable products.
73 Appellate Body Report, EC – Asbestos, para. 75.
74 Panel report, para. 7.100.
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the measure at issue and the circumstances of the case.75
In the view of the
European Union the Appellate Body, rather than setting a general rule, calls for a
case-by-case assessment of a measure in determining whether it can be considered
a technical regulation.
81. In the context of analysing a measure such as the Seal Regime, where not all
components can be said to meet the definition of a technical regulation, it would be
the task of the Panel to strike the right balance after having considered all
components of the measure and their respective role in the operation and object
and purpose of the measure.
82. In addition to failing to appreciate the necessity of making an actual holistic
assessment of the measure before it (and – as has been discussed previously under
headings 2.2.1.2 and 2.2.1.3 – erring in the interpretation of the terms of Annex
1:1, which in turn lead the Panel to incorrectly find that the exceptions constitute
applicable administrative procedures and lay down product characteristics), the
Panel also blatantly failed to take into consideration the fact that the ban on
products consisting exclusively of seal, whether processed or not, does not lay
down any product characteristics.
83. The Panel states in footnot