(d) "Security and Predictability"

4.746  The European Communities points out that Professor Robert E. Hudec wrote:

"Section 301 is an intricate maze of mandatory commands in one place and extremely wide loopholes in the other. One needs a wiring diagram to trace whether mandatory commands given in one part will actually reach their final target without passing through at least one discretionary exit point. Even with the aid of such a diagram, one cannot predict actual outcomes".³⁸⁶

4.747  The European Communities also points out that Professor John H. Jackson testified before the Senate Foreign Relations Committee as follows:

"Although there are plausible ways to interpret the statutory provisions of regular Section 301 so as to give the President discretion to act consistently with the Uruguay Round dispute settlement rules, in a few cases, particularly in Section 301(a) (mandatory provision) the interpretations to do this are a bit strained …".³⁸⁷

4.748  In the EC's view, if the United States' two foremost scholars on international trade law are unable to identify a sound legal avenue in Sections 301-310 permitting the USTR to act consistently with the DSU and the GATT 1994, nobody else can.

4.749  The European Communities notes that the legislative history of the 1988 Omnibus Trade and Competitiveness Act, which is at the origin in particular of the present version of Sections 301-310, demonstrates that the lack of a sound legal avenue was deliberate.

4.750  The European Communities states that the United States now attempts to benefit from the creation of this legal "maze" by claiming that it is for the European Communities to prove that it is not possible to interpret Sections 301-310 as permitting WTO-consistent implementation.

4.751  According to the European Communities, the fundamental objective of the WTO - namely to create security and predictability in international trade relations - could not be achieved if WTO Members were permitted to maintain domestic legislation that fails to provide the executive authorities with a sound legal basis for the measures required to implement their WTO obligations.

4.752  The European Communities is therefore of the view that, in a panel's examination of whether domestic legislation stipulates WTO-inconsistent determinations or action, the defendant should not be able to hide behind legal uncertainties arising from its own law, in particular if these uncertainties have been deliberately created. In accordance with the approach endorsed by the Appellate Body in India - Patents (US), a panel should rule against the defendant if it concludes, on the basis of the evidence before it, that there is an objective (and thus reasonable) uncertainty on whether the domestic law permits WTO-consistent determinations or actions.

4.753  The European Communities considers that if the panel has reasonable doubts, so will economic operators planning their future trade. No legitimate interest would be protected if Members were entitled to retain law lacking such a basis. In fact, as the case before the Panel demonstrates, this would be an invitation to Members to restrict trade by exposing it deliberately to legal uncertainties.

4.754  The United States argues that the Statement of Administrative Action and accompanying legislation are the definitive congressional materials with respect to the WTO-consistency of Sections 301-310 before the adoption of the Uruguay Round Agreements Act by the Congress. Page 360 of the Statement of Administrative Action (US Exhibits 3 and 11) outlines the changes considered necessary to ensure compliance. In addition, the United States directs the Panel's attention to the testimony on this topic of Professor John Jackson when he appeared before the Senate Finance Committee.³⁸⁸

4.755  The United States points out that Professor Jackson concluded that, "There may need to be some alterations to some time limits, or transition measures, but the basic structure of 301 is not necessarily inconsistent with the Uruguay Round results". He also concluded that even when Section 301 is considered "in its current statutory form" (i.e. before the 1994 amendments), "the Executive appears to have the discretion to apply actions under Section 301 in a manner consistent with the proposed new rules of the Uruguay Round dispute settlement understanding".³⁸⁹ Professor Jackson thus considered that with only minor changes, Section 301 would be clearly consistent with the WTO obligations of the United States. Moreover, his emphasis on the fact that the Executive had adequate discretion to apply Section 301 in a WTO-consistent manner reflects the fact that he took for granted that the reasoning applied in the Superfund line of cases would continue to apply under the WTO.

4.756  The United States notes that Professor Jackson believed that sufficient clarity could be provided to the interpretation of the statute through the inclusion of language in the Statement of Administrative Action.³⁹⁰ .³⁹¹

4.757  The European Communities emphasises that the US arguments are both new and incorrect, as can be seen already from the internal meeting report of 11 November 1993 by the US delegate contained in US Exhibit 23. This exhibit, in particular, shows that several Uruguay Round participants, including the European Communities, worked for a strengthening of Article XVI:4 of the WTO Agreement beyond the "natural obligation under int'l law" which finds its source in Articles 26 and 27 of the Vienna Convention on the Law of Treaties. This "natural obligation" is already incorporated into the WTO by virtue of Article 3.2, second sentence, of the DSU, which provides that "[t]he Members recognise that [the dispute settlement system] serves to … clarify the existing provisions of those agreements in accordance with customary rules of interpretation of public international law". The US reply thus appears to be an attempt to go back on the achievements of the Uruguay Round.

4.758  The United States rebuts the EC argument that the principles of VCLT Article 26 have already been incorporated into the WTO through DSU Article 3.2, second sentence, and that Article XVI:4 therefore need not serve this purpose. However, DSU Article 3.2 provides for the dispute settlement system to clarify WTO provisions "in accordance with customary rules of interpretation of public international law". Article 26 is not such a customary rule of interpretation. As the Appellate Body explained in US – Gasoline and Japan – Alcoholic Beverages, these rules of interpretation are reflected in VCLT Articles 31 and 32, which, indeed, are entitled "General rule of interpretation" and "Supplementary means of interpretation", respectively. ³⁹² Inasmuch as Article 26 is not such a rule of interpretation, DSU Article 3.2, second sentence, may not be read to reference it. Thus, the EC argument fails to undermine the United States point that Article XVI:4 made the principles of VCLT Article 26 binding on all WTO Members, even those Members not parties to the Vienna Convention. It is worth noting that, during negotiations from 1991-1993, the United States negotiator explicitly brought to the attention of other delegations that the United States is not a party to the Vienna Convention.

(e) Article XVI:4 of WTO Agreement

4.759  In the case of Sections 301-310, the European Communities is of the view that these provisions are biased against the conformity with the requirements of Article 23 (and the related provisions under Articles 21 and 22) of the DSU and thus in breach of Article XVI:4 of the Marrakech Agreement. This view is supported by the fact that the United States has always given precedence to an Act of Congress in the event of a conflict with an international obligation that the United States had accepted, at least in situations where the acceptance of the international agreement was prior to the adoption of the Act of Congress.

4.760  In this regard, the European Communities refers to an official statement made by the US Attorney-General in a letter of 21 March 1988 ³⁹³ to the PLO Permanent Observer accredited to the United Nations quoted in the Advisory Opinion of the International Court of Justice on the Headquarters Agreement of the United Nations:

"I am aware of your position that requiring closure of the Palestine Liberation Organisation ('PLO') Observer Mission violates our obligations under the United Nations ('UN') Headquarters Agreement and, thus, international law. However, among a number of grounds in support of our action, the United States Supreme Court has held for more than a century that Congress has the authority to override treaties and, thus, international law for the purpose of domestic law. Here Congress has chosen, irrespective of international law, to ban the presence of all PLO offices in this country, including the presence of the PLO Observer Mission to the United Nations. In discharging my obligation to enforce the law, the only responsible course of action available to me is to respect and follow that decision".³⁹⁴

4.761  The European Communities indicates that its concerns in the present case are based on this description of the legal situation with regard to the relationship between US domestic law and the international obligations of the United States.³⁹⁵

4.762  The European Communities further states that the Uruguay Round Agreements Act 1994, which is the Act by which the United States Congress approved the Marrakech Agreement Establishing the World Trade Organisation, contains the following provisions in Section 102(a):

"(1) United states law to prevail in conflict. - No provision in any of the Uruguay Round Agreements, nor the application of any such provision to any person or circumstance, that is inconsistent with any law of the United States shall have effect.

(2) Construction. - Nothing in this Act shall be construed - …

(B) to limit any authority conferred under any law of the United States, including section 301 of the Trade Act of 1974,

unless specifically provided for in this Act".

4.763  In the view of the European Communities, it clearly follows from these provisions of the Uruguay Round Agreements Act 1994 that none of the provisions contained in any of the Uruguay Round Agreements can override any Act of the US Congress or affect any authority conferred under such an Act, whether adopted before or after the approval of the Uruguay Round Agreements by the US Congress, including in particular Section 301.³⁹⁶

4.764  The European Communities claims that on this basis, it is apparent that the approval of the Uruguay Round Agreements by the US Congress in 1994 is not sufficient to bring US domestic legislation, to the extent that it is inconsistent with US obligations under the covered agreements, into conformity with these agreements.

4.765  The European Communities maintains that rather, it is necessary that the United States amend the existing inconsistent legislation in order to fulfil the obligation placed on all WTO Members by the very explicit terms of Article XVI:4 of the WTO Agreement.

4.766  The European Communities points out that the very purpose of Article XVI:4 of the Marrakech Agreement resides in the creation of an obligation to provide certainty and predictability in multilateral trade relations by bringing domestic laws into conformity with the requirements under the relevant covered agreement. It is thus not sufficient just to abstain (or to promise to do so) from applying a piece of legislation that is inconsistent with the obligations under the relevant covered agreements since the mere existence of such a piece of legislation creates uncertainty. While not dealing explicitly with the requirements of Article XVI:4 of the Marrakech Agreement, the panels and the Appellate Body in the India - Patents (US) case have clearly indicated the need to create a sound and predictable basis for WTO-consistent behaviour of the administration in domestic law and to avoid a situation where domestic legislation destabilises the solidity of WTO rights and obligations.

4.767  The United States responds that an analysis of whether Sections 304(a)(1)(A) and 304(a)(2)(A) mandate a violation of DSU Article 23.2(a) must begin with an analysis of the text of DSU Article 23.2(a). Article 23.2(a) provides that Members shall:

"not make a determination to the effect that a violation has occurred, that benefits have been nullified or impaired or that the attainment of any objective of the covered agreements has been impeded, except through recourse to dispute settlement in accordance with the rules and procedures of this Understanding, and shall make any such determination consistent with the findings contained in the panel or Appellate Body report adopted by the DSB or an arbitration award rendered under this Understanding".

4.768  The United States claims that there can be no violation of Article 23.2(a) unless: (1) there is a determination to the effect that a violation has occurred; and (2) that determination has not been made through recourse to DSU rules and procedures, or is not consistent with adopted panel or Appellate Body findings or an arbitral award. In the absence of a specific determination, the mere existence of legislation may be found inconsistent with Article 23.2(a) only if that legislation mandates a determination which does not meet the requirements of Article 23.2(a).³⁹⁷ If that legislation may reasonably be read to provide authorities with discretion to comply with DSU Article 23.2(a), then that legislation does not mandate a determination inconsistent with Article 23.2(a).³⁹⁸ On the other hand, nothing in the language of Article 23.2(a) or its context supports the EC's claim that the "design, structure and architecture" of legislation must be examined to determine whether it is "manifestly intended to encourage violations of WTO law or is otherwise biased against WTO-consistent action".

4.769  The European Communities recalls the US claim that the fact that the European Communities in a separate panel procedure³⁹⁹ affirmed that "implementing measures must be presumed to conform to WTO rules unless their conformity has been duly challenged under the appropriate DSU procedures" should be in some ways inconsistent with the EC's stance in this case aimed at finding that Sections 301-310 structure, design and architecture by mandating actions of the US executive authorities that are incompatible with the US WTO obligations, are biased against compliance with US' WTO obligations.

4.770  The European Communities considers that the core of the US argument is that "[o]ne may not assume that authorities will fail to implement their international obligations in good faith".

4.771  The European Communities points out that while this last US statement is certainly correct, and it agrees with it, it is however not logically linked with the previous US affirmation (the European Communities is inconsistent) and, more importantly, it does not refer to the factual situation before this Panel.

4.772  The European Communities claims that in the specific case of Sections 301-310, the presumption of compliance is not applicable for the simple reason that their text, design structure and architecture are, on their face, clearly biased against compliance.

4.773  In the view of the European Communities, it would therefore be extraordinary to claim, as the United States seems to imply, that a presumption (iuris tantum, i.e. rebuttable) of compliance would shield a domestic legislation which on its face defeats such a presumption. Legally, this would mean transforming a presumption iuris tantum in a presumption iuris et de jure (i.e. non-rebuttable), which is however not foreseen under the WTO Agreements.

4.774  The European Communities then argues that the burden of demonstrating that the text, design, structure and architecture of Sections 301-310 are not what they appear to be from the text published in the US statute books still rests with the United States. Until such evidence is submitted, the onus remains on the United States.

4.775  In response to the Panel's question as to how the United States has dealt with the obligation under Article XVI:4 to review existing legislation and bring it into conformity with the WTO Agreement, if necessary, in respect of Sections 301-310, the United States responds that as explained in greater detail in US Exhibits 3 and 11, it dealt with this obligation with respect to Sections 301-310 by adjusting time frames for disputes involving subsidies, the TRIPs Agreement and government procurement to conform with the standard time frames in the DSU.

4.776  The United States also refers to US Exhibit 24, which includes the 1994 testimony of Professor John Jackson cited by the European Communities. In the paragraph immediately prior to that which the European Communities quoted, Professor Jackson states:

"My basic judgment is that very few statutory changes will be needed to U.S. Section 301, at least the 'regular 301' (compared to Special 301 and other similar statutory provisions, such as those on telecommunications.)There may need to be some alterations to some time limits, or transition measures, but the basic structure of 301 is not necessarily inconsistent with the Uruguay Round results.Indeed, I continue to have the opinion that Section 301 appropriately used in its current statutory form, is a constructive measure for U.S. trade policy, and for world trade policy. Section 301 calls for cases presented under the 301 procedural framework to be taken to the international dispute settlement process. Thus the Executive appears to have the discretion to apply actions under Section 301 in a manner consistent with the proposed new rules of the Uruguay Round dispute settlement understanding".⁴⁰⁰

4.777  The United States explains that with respect to how the Administration more generally applied Article XVI:4 by reviewing existing legislation and bringing it into conformity, the United States notes that precisely such a review was necessary to prepare the Statement of Administrative Action. As described on page 1 of that document (Exhibit 11),

"This Statement describes significant administrative actions proposed  to implement the Uruguay Round agreements.  In addition, incorporated into this Statement are two other statements required under section 1103:  (1) an explanation of how the implementing bill and proposed administrative action will change or affect existing law; and (2) a statement setting forth the reasons why the implementing bill and proposed administrative action are necessary or appropriate to carry out the Uruguay Round agreements".  (emphasis added.)

4.778  In response to the Panel's question as to whether considering "security and predictability" from a factual dimension, a public announcement in legislation mandating the making of a determination even if WTO proceedings have not yet been completed – albeit not necessarily a determination of violation – does not affect the assurance given to other Members that no determinations of violation can be made before the completion of WTO procedures?  Does the very discretion explicitly provided for and publicly announced - allowing the Member to decide either way - not constitute a threat to security and predictability, the United States comments that there is no independent obligation to provide "security and predictability" apart from that provided by compliance with substantive WTO obligations and DSU rules and procedures.  A finding that such an obligation exists would run counter to the entire line of reasoning underlying the mandatory/discretionary distinction under which the trading system now operates. However, even if there were such an obligation, from a factual standpoint the circumstances posited in the question most certainly do not threaten "security and predictability".

4.779  In the view of the United States, there is nothing inherently threatening to "security and predictability" in the making of determinations – even determinations that a violation has occurred – or in suspending concessions.  If there were, then the only conclusion to be drawn would be that the DSU itself threatens security and predictability, since it provides for findings of violations and for the suspension of concessions.  Each and every WTO Member knows that it is possible that another Member may obtain a DSB ruling that a WTO violation has occurred, may make a determination consistent with that ruling, and may suspend concessions in response – and each such Member has agreed to accept this possibility by virtue of its having become a WTO Member.  It should therefore come as no surprise when a Member provides in its laws for the possibility of making determinations or suspending concessions.  This possibility cannot be considered a threat to security and predictability.

4.780  The United States points out that Members were willing to accept this possibility because they also accepted an obligation to make such determinations of violations and to suspend concessions in accordance with DSU rules and procedures.  That binding international obligation is no different in nature than that assumed by the Members with respect to any other WTO obligation.  The willingness of WTO Members to enter into these obligations provides the only assurance that any WTO Member has that its fellow Members will not deny their WTO rights.  Every WTO Member has the power, and most of their governments have the domestic legal authority, to violate their international obligations.  However, the fact that these Members have accepted WTO obligations – and the fact that effective dispute settlement procedures exist – provides assurances that they will respect other Members' rights.  The dispute settlement system itself helps to provide security and predictability, as DSU Article 3.2 states.

4.781 The United States notes that these are the only assurances. In fact, the European Communities concedes that there is no independent WTO obligation to limit discretion in domestic law so as to preclude the possibility of WTO-inconsistent action.⁴⁰¹ According to the European Communities, such an obligation is not found in Article XVI:4.⁴⁰² It is an error to assume that the "public warning" that authorities may decide either way on the issue of whether agreement rights have been denied creates any special threat or insecurity beyond that present when authorities have broad, undefined authority to violate their obligations. To the extent a law provides for a determination by a given date – a date consistent with DSU guidelines – but does not require the only determination proscribed by the DSU (that a violation has occurred), the possibility that the determination will breach that Member's obligations under Article 23.2(a) is no greater than if the law did not exist at all. In either case, WTO Members must rely on the good faith of the Member in question to exercise its discretion in accordance with its binding, international obligations.   Good faith, and the security and predictability provided by a dispute settlement system that rules on the basis of law, and which may not be undermined by a losing party, provide all the assurances WTO Members have, and all that they agreed they would have.

4.782  The United States claims that nevertheless, it has provided additional assurances in US law, in the form of the Section 304(a)(1) requirement that determinations that agreement rights have been denied must be based on the results of dispute settlement proceedings, as interpreted in light of the authoritative interpretation of the statute provided in the Statement of Administrative Action at pages 365-66.

4.783  The United States notes that if it were appropriate to examine whether "assurances" have been undermined by a Member because of the possibility of future breaches, it would be impossible to escape the conclusion that a broad, non-specific discretionary authority which has been repeatedly exercised to violate another Member's rights creates a greater possibility of further violations than a statute which explicitly provides discretionary authority to make determinations only one of which might violate another Member's rights,⁴⁰³ but which has never been used to make that determination in violation of DSU or GATT rules. However, it is not appropriate to examine the likelihood of future breach. It may not be assumed that in the future, the Member in question will act in bad faith. If it may be assumed that a Member will exercise its discretion in bad faith, then, indeed, there would be a threat to the security and predictability of the multilateral trading system, because the rules set forth in the DSU and the other covered agreements will have been reduced to a popularity contest on the question of who can be trusted.

4.784  The United States further argues that because it is the dispute settlement system which provides security and predictability, it is no exaggeration to conclude that a true threat to security and predictability would come from a legal analysis which departs from the text agreed to by the Members in favor of creation of new obligations not found in the text, or which abandons a consistent, logical analysis applied for years before the WTO Agreement entered into affect, and which Members assumed would remain in effect. On this point – the continued applicability of the Superfund reasoning – and on the issue of whether Article XVI:4 changed this, the United States wishes to quote the views expressed by Pieter-Jan Kuyper, the legal adviser to the EC's Uruguay Round negotiators, and by Frieder Roessler, the Director of the Legal Affairs Division of the GATT Secretariat, in a volume reproducing papers from a conference held in October 1994 on the WTO Agreement and dispute settlement. Mr. Roessler stated:

"The wording of [Article XVI:4] could be interpreted to mean either that domestic law must prescribe that the executive authority act in conformity with WTO law or that domestic law must permit that authority to act in conformity with WTO law. There are similar provisions in the Tokyo Round Agreements on Anti-dumping and Subsidies,⁴⁰⁴ which have generally been interpreted as requiring the parties to these Agreements to adopt laws, regulations and procedures that permit them to act in conformity with their obligations under these Agreements.  The main function of these provisions was to permit the committees established under these Agreements to review the law of the parties and not merely the practices followed under that law.   Several GATT 1947 panels concluded that legislation mandatorily requiring the executive authority of a contracting party to act inconsistently with the GATT may be found to be inconsistent with that contracting party's obligations under the GATT, whether or not an occasion for its actual application has yet arisen, but that legislation merely giving the executive authorities the power to act inconsistently with the GATT is not, by itself, inconsistent with the GATT.⁴⁰⁵  Given this background, one can expect that the WTO Agreement provision stipulating consistency between domestic law and WTO law will be interpreted to establish the obligation for each WTO Member to ensure that the domestic law is such as to permit the executive authority to act in conformity with the obligations under the WTO Agreement".⁴⁰⁶

4.785  The United States points out that likewise, Mr. Kuyper in his paper stated that Article XVI:4

"may turn out to be a very onerous obligation, requiring full conformity of all Community and national laws . . . with the precise provisions of the WTO's annexes. It may also have hardly any consequences at all, compared to the present situation, if it is interpreted in the light of standing panel case law which determines that a law or regulation is contrary to the GATT only if it is mandatory and as such contrary to GATT terms, but that such is not the case, if the text of the law or regulation permits a GATT conform [sic] application of the text.⁴⁰⁷ If conformity to WTO obligations is interpreted in this way - which would not be unreasonable in the light of the succession of the WTO to the �acquis gattien�⁴⁰⁸ – it should be clear that the added value of Article XVI:4 is rather limited".⁴⁰⁹

4.786  The United States further notes that Mr. Kuyper stated in a footnote that the conclusion that the value of Article XVI:4 is "rather limited" is his own view.⁴¹⁰ Mr. Kuyper went on to note that if a more expansive view of Article XVI:4 were adopted, "it must be clear that the European Communities and the Member States have an obligation to maintain their laws and regulations in constant conformity with the terms of the WTO Agreement and its annexes. That is no simple matter".⁴¹¹ He explained that, in order to prevent WTO panel condemnation, the Commission would frequently be required to aggressively step in and quickly enforce WTO rules domestically through the procedures of Article 169 of the Treaty of Rome, which had been little used with a view to enforcing international treaties.⁴¹² This would mean a fundamental change in the balance between the Community and the Member States.

4.787  The United States then argues that the EC's own legal adviser, writing shortly after the conclusion of the negotiations, took a position contradicting that presented by the European Communities in the context of this dispute, and expressed his view that Article XVI:4 did not in any way change the operation of the principle that laws are WTO-consistent if they provide for discretion to act in a WTO-consistent manner. To the contrary, he, like the United States here, emphasized the great disruption to security and predictability were a different interpretation adopted. He, like the United States, fully expected that the principle in Superfund would continue to be applied.

4.788  The United States further points out that Professor Jackson's testimony to Congress makes clear that he also took for granted the continued relevance and applicability of the principle that legislation would not be WTO inconsistent if it provided adequate discretion to act in a WTO-consistent manner. Thus, he emphasized, "the Executive appears to have the discretion to apply actions under Section 301 in a manner consistent with the proposed new rules of the Uruguay Round dispute settlement understanding".⁴¹³

4.789  The United States goes on to state that Professor Jackson's testimony also highlights the fact that, whatever the statute may provide regarding determinations and their timing, additional assurances are provided in US law to counter any insecurities other Members may feel. Referring to the statute before it was amended, he stated:

"I continue to have the opinion that Section 301 appropriately used in its current statutory form, is a constructive measure for U.S. trade policy, and for world trade policy. Section 301 calls for cases presented under the 301 procedural framework to be taken to the international dispute settlement process". ⁴¹⁴

4.790  The United States adds that US law also includes assurances in the form of the Section 304(a)(1) requirement that determinations that agreement rights have been denied be based on DSB-adopted panel and Appellate Body findings. Thus, even though the WTO Agreement requires Members to provide no assurances beyond the fact of their good faith and the certainty of effective dispute settlement procedures, the United States has, in fact, included in its laws further legal assurances. The notion that the European Communities or any other Member nevertheless feels "threatened" in the face of these assurances is absurd, and testifies only to a desire to attack a statute not for what it is or commands, but for specific instances of how discretion was exercised in the past – instances not within the Panel's terms of reference, and all of which involved the parallel use of multilateral dispute settlement rules when a US right under a multilateral agreement was at stake.

TO CONTINUE WITH UNITED STATES – SECTIONS 301-310 OF THE TRADE ACT OF 1974

³⁸⁶ Robert E. Hudec, Thinking About the New Section 301: Beyond Good and Evil, in:. Jagdish Bhagwati and Hugh T. Patrick, Editors, Aggressive Unilateralism. America's 301 Trade Policy and the World Trading System (Harvester Wheatsheaf 1990), page 122.

³⁸⁷ Jackson Testimony, op. cit.

³⁸⁸ Results of the Uruguay Round Trade Negotiations: Hearings Before the Senate Committee on Finance, 103d Cong. 195 (1994) (statement of Professor John Jackson) (US Exhibit 24).  The EC excerpts this testimony.

³⁸⁹ Ibid. at 200.

³⁹⁰ Ibid.

³⁹¹ See the parties' further arguments contained in Paragraphs 4.340-4.360 above.

³⁹² The United States cites Appellate Body Report on US – Gasoline, op. cit., pp. 16-17; Appellate Body Report on Japan – Alcoholic Beverages, op. cit., pp. 10-12.

³⁹³ The European Communities recalls that this is the same year in which the US Trade Act of 1974 was substantially amended by the Omnibus Trade and Competitiveness Act of 1988.

³⁹⁴ International Court of Justice, Advisory Opinion of 26 April 1988 on the Applicability of the Obligation to Arbitrate under Section 21 of the United Nations Headquarters Agreement, ICJ-Reports 1988, p. 12, para. 27.

³⁹⁵ The European Communities claims that this is the main reason why the European Communities is not reassured by the ruling of the US Supreme Court in Missouri v. Holland, 252 U.S. 416 (1920) in which Mr. Justice HOLMES, in delivering the opinion of the Court, made the following statement: "[B]y Article 6 [of the Tenth Amendment] treaties made under the authority of the United States, along with the Constitution and laws of the United States made in pursuance thereof, are declared the supreme law of the land. If the treaty is valid there can be no dispute about the validity of the statute under Article 1, Section 8, as a necessary and proper means to execute the powers of the Government. The language of the Constitution as to the supremacy of treaties being general, the question before us is narrowed to an inquiry into the ground upon which the present supposed exception is placed". The apparent discrepancy between this statement and the statement of the Attorney-General quoted in this paragraph can be explained by the consideration that, under US constitutional law, international treaties concluded in the forms foreseen by the Constitution generally take precedence only on earlier domestic legislation, but not on subsequent Acts of the US Congress. However, because of the specific provisions contained in Section 102 of the Uruguay Round Agreements Act 1994, this general rule does not apply in the case of the Marrakech Agreement Establishing the World Trade Organisation, as we explain in paragraph 52 of our present submission.

³⁹⁶ Cf. D.W. Leebron, Implementation of the Uruguay Round Results in the United States, in: J.H. Jackson/A. Sykes, Implementing the Uruguay Round, Oxford 1997, p. 175 (at 213); L. Henkin, Foreign Affairs and the US Constitution, 2^nd ed., Oxford 1996, p. 209.

³⁹⁷ Panel Report on US – Superfund, op. cit., para. 5.2.9.

³⁹⁸ Panel Report on US – Tobacco, op. cit., para. 123.

³⁹⁹ European Communities - Regime for Importation, Sale and Distribution of Bananas, Recourse to Article 21.5 by the European Communities, WT/DS27/RW/EC.

⁴⁰⁰ Jackson Testimony, op. cit., at 200.

⁴⁰¹ The United States notes the EC statement that "it would be inappropriate to interpret Article XVI:4 of the WTO Agreement so extensively as to require WTO Members to include specific language in their domestic law precluding WTO-inconsistent action".

⁴⁰² Ibid.

⁴⁰³ The United States also notes that then only if the timing of the proceedings does not conform with DSU time frames and if the Member makes specific choices. 

⁴⁰⁴ (footnote in original) Article 16(6) of the Anti-Dumping Code and Article 19(5) of the Agreement on Subsidies and Countervailing Duties.

⁴⁰⁵ (footnote in original) See BISD, 39th Suppl., p.197.

⁴⁰⁶ Frieder Roessler, The Agreement Establishing the World Trade Organization, in The Uruguay Round Results, A European Lawyers' Perspective 67, 80 (Jacques H.J. Bourgeois, Fr�d�rique Berrod & Eric Gippini Fournier eds. 1995) (emphasis added).

⁴⁰⁷ (citation in original) See US - Taxes on Petroleum (�Superfund�), BISD 34S/134, para. 5.2.9. and EEC - Regulation on imports of parts and components, BISD 37S/132, para. 5.25-26.  The United States notes that no reference is made to the Protocol of Provisional Application, or to cases citing the Protocol of Provisional Application.

⁴⁰⁸ (citation in original) See Article XVI:1 of the WTO Agreement.

⁴⁰⁹ Pieter-Jan Kuyper, The New WTO Dispute Settlement System: The Impact on the Community, in The Uruguay Round Results, A European Lawyers' Perspective 87, 110 (Jacques H.J. Bourgeois, Fr�d�rique Berrod & Eric Gippini Fournier eds. 1995)(emphasis added).

⁴¹⁰ Ibid. at footnote 46.

⁴¹¹ Ibid., at 110.

⁴¹² Ibid., at 110-11.

⁴¹³ Jackson Testimony, op. cit., at 200.

⁴¹⁴ Ibid. (emphasis added)