A. Law, Regulation or Requirement Affecting the Internal Use of Imported
and Like Domestic Products
207. The United States contests the Panel's finding that the measure
"affects" the internal use of like imported products, and argues that
there is no "necessary relationship" between the fair market value rule
and the internal use of imported products. The United States emphasizes
that the fair market value rule is a "measure of general application that
is not directed against imports".179 In such a situation, the United States
argues, the word "affecting" in Article III:4 must be given a narrow
scope. However, the United States does not contest the Panel's finding
that the fair market value rule is a "law, regulation or requirement"
within the meaning of Article III:4 of the GATT 1994.
208. We observe that the clause in which the word "affecting" appears
"in respect of all laws, regulations and requirements affecting their
internal sale, offering for sale, purchase, transportation, distribution
or use" serves to define the scope of application of Article III:4.
(emphasis added) Within this phrase, the word "affecting" operates as a
link between identified types of government action ("laws, regulations and
requirements") and specific transactions, activities and uses relating to
products in the marketplace ("internal sale, offering for sale, purchase,
transportation, distribution or use"). It is, therefore, not any "laws,
regulations and requirements" which are covered by Article III:4, but only
those which "affect" the specific transactions, activities and uses
mentioned in that provision. Thus, the word "affecting" assists in
defining the types of measure that must conform to the obligation not to
accord "less favourable treatment" to like imported products, which is set
out in Article III:4.
209. The word "affecting" serves a similar function in Article I:1 of the
General Agreement on Trade in Services (the "GATS"), where it also defines
the types of measure that are subject to the disciplines set forth
elsewhere in the GATS but does not, in itself, impose any obligation.180 In
EC Bananas III, we considered the meaning of the word "affecting" in
that provision of GATS. We stated:
[t]he ordinary meaning of the word "affecting" implies a measure that has
"an effect on", which indicates a broad scope of application. This
interpretation is further reinforced by the conclusions of previous panels
that the term "affecting" in the context of Article III of the GATT is
wider in scope than such terms as "regulating" or "governing".181 (emphasis
added, footnote omitted)
210. In view of the similar function of the identical word, "affecting",
in Article III:4 of the GATT 1994, we also interpret this word, in this
provision, as having a "broad scope of application".
211. Turning to the fair market value rule, we recall that, under the ETI
measure, a taxpayer producing property in the United States will be
eligible to obtain a tax exemption in respect of income derived from an
export-sale of such property on the condition that, inter alia, not more
than 50 percent of the fair market value of the product is attributable to
articles produced outside the United States or to direct costs for labour
performed outside the United States. The United States regards the fair
market value of property as the sales price of the property in the
marketplace. Fair market value is attributable to three different
elements: (i) inputs used to produce the property;
(ii) direct labour used to produce the property, and (iii) "non-tangible
elements, including intellectual property rights, goodwill, capital,
marketing, distribution, and other services".182
212. Any taxpayer that seeks to obtain a tax exemption under the ETI
measure must ensure that, in the manufacture of qualifying property, it
does not "use" imported input products, whose value comprises more than 50
percent of the fair market value of the end-product. The fair market value
rule, thus, places an express maximum limit on the extent to which the
value of qualifying property can be attributable to imported input
products. A manufacturer's use of imported input products always counts
against the 50 percent ceiling in the fair market value rule, while in
contrast, the same manufacturer's use of like domestic input products has
no such negative implication. Manufacturers wishing to obtain the ETI tax
exemption are not restricted, in any way, on the use they make of domestic
inputs. The fair market value rule, therefore, influences the
manufacturer's choice between like imported and domestic input products if
it wishes to obtain the tax exemption under the ETI measure.
213. Accordingly, we agree with the Panel's finding, in paragraph 8.149 of
its Report, that the fair market value rule "affects" the "internal
use"
of imported products, within the meaning of Article III:4 of the GATT
1994, as compared with like domestic products.
B. "Less Favourable Treatment"
214. We now come to the second part of the United States' appeal of this
issue, namely, its argument that the Panel erred in finding that the fair
market value rule accords less favourable treatment to like imported
products. The United States asserts that it is possible for a manufacturer
to satisfy the fair market value rule without using as inputs any goods
produced in the United States, and that the Panel could not, therefore,
have found that the fair market value rule involves de jure discrimination
against imports.
215. The examination of whether a measure involves "less favourable
treatment" of imported products within the meaning of Article III:4 of the
GATT 1994 must be grounded in close scrutiny of the "fundamental thrust
and effect of the measure itself".183 This examination cannot rest on simple
assertion, but must be founded on a careful analysis of the contested
measure and of its implications in the marketplace. At the same time,
however, the examination need not be based on the actual effects of the
contested measure in the marketplace.184
216. If a United States citizen or resident fulfills the prescribed
conditions of grant, it obtains a clearly significant financial benefit in
the form of a tax exemption.185 The availability of such a tax exemption
depends upon the taxpayer organizing its business affairs in such a way as
to comply with the prescribed conditions of grant.
217. One of these conditions is the fair market value rule which places,
as we have said, an express maximum limit on the extent to which the value
of qualifying property can be attributable to imported input products. No
such limit exists for like domestic input products. The fair market value
rule, therefore, draws a formal distinction, on its face, between the
treatment of like domestic and imported input products.186 This formal
difference also has substantive importance because, on its face, the fair
market value rule constrains the use of like imported input products.
218. In situations where the use of imported input products in the
manufacture of qualifying property may breach the 50 percent limit and
thereby render a manufacturer ineligible to obtain a tax exemption, the
manufacturer will avoid the use of like imported input products if it
wishes to obtain a tax exemption. As the 50 percent limit is approached,
the manufacturer will be increasingly sensitive to the value of the
imported input products it can use and to the contribution these products
will make to the fair market value of the property being manufactured.
Before making purchasing decisions, the manufacturer will weigh the choice
between domestic and imported input product, in the light of the
anticipated value of the end-product, to ensure that the purchases of
imported products do not adversely affect the availability of the tax
exemption. These same considerations will never apply if the manufacturer
opts to purchase domestic input products. Thus, for purposes of satisfying
the fair market value rule and ensuring the availability of the tax
benefit, a real and substantive advantage attaches to the use of domestic
input products, and a corresponding disadvantage to the use of like
imported products.
219. The difference in resulting treatment between like domestic and
imported products becomes very clear where the manufacturing process is
product input-intensive and the value of input products typically
constitutes more than 50 percent of the fair market value of the
qualifying property.187 In these situations, the measure in effect precludes
United States manufacturers who desire the tax benefit, from making a free
choice between like domestic and imported input-products on the basis of
purely commercial considerations.
220. In sum, if the manufacturer wishes to obtain the beneficial tax
exemption under the ETI measure, the fair market value rule provides a
considerable impetus, and, in some circumstances, in effect, a
requirement, for manufacturers to use domestic input products, rather than
like imported ones. As such, the fair market value rule treats imported
products less favourably than like domestic products.
221. In our view, the above conclusion is not nullified by the fact that
the fair market value rule will not give rise to less favourable treatment
for like imported products in each and every case. There may well be, as
the United States maintains, property which does not require extensive
material and labour inputs such that the fair market value rule would not,
in those cases, bear upon the input choices manufacturers make. Even so,
the fact remains that in an indefinite number of other cases, the fair
market value rule operates, by its terms, as a significant constraint upon
the use of imported input products. We are not entitled to disregard that
fact.
222. For the above reasons, we uphold the Panel's finding, in paragraphs
8.154 and 9.1(d) of its Report that, by virtue of the fair market value
rule, the measure accords less favourable treatment within the meaning of
Article III:4 of the GATT 1994 to imported products than to like products
of United States origin.
X. Article 4.7 of the SCM Agreement: Withdrawal of FSC Subsidies
223. The United States appeals the Panel's finding that:
the United States has not fully withdrawn the FSC subsidies found to be
prohibited export subsidies inconsistent with Article 3.1(a) of the SCM
Agreement and has therefore failed to implement the recommendations and
rulings of the DSB made pursuant to Article 4.7 SCM Agreement.188
224. The United States notes that the ETI Act repeals the FSC provisions
and provides that no corporation can elect to be treated as an FSC after
30 September 2000. The ETI Act also contains certain transitional rules
that, in the view of the United States, ensure taxpayers a degree of
certainty in their tax planning and that are essential to the orderly
passage from one set of tax rules to another. The United States submits
that, in requiring a Member to change its tax rules, WTO rules cannot be
intended to require such a Member to deny its taxpayers the right to an
orderly transition. Thus, the United States reasons, the Panel's finding
that the United States has acted inconsistently with Article 4.7 of the
SCM Agreement should be reversed.
225. We recall that, in our Report in US FSC, we upheld the panel's
finding "that the FSC measure constitutes a prohibited export subsidy
under Article 3.1(a) of the SCM Agreement".189 In its report, the panel
recommended, pursuant to Article 4.7 of the SCM Agreement, that the United
States withdraw the FSC subsidies found to be prohibited export subsidies
under Article 3.1(a) of the SCM Agreement by 1 October 2000".190 On 12
October 2000, the DSB acceded to the United States' request "that the DSB
modify the time-period in this dispute so as to expire on 1 November
2000".191
226. Article 4.7 of the SCM Agreement reads:
If the measure in question is found to be a prohibited subsidy, the panel
shall recommend that the subsidizing Member withdraw the subsidy
without
delay. In this regard, the panel shall specify in its recommendation the
time period within which the measure must be withdrawn. (emphasis added)
227. In examining this provision in Brazil Aircraft (Article 21.5
Canada), we said:
Turning to the ordinary meaning of "withdraw", we observe first that this
word has been defined as "remove" or "take away" , and as "to take away
what has been enjoyed; to take from." This definition suggests that
"withdrawal" of a subsidy, under Article 4.7 of the SCM Agreement, refers
to the "removal" or "taking away" of that subsidy.192 (footnotes omitted)
228. Under the ETI Act, no corporation may elect to be treated as an FSC
after 30 September 2000.193 However, for FSCs in existence as of that date,
the repeal of the original FSC measure "shall not apply" to any
transaction which occurs before 1 January 2002.194 Moreover, even after that
date, existing FSCs can continue to use the original FSC measure for
transactions pursuant to a binding contract between the FSC and any
unrelated person that was in effect on and after 30 September 2000.195 Thus,
by the United States' own acknowledgement, the original FSC measure
continues to apply, unmodified, to existing FSCs in respect of a defined
set of transactions.196 The success of the United States' appeal depends on
the success of its argument that prohibited FSC subsidies can continue to
be granted to protect the contractual interests of private parties and to
ensure an orderly transition to the regime of the new measure. In short,
on the basis of these arguments, the United States seeks to have the
time-period for the full withdrawal of the prohibited FSC subsidies
extended, in some circumstances, indefinitely.
229. Article 4.7 of the SCM Agreement requires prohibited subsidies to be
withdrawn "without delay", and provides that a time-period for such
withdrawal shall be specified by the panel. We can see no basis in Article
4.7 of the SCM Agreement for extending the time-period prescribed for
withdrawal of prohibited subsidies for the reasons cited by the United
States. In that respect, we recall that, in Brazil Aircraft (Article
21.5 Canada), Brazil made a similar argument to the one made by the
United States in these proceedings. Brazil argued that, after the
expiration of the time-period for withdrawal of the prohibited export
subsidies, it should be permitted to continue to grant certain of these
subsidies because it had assumed contractual obligations, under municipal
law, to do so.197 We rejected this argument, and observed that:
to continue to make payments under an export subsidy measure found to be
prohibited is not consistent with the obligation to "withdraw" prohibited
export subsidies, in the sense of "removing" or "taking away".198
230. Thus, as we indicated in that appeal, a Member's obligation under
Article 4.7 of the SCM Agreement to withdraw prohibited subsidies "without
delay" is unaffected by contractual obligations that the Member itself may
have assumed under municipal law. Likewise, a Member's obligation to
withdraw prohibited export subsidies, under Article 4.7 of the SCM
Agreement, cannot be affected by contractual obligations which private
parties may have assumed inter se in reliance on laws conferring
prohibited export subsidies. Accordingly, we see no legal basis for
extending the time-period for the United States to withdraw fully the
prohibited FSC subsidies.
231. Accordingly, we uphold the Panel's finding, in paragraphs 8.170 and
9.1(e) of its Report, that the United States has not fully withdrawn the
FSC subsidies found to be prohibited export subsidies under Article 3.1(a)
of the SCM Agreement and has therefore failed to implement the
recommendations and rulings of the DSB made pursuant to Article 4.7 of the
SCM Agreement.
XI. Article 10.3 of the DSU
232. In its first written submission to the Panel, the European
Communities requested:
the Panel to make a preliminary ruling to the effect that third parties
are entitled to receive all written submissions of the parties submitted
prior to the meeting of the Panel and to make this preliminary ruling and
communicate it to the parties and the third parties as soon as possible
after receipt of the US first written submission and before the date for
the presentation of the second written submissions.199 (footnote omitted)
233. The United States requested the Panel to reject the European
Communities' request and to find, on the basis of reasoning employed by
previous panels proceeding under Article 21.5 of the DSU, "that the third
parties in this proceeding do not have a right to the parties' rebuttal
submissions."200
234. On 21 February 2001, the Panel issued a decision to the parties
refusing the request of the European Communities and stating that:
we do not consider that Article 10.3 DSU requires that third parties
receive all pre-meeting submissions of the parties (including rebuttal
submissions) in the context of an accelerated proceeding under Article
21.5 DSU that involves only one meeting of the parties and third parties
with the panel.201
235. The European Communities appeals this interpretive preliminary ruling
by the Panel. In the view of the European Communities, Rule 9 of the
working procedures adopted by the Panel in this case (the "Working
Procedures") conflicts with Article 10.3 of the DSU and does not respect
the rights afforded to third parties under the DSU. According to the
European Communities, although panels have a certain discretion to
establish their own working procedures, they may not derogate from binding
provisions of the DSU, including the requirement in Article 10.3 of the
DSU that "[t]hird parties shall receive the submissions of the parties to
the dispute to the first meeting of the panel." (emphasis added) In the
view of the European Communities, this requirement means that third
parties are entitled to receive all written submissions made prior to the
first meeting of the panel even if, as in many proceedings under Article
21.5 of the DSU, there is only one meeting with the panel.
236. We review briefly the factual background against which this appeal is
made. The Working Procedures provide for two written submissions by each
party to be made to the Panel, followed by a single meeting of the Panel.
The Panel communicated its proposed Working Procedures to the parties on
20 December 2000, and requested that the parties comment on them at the
organizational meeting of the Panel to be held the following day. The
proposed Rule 9 provided, in relevant part, that:
Third parties shall receive copies of the parties' first written
submissions. Any party may decide to provide the third parties with a copy
of its rebuttal or other submissions. (emphasis added)
237. Neither of the parties commented on the proposed Rule 9 at the
organizational meeting.202 The Working Procedures adopted by the Panel
including the above-quoted portion of Rule 9 were communicated to the
parties on 22 December 2000, and to the third parties on 4 January 2001.
238. In its first written submission to the Panel, submitted on 17 January
2001, the European Communities requested the Panel to amend Rule 9 of the
Working Procedures to provide that third parties shall receive copies of
all the submissions filed by the parties prior to the single meeting of
the Panel.203 The United States opposed the request in its first written
submission, submitted to the Panel on 7 February 2001. On 21 February
2001, the Panel issued its decision denying the request of the European
Communities.
239. We also note that in proceedings under Article 21.5, which are
subject to considerably shorter time-frames than apply under Article 12.8
of the DSU 204, panels have adopted the practice of holding a single meeting
with the parties, rather than two meetings. At the same time, Article 21.5
panels uniformly have maintained the practice of requiring parties to file
two written submissions.
240. We begin our examination of the European Communities' appeal with
Article 12.1 of the DSU, which states that panels "shall" follow the
working procedure set out in Appendix 3 to the DSU "unless the panel
decides otherwise after consulting the parties to the dispute". We
observe, first, that the DSU and, in particular, paragraphs 5, 6 and 7 of
Appendix 3 to the DSU, "contemplate two distinguishable stages in a
proceeding before a panel."205 The "first stage" comprises the first written
submissions by the parties and the first meeting of the panel, while the
"second stage" consists of the second written submissions or "rebuttal"
submissions and the second meeting with the panel.206 However, no provision
of the DSU explicitly requires panels to hold two meetings with the
parties, or to oblige the parties to submit two written submissions.
241. We have already observed that:
[a]lthough panels enjoy some discretion in establishing their own working
procedures, this discretion does not extend to modifying the substantive
provisions of the DSU.
Nothing in the DSU gives a panel the authority
either to disregard or to modify other explicit provisions of the DSU.207
242. In this appeal, we must determine whether, in refusing to require
that the third parties be given access to the second, "rebuttal",
submissions filed prior to the sole substantive meeting with the Panel,
the Panel acted inconsistently with any provision of the DSU.
243. In respect of the provisions of the DSU governing third party rights,
we have already observed that, as the DSU currently stands, the rights of
third parties in panel proceedings are limited to the rights granted under
Article 10 and Appendix 3 to the DSU.208 Beyond those minimum guarantees,
panels enjoy a discretion to grant additional participatory rights to
third parties in particular cases, as long as such "enhanced" rights are
consistent with the provisions of the DSU and the principles of due
process.209 However, panels have no discretion to circumscribe the rights
guaranteed to third parties by the provisions of the DSU.
244. In this appeal, the European Communities alleges that the Working
Procedures adopted by the Panel are inconsistent with the rights afforded
to third parties pursuant to Article 10.3 of the DSU, which provides:
Third parties shall receive the submissions of the parties to the dispute
to the first meeting of the panel. (emphasis added)
245. Article 10.3 of the DSU is couched in mandatory language. By its
terms, third parties "shall" receive "the submissions of the parties to
the first meeting of the panels". (emphasis added) Article 10.3 does
not say that third parties shall receive "the first submissions" of the
parties, but rather that they shall receive "the submissions" of the
parties. (emphasis added) The number of submissions that third parties are
entitled to receive is not stated. Rather, Article 10.3 defines the
submissions that third parties are entitled to receive by reference to a
specific step in the proceedings the first meeting of the panel.210 It
follows, in our view, that, under this provision, third parties must be
given all of the submissions that have been made by the parties to the
panel up to the first meeting of the panel, irrespective of the number of
such submissions which are made, including any rebuttal submissions filed
in advance of the first meeting.211
246. The Panel, however, reasoned that the use of the word "first" in
Article 10.3 "presupposes a context where there is more than one meeting
of a Panel."212 The Panel concluded, from this "presupposition", that in
proceedings involving a single panel meeting, Article 10.3 "must be
understood as limiting third party rights in these proceedings to access
to the first written submissions only, and as not including access to the
written rebuttals."213
247. In our view, the interpretation of Article 10.3 of the DSU must start
from the express wording of the provision. We have noted that the text of
Article 10.3 does not limit the number of submissions which third parties
may receive prior to the "first meeting". We do not see any reason to
"presuppose" that such a limitation applies in cases where the "first
meeting" with the Panel proves to be the only meeting. The DSU allows
panels the flexibility, in determining their procedures, to request more
than one submission in advance of the first meeting, and the DSU also
allows for the possibility that panels may, ultimately, hold only one
meeting. The text of Article 10.3 applies the same rule in each case
third parties are entitled to receive the submissions to the first
meeting.
248. We read the reference to the "first meeting" as reflecting the
flexibility that exists in panel proceedings under the DSU. Thus, in any
proceedings, even if only one meeting with the parties is initially
scheduled, it cannot be excluded that a second will not be held later.
Panels have the discretion to request such an additional meeting with the
parties, and the parties can also request such a meeting with the panel at
the stage of interim review.214 The wording of Article 10.3 provides for this
flexibility by referring generically to the "first meeting", which may be
one of a series of meetings or may be the only meeting.
249. Our interpretation of Article 10.3 is also consistent with the
context of that provision. Article 10.1 directs panels "fully" to take
into account the interests of Members other than the parties to the
dispute, and Article 10.2 requires panels to grant to third parties "an
opportunity to be heard". Article 10.3 ensures that, up to a defined stage
in the panel proceedings, third parties can participate fully in the
proceedings, on the basis of the same written submissions as the parties
themselves. Article 10.3 thereby seeks to guarantee that the third parties
can participate at a session of the first meeting with the panel in a full
and meaningful fashion that would not be possible if the third parties
were denied written submissions made to the panel before that meeting.
Moreover, panels themselves will thereby benefit more from the
contributions made by third parties and will, therefore, be better able
"fully" to take into account the interests of Members, as directed by
Article 10.1 of the DSU.
250. In this regard, we observe that we agree with the panel in Canada
Dairy (Article 21.5 New Zealand and US), which reasoned that:
Third parties can only [participate in an informed and, hence, meaningful,
manner] if they have received all the information exchanged between the
parties before that session. Otherwise, third parties might find
themselves in a situation where their oral statements at the meeting
become partially or totally irrelevant or moot in the light of second
submissions by the parties to which third parties did not have access.
Without access to all the submissions by the parties to the dispute to the
first meeting of the panel, uninformed third party submissions could
unduly delay panel proceedings and
prevent the Panel from receiving "the
benefit of a useful contribution by third parties which could help the
Panel to make the objective assessment that it is required to make under
Article 11 of the DSU.215 (footnote omitted)
251. For these reasons, we believe that Article 10.3 requires that third
parties be provided with all of the submissions made by the parties up to
the time of the first panel meeting in which the third parties participate
whether that meeting is the first of two panel meetings, or the first
and only panel meeting. Read in this way, Article 10.3 has the same
meaning, and can be applied in the same way, regardless of the number of
panel meetings that are held in a particular case.
252. We, therefore, find that, in its decision refusing the European
Communities' request to modify Rule 9 of the Panel's Working Procedures,
the Panel erred in its interpretation of Article 10.3 of the DSU.
XII. Conditional Appeals
253. The European Communities makes four conditional appeals requesting us
to consider claims in respect of which the Panel exercised judicial
economy.216 It declares that these appeals are made only "in case [the
Appellate Body] should reverse those of the Panels findings that led the
Panel to exercise judicial economy."217 The European Communities states
explicitly that it is not challenging the Panel's exercise of judicial
economy as such, and that it considers that "the Panel has effectively
ruled on all elements of the subsidy scheme under review and has,
accordingly, already given sufficiently precise guidance
".218
254. The United States observes that "the conditions that would trigger
the Appellate Bodys consideration of any of these claims is not clear".219
255. In this Report, we have upheld all of the Panel's findings under
appeal. Therefore, in any event, none of the conditions on which the
European Communities' appeal is predicated arise, and there is no need for
us to examine any of the conditional appeals.
XIII. Findings and Conclusions
256. For the reasons set out in this Report, the Appellate Body:
(a) upholds the Panel's finding, in paragraphs 8.30 and 8.43 of the Panel
Report, that the ETI measure involves the foregoing of revenue which is
"otherwise due" and thus gives rise to a "financial contribution" within
the meaning of Article 1.1(a)(1)(ii) of the SCM Agreement;
(b) upholds the Panel's finding, in paragraphs 8.75 and 9.1(a) of the
Panel Report, that the ETI measure includes subsidies "contingent
upon
export performance" within the meaning of Article 3.1(a) of the SCM
Agreement;
(c) upholds the Panel's finding, in paragraphs 8.107 and 9.1(a) of the
Panel Report, that the ETI measure, viewed as a whole, does not fall
within the scope of footnote 59 of the SCM Agreement as a measure taken to
avoid the double taxation of foreign-source income;
(d) upholds the Panel's finding, in paragraphs 8.122 and 9.1(c) of the
Panel Report, that the ETI measure involves export subsidies inconsistent
with the United States' obligations under Articles 3.3, 8 and 10.1 of the
Agreement on Agriculture;
(e) upholds the Panel's finding, in paragraphs 8.158 and 9.1(d) of the
Panel Report, that the ETI measure is inconsistent with the United States'
obligations under Article III:4 of the GATT 1994 because it accords less
favourable treatment to imported products as compared with like products
of United States origin;
(f) upholds the Panel's finding, in paragraphs 8.170 and 9.1(e) of the
Panel Report, that the United States has not fully withdrawn the subsidies
found, in the original proceedings, to be prohibited export subsidies
under Article 3.1(a) of the SCM Agreement, and that the United States has,
therefore, failed fully to implement the recommendations and rulings of
the DSB made pursuant to Article 4.7 of the SCM Agreement; and
(g) finds that the Panel erred in its interpretation of Article 10.3 of
the DSU in declining, in its decision of 21 February 2001, reproduced in
paragraph 6.3 of the Panel Report, to rule that all the written
submissions of the parties filed prior to the only meeting of the Panel
must be provided to the third parties.
257. The Appellate Body recommends that the DSB request the United States
to bring the ETI measure, found in this Report, and in the Panel Report as
modified by this Report, to be inconsistent with its obligations under
Article 3.1(a) of the SCM Agreement, under Articles 3.3, 8 and 10.1 of the
Agreement on Agriculture, and under Article III:4 of the GATT 1994, into
conformity with its obligations under those Agreements, and that the DSB
request the United States to implement fully the recommendations and
rulings of the DSB in US FSC, made pursuant to Article 4.7 of the SCM
Agreement.
Signed in the original at Geneva this 21st day of December 2001 by:
_________________________
Florentino P. Feliciano
Presiding Member
__________________ |
____________________ |
A.V. Ganesan
Member |
Yasuhei Taniguchi
Member |
Notes
179 United States'
appellant's submission, paras. 254-256.
180
Article I:1 of the GATS provides that "[t]his Agreement applies to
measures by Members affecting trade in services." (emphasis added)
181
Appellate Body Report, supra, footnote 47, para. 220. We made the same
statement regarding the word "affecting" in Article I:1 of the GATS in our
Report in Canada Autos, supra, footnote 56, para. 150.
182
See United States' first submission to the Panel, para. 201; Panel Report,
pp. A-95 A-96. The United States confirmed our understanding of the fair
market value rule in its response to questioning at the oral hearing.
183
Appellate Body Report, Korea Various Measures on Beef, supra, footnote
44, para. 142.
184
Appellate Body Report, Japan Alcoholic Beverages II, supra, footnote
116, at 110.
185
We recall that the tax exemption may be: 1.2 percent of foreign trading
gross receipts; 15 percent of foreign trade income; or 30 percent of
foreign sales and leasing income. See supra, para. 25.
186
See supra, para. 201, for the text of the fair market value rule. See also
Panel Report, para. 8.133.
187
We note that the European Communities provided the Panel with a list of
circumstances, for illustrative purposes, where such a requirement to use
like domestic products may arise. (Annex to the European Communities'
second submission to the Panel; Panel Report, pp. C-46 C-52)
188
Panel Report, para. 8.170.
189
Appellate Body Report, supra, footnote 3, para. 177(a).
190
Original Panel Report, supra, footnote 4, para. 8.8.
191
WT/DS108/11, 2 October 2000. See also WT/DSB/M/90, paras. 6-7.
192
Appellate Body Report, supra, footnote 86, para. 45.
193
Section 5(b)(1) of the ETI Act.
194
Section 5(c)(1)(A) of the ETI Act.
195
See Section 5(c)(1)(B)(ii) of the ETI Act.
196
Panel Report, para. 8.169.
197
Appellate Body Report, Brazil Aircraft (Article 21.5 Canada), supra,
footnote 86, para. 46.
198
Ibid., para. 45.
199
Panel Report, para. 6.1; European Communities' first submission to the
Panel, paras. 247-258 and 260; Panel Report, pp. A-44 A-45.
200
Panel Report, para. 6.2. (footnote omitted)
201
Ibid., para. 6.3, subpara. 2.
202
Panel Report, para. 6.3, subpara. 11.
203
By way of background, we note that the European Communities has, as a
third party in four unrelated proceedings under Article 21.5 of the DSU,
requested an Article 21.5 panel to amend a rule in its working procedures
similar to the contested portion of Rule 9 of the Working Procedures. Two
of those panels denied the request by the European Communities. (Panel
Report, Australia Measures Affecting Importation of Salmon Recourse to
Article 21.5 of the DSU by Canada, WT/DS18/RW, adopted 20 March 2000,
paras. 7.5 7.6; and Panel Report, Australia Subsidies Provided to
Producers and Exporters of Automotive Leather Recourse to Article 21.5
of the DSU by the United States, WT/DS126/RW and Corr.1, adopted 11
February 2000, paras. 3.9-3.10) According to the United States, a similar
decision refusing the request of the European Communities was taken by the
panel in a third case, although such decision was not published as the
parties ultimately reached a mutually acceptable solution. (Panel Report,
United States Anti-Dumping Duty on Dynamic Random Access Memory
Semiconductors (DRAMS) of One Megabit or Above from Korea Recourse to
Article 21.5 of the DSU by Korea, WT/DS99/RW, 7 November 2000; Decision of
the panel concerning the EC request for access to the parties' rebuttal
submissions, 27 June 2000, reproduced in part in the United States' first
submission to the Panel, para. 236; Panel Report, p. A-103) One panel
agreed to modify its working procedures to provide that the third parties
in those proceedings were entitled to receive all written submissions
submitted by the parties prior to the single substantive meeting of the
panel. (Panel Report, Canada Measures Affecting the Importation of Milk
and the Exportation of Dairy Products Recourse to Article 21.5 of the DSU by New Zealand and the United States ("Canada Dairy (Article 21.5
New Zealand and US) "), WT/DS103/RW, WT/DS113/RW, adopted 18 December
2001, as reversed by the Appellate Body Report, WT/DS103/AB/RW,
WT/DS113/AB/RW, paras. 2.32-2.35) This is the first occasion on which this
issue has been raised on appeal.
204
Article 21.5 of the DSU contemplates that panels will complete their work
within 90 days, whereas Articles 12.6 and 12.8 of the DSU contemplate that
panels will circulate their reports within six months.
205
Appellate Body Report, Argentina Measures Affecting Imports of Footwear,
Textiles, Apparel and Other Items, WT/DS56/AB/R and Corr.1, adopted 22
April 1998, DSR 1998:III, 1003, para. 79.
206
Ibid.
207
Appellate Body Report, India Patent Protection for Pharmaceutical and
Agricultural Chemical Products, WT/DS50/AB/R, adopted 16 January 1998, DSR
1998:I, 9, para. 92.
208
Appellate Body Report, United States Anti-Dumping Act of 1916 ("US
1916 Act "), WT/DS136/AB/R, WT/DS162/AB/R, adopted 26 September 2000, para.
145.
209
Appellate Body Report, US 1916 Act, supra, footnote 208, para. 150. See
also Appellate Body Report, EC-Hormones, supra, footnote 40, para. 154.
210
We note, in this regard, that paragraph 6 of Appendix 3 to the DSU also
links the participatory rights of third parties to this step in the
proceeding. It states that third parties "shall be invited in writing to
present their views during a session of the first substantive meeting of
the panel". (emphasis added)
211
We note, in that respect, that the DSU does not place any limits on the
number of submissions which panels can request of the parties in advance
of the first meeting.
212
Panel Report, para. 6.3, subpara. 5.
213
Ibid., para. 6.3, subpara. 9. (emphasis added)
214
Paragraph 12 of Appendix 3 to the DSU recognizes that the standard
timetable for panels may be adjusted to allow for "additional meetings
with the parties", including a possible meeting at the stage of interim
review.
215
Panel Report, supra, footnote 203, para. 2.34.
216
Panel Report, paras. 8.108, 8.162-8.163 and 8.171.
217
European Communities' other appellant's submission, para. 31.
218
Ibid., para. 30.
219
United States' appellee's submission, para. 13.