WT/DS265/R
Page 13
Organization
WT/DS265/R
15 October 2004
(04-4209)
Original: English
EUROPEAN COMMUNITIES – EXPORT SUBSIDIES
ON SUGAR
COMPLAINT BY AUSTRALIA
Report of the Panel
WT/DS265/R
Page 13
TABLE OF CONTENTS
Page
I. Introduction 1
1. Terms of reference 1
2. Panel composition 1
3. Third parties 2
4. Organizational meeting 2
5. Meetings with the parties and third parties 2
6. Reports 2
II. Preliminary rulings by the Panel and other issues 3
1. Notification of third parties' interest 3
2. Third parties enhanced rights 3
3. Request for additional working procedures for the protection of proprietary information 4
4. Amicus curiae 6
5. Breach of confidentiality 6
III. Factual Aspects 7
1. Product coverage 7
2. Quotas 7
3. Intervention price 8
4. Basic and minimum prices 8
5. Basic production levy and B levy 9
6. Import and export licences 9
7. Export refunds 9
8. Management Committee for Sugar 9
9. Commitments 9
10. Preferential import arrangements 10
11. Review 10
IV. Main Arguments 10
A. Parties' Requests for findings 10
B. Terms of reference 14
1. Provisions and measures at issue 14
2. Procedural matters 17
C. Burden of Proof 17
1. Quantitative aspect 18
2. Export subsidization aspect 19
D. C Sugar 20
1. Article9.1(c) of the Agreement on Agriculture 20
(a) "Payment" 20
(b) "Financed by virtue of governmental action" 31
(c) "payment on the export" 35
2. In the alternative, Article10.1 of the Agreement on Agriculture 39
(a) Item (d) of the Illustrative List of Export Subsidies 39
(b) Article1.1 of the SCMAgreement 42
3. Good faith 45
(a) Exports of Csugar were consistent with the reduction commitments 45
(b) Good faith and estoppel 53
E. acp/india "equivalent" sugar 60
1. Article9.1(a) of the Agreement on Agriculture 60
2. Exemptions through unilateral insertions in Schedules 62
3. Application of the footnote to "ACP/India equivalent sugar" 73
4. Good faith and estoppel 76
F. Article3 of the SCMAgreement 78
G. Nullification or Impairment 85
V. Arguments by Third Parties 89
VI. INTERIM REVIEW 111
A. editorial and other changes 111
B. terms of reference 111
C. there are no "c sugar producers" and no "C beet growers" as such 112
D. A reference to the european communities' commitments for budgetary outlays 113
E. panel's exercise of judicial economy over the scm claims 113
VII. FINDINGS 114
A. main claims and general arguments of the parties 114
B. procedural issues in this dispute 114
1. The European Communities' challenges of the Panel's jurisdiction under its terms of reference 114
(a) The timing of objections to the Panel's jurisdiction 115
(b) The Complainants' requests for establishment of a panel 116
(c) Alleged lack of proper identification of the "measures" covered by the claims under Article10.1 of the Agreement on Agriculture 119
(d) Alleged lack of proper identification of "payments" as distinct measures or distinct claims under Articles 3, 8 (and 9.1(c)) of the Agreement on Agriculture 119
(i) Arguments of the parties 119
(ii) Assessment by the Panel 121
(e) Alleged lack of proper identification of "claims" under Article9.2(b)(iv) of the Agreement on Agriculture 124
(i) Arguments of the parties 124
(ii) Assessment by the Panel 124
(f) Alleged lack of proper identification of claims in relation to Footnote 1 to the EC's Schedule (ACP/India sugar) 125
(i) Arguments of the parties 125
(ii) Assessment by the Panel 126
2. European Communities' allegation that the Complainants are "estopped" from pursuing this dispute 127
(a) Arguments of the parties 127
(b) Assessment by the Panel 128
3. The amicus curiae of WVZ 131
(a) Factual background 131
(b) Assessment by the Panel 132
4. Breach of confidentiality 133
(a) Factual background 133
(b) Assessment by the Panel 134
C. order of analysis by the panel 135
D. The European Communities' export subsidy commitment levels for subsidized exports of sugar 136
1. Introduction 136
2. What is the European Communities' commitment level in light of the ACP/India sugar Footnote? 137
(a) Arguments of the parties 137
(b) Assessment by the Panel 139
(i) Introduction 139
(ii) The obligations of the Agreement on Agriculture with respect to export subsidies – Articles 3, 8 and 9 of the Agreement on Agriculture 140
(iii) The interpretation of terms included in WTO Members' Schedules 144
Provisions of a Member's Schedule should be interpreted as treaty provisions 144
Effective treaty interpretation 146
(iv) The issue of "conflict" between provisions of a Member's Schedule and provisions of the Agreement on Agriculture 147
(v) Interpretation of the European Communities' Footnote 1 on ACP/India sugar: 150
Footnote 1 does not contain any "limitation" on export subsidies of ACP/India sugar 151
Footnote 1 does not provide for any commitment for sugar "equivalent" from ACP/India 154
Conclusion 155
Can the ACP/India Footnote be regarded as a second component of the European Communities' commitment level that would not be subject to reduction per se but that would form part of the overall European Communities' commitment level which has been reduced? 155
The ACP/India Footnote does not contain any budgetary outlays so it cannot consist of an export subsidy consistent with the Agreement on Agriculture 157
(vi) Conclusion on the legal value and effect of the ACP/India sugar Footnote 158
3. Was the European Communities authorized to deviate from the Agreement on Agriculture's basic obligations through a negotiated departure from the Modalities Paper? 158
(a) Arguments of the parties 158
(b) Assessment by the Panel 159
4. Conclusion on the European Communities' commitment level for exports of subsidized sugar 163
E. Is the European Communities exporting subsidized sugar in quantities exceeding its level of commitment contrary to Articles 3, 8 and 9 of the Agreement on Agriculture ? 163
1. The burden of proof of Article 10.3 of the Agreement on Agriculture 163
2. The application of the special rule on the burden of proof to this dispute 165
(a) The quantitative aspect 165
(b) The subsidization aspects of the claim 165
3. Has the European Communities demonstrated that its exports of ACP/India equivalent sugar are not subsidized? 165
(a) Arguments of the parties 165
(b) Assessment by the Panel 166
4. Has the European Communities demonstrated that its exports of Csugar are not subsidized? 166
(a) Introduction 166
(b) Arguments of the parties 167
(c) Assessment by the Panel 168
(i) The Panel's understanding of the ECsugar regime 168
(ii) Article9.1(c) of the Agreement on Agriculture 169
(iii) Does the sale of C beet to Csugar producers constitute a payment on export financed by virtue of governmental action? 170
Is there a payment? 170
Is such payment-in-kind through sales of below-costs C beet made "on the export"? 174
Is the payment-in-kind through sales of below-cost-C beet "financed by virtue of governmental action" ? 175
Conclusion 179
(iv) Does the cross-subsidization resulting from the ECsugar regime constitute a payment on exports by virtue of governmental action? 179
Does the cross-subsidization from the EC regime constitute a payment? 179
Is the payment on export? 184
Is this cross-subsidization payment financed by virtue of governmental action? 186
5. Overall conclusion 188
6. The interpretation and correction of the European Communities' Schedule in light of the Modalities Paper 189
(a) Arguments of the parties 189
(b) Assessment by the Panel 190
F. Article10.1 of the Agreement on Agriculture 191
1. Arguments of the parties 191
2. Assessment by the Panel 192
G. nullification or impairment 192
1. Arguments of the parties 192
2. Assessment by the Panel 193
H. Article3 of the SCMAgreement 196
1. Arguments of the parties 196
2. Assessment by the Panel 197
VIII. CONCLUSIONS, recommendation and suggestion 199
A. conclusions 199
B. recommendation 200
C. suggestion by the panel 200
Annex A: List of Exhibits Submitted by the Parties 201
Annex B: Scheduled Export Subsidy Commitment Levels (Quantities) and Notified Total Exports 206
Annex C: Schedule CXL: European Communities 207
Annex D: Requests for the Establishment of a Panel 208
TABLE OF CASES CITED IN THIS REPORT
Argentina – Poultry AntiDumping Duties / Panel Report, Argentina – Definitive Anti-Dumping Duties on Poultry from Brazil, WT/DS241/R, adopted 19May2003
Australia – Automotive LeatherII / Panel Report, Australia – Subsidies Provided to Producers and Exporters of Automotive Leather, WT/DS126/R, adopted 16June1999, DSR1999:III,951
Australia – Automotive LeatherII
(Article 21.5 – US) / 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 11February2000, DSR2000:III, 1189
Australia – Salmon / Appellate Body Report, Australia – Measures Affecting Importation of Salmon, WT/DS18/AB/R, adopted 6November1998, DSR1998:VIII, 3327
Brazil – Aircraft / Panel Report, Brazil – Export Financing Programme for Aircraft, WT/DS46/R, adopted 20August1999, as modified by the Appellate Body Report, WT/DS46/AB/R, DSR1999:III,1221
Brazil – Aircraft / Appellate Body Report, Brazil – Export Financing Programme for Aircraft, WT/DS46/AB/R, adopted 20August1999, DSR1999:III,1161
Canada – Aircraft / Panel Report, Canada – Measures Affecting the Export of Civilian Aircraft, WT/DS70/R, adopted 20August1999, as upheld by the Appellate Body Report, WT/DS70/AB/R, DSR1999:IV,1443
Canada – Aircraft / Appellate Body Report, Canada – Measures Affecting the Export of Civilian Aircraft, WT/DS70/AB/R, adopted 20August1999, DSR1999:III,1377
Canada – Aircraft
(Article21.5 – Brazil) / Panel Report, Canada – Measures Affecting the Export of Civilian Aircraft – Recourse by Brazil to Article21.5 of the DSU, WT/DS70/RW, adopted 4August2000, as modified by the Appellate Body Report, WT/DS70/AB/RW, DSR2000:IX, 4315
Canada – Aircraft
(Article21.5 – Brazil) / Appellate Body Report, Canada – Measures Affecting the Export of Civilian Aircraft – Recourse by Brazil to Article21.5 of the DSU, WT/DS70/AB/RW, adopted 4August2000, DSR2000:IX, 4299
Canada – Aircraft Credits and Guarantees / Panel Report, Canada – Export Credits and Loan Guarantees for Regional Aircraft, WT/DS222/R and Corr.1, adopted 19February2002
Canada – Dairy / Panel Report, Canada – Measures Affecting the Importation of Milk and the Exportation of Dairy Products, WT/DS103/R, WT/DS113/R, adopted 27October1999, as modified by the Appellate Body Report, WT/DS103/AB/R, WT/DS113/AB/R, DSR1999:VI,2097
Canada – Dairy / Appellate Body Report, Canada – Measures Affecting the Importation of Milk and the Exportation of Dairy Products, WT/DS103/AB/R, WT/DS113/AB/R and Corr.1, adopted 27October1999, DSR 1999:V,2057
Canada – Dairy
(Article21.5 – New Zealand andUS) / Panel Report, Canada – Measures Affecting the Importation of Milk and the Exportation of Dairy Products – Recourse to Article21.5 of the DSU by New Zealand and the United States, WT/DS103/RW, WT/DS113/RW, adopted 18December2001, as reversed by the Appellate Body Report, WT/DS103/AB/RW, WT/DS113/AB/RW
Canada – Dairy
(Article21.5 – New Zealand andUS) / Appellate Body Report, Canada – Measures Affecting the Importation of Milk and the Exportation of Dairy Products – Recourse to Article21.5 of the DSU by New Zealand and the United States, WT/DS103/AB/RW, WT/DS113/AB/RW, adopted 18 December 2001
Canada – Dairy
(Article21.5 – New Zealand andUSII) / Appellate Body Report, Canada – Measures Affecting the Importation of Milk and the Exportation of Dairy Products – Second Recourse to Article21.5 of the DSU by New Zealand and the United States, WT/DS103/AB/RW2, WT/DS113/AB/RW2, adopted 17January2003
Canada – Dairy
(Article21.5 – New Zealand andUSII) / Panel Report, Canada – Measures Affecting the Importation of Milk and the Exportation of Dairy Products – Second Recourse to Article21.5 of the DSU by New Zealand and the United States, WT/DS103/RW2, WT/DS113/RW2, adopted 17 January 2003, as modified by the Appellate Body Report, WT/DS103/AB/RW2, WT/DS113/AB/RW2
Chile – Price Band System / Appellate Body Report, Chile – Price Band System and Safeguard Measures Relating to Certain Agricultural Products, WT/DS207/AB/R, adopted 23October2002
EC–Asbestos / Panel Report, European Communities – Measures Affecting Asbestos and Asbestos-Containing Products, WT/DS135/R and Add.1, adopted 5April2001, as modified by the Appellate Body Report, WT/DS135/AB/R
EC–BananasIII (US) / Panel Report, European Communities – Regime for the Importation, Sale and Distribution of Bananas – Complaint by the United States, WT/DS27/R/USA, adopted 25September1997, as modified by the Appellate Body Report, WT/DS27/AB/R, DSR1997:II,943
EC–BananasIII / Appellate Body Report, European Communities – Regime for the Importation, Sale and Distribution of Bananas, WT/DS27/AB/R, adopted 25 September1997, DSR1997:II,591
EC–Computer Equipment / Panel Report, European Communities – Customs Classification of Certain Computer Equipment, WT/DS62/R, WT/DS67/R, WT/DS68/R, adopted 22June1998, as modified by the Appellate Body Report, WT/DS62/AB/R, WT/DS67/AB/R, WT/DS68/AB/R, DSR1998:V,1891
EC–Computer Equipment / Appellate Body Report, European Communities – Customs Classification of Certain Computer Equipment, WT/DS62/AB/R, WT/DS67/AB/R, WT/DS68/AB/R, adopted 22June1998, DSR1998:V,1851
EC–Hormones / Appellate Body Report, EC Measures Concerning Meat and Meat Products (Hormones), WT/DS26/AB/R, WT/DS48/AB/R, adopted 13February1998, DSR1998:I,135
EC–Poultry / Appellate Body Report, European Communities – Measures Affecting the Importation of Certain Poultry Products, WT/DS69/AB/R, adopted 23July1998, DSR1998:V,2031
EC –Sugar Exports (Australia) / Panel Report, European Communities – Refunds on Exports of Sugar(Complaint by Australia), adopted 6 November 1979, BISD 26S/290
EC –Sugar Exports (Brazil) / Panel Report, European Communities – Refunds on Exports of Sugar(Complaint by Brazil), adopted 10 November 1980, BISD 27S/69
EC–Tariff Preferences / Panel Report, European Communities – Conditions for the Granting of Tariff Preferences to Developing Countries, WT/DS246/R, adopted 20 April 2004, as modified by the Appellate Body Report, WT/DS/246/AB/R
EC–Tariff Preferences / Appellate Body Report, European Communities – Conditions for the Granting of Tariff Preferences to Developing Countries, WT/DS246/AB/R, adopted 20April2004
EEC (Member States) – Bananas I / Panel Report, EEC – Member States' Import Regimes for Bananas, 3June1993, unadopted, DS32/R
Guatemala – CementI / Panel Report, Guatemala – Anti-Dumping Investigation Regarding Portland Cement from Mexico, WT/DS60/R, adopted 25November1998, as modified by the Appellate Body Report, WT/DS60/AB/R, DSR1998:IX,3797
Guatemala – CementII / Panel Report, Guatemala – Definitive Anti-Dumping Measures on Grey Portland Cement from Mexico, WT/DS156/R, adopted 17November2000, DSR2000:XI, 5295