WT/DS315/R
Page 1
V.ARGUMENTS OF THE THIRD PARTIES[44]
5.1The arguments of those third parties who made written and/or oral statements to the Panel are summarized in this section. The summaries are based on the executive summaries submitted by those third parties. Where a third party has provided written responses to questions posed by the Panel, these responses are set out in AnnexA. (See list of Annexes at page xvi).
A.third party written submission of china
5.2China believes that it has substantial interests in the matter before this panel whether European Communities' ("EC") administration of customs law is in a uniform manner, as required by ArticleX:3(a) of the General Agreement on Tariffs and Trade 1994 ("the GATT 1994"), and the requirements of prompt review and correction of administrative actions relating to customs matters by ArticleX:3(b) of the GATT 1994 have been met by the EC .
1.Issues relating to interpretation and application of ArticleX:3(a)
(a)The scope of application of ArticleX:3(a) of the GATT 1994
5.3ArticleX:3(a) of GATT 1994 concerns the administration of customs laws, not the customs laws themselves. The EC seems concerned with whether ArticleX:3(a) GATT applies to the administration of customs laws atthe local level as well as at the central level.
5.4Based on ArticleXXIV:12 of the GATT 1994 and the GATT Panel report in Canada – Gold Coins, the EC drew its conclusion that "ArticleX:3(a) GATT does not require that customs laws be regulated at the central level of each WTO Member"[45].
5.5Taking no position on this EC assertion, however, China does not think ArticleXXIV:12 of the GATT 1994 and the GATT Panel report in Canada – Gold Coins are proper in supporting EC's argument.
5.6ArticleXXIV:12 requires that the provisions of GATT be observed by both the central government and the regional or local authorities of a Contracting Party, and that the central governmenttake the responsibility for ensuring the observance of the provisions of GATT by its local authorities. So, if there are any difficulties, encountered by the federal government of a Contracting Party because of its particular administrative or legal structures, in ensuring the observance of the provisions of GATT by its local authorities, the federal government shall stillseek such reasonable measures as are available to it to secure the observance of the provisions of GATT by its local authorities in accordance with ArticleXXIV:12 until the actions or measures inconsistent with any provisions of GATT by its local authorities are removed. The federal government of such a Contracting Party shall compensate, because of such actions or measures by its local authorities, for any nullified or impaired benefits accruing to other Contracting Parties under the provisions of the GATT.[46]
5.7According to the GATT panel in Canada – Gold Coins, ArticleXXIV:12 appliesto those measures taken by the local level authority of contracting parties with federal regimes when administering their laws or regulations of local level.[47] The present dispute does not concern a measure taken by the local authority when administering their laws or regulations of local level, but concerns whether the EC customs laws (i.e. laws of central level) can be administered by the EC member States (i.e. local level authority) and whether such administration is in a uniform manner.
5.8The GATT panel in Canada – Gold Coins further stated that ArticleXXIV:12 does not change the scope ofapplication of the provisions of the GATT.[48] China agrees with the EC that "ArticleX:3(a) GATT does not prescribe the specific way in which WTO Members should administer their customs laws"[49]. However, the obligation of uniform administration of customs laws should not be varied.
(b)The meaning of "uniform" as used in ArticleX:3(a)of the GATT 1994
5.9The ordinary meaning of "uniform", as relevant here, is "of one unchanging form, character, or kind; that is or stays the same in different places or circumstances, or at different times"[50].
5.10The panel in Argentina – Hides and Leather stated: "Customs laws should not vary, that every exporter and importer should be able to expect treatment of the same kind, in the same manner both over time and in different places and with respect to other persons. Uniform administration requires that Members ensure that their laws are applied consistently and predictably. This is a requirement of uniform administration of Customs laws and procedures between individual shippers and even with respect to the same person at different times and different places"[51].
5.11China considers that the interpretation clarified by the panel in Argentina – Hides and Leather of the word "uniform" as used in ArticleX:3(a) is of the same substance with this ordinary meaning of "uniform".
5.12China believes that when addressing the meaning of the word "uniform" reference should be made to the interpretation given by the panel in Argentina – Hides and Leather.
(c)The standard of uniformityrequired by ArticleX:3(a) of the GATT 1994
5.13The EC argues that "ArticleX:3(a) GATT only lays down minimum standards"[52]. The EC referred to the Appellate Body report in US – Shrimp to support its argument. The paragraph referred to by the EC of the Appellate Body report in US – Shrimp reads:
"It is also clear to us that ArticleX:3 of the GATT 1994 establishes certain minimum standards for transparency and procedural fairness in the administration of trade regulations which, in our view, are not met here.……"[53] (emphasis added by China).
5.14The minimum standards articulated by the Appellate Body are for transparency and procedural fairness in the administration of trade regulations, not for directly the uniformity requirement of the administration of customs law.
5.15The EC also referred to the Panel report in Argentina – Hides and Leather to support its argument. However, the paragraphs referred to by the EC address the meaning of the word "uniform", and do not directly concern the standard of the uniformity.
2.Conclusion
5.16China thanks the Panel to provide an opportunity to comment on the issues involved in this proceedings, and hopes that its comments will prove to be helpful.
B.third party written submission of japan
1.Introduction
5.17Japan participates in this dispute based on its systemic interests in the correct interpretation and application of ArticlesX:3(a) and (b) of the General Agreement on Tariffs and Trade 1994 ("the GATT 1994").
2.Consistency of the challenged measures with ArticleX:3(a) of the GATT
(a)The meaning of the term "uniform" administration in ArticleX:3(a) of the GATT 1994
5.18As a premise, Japan agrees with the United States that the EC, as a Contracting Party, is responsible for ensuring a uniform administration of customs matters throughout its territory[54], and that the term "general application" in ArticleX:1 GATT would in EC's case mean the general application within the EC as a whole.
5.19The United States claims that the "EC's customs laws are administered by 25 different authorities, among which divergences inevitably occur, and the EC does not provide for the systemic reconciliation of such divergences."[55] The United States elaborates that such divergences and the lack of systemic reconciliation of the divergences occur in customs classification, customs valuation and customs procedures of the EC member States.[56]
5.20In determining the meaning of the term "uniform" required under ArticleX:3(a) GATT, it is useful to first recall the Panel's finding in US – Hot-Rolled Steel. The Panel held that, for a Member's measure to be inconsistent with GATT X:3(a) GATT, it would have to have a significant impact on the overall administration of that Member's law and not simply on an impact on the outcome in the single case in question. The Panel found:
While it is not inconceivable that a Member's actions in a single instance might be evidence of lack of uniform, impartial, and reasonable administration of its laws, regulations, decisions and rulings, we consider that the actions in question would have to have a significant impact on the overall administration of the law, and not simply on the outcome in the single case in question. Moreover, we consider it unlikely that such a conclusion could be reached where actions in the single case in question were, themselves, consistent with more specific obligations under other WTO Agreements.[57]
5.21The panel's finding in Argentina –Hides and Leather is also relevant. The Panel found that:
We are of the view that this provision should not be read as a broad anti-discrimination provision. We do not think this provision should be interpreted to require all products be treated identically. That would be reading far too much into this paragraph which focuses on the day to day application of Customs laws, rules and regulations. There are many variations in products which might require differential treatment and we do not think this provisions should be read as a general invitation for a panel to make such distinctions.[58]
5.22The GATT Panel in EEC – Dessert Apples, has also made a finding regarding ArticleX:3(a)of the GATT that minimal differences do not constitute a breach thereof, as follows:[59]
The Panel further noted that the EEC Commission Regulations in question were directly applicable in all of the ten member States concerned in a substantially uniform manner, although there were some minor administrative variations, e.g., concerning the form in which licence applications could be made and the requirement of pro-forma invoices. The Panel found that these differences were minimal and did not in themselves establish a breach of ArticleX:3.
5.23In light of the above findings as well as the complex nature and vast amount of imports that customs authorities handle, Japan shares the EC's view that "ArticleX:3(a) lays down minimum standards"[60] to ensure the impartial administration of trade related laws. The Panel should consider the nature of customs administration which often times involve a vast number of imports and numerous different products which are complicated to classify, reflecting realities such as the speed of technological advances and the resulting production of new products. Therefore, the fact that divergences between individual decisions of various customs authorities may exist in itself is not inconsistent with ArticleX:3(a) of the GATT, as both the United States and the EC confirm.[61] In this context, it is necessary to analyze whether the alleged divergences exist, as claimed by the United States, and if so, whether such divergences exist to a degree that would be considered to be inconsistent with ArticleX:3(a) GATT in light of the particular customs system as a whole.
(b)ArticleX:3(a) of the GATT does not prescribe the specific means a Member must employ in order to ensure a uniform administration of customs laws; such uniformity should be determined in respect of the particular customs system as a whole
5.24In respect of the United States' claim that the EC does not provide a systematic reconciliation of divergences, ArticleX:3(a) GATT "do[es] not concern the customs laws themselves, but only their administration"[62] and "does not prescribe the specific means a Member must employ in order to ensure a uniform administration of customs laws", as stated by the EC.[63] This is also in line with Japan's above-mentioned view that the issue is whether or not the results of applying a specific means of a Member ensure a uniform administration as a whole.
5.25While Japan hopes that, where appropriate,Members further harmonize their customs administration within their respective territories in the future, Japan is of the view that the specific means to ensure a uniform administration of customs laws is one of the matters which should be addressed through the Doha Negotiations on Trade Facilitation which aims "to clarify and improve relevant aspects of Articles V, VIII and X of the GATT 1994…"
5.26In respect of the BTI system or the function of the Customs Code Committee (CCC), it is useful to recall that the BTI and the CCC are each individual means that the EC provides to ensure a uniform administration of customs matters, and not each the only means. It is necessary to analyze other means such as classification regulations, the HS explanatory notes and opinions, and the EC explanatory notes to determine whether the EC's customs system as a whole ensures a uniform administration consistent with ArticleX:3(a) GATT.
3.Consistency of the challenged measures with ArticleX:3(b) of the GATT
(a)The measure in question
5.27The United States claims that the EC does not provide tribunals or procedures for the prompt review and correction of administrative actionsrelating to customs matters, as required by ArticleX:3(b) GATT.[64] Japan agrees with the United States that as the EC is the responsible entity in administering regulation of customs matters, the EC should provide tribunals or procedures for the prompt review and correction.
5.28The United States claims that the EC does not provide an opportunity to review and correct administration of customs matters because, for example, the "Community Customs Code says little on the question of appeal"[65] and "in fact, the time periods for first instance reviews conducted by Member State customs authorities can vary widely…with the exception of courts of last resort, referral of questions by Member State courts [to the ECJ] is discretionary."[66]
(b)The consistency of the challenged measure with ArticleX:3(b) of the GATT
5.29In respect of the United States' challenge that the EC does not provide an opportunity to review and correct administration of customs matters due to a lack of a common appeals procedure, Japan would like to point out that although a central court or procedure would likely ensure this result, again, this may not be the only means to realize an opportunity to review and to correct by the EC, especially in light of the principles of supremacy and of direct effect of Community law binding the national courts of the EC's member States.[67] As explained by the EC, the national courts could "assume the status of Community courts of general competence."[68]
5.30Japan shares the view of the EC that ArticleX:3(b)of the GATT "does not require a central court or procedure to appeal administrative decisions in customs matters. There is no obligation under the GATT for WTO Members to establish a court similar to the United States Court of International Trade."[69]
5.31As each Member is obliged to administer in a uniform manner all its customs matters pursuant to ArticleX:3(a) GATT, it is reasonable to deduce that the results of the tribunals or procedures of a prompt review pursuant to ArticleX:3(b) GATT shall ensure uniform administration of customs matters. However, this would be an issue of ArticleX:3(a) GATT.
5.32In respect of the United States' challenge that "in fact, the time periods for first instance reviews conducted by member State customs authorities can vary widely"[70], the EC refers to the meaning of the word "prompt" as "without delay", while "delay" is "(a period of) time lost by inaction or inability to proceed."[71] Japan agrees that the GATT does not provide any specific standard for a "prompt" review and correction that should be taken, and refrains at this juncture from delving into factual issues. However, if one sees two different systems within the EC – whereas in one member State such review or correction can take up to one year, in another member State it is limited to 30 days – it seems to suggest that the former member State whose review or correction takes one year is not providing a "prompt review or correction" in a reasonably short term.
4.Conclusion
5.33As set out at the beginning, based on its systemic interests in the correct interpretation and application of ArticlesX:3(a) and (b) of the GATT, Japan respectfully looks forward to the Panel'sdeliberation on issues concerning these provisions brought forward by the United States in this dispute.
C.third party written submission of the republic of korea
1.Introduction
5.34Korea believes that certain aspects of the EC's customs system fails to be administered in an uniform manner, as required by the relevant provisions of GATT 1994. Rather than reiterating all the arguments, however, Korea will address in this submission certain critical issues.
2.Legal arguments
(a)The EC's non-uniform administration of laws and regulations concerning customs classification, valuation and other procedures violate ArticleX:3(a) of GATT 1994
5.35The key issue in this dispute is whether, taken together, the EC's customs system provides uniformity in terms of administration of customs laws and regulations.
5.36Korea does not dispute the fact that, by nature, customs laws and regulations involve discretion on the part of customs authorities of WTO Members.[72] Discretion, however, does not mean that the Customs authorities have the flexibility to administer customs laws and regulations in a non-uniform, partial or unreasonable manner. If such administration occurs, it is not an instance of exercising discretion; rather it is simply a deviation from the explicit obligation imposed by ArticleX:3(a) of GATT 1994.
5.37In the area of customs control, the EC does have "uniform" laws and regulations. However, what ArticleX:3(a) requires and what the United States challenges here (and thus what causes Korea's concern as a third party participant) are not the laws and regulations themselves. Rather, the core of the challenge in this dispute is the fact that these EC laws and regulations are administered individually by 25 member States in a non-uniform manner. The 25 member States have their own customs authorities that administer customs laws and regulations in a way they see fit, in terms of classification, valuation and customs procedures.
5.38Korea duly recognizes and respects the unique characteristics of the EC where all 25 member States individually exercise their authorities in the customs area. The unique characteristics, however, should not be referred to as a pretext to deviate from otherwise applicable WTO obligations, including GATT 1994. As a Member of the WTO in its own right, separate from its constituent member States, the EC has an obligation to make sure there are mechanisms in place which produce the effect of a uniform administration of its customs laws and regulations. Even if all its member States preserve individual customs authorities under the constituent legal document, the EC, at least, should have known that divergent customs regulations and practices among member States would be rampant, and thus established a mechanism through which such divergent regulations and practices are harmonized and reconciled.
5.39From Korea's perspective, this problem caused by the EC's unique customs system will be aggravated as time passes by. Given the continued technological development and advent of new or hybrid products, customs control and regulationbecomes increasingly complicated.
5.40The EC's effort to downplay this widely known confusion and inconsistency simply falls apart when one looks at what is happening "in the field." Korea stresses that what is important in examining ArticleX:3(a) is the reality foreign exporters have to face at the border. The panel in Argentina – Hides and Leather pointed out that "ArticleX:3(a) requires an examination of the 'real effect' that a measure might have on traders operating in the commercial world."[73] Under the current system of disarray in the EC, it is simply impossible for "[e]very exporter and importer…to expect treatment of the same kind, in the same manner both over time and in different places…"[74]