54. According to Brazil, the European Communities misreads Article 59 of the Vienna Convention by limiting its application to only one element of the subsequent treaty, its Schedule, rather than referring to the WTO Agreement as a whole. Members intend that their relations should be governed by the WTO Agreement read in the light of earlier agreements reached between Members. The Oilseeds Agreement may be considered part of the GATT 1994, as a protocol or certification relating to tariff concessions within the meaning of paragraph 1(b)(i) of the language in Annex 1A incorporating the GATT 1994 into the WTO Agreement.

55. Article 30.3 of the Vienna Convention is not applicable in this case because the country-specific aspects of the incorporated Oilseeds Agreement are fully compatible with the WTO Agreement. The incorporation of the Oilseeds Agreement into the WTO Agreement did not change the terms of the earlier agreement.

56. Brazil argues that if the tariff-rate quotas for frozen poultry meat in the Oilseeds Agreement and the WTO Agreement are identical, and if the Oilseeds Agreement was incorporated into Schedule LXXX, then, on the basis of Article 30.2 of the Vienna Convention, the tariff-rate quota in Schedule LXXX is the same as the tariff-rate quota in the Oilseeds Agreement and is therefore subject to the conditions set out in the Oilseeds Agreement. If the tariff-rate quotas in the Oilseeds Agreement and the WTO Agreement are not identical, and if the Schedule LXXX tariff-rate quota is a new tariff-rate quota negotiated within the terms of the Uruguay Round, then the European Communities would be in breach of its obligations under the Oilseeds Agreement, Article XXVIII of the GATT and Article 26 of the Vienna Convention.

57. According to Brazil, customary international law cautions against the application of one legal maxim for the interpretation of treaties to the exclusion of others. Acceptance of the EC arguments on Articles 59 and 30.3 of the Vienna Convention would give undue weight to the legal maxim lex posterior derogat prior on the issue of the succession of treaties relating to the same subject-matter. To ignore the relevance of the Oilseeds Agreement would undermine the security and predictability in the multilateral trading system and the fundamental principle of legal certainty. The European Communities "did not perform its obligations to Brazil in good faith".

58. In the view of Brazil, the Panel reached the correct conclusion on the interpretation of Article 5.1(b) of the Agreement on Agriculture. The special safeguard provision is an exception to the requirement set out in Article 4.2 of that Agreement. Contrary to the EC argument, the system applying the special safeguard clause is not separate and parallel to the tariffication process under Article 4.2. The provisions are linked. Special safeguards are dependent on the implementation of tariffication. The reduction in tariffs over time may, in certain circumstances, increase the need for the introduction of special safeguards, but this does not necessarily make the two processes a different set of rights and obligations.

59. According to Brazil, the "price at which a product may enter the customs territory" is the duty-paid price and this market entry price, while "determined on the basis of" the c.i.f. price, is not the c.i.f. price itself. Payment of any applicable customs duty is a sine qua non of customs clearance. Brazil agrees with the finding of the Panel that, for present purposes, the words "market entry price" and the "price at which a product may enter the customs territory" are equivalent. Article 5.1(b) requires that the c.i.f. price is the price from which the calculation of the market entry price begins, but the market entry price is not the same as, but is "based on", the c.i.f. price.

60. Brazil stresses that Members were free to fix an appropriate "reference price" (or trigger price) which was only, in general, to be based on the average c.i.f. unit value. Members had a certain discretion in fixing the reference price. The fact that some Members may now be in a situation where use of the special safeguard is unlikely in relation to a limited number of products because of the level of the reference price which they have set and the level of tariff they have negotiated, is not material to the proper interpretation of the text of Article 5.

61. Brazil asserts that if the Appellate Body reverses the findings of the Panel on Article 5.1(b) of the Agreement on Agriculture, then the question will remain whether or not the European Communities has complied with the other provisions of Article 5, in particular Article 5.5, or with Article 4.2, and that the Appellate Body must consider the proper procedure to be followed with regard to the finding of a panel on the basis of judicial economy. Because the Panel did not examine the substance of the claims under Articles 5.5 or 4.2 of the Agreement on Agriculture, there were no issues of law to be appealed by Brazil. According to Brazil, the very act of appeal of a panel's finding must open the possibility for the appellee to address, not only the grounds of appeals raised by the appellant, but also those issues of law and of fact that become germane as a consequence of the examination of those grounds. This would be "in line with" the doctrine of due process, to consider otherwise would be to defeat the doctrine of judicial economy. Should the Appellate Body reverse the findings of the Panel on Article 5.1(b), Brazil considers that the Appellate Body should also address the question of the substantive issues raised by Brazil so as not to diminish Brazil's rights in relation to dispute settlement. Brazil considers that the best approach is the approach adopted in previous appeals, and that Rule 16 of the Working Procedures allows such an approach. The problem in this case only arises if a finding is cross-appealed (without the benefit of a notice of appeal) and if that finding is reversed.

62. Brazil maintains that nothing in Article 5 of the Agreement on Agriculture permits a Member to introduce a representative price system. According to Brazil, the representative price mechanism distorts the implementation by the European Communities of Article 5 and results in the application of additional duties in a manner incompatible with that Article. Even though Regulation 1484/95 gives importers of out-of-quota frozen poultry meat two options for establishing the c.i.f. price of any one shipment, the representative c.i.f. price nevertheless determines the conditions for the import of frozen poultry meat into the European Communities. This is so because, upon importation, the European Communities requires immediate payment of the additional duty calculated on the basis of the representative price. If the importer elects to establish the actual c.i.f. price, payment of a security of the same value as the additional duty is required. This security must be pre-paid, and it is forfeited unless the trader can comply with the proofs required under Article 3.1 of Regulation 1484/95.

63. According to Brazil, the information provided by the European Communities to the Panel on the use by traders of all origins of the option to prove the actual c.i.f. price was inadequate and lacked transparency. Because of the complexities of the system, the use of the representative price is the rule and not the exception. The European Communities did not provide information to the Panel on how precisely the representative price is calculated in practice. Although the representative price is supposed to be representative of an average c.i.f. price of all shipments from any one origin, there is no element in its calculation that refers to the value of the product at the EC frontier or to the value of the product on world markets. To comply with Article 5 of the Agreement on Agriculture, the European Communities is obliged to use the actual world price or free-at-frontier price. Brazil argues that as an exception to Article 4.2 of the Agreement on Agriculture, Article 5 must be construed narrowly. The representative price is not the c.i.f. price, nor is it representative of the c.i.f. price of any one shipment. Therefore, the representative price mechanism is not provided for, nor in compliance with, Article 5 of the Agreement on Agriculture. Brazil did not have an opportunity to comment on the EC submission to the Panel of 21 November 1997 concerning the calculation by the European Communities of the representative price, other than in a letter responding to the EC protest that Brazil breached confidentiality with respect to these documents, and in the comments on the interim report.

64. Brazil contends that, because the additional duty or bond that is payable on the basis of the EC representative price varies regularly depending on the published representative price, it is equivalent to a variable levy. This form of border protection measure is prohibited under Article 4.2 of the Agreement on Agriculture. Additional duties under Article 5.1(b) should be allowed to rise and fall on the basis of the shipment-by-shipment c.i.f. price changes.

66. Thailand disagrees with the Panel's conclusion in paragraph 262 of the Panel Report that the tariff-rate quota for frozen poultry meat is fully utilized. Because the import licensing regime of the European Communities is operating in such a way that exporters do not know whether the transactions involved are within or outside the tariff-rate quota, and thus cannot take that factor into account when making the transactions, Thailand maintains it cannot be said that the tariff-rate quota is fully utilized. Once a tariff-rate quota is allocated, it must be administered in a manner that enables Members to "utilize fully the share of any such total quantity or value which has been allotted" to them in accordance with Article XIII:2(d) of the GATT 1994. No conditions or formalities may be imposed that would prevent such full utilization. This is a substantive provision that Thailand understands to be applicable not only with respect to the total quantity or total value per se, but also in respect of the full benefits derived from the tariff-rate quotas, including the full enjoyment of the in-quota tariff rate.

67. Thailand agrees with the Panel's finding in paragraph 278 of the Panel Report that the "ordinary meaning of the phrase 'the price at which imports may enter the customs territory of the member granting the concession' would include payment of applicable duties" and in paragraph 282 of the Panel Report that "the EC has not invoked the special safeguard provision with respect to poultry in accordance with Article 5.1(b)." Thailand, however, disagrees with the Panel's exercise of judicial economy concerning Article 5.5 of the Agreement on Agriculture and argues that the Panel should have examined the consistency of the representative price with Article 5.1(b). In Thailand's opinion, the representative price is not in conformity with Article 5.1(b), which requires that the market entry price must be calculated on the basis of the c.i.f. import price of the shipment concerned alone. To the extent that the representative price is used in place of the c.i.f. import price for comparison with the trigger price for the purpose of setting additional duties to be paid as special safeguard duties, it is also inconsistent with Article 5.5 of the Agreement on Agriculture, which requires that the comparison be made only between the c.i.f. import price and the trigger price. Because the representative price is calculated on the basis of an average of a variety of prices, including internal market prices that are not c.i.f. prices within the meaning of Article 5.1(b), the representative price is thus functioning in such a way as to stabilize the price of the product concerned in the same fashion as the former EC regime of variable import levies.

68. The United States supports the conclusion of the Panel that Brazil is not entitled to an allocation of the entire in-quota quantity of the tariff-rate quota for frozen poultry meat. The United States maintains that Brazil has failed to demonstrate that the EC allocation of this tariff-rate quota is inconsistent with the obligations of the European Communities under Articles XIII and XXVIII of the GATT, or that Brazil is otherwise entitled to the entire in-quota quantity of this tariff-rate quota. Brazil is incorrect to argue that as no Member objected, all Members must be deemed to have agreed to the solution agreed between Brazil and the European Communities. According to the United States, Brazil misunderstands the purpose of a notice withdrawing concessions under Article XXVIII of the GATT. Failure to have recourse under Article XXVIII:3 of the GATT can hardly be perceived as "agreement" of all Members, since not all Members have a right to such recourse. Brazil also errs in claiming that the opening of a country-specific tariff-rate quota for frozen poultry meat by the European Communities does not give rise to a negative impact on the trade interests of other Members. A country-specific tariff-rate quota increases a trade opportunity for one Member, which receives a benefit relative to other Members.

69. The United States believes that the Panel correctly found in paragraph 230 of the Panel Report that there is "nothing in Article XIII that obligates Members to calculate tariff quota shares on the basis of imports from Members only", and, consequently, that it was consistent with Article XIII of the GATT 1994 for the European Communities to allow non-Members access to the tariff-rate quota. The obligations in Article XIII with respect to the treatment of Members when allocating a tariff-rate quota in no way imply that non-Members must be excluded from access to the in-quota quantity of a tariff-rate quota. The Panel correctly defined the issue before it as whether the European Communities is required to exclude non-Members from the basis of the calculation of tariff quota shares.

70. The United States supports the Panel's conclusion in paragraph 269 of the Panel Report that licences granted to a specific company or tariffs applied to a specific shipment would not be considered measures of "general application" within the scope of Article X of the GATT 1994. Moreover, the United States agrees with the EC view that Brazil's request to have each shipper informed of whether a shipment would be in-quota or out-of-quota could be impossible to implement in practice and is not required by Article X of the GATT 1994.

71. To the extent that the Panel's statement in paragraph 249 of the Panel Report that "[t]he Licensing Agreement, as applied to this particular case, only relates to in-quota trade" could be read to require that the "effects" referred to in Article 3.2 of the Licensing Agreement are limited to effects on in-quota imports, the United States supports the appeal of Brazil that the Panel's reasoning should be modified. The United States also supports Brazil's appeal with respect to the Panel's reliance on "full utilization" of the in-quota quantity as being dispositive of whether or not there is a breach of Article 3.2 of the Licensing Agreement. To the extent that the Panel's reasoning may be read to imply that full utilization of a quota allocation would preclude a finding of trade distortion, the United States supports the appeal of Brazil that the Panel's reasoning should be modified.

72. According to the United States, the Appellate Body should reject the EC appeal concerning the application of Articles 30.3 and 59.1 of the Vienna Convention. The approach advocated by the European Communities is based on the erroneous assumption that the agreement between the European Communities and Brazil -- whether reflected in the bilateral Oilseeds Agreement or in Schedule LXXX -- is dispositive in this case. According to the United States, it is not the bilateral agreement between the European Communities and Brazil which is at issue; rather, the question is whether the current allocation by the European Communities of its tariff-rate quota is in accordance with its obligations under Articles XIII and XXVIII of the GATT. The Oilseeds Agreement is not a "covered agreement" under the DSU. The Panel correctly set forth the role of the Oilseeds Agreement in its analysis in paragraph 202 of the Panel Report. The Panel's conclusion that the provisions of the Oilseeds Agreement did not provide for Brazil to receive the entire amount of the tariff-rate quota for frozen poultry meat renders moot much of the EC argument on this point. Article XXVIII of the GATT could not justify a quota allocation inconsistent with Article XIII, even had that allocation been implemented in accordance with the terms of the Oilseeds Agreement.

73. With respect to Article 5.1(b) of the Agreement on Agriculture, the United States supports the position of the European Communities and believes that the Panel erred in interpreting the phrase "the price at which imports of that product may enter the customs territory of the Member granting the concession" to mean the price including the payment of applicable duties.

74. According to the United States, the Working Procedures do not appear to address the situation where a successful cross-appeal under Rule 23 would require that other issues raised in the panel proceeding be addressed by the Appellate Body in order to resolve the dispute. However, the United States notes that where a procedural question arises that is not covered by the Working Procedures, Rule 16.1 of the Working Procedures permits a Division to adopt an appropriate procedure for the purposes of a particular appeal. In this case, Brazil should not be denied relief to which it might otherwise be entitled simply because it did not appeal issues that only became relevant in light of the EC cross-appeal. However, the United States adds that for the purpose of making legal findings on Brazil's claims relating to additional duties, the Appellate Body should make legal findings based only on the Panel's factual findings or on facts submitted by the parties that were uncontested at the panel stage, and not on facts presented by a party for the first time on appeal.

75. The United States maintains that the EC representative price is inconsistent with Article 5.5 of the Agreement on Agriculture, as it appears to bear no relationship to the price of the individual shipment it is intended to represent. The United States agrees with Brazil that the burdens imposed by the European Communities, and its use of a penalty provision, create an effective deterrent to traders seeking to have additional duties calculated on a shipment-by-shipment basis. In the view of the United States, these facts undermine the EC claim that the use of a representative price is optional and help to explain the low rate at which traders are requesting shipment-by-shipment calculation of additional duties. With respect to Brazil's claim under Article 4.2 of the Agreement on Agriculture, the United States wishes to express caution as to whether the changes in the special safeguard duty as applied by the European Communities are such as to render it a "variable levy" within the meaning of that provision. By its nature, the amount of additional duties calculated under Article 5.5 could vary from shipment to shipment, so some variation must be permitted under the Agreement on Agriculture.

76. The following legal issues were raised by the appellants in this appeal: