43. The Philippines disputed Brazil's position that Article VI of GATT 1994 and the SCM Agreement must be invoked together. The Philippines noted that language virtually identical to Article 10 of the SCM Agreement was found in the Tokyo Round SCM Code. Yet, this had not precluded signatories to that Code from invoking only Article VI of GATT 1947 in dispute resolution. In this regard, the Philippines also noted that, in the Reformulated Gasoline dispute, both the Panel and the Appellate Body resolved the dispute with reference only to GATT 1994, and did not address the requirements of the Agreement on Technical Barriers to Trade, which had also been invoked by the complaining parties as applicable to the disputed U.S. measures.

44. The Philippines contended that Brazil's position regarding Article 32.3 misrepresented the scope and functions of that provision. The Philippines took the position that Article 32.3 clearly applies only to procedural obligations under the SCM Agreement - not GATT 1994 or the Agreement on Agriculture - and only to the obligations relating to investigations. In the Philippines' view, Article 32.3 could not be used to bar a claim premised on a substantive right clearly provided for in Article VI of GATT 1994. The purpose of this provision was to prevent WTO Members from having to redo investigations which were started before they were bound by the SCM Agreement in order to apply the new and more detailed procedural requirements governing the conduct of investigations set out in that Agreement. In addition, Article 32.3 was needed to clarify at which stage in ongoing investigations the switch to the new procedural requirements of the SCM Agreement would have to take place. In the Philippines' view, these rationales underlying Article 32.3 did not apply to the requirements of Article VI of GATT 1994 because the standards under that provision are not textually different from those of Article VI of GATT 1947, which already existed for WTO Members who were also Contracting Parties of GATT 1947 at the time of the entry into force of the WTO Agreement.

45. Brazil agreed with the Philippines that the purpose of Article 32.3 was to prevent WTO Members from having to redo investigations which were started before they were bound by the SCM Agreement. Brazil maintained that this was precisely the situation at issue here. The Philippines was attempting to use the WTO to object to an investigation begun before Brazil was bound by the WTO Agreements. Brazil did not believe it should have to redo an investigation to conform to obligations that did not exist when the investigation was started.

46. The Philippines also maintained that Brazil�s interpretation of Article 32.3 obscured the rights and obligations of WTO Members who were not signatories to the Tokyo Round SCM Code. In the Philippines' view, if Article VI of GATT 1994 were deemed inapplicable to investigations conducted prior to the entry into force of the WTO Agreement, such Members would be denied any remedy against countervailing measures imposed on them after the entry into force of the WTO Agreement. The Philippines maintained that this result could not have been contemplated by the WTO Agreement.

47. The Philippines argued that Article 32.3 of the SCM Agreement does not automatically preclude the application of the SCM Agreement to measures imposed after the date of entry into force of the WTO Agreement pursuant to investigations initiated prior to the entry into force of the WTO Agreement. Indeed, Article 32.3 provides that a review of an existing measure, i.e. one in existence on the date of entry into force of the WTO Agreement, initiated pursuant to an application filed after the entry into force of the WTO Agreement, is subject to the requirements of the SCM Agreement. Obviously, the investigation that preceded such an existing measure would have been initiated prior to the entry into force of the WTO Agreement. Thus, in the Philippines' view the fact that an investigation was initiated prior to the effective date of the WTO does not, as such, preclude application of the SCM Agreement if that investigation leads to a measure imposed after the effective date of the WTO which then becomes the subject of review under the WTO. Moreover, the Philippines noted that the measure in question here was not imposed prior to the effective date of the WTO Agreement, and thus was not an existing measure as of that date. Thus, in the Philippines' view, Article 32.3 did not resolve the question of what law was applicable to the measure.

48. The Philippines argued that Brazil could not be surprised at the substance of the standards under GATT 1994, and thus there was no inequity in subjecting the measures imposed after the effective date of that agreement to its requirements. The provisions of Articles I, II and VI of GATT 1994 were identical to those of Articles I, II and VI of GATT 1947, which applied to both Brazil and the Philippines. The text of the provisions of GATT 1947 applied when the investigation was initiated, and the provisions of GATT 1994 were in effect in 1995 when Brazil imposed the countervailing duties. The Philippines therefore was not asking the Panel to apply to the measures rules whose content did not already exist when the procedures that led to their imposition were initiated, and when the countervailing duties were imposed.

49. In Brazil's view, the fact that the language of Article VI of GATT 1994 is the same as the language of Article VI of GATT 1947 did not permit retroactive application of the provisions of GATT 1994 to the measures in question. Brazil noted that, according to Article II:4 of the Marrakesh Agreement, GATT 1994 and GATT 1947 are legally distinct documents. Thus, the obligations of GATT 1947 are not legally binding once it terminated on 31 December 1995, and because of their legally distinct status, application of GATT 1994 would be retroactive application which is contrary to customary rules of public international law.

50. The Philippines asserted that the legal distinction between GATT 1947 and GATT 1994 was not intended to preclude WTO Members from invoking GATT 1994 as against identical provisions in GATT 1947, but rather to avoid the "free-rider" problem posed by the prospect of GATT 1947 Contracting Parties demanding and obtaining WTO benefits on the basis of the most-favoured-nation clause in GATT 1947. Thus, in the Philippines' view, the legal distinction between GATT 1947 and GATT 1994 did not support Brazil's position on retroactivity. The Philippines also referred to the decision of the Appellate Body in Reformulated Gasoline, which noted that the relevant provisions in that case had not changed as a result of the Uruguay Round negotiations. The Philippines argued that the legal distinction between GATT 1947 and GATT 1994 did not bar the interpretation of the latter in light of the former.

51. The Philippines argued that the Tokyo Round SCM Committee's Decision on Transitional Co-Existence of the Agreement on Interpretation and Application of Articles VI, XVI and XXIII of the General Agreement on Tariffs and Trade and the Marrakesh Agreement Establishing the World Trade Organization ("Decision on Transitional Co-Existence") ¹¹ accorded a temporary and limited right to look to the Tokyo Round SCM Code even after its termination, but was not intended to curtail the right of a WTO Member to resort to the dispute settlement procedures of the WTO. The Philippines noted that the Decision on Transitional Co-Existence provided that the Tokyo Round SCM Code would "continue to apply with respect to any countervailing duty investigation or review which is not subject to application of the WTO [Subsidies] Agreement pursuant to the terms of Article 32.3 of that Agreement". The Philippines referred to sub-paragraph (d) of the Decision on Transitional Co-Existence, which provides in pertinent part that:

In turn, Article 19 of the DSU (as well as Article 3.2 to which it refers) cautions that a WTO Panel "cannot add to or diminish the rights and obligations provided in the [WTO] covered agreements". Thus, in the Philippines' view, the Decision on Transitional Co-Existence is not in derogation of a WTO Member's right to invoke the WTO Agreement.

52. In the Philippines' view, the Decision on Transitional Co-Existence recognized that invocation of the WTO Agreement was not constrained by any Tokyo Round SCM Code obligations. Indeed, the Decision indicates that a Member's invocation of the WTO Agreement precluded another Member from objecting based on any purported inconsistency with the Tokyo Round SCM Code.

53. Brazil took a different view of the effect of the transition decisions of the Tokyo Round SCM Committee. Brazil argued that the Decision on Transitional Co-Existence and the Decision on Consequences of Withdrawal from or Termination of the Agreement on Interpretation and Application of Articles VI, XVI and XXIII of the General Agreement on Tariffs and Trade ("Decision on Consequences of Termination") ¹² reflected the intent that there would be no retroactive application of the new Agreements. In Brazil's view, the Decision on Transitional Co-Existence, by permitting, but not requiring, the adoption during the transition period of any measure consistent with the SCM Agreement, regardless of whether it was consistent with Tokyo Round SCM Code obligations, gives some guidance on the applicable law. Because it does not require parties to adopt immediately measures consistent with the WTO, it contemplates the continuing application of Tokyo Round SCM Code obligations, at least to the measures initiated under the Tokyo Round SCM Code. Paragraph 2(a), referred to by the Philippines in its requests for dispute settlement proceedings, permits disputes to be brought in accordance with the DSU but does not address what law is applicable in considering the dispute. Finally, the Decision on Transitional Co-Existence provides that for its purposes the Tokyo Round SCM Code terminated one year after entry into force of the WTO, i.e. on 31 December 1995. Thus, in accordance with this Decision, the Tokyo Round SCM Code is terminated and was terminated before this Panel was requested. Therefore, the Philippines' reliance on this Decision as a basis for this Panel was unfounded.

54. Brazil also argued that the Decision on Consequences of Termination addresses disputes arising once the Tokyo Round SCM Code was terminated, as is the case here. It provides, inter alia, that for dispute settlement purposes, the Tokyo Round SCM Committee shall continue in force for two years after the entry into force of the WTO, i.e. through 31 December 1996. Thus, in Brazil's view, during 1996 the Decision on Consequences of Termination controls disputes originating out of a countervailing duty investigation begun before 1 January 1995, as is the case here. Paragraph (a) provides that the Tokyo Round SCM Code shall continue to apply with respect to any investigation or review begun prior to the entry into force of the WTO. Brazil maintained that this was consistent with Article 32.3 of the SCM Agreement, allowing for coverage of all subsidies disputes. Brazil contended that, in accordance with the Decision on Consequences of Termination, the applicable law for the current dispute is the Tokyo Round SCM Code. The Decision on Consequences of Termination also provides, in paragraph (d), for disputes to be raised in accordance with "rules and procedures for the settlement of disputes arising under the Agreement applicable immediately prior to the date of entry into force of the WTO Agreement" for any disputes arising out of an investigation or review begun prior to entry into force of the WTO.

55. In Brazil's view, the Philippines' reliance on one provision of paragraph (d) of the Decision on Consequences of Termination in support of its claim that GATT 1994 applies reads that provision out of context. Paragraph (d) states that the dispute rules in effect immediately prior to entry into force of the WTO apply, but that if consultations are requested after entry into force of the WTO Agreement, Article 19 of the DSU shall guide panels. Article 19 of the DSU says only that, where a violation is found, the Panel shall recommend that the violating Member bring its measure into conformity with the violated agreement and may suggest ways the recommendations could be implemented. This does not, in Brazil's view, mean either that the complaint can be brought under the DSU or that GATT 1994 or its covered agreements constitute the applicable law. Brazil noted that the Decision on Consequences of Termination will remain in effect through 31 December 1996, and therefore, the Philippines has had and will continue to have recourse to dispute settlement under the Tokyo Round SCM Code until 1 January 1997. ¹³

56. The Philippines argued that whatever the effect of the Tokyo Round SCM Committee's transition decisions, a decision of the signatories to the Tokyo Round SCM Code did not bind the Members of the WTO, the majority of which were not signatories to that Code. While the signatories to the Tokyo Round SCM Code may have decided to adjust their rights and obligations under that Code to take into account the existence of the WTO Agreement, the WTO adopted no corresponding decision on the coexistence of the Tokyo Round SCM Code and the WTO Agreement. Nor did WTO Members adopt any other decision that could be interpreted as an understanding that Members' rights under the WTO Agreement are in any way diminished by the existence or continued application of the Tokyo Round SCM Code. Hence, the Philippines argued that as a WTO Member, it was free to enforce its rights under the WTO Agreement.

57. The Philippines considered it well established that where a party has alternative legal grounds upon which to base its claim, the party has the right to choose the legal basis for its claim, and suggested that to question that right would be to deny the complaining party its rights under any agreements that the other party argues should not be applied. In this regard, the Philippines referred to the Panel decisions in United States - Countervailing Duties on Fresh, Chilled and Frozen Pork from Canada (adopted 11 July 1991), BISD 38S/30 ("Pork") and EEC - Payments and Subsidies Paid to Processors and Producers of Oilseeds and Related Animal-Feed Proteins (adopted 25 January 1990), BISD 37S/116, para. 110 ("Oilseeds"). In those cases, the decision of GATT Contracting Parties who were also signatories to the Tokyo Round SCM Code to proceed under provisions of the GATT 1947, rather than the Tokyo Round SCM Code, was not questioned by the respective Panels.

58. In the Philippines' view, there were important legal and policy or institutional reasons why panels have consistently respected the right of the participants to choose the legal basis of their claims. This right permits the participants in the multilateral trading system to choose the instrument that contains the most favourable substantive provisions and that is most effectively enforced. It thereby strengthens the multilateral trading order.

59. The Philippines noted in particular that in Pork, Canada chose to invoke its rights under GATT 1947 rather than the Tokyo Round SCM Code apparently because the dispute settlement procedures of the Tokyo Round Agreements had broken down. The fact that Canada had the choice of invoking its GATT rights furthered the objectives of the system, which might otherwise have been wholly frustrated. Similarly, the Philippines in this case considered the dispute settlement procedures and covered agreements of the WTO to be more effective than those of the now-terminated Tokyo Round SCM Code. The Philippines believed that, by choosing to exercise its rights under the WTO Agreement, it furthered its trade interests as well as the interests of all participants in the multilateral trading system by invoking the most effective instrument currently available governing the application of countervailing duties.

60. Brazil argued that the Philippines' position that it could resort to dispute settlement under the WTO, invoking GATT 1994, because WTO dispute settlement was more effective did not affect the central issue of determining what set of obligations were in force during the investigation in order to determine the appropriate procedures for dispute settlement. In Brazil's view, there was no support for the choice of dispute settlement procedures on the basis of what is considered "most effective" independent of the alleged violation. There are specific dispute settlement procedures for each case and GATT 1994 obligations cannot be invoked for past acts merely because one Member considers its dispute settlement procedures "more effective" than those of the applicable law. Brazil argued that there should be a clear separation between the dispute settlement procedures a Member may invoke and the obligations concerning the investigation process. Under the Philippines's view, Brazil argued, it would be possible to invoke GATT 1994 dispute settlement procedures at any time and, as a consequence, it would be possible to invoke the WTO DSU with regard to obligations under any prior agreement whatsoever.

61. The Philippines clarified that it had identified the greater effectiveness of dispute settlement under the DSU as one of its reasons for exercising the right to proceed under the WTO and not the Tokyo Round SCM Code, not as the basis of that right. In the Philippines's view, that right existed independently of the complaining party's reasons for invoking it. For example, the Philippines argued that the Panels in Pork and Oilseeds had not conditioned the exercise of parties' rights to choose dispute settlement under GATT 1947 rather than under the applicable Tokyo Round SCM Code on the reasons, motives or purposes of the complaining party for exercising that right. The Philippines stated that its principal reason for considering the WTO dispute settlement mechanism more effective was that, under the WTO system, Brazil would not have the ability to block the report of this Panel on the merits that it would have had under the old GATT system. The Philippines asserted that Brazil had, in the past, blocked adoption of a panel report, referring to Non-Rubber Footwear (report issued 4 October 1989, adopted 13 June 1995).

62. Brazil took issue with the suggestion that it would block a panel report under the Tokyo Round SCM Code, thus rendering dispute settlement ineffective. Brazil asserted that every panel report in a dispute involving Brazil had been adopted.

63. Brazil also argued that if the Panel decided that Article VI of GATT 1994 applies to this dispute, it must be interpreted without reference to the substantive provisions of the Tokyo Round SCM Code or the SCM Agreement. The Tokyo Round SCM Code interpreted Articles VI, XVI and XXIII of GATT 1947, not GATT 1994. Article II:4 of the Marrakesh Agreement specifically states that the two GATTs are legally distinct. Moreover, except for the extension of dispute resolution under the Decision on Consequences of Termination, the Tokyo Round SCM Code terminated on 31 December 1995 by agreement of the signatories to the Code. Therefore, it cannot be applied to interpret Article VI of GATT 1994. Moreover, Brazil argued that to apply the rights and obligations contained in the Tokyo Round SCM Code would either add to or diminish the rights and obligations provided for in Article VI of GATT 1994 - an action prohibited by Articles 3:2 and 19:2 of the DSU.

64. Brazil argued that, if the Panel decided that Article VI of GATT 1994 could be applied to this dispute despite the fact that the SCM Agreement did not apply, the Panel should nonetheless reject all arguments raised by the Philippines that rely on concepts, rights, and obligations found in the Tokyo Round SCM Code or the SCM Agreement, but not found within the plain language of Article VI of GATT 1994. In this regard, Brazil noted certain arguments raised by the Philippines that, in Brazil's view, arose from concepts set forth in and requirements of the Tokyo Round SCM Code or the SCM Agreement that were not found in Article VI of GATT 1994. Brazil referred specifically to the argument that the Agrarian Land Reform programme is not a subsidy because it is of general application to all poor Philippine farmers, the argument that Brazil was required to consider whether there was a significant increase in imports, a price effect from the imports, and price depression or suppression in making an injury determination, and the argument that Brazil did not adequately examine other factors that adversely affected production of desiccated coconut. Brazil maintained that Article VI of GATT 1994 did not contain a requirement for a finding of specificity in determining the existence of a subsidy, and did not contain any requirements on the analysis of injury.

65. The Philippines noted out that Article XVI:1 of the Marrakesh Agreement permits WTO dispute settlement panels to seek guidance from "decisions, procedures and customary practices followed by the CONTRACTING PARTIES to GATT 1947 and the bodies established in the framework of GATT 1947". The Philippines also observed that in Reformulated Gasoline, both the Panel and the Appellate Body sought guidance from old GATT decisions. In addition, the Philippines asserted that the Panel in Non-Rubber Footwear had acknowledged that certain interpretations of Article VI of GATT 1947 antedated, and were merely reflected by, the Tokyo Round SCM Code. ¹⁴

66. Brazil also argued that application of the Agreement on Agriculture to this dispute would constitute retroactive application and that there was no agreement among the parties to such retroactive application. In addition, Brazil maintained that Article 13 of the Agreement on Agriculture cannot apply if the SCM Agreement does not apply. Since the SCM Agreement - by the terms of Article 32.3 - does not apply to this dispute, Article 13 of the Agreement on Agriculture also cannot apply.

67. Brazil noted that the chapeau of Article 13 is based specifically on the provisions of GATT 1994 and the SCM Agreement. Article 13 acts as a constraint upon actions taken under the combined auspices of GATT 1994 and the SCM Agreement. Because this dispute is not under the auspices of the SCM Agreement, because of the wording of Article 32.3 of that Agreement, Article 13 cannot apply to this dispute. In addition, Article 13 constrains countervailing duties as defined in footnote 4 to Article 13. That footnote states that the countervailing duties so constrained "are those covered by Article VI of GATT 1994 and Part V of the Agreement on Subsidies and Countervailing Measures". Therefore, for Article 13 to be applicable, the duties at issue must be covered by Part V of the SCM Agreement as well as by Article VI of GATT 1994. Because the SCM Agreement does not apply to this investigation or the resulting duties, by reason of Article 32.3, the countervailing duties at issue in this dispute cannot be subject to Article 13 of the Agreement on Agriculture.

68. The Philippines argued that Brazil's reading of Article 13 of the Agreement on Agriculture was strained and stilted. In the Philippines' view, the word "and" in Article 13 of the Agriculture Agreement must be understood in the disjunctive sense and thus did not limit the applicability of the Agreement on Agriculture only to situations where both Article VI of GATT 1994 and the SCM Agreement must be invoked. Rather, that provision means that the Agreement on Agriculture applies to situations covered by either Article VI of GATT 1994 or the SCM Agreement, or both.

69. Brazil argued that, in its first submission to the Panel, the Philippines had sought to broaden the scope of the terms of reference beyond the matters set forth in its request for establishment of a panel, which request defines the substantive mandate of the Panel. Brazil identified the following as being beyond the proper scope of the Panel's terms of reference:

70. Brazil referred to Article 6.2 of the DSU, which provides in part that "The request for the establishment of a panel shall be made in writing. It shall indicate whether consultations were held, identify the specific measures at issue and provide a brief summary of the legal basis of the complaint sufficient to present the problem clearly". Brazil asserted that Article 6.2 of the DSU reflects substantial past panel practice that each claim in a dispute must be specified with some particularity within the documents included in the terms of reference. In this regard, Brazil referred to the report of the Panel in Cotton Yarn, where the Panel stated that "the fundamental purpose" of the terms of reference is to give advance notice to the defendant and third parties of the claim at issue and therefore, the claim had to be "expressly referred to" in the request for establishment of a panel in order to be within the terms of reference. ¹⁵ Brazil also referred to the report of the Panel in Salmon, which noted that the term "matter" identified in the terms of reference "consisted of the specific claims stated by Norway in these documents [the Panel Request and addendum] with respect to the imposition of these duties by the United States". ¹⁶ The Panel further addressed the importance of the notice function of the terms of reference:

Brazil also noted that in Non-Rubber Footwear MFN, ¹⁸ the Panel had found that the terms of reference were limited to matters raised by Brazil in its request for establishment of a panel. Thus, Brazil argued that the requirement that the claims be stated with some particularity in the request for establishment of a panel (or other documents included within the terms of reference) is a long-standing practice that was explicitly recognized by Article 6.2 of the DSU.

71. The Philippines asserted that its requests for relief did not broaden the terms of reference. The Philippines contended that Article 6.2 of the DSU requires only that the statement of a claim be specific enough "to present the problem clearly", which it contended was the case here. The Philippines also noted that the standard terms of reference under the old GATT system ("examine in the light of the relevant GATT provisions") differed from the standard terms of reference under Articles 7.1 and 7.2 of the DSU ("address the relevant provisions in any covered agreement cited by the parties"). In the Philippines' view, the latter more sharply defines the Panel's mandate to address the "relevant" provisions in the cited agreements, not only "cited" provisions. Moreover, the Philippines asserted that, unlike Part F(a) of the Montreal Improvements to the GATT Dispute Settlement Rules and Procedures, L/6489 (13 April 1989), Article 6.2 of the DSU omits any reference to a complaint's "factual" basis and simply requires a summary of the complaint's "legal" basis. The Philippines argued that some of Brazil's criticisms confused the notion of "claims" with the concepts of "relevant provisions" and the relief requested.

72. Brazil argued that Articles I and II of GATT 1994 were not even mentioned in any of the documents referred to in the terms of reference. Thus, any claims under those Articles were beyond the scope of the Panel's mandate. Brazil further maintained that the Philippines' claim that Brazil had violated Article VI of GATT 1994 was not a sufficient basis from which to infer a claim of violation of Articles I and II of GATT 1994. A claim under Articles I and II must be specifically identified. In this regard, Brazil referred to the Panel decision in Non-Rubber Footwear MFN. ¹⁹ In that case, the Panel disallowed claims under Articles X and XXIII:1(b) and (c) of GATT 1947 because it found that although the question of discrimination had been raised, it had not been raised in such a way in the request for establishment of a panel as to implicate Article X. With respect to Article XXIII:1(b) and (c), the Panel found that Brazil had argued the United States had acted inconsistently with its obligations but had not claimed that benefits accruing to it under the General Agreement were nullified or impaired. Therefore, the Panel found that matters raised by Brazil with respect to Article XXIII:1(b) and (c) were not within the terms of reference of the Panel. ²⁰ Brazil maintained that this case was similar, in that the Philippine request for establishment of a panel argued that Brazil's actions were inconsistent with Article VI of GATT 1994, but did not claim that they were inconsistent with its obligations under Articles I and II of GATT 1994.

73. The Philippines argued that Articles I and II of GATT 1994 are covered by the terms of reference because they are relevant provisions of the agreement, GATT 1994, cited by the Philippines. The Philippines asserted that Articles I and II lay down the general rule of non-discrimination, to which Article VI is an exception, citing the Pork Panel, para. 4.4. In the Philippines' view, Articles 7:1 and 2 of the DSU indicate that, while a panel's mandate is limited to the agreement cited by the parties in the terms of reference, a panel is authorized to examine and base its ruling on all relevant provisions of the cited agreement, in this case, GATT 1994. The Philippines considered Articles I and II relevant because they lay down the most-favoured-nation principle and the commitment to tariff bindings to which Article VI allows a limited exception for the imposition of countervailing duties.

74. Brazil noted that the request for establishment of a panel sought a finding that the imposition of the duties was a violation of Article VI of GATT 1994, and a recommendation that the duties be revoked and reimbursed. However, in Brazil's view, this did not constitute a claim that a failure to revoke the measure and reimburse duties prior to the completion of the dispute settlement process was itself a violation of GATT 1994. Brazil argued that it was incomprehensible how a failure to revoke the measure and reimburse duties could possibly constitute a violation of GATT 1994 in the absence of a finding that the imposition of the measure was inconsistent with its obligations.

75. The Philippines argued that its request for relief concerning Brazil's failure to revoke the measure and reimburse the collected duties simply addressed Brazil's continued implementation of its countervailing measure despite Philippine representations on the impropriety of that measure. The Philippines clarified that it was simply requesting the Panel to include reimbursement of duties paid under the disputed measure among the reliefs to be granted to the Philippines, referring to WT/DS22/5, page 2, penultimate paragraph, sub-paragraph 2.

76. Brazil recognized that the request for establishment of a panel described the Philippines' view of the consultation history, but denied that this in itself stated a claim before the Panel. Brazil noted that the consultation history is usually included in a request for establishment of a panel, but argued that it does not constitute the basis of a claim in its own right unless a specific claim was identified in the request for establishment of a panel, which Brazil maintained was not the case here.

77. The Philippines contended that Brazil's argument that the description of the consultation history cannot form the basis of a claim merely begs the question whether a refusal to consult, which would of course be part of the consultation history, could be the subject matter of a claim. The Philippines maintained that its request for establishment of a panel accused Brazil of refusing a request for consultations under Article XXIII:1 and alleged a failure to enter into consultations with the Philippines in accordance with XXIII:1 of GATT 1994, thereby violating its obligations under Article XXIII:1 of GATT 1994 and Article 4 of the DSU.

78. Brazil argued that the Philippines' claims regarding injury and the Agreement on Agriculture did not meet the requirement of Article 6.2 of the DSU that a request for establishment of a panel "identify the specific measures at issue and provide a brief summary of the legal basis of the complaint sufficient to present the problem clearly". In Brazil's view, none of the points set forth in the Philippines' request for establishment of a panel stated the legal basis of any claim with respect to injury or the Agreement on Agriculture. Brazil noted that document WT/DS22/3 and statements made by Brazil and the Philippines at the DSB meeting where the request for establishment of a panel was first discussed addressed only the question of applicable law. Thus, in Brazil's view, the only basis for raising claims concerning the injury determination or the Agreement on Agriculture would be the request for establishment of a panel itself. Brazil recognized that WT/DS22/5 contained a citation to paragraph 6(a) of Article VI of GATT 1994, implicitly referencing injury, and a citation to Article 13 of the WTO Agreement on Agriculture. However, Brazil noted that the term injury was not even used in the request for establishment of a panel, although it did refer to like product. That reference was in the context of the subsidy calculation, not injury. Thus, in Brazil's view, no claim was raised with respect to like product in the context of Brazil's determination of injury. Moreover, Brazil contended that there was no explanation of how the Philippines considered Brazil to have violated either the injury requirement of Article VI, or Article 13 of the Agreement on Agriculture. Thus, in Brazil's view, the request for establishment of a panel did not state a claim with respect to either provision.

79. In this regard, Brazil cited the Panel report in Cotton Yarn as providing a description of what constitutes a claim. According to that report, "a claim [is] the specification of the particular legal and factual basis upon which it was alleged that a provision of this Agreement had been breached". ²¹ The Panel also noted that since there may be more than one legal basis for alleging the breach of the same provision of the Agreement a claim for one would not constitute a claim for the other. ²² Finally, the Panel indicated that the legal basis for the claim must be described in the documents within the terms of reference. ²³ Since, in Brazil's view, none of the documents within the terms of reference of this Panel provided any description of the legal or factual basis for the Philippines' claims regarding injury and the Agreement on Agriculture, such claims were not within the terms of reference of this Panel.

80. The Philippines maintained that its request for establishment of a panel adequately set forth a claim pertaining to Brazil's injury determination, and that Brazil had had notice that the Philippines considered that determination deficient. The Philippines noted that Brazil recognized that the request for establishment of a panel implicitly referred to the issue of injury by citing Article VI:6(a) of GATT 1994. Moreover, the Philippines' request also discussed like product in the context of criticizing Brazil's calculation of the countervailing duty, in addition to the calculation of the subsidy. In this connection, the Philippines' request noted that Brazil was a producer of coconuts and desiccated coconut, both of which are available in the domestic market of Brazil. Thus, in the Philippines' view, Brazil was duly apprised that the Philippines was contesting Brazil's injury findings.

81. The Philippines referred to the report of the Panel in Cotton Yarn as having recognized that a general criticism of an anti-dumping methodology can encompass more specific aspects of that methodology. Cotton Yarn, para. 463. The Philippines' criticism of Brazil's injury and causation findings simply related to the basic requirement of Article VI:6(a) of GATT 1994 that such determinations be based on adequate facts and reasons. The thrust of that criticism was that Brazil had relied on indeterminate and inconsistent facts, some of which undercut Brazil's own conclusions, and advanced reasons that could not be supported by such indeterminate facts. In the Philippines' view, these asserted deficiencies were sufficiently encompassed by the basic criticism that the injury findings were inconsistent with Article VI:6(a) of GATT 1994. Moreover, the Philippines pointed out that following an informal meeting between the parties on 27 October 1995 the Philippines had sent Brazil a letter requesting additional information about Brazil's injury determination, which showed that Brazil was fully aware of the Philippines' questions about Brazil's injury determination.

82. Finally, the Philippines asserted that its request for a ruling on the measure's inconsistency with the Agreement on Agriculture was a sufficient statement of a claim of violation of that Agreement. The Philippines' request for establishment of a panel clearly alleged that the disputed measure was inconsistent with Article 13 of the Agreement on Agriculture, and asserted that the investigated programmes, as implemented by a developing country like the Philippines, should not have been considered as subsidies per se. In the Philippine's view, Brazil was put sufficiently on notice concerning the Philippines' claims under the Agreement on Agriculture.

83. In Brazil's view, the Philippines' argument invited the Panel to ignore the requirement set forth in Article 6:2 of the DSU that the request for establishment of a panel must "provide a brief summary of the legal basis of the complaint sufficient to present the problem clearly". Brazil asserted that, in arguing that Brazil was on notice concerning the Philippines' claims regarding injury, despite the fact that the request for establishment of a panel does not even mention the term "injury," merely because Brazil had received questions from the Philippines raising concerns about the injury finding during the course of the informal bilateral consultations, the Philippines failed to recognize the importance of the notice function of the panel request. Brazil further noted that the questions referred to by the Philippines concerned Brazil's injury determination in light of Brazil's obligations under the Tokyo Round SCM Code. Thus, in Brazil's view, these questions did not provide any notice of concern under GATT 1994.

84. Brazil argued that whether issues are raised in the process leading up to a request for establishment of a panel is a separate question from whether they are properly within the terms of reference of the Panel by being set forth in the documents cited in the terms of reference. Brazil argued that previous Panels have recognized the importance of the notice function, not just for the party against whom the complaint is made, but, equally importantly, for third parties in order to enable them to determine whether their interests are affected by the dispute. In this regard, Brazil referred to the Panel decision in Salmon, where the Panel stated:

More recently the Cotton Yarn Panel stated:

Thus, in Brazil's view, the fact that the Philippines may have indicated concerns at prior stages of this dispute was an insufficient basis for the conclusion that they constituted claims within the terms of reference of the Panel, unless they were specifically stated in the request for establishment of a panel. Indeed, Brazil noted that issues could well have been discussed in the consultation process and then not raised before the Panel, as the clarification and resolution of issues if possible was one function of the consultations.

85. The Philippines took the position that the allowance of countervailing duties under Article VI:3 of GATT 1947 is an exception to the basic free trade principles of Article I:1 of GATT 1947. Accordingly, in the Philippines' view, Article VI:3 has been interpreted narrowly, and any party invoking it has the burden of proving compliance with its requirements. ²⁶ These principles also apply to the identical provisions of GATT 1994. Thus, the Philippines argued that Brazil bore the burden of identifying positive evidence that its imposition of a countervailing measure against Philippine desiccated coconut met all requirements for the application of a countervailing measure under the exception provided for in Article VI. The Philippines asserted that, consistent with GATT 1947 precedents and practice, Article VI of GATT 1994 prohibits the imposition of a countervailing duty unless the following three elements are established: (a) a subsidy of the relevant product by the government of the exporting country; (b) material injury to the domestic industry producing the same or a like product in the importing country; and, (c) a causal relationship between the allegedly subsidized imports and the alleged injury to the pertinent domestic industry. The Philippines asserted that Brazil had failed to prove any of the necessary elements for the imposition of a countervailing duty.

86. Brazil took the position that longstanding panel practice required that the party that invokes the dispute settlement provisions substantiate its claims, ²⁷ and that this burden was not shifted for disputes under Article VI. Brazil referred to several disputes in which, it asserted, Panels had chosen not to rule on the question of whether Article VI constituted an exception and had proceeded to accord the burden to the complaining party, just as with other GATT dispute settlements. ²⁸ Thus, in Brazil's view, the burden in this case was on the Philippines to establish that Brazil's actions were inconsistent with its obligations.

87. The Philippines argued that Brazil's reliance on the report of the Panel in Uruguayan Recourse to Article XXIII was mistaken and misleading. The Philippines argued that the Panel had concluded in that case that the complaining party has the burden of proof only in a non-violation complaint under Article XXIII:1(b). ²⁹ However, in the Philippines' view, the Panel had recognized that in a violation complaint, the offending "action would prima facie, constitute a case of nullification or impairment". ³⁰ As the Philippines' request for establishment of a panel made clear, this dispute involved a violation complaint under Article XXIII:1(a), in which the burden of proof was on Brazil as the party that imposed the countervailing duty. The Philippines also argued that Brazil's reliance on Alcoholic Drinks was misplaced and misleading. In the Philippines's view, the issue in that case involved whether the complaining party was required to prove the existence of the practices complained against where there was a factual dispute between the parties as to the existence of some of those practices. ³¹ The Panel concluded that it was necessary for the complaining party to prove the existence of the practices complained against before the Panel could evaluate those practices in light of GATT obligations. In this case, by contrast, there was no question that Brazil had imposed the countervailing measure at issue. Thus, the Philippines considered that it had satisfied the preliminary need to identify the existence of the disputed measure, which Brazil then had the burden of justifying.

88. Brazil took the position that although it agreed with the Philippines' contention that in the case of a prima facie nullification or impairment of benefits, there was a presumption of adverse impact on the complaining party and the responding party bore the burden of rebutting that presumption, that was not the situation before this Panel. A case of prima facie nullification and impairment can be found only if an infringement of obligations is first found. In Brazil's view, the question before this Panel was whether there had been an infringement of Brazil's obligations in the first place. In that situation, Brazil considered that past practice indicated that the burden of proof was on the complaining party.

89. The Philippines asserted that, in examining whether Brazil's findings satisfied the prerequisites of Article VI of GATT 1994 for imposition of a countervailing measure, the Panel must examine the factual and legal reasons set forth in the Ordinance containing Brazil's final determination, but must disregard any alleged evidence and reasons not covered in the Ordinance itself, because to take into account considerations beyond the Ordinance would be tantamount to allowing a party to modify and rationalize its determination ex post facto. ³² In the Philippines' view, the Ordinance fell short of the requirements for the imposition of countervailing duties, in that Brazil did not identify adequate evidence and reasons to support its findings, and ignored evidence that favoured the Philippines.

90. Brazil asserted that the Panel should examine not only the factual and legal reasoning set forth in the final Ordinance but also that set forth in DTIC Opinion 006/95. Brazil stated that, under Brazilian law, the Ordinance, published in the Diario Official, is a summary of the reasons and bases for its decision, which are reflected more fully in DTIC Opinion 006/95. Brazil noted that, in its first submission, the Philippines had repeatedly referred to another document, DTIC Opinion 004/95. Brazil asserted that the Philippines erred in referring to DTIC Opinion 004/95, because the final determination was based on DTIC Opinion 006/95. ³³

91. Brazil stated that, while not published in the Diario Official, DTIC Opinion 006/95, which was signed by the individuals responsible for the investigation and preceded the published final Ordinance, was available to all interested parties upon request. Brazil maintained that consideration of DTIC Opinion 006/95 would not constitute an ex post facto modification or rationalization of Brazil's decision. Rather, Brazil contended, consideration of DTIC Opinion 006/95 would be consistent with prior panel practice, referring to the Panel reports in Korea - Anti-Dumping Duties on Imports of Polyacetal Resins from the United States, ADP/92 (adopted 27 April 1993) ("Polyacetal Resins"), BISD 40S/205, para. 211, and Brazil - Imposition of Provisional and Definitive Countervailing Duties on Milk Powder and Certain Types of Milk from the European Economic Community, SCM/179 (adopted 28 April 1994) ("Milk Powder"), para. 291. Brazil asserted that, unlike the transcript of deliberations the Panel declined to consider in Polyacetal Resins, DTIC Opinion 006/95 is a formal statement of the issues of fact and law considered material and the reasons and bases therefore, signed by the investigating authorities responsible, and made publicly available to the interested parties. Moreover, following the Panel report in Milk Powder, where the Panel looked only at the explanation provided in the published notice of Brazil's determination, stating that "it could not have regard to factual reasons presented by Brazil to the Panel but not stated in the public notice of the findings or otherwise contained in a public statement of reasons issued by the Brazilian authorities at the time of that finding," the Brazilian authorities had revised their procedures. Consequently, in this investigation, DTIC Opinion 006/95 was issued by the Brazilian authorities at the time of the final finding and was publicly available to the interested parties upon request. Brazil noted that DTIC Opinion 006/95 was, in fact, requested and provided to one Philippine exporter. The co-petitioners had also requested and received a copy. Brazil maintained that the Philippine government was offered the opportunity to review the record and receive a copy of DTIC Opinion 006/95 but did not avail itself of the opportunity. ³⁴ Thus, in Brazil's view, DTIC Opinion 006/95 is part of the public statement of reasons accompanying the final determination, along with the Ordinance published in the Diario Official, and must be considered in the Panel's review of Brazil's determination.

92. The Philippines challenged Brazil's reliance on DTIC Opinion 006/95. The Philippines noted that this opinion was not mentioned in the Ordinance, although DTIC Opinion 004/95, dated 18 July 1995, was. Moreover, the Philippines asserted that it was unaware of the existence of DTIC Opinion 006/95 until it received Brazil's first submission, despite having requested that Brazil provide it with a copy of any internal memorandum relied upon in the determination. In the Philippines' view, DTIC Opinion 006/95 was at most a portion of the administrative record that could not be considered as a basis for the Ordinance's findings unless duly identified in the Ordinance itself. In this regard, the Philippines referred to the Panel report in Milk Powder, paras. 286-87, 291, 312:

93. The Philippines also referred to the report of the Panel in Polyacetal Resins, paras. 251-54 and 284, where the Panel did not consider data in a "staff report" because it was not mentioned or discussed in, and thus was deemed not relied on by, the public statement of reasons for the determination. In the Philippines' view, DTIC Opinion 006/95 merely contained recommendations, and was not mentioned or discussed in the Ordinance, which should identify and explain any adopted recommendations.

94. The Philippines considered Brazil's argument that DTIC Opinion 006/95 was part of the public statement of reasons, because it was a formal statement that was available to the interested parties, to be without merit. In this regard, the Philippines referred to the report of the Panel in Milk Powder, which stated "That [the investigated country] might have had access to the record containing the facts considered by the Brazilian authorities was irrelevant in ... respect" to the "lack of explanation of the reasons" for Brazil's findings. Milk Powder, para. 294. Moreover, the Philippines alleged that Brazil had precluded the Philippines' access to DTIC Opinion 006/95 by not mentioning it in the Ordinance, and had failed to provide the Philippines with a copy despite the fact that the Philippines had requested a copy of any internal memorandum that formed the basis of the determination in the Ordinance. The Philippines acknowledged that its request was made before the issuance of the Ordinance, but considered that this did not justify Brazil's failure to provide it with a copy after the Ordinance had been issued. The Philippines noted that the request from the Philippine exporter who did receive a copy of DTIC Opinion 006/95 was also received by Brazil before the issuance of the Ordinance. Moreover, the Philippines had continued to seek clarification from Brazil concerning the Ordinance, including a letter dated 27 October 1995, more than two months after issuance of the Ordinance, containing questions concerning Brazil's determination. However, Brazil had not taken that opportunity to provide the Philippines with a copy of DTIC Opinion 006/95, and had not even responded to the Philippines' questions. Thus, in the Philippines' view, Brazil itself had obstructed both the publicity and the accessibility of DTIC Opinion 006/95, and therefore could not rely on it in support of its determination as set forth in the Ordinance.

95. Brazil responded that the cited previous panels' analyses regarding what documents to consider were based on procedural requirements of the Tokyo Round Codes, not of Article VI. Article VI of GATT 1994 did not require any public notice of the reasons or bases for the decision. In the view of Brazil, therefore, it was irrelevant under Article VI whether the documents were publicly available. As long as those documents were official, contemporaneous statements of the reason and bases of the decision, they should be considered by this Panel.

96. On 12 June 1996, the second day of the Panel's first meeting with the parties, Brazil provided the Panel with a two-page document setting forth corrections to its translations of Interministerial Ordinance No. 11 and DTIC Opinion 006/95. Brazil indicated that the initial translation did not properly reflect the original Portuguese-language determinations.

TO CONTINUE WITH BRAZIL - MEASURES AFFECTING DESICCATED COCONUT

¹¹ SCM/186 (adopted 8 December 1994).

¹² SCM/187 (adopted 8 December 1994).

¹³ In this regard, Brazil noted that, in the anti-dumping area, where there are similar transition agreements, Canada had recently requested conciliation under the 1979 Tokyo Round Anti-Dumping Code against Mexico, (ADP/142), the United States had recently held consultations (under the auspices of the 1979 Tokyo Round Anti-Dumping Code) with Brazil on the Brazilian imposition of anti-dumping duties on blood collection tubes from the United States, and the United States had been considering requesting consultations on the EU anti-dumping duties on soda ash from the United States. These proceedings indicated that, under facts similar to those at issue here, Canada and the United States continued to have recourse to, and Canada, Mexico, and the United States consider the appropriate rules and forum for resolving disputes involving an investigation initiated under a Tokyo Round Code, to be the Tokyo Round Code, not Article VI of GATT 1994. Brazil argued that subsequent practice of the parties to a treaty is one of the primary sources for interpretation of that treaty, referring to Article 31.3(b) of the Vienna Convention.

¹⁴ Non-Rubber Footwear, para. 4.10.

¹⁵ Cotton Yarn, para. 463.

¹⁶ Salmon, para. 212.

¹⁷ Salmon, para. 208. Brazil noted that this point was reiterated in the companion anti-dumping Panel report. United States - Imposition of Anti-Dumping Duties on Imports of Fresh and Chilled Atlantic Salmon from Norway, ADP/187 (adopted 24 April 1994) ("Salmon ADP"), para. 336.

¹⁸ Non-Rubber Footwear MFN, para. 6.2.

¹⁹ Non-Rubber Footwear MFN, para. 6.2.

²⁰ Non-Rubber Footwear MFN.

²¹ Cotton Yarn, para. 444.

²² Cotton Yarn, para. 444.

²³ Cotton Yarn, para. 456.

²⁴ Salmon, para. 208.

²⁵ Cotton Yarn, para. 456.

²⁶ In support of this position, the Philippines referred to the Panel reports in Pork, para. 4.4, and New Zealand - Imports of Electrical Transformers from Finland, (adopted 18 July 1985), BISD 32S/55, para. 4:4.

²⁷ In this regard, Brazil cited the Panel reports in Uruguayan Recourse to Article XXIII, L/1923 (adopted 16 November 1962), BISD 11S/95, paras. 15-16 and Canada - Import, Distribution and Sale of Certain Alcoholic Drinks by Provincial Marketing Agencies, DS17/R (adopted 18 February 1992) ("Alcoholic Drinks"), BISD 39S/27, para. 5.3.

²⁸ Cotton Yarn, para. 516, EC - Anti-Dumping Duties on Audio Tapes in Cassettes Originating in Japan, ADP/136 (unadopted, 28 April 1995) ("Audiocassettes") paras. 358-359, Salmon ADP, para. 483.

²⁹ The Philippines also considered that Article 26:1(a) of the DSU recognizes that it is only with respect to non-violation complaints under Article XXIII:1(b) that the complainant bears the burden of "present[ing] a detailed justification in support of any complaint relating to a measure which does not conflict with the relevant covered agreement".

³⁰ Uruguayan Recourse to Article XXIII, para. 15.

³¹ Alcoholic Drinks, para. 5.3.

³² However, the Philippines argued that the administrative record can be considered in connection with any relevant evidence that the Ordinance improperly ignored.

³³ In this regard, Brazil noted that the Ordinance itself indicates that DTIC Opinion 004/95 is not the basis of the final determination. In its discussion of the case history, the Ordinance notes that after the 21 July 1995 meeting with the Conselho Tecnico Consultivo (Technical Consultative Counsel) at which DTIC Opinion 004/95 was considered, that opinion was discussed and the investigation was continued until additional information had been gathered.

³⁴ Brazil acknowledged that the Philippine government did request any memorandum that formed the basis of the final determination in a letter submitted a few days before the final decision was made. Under Brazilian practice DTIC Opinions are not final and part of the record until the final determination is made, so Brazil did not supply it at that time.