Report of the Appellate Body

(Continued)

IX. Object and Purpose

236. We next discuss whether the Panel erred in finding that an interpretation of the term "salted" in the tariff commitment under heading 02.10 of the EC Schedule, as including the criterion of long-term preservation, "could undermine the object and purpose of security and predictability", which underlie both the WTO Agreement and the GATT 1994.⁴⁴⁴

237. The European Communities appeals several aspects of the Panel's reasoning and conclusions relating to "object and purpose". The European Communities submits that the Panel relied on the "object and purpose" of the treaty (that is, the WTO Agreement and the GATT 1994) and failed to take into account the "object and purpose" of the relevant treaty provision (that is, Article II of the GATT 1994, read in conjunction with heading 02.10 of the EC Schedule, including its underlying criterion of "long-term preservation").⁴⁴⁵ The European Communities also argues that the Panel erroneously relied on the concept of the "expansion of trade" in its analysis of the "object and purpose" of maintaining the security and predictability of tariff concessions. In addition, the European Communities alleges that the Panel erred by finding that the application of the criterion of "preservation" would undermine the security and predictability of the tariff commitment. Finally, the European Communities contends that heading 02.10 of the EC Schedule was not intended to address "frozen [salted] poultry".⁴⁴⁶

A. Object and Purpose of the Treaty or of a Particular Treaty Provision

238. We begin our analysis with the question whether the Panel incorrectly distinguished between the object and purpose of the treaty and that of its individual provisions.⁴⁴⁷ It is well accepted that the use of the singular word "its" preceding the term "object and purpose" in Article 31(1) of the Vienna Convention indicates that the term refers to the treaty as a whole⁴⁴⁸; had the term "object and purpose" been preceded by the word "their", the use of the plural would have indicated a reference to particular "treaty terms". Thus, the term "its object and purpose" makes it clear that the starting point for ascertaining "object and purpose" is the treaty itself, in its entirety.⁴⁴⁹ At the same time, we do not believe that Article 31(1) excludes taking into account the object and purpose of particular treaty terms, if doing so assists the interpreter in determining the treaty's object and purpose on the whole. We do not see why it would be necessary to divorce a treaty's object and purpose from the object and purpose of specific treaty provisions, or vice versa. To the extent that one can speak of the "object and purpose of a treaty provision", it will be informed by, and will be in consonance with, the object and purpose of the entire treaty of which it is but a component.⁴⁵⁰

239. Having said this, we caution against interpreting WTO law in the light of the purported "object and purpose" of specific provisions, paragraphs or subparagraphs of the WTO agreements, or tariff headings in Schedules, in isolation from the object and purpose of the treaty on the whole. Even if, arguendo, one could rely on the specific "object and purpose" of heading 02.10 of the EC Schedule in isolation⁴⁵¹, we would share the Panel's view that "one Member's unilateral object and purpose for the conclusion of a tariff commitment cannot form the basis"⁴⁵² for an interpretation of that commitment, because interpretation in the light of Articles 31 and 32 of the Vienna Convention⁴⁵³   must focus on ascertaining the common intentions of the parties.⁴⁵⁴

240. For these reasons, we have no difficulty with the Panel's approach in interpreting the tariff commitment at issue in this case in the light of the object and purpose of the WTO Agreement and the GATT 1994.

B. Did the Panel Rely on "Expansion of Trade" as an Interpretative Principle?

241. We note that the Panel deduced the object and purpose of the WTO Agreement and the GATT 1994 from the preambles and from Appellate Body statements.⁴⁵⁵ The Panel referred to the Appellate Body statement in Argentina � Textiles and Apparel that "a basic object and purpose of the GATT 1994, as reflected in Article II, is to preserve the value of tariff concessions negotiated by a Member with its trading partners, and bound in that Member's Schedule."⁴⁵⁶ The Panel found that:

[t]aken together, the relevant aspects of the WTO Agreement and the GATT 1994 indicate that concessions made by WTO Members should be interpreted so as to further the general objective of the expansion of trade in goods and the substantial reduction of tariffs. ... In other words, the terms of a concession should not be interpreted in such a way that would disrupt the balance of concessions negotiated by the parties. Finally, the interpretation must ensure the security and predictability of the reciprocal and mutually advantageous arrangements manifested in the form of concessions.⁴⁵⁷ (emphasis added)

242. The European Communities argues on appeal that the Panel erred in finding that "concessions made by WTO Members should be interpreted so as to further the general objective of the expansion of trade in goods and the substantial reduction of tariffs."⁴⁵⁸

243. In our view, a careful reading of the phrasing used by the Panel reveals that it did not, as the European Communities asserts, develop an "interpretative principle directing Panels to bias towards the reduction of tariff commitments".⁴⁵⁹ We note that, in the sentence that followed, the Panel qualified the statement challenged by the European Communities by stating that "such an interpretation is limited by the condition that arrangements entered into by Members be reciprocal and mutually advantageous."⁴⁶⁰ This sentence underscores the Panel's view that trade liberalization is achieved through negotiations for mutual benefit. Indeed, the Panel concluded that its interpretation should be governed by the object and purpose of maintaining the security and predictability of reciprocal market access arrangements manifested in tariff concessions, an objective endorsed by the European Communities. Thus, we do not believe that the Panel relied on trade expansion and tariff reduction as an interpretative principle. In fact, the Panel focused its "object and purpose" interpretation on the principles of security and predictability of tariff concessions. Moreover, we agree with the Panel that "the security and predictability of 'the reciprocal and mutually advantageous arrangements directed to the substantial reduction of tariffs and other barriers to trade' is an object and purpose of the WTO Agreement, generally, as well as of the GATT 1994."⁴⁶¹

C. Does a Criterion of "Preservation" Undermine the Security and Predictability of Tariff Concessions?

244. In addition, the European Communities appeals the Panel finding that:

... the lack of certainty associated with the application of the criterion of long-term preservation with respect to the concession contained in heading 02.10 of the EC Schedule ... could undermine the object and purpose of security and predictability [of the reciprocal and mutually advantageous arrangements [that] must be preserved], which lie[] at the heart of the WTO Agreement and the GATT 1994.⁴⁶²

245. The European Communities contends that the Panel misrepresented the criterion of preservation, because EC Regulation 1223/2002 and EC Decision 2003/97/EC do not, in fact, apply a "criterion of long-term preservation" but, instead, treat chicken cuts with a salt content of up to 3 per cent as falling under heading 02.07 rather than heading 02.10.⁴⁶³

246. We agree with the Panel that, in characterizing a product for purposes of tariff classification, it is necessary to look exclusively at the "objective characteristics" of the product in question when presented for classification at the border.⁴⁶⁴ At the same time, we note that the European Communities provides examples indicating that product descriptions including a criterion of "preservation" may qualify as "objective characteristics" under the Harmonized System.⁴⁶⁵ The European Communities considers that, accordingly, the criterion of preservation is not intrinsically uncertain, given its use in other parts of the Harmonized System.⁴⁶⁶ In this sense, we consider that the Harmonized System does not preclude the use of a criterion of preservation, as such, provided that the conditions mentioned in paragraph 230 above are met. Therefore, the application of such a criterion would not necessarily be in conflict with the objectives of security and predictability of the WTO Agreement and the GATT 1994 (including Schedules of tariff commitments).

247. Turning to the facts of this case, we recall the Panel's statement that the European Communities had never explained what it meant exactly, for purposes of heading 02.10, by "'long-term preservation' in practice".⁴⁶⁷ The Panel was satisfied that it could be ascertained through laboratory analyses whether a salted and frozen product was preserved for the long-term.⁴⁶⁸ However, it was unclear to the Panel whether preservation for the long-term had to be the result of salting, or freezing, or a combination of the two.⁴⁶⁹ The European Communities submits on appeal that there are no such practical problems, either with respect to the products at issue (which have not been claimed to be preserved) or for a customs official with access to tools of analysis and for whom the highly traditional products under heading 02.10 are recognizable and familiar.⁴⁷⁰ According to the European Communities, if a product has been "frozen" within the meaning of heading 02.07, it will still be classified under heading 02.10 of the EC Schedule as a "salted" product, provided that the salting ensures "preservation" within the meaning of EC Regulation 1223/2002 and EC Decision 2003/97/EC.⁴⁷¹

248. Although the European Communities clarifies that, for purposes of heading 02.10 of the EC Schedule, preservation has to be the result of the processes mentioned in that heading and not of the processes listed under heading 02.07 (namely, chilling, freezing), it does not explain how, in respect of frozen and salted meat, the preservation effect of the processes listed in heading 02.10 could be distinguished from the processes listed in heading 02.07.⁴⁷² Therefore, we share the Panel's concern about the lack of certainty in the application of the preservation criterion used by the European Communities regarding the tariff commitment under heading 02.10 of the EC Schedule.

249. In the light of these considerations, we see no reason to disturb the Panel's finding, in paragraph 7.328 of the Panel Reports, that "the lack of certainty associated with the application of the criterion of long-term preservation with respect to the concession contained in heading 02.10 of the EC Schedule ... could undermine the object and purpose of security and predictability, which [underlie] both the WTO Agreement and the GATT 1994."

D. Was Heading 02.10 Intended to Cover Frozen (Salted) Poultry Meat?

250. Finally, the European Communities submits that the Panel ignored its argument that heading 02.10 did not have the object and purpose, when negotiated, of securing market access arrangements on frozen salted poultry meat.⁴⁷³ In this respect, the Panel ruled that it was not authorized "to consider the European Communities' unilateral object and purpose when it concluded its Schedule in interpreting the concession contained in heading 02.10 of the EC Schedule".⁴⁷⁴ We agree with the Panel that a treaty interpreter must ascertain the common intentions of the parties and that these "common intentions cannot be ascertained on the basis of the subjective and unilaterally determined 'expectations' of one of the parties to a treaty."⁴⁷⁵ In our view, the European Communities' argument pertains to the "subjective views as to what [was] the agreement reached during tariff negotiations"⁴⁷⁶, because we see no indication in the Panel record showing that it was a "commonly shared view" of the parties to exclude frozen (salted) poultry meat from the product scope covered by heading 02.10 of the EC Schedule. Consequently, we find the Panel made no error in this regard.

X. Subsequent Practice

251. The European Communities appeals the Panel's finding that the European Communities' practice, between 1996 and 2002, of classifying the products at issue under heading 02.10 of the EC Schedule amounts to "subsequent practice" within the meaning of Article 31(3)(b) of the Vienna Convention⁴⁷⁷, which provides:

3. There shall be taken into account, together with the context:

...

(b) any subsequent practice in the application of the treaty which establishes the agreement of the parties regarding its interpretation[.]

252. In reaching its conclusion, the Panel found it "reasonable to rely upon EC classification practice alone in determining whether or not there is 'subsequent practice' that 'establishes the agreement' of WTO Members within the meaning of Article 31(3)(b)".⁴⁷⁸ For the Panel, it made "practical sense" that the classification practice of the importing Member "whose schedule is being interpreted" is important, because WTO Schedules are "particular to each WTO Member".⁴⁷⁹ The Panel found "a reasonable indication of consistent practice"⁴⁸⁰ by the European Communities, between 1996 and 2002⁴⁸¹, of classifying imports of the products at issue under heading 02.10. In addition, the Panel examined evidence of classification practice regarding imports into and exports from Brazil and Thailand, and imports into and exports from the third parties, namely, China and the United States, but found this classification practice "inconsistent" or of "limited usefulness".⁴⁸²

253. The European Communities contests the Panel's interpretation of the concept of "subsequent practice" under Article 31(3)(b). The European Communities argues that the subsequent practice of one party alone cannot determine the interpretation of a treaty, and that the Panel erred in its analysis of whether there was consistent practice at the level of the European Communities and at the multilateral level.⁴⁸³ Brazil and Thailand contend that, because the EC Schedule is at issue in this case, it is the European Communities' practice that is relevant for the identification of "subsequent practice" within the meaning of Article 31(3)(b).⁴⁸⁴ Brazil and Thailand thus request that we uphold the Panel's finding that the European Communities' consistent practice, between 1996 and 2002, of classifying the products at issue under heading 02.10 of the EC Schedule "amounts to subsequent practice" within the meaning of Article 31(3)(b) of the Vienna Convention.

254. This issue raises the following questions: (i) what may qualify as "practice"? (ii) how does one establish the agreement of the parties who have not engaged in the practice at issue? and (iii) was there "consistency" of relevant practice by the European Communities and other WTO Members?

A. What May Qualify as Practice?

255. At the outset, we observe that "subsequent practice" in the application of a treaty may be an important element in treaty interpretation because "it constitutes objective evidence of the understanding of the parties as to the meaning of the treaty".⁴⁸⁵

256. The Appellate Body found, in Japan � Alcoholic Beverages II, that "subsequent practice" within the meaning of Article 31(3)(b) entails a:

... "concordant, common and consistent" sequence of acts or pronouncements which is sufficient to establish a discernible pattern implying the agreement of the parties [to a treaty] regarding its interpretation.⁴⁸⁶

257. In  US � Gambling, the Appellate Body clarified that establishing "subsequent practice" within the meaning of Article 31(3)(b) involves two elements:

... (i) there must be a common, consistent, discernible pattern of acts or pronouncements; and (ii) those acts or pronouncements must imply agreement on the interpretation of the relevant provision.⁴⁸⁷ (original emphasis)

258. The Panel considered that the main question in the case at hand was whether "common" and "concordant" practice "necessarily means that all WTO Members must have engaged in a particular practice in order for it to qualify as 'subsequent practice' ... or whether the practice of a sub-set of the entire WTO-membership, including the practice of one Member only, may suffice."⁴⁸⁸ The Panel noted that the International Law Commission ("ILC") had stated that:

The [original text of Article 31(3)(b) of the Vienna Convention] spoke of a practice which "establishes the understanding of all the parties". By omitting the word "all" [in the final text], the Commission did not intend to change the rule. It considered that the phrase "the understanding of the parties" necessarily means the "parties as a whole". It omitted the word "all" merely to avoid any possible misconception that every party must individually have engaged in the practice where it suffices that it should have accepted the practice.⁴⁸⁹ (emphasis added)

The Panel inferred from this statement that "it is not necessary to show that  all  signatories to a treaty must have engaged in a particular practice in order for it to qualify as subsequent practice under Article 31(3)(b)".⁴⁹⁰ Rather, "it may be sufficient to show that all parties to the treaty have accepted the relevant practice."⁴⁹¹

259. We share the Panel's view that not each and every party must have engaged in a particular practice for it to qualify as a "common" and "concordant" practice. Nevertheless, practice by some, but  not all  parties is obviously not of the same order as practice by only one, or very few parties. To our mind, it would be difficult to establish a "concordant, common and discernible pattern" on the basis of acts or pronouncements of one, or very few parties to a multilateral treaty, such as the WTO Agreement. We acknowledge, however, that, if only some WTO Members have actually traded or classified products under a given heading, this circumstance may reduce the availability of such "acts and pronouncements" for purposes of determining the existence of "subsequent practice" within the meaning of Article 31(3)(b).

260. We turn next to the question of whose practice is relevant to establish agreement on the interpretation of the relevant provision. For the Panel, the classification practice of the importing Member "whose Schedule is being interpreted" is critical for purposes of establishing "subsequent practice" regarding a tariff concession, because WTO Schedules are "particular to each WTO Member".⁴⁹² Moreover, the European Communities was the only Member that actually imported the products covered by the measures challenged in this case.⁴⁹³ Therefore, the Panel found it "reasonable [in this case] to rely upon EC classification practice alone in determining whether or not there is 'subsequent practice' that 'establishes the agreement' of WTO Members within the meaning of Article 31(3)(b)".⁴⁹⁴

261. On appeal, the European Communities argues that the subsequent practice of one party alone cannot determine the interpretation of a treaty⁴⁹⁵, and that, therefore, exclusive reliance on the classification practice of the Member whose Schedule is at issue is not justified. This is particularly so, according to the European Communities, when there is no reason to believe that the Schedule departs from the Harmonized System, which is used by all Members in their agricultural Schedules.⁴⁹⁶ Brazil and Thailand submit that a tariff concession "brings about an obligation (and is binding) only with respect to the conceding Member [and that this] is quite different from other WTO obligations that bind all Members."⁴⁹⁷ Brazil and Thailand therefore contend that the fact that the EC Schedule is at issue in this case means that only the European Communities' classification practice is relevant for purposes of establishing subsequent practice in respect of that concession.⁴⁹⁸

262. We agree with Brazil and Thailand that each WTO Member has its own individual Schedule of tariff concessions and that the tariff commitments bound for specific products in those Schedules vary between different WTO Members. Nevertheless, it must be borne in mind that, during the course of the Uruguay Round, tariff commitments were negotiated on the basis of the Harmonized System.⁴⁹⁹ As a result, Schedules of WTO Members other than the European Communities also include tariff bindings under headings 02.07 and 02.10, which are based on the structure and description of the Harmonized System. Therefore, although this dispute concerns the scope of a tariff commitment contained in the WTO Schedule specific to the European Communities, the relevant headings are common to all WTO Members.

263. Brazil further contends that, although WTO Schedules are based on the Harmonized System, they are not identical: the Uruguay Round negotiations used the Harmonized System as a starting point, but the end result of those negotiations did not need to be identical to it.⁵⁰⁰ In Brazil's view, when, by means of EC Regulation 535/94, the European Communities included Additional Note 7 to Chapter 2 of the European Communities' Combined Nomenclature, it announced to its negotiating partners in the Uruguay Round the definition and scope of its tariff concession under heading 02.10 of its Schedule.⁵⁰¹

264. In our view, these arguments do not mean that the European Communities' WTO Schedule is as unique to the European Communities as Brazil and Thailand suggest.⁵⁰² Having said that, EC Regulation 535/94 may be relevant as evidence of what might have been agreed between WTO Members for the tariff commitment under heading 02.10 of the European Communities' WTO Schedule, within the flexibility conferred by the Harmonized System.⁵⁰³ This, however, does not render the classification practice of other WTO Members in relation to heading 02.10,  per se, irrelevant.

265. We acknowledge that we are concerned here with the interpretation of a tariff commitment contained in the WTO Schedule of the European Communities that, according to Article II:7 of the GATT 1994, forms an "integral part" of the WTO Agreement, as do all Members' WTO Schedules. In EC � Computer Equipment, the Appellate Body found that:

... the fact that Members" Schedules are an integral part of the GATT 1994 indicates that, while each Schedule represents the tariff commitments made by one Member, they represent a common agreement among all Members.⁵⁰⁴ (original emphasis)

The Appellate Body also stated in that appeal that:

The purpose of treaty interpretation is to establish the common intention of the parties to the treaty. To establish this intention, the prior practice of only one of the parties may be relevant, but it is clearly of more limited value than the practice of all parties. In the specific case of interpretation of a tariff concession in a Schedule, the classification practice of the importing Member, in fact, may be of great importance. However, the Panel was mistaken in finding that the classification practice of the United States was not relevant.⁵⁰⁵ (original emphasis)

266. The Appellate Body made these statements in the context of an interpretation pursuant to Article 32 of the Vienna Convention, but, as the Panel put it, these statements "confirm[] the importance of the classification practice of the importing Member whose schedule is being interpreted [but] also indicate[] that the classification practice of other WTO Members, including the exporting Member's practice, may be relevant."⁵⁰⁶ In our view, these statements cannot be read to justify exclusive reliance on the importing Member's classification practice. Therefore, we fail to see how the Panel's finding that it was "reasonable to rely upon EC classification practice alone in determining whether or not there is 'subsequent practice' that 'establishes the agreement' of WTO Members within the meaning of Article 31(3)(b)" can be reconciled with these statements of the Appellate Body in EC � Computer Equipment.⁵⁰⁷

267. We now turn to another aspect of the Panel's finding on subsequent practice, namely, what product range is relevant for purposes of establishing "subsequent practice" in this case. The European Communities submits on appeal that the Panel should have analyzed practice relating to all salted products subject to heading 02.10, not just practice concerning frozen salted chicken cuts with a salt content of between 1.2 and 3 per cent (the "products at issue"). According to the European Communities, the Panel should also have examined the practice of classifying products containing salt under alternative headings of Chapter 2 and, particularly, heading 02.07.⁵⁰⁸ Brazil and Thailand contend that practice concerning the products at issue alone is relevant for purposes of establishing "subsequent practice".⁵⁰⁹ Alternatively, Thailand points out that the Panel did consider practice relating to salted meat products classifiable under heading 02.10 other than the "products at issue" to the extent that the European Communities complied with the Panel's requests for information, but that the Panel ultimately decided that this evidence was not persuasive.⁵¹⁰

268. We have already noted that this dispute concerns the interpretation of the tariff commitment under heading 02.10 of the EC Schedule. In particular, it is the interpretation of the term "salted" in heading 02.10 that is at the heart of this dispute. Therefore, what is relevant for purposes of examining "subsequent practice" in this case is the classification practice relating to the entire range of salted meat products classifiable under heading 02.10, and not only the classification practice relating to the subset of such products covered by the measures challenged in this dispute. As the European Communities contends that the products at issue in this case are properly classified under heading 02.07, practice of classifying products containing salt under other headings of Chapter 2, especially heading 02.07, may also be relevant.

269. In this regard, we note that the Panel refers in its reasoning to classification practice under the "concession contained in heading 02.10"⁵¹¹ as well as to classification practice relating to the "products at issue".⁵¹² It is not clear from these statements whether the Panel considered relevant the classification practice in respect of the entire range of salted meat products classifiable under heading 02.10, or only in respect of the products at issue. In any event, with the exception of a BTI from Spain relating to dried and salted ham, the Panel limited its analysis to the classification practice relating to salted chicken cuts with a salt content of between 1.2 and 3 per cent, the products covered by the measures it had determined to be within its terms of reference. However, it is undisputed that salted meat products other than chicken cuts with a salt content of 1.2 to 3 per cent are also subject to heading 02.10 of the EC Schedule. The limitation in the Panel's terms of reference to measures covering the products at issue did not justify the Panel excluding the examination of the classification practice relating to other salted meat products classifiable under heading 02.10 (or relevant alternative headings such as heading 02.07) in its analysis of "subsequent practice".

270. In our view, as the Panel examined only a subset of salted meat products classifiable under heading 02.10, and it did not examine classification practice with respect to alternative headings such as heading 02.07, it could not draw valid conclusions as to the existence of "subsequent practice" establishing the agreement of the parties within the meaning of Article 31(3)(b) with respect to all salted meat products potentially covered by the tariff commitment under heading 02.10 of the EC Schedule.

B. How Does One Establish Agreement of Parties that Have Not Engaged in a Practice?

271. We recall that, under Article 31(3)(b), agreement of the parties regarding interpretation of a treaty term must be established. This raises the question how to establish agreement of those parties that have not engaged in a practice. According to the Panel, acceptance "deduced from a party's reaction or lack of reaction to the practice" of another Member is sufficient to establish the agreement of treaty parties regarding the interpretation of a provision.⁵¹³ The Panel held that, as other WTO Members did not "protest" against the European Communities' classification practice from 1996 to 2002�whereby the products at issue were classified under heading 02.10�they can be presumed to have accepted it.⁵¹⁴

272. We agree with the Panel that, in general, agreement may be deduced from the affirmative reaction of a treaty party. However, we have misgivings about deducing, without further inquiry, agreement with a practice from a party's "lack of reaction". We do not exclude that, in specific situations, the "lack of reaction" or silence by a particular treaty party may, in the light of attendant circumstances, be understood as acceptance of the practice of other treaty parties.⁵¹⁵ Such situations may occur when a party that has not engaged in a practice has become or has been made aware of the practice of other parties (for example, by means of notification or by virtue of participation in a forum where it is discussed), but does not react to it. However, we disagree with the Panel that "lack of protest" against one Member's classification practice by other WTO Members may be understood, on its own, as establishing agreement with that practice by those other Members. Therefore, the fact that Brazil and Thailand, having actually exported the products at issue, may have accepted the European Communities' import classification practice under heading 02.10, is not dispositive of whether other Members with actual or potential trade interests have also accepted that practice. We, therefore, disagree with the Panel that "subsequent practice" under Article 31(3)(b) has been established by virtue of the fact that the Panel "[had] not been provided any evidence to indicate that WTO Members protested against the EC classification practice in question from 1996 - 2002".⁵¹⁶

273. Finally, we recall that, according to the European Communities, Article IX:2 of the WTO Agreement⁵¹⁷ suggests that "any practice relating to the interpretation of the multilateral trade agreements and acceptance thereof must take the form of overt acts that are explicitly submitted for consideration of all WTO Members and adopted by a large majority of the WTO Membership."⁵¹⁸ To our mind, the existence of Article IX:2 of the WTO Agreement is not dispositive for resolving the issue of how to establish the agreement by Members that have not engaged in a practice. We fail to see how the express authorization in the WTO Agreement for Members to adopt interpretations of WTO provisions�which requires a three-quarter majority vote and not a unanimous decision�would impinge upon recourse to subsequent practice as a tool of treaty interpretation under Article 31(3)(b) of the Vienna Convention. In any case, we are mindful that the Appellate Body, in Japan � Alcoholic Beverages II, cautioned that relying on "subsequent practice" for purposes of interpretation must not lead to interference with the "exclusive authority" of the Ministerial Conference and the General Council to adopt interpretations of WTO agreements that are binding on all Members.⁵¹⁹ In our view, this confirms that "lack of reaction" should not lightly, without further inquiry into attendant circumstances of a case, be read to imply agreement with an interpretation by treaty parties that have not themselves engaged in a particular practice followed by other parties in the application of the treaty. This is all the more so because the interpretation of a treaty provision on the basis of subsequent practice is binding on all parties to the treaty, including those that have not actually engaged in such practice.

C. Was there "Consistency" of Customs Classification Practice in this Case?

274. Our next task is to consider the Panel's conclusion that there was evidence of a "consistent, common and discernible pattern" of classification under heading 02.10 of the EC Schedule during the period 1996 to 2002.⁵²⁰ The Panel found "a reasonable indication of consistent practice" by the European Communities between 1996 and 2002 on the basis of the classification of imports of the products at issue under heading 02.10.⁵²¹ In addition, the Panel examined evidence of classification practice regarding imports into and exports from Brazil and Thailand, and imports into and exports from the third parties, namely, China and the United States, but found that this evidence was of limited probative value.⁵²²

275. However, in view of the fact that we disagreed above with several aspects of the interpretation and application by the Panel of the requirements of Article 31(3)(b), we do not believe that it is necessary for us to examine whether there was "consistency" of the European Communities' classification practice between 1996 and 2002 so as to establish "subsequent practice" within the meaning of Article 31(3)(b). Even if we were to agree with the Panel that the European Communities consistently classified the "products at issue" under heading 02.10 of the EC Schedule, between 1996 and 2002, this would not change our view with respect to the Panel's interpretation and application of Article 31(3)(b).

D. Conclusion

276. For the reasons set out above, we reverse the Panel's interpretation and application of the concept of "subsequent practice" within the meaning of Article 31(3)(b) of the Vienna Convention; consequently, the Panel's conclusions, in paragraphs 7.289-7.290 and 7.303 of the Panel Reports, that the European Communities' practice of classifying, between 1996 and 2002, the products at issue under heading 02.10 of the EC Schedule "amounts to subsequent practice" within the meaning of Article 31(3)(b) of the Vienna Convention cannot stand.

XI. Interpretation of the EC Schedule in the Light of Article 32 of the Vienna Convention

A. Introduction

277. After summarizing the "preliminary conclusions" of its interpretative analysis of the term "salted" in the tariff commitment under heading 02.10 of the EC Schedule in the light of Article 31 of the Vienna Convention⁵²³, the Panel stated:

... while the interpretation undertaken by the Panel pursuant to Article 31 of the Vienna Convention suggests that the products at issue are covered by the concession contained in heading 02.10 of the EC Schedule, we turn to supplementary means of interpretation of the concession contained in heading 02.10 of the EC Schedule pursuant to Article 32 of the Vienna Convention to seek confirmation that this is, in fact, the case.⁵²⁴

278. The Panel structured its analysis under Article 32 as follows. It looked first at "preparatory works", and then continued with "circumstances of the conclusion of the EC Schedule". It interpreted the concept of "circumstances of [a treaty's] conclusion" in respect of its substantive and temporal scope. Having completed this general interpretation of "circumstances", the Panel considered the relevance, for the interpretation of the term "salted" in heading 02.10 in the EC Schedule, of certain legal instruments of the European Communities (specifically, EC Regulation 535/94, the Dinter and Gausepohl judgments⁵²⁵ of the ECJ, and the Explanatory and Additional Notes to the European Communities' customs legislation) and the classification practice of the European Communities.

279. The Panel concluded its analysis of "supplementary means" within the meaning of Article 32 with the following finding:

We considered EC Regulation No. 535/94, the Dinter and Gausepohl ECJ judgements, EC Explanatory Notes, an EC Additional Note and classification practice prior to the conclusion of the EC Schedule.
In the Panel's view, the relevant aspects of the supplementary means of interpretation, most particularly, EC Regulation No. 535/94, indicate that meat that has been deeply and homogeneously impregnated with salt and has a minimum salt content of 1.2% by weight would qualify as "salted" meat under the concession contained in heading 02.10 of the EC Schedule. Therefore, the Panel concludes that the supplementary means of interpretation considered under Article 32 of the Vienna Convention confirm the preliminary conclusions we reached ... above following an analysis under Article 31 of the Vienna Convention.⁵²⁶

280. The European Communities appeals the Panel's interpretation of the term "salted" in heading 02.10 of the EC Schedule in the light of Article 32 of the Vienna Convention. It challenges the Panel's interpretation of the concept of "circumstances of [a treaty's] conclusion" in Article 32 and the legal characterization of, in particular, EC Regulation 535/94 and the ECJ's Gausepohl judgment. The European Communities also claims that the Panel acted inconsistently with its obligations under Article 11 of the DSU, to the extent that the Panel's conclusions under Article 32 were "premised on an erroneous assessment of the facts".⁵²⁷

281. We recall that, above, we concluded that the term "salted" in heading 02.10, read in the context of the Harmonized System, does not contain a requirement that salting must, by itself, ensure "preservation".⁵²⁸ At the same time, we have found that the Harmonized System does not, as such, preclude the use of this criterion for purposes of classification and that Members have the flexibility to negotiate particular tariff commitments within the parameters required by the Harmonized System. The purpose of our analysis under Article 32 is, ultimately, to ascertain whether WTO Members have agreed on the preservation criterion advanced by the European Communities with respect to the tariff commitment under heading 02.10 of the EC Schedule.

B. The Concept of "Circumstances of the Conclusion of a Treaty"

282. We begin our analysis by pointing out that the means of interpretation listed in Article 32⁵²⁹  are supplementary means to be resorted to when interpretation in the light of Article 31 leaves the meaning of a treaty provision ambiguous or obscure, or, in order to confirm the meaning resulting from the application of the interpretation methods listed in Article 31. In this regard, we recall that the Appellate Body recognized in EC � Computer Equipment that:

... the classification practice in the European Communities during the Uruguay Round [was] part of 'the circumstances of [the] conclusion' of the WTO Agreement and may be used as a supplementary means of interpretation within the meaning of Article 32 of the Vienna Convention.⁵³⁰

283. We stress, moreover, that Article 32 does not define exhaustively the supplementary means of interpretation to which an interpreter may have recourse. It states only that they include the preparatory work of the treaty and the circumstances of its conclusion. Thus, an interpreter has a certain flexibility in considering relevant supplementary means in a given case so as to assist in ascertaining the common intentions of the parties.⁵³¹

284. The Panel interpreted the term "salted" in the tariff commitment under heading 02.10 of the EC Schedule in the light of the circumstances of the conclusion of the WTO Agreement, noting that these circumstances "may provide insights into the historical background against which the EC Schedule was negotiated".⁵³² The Appellate Body expressed a similar view in  EC � Computer Equipment:

With regard to "the circumstances of [the] conclusion" of a treaty, this permits, in appropriate cases, the examination of the historical background against which the treaty was negotiated.⁵³³

285. The Panel considered as "circumstances of conclusion" in this case the "historical background compris[ing] the collection of events, acts and other instruments that characterize the prevailing situation in the European Communities"⁵³⁴ at the time the tariff commitment under heading 02.10 of the EC Schedule was negotiated. Accordingly, the Panel decided to "consider EC law and the EC's classification practice during the Uruguay Round negotiations to the extent that they are relevant to the conclusion of the EC Schedule pursuant to Article 32".⁵³⁵

286. The European Communities challenges the Panel's analysis under Article 32 on various grounds. We discuss first the European Communities' arguments with respect to the Panel's interpretation of the concept of "circumstances of the conclusion of the treaty".

1. The Concept of "Circumstances"

287. According to the European Communities, the concept of "circumstances" must be interpreted narrowly. Circumstances must have directly influenced the common intention of all the parties to the treaty. A very high degree of consistency and strict conditions as to duration are required for prior practice to be established. WTO jurisprudence shows that a "circumstance" in the form of a condition relating to a negotiating party must have been an objective fact, evident to all the negotiators at the time. There must be a direct and genuine link between the relevant circumstances and the common intentions of the parties; mere "constructive knowledge" is not sufficient.⁵³⁶

288. We turn first to the European Communities' argument that, for an "event, act or instrument" to qualify as a "circumstance of the conclusion of a treaty", it "must have directly influenced the common intentions of parties, that is, all parties to a treaty"⁵³⁷ when they "were actually drafting the text".⁵³⁸ According to the European Communities, in the absence of such a "direct link"⁵³⁹, any event, act, or instrument does not amount to a "circumstance" within the meaning of Article 32. The European Communities relies on the opinion of Yasseen who, in his work, L'interpr�tation des Trait�s d'apr�s la Convention de Vienne sur le Droit des Trait�s, defines "circumstances of conclusion" as the historical background that "comprises the collection of events which led the parties to conclude the treaty in order to maintain or confirm the status quo, or to bring about an alteration made necessary by a new situation".⁵⁴⁰ The European Communities infers from this statement that something that has not directly influenced the conclusion of the treaty cannot be a "circumstance" of conclusion; nor does something that has not influenced all the parties to the treaty qualify as such a "circumstance". The European Communities also relies on the Appellate Body's statement in  EC � Computer Equipment  that "the purpose of treaty interpretation is to establish the common intentions of the parties" in support of its position that a circumstance must have directly influenced the common intentions of the parties.⁵⁴¹

289. Although we do not disagree with the general proposition by Yasseen, we do not agree with the European Communities that a "direct link" to the treaty text and "direct influence" on the common intentions must be shown for an event, act, or instrument to qualify as a "circumstance of the conclusion" of a treaty under Article 32 of the Vienna Convention. An "event, act or instrument" may be relevant as supplementary means of interpretation not only if it has actually influenced a specific aspect of the treaty text in the sense of a relationship of cause and effect; it may also qualify as a "circumstance of the conclusion" when it helps to discern what the common intentions of the parties were at the time of the conclusion with respect to the treaty or specific provision. Moreover, the European Communities has taken the Appellate Body statement out of context; the Appellate Body was speaking of the sum or end-result of treaty interpretation; it should not be misconstrued as introducing a concept that an act, event, or instrument qualifies as a circumstance only when it has influenced the intent of all the parties. Thus, not only "multilateral" sources, but also "unilateral" acts, instruments, or statements of individual negotiating parties may be useful in ascertaining "the reality of the situation which the parties wished to regulate by means of the treaty" and, ultimately, for discerning the common intentions of the parties.⁵⁴²

2. Relevance of Circumstances for Interpretation

290. We agree with the Panel that "relevance", as opposed to "direct influence" or "[genuine] "link", is the "more appropriate criterion" to judge the extent to which a particular event, act, or other instrument should be relied upon or taken into account when interpreting a treaty provision in the light of the "circumstances of its conclusion".⁵⁴³ As to how such relevance should be demonstrated, the Panel said that "it must be shown that the event, act or other instrument has or could have influenced the specific aspects of the ultimate text of a treaty that are in issue."⁵⁴⁴ The European Communities submits that the relevance of a circumstance should not be ascertained on the basis of whether it could have influenced the ultimate treaty text but, rather, on the basis of "objective facts".⁵⁴⁵

291. In our view, the relevance of a circumstance for interpretation should be determined on the basis of objective factors, and not subjective intent. We can conceive of a number of objective factors that may be useful in determining the degree of relevance of particular circumstances for interpreting a specific treaty provision. These include the type of event, document, or instrument and its legal nature; temporal relation of the circumstance to the conclusion of the treaty⁵⁴⁶; actual knowledge or mere access to a published act or instrument; subject matter of the document, instrument, or event in relation to the treaty provision to be interpreted; and whether or how it was used or influenced the negotiations of the treaty.

3. "Circumstances " at What Time?

292. As regards the temporal correlation between an event, act, or instrument and the conclusion of the treaty, the Panel stated that:

... there is not necessarily a single point in time when the "circumstances of conclusion" should be ascertained. Rather, we consider that it relates to a period starting some time prior to the conclusion of the treaty in question and ending at the point of conclusion.⁵⁴⁷ (footnote omitted)

293. According to the European Communities, the Panel's recognition that an interpreter should ascertain the "circumstances of conclusion", not at a single point in time but, rather, over a certain period, "sits uncomfortably" with the Panel's observation that the date of conclusion of the WTO Agreement is 15 April 1994.⁵⁴⁸ We disagree with the European Communities, because the precise date of conclusion of a treaty should not be confused with the circumstances that were prevailing at that point in time. Events, acts, and instruments may form part of the "historical background against which the treaty was negotiated", even when these circumstances predate the point in time when the treaty is concluded, but continue to influence or reflect the common intentions of the parties at the time of conclusion. We also agree with the Panel that there is "some correlation between the timing of an event, act or other instrument ... and their relevance to the treaty in question"⁵⁴⁹, in the sense that "the further back in time that an event, act or other instrument took place, was enacted or was adopted relative to the conclusion of a treaty", the less relevant it will be for interpreting the treaty in question.⁵⁵⁰ What should be considered "temporally proximate will vary from treaty provision to treaty provision" and may depend on the structure of the negotiating process.⁵⁵¹ Accordingly, we see no error in the Panel's finding that the circumstances of the conclusion should be ascertained over a period of time ending on the date of the conclusion of the WTO Agreement.

4. What Kind of Knowledge is Required?

294. The European Communities also contests the Panel's "doctrine of 'constructive knowledge', whereby all negotiating parties were deemed to have knowledge of a particular event, act or instrument through publication".⁵⁵² The Panel considered "whether knowledge on the part of all parties of an event, act or other instrument is necessary in order for [it] to qualify as 'circumstances of conclusion' under Article 32".⁵⁵³ The Panel found that actual knowledge was not necessary, provided that:

... [when] parties have deemed notice of a particular event, act or instrument through publication, they may be considered to have had constructive knowledge and that such knowledge suffices for the purposes of Article 32 of the Vienna Convention.⁵⁵⁴ (emphasis added; footnote omitted)

295. In the European Communities' view, "deemed knowledge" or publication is not sufficient for purposes of Article 32; a "circumstance" must be an "objective fact, evident to all negotiators at the time".⁵⁵⁵ The European Communities argues that "the Panel's notion of deemed knowledge on the basis of general 'access' cannot substitute the need to demonstrate a direct link between a circumstance and the common intentions of the parties."⁵⁵⁶

296. The Panel turned, as support for the concept of "constructive knowledge" of circumstances of conclusion, to a statement made by Sir Iain Sinclair in his work, The Vienna Convention on the Law of Treaties, in relation to "preparatory works".⁵⁵⁷ This statement expresses concerns about "the unity of a multilateral treaty" if "different methods of interpretation [w]ould be employed, the one for States who participated in the travaux pr�paratoires and the other for States who did not so participate" and acceded later on.⁵⁵⁸ The Panel saw "no reason why these comments would not be equally applicable with respect to 'circumstances of conclusion' under Article 32 of the Vienna Convention."⁵⁵⁹ We are not so convinced that the remarks on the knowledge of preparatory works by States not participating in negotiations are applicable to the "circumstances of conclusion" which we are dealing with here.

297. We understand the Panel's notion of "constructive knowledge" to mean that "parties have deemed notice of a particular event, act or instrument through publication".⁵⁶⁰ We note the European Communities' view that "deemed knowledge" on the basis of general "access" to a publication cannot substitute the need for demonstrating a direct link between a circumstance and the common intentions of the parties.⁵⁶¹ However, we consider that the European Communities conflates the preliminary question of what may qualify as a "circumstance" of a treaty's conclusion with the separate question of ascertaining the degree of relevance that may be ascribed to a given circumstance, for purposes of interpretation under Article 32. As far as an act or instrument originating from an individual party may be considered to be a circumstance under Article 32 for ascertaining the parties' intentions, we consider that the fact that this act or instrument was officially published, and has been publicly available so that any interested party could have acquired knowledge of it, appears to be enough. Of course, proof of actual knowledge will increase the degree of relevance of a circumstance for interpretation.

5. Whose Acts or Instruments May Qualify as "Circumstances"?

298. In addition, the European Communities criticizes the Panel for failing to take into account the "internationally prevailing situation" and the practice of other Members, specifically, the United States.⁵⁶²

299. As noted above, the Panel understood the "circumstances of conclusion" as the "historical background" comprising "the collection of events, acts and other instruments" against which the treaty was negotiated. The Panel found that the "historical background" against which heading 02.10 of the EC Schedule was negotiated was the "events, acts and other instruments" that characterize the "prevailing situation in the European Communities".⁵⁶³ However, the Panel also referred in this respect to the Appellate Body's guidance in EC � Computer Equipment that "it is most useful to examine the classification practice of all WTO Members".⁵⁶⁴ In  EC � Computer Equipment, the Appellate Body emphasized that, "while each Schedule represents the tariff commitments made by one  Member, they represent a common agreement among  all  Members".⁵⁶⁵ It also found that in the "specific case of the interpretation of a tariff concession in a Schedule", the purpose of interpretation is "to establish the common intention of the parties to the treaty".⁵⁶⁶ The Appellate Body concluded that:

... the classification practice of the importing Member, in fact, may be of great importance. However, the Panel was mistaken in finding that the classification practice of the United States was not relevant.⁵⁶⁷ (original emphasis)

300. We agree with the Panel that, for purposes of interpreting the term "salted" under heading 02.10 of the EC Schedule in the light of the "circumstances of its conclusion", the customs classification practice in the European Communities is of great importance⁵⁶⁸; however, we share the European Communities' view that its situation is not of exclusive relevance, and that the "prevailing situation internationally" is relevant.⁵⁶⁹ We note that the Panel did, in fact, examine the United States' classification practice. The Panel concluded that this evidence had limited probative value, notably because it concerned products other than those at issue. Moreover, the United States indicated that the ruling of the United States' custom authorities of 1993 did not "endorse" the European Communities' interpretation of heading 02.10.⁵⁷⁰ We also observe that the Panel considered that it had been provided with only "limited evidence" in respect of the classification practice of other WTO Members.

301. In our view, the Panel's conclusion regarding the evidence of other WTO Members' classification practice, including that of the United States, falls within its discretion as the trier of facts. We, therefore, see no basis for objecting to the Panel's treatment of the "prevailing situation internationally".

6. What Types of Events, Acts, and Instruments?

302. The Panel also addressed the question of what types of events, acts, and other instruments may be taken into account as circumstances of conclusion under Article 32. In this dispute, the question arises whether the classification practice of customs authorities and the customs legislation of the European Communities and court judgments of the ECJ relating to tariff classification may be relevant as "circumstances" of the conclusion of the WTO agreements, including the EC Schedule.

303. The Panel noted that the Appellate Body recognized in  EC � Computer Equipment that:

... the classification practice in the European Communities during the Uruguay Round [was] part of 'the circumstances of [the] conclusion' of the WTO Agreement and may be used as a supplementary means of interpretation within the meaning of Article 32 of the Vienna Convention.⁵⁷¹ (emphasis added)

304. In this statement, the Appellate Body referred to customs classification practice prior to the conclusion of a treaty. The Panel noted that practice that "does not qualify as 'subsequent practice' under Article 31(3)(b) ... may, nevertheless, be taken into consideration under Article 32".⁵⁷² The European Communities criticizes the Panel for considering classification practice subsequent to the conclusion of the treaty as relevant for purposes of interpretation under Article 32.⁵⁷³

305. In our view, it is possible that documents published, events occurring, or practice followed subsequent to the conclusion of the treaty may give an indication of what were, and what were not, the "common intentions of the parties" at the time of the conclusion.⁵⁷⁴ The relevance of such documents, events or practice would have to be determined on a case-by-case basis.

306. In addition, the European Communities asserts on appeal that the classification practice must show a high level of "consistency" for it to be relevant as a "circumstance of the conclusion of a treaty".⁵⁷⁵ The European Communities refers to the "standards of consistency" that were endorsed by the Appellate Body in EC � Computer Equipment, and states that customs classification practice should not be considered separately from applicable legislation. Moreover, according to the European Communities, classification practice should not have been interrupted and must have "endured".⁵⁷⁶

307. We believe that the Appellate Body's statement in  EC � Computer Equipment regarding the "consistency" of classification practice should not be read as setting a benchmark for determining whether a particular classification practice may qualify at all as "circumstance of the conclusion". A careful reading reveals that the Appellate Body addressed the degree of relevance of customs classification practice. The Appellate Body said:

Consistent prior classification practice may often be significant. Inconsistent classification practice, however, cannot be relevant in interpreting the meaning of a tariff concession.⁵⁷⁷ (original emphasis)

Thus, the Appellate Body concluded that the "consistent prior classification practice" is "significant", whereas "inconsistent classification practice" is not "relevant".

308. Regarding the relevance of legislation relating to customs classification for purposes of interpretation, we agree with the Panel's reliance⁵⁷⁸ on the following statement of the Appellate Body in  EC � Computer Equipment:

If the classification practice of the importing Member at the time of the tariff negotiations is relevant in interpreting tariff concessions in a Member's Schedule, surely that Member's legislation on customs classification at that time is also relevant.⁵⁷⁹ (emphasis added)

309. In addition, the Panel asked whether a Member's  court judgments  may, in principle, be taken into account as supplementary means of interpretation under Article 32. The Panel concluded that:

This would suggest that a valid distinction cannot be drawn between, on the one hand, EC legislation and, on the other hand, ECJ judgements for the purposes of Article 32 of the Vienna Convention.⁵⁸⁰ (footnote omitted)

We share the Panel's consideration that judgments of domestic courts are not, in principle, excluded from consideration as "circumstances of the conclusion" of a treaty if they would be of assistance in ascertaining the common intentions of the parties for purposes of interpretation under Article 32.⁵⁸¹ It is necessary to point out, however, that judgments deal basically with a specific dispute and have, by their very nature, less relevance than legislative acts of general application (although judgments may have some precedential effect in certain legal systems).⁵⁸²

C. Characterization of Relevant Law of the European Communities

310. Having discussed the concept of "circumstances of the conclusion of a treaty" within the meaning of Article 32, we turn to reviewing the Panel's findings determining the relevance, for interpreting the term "salted" in the tariff commitment under heading 02.10 of the EC Schedule, of the customs classification legislation, practice, and court judgments of the European Communities (namely, EC Regulation 535/94, the Dinter and Gausepohl judgments of the ECJ, certain Explanatory Notes to the Combined Nomenclature, and classification practice prior and subsequent to the conclusion of the EC Schedule). We then review whether the elements of the European Communities' law and practice examined by the Panel qualify as supplementary means of interpretation under Article 32 and support the Panel's conclusion with respect to the meaning of the term "salted" in the tariff commitment under heading 02.10 of the EC Schedule.

311. The European Communities submits on appeal that the Panel mischaracterized the customs classification law and practice of the European Communities, in particular EC Regulation 535/94 and the ECJ judgment in Gausepohl, and that this mischaracterization amounts to a distortion of facts contrary to Article 11 of the DSU.⁵⁸³ According to the European Communities, the Panel failed to consider the "totality" of the European Communities' customs legislation, practice, and court judgments and erred in interpreting the interaction between various elements of the European Communities' legal system.⁵⁸⁴ The European Communities challenges specifically the Panel's finding that EC Regulation 535/94 "superseded" the ECJ judgment in Gausepohl, such that the criterion of preservation under heading 02.10 of the European Communities' Combined Nomenclature no longer applies.⁵⁸⁵

312. Brazil contends that EC Regulation 535/94 introduced an objective criterion for the classification of salted meat (deep salt impregnation with a salt content of at least 1.2 per cent), and did not refer to the concept of "preservation". Brazil observes that the Regulation was enacted before the conclusion of the WTO agreements and therefore determines the product definition that applies to heading 02.10 of the European Communities' WTO Schedule. Brazil submits that the Panel appropriately considered relevant law, practice, and court judgments of the European Communities. According to Brazil, even if the European Commission took the ECJ's judgment in Gausepohl into account in enacting EC Regulation 535/94, that judgment suggests that deep impregnation with at least 1.2 per cent of salt meets the ECJ's understanding of "preservation".⁵⁸⁶

313. Thailand argues that, in Gausepohl, the ECJ held that there are three characteristics for bovine meat to be classified under heading 02.10: the meat must (i) be deeply and evenly impregnated with salt in all its parts; (ii) be for the purpose of preservation; and (iii) have a minimum total salt content of 1.2 per cent by weight.⁵⁸⁷ In contrast, Additional Note 7, inserted into the European Communities' Combined Nomenclature through EC Regulation 535/94, provides that, in order to fall under heading 02.10, meat must (i) be deeply and homogeneously impregnated with salt in all its parts; and (ii) have a total salt content of not less than 1.2 per cent by weight. In Thailand's view, the European Communities deliberately omitted from EC Regulation 535/94 the criterion that salting must ensure preservation.⁵⁸⁸

1. EC Regulation 535/94

314. As explained above⁵⁸⁹, EC Regulation 535/94 provided a product description for heading 02.10 of the European Communities' Combined Nomenclature that was inserted as an Additional Note into Chapter 2 of that nomenclature.⁵⁹⁰ The Additional Note states:

For the purposes of heading No. 0210, the term 'salted' means meat or edible meat offal which has been deeply and homogenously impregnated with salt in all parts, having a total salt content of no less than 1.2% by weight.

315. The recitals to EC Regulation 535/94 indicate the reasons why it was enacted:

Whereas, to ensure uniform application of the Combined Nomenclature, provisions should be laid down for the classification of salted meat and edible meat offal falling within CN code heading 0210, in order to distinguish them from fresh, chilled or frozen meat and edible meat offal; whereas a total salt content of 1.2% or more by weight appears an appropriate criterion for distinguishing between these two types of products.

316. Regarding the legal effect of EC Regulation 535/94 in European Communities' law, the Panel found that:

... EC Regulation No. 535/94 introduced an Additional Note into the [Combined Nomenclature]. The effect of that Regulation, through the Additional Note that it introduced, was that if meat had been deeply and homogeneously impregnated with salt, with a minimum salt content of 1.2% by weight, it would meet the requirements of that Regulation and would qualify as "salted" meat under heading 02.10 of the [Combined Nomenclature].⁵⁹¹

317. The Panel observed that EC Regulation 535/94 was part of the European Communities' legislation on customs classification at the time of the conclusion of the WTO agreements and that, therefore, it is relevant as a "circumstance of its conclusion".⁵⁹² We agree with the Panel that "the mere fact that an act, such as EC Regulation No. 535/94, is unilateral, does not mean that that act is automatically disqualified from consideration under Article 32".⁵⁹³ Indeed, this is consistent with the Appellate Body's statement in EC � Computer Equipment that a Member's customs legislation is relevant in interpreting tariff concessions.⁵⁹⁴

318. We turn now to review the Panel's findings concerning the relevance of EC Regulation 535/94 for purposes of interpreting the term "salted" in the tariff commitment under heading 02.10 of the EC Schedule in the light of Article 32. As we noted above⁵⁹⁵, a number of factors may be useful in ascertaining the relevance of a "circumstance of conclusion" for interpretation.

319. We look first to the  temporal aspect of the relevance of EC Regulation 535/94. We note that it was published in the Official Journal of the European Communities on 11 March 1994 and entered into force on 1 April 1994.⁵⁹⁶ Having considered the participants' arguments, we believe that the temporal proximity of these dates to the conclusion of the WTO Agreement on 15 April 1994 makes EC Regulation 535/94 relevant as a "circumstance of conclusion" for the interpretation of the tariff commitment under heading 02.10 of the EC Schedule.

320. The European Communities submits that the final results of tariff negotiations that took place between 1986 and 15 December 1993 cannot be altered by a unilateral measure.⁵⁹⁷ We agree. However, the European Communities acknowledges that a legislative act taken during the verification period, prior to the formal adoption of the WTO Agreement, could be relevant for interpreting the tariff commitment under heading 02.10 of the EC Schedule, provided that compelling evidence proves that negotiators "actually took note" of such act.⁵⁹⁸

321. We do not believe that the mere fact that EC Regulation 535/94 was enacted after the conclusion of the Uruguay Round tariff negotiations makes it irrelevant for ascertaining what the European Communities intended when offering its tariff concession, or for ascertaining whether it reflects the common intentions of the parties in respect of the tariff commitment under heading 02.10 of the EC Schedule.

322. Turning to the subject-matter, EC Regulation 535/94 (which inserts an Additional Note to heading 02.10 of the European Communities' Combined Nomenclature) clearly covers the same salted meat products that fall under the tariff commitment under heading 02.10 of the European Communities' WTO Schedule. Although the European Communities' Combined Nomenclature cannot be equated with the European Communities' WTO Schedule, the Combined Nomenclature implements the European Communities' WTO Schedule and the Harmonized System in the domestic legal system of the European Communities.⁵⁹⁹

323. Turning to the content of EC Regulation 535/94, we note that, although Additional Note 7 mentions deep impregnation with salt, with a minimum salt content of 1.2 per cent by weight, there is no criterion of preservation or long-term preservation stated in the text of that Regulation. The European Communities contends that EC Regulation 535/94 provides only one part of the product description applicable to the tariff commitment under heading 02.10 of the EC Schedule. According to the European Communities, for purposes of the tariff commitment under heading 02.10 of the EC Schedule, salting must ensure long-term preservation, and this requirement is not altered by EC Regulation 535/94.

324. The European Communities supports its position with several arguments. First, it asserts that the criterion of preservation is intrinsic to and flows directly from heading 02.10 of the Harmonized System. In addition, it contends that the notion of "preservation" has always governed the European Communities' customs classification practice for "salted" meat products and that it has also been confirmed in judicial pronouncements of the ECJ since the 1980s.⁶⁰⁰ EC Regulation 535/94 lays down only a technical minimum level of 1.2 per cent of salt for considering a product to be salted for "preservation", but it does not and cannot "supersede" the requirement of "preservation". As we held above, the product description in heading 02.10 of the Harmonized System (read together with relevant Chapter and Explanatory Notes) does not contain a requirement of "preservation" and does not limit the scope of heading 02.10 of the Harmonized System to products that are salted for the purpose of "preservation".⁶⁰¹ However, we do not see that EC Regulation 535/94 explicitly requires that meat must be salted so as to ensure "preservation".

325. We turn next to the European Communities assertion that the requirement of preservation in respect of heading 02.10 flows from prior case-law of the ECJ interpreting European Communities' customs legislation and from relevant Explanatory Notes. According to the European Communities, that criterion was embedded in the European Communities' legal system also after the enactment of EC Regulation 535/94 as well, because that Regulation only implements, but cannot derogate from, ECJ case-law and the European Communities' Combined Nomenclature.

2. The  Dinter and Gausepohl  Judgments of the European Court of Justice

326. The Panel addressed the ECJ judgments in  Dinter and Gausepohl before dealing with the Explanatory Notes from the 1980s. In 1982-1983, the ECJ was asked in the Dinter case⁶⁰² whether turkey meat seasoned with salt and pepper was properly classified under Chapter 2 or, instead, under Chapter 16 of the European Communities' Combined Nomenclature. The ECJ ruled that the meat was properly classified under Chapter 16, because "Chapter 02 comprises poultrymeat which has undergone a preserving process."⁶⁰³

327. We note that the Dinter judgment relates to salted turkey meat, which is a subset of the products covered by heading 02.10 of the EC Schedule. However, the temporal relationship between that judgment (published in 1983) and the conclusion of the WTO Agreement is remote. In our view, this diminishes its relevance for the "historic background" against which tariff commitments were negotiated during the Uruguay Round. We agree with the Panel that the Gausepohl judgment (published in May 1993) is more relevant.⁶⁰⁴

328. In 1993, in Gausepohl, the ECJ considered the question whether beef to which salt had been added should be classified under heading 02.10.⁶⁰⁵ The ECJ held that:

... meat of bovine animals to which a quantity of salt has been added merely for the purpose of transportation cannot be regarded as salted for the purposes of heading 0210. On the other hand, salting as a method of preserving meat of bovine animals for a longer period must be applied evenly to all parts of the meat.

...

The reply to the questions from the national court should therefore be that heading 0210 of the Common Customs Tariff (Combined Nomenclature) must be interpreted as meaning that meat of bovine animals may be classified under that heading as salted meat only if it has been deeply and evenly impregnated with salt in all its parts for the purposes of long-term preservation so that it has a minimum total salt content of 1.2% by weight.⁶⁰⁶ (emphasis added)

329. As to the meaning of the Gausepohl  judgment in European Communities' law, the Panel took the view that:

Heading 0210 of [the Combined Nomenclature] � must be interpreted as meaning that meat of bovine animals may be classified under that heading as salted meat only if it has been deeply and evenly impregnated with salt in all its parts for the purposes of long-term preservation so that it has a minimum total salt-content of 1.2% by weight.⁶⁰⁷

However, the Panel found that:

� the aspects of the Gausepohl judgment that are relevant to this case [�that is, preservation or long-term preservation�] were superseded through the enactment of EC Regulation No. 535/94.⁶⁰⁸ (emphasis added)

330. The Panel also considered that there were "certain ambiguities concerning the meaning and effect of the Gausepohl judgment". The Panel understood the judgment to mean that "bovine meat that has been deeply and homogeneously impregnated with salt and has a minimum salt content of 1.2% by weight will be covered by heading 02.10 of the EC Schedule".⁶⁰⁹ It was not persuaded that "the 1.2% salt content is merely a minimum above which it is possible that meat qualifies under heading 02.10, presumably subject to meeting other conditions"⁶¹⁰ (such as a preservation criterion). The Panel, therefore, concluded that its interpretation of the term "salted" in the tariff commitment under heading 02.10 of the EC Schedule as excluding a requirement that salting must ensure preservation was "not affected" by the  Gausepohl  judgment.⁶¹¹

331. The European Communities challenges the Panel's finding that EC Regulation 535/94 "superseded" the ECJ  Gausepohl  judgment, such that the criterion of preservation in heading 02.10 of the European Communities' Combined Nomenclature no longer applies.⁶¹² According to the European Communities, the Panel failed to consider the "totality" of the European Communities' legal system (including customs legislation, practice, and court judgments)⁶¹³ and erred in interpreting the interaction between various elements of the European Communities' legal system.⁶¹⁴ Specifically, the European Communities submits that a Commission Regulation cannot override an interpretation given by the ECJ to the European Communities' Combined Nomenclature, where that Nomenclature is implementing the Harmonized System⁶¹⁵, because the Commission "is only empowered to issue Regulations at the 'technical level' to ensure the uniform implementation of the Combined Nomenclature".⁶¹⁶ In addition, the European Communities challenges the Panel's interpretation of the Gausepohl judgment as not being necessarily governed by the principle of "long-term preservation".⁶¹⁷ Thailand contends that EC Regulation 535/94 did not alter the scope of heading 02.10 as interpreted by the ECJ in Dinter and Gausepohl⁶¹⁸; rather, it merely specified the criteria to be taken into account for classifying products under heading 02.10.⁶¹⁹

332. Regarding the relevance of the Gausepohl judgment for the interpretation of the term "salted" in heading 02.10, we note that the Panel ascribed relevance to Gausepohl because that judgment concerned "the interpretation of heading 02.10 of the [Combined Nomenclature], corresponding to the specific heading at issue in this dispute".⁶²⁰ We also note that salted beef�at issue in Gausepohl�is a subset of the products that may fall under heading 02.10, and thus both concern the same subject matter.⁶²¹

333. We further note, as did the Panel, the temporal proximity between the publication of the Gausepohl  judgment in May 1993, the Uruguay Round tariff negotiations that came to an end in December 1993, and the conclusion of the WTO Agreement in April 1994.⁶²² However, temporal correlation alone should not be taken to imply that the Gausepohl judgment actually influenced or reflected, in substance, the common intentions of the negotiators with respect to heading 02.10 of the EC Schedule.

334. The Panel record does not indicate that parties to the Uruguay Round tariff negotiations other than the European Communities had actual knowledge of the Gausepohl judgment, although they could have taken notice of the publication of the judgment outside the framework of the Uruguay Round.⁶²³ However, we noted above that mere access to a published judgment cannot be equated with acceptance of the criterion of preservation (assuming that the Gausepohl judgment enshrines it). Therefore, we are not persuaded that the negotiating partners of the European Communities can be said to have negotiated the tariff commitment under heading 02.10 of the EC Schedule against the background of a requirement that "salting" must ensure preservation (assuming that it is enshrined in ECJ case-law).

335. In general, tariff commitments are negotiated against the background of the situation prevailing in the negotiating parties prior to the conclusion of the treaty (including, in particular, the situation of the importing Member). However, in this case, as pointed out by the Panel, it is not entirely clear whether the ECJ's Gausepohl judgment implies that bovine meat that has been deeply and homogeneously impregnated with a salt content of 1.2 per cent will ipso facto be considered as preserved for the long-term, and thus covered by heading 02.10 of the EC Schedule; or, whether the judgment should be read in the sense that the 1.2 per cent salt content is merely a minimum above which meat qualifies under heading 02.10 only if it is additionally preserved for the long-term. Therefore, it is not clear whether the ECJ's Gausepohl judgment requires that, for purposes of heading 02.10, salting must ensure preservation, and whether such a criterion "lives on" in the European Communities' legal system after EC Regulation 535/94 entered into force.

336. Regarding the interaction between EC Regulation 535/94 and the Gausepohl judgment, we do not find it necessary, for purposes of resolving this appeal, to decide whether the Regulation "superseded" the judgment.⁶²⁴  Regardless of whether EC Regulation 535/94 "superseded", clarified, or implemented the ECJ judgment in Gausepohl, we are not persuaded that Gausepohl must be understood in the sense that the 1.2 per cent salt content is merely a minimum above which it is necessary to show�in addition�that salting ensures long-term preservation.⁶²⁵ In any event, we do not see evidence on record that the Gausepohl judgment was taken into account in the Uruguay Round negotiations with respect to the tariff commitment at issue.

337. In addition, the European Communities argues that the Panel incorrectly "dismissed" relevant Explanatory Notes to the European Communities' Combined Nomenclature, although these Notes remained relevant for assessing classification practice even after the insertion of the Additional Note to the Combined Nomenclature through EC Regulation 535/94.⁶²⁶ In 1981⁶²⁷, and again in 1983, the European Communities inserted an Explanatory Note into its Common Customs Tariff.⁶²⁸ According to the European Communities, both Explanatory Notes suggest that only meat salted for the purpose of "preservation" is classifiable under heading 02.10 of the EC Schedule. We note that the Panel did not ignore, but rather considered the relevance of the Explanatory Notes for interpreting heading 02.10 of the EC Schedule. The Panel decided that these Notes did not suggest that a criterion of preservation applied under that tariff commitment.⁶²⁹ We also note the remote temporal relationship between these Explanatory Notes from the early 1980s and the conclusion of the WTO Agreement.

338. We now turn to consider whether the classification practice of the European Communities after the conclusion of the WTO Agreement confirms the European Communities' position that the criterion of "preservation" governs its customs classification practice.⁶³⁰ In this regard, we note that EC Regulation 535/94 remained in force and seems to have determined the customs classification practice of the European Communities between 1996 and 2002. We recall that the Panel examined, in its analysis under Article 31(3)(b), three sets of evidence regarding the classification practice of the European Communities between 1996 and 2002:  (i) the European Communities' acknowledgement that, during this period, certain European Communities' customs offices were classifying the products at issue under heading 02.10;  (ii) a number of BTIs relating to the classification by European Communities' Customs authorities under heading 02.10; and (iii) three sets of minutes of meetings of the European Communities' Customs Code Committee concerning classification under heading 02.10.⁶³¹

339. More specifically, the European Communities had acknowledged that, between 1996 and 2002, customs offices at major ports of the European Communities (including Hamburg, Rotterdam, and certain ports in the United Kingdom) were classifying products with a salt content of between 1.2 and 3 per cent under heading 02.10⁶³², and that "substantial trade" of the products at issue entered the European Communities under that tariff heading during the period 1996 to 2002.⁶³³

340. Moreover, the Panel reviewed a number of BTI notices relating to product classification by customs authorities under heading 02.10. The BTIs pertaining to frozen salted chicken cuts with a salt content of between 1.2 and 3 per cent indicated that, from 1998 to 2002, these products were classified under subheading 02.10.90.⁶³⁴ The Panel also stated that it was not provided with any BTIs indicating that the products at issue were being classified under any heading other than heading 02.10 (such as, for instance, heading 02.07) before the introduction of EC Regulation 1223/2002 and EC Decision 2003/97/EC.⁶³⁵

341. Turning to the minutes of the meetings of the European Communities' Customs Code Committee concerning classification under heading 02.10, the Panel observed that, at the relevant meetings, the Committee considered that products with characteristics matching those of the products at issue were "classifiable" and were also classified under heading 02.10.⁶³⁶

342. The Panel also reviewed trade statistics concerning trade flows into the European Communities under headings 02.07 and 02.10 of the EC Schedule.⁶³⁷ According to the Panel, when read together, the BTIs and trade data indicate that, between 1996 and 2002, significant trade volumes of chicken cuts with a salt content of 1.2 to 3 per cent imported from Brazil and Thailand to the European Communities were being classified under heading 02.10.⁶³⁸

343. Thus, the evidence reviewed by the Panel does not indicate that a requirement that salting must ensure long-term preservation was applied in the customs classification practice of the European Communities under heading 02.10 between 1994 and 2002 pursuant to EC Regulation 535/94. In view of this, we fail to see how such a criterion could have entered into�even by implication�an agreement between the European Communities and other WTO Members with respect to the tariff commitment under heading 02.10 of the EC Schedule.

344. As we held above, the term "salted" in heading 02.10 of the Harmonized System does not contain a requirement that salting must, by itself, ensure long-term preservation; but, at the same time, it does not exclude the notion of "preservation". Therefore, we are of the view that, if a specific criterion of long-term preservation�such as the one advocated by the European Communities, namely, that salting, by itself, must ensure long-term preservation and that therefore it must be "much higher than 3%"�is to form a part of the tariff commitment of the European Communities under its Schedule relating to heading 02.10, then there must be clear evidence that such a criterion was agreed upon by the parties for the European Communities' WTO Schedule. We see no such evidence on record; nor do we see it stated explicitly in the European Communities' customs legislation in force at the time of conclusion of the WTO Agreement, namely, EC Regulation 535/94; nor do we find it clearly enshrined in the ECJ's case-law prior to the enactment of EC Regulation 535/94. Rather, we find that the products at issue in this dispute were invariably classified by the customs authorities under heading 02.10 between 1996 and 2002, when the European Communities adopted EC Regulation 1223/2002, introducing the phrase "provided  ...  salting ensures long-term preservation".

345. We turn briefly to the European Communities' claim under Article 11 of the DSU. In the light of the foregoing, we disagree with the European Communities that the Panel failed to consider the "totality" of the European Communities' legal system.⁶³⁹ To the contrary, the Panel examined relevant customs legislation, practice, and relevant court judgments of the ECJ, although it characterized the Gausepohl judgment and interpreted the interaction between this judgment and EC Regulation 535/94 in a way with which the European Communities does not agree.⁶⁴⁰ Therefore, we find that the Panel did not fail to make an objective assessment of the facts within the meaning of Article 11 of the DSU.

D. Conclusion

346. For the reasons set out above, we modify certain aspects of the Panel's interpretation of the concept of "circumstances of [a treaty's] conclusion" within the meaning of Article 32 of the Vienna Convention; and find that the term "salted" in the tariff commitment under heading 02.10 of the EC Schedule, interpreted in the light of supplementary means under Article 32 of the Vienna Convention, does not include the requirement that salting must be for the purpose of preservation. Therefore, we uphold the Panel's conclusion, in paragraph 7.423 of the Panel Reports, that the supplementary means of interpretation considered under Article 32 confirm that the products at issue are covered by the tariff commitment under heading 02.10 of the EC Schedule.

XII. Findings and Conclusions

347. For the reasons set forth in this Report, the Appellate Body:

(a) regarding the terms of reference:

(i) upholds the Panel's finding, in paragraph 7.37 of the Panel Reports, that the Panel's terms of reference do not include EC Regulation 1871/2003 and EC Regulation 2344/2003;

(ii) upholds the Panel's finding, in paragraph 7.37 of the Panel Reports, that the products covered by the Panel's terms of reference are those covered by the specific measures at issue, namely, frozen boneless chicken cuts impregnated with salt, with a salt content of 1.2 to 3 per cent;

(b) regarding the interpretation of the term "salted" in the tariff commitment under heading 02.10 of the EC Schedule in the light of Articles 31 and 32 of the Vienna Convention:

(i) upholds the Panel's conclusion, in paragraph 7.150 of the Panel Reports, that "the ordinary meaning of the term 'salted' when considered in its factual context indicates that the character of a product has been altered through the addition of salt", and upholds the Panel's conclusion, in paragraph 7.151 of the Panel Reports, that "there is nothing in the range of meanings comprising the ordinary meaning of the term 'salted' that indicates that chicken to which salt has been added is not covered by the concession contained in heading 02.10 of the EC Schedule";

(ii) finds that the term "salted", in heading 02.10 of the Harmonized System, does not contain a requirement that salting must, by itself, ensure "preservation"; and consequently, upholds the Panel's finding, in paragraphs 7.245 and 7.331(c) of the Panel Reports, that the context of the term "salted" in the tariff commitment under heading 02.10 of the EC Schedule "indicates that that concession is not necessarily characterized by the notion of long-term preservation", and finds that the scope of that tariff commitment is not limited to products salted provided that it ensures long-term preservation;

(iii) upholds the Panel's conclusion, in paragraph 7.328 of the Panel Reports, that "the lack of certainty associated with the application of the criterion of long-term preservation with respect to the concession contained in heading 02.10 of the EC Schedule ... could undermine the object and purpose of security and predictability, which lie at the heart of both the WTO Agreement and the GATT 1994";

(iv) reverses the Panel's interpretation and application of the concept of "subsequent practice" within the meaning of Article 31(3)(b) of the Vienna Convention;  and consequently, reverses the Panel's conclusions, in paragraphs 7.289-7.290 and 7.303 of the Panel Reports, that the European Communities' practice of classifying, between 1996 and 2002, the products at issue under heading 02.10 of the EC Schedule "amounts to subsequent practice" within the meaning of Article 31(3)(b) of the Vienna Convention;

(v) modifies certain aspects of the Panel's interpretation of the concept
of "circumstances of [a treaty's] conclusion" within the meaning of Article 32 of the Vienna Convention; but upholds the Panel's conclusion, in paragraph 7.423 of the Panel Reports, that the supplementary means of interpretation considered under Article 32 confirm that the products at issue are covered by the tariff commitment under heading 02.10 of the EC Schedule; and consequently

(c) upholds the Panel's findings, in paragraphs 7.424 and 8.1 of the Panel Reports, that:

(i) frozen boneless chicken cuts that have been impregnated with salt, with a salt content of 1.2 to 3 per cent (the products at issue) are covered by the tariff commitment under heading 02.10 of the EC Schedule;

(ii) EC Regulation 1223/2002 and EC Decision 2003/97/EC result in the imposition of customs duties on the products at issue that are in excess of the duties provided for in respect of the tariff commitment under heading 02.10 of the EC Schedule; and

(iii) accordingly, that the European Communities has acted inconsistently with the requirements of Articles II:1(a) and II:1(b) of the GATT 1994 and, thus, nullified or impaired benefits accruing to Brazil and Thailand; and

(d) finds that the Panel complied with its obligations under Article 11 of the DSU.

348. The Appellate Body recommends that the Dispute Settlement Body request the European Communities to bring its measures, found in this Report and in the Panel Report as modified by this Report to be inconsistent with the  General Agreement on Tariff and Trade1994, into conformity with its obligations under that Agreement.

Signed in the original in Geneva this 27th day of August 2005 by:

_________________________

Giorgio Sacerdoti

Presiding Member

To continue with  Annex I

Return to  Index

444 Panel Reports, para.7.323.

445 European Communities' appellant's submission, paras.180-181.According to the European Communities, a treaty interpreter should consider the object and purpose of the provision at issue first,
before considering the object and purpose of the agreement. The European Communities submits that, in
US � Line Pipe, the Appellate Body referred to the object and purpose of ArticleXIX of the GATT 1994 (Appellate Body Report, US � Line Pipe, para.81) and in Chile � Price Band System, the Appellate Body relied on the object and purpose of Article 4 of the Agreement on Agriculture. (Appellate Body Report, Chile � Price Band System, para.234)

446 European Communities' appellant's submission, paras. 212-219.

447 Ibid., paras.179-182 (referring to Panel Reports, para.7.316). The European Communities asserts that the Panel should have ascertained the object and purpose of ArticleII of the GATT 1994, read in conjunction with heading02.10 of the ECSchedule, and its underlying purpose of "preservation".

448 See Sinclair, supra, footnote 36, pp. 130-135.

449 Panel Report, paras. 7.316-7.317. See also Sinclair, supra, footnote 36, pp. 130-135.

450 In this regard, we refer to the Appellate Body Report in Argentina � Textiles and Apparel, where the Appellate Body stated that "a basic object and purpose of the GATT 1994 [was] reflected in ArticleII". (Appellate Body Report, Argentina � Textiles and Apparel, para.47)

451 The European Communities argues that the notion of "long-term preservation" characterizes the four processes mentioned in heading02.10, that is, "salted", "in brine", "dried", and "smoked".

452 Panel Reports, para.7.326.

453 The Panel relied on Appellate Body Report, EC � Computer Equipment, para.84; and Sinclair, supra, footnote 36, pp.130-131 (referred to in Panel Reports, footnote 536 to para. 7.326).

454 Appellate Body Report, EC � Computer Equipment, para.84.

455 The Panel relied on the Appellate Body statement inEC � Computer Equipment that "the security and predictability of 'the reciprocal and mutually advantageous arrangements directed to the substantial reduction of tariffs and other barriers to trade' is an object and purpose of the WTO Agreement, generally, as well as of the GATT 1994." (Appellate Body Report, EC � Computer Equipment, para. 82)

456 Appellate Body Report, Argentina � Textiles and Apparel, para.47.

457 Panel Reports, para.7.320.

458 Ibid. (quoted in European Communities' appellant's submission, para.183).

459 European Communities' appellant's submission, para.189.

460 Panel Reports, para. 7.320.

461 Ibid., para.7.318 (quoting Appellate Body Report, EC � Computer Equipment, para.82). We note that "security and predictability" is also mentioned in Article 3.2 of the DSU.

462 Panel Reports, para.7.323.

463 These measures are considered to be justified by the European Communities on the basis that the term "salted" in heading02.10 should be read to contain a criterion of preservation, which the products at issue do not meet. (European Communities' appellant's submission, paras.190-211)

464 Panel Reports, para.7.321.

465 For example, the Harmonized System heading 05.10 mentions "[a]mbergris...otherwise provisionally preserved"; heading 08.14 concerns "[p]eel of citrus ... provisionally preserved"; heading 07.11 concerns "[v]egetables provisionally preserved"; and General Rule 5(a) refers to "[c]amera cases, suitable for long-term use". (European Communities' appellant's submission, para.201) (emphasis added)

466 Ibid., paras.201-202.

467 Panel Reports, para. 7.322.

468 The European Communities indicated to the Panel that it conducts laboratory analyses when necessary. (Ibid., footnote 534 to para.7.321) See also Exhibit THA-23 submitted by Thailand to the Panel. The WCO also considered that laboratory analyses might be required to determine whether a product can be regarded as "salted" within the meaning of heading02.10 of the Harmonized System. (Panel Reports, para.7.321)

469 Ibid., para.7.322.

470 European Communities' appellant's submission, paras.203-208.

471 Panel Reports, para.7.322.

472 European Communities' response to questioning at the oral hearing.

473 According to the European Communities, heading02.10 was not intended to provide a means of circumventing the tariff protection agreed under heading02.07. (European Communities' appellant's submission, paras.212-218)

474 Panel Reports, para.7.327.

475 Appellate Body Report, EC � Computer Equipment, para.84. (original emphasis)

476 Ibid., para.82. (original emphasis)

477 Panel Reports, paras.7.289 and 7.303.

478 Panel Reports, para.7.289. (emphasis added)

479 Ibid., paras.7.253-7.254.

480 Ibid., para.7.267. (original emphasis omitted)

481 EC Regulation 1223/2002, the first of the challenged measures, entered into force in 2002.

482 Panel Reports, paras. 7.284 and 7.288-7.289. The Panel also considered WCO letters of advice from 1997 and 2003 and subsequent Explanatory Notes to the European Communities' Combined Nomenclature. (Ibid., paras. 7.298-7.299 and 7.302)

483 European Communities' appellant's submission, para. 116.

484 Brazil's appellee's submission, para. 123; Thailand's appellee's submission, paras. 59 and 67.

485 Yearbook of the International Law Commission, supra, footnote 69, p.219, para.(6).

486 Appellate Body Report, Japan � Alcoholic Beverages II, p.13, DSR 1996:1, 97, at 106; Panel Reports, para.7.250.

487 Appellate Body Report, US � Gambling, para.192.

488 Panel Reports, para.7.251. (footnote omitted)

489 Ibid., para.7.252 (quoting Yearbook of the International Law Commission, supra, footnote69, p.222, para.15).

490 Panel Reports, para.7.253. (emphasis added)

491 Ibid., para.7.253.

492 Ibid., paras.7.253-7.254.

493 Ibid., para.7.255.

494 Ibid., paras.7.255 and 7.289.

495 European Communities' appellant's submission, para. 118.

496 Ibid., para.134.

497 Brazil's appellee's submission, para.139. See also Thailand's appellee's submission, paras.75-84.

498 Brazil's appellee's submission, paras.137-145; Thailand's appellee's submission, paras.75-84.

499 For agricultural products, Annex I of the Agreement on Agriculture defines the product coverage of that Agreement on the basis of the Harmonized System.

500 Brazil's appellee's submission, para.144.

501 Ibid., para.142.

502 Ibid., para.141; Thailand's appellee's submission, para. 79.

503 We return to this question later when interpreting heading02.10 of the EC Schedule in the light of Article32 of the Vienna Convention.

504 Appellate Body Report, EC � Computer Equipment, para.109.

505 Ibid., para.93.

506 Panel Reports, para.7.254.

507 Ibid., para.7.289.

508 European Communities' response to questioning at the oral hearing.

509 Brazil's appellee's submission, para.153; Thailand's appellee's submission, para.97.

510 Thailand's appellee's submission, para.107.

511 Panel Reports, para.7.268.

512 Ibid., paras.7.265 and 7.269-7.276.

513 Panel Reports, footnote 396 to para.7.253. Here, the Panel relied on Yasseen's statement that: "acceptance by a party may be 'deduced from that party's reaction or lack of reaction to the practice at issue'." (Yasseen, supra, footnote 70, p. 49, para.18)

514 Panel Reports, para.7.255.

515 "It is not necessary to show that each party has engaged in a practice, only that all have accepted it, albeit tacitly." (A. Aust, Modern Treaty Law and Practice (Cambridge University Press, 2000), p.195) See also D. Anzilotti, Corso di Diritto Internazionale ["International Law Course"], Vol.1, IV Edizione (CEDAM, 1955), p. 292:

These conclusive facts also include silence, the value of which, as a manifestation of will, obviously cannot be reduced to general rules, because such value depends on the factual circumstances in which the silence is observed ... It is easy, moreover, to envisage circumstances in which silence on the part of a State cannot be construed as anything but indifference or failure to express its will in any form: The recently expressed view that, in international law, the principle of qui tacet consentire videtur is entirely valid cannot be accepted in such general terms[.].