(b) Quantitative restrictions permitted under the ATC

73. The ATC allows new restrictions in the case of safeguard measures (Article 6 of the ATC) or pursuant to Articles 2.14 and 7 of the ATC when a Member does not comply with the requirements of the agreement. We note that there is no provision in the ATC for general exceptions or security exceptions nor any other provisions on regional trade agreements.
74. We note that on 27 February 1995 ²⁹⁹ Turkey notified the first stage of its integration programme to the TMB; in doing so Turkey is entitled, pursuant to Article 6.1 of the ATC, to make use of the special safeguard mechanism. It should be noted that under the ATC the right to maintain MFA derived quantitative restrictions and the integration process by stages are not related. The provisions of the ATC make clear that the fact that a product has not yet been re-integrated into the general GATT rules does not in any manner imply a right to introduce new import restrictions under Article 2.1 of the ATC on such products. The main benefit for Members resulting from the notification of an integration programme within 6 months of the entry into force of the WTO Agreement, is the use of the special safeguard mechanism under the ATC. There is no relation between the safeguard provisions of the ATC and the right to introduce new quantitative restrictions under Article 2.1 of the ATC. On 27 December 1996, Turkey notified the second stage of its integration programme³⁰⁰ to take effect on 1 January 1998. On the same day, Turkey also notified, early, the provisions of the third stage of its integration programme ³⁰¹ to take effect on 1 January 2003. All these notifications relate to imports of textiles and clothing into Turkey only. (We also note that the products covered by the measures at issue are not listed therein.)

(c) The Turkish measures under the ATC - are these new measures?

75. Article 3.3 of the ATC provides for notification of "new restrictions" or "changes in existing restrictions". It reads as follows:

"3. During the duration of this Agreement, Members shall provide to the TMB, for its information, notifications submitted to any other WTO bodies with respect to any new restrictions or changes in existing restrictions on textile and clothing products, taken under any GATT 1994 provision, within 60 days of their coming into effect." (emphasis added)

76. In their joint communication dated 7 November 1997, ³⁰² Turkey and the European Communities notified the TMB pursuant to Article 3.3 of the ATC:

"In addition Turkey and the European Communities have the honour to copy to the Chairman of the Textiles Monitoring Body for information a communication to the Chairman of the Committee on Regional Trade Agreements (CRTA) annexed to which are details of certain quantitative limits introduced by Turkey in respect of imports of certain textile and clothing products into Turkey from certain WTO Members, and necessary to give effect to the Customs Union in conformity with the provisions of Article XXIV of GATT 1994." (emphasis added)

77. On 6 May 1998, the European Communities and Turkey sent a second notification under Article 3.3 of the ATC to the TMB, ³⁰³ which reads as follows:

"Turkey and the European Communities � concerning details of changes in respect of the quantitative limits applied by Turkey in respect of imports of certain textile and clothing products from certain WTO Members in conformity with its commitments arising out of the customs union and with the provisions of Article XXIV of GATT 1994." (Emphasis added.)

78. In light of Article 3.3 of the ATC, Turkey (and the European Communities) must consider that these measures are either "new" or "changes" to existing restrictions. As discussed above, ³⁰⁴ the measures at issue can only be considered to be, in WTO terms, Turkish measures. Since Turkey did not have any restrictions in place on 1 January 1995 that it could change, any such import restriction is, by definition, "new" for Turkey in the sense of the ATC. In this regard we cannot accept Turkey's argument that its measures are not new because the European Communities (its customs union partner) had a similar measure in place. Conceivably, a change of geographical coverage could constitute a "change" to an "existing" restriction (as could be the case on the occasion of an enlargement of a customs union - an issue which in this case we do not need to address). But since the measures at issue were introduced and are applied by Turkey, ³⁰⁵ and in view of our previous conclusion that the measures at issue are not EC measures but Turkish measures, ³⁰⁶ Turkey's quantitative restrictions cannot be considered to be changes to the existing EC restrictions.
79. We need, however, to examine the possibility of exceptions or justifications under Article 2.4 of the ATC and whether, any such Turkish measures could otherwise be legitimized in the context of the application of an Article XXIV type of agreement, escaping thereby the prohibition of Article 2.4 of the ATC against the introduction of new restrictions.
80. In the absence of any ATC justification claimed for the Turkish measures and given the reference to Article XXIV in the Article 3.3 notification, it would seem that any such justification must be based on Article XXIV. We address below whether the formation of a customs union presents an opportunity to adopt measures which would otherwise be WTO incompatible, (unless, as noted by India, these are inherent to the very conclusion of the customs union.) We also consider the argument that if a WTO compatible measure was already in place for one Member forming the customs union, the other constituent member(s), in an effort to harmonize their trade policies, may be authorized to introduce a similar restriction, thereby legitimizing what would otherwise constitute a new restriction in the sense of the ATC. In Section G below, we shall develop our interpretation of the language of Article XXIV and the flexibility it may provide to Members forming such a customs union, namely in their efforts to adopt "substantially the same duties and other regulations of commerce". This possibility would not, in our view, change the nature of the restrictions at issue as being "new restrictions" in the sense of Article 2.4 of the ATC, in so far as Turkey is concerned. It remains to be decided whether Article XXIV authorizes the introduction of such new ATC restrictions.
81. Therefore, at this stage of our analysis, we consider that the measures at issue are new measures in the sense of Article 2.4 of the ATC.

(d) Jurisdiction of the TMB versus that of the Panel

82. We refer to our preliminary ruling on the jurisdiction of the TMB in paragraph 9.15 above. In order to consider the claim of India under Article 2.4 of the ATC (and following our preliminary ruling of 25 September 1998), we now address further the issue of the relationship between the jurisdiction of the Panel and that of the TMB. We consider, based on the interpretation by the Appellate Body in Guatemala � Cement ³⁰⁷ with regard to the relationship between the DSU and the Antidumping Agreement, that the provisions of the ATC (providing jurisdiction to the TMB to examine measures applied pursuant to the ATC) and the provisions of the DSU (providing jurisdiction for panels to interpret any covered agreement, including the ATC) may both apply together. Therefore even if the TMB has jurisdiction to determine what constitutes a "new" measure in the sense of the ATC and whether a violation of the ATC has taken place, we remain convinced that a panel is entitled to interpret the ATC to the extent necessary to ascertain whether Turkey benefits from a defense to India's claims under Articles XI and XIII of GATT based on the provisions of the ATC.
83. We consider, in any case, that the measures under examination are not measures applied pursuant to the ATC itself and therefore the ATC cannot provide such a defense. As discussed above, the ATC authorizes some exceptions to the general prohibitions against import restrictions contained in Articles XI and XIII of GATT (e.g., existing MFA restrictions notified within 60 days of the entry into force of the WTO Agreement (Article 2), safeguard measures pursuant to Article 6 of the ATC and measures adopted in the context of Articles 7 and 2.14 of the ATC).
84. On their face, the introduction of the Turkish measures do not correspond to any of the above situations, as noted also by Thailand in its third party submission. ³⁰⁸ We note that the ATC does not contain any provision dealing with regional trade agreements or any other general or specific exceptions. We conclude that in the present case, as acknowledged by the parties, ³⁰⁹ the measures at issue do not benefit from any circumstances specified in the ATC that would prevent the application of Article 2.4 of the ATC or Articles XI and XIII of GATT. We note also that Turkey has notified the said import restrictions to the TMB under Article 3.3 of the ATC which refers explicitly to "new restrictions or changes � taken under any GATT 1994 provision". Article 3.4 of the ATC suggests that the ATC envisages that non-ATC matters (such as those notified under Article 3.3 and the reverse notification pursuant to Article 3.4) will be dealt with "under relevant GATT 1994 provisions or procedures in the appropriate WTO body". Turkey does not claim that it benefits from an exemption to the prohibitions of Articles XI and XIII of GATT that is contained in the ATC, but rather one that derives from Article XXIV. It appears to us that the matter at issue involves a GATT provision rather than the ATC. The fact that the products under examination are textiles and clothing does not imply that it is the ATC exclusively which deals with the measures at issue. In fact GATT rules are generally applicable to all textile and clothing products and the ATC is applicable by exception principally to allow the maintenance for a limited period of time of MFA-derived quantitative restrictions and the use of the special safeguard mechanism.
85. Turkey's main defense is that its measures were adopted in the context of the formation of a customs union and are compatible with Article XXIV which is the only applicable provision. Clearly the interpretation of Article XXIV is not a matter covered by the provisions of the ATC, and could not fall under the exclusive jurisdiction of the TMB. ³¹⁰ Having decided that the measures under examination are Turkish measures and not EC measures, we find that the ATC does not provide any exception to the prohibitions against quantitative restrictions contained in Articles XI and XIII of GATT.

3. Conclusions on India's claims under Articles XI and XIII of GATT, and Article 2.4 of the ATC

86. Consequently, unless the measures under examination are justified by Article XXIV (Turkey's defense that we examine below) they are inconsistent with the provisions of Articles XI and XIII of GATT and they would necessarily violate also Article 2.4 of the ATC. ³¹¹

G. Turkey's Defense Based on Article XXIV of GATT

87. We shall now proceed to examine Turkey's defense based on the application of Article XXIV and determine whether it rebuts what appears to be prima facie evidence of violations of Articles XI and XIII of GATT and Article 2.4 of the ATC.
88. Turkey argues that the measures at issue do not violate Articles XI and XIII of GATT or Article 2.4 of the ATC because they were implemented in relation to the formation of its customs union with the European Communities, which it considers to be compatible with the provisions of Article XXIV of GATT. For Turkey, the provisions of Article XXIV are concerned with the scope of application of GATT, both generally and in particular circumstances. As such, Article XXIV should not be regarded as a "justification", a "defense", an "exception" or a "waiver". In Turkey's view, the special nature of Article XXIV is evidenced by the fact that Article XXIV is in Part III of GATT, and not in Part II together with other provisions on commercial policies. For Turkey, Article XXIV, paragraphs 5 to 9, is to be viewed as lex specialis for the rights and obligations of WTO Members at the time of formation of a regional trade agreement. In other words, in Turkey's view, the WTO consistency of the measures challenged by India depends on the WTO consistency of the Turkey-EC customs union (of which they are an integral part) and the WTO consistency of both the customs union and its measures is to be determined with reference to the provisions of paragraphs 5 to 9 of Article XXIV only and no other GATT provisions.
89. India considers that all GATT rules define the limits of applicability of the GATT. India is of the view that, if Turkey�s argument were accepted, Members forming a customs union could legally circumvent the WTO procedural and substantive requirements with respect to quantitative restrictions, which the signatories of the WTO agreements agreed to permit only in exceptional circumstances. In respect of such Members, the WTO agreements could no longer operate as a legal framework providing effective assurances of market access and the WTO dispute settlement procedures would be rendered ineffective.
90. In order to analyze Turkey's arguments, which we consider are properly labelled a defense ³¹² to India's claims, we firstly recall certain basic interpretative principles applicable in WTO dispute settlement proceedings. Secondly, we examine the provisions of Article XXIV generally. Thirdly, we consider the meaning of Article XXIV:5 and, finally that of Article XXIV:8, which constitute the heart of Turkey's defense to India's claims.

1. General Interpretative Principles

(a) Vienna Convention on the Law of Treaties

91. In its examination of Article XXIV, the Panel is guided by the principles of interpretation of public international law (Article 3.2 of the DSU) which include Articles 31 and 32 of the Vienna Convention on the Law of Treaties (VCLT). As provided for in these articles and as applied by panels and the Appellate Body, we interpret the provisions of Article XXIV using first the ordinary meaning of the terms of that provision, as elaborated upon by the 1994 Understanding on Article XXIV, in their context and in light of the object and purpose of the relevant WTO agreements. If need be, to clarify or confirm the meaning of these provisions, we may refer to the negotiating history, including the historical circumstances that led to the drafting of Article XXIV of GATT. We note also the prescription of Article XVI:1 of the WTO Agreement which provides that "� the WTO shall be guided by the decisions, procedures and customary practices followed by CONTRACTING PARTIES to GATT 1947 and the bodies established in the framework of GATT 1947".³¹³

(b) WTO rules on conflicts

92. As a general principle, WTO obligations are cumulative and Members must comply with all of them at all times unless there is a formal "conflict" between them. This flows from the fact that the WTO Agreement is a "Single Undertaking". ³¹⁴ On the definition of conflict, it should be noted that:

"� a conflict of law-making treaties arises only where simultaneous compliance with the obligations of different instruments is impossible. ... There is no conflict if the obligations of one instrument are stricter than, but not incompatible with, those of another, or if it is possible to comply with the obligations of one instrument by refraining from exercising a privilege or discretion accorded by another." ³¹⁵

93. This principle, also referred to by Japan in its third party submission, ³¹⁶ is in conformity with the public international law presumption against conflicts which was applied by the Appellate Body in Canada � Periodicals ³¹⁷ and in EC � Bananas III, ³¹⁸ when dealing with potential overlapping coverage of GATT 1994 and GATS, and by the panel in Indonesia � Autos, ³¹⁹ in respect of the provisions of Article III of GATT, the TRIMs Agreement ³²⁰ and the SCM Agreement. ³²¹ In Guatemala � Cement, ³²² the Appellate Body when discussing the possibility of conflicts between the provisions of the Anti-dumping Agreement ³²³ and the DSU, stated: "A special or additional provision should only be found to prevail over a provision of the DSU in a situation where adherence to the one provision will lead to a violation of the other provision, that is, in the case of a conflict between them."
94. We recall the Panel's finding in Indonesia � Autos, a dispute where Indonesia was arguing that the measures under examination were subsidies and therefore the SCM Agreement being lex specialis, was the only "applicable law" (to the exclusion of other WTO provisions):

"14.28 In considering Indonesia�s defence that there is a general conflict between the provisions of the SCM Agreement and those of Article III of GATT, and consequently that the SCM Agreement is the only applicable law, we recall first that in public international law there is a presumption against conflict. ³²⁴ This presumption is especially relevant in the WTO context ³²⁵ since all WTO agreements, including GATT 1994 which was modified by Understandings when judged necessary, were negotiated at the same time, by the same Members and in the same forum. In this context we recall the principle of effective interpretation ³²⁶ pursuant to which all provisions of a treaty (and in the WTO system all agreements) must be given meaning, using the ordinary meaning of words."

95. In light of this general principle, we will consider whether Article XXIV authorizes measures which Articles XI and XIII of GATT and Article 2.4 of the ATC otherwise prohibit. In view of the presumption against conflicts, as recognized by panels and the Appellate Body, we bear in mind that to the extent possible, any interpretation of these provisions that would lead to a conflict between them should be avoided.

(c) Principle of effective interpretation

96. Finally we would also like to recall the principle of effective interpretation ³²⁷ whereby all provisions of a treaty must be, to the extent possible, given their full meaning so that parties to such a treaty can enforce their rights and obligations effectively. We note that the Appellate Body has referred to this principle on several occasions. ³²⁸ We understand that this principle of interpretation prevents us from reaching a conclusion on the claims of India or the defense of Turkey, or on the related provisions invoked by the parties, that would lead to a denial of either party's rights or obligations.

To continue with Overview of Article XXIV of GATT

²⁹⁹ G/TMB/N/44.

³⁰⁰ G/TMB/N/228.

³⁰¹ G/TMB/N/240.

³⁰² G/TMB/N/308.

³⁰³ G/TMB/N/326.

³⁰⁴ See para. 9.44 above.

³⁰⁵ See also the European Communities' responses to the Panel's questions, referred to in footnote 268 above and paras. 4.2 and 4.3 above, where it was said by the European Communities that Turkey itself ensures the surveillance of its own quantitative restrictions at the Turkey/India border.

³⁰⁶ See paras. 9.33 to 9.44 above.

³⁰⁷ Appellate Body Report on Guatemala � Cement, para. 75.

³⁰⁸ See paras. 7.76 and 7.77 above.

³⁰⁹ See para. 6.26 (for Turkey) and paras. 3.47 and 3.48 (for India) above.

³¹⁰ We recall the provisions of Article 8.1 of the ATC: " In order to supervise the implementation of this Agreement, to examine all measures taken under this Agreement and their conformity therewith, and to take the actions specifically required of it by this Agreement, the Textiles Monitoring Body ("TMB") is hereby established �".

³¹¹ The Panel is aware of the Appellate Body statement in EC - Bananas III that when two provisions are both applicable, a panel should proceed to apply the more specific provision first. However, such an exercise is not necessary here as what is examined is the relationship between Article XXIV and quantitative restrictions (either under Articles XI and XIII of GATT or the ATC).

³¹² We note, from our research, that during the negotiation of Article XXIV, participants typically referred to Article XXIV as an "exception" for customs unions and free-trade areas. See also footnote 287 above.

³¹³ See Appellate Body Report on Japan � Alcoholic Beverages, p. 14.

³¹⁴ See the Appellate Body statement in Brazil � Desiccated Coconut, page 12. The WTO is a single undertaking except for the plurilateral agreements for the non-signatories.

³¹⁵ Wilfred Jenks, "The Conflict of Law-Making Treaties", The British Yearbook of International Law (1953) at p. 426-427.

³¹⁶ See para. 7.22 above.

³¹⁷ Appellate Body Report on Canada � Certain Measures Concerning Periodicals, adopted on 30 July 1997, WT/DS31/AB/R, ("Canada - Periodicals"), page 19.

³¹⁸ Appellate Body Report on EC - Bananas III, paras. 219-222.

³¹⁹ Panel Report on Indonesia � Autos, para. 14.28.

³²⁰ The Agreement on Trade-Related Investment Measures.

³²¹ The Agreement on Subsidies and Countervailing Measures.

³²² Appellate Body Report on Guatemala � Cement, para.65.

³²³ The Agreement on the Implementation of Article VI of GATT 1994.

³²⁴ [Footnote original]In international law for a conflict to exist between two treaties, three conditions have to be satisfied. First, the treaties concerned must have the same parties. Second, the treaties must cover the same substantive subject matter. Were it otherwise, there would be no possibility for conflict. Third, the provisions must conflict, in the sense that the provisions must impose mutually exclusive obligations. "... [T]echnically speaking, there is a conflict when two (or more) treaty instruments contain obligations which cannot be complied with simultaneously. ... Not every such divergence constitutes a conflict, however. ... Incompatibility of contents is an essential condition of conflict". (7 Encyclop�dia of Public International Law (North-Holland 1984), page 468). The lex specialis derogat legi generali principle "which [is] inseparably linked with the question of conflict"(Idem., page 469) between two treaties or between two provisions (one arguably being more specific than the other), does not apply if the two treaties ".. deal with the same subject from different points of view or [is] applicable in different circumstances, or one provision is more far-reaching than but not inconsistent with, those of the other" (Wilfred Jenks, "The Conflict of Law-Making Treaties", The British Yearbook of International Law (BYIL) 1953, at 425 et seq.). For in such a case it is possible for a state which is a signatory of both treaties to comply with both treaties at the same time. The presumption against conflict is especially reinforced in cases where separate agreements are concluded between the same parties, since it can be presumed that they are meant to be consistent with themselves, failing any evidence to the contrary. See also E.W. Vierdag, "The Time of the "Conclusion" of a Multilateral Treaty: Article 30 of the Vienna Convention on the Law of Treaties and Related Provisions ", BYIL, 1988, at 100; Sir Robert Jennings/Sir Arthur Watts (ed.), Oppenheim's International Law, Vol. I., Parts 2 to 4, 1992, at 1280; Sir Gerald Fitzmaurice, "The Law and procedure of the International Court of Justice", BYIL , 1957, at 237; Sir Ian Sinclair, The Vienna Convention on the Law of Treaties, 1984, at 97.

³²⁵ [Footnote original]In this context we note that the WTO Agreement contains a specific rule on conflicts which is however limited to conflicts between a specific provision of GATT 1994 and a provision of another agreement of Annex 1A. We do not consider this interpretative note in this section of the report because we are dealing with Indonesia�s argument that there is a general conflict between Article III and the SCM Agreement, while the note is concerned with specific conflicts between a provision of GATT 1994 and a specific provision of another agreement of Annex 1A.

³²⁶ [Footnote original]"This would correspond to the ruling of the Appellate Body when it stated that a treaty may not be interpreted so as to reduce whole clauses to "inutility". See footnote 649 supra."

³²⁷ The principle of effective interpretation or "l'effet utile" or in latin ut res magis valeat quam pereat reflects the general rule of interpretation which requires that a treaty be interpreted to give meaning and effect to all the terms of the treaty. For instance one provision should not be given an interpretation that will result in nullifying the effect of another provision of the same treaty. For a discussion of this principle see also the Yearbook of the International Law Commission, 1966, Vol II A/CN.4/SER.A/1966/Add.1 p. 219 and following. See also E.g., Corfu Channel Case, (1949) I.C.J. Reports, p. 24; Territorial Dispute Case (Libyan Arab Jamahiriya v. Chad), (1994) I.C.J. Reports, p. 23; Oppenheim's International Law (9th ed., Jennings and Watts eds., 1992), Volume 1, 1280-1281; P. Dallier and A. Pellet, Droit International Public, 5� �d. (1994) para. 17.2; D. Carreau, Droit International (1994), para. 369.

³²⁸ See for instance the statement of the Appellate Body in United States � Standards for Reformulated and Conventional Gasoline, adopted on 20 May 1996, WT/DS2/AB/R ("US � Gasoline"):"An interpreter is not free to adopt a reading that would result in reducing whole clauses or paragraphs of a treaty to redundancy or inutility"; also the Appellate Body Report on Japan � Alcoholic Beverages, p. 12; Appellate Body Report on United States � Restrictions on Imports of Cotton and Man-Fibre Underwear, adopted on 25 February 1997, WT/DS24/AB/R, p. 16.