(viii) Protection of legitimate expectations

46. Brazil submitted that the benefits accruing to Brazil under the GATT included the protection of the expectation that prevailed in July 1993, when the new concessions were agreed, that Brazil would be fully compensated. Brazil had had a reasonable expectation that the value of the concession agreed would not be nullified or impaired by the subsequent introduction of a lesser TRQ for the products concerned. ³³ Brazil also had a legitimate expectation that the EC would not attempt to change the country-specific nature of the TRQ when Brazil agreed that the changes would be made at the time the EC submitted its Uruguay Round schedule. Brazil was entitled to expect that the EC would implement the Oilseeds Agreement TRQ in a manner compatible with the terms and objectives of the Agreed Minutes. Brazil signed the bilateral agreement because the compensation package addressed its specific concerns.

47. The EC replied that this Panel was not concerned with a non-violation case under Article XXIII:1(b) of GATT. The notion of "legitimate expectations" was developed only in the framework of such cases and, therefore, it was not relevant here. The EC considered also that Article II:5 was irrelevant in the present context: that provision was, like Article XXVIII, a procedural one since it provided for the possibility to enter negotiations. It was evident, the EC believed, that none of the conditions set out in that provision were fulfilled here and Article II:5 should not be considered relevant for the resolution of the issues raised in this case.

(ix) The implementation of the frozen chicken TRQ

48. Brazil submitted that since the EC had ratified the Oilseeds Agreement in Council Decision 87/94 of 20 December 1993, it considered the agreement to be distinct from other agreements (and not part of the Uruguay Round agreement). The frozen chicken TRQ was opened by Council Regulation 774/94 and allocated among supplying countries by Commission Regulation 1431/94. According to the recitals to 774/94 the purpose of opening the frozen chicken TRQ (as well as the other TRQs provided for in the Regulation) was to comply with the Article XXVIII commitments which required that the TRQ be opened by 1 January 1994. There was no reference to any other GATT commitments to be met. It was clear therefore, in the opinion of Brazil, that the EC considered that it was fulfilling its commitments under Article XXVIII only.

49. The EC replied that the negotiations between Brazil and the EC further to the Article XXVIII:4 procedure resulted in an agreement in the form of Agreed Minutes in July 1993, formally concluded by the EC institutions on 20 December 1993 and formally signed by both parties on 31 January 1994. The Agreement was published in the Official Journal of the EC on 18 February 1994. On the same date, a number of parallel agreements signed with other primarily concerned and substantially interested GATT contracting parties ³⁴ was published. Whilst the content of those agreements varied, they were identical to the extent that they stated that an agreement had been reached in negotiations under Article XXVIII:4 of GATT concerning the elimination of the impairment of the tariff concessions as recommended by the panel report on EEC - Payments and Subsidies paid to Processors and Producers of Oilseeds and Related Animal-Feed Proteins. By 17 February 1994 at the latest, therefore, the EC argued, all the primarily concerned and substantially interested GATT contracting parties had acknowledged that the procedure under Article XXVIII:4 which had been authorized on 19 June 1992, had been successfully completed.

50. With respect to the question of whether the rights of other Members could be diminished by a finding that a schedule submitted as part of a multilateral negotiating process did not reflect the full range of that Member's commitments, Brazil was of the view that this question should be examined in respect of the conclusion of the Article XXVIII negotiations. The EC had stated that it had notified the CONTRACTING PARTIES of the conclusion of the Article XXVIII negotiations at the latest on 17 February 1994. Under the terms of Article XXVIII, contracting parties who were not parties to the negotiations were free (under the terms of Article XXVIII:3(b)), within six months of the conclusion of negotiations, to withdraw substantially equivalent concessions if they were not satisfied with the bilateral country-specific agreements between the Members principally concerned. No contracting party took such action. Therefore, Brazil concluded that all contracting parties were satisfied.

(x) Compensation

51. Brazil submitted that the importance of compensation as an element of the multilateral system was apparent from the ranking of GATT/WTO remedies in the case of nullification or impairment. The preferred remedy in the case of a finding of nullification or impairment was the changing of the GATT/WTO inconsistent provisions. The second remedy was the granting of compensatory concessions and the third was the withdrawal of concessions. According to Brazil, "compensation" was a broad concept not specifically defined in the GATT/WTO. Its objective was to ensure that the same level of reciprocal trade was maintained in favour of the Member with a principal supplying interest. Brazil was of the view that compensation had an element of specificity about it. It was not, therefore, something to which the MFN principle necessarily applied. The drafters of Article XXVIII did not consider it to be so as they allowed for bilateral negotiations within its framework. Brazil argued that compensation was usually in the form of a concession to increase market access (or trade) in another product. Where the compensation was in the form of a lower tariff, the intention of the Member was clearly to grant it on an MFN basis. Where the concession was granted in the form of a TRQ, in the opinion of Brazil, the intention of the Member was to ensure the same level of reciprocal trade between the two negotiating parties. The question of the allocation of the TRQ was a separate issue to be agreed between the parties.

52. Brazil submitted that the compensation package was not built upon an exact compensation figure. The value had never been clearly defined by the parties and was not deemed necessary for the purpose of concluding the bilateral negotiations. In the case of the Article XXVIII:4 negotiations between Brazil and the EC, a choice was made to avoid the difficulties created by the calculation of an exact amount of total compensation. Therefore, Brazil accepted the EC's proposal to conduct the negotiations by working from a list of offers which included the frozen chicken TRQ, and not from an exact or fixed compensation value. Negotiation resulted in the agreed final offers. Brazil submitted that the Panel should only take into consideration that there was now an agreed compensation package made up of different elements, that the 15,500 tonnes TRQ in frozen chicken was part of that package and that it should have been allocated to Brazil.

53. The EC recalled that the EC and Brazil reached an agreement in accordance with Article XXVIII, which was accepted by both parties. Whether each of the parties negotiated and obtained certain concessions on the basis of a specific value which they attributed to such concessions was not only irrelevant once the negotiating process was completed, but was also not necessarily capable of being reduced to a straightforward calculation. The agreement reached was the consequence of a GATT panel's finding that the EC's support system for oilseeds had the effect of reducing the value of the tariff concessions granted by the Community in 1962 and the agreed outcome of the negotiations not only comprised new tariff concessions on certain products including frozen poultry meat products (to which the EC did not at the time apply fixed tariffs, but variable levies), but also modifications to the EC's internal regime on oilseeds. As concerns the frozen poultry meat TRQ, the Brazilian allocation of the TRQ (7,100 tonnes) corresponded to Brazil's share of the overall imports of those frozen poultry meat products at the time of the negotiations.

54. Referring to Article XIX:3 and Article XXIII:2 of GATT which, according to Brazil, both authorized country-specific compensation, Brazil argued that there was very little guidance in the reports of previous panels or of the Appellate Body on which to base the justification that agreements within the terms of Article XXIV:6 were an exception to the general MFN rule. It had been accepted that, by nature, these compensatory agreements had to be country-specific as the rights of specific Members had been diminished by the creation of custom unions. No distinction could be made either in procedure or in intention between the compensation agreements under Articles XXIV and those of XXVIII. In practice, Brazil continued, there were examples of both country-specific and MFN TRQs offered and implemented by the EC as compensation under Article XXIV:6 of GATT. Those considered to be erga omnes or MFN were usually stated to be so by means of the letters "MFN" or the words "erga omnes" in brackets after the TRQ. ³⁵ There were also examples of country-specific TRQs. ³⁶ The GATT therefore recognized a number of exceptions to the MFN rule. These exceptions were provided for in both the text of the GATT and practised by the Members. They were also well recognized by academic writers. ³⁷

55. The EC indicated that, in its view, the agreement resulting from the Article XXVIII Oilseeds negotiations and the Uruguay Round agreement had the same objective albeit a (partially) different purpose. They both pursued the objective of ensuring a particular (reduced) tariff rate for frozen poultry meat as compared to the normal bound duty rate applicable to imports into the EC. They both also pursued the objective of ensuring that tariff treatment was bound in the EC Schedule of commitments. In the EC's view, since they both were undertaken in the framework of the GATT, they both had also the objective of complying with the general principles of non-discrimination as set out in Articles I and XIII of GATT. Otherwise, they would have violated the general principle of customary public international law pacta servanda sunt. However, the EC continued, the two negotiations were initiated for partially different reasons: the earlier Article XXVIII negotiations were justified by the limited purpose of ensuring compensation after the Oilseeds panel while the later Uruguay Round agreements had a much wider purpose of ensuring an overall balance of concessions between Members where tariff concessions in certain products could balance (or "compensate") tariff concessions for other products. ³⁸ Thus, in order to create a new level of reciprocal commitments, the later negotiations incorporated the results of the earlier more limited negotiation which had been reflected in the revised EC Schedule. ³⁹ However, the EC Schedule resulting from the Uruguay Round negotiations maintained unaltered the level of tariff treatment agreed in the Article XXVIII Oilseeds negotiations with respect to the frozen poultry meat TRQ. "Compensation" could therefore not change the legal reality under the WTO covered agreements: the EC was bound, on a MFN basis, by its current Schedule of commitments for the tariff treatment of frozen poultry meat which was the result of the Uruguay Round. The application of the principles of the Vienna Convention, and in particular Articles 59(1), 30(3) and 31, fully supported this view. (See also paragraphs 146 and 150).

(xi) Interpretation of "global"

56. Brazil submitted that there was one word in the Agreed Minutes, i.e. "global", which required special consideration as the Community had placed great emphasis on this word in bilateral consultations prior to the commencement of the dispute settlement procedure. In the view of Brazil, the word "global" had no fixed or established meaning in GATT law or practice. It was not equivalent to the words "erga omnes" or to "MFN". These words had distinct meanings and were available for use should the parties to an agreement wish to use them in the sense that they had. The parties to the Agreed Minutes did not wish to use these words, according to Brazil, and therefore did not do so. The word global, Brazil continued, had been used in relation to all the TRQs which were opened by the Community in all the Oilseeds agreements, except the maize TRQ opened for Argentina. The maize TRQ was the only one encompassing only one tariff line, so there was no need to use the word "global" to cover a variety of tariff lines. In relation to the Brazil-EC Agreement the word "global" was used in respect of all three TRQs. When the EC opened the quotas by means of Council Regulation 774/94, it accumulated the three Hilton beef TRQs provided for in three of the agreements, and allocated the quota among those countries, but did not accumulate the three frozen chicken TRQs in a like manner. Both TRQs were described as being "global". "Global" was not therefore equivalent to the MFN principle. Brazil observed that the use of the word "global" in the Agreed Minutes did not prevent the Community from interpreting the Agreed Minutes in such a way so as not to open the TRQ on an "erga omnes" basis. The TRQ was allocated, albeit incorrectly and inconsistently with the Oilseeds Agreement, among certain supplying countries by Commission Regulation 1431/94. "Global" was not therefore to be read as meaning erga omnes.

57. The only element of disagreement, the EC said, resided in the claim by Brazil that the 15,500 tonnes TRQ should be reserved only for Brazil. Brazil's claims in this respect rested on a reading of the word "global" ⁴⁰ of the Article XXVIII Oilseeds Agreement which was different from the normal meaning, understood by the EC to be equivalent to "general", "universal", "comprehensive", "catch-all" or, in WTO terms, MFN or erga omnes. According to Brazil's interpretation, that word meant that the EC was committing itself only vis-à-vis Brazil for a quantity that globally encompassed the frozen poultry meat. The EC was firmly of the view that this interpretation had no value for the following reasons. An interpretation in good faith of the word "global" in the light of the object and purpose of a negotiation under Article XXVIII could not mean, EC argued, anything else than "erga omnes" or "MFN". This was indeed the manner in which the EC had immediately and consistently implemented its agreement with Brazil, together with all the other parallel agreements concluded with other GATT contracting parties in the context of the Oilseeds case settlement. ⁴¹ Moreover, Brazil could not have disregarded the interpretation of the word "global" as meaning "MFN" that resulted from the practice of the management of the TRQ and from the EC Schedule as they were formally used in the context of the Uruguay Round final negotiations and verification process. The fact that Brazil and the EC (together with all the other WTO Members), by ratifying the Marrakesh Agreement, agreed to the EC Schedule with respect to the MFN TRQ concerning the frozen poultry meat could certainly be defined as a "subsequent agreement between the parties regarding the ... application of its provisions". The EC did not admit, even for the sake of argument, that an ambiguity existed with regard to the interpretation of the word "global" at the moment of the signature of the Article XXVIII Agreement in January 1994. In any event, the alleged ambiguity could not reasonably persist after the agreed conclusions of the Uruguay Round negotiations. Should the Panel consider, quod non, that the word "global" in the earlier treaty meant country-specific, then the EC submitted that there would be a clear conflict between the provisions in the earlier treaty and the EC MFN Schedule in the later treaty. In application of Article 30(3) of the Vienna Convention, the former could therefore continue to apply only "to the extent of their compatibility with the later treaty". This necessarily meant that the duty-free poultry TRQ, which continued to exist, necessarily had to be applied on an erga omnes basis.

58. Brazil further submitted that it was obvious from references to the word "global" in the GATT academic literature that the word did not mean MFN or erga omnes. In the Handbook of GATT⁴², reference was made to the establishment of a global quota in the head note to the Chilean Apples case ⁴³ but in the text of the commentary reference was being made to the "total amount of permitted imports". Furthermore, in the Analytical Index of the GATT ⁴⁴ reference was made to "global quotas for leather". ⁴⁵ It was clear from this case that reference was being made to the total amount of imports under all the quotas which were, in practice, country-specific. Brazil argued that in the present context the word "global" should be read in its ordinary sense in light of its objective and purpose and in good faith. A global annual tariff quota of 15,500 tonnes made up of three product classifications was referring to the fact that three different products were bundled within the same global TRQ volume. Thus, within the "global" TRQ of 15,500 tonnes there was to be no subdivision between the different products. In conclusion, therefore, the text of the Brazil-EC Oilseeds Agreement was clear and precise. There was no special meaning to be given to any terms used in the Agreement. Not to interpret the Agreement in its ordinary sense would lead to results that were manifestly absurd or unreasonable.

Article XIII of GATT

59. In the view of Brazil, Article XIII did not apply to compensatory, country-specific TRQs which had their origins in Article XXVIII, unless the parties agreed that the TRQ should be MFN. Brazil argued that the reason Article XIII did not apply to the allocation of the frozen chicken TRQ was that it was a TRQ agreed within the context of a bilateral agreement negotiated between Brazil and the EC under Article XXVIII with the specific purpose of compensating Brazil for the modification or withdrawal of a concession. Referring to the observation of a previous panel that Article XIII was "basically a provision relating to the administration of restrictions authorized as exceptions to one of the most basic GATT provisions - the general ban on quotas and other non-tariff restrictions contained in Article XI" ⁴⁶, Brazil argued that the frozen chicken TRQ was not a restriction on trade prohibited by Article XI of GATT. There was considerable trade in poultry products into the Community over and above the volume of the TRQ. The TRQ was compensation for the withdrawal of a concession. It provided for market access at a tariff rate lower than that generally applicable with the purpose of compensating one Member for a loss elsewhere. Brazil noted that the Appellate Body had recently ruled that Article XIII applied to TRQs. ⁴⁷ In the view of Brazil, this did not mean that Article XIII applied automatically to all TRQs. It did not necessarily apply to country-specific TRQs.

60. The EC argued that it had demonstrated that any country-specific tariff advantage (like a country-specific, reduced-rate or duty-free TRQ), bound as a result of a re-scheduling negotiation under Article XXVIII would be contrary to Article I:1 of GATT and could not be justified either by reference to Article XXIV of GATT or by any decision under Article IX of the WTO Agreement. The EC failed therefore to see how, in the absence of any legal justification under those Articles the "basic principle of non-discrimination" would not apply to the allocation of any TRQ established as a result of an Article XXVIII negotiation. The quoted paragraph of the Banana III Appellate Body report, albeit limited to the particular issue of Members not having a substantial interest that was specific to that case, clearly indicated, in the view of the EC, that this was indeed the case.

61. Brazil submitted that, to the extent that country-specific quotas existed in Members' schedules, Article XIII did not apply. It would be illogical, in the view of Brazil, to apply Article XIII in such a situation. The EC Schedule provided for a series of country-specific agricultural TRQs, all of which were included in "Part I Most-Favoured-Nation Tariff, Section I - B Tariff Quotas". Brazil considered that the EC was not consistent in its arguments in relation to Article XIII as evidenced by its practice in relation to other TRQs in its Schedule. Article XIII was not applied by Members to country-specific TRQs, and as the frozen chicken TRQ was specific to Brazil, Article XIII did not apply. However, if this Panel was to consider that Article XIII did apply to the frozen chicken TRQ, as an alternate plea Brazil claimed the EC had not complied with the terms of Article XIII.

62. The EC replied that the recent Appellate Body report in the Banana III dispute ⁴⁸ addressed the issue of the applicability of the "basic principle of non-discrimination" to Members not having a substantial interest. The Appellate Body stated in particular "when this principle of non-discrimination is applied to the allocation of tariff quota shares to Members not having a substantial interest, it is clear that a Member cannot, whether by agreement or by assignment, allocate tariff quota shares to some Members not having a substantial interest while not allocating shares to other Members who likewise do not have a substantial interest. To do so is clearly inconsistent with the requirement in Article XIII:1".

63. Referring to paragraph 1 and paragraph 2(d) of Article XIII, Brazil noted that Article XIII provided that a TRQ could be allocated among supplying countries in one of two, mutually exclusive, ways, i.e. (i) by agreement; or, in the absence of agreement, (ii) by allocation on the basis of past supply performance during a specific reference period, due account being taken of special factors. Brazil considered that there was a clear prioritization between these two options. The first option was to reach agreement with Members having a substantial interest. Only in the absence of agreement could a Member allot the shares on the basis of past performance.

(i) by agreement

64. Brazil held the view that the EC had reached an agreement with Brazil in 1993 on the allocation of the full TRQ to Brazil. There had been no change to that agreement and Brazil had made its views known to the Community prior to the country allocation of the TRQ in June 1994. No other Member did seek an agreement with the EC on the allocation of the TRQ. Frozen chickens were the subject of agreement with other Members negotiating with the EC on Oilseeds compensation. However, Brazil was of the view that neither Argentina nor Poland had a real interest in supplying frozen chicken to the Community. Brazil had consistently maintained that there was an agreement on the full allocation of the frozen chicken TRQ exclusively to Brazil. The EC had failed to respect this agreement.

65. The EC replied that the EC and Brazil had agreed, inter alia - firstly in January 1994 and later at the end of the Uruguay Round negotiations - on the principle of an erga omnes TRQ up to 15,500 tonnes for the three poultry products concerned with this dispute. They had also agreed on the level of duties that should be applied within that TRQ (duty-free tariff treatment). By contrast, they did not agree - either in January 1994 or at the conclusion of the Uruguay Round negotiation or at any later moment - on the allocation of the TRQ. Therefore, the EC had decided autonomously, in accordance with the rules of Article XIII:2(d), to assign to the Members having a substantial interest in supplying the product concerned a share of the TRQ with the aim to achieving "a distribution of trade in such product[s] approaching as closely as possible the shares which the various contracting parties might be expected to obtain in the absence of such restriction".⁴⁹

(ii) by allocation on the basis of past performance

66. Brazil argued that the EC appeared to have applied the second method for the allocation of a TRQ set out in Article XIII. Brazil noted that the past performance method required that the TRQ be allocated among supplying countries based on their past supply performance during a specific reference period, due account being taken of special trade factors. It was understood that the EC chose the period 1991-1993 as the reference period. On that basis, three categories of origins were created: Brazil, Thailand and others. The size of the "others" category reflected, according to Brazil, the percentage of EC imports of frozen chicken from China. It was designed to facilitate the continuation of this trade (until imports were stopped because of phytosanitary problems). China filled most of the "others" category. By this method the Community granted a non-Member access to a TRQ which was designed to compensate GATT Members only.

67. Brazil's assumption was incorrect, EC replied: Article XIII:2(d), first sentence, clearly referred to "supplying countries" in general. It used the expression "contracting parties" only with respect to "contracting parties having a substantial interest in supplying the product concerned" with which an agreement could be sought or to which a share could be autonomously allotted by the importing Member. The EC had complied to the letter with these requirements. The total amount of the TRQ, the EC submitted, was allocated in accordance with the quantities shown in Annex 1 of Regulation 1431/94 and in compliance with the provisions of Article XIII of GATT. The quantities allocated to Groups 1 (Brazil) and 2 (Thailand) were specific to those countries since licences carried with them an obligation to import from those countries (Article 1 of Commission Regulation 997/97). Licences for Group 3 countries were not country-specific but they could not be used in respect of products originating in Brazil or Thailand (Commission Regulation 1514/97). Licences for all groups of countries were allocated on a quarterly basis in accordance with the procedures set out in Article 4 of Regulation 1431/94 which provided for the fixing of a single percentage of acceptance of the quantities applied for. There was no allocation on a "first-come, first-served" basis.

68. Brazil submitted that the Banana III panel examined the concept of an "others" category in the allocation of TRQs. The panel considered that this type of category had a value in allowing new trade patterns to develop. It also considered that country allocations of TRQs needed to be reviewed on the accession of new Members to the WTO. However, Brazil argued, the EC could not unilaterally grant to non-WTO members the right to participate in a compensatory TRQ. Nor could the EC operate a TRQ allocation system which allowed a non-WTO member to participate by default. The WTO was a system for the benefit of Members who had chosen to be bound by its obligations. In addition, Brazil continued, the EC allowed Members with other privileged market access to partake of the TRQ. This practice was declared to be inconsistent with the GATT in the Newsprint panel. ⁵⁰ The East European countries which had association agreements with the EC had all been allocated privileged access to the EC market in chicken products. By allowing these countries to participate in the TRQ, the EC was reducing the benefit to other Members. In conclusion, Brazil said, the EC had used Article XIII to avoid its commitments under the Article XXVIII Oilseeds Agreement with Brazil. Secondly, the Community had misinterpreted the terms of Article XIII and, finally, the EC had denied Brazil compensation within the global balance of benefits that had existed prior to the Article XXVIII negotiations.

69. The EC noted that the allocation of a share of a TRQ had been considered an advantage by the recent Appellate Body report in the Banana III dispute ⁵¹ to such an extent that the "basic principle of non-discrimination" applied strictly when allocating shares of a TRQ, including for Members not having a substantial interest. By assigning a share of the TRQ to all substantially interested Members, including Brazil, the EC had therefore provided the complainant with the best possible (and legally sound) situation in the trade of the poultry products within the TRQ. The EC had made use of the most recent statistics available at the time of the negotiations (1991-1993) to elaborate the "previous representative period" required under Article XIII:2(d) and had followed a criterion ⁵² that was considered correct by the recent Banana III panel. ⁵³ That panel had also accepted (and the point was not overturned by the Appellate Body) the creation of a residual category "others" "for all suppliers other than Members with a substantial interest in supplying the product". ⁵⁴ (emphasis added)

70. Brazil considered that if the TRQ was given in compensation to Members, the EC could not justify the administration of the TRQ in such a way that non-Members benefited whether that administration was justified under Article XIII or not. The proper question was not only whether non-Members came within the terms of Article XIII, which they clearly did not, but the extent to which non-Members could benefit from compensation at all. It was within the context of the examination of the nature of compensation that the Panel should examine the administration of the TRQ. If the EC was permitted to offer WTO-specific compensation to non-WTO members, Brazil continued, it had diminished that compensation whether it was "MFN" compensation or not. Even if it was MFN (which Brazil denied), it remained compensation to WTO Members. It was not a TRQ which could be administered so that non-WTO members benefited. Finally, the EC had erred in applying Article XIII by allowing Members with privileged access in the same products to benefit from the compensation TRQ.

71. The EC considered that the text of Article XIII:2(d) was clear: when proceeding to the allocation of a TRQ, there was an obligation to allocate a share to Members having a substantial interest and this was what the EC did, inter alia, with Brazil. By contrast, there was no obligation to discriminate against non-Members of the WTO in their access to the TRQ in the residual category under "others". The EC maintained that while there was a general principle to treat on an MFN basis any Member with respect to advantages granted even to a non-Member, there was no provision in the WTO forbidding the Members from providing market access to non-Members on an MFN basis. Moreover, Brazil's claim that the EC should exclude any non-Member-supplying country from the allocation of the TRQ would inevitably entail an increase of its share of the tariff quota. This was, in the view of the EC, an unjustified request in the light of the chapeau of Article XIII:2: Brazil would then obtain a significantly higher share of imports than it "might be expected to obtain in the absence of such restriction", thus violating the provision it allegedly wished to see applied by the EC. The EC also noted that what market access to the residual part of a TRQ and to whom it was given by the importing country following the allocation amongst the substantially interested Members, was a matter that could not harm in any manner the trade interests of Members having a substantial interest, if their shares had been correctly allocated in accordance with the relevant provisions of Article XIII. This was certainly the case for Brazil with respect to the allocation of the duty-free TRQ concerning the frozen poultry meat.

To continue with European Communities - Measures Affecting the Importation of Certain Poultry Products, (c) Article 31 of the Vienna Convention, The Agreement on Import Licensing Procedures

³³ Ibid.

³⁴ Argentina, Canada, Poland, Sweden and Uruguay.

³⁵ See for example Agreement between the United States and the EC published in O.J. L 098 of 10 April 1987 as well as Council Decision 95/592 of 22 December 1995.

³⁶ See for example Council Decision 95/592 of 22.12.95 and published in O.J. L 334 of 30.12.95.

³⁷ Merciai (Patricio Merciai, Safeguard Measures in GATT, 15 Journal of World Trade Law (1981)) stated that it was standard practice that country-specific trade benefits were the result of negotiations to avoid retaliatory action under Article XIX:3 or XXIII:2. Bronckers (Marco Bronckers, Selective Safeguard Measures in Multilateral Trade Relations, TM Asser Instituut, (1995)) stated that this compensation needed not be administered on an MFN basis.

³⁸ This was clearly expressed for instance in paragraph 4 of the Marrakesh Protocol to the General Agreement on Tariffs and Trade 1994. It was apparent from that provision that the EC could have been theoretically entitled to withhold or withdraw the frozen poultry meat concession in the event that Brazil's Schedule had not yet become a schedule to GATT 1994. However, paragraph 4 of the Marrakesh protocol was further evidence of the fact that the CONTRACTING PARTIES to the Uruguay Round considered the new agreements as a new set of rules and commitments replacing earlier concessions (such as the ones resulting from Article XXVIII Oilseeds negotiation), which was fully in accordance with Article 59.1 of the Vienna Convention.

³⁹ As indicated expressly in Ambassador Tran Van Thinh's letter on 14 December 1993, annexed to the EC's first written submission.

⁴⁰ To be found in the text of the Agreed Minutes of Article XXVIII Oilseeds Agreement between the EC and Brazil, in particular in the Annex, part D - new concessions, footnote No. 2.

⁴¹ Brazil indicated in this respect that the EC had created some country-specific TRQs for other products. The EC denied this allegation with force. All products negotiated under Article XXVIII, including those mentioned by Brazil, were provided duty treatment on an MFN basis.

⁴² Handbook of WTO/GATT Dispute Settlement, ed. Pierre Pescatore, William Davey and Andreas Lowenfeld, New York, Transnational Publishers, Inc., 1995, at CS 43/2 and CS 43/3.

⁴³ Panel Report on EEC - Restrictions on Imports of Dessert Apples, adopted on 10 November 1980, BISD 275/98.

⁴⁴ GATT, Analytical Index: Guide to GATT Law and Practice, updated 6th edition (1995) page 298.

⁴⁵ Panel Report on Japanese Measures on Imports of Leather, adopted on 6 November 1979, BISD 26S/320.

⁴⁶ The Panel Report on Banana III, op. cit., page 344.

⁴⁷ The Appellate Body Report on Banana III, op. cit.

⁴⁸ Ibid, paragraph 159 to 163.

⁴⁹ Article XIII:2, first sentence.

⁵⁰ Panel Report on Newsprint, op. cit.; paragraph 55 of the findings and conclusions: "Imports which are already duty-free, due to a preferential agreement, cannot by their very nature participate in an MFN duty-free quota".

⁵¹ Appellate Body Report on Banana III, op. cit., paragraphs 161 and 162.

⁵² The average of the last three full years of trade in the product concerned for which reliable official statistics are available at the time of the negotiation.

⁵³ Paragraph 7.83.

⁵⁴ Paragraph 7.75.