(x) Burden of proof

112. The EC underlined the need for Brazil, in making its various allegations, to demonstrate at least a prima facie infringement of the cited provisions of the Licensing Agreement. As the Appellate Body stated in its report on Shirts and Blouses, "a party claiming a violation of a provision of the WTO Agreement must assert and prove its claim" (emphasis added). ⁷⁰ It was thus for the party asserting a violation of a WTO obligation to put forward evidence and legal arguments sufficient to demonstrate its claim. In respect of a number of the claims made in relation to the operation of the licensing regime at issue in this case, the EC was of the view that Brazil had failed to adduce any, or at least any sufficient evidence, that there had been a violation of the obligations of the EC under the Licensing Agreement. Some of Brazil's claims amounted to little more than unsubstantiated assertions.

113. Recalling Article 3.8 of the DSU⁷¹, Brazil replied that the Appellate Body report on the Shirts and Blouses had stated that "In the context of the GATT 1994 and the WTO Agreement, precisely how much and precisely what kind of evidence will be required to establish such a presumption will necessarily vary from measure to measure, provision to provision and case to case." Brazil considered that it had met the standard of proof that was necessary to sustain its claims. The EC had not addressed the facts that had been put before this Panel and had not indicated how Brazil had failed to meet the burden of proof standard. Quoting the findings of the Appellate Body in Shirts and Blouses⁷², Brazil was of the opinion that it had adduced evidence of fact and of law that the EC had not complied with its obligations under the WTO Agreement. Brazil considered that it had established a prima facie case. Brazil believed that the weight of the evidence adduced was such that it had passed the threshold at which the burden of proof shifted to the EC. It was now up to the EC to rebut this evidence. Brazil was not in a position to adduce all the factual evidence in this case and, in particular, in relation to licence usage, the methods used to determine the representative price or the representative price itself. These were facts which only the EC could provide and the EC had, in the opinion of Brazil, failed to provide them. Brazil considered that, by not addressing the issues of fact established by Brazil, and by not presenting, to Brazil or to the Panel, those issues of fact which only the EC could provide, the EC was not fulfilling its role in establishing the facts of this dispute.

114. In the EC's view Brazil had failed to discharge the burden of proof incumbent on it to show that the procedures used in the application of the TRQ had caused distortions of trade. Brazil was not able to submit sufficient factual evidence because that evidence did not exist.

The Agreement on Agriculture

(i) Article 4

115. Brazil submitted that the Agreement on Agriculture constrained WTO Members to binding commitments in agricultural products for market access, domestic support and export competition, as well as to agreeing on sanitary and phytosanitary issues. Referring to the market access provisions contained in Article 4.2 ⁷³ and its footnote ⁷⁴, Brazil argued that Article 4 was a comprehensive prohibition against the maintenance of any type of border protection measures other than tariffs. It was the embodiment of the principle of tariffication and was one of the pillars of the Agreement. However, the text of Article 4 provided for two exceptions to the general prohibition, i.e. the "special treatment clause" (Annex 5) and "the special safeguard clause" (Article 5). As exceptions to the general rule, Brazil pointed out, both "clauses" had to be interpreted strictly. Brazil made two distinct claims in relation to price safeguards. Firstly, that the terms of Article 5.1(b) of the Agreement on Agriculture required an examination of the price at which the product entered the EC's customs territory; and secondly, that the representative price was incompatible with Article 5.

(ii) Article 5: safeguards

116. Brazil was of the view that special safeguards could not be used in all cases. The EC had, however, retained the possibility of introducing special safeguards for poultry and in particular for the three specific frozen chicken products which were the subject of this complaint. Brazil noted that the EC had invoked the special price safeguards for frozen chickens as of the date of its implementation of the Uruguay Round agricultural provisions on 1 July 1995. In the opinion of Brazil, it had done so in breach of the strict provisions of Article 5 of the Agreement on Agriculture. The maintenance of this variable additional duty for frozen chicken by the Community was therefore a breach of the obligation to remove all variable levies in compliance with Article 4.

117. The EC replied that Article 5 was a special safeguard provision applying to agricultural products. Citing Article 21.1 of the Agreement of Agriculture ⁷⁵, the EC recalled that the Appellate Body in applying that Article in the Banana III report stated that: "the provisions of GATT 1994 apply to market access commitments concerning agricultural products, except to the extent that the Agreement on Agriculture contains specific provisions dealing specifically with the same subject matter". ⁷⁶ The EC was of the view that there could be no doubt that Article 5 could be considered to constitute a "specific provision" dealing specifically with safeguards in the agricultural sector. In consequence, it formed a complete, self-contained code for the rules to be followed for special agricultural safeguards which might be necessary as a result of tariffication. The EC was of the view that it had applied correctly the special safeguards provisions under Article 5. Brazil's claims in this respect, related, in particular, to the definition of the c.i.f. price and the alleged obligation of showing injury prior to the implementation of the SSG, amounted in substance to a re-writing of that Agreement which was clearly beyond the powers and the terms of reference of this Panel.

118. Brazil submitted that Article 5 allowed for the imposition of an additional customs duty, over and above the bound customs duty (or tariffied duty), when a "trigger" price or a "trigger" volume was reached for the product in question. ⁷⁷ The use of the special safeguards required two preconditions which were set out in the first part of subparagraph 1, i.e. "tariffication" (or the conversion into ordinary customs duties of non-tariff border measures) of the products to which the special safeguard was to apply; and the designation of the product in question with the symbol "SSG" in the Member's schedule.

If these two preconditions were met, Brazil said, a Member could invoke the special safeguard clause. Brazil noted that the EC had notified to the Committee on Agriculture that it maintained a price safeguard in respect of frozen chicken parts.

(a) The price safeguard

119. Referring to subparagraphs (a) and (b) of paragraph 5 of Article 5 ⁷⁸ of the Agreement on Agriculture, Brazil argued that it was clear from the structure of Article 5(1) that the provisions of paragraph 5 could only be invoked if the conditions set out in paragraph 1 and, in addition, the conditions of subparagraph 1(b), were met. To satisfy the conditions for the application of subparagraph 1(b), it was necessary to determine the price at which the product entered the customs territory of the Member invoking the safeguard. However, Brazil claimed that the Community had not introduced a system for measuring the price at which the product entered the Community market. It merely measured the c.i.f. price and should that price fall below the trigger price it imposed an additional duty.

120. The EC replied that Brazil's assertion that Article 5 of the Agreement on Agriculture stipulated that the price of a product had to be measured "after" the product had entered the market was clearly contradicted by the text of Article 5.1(b) which referred to the price at which imports "may enter" the customs territory. The EC submitted that the figures presented by Brazil, and which were intended to show a decline in the volume of imports into the EC, were not representative of the entire period over which the special safeguard was applied. The special safeguard had been applied since 1 July 1995. In 1995 the total volume of imports was 53,067 tonnes and this figure increased to 86,501 tonnes in 1996. These statistics showed that there had been an upward trend in imports.

(b) C.i.f. prices

121. Brazil submitted that the whole phrase "determined on the basis of the c.i.f. import price" in Article 5 needed to be examined by the Panel, not only the letters c.i.f. This price was not the c.i.f. price itself; it was something more than the c.i.f. price, it was "the price at which imports of that product may enter the customs territory of the Member granting the concession". The c.i.f. price was the price at the frontier prior to entry or otherwise the free at frontier price which the EC referred to in Article 2 of Regulation 1484/95. ⁷⁹ The price (as determined on the basis of the c.i.f. price but not the c.i.f. price itself) at which the product could enter the customs territory was the c.i.f. price plus the bound duty. This was, according to Brazil, the clear meaning of the text. Brazil did not share the view that as the trigger price was based on the c.i.f. unit value of the product concerned the comparative price for the purposes of Article 5(1)(b) had to be the c.i.f. price. A market entry price determined on the basis of the c.i.f. price allowed for fair comparison if the non-c.i.f. element was the fixed and bound tariff in the Schedule.

122. The EC replied that Brazil's claim as regards the interpretation to be given to "on the basis of the c.i.f. price" was not supported by the text which in the Community's view clearly and unambiguously stated precisely the opposite of what Brazil asserted. The EC considered that Brazil's assertion undermined entirely the plain meaning of the words used by the authors of the Agreement. There was nothing in the Agreement on Agriculture to suggest that the parties intended that the "c.i.f. import price" should have any special meaning in this context. Therefore, the EC submitted, the Panel should give the phrase "on the basis of the c.i.f. import price" its normal meaning, i.e. cost of the product plus insurance and freight charges. Further support could be drawn from the manner in which Article 5(1)(b) was structured and the fact that it envisaged that the calculation would take place prior to the entry of the product onto the Community market. The EC argued that "on the basis of" meant "founded on" ⁸⁰ and in consequence the purpose of the authors of the Agreement in using this terminology was that the c.i.f. price should be the principal reference point. The EC had not deviated from this standard. Brazil's suggestion of the market entry price on the contrary bore no relation to, and indeed constituted a substantial deviation from, the standard set in Article 5. Brazil appeared to be advocating a re-writing by the Panel of the Agreement on Agriculture.

123. Moreover, the EC indicated that Article 5.1(b) of the Agreement on Agriculture referred to the price at which imports "may enter" the customs territory. This wording confirmed that the price at issue was that which was calculated at the moment a shipment arrived prior to its entry on to the Community market, at which point taxes and duties become payable. Moreover, footnote 2 to Article 5.1(b) stated that the reference price to be used to invoke the provision of that subparagraph "shall, in general be the average c.i.f. unit value of the product concerned". This confirmed the Community's interpretation of the wording of Article 5.1(b). Any other interpretation rendered nonsensical the comparison between the import price and the trigger price since the comparison would not be one of like with like.

124. Brazil submitted that the negotiating history of the special safeguard mechanism in Article 5 showed that it was to be used when the tariffied duty under the tariffication principles was insufficient to protect the domestic market. If, in exceptional circumstances, this new tariff was insufficient to protect markets that were once protected by variable levies, then price safeguards were applicable. The protection of the market was not an abstract concept.

125. The EC replied that Brazil had put before the Panel extracts from the negotiating history of the Agriculture Agreement. Since, however, the plain wording of the Agreement was clear, the negotiating history was, in the opinion of the EC, of little relevance to the Panel's deliberations on this issue. ⁸¹

(c) Injury requirement

126. Brazil submitted that the text of Article 5(1)(b) gave no exact measure of what the market entry price was. It provided that it was to be determined "on the basis of the c.i.f. import price". In the opinion of Brazil, it was clearly not the c.i.f. price itself. Nor was it the customs value of the product in question. It was something more. The whole purpose of the special safeguard provisions was to protect Members' markets. However, there had to be a measure of injury before any safeguard measure could be taken. The Community not only did not measure a market entry price but also it had no mechanisms for examining the effects on the Community market. The Community had thus failed to show one of the essential preconditions for the application of the special safeguard measure. It applied, in the view of Brazil, the additional duty in the absence of an examination of possible harm to the Community market.

127. The EC replied that a safeguard element was already encompassed in the trigger price mechanism under Article 5 of the Agreement on Agriculture and that there was therefore no need for a separate demonstration of injury. In other words, once the c.i.f. price fell below the trigger price there was ipso facto a disruptive effect on domestic production. In the opinion of the EC, this was clear from Article 5.1 which provided that the designation "SSG" could be used either where "the volume of products ... exceeds a trigger level" or where "the price at which imports of that product may enter the customs territory of the member granting the concession ... falls below a trigger price equal to the average 1986 to 1988 reference price for the product concerned". There was no provision in Article 5 which introduced a further requirement that the country imposing the SSG demonstrate the nature and extent of the disruptive effect on its domestic market. ⁸² The EC recalled that, as mentioned above, the "special safeguard provision" dealt specifically with agricultural products. If the authors of the agreement had intended that the additional hurdle of a demonstration of further injury should be included, they would surely have inserted this in the text of the Agreement. The EC underlined that under Article 3.2 of the DSU, the objective of a dispute settlement procedure was to clarify the existing provisions of the covered agreements and not to add to existing obligations provided for in those agreements. Brazil's claim infringed this basic principle.

128. Brazil did not agree with the EC's view that there was no need to demonstrate injury to trigger the price safeguard mechanism. Nor that, if the c.i.f. price fell below the trigger price, there was "ipso facto" a disruptive effect on domestic production. In the opinion of Brazil, injury or damage to the market had to be shown. The EC had not done so. The drafters of the text of Article 5.1(b), Brazil submitted, did not consider it necessary to define the price at which the product entered the customs territory other than to state that it should be "determined on the basis of the c.i.f. price". Entry to the customs territory of a Member required the payment of all taxes and the completion of all administrative requirements. The market entry price was therefore the c.i.f. price plus the bound tariff provided for in the Member's schedule. The failure to measure this market entry price or to make this price the determinant for triggering the application of an additional duty was, in the opinion of Brazil, a fundamental breach of Article 5. It meant that the additional duty was not a "safeguard" in the ordinary meaning of that word. It was a c.i.f. price maintenance system and was independent of any safeguard element. The additional duties which the EC applied to frozen chicken products were therefore outside the scope of the exception to the basic prohibition on variable levies. There was no other exception to the prohibition on variable levies to which the EC could have recourse. Thus, the additional levies were, in the opinion of Brazil, a clear breach of Article 4.

129. Brazil submitted that there was nothing in the negotiating history of the special safeguard provisions to justify the imposition of additional duties based on the need to maintain a c.i.f. entry price. The special safeguard provisions were designed to protect markets against possible disturbances as a result of tariffication. The volume safeguards were not designed to protect the Community market from volume surges in deliveries to the Community frontier but only from volume surges of imports onto the market. In the same way, the price safeguards were not designed to maintain the world market price or even the c.i.f. price but to keep the price on the Community market from falling below a certain level. Brazil believed that this understanding of the terms of Article 5 was in line with the overall scope of the Agreement on Agriculture and the history of the negotiation of the Agreement. Brazil submitted that the concern of the negotiators of the Agreement on Agriculture had been to find a mechanism that would deal with the problem of possible import surges or excessive world price movements once tariffication had been completed and gradual tariff reductions had commenced. It was considered that tariff increases might be allowable in these special circumstances (thus the term special safeguard clause) and "would remain in force only as long as the conditions which led to their implementation remained in place". ⁸³

130. The intent of the negotiators, according to Brazil, was to "sweeten the pill" of tariffication. Should the price safeguard be triggered, the additional duty would be based on differences between the c.i.f. import price and the trigger price. However, Brazil believed that this additional duty was only to be triggered if there was a danger to domestic production or the domestic market. The negotiators agreed that the price at which the whole mechanism would be triggered was the price at which the product "entered the customs territory" (and not "arrived at the port of entry"). In the opinion of Brazil the negotiators of the special safeguard clauses were concerned with safeguarding markets, not merely maintaining c.i.f. prices. The EC appeared to have misunderstood this fundamental objective of the clause which should only come into play when the tariffs resulting from tariffication proved insufficient to safeguard a market in the case of exchange rate or world market price fluctuations.

131. The EC replied that it was not necessary for the Panel to consider the negotiating history of Article 5. Even if this were to be taken into account, it provided no support for Brazil's arguments since it confirmed that the text of Article 5 reflected fully the intentions of the authors of the treaty.

(d) The representative price

132. Brazil submitted that the Community had not complied with its own interpretation of the price safeguard mechanism. The Community had introduced a mechanism for measuring the c.i.f. price so as to verify whether an additional duty was payable. This mechanism, known as the representative price, was set out in Article 2(1) of Commission Regulation 1484/95. For the purposes of the application or not of an additional levy, an importer could choose to establish the actual c.i.f. price of the consignment in question or, in the alternative, could pay an additional duty based on the representative price. If the importer had chosen to establish the actual c.i.f. price, then a bond equal to the additional duty was payable just as if the consignment price was the representative price. In practice, Brazil understood that all traders had chosen not to establish the actual consignment c.i.f. price as the requirements and timing made it practically impossible to establish.

133. The EC stressed that the representative price was an average price which provided a facility to operators, should they decide to avail themselves of it. The figures which were taken into account in determining the representative price were average c.i.f. prices. There was no requirement, either in law or in fact, that the representative price mechanism had to be used and operators were free to opt for the actual c.i.f.import price. The documents which had to be supplied by importers as evidence of the actual c.i.f. price were documents which were normally available. The importer had a period of one month from the date of sale of the products in question, subject to a limit of four months from the date of acceptance of the declaration of release for free circulation, to supply the relevant documentation. This time limit could be extended on the basis of a duly substantiated request of the importer (Article 3 of Regulation 1484/95).

134. Brazil submitted that the representative price was calculated on the basis of three elements set out in Article 2(1) of Commission Regulation 1484/95, namely external market prices, internal market prices and prices adjusted for quality. Brazil was, however, of the opinion that the method of calculation of the additional duty was not transparent. This, in itself, was a breach of the underlying GATT/WTO principle of transparency. In addition, the Community could not take an internal market price as the determinant for the external c.i.f. price. There was nothing in Article 5 or elsewhere in the Agreement on Agriculture which justified the use of internal market prices to determine external c.i.f. prices. Finally, the Community had failed to indicate how the quality element provided for in its examination of the internal market price was to be factored. Brazil concluded therefore that the EC had implemented the special price safeguard in a manner such that it functioned as a variable levy in breach of Article 4 and in a way that did not bring it within the exception to Article 4 of the Agreement on Agriculture provided for in Article 5.1(b). There was nothing in the text of Article 5, or in the object or purpose of the special safeguard provisions, or in the negotiating history of the provision, that could justify the measures that the EC had introduced on the basis of Article 5.

135. The EC replied that the representative price was based on prices on the world market and on the Community market, i.e. both were taken into account in the calculation according to Article 2 of Regulation 1484/95. The representative price was published in the Official Journal and was therefore known to traders. Article 2 of Regulation 1484/95 required Member States to supply regularly statistics relating to Article 5 of Regulation 1484/95 so that the representative price could be adjusted, if necessary. This representative price was an average c.i.f. price which excluded taxes and duties and was therefore a valid comparative price. This mechanism constituted an opportunity afforded to importers, should they choose to avail themselves of it, to reduce the formalities to be completed by them by avoiding a shipment by shipment approach which was more burdensome and was thus more favourable than the shipment by shipment approach advocated by Article 5 of the Agreement on Agriculture.

136. Brazil submitted that if no importer could comply with the procedures necessary to prove the shipment by shipment c.i.f. price, then it was clear that the EC had not met its obligations under Article 5 to measure c.i.f. prices on a shipment by shipment basis. One of the reasons why importers did not use the shipment by shipment approach was that if they failed to satisfy the Community as to the actual c.i.f. price, the bond payable on import was forfeited. In addition to the bond, the importer had to pay interest. The importer was, therefore, penalized for trying to establish the shipment by shipment c.i.f. price. Article 5 of the Agreement on Agriculture did not provide for a c.i.f. price "policing" mechanism. Therefore, this mechanism of itself was not compatible with the provisions of Article 5. This was particularly the case as a duty was payable on the basis of the representative price either in the form of a bond or in the form of the duty itself. Moreover, the representative price was not the c.i.f. price. Article 2 of Regulation 1484/95 provided that the representative price be based on three elements, one of which was the domestic price. This was not the c.i.f. price and no provision was made in the regulations for extrapolating the c.i.f. price from the domestic price. The result of these inconsistencies, Brazil said, was that the additional duty was always, as a matter of fact and practice, payable and that traders were not given a reasonable opportunity to maintain their prices and thus avoid the imposition of the penalty duty. This was, in the opinion of Brazil, a clear breach both of the terms of Article 5 of the Agreement on Agriculture itself and Article X:3(a) of the GATT. Finally, Brazil observed, at the time the price safeguard was introduced by the EC, in July 1995, the volume of imports was declining. Article 5.7 of the Agreement on Agriculture provided that Members undertook, as far as practicable, not to take recourse to price safeguards when the volume of imports was declining.

137. As Brazil noted in its submission, the EC submitted, importers were not prevented from adopting a shipment by shipment approach. Under Article 3 of Regulation 1484/95 they could request that the additional duty be established on the basis of the c.i.f. import price if this price was higher than the applicable representative price. Hence, if importers so desired they were free to establish the individual c.i.f. price of their consignment and to request that the additional duty be determined on that basis. In either case, all the elements to be taken into account were specified and the calculation was clear and fully transparent. The EC also observed that Brazil advanced no evidence of any reduction in the competitive opportunities open to Brazilian products as a consequence of the administration of the additional duties pursuant to the SSG.

138. Brazil submitted that if an importer chose to use the shipment by shipment approach under Community law, that importer was required to pay a bond equal to the amount of the additional duty. This bond was redeemable if certain conditions were met. Article 3 of Regulation 1484/95 set out what those conditions were. It was Brazil's understanding that no importers made use of this facility as the procedure was too burdensome. Brazil was not in a position to prove this assertion as the information was not available to Brazil. However, the EC had recognized, according to Brazil, that the procedure could be burdensome and therefore it had provided importers with the opportunity of using the representative price.

139. The EC replied that in accordance with the provisions of Article 2 of Regulation 1484/95, representative prices were determined at regular intervals taking account of c.i.f prices on third country markets, c.i.f. prices within the Community and prices at the various stages of marketing in the Community for imported products. Member States were requested to supply information on a monthly basis. Prices recorded referred to average quality. The Commission also made use of special price recordings from the processing industry which provided rapid access to up-to-date prices. Such price recordings were carried out in those Member States which imported significant quantities of boneless chicken meat (Germany, Netherlands, Austria and Belgium). There was no predetermined formula to determine the relative weight to be afforded to the factors to be taken into account in accordance with Article 2 of Regulation 1484/95. As mentioned above, representative prices were calculated on the basis of an average of c.i.f. prices communicated by the Member States which included imports under the TRQ which tended to result in a higher representative price than that which would arise if only imports outside the TRQ were taken into account. The EC noted that importers had a free choice between the shipment by shipment approach and the representative price. The latter was a simplified version of the former and by using it, importers could avoid the need to show every time, by appropriate documentation, the exact value of the imports concerned when that value equalled or was lower than the representative price. However, the shipment by shipment approach was always available and according to the statistics available to the Community, approximately five per cent of traders used this approach. The Community did not see how importers found it impossible to supply purchasing, transport and insurance contracts, the relevant invoice, origin certificates and, where appropriate, the bill of lading especially when they had a period of up to four months to do so. These were normally available documents which were required for the shipment of the products. There was nothing "uncertain" about the nature of the proof required.

Article X

140. Brazil submitted that to be able to benefit from the requirements, or constraints, of exporting either within or outside the TRQ, the traders needed to know which trade regime was applicable to any one consignment. This was a right which the traders enjoyed under the WTO transparency provisions and which was not, in Brazil's view, respected by the Community regime. Brazil claimed that Community traders used the lack of transparency in the licensing system to drive down prices for all consignments, whether within or outside the TRQ, to the disadvantage of Brazilian traders. Because of speculation in licences and the sale of those licences to traders other than those first entitled to them, all traders claimed that they were not importing under licence and within the TRQ and the Brazilian exporter had then to quote prices for over-quota trade, i.e. as if all sales were subject to duties. In practice, individual consignments were customs cleared partly within the TRQ and partly outside. This common in-TRQ and out-TRQ price was then used to determine the representative price driving this artificial price down even further. The lack of transparency in the EC trade regime for the importation of frozen chicken parts was not consistent with the underlying object and purpose of Article X of GATT. Article X addressed the publication and notification of measures affecting trade. The purpose of such publication and notification was to enable "governments and traders" to become acquainted with them. Traders, in particular, needed to become acquainted with the rules governing trade so that they could comply with, and benefit from, those measures. Brazil considered, however, that the mere publication of measures, or their notification to the WTO, was not sufficient to satisfy the requirement of ensuring that traders become familiar with them. Article X implied, and had to be interpreted so as to mean, that traders had to know, not only the rules themselves, but to which products or consignments these rules applied. If this were not so then the object of publication and notification would not be served.

141. Referring to Brazil's claims that trade in frozen poultry meat products subject to the TRQ was not transparent, the EC replied that the exact nature of Brazil's claim in this respect was unclear since it did not state specifically which aspects of either the administration of the TRQ or of the special safeguard provision it considered were contrary to Article X. Brazil referred to the fact that Article X of GATT "addresses the publication and notification of measures affecting trade" of which the purpose was "to enable governments and traders to become acquainted with them". However, Brazil did not indicate clearly which provision of Article X it intended to invoke. Moreover, the EC argued, the question of publication and transparency of licensing procedures was dealt with specifically in the Licensing Agreement, in particular in respect of non-automatic licensing procedures in Article 3 of that Agreement. The inter-relationship between the general transparency provisions of Article X and the specific provisions of the Licensing Agreement was recently considered by the Appellate Body in the Banana III report. In that report, the Appellate Body confirmed that the Licensing Agreement took precedence over Article X of the General Agreement since it dealt "specifically, and in detail, with the administration of licensing procedures". ⁸⁴ In consequence, the Community considered that the Panel should dismiss Brazil's claim as inadmissible. Should the Panel consider it necessary to address the issues raised by Brazil in respect of Article X in the light of the provisions of the Licensing Agreement, there had been no breach of the obligations under that Agreement. In summary, the administration of the poultry meat TRQ did not, in the opinion of the EC, create a discrimination, either de jure or de facto, between imported products and domestic products. The allegations by Brazil should therefore be dismissed.

To continue with European Communities - Measures Affecting the Importation of Certain Poultry Products, (c) Article 31 of the Vienna Convention, section 142

⁷⁰ See page 16, section IV of the Appellate Body Report on Shirts and Blouses, op. cit.

⁷¹ "In cases where there is an infringement of the obligations assumed under a covered agreement, the action is considered prima facie to constitute a case of nullification or impairment. This means that there is normally a presumption that a breach of the rules has an adverse impact on other Members parties to that covered agreement, and in such cases, it shall be up to the Member against whom the complaint has been brought to rebut the charge."

⁷² "Also, it is a generally accepted canon of evidence in civil law, common law and in fact, most jurisdictions, that the burden of proof rests upon the party, whether complaining or defending, who asserts the affirmative of a particular claim or defence. If that party adduces evidence sufficient to raise a presumption that what is claimed is true, the burden then shifts to the other party, who will fail unless it adduces sufficient evidence to rebut the presumption." The Appellate Body further stated that "We agree with the Panel that it, therefore, was up to India to put forward evidence and legal argument sufficient to demonstrate that the transitional safeguard action by the United States was inconsistent with the obligations assumed by the United States under Articles 2 and 6 of the ATC. India did so in this case. And, with India having done so, the onus then shifted to the United States to bring forward evidence and argument to disprove the claim."

⁷³ "Members shall not maintain, resort to, or revert to any measures of the kind which have been required to be converted into ordinary customs duties, except as otherwise provided for in Article 5 and Annex 5."

⁷⁴ "These measures include quantitative import restrictions, variable import levies, minimum import prices, discretionary import licensing, non-tariff measures maintained through state trading enterprises, voluntary export restraints, and similar border measures other than ordinary customs duties, whether or not the measures are maintained under country-specific derogations form the provisions of GATT 1947 ..."

⁷⁵ "The provisions of GATT 1994 and of other Multilateral Trade Agreements ... shall apply subject to the provisions of this Agreement."

⁷⁶ Appellate Body Report on Banana III, op. cit., paragraph 204.

⁷⁷

⁷⁸ "The additional duty imposed under subparagraph 1(b) shall be set according to the following schedule:

⁷⁹ Official Journal L 145/47 of 29 June 1995.

⁸⁰ The Oxford English Dictionary entry for "basis" reads: "foundation, main or determining principle or ingredient; starting-point for discussion".

⁸¹ Article 31 of the Vienna Convention which set out fundamental canons of treaty interpretation and which had now been referred to in several Appellate Body reports above, provided that the words of the treaty form the foundation of the interpretative process.

⁸² It could be said that an "additional" requirement flowed from Article 5(7) which stated that Members undertook not to invoke Article 5(1)(b) when imports were declining but the EC noted that Members only undertook to do this "as far as practicable" and that in any event no evidence had been put forward to suggest that imports were doing anything else than increasing or remaining constant.

⁸³ MTN/GNG/NG5/W/194.

⁸⁴ Appellate Body Report on Banana III, op. cit., paragraph 204.