19 April 1989

Table of Contents

1. Introduction

2. Factual aspects

3. Main arguments by the parties to the dispute

4. Submissions by third parties

5. Findings

6. Conclusions

I. Act No.5 of 22 June 1934

II. Provisional Act No. 29 of 13 December 1946

III. Excerpts from White Paper No. 45 (1947)

IV. Excerpts from White Paper No. 10 (1947)

V. Excerpts from White Paper No. 60 (1955)

VI. Excerpts from Recommendation S. No. 47 (1957)

VII. Excerpts from White Paper No. 80 (1958)

VIII. Royal Decree of 1 August 1958

IX. Royal Decree of 12 December 1958

X. Royal Decree of 2 June 1960

XI. Royal Decree of 8 June 1973

XII. Excerpts from White Paper No. 64 (1963-64)

1.1 In a communication dated 9 March 1988, the Government of the United States requested the CONTRACTING PARTIES to establish a panel to review a dispute between Norway and the United States concerning restrictions on imports of apples and pears applied by Norway (L/6311).

1.2 This recourse to Article XXIII:2 by the United States was considered by the Council on 22 March 1988. The Council agreed to establish a panel and authorized the Council Chairman to draw up the terms of reference and to designate the Chairman and members of the Panel in consultation with the parties concerned. On the same occasion Australia, Canada, the European Communities and Hungary reserved their right to make a submission to the Panel (C/M/218, page 9). However, Australia and Hungary later informed the Panel that they would not exercise their right to make a submission to the Panel.

1.3 At the Council meeting on 16 June 1988, the Chairman announced the terms of reference and composition of the Panel as follows:

Terms of reference:

Composition:

(C/M/222, pages 31 and 32.)

1.4 The Panel met with the parties on 21 September and on 21 October 1988. Canada presented a submission on 21 September 1988 and the European Communities presented a submission on 21 October 1988.

2.1 The subject of the dispute was a seasonal import restriction programme for apples and pears applied by Norway through a licensing scheme operated along the following lines. During the period of the year that domestic production was being marketed, i.e. from 1 August to 31 January in the case of apples, and from 11 August to 19 December in the case of pears, import licences had been granted only when domestic production could not cover domestic demand. Whenever the market situation permitted, the quantitative restrictions were lifted and imports were allowed to be made prior to the ultimate deadline indicated above. Furthermore, the licensing requirements could be suspended whenever domestic prices exceeded a given target price by 12 per cent or more for two consecutive weeks. Whenever the price fell below that upper limit, the licensing requirements were reintroduced with a nine-days' notice.

2.2 In the period from 1 February to 30 April, no licensing requirements were in force as regards apples. This period could be extended beyond 30 April. In the period from 1 May to end of July or beginning of August, the import of apples was subject to licensing for surveillance purposes only to prevent the accumulation of excessive stocks at the time the domestic produce entered the market. Market demand in this period was met exclusively by imports. In the case of pears the free period was from 20 December to 10 August.

2.3 The stated legal basis for the actual Norwegian import regime for apples and pears, was Act No. 5 of 22 June 1934, relating to the provisional ban on imports etc. According to Section 1: "The King can decide that, until further notice, it shall be prohibited to import from abroad one or more, by the King indicated, kinds of articles and goods, hereunder live animals and plants, unless there is shown to the customs authorities, at the time of importation, a written declaration from such authority or institution as is appointed by the King, that it consents to the import. ...". Moreover, under Section 2: "The King can decide, ... that the import from abroad of one or more kinds of articles and goods must not exceed a certain quantity with a certain period". (Annex I.) Due to the special considerations of the post-war situation, from 1945 to 1958, the Norwegian import regime for apples and pears had been based on general licensing requirements provided for in a temporary ordinance of 20 July 1945, subsequently repealed and replaced by a Provisional Act (No. 29) of 13 December 1946 relating to a general ban on imports (Annex II). The latter Act established a general ban on imports, while authorizing the King to grant dispensation by providing for the issuance of import licences.

2.4 During the early post-war period, some general principles and guidelines for agricultural policies were agreed upon by the Storting which in subsequent years formed a basis for various measures implemented by the Executive power. In 1945, a Common Political Programme establishing an income target for the agricultural sector, was concerted among the political parties then represented in the Storting (the Norwegian Parliament). This Programme and its implementation was considered by the Storting in 1947 (Annex III).

2.5 Further long-term agricultural policy goals, including production targets, were established during parliamentary discussions of the National Budget in 1947. The policy targets established were, on the one hand, to guarantee the profitability of orderly, well managed, family farms without resulting in agricultural products being unnecessarily expensive to consumers and, on the other hand, to ensure the agricultural population living conditions equivalent to those of other occupational groups in the society. It was stated that agricultural policy "must place agriculture on an equal footing with the other sectors and aim at an equalization of living conditions in the country", and it must be seen to that "the income and income potential of agriculture does not deteriorate in relation to that of other sectors". Another central aspect of agricultural policy directly related to the income target, was the production target, which was included in the National Budget of 1947. As regards the production target, the objective stipulated in 1947 was to cover in general the country's needs through domestic production. It was stressed however that becoming much more self-sufficient would prove too costly and would impede the development of the standard of living. Reference was at that time made merely to "some fruits" with no explicit reference being made to apples and pears (Annex IV).

2.6 This was the import regime applied by Norway at the time when the Protocol of Provisional Application of the General Agreement was established on 30 October 1947.

2.7 Income objectives and production targets were throughout subsequent years subject to further considerations by the Storting, in connection with its deliberations on White Papers and agricultural agreements and were in principle maintained in the form they had been given in 1945 and 1947. The agricultural policies adopted by the Storting in 1945 and 1947 required the Government to negotiate and conclude medium-term agreements with the farmers' organizations. There had been negotiations between the authorities and farmers as to agricultural policy since 1946. As an outcome of these negotiations, a basic agricultural agreement established between the Government and the farmers' organizations in 1950, was followed by a series of medium-term agreements concluded over 2 or 3 years. In a White Paper No. 60 of 1955, fruit and vegetable production was explicitly mentioned and it was stated that the aim should be meeting on a regular basis, a greater share of the demand with Norwegian produce and that this would require the building of more refrigeration plants and storage facilities (Annex V). That more of the domestic demand for fruit should be met on a regular basis by national production was again endorsed by a Storting Committee in 1957 which furthermore stated that great caution must be exercised as to the question of extending the period during which fruit might be imported without restrictions (Annex VI), thus confirming that at that time, import restrictions had a seasonal character. In a White Paper No. 80 of 1958, relating to the Agricultural Agreement for 1958-61, the Government announced its intention of appointing an Import Advisory Council with the task of providing the Government with advice and assistance regarding the categories of goods to be subject to import regulations, the duration of periods when imports shall be restricted and regarding establishment of a target-price mechanism governing imports. The Agricultural Agreement for 1958-61, concluded along the lines given by the Storting in 1945 and 1947 and taking account of subsequent considerations, were in particular important for the formulation of the regimes adopted in 1958 and 1960 (Annex VII).

2.8 Some changes were made in the Norwegian import regime for apples and pears in 1958: the application of the Act of 13 December 1946 having been suspended in 1958, Act No. 5 of 22 June 1934 became the legal basis for the regime. The regime of 1958 was initially implemented through a Royal Decree dated 1 August 1958 (Annex VIII), amended by another dated 12 December 1958 (Annex IX), but which were on 1 July 1960, repealed and replaced by a Royal Decree of 2 June 1960 (Annex X). The Royal Decree of 2 June 1960 was subsequently amended by a Royal Decree of 8 June 1973 (Annex XI). By an amendment adopted in 1973, subsequent to the conclusion of a Free Trade Agreement between Norway and the European Communities, the duration of the periods during which imports of apples and pears should be prohibited was reduced. In its amended form, the Decree stipulated, inter alia, that "Until further notice, it shall be prohibited to import to the country: ......... 1. Apples during the period 1 May to 31 January. 2. Pears during the period 11 August to 19 December", and furthermore that: "The Ministry of Agriculture shall ensure that the ban on imports shall only be enforced to such extent as is compatible with Norway's obligations under current international agreements. ..." This Royal Decree, as last amended on 8 June 1973, constituted the measures complained of by the United States.

2.9 The stated purposes and aims of the import regime as established in 1958 have been explained in several White Papers, notably in White Paper No. 64 (1963/64) (Annex XII), recalling the long-term targets of Norwegian agricultural policy with regard to agricultural production and agricultural incomes. As regards fruit, "... the aim should be to meet as much of domestic demand as possible through domestic production ...". To achieve the objectives, three main categories of measures have been applied to safeguard market opportunities: price measures, other domestic market-stabilizing measures and import policy measures. Quantitative import restrictions were considered to be the most important means of protecting Norwegian agriculture and considered to be a prerequisite if the economic support schemes were to have the intended effects. Consequently, existing arrangements involved a price-related import ban on fruit, only applied when domestic price quotations remained below a prescribed upper limit.

2.10 For the period 1978-87, annual apple production in Norway averaged 20 thousand tons, while average annual imports of apples amounted to 42 thousand tons accounting for 70 per cent of total supplies and consumption. For pears, average annual production was 3,100 tons and average annual imports 11 thousand tons, the latter covering 80 per cent of total supplies and consumption.

2.11 During the years 1978 to 1987, United States exports of apples to Norway varied between 2,400 and 8,600 tons accounting for between 6 and 19 per cent of total Norwegian imports. For pears, United States exports to Norway in the same period varied between 200 and 2,300 tons, covering between 2 and 24 per cent of total Norwegian imports.

- Article XI

3.1 The United States considered that the measures applied by Norway to imports of apples and pears clearly contravened Article XI:1, which provided a fundamental and sweeping prohibition of licensing programmes restricting imports. The measures could not be justified under Article XI:2 as Norway did not have domestic supply management programmes restraining the production or marketing of apples and pears. Furthermore, prohibitions of imports such as the ones in question would fall outside the scope of Article XI:2(c). The United States therefore alleged that the measures applied resulted in an infringement of Norway's obligations under Article XI:1 and constituted, prima facie, a case of nullification or impairment of United States rights under the General Agreement.

3.2 Norway considered that as the legal basis for its import restrictions on apples and pears were provisions of the Protocol of Provisional Application of the General Agreement on Tariffs and Trade, a reference to Article XI or other Articles of Part II of the Agreement had not been envisaged to be made by its delegation.

- Protocol of Provisional Application of the General Agreement on Tariffs and Trade

- General comments

3.3 Norway considered that the Norwegian import regime for apples and pears was in full conformity with Norway's obligations under the General Agreement as the legislation on which the relevant import restrictions were based, was covered by the provisions of paragraph 1(b) of the Protocol of Provisional Application of the General Agreement on Tariffs and Trade worded as follows: "... to apply provisionally on and after 1 January 1948: ... (b) Part II of that Agreement to the fullest extent not inconsistent with existing legislation." The said Protocol was an integral part of the Agreement and had as such been signed in June 1948 and had entered into force for Norway on 10 July 1948.

3.4 The legal basis for the import régime for apples and pears was actually the Act of 22 June 1934 relating to the provisional ban on imports, etc. In the period 1945 to 1958, however, imports of apples and pears had also been restricted according to a temporary ordinance of 20 July 1945 and later the Provisional Act of 13 December 1946 relating to the ban on imports, mainly applied for balance-of-payments considerations. Some changes in the import regime of apples and pears had been made in 1958. While the Act of 22 June 1934, remained the stated legal basis for the amended regime, account had also been taken of decisions and considerations by the Storting and subsequent agreements established between the Government and the farmers' organizations. The changes made were without exception steps in the direction of greater liberalization.

3.5 As to various earlier considerations by the CONTRACTING PARTIES, Norway recalled that in 1948 the Chairman of the CONTRACTING PARTIES had ruled that the phrase "existing legislation" in paragraph 1(b) of the Protocol of Provisional Application referred to legislation existing on 30 October 1947 (BISD, Vol. II/35). Both the Act of 22 June 1934 (Annex I) and the Provisional Act of 13 December 1946 (Annex II), predated 30 October 1947. The question of amendment of legislation had been addressed by the CONTRACTING PARTIES in 1948 and 1984 (BISD, Vol. II/183 and BISD 31S/89). Norway also recalled that the conclusion reached was that amendments in legislation which lead to a greater degree of conformity with the General Agreement would not alter the status of existing legislation in relation to the Protocol. The chronological presentation of developments since 1947, in the Norwegian import regime for apples and pears, demonstrated that all changes had improved the consistency of the regime with the General Agreement. It consequently argued that the Norwegian legislation on which the import restrictions for apples and pears was based, clearly qualified as existing legislation in terms of the Protocol of Provisional Application of the General Agreement.

3.6 The United States noted that the only defence of Norway was the claim that the restrictions on imports of apples and pears were excepted from the provisions of Article XI by virtue of paragraph 1(b) of the Protocol of Provisional Application. It stressed that quantitative restrictions could not be justified by mere longevity and he recalled that the United States had questioned Norway about the application of import quotas to apples and pears and other products in consultations held pursuant to Article XXII early in the 1960's (L/2675). The fact that quotas had not been challenged in an Article XXIII proceeding did not alter the obligations accepted by contracting parties under GATT provisions as established by an earlier Panel (BISD 30S/130, paragraph 28). It also recalled that in 1958, Norway had informed the CONTRACTING PARTIES that the only basis under the GATT for its restrictions on agricultural imports was balance-of-payments reasons (L/1086, paragraphs 6 and 28), and did not at that time invoke the exception provided by the Protocol.

3.7 Norway recalled that the 1966 consultations between the United States and Norway were based on a request for consultations under Article XXII. Both parties, in accordance with normal GATT practice, had reserved their positions as to the GATT legality. These consultations were conducted and finalized without the issue of nullification or impairment of United States rights regarding existing restrictions applied by Norway being raised. The United States did not at that time seek recourse to Article XXIII, and Norway therefore concluded that the GATT conformity of the restrictions was accepted.

3.8 In the view of the United States, the burden of proof would rest upon the party claiming the protection of an exception to a general rule. Accordingly, Norway would have to prove the following: that the laws requiring these apple and pear restrictions were in force on 30 October 1947; that the laws absolutely prohibited the executive branch of the Norwegian Government from implementing the requirements of the General Agreement with respect to apple and pear imports (i.e., the laws were "mandatory"); and that the laws did not at any time lapse, nor were they subsequently liberalized to a greater extent than existed at the present time.

3.9 The United States noted that Norway extended the term legislation to include regulations and other actions by the executive. The position adopted by Norway that "'legislation' ... must be regarded as a broader concept including not only 'laws', but also 'regulations' was in its view untenable for the purposes of defining Norway's international obligations. It found it to be unprecedented for such a major limitation of a country's international obligations to be authorized by implication, inference, or some other form of obscure interpretation. Referring to earlier considerations of the matter, it recalled that subsequent to the 1949 working party report, a Panel on the Belgian Family Allowances had construed the mandatory legislation requirement very narrowly, and that it was Norway that at the time had advanced the winning argument (BISD 1S/61). Later considerations such as that of a Working Party on Organizational and Functional Questions (BISD 3S/249) and most recently that of a Panel on the United States Manufacturing Clause (BISD 31S/74 to 88), had amply demonstrated that the narrow nature and specific requirements of the mandatory legislation exception was not a mere theory, but was indeed the long-settled law of the GATT.

3.10 The United States disagreed with the suggestion by Norway that the reference in the Protocol to "existing legislation" should include existing regulations. Earlier considerations within the GATT had made it clear that there should be a sharp distinction between measures or executive action and the authorizing legislation (GATT Article III, BISD II/62 and BISD 1S/61). Legislation would refer only to the law and would not encompass executive action regardless of whether that executive action was taken in consultation with the legislature.

3.11 As to the meaning of the term "legislation" as used in the Protocol, Norway felt that this term included the Constitution and constitutional principles, the Acts, travaux préparatoires, as well as derivative legislation - regulations - clarifying the content of the Act. It noted that while Article III distinguished between laws, regulations and requirements, the Protocol only used the term "legislation", and thereby confirmed a broader concept of that term. Administrative decisions, instructions and practices could also be relevant when interpreting an Act. The exception provided by the Protocol was originally a compromise between opposing considerations, accepted in order to avoid the need for legislative changes as precondition for countries to become contracting parties. Subsequent considerations of the question whether the Protocol should be replaced by an acceptance of the General Agreement itself had not led to results. The formulation of paragraph 1(b) of the Protocol implied a reference to national legislation and it would follow from the wording and occasio legis of the clause that it would depend on national legislation whether the contracting party invoking that provision would be bound to apply Part II of the General Agreement. It was well established GATT dispute settlement practice that the respondent State would be entitled to explain its domestic provisions, its legal system, its sources of law and the method employed when national legislation was interpreted. The criterion "expressed intent" should be seen in that perspective.

- Mandatory character

3.12 While the United States could accept the 1934 Act as existing legislation, it did not accept Norway's attempt to broaden the term "legislation" to include subsequent regulatory provisions. It recalled that earlier considerations by the CONTRACTING PARTIES had clearly settled that a measure could be permitted under the Protocol, provided that the legislation upon which it was based was by its terms or expressed intent of a mandatory character -- that is, it imposed on the executive authority requirements which could not be modified by executive action (BISD Vol.II/62). To try, as Norway was doing, to use subsequent regulations to define an earlier piece of legislation as mandatory, rendered the whole requirement of mandatory legislation meaningless. In its view, long accepted GATT practice and interpretation required an explicit manifestation of the mandatory nature of the legislation itself. It noted that the legal basis for the restrictions under consideration was the Act of 22 June 1934. It seemed obvious to him in considering the language of the statute, that complete discretion was provided to the executive to determine which imports were permitted entry. The legislation upon which Norway relied, the Act of 22 June 1934, used both mandatory and enabling language. If the enabling language were in fact mandatory, there would be no reason for specific mandatory language in another section. In the view of the United States, Norway's argument required two different interpretations of the same statute. The United States also noted that it was obvious that the language of the statute concerning import restrictions was specifically intended to give great discretion to the executive, for the law permitted a complete ban on all agricultural imports. The Storting obviously did not intend to ban all such imports, for the nation could not physically survive such a ban. Furthermore, section 5 of the 1934 law explicitly gave the executive the authority to amend its own regulations without further parliamentary action. The fact that the Storting approved of the regulatory restrictions on imports of apples and pears and might have disapproved of contrary action, was merely a restatement of a normal relationship between the legislature and the executive and did not imply that the regulations were equivalent to or expressly part of the laws. An examination of parts of the Norwegian Constitution (i.e. Articles 17, 26 and 75(f)) seemed to confirm the United States position on this point. For instance, Article 17 of the Norwegian Constitution gave the executive the right to issue regulations. This was expressly distinct from legislative prerogatives. In contrast, Article 26 of the Norwegian Constitution provided that treaties signed by the executive "shall not be binding until the Storting has given its consent thereto." Under Article 75, regulations such as those at issue here merely needed to be available for presentation to the Storting; there was no comparable need for approval. Obviously, the Norwegian Constitution expressly recognized the distinction between legislation and executive action now denied by the Government of Norway in this case.

3.13 Norway argued that the question of whether Norwegian legislation was "by its terms or expressed intent of a mandatory character, that it imposes on the executive authority requirements which cannot be modified by executive action", had to be answered on the basis of Norwegian law. Statutory provisions did not always reflect the level of discretion given to the executive authorities. Even if an Act, according to its wording might give a significant degree of discretion to the Executive Authority, it would be necessary to interpret each provision of the Act in the light of all relevant sources of law, and in particular to take into account the binding constitutional principles governing the relationship between the Government and the Storting. The parliamentary discussions of the National Budget of 1947 were in particular revealing of how the Storting might confer upon the Executive Power certain obligations. A proposal made by one representative to the effect that the budget should not be established by a formal decision, which would be binding for future policies, was rejected by a large majority clearly illustrating that the adoption of the National Budget entailed binding goals concerning, inter alia, agricultural policy. The Storting's consideration of a White Paper reporting on how the Government was implementing the Common Political Programme equally revealed that the Programme was considered binding on the Government. These statements of principle were made by the Storting before 30 October 1947, and the relevant legislation must therefore be interpreted in the light of the firm and unanimous attitude of the Storting and which remained unchanged ever since. Norway added that the reference by the United States to Articles 17, 26 and 75 of the Norwegian Constitution was irrelevant and based on a misinterpretation of these provisions.

3.14 The Norwegian delegation submitted the opinion of a legal expert on the matter which concluded that:

3.15 The United States observed that while an examination of the terms of Norway's Constitution confirmed the United States position, it was not necessary to enter into such a detailed analysis. Rather, what was involved here was not a question of Norwegian law, but a question of Norway's obligations to other contracting parties to the GATT. For purposes of defining the parameters of those obligations, an exception had been established for restrictions required by pre-existing legislation that was by its own terms or expressed intent of a mandatory nature. In its view, Norway had not carried the burden of proving the applicability of the exception contained in the Protocol, given the lack of written legislation requiring the quantitative restrictions at issue here. New parameters to the international rules could not now be written.

3.16 Norway emphasized that Article 1(b) of the Protocol implied a renvoi to national legislation. Its delegation had provided extensive documentation to substantiate the conclusion that domestic legislation was in fact mandatory. This conclusion followed clearly from constitutional principles governing the relationship between the Storting and the executive authorities. In the present case there was no risk that the outside world must accept a mere reference to Norwegian law. The documents containing the legal sources were accessible to everyone, and the conclusion reached was based on a perfectly normal legal method.

3.17 In this respect, Norway made reference to the adoption by the Storting of a Common Political Programme in 1945 establishing an income target for the agricultural sector, and to parliamentary discussions of the National Budget of 1947 which set out long-term agricultural policy goals including production targets. The considerations undertaken and decisions made by the Storting on these matters were binding for the administration. In implementing these targets, the executive authorities had been confined to applying only quantitative restrictions as this was the only possibility in pursuance of the Acts of 1946 and 1934. The system of quantitative restrictions had repeatedly been reconfirmed by the Storting in connection with its deliberations on White Papers, including unanimous recommendations from committees within the Storting to the plenary. Furthermore, the agricultural policies adopted by the Storting had imposed on the executive authority the obligation to negotiate and conclude agreements with the farmers' organizations such as the Agricultural Agreement for 1958-61. These agreements had on a continuous basis confirmed the obligation of the executive authorities to continue to apply quantitative import restrictions for apples and pears in accordance with the Act of 22 June 1934, thus confirming the mandatory character of the legislation. There was a legal obligation for the executive authorities to comply with directives given by the Storting, and this obligation was of a constitutional character, based on the system of parliamentarism. Non-compliance with this obligation could lead to proceedings against the responsible Minister before the Court of Impeachment. These constitutional elements were of crucial importance for determining whether existing legislation was by its terms or expressed intent of a mandatory character.

3.18 The United States found the Norwegian position on the question under consideration to be contrary to positions it had previously taken in the GATT, both with respect to the legal interpretation of the exception provided for in the Protocol of Provisional Application, and with respect to the justification of its restrictions on imports of apples and pears. In earlier considerations related to legal interpretation of the Protocol, Norway had advocated a very narrow interpretation of the exception provided by it (BISD 1S/59). Specifically, the United States noted that Norway had prevailed in its argument to the Panel in the case of Belgian Family Allowances to the effect that the Protocol exception did not apply because there was some possibility of executive action, even though the Belgian law "appeared to be of a mandatory nature." Thus, in the earlier case, Norway claimed no applicability of the Protocol exception even though the law appeared mandatory; now Norway was arguing for applicability of the exception even though the law appeared to be completely discretionary. In the United States view, it was obvious that Norway was now arguing for exactly the opposite legal position it had proposed and won with earlier.

3.19 As to the allegation by the United States that there was inconsistency between the opinion now expressed by Norway and the positions taken by it earlier, with respect to what constituted existing legislation of a mandatory character in terms of the Protocol of Provisional Application, Norway asserted that there was no reason for that allegation, as its position remained unchanged. In 1948, Norway did endorse the view that legislation could not be mandatory if the executive authority had the discretion to "grant an exemption to a country whose system of family allowances did not meet fully the requirements of the law", i.e. to choose between actions which were consistent with GATT and those which were not (Belgian Family Allowances; report adopted by the CONTRACTING PARTIES on 7 November 1952, BISD 1S/59). The Norwegian opinion on that point remained the same, but as stated, the Norwegian Government had no such discretion in the present case. In 1958, Norway did not agree that any legislation in force would take precedence over Part II and not only "mandatory legislation" (Import Restrictions Maintained by the Federal Republic of Germany, report adopted by the Intersessional Committee on 2 May 1958, BISD 7S/104), and that view was still maintained. It recalled that "Other members did not consider that it was within the terms of reference of the working party to pass final judgement on the mandatory character of the legislation which the Government of the Federal Republic of Germany had officially presented to the CONTRACTING PARTIES as having such character. They did consider, however, that it was within the terms of reference, on the basis of a careful examination of the question and discussion with the contracting party concerned, to say whether they were satisfied that the Federal Republic was fulfilling its obligations by applying the provisions of Part II of the General Agreement to the fullest extent not inconsistent with the legislation in question" (BISD 7S/107). It was therefore necessary to carefully examine national legislation in order to establish whether such legislation met the requirements of the Protocol of Provisional Application.

3.20 Replying to a question whether Norway claimed the justification of paragraph 1(b) of the Protocol of Provisional Application for import restrictions applying to other products, Norway said that the terms of reference limited the examination of the Panel to import restrictions on apples and pears. The situation for other products fell outside those terms of reference and might if requested, necessitate a separate examination. Norway was therefore not in the position to be specific as to the situation for other products than apples and pears.

- Some concluding remarks by the parties

3.21 In conclusion, the United States claimed that it would be appropriate for the Panel to conclude that Norway's seasonal import prohibitions on apples and pears were inconsistent with Norway's obligations under Article XI of the General Agreement; that these measures were not sheltered by paragraph 1(b) of the Protocol of Provisional Application; and that they constituted, prima facie, nullification of benefits accruing to the United States under the General Agreement. It urged that the Panel suggested that the CONTRACTING PARTIES recommend that Norway take action immediately to eliminate its seasonal import restraints on apples and pears in accordance with Norway's obligations under the General Agreement.

3.22 Norway claimed that Norwegian regulations of imports of apples and pears were based on existing legislation in terms of the Provisional Protocol of Application; that the legislation was of a mandatory character as the Government had never, during the period in question, had any actual discretion to alter the level and form of the restrictions, this authority being held by the Storting itself; that the changes in the import regime for apples and pears had without exception made the measures less inconsistent with the General Agreement, thereby retaining the "existing legislation" status; and that the changes in the regime had been formally implemented by means of Royal Decree, in each case subject to prior presentation to and approval by the Storting - reflecting the mandatory character of the legislation on which the restrictions were based; and that being in full conformity with the requirements of the Provisional Protocol of Application, the Norwegian regulations of imports of apples and pears did not constitute any nullification or impairment of United States rights under the General Agreement.

4.1 In making a submission to the Panel, Canada pointed out that this only dealt with apples. It alleged that the measures applied by Norway to the imports of apples, in particular the ban on the importation of apples below an established price during the crop season, constituted a prohibition in terms of Article XI and was, prima facie, a contravention of that Article. Canada considered that the ban acted as an impairment to its right of entry to the Norwegian market. In addition, the introduction of quantitative restrictions on imports of apples through the granting of licences, was contrary to the provisions of Article XI:1. It was the view of Canada that the measures applied by Norway would not qualify as exceptions in accordance with Article XI:2(c), as that provision would not allow for a prohibition. Canada also held the view that Article XI:2(c)(i) allowed restrictions to be applied only where there were effective restrictions on the production or marketing of a like domestic product. It was Canada's understanding that Norway had no restrictions on production of domestic apples.

4.2 Canada recalled earlier considerations related to interpretation of paragraph 1(b) of the Protocol of Provisional Application (BISD Vol. II/62 and BISD 31S/90) and expressed the view that in the present case, the burden was on Norway to demonstrate that the legislation in question fulfilled all the conditions laid down by the CONTRACTING PARTIES to justify an exception under said Protocol. Furthermore, it insisted that any resolution of the complaint should be on a most-favoured-nation basis.

4.3 As to the compatibility with the provisions of Article XI, of the import restrictions applied by Norway to the imports of apples and pears, the European Communities underlined that in order to judge whether there was a ban or a simple restriction, import conditions over a sufficiently long period should be observed, assessing the effects of the measures in question. The usual method used under the GATT was to proceed with such an observation on an annual basis, or on the basis of a season, taking into account the duration of production and marketing for national and imported products. Splitting up the periods during which restrictions were applied, could for example, lead to import suspension measures being considered as import bans whenever the quota was filled. In this respect, the Community noted that imports into Norway were unrestricted for the greater part of the year and that they made up the major part of domestic consumption even exceeding 70 per cent of the latter.

4.4 The European Communities subscribed to the existing practice of interpreting the Protocol and agreed that for a measure to be covered by the Protocol, it must be based on legislation which by its terms or expressed intent was of a mandatory character, and secondly, that the Protocol would not cover increases in the degree of inconsistency with the General Agreement. In interpreting the Protocol the general objectives of the General Agreement to reduce barriers to trade and to establish an overall balance of the level of obligations for all contracting parties would need to be taken into account. It also drew the attention of the Panel to the fact that Article XXIII:1(b) and (c) might also be relevant in this context with a view to protecting the proper balance of benefits.

5.1 The Panel noted that Norway maintained a system of restrictive licensing for import of apples and pears which was claimed by the United States to be inconsistent with Article XI:1 of the General Agreement. It also noted that Norway claimed that this system was covered by paragraph 1(b) of the Protocol of Provisional Application of the General Agreement of 30 October 1947 (hereinafter referred to as "the Protocol"), according to which the signatory contracting parties undertake to apply Part II of the General Agreement

5.2 According to Norway, the system of restrictive licensing was covered by the existing legislation clause because it implemented parliamentary acts predating the Protocol, namely Act No. 5 of 12 June 1934 Relating to the Provisional Ban on Imports etc. (Annex I), the Common Political Programme adopted in 1945 by the parties represented in the Storting (the Norwegian Parliament) (Annex III) and some principles on agricultural policies endorsed by the Storting in connection with the adoption of the 1947 National Budget (Annex IV).

5.3 Norway did not contest the contention of the United States that the system of restrictive licensing was inconsistent with Article XI:1. The sole issue before the Panel was therefore whether Norway's system of restrictive licensing for import of apples and pears was covered by the existing legislation clause.

5.4 The Panel began its examination by analysing the historical origin of the Protocol and relevant decisions of the CONTRACTING PARTIES relating to the existing legislation clause.

TO CONTINUE WITH RESTRICTIONS ON IMPORTS OF APPLES AND PEARS