24 May 1989

1. In March and April 1988, Australia and the Republic of Korea held Article XXIII:1 consultations concerning Korea's beef import restrictions. These consultations did not lead to a mutually satisfactory solution. Australia therefore requested the Council to establish a panel to examine the matter (L/6332).

2. At its meeting on 4 May 1988, the Council agreed to establish a panel and authorized its Chairman to designate the chairman and members of the Panel in consultation with the parties concerned. Furthermore, since at the same Council meeting another panel concerning the same subject matter was set up at the request of the United States, it was decided that the Council Chairman would consult with the parties to the two Panels and with the secretariat concerning the appropriate administrative arrangements (C/M/220, item 3). Argentina, Canada, the European Community, New Zealand, the United States and Uruguay each reserved their right to make a submission to the Panel.

3. The following terms of reference were agreed upon:

4. In consultations among the parties it was agreed that both the Australian/Korean Panel and the United States/Korean Panel would have the same composition*, as follows:

*Later it was agreed that the New Zealand/Korean Panel on the same subject matter would also have the same composition.

5. The Panel met with the parties on 30 November 1988 and on 18 January 1989. It received third country submissions from Canada, New Zealand and the United States. Their views are summarized below in paragraphs 79 to 89. The Panel submitted its report on the dispute to the parties on 25 April 1989.

6. In its first submission to the Panel, the Republic of Korea argued that the complaint had been improperly brought under Article XXIII of the GATT and that the Panel should therefore declare it inadmissible. Korea requested that the Panel rule on the issue of admissibility prior to considering the merits of the complaint.

7. Korea put forward the following arguments for its request: since its accession to the GATT, Korea had applied restrictions on beef, among other products, under Article XVIII:B. Korea had regularly held consultations about these restrictions pursuant to Article XVIII:12(b), under the aegis of the GATT's Balance-of-Payments Committee. The most recent report of this Committee was issued as BOP/R/171 (1987). A new round of consultations was scheduled to take place in June 1989.

8. Korea also argued that the General Agreement made specific provision for a complaint procedure in Article XVIII:12(d) if, despite the multilateral surveillance exercised pursuant to other provisions of Section B of Article XVIII, a contracting party wanted to challenge the consistency of restrictions that have been applied under this Section.

9. Korea further noted that the complaint procedures of Article XVIII:12(d) and Article XXIII differed in several important respects. For example, under Article XVIII:12(d), the complainant had to make a prima facie showing that the disputed restrictions were inconsistent with the provisions of Article XVIII:B. On the other hand, Article XXIII merely required a showing of nullification or impairment of benefits of the complainant, which was not dependent on a showing of inconsistencies with the General Agreement. There were valid reasons for these differences. When countries applied restrictions under Article XVIII:B and held regular consultations concerning these measures with a qualified GATT Committee that took into account the relevant findings of the International Monetary Fund, they had a legitimate expectation that these measures could not simply be challenged under the relatively loose requirements of Article XXIII regarding nullification or impairment. Otherwise, the exercise of multilateral surveillance pursuant to Article XVIII:B became meaningless.

10. The Panel decided to make an immediate ruling on the question of admissibility as requested by Korea, valid for both the United States Panel and for Australia's Panel, as follows:

11. The case before the Panel concerned measures maintained by the Republic of Korea on imports of beef (CCCN 02.01).

(a) General

12. Since its accession in 1967, Korea has maintained balance-of-payments (BOP) measures on various products. Since that year, and to date, Korea's BOP restrictions have been subject to regular review by the BOP Committee. During this period, Korea had abandoned or relaxed restrictions on some products. By 1988, restrictions for which Korea claimed BOP cover were still maintained on 358 items, including beef. In 1979, the Korean tariff on beef was reduced from 25 per cent to 20 per cent and bound at that level. Korean beef imports increased from 694 tons (product weight) in 1976 to 25,316 tons in 1981, 42,329 tons in 1982 and 51,515 tons in 1983. ¹ Increased beef supplies, due to rising domestic production and the higher level of beef imports, resulted eventually in falling prices on the Korean domestic market and mounting pressures from Korean beef farmers for protection from the adverse effects of beef imports.

13. In October 1984, Korea ceased issuing tenders for commercial imports to the general market, and in May 1985 orders for imports of high-quality beef for the hotel market also ceased, leading to a virtual stop of commercial beef imports. These measures were neither notified to, nor discussed in, the BOP Committee. Between May 1985 and August 1988, no commercial imports of beef took place. Korea partially reopened its market in August 1988, permitting up to 14,500 tons (product weight) of beef to be imported before the end of the year. For 1989, a quota of up to 39,000 tons had been announced.

(b) Korea's balance-of-payments consultations

14. At the last meeting of the BOP Committee in December 1987, "the Committee took note with great satisfaction of the improvement in the Korean trade and payments situation since the last full consultation". ² "The prevailing view expressed in the Committee was that the current situation and outlook for the balance of payments was such that import restrictions could no longer be justified under Article XVIII:B. The conditions laid down in paragraph 9 of Article XVIII for the imposition of trade restrictions for balance-of-payments purposes and the statement contained in the 1979 Declaration on Trade Measures Taken for Balance-of-Payments Purposes that 'restrictive trade measures are in general an inefficient means to maintain or restore balance-of-payments equilibrium' were also recalled. It also noted that many of the remaining measures were related to imports of agricultural products or to particular industrial sectors, and recalled the provision of the 1979 Declaration that 'restrictive import measures taken for balance-of-payments purposes should not be taken for the purpose of protecting a particular industry or sector'".

15. Therefore, the BOP Committee "stressed the need to establish a clear timetable for the early, progressive removal of Korea's restrictive trade measures maintained for balance-of-payments purposes. It welcomed Korea's willingness to undertake another full consultation with the Committee in the first part of 1989. However, the expectation was expressed that Korea would be able in the meantime to establish a timetable for the phasing out of balance-of-payments restrictions, and that Korea would consider alternative GATT justifications for any remaining measures, thus obviating the need for such consultations. The representative of Korea stated that he could not prejudge the policy of the next Government in this regard". ³ Moreover, members of the Committee had stated that "they did not necessarily expect Korea to disinvoke Article XVIII:B immediately ...".

16. Economic indicators in Korea since its latest BOP consultations showed a continuation of the favourable economic situation of the recent past. Economic growth for the period January-September 1988 was expected to have reached 12 per cent as compared to the same period in 1987. Terms of trade improved by 2.5 per cent during the first nine months of 1988 while unemployment dropped from 4 per cent in 1985 to 2.6 per cent for the period January-September 1988. As regards BOP, the current account for the first nine months of 1988 showed a favourable balance of US$14.1 billion, compared to US$9.9 billion for the whole year of 1987. Official reserves (gross) passed from US$3.6 billion at the end of 1987 (enough to finance 1.1 months of imports) to US$12.3 billion at the end of 1988 (3 months of imports). Finally, the ratio of external debt to GNP decreased from 30 per cent in 1987 to 20.4 per cent for the period January-September 1988. ⁴

(c) Korean beef production and imports

17. During the late 1970's and early 1980's, Korea adopted a number of policies designed to promote a cattle herd build-up. These measures included banning the slaughter of all bulls under 350 kg. and cows of less than six years of age. In addition, Korea began to import large quantities of beef for domestic consumption. Finally, Korea undertook an expansion of credit to help cattle farmers build up their herds and provided producer incentives (5,000 won per head) for female calves. The credit programme and restrictive slaughter rules led to a sharp increase in imports of live cattle and beef. Korean live beef cattle imports increased from 8,138 head in 1979 to a peak of 67,706 head in 1983. During this period, Korean beef imports averaged 30,330 metric tons ⁵ (product weight).

18. The success of the Korean programme led to a strong increase in domestic cattle numbers. Official Korean statistics showed that the beef cattle inventory nearly doubled between 1982 and 1986. The total beef inventory increased from 1,312,000 head on 1 January 1982 to 2,553,000 head on 1 January 1986. This build-up in cattle inventories eventually led to falling cattle prices. Livestock market prices for Korean native cattle (400 kg.) rose to a peak of 1.57 million won per head in February 1983 and then began to fall throughout 1984-1986, eventually reaching a low of 0.92 million won per head in February 1987. ⁶ The decline in cattle prices led to reduced profitability for cattle farmers.

(d) Korean beef import régime

(i) Import system prior to 1 July 1987

19. Prior to 1 July 1987, Korea's beef imports were governed by the Foreign Trade Transaction Act (as amended) which came into force in 1967. The Foreign Trade Transaction Act provided, inter alia, that the Minister of Trade and Industry was obliged to publicly notify the classification of (a) automatic approval import items; (b) restricted approval items; and (c) prohibited items. For restricted items, the Minister was required to lay down procedures controlling their import, including any restrictions on quantity. These arrangements were published in a consolidated public notice (the Export and Import Notice). Meat and edible offals were classified in 1967 as restricted items for the purposes of the Foreign Trade Transaction Act. As restricted products, beef could be imported on the recommendation of the National Livestock Cooperatives Federation (NLCF) subject to the guidelines of the Ministry of Agriculture, Forestry and Fisheries (MAFF), which controlled the quota allocation. If import levels became too high in relation to the level of consumption, imports could be adjusted or suspended.

20. Under the Foreign Trade Transaction Act, the Republic of Korea handled beef imports via two separate mechanisms. One mechanism was concerned with imports of beef for general domestic consumption and generally covered more than 90 per cent of beef imports. These were administered by the NLCF which was established in 1981 by the Livestock Cooperative Law. It had the following functions: (a) administration of a Livestock Development Fund (funded by import levies and direct government contributions) with a prime responsibility of providing concessional loans to livestock farmers; (b) establishment of livestock markets; (c) intervention in the domestic market to stabilize prices through the purchase or sale of stocks; (d) import operations; (e) supply of farming material; (f) marketing of livestock products; (g) general banking business; and (h) extension services. The NLCF imported beef for the general market through a tender system, according to the MAFF's guidelines. Some of the imported beef was processed by the NLCF into packed beef, and some was released to a private entity called Korea Cold Storage Co., at prices lower than those of the domestic wholesale market in order for the latter to produce packed beef. The margin between the wholesale release price and the NLCF's costs, including the purchase price of imported beef, duty and handling charges, was allocated to the Livestock Development Fund.

21. The second mechanism was concerned with imports of high-quality beef for hotels and was handled by the Korean Tourist Hotel Supply Centre (KTHSC) between 1981 and 1985. The KTHSC, an organization representing Korea's major tourist hotels, was established in 1972, under the jurisdiction of the Ministry of Transportation, to import goods solely for tourist hotels. After application from the KTHSC, the Ministry of Transportation would forward the demand for beef imports to the MAFF. The KTHSC paid a levy of 2 per cent of the c.i.f. price of the imported beef to the NLCF for the Livestock Development Fund. The import operations of the NLCF were virtually suspended in October 1984 and those of the KTHSC in May 1985.

(ii) Current import system

22. On 1 July 1987 the Foreign Trade Transaction Act was superseded by the Foreign Trade Act (Law No. 3895 of 31 December 1986). A new organization was established by the Korean Government, the Livestock Products Marketing Organization (LPMO), with effect from 1 August 1988. This organization administered on an exclusive basis the importation of beef within the framework of quantitative restrictions set by the Korean Government. According to its current by-laws, as amended on 29 December 1988, the LPMO was to:

The main function of the LPMO was the administration of the quota restrictions set by the government. The LPMO's board of fifteen directors included the following representatives:

23. Under the current import arrangements, the MAFF sets a maximum import level on the basis of various criteria such as estimated domestic beef production and estimated domestic consumption. In 1988, the LPMO imported the beef through a system of open tenders and resold a major part of it by auction to the domestic market.

24. Before reselling the imported beef either through the wholesale auction system (61.2 per cent of total volume) or directly (38.8 per cent), for instance to hotels, the LPMO added its costs and a profit margin. Between August and October 1988 the LPMO imposed an announced base price under which the meat was not sold at the wholesale auction. Since October, no explicit base price had been announced on the understanding that a certain base price level had to be respected. After having deducted its overhead, the difference between the import contract price and the auction price (or derived direct sale price) was paid into the Livestock Development Fund. This difference varied from one month to another, and also for different types of beef, but was on average approximately 44 per cent in the period August to November 1988.

25. Australia considered that the prohibition of beef imports from end- 1984 until August 1988 and the subsequent import ceiling restrictions maintained by the Republic of Korea were contrary to the provisions of Article XI:1 and could not be justified under Article XI:2, Article XVIII:B or under any other article of the General Agreement. The restrictions were also in contravention of Article II:4 of the General Agreement. Australia further questioned the conformity of the measures with the provisions of Articles II:1(b), X and XIII. It referred to the arguments made in third party submissions concerning these Articles and requested that the Panel include these arguments in its consideration. The relevant arguments are summarized in paragraphs 84 and 85 below. It concluded therefore that Korea's beef import restrictions had resulted in nullification and impairment of benefits accruing to Australia within the meaning of Article XXIII:2 of the General Agreement, and had caused serious damage to Australia's trade interests.

26. The Republic of Korea argued that its restrictions on beef imports were covered by the balance-of-payments provisions of Article XVIII:B and were thus permissible under the General Agreement. Furthermore, Australia's complaint could not be reviewed under the standards of Article XXIII in view of the standards and procedures in Article XVIII:12(d).

27. Australia argued that the Korean Government's decisions regarding beef imports had been based solely on the domestic supply and demand situation and industry protection considerations. Therefore, the restrictions had to be judged under the provisions of Article XI. Australia also argued that the quantitative restrictions and import ban maintained by Korea since 1984/85 on imports of beef were prima facie inconsistent with the GATT under the provisions of Article XI:1 which proscribed "prohibitions or restrictions other than duties, taxes or other charges, whether made effective through quotas, import or export licences or other measures". Australia maintained that the restrictions could not be justified under the exemption provisions of Article XI:2 since they were not measures necessary to the enforcement of government efforts to restrict the amount of domestic beef permitted to be marketed or produced, or to the removal of a temporary surplus by making this available to certain groups of consumers at less than market prices.

28. Although the Korean Government had often referred to its import regime covering the period from end-1984 until the second half of 1988 as a "suspension of imports", this, Australia argued, did not alter the fact that no commercial imports of beef were permitted by Korea during that period, i.e., the measures had the effect of an import prohibition. Korean official import statistics supported this contention. Australia also noted that although there had been a very limited easing of the ban on beef imports in the second half of 1988, the fundamental import control mechanisms remained basically unchanged. Australia had been advised by the Korean Government that the 14,500 tons access for 1988 announced on 26 July was not a definite quota as such but an anticipated amount that might need to be imported to make up an expected shortfall in supply. It might be contended that the partial (and possibly temporary) easing by the Korean Government of its ban on beef imports in the second half of 1988 meant that the continuing controls on access to the market now constituted restrictions rather than the prohibition that previously existed. However, Australia would argue that Korea was still clearly in breach of its obligations under Article XI:1.

29. Korea did not deny that the beef restrictions maintained by Korea were contrary to the provisions of Article XI but claimed that they were justified under Article XVIII:B.

30. Australia noted that the beef import arrangements introduced in August 1988 included the establishment of the Livestock Products Marketing Organisation (LPMO). The LPMO was the sole channel for beef imports both for general consumption and for tourist hotels and facilities. Under the new beef import arrangements which, Australia contended, represented no effective change from the previous system, the Korean Ministry of Agriculture, Forestry and Fisheries (MAFF) determined the maximum import level on the recommendation of the LPMO. The LPMO then imported beef through open tender and sold it in a manner consistent with the Korean Government's objective of beef price stabilization. In so doing, the LPMO controlled the frequency of tenders, tender specifications, quantity of particular types of beef imported, the import price, distribution of imports and the release price. Participation in tenders was open to countries which met the Korean health and veterinary requirements. The first LPMO tender was called on 9 August 1988 and four tenders had been held to the beginning of December 1988.

31. Imported beef was released on a wholesale basis by the LPMO at prices equivalent to the average wholesale price of Korean beef obtained at auction in Seoul during the ten days preceding that release. Thus, Australia argued, the LPMO applied a price equalization mechanism to bring the price of imported beef up to domestic wholesale prices. The resulting difference between the wholesale release price and the LPMO's buy-in price was then paid to the Livestock Development Fund. Australia understood that this mechanism currently applied to beef imported for both the general and hotel markets, although the Korean authorities had still to take a decision on the arrangements to apply in the future to beef imports for hotel use. The price equalization mechanism resulted in an excessive monopoly return which effectively increased protection beyond that provided by the bound duty. Australia also pointed out that the impact of such a mechanism was uneven in that the percentage mark-up was generally lower on the more expensive cuts/types of beef and on beef imported from higher-priced sources and conversely higher on beef in the categories traditionally imported from Australia.

32. In conclusion, Australia considered that the LPMO was an authorized import monopoly in terms of Article II:4 and that the application of the price mark-up on imports by the LPMO was in contravention of Article II:4 and in excess of Korea's import tariff on beef which was bound at 20 per cent ad valorem.

33. Korea replied that it was important to stress at the outset that the LPMO mechanism did not represent a separate import restriction. The LPMO simply had no authority to set or modify quantitative limitations on beef imports. Nor was the LPMO charged with making recommendations to the Korean Government on the appropriate level of imports. Rather, the LPMO administered the importation of beef within the framework of quantitative restrictions set by the Government. Since the LPMO was just an implementing mechanism, the LPMO's objectives did not affect the justification of the Government's restrictions on beef imports. As concerned the Livestock Development Fund, the NLCF administered expenditures from this Fund under instructions from the MAFF.

34. Korea further responded that as long as it maintained quantitative restrictions justified under Article XVIII:B, these had to be administered, i.e., be allocated among the different suppliers. With respect to administering restrictions, Article XVIII:B referred to Article XIII, which laid down principles to avoid discrimination among foreign suppliers who wanted to export to the country that applied quantitative restrictions. However, Article XIII was not the only standard that a country had to observe when it imported products which it had subjected to restriction. The importing country had to continue to observe its tariff bindings as well, even if it had GATT justification to subject the products concerned to quantitative restrictions. Thus, while Article XVIII permitted a country to impose quantitative restrictions for BOP reasons, it did not make allowance for surcharges that increased import duties above the level bound in GATT. This was clearly established by the working party that reviewed the tariff surcharge imposed by the United States for BOP reasons in 1971. ⁷

35. Consequently, assuming that Korea was entitled to maintain quantitative restrictions under Article XVIII:B, then the LPMO's administration of these restrictions was subject to two GATT requirements: first, the LPMO had to administer these consistent with Article XIII; second, the LPMO could not impose surcharges on beef imports that exceeded Korea's tariff on beef which had been bound pursuant to Article II. These were the relevant standards for this Panel's review of the LPMO's operation. Korea explained that quota shares were allocated to the foreign suppliers who submitted the lowest bid to the tender which the LPMO had issued. Beef from the successful bidder would be subject to the bound customs duty of 20 per cent. In addition, 2.5 per cent would be levied pursuant to the National Defence Tax Law. This extra levy was not inconsistent with the GATT because the levy applied across the board, to foreign and domestic goods alike and even to the income of wage earners. No other taxes, levies or charges were applied on imports of beef. Furthermore, Korea denied that the LPMO, when reselling imported beef on the domestic market, equalized prices of imported beef to the price level of domestic beef. Korea recalled that virtually all imported beef was resold through wholesale market auctions or at prices that were equivalent to or lower than an auction-based price average for imported beef. Thus, in Korea's view, the LPMO's operation was consistent with Article II.

(a) Procedural aspects

36. The Republic of Korea argued that Australia could not challenge the GATT compatibility of Korea's restrictions under Article XXIII because of the existence of special review procedures in Article XVIII:B as well as the actual results of Article XVIII:B reviews by the Balance-of-Payments (BOP) Committee. Korea referred to a recent panel case ⁸ in which the United States had challenged tariff preferences on citrus fruit granted by the European Community to certain Mediterranean countries with whom it had concluded free trade agreements. The Community argued in that case that the United States complaint was inadmissible under Article XXIII. It referred to Article XXIV:7 which, in the Community's view, represented the exclusive mechanism to review the consistency of the tariff preferences and the underlying free trade agreements with the GATT. The panel admitted the United States complaint, but refused to consider its merits under Article XXIII:1(a). Instead, the panel reviewed the merits of the United States complaint exclusively under Article XXIII:1(b), thus limiting its review to the issue of "non-violation" nullification or impairment.

37. Korea therefore argued that Australia would have to make a showing of "non-violation" nullification or impairment. Referring to the above-mentioned Citrus Panel case in which the panel considered that "the practice, so far followed by the CONTRACTING PARTIES never to use the procedures of Article XXIII:2 to make recommendations or rulings on the GATT compatibility of measures subject to special review procedures was sound", ⁹ thus ruling out the consideration of the United States complaint under paragraph 1(a) of Article XXIII, Korea argued that if Article XXIV:7 was deemed a special review procedure as in the above-mentioned case, Article XVIII paragraph 12 a fortiori set forward such procedures.

38. The above-mentioned principle was self-evident, according to Korea. If measures were subject to GATT review pursuant to special procedures, it made no sense to allow them to be challenged under Article XXIII as well. Such duplication wasted the resources of all concerned, in particular those of the GATT bodies charged with the special review, and of the country whose measures were being examined. Moreover, to the extent the standards of review under Article XXIII were different from the standards applied to the special review procedures, review under Article XXIII might negate the latter.

39. Australia replied that the particular finding in the Citrus Panel report quoted by Korea in paragraph 37 above was an especially contentious issue and that this report had not been adopted by the Council. The findings of the Citrus Panel were therefore not binding in any way. An examination of the Council's consideration of the report revealed that many contracting parties, whether or not they supported the recommended "economic solution" to the dispute, had reservations about individual findings. Australia's view was made clear in its third party submission to the Citrus Panel. ¹⁰ The United States held the same position and, in the first Council discussion of the panel's report (document C/M/186), had noted that the EEC's support of the panel's approach "was a reversal of that taken in working party reviews of its preferential arrangements, i.e., that contracting parties retained their rights under Articles XXII and XXIII". The finding drew a conclusion which was not self-evident, i.e., because something had never been done, there was some de facto "agreement" that this represented an accepted practice that it could not or should not be done. An alternative, and more plausible, conclusion was that a situation had not yet arisen in which recourse to the procedures of Article XXIII was considered to be necessary. Indeed, Australia was not aware of any agreement, whether implicit or explicit, in support of the so-called practice found by the Citrus Panel. Australia would argue that because such a practice would involve a ceding of basic rights under the General Agreement, any such agreement would require an explicit decision by the CONTRACTING PARTIES.

40. To this, Korea responded that Australia ignored its right to challenge, at any time, the compatibility with the GATT of BOP restrictions pursuant to the proper standards and procedure of Article XVIII:12(d). Thus, there was no question of ceding basic rights under the General Agreement, nor had Australia cited any argument or precedent that defeated the logic of the Citrus Panel rule, which was self-evident. Moreover, Korea made reference to the following statement in a 1955 Working Party report from which it could be clearly deduced that the proper remedy to complain about the compatibility with the GATT of BOP restrictions was Article XVIII:12(d) rather than Article XXIII:

The Working Party decided not to include a multilateral review mechanism to supervise the justification of quantitative restrictions imposed pursuant to paragraph 2 of Article XI because it felt comfortable with a challenge of these restrictions under the general procedure of Article XXIII. On the other hand, the same Working Party incorporated a multilateral review mechanism (Article XVIII:12(b)) to supervise the justification of quantitative restrictions imposed pursuant to Article XVIII:B. And while consciously avoiding duplication of dispute settlement procedures, the Working Party established a separate complaint procedure to challenge these restrictions, with more difficult standards, in Article XVIII:12(d). Obviously, the Working Party did not envisage that the restrictions reviewed by the BOP Committee under Article XVIII:12(b) could be challenged under the relatively loose standards of Article XXIII as well.

41. Australia responded that Article XXIII provided for the settlement of disputes concerning failure to carry out obligations under any and all provisions of the General Agreement. Logically, Article XVIII:12(d) consultation procedures would be utilized in situations where both parties agreed that the import restrictions in question were restrictions applied for BOP reasons and both parties considered that such a process was appropriate and useful. Korea had made unilateral declarations that its import restrictions on beef had been and were being taken for BOP reasons. However, Australia had demonstrated that the measures and their implementation and administration had and were being applied for industry protection reasons and should be judged against the obligations in Articles XI:1 and II:4.

42. Korea replied that Australia committed an analytical error. The mere fact that Australia disagreed that Korea's restrictions on beef imports were justified for BOP reasons did not mean that these restrictions were unjustified, or that Australia could ignore the procedures of Article XVIII:B to express its disagreement. According to Korea, Australia could challenge the BOP justification of Korea's restrictions in the regular consultations before the BOP Committee pursuant to Article XVIII:12(b), or at any time pursuant to the special complaint procedure of Article XVIII:12(d). If the Panel reviewed Australia's complaint under the standards of Article XXIII, Korea argued, it agreed that Australia and any other country which wanted to challenge a BOP measure could choose to ignore Article XVIII:12(d). By doing so, the Panel would render the latter provisions obsolete. The general procedure of Article XXIII would supersede the special review procedure of Article XVIII:12(d), thus amounting to an improper amendment of the GATT in violation of Article XXX.

43. Consequently, Korea argued, in accordance with the long-standing practice of the CONTRACTING PARTIES, Australia was not entitled to complain about the possible inconsistencies of the disputed beef restrictions with provisions of the General Agreement pursuant to Article XXIII:1(a). Instead, Australia would have to show that Korea's restrictions on beef imports constituted "non-violation" nullification or impairment under Article XXIII:1(b) or (c). In Korea's view, there was no hard and fast rule as to how a showing of "non-violation" nullification or impairment was to be made. What was clear was that the complaining party had to provide a "detailed justification". ¹¹ To date, Australia had not provided any such justification.

44. Referring again to the Citrus case mentioned above, Korea argued that the panel arrived at its conclusion of "non-violation" nullification or impairment by inquiring whether, inter alia, the disputed restrictions could have been reasonably anticipated by the United States, the complaining party. This panel did not find that the disputed measures could not have been reasonably anticipated by the United States. ¹² Likewise, in the present case, Australia could not claim that it could not have reasonably anticipated Korea's restrictions on beef imports since Korea had maintained these restrictions since its accession to the GATT, and had regularly consulted about them under Article XVIII:B.

TO CONTINUE WITH RESTRICTIONS ON IMPORTS OF BEEF - COMPLAINT BY AUSTRALIA

¹ Figures provided by the Republic of Korea