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WORLD TRADE
ORGANIZATION

WT/DS231/R
29 May 2002

(02-2894)

 
  Original: English

EUROPEAN COMMUNITIES —
TRADE DESCRIPTION OF SARDINES




Report of the Panel *



The report of the Panel on European Communities - Trade Description of Sardines is being circulated to all Members, pursuant to the DSU. The report is being circulated as an unrestricted document from 29 May 2002 pursuant to the Procedures for the Circulation and Derestriction of WTO Documents (WT/L/160/Rev.1). Members are reminded that in accordance with the DSU only parties to the dispute may appeal a panel report. An appeal shall be limited to issues of law covered in the Panel report and legal interpretations developed by the Panel. There shall be no ex parte communications with the Panel or Appellate Body concerning matters under consideration by the Panel or Appellate Body.


* Note by the Secretariat: This Panel Report shall be adopted by the Dispute Settlement Body (DSB) within 60 days after the date of its circulation unless a party to the dispute decides to appeal or the DSB decides by consensus not to adopt the report. If the Panel Report is appealed to the Appellate Body, it shall not be considered for adoption by the DSB until after the completion of the appeal. Information on the current status of the Panel Report is available from the WTO Secretariat.


TABLE OF CONTENTS

  1. INTRODUCTION
     
  2. FACTUAL ASPECTS
  1. BASIC CHARACTERISTICS OF SARDINA PILCHARDUS WALBAUM AND SARDINOPS SAGAX SAGAX
     
  2. THE COUNCIL REGULATION (EEC) 2136/89 OF 21 JUNE 1989 LAYING DOWN COMMON MARKETING STANDARDS FOR PRESERVED SARDINES
     
  3. THE CODEX ALIMENTARIUS COMMISSION STANDARD FOR CANNED SARDINES AND SARDINE TYPE PRODUCTS (CODEX STAN 94 -1981 REV.1 - 1995)
  1. FINDINGS AND RECOMMENDATIONS REQUESTED BY THE PARTIES
     
  2. ARGUMENTS OF THE PARTIES
  1. ALLOCATION OF THE BURDEN OF PROOF
     
  2. WHETHER THE EC REGULATION IS A TECHNICAL REGULATION
     
  3. APPLICATION OF THE TBT AGREEMENT TO MEASURES ADOPTED BEFORE 1 JANUARY 1995
     
  4. ARTICLE 2.4 OF THE TBT AGREEMENT
  1. Whether Codex Stan 94 is a relevant international standard
     
  2. Whether Codex Stan 94 was used "as a basis" for the EC Regulation
     
  3. Whether Codex Stan 94 is ineffective or inappropriate to fulfil the legitimate objectives pursued by the EC Regulation

(a) Whether the EC Regulation fulfils a legitimate objective

(b) Whether Codex Stan 94 is ineffective or inappropriate to fulfil the legitimate objectives pursued by the EC Regulation

  1. ARTICLE 2.2 OF THE TBT AGREEMENT
  1. Whether the EC Regulation is "more trade restrictive than necessary"

(a) Trade-restrictive effects

(b) More trade-restrictive than necessary

  1. Taking account of the risks non-fulfilment would create
  1. ARTICLE 2.1 OF THE TBT AGREEMENT AND ARTICLE III:4 OF THE GATT 1994
  1. The relationship between Article 2.1 of the TBT Agreement and Article III:4 of the GATT 1994
     
  2. Whether domestic products prepared from Sardina pilchardus and imported products prepared from Sardinops sagax are "like" products
     
  3. Whether the prohibition to market products prepared from Sardinops sagax under the name "sardines" accords a less favourable treatment
  1. JUDICIAL ECONOMY
     
  2. H. EUROPEAN COMMUNITIES' ARGUMENT THAT PERU REFORMULATED ITS CLAIMS
  1. ARGUMENTS OF THIRD PARTIES
  1. CANADA
  1. Introduction
     
  2. Retroactive application of the TBT Agreement
     
  3. Article 2.4 of the TBT Agreement
     
  4. Article 2.2 of the TBT Agreement
     
  5. Article 2.1 of the TBT Agreement
     
  6. Articles I:1 and III:4 of the GATT 1994
     
  7. Remarks on implementation
  1. CHILE
  1. Introduction
     
  2. Retroactive application of the TBT Agreement
     
  3. Article 2.4 of the TBT Agreement
     
  4. Article 2.2 of the TBT Agreement
  1. COLOMBIA
  1. Introduction
     
  2. Retroactive application of the TBT Agreement
     
  3. Article 2.4 of the TBT Agreement
     
  4. Article 2.2 of the TBT Agreement
     
  5. Remarks on implementation
  1. ECUADOR
  1. Introduction
     
  2. Retroactive application of the TBT Agreement
     
  3. Article 2.4 of the TBT Agreement
     
  4. Article 2.2 of the TBT Agreement
     
  5. Article 2.1 of the TBT Agreement
     
  6. Articles I:1 and III:4 of the GATT 1994
     
  7. Final remarks
  1. UNITED STATES
  1. Introduction
     
  2. Application of the TBT Agreement
     
  3. Article 2.4 of the TBT Agreement
     
  4. Article 2.2 of the TBT Agreement
     
  5. Remarks on implementation
  1. VENEZUELA
  1. Introduction
     
  2. Remarks on the term "sardines"
     
  3. Article 2.4 of the TBT Agreement
     
  4. Article 2.2 of the TBT Agreement
     
  5. Remarks on implementation
  1. INTERIM REVIEW
     
  2. FINDINGS
  1. PRODUCTS AT ISSUE
     
  2. MEASURE AT ISSUE
     
  3. THE CODEX ALIMENTARIUS COMMISSION STANDARD FOR CANNED SARDINES AND SARDINE TYPE PRODUCTS (CODEX STAN 94 -1981 REV.1 - 1995)
     
  4. FINDINGS AND RECOMMENDATIONS REQUESTED BY THE PARTIES
     
  5. GENERAL INTERPRETATIVE ISSUES
  1. Rules of interpretation
     
  2. Order of analysis of the claims
  1. APPLICABILITY OF THE TBT AGREEMENT
  1. Consideration of the EC Regulation as a technical regulation
     
  2. Consideration of the European Communities' arguments that its Regulation does not contain a labelling requirement and does not concern preserved Sardinops sagax

(a) The European Communities' argument that its Regulation is not a technical regulation because it deals with naming rather than labelling of a product

(b) The European Communities' argument that its Regulation does not lay down mandatory labelling requirement for products other than preserved Sardina pilchardus

  1. CONSISTENCY OF THE EC REGULATION WITH ARTICLE 2.4 OF THE TBT AGREEMENT
  1. Burden of proof
     
  2. Application of the TBT Agreement to measures adopted before 1 January 1995
     
  3. Whether Codex Stan 94 is a relevant international standard

(a) Consideration of Codex Stan 94 as a relevant international standard

(b) Consideration of European Communities' temporal argument and its arguments that Codex Stan 94 is not a relevant international standard

(i) The European Communities' argument that the requirement to use relevant international standards as a basis does not apply to existing technical regulations

(ii) The European Communities' argument that the "predecessor standard" to Codex Stan 94 should have been invoked because Codex Stan 94 is not the relevant international standard as it did not exist and its adoption was not imminent when the EC Regulation was adopted 

(iii) The European Communities' argument that Codex Stan 94 is not a relevant international standard because it was not adopted by consensus 

(iv) The European Communities' argument that Codex Stan 94 is not a relevant international standard on the basis that Peru's interpretation would mean that the Codex Stan 94 is invalid because there was no referral to the Committee even though there was a substantive change

(v) The European Communities' argument that Codex Stan 94 is not a relevant international standard because the EC Regulation does not regulate products other than preserved Sardina pilchardus 

  1. Whether Codex Stan 94 was used as a basis for the technical regulation
     
  2. Whether Codex Stan 94 would be an ineffective or inappropriate means for the fulfilment of the legitimate objectives pursued
     
  3. Overall conclusion with respect to Article 2.4 of the TBT Agreement
  1. CONSIDERATION OF THE EUROPEAN COMMUNITIES' ARGUMENT THAT PERU BROADENED ITS CLAIMS
     
  2. JUDICIAL ECONOMY
  1. CONCLUSIONS AND RECOMMENDATIONS
     
  2. ANNEXES
  1. ANNEX 1: COUNCIL REGULATION (EEC) 2136/89 OF 21 JUNE 1989 LAYING DOWN COMMON MARKETING STANDARDS FOR PRESERVED SARDINES
     
  2. ANNEX 2: THE CODEX ALIMENTARIUS COMMISSION STANDARD FOR CANNED SARDINES AND SARDINE TYPE PRODUCTS (CODEX STAN 94 -1981 REV.1 - 1995)

I. INTRODUCTION

1.1 In a communication dated 20 March 2001, Peru requested consultations with the European Communities pursuant to Article 4 of the Understanding on Rules and Procedures Governing the Settlement of Disputes ("DSU"), Article XXII of the General Agreement on Tariffs and Trade 1994 (the "GATT 1994"), and Article 14 of the Agreement on Technical Barriers to Trade (the "TBT Agreement"), with respect to Council Regulation (EEC) No. 2136/89 (the "EC Regulation" or "Regulation") laying down common marketing standards for preserved sardines.1

1.2 On 31 May 2001, Peru and the European Communities held the requested consultations but failed to reach a mutually satisfactory solution.

1.3 In a communication dated 7 June 2001,2 Peru requested the establishment of a panel to examine the EC Regulation, with the standard terms of reference set out in Article 7 of the DSU. Peru made its request in accordance with Article XXIII of the GATT 1994, Articles 4 and 6 of the DSU and Article 14 of the TBT Agreement. In its communication, Peru stated that it considered the EC Regulation to constitute an unnecessary obstacle to international trade which is inconsistent with Articles 2 and 12 of the TBT Agreement, Article XI:1 of the GATT 1994 and the principle of non-discrimination under Articles I and III of the GATT 1994.

1.4 At its meeting on 24 July 2001, the Dispute Settlement Body ("DSB") established a panel pursuant to Peru's request in accordance with Article 6 of the DSU. Canada, Chile, Colombia, Ecuador, the United States and Venezuela reserved their rights to participate in the Panel proceedings as third parties in accordance with Article 10 of the DSU.

1.5 At the meeting of the DSB on 24 July 2001, the parties to the dispute agreed that the Panel should have standard terms of reference provided in Article 2.1 of the DSU. The terms of reference of the Panel are as follows:

To examine, in the light of the relevant provisions of the covered agreements cited by Peru in document WT/DS231/6, the matter referred to the DSB by Peru in that document, and to make such findings as will assist the DSB in making the recommendations or in giving the rulings provided for in those agreements.

1.6 On 31 August 2001, Peru requested the Director-General of the World Trade Organization ("WTO") to determine the composition of the Panel pursuant to paragraph 7 of Article 8 of the DSU:

If there is no agreement on the panelists within 20 days after the date of the establishment of a panel, at the request of either party, the Director-General, in consultation with the Chairman of the DSB and the Chairman of the relevant Council or Committee, shall determine the composition of the panel by appointing the panelists whom the Director-General considers most appropriate in accordance with any relevant special or additional rules or procedures of the covered agreement or covered agreements which are at issue in the dispute, after consulting with the parties to the dispute. The Chairman of the DSB shall inform the Members of the composition of the panel thus formed no later than 10 days after the date the Chairman receives such a request.

1.7 On 11 September 2001, the Director-General accordingly composed the Panel as follows:

     
    Chairperson: Ms. Margaret Liang

    Members:


     
    Ms. Merit Janow

    Mr. Mohan Kumar

1.8 The Panel met with the parties on 27, 28 November 2001 and 23 January 2002. The Panel met with the third parties on 28 November 2001.

1.9 The Panel submitted its interim report to the parties on 28 March 2002. On 3 May 2002, the parties requested the Panel to suspend its proceedings in accordance with Article 12.12 of the DSU until 21 May 2002 so as to enable the parties to find a mutually satisfactory solution to the dispute. The Panel agreed to this request.3 As the parties were unable to reach a mutually satisfactory solution within the requested period of time, the Panel issued its final report to the parties on 22 May 2002.

II. FACTUAL ASPECTS

A. BASIC CHARACTERISTICS OF SARDINA PILCHARDUS WALBAUM AND SARDINOPS SAGAX SAGAX

2.1 This dispute concerns Sardina pilchardus Walbaum ("Sardina pilchardus") and Sardinops sagax sagax ("Sardinops sagax"), two small fish species which belong, respectively, to genus Sardina and Sardinops of the Clupeinae subfamily of the Clupeidae family; fish of the Clupeidae family populate almost all oceans.

2.2 Sardina pilchardus is found mainly around the coasts of the Eastern North Atlantic, in the Mediterranean Sea and in the Black Sea, and Sardinops sagax is found mainly in the Eastern Pacific along the coasts of Peru and Chile. Despite the various morphological differences that can be observed between them, such as those concerning the head and length, the type and number of gillrakes or bone striae and size and weight, Sardina pilchardus and Sardinops sagax display similar characteristics: they live in a coastal pelagic environment, form schools, engage in vertical migration, feed on plankton and have similar breeding seasons.

2.3 The taxonomic classification of Sardina pilchardus and Sardinops sagax is as follows:

"Sardina pilchardus Walbaum" "Sardinops sagax sagax"

  Phylum   Chordata   Chordata
  Subphylum   Vertebrata   Vertebrata
  Superclass   Gnathostomata   Gnathostomata
  Class   Osteichthyes   Osteichthyes
  Order   Clupeiformes   Clupeiformes
  Suborder   Clupeoidei   Clupeoidei
  Family   Clupeidae   Clupeidae
  Subfamily   Clupeinae   Clupeinae
  Genus   Sardina   Sardinops
  Species   Sardina pilchardus Walbaum   Sardinops sagax sagax


2.4 Both fish, as well as other species of the Clupeidae family, are used in the preparation of preserved and canned fish products, packed in water, oil or other suitable medium.

B. THE COUNCIL REGULATION (EEC) 2136/89 OF 21 JUNE 1989 LAYING DOWN COMMON MARKETING STANDARDS FOR PRESERVED SARDINES

2.5 Council Regulation (EEC) No. 2136/89 laying down common marketing standards for preserved sardines (the "EC Regulation") was adopted on 21 June 1989.4 The EC Regulation defines the standards governing the marketing of preserved sardines in the European Communities.

2.6 Article 2 of the EC Regulation provides that only products prepared from fish of the species Sardina pilchardus may be marketed as preserved sardines. Article 2 reads as follows:

Only products meeting the following requirements may be marketed as preserved sardines and under the trade description referred to in Article 7:

—    they must be covered by CN codes 1604 13 10 and ex 1604 20 50;

—    they must be prepared exclusively from the fish of the species "Sardina pilchardus Walbaum";

—    they must be pre-packaged with any appropriate covering medium in a     hermetically sealed container;

—    they must be sterilized by appropriate treatment.

C. THE CODEX ALIMENTARIUS COMMISSION STANDARD FOR CANNED SARDINES AND SARDINE TYPE PRODUCTS (CODEX STAN 94 -1981 REV.1 - 1995)

2.7 The Codex Alimentarius Commission of the United Nations Food and Agriculture Organization ("FAO") and the World Health Organisation ("WHO") (the "Codex Alimentarius Commission") adopted in 1978 a standard ("Codex Stan 94") for canned sardines and sardine-type products.5 Article 1 of Codex Stan 94 states that this standard applies to "canned sardines and sardine-type products packed in water or oil or other suitable packing medium" and that it does not apply to speciality products where fish content constitutes less than 50% m/m of the net contents of the can.

2.8 Article 2.1 of Codex Stan 94 provides that canned sardines or sardine-type products are prepared from fresh or frozen fish from a list of 21 species, amongst them Sardina pilchardus and Sardinops sagax.6

2.9 Article 6 of Codex Stan 94 reads as follows:

"6. LABELLING

In addition to the provisions of the Codex General Standard for the Labelling of Prepackaged Foods (CODEX STAN 1-1985, Rev. 3-1999) the following specific provisions shall apply:

6.1 NAME OF THE FOOD

The name of the products shall be:

6.1.1 (i) "Sardines" (to be reserved exclusively for Sardina pilchardus (Walbaum)); or

(ii) "X sardines" of a country, a geographic area, the species, or the common name of the species in accordance with the law and custom of the country in which the product is sold, and in a manner not to mislead the consumer".

III. FINDINGS AND RECOMMENDATIONS REQUESTED BY THE PARTIES

3.1 Peru makes the following requests:

(a) Peru requests the Panel to find that the measure at issue, the EC Regulation, prohibiting the use of the term "sardines" combined with the name of the country of origin ("Peruvian Sardines"); the geographical area in which the species is found ("Pacific Sardines"); the species ("Sardines - Sardinops sagax"); or the common name of the species Sardinops sagax customarily used in the language of the member State of the European Communities in which the product is sold ("Peruvian Sardines" in English or "Südamerikanische Sardinen" in German), is inconsistent with Article 2.4 of the TBT Agreement because the European Communities did not use the naming standard set out in paragraph 6.1.1(ii) of Codex Stan 94 as a basis for its Regulation even though that standard would be an effective and appropriate means to fulfil the legitimate objectives pursued by the Regulation.

(b) If the Panel were to find that the EC Regulation is consistent with Article 2.4 of the TBT Agreement, Peru requests the Panel to find that the EC Regulation is inconsistent with Article 2.2 of the TBT Agreement because it is more trade-restrictive than necessary to fulfil the legitimate objective of market transparency that the European Communities claims to pursue.

(c) If the Panel were to find that the EC Regulation is consistent with Articles 2.2 and 2.4 of the TBT Agreement, Peru requests the Panel to find that the measure is inconsistent with Article 2.1 of the TBT Agreement because it is a technical regulation that accords Peruvian products prepared from fish of the species Sardinops sagax treatment less favourable than that accorded to like European products made from fish of the species Sardina pilchardus.

(d) If the Panel were to find that the measure at issue is consistent with the TBT Agreement, Peru requests the Panel to find that it is inconsistent with Article III:4 of the GATT 1994 because it is a requirement affecting the offering for sale of imported sardines that accords Peruvian products prepared from fish of the species Sardinops sagax treatment less favourable than that accorded to like European products made from fish of the species Sardina pilchardus.

3.2 Peru requests the Panel to recommend that the DSB request the European Communities to bring its measure into conformity with the TBT Agreement. Peru further requests the Panel to suggest that the European Communities permit Peru, without any further delay, to market its sardines in accordance with a naming standard consistent with the TBT Agreement.

3.3 The European Communities requests the Panel to reject Peru's claims that the EC Regulation is inconsistent with Articles 2.4, 2.2 and 2.1 of the TBT Agreement and Article III:4 of the GATT 1994.


1 WT/DS231/1; G/L/449; G/TBT/D/22, 23 April 2001.

2 WT/DS231/6, 8 June 2001.

3 WT/DS231/9, 8 May 2002.

4 The EC Regulation in its entirety is attached as Annex 1.

5 Codex Stan 94 is attached in its entirety as Annex 2.

6 Article 2.1.1 lists the following species:

— Sardina pilchardus
Sardinops melanostictus, S. neopilchardus, S. ocellatus, S. sagax S. caeruleus
Sardinella aurita, S. brasiliensis, S. maderensis, S. longiceps, S. gibbosa
Clupea harengus
Sprattus sprattus
Hyperlophus vittatus
Nematalosa vlaminghi
Etrumeus teres
Ethmidium maculatum
Engraulis anchoita, E. mordax, E. ringens
-Opisthonema oglinum


To continue with IV. ARGUMENTS OF THE PARTIES