EUROPEAN COMMUNITIES �
TRADE DESCRIPTION OF SARDINES

5. Whether Codex Stan 94 would be an ineffective or inappropriate means for the fulfilment of the legitimate objectives pursued

7.113 The European Communities contends that Codex Stan 94, by allowing for the use of the word "sardines" for products other than Sardina pilchardus, is ineffective or inappropriate to fulfil the objectives of consumer protection, market transparency and fair competition. The European Communities argues that its consumers expect that products of the same nature and characteristics will always have the same trade description, and that consumers in most member States of the European Communities have always, and in some member States have for at least 13 years, associated "sardines" exclusively with Sardina pilchardus. With respect to the objective of promoting fair competition, the European Communities argues that Peru should not be able to take advantage of the reputation associated with the term "sardines", but that Peru should "develop its own reputation with its own name and persuade the consumer to appreciate its product with its own characteristics".

7.114 In paragraph 7.50, we determined that the European Communities, as the party asserting that Codex Stan 94 is ineffective or inappropriate to fulfil the legitimate objectives pursued by the Regulation, has the burden of proving this assertion. Although the burden of proof rests with the European Communities to prove that Codex Stan 94 is an ineffective or inappropriate means for the fulfilment of the legitimate objectives pursued, we note that Peru has provided sufficient evidence and legal arguments, as set out below, to demonstrate that Codex Stan 94 is not an ineffective or inappropriate means to fulfil the legitimate objectives pursued by the EC Regulation.

7.115 In assessing the arguments presented by the European Communities, we must first determine what should be understood by the term "ineffective or inappropriate" and what the "legitimate objectives" referred to by this provision are.

7.116 Concerning the terms "ineffective" and "inappropriate", we note that "ineffective" refers to something which is not "having the function of accomplishing", "having a result", or "brought to bear",⁹¹ whereas "inappropriate" refers to something which is not "specially suitable", "proper", or "fitting".⁹² Thus, in the context of Article 2.4, an ineffective means is a means which does not have the function of accomplishing the legitimate objective pursued, whereas an inappropriate means is a means which is not specially suitable for the fulfilment of the legitimate objective pursued. An inappropriate means will not necessarily be an ineffective means and vice versa. That is, whereas it may not be specially suitable for the fulfilment of the legitimate objective, an inappropriate means may nevertheless be effective in fulfilling that objective, despite its "unsuitability". Conversely, when a relevant international standard is found to be an effective means, it does not automatically follow that it is also an appropriate means. The question of effectiveness bears upon the results of the means employed, whereas the question of appropriateness relates more to the nature of the means employed.

7.117 We note that the terms "ineffective" and "inappropriate" are separated in the text by the disjunctive "or". Thus, it is clear that the party invoking the affirmative defence under Article 2.4 need not establish that a relevant international standard is both ineffective and inappropriate. If it is established by a party that the relevant international standard is either an ineffective or inappropriate means for the fulfilment of the legitimate objective pursued, that party would not have to use the international standard as a basis for its technical regulation.⁹³

7.118 The next question we address concerns the phrase "legitimate objectives pursued". We first consider that the "legitimate objectives" referred to in Article 2.4 must be interpreted in the context of Article 2.2, which lists examples of objectives which are considered legitimate under the TBT Agreement. As indicated by the phrase "inter alia", this list is illustrative and allows for the possibility that other objectives, which are not explicitly mentioned, may very well be legitimate under the TBT Agreement.

7.119 We also note in this respect that the WTO Members expressed in the preamble to the TBT Agreement their desire that:

[�] technical regulations and standards [�] do not create unnecessary obstacles to trade [�]; (emphasis added)

and recognized that:

no country should be prevented from taking measures to ensure the quality of its exports, or for the protection of human, animal or plant life or health, of the environment, or for the prevention of deceptive practices, at the levels it considers appropriate, subject to the requirement that they are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between countries where the same conditions prevail or a disguised restriction on international trade [�]. (emphasis added)

7.120 Article 2.2 and this preambular text affirm that it is up to the Members to decide which policy objectives they wish to pursue and the levels at which they wish to pursue them. At the same time, these provisions impose some limits on the regulatory autonomy of Members that decide to adopt technical regulations: Members cannot create obstacles to trade which are unnecessary or which, in their application, amount to arbitrary or unjustifiable discrimination or a disguised restriction on international trade. Thus, the TBT Agreement, like the GATT 1994, whose objective it is to further, accords a degree of deference with respect to the domestic policy objectives which Members wish to pursue. At the same time, however, the TBT Agreement, like the GATT 1994, shows less deference to the means which Members choose to employ to achieve their domestic policy goals. We consider that it is incumbent upon the respondent to advance the objectives of its technical regulation which it considers legitimate.

7.121 Article 2.4 refers to "the legitimate objective pursued". The ordinary meaning of "to pursue" is "to try to obtain or accomplish" and "to aim at".⁹⁴ Thus, a "legitimate objective pursued" is a legitimate objective which a Member aims at or tries to accomplish. Only the Member pursuing the legitimate objective is in a position to elaborate the objective it is trying to accomplish. Panels are, however, required to determine the legitimacy of those objectives. We note in this regard that the panel in Canada - Pharmaceuticals Patents, in defining the term "legitimate interests", stated that it must be defined "as a normative claim calling for protection of interests that are 'justifiable' in the sense that they are supported by relevant public policies or other social norms".⁹⁵

7.122 Thus, we are obliged to examine whether the objectives outlined by the European Communities are legitimate in the context of Article 2.4 of the TBT Agreement. We note, however, that in this case Peru acknowledged that the objectives identified by the European Communities are legitimate and we see no reason to disagree with the parties' assessment in this respect. Accordingly, we will proceed with our examination based on the premise that the objectives identified by the European Communities are legitimate.

7.123 We now turn to the arguments presented by the European Communities in support of its position that Codex Stan 94 is ineffective or inappropriate for the fulfilment of the three legitimate objectives pursued by its Regulation. We recall that the three legitimate objectives pursued by the EC Regulation are market transparency, consumer protection and fair competition and these objectives, as argued by the European Communities, are interdependent and interact with each other. In this regard, we are mindful of the European Communities' argument that providing accurate and precise names allows products to be compared with their true equivalents rather than with substitutes and imitations whereas inaccurate and imprecise names reduce transparency, cause confusion, mislead the consumer, i.e., make consumers believe that they are buying something they are not, allow products to benefit from the reputation of other different products, give rise to unfair competition and reduce the quality and variety of products available in trade and ultimately for the consumer. In light of the fact that the three objectives are closely interrelated, if we were to find that Codex Stan 94 allows for precise labelling of products so as to improve market transparency, such finding would have a bearing upon whether Codex Stan 94 is effective or appropriate in protecting consumers and promoting fair competition, that is, not misleading consumers and confusing them into believing that they are buying something that they are not. We also note that the European Communities' stated objectives are based on the factual premise that the consumers in the European Communities associate "sardines" exclusively with Sardina pilchardus. Thus, the persuasiveness of European Communities' argument will be affected by the extent to which this factual premise is supported by the evidence and established to be valid.

7.124 Under Codex Stan 94, if a hermetically sealed container contains fish of species Sardina pilchardus, the product would be labelled "sardines" without any qualification. A product containing preserved Sardinops sagax, however, would be labelled "X sardines" with the "X" representing the name of a country, the name of a geographic area, the name of the species or the common name in accordance with the law and custom of the country in which the product is sold. If a hermetically sealed container is labelled simply as "sardines" without any qualification, the European consumer would know that it contains European sardines. However, if the product is labelled, for example, "Pacific sardines", the European consumer would be informed that the product does not contain sardines originating from Europe. We note that preserved sardines from Morocco, which contains Sardina pilchardus, sold in the European Communities is labelled "Sardines Marocaines". Although the product could simply be called "sardines" because it contains Sardina pilchardus, the label containing the name of a country provides a precise trade description by informing the European consumers of the provenance of the preserved Sardina pilchardus.

7.125 The European Communities, however, argued that "X sardines" is ineffective or inappropriate to fulfil the legitimate objectives pursued by the EC Regulation because European consumers associate the term "sardines" exclusively with Sardina pilchardus and even if "sardines" is combined with a qualification, it would suggest to European consumers that the products are the same but come from different countries or geographic areas. As noted above, the argument advanced by the European Communities in support of its claim that Codex Stan 94 is ineffective or inappropriate is based on the underlying factual assumption that consumers in most member States of the European Communities have always associated the common name "sardines" exclusively with Sardina pilchardus and that the use of "sardines" in conjunction with "Pacific", "Peruvian" or "Sardinops sagax" would therefore not enable the European consumer to distinguish products made from Sardinops sagax as opposed to Sardina pilchardus. The European Communities summarizes its argument as follows:

In most parts of the European Communities, especially in the production countries, the term "sardine" has historically made reference only to the Sardina pilchardus.⁹⁶ However, other species like sprats (Sprattus sprattus) were sold in tiny quantities on the European Communities market with the denomination "brisling sardines". In view of the confusion that this created in the market place, the European Communities has constantly tried to clarify the situation, both externally (note of 16/04/73 to Norway⁹⁷) and internally (Regulation 2136/89).

This situation has now created uniform consumer expectations throughout the European Communities, the term "sardine" referring only to a preserve made from Sardina pilchardus.⁹⁸

7.126 Thus, the European Communities asserted, on the one hand, that in most member States the term "sardines" has historically responded to the particular consumer expectations which in its view underlie its Regulation, and acknowledged, on the other hand, that in some member States, it is the Regulation which "created" those "uniform" consumer expectations. The European Communities therefore made a factual distinction between two situations, and we will address these two situations separately.

7.127 The European Communities acknowledged that it is the Regulation which in certain member States "created" the consumer expectations which it now considers require the maintenance of that same Regulation. Thus, through regulatory intervention, the European Communities consciously would have "created" consumer expectations which now are claimed to affect the competitive conditions of imports. If we were to accept that a WTO Member can "create" consumer expectations and thereafter find justification for the trade-restrictive measure which created those consumer expectations, we would be endorsing the permissibility of "self-justifying" regulatory trade barriers. Indeed, the danger is that Members, by shaping consumer expectations through regulatory intervention in the market, would be able to justify thereafter the legitimacy of that very same regulatory intervention on the basis of the governmentally created consumer expectations. Mindful of this concern, we will proceed to examine whether the evidence and legal arguments before us demonstrate that consumers in most member States of the European Communities have always associated the common name "sardines" exclusively with Sardina pilchardus and that the use of "sardines" in conjunction with "Pacific", "Peruvian" or "Sardinops sagax" would therefore not enable European consumers to distinguish between products made from Sardinops sagax and Sardina pilchardus.

7.128 As indicated above, the European Communities asserted that in most member States the consumer expectations allegedly underlying the EC Regulation existed before the EC Regulation introduced an EC-wide regime. To that effect, the European Communities submitted copies of pre-1989 Spanish and French regulations prescribing the common name "sardines" for products made from Sardina pilchardus. The European Communities also submitted copies of the 1981 and 1996 United Kingdom Food Labelling Regulations and a copy of the 2000 German Lebensmittelbuch, which the European Communities has described as constituting "only a guideline". These documents prescribe the common name "sardines" for Sardina pilchardus, and "Pacific pilchard" or "pilchard" for Sardinops sagax. Thus, the European Communities argued that for those four European Communities' member States, domestic regulations reserving the common name "sardines" for Sardina pilchardus is to be considered probative of consumer perceptions at that time and thereafter. In other words, governments in those countries would have "codified" consumer expectations in their domestic regulations. Although it may be debatable as to whether this will always be so,⁹⁹ we will proceed on the assumption that domestic legislation pre-dating¹⁰⁰ the EC Regulation may indeed have such probative value regarding consumer expectations.

7.129 Concerning the pre-1989 versions of Spanish, French and United Kingdom regulations, we consider that these do indeed demonstrate that the legislative or regulatory authorities in those countries considered that the common name "sardines" without any qualification was to be reserved for products made from Sardina pilchardus, even before the EC Regulation entered into force.¹⁰¹ We note, however, that these documents, which concern three European Communities' member States, are not probative of the assertion that the use of a qualifying term, such as "Pacific", "Peruvian" or "Sardinops sagax", in combination with "sardines" would not enable European consumers to distinguish products made from Sardinops sagax as opposed to Sardina pilchardus.

7.130 We also note that in the United Kingdom, which imports 97% of all Peruvian exports of preserved Sardinops sagax to the European Communities, the 1981 Food Labelling Regulations also allowed for the use of the common name "pilchards" for Sardina pilchardus and prescribed the common name "Pacific pilchards" for Sardinops sagax. Thus, United Kingdom consumers did not associate Sardina pilchardus exclusively with the common name "sardines", and were able to distinguish Sardinops sagax from Sardina pilchardus by the simple indication of a geographical region (i.e., "Pacific"). If the insertion of the geographic area "Pacific" with the word "pilchard" was used in the United Kingdom to distinguish between Sardina pilchardus and Sardinops sagax, we fail to see why the inclusion of the name of a country, name of a geographic area, name of the species or the common name with the term "sardines" to refer to Sardina sagax would be ineffective or inappropriate to fulfil the legitimate objectives pursued by the EC Regulation.

7.131 Contrary to the European Communities' assertion, Peru submitted evidence to demonstrate that European consumers do not associate "sardines" exclusively with Sardina pilchardus. It did so by demonstrating that the term "sardines" either by itself or combined with the name of a country or the geographic area, is a common name for Sardinops sagax in the European Communities. In support of its assertion that "sardines" by itself or combined with the name of a country or geographic region is a common name for Sardinops sagax in the European Communities, Peru referred to the Multilingual Illustrated Dictionary of Aquatic Animals and Plants, published in close cooperation with the European Commission and the member States of the European Communities for the purpose of, inter alia, improving market transparency, which lists the common name of Sardinops sagax in nine European languages as "sardines" or the equivalent thereof in the national language combined with the country or geographic area of origin. Similarly, Peru submitted copies of the electronic publication, Fish Base, produced with the support of the European Commission, which indicates that a common name for Sardinops sagax in Italy, the Netherlands, Germany, France, Sweden and Spain is "sardines" or its equivalent in the national language combined with the country or geographical area of origin. In addition, Peru relied on the Multilingual Dictionary of Fish and Fish Products prepared by the Organisation for Economic Cooperation and Development ("OECD") which indicates that a common name of Sardinops sagax is "sardines", either by itself or combined with the name of a country or geographic area. According to this Multilingual Dictionary of Fish and Fish Products, one of the common names in English is "Pacific Sardine", or "Sardine du Pacifique" in French. Even the European Communities acknowledged that one of the common names for Sardinops sagax is "sardines" or its equivalent thereof in the national language combined with the country or geographical area of origin.¹⁰²

7.132 According to the Consumers' Association, "a wide array of sardines were made available to European consumers for many decades prior to the imposition of this restrictive Regulation".¹⁰³ Canada submitted evidence showing that a Canadian company exported Clupea harengus harengus under the trade description "Canadian sardines" to the Netherlands for thirty years, until 1989. Canada also submitted evidence showing that there have been exports of Clupea harengus harengus under the trade description "[company name] sardines in hot tabasco" to the United Kingdom for forty years, until 1989. We note in this regard that with respect to the objective of promoting fair competition, the aim of which is to prevent producers of one product from benefitting from the reputation associated with another product,¹⁰⁴ the underlying premise is that the term "sardines" is associated only with Sardina pilchardus. However, as species other than Sardina pilchardus also contributed to the reputation of the term "sardines" and in light of the fact that "sardines", either by itself or combined with the name of a country or a geographic area, is a common name for Sardinops sagax in the European Communities, we do not consider that only Sardina pilchardus developed the reputation associated with the term "sardines".

7.133 Even if we were to assume that the consumers in the European Communities associate the term "sardines" exclusively with Sardina pilchardus, the concern expressed by the European Communities, in our view, was taken into account when Codex Stan 94 was adopted. By establishing a precise labelling requirement "in a manner not to mislead the consumer", the Codex Alimentarius Commission considered the issue of consumer protection in countries producing preserved sardines from Sardina pilchardus and those producing preserved sardines from species other than Sardina pilchardus by reserving the term "sardines" without any qualification for Sardina pilchardus only. The other species enumerated in Codex Stan 94 are to be labelled as "X sardines" with the "X" denoting the name of a country, name of a geographic area, name of the species or the common name in accordance with the law and custom of the country in which the product is sold. Thus, Codex Stan 94 allows Members to provide precise trade description of preserved sardines which promotes market transparency so as to protect consumers and promote fair competition.¹⁰⁵

7.134 Negotiating history confirms that Codex Stan 94 takes into account the European Communities' concern that consumers might be misled if a distinction were not made between Sardina pilchardus and other species. The Report of Codex Committee on Fish and Fishery Products on the Seventh Session states:

The traditional canners of this fish [Sardina pilchardus] were adamant that no other species should be allowed to use "sardines" without some form of qualification. Nor were they disposed to agree to qualifications which in their view could lead to confusion as to the species � For [countries producing fish of other species] any distinction was discriminatory and would result in their consumers being misled �. The Committee agreed upon the need to protect the consumer.¹⁰⁶ (emphasis added)

7.135 At the Twelfth Session of the Codex Alimentarius Commission where the Commission adopted the draft standard for canned sardines and sardine-type products, a proposal was made to include Engraulis mordax and Sardinella longiceps. In response to this proposal, it is recorded that:

France stated that, in its opinion, the list of species (2.1.2) covered too broad range of fish which could place the consumer at a disadvantage with regard to making a sound choice between different products. It was pointed out that the present standard was a group standard and that the labelling section contained adequate provisions to safeguard the consumer.¹⁰⁷

7.136 Moreover, a 1969 Synopsis of Governments Replies on the Questionnaire on "Canned Sardines", prepared by the Codex Committee on Fish and Fishery Products, demonstrates that the governments of several current European Communities' member States, such as Denmark, Sweden and the United Kingdom, responded affirmatively to the question "[i]s it accepted that existing practices whereby sardine-type products are often labelled as sardines but with an appropriate qualifying phrase should be fully taken into account and provided for so long as the consumer is not deceived?". These governments considered "that this way of designating the sardine-type products as sardines has been in use for about one century in many countries". France was recorded as stating that "only the species recognized as sufficiently near to Sardina pilchardus might be designated as 'sardine' followed or preceded by a qualifying term", adding that "a geographic qualifying term could be acceptable on the condition that the consumer is not deceived (i.e., Atlantic sardine can mean either Sardina pilchardus, or another species caught in the Atlantic Ocean)". Of all current European Communities' members States, only the Federal Republic of Germany, Portugal and Spain stated that their domestic legislation did "not accept any designation of 'sardines' even with a qualifying term for species other than Sardina pilchardus (Walbaum)".

7.137 In light of our considerations above and based on our review of the available evidence and legal arguments, we find that it has not been established that consumers in most member States of the European Communities have always associated the common name "sardines" exclusively with Sardina pilchardus and that the use of "X sardines" would therefore not enable the European consumer to distinguish preserved Sardina pilchardus from preserved Sardinops sagax.^{108, 109} We also find that Codex Stan 94 allows Members to provide precise trade description for preserved sardines and thereby promote market transparency so as to protect consumers and promote fair competition.

7.138 We therefore conclude that it has not been demonstrated that Codex Stan 94 would be an ineffective or inappropriate means for the fulfilment of the legitimate objectives pursued by the EC Regulation, i.e., consumer protection, market transparency and fair competition. We conclude that Peru has adduced sufficient evidence and legal arguments to demonstrate that Codex Stan 94 is not ineffective or inappropriate to fulfil the legitimate objectives pursued by the EC Regulation.

6. Overall conclusion with respect to Article 2.4 of the TBT Agreement

7.139 In light of our findings that Codex Stan 94 is a relevant international standard, that it was not used as a basis for the EC Regulation and that it is not ineffective or inappropriate to fulfil the legitimate objectives pursued by the EC Regulation, we find that the EC Regulation is inconsistent with Article 2.4 of the TBT Agreement.

H. CONSIDERATION OF THE EUROPEAN COMMUNITIES' ARGUMENT THAT PERU BROADENED ITS CLAIMS

7.140 The European Communities argues that Peru's reformulated request for findings broadens the claims made by Peru in its first written submission and is therefore inadmissible. The European Communities argues that Peru is claiming in its second written submission that the European Communities and its member States cannot use a common name of the species Sardinops sagax according to the relevant law and custom to designate the preserved product unless it is accompanied by the word "sardines".

7.141 The European Communities argues that Peru's formulation of its request for findings seeks to obtain a declaratory judgment that would require the European Communities to take certain specific action rather than simply remove any inconsistency and, in the European Communities' view, this request goes beyond the panel's mandate and is inadmissible. The European Communities argues that Peru's reformulation of its claim is a consequence of the fact that Peru failed to properly research the common names of Sardinops sagax in the European Communities prior to commencing this dispute.

7.142 Concerning the European Communities' argument that Peru broadened its claim, it is necessary to examine the terms of reference which are set out in document WT/DS231/16:

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.

7.143 Regarding the term "matter", the Appellate Body in Guatemala - Cement I stated that the matter consists of the specific measure and the claims relating to it, both of which must be identified in the request for the establishment of a panel.¹¹⁰ In its Request for the Establishment of a Panel, Peru invoked the EC Regulation as the specific measure at issue and claimed that the EC Regulation is inconsistent with Articles 2 and 12 of the TBT Agreement and Articles I, III and XI:1 of the GATT 1994. In the so-called reformulated request for findings, Peru asked the Panel to find that the EC Regulation prohibiting the use of the term "sardines" combined with the name of a country of origin, name of a geographic area, name of the species or the common name of Sardinops sagax used in the language of the member State of the European Communities in which the product is sold is inconsistent with Article 2.4 of the TBT Agreement. Peru specifically referred to the EC Regulation and Article 2.4 of the TBT Agreement, both of which are set out in Peru's Request for the Establishment of a Panel. Therefore, we do not consider that Peru, even if it broadened the scope of its request beyond what it originally requested in its first written submission, made any claims that exceeded the terms of reference.¹¹¹

7.144 We are well aware that panels can consider only those claims that it has the authority to consider under the terms of reference which sets out our mandate. In this regard, a distinction must be made between claims and arguments.¹¹² We note that the Appellate Body stated:

there is a significant difference between the claims identified in the request for the establishment of a panel, which establish the panel's terms of reference under Article 7 of the DSU, and the arguments supporting those claims, which are set out and progressively clarified in the first written submissions, the rebuttal submissions and the first and second panel meetings with the parties.¹¹³ (emphasis added)

7.145 The request for findings submitted by Peru in its first and second written submissions, in our view, is a summation of its arguments and do not constitute claims. And, as arguments, we are not bound by them.

7.146 For the reasons set out above, we reject the European Communities' argument that Peru's reformulated request broadens the claim and that Peru's request goes beyond the Panel's mandate.

I. JUDICIAL ECONOMY

7.147 In this dispute, Peru requested us to first examine the consistency of the EC Regulation with Article 2.4 of the TBT Agreement. Peru requested that we consider the consistency of the EC Regulation with Article 2.2 of the TBT Agreement only if we were to find that the EC Regulation is consistent with Article 2.4 of the TBT Agreement and then examine its claim under Article 2.1 of the TBT Agreement only if we were to find the EC Regulation is consistent with Article 2.2 of the TBT Agreement. In the event that we were to find the EC Regulation consistent with the TBT Agreement, Peru requested that we examine whether the EC Regulation is consistent with Article III:4 of the GATT 1994. The European Communities did not contest Peru's requests.

7.148 We note that our obligation as a panel is set out in Article 11 of the DSU which provides:

a panel should make an objective assessment of the matter before it, including an objective assessment of the facts of the case and the applicability of and conformity with the relevant covered agreements, and the make such other findings as will assist the DSB in making the recommendations or in giving the rulings provided for in the covered agreements.

7.149 We are mindful that "[n]othing in [Article 11 of the DSU] or in previous GATT practice requires a panel to examine all legal claims made by the complaining party"¹¹⁴ but note that the principle of judicial economy has to be applied bearing in mind the aim of the dispute settlement mechanism which is to "secure a positive solution to a dispute".

7.150 Panels in a number of disputes have applied the principle of judicial economy. We are mindful that in some instances, the Appellate Body found that principle was applied incorrectly; in others, the Appellate Body affirmed the panel's decision. As initially developed in US - Wool Shirts and Blouses, the Appellate Body stated that "a panel need only address those claims which must be addressed in order to resolve the matter at issue".¹¹⁵ This was further qualified in Australia - Salmon where the Appellate Body stated that:

the principle of judicial economy has to be applied keeping in mind the aim of the dispute settlement system. The aim is to resolve the matter at issue and to secure a positive solution to the dispute. To provide only a partial resolution of the matter at issue would be false judicial economy. A panel has to address those claims on which a finding is necessary in order to enable the DSB to make sufficiently precise recommendations and rulings so as to allow for prompt compliance by a Member with those recommendations and rulings "in order to ensure effective resolution of disputes to the benefit of all Members".¹¹⁶

7.151 Therefore, in keeping with the principle of judicial economy, we conclude that it is not necessary for us to consider other claims and arguments raised by the parties in this dispute. We made an objective assessment of whether the EC Regulation is consistent with Article 2.4 of the TBT Agreement and found that the EC Regulation is not consistent with Article 2.4 of the TBT Agreement. This finding, in our view, produces a positive solution to the current dispute and also enables the DSB to make sufficiently precise recommendations and rulings without any further findings under Articles 2.1 and 2.2 of the TBT Agreement and Article III:4 of the GATT 1994. Although panels are not bound by the complaining party's request which is not contested by the responding party, we are aided in our view by the complaining party's specific request that we examine the consistency of the EC Regulation with other legal provisions invoked by Peru only if we were to find the EC Regulation is consistent with Article 2.4 of the TBT Agreement.

7.152 Accordingly, we exercise judicial economy with respect to Peru's claim under Articles 2.1 and 2.2 of the TBT Agreement and Article III:4 of the GATT 1994.

VIII. CONCLUSIONS AND RECOMMENDATIONS

8.1 In light of the findings above, we conclude that the EC Regulation is inconsistent with Article 2.4 of the TBT Agreement.

8.2 Pursuant to Article 3.8 of the DSU which provides that "[i]n cases where there is an infringement of the obligations assumed under a covered agreement, the action is considered prima facie to constitute a case of nullification and impairment", we conclude that the EC Regulation nullified and impaired the benefits of Peru under the WTO Agreement, in particular under the TBT Agreement.

8.3 Peru requested that we suggest in accordance with Article 19.1 of the DSU 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." We note that Article 19.1 states that the panel may suggest a way to implement the recommendations of the panel and that the panel is not required to make such suggestion. As the authority under Article 19.1 is one of discretion, we decline to make a suggestion. We recommend that the DSB request the European Communities to bring its measure into conformity with its obligations under the TBT Agreement.

91 The New Shorter Oxford English Dictionary, (Clarendon Press, 1993), p. 786.

92 Ibid., p. 103.

93 In this case, we observe that the European Communities has used the terms "ineffective" and "inappropriate" interchangeably throughout its oral and written statements.

94 The New Shorter Oxford English Dictionary, supra, p. 2422.

95 Panel Report, Canada - Patent Protection of Pharmaceutical Products ("Canada -Pharmaceuticals"), WT/DS114/R, adopted 7 April 2000, para. 7.69. Similarly, the panel in US - Section 110(5) Copyright Act stated that the term has to be considered from a "normative perspective, in the context of calling for the protection of interests that are justifiable in the light of the objectives that underlie the protection of exclusive rights". Panel Report, United States - Section 110(5) of the US Copyright Act ("US - Section 110(5) Copyright Act"), WT/DS160/R, adopted 27 July 2000, para. 6.224.

96 (footnote original) See Spanish legislation (Exhibit EC-21) and French legislation (Exhibit EC-22).

97 (footnote original) See Exhibit EC-23.

98 EC's First Submission, paras. 64-65. Emphasis added.

99 See paragraph 7.127 wherein we express our concern that "Members, by shaping consumer expectations through regulatory intervention in the market, would be able to justify thereafter the legitimacy of that very same regulatory invention on the basis of the governmentally created consumer expectation".

100 With respect to the post-1989 regulations in the United Kingdom and Germany, we fail to see how these documents could be relevant for our assessment, considering the European Communities' confirmation that its Regulation, which predates both documents, "is the law directly applicable" in all European Communities' member States (EC's Response to Panel Question 42(b)). Thus, if European Communities' member States are to comply with the EC Regulation, it would have been surprising to find member State regulations or guidelines post-1989 which extend the right to use the trade description "sardines" also to products made from Sardinops sagax, as this would be clearly inconsistent with Article 2 of the EC Regulation. These documents therefore do not demonstrate that consumers in most member States of the European Communities have always, and in some member States have for at least 13 years, associated the trade description "sardines" exclusively with Sardina pilchardus. They are simply consistent with the EC Regulation, as they can expected to be.

101 We note, however, that the European Communities have not provided any evidence regarding this assertion for the twelve other European Communities' member States.

102 EC's First Submission, paras. 25 and 27-28. The European Communities lists one of the common names for Sardinops sagax as "sardina" in Spain and "Pacific sardine" in the United Kingdom.

103 Exhibit Peru-16, p. 8.

104 EC's First Submission, paras. 63, 140 and 141.

105 We note that Article 7(c) of the EC Regulation permits, "by way of derogation from Article 2, second indent", a can of sardines to be labelled as "sardine mousse", "sardine paste" or "sardine p�t�", even if the can is comprised of only 25% Sardina pilchardus and 75% other fish, including those of Sardinops sagax. In its response to the Panel's question on the matter, the European Communities confirmed that a can containing at least 25% of homogenised Sardina pilchardus flesh and the remainder containing "the flesh of other fish which have undergone the same treatment" can be marketed as "sardine mousse", "sardine paste", or "sardine p�t�" if the content of the flesh of any other fish is less than 25%. Thus, as long as the 25% of Sardina pilchardus is the predominant weight, the product can be marketed as "sardine mousse", "sardine paste", or "sardine p�t�". For example, if a mousse is made of 60% fish and 40 % other ingredients, the fish component could, according to Article 7, be comprised of 25% Sardina pilchardus and 15% each of five different fish and it would still be a "sardine mousse". On the other hand, a mousse of which the fish component represents 49.9% Sardina pilchardus and 50.1% Sardinops sagax, however, would not. The European Communities argues that consumers will nevertheless be protected by the indication of the ingredients on the can. However, if the indication of ingredients on the can is sufficient to inform consumers that their "sardine" product in reality contains 25% Sardina pilchardus and 75% other fish, we fail to see why Codex Stan 94 which informs consumers that no Sardina pilchardus is contained by labelling the product "X sardines" is ineffective or inappropriate to fulfil the legitimate objectives pursued by the EC Regulation.

106 Exhibit Canada-3, Report of the Codex Committee on Fish and Fishery Products, Seventh Session, 2-7 October 1972, ALINORM 74/18, paras. 57 and 59.

107 Exhibit Canada-3, Report of the Twelfth Session of the Joint FAO/WHO Codex Alimentarius Commission, p. 52.

108 In light of our finding that the consumers in the European Communities do not necessarily associate sardines exclusively with Sardina pilchardus, it is worth noting that the regulation governing tuna and bonito indicates that Atlantic and Pacific bonito, Atlantic little tuna, Eastern little tuna, black skipjack and other species of the genus Euthynnuis can be labelled "bonito" without any qualification. If a requirement that is less precise, especially in respect of the geographic origin, than that set out in Codex Stan 94 can "ensure market transparency" and "ensure clarity in the trade description of the products concerned", Codex Stan 94 that allows a more precise trade description to be used is arguably effective and appropriate to fulfil the objective of promoting market transparency, protecting consumers and promoting fair competition.

109 With respect to parties' argument about whether the term "sardines" is generic, we do not consider it necessary to make a determination on this particular issue.

110 Appellate Body Report, Guatemala - Anti-Dumping Investigation Regarding Portland Cement from Mexico ("Guatemala - Cement I"), WT/DS60/AB/R, adopted 25 November 1998, DSR 1998:IX, para. 72.

111 In any event, we note that the findings requested by Peru as set out in the first and second written submissions are not substantively different. Peru's second written submission refers to the prohibition to market the products prepared from Sardinops sagax under the name "sardines" combined with an indication of the name of the country of origin, the geographic area, the species and the common name whereas the first written submission, while similar in all respect, refers to "the prohibition � to market the products � under 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 (such as 'Peruvian sardine' in English, or 'S�damerikanische Sardine' in German)". Although the latter does not contain the explicit reference to the term "sardines" combined with the common name, we note that examples cited by Peru uses the term "sardines" with the putative common name. Moreover, Peru argued throughout the proceedings that the term "sardines" has to be used in combination with the four alternatives set out in Codex Stan 94.

112 The Appellate Body in Korea - Dairy, para. 139, stated that "[b]y 'claim' we mean a claim that the respondent party has violated, or nullified or impaired the benefits arising from, an identified provision of a particular agreement. Such a claim of violation must, as we have already noted, be distinguished from the arguments adduced by a complaining party to demonstrate that the responding party's measure does indeed infringe upon the identified treaty provision" (emphasis original).

113 Appellate Body Report, EC - Bananas III, para. 141.

114 Appellate Body Report, US - Wool Shirts and Blouses, p. 339. Emphasis original.

115 Appellate Body Report, US - Wool Shirts and Blouses, p. 340.

116 Appellate Body Report, Australia - Salmon, para. 223.

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