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EUROPEAN COMMUNITIES �
(Continued)
1. Introduction
5.49 Ecuador has trade and systemic interests in this dispute because its
sardine exports are adversely affected by the EC Regulation and because it
considers that this case offers an opportunity to clarify important aspects of
the proper application of the TBT Agreement.
5.50 Ecuador argues that the fundamental incompatibility of the EC Regulation
with Article 2.4 of the TBT Agreement leads to additional discrimination that in
turn is inconsistent with Article 2.2 and 2.1 of the TBT Agreement and Articles
I:1 and III:4 of the GATT 1994.
2. Retroactive application of the TBT Agreement
5.51 Ecuador disagrees with the European Communities' argument that Codex Stan
94 is not relevant because the measure set forth in the Regulation at issue
predates the entry into force of Codex Stan 94. Ecuador argues that on the
strength of such an argument, any WTO Member could be exempted from countless
obligations on the grounds that WTO-incompatible measures predating the entry
into force of international rules or the WTO Agreements themselves need not be
amended or adjusted to new international commitments. Ecuador contends that if
the EC Regulation was not compatible at the time the TBT Agreement came into
force, the European Communities was under the obligation to bring it in line
with all WTO Agreements, in pursuance of Article XVI of the WTO Agreement.
3. Article 2.4 of the TBT Agreement
5.52 Ecuador argues that WTO Members have the obligation to comply with Article
2.4 of the TBT Agreement and are therefore required to bring their technical
regulations into conformity with international standards where they exist and
are relevant.
5.53 With regard to the burden of proof, Ecuador submits that the initial burden
of proof lies with the complaining party to establish if the measure which is
challenged presents a case of inconsistency with Articles 2.4 and 2.2 of the TBT
Agreement. Ecuador submits that Peru has demonstrated that an international
standard exists (the Codex Stan 94), that it is relevant and that the European
Communities is not using this standard. Therefore, the European Communities has
the obligation to base the application of its technical regulation on Codex Stan
94. Ecuador contends that the European Communities has, in turn, to respond to
Peru's arguments and justify why the international standard has not been used.
Ecuador notes that the European Communities has provided no evidence that the
standard in question was irrelevant. Hence, Ecuador sees no justification for
the European Communities' failure to apply a relevant international standard.
5.54 Ecuador further argues that Codex Stan 94 is adequate to fulfil the
legitimate objectives pursued by the EC Regulation, because it does not mislead
the consumers. Ecuador notes that Codex Stan 94 clearly stipulates that sardines
of species other than Sardina Pichardus shall be described as "X" sardines;
this would be the case of the name "Pacific sardine" used for sardines of the
species Sardinops sagax. Moreover, Ecuador asserts that the text of the Codex
Stan 94 in Spanish is quite clear in that countries can choose to use the
denomination "sardines X", where "X" is the country of origin or a geographical
area, with the name of the species or the common name.
4. Article 2.2 of the TBT Agreement
5.55 Ecuador argues that the EC Regulation creates an unnecessary obstacle to
trade, contrary to Article 2.2 of the TBT Agreement.
5.56 In Ecuador's view, the EC Regulation serves protectionist purposes with
trade-distorting effects beyond those already affecting the sector as a result
of fisheries subsidies in the form of Community aid to offset marketing costs
for products such as sardines. Ecuador notes the European Communities' argument
that its Regulation has the "aim of ensuring consumer protection through market
transparency and fair competition". In practice, Ecuador argues, this aim is not
being met; indeed, the EC Regulation allows no competition in that it excludes
from the market other types of sardines that would be able to compete
effectively under an "X" trade description affording the consumer freedom of
choice and the transparency that a label based on a relevant international
standard such as the Codex Stan 94 could provide.
5. Article 2.1 of the TBT Agreement
5.57 With regard to Article 2.1 of the TBT Agreement, Ecuador argues that the EC
Regulation is inconsistent with the national-treatment principle because
sardines of a trade description other than Sardina Pichardus are accorded less
favourable treatment by differentiating between the species of fish and between
the origin of the product. According to Ecuador, Peru is correct in arguing that
these are "like" products, primarily because canned sardines of the species
pilchardus and of the species sagax sagax are identical products in terms of
their physical characteristics - especially flavour, texture and nutritional
value - and because they are interchangeable in terms of use and consumption. In
Ecuador's view, this is borne out by the fact that sardines of species other
than Sardina Pichardus were successfully marketed in the European Communities
prior to the entry into force of the EC Regulation, as demonstrated by both Peru
and Canada and also by the statistics provided by the European Communities.
6. Articles I:1 and III:4 of the GATT 1994
5.58 Finally, Ecuador considers that the foregoing analysis proving
discrimination by the European Communities within the context of the TBT
Agreement is also applicable for the determination of inconsistency of the EC
Regulation with Articles I:1 and III:4 of the GATT 1994.
5.59 In the light of the above considerations, Ecuador submits that the Panel
must find that the EC Regulation is in violation of the European Communities'
obligations under WTO Agreements and recommend that the European Communities
bring its measure into conformity with those obligations.
E. UNITED STATES
1. Introduction
5.60 The United States indicates that there are a number of sardine species that
are harvested in the United States, but that are not exported to the European
Communities because of the restrictive labeling requirements in the European
Communities. They are, however, sold to many parts of the rest of the world.
These species include Clupea Harengus, Sardinops caeruleus, Sardinops sagax,
Harengula jaguana, Sardinella and Sardinella longiceps. The United States has no
regulations requiring the use of specific names for these fish species. There
is, however, a general requirement that labels should not be false or
misleading. All of these fish either can be, or actually are, marketed in the
United States under the name "sardines", among other names.
5.61 The United States endorses Peru's request that the Panel exercise judicial
restraint upon finding that the EC Regulation breaches Article 2.4 of the TBT
Agreement, and not reach Peru's other claims. According to the United States,
panels should address those claims necessary to resolve the dispute, and, as
Peru recognizes, that can be accomplished through consideration of Article 2.4
alone.
5.62 Concerning the burden of proof, the United States submits that, as
recognized by the Appellate Body in US - Wool Shirts and Blouses, EC - Hormones
and other reports, the complaining party has the burden of presenting evidence
and arguments sufficient to make a prima facie demonstration of each claim that
the measure at issue is inconsistent with a provision of a covered agreement.21
This burden is not shifted to the responding party simply because the obligation
identified is characterized as an "exception".22 However, the responding party
would have the burden with respect to an "affirmative defense" that a breach of
an obligation is justified by a separate provision that would excuse the breach.23
2. Application of the TBT Agreement
5.63 The United States argues that the TBT Agreement applies in full to
technical regulations in place on or after 1 January 1995, regardless of whether
the regulation was put in place before that date. It further argues that
labeling requirements that are "mandatory" and "apply to a product, process or
production method" constitute "technical regulations."
3. Article 2.4 of the TBT Agreement
5.64 The United States argues that the EC Regulation is inconsistent with
Article 2.4 of the TBT Agreement and that it is not based on the Codex Stan 94,
an international standard for purposes of the TBT Agreement. It notes that
although Codex Stan 94 specifically provides for the label "X sardines", the EC
Regulation specifically prohibits that label, with no plausible justification
for contradicting the standard.
5.65 Concerning the question of whether Codex Stan 94 is a relevant
international standard, the United States notes that relevancy does not refer to
the timing of the international standard, but only to its subject matter - i.e.,
whether an international standard is apposite, pertinent or germane to the issue
for which the technical regulation is required. The United States argues that
the reference to "their completion is imminent" in Article 2.4 of the TBT
Agreement in relation to "relevant international standards" makes clear that the
question of relevance is separate from the question of the date on which the
international standard came into existence.
5.66 Concerning the requirement of Article 2.4 of the TBT Agreement, that
Members "shall use [relevant international standards] as a basis for" their
technical regulations, the United States recalls Canada's argument that the
phrase "as a basis for" should be construed consistently with "based on". The
United States submits that the Appellate Body defined the term as "[a] thing is
commonly said to be 'based on' another thing when the former 'stands' or is
'founded' or 'built' upon or 'is supported by' the latter."24 It argues that this
statement by the Appellate Body does not mean that the technical regulation must
"conform" to the terms of the relevant international standard, but it does mean
that a Member's technical regulation must be founded upon or supported by the
standard, insofar as the standard is "relevant," not "ineffective" and not
"inappropriate."
5.67 The United States further argues that there is no reason why the
application of Codex Stan 94, in particular permitting other species to be
marketed as "X" sardines, would be an ineffective or inappropriate means for
meeting the European Communities' stated objectives of consumer protection,
transparency and fair competition. To the contrary, according to the United
States there is ample evidence indicating that the Regulation at issue
undermines the European Communities' objectives, since European consumers have
in fact come to know the Peruvian product as a form of sardines and are likely
to be confused by the use of other names. Indeed, the use of a proper descriptor
prior to the term "sardines," as provided for in the international standard,
appears to be a very effective means to assure transparency and protect the
consumer.
5.68 In the view of the United States, Codex Stan 94 does not anticipate a
country choosing between "X Sardines" and the common name of the species.
Rather, under the standard, a country permits the named sardine species to be
sold as "X Sardines", where "X" is a country, a geographic area, a species, or
the common name of the species. The United States argues that under the
standard, the product could be labelled, for example, "Peruvian sardines",
"Pacific sardines", or "Atlantic herring sardines". The standard does not
envision the "common name" as an alternative to "X sardines", only as an option
for "X" in the name "X Sardines." This interpretation is clear in the English
version of Codex Stan 94, but is even more clear in the French version, which
states that species other than Sardina Pichardus shall be called "'X Sardines',
'X' designating a country, a geographic area, a species, or the common name".25
4. Article 2.2 of the TBT Agreement
5.69 Concerning Article 2.2 of the TBT Agreement, the United States argues that
in order for a Member to show that a government's technical regulation is more
trade-restrictive than necessary to fulfill a legitimate objective, it would
need to show that there is another measure that is reasonably available, that
would fulfill the regulating Member's legitimate objectives, and that is
significantly less restrictive to trade.
5.70 The United States considers that in this case there are clear alternatives
which meet these requirements. In addition to simply removing the technical
regulation, allowing other species to be marketed as "X sardines" would fulfill
the European Communities' objectives of consumer protection, transparency and
fair competition. The alternative is reasonably available, since there are no
impediments to such a change, nor would there be any disruption to markets where
consumers are already accustomed to seeing the products at issue referred to as
"sardines." Finally, the alternative would be significantly less trade
restrictive, inasmuch as there is now a complete ban on the marketing of several
species as "sardines," with or without a qualifier. Further, the United States
argues that there is no requirement under Article 2.2 to demonstrate a trade
restrictive effect as such; the only requirement is to show that a measure is
more trade restrictive than necessary. With respect to this dispute, there is no
doubt that a measure prohibiting the use of the term "sardines" in connection
with sardine products is trade restrictive.
5.71 Finally, the United States argues that the Panel should refrain from
offering a specific suggestion on how the European Communities should comply in
this case. This case is not unusual in this regard, and the European
Communities, like other Members, has the right to determine how it will bring
its measure into compliance.
F. VENEZUELA
1. Introduction
5.72 Venezuela submits that its participation as a third party in this dispute
is based on a systemic interest relating to the correct interpretation of the TBT Agreement, in particular Article 2.4. Venezuela submits that it also has a
genuine trade interest, inasmuch as the conditions for the marketing of canned
sardines on the European market, as set out in the EC Regulation, are
prejudicial to Venezuelan exports of sardines to that market, which is a major
destination for Venezuela's export industry.
2. Remarks on the term "sardines"
5.73 Venezuela argues that from the standpoint of statistical data, the term
"sardines", in the broad sense, has been used to cover species other than Sardina Pichardus. Organizations such as the FAO classify under the same
heading species of the genera Sardina, Sardinops, Opisthonema, Clupea and
Sardinella, inter alia.26 The FAO also groups sardines, sardinella and brisling or
sprat production, import and export statistics in a single table, which is not
confined to the species Sardina Pichardus.27 Likewise, the word "sardines" is
used to identify various species, according to relevant European and
international publications.28 In the view of Venezuela, the above facts point to
the universality of the term "sardines".
5.74 Venezuela also submits that the broad use of a name is not exclusive to
sardines; on the contrary, there is a variety of other examples. Mussels, for
instance, are known under the scientific names of Mytilus edulus, Perna Perna
and Perna viridis, but "mussel" is the common trade description for all these
species. Another example given by Venezuela is tuna, whose trade description
includes bluefin tuna (Tunnus thynnus), yellowfin tuna (Tunnus albacares),
bigeye tuna (Tunnus obesus) and skipjack tuna (Katsuwonus pelamis). Thus,
Venezuela argues that the use of generic nomenclature to justify trade
descriptions is not relevant and that probably the case of the European sardines
is the only one where attempts have been made to match the trade description
with the scientific name. Even where both terms obviously coincide, it is not
possible to argue exclusivity in respect of a trade description, because this
practice is not in universal use.
5.75 Venezuela further argues that scientific names of species may vary over
time as a result of taxonomic revision. Thus, species of the genus Sardinops
were initially named Sardina spp, as was the case of Sardinops caeruleus, which
is a synonym for Sardina sagax and Alausa californica, and the species
Sardinops
neopilchardus, which is a synonym for Sardinella neopilchardus. Similarly,
Sardina pilchardus and Sardinella aurita were initially described as belonging
to the genus Clupea - the former in 1792 under the name Clupea pilchardus and
the latter in 1810 under the name Clupea allecia, a term which is also used for
the Australian sardine pilchard.
3. Article 2.4 of the TBT Agreement
5.76 Venezuela argues that the labelling requirements for preserved sardines
laid down in the EC Regulation do not comply with Article 2.4 of the TBT
Agreement because they disregard the relevant international standards. In its
view, the EC Regulation, as a technical regulation, must not only recognize but
also apply international standards such as those established in Codex Stan 94.
5.77 Venezuela argues that the term "as a basis" in Article 2.4 of the TBT
Agreement should be interpreted to mean "shall be based on, in such a way as not
to contradict any of its aspects". Therefore, Venezuela argues that the EC
Regulation cannot be considered to "be based on" Codex Stan 94 because the EC
Regulation does not provide for the possibility of canned products prepared from
other species of sardines (other than Sardina Pichardus) to include the word
"sardines" to indicate the species from which the canned product is prepared. On
the contrary, Codex Stan 94 stipulates that the common name "sardines" may be
used for products made from species other than Sardina Pichardus, provided that
(a) the name is supplemented by an indication identifying the country of origin,
the geographical area in which the species is to be found or the name of the
species, or (b) the product is made under the common name in the language of the
member State of the European Communities in which it is sold.
5.78 Venezuela submits that the Codex Alimentarius is the source of standards,
codes of practice and internationally accepted guidelines that have become a
global benchmark for food consumers, producers and manufacturers, national food
control agencies and the international food trade. Venezuela also points out
that Codex's contribution to the international harmonization of food standards,
by providing for the protection of consumer health and guaranteeing fair
practices, is indisputable.
5.79 Venezuela contends that species of different genera are marketed under the
name "X sardines" in almost every country in the world, and points out that, in
the past, the name was acceptable for describing different genera, including in
some countries of the European Communities. In Venezuela's view, the European
Communities' argument that if Sardinops sagax products were to be marketed as "X
sardines", they would benefit from the reputation enjoyed by another product
(namely sardines) and the customer would be misled, is without merit. Contrary
to the European Communities' assumption that the term "sardines" is used
exclusively at the European level, Venezuela indicates that Latin America and
North America have given the name "sardines" to a finished product prepared from
a different raw material which, however, possesses similar organoleptic
characteristics. Moreover, in Venezuela, the term "sardines" is used to describe
a product prepared essentially from the raw material Sardinella aurita. For
example, in Venezuela's view, it would be hard to imagine consumers of caviar
(i.e., a finished product), for example, being misled by the product's
presentation under the name Iranian, Russian or American caviar, knowing as
everyone does, that each involves a different type of sturgeon.
5.80 Venezuela argues that in view of the above-mentioned facts and, given the
similarities between the species, all that would need to be done in order to
distinguish one product from another from the standpoint of the objectives of
the EC Regulation would be to use the common name "sardines", accompanied by a
reference to its geographical area of origin - in other words, to use the name
"X sardines", as provided for in the Codex Stan 94. Consumers purchasing
products prepared from X sardines would thus know that these were made from
sardines of a species other than the type found in European waters.
5.81 Venezuela also emphasizes that the legitimate objectives set forth in the TBT Agreement are to promote achievement of the goals of the GATT 1994 and to
ensure that technical regulations and rules, including those relating to
labelling, do not create unnecessary barriers to international trade. Venezuela
argues that the objective of the EC Regulation is to enhance the profitability
of sardine production in the Community, the market outlets therefor, as well as
to facilitate disposal of its products, is not compatible with the above
objectives.29 Venezuela considers that, if it is a matter of fulfilling the
objective laid down in the EC Regulation, there are other trade mechanisms,
within the framework of the WTO, that can be used to that end, such as the
application of tariff regimes and more specific tariff regulations.
4. Article 2.2 of the TBT Agreement
5.82 Venezuela submits that the objectives of the EC Regulation can be achieved
by means of a less trade-restrictive measure. Venezuela argues that the EC
Regulation has a restrictive impact given that it prevents countries that
prepare products from fish of species similar to Sardina Pichardus from
marketing such products under a name containing the word "sardines", although
this is allowed by the relevant international standard. Venezuela is of the
opinion that this diminishes the value of the products for the European
customer, since their perceived value of a product using a scientific name as a
commercial name bears no relation to the true quality of the product. This fact
places those products at a disadvantage in competition with like European
products. This type of measure is discriminatory in terms of where the sardines
were caught, by reserving exclusivity of the trade description for products of
European origin.
5.83 If the Panel decides to suggest any action to the European Communities,
Venezuela requests that the European Communities should be required to bring its
Regulation into line with the WTO Agreement and to agree that its Regulation be
based on the Codex Alimentarius, in other words, that it be made sufficiently
broad to include similar types of sardines, including the Venezuelan sardine
Sardinella aurita.
21 European Communities - Measures
Concerning Meat and Meat Products ("EC - Hormones"), WT/DS26/AB/R,
WT/DS48/AB/R, adopted 13 February 1998, DSR 1998:I, paras. 104 - 109.
22 Appellate Body Report, EC - Hormones, para. 104.
23 Appellate Body Report, EC - Hormones, para. 109.
24 Appellate Body Report, EC - Hormones, para. 163.
25 "Sardines X", "X" d�signant un pays, une zone g�ographique,
l�esp�ce ou le nom commun de l�esp�ce �".
26 See FAO Yearbook of Fishery Statistics, Catches and Landings,
Vol. 80, 1995, pp. 308 ff.
27 See FAO Yearbook of Fishery Statistics, Commodities, Vol. 89,
p. 102.
28 See Multilingual Illustrated Dictionary of Aquatic Animals
and Plants, and www.fishbase.org.
29 Based on the introductory remarks to Council Regulation N�
2136/89 of 21 June 1989.
To continue with VI. INTERIM REVIEW
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