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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

(Continued)


VI. INTERIM REVIEW30

6.1 Our interim report was issued to the parties on 28 March 2002, pursuant to Article 15.2 of the Understanding on Rules and Procedures Governing the Settlement of Disputes ("DSU"). On 5 April 2002, the European Communities requested us to review certain aspects of the interim report. Peru did not have any comments on the interim report. Neither of the parties requested us to hold an interim review meeting. When sending the interim report to the parties, we provided each party an opportunity to transmit in writing its comments on the other party's interim review comments, if no meeting was requested. In a letter dated 11 April 2002, Peru requested that we not consider the new evidence submitted by the European Communities. We carefully reviewed the arguments and issues presented by the European Communities and each issue is addressed below.

6.2 The European Communities requested a change to the summary of the European Communities' arguments in paragraph 4.73. We would like to point out that the European Communities' arguments are fully reflected in paragraphs 4.73 and 4.81.

6.3 The European Communities requested us to either change the heading of Chapter A of the findings from "Measure at issue" to "Product at issue", or to delete the two first paragraphs of Chapter A (7.1-7.2). We are of the view that the repetition, in the beginning of the findings section, of the basic characteristics of the two fish species at issue in the dispute is useful. As suggested by the European Communities, we have inserted paragraphs 7.1 and 7.2 under the newly created heading entitled "Products at issue".

6.4 The European Communities made the following comments on paragraphs 7.27 and 7.28 of the findings: "A regulator cannot set by legislative means the characteristics that are 'intrinsic' to a product. By definition, these are present in nature, they exist within the product and do not come from the outside. Consequently, it is an error to qualify as a 'product characteristic' the fact that preserved sardines must be prepared from fish of the species Sardina. The Codex Alimentarius, by reserving the term 'sardines' only to fish of the species Sardina, recognizes this fact". We do not agree with the notion that regulators cannot establish intrinsic product characteristics by legislative means and do not consider that it is an error to qualify as a "product characteristic" the fact that preserved sardines must be prepared from fish of the species Sardina pilchardus. The Appellate Body in EC - Asbestos unequivocally stated that "'product characteristics' include, not only features and qualities intrinsic to the product itself, but also related 'characteristics' such as the means of identification, the presentation and the appearance of a product" (emphasis added).31 As we explained in our findings (paragraphs 7.26 and 7.27), various provisions of the EC Regulation lay down product characteristics that deal with features and qualities affecting composition, size, shape, colour and texture of preserved sardines. One product characteristic required by Article 2 of the EC Regulation is that preserved sardines must be prepared exclusively from fish of the species Sardina pilchardus. As we pointed out, this product characteristic must be met for the product to be "marketed as preserved sardines and under the trade description referred to in Article 7" of the EC Regulation. We considered that the requirement to use exclusively Sardina pilchardus is a product characteristic as it objectively defines features and qualities of preserved sardines for the purposes of their "market[ing] as preserved sardines and under the trade description referred to in Article 7" of the EC Regulation. For these reasons, we have not made any changes to paragraphs 7.26 and 7.27.

6.5 With respect to the section dealing with whether Codex Stan 94 is a relevant international standard, the European Communities claimed that we did not consider the fact that Codex Stan 94 had only been accepted by 18 countries, of which only four accepted it fully, and that neither Peru nor any member States of the European Communities were among these 18 countries. Therefore, the European Communities asked us to justify why we disregarded this argument. We did consider this argument but were not persuaded that this argument was relevant in determining whether Codex Stan 94 is an international standard. We note that the European Communities is referring to the Acceptance Procedure set by the Codex Alimentarius Commission which allows a country to accept a Codex standard in accordance with its established legal and administrative procedures. We recall that Annex 1.2 of the Agreement on Technical Barriers to Trade (the "TBT Agreement") defines a standard as a "document approved by a recognized body" and does not require that the standard be accepted by countries as part of their domestic law. Codex Stan 94 was adopted by the Codex Alimentarius Commission and we consider that this is the relevant factor for purposes of determining the relevance of an international standard within the meaning of the TBT Agreement.

6.6 With regard to paragraph 7.66 of the findings, the European Communities asserted that our reasoning did not accurately reflect the "conditional argument that … there would be less doubts about this [the status of the Codex Alimentarius Commission as an international standardization body] if the European Communities would be allowed to become a member". We note that all member States of the European Communities are parties to the Codex Alimentarius Commission and that the European Communities is an observer at the Commission. We stated in the findings that Annex 1.4 of the TBT Agreement defines an "international body" as a "[b]ody or system whose membership is open to the relevant bodies of at least all Members". According to Rule 1 of the Statutes and Rules of Procedures of the Codex Alimentarius Commission, "[m]embership of the joint FAO/WHO Codex Alimentarius Commission … is open to all Member Nations and Associate Members of the FAO and/or WHO". As membership to the Codex Alimentarius Commission is open to all WTO Members, we found that it is an international body within the meaning of Annex 1.4 of the TBT Agreement and the European Communities did not contest the status of the Codex Alimentarius Commission as an international standardization body for the purposes of the TBT Agreement. We have included in the descriptive part the European Communities' argument that the status of the Codex Alimentarius Commission as an international standardization body would come into doubt if the European Communities were not allowed to become a member of the Codex.

6.7 The European Communities commented on paragraphs 7.93 to 7.96 where it felt that its position on the understanding of the text of paragraph 6.1.1(ii) of Codex Stan 94 had not been adequately reflected. The European Communities requested us to justify why the European Communities' arguments about the editorial change were not persuasive. The European Communities also asserted that there were differences between the three linguistic versions of Codex Stan 94. Contrary to the European Communities' assertion, we dealt with the European Communities' arguments set out in paragraphs 4.34 and 4.48 and actually explained why we were not persuaded that the negotiating history supported the European Communities' interpretation that Codex Stan 94 allows Members to choose between "X sardines" on the one hand and the common name of the species in accordance with the law and custom of the country in which the product is sold on the other hand. Our reasoning on this issue was in threefold. First, the text of Codex Stan 94 is clear on its face that it provides Members with four alternatives. Second, the deletion of the third alternative and the adoption of the current text indicate that the latter reflects the true intentions of the drafters. Third, that the change is referred to as "editorial" in the minutes of the meeting suggests that both the earlier version and the final text expressed the same view but the final text did so more succinctly. Moreover, we considered that Codex standards are adopted in a procedurally correct manner and were not persuaded that Codex Stan 94 was not adopted in a procedurally correct manner. Concerning the European Communities' argument in respect of the three different linguistic versions, we stated, in paragraphs 7.108 and 7.109 of the findings, that there was no difference between the French and the English text, and that the Spanish version confirmed the view that the name of the species or common name must be added to the word "sardines" and not replace the word "sardines". Therefore, we reject the arguments made by the European Communities with respect to these paragraphs.

6.8 The European Communities reminded us of its requests that the Codex Alimentarius Commission be consulted on the meaning of the text of paragraph 6.1.1(ii). We recall the European Communities' statement at the Second Substantive Meeting that "[i]f the Panel should have any doubt that the interpretation of Article 6.1.1(ii) [of] Codex Stan 94 advanced by the European Communities is correct and considers that it will reach the question of the meaning of Article 6.1.1(ii) of Codex Stan 94, the European Communities invites the Panel to ask the Codex Alimentarius to provide its view of the meaning of this text". This request is reflected in paragraph 4.49 of the descriptive part. In accordance with Article 13 of the DSU, it is the right of the panel to seek or refuse to seek information.32 In this regard, in EC - Hormones, the Appellate Body stated that Article 13 of the DSU "enable[s] panels to seek information and advice as they deem appropriate in a particular case".33 Also, in US - Shrimp, the Appellate Body considered that "a panel also has the authority to accept or reject any information or advice which it may have sought and received, or to make some other appropriate disposition thereof. It is particularly within the province and the authority of a panel to determine the need for information and advice in a specific case…".34 In this case, we determined that there was no need to seek information from the Codex Alimentarius Commission.

6.9 The European Communities requested that the adjective "European" in front of the word "sardines" in the seventh line of paragraph 7.124 be deleted, as well as the whole sentence that follows. The European Communities argued that "[i]t is, in fact, factually incorrect to state that 'if a hermetically sealed container is labelled simply as 'sardines' without any qualification, the European consumer would know that it contains European sardines". The EC Regulation, in fact, only requires that preserved sardines be made of Sardina pilchardus, irrespective of its origin of landing. Accordingly, what a European consumer knows when buying a hermetically sealed container labelled simply as 'sardines' is that it contains sardines, i.e. Sardina pilchardus; it does not know the origin of the fish". We recall a statement made by the European Communities in response to a question posed by Peru at the First Substantive Meeting: "The European consumers, when offered a can labelled 'sardines' expect to buy the product they know under this name, the European sardines, even if it has been caught in non-European waters." We were not persuaded that the European consumers would consider "sardines" combined with the name of a country or geographic area to be European sardines for the reasons set out in paragraphs 7.129 to 7.136 of the findings. We therefore decline to delete the word "European" and the sentence that follows.

6.10 The European Communities objected to the summary, in paragraph 7.127, of the European Communities' statement that the EC Regulation created "uniform" consumer expectations. The European Communities claimed that this assertion was used out of its context. We disagree with this claim and would like to recall the statement made by the European Communities in its entirety: "In most parts of the European Communities, especially in the production countries, the term 'sardine' has historically made reference only to the Sardina pilchardus. [Footnote omitted] 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 Norway [footnote omitted]) 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". This entire quote is set out in paragraph 7.125. In light of this, we reject the European Communities' claim that we used its argument "out of its context, that the EC Regulation artificially created 'uniform consumer expectations'".

6.11 The European Communities further requested the deletion of the adjective "trade restrictive" in front of the word "measure" in the following sentence (paragraph 7.127): "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 in the existence of those 'created' consumer expectations, we would be endorsing the permissibility of 'self-justifying' regulatory trade barriers". The European Communities argued that the question of whether the measure at issue was trade-restrictive was an issue on which we had exercised judicial economy and therefore should "refrain from gratuitously qualifying the EC measure as 'trade-restrictive'". We used the expression "trade-restrictive" as part of the legal reasoning to state that if Members can create consumer expectations and then justify the trade restrictive measure, we would be endorsing the permissibility of self-justifying regulatory trade barriers. Therefore, we were justified in using the term "trade-restrictive". Moreover, in our examination of the EC Regulation, we were of the view that the EC Regulation was more trade-restrictive than the relevant international standard, i.e., Codex Stan 94. Our characterization of the EC Regulation as such is based on the fact that the EC Regulation prohibited the use of the term "sardines" for species other than Sardina pilchardus whereas Codex Stan 94 would permit the use of the term "sardines" in a qualified manner for species other than Sardina pilchardus.35

6.12 The European Communities objected to the use of dictionaries as proof of consumer expectations and rejected our assertion in paragraph 7.131 that "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". Concerning the first comment, we are of the view that the use of the dictionaries referred to by both parties is an appropriate means to examine whether the term "sardines", either by itself or combined with the name of a country or geographic area, is a common name that refers to species other than Sardina pilchardus, especially in light of the fact that the Multilingual Illustrated Dictionary of Aquatic Animals and Plants was published in cooperation with the European Commission and member States of the European Communities for the purposes of, inter alia, improving market transparency. We note that the electronic publication, Fish Base, was also produced with the support of the European Commission. In making our finding, not only did we consider carefully dictionaries referred to by both parties but also considered other evidence such as the regulations of several member States of the European Communities, statements made by the Consumers' Association and the trade description used by Canadian exporters of Clupea harengus harengus to the Netherlands and the United Kingdom. In our weighing and balancing of the totality of evidence before us, including the examination of the Oxford Dictionary referred to by Peru36 and Canada as well as the Grand Dictionnaire Encyclopédique Larousse and Diccionario de la lengua espanola referred to by the European Communities, we were persuaded, on balance, that the term "sardines", either by itself or combined with the name of a country or geographic area, is a common name in the European Communities and that the consumers in the European Communities do not associate the term "sardines" exclusively with Sardina pilchardus.37 For the sake of clarity, we inserted a sentence to reflect that Peru demonstrated that European consumers do not associate "sardines" exclusively with Sardina pilchardus by pointing out that the term "sardines", either by itself or combined with the name of a country or geographic area, is a common name for Sardinops sagax in the European Communities. Concerning the second comment, we consider that the last sentence of paragraph 7.131 accurately reflects the statements made by the European Communities in its first written submission. For the sake of clarity, we have cited in Footnote 100 what the European Communities stated in paragraph 28 of its first written submission.

6.13 The European Communities made a number of comments with respect to paragraph 7.132. First, the European Communities stated that "[t]he assessment of the facts developed by the Panel in this paragraph to establish that sardines is a generic term in the territory of the European Communities is not objective". The European Communities makes this assertion based on the probative value we attached to the letter of the United Kingdom Consumers' Association and the use of "slid" and "herring" in addition to the use of the term "sardines" to market the Canadian Clupea harengus harengus. In addition, the European Communities argued that "the Panel completely ignores the evidence submitted … on the range and diversity of preserved fish products that the European consumers can find in any European supermarket and that responds to their expectations that each fish be called and marketed with its own name". As a claim that a panel has not made an objective assessment is very serious,38 we will examine each of the European Communities' arguments.

6.14 With respect to the first argument that questions the probative value or the relative weight we ascribed to the Consumers' Association's letter, we note that the Appellate Body in Korea - Dairy stated:

…under Article 11 of the DSU, a panel is charged with the mandate to determine the facts of the case and to arrive at factual findings. In carrying out this mandate, a panel has the duty to examine and consider all the evidence before it, not just the evidence submitted by one or the other party, and to evaluate the relevance and probative force of each piece thereof … The determination of the significance and weight properly pertaining to the evidence presented by one party is a function of a panel's appreciation of the probative value of all the evidence submitted by both parties considered together.39

6.15 We are also mindful that we are not "required to accord to factual evidence of the parties the same meaning and weight as do the parties".40 We did consider the Consumers' Association letter in determining whether the European consumers associate the term "sardines" exclusively with Sardina pilchardus but, as stated above, this was not the sole basis on which we made the determination as other evidence was considered in the overall weighing and balancing process. We therefore do not agree with the European Communities' argument that our approach was partial.

6.16 The European Communities submitted additional evidence, i.e., letters it had received lately from other European consumers' associations on the same issue. In a letter dated 11 April 2002, Peru requested that the new evidence submitted by the European Communities not be considered. In this regard, Peru referred to Article 12 of the Panel's Working Procedures which did not provide for the submission of new evidence at this stage of the Panel proceedings. Article 12 of the Panel's Working Procedures reads as follows: "Parties shall submit all factual evidence to the Panel no later than during the first substantive meeting, except with respect to evidence necessary for purposes of rebuttal submissions, answers to questions or comments on answers provided by others. Exceptions to this procedure will be granted upon a showing of good cause. In such cases, the other party shall be accorded a period of time for comment, as appropriate". We are obliged to point out that Peru submitted the letter from Consumers' Association as a part of its rebuttal submission. In light of this, it is our view that the European Communities should have submitted the evidence at the second substantive meeting or at least not later than at the time it submitted answers to the questions posed by the Panel. Further, the European Communities did not request an extension of time-period to rebut the letter from Consumers' Association. Nor did the European Communities demonstrate the requisite "good cause" which must be shown by the party submitting the new evidence. We do not consider that the interim review stage is the appropriate time to introduce new evidence. Therefore, we decline to consider the new evidence submitted by the European Communities.

6.17 With respect to the letter from an exporter submitted by Canada, on balance we found the argument that the juvenile product of Clupea harengus harengus was marketed as sardines in the European Communities credible and therefore considered it as a part of the overall evidence in determining whether the European consumers associate the term "sardines" exclusively with Sardina pilchardus. With respect to the European Communities' argument that "the real use of the word 'sardines' for Canada's product was for sales to Surinamese in the Netherlands of a Canadian product they had got to know in Suriname", we do not see how this detracts from the fact that Canada exported Clupea harengus harengus as "Canadian sardines" to the Netherlands for thirty years until 1989. The fact that the majority of consumers of Canadian sardines in the Netherlands originates from Suriname does not affect the relevance of the evidence.

6.18 Finally, the European Communities claimed that in paragraph 7.132 we "completely ignor[ed] the evidence submitted by the European Communities on the range and diversity of preserved fish products that the European consumers could find in any European supermarket and that responds to their expectations that each fish be called by and marketed under its own name". Again, we did not ignore any evidence and we took note of the fact that there is diverse range of fish products that are available in European supermarkets. However, we were not persuaded that the existence of diverse preserved fish products in the European market suggested that the European consumers associate the term "sardines" exclusively with Sardina pilchardus. We therefore reject the European Communities' argument that we "completely ignored" the evidence it submitted.

6.19 In light of the above, we reject the European Communities' argument that our assessment was not objective and decline to change our views set out in paragraph 7.132. We have, however, for the sake of clarity, revised the last sentence to state that the term "sardines", either by itself or combined with the name of a country or geographic area is a common name for Sardinops sagax in the European Communities. We are obliged to point out, in response to the European Communities' comment that "[t]he assessment of the facts developed by the Panel … to establish that sardines is a generic term in the territory of the European Communities is not objective", that we stated in Footnote 107 of the findings: "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".

6.20 The European Communities argued that we incorrectly described Article 7 of the EC Regulation in Footnote 104 of the findings. Concerning the composition of "sardine mousse", the European Communities argued that the EC Regulation referred to at least 25% Sardina pilchardus of the net weight of the product and that these products could not materially be composed of 100% fish. The European Communities further noted that these products consisted of 40% to 50% of the net weight of sardine meat, whilst the rest were non-fish ingredients which are necessary to give the product its particular texture and taste. We have made changes to Footnote 104 to accurately reflect Article 7 of the EC Regulation in light of the European Communities' argument.

6.21 Finally, the European Communities contested "the partial and random use made by the Panel of the evidence submitted by the parties on the negotiating history of the Codex Stan 94, which is considered unnecessary in certain parts and is selectively relied upon in others". With regard to paragraph 7.136, the European Communities further recalled a statement by France in the 1969 Synopsis of Governments' Replies on the Questionnaire on Canned Sardines: "the use of country of origin as a prefix is confusing, because several species would have the same trade name and a single species would be given several names according to the country where it is caught or processed". We would like to emphasize again that we considered the totality of the evidence before us. We considered the text of Codex Stan 94 in determining that the language provided therein took into account the issue of consumer protection in countries producing preserved sardines using Sardina pilchardus. We resorted to the negotiating history only to confirm 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.

6.22 For the sake of clarity, we have inserted a sentence at the end of paragraph 7.99 and added paragraph 7.139 which summarizes our findings by way of an overall conclusion, which is reflected in paragraph 8.1, with respect to Article 2.4 of the TBT Agreement.



30 Pursuant to Article 15.3 of the DSU, "The findings of the final panel report shall include a discussion of the arguments made at the interim review stage". The following section entitled "interim review" therefore forms part of the findings.

31 Appellate Body Report, European Communities - Measures Affecting Asbestos and Asbestos-Containing Products ("EC - Asbestos"), WT/DS135/AB/R, adopted 5 April 2001, para. 67.

32 "Panels may seek information from any relevant source and may consult experts to obtain their opinion on certain aspects of the matter" (emphasis added).

33 European Communities - Measures Concerning Meat and Meat Products ("EC - Hormones"), WT/DS26/AB/R and WT/DS48/AB/R, adopted 13 February 1998, DSR 1998:I, para. 147.

34 United States - Import Prohibition of Certain Shrimp and Shrimp Products ("US - Shrimp"), WT/DS58/AB/R, adopted 6 November 1998, DSR 1998:VII, para. 104.

35 In addition, we took note of the context provided by Article 2.5 of the TBT Agreement which states that if a technical regulation is in accordance with relevant international standards, "it shall be rebuttably presumed not to create an unnecessary obstacle to international trade." Because the EC Regulation was not in accordance with Codex Stan 94, we considered that it created an "unnecessary obstacle to trade", which, in our view, can be construed to mean more trade-restrictive than necessary.

36 Peru's First Oral Statement, para. 4.

37 We noted that Grand Dictionnaire Encyclopédique Larousse refers the term "sardine" to Sardina pilchardus. We also took note of the fact that the same dictionary states "[o]n trouve des espèces voisines dans le Pacifique (Sardinops caerulea), ainsi que sur les côtes du sud de l'Afrique (S. sagax) et d'Australie (S. neopilchardus)". Diccionario de la lengua espanola defines the term "sardina" as "pez teleósteo marino fisóstomoto, de 12 a 15 centímetros de largo, parecido al arenque, pero de carne más delicada, cabeza relativamente menor, la aleta dorsal muy delantera y el cupero más delicada y el cuerpo más fusiforme y de color negro ayulado por encima, dorado en la cabeza y peteado en los costados y vientre." (emphasis added) These two dictionaries referred to by the European Communities support the view that the term "sardines" is not limited to just Sardina pilchardus but includes other species, including Sardinops sagax.

38 The Appellate Body in European Communities - Measures Affecting the Importation of Certain Poultry Products ("EC - Poultry"), WT/DS69/AB/R, adopted 23 July 1998, DSR 1998:V, stated that "[a]n allegation that a panel has failed to conduct the 'objective assessment of the matter before it' … is a very serious allegation". Para. 133.

39 Appellate Body Report, Korea - Definitive Safeguard Measure on Imports of Certain Dairy Products ("Korea - Dairy"), WT/DS98/AB/R, adopted 12 January 2000, para. 137.

40 Appellate Body Report, Australia - Measures Affecting the Importation of Salmon ("Australia - Salmon"), WT/DS18/AB/R, adopted 6 November 1998, DSR 1998:VIII, para. 267.


To continue with VII. FINDINGS

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