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EUROPEAN COMMUNITIES �
(Continued)
G. CONSISTENCY OF THE EC REGULATION WITH ARTICLE 2.4 OF THE TBT AGREEMENT
7.48 The issue of burden of proof has been repeatedly examined in WTO
jurisprudence. The Appellate Body stated in US - Wool Shirts and Blouses that:
� the burden of proof rests upon the party, whether complaining or defending,
who asserts the affirmative of a particular claim or defence. If that party
adduces evidence sufficient to raise a presumption that what is claimed is true,
the burden then shifts to the other party, who will fail unless it adduces
sufficient evidence to rebut the presumption.67
7.49 Once the Panel determines that the party asserting the affirmative of a
particular claim or defence has succeeded in raising a presumption that its
claim is true, it is incumbent upon the Panel to assess the merits of all the
arguments advanced by the parties and the admissibility, relevance and weight of
all the factual evidence submitted with a view to establishing whether the party
contesting a particular claim has successfully refuted the presumption raised.
In the event that the arguments and the factual evidence adduced by the parties
remain in equipoise, the Panel must, as a matter of law, find against the party
who bears the burden of proof.
7.50 Under the well-established principle concerning burden of proof, it is for
the complaining party to establish the violation it alleges; it is for the party
invoking an exception or an affirmative defence to prove that the conditions
contained there are met; and it is for the party asserting a fact to prove it.68
Applying this principle in the context of Article 2.4 of the TBT Agreement, it
is Peru, as the complaining party, that bears the burden of establishing a prima
facie case by demonstrating that a relevant international standard exists and
that this standard was not used as a basis for the technical regulation. At this
point, should the European Communities make an assertion to rebut Peru's claims,
it carries the burden of establishing that assertion. We note that the European
Communities asserted that Codex Stan 94 is ineffective or inappropriate to
fulfil the legitimate objectives pursued by the EC Regulation. According to the
Appellate Body, "the burden of proof rests upon the party, whether complaining
or defending, who asserts the affirmative of a particular claim or defence".69
Thus, in line with the principle enunciated by the Appellate Body, the burden of
proof rests with the European Communities, as the party "assert[ing] the
affirmative of a particular claim or defence", to demonstrate that the
international standard is an ineffective or inappropriate means to fulfil the
legitimate objectives pursued by the EC Regulation.70
7.51 Moreover, we are concerned that a complaining party, if it were to be
required to determine, as part of the prima facie case it has to establish, what
the "legitimate" objectives pursued by the respondent are and what factors may
render the international standard "inappropriate" in light of the respondent's
specific conditions, may not be in a position to do so. A complainant cannot in
our view be required to spell out the "legitimate" objectives pursued by a
technical regulation. Only the respondent Member can do so. Similarly, we
consider that the assessment of whether a relevant international standard is
"inappropriate" includes considerations which may be distinct from those
underlying an "effectiveness" assessment, and may extend to considerations which
are proper to the Member adopting or applying a technical regulation. As
indicated below, whereas the "effectiveness" of an international standard bears
upon the result of the means employed, the "appropriateness" of that
international standard bears upon the nature of the means employed.
Consequently, when a Member challenges a technical regulation under Article 2.4,
it cannot in our view be required to second-guess what those considerations of
"appropriateness" are which underlie the respondent's decision not to use a
relevant international standard as a basis. A complainant would then be required
to explain why a relevant international standard is not "inappropriate", without
knowing on what basis the respondent considers the relevant international
standard "inappropriate".71
7.52 For the reasons stated above, it is for Peru, as the complaining party, to
establish prima facie that the EC Regulation is a technical regulation within
the meaning of the TBT Agreement; that relevant international standards exist;
and that such standards were not used as a basis for the technical regulation.
The burden rests with the European Communities, as the party "assert[ing] the
affirmative of a particular claim or defence", to demonstrate that the
international standard is an ineffective or inappropriate means to fulfil the
legitimate objectives pursued by the Regulation.
2. Application of the TBT Agreement to measures adopted before 1 January 1995
7.53 The European Communities argues that Article 2.4 of the TBT Agreement is
not applicable to measures that were adopted before 1 January 1995. Referring to
Article 28 of the Vienna Convention, the European Communities claims that the
adoption of its Regulation was an "act � which took place � before the date of
entry into force of the treaty" and since there is no expression of contrary
intention, Article 2.4 does not apply to the Regulation.
7.54 Article 2.4 of the TBT Agreement states:
Where technical regulations are required and relevant international standards
exist or their completion is imminent, Members shall use them, or the relevant
parts of them, as a basis for their technical regulations except when such
international standards or relevant parts would be an ineffective or
inappropriate means for the fulfilment of the legitimate objectives pursued, for
instance because of fundamental climatic or geographical factors or fundamental
technological problems.
7.55 Peru claims that the expression "[w]here technical regulations are
required" indicates that Article 2.4 applies in the situations in which
technical regulations are required and not merely at the point in time when the
decision to adopt them was taken. Peru argues that the European Communities'
argument cannot be reconciled with Article XVI:4 of the WTO Agreement, which
provides that "each Member shall ensure the conformity of its laws, regulations
and administrative procedures with its obligations as provided for in the
annexed agreements" or with Article 28 of the Vienna Convention, pursuant to
which a treaty does apply to situations that continue to exist after its entry
into force. Peru points out that the European Communities made a similar claim
in the context of the SPS Agreement in EC - Hormones which the Appellate Body
rejected by stating that "if negotiators had wanted to exempt the very large
group of SPS measures in existence on 1 January 1995 � it appears reasonable to
us to expect that they would have said so explicitly".
7.56 The general principle of international law embodied in Article 28 of the
Vienna Convention is that "[u]nless a different intention appears from the
treaty or is otherwise established, its provisions do not bind a party in
relation to any act or fact which took place or any situation which ceased to
exist before the date of the entry into force of the treaty with respect to that
party." In Brazil - Desiccated Coconut, the Appellate Body stated that, in
reference to Article 28 of the Vienna Convention, "[a]bsent a contrary
intention, a treaty cannot apply to acts or facts which took place, or
situations which ceased to exist, before the date of its entry into force".72 We
note that the EC Regulation was adopted on 21 June 1989 and the TBT Agreement
entered into force on 1 January 1995. In this regard, the EC Regulation is a
situation which has not ceased to exist after the date of the entry into force
of the TBT Agreement but is a continuing situation. Therefore, absent a contrary
intention, the TBT Agreement applies to the EC Regulation.
7.57 The TBT Agreement itself does not reveal any such contrary intentions. The
TBT Agreement does not contain a transition period and there are provisions that
indicate that the TBT Agreement was intended to apply to technical regulations
that were adopted before the entry into force of the TBT Agreement. We note, for
instance, that Article 2.2 states that "Members shall ensure that technical
regulations are not prepared, adopted or applied with a view to or with the
effect of creating unnecessary obstacles to international trade"; Article 2.3
states that "[t]echnical regulations shall not be maintained if the
circumstances or objectives giving rise to their adoption no longer exists�";
and Article 2.6 states that a "Member preparing, adopting or applying a
technical regulation which may have a significant effect on trade of other
Members shall � explain justification for that technical regulation" (emphasis
added).
7.58 Although the temporal issue has not been considered by panels or the
Appellate Body in the context of the TBT Agreement, an analogous temporal issue
has been considered in the context of the SPS Agreement . The Appellate Body in
EC - Hormones examined whether the SPS Agreement applies to certain SPS measures
that were enacted before the entry into force of the SPS Agreement on 1 January
1995 and held that, under Article 28 of the Vienna Convention, the SPS Agreement
is applicable to such measures:
We agree with the Panel that the SPS Agreement would apply to situations or
measures that did not cease to exist, such as the 1981 and 1988 Directives,
unless the SPS Agreement reveals a contrary intention. We also agree with the
Panel that the SPS Agreement does not reveal such an intention. The SPS
Agreement does not contain any provision limiting the temporal application of
the SPS Agreement , or of any provision thereof, to SPS measures adopted after 1
January 1995. In the absence of such a provision, it cannot be assumed that
central provisions of the SPS Agreement , such as Articles 5.1 and 5.5, do not
apply to measures which were enacted before 1995 but which continue to be in
force thereafter.73
7.59 The factual aspect of the current dispute is not dissimilar to the one in
hand in EC - Hormones in that, like the 1981 and 1988 Directives, the EC
Regulation is a "situation or measure that did not cease to exist" and the TBT
Agreement does not reveal a contrary intention to limit the temporal application
of the TBT Agreement to measures adopted after 1 January 1995.
7.60 Therefore, Article 2.4 of the TBT Agreement applies to measures that were
adopted before 1 January 1995 but which have not ceased to exist.
3. Whether Codex Stan 94 is a relevant international standard
(a) Consideration of Codex Stan 94 as a relevant international standard
7.61 Peru argues that Codex Stan 94 is a relevant international standard as it
was adopted by the Codex Alimentarius Commission which is an internationally
recognized standard setting body that develops standards for food products.
Referring to the definition of "standard" set out in Annex 1 of the TBT
Agreement, Peru argues that it is an international standard that was adopted by
consensus. Peru claims that Codex Stan 94 is also a relevant international
standard that applies to sardines and sardine-type products that are prepared
from the fish of 21 different species, including Sardina pilchardus and
Sardinops sagax.
7.62 Although the European Communities does not contest that the Codex Alimentarius Commission is an internationally recognized standard setting body,
the European Communities claims that the requirement to use relevant
international standards as a basis set out in Article 2.4 of the TBT Agreement
does not apply to existing measures. The European Communities also argues that
Codex Stan 94 is not a relevant international standard on the basis that it did
not exist and its adoption was not imminent when the EC Regulation was adopted.
Furthermore, the European Communities also takes issue with several procedural
features surrounding the development of Codex Stan 94. The European Communities
argues that the standard was not adopted by consensus and that the prior,
non-final draft of Codex Stan 94 indicates that the use of the common name for
the species other than Sardina pilchardus without the word "sardines" is an
independent option and Peru's interpretation that it is not an independent
option would render Codex Stan 94 invalid. The European Communities argues that
if Peru's interpretation were accurate, it would render Codex Stan 94 invalid
because the change in the language of the standard was made without a referral
back to the Committee for its approval. According to the European Communities,
under Codex rules, any substantive change in the process of developing an
international standard requires the approval of the Committee. The European
Communities finally argues that paragraph 6.1.1(ii) of Codex Stan 94 is not the
relevant provision for the EC Regulation because the EC Regulation does not
regulate products other than preserved Sardina pilchardus.
7.63 International standards are standards that are developed by international
bodies. Our starting point of analysis, therefore, is whether Codex Stan 94
comes within the scope of the definition of "standard" provided in Annex 1.2 of
the TBT Agreement and followed by whether the Codex Alimentarius Commission is
an international body within the meaning set out in Annex 1.2 of the TBT
Agreement.
7.64 The term "standard" is defined as:
Document approved by a recognized body, that provides, for common and repeated
use, rules, guidelines or characteristics for products or related processes and
production methods, with which compliance is not mandatory. It may also include
or deal exclusively with terminology, symbols, packaging, marking or labelling
requirements as they apply to a product, process or production method.
7.65 A standard comes within the definition set out in paragraph 2 of Annex 1 of
the TBT Agreement if it provides "for common and repeated use, rules, guidelines
or characteristics for products or related processes and production methods";
compliance is not mandatory; and is approved by a "recognized body". We note
that the parties are in agreement that Codex Stan 94 is a "standard" and see no
reason to disagree with that assessment for the purposes of this dispute. We
therefore find that Codex Stan 94 is a standard within the meaning of Annex 1.2
of the TBT Agreement.
7.66 With respect to whether the Codex Alimentarius Commission is an
international body for the purposes of this dispute,74 we note that "international
body" is defined in Annex 1.4 of the TBT Agreement 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, it
is an international body within the meaning of annex 1.4 of the TBT Agreement.
Moreover, we note that Peru submitted that the Codex Alimentarius Commission was
an internationally recognized standard setting body that develops standards for
food products and the European Communities indicated, in a response to the
Panel's question on the matter, that it did not "contest the status of the Codex
Alimentarius Commission as an international standardization body for the
purposes of the TBT Agreement".
7.67 Based on the reasons above, we find that Codex Stan 94 is an international
standard for the purposes of this dispute.
7.68 Having determined that Codex Stan 94 is an international standard, the
analysis turns to whether Codex Stan 94 is a "relevant" international standard
in respect of the EC Regulation. We note that the ordinary meaning of the term
"relevant" is "bearing upon or relating to the matter in hand; pertinent".75 Based
on the ordinary meaning, Codex Stan 94 must bear upon, relate to or be pertinent
to the EC Regulation for it to be a relevant international standard.
7.69 The title of Codex Stan 94 is "Codex Standard for Canned Sardines and
Sardine-type Products" and the EC Regulation lays down common marketing
standards for preserved sardines. The European Communities indicated in its
response that the term "canned sardines" and "preserved sardines" are
essentially identical.76 Therefore, it is apparent that both the EC Regulation and
Codex Stan 94 deal with the same product, namely preserved sardines. The scope
of Codex Stan 94 covers various species of fish, including Sardina pilchardus
which the EC Regulation covers, and includes, inter alia, provisions on
presentation (Article 2.3), packing medium (Article 3.2), labelling, including a
requirement that the packing medium is to form part of the name of the food
(Article 6), determination of net weight (Article 7.3), foreign matter (Article
8.1) and odour and flavour (Article 8.2). The EC Regulation contains these
corresponding provisions set out in Codex Stan 94, including the section on
labelling requirement.
7.70 Therefore, for the reasons set out above and subject to the consideration
of European Communities' arguments below, we find that Codex Stan 94 is a
relevant international standard.
(b) Consideration of European Communities' temporal argument and its arguments
that Codex Stan 94 is not a relevant international standard
7.71 We noted that the ordinary meaning of the term "relevant" is "bearing upon
or relating to the matter in hand; pertinent". The dictionary meaning indicates
that relevance refers to the subject matter at issue, i.e., preserved sardines,
and not to the temporal aspect of the international standard or procedural
aspect of the adoption of the international standard. We will nevertheless
consider the European Communities' argument that Codex Stan 94 is not a relevant
international standard on the ground that it did not exist and its completion
was not imminent when the European Communities adopted the Regulation.
(i) The European Communities' argument that the requirement to use relevant
international standards as a basis does not apply to existing technical
regulations
7.72 The European Communities advances the argument that the language of Article
2.4 of the TBT Agreement requiring that relevant international standards be used
as a basis for drawing up technical regulations suggests that the obligation
does not apply to existing measures. The European Communities argues that the
requirement to use a relevant international standard for technical regulations
exists prior to the adoption of the measure, not afterwards because
international standards cannot be used as a basis when technical regulations
have already been adopted. The European Communities argues that the use of the
word "imminent" further confirms its interpretation. For these reasons, the
European Communities argues that Article 2.4 of the TBT Agreement applies only
to preparation and adoption and not to the application of technical regulations.
7.73 As noted earlier, Article 2.4 of the TBT Agreement states:
Where technical regulations are required and relevant international standards
exist or their completion is imminent, Members shall use them, or the relevant
parts of them, as a basis for their technical regulations except when such
international standards or relevant parts would be an ineffective or
inappropriate means for the fulfilment of the legitimate objectives pursued, for
instance because of fundamental climatic or geographical factors or fundamental
technological problems. (emphasis added)
7.74 Article 2.4 of the TBT Agreement starts with the language "where technical
regulations are required". We construe this expression to cover technical
regulations that are already in existence as it is entirely possible that a
technical regulation that is already in existence can continue to be required.
Considered in the context of Article 28 of the Vienna Convention, the existing
technical regulation is a situation that has not ceased to exist but continues
to exist and Article 2.4 that requires the use of relevant international
standards for technical regulations would therefore apply to those existing
technical regulations. Moreover, we note that the first part of the sentence of
Article 2.4 is in the present tense ("exist") and not in the past tense -
"[w]here technical regulations are required and relevant international standards
exist or their completion is imminent", Members are obliged to use such
international standards as a basis. This supports the view that Members have to
use relevant international standards that currently exist or whose completion is
imminent with respect to the technical regulations that are already in
existence. We do not consider that the word "imminent", the ordinary meaning of
which is "likely to happen without delay",77 is intended to limit the scope of the
coverage of technical regulations to those that have yet to be adopted. Rather,
the use of the word "imminent" means that Members cannot disregard a relevant
international standard whose completion is imminent with respect to their
existing technical regulations. Therefore, a textual reading of Article 2.4 does
not support the view that the requirement to use relevant international
standards as a basis for technical regulations applies only to technical
regulations that are to be prepared and adopted and is not applicable to
existing technical regulations.
7.75 There is contextual support for the interpretation that Article 2.4 applies
to technical regulations that are already in existence. The context provided by
Article 2.5, which explicitly refers to Article 2.4, speaks of "preparing,
adopting or applying" a technical regulation and is not limited to, as the
European Communities claims, to preparing and adopting. A technical regulation
can only be applied if it is already in existence. The first sentence imposes an
obligation on a Member "preparing, adopting or applying" a technical regulation
that may have a significant effect on trade of other Members to provide the
justification for that technical regulation. The second sentence of Article 2.5
states that whenever a technical regulation is "prepared, adopted or applied"
for one of the legitimate objectives explicitly set out in Article 2.2 and is in
accordance with relevant international standards, it is to be rebuttably
presumed not to create an unnecessary obstacle to trade. The use of the term
"apply", in our view, confirms that the requirement contained in Article 2.4 is
applicable to existing technical regulations.
7.76 Article 2.6 provides another contextual support. It states that Members are
to participate in preparing international standards by the international
standardizing bodies for products which they have either "adopted, or expect to
adopt technical regulations." Those Members that have in place a technical
regulation for a certain product are expected to participate in the development
of a relevant international standard. Article 2.6 would be redundant and it
would be contrary to the principle of effectiveness, which is a corollary of the
general rule of interpretation in the Vienna Convention, if a Member is to
participate in the development of a relevant international standard and then
claim that such standard need not be used as a basis for its technical
regulation on the ground that it was already in existence before the standard
was adopted. Such reasoning would allow Members to avoid using international
standards as a basis for their technical regulations simply by enacting
preemptive measures and thereby undermine the object and purpose of developing
international standards.
7.77 Based on our examination of the ordinary meaning of the words contained in
Article 2.4 of the TBT Agreement and the context provided by Articles 2.5 and
2.6, we are of the view that the requirement contained in Article 2.4 to use
relevant international standards as a basis for technical regulations applies to
technical regulations that are already in existence. We note, however, that the
European Communities argued that while relevant international standards could be
used as a basis for a technical regulation when it is amended, this issue was
not before the Panel. The European Communities argued that the question at issue
is whether Members have an obligation after the WTO Agreement entered into force
to revise their existing technical regulations to ensure that they have used
relevant international standards as a basis. The European Communities argued
that there is no obligation to review and amend existing technical regulations
whenever an international standard is adopted or amended and that such
obligation would turn standardisation bodies virtually into "world legislators".
The European Communities noted that the Appellate Body stated with respect to
"an obligation to use standards: We cannot lightly assume that sovereign states
intended to impose upon themselves the more onerous, rather than less
burdensome, obligation�".
7.78 In our view, Article 2.4 of the TBT Agreement imposes an ongoing obligation
on Members to reassess their existing technical regulations in light of the
adoption of new international standards or the revision of existing
international standards. We do not, however, share the concern expressed by the
European Communities that the obligation to amend a technical regulation when a
new international standard is adopted would turn standardization bodies into
"world legislators" because the nature of the obligation agreed to by Members is
circumscribed by four elements. First, the obligation applies only "where
technical regulations are required". If a Member does not enact a technical
regulation or determines that the technical regulation is no longer required, it
need not consider the international standard. Second, the obligation exists only
to the extent that the international standard is relevant for the existing
technical regulation. Third, if it is determined that a technical regulation is
required and the international standard is relevant, Members are to use that
international standard "as a basis", which means that Members are to use a
relevant international standard as "the principal constituent � or fundamental
principle"78 and does not mean that Members must conform to or comply with that
relevant international standard.79 The requirement to use the relevant
international standard as a basis does not impose a rigid requirement to bring
the technical regulation into conformity with the relevant international
standard. This provides Members with a certain amount of latitude in complying
with the obligation set out in Article 2.4 of the TBT Agreement. In our view,
the reference to the term "use as a basis" in Article 2.4 of the TBT Agreement
recognizes that there may be various ways in which Members can use the relevant
international standard in the formulation of their technical regulations.
Finally, Members are not obliged to use the relevant international standard if
such international standard is ineffective or inappropriate to fulfil the
legitimate objectives pursued by the technical regulation.80 Thus, a judicious
application of the obligations contained in Article 2.4 provides assurances
against the over-reaching implied by the European Communities.
7.79 If Members did not have an ongoing obligation to examine their technical
regulation in light of relevant international standards that are adopted or
revised, the effect would be to create grandfather rights for those existing
technical regulations that are at odds with those international standards as
only the technical regulations enacted after the adoption or revision of the
international standard would be subject to the international standard.81 If we
were to find that Members do not have an ongoing obligation to reassess their
technical regulations, it would be possible to preempt obligations under Article
2.4 of the TBT Agreement by adopting technical regulations before relevant
international standards are adopted. As we have examined above, the ordinary
meaning and context, especially in the context of Article 2.6 of the TBT
Agreement, do not support the view that Members do not have an ongoing
obligation to reassess their technical regulations in light of new international
standards that are adopted.
7.80 There are other provisions that contextually support the view that the
obligation under Article 2.4 is not a static obligation and that there is an
ongoing obligation to reassess technical regulations in light of international
standards that are adopted or revised. Article 2.3 of the TBT Agreement states:
Technical regulations shall not be maintained if the circumstances or objectives
giving rise to their adoption no longer exist or if the changed circumstances or
objectives can be addressed in a less trade-restrictive manner.
7.81 The language of Article 2.3 suggests that Members are to eliminate
technical regulations that no longer serve their purpose or amend them if the
changed circumstances or objectives can be addressed in a less trade-restrictive
manner. This requirement also applies to technical regulations that were enacted
before the TBT Agreement came into force. Thus, Members would be under an
obligation to periodically evaluate their technical regulations and either
discontinue them if they no longer serve their objectives or change them if
there is a less trade-restrictive manner in which to achieve the underlying
objectives of the regulations. Such reading of Article 2.3 is supported by
Article 2.8 of the TBT Agreement which states that, wherever appropriate,
Members are to "specify technical regulations based on product requirements in
terms of performance rather than design or descriptive characteristics".
Performance, the ordinary meaning of which is "operation or functioning, usually
with regard to effectiveness",82 of products can change and technical regulations
governing these products are to reflect these changes. The above interpretation
is also consistent with the object and purpose of not creating unnecessary
obstacles to international trade and one way to achieve that objective is to
discontinue technical regulations that no longer serve their purpose or find a
less trade-restrictive manner in which the objective can be fulfilled.
7.82 In support of its argument that Article 2.4 does not create an ongoing
obligation to reassess technical regulations when international standards are
adopted or amended, the European Communities referred to the Appellate Body's
statement that "[w]e cannot lightly assume that sovereign states intended to
impose upon themselves the more onerous, rather than the less burdensome,
obligation�". The full sentence reads: "We cannot lightly assume that sovereign
states intended to impose upon themselves the more onerous, rather than the less
burdensome, obligation by mandating conformity or compliance with such
standards, guidelines and recommendations". Thus, it is clear that the Appellate
Body was distinguishing an obligation to conform to or comply with international
standard from the language "based on". We have unequivocally stated that the
term "use as a basis" does not mean conform to or comply with relevant
international standards. It is our view, however, that, based on the reasons set
out above, Members intended to impose an ongoing obligation to reassess their
technical regulations in light of international standards that are adopted or
revised and to use those relevant international standards as a basis for the
technical regulations.
7.83 Based on the reasons set out above, we reject the European Communities'
argument that Article 2.4 does not apply to existing technical regulations.
(ii) The European Communities' argument that the "predecessor standard" to Codex
Stan 94 should have been invoked because Codex Stan 94 is not the relevant
international standard as it did not exist and its adoption was not imminent
when the EC Regulation was adopted
7.84 The European Communities argues that even if Article 2.4 were to have a
retroactive effect, Codex Stan 94 is not a relevant international standard
because "it did not exist and its adoption was not 'imminent' when the
Regulation was adopted". The European Communities claims that Peru should have
invoked the "predecessor standard" in arguing that the EC Regulation is
inconsistent with the relevant international standard. The European Communities
points out that "it did comply with the requirements of the Tokyo Round
Standards Code when it adopted the Regulation and notified it to the GATT".83
7.85 We examined above the European Communities' temporal argument that Article
2.4 of the TBT Agreement does not apply to measures that were enacted prior to 1
January 1995 and found that, under Article 28 of the Vienna Convention, the EC
Regulation is a situation that has not ceased to exist but continues to exist
and Article 2.4 of the TBT Agreement therefore is applicable to the EC
Regulation. Our conclusion becomes more apparent when the EC Regulation is
considered from the perspective of the application rather than the adoption of
the Regulation.84
7.86 Having determined that Article 2.4 is applicable to the EC Regulation, we
note that Article 2.4 does not impose any temporal constraint in respect of
relevant international standards that are to be used as a basis for technical
regulations. Moreover, as we noted in paragraphs 7.78 to 7.82, Members have an
ongoing obligation to reassess their technical regulations in light of relevant
international standards that are adopted or revised. We do not agree with the
European Communities' argument that Peru should have invoked the "predecessor
standard", presumably the 1978 version of Codex Stan 94, for the reasons set out
in paragraphs 7.56 to 7.60.85
7.87 Based on the reasons set out above, we reject the European Communities'
argument that Codex Stan 94 is not a relevant international standard because it
did not exist and its adoption was not imminent when the EC Regulation was
adopted and that Peru should have invoked the predecessor standard.
(iii) The European Communities' argument that Codex Stan 94 is not a relevant
international standard because it was not adopted by consensus
7.88 The European Communities argues that because there was no consensus in
adopting Codex Stan 94, it is inconsistent with the principle of relevance
contained in the Decision of the Committee on Principles for the Development of
International Standards, Guides and Recommendations with Relation to Articles 2,
5 and Annex 3 of the Agreement (the "Decision") and therefore is not a relevant
international standard.
7.89 For the purposes of determining whether standards must be based on
consensus, the controlling provision is paragraph 2 of Annex 1 of the TBT
Agreement and its explanatory note. The explanatory note for paragraph 2
provides:
Standards prepared by the international standardization community are based on
consensus. This Agreement covers also documents that are not based on consensus.
7.90 The first sentence reiterates the norm of the international standardization
community that standards are prepared on the basis of consensus. The following
sentence, however, acknowledges that consensus may not always be achieved and
that international standards that were not adopted by consensus are within the
scope of the TBT Agreement.86 This provision therefore confirms that even if not
adopted by consensus, an international standard can constitute a relevant
international standard.
7.91 The Decision to which the European Communities refers is a policy statement
of preference and not the controlling provision in interpreting the expression
"relevant international standard" as set out in Article 2.4 of the TBT
Agreement. The controlling provision must be understood as paragraph 2 of Annex
1 of the TBT Agreement. As we have seen above, the explanatory note of Annex 1.2
states that standards covered by the TBT Agreement include those that were
adopted by consensus and those that were not adopted by consensus.
7.92 Therefore, we reject the European Communities' argument that Codex Stan 94
is not a relevant international standard must be rejected.
(iv) The European Communities' argument that Codex Stan 94 is not a relevant
international standard on the basis that Peru's interpretation would mean that
the Codex Stan 94 is invalid because there was no referral to the Committee even
though there was a substantive change
7.93 The European Communities argues that the negotiating history of paragraph
6.1.1 of Codex Stan 94 indicates that the provision provides an option between
"X sardines" on the one hand and the common name of the species on the other.
The European Communities' claim is based on the fact that the change is
described as "editorial" in the minutes of the meeting. The European Communities
points out that the text of paragraph 6.1.1 was prepared and discussed in steps
1 to 7 and the text reads:
6.1.1 The name of the product shall be:
The final version of the text reads:
The name of the product shall be:
7.94 The European Communities' argument is that these changes are "editorial" as
indicated in the minutes of the meeting and points out that substantive changes
cannot be made at step 8 of the adoption process because an amendment at the
stage requires the text to be referred back to the relevant committee for
comments before its final adoption. Therefore, according to the European
Communities, the reformulation of the text at step 8 cannot have produced any
substantive change and its interpretation that a Member can choose between "X
sardines" and common names is correct and that any change to this interpretation
would render Codex Stan 94 invalid and therefore cannot be deemed relevant.
7.95 While the European Communities' explanation on the negotiating history and
the process involving the adoption of an international standard is much
appreciated, we are not persuaded that the negotiating history supports 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. The text of Codex Stan 94 is clear on its face that it
provides Members with four alternatives using the term "sardines" combined with
the name of a country, the name of a geographic area, the name of species or the
common name.87 Moreover, the deletion of the third alternative and the adoption of
the current text indicate that the latter reflects the true intentions of the
drafters. 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. Thus, paragraph 6.1.1 of
Codex Stan 94 provides four alternatives and the use of the common name is not,
as argued by the European Communities, "a self standing option independent from
the formula 'X sardine'".
7.96 For these reasons, we reject the European Communities' argument that Codex
Stan 94 is not a relevant international standard.
(v) The European Communities' argument that Codex Stan 94 is not a relevant
international standard because the EC Regulation does not regulate products
other than preserved Sardina pilchardus
7.97 The European Communities argues that paragraph 6.1.1(ii) of Codex Stan 94,
on which Peru relies to argue that the EC Regulation is inconsistent with
Article 2.4, is not the relevant provision because the EC Regulation does not
apply to products other than preserved Sardina pilchardus. The European
Communities argues that the relevant part of the international standard is
paragraph 6.1.1(i) of Codex Stan 94 which deals with Sardina pilchardus.
7.98 We referred to the Appellate Body finding in EC - Asbestos that a document
may prescribe a product characteristic in either a positive or a negative form.
We determined that Article 2 of the EC Regulation requires positively that only
products using Sardina pilchardus can be "marketed as preserved sardines and
under the trade description referred to in Article 7" and that the negative
implication flowing therefrom is that those products using species other than
Sardina pilchardus cannot be "marketed as preserved sardines and under the trade
description referred to in Article 7". We considered that by laying down a
product characteristic that only Sardina pilchardus can constitute preserved
sardines, the EC Regulation regulates species other than Sardina pilchardus by
laying down product characteristics in a negative form.
7.99 As a standard that lays down product characteristics for Sardinops sagax
and other species except Sardina pilchardus, we consider that paragraph
6.1.1(ii) of Codex Stan 94 is the relevant provision of the international
standard in respect of species other than Sardina pilchardus and therefore
reject the European Communities' argument that paragraph 6.1.1(ii) of Codex Stan
94 is not the relevant provision. Therefore, we confirm our finding in paragraph
7.70 that Codex Stan 94 is a relevant international standard.
4. Whether Codex Stan 94 was used as a basis for the technical regulation
7.100 Peru acknowledges that a measure would be consistent with paragraph
6.1.1(i) if it requires the term "sardines", when used without any
qualification, be reserved for Sardina pilchardus. However, Peru contends that
all other species referred to in Codex Stan 94 may be marketed, pursuant to
sub-paragraph (ii), as "X sardines" where "X" is either a country, a geographic
area, the species or the common name of the species. Peru argues that Sardinops
sagax exported by Peru to the European Communities shall be marketed as
"Peruvian sardines", "Pacific sardines", just "sardines" combined with the name
of the species or the common name in the European Communities' member State in
which the sardines are sold, such as "S�damerikanische Sardinen" in Germany.
Peru contends that in each of the four alternatives set out in this labelling
standard, the term "sardines" is part of the trade description and a total
prohibition on the use of the term "sardines" in the labelling of canned
sardines is not foreseen. Peru argues that it is therefore inconsistent with
sub-paragraph (ii) of paragraph 6.1.1 of Codex Stan 94 if sardines of the
species Sardinops sagax may not be marketed under the name "sardines" qualified
by the name of a country, name of a geographic area of origin, name of the
species or the common name.
7.101 The European Communities argues that, under paragraph 6.1.1(ii) of Codex
Stan 94, each country has the option of choosing between "X sardines" and the
common name of the species. The European Communities argues that "the common
name of the species in accordance with the law and customs of the country in
which the product is sold" is intended to be a self-standing option independent
of the formula "X sardines". The European Communities argues that the fact that
the name for products other than Sardina pilchardus could not be harmonized and
had to defer to each country is reflected in the language "in accordance with
the law and custom of the country in which the product is sold". The European
Communities argues that the use of the word "sardines" for products other than
preserved Sardina pilchardus would not be in accordance with the law and custom
of the European Communities' member States and would mislead the consumers in
the European Communities. The European Communities notes that there is an
additional element contained in Codex Stan 94 that is not applicable to Sardina
pilchardus but applicable to other species, namely that the trade description of
the latter group of species must not mislead the consumer in the country in
which the product is sold.
7.102 Paragraph 6.1.1 of Codex Stan 94 reads:
The name of the product shall be:
6.1.1 (i) "Sardines" to be reserved exclusively for Sardina pilchardus
(Walbaum); or
(ii) "X Sardines" of a country, a geographic area, the species, or the common
name of the species in accordance with the law and custom of the country in
which the product is sold, and in a manner not to mislead the consumer.
7.103 Textual reading of paragraph 6.1.1(ii) suggests that for species other
than Sardina pilchardus, the label would read "X Sardines" with the "X" denoting
a country, a geographic area, the species or the common name of the species in
accordance with the law and custom of the country where the product is sold. We
consider that paragraph 6.1.1(ii) of Codex Stan 94 contains four alternatives
and each alternative envisages the use of the term "sardines" combined with the
name of a country, name of a geographic area, name of the species or the common
name of the species in accordance with the law and custom of the country in
which the product is sold.
7.104 The European Communities construes paragraph 6.1.1(ii) of Codex Stan 94 as
providing a choice between "X sardines" with the "X" representing a country,
geographical area or the species on the one hand and the common name of species
in accordance with the law and custom of the country in which the product is
sold on the other hand. The European Communities' interpretation is based on the
fact that the phrase "the common name of the species in accordance with the law
and custom of the country in which the product is sold" is situated between
commas; there is no comma between "species" and "in accordance with"; and there
is a comma before "and in a manner not to mislead the consumer".
7.105 We are not persuaded that the European Communities' reasons support its
interpretation. As a matter of English grammar, it is not uncommon to insert a
comma before the words "or" when listing more than two items. That is, the
expression "A, B, C, or D" means one of the four items. It does not mean that A,
B or C constitute one option while D is another option. For the European
Communities' interpretation to be persuasive, Codex Stan 94 would at least have
to contain an additional "or" so as to read:
"X Sardines" of a country, a geographical area or the species, or the common
name of the species in accordance with the law and custom of the country in
which the product is sold, and in a manner not to mislead the consumer.
7.106 With respect to the European Communities' second argument that there is no
comma between "species" and "in accordance with", the comma is missing because
the words "in accordance with the law and custom of the country in which the
product is sold" refer to the "common name of the species" and not to the name
of a country, a geographical area or the species which need not be subject to
the law and custom of the country.88
7.107 With respect to the European Communities' third argument, the existence of
a comma before "and in a manner not to mislead the consumer" indicates that the
requirement of not misleading the consumer attaches to all four alternatives.
7.108 The interpretation that paragraph 6.1.1(ii) of Codex Stan 94 contains four
alternatives which provide for the use of the term "sardines" in each
alternative is confirmed by the French text of Codex Stan 94. We note that the
official languages of the Codex Alimentarius Commission are English, French and
Spanish which means that all three versions are authentic. The French version
reads:
"Sardines X", "X" d�signant un pays, une zone g�ographique, l'esp�ce ou le nom
commun de l'esp�ce en conformit� des lois et usages du pays o� le produit est
vendu, de mani�re � ne pas induire le consommateur en erreur. (emphasis added)
7.109 The French version confirms the interpretation that a Member is to choose
among the four available alternatives and that it does not offer the option of
choosing between "X Sardines" of a country, a geographical area or the species
on the one hand and the common name in accordance with the law and custom of the
country on the other hand. The Spanish version also confirms the view that the
name of the species or common name must be added to the word "sardines" and not
replace the word "sardines".
7.110 We note the European Communities' argument that even if Peru's
interpretation were valid in that the term "sardines" must be used with a
qualification for species other than Sardina pilchardus, Article 2.4 of the TBT
Agreement would still not require that such name be used because use as a basis
does not mean conform to. We are cognizant of the Appellate Body's finding in EC
- Hormones that the term "based on" does not mean "conform to". Yet, this
observation does not resolve the issue at hand. Article 2.4 states that Members
"shall use" international standards "as a basis" for their technical regulation.
The use of the word "shall" denotes a requirement that is obligatory in nature
and that goes beyond mere encouragement. The ordinary meaning of the word "use"
is "to employ for or apply to a given purpose".89 The word "basis" means "the
principal constituent of anything, the fundamental principle or theory, as of a
system of knowledge".90 Thus, if the European Communities "used" the existing
relevant international standard, that is, if it employed or applied Codex Stan
94 as the principal constituent or fundamental principle for the purpose of
enacting its technical regulation governing preserved sardines, the EC
Regulation would not be inconsistent with Article 2.4 of the TBT Agreement.
7.111 In this regard, the European Communities argued that its Regulation uses
Codex Stan 94 as a basis and is therefore consistent with Article 2.4 of the TBT
Agreement. Specifically, the European Communities argued that Codex Stan 94
provides that the trade description for species other than Sardina pilchardus is
to be determined by the country in which the product is sold in accordance with
its law and custom. Based on this interpretation of Codex Stan 94, the European
Communities argued that because the UK and German laws prescribe that the trade
description for Sardinops sagax is to be Pacific pilchard and Sardinops or
pilchard, respectively, there is no need to allow Sardinops sagax to be labelled
as sardines on the basis that the use of the term "sardines" would not be in
accordance with the law and custom of European Communities' member States. As we
have found above, paragraph 6.1.1(ii) of Codex Stan 94 contains four
alternatives for labelling species other than Sardina pilchardus and all four
alternatives require the use of the term "sardines" with a qualification. The
European Communities' interpretation that Members need not use the term
"sardines" if their laws provide otherwise would render international standards
meaningless because Members would be able to justify their non-use of the
relevant international standard on the basis that their domestic technical
regulations are contrary to the international standard.
7.112 We recall our finding that the EC Regulation constitutes a technical
regulation within the meaning of Annex 1.1 of the TBT Agreement as it lays down
product characteristics of preserved sardines. We also found that the EC
Regulation contains a labelling requirement that permits only products prepared
from Sardina pilchardus to be labelled as "sardines" and that species such as
Sardinops sagax cannot be called "sardines" even when it is combined with 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. The European Communities confirmed that species other than Sardina
pilchardus cannot use the word "sardines" and that preserved Sardinops sagax is
referred to as pilchards in the European Communities. In light of our findings
above, we find that the relevant international standard, i.e., Codex Stan 94,
was not used as a basis for the EC Regulation.
67 Appellate Body Report, United States - Measures Affecting
Imports of Woven Wool Shirts and Blouses from India ("US - Wool Shirts
and Blouses"), WT/DS33/AB/R, adopted 23 May 1997, DSR 1997:I, p. 335.
68 Panel Report, Turkey - Restrictions on Imports of Textile
and Clothing Products ("Turkey - Textiles"), WT/DS34/R, as modified
by the Appellate Body Report, WT/DS34/AB/R, adopted 19 November 1999, DSR
1999:VI, para. 9.57.
69 Appellate Body Report, US - Wool Shirts and Blouses,
p. 335.
70 We are cognizant of the Appellate Body's finding in EC -
Hormones that, in reference to Articles 3.1 and 3.3 of the SPS Agreement ,
the latter provision, which allows Members to establish their own level of
sanitary protection, does not constitute an exception to the general obligation
of Article 3.1, and that the burden of the complaining party to establish a
prima facie case of inconsistency "is not avoided by simply describing that
provision as an 'exception'". However, we consider that the Appellate Body's
finding in EC - Hormones does not have a direct bearing on the matter
before us.
71 We are aware that Members, pursuant to
Article 2.5 of the TBT Agreement, upon the request of another Member, "shall
explain the justification for that technical regulation in terms of the
provisions of paragraphs 2 to 4 [of Article 2]". It cannot be excluded, however,
that a Member, while acting in good faith, does not provide all the information
required in sufficient detail for the respondent to determine with accuracy what
the "legitimate" objectives pursued are and, if applicable, what considerations
of "inappropriateness" underlie the Member's decision not to use the
international standard as a basis. Lack of such information could frustrate a
complainant's efforts to meet its burden of proof regarding the ineffectiveness
or inappropriateness of an international standard.
72 Appellate Body Report, Brazil - Measures Affecting
Desiccated Coconut ("Brazil - Desiccated Coconut"), WT/DS22/AB/R,
adopted 20 March 1997, DSR 1997:I, pp. 179-180.
73 Appellate Body Report, EC - Hormones , para. 128. In
Canada - Term of Patent
Protection ("Canada -
Patent Term"), WT/DS170/R,
adopted 12 October 2000, as upheld by the Appellate Body Report, WT/DS170/AB/R,
the panel held that the TRIPS Agreement was applicable to patents that were
granted before the date of entry into force of the TRIPS Agreement (1 January
1996 for developed Members) because the subject matter of the patent that was
granted protection is ongoing and continues past 1 January 1996 and to the
extent that the protection of the subject matter continues beyond that date, it
is a situation that has not ceased to exist and the TRIPS Agreement is therefore
applicable.
74 We note that the Codex Alimentarius Commission is explicitly
referred to in Article 3.4 of the SPS Agreement .
75 Webster's New World Dictionary, (William Collins &
World Publishing Co., Inc., 1976), p. 1199.
76 EC's Response to Panel Question 6.
77 Webster's New World Dictionary, supra, p. 702.
78 Webster's New World Dictionary, supra, p. 117.
79 This reading of Article 2.4 of the TBT Agreement is
consistent with the Appellate Body's finding in EC - Hormones that "based
on" does not mean "conform to".
80 A detailed discussion on the meaning of ineffective and
inappropriate is set out in paragraph 7.116.
81 We note in this regard that the Appellate Body stated that
because the "WTO Agreement was accepted definitively by Members � there are no
longer 'existing legislation' exceptions (so called 'grandfather rights')".
EC - Hormones , para. 128.
82 Webster's New World Dictionary, supra, p. 1056.
83 EC's First Submission, para. 115.
84 The European Communities argued that "[t]he adoption of the
Regulation was an 'act' � which took place � before the date of the entry into
force of the treaty and, since there is no expression of contrary intention
Article 2.4 does not apply to it". EC's First Submission, para. 113.
85 With respect to the European Communities' argument that it
complied with the Tokyo Round Standards Code when it adopted the Regulation, we
note that the Tokyo Round Standards Code was terminated pursuant to a decision
taken by the Tokyo Round Committee on Technical Barriers to Trade.
86 The record does not demonstrate that Codex Stan 94 was not
adopted by consensus. In any event, we consider that this issue would have no
bearing on our determination in light of the explanatory note of paragraph 2 of
Annex 1 of the TBT Agreement which states that the TBT Agreement covers
"documents that are not based on consensus".
87 Our examination of paragraph 6.1.1 of Codex Stan 94 is set
out in paragraphs 7.103 to 7.109.
88 We note that the Report of the Tenth
Session of the Codex Committee on Fish and Fishery Products states: "The
attention of the Committee was drawn to the clause that the name of the food
should be 'in accordance with the law and custom of the country in which the
product is sold'. One delegation held the view that such a requirement was not
conducive to harmonization of food legislation. Other delegations stated that
for sardines and sardine type products this provision was indispensable. It was
agreed to request governments to supply information on the names commonly
used in labelling of these types of products in their countries". (emphasis
added)
89 Webster's New World Dictionary, supra, p. 1564.
90 Ibid., p. 117.
To continue with 5. Whether Codex Stan 94 would be an ineffective or inappropriate means for
the fulfilment of the legitimate objectives pursued Return to
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