VII. The Characterization of Codex Stan 94 as a "Relevant International Standard"

217. We proceed to the European Communities' claim that the Panel erred in finding that Codex Stan 94 is a "relevant international standard" within the meaning of Article 2.4 of the TBT Agreement

218. The Panel found that "Codex Stan 94 is a relevant international standard".¹³⁵ The European Communities challenges this finding for two reasons. The European Communities asserts, first, that only standards adopted by international bodies by consensus are "relevant international standards" under Article 2.4 of the TBT Agreement.¹³⁶ The European Communities argues that the Panel assumed "that Codex Stan 94 � was adopted by consensus � without undertaking positive steps to verify the accuracy of the conflicting statements made in this respect by the parties".¹³⁷ Second, the European Communities asserts that, even if Codex Stan 94 were considered an international standard, it is not a "relevant international standard" because its product coverage is different from that of the EC Regulation. The European Communities contends that the EC Regulation covers only preserved sardines, while Codex Stan 94 covers that product as well as "sardine-type" products.¹³⁸ We will address each of these arguments in turn.

A. The European Communities' Argument that Consensus is Required

219. The European Communities argues that only standards that have been adopted by an international body by consensus can be relevant for purposes of Article 2.4. The European Communities contends that the Panel did not verify that Codex Stan 94 was not adopted by consensus, and that, therefore, it cannot be a "relevant international standard".¹³⁹

220. However, in our view, the European Communities' contention is essentially related to whether Codex Stan 94 meets the definition of a "standard" in Annex 1.2 of the TBT Agreement . The term "standard", is defined in Annex 1.2 as follows:

2. Standard

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.

Explanatory note

The terms as defined in ISO/IEC Guide 2 cover products, processes and services. This Agreement deals only with technical regulations, standards and conformity assessment procedures related to products or processes and production methods. Standards as defined by ISO/IEC Guide 2 may be mandatory or voluntary. For the purpose of this Agreement standards are defined as voluntary and technical regulations as mandatory documents. Standards prepared by the international standardization community are based on consensus. This Agreement covers also documents that are not based on consensus. (emphasis added)

221. The European Communities does not contest that the Codex Commission is an international standardization body, and that it is a "recognized body" for purposes of the definition of a "standard" in Annex 1.2.¹⁴⁰ The issue before us, rather, is one of approval. The definition of a "standard" refers to documents approved by a recognized body. Whether approval takes place by consensus, or by other methods, is not addressed in the definition, but it is addressed in the last two sentences of the Explanatory note.

222. The Panel interpreted the last two sentences of the Explanatory note as follows:

We agree with the Panel's interpretation. In our view, the text of the Explanatory note supports the conclusion that consensus is not required for standards adopted by the international standardizing community. The last sentence of the Explanatory note refers to "documents". The term "document" is also used in the singular in the first sentence of the definition of a "standard". We believe that "document(s)" must be interpreted as having the same meaning in both the definition and the Explanatory note. The European Communities agrees.¹⁴² Interpreted in this way, the term "documents" in the last sentence of the Explanatory note must refer to standards in general, and not only to those adopted by entities other than international bodies, as the European Communities claims.

223. Moreover, the text of the last sentence of the Explanatory note, referring to documents not based on consensus, gives no indication whatsoever that it is departing from the subject of the immediately preceding sentence, which deals with standards adopted by international bodies. Indeed, the use of the word "also" in the last sentence suggests that the same subject is being addressed-namely standards prepared by the international standardization community. Hence, the logical assumption is that the last phrase is simply continuing in the same vein, and refers to standards adopted by international bodies, including those not adopted by consensus.

224. The Panel's interpretation, moreover, gives effect to the chapeau of Annex 1 to the TBT Agreement , which provides:

The terms presented in the sixth edition of the ISO/IEC Guide 2:1991, General Terms and Their Definitions Concerning Standardization and Related Activities, shall, when used in this Agreement, have the same meaning as given in the definitions in the said Guide �

For the purpose of this Agreement, however, the following definitions shall apply � (emphasis added)

Thus, according to the chapeau, the terms defined in Annex 1 apply for the purposes of the TBT Agreement only if their definitions depart from those in the ISO/IEC Guide 2:1991 (the "ISO/IEC Guide").¹⁴³ This is underscored by the word "however". The definition of a "standard" in Annex 1 to the TBT Agreement departs from that provided in the ISO/IEC Guide precisely in respect of whether consensus is expressly required.

225. The term "standard" is defined in the ISO/IEC Guide as follows:

Document, established by consensus and approved by a recognized body, that provides, for common and repeated use, rules, guidelines or characteristics for activities or their results, aimed at the achievement of the optimum degree of order in a given context.¹⁴⁴ (original emphasis)

Thus, the definition of a "standard" in the ISO/IEC Guide expressly includes a consensus requirement. Therefore, the logical conclusion, in our view, is that the omission of a consensus requirement in the definition of a "standard" in Annex 1.2 of the TBT Agreement was a deliberate choice on the part of the drafters of the TBT Agreement , and that the last two phrases of the Explanatory note were included to give effect to this choice. Had the negotiators considered consensus to be necessary to satisfy the definition of "standard", we believe they would have said so explicitly in the definition itself, as is the case in the ISO/IEC Guide. Indeed, there would, in our view, have been no point in the negotiators adding the last sentence of the Explanatory note.

226. Furthermore, we observe that the Panel found that, in any event, the European Communities did not prove that Codex Stan 94 was not adopted by consensus. Instead, the Panel found that, "[t]he record does not demonstrate that Codex Stan 94 was not adopted by consensus".¹⁴⁵

227. Therefore, we uphold the Panel's conclusion, in paragraph 7.90 of the Panel Report, that the definition of a "standard" in Annex 1.2 to the TBT Agreement does not require approval by consensus for standards adopted by a "recognized body" of the international standardization community. We emphasize, however, that this conclusion is relevant only for purposes of the TBT Agreement . It is not intended to affect, in any way, the internal requirements that international standard-setting bodies may establish for themselves for the adoption of standards within their respective operations. In other words, the fact that we find that the TBT Agreement does not require approval by consensus for standards adopted by the international standardization community should not be interpreted to mean that we believe an international standardization body should not require consensus for the adoption of its standards. That is not for us to decide.

B. The European Communities' Argument on the Product Coverage of Codex Stan 94

228. We turn now to examine the European Communities' argument that Codex Stan 94 is not a "relevant international standard" because its product coverage is different from that of the EC Regulation.

229. In analyzing the merits of this argument, the Panel first noted that the ordinary meaning of the term "relevant" is "bearing upon or relating to the matter in hand; pertinent".¹⁴⁶ The Panel reasoned that, to be a "relevant international standard", Codex Stan 94 would have to bear upon, relate to, or be pertinent to the EC Regulation.¹⁴⁷ The Panel then conducted the following analysis:

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. 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.¹⁴⁸ (emphasis added; footnote omitted)

230. We do not disagree with the Panel's interpretation of the ordinary meaning of the term "relevant". Nor does the European Communities.¹⁴⁹ Instead, the European Communities argues that, although the EC Regulation deals only with preserved sardines-understood to mean exclusively preserved Sardina pilchardus -Codex Stan 94 also covers other preserved fish that are "sardine-type".¹⁵⁰

231. We are not persuaded by this argument. First, even if we accepted that the EC Regulation relates only to preserved Sardina pilchardus , which we do not, the fact remains that section 6.1.1(i) of Codex Stan 94 also relates to preserved Sardina pilchardus . Therefore, Codex Stan 94 can be said to bear upon, relate to, or be pertinent to the EC Regulation because both refer to preserved Sardina pilchardus.

232. Second, we have already concluded that, although the EC Regulation expressly mentions only Sardina pilchardus , it has legal consequences for other fish species that could be sold as preserved sardines, including preserved Sardinops sagax.¹⁵¹ Codex Stan 94 covers 20 fish species in addition to Sardina pilchardus.¹⁵² These other species also are legally affected by the exclusion in the EC Regulation. Therefore, we conclude that Codex Stan 94 bears upon, relates to, or is pertinent to the EC Regulation.

233. For all these reasons, we uphold the Panel's finding, in paragraph 7.70 of the Panel Report, that Codex Stan 94 is a "relevant international standard" for purposes of Article 2.4 of the TBT Agreement .

VIII. Whether Codex Stan 94 Was Used "As a Basis For" the EC Regulation

234. We turn now to whether Codex Stan 94 has been used "as a basis for" the EC Regulation. It will be recalled that Article 2.4 of the TBT Agreement requires Members to use relevant international standards "as a basis for" their technical regulations under certain circumstances. The Panel found that "the relevant international standard, i.e., Codex Stan 94, was not used as a basis for the EC Regulation".¹⁵³ The European Communities appeals this finding.

235. The starting point of the Panel's analysis was the interpretation of section 6.1.1(ii) of Codex Stan 94, which reads as follows:

The name of the product shall be:

�

(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.

236. Two interpretations of section 6.1.1(ii) of Codex Stan 94 were submitted to the Panel. The European Communities argued 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", found in section 6.1.1(ii) of Codex Stan 94, is intended as a self-standing option for "naming", independent of the formula "X sardines", and that, under this section, "each country has the option of choosing between 'X sardines' and the common name of the species".¹⁵⁴

237. For its part, Peru contended that, under section 6.1.1(ii), the species other than Sardina pilchardus to which Codex Stan 94 refers may be marketed as "X sardines" where "X" is one of the four following alternatives: (1) a country; (2) a geographic area; (3) the species; or (4) the common name of the species.¹⁵⁵ Thus, in Peru's view, "the common name of the species" is not a stand-alone option for naming, but rather is one of the qualifiers for naming sardines that are not Sardina pilchardus . Further, Peru argued that prohibiting the marketing in the European Communities of Sardinops sagax imported from Peru as, for example, "Peruvian sardines" would run counter to the first of the four options in section 6.1.1(ii).

238. The Panel was of the view that a textual reading of section 6.1.1(ii) favoured the interpretation advocated by Peru, adding that:

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.¹⁵⁶

239. We agree with Peru and with the Panel that section 6.1.1(ii) permits the marketing of non-Sardina pilchardus as "sardines" with one of four qualifiers. The French version of section 6.1.1(ii) supports this approach. It provides:

"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.

The French language is one official language of the Codex Commission. The French and English versions are equally authentic. The French version is drafted in a manner that puts all four qualifiers on an equal footing. In the French version, there is no comma after the word "esp�ce". The use of the term " 'X' d�signant" to introduce the enumeration in section 6.1.1(ii) of Codex Stan 94 makes clear that the common name of the species is one of the qualifiers that may be attached to the term "sardines" when marketing preserved sardines.¹⁵⁷

240. With this understanding of this international standard in mind, we turn to the requirement that relevant international standards must be used "as a basis for" technical regulations. We note that the Panel interpreted the word "basis" to mean "the principal constituent of anything, the fundamental principle or theory, as of a system of knowledge".¹⁵⁸ In applying this interpretation of "basis" to the measure in this dispute, the Panel contrasted its interpretation of section 6.1.1(ii) of Codex Stan 94 as setting forth "four alternatives for labelling species other than Sardina pilchardus " that all "require the use of the term 'sardines' with a qualification"¹⁵⁹, with the fact that, under the EC Regulation, "species such as Sardinops sagax cannot be called 'sardines' even when � 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."¹⁶⁰ In the light of this contrast, the Panel concluded that Codex Stan 94 was not used "as a basis for" the EC Regulation.

241. On appeal, the European Communities contends that the Panel erred in finding that Codex Stan 94 was not used "as a basis for" the EC Regulation. The European Communities submits that the EC Regulation is "based on" Codex Stan 94 "because it used as a basis paragraph 6.1.1(i) of the Codex standard", and because this paragraph reserves the term "sardines" exclusively for Sardina pilchardus.¹⁶¹ According to the European Communities, the term " 'as a basis' should involve a consideration of the texts as a whole, examining the basic structure of the domestic measure and deciding whether the international standard has been used in its preparation and adoption."¹⁶² The European Communities adds that, in order to determine whether a relevant international standard, or a part of it, is used "as a basis for" a technical regulation, the criterion to apply is not, as the Panel suggested, whether the standard is the principal constituent or the fundamental principle of the technical regulation, but, rather, whether there is a "rational relationship" between the standard and the technical regulation on the substantive aspects of the standard in question.¹⁶³

242. The question before us, therefore, is the proper meaning to be attributed to the words "as a basis for" in Article 2.4 of the TBT Agreement . In EC - Hormones, we addressed a similar issue, namely, the meaning of "based on" as used in Article 3.1 of the SPS Agreement, which provides:

Harmonization

1. To harmonize sanitary and phytosanitary measures on as wide a basis as possible, Members shall base their sanitary or phytosanitary measures on international standards, guidelines or recommendations, where they exist, except as otherwise provided for in this Agreement, and in particular in paragraph 3. (emphasis added)

In EC - Hormones , we stated that "based on" does not mean the same thing as "conform to".¹⁶⁴ In that appeal, we articulated the ordinary meaning of the term "based on", as used in Article 3.1 of the SPS Agreement in the following terms:

The Panel here referred to this conclusion in its analysis of Article 2.4 of the TBT Agreement . In our view, the Panel did so correctly, because our approach in EC - Hormones is also relevant for the interpretation of Article 2.4 of the TBT Agreement.¹⁶⁶

243. In addition, as we stated earlier, the Panel here used the following definition to establish the ordinary meaning of the term "basis":

Informed by our ruling in EC - Hormones , and relying on this meaning of the term "basis", the Panel concluded that an international standard is used "as a basis for" a technical regulation when it is used as the principal constituent or fundamental principle for the purpose of enacting the technical regulation.¹⁶⁸

244. We agree with the Panel's approach. In relying on the ordinary meaning of the term "basis", the Panel rightly followed an approach similar to ours in determining the ordinary meaning of "based on" in EC - Hormones.¹⁶⁹ In addition to the definition of "basis" in Webster's New World Dictionary that was used by the Panel, we note, as well, the similar definitions for "basis" that are set out in the The New Shorter Oxford English Dictionary, and also provide guidance as to the ordinary meaning of the term:

3 [t]he main constituent. � 5 [a] thing on which anything is constructed and by which its constitution or operation is determined; a determining principle; a set of underlying or agreed principles.¹⁷⁰

245. From these various definitions, we would highlight the similar terms "principal constituent", "fundamental principle", "main constituent", and "determining principle"�all of which lend credence to the conclusion that there must be a very strong and very close relationship between two things in order to be able to say that one is "the basis for" the other.

246. The European Communities, however, seems to suggest the need for something different. The European Communities maintains that a "rational relationship" between an international standard and a technical regulation is sufficient to conclude that the former is used "as a basis for" the latter.¹⁷¹ According to the European Communities, an examination based on the criterion of the existence of a "rational relationship" focuses on "the qualitative aspect of the substantive relationship that should exist between the relevant international standard and the technical regulation".¹⁷² In response to questioning at the oral hearing, the European Communities added that a "rational relationship" exists when the technical regulation is informed in its overall scope by the international standard.

247. Yet, we see nothing in the text of Article 2.4 to support the European Communities' view, nor has the European Communities pointed to any such support. Moreover, the European Communities does not offer any arguments relating to the context or the object and purpose of that provision that would support its argument that the existence of a "rational relationship" is the appropriate criterion for determining whether something has been used "as a basis for" something else.

248. We see no need here to define in general the nature of the relationship that must exist for an international standard to serve "as a basis for" a technical regulation. Here we need only examine this measure to determine if it fulfils this obligation. In our view, it can certainly be said�at a minimum�-that something cannot be considered a "basis" for something else if the two are contradictory. Therefore, under Article 2.4, if the technical regulation and the international standard contradict each other, it cannot properly be concluded that the international standard has been used "as a basis for" the technical regulation.

249. Thus, we need only determine here whether there is a contradiction between Codex Stan 94 and the EC Regulation. If there is, we are justified in concluding our analysis with that determination, as the only appropriate conclusion from such a determination would be that the Codex Stan 94 has not been used "as a basis for" the EC Regulation.

250. In making this determination, we note at the outset that Article 2.4 of the TBT Agreement provides that "Members shall use [relevant international standards], or the relevant parts of them, as a basis for their technical regulations". (emphasis added) In our view, the phrase "relevant parts of them" defines the appropriate focus of an analysis to determine whether a relevant international standard has been used "as a basis for" a technical regulation. In other words, the examination must be limited to those parts of the relevant international standards that relate to the subject-matter of the challenged prescriptions or requirements. In addition, the examination must be broad enough to address all of those relevant parts; the regulating Member is not permitted to select only some of the "relevant parts" of an international standard. If a "part" is "relevant", then it must be one of the elements which is "a basis for" the technical regulation.

251. This dispute concerns the WTO-consistency of the requirement set out in Article 2 of the EC Regulation that only products prepared exclusively from the species Sardina pilchardus may be marketed in the European Communities as preserved sardines. Consequently, the "relevant parts" of Codex Stan 94 are those elements of Codex Stan 94 that bear upon or relate to the marketing of preserved fish products under the name "sardines". The term "relevant parts of them", as used in Article 2.4, implies two things for the case before us. First, the determination whether Codex Stan 94 has been used "as a basis for" the EC Regulation must stem from an analysis that is limited to those "parts" of Codex Stan 94 relating to the use of the term "sardines" for the identification and marketing of preserved fish products. Those parts include not only sections 6.1.1(i) and 6.1.1(ii), but also section 2.1.1 of Codex Stan 94, which sets out the various species that may be given the names contemplated in sections 6.1.1(i) and 6.1.1(ii). Second, this analysis must address all of those relevant provisions of Codex Stan 94, and must not ignore any one of them.

252. In response to our questioning at the oral hearing, the European Communities expressed the view that, in order to determine whether Codex Stan 94 has been used "as a basis for" the EC Regulation, the whole of the standard and the whole of the EC Regulation should be compared. We disagree. We do so because there are several parts of Codex Stan 94 that are not relevant to the use of the term "sardines" for the identification and marketing of preserved fish products. We see no reason why this examination under Article 2.4 of the TBT Agreement should extend beyond Article 2 of the EC Regulation, which is the only provision of the EC Regulation whose WTO-consistency has been challenged by Peru in this dispute. There is simply no purpose served in examining other provisions of the EC Regulation that are irrelevant to this dispute.¹⁷³

253. As we have said, the European Communities contends that Codex Stan 94 was used "as a basis for" the EC Regulation "because it used as a basis paragraph 6.1.1(i) of the Codex standard"¹⁷⁴, which stipulates that only Sardina pilchardus may have the name "sardines", and that our examination as to whether Codex Stan 94 has been used "as a basis for" the EC Regulation must be limited to section 6.1.1(i).¹⁷⁵ This contention stems from the European Communities' proposition that the scope of the EC Regulation and that of Codex Stan 94 are different: the European Communities considers that the EC Regulation lays down prescriptions and technical requirements for Sardina pilchardus only, whereas Codex Stan 94 has a broader scope, as it also addresses other species, namely "sardine-type" products. In the view of the European Communities, section 6.1.1(ii) is not a "relevant part" of Codex Stan 94 for our determination of whether that standard has been used "as a basis for" the EC Regulation, because section 6.1.1(ii) concerns species other than Sardina pilchardus , a subject-matter the EC Regulation does not address.

254. We are not persuaded by this line of reasoning. Article 2 of the EC Regulation governs the use of the term "sardines" for the identification and marketing of preserved fish products. Section 6.1.1(ii) of Codex Stan 94 also relates to this same subject. Therefore, section 6.1.1(ii) is a "relevant part" of Codex Stan 94 for the purpose of determining whether Codex Stan 94 was used "as a basis for" the EC Regulation. As we stated earlier, the analysis must address all of the parts of Codex Stan 94 that relate to the use of the term "sardines" for the identification and the marketing of preserved fish products, and not only to selected parts. Moreover, the European Communities' argument that the EC Regulation does not relate to species other than Sardina pilchardus is simply untenable. It is tantamount to saying that a regulation stipulating 16 years as the age at which one may obtain a driver's licence, does not relate to persons that are under 16 years of age. Consequently, contrary to what the European Communities suggests, the "as a basis for" analysis cannot be restricted to section 6.1.1(i) of Codex Stan 94; it must, in addition, also encompass both section 6.1.1(ii), and section 2.1.1 of Codex Stan 94.

255. In the light of all this, we ask now whether there is a contradiction between the EC Regulation and Codex Stan 94 in the use of the term "sardines" for the identification and marketing of preserved fish products.

256. We accept the European Communities' contention that the EC Regulation contains the prescription set out in section 6.1.1(i) of Codex Stan 94. However, as we have just explained, the analysis must go beyond section 6.1.1(i); it must extend also to sections 6.1.1(ii) and 2.1.1 of Codex Stan 94. And, a comparison between, on the one hand, sections 6.1.1(ii) and 2.1.1 of Codex Stan 94 and, on the other hand, Article 2 of the EC Regulation, leads to the inevitable conclusion that a contradiction exists between these provisions.

257. The effect of Article 2 of the EC Regulation is to prohibit preserved fish products prepared from the 20 species of fish other than Sardina pilchardus to which Codex Stan 94 refers-including Sardinops sagax -from being identified and marketed under the appellation "sardines", even with one of the four qualifiers set out in the standard. Codex Stan 94, by contrast, permits the use of the term "sardines" with any one of four qualifiers for the identification and marketing of preserved fish products prepared from 20 species of fish other than Sardina pilchardus. Thus, the EC Regulation and Codex Stan 94 are manifestly contradictory. To us, the existence of this contradiction confirms that Codex Stan 94 was not used "as a basis for" the EC Regulation.

258. We, therefore, uphold the finding of the Panel, in paragraph 7.112 of the Panel Report, that Codex Stan 94 was not used "as a basis for" the EC Regulation within the meaning of Article 2.4 of the TBT Agreement .

175 European Communities' response to questioning at the oral hearing.

To continue with IX. The Question of the "Ineffectiveness or Inappropriateness" of Codex Stan 94

Return to Contents