262. Second, the Panel addressed the meaning of the phrase "legitimate objectives pursued". The Panel stated that the " 'legitimate objectives' referred to in Article 2.4 must be interpreted in the context of Article 2.2", which provides an illustrative, open list of objectives considered "legitimate".¹⁷⁸ Also, the Panel indicated that Article 2.4 of the TBT Agreement requires an examination and a determination whether the objectives of the measure at issue are "legitimate".¹⁷⁹

263. The Panel took note of the three "objectives" of the EC Regulation identified by the European Communities, namely market transparency, consumer protection, and fair competition.¹⁸⁰ The Panel also noted Peru's acknowledgement that those "objectives" are "legitimate", and the Panel saw "no reason to disagree with the parties' assessment in this respect."¹⁸¹ During questioning at the oral hearing, Peru confirmed that it does see these three objectives pursued by the European Communities as "legitimate" within the meaning of Article 2.4.

264. The Panel then examined whether Codex Stan 94 is "ineffective" or "inappropriate" for the fulfilment of the three objectives pursued by the European Communities through the EC Regulation in the light of the definitions that the Panel articulated for those two terms. The Panel noted that the three objectives were founded on the factual premise that consumers in the European Communities associate "sardines" exclusively with Sardina pilchardus . The Panel was of the view that, if this factual premise is valid, it must be concluded that Codex Stan 94 is "ineffective or inappropriate" to meet the "legitimate objectives" of market transparency, consumer protection, and fair competition. In other words, if European Communities consumers associate the term "sardines" exclusively with Sardina pilchardus , a product identified as "sardines" would have to be made exclusively of Sardina pilchardus so as not to mislead those consumers.¹⁸² However, after reviewing the evidence adduced by the parties, the Panel stated that "it has not been established that consumers in most member States of the European Communities have always associated the common name 'sardines' exclusively with Sardina pilchardus and that the use of 'X sardines' would therefore not enable the European consumer to distinguish preserved Sardina pilchardus from preserved Sardinops sagax ."¹⁸³ The Panel also found that, by establishing a precise labelling requirement "in a manner not to mislead the consumer"¹⁸⁴, "Codex Stan 94 allows Members to provide [a] precise trade description of preserved sardines which promotes market transparency so as to protect consumers and promote fair competition."¹⁸⁵ On this basis, the Panel concluded that Codex Stan 94 is not "ineffective or inappropriate" to fulfil the "legitimate objectives" pursued by the European Communities through the EC Regulation.

265. Although the Panel had assigned the burden of proof under Article 2.4 to the European Communities-so that it was for the European Communities to prove that Codex Stan 94 was "ineffective or inappropriate" to meet the European Communities' "legitimate objectives"-the Panel stated that Peru had, in any event, adduced sufficient evidence and legal arguments to allow the Panel to reach the conclusion that the standard was not "ineffective or inappropriate".¹⁸⁶

266. The European Communities appeals the Panel's assignment of the burden of proof under Article 2.4 of the TBT Agreement . The European Communities disputes the Panel's conclusion that the burden rests with the European Communities to demonstrate that Codex Stan 94 is an "ineffective or inappropriate" means to fulfil the "legitimate objectives" of the EC Regulation. The European Communities maintains that the burden of proof rests rather with Peru, as Peru is the party claiming that the measure at issue is inconsistent with WTO obligations.

267. The European Communities also appeals the finding of the Panel that Codex Stan 94 is not "ineffective or inappropriate" to fulfil the "legitimate objectives" of the EC Regulation. In particular, the European Communities argues that the Panel erred in founding its analysis on the factual premise that consumers in the European Communities associate "sardines" exclusively with Sardina pilchardus.¹⁸⁷ Furthermore, the European Communities contends that the Panel erred in concluding that the term "sardines", either by itself or when combined with the name of a country or geographic area, is a common name for Sardinops sagax in the European Communities. The European Communities also objects to the decision by the Panel to take this conclusion into account in its assessment of whether consumers in the European Communities associate the term "sardines" exclusively with Sardina pilchardus .

268. In considering these claims of the European Communities, we will address, first, the question of the burden of proof, and, next, the substantive content of the second part of Article 2.4 of the TBT Agreement .

A. The Burden of Proof

269. Before the Panel, the European Communities asserted that Codex Stan 94 is "ineffective or inappropriate" to fulfil the "legitimate objectives" of the EC Regulation. The Panel was of the view that the European Communities was thus asserting the affirmative of a particular claim or defence, and, therefore, that the burden of proof rests with the European Communities to demonstrate that claim.¹⁸⁸ The Panel justified its position as follows: first, it reasoned that the complainant is not in a position to "spell out" the "legitimate objectives" pursued by a Member through a technical regulation; and, second, it reasoned "that the assessment of whether a relevant international standard is 'inappropriate' � may extend to considerations which are proper to the Member adopting or applying a technical regulation."¹⁸⁹

270. We recall that, in United States - Measure Affecting Imports of Woven Wool Shirts and Blouses from India, we said the following about the burden of proof:

� 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.

In the context of the GATT 1994 and the WTO Agreement, precisely how much and precisely what kind of evidence will be required to establish such a presumption will necessarily vary from measure to measure, provision to provision, and case to case.¹⁹⁰ (footnote omitted)

271. In EC - Hormones, we stated that characterizing a treaty provision as an "exception" does not, by itself, place the burden of proof on the respondent Member.¹⁹¹ That case concerned, among other issues, the allocation of the burden of proof under Articles 3.1 and 3.3 of the SPS Agreement. Those Articles read as follows:

Article 3

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.

�

3. Members may introduce or maintain sanitary or phytosanitary measures which result in a higher level of sanitary or phytosanitary protection than would be achieved by measures based on the relevant international standards, guidelines or recommendations, if there is a scientific justification, or as a consequence of the level of sanitary or phytosanitary protection a Member determines to be appropriate in accordance with the relevant provisions of paragraphs 1 through 8 of Article 5. Notwithstanding the above, all measures which result in a level of sanitary or phytosanitary protection different from that which would be achieved by measures based on international standards, guidelines or recommendations shall not be inconsistent with any other provision of this Agreement. (footnote omitted)

272. In EC - Hormones, the panel assigned the burden of showing that the measure there was justified under Article 3.3 to the respondent, reasoning that Article 3.3 provides an exception to the general obligation contained in Article 3.1. The panel there was of the view that it was the defending party that was asserting the affirmative of that particular defence. We reversed the panel's finding.¹⁹² In particular, we stated:

The general rule in a dispute settlement proceeding requiring a complaining party to establish a prima facie case of inconsistency with a provision of the SPS Agreement before the burden of showing consistency with that provision is taken on by the defending party, is not avoided by simply describing that same provision as an "exception". In much the same way, merely characterizing a treaty provision as an "exception" does not by itself justify a "stricter" or "narrower" interpretation of that provision than would be warranted by examination of the ordinary meaning of the actual treaty words, viewed in context and in the light of the treaty's object and purpose, or, in other words, by applying the normal rules of treaty interpretation.¹⁹³ (original emphasis)

273. The Panel in this case acknowledged our finding in EC - Hormones, but concluded that it "does not have a direct bearing" on the question of the allocation of the burden of proof under the second part of Article 2.4 of the TBT Agreement.¹⁹⁴ The relevant statement in the Panel Report�found in a footnote�reads as follows:

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.¹⁹⁵ (emphasis added)

274. We disagree with the Panel's conclusion that our ruling on the issue of the burden of proof has no "direct bearing" on this case. The Panel provides no explanation for this conclusion and, indeed, could not have provided any plausible explanation. For there are strong conceptual similarities between, on the one hand, Article 2.4 of the TBT Agreement and, on the other hand, Articles 3.1 and 3.3 of the SPS Agreement, and our reasoning in EC - Hormones is equally apposite for this case. The heart of Article 3.1 of the SPS Agreement is a requirement that Members base their sanitary or phytosanitary measures on international standards, guidelines, or recommendations. Likewise, the heart of Article 2.4 of the TBT Agreement is a requirement that Members use international standards as a basis for their technical regulations. Neither of these requirements in these two agreements is absolute. Articles 3.1 and 3.3 of the SPS Agreement permit a Member to depart from an international standard if the Member seeks a level of protection higher than would be achieved by the international standard, the level of protection pursued is based on a proper risk assessment, and the international standard is not sufficient to achieve the level of protection pursued. Thus, under the SPS Agreement, departing from an international standard is permitted in circumstances where the international standard is ineffective to achieve the objective of the measure at issue. Likewise, under Article 2.4 of the TBT Agreement , a Member may depart from a relevant international standard when it would be an "ineffective or inappropriate means for the fulfilment of the legitimate objectives pursued" by that Member through the technical regulation.

275. Given the conceptual similarities between, on the one hand, Articles 3.1 and 3.3 of the SPS Agreement and, on the other hand, Article 2.4 of the TBT Agreement, we see no reason why the Panel should not have relied on the principle we articulated in EC - Hormones to determine the allocation of the burden of proof under Article 2.4 of the TBT Agreement . In EC - Hormones, we found that a "general rule-exception" relationship between Articles 3.1 and 3.3 of the SPS Agreement does not exist, with the consequence that the complainant had to establish a case of inconsistency with both Articles 3.1 and 3.3.¹⁹⁶ We reached this conclusion as a consequence of our finding there that "Article 3.1 of the SPS Agreement simply excludes from its scope of application the kinds of situations covered by Article 3.3 of that Agreement".¹⁹⁷ Similarly, the circumstances envisaged in the second part of Article 2.4 are excluded from the scope of application of the first part of Article 2.4. Accordingly, as with Articles 3.1 and 3.3 of the SPS Agreement, there is no "general rule-exception" relationship between the first and the second parts of Article 2.4. Hence, in this case, it is for Peru �as the complaining Member seeking a ruling on the inconsistency with Article 2.4 of the TBT Agreement of the measure applied by the European Communities-to bear the burden of proving its claim. This burden includes establishing that Codex Stan 94 has not been used "as a basis for" the EC Regulation, as well as establishing that Codex Stan 94 is effective and appropriate to fulfil the "legitimate objectives" pursued by the European Communities through the EC Regulation.

276. The TBT Agreement acknowledges the right of every WTO Member to establish for itself the objectives of its technical regulations while affording every other Member adequate opportunities to obtain information about these objectives. That said, part of the reason why the Panel concluded that the burden of proof under Article 2.4 is on the respondent is because, in the Panel's view, the complainant cannot "spell out" the "legitimate objectives" of the technical regulation. In addition, the Panel reasoned that the assessment of the appropriateness of a relevant international standard involves considerations which are properly the province of the Member adopting or applying a technical regulation.¹⁹⁸

277. In our opinion, these two concerns are not justified. The TBT Agreement affords a complainant adequate opportunities to obtain information about the objectives of technical regulations or the specific considerations that may be relevant to the assessment of their appropriateness. A complainant may obtain relevant information about a technical regulation from a respondent under Article 2.5 of the TBT Agreement , which establishes a compulsory mechanism requiring the supplying of information by the regulating Member. This Article provides in relevant part:¹⁹⁹

A Member preparing, adopting or applying a technical regulation which may have a significant effect on trade of other Members shall, upon the request of another Member, explain the justification for that technical regulation in terms of the provisions of paragraphs 2 to 4.

278. Peru expresses doubts about the usefulness and efficacy of this obligation in the TBT Agreement . Peru argues that a Member may not respond fully or adequately to a request for information under Article 2.5, and that, therefore, it is inappropriate to rely on this obligation to support assigning the burden of proof under Article 2.4 to the complainant.²⁰⁰ We are not persuaded by this argument. We must assume that Members of the WTO will abide by their treaty obligations in good faith, as required by the principle of pacta sunt servanda articulated in Article 26 of the Vienna Convention.²⁰¹ And, always in dispute settlement, every Member of the WTO must assume the good faith of every other Member.

279. Another source of information for the complainant is the "enquiry point" that must be established by the respondent under the TBT Agreement . Article 10.1 of the TBT Agreement , in relevant part, provides as follows:²⁰²

10.1 Each Member shall ensure that an enquiry point exists which is able to answer all reasonable enquiries from other Members and interested parties in other Members as well as to provide the relevant documents regarding:

10.1.1 any technical regulations adopted or proposed within its territory by central or local government bodies, by non-governmental bodies which have legal power to enforce a technical regulation, or by regional standardizing bodies of which such bodies are members or participants;

280. Indeed, the dispute settlement process itself also provides opportunities for the complainant to obtain the necessary information to build a case. Information can be exchanged during the consultation phase, and additional information may well become available during the panel phase itself. On previous occasions, we have stated that the arguments of a party "are set out and progressively clarified in the first written submissions, the rebuttal submissions and the first and second panel meetings with the parties"²⁰³, and that "[t]here is no requirement in the DSU or in GATT practice for arguments on all claims relating to the matter referred to the DSB to be set out in a complaining party's first written submission to the panel."²⁰⁴ Thus, it would not be necessary for the complainant to have all the necessary information about the technical regulation before commencing an action under the DSU. A complainant could collect information before and during the early stages of the panel proceedings and, on the basis of that information, develop arguments relating to the objectives or to the appropriateness that may be put forward during subsequent phases of the proceedings.

281. The degree of difficulty in substantiating a claim or a defence may vary according to the facts of the case and the provision at issue. For example, on the one hand, it may be relatively straightforward for a complainant to show that a particular measure has a text that establishes an explicit and formal discrimination between like products and is, therefore, inconsistent with the national treatment obligation in Article III of the GATT 1994. On the other hand, it may be more difficult for a complainant to substantiate a claim of a violation of Article III of the GATT 1994 if the discrimination does not flow from the letter of the legal text of the measure, but rather is a result of the administrative practice of the domestic authorities of the respondent in applying that measure. But, in both of those situations, the complainant must prove its claim. There is nothing in the WTO dispute settlement system to support the notion that the allocation of the burden of proof should be decided on the basis of a comparison between the respective difficulties that may possibly be encountered by the complainant and the respondent in collecting information to prove a case.

282. We, therefore, reverse the finding of the Panel, in paragraph 7.52 of the Panel Report, that, under the second part of Article 2.4 of the TBT Agreement , the burden rests with the European Communities to demonstrate that Codex Stan 94 is an "ineffective or inappropriate" means to fulfil the "legitimate objectives" pursued by the European Communities through the EC Regulation. Accordingly, we find that Peru bears the burden of demonstrating that Codex Stan 94 is an effective and appropriate means to fulfil the "legitimate objectives" pursued by the European Communities through the EC Regulation.

283. We turn now to consider whether Peru effectively discharged its burden of proof under the second part of Article 2.4 of the TBT Agreement .

B. Whether Codex Stan 94 is an Effective and Appropriate Means to Fulfil the "Legitimate Objectives" Pursued by the European Communities Through the EC Regulation

284. We recall that the second part of Article 2.4 of the TBT Agreement reads as follows:

� except when such international standards or relevant parts would be an ineffective or inappropriate means for the fulfilment of the legitimate objectives pursued �

Before ruling on whether Peru met its burden of proof in this case, we must address, successively, the interpretation and the application of the second part of Article 2.4.

1. The Interpretation of the Second Part of Article 2.4

285. The interpretation of the second part of Article 2.4 raises two questions: first, the meaning of the term "ineffective or inappropriate means"; and, second, the meaning of the term "legitimate objectives". As to the first question, we noted earlier the Panel's view that the term "ineffective or inappropriate means" refers to two questions-the question of the effectiveness of the measure and the question of the appropriateness of the measure�and that these two questions, although closely related, are different in nature.²⁰⁵ The Panel pointed out that the term "ineffective" "refers to something which is not 'having the function of accomplishing', 'having a result', or 'brought to bear', whereas [the term] 'inappropriate' refers to something which is not 'specially suitable', 'proper', or 'fitting' ".²⁰⁶ The Panel also stated that:

Thus, in the context of Article 2.4, an ineffective means is a means which does not have the function of accomplishing the legitimate objective pursued, whereas an inappropriate means is a means which is not specially suitable for the fulfilment of the legitimate objective pursued. � The question of effectiveness bears upon the results of the means employed, whereas the question of appropriateness relates more to the nature of the means employed.²⁰⁷ (original emphasis)

We agree with the Panel's interpretation.

286. As to the second question, we are of the view that the Panel was also correct in concluding that "the 'legitimate objectives' referred to in Article 2.4 must be interpreted in the context of Article 2.2", which refers also to "legitimate objectives", and includes a description of what the nature of some such objectives can be.²⁰⁸ Two implications flow from the Panel's interpretation. First, the term "legitimate objectives" in Article 2.4, as the Panel concluded, must cover the objectives explicitly mentioned in Article 2.2, namely: "national security requirements; the prevention of deceptive practices; protection of human health or safety, animal or plant life or health, or the environment." Second, given the use of the term "inter alia" in Article 2.2, the objectives covered by the term "legitimate objectives" in Article 2.4 extend beyond the list of the objectives specifically mentioned in Article 2.2. Furthermore, we share the view of the Panel that the second part of Article 2.4 implies that there must be an examination and a determination on the legitimacy of the objectives of the measure.²⁰⁹

2. The Application of the Second Part of Article 2.4

287. With respect to the application of the second part of Article 2.4, we begin by recalling that Peru has the burden of establishing that Codex Stan 94 is an effective and appropriate means for the fulfilment of the "legitimate objectives" pursued by the European Communities through the EC Regulation. Those "legitimate objectives" are market transparency, consumer protection, and fair competition. To satisfy this burden of proof, Peru must, at least, have established a prima facie case of this claim. If Peru has succeeded in doing so, then a presumption will have been raised which the European Communities must have rebutted in order to succeed in its defence. If Peru has established a prima facie case, and if the European Communities has failed to rebut Peru's case effectively, then Peru will have discharged its burden of proof under Article 2.4. In such an event, Codex Stan 94 must, consistent with the European Communities' obligation under the TBT Agreement, be used "as a basis for" any European Communities regulation on the marketing of preserved sardines, because Codex Stan 94 will have been shown to be both effective and appropriate to fulfil the "legitimate objectives" pursued by the European Communities. Further, in such an event, as we have already determined that Codex Stan 94 was not used "as a basis for" the EC Regulation, we would then have to find as a consequence that the European Communities has acted inconsistently with Article 2.4 of the TBT Agreement .

288. This being so, our task is to assess whether Peru discharged its burden of showing that Codex Stan 94 is appropriate and effective to fulfil these same three "legitimate objectives". In the light of our reasoning thus far, Codex Stan 94 would be effective if it had the capacity to accomplish all three of these objectives, and it would be appropriate if it were suitable for the fulfilment of all three of these objectives.

289. We share the Panel's view that the terms "ineffective" and "inappropriate" have different meanings, and that it is conceptually possible that a measure could be effective but inappropriate, or appropriate but ineffective.²¹⁰ This is why Peru has the burden of showing that Codex Stan 94 is both effective and appropriate. We note, however, that, in this case, a consideration of the appropriateness of Codex Stan 94 and a consideration of the effectiveness of Codex Stan 94 are interrelated�as a consequence of the nature of the objectives of the EC Regulation. The capacity of a measure to accomplish the stated objectives�its effectiveness�and the suitability of a measure for the fulfilment of the stated objectives�its appropriateness�are both decisively influenced by the perceptions and expectations of consumers in the European Communities relating to preserved sardine products.²¹¹

290. We note that the Panel concluded that "Peru has adduced sufficient evidence and legal arguments to demonstrate that Codex Stan 94 is not ineffective or inappropriate to fulfil the legitimate objectives pursued by the EC Regulation."²¹² We have examined the analysis which led the Panel to this conclusion. We note, in particular, that the Panel made the factual finding that "it has not been established that consumers in most member States of the European Communities have always associated the common name 'sardines' exclusively with Sardina pilchardus".²¹³ We also note that the Panel gave consideration to the contentions of Peru that, under Codex Stan 94, fish from the species Sardinops sagax bear a denomination that is distinct from that of Sardina pilchardus²¹⁴, and that "the very purpose of the labelling regulations set out in Codex Stan 94 for sardines of species other than Sardina pilchardus is to ensure market transparency".²¹⁵ We agree with the analysis made by the Panel. Accordingly, we see no reason to interfere with the Panel's finding that Peru has adduced sufficient evidence and legal arguments to demonstrate that Codex Stan 94 meets the legal requirements of effectiveness and appropriateness set out in Article 2.4 of the TBT Agreement.

291. We, therefore, uphold the finding of the Panel, in paragraph 7.138 of the Panel Report, that Peru has adduced sufficient evidence and legal arguments to demonstrate that Codex Stan 94 is not "ineffective or inappropriate" to fulfil the "legitimate objectives" of the EC Regulation. Our finding on this issue is, however, subject to our examination of whether the Panel acted consistently with Article 11 of the DSU. We turn to that issue now.

215 Ibid., para. 4.86.

To continue with X. The Objectivity of the Assessment of Certain Facts by the Panel

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