X. The Objectivity of the Assessment of Certain Facts by the Panel

292. We next consider whether the Panel properly discharged its duty under Article 11 of the DSU to make an "objective assessment" of certain "facts of the case" before it. We recall that Article 11 reads as follows:

Function of Panels

The function of panels is to assist the DSB in discharging its responsibilities under this Understanding and the covered agreements. Accordingly, a panel should make an objective assessment of the matter before it, including an objective assessment of the facts of the case and the applicability of and conformity with the relevant covered agreements, and make such other findings as will assist the DSB in making the recommendations or in giving the rulings provided for in the covered agreements. Panels should consult regularly with the parties to the dispute and give them adequate opportunity to develop a mutually satisfactory solution. (emphasis added)

293. The European Communities contends that, in four specific instances, the Panel failed to discharge its duty under Article 11 of the DSU to make an objective assessment of the facts of the case. First, the European Communities submits that the Panel's treatment of the dictionary definitions of the term "sardines" amounts to a contravention of Article 11 of the DSU.²¹⁶ Second, the European Communities sees a violation of Article 11 of the DSU in the way the Panel handled a letter from the United Kingdom Consumers' Association and in the Panel's rejection of letters from other European consumers' associations submitted by the European Communities at the interim review stage.²¹⁷ Third, the European Communities submits that the Panel disregarded evidence in the form of tins, supermarket receipts, and labels relating to various preserved fish and thus violated Article 11 of the DSU.²¹⁸ Fourth, the European Communities finds a violation of Article 11 of the DSU in the decision of the Panel not to ask the Codex Commission "about the meaning, status and even validity of � Codex Stan 94".²¹⁹

294. All four points were raised by the European Communities in the interim review and addressed by the Panel at that stage of the Panel proceedings. On the use of the dictionary definitions of the term "sardines", the Panel stated:

[W]e are of the view that the use of the dictionaries referred to by both parties is an appropriate means to examine whether the term "sardines", either by itself or combined with the name of a country or geographic area, is a common name that refers to species other than Sardina pilchardus, especially in light of the fact that the Multilingual Illustrated Dictionary of Aquatic Animals and Plants was published in cooperation with the European Commission and member States of the European Communities for the purposes of, inter alia, improving market transparency. We note that the electronic publication, Fish Base, was also produced with the support of the European Commission. In making our finding, not only did we consider carefully dictionaries referred to by both parties but also considered other evidence such as the regulations of several member States of the European Communities, statements made by the Consumers' Association and the trade description used by Canadian exporters of Clupea harengus harengus to the Netherlands and the United Kingdom. In our weighing and balancing of the totality of evidence before us, including the examination of the Oxford Dictionary referred to by Peru and Canada as well as the Grand Dictionnaire Encyclop�dique Larousse and Diccionario de la lengua espanola referred to by the European Communities, we were persuaded, on balance, that the term "sardines", either by itself or combined with the name of a country or geographic area, is a common name in the European Communities and that the consumers in the European Communities do not associate the term "sardines" exclusively with Sardina pilchardus.²²⁰ (original emphasis; footnotes omitted)

295. On the letter from the United Kingdom Consumers' Association, the Panel replied:

296. With respect to the letters from other European consumers' associations submitted by the European Communities at the interim review stage, the Panel made the following statement:

The European Communities submitted additional evidence, i.e., letters it had received lately from other European consumers' associations on the same issue. In a letter dated 11 April 2002, Peru requested that the new evidence submitted by the European Communities not be considered. In this regard, Peru referred to Article 12 of the Panel's Working Procedures which did not provide for the submission of new evidence at this stage of the Panel proceedings. Article 12 of the Panel's Working Procedures reads as follows: "Parties shall submit all factual evidence to the Panel no later than during the first substantive meeting, except with respect to evidence necessary for purposes of rebuttal submissions, answers to questions or comments on answers provided by others. Exceptions to this procedure will be granted upon a showing of good cause. In such cases, the other party shall be accorded a period of time for comment, as appropriate". We are obliged to point out that Peru submitted the letter from Consumers' Association as a part of its rebuttal submission. In light of this, it is our view that the European Communities should have submitted the evidence at the second substantive meeting or at least not later than at the time it submitted answers to the questions posed by the Panel. Further, the European Communities did not request an extension of time-period to rebut the letter from Consumers' Association. Nor did the European Communities demonstrate the requisite "good cause" which must be shown by the party submitting the new evidence. We do not consider that the interim review stage is the appropriate time to introduce new evidence. Therefore, we decline to consider the new evidence submitted by the European Communities.²²²

297. Regarding the third point-the evidence regarding tins, supermarket receipts, and labels-the Panel stated:

[T]he European Communities claimed that in paragraph 7.132 we "completely ignor[ed] the evidence submitted by the European Communities on the range and diversity of preserved fish products that the European consumers could find in any European supermarket and that responds to their expectations that each fish be called by and marketed under its own name". Again, we did not ignore any evidence and we took note of the fact that there is diverse range of fish products that are available in European supermarkets. However, we were not persuaded that the existence of diverse preserved fish products in the European market suggested that the European consumers associate the term "sardines" exclusively with Sardina pilchardus . We therefore reject the European Communities' argument that we "completely ignored" the evidence it submitted.²²³

298. Finally, the Panel commented on its decision not to seek information from the Codex Commission:

299. The first three points raised by the European Communities relate to the task�which we have discussed earlier�of evaluating evidence adduced in connection with the Panel's inquiry into whether consumers in the European Communities associate the term "sardines" exclusively with Sardina pilchardus . As we have stated in several previous appeals, panels enjoy a discretion as the trier of facts²²⁵; they enjoy "a margin of discretion in assessing the value of the evidence, and the weight to be ascribed to that evidence."²²⁶ We have also said that we will not "interfere lightly" with the Panel's appreciation of the evidence: we will not intervene solely because we might have reached a different factual finding from the one the panel reached; we will intervene only if we are "satisfied that the panel has exceeded the bounds of its discretion, as the trier of facts, in its appreciation of the evidence".²²⁷

300. In particular, we stated, in EC - Hormones , that:

Determination of the credibility and weight properly to be ascribed to (that is, the appreciation of) a given piece of evidence is part and parcel of the fact finding process and is, in principle, left to the discretion of a panel as the trier of facts.²²⁸

Furthermore, in Australia - Measures Affecting Importation of Salmon, we indicated that:

Panels � are not required to accord to factual evidence of the parties the same meaning and weight as do the parties.²²⁹

Moreover, in Korea - Definitive Safeguard Measure on Imports of Certain Dairy Products, we ruled that:

� under Article 11 of the DSU, a panel is charged with the mandate to determine the facts of the case and to arrive at factual findings. In carrying out this mandate, a panel has the duty to examine and consider all the evidence before it, not just the evidence submitted by one or the other party, and to evaluate the relevance and probative force of each piece thereof. � The determination of the significance and weight properly pertaining to the evidence presented by one party is a function of a panel's appreciation of the probative value of all the evidence submitted by both parties considered together.²³⁰

In the light of the comments made by the Panel at the interim review stage, we have no reason to believe, nor has the European Communities been able to persuade us, that the Panel did not examine and consider all the evidence properly put before it, or that the Panel did not evaluate the relevance and probative value of each piece of evidence. In particular, the Panel manifestly did not ignore the evidence in the form of tins, supermarket receipts, and labels relating to various preserved fish submitted by the European Communities, for it addressed that evidence specifically in paragraph 6.18 of the Panel Report. In addition, the Panel specifically stated that its 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 "²³¹ was the result of an "overall weighing and balancing process"²³² bearing upon a plurality of pieces of evidence. On the other points raised by the European Communities, we reiterate: the Panel enjoyed a margin of discretion, as the trier of facts, to assess the value of each piece of evidence and the weight to be ascribed to them. In our view, the Panel did not exceed the bounds of this discretion by giving some weight to dictionary definitions, and to an extract of a letter from a United Kingdom Consumers' Association.²³³

301. We also reject the European Communities' contention relating to the letters it submitted at the interim review stage. The interim review stage is not an appropriate time to introduce new evidence. We recall that Article 15 of the DSU governs the interim review. Article 15 permits parties, during that stage of the proceedings, to submit comments on the draft report issued by the panel²³⁴, and to make requests "for the panel to review precise aspects of the interim report".²³⁵ At that time, the panel process is all but completed; it is only�-in the words of Article 15�-"precise aspects" of the report that must be verified during the interim review. And this, in our view, cannot properly include an assessment of new and unanswered evidence. Therefore, we are of the view that the Panel acted properly in refusing to take into account the new evidence during the interim review, and did not thereby act inconsistently with Article 11 of the DSU.

302. We also reject the European Communities' claim regarding the fourth instance of supposed impropriety, which relates to the decision of the Panel not to seek information from the Codex Commission. Article 13.2 of the DSU provides that "[p]anels may seek information from any relevant source and may consult experts to obtain their opinion on certain aspects of the matter." This provision is clearly phrased in a manner that attributes discretion to panels, and we have interpreted it in this vein. Our statements in EC � Hormones , Argentina � Measures Affecting Imports of Footwear, Textiles, Apparel and Other Items ("Argentina - Textiles and Apparel ")²³⁶, and US � Shrimp, all support the conclusion that, under Article 13.2 of the DSU, panels enjoy discretion as to whether or not to seek information from external sources.²³⁷ In this case, the Panel evidently concluded that it did not need to request information from the Codex Commission, and conducted itself accordingly. We believe that, in doing so, the Panel acted within the limits of Article 13.2 of the DSU. A contravention of the duty under Article 11 of the DSU to make an objective assessment of the facts of the case cannot result from the due exercise of the discretion permitted by another provision of the DSU, in this instance Article 13.2 of the DSU.

303. In the light of this, we reject the claim of the European Communities that the Panel did not conduct "an objective assessment of the facts of the case", as required by Article 11 of the DSU.

XI. The References in the Panel Report to Trade-Restrictiveness

304. We now turn to the issue whether the Panel made a determination that the EC Regulation is trade-restrictive, and, if so, whether the Panel erred in making such a determination, as contended by the European Communities.

305. The Panel stated:

The European Communities acknowledged that it is the Regulation which in certain member States "created" the consumer expectations which it now considers require the maintenance of that same Regulation. Thus, through regulatory intervention, the European Communities consciously would have "created" consumer expectations which now are claimed to affect the competitive conditions of imports. If we were to accept that a WTO Member can "create" consumer expectations and thereafter find justification for the trade-restrictive measure which created those consumer expectations, we would be endorsing the permissibility of "self-justifying" regulatory trade barriers. Indeed, the danger is that Members, by shaping consumer expectations through regulatory intervention in the market, would be able to justify thereafter the legitimacy of that very same regulatory intervention on the basis of the governmentally created consumer expectations. Mindful of this concern, we will proceed to examine whether the evidence and legal arguments before us demonstrate 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 "sardines" in conjunction with "Pacific", "Peruvian" or "Sardinops sagax" would therefore not enable European consumers to distinguish between products made from Sardinops sagax and Sardina pilchardus.²³⁸ (emphasis added)

At the interim review in the Panel proceedings, the European Communities asked the Panel to delete the term "trade-restrictive" in the sixth line of paragraph 7.127 of the Panel Report.²³⁹

306. The Panel dismissed this request in the following terms:

307. On appeal, the European Communities contends that-in paragraphs 7.127 and 6.11, as well as in footnote 35, of the Panel Report-the Panel characterized the EC Regulation as trade-restrictive. The European Communities considers "the findings of the Panel (if such they are) in paragraphs [7.127] and 6.11 of the Panel Report to the effect that the Regulation is 'trade restrictive' or 'more trade restrictive than the relevant international standard' should be reversed or considered moot and without legal effect."²⁴¹

308. In our view, the argument of the European Communities is flawed regarding paragraph 7.127. We do not agree that the Panel characterized the EC Regulation as trade-restrictive in paragraph 7.127 of the Panel Report. In that paragraph, the Panel stated:

If we were to accept that a WTO Member can "create" consumer expectations and thereafter find justification for the trade-restrictive measure which created those consumer expectations, we would be endorsing the permissibility of "self-justifying" regulatory trade barriers. (emphasis added)

This statement by the Panel is made in abstracto; the Panel is not making a definitive finding here about the EC Regulation. Moreover, this statement is relevant only for the purposes of Article 2.4 of the TBT Agreement , as it was part of the Panel's examination whether consumers in the European Communities associate the term "sardines" exclusively with Sardina pilchardus. We are, therefore, of the view that, in paragraph 7.127 of the Panel Report, the Panel did not make a determination that the EC Regulation itself is trade-restrictive per se as that term is used in Article 2.2 of the TBT Agreement . Accordingly, we reject the claim of the European Communities insofar as it relates to paragraph 7.127 of the Panel Report.

309. The Panel's statements in paragraph 6.11 and in footnote 35 of the Panel Report, however, are of a different nature. The relevant excerpt is as follows:

In this paragraph, the Panel stated that the "the EC Regulation was more trade-restrictive than the relevant international standard, i.e., Codex Stan 94." Also, in footnote 35, the Panel stated that the EC Regulation "created an 'unnecessary obstacle to trade', which, in [its] view, can be construed to mean more trade-restrictive than necessary." These two statements do contain determinations of the trade-restrictive nature of the EC Regulation.

310. The only provision of the WTO Treaty on which the Panel made a ruling was Article 2.4 of the TBT Agreement . We agree with the European Communities that the question whether the EC Regulation is trade-restrictive is not relevant for the purposes of making a finding under Article 2.4. The Panel exercised judicial economy with respect to other claims where the trade-restrictive character of the EC Regulation might have been relevant.²⁴² As a consequence, the Panel should have refrained from making the statements quoted from paragraph 6.11 and footnote 35 of the Panel Report.²⁴³

311. The question whether the EC Regulation is trade-restrictive in nature could have been relevant to a legal analysis under Article 2.2 of the TBT Agreement . For this reason, the Panel's statements in paragraph 6.11 and in footnote 35 of the Panel Report on the trade-restrictive character of the EC Regulation, to the extent that they could relate to the legal analysis under Article 2.2 of the TBT Agreement, constitute legal interpretations within the meaning of Article 17.6 of the DSU. Because the Panel had determined not to make legal findings under Article 2.2, we declare the two statements in paragraph 6.11 and in footnote 35 of the Panel Report on the trade-restrictive character of the EC Regulation moot and without legal effect.

XII. Completing the Legal Analysis

312. Peru submits that, if we conclude that the EC Regulation is consistent with Article 2.4, it would be appropriate for us to complete the Panel's analysis and resolve the dispute by making findings on those provisions of Article 2 of the TBT Agreement on which the Panel did not make any findings, namely Articles 2.2 and 2.1 of the TBT Agreement.²⁴⁴ Although Peru made a claim before the Panel under Article III:4 of the GATT 1994, Peru does not ask us to complete the analysis by addressing that provision. The European Communities objects to the completion of the analysis, expressing the view that there are not sufficient undisputed facts in the record to do so.²⁴⁵

313. Because we have found that the EC Regulation is not consistent with Article 2.4 of the TBT Agreement, the conditions to Peru's request have not been met, and, therefore, we do not think it is necessary for us to make a finding under Articles 2.2 and 2.1 of the TBT Agreement in order to resolve this dispute. Equally, we do not think it is necessary to make a finding under Article III:4 of the GATT 1994 in order to resolve this dispute. Therefore, we decline to make findings on Articles 2.2 and 2.1 of the TBT Agreement , or on Article III:4 of the GATT 1994.

314. We indicated earlier in this Report that we would return to the question whether Morocco's amicus curiae brief assists us in this appeal when considering the issue of completing the legal analysis under Article 2.1 of the TBT Agreement and the GATT 1994.²⁴⁶ In the light of our decision not to complete the analysis by making findings on these provisions, we find that the legal arguments submitted by Morocco in its amicus curiae brief on Article 2.1 of the TBT Agreement and on the GATT 1994 do not assist us in this appeal.

XIII. Findings and Conclusions

315. For the reasons set out in this Report, the Appellate Body:

(a) finds that the condition attached to the withdrawal of the Notice of Appeal of 25 June 2002 is permissible, and that the appeal of the European Communities, commenced by the Notice of Appeal of 28 June 2002, is admissible;

(b) finds that the amicus curiae briefs submitted in this appeal are admissible but their contents do not assist us in deciding this appeal;

(c) upholds the Panel's finding, in paragraph 7.35 of the Panel Report, that the EC Regulation is a "technical regulation" under the TBT Agreement ;

(d) upholds the Panel's findings, in paragraph 7.60 of the Panel Report, that Article 2.4 of the TBT Agreement applies to measures that were adopted before 1 January 1995 but which have not "ceased to exist", and, in paragraph 7.83 of the Panel Report, that Article 2.4 of the TBT Agreement applies to existing technical regulations, including the EC Regulation;

(e) upholds the Panel's finding, in paragraph 7.70 of the Panel Report, that Codex Stan 94 is a "relevant international standard" under Article 2.4 of the TBT Agreement ;

(f) upholds the Panel's finding, 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 ;

(g) reverses the Panel's finding, in paragraph 7.52 of the Panel Report, that, under the second part of Article 2.4 of the TBT Agreement , the burden of proof rests with the European Communities to demonstrate that Codex Stan 94 is an "ineffective or inappropriate means for the fulfilment of the legitimate objectives pursued" by the European Communities through the EC Regulation, and finds, instead, that the burden of proof rests with Peru to demonstrate that Codex Stan 94 is an effective and appropriate means to fulfil those "legitimate objectives", and, upholds the Panel's finding, 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;

(h) rejects the claim of the European Communities that the Panel did not conduct "an objective assessment of the facts of the case", as required by Article 11 of the DSU;

(i) rejects the claim of the European Communities that the Panel made a determination, in paragraph 7.127 of the Panel Report, that the EC Regulation is trade-restrictive, and, declares moot and without legal effect the two statements, in paragraph 6.11 and in footnote 35 of the Panel Report, on the trade-restrictive character of the EC Regulation; and

(j) finds it unnecessary to complete the analysis under Article 2.2 of the TBT Agreement, Article 2.1 of the TBT Agreement , or Article III:4 of the GATT 1994.

Therefore, the Appellate Body upholds the Panel's finding, in paragraph 8.1 of the Panel Report, that the EC Regulation is inconsistent with Article 2.4 of the TBT Agreement .

316. The Appellate Body recommends that the DSB request the European Communities to bring the EC Regulation, as found in this Report and in the Panel Report, as modified by this Report, to be inconsistent with Article 2.4 of the TBT Agreement, into conformity with its obligations under that Agreement.

Signed in the original at Geneva this 12th day of September 2002 by:

246 Supra, paras. 169-170.

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