in the world trade organization before the appellate...

In the World Trade Organization

Before the Appellate Body

EUROPEAN COMMUNITIES – MEASURES PROHIBITING THE

IMPORTATION AND MARKETING OF SEAL PRODUCTS

(AB-2014-1, 2 / DS400, DS401)

Other Appellant Submission

by the European Union

Geneva, 29 January 2014

EC – Seal Products Other Appellant Submission

(AB-2014-1, 2 / DS400, DS401) by the European Union

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TABLE OF CONTENTS

1. INTRODUCTION AND EXECUTIVE SUMMARY ........................................................... 1

1.1. The Panel erred by finding that the EU Seal Regime is a technical

regulation within the meaning of the TBT Agreement.................................. 1

1.2. The Panel erred by finding that the IC exception bears no "rational

relationship" to the primary objective of the EU Seal Regime .................... 2

1.3. The Panel erred by finding that the EU Seal Regime is inconsistent with

Article 2.1 TBT Agreement because the IC exception is not designed and

applied even-handedly .................................................................................. 2

1.4. The Panel erred by finding that the IC exception diminishes the

contribution of the EU Seal Regime to its public morals objective .............. 5

1.5. The Panel made an erroneous interpretation of Articles I:1 and III:4 of the

GATT 1994 ................................................................................................... 5

1.6. The Panel's finding that the EU Seal regime is inconsistent with Article I:1

of the GATT is in error because the Panel failed to consider whether the IC

exception involves a legitimate regulatory distinction ................................. 6

1.7. Subsidiarily, the Panel erred by finding that the IC exception is not justified

under Article XX(a) GATT because it fails to meet the requirements of the

chapeau ........................................................................................................ 6

1.8. Subsidiarily, the Panel erred by finding that the European Union had failed

to establish a prima facie case for its claim that the IC exception is justified

under Article XX(b) GATT............................................................................ 7

2. THE PANEL ERRED BY FINDING THAT THE EU SEAL REGIME IS A TECHNICAL

REGULATION WITHIN THE MEANING OF THE TBT AGREEMENT ........................... 7

2.1. BACKGROUND ................................................................................................ 8

2.1.1. Measure at issue .............................................................................. 8

2.1.2. Summary of the parties' arguments before the Panel ................. 9

2.1.2.1 Complainants ........................................................................ 9

2.1.2.2 The European Union........................................................... 10

2.1.3. Summary of the Panel's findings................................................. 11

2.2. LEGAL ARGUMENT ........................................................................................ 13

2.2.1. The Panel errs in the interpretation and application of Annex 1:1 of the TBT Agreement ........................................................... 13

2.2.1.1 Legal standard .................................................................... 13

2.2.1.2 The Panel errs in interpreting the terms "applicable

administrative provisions" under Annex 1:1 of the TBT

Agreement and fails to apply Annex 1:1 of the TBT

Agreement correctly to the EU Seal Regime ..................... 15



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2.2.1.3 The Panel errs in interpreting the terms "product

characteristics" under Annex 1:1 of the TBT Agreement and

fails to apply Annex 1:1 of the TBT Agreement correctly to

the EU Seal Regime............................................................ 19

2.2.1.4 In applying its interpretation of Annex 1:1 of the TBT

Agreement to the facts the Panel does not make a holistic

assessment of the measure .................................................. 23

2.3. CONCLUSION ................................................................................................ 27

3. THE PANEL ERRED BY FINDING THAT THE IC EXCEPTION BEARS NO "RATIONAL

RELATIONSHIP" TO THE PRIMARY OBJECTIVE OF THE EU SEAL REGIME .......... 28

3.1. Background ................................................................................................ 28

3.1.1. The Parties' arguments before the Panel ......................................... 28

3.1.2. The Panel's findings ........................................................................ 31

3.2. Legal argument ........................................................................................... 32

3.2.1. The Panel made an erroneous interpretation of the notion of "public

morals" ............................................................................................ 32

3.2.2. The Panel failed to conduct an objective assessment of the evidence

before it ........................................................................................... 35

3.2.2.1 The opinion polls referenced in Canada's Royal Commission

Report ................................................................................ 35

3.2.2.2 Public consultation ............................................................. 39

3.3. Conclusion .................................................................................................. 40

4. THE PANEL ERRED BY FINDING THAT THE EU SEAL REGIME IS INCONSISTENT

WITH ARTICLE 2.1 TBT AGREEMENT BECAUSE THE IC EXCEPTION IS NOT

DESIGNED AND APPLIED EVEN-HANDEDLY ............................................................ 40

4.1. Background ................................................................................................ 41

4.1.1. Summary of the parties' arguments before the Panel ..................... 41

4.1.1.1 Canada ................................................................................ 41

4.1.1.2 The European Union........................................................... 42

4.1.2. Summary of the Panel's findings .................................................... 43

4.2. Legal argument ........................................................................................... 50

4.2.1. The Panel's errors in the interpretation and application of Article 2.1

of the TBT Agreement.................................................................... 52

4.2.1.1 Legal standard: assessing even-handedness under Article 2.1

of the TBT Agreement........................................................ 54

4.2.1.2 The Panel's errors in the interpretation and application of

Article 2.1 of the TBT Agreement ..................................... 63

The IC exception is designed and applied in an even-handed manner 4.2.1.2.1and, thus, does not reflect discrimination against Canadian imports .. 65



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The Panel's reliance on the de facto exclusivity of the IC exception to 4.2.1.2.2Greenland where the Inuit hunts bears the greatest similarities to

commercial characteristics of commercial hunts does not show lack of

even-handedness ................................................................................. 71

4.2.1.3 Conclusion .......................................................................... 79

4.2.2. Panel's errors under Article 11 of the DSU .................................... 80

4.2.2.1 Legal standard under Article 11 of the DSU ...................... 82

4.2.2.2 The Panel erred when finding that "the text of the IC

exception, its legislative history, and the actual application

of the IC exception, cast serious doubt on the even-

handedness of the design and application of the IC

exception" ........................................................................... 83

Text of the IC exception ..................................................................... 83 4.2.2.2.1

Legislative history of the IC exception ............................................... 84 4.2.2.2.2

(a) COWI 2010 Report ................................................................. 85

(b) European Parliament Report (Exhibit JE-4) ............................ 90

(c) COWI 2008 Report ................................................................. 90

(d) Conclusion ............................................................................... 91

The application of the IC exception .................................................... 91 4.2.2.2.3

Conclusion .......................................................................................... 92 4.2.2.2.4

4.2.2.3 The Panel erred when finding that "the degree of the

commercial aspect of [Greenland's] hunts is comparable to

that of the commercial hunts", and that "the Inuit hunt [in

Greenland] bears the greatest similarities to the commercial

characteristics of commercial hunts" .................................. 92

The level of development in the commercial aspect of Greenlandic seal 4.2.2.3.1hunts ................................................................................................... 93

The volume of sealskins traded in Greenland ..................................... 94 4.2.2.3.2

The allegedly integrated nature of the seal product industries in 4.2.2.3.3Greenland, Canada, and Norway ........................................................ 98

The Panel also provided incoherent reasoning when noting that these 4.2.2.3.4three elements "indicate that the purpose of seal hunts in Greenland

has characteristics that are closely related to that of commercial hunts"

102

Conclusion ........................................................................................ 103 4.2.2.3.5

4.2.2.4 Conclusion ........................................................................ 104

4.3. Conclusion ................................................................................................ 104

5. THE PANEL ERRED BY FINDING THAT THE IC EXCEPTION DIMINISHES THE

CONTRIBUTION OF THE EU SEAL REGIME TO ITS PUBLIC MORALS OBJECTIVE 105

5.1. Background .............................................................................................. 105

5.1.1. The Parties' arguments before the Panel ....................................... 105

5.1.2. The Panel's findings ...................................................................... 106

5.2. Legal argument ......................................................................................... 106

5.3. Conclusion ................................................................................................ 107



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6. LEGAL ERROR IN THE INTERPRETATION OF ARTICLES I:1 AND III:4 OF THE

GATT 1994 .......................................................................................................... 107

6.1. Summary of the Panel's findings .............................................................. 107

6.2. Legal argument ......................................................................................... 108

6.3. Conclusion ................................................................................................ 115

7. THE PANEL'S FINDING THAT THE EU SEAL REGIME IS INCONSISTENT WITH

ARTICLE I:1 GATT IS IN ERROR BECAUSE THE PANEL FAILED TO CONSIDER

WHETHER THE IC EXCEPTION INVOLVES A LEGITIMATE REGULATORY

DISTINCTION ........................................................................................................ 116

8. SUBSIDIARILY, THE PANEL ERRED BY FINDING THAT THE IC EXCEPTION IS NOT

JUSTIFIED UNDER ARTICLE XX(A) GATT BECAUSE IT FAILS TO MEET THE

REQUIREMENTS OF THE CHAPEAU ....................................................................... 117

9. SUBSIDIARILY, THE PANEL ERRED BY FINDING THAT THE EUROPEAN UNION HAD

FAILED TO ESTABLISH A PRIMA FACIE CASE FOR ITS CLAIM THAT THE IC

EXCEPTION IS JUSTIFIED UNDER ARTICLE XX(B) GATT .................................. 118

9.1. Background .............................................................................................. 119

9.1.1. The EU's arguments before the Panel ........................................... 119

9.1.2. The Panel's finding ....................................................................... 120

9.2. Legal argument ......................................................................................... 120

9.3. Conclusion ................................................................................................ 122

10. CONCLUSION AND RELIEF REQUESTED ............................................................... 122



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TABLE OF CASES CITED

Short Title Full Case Title and Citation

Australia – Salmon

Appellate Body Report, Australia – Measures Affecting Importation of

Salmon, WT/DS18/AB/R, adopted 6 November 1998, DSR 1998:VIII,

p. 3327

Brazil – Retreaded Tyres

Appellate Body Report, Brazil – Measures Affecting Imports of Retreaded

Tyres, WT/DS332/AB/R, adopted 17 December 2007, DSR 2007:IV,

p. 1527

China – Publications and

Audiovisual Products

Panel Report, China – Measures Affecting Trading Rights and Distribution

Services for Certain Publications and Audiovisual Entertainment Products,

WT/DS363/R and Corr.1, adopted 19 January 2010, as modified by

Appellate Body Report WT/DS363/AB/R, DSR 2010:II, p. 261

Dominican Republic –

Import and Sale of

Cigarettes

Appellate Body Report, Dominican Republic – Measures Affecting the

Importation and Internal Sale of Cigarettes, WT/DS302/AB/R, adopted 19

May 2005, DSR 2005:XV, p. 7367

EC – Asbestos

Appellate Body Report, European Communities – Measures Affecting

Asbestos and Asbestos-Containing Products, WT/DS135/AB/R, adopted 5

April 2001, DSR 2001:VII, p. 3243

EC – Asbestos

Panel Report, European Communities – Measures Affecting Asbestos and

Asbestos-Containing Products, WT/DS135/R and Add.1, adopted 5 April

2001, as modified by Appellate Body Report WT/DS135/AB/R,

DSR 2001:VIII, p. 3305

EC – Bananas III

Appellate Body Report, European Communities – Regime for the

Importation, Sale and Distribution of Bananas, WT/DS27/AB/R, adopted

25 September 1997, DSR 1997:II, p. 591

EC – Fasteners (China)

Appellate Body Report, European Communities – Definitive Anti-Dumping

Measures on Certain Iron or Steel Fasteners from China,

WT/DS397/AB/R, adopted 28 July 2011, DSR 2011:VII, p. 3995

EC – Hormones

Appellate Body Report, EC Measures Concerning Meat and Meat Products

(Hormones), WT/DS26/AB/R, WT/DS48/AB/R, adopted 13 February

1998, DSR 1998:I, p. 135

EC – Sardines

Appellate Body Report, European Communities – Trade Description of

Sardines, WT/DS231/AB/R, adopted 23 October 2002, DSR 2002:VIII, p.

3359

EC and certain member

States – Large Civil Aircraft

Appellate Body Report, European Communities and Certain Member

States – Measures Affecting Trade in Large Civil Aircraft,

WT/DS316/AB/R, adopted 1 June 2011, DSR 2011:I, p. 7

Japan – Alcoholic Beverages

II

Appellate Body Report, Japan – Taxes on Alcoholic Beverages,

WT/DS8/AB/R, WT/DS10/AB/R, WT/DS11/AB/R, adopted 1 November

1996, DSR 1996:I, p. 97

Philippines – Distilled

Spirits

Appellate Body Reports, Philippines – Taxes on Distilled Spirits,

WT/DS396/AB/R / WT/DS403/AB/R, adopted 20 January 2012

US – Clove Cigarettes Appellate Body Report, United States – Measures Affecting the Production

and Sale of Clove Cigarettes, WT/DS406/AB/R, adopted 24 April 2012

US – Continued Zeroing

Appellate Body Report, United States – Continued Existence and

Application of Zeroing Methodology, WT/DS350/AB/R, adopted

19 February 2009, DSR 2009:III, p. 1291



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Short Title Full Case Title and Citation

US – COOL

Appellate Body Reports, United States – Certain Country of Origin

Labelling (COOL) Requirements, WT/DS384/AB/R / WT/DS386/AB/R,

adopted 23 July 2012

US – Gambling

Panel Report, United States – Measures Affecting the Cross-Border Supply

of Gambling and Betting Services, WT/DS285/R, adopted 20 April 2005,

as modified by Appellate Body Report WT/DS285/AB/R, DSR 2005:XII,

p. 5797

US – Softwood Lumber V

Appellate Body Report, United States – Final Dumping Determination on

Softwood Lumber from Canada, WT/DS264/AB/R, adopted 31 August

2004, DSR 2004:V, p. 1875

US – Tuna II (Mexico)

Appellate Body Report, United States – Measures Concerning the

Importation, Marketing and Sale of Tuna and Tuna Products,

WT/DS381/AB/R, adopted 13 June 2012

US – Upland Cotton

(Article 21.5 – Brazil)

Appellate Body Report, United States – Subsidies on Upland Cotton –

Recourse to Article 21.5 of the DSU by Brazil, WT/DS267/AB/RW,

adopted 20 June 2008, DSR 2008:III, p. 809

US – Wheat Gluten

Appellate Body Report, United States – Definitive Safeguard Measures on

Imports of Wheat Gluten from the European Communities,

WT/DS166/AB/R, adopted 19 January 2001, DSR 2001:II, p. 717



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1. INTRODUCTION AND EXECUTIVE SUMMARY

1. Pursuant to Article 16.4 and Article 17 of the DSU and Rule 23 of the Working

Procedures for Appellate Review, the European Union appeals to the Appellate

Body certain issues of law and certain legal interpretations developed by the Panel

in European Communities – Measures Prohibiting the Importation and Marketing

of Seal Products (WT/DS400/R, WT/DS401/R) (Panel Report).

1.1. THE PANEL ERRED BY FINDING THAT THE EU SEAL REGIME IS A TECHNICAL REGULATION WITHIN THE MEANING OF THE TBT AGREEMENT

2. The European Union appeals the Panel's conclusion that the EU Seal Regime is a

technical regulation within the meaning of Annex 1.1 of the TBT Agreement.1

3. This conclusion is in error for the following reasons: 1) the Panel wrongly

interpreted the terms "applicable administrative provisions" and wrongly

concluded that the exceptions under the EU Seal Regime constitute applicable

administrative provisions;2 2) the Panel wrongly established the scope of products

characteristics under Annex 1:1 of the TBT Agreement, which led it to erroneously

conclude that the criteria under the exceptions lay down product characteristics3;

and 3) the Panel failed to make a holistic assessment of the measure at issue4 and,

thus, wrongly found that the measure as a whole is a "technical regulation" within

the meaning of Annex 1:1 of the TBT Agreement.5

4. Reversal of the Panel's conclusion that the EU Seal Regime is a technical

regulation would dispose of Canada's and Norway's claims under the TBT

Agreement. Accordingly the European Union requests the Appellate Body to find

that the Panel's findings and conclusions with regards to Articles 2.1, 2.2, 5.1.2 and

5.2.1 of the TBT Agreement are moot and of no legal effect.

1 See e.g. Panel report, para. 7.111. See also the conclusion under para. 8.2.a) of both reports.

2 See e.g. Panel report, para. 7.108.

3 See Panel report, para. 7.110.

4 Panel report, para. 7.100, 7.106, footnote 153.

5 See Panel report, paras. 7.111, 7.125.



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1.2. THE PANEL ERRED BY FINDING THAT THE IC EXCEPTION BEARS NO "RATIONAL RELATIONSHIP" TO THE PRIMARY OBJECTIVE OF THE EU SEAL REGIME

5. The European Union also appeals the Panel's finding, as part of its analysis under

Articles 2.1 and 2.2 of the TBT Agreement and under Article XX(a) of the GATT

1994, that "the IC exception does not bear a rational relationship to the objective

of addressing the moral concerns of the public on seal welfare".6

6. This finding is in error because it is based on an incorrect interpretation of the

notion of "public morals", according to which a Member invoking that a measure

pursues a public morals objective would have to show that such measure is

supported by a majority of its population.

7. Furthermore, the European Union submits in the alternative that, in reaching its

conclusion that the EU public does not support the IC exception the Panel failed to

make an objective assessment of the evidence before it, as required by Article 11

DSU. Specifically, the Panel relied upon the following factual evidence: 1) the

results of two opinion polls analysed in Canada's Royal Commission Report on

Sealing7; and 2) the results of a public consultation conducted by the EU

Commission as part of the preparation of its proposal to the EU legislators.8 Yet

this evidence lends no support to the Panel's appealed finding.

8. In view of these errors, the European Union requests the Appellate Body to reverse

this finding.

1.3. THE PANEL ERRED BY FINDING THAT THE EU SEAL REGIME IS INCONSISTENT WITH ARTICLE 2.1 TBT AGREEMENT BECAUSE THE IC EXCEPTION IS NOT

DESIGNED AND APPLIED EVEN-HANDEDLY

9. The European Union also appeals the Panel's finding that the IC exception "is not

designed and applied in an even-handed manner" and that, consequently, "the IC

exception of the EU Seal Regime is inconsistent with the European Union's

obligations under Article 2.1 of the TBT Agreement as the European Union has

failed to demonstrate that the detrimental impact caused by the IC exception on


7 See e.g. Panel report, footnote 676.

8 See e.g. Panel report, footnotes 652 and 676.



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Canadian seal products stems exclusively from a legitimate distinction".9 The

Panel made a reversible error when finding that, as currently designed and applied,

the IC exception lacked even-handedness because it was not equally available to

all Inuit or indigenous communities.10

10. This finding is in error because the Panel misinterpreted and misapplied Article 2.1

of the TBT Agreement when examining the even-handedness in the design and

application of the IC exception.11

The Panel misinterpreted the essence of the

substantive analysis that must be conducted when assessing the even-handedness

of the IC exception, i.e., whether the measure is reasonable, impartial and

harmonious, having regard to the objective it pursues. In this case, the IC

exception seeks to protect the economic and social interests of the Inuit and other

indigenous communities engaged in seal hunting. Such hunting, while also having

a commercial aspect, the extent of which varies from community to community, is

conducted primarily for subsistence purposes. The IC exception is designed by

identifying the key elements defining those hunts for subsistence purposes

conducted by Inuit and other indigenous communities. The IC exception is also

applied in a neutral manner, where all Inuit and indigenous communities engage in

seal hunting for subsistence purposes have access to the EU market through the IC

exception and the relevant conformity assessment procedures.

11. Rather than considering whether the IC exception was designed and applied in a

reasonable, impartial and harmonious manner, having regard to its objective (i.e.,

the protection of the interest of the Inuit and other indigenous communities

traditionally engaged in seal hunting for subsistence purposes), the Panel wrongly

conducted the analysis of the even-handedness of the IC exception by focussing on

the effects of the measure in a particular period of time, while ignoring the

passivity of the relevant Canadian (and Canadian Inuit) authorities and operators.

The Panel also wrongly focused on the alleged similarities of Greenland's hunts to

the commercial hunts. Those similarities, however, were irrelevant for assessing

even-handedness, in view of the Panel's earlier finding that the Inuit hunts are

9 See e.g. Panel Report, para. 7.319.

10 Panel Report, paras. 7.317 and 7.318.

11 Panel Report, para. 7.317.



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conducted primarily for subsistence purposes and can be legitimately distinguished

from the commercial hunts.12

In this respect, the Panel gave predominance to

factors that were not inherent or permanent and that did not flow from the IC

exception.

12. Furthermore, the European Union submits in the alternative that this finding was

based on several material inaccuracies leading to erroneous factual determinations

as well as incoherent reasoning, contrary to the Panel's duties under Article 11 of

the DSU. Specifically, the European Union challenges the Panel's finding that "the

IC exception is available de facto exclusively to Greenland"13

based on "the text of

the IC exception, its legislative history, and the actual application of the IC

exception".14

These three elements on which the Panel based its conclusion about

the lack of even-handedness in the design and application of the IC exception were

incorrectly assessed by the Panel, contrary to its obligations under Article 11 of the

DSU. The European Union also challenges the Panel's findings that "the degree of

the commercial aspect of [Greenland's] hunts is comparable to that of the

commercial hunts",15

and that "the Inuit hunt [in Greenland] bears the greatest

similarities to the commercial characteristics of commercial hunts".16

Those

findings were made on the basis of an incorrect assessment of the facts. The Panel

lacked sufficient basis to make such findings and provided incoherent reasoning,

contrary to Article 11 of the DSU.

13. The European Union submits that these errors are material, leading to the

conclusion that the Panel's reasoning and ultimate conclusion cannot stand.

Consequently, the European Union requests the Appellate Body to find that the

Panel failed to make an objective assessment of the matter, contrary to Article 11

of the DSU, when finding that the IC exception was not currently designed and

applied in an even-handed manner.17

12 Panel Report, paras. 7.288 and 7.289.

13 Panel Report, paras. 7.314 – 7.317.




17 See e.g. Panel Report, paras. 7.317 and 7.319.



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14. In view of these fundamental errors, or any combination thereof, the European

Union requests the Appellate Body to reverse the Panel's finding that the

distinction made by the IC exception between IC and commercial hunts based on

the purpose of the hunt "is not designed and applied in an even-handed manner"

and, thus, that "the IC exception of the EU Seal Regime is inconsistent with the

European Union's obligations under Article 2.1 of the TBT Agreement as the

European Union has failed to demonstrate that the detrimental impact caused by

the IC exception on Canadian seal products stems exclusively from a legitimate

distinction".18

1.4. THE PANEL ERRED BY FINDING THAT THE IC EXCEPTION DIMINISHES THE CONTRIBUTION OF THE EU SEAL REGIME TO ITS PUBLIC MORALS OBJECTIVE

15. The European Union appeals the Panel's finding, as part of its analysis under

Article 2.2 of the TBT Agreement and Article XX(a) of the GATT 1994, that the

IC exception "diminishes" the contribution of the EU Seal Regime to its public

morals objective.19

16. This finding is in error because it is premised on the Panel's earlier erroneous

finding that the IC exception bears no "rational relationship" to the public morals

objective pursued by the EU Seal Regime. Accordingly, the European Union

requests the Appellate Body to reverse this finding.

1.5. THE PANEL MADE AN ERRONEOUS INTERPRETATION OF ARTICLES I:1 AND III:4 OF THE GATT 1994

17. The European Union appeals the Panel's finding that it "do[es] not consider that

the legal standard with respect to the non-discrimination obligation under

Article 2.1 of the TBT Agreement 'equally applies' to claims under Articles I:1 and

III:4 of the GATT 1994"20

. The European Union submits that the Panel's finding

constitutes an erroneous interpretation of Articles I.1 and III:4 of the GATT 1994

because it is contrary to established Appellate Body jurisprudence on Article III:4

18 Panel Report, para. 7.319. See also the conclusion under paragraph 8.2 (b) with regard to the

complaint by Canada (DS 400).

19 See e.g. Panel report, para. 7.460. See also Panel report, paras. 7.447-7.448, 7.451-7.452, 7.466 and

7.638.




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of the GATT 1994, fails to take into account the context of Article III:1 of the

GATT 1994, is incoherent with the interpretation of Article 2.1 of the TBT

Agreement and renders Article 2.1 of the TBT Agreement irrelevant. Therefore,

the European Union requests the Appellate Body to reverse that finding.

1.6. THE PANEL'S FINDING THAT THE EU SEAL REGIME IS INCONSISTENT WITH ARTICLE I:1 OF THE GATT IS IN ERROR BECAUSE THE PANEL FAILED TO

CONSIDER WHETHER THE IC EXCEPTION INVOLVES A LEGITIMATE REGULATORY

DISTINCTION

18. The European Union also appeals the Panel's application of its erroneous

interpretation of Article I:1 of the GATT 1994 in reaching its finding that the EU

Seal Regime is inconsistent with Article I:1 of the GATT 1994.21

Accordingly the

European Union requests the Appellate Body to reverse that finding.

1.7. SUBSIDIARILY, THE PANEL ERRED BY FINDING THAT THE IC EXCEPTION IS NOT JUSTIFIED UNDER ARTICLE XX(A) GATT BECAUSE IT FAILS TO MEET THE

REQUIREMENTS OF THE CHAPEAU

19. Were the Appellate Body to uphold the Panel's finding that the IC exception is

inconsistent with Article I:1 of the GATT 1994, the European Union appeals the

Panel's finding that the IC exception is not justified under Article XX(a) of the

GATT 1994 because it fails to meet the requirements of the chapeau.22

20. The Panel's analysis of the even-handedness of the IC exception under Article 2.1

of the TBT Agreement contained several legal errors.23

Should the Appellate Body

reverse the Panel's finding that the IC exception "is not designed and applied in an

even-handed manner" and, thus, that "the IC exception of the EU Seal Regime is

inconsistent with the European Union's obligations under Article 2.1 of the TBT

Agreement as the European Union has failed to demonstrate that the detrimental

impact caused by the IC exception on Canadian seal products stems exclusively

from a legitimate distinction",24

the European Union requests the Appellate Body

21 See e.g. Panel Report, para. 7.600. See also the conclusion under para. 8.3 a) with regard to both

complaints (DS 400 and DS 401).

22 See Panel Report, para. 7.650. See also the conclusion under para. 8.3 d) with regard to both

complaints (DS 400 and DS 401).

23 See para. 9 above.




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to also reverse the Panel's finding under the chapeau of Article XX(a) of the

GATT 1994. The European Union further requests the Appellate Body to complete

the analysis under the chapeau of Article XX(a) of the GATT 1994 and find, on

the basis of the considerations made before, that the IC exception is not "applied in

a manner which would constitute a means of arbitrary or unjustifiable

discrimination between countries where the same conditions prevail, or a disguised

restriction on international trade" and, accordingly, that the IC exception meets the

requirements under Article XX(a) of the GATT 1994, including its chapeau.

1.8. SUBSIDIARILY, THE PANEL ERRED BY FINDING THAT THE EUROPEAN UNION HAD FAILED TO ESTABLISH A PRIMA FACIE CASE FOR ITS CLAIM THAT THE IC

EXCEPTION IS JUSTIFIED UNDER ARTICLE XX(B) GATT

21. Finally, in the event that the Appellate Body were to 1) uphold the Panel's finding

that the EU Seal Regime is inconsistent with Article I:1 of the GATT 1994; and 2)

reverse the Panel's finding that the EU Seal Regime falls within the scope of

GATT Article XX(a), the European Union appeals the Panel's finding that "the

European Union has failed to establish a prima facie case for its claim under

Article XX(b) [of the GATT]".25

The European Union submits that in reaching this

conclusion the Panel failed to fulfil its duty to conduct an objective assessment of

the matter as required by Article 11 of the DSU. Accordingly, the European Union

requests the Appellate Body: 1) to reverse the Panel's finding that the European

Union failed to establish a prima facie case under GATT Article XX(b); and 2) to

complete the analysis under GATT Article XX(b) and find that the EU Seal

Regime is justified under that provision.

2. THE PANEL ERRED BY FINDING THAT THE EU SEAL REGIME IS A TECHNICAL REGULATION WITHIN THE MEANING OF THE TBT AGREEMENT

22. The European Union appeals the Panel’s findings on issues of law and legal

interpretations that serve as the basis for the conclusion that the EU Seal Regime is

a technical regulation within the meaning of Annex 1.1 of the TBT Agreement.26

25 See e.g. Panel report, para. 7.640 and para. 8.3 e) of the conclusions and recommendations in both

WT/DS400 R and WTDS401/R.

26 Panel report, para. 7.111.



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23. The European Union submits that the Panel erred in its interpretation of Annex 1.1

of the TBT Agreement, as well as in its application of said provision to the facts,

and hence wrongly concluded that the EU Seal Regime constitutes a technical

regulation within the meaning of Annex 1:1 of the TBT Agreement.

2.1. BACKGROUND

2.1.1. Measure at issue

24. The EU Seal Regime provides for a General Ban on the placing on the market of

seal products. In the case of imported products, the General Ban is applied at the

point of importation. The General Ban is subject to three exceptions: the IC

exception, the MRM exception and the Travellers exception.

25. Article 3.1 of the Basic Regulation sets forth the General Ban together with the

main exception (the IC exception). In turn, the Travellers exception and the MRM

exception are stipulated in Article 3.2 a) and 3.2 b), respectively.

26. The IC exception allows the placing on the market of seal products "where the seal

products result from hunts traditionally conducted by Inuit and other indigenous

communities and contribute to their subsistence" (Article 3(1) of the Basic

Regulation). Article 3(1) of the Implementing Regulation further sets out that the

hunts must be conducted by "communities which have a tradition of seal hunting

in the community and in the geographical region", that the products of the hunt

must be "at least partly used, consumed or processed within the communities

according to their traditions" and that the hunts must "contribute to the subsistence

of the community".

27. The MRM exception allows the placing on the market of seal products "where the

seal products result from by-products of hunting that is regulated by national law

and conducted for the sole purpose of the sustainable management of marine

resources" under the condition that it is "on a non-profit basis" and "[t]he nature

and quantity of the seal products shall not be such as to indicate that they are being

placed on the market for commercial reasons" (Article 3(2)(b) of the Basic

Regulation). Article 5(1) of the Implementing Regulation further provides that the

seal products must result from hunts "conducted under a national or regional

natural resources management plan which uses scientific population models of



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marine resources and applies the ecosystem-based approach", and which "do not

exceed the total allowable catch quota established in accordance with [such] plan"

and "the by-products of which are placed on the market in a non-systematic way

on a non-profit basis".

28. The Travellers exception allows the importation of seal products "where it is of an

occasional nature and consists exclusively of goods for the personal use of

travellers or their families" provided that "[t]he nature and quantity of such goods

shall not be such as to indicate that they are being imported for commercial

reasons" (Article 3(2)(a) of the Basic Regulation). Article 4 of the Implementing

Regulation further specifies that the seals products must be "either worn by the

travellers, or carried in their personal luggage", "contained in the personal property

of a natural person transferring his normal place of residence from a third country

to the Union" or "acquired on site in a third country by travellers and imported by

those travellers at a later date, provided that, upon arrival in the Union territory,

those travellers present to the customs authorities of the Member State concerned

[certain] documents".

29. Conformity with the Indigenous Communities and Marine Resources Management

exceptions is determined on the basis of an "attesting document". In accordance

with Article 7.1 of the Implementing Regulation such documents can only be

issued by entities included on the list of "recognised bodies".

2.1.2. Summary of the parties' arguments before the Panel

2.1.2.1 Complainants

30. The Complainants argued before the Panel that the EU Seal Regime lays down

product characteristics in both positive and negative form. The complainants

explained that if a product meets the requirements of the IC, MRM, or Travellers

exceptions, it may possess the characteristic of containing seal. Conversely, if the

product does not meet such requirements, then it may not contain seal.27

The

complainants alleged that in determining whether the EU Seal Regime lays down

27 Canada's first written submission, para. 363; Norway's first written submission, para. 499;

complainants' responses to Panel question No. 127.



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product characteristics, it is not necessary for the exceptions themselves to

prescribe product characteristics.28

31. The complainants further argued that because products falling within one of the

three exceptions must satisfy certain administrative requirements set out in the

Implementing Regulation in order be able to benefit from the exceptions, the EU

Seal Regime also sets forth "applicable administrative provisions" within the

meaning of Annex 1.1 of the TBT Agreement.29

2.1.2.2 The European Union

32. The European Union argued that the EU Seal Regime needs to be examined as a

whole and that a conclusion about the proper legal nature of the measure cannot be

made based on one of its elements only. In response to the allegations by the

complainants, the European Union argued that when the general rule is a ban, the

exceptions are part of what defines the scope of the ban. Their exact content,

nature and purpose therefore critically inform the proper legal character of the

measure as a whole.

33. The European Union explained that the EU Seal Regime prohibits the placing on

the market of products which consist exclusively of seal, such as "pure" seal meat,

oil, blubber, organs and fur skins, whether processed or not.30

The European Union

noted that this prohibition under the EU Seal Regime is similar to the prohibition

of asbestos fibres "as such" in the measure at issue in EC – Asbestos, which the

Appellate Body found did not constitute a technical regulation.

34. As regards products containing seal and other ingredients ("mixed" products), the

European Union argued that it would be inappropriate for the Panel to limit its

analysis to the fact that the EU Seal Regime lays down intrinsic characteristics in

the negative form, by providing that all products may not contain seal. The

determination of whether the EU Seal Regime lays down product characteristics

should also take into account the exceptions, because it is the permissive elements,

28 See, e.g. Norway's second written submission, para. 145.

29 Canada's first written submission, paras. 364-365; Norway's first written submission, paras.

502-503.

30 European Union's first written submission, para. 213.



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together with the prohibition, that determine the situations where seal products

may be placed on the European Union market.31

35. The European Union explained that what is decisive for the characterization of the

EU Seal Regime is that none of the three exceptions lays down product

characteristics. The IC exception concerns the type of hunters, the traditions of

their communities, and the purpose of the hunt, but not the intrinsic or related

features of the products, such as their composition or presentation.32

The MRM

exception imposes requirements relating to the size of the hunt, the intensity and

purpose of the hunt, and the marketing conditions of the products. In the European

Union's view, none of these conditions sets out intrinsic or related features of the

products.33

The European Union argued that the EU Seal Regime differs in that

sense from the measure in EC – Asbestos, where the exceptions themselves

referred to particular characteristics intrinsic to the product.34

36. With respect to the question whether the EU Seal Regime prescribes applicable

administrative provisions, the European Union argued that Annex 1:1 addresses

only those administrative provisions that apply to "product characteristics or their

related PPMs". Given that the procedural requirements set out in the Implementing

Regulation are not related to any product characteristics or their related PPMs,

such provisions do not constitute "applicable administrative provisions" within the

meaning of Annex 1:1.35

2.1.3. Summary of the Panel's findings

37. In considering whether the EU Seal Regime qualified as a “technical regulation”,

the Panel applied the three-tier test established by the Appellate Body.

38. The parties did not contest and the Panel found that the EU Seal Regime applied to

an identifiable group of products36

and that compliance with the measure was


32 European Union's first written submission, para. 220; response to Panel's Question No. 127.



35 European Union's first written submission, paras 229-234.




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mandatory37

. With regard to the condition that the measure lays down product

characteristics or their related process and production methods, including

applicable administrative provisions, the Panel explained that the final decision on

the character of the measure must be based on the measure as a whole, "taking into

account, as appropriate, the prohibitive and permissive elements that are part of

it"38

.

39. The Panel found that the prohibition on seal containing products under the EU Seal

Regime lays down a product characteristic in the negative form by requiring that

all products not contain seal.39

The Panel noted that such conclusion is not affected

by the fact that the prohibition of seals "in their natural state" might not, in itself,

prescribe or impose any "characteristics".40

40. The Panel found that the EU Seal Regime sets out, through its exceptions, the

"applicable administrative provisions with which compliance is mandatory" for

products with certain objective "characteristics".41

First, the exceptions define the

scope of the prohibition in the EU Seal Regime, albeit implicitly.42

Second, the

nature of the exceptions is to allow products containing seal on the EU market,

subject to compliance with strict administrative requirements. Additionally, the

Panel considered that the scope of the exceptions is determined under the EU Seal

Regime based on a set of criteria. These criteria under the exceptions identify,

according to the Panel, the seal products that are allowed to be placed on the

European Union market. The Panel explains that the criteria define the categories

of seal that can be used as an input for such products; only seals obtained from the

specific type of hunter and/or the qualifying hunts may be used in making final

products. In the Panel’s view, these criteria constituted "objectively definable

features" of the seal products that are allowed to be placed on the EU market and

consequently lay down particular "characteristics" of the final products.




40 Panel report, footnote 153.





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41. The Panel exercised judicial economy with respect to the complainants claim that

the EU Seal Regime lays down PPMs.43

2.2. LEGAL ARGUMENT

42. The European Union submits that the Panel's finding that the EU Seal Regime

constitutes a technical regulation within the meaning of Annex 1:1 of the TBT

Agreement is tainted with several errors.

43. First, the Panel wrongly interpreted the terms "applicable administrative

provisions" and wrongly concluded that the exceptions under the EU Seal Regime

constitute applicable administrative provisions.44

Second, the Panel wrongly

established the scope of products characteristics under Annex 1:1 of the TBT

Agreement, which led it to conclude that the criteria under the exceptions lay

down product characteristics.45

Third, the Panel failed to make a holistic

assessment of the measure at issue46

and, thus, wrongly found that the measure as

a whole is a "technical regulation" within the meaning of Annex 1:1 of the TBT

Agreement.47

2.2.1. The Panel errs in the interpretation and application of Annex 1:1 of the TBT Agreement

2.2.1.1 Legal standard

44. Article 1.2 of the TBT Agreement provides that for the purposes of the TBT

Agreement the meanings of the terms given in Annex 1 apply. Annex 1:1 of

the TBT Agreement defines a "technical regulation" as a:

Document which lays down product characteristics or their

related processes and production methods, including the

applicable administrative provisions, with which compliance is

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.




46 Panel report, para. 7.100, 7.106, footnote 153.

47 Panel report, paras. 7.111, 7.125.



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45. According to the interpretation which the Appellate Body developed in EC –

Asbestos48

and summarised in EC – Sardines, a document must meet three criteria

to fall within this definition:

First, the document must apply to an identifiable product or group

of products. The identifiable product or group of products need

not, however, be expressly identified in the document. Second, the

document must lay down one or more characteristics of the

product. These product characteristics may be intrinsic, or they

may be related to the product. They may be prescribed or imposed

in either a positive or a negative form. Third, compliance with the

product characteristics must be mandatory.49

46. These three criteria apply cumulatively. This follows from the wording of Annex

1:1 of the TBT Agreement as interpreted by the Appellate Body50

.

47. With regard to the method of analysis, the Appellate Body held in EC – Asbestos

that:

[T]he proper legal character of the measure at issue cannot be

determined unless the measure is examined as a whole. (…) We,

therefore, conclude that the measure at issue is to be examined as

an integrated whole, taking into account, as appropriate, the

prohibitive and the permissive elements [of the measure].51

48. In US – Tuna, the Appellate Body added that:

[T]he determination of whether a particular measure constitutes a

technical regulation must be made in the light of the

characteristics of the measure at issue and the circumstances of

the case. In some cases, this may be a relatively straightforward

exercise. In others, the task of the panel may be more complex.52

49. In sum, a document fulfilling the second criterion for a technical regulation needs

to prescribe ("lay down"), in positive or negative form, one of three types of

subject matter: (1) "product characteristics" which encompass (a) intrinsic features

and qualities to the product, such as a product's composition, size, shape, colour,

texture, hardness, tensile strength, flammability, conductivity, density, or viscosity,

and (b) related "characteristics", such as the means of identification, the

48 Appellate Body Report, EC – Asbestos, paras. 66-70. 49 Appellate Body Report, EC – Sardines, para. 176 (emphasis in the original). 50 See Appellate Body Report, EC – Asbestos, paras. 66-70; Appellate Body Report, EC – Sardines,

para. 176 ("… we set out three criteria that a document must meet to fall within the definition of

'technical regulation' in the TBT Agreement", emphasis in the original). 51 Appellate Body Report, EC – Asbestos, para. 64. 52 Appellate Body Report, US – Tuna II (Mexico), para. 188 (footnote omitted).



________________________________________________________________________________________

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presentation and the appearance of a product53

; (2) "processes and production

methods" which are "related" to such product characteristics; or (3) "administrative

provisions" which are "applicable" to such product characteristics or their related

processes and production methods. The analysis of whether a document prescribes

such subject matter needs to examine the measure as an integrated whole, taking

into account, as appropriate, the prohibitive and the permissive elements.54

This

means that a measure cannot be characterized as laying down "product

characteristics" on the basis of its prohibitive elements alone. If that measure not

only contains a ban but also exceptions, these permissive elements have to be

taken into account as well in order to determine whether the measure "as an

integrated whole" qualifies as a "technical regulation". Furthermore, the

determination of whether the measure constitutes a technical regulation must be

made in the light of the characteristics of the measure at issue and the

circumstances of the case.55

2.2.1.2 The Panel errs in interpreting the terms "applicable administrative provisions" under Annex 1:1 of the TBT

Agreement and fails to apply Annex 1:1 of the TBT

Agreement correctly to the EU Seal Regime

50. The Panel considered that the EU Seal Regime "sets out, through its exceptions,

the 'applicable administrative provisions with which compliance is mandatory' for

products with certain objective 'characteristics'".56

51. In reaching this finding the Panel did not set out its interpretation of what would be

considered as "applicable administrative provisions", but limited itself to quoting

from the report by the Appellate Body in EC-Asbestos:

53 Appellate Body Report, EC – Asbestos, para. 67. 54 Appellate Body Report, EC – Asbestos, para. 64. 55 Appellate Body Report, US – Tuna II, para. 188. 56 Panel Report, para. 7.108.



________________________________________________________________________________________

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Further, the Appellate Body considered that, through its

exceptions, the measure in EC - Asbestos set out the "'applicable

administrative provisions, with which compliance is mandatory'

for products with certain objective 'characteristics'".154 On this

question, the Appellate Body relied on the panel's finding that the

marketing criteria applying to products falling under the

exceptions "relate to the characteristics of one or more given

products or processes or production methods relating to them".155

According to these criteria, products containing chrysotile

asbestos could be marketed provided that there was no substitute

fibre available (i) that presented less occupational health risk to

workers than chrysotile fibre; and (ii) that met all technical

guarantees of safety appropriate to the use. The panel noted that

such requirements had to be read in conjunction with

administrative provisions requiring a statement and supporting

documents to attest that the criteria of the exceptions were

satisfied.57

______________________________

154 Appellate Body Report, EC – Asbestos, para. 74 (quoting Panel Report,

para. 8.69). The panel in that dispute found that:

[A]rticle 2 of the Decree sets out the criteria for marketing the products

identified in the Decree and not solely the criteria for excluding products from

the market. The second sentence in Article 3.I of the Decree completes these

criteria. In our view, the marketing criteria in Article 2.I of the Decree relate to

the characteristics of one or more given products or processes or production

methods relating to them. This is particularly true of the second subparagraph on

the technical guarantees of safety appropriate to use … We also note that

Article 2.II and Article 3 in particular cover the administrative provisions

applicable to the technical regulations. (Panel Report, EC – Asbestos,

paras. 8.68-8.69, (cross-referencing para. 8.1 of the Panel Report)).

155 Panel Report, EC – Asbestos, para. 8.69.

52. The Panel considered that the factual circumstances of the measure at issue in

EC - Asbestos were similar to those that characterise the EU Seal Regime and

concluded:

Similarly, we find that the EU Seal Regime sets out, through its

exceptions, the "applicable administrative provisions with which

compliance is mandatory" for products with certain objective

"characteristics". First, the exceptions define the scope of the

prohibition in the EU Seal Regime, albeit implicitly. Second, the

nature of the exceptions is to allow products containing seal on

the EU market, subject to compliance with strict administrative

requirements. Finally, the scope of the exceptions is determined

under the Regime based on a set of criteria.58

53. While the interpretation of "applicable administrative provisions" under Annex 1:1

of the TBT Agreement has not been explicitly set out, the Panel seems to assume

57 Ibid. para. 7.107 (footnotes original).

58 Ibid, para. 7.108.



________________________________________________________________________________________

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that any document containing administrative provisions relating to identifiable

products constitutes a technical regulation. In the view of the European Union,

such an interpretation runs contrary to the customary rules of treaty

interpretation.59

Specifically, the European Union submits that the Panel wrongly

concluded that the requirement that the administrative provisions be "applicable

pertains to the "products" and not, to "product characteristics or their related

processes and production methods".

54. The European Union submits that Annex 1:1 of the TBT Agreement only

addresses those administrative provisions which apply to product characteristics or

their related processes and production methods. Already the term "applicable" in

the wording of Annex 1:1 of the TBT Agreement indicates that only administrative

provisions which apply to the subject matters mentioned in the first part of the

definition may qualify a document as a technical regulation.

55. This is further supported by the context. The reference to "applicable

administrative provisions" immediately follows the mention of "product

characteristics or their related processes and production methods". The linkage to

these two categories of subject matter is expressed by the conjunctive term

"including". Had the drafters of the TBT Agreement intended to qualify

documents laying down any administrative provision applying to products as

technical regulations, they could have chosen the following wording: "Document

which lays down product characteristics or their related processes and production

methods or administrative provisions relating to products …". The fact that they

did not indicates that Annex 1:1 of the TBT Agreement addresses only those

administrative provisions which apply to product characteristics or their related

processes and production methods.

56. The alternative interpretation that any administrative provisions relating to

products are covered would also appear to be over-inclusive and, thus, to go

against the object and purpose of the TBT Agreement. Documents laying down

59 The European Union recalls that under Article 3.2 of the DSU, panels are bound to interpret

provisions of the covered agreements in accordance with the customary rules of interpretation of

public international law, including as reflected in Article 31 of the Vienna Convention on the Law

of Treaties (“Vienna Convention”). Under Article 31 of the Vienna Convention, the ordinary

meaning of treaty terms must be ascertained in their context and in the light of the object and

purpose of the treaty.



________________________________________________________________________________________

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administrative provisions relating to products would comprise laws and regulations

on issues as diverse as drivers' licences for cars or customs procedures and

requirements for import and export of goods. In the view of the European Union,

the legal regime for "technical regulations" set out in the TBT Agreement is

clearly not meant to deal with such types of measures.

57. Consequently, whereas the procedural requirements set out in the Implementing

Regulation may be considered as administrative provisions, they do not constitute

"applicable administrative provisions" within the meaning of Annex 1:1 of the

TBT Agreement.

58. First, it is clear that the procedural provisions of the Implementing Regulation do

not directly pertain to the what the Panel considered as a product characteristic laid

down in the negative form, namely that the products must not contain seal. As

explained, if the mere fact that the procedural provisions regulates trade in seal

products were sufficient to consider them as "applicable" to the product

characteristic or process and production method within the meaning of Annex 1:1

of the TBT Agreement, a myriad of other administrative provisions that apply to

seal products before they can be put on the EU market would fall within the scope

of the TBT Agreement (customs regulations, tax regulations etc.). Such a result

would be absurd.

59. Second, as will be explained in greater detail below (under subheading 2.2.1.3),

since the Panel erroneously concluded that the criteria under the exceptions

themselves lay down product characteristics, it would be incorrect to conclude that

they can be considered as "applicable administrative provisions" on that basis as

well. In the view of the European Union, it is precisely in this respect, that the

exceptions under the EU Seal Regime differ from the procedural provisions

relating to the exceptions of the asbestos Decree in EC - Asbestos which the

Appellate Body found to constitute "applicable administrative provisions" within

the meaning of Annex 1:1 of the TBT Agreement60. The difference in

EC - Asbestos is that the relevant exceptions under the measure at issue in that case

did lay down product characteristics. In contrast to the present case, the Appellate

60 Appellate Body Report, EC – Asbestos, para. 73.



________________________________________________________________________________________

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Body in EC - Asbestos could therefore conclude that the procedural provisions

applied to product characteristics.

60. In sum, the European Union submits that the Panel erred in interpreting

"applicable administrative provisions" under Annex 1:1 of the TBT Agreement

and consequently wrongly concluded that the EU Seal Regime "sets out, through

its exceptions, the 'applicable administrative provisions with which compliance is

mandatory' for products with certain objective 'characteristics'".

2.2.1.3 The Panel errs in interpreting the terms "product characteristics" under Annex 1:1 of the TBT Agreement

and fails to apply Annex 1:1 of the TBT Agreement

correctly to the EU Seal Regime

61. The European Union further submits that the Panel failed to apply the customary

rules of treaty interpretation correctly in interpreting the terms "product

characteristics" under Annex 1:1 of the TBT Agreement. Instead of interpreting

the treaty terms in light of the legal issue before it, the Panel relied on only a

fragment of the Appellate Body's analysis in EC - Asbestos, which dealt with the

ordinary meaning of the terms "product characteristics", and on this basis

developed an interpretation divorced from context and contrary to the object and

purpose of the Treaty, as well as its negotiating history.

62. As a result of this interpretative error the Panel also erred in its application of the

law to the facts and wrongly concluded that the criteria under the exceptions under

the EU Seal Regime lay down product characteristics.

63. In its analysis the Panel seems to have relied on the ordinary meaning of the terms

"product characteristics", as set out by the Appellate Body in EC – Asbestos. To

recall, the Appellate Body in EC – Asbestos interpreted the requirement that the

document lay down product characteristics as follows:



________________________________________________________________________________________

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The heart of the definition of a "technical regulation" is that a

"document" must "lay down" – that is, set forth, stipulate or

provide – "product characteristics". The word "characteristic"

has a number of synonyms that are helpful in understanding the

ordinary meaning of that word, in this context. Thus, the

"characteristics" of a product include, in our view, any objectively

definable "features", "qualities", "attributes", or other

"distinguishing mark" of a product. Such "characteristics" might

relate, inter alia, to a product's composition, size, shape, colour,

texture, hardness, tensile strength, flammability, conductivity,

density, or viscosity. In the definition of a "technical regulation"

in Annex 1.1, the TBT Agreement itself gives certain examples of

"product characteristics" – "terminology, symbols, packaging,

marking or labelling requirements". These examples indicate that

"product characteristics" include, not only features and qualities

intrinsic to the product itself, but also related "characteristics",

such as the means of identification, the presentation and the

appearance of a product. In addition, according to the definition

in Annex 1.1 of the TBT Agreement, a "technical regulation" may

set forth the "applicable administrative provisions" for products

which have certain "characteristics". Further, we note that the

definition of a "technical regulation" provides that such a

regulation "may also include or deal exclusively with terminology,

symbols, packaging, marking or labelling requirements".

(emphasis added) The use here of the word "exclusively" and the

disjunctive word "or" indicates that a "technical regulation" may

be confined to laying down only one or a few "product

characteristics".61

64. The European Union does not put into question the Appellate Body's analysis62

that according to the ordinary meaning of the text, product characteristics can

cover not only intrinsic characteristics, but also characteristics related to a product.

Establishing the ordinary meaning, however, is but the first step of the

interpretative process. What the Panel overlooked is that ordinary meaning of

treaty terms is immediately and intimately linked with context, and must further be

taken in conjunction with all other relevant elements under the customary rules of

treaty interpretation.

65. In relaying on the afore mentioned excerpt from the Appellate Body Report in

EC - Asbestos, the Panel concluded that "objectively definable features" of a

product constitute particular "characteristics" of a product. According to the Panel,

criteria such as the one established under the Implementing Regulation concerning

61 Appellate Body Report, EC – Asbestos, para. 67. 62 Ibid.



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the "type of the hunter and/or the qualifying hunts"63

constitute "objectively

definable features" of a product and as a result "product characteristics" for the

purposes of Annex 1:1 of the TBT Agreement.

66. The European Union submits that stopping interpretation at establishing the

ordinary meaning, as the Panel did here, manifestly lead to the erroneous result,

whereby virtually anything that bares any relation to a product – no matter how

indirect and distant that relation may be – could be construed as a product

characteristic and be thus potentially considered a technical regulation subject to

the disciplines of the TBT Agreement.

67. The European Union submits that such an expansive reading of "product

characteristics" renders (at least in part) redundant the inclusion of "related process

or production methods" in the text of the definition technical regulations under

Annex 1:1 of the TBT Agreement. This result is problematic in more than one

respect. First, such a reading of "product characteristics" would partially overlap

with the scope of "process or production methods" (PPMs). Second, and perhaps

even more troublesome, since only the PPMs related to a product are considered to

be covered by the TBT Agreement, adopting an interpretation which would

subsume PPMs into product characteristics, would effectively do away with the

limitation of the scope for PPMs covered by the TBT Agreement to product related

or incorporated PPMs.

68. In the view of the European Union an over expansive reading of product

characteristics also goes contrary to the object and purpose of the TBT Agreement.

The European Union recalls that the TBT Agreement was designed to elaborate on

the disciplines of Article III of the General Agreement for a very specific subset of

measures (technical regulations, standards and conformity assessment procedures).

The term "technical regulation" is not so broad as to cover all government

regulatory actions affecting products.

69. As the Appellate Body acknowledged in EC - Asbestos, the scope of the TBT

Agreement is to be considered limited to certain measures and does not cover all

internal measures covered by Article III:4 of the GATT 1994:

63 Panel report, para. 7.110. The European Union notes that a more accurate description of the criteria

under the exceptions to the EU Seal regime can be found in paras 7.19 to 7.24 of the report.



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We note, however – and we emphasize – that this does not mean

that all internal measures covered by Article III:4 of the GATT

1994 "affecting" the "sale, offering for sale, purchase,

transportation, distribution or use" of a product are, necessarily,

"technical regulations" under the TBT Agreement. Rather, we rule

only that this particular measure, the Decree at stake, falls within

the definition of a "technical regulation" given in Annex 1.1 of

that Agreement.64

70. This intent to circumscribe the scope of the TBT Agreement is also clearly

reflected in the negotiating history of the agreement.65

Indeed, WTO Members

only agreed to expand the scope of the Agreement on Technical Barriers to Trade

to process or production methods related to product characteristics during the

Uruguay round negotiations.66

71. The European Union submits that if terms "product characteristics" are interpreted

in accordance with the customary rules of treaty interpretation, it becomes

apparent that conditions, like the ones imposed under the EU Seal Regime, do not

concern the intrinsic characteristics or features that are related to the products.

72. First, the IC exception allows the placing on the market of seal products "where

the seal products result from hunts traditionally conducted by Inuit and other

indigenous communities and contribute to their subsistence"67

. This exception

concerns the identity of the hunters, the traditions of their communities and the

purpose of the hunt, none of which can be considered as intrinsic or related

features of the products, such as their composition or presentation.

73. Second, the MRM exception allows the placing on the market of seal products

"where the seal products result from by-products of hunting that is regulated by

national law and conducted for the sole purpose of the sustainable management of

marine resources" under the condition that it is "on a non-profit basis" and "[t]he

nature and quantity of the seal products shall not be such as to indicate that they

64 Appellate Body report, EC-Asbestos, para. 77.

65 See G/TBT/W11, in particular para. 131.

66 Notably, they also only agreed to extend the scope to "related" process and production methods and

not all process and production methods.

67 Article 3(1) of the Basic Regulation. Article 3(1) of the Implementing Regulation further sets out

that the hunts must be conducted by "communities which have a tradition of seal hunting in the

community and in the geographical region", that the products of the hunt must be "at least partly

used, consumed or processed within the communities according to their traditions" and that the

hunts must "contribute to the subsistence of the community".



________________________________________________________________________________________

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are being placed on the market for commercial reasons".68

This exception concerns

the size, intensity and purpose of the hunt and the marketing conditions (i.e. non-

profit and non-systematic) of the products. Similarly to the IC exception, these

conditions do not set out any intrinsic or related features of the products.

74. Finally, the Travellers exception allows the importation of seal products "where it

is of an occasional nature and consists exclusively of goods for the personal use of

travellers or their families" provided that "[t]he nature and quantity of such goods

shall not be such as to indicate that they are being imported for commercial

reasons".69

Here, the exception concerns the use of the products and the

circumstances of their importation, but none of their intrinsic or related features.

2.2.1.4 In applying its interpretation of Annex 1:1 of the TBT Agreement to the facts the Panel does not make a

holistic assessment of the measure

75. Three main components of the EU Seal Regime are relevant of the purpose of the

analysis on the applicability of the TBT Agreement, namely: (i) the ban on

products consisting exclusively of seal, whether processed or not; (ii) the ban on

products containing seal and other ingredients; (iii) the exceptions to the ban on all

seal products.

76. The Parties to this dispute, as well as the Panel seem to agree with the Appellate

Body in EC - Asbestos 70

that the proper legal character of the measure at issue

cannot be determined unless the measure is examined as a whole. In this respect

the Panel reasoned:

68 Article 3(2)(b) of the Basic Regulation. Article 5(1) of the Implementing Regulation further

provides that the seal products must result from hunts "conducted under a national or regional

natural resources management plan which uses scientific population models of marine resources

and applies the ecosystem-based approach", and which "do not exceed the total allowable catch

quota established in accordance with [such] plan" and "the by-products of which are placed on the

market in a non-systematic way on a non-profit basis".

69 Article 3(2)(a) of the Basic Regulation. Article 4 of the Implementing Regulation further specifies

that the seals products must be "either worn by the travellers, or carried in their personal luggage",

"contained in the personal property of a natural person transferring his normal place of residence

from a third country to the Union" or "acquired on site in a third country by travellers and imported

by those travellers at a later date, provided that, upon arrival in the Union territory, those travellers

present to the customs authorities of the Member State concerned [certain] documents".

70 Appellate Body report, para. 64.



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A panel may have to examine different components of a measure

separately in order to make a holistic analysis of the measure's

legal character. However, the final decision on the character of

the measure must be based on the measure as a whole, "taking

into account, as appropriate, the prohibitive and permissive

elements that are part of it".71

77. The Appellate Body in EC - Asbestos did not provide any general guidance as to

the weight that should be ascribed to legal characterisation of the various

components of a measure, when a measure is composed of multiple components

not all of which meet the criteria for technical regulation, in determining whether

the measure as a whole should be considered a technical regulation.72

Nor did it

conclude that it is sufficient for one component to meet the criteria for a technical

regulation for a measure as a whole to be considered a technical regulation.

78. Despite that, at the outset of its analysis and after referring to a passage of the

report of the Appellate Body in EC-Asbestos73

, the Panel explained:

In our view, the Appellate Body's analysis of the measure at issue

in EC – Asbestos does not suggest that for a measure consisting of

a ban and certain exceptions to qualify as a technical regulation,

both the prohibition and the exceptions must individually lay

down product characteristics or their related PPMs.74

79. The European Union fails to see how such a general conclusion on the

interpretation of the definition of technical regulation could have been reached

based on a very fact specific conclusion of the Appellate Body in EC - Asbestos.

The European Union thus submits that the Panel incorrectly applied Appellate

Body jurisprudence in suggesting in para. 7.100 of the Panel report that any given

measure can as a whole be considered as a technical regulation, simply because

one of its components meets the criterion for a technical regulation.

80. Contrary to what para. 7.100 seems to suggest, it is clear from subsequent

Appellate Body jurisprudence that the determination of whether the measure

constitutes a technical regulation must be made in the light of the characteristics of

71 Panel's report, para. 7.101, footnote omitted.

72 In EC-Asbestos only one part of the ban, namely the ban concerning asbestos fibres, was considered

by the Appellate Body as not laying down product characteristics, whereas the other components of

the measure had been found to lay down mandatory product characteristics with respect to

identifiable products.

73 Appellate Body Report, EC – Asbestos, para. 75.




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the measure at issue and the circumstances of the case.75

In the view of the

European Union the Appellate Body, rather than setting a general rule, calls for a

case-by-case assessment of a measure in determining whether it can be considered

a technical regulation.

81. In the context of analysing a measure such as the Seal Regime, where not all

components can be said to meet the definition of a technical regulation, it would be

the task of the Panel to strike the right balance after having considered all

components of the measure and their respective role in the operation and object

and purpose of the measure.

82. In addition to failing to appreciate the necessity of making an actual holistic

assessment of the measure before it (and – as has been discussed previously under

headings 2.2.1.2 and 2.2.1.3 – erring in the interpretation of the terms of Annex

1:1, which in turn lead the Panel to incorrectly find that the exceptions constitute

applicable administrative procedures and lay down product characteristics), the

Panel also blatantly failed to take into consideration the fact that the ban on

products consisting exclusively of seal, whether processed or not, does not lay

down any product characteristics.

83. The Panel states in footnot