European Communities – MEASURES PROHIBITING THE IMPORTATION AND MARKETING OF SEAL PRODUCTS

AB-2014-1
AB-2014-2

Reports of the Appellate Body

 

The Appellate Body is issuing these Reports in the form of a single document constituting two separate Appellate Body Reports: WT/DS400/AB/R; and WT/DS401/AB/R. The cover page, preliminary pages, sections 1 through 5, and the annexes are common to both Reports. The page header throughout the document bears the two document symbols WT/DS400/AB/R and WT/DS401/AB/R, with the following exceptions: section 6 on pages CAN-191 to CAN-192, which bears the document symbol for and contains the Appellate Body's conclusions and recommendation in the Appellate Body Report WT/DS400/AB/R; and section 6 on pages NOR-193 to NOR-194, which bears the document symbol for and contains the Appellate Body's conclusions and recommendation in the Appellate Body Report WT/DS401/AB/R.

 

Table of Contents

 

1              Introduction.. 13

2              Arguments of the Participants and Third Participants. 17

2.1           Claims of error by Canada – Appellant. 17

2.1.1         Article 2.1 of the TBT Agreement 17

2.1.2         Article 2.2 of the TBT Agreement 20

2.1.2.1      The Panel's analysis of the contribution of the EU Seal Regime to its objective. 20

2.1.2.2      The Panel's analysis of the alternative measure. 23

2.1.3         Article XX of the GATT 1994. 25

2.1.3.1      Scope of Article XX(a) 25

2.1.3.2      The Panel's analysis of "necessity". 27

2.1.3.3      The Panel's analysis under the chapeau of Article XX. 28

2.2           Claims of error by Norway – Appellant. 29

2.2.1        Article 2.2 of the TBT Agreement 29

2.2.1.1      The Panel's identification of the objective of the EU Seal Regime. 29

2.2.1.2      The Panel's analysis of the contribution of the EU Seal Regime to its objective. 33

2.2.1.3      The Panel's analysis of the alternative measure. 37

2.2.1.4      Request for completion of the analysis. 39

2.2.2         Article XX of the GATT 1994. 40

2.2.2.1      Aspects of the measure to be justified under Article XX(a) 40

2.2.2.2      The Panel's analysis of "necessity". 42

2.2.2.3      The Panel's analysis under the chapeau of Article XX. 43

2.3           Arguments of the European Union – Appellee. 44

2.3.1         Article 2.1 of the TBT Agreement 44

2.3.2         Article 2.2 of the TBT Agreement 47

2.3.2.1      The Panel's identification of the objective of the EU Seal Regime. 47

2.3.2.2      The Panel's analysis of the contribution of the EU Seal Regime to its objective. 48

2.3.2.3      The Panel's analysis of the alternative measure. 52

2.3.3         Article XX of the GATT 1994. 54

2.3.3.1      Aspects of the measure to be justified under Article XX(a) 54

2.3.3.2      Scope of Article XX(a) 55

2.3.3.3      The Panel's analysis of "necessity". 56

2.3.3.4      The Panel's analysis under the chapeau of Article XX. 57

2.4           Claims of error by the European Union – Other appellant. 58

2.4.1         Annex 1.1 to the TBT Agreement 58

2.4.2         Article 2.1 of the TBT Agreement 60

2.4.2.1      Claims under Article 11 of the DSU. 62

2.4.3         Article I:1 and Article III:4 of the GATT 1994. 66

2.4.4         Article XX of the GATT 1994. 68

2.4.4.1      The Panel's analysis under the chapeau of Article XX. 68

2.4.4.2      The Panel's analysis under Article XX(b) 68

2.5           Arguments of Canada – Appellee. 69

2.5.1         Annex 1.1 to the TBT Agreement 69

2.5.2         Article 2.1 of the TBT Agreement 71

2.5.3         Article I:1 and Article III:4 of the GATT 1994. 75

2.5.4         Article XX of the GATT 1994. 77

2.5.4.1      The Panel's analysis under the chapeau of Article XX. 77

2.5.4.2      The Panel's analysis under Article XX(b) 77

2.5.5         Non-violation nullification or impairment in the sense of Article XXIII:1(b) of the GATT 1994  78

2.6           Arguments of Norway – Appellee. 78

2.6.1         Annex 1.1 to the TBT Agreement 78

2.6.2         Article I:1 and Article III:4 of the GATT 1994. 80

2.6.3         Article XX of the GATT 1994. 82

2.6.3.1      The Panel's analysis under the chapeau of Article XX. 82

2.6.3.2      The Panel's analysis under Article XX(b) 85

2.6.4         Non-violation nullification or impairment in the sense of Article XXIII:1(b) of the GATT 1994  86

2.7           Arguments of the third participants. 87

2.7.1         Ecuador 87

2.7.2         Iceland. 87

2.7.3         Japan. 88

2.7.4         Mexico. 91

2.7.5         Namibia. 92

2.7.6         United States. 92

3              ISSUES RAISED IN THESE APPEALS. 95

4              BACKGROUND AND OVERVIEW OF THE MEASURE AT ISSUE. 96

5              ANALYSIS OF THE APPELLATE BODY. 100

5.1           Legal characterization of the EU Seal Regime – Annex 1.1 to the TBT Agreement  100

5.1.1         Introduction. 100

5.1.2         Interpretation of Annex 1.1 to the TBT Agreement 102

5.1.3         Whether the EU Seal Regime constitutes a technical regulation. 104

5.1.3.1      Overview of the EU Seal Regime. 104

5.1.3.2      Preliminary remarks. 105

5.1.3.3      Whether the EU Seal Regime lays down product characteristics including the applicable administrative provisions. 106

5.1.3.4      Completing the legal analysis. 115

5.1.4         Overall conclusion. 117

5.2           Article I:1 and Article III:4 of the GATT 1994. 117

5.2.1         The Panel's findings. 118

5.2.2         The legal standards of the obligations under Article I:1 and Article III:4 of the GATT 1994  118

5.2.3         Article I:1 of the GATT 1994. 120

5.2.4         Article III:4 of the GATT 1994. 122

5.3           Article XX of the GATT 1994. 129

5.3.1         The objective of the EU Seal Regime. 130

5.3.1.1      The Panel's findings. 130

5.3.1.2      Identification of the objective pursued by the EU Seal Regime. 132

5.3.2         Article XX(a) of the GATT 1994. 139

5.3.2.1      The Panel's findings on Article XX(a) 141

5.3.2.2      The Panel's analysis of the aspects of the EU Seal Regime to be justified under Article XX(a) 144

5.3.2.3      The Panel's analysis of the protection of public morals under Article XX(a) 146

5.3.2.4      The Panel's analysis of the contribution of the EU Seal Regime to the objective. 150

5.3.2.5      The Panel's analysis of the reasonable availability of the alternative measure. 166

5.3.2.6      Conclusion. 174

5.3.3         The chapeau of Article XX of the GATT 1994. 175

5.3.3.1      Interpretation of the chapeau of Article XX of the GATT 1994. 175

5.3.3.2      Canada's and Norway's claims on appeal regarding the Panel's reasoning under the chapeau of Article XX of the GATT 1994. 179

5.3.3.3      Whether the EU Seal Regime meets the requirements of the chapeau of Article XX of the GATT 1994  181

6              Findings and conclusions in the Appellate Body Report WT/DS400/AB/R   can-191

6              Findings and conclusions in the Appellate Body Report WT/DS401/AB/R  nor-193

Annex 1    195

Annex 2    197

Annex 3    202

Annex 4    206

Annex 5    208

 

 

CASES CITED IN THESE REPORTS

Short Title	Full Case Title and Citation
Argentina – Footwear (EC)	Appellate Body Report, Argentina – Safeguard Measures on Imports of Footwear, WT/DS121/AB/R, adopted 12 January 2000, DSR 2000:I, p. 515
Argentina – Hides and Leather	Panel Report, Argentina – Measures Affecting the Export of Bovine Hides and Import of Finished Leather, WT/DS155/R and Corr.1, adopted 16 February 2001, DSR 2001:V, p. 1779
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 – Internal Taxes	Working Party Report, Brazilian Internal Taxes, GATT/CP.3/42 (First Report), adopted 30 June 1949, BISD II, p. 181; GATT/CP.5/37 (Second Report), adopted 13 December 1950, BISD II, p. 186
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
Brazil – Retreaded Tyres	Panel Report, Brazil – Measures Affecting Imports of Retreaded Tyres, WT/DS332/R, adopted 17 December 2007, as modified by Appellate Body Report WT/DS332/AB/R, DSR 2007:V, p. 1649
Canada – Aircraft (Article 21.5 – Brazil)	Appellate Body Report, Canada – Measures Affecting the Export of Civilian Aircraft – Recourse by Brazil to Article 21.5 of the DSU, WT/DS70/AB/RW, adopted 4 August 2000, DSR 2000:IX, p. 4299
Canada – Autos	Appellate Body Report, Canada – Certain Measures Affecting the Automotive Industry, WT/DS139/AB/R, WT/DS142/AB/R, adopted 19 June 2000, DSR 2000:VI, p. 2985
Canada – Periodicals	Appellate Body Report, Canada – Certain Measures Concerning Periodicals, WT/DS31/AB/R, adopted 30 July 1997, DSR 1997:I, p. 449
Canada – Provincial Liquor Boards (EEC)	GATT Panel Report, Canada – Import, Distribution and Sale of Alcoholic Drinks by Canadian Provincial Marketing Agencies, L/6304, adopted 22 March 1988, BISD 35S, p. 37
Canada – Renewable Energy / Canada – Feed-in Tariff Program	Appellate Body Reports, Canada – Certain Measures Affecting the Renewable Energy Generation Sector / Canada – Measures Relating to the Feed-in Tariff Program, WT/DS412/AB/R / WT/DS426/AB/R, adopted 24 May 2013
Chile – Price Band System	Appellate Body Report, Chile – Price Band System and Safeguard Measures Relating to Certain Agricultural Products, WT/DS207/AB/R, adopted 23 October 2002, DSR 2002:VIII, p. 3045 (Corr.1, DSR 2006:XII, p. 5473)
China – Auto Parts	Appellate Body Reports, China – Measures Affecting Imports of Automobile Parts, WT/DS339/AB/R / WT/DS340/AB/R / WT/DS342/AB/R, adopted 12 January 2009, DSR 2009:I, p. 3
China – Publications and Audiovisual Products	Appellate Body Report, China – Measures Affecting Trading Rights and Distribution Services for Certain Publications and Audiovisual Entertainment Products, WT/DS363/AB/R, adopted 19 January 2010, DSR 2010:I, p. 3
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
Colombia – Ports of Entry	Panel Report, Colombia – Indicative Prices and Restrictions on Ports of Entry, WT/DS366/R and Corr.1, adopted 20 May 2009, DSR 2009:VI, p. 2535
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 – Bananas III	Panel Reports, European Communities – Regime for the Importation, Sale and Distribution of Bananas (EC – Bananas III), WT/DS27/R/ECU (Ecuador) / WT/DS27/R/GTM, WT/DS27/R/HND (Guatemala and Honduras) / WT/DS27/R/MEX (Mexico) / WT/DS27/R/USA (US), adopted 25 September 1997, as modified by Appellate Body Report WT/DS27/AB/R, DSR 1997:II, p. 695 to DSR 1997:III, p. 1085
EC – Bed Linen (Article 21.5 – India)	Appellate Body Report, European Communities – Anti‑Dumping Duties on Imports of Cotton‑Type Bed Linen from India – Recourse to Article 21.5 of the DSU by India, WT/DS141/AB/RW, adopted 24 April 2003, DSR 2003:III, p. 965
EC – Export Subsidies on Sugar	Appellate Body Report, European Communities – Export Subsidies on Sugar, WT/DS265/AB/R, WT/DS266/AB/R, WT/DS283/AB/R, adopted 19 May 2005, DSR 2005:XIII, p. 6365
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 – Poultry	Appellate Body Report, European Communities – Measures Affecting the Importation of Certain Poultry Products, WT/DS69/AB/R, adopted 23 July 1998, DSR 1998:V, p. 2031
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 – Seal Products	Panel Reports, European Communities – Measures Prohibiting the Importation and Marketing of Seal Products, WT/DS400/R / WT/DS401/R / and Add.1, circulated to WTO Members 25 November 2013
EC – Selected Customs Matters	Appellate Body Report, European Communities – Selected Customs Matters, WT/DS315/AB/R, adopted 11 December 2006, DSR 2006:IX, p. 3791
EC – Tariff Preferences	Appellate Body Report, European Communities – Conditions for the Granting of Tariff Preferences to Developing Countries, WT/DS246/AB/R, adopted 20 April 2004, DSR 2004:III, p. 925
EC – Tariff Preferences	Panel Report, European Communities – Conditions for the Granting of Tariff Preferences to Developing Countries, WT/DS246/R, adopted 20 April 2004, as modified by Appellate Body Report WT/DS246/AB/R, DSR 2004:III, p. 1009
EC – Trademarks and Geographical Indications (US)	Panel Report, European Communities – Protection of Trademarks and Geographical Indications for Agricultural Products and Foodstuffs, Complaint by the United States, WT/DS174/R, adopted 20 April 2005, DSR 2005:VIII, p. 3499
EC – Tube or Pipe Fittings	Appellate Body Report, European Communities – Anti‑Dumping Duties on Malleable Cast Iron Tube or Pipe Fittings from Brazil, WT/DS219/AB/R, adopted 18 August 2003, DSR 2003:VI, p. 2613
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
India – Patents (US)	Appellate Body Report, India – Patent Protection for Pharmaceutical and Agricultural Chemical Products, WT/DS50/AB/R, adopted 16 January 1998, DSR 1998:I, p. 9
Japan – Agricultural Products II	Appellate Body Report, Japan – Measures Affecting Agricultural Products, WT/DS76/AB/R, adopted 19 March 1999, DSR 1999:I, p. 277
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
Japan – Apples	Appellate Body Report, Japan – Measures Affecting the Importation of Apples, WT/DS245/AB/R, adopted 10 December 2003, DSR 2003:IX, p. 4391
Korea – Alcoholic Beverages	Appellate Body Report, Korea – Taxes on Alcoholic Beverages, WT/DS75/AB/R, WT/DS84/AB/R, adopted 17 February 1999, DSR 1999:I, p. 3
Korea – Dairy	Appellate Body Report, Korea – Definitive Safeguard Measure on Imports of Certain Dairy Products, WT/DS98/AB/R, adopted 12 January 2000, DSR 2000:I, p. 3
Korea – Various Measures on Beef	Appellate Body Report, Korea – Measures Affecting Imports of Fresh, Chilled and Frozen Beef, WT/DS161/AB/R, WT/DS169/AB/R, adopted 10 January 2001, DSR 2001:I, p. 5
Thailand – Cigarettes (Philippines)	Appellate Body Report, Thailand – Customs and Fiscal Measures on Cigarettes from the Philippines, WT/DS371/AB/R, adopted 15 July 2011, DSR 2011:IV, p. 2203
US – Anti-Dumping and Countervailing Duties (China)	Appellate Body Report, United States – Definitive Anti-Dumping and Countervailing Duties on Certain Products from China, WT/DS379/AB/R, adopted 25 March 2011, DSR 2011:V, p. 2869
US – Carbon Steel	Appellate Body Report, United States – Countervailing Duties on Certain Corrosion‑Resistant Carbon Steel Flat Products from Germany, WT/DS213/AB/R and Corr.1, adopted 19 December 2002, DSR 2002:IX, p. 3779
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
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 – COOL	Panel Reports, United States – Certain Country of Origin Labelling (COOL) Requirements, WT/DS384/R / WT/DS386/R, adopted 23 July 2012, as modified by Appellate Body Reports WT/DS384/AB/R / WT/DS386/AB/R
US – FSC (Article 21.5 – EC)	Appellate Body Report, United States – Tax Treatment for "Foreign Sales Corporations" – Recourse to Article 21.5 of the DSU by the European Communities, WT/DS108/AB/RW, adopted 29 January 2002, DSR 2002:I, p. 55
US – Gambling	Appellate Body Report, United States – Measures Affecting the Cross‑Border Supply of Gambling and Betting Services, WT/DS285/AB/R, adopted 20 April 2005, DSR 2005:XII, p. 5663 (Corr.1, DSR 2006:XII, p. 5475)
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 – Gasoline	Appellate Body Report, United States – Standards for Reformulated and Conventional Gasoline, WT/DS2/AB/R, adopted 20 May 1996, DSR 1996:I, p. 3
US – Gasoline	Panel Report, United States – Standards for Reformulated and Conventional Gasoline, WT/DS2/R, adopted 20 May 1996, as modified by Appellate Body Report WT/DS2/AB/R, DSR 1996:I, p. 29
US – Large Civil Aircraft (2nd complaint)	Appellate Body Report, United States – Measures Affecting Trade in Large Civil Aircraft (Second Complaint), WT/DS353/AB/R, adopted 23 March 2012
US – Malt Beverages	GATT Panel Report, United States – Measures Affecting Alcoholic and Malt Beverages, DS23/R, adopted 19 June 1992, BISD 39S, p. 206
US – Oil Country Tubular Goods Sunset Reviews	Appellate Body Report, United States – Sunset Reviews of Anti‑Dumping Measures on Oil Country Tubular Goods from Argentina, WT/DS268/AB/R, adopted 17 December 2004, DSR 2004:VII, p. 3257
US – Section 211 Appropriations Act	Appellate Body Report, United States – Section 211 Omnibus Appropriations Act of 1998, WT/DS176/AB/R, adopted 1 February 2002, DSR 2002:II, p. 589
US – Section 337 Tariff Act	GATT Panel Report, United States Section 337 of the Tariff Act of 1930, L/6439, adopted 7 November 1989, BISD 36S, p. 345
US – Shrimp	Appellate Body Report, United States – Import Prohibition of Certain Shrimp and Shrimp Products, WT/DS58/AB/R, adopted 6 November 1998, DSR 1998:VII, p. 2755
US – Shrimp (Article 21.5 – Malaysia)	Appellate Body Report, United States – Import Prohibition of Certain Shrimp and Shrimp Products – Recourse to Article 21.5 of the DSU by Malaysia, WT/DS58/AB/RW, adopted 21 November 2001, DSR 2001:XIII, p. 6481
US – Softwood Lumber VI (Article 21.5 – Canada)	Appellate Body Report, United States – Investigation of the International Trade Commission in Softwood Lumber from Canada – Recourse to Article 21.5 of the DSU by Canada, WT/DS277/AB/RW, adopted 9 May 2006, and Corr.1, DSR 2006:XI, p. 4865
US – Superfund	GATT Panel Report, United States – Taxes on Petroleum and Certain Imported Substances, L/6175, adopted 17 June 1987, BISD 34S, p. 136
US – Tobacco	GATT Panel Report, United States – Measures Affecting the Importation, Internal Sale and Use of Tobacco, DS44/R, adopted 4 October 1994, BISD 41S, p. 131
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 – Tuna II (Mexico)	Panel Report, United States – Measures Concerning the Importation, Marketing and Sale of Tuna and Tuna Products, WT/DS381/R, adopted 13 June 2012, as modified by Appellate Body Report WT/DS381/AB/R
US – Upland Cotton	Appellate Body Report, United States – Subsidies on Upland Cotton, WT/DS267/AB/R, adopted 21 March 2005, DSR 2005:I, p. 3
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

 

PANEL EXHIBITS CITED IN THESE REPORTS

Short Title	Full Case Title and Citation
CDA-12	Council Directive No. 83/129 of 28 March 1983 concerning the importation into Member States of skins of certain seal pups and products derived therefrom, Official Journal of the European Communities, L Series, No. 91 (9 April 1983), pp. 30-31
CDA-29	J.C. Talling and I.R. Inglis, "Improvements to trapping standards", DG ENV (2009) (a joint research report by Food and Environment Research Agency (UK), Federation of Associations for Hunting and Conservation of the EU, Julius Kühn-Institut (Germany), and Swedish Environmental Protection Agency)
CDA-34	P-Y. Daoust and C. Caraguel, "The Canadian harp seal hunt: observations on the effectiveness of procedures to avoid poor animal welfare outcomes", Animal Welfare (2012), Vol. 21, pp. 445-455
CDA-47	EFSA, "Opinion of the Scientific Panel on Animal and Welfare on a request from the Commission related to welfare aspects of the main systems of stunning and killing the main commercial species of animals", The EFSA Journal (2004), No. 45, pp. 1-29
CDA-98	R. Munro, "Report on the Deer Industry in Great Britain, 2002", prepared for DEFRA and the Food Standards Agency, available at: <http://www.dnr.illinois.gov/hunting/deer/Documents/IllinoisDeerHarvestReportFinal.2011.2012.pdf>
CDA-102	Nunavut Economy Fact Sheet
CDA-122	Deer Commission for Scotland/Scottish Natural Heritage webpage, Best Practice Guide, "Reaction & follow-up", available at: <http://www.bestpracticeguides.org.uk/culling/follow‑up> (accessed 19 April 2013)
CDA-123	DEFRA, Current and Future Deer Management Options, Report on behalf of DEFRA European Wildlife Division, December 2003, pp. 14-15, available at: <http://www.naturalengland.org.uk/Images/managementoptions_tcm6-4637.pdf>
CDA-124	The British Deer Society webpage, "Learn about deer", available at: <http://www.bds.org.uk/learn_about_deer.html> (accessed 24 April 2013)
JE-1	Regulation (EC) No. 1007/2009 of the European Parliament and of the Council of 16 September 2009 on trade in seal products, Official Journal of the European Union, L Series, No. 286 (31 October 2009)
JE-2	Commission Regulation (EU) No. 737/2010 of 10 August 2010 laying down detailed rules for the implementation of Regulation (EC) No. 1007/2009 of the European Parliament and of the Council on trade in seal products, Official Journal of the European Union, L Series, No. 216 (17 August 2010), pp. 1-10
JE-4	Committee on the Internal Market and Consumer Protection, Report on the proposal for a regulation of the European Parliament and of the Council concerning trade in seals products (5 March 2009), A-0118/2009
JE-8	European Commission webpage, "Implementation of Humane Trapping Standard in the EU – 1991-2005", available at: <http://ec.europa.eu/environment/biodiversity/animal_welfare/hts/index_en.htm> (accessed 14 October 2012)
JE-9	European Commission, Proposal for a regulation of the European Parliament and the Council concerning trade in seal products (23 July 2008), COM(2008) 469 final
JE-16	European Commission, "Commission Staff Working Document accompanying document to the Proposal for a regulation of the European Parliament and of the council concerning trade in seal products – Impact Assessment on the potential impact of a ban of products derived from seal species" (23 July 2008), COM(2008) 469 final
JE-17	European Commission, Staff Working Paper, "Impact Assessment: accompanying the document, Communication from the Commission to the European Parliament, the Council and the European Economic and Social Committee on the European Union Strategy for the Protection and Welfare of Animals 2012-2015" (19 January 2012), COM(2012) 6 final
JE-20	COWI, Assessment of the potential impact of a ban of products derived from seal species (April 2008)
JE-21	COWI, Study on implementing measures for trade in seal products, Final Report (January 2010)
JE-22	European Food Safety Authority, "Scientific Opinion of the Panel on Animal Health and Welfare on a request from the Commission on the Animal Welfare aspects of the killing and skinning of seals", The EFSA Journal (2007), No. 610, pp. 1‑122
JE-24	North Atlantic Marine Mammal Commission, Report of the NAMMCO Expert Group Meeting on Best Practices in the Hunting and Killing of Seals (February 2009)
JE-26	Government of Greenland, Ministry of Fisheries, Hunting and Agriculture, Management and Utilization of Seals in Greenland (revised April 2012)
JE-27	Canadian Department of Fisheries and Oceans, Canadian Commercial Seal Harvest Overview 2011, Statistical and economic analysis series (October 2012)
JE-30	Nunavut Department of Environment, Fisheries and Sealing Division, Report on the Impacts of the European Union Seal Ban, (EC) No. 1007/2009, in Nunavut (2012)
JE-31	Norwegian Scientific Committee for Food Safety (VKM), Panel on Animal Health and Welfare, Scientific Opinion on animal welfare aspects of the killing and skinning in the Norwegian seal hunt (October 2007)
EU-48	Report of the Royal Commission, Seals and Sealing in Canada (1986), Vol. I, Chapter 11, "Public Opinion on Sealing"
EU-49	Public opinion survey by Orb for Respect for Animals, 16 December 2008 (United Kingdom)
EU-50	Public opinion survey by TNS Infratest for IFAW, February 2009 (Germany)
EU-51	Public opinion survey by TNO NIPP, July 2006 (The Netherlands)
EU-52	Public opinion survey by Ipsos-MORI for IFAW, 11 October 2007 (Portugal and Slovenia)
EU-53	Public opinion survey by Dedicated Research for IFAW, May 2006 (Belgium)
EU-54	Public opinion survey by IPSOS for IFAW, 18 October 2007 (France)
EU-55	Public opinion survey by TNS Infratest for IFAW, August 2007 (Austria)
EU-56	Public opinion survey by IPSOS-Mori for IFAW, January 2008 (Sweden)
EU-57	Public opinion survey by TNS Aisa for IFAW, February 2008 (Czech Republic)
EU-58	A summary of the results of various public opinion surveys compiled by IFAW
EU-59	Public opinion survey by IPSO-Mori for IFAW and HSI, June 2011 (Belgium, France, Germany, United Kingdom, Italy, Lithuania, Netherlands, Poland, Romania, Spain and Sweden)
EU-145	"European Commission representative visits Iqaluit on good-will trip", Nunatsiaq Online, 23 April 2013

 

ABBREVIATIONS USED IN THESE REPORTS

Abbreviation	Description
AGRI	Committee on Agriculture and Rural Development of the European Parliament
Basic Regulation	Regulation (EC) No. 1007/2009 of the European Parliament and of the Council of 16 September 2009 on trade in seal products, Official Journal of the European Union, L Series, No. 286 (31 October 2009) (Panel Exhibit JE-1)
Canada Panel Report (DS400)	Panel Report, European Communities – Measures Prohibiting the Importation and Marketing of Seal Products (WT/DS400/R)
Canadian Seal Harvest Overview	Canadian Department of Fisheries and Oceans, Canadian Commercial Seal Harvest Overview 2011, Statistical and economic analysis series (October 2012) (Panel Exhibit JE-27)
Commission 2008 Impact Assessment	European Commission, "Commission Staff Working Document accompanying document to the Proposal for a regulation of the European Parliament and of the council concerning trade in seal products – Impact Assessment on the potential impact of a ban of products derived from seal species" (23 July 2008), COM(2008) 469 final (Panel Exhibit JE-16)
Commission Proposal	European Commission, Proposal for a regulation of the European Parliament and the Council concerning trade in seal products (23 July 2008), COM(2008) 469 final (Panel Exhibit JE-9)
Complainants	Canada and Norway
COWI	Danish-based international consulting group
COWI 2008 Report	COWI, Assessment of the potential impact of a ban of products derived from seal species (April 2008) (Panel Exhibit JE-20)
COWI 2010 Report	COWI, Study on implementing measures for trade in seal products, Final Report (January 2010) (Panel Exhibit JE-21)
CSA poll	Opinion poll conducted by the Canadian Sealers Association (Research Dimensions, 1985) (results printed in Royal Commission Report, pp. 151-152)
DSB	Dispute Settlement Body
DSU	Understanding on Rules and Procedures Governing the Settlement of Disputes
EC Seal Pups Directive	Council Directive No. 83/129 of 28 March 1983 concerning the importation into Member States of skins of certain seal pups and products derived therefrom, Official Journal of the European Communities, L Series, No. 91 (9 April 1983), pp. 30-31 (Panel Exhibit CDA‑12)
EFSA	European Food Safety Authority
EFSA Scientific Opinion	European Food Safety Authority, "Scientific Opinion of the Panel on Animal Health and Welfare on a request from the Commission on the Animal Welfare aspects of the killing and skinning of seals", The EFSA Journal (2007), No. 610, pp. 1‑122 (Panel Exhibit JE-22)
ENVI	Committee on the Environment, Public Health and Food Safety of the European Parliament
EPA	United States Environmental Protection Agency
EU Seal Regime	The Basic Regulation and the Implementing Regulation combined together
GATS	General Agreement on Trade in Services
GATT 1994	General Agreement on Tariffs and Trade 1994
Greenland 2012 Seal Management Report	Government of Greenland, Ministry of Fisheries, Hunting and Agriculture, Management and Utilization of Seals in Greenland (revised April 2012) (Panel Exhibit JE-26)
IC	Inuit or other indigenous communities
IC exception	An exception under the EU Seal Regime for seal products obtained from seals hunted by Inuit or other indigenous communities
IC hunts	Hunts undertaken by Inuit or other indigenous communities
Implementing Regulation	Commission Regulation (EU) No. 737/2010 of 10 August 2010 laying down detailed rules for the implementation of Regulation (EC) No. 1007/2009 of the European Parliament and of the Council on trade in seal products, Official Journal of the European Union, L Series, No. 216 (17 August 2010), pp. 1-10 (Panel Exhibit JE-2)
ISO/IEC Guide	International Organization for Standardization/International Electrotechnical Commission, Guide 2:1991 – General terms and their definitions concerning standardization and related activities, 6th edn
MFN	Most favoured nation
MRM	Marine resource management
MRM exception	An exception under the EU Seal Regime for seal products obtained from seals hunted for purposes of marine resource management
MRM hunts	Hunts conducted for marine resource management purposes
Norway Panel Report (DS401)	Panel Report, European Communities – Measures Prohibiting the Importation and Marketing of Seal Products (WT/DS401/R)
Nunavut 2012 Report	Nunavut Department of Environment, Fisheries and Sealing Division, Report on the Impacts of the European Union Seal Ban, (EC) No. 1007/2009, in Nunavut (2012) (Panel Exhibit JE-30)
Panel Reports	Panel Reports, European Communities – Measures Prohibiting the Importation and Marketing of Seal Products (WT/DS400/R / WT/DS401/R)
Parliament Report	Committee on the Internal Market and Consumer Protection, Report on the proposal for a regulation of the European Parliament and of the Council concerning trade in seals products (5 March 2009), A-0118/2009 (Panel Exhibit JE‑4)
PPMs	Processes and production methods
RC poll	Opinion poll conducted by the Canadian Royal Commission (Canadian Gallup Poll Limited, 1986a, 1986b) (results printed in Royal Commission Report, pp. 150‑151)
Royal Commission Report	Report of the Royal Commission, Seals and Sealing in Canada (1986), Vol. I, Chapter 11, "Public Opinion on Sealing" (Panel Exhibit EU-48)
SCM Agreement	Agreement on Subsidies and Countervailing Measures
SPS Agreement	Agreement on the Application of Sanitary and Phytosanitary Measures
TBT Agreement	Agreement on Technical Barriers to Trade
Travellers exception	An exception under the EU Seal Regime for seal products brought by travellers into the European Union in limited circumstances
Working Procedures	Working Procedures for Appellate Review, WT/AB/WP/6, 16 August 2010
WTO	World Trade Organization
WTO Agreement	Marrakesh Agreement Establishing the World Trade Organization

 

World Trade Organization

Appellate Body

 

 

European Communities – Measures Prohibiting the Importation and Marketing of Seal Products (DS400 / DS401)   Canada Appellant/Appellee Norway Appellant/Appellee European Union[1] Other Appellant/Appellee   Argentina, Third Participant China, Third Participant Colombia, Third Participant Ecuador, Third Participant Iceland, Third Participant Japan, Third Participant Mexico, Third Participant Namibia, Third Participant[2] Russian Federation, Third Participant United States, Third Participant

AB-2014-1 AB-2014-2     Appellate Body Division:   Graham, Presiding Member Chang, Member Zhang, Member

 

 

1  Introduction

1.1.  Canada, Norway, and the European Union each appeals certain issues of law and legal interpretations developed in the Panel Reports, European Communities – Measures Prohibiting the Importation and Marketing of Seal Products^[3] (Panel Reports).^[4] The Panel was established^[5] to consider complaints by Canada^[6] and Norway^[7] (the complainants) with respect to a European Union measure dealing with seal products.^[8]

1.2.  The measure at issue in these disputes, as identified by the Panel^[9], consists of the following legal instruments:

a.      Regulation (EC) No. 1007/2009 of the European Parliament and of the Council of 16 September 2009 on trade in seal products^[10] (Basic Regulation); and

b.     Commission Regulation (EU) No. 737/2010 of 10 August 2010 laying down detailed rules for the implementation of Regulation (EC) No. 1007/2009 of the European Parliament and of the Council on trade in seal products^[11] (Implementing Regulation).

1.3.  The Panel considered it appropriate to treat the Basic Regulation and the Implementing Regulation as a single measure, which it referred to as the "EU Seal Regime".^[12] We do the same in these Reports.

1.4.  The EU Seal Regime prohibits the placing of seal products on the EU market unless they qualify under certain exceptions, consisting of the following: (i) seal products obtained from seals hunted by Inuit or other indigenous communities (IC exception); (ii) seal products obtained from seals hunted for purposes of marine resource management (MRM exception); and (iii) seal products brought by travellers into the European Union in limited circumstances (Travellers exception).^[13] The EU Seal Regime lays down specific requirements in respect of each of these exceptions.^[14]

1.5.  Canada and Norway claimed before the Panel that the EU Seal Regime violates various obligations under the General Agreement on Tariffs and Trade 1994 (GATT 1994) and the Agreement on Technical Barriers to Trade (TBT Agreement). The complainants alleged that the IC and MRM exceptions of the EU Seal Regime violate the non-discrimination obligations under Articles I:1 and III:4 of the GATT 1994 and, according to Canada, also under Article 2.1 of the TBT Agreement. Both complainants contended, in essence, that the IC and MRM exceptions accord seal products from Canada and Norway less favourable treatment than that accorded to like seal products of domestic origin, mainly from Sweden and Finland, and those of other foreign origin, particularly from Greenland. The complainants also asserted that the EU Seal Regime creates an unnecessary obstacle to trade, inconsistent with Article 2.2 of the TBT Agreement, because it is more trade restrictive than necessary to fulfil a legitimate objective. They further argued that certain procedural aspects of the measure violate the requirements for conformity assessment under Article 5 of the TBT Agreement. The complainants additionally claimed that the IC, MRM, and Travellers exceptions impose quantitative restrictions on trade, in a manner inconsistent with Article XI:1 of the GATT 1994.^[15] Norway also argued that, if the EU Seal Regime was found to violate Article XI:1 of the GATT 1994, then it would also violate Article 4.2 of the Agreement on Agriculture. Finally, Canada and Norway both contended that the application of the EU Seal Regime nullifies or impairs benefits accruing to them under the covered agreements within the meaning of Article XXIII:1(b) of the GATT 1994.^[16]

1.6.  The Panel Reports were circulated to Members of the World Trade Organization (WTO) on 25 November 2013. In its Reports, the Panel found it appropriate first to address the claims under the TBT Agreement, followed by those made under the GATT 1994.^[17]

1.7.  With respect to Canada's and Norway's claims under the TBT Agreement, the Panel concluded that:

a.      the EU Seal Regime is a "technical regulation" within the meaning of Annex 1.1 to the TBT Agreement;

b.     with respect to Canada's claim under Article 2.1, the IC exception and MRM exception under the EU Seal Regime are inconsistent with Article 2.1 because the detrimental impact caused by these exceptions does not stem exclusively from legitimate regulatory distinctions and, consequently, the exceptions accord imported seal products treatment less favourable than that accorded to like domestic and other foreign seal products;

c.      the EU Seal Regime is not inconsistent with Article 2.2 because it fulfils the objective of addressing EU public moral concerns regarding seal welfare to a certain extent, and no alternative measure has been demonstrated to make an equivalent or greater contribution to the fulfilment of the objective of the EU Seal Regime;

d.     the European Union acted inconsistently with its obligations under Article 5.1.2 because the conformity assessment procedures under the EU Seal Regime were incapable of enabling trade in qualifying products to take place as from the date of entry into force of the EU Seal Regime; and

e.     Canada and Norway did not demonstrate that the European Union had acted inconsistently with its obligations under Article 5.2.1.^[18]

1.8.  With respect to Canada's and Norway's claims under the GATT 1994, the Panel concluded that:

a.      the IC exception under the EU Seal Regime is inconsistent with Article I:1 because an advantage granted by the European Union to seal products originating in Greenland is not accorded immediately and unconditionally to like seal products originating in Canada and Norway;

b.     the MRM exception under the EU Seal Regime is inconsistent with Article III:4 because it accords imported seal products treatment less favourable than that accorded to like domestic seal products;

c.      each of the IC, MRM, and Travellers exceptions under the EU Seal Regime is not inconsistent with Article XI:1;

d.     the IC exception and the MRM exception under the EU Seal Regime are not justified under Article XX(a) because they fail to meet the requirements under the chapeau of Article XX; and

e.     the IC exception and the MRM exception under the EU Seal Regime are not justified under Article XX(b) because the European Union failed to make a prima facie case for its claim.^[19]

1.9.  The Panel rejected Norway's claim under Article 4.2 of the Agreement on Agriculture^[20], and refrained from examining Canada's and Norway's non-violation claim under Article XXIII:1 of the GATT 1994.^[21] The Panel found that, pursuant to Article 3.8 of the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU), to the extent that the European Union had acted inconsistently with Article 2.1 (in the case of Canada) and Article 5.1.2 of the TBT Agreement, and Articles I:1 and III:4 of the GATT 1994, it nullified or impaired benefits accruing to Canada and Norway under these agreements.^[22]

1.10.  On 24 January 2014, Canada and Norway each notified the Dispute Settlement Body (DSB), pursuant to Articles 16.4 and 17 of the DSU, of its intention to appeal certain issues of law covered in the Panel Reports and certain legal interpretations developed by the Panel, and each filed a Notice of Appeal^[23] and an appellant's submission pursuant to Rule 20 and Rule 21, respectively, of the Working Procedures for Appellate Review^[24] (Working Procedures). On 29 January 2014, the European Union notified the DSB, pursuant to Articles 16.4 and 17 of the DSU, of its intention to appeal certain issues of law covered in the Panel Reports and certain legal interpretations developed by the Panel and filed a Notice of Other Appeal^[25] and an other appellant's submission pursuant to Rule 23 of the Working Procedures. On 11 February 2014, the European Union, Canada, and Norway each filed an appellee's submission.^[26] On 14 February 2014, Iceland, Japan, Mexico, and the United States each filed a third participant's submission.^[27] On the same day, Namibia notified its intention to appear at the oral hearing as a third participant^[28] (in DS401 only), and Argentina, China, and Ecuador (on 17 February 2014), Colombia (on 19 February 2014), and Russia (on 21 February 2014) each notified its intention to appear at the oral hearing as a third participant.^[29]

1.11.  On 29 January 2014, the Appellate Body received a joint communication from Canada and Norway requesting that the oral hearing in these appellate proceedings be opened to public observation. Both complainants proposed that public observation be permitted via simultaneous closed‑circuit television broadcasting with the option for the transmission to be turned off should a third participant indicate that it wished to keep its oral statement confidential. They further requested the adoption of additional procedures to ensure the security and orderly conduct of the proceedings. On the same date, the Appellate Body received a communication from the European Union, joining Canada and Norway's request for public observation of the hearing, and indicating that it had no objections to the proposed additional security arrangements.

1.12.  On 30 January 2014, the Appellate Body Division in these appellate proceedings invited the third parties to comment in writing on the participants' request for an open oral hearing. Japan, Mexico, and the United States submitted their responses on 3 February 2014. In its communication, Japan indicated that it had no objection to the request for public observation or the proposed logistical arrangements. Mexico also did not object, but nevertheless stated that its position in these appeals was without prejudice to its systemic views on the public observation of oral hearings. The United States articulated its support for the request to open the hearing to the public, and suggested that the Division accommodate the participants' logistical requests to the extent possible.

1.13.  On 5 February 2014, the Division issued a Procedural Ruling authorizing the request of Canada, Norway, and the European Union to open the hearing to public observation and adopting additional procedures for the conduct of the hearing. The Procedural Ruling is attached as Annex 4 to these Reports.

1.14.  The oral hearing in these appeals was originally scheduled for 3-5 March 2014. On 30 January 2014, the Appellate Body received letters from Canada, Norway, and the European Union, requesting the postponement of the dates for the oral hearing due to logistical difficulties faced by the parties during the week of 3 March 2014. The participants requested that the oral hearing be postponed to no earlier than the week of 17 March 2014. On 31 January 2014, the Division invited the third parties to comment in writing on the request for postponement of the oral hearing. Japan, Mexico, and the United States submitted their comments on 4 February 2014, indicating that they had no objection to the participants' request. On 5 February 2014, the Division issued a Procedural Ruling rescheduling the oral hearing for 17 to 19 March 2014. The Procedural Ruling is attached as Annex 5 to these Reports.

1.15.  On 19 February^[30], 6 March^[31], and 17 March 2014^[32], the Appellate Body received unsolicited amicus curiae briefs. The participants and third participants were given an opportunity to express their views on the admissibility and substance of these briefs at the oral hearing, if they so wished. We note that the brief of 17 March 2014 was received on the first day of the oral hearing. In the light of its late filing, and mindful of the requirement to ensure that participants and third participants are given an adequate opportunity fully to consider any written submission filed with the Appellate Body, the Division deemed this brief inadmissible. The Division did not find it necessary to rely on the other two amicus curiae briefs in rendering its decision.

1.16.  The oral hearing in these appeals was held from 17 to 19 March 2014. Public observation took place via simultaneous closed‑circuit television broadcast to a separate viewing room. The participants and Ecuador, Japan, Mexico, Namibia, and the United States made opening statements. The participants and third participants responded to questions posed by the Members of the Division hearing the appeals.

1.17.  On 24 March 2014, the Chair of the Appellate Body informed the Chair of the DSB that, due to the requests made by the participants to postpone the date for the oral hearing and the subsequent rescheduling of the oral hearing from 3-5 March 2014 to 17-19 March 2014, and also due to the size of these appeals and the other appeal by the European Union, including the number and complexity of the issues raised by the participants, it was expected that the Appellate Body Reports in these appeals would be circulated to WTO Members no later than Tuesday, 20 May 2014.^[33] Subsequently, by letter dated 16 May 2014, the Chair of the Appellate Body informed the Chair of the DSB that due to the time required for translation and the caseload of the Appellate Body, the Reports in these appeals would be circulated on Thursday, 22 May 2014 in all official languages.^[34]

2  Arguments of the Participants and Third Participants

2.1  Claims of error by Canada – Appellant

2.1.1  Article 2.1 of the TBT Agreement

2.1.  Canada submits that the Panel erred by formulating and applying the wrong legal test under Article 2.1 of the TBT Agreement. Canada further challenges the Panel's intermediate conclusion, in the context of its analysis under Article 2.1, that the regulatory distinction between commercial hunts and hunts undertaken by Inuit or other indigenous communities (IC hunts) is justified. Canada requests the Appellate Body to complete the legal analysis under Article 2.1 by applying the correct "even-handedness" test; and to uphold the Panel's ultimate finding that the detrimental impact of the EU Seal Regime does not stem exclusively from a legitimate regulatory distinction under Article 2.1, but on the modified grounds that the distinction between commercial and IC hunts is arbitrary and unjustifiable.

2.2.  Canada submits that the Panel committed a legal error by articulating the wrong test to determine whether the detrimental impact of the EU Seal Regime on the competitive opportunities of Canadian seal products stems exclusively from a legitimate regulatory distinction. Specifically, Canada takes issue with the Panel's framing of the test as consisting of three distinct elements. According to Canada, this is contrary to the Appellate Body's framing of the test, in three previous disputes under the TBT Agreement, as "a determination of whether the regulatory distinction that resulted in the detrimental impact was designed or applied in an even‑handed manner."^[35] Canada submits that the Panel erred in treating the first two elements of its test – i.e. whether the regulatory distinction was rationally connected to the objective and, if not, whether there was another cause or rationale that could justify the distinction – as distinct from the third element – i.e. whether the regulatory distinction was designed and applied in an even‑handed manner.^[36] In support of its argument, Canada points to the Appellate Body's findings in US – Clove Cigarettes and US – COOL. Canada argues that, in both of these cases, "the absence of [a] rationale explaining or justifying the regulatory distinction played a central role in the Appellate Body finding that there had been a lack of even-handedness in how the distinction was designed and applied."^[37] Hence, in Canada's view, "the presence or absence of a rationale that explains or justifies the regulatory distinction is a critical aspect in determining whether a regulatory distinction is even‑handed."^[38]

2.3.  Canada further submits that the Panel committed a number of legal errors in finding that the regulatory distinction between non-conforming Canadian seal products and Greenlandic Inuit seal products was justifiable. First, Canada asserts that the Panel erred in finding that the distinction was justifiable despite evidence demonstrating that the rationale for the distinction "goes against" the objective of the EU Seal Regime.^[39] Canada highlights that, in its assessment of the EU Seal Regime's contribution to its objective, the Panel found that the IC exception actually "diminishes" the overall contribution of the EU Seal Regime to that objective.^[40] Canada submits that a regulatory distinction that undermines the objective of a measure cannot be justified, as it would constitute arbitrary or unjustifiable discrimination. Canada argues that, in Brazil – Retreaded Tyres, the finding that the rationale for the discrimination undermined the objective of the measure at issue was determinative for the finding of arbitrary and unjustifiable discrimination.^[41] Given the similarities between the test under Article 2.1 of the TBT Agreement and the chapeau of Article XX of the GATT 1994, Canada argues that the fact that the rationale for the discrimination completely undermines the objective of the measure must play a determinative role under both provisions. Canada further clarifies its view that the Panel committed an error in attempting to distinguish the Appellate Body's reasoning in Brazil – Retreaded Tyres.^[42] Canada notes that, according to the Panel, the Appellate Body's conclusion of arbitrary and unjustifiable discrimination in that case was based on a finding that the rationale for the exception was not sufficient to justify the exception in the face of the rational disconnection to the objective of the measure. Canada submits that this is not correct. In Canada's view, the Appellate Body's conclusion was based solely on its determination that there was no rational connection between the exception and the objective of the ban, and did not involve a balancing of the objective of the exception with the rational disconnection.

2.4.  Second, Canada alleges that the Panel committed a legal error "by relying on international instruments extraneous to the case" to justify the distinction between IC and commercial hunts.^[43] Canada notes that the international agreements cited by the European Union before the Panel do not require the European Union to protect the interests of Inuit or other indigenous communities by discriminating against the products of non-indigenous peoples. Canada further argues that "the merits of according preferential treatment to indigenous peoples must still be balanced with how such treatment accords with the objective of the measure."^[44] Canada recalls the Appellate Body's observation in Brazil – Retreaded Tyres that, even if a rationale is not capricious or random, it can still be found to be arbitrary or unjustifiable because it bears no relationship to the objective of the measure or goes against it.^[45] Canada submits that the existence of international agreements that recognize, in general terms, the interests of indigenous people cannot be a determining factor in assessing whether the rationale for the regulatory distinction is justified.

2.5.  The third legal error that Canada identifies is the Panel's failure to examine whether giving effect to the distinction will actually fulfil its rationale. Canada points to the Appellate Body's discussion of the rationales for the distinction between clove and menthol cigarettes that the United States put forward in the US – Clove Cigarettes case. According to Canada, the Appellate Body in that case dismissed the rationales on the basis that "it was not clear" that the alleged consequences of not making the distinction – namely, the impact on the US health care system associated with banning menthol and the risk of the development of a black market for menthol cigarettes – would materialize.^[46] Canada argues that, in the present disputes, it is equally "not clear" that the IC exception will serve to protect Inuit or other indigenous communities' (IC) interests. Canada notes that Inuit communities were opposed to the EU Seal Regime as a whole despite the IC exception because they believe that it will have a negative impact on the market for all seal products.^[47] Canada submits that the Panel's failure to consider the lack of fulfilment of the regulatory distinction's purpose constitutes legal error.^[48]

2.6.  Canada further alleges that the Panel erred by focusing on the wrong comparison in its assessment of whether the regulatory distinction is even-handed. According to Canada, the Panel erroneously applied the "even-handedness" test by analysing different Inuit hunts rather than the regulatory distinction between commercial and IC hunts, which it had found to be causing the detrimental impact. Canada notes that, in assessing the legitimacy of a regulatory distinction for the purposes of Article 2.1 of the TBT Agreement, the Appellate Body has focused only on the distinction that accounts for the detrimental impact on imported products as compared to domestic products.^[49] Canada submits that, by not focusing on the proper regulatory distinction, the Panel failed to follow the guidance provided by the Appellate Body in previous TBT disputes. Canada argues that, had the Panel directed its attention towards the regulatory distinction between commercial and IC hunts, it would have had the correct basis to conclude that this regulatory distinction was designed and applied in an arbitrary manner because the IC hunt in Greenland exhibits the characteristics of a commercial hunt. As Canada sees it, the fact that the application of the IC exception results in differentiated benefits amongst the Inuit is not germane to the question of whether the regulatory distinction between commercial and IC hunts is even‑handed. As a result, Canada argues, the Panel failed to determine whether the regulatory distinction between commercial and IC hunts is even-handed.

2.7.  Canada further submits that the Panel erred by failing to examine the arbitrary aspects of the regulatory distinction between commercial and IC hunts.^[50] In Canada's view, the Panel should have taken into account its finding that the Inuit hunt in Greenland has "characteristics that are closely related to that of commercial hunts" in examining whether the regulatory distinction between commercial and IC hunts was designed and applied in an arbitrary or unjustifiable manner.^[51] For Canada, the Panel's findings regarding the similarities between the Inuit hunt in Greenland and commercial hunts are relevant to the application of the test under Article 2.1, not because they show that the IC exception was not designed or applied in an even-handed manner, but because they demonstrate that the distinction between Inuit and commercial hunts is "illusory in practice", and is thus designed in an arbitrary manner.^[52] According to Canada, it is, therefore, the distinction between commercial and IC hunts, rather than the IC exception as such, that is designed in an arbitrary manner.^[53] Canada submits that the Panel's analysis of the even‑handedness of the regulatory distinction between commercial and IC hunts was misdirected and constitutes an error of law.

2.8.  Canada further submits that the factual findings made by the Panel in its analysis of the even-handedness of the EU Seal Regime with respect to different IC hunts support the conclusion that the Greenlandic seal hunt is not primarily driven by subsistence considerations.^[54] Therefore, Canada argues, the application of the regulatory distinction between Canada's commercial hunt and the Greenlandic hunt is arbitrary, even if the distinction between commercial hunts and Inuit hunts, generally, may not be.

2.9.  Canada further argues that the Panel acted inconsistently with its duties under Article 11 of the DSU in failing to assess Canada's evidence demonstrating that the commercial hunts in Canada possess characteristics that are similar to the characteristics of subsistence hunts. According to Canada, this evidence was "highly material" to Canada's claims pertaining to the legitimacy of the regulatory distinction between commercial and IC hunts.^[55] Canada asserts that, in its assessment of commercial hunts, the Panel selectively highlighted certain characteristics that are not similar to those of IC hunts, and did not respond to Canada's claims regarding the long-standing tradition of seal hunting on the east coast of Canada, the generation of income for small seal-hunting communities from the seal hunt, as well as the use of seal by-products in those communities.^[56] Canada submits that, even if examining this evidence would not have changed the Panel's ultimate finding on the uniqueness of IC hunts, the Panel had a duty under Article 11 of the DSU to consider this evidence and explain why this information did not affect its finding.

2.10.  Canada, therefore, requests the Appellate Body to complete the legal analysis under Article 2.1 by applying the correct "even-handedness" test; and to uphold the Panel's ultimate finding that the detrimental impact of the EU Seal Regime does not stem exclusively from a legitimate regulatory distinction under Article 2.1 of the TBT Agreement, but on the modified grounds that the distinction between commercial and IC hunts is arbitrary and unjustifiable.^[57]

2.1.2  Article 2.2 of the TBT Agreement

2.11.  Canada claims that the Panel erred in finding that the EU Seal Regime is more trade restrictive than necessary within the meaning of Article 2.2 of the TBT Agreement. Canada submits that the Panel erred in its analysis of the degree of contribution that the EU Seal Regime makes to the identified objective, in failing to assess the risk non-fulfilment would create and to conduct a "relational" analysis, and in its analysis of whether the alternative measure makes at least an equivalent or greater contribution to the objective. Canada requests that the Appellate Body reverse the Panel's finding and complete the legal analysis and find that the EU Seal Regime is inconsistent with Article 2.2.

2.1.2.1  The Panel's analysis of the contribution of the EU Seal Regime to its objective

2.12.  Canada argues that the Appellate Body has stressed the importance of "clear and precise" panel findings in considering the three elements of the test under Article 2.2 of the TBT Agreement.^[58] Without clear and precise findings regarding the degree of contribution of the measure to the objective, Canada argues, "a panel cannot complete the relational analysis or the comparison of the challenged measure with an alternative measure as it will not have a sufficiently accurate benchmark degree of contribution for comparison."^[59]

2.13.  Canada claims that the Panel erred in its "contribution" analysis in several respects. Canada submits that the Panel erred in its analysis of the contribution of the EU Seal Regime to the first aspect of the identified objective, namely, preventing the EU public from being exposed to or purchasing products derived from seals killed inhumanely. Canada argues that the Panel's consideration of the prohibitive part of the measure is "immaterial" because its permissive aspect allows unlimited amounts of products from IC hunts and hunts conducted for marine resource management purposes (MRM hunts).^[60] Because the Panel found that the EU public is exposed to and may be purchasing seal products derived from inhumanely killed seals under the EU Seal Regime, Canada states that the Panel "should have found that the EU Seal Regime, as a whole, fails to contribute to the first aspect of the objective because the EU public may still purchase seal products derived from seals killed inhumanely".^[61]

2.14.  Moreover, Canada argues that, even if the Panel correctly found that the ban contributes to the first aspect of the objective, it erred "by failing to make an overall conclusion that the EU Seal Regime as a whole makes a net positive contribution to preventing the EU public from being exposed to or purchasing seal products from inhumanely killed seals".^[62] Canada maintains that the degree of contribution is a key factor in assessing the necessity of a measure under Article 2.2. In Canada's view, the Panel's failure to articulate a "clear or precise" finding of the extent of a positive or negative contribution to the first aspect of the objective of the EU Seal Regime and to provide an overall conclusion on the degree of contribution to that objective as a whole constitutes legal error.^[63] Canada adds that, if the Panel had properly articulated the extent of the degree of contribution of the prohibitive and permissive aspects to the first aspect of the objective, there were factual findings in other sections of the Panel Reports "that [led] to the conclusion that products allowed access under the IC exception in particular, include a much higher risk of being derived from inhumanely killed seals".^[64] Canada maintains that, based on the Panel's findings, "there is an increased likelihood of seal products being derived from inhumanely killed seals" in Greenlandic versus Canadian hunts, and "a high likelihood of an increase in supply of seal products from Greenland in the absence of seal products from Canada and Norway".^[65] In Canada's view, not only are EU citizens being exposed to and possibly purchasing seal products derived from inhumanely killed seals under the EU Seal Regime, but the extent to which this occurs is higher under the EU Seal Regime and increases the negative contribution of the exceptions to the first aspect of the objective. If the Panel had applied the "degree of contribution" test correctly to the facts, Canada argues, it would have found that "the EU Seal Regime as a whole fails completely to make a contribution to the first aspect of the objective."^[66]

2.15.  Canada submits that the Panel erred in its analysis of the contribution of the EU Seal Regime to the second aspect of the identified objective, namely, reducing the incidence of the inhumane killing of seals. Canada argues that the Panel sought to determine whether the measure contributed to a "proxy objective" of reducing demand for seal products in the EU and globally without assessing whether this then contributed to a reduction in the incidence of the inhumane killing of seals.^[67] Canada states that, in failing to assess this second step, the Panel failed to demonstrate that there was "a genuine relationship of ends and means between the objective pursued and the measure at issue".^[68] Canada moreover states that this finding was made on the basis of its examination of trade data, despite finding that "the extent of the connection between the ban aspect of the measure and the reduction in the number of seals killed is not clearly discernible".^[69]

2.16.  In Canada's view, the Panel erred because it "failed to provide a clear and precise articulation of an actual contribution and the extent of the contribution or the capability of making a contribution to the proxy objective".^[70] Canada adds that the Panel then "failed to undertake an examination of whether a reduction in demand for seal products in the EU or globally would consequently result in a reduction in the incidence of inhumane killing of seals".^[71] Canada argues that findings made by the Panel in other parts of its Reports would not support such a showing since "the incidence of inhumane killing under the exceptions would be greater despite the possibility of fewer overall seals being killed."^[72] Canada further alleges that the Panel compounded its error by referring to the "'incidence' of inhumane killing" without clarifying whether it was referring to the "proportion of seals being killed inhumanely or a total number of seals killed inhumanely".^[73] Canada also contends that the Panel acted contrary to Article 11 of the DSU by failing to refer to any evidence that supports its finding that, by reducing global demand for seal products resulting from commercial hunts, fewer seals will be killed in an inhumane way.

2.17.  Canada argues that the Panel erred because its findings with respect to the contribution that the EU Seal Regime makes to the identified objective "are insufficiently specific or detailed to provide an accurate assessment of the 'degree' of contribution and a benchmark for comparison with the alternative measure".^[74] Relying on the Appellate Body reports in US – COOL, Canada contends that a panel needs to present "clear and precise" findings that enable identification of the degree of contribution made to the objective.^[75] In Canada's view, however, the Panel failed to articulate what degree of contribution the EU Seal Regime as a whole makes to the identified objective "beyond vague references to 'some' contribution, 'a contribution' and 'contributes to a certain extent'".^[76] Moreover, Canada considers that the Panel's finding that one part of the EU Seal Regime is capable of making and does make some contribution to the objective, while finding that the contribution is diminished and further negatively affected by other parts of the measure, provides an insufficient basis on which to identify the overall degree to which the EU Seal Regime makes a contribution to the objective. Canada argues that, without a finding of the overall degree of contribution of the measure to the objective, "it is not possible to compare the degree of contribution of the EU Seal Regime with that of the alternative measure."^[77]

2.18.  Canada further explains that its argument is not that imports from Greenland will replace imports from Canada, but rather that imports from Greenland can and do have access to the EU market despite the fact, as found by the Panel, that these products may be derived from seals killed inhumanely^[78] Similarly, with respect to reducing the incidence of inhumanely killed seals, Canada notes that its contention is not that imports from Greenland will replace imports from Canada, but rather that they could, because there is no limit on the number of imports under the IC exception that can be placed on the EU market. Thus, Canada maintains, a reduction in demand for seal products in the European Union would not necessarily result in a decrease in the incidence of inhumanely killed seals since imports from Greenland are derived from hunting practices that have been recognized as creating poor animal welfare outcomes.

2.19.  Finally, Canada claims that the Panel erred in two respects in its application of the legal standard under Article 2.2. First, the Panel failed properly to assess the risks non-fulfilment would create. According to Canada, although the Panel determined that the level of protection actually achieved by the measure is not as high as the European Union had claimed, the Panel then failed "to continue its analysis to assess the 'nature of the risks at issue' and the 'consequences of non‑fulfilment' of the objective under the EU Seal Regime".^[79] Second, Canada considers that the Panel compounded this error by failing to undertake a "relational" analysis between the risks non‑fulfilment would create under the EU Seal Regime, the trade-restrictiveness of the EU Seal Regime, and the contribution of the EU Seal Regime to the identified objective. Had the Panel completed this analysis, Canada asserts, the Panel would have concluded that "a very trade‑restrictive measure that does not make a significant contribution to the objective and has relatively low consequences of nonfulfillment of the objective is not 'provisionally' necessary pending confirmation by comparison with a less trade-restrictive alternative".^[80]

2.1.2.2  The Panel's analysis of the alternative measure

2.20.  Canada claims that the Panel erred in several respects in its assessment of the alternative measure. Canada argues that the Panel erred by comparing the contribution of the alternative measure against only the prohibitive aspect of the EU Seal Regime. Canada notes that, unlike the Panel's analysis of the contribution of the EU Seal Regime, in which it assessed both positive and negative contributions to the objective, the Panel made no reference to the manner in which the exceptions, both implicit and explicit, diminish and undermine the contribution to the objective. Canada argues that the Panel erred by "ignoring its own findings" and establishing an improper benchmark for analysis of the alternative measure that considered the EU Seal Regime as "only a prohibition without the explicit or implicit exceptions".^[81]

2.21.  Canada maintains that, by failing to assess the alternative measure against the actual contribution of the EU Seal Regime, the Panel "assessed the alternative measure against the standard of complete fulfilment of the objective".^[82] Canada considers that such an approach created an improper standard against which to compare the alternative measure. With regard to the first aspect of the objective, Canada argues that it appears the Panel was requiring that the alternative measure "would have to limit market access to only those seal products that were, in fact, derived from humanely killed seals"^[83], and thus "prescribe adequate animal welfare standards and a certification and labelling scheme that would succeed in limiting access to the EU market exclusively to seal products derived from humanely killed seals".^[84] And although the Panel also concluded that less stringent animal welfare standards and verification requirements would diminish the degree of contribution to the fulfilment of the objective, Canada argues that the Panel "fail[ed] to reconcile this with its finding that the IC and MRM exceptions 'diminish' the extent of the contribution that the 'ban' makes to both aspects of the objective and that the 'implicit exceptions' undermine the objective".^[85]

2.22.  With regard to the second aspect of the objective – namely, reducing the number of inhumanely killed seals – Canada observes that, on the one hand, the Panel found that the alternative measure may subject a greater number of seals to the risks of poor animal welfare by "restoring the potential market" in the European Union.^[86] On the other hand, the Panel considered that the imposition of animal welfare requirements may also promote the humane killing practices in seal hunts that could reduce the number of inhumanely killed seals to some extent. Canada argues, however, that the Panel here also "failed to make an overall determination of the extent of contribution that the alternative measure makes to this aspect of the objective".^[87] Canada considers that, by comparing the alternative measure to a standard of complete fulfilment of the objective and its two aspects, a standard that the EU Seal Regime itself failed to meet, the Panel erred in the application of the "necessity" test under Article 2.2.^[88]

2.23.  Canada also argues that the Panel erred by adopting the incorrect legal standard of complete fulfilment of the objective with respect to determining the degree of contribution the alternative measure would need to make and thus the reasonable availability of the alternative measure on that basis. In Canada's view, "[s]ince complete fulfilment of the objective is a higher degree of contribution than what was found under the EU Seal Regime, the Panel erred in finding that the alternative measure is not reasonably available."^[89] Canada argues that, when the Panel considered whether the EU Seal Regime was reasonably available, it sought to determine whether the alternative measure reflected a high level of animal welfare. In doing so, Canada contends, the Panel erred "by basing its conclusion that the alternative measure was not reasonably available on the requirement that it meet this level of animal welfare".^[90] Canada argues that the Panel also wrongly concluded that certification at the country or hunter level is insufficient because it would fail to convey accurate information in respect of seal welfare. Canada thus maintains that the Panel erred because its conclusion that the stringent version of the alternative measure imposes the sort of prohibitive costs and technical difficulties that can prevent an alternative measure from being considered to be reasonably available was "premised on the alternative measure being required to completely fulfil the objective".^[91]

2.24.  Canada submits that the Panel's error in evaluating the alternative measure against complete fulfilment of the objective led it to err in its reliance on certain jurisprudence and to disregard other relevant considerations. Canada argues, for instance, that the Panel's misconception about the standard against which to compare the alternative led it to err in its reliance on the Appellate Body report in EC – Asbestos.^[92] According to Canada, it was not appropriate for the Panel to rely on the Appellate Body's analysis of whether the alternative measure led to a continuation of asbestos-related health risks because, in contrast to the measure in EC – Asbestos, the EU Seal Regime does not achieve the level of protection asserted by the European Union.

2.25.  Canada maintains that the Panel further erred in its interpretation and application of the jurisprudence by dismissing the evidence regarding other wildlife hunts and abattoirs. Canada points to the Appellate Body's statements in Korea – Various Measures on Beef as support for examining measures applicable to other related product areas in assessing the reasonable availability of a proposed alternative measure.^[93] Canada argues that, because the Panel found that the EU public's specific moral concern with respect to the inhumane killing of seals was rooted in animal welfare generally being an issue of public morals in the EU, "the same regulatory actions applied in the cases of other animals relied on by the EU to support its assertion of a public moral on seal welfare are relevant to the issue of which types of regulatory responses are reasonably available."^[94] In Canada's view, if the Panel had correctly interpreted and applied the jurisprudence, it would have found that the types of measures applied with respect to the welfare of other animals – including setting animal welfare requirements, certification, labelling, monitoring, and enforcement – raise doubts with respect to the necessity of the more restrictive EU Seal Regime. Furthermore, Canada argues that, because the Panel misinterpreted and misapplied the jurisprudence to the facts of this case, it "erred in considering the costs and logistical demands on hunters and marketers of seal products if a strict certification scheme were to be adopted by the EU".^[95] Canada also argues that it is the burdens and costs imposed by compliance with an alternative measure on the responding WTO Member, not on the industry, that are relevant for a finding that the alternative measure is reasonably available.

2.26.  For these reasons, Canada requests the Appellate Body to reverse the Panel's finding, and to complete the legal analysis and find that the EU Seal Regime is inconsistent with Article 2.2 of the TBT Agreement.^[96]

2.27.  Canada also asserts a claim under Article 11 of the DSU regarding the Panel's finding that the alternative measure could result in an increase in the number of seals killed inhumanely. In particular, Canada argues that the Panel's finding was based on an assertion of the European Union, which is itself a restatement of an unsupported assertion made in an amicus curiae submission. According to Canada, the Panel thus found that "a stringent animal welfare standard would lead to more seals being killed inhumanely … without any evidentiary support."^[97]

2.1.3  Article XX of the GATT 1994

2.1.3.1  Scope of Article XX(a)

2.28.  Canada appeals the Panel's finding that the EU Seal Regime was designed to protect public morals and therefore falls within the scope of application of Article XX(a) of the GATT 1994. Relying on the Panel report in US – Gambling, Canada notes that the first element of the test under Article XX(a) is to determine whether a given measure is designed "to protect" public morals.^[98] Canada highlights that the phrase "to protect" is also used in Article XX(b). In EC – Asbestos, the panel observed that "the use of the word 'protection' implies the existence of a risk."^[99] In Canada's view, "[g]iven the close similarity between Articles XX(a) and XX(b), the interpretive reasoning of the panel in EC – Asbestos is highly relevant to this dispute".^[100] For these reasons, Canada "extrapolate[s] that the test to be applied" in determining whether a measure falls within the scope of application of Article XX(a) includes three elements: (i) "identification of a public moral"; (ii) "identification of a risk to that public moral"; and (iii) "establishing that a nexus exists between the challenged measure and the protection of the public moral against that risk in the sense that the measure is capable of making a contribution to the protection of that public moral".^[101]

2.29.  With respect to the first element of its test, Canada argues that the Panel failed to "inquire what the content of the [relevant] moral norm is" by evaluating "the standard of right and wrong conduct in the European Union with respect to animal welfare".^[102] According to Canada, "[s]uch an inquiry must focus on the content of animal welfare laws, policies and practices" in the European Union.^[103] Instead, Canada argues, the Panel "merely pointed to the existence of EU animal welfare legislation while noting that the presence of animal welfare policies in a variety of EU and EU Member State legislation supports the idea that animal welfare is a moral matter".^[104]

2.30.  Turning to the second element of its test, Canada asserts that, in order to ascertain whether a "risk" to the public morals identified above exists, the Panel should have considered "whether there is evidence to show that the animal welfare practices with which the measure is concerned fall below that standard."^[105] According to Canada, a "risk" to public morals in the European Union exists only if the evidence leads to the conclusion that "the commercial seal hunts targeted by the ban exhibit a degree or incidence of animal suffering that falls below the standard or norm of right and wrong conduct in the context of animal welfare shown to prevail within the [European Union]."^[106] Canada recalls that it had presented evidence before the Panel to show that "EU policies and practices with respect to animal welfare included a tolerance for a certain degree of animal suffering, both for slaughterhouses and wildlife hunts", and that the welfare risks associated with commercial seal hunts are "'commonplace' in situations that involve the killing of animals, especially in the context of wild life hunts".^[107] On this basis, Canada argues that the Panel failed to consider whether the risks associated with commercial seal hunts "exceeded the accepted level of risk of compromised animal welfare, as reflected in the EU's policies and practices in this field".^[108]

2.31.  Canada also challenges the Panel's findings under Article 11 of the DSU, specifically in respect of the Panel's finding "that the circumstances and conditions of seal hunts present certain specific challenges to the humane killing of seals".^[109] Canada argues that, by characterizing seal hunts as "unique", and by disregarding the evidence relating to other situations involving the killing of animals, the Panel "failed to provide the comparative basis that would have allowed it to evaluate whether the commercial seal hunt failed to satisfy prevailing animal welfare standards in the European Union that provide the foundation for the alleged public moral concern".^[110]

2.32.  Canada asserts that "[t]he Panel did not provide any analysis based on the evidence before it to support its finding that the physical environment of seal hunts was distinguishable from wildlife hunts."^[111] While the Panel did consider the European Food Safety Authority's Scientific Opinion on Animal Health and Welfare^[112] (EFSA Scientific Opinion) that compared the conditions between seal hunts and abattoirs, it did not refer to any part of the EFSA Scientific Opinion that looked at other wildlife hunts.^[113] Canada argues that much of the evidence regarding seal hunts, including the EFSA Scientific Opinion, provided comparison with other hunts "for the purpose of making qualified conclusions regarding the seal hunt", and such comparisons were necessary for the findings in the EFSA Scientific Opinion.^[114] Because the Panel "felt that the other wildlife hunts were not comparable", Canada argues, the Panel "deviated from the proper scientific method employed by the experts to arrive at their conclusion on the seal hunt".^[115] According to Canada, the Panel, "[a]t a minimum", should have provided "a thorough assessment of the findings in the EFSA Scientific Opinion regarding other wildlife hunts."^[116] Canada argues that the Panel acted inconsistently with Article 11 of the DSU when it failed to provide reasons why environmental conditions between seal hunts and other wildlife hunts "are so different as to make the animal welfare aspects of the respective hunts incomparable", and when it did not objectively assess the evidence before it, "particularly evidence that goes to the heart of Canada's arguments".^[117]

2.33.  Canada also argues that the Panel did not properly compare the risks to animal welfare that arise from other terrestrial hunts. In particular, Canada points out that the Panel failed to take into account its evidence and arguments with respect to poor animal welfare outcomes in deer hunts, and, therefore, failed to recognize and compare the poor animal welfare outcomes in other terrestrial hunts.^[118] According to Canada, the particular characteristics of seal hunts identified by the Panel "that pose 'various risks to the welfare of seals' including things such as ineffective stunning, delays in the killing process and struck and lost rates are all equally evident in wildlife hunts".^[119] Canada recalls that it "had shown that the shooting of wildlife such as deer pose similar risks due to poor marksmanship, wounding as opposed to killing of deer as well as the inordinate delay between a shot and when a hunter checks the animal".^[120] The Panel, however, "failed to disclose why this evidence that is of utmost relevance for Canada's arguments did not have a bearing on its determination regarding the particular risks to seal hunting".^[121]

2.1.3.2  The Panel's analysis of "necessity"

2.34.  Canada claims that the Panel also erred in its interpretation and application of the "necessity" test under Article XX(a) of the GATT 1994. To the extent that the Panel relied upon its analysis under Article 2.2 of the TBT Agreement, Canada puts forth the same claims of error with respect to the Panel's "necessity" analysis under Article XX(a) as Canada's claims of error with respect to Article 2.2 of the TBT Agreement.^[122] Additionally, Canada presents a "specific claim of legal error" concerning the Panel's interpretation of the "material contribution" test established by the Appellate Body in Brazil – Retreaded Tyres.^[123]

2.35.  Canada takes issue with the Panel's conclusion that "for a preliminary finding that 'the measure as a whole is "necessary"' the contribution 'made by the "ban" to the identified objective must be shown to be at least material given the extent of its trade-restrictiveness'."^[124] According to Canada, in taking this approach, the Panel appears to have relied on the statement of the Appellate Body in Brazil – Retreaded Tyres, that refers to "restrictive effects" "as severe as those resulting from an import ban".^[125] Canada highlights, however, that in that dispute the panel analysed the import ban on retreaded tyres as a measure on its own and the MERCOSUR exception as a separate measure because of the structure of the complainant's request for the establishment of a panel in that case.^[126] Relying on the Appellate Body's observations in Brazil – Retreaded Tyres, Canada argues that "the jurisprudence does not provide a basis upon which only the ban, which is not the aspect of the measure found inconsistent with the other provisions of the GATT 1994, is examined for the purposes of determining whether the measure makes a material contribution to the objective."^[127] For these reasons, Canada contends that the Panel erred in its interpretation and application of the "contribution" test by only considering the "ban" aspect of the EU Seal Regime when considering whether the measure makes a "material" contribution to its identified objective.^[128]

2.36.  Next, Canada argues that, had the Panel applied the contribution element of the "necessity" test correctly, it would have found that the EU Seal Regime failed to make a material contribution to its objective. Canada recalls that, under its Article XX(a) analysis, the Panel referred to its findings in the context of Article 2.2 of the TBT Agreement to conclude that "[o]verall, with respect to the EU Seal Regime as a whole … we found that it contributed to a certain extent to its objective."^[129] The Panel's conclusion that the EU Seal Regime makes "some contribution" or "contributes to a certain extent" does not provide a "sufficient or meaningful articulation" of the degree of contribution of the measure to the objective.^[130] For a measure to be considered "necessary", "it should fall significantly closer to the pole of 'indispensable' rather than the opposite pole of 'simply making a contribution to'."^[131] However, the EU Seal Regime's "degree of contribution" identified by the Panel, "fall[s] closer to the 'simply making a contribution to' end of the spectrum rather than the indispensable end".^[132] For these reasons, Canada contends that the Panel erred in characterizing "some contribution" and "makes a contribution to" the identified objective as equivalent to making a "material contribution", as suggested by the Appellate Body in Brazil – Retreaded Tyres.^[133]

2.37.  Canada also takes issue with the Panel's statement: "[w]e consider, and the parties do not dispute, that … such public moral concern [with regard to the protection of animals] is indeed an important value or interest."^[134] Specifically, Canada refers to its second written submission to the Panel to assert that it "did not agree that the specific public moral concern[s] in issue [were] considered important or presented a serious risk".^[135] For this reason, Canada asserts that the Panel erred in stating that Canada did not dispute the importance of the public moral concerns at issue in this case, and thus erred in making an objective assessment of the matter, contrary to Article 11 of the DSU.

2.38.  Canada, therefore, requests the Appellate Body to reverse the Panel's intermediate findings under Article XX(a) of the GATT 1994 that: (i) the measure falls within the scope of application of Article XX(a); (ii) the EU Seal Regime as a whole makes a contribution to the identified objective; and (iii) the alternative measure advanced by Canada is not reasonably available.^[136] Canada also requests the Appellate Body to complete the legal analysis and find that the EU Seal Regime cannot be provisionally justified under Article XX(a).^[137]

2.1.3.3  The Panel's analysis under the chapeau of Article XX

2.39.  Canada argues that, although the Panel came to the correct conclusion, it erred in its reasoning under the chapeau of Article XX of the GATT 1994 by finding that the discrimination against Canadian "non-Inuit" seal products is justifiable. Canada takes issue with the Panel's "exclusive" reliance on its legal analysis and findings under Article 2.1 of the TBT Agreement to determine whether the EU Seal Regime is applied in a manner that constitutes "arbitrary or unjustifiable discrimination" within the meaning of the chapeau of Article XX.^[138] Canada argues that, by "relying solely on the ['legitimate regulatory distinction'] test it had devised under TBT Article 2.1", the Panel committed an "error in law".^[139] Canada maintains that the general overlap in scope and similarities in the objectives between the GATT 1994 and the TBT Agreement are not sufficient to "import the results of the ['legitimate regulatory distinction'] test directly into the analysis of the chapeau requirements", while "ignor[ing] crucial elements of the test for arbitrary or unjustifiable discrimination" under the chapeau.^[140] According to Canada, although the text of the chapeau of Article XX is similar to the text of the sixth preambular recital of the TBT Agreement, there is no reason why "the wording of the sixth recital of the preamble of the TBT Agreement, created in 1994, should affect the interpretation of the chapeau requirements of Article XX, which dates back to 1947."^[141] Canada asserts that the Panel "did not have a proper basis under the customary international law rules of treaty interpretation to read into the text of the chapeau requirements the ['legitimate regulatory distinction'] test applicable to another agreement".^[142] Canada also argues that, by relying on its analysis under Article 2.1, the Panel erred by failing to apply the test laid down by the Appellate Body in Brazil – Retreaded Tyres. In that case, the Appellate Body ended its analysis under the chapeau of Article XX after finding that "there was no rational connection between the discrimination in the Brazilian measure and its objective".^[143] Canada argues that, "[a]t a minimum", the Panel should have referred to the "rational connection" test that is directly applicable to the chapeau and provided an explanation why it did not apply the test in its chapeau analysis.^[144]

2.40.  Canada asserts that "[t]he ['legitimate regulatory distinction'] test developed by the Panel for TBT Article 2.1 did not properly assess the justifiability of the rationale for the regulatory distinction in the light of the identified objective of the measure."^[145] According to the Appellate Body, Canada adds, "a rationale that purports to explain discrimination cannot be justified under Article XX where there is no rational connection to the objective or if it goes against the objective."^[146] In Canada's view, the chapeau analysis "is not designed to assess whether a WTO Member has properly put forward a policy rationale that is not covered by one of the paragraphs of Article XX".^[147] Canada argues that the Panel erred "by finding that discrimination arising from a regulatory distinction was justified despite the fact that the objective of that distinction had not been assessed to determine whether it fell within the scope of application of any of the paragraphs under Article XX".^[148] Canada further argues that the Panel also erred "by failing to take into account the fact that, not only is there no rational connection between the discrimination and the policy objective of addressing the EU public moral concerns regarding seal welfare", but also that the exceptions in fact "go against that objective by enabling IC and MRM-sourced seal products to be sold on the EU market".^[149]

2.41.  In the event that the Appellate Body does not agree with Canada that the EU Seal Regime is not provisionally justified under Article XX(a) of the GATT 1994, Canada requests the Appellate Body to reverse the Panel's intermediate finding that the discrimination against Canadian commercial seal products arising from the IC exception is justifiable.^[150] Canada requests the Appellate Body to complete the legal analysis on this specific point by applying the test set out in Brazil – Retreaded Tyres and to find that the discrimination between Canadian commercial seal products and IC seal products arising from the application of the EU Seal Regime is "arbitrary and unjustifiable".^[151] Should the Appellate Body disagree with its requests, Canada clarifies that its challenge under the chapeau of Article XX of the GATT 1944 is restricted to the Panel's reasoning thereunder, and not its ultimate finding that the EU Seal Regime does not meet the requirements of the chapeau.^[152]

2.2  Claims of error by Norway – Appellant

2.2.1  Article 2.2 of the TBT Agreement

2.2.1.1  The Panel's identification of the objective of the EU Seal Regime

2.42.  Norway contends that the Panel erred in finding that the protection of the interests of indigenous communities, as reflected in the IC exception, and the promotion of the sustainable management of marine resources, as reflected in the MRM exception, do not amount to "objectives" of the EU Seal Regime for purposes of Article 2.2 of the TBT Agreement. Norway challenges the Panel's findings on several grounds.

2.2.1.1.1  Reasons provided by the Panel

2.43.  Norway argues that the Panel gave erroneous reasons for finding that the protection of the IC and MRM interests do not amount to an objective of the EU Seal Regime within the meaning of Article 2.2 of the TBT Agreement. Norway submits that, even assuming that the Panel properly assessed the evidence before it, it nevertheless erred in its application of the law to the facts in finding that the IC and MRM interests do not amount to an objective of the EU Seal Regime within the meaning of Article 2.2. Specifically, Norway takes issue with four aspects of the Panel's reasoning that led the Panel to conclude that the interests accommodated in the IC and MRM exceptions do not amount to objectives of the EU Seal Regime.

2.44.  First, Norway agrees that the public concerns regarding seal welfare must be distinguished from the policy interests targeted by the European Union in allowing the marketing of seal products derived from IC and MRM hunts. However, Norway emphasizes that "the mere fact that the three different policy interests pursued by the legislation (public concerns on seal welfare; protection of IC communities; and promoting sustainable marine resource management) must be distinguished is not a valid reason for considering that two of the three interests do not amount to 'objectives'."^[153] According to Norway, "the need to distinguish the three legislative interests pursued by the measure was merely an organizational issue for the Panel in structuring its analysis and reasoning" and not a substantive reason to find that two of the interests are not objectives.^[154]

2.45.  Second, Norway suggests that the Panel erred in assuming that, for an interest to amount to a regulatory objective, it must be "grounded in the concerns of citizens".^[155] Norway emphasizes that this need not necessarily be the case. For example, an interest "may be grounded in policy interests raised by legislators or regulators that enjoy limited or no public support and do not address citizens' concerns".^[156]

2.46.  Third, according to Norway, the Panel erred by assuming that the IC and MRM exceptions could not amount to objectives of the EU Seal Regime given that they were "included in the course of the legislative process".^[157] Norway submits instead that "it is to be expected that the objectives of the legislative or regulating entity responsible for adopting the measure would arise 'in the course of the legislative process'."^[158]

2.47.  Fourth, Norway alleges that the Panel erred by relying on the Appellate Body report in Brazil – Retreaded Tyres to support its conclusion that the IC and MRM interests were not "objectives". Norway notes in particular that the exception at issue in Brazil – Retreaded Tyres "did not form part of the measure itself" but was "made effective through the application of the measure" and followed from a ruling of the MERCOSUR tribunal.^[159] According to Norway, "[t]he factual circumstances surrounding the adoption of that exception were, therefore, very different from the circumstances surrounding the adoption of the IC and [M]RM 'exceptions', which were included by the legislator at the time it adopted the measure."^[160] Norway adds that "[t]he mere fact that the respondent in a different dispute did not argue that an exception under a different measure, adopted in unusual circumstances in a different country, had distinct policy objectives, does not mean that exceptions cannot have distinct policy objectives."^[161] Nor does it mean, according to Norway, that "the IC and MRM requirements – even if they were 'exceptions' – do not evidence distinct policy objectives."^[162] Norway adds that, if a regulator adopts exceptions to general rules, there is usually a policy reason for doing so – "the exception will have some aim, target or goal, just as the IC and MRM requirements do".^[163]

2.48.  On this basis, Norway claims that the Panel erred under Article 2.2 of the TBT Agreement by providing "invalid reasons" for concluding that the interests accommodated by EU legislators in the IC and MRM exceptions do not amount to objectives of the EU Seal Regime, and therefore requests the Appellate Body to reverse the Panel's findings under Article 2.2 of the TBT Agreement.^[164]

2.2.1.1.2  The Panel's legal characterization of the objective of the measure

2.49.  In addition to challenging the reasoning provided by the Panel in paragraph 7.402 of the Panel Reports, Norway contends, as a separate matter, that the evidence before the Panel, as well as the Panel's own findings and the Panel's findings relating to the legislative history, text, and structure, design, and expected operation of the measure, do not support the Panel's overall conclusion that "the EU Seal Regime pursues a single objective, and does not pursue objectives relating to the IC and [M]RM requirements".^[165] According to Norway, since the task of the Panel under Article 2.2 consisted of assessing the evidence before it for the purpose of identifying the objectives of the measure, the Panel's errors in this regard constitute errors in the legal characterization of the facts. Norway challenges several aspects of the Panel's analysis.

2.50.  First, with regard to the Panel's analysis of the legislative history of the EU Seal Regime, Norway argues that the Panel erred in finding that addressing EU public moral concerns regarding seal welfare was the "principal" objective of the EU Seal Regime, when, according to Norway, the legislative history of the measure indicated that "the interests of indigenous communities and sustainable resource management were also priorities in the minds of legislators when developing the measure."^[166] In support of its position, Norway refers to the legislative proposal by the European Commission for a regulation concerning trade in seal products^[167] (Commission Proposal), which not only makes reference to public concerns regarding seal welfare, but also includes protecting IC interests as one of the "[g]rounds for and objectives of the proposal".^[168] According to Norway, the Panel failed to take this into account in its analysis. Norway also refers to the report of the Committee on the Internal Market and Consumer Protection on the Commission Proposal^[169] (Parliament Report) and an opinion provided therein by the Committee on Agriculture and Rural Development of the European Parliament (AGRI), which, in Norway's view "indicated the importance to EU legislators of the policy objectives underlying the IC and [M]RM objectives".^[170] Norway further explains that the Committee on the Environment, Public Health and Food Safety of the European Parliament (ENVI) proposed, in the Parliament Report, "a full ban on trade in seal products with a limited exemption for Inuit communities"^[171] and the Rapporteur of AGRI also supported restrictions that excluded Inuit communities from the scope of the regulation.^[172] In addition, referring to remarks made by Finland and Sweden within the Council of the European Union, Norway argues that "the adoption of the EU Seal Regime in the precise form it took reflected a compromise attempt to incorporate a multitude of 'policy' aims and objectives proposed by the various stakeholders in the European Union's institutions: the Parliament, the Commission and the Council."^[173] For Norway, these goals were animal welfare, protection of Inuit interests, and marine resource management.

2.51.  Norway submits that, despite this evidence, "the vast majority of the Panel's reasoning on objectives examines whether the evidence supported the objective asserted by the European Union, namely that the measure addressed public concerns about seal welfare."^[174] Moreover, when it came to the objectives asserted by the complainants, the Panel made only "selective" references to some of the above evidence.^[175] For example, according to Norway, the Panel "did not … consider the role played by passages from the same Proposal on the need to 'ensur[e]' that the regulation protected the Inuit interests, in informing the objective of the EU measure" and did not mention the Parliament Report.^[176]

2.52.  Regarding the Panel's analysis of the text of the EU Seal Regime, Norway asserts that the Basic Regulation reflects the fact that the IC and MRM interests "are prominently reflected in the measure in a manner that gives rise to a hierarchy of interests established in favour of" the interests accommodated in those exceptions.^[177] In Norway's view, the design and structure of those exceptions indicate that the legislator "prioritized market access for products from qualifying hunts".^[178] Norway further alleges that the Panel "entirely overlooked" the Implementing Regulation, noting simply that, "while providing practical details necessary for the enforcement of the Basic Seal Regulation, the Implementing Regulation does not in itself assist us in identifying the objective of the measure."^[179] Norway points out that the Implementing Regulation is an "integral part" of the EU Seal Regime, and that "detail with which the permissive elements are described and provided for illustrate that the IC and [M]RM concerns were prominent in the minds of the legislators."^[180]

2.53.  Further, Norway claims that the Panel failed to consider and give appropriate weight to its own findings in other sections of the Panel Reports regarding the design, structure, and expected operation of the EU Seal Regime, which indicates that the IC and MRM exceptions amount to objectives of the EU Seal Regime. In particular, Norway recalls that the Panel noted earlier in its Reports that the EU Seal Regime is expected "to operate in such a way that most of the products from Greenland and Sweden qualify under the IC requirements and are therefore permitted into the EU market, whereas practically none of the seal products from Norway and Canada are permitted".^[181] Norway adds that Greenland is expected to supply large quantities of the imported seal products and has the capacity to meet all of the European Union's demand. Thus, through the design and operation of the EU Seal Regime, seal products are not banned, but are instead allowed, through the IC and MRM exceptions. According to Norway, "[t]he expected operation of the measure therefore fulfills the aim of the regulators to ensure that products meeting the IC and [M]RM requirements have access to the EU market."^[182] Norway further claims that the Panel "failed to draw the relevant legal conclusion, namely, that the operation of the measure reinforces its aim or goal of pursuing the IC, [M]RM, and personal use interests, and in fact undermines the degree to which the measure addresses public concerns about seal welfare".^[183]

2.54.  Norway further emphasizes that, in any event, the issue is not whether the IC and MRM interests are more or less important than seal welfare; the issue is simply whether the objectives of the measure include promoting IC and MRM interests.^[184] To be an objective, a policy interest must form a regulatory goal or target, whether it is more, less, or equally important compared to other goals. Norway argues that a panel may have regard to the ways in which different interests are pursued and balanced, but it need not conclude that there is some absolute hierarchy among different objectives.

2.2.1.1.3  Claims under Article 11 of the DSU

2.55.  Norway further claims that, through its treatment of the evidence relating to the design, structure, and legislative history of the EU Seal Regime, the Panel failed to make an objective assessment of the facts, as required under Article 11 of the DSU, in finding that the interests pursued by the IC and MRM exceptions do not amount to separate and independent objectives of the EU Seal Regime. Norway's claim that the Panel acted inconsistently with its obligations under Article 11 of the DSU is based on four grounds.

2.56.  Norway contends, first, that the Panel disregarded evidence provided by Norway showing that the legislative objectives of the EU Seal Regime included protecting the economic and social interests of indigenous communities, and separately promoting the sustainable management of marine resources.^[185] Instead, the Panel undertook a "selective" and "unbalanced" review of the evidence of the legislative history, dedicating most of its analysis to addressing evidence that supported the public morals objective asserted by the European Union.^[186] In contrast, the Panel's "discussion and consideration of the IC and [M]RM objectives asserted by Norway receive[d] a few cursory lines of commentary".^[187] Norway emphasizes, however, that "[a]n objective assessment of the facts requires substantially more than 'notice' by a panel."^[188] Norway further asserts that the Panel's "imbalanced treatment of the evidence is highlighted by its selective reliance" on the Commission Proposal.^[189] In this regard, Norway notes that "[t]he Panel referred to the Commission's Proposal to support the view that public concerns regarding seal welfare were to be addressed in the measure, quoting two full paragraphs of that Proposal."^[190] Yet, according to Norway, "the Panel failed to attribute equal (or for that matter any) weight in its discussion to other objectives highlighted in that very same document"^[191], namely that "[t]he fundamental economic and social interests of Inuit communities traditionally engaged in the hunting of seals should not be adversely affected."^[192]

2.57.  Second, Norway asserts that the Panel failed adequately to take into account the text of the EU Seal Regime, and in particular the Implementing Regulation for purposes of identifying the objective of the EU Seal Regime. Norway argues that, in its consideration of the text of the EU Seal Regime, the Panel erred because it failed to appreciate the import of its own finding that the preamble of the Basic Regulation sets out three main considerations with equal prominence, which included those relating to IC and MRM interests. According to Norway, the Panel's failure to explain why, in the light of that finding, "it still gave prominence singularly to the seal welfare concerns of the EU public, constitutes further error".^[193]

2.58.  Third, according to Norway, the Panel failed to account for the relevance of the measure's operation to discern the objective of the EU Seal Regime. More specifically, the Panel failed entirely to consider and give probative weight to its own findings in other sections of its Reports. According to Norway, these show that the EU Seal Regime will operate to allow into the EU market "all, or virtually all" seal products from Greenland under the IC exception, and that seal products from certain EU countries, including Sweden, would "likely qualify" under the MRM exception.^[194] Norway posits that this evidence concerning the expected operation of the EU Seal Regime "confirms that the goals expressed in the legislative history, and reflected in the text and hierarchy of the measure, are implemented in the measure's operation to a considerable practical extent".^[195] Thus, Norway contends that, together "with the remaining evidence, these findings should have revealed to the Panel that the EU Seal Regime pursues objectives relating to the protection of IC and [M]RM interests".^[196]

2.59.  Fourth, Norway alleges that the Panel's reasoning in paragraph 7.402 of its Reports lacks coherence to a degree that falls short of basic standards required under Article 11 of the DSU and is not supported by the evidence that was before the Panel. In this regard, Norway recalls its argument that the reasons given by the Panel for finding that protecting the IC and MRM interests were not objectives of the EU Seal Regime were: (i) that the three interests pursued in the measure "must be distinguished"; (ii) that the IC and MRM interests are not grounded "in the concerns of EU citizens"; (iii) that the IC and MRM "exceptions" were "included in the legislative process"; and (iv) that the exception in Brazil – Retreaded Tyres was not argued to constitute an "objective".^[197] In Norway's view, "these reasons do not provide a coherent basis for the Panel's conclusion."^[198] Moreover, according to Norway, the Panel's reasoning fails to address the "considerable evidence" on the Panel record showing that protection of the IC and MRM interests were objectives of the measure.^[199]

2.2.1.2  The Panel's analysis of the contribution of the EU Seal Regime to its objective

2.60.  Norway claims that the Panel erred in finding that the EU Seal Regime was more trade restrictive than necessary within the meaning of Article 2.2 of the TBT Agreement. Norway first directs its challenge at the Panel's finding regarding the degree of contribution made by the EU Seal Regime to the protection of EU public morals. Norway asserts that the Panel's findings on contribution were insufficiently clear and precise, and were not properly substantiated.

2.2.1.2.1  Degree of contribution

2.61.  Norway contends that the Panel was required "to state with sufficient clarity and precision the degree or extent of the net overall positive contribution it found to be made by the EU Seal Regime" to its objective.^[200] Recognizing that a panel enjoys flexibility in conducting its analysis of the degree of the contribution, Norway observes that "the Panel opted for a methodology in which it considered the degree of positive, then negative, contribution made by the measure to each aspect of the EU public morals objective" before "reaching an overall conclusion that there is a net positive contribution to the objective of the measure".^[201] Norway maintains that "the Panel was [thus] required to articulate sufficiently clearly and precisely the degree of the contribution made by the measure to each aspect of the objective, so that it could conclude with sufficient precision and clarity" that the measure made an overall net positive contribution to its objective.^[202] Because the prohibitive and permissive aspects of the measure at issue "counteract each other"^[203], Norway considered it particularly important that the Panel "articulate with clarity and precision the degree to which the positive contributions made by the prohibitive elements exceeded the negative contributions made by the permissive elements".^[204] This, Norway adds, would provide an objective basis on which to conclude that the measure makes an overall net positive contribution to its objective, and provide a benchmark for purposes of comparison with the contribution of alternative measures.

2.62.  Norway maintains that the Panel failed to establish the degree of contribution made by either of the two aspects of the public morals objective of the EU Seal Regime identified by the Panel, namely: (i) whether the measure ensures that EU citizens do not participate as consumers in products derived from seals killed inhumanely; and (ii) reducing the incidence of the inhumane killing of seals. Regarding the first aspect of the objective, Norway argues that, although the Panel concluded that the prohibitive element of the measure prevents the EU public from purchasing seal products to the "extent" that the banned products include products derived from seals killed inhumanely, the Panel never considered to what extent these hunts actually involved inhumane killing.^[205] Moreover, Norway contends that the Panel failed in its assessment of the negative contribution of the IC and MRM hunts by not articulating with any clarity the extent of the risk of inhumane killing in these hunts, particularly in relation to the banned hunts. Norway concludes that the Panel, having failed to articulate the degree of the positive and negative contributions made, "had no basis to conclude that the measure actually makes a net positive contribution to that aspect of the objective".^[206] Although the Panel concluded that the ban is capable of making a contribution to the measure's objective, Norway argues that it never determined "in what circumstances will the capability of contributing be converted into an actual contribution".^[207]

2.63.  With regard to the second aspect of the objective, Norway first criticizes the Panel for failing to explain the basis for treating a reduction in demand for seal products as a proxy for a reduction in inhumane killing. According to Norway, "[e]ven if demand were to fall, inhumane killing could increase if the measure favours supply from a hunt with poorer animal welfare outcomes."^[208] Norway contends that, under these circumstances, the supply of seal products derived from inhumanely killed seals would increase, which is what occurs under the EU Seal Regime. Norway argues that the Panel failed to articulate the extent of the positive contribution made by the prohibitive elements of the measure to this aspect of the objective. In particular, Norway maintains that the EU Seal Regime is incapable of affecting consumer demand, and that the Panel itself acknowledged that it was unable to draw any concrete conclusions based on the available data. Moreover, Norway considers that the Panel's conclusion that the measure "may have contributed" to reducing EU demand is nothing more than a "possibility" that the measure did so.^[209]

2.64.  Norway argues that the Panel's articulation of the negative contribution made to the second aspect of the measure is also inadequate. According to Norway, the Panel did not set out the extent of the negative contribution, or the extent to which that contribution is minimized by the inability of certain indigenous communities to benefit from the IC exception, or by commercial activity occurring under one of the implicit exceptions. As it did in respect of the contribution of the first aspect of the measure, Norway concludes that the Panel had no basis to conclude that the measure actually makes an overall net contribution to that aspect of the objective, and in fact never even stated that there was such a contribution.

2.65.  With regard to the Panel's conclusion concerning the measure as a whole, Norway echoes the concerns it raises in respect of the Panel's intermediate findings. As Norway argues, the Panel's contribution findings "are so beset with equivocation, vagueness, and imprecision that it is impossible to form an understanding as to how the findings justify the overall conclusion that there is even 'some' contribution, much less what the Panel itself considered to be the degree or extent of that contribution".^[210] Norway adds that there is, therefore, no basis for the Panel's finding that the EU Seal Regime makes a contribution to its public morals objective, and requests that the Panel's finding be reversed.^[211]

2.66.   Norway further argues that the fact that a qualitative assessment is chosen does not mean that the specification of the extent of the contribution may be vague and imprecise, as suggested by the European Union.^[212] Norway maintains that, despite the existence of qualitative assessments in Brazil – Retreaded Tyres and US – Tuna II (Mexico), the panels in both of those cases nevertheless offered detailed qualitative explanations in support of their findings that a contribution existed.

2.2.1.2.2  Basis for a finding of contribution

2.67.  Norway claims that the Panel also erred in applying Article 2.2 of the TBT Agreement "to arrive at the conclusion that the measure makes 'some' net overall contribution to that objective".^[213] Norway focuses this aspect of its appeal on two features of the Panel's overall conclusion: (i) that the Panel undervalued the negative contribution of the permissive elements; and (ii) that it overvalued the positive contribution of the prohibitive elements. Norway considers that "neither the evidence before the Panel, nor its own findings, support the conclusion that the EU Seal regime makes a net overall positive contribution to the objective."^[214] Norway considers that the Panel's errors constitute errors in the legal characterization of the facts, but also makes claims under Article 11 of the DSU with respect to limited aspects of the Panel's assessment of the issue.

2.68.  Norway identifies six points that it considers the Panel undervalued in assessing the negative contribution of the EU Seal Regime to the public morals objective. First, Norway refers to the Panel's conclusions that virtually all seal products from Greenland and the European Union are likely to be introduced on the EU market by virtue of the IC and MRM exceptions, whereas the vast majority of Canadian and Norwegian seal products do not meet the requirements of either of these exceptions. Norway observes that these exceptions "impose no animal welfare conditions whatsoever"^[215], and recalls the Panel's finding that seal products may be sold on the EU market under the IC and MRM exceptions "regardless of whether they derive from seals killed humanely" and without any quantitative limits.^[216]

2.69.  Second, Norway takes note of the Panel's conclusion that EU public moral concerns regarding seal welfare appear to be related to seal hunts in general, not to particular types of seal hunts. Although the European Union had argued that certain interests prevailed over concerns in respect of seal welfare, Norway claims that the Panel rejected this argument because it was unsupported by the evidence of record on the scope and content of the relevant public moral.^[217] Thus, Norway argues, "the moral standard found by the Panel applies to the IC and [M]RM hunts conducted in Greenland and the European Union as much as it does to other seal hunts."^[218]

2.70.  Third, Norway criticizes the Panel for failing to make an assessment of the animal welfare risks presented by the Greenlandic hunt in relation to the banned hunts. Norway points to the Panel's conclusions that "the use of rifles from boats in 'open water hunting' or trapping and netting appear to be the main hunting methods for Greenlandic Inuit", and that those hunting methods contribute to seal welfare concerns.^[219] Norway also points to differences in compliance monitoring efforts as between Greenland, and Canada and Norway. Norway argues that the Panel, however, "failed to make any assessment of the animal welfare risks presented by the Greenlandic hunt in relation to the banned hunts".^[220]

2.71.  Fourth, Norway points to Panel findings and record evidence that, in its view, support the conclusion that the EU Seal Regime would lead to the substitution of Greenlandic seal products for imports previously derived from commercial hunts in Canada and Norway. Norway argues that these Panel findings and record evidence demonstrate that Greenlandic trade could by itself satisfy EU demand.^[221] Norway further argues that the data relied on by the European Union to show levels of Canadian imports into the European Union were overstated because they also include transit goods that do not enter the EU market.^[222]

2.72.  Fifth, Norway argues that the Panel wrongly concluded that indigenous communities have not been able to benefit from the IC exception, a factor that the Panel considered to limit the negative impact of the exceptions. Norway asserts that the Panel's finding was "disingenuous"^[223] because no Greenlandic imports were possible under the IC exception until a Greenlandic body to certify imports was recognized in April 2013, four days before the second Panel meeting.^[224] Norway argues that the Panel's conclusion demonstrates a selective treatment of the evidence and a failure to refer to or reconcile its findings, in violation of Article 11 of the DSU.

2.73.  Sixth, Norway accuses the Panel of failing to assess the impact of the implicit exceptions under the EU Seal Regime. Norway contends that, despite the fact that the Panel's findings demonstrate that the implicit exceptions have commercial importance, and thus make an important negative contribution to countering the measure's objective, its significance "is nowhere properly taken into account or characterized by the Panel in arriving at its overall conclusion".^[225]

2.74.  In addition, Norway asserts two errors of the Panel that demonstrate its overvaluing of the positive contribution of the EU Seal Regime to the public morals objective. First, Norway considers that the Panel committed a "recurring error" by failing properly "to characterize the consequences of the explicit and implicit 'exceptions' for the capability of the 'ban' to make an overall net positive contribution".^[226] Norway asserts that the Panel failed to reconcile the effects of the prohibitive and permissive aspects of the measure, and that it is impossible to understand on this basis how and why the Panel concluded that there is a net positive contribution to the measure's objective. Moreover, Norway asserts that, in terms of Article 11 of the DSU, "the imprecision of the Panel's analysis means that the Panel provide[d] an inadequate statement on how it weighed, balanced, and reconciled the competing evidence of positive and negative contributions".^[227] Norway adds that, "[a]s the Panel failed to explain and reconcile the evidence in arriving at its conclusion, including in making its intermediate factual findings, there is no objective basis to comprehend how it arrived at its net overall conclusion".^[228] This, Norway contends, demonstrates a lack of objectivity by the Panel, in violation of Article 11 of the DSU.

2.75.  Second, Norway maintains that the Panel erroneously found that the ban reduces demand for seal products within the European Union and globally. With respect to the decline in demand within the European Union, Norway contends that "[t]he Panel did not identify any features of the measure, by design or otherwise", that affect the demand for seal products.^[229] In Norway's view, the exceptions of the EU Seal Regime will ensure "sufficient quantities of seal products … in the EU market to meet the entirety of EU demand".^[230] Norway also contends that the reasons given by the Panel for finding that the direct impact of the ban is a reduction of demand within the European Union "do not withstand scrutiny".^[231] Norway further asserts that, in terms of Article 11 of the DSU, the Panel failed to substantiate its findings and engaged in selective treatment of the evidence demonstrating a lack of objectivity. Moreover, Norway argues that the Panel relied for its conclusion on trade data that do not pertain to EU or global demand, and that the Panel itself stated did not provide it with a basis to reach concrete conclusions. Accordingly, Norway argues, the Panel's findings lack objectivity.

2.2.1.2.3  Other issues regarding contribution

2.76.  Norway further contends that the Panel acted inconsistently with Article 11 of the DSU when it failed to address Norway's claim that the so-called "non-profit", "non-systematic", and "sole purpose" conditions of the MRM exception are unnecessary to the achievement of the seal welfare considerations underlying the public moral concerns found by the Panel, or to the achievement of sustainable resource management. As Norway argues, these three conditions "establish a barrier to trade in seal products from Norway"^[232] and thus form a critical part of Norway's claim under Article 2.2 of the TBT Agreement. Norway maintains that, "[b]y completely ignoring this element of Norway's claim", the Panel failed in its duty under Article 11 of the DSU.^[233]

2.77.  Finally, Norway contends that the Panel failed to address "arbitrary or unjustifiable discrimination" in its analysis of whether the EU Seal Regime is more trade restrictive than necessary under Article 2.2. Norway contends that the sixth recital of the TBT Agreement reflects that WTO Members "have consciously carried over the qualifications in the chapeau to the disciplines that regulate technical regulations".^[234] Norway adds that, because the Appellate Body previously found relevant contextual support in the sixth recital for its interpretation of Article 2.2, to "give effect to this context", a panel must assess whether there is "arbitrary or unjustifiable discrimination", in the pursuit of the justifying objective, in determining whether trade restrictions are necessary to fulfil an objective.^[235] Norway claims that the Panel erred in its interpretation and application of the legal standard under Article 2.2 of the TBT Agreement, and, by failing to address Norway's arguments in this regard, acted inconsistently with its duty under Article 11 of the DSU.

2.2.1.3  The Panel's analysis of the alternative measure

2.78.  Norway then addresses the Panel's analysis of the proposed alternative measure. Norway claims that, although the Panel identified the correct question in examining the contribution of a less trade-restrictive alternative measure, the Panel erred by "focus[ing] on whether the alternative could fulfil completely the identified objective, as if the contested measure being compared against the alternative were a comprehensive ban".^[236] Norway contends that the Panel thus erred by holding the alternative measure up to a benchmark level of contribution that was higher than the contribution achieved by the EU Seal Regime. This error, Norway argues, compromised the Panel's analysis of whether the contribution of the alternative was equal to or greater than the level actually achieved by the EU Seal Regime, and of whether the alternative was reasonably available.

2.79.  Norway considers that the Panel's assessment is erroneously premised on a requirement that the less-trade-restrictive alternative effectively prevents exposure to products from seals killed inhumanely. Norway finds evidence of the Panel's error in its conclusion that, even if market access were limited to seal products that meet animal welfare requirements, those seal products "would originate in hunts that may have caused poor animal welfare outcomes for some other number of seals".^[237] Norway contends that the "logical implication" of this rationale is that "the current EU Seal Regime performs better than the alternative in this respect".^[238] According to Norway, the IC and MRM exceptions allow the marketing of seal products irrespective of animal welfare considerations, and admit seal products from seal hunts, such as the Greenlandic hunt, that permit and commonly use inhumane killing methods, such as netting. Norway thus argues that "unlimited quantities of seal products are already admitted to the EU market" from hunts that have caused poor animal welfare outcomes.^[239] In Norway's view, an alternative that conditions EU market access on a requirement that seal products be derived from seal hunts applying strict animal welfare requirements "can only be an improvement" on the EU Seal Regime, since it has exceptions that admit seal products regardless of animal welfare outcomes.

2.80.  Norway also considers that the Panel similarly erred in its statement that the alternative may "have the consequence of subjecting a greater number of seals to the animal welfare risks incidental to seal hunting".^[240] In doing so, the Panel relied on a report that rejected a proposed amendment during the legislative process on the grounds that it did not meet EU citizens' demands to end the trade in seal products.^[241] As Norway argues, the Panel overlooked its own findings since the EU Seal Regime focused not on ending the trade in seal products, but rather on addressing concerns about the welfare of seals. Norway considers that the Panel's approach "holds the alternative measure up to a standard of contribution that is much higher than that actually achieved by the EU Seal Regime".^[242]

2.81.  With respect to the availability of the alternative measure, Norway argues that the Panel erred by considering the feasibility of an alternative measure that would completely fulfil the objective at issue. Norway points to the Panel's consideration of the level of stringency required from animal welfare standards "in order to genuinely assuage [animal welfare] concerns".^[243] In Norway's view, the Panel's findings on the contribution of the EU Seal Regime show that the measure at issue does not genuinely assuage animal welfare concerns, because consumers are exposed to unlabelled seal products imported under the IC and MRM exceptions. By way of further example, Norway considers that the Panel's assertion that stringent animal welfare standards are not a reasonably available alternative because stringent standards might not be met relies on an inappropriate benchmark. In Norway's view, "animal welfare requirements are already not being met in the IC and [M]RM hunts".^[244] According to Norway, "the proposed alternative actually imposes animal welfare requirements, whereas the measure imposes none."^[245] Norway points to other errors it argues the Panel made in respect of certification, labelling, and costs. Norway, moreover, criticizes the Panel for its reliance on EC – Asbestos for the proposition that a responding Member cannot be expected to employ an alternative measure that involves a continuation of the risk that the challenged measure seeks to halt.^[246] In Norway's view, this reliance by the Panel was misplaced, because the EU Seal Regime itself "does not even 'seek to halt' the animal welfare risks associated with seal hunting", given that it admits seal products under the IC and MRM exceptions.

2.82.  Finally, Norway submits that the Panel misapplied WTO jurisprudence, in particular by indicating that the significance of costs and technical difficulties relates to those borne by WTO Members, not industry. Norway argues that efficient suppliers will have an incentive to meet any costs they bear, because they still are permitted to trade. In Norway's view, "compliance costs do not make the measure less 'reasonably available' to the regulating Member, since the cost of compliance could be borne by industry."^[247] Moreover, Norway contends that the Panel "fundamentally misunderstood" the relevance of costs and technical difficulties addressed by the Appellate Body in Brazil – Retreaded Tyres and US – Gambling and, in doing so, "laid down an improper standard for less-restrictive alternatives to meet".^[248] In Norway's view, it is clear from these decisions that the Appellate Body "was addressing the relevance of costs and technical difficulties that would be borne by the responding Member under a proposed alternative measure", and "was not addressing the cost to be borne by industry".^[249]

2.83.  Norway further submits that the Panel acted in violation of Article 11 of the DSU by ignoring two further alternative measures it had proposed during the course of the Panel proceedings. First, Norway proposed an alternative that consisted of the removal of the restrictive conditions of the EU Seal Regime. Under this alternative, trade would be permitted from hunts that, under the measure at issue, "could not meet the conditions for market access under the IC, [M]RM or Travellers 'exceptions'".^[250] The second alternative was the removal of three contested conditions for access to the MRM exception – namely, the "not-for-profit", "non‑systematic", and "sole purpose" conditions – leaving all the other elements of the EU Seal Regime undisturbed.^[251] In Norway's view, "this alternative could include animal welfare, certification, and labelling requirements on seal products that meet the two remaining [M]RM conditions".^[252] According to Norway, "these alternatives were completely ignored by the Panel".^[253] Norway contends that the Panel's failure to address the second alternative was "egregious" since the three conditions were found to restrict access to the EU market.^[254] Norway asserts that "the Panel's failure to assess whether Norway's proposed alternative – which excludes these three restrictive conditions, but adds animal welfare requirements and labelling – could make an equivalent contribution to the public morals objective is manifestly inadequate."^[255]

2.2.1.4  Request for completion of the analysis

2.84.  Finally, Norway requests, if the Appellate Body reverses the Panel's finding that the EU Seal Regime is not inconsistent with Article 2.2 of the TBT Agreement, that the Appellate Body complete the legal analysis. Norway explains that "there may not be a sufficient basis in the Panel findings and record to complete the analysis on all aspects of Norway's claim".^[256] Norway thus requests that the Appellate Body make "limited findings" in relation to the objectives of the EU Seal Regime and the legitimacy of the objectives, as well as a "narrow finding" of inconsistency in relation to certain conditions for market access under the MRM exception.^[257]

2.85.  Norway requests the Appellate Body to complete the legal analysis in relation to three specific points. First, Norway requests the Appellate Body to find that, in addition to addressing EU public moral concerns regarding seal welfare, the EU Seal Regime also includes two additional objectives: protecting IC interests, and promoting marine resource management.^[258] Second, Norway requests the Appellate Body to find that the MRM objective is legitimate, although it does not request completion as to whether the objective of protecting IC interests is legitimate.^[259]
Third, Norway requests the Appellate Body to find that the EU Seal Regime is more trade restrictive than necessary by virtue of three contested conditions of the MRM exception: namely, the "not‑for‑profit", "non-systematic", and "sole purpose" conditions.^[260]

2.2.2  Article XX of the GATT 1994

2.2.2.1  Aspects of the measure to be justified under Article XX(a)

2.86.  Norway asserts that the Panel identified two precise aspects of the EU Seal Regime that violated the substantive provisions of the GATT 1994, namely, the IC exception and the MRM exception. According to Norway, although the Panel purported to agree with the parties and the relevant WTO jurisprudence that it is these "specific provisions"^[261] – i.e. the IC and MRM exceptions found to be GATT-inconsistent – that have to be provisionally justified under Article XX(a), the Panel departed from this approach by expressly finding that "the EU Seal Regime can be provisionally deemed 'necessary' within the meaning of Article XX(a)."^[262] Norway highlights that the Panel sought to draw a distinction between "justifying" the IC and MRM exceptions, on the one hand, and "considering" or "analysing" the EU Seal Regime as "a whole" in the process of "justifying" the IC and MRM exceptions, on the other hand.^[263] Norway does not consider such distinction objectionable to the limited extent the Panel "consider[ed]" and "analy[sed]" the "ban" aspect of the EU Seal Regime to "better understand[]" the IC and MRM exceptions, all with the ultimate aim of assessing the provisional justification of these exceptions.^[264] However, Norway points out that the Panel instead assessed and found the EU Seal Regime "as a whole" to be provisionally justified on the basis of the positive contribution of the ban, which allowed the Panel to "mask" and "overcome" the negative contribution of the exceptions.^[265] In this way, the Panel's consideration of the ban went well beyond "better understanding"^[266] the exceptions, as it allowed aspects of the EU Seal Regime found to be WTO‑consistent (i.e. the ban) to "shield from scrutiny" under Article XX(a) those aspects of the measure found to be WTO-inconsistent (i.e. the exceptions).^[267]

2.87.  Norway makes three arguments in support of its position. First, Norway refers to the GATT Panel report in US – Section 337 Tariff Act and the Appellate Body reports in Thailand – Cigarettes (Philippines) and US – Gasoline to show "consistent" GATT and WTO jurisprudence that it is the "particular aspect of the measure found to be inconsistent that must be justified under Article XX".^[268] With respect to US – Section 337 Tariff Act, Norway recalls that the GATT panel found that "the part of the measure found to be inconsistent with GATT obligations is the part that must be justified".^[269] The panel noted that, otherwise, contracting parties could introduce GATT‑inconsistent provisions that are not "necessary", simply by making them part of a measure that contained other elements that are "necessary".^[270] Norway considers that this approach
was affirmed by the Appellate Body in Thailand – Cigarettes (Philippines) when it observed that, "when Article XX(d) is invoked to justify an inconsistency with Article III:4, what must be shown to be 'necessary' is the treatment giving rise to discrimination".^[271] Finally, with respect to
US – Gasoline, Norway notes that only the WTO-inconsistent part of the measure at issue in that case – i.e. the "baseline establishment rules" – were found by the Appellate Body to be provisionally justified under Article XX(g).^[272] Norway maintains that, in that dispute, "[t]he WTO‑consistent non‑degradation requirements were treated merely as 'context' for understanding
whether the WTO‑inconsistent baseline establishment rules were 'related to' conservation" within the meaning of Article XX(g).^[273] In Norway's view, "although the Appellate Body considered the non‑degradation requirements as context, it assessed, and found, that the baseline establishment rules were themselves provisionally justified."^[274] Norway submits that these cases establish that the WTO‑consistent parts of a measure play a "limited role", and can do no more than "shed light" on understanding whether the WTO-inconsistent parts are justified under Article XX.

2.88.  Second, Norway takes issue with the Panel's finding that "an exception to a general rule, by definition, would hardly be considered as 'necessary', when considered on its own, to achieve a policy objective of the general rule".^[275] Norway sees no reason why a properly characterized exception, even if found to be WTO-inconsistent, cannot be justified as "necessary" to achieve a policy objective as set out in one of these subparagraphs of Article XX, even if it is different from the objective of the measure as a whole. For example, Norway suggests that the European Union could have sought to justify the MRM exception on the ground that they relate to the conservation of exhaustible natural resources. According to Norway, "an unnecessary WTO‑inconsistent provision does not become necessary to achieve an objective, simply because the WTO‑consistent provisions are necessary to achieve that objective."^[276] If such a "flawed approach" were permitted, it would remove multilateral scrutiny of WTO-inconsistent provisions under Article XX only because they are formally characterized as "exceptions".^[277]

2.89.  Norway argues that the Panel's reliance on its findings under the TBT Agreement to justify its approach under Article XX of the GATT 1994 was misplaced, because the Panel did not explain the precise relevance of these findings to the "distinct analysis" under Article XX.^[278] Specifically, Norway challenges the Panel's reliance on its findings under Article 2.2 of the TBT Agreement, because the subject matter of the examinations under Article 2.2 and Article XX(a) are different. Under Article 2.2, the Panel considered whether the technical regulation "as a whole" is more trade restrictive than necessary.^[279] In so doing, the Panel weighed the positive contribution made by the ban against the negative contribution made by the explicit and implicit exceptions of the measure. By contrast, Norway submits that, under Article XX(a), the Panel was required to assess whether the "discriminatory IC and [M]RM 'exceptions' are 'necessary' to protect EU public morals", and therefore the necessity of the prohibitive ban element and the contribution it makes are "irrelevant" to the analysis under Article XX(a).^[280] Since the Panel found that the IC and MRM exceptions are "rationally disconnected" from the public moral concerns, and undermine its achievement, the exceptions cannot be found to be necessary to protect public morals.^[281] Norway requests the Appellate Body to reverse the Panel's finding that the EU Seal Regime, as a whole, should be provisionally justified under Article XX(a), and to complete the legal analysis to find that the IC and MRM exceptions cannot be provisionally justified under Article XX(a) of the GATT 1994. Specifically, Norway argues that, since the Panel found that the IC and MRM exceptions are not "rationally connected" to the objective of addressing the EU public moral concerns regarding seal welfare^[282], and since the requirements under the two exceptions "counteract and prejudice" the achievement of the EU Seal Regime's objective^[283], the IC and MRM exceptions "could never contribute, much less be 'necessary', to protect the public moral at issue".^[284]

2.2.2.2  The Panel's analysis of "necessity"

2.90.  In the event that the Appellate Body disagrees with Norway and finds that the Panel was correct in finding that it was the EU Seal Regime "as a whole" that should be provisionally justified as "necessary" under Article XX(a), Norway argues that the Panel erred in its finding that the EU Seal Regime contributes to the objective of protecting public morals regarding seal welfare.^[285] The Panel considered that only "the 'contribution' made by the 'ban' aspect of the measure needed to be 'material', and that it was sufficient for the measure as a whole to contribute to 'a certain extent' to its objective of addressing EU public moral concerns".^[286] Norway highlights that, assuming that the Panel was correct in "considering the provisional justification of the measure as a whole (quod non), it was required to consider whether the contribution of the measure as a whole was 'material'".^[287] A "material" contribution is a "significant degree of contribution that exceeds the minimal level of contribution reflected in the Panel's finding that there is contribution 'to a certain extent'".^[288] Although the Panel referred to "materiality" as regards the "ban" aspect of the measure, it did not consider that "its task was to determine whether the measure as a whole made a 'material' contribution to [the protection of] public morals."^[289]

2.91.  Norway asserts that the Panel's findings "reflect error in the application of the proper legal standard under Article XX(a) for two reasons".^[290] First, the Panel's statement of the level of contribution of the EU Seal Regime lacks clarity and precision. The Panel's conclusion that the EU Seal Regime as a whole contributes to a "certain extent"^[291] to the protection of EU public morals lacks the "clarity and precision that is indispensable to a finding of contribution under the 'necessity' analysis in Article XX".^[292] According to Norway, as with the analysis under Article 2.2 of the TBT Agreement, a "clear and precise" articulation of the degree of contribution of the EU Seal Regime was required in order to establish whether the contribution meets the "required legal standard of contribution", reflected in the notion of "materiality", and to provide an "operable and objective benchmark" against which the contribution of Norway's less trade-restrictive alternative measures could be assessed.^[293]

2.92.  Norway also contends that the factual findings of the Panel do not support the conclusion that the EU Seal Regime "contributes either 'to a certain extent' – as the Panel found – or 'materially' – as it was required to find under the proper legal standard".^[294] For the same reasons as its appeal with respect to the Panel's analysis under Article 2.2 of the TBT Agreement, Norway asserts that the Panel both overvalued the positive contribution of the ban aspect of measure and undervalued the negative contribution made by the permissive aspects of the measure. For the same reasons as provided in its Article 2.2 appeal, Norway submits that the Panel's conclusion that the EU Seal Regime contributes "to a certain extent" to its objective "cannot be sustained".^[295] Moreover, as with its appeal under Article 2.2, Norway submits that the Panel's intermediate findings with respect to the contributions of the prohibitive and permissive aspects, as well as the overall contribution of the EU Seal Regime, are "not grounded in an objective assessment of the facts" and, therefore, are inconsistent with Article 11 of the DSU.^[296] For these reasons, Norway contends that "there is simply no basis for a finding that the EU Seal Regime makes a 'material' contribution to [the protection of] EU public morals."^[297]

2.93.  Norway notes that, having concluded that the EU Seal Regime contributed to "a certain extent" to its objective, the Panel recalled its "less trade-restrictive alternative" analysis under Article 2.2 of the TBT Agreement, wherein it concluded that the alternative measure proposed by the complainants was not reasonably available to the European Union.^[298] For the same reasons set out in its appeal under Article 2.2 of the TBT Agreement, Norway asserts that the Panel erred: (i) in concluding that the less trade-restrictive alternatives proposed by Norway were not reasonably available; and (ii) in failing to make an objective assessment of the facts, as required by Article 11 of the DSU.

2.2.2.3  The Panel's analysis under the chapeau of Article XX

2.94.  In the event that the Appellate Body disagrees with Norway that the Panel was incorrect in determining whether the EU Seal Regime as a whole was justified under Article XX(a) of the GATT 1994, Norway argues that, although it reached the correct conclusion, the Panel erred in the reasoning underpinning its finding that the EU Seal Regime is inconsistent with the requirements of the chapeau of Article XX. Specifically, Norway submits that the Panel erred in its analysis under the chapeau because it failed to: (i) articulate the relevant legal standards under the chapeau; and (ii) apply the proper standard to the IC and MRM exceptions. As to the Panel's failure to articulate the proper legal standard, Norway argues that the Panel erroneously applied the same test under the chapeau that it had adopted to address the "legitimate regulatory distinction" under Article 2.1 of the TBT Agreement. Although the Appellate Body has explained that the GATT 1994 and the TBT Agreement are "similar", Norway asserts that, "when seeking to understand how the legal standards under each Agreement are to be interpreted and applied, a panel must be faithful to the independence of the analysis to be conducted under each Agreement."^[299]

2.95.  Moreover, the legal standard developed by the Panel under Article 2.1 and applied by the Panel under the chapeau is contrary to the "well-accepted" jurisprudence on the requirements under the chapeau.^[300] According to Norway, WTO jurisprudence is clear that, in considering whether WTO-inconsistent provisions of a measure comply with the chapeau, "a panel must assess whether there is any discrimination that runs counter to, or is otherwise rationally disconnected from, the objective that the measure pursues under one of the sub-paragraphs of Article XX."^[301] Norway adds that, if the rationale or reason for discrimination "goes against, or otherwise bears no rational relationship to, even to a small extent, the objective assessed under one of the sub‑paragraphs, it is arbitrary and unjustifiable."^[302] Norway argues that, instead of applying this legal standard, the Panel erroneously applied its "three-step test" developed in the context of its "legitimate regulatory distinction" analysis under Article 2.1 of the TBT Agreement.^[303] Norway notes that "step 1" of the Panel's analysis under Article 2.1 – namely, that the regulatory distinctions drawn between commercial and IC/MRM hunts must be rationally connected to the objective of the EU Seal Regime – "bears some resemblance" to the legal test developed by the Appellate Body under the chapeau.^[304]

2.96.  By contrast, Norway argues that "step 2" of the Panel's analysis under Article 2.1 – "which serve[d] for the Panel to justify a regulatory distinction in a measure that is rationally disconnected to the objective of the measure" – "represents a subversion of the structure of Article XX".^[305] Norway highlights that the Appellate Body has "never allowed the discrimination under the chapeau to be justified by reference to an objective (cause or rationale) that had not provided the basis for provisional justification under one of the sub-paragraphs of Article XX".^[306] Norway notes that, although the Panel rejected the European Union's argument that the IC and MRM exceptions were also provisionally justified under Article XX(a), rather than drawing the "obvious consequence" from the European Union's failure to secure provisional justification of the IC and MRM exceptions under one of the subparagraphs of Article XX, the Panel's "step 2" analysis "simply excused the European Union from that burden".^[307] Such an approach, in Norway's view, undermines the "interpretive harmony" between the chapeau and the subparagraphs of Article XX, which requires that the discrimination be rationally connected "to the objective that provides the basis for provisional justification under a sub-paragraph", since, under the chapeau analysis, a panel must "verify" whether the provisional justification under a given subparagraph of Article XX is "not lost because the Member seeks … 'abuse or illegitimate use of the exceptions' to justify the WTO‑inconsistent aspects".^[308]

2.97.  Turning to "step 3" of the Panel's analysis under Article 2.1, which sought to determine whether the discriminatory aspects of the measure are applied in an even‑handed manner with regard to the additional cause or rationale used to "justify" it under "step 2", Norway submits that, although a panel may consider even-handedness with respect to the pursuit of the objective found to be provisionally justified under a subparagraph of Article XX, "there is simply no basis for the consequential third step of assessing whether this additional objective (cause or rationale) is pursued in an even-handed manner."^[309] For these reasons, Norway asserts that the three-step test developed by the Panel under Article 2.1 of the TBT Agreement is "erroneous" in the context of the chapeau of Article XX of the GATT 1994.^[310]

2.98.  As a consequence of the erroneous legal standard adopted by the Panel for its Article XX analysis, Norway argues that the Panel erred in its reasoning as to why the IC and MRM exceptions do not meet the chapeau requirements. To the extent that Norway acknowledges the similarities between "step 1" of the Panel's analysis under Article 2.1 and the legal standard under the chapeau of Article XX, Norway asserts that the Panel should have found that the distinction between the IC and MRM hunts, on the one hand, and the commercial hunts subject to the ban, on the other hand, was not rationally connected to the objective of the EU Seal Regime.^[311] For these reasons, Norway requests the Appellate Body to modify the Panel's reasoning and to find that the IC and MRM exceptions are not justified under the chapeau of Article XX of the GATT 1994 for the aforementioned reasons.^[312]

2.3  Arguments of the European Union – Appellee

2.3.1  Article 2.1 of the TBT Agreement

2.99.  In response to Canada's argument that the Panel articulated the wrong test under Article 2.1 of the TBT Agreement, the European Union argues that the Panel in fact conducted a proper two‑step analysis. According to the European Union, the Panel first examined whether the regulatory distinction between commercial and IC hunts was "'justifiable' in the abstract", "without looking into the particular features of the IC exception as contained in the EU Seal Regime".^[313] Having found this to be the case, the Panel then turned to examine whether that regulatory distinction between commercial and IC hunts "was 'indeed' designed and applied in an even‑handed manner and did not reflect discrimination".^[314] According to the European Union, the Panel thus sought to establish whether the objective or rationale pursued by the regulatory distinction was justifiable, and in that case, whether the measure at issue was designed and applied in an even-handed manner. The European Union emphasizes that the Panel did not consider these two elements in isolation, but instead conducted an overall analysis as to whether the detrimental impact stemmed from a legitimate regulatory distinction. The European Union argues that the Panel did not err in structuring its analysis in this way. The European Union submits that the analysis of the rationale of a regulatory distinction "could be made in the abstract … or in the context of examining the design and application of the particular measure at issue".^[315] For the European Union, "[t]he key point is that such an analysis of the alleged rationale or justification must be conducted as part of the analysis."^[316] Thus, the European Union characterizes Canada's arguments as "formalistic and rigid".^[317]

2.100.  The European Union responds to Canada's appeal of the Panel's finding that the distinction between commercial and IC hunts is justifiable even though the rationale of the distinction "goes against" the objective of the EU Seal Regime^[318] by highlighting the case‑specific nature of the Panel's finding.^[319] The European Union submits that the Panel's conclusion is both legally correct and reasonable on substantive terms, given that "exceptions are precisely 'exceptions' because they go against the general rule".^[320] The European Union acknowledges that an exception "may pursue an objective that detracts from the main objective of the general rule in view of other legitimate regulatory concerns or rational explanations/justifications".^[321] The European Union considers that, where a measure "clearly shows the weighing of opposing interests with the main objective", the regulatory distinction embodied in the measure could be found to be non-arbitrary and justifiable "even if the exception undermines the main objective of the measure".^[322] The European Union notes that this view finds support in the Appellate Body report in US – Clove Cigarettes, where the Appellate Body examined the justifications provided by the defending Member, even though it had already found that there was no rational connection between the objective of the measure at issue and the exception.^[323]

2.101.  In response to Canada's argument that the Panel improperly relied on "international instruments extraneous to the case"^[324] to justify the distinction between IC and commercial hunts, the European Union recalls that the Panel did not rely only on the existence of international instruments recognizing the interests of indigenous peoples, but also found such recognition in the legislative history of the EU Seal Regime and in measures adopted by other WTO Members, including Canada.^[325] Moreover, the European Union submits that the Panel was referring to international instruments as "evidence" – in line with the practice of the Appellate Body – and not as instruments setting out legal obligations that would conflict with the WTO agreements.^[326] The European Union further argues that, in finding that the distinction between commercial and IC hunts was justifiable, the Panel took into account the balance between the protection of IC interests and the principal objective of the measure as reflected in the EU Seal Regime. According to the European Union, it was only logical for the Panel to assess the merits of protecting the interests of indigenous peoples by reference to international instruments. Finally, the European Union notes that the Appellate Body has recognized that a technical regulation may pursue several purposes, including purposes which are not listed in the sixth recital of the TBT Agreement.^[327]

2.102.  With respect to Canada's allegation that the Panel failed to examine whether giving effect to the IC exception will actually fulfil the rationale of protecting Inuit interests, the European Union notes that, while the Panel found evidence that Inuit communities have been adversely affected by the EU Seal Regime as a whole, the Panel also found that Greenland was currently benefiting from the IC exception. According to the European Union, this shows that the IC exception does serve to protect the interests of the Inuit communities engaged in seal hunting. The European Union further argues that, in any event, the opposition of some Inuit communities to the EU Seal Regime does not demonstrate that the purpose of the IC exception, i.e. to protect IC interests, is not fulfilled by the regulatory distinction, given that, without the IC exception, seal products derived from IC hunts would fall under the general ban and would thus not be permitted to be placed on the EU market. The European Union acknowledges that Inuit sealing communities would be better off absent any regulation of the placing on the EU market of seal products; however, the IC exception seeks to mitigate the necessarily adverse impact of the EU Seal Regime on the Inuit and other indigenous communities.

2.103.  The European Union submits that Canada's argument that the Panel focused its analysis of even‑handedness on the wrong comparison and failed to examine the arbitrary aspects of the distinction between commercial and IC hunts is based on a misreading of how the Panel conducted the analysis of whether the detrimental impact that it had found to exist stemmed from a legitimate regulatory distinction. As the European Union sees it, the Panel had already examined the arguments raised by Canada in the context of its analysis of whether the regulatory distinction is justified.^[328] To the European Union, it appears logical that the Panel did not need to repeat the same analysis in the context of its assessment of the even-handedness of the distinction. At the same time, the European Union recalls that, in its other appellant's submission, it expresses the view that 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.^[329] According to the European Union, the Panel should have examined whether the IC exception under the EU Seal Regime was designed and applied in a reasonable, impartial, and harmonious manner, having regard to the objective it pursues.

2.104.  With respect to Canada's argument that the distinction between commercial and Inuit hunts is "illusory" in the light of the strong commercial dimension of the Inuit hunt in Greenland, the European Union maintains that the extent of development of the commercial aspect in the marketing of by-products from Inuit communities in Greenland is irrelevant for assessing the even‑handedness of the IC exception. The European Union submits that, as long as the relevant criteria to qualify as a legitimate indigenous subsistence activity are met and subsistence thus remains the primary objective of the hunts, the extent to which some of the by-products of these hunts are sold through commercial channels is irrelevant for assessing even-handedness. Hence, this does not show any arbitrariness in the design and application of the IC exception. The European Union also argues that the Panel did not find Greenland's hunt to be commercial in nature. Rather, the Panel found that, while the commercial aspect of seal hunting in Greenland has been developed to a degree that is comparable to that of commercial hunts, Greenland's hunts remain "subsistence"/IC hunts. The European Union underscores that seal hunts in Greenland are primarily conducted for subsistence purposes, "even if they may have a commercial aspect".^[330]

2.105.  For the aforementioned reasons, the European Union requests the Appellate Body to reject Canada's allegations that the Panel erred in its findings relating to Canada's claim under Article 2.1 of the TBT Agreement.^[331]

2.106.  The European Union further submits that Canada's allegations of error under Article 11 of the DSU should be dismissed for several reasons. First, the European Union argues that Canada has failed to explain how the Panel's alleged failure to consider the evidence put forward by Canada affected the objectivity of the Panel's assessment. Second, the European Union notes that the Panel summarized the arguments raised by Canada in the Panel Reports^[332], and that the Panel distinguished commercial and IC hunts on the basis of their "primary purpose".^[333] Third, the European Union submits that the alleged similarities between Canada's east coast hunt and IC hunts are irrelevant. The European Union notes that Canada never contested that the majority of seal hunts conducted in Canada are commercial hunts with the sole or primary purpose of making a profit. Finally, the European Union recalls the Panel's finding that the type of the hunter (Inuit versus non‑Inuit) is also relevant for the regulatory distinction at issue. According to the European Union, the similarities between commercial and IC hunts mentioned by Canada "are irrelevant insofar as the hunter in question does not belong to the Inuit or other indigenous communities".^[334]

2.3.2  Article 2.2 of the TBT Agreement

2.3.2.1  The Panel's identification of the objective of the EU Seal Regime

2.107.  The European Union maintains that the Panel correctly found that the main objective of the EU Seal Regime is to address EU public moral concerns regarding seal welfare.^[335] The European Union explains that, as found by the Panel, the text of the Basic Regulation, its drafting history, and its design and structure, establish that the EU Seal Regime was adopted in order to respond to EU public moral concerns regarding seal welfare.

2.108.  The European Union agrees with the Panel's finding that the objectives of the IC exception and the MRM exception are not "independent" of the main objective of the EU Seal Regime.^[336] Instead, they seek to accommodate other interests that the EU legislators deemed "morally superior to the welfare of seals in certain circumstances and under certain conditions" identified by the EU legislators.^[337] By providing for such exceptions, the EU legislators were hence not undermining the public morals objective of the EU Seal Regime, "but instead giving effect to the basic moral standard that underlies the EU Seal Regime and, more generally, all EU legislation on animal welfare".^[338] The European Union adds that the scope of the IC and MRM exceptions was, nevertheless, "carefully circumscribed, so as to preserve, to the extent possible, the contribution of the EU Seal Regime to the objective of improving the welfare of seals".^[339]

2.109.  The European Union submits that, if the EU legislators' objective had been "to protect the interests of the Inuit and other indigenous communities or the objective that Norway ascribes to the MRM exception, they would have refrained from adopting the EU Seal Regime in the first place".^[340] According to the European Union, "[t]hose objectives would be best served by removing all restrictions to the marketing of seal products."^[341]

2.110.  The European Union further emphasizes that "[t]he IC exception does not seek to promote exports of seal products by the Inuit and other indigenous communities, but rather to mitigate the necessary adverse effects of the EU Seal Regime on those communities to the extent compatible with the main objective of addressing the public moral concerns with regard to the welfare of seals."^[342] According to the European Union, there is evidence of such adverse effects.^[343] The European Union further recalls that the IC exception was part of the Commission Proposal for a regulation concerning trade in seal products, and a similar exception is found in the European Council Directive concerning imports of certain seal pup skins and products^[344] (EC Seal Pups Directive), in the national bans enacted by some EU member States prior to the EU Seal Regime, and in the measures banning trade in seal products adopted by other Members, both before and after the adoption of the EU Seal Regime.^[345] According to the European Union, this shows the existence of a "broad consensus" regarding the duty to take into account the special needs of the Inuit and other indigenous communities.^[346] In all those legal instruments, however, the provisions in favour of the Inuit and other indigenous communities operate as "exceptions from the restrictions generally applied with regard to the marketing of seal products".^[347]

2.111.  The European Union further notes that, unlike the IC exception, the MRM exception was not envisaged in the Commission Proposal. Nor is a similar exception provided for in the EC Seal Pups Directive or in any of the measures taken by the EU member States or other WTO Members in order to restrict trade in seal products. Instead, the MRM exception was introduced in the EU Seal Regime towards the end of the legislative process in response to the concerns raised by some EU member States with regard to small-scale hunts conducted exclusively for MRM purposes. The European Union further explained that "the MRM exception was subjected to strict conditions that define very narrowly its scope" in order to avoid creating a loophole allowing the marketing of products from large-scale commercial hunts.^[348] The European Union adds that, in 2011, only 96 seals qualified for the MRM exception. On this basis, the European Union does not agree with Norway that the objective pursued by the MRM exception would be more "prominent" than the objective of addressing EU public moral concerns regarding seal welfare.^[349]

2.112.  For the European Union, although "it is in the nature of all exceptions to derogate from the general rule", this does not mean that, "for that reason, the objective of the exception should be regarded as being equally important, or even more important, than the objective of the general rule."^[350]

2.113.  As a separate matter, the European Union argues that, having found that the objectives of the IC and MRM exceptions are not "independent" of the main objective of the EU Seal Regime, the Panel should have proceeded to find that both objectives are "rationally connected" because they stem from the same standard of morality.^[351] In the European Union's view, it was "contradictory" for the Panel to maintain that the objective pursued by the IC exception is not "independent" of the public morals objective pursued by the EU Seal Regime and, at the same time, that the IC exception does not bear any "rational relationship" to that objective.^[352] Thus, in the event that the Appellate Body were to reject the European Union's other appeal concerning this aspect of the Panel's findings^[353], the European Union submits that the Appellate Body should uphold Norway's claim that the Panel erred by failing to identify the objective pursued by the IC exception as one of the objectives of the EU Seal Regime to be examined under Article 2.2 of the TBT Agreement.^[354] The European Union explains in this regard that "the mere fact that the public morals objective is the 'main' objective of a measure does not have the implication that other, less important, but 'rationally disconnected' objectives of the same measure become irrelevant under Article 2.2 of the TBT Agreement."^[355] Thus, on the assumption that the objective of the IC exception was not "rationally connected" to the public morals objective of the EU Seal Regime, it should, according to the European Union, have been identified by the Panel as a separate objective of the EU Seal Regime, albeit one of lesser importance than the public morals objective.

2.3.2.2  The Panel's analysis of the contribution of the EU Seal Regime to its objective

2.114.  The European Union submits that Canada's and Norway's arguments are "unfounded"^[356], because the TBT Agreement does not prescribe the manner in which the contribution to the fulfilment of the measure's legitimate objective should be assessed, nor how specific that assessment should be.^[357] The European Union argues that the Appellate Body in Brazil – Retreaded Tyres clarified that there is no requirement to quantify the contribution to the achievement of the measure's objective, and that panels may rely on a qualitative analysis.^[358] The European Union maintains that the Panel's analysis is in line with this guidance, and that, because the quantitative evidence available did not permit a precise quantification of the contribution, "the Panel had no alternative but to resort to qualitative reasoning."^[359]

2.115.  The European Union contends that the Panel's findings were no less specific than those reached by other panels conducting a "necessity" test.^[360] The European Union further contends that the analysis by the Appellate Body in US – COOL contradicts the position of the complainants in these disputes. In particular, the European Union refers to the Appellate Body's reliance on the fact that the measure in those disputes contributed to the objective "at least to some degree".^[361] The European Union adds that, although the Appellate Body alluded to the panel's failure to specify the degree of contribution among the reasons that prevented it from completing the legal analysis, this was not the only obstacle cited by the Appellate Body. According to the European Union, the Appellate Body's analysis in US – COOL "shows that it is not possible to determine, in the abstract, whether a finding of contribution is sufficiently specific", and that such a determination "can only be made taking into account the circumstances of each dispute".^[362]

2.116.  The European Union argues that the complainants' claim that the Panel's contribution finding was unsubstantiated is premised entirely on the contention that imports from Norway and Canada will be replaced by imports from Greenland under the IC exception. As a preliminary matter, the European Union submits that the errors alleged by the complainants raise factual issues and should have been submitted under Article 11 of the DSU, and requests the Appellate Body to consider whether these claims should be examined as a legal characterization of the facts or under Article 11.^[363]

2.117.  The European Union argues that the complainants' main piece of evidence – a statement by the Danish-based international consulting group COWI that "[t]he Greenlandic trade is more than enough to cover EU demand^[364] – "is not supported by any evidence or reasoning and it is not possible to know on what basis COWI came to that view".^[365] The European Union identifies other facts that, in its view, contradict the complainants' position: (i) the number of seals hunted in Canada and Norway has traditionally exceeded the number of catches in Greenland; (ii) unlike in Canada and Norway, a large part of the seal skins in Greenland are consumed domestically rather than traded internationally; (iii) a large part of the seal skins are exported from Greenland to markets outside the European Union; (iv) Greenland can also export seal skins under Inuit exceptions to seal product bans in other countries; (v) the assumption that global demand for seal products will remain unchanged at currently depressed levels; (vi) the IC exception is subject to conditions that constrain Greenland's ability to expand supply more than traditional levels; (vii) Greenland's supply capacity is declining; and (viii) Greenlandic export data show declining exports to the European Union.^[366]

2.118.  The European Union contends that this evidence demonstrates that, due to depressed global demand and prices produced in part by the EU Seal Regime, imports from Greenland "have not even returned to their usual level" before seal product bans were first introduced in the European Union in 2007.^[367] The European Union also maintains that Norway's assertion that Greenland's supply of 80,000 seal skins per year can easily supply the European Union's average imports of 20,000 skins "is deeply flawed".^[368] These data, the European Union argues, only cover tanned skins, whereas Canada's principal exports to the European Union consisted of raw skins. Noting that Canada exported more than 100,000 raw skins to the European Union in 2006, the European Union asserts that Norway's own estimates show that "Greenland could not supply that volume on its own, even if it were to discontinue its exports to all other countries."^[369]

2.119.  The European Union also argues that the evidence before the Panel supports the finding that the Inuit have been adversely affected by the EU Seal Regime and have not always been able to benefit from the IC exception. According to the European Union, the EU Seal Regime has a depressing effect on global prices and demand, including on seal products from the IC hunts, and "this negative impact is one of the main reasons why the Complainants' speculative allegations that imports from Greenland will simply replace imports into the European Union from Canada and Norway are unfounded."^[370] The European Union also challenges as "thoroughly misguided" Norway's assertion that the only reason the indigenous communities have not been able to benefit from the IC exception, as the Panel found, was because Greenland did not have an established recognized body at the time of the Panel proceedings.^[371] Noting that the Panel was "well aware that Greenland had benefitted effectively from the IC exception since 2010", the European Union argues that the Panel must be understood as referring to difficulties faced by Inuit and other indigenous communities in Canada, not Greenland.^[372]

2.120.  The European Union submits that, contrary to the complainants' allegations, the evidence before the Panel supported the Panel's finding that the EU Seal Regime contributes to reducing EU demand for seal products, as well as global demand. The European Union asserts that "[i]t is beyond dispute that the EU Seal Regime has effectively limited imports of seal products resulting from the commercial hunts in Canada and Norway."^[373] Although the Panel found that the statistics are incomplete because they do not track separately all categories of seal products, the European Union considers that "this does not mean that those statistics are unreliable."^[374] The European Union thus considers that the Panel was correct in concluding that the statistics "show a general trend that seal product imports from the complainants into the EU Market have decreased significantly over the last few years".^[375] The European Union again rejects the "speculative prediction" underlying the complainants' arguments that the EU Seal Regime does not contribute to reduce the demand for seal products within the EU market because imports from Canada and Norway will be replaced by imports from Greenland.^[376]

2.121.  The European Union further maintains that, because EU demand for seal products is a component of the global demand for such products, reducing EU demand also contributes to reducing global demand. Accordingly, while other factors may contribute to reducing global demand, "the reduction in EU demand would still entail a reduction in potential global demand."^[377] According to the European Union, this is supported by trade statistics that showed a decline in Canada's exports and a "precipitous reduction in the number of seals hunted".^[378] The European Union moreover observes that Canada acknowledged the "negative impacts" and "depressing effects" of the EU Seal Regime on the EU seal product market, and that the Panel found that a connection exists, even if it could not be precisely quantified, between the EU Seal Regime and the number of seals hunted.^[379]

2.122.  The European Union considers wrong on two counts the complainants' allegations that the Panel failed to establish any link between a reduction in global demand and the number of inhumanely killed seals. First, the European Union maintains that neither it nor the Panel ever sought, in referring to the "incidence of inhumane killing" of seals, to ascribe any meaning to that term other than that relating to the number of such inhumanely killed seals.^[380] Second, the European Union argues that "the Panel was entitled to assume that a reduction in the number of seals killed would entail necessarily a reduction of the number of seals being killed inhumanely" on the basis of its factual findings regarding the welfare risks inherent in all seal hunts.^[381]

2.123.  The European Union also rebuts the complainants' claims under Article 11 of the DSU. The European Union does not separately address most of these claims, as it considers them "largely duplicative of those previously made" by the complainants in their claims of error in the legal application of Article 2.2 of the TBT Agreement.^[382] With regard to Norway's claim that the Panel acted inconsistently with Article 11 of the DSU by failing to examine the contribution of certain conditions of the MRM exception to meeting the EU public moral concerns regarding seal welfare, the European Union argues that "this claim is entirely dependent" on Norway's previous appeal of the Panel's finding that MRM interests are not an objective of the EU Seal Regime. The European Union adds that, by examining the contribution of the EU Seal Regime as a whole to the objective of addressing EU public moral concerns with regard to seal welfare, the Panel "examined the contribution of the conditions attached to the MRM exception to that objective".^[383]

2.124.  The European Union rejects Canada's contention that the Panel failed to assess the risks of non-fulfilment and to conduct a "relational" analysis before considering the proposed less trade‑restrictive alternative. The European Union maintains that the Panel conducted its assessment of the risks of non-fulfilment at paragraphs 7.465 and 7.466 of its Reports before proceeding to assess the less trade-restrictive alternative. The European Union contends that the comparison with a proposed less trade-restrictive alternative "is a more sophisticated and reliable conceptual tool for assessing the necessity of a measure in the light of the relevant weighing factors than the type of relational analysis" suggested by Canada.^[384] Given that the Appellate Body stated in US – Tuna II (Mexico) that a comparison with the proposed less trade-restrictive alternative is required in most cases, the European Union argues that panels are not required to make an explicit and motivated finding justifying why they proceed to such a comparison.^[385] The European Union adds that such a justification "is required only in the exceptional cases where a panel decides not to perform a comparison with the proposed [less trade-restrictive alternative]".^[386]

2.125.  The European Union also rejects Norway's argument that the Panel erred by failing to consider "arbitrary or unjustifiable discrimination" under Article 2.2. According to the European Union, Norway's interpretation has no basis in the text of Article 2.2 or in recent Appellate Body reports concerning Article 2.2.^[387] The European Union further contends that the proviso in the last part of the sixth recital alludes to Article 2.1, but "does not justify reading the same requirement into Article 2.2".^[388] The European Union considers that Norway's interpretation would be "superfluous because it would prohibit what is already prohibited by Article 2.1".^[389] The European Union goes on to reject the distinction Norway draws between origin-based discrimination under Article 2.1 versus other types of discrimination captured under Article 2.2. As the European Union explains, Article 2.2 is designed to address measures "that are not discriminatory, but nevertheless create unnecessary obstacles to trade".^[390] Moreover, the European Union explains, "if a measure found justified under Article 2.2 is applied in a discriminatory manner, such discriminatory application can be challenged under Article 2.1."^[391]

2.3.2.3  The Panel's analysis of the alternative measure

2.126.  The European Union argues that the complainants' allegations that the Panel assessed the contribution made by the proposed less trade-restrictive alternative against the wrong benchmark "misrepresent the analysis conducted by the Panel and are unfounded".^[392] The European Union contends that the Panel did not ignore its findings regarding the exceptions, and that, even if it did not expressly repeat its findings with regard to the exceptions, "those findings are reflected in the Panel's overall assessment of the contribution".^[393] The European Union maintains that, because the complainants failed to articulate a sufficiently precise less trade-restrictive alternative, the Panel "had to assess instead the degree of contribution and the reasonable availability of two distinct hypothetical regimes within the scope of the broad [less trade-restrictive alternative] proposed by the Complainants".^[394] The European Union recalls the Panel's conclusions that, while "more stringent regimes" would make a positive contribution to the objective, they were not "reasonably available"; by contrast, "more lenient regimes" were "reasonably available", but would "call into question the degree to which the alternative measure can contribute to the welfare of seals".^[395]

2.127.  The European Union maintains that, although the complainants sought to establish that a more lenient regime was possible, they "failed to specify the content of such a 'more lenient regime' before the Panel, let alone provide any meaningful assessment of its contribution to the measure's objective".^[396] The European Union adds that, although the Panel could have dismissed the claim on that basis alone, it "made considerable efforts to examine the degree of contribution and reasonable availability of different hypothetical regimes spanned by the broad [less trade-restrictive alternative] proposed".^[397] The European Union rejects as "unsupported speculation" the complainants' claims that the negative impact described by the Panel would be offset by the fact that seal products currently covered by the IC exception would be excluded from the EU market by virtue of a more lenient regime.^[398] The European Union adds that much would depend on the specific welfare requirements and certification methods of the more lenient regime, but that the complainants failed to specify any such requirements and methods before the Panel.

2.128.  The European Union also addresses the complainants' claim that the Panel improperly relied on dictum from EC – Asbestos. The European Union argues that the quoted language "reflects the basic and undisputed principle that, both under Article XX of the GATT and under Article 2.2 of the TBT Agreement, the proposed [less trade-restrictive alternative] must achieve at least the same degree of contribution as the challenged measure".^[399] The European Union further argues that "[t]he mere fact that the measure at issue in EC – Asbestos provided for a more comprehensive ban on trade in the product concerned than the EU Seal Regime is wholly immaterial."^[400] What matters, the European Union adds, "is that in both cases the defending Member cannot be forced to adopt alternative measures that would fail to achieve the same degree of contribution to its objective".^[401]

2.129.  The European Union rejects Canada's claim that the Panel failed to take into account certain measures applied by the European Union in other areas in its analysis. The European Union argues that Korea – Various Measures of Beef does not support such a comparison if it does not address behaviour of the same kind for like or at least similar products.^[402] According to the European Union, the Panel recognized that "seal hunting gives rise to specific welfare risks".^[403] The European Union also maintains that, "even if the Panel had found that the welfare risks of seal hunting were sufficiently similar" to other situations, "the European Union would still have been entitled to apply different measures with regard to seal products".^[404] The European Union adds that the objective "pursued by the EU Seal Regime is to address public moral concerns with regard to the welfare of seals, rather than protecting the welfare of seals as such."^[405]

2.130.  The European Union also takes issue with the argument by the complainants that Brazil – Retreaded Tyres requires that consideration of any "prohibitive costs or substantial technical difficulties" must be those borne by the Member.^[406] According to the European Union, that dispute simply identifies an example of a situation where the proposed less trade-restrictive alternative would not be reasonably available, and there "can be other circumstances where a measure would not be available because it would be 'merely theoretical in nature'".^[407] The European Union refers to the Panel's various findings regarding the challenges presented by a "more stringent regime".^[408] The European Union also notes that, despite the Panel's conclusion regarding the greater expenditure and practical challenges of implementation, the costs of such a regime was "just one of the obstacles mentioned by the Panel and, by no means, the most important".^[409]

2.131.  The European Union disagrees with Canada that the Panel failed to make an objective assessment under Article 11 of the DSU by finding that the less trade-restrictive alternative could result in an increase in the number of inhumanely killed seals. The European Union contends that the Panel's finding "can be reasonably inferred from the Panel's findings regarding the inevitability of certain risks of inhumane killing arising from the conditions and circumstances of the seal hunts".^[410]

2.132.  The European Union also rejects Norway's argument that the Panel committed a violation of Article 11 of the DSU by failing to address two other less trade-restrictive alternatives put forward by Norway. The European Union notes that one of these proposed less trade-restrictive alternatives consisted of removing all of the requirements of the EU Seal Regime, and "amounted effectively to repealing the EU Seal Regime".^[411] Because Norway's proposal was premised on the assumption that the EU Seal Regime made no contribution to its objective, the European Union argues that the Panel implicitly rejected this claim. The European Union notes that the other less trade-restrictive alternative put forward by Norway was the removal of three conditions attached to the MRM exception (the "not‑for‑profit", "non‑systematic", and "sole purpose" conditions). The European Union argues that, although the Panel did not expressly address this proposal, it is clearly implicit in the Panel's reasoning and findings that this less trade-restrictive alternative would also fail to make an equivalent contribution to the measure's objective.

2.133.  For the above reasons, the European Union requests the Appellate Body to reject the claims raised by Canada and Norway under Article 2.2 of the TBT Agreement with regard to the contribution made by the EU Seal Regime to it objective and the Panel's analysis of the proposed less trade-restrictive alternatives.^[412] The European Union further requests the Appellate Body to uphold the Panel's finding that the EU Seal Regime is not inconsistent with Article 2.2 of the TBT Agreement.^[413]

2.3.3  Article XX of the GATT 1994

2.3.3.1  Aspects of the measure to be justified under Article XX(a)

2.134.  The European Union requests the Appellate Body to reject Norway's appeal against the Panel's findings with respect to the aspect of the EU Seal Regime to be justified under Article XX(a) of the GATT 1994. According to the European Union, contrary to what Norway alleges, WTO jurisprudence on the issue "is not as clear cut and rather suggests that an artificial separation of certain provisions from the remainder of the measure at issue … is not conducive to a proper understanding of the measure and can affect the correctness of the analysis under Article XX".^[414]

2.135.  Responding to Norway's criticism of the Panel's reliance on US – Gasoline, the European Union points out that the Appellate Body in US – Gasoline was of the view that "not only the provisions relating to importers and blenders, but also those related to domestic refiners had to be considered in determining whether the measure [– i.e. the Gasoline Rule –] [could] be justified".^[415] This is because, in that case, the less favourable treatment found to be in violation of Article III:4 of the GATT 1994 "resulted from the interplay between the provisions relating to baselines for domestic refiners and the provisions relating to baselines for blenders and importers of gasoline".^[416] The Panel's approach in the present case is similar to the approach adopted by the Appellate Body in US – Gasoline since, under the EU Seal Regime, "the less favourable treatment alleged by the Complainants results from the interplay between the General Ban and the IC and MRM exceptions and not from the exceptions alone."^[417] The Panel was, therefore, correct in concluding that the ban and the exceptions under the EU Seal Regime are "closely connected to each other and could not operate in isolation".^[418] The European Union adds that the approach of the Appellate Body in US – Gasoline was "echoed subsequently" in the Panel report in Argentina – Hides and Leather.^[419]

2.136.  With respect to Norway's reliance on the Appellate Body report in Thailand – Cigarettes (Philippines), the European Union submits that, contrary to what Norway alleges, the Appellate Body's observations in that dispute indicate that, when less favourable treatment results from certain regulatory treatment of imports, "the analysis under the exceptions of Article XX should focus on whether such 'regulatory differences' are 'necessary' in order to achieve the objectives set out in either of those two provisions at the level of protection chosen by the responding Member."^[420]

2.137.  Based on these cases, the European Union asserts that the aspect of the measure to be justified should not be defined so narrowly as to make it impossible correctly to understand the measure, and that the focus of the analysis under Article XX should be on "regulatory differences".^[421] In the present case, the Panel was correct in not limiting its analysis to the IC and MRM exceptions, since the discrimination found to be inconsistent with the GATT 1994 resulted from the "interplay" between the ban and the exceptions.^[422]

2.138.  In response to Norway's criticism of the Panel's reasoning that an "exception", when considered alone, could never be "necessary" to achieve the objective of a ban, the European Union posits that "the mere fact that the exception is considered together with the general rule in the context of the analysis of the design and structure of the measure under a paragraph of Article XX in no way means that the exception is altogether 'removed from scrutiny'".^[423] Instead, the exception "critically informs the design and structure" of the measure, particularly "the extent to which the measure contributes to the stated objective", which then affects the Article XX analysis.^[424] Finally, the European Union contends that the Panel did not err in making a reference to its analysis under the TBT Agreement in its assessment of the measure with respect to Article XX. If at all, the Panel's "consistent and coherent analysis between the TBT Agreement and the GATT 1994 … further supports the correctness of [its] approach".^[425]

2.139.  In the event that the Appellate Body agrees with Norway that the Panel erred in considering whether the EU Seal Regime as a whole was provisionally justified under Article XX(a), the European Union notes its other appeal of the Panel's finding that the objective of the IC exception is rationally disconnected from the EU Seal Regime objective.^[426] If the Appellate Body agrees with the European Union and reverses the Panel's finding that the IC exception does not bear a rational relationship to the objective of addressing EU public moral concerns regarding seal welfare, "in completing the analysis following Norway's appeal, the Appellate Body would need to base its analysis on the finding that there is a rational connection between the IC exception and the objective of the EU Seal Regime."^[427] If the Appellate Body upholds the Panel's finding that the IC exceptions does not bear a rational relationship with the objective of the EU Seal Regime, the European Union submits that the Appellate Body "should uphold Norway's claim that the Panel erred by failing to identify the objective pursued by the IC exception as an independent objective of the EU Seal Regime".^[428] In completing the analysis under Article XX(a) in such circumstances, the European Union requests the Appellate Body to take into account "the modified Panel's analysis as to the objective of the IC exception and its contribution to its fulfilment and find that the IC exception is justified" under Article XX(a) of the GATT 1994.^[429]

2.3.3.2  Scope of Article XX(a)

2.140.  The European Union disagrees with Canada's claim that the Panel erred in finding that the EU Seal Regime falls within the scope of application of Article XX(a) of the GATT 1994. Contrary to Canada's arguments, the European Union submits that there is no requirement to assess the "risk" to public morals in order to determine whether a measure falls within the scope of Article XX(a). Instead, such examination must be undertaken as part of the "necessity" analysis because, where the risks that a measure purports to address are shown to be "inexistent or negligible", the measure will be found "unnecessary".^[430] Relying on a statement by the Appellate Body in Korea – Various Measures on Beef, the European Union argues that "all that must be shown in order to establish that a measure falls within the scope of Article XX(a) is that the measure is designed to protect public morals."^[431] The European Union points out that Canada has not appealed the Panel's finding that the EU Seal Regime pursued a "public morals objective". On the basis of this finding, the European Union considers that "the Panel was entitled to conclude that the EU Seal Regime was designed to protect public morals and, therefore, fell within the scope of Article XX(a) of the GATT 1994."^[432]

2.141.  The European Union submits that Canada's interpretation of Article XX(a) would "effectively introduce … a strict consistency test", which would impose on Members the burden of proving "that the relevant standard of morality is consistently applied by them in each and every situation involving similar risks."^[433] According to the European Union, WTO jurisprudence shows that the application of a measure in one area is "only of a limited relevance" to an Article XX analysis.^[434] The European Union adds that introducing a "consistency" test into Article XX would limit Members' "regulatory autonomy and, in particular, their right to select an appropriate level of protection in different situations".^[435] Such a limitation, the European Union maintains, cannot be easily presumed absent clear text, since, when the drafters intended to provide for a consistency obligation, they did so expressly, such as in Article 5.5 of the Agreement on the Application of Sanitary and Phytosanitary Measures (SPS Agreement).^[436]

2.142.  The European Union also takes issue with Canada's argument that the EU Seal Regime does not address genuine risks to public morals on animal welfare on the ground that the European Union "tolerates" a similar degree of animal suffering in slaughterhouses and terrestrial wildlife hunts.^[437] The European Union highlights that the Panel gave detailed reasons for its findings on the uniqueness and distinctiveness of the welfare risks associated with seal hunts, and that these findings have not been challenged by Canada. The European Union reiterates that comparing seal hunts with those activities would be "of limited value" given the differences in the animals involved, the killing methods, and the physical environment.^[438] Owing to these differences, and the "limited value" accorded to comparisons with terrestrial hunts, the European Union argues that the Panel was not bound to address Canada's evidence concerning the poor welfare outcomes in terrestrial wildlife hunts.

2.143.  Finally, with respect to Canada's claim that the Panel failed to make an objective assessment of the matter, contrary to Article 11 of the DSU, by failing to take into account evidence relating to environmental conditions and risks in other situations, such as wildlife hunts, the European Union notes that Canada misstates the Panel's finding. According to the European Union, the Panel did not simply distinguish the physical environmental conditions of seal hunts from the conditions in wildlife hunts, but rather distinguished between "hunts occurring within or near Arctic and sub‑Arctic regions, on the one hand, and terrestrial wild life hunts, on the other hand".^[439] The European Union submits that the differences between Arctic and semi‑Arctic marine habitats and the terrestrial habitats of animals are "self-evident".^[440] As to Canada's argument that the Panel failed thoroughly to assess the EFSA Scientific Opinion, the European Union submits that, contrary to Canada's arguments, the EFSA Scientific Opinion "stressed that the methods for killing wild animals and their efficacy vary considerably" and "cautioned that 'care should be taken when comparing their efficacy because of the great variation in environmental conditions concerned'".^[441] With respect to the Panel's alleged failure to consider the risks to animal welfare in terrestrial wildlife hunts in determining whether such risks exist for seal hunts, the European Union points out that the Panel found comparisons with terrestrial hunts to be "of limited value" and, therefore, it was not necessary for the Panel to address the evidence cited by Canada.^[442]

2.3.3.3  The Panel's analysis of "necessity"

2.144.  The European Union asserts that the complainants' arguments with respect to the Panel's "contribution" analysis are based on a misreading of the Appellate Body's observations in Brazil – Retreaded Tyres. The European Union clarifies that the Appellate Body in that case left open "the possibility that, exceptionally, an import ban may be considered necessary even when the contribution is not 'material'".^[443] Moreover, the European Union adds, in using the phrase "material contribution", the Appellate Body "did not purport to define a minimum legal requirement to be enforced by panels as a mandatory component of the necessity test".^[444] Instead, the Appellate Body simply made a "prediction about the likely legal characterization of a certain factual scenario", which provides useful guidance, but should not be taken as a legal requirement.^[445] The European Union considers that the interpretation advanced by the complainants would contradict the interpretation of the contribution requirement under Article 2.2 of the TBT Agreement as applied in US – COOL, in which "the Appellate Body rebuked the panel for having considered it necessary for the COOL measure to meet some minimum level of fulfilment".^[446] The European Union also highlights that, unlike the measure at issue in Brazil – Retreaded Tyres, the EU Seal Regime does not provide for "a complete import ban", as the complainants themselves appear to have acknowledged.^[447]

2.145.  In any event, the European Union maintains that, in Brazil – Retreaded Tyres, the Appellate Body held that "a contribution should be deemed 'material' provided that it is not 'marginal or insignificant'."^[448] In this case, the European Union claims that both the Panel's findings and the evidence on record "demonstrate that the contribution of the EU Seal Regime is clearly more than 'marginal or insignificant', even if it cannot be quantified precisely".^[449] For these reasons, the European Union requests the Appellate Body to reject Canada's and Norway's claims and arguments on appeal with regard to the necessity of the EU Seal Regime under Article XX(a) of the GATT 1994.

2.3.3.4  The Panel's analysis under the chapeau of Article XX

2.146.  The European Union submits that the Appellate Body should reject Canada's claims of legal error with respect to the Panel's reasoning under the chapeau of Article XX of the GATT 1994. According to the European Union, the Panel's approach of taking into account its "legitimate regulatory distinction" analysis under Article 2.1 of the TBT Agreement for the purposes of its assessment of "arbitrary or unjustifiable discrimination" under the chapeau is legally correct.^[450] The European Union asserts that the complainants' "rigid interpretation" of the term "arbitrary or unjustifiable discrimination" as embodying a requirement that the reasons for discrimination be "rationally connected" to the policy objective of the measure is not reflected in the text of the chapeau or past Appellate Body jurisprudence.^[451] While the European Union agrees that determining whether the discrimination at issue is "arbitrary or unjustifiable" usually involves an investigation of the reason underlying the discrimination, in its view, investigating the cause underlying the discrimination is not necessarily limited to determining whether such cause is "rationally connected" to the objective of the measure. Moreover, as reflected in prior Appellate Body jurisprudence, determining the cause of the discrimination may involve the consideration of other factors.^[452]

2.147.  The European Union considers that its position is supported by Brazil – Retreaded Tyres, where the Appellate Body found that, under the specific circumstances of that case, the MERCOSUR arbitral ruling was "not an acceptable rationale for the discrimination, because it [bore] no relationship to the legitimate objective pursued by the Import Ban that [fell] within the purview of Article XX(b), and even [went] against this objective".^[453] The European Union emphasizes that, unlike the EU Seal Regime, the measure in Brazil – Retreaded Tyres was a health measure, which was provisionally justified under Article XX(b). According to the European Union, the "line of equilibrium" that the Appellate Body found with respect to the health measure in Brazil – Retreaded Tyres under the specific circumstances of that case does not apply to the EU Seal Regime, which requires a different "balancing exercise" between public moral concerns and other interests.^[454] The European Union contends that the Panel, therefore, correctly based its conclusion on the justification of the regulatory distinction on the specific circumstances of these disputes.

2.148.  The European Union further maintains that the Panel based its conclusion about the justification of the regulatory distinction on its finding that, in the EU Seal Regime, "the interests underlying the IC exception are 'balanced against the objective of the measure at issue.'"^[455] The European Union adds that, by contrast, in Brazil – Retreaded Tyres, the Appellate Body did not find "any such balancing" in the measure at issue, since, in that case, there was a "complete dissociation of objectives".^[456] Finally, the European Union notes that the nature of the exceptions in the two cases differ significantly. In the present case, the IC exception is "based on a broad recognition of the unique interests of Inuit and other indigenous communities", whereas in Brazil – Retreaded Tyres, the exception at stake had "a mere economic objective, i.e. implementing the market access concessions contained in the MERCOSUR free trade agreement".^[457] Given the "relevant differences" between the present case and Brazil – Retreaded Tyres, the European Union submits that the Panel's approach to not "exclusively focus" on the rational connection between the cause of the exceptions and the main objective of the measure "appears correct".^[458]

2.149.  The European Union also submits that the approach proposed by the complainants also conflicts with the purpose of Article XX, which is "to balance the substantive obligations established in the GATT 1994 with certain important and legitimate policy objectives".^[459] The European Union underscores that the "[e]xceptions are often not 'rationally connected' to the main purpose of a measure", and when they are "inserted to achieve a balance between the main objective … and conflicting other legitimate objectives, there will typically be a 'disconnect' between their rationale and the main objective pursued".^[460] The approach proposed by the complainants would preclude Members from carrying out such a balancing exercise, when there is nothing "arbitrary or unjustifiable" in "striking a balance between animal welfare and these other objectives".^[461] Finally, the European Union contends that the "rigid interpretation" proposed by the complainants also disregards the context provided by the TBT Agreement to the chapeau of Article XX of the GATT 1994, and that the Panel rightly attempted to achieve a "coherent and consistent interpretation" by taking into account its analysis under Article 2.1 of the TBT Agreement.^[462] For these reasons, the European Union requests the Appellate Body to reject Canada's and Norway's allegations of errors concerning the Panel's findings under the chapeau of Article XX of the GATT 1994.^[463]

2.150.  In the event that the Appellate Body accepts Canada's and Norway's appeals, the European Union notes its other appeal of the Panel's finding that "the IC exception does not bear a rational relationship to the objective of addressing the moral concerns of the public on seal welfare."^[464] According to the European Union, if the Appellate Body modifies the Panel's reasoning following successful appeals by Canada and Norway as regards the interpretation of the chapeau, the Appellate Body "should not base its analysis on a finding of a lack of rational connection between the IC exception and the objective of the EU Seal Regime".^[465]

2.4  Claims of error by the European Union – Other appellant

2.4.1  Annex 1.1 to the TBT Agreement

2.151.  The European Union contends that the Panel erred in its interpretation and application of the terms "product characteristics" and "applicable administrative provisions" in the definition of a "technical regulation" under Annex 1.1 to the TBT Agreement, and consequently requests the Appellate Body to reverse the Panel's conclusion that the EU Seal Regime constitutes a "technical regulation" and to declare moot and of no legal effect the Panel's findings and conclusions under Article 2.1, 2.2, 5.1.2, and 5.2.1 of the TBT Agreement.^[466]

2.152.  First, with respect to the Panel's interpretation of the term "applicable administrative provisions", the European Union submits that the Panel erred in considering that the word "applicable" pertains to "products" rather than "product characteristics or their related processes and production methods" (PPMs).^[467] Pointing to the text of Annex 1.1, the European Union observes that "[t]he reference to 'applicable administrative provisions' immediately follows the mention of 'product characteristics or their related [PPMs]'", with the two categories being linked by "the conjunctive term 'including'".^[468] Regarding the measure at issue, the European Union asserts that, while the procedural requirements contained in the Implementing Regulation might be described as administrative provisions, they "do not directly pertain to … what the Panel considered as a product characteristic laid down in the negative form, namely that the products must not contain seal".^[469] Instead, they regulate trade in seal products. For the European Union, they cannot therefore be considered as being "applicable" to a product characteristic within the meaning of Annex 1.1.

2.153.  Second, the European Union alleges that the Panel erred in its interpretation of the term "product characteristics" by relying only on "a fragment of the Appellate Body's analysis in
EC – Asbestos" on the ordinary meaning of "product characteristics".^[470] In particular, the Panel erred in relying on EC – Asbestos to find support for its finding that any "objectively definable features" of a product constitute product characteristics.^[471] This led the Panel to find that the criteria established under the Implementing Regulation concerning the type of hunter and/or qualifying hunts amount to "product characteristics" within the meaning of Annex 1.1. Under the Panel's interpretation of Annex 1.1, "virtually anything" that bears a relation to a product could be construed as a product characteristic".^[472] The European Union adds that the Panel's reading of Annex 1.1 renders redundant, at least in part, the inclusion of "related [PPMs]", as the two concepts overlap in scope. It also contradicts the object and purpose of the TBT Agreement, which "was designed to elaborate on the disciplines of Article III of the [GATT] for a very specific subset of measures" rather than to cover "all government regulatory actions affecting products" or "all internal measures covered by Article III:4 of the GATT 1994".^[473] The European Union further argues that the negotiating history of the TBT Agreement reflects the intent to narrow the scope of the TBT Agreement, as negotiators only agreed to include PPMs "related to product characteristics".^[474]

2.154.  On this basis, the European Union submits that the conditions imposed under the EU Seal Regime – the IC, MRM, and Travellers exceptions – "do not concern the intrinsic characteristics or features that are related to the products".^[475] Specifically, the IC exception deals with "the identity of the hunters, the traditions of their communities and the purpose of the hunt"^[476]; the MRM exception relates to "the size, intensity and purpose of the hunt and the marketing conditions (i.e. non-profit and non-systematic) of the products"^[477]; and the Travellers exception pertains to "the use of the products and the circumstances of their importation".^[478] None of these conditions, argues the European Union, set out any intrinsic or related features of the products.

2.155.  Finally, referring to the Appellate Body's findings in EC – Asbestos, the European Union recalls that the proper legal characterization of the measure at issue cannot be determined unless the measure is examined "as a whole".^[479] The European Union adds, however, that the Appellate Body did not suggest in that case that "it is sufficient for one component to meet the criteria for a technical regulation for a measure as a whole to be considered" as such.^[480] Thus, it was incorrect for the Panel to conclude that a measure as a whole can be deemed a technical regulation "simply because one of its components meets the criterion for a technical regulation".^[481] In the European Union's view, since not all of the components of the EU Seal Regime meet the criteria for a technical regulation, the Panel should have instead based its determination on consideration of "all components of the measure and their respective role in [its] operation and object and purpose".^[482] In this regard, the European Union argues that the Panel failed to address how the ban on products consisting exclusively of seal impacts on the legal characterization of the measure as a whole.^[483] The European Union further highlights that, while the exceptions in the measure at issue in EC – Asbestos "permitted certain products which were identified according to their intrinsic characteristics"^[484], none of the conditions under which seal-containing products may enter the European Union market "relate to intrinsic or related product characteristics".^[485] Thus, if the prohibition contained in the EU Seal Regime is examined in the light of the IC, MRM, and Travellers exceptions, the measure "cannot be reduced to the simple negative intrinsic product characteristic that products may not contain seal".^[486] Nor does the EU Seal Regime, when considered as a whole, lay down "product characteristics" within the meaning of Annex 1.1 to the TBT Agreement.

2.4.2  Article 2.1 of the TBT Agreement

2.156.  The European Union appeals the Panel's finding that "the IC exception does not bear a rational relationship to the objective of addressing the moral concerns of the public on seal welfare".^[487] The European Union submits that this finding was "based on an incorrect interpretation of the notion of 'public morals'", according to which a Member claiming that a measure pursues a public morals objective has to show that the measure is supported by a majority of its population.^[488] Alternatively, the European Union submits 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 of the DSU.

2.157.  The European Union observes that the Panel cited with approval the interpretation of the notion of "public morals" made by the panels in US – Gambling and China – Publications and Audiovisual Products, but argues that, in its reasoning, the Panel disregarded the interpretation developed in these previous disputes.^[489] According to the European Union, the Panel held that the IC exception was not related to the public morals objective of the EU Seal Regime because it was not "grounded in the concerns of EU citizens", a finding that it had in turn inferred from evidence "consisting exclusively of opinion polls and a public consultation".^[490] The European Union takes issue with the Panel's finding on the basis that the "standards of right and wrong" that make up a Member's public morals "do not necessarily have to be held by a majority of members of a community".^[491] Instead, the European Union argues that these standards "can be set by a Member's authorities on behalf of a community, in accordance with that Member's own system of government".^[492] The European Union submits that "[i]t is … the task of legislators and regulators to translate the broader moral concerns of the public into precise requirements, by relying on their superior knowledge of the specific factual circumstances."^[493] This means, according to the European Union, that, even if it could be concluded that the IC exception is not "grounded in the concerns of EU citizens", this would not imply that the IC exception is "rationally disconnected" from the public morals objective pursued by the EU Seal Regime.^[494]

2.158.  The EU Seal Regime, according to the European Union, reflects the "moral standard" that "humans ought not to inflict suffering upon animals without a sufficient justification".^[495] The European Union claims that the IC exception reflects a "balancing of interests which is an integral part of that moral standard".^[496] The European Union finds the Panel's conclusion to be "all the more difficult to understand" in view of the fact that the Panel, in reaching its earlier finding that public concerns regarding the welfare of seals were "moral" in nature, had found ample evidence for the existence of a "well-established moral doctrine" grounding these concerns.^[497] According to the European Union, the Panel totally disregarded that evidence when considering whether the IC exception was rationally connected to the public morals objective of the EU Seal Regime. Nevertheless, the European Union claims that the IC exception is in fact the outcome of the application of that moral doctrine in the context of seal hunting.

2.159.  The European Union further explains that the fundamental tenet of the moral doctrine of "animal welfarism" is that it is morally acceptable to inflict suffering upon animals where sufficiently justified by human needs.^[498] The European Union notes that none of the laws on animal welfare cited by the Panel stipulate an absolute prohibition on inflicting suffering upon animals; rather, all of them provide for exceptions based on overriding human needs. The European Union further submits that the evidence before the Panel confirmed that the IC exception was the result of a proper application of the moral standard invoked by the European Union. The European Union points to the Panel's finding that "seal hunting represents a vital element of the tradition, culture, and livelihood of Inuit and indigenous populations", and submits that the EU legislators could reasonably have concluded that these specific circumstances rendered the IC exception necessary.^[499]

2.160.  The European Union submits that the Panel misinterpreted and misapplied Article 2.1 of the TBT Agreement when examining whether the IC exception is even-handed in its design and application. According to the European Union, the Panel should have examined whether the IC exception was designed and applied "in a reasonable, impartial and harmonious manner", having regard to its objective, namely, to protect the interests of Inuit and other indigenous communities traditionally engaged in seal hunting for subsistence purposes.^[500] Instead, the Panel determined that the IC exception was de facto available exclusively to Greenland, without examining the actions and omissions of the relevant Canadian authorities and operators. The European Union further submits that the Panel wrongly focused on the greatest similarities between seal hunts in Greenland and commercial hunts, which is irrelevant for the assessment of even‑handedness, given that the Panel had already found that seal hunts in Greenland are IC hunts conducted for subsistence purposes.^[501]

2.161.  More specifically, the European Union recalls that the IC exception makes a distinction between IC and commercial hunts in view of their purposes – i.e. subsistence versus primarily or solely for profit – and that the requirements to qualify under the IC exception are "reasonable, tailor‑made and harmonious with the objective" of the IC exception – i.e. the protection of Inuit interests. The European Union further argues that the operation and application of the IC exception is fair, impartial, and harmonious with its objective, in that only seal products derived from hunts conducted by Inuit communities for subsistence purposes can benefit from the exception. The European Union notes that any entity within the Inuit communities in Canada or elsewhere can meet the requirements to become a recognized body for the purposes of assessing conformity with the IC exception. The European Union submits that the fact that, so far, only an entity in Greenland has become a recognized body results from the decisions of the relevant authorities and operators in other countries, and cannot be attributed to the EU Seal Regime. The European Union argues that, contrary to what the Panel found, there is no "inherent flaw" or permanent defect in the IC exception that prevents Inuit communities, other than those in Greenland, from taking advantage of it.^[502]

2.162.  The European Union further submits that the Panel's focus on the de facto exclusivity of the IC exception to Greenland, where the Inuit hunt bears the greatest similarities to commercial hunts, is misdirected. According to the European Union, the Panel wrongly assessed the even‑handedness of the IC exception by looking at the effects of the measure in a particular period of time. The European Union underscores that, while Canada and its Inuit communities have not taken any steps to benefit from the IC exception despite numerous efforts made by the EU authorities, they could do so at any time in the future, if and when they so wish, based on their assessment of whether exports to the European Union are desirable. In the European Union's view, the fact that the Canadian authorities purchase Inuit products under a targeted programme means that they have, in principle, a convenient and easy means to identify the seal products qualifying for the IC exception.

2.163.  With respect to the Panel's findings on the degree of the commercial aspect in seal hunts in Greenland, the European Union expresses its understanding that the Panel did not find that seal hunts in Greenland should be characterized as "commercial hunts" – i.e. as hunts having as their sole or primary purpose to make a profit out of selling seal products on the market. The European Union submits that, as long as these hunts meet the criteria to qualify as a legitimate indigenous subsistence activity, and are thus "'subsistence'/IC hunts", the extent to which some of the by‑products of these hunts are sold through commercial channels by Inuit communities in Greenland is irrelevant for assessing even-handedness in the design and application of the IC exception.^[503] The European Union notes that the commercial aspect of subsistence hunts "by definition" resembles the commercial characteristics of commercial hunts.^[504] The European Union argues that, given that the Panel accepted the legitimacy of an exception to the sales ban for the marketing of by-products of indigenous subsistence hunting, the fact that such marketing then "actually happen[ed]" cannot invalidate that legitimacy on the basis of a lack of even-handedness.^[505] For the European Union, the Panel's reference to the degree of commercialization of seal products in Greenland is, therefore, "logically erroneous".^[506]

2.4.2.1  Claims under Article 11 of the DSU

2.164.  The European Union maintains that the evidence on which the Panel relied – consisting of opinion polls and a public consultation – lends no support to the Panel's finding that the IC exception is not "grounded in the concerns of EU citizens".^[507] Before the Panel, the European Union had argued that two opinion polls referenced in the 1986 Report of the Royal Commission on seals and sealing in Canada^[508] (Royal Commission Report) confirmed that the EU public's concerns varied according to the purpose of the hunt, and more specifically, that the public was less concerned with the hunts conducted by the Inuit for subsistence purposes than with commercial hunts. In the first poll – conducted by the Royal Commission (RC poll) – respondents were asked which, if any, of various types of seal hunts they found acceptable. According to the European Union, the results showed that only a very small percentage of respondents found commercial seal hunts acceptable, while a very large percentage found seal hunting by indigenous communities for food and clothing acceptable. The European Union contends that, while the percentage of respondents who found Inuit seal hunting for cash or to finance hunting for food acceptable was significantly smaller, it was still much higher than the percentage of respondents who found acceptable either the purely commercial hunts or all hunts.^[509] In the second poll – conducted by the Canadian Sealers Association (CSA poll) – respondents were asked under which conditions the killing of animals would be acceptable. The European Union points out that 90% of respondents agreed with the statement that "the killing of wild animals is acceptable if a person's survival or livelihood depends on it".^[510]

2.165.  The European Union submits that the Panel did not claim that these polls support its finding, but rather characterized them as "unreliable".^[511] The European Union argues that, in reaching this conclusion, the Panel "disregarded" or "distorted" the findings of the Royal Commission.^[512] Although the Panel noted that the Royal Commission identified "two uncertainties" about the result of the polls, the European Union argues that these uncertainties did not lead the Royal Commission to question the "reliability" of the CSA poll.^[513] Instead, the Royal Commission concluded that the CSA poll "at least, supports the view that there is strong public approval of taking seals for subsistence purposes".^[514] In the European Union's view, it is "impossible to reconcile" this finding of the Royal Commission with the Panel's finding that EU public concerns regarding seal welfare do not vary depending on the purpose of the hunt.^[515] In addition, although the Panel relied on the observation of the Royal Commission that the responses to the RC poll "may perhaps imply little general understanding of the essential economic structure" of Inuit hunts^[516], the European Union contends that the Royal Commission went on to conclude that both the RC poll and the CSA poll "showed that the purpose behind the hunt may have a great effect on public reaction to it".^[517] In the European Union's view, the public's relatively low level of knowledge as to the economic realities of Inuit hunts would not render "unreliable" the opinions expressed by the public or the underlying moral views.^[518]

2.166.  Regarding the public consultation conducted by the EU Commission in connection with the adoption of the EU Seal Regime, the European Union took note of the Panel's observation that 62% of respondents stated that seals should not be hunted for any reason, whereas 18% stated that hunting is most acceptable when the hunter belongs to a traditional seal culture/community or depends on the seal hunt for his main income.^[519] The European Union also notes the comment by COWI that the consultation showed that there is a "greater level of acceptance of the hunt if it is embedded in a traditional seal hunting culture"^[520], and further observes that the representativeness of the respondents was limited, and that there are "clear indications" that the consultation underestimates the actual percentage of members of the public who regard traditional hunts conducted for subsistence purposes as more acceptable than other hunts.^[521]

2.167.  In the alternative, the European Union alleges that the Panel acted inconsistently with Article 11 of the DSU in finding that: (i) the text, legislative history, and application of the IC exception indicate that the IC exception is available de facto exclusively to Greenland; and (ii) the commercial aspect of seal hunts in Greenland is comparable to that of commercial hunts. The European Union further claims that the Panel's 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" is inconsistent with the Panel's duty under Article 11 of the DSU to make an objective assessment of the facts.^[522] The European Union submits that the Panel failed to provide reasoned and adequate explanations, lacked a sufficient evidentiary basis, and provided incoherent reasoning in arriving at this conclusion.

2.168.  With respect to the text of the IC exception, the European Union notes the Panel's finding earlier in its analysis that, "[b]ased on the text, we consider that the requirements of the IC exception are generally linked to the characteristics of IC hunts".^[523] For the European Union, this means that the Panel "did not find anything wrong with the requirements" attached to the IC exception.^[524] The European Union, therefore, fails to understand how the Panel could have relied on the text of the IC exception as a basis for finding a lack of even-handedness. The European Union submits that, by doing so, the Panel provided incoherent reasoning and failed to provide an adequate explanation for its finding.

2.169.  With respect to the legislative history of the IC exception, the European Union notes the Panel's observation that the COWI 2008 and 2010 Reports^[525] "anticipated" that Greenland would be the only beneficiary of the IC exception, as well as the Panel's finding that the fact that Greenland is the only beneficiary of the IC exception is "not merely an incidental effect" of the application of the exception.^[526] According to the European Union, the Panel based its conclusion that the IC exception was drafted with the knowledge that only Greenland could benefit from it on the two COWI Reports, as well as the Parliament Report on the proposal for a regulation concerning trade in seal products.^[527] The European Union submits that the Panel's reliance on those documents was "unwarranted", and that the Panel lacked an evidentiary basis for its finding.^[528] According to the European Union, neither the COWI Reports nor the Parliament Report lends support to the conclusion that "only Greenland could benefit from the IC exception".^[529]

2.170.  With respect to the COWI 2010 Report on the study on implementing measures for trade in seal products, the European Union asserts that the Panel took certain statements by COWI out of context, and that they were in any event unsupported by any evidence. For example, the COWI statement that the Panel relied upon was made in the context of assessing the impact of adopting stricter, as compared to less stringent, systems of traceability of seal products. The European Union notes that COWI merely found that "[t]he more stringent the implementing rules (i.e. the traceability system), the more likely this would result in the diversion of all exempted trade to Greenland."^[530] The European Union further submits that the Panel ignored a number of statements contained in the COWI 2010 Report that indicated that the IC exception was potentially available to many Inuit communities.^[531] The European Union further notes that the Panel gave an inappropriate value to COWI's statements. The European Union underscores that COWI did not have the authority, the qualifications, or the mandate to engage in the legal interpretation of the Basic Regulation. Moreover, the European Union highlights that the Implementing Regulation, which specifies the conditions for qualifying for the IC exception, was adopted well after the COWI 2010 Report was issued. The statement contained in the COWI 2010 Report was thus "mere speculation".^[532] With respect to the Parliament Report and the COWI 2008 Report on the assessment of the potential impact of a ban of products derived from seal species, the European Union claims that it is unable to identify how these sources lend support to the Panel's findings, as the propositions that the Panel attributes to those sources cannot be found in them. The European Union, therefore, submits that the Panel failed to provide reasoned and adequate explanations, and that these sources do not support the Panel's conclusion.

2.171.  With respect to the actual application of the IC exception, the European Union argues that the fact that the Danish customs authorities, based on their interpretation of the Implementing Regulation, processed imports based on certificates issued by the Greenlandic authorities prior to a Greenlandic entity obtaining recognized body status, says very little as to whether the IC exception only benefits imports from Greenland. The European Union notes that it took more than two years for the EU authorities to process Greenland's request to become a recognized body. Further, the EU authorities issued explicit invitations and made substantial efforts so that entities in Canada could also become recognized bodies, and the Canadian Inuit could benefit from the IC exception. The European Union argues that this shows that the application of the IC exception does not reveal that the IC exception could only benefit Greenland. The European Union submits that the above errors made by the Panel in its assessment of the even-handedness of the IC exception were material and that the Panel's reasoning and ultimate conclusion cannot stand.

2.172.  The European Union alleges that the Panel erred in finding that "the degree of the commercial aspect of [Greenland's IC] 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."^[533] The European Union notes that these Panel findings rested on three factors: (i) the level of development of the commercial aspect of Greenlandic seal hunts; (ii) the volume of sealskins trade in Greenland; and (iii) the integrated nature of the seal product industries in Greenland, Canada, and Norway. The European Union submits that the Panel wrongly assessed these factors and provided incoherent reasoning, thus failing to make an objective assessment of the facts.^[534]

2.173.  The European Union submits that, with respect to the development of the commercial aspect of Greenlandic seal hunts, the Panel made "a fundamental mistake".^[535] The European Union points out that the source on which the Panel relied for its statement that "over 50 per cent of the hunted seals in Greenland are sold to the tannery of Great Greenland A/S"^[536] actually states that "the skins from just over half of all caught seals are sold by the hunters to the tannery of Great Greenland A/S".^[537] The European Union emphasizes that, while half of the skins are sold, the other parts of the seals hunted by Inuit in Greenland are still consumed by them. For the European Union, this indicates that the commercial aspect of Greenland's hunts is not comparable to that of commercial hunts, where 100% of the seals hunted are sold in their entirety.^[538]

2.174.  With respect to the volume of sealskins traded in Greenland, the European Union points out that the volumes in Greenland are relatively constant, whereas the volumes in Canada reflect market conditions. For the European Union, the relative inelasticity of the production of seal products in Greenland is an "important difference" that the Panel ignored when relying on the volume of the hunts in Greenland as a basis to conclude that such a volume "was comparable to that of commercial … hunts in Canada".^[539] The European Union further alleges that the Panel disregarded the fact that Greenland provides subsidies to support Inuit hunters in order to support the subsistence of Inuit communities and allow them to preserve their cultural identity. Finally, the European Union points to the fact that the volume of seals hunted in commercial hunts is produced by a few hunters killing many seals in a short period of time, whereas the volume of seals hunted by Inuit communities derives from a large population that hunts throughout the year. The European Union submits that, in ignoring these factors, the Panel wrongly assessed the relevance of the volume of sealskins traded in Greenland.

2.175.  With respect to the allegedly integrated nature of the seal product industries in Greenland, Canada, and Norway, the European Union alleges that the Panel's findings are not supported by the evidence on the record. The European Union notes that, in response to the question asked by the Panel on this issue, the complainants recognized that there was "little direct cooperation" between their industries and Greenland.^[540] Moreover, the European Union points out that the one example of integration that the Panel mentions – the purchase of sealskins from Canada by Great Greenland A/S – was a "one-off situation in the rather distant past", and was not based on general commercial considerations, but rather on an attempt to deal with a temporary crisis in a way that avoided laying off local workforce.^[541]

2.176.  Finally, the European Union submits that the Panel's conclusion that "the purpose of seal hunts in Greenland has characteristics that are closely related to that of commercial hunts" contradicts its earlier conclusion that the primary purpose of seal hunts conducted by Inuit communities, including in Greenland, was the "subsistence" of those communities in terms of their culture and tradition as well as their livelihood.^[542] According to the European Union, the Panel's reasoning is therefore incoherent.

2.177.  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, and to reverse the Panel's finding that the IC exception was not designed and applied in an even-handed manner.^[543]

2.4.3  Article I:1 and Article III:4 of the GATT 1994

2.178.  The European Union requests the Appellate Body to reverse the Panel's finding that the legal standard for the non-discrimination obligation under Article 2.1 of the TBT Agreement does not "equally apply" to claims under Articles I:1 and III:4 of the GATT 1994.^[544] In addition, the European Union requests the Appellate Body to reverse the Panel's conclusion that the measure at issue is inconsistent with Article I:1 of the GATT 1994 because it does not "immediately and unconditionally" extend the same market access advantage to Canadian and Norwegian seal products compared to seal products originating from Greenland.^[545]

2.179.  The European Union submits that the Panel's interpretation of Articles I:1 and III:4 is in error for the following reasons: (i) it is contrary to established Appellate Body jurisprudence under Article III:4 of the GATT 1994; (ii) it fails to take account of the context provided by Article III:1 of the GATT 1994; and (iii) it is incoherent with the interpretation of Article 2.1 of the TBT Agreement and renders that provision irrelevant.

2.180.  The European Union contends that, in Dominican Republic – Import and Sale of Cigarettes, the Appellate Body clarified that a detrimental effect on imports alone does not indicate a de facto "less favourable treatment" of imports under Article III:4.^[546] This finding, according to the European Union, is in line with the Appellate Body's earlier finding in EC – Asbestos that "a Member may draw distinctions between products which have been found to be 'like', without, for this reason alone, according to the group of 'like' imported products 'less favourable treatment' than that accorded to the group of 'like' domestic products."^[547] The European Union observes that, in US – Clove Cigarettes, the Appellate Body clarified that, in Dominican Republic – Import and Sale of Cigarettes, a violation of Article III:4 was not established because the detrimental impact on competitive opportunities for "like" imported products was not attributable to the specific measure at issue.^[548] For the European Union, this confirms that the analysis under Article III:4 goes beyond a consideration of whether there has been a detrimental impact on the competitive opportunities for "like" imported products.

2.181.  The European Union submits further that the Panel erred in its interpretation of Articles I:1 and III:4 because it failed to take into account the context of Article III:1 of the GATT 1994. In this regard, the European Union points out that, in Japan – Alcoholic Beverages II, the Appellate Body considered that the general principle reflected in Article III:1 – that internal measures should not be applied so as to afford protection to domestic production – informs the rest of Article III.^[549] Further, in EC – Asbestos, the Appellate Body confirmed the relevance of Article III:1
for the interpretation of Article III:4.^[550] The European Union notes that the Appellate Body has found that a determination of whether a measure is applied so as to afford protection to domestic
production – within the meaning of Article III:1 – requires an inquiry into the design, architecture, and revealing structure of a measure. Moreover, panels should, in conducting this inquiry, give full consideration to all the relevant facts and circumstances of a given case.^[551] The European Union submits that this test "corresponds to the second step of the de facto discrimination analysis" that the Appellate Body has found to be required under Article 2.1 of the TBT Agreement.^[552] Thus, the Panel's suggestion that this analysis is unnecessary for a finding of de facto discrimination under Articles III:4 and I:1 "clearly fails to take account" of the context of Article III:1.^[553]

2.182.  The European Union also contends that the Panel's interpretation of Articles I:1 and III:4 fundamentally misunderstands the contextual relationship between the GATT 1994 and the TBT Agreement. Relying on the Appellate Body's finding in US – Clove Cigarettes that the GATT 1994 and the TBT Agreement should be interpreted in a coherent and consistent manner, the European Union argues that the Panel failed to put forward any convincing reason as to why the interpretation of Articles III:4 and I:1 should be "clinically isolated from the context given by Article 2.1 of the TBT Agreement", and lead to diverging results with regard to de facto discrimination.^[554]

2.183.  According to the European Union, under the Panel's interpretation, a technical regulation could be considered non-discriminatory under the agreement specifically addressing these types of measures, but still violate the GATT 1994 addressing goods-related measures. The European Union explains that the list of possible legitimate objectives that may factor into an analysis under Article 2.1 of the TBT Agreement is open, in contrast to the closed list of objectives enumerated under Article XX of the GATT 1994. Thus, the Panel's "divergent approach to de facto discrimination" could lead to a situation where, under Article 2.1 of the TBT Agreement, a technical regulation that has a detrimental impact on imports would be permitted if such detrimental impact stems from a legitimate regulatory distinction, while, under Articles I:1 and III:4 of the GATT 1994, the same technical regulation would be prohibited if its objective did not fall within the subparagraphs of Article XX of the GATT 1994.^[555] The European Union concedes that such an "asymmetrical outcome" would not arise in the context of these disputes "since the Panel rightly considered that the objective of the EU Seals Regime fell within the list of objectives of Article XX".^[556] However, under the Panel's interpretation of Articles I:1 and III:4, the regulatory space under the TBT Agreement could, in other cases, be "significantly" wider than the regulatory space under the GATT 1994.^[557] This would "render Article 2.1 of the TBT Agreement irrelevant" as complainants would have a strong incentive not to invoke Article 2.1 of the TBT Agreement, and, instead, to bring claims under the GATT 1994, even if the measure at issue qualified as a technical regulation.^[558]

2.184.  Finally, the European Union notes that its proposed interpretation of Articles I:1 and III:4 of the GATT 1994 requiring, in respect of de facto discrimination claims, a determination of whether any detrimental impact on imports resulting from the measure stems exclusively from a legitimate regulatory distinction leaves "significant space" for Article XX, which would remain applicable to provisions not relating to discrimination, for example, Article XI and to de jure discrimination claims.^[559]

2.185.  With regard to the Panel's finding that the requirements of the IC exception are inconsistent with Article I:1 of the GATT 1994, the European Union contends that this finding is based on the Panel's incorrect interpretation of the legal standards under Articles I:1 and III:4 of the GATT 1994. Consequently, the European Union requests the Appellate Body to reverse the Panel's finding that the measure at issue is inconsistent with Article I:1 of the GATT 1994 because it does not immediately and unconditionally extend the same market access advantage accorded to seal products of Greenlandic origin to like seal products of Canadian and Norwegian origin.^[560]

2.4.4  Article XX of the GATT 1994

2.4.4.1  The Panel's analysis under the chapeau of Article XX

2.186.  In the event that the Appellate Body upholds 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 was not justified under Article XX(a) of the GATT 1994 because it fails to meet the requirements of the chapeau.^[561] Given that, in its analysis under the chapeau of Article XX, "the Panel applied mutatis mutandi the analysis that it had conducted in the context of Article 2.1 of the TBT Agreement"^[562], the European Union refers to its other appeal of the Panel's findings of even‑handedness under Article 2.1 of the TBT Agreement.^[563] The European Union requests, if the Appellate Body accepts its arguments with respect to Article 2.1 and reverses the Panel's finding that the IC exception was not designed and applied in an even-handed manner, that it also reverse the Panel's finding under the chapeau of Article XX(a).^[564] Finally, since the IC exception is "applied in a reasonable, impartial and harmonious manner, where all Inuit communities can equally benefit from the IC exception", the European Union requests the Appellate Body to complete the legal analysis under the chapeau of Article XX(a) and find that the IC exception meets the requirements under Article XX(a) of the GATT 1994, including its chapeau.^[565]

2.4.4.2  The Panel's analysis under Article XX(b)

2.187.  In the event that the Appellate Body upholds the Panel's finding that the EU Seal Regime is inconsistent with Article I:1 of the GATT 1994, and reverses the Panel's finding that the EU Seal Regime is provisionally justified under Article XX(a) of the GATT 1994, 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)".^[566] The European Union takes issue with the three reasons provided by the Panel in support of its appealed finding, and claims that the Panel failed to conduct an objective assessment of the matter as required by Article 11 of the DSU. First, the European Union considers that the Panel's statement that "the European Union never submitted in this dispute that the protection of seal welfare was as such the objective of the EU Seal Regime" is "factually inaccurate".^[567] The European Union asserts that it "identified the objective of contributing to the welfare of seals as being 'simultaneously a legitimate objective on its own and one of the instruments to achieve the first, broader and overarching, objective.'"^[568] Second, the European Union argues that the Panel could "hardly justify its finding that the European Union failed to establish a prima facie case" merely on the basis that it found the objective of the EU Seal Regime was to address EU public moral concerns regarding seal welfare, and that this objective fell within the scope of Article XX(a).^[569] The European Union notes the Panel's recognition that a measure may pursue more than one objective, adding that there is not any reason why a measure cannot be justified "simultaneously under more than one of the grounds listed in Article XX of the GATT".^[570] According to the European Union, this reason, "[a]t most", could have justified exercising judicial economy with respect to its defence under Article XX(b).^[571]

2.188.  The European Union further submits that the Panel's observation on the "limited" extent of the European Union's argument is also "incorrect as a matter of fact"^[572], because, with respect to Article XX(b), the European Union "cross-referred to arguments and evidence previously submitted under Article 2.2 [of the TBT Agreement] and … Article XX(a) [of the GATT 1994]".^[573] The European Union contends that the arguments and evidence analysed by the Panel for its "contribution" analysis under Article 2.2 "would have allowed the Panel to determine whether the EU Seal Regime was 'necessary' to attain the objective mentioned under … Article XX(b) [of the GATT 1994]".^[574] Similarly, the European Union adds, the arguments and evidence examined by the Panel under its chapeau analysis are equally relevant, "irrespective of whether the EU Seal Regime is deemed necessary to achieve the objective mentioned under letter a) and/or under letter b) of … Article XX [of the GATT 1994]".^[575] For these reasons, in the event that the two conditions for its other appeal under Article XX(b) are met, the European Union requests the Appellate Body to reverse the Panel's finding that the European Union failed to establish a prima facie case under Article XX(b) and to complete the legal analysis and find that the EU Seal Regime is justified under Article XX(b) of the GATT 1994.^[576]

2.5  Arguments of Canada – Appellee

2.5.1  Annex 1.1 to the TBT Agreement

2.189.  Canada requests the Appellate Body to uphold the Panel's finding that the EU Seal Regime is a "technical regulation" within the meaning of Annex 1.1 to the TBT Agreement. Canada agrees with the Panel's interpretation of the terms "product characteristics" and "applicable administrative provisions" and considers that the Panel correctly applied Annex 1.1 to the TBT Agreement to the facts of the case in finding that the measure at issue constitutes a "technical regulation".

2.190.  Canada submits that the European Union "incorrectly characterizes the Panel's conclusion as being that 'any document containing administrative provisions relating to identifiable products' will constitute applicable administrative provisions under Annex 1.1".^[577] Instead, Canada argues, the Panel correctly found that the EU Seal Regime "[lays] down a product characteristic in the negative form by requiring that 'all products not contain seal'".^[578] Moreover, the Panel correctly found that, in order to place seal-containing products on the EU market, "the requirements of the IC and MRM exceptions had to be met and certain administrative provisions (such as the criteria to be met to qualify for an exception and the production of an attesting document) had to be followed."^[579] In Canada's view, the administrative provisions in the EU Seal Regime "apply to product characteristics in the sense that the administrative provisions operate to ensure that products that exhibit the product characteristic of containing seal satisfy the criteria set out in the exceptions".^[580] According to Canada, the European Union was, therefore, "misguided" in its concern that the Panel's reasoning leads to an "over-inclusive" characterization of "applicable administrative provisions", as the administrative provisions under the EU Seal Regime apply to "products that contain seal" that meet the requirements of one of the exceptions.^[581]

2.191.  Canada further argues that, by focusing on a single sentence in paragraph 7.110 of the Panel Reports, the European Union fails to take into account the broader context of the Panel's interpretation of "product characteristics", which includes, in Canada's view, "the Panel's findings that the exceptions define the scope of the prohibitive aspects of the EU Seal Regime, and … also set out the 'administrative provisions with which compliance is mandatory'".^[582] Canada maintains that the Panel described the criteria under the exceptions as identifying the seal products that may be placed on the EU market "by defining the categories of seal that can be used as an input".^[583] In Canada's view, the Panel "carefully considered the interplay among these various elements of the EU Seal Regime" prior to finding that the measure as a whole lays down product characteristics.^[584] The European Union's focus on the Panel's reference to the criteria under the exceptions as constituting "objectively definable features" of seal products is therefore, according to Canada, a mischaracterization of the Panel's overall analysis of the role played by the exceptions in the EU Seal Regime.^[585]

2.192.  Lastly, Canada argues that the Panel correctly recalled the Appellate Body's conclusion in EC – Asbestos that a measure must be examined as "an integrated whole" to determine whether it constitutes a technical regulation.^[586] Canada agrees with the Panel that the Appellate Body report 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".^[587] In addition, Canada maintains that the Panel was correct in relying on the measure at issue in EC – Asbestos to describe the EU Seal Regime, which "operates as a ban on seal products, combined with an exception and two derogations, forming three conditions prescribed in Article 3 of the Basic Regulation".^[588]

2.193.  In Canada's view, the EU Seal Regime and the measure at issue in EC – Asbestos are "essentially the same in all material respects relevant to determining whether a measure
is a technical regulation".^[589] According to Canada, both measures: (i) prohibit "pure"
products – i.e. asbestos fibres or seal products containing only seal inputs; (ii) prohibit products from exhibiting an intrinsic characteristic – i.e. containing asbestos fibres or seal inputs, thus laying down product characteristics in a negative form; (iii) contain exceptions to the prohibition that set out criteria to be met to qualify for market access – i.e. the absence of a safer substitute for asbestos fibres, or the identity of the hunter and purpose of the hunt for seal products; and (iv) set out administrative provisions with which compliance is mandatory to allow a product containing the proscribed characteristic to be placed on the relevant market. Canada notes that "the exceptions under both the Asbestos measure and the EU Seal Regime do not themselves set out product characteristics" but ,rather, "merely set out criteria that must be met in order for the product to contain the otherwise proscribed characteristic".^[590] In Canada's view, the Panel properly engaged in a thorough examination of the discrete elements of the EU Seal Regime, including the prohibitive and permissive aspects of the measure, the criteria to be applied to determine whether a given product is permitted to contain seal inputs, and the administrative provisions, in order to reach its conclusion on whether the EU Seal Regime constitutes a technical regulation.

2.194.  In the event that the Appellate Body were to reverse the Panel's finding that the EU Seal Regime lays down product characteristics and/or applicable administrative provisions, Canada requests the Appellate Body to complete the legal analysis and find that the EU Seal Regime constitutes a "technical regulation" within the meaning of Annex 1.1 to the TBT Agreement.^[591]

2.5.2  Article 2.1 of the TBT Agreement

2.195.  With respect to the European Union's appeal of the Panel's finding that the IC exception does not bear a rational relationship to the objective of addressing the EU public moral concerns regarding seal welfare, Canada submits that the problem with the European Union's conception of a "moral norm" is that "it is open-ended, and therefore not a standard at all."^[592] Canada argues that, "[i]f it is simply left to the legislator to decide when the suffering of animal[s] is justified, the content of the so-called moral standard becomes inherently subjective and therefore arbitrary."^[593] As Canada sees it, the Panel found that the IC exception is not grounded in public moral concerns, but in a decision of the legislator that the pursuit of the public morals objective should not damage the interests of Inuit and other indigenous communities.

2.196.  Canada further submits that the European Union does not accurately characterize the previous jurisprudence on the notion of "public morals".^[594] Canada highlights that a panel is only required to give some scope to a Member's definition of its public morals. Finally, Canada notes that the Panel did not look directly to moral doctrine to determine the objective of the EU Seal Regime, but instead based its determination on the evidence presented by the European Union. According to Canada, this evidence persuaded the Panel to find that animal welfare is an issue of an ethical and moral nature in the European Union, but did not demonstrate that protecting the interests of Inuit and other indigenous communities also fell within the scope of the objective of addressing the EU public moral concerns regarding seal welfare.

2.197.  Canada responds to the European Union's appeal of the Panel's conclusion that the IC exception is not designed and applied even-handedly by arguing that "the European Union's conception of the "even-handedness" test is not reflected in the jurisprudence."^[595] Canada further considers that the terminology introduced by the European Union does not add anything to, or clarify, the legal standard as established by the Appellate Body.^[596] Canada also takes issue with the European Union's suggestion that the test of even-handedness focuses on the relationship between the regulatory distinction and the objective that the distinction pursues. Canada argues that the question is instead whether the regulatory distinction can be shown to be rationally connected to the objective of the measure. At the same time, Canada acknowledges that the Panel's finding of a lack of even‑handedness in this case was based on its consideration of "the rationale or cause of the exception", namely, the subsistence of Inuit and other indigenous communities.^[597] According to Canada, the Panel contrasted this rationale with its finding that the IC exception, as designed and applied, is de facto available exclusively to Greenland, and thus effectively allows only large‑scale, sophisticated Inuit sealing operations to take advantage of the market access it offers. According to Canada, this approach is entirely consistent with the Appellate Body's analysis in previous disputes, which focused on the question of whether the design and application of the measure effectively addressed the specific problem or concern that the responding party claimed to be addressing.^[598]

2.198.  With respect to the European Union's argument that the Panel erred by discounting the lack of action by Canadian authorities and Canadian Inuit authorities to seek access to the EU market under the IC exception, Canada submits that the Panel did in fact consider the behaviour of the Canadian authorities. Canada further alleges that the European Union has misunderstood the thrust of the Panel's reasoning. According to Canada, the Panel's concerns about the design and application of the IC exception did not relate to whether Canadian Inuit seal products formally qualified for EU market access under the IC exception, but rather to the question of whether they could benefit from it in practice. As Canada sees it, the Panel concluded that they could not because the IC exception was designed and applied in such a way that only large-scale, commercially oriented seal-hunting operations possess the wherewithal to do so. Canada highlights the Panel's reference to a statement by the Canadian Inuit that their hunt is too small to "generate market interest alone on an international scale", and that "market realities are ꞌmajor factors contributing to the ineffectiveness of the Inuit exemption to the EU seal banꞌ".^[599] According to Canada, the Panel agreed that there is "little point" in Canadian Inuit applying for the IC exception if, due to its design and application, they are unable to take advantage of it.^[600] Canada alleges that, more generally, the actions of a WTO Member or private actors should not form the basis for an assessment of whether the challenged measure discriminates against that WTO Member.

2.199.  With respect to the European Union's argument that the Panel erred by relying on the degree of similarities of the seal hunt in Greenland with commercial hunts, Canada submits that the Panel conducted this examination as a means to assess what would be required for a given Inuit hunt to be able to take advantage of the IC exception. Canada faults the European Union for equating access with formal compliance with the criteria set out in the IC exception. Canada argues that, for the Panel, this was not sufficient, as even-handedness required equal access in practice. Canada submits that the factors examined by the Panel relate to the ability of Inuit communities to get their products to the EU market, and that these factors – in particular the degree of commercialization of the seal hunt in Greenland – are highly relevant to determine the even‑handedness of the regulatory distinction.

2.200.  Canada responds that the European Union mischaracterizes the Panel's approach to the arguments and evidence concerning the scope of the EU public's moral concerns. Canada argues that, contrary to what the European Union suggests, the Panel did not rely "exclusively" on the two opinion polls and the public consultation cited by the European Union.^[601] Rather, the Panel based its conclusion on "all the evidence before it".^[602] According to Canada, the Panel found that the polls were of "limited probative value", and that the "reliability of the results" had not been clearly demonstrated.^[603]

2.201.  Canada notes that the European Union does not challenge the finding that the polls cited in the Royal Commission Report have limited probative value. Instead, Canada argues, the European Union selectively identifies aspects from the two polls that, in its view, do not support the Panel's finding that the EU public's concerns about seal welfare relate to seal hunting in general and not to any particular type of hunt. Canada submits that the results of the RC poll are "unclear" and "not evidently reliable".^[604] Canada also points to the fact that the RC poll was conducted in 1985 and only included respondents from three EU member States. Canada asserts that the RC poll provides "no information on the EU public's views on the moral concerns with respect to different types of seal hunts".^[605]

2.202.  With respect to the CSA poll, Canada notes that the specific results in the poll cited by the European Union are responses to the question that the Royal Commission found to raise "uncertainties".^[606] In response to the European Union's argument that the Panel failed explicitly to state that these uncertainties rendered the CSA poll unreliable, Canada submits that the Panel's finding was due to the failure of the European Union to demonstrate the reliability of the results. Canada claims that, as the European Union had presented the Royal Commission Report in support of its factual claim, it was incumbent on the European Union to explain why the Panel should disregard the uncertainties.

2.203.  With respect to the Panel's reliance on the results of public surveys, Canada submits that the fact that 62% of the respondents stated that seals should not be hunted for any reason is consistent with the Panel's finding that the EU public's moral concerns about the hunt do not vary according to the type of seal hunt. At the same time, Canada argues that the Panel did not rely on the evidence from the public consultation to support its "basic" finding on whether the EU public's concerns on seal welfare varied with the type of hunt.^[607] Canada further submits that the fact that the Panel did not explicitly address COWI's comment on the results of the consultation was "reasonable in the circumstances", and was within its discretion as the trier of fact.^[608]

2.204.  Canada responds that the European Union's claims that the Panel committed material inaccuracies that led to erroneous factual determinations and incoherent reasoning are without merit. First, Canada submits that the Panel did not say that each of the elements that it
considered – the text, legislative history, and application of the IC exception – demonstrated a lack of even‑handedness. Instead, according to Canada, the Panel only stated that it considered these three elements. With respect to the text of the IC exception, Canada notes that the European Union fails to mention the Panel's observation that the "scope and meaning of the 'subsistence' criterion under the requirements [of the IC exception] is not defined under the measure", as well as the Panel's reference to an observation in the COWI 2010 Report to the effect that, in order to fall into the "subsistence" category, a hunt must not be "organized on a large scale".^[609] According to Canada, the Panel's scrutiny of the text of the IC exception established a "crucial element" in its analytical framework.^[610]

2.205.  With respect to the Panel's examination of the legislative history of the IC exception, Canada submits that the European Union misconstrues the findings of the COWI 2010 Report. According to Canada, COWI's comments to the effect that Greenland would be the only Inuit community that would be able to make use of the IC exception were based not only on the potential stringency of the compliance regime, but also on the relative sizes of the Canadian and Greenlandic Inuit hunts. Moreover, even though COWI could not have known at that time which compliance regime the European Union would eventually adopt, Canada submits that the Panel could rely on COWI's statements given that it had "full knowledge" of the actual compliance regime that the European Union had put in place.^[611] Canada also disputes the European Union's claim that other statements in the COWI 2010 Report express the view that the Canadian Inuit will benefit from the IC exception. According to Canada, those statements only suggest that Canadian Inuit products might be able to comply with the requirements of the IC exception. Canada submits that those statements were, therefore, not probative considerations in the Panel's assessment of even‑handedness.

2.206.  With respect to the actual application of the IC exception, Canada also contests the European Union's claim that the Panel wrongly suggested that the European Union had favoured Greenlandic seal products in applying the exception. According to Canada, the Panel made no such suggestion. Canada submits that the Panel merely considered the uncontroverted fact that Greenlandic seal products had been processed in advance of obtaining approval to enter the EU market in order to confirm that Greenland is a de facto beneficiary of the IC exception. Canada argues that, since the evidence does not contradict the Panel's finding, there is no violation of Article 11 of the DSU. In sum, Canada submits that the Panel did not incorrectly assess the evidence and that, even if there were errors, they were not material.

2.207.  Canada considers that the European Union's challenge to the Panel's findings concerning the commercial aspects of Greenland's hunts is entirely without merit. With respect to the level of development of the commercial aspect of Greenland's hunts, Canada takes issue with the way in which the European Union contrasts the fact that only seal skins are processed on an industrial scale in Greenland with the conditions in commercial hunts. Canada alleges that it is also true for commercial hunts that only certain parts of the seal are commercialized.^[612] Canada notes, for example, that seal meat has been commercialized only to a very limited extent.^[613] Canada adds that, to the extent that commercial sealers retain the meat from seal carcasses, they have done so largely for personal consumption.

2.208.  With respect to the volume of sealskins traded, Canada also alleges that the reasons why Greenland's seal product exports are limited to seal skins have less to do with the diversion of other products towards subsistence, and more to do with the fact that the Greenlandic seal industry faces logistical challenges in collecting fresh blubber quickly enough to refine it into oil.^[614] Canada further asserts that commercialized seal products are not limited to skins, given that teeth and claws are used to make products for the tourist industry, and the meat, blubber, and offal are sold in local markets and restaurants, as well as in larger supermarkets.^[615]

2.209.  Canada further points out that the European Union neglects to address the many other considerations that led the Panel to describe the Greenlandic seal hunt as exhibiting characteristics that are closely related to those of commercial hunts. In this regard, Canada notes the Panel's finding that Greenland has 2,100 paid full-time hunters, who are licensed professionals and who kill roughly 80% of all seals hunted in Greenland.^[616] Canada further points to the presence of the government-owned Great Greenland A/S, which operates a state-of-the-art processing facility, as well as manufacturing, design, and marketing facilities in Greenland.^[617] In sum, Canada submits that the range of seal products sold by Greenland does not change the commercial characteristics of the Greenlandic hunt so that it no longer resembles a commercial hunt.

2.210.  In response to the European Union's argument that the Panel wrongly assessed the relevance of the volume of seal skins traded in Greenland, Canada recalls the Panel's finding that the scale of a hunt is important in determining what a commercial hunt is.^[618] Canada submits that the fact that Greenland subsidizes the seal hunt does not mean that there is a qualitative difference in the volume of seals killed in Greenland. Canada points to the Greenlandic government's intention to provide subsidies in response to "world market prices" as evidence of the commercial characteristics of the Greenlandic hunt.^[619]

2.211.  With respect to the Panel's findings regarding the allegedly integrated nature of the seal product industries in Greenland, Canada, and Norway, Canada submits that the European Union misrepresents the complainants' submissions on this issue. According to Canada, the fact that there is "little direct cooperation" between the Canadian industry and Greenland does not mean that the seal product industries are not integrated.^[620] Canada also argues that the Panel's finding with respect to the integrated nature of the seal industry is but one element in its overall conclusion that the Greenlandic seal industry exhibits characteristics closely related to commercial hunts.

2.212.  Canada responds to the European Union's argument that the Panel provided incoherent reasoning in attributing commercial characteristics to what it had previously found to be a subsistence hunt by alleging that the European Union fails to take into account the Panel's explanation of what is a subsistence hunt. Canada recalls the Panel's finding that the subsistence purpose of IC hunts encompasses not only direct use and consumption of seal products, but also a commercial component. Thus, Canada submits that a finding that an Inuit hunt has characteristics closely related to those of commercial hunts is not inconsistent with the Panel's characterization of what constitutes a subsistence hunt. In conclusion, Canada asserts that the Panel did not err in its findings regarding the commercial aspect of Greenland's hunts. Canada claims that none of the European Union's allegations have merit and, even if factually correct, they do not rise to the level of a violation by the Panel of Article 11 of the DSU.^[621]

2.5.3  Article I:1 and Article III:4 of the GATT 1994

2.213.   Canada submits that the Panel was correct in finding that the legal standard with respect to the non-discrimination obligations under Article 2.1 of the TBT Agreement does not equally apply to claims under Articles I:1 and III:4 of the GATT 1994.^[622] Therefore, Canada requests the Appellate Body to dismiss the European Union's appeal of the Panel's interpretation of Articles I:1 and III:4 of the GATT 1994. In the event that the Appellate Body reverses the Panel's interpretation of Articles I:1 and III:4, Canada requests the Appellate Body to complete the legal analysis and find that the measure at issue is inconsistent with Articles I:1 and III:4 of the GATT 1994.^[623]

2.214.  Turning to the European Union's argument that the Panel's interpretation of Articles I:1 and III:4 is not supported by the Appellate Body's jurisprudence, Canada notes that the European Union relies largely on jurisprudence developed under Article III:4 to support its interpretation of both Articles I:1 and III:4. In doing so, the European Union fails to take account of the fact that Article I:1 does not refer to "treatment no less favourable", but rather requires that "any advantage, favour, privilege or immunity granted to any product originating in or destined to another WTO Member be granted immediately and unconditionally to the like product of every other WTO Member."^[624] Canada submits that the Appellate Body has expressly excluded consideration of the policy rationale underlying the challenged measure for the purpose of an analysis under Article I:1. Instead, the Appellate Body "has been clear" that discrimination between like products originating from different WTO Members is inconsistent with Article I:1 unless the obligation has been waived or the measure falls within one of the exceptions set out in the GATT 1994.^[625]

2.215.  In addition, Canada submits that the Appellate Body's findings in Dominican Republic – Import and Sale of Cigarettes and EC – Asbestos do not support the European Union's interpretation of Articles I:1 and III:4 of the GATT 1994. Canada points out that, in US – Clove Cigarettes, the Appellate Body rejected an argument that its finding in Dominican Republic – Import and Sale of Cigarettes stood for the proposition that, similar to Article 2.1 of the TBT Agreement, under Article III:4 of the GATT 1994, a panel is required to inquire into the rationale of a measure causing detrimental impact to imported products.^[626] Instead, the Appellate Body found in US – Clove Cigarettes that the "'treatment no less favourable standard' under Article III:4 … prohibits WTO Members from modifying the conditions of competition in the marketplace to the detriment of the group of imported products vis‑à‑vis the group of domestic like products".^[627]

2.216.  Canada considers that the European Union's reading of the Appellate Body report
in EC – Asbestos is also incorrect. That report, according to Canada, indicates that, while a distinction between products in itself will not automatically result in a finding of less favourable treatment under Articles I:1 and III:4, a distinction that modifies the conditions of competition in the relevant market to the detriment of imported products will result in such a finding.^[628] For Canada, the Appellate Body was referring to distinctions between products that do not themselves result in less favourable treatment of imported products. However, Canada points out that, in the current disputes, the Panel's factual findings indicate that there is a direct relationship between the measure and the detrimental impact on competitive opportunities for Canadian and Norwegian seal products.^[629] The Panel was therefore correct in not considering, under Articles I:1 and III:4, whether the detrimental impact on imported products stems from a legitimate regulatory distinction.

2.217.  Turning to the European Union's argument that the Panel's interpretation of Articles I:1 and III:4 disregards the context provided by Article III:1, Canada submits that the European Union misinterprets the Appellate Body's comments in Japan – Alcoholic Beverages II on the relevance of Article III:1 for the interpretation of the legal standard under Article III:2, second sentence.^[630] In Canada's view, the Appellate Body simply recognized that, under Article III:2, second sentence, panels should consider the relevant circumstances, including the design, structure, operation, and application of the measure at issue in determining whether the measure at issue results in de facto discrimination. The Appellate Body did not, according to Canada, "suggest this to mean that discrimination under Article III could be justified by regulatory distinctions".^[631]

2.218.  Canada considers as unfounded the European Union's argument that the Panel's interpretation of Articles I:1 and III:4 of the GATT 1994 is incoherent with the interpretation of Article 2.1 of the TBT Agreement. In Canada's view, the European Union is suggesting that the legal standards under Articles I:1 and III:4 of the GATT 1994, on the one hand, and Article 2.1 of the TBT Agreement, on the other hand, should be the same. Canada submits, however, that this is not supported by the text, context or jurisprudence of Articles I:1 or III:4.

2.219.   Canada observes that, in setting out the "alleged incoherency" between the de facto discrimination standards under the GATT 1994 and the TBT Agreement, the European Union "incorrectly compares" Article 2.1 of the TBT Agreement with Articles I:1 and III:4 of the GATT 1994.^[632] In Canada's view, the proper comparison is between, on the one hand, Article 2.1 of the TBT Agreement, as interpreted in the light of the preamble of the TBT Agreement, and, on the other hand, Articles I:1, III:4, and XX of the GATT 1994. Canada submits that the Appellate Body confirmed in US – Clove Cigarettes that the balance between the pursuit of trade liberalization under Articles I:1 and III:4 and the right to regulate under Article XX "corresponds to" the balance found in Article 2.1 itself, read in the light of the context and object and purpose of the TBT Agreement.^[633]

2.220.  Canada disagrees with the European Union's argument that, because the list of possible legitimate objectives under the TBT Agreement is open while the list of objectives under Article XX of the GATT 1994 is closed, accepting the Panel's approach would result in divergent outcomes under the TBT Agreement and the GATT 1994, in respect of the same measure.^[634] Noting the Appellate Body's statement in US – Clove Cigarettes that the TBT Agreement and the GATT 1994 should be "interpreted in a coherent and consistent manner", Canada submits that "the more reasonable view with respect to the scope or range of objectives that may be considered legitimate for the purposes of the TBT Agreement is that it mirrors the scope of Article XX of the GATT 1994".^[635]

2.221.  Finally, Canada submits that the European Union's argument that the Panel's interpretation of Articles I:1 and III:4 of the GATT 1994 would render Article 2.1 of the TBT Agreement irrelevant is entirely speculative. Further, Canada asserts that this interpretation cannot justify ignoring the textual and contextual differences between the TBT Agreement and the GATT 1994 simply to prevent the possibility that Members may choose not to invoke Article 2.1 of the TBT Agreement, and instead proceed solely under the GATT 1994 in challenging technical regulations.

2.222.  Canada, therefore, requests the Appellate Body to dismiss the European Union's appeal that the Panel erred in its interpretation and application of the legal tests under Article I:1 and Article III:4 of the GATT 1994. If, however, the Appellate Body reverses the Panel's finding that Articles I:1 and III:4 of the GATT 1994 do not include a "legitimate regulatory distinction" test, and consequentially reverses the Panel's findings of violations under these two provisions, Canada requests the Appellate Body to complete the legal analysis to find that the detrimental impact to the competitive opportunities of Canadian seal products caused by the IC and MRM exceptions does not stem exclusively from a legitimate regulatory distinction, and that, therefore, the IC and MRM exceptions violate Articles I:1 and III:4 of the GATT 1994.^[636]

2.5.4  Article XX of the GATT 1994

2.5.4.1  The Panel's analysis under the chapeau of Article XX

2.223.  Canada requests the Appellate Body to reject the European Union's other appeal that the IC exception is justified under Article XX(a) of the GATT 1994 because it meets the requirements of the chapeau. Canada refers to the arguments set out in its appellant's submission to assert that "[t]the Panel's transposition of the ['legitimate regulatory distinction'] test into the chapeau analysis is incorrect as a matter of law."^[637] According to Canada, the European Union's other appeal requests the Appellate Body to repeat this error, while disregarding the proper test under the chapeau.^[638] Even if the Appellate Body reverses the Panel's finding with respect to the "legitimate regulatory distinction" test under Article 2.1 of the TBT Agreement, Canada asserts that the Appellate Body must undertake an independent assessment, based on the proper test under the chapeau of Article XX, to determine whether the IC exception meets the requirements under the chapeau. For these reasons, should the Appellate Body reverse the Panel's findings under Article 2.1 of the TBT Agreement, and the chapeau of Article XX of the GATT 1994, Canada requests the Appellate Body to complete the legal analysis under the chapeau and find that the IC exception does not meet its requirements "because it arbitrarily and unjustifiably discriminates between Canadian seal products and Greenlandic seal products".^[639]

2.5.4.2  The Panel's analysis under Article XX(b)

2.224.  Canada requests the Appellate Body to reject the European Union's conditional claims of error with respect to the Panel's findings under Article XX(b) of the GATT 1994. Specifically, Canada argues that the European Union fails to show that the Panel exceeded the bounds of its discretion as the initial trier of facts under Article 11 of the DSU.^[640] Canada points out that, contrary to the European Union's arguments on appeal, its written submissions to the Panel did not clearly identify the welfare of seals as an independent objective for the purpose of Article XX(b). Canada asserts that the European Union's second written submission to the Panel instead referred to the objectives of the measure under Article 2.2 of the TBT Agreement.^[641] Canada adds that, in the European Union's first written submission to the Panel, it "merely referred to the EU Seal Regime as making 'a substantial contribution to the welfare of seals'", which is "entirely consistent" with the Panel's finding that seal welfare is one aspect of the moral concerns in question, rather than a second objective of the EU Seal Regime.^[642] Canada argues that the Panel "carefully considered the European Union's varied articulations of the policy objective"^[643] and "did not find that '… the protection of seal welfare as such was the objective of the EU Seal Regime'".^[644] Canada argues that the Panel considered the European Union's arguments with respect to the objective, and "rejected the idea that the EU Seal Regime pursued any objectives other than EU public moral concerns on seal welfare".^[645]

2.225.  Finally, Canada considers that the European Union's claim that the Panel erred in finding that its arguments under Article XX(b) were "limited" is "equally ill-founded from the standpoint of the legal standard under Article 11".^[646] Canada maintains that the European Union's first and second written submissions to the Panel dealt with Article XX(b) in one paragraph and two paragraphs, respectively.^[647] Although the European Union made several cross-references to other parts of its submissions in these paragraphs, Canada notes that those cross-references "were general and made no attempt to situate the content of the cross-referenced sections in the specific context of the elements that together make up Article XX(b)".^[648] For these reasons, Canada asserts that the European Union has failed to establish that the Panel acted inconsistently with Article 11 of the DSU, and, therefore, requests the Appellate Body to dismiss the European Union's claim of error with respect to Article XX(b) of the GATT 1994.^[649]

2.5.5  Non-violation nullification or impairment in the sense of Article XXIII:1(b) of the GATT 1994

2.226.  Canada recalls that it had presented arguments and evidence before the Panel to demonstrate that, if the EU Seal Regime was not found to be inconsistent with either the TBT Agreement or the GATT 1994, the measure's application nevertheless nullifies or impairs benefits that would otherwise accrue to Canada in the sense of Article XXIII:1(b) of the GATT 1994. Canada points to its arguments before the Panel that the EU Seal Regime has upset the competitive relationship between Canadian seal products and seal products from the European Union and Greenland, thereby frustrating Canada's legitimate market access expectations arising from concessions granted by the European Union in the Tokyo and Uruguay Rounds.^[650]

2.227.  Canada notes that, having found the IC and MRM exceptions to be inconsistent with the European Union's obligations under the TBT Agreement and the GATT 1994, the Panel considered it unnecessary to address Canada's non‑violation claim under Article XXIII:1(b) of the GATT 1994. According to Canada, the Panel thereby left Canada's claim "unresolved".^[651]

2.228.  In the light of the European Union's claims of error in these appeals, and in the event that the Appellate Body reverses the Panel's findings that the EU Seal Regime is inconsistent with the TBT Agreement and the GATT 1994, Canada requests the Appellate Body to complete the legal analysis under Article XXIII:1(b) of the GATT 1994.^[652] In this regard, Canada points the Appellate Body to the arguments and evidence that it had submitted to the Panel with respect to its claim under Article XXIII:1(b).^[653]

2.6  Arguments of Norway – Appellee

2.6.1  Annex 1.1 to the TBT Agreement

2.229.  Norway requests the Appellate Body to reject the appeal of the European Union with respect to the legal characterization of the EU Seal Regime as a "technical regulation" within the meaning of Annex 1.1 to the TBT Agreement.

2.230.  Norway agrees with the Panel's finding that the EU Seal Regime "prescribes 'applicable administrative provisions' for products with certain objective characteristics".^[654] The administrative provisions under the measure at issue in EC – Asbestos applied to products possessing the regulated product characteristic of containing chrysotile asbestos^[655], while the exceptions under the EU Seal Regime include administrative provisions that "'apply' to products possessing the regulated product characteristic" of containing seal.^[656] Thus, these administrative provisions are "inextricably linked to the mandatory requirements regarding product characteristics laid down in the measure".^[657] According to Norway, "the close nexus between 'administrative provisions' and 'product characteristics' arises because the products exhibit or possess the 'product characteristic' laid down in the document in question."^[658] For Norway, the products subject to the administrative provisions are identifiable not just as products in general but because they possess the regulated product characteristic.

2.231.  Norway further agrees with the Panel's characterization of the EU Seal Regime as a measure that "lays down, in positive and negative terms, characteristics for all products, namely, when and under what conditions products may, and may not, contain seal inputs".^[659] Like the measure at issue in EC – Asbestos, the EU Seal Regime contains permissive elements that form an "integral part of the measure", as they "define the scope of the prohibitive elements" without having an "independent meaning in the absence" thereof.^[660] These permissive elements "appl[ied] to products possessing defined objective characteristics (i.e. products containing chrysotile asbestos or seal)", and "operate[d] on the basis of a defined set of criteria".^[661] In Norway's view, the EU Seal Regime, "through the combination of the prohibitive and permissive elements", lays down product characteristics in the negative form for all products that might contain seal.^[662] Norway adds that the "criteria for determining when and under what conditions a product may contain a particular input lay down an 'intrinsic' feature of the subject products" and this, in turn, defines "an aspect of product 'composition'".^[663]

2.232.  Lastly, like Canada, Norway considers that "the prohibition and exceptions need not 'individually' lay down product characteristics, so long as, as a whole, they did so."^[664] In Norway's view, the Panel's finding that the EU Seal Regime constitutes a technical regulation was based on a holistic examination of the "ban" and the "exceptions" components of the measure. Norway adds that the Panel correctly found that the EU Seal Regime, through its exceptions, lays down applicable administrative provisions. As to the European Union's argument that the ban on "pure seal products" does not lay down product characteristics, Norway contends that seal products are not in their "naturally occurring state" as "'live' seals or 'dead' seal carcasses", but rather involve some form of processing, such as in the preparation of skins, blubber, oil, meat, or further processed seal products.^[665] Moreover, Norway recalls that "the majority of seal products subject to the measure are mixed products that include non-seal inputs", and "the extent of pure seal products is so limited" that it does not affect the overall finding that the EU Seal Regime, through the combination of its prohibitive and permissive elements, lays down product characteristics for all products that might contain seal inputs.^[666] Norway adds that the mere fact that the EU Seal Regime applies to pure seal products does not preclude the measure from being characterized as a technical regulation, considering that it lays down characteristics for all products containing seal inputs.

2.233.  In concluding, Norway argues that the European Union "concedes that the measure lays down product characteristics by prohibiting products from containing seal inputs".^[667] According to Norway, the European Union also concedes that the exceptions in the EU Seal Regime "define the scope of the prohibitions".^[668] Norway submits that, rather than accepting the "consequences of these admissions", the European Union takes issue with "fragments of the Panel's analysis" and focusses "on a small minority of products consisting exclusively of seal".^[669] According to Norway, the European Union's "objections to the Panel's reasoning do not alter the 'fundamental thrust and effect', and 'centre of gravity', of the measure as a whole."^[670] Norway requests, on this basis, that the Appellate Body uphold the Panel's finding that the EU Seal Regime constitutes a "technical regulation" within the meaning of Annex 1.1 to the TBT Agreement.

2.234.  In the event that the Appellate Body reverses the Panel's finding that the EU Seal Regime lays down product characteristics and/or applicable administrative provisions, Norway requests the Appellate Body to complete the legal analysis and to find that the measure is a "technical regulation" within the meaning of Annex 1.1 to the TBT Agreement.^[671]

2.6.2  Article I:1 and Article III:4 of the GATT 1994

2.235.  Norway requests the Appellate Body to reject the European Union's appeal of the Panel's interpretation of Articles I:1 and III:4 of the GATT 1994. With regard to the Panel's application of Article I:1 and its legal conclusion thereunder, Norway notes that the European Union "raises no additional argument" as to why the Panel's conclusion under Article I:1 should not be upheld by the Appellate Body, beyond its arguments concerning the alleged errors in the Panel's interpretation of that provision.^[672] According to Norway, because the Panel did not err in its interpretation of Article I:1, the Appellate Body should reject the European Union's appeal regarding the Panel's conclusion under that provision.

2.236.  Turning to the specific arguments raised by the European Union, Norway disagrees with the European Union's assertion that the Panel's interpretation of these provisions is not supported by the Appellate Body reports in Dominican Republic – Import and Sale of Cigarettes and
EC – Asbestos. With respect to the European Union's reliance on Dominican Republic – Import and Sale of Cigarettes, Norway points out that, in US – Clove Cigarettes, the Appellate Body clarified that, in the former dispute, it had rejected the complainant's claim under Article III:4 for reasons other than any justification given for the detrimental impact caused by the measure on imported products. Thus, the Appellate Body confirmed that the focus of the analysis under Article III:4 is on whether the measure at issue "modif[ies] the conditions of competition in the marketplace to the detriment of the group of imported products vis‑à‑vis the group of domestic like products".^[673]

2.237.  Norway contends that the European Union's reliance on EC – Asbestos is also misplaced. For Norway, the Appellate Body merely explained in that dispute that "Article III:4 is not violated for the sole reason that objective distinctions are drawn between like products."^[674] According to Norway, "[t]he mere fact that a regulating Member may draw objective distinctions, under Article III:4, between like products does not mean that, if the distinction gives rise to a detrimental impact on imports, the regulating Member may justify those distinctions under Article III:4."^[675]

2.238.  Norway further disagrees with the European Union's argument that, by failing to apply the same test developed under Article 2.1 of the TBT Agreement to Articles I:1 and III:4 of the GATT 1994, the Panel overlooked the context provided by Article III:1 of the GATT 1994. The Appellate Body has emphasized that the role of Article III:1 in interpreting the remaining paragraphs of Article III depends on whether Article III:1 is expressly invoked in the particular paragraph of Article III.^[676] Norway notes in this regard that Article III:1 is not expressly invoked in Article III:4, and that the Appellate Body clarified that the legal requirements set out in Article III:4 are themselves an application of the general principle set forth in Article III:1. Thus, in assessing whether there is less favourable treatment of imports under Article III:4, a panel is required to examine whether the measure has a detrimental or "adverse impact on competitive opportunities for imported versus like domestic products".^[677] Norway asserts that, if it does, the measure will not be in accordance with the "general principle" expressed in Article III:1, which is "to ensure equality of competitive conditions between imported and like domestic products".^[678]

2.239.  Noting the European Union's argument that the test under Article III:2, second sentence, of the GATT 1994 "'corresponds to the second step of the de facto discrimination analysis' under Article 2.1 of the TBT Agreement", Norway submits that the European Union misunderstands the legal standard under Article III:2, second sentence.^[679] According to Norway, under Article III:2, second sentence, a panel is not required to entertain "a justification for a tax measure that has been found to have a detrimental impact" on the equality of competitive conditions for imported products.^[680] Instead, if dissimilar taxation results in such detrimental impact, then the respondent may justify that detrimental impact under Article XX of the GATT 1994.

2.240.  Norway further disagrees with the European Union's argument that the Panel's interpretation of Articles I:1 and III:4 of the GATT 1994 is incoherent with Article 2.1 of the TBT Agreement. First, Norway considers that the Appellate Body's statement, in US – Clove Cigarettes, that the TBT Agreement and the GATT 1994 "should be interpreted in a coherent and consistent manner" does not mean that the provisions of the two agreements should be given the same meaning.^[681] Norway notes in this regard the Appellate Body's statement in US – Tuna II (Mexico) that the scope and content of Article 2.1 of the TBT Agreement and of Articles I:1 and III:4 of the GATT 1994 are not the same.^[682]

2.241.  Second, Norway disagrees with the European Union's argument that, because the list of legitimate policy objectives under Article 2.1 of the TBT Agreement is open, in contrast to the closed list of objectives under Article XX of the GATT 1994, the Panel's interpretation could lead to diverging results under the two agreements. In Norway's view, the European Union overstates the supposed gap between the list of policy interests that may justify a detrimental impact on imports under the TBT Agreement and the GATT 1994. According to Norway, although the range of legitimate interests that may be pursued under Article 2.1 is wider than the range of interests under Article XX, it is not wider than the range of interests reflected in all provisions of the covered agreements. Even assuming, for the sake of argument, that there is some policy interest that may be pursued under the TBT Agreement, but not under the GATT 1994, "it would not be appropriate to circumvent the drafters' decision by allowing a policy interest not reflected in the GATT 1994 to justify a trade-restrictive measure under that Agreement."^[683]

2.242.  Finally, in response to the European Union's argument that the Panel's interpretation of Articles I:1 and III:4 of the GATT 1994 renders Article 2.1 of the TBT Agreement irrelevant, Norway contends that the European Union ignores the "fundamental interpretative principle" that the obligations in the different WTO covered agreements are cumulative.^[684] Thus, "[a]bsent an express statement modifying the cumulative application of the TBT Agreement and the GATT 1994, there are no grounds to conclude that a measure could not be consistent with … Article 2.1 of the TBT Agreement[] and inconsistent with … Article III:4 of the GATT 1994".^[685]

2.6.3  Article XX of the GATT 1994

2.243.  In its appellee arguments under Article XX of the GATT 1994, Norway addresses certain of the European Union's claims on appeal, including those concerning Article 2.1 of the TBT Agreement. Norway submits, for instance, that the European Union's appeal of the Panel's finding that the IC exception does not bear a rational relationship to the measure's objective of addressing the EU public moral concerns regarding seal welfare must be dismissed on the basis that the European Union has not linked its argument that "the Panel erred in interpreting the term 'public morals' to the language of Articles 2.1 and 2.2" of the TBT Agreement.^[686] According to Norway, a party that alleges an error in a panel's "interpretation of the existing provisions of a covered agreement … must somehow tie its claims and arguments to the words that are used in the treaty."^[687] Norway, therefore, requests the Appellate Body to dismiss the European Union's interpretative appeal insofar as it relates to Articles 2.1 and 2.2 of the TBT Agreement.^[688]

2.244.  With respect to the notion of "public morals" under Article XX of the GATT 1994, Norway argues that a panel cannot "simply accept the respondent's assertions on the precise and specific content of an alleged moral that purportedly justifies a GATT-inconsistent measure, even when the measure is adopted by the Member's 'representative institutions'".^[689] Norway notes that
"[a] respondent could easily tailor the scope of an alleged moral norm to fit the precise contours of the … legal norm that its legislator has adopted."^[690] Norway is concerned that, if "the legislator's adoption of the contested measure, effectively, becomes proof of the measure's asserted moral objective", then "the respondent's justification of the measure becomes entirely circular", since the measure is "ultimately justified by its own adoption".^[691]

2.245.  Norway further asserts that "[t]he Panel engaged in careful scrutiny of the evidence and rejected the view that the public moral at stake varied according to the type of seal hunt."^[692] According to Norway, "the Panel saw no evidentiary basis to conclude that the adoption of the IC requirements by the EU legislator reflected the establishment of a public moral that IC interests are morally more important than seal welfare."