European Union – measures affecting tariff concessions on certain poultry meat products

REPORT of the Panel

TABLE OF CONTENTS

1   Introduction.. 15

1.1   Complaint by China. 15

1.2   Panel establishment and composition. 15

1.3   Panel proceedings. 15

1.3.1   General 15

1.3.2   Requests for enhanced third-party rights. 16

1.3.3   Requests for preliminary rulings. 16

2   Factual aspects. 16

3   Parties' requests for findings and recommendations. 19

4   Arguments of the parties. 22

5   Arguments of the third parties. 22

6   Interim Review... 22

6.1   Factual aspects and General overview of China's claims and horizontal arguments. 22

6.2   The tariff rate quotas and the SPS measures. 23

6.3   Terms of reference issues. 23

6.4   Claims under Article XXVIII:1 of the GATT 1994. 25

6.5   Claims under Article XXVIII:2 read in conjunction with paragraph 6 of the Understanding on Article XXVIII of the GATT 1994. 28

6.6   Claims under Article XIII:2(d) of the GATT 1994. 29

6.7   Claims under the chapeau of Article XIII:2 of the GATT 1994. 30

6.8   Claims under Article XIII:1 of the GATT 1994. 31

6.9   Claims under Article I:1 of the GATT 1994. 32

6.10   Claims under Article XIII:4 of the GATT 1994. 32

6.11   Claims under Article II:1 of the GATT 1994. 33

7   Findings. 34

7.1   General 34

7.1.1   General overview of China's claims and horizontal arguments. 34

7.1.2   Order of analysis. 36

7.1.3   Function of the Panel 36

7.1.4   Interpretation of the GATT 1994. 37

7.1.5   Burden of proof 39

7.1.6   Request for enhanced third-party rights. 40

7.2   The tariff rate quotas and the SPS measures. 44

7.2.1   The First Modification Package. 44

7.2.2   The Second Modification Package. 47

7.2.3   The SPS measures applicable to poultry products from China. 53

7.2.4   Import statistics. 56

7.3   Terms of reference issues. 61

7.3.1   Introduction. 61

7.3.2   The scope of China's claims under Article XIII of the GATT 1994. 62

7.3.2.1   China's contention that the European Union violated the chapeau of Article XIII:2 because it did not set the shares of the TRQs allocated to the "all others" category at sufficient levels. 62

7.3.2.2   China's contention that the European Union violated the chapeau of Article XIII:2 and Article XIII:4 because it failed to disclose the trade data it used to determine the TRQs. 64

7.3.2.3   China's contention that the European Union violated Article XIII:1 and the chapeau of Article XIII:2 by failing to annually review and reallocate the TRQ shares. 67

7.3.3   The scope of China's claims relating to certification. 70

7.3.3.1   China's contentions that the European Union did not respect paragraph 7 of the Procedures for Negotiations under Article XXVIII and paragraph 1 of the Procedures for Modification and Rectification of Schedules. 70

7.3.3.2   China's contention of a possible violation of Article II:1 in the period 2007-2009 arising from the European Union applying new rates prior to notifying all Members of the completion of the negotiations  75

7.4   Claims under Article XXVIII:1 of the GATT 1994. 76

7.4.1   Introduction. 76

7.4.2   Relevant provisions. 76

7.4.3   Analysis by the Panel 81

7.4.3.1   Whether the SPS measures at issue constitute "discriminatory quantitative restrictions"  81

7.4.3.1.1   Main arguments of the parties. 81

7.4.3.1.2   Findings of the Panel 83

7.4.3.2   Whether the European Union was obliged to re-determine which Members held a supplying interest to reflect changes in import shares that took place following the initiation of the negotiations. 87

7.4.3.3   Whether the European Union's decision not to recognize China as a Member holding a supplying interest was justified by the timing of China's claim.. 94

7.4.4   Conclusion. 95

7.5   Claims under Article XXVIII:2 read in conjunction with paragraph 6 of the Understanding on Article XXVIII of the GATT 1994. 95

7.5.1   Introduction. 95

7.5.2   Relevant legal provisions. 96

7.5.3   Analysis by the Panel 98

7.5.3.1   Whether different reference periods can be used for the determinations under Article XXVIII:1 and Article XXVIII:2 read in conjunction with paragraph 6 of the Understanding. 98

7.5.3.2   Whether the total amount of the TRQs is consistent with paragraph 6 of the Understanding  99

7.5.3.2.1   Whether the European Union was obliged to calculate the total amount of the TRQs on the basis of an estimate of what import levels would have been in the absence of the SPS measures. 100

7.5.3.2.2   Whether the European Union was obliged to calculate the total amount of the TRQs on the basis of import levels over the three years preceding the conclusion of the Article XXVIII negotiations. 102

7.5.3.2.3   Whether the European Union was required to account for poultry imports into Romania, Bulgaria and Croatia in the years before they acceded to the European Union. 104

7.5.3.3   Whether the allocation of the TRQs is inconsistent with Article XXVIII:2 read in conjunction with paragraph 6 of the Understanding. 106

7.5.4   Conclusion. 109

7.6   Claims under Article XIII:2(d) of the GATT 1994. 109

7.6.1   Introduction. 109

7.6.2   Relevant provisions. 110

7.6.3   Analysis by the Panel 112

7.6.3.1   Separate analysis of China's claims under Article XIII:2(d) and the chapeau of Article XIII:2  112

7.6.3.2   Relevance of "special factors" to the determination of which Members hold a "substantial interest" within the meaning of Article XIII:2(d) 113

7.6.3.3   Whether different reference periods can be used for the determinations under Article XXVIII:1, Article XXVIII:2, and Article XIII:2(d) 114

7.6.3.4   Whether the European Union was obliged to determine which Members were substantial suppliers based on an estimate of what their import shares would have been in the absence of the SPS measures  115

7.6.3.5   Whether the European Union was obliged to determine which Members were substantial suppliers taking into account changes in import shares following the initiation of the negotiations on TRQ allocation  118

7.7   Claims under the chapeau of Article XIII:2 of the GATT 1994. 127

7.7.1   Introduction. 127

7.7.2   Relevant provisions. 128

7.7.3   Analysis by the Panel 129

7.7.3.1   Separate analysis of China's claims under Article XIII:2(d) and the chapeau of Article XIII:2  129

7.7.3.2   Relevance of "special factors" in the determination of whether the allocation of TRQ shares to "all others" complies with the general rule in the chapeau of Article XIII:2. 130

7.7.3.3   Whether the European Union was obliged to allocate a greater TRQ share to "all others" based on an estimate of what their import shares would have been in the absence of the SPS measures. 131

7.7.3.4   Whether the European Union was obliged to allocate a greater TRQ share to "all others" taking into account changes in import shares following the initiation of the negotiations on TRQ share allocations  132

7.7.3.5   Whether the European Union was under an obligation to allocate an "all others" share of at least 10% for each of the TRQs under the First and Second Modification Packages. 134

7.8   Claims under Article XIII:1 of the GATT 1994. 137

7.8.1   Introduction. 137

7.8.2   Relevant legal provisions. 138

7.8.3   Analysis by the Panel 138

7.8.4   Conclusion. 141

7.9   Claims under Article I:1 of the GATT 1994. 141

7.9.1   Introduction. 141

7.9.2   Relevant legal provisions. 142

7.9.3   Analysis by the Panel 142

7.9.4   Conclusion. 144

7.10   Claims under Article XIII:4 of the GATT 1994. 145

7.10.1   Introduction. 145

7.10.2   Relevant legal provisions. 145

7.10.3   Analysis by the Panel 146

7.10.3.1   Whether Article XIII:4 applies in cases where TRQ shares are allocated among supplying countries by agreement with substantial suppliers pursuant to Article XIII:2(d) first sentence. 146

7.10.3.2   Whether China had a substantial interest in supplying the products concerned at the time of its request under Article XIII:4. 148

7.10.3.3   Whether Article XIII:4 imposes an obligation to reallocate TRQ shares upon request from a Member with a substantial interest in supplying the product 150

7.10.3.4   Whether the European Union refused to consider the need for an adjustment of the TRQ shares or the reference period or reappraisal of special factors. 153

7.10.4   Conclusion. 156

7.11   Claims under Article II:1 of the GATT 1994. 156

7.11.1   Introduction. 156

7.11.2   Factual background. 157

7.11.3   Paragraph 1 of the Procedures for Modification and Rectification of Schedules and paragraph 7 of the Procedures for Negotiations under Article XXVIII 158

7.11.4   Analysis by the Panel 159

7.11.5   Conclusion. 171

8   Conclusions and Recommendation.. 171