6. Treaty Interpretation at the World Trade Organization

Jackson (1998), p. 830. The World Trade Organization (WTO) is an international organisation of 159 members that deals with the rules of trade between nations.

Panitchpakdi (2006), p. 8.

Van Damme (2010), p. 641.

See Chap. 2 of this book—for a discussion on ‘self- contained’ regime, in, e.g., Simma and Pulkowski (2006).

See for this argument, e.g., McRae (2004), Kelly (2002), Kuyper (1994), Trachtman (1999), Beckford (2008).

Merrills (2005), p. 205.

Jennings (2004), p. 2.

Bermann et al. (2002), p. 1073. According to the authors the WTO was assigned with three functions: First, the WTO oversees the operation of the WTO agreements on international trade (these include GATT and 12 related agreements on trade in goods, GATS and TRIPS). Second, the WTO serves as a forum for trade negotiations. Third, the WTO administers a dispute settlement system which plays a very significant role in EU-US relations.

The WTO guide website (available at https://​www.​wto.​org/, last visited April, 2017).

Id. See the Structure of WTO.

Bermann et al. (2002), p. 1073.

WTO guide website: the Structure of WTO, supra note 13.

Gardiner (2008), p. 117.

Contained in Annex 2 of the WTO Agreement.

WTO guide website, supra note 13.

Article XXII of the General Agreement on Tariffs and Trade (GATT 1947).

(Emphasis added) Article 3.2 of the D.S.U. provides in full:

The dispute settlement system of the WTO is a central element in providing security and predictability to the multilateral trading system. The Members recognize that it serves to preserve the rights and obligations of Members under the covered agreements, and to clarify the existing provisions of those agreements in accordance with customary rules of interpretation of public international law. Recommendations and rulings of the DSB cannot add to or diminish the rights and obligations provided in the covered agreements.

Article 17.6 (ii) of the Anti-Dumping Agreement (Committee on Anti-Dumping Practices) provides:

the panel shall interpret the relevant provisions of the Agreement in accordance with customary rules of interpretation of public international law. Where the panel finds that a relevant provision of the Agreement admits of more than one permissible interpretation, the panel shall find the authorities’ measure to be in conformity with the Agreement if it rests upon one of those permissible interpretations.

See WTO guide website, supra note 13.

Article IX (Decision Making) of the Marrakesh Agreement Establishing the World Trade Organization provides:

The Ministerial Conference and the General Council shall have the exclusive authority to adopt interpretations of this Agreement and of the Multilateral Trade Agreements. In the case of an interpretation of a Multilateral Trade Agreement in Annex 1, they shall exercise their authority on the basis of a recommendation by the Council overseeing the functioning of that Agreement. The decision to adopt an interpretation shall be taken by a three-fourths majority of the Members. This paragraph shall not be used in a manner that would undermine the amendment provisions in Article (X).

Id (‘Chapter 1: Introduction of the WTO Dispute Settlement System’, Dispute Settlement System Training Module).

See, e.g., Panel Report, United States Antidumping Act of 1916, Complaint by the European Communities (US—1916 Act (EC), WT/DS136/R (circulated March 31, 2000, adopted 26 September 2000, upheld by Appellate Body Report WT/DS136/AB/R, WT/DS162/AB/R, DSR 2000:X, 4593), para 6.53 and FN 329. This case illustrates the Panel’s approach in weighting and assessing divergent municipal courts’ jurisprudence when determining that a question related to municipal law was in line with the reasoning of the PCIJ in the Brazilian Loans case; Panel Report, United States – Anti-Dumping Duty on Dynamic Random Access Memory Semiconductors (DRAMS) of One Megabit or Above from Korea, (US – DRAMS), WT/DS99/R, adopted 19 March 1999, DSR 1999:II; 1999 WL 38403 (W.T.O.), paras 4.113–15—for reference to Vienna Convention art 31–32 when interpreting a treaty, and especially FN 65 and the reference to ICJ’s case Admission of a State to the United Nations (Second Admissions Case) [1950], ICJ Rep., at p. 8)—for an indication of justification of the interpretative approach taken by the Panel in the case; Panel Report, United States – Countervailing Duties on Certain Corrosion-Resistant Carbon Steel Flat Products from Germany, (US – Carbon Steel) WT/DS213/R and Corr. 1, 3 July 2002, as modified by Appellate Body Report WT/DS213/AB/R, DSR 2002:IX, 3833, 2002 WL 1438051 (W.T.O.) at para 6.5, and especially FN 187—for specific reference to ICJ practice: the Conditions of Admission of a State to the United Nations (Second Admissions Case), [1950], ICJ Rep., in establishing the first duty of an international court, respectively of the WTO panels, when engaging in treaty interpretation; Appellate Body Report in United States-Final Countervailing Duty to determination with respect to certain softwood from Canada (US – Softwood Lumber IV, AB-2003-6, January 2004), WT/DS257/AB/R, adopted 17 February 2004, DSR 2004:II, 571 at para 59 and FN 49 and 50—for direct reference to VCLT Art. 33, to the ILC interpretation (preparatory work) on VCLT, and on ICJ’s Case Concerning Elettronica Sicula S.p.A. (ELSI) (United States v. Italy), Merits. 1989, ICJ Reports, para 132; Panel Report in Canada Term of Patent Protection, (Canada – Patent Term), WT/DS170/R, circulated 5 May 2000, adopted 12 October 2000, upheld by Appellate Body Report WT/DS170/AB/R, DSR 2000:XI, 5121 (2000 WL 631059 (W.T.O.), para 6.49—for reference to ICJ practice in determining the principle of effective interpretation; Panel Report in European Communities – Measures Affecting Trade in Large Civil Aircraft (EC and certain member States – Large Civil Aircraft), WT/DS316/R (30 June 2010), at p. 379 (FN 2331)/2010 WL 2671492 (June 30, 2011), at p. 367—for references to International Arbitration cases (Island of Palmas Arbitration, 2 R. of Int’l Arb. Awards (1928) 829, 845, The Grisbadarna Case, 11 R. Int’l Arb. Awards 155 (1909), and The North Atlantic Coast Fisheries Case, 11 R. Int’l Arb. Awards 167 (1910)), and to ICJ cases (The Fisheries Case, (United Kingdom v Norway), ICJ Reports 1951, p. 116; The Minquiers and Ecrehos case, ICJ Reports 1953, p. 47; and the Aegean Sea Continental Shelf Case, ICJ Reports 1978, p. 3)—when establishing the applicable doctrine of inter-temporal application of international law (reflected in Article 31(3)(c) VCLT).

See WTO Chronological list of disputes cases, available online at: http://​www.​wto.​org (last visited February 2017).

E.g. US – Shrimp/Turtle (1998), Japan – Alcoholic Beverages II (1996), discussed further in this chapter.

By virtue of judicial discretion to, e.g., ordinary meaning, context, good faith, object and purpose, intention, etc.

As the Court with no exception employs more than a method/rule in a case.

Lennard (2002), pp. 86-87.

Law No. 949 of July 1952.

Whether the Italian Law was inconsistent with Article III:4 of the GATT which provides:

The products of the territory of any contracting party imported into the territory of any other contracting party shall be accorded treatment no less favourable than that accorded to like products of national origin in respect of all laws, regulations and requirements affecting their internal sale, offering for sale, purchase, transportation, distribution or use. The provisions of this paragraph shall not prevent the application of differential internal transportation charges which are based exclusively on the economic operation of the means of transport and not on the nationality of the product.

Italy-Agricultural Machinery (1958), supra note 40, para 11.

Article III*: National Treatment on Internal Taxation and Regulation:

1. The contracting parties recognize that internal taxes and other internal charges, and laws, regulations and requirements affecting the internal sale, offering for sale, purchase, transportation, distribution or use of products, and internal quantitative regulations requiring the mixture, processing or use of products in specified amounts or proportions, should not be applied to imported or domestic products so as to afford protection to domestic production. *The scope of this Article is mainly designed to prevent the contracting party of using internal taxes and other regulatory measures ‘as to afford protection to domestic production’, to undermine negotiated tariff concession.

Italy-Agricultural Machinery (1958), para 13. Article III: 8(b) provided

The provisions of this Article shall not prevent the payment of subsidies exclusively to domestic producers, including payments to domestic producers derived from the proceeds of internal taxes or charges applied consistently with the provisions of this Article and subsidies effected through governmental purchases of domestic products.

Exchange of Greek and Turkish Population (Lausanne Convention VI, January 30th, 1923, Article 2), Advisory opinion, PCIJ, Series B, No. 10, 1925, p. 20. (See the analysis of this case in Chap. 4 of this book).

The Conditions of Admission of a State to Membership in the United Nations (Article 4 of the Charter), ICJ, May 28th, 1948, p. 62. See the analysis of this case in Chap. 4 of this book.

Id. See Joint dissenting opinion of Judge Basdevant, Winiarski, McNair and Read, at p. 86.

Smith (2010), p. 5.

Cameron and Gray (2001), p. 275. The authors note that this uncertainty was resolved by the Appellate Body in the Japan – Taxes case, when ruled that ‘the VCLT represent a codification of customary international law and is therefore binding on all States.’ See also Mitchell (2007), p. 807—for a similar conclusion based WTO’s practice on treaty interpretation.

Van Damme (2009), p. 34.

McInerney (2009), p. 154. Article XIV of the GATS which contains similar provisions as Article XX of the GATT sets out a “two tier analysis” for justifying a measure.

See WTO guide website, supra note 13. (WTO rules and environmental policies: GATT exceptions).

See, e.g., the Gasoline; Shrimp/Tuna; US – Canadian Tuna cases. As a statistic of such cases: under the GATT (1948–1994), six panel proceedings involving an examination of environmental measures or human health-related measures under GATT Article 20 (XX) were completed. Of the six reports, three were not adopted. In 1995, the WTO’s dispute settlement procedure took over from GATT. Since then, three such proceedings have been completed. Adopted, pre-WTO, GATT panel reports (on Article XX): United States – Taxes on Automobiles, ruling not adopted, circulated on 11 October 1994. Case brought by EU; United States – Restrictions on Imports of Tuna, “son of tuna-dolphin”, ruling not adopted, circulated on 16 June 1994. Case brought by EU’. United States – Restrictions on Imports of Tuna, the “tuna-dolphin” case, ruling not adopted, circulated on 3 September 1991. Case brought by Mexico; Thailand – Restrictions on the Importation of and Internal Taxes on Cigarettes, ruling adopted on 7 November 1990. Case brought by US; Canada – Measures Affecting Exports of Unprocessed Herring and Salmon, ruling adopted on 22 March 1988. Case brought by US; United States – Prohibition of Imports of Tuna and Tuna Products from Canada, ruling adopted on 22 February 1982, case brought by Canada. After 1995: European Communities – Measures Asbestos and Products Containing Asbestos (Complainant: Canada), WT/DS135/R, 12 March, 2001, United States – Import Prohibition of Certain Shrimp and Affecting Shrimp, WT/DS58/AB/R, 12 October, 1998; and United States – Standards for Reformulated and Conventional Gasoline, WT/DS 2/AB, 29 April, 1996.

Gasoline (1996), supra note 32. The dispute was related to the implementation by the United States of its domestic legislation known as Clean Air Act of 1990, and in addition to the regulation enacted by the United States-Environmental Protection Agency, pursuant to that Act, to control toxic and other pollution caused by the combustion of gasoline manufactured in or imported into the United States. The regulation is referred to Part 80 of Title 40 of the Code of Federal Regulations, and known as the ‘Gasoline Rule’.

Article XX of the GATT provides:

Subject to the requirement that such measures are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between countries where the same conditions prevail, or a disguised restriction on international trade, nothing in this Agreement shall be construed to prevent the adoption or enforcement by any contracting party of measures: paragraph (g) relating to the conservation of exhaustible natural resources if such measures are made effective in conjunction with restrictions on domestic production or consumption.

Id, p. 23. See Territorial Dispute Case (Libyan Arab Jamahiriya v. Chad) (1994) I.C.J. Reports, p. 20.

Gasoline (1996), p. 18. The Appellate Body invokes Canada – Measures Affecting Exports of Unprocessed Herring and Salmon, BISD 35S/98, para 4.6; adopted 22 March, 1988, cited in Panel Report, para 6.39. This customary rule of interpretation of treaties can also be illustrated in ICJ’s practice, in cases such as Competence of the ILO to Regulate the Personal Work of the Employer, PCIJ, Series B, No. 13, 1926, pp. 6–18; International Status of South Africa, ICJ, Reports, 1962, p. 128, para 336.

Article III (National Treatment on Internal Taxation and Regulation), paragraph 4, in the main part, provides that:

The products of the territory of any contracting party imported into the territory of any other contracting party shall be accorded treatment no less favourable than that accorded to like products of national origin in respect of all laws, regulations and requirements affecting their internal sale, offering for sale, purchase, transportation, distribution or use …

Id. The Appellate Body invokes the Corfu Channel Case (1949), I.C.J. Reports, p. 26, ICJ. The ICJ in Corfu Channel invoked the Free Zones case (Free Zones of Upper Savoy and District of Gex (Fr. v. Switz.), 1929 P.C.I.J. (ser. A) No. 22 (Order of Aug. 19), pp. 13–24), and it found that: ‘in case of doubt, the clauses of a special agreement by which a dispute is referred to the Court must, if it does not involve doing violence to their terms, be construed in a manner enabling the clauses themselves to have appropriate effects.’ Also, the effectiveness principles is illustrated earlier in the PCIJ practice, such as in Competence of the Int’l Labour Org. to Regulate, Incidentally, the Personal Work of the Employer, Advisory Opinion, 1926 P.C.I.J. (ser. B) No. 13 (July 23), p. 19. The PCIJ held in this case: ‘the Court, in determining the nature and scope of a measure, must look to its practical effect rather than to the predominant motive that may be conjectured to have inspired it.’

Territorial Dispute Case (Libyan Arab Jamahiriya v. Chad) (1994), supra note 75, p. 23. See the analysis of this case in Chap. 4 for similarities of the effectiveness principle’s application.

Corfu Channel Case (1949), see supra note 85, p. 26.

Article XI:1 of the GATT provides:

No prohibitions or restrictions other than duties, taxes or other charges, whether made effective through quotas, import or export licences or other measures, shall be instituted or maintained by any contracting party on the importation of any product of the territory of any other contracting party or on the exportation or sale for export of any product destined for the territory of any other contracting party.

Article XX(g):

relating to the conservation of exhaustible natural resources if such measures are made effective in conjunction with restrictions on domestic production or consumption.

US – Canadian Tuna (1982), supra note 89, para 4.1.

Id, para 4.6. Article XI: 2 provides:

The provisions of paragraph 1 of this Article shall not extend to the following:

(a)

Export prohibitions or restrictions temporarily applied to prevent or relieve critical shortages of foodstuffs or other products essential to the exporting contracting party;

 

(b)

Import and export prohibitions or restrictions necessary to the application of standards or regulations for the classification, grading or marketing of commodities in international trade;

 

(c)

Import restrictions on any agricultural or fisheries product, imported in any form,* necessary to the enforcement of governmental measures which operate: … Any contracting party applying restrictions on the importation of any product pursuant to subparagraph (c) of this paragraph shall give public notice of the total quantity or value of the product permitted to be imported during a specified future period and of any change in such quantity or value…

 

See Preamble of the GATT 1947.

ILC (2006), p. 90. The justification is based on the presumption that the States adopted the Marrakesh agreements in accordance with, and under the rules and principles of international law.

Jackson (1998), p. 829. The author adds other examples such as: ‘the right of a government to hire a private counsel of its own choosing’, which has been influenced by general international law.

See for this discussion Chap. 3 of this book. In these cases the Appellate Body refused to take the precautionary principle in general international law and treat it as customary under Article 31(3)(3) VCLT.

Sheeran (2014), p. 90.

See Kelly (2002)—for a critique of the ‘evolutionary interpretation’ approach in this case. Also, Kelly argues that the WTO Appellate Body’s reference to the ICJ’s Namibia case is misplaced, since the concept of ‘evolutionary’ was much narrow defined.

See also Kelly (2005), p. 459.

Kelly (2008).

McInerney (2009), p. 199. McInerney observes that Panels and the Appellate Body focus on whether the resulting discrimination is reasonable related to the goals behind the measure.

Id, p. 199. McInerney gives as example Brasil-Measures Affecting Imports of Retracted Tyres, 146, WT/DS332/AB/R, December 3, 2009—suggesting that a demonstration of an import ban’s material contribution towards its stated objective would be sufficient to determine its necessity. Also, United States Gambling and Betting Services, 1, WT/DS285/AB/R, April 7, 2005, and Korea-Measures Affecting Imports of Fresh Chilled and Frozen Beef, 174, WT/DS161/AB/R;WT/DS169.AB/R, December 11, 2000—these cases constitute the background upon which the Appellate Body based its decision in Brasil-Tyres.

See, e.g., US – Canadian Tuna (1982), supra note 89.

See the recent case concerning the Dispute Regarding Navigational and Related Rights (Costa Rica v. Nicaragua), ICJ, Judgment of 13 July 2009, paras 66–67. This case shows how the ICJ adopted a clear dynamic/evolutive treaty interpretation approach with regard to navigational and related rights on the river San Juan. The Court gave an evolutionary dimension to treaty interpretation, when interpreted the term ‘commerce’ in the 1858 treaty concluded between the two parties to the dispute. It held that ‘where the parties have used generic terms in a treaty, the parties necessarily having been aware that the meaning of the terms was likely to evolve over time, and where the treaty has been entered into for a very long period or is “of continuing duration”, the parties must be presumed, as a general rule, to have intended those terms to have an evolving meaning’.

US – Shrimp/Turtle (1998), para 2, supra note 114. See also the first phase of this case: United States – import prohibition of certain shrimp and shrimp products, WT/DS58/R, 15 May 1998. The Department of State determined in the first phase that all shipments of shrimp and shrimp products into the United States must be accompanied by a declaration attesting that the shrimp or shrimp product in question has been harvested ‘either under conditions that do not adversely affect sea turtles … or in waters subject to the jurisdiction of a nation currently certified pursuant to Section 609’. The restriction was imposed by the USA by Section 609 of Public Law 101-162 and associated regulations and judicial rulings, measure necessary ‘to protect human, animal or plant life or health’.

(Specifically under Article XX of the GATT 1994) Article XX paragraphs: ‘(b) (necessary to protect human, animal or plant life or health’; and ‘(g) relating to the conservation of exhaustible natural resources if such measures are made effective in conjunction with restrictions on domestic production or consumption.’

Case Concerning Oil Platforms (Islamic Republic of Iran v. United States of America), Preliminary Objection, ICJ, 12 December, 1996, p. 13. The ICJ recalled in this case that ‘a treaty must be interpreted in good faith in accordance with the ordinary meaning to be given to its terms in their context and in the light of its object and purpose.’ The Treaty of 1955 contained no provision which expressly excluded certain matters from the jurisdiction (the treaty language being equivocal or inconclusive), however, the Court found that either this aspect ‘does not restrict its jurisdiction in the present case.' It gave a great account to the object and purpose and context of the Treaty (see Chap. 4 of this book).

Id. For example, the Appellate Body invokes here Legal Consequences for States of the Continued Presence of South African Namibia, (South West Africa) notwithstanding SC Resolution 276, Advisory Opinion of 21 June 1971, ICJ, p. 31, para 53, and the Aegean Sea Continental Shelf Case (Greece v. Turkey), 1978, ICJ, Rep., p. 3.

See Aegean Sea Continental Shelf Case, supra note 140, p. 34 (emphasis added). The ICJ pointed out in this regard that: ‘the concept embodied in Article 22 of the Covenant—the strenuous conditions of the modern world and the well-being and development of the people concerned - were not static, but were by definition evolutionary.’

Fisheries Case (United Kingdom v. Norway), Judgment of December 18th, ICJ Reports, 1951, p. 21. Also, the ICJ adopted a dynamic interpretation in Rights of Nationals of the United States of America in Morocco (France v. United States of America), Judgment of 27 August 1952, ICJ Reports, p. 189. The Court concluded that: ‘the system of delimitation in 1935, a system characterised by the use of straight lines, does not therefore infringe the general law, it is an adaptation rendered necessary by local conditions.’

Gabčíkovo-Nagymaros Project (Hungary/Slovakia), Judgment of 25 September 1997, ICJ Reports, p. 78, para 140. See also Bjorge (2014)—for an analysis of the evolutionary principle at international courts and tribunals.

Border and Transborder Armed Actions Case (1988) I.C.J. Rep. 105; Rights of Nationals of the United States in Morocco Case (1952) I.C.J. Rep. 176; Anglo-Norwegian Fisheries Case (1951) I.C.J. Rep. 142.

Id, para 158. The Appellate Body reiterates the role of good faith when it states: ‘One application of this principle, the application widely known as the doctrine of abuse de droit, prohibits the abusive exercise of a state’s rights and enjoins that whenever the assertion of a right impinges on the field covered by [a] treaty obligation, it must be exercised bona fide, that is to say, reasonably.’

Van Damme (2009). Van Damme argues that, generally, the critics of the VCLT do not demonstrate on what base these non-codified interpretative maxims/principles are applied in the interpretative process, and that such critics neglect to formulate new principles.

Mitchell (2007), pp. 798–803. Other principles revealed by the WTO case law analysis are: expresio unius es exclusion alterius (the expression of one thing is the exclusion of another), presumption of consistency, precautionary principle, in dubio mitius (the reasonable meaning is to be preferred to the unreasonable), legitimate expectation, lex specialis, evolutionary meaning, actori incumbit probatio (the (burden of) proof weights on the plaintiff).

Petersmann (2004), pp. 1:12 and 1:27. Petersmann observes that, since ‘the procedural rules of WTO dispute settlement are designed to promote … the fair, prompt and effective resolution of trade disputes,’ many principles of (municipal) law (e.g. rules on the distribution of the burden of proof, jura novit curia) and of international law (e.g. the interpretive principle of in dubio mitius as a corollary of respect for state sovereignty) may be classifiable as ‘basic principles underlying this multilateral trading system’ that are ‘implicit in, or required by, the WTO dispute settlement rules and procedures in order to realise their respective objectives (such as “providing security and predictability to the multilateral trading system”)’.

Mavroidis (2008), p. 19.

Id, p. 16. See also for the ‘good faith’ principle discussion, Mercurio and Tyagi (2010), p. 318. These authors assert that the good faith principle, provided in Article 31(1) of the VCLT, is amorphous and “operates with little guidance”, fact that enable the dispute settlement bodies to “infuse” “good faith” into their deliberation by resorting to certain international rules of interpretation, which are not explicitly provided by the VCLT framework’s general rule of interpretation.

Marceau (2006), p. 30.

See Gardiner (2008), p. 149—commenting on the Third Report on the Law of Treaties (1964), paras 13–14. Gardiner explains the origin of ‘good faith’ meaning, history and preparatory work in the relevant documents, and also as it is reflected in the VCLT. Formulated in the Third Report on the Law of Treaties (1964), the Principle of integration provided that ‘Treaties are to be interpreted as a whole, and particular parts, chapters or sections also as a whole’. Also, the Principle of effectiveness provided that: ‘Treaties are to be interpreted with reference to their declared or apparent objects and purposes; and particular provisions are to be interpreted as to give them their fullest weight and effect consistent with the normal sense of the words and with other parts of the text, and in such a way that reason and meaning can be attributed to every part of the text.’

Id. Article XIX of the GATT 1994 (Emergency Action on Imports of Particular Products) provides:

1. (a) If, as a result of unforeseen developments and of the effect of the obligations incurred by a contracting party under this Agreement, including tariff concessions, any product is being imported into the territory of that contracting party in such increased quantities and under such conditions as to cause or threaten serious injury to domestic producers in that territory of like or directly competitive products, the contracting party shall be free, in respect of such product, and to the extent and for such time as may be necessary to prevent or remedy such injury, to suspend the obligation in whole or in part or to withdraw or modify the concession.

Id. The Appellate Body relies on Gasoline, supra note 32, p. 23, where it invoked the ICJ’s Corfu Channel and Territories Dispute cases as to illustrate the effectiveness principle; Japan – Alcoholic Beverages II, infra note 186, p. 12; Canada – Measures Affecting the Importation of Milk and the Exportation of Dairy Products, WT/DS103/AB/R, WT/DS113/AB/R, adopted 27 October 1999, para 133; Argentina – Safeguard Measures on Imports of Footwear, WT/DS121/AB/R, circulated 14 December 1999, para 88.

Id. See footnote 44 of the Appellate Body’s report. The Appellate Body makes also reference to the most relevant publications of international law such as Brownlie (1998), p. 634; Fitzmaurice (1957), p. 211; McNair (1961), pp. 381–382; Sinclair (1984), pp. 127–129; Hudson (1936), pp. 654–659; Costa and Ruda (1985), p. 105.

Competence of the ILO to Regulate Agricultural Labour, PCIJ, Series B, Nos. 2 and 3, 1922, p. 23. The PCIJ held in this case: ‘In considering the question before the Court upon the language of the Treaty, it is obvious that the Treaty must be read as a whole, and that its meaning is not to be determined merely upon particular phrases which, if detached from the context, may be interpreted in more than one sense.’ (emphasis added).

Ambatielos Case, ICJ Reports, 1953, p. 23.The ICJ held in Ambatielos that ‘the provisions of the Declaration are in the nature of an interpretation clause, and, as such, should be regarded as an integral part of the Treaty, even if this was not stated in terms.’

See discussion on this principle in Chap. 3 of this book (Sect. 2.​3.​2.​1). As it was initially drawn up and proposed by G. G. Fitzmaurice as a distinct article in the Third Draft on the Law of Treaties, the effectiveness principle proposed that: ‘Treaties are to be interpreted with reference to their declared or apparent objects and purposes; and particular provisions are to be interpreted so as to give them their fullest weight and effect consistent with the normal sense of the words and with other parts of the text, and in such a way that a reason and a meaning can be attributed to every part of the text.’

Yearbook of the International Law Commission (1966), p. 219.

(Specifically in violation of Article III, paragraphs 1 and 2, of the GATT 1994). Article III provides:

1.

The contracting parties recognize that internal taxes and other internal charges, and laws, regulations and requirements affecting the internal sale, offering for sale, purchase, transportation, distribution or use of products, and internal quantitative regulations requiring the mixture, processing or use of products in specified amounts or proportions, should not be applied to imported or domestic products so as to afford protection to domestic production.

 

2.

The products of the territory of any contracting party imported into the territory of any other contracting party shall not be subject, directly or indirectly, to internal taxes or other internal charges of any kind in excess of those applied, directly or indirectly, to like domestic products. Moreover, no contracting party shall otherwise apply internal taxes or other internal charges to imported or domestic products in a manner contrary to the principles set forth in paragraph 1.

 

Libyan Arab Jamahiriya v. Chad, supra note 75, p. 20. The ICJ held in this case a similar approach: ‘interpretation must be based above all upon the text of the treaty.’

Id. Competence of the General Assembly for the Admission of a State to the United Nations (Second Admissions Case), supra note 97, p. 4.

Id. The Appellate Body finds a similar illustration of this rule in the practice of the ICJ, specifically in Competence of the ILO to Regulate the Personal Work of the Employer (at pp. 6–18), and International Status of South Africa (p. 128, para 336), supra note 77. The AB relies in addition on other sources of international law such as scholarly work of prominent jurists: Harris (1991), p. 770; de Arechaga (1978), p. 1; Sinclair (1984), p. 130; Jennings and Watts (1992), p. 1273.

Competence of the ILO to Regulate the Personal Work of the Employer, supra note 79, p. 15. The ICJ held: ‘Article 387 of the Treaty declares that the Organization was “established for the promotion of the objects set forth in the Preamble”’. The ICJ applied a teleological approach to an ambiguous provision of the ILO.

International Status of South Africa, supra note 79.

Id, p. 23. The Appellate Body relies on the approach adopted in Gasoline (emphasis added).

Id, p. 12. The Appellate Body cites in this support the findings of the ILC in the Yearbook of the International Law Commission (1966), p. 219 (emphasis added).

Id. Article 59 of Statute of the ICJ provides: ‘The decision of the Court has no binding force except between the parties and in respect of that particular case.’ The Appellate Body states further that ‘[t]his has not inhibited the development by that Court (and its predecessor) of a body of case law in which considerable reliance on the value of previous decisions is readily discernible.’ See for a similar approach at the ICJ, the Interpretation of Peace Treaties with Bulgaria, Hungary and Romania case (ICJ, Advisory Opinion of Jul. 18, 1950, para 229), or Application for Revision and Interpretation of the Judgment of 24 February 1982 in the Case Concerning the Continental Shelf; Land, Island and Maritime Frontier Dispute (El Sal. v. Hond.), Application for Permission to Intervene, ICJ, February 28, 1990, pp. 3–4.

Id, p. 11. In this support, the Appellate Body invokes two ICJ cases: Libyan Arab Jamahirya/Chad, supra note 75, p. 20; and Maritime Delimitation and Territorial Questions between Qatar and Bahrain, supra note 192, p. 18.

See Chap. 3 for this aspect.

The complaining party was the United States and the third Parties were Argentina; Brazil; Canada; Chile; Colombia; Ecuador; European Union; India; Japan; Korea, Republic of; Mexico; Norway; Chinese Taipei; Turkey; Saudi Arabia.

Id. Paragraph 11.3 of China’s Accession Protocol provides that:

China shall eliminate all taxes and charges applied to exports unless specifically provided for in Annex 6 of this Protocol or applied in conformity with the provisions of Article VIII of the GATT 1994.

Id. The Appellate Body invokes Gasoline (1996), para 16; Japan – Alcoholic Beverages II (1996), para 104.

Libyan Arab Jamahiriya v. Chad, supra note 75, p. 6.

China-Raw Materials (2012), para 213. The Appellate Body resorts to the Shorter Oxford English Dictionary (Trumble and Stevenson 2002), p. 3204.

Id, para 303. See for Article XX of the GATT, supra note 68.

See a similar approach taken by the ICJ in Libyan Arab Jamahiriya v. Chad, supra note 75, p. 27. As the text of the treaty was considered sufficiently clear, the ICJ declared it “may” ‘refer to the travaux preparatoire to elucidate the context of the 1955 Treaty … to confirm its reading of the text.’

Gardiner (2008), p. 152. Citing Oppenheim, Gardiner explains that the concept of good faith as reflected in Article 31(1) ‘strongly implies an element of reasonableness and that the requirement that a treaty is to be interpreted in good faith, as well as being necessary ‘as a matter of general principle … follows from article 26…’

Article II: 1 of GATT/WTO 1994 provides for “Schedules of Concessions”:

1. (a) Each contracting party shall accord to the commerce of the other contracting parties treatment no less favorable than that provided for in the appropriate Part of the appropriate Schedule annexed to this Agreement. b) The products described in Part I of the Schedule relating to any contracting party, which are the products of territories of other contracting parties, shall, on their importation into the territory to which the Schedule relates, and subject to the terms, conditions or qualifications set forth in that Schedule, be exempt from ordinary customs duties in excess of those set forth and provided therein. Such products shall also be exempt from all other duties or charges of any kind imposed on or in connection with the importation in excess of those imposed on the date of this Agreement or those directly and mandatorily required to be imposed thereafter by legislation in force in the importing territory on that date.

Schedule LXXX of the European Communities (in Final Act Embodying the Results of the Uruguay Round of Multilateral Trade Negotiations, done at Marrakesh, 15 April 1994). The Appellate Body notes that ‘Schedule LXXX provides tariff concessions for ADP machines under headings 84.71 and 84.73 and for telecommunications equipment under heading 85.17. The customs duties set forth in Schedule LXXX on telecommunications equipment are generally higher than those on ADP machines.’

Sinclair (1984), p. 141.

Libyan Arab Jamahirya/Chad, supra note 75, p. 27.

Mortenson (2013), p. 821.

Under Article XIII: 2(a) of the GATT.

EC-Poultry (1998), supra note 266. The bilateral agreement set out in the “Oilseeds Agreement” provided inter-alia a duty—free global annual tariff rate quota. Brazil complained that the tariff-rate quota on frozen poultry meat should have been allocated by the EC exclusively to Brazil, and not shared on an MFN basis, and that the EC had improperly invoked a special safeguard provision under the Agreement on Agriculture.

Schedule LXXX of the European Communities provides for a duty-free tariff–rate quota for up to 15,500 tonnes of frozen poultry meat in Part I—Most Favored Nation Tariff, Section I Agricultural Products (Section I-B Tariff Quotas, with out-of-quota base duty rates of 1600 ECU/tonne, 940 ECU/tonne, and 1575/tonne).

Libyan Arab Jamahirya/Chad, supra note 75, p. 22.

See the analysis of this case in Chap. 4 of this book.

Id, para 89. Article 1.2 of the Licensing Agreement states in relevant part:

Members shall ensure that the administrative procedures used to implement import licensing regimes are in conformity with the relevant provisions of GATT 1994 including its annexes and protocols as interpreted by this Agreement trade distortions that may arise from an inappropriate operation of those procedures, taking into account the economic development purposes and financial and trade needs of developing country Members.

Id, para 92. A similar illustration of this rule could be seen in the Question Concerning the Acquisition of Polish Nationality (Advisory opinion), PCIJ, 15 September 1923, p. 21. In referring to Article 4 of the Peace Treaty, the PCIJ held that the provision must be accepted “in the present meaning” for the purpose of applying the Treaty, and that by imposing an additional condition in the acquisition of Polish nationality would lead ‘not to interpreting the Treaty, but to reconstructing it.’

Fitzmaurice and Merkouris (2010), p. 180.

See other similar examples of deviation of the WTO adjudicative bodies from the general standard of treaty interpretation, e.g., in Babu (2010)—discussing some cases of improper and excessive use of power by the Panels and Appellate Body, e.g., in: India-Quantitative Restrictions, Appellate Body and the Panel Report, WT/DS 90/AB/R, 23 August 1999 and WT/DS 90/R, 6 April 1999; US-Section 301-310 of the Trade Act of 1974, Panel Report, WT/DS 152/R of 22 December 1999; India – Patent Protection for Pharmaceutical and Agricultural Chemical Products, Appellate Body and Panel Report, WT/DS 50/AB/R, 19 December 1997 and WT/DS 50, 5 September 1997. See also Gruszczynski (2012)—for a discussion on WTO cases (of deviation from international law) analysed from the perspective of the fragmentation of international law due to the WTO’s overreliance on dictionaries (of specific terms in the WTO Agreements) in, e.g., European Communities – Anti-Dumping Duties on Malleable Cast Iron Tube or Pipe Fittings from Brazil WT/DS219/AB/R, 18 August 2003; or European Communities-Measures Concerning Meat and Meat Products (Hormones), WT/DS26/AB/R, WT/DS48/AB/R WTO, 16 January 1998; or other examples of deviation (from the substantive international law, i.e., customary international law) under Article 31(3)(c) VCLT such as: Report of the Panel, United States – Restrictions on Imports of Tuna, DS21R/-39S/155 (Sept. 3, 1991), GATT B.I.S.D. (39th Supp.), and Report of the Panel, Thailand – Restrictions on Importation of and Internal Taxes on Cigarettes, ¶ 75, DS10/R—37S/200 (Oct. 5, 1990)—These cases are discussed in the scholarship as illustrations where the GATT panels generally did not favour trade restrictive measures, and where they approached narrowly interpretations of the exceptions to free trade. In this regard, see, e.g., McInerney (2009); European Communities-Measures Concerning Meat and Meat Products (Hormones), WT/DS26/AB/R, WT/DS48/AB/R WTO, 16 January 1998, para 123—where the Appellate Body refused to take the precautionary principle in international law, and to treat it as ‘customary’ under Article 31(3)(3) VCLT. The AB held: ‘We consider, however, that it is unnecessary, and probably imprudent, for the Appellate Body in this appeal to take a position on this important, but abstract, question.’ Also, European Communities – Measures Affecting the Approval and Marketing of Biotech Products. WT/DS291/R, WT/DS292/R, WT/DS293/R, 21 November 2006—This case reviewed the jurisprudence and doctrine related to the precautionary principle, noting many uncertainties in the status of this principle. The Panel held (at para 7.88): ‘The Panel finally declined to uphold the European Communities’ contention that the precautionary principle has “by now becomes a fully-fledged and general principle of international law”.’

Empresa Brasileira de Aeronáutica S.A. (“Embraer”) refers to a Brazilian manufacturer of regional aircraft.

Brazil Aircraft (1999), supra note 289, para 40. Article 27 entitled: ‘Special and Differential Treatment of Developing Country Members.’

Article 27. 2 (b) of the SCM Agreement provides:

The prohibition of paragraph 1(a) of Article 3 shall not apply to: … (b) other developing country Members for a period of eight years from the date of entry into force of the WTO Agreement, subject to compliance with the provisions in paragraph 4.

Article 27.4 of the SCM Agreement provides in its relevant part:

Any developing country Member referred to in paragraph 2(b) shall phase out its export subsidies within the eight-year period, preferably in a progressive manner. However, a developing country Member shall not increase the level of its export subsidies (55), and shall eliminate them within a period shorter than that provided for in this paragraph when the use of such export subsidies is inconsistent with its development needs.

Marrakesh Agreement Establishing the World Trade Organisation (1999).

See US Shrimp/Turtle, supra note 114.

See the other cases in this chapter.

See Preamble of the Marrakesh Agreement Establishing the World Trade Organization.

Gasoline, supra note 32, p. 16.

See examples of cases where the ICJ stated that the text of the provision at issue is clear, and adopted the teleological method of interpretation in addition to the textualist method, e.g., the Case of S.S. Wimbledon, PCIJ, Ser. A, No. 1, 1923; Corfu Channel (U.K. and N. Ir. v. Alb.), (Preliminary Objection), 1948, I.C.J; Ambatielos Case (Greece v. U.K.), 1953 I.C.J. (Merits: Obligation to Arbitrate); Temple of Preah Vihear (Cambodia v. Thailand), 1961, I.C.J. (Preliminary Objections); Aegean Sea Continental Shelf (Greece v. Turk.), 1978 I.C.J.

Conditions of Admission of a State to Membership in the United Nations (Article 4 of the Charter), supra note 54, p. 62.

Villiger (2009), pp. 434–436. See discussion on this point in Chap. 3 of this book.

Notably, that a developing country Member ‘shall eliminate [its export subsidies] within a period shorter than that provided for in this paragraph when the use of such export subsidies is inconsistent with its development needs’.

See the Panel’s report of this case, at para 7.89. The Panel justified this approach stating that it ‘is an inquiry of a peculiarly economic and political nature, and notably ill-suited to review by a panel whose function is fundamentally legal’, moreover as ‘the SCM Agreement provides panels with no guidance with respect to the criteria to be applied in performing this examination’.

McDougal (1968), pp. 1021–1023.

See EC – Computer Equipment, supra note 241.

E.g. Gasoline, supra note 32; US – Shrimp/Turtle, supra note 114; Korea – Dairy, supra note 162.

Japan – Alcoholic Beverages II, supra note 186.

E.g. Korea – Dairy, supra note 162. This corollary was best expressed in the Gasoline case, under the: ‘basic international law rule of treaty interpretation …’ that is ‘the terms of a treaty are to be given their ordinary meaning, in context, so as to effectuate its object and purpose …’

An approach which also could be seen in the ICJ’s practice, e.g, Namibia (Legal Consequences), Advisory Opinion (1971) I.C.J. Rep., p. 31; Aegean Sea Continental Shelf Case (Greece v. Turkey), 1978 I.C.J., p. 34. The ICJ preferred to take in such cases an ‘evolutive interpretation’ approach, in the light of the relevant international law’s development and the object and purpose of the treaty at issue.

Statement of Professor McDougal (1968), pp. 1021–1023.

Which rather addresses a different normative level, respectively how economic law ought to be.

Brazil Aircraft, supra note 289.

See also, e.g., the EC-Biotechnical Products (2006) and Beef Hormones (1998) cases (briefly discussed in Chap. 3 of this book) as illustrations of deviation from general international law and limitation of the use of the ‘systemic integration’ principle reflected in Article 31(3)(c) of the VCLT.

For example, when the WTO returned to the Brazil Aircraft case, in the Second Recourse by Canada (Brazil-Export Financing Programme for Aircraft, Second Recourse by Canada to Article 21.5 of the DSB, WT/DS46/RW/2, 26 July 2001), the Panel was able to correct the decision.

Also in relation with other international regime(s)—realising the so-called cross-fertilization.

See examples of cases in which the WTO makes an express reference to the ICJ such as: US Shrimp/Turtle, Japan Beverages II cases, or Gasoline, where the WTO emphasised the relation between trade and international law, stating that ‘the General Agreement is not to be read in clinical isolation from public international law’.

It should be recalled that there are more cases than those strictly related to treaty interpretation matter in which the Panels and the Appellate Body refer directly to PCIJ/ICJ case law (or to other international judicial bodies) in order to resolve questions of trade law. Notably, these bodies refer to substantive aspects of international law that have, at best, been applied as part of the interpretation and application of trade rules. For example: the Appellate Body Report in EC Measures Concerning Meat and Meat Products (Hormones), (EC – Hormones) WT/DS26/AB/R, WT/DS48/AB/R, (AB-1997-4), 16 January 1998, DSR 1998: I, 135; 1998 WL 25520 (W.T.O.), at paras 123–165, and footnotes 93 and 154—for references to the ICJ’s Case Concerning the Gabcikovo-Nagymaros Project (Hungary/Slovakia) (1997)—when establishing the level of recognition of the precautionary principle in international law, respectively to the ICJ’s Nuclear Tests Case (Australia v. France) (1974), and to the PCIJ’s Access of Polish War Vessels to the Port of Danzig (1931) case, among other relevant international arbitral bodies cases, in establishing the acceptance in international law of the interpretative principle: in dubio mitius, among the ‘supplementary means of interpretation’; Appellate Body Report in Canada-Measures Affecting the Export of Civilian Aircraft (Canada – Aircraft), 2 August 1999, WT/DS70/AB/R, DSR 1999: III, 1377 (1999 WL 591866 (W.T.O.)), at para 202—for reference to the PCIJ/ICJ practice in determining the meaning of authority of an international judicial body to include drawing inferences from States actions and inactions; Panel Report in United States-Section 211 Omnibus Appropriation Act of 1998 (US – Section 211 Appropriations Act), WT/DS176/R, submitted 6 August 2001, paras 8.79 and subseq., and footnote 122—for direct reference to the ICJ practice, specifically to the Corfu Channel Case and Territorial Dispute Case (Libyan Arab Jamahiriya v. Chad) (1994)—for establishing the principle of effective treaty interpretation (Latin: ut res magis valeat quam pereat) in a dispute related to the conformity of trademark registration in national law with the obligations assumed under WTO and other multilateral treaties; Report of the Panel in Guatemala-Definitive Anti-Dumping Measures on Grey Portland Cement from Mexico (Guatemala – Cement I), WT/DS60/R, circulated 24 October 2000, at para 6.386, and FN 372—for reference, inter-alia, to the ICJ case law (Appeal relating to the jurisdiction of the ICOA Council (India v. Pakistan) (1972) I.C.J. 46 (18 August) (Separate Opinion of Judge Dillard)—when establishing the large recognition in international law of the principle of “harmless error” applicable in the Guatemala case; Panel Report in Korea-Measures Affecting Government Procurement (Korea – Procurement), WT/DS163/R, circulated 1 May 2000, adopted 19 June 2000, DSR 2000:VIII, 3541, 2000 WL 559176 (W.T.O.), at para 7.123—for reference to the PCIJ (Legal Status of Eastern Greenland) (1933) and ICJ (Temple of Preah Vihear) (1962) practice in developing the concept of “error” in respect to a treaty, in customary international law; Panel Report in United States Countervailing Measures Concerning Certain Products from the European Communities (US – Countervailing Measures on Certain EC Products), WT/DS212/R (July 2002), para 7.124, and FN 380—for reference to ICJ Brazilian Loans, PCIJ, Series A, Nos. 20/21, p. 124 cited in Elettronica Sicula S.p.A. (ELSI), Judgment, ICJ Reports 1989, p. 47, para 62—for examination of case law of municipal courts, when the determination of a question of municipal law appear before an international Court; Panel Report in China – Measures Related to the Exportation of Various Raw Materials (China – Raw Materials), 5 July 2011, WT/DS394/R, WT/DS395/R, WT/DS398/R, at pp. 111–112—for reference to the PCIJ case law for establishing the principle of state sovereignty in international law; Panel Report in United States – Certain Measures Affecting Imports of Poultry from China, WT/DS392/R, 29 September 2010, at p. 109; 2010 WL 3835614 (W.T.O.), at p. 126—for reference to the PCIJ: Certain German Interests in Polish Upper Silesia, (PCIJ, 1926, Rep., Series A, No. 7, p. 19)—in order to establish that for international courts ‘municipal law is to be approached as a “factual issue”’. See also e.g. Lindroos and Mehling (2005)—for a discussion related to the WTO’s resort to substantive aspects of international law. These authors observe that ‘several panels and the Appellate Body have applied rules and principles of general international law, such as representation, legal interest, compétence de la compétence, burden of proof, the treatment of municipal law, acceptability of amicus curiae briefs, lex specialis, and the authority to draw adverse inferences, and judicial economy, all of which are by nature procedural rules. Finally, in the area of general international law, the judicial bodies of the WTO have also referred to the rules of state responsibility.’

See e.g. US – Shrimp/Turtle, EC-Poultry, Gasoline discussed in this chapter.

Lamy (2006), p. 969.

Lennard (2002).