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  ANNEX D 
 
SUBMISSIONS OF THE EUROPEAN COMMUNITIES 
 
CONTENTS PAGE 
D-1 Executive Summary of the first written submission by the  
European Communities D-2 
D-2 Executive Summary of the oral statement by the  
European Communities at the first substantive meeting D-12 
D-3 Executive Summary of the second written submission by the  
European Communities  D-20 
D-4 Executive Summary of the oral statement by the  
European Communities at the second substantive meeting D-34 
 
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  ANNEX D–1 
 
EXECUTIVE SUMMARY OF THE FIRST WRITTEN SUBMISSION  
BY THE EUROPEAN COMMUNITIES 
 
I. INTRODUCTION  
1. The present dispute is mainly about whether certai n products are within the scope of the tariff 
concessions made by the European Communities pur suant to the ITA, as the complainants have 
alleged, or rather within the scope of other c oncessions included in the EC Schedule, which do not 
provide for duty free treatment.  
2. It is regrettable, however, that the complainan ts have deemed it necessary to call into question 
the good faith of the European Communities by sugg esting that the European Communities is seeking 
to undermine the ITA and to evade the tariff co ncessions which it has made pursuant to that 
agreement.  Contrary to what the complainants may want to imply, the ITA is not "their project".  It 
was, in fact, the European Communities which play ed a seminal role in developing the idea of an 
agreement on liberalization of trade in IT prod ucts.  What resulted from the negotiations was a 
landmark agreement, but also a balanced compromise.  
II. THE INFORMATION TECHNOLOGY AGREEMENT ("ITA") 
3. Regrettably, the complainants never explain what  the ITA is really about, and focus instead 
on a few selected provisions or excerpts thereof.  The ITA consists of three parts:  (i) the Ministerial 
Declaration, (ii) the Annex to it and (iii) Attachme nts A and B to the Annex.  To capture the object 
and purpose of the ITA, all these parts have to be interpreted in such a way that all of them are given 
meaning and none of them is rendered ineffective.   The complainants see m to forget that the 
certification of schedules by WTO members has comp leted the process envisioned in the ITA for its 
implementation.  With the certification, the ITA oblig ations were transformed into binding Schedules.  
This approach of the complainan ts raises questions about the solidity of the assumptions that the 
complainants advance as legal bases for their claims against the EC.  
4. The negotiating history illustrates well that the scope of the product coverage is one of the 
central issues of the ITA and that the ITA as a whole is about the product coverage  and ways  in which 
that product coverage can (or cannot) be expanded  to benefit from liberalized market access.  
III. THE CLAIM ON "FLAT PANEL DISPLAY DEVICES" (FPD) UNDER ARTICLE II 
OF THE GATT 1994 
A. P
RELIMINARY REMARKS  
5. To the extent the European Comm unities is able to understand the claim relating to Flat Panel 
Display Devices, the complainants criticise two criteri a the EC is allegedly incorrectly applying under 
the measures with the result that the EC is in breach  of Article II of the GATT 1994:  (1) the existence 
of a DVI connector and (2) the question whether a m onitor is able to display signals only from an 
automatic data-processing machine. 
6. Furthermore and to the extent the European Co mmunities is able to understand the claim, the 
complainants are invoking at least two terms or pos itions in the EC Schedule that, according to them, 
cover the products at issue in this dispute.   WT/DS375/R 
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  7. The main focus is on the term "flat panel display devices (including LCD, Electro 
Luminescence, Plasma, Vacuum-Fluorescence and other technologies) for products falling within this 
agreement, and parts thereof" that is the result of the EC incorporating Attachment B of the ITA into 
its Schedule.  This is not a term  used by the Harmonised System. It is a specific term pursuant to the 
ITA. 
8. "Alternatively" (Japan) or "independently" (TPK M) or "in addition" (US), the complainants 
invoke the tariff term "input or output units, whether or not containing storage units in the same housing – other – other" in tariff line 8471 60 90 (H S 96).  This is clearly a secondary line of 
argument. 
9. However, the complainants are not very clear  on how they see the interplay between these 
allegedly separate commitments in the EC Schedule a nd/or in the ITA as allegedly incorporated into 
the EC Schedule.  However, there is no dispute between the Parties that a monitor capable of 
displaying signals only from an automatic data-pro cessing machine cannot be subject to duties despite 
the complainants insisting that such monito rs are within the scope of the dispute.  
B. L
ACK OF A PRIMA FACIE CASE  
10. The European Communities is of the view that  the complainants have failed to make a prima 
facie  case in respect of the measures concerning "Flat Panel Display Devices" for at least four 
different reasons, namely they have 
− failed to identify the product or products at issue in sufficient deta il for the European 
Communities to defend itself and for the Panel to rule on the dispute in the absence of 
rebuttal; 
− failed to identify with the necessary clarity  the obligation the European Communities 
is allegedly in breach; 
− failed to demonstrate that the European Communities would be applying ordinary 
customs duties in excess of those set forth in the EC Schedule because the European 
Communities does not apply duties on produc ts the European Communities assumes 
could fall within the scope of the dispute; 
− only identified certain specific elements in the disputed EC measures that could not, 
even if all the arguments of the complainants would be accepted, necessarily lead to a violation of Article II of the GATT 1994. 
11. In any event, the case the complainants ha ve brought cannot extend to challenging the EC 
measures as such . 
C. T
HE MEASURES AT ISSUE AND THEIR INTERPRETATION BY THE EUROPEAN COURT OF JUSTICE  
12. In the Panel request, the complainants have id entified five different measures as "measures at 
issue": 
13. Regulation 493/2005 suspending the application of duties on certain video monitors expired 
on 31 December 2008.  It has been replaced by Co uncil regulation 179/2009.  In accordance with its 
Article 2, regulation 179/2009 applies from 1 January 2009.  It suspends the application of customs WT/DS375/R 
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  duties on certain flat panel video monitors.  The pr oduct scope is wider than its predecessor regulation 
493/2005 cited by the complainants in their panel request. 
14. Regulations 634/2005 and 2171/2005 provided inter alia  for the classification of certain LCD 
monitors within the CN codes 8471 60 80 and 8528 21 90 as the CN codes existed at the time in the 
light of HS 2002.  The codes as they existed at th e time no longer exist.  As a result, the above 
mentioned classification regulations have effect ively lost their relevance and the European 
Communities is in the process of repealing or re placing them as appropriate for reasons of legal 
certainty.  However, the LCD monitors in the anne xes are the only products the complainants have 
identified with sufficient clarity. 
15. Council regulation 2658/87 as amended provides for the current version of the CCT.  
Monitors "of a kind solely or principally u sed in an automatic data-processing system of 
heading 8471" are free of duty.  Other monitors and televisions carry a duty ranging from 2 to 14% ad 
valorem .  However, as described above, the applicati on on duties on most video monitors has been 
suspended. 
16. Finally, the complainants have identified also Explanatory Notes to the Combined 
Nomenclature of the European Communities,  2008/C 133/01 (30 May 2008), "alone or in 
combination with Council Regulation (EEC) No. 2658/ 87 of 23 July 1987".  It should, however, be 
underlined that Explanatory Notes are not legally binding in the EC legal order.  Explanatory Notes are not "like a regulation" as the complainants' desc ribe them.  To the extent there is a conflict 
between the wording of the headings and the Expl anatory Notes, the latter will be inapplicable. 
17. On 19 February 2009 the European Court of Ju stice (ECJ) gave its judgment in case C-376/07 
Kamino.  As a matter of current EC law as interpreted by the ECJ, the classification of monitors using 
LCD technology as units of the kind used "princip ally" in an automatic data-processing system is not 
precluded on the sole ground that they are capable of displaying signals coming both from an 
automatic data-processing machine and from othe r sources as claimed by the complainants.  
18. In fact it never was precluded as rigidly as the complainants assert in view of item 1 of 
regulation 2171/2005.  However, any possible ambiguity  that there was in this respect has now been 
clarified by the ECJ through the interpretation provided by the Court.  It is also noteworthy that in 
order to reach its conclusion the ECJ essentially had to  consider that there is a textual conflict between 
the HS2002 Explanatory Notes to heading 8471 and the HS2002 Note 5(B)(a) to chapter 84.  The ECJ 
resolved this textual conflict on the basis of the hierarchy of Notes in the CN and the HS. 
19. Neither is the fact that an LCD monitor is f itted with a DVI connector alone decisive on the 
tariff classification under EC law as claimed by  the complainants although the ECJ uphold the 
relevance of the criterion.  To decide whether a give n monitor is or is not used "principally" in an 
automatic data-processing system requires inherently a case-by-case analysis.  
D. C
ONCLUSIONS  
20. In its first written submission the EC demonstrat es that video monitors and televisions were 
explicitly excluded from the scope of the ITA an d the concessions made pursuant thereto.  The 
complainants fail to recognise that  this follows from the narrative pr oduct definitions in Attachment B 
to the ITA.   
21. Furthermore, as becomes clear when the clai ms are examined in the context of the 
Harmonized System, the European Communities has simply been applying the criteria contained  WT/DS375/R 
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  therein to distinguish between display units of ADP machines and video monitors.  At the time 
relevant to the case, the language of the Explanator y Note to heading 8471 with regard to "separately 
presented units" such as "display units of automati c data-processing machines" stated that display 
units of ADP machines were "capable of accepting a signal only from the central processing unit of an 
automatic data-processing machine and [were] theref ore not able to reproduce a colour image from a 
composite video signal whose waveform conforms  to a broadcast standard (NTSC, SECAM, PAL, 
D-MAC etc.)".  Such display units were equally  "fitted with connectors characteristic of data-
processing systems (e.g. RS-232C interface, DIN or  SUB-D connectors)".  These are precisely the 
two criteria the complainants claim the European Communities should not have applied.  
22. Finally, even if one were to ignore the language of the HS96 Explanatory Notes to 
heading 8471, it would in most cases be necessary to  have recourse to the application of GIR 3(c) 
because in most individual cases  it is impossible to identify the principal  function of a given monitor.  
As a result, the relevant monitor would be classi fied in one of the subheadings in heading 8528 
because that "occurs last in numerical order among t hose which equally merit consideration".  Indeed, 
as the European Communities demonstrates this is precisely how the United States classifies such 
monitors. 
23. The European Communities considers that in respect of the claim on "flat panel display 
devices" 
(a) The complainants' have failed to present a prima facie case 
(b) To the extent the Panel considers the comp lainants have presented a prima facie case, 
the claim does not extend to an "as such" claim, and in any event, 
(c) The European Communities is not in breach of its obligations under Article II:1(a) 
and II:1(b) of the GATT 1994. 
IV. THE CLAIM ON SET TOP BOXES WHICH HAVE A COMMUNICATION 
FUNCTION (STBC) UNDER ARTICLE  II GATT 1994 
A. P
RELIMINARY REMARKS  
24. The complainants have failed to explain and establish what constitutes the EC concession.  
The EC addresses the claim in the way put forward by  the complainants, namely as that resting solely 
on the narrative description of the product at issue in the EC Schedule and/or ITA.  That does not 
mean, however, that the EC necessar ily agrees with the proposition that the EC tariff concession is set 
forth both in the EC Schedule and the ITA and that it is affected by the "headnote" in the way the 
complainants assert. 
25. Neither the ITA nor the EC Schedule refers to a product referred to by the complainants as a 
"set top box with a communication function".  The EC's commitment is made with respect to "[S]et 
top boxes which have  a communication function".  An analys is of a commitment in light of the 
Vienna Convention must, at a minimum , be based on a full, correct and unaltered text of that 
commitment.  
26. The product descriptions provided by the comp lainants are inaccurate, irrelevant and 
misleading.  By joining and combining descriptiv e elements from various sources and, importantly, 
time periods, the complainants avoided addressing a ny differences between the product existing at the 
time of the conclusion of the ITA (and when the EC made its bindings) and the product of today WT/DS375/R 
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  which is under dispute.  A product which had certain  features and characteristics at the time of the 
conclusion of the ITA is not the product the tr eatment of which is complained about by the 
complainants.  
B. T
HE NARRATIVE DESCRIPTION IN THE EC SCHEDULE  
27. The narrative description of the product at issue is part of an international agreement (namely, 
the GATT 1994).  In addition, the narrative descripti on itself stems from an international agreement, 
the ITA.  Hence, the EC interprets this term in  accordance with the rules of interpretation under 
international law, i.e., in accordance with the ordinary meani ng interpreted in light of the surrounding 
circumstances, taking due account of the context an d subsequent developmen ts, including subsequent 
practice.  This interpretation makes clear that the narrative description refers to a certain specific 
category of set top boxes and not all or any products called or referred to as "set top boxes" fulfilling 
certain minimum requirements.  The narrative desc ription covered only certain category of set top 
boxes, while other set top boxes (certain technologies)  were not covered by the narrative description.  
C. THE MEASURE (S) AT ISSUE RESPECT THE EC COMMITMENT  
28. The complainants argue that the narrative description means that any STB, as long as it 
contains three "attributes" (namely, (1) it is a microprocessor-based device, (2) incorporating a 
modem for gaining access to the Internet and (3) having a function of interactive information 
exchange) is an STBC as defined in the EC Schedul e and the ITA.  It does not matter whether the 
product at issue has any other functions or incorporates any other devices " in addition to " the three 
"attributes".  In other words, despite calling the na rrative description a "definition", the complainants 
essentially view the narrative description of the STBCs as setting forth minimal requirements : once 
present, an apparatus qualifies for a duty free treatment, regardless of what else the apparatus contains.  A set top box which performs 1% comm unication function and 99% other functions, or 1% 
of which is constituted by the above three "attributes " and 99% by other technical elements (a hard 
disk, a DVD recorder, etc.), is in the view of th e complainants a set top box covered by the ITA and 
the EC commitment.    
29. Such an interpretation would mean that one do es not consider the objective characteristics of 
a product, i.e., the technological elements present in the set  top box.  To the contrary, anything can be 
put into a set top box and, as long as it fits inside together with the above three elements, it is supposed to be, in the view of the complainants, a set top box covered by the EC Schedule.  This is 
clearly wrong. 
30. Moreover, products which the compla inants want to have covered by the definition of "set top 
boxes which have a communication function" are no l onger even considered as set top boxes: their 
main features and functionality make them a comple tely different product – a "digital video recorder" 
(DVR) or "personal video recorder" (PVR).   
31. The ISDN/W-LAN/Ethernet devices are not "mode ms".  Hence, set top boxes with these 
devices are not granted ITA treatment because they  do not fulfil the narrative description and not 
because the EC would deny that they allow a connec tion to the Internet.  Similarly, set top boxes 
which perform the function of a reception appara tus for television but which do not incorporate a 
video tuner (such as "IP-streaming boxes") do not incorporate a modem but connect to the Internet through, for example, an Ethernet interface.  
32. The complainants also misunderstand the EC cla ssification. It is through the CN codes that 
the EC implements its obligations flowing from its  Schedule, including those taken pursuant to the  WT/DS375/R 
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  ITA.  If the complainants consider that the EC miscl assifies, they have to yet make their case.  If they 
decide to do so, and considering that the EC cla ssifies on the basis of objective characteristics of the 
products, they cannot merely point to one technical element out of many in a product – they have to 
make their case with respect to the totality of th e objective characteristics of a given existing product, 
and not merely to an abstract category of produc ts delineated by certain minimal attributes.  
D. C
ONCLUSIONS  
33. In its first written submission, the EC demonstrat es, first, that the narrative description of the 
product at issue in the EC Schedule and the ITA does not support the claim made by the 
complainants.  To the extent that narrative descr iption constitutes the EC concession, that concession 
is not open-ended.  The Greece – Phonograph Records  case supports, rather than contradicts, the EC 
position. 
34. Second, the EC's customs classification, throug h which the EC implements the ITA, is, in 
accordance with the guidance provide d by the ECJ, WCO and the Appellate Body, based on objective 
characteristics of a product at the time of importation.   This approach to classification does not mean 
that one selects a single characteristic and ignores all the other.  To the contrary, the EC considers the 
totality of the characteristics to make a classificati on decision.  The complainants are therefore wrong 
in arguing that the EC excludes certain STBs from th e ITA treatment "merely due to the presence of a 
hard disk".  It is rather because those products, b ased on a consideration of all their characteristics, 
perform other functions than that covered by the ITA description and the EC Schedule, that the EC 
classifies them in a certain way.   
35. Third, by interpreting the narrative descripti on as setting forth minimum requirements, the 
complainants avoided presenting any evidence showi ng that in any given case, the EC incorrectly 
considered the totality of the product as a whole an d that it incorrectly concluded that it was not 
entitled to ITA treatment.  Nonetheless, since the narrative description is about a certain type of 
products and not about minimum requirements, the comp lainants have yet to show that in any given 
case the EC acted inconsistently with its obligations .  This is a highly significant observation, because 
it pertains both to the complainants' failure to iden tify conclusively the products at issue as well as to 
their lack of showing that the EC violates Ar ticles II:1(a) and (b) GATT 1994 "as such and as 
applied". 
V. THE CLAIM ON SET TOP BOXES WHICH HAVE A COMMUNICATION 
FUNCTION (STBC) UNDER ARTICLE X GATT 1994 
A. ARTICLE X:1 GATT 1994   
36. The US based its claim on the following premise:  the CN EN at issue "were approved by the 
… Customs Code Committee … in October 2006 and May 2007, respectively. Yet the EC failed to 
publish amendments in its official journal until Ma y 2008, over a year after the amendments had been 
approved." TPKM advances a similar claim, albe it arguing that the CN EN were adopted in 
April 2007. 
37. The premise of the complainants is factually and legally wrong.  First, it is incorrect to say 
that the CN EN were published over a year after their adoption.  The Customs Code Committee does 
not "adopt" or "approve" anything in the manage ment procedure.  The complainants acknowledge 
this, in fact, in the initial parts of their submissions  in which they describe the functioning of the EC 
customs law.  By arguing something different in the sections dealing with their claim, they are 
contradicting themselves. WT/DS375/R 
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  38. Second, what happened was that various parts of  the interrelated text of the CN EN were 
revised several times following th eir first discussion in the Committee in May 2006 and, during the 
process of redrafting and revision, voted upon several times by the Committee (October 2006, 
April 2007 and February 2008).  In this way, the dr aft developed into a cohe rent text reflecting the 
discussion.  Once all the parts of the draft measu re voted upon, the Commission services proposed the 
text to the Commission for adoption.  The CN EN we re adopted at the end of April 2008. Thereafter, 
the CN EN were promptly published on 7 May 2008.  
B. A
RTICLE X:2 GATT 1994   
39. In reality, the complainants argue that the CN EN violated Article X:2 GATT 1994 because 
they were enforced before their adoption  (and subsequent publication).  The legal status and effect of 
draft CN EN, which were merely voted upon, cannot exceed that of adopted  and published  CN EN.  
Therefore, without considering any further arguments  by the complainants, one can already conclude 
that the complainants are wrong. 
40. It appears that the complainants are rather tr ying to convince the Panel that it is the votes and 
discussions in the Committee made in the context of the management procedure which constitute a 
measure in the sense of Article X:2 GATT 1994.  This line of thought cannot be followed, however. 
Neither the misinterpreted statement presented as evidence, nor any of the BTIs provided by the 
complainants support the complainants' argument.  
VI. CLAIM CONCERNING CERTAIN "MULTIFUNCTIONAL MACHINES" (MFMS) 
UNDER ARTICLE II OF THE GATT 1994 
A. BACKGROUND  
1. The products at issue 
41. This claim concerns the tariff treatment accorded  by the EC to imports of certain MFMs.  
Specifically, according to the complainants, the pro ducts at issue comprise:  (a) MFMs which are 
connectable, either directly or indirectly, to an  ADP machine (ADP MFMs); and, (b) MFMs which 
are not connectable to an ADP machine and use a phone line to perform a facsimile transmission function (non-ADP MFMs). 
42. MFMs are not a "technological advanced version of printers".  They are th e result of a process 
of technological convergence, whereby devices with  different functions ( photocopying, printing and 
facsimile) have been merged into one in or der to perform these various functions.   
43. Many MFMs manufacturers produce stand-alone photocopiers and have developed MFMs 
from a photocopier basis. Producers such as Rico h, Canon and Kyocera market their MFMs as 
"copier-based" or "copycentric".  The essential compone nt of MFMs is the print engine.  However, a 
print engine is different from a printer.  In an MF M the print engine is used not only for printing data 
from an ADP machine, but also for copying and for pr inting incoming faxes.  If it is true that a print 
engine is a necessary component of all printers, it is also true that a print engine is equally a necessary 
component of all stand-alone copiers and fax machines.   
2. The measures at issue 
44. In the joint Panel Request, the complainants identified four measures as arguably been 
inconsistent with the EC obligatio ns under the GATT 1994, namely, (a)  Council Regulation (EEC)  WT/DS375/R 
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  No. 2658/87 of 23 July 1987, (b)  Commission Regulation (EC) No. 517/1999, (c)  Commission 
Regulation (EC) No. 400/2006, and (d)  Statement of the Customs Code Committee, Tariff and 
Statistical Nomenclature Section, containe d in the Report of Conclusions of its 360
th meeting.  In 
Commission Regulations 517/1999 an d 400/2006, as well as in the CCCE statement, MFMs were 
classified under CN 9009 12 00.  Yet, CN 9009 12 00 was removed from the CCT, effective 
1 January 2007, as part of the implementation of th e HS 2007.  Hence, the EC considers that the only 
measure at issue in the present dispute is the current version of the CCT. 
45. The EC also understands that the complainants' contention in this dispute is limited to the 
current CN 8443 31 91 ("machine performing a copying function by scanning the original and 
printing the copies by means of an electrostatic  print engine"), as it is the only tariff line in 
subheading 8443 31 that provides a tariff rate of 6%, co mpared to the rest of the tariff lines of the said 
subheading, which provide for duty-free treatment.   
3. Relevant Tariff Concessions 
46. The complainants claim that the tariff treat ment given to imports of MFMs under current 
CN 8443 31 91 (tariff rate of 6%) is less favourable than that recorded in the EC Schedule under the 
concessions for the various codes of  subheading 8471 60 and for CN 8517 21 00, which provide for 
duty-free treatment.  The EC, on the other hand, cons iders that, as a general rule, MFMs fall within 
the concession for CN 9009 12 00, which provides for a bound tariff rate of 6%. 
4. The Issue 
47. In essence, the matter to be resolved in this di spute is whether the MFMs currently covered by 
CN 8443 31 91 fall within the concessions made in  the EC Schedule for the various codes of 
subheading HS 8741 60 and for CN  8517 21 00 or, rather, within the concession for CN 9009 12 00. 
B. ADP  MFM S 
1. Digital copying is a form of photocopying 
48. The complainants argue that "digital copying" is not a form of "photocopying", so that ADP 
MFMs cannot be classified under subheading 9009 12.  However, digital copying is but a 
technological development of photocop ying.  There is nothing in subheading 9009 12 that may lead to 
the conclusion that this position excludes digital copying. 
49. According to the ordinary meaning of "photoc opying apparatus", the term "photo" means 
light.  Light is, indeed, the defining feature that distinguishes photocopiers, both digital and analogue, 
from other types of copying machines.  Moreover,  the only difference between analogue and digital 
photocopiers is that the latter utili zes an additional intermediate step, i.e. the digitalization of the 
image before reconstituting it on an electrostatic drum.  This difference, however, does not bring 
digital photocopiers outside subheading 9009 12, because this position also encompasses 
photocopying by means of indirect processes. 
50. The context provided by other positions of the EC Schedule and the HS96 also shed light on 
the correct classification of MFMs. The complainants  argue that digital photocopiers must not be 
classified under  subheading 9009 12 because they do not use "optical technology", omitting that digital photocopiers use an optical system consisting of lamps, lenses and mirrors.   WT/DS375/R 
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  51. The EC has consistently classified digital c opiers under subheading 9009 12.  And so did the 
US until 2002.  As noted by the complainants, even  the WCO struggled with the classification of the 
MFMs at issue under the HS 96, to the extent that no decision could be reached. 
2. ADP MFMs fall outside the concession for subheading 8471 60, unless it can be shown 
that their copying function is secondary 
52. Note 5(B) to Chapter 84, which forms integral part of the HS, establishes three criteria that, 
altogether, must be met in order for a product to fall under  subheading 8471 60.  There is no dispute 
that letters (b) and (c) of that note are fulfilled by the MFMs in question.  However, letter (a) will be 
met depending on the specific nature and relative importance of the functions performed by each 
particular kind of MFM.  As recognized by the complainants, digital copying works independently 
from an ADP.  Hence, to the extent an MFM is u sed for copying, it cannot be regarded as being "used 
in an automatic data processing system". As concluded by the ECJ in the Kip case, pursuant to 
Note 5(B)(a), ADP MFMs may not be classified directly under subheading 8471 60 unless the 
copying function is "secondary" in relation to the  ADP functions.  
53. The determination of whether the copying func tion is "secondary" must be assessed on a case-
by-case basis in accordance w ith the "objective characteristics" of each kind of MFM. The application 
of letter (a) of Note 5(B) is not excluded by No te 5(D) to Chapter 84 because MFMs are not mere 
printers.  
54. The negotiating history of the ITA also shows th at the drafters never intended to cover the 
ADP MFMs at issue, even though they were already in  the market in 1996.  Neither "Landscape 1" of 
12 March 1996, nor "Landscape 2" of 28 of Marc h 1996 made any reference to MFMs at all. 
3. ADP MFMs with equivalent copying function fall within the scope of concessions for 
CN 9009 12 pursuant to GIR 3 
55. When the copying function of the ADP MFMs at issue is not "secondary" in relation to their 
ADP functions, they are prima facie classifiable  under subheadings 8471 60 and 9009 12.  It becomes 
necessary therefore to classify them  in accordance with GIR 3.  GIR 3(a) cannot be applied pursuant 
to its second sentence. GIR 3(b) cannot be applied either, because the ADP MFMs at issue cannot be 
classified after the component which arguably confer s them their "essential character", i.e. the print 
engine.  Indeed, that component may be classifiab le under different positions  depending on whether it 
is intended for use with a printer, a copier or a fa x machine.  Since neither GIR 3(a) nor GIR 3(b) can 
be applied, it becomes necessary to resort to GIR 3( c).  As subheading 9009 12 occurs last in the HS, 
the ADP MFMs at issue must be classified under that position. 
C. N
ON-ADP  MFM S 
56. The complainants claim that non ADP MFMs that have a facsimile transmission function fall 
always under the concession for CN 8517 21, and must be granted duty-free treatment.  This assertion 
overlooks another of the functions of the non-ADP MFMs at issue, namely, photocopying. Although 
the complainants point out that in the commercial jargon these mach ines are usually called "facsimile 
machines", this is not always the case.  But even  if so, as the Appellate Body has reiterated, the 
subjective characterization of a product by its manuf acturer is not dispositive for its classification.  
57. Given the fact that the non-ADP MFMs at issue perform both facsimile and photocopying 
functions, and consequently, are prima facie  classifiable under both subheadings 8517 21 and 
9009 12, it is, again, necessary to resort to GIR 3.   For the aforementioned reasons, neither GIR 3(a)  WT/DS375/R 
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  nor GIR 3(b) are applicable.  Therefore, the non-ADP MFMs at issue must be classified in accordance 
with GIR 3(c).  As subheading 9009 12 comes last in the HS, the non-ADP MFMs at issue must be classified under that position. 
VII. CONCLUSION 
58. In the light of the foregoing considerations , the European Communiti es respectfully requests 
the Panel to reject the claims made by the complainants.  
 
 
 
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  ANNEX D–2 
 
EXECUTIVE SUMMARY OF THE ORAL STATEMENT BY THE EUROPEAN 
COMMUNITITES AT THE FIRST SUBSTANTIVE MEETING 
 
I. INTRODUCTION 
1. This dispute is not about the EC's support fo r the ITA.  The EC is fully committed to the 
success of the ITA and the liberalisation which the ITA has brought about. 
2. Nor is this dispute about the good faith of the EC  in implementing the ITA.  As shown by the 
EC, the complainants' insidious and unsupported a llegations of "methodical reclassification" are 
groundless.   
3. Lastly, this dispute is not about "protectionism" on the part of the EC.  In fact, the EC has no 
significant domestic production of any of the products at issue.  
4. Instead, the present dispute raises a limited number of issues concerning just a few of the 
many products covered by the ITA.  In essence, this  dispute is about whether the products at issue fall 
within the scope of certain tariff concessions made by the EC pursuant to the ITA, as the 
complainants have alleged, or rather within th e scope of other concessions included in the EC's 
Schedule, which do not provide for duty free treatment. 
5. The EC considers that the complainants' claims stem from a misinterpretation of the relevant 
terms of the EC's Schedule.  Unlike the compla inants, however, the EC does not claim that the 
interpretation of those terms is straightforward.  The fact that similar issues have been the subject of 
lengthy discussions within the World Customs Organization and the ITA Committee and have 
prompted litigation before several national courts, in cluding the European Court of Justice, as well as 
the complainants' own shifting classification prac tices, all attest to the difficulties involved. 
6. Those difficulties arise, to a larg e extent, from the fact that the three categories of products at 
issue in this dispute are "multifunctional", i.e. they  can perform more than one function. As a result, 
they may be prima facie classifiable within more th an one of the different concessions included in the 
EC's Schedule.  The EC considers that, in deciding into which of those concessions the products at 
issue are to be classified, it is essential to take into  account all the functions of those products, as well 
as their relative importance.  In so far as the c oncessions at issue refer to the 1996 version of the 
Harmonised System (HS96), this analysis must be  performed within the framework provided by the 
notes and interpretative rules stipulated in the HS96 in  order to deal specifically with this type of 
situation. 
7. The complainants' position, on the other hand, is guided by the notion that any 
multifunctional product which happe ns to have among its functi ons one covered by an ITA 
concession must always be classified according to that  function, irrespective of that function's relative 
importance when compared to other functions not co vered by the ITA.  In essence, the complainants' 
view is that an ITA concession always trumps a non-ITA concession.  The complainants seek to 
justify this over-extensive reading of the scope of the ITA by arguing that it is necessary in order to 
further the "object and purpose" of the ITA.  
8. The EC cannot agree with the complainants' approach.  In the first place, because it is 
incompatible with the basic rules of treaty interpretation, as well as  with the specific rules for the 
interpretation of the HS96.  Furthermore, the EC is concerned about the systemic implications of  WT/DS375/R 
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  upholding the complainants' simplistic way of reas oning; as would be the complainants themselves if 
only they could look beyond their immediate trade inte rests in this dispute.  Unfortunately, however, 
the complainants are seeking to achieve very short term trade gains at the expense of the 
indispensable legal certainty and predictability of  tariff concessions.  It is obvious, however, that, 
without the latter, all Members will become reluctan t to pursue the ITA liberalization process.  Thus, 
far from furthering the ITA's "object and purpose", th e complainants' short-sighted claims may well 
have the opposite effect. 
II. THE CLAIM CONCERNING "FLAT PANEL DISPLAY DEVICES" (FPD) UNDER 
ARTICLE II OF THE GATT 1994 
9. The complainants have made an "as such" claim against the measures of the EC in respect of 
some  Flat Panel Display Devices under Article II of  the GATT 1994.  As the Appellate Body has 
held, 
" 'as such' challenges against a Member 's measures in WTO dispute settlement 
proceedings are serious challenges. … We would therefore urge complaining parties 
to be especially diligent  in setting out "as such" claims in their panel requests as 
clearly as possible." 
10. If the Panel request already has to be presente d especially diligently when the measures of a 
WTO member are challenged "as such", this must apply a fortiori  to the first written submission when 
those claims are presented in detail. In the context of a claim alleging the breach of Article II of the 
GATT, the first written submission must necessarily be clear on the specific product that is the subject 
of the claim and the precise concession the respondent is alleged to have breached.  
11. As regards the first omission, the EC has some  sympathy for the apparent underlying reasons 
for the failure to identify the products with sufficien t detail. Indeed, the exceptionally wide variety of 
different kinds of modern "monitors" and "display s", the different functions they can perform in 
connection with different devices and the various tec hnical specifications that are legally relevant for 
tariff classification and for the purposes of classifying a given monitor within the EC's Schedule, make the task difficult. This task is not rend ered any easier by the extraordinary speed in 
technological development and the convergence of the IT and the multimedia consumer electronics 
industries, even when one is to consider only a handful of specific monitors. Indeed, as China has 
correctly put it in its third party submission, the real cause of the present dispute is "the rapid 
development of IT technology". 
12. However, if the ambitions are set as high as the complainants seem to have done without 
simultaneously at least identifying specific product categories, the task of setting out the claims with particular diligence becomes practically impossible w ithout compromising the rights of defence.  It is 
simply not good enough to state that the case includes " certain"  or " some"  monitors with certain 
attributes while also stating that it is not limited to those.  A fortiori , it is far from sufficient if the 
product is not defined in any rele vant detail, as is the case with the first written submission of the 
United States.  
13. Of course, if the complainants in truth are claiming that all flat panel monitors are subject to 
the relevant commitments and zero duty, the task of defining the products at issue becomes easy.  
However, that is not what the Pa nel request states although the firs t written submissions do not fall far 
short of claiming so. To complicate things further,  the claims differ even between the complainants. WT/DS375/R 
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  14. The EC has far less sympathy for the second om ission, namely the failure to identify in 
sufficient detail the relevant concession that it has a llegedly breached.  This is  purely a legal question. 
The complainants ought to have identified in their first written submissions precisely where the 
relevant concession is.  Remarkably, the complainants have failed to do so, at least when it comes to 
the product definitions in Attachment B to the ITA.  
15. Having said that the EC would like to anticip ate some arguments in order to avoid any 
misunderstandings: the EC is not trying to ignore the so called "headnote" in the Schedule. On the 
contrary, the EC readily accepts that it is part of the EC Schedule.  However, the EC does not 
understand what the "headnote" and the "wherever classified" language can add to the commitments 
the EC has made by indicating specific headings next to the product definitions relevant to this case.  
All these headings carry a zero duty in the EC Schedul e that follows the HS96 nomenclature.  In other 
words, the commitments are in fact made twice and the EC believes that they exhaust the "headnote".  
This is precisely the same technique the United States and TPKM have used in their own Schedules 
and these Schedules have all been approved by consensus. 
16. It is the complainants, not the EC, who wish to  argue text out of the EC Schedule when they 
ignore the headings next to the product definitions.  Just as the "headnote" is part of the EC Schedule, 
so are the headings next to the product definitions.  Indeed, if the specific headings were not there, 
Attachment B to the ITA could simply have been in corporated into the Schedules of the ITA parties 
by mere reference or by merely copying the product definitions.  Clearly this is not what was intended 
if one reads the text of the ITA objectively an d in accordance with the customary rules on Treaty 
interpretation. 
17. Now, let us assume for the sake of the argument that the "wherever classified" language in the 
"headnote" is a kind of  "safety net" whereby there c ould, at least in principle, be other products that 
fulfil a given product definition and, thus, fall within headings other th an those identified next to the 
product definitions.  Leaving aside the legal and prac tical uncertainties that such an approach would 
entail, the EC could even agree with such an interp retation.  However, a claim that essentially states 
that the EC ought to have identified another headi ng next to the product definition seems untenable in 
the light of the fact that the Schedule has been approved and certified by consensus and represents a 
common agreement between all WTO members.  In an y event and, at the very least, such a claim 
must be subject to a strict burden of proof showing that headings are missing from the list. 
18. The EC understands that the complainants claim that  all or at least the great majority of "flat 
panel display devices" are entitled to duty free tr eatment under at least two concessions in the EC 
schedule namely under heading 84 71 60 90 "input or output units" for an automatic data processing 
machine and under a given narrative product definition in the EC Sc hedule relating to "flat panel 
display devices" that implements Attachment B of  the ITA, although, at times, it seems that the 
complainants claim that the actual commitment is in the ITA itself. In any event, the legal arguments 
are made only in relation to multifunctional monitors that use LCD technology even if the claims are 
not apparently limited to such monitors. 
19. The EC fully agrees that a genuine ADP mon itor is entitled to zero duties treatment and 
therefore does not understand why the claim also cove rs monitors that can only be used with ADP 
machines.  However, the real problem is that the radical changes in monitor technology over the past 
decade or so have made it extremely difficult to distinguish between computer monitors and video 
monitors including television sets.  The latter are explicitly excluded from the scope of the 
commitments made pursuant to the ITA. Indeed, qui te remarkably the complainants are completely 
silent in their submissions about the fact that A ttachment B contains a definition of "monitors" that 
explicitly excludes video monitors and televisions fro m the scope of the obligations. Furthermore, the  WT/DS375/R 
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  complainants also fail to recognise that the two criteria the EC is allegedly incorrectly using in tariff 
classification are explicitly provided by the HS96 Explanatory Notes. 
20. Even if one were to ignore the language of the HS96 Explanatory Notes to Heading 8471, the 
technological circumstances of today are very diffe rent from the circumstan ces that surrounded the 
ITA negotiations.  Back in 1996 the technology used  made it easier to distinguish between computer 
monitors and video monitors. Today these two product categories have, to a large extent, been merged 
into one where the same monitor can  be connected to a number of different devices.  The monitors are 
genuinely multifunctional. Of course some individual products or models are marketed in a way that 
the video or gaming functionalities are emphasised wh ile in relation to othe rs the data processing 
functionalities are underlined.  Whether a product br ochure uses a picture with a person working on a 
computer or watching a football match, the monito rs can in most cases be used for both purposes. 
Therefore, when classifying the product for tariff purposes it becomes very important to look at the 
technical details of each individual product on a case-by-case basis. In many cases it will be 
impossible to identify the principal function of a mo nitor and therefore the General Interpretative Rule 
("GIR") 3 c) of the Harmonised System will need to  be applied.  Indeed, this is precisely how the 
United States has tackled the problem as demons trated in the EC's first written submission. 
21. The European Court of Justice also upheld th e necessity of a case by case analysis in its 
recent judgment in the so called Kamino  case to which reference has been made in the written 
submissions of the EC and TPKM.  That judgment represents the state of EC law today. 
22. The EC is not guilty of reclassifications of m odern LCD monitors motivated by bad faith as 
alleged by the complainants.  There is a genuine problem of tariff classification that has emerged due 
to technological developments.  The serious difficu lties the complainants have faced in framing their 
case are themselves testimony to this problem.  Th e complainants will no doubt attempt to use this 
hearing and the subsequent stages of the procedure for the purpose of trying to define their case better. 
The EC trusts that the Panel will car efully guard and protect the basic due process rules inherent in the 
DSU.  Indeed, an objective assessment of the case under Article 11 of the DSU requires the Panel to examine whether the complainants have identified clearly and specifically the products that are the 
subject of the claim and the precise commitment the EC is alleged to have breached.  The EC respectfully submits that this is not the case a nd requests that the complainants' claims must be 
rejected. 
III. THE CLAIM CONCERNING SET TOP BOXES WHICH HAVE A 
COMMUNICATION FUNCTION (STBC) UNDER ARTICLE II OF THE GATT 1994 
A. S
ET TOP BOXES INCORPORATING A HARD DISK  
23. The EC does not exclude any STBs "from duty-free treatment due to the presence  of a hard 
disk or other apparatus".  On the contrary, set t op boxes can be equipped with a hard disk and still 
qualify as STBCs with a zero rate of duty.  The CN EN, in the pertinent part, explains rather clearly 
that it is the recording or reproducing function  of a hard disk (or any other apparatus) in set top boxes 
which is the criterion at issue.  The presence of this function requires that such STB should be 
classified as a video recorder, unless the totality of technological elements present in the STB were to 
suggest otherwise.  
24. In its first written submission, the EC provide d product brochures for one of the products that 
the complainants are concerned about (Exhibit EC-4 4).  Those brochures confirm that that product is 
widely known in the market as a "digital video record er". This is in stark contrast with the STBCs WT/DS375/R 
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  which either incorporate no hard disk at all or a ha rd disk of 1, 2 or 5 GB.  Such hard disks merely 
allow the STBCs to perform related functions su ch as saving of emails with attachments.  
25. In the EC's view, this is perhaps the core of the dispute.  The complainants try to create the 
impression that the EC denies duty-free treatment to STBCs equipped with some minor functions 
added almost as a necessity in the course of the technological developments.  That is not correct.  The 
recording functionality "added" to an STBC is far more than a supportive or ancillary one.  That 
functionality is a fully fledged self-standing functi on that fundamentally and objectively changes the 
product.  To put it briefly: an STBC does not need a hard disk of 160 GB for its functioning – a 
recorder does. 
26. With a hard disk of that size, we should not sp eak about a hard disk being added to an STBC: 
rather it is the other way round.  It is effectiv ely the communication function which is added to a 
recorder. Needless to say, neither Attachment A nor Attachment B of the ITA mention video-recorders (or video-recorders with a communica tion function) as being included in the ITA. 
27. As the EC explained in its first submission, an d as even one of the third parties also pointed 
out, there are many varieties of set top boxes, some of which have been undoubtedly excluded from the ITA from the beginning.  The considera tion of others depends on the understanding and 
evaluation of all of their technical characteristics, which can only be done on a case-by-case basis. Moreover, let us not forget that the complainants poi nted to a hard disk as being one of the decisive 
technical elements at issue.  However, there are se t top boxes with a hard disk which in our view fall 
within the product category of STBCs.  Hence, at this moment, it is not clear which individual 
products or categories of products are at issue.  Under the well-established principles of WTO law, 
confirmed recently by the panel in the China – Auto Parts  case, complainants' advancing an "as such" 
claim have to establish that the challenged measures, in their every  application in relation to a given 
product model (and, it is to be noted again that it is  not the CN EN but rather the CN itself which is 
applied here) always  and necessarily  lead to a violation of the GATT 1994.  The EC submits that this 
has not been shown. Nor have the complainants shown a violation of GATT 1994 in any individual 
case.  
B. S
ET TOP BOXES USING "CERTAIN TYPES OF MODEMS TO COMMUNICATE " 
28. The definition of STBCs included in Attachment B of the ITA was drafted with one particular 
product type in mind.  That product incorporated  a modem, i.e ., the modem was inside the set top box. 
The in-built  modem has therefore become one of the defining elements of a STBC.  The complainants 
expressly acknowledge this much.  
29. It is correct to say that the Ethernet/W-LAN devices, to which the complainants refer as 
"certain types" of "modems", also allow, like mo dems, a connection to internet.  However, these 
devices do so by connecting the STB in question through a cable  (or radio waves in case of W-LAN) 
to another device, namely an external  (self-standing) modem.  It is that  external modem  which then, in 
turn, connects to the Internet. In ot her words, the modems which are at issue here are not incorporated 
in the set top boxes: they are outside , connected to a set top box via cable (or radio waves).  
30. Faced with this indisputable fact, the complainants are trying to circumvent the requirement 
of an incorporated modem by re-interpreting what  a modem is. Through a creative new interpretation 
the complainants attempt to show that a m odem which is beyond doubt physically located outside  an 
STB is actually incorporated inside  it, as required by the ITA definition.   WT/DS375/R 
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  31. The Oxford dictionary defines a "modem" quite accurately, namely as "[A] combined 
modulator and demodulator, used esp. to  connect a computer to a telephone line
, for converting 
digital electrical signals to analogue or audio ones and vice versa" .  Using this definition, the 
complainants would find it more difficult to prevai l in their claim, because the device connecting to 
the telephone line, i.e ., the modem, is simply not incorporated in the set top boxes communicating 
through Ethernet or W-LAN devices.   
32. The dictionary the complainants rely on includes a more vague definition of a modem 
suggesting that it is " equipment that connects … to a communication line ".  Basing themselves on the 
assumption that not only a telephone line but anythi ng, even a piece of cable linking an indefinite 
number of individual devices and transferring in formation could be a "communication line", the 
complainants arrive at their objective.  To give an  example, using this vague  definition, one could be 
connecting to Internet through a modem "incorporated " in his or her set top box even if that modem 
itself would be located in the neighbours' flat or a nother house.  Needless to say, this is not what the 
drafters of the ITA intended. 
IV. THE CLAIM CONCERNING SET TOP BOXES WHICH HAVE A 
COMMUNICATION FUNCTION (STBC) UNDER ARTICLE X OF THE GATT 1994  
33. Many of the assertions made by the compla inants are simply b ased on a mistaken 
understanding of the EC customs legal system – a sy stem which has been extensively discussed in the 
recent EC – Selected Customs  Matters  case, both at the panel and Appellate Body levels.  It seems 
odd, therefore, that the complainants advance before  this Panel a factual description of EC customs 
law which often departs even from the very basic concepts discussed at lengt h already in that case. 
What is even more puzzling is that the complainan ts often correctly describe certain aspects of EC 
customs law in the initial parts of their submissions, only to depart from them later on in their submissions without any explanation.  
V. CLAIMS CONCERNING MULTIFUNCTIONAL MACHINES (MFMS) UNDER 
ARTICLE II OF THE GATT 1994 
34. There appears to be agreement among all the par ties that the question to be resolved by the 
Panel is essentially one of classification: whethe r the MFMs at issue are covered by the EC 
concessions for HS96 subheadings 8471 60 and 851 7 21 or by the EC concession for HS96 
subheading 9009 12.  
A. ADP
 CONNECTABLE MFM S 
35. The complainants' position is that the EC c oncession for subheading 8471 60 covers each and 
every MFM that can be connected to a computer;  and this even if the MFM also performs other 
functions, such as copying, which do not involve the use of a computer. 
36. Thus, the complainants' position is that any MF M which can both print and copy must always 
be treated as if it were a single-function printer.  In  other words, the complainants' position is that the 
copying function of an MFM is always irrelevant, i rrespective of its relative importance, and must be 
disregarded for the purposes of classifying that MFM within the EC's Schedule of concessions. 
37. In addition to being manifestly unreasonabl e, the complainants' position disregards the 
express language of Note 5(B) to Chapter 84 of the HS96.  It follows from that note that an "output 
unit" cannot be classified directly under HS96 headi ng 8471 unless it is used "solely or principally" 
with an ADP system. WT/DS375/R 
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  38. In essence, the EC position is that because of the wide variety of MFMs it is necessary to 
examine, on a case-by-case basis
, the characteristics of each kind of MFM.  If it is determined, on the 
basis of such examination, that for a particular ki nd of machine the copying function is "secondary" to 
the printing function, that kind of MFM must be classified under subheading 8471 60 and accorded 
duty free treatment. 
39. On the other hand, where it is determined that  the copying and printing functions of a given 
kind of MFM are of equivalent importance, such a machine must be deemed prima facie classifiable 
under two different subheadings: 8471 60 and 9009 12.  In those cases, it becom es necessary to resort 
to GIR 3 of the HS96, which specifically addresses the situation where a product is prima facie  
classifiable under two or more positions. 
40. As shown by the EC, neither GIR 3(a) nor GIR 3( b) can be applied to the classification of 
MFMs.  Therefore, the MFMs at issue must be clas sified pursuant to GIR 3(c).  The application of 
that rule leads to the conclusion that, where the c opying function is equivalent to the printing function, 
the MFMs at issue fall under subheading 9009 12.  It follows that, in those cases, the EC is not 
required to grant duty free treatment to the products at issue. 
B. NON-ADP  MFM S     
41. The complainants' position with regard to the second subcategory of MFMs at issue is that 
any MFM which can be used for faxing and copying must always be treated as a facsimile machine 
and classified under subheading 8517 21.  And this i rrespective of the relative importance of each of 
the two functions. Thus, the complainants again disregard entirely the copying function of the MFMs.  
42. In contrast, the EC's view is that a non-connectable MFM which can be used for both copying 
and faxing is prima facie classifiable under both subheading 8517 21, as a facsimile machine, and 
subheading 9009 12, as a photocopier.  This renders it necessary, once ag ain, to resort to the specific 
rule laid down in GIR 3 for dealing with this type of situation.  As shown by the EC, the application 
of GIR 3 leads to the conclusion that this s ubcategory of MFMs falls under subheading 9009 12. 
Therefore, the EC is not required to grant dut y free treatment for imports of this category. 
C. PHOTOCOPYING IS A FORM OF DIGITAL COPYING  
43. The complainants' position with respect to bo th subcategories of MFMs is based on the 
premise that digital copying is not a form of photoc opying.  As the EC has shown in its first written 
submission, this premise is mistaken. 
44. Digital copying is but the latest technological  development in the field of photocopying.  
There are obvious technological differences between analogue and digital photocopiers.  But the 
terms of subheading 9009 12 are broad enough, when properly interpreted, to encompass both types 
of photocopying. Indeed, the complainants them selves continued to classify "stand-alone" digital 
copiers as photocopiers long after the conclusion of the ITA. 
45. Furthermore, if "stand-alone" digital copiers could not be considered as photocopiers, they 
would have to be classified under subheading 847 2 90, a residual subheading covering "other", 
mainly mechanical office mach ines.  In any event, classifyin g digital copiers under subheading 
8472 90, rather than under subheading 9009 12, would not  dispose of the issue before the Panel.  On 
that interpretation, the MFMs at issue would be prima facie classifiable under that position, in addition to being prima facie  classifiable under subheadings 8471 60 and/or 8517 21.  Hence, it would  WT/DS375/R 
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  still be necessary to determine which of these positi ons is the most pertinent, having regard to the 
relevant notes and interpretative rules of the HS96. 
 
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Page D-20 
  
  ANNEX D–3 
 
EXECUTIVE SUMMARY OF THE SECOND WRITTEN SUBMISSION  
BY THE EUROPEAN COMMUNITIES 
 
 
I. GENERAL ISSUES 
A. T
HE EC CONCESSIONS PURSUANT TO ATTACHMENT B OF THE ITA 
1. In its first written submission the European Co mmunities argued that the complainants have 
failed to identify the relevant obligations in th e EC's Schedule pursuant to Attachment B with 
sufficient clarity.  This failure was again emphasise d in the EC's first oral statement. Following 
specific questions from the Panel, the complainan ts have attempted to identify the relevant 
concessions with more precision.  To a large exte nt the replies only add to the confusion. The 
complainants now advance a rather revolutionary view  with respect to the lega l status of the ITA and 
they continue to disagree among themselves where precisely the concessions pursuant to Attachment 
B are in the EC's Schedule. 
1. The legal status of the ITA 
2. The parties to the dispute have a fundamentally different view of the ITA and its legal status. 
While the European Communities has considered it to be a fully-fledged international treaty within 
the meaning of Art. 2(1) VCLT, the complainants c onsider that the ITA is not a treaty in that sense 
and regard it as a mere "political declaration".  
3. The first question which arises is how to interpre t any terms of such a "political declaration", 
for instance any narrative definitions provided in Att achment B to the Annex of the ITA. In the light 
of Article 2(1) VCLT, the VCLT interpretative ru les are not applicable, which the complainants 
expressly confirm. Even if they were applicab le, however, they would not help much in the 
interpretative analysis.  
4. The first command of the VCLT, namely to inte rpret the terms according to their ordinary 
meaning, entirely fails when applied to this "politi cal declaration". This can be well illustrated on the 
word "agreement". A cursory review of Attachment B reveals that its drafters used at least 5 times the 
word "agreement".  In its ordinary meaning, this  word means "a mutual understanding, a covenant, a 
treaty" and "a legally binding a rrangement between two or more pa rties". The word "agreement" is 
also used in Art. 2(1) VCLT to  describe a basis of a treaty covered by that Convention. Yet, the 
complainants are of the view that the drafters, when  they used the word "agreement", wanted to say 
"political declaration".  
5. This has significant consequences. If the drafte rs indeed used such an imprecise language 
with respect to this rather important term, then how can the complainants be sure that the drafters used 
any other term in the declaration with more precision and accuracy?  
6. Furthermore, in the view of at least the Unit es States, there are at least two sets of narrative 
definitions relevant for the interpretation of the EC 's Schedule. First, there is the "headnote" which 
"directs the reader to Attachment B of the ITA". One set of narrative definitions is therefore directly 
the one set forth in that Attachment. Second, ther e would also be another, separate set of narrative 
obligations in the EC's Schedule. This set, "sep arated by a heavy black line" from the "headnote",  WT/DS375/R 
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  includes both the narrative definitions and the HS /CN codes notified by the European Communities 
next to the definitions.  
7. The first set of narrative definitions, namely th e one provided in the Attachment B to the ITA 
to which the "headnote" points to, cannot be used for a credible and reliabl e determination of legal 
rights and obligations if the ITA is just a political declaration. There is no reason to assume that the 
drafters have been more careful and accurate with respect to some terms of Attachment B when they 
have been so apparently inaccurate in their use of the term "agreement".  
8. Therefore, an interpreter of the EC's Schedul e would have to base himself on the second set of 
the narrative definitions, namely the one "separated by a heavy black line" from the headnote. This set 
includes, however, the HS/CN codes notified at the same time alongside those narrative definitions. It 
follows that those codes are much more than me re context, they constitute the actual concession. 
9. The complainants simply cannot have it both ways: relegate the ITA to a mere political 
declaration and rely on a specific interpretation of th e words in such a political declaration. 
2. Where exactly are the relevant Attachment B concessions? 
10. There is a difference between the United States on the one hand, and TPKM and Japan on the 
other hand, on the question what precisely constitu tes the EC's concession pursuant to Attachment B 
of the ITA. Although all of the complainants wish  to downplay the legal relevance of the specific 
headings next to the product definitions in the EC 's Schedule pursuant to Attachment A, Section 2 and 
Attachment B, the precise concession the compla inants claim is breached by the European 
Communities in relation to "flat panel displa y devices …." and "set-top boxes which have a 
communication function" is defined di fferently between the complainants. 
11. Apart from there being a difference on what exactly  is incorporated into the EC's Schedule, 
the United States considers that the so calle d "chart that follows the headnote" is a separate  provision 
of the EC's Schedule. On this basis the EC's  Schedule would contain two sets of commitments 
pursuant to Attachment B. Japan and TPKM in tu rn appear to see the "headnote" and the product 
definitions together with the headings next to them  as part and parcel of the same concession. They 
emphasise that the headings next to the product definitions are illustrative only.  
12. These differences are not just formal. It is f undamentally important to define what the 
relevant EC's concession is and what  in turn provides context for its interpretation. The position of the 
European Communities is clear: the headings next to the product definitions cannot be read out from 
the EC's Schedule. They inform of the commitmen ts made by the European Communities pursuant to 
Attachment B of the ITA. 
13. Even if it were to be accepted that there is a "safety net" commitment that could be derived 
from the "headnote", overwhelming evidence must be required to demonstrate that a Member is in 
breach of its obligations because there is another product that fulfils a given definition despite not 
falling within the scope of the headings explicitly id entified next to the product definition. The EC's 
Schedule together with the headings next to th e product definitions was agreed by consensus and 
certified accordingly. WT/DS375/R 
WT/DS376/R WT/DS377/R 
Page D-22 
  
  II. CLAIM CONCERNING CERTAIN "FLAT PANEL DISPLAY DEVICES" 
A. C
ONTINUED LACK OF DILIGENCE IN SETTING OUT THE CLAIMS  
14. The complainants have to some extent clarif ied which concessions in the EC's Schedule are 
subject to this case although the claim based on th e concession pursuant to Attachment B suffers from 
the general shortcomings identified above. However,  despite very clear questions from the Panel, the 
complainants continue to be extremely vague on the products at issue.  
15. But there is another lack of precision in setting out the claims, which the European 
Communities was not able to identify from the first written submissions. Following the oral 
statements and the complainants' replies to the questions, the European Communities understands that 
the scope of the two claims the complainants are adva ncing in relation to flat panel monitors are very 
different in scope.  
B. TWO SEPARATE CLAIMS UNDER TWO SEPARATE COMMITMENTS  
16. Following the clarifications from the compla inants, the European Communities understands 
the claim in relation to Attachment B to be as fo llows: according to the comp lainants, the European 
Communities fails to grant duty free treatment to all flat panel display devices that are "for" a 
computer or other products falling within the ITA. As  TPKM put it in their first oral statement, "the 
real interpretative issue is the meaning of 'for' ". The complainants claim that any flat panel display 
device that is merely capable of operating with a computer  is "for" a computer. Nothing more nothing 
less; no need to consider any other criteria. Thus, if the complainants do not succeed in convincing the 
Panel on their interpretation of the word "for", the claim falls. 
17. The position of the complainants is completely at  odds with the ordinary meaning of the word 
"for" read in its context that manifestly must in clude the other concessions in the EC Schedule and in 
particular those made pursuant to Attachment B. Among those definitions is the definition of 
"monitors" that categorically excludes televisions - including high definition televisions - from the 
scope of the whole agreement. In the view of  the European Communities this exclusion also 
necessarily covers video monitors and particularly  HD ready monitors becau se they are capable of 
receiving and processing television signals or other analogue or digitally processed audio or video 
signals without the assistance of a central processing unit of a computer. 
18. However, while the scope of the claim unde r the concession pursuant to Attachment B 
becomes otherwise clearer, it manifestly creates conf usion from the point of view of the measures 
challenged. The very wide interpretation of the word "for" and the consequent width of the products at 
issue the complainants advance unde r the concession pursuant to Att achment B of the ITA has some 
very important consequences for this case: it l eads to a situation where it is entirely unclear  how the 
challenged measures come within the scope  of each of the two separate claims . Do the complainants 
consider that all EC's measures that would be relevant in assessing the duties on all products falling 
within the scope of the ITA and that follow the HS  nomenclature are necessarily in breach of the EC's 
WTO obligations? Would there be other criteria in HS 96 that in the view of the complainants would 
also lead to WTO violations? What parts of the CN and CNEN are actually within the scope of each 
of the two claims?  WT/DS375/R 
 WT/DS376/R 
 WT/DS377/R 
 Page D-23 
  
  C. F
URTHER CONFUSION ON THE PRODUCTS AT ISSUE : CONSEQUENCES OF THE TWO SEPARATE 
CLAIMS  
19. The fact that the two claims the complainants advance in relation to flat panel monitors are 
different in scope necessarily has the same consequen ce in relation to the products at issue. Indeed, 
the claim under heading 8471 60 90 appears to concern monitors that are solely or principally  for use 
with an ADP machine whereas the claim under the re levant concession pursuant to Attachment B of 
the ITA concerns monitors that are merely capable of operating with a computer . The European 
Communities understands that the latter claim is nece ssarily wider than the former and therefore more 
monitors are within its scope. However, with th e exception of Japan's reply to question 48, the 
complainants refuse to otherwise clarify the bor derlines and the legal criteria for distinguishing 
different monitors from each other in order to clarify the scope of and, perhaps even more 
importantly, the relationship between the two claims. 
20. Prior to seeing the replies of the complainants to the questions from the Panel, the European 
Communities had assumed that, in addition to the fi ve specific monitors identified in Commission 
regulations 634/2005 and 2171/2005, th e products at issue were LCD monitors with a DVI interface 
irrespective of any other technical characteristic (a ll complainants) and LCD monitors that can display 
information only from an ADP machine (US and TPKM ). Indeed, in the absence of any explanation 
to the contrary, the European Communities underst ood that the product scope was the same under the 
two claims. 
21. Now the European Communities understands that all flat panel monitors, irrespective of any 
other technical characteristic, are within the scope of  the claim that is based on the EC's commitments 
pursuant to Attachment B of the ITA. Indeed, not only LCD monitors with a DVI but any flat panel 
monitors including plasma and other technologies, with e.g. HDMI interface, or other technical 
characteristic such as a tuner etc. are within the scope of the claim as long as the monitor is merely 
capable of operating with a computer.  
22. The claim under heading 8471 60 90 in turn a ppears narrower from the point of view of the 
products at issue. The European Communities unde rstands therefore that the United States is not 
claiming that a modern flat panel television is w ithin the scope of their claim under heading 8471 60 
90 while such a product would appear to be with in the scope of the claim under the relevant 
concession pursuant to Attachment B. Curiously  both TPKM and Japan refrain from answering 
question 58 from the point of view of a TV that can  connect to a computer and therefore considerable 
uncertainty remains on the product scope in re lation to their claim under heading 8471 60 90. 
23. In these circumstances the Eur opean Communities is simply not in a position to know what 
products come within the scope of the claim under heading 8471 60 90. There is a complete 
confusion. The complainants' replies inter alia  to questions 3, 23 a), 48, 49, 58, 66 and 67 are simply 
not internally consistent and do not distinguish between the two separate claims under two separate 
concessions they appear to invoke. In such ci rcumstances the European Communities is not in a 
position to provide an effective rebuttal and c onsiders that its due process rights are being 
compromised. WT/DS375/R 
WT/DS376/R WT/DS377/R 
Page D-24 
  
  D. T
HE MEASURES AT ISSUE : HOW ARE THE MEASURES WITHIN THE SCOPE OF THE TWO 
SEPARATE CLAIMS ? 
1. The CN 
24. Regulation 2658/87 as last amended by Co mmission regulation 1031/2008 provides for the 
CN 2009 currently in force. Under the CN that re flects HS2007 there are a number of headings to 
which a given flat panel monitor could be classifi ed depending on its objec tive characteristics. Among 
these is heading 8528 51 00 (HS2007).  
25. Products falling within this heading "…monitors  – other monitors -- of a kind solely or 
principally used in automatic data-p rocessing system of heading 8471" are duty free . The same is the 
case for heading 8528 41 00. In the view of the Eu ropean Communities, these headings implement in 
the CN currently in force the relevant  obligations pursuant to the ITA. 
26. It is not entirely clear to the European Commun ities what is the basis for considering that the 
European Communities would be in breach of its  obligations under the claim based on heading 
8471 60 90 (HS96) because the combined scope of  heading 8528 51 00 (H S2007) and 85 28 41 00 
(HS2007) is at least as wide as heading 8471 60 90 (HS96) despite the clear differences in the 
wording in the text of the heading. Presumably the alleged violation stems from the alleged interpretative effect of certain criteria in the Expl anatory Notes to the CN (CNEN) when the CN is 
applied in practice. 
27. It is equally not entirely clear to the Europ ean Communities how the CN is alleged to breach 
the "safety net" concession pursuant to Attach ment B of the ITA. The European Communities 
understands that the complainants cl aim that there are mon itors that are classified elsewhere in a 
dutiable heading (such as "video monitors" under h eadings 8528 59 10 or 8528 59 90 or "televisions" 
under various eight digit headings under heading 8528 71) but would neverthe less still be entitled to 
duty free treatment. If the European Communities unders tands correctly, the claim means that it ought 
to have foreseen duty free headings also under th e relevant CN headings for video monitors and 
televisions due to the "safety net" concession in th e so called "headnote". But on the basis of what 
criteria should the European Communities have drawn the borderline between e.g. televisions that, in 
the view of the complainants, fall within the scope of the ITA and those that do not? Mere ability to 
connect with a computer? 
2. The CNEN 
28. The complainants also challenge the CNEN. However, it is not clear to the European 
Communities whether and in what respects the CNEN  are challenged under the two claims made by 
the complainants i.e. under heading 8471 60 90 and the relevant commitment pursuant to Attachment 
B of the ITA. 
29. The CNEN to heading 8528 41 00 provide for a lengthy list of relevant classification criteria. 
However, the European Communities understands that  the CNEN to heading 8528 41 00 are not in 
themselves challenged under either of the claims. The challenge is only through the mutatis mutandis  
language in the CNEN to heading 8528 51 00. 
30. According to the CNEN to heading 8528 41 00, "monitors of this subheading work with the 
cathode ray tube (CRT) display technology". Thus, in  order to apply the CNEN to other technologies 
mutatis mutandis , it is necessary to distinguish between the t echnical criteria that are relevant only in 
relation to CRT technology. Contrary to what the complainants appear to argue, the words mutatis  WT/DS375/R 
 WT/DS376/R 
 WT/DS377/R 
 Page D-25 
  
  mutandis  do not incorporate all of the CNEN to heading 8528 41 00 into the CNEN to heading 
8528 51 00. This is not a straightforward task although the CNEN do at times distinguish between 
different technologies.  
31. However, to the extent the European Commun ities understands the claims, the complainants 
consider that the specific formulation of two crite ria in the CNEN to heading 8528 41 00 as allegedly 
applied verbatim  under heading 8528 51 00 necessarily leads the European Communities to classify 
some monitors in a different heading than 8528  51 00, which according to the complainants is 
necessarily a dutiable heading. 
32. The European Communities understands this to  be because of the allegedly mandatory 
language in the CNEN to heading 8528 41 00 th at allegedly leaves no discretion to the customs 
authorities when applying the CN. In this cont ext, it should be recalled that the criteria the 
complainants are challenging are provide d in the Explanatory Notes to HS96. 
33. Whether the complainants consider there to be other criteria in the CNEN that lead in their 
view to a breach of Article II of the GATT 1994 remains unclear. It is not clear whether the CNEN are challenged  in the same way under both of the claims i.e. under heading 8471 60 90 and the 
relevant concession pursuant to Attachment B of the ITA. In particular, it is not clear whether the 
CNEN come at all within the scope of the clai m made under the concession pursuant to Attachment B 
of the ITA. 
34. In any event, the European Communities has already demonstrated in its first written 
submission that the allegedly mandatory language  in the CNEN does not preclude the exercise of 
discretion in relation to a monitor identified with a ll of its relevant objective characteristics. Indeed, 
the CNEN are not legally binding despite the co mplainants' attempt to describe them as such. 
According to the established case law of  the European Court of Justice; 
"the Explanatory Notes drafted by the Commission, in respect of the CN, and those 
adopted by the WCO, in respect of the HS, are an important aid for interpreting the scope of the various tariff headings but do not have legally binding force …" 
35. It is also important to clarify the state of EC law following the judgment of the European 
Court of Justice in case C-376/07 Kamino.  Indeed, all complainants refer to the case in their 
submissions. 
36. In Kamino  the European Court of Justice considered  that the CN should be applied on a case-
by-case basis taking into account all the relevant objective characteristics of a given monitor. The 
Court explicitly dealt with the two cr iteria addressed by the complainants.  
37. Even if the view of the complainants on how  the European Communities has applied these 
criteria in concrete cases would be accepted ( quod non ), they can no longer be applied in that way 
under EC law. 
38. In the view of the European Communities th ere is nothing WTO inconsistent in the 
interpretation given by the ECJ in C-376/07 Kamino . However, the European Communities is in the 
process of repealing and/or replacing the relevant CNEN for reasons of clarity. WT/DS375/R 
WT/DS376/R WT/DS377/R 
Page D-26 
  
  3. The classification regulations 
39. Finally, the complainants challenge Commi ssion regulations 634/2005 and 2171/2005 that 
have applied the CN in relation to certain specific monitors. Again, it is unclear whether these 
regulations are challenged in the same way under both of the claims made by the complainants  i.e. 
heading 8471 60 90 and the relevant concession pursuant to Attachment B of the ITA. The 
complainants have not developed their argumentati on in any relevant detail in respect of these 
regulations. 
III. CLAIMS CONCERNING CERTAIN "SET-TOP BOXES WHICH HAVE A 
COMMUNICATION FUNCTION" 
A. C
LAIM ON STBC S UNDER ARTICLE II OF THE GATT  1994 
1. The complainants have not established an "as such" violation 
40. The complainants argue that the European Co mmunities suggests that to succeed with their 
"as such" claims, the complainants are "required to demonstrate that the measures in question result in 
the imposition of duties on every single model  of FPD, STB, or MFM that crosses the EC border". 
This is not correct. The European Communities argues th at the complainants have to establish in this 
respect that the challenged measures necessarily resu lt in inconsistency with WTO law when applied 
to "a given  product model" or " a certain  product or category of products " out of possibly many other 
categories covered by those measures and treated by  the European Communities consistently with its 
obligations. 
41. The disagreement between the parties seems to be  in the fact that in the EC's view the 
category of products with respect to which in consistency has to be shown has to be a certain , duly 
defined category of products. Knowing which products or types of products are at issue allows to 
examine of the totality of objective characteristics of those products (or,  product types) which, in turn, 
allows to determine whether the challenged measures tr eat that category of products consistently with 
WTO law or not. 
42. The complainants attempt to escape this issu e by delineating the category of products by a 
single criterion, which they deem arbitrary.  Clearly , one can define a product category like this. But, 
in the EC's view, explained in this and previous su bmissions, the Panel can hardly rule that the EC's 
treatment of a category including all set top boxes with a hard disk drive or DVD apparatus 
performing a recording or reproducing function (even if they otherwise fulfil the definition of an 
STBC) necessarily results in violation of the EC  commitments. Such a finding would presuppose, in 
the EC's view, that one accepts the complainants ' dubious theory of minimum requirements. In 
contrast, if the Panel finds itself convinced by  the – so far non-existent – arguments by the 
complainants that a certain category of set top boxes within that overall category of all set top boxes which incorporate a device performing a record ing or reproducing functi on (and which otherwise 
fulfil the definition of an STBC) is treated by the European Communities inconsistently with its 
obligations, the Panel can naturally make a finding in that regard. But then one would have to explain 
what that category of products is. In this respect , it should not be forgotten that besides the CN 
Explanatory Note (CN EN), the complainants al so challenged the entire Combined Nomenclature, 
meaning that the combinations of products whic h are potentially at issue is, without any further 
specification, indeed truly endless.  WT/DS375/R 
 WT/DS376/R 
 WT/DS377/R 
 Page D-27 
  
  2. The complainants incorrectly int erpret the narrative description  
43. The explanations provided by the European Communities have shown that even if the 
complainants' approach of focusing solely on the narrative descriptions were a correct way of 
interpreting the concessions in the EC Schedule, it would still fail to support the complainants' 
position with respect to "set top boxes which have a communication function".  
44. The starting point for an interpretation of the narrative description is a correct  text of that 
description. The European Communities is not of the view that one can interpret text "set top boxes 
which have a communication functi on" while using the phrase "set top box with a communication 
function". That does not mean that the complainants  cannot interpret the phrase "set top box with a 
communication function" if they are of the view the relevant concession is in that phrase. But in such 
a case they must be clear about the fact that they are interpreting a language different from that of the 
narrative description of STBCs and that that diffe rent language is provided in a document distinct 
from Attachment B of the ITA or the EC Schedule.  These differences cannot be ignored: each of these 
phrases has not only a different text, but also a distinct  context, in which it is to be understood. This – 
and not so much the fact that "which" and "with" may have a different meaning in itself – is the main reason for which the European Communities insists on using a correct text for interpretation.  
(a) Document G/MA/TAR/RS/74 and its relationship to the narrative description 
45. To be able to asses the legal significance of th at communication, one of course has to analyze 
its text, provided on page 2 of  document G/MA/TAR/RS/74.  
46. The first four paragraphs at page 2 explain the background of the communication, including 
the fact that the European Comm unities created a new tariff line in its nomenclature, 8528 12 91. The 
table included in the third paragraph explains that th at code in the EC's domestic classification covers 
an "Apparatus with a microprocessor-based device incorporating a modem for gaining access to the 
Internet, and having a function of interactive info rmation exchange, capable of receiving televisions 
signals". As is further apparent from the table, th e EC legislator adopting the legislative measure to 
the EC's Combined Nomenclature called these products "Set-top boxes with a communication 
function".  
47. The use of this term – which is not identical  to the narrative description set forth in the EC 
Schedule and the ITA – reflects well the fact that th e description of the apparatus classifiable in CN 
8528 12 91 is not identical  with the narrative description provid ed in the ITA and the EC Schedule 
either (namely, the words "capable of receiving tele visions signals" are added in the EC legislation). 
48. No matter how interesting it may be to compare the two distinct phrases, however, the 
practical significance of such a comparison for the present case is rather limited. This is because no 
particular name or phrase used by the EC legislator  for describing and naming a product in the context 
of adopting EC's own classification measure could be relevant for the interpretation of the scope of a 
tariff concession formulated at the WTO level (and the EC recalls that the complainants argue that it 
is narrative description of STBCs included in th e ITA and the EC Schedule which constitutes the 
concession). As the US correctly stated, referring to the panel in China – Auto Parts  case: "[I]t is 
well-established that a Member's classification law … cannot add to or diminish its WTO tariff 
concessions." 
49. The term "set-top boxes with a communication f unction" would naturally be relevant, had the 
European Communities made it a part of its Schedule. That is not the case, however, as specified in 
the fifth paragraph of the communication. This reflects two facts. First, it confirms that that in 2000, WT/DS375/R 
WT/DS376/R WT/DS377/R 
Page D-28 
  
  just as it had been in 1996 and just as it is now, the European Communities was of the view that the 
CN codes inscribed in its Schedule next to the Attachment B product description matter. Second, it 
shows that the notification neither introduced  a separate  narrative description  into its Schedule nor 
modified  the existing narrative description . In that respect, the text could not have been clearer.  
50. Nonetheless, even if one accepted that  through document G/MA/TAR/RS/74 the narrative 
description  was somehow modified (with the effect that  its scope was enlarged), one still could not 
argue that such a modification meant that the Eu ropean Communities recognized that a distinction 
between "with" and "which have" was without basi s, as the complainants argue. And even less so 
could it be argued that through the 2000 notifica tion the European Commun ities accepted that the 
narrative description was one of setting minimum requirements .  
51. This is not only an issue of substance, it also h as its procedural aspects. This is, in particular, 
because the complainants do not appear to have unifi ed views on this issue. Of course such a split 
position is very comfortable for the multiple complain ants, since no matter where the truth is, at least 
one of them will be correct in the end and, through  the unclear "joint and several" approach all the 
complainants will eventually subscr ibe to that correct view. In co ntrast, the European Communities, 
acting alone, has to spread its efforts and cover th e entire spectrum of the co mplainants' views. In 
such a situation, the EC's call for clarity is more than a call of its defence lawyers for an 
understanding of the complainants' position, it becomes a due process  issue. 
(b) Understanding of terms established from the documents used during the negotiations 
52. The European Communities refers to its first wr itten submission, in which it described certain 
surrounding circumstances established through a number  of documents used in the ITA negotiations. 
In accordance with the guidance provided by the Ap pellate Body, the European Communities is of the 
view that a proper analysis of surrounding circum stances is essential for a correct interpretation.  
53. The complainants seem to dispose summarily of th e EC's arguments in this regard by arguing 
that "the ITA does not have a formal 'negotiating history' ". Irrespective of whether these documents 
as a whole constitute part of the ITA's negotiating history or not, they contain many individual 
statements which, on their own, establish certain  circumstances surrounding and shedding light on the 
use of certain ITA terms by its drafters. What is indisputable is that those statements are highly 
relevant  to the present dispute and cannot be ignored.  
54. The complainants endeavour to downgrade these statements by pointing to the interpretative 
hierarchy established in Articles 31 and 32 VCLT (and,  even then, they argue that they cannot be 
considered as a preparatory work). What the compla inants ignore, however, is that this hierarchy of 
interpretative sources has its sense in a situation wher e different elements of the interpretative analysis 
(text, context, object and purpose, supplementary m eans of interpretation) provide different (or even 
contradictory) meanings. In this case, however, al l the interpretative elemen ts point to the same 
direction, and the application of the hierarchical order of the individual sources thus becomes less 
relevant for a correct outcome of the interpretative analysis.  
(c) Relevance of HS Codes  
55. As the European Communities explained in its first written submission, even if the 
complainants' theory that the EC's (and other ITA parties') concession on STBCs is indeed expressed 
solely in the narrative description of STBCs were correct, one cannot ignore the relevance of the HS 
codes notified by the parties next to that narrativ e description in accordance with paragraph 2 of the 
Annex to the ITA. At the very minimum, these cod es constitute a context for the interpretation of the  WT/DS375/R 
 WT/DS376/R 
 WT/DS377/R 
 Page D-29 
  
  narrative description, since they clearly reflect the understanding  of the product at issue by the party 
which notified those codes at the time.  
56. The European Communities is pleased to see th at the complainants agree with that 
proposition. In addition, however, the complainan ts make the argument that the HS codes do not 
restrict the scope of the concession. The complainan ts point, in this respect, to the headnote, in 
particular its "wherever … classifi ed" language. This argument may or  may not be relevant in the 
overall discussion between the European Communities and the complainants as to whether the EC 
concession is set forth in the narrative description and/or the HS/CN codes notified next to it. 
However, this argument has zero relevance in th e context of the theory that it is the narrative 
description which comprises the EC commitment, wh ich the complainants advance with respect to 
STBCs. One naturally has first to identify and und erstand the content of the narrative description, 
before one is able to say what product is to be  granted a duty-free treatment and benefit from the 
language "whenever … classified".  
57. It follows from the above that the Panel should carefully examine the HS codes that the ITA 
participants notified to WTO with respect to ST BCs. These codes are context and shed considerable 
light on what sort of products the ITA parties (i .e., not only the European Communities) understood to 
be covered by the narrative description in 1996/1997  (and, yet again, in 1999). It is also the 
multilateral nature of this evidence whic h makes clear that it cannot be ignored. 
B. C
LAIM ON STBC S UNDER ARTICLE X OF THE GATT  1994 
58. First, the complainants' key assumption that "the EC did not publish [the CN EN] … for over 
a year after it was approved, and applied it to coll ect the WTO-inconsistent duties even before it was 
published" is simply factually  incorrect (in addition to their err oneous legal characterization of those 
mistaken facts).  
59. Under EC law, the text of a measure has to be finalized, voted on (in all parts in the final 
version by the CCCE) and then adopted by the Commission for a CN EN to exist.  
60. The Community measure, as the complainants portray it, does not exist in the WTO sense 
either. The discussions or votings in the CCCE pertaining to a draft measure simply have no legal or other effect alleged by the complainants. The compla inants attempt to connect certain events to create 
a Community measure. Yet, those events are not connectable in the way complainants argue, and 
what they perceive as a causal link linking certa in facts with a supposed Community measure is 
misunderstanding of the events, as just described. A Community measure  which the complainants 
challenge does not exist, as a matter of fact.  
61. Second, it is also useful to note that the European Communities naturally cannot prevent 
individual Member States from finding a certain interpretation of the Combined Nomenclature 
discussed in the CCCE convincing and from deciding, on their own, to follow such an interpretation.  
However, if an EC Member State indeed decides to change the interpretation of a certain tariff line in 
such a case (leading to a classification of prod ucts different from that followed by that MS 
previously), this change would be a meas ure of that individual Member State.  
62. If this were indeed the compla inants' theory, however, it would raise at least three questions. 
First, does the evidence provided by the complainants, i.e. the three  BTIs issued by French customs 
authorities (all issued on the same day) and the one BTI issued by a Czech customs authority, indeed 
demonstrate the existence of a change  of classification by the customs authorities of these Member 
States? Second, even if the Panel agreed that the complainants dem onstrated the existence of such WT/DS375/R 
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Page D-30 
  
  measures, the next question is whether such meas ures would be properly before the Panel at all. 
Finally, even if such measures were before the Pane l, the third question is whether they would indeed 
fall, given their nature and functioning, within the ambit of Art. X:1 or X:2 GATT. In the EC's view, 
the complainants have not established any of the three points raised above. 
IV. CLAIM CONCERNING CERTAIN "MULTIFUNCTIONAL MACHINES" (MFMS) 
A. ADP
 MFM S         
1. Digital copiers are "photocopying apparatus with an optical system" - MFMs with a 
digital copying function are prima facie  classifiable under HS96 subheading 9009 12 
(a) HS96 heading 9009 
63. The critical issue in deciding whether digital copiers meet the terms of HS96 heading 9009 is 
whether they are "photocopying apparatus". The dic tionary definitions of that term cited by the 
complainants are equally apt to encompass both anal ogue and digital photocopiers. They confirm that 
the defining characteristic of all photocopiers is that they use light in order to produce instant copies 
of an original document.  
(b) HS96 subheading 9009 12   
64. Japan has advanced two arguments in order to  show that digital photocopiers do not follow 
the "indirect process" described in subheading 9009 12.  Both are clearly without merit. The first and 
main argument is purely grammatical, namely th at subheading HS9009 12 uses the terms "image" and 
"copy" in the singular form. But no conclusion can  be drawn from this. In describing a production 
process it is common to use the singular form ev en when such process ca n be used to produce 
simultaneously more than one unit of the same product.  
65. Japan's second argument is based on what it describes, rather confusingly, as being 
simultaneously the "specific" and the "ordinary" me aning of the term "intermediate". According to 
Japan, that term would allude exclusively to an elect rostatic drum or plate. But there is no basis for 
such a narrow reading. The ordinary meaning of "i ntermediate" is "coming or occurring between two 
things in time, place, order, character, etc". The "sp ecific" dictionary meaning of "intermediate" cited 
by Japan does not belong to the field of photocop ying, but rather to the printing machinery falling 
within HS96 8443. Even assuming that the term "i ntermediate" meant "electrostatic drum", the 
undisputable fact is that the digital copiers at issue do incorporate an electrostatic drum.  
66. Japan is reading into the wording of HS96 9009 12 a requirement which is not there: that the 
"original image" must be "reflected" or "projected" onto the "intermediate" and that it must be so 
"directly". Yet what HS 9009 12 actually says is that the "original image" must be "reproduced" (and not "reflected" or "projected") onto the "copy" (and not onto the "intermediate") and that this must be 
done "via an intermediate". Even if  the terms "via an intermediate" ha d to be read as meaning "via an 
electrostatic drum", this requirement would be sa tisfied provided that the image is reproduced onto 
the copy with the intervention of an electrostatic drum.   
(c) The Explanatory Note to HS96 heading 9009 
67. As the complainants cannot show that digital c opiers fail to meet the terms of either heading 
9009 or subheading 9009 12, their claim becomes dependant on a narrow reading of a non-binding and largely obsolete Explanatory Note. If that note does not mention digital copiers it is simply  WT/DS375/R 
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  because it was drafted before digital copiers came into existence. Although the note does not mention 
expressly digital copiers, it do es not exclude them either. 
68. In 2002 Japan made a proposal to amend the Explanatory Note to HS96 9009 in order to 
provide that the image of the document must be projected "directly" onto the light-sensitive surface. 
This proposal, however, was not accepted. 
69. The United States has argued that a CCD is not a "light-sensitive surface" within the meaning 
of the Explanatory Note. But the Explanatory Note to the HS2007 describes a CCD as a "photosensitive surface" when defining the notion of digital copier. 
2. The classification practice of the complainants  and of the third parties supports the EC's 
position 
70. The evidence made available to the Panel shows that, prior to the conclusion of the ITA, all 
WTO members, and not just the European Communities, classified digital copiers under HS96 9009: (1) TPKM has recognised  that, both before and afte r the conclusion of the ITA, it classified all
 digital 
copiers as photocopying apparatus under HS96 9009; (2 ) the United States has recognised that it was 
not until 2002 that the US customs authorities ruled, for the first time, that digital copiers were not 
photocopying apparatus covered by HS96 9009; (3) Japan professes not to know now how or where 
its authorities classified digital copiers prior to the conclusion of the ITA or, indeed, at any point in 
time prior to the introduction of the HS2007. But in December 1997 Japan made a proposal to the ITA 
Committee with a view to including HS96 9009 12 with in the scope of the ITA, so as to cover digital 
copiers. This suggests that, at that time, Japan t ook the view that digital copiers fell within that 
subheading; (4) Singapore has confirmed that, like TPKM, it classified all  digital copiers under HS96 
9009 both before and after the conclusion of the ITA;  (5) none of the other third parties which have 
intervened in support of the complainants has allege d, let alone proved, that it classified any digital 
copiers under any HS96 heading other than 9009, either  before or at any time after the conclusion of 
the ITA.  
71. The evidence made available to the Panel also indicates that, at the time of the conclusion of 
the ITA, none of the complainants or of th e third parties was of the view that all  ADP MFMs with a 
digital copying function had to be classified n ecessarily under HS96 8471:  (1) TPKM has recognised 
that, until the introduction of the HS 2007, it cl assified ADP MFMs with a copying function under 
HS96 9009 where, on the basis of a "case-by-case examination", it was determined that no function 
was more "important" than the copying function; (2) the United States has confirmed that until 2002 
ADP MFMs with a copyin g function were deemed prima facie  classifiable under both HS96 8471 and 
HS96 9009 and their classification was determined in acco rdance with GIR 3(b); (3) Japan says that it 
ignores how and where its authorities classified ADP MF Ms with a copying function either before or 
after the conclusion of the ITA;  (4) until the introduction of the HS2007, in Singapore ADP MFMs 
were deemed prima facie  classifiable under both HS96 8471 and HS96 9009. Furthermore, Singapore 
has admitted that certain ADP MFMs may have to  be classified under HS96 9009 pursuant to GIR3; 
(5) no other third party has provided any evidence showing that it classified all ADP MFMs with a 
copying function under HS96 8471, either befo re or after the conclusion of the ITA.  
3. ADP MFMs cannot be classified directly under HS96 subheading 8471 60 unless they 
are used "solely or principally" with a computer 
72. The thrust of the complainants' argument is th at the ordinary meaning of the terms "output 
unit" is so unmistakably clear that the Panel can  and must conclude, on that basis alone, that all  ADP 
MFMs are covered by the concession for HS96 subh eading 8471 60. The complainants' position is WT/DS375/R 
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  wrong as a matter of law because it disregards Article 31 of the Vienna Convention . The context of a 
treaty provision is not a subsidiary means of interp retation. The HS96 is part of the context for the 
interpretation of the Members' schedules. Note 5(B) to  chapter 84 is an integral part of the HS96 and, 
therefore, relevant context. Japan has recognised th at Note 5 to Chapter 84 "speaks directly to the 
interpretative question at hand" and "must be given si gnificant interpretative weight." It is, therefore, 
incomprehensible that, at the same time, Japan continues to argue that the HS is "of minimum 
practical value" in this dispute. 
73. Note 5(B) to Chapter 84 makes it clear that a "unit" may not be classified under subheading 
8471 60 unless it is used "solely or principally" with an ADP system. While denying the relevance of 
that Note, Japan asserts that printing is the "princ ipal" or even the "predominant" function of all ADP 
MFMs. Nevertheless, Japan provides no evidence or  argument in order to support such assertions. 
Instead, Japan refers to the ECJ's Kip judgement as confirming that pr inting is always the principal 
function. But the ECJ said nothing of the sort. Japan has quoted the ECJ as saying that ADP-MFMs " 
… are likely  to be of a kind used principally in an automatic data-processing system".  But the quoted 
text is just a translation. What the French origin al version says is that "… lesdits appareils sont 
susceptibles  d'appartenir au type utilisé principalement dans un système automatique de traitement de 
l'information." 
74. Japan goes on to argue that Note 5(B)(a) does not apply by virtue of Note 5(D). But it is 
rather Note 5(D) which is clearly inapplicable  in this case, because ADP MFMs are not mere 
"printers". They are multifunctional machines.  
B. N
ON-ADP  MFM S 
75. In its oral statement, Japan continues to glo ss over the undisputable fact that the Non-ADP 
MFMs at issue, in addition to having a facsimile  capability, also have a copying capability.  Japan 
also contends that digital copiers do not fall within HS 9009. But, even if it were true that digital 
copiers are not photocopiers, it would not follow that all  non-ADP MFMs must be classified under 
HS96 8517 21. On the assumption that digital copiers are not photocopiers, they would have to be 
classified under HS96 8472 90. Accordingly, on  the same assumption, non-ADP MFMs would fall 
prima facie  within both HS96 8517 21 and HS96 8472 90 and their classification would have to be 
determined, on a case-by-case basis, pursuant to  Note 3 to Section XVI of the HS96. 
76. Once again, the practice of the complainants a nd of third parties, as evidenced by their 
responses to the EC's questions,  supports the EC 's position:  (1) TPKM has recognised that, both 
prior to the conclusion of the ITA and subsequent ly until the introduction of the HS2007, it classified 
non-ADP MFMs under HS 9009 "as long as it was de termined that no other function was more 
important than the copying function";  (2) the United States has openly admitted that not all  non-ADP 
MFMs which can both copy and fax are to be classified under HS96 subheading 8517 21. The United 
States has further explained that, until 2002, its customs authorities classified non-ADP MFMs on a 
case-by-case basis pursuant to GIR 3(b). Furthermore, starting in 2002, the US authorities classified in 
many occasions non-ADP MFMs under HS8472 90, rath er than under HS8517 21, pursuant to Note 3 
to Section XVI of the HS96, on the grounds that the copying function, and not the fax function, was the more "important";  (3) as usual, Japan prete nds not to know how or where non-ADP MFMs were 
classified by its customs authorities at any point in time prior to the introduction of the HS 2007;  (4)  
Singapore has recognised that the MFMs at issue may have to be classified pursuant to GIR3;  (5) no 
other third party has alleged, let alone proved, that it classified all
 non-ADP MFMs under HS 8517 21 
either prior to the conclusion of the ITA or at any time until the introduction of the HS 2007.    WT/DS375/R 
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  V. SPECIFIC COMMENTS ON THE COMPLAINANTS RESPONSES TO PANEL'S 
QUESTIONS 
77. In this Section the European Communities addre sses some specific elements in the replies of 
the complainants to the first set of questions from the Panel. No additional comments are provided 
where the EC's responses to the same questions alre ady anticipate the complainants' arguments. In any 
event, the fact that the Eur opean Communities does not comment on all of the responses from the 
complainants does not necessarily mean that it agrees with their position. 
 
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Page D-34 
  
  ANNEX D–4 
 
EXECUTIVE SUMMARY OF THE ORAL STATEMENT BY THE EUROPEAN 
COMMUNITITES AT THE SECOND SUBSTANTIVE MEETING 
 
I. THE CLAIM CONCERNING CERTAIN "FLAT PANEL DISPLAY DEVICES" 
A. S
TILL NO PRIMA FACIE CASE  
1. The European Communities has already explained at length in previous submissions why the 
complainants have failed to present a prima facie case as regards their claim on "certain flat panel 
display devices".  There are many reasons for this but the main new element is  that the complainants' 
respective positions are increasingly diverging.  
2. It was clear from the outset that the claims were not the same between all complainants.  
However, the differences are far more important than  what initially seemed.  First, the complainants 
have so far clarified that they are making two separat e claims in relation to "certain flat panel display 
devices".  These two claims are based on two separate concessions.  However, the concessions are identified differently by different complainants.  Second, the European Communities insists that the 
complainants have failed to identify the products at i ssue in this dispute in relation to "certain flat 
panel display devices".  
3. The complainants hardly even begin to explai n how the measures define the products because 
they are not even able to be clear which headings in  the CN are relevant to their case.  The European 
Communities still does not know whether headings on vi deo monitors and televisions are within the 
scope of the case.  
4. In this respect it is important to recall that in EC – Computer Equipment  the Appellate Body 
was interpreting Article 6.2 of the DSU. In the case before us the situation is different. The issue is 
whether the complainants have made a prima f acie case and the consequences that follow from the 
failure to do so, including on the burden of proof.  The European Communities has the right to know with sufficient precision, what types of products th e complainants claim should be duty free in order 
to be able to rebut their arguments.  The Europ ean Communities has also the right to know precisely 
which headings of the CN are within the scope of ea ch of the two claims.  It is simply not enough to 
point to the CN generally because it covers a ll products.  And it is certainly not good enough to 
identify certain CN headings and certain products only to contradict such identification in the next or 
even in the same submission to the Panel. 
5. The complainants insist that they are making two claims that are not identical in scope.  They 
must therefore explain precisely what the difference between the claims is.  
6. For instance, Japan identified the CN headings on video mon itors and televisions to be 
relevant for the purposes of the claim on certain flat panel display devices.  In its second written 
submission Japan first considers televisions as " non-ITA products" only to contradict this position 
later in the same submission.  The confusion is co mplete even without the added issue of how these 
conflicting positions relate to the two separate claims. 
7. In its previous submissions TPK M in turn appeared to consid er that televisions are not 
covered by the ITA because it did not identify the rele vant CN headings in its  reply to question 66 of 
the Panel.  In its second written submission TPKM firs t considers that televisions are not covered but 
insists later that televisions are in fact covered by the ITA concessions.  TPKM goes even as far as  WT/DS375/R 
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  calling the most relevant CN h eading 8471 60 90 in this case a "residual category covering all 
input/output units for ADP machines not specifically me ntioned in previous CN codes".  One is left 
completely perplexed.  If CN heading 8471 60 90 is a "residual category" what does it mean for the 
second claim based on this heading? 
8. For its part the United States appears to concede that televisions are not covered by the ITA 
concessions.  Yet, the US insists that the definition of monitors in Attachment B of the ITA, including 
the carve-out on televisions, is limited to the CRT te chnology.  This is simply logically inconsistent 
and confusing.  If televisions gene rally are not covered by the ITA concessions because of the explicit 
carve-out in the definition of monitors, that defin ition cannot be limited to monitors and televisions 
using the CRT technology.  It is equally not logically  consistent to insist that any monitor that is 
merely capable of functioning with an ADP m achine is covered by the ITA concessions only to 
concede that televisions generally are not covered by  those concessions.  Modern flat panel televisions 
are manifestly capable of functioning with an ADP machine.  The United Stat es accuses the European 
Communities of being illogical. In the light of the US arguments, the European Communities can 
therefore only assume that the United States uses a fundamentally different standard for what it 
considers to be logical. 
9. Japan on the other hand insists in its second wr itten submission that the case is very simple. 
According to Japan, one would only need to look at the ordinary meaning, or the "language" of the 
relevant definition.  This definition is apparently so crystal clear that one only needs to read it. Indeed, 
the case appears to be limited to interpreting the wo rd "for" in this definition as TPKM suggests.  Or, 
as Japan puts it: "FPD devices that are capable of operating with a computer will by definition be 
"for" the display of data from an ADP machine".  A pparently it is just absolutely clear that the word 
"for" must mean anything that is merely capable of functioning with an ADP machine.  Nothing else 
appears relevant for adjudicating the case because everything else is allegedly just "irrelevant", 
including the HS, the ITA, the negotiating history,  the submissions of ITA parties in the ITA II 
negotiations etc.  Even the size of a mon itor is allegedly completely irrelevant.  
10. To the extent the European Communities is able to understand the complainants' overly 
simplistic assertions and arguments , they just do not add up under a serious legal analysis based on 
customary rules of interpretation of public international law. 
B. M
ANIFESTLY INCORRECT FACTUAL ASSERTIONS  
11. The European Communities is increasingly attacked on the basis of manifestly confusing and, 
at times, simply counterfactual or circular statem ents.  The European Communities already pointed to 
the evidence submitted by the United States itself a ccording to which the DVI specification "provides 
a high-speed digital connection for visual data types that is display technology independent ".  Japan 
changed its position and states that "the mere presence of a DVI connector in a flat panel display 
monitor does not by itself necessarily mean the FPD will be capable of operating with a computer". 
The United States boldly states that "virtually no consumer electronics devices are today equipped with DVI".  It is hardly surprising that the US does not provide any evidence to support this rather 
startling assertion. Indeed they cannot because it is si mply counterfactual and can be proven to be so 
in less than 10 seconds.  It suffices to do an inte rnet product search.  In its second written submission 
the United States also claims that it has provided an example of a flat panel display device with a DVI 
interface that according to its operating manual exhi bited as Exhibit US-78 allegedly "cannot operate 
without [a computer]".  Again, it is no surprise that the United States does not provide the precise 
reference to this alleged statement in th e operating manual because that statement is not in the 
operating manual. In fact, quite the contrary.  WT/DS375/R 
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  C. M
ANIFESTLY INCORRECT ASSERTIONS ABOUT EC LAW  
12. The complainants go as far as claiming they know  EC law better than the European Court of 
Justice.  The complainants are manifestly unable to  demonstrate anything in the CN itself that could 
possibly be incompatible with Article II of the GATT 1994.  W ith regard to the Commission 
regulations listed in the Panel request, the complainan ts have not really even tried to argue their case 
although in their second written submissions some fi rst attempts are made.  When examining the 
regulations, the US remarkably even concedes that the regulations do not provide for a mandatory rule 
in respect of the DVI interface. In reality one is only left with the CNEN.  However, presumably the 
complainants are not happy with this consequen ce of the way they are arguing the case because they 
desperately try to elevate the status  of the CNEN to something more th an they are within the EC legal 
order. In doing so, they are forced to blatantly disagree with the European Court of Justice on the 
interpretation of EC law.  In addition they are forced to disagree not only between  but remarkably 
with themselves.  
13. It is crystal clear that under EC law the CNEN are fundamentally different from a regulation. 
Indeed, the CNEN have even less importance than the Explanatory Notes to the HS, the HSEN.  The 
arguments of the complainants are simply circular. If an instrument is not legally binding, it cannot be 
mandatory.  If an instrument may be taken into account by the customs authorities it by definition 
cannot be mandatory.  A sentence or two in a non-bi nding instrument cannot alter the very nature of 
the instrument itself even if those sentences were to be written in a way that, if read in isolation and 
out of context, would give the impression of a mandatory rule.  
14. Item 1 of Commission regulation 2171/2005 clearly provides for duty free treatment for an 
LCD monitor that is capable of "receiving signals from a source other than an automatic data-
processing machine".  Indeed, TPKM tries to limit the damage by claiming that "item 1 of Regulation …2171/2005 is not subject to this dispute".  The complainants cannot have it both ways: to include 
within their claim only those parts of the measures they think might support their argument and ignore 
those that do not.  
15. The complainants are even distorting the Kamino  judgment and the whole system of 
preliminary rulings under Article 234 of the EC Treaty.  Further, in Kamino,  the Court explicitly dealt 
with the two relevant elements in the CNEN.  First w ith regard to the first sentence of point 1 of Part 
One, Chapter I(D), and, second, with regard to th e number and type of sockets with which monitors 
are equipped.  It is simply quite remarkab le that TPKM explicitly argues that the "the Kamino  case 
did not deal expressly with the CNEN" when the contra ry is so manifestly the case.  It is equally 
simply unbelievable that TPKM asserts time and ti me again that EC customs authorities would not 
apply the CN as interpreted by the highest court in  the EC.  In fact, TPKM is asking the Panel to 
decide this case on the manifestly unproven premise that the customs authorities of EC Member States 
will always deliberately and necessarily violate EC law.  
16. The two elements in the CNEN the complainants  criticise simply cannot be applied in the way 
the complainants claim when applying the CN following the judgment of the Court.  If they ever were 
interpreted in such a way in the p ast, the European Court of Justice is very clear that this was not 
correct and national courts are obliged to follow the judgment even in relation to past imports if the 
facts are similar as in Kamino .  If there ever was a need for a reme dy, it has already been provided for 
in law. What is left is to adju st the CNEN to be in line with th e ECJ's interpretation.  Although not a 
legal requirement under EC law, this is essentially a fo rmality in the interest of uniformity, clarity and 
legal certainty in order to avoid that customs officials could erroneously  use the CNEN as guidance 
in the way criticised by the Court.  WT/DS375/R 
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  17. Finally, the European Communities recalls that  it has since 2005 suspended the collection of 
duties on most flat panel monitors including on m onitors on which duties would manifestly be due.  
II. THE CLAIM CONCERNING CERTAIN STBCS UNDER ARTICLE II OF THE 
GATT 1994  
A. I
N  SEARCH OF A MISSING CONCESSION  
18. The complainants repeatedly say that the narrative description is dispositive of this dispute.  It 
is therefore understandable that they are looking for a narrative description  meeting their objectives. 
But what should we understand under a " description contained in the four individual tariff lines "? 
What if the European Communities decided to call one of these subheadings, e.g., the one it notified 
in 2000, simply "Other"?  Would that be a valid  narrative description of a commitment to the US?  
Clearly not.  That does not mean that the word "Other", the phrase "Set-top boxes with a 
communication function" or any other word or phrase used in the descriptions of the subheadings is 
without any meaning.  Such a word or phrase ca n naturally have a very precise meaning if one 
considers it together with the HS/CN code next to it.  But that requires the employment of customs 
classification rules. TPKM does not refer to the " description contained in the four individual tariff 
lines" at all.  
B. THE REQUIREMENTS OF AN "AS SUCH " CLAIM AND OTHER RED HERRINGS  
19. With respect to the complainan ts' "as such" claims, the Europ ean Communities is of the view 
that to be able to say that a certain product model or a certain category of products is treated by the 
European Communities inconsistently with its obligati ons, the complainants have to first explain what 
that product model or a category of products is.  Only if one knows what products or product 
categories are at issue, one can determine – on the basis of an examination of the totality of the 
objective characteristics of those products – whethe r the European Communities treats those products 
consistently with its obligations or not.  The comp lainants nonetheless suggest that one can make such 
a determination simply on the basis of (one of) the criteria referred to in the challenged EC measures. 
This is wrong.  
20. First, the challenged CN Explanatory note do es not employ the one or more – allegedly 
arbitrary – criteria in the way the complainants argue it does.  Second, even if the challenged 
Explanatory note were functioning in the way the complainants argue, it would not mean that the 
criteria which it refers to were arbitrary.  Again, these are classification criteria (and not tariff 
treatment criteria).  The complainants argue that their case is dependent on the narrative description . 
The HS/CN codes notified next to the na rrative description are in their view " irrelevant ".  In such a 
situation, it is a schizophrenic approach that th e complainants still focus on establishing that the 
classification  criteria which are set forth in the Explanatory note (or elsewhere) are wrong.  Third, the 
theory of minimum requirements , which is at the core of the co mplainants' claim, deeply flawed. 
21. The US said: " [T]he ITA covers products, not 'functions'  ". There is indeed no basis for 
arguing that anything, any set-top box which also happens to have a communication function, is 
covered by the ITA simply because it has the communi cation function.  The US has made that quite 
clear. WT/DS375/R 
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Page D-38 
  
  C. STB
S WHICH INCORPORATE A DEVICE PERFORMING A RECORDING OR REPRODUCING 
FUNCTION  
22. Only apparatus which fulfils the requireme nts of heading 8521 can be classified in 
subheading 8521 90 00.  This is also specifically recognized in the CN Explanatory note to 
subheading 8521 90 00 which talks about a rather speci fic category of products, i.e. a category with 
specific features, such as the cap acity to receive television signals.  This description reflects a 
category of products which are currently present on th e market and which primarily serve to record 
and reproduce movies and other TV programs.  Face d with this classification issue, the US makes 
some rather remarkable statements, which, however , have nothing to do with classification and are, 
frankly, also at odds with the technological reality.  
23. In this respect, the US also tak es issue with the product referred to in Exhibit EC-44.  In its 
recent submissions, the US has submitted a couple of new exhibits pertaining to this product.  These materials are worth a particularly close look be fore one takes the information which the US quotes 
from them for granted.  The European Communities does not deny that these products also contain 
technology allowing for a communication function.  But this function is clearly ancillary to its recording function.  This product is a digital video recorder. 
24. Also in terms of price, the STBC product fits at least twice in the DVR product. One has to 
ask what inside of the product is so valuable, what do the consumers pay the extra for?  It is also 
important to understand that these issues are not irre levant for the customs classification of a product 
either.  As the ECJ stated, "the intended use of  a product may constitute an objective criterion for 
classification if it is inherent to the product, and th at inherent character must be capable of being 
assessed on the basis of the product's objective characteristics and properties." 
D. S
ET-TOP BOXES WHICH DO NOT INCORPORATE MODEMS  
25. In its second written submission, the US stated  that: "[I]ndeed, at the time the ITA was 
concluded, the term "modem" was understood to apply to a range of  modem devices, including digital 
devices, such as ISDN and LAN modems."  In its submissions in the EC – Computer Equipment  case, 
which is highly relevant among other things because of its timing, the United States stated that "[T]he principal types of LANs are Ethernet, Token Ring and FDDI" and that "Modems are not LAN 
equipment".   
26. The fact that modems are different from IS DN technology can be also demonstrated on 
excerpts from a book by Mr. O'Driscoll, to which th e complainants themselves refer, as well on the 
definition of "modem" in the McGraw-Hill Dicti onary of Scientific and Technical Terms. 
27. By asserting that Ethernet, WLAN and ISDN technologies are modems, it is the 
complainants, and not the European Communities, w ho read words into the na rrative description that 
are not there.  Given the overall acceptance of what the term "modem" means and meant at the time of 
conclusion of the ITA, it is highly unreasonable – to say the least – to assume that the drafters of the 
ITA relied on that word to cover ISDN, Ethernet  or WLAN.  Given the fundamental differences 
between the modem and these three technologies, and the fact that the ITA was not meant to be over-
inclusive, it also cannot be argued that the term modem can somehow be interpreted in a liberalizing 
and forward looking way to ultimately include the other three technologies.   WT/DS375/R 
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  III. THE CLAIM ON STBCS UNDER ARTICLE X OF THE GATT 1994 
28. First, the complainants continue to portray the functioning of the EC customs system in a 
misleading way.  The principal point which the comp lainants misunderstand is that ECJ case law and 
other statements only relate to CN EN which are existing , i.e., to Explanatory notes which have been 
duly adopted and published by the European Communities.  They do not and cannot  relate to mere 
drafts (even less so to intermediate drafts), discussions, Member States' votes or Customs Code Committee opinions delivered in the management pr ocedure.  These events simply do not have any 
legal effect on the interpretation and application of the CN.  
29. Second, as a matter of general principle a preparatory act or a mere draft of a measure which 
has not yet been adopted cannot be made subject to the requirements of Article X:1 and X:2. As 
explained, the discussion and vote in the Committee serves merely to fulfil one of the procedural 
requirements set forth in the so-called "Comitology decision".  
30. Further, the question in this case seems to be wh ether, in this specific case before the Panel, 
there was anything more than a mere preparatory act , i.e., any further relevant factual circumstances 
suggesting that there is a measure in the sense of Ar ticle X:2  of the GATT 1994.  In this respect, the 
statements by the Chairman of the Customs Code  Committee and certain BTIs pointed out by the 
complainants cannot support their claim.  
31. Hence, there is no Community measure in th e sense of Art. X:2 before the Panel.  The 
complainants have not brought any claim under Article X:3(a). 
IV.  THE CLAIM CONCERNING CERTAIN "MULTIFUNCTIONAL MACHINES" 
(MFMS) 
A. P
RODUCTS IN DISPUTE  
32. In its second written submission TPKM has alleged,  for the first time, that its claim also 
covers "ADP MFMs which perform  a scanning and a copying functi on but not a facsimile function" 
and which, according to TPKM, would be classifiable   under CN 8443 32 91. This additional claim is 
outside the Panel's terms of reference.  The m achines described by TPKM are not covered by the 
definition of 'MFM" made by the complainants in the panel request.  Furthermore, while the panel 
request alludes expressly to the tariff treatment  provided under CN 8443 31 91, it makes no reference 
to CN 8443 32 91.  
B. ADP  MFM S         
1. HS96 heading 9009 
33. The complainants argue that digital copiers ar e not "photocopying" apparatus because they do 
not use light to produce a copy, but rather to "coll ect digital data". But this argument is wrong on two 
accounts.  
34. First, because the digital copiers at issue use light for two different purposes.  First, a source 
of light projects the image of the original document onto the photo-sensitive surface of a scanning 
device, which converts it into electrical signals.  Se condly, those signals are used to guide another 
source of light (a laser beam), which recreates the image onto another photo-sensitive surface (the 
electrostatic drum).    WT/DS375/R 
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  35. In addition, the complainants' argument assumes that  the "collection of digital data" is not part 
of the copying process and, ultimately, that "digital copying" is not a form of "copying", but just a 
succession of scanning and printing.  This argument is specious.  To be sure, digital copying involves 
the use of the print engine.  Bu t it differs from the printing function in that it is performed 
autonomously from an ADP system.  This difference is of crucial importance, because the use of an 
ADP system is the defining characteristic of all the "output units" falling within HS96 8471 60.  That digital copying is a separate and distinct function is confirmed by the existence of single function 
(stand-alone) digital copiers.  In addition, it is  beyond doubt that manufacturers and users regard 
copying as a separate and distinct function from pr inting and scanning.  Furthermore, in many cases 
the digital copying function is marketed as the "basic"  function, with the other functions being offered 
as mere "options". Indeed, that digital copying is a distinct function has been admitted by the 
complainants themselves in their own definiti on of "MFM" included in the panel request.  
36. The United States argues that digital copiers ar e not "photocopying apparatus" because they 
do not incorporate an "optical system". But digital copiers incorporate not just one, but two different 
optical systems.  Japan does not contest the obvious fact that digital copiers incorporate an optical 
system. But it argues that it is not used for making copies.  Again, however, this argument is premised on the implausible proposition that the collection of di gital data is not part of  the copying process and 
that, ultimately, digital copying is not "copying" at all.  
2. HS96 subheading 9009 12   
37. The complainants also argue that digital copiers are not "photocopying apparatus" because 
they do not follow the "indirect process" describ ed in HS96 subheading 9009 12.  However, in 
making this argument the complainants are reading into that subheading a series of narrowly defined 
requirements which, quite simply, are not there.  Wh at that subheading actually says is, simply, that 
the "original image" must be "reproduced" (and not "reflected" or "projected") onto the "copy" (and 
not onto the "electrostatic drum"); and that this must be done "via an intermediate".  
38. Even if the terms "via an intermediate" ha d to be read, notwithstanding their ordinary 
meaning, as meaning "via an electrostatic drum", this requirement would be satisfied as long as the 
image is reproduced onto the copy w ith the intervention of an electrostatic drum.  This is indeed the 
case of all digital copiers using an electrostatic engine. 
3. The Explanatory Note to HS96 heading 9009 
39. The complainants have failed to show that digi tal copiers do not meet the terms of either 
heading 9009 or subheading 9009 12.  As a result, their claim is entirely dependant on the mere fact 
that digital copiers are not mentioned expressly in a non-binding Explanatory Note to HS96 heading 9009.  However, if that Explanatory No te does not mention digital copiers it is simply 
because it was drafted before digital copiers came into existence.  Furthermore, although the 
Explanatory Note does not menti on expressly digital copiers, it does not exclude them either. 
4. Notes 5(B) and 5(D) to Chapter 84 of the HS96 
40. When an MFM is used for printing data receive d from an ADP machine, it functions as an 
"output unit". On the other hand, when an MFM ma kes copies, it does no use the ADP system at all 
and, therefore, does not operate as an "output unit".  Rather it operates as a "photocopying apparatus". Since the MFMs at issue are caught prima facie by the "ordinary meaning" of two different 
concessions, each covering a different HS96 subheading, it is crucial to take the context into account. 
In turn, the most relevant contextual element is No te 5(B) to Chapter 84, because that note is meant to  WT/DS375/R 
 WT/DS376/R 
 WT/DS377/R 
 Page D-41 
  
  address specifically the type of situation before the Panel.  Indeed, letter (a) of Note 5(B) makes it 
clear that a "unit" may not be classified under HS 96 subheading 8471 60 unless it is used "solely or 
principally" with an ADP system.  
41. Japan argues that Note 5(B)(a) does not apply in this case by virtue of Note 5(D). But it is 
rather Note 5(D) which is inapplicable. MFMs are not mere "printers".  They are multifunctional 
machines, which have other functions, such as copyi ng or faxing, besides printing.  Japan concludes 
that MFMs must be deemed "printers" for purposes of  Note 5(D) because their "principal function" is 
printing.  The EC disagrees. Note 5(D) provides a na rrow exception to Note 5(B)(a).  As such, it must 
be interpreted strictly.  Any machines not expressly mentioned in Note 5(D) remain subject to the 
general rule of Note 5(B)(a).   
42. The EC agrees that, as the ECJ held in Kip, pursuant to Note 5(B)(a) ADP MFMs must be 
classified directly under HS96 8471 60 and granted duty free treatment, if the copying function, which 
does not involve the "use of an ADP system", is of secondary importance in relation to other 
functions, which do involve the "use of an ADP system", such as printing.  In order to determine 
whether the copying function is secondary, it is n ecessary to conduct a case-by-case examination of 
the objective characteristics of each model of MFM.  In contrast, Japan's position is that it must be 
assumed a priori  that printing is always and necessarily th e "principal" function of any ADP MFM, 
irrespective of the specific objective characteristi cs of each model of ADP MFM.  Japan has put 
forward three types of arguments in support of its  position that printing is always the "principal" 
function.  All of them are without merit. 
43. The first argument is that what Japan calls the "p rint unit" or the "print module" is the "most 
important" component.  However, most of the printi ng components, including in particular the print 
engine, are themselves multifunctional.  Thus, from th e mere fact that the printing components are the 
"most important" it does not follow that the printing function is the most important. 
44. Japan's second argument is that the copying func tion is "incidental" to the other functions.  
This is, once again, the same implausible argument to the effect that "digital copying" is not really 
"copying".  Furthermore, even if this argument we re correct, it would be of no use to Japan in relation 
to Note 5(B)(a), because it is beyond dispute that di gital copying, regardless of  whether it is a distinct 
"function", does not involve "the use of an ADP sy stem".  Hence Japan's gymnastics to avoid the 
application of Note 5(B)(a) and to read a "pri ncipal function" test into Note 5(D).    
45. Japan's third argument is that there is "empiri cal evidence" that the printing function is the 
"most used function".  Such evidence consists excl usively of a self-styled "survey" supplied by the 
United States.  But the so-called "survey" is just a power point presentation, without a proper 
explanation of either the meaning of the terms used or the methodology followed and without any 
indication of the margin of error.  The number of respondents is very small:  [just 200].  Besides, we 
do not know how they were selected, except that [t hey are all US companies].  In any event, the 
"survey" does not really support Japan's position.  
5. GIR 3(b) of the HS96 
46. The architecture and design of the MFMs at i ssue may vary considerably from one model to 
another, depending on the manufacturer, the func tions of each model and the specific features and 
capabilities of each function.  This makes the casual u se of vague terms such as "print unit" or "print 
module", without any further precision, virtually meaningless. WT/DS375/R 
WT/DS376/R WT/DS377/R 
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  47. A basic ADP MFM with the functions of copyin g and printing consists essentially of three 
types of components: a print engine; a scanner; a nd various electronic components.  The electronic 
components ensure the interface between the print engine, the scanner and the ADP machine to which 
the MFM is connected and control the operation of  the different functions of the MFM.  The 
electronic components may fall within three subcateg ories: electronic components used when printing 
data from the ADP; electronic components used when operating the MFM autonomously from the ADP machine for making copies; and electronic components used for both copying and printing.  In practice, the electronic components may appear in ve ry different configurations within the MFM.  
48. Japan's position appears to be that, since the print engine cannot operate alone, it must be 
grouped together with the electronic components used for printing data received from the ADP 
machine.  However, there is no good reason why the print engine should be grouped with those 
electronic components, rather than with the elect ronic components used for operating autonomously 
the MFM in order to make copies.  Furthermore, by  Japan's own flawed logic, one could as well argue 
that, since in the MFMs with the functions of prin ting and copying, neither the scanner nor the print 
engine can be operated without certain electronic components, all such three components must be 
grouped together into a single "functional unit".  The previous discussion evidences that requiring, as 
Japan does, that the "component" which confers th e "essential character" for the purposes of GIR 3(b) 
must be, in itself, a "functional unit" capable of " operating alone", leads necessarily to various, and 
conflicting, possible definitions of that "component" and, ultimately, renders GIR 3(b) impossible to 
apply.  This is so because many of the components of an MFM, including in particular the "print 
engine", are themselves multifunctional. 
6. The classification practice of the parties and third parties   
49. Japan is wrong when it says that the EC's own cl assification practice is irrelevant because that 
practice is the subject of this dispute.  The present dispute is about the tariff treatment currently given 
by the EC to certain products. It is not about the EC 's classification practice prior to the conclusion of 
the ITA, which is what the EC is invoking.  The Appellate Body has made it clear that the classification practice of the importing country may be not only relevant, but indeed "of great importance"..   
50. Japan makes much of the fact that MFMs with  a digital copying function were already in 
existence at the time of the conclusion of the ITA.  Japan argues that, because such products existed in 
1996, the EC must have been aware that they we re covered by the concession for HS96 8471 60.  But 
it is obvious that one thing does not follow from the other. Indeed, as shown by the EC, the actual classification practice of the parties and third par ties around 1996 contradicts Japan's assumption.  
7. The negotiating history 
51. The EC finds it truly remarkable that, while denying any interpretative value to negotiating 
documents signed by a high ranking US official, the United States appears to consider as most 
authoritative an article co-written by two officials of the OECD in their own personal capacity.  The 
article in question provides a useful overview of the negotiating process. But the authors, not being 
experts in customs classification, have made mistak es when trying to decipher the complex details of 
the ITA's product coverage.  
52. The United States appears to concede that the EC sought the inclusion of digital copiers in the 
ITA and that the United States opposed such inclus ion.  But why would the EC have made any 
concession to the United States in order to secure duty free treatment for the products at issue in this  WT/DS375/R 
 WT/DS376/R 
 WT/DS377/R 
 Page D-43 
  
  dispute and, immediately after having achieved that  objective, pretend that, in fact, those products 
were not covered by the ITA?  
8. Non-ADP MFMs 
53. In its second written submission Japan has fina lly acknowledged, for the first time in this 
dispute, that, in addition to a fax function, these m achines have also a copying function.  Nevertheless, 
Japan seeks to play down the importance of th e copying function by describing it as merely 
"incidental".  It is, of course, correct that the copying function shares some components with the fax 
function.  But this does not mean that the fax function is always the "essential" function and the 
copying function purely "incidental".  As shown by the EC, the copying performance of some of the 
machines at issue is similar or higher than that of cer tain stand-alone digital copiers.  Furthermore, in 
some cases the copying function is marketed as th e "basic" function and the fax function as a mere 
"option" which can be added at a relatively low cost.  
54. In response to a question from the EC, the United States has conceded that not all
 non-ADP 
MFMs which can both copy and fax are to be cla ssified under HS96 subheading 8517 21.  For its part, 
TPKM has recognised that until the introduction of the HS2007, it classified non-ADP MFMs under HS96 9009 "as long as it was determined that no other function was more important than the copying function".  This suggests that the United States and TPKM do not really agree with Japan's inflexible 
position that all
 non-ADP MFMs are covered by the concession for HS96 8517 21.  
 
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