WORLD TRADE  
ORGANIZATION  WT/DS315/R 
16 June 2006 
 (06-2828) 
 Original:   English 
  
 
     
 
   
EUROPEAN COMMUNITIES – SELECTED CUSTOMS 
MATTERS 
  
 
Report of the Panel 
 
 
 
 
  WT/DS315/R 
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TABLE OF CONTENTS 
Page  
LIST OF ANNEXES................................................................................................................ .........xvii 
TABLE OF CASES CITED IN THIS REPORT ............................................................................xix 
LIST OF ABBREVIATIONS .......................................................................................................... xxii 
I. INTRODUCTION ................................................................................................................... .1 
II. FACTUAL ASPECTS ..............................................................................................................2  
A. THE LEGISLATIVE FRAMEWORK FOR ADMINISTRATION OF EC CUSTOMS LAW ............................2  
1. The Community Customs Tariff .............................................................................................3  
2. The Community Customs Code...............................................................................................3  
3. The Implementing Regulation .................................................................................................3  
B. INSTITUTIONS AND MECHANISMS INVOLVED IN THE ADMINISTRATION OF THE EC 
CUSTOMS LAWS ...........................................................................................................................4  
1. The Commission................................................................................................................. .......4  
2. The member  States .............................................................................................................. .....4 
(a) Legal effect of EC custom s law on member States ....................................................................4  
(b) Administration of EC customs law .............................................................................................5  
3. The Customs Code  Committee ................................................................................................5  
4. EC courts ...................................................................................................................... .............7  
(a) Role and function of the courts of member States ......................................................................7  
(b) Role and function of the ECJ................................................................................................... ...7 
5. Cooperation between the member States and between the member States and 
the Commission ................................................................................................................. ........8  
(a) Council Regulation (EC) No. 515/97..........................................................................................8  
(b) Action programmes.............................................................................................................. .......8  
6. Training ....................................................................................................................... ..............9  
7. Budgetary and financial control ..............................................................................................9  
C. SPECIFIC AREAS OF CUSTOMS ADMINISTRATI ON REFERRED TO BY THE UNITED STATES 
IN ITS SUBMISSIONS .....................................................................................................................9  
1. Tariff Classification .......................................................................................................... ........9  
(a) Classification Regulations ..................................................................................................... ...10 
(b) HS Explanatory Notes and WCO Opinions..............................................................................10  
(c) Explanatory Notes of the Combined Nomenclature .................................................................10  
(d) Opinions of the Customs Code Committee ..............................................................................10  
(e) Binding tariff information..................................................................................................... ....11  
2. Customs valuation.............................................................................................................. .....13  WT/DS315/R 
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 3.
 Audit following release for free circu lation ..........................................................................14  
4. Penalties for infringement s of EC customs law....................................................................14  
5. Processing under cu stoms control .........................................................................................15  
6. Local clearance procedures....................................................................................................1 5 
7. Recovery of customs debt....................................................................................................... 16 
D. REVIEW OF CUSTOMS DECISIONS ...............................................................................................16  
1. Decisions the subject of  judicial review.................................................................................16  
2. Review by member States' customs authorities and courts ................................................16  
3. Direct appeals to the ECJ...................................................................................................... .17 
III. PARTIES' REQUESTS FOR FIND INGS AND RECOMMENDATIONS.......................17  
A. UNITED STATES .........................................................................................................................17  
B. EUROPEAN COMMUNITIES .........................................................................................................17  
IV. ARGUMENTS OF THE PARTIES ......................................................................................18  
A. FIRST WRITTEN SUBMISSION OF THE UNITED STATES ................................................................18  
1. Introduction................................................................................................................... ..........18  
2. The EC fails to administer its customs law in a uniform manner ......................................19  
(a) Customs classification ......................................................................................................... .....19  
(b) Customs valuation.............................................................................................................. .......20  
(c) Customs procedures............................................................................................................. .....21  
(d) The Commission, acting through the Customs Code Committee, does not provide 
uniformity to the administration of EC customs law ................................................................23  
3. The EC does not provide tribunals or procedures for the prompt review and 
correction of administrative action relating to customs matters ........................................24  
4. Conclusion ..................................................................................................................... ..........26  
B. FIRST WRITTEN SUBMISSION OF THE EUROPEAN COMMUNITIES ...............................................26  
1. Introduction................................................................................................................... ..........26  
2. Factual background............................................................................................................. ...27 
(a) General principles of th e EC legal system................................................................................27  
(i) The EC institutions and the EC legislative process ..................................................................27  
(ii) The implementing powers of the European Commission..........................................................28  
(iii) The legal effect of Community law............................................................................................29  
(iv) The Commission, the member States, an d the execution of Community law ............................29  
(b) The administration of EC customs law.....................................................................................31  
(i) The basic principles of th e EC Customs Union ........................................................................31  
(ii) The EC's international commitments in the field of customs administration and 
cooperation .................................................................................................................... ...........31  
(iii) The legislative framework of  the EC Customs Union ...............................................................32   WT/DS315/R 
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 (iv) The Commission, the member States, and the Customs Code Committee ................................33  
(v) Tariff classification .......................................................................................................... .........34  
(vi) Customs valuation.............................................................................................................. .......37  
(vii) Processing under customs control ............................................................................................38  
(viii) Local clearan ce procedure ...................................................................................................... .39 
(ix) Penalties for violations of customs law.....................................................................................39  
(x) EC customs cooperation ......................................................................................................... ..40 
(xi) Budgetary and financial aspects...............................................................................................4 1 
(xii) The continuous evolution of EC customs law ...........................................................................41  
(c) Judicial control in EC law..................................................................................................... ....42  
(i) The EC court system ............................................................................................................ .....42  
(ii) Judicial protection in the EC legal system................................................................................43  
(iii) Preliminary rulings: the Court of Justice and the uniform interpretation and 
application of Community law..................................................................................................4 3 
(iv) Judicial review of customs decisions ........................................................................................45  
(d) The US system in comparison ..................................................................................................45  
(i) The administration of US customs law .....................................................................................45  
(ii) Review of customs decisions in US law ....................................................................................46  
3. The US claims under Article X:3(a) GATT..........................................................................46  
(a) The requirements of Article X:3(a) GATT...............................................................................46  
(i) Article X:3(a) GATT concerns the administr ation of customs laws, not the customs 
laws themselves................................................................................................................ .........46  
(ii) Article X:3(a) GATT does not prescribe the ways in which WTO Members must 
administer their customs laws.................................................................................................. .47 
(iii) Article X:3(a) GATT lays down minimum standards................................................................48  
(iv) The meaning of "uniform administration" ................................................................................48  
(b) The burden of proof ............................................................................................................ ......49  
(c) General issues underlying the US cl aims under Article X:3(a) GATT ....................................50  
(i) The fact that EC customs law is administered by the customs authorities of EC 
member States is compatible w ith  Article X:3(a) GATT..........................................................50  
(ii) The EC has measures in place to ensure th e uniform administration of EC customs 
laws throughout the EC ......................................................................................................... ...50 
(iii) Some necessary corrections regarding the role and functioning of the Customs Code 
Committee ...................................................................................................................... ...........51  
(iv) The role of the Court of Justice in ensu ring uniformity in the administration of EC 
customs law.................................................................................................................... ...........52  
(d) The US claims under Article X:3(a) GATT..............................................................................53  
(i) Tariff classification .......................................................................................................... .........53  WT/DS315/R 
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 The ECJ and tariff  classifi cation .............................................................................................. ............... 53  
Binding tariff information ..................................................................................................... .................. 53  
Alleged divergences in EC  classificati on practice.............................................................................. ..... 55  
(ii) Customs valuation.............................................................................................................. .......57  
The uniform administration of valuation rule s in the EC ........................................................................ 57 
Report 23/2000 of the EC Court of  Auditors ..................................................................................... ..... 59  
The Reebok case................................................................................................................ ...................... 59  
(iii) Processing under customs control ............................................................................................60  
(iv) Local clearan ce procedure ...................................................................................................... .60 
(v) Penalties for violations of customs law.....................................................................................61  
4. The US claim under Arti cle X:3(b) GATT ...........................................................................62  
(a) The requirements of Article X:3(b) GATT...............................................................................62  
(b) The EC provides for prompt review of customs decisions .......................................................63  
(i) The claim regarding the absence of an EC customs court .......................................................63  
(ii) Promptness in  the review....................................................................................................... ...64 
C. FIRST ORAL STATEMENT OF THE UNITED STATES ......................................................................64  
D. FIRST ORAL STATEMENT OF THE EUROPEAN COMMUNITIES .....................................................73  
1. The significance of the case ................................................................................................... .73 
(a) The constitutional significance of the case for the EC..............................................................73  
(b) The systemic importance of  the case for the WTO...................................................................73  
2. The uniform administration of EC customs law ..................................................................74  
(a) The requirements of Article X:3(a) GATT...............................................................................74  
(b) The burden of proof ............................................................................................................ ......75  
(c) The claims raised by the United States .....................................................................................76  
(i) Tariff classification .......................................................................................................... .........76  
(ii) Customs valuation.............................................................................................................. .......77  
(iii) Processing under customs control and local clearance procedure ..........................................77  
(iv) Penalties for violations of customs law.....................................................................................78  
3. The prompt review of custom s decisions in the EC .............................................................78  
(a) The requirements of Article X:3(b) GATT...............................................................................78  
(b) The burden of proof ............................................................................................................ ......79  
(c) The claims raised by the United States .....................................................................................79  
(i) The absence of an EC customs court ........................................................................................79  
(ii) The lack of promptness in the review........................................................................................79  
E. SECOND WRITTEN SUBMISSION OF THE UNITED STATES ...........................................................80  
1. Introduction................................................................................................................... ..........80   WT/DS315/R 
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 2. GATT 1994 Article X:3 does not contain a relative, Member-specific standard..............81  
(a) The obligations in GATT 1994 Article X:3 do not vary according to the particular 
features of a Member's customs administration system............................................................81  
(b) The United States does not seek the harmonization of WTO Members' customs administrati on systems......................................................................................................... .....82
 
3. GATT 1994 Article X:3(a) is not a "subsidiary," "minimum standards 
provision" that is breached only when the non-uniform administration of a Member's customs laws exhi bits a discernible pattern .......................................................83
 
(a) There is no basis for the EC's characterization of GATT 1994 Article X:3(a) as a 
"subsidiary," "minimum standards provision"..........................................................................83  
(b) The United States is not required to demonstrate a "pattern" of non-uniform administration to establish that the EC is in breach of its GATT 1994 Article X:3(a) obligation ..................................................................................................................... .............83
 
(i) The "pattern" requirement asserted by the EC has no basis in GATT 1994 
Article X:3(a) ................................................................................................................. ...........83  
(ii) The EC fails to even explain what it believes the United States must establish to meet 
the so-called "pattern" requirement..........................................................................................84  
(iii) The reference to a "pattern" in the pane l report in US – Hot-Rolled Steel is not 
relevant to the present dispute ................................................................................................ ..84 
(c) The EC acknowledges the existence of divergences among member State authorities 
in the administration of EC customs law ..................................................................................85  
4. The instruments that the EC holds out as ensuring uniform administration do not do so ...................................................................................................................... .............85
 
(a) Most of the instruments that the EC holds out as securing uniform administration are 
non-binding, discretionary, or ex tremely general in nature ......................................................86  
(b) Binding tariff information does not secure uniform administration .........................................86  
(i) The EC system permits "shopping" for favorable BTI from among the 25 member 
State customs authorities ...................................................................................................... ....86  
(ii) The power of a member State customs authority to revoke BTI based on nothing more 
than its own reconsideration of the applicable cl assification rules, as affirmed in the 
Timmermans decision, detracts fr om uniform administration..................................................87  
(c) The availability of review by member State courts as the "normal" means of 
reconciling divergences in member State administration of EC customs laws does not 
fulfill the EC's GATT 1994 Article X:3(a) ob ligation to administer its customs laws 
in a uniform manner............................................................................................................ ......88  
5. In arguing that matters such as penalti es and audit procedures are outside the 
scope of its obligation under GATT 1994 Article X:3(a), the EC relies on an 
erroneous understanding of what it means to "administer" customs laws .......................89  
(a) The EC relies on an erroneous understandi ng of what it means to "administer" 
customs laws ................................................................................................................... ..........90  
(b) Penalties and audit procedures play a critical role in carrying out EC customs laws ...............90  
(c) Member States' penalties and audit procedures are properly characterized as tools for 
the administration of EC customs laws.....................................................................................91  WT/DS315/R 
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 (i)
 A law may be a tool for administering other laws ....................................................................91  
(ii) Basing a claim of non-uniform administration on differences among member State 
laws that are tools for administering the EC's customs laws is not inconsistent with the Appellate Body's finding that a GATT 1994 Article X:3(a) claim must concern the 
administration of customs laws rather than their substance ....................................................91
 
(iii) The findings of the panel in Argentina – Hides and Leather are directly relevant to 
the present dispute ............................................................................................................ ........92  
(d) Reference to "penalties" for "minor brea ches" in GATT 1994 Article VIII:3 does not 
put penalties outside the sc ope of Article X:3(a)......................................................................93  
(e) The US argument does not imply a requirem ent of harmonization of all sub-federal 
laws of WTO Members that have any simila rity in subject matter to federal laws ..................93  
6. The decisions of review tribunals in the EC do not govern the practice of "the 
agencies" entrusted with administrative enforcement of EC customs laws, contrary to GATT 1994 Article X:3(b) .................................................................................93
 
(a) The decisions of the tribunals or procedures a WTO Member provides pursuant to 
GATT 1994 Article X:3(b) must govern the practice of "the agencies" entrusted with 
administrative enforcement of the Member's customs laws .....................................................93  
(b) The US argument does not imply a requirement for every WTO Member to establish 
a single, centralized  customs court ...........................................................................................9 4 
F. SECOND WRITTEN SUBMISSION OF THE EUROPEAN COMMUNITIES ...........................................96  
1. The measures at issue in  the present dispute........................................................................96  
2. The US claims under Article X:3(a) GATT..........................................................................97  
(a) The requirements of Article X:3(a) GATT...............................................................................97  
(i) Article X:3(a) GATT concerns the administr ation of customs laws, not the customs 
laws themselves................................................................................................................ .........97  
(ii) Article X:3(a) GATT does not prescribe the ways in which WTO Members must 
administer their customs laws.................................................................................................. .98 
(iii) Article X:3(a) GATT lays down minimum standards................................................................99  
(iv) The meaning of "uniform administration" ................................................................................99  
(b) The burden of proof ............................................................................................................ ....100  
(c) General issues underlying the US cl aims under Article X:3(a) GATT ..................................102  
(i) The US case is aimed at compelling the EC to create an EC customs agency .......................102  
(ii) The United States misrepresen ts the EC legal system ............................................................103  
(d) The US claims under Article X:3(a) GATT............................................................................104  
(i) Tariff classification .......................................................................................................... .......104  
Binding tariff information ..................................................................................................... ................ 104  
The alleged risk of BTI shopping ............................................................................................... ... 104  
The alleged difficulties of detecti ng and correcting di vergent BTIs.............................................. 104  
The US claim that member States do not tr eat BTI issued by other member States as 
binding........................................................................................................................ ................... 105  
The legal effe ct of BTI........................................................................................................ ........... 106   WT/DS315/R 
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 Alleged divergences in EC  classificati on practice.............................................................................. ... 106  
Blackout Drap ery Li ning ........................................................................................................ ....... 106  
LCD Mon itors................................................................................................................... ............. 108  
Further examples of alleged non-unifo rmity in classifica tion practic e.......................................... 109  
(ii) Customs valuation.............................................................................................................. .....111  
Report 23/2000 of the EC Court of  Auditors ..................................................................................... ... 111  
The Reebok case................................................................................................................ .................... 112  
(iii) Processing under customs control ..........................................................................................113  
(iv) Local clearance procedure .....................................................................................................1 14 
(v) Penalties for violations of customs law...................................................................................115  
Penalty provisions are not covere d by Article X: 3(a) GATT................................................................ 115  
Article X:3(a) GATT does not require the harmoniza tion of member States' penalty provisions......... 116  
Community law ensures a sufficient degree of  uniformity of penalty provisions................................. 116  
3. The US claim under Arti cle X:3(b) GATT .........................................................................117  
(a) Nature of the review: independe nt tribunals or procedures ....................................................117  
(b) Time requirement: promptness in the review .........................................................................120  
G. SECOND ORAL STATEMENT OF THE EUROPEAN COMMUNITIES ...............................................120  
1. The EC is not obliged to create an EC customs agency and a customs court..................120  
2. The US claims under Article X:3(a) GATT........................................................................123  
(a) The United States misrepresents the requirements of Article X:3(a) GATT..........................123  
(i) Article X:3(a) GATT is a non-prescrip tive, minimum standards provision............................123  
(ii) Article X:3(a) GATT requires the United States to demonstrate the existence of a 
pattern of non-uniform administration ...................................................................................123  
(b) The US has not provided any evidence of  a lack of uniformity in the EC's 
administration of its customs laws..........................................................................................124  
(c) The US criticisms of the EC's system of customs administration are unjustified, and 
do not demonstrate any incompatibility with Article X:3(a) GATT.......................................125  
(i) Administrative guidance and the duty of cooperation ............................................................126  
(ii) The EBTI system ................................................................................................................ .....127  
(iii) Judicial review by member States' Courts ..............................................................................128  
(d) Article X:3(a) GATT does not require the EC to harmonize member States' penalty 
provisions..................................................................................................................... ...........129  
(i) Penalty provisions are not covered  by Article X:3(a) GATT..................................................129  
(ii) Article X:3(a) GATT does not require the harmonization of laws which exist in a 
WTO Member at sub-federal level..........................................................................................129  
(iii) Community law ensures a sufficient degree of  uniformity of penalty provisions....................131  
3. The US claim under Arti cle X:3(b) GATT .........................................................................131  
(a) The ECJ and the requirement of prompt review .....................................................................131  WT/DS315/R 
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 (b)
 The requirement that the decisions of the tribunals must govern the practices of the 
agencies....................................................................................................................... ............132  
(c) The US interpretation of Article X:3(b) GATT requires the establishment, in every 
WTO Member, of a single and centralized customs court or a single and centralized customs ag ency. ................................................................................................................ ......134
 
4. Closing statement.............................................................................................................. ....135  
H. SECOND ORAL STATEMENT OF THE UNITED STATES ................................................................140  
1. Introduction................................................................................................................... ........140  
2. The EC fails to rebut evid ence supporting US Claims ......................................................141  
(a) EC admissions of non-uniform administration .......................................................................141  
(b) There is no requirement to show a "pa ttern" of non-uniform administration .........................142  
(c) Difficulty of certain customs administration questions does not counter evidence of 
non-uniform administration and, in fact, highlights the problem ...........................................142  
(d) Resolution of divergences among member States after months or years does not counter evidence of non-uniform administration....................................................................142
 
3. Recent cases confirm that processes EC holds out as securing uniform administration fail to do so................................................................................................... 142
 
4. It is appropriate for the Panel to exercise its authority under DSU Article 13 ...............144  
5. The EC fails to rebut evidence that cla ssification rules are administered in a 
non-uniform manner ............................................................................................................1 45 
(a) BTI does not secure uniform administration...........................................................................145  
(b) LCD monitors ................................................................................................................... ......146  
(c) Blackout drapery lining........................................................................................................ ...147  
6. The EC fails to rebut evidence that valuation rules are administered in a non-
uniform manner ................................................................................................................. ...148  
7. The EC fails to rebut evidence that customs procedures are administered in a 
non-uniform manner ............................................................................................................1 48 
(a) Processing under customs control...........................................................................................148  
(b) Penalties...................................................................................................................... ............149  
8. Member State courts, whose decisions gov ern only the customs authorities in 
their respective territories, do not fulfil the EC's obligation under Article X:3(b) 
of the GATT 1994............................................................................................................... ...150  
9. Closing statement.............................................................................................................. ....151  
V. ARGUMENTS OF THE THIRD PARTIES ......................................................................154  
A. THIRD PARTY WRITTEN SUBMISSION OF CHINA .......................................................................154  
1. Issues relating to interpretation and application of Article X:3(a) ..................................154  
(a) The scope of application of Artic le X:3(a) of the GATT 1994...............................................154  
(b) The meaning of "uniform" as used in Article X:3(a) of the GATT 1994 ...............................155  
(c) The standard of uniformity required by  Article X:3(a) of the GATT 1994............................155   WT/DS315/R 
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 2. Conclusion ..................................................................................................................... ........156  
B. THIRD PARTY WRITTEN SUBMISSION OF JAPAN .......................................................................156  
1. Introduction................................................................................................................... ........156  
2. Consistency of the challenged measures with Article X:3(a) of the GATT .....................156  
(a) The meaning of the term "uniform" administration in Article X:3(a) of the GATT 
1994 ........................................................................................................................... .............156  
(b) Article X:3(a) of the GATT does not prescr ibe the specific means a Member must 
employ in order to ensure a uniform administration of customs laws; such uniformity should be determined in respect of the pa rticular customs system as a whole .......................157
 
3. Consistency of the challenged measures with Article X:3(b) of the GATT .....................158  
(a) The measure in question ........................................................................................................ .158 
(b) The consistency of the challenged measure  with Article X:3(b) of the GATT ......................158  
4. Conclusion ..................................................................................................................... ........159  
C. THIRD PARTY WRITTEN SUBMISSION OF THE REPUBLIC OF KOREA .........................................159  
1. Introduction................................................................................................................... ........159  
2. Legal arguments................................................................................................................ ....159  
(a) The EC's non-uniform administration of laws and regulations concerning customs 
classification, valuation and other procedur es violate Article X:3(a) of GATT 1994............159  
(b) EC judicial system's failure to provide a viable mechanism to promptly review 
customs related administrative actions vi olate Article X:3(b) of GATT 1994.......................160  
3. Conclusion ..................................................................................................................... ........161  
D. THIRD PARTY WRITTEN SUBMISSION OF THE SEPARATE CUSTOMS TERRITORY OF 
TAIWAN , PENGHU , KINMEN AND MATSU .................................................................................162  
1. Introduction................................................................................................................... ........162  
2. Arguments ...................................................................................................................... .......162  
3. Conclusion ..................................................................................................................... ........164  
E. THIRD PARTY ORAL STAT EMENT OF ARGENTINA ....................................................................164  
1. Introduction................................................................................................................... ........164  
2. The link between subparagraph (b) and subparagraph (a) of Article X:3 of the 
GATT 1994 ...................................................................................................................... ......164  
3. "Promptness" as an obligation in Article X:3(b)...............................................................165  
F. THIRD PARTY ORAL STATEMENT OF AUSTRALIA .....................................................................166  
G. THIRD PARTY ORAL STATEMENT OF CHINA .............................................................................166  
1. The scope of application of Article X:3(a) of the GATT 1994 ..........................................166  
2. The meaning of "uniform" as used in Article X:3(a) of the GATT 1994 ........................167  
3. The standard of uniformity required by Article X:3(a) of the GATT 1994 ....................168  
H. THIRD PARTY ORAL STATEMENT OF JAPAN .............................................................................168  WT/DS315/R 
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 1.
 Arguments relating to the consistency of the challenged measures with 
Article X:3(a) of the GATT..................................................................................................168  
I. THIRD PARTY ORAL STATEMENT OF THE REPUBLIC OF KOREA ...............................................170  
1. The EC's non-uniform administration of laws and regulations concerning 
customs classification, valuation and other procedures violate Article X:3(a) of 
GATT 1994 ...................................................................................................................... ......170  
2. The EC judicial system's failure to pr ovide a viable mechanism to promptly 
review customs related administrative actions violates Article X:3(b) of GATT 1994 ........................................................................................................................... .............170
 
VI. INTERIM REVIEW.............................................................................................................171  
A. NEW EVIDENCE REFERRED TO IN COMMENT S DURING THE INTERIM REVIEW STAGE ..............171  
B. PANEL 'S TERMS OF REFERENCE ...............................................................................................172  
1. Manner of administration ....................................................................................................172  
2. Challenge of the EC system as a whole/overall ..................................................................172  
3. Administration by "national customs authorities of EC member States" of 
"laws, regulations, handbooks, manua ls and administrative practices".........................173  
4. Temporal issues................................................................................................................ .....173  
(a) Expired measures or measures not yet in existence at the time of panel establishment .........173  
(b) The temporal scope of "administration" .................................................................................174  
(c) "Currently".................................................................................................................... ..........175  
5. Retroactive recovery of customs duties...............................................................................176  
C. INTERPRETATION OF ARTICLE X :3(A) OF THE GATT 1994 .......................................................176  
1. "Object and purpose" ..........................................................................................................1 76 
2. "Supplementary means of interpretation".........................................................................176  
3. "Minimum standards" .........................................................................................................177  
4. "Uniform" ...................................................................................................................... .......177  
(a) Nature of the challenge ........................................................................................................ ...177  
(b) "Reasonable period of time" ...................................................................................................1 78 
D. PANEL 'S OBSERVATIONS REGARDING THE EC SYSTEM OF CUSTOMS ADMINISTRATION ..........178  
E. SPECIFIC INSTANCES OF ALLEGED VIOLATION OF ARTICLE X:3(A)  OF THE GATT 1994..........179  
1. Tariff classification of blackout drapery lining..................................................................179  
2. Tariff classification of liquid crystal display flat monitors with digital video 
interface ...................................................................................................................... ...........181  
3. Revocation of BTI concerning candlesticks and preserved fruits and nuts in the 
context of the Timmermans  case ..........................................................................................181  
4. Penalties against infringements of EC customs legislation ...............................................181  
F. EC AND MEMBER STATE OBLIGATIONS ....................................................................................182  
G. OTHER REQUESTS FOR REVIEW ................................................................................................182   WT/DS315/R 
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 VII. FINDINGS....................................................................................................................... ......183  
A. ARTICLE X OF THE GATT 1994 .................................................................................................183  
B. THE PANEL 'S TERMS OF REFERENCE ........................................................................................184  
1. The measure(s)  at issue........................................................................................................ .184 
(a) Summary of the parties' arguments.........................................................................................184  
(b) Analysis by the Panel.......................................................................................................... ....185  
(i) Interpretation of the term "measures at issue" under Article 6.2 of the DSU ........................186  
(ii) The "measure(s) at issue" for the purposes of a claim under Article X:3(a) of the 
GATT 1994...................................................................................................................... ........188  
(iii) The "measure at issue" for the pur poses of the United States' claim under 
Article X:3(a) of the GATT 1994 in this dispute .....................................................................189  
Manner of admi nistration ....................................................................................................... ............... 189  
"Laws, regulations, decisions and rulings of th e kind described in Article X:1 of the GATT 
1994" .......................................................................................................................... ........................... 189  
Areas of customs administration ................................................................................................ ........... 191  
(iv) Summary ........................................................................................................................ .........192  
2. Temporal matters concerning the Panel's terms of reference ..........................................192  
(a) Summary of the parties' arguments.........................................................................................192  
(b) Analysis by the Panel.......................................................................................................... ....193  
3. The scope of the United States' challenge of the EC system of customs 
administration under Article X:3(a) of the GATT 1994 ...................................................194  
(a) Summary of the parties' arguments.........................................................................................194  
(b) Analysis by the Panel.......................................................................................................... ....194  
4. The nature of the United States' challenge of the EC system of customs 
administration under Article X:3(a) of the GATT 1994 ...................................................197  
(a) Summary of the parties' arguments.........................................................................................197  
(b) Analysis by the Panel.......................................................................................................... ....198  
5. Overall conclusions regarding the Panel's terms of reference..........................................201  
C. PROCEDURAL ISSUES ...............................................................................................................202  
1. Admissibility of certain evidence.........................................................................................202  
(a) Evidence contained in section III of the United States' oral statement at the second 
substantive meeting............................................................................................................ .....202  
(b) Evidence relied upon by the United States in sections of its oral statement at the 
second substantive meeting other than  that contained in section III.......................................205  
(c) Summary and conclusions ......................................................................................................20 6 
2. Requests by the United States that the Panel exercise its discretion under 
Article 13 of  the DSU .......................................................................................................... ..206  
D. CLAIMS UNDER ARTICLE X :3(A) OF THE GATT 1994................................................................209  
1. Article X:3(a) of the GATT 1994.........................................................................................209  WT/DS315/R 
Page xii  
 
 2.
 Findings requested by the United States under Article X:3(a) of the GATT 1994 .........209  
(a) Summary of the parties' arguments.........................................................................................209  
(b) Analysis by the Panel.......................................................................................................... ....211  
3. Interpretation of Article X:3(a) of the GATT 1994 ...........................................................212  
(a) Interpretation of "administer" ................................................................................................. 212 
(i) Summary of the parties' arguments.........................................................................................212  
Ordinary meaning............................................................................................................... ................... 212  
Substance versus administration................................................................................................ ............ 213  
Forms of administration ........................................................................................................ ................ 213  
(ii) Analysis by the Panel.......................................................................................................... ....214  
Ordinary meaning............................................................................................................... ................... 214  
Context ........................................................................................................................ .......................... 215  
Interpretation of Spanish and French versions  of Article X:3(a) of the GATT 1994............................ 216  
Summary and conclusions........................................................................................................ ............. 216  
(b) Interpretation of "uniform" .................................................................................................... .218 
(i) Summary of the parties' arguments.........................................................................................218  
(ii) Analysis by the Panel.......................................................................................................... ....219  
Ordinary meaning............................................................................................................... ................... 219  
Context ........................................................................................................................ .......................... 219  
Supplementary means of interpretation.......................................................................................... ....... 220  
Summary and conclusions........................................................................................................ ............. 222  
4. Relevance of Article XXIV:12 of the GATT 1994 for the interpretation of 
Article X:3(a) of the GATT 1994 in the context of this dispute........................................222  
(a) Summary of the parties' arguments.........................................................................................222  
(b) Analysis by the Panel.......................................................................................................... ....224  
5. Burden of proof................................................................................................................ .....226  
(a) Summary of parties' arguments...............................................................................................226  
(b) Analysis by the Panel.......................................................................................................... ....228  
6. Specific alleged violations of Article X:3(a) of the GATT 1994........................................229  
(a) Relevant aspects of the EC system of customs administration...............................................229  
(i) Administration by customs authorities in the EC member States ...........................................229  
(ii) Institutions and mechanisms involved in the administration of the EC customs laws............230  
Institutions and mechanisms applicable generally  in all areas of customs administration .................... 230  
Customs Code  Committee ......................................................................................................... .... 230  
Article 10 of the EC Treaty.................................................................................................... ........ 232  
Preliminary refe rence system................................................................................................... ...... 233  
Infringement proceedings ....................................................................................................... ....... 234   WT/DS315/R 
 Page xiii 
 
 
 The European Ombudsman ......................................................................................................... .. 234 
Complaints to th e EC Commission................................................................................................ 235 
Restrictions on the adoption of national measures by customs authorities of the member 
States......................................................................................................................... ..................... 235  
Consultations and mutual assistance betwee n member State customs authorities......................... 236  
Best practice guide lines ....................................................................................................... .......... 236  
Institutions and mechanisms applicable in specifi c areas of customs administration referred to 
in the United States' request fo r establishment of a panel ..................................................................... 237 
Tariff cla ssification.......................................................................................................... .............. 237  
Customs valuation .............................................................................................................. ........... 239  
Customs procedures............................................................................................................. .......... 240  
General observations regarding the institutions and mechanisms involved in the administration 
of the EC customs laws ......................................................................................................... ................ 241  
(b) Allegations of non-uniform administration of the Common Customs Tariff in the area 
of tariff cl assification ....................................................................................................... .......241  
(i) Tariff classification of network cards for personal computers ...............................................241  
Summary of the par ties' arguments .............................................................................................. ......... 241  
Analysis by the Panel .......................................................................................................... .................. 243  
(ii) Tariff classification of dr ip irrigation products......................................................................246  
Summary of the par ties' arguments .............................................................................................. ......... 246  
Analysis by the Panel .......................................................................................................... .................. 247  
(iii) Tariff classification of uni sex articles or shorts......................................................................248  
Summary of the par ties' arguments .............................................................................................. ......... 248  
Analysis by the Panel .......................................................................................................... .................. 249  
(iv) Tariff classification of blackout drapery lining ......................................................................250  
Summary of the par ties' arguments .............................................................................................. ......... 250  
Evidence of divergence in classi fication....................................................................................... .2 5 0 
Goods in question the same? .................................................................................................... ..... 251  
Explanatory Note to sub-heading 59 07 of the Harmonized System .............................................. 253  
German interp retative aid ...................................................................................................... ........ 253  
Compatibility with  WCO opinion................................................................................................. .2 5 5 
Analysis by the Panel .......................................................................................................... .................. 255  
General........................................................................................................................ ................... 255  
Evidence relied upon by the United States to prove the existence of  divergence in the 
tariff classification of bl ackout drap ery lining............................................................................... 256 
Physical characteristics of the products that were the subject of classification by on the 
one hand, customs authorities in the United Kingdom, Ireland, the Netherlands and 
Belgium and, on the other hand, cu stoms authorities in  German y................................................. 260  
Administrative process leading to tariff cl assification decisions for the product in 
question by German cu stoms authorities ....................................................................................... 26 4 
German interpretative aid ............................................................................................................. 264  WT/DS315/R 
Page xiv  
 
 Tariff classification decisions in other member States .................................................................. 265  
Conclusion ..................................................................................................................... ................ 267  
(v) Tariff classification of liquid crystal display fla t monitors with digital video interface.........267  
Summary of the par ties' arguments .............................................................................................. ......... 267  
Evidence of divergence in classi fication....................................................................................... .2 6 7 
Measures taken by the European Communities to  resolve the divergence in classification .......... 268  
Opinion of the Custom s Code Committee ..................................................................................... 271  
Analysis by the Panel .......................................................................................................... .................. 273  
(vi) Treatment of BTI in member States other than the issuing member State ..............................278  
Summary of the par ties' arguments .............................................................................................. ......... 278  
Analysis by the Panel .......................................................................................................... .................. 281  
(vii) Refusal to withdraw revocation of BTI con cerning Sony PlayStations2 in the context 
of the Sony PlayStation2 case .................................................................................................2 84 
Summary of the par ties' arguments .............................................................................................. ......... 284  
Analysis by the Panel .......................................................................................................... .................. 285  
(viii) Interpretation and application of an ame ndment to an explanatory note concerning 
camcorders in the Camcorders case.......................................................................................288  
Summary of the par ties' arguments .............................................................................................. ......... 288  
Analysis by the Panel .......................................................................................................... .................. 289  
(ix) Summary and conclusions.......................................................................................................2 91 
(c) Allegations of non-uniform administration of the Community Customs Code and the 
Implementing Regulation in the area of customs valuation....................................................292  
(i) Royalty payments ............................................................................................................... .....292  
Summary of the par ties' arguments .............................................................................................. ......... 292  
Analysis by the Panel .......................................................................................................... .................. 293  
(ii) Valuation on a basis other than the transaction of the last sale (or "successive sale") .........296  
Summary of the par ties' arguments .............................................................................................. ......... 296  
Analysis by the Panel .......................................................................................................... .................. 298  
(iii) Vehicle repair costs cove red under warranty.........................................................................300  
Summary of the par ties' arguments .............................................................................................. ......... 300  
Analysis by the Panel .......................................................................................................... .................. 301  
(iv) Relationship between EC importer and non-EC manufacturers.............................................305  
Summary of the par ties' arguments .............................................................................................. ......... 305  
Analysis by the Panel .......................................................................................................... .................. 307  
(v) Summary and conclusions.......................................................................................................3 10 
(d) Allegations of non-uniform administration of the Community Customs Code and the 
Implementing Regulation in the area of customs procedures .................................................311  
(i) Audit following release fo r free circulation............................................................................311   WT/DS315/R 
 Page xv 
 
 
 Summary of the par ties' arguments .............................................................................................. ......... 311  
Analysis by the Panel .......................................................................................................... .................. 313  
(ii) Penalties against infringements of EC customs legislation ....................................................317  
Summary of the par ties' arguments .............................................................................................. ......... 317  
Analysis by the Panel .......................................................................................................... .................. 320  
(iii) Processing under customs control ..........................................................................................321  
Summary of the par ties' arguments .............................................................................................. ......... 321  
Analysis by the Panel .......................................................................................................... .................. 324  
(iv) Local clearance procedures....................................................................................................3 27 
Summary of the par ties' arguments .............................................................................................. ......... 327  
Analysis by the Panel .......................................................................................................... .................. 330  
(v) Summary and conclusions.......................................................................................................3 31 
(e) Allegations of non-uniform administra tion regarding Article 221(3) of the 
Community Customs Code.....................................................................................................332  
(i) Summary of the parties' arguments.........................................................................................332  
(ii) Analysis by the Panel.......................................................................................................... ....333  
(f) Overall observations regarding the United  States' allegations of non-uniform 
administration under Article X:3(a) of the GATT 1994 .........................................................335  
E. CLAIMS UNDER ARTICLE X :3(B) OF THE GATT 1994................................................................336  
1. Article X:3(b) of the GATT 1994.........................................................................................336  
2. Findings requested by the United States under Article X:3(b) of the GATT 1994.........336  
(a) Summary of the parties' arguments.........................................................................................336  
(b) Analysis by the Panel.......................................................................................................... ....337  
3. Interpretation of Article X:3(b) of the GATT 1994 ...........................................................338  
(a) Summary of the parties' arguments.........................................................................................338  
(i) Relevant features of review bodies .........................................................................................338  
(ii) Geographical coverage and substantive effect of decisions of review bodies ........................338  
General ........................................................................................................................ .......................... 338  
Significance of the term "sha ll govern the practice of"........................................................................ .3 3 9 
Significance of the referenc e to "the agencies" ................................................................................ ..... 340  
Significance of the reference to the right to seek review by "the central administration of such 
agency"........................................................................................................................ .......................... 340  
Legal relationship between Articles X:3( a) and X:3(b) of the GATT 19 94.......................................... 341  
Significance of  the reference to "tribunal s" and "procedures" in the plural ......................................... 343  
Decisions...................................................................................................................... ......................... 343  
(b) Analysis by the Panel.......................................................................................................... ....344  
Ordinary meaning............................................................................................................... ................... 344  
"Independent" .................................................................................................................. .............. 344  WT/DS315/R 
Page xvi  
 
 Level of review................................................................................................................ .............. 345  
"Tribunals or procedures"...................................................................................................... ........ 346  
"Such agencies" ................................................................................................................ ............. 346  
"Govern the pr actice of" ....................................................................................................... ......... 347  
Context ........................................................................................................................ .......................... 348  
Legal relationship between Articles X:3( a) and X:3(b) of the GATT 1994 .................................. 348  
Article X of the GATT 1994..................................................................................................... ..... 349  
Overall summary and conclusions................................................................................................ ......... 349  
4. Specific alleged violations of Article X:3(b) of the GATT 1994........................................349  
(a) Summary of the parties' arguments.........................................................................................349  
(b) Analysis by the Panel.......................................................................................................... ....351  
(i) Discharge of the European Communities' obligation under Article X:3(b) of the 
GATT 1994...................................................................................................................... ........352  
(ii) Review of administrative action relating to customs matters by authorities in the 
member States .................................................................................................................. .......354  
(iii) Summary and conclusions.......................................................................................................3 54 
VIII.  CONCLUSIONS AND RECOMMENDATIONS..............................................................355  
  WT/DS315/R 
 Page xvii 
 
 
 LIST OF ANNEXES 
 
ANNEX A 
 
RESPONSES TO QUESTIONS POSED BY THE PANEL AND OTHER PARTIES AFTER  
THE FIRST SUBSTANTIVE MEETING OF THE PANEL   
 
Contents Page 
Annex A-1 Responses of the United States to Questions posed by the Panel after 
the First Substantive Meeting A-2 
Annex A-2 Responses of the United States to Questions posed by the European 
Communities after the First Substantive Meeting A-44 
Annex A-3 Responses of the European Co mmunities to Questions posed by the 
Panel after the First Substantive Meeting A-46 
Annex A-4 Responses of the European Co mmunities to Questions posed by the 
United States after the First Substantive Meeting A-84 
Annex A-5 Responses of Argentina to Questi ons posed by the Panel after the First 
Substantive Meeting A-87 
Annex A-6 Responses of China to Questions posed by the Panel after the First 
Substantive Meeting A-92 
Annex A-7 Responses of Japan to Questions posed by the Panel after the First 
Substantive Meeting A-94 
Annex A-8 Responses of Korea to Questions posed by the Panel after the First 
Substantive Meeting A-102 
Annex A-9 Responses of the Separate Customs Territory of Taiwan, Penghu, 
Kinmen and Matsu after the First Substantive Meeting A-107 
 
 
ANNEX B 
 
RESPONSES TO QUESTIONS POSED BY THE PANEL AND OTHER PARTIES AFTER 
THE SECOND  SUBSTANTIVE MEETING OF THE PANEL   
 
Contents Page 
Annex B-1 Responses of the United States to Questions posed by the Panel after 
the Second Substantive Meeting B-2 
Annex B-2 Responses of the European Co mmunities to Questions posed by the 
Panel after the Second Substantive Meeting B-32 
Annex B-3 Comments of the United States on the European Communities' 
Responses to Questions posed by the Panel after the Second Substantive 
Meeting  B-57 
Annex B-4 Comments of the European Communities on the United States' 
Responses to Questions posed by the Panel after the Second Substantive 
Meeting B-77 
 
 
 WT/DS315/R 
Page xviii  
 
 ANNEX C 
 
RESPONSES TO SUPPLEMENTARY QUESTIONS  POSED BY THE PANEL REGARDING 
SECTION III OF THE UNITED STATES SECOND ORAL STATEMENT  
 
Contents Page 
Annex C-1 Response of the European Communities to the Panel's Question 
No. 172 regarding section III of the US Second Oral Statement  C-2 
Annex C-2 Responses of the United States to Supplementary Questions posed by 
the Panel regarding section III of the US Second Oral Statement C-19 
Annex C-3 Responses of the European Communities to Supplementary Questions 
posed by the Panel regarding sec tion III of the US Second Oral 
Statement C-31 
 
 
ANNEX D 
 
REQUEST FOR THE ESTABLISHMENT OF A PANEL 
 
Contents Page 
Annex D-1 Request for the Establishment of a Panel by the United States  
(WT/DS315/8) D-1 
 
 
ANNEX E 
 
PANEL'S WORKING PROCEDURES 
 
Contents Page 
Annex E-1 Panel's Working Procedures E-1 
 
 
ANNEX F 
 
LISTS OF EXHIBITS SUBMITTED BY THE PARTIES 
 
Contents Page 
Annex F-1 List of Exhibits submitted by the United States F-2 
Annex F-2 List of Exhibits submitted by the European Communities F-7 
 
  WT/DS315/R 
 Page xix 
 
 
 TABLE OF CASES CITED IN THIS REPORT 
 
 
Short Title Full Case Title and Citation of Case 
Argentina – 
Footwear (EC)  Appellate Body Report, Argentina – Safeguard Measures on Imports of Footwear , 
WT/DS121/AB/R, adopted 12 January 2000 
Argentina – Hides and 
Leather  Panel Report, Argentina – Measures Affecting the Export of Bovine Hides and the Import 
of Finished Leather , WT/DS155/R and Corr.1, adopted 16 February 2001 
Argentina – Textiles and 
Apparel Appellate Body Report, Argentina – Measures Affecting Imports of Footwear, Textiles, 
Apparel and Other Items , WT/DS56/AB/R and Corr.1, adopted 22 April 1998 
Brazil – Desiccated 
Coconut Appellate Body Report, Brazil – Measures Affe cting Desiccated Coconut , 
WT/DS22/AB/R, adopted 20 March 1997 
Canada – Gold Coins GATT Panel Report, Canada – Measures Affecting the Sale of Gold Coins , L/5863, 
17 September 1985 
Canada – Wheat Exports and Grain Imports Appellate Body Report, Canada - Measures Relating to Exports of Wheat and Treatment 
of Imported Grain , WT/DS276/AB/R, adopted 27 September 2004 
Canada – Wheat Exports 
and Grain Imports Panel Report, Canada - Measures Relating to Exports of Wheat and Treatment of 
Imported Grain , WT/DS276/R, adopted 27 September 2004 as upheld by the Appellate 
Body Report, WT/DS276/AB/R 
Chile – Price Band 
System  Appellate Body Report, Chile – Price Band System and Safeguard Measures Relating to 
Certain Agricultural Products , WT/DS207/AB/R, adopted 23 October 2002  
EC – Bananas III  Appellate Body Report, European Communities – Regime for the Importation, Sale and 
Distribution of Bananas , WT/DS27/AB/R, adopted 25 September 1997 
EC – Chicken Cuts Appellate Body Report, European Communities – Customs Classification of Frozen 
Boneless Chicken Cuts , WT/DS/269/AB/R, WT/DS286/AB/R 
EC – Chicken Cuts Panel Report, European Communities – Customs Classification of Frozen Boneless 
Chicken Cuts , Complaint by Thailand, WT/DS286/R 
EC – Computer 
Equipment Appellate Body Report, European Communities – Customs Classification of Certain 
Computer Equipment , WT/DS62/AB/R, WT/DS67/AB/R; WT/DS68/AB/R, adopted 
5 February 1998 
EC – Hormones Appellate Body Report,  EC Measures Concerning Meat and Meat Products (Hormones),  
WT/DS26/AB/R, WT/DS48/AB/R, adopted 13 February 1998  
EC – Poultry  Appellate Body Report, European Communities – Measures Affecting the Importation of 
Certain Poultry Products , WT/DS69/AB/R, adopted 23 July 1998 
EC – Sardines  Appellate Body Report, European Communities – Trade Description of Sardines , 
WT/DS231/AB/R, adopted 23 October 2002 
EC – Tariff Preferences Appellate Body Report, European Communities – Conditions for the Granting of Tariff 
Preferences to Developing Countries , WT/DS246/AB/R, adopted 20 April 2004 
EC – Trademarks and 
Geographical 
Indications (US) Panel Report, European Communities – Protection of Trademarks and Geographical 
Indications for Agricultural Products and Foodstuffs, Complaint by the United States , 
WT/DS174/R, adopted 20 April 2005 
EEC – Dessert Apples GATT Panel Report, European Economic Community – Restrictions on Imports of 
Dessert Apples – Complaint by Chile , L/6491, adopted 22 June 1989, BISD 36S/93 
Guatemala – Cement I Appellate Body Report, Guatemala – Anti-Dumping Investigation Regarding Portland 
Cement from Mexico , WT/DS60/AB/R, adopted 25 November 1998 WT/DS315/R 
Page xx  
 
 India – Patents (US) Appellate Body Report, India – Patent Protection for Pharmaceutical and Agricultural 
Chemical Products, WT/DS50/AB/R, adopted 16 January 1998  
Japan – Agricultural 
Products II  Appellate Body Report, Japan – Measures Affecting Agricultural Products , 
WT/DS76/AB/R, adopted 19 March 1999 
Japan – Alcoholic 
Beverages II Appellate Body Report, Japan – Taxes on Alcoholic Beverages , WT/DS8/AB/R, 
WT/DS10/AB/R, WT/DS11/AB/R, adopted 1 November 1996  
Japan – Film Panel Report, Japan – Measures Affecting Consumer Photographic Film and Paper , 
WT/DS44/R, adopted 22 April 1998 
Korea – Dairy Appellate Body Report, Korea – Definitive Safeguard Measure on Imports of Certain 
Dairy Products , WT/DS98/AB/R, adopted 12 January 2000 
Thailand – H-Beams Appellate Body Report,  Thailand – Anti-Dumping Duties on Angles, Shapes and Sections 
of Iron or Non-Alloy Steel and H-Beams from Poland , WT/DS1222/AB/R, adopted 5 April 
2001 
US – Carbon Steel  Appellate Body Report, United States – Countervailing Duties on Certain Corrosion-
Resistant Carbon Steel Flat Products from Germany , WT/DS213/AB/R and Corr.1, 
adopted 19 December 2002 
US – Corrosion-Resistant Steel Sunset 
Review
  Appellate Body Report, United States – Sunset Review of Anti-Dumping Duties on 
Corrosion-Resistant Carbon Steel Flat Products from Japan , WT/DS244/AB/R, adopted 
9 January 2004  
US – Corrosion-
Resistant Steel Sunset Review
  Panel Report, United States – Sunset Review of Anti-Dumping Duties on Corrosion-
Resistant Carbon Steel Flat Products from Japan , WT/DS244/R, adopted 9 January 
2004, as modified by the Appellate Body Report, WT/DS244/AB/R  
US – Gambling Panel Report, United States – Measures Affecting the Cross-Border Supply of Gambling 
and Betting Services , WT/DS285/R, adopted 20 April 2005, as modified by the Appellate 
Body Report, WT/DS285/AB/R 
US – Gasoline Appellate Body Report, United Sttates – Standards for Reformulated and Conventional 
Gasoline , WT/DS2/AB/R, adopted 20 May 1996 
US – Gasoline  Panel Report, United States – Standards for Reformulated and Conventional Gasoline , 
WT/DS2/R, adopted 20 May 1996, as modified by the Appellate Body Report, WT/DS2/AB/R 
US – Hot-Rolled Steel  Panel Report, United States – Anti-Dumping Measures on Certain Hot-Rolled Steel 
Products from Japan , WT/DS184/R, adopted 23 August 2001 as modified by the Appellate 
Body Report, WT/DS184/AB/R 
US – Malt Beverages GATT Panel Report, United States – Measures Affecting Alcoholic and Malt Beverages , 
adopted 19 June 1992, BISD 39S/206 
US – Offset Act  
(Byrd Amendment ) Appellate Body Report, United States – Continued Dumping and Subsidy Offset Act of 
2000 , WT/DS217/AB/R, WT/DS234/AB/R, adopted 27 January 2003 
US – Oil Country 
Tubular Goods from Mexico Appellate Body Report, Anti-Dumping Measures on Oil Country Tubular Goods 
(OCTG) from Mexico, WT/DS282/AB/R, adopted 28 November 2005  
US – Oil Country 
Tubular Goods Sunset 
Reviews Appellate Body Report, United States – Sunset Reviews of Anti-Dumping Measures on Oil 
Country Tubular Goods from Argentina , WT/DS268/AB/R, adopted 17 December 2004  WT/DS315/R 
 Page xxi 
 
 
 US – Section 301 Trade 
Act Panel Report, United States – Sections 301-310 of the Trade Act 1974 , WT/DS152/R, 
adopted 27 January 2000 
US – Shrimp  Appellate Body Report, United States – Import Prohibition of Certain Shrimp and Shrimp 
Products , WT/DS58/AB/R, adopted 6 November 1998 
US – Stainless Steel Panel Report, United States – Anti-Dumping Measures on Stainless Steel Plate in Coils 
and Stainless Steel Sheet and Strip from Korea , WT/DS179/R, adopted 1 February 2001  
US – Underwear Appellate Body Report, United States – Restrictions on Imports of Cotton and Man-made 
Fibre Underwear, WT/DS24/AB/R, adopted 25 February 1997  
US – Upland Cotton Panel Report, United States – Subsidies on Upland Cotton , WT/DS267/R, adopted 
21 March 2005 as modified by the Appellate Body Report, WT/DS267/AB/R  
US – Wool Shirts and 
Blouses Apellate Body Report, United States – Measures Affecting Imports of Woven Wool Shirts 
and Blouses from India , WT/DS33/AB/R and Corr.1, adopted 23 May 1997 
 WT/DS315/R 
Page xxii  
 
 LIST OF ABBREVIATIONS 
 
 BDL  Blackout drapery lining  
BTI  Binding Tariff Information 
 
CCC, the Code Community Customs Code, Council 
Regulation (EEC) 2913/92 
 
CFI  European Court of First Instance  
 CIS  Customs Information System  
 
CN  European Communities Combined 
Nomenclature  
 
Comitology Decision  Council Decision 1999/468/EC of 28 June 
1999 laying down the procedures for the exercise of implementing powers conferred on the Commission 
 
Commission, EC Commission  Commission of the European Communities 
 Council, EC Council  Council of the European Union 
 
Court of Justice, European Court of Ju stice Court of Justice of the European 
Communities 
 Customs Code Committee, th e Committee Committee established by Articles 247a (1) 
and 248a (1) of the CCC 
 
Customs Valuation Agreement  Agreement on Implementation of Article VII 
of the General Agreement on Tariffs and Trade 1994  
 
DSB  Dispute Settlement Body  
DSU  Understanding on Rules and Procedures 
Governing the Settlement of Disputes 
 
EBTI   European Binding Tariff Information  
 
EC  European Communities  
 
ECJ  European Court of Justice 
 ECR  European Court of Justice, Reports of Cases 
before the Court  
 
EC Treaty  Treaty establishing the European 
Community 
  WT/DS315/R 
 Page xxiii 
 
 
 EU Treaty  Treaty on European Union 
 
GATT  General Agreemen t on Tariffs and Trade 
1994 
 
HS   Harmonized Commodity and Coding System 
 HS Convention International Convention on the Harmonized 
Commodity and Coding Sysdtem 
 
Implementing Regulation , CCCIR  Commission Regulation (EEC) 2454 of 
2 July 1993 laying down provisions for the Implementation of the CCC  
 
Kyoto Convention  International Convention on the 
Simplification and Harmonization of 
Customs Procedures  
 
LCD monitors with DVI Liquid crystal display flat monitors with 
digital video interface 
 
LCP  Local clearance procedures 
 
Member States, EC member States  Member States of the European Union 
 Official Journal Official Journal of the European Union 
 
PCC  Processing under customs control procedure  RIL  Reebok International Limited  Taric  Integrated Tariff of the European 
Communities 
 Tariff, the Community Customs Tariff, Council 
Regulation (EEC) 2658/87 
 
US  United States 
 USCIT  United States Court of International Trade  
 USTR  United States Trade Representative  
WCO  World Customs Organization  
 
WTO  World Trade Organization 
 WTO Agreement Marrakesh Ag reement Establishing the 
World Trade Organization 
    WT/DS315/R 
 Page 1 
 
 
 I. INTRODUCTION 
1.1 On 21 September 2004, the United States requested consultations with the European 
Communities (EC) pursuant to Articles 1 and 4 of  the Understanding on the Rules and Procedures 
Governing the Settlement of Disputes (DSU) and Ar ticle XXII:1 of the General Agreement on Tariffs 
and Trade 1994 (GATT 1994) (WT/DS315/1).   
1.2 The request referred to the alleged non-uniform  manner in which the European Communities 
administers its laws, regulations, decisions and rulin gs of the kind described in Article X:1 of GATT 
1994 pertaining to the classification and valuati on of products for customs purposes and to 
requirements, restrictions or prohibitions on imports.  
1.3 The request identified the following measures:  Council Regulation (EEC) No. 2913/92 of 
12 October 1992 establishing the Community Customs Code, including all annexes thereto, as 
amended (the "Code");  Commission Regulation (E EC) No. 2454/93 of 2 July 1993 laying down 
provisions for the implementation of Council Re gulation (EEC) No. 2913/92 of 12 October 1992 
establishing the Community Customs Code, including all annexes thereto, as amended (the "Commission Regulation");  Council Regulation (E EC) No. 2658/87 of 23 July 1987 on the tariff and 
statistical nomenclature and on the Common Custom s Tariff, including all annexes thereto, as 
amended (the "Tariff Regulation");  the Integrated  Tariff of the European Communities established by 
virtue of Article 2 of Council Regulation (EEC) No. 2658/87 of 23 July 1987 on the tariff and statistical nomenclature and on the Common Custom s Tariff, including all annexes thereto, as 
amended (the "TARIC"); and for each of the above laws and regula tions, all amendments, 
implementing measures and other related measures.  
1.4 The request also referred to the alleged failu re of the European Co mmunities to institute 
judicial, arbitral or administrative tribunals or procedures for the purpose, inter alia , of the prompt 
review and correction of administrativ e action relating to customs matters.   
1.5 The United States and the European Communiti es held consultations on 16 November 2004 
but failed to reach a mutually satisfactory resolutio n of the matter.  Consequently, in a communication 
dated 13 January 2005
1, the United States requested the Dispute Settlement Body (DSB) to establish a 
panel.  Accordingly, at its m eeting of 21 March 2005, the DSB est ablished the Panel with standard 
terms of reference.  The terms of reference for the Panel are, therefore, the following: 
"To examine, in the light of the relevant provisions of the covered agreements cited 
by the United States in document WT/DS315/8,  the matter referred to the DSB by the 
United States in that document and to ma ke such findings as will assist the DSB in 
making the recommendations or in giving the rulings provided for in those 
agreements." 
1.6 On 17 May 2005, the United States requested the Director-General to determine the 
composition of the Panel, pursuant to paragraph 7 of Article 8 of the DSU.  That paragraph provides: 
If there is no agreement on the panelists within 20 days after the date of the 
establishment of a panel, at the request of either party, the Director-General, in 
consultation with the Chairman of the DSB and the Chairman of the relevant Council 
or Committee, shall determine the com position of the panel by appointing the 
panelists whom the Director-General consid ers most appropriate in accordance with 
any relevant special or additional rules or  procedures of the covered agreement or 
covered agreements which are at issue in th e dispute, after consulting with the parties 
                                                      
1 WT/DS315/8 contained in Annex C. WT/DS315/R 
Page 2  
 
 to the dispute.  The Chairman of th e DSB shall inform the Members of the 
composition of the panel thus formed no later than 10 days after the date the 
Chairman receives such a request. 
1.7 On 27 May 2005, the Director-General acco rdingly composed the Panel as follows: 
Chairman: Mr. Nacer Benjelloun-Touimi 
 
 Members: Mr. Mateo Diego-Fernández    Mr. Hanspeter Tschäni  1.8 Argentina;  Australia;  Brazil;  China;  Hong Kong, China;  India;  Japan;  Korea;  and 
Chinese Taipei reserved their third party rights to participate in the Panel's proceedings. 
1.9 The Panel held the first substantive meeting with the parties on 14-16 September 2005. The 
session with the third parties took place on 15 Se ptember 2005.  The Panel's second substantive 
meeting with the parties was held on 22-23 November 2005.  
1.10 On 10 January 2005, the Panel issued the Descri ptive Part of its Panel Report.  The Interim 
Report was issued to the parties on 10 February 2006 and the Final Report was issued to the parties on 
31 March 2006. 
II. FACTUAL ASPECTS 
2.1 This dispute concerns, inter alia , the question of whether the manner in which the European 
Communities administers its laws, regulations, d ecisions and rulings of the kind described in 
Article X:1 of GATT 1994, pertaining to the classi fication and valuation of products for customs 
purposes and to requirements, restrictions or prohibi tions on imports, complies with the obligation of 
uniform administration contained in Article X:3(a) of the GATT 1994.  In particular, the United States 
argues that the following measures are not being ad ministered in a uniform way by the European 
Communities in violation of Article X:3(a): (a) th e "Community Customs Code" contained in Council 
Regulation (EEC) No. 2913/92 of 12 October 1992; (b) the "Implementing Regulation" implementing 
the Community Customs Code contained in Commission Regulation (EEC) No. 2454/93 of 2 July 
1993; (c) the "Common Customs Tariff", which wa s originally promulgated in Council Regulation 
(EEC) No. 2658/87 but which is updated annually in the EC Official Journal; (d) the "Taric", which is 
the Integrated Tariff of the European Communities established by virtue of Article 2 of the Council 
Regulation (EEC) No. 2658/87 of 23 July 1987 and (d) "related measures".  The United States also challenges the alleged failure of the European Co mmunities to provide for the review and correction 
of administrative action relating to customs matters in the manner prescribed by Article X:3(b) of the 
GATT 1994. 
A. 
THE LEGISLATIVE FRAMEWORK FOR ADM INISTRATION OF EC CUSTOMS LAW  
2.2 The EC Treaty establishes a common commercial po licy.  According to Article 133(1) of the 
EC Treaty, the common commercial policy is based on uni form principles, particularly with regard to 
changes in tariff rates, the conclusion of tariff and trade agreements, the achievement of uniformity in 
measures of liberalisation, export polic y, and measures to protect trade such as those to be taken in the 
event of dumping or subsidies.  The ECJ has confirmed that the customs union and the common 
commercial policy, which includes administration of  customs matters, fall within the exclusive 
competence of the European Communities.2 
                                                      
2 Opinion 1/75, Local Cost Standard , [1975] ECR 1355 (Exhibit EC-13).  WT/DS315/R 
 Page 3 
 
 
 2.3 The three main instruments comprising the legi slative framework for customs administration 
in the European Communities are: the Community  Customs Tariff; the Community Customs Code; 
and the Implementing Regulation.  Each of these instruments are EC regulations.  Pursuant to 
Article 249(2) of the EC Treaty, they are binding in  their entirety and directly applicable in all 
member States. 
1. The Community Customs Tariff 
2.4 The Community Customs Tariff was established by Council Regulation (EC) No. 2658/87 on 
23 July 1987, which covers customs tariffs and the coll ection of international trade statistics.  In turn, 
the Community Customs Tariff establishes the Combin ed Nomenclature (CN).  Being a signatory to 
the HS Convention, the European Communities base d the CN on the Harmonized System (HS).  In 
particular, Article 1(2) of Regul ation No. 2658/87 states that the CN is comprised of:  (a) the 
harmonized system nomenclature; (b) EC subdivisi ons/headings to that nomenclature (where a 
corresponding duty rate is specified); and (c) pre liminary provisions, additional sections or chapter 
notes and footnotes relating to subheadings.  The preliminary provisions contain, inter alia , general 
rules for the interpretation of the CN. 
2.5 The actual tariff nomenclature is contained in the Annex to Regulation No. 2658/87, which is 
updated on a periodic basis pursuant to Article 12 of  the Regulation.  The current version of the 
Annex was published on 7 September 2004 and cam e into force on 1 January 2005 as Commission 
Regulation (EC) No. 1810/2004. 
2.6 The CN has eight-digit codes, with the first si x digits representing the HS codes (as required 
by the HS Convention) and the last two digits id entifying CN subheadings.  Additionally, there may 
be a 9th digit reserved for the use of national sta tistical subdivisions and a 10th and 11th digit for the 
Integrated Tariff of the European  Communities, known as the "Taric".3  Similar to the HS, the CN 
consists of 21 sections, covering 99 chapters.  Some s ections and chapters of the CN are preceded by 
notes. 
2. The Community Customs Code 
2.7 Council Regulation (EEC) No. 2913/92 establishes the Community Customs Code.4  T h e  
Community Customs Code comprises 253 articles and is divided into nine Titles, dealing with the following topics – Title I: Scope and basic definitions; Title II: Factors on the basis of which import duties or export duties and the other measures prescr ibed in respect of trade in goods are applied; 
Title III: Provisions applicable to goods brought into the customs territory of the Community until 
they are assigned a customs-approved treatment or us e; Title IV: Customs-approved treatment or use; 
Title V: Goods leaving the customs territory of  the Community; Title VI: Privileged operations; 
Title VII: Customs debt; Title VIII: Appeals; Title IX: Final provisions. 
3. The Implementing Regulation 
2.8 According to Article 247 of the Community Customs Code, the measures necessary for the 
implementation of the Community Customs Code are to  be adopted by the Commission.  On the basis 
of Article 247, the Commission adopted Regula tion (EEC) No. 2454 of 2 July 1993 laying down 
provisions for the Implementation of the Co mmunity Customs Code (the "Implementing 
                                                     
 
3 Article 2 of Regulation No. 2658/87 provides that the Taric shall be based on the CN.  Section I of the 
TARIC explicitly states that it incorporates, inter alia , (a) the provisions of the HS; and (b) the provisions of the 
CN.  The current version of the Taric is contained in Exhibit US-7. 
4 The current version of the Community Customs Code is contained in Exhibit US-5. WT/DS315/R 
Page 4  
 
 Regulation").
5  The Implementing Regulation sets out in detail the provisions necessary for the 
implementation of the Community Customs Code.  Its structure broadly follows that of the 
Community Customs Code. 
B. INSTITUTIONS AND MECHANISMS INVOLVED IN  THE ADMINISTRATION OF THE EC CUSTOMS 
LAWS  
1. The Commission 
2.9 The Commission is not normally directly involved in the administration of EC customs law.  
Rather, Article 211 of the EC Treaty provides that th e Commission shall "ensure that the provisions of 
this Treaty and the measures taken by the institutions  pursuant thereto are applied".  Generally, in the 
area of customs administration, the function of the European Commission as the guardian of the 
Treaty pursuant to Article 211 is to monitor the corr ect and uniform application of EC customs laws 
by the member States.  Where the Commission consid ers that a member State has failed to fulfil an 
obligation under the Treaty, the Co mmission has the possibility, in accordance with the procedures of 
Article 226 of the EC Treaty, to bring the matter be fore the ECJ.  Such "infringement proceedings" 
can be brought in response to any violation of Community law by a member State and can also 
concern the incorrect application of Community law by  the administrations of the member States.  In 
addition, there is a standardised procedure for co mplaints by individuals to be addressed to the 
European Commission regarding alleged infringement s of Community law.  Such complaints, which 
may also concern the application of Community la w by national administrations, may lead to the 
institution of infringement proceedings by the Comm ission.  In accordance with Article 228(1) of the 
EC Treaty, if the ECJ finds that a member State h as failed to fulfil an obligation under the EC Treaty, 
the member State concerned is required to take the necessary measures to comply with the judgment 
of the ECJ.  Where the member State concerned fails to comply with the judgment, the ECJ may 
impose a penalty payment on the member State pursuant to Article 228 (1) of the EC Treaty. 
2.10 In the exercise of its duties under the EC Treaty, the public service of the European 
Commission is guided by a Code of Conduct which is  part of the Commission's rules of procedure, 
and which sets out the principles of good administrative behaviour to be observed by all Commission 
staff.6  In particular, Part 4 of the Code of Conduct provides that all enquiries must be dealt with as 
quickly as possible, and sets out time limits within which corr espondence should be answered.  
Complaints regarding non-compliance with the Code  of Conduct may be addressed to the Secretariat-
General of the Commission.  In addition, the Commi ssion is politically responsible to the European 
Parliament.  Moreover, in accordance with Article 194 of the EC Treaty, any citizen may direct a 
petition to the European Parliame nt on any matter which comes within the Community's fields of 
activity.  Finally, in accordance with Article 195 of  the EC Treaty, the European Parliament has 
appointed an Ombudsman empowered to receive comp laints from individuals concerning instances of 
maladministration in the activities of the Community institutions or bodies. 
2. The member States 
(a) Legal effect of EC customs law on member States 
2.11 Jurisprudence of the ECJ has established that  the law of the European Community, including 
EC customs law, has primacy over the national law of the member States.7  The principle of primacy 
applies to all provisions contained in the EC Treaty  (primary Community law) and in acts of the EC 
                                                      
5 The current version of the Implementing Regulation is contained in Exhibit US-6. 
6 Exhibit EC-12. 
7 Case 6/64, Costa/E.N.E.L. , [1964] ECR 1251, 1270 (Exhibit EC-4); Case 106/77, Simmenthal II , 
[1978] ECR 629, para. 17-18 (Exhibit EC-5).  WT/DS315/R 
 Page 5 
 
 
 institutions (secondary Community law).  It also app lies in respect of any provision of national law at 
any level, including member States' constitutions.8  In practical terms, the principle means that, 
whenever a court of a member State encounters a conflict between a provision of Community law and 
a provision of its national law, it must set aside  the provision of national law and only apply 
Community law. 
2.12 Jurisprudence of the ECJ has also established th at Community law is directly effective in 
member States.  This means that Community la w may create rights for individuals, which can be 
directly invoked by those indi viduals in proceedings before national courts and authorities.9  T h e  
principle of "direct effect" may apply both to primary Community law as well as to secondary Community law. 
(b) Administration of EC customs law 
2.13 Community customs law is executed by the national authorities of the member States.  This 
arrangement is referred to as "executive federalism".
10  The principle of executive federalism within 
the European Communities reflects the principle of subsidiarity, which is enshrined in Article 5(2) of 
the EC Treaty, according to which the Community should take action only if and in so far as the 
objectives of the proposed action cannot be sufficiently achieved by the member States. 
2.14 Article 10 of the EC Treaty imposes the following obligation on the member States regarding 
their administration, inter alia  of EC customs law : 
Member States shall take all appropriate me asures, whether general or particular, to 
ensure fulfilment of the obligations arisi ng out of this Treaty or resulting from action 
taken by the institutions of the Community.  They shall facilitate the achievement of 
the Community's tasks. 
They shall abstain from any measure which could jeopardise the attainment of the 
objectives of this Treaty. 
3. The Customs Code Committee 
2.15 The Customs Code Committee is establishe d by Articles 247a(1) and 248a(1) of the 
Community Customs Code.  The Customs Code Co mmittee has adopted its own Rules of Procedure11, 
which are based – with some minor modifications – on the standard rules of procedure for comitology 
committees.12 
2.16 In accordance with Article 1(1) of its Rul es of Procedure, the Customs Code Committee 
comprises the following sections: Section for Genera l Customs Rules; Origin Section; Duty-Free 
Arrangements Section; Customs Valuation Section;  Section for Customs Warehouses and Free Zones; 
Section for Customs Procedures with Economic Im pact; Transit Section; Single Administrative 
Document Section; Repayment Section; Tariff and St atistical Nomenclature Section; Section on the 
Movement of Air or Sea Passengers' Baggage; Econo mic Tariff Questions Section; Counterfeit Goods 
                                                      
8 Case 11/70, Internationale Handelsgesellschaft , [1970] ECR 1125, para. 3 (Exhibit EC-6). 
9 Case 26/62, Van Gend en Loos , [1963] ECR 1, 25 (Exhibit EC-7). 
10 Koen Lenaerts/Piet van Nuffel, Constitutional Law of the European Union , 2nd ed, para. 14-047 
(2005) (Exhibit EC-10). 
11 Exhibit US-9. The Rules of Procedure of the Commi ttee are also available on the public website of 
the European Commission:  
http://europa.eu.int/comm/taxation_customs/customs /procedural_aspects/general/community_code/ind
ex_en.htm 
12 These standard rules of procedure have been published in the Official Journal (Exhibit EC-2). WT/DS315/R 
Page 6  
 
 Section; Section for favourable treatment (end-u se of goods).  The Customs Code Committee is 
composed of representatives from each member State and chaired by a representative of the Commission. 
2.17 Article 249 of the Community Customs Code states that the Customs Code Committee has 
the authority to examine any question concerning cust oms legislation which is raised by its chairman, 
either on his own initiative or at the request of a me mber State's representative.  A similar provision is 
found in Article 8 of Regulation No. 2658/87 estab lishing the Common Customs Tariff, according to 
which the Committee may examine any matter referre d to it by its chairman, either on his own 
initiative or at the request of a representative of a member State, concerning the CN or the Taric. 
2.18 In practice, the Customs Code Committee unde rtakes the following tasks: gives opinions on 
amendments to the Community Customs Code or implementing measures proposed by the 
Commission; examines questions concerning the interp retation of customs provisions or definitions of 
terms used in customs legislation; exercises powers granted by virtue of specific customs legislation 
e.g., Article 9(1) of Regulation No. 2658/87 rega rding: (a) amendment of the CN (including the 
creation of statistical Taric sub-headings); (b ) consideration of classification regulations; (c) 
determination of the position of the European Co mmunities in the Harmonized System Committee.  
The opinions of the Customs Code Committee are not legally binding.
13 
2.19 Articles 247a and 248a of the Community Customs Code provide that the Customs Code 
Committee shall act as a regulatory or management committee.  Article 247 of the Community Customs Code foresees that the measures necessar y for the implementation of the Community 
Customs Code are normally adopted according to the regulatory procedure.  In certain cases, 
including those mentioned in Article 248 of the Community Customs Code, the management 
procedure applies instead. 
2.20 According to Article 2 of the "Comitology Decision" contained in Decision 1999/468/EC,
14 
the regulatory procedure should be applied for the ad option of "measures of general scope designed to 
apply essential provisions of basic instruments".  Ar ticle 5 of the Comitology Decision provides that 
the Commission can adopt a proposed measure only  if the Committee has agreed by qualified 
majority.15  If no such majority has been reached or a qualified majority is against the proposal, the 
draft is submitted to the European Council.  The European Council must then decide by qualified 
majority within 3 months, including to reject the m easure in question.  If no decision is taken within 
this time limit, the Commissi on adopts the proposed measure. 
2.21 The "management procedure", which applies to "management measures",16 is prescribed in 
Article 4 of Decision 1999/468/EC.  That Article pr ovides that, under this procedure, the Commission 
can adopt a proposed measure even  when the Committee does not agr ee.  However, if a negative 
opinion is rendered with a qualified majority by  the Committee, the Commission must involve the 
European Council who can take a different decision  with qualified majority within 3 months.  The 
Commission can defer the application of the measure in such cases.  In the ev ent that the European 
Council takes no decision within three months, the suspended measure becomes applicable. 
                                                      
13 Joined Cases 69 and 70/76, Dittmeyer , [1977] ECR 231 (Exhibit EC-31). 
14 Exhibit US-10. 
15 A "qualified majority" decision involves a weighing of the votes of the member States pursuant to 
Article 205(2) of the Treaty Establishing the European Community, as amended by Article 3 of the Protocol on 
the Enlargement of the European Union.    
16 Article 2 of the Comitology Decision explains that "management measur es" include measures 
relating to the application of the common agricultural an d common fisheries policies, or to the implementation 
of programmes with substantial budgetary implications.  WT/DS315/R 
 Page 7 
 
 
 2.22 Community legal acts other than the Community Customs Code may also include references 
to the Customs Code Committee.  In such cases, the applicable deci sion-making procedure is laid 
down in the provision attributing decision-making  power to the Commission.  One example is 
Article 10 of Regulation No. 2658/87 establishing the Common Customs Tariff, which provides that 
the Commission will be assisted by the Custom s Code Committee in accordance with the 
management procedure. 
4. EC courts 
(a) Role and function of the courts of member States 
2.23 The courts of the member States perform a dua l role.  When determining a dispute governed 
by national law, they form part of the national le gal order.  However, these national courts assume the 
status of Community courts when determining a cas e governed by Community law.  The courts of the 
member States are competent to determine any di spute in cases where jurisdiction is not expressly 
conferred on the ECJ nor on the EC Court of First Instance.  Pursuant to Article 234 of the EC Treaty, courts of member States may refer questions to the ECJ. 
(b) Role and function of the ECJ 
2.24 The ECJ and the Court of First Instance of  the European Communities are constituted under 
the EC Treaty and the Protocol on the Statute of the ECJ annexed to it.
17  Both Courts are composed 
of one judge per member State and they normally decide in chambers of three or five judges.  The ECJ is assisted by eight Advocates General, who provide opinions on cases. 
2.25 According to Article 220 of the EC Treaty, the central task of the ECJ and the Court of First 
Instance is to ensure that, in th e interpretation and application of the Treaty, the law is observed.  
Actions may be taken directly to the ECJ such as acti ons against member States for failure to fulfil an 
obligation under Community law (Articles 226-228 of the EC Treaty), actions for the annulment of a 
Community measure (Articles 230-231 of the EC Treaty), actions for failure by a Community 
institution to act (Article 232 of the EC Treaty), and actions for damages relating to the Community's 
non-contractual liability (Article 235 of the EC Treaty).   
2.26 Proceedings before the ECJ may also originat e from a national court under Article 234 of the 
EC Treaty.  According to Article 234 EC, nati onal courts may refer any question regarding the 
interpretation of Community law to the ECJ.  With  certain exceptions, member States' courts against 
whose decision there is no judicial remedy under na tional law are obliged to refer such questions to 
the ECJ. 
2.27 Article 225(1) of the EC Treaty provides that the Court of First Instance shall have 
jurisdiction at the first instance in respect of actions  for annulment, actions for failure to act, actions 
founded on non-contractual liability, staff cases and cases under arbitration clauses in Community 
contracts, with the exception of those reserved to th e ECJ.  According to Article 51 of the Statue of 
the Court of Justice, the ECJ shall hear actions br ought by the Member States,  the institutions of the 
Communities and by the European Central Bank.  The ECJ may hear appeals on points of law from 
decisions of the Court of First Instance, where that Court has jurisdiction at first instance. 
                                                     
 
17 Exhibit  US-42. WT/DS315/R 
Page 8  
 
 5. Cooperation between the member States and between the member States and the 
Commission 
(a) Council Regulation (EC) No. 515/97 
2.28 Council Regulation (EC) No. 515/97 on mutual assistance between the administrative 
authorities of the member States and cooperation between the latter and the Commission seeks to 
ensure the correct application of, inter alia , the law on customs matters.
18 
2.29 Title I of Regulation No. 515/97 deals with the provision of assistance on request between 
member States customs authorities.  Title II d eals with spontaneous assistance between customs 
authorities.  Title III deals with relations betw een member States' customs authorities and the 
Commission.  Title V establishes the Customs Information System, which is an automated 
information system for the use of the administrative authorities of the member States and the 
Commission to assist EC customs authorities in prev enting, investigating, and prosecuting operations 
that are in breach of customs law. 
(b) Action programmes 
2.30 The Community has adopted and implemen ted successive action programmes aimed at 
strengthening the effective implem entation of the EC customs union.  The current action program, 
"Customs 2007", applies for the period of 1 January 2003 to 31 December 2007.  It is established by 
Decision 253/2003/EC of the European Parliament and the Council.19  The objectives of Customs 
2007 are set out in Article 3 (1) of Decision 253/2003.  According to this Article, the objectives of the 
program are to ensure that the memb er States' customs administrations: 
(a) carry out coordinated action to ensure  that customs activity matches the needs 
of the Community's internal market th rough implementing the strategy set out 
in the aforementioned Commission co mmunication and Council resolution on 
a strategy for the customs union; 
(b) interact and perform their duties as efficiently as though they were one 
administration and achieve equivalent results at every point of the 
Community customs territory; 
(c) meet the demands placed on them by globalisation and increasing volumes of 
trade and contribute towards strengthening the competitive environment of the European Union; 
(d) provide the necessary protection of the financial interests of the European 
Union and provide a secure and safe environment for its citizens; 
(e) take the necessary steps to prepar e for enlargement and to support the 
integration of new member States. 
2.31 Customs 2007 foresees a number of programme acti ons, which include actions in the field of 
communication and information exchange systems, be nchmarking, exchanges of officials, seminars, 
workshops and project groups, training activities, mon itoring actions, and external  actions  in the form 
of technical assistance and training. 
                                                     
 
18 Exhibit EC-42. 
19 Exhibit EC-43.  WT/DS315/R 
 Page 9 
 
 
 6. Training 
2.32 The training of customs officials of the member States takes place primarily at the national 
level.  In addition, a "Common Customs Traini ng Programme" was developed in the context of 
Customs 2007. 
7. Budgetary and financial control 
2.33 According to Article 2(1)(b) of the Counc il Decision 2000/597/EC, Euratom on the system of 
the European Communities' own resources20, common customs tariff duties and other duties 
established in respect of trade with non-member c ountries shall constitute an "own resource" entered 
into the budget of the European Communities.  Article 17(1) of Council Regulation (EC/Euratom) 
No. 1150/200021 provides that member States must take all requisite measures to ensure that the 
amounts corresponding to the Community's entitlement  are made available to the Community as 
specified in that Regulation.  In accordance with  Article 18(2)(a) of Regul ation No. 1150/2000, the 
member States must, at the request of the EC Co mmission, carry out additional inspections, with 
which the Commission shall be associated at its request.  According to Article 18(3) of Regulation No. 1150/2000, the Commission may also itsel f carry out inspection measures on the spot. 
C. 
SPECIFIC AREAS OF CUSTOMS ADMINISTRATION RE FERRED TO BY THE UNITED STATES IN ITS 
SUBMISSIONS  
1. Tariff Classification 
2.34 The term "tariff classification" is defined in Article 20(6) of the Community Customs Code as 
the relevant subheading of: (a) the CN or any othe r nomenclature based on it, with or without further 
subdivisions, which is used for the application of  Community tariff measures relating to trade in 
goods (e.g., tariff suspensions, tariff preferences, anti-dumping duties); or (b) any other Community 
nomenclature based on the CN, with or without furthe r subdivisions, which is used for the application 
of non-tariff measures relating to trade in goods  (e.g., import quotas for textile products, export 
refunds for agricultural goods). 
2.35 The obligation to classify products under the Co mmunity Customs Code is borne by "customs 
authorities", which are defined in Article 4(3) of the Community Customs Code as the authorities 
responsible inter alia  for applying customs rules.  In the c ontext of the European Communities, which 
is a customs union and which has a common customs tariff between EC member States and third countries, the member State administrations are responsible for all opera tions relating to the 
implementation on a day-to-day basis of the CN, including the making of classification decisions. 
2.36 Jurisprudence of the ECJ establish es that tariff classification is carried out on the basis "of the 
objective characteristics and properties of products  which can be ascertained when customs clearance 
is obtained".
22  Classification instruments that may be  applicable throughout the European 
Communities include classification regulations, HS explanatory notes and opinions, EC explanatory 
notes, and opinions of the Customs Code Committee and binding tariff information. 
                                                      
20 Exhibit EC-44. 
21 Exhibit EC-45. 
22 Case 38/76, Luma , [1976] ECR 2027, para. 7 (Exhibit EC-18); Case C-233/88, van de Kolk , [1990] 
ECR I-265, para. 12 (Exhibit EC-19). WT/DS315/R 
Page 10  
 
 (a) Classification Regulations 
2.37 Pursuant to Article 9(1)(a) of Regulation No . 2658/87, the Commission may adopt regulations 
on the classification of goods.  Such classification regulations are adopted by the Commission in accordance with the management procedure referred to in Article 10 of Regulation No. 2658/87.  
Classification regulations determine the tariff subhead ing to be applied to the specific good described 
in the Regulation but may also become relevant by analogy to products simila r to those described in 
the regulation.
23  A classification regulation is binding th roughout the Community in accordance with 
Article 249(2) of the EC Treaty but cannot amend the CN.24 
(b) HS Explanatory Notes and WCO Opinions 
2.38 According to Article 7(1)(b) of the HS Convention, the HS Committee can prepare 
Explanatory Notes, classification opinions and othe r advice as guidance to the interpretation of the 
HS.  The ECJ has stated in its case law that, even though they are not normally binding in Community law, HS Explanatory Notes and classification opi nions of the World Customs Organization (WCO) 
are important aids in the interpretation of the Common Customs Tariff.
25  Nevertheless, the ECJ has 
also judged that an interpretation of the HS  approved by the WCO Council is binding on the 
Community when it reflects general practice followed by the member States, unless it is incompatible 
with the wording of the heading concerned or go es manifestly beyond the discretion conferred on the 
WCO.26 
(c) Explanatory Notes of the Combined Nomenclature 
2.39 According to Article 9(1)(a) of Regulation No. 2658/87, the Commission may issue 
explanatory notes to the CN.  Such explanator y notes are adopted by the Commission in accordance 
with the management procedure foreseen in Article  10 of that Regulation.  Explanatory notes may 
clarify particular issues of tariff classification arising under the CN but are distinct from the notes 
which introduce the chapters of the CN.27  Explanatory notes to the CN are not legally binding, and 
cannot amend the CN.  However, the ECJ has repeatedly acknowledged that explanatory notes are an important aid in the interpretation of the CN.
28 
(d) Opinions of the Customs Code Committee 
2.40 On the basis of Article 8 of Regulation No. 2658/87, the Customs Code Committee may adopt 
opinions on questions relating to the application a nd interpretation of the CN.  Such opinions are 
distinct from opinions which the Committee adopts in  the context of a comitology procedure on 
measures proposed by the Commission.  Opinions adopted by the Committee are not legally binding. 
However, the ECJ has held that that such opini ons constitute an important means of ensuring the 
                                                      
23 Case C-130/02, Krings , judgment of 4 March 2004 (not yet in the official reports), para. 35 
(Exhibit EC-20). 
24 Case C-401/93, GoldStar , [1994] ECR I-5587, para. 19 (Exhibit EC-21); Case C-265/89, Vismans , 
[1990] ECR I-3411, para. 13 (Exhibit EC-22). 
25 Case C-396/02, DFDS , judgment of 16 September 2004 (not yet published), para. 28 (Exhibit EC-
25); Case 14/70, Deutsche Bakels, [1970] ECR 1001, paras 9-10 (Exhibit EC-26). 
26 Cf. Case C-233/88, van de Kolk , [1990] ECR I-265, para. 9 (Exhibit EC-19). 
27 Case 183/73, Osram, [1974] ECR 477 , para. 12 (Exhibit EC-27);  Case 149/73, Witt, [1973] ECR 
1587, para. 3 (Exhibit EC-28). 
28 Case C-396/02, DFDS , judgment of 16 September 2004 (not yet published), para. 28 (Exhibit EC-
25); Case C-259/97, Clees , [1998] ECR I-8127, para. 12 (Exhibit EC-29).  WT/DS315/R 
 Page 11 
 
 
 uniform application of the common customs tariff by the authorities of the member States and, as 
such, can be considered as a valid aid to the interpretation of the Common Customs Tariff.29 
(e) Binding tariff information 
2.41 The basic provisions on binding tariff information ("BTI") are set out in Article 12 of the 
Community Customs Code.  Further rules concerning binding information are contained in Title II of 
Part I of the Implementing Regul ation (Articles 5-14).  These additional provisions address, in 
particular, the procedures for obtaining binding information, measures to be taken in the event of binding information, the legal effect of binding inform ation, and the expiry of binding information.  In 
addition, the Commission has issued administra tive guidelines on the European Binding Tariff 
Information (EBTI) System and its operation.
30  
2.42 The aim of binding information is to enable the trader to proceed with certainty where there 
are doubts as to the classification or origin of goods, thereby protecting the trader against any 
subsequent change in the position adopted by the customs authorities. 
2.43 According to Article 6(1) of the Implemen ting Regulation, applications for binding 
information are to be made in writing, either to  the customs authorities in the member State or 
member States in which the information is to be us ed, or to the competent customs authorities in the 
member State in which the applicant is establishe d.  In accordance with Article 6(5) of the 
Implementing Regulation, a list of the member States ' authorities competent to issue BTI is regularly 
published in the Official Journal.31 
2.44 The application must be made on a standard application form conforming to the specimen 
contained in Annex 1B to the Implementing Regulation.   The details that an application for BTI must 
contain are set out in Article 6(3)(A) of the Implementing Regulation.  According to 
Article 6(3)(A)(j), the application must contain the indication by the applicant whether, to his knowledge, BTI for identical or similar goods has al ready been applied for, or issued in the 
Community.   
2.45 Article 8(1) of the Implementing Regulation provides that a copy of the application for BTI, a 
copy of BTI notified to the applicant, and the info rmation contained in copy 4 of the BTI form shall 
be transmitted to the Commission.  This transmis sion is done by electronic means.  In accordance 
with Article 8(3) of the Implementing Regulation, th is data is stored in a database of the Commission, 
called the EBTI data base.  There are two versions of this database.  One is available to the public for 
consultation; the other is exclusively available to  the Commission and issuing customs authorities of 
the member States.  The version available to th e public allows searches of valid BTI by issuing 
country, start and end date of validity, BTI referen ce, CN code, keyword, or product description.  The 
public version of the EBTI database is accessible on the website of the European Commission.
32  The 
version available to the Commission and customs authorities of the member States contains additional information of a confidential nature, which is not made available to the public (i.e. the name and 
address of the applicant, holder and agent, if one has been appointed, confidential commercial details 
concerning the goods for which the BTI has been issued, including trade names).  The version 
available to the Commission and issuing customs author ities also contains all applications for BTI that 
have been submitted to member State customs admi nistrations and BTI that has ceased to be valid.
33  
                                                      
29 Joined Cases 69 and 70/76, Dittmeyer, [1977] ECR 231, para. 4 (Exhibit EC-31). 
30 Exhibit EC-32. 
31 Exhibit EC-33. 
32 http:// europa .eu.int/comm/taxation_customs/dds/en/ebticau.htm . 
33 A copy of the search interface of the database available to the Commission and issuing authorities of 
the member States are contained in Exhibit EC-34. WT/DS315/R 
Page 12  
 
 According to the administrative guidelines issued by the Commission on the EBTI system, the EBTI 
database should be consulted by customs authorities prior to the issuance of BTI in cases where there 
is a doubt regarding the correct classification, or  where different headings merit consideration.
34 
2.46 As for who is responsible for issuing BTI, this is the task of member State customs 
authorities.  In particular, Article 12 of the Community Customs Code provides that member State 
customs authorities must, upon written request, issu e BTI.  When the customs authorities have 
possession of all the elements nece ssary for them to determine the classification of the goods, BTI 
shall be notified to the applicant as soon as po ssible in accordance with Article 7(1) of the 
Implementing Regulation. 
2.47 Article 10 of Implementing Regulation provides that BTI may only be invoked by the holder 
of the information or the holder's representative.35  Articles 5 and 11 of the Implementing Regulation 
provide that BTI is binding on the administration of all member States.  Further, according to Article 12(2) of the Community Customs Code, BTI will be binding on the customs authorities as against the holder of the BTI.  Article 12(3) of th e Community Customs Code clarifies that BTI will 
be binding only in respect of the tariff classification of goods that correspond in every respect to those 
described in the information.  Article 12(4) of the Community Customs Code indicates that BTI will 
be valid for a period of six years but may be annulle d where the customs authorities determine that the 
information is based on inaccurate or incomplete info rmation from the applicant.  Article 12(5) of the 
Community Customs Code identifies the circum stances in which BTI shall cease to be valid, 
including where BTI is revoked or amended in accordance with Article 9.  Article 9 of the 
Community Customs Code, in turn, provides for revo cation or amendment of BTI where "one or more 
of the conditions laid down for its issue were not or  are no longer fulfilled."  The ECJ has held that a 
member State customs authority is entitled to cons ider that one of the provisions laid down for the 
issuance of BTI is no longer fulfilled and to revoke that BTI where, on more detailed examination, it 
appears to that authority that its initial interpreta tion of the legal provisions applicable to the tariff 
classification of the goods concerned "is wrong, foll owing an error of assessment or evolution in the 
thinking in relation to  tariff classification"
36.   
2.48 The procedure that will apply in the event of inconsistencies arising in BTI is set out in 
Article 9 of the Implementing Regulation.  In partic ular, such inconsistencies may be considered by 
the Customs Code Committee if it has been placed  on the agenda of the next meeting of the 
Committee by the Commission or at the request of a representative of a member State.  Article 9 
further provides that, in light of such inconsistenc ies, the Commission must adopt a measure to ensure 
the uniform application of the CN rules, as app licable, as soon as possible and within six months 
following the meeting at which the inconsistency is placed on the agenda of the Customs Code 
Committee.  The measures foreseen in Article 9(1) of the Implementing Regulation may take the form 
of a classification regulation adopted by the Commis sion on the basis of Article 9(1)(a) of Regulation 
No. 2658/87.  In accordance with Article 12(5)(a)(i ) of the Community Customs Code, where such a 
regulation is adopted, BTI which is not in accordance w ith it will cease to be valid.  Alternatively, the 
Commission may also, on the basis of Article 12( 5)(a)(iii) of the Community Customs Code and 
Article 9(1) of the Implementing Regulation, adopt a decision obliging the member State who issued 
BTI to revoke it.   
                                                      
34 Exhibit EC-32, p. 7. 
35  Article 5(3) of the Implementing Regulation defines the "holder" of BTI to mean "the person in 
whose name the binding information is issued."  The "holder" of BTI need not be the same as the "applicant" for 
BTI.   
36 Timmermans Transport & Logistics BV v. Inspecteur der Belastingdienst – Douanendistrict 
Rososendaal and Hoogenboom Production Lts. v. Inspect eur der Belastingdienst – Douanendistrict Rotterdam , 
Joined Cases C-133/02 and C-134/02, 2004 ECR I-01125, 22 January 2004, para. 25 (Exhibit US-2).  WT/DS315/R 
 Page 13 
 
 
 2. Customs valuation 
2.49 Where customs duties are calculated on an ad valorem basis – that is, they are expressed as a 
percentage of the value of the good – the assessment of duties owed must include the valuation of the 
good. 
2.50 The basic provisions on customs valuation are contained in Chapter 3 of Title II of the 
Community Customs Code (Articles 28-36).  More de tailed provisions are contained in Title V of the 
Implementing Regulation (Articles 141-181a).  Title V is subdivided into seven chapters, concerning 
general provisions; royalties and licensing fees; the place of introduction into the Community; transport costs; rates of exchange; simplified pr ocedures for perishable goods ; and declarations of 
particulars and documents to be furnished.  In addition, Annex 23 of the Implementing Regulation 
contains interpretative notes on customs valuation.   Article 141(1) of the Implementing Regulation 
requires that, when applying the provisions of th e Community Customs Code and the Implementing 
Regulation, member States shall comply with the interpretative notes. 
2.51 Pursuant to Article 29 of the Community Cust oms Code, the primary basis for determination 
of customs value in the European Communities is th e "transaction value" – that is, the price actually 
paid or payable for the imported goods.  The tr ansaction value may be used for imported goods 
provided that none of the restrictions or conditions  leading to the rejection of the transaction value 
applies. 
2.52 According to Article 32 of the Community Customs Code, the transaction value must be 
adjusted by additions  to the price for: (a) commissions and br okerage; (b) the cost of containers and 
packing; (c) goods and services supplied by the buyer;  (d) any royalties or licence fees related to the 
goods; (e) the proceeds to the seller of any subse quent resale, disposal or use of the imported 
merchandise; and (f) the costs of transport, insura nce, loading and handling charges in the exporting 
country.  Articles 157 - 159 of the Implementing Re gulation provide further guidance concerning the 
meaning of "royalties" and the circumstances when th ey should be included in the transaction value.  
Article 33 of the Community Customs Code provides th at the transaction cost must also be adjusted 
by deductions  to the price for, for example: (a) cost s for transportation within the European 
Communities; and (b) EC customs duties, antidum ping duties and other charges payable in the 
European Communities by reason of the importation or sale of the goods. 
2.53 The transaction value is the preferred and prim ary method of valuation and is used in most 
instances.  However, pursuant to Article 29(1)(b ) of the Community Customs Code, the transaction 
value may be rejected if, inter alia , the buyer and seller are "related" parties.  Article 143 of the 
Implementing Regulation defines "related" parties to  include cases such as: (a) where the parties are 
legally recognized partners in business; and (b) one of them directly or indirectly controls the other.  
Article 29(2) of the Community Customs Code makes it clear that the existence of a legal relationship 
between the buyer and seller does not necessarily mean that the transaction value will be rejected.  
This will only occur if the relationship influen ces the price.  Annex 23 of the Implementing 
Regulation, which contains interpretative notes on cu stom value, explains in more detail when the 
transaction value should be disregarded in light of the relationship between buyer and seller. 
2.54 Article 30 of the Community Customs Code provides that, if the transaction value cannot be 
used, alternative bases for valua tion are to be used in the following sequential order: (a) the 
transaction value of identical goods; (b) the transact ion value of similar goods; (c) the unit price at 
which the imported or identical or similar goods are sold in the greatest aggregate quantity to persons 
not related to the sellers; and (d) the computed va lue, which is the production cost including general 
expenses and the usual amount of profit.  Anne x 23 of the Implementing Regulations provides 
additional guidance regarding when thes e alternative methods can be used. WT/DS315/R 
Page 14  
 
 2.55 Article 147(1) of the Implementing Regulation provides that, for the purposes of Article 29 of 
the Community Customs Code, the fact that the goods which are the subject of a sale are declared for 
free circulation shall be regarded as adequate indication that they we re sold for export to the customs 
territory of the Community.  Article 147(1) of the Implementing Regulation further provides that, in the case of successive sales before valuation, only th e last sale, which led to the introduction of the 
goods into the customs territory of the Community, or a sale taking place in the customs territory of 
the Community before entry for free circulation of the goods, shall constitute such indication. 
2.56 Where a need for further detailed rules on valuation occurs, the Commission may, in 
accordance with the procedure refe rred to in Article 247 of the Co mmunity Customs Code, amend the 
valuation rules contained in the Implementing Re gulation, which will be legally binding in all 
member States.  In addition, in accordance with  Article 249 of the Community Customs Code, the 
Customs Code Committee (through its Customs Valuation Section) may examine questions concerning the application of EC customs legislation in the field of valuation.  The Commission has also issued a Compendium of Customs Valuation texts which contains commentaries prepared and conclusions reached by the Customs Code Committ ee on specific issues of customs valuation on the 
basis of Article 249 of the Community Customs Code.  In addition, it contains excerpts from relevant 
judgments of the ECJ on valuation issues, as well as indices of other relevant texts.
37 
3. Audit following release for free circulation 
2.57 Article 78 of the Community Customs Code au thorizes customs authorities to inspect the 
commercial documents and data relating to any im ports or exports or to subsequent commercial 
operations involving them.  Such inspections help customs authorities to be in a position to satisfy 
themselves as to the accuracy of the particulars cont ained in the relevant customs declaration.  Such 
inspections may be carried out at the premises of the declarant or of any person directly or indirectly 
involved in these operations.  Customs authorities may also examine goods where it is still possible for them to be produced. 
2.58 No provisions in the Community Customs Code  nor in the Implementing Regulation oblige 
customs authorities to conduct audits following the release of goods for free circulation or impose any 
obligations on the manner in which such audits are to be conducted.  However, the EC Commission in 
conjunction with the member States has pr epared a Community Customs Audit Guide
38, which sets 
out a framework for post-clearance and audit-based controls. 
4. Penalties for infringements of EC customs law  
2.59 There are no provisions in the Community Cust oms Code nor in the Implementing Regulation 
that define the penalties applicable for violations of  EC customs law.  Therefore, as a general rule, the 
nature and level of such penalties, whether administra tive or criminal in nature, are determined by the 
national laws of the member States.  Nevertheless , in furtherance of Article 10 of the EC Treaty, 
member States must take all measures necessary fo r the proper implementation and application of EC 
law, including the provision of penalties for violations of  EC law.  In particular, they must ensure that 
particular infringements of Community law are penalized under conditions, both procedural and 
substantive, which are analogous to those applicab le to infringements of national law of a similar 
nature and importance and which, in any event,  make the penalty eff ective, proportionate and 
dissuasive.39  This has been confirmed by Council resolu tion of 29 June 1995 on the effective uniform 
                                                      
37 Exhibit EC-37. 
38 Exhibit EC-90. 
39 Case C-68/88, Commission/Greece , [1989] ECR 2965, para. 23-25 (Exhibit EC-38); similarly, Case 
C-326/88, Hansen , [1990] ECR I-2911, para. 17 (Exhibit EC-39); Case C-36/94, Siesse , [1995] ECR I-3573, 
para. 20 (Exhibit EC-40); Case C-213/99, Andrade , [2000] ECR I-11083, para. 19, 20 (Exhibit US-31).  WT/DS315/R 
 Page 15 
 
 
 application of Community law and on the penalties applicable for breaches of Community law in the 
internal market, which recalls the relevant ca se law of the ECJ and calls upon member States to 
ensure that "Community law is duly applied with  the same effectiveness and thoroughness as national 
law and that, in any event, the penalty provi sions adopted are effective, proportionate and 
dissuasive".40  Where a member State fails to provide such effective, proportionate and dissuasive 
penalities, it fails to fulfil its obligations under the EC Treaty.41 
5. Processing under customs control 
2.60 Article 130 of the Community Customs Code states that the procedure for processing under 
customs control allows non-Community goods to be used in the customs territory of the Community 
in operations which alter their nature or state, without being subject to import duties or commercial 
policy measures, and thereafter allows the processed pr oducts to be released for free circulation at the 
rate of import duty applicable  to the processed products. 
2.61 Article 85 of the Community Customs Code pr ovides that the use of  the procedure for 
processing under customs control (which is defined as  a customs procedure with economic impact) is 
conditional upon authorizati on being issued by the customs authorities at the request of the person 
who carries out the processing or a rranges for it to be carried out.  Authorization will only be granted 
if certain conditions are fulfilled.  One such conditi on is contained in Article 133(e) of the Community 
Customs Code. 
2.62 Article 133(e) of the Community Customs Code provides that, before granting authorization 
under Article 85, the customs authorities must exam ine the economic consequences of the use of the 
processing under customs control procedures to dete rmine whether or not the procedure helps to 
create or maintain a processing activity in the Eu ropean Communities without adversely affecting the 
essential interests of EC producers of similar goods.  Article 502(3) of the Implementing Regulation 
provides that, in respect of processing under custom s control arrangements, the examination shall 
establish whether the use of non-Community sources enables processing activities to be created or 
maintained in the Community. 
2.63 Article 552 and Part A of Annex 76 of the Im plementing Regulation set out the cases in 
which the economic conditions are deemed to be fulf illed so that, in those cases, an examination of 
the economic conditions is not necessary.  For the types of goods and operations mentioned in Part B 
of Annex 76 of the Implementing Regulation and those not covered by Part A of that Annex, the 
examination of the economic conditions must take place at Community level, through the relevant 
Committee procedure.  For the types of goods an d operations not mentioned in Annex 76 of the 
Implementing Regulation, pursuant to Articles 502(1) and 552(1) of the Implementing Regulation, the 
examination of the economic conditions shall take pl ace at national level.  When examinations take 
place at the national level, member States must communicate to the Commission relevant information in accordance with Article 522 of the Implementing Regulation.  Furthermore, pursuant to Articles 
503 and 504 of the Implementing Regulation, if a memb er State objects to an authorization issued or 
if the customs authorities concerned wish to consu lt before or after issuing an authorization, an 
examination of the economic condition may take place at Community level. 
6. Local clearance procedures 
2.64 Pursuant to Article 263 of the Implementing Regulation, customs authorities of EC member 
States may allow, upon request, the use of the "local clearance procedure" to any applicant wishing to 
                                                     
 
40 Exhibit EC-41. 
41 Case C-68/88, Commission/Greece , [1989] ECR 2965, para. 23-25 (Exhibit EC-38), where Greece 
was found to have violated its obligations under Article 10 of the EC Treaty. WT/DS315/R 
Page 16  
 
 have goods released for free circulation at the appl icant's premises or at other designated places.  In 
other words, an importer may have goods released fo r free circulation at its own premises or certain 
other designated locations without having to present the goods to customs. 
2.65 The basic provision for the local clearance pro cedure is Article 76(1)(c) of the Community 
Customs Code.  Additionally, where a data-pro cessing technique is used, Article 77 of the 
Community Customs Code shall apply.  More deta iled provisions are laid down in Articles 263 – 267 
of the Implementing Regulation. 
2.66 Under Article 263 of the Implem enting Regulation, authorisation to use the local clearance 
procedure shall be granted to any person wishing to  have goods released for free circulation at his 
premises or at the other places designated or approved  by the customs authorities in respect of goods 
subject to certain procedures (transit or custom s procedures with economic impact) or which are 
brought into the customs territory of the Commun ity with an exemption from the requirement that 
they be presented to customs.  Article 264(1)  of the Implementing Regulation provides that 
authorisation for local clearance will be granted provided that the applicant's records enable the 
customs authorities to carry out effective checks. 
7. Recovery of customs debt 
2.67 Revenue from import and export duties based on the Common Customs Tariff constitutes 
"own resources" pursuant to Article 2(1)(b) of th e Council Decision 2000/597/EC, Euratom.  Articles 
217 – 220 of the Community Customs Code govern th e entry into the accounts of the member States 
and, therefore, constitute the link between, on the one hand, the obligations of the debtor to pay 
import or export duty to the national customs administration and, on the other hand, the member 
States' obligation to make the "own resources" ava ilable to the European Communities.  Pursuant to 
Article 221 of the Community Customs Code, as soon as the amount has been entered into the 
accounts, it must be communicated to the debtor in  accordance with the appropriate procedures.  
Article 221(3) of the Community Customs Code stipulates the period of time within which the debt must be communicated to the debtor. 
D. 
REVIEW OF CUSTOMS DECISIONS  
1. Decisions the subject of judicial review 
2.68 A "decision" is defined in Article 4(5) of the Community Customs Code as any "official act 
by the customs authorities pertaining to customs ru les giving a ruling on a particular case, such act 
having legal effects on one or more specific or identifiable persons ; this term covers, inter alia , 
binding information within the meaning of Artic le 12 [of the Community Customs Code]".  In 
addition, Article 6(3) of Community Customs Code provides that "[d]ecisions adopted by the customs 
authorities in writing which either reject requests or are detrimental to the persons to whom they are 
addressed shall set out the grounds on which they are based.  They shall refer to the right of appeal 
provided for in Article 243". 
2.69 Article 243(1) of the Community Customs Code provides that any person directly and 
individually concerned by a decision  of the customs authorities regarding the application of customs 
legislation has the right to lodge an appeal.  An a ppeal is also possible where a requested decision has 
not been taken within the time period stipulated in Article 6(2) of the Community Customs Code. 
2. Review by member States' customs authorities and courts 
2.70 Article 243(1) of the Community Customs Code st ates that an appeal must be lodged in the 
member State where the relevant d ecision has been taken or applied for.  In addition, Article 245 of  WT/DS315/R 
 Page 17 
 
 
 the Community Customs Code states that "provision s for the implementation of the appeals procedure 
shall be determined by the member States", meani ng that appeals procedures are laid down in the 
national laws of the member States. 
2.71 Article 243(2) indicates that the right of appeal may be exercised: (a) initially before the 
customs authorities designated for that purpose by the member States; and (b) subsequently, before an 
independent body, which may be a judicial authority  or an equivalent specialised body, according to 
the provisions in force in the member States. 
2.72 With respect to review by customs authorities d esignated in member States, this is required in 
most member States.  However, in Belgium, Est onia, Greece, Cyprus, France, Malta and Portugal, 
administrative reviews are voluntary.  Further, in Sweden, there is no administrative review and the 
administrative decision has to be appealed directly to the courts.  Administrative authorities in the 
member States can repeal, revoke, alter or replace a disputed administrative decision. 
2.73 Regarding appeals to member States' courts, mo st such courts are only entitled to annul the 
administrative decision should they consider it unlaw ful.  However, in some cases, the courts may 
substitute their own decisions in cases involving the payment of duties.  A few national courts have 
the power to substitute or amend the administra tive decision challenged: Denmark, Latvia, the 
Netherlands, Sweden and Slovenia. 
3. Direct appeals to the ECJ 
2.74 Article 230 of the EC Treaty vests individuals w ith the right to approach the Court of First 
Instance directly in certain cases.  Article 230, whic h concerns actions for annulment, deals with the 
jurisdiction of the ECJ to review the legality of act s jointly adopted by the European Parliament and 
the Council, the European Commission and the ECB, or by the Council itself or the Parliament where 
the act is intended to produce legal effects vis-à- vis third parties.  An action for annulment under 
Article 230 does not cover acts adopted by a national authority.  Nor does it extend to the EC Treaty 
and its amendments. 
III. PARTIES' REQUESTS FOR FINDINGS AND RECOMMENDATIONS  
A. UNITED STATES42 
3.1 The United States requests the Panel to: 
(a) find that the European Communities is not in conformity with Article X:3(a) 
and Article X:3(b) of the GATT 1994; 
(b) recommend that the European Commun ities bring itself into compliance with 
Article X:3(a) and Article X:3(b) of the GATT 1994 promptly.  
B. EUROPEAN COMMUNITIES43 
3.2 The European Communities requests the Panel to  reject the claims raised by the United 
States. 
                                                      
42 US First Written Submission, para. 155, and Second Written Submission, para. 117.  
43 EC First Written Submission, para. 477, and Second Written Submission, para. 246. WT/DS315/R 
Page 18  
 
 IV. ARGUMENTS OF THE PARTIES 
4.1 The arguments of the parties' are set out in thei r written and oral submissions to the Panel, and 
in their answers to questions.  The parties' arguments as presented in their submissions are 
summarized in this section.  Th e summaries are based on the exec utive summaries submitted by the 
parties.  The parties' written answers to questions from the Panel and from each other are set out in the 
Annexes to this Report (see list of Annexes at page xvi).  
A. 
FIRST WRITTEN SUBMISSION OF THE UNITED STATES  
1. Introduction 
4.2 This dispute raises two questions: First, do es the European Communities ("EC") administer 
its customs laws, regulations, judicial decisions and administrative rulings of general application in a 
uniform, impartial and reasonable manner, as required by Article X:3(a) of the General Agreement on 
Tariffs and Trade 1994  ("GATT 1994")?  Second, does the EC ha ve in place judicial, arbitral or 
administrative tribunals or procedures for the purpose, inter alia , of the prompt review and correction 
of administrative action relating to customs matters, as required by Article X:3(b) of the GATT 1994?  
The answer to both questions is, no.  
4.3 Instead of administering its basic customs law in  a uniform way, the EC administers it in 25 
different ways.  As administration is the resp onsibility of each member State, questions of 
classification and valuation may be subject to as many  as 25 different interpretations, and traders are 
subject to 25 different procedural regimes for bringi ng goods into free circulation in the EC.  The net 
result is an administration that distorts rather th an facilitates trade and that imposes transaction costs 
that should not exist where administration is uniform. 
4.4 This problem is magnified by the absence of EC tribunals or procedures for the prompt 
review and correction of administra tive action relating to customs matters.  Like the administration of 
EC customs measures, appeals from customs decisi ons are a matter for each member State.  As a 
result, there are 25 different appellate regimes in th e EC, none of which can yield a decision with    
EC-wide effect, unless and until a question is referre d to the Court of Justice of the European 
Communities ("the ECJ").  
4.5 In the EC, the basic elements of the customs system are laid out in three pieces of legislation:  
the Community Customs Code ("CCC"), the CCC Implementing Regulation ("Implementing Regulation" or "CCCIR"), and the Common Customs Tariff ("the Tariff").  These measures (as well 
as related measures) are administered separately by  the customs authorities in each of the 25 member 
States of the EC.  There is a Customs Code  Committee ("the Committee"), consisting of 
representatives of each of the member States and ch aired by a representative of the Commission.  
Ostensibly, one of its functions  is to reconcile divergences that emerge in member State 
administration of EC customs law.  However, seri ous institutional constraints prevent it from fulfilling 
that function on a systematic basis.    
4.6 Where a trader disputes a decision by a member State's customs authorities, its only recourse 
is to appeal that decision through the courts or othe r review tribunals of the member State.  There is 
no EC forum to which a trader can promptly a ppeal a decision by a member State's customs 
authorities, including a decision that diverges from decisions of other member State authorities.  
4.7 As a Member of the WTO in its own right, th at is, separately from its constituent member 
States, the EC has an obligation to  provide for administration of its customs laws and to provide for 
the prompt review and correction of administrativ e action relating to customs matters in the manner 
prescribed by GATT Articles X:3(a) and (b), respectively.   The first question raised by this dispute is  WT/DS315/R 
 Page 19 
 
 
 whether the EC administers its customs law in a uniform manner, as required by Article X:3(a).  
Considering the ordinary meaning to be given to th e terms of that article, the question is whether the 
EC manages, carries on, or executes its customs law in a manner that is the same in different places or 
circumstances, or at different times.  Of particul ar relevance here is uniformity with respect to 
different places.   
4.8 One of the few panels to probe Article X:3(a) in any detail was the panel in Argentina – 
Measures Affecting the Export of Bovine Hides and the Import of Finished Leather  ("Argentina – 
Hides and Leather ").  The panel report in that dispute suppor ts the proposition that the requirement of 
uniform administration in Article X:3(a) includes administration that is uniform across the territory of a WTO Member.  The EC does not administer its customs law in a manner that is uniform across 
different places in the EC, as Article X:3(a) requires.  It administers its customs law in a manner that 
varies from member State to member State and fails to provide an EC mechanism for the systematic 
reconciliation of such variations.  
2. The EC fails to administer its customs law in a uniform manner 
(a) Customs classification 
4.9 One area in which divergent administration of  EC customs law is especially troubling is 
customs classification.  Not surprisingly, when 25 different authorities are tasked with interpreting a 
complex nomenclature system, the possibilities for dive rgent interpretations are substantial.  Indeed, 
the EC evidently was quite candid about this in  its dispute with Thailand and Brazil over the 
classification of frozen boneless chicken cuts ( European Communities – Customs Classification of 
Frozen Boneless Chicken Cuts ).  Neither the Code, nor any other provision of EC law of which the 
United States is aware, requires one member State to follow another member State's interpretation of 
the Tariff.  If one member State classifies a product under a particular tariff subheading, there is no 
requirement that other member States classify it under the same subheading.  A fortiori , there is no 
requirement that other member States follow the rationale of the first member State in classifying similar  goods. 
4.10 It is instructive to consider administration of the EC's provision for advance classification 
rulings, known as binding tariff information ("BTI").  Under the BTI system, an importer or other interested party applies to a member State's cu stoms authorities for issuance of BTI confirming the 
classification that will be assigned to particular goods on importation into the territory of that member State.  The application may be made by the "holder"  of the BTI (i.e. the person in whose name it is 
issued), or by another "applicant" (defined as any person who applies for BTI).  The holder or other 
applicant chooses the member State to which it will make the application.  
4.11 Once issued, BTI is "binding on the custom s authorities as against the holder of the 
information."  Article 11 of the Implementing Regulation states that BTI issued by the authorities of one member State is "binding on the competent au thorities of all the Member States under the same 
conditions."  However, in reality member States do not always treat BTI issued by other member 
States as binding, and the BTI system does not ensure uniform administration of customs 
classifications.  Moreover, pre-existing BTI issued by one member State does not prevent an applicant 
from trying to persuade a second member State that the classification in the original BTI was mistaken.  In issuing the new BTI, nothing in the Code or Implementing Regulation requires the authorities to adhere to the findings contained in the previously issued BTI. 
4.12 There are several ways in which the BTI system fails to achieve uniform administration with 
respect to classification.  The fi rst way is that it results in BTI shopping.  In theory, the Commission 
should be able to control BTI shopping by exercising its authority to reconcile inconsistent BTI.  
However, there are several impediments to the Comm ission performing this function.  First, it may be WT/DS315/R 
Page 20  
 
 difficult to detect whether, in fact, "different bindi ng information exists."  BTI is particular to the 
holder.  Thus, it is possible for two different  holders to possess conflicting BTI for identical 
merchandise.  That "different binding information ex ists" would not be readily apparent in that case.  
Even where the same holder possesses conflicting BT I, the existence of the conflict may not be 
readily apparent to the Commission or the represen tative of a member State.  The holder of the BTI 
may choose not to bring the conflict to the attenti on of the Committee.  Other persons interested in 
having the difference reconciled (e.g., competitors) w ould not necessarily be aware of the conflict.  
Conversely, where a holder or other interested pers on is aware of conflicting BTI and wants to see the 
conflict resolved, it has no right to have the matte r put before the Committee for resolution within a 
prescribed period of time.   
4.13 Moreover, differences in classification of identi cal goods from member State to member State 
need not necessarily manifest themselves through conflic ting BTI.  It is possible for an applicant to 
receive unfavorable BTI from one member State and simply import the goods at issue through another 
member State (possibly incurring additional shipping, distribution, or other costs) without necessarily 
seeking BTI from that State.  In that case, the existence of a difference would not necessarily be 
apparent to the Commission. 
4.14 The EC does have in place an electronic database  available to the public for searching BTI.  
In theory, one might be able to use the database  to determine whether different member States had 
issued conflicting BTI for identical products.  Ho wever, as a practical matter, such a search is 
extremely difficult, if not impossible.  
4.15 Moreover, the inability to achieve uniform appli cation of the Tariff through the BTI system is 
further demonstrated by the relative autonomy that each member State has with respect to revocation 
or amendment of BTI.  In a recent decision, in a case known as Timmermans , the ECJ held that a 
member State customs authority can revoke BTI b ased on its own reconsideration of the Tariff (as 
opposed to the revelation of facts not before it when  the BTI was issued).  The Court reached this 
conclusion, even though the Advocate General had recommended the opposite conclusion, observing 
that "the possibility of revoking BTI in this way is not readily compatible either with the objective of 
the uniform application of the customs nomenclature or with the objective of legal certainty pursued 
by the introduction of BTI."  Indeed, this is precisely the problem from the point of view of GATT Article X:3(a).  Whatever limited potential the BTI system might have to provide for some degree of 
uniformity across the EC with respect to the partic ular goods and holder that are the subject of the 
BTI is further undermined by the fact that revisions to BTI are not even ostensibly "binding."  
4.16 Finally, the problem of non-uniform administration of EC law on customs classification is 
illustrated by two recent (but by no means isolated) cases.  In one case, German customs authorities 
have diverged from other member State authorities in  the classification of a specialized textile product 
(blackout drapery lining) for five years, and EC ins titutions have not reconciled the divergence.  In the 
second case, involving liquid crystal display flat monito rs with digital video interface, the question of 
divergent classification (between the Netherlands, on the one hand, and other member States, on the 
other) was brought before the Committee in 2004 and, with respect to a major subset of the product 
concerned, remains unresolved today (and is subject to a temporary solution only with respect to the 
rest). 
(b) Customs valuation 
4.17 In some respects, the problems of non-uniform administration of customs law are even more 
pronounced in the area of valuation than they are in the area of classification.  Unlike classification, 
EC customs law on valuation does not even provid e a system comparable to BTI – that is, an 
information system that is ostensibly binding (alb eit in a very limited way) and that (depending on 
how designed and administered) could at least be a step towards achieving uniform administration.  In  WT/DS315/R 
 Page 21 
 
 
 general, the ability of EC institutions to step into  the breach to impose uniformity is limited.  The 
valuation section of the Committee does not have th e authority to examine individual cases with a 
view to reconciling differences in administration from member State to member State.   
4.18 The ways in which the valuation provisions of the Code and Implementing Regulation have 
been applied differently in different member Stat es were catalogued in great detail in a December 
2000 report by the EC Court of Auditors.  One highli ght of the Court's report is differential treatment 
of royalty payments.  Under Article 32(1)(c) of the Code, royalties and license fees related to the 
goods being valued are supposed to be added to the pr ice actually paid or payable, to the extent not 
already included.  The Court found that in a number of cases, different member States apportioned royalties differently to the customs value of identical goods imported by the same company.  
Significantly, it found that in the cases identified, the member States involved either did not bring the 
disparate treatment to the attention of the Co mmittee, or the matter was not examined by the 
Committee. 
4.19 Another issue the Court examined was applicati on of the rule that allows imported goods, in 
certain cases, to be valued on a basis other than the transaction of the last sale which led to the 
introduction of the goods into the customs territory  of the EC.  The Court found that authorities in 
some member States but not others  required importers to obtain prior approval for valuation on a basis 
other than the transaction value of the last sale. 
4.20 A third issue identified by the Court was differen tial treatment of vehicle repair costs covered 
under warranty.  In at least one member State – Germany – the Court found that customs authorities 
reduced the customs value of imported vehicles by th e value of repairs undertaken in the territory of 
the EC and reimbursed by the foreign seller.  Other member States – in particular, Italy, the 
Netherlands, and the United Kingdom – declined requ ests for similar customs value reductions.  Of 
particular note, the Court observed that the Comm ission had been aware of differential treatment 
among member States for at least ten years and had not  taken any steps to reconcile the difference.  In 
response, the Commission noted that since 1997 it ha d "attempted to align by means of implementing 
legislation diverging practices in the Community" bu t was unable to attain the necessary majorities in 
the Committee.  
4.21 A recent case involving non-uniform administration of EC customs valuation law concerns 
divergent approaches to the determination of whethe r an importer has a control relationship with its 
off-shore suppliers.  In that case, Spanish cust oms authorities found Reebok International Limited 
(RIL) to have a control relationship with suppliers  outside the EC based on its contracts with those 
suppliers, while other member States (in particular, the Netherlands) found no such relationship.  The 
different interpretation has significant consequences.  Member State authorities that agreed with RIL 
that it did not have a control rela tionship with its suppliers allowed it to declare the customs value of 
its goods on the basis of the "sale for export" transacti on value rule set out in Article 29 of the Code.  
On the other hand, the Spanish authorities require d RIL to apply a different methodology.  The net 
impact on RIL was an additional customs liability of 350,000 Euros per year (390,000 Euros when 
value-added tax and interest are included).  
4.22 In sum, valuation, like classification, is an ar ea in which the EC does not provide for uniform 
administration of its customs law.  Each member State's authorities make their own interpretations of the Code and Implementing Regulation, and even where differences between member States are identified, the EC lacks the capacity systematically to reconcile them.  
(c) Customs procedures 
4.23 With respect to customs procedures, non-uniform  administration is evident in various phases 
of the customs process.  It comes up, for example, in the audits that different member State authorities WT/DS315/R 
Page 22  
 
 perform after goods have been released for free circul ation.  It is not uncommon for a member State's 
authorities to perform an audit to verify the valu e that an importer declared for goods that were 
released for free circulation.  The December 2000 Court of Auditors Report found that different 
member State authorities take different approach es to such valuation audits, with important 
consequences for importers. 
4.24 In the case of at least one member State, the Court found that the customs authorities lack the 
right to perform post-importation audits at all, ex cept in cases of fraud.  Even among States in which 
authorities are permitted to perform post-importa tion audits, the Court found differences among 
working practices, including the balance between reliance on examinations of goods at time of 
importation and post-release audits.  Significantly, the Court found that differences in working 
procedures mean that "individual customs authorities are reluctant to accept each other's decisions."  
One audit procedure that the Court highlighted was the issuance of written valuation decisions.  While 
some member States regularly issue written valuatio n decisions with binding effect going forward, 
others rarely issue such decisions.  
4.25 Another area in which administration varies from member State to member State concerns 
penalties for violation of customs law.  This area of  divergence is one that h as been noted by the ECJ 
on a number of occasions.  The Commission itsel f has recognized (in its explanatory note 
accompanying a recent proposed revision to the Code ) that "[e]conomic operators have complained 
for a long time about the lack of harmonization wi th regard to penalties against infringements of the 
customs rules.  Specific offences may be considered  in one Member State as a serious criminal act 
possibly leading to imprisonment, whilst in anothe r Member State the same act may only lead to a 
small – or even no – fine."  
4.26 Yet another area in which the administration of  EC customs law differs among member States 
is the decision to permit what is known as "processing  under customs control."  Where this procedure 
is permitted, goods may be brought into the EC w ithout being subject to duty and processed into 
downstream products in the EC, with those products then being released for free circulation at the 
applicable duty rate.  Permission to engage in  processing under customs control is subject to an 
economic conditions assessment, which different memb er States administer differently.  Guidance 
issued by the United Kingdom customs author ities states that ther e are "two aspects
 to the economic 
test" and requires an applicant to provide eviden ce of the impact on its business of processing under 
customs control as well as evidence of "the impact upon any other community producers of the imported goods."  In contrast, French regulations, for example, do not impose the additional test of 
demonstrating the absence of harm to competitors in the EC.  
4.27 Another area in which non-uniform administrati on is evident is local clearance procedures 
("LCP").  Under LCP, an importer may have goods re leased for free circulation at its own premises or 
certain other designated locations (as opposed to customs premises).  While the general concept of 
how LCP is supposed to operate is set forth in  the Implementing Regulation, the particular 
requirements vary from member State to member Stat e.  This is evident in the information that 
member States require LCP importers to transmit to customs authorities before goods are released.  
Some require only the electronic transmittal of manifest  data.  Others require that manifest data be 
translated or supplemented.  Variations also ar e evident in the involvement of customs authorities 
prior to goods being released.  Some member States rely on post-release audits, while others reserve 
the right to inspect goods prior to release.  Memb er States typically require that supplementary 
information be transmitted to customs authorities following release under LCP, though here, too, the 
requirements vary.  For example, some member St ates require transmittal of the EC's DV1 valuation 
form, whereas others do not.  Some require the transmittal of invoices, certificates, and other supporting documentation, whereas others do not.  Finally, requirements for retaining documents 
supporting LCP imports vary widely, ranging from f our years in the United Kingdom to ten years in 
the Netherlands.  WT/DS315/R 
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 4.28 As the panel correctly observed in Argentina – Hides and Leather , "Article X:3(a) requires an 
examination of the real effect that a measure might have on traders operating in the commercial world" (para. 11.77).  To that end, "[e]very expo rter and importer should be able to expect treatment 
of the same kind, in the same manner both over time and in different places . . . " (para. 11.83; 
emphasis added).  Article X:3(a) thus acts as a chec k against certain distortions to trade that may 
come about through administration that varies depe nding on factors such as point of entry within the 
territory of a Member. 
4.29 A system that subjects traders to different procedures and different interpretations of 
classification and valuation law depending on the member State through which goods are imported 
into the territory of the EC is contrary to this b asic principle.  At a minimum, it makes it difficult for a 
trader to have a reasonable expectation of the treatment goods will receive when they are imported 
into the EC.  It may also cause traders to make d ecisions about how to bring goods into the EC based 
on known differences among member States. 
(d) The Commission, acting through the Customs Code Committee, does not provide uniformity 
to the administration of EC customs law 
4.30 The mechanism provided in the Code for the Commission to address questions of 
administration of EC customs law is the Custom s Code Committee.  The Committee consists of 
representatives of each of the member States and is chaired by a representative of the Commission.  Individual traders have no right to raise matters wi th the Committee.  That right is reserved to the 
chairman of the Committee and member State representatives.  A trader may petition a member State to bring a question before the Committee (though the C ode does not require member States to have a 
petition process).  However, the member State is under no obligation to respond favorably to such a 
petition. 
4.31 For the most part, the Committee operates under th e "regulatory procedure" laid down in the 
EC's so-called "comitology" decision.  In matters relating to binding advance rulings that member 
States may issue on the classification or origin of goods, and in certain matters relating to preferential 
tariff treatment, the Committee opera tes under the comitology decisi on's "management procedure."  
Under both the regulatory procedure and the mana gement procedure, a decision by the Committee 
requires the support of a majority of the member State representatives and at least 231 votes out of a 
total of 321 (based on weighting by member State as set out in the EC Treaty), and failure to reach a decision can lead to referral of the matter to th e Council of the European Union, with different 
consequences depending on the applicable procedure.  However, in practice, with respect to matters of 
customs administration, the Commission turns to  the Council only on extremely rare occasions.  
Given institutional disincentives to refer matters to  the Council, they may lin ger before the Committee 
indefinitely, as the Commission atte mpts to achieve the necessary major ities.  This may mean that in 
controversial cases, no decision at all is taken.  
4.32 The Code provides for adoption by the Committee of  its own rules of procedure.  Those rules 
are notable for purposes of the present di spute primarily for what they do not say.  First, the rules do 
not contain any process for a trader affected by a member State's application of the Code to petition the Committee.  Second, the rules contain no require ment that the Committee publish its agenda in 
advance of its meetings.  Thus, a trader that may be affected by a question put before the Committee 
has no assurance that it will be made aware of the pendency of the matter.  Third, while the rules 
contain an Article entitled "Admission of third pa rties," that Article does not establish a right for 
potentially affected parties to submit evidence and arguments to the Committee or even to be present 
at Committee meetings.  It merely authorizes the Co mmittee Chairman to invite experts to address the 
Committee and allows observers of certain third countries or organi zations as specified in other EC 
instruments to be present at Committee meetings.  Fi nally, there is no requirement that records of the 
Committee's proceedings be made public.  In fact , Article 15 of the rul es expressly provides that WT/DS315/R 
Page 24  
 
 decisions on public access to the Committee's docum ents are subject to the discretion of the 
Commission and that, in any event, "[t]he Comm ittee's discussions shall be kept confidential." 
4.33 Traders as well as EC institutions have acknow ledged the limits of the Committee procedure's 
ability to reconcile differences in administration among member State customs authorities.  For example, in the Court of Auditors Valuation Re port, it was observed that in using the valuation 
section of the Committee, the Commission "has to re ly on discussion, persuasion and encouragement 
as the means of achieving common treatment of identi cal problems in Member States."  In reply, the 
Commission itself acknowledged that the Committee "can  . . . only deal with a limited number of 
important cases that are brought before it."  
4.34 In sum, the Committee process through which th e Commission operates in matters of customs 
administration is not designed to systematically achieve uniform administration where divergences are 
shown to exist.  From the point of view of "trade rs operating in the commercial world" (the relevant 
perspective for examining the Article X:3( a) obligation, as noted by the panel in Argentina – Hides 
and Leather ), a WTO Member does not provide for uniform  administration where there is doubt as to 
whether the mechanism ostensibly available for bringing about uniformity will or will not operate in 
the case of any given divergence.  The mechanism theo retically available for bringing uniformity to 
the administration of customs law in the EC lacks a process for doing so on a systematic basis, and this absence of a process leads back  to the conclusion that the EC simply does not provide for the 
uniform administration required by Article X:3(a). 
3. The EC does not provide tribunals or pro cedures for the prompt review and correction 
of administrative action relating to customs matters 
4.35 The second aspect of the US claim concerns the EC's failure to provide for an EC court or 
other forum to which a member State customs deci sion can be promptly appealed.  Under the EC 
system, review of a member State customs decision is available in the courts of that member State.  
The only court with jurisdiction to issue decisions with EC-wide effect on matters of customs 
administration is the ECJ.  However, the referral of questions to that court is not automatic, and even 
when a question does get referred to the ECJ, the time and steps necessary from the initial rendering 
of a customs decision by a member State's author ities to issuance of a decision by the ECJ makes 
review in that forum far from prompt. 
4.36 The issue of reviewability of customs deci sions is linked to the issue of uniform 
administration of customs law.  To the extent that  the administration of customs law is fragmented, 
the provision for review in the courts of each  of 25 member States does not alleviate the 
fragmentation and may well compound it.  In contrast, a single system of review could alleviate the 
different initial results that may occur in different ports from time to time.  
4.37 The GATT 1994 provision pertinent to appella te review of customs decisions is 
Article X:3(b), which requires each  WTO Member to "maintain, or institute as soon as practicable, 
judicial, arbitral or administrative tribunals or procedures for the purpose, inter alia , of the prompt 
review and correction of administrative action re lating to customs matters."  The EC is a WTO 
Member in its own right and is subject to Article  X:3(b).  Accordingly, the EC must have such 
tribunals or procedures.  
4.38 Relevant context for interpreting Article X:3(b) includes the immediately preceding 
subparagraph in the paragraph in wh ich the obligation at issue appears.  That subparagraph calls for 
the "uniform, impartial, and reasonable" administra tion of customs laws.  Thus, the decisions of the 
tribunals or procedures must provide for the review  and correction of customs matters for the EC as a 
whole, not just within limited geographical regi ons within the EC.  It is inconsistent with 
Article X:3(b) to require a trader who had receiv ed adverse customs decisions in three different  WT/DS315/R 
 Page 25 
 
 
 member States, each at odds with the prevailing in terpretation of EC customs law in other member 
States, to pursue separate appeal s in each of those States.  
4.39 The Community Customs Code says little on the question of appeals.  It merely establishes 
that there shall be a right to appeal from customs d ecisions; provides that, in the first instance, appeals 
may be exercised before a member State's custom s authorities and subsequently before a court or 
other independent body; and provides that, except in certain specified circumstances, "the lodging of 
an appeal shall not cause implementation of the dis puted decision to be suspended."  Beyond that, the 
Code simply states that "[t]he provisions for the implementation of the appeals procedure shall be 
determined by the Member States." 
4.40 Thus, the Code leaves wide discretion to the individual member States in establishing 
procedures for appeals from customs decisions, and th at discretion is evidenced in the diversity of 
procedures in fact available in the different memb er States.  Indeed, even if it could be argued 
(contrary to what the United States argues here) that the EC might fulfill its obligation under Article X:3(b) merely by requiring member States to have appellate procedures in place, it is notable that nothing in the Code requires that review by memb er State tribunals be prom pt.  The Code is silent 
on the question of timing. 
4.41 In fact, appellate procedures vary from member State to member State with respect to factors 
such as the availability of first-level review by the customs authorities themselves, time-periods for 
first-level review by the customs authorities (where such review is mandatory before proceeding to 
court), requirements to post security in order to  avoid immediate enforcement of the decision on 
appeal, and availability of review by  courts of superior jurisdiction.  For example, the time periods for 
first instance reviews conducted by member State customs authorities can vary widely (from 30 days 
in Ireland, to one year in the Netherlands).  Mo reover, differences among procedures are even more 
pronounced after the first stage of review. 
4.42 At the top of the review structure is the ECJ.  Unlike the decisions of the courts in individual 
member States, the decisions of the ECJ do have effect  throughout the territory of the EC.  It is only at 
this stage, after a trader has pursued its appeal th rough a member State's court system, that the trader 
reaches a forum for review and correction provided by the EC itself.  However, given the time it 
necessarily takes to reach this foru m, it can hardly be considered to meet the EC's Article X:3(b) 
obligation to provide "tribunals or procedures for the purpose . . . of the prompt  review and correction 
of administrative action relating to customs matters."  
4.43 In commenting on the request for the establishment of a panel in this dispute, the EC referred 
to the ECJ as the second institution (alongside the Commission) that enfor ces "harmonized customs 
rules and institutional and administrative measures . . . to prevent divergent practices."  That the EC 
views the ECJ as serving this function is instructive and cause for examining the role actually filled by 
the ECJ.  What that examination reveals is signifi cant institutional limitations on the ability of the ECJ 
"to prevent divergent practices" and a failure of the ECJ to constitute a tribunal or procedure for 
prompt review and correction of administrative act ion relating to customs matters, as required by 
Article X:3(b).  The principal manner in which a qu estion of a member State's administration of EC 
customs law is likely to come before the ECJ is through a referral by the court of a member State, 
pursuant to Article 234 of the EC Treaty.  However, w ith the exception of courts of last resort, referral 
of questions by member State courts is discre tionary.  Moreover, even when a question does get 
referred to the ECJ, the answer of the ECJ does not finally decide the matter.  Rather the answer is 
sent back to the requesting court, which then decid es the case before it in light of the ECJ's guidance. 
4.44 In his opinion in the 1997 
Weiner  case before the ECJ, the EC's Advocate General urged 
member State courts to exercise self-restraint in referring questions of customs classification law to the ECJ.   The Advocate General found it "clear that the Court's contribution to uniform application of WT/DS315/R 
Page 26  
 
 the Common Customs Tariff by deciding on the classification of particular products will always be 
minimal."  The Advocate General's reasoning is easily  transferrable to valuation and other areas in 
which member States' administration of EC law may diverge.  A key lesson to be drawn from Weiner  
is that the ECJ is not suited to be the EC's tribuna l or procedure for prompt review and correction of 
administrative action relating to customs matters requir ed by Article X:3(b).  Its place within the EC 
system – as the highest level adjudicator of questi ons of EC law – and the manner in which questions 
are put to it – typically, through discretionary refe rral by member State courts – make it incapable of 
serving that role.  
4.45 As the ECJ is not set up to be an EC customs court – and, in any event, as the time it takes for 
a question raised in a member State's customs decision ultimately to get to ECJ review hardly 
qualifies such review as prompt – what is left is  a patchwork of member State customs authorities 
whose work is reviewed by member State courts, with no EC tribunal or procedure providing prompt 
review and correction of customs decisions in a way that would bring about uniformity in the 
administration of EC customs law.  In sum, the EC provides no tribunal or procedure for the prompt review and correction of administrative acti on relating to customs matters, as required by 
Article X:3(b) of the GATT 1994.  
4. Conclusion   
4.46 For the reasons set forth in the First Written Submission of the United States, the EC fails to 
comply with the obligations in Articles X:3(a) a nd X:3(b) of the GATT 1994.  It does not administer 
its customs laws, regulations, decisions and rulings in a uniform, impartial, and reasonable manner.  
Nor does it maintain judicial, arbitral, or administra tive tribunals or procedures for the purpose of the 
prompt review and correction of administrative action relating to customs matters.  The United States 
asks that the Panel find the EC is not in conform ity with Articles X:3(a) and X:3(b) of the GATT 
1994 and recommend that it come into compliance promptly. 
B. 
FIRST WRITTEN SUBMISSION OF THE EUROPEAN COMMUNITIES  
1. Introduction 
4.47 The United States alleges that the EC does not fu lfil its obligations under Article X:3(a) of the 
GATT by failing to administer its customs laws in  a uniform manner.  Moreover, the United States 
alleges that the EC does not comply with its ob ligations under Article X:3(b) GATT by not providing 
judicial, arbitral or administrative tribunals or procedures for the prompt review and correction of 
administrative action relating to customs matters.  
4.48 These claims of the United States are unfounded.  The United States does not provide 
evidence that the EC fails to administer its cust oms laws in a manner contrary to Article X:3(a) 
GATT.  Apart from a small number of isolated a nd misleading examples, the United States provides 
very little information about the actual administrati on of EC customs law.  Since it does not provide 
any evidence to the effect that the EC administers its customs laws in a non-uniform manner, the 
United States fails to establish a prima facie case in support of its claims. 
4.49 The focus of the United States case is not on the actual administration of EC customs laws, 
but on the EC system of customs administration.  Put simply, the United States objects to the fact that 
the EC administers EC customs laws not through an EC customs agency, but through the national administrations of its member States.  Similarly, the United States objects to the fact that judicial 
review of customs decisions in the EC is provi ded not through "EC-level tribunals", but through 
tribunals of the EC member States. With these claims, the United States is putting into question 
fundamental structural elements of the EC legal or der, without providing a shred of proof that these 
structural elements are indeed incompatible with  the requirements of Article X:3(a) and (b) GATT.  WT/DS315/R 
 Page 27 
 
 
 4.50 The US interpretation of Article X:3(a) and (b ) GATT is without basis in the text of these 
provisions.  According to the United States, Article  X:3(a) and (b) GATT seems to prescribe in detail 
the way in which a WTO Member must implement its customs laws.  The EC does not believe that this is the objective underlying Article X:3 GA TT.  Article X:3 GATT is a provision laying down 
minimum standards for the administration of custom s law, not a legal basis for the harmonization of 
the systems of customs administration of WTO Members. 
4.51 The weakness of the US case is also illustrated by the lukewarm reaction of traders to the US 
case.  In response to a request for input by th e United States Trade Representative following the 
consultation request, USTR received a mere three submissions.  Only one of these submissions is 
referred to in the US First Written Submissi on.  Of the other two submissions, one was 
unsubstantiated, one unhelpful to the US case since it provided an example of the uniform application 
of EC classification rules. 
2. Factual background 
(a) General principles of the EC legal system 
4.52 The progress of European integration has largely been built on legislati on.  Over the decades, 
the EC has built a large body of Community law covering an increasing range of policy areas on the 
basis of the powers attributed to it in its founding treaties.  
4.53 The success of European integration is base d on the direct and uniform application of 
Community law in the legal order of the memb er States of the Comm unity.  The European 
Community is therefore very much a Community based  on the rule of law.  This fact is explicitly 
recognized in Article 6(1) EU Treaty. 
4.54 However, with the exception of some limited po licy fields, the EC does not itself administer 
Community law through an EC-level administration.   Rather, the execution of EC law takes place 
through the national administrations of the member  States, and similarly through the Courts of the 
member States.  This principle of administrati on through the member States can be described as 
"executive federalism". 
4.55 The US attack on the EC system of custom s administration directly puts into question 
fundamental principles of EC law.  In order to pl ace these issues in their pr oper context, a deeper 
explanation of the basic principles of EC constitutional law is required. 
(i) The EC institutions and the EC legislative process 
4.56 According to Article 5 of the EC Treaty, the Community shall act within the limits of the 
powers conferred upon it by the Treaty.  Furthermore,  Article 5 EC Treaty requires the EC to act in 
accordance with the principles of subsidiarity and proportionality.  The EC Treaty sets up a number of 
institutions which shall carry out the tasks entr usted to the European Community.  The main 
institutions involved with the EC legislative proc ess are the European Pa rliament, the Council of 
Ministers, and the European Commission. 
4.57 The legislative procedure applicable to the adop tion of a particular legal act is laid down in 
the specific legal basis conferring the powers on the Community to adopt such an act.  In the large 
majority of cases, the adoption of a legislative act  of the Community will require a proposal from the 
European Commission.  In most cases, the EC Tr eaty foresees that legislative acts shall be adopted 
jointly by the European Parliament and the Counc il in accordance with the co-decision procedure set 
out in Article 251 EC Treaty.  To this extent, the European Parliament and the Council can be WT/DS315/R 
Page 28  
 
 regarded as the primary legislative organs of the EC .  In certain cases, the Treaty also provides that 
the Council may adopt legislative acts alone, usually after consultation of the European Parliament.  
(ii) The implementing powers of the European Commission 
4.58 Article 202, third indent, of the EC Treaty provides that the Council may confer on the 
Commission powers for the implementation of Commun ity law.  Article 202, third indent, further 
provides that the Council may impose certain requirement s in respect of the exercise of those powers.  
Finally, the last sentence of Article 202, third indent, EC Treaty provides that these procedures must be "consonant with principles and rules to be  laid down in advance by the Council, acting 
unanimously on a proposal from the Commission and after obtaining the opin ion of the European 
Parliament". 
4.59 On the basis of Article 202, third indent, of the EC Treaty, the Council has adopted Decision 
1999/468.  This decision, also known as the "Comitology Decision" , lays down, at a general level, the 
procedures for the exercise of implementing po wers which the Council may delegate to the 
Commission.  
4.60 The Comitology Decision distinguishes three typ es of procedure: the advisory procedure, the 
management procedure, and the re gulatory procedure.  In accordance with Article 2 of the Decision, 
the regulatory procedure should be applied for the ad option of "measures of general scope designed to 
apply essential provisions of basic instruments".  The management procedure is applicable to the 
adoption of "management measures", such as thos e relating to the application of the common 
agricultural and common fisheries policies, or to the implementation of programmes with substantial 
budgetary implications.  The advisory procedure is applicable in all other appropriate cases. 
4.61 The specific procedures to be followed are resp ectively set out in Articles 3, 4 and 5 of the 
Comitology decision.  Under each of the pro cedures, the Commission is assisted by a committee 
composed of representatives of the member States, and chaired by a representative of the 
Commission.  The Commission shall submit a draft of  the measures to be adopted to the Committee. 
4.62 Where the advisory procedure is applicable, th e Committee shall deliver its opinion by simple 
majority.  In contrast, where the management and the regulatory proce dure are applicable, the 
Committee shall deliver its opinion by qualified majo rity, which involves a weighing of the votes of 
the member States as foreseen in  Article 205(2) EC Treaty.  
4.63 The main difference between the three proce dures lies in the consequences of a negative 
opinion of the Committee.  In the case of the advi sory procedure as described in Article 3 of the 
Comitology Decision, the Commission shall take "u tmost account" of the opinion delivered by the 
Committee.  However, it may adopt the measure even if it is not in accordance with the opinion of the 
Committee. 
4.64 In the case of the management procedure described  in Article 4 of the Comitology Decision, 
the Commission adopts measures which shall apply i mmediately.  However, if these measures are not 
in accordance with the opinion of the committee, th ey shall be communicated by the Commission to 
the Council.  In that event, the Commission may defer application of the measures on which it has 
decided for a period to be laid down in each basic instrument but which shall in no case exceed three 
months from the date of such communication.  Th e Council, acting by qualified majority, may take a 
different decision within the period provided for by paragraph 3 of Article 4 of the Decision. 
4.65 In the case of the regulatory procedure as describ ed in Article 5 of the Comitology Decision, 
if the measure is not in accordance with the op inion of the Committee, the Commission shall submit  WT/DS315/R 
 Page 29 
 
 
 to the Council a proposal relating to the measures to be  taken.  In this case, the applicable procedure is 
set out in Article 5(6) of the Decision. 
4.66 Accordingly, the committees established pursu ant to the Comitology Decision fulfil an 
important role in the Community's internal decision- making process.  In particular, in the context of 
the management and the regulatory procedure, th e opinion of the Committee may determine whether a 
measure can be adopted by the Commission,  or must be referred to the Council.  
4.67 In accordance with Article 7(1) of the Comito logy decision, each Committee shall establish 
its own rules of procedure on the proposal of its chairman on the basis of standard rules of procedure. 
(iii) The legal effect of Community law 
4.68 On the basis of the powers attributed to th e European Community in the EC Treaty, the 
institutions may adopt a number of legislative and other acts. Article 249(1) EC Treaty states that the 
competent institutions may adopt regulations, dir ectives, decision, recommendations, and opinions. 
The legal effect of these acts is described in Article 249(2) EC Treaty. 
4.69 According to the constant case law of the C ourt of Justice, the law of the European 
Community has primacy over the national law of the member States.  This primacy of Community 
law is a fundamental principle of the Community legal order.  It applies to all provisions contained in 
the EC Treaty and in acts of the EC institutions.  It  also applies against any provision of national law 
at any level, including member States' constitutions.  This means that whenever a Court of a Member 
State encounters a conflict between a provision of Co mmunity law and a provision of its national law, 
it must set aside the provision of national law, and apply Community law only. 
4.70 A second fundamental principle of Community law is  that of direct effect.  As the Court has 
held in its constant case law, Community law may cr eate rights for individuals which can be directly 
invoked by those individuals in proceedings before nati onal courts and authorities.  This direct effect 
may apply both to provisions of the founding treaties and to acts of secondary Community law.   
4.71 Taken together, the principles of supremacy and of  direct effect are essential for the effective 
and uniform application of Community law.  Th ey enable individuals to invoke provisions of 
Community law in proceedings before national cour ts.  They thereby enable national judges – acting 
in constant dialogue with the Eur opean Court of Justice through the preliminary reference procedure – 
to safeguard the respect of Community law. 
4.72 Moreover, the Court of Justice held that wh en the conditions under which individuals may 
rely on the provisions of Community law before the national courts are met, all organs of the 
administration, including decentralized authorities,  are obliged to apply those provisions and if 
necessary must directly set aside national provisions that are in contradiction with EC law. 
(iv) The Commission, the member States, and the execution of Community law 
4.73 Community law is typically implemented through the national administrations of the member 
States.  Only in a limited number of policy fields is the execution of Community law directly carried 
out by European Commission. 
4.74 The system of the execution of EC law has frequently been referred to as "executive 
federalism".  The principle of executive federalism within the EC also reflects the principle of 
subsidiarity enshrined in Article 5(2) EC Treat y, according to which the Community should take 
action only if and in so far as the objectives of the proposed action cannot be sufficiently achieved by the member States. WT/DS315/R 
Page 30  
 
 4.75 The executive federalism of the EC is fully comp atible with the requirements of uniformity in 
the interpretation and application of Community law.  In this regard, the principles of primacy and 
direct effect once again have an important role .  Through those principles, Community law becomes 
directly binding on national administrations, and ma y be invoked against them.  This enables the 
European Court of Justice to ensure, through th e preliminary reference procedure, the uniform 
interpretation and application of Community law. 
4.76 Moreover, Article 10 EC Treaty imposes on the member States a duty of cooperation, which 
applies also to the execution of Comm unity law by the member States.  
4.77 In addition, Article 211, first indent, of th e EC Treaty provides that the Commission shall 
"ensure that the provisions of this Treaty and the measures taken by the institutions pursuant thereto 
are applied".  In reflection of this role, the Comm ission is frequently referre d to as the "guardian of 
the Treaty".  
4.78 Where the Commission considers that a Member St ate has failed to fulfil an obligation under 
the Treaty, the Commission has the possibility, in accordance with th e procedures of Article 226 EC 
Treaty, to bring this matter before the Court of  Justice. Such "infringement proceedings" can be 
brought in response to any violation of Community law by a Member State, and can also concern the 
incorrect application of Community law by the administrations of the member States. 
4.79 In accordance with Article 228(1) EC Treaty, if th e Court of Justice finds that a Member State 
has failed to fulfil an obligation under the EC Treaty, the State concerned shall be required to take the 
necessary measures to comply with the judgment of the Court of Justice.  Where the Member State 
concerned fails to comply with the judgment, th e possibility exists under Article 228(1) of the EC 
Treaty for the Court of Justice to impose a penalty payment on the Member State. 
4.80 Individuals have a vital role in detecting infringements of Community law.  There is a 
standardized procedure for complaints to be addressed to the European Commission regarding 
infringements of Community law.  Such complain ts, which may also concern the application of 
Community law by national administrations, can lead to the institution of infringement proceedings 
by the Commission. 
4.81 The public service of the European Commission is guided by a code of conduct which is part 
of the Commission's rules of procedure, and which sets out the principles of good administrative behaviour to be observed by all Commission staff.  The Code of Conduct provides in particular that 
all enquiries must be dealt with as quickly as po ssible, and sets out time limits within which 
correspondence should be answered. Complaints rega rding non-compliance with the Code of Conduct 
may be addressed to the Secretariat-General of the Commission. 
4.82 The Commission in the exercise of its duties is also subject to certain other controls.  In 
particular, the Commission is politically responsib le to the European Parliament.  Moreover, in 
accordance with Article 194 EC Treaty, any citizen may direct a petition to the European Parliament 
on any matter which comes within the Community's fi elds of activity.  Finally, in accordance with 
Article 195 EC Treaty, the European Parliament has appointed an Ombudsman empowered to receive 
complaints from individuals concerning instances  of maladministration in the activities of the 
Community institutions or bodies.  WT/DS315/R 
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 (b) The administration of EC customs law 
(i) The basic principles of the EC Customs Union 
4.83 According to Article 23(1) EC Treaty, the Community shall be based upon a customs union 
which shall cover all trade in goods and which shall involve the prohibition between member States of 
customs duties on imports and exports and of all char ges having equivalent effect, and the adoption of 
a common customs tariff in relation to third countries. 
4.84 Accordingly, the EC customs union has an internal  and an external dimension. As regards the 
internal dimension, Article 25 EC Treaty provides for the prohibition of all customs duties and charges having equivalent effect in trade between  the member States. Articles 28 and 29 EC Treaty 
contain a prohibition of quantitative restrictions a nd measures having equivalent  effect on imports and 
exports between the EC member States. 
4.85 As for the external dimension, the EC Tr eaty establishes a common commercial policy. 
According to Article 133(1) EC Treaty, the common commercial policy is based on uniform 
principles, particularly in regard to changes in  tariff rates, the conclusion of tariff and trade 
agreements, the achievement of uniformity in measur es of liberalization, export policy, and measures 
to protect trade such as those to be taken in the ev ent of dumping or subsidies. As the Court of Justice 
has confirmed on numerous occasions, the custom s union and the common commercial policy fall 
within the exclusive competence of the EC. 
4.86 The internal dimension of the EC customs union also benefits products originating in third 
countries. According to Article 23(2) EC Treaty, the prohibitions contained in Articles 25, 28 and 29 
EC Treaty shall also apply to products from third countries which are in free circulation in member 
States. Article 24 EC Treaty defines products from third countries as being in free circulation when 
the import formalities have been complied with a nd any customs duties or charges having equivalent 
effect which are payable have been levied in that Member State, and if they have not benefited from 
total or partial drawback of such duties or char ges. In other words, once goods from a third country 
are in free circulation in the EC, they are treated in every respect like Community goods, and benefit 
from the free movement of goods in the internal ma rket in the same way as goods originating in the 
Community. 
(ii) The EC's international commitments in the fie ld of customs administration and cooperation 
4.87 The EC is a founding Member of the WTO.  As such, the EC respects and implements its 
commitments under the covered agreements.  In pa rticular, EC customs law implements, and fully 
respects, relevant WTO agreements such as the GATT, the Customs Valuation Agreement, or the 
Agreement on Rules of Origin. 
4.88 While the EC is not yet a Member of the Wo rld Customs Organization (WCO), the EC is a 
party to numerous Conventions negotiated under the ausp ices of the WCO.  Notably, the EC is a party 
to the International Convention on the Harmonized Commodity and Coding System (HS Convention), and the International Convention on the Simplifi cation and Harmonization of Customs Procedures 
(Kyoto Convention). 
4.89 The EC also has concluded a number of bilate ral agreements with third countries on customs 
cooperation.  In particular, the EC has conclude d such an agreement with the United States. WT/DS315/R 
Page 32  
 
 (iii) The legislative framework of the EC Customs Union 
4.90 On the basis of the powers attributed to them  in the EC Treaty, the EC institutions have 
adopted a number of legislative acts which establis h the legal framework of the EC customs union.  
The three main instruments of EC customs legi slation are the Community Customs Tariff, the 
Community Customs Code (CCC), and the Implementi ng Regulation. It is noteworthy that all these 
instruments are regulations, which, according to Article 249(2) EC Treaty, are binding in their entirety 
and directly applicable in all member States. 
4.91 The Community Customs Tariff is established by Council Regulation (EEC) 2658/87.  The 
Community Customs Tariff establishes a combined nom enclature (CN) with a description of goods up 
to an eight-digit code. The CN is based on the six-digit HS nomenclature, to which it adds 
Community subdivisions, referred to as "CN subheadings".  
4.92 In addition, the CN contains preliminary provi sions.  These preliminary provisions notably 
contain general rules for the interpretation of th e CN, other general provisions, as well as special 
provisions for certain types of goods.  In addition, the CN also contains section and chapter notes, as 
well as footnotes relating to the application of duty rates. 
4.93 The CN is contained in Annex I to Counc il Regulation 2658/87.  In accordance with 
Article 12 of this Regulation, the Commission adopts each year a regulation containing the complete 
version of the CN.  The CN contai ns the conventional rate of duties applicable on importation to the 
Community and, where applicable, lower autonomous rates. 
4.94 In accordance with Article 2 of Regulation 2658/ 87, an integrated tariff of the European 
Communities (Taric) is established by the Commission.   The Taric is based on the CN, and contains 
all measures contained in the CN, additional Community subdivisions, referred to as Taric 
subheadings, which are needed for the implementa tion of specific policies,  any other information 
necessary for the implementation or management of  the Taric, as well as the rates of customs duty 
applicable and other import and export charges, including duty suspensions and preferential tariff 
rates.  Taric codes include the 8-digit CN codes plus a 9
th and 10th digit.  The Taric is established and 
continuously updated by the Commission, and available online through the internet. 
4.95 Article 9(1)(b), (d), (e) and (f) of Regul ation 2658/87 also give the Commission the 
possibility to amend the combined nomenclature in  certain respects.  Such amendments must be 
adopted in accordance with the management procedur e referred to in Article 10 of the Regulation.  
4.96 Council Regulation (EEC) 2913/92 establishes the Community Customs Code (CCC).  The 
CCC comprises 253 articles and is divided into nine Titles.  The CCC together with its implementing 
provisions constitutes a comprehensive codification of the rules for the administration of customs 
throughout the Community.  
4.97 According to Article 247 CCC, the measures ne cessary for the implementation of the CCC 
are to be adopted by the Commission in accordan ce with the Regulatory Procedure referred to in 
Article 247a CCC.  Article 247a refers to Article 5 of the Comitology Decision. 
4.98 On the basis of Article 247 CCC, the Commission has adopted Regulation (EEC) No. 2454 of 
2 July 1993 laying down provisions for the Implementation of the CCC.  The Implementing 
Regulation is a voluminous text comprising ca. 800 arti cles and over 100 annexes.  It sets out in detail 
the provisions necessary for the implementation of the CCC.  Its structure follows broadly that of the 
CCC.   WT/DS315/R 
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 (iv) The Commission, the member States,  and the Customs Code Committee 
4.99 As is generally the case for Community law, Community customs law is executed by the 
national authorities of the EU member States.  Member States' customs authorities are bound by 
Community customs law, which applies directly and uniformly through the Community legal order.  
4.100  As in other fields of Community law, the Commission is not normally directly involved with 
the administration of EC customs law.  There are only a limited number of cases in which the 
Commission may itself take decisions regarding the application of EC customs law.  Generally, the 
function of the European Commission as the guardian of the Treaties is to monitor the correct and 
uniform application of EC customs laws by the member States. 
4.101  A specific forum for cooperation between th e member States and the Commission is the 
Customs Code Committee.  This Committee is est ablished by Articles 247a(1) and 248a(1) of the 
CCC.  It is composed of representatives of all me mber States and chaired by a representative of the 
Commission. It has adopted its own Rules of Proc edure, which are based on the standard rules of 
procedure for comitology committees.  
4.102  In accordance with Article 1(1) of its Rul es of Procedure, the Customs Code Committee 
comprises a number of sections covering specific areas of customs law and administration.  The 
Customs Code Committee has a number of functi ons which are attributed to it in Community 
legislation.  Articles 247a and 248a CCC provide that the Customs Code Committee shall act as a 
regulatory or management committee within the m eaning of the Comitology Decision.  Article 247 
CCC foresees that the measures necessary for th e implementation of the CCC are normally adopted 
according to the regulatory procedure.  In certa in cases, including those mentioned in Article 248 
CCC, it is the management procedure which shall apply.  
4.103  Legal acts other than the CCC may also include references to the Customs Code Committee.  
In this case, the specific procedure applicable is laid down in the respective provision attributing the 
decision-making power to the Commission.  One example is Article 10 of Regulation 2658/87 establishing the Common Customs Tariff, which provid es that the Commission will be assisted by the 
Customs Code Committee in accordance with the management procedure.  
4.104  In addition, Article 249 CCC provides that  the Committee may examine any question 
concerning customs legislation which is raised by its chairman, either on his own initiative or at the 
request of a Member State's representative.  A similar provision is also found in Article 8 of 
Regulation 2658/87 establishing the Common Custom s Tariff, according to which the Committee may 
examine any matter referred to it by its chairman, ei ther on his own initiative or at the request of a 
representative of a Member State, concerning the comb ined nomenclature or the Taric nomenclature.  
4.105  The Customs Code Committee is not a mechanism fo r the administrative or judicial review of 
customs decisions.  Rather, it is an integral part  of the Community's regulatory process, through which 
the member States' expertise is integrated into this  process.  The US complain ts are accordingly based 
on an erroneous understanding of the na ture and functions of the Committee. 
4.106  However, any individual with a concern regard ing the administration of customs matters can 
bring this issue to the attention of the Commissi on, which will consider the matter and respond in 
accordance with the Commission's Code of Conduct.  If the Commission considers that the matter 
requires consideration by the Committee, it will pu t this matter on the Committee's agenda.  In a 
similar fashion, a concerned individual may also address the administration of a Member State, which may equally decide to raise the matter in the Committee. WT/DS315/R 
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 4.107  Moreover, Article 9(1) of the Committee's Ru les of Procedure allows the Chairman, on his 
initiative or at the request of a Member, to invite ex perts to talk on particular matters.  Thus, where 
this is justified by the complexity of a particular  issue, the Committee may also hear representatives of 
the concerned industry or traders, and has done so in the past. 
(v) Tariff classification 
4.108  According to Article 20(1) of the CCC, duties le gally owed where a customs debt is incurred 
shall be based on the Common Customs Tariff.  In acc ordance with the constant case law of the Court 
of Justice, tariff classification is carried out on the basis "of the objective characteristics and 
properties of products which can be ascertain ed when customs clearance is obtained". 
4.109  In principle, the classification of goods is th e responsibility of the customs authorities of the 
member States which carry out th e customs clearance of the goods c oncerned.  In addition, there 
exists a variety of tools which ensure a uniform classification practice throughout the Community. These tools include classification regulations, HS explanatory notes and opi nions, EC explanatory 
notes, and opinions of the Customs Code Comm ittee.  Moreover, the CCC provides for binding 
information on questions of tariff classification.  In  this way, Community law provides for a graduated 
set of tools adaptable to the circumstances of the specific case in order to ensure a uniform 
classification practice.  Finally, judgments of the Court of Justice also are an important tool for ensuring a uniform classification practice. 
4.110  According to the first indent of Article 9( 1)(a) of Regulation 2658/87, the Commission may 
adopt Regulations on the classification of goods.  Su ch classification regulations are adopted by the 
Commission in accordance with the management pro cedure referred to in Article 10 of Regulation 
2658/87. 
4.111  Classification regulations will determine the tari ff subheading to be applied to the specific 
good described in the Regulation.  The Court of Justice has confirmed that under certain circumstances, classification regulations may also beco me relevant by analogy to products similar to 
those described in the regulation.  A classificati on regulation is binding throughout the Community in 
accordance with Article 249(2) EC Treaty.  Howeve r, classification regulations cannot amend the CN, 
and must therefore respect the Common Customs Tariff. 
4.112  Where a national Court has doubts about the validity of a classification regulation, it may 
refer this question to the Court of Justice in acco rdance with Article 234(1)(b) of the EC Treaty.  If 
the question arises before a national court against th e decision of which there is no further remedy, the 
Court must refer this question to the Court of Jus tice.  In determining whether or not the Commission 
has exceeded its powers, the Court of Justice has sought to establish whether the Commission has 
committed "a manifest error of assessment". 
4.113  In contrast, since classification regulations ar e acts of general applicability, they would 
normally not be of direct and individual concern to individuals as required by Article 230(4) EC 
Treaty.  Accordingly, classification regulations cannot normally be challenged through a direct 
annulment action before the Tribunal of First Instan ce.  Only under exceptiona l circumstances, where 
a classification regulation is so specific that it affects only the applicant by virtue of certain attributes 
which are peculiar to it, can a classification re gulation also be challenged directly through an 
annulment action. 
4.114  The Community is a party to the HS Convention,  and the common customs tariff is based on 
the HS nomenclature.  According to Article 7(1 )(b) of the HS Convention, the HS Committee can 
prepare Explanatory Notes, Classification Opinions and other advice as guidance to the interpretation 
of the HS.  The EC considers that WCO explanatory notes and classification opinions constitute an  WT/DS315/R 
 Page 35 
 
 
 important tool for uniform tariff classification not only within the Community, but also beyond.  The 
EC participates actively in the drafting of the e xplanatory notes and classification opinions, and has 
up to now adopted all of the HS measures. 
4.115  The Court of Justice has stated in its case la w that even though they are not normally binding 
in Community law, HS Explanatory Notes and Clas sification Opinions of the WCO are an important 
aid in the interpretation of the Community customs tari ff.  In other cases, the Court of Justice has also 
judged that an interpretation of the HS approve d by the WCO Council is binding on the Community 
when it reflects the general practice followed by th e member States, unless it is incompatible with the 
wording of the heading concerned or goes manif estly beyond the discretion conferred on the Customs 
Cooperation Council. 
4.116  According to Article 9(1)(a), second inde nt, of Regulation 2658/87, the Commission may 
issue explanatory notes.  Such explanatory not es are adopted by the Commission in accordance with 
the management procedure foreseen in Article 10 of the Regulation.  
4.117  Explanatory notes may equally clarify particular issues of tariff classification arising under 
the CN.  They must, of course, be distinguished from the notes which introduce the chapters of the 
CN, and which are an integral part of the tariff a nd cannot be modified by explanatory notes.  EC 
explanatory notes are not legally binding, and cannot  amend the CN.  However, the Court of Justice 
has repeatedly acknowledged that explanatory notes are an important aid in the interpretation of the 
CN.  
4.118  On the basis of Article 8 of Regulation 2658/87, the Customs Code Committee may adopt 
opinions on questions relative to the application a nd interpretation of the combined nomenclature.  
Such opinions must be distinguished from opini ons which the Committee adopts in the context of a 
comitology procedure on measures proposed by the Commission.  
4.119  Opinions adopted by Committee are not legally binding. However, the Court of Justice has 
held that that such opinions constitute an important  means of ensuring the uniform application of the 
common customs tariff by the authorities of the memb er States and as such can  be considered as a 
valid aid to the interpretation of the tariff.  
4.120  According to Article 12(1) of the CCC, the customs authorities shall, upon written request, 
issue binding tariff information (BTI).  The basic provisions on binding tariff information are set out in Article 12 CCC.  Further rules concerning binding in formation are contained in Title II of Part I of 
the Implementing Regulation (Articles 5-14).  These additional provisions address in particular the procedures for obtaining binding information, m easures to be taken in the event of binding 
information, the legal effect of binding informati on, and the expiry of binding information.  In 
addition, in order to ensure a harmonious and un iform application of the rules on binding tariff 
information, the Commission has issued administrative guidelines on the European Binding Tariff Information (EBTI) System and its operation. 
4.121  According to Article 6(1) of the Implemen ting Regulation, applications for binding 
information are to be made in writing, either to  the customs authorities in the Member State or 
member States in which the information is to be us ed, or to the competent customs authorities in the 
Member State  in which the applicant is established.  
4.122  The application shall be made on a standard application form conforming to the specimen 
contained in Annex 1 B to the Implementing Regula tion.  The details which an application for BTI 
must contain are set out in Article 6(3)(A) of  the Implementing Regulation.  According to 
Article 6(3)(A)(j), the application must in particul ar contain the indication by the applicant whether, 
to his knowledge, binding tariff information for id entical or similar goods has already been applied WT/DS315/R 
Page 36  
 
 for, or issued in the Community.  When custom s have possession of all the elements necessary for 
them to determine the classification of the goods, binding information shall be notified to the 
applicant as soon as possible in accordance with Article 7(1) of  the Implementing Regulation. 
4.123  Article 8(1) of the Implementing Regulation provides that a copy of the application for BTI, a 
copy of BTI notified to the applicant, and the info rmation contained in copy 4 of the BTI form shall 
be transmitted to the Commission.  This transmis sion is done by electronic means.  In accordance 
with Article 8(3) of the Implementing Regulation, th is data is stored in a database of the Commission, 
which is called the EBTI data base. 
4.124  There are two versions of this database.  One is available to the public for consultation, the 
other is exclusively available to the Commission a nd issuing authorities of the member States.  The 
version available to the public allows searches of va lid BTI by issuing country, start and end date of 
validity, BTI reference, CN code, keyword, or pr oduct description.  The public version of the EBTI 
database is accessible on the website of the European Commission. 
4.125  The version available to the Commission and na tional customs authorities contains additional 
information of a confidential nature which is not made available to the public (i.e. the name and 
address of the applicant, holder and agent, if one has been appointed, confidential commercial details 
concerning the goods for which the BTI has been issued, including trade names).  The version 
available to the Commission and issuing customs au thorities also contains all applications for BTI 
which have been submitted to customs administ rations and BTI that has ceased to be valid. 
4.126  The EBTI database is an important tool for securing a uniform BTI practice.  In particular, 
according to the administrative guidelines issued by  the Commission on the EBTI system, the EBTI 
data base must be consulted by customs authoriti es prior to the issuance of BTI in all cases where 
there is a doubt regarding the correct classification, or where different headings merit consideration. 
4.127  According to Article 12(2) CCC, BTI will be binding on the customs authorities as against the 
holder of the BTI.  It follows furthermore fro m Article 12(2) CCC and Article 5 No. 1 of the 
Implementing Regulation that BTI is binding not only on the administration which has issued it, but 
on the administrations of all member States.  
4.128  According to Article 12(3) CCC, BTI will be binding only in respect of the tariff 
classification of goods which correspond in every resp ect to those described in the information.  In 
accordance with Article 12(4) CCC, BTI will be valid  for a period of six years.  Further details 
regarding the legal effect of binding information are set out in Articles 10 to 12 of the Implementing Regulation. 
4.129  Article 12(5) CCC sets out the cases in which BT I shall cease to be valid.  According to 
Article 12(6) of the CCC, the holder of binding info rmation which ceases to be valid may still use that 
information for a period of six months, provided that  he concluded binding contracts for the purchase 
or sale of the goods in question, on the basis of th e BTI, before the measure was adopted.   Further 
details are set out in Articles 13 and 14 of the Implementing Regulation.  
4.130  In the event that despite the procedural saf eguards described above, different BTI exists, 
Article 9(1) gives the Commission the power to a dopt the necessary measures to ensure the uniform 
application of the CN. The measures foreseen in the second indent of Article 9(1) of the Implementing 
Regulation may take the form of a classification regulation adopted by the Commission on the basis 
of Article 9(1)(a) of Regulation 2658/87.  In acco rdance with Article 12(5)(a)(i) of the CCC, where 
such a regulation is adopted, BTI which is not in accordance with it will cease to be valid.  
Alternatively, the Commission may also, on the basis of Article 12(5)(a)(iii) CCC and the second  WT/DS315/R 
 Page 37 
 
 
 indent of Article 9(1) of the Implementing Regul ation, adopt a decision obliging the Member State 
who issued the BTI to revoke it.  
4.131  A decision requiring the revocation of BTI is of direct and individual concern to the holder of 
the BTI.  Therefore, the holder may bring a direct action for the annulment of such a decision by the 
Commission before the Court of First Instance in acco rdance with Article 230(4) EC.  In contrast, a 
direct action for annulment is normally not possible against a classification regulation.  However, the 
validity of such classification could be raised in th e context of proceedings be fore a national tribunal, 
and could then be referred to the Court of Jus tice in accordance with the preliminary reference 
procedure.  
(vi) Customs valuation 
4.132  Community customs law contains a complete set of rules for customs valuation in the EC.  
The basic provisions are contained in Chapter 3 of Title II of the CCC (Articles 28 through 36).  More 
detailed provisions are contained in Title V of the Implementing Regulati on (Articles 141 to 181a). 
Title V is subdivided into seven chapters, concer ning general provisions, royalties and licensing fees, 
the place of introduction into th e Community, transport costs, rates of exchange, simplified 
procedures for perishable goods, and declarations of  particulars and documents to be furnished. 
4.133  In addition, Annex 23 to the Implementing Re gulation contains interpretative notes on 
customs value, which reflect the interpretative notes contained in Annex I to the WTO Valuation 
Agreement. Article 141(1) of the Implementing Regulation requires that when applying the provisions 
the provisions of the CCC and the Implementing Regulation, member States shall comply with the interpretative notes.  In addition, Article 141(2) of  the Implementing Regulatio n refers to Annex 24 to 
the Regulation, which sets out the generally accep ted accounting principles to be applied for the 
determination of customs value.  Finally, Annex 25 to the Implemen ting Regulation contains details 
on the calculation of air transport costs to be included in the customs value. 
4.134  In accordance with the WTO Valuation Agreem ent, Article 29(1) of the CCC provides that 
the customs value of imported goods shall normally be the transaction value, i.e. the price actually 
paid or payable for the goods when sold for export  to the customs territory of the Community.  The 
details and exceptions to this rule  are contained in the Community legislation referred to above, in 
accordance with the WTO Valuation Agreement.  
4.135  EC customs law also provides for a number of mechanisms to ensure the uniform application 
of EC valuation rules.  These tools are not as numerous as those available in the case of tariff classification.  However, this is due to the subs tantial differences between tariff classification and 
valuation which must be kept in mind.  
4.136  First, it should be noted that the EC valuation rules are extremely detailed.  For this reason, 
the room for specific additional interpretations is relatively small. Second, since the valuation of 
goods is normally based on the transaction value,  customs valuation very much depends on 
evaluations to be carried out on a case-by-case basis.  This means that valuation rules typically must 
be of a general and abstract charac ter, rather than product specific.  In other words, whereas it may be 
possible to decide in the abstract on the classificatio n of a defined type of good, it is not possible to 
lay down once and for all in the abstract the value of a particular good. 
4.137  Where a need for further detailed rules on valuation occurs, the Commission may, in 
accordance with the procedure of Article 247 CCC,  amend the valuation rules contained in the 
Implementing Regulation.  Such ame ndments will be legally binding in all member States.  From this 
perspective, amendments to the Implementing Regula tion and its annexes may, in relation to specific 
issues, be regarded as functionally similar to classification regulations. WT/DS315/R 
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 4.138  Moreover, in accordance with Article 249 CCC,  the Customs Code Committee (through its 
Customs Valuation Section) may examine any ques tions concerning the application of EC customs 
legislation in the field of valuation.  On this basis, the CCC may issue opinions on specific issues of 
application of EC valuation rules . Whereas such opinions are not le gally binding, they may constitute 
useful guidance for the interpretation of the applicable EC law. 
4.139  The Commission has also issued a Compendi um of Customs Valuation texts. This 
Compendium contains commentaries prepared and conclusions reached by the Customs Code 
Committee on specific issues of customs valuation on the basis of Article 249 CCC.  In addition, it 
contains excerpts from relevant judgments of the Court of Justice on valuation issues, as well as 
indices of other relevant texts. 
4.140  As in other areas of EC customs law, the ECJ pl ays an important role in ensuring the uniform 
interpretation of EC valuation rules.  Wherever a dispute occurs between an importer and EC customs 
authorities on the interpretation and application of EC valuation rules, the national court may – and 
sometimes must – refer the question to the Court of Justice in accordance with Article 234 EC Treaty. 
(vii) Processing under customs control 
4.141  The processing under customs control procedure (PCC) allows the nature or state of non-
Community goods to be altered without subjectin g them to import duties or commercial policy 
measures.  The resulting products are released for free circulation at the rate of import duty applicable to the processed products in order to benefit fro m a lower import duty amount or to fulfil technical 
requirements for placing the goods on the market.  
4.142  The detailed provisions governing PCC are laid dow n in Articles 84 to 90 and 130 to 136 of 
the CCC and Articles 496 to 523 and 551 to 552 of th e Implementing Regulation.  The use of the 
procedure requires an authorization, which is grante d only if certain conditions are fulfilled.  The US 
First Written Submission deals only with one type of condition, the so-ca lled "economic conditions" 
which are described in Article 133(e) CCC.  EC la w ensures the uniform application of the assessment 
of the economic conditions by several means.  
4.143  For the types of goods and operations mentione d in Annex 76, Part A, of the Implementing 
Regulation, which represent the majority of the cas es, the economic conditions shall be deemed to be 
fulfilled in accordance with Article 552(1) first subp aragraph of the Implementing Regulation.  This 
means that, in these cases, cu stoms authorities do not examine the economic conditions. 
4.144  For the types of goods and operations mentioned in Annex 76, Part B, of the Implementing 
Regulation and not covered by Part A of that Anne x, the examination of the economic conditions shall 
take place at Community level, through the relevant  Committee procedure.  This means that a uniform 
assessment of the economic conditions is ensu red for so-called sens itive goods because the 
examination has to take place at Community level. 
4.145  Third, for the types of goods and operations not mentioned in Annex 76 of the Implementing 
Regulation, the examination of the economic cond itions shall take place at national level. An 
examination at national level is required only in rare cases because, as mentioned before, either the 
economic conditions are deemed to be fulfilled or the examination takes place at Community level.  
Nevertheless, transparency and uniform applica tion of the assessment of the economic condition is 
also ensured in these rare cases because member States have to communicate to the Commission 
relevant information in accordance with Artic le 522 of the Implementing Regulation.  The 
Commission makes these particulars available to the customs administrations. Furthermore, if a 
Member State objects to an authorization issued or if the customs authorities concerned wish to  WT/DS315/R 
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 consult before or after issuing an authorization,  an examination of the economic condition may take 
place at Community level.  
(viii) Local clearance procedure 
4.146  Community customs legislation contains simplified procedures in order to facilitate 
completion of formalities for placing goods under a custom procedure as far as possible while 
ensuring that operations are conducted in a proper manner.  The local clearance procedure is one of 
those simplified procedures, where an importer may have goods released for free circulation at its 
own premises or certain other designated locations  without having to present the goods to customs. 
4.147  The basic provision for the local clearance pro cedure is Article 76(1)(c) CCC.  Where a data-
processing technique is used, Article 77 CCC applies in addition. More detailed provisions are laid 
down in Articles 263 to 267 of the Implementing Regulation.  
4.148  According to Article 263 of the Implementing Regulation, authorization to use the local 
clearance procedure shall be granted to any person wishing to have goods released for free circulation 
at his premises or at the other places designated or approved by the customs authorities in respect of 
goods subject to certain procedures (transit or cust oms procedures with economic impact) or which 
are brought into the customs territory of the Commun ity with an exemption from the requirement that 
they be presented to customs. 
4.149  Under Article 267 of the Implementing Regula tion, the authorization shall lay down the 
specific rules for the operation of the procedure. Article 266 of the Implementing Regulation imposes 
some obligations on the holder of the authorization in order to enable the customs authorities to satisfy themselves as to the proper conduct of the operations.  Generally speaking, these obligations 
consist in the notification to the customs authorities of  some events (like the arrival of the goods to the 
place designated for release or the holder's desire to have the goods released for free circulation) and 
the obligation to enter the goods  in the holder's records. 
(ix) Penalties for violations of customs law 
4.150  EC customs law does not explicitly set out the sanctions which apply in case of a violation by 
individuals of provisions of EC customs law.  Acco rdingly, the nature and level of such penalties, 
whether administrative or criminal in nature, is dete rmined by the national laws of the member States. 
4.151  However, this does not mean that the member States have complete freedom in the 
determination of the appropriate le vel of penalties. In its constant case law, the European Court of 
Justice has repeatedly stated that Article 10 EC Treat y requires the member States to take all measures 
necessary for the proper implementation and applica tion of Community law, including the provision 
of penalties for violations of EC law. 
4.152  According to the case law of the Court, member  States are obliged to provide for effective, 
proportionate and dissuasive penalities for any violati on of EC law.  Where a member States fails to 
provide such effective, proportionate  and dissuasive penalities, it fails  to fulfil its obligations under 
the EC Treaty.  This has been confirmed by the ECJ specifically also in respect of the application of 
EC customs law. 
4.153  The principles set out in the case law of the ECJ regarding the imposition of penalties for the 
violation of EC law can be regarded  as generally accepted principles of EC law.  This is illustrated by 
the Council resolution of 29 June 1995 on the effec tive uniform application of Community law and on 
the penalties applicable for breaches of Community law in the internal market.  This resolution recalls 
the relevant case law of the Court of Justice, and calls upon member States to ensure that "Community WT/DS315/R 
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 law is duly applied with the same effectiveness and thoroughness as national law and that, in any 
event, the penalty provisions adopted are effective, proportionate and dissuasive". 
(x) EC customs cooperation 
4.154  An important instrument in the field of EC customs cooperation is Regulation (EC) 515/97 on 
mutual assistance between the administrative authorities of the member States and cooperation 
between the latter and the Commission to ensure th e correct application of the law on customs and 
agricultural matters. 
4.155  Title I of Regulation 515/97 deals with assistance on request between member States customs 
authorities.  According to Article 4(1) of the Regul ation, EC customs authorities must transmit to one 
another, upon request, any information necessary to  ensure compliance with the provisions of EC 
customs legislation.  The modalities of such assi stance are set out in the following articles of 
Regulation 515/97.  Article 7 provides that at th e request of a customs authority, the requested 
authority shall keep a special watch for certain  persons, places, movements of goods, or means of 
transport. Article 9 provides that customs authorities sh all, at the request of another customs authority, 
carry out investigations concerning operations which appear to constitute a breach of customs 
legislation. 
4.156  Title II deals with spontaneous assistance between  customs authorities.  Article 15 provides in 
particular that EC customs authorities must pr ovide each other spontaneously any information 
concerning operations which appear to constitute  violations of EC customs legislation.  
4.157  Title III deals with relations between member States' customs authorities and the 
Commission, and obliges member States in particular  to provide information to the Commission on all 
operations which appear to constitute breaches of EC customs law.  According to Article 18(3) of the 
Regulation, in response to a reasoned request fro m the Commission, the member States' authorities 
shall take the actions foreseen in Articles 4 to 8 of the Regulation.  According to Article 18(4) of the 
Regulation, where the Commission considers that irregularities have taken place, it may prompt a 
Member State to carry out an inquiry, at wh ich Commission officials may be present under the 
conditions set out in Articles 9(2) and 11 of the Re gulation.  The Member State authorities shall, as 
soon as possible, communicate to the Commission the findings of the enquiry. 
4.158  Title V establishes the Customs Information Sy stem (CIS).  The CIS is an automated 
information system for the use of the administrative authorities of the member States and the Commission.  In accordance with Article 23(2) of th e Regulation, its aim is to assist the EC customs 
authorities in preventing, investigating, and pro secuting operations which are in breach of customs 
law by allowing the rapid dissemination of relevant  information among all EC customs authorities.  
The conditions for the operation and use of the CIS are set out in detail in the following chapters of 
Title V of the Regulation. 
4.159  Finally, customs cooperation is obviously an ar ea which is subject to constant evolution, 
reflecting changing circumstances and technological  and practical needs. For this reason, the 
Community has adopted and implemented successive  action programmes aimed at strengthening the 
effective implementation of the EC customs union.  The current action program is Customs 2007, which applies for the period of 1 January 2003 to  31 December 2007. It is established by Decision 
No. 253/2003/EC of the European Parliament and the Council.  
4.160  The objectives of Customs 2007 are set out in Article 3(1) of Decision 253/2003.  For the 
attainment of its objectives, Customs 2007 for esees a number of programme actions, which include 
actions in the field of communication and informa tion exchange systems, benchmarking, exchanges 
of officials, seminars, workshops and project gr oups, training activities, monitoring actions, and  WT/DS315/R 
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 external actions  in the form of technical assist ance and training. According to Article 14 of the 
Decision, the financial framework for the operati ons to be undertaken is set at €133 million. 
(xi) Budgetary and financial aspects 
4.161  The uniform implementation of the EC custom s union is also important for the EC for 
budgetary and financial reasons.  According to Article 2(1)(b) of the Council Decision 2000/597/EC, 
Euratom on the system of the European Communitie s' own resources, common customs tariff duties 
and other duties established in respect of trade with non-member countries shall constitute an own 
resource entered into the budget of the European Co mmunities.  According to Article 2(3) of the 
Decision, of the amount collected, Members shall reta in an amount of 25% by way of collection cost.  
Accordingly, the correct implementation of Commun ity customs law has direct implications for the 
EC budget, and is also for this reason closely mon itored by the EC institutions, and in particular the 
European Commission.  
4.162  Council Regulation (EC/Euratom) No. 1150/200 0 sets out further procedures for the 
implementation of the own resources decision.  This Regulation provides further tools for the uniform implementation of Community customs law, and theref ore deserves to be considered here.  According 
to Article 17(1) of the Regulation, member States mu st take all requisite measures to ensure that the 
amounts corresponding to the Community's entitlement  are made available to the Community as 
specified in the Regulation. In acco rdance with Article 18(2)(a) of the Regulation, the member States 
must, at the request of the Commission, carry out  additional inspections, with which the Commission 
shall be associated at its request.  According to Article 18(3) of the Regulation, the Commission may 
also itself carry out inspection measures on the spot.  
4.163  A failure to make available the Community's ow n resources is an infringement of the treaty, 
which can give rise to infringement proceedings ag ainst the Member State concerned.  Where such a 
failure results from an incorrect application of EC  customs law, the infringement procedures may at 
the same time also result in a finding that the me mber States has incorrectly applied EC customs law. 
(xii) The continuous evolution of EC customs law 
4.164  The EC institutions keep EC customs law under co nstant review in order to ensure that EC 
customs authorities can operate under the best possible conditions possible. 
4.165  As the most recent example in this respect, the European Commission has launched a process 
of public consultations with a view to the prepar ation of a modernized customs code.  The draft 
versions of the customs code have been submitted to several rounds of public consultations, in which 
traders, national administrations and third countries were provided with an opportunity to comment on 
the envisaged amendments.  The United States did no t provide any comments in the context of these 
consultations, even though it would have been perfectly possible for it to do so. 
4.166  The Unites States has stated that "the most vo cal critics of the EC frequently have been the 
EC's own officials".  However, the statements to which the United States refers simply reflect the ongoing process of reform and review of EC customs law.  Indeed, the EC is not complacent about its 
own system, and is committed to continue developing it in acco rdance with changing needs and 
circumstances.  However, this does not prove that the EC is in any way failing to comply with its 
obligations under Article X:3(a) and (b) GATT. WT/DS315/R 
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 (c) Judicial control in EC law  
(i) The EC court system 
4.167  In the EC, all disputes concerning matters govern ed by Community law which are not subject 
to the jurisdiction of the Court of Justice of the EC (and the EC Court of First Instance) fall within the 
competence of the national courts.  The national courts  thus assume the status of Community courts of 
general competence, in the sense th at they are competent to determine any dispute that is not 
expressly conferred on the EC Court of Justice and on th e EC Court of First Instance.  The situation of 
the national courts is such that they perform a dual functional role.  When determining a dispute 
governed by national law, they continue to form part  of the national legal order.  When determining a 
case governed by Community law, they belong from the functional point of view to the Community 
legal order.  Since the very foundation of the EC, the use of national courts to implement Community 
law has been considered as the b est way of ensuring justice in a swift manner close to the citizens. 
4.168  The EC Treaty itself established the role of th e national courts in the application of the 
Community legal order, as well as the scope and con sequences thereof, by virtue of its Article 234 
concerning references to the Court of Justice by national Courts.  Such ro le cannot be negated by 
Community legislation.  Therefore, any modification in the boundaries between the competences of 
the Court of Justice and the national Courts would require the amendment of the EC Treaty. 
4.169  The Court of Justice and the Court of Firs t Instance of the European Communities are 
constituted under the EC Treaty and th e Protocol on the Statute of the Court of Justice annexed to it.  
Both Courts are composed of one judge per Member State and they normally decide in chambers of three or five judges.  The Court of Justice is assisted by eight Advocates General, who act with 
complete impartiality and independence in deliver ing an individual reasone d opinion on cases which 
require his or her involvement. 
4.170  According to Article 220 of the EC Treaty, the central task of the Court of Justice and the 
Court of First Instance is to ensure that in the in terpretation and application of the Treaty, the law is 
observed.  This is done through different proce dures, which delimitate the jurisdiction of both 
European Courts between themselves and with the na tional courts.  The Court of Justice and the Court 
of First Instance are to act within the limit s of the powers conferred upon them by the founding 
treaties. 
4.171  The main division between the different kinds of  proceedings before the Court of Justice is 
between those originating and terminating befo re the Court itself and those originating and 
terminating before national courts.  In addition, the Court of Justice is competent to hear appeals on 
points of law from decisions of the Court of First In stance, where that Court has jurisdiction at first 
instance. 
4.172  The main kinds of proceedings originating and terminating before the Court of Justice are, 
amongst others, actions against member States for failure to fulfil an obligation under Community 
law, actions for the annulment of a Community  measure, actions for failure by a Community 
institution to act, and action for damages relating to the Community's non-contractual liability.  The 
second category of proceedings before the Court of Ju stice is actions which originate before a national 
court but are referred to the Court of Justice for a ruling on the interpretation or validity of a point of 
Community law. 
4.173  Article 225(1) of the EC Treaty provides that the Court of First Instance shall have 
jurisdiction at first instance in actions for annulme nt, actions for failure to act, actions founded on 
non-contractual liability, staff cases and cases under ar bitration clauses in Community contracts, with 
the exception of those reserved in th e Statute to the Court of Justice.  As the Statute reserves to the  WT/DS315/R 
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 Court actions for annulment and acti ons for failure to act brought by institutions and member States in 
some sectors, the jurisdiction conferred on the Cour t of First Instance covers virtually all direct 
actions brought by natural or legal persons as well as direct actions by member States challenging 
executive action by the Community inst itutions.  In the fields thus defined, the Court of First Instance 
has exclusive jurisdiction at first instance, its decisi ons being subject to a right  of appeal on points of 
law only to the Court of Justice. 
(ii) Judicial protection in the EC legal system 
4.174  As a Community based on the rule of law, the Community recognizes the right of individuals 
to judicial protection.  This right to an effective re medy before a tribunal is, first of all, recognized in 
Article 47 of the Charter of Fundamental Rights of th e European Union, which reflects, in accordance 
with Article 6(2) EU Treaty, the constitutional trad itions of the member States.  It should be also 
stressed that all EC members States are parties to  the Council of Europe Convention for the Protection 
of Human Rights and Fundamental Freedoms of 14 N ovember 1950, where Article 6(1) lays down the 
right to a fair trial by an independent and impartial tribunal established by law. 
4.175  In the EC legal system, national courts guarant ee this right when a decision taken by national 
authorities is challenged.  This also applies to  acts of the member States through which they 
implement Community law. While the judicial or ganization and procedures in the member States 
result from their various political, constitutional and le gal traditions, they all provide complete legal 
protection in relation to administrative decisions. 
4.176  As regards the decisions of the EC institutions, the main action to exercise this right is the 
action for annulment.  Under Article 230 of the EC Tr eaty, the Court is to review the legality of acts, 
amongst others, adopted jointly by the European Parliament and the Council, of the acts of the 
Council, and of the Commission, other than recomme ndations or opinions.  Generally speaking, an 
action for annulment is available in the case of all measures adopted by the institutions, whatever their 
nature or form, which are intended to have legal effects.  However,  this jurisdiction does not cover 
acts adopted by a national authority. Neither does it extend to the Treaty and its amendments. 
4.177  Under Article 230(4) of the EC Treaty, natura l or legal persons may institute proceedings 
against a decision addressed to that person or agai nst a decision which, although in the form of a 
regulation or a decision addressed to another person, is of direct and individual concern to the former person.  The Court of Justice has in terpreted "of direct concern" to mean that the effect of the measure 
on the person's interests must not depend on the di scretion of another person,  including the relevant 
Member State.  The requirement of "individual c oncern" is fulfilled where the measure in question 
affects specific natural or legal persons by reason of certain attributes peculiar to them, or by reason 
of a factual situation which differentiates them from all other persons and distinguishes them 
individually in the same way as the addressee. 
(iii) Preliminary rulings: the Court of Justice and the uniform interpretation and application of 
Community law 
4.178  The Court of Justice plays a central role in the uniform interpretation and application of 
Community law throughout the Community by means of the preliminary reference procedure set out in Article 234 EC Treaty. 
4.179  Where a question as to any of these matters arises  before any court or tribunal of a Member 
State, that court or tribunal may, if it considers th at a decision on the question is necessary to enable it 
to give Judgment, request the Court of Justice to give a ruling on it.  Where any such question is 
raised in a case pending before a court or tribunal of  a Member State, against whose decisions there is WT/DS315/R 
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 no judicial remedy under national law, that court or tribunal must bring the matter before the Court of 
Justice. 
4.180  However, where the validity of a Community act  is challenged before a national court, the 
Court of Justice has declared that the power to declare the act invalid must be reserved to the latter.  
Therefore, if a national court considers that an act of  an EC institution is invalid, it is obliged to make 
a reference to the Court of Justice.  The latter has justified this case law with the need to secure the 
uniform application of all acts of the Community. 
4.181  In a recent case, the Court of Justice confirmed that the principle of Member State liability for 
breaches of Community law also applies when a breach  is attributable to a Member State court, 
because it fails to refer a case to the Court of Justice.  In such cases, the affected claimant is entitled to 
bring another suit, affording the national judge hear ing that case the opportunity to refer the issue to 
the Court of Justice at the second attempt. 
4.182  When entertaining a preliminary reference, the Court of Justice does not exercise an appellate 
power to approve or overrule determinations of the referring courts.  Rather, it assists the national 
court in coming to a decision which has not been made  at the time of the reference.  The relationship 
between national courts and the Court of Justice is co-operative and not hierarchical, based on the 
recognition that each court has a different function, and on mutual goodwill and respect. 
4.183  The main objective of this preliminary refe rence system is to guarantee the proper and 
uniform interpretation and application of Community  law throughout all the member States, avoiding 
the establishment of a long and expensive appellate sy stem before the Court of Justice.  This is 
extremely important because the administration of the Community is, to a large extent, carried out by 
the member States rather than by  the Community institutions and because Community legislation may 
require implementing measures to be adopted by nati onal legislatures or executives.  It is through 
preliminary references that divergences within and be tween the member States can be avoided and the 
effective application of Community law be assured.   At the same time, the reference procedure 
constitutes the principal method by which the co mpatibility of national law and administrative 
decisions with Community law is tested. 
4.184  Apart from providing a means of ensuring unif ormity throughout the Community, individual 
litigants find that their national cases are referred to the Court of Justice as to the validity or 
interpretation of an act of a Community institution.   All parties to the main action are entitled to 
participate in the preliminary reference proceedings, as well as Members States and Community institutions.  It is the practice of the Commission to participate in every case before the Court of 
Justice, as a consequence of its role as guardia n of the Community interest.  A preliminary ruling 
given by the Court of Justice is binding on the na tional court hearing the case in which the ruling is 
given.  Besides, national courts and tribunals implement faithfully th e preliminary rulings of the Court 
of Justice.  If a referring court does not follow the ru ling of the Court of Justice, this would constitute 
a breach of the obligations of the Member State under the Treaty, which could be brought before the 
Court of Justice under Articles 226 to 228 of the EC Treaty. 
4.185  A preliminary ruling has also an effect on persons who are not parties to the case referred. In 
Simitzi v. Municipality of Kos , the Court held that Greece could no longer reasonably have believed 
that a duty was compatible with Community law afte r the date of the Judgment in which a comparable 
French charge was held not to be.  In a recent cas e, the Court of Justice has expanded the effects of 
preliminary rulings to certain res judicata  situations.  The Court declared that, in view of the 
obligation on all the authorities of the member St ates to ensure observance of Community law and 
because of the principle of cooperation arising fro m Article 10 EC, an administrative body may be 
under an obligation to review a final administrati ve decision in order to take account of the 
interpretation of the relevant provision given by  the Court in a subsequent preliminary ruling.  WT/DS315/R 
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 (iv) Judicial review of customs decisions 
4.186  Article 243(1) CCC provides that any person shall have the right to appeal against decisions 
taken by the customs authorities which relate to the application of customs legislation and which 
concern him or her directly and individually.  Article 243(1) CCC also provides that any person who 
has applied to the customs authorities for a decision relating to the application of customs legislation 
and has not obtained a ruling on that request within  the period referred to in Article 6(2) CCC shall 
also be entitled to exercise the ri ght of appeal.  Article 243(1) finally provides that the appeal must be 
lodged in the member State where the decision has been taken or applied for. 
4.187  Since Community customs law is implemented through the customs authorities of the 
member States, the appeal is lodged before a tri bunal of the member State whose customs authorities 
have issued the decision. In accordance with Ar ticle 245 CCC, the provisions governing the appeals 
procedure are laid down in the national laws of the member States.  The CCC abstains from 
harmonising the national law on administrative and judicial appeals against customs decisions.  This reflects the fact that such procedural laws ofte n apply uniformly to the whole field of national 
administration.  Harmonization might therefore have  led to the fragmentation of hitherto uniform 
national appeals procedures. 
4.188  As it has already been explained above, the role of the member States' courts in the judicial 
review of customs decision is fully compatible wi th the uniform application of EC customs law.  
member States' courts are obliged to apply EC law according to the interpretation given by the Court 
of Justice and set aside any national provision or meas ure that is inconsistent with EC law.  Wherever 
a question of interpretation of Community law arises,  such a question may be referred to the Court of 
Justice in accordance with Article 234 EC.  Where the national court is a court of last instance or any 
national court considers that the Community measure is invalid, such court is obliged to refer the 
question to the ECJ. 
4.189  Finally, it should be noted that in exceptiona l cases, a right of appeal against customs 
decisions may also be available directly to the EC Court of First Instance.  This is the case when the 
European Commission takes decisions applying EC customs law which are of direct and individual 
concern to individuals within the meaning of Artic le 230(4) EC Treaty. Examples for such decisions 
are Commission decisions revoking BTI.  Another example would be Commission decisions on the repayment or remission of import duties on equitabl e grounds on the basis of Article 907 of the 
Implementing Regulation.   
(d) The US system in comparison 
(i) The administration of US customs law 
4.190  In the United States, customs laws, which are fede ral laws, are essentially administered by US 
Customs and Border Protection.  US Customs and Bo rder Protection is an agency of the US Federal 
Government part of the US Department of Homela nd Security.  US Customs and Border Control has 
20 Field Operations Offices which oversee 317 US ports of entry and 14 preclearance offices. 
4.191  However, it is noteworthy that the fact that US customs law is implemented by a federal 
agency is not specific to customs matters.  On th e contrary, it reflects a fundamental interpretation of 
US constitutional law according to which Congress ma y not require US states to implement federal 
law.  This has been confirmed by the US Supreme Court in the case Printz vs. United States.  
4.192  The US dual federalism is diametrically opposed to  the basic principles of the EC legal order. 
The US system is characterized by a principle of "dual sovereignty", in which the individual States 
may not be "conscripted" or "commandeered" to admini ster federal law.  EC law is characterized by WT/DS315/R 
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 the principle of executive federalism, where all EC law must be executed by the national authorities of 
the member States, acting under the guidance and supervision of the EC institutions. 
4.193  The EC does not intend to question the constitu tional choices which the United States has 
made.  However, in response to the US claims under Article X:3(a) GATT, it is important to stress 
that the EC's executive federalism is just as fundame ntal and legitimate a constitutional choice as the 
US system of dual sovereignty.  The EC considers that its constitutional c hoices should be afforded 
the same respect as those of the United States. 
(ii) Review of customs decisions in US law 
4.194  Judicial review in the US concerning customs and trade issues is in the first step attributed to 
the United States Court of International Trade (the  "USCIT"), which is a federal court established 
under Article III of the US Constitution. The USCIT is  equal in rank to a federal district court. 
4.195  Appeals against the USCIT's decisions may in all cases be taken as of right to the US Court of 
Appeals for the Federal Circuit (the "CAFC").  It is a specialized appellate court with the rank of a 
federal circuit court, which has exclusive ju risdiction over appeals from the USCIT as well as a 
disparate group on non-USCIT issues, patents appeals being the most common.  Ultimately, an appeal 
to the US Supreme Court, via petition for writ of certiorari, can be lodged. 
4.196  It is worth noting that this centralized first inst ance judicial review at federal level through the 
USCIT is a political choice that the United States has made. Under US law, State courts have also a 
role in enforcing federal law, as was clearly explained by the US Supreme Court in the case Claflin v. 
Houseman . 
4.197  The EC does not intend to question the political  choices which the United States has made to 
organize its judiciary in relation to customs matter s.  However, in response to the US claims under 
Article X:3(b) GATT, it is important to stress that th e EC's judiciary system is just as fundamental and 
legitimate a constitutional choice as the US centr alized system. The EC considers that its 
constitutional choices should be afforded the sa me respect as those of the United States. 
3. The US claims under Article X:3(a) GATT 
(a) The requirements of Article X:3(a) GATT 
(i) Article X:3(a) GATT concerns the administrati on of customs laws, not the customs laws 
themselves 
4.198  The requirements of Article X:3(a) GATT do not concern the customs laws themselves, but 
only their administration .  This was clearly spelt out by the Appellate Body in EC – Bananas III . 
4.199  This distinction is highly important for the pr esent case.  It means that Article X:3(a) GATT 
does not require a harmonization of la ws within a Member where, for instance, different legal regimes 
are applicable within different parts of the territory of a WTO Member.  
4.200  This is particularly relevant for all WTO Me mbers which have a federal structure.  In a 
federal State or entity, different la ws may apply in the different parts of the territory of the Member 
concerned, depending on whether it is the federal or  the sub-federal level which has legislated on a 
particular issue.  
4.201
 Article X:3(a) GATT does not interfere with the question of whether a pa rticular issue should 
be dealt with at the federal or the sub-federal leve l.  It guarantees merely that whatever laws exist  WT/DS315/R 
 Page 47 
 
 
 must be administered in uniform ma nner.  However, where laws apply onl y in part of the territory of a 
Member, this requirement is met provided that those laws are applied uniformly within the part of the 
territory in which they are applicable. 
4.202  Further confirmation for this interpretation is  found in Article XXIV:12 GATT.  The Panel in 
Canada – Gold Coins  found that this provision has the "func tion of allowing federal States to accede 
to the General Agreement without having to cha nge the federal distribution of competence".  
Accordingly, any interpretation of Article X:3(a) GATT which would affect the internal distribution 
of competence is incompatible with Article XXIV:12 GATT. 
4.203  In other words, Article X:3(a) GATT does not re quire that customs laws be regulated at the 
central level of each WTO Member.  The WTO Ag reements respect the internal structure and 
divisions of competences in each WTO Member.  Where sub-federal laws exist in a particular WTO 
Member, it is therefore to the administration of those laws that Article X:3(a) GATT refers. 
(ii) Article X:3(a) GATT does not prescribe the ways in which WTO Members must administer 
their customs laws 
4.204  Article X:3(a) GATT does not prescribe the specific way in which WTO Members should 
administer their customs laws.  It merely sets ou t an obligation to administer customs laws in a 
uniform manner.   
4.205  Article X:3(a) GATT is not the only provision of the covered agreements dealing with the 
administration of customs laws.  Indeed, a number of  Agreements contained in  Annex 1A to the WTO 
Agreement deal with specific matters of customs administration, notably the Valuation Agreement, 
the Agreement on Rules of Origin, and the Agreement on Import Licensing Procedures.  
4.206  Wherever it was felt necessary to lay down specific disciplines on how WTO Members 
should administer their customs laws, appropria te provisions were included in the respective 
agreements.  For example, Articles 2(h) and 3(f) of the Agreement on Rules of Origin require WTO 
Members to issue advance rulings on the origin of  goods.  If it had been felt necessary to include 
similar obligations for the issuance of advance rulings  on other issues, such as tariff classification or 
customs valuation, such provisions could have been included in the covered agreements.  If they were 
not, it must be concluded that WTO Members did not consider such obligations appropriate.  
4.207  Article X:3(a) GATT must therefore not be interpreted in such a way as to create WTO 
obligations where WTO Members consciously abstai ned from laying them down.  In other words, 
Article X:3(a) GATT is not a legal basis for e ngaging in a harmonization of the customs law and 
administrations of WTO Members through the DSU. 
4.208  Respect of these principles is particularly necessary since the revision of Article X GATT is 
currently the subject of the ongoing Doha negotiations  on trade facilitation.  In the context of these 
negotiations, WTO Members have made a large number of proposals to supplement and improve 
Article X GATT, including on issues which are the subject  of the US claims.  This also applies to the 
United States itself, which has made a number of pr oposals in relation to Article X GATT, including a 
proposal to create an obligation to "make available, upon request of a trader, binding rulings in certain 
specific subject areas (e.g., tariff classification, cu stoms valuation, duty deferral)".  Proposals on 
advance rulings, the majority of which however is li mited to issues of tariff classification, have also 
been made by a number of other countries. 
4.209  These ongoing negotiations underline that on those matters in which it is currently silent, 
Article X GATT in fact does not contain any obliga tions.  It is unclear to the EC how the United 
States can simultaneously make proposals for the cr eation of new obligations  going beyond Article X WT/DS315/R 
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 GATT, and then argue that very similar obliga tions are already owed under Article X GATT as it 
currently stands. 
4.210  The US case is motivated less by legal than by po litical considerations.  In fact, this has been 
explicitly admitted by the United States in a press re lease that was issued by  USTR to announce the 
US request, which indicated that "pressing a major player in world trade to administer its customs 
laws and regulations in a uniform manner will he lp to advance" the Doha Round trade facilitation 
negotiations.  The EC is highly concerned by this at tempt by the United States to instrumentalize the 
DSU for the purposes of influencing the ongoing Doha Round negotiations.  
(iii) Article X:3(a) GATT lays down minimum standards 
4.211  In line with the foregoing, it must be considered that Article X:3(a) GATT only lays down 
minimum standards.  It does not oblige WTO Me mbers to meet the highest possible standard 
achievable at a given point in time.  This character of Article X:3(a) as a minimum standard has been emphasized by the Appellate Body in US – Shrimp . The Panel in Argentina – Hides and Leather has 
also cautioned against reading too much into Article X:3(a) GATT. 
4.212  Moreover, minor administrative differences in treatment cannot be regarded as implying a 
violation of Article X:3(a) GATT.  This was clearly stated by the GATT Panel in EC – Dessert 
Apples , which confirmed that certain variations between EC member States in the administration of 
import licensing, e.g., as regards the form in wh ich licence applications could be made and the 
requirement of pro-forma invoices, did not constitute a breach of Article X:3(a) GATT. 
4.213  Overall, Article X:3(a) GATT is therefore a minimum standards provision which guarantees 
only a certain minimum level of uniformity in ad ministration.  Moreover, Article X:3(a) GATT does 
not prohibit administrative variations where such va riations are minor or do not significantly affect 
the interests of traders. 
(iv) The meaning of "uniform administration" 
4.214  The meaning of the requirement of "uniform ad ministration" must be established in the light 
of the foregoing observations.  Moreover, account mu st be taken of the practical realities in which 
customs administrations must work. 
4.215  The administration of customs laws in the r eal world involves a number of difficulties and 
challenges.  First of all, the administration of cu stoms frequently involves complex questions of law 
and fact.  Second, the circumstances under which customs authorities operate are in continuous 
evolution due to changes in goods traded or comme rcial behaviour.  This requires customs authorities 
to continuously adapt to new realities.  Thir d, customs administration is a mass business. 
4.216  Therefore, a measure of realism is required in the application of Article X:3(a) GATT.  If 
customs authorities struggle with a complex new question of law and fact, this does not already mean that authorities in the member concerned administer  customs law in a non-uniform manner. Similarly, 
if it takes a certain amount of time to come to an established practice on a new and complex issue of 
customs law, this does not yet mean that customs la ws are being administered in a non-uniform way.  
4.217  A complete uniformity in the application of customs laws could never be achieved by any 
Member, even those with the most efficient system s of customs administration.  In a large country 
with a large bureaucracy, a minimum degree of non-uniformity is de facto unavoidable.  This may 
occur, for instance, because a trad er in a particular case does not challenge a particular decision even 
though it was illegal. In such a case, non-uniformity ma y be the result, but this does not mean that the 
Member in question fails to meet its obligations under Article X:3(a) GATT.  The EC notes that the  WT/DS315/R 
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 United States appears to agree with this, since it st ates that "the fact that divergences occur is not 
problematic in and of itself". 
4.218  The proposition that individual instances of administration are not probative for a violation of 
Article X:3(a) GATT also finds support in the case law under the DSU. In EC – Poultry , the 
Appellate Body already confirmed that individual me asures of application do not fall within the scope 
of Article X GATT. In US – Hot Rolled Steel , the Panel stated that rather than relying on individual 
instances of administration, it was necessary for th e complaining party to establish a pattern of 
decision making contrary to Article X:3(a) GATT. 
4.219  Accordingly,  whether a particular member me ets the requirement of "uniformity" cannot be 
established merely by looking at an individual ex ample of practice.  Rather, uniformity can be 
assessed only on the basis of an overall pattern of cu stoms administration.  Only if, on the basis of 
such general patterns, a WTO Member's administra tion of its customs laws can be shown to be non-
uniform, is the standard of Article X:3(a) GATT violated. 
(b) The burden of proof 
4.220  It is established case law under the DSU that th e party which asserts a particular claim bears 
the burden of proof.  In the present case, it is th e United States which claims that the EC does not 
administer its customs laws in a uniform manner.   It is accordingly the United States which must 
adduce evidence to establish a prima facie case that its claim is true.  Only if the United States 
discharges this burden of proof will the burd en shift to the EC to rebut the US case. 
4.221  The United States does not even come close to di scharging this burden of proof.  In fact, the 
United States adduces only very sparse evidence rega rding the actual administration of EC customs 
law.  The examples given by the United States are pa rtially irrelevant, partially inconclusive, and in 
any event do not show a general pattern of non- uniform administration of EC customs law. 
4.222  Instead of adducing concrete evidence regardi ng the administration of EC customs law, the 
United States tries to build its case on systemic criticisms of the EC system of customs administration, arguing for instance that because EC law is admini stered by the authorities of the 25 EC member 
States, "divergences will inevitably occur".  Ho wever, the assertion that such "divergences are 
inevitable", which the EC strongly contests, does not replace the proof that divergences actually 
occur. 
4.223  The entirely speculative nature of the US case is also illustrated by the US references to the 
expected effects of the enlargemen t of the EU by 10 new member States on 1 May 2004.  In the press 
release of USTR announcing the US Panel Request, th e anticipated effects of EU enlargement were 
cited as the primary reason for requesting a Panel. 
4.224  At the time the United States made its request for a Panel, EU enlargement had been in effect 
for less than eight months.  The United States has not referred to any lack of uniformity in the 
implementation of EC customs law by the administrations of the 10 new member States.  Pure speculation about possible future developments cannot replace facts and evidence  as a basis for claims 
made under the DSU. 
4.225  In its efforts to avoid its own burden of proof, the United States prefers to refer to 
pronouncements of EC officials or institutions, which it claims are the "most vocal critics" of the EC system.  However, these references  are taken out of  context, and do not su pport the conclusions the 
Unites States would draw from them.  In any event, the desire to make further progress is natural in 
the context of a healthy system of customs administ ration.  Such statements have nothing to do with WT/DS315/R 
Page 50  
 
 the question of whether the EC is in compliance wi th its obligations under Article X:3(a) GATT, and 
do not exempt the United States from the necessity of discharging its burden of proof. 
4.226  Finally, that the US case is not really based on any pattern of non-uniformity in  the 
administration of customs in the EC is strikingly conf irmed by the almost complete lack of reaction to 
the call for input by the United States Trade Re presentative following the consultation request.  If 
really there was a pattern of non-uniformity, as the United States alleges, one could have expected 
that the United States would receive more than three contributions, two of which were not even pertinent to the US case. 
(c) General issues underlying the US claims under Article X:3(a) GATT  
(i) The fact that EC customs law is administered by  the customs authorities of EC member States 
is compatible with  Article X:3(a) GATT 
4.227  Article X:3(a) GATT does not prescribe the ways in which a WTO Member must implement 
its customs laws.  This also in cludes the question through what authorities or administration customs 
laws are administered.  Article X:3(a) GATT in no ways excludes that in a federal or quasi-federal 
state or entity, customs laws could be administered by authorities at the sub-federal level.  Contrary to 
the United States, it does not prescribe the creation of a customs agency similar to US Customs and 
Border Protection.  
4.228  Moreover, when they administer EC customs law,  the EC member States act as the organs of 
the EC.  This has been confirmed with by the recent Panel report in EC – Trademarks and 
Geographical Indications (US) , where the Panel noted that when EC member States execute a 
particular EC regulation, they do so as organs of the EC, for which the EC is responsible under public 
international law. 
4.229  For this reason, the United States is wrong to assert that there "is no EC customs authority to 
speak of".  The customs authorities of the EC member States, acting together with and under the supervision of the competent institutions of the EC, ar e the EC customs authority.  That this system of 
customs administration is different from that of the United States is of no relevance under 
Article X:3(a) GATT.  It should also be recalled that the United States itself has accepted, in the EC-
US Agreement on customs cooperation, the fact th at the EC member States together with the 
European Commission constitute the EC customs authority.  
4.230  The United States is also wrong to assert that due to the involvement of EC member States in 
the administration of EC customs law, "divergences inevitably occur".  As the EC has already shown, 
and will recall again in the following section, the EC  has numerous mechanisms  in place to ensure 
that the administration of EC customs law takes pl ace in a uniform manner.  In addition, the US 
statement that in the EC system, a lack of uni formity would be "inevitable" is unsupported by 
evidence.  
(ii) The EC has measures in place to ensure the uniform administration of EC customs laws 
throughout the EC 
4.231  The US claim that the EC does not provide for the systematic reconciliation of divergences in 
the application of EC customs law is false.  It reflects a biased and incomplete presentation of the EC 
system, in which the United States focuses on a sm all number of instruments while ignoring a wide 
range of other instruments which equally contribute to the uniform interpretation and application of 
EC customs law.  Moreover, the United States fails to take into account the overall context of the EC 
legal system and the ways in which unifo rmity is ensured within the EC system.  WT/DS315/R 
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 4.232  The EC finds it remarkable that the United St ates would make sweeping statements about the 
uniformity of EC law without ever once mentioning such fundamental principles of EC law as the 
supremacy and direct effect of EC law, the duty of  cooperation, infringement proceedings, the various 
instruments of EC customs cooperation, or the budgetary control aspects.  
4.233  A particularly striking example of the highly sel ective US approach is customs classification, 
where the United States concentrates mainly on the EC BTI system, without giving any consideration 
to the other tools for ensuring a uniform classifica tion practice within the EC, such as classification 
regulations, HS instruments, EC explanatory not es, or opinions of the Customs Code Committee. 
Even where the US considers parts of the EC sy stem, it presents these in a highly distorted way. 
4.234  The question of whether the EC, at a systemat ic level, administers EC customs law in a 
uniform manner cannot be evaluated by simply considering one single instrument in isolation.  
Rather, the EC system has to be evaluated as a whole, taking into account all of the relevant 
instruments in their proper context. 
4.235  This evaluation should be made taking into account  the structural elements of the EC legal 
system and the overall record and experience of Eur opean integration. The structural elements which 
the United States criticises are not specific to the administration of customs laws, but are general 
structural elements of the EC cons titutional order.  More than fifty years of successful integration in 
Europe based on the EC's model of executive federalism should not lightly be dismissed. 
(iii) Some necessary corrections re garding the role and functioning of the Customs Code 
Committee  
4.236  The United States argues that the Customs C ode Committee does not function efficiently 
enough and that individual traders are not given enough rights in the context of the proceedings of the 
Committee.  These US criticisms are unfounded. 
4.237  As regards the alleged inefficiency in the Committee's operation, the United States relies 
essentially on general statements about "institu tional disincentives" which would keep the 
Commission from putting matters to a vote.  These a llegations regarding "institutional disincentives" 
are unfounded and are not supported by any evidence. Moreover, the United States neglects that the 
conditions under which the Chairman  puts a matter to the vote or may postpone a vote are laid down 
in Article 6 of the Rules of Procedure of the Committee. 
4.238  The fact that in some cases, the Committee may have to be seized more than one time of the 
same or of related matters has nothing to do with "institutional disincentives".  Rather, this may reflect 
the complexity of the issue in question and the need to gather a full understanding of the factual 
situation before a decision can be taken. 
4.239  The entirely speculative nature of  the US claims is also illust rated by the references it makes 
to the supposed negative effects of EU enlargemen t on the efficiency of the Committee.  The United 
Sates makes these statements without being able to  support them with any concrete evidence.  
4.240  As regards the rights of individual traders in re spect of the proceedings of the Committee, the 
United States makes these arguments in the context of a discussion of whether the EC administers its 
customs laws uniformly in acco rdance with Article X:3(a) GATT.  The EC does not understand the 
relevance of these arguments regarding the rights of  private traders before the Committee for the 
question of whether EC customs law is uniformly applied throughout the EC.  
4.241  The US complaints seem to be based on a f undamental misunderstanding of the role of the 
Customs Code Committee.  The Committee is not a mechanism for the administrative or judicial WT/DS315/R 
Page 52  
 
 review of customs decisions.  Rather, it is an integral part of the Community's regulatory process, 
through which member States expertise is integrated  into this process.  There is accordingly no basis 
for the extensive rights of private tr aders requested by the United States. 
4.242  Any individual with a concern regarding the administration of customs matters can bring this 
issue to the attention of the Commission, which will consider the matter and respond in accordance 
with the Commission's Code of Conduct.  If th e Commission considers that the matter requires 
consideration by the Committee, it will put this  matter on the Committee's agenda.  In a similar 
fashion, a concerned individual may also address the administration of a Member State, which may equally decide to raise th e matter in the Committee. 
4.243  As regards the publication of agendas or reports  of the Committee, there is no obligation of 
publication in this respect.  The United States also  has not raised any claim under Article X:1 GATT. 
In any event, the US claims are factually wrong.  Documents relating to the Customs Code Committee, 
including agendas and summary records of mee tings, are available on the public register of 
comitology of the European Commission. More over, access to the agendas and records of the 
Committee is governed by the EC rules on access to documents laid down in Regulation 
EC/1049/2001. 
(iv) The role of the Court of Justice in ensuring uniformity in the administration of EC customs 
law 
4.244  The United States contests that uniform admini stration can be guaranteed by the Court of 
Justice through preliminary references made by nationa l courts.  To sustain its arguments, the United 
States relies on the opinion of AG Jacobs in Wiener.   However, AG Jacobs´ position departs from the 
case-law of the Court of Justice and, what is even  more fundamental, his position as to the exercise of 
a greater measure of self-restraint either on the part of the Court or by national courts was not followed by the Court. 
4.245  AG Jacobs proposed to the Court that the ques tion referred by the Bundesfinanzhof should be 
answered by reminding the principles enshrined in th e case-law of the Court of Justice in relation to 
customs classification.  Contrary to the conclusions  of the AG, the Court of Justice provided a specific 
answer to the question of how the goods  in question were to be classified. 
4.246  As to AG Jacobs' advice for self-restraint addressed  to national courts, the ruling of the Court 
of Justice is completely silent on this issue.  Therefore, AG Jacobs' non-binding opinion constitutes a 
doctrinal position with no influence on th e case law of the Court of Justice.  
4.247  Concerning AG Jacob's statement about the supposed ly minimal contribution of the Court to 
the uniform application of the Common Customs Tari ff, the United States has clearly taken it out of 
context.  What AG Jacobs underlined in its opinion is that, considering the detailed character of the 
Common Customs Tariff, there were also other ways of ensuring uniformity in the field of customs 
classification and gave the Commission's classification regulations as an example.  
4.248  To confirm that AG Jacobs' advice for self-restra int is being followed by  national courts, the 
United States refers to two Judgments given by tw o different UK courts.  Thus the support found by 
the United States to its arguments is limited to tw o cases in one of the 25 EC member States.  No 
evidence is provided on the position taken by the ot her 24 national judiciary branches in relation to 
the AG's advice (should such a position exist).  Th e EC considers that these two UK cases are not 
sufficient to support the US claim. 
4.249  Moreover, in Anchor Foods Limited , the UK Queen's Bench Division did not rely on AG 
Jacobs´ opinion to decide that there was no need to refer to Court of Justice.  Indeed, the Queen´s  WT/DS315/R 
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 Bench Division decided not to refer because of the limited importance of the case.  It should also be 
pointed out that the Queen's Bench Division did not act in this case as a court of last instance and that, 
therefore, it was not under an obligation to  refer the case to the Court of Justice. 
(d) The US claims under Article X:3(a) GATT 
(i) Tariff classification 
The ECJ and tariff classification  
4.250  The United States argues that the ECJ as an ins titution is ill-equipped to bring uniformity to 
the administration of the Tariff.  This statement, which is solely based on the Opinion of AG Jacobs, 
in Wiener, is wrong. 
4.251  Concerning specifically the role of the ECJ in classification disputes, the EC disagrees with 
the US opinion that because of this fact-intensive nature of classification questions, the ECJ cannot 
play a useful role in securing a uniform  admi nistration of EC classification rules. Even if 
classification questions may typically be fact-int ensive, this does not make them fundamentally 
different from other questions of law, which also in volve the application of abstract rules to factual 
situations. 
4.252  Moreover, it is in the nature of classification issues that they concern the classification of 
specific goods.  To which extent a classification of particular goods may be transposable by analogy 
to different, but similar goods is a complex ques tion which can be evaluated only on a case-by-case 
basis.  Once again, however, this is a general issue of classification, and is not in any way specific to 
the role of the Court. 
4.253  Finally, the US attempts to belittle the role of the Court are strikingly at odds with its 
allegations that the EC acts in a non-uniform manne r.  The US comments would actually seem to cast 
doubt on whether classification questions can be regula ted effectively at all.  The concerns expressed 
by the United States concerning the fact-intensive na ture of classification questions arise regardless of 
whether the final decision-maker is a Court or an administrative agency.  
4.254  Overall, the US line of argument leaves the EC perplexed.  The United States seems to 
practically claim that a uniform classification cannot be achieved, and then fault the EC for not doing 
enough to achieve it.  
Binding tariff information  
4.255  Article X:3(a) GATT is a provision which sets out minimum standards, and does not 
prescribe the specific means a Member must employ in  order to ensure a uniform administration of 
customs laws.  For this reason, there is no obliga tion under WTO law for a Member to have a system 
of binding tariff information in place.  This is clearly illustrated also by the US proposals in the 
context of the Doha Round trade facilitation negot iations, which aim at supplementing Article X 
GATT by introducing an obligation to provide for advance rulings on classification matters. 
4.256  The United States alleges that the EBTI system  encourages "BTI shopping" and thus leads to 
an increased risk of divergent BTIs. These US allegations are based on numerous misconceptions 
about the EBTI system. The United States claims that the "holder or other applicant chooses the 
member States to which it will make the application" .  This is misleading.  EC customs law does not 
allow applicants to "pick and choose" the member  State which will issue the BTI.  According to 
Article 6(1) of the Implementing Regulation, appl ications for BTI must be made either to the WT/DS315/R 
Page 54  
 
 competent authorities in the Member State or member St ates in which the information is to be used, or 
to the competent authorities in the Member State were the applicant is established. 
4.257  The United States also complains that a BTI "is not binding on the holder, in the sense that it 
does not need to be invoked by the holder".  Firs t, this is not entirely true.  According to 
Article 10(2)(a) of the Implementing Regulation, the customs authorities may require the holder, 
when fulfilling customs formalities, to inform the cu stoms authorities that he is in possession of BTI 
in respect of the goods being cleared through customs.  
4.258  Second, the EC fails to see the practical relevan ce of this issue from the point of view of a 
uniform BTI practice.  The United States states that  a person that has received unfavourable BTI in 
one Member State "may ignore it, not apply for BTI in another State, and simply attempt to import 
merchandise through another member State asserting the more favourable classification without 
relying on BTI at all".  This may be so, but the situation would be no different if no BTI had been 
granted at all. BTI is granted for the benefit of th e holder.  In the situati on described by the United 
States, it would therefore be more natural for th e person which has received the unfavourable BTI to 
challenge it, if it believes it to be wrong.  Moreov er, there is no reason to assume that other EU 
customs authorities will apply a different tariff classi fication than the one foreseen in the BTI, just 
because the BTI is not invoked. 
4.259  The US claim that an applicant may apply in one  Member State and, if it is not favourable, 
decline to invoke it and apply for BTI in another member State is wrong.  According to Article 6(3)(A)(j) of the Implementing Regulation, when  applying for BTI, the applicant must indicate 
whether, to his knowledge, binding tariff information for identical or similar goods has already been 
applied for, or issued in the Community.  Moreove r, Box 11 of the Standard BTI Application form 
requires the applicant to declare whether he has a pplied or been issued wi th BTI for similar or 
identical goods.  The United States cannot here try to show deficiencies in the EC system by 
constructing scenarios which are based on flagrant violations of EC rul es.  In addition, Article 12(4) 
CCC provides that BTI based on inaccurate or inco mplete information from the applicant shall be 
annulled. 
4.260  The United States argues that where divergent BTIs  exist, the EC system does not provide for 
sufficient mechanisms to correct  these divergences.  The scenario s and supposed difficulties which 
the United States describes in detecting divergen t BTIs are largely theoretical.  Classification 
differences typically occur in cases where several h eadings potentially merit consideration, and the 
choice between them is not entirely obvious. Such cases do not remain secret for long.  It is the 
customs authorities themselves which will first notice the difficulty, and if they do not, traders will 
make them aware of it by challenging decisions wh ich they perceive as unfavourable to them.  If a 
challenge occurs, the question may be referred to the C ourt of Justice, which will ultimately lead to its 
being clarified. 
4.261  However, even before the Courts have been seized or have given judgment, frequently the 
national customs authorities themselves will rais e the issue in the Customs Code Committee. 
Alternatively, they may first seize the Commission of  the matter, which may decide to bring it before 
the Customs Code Committee.  
4.262  Individual traders also frequently approach the Commission or member States authorities with 
particular problems of customs classification, wh o can then decide to take the necessary action, 
including raising the issue before the Customs Code  Committee.  In brief, difficulties in detecting 
"hidden" divergent BTI are greatly exaggerated by the United States; experience in fact shows that 
such divergences, if they have economic im plications, do not remain hidden for long.  WT/DS315/R 
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 4.263  The EC also has the EBTI data base, which allo ws searches of all BTIs both by the public and 
by the customs authorities.  This data base is an important instrument of transparency in the EBTI 
system.  The EBTI database is very well received by traders and used frequently; in the first six months of 2005, for instance, the average number of consultations per month was about 324.000. 
4.264  The United States is wrong to argue that the search might be difficult because product 
descriptions might vary.  First, that product descriptions  might vary is true, but this is hardly a barrier 
to conducting a search.  Searches of the public EBTI  data base can be conducted using a variety of 
parameters, and a careful targeting of criteria will yield results.  Keywords are available in all official languages of the EC.  There is also a translation fac ility available to translate keywords into any of the 
19 languages.  Accordingly, language should not be a major difficulty in making searches. 
4.265  Moreover, as the EC has also explained, there exists a version of the EBTI data base 
accessible to the member States' customs authorities and the Commission.  This data base allows 
searches of BTI using additional parameters, incl uding notably the name and address of holder and 
applicant.  Moreover, this data base also allows  searches of pending applications for BTI.  Detailed 
instructions for the EC customs authorities as to ho w to conduct searches have  also been included in 
the Administrative Guidelines on the EBTI sy stem issued by the European Commission. 
4.266  It is untrue that the EC has no means of detecting divergent BTIs.  It is interesting to note that 
the United States, in order to illustrate its clai m of a divergent classification practice regarding 
blackout drapery lining has provided as an exhibit ex cerpts from the public EBTI data base.  Thus, the 
United States has itself disproved its claim that use of the EBTI data base is impossible. 
4.267  The US criticisms of the judgment in decisi on of the Court of Justice in Case C-133/02, 
Timmermans , are without merit.  There is no reason to assume, as the United States does, that a 
revocation of a BTI as allowed by the Court in Timmermans would lead to less uniformity.  On the 
contrary, a revocation may precisely be necessary in order to take into account that other customs 
authorities have adopted a different classification prac tice, which is confirmed to be the correct one.  
This in fact is precisely what happened in Timmermans , where the withdrawal of the BTI occurred 
because "on a closer examination and in consulta tion with the customs authorities of a neighbouring 
district concerning the interpretation of the app licable nomenclature, it had become apparent the 
goods in question should be classified under" a different subheading.  The same reasoning could also have been applied if the divergence had arisen in relation to the practice of the authorities of another 
Member State. 
4.268  In any event, the Timmermans judgment does not primarily concern a question of uniform 
application, but a question of legal security for th e trader.  The Court of Justice held that the 
legitimate interests of the trader were sufficiently  protected by the provisions of Article 12(6) CCC, 
which under certain conditions allow continued use of  the BTI for a limited period of time.  This is 
not problematic under Article X:3(a) GATT. 
Alleged divergences in EC classification practice
 
4.269  In order to support its claim, the United Stat es has referred to two cases in which the EC 
allegedly has administered its laws in the field of tariff classification in a non-uniform manner.  However, both cases do not show any lack of uniformity in the EC's administration. 
4.270  The first case of alleged divergences concerns  the classification of Blackout Drapery Lining 
(BDL).  However, in this case, the goods examin ed by the German customs authorities were not 
identical to those described in the BTI, since they were not flocked with a layer of textile flock.  
Whether the product was flocked or not is an impor tant difference, which justifies the different 
classification of the product. Accordingly, since th e United States has not shown that the products WT/DS315/R 
Page 56  
 
 were identical in the relevant r espect, the United States fails to s how that there is in fact any 
inconsistency. 
4.271  Moreover, the EC would like to recall that according to Article 12(3) CCC, the holder of BTI 
must be able to prove that the good declared corre spond in every respect to those described in the 
information.  Goods as described in the decision of  the German customs authorities would not appear 
to fall under the description contained in the BTIs. 
4.272  In addition, it should be noted that according to Article 6(3)(A)(d) of the Implementing  
Regulation, it is the applicant which must provi de a detailed description of the goods permitting their 
identification and the determination of their classifi cation in the customs nomenclature.  In contrast, 
the United States has not provided information as to whether samples were submitted to the 
authorities issuing the BTI, and whether these samples were indeed identical with the ones that were 
analysed by the German authorities. 
4.273  Even if a mistake had occurred in the factual appr aisal of the products, this does not mean that 
there is a lack of uniformity in the application of EC customs law.  In particular, if the importer in question felt that the German authorities had erred in their appraisal of the good in question, he could 
have appealed the decision of the Main Customs O ffice of Bremen before the Bremen Tax Court.  
The United States has not provided information whethe r the importer in question has made an appeal.  
If the importer has chosen not to appeal, then this ca nnot be used to claim a lack of uniformity in the 
EC's system of customs classification.  The EC would also note that neither the importer nor the producer have ever brought the issue of classification of BDL to the attention of the European Commission. 
4.274  The administrative aids referred to by the lower German customs office contain nothing 
contrary to Community law, and in any event is purely an interpretative aid prepared for 
administrative purposes which does not in any way ha ve force of law, and does not derogate from 
Community law.  That handbooks, guidance or othe r compilations prepared by member States have 
no legally binding character in Community law has been  clarified by the European Court of Justice in 
Binder . 
4.275  Finally, it is not without interest to note that the United States has had its own difficulties in 
classifying BDL, and has had to revoke prev ious classification rulings regarding BDL.  
4.276  As regards the case of LCD monitors, the essen tial question is whether they are to be 
classified as computer monitors or as video monitors .  The correct classification of these monitors is a 
relatively recent question which has arisen due  to the increasing convergence of information 
technology and consumer electronics.  Many LCD mon itors, by virtue of their design and technical 
characteristics, can serve both as a computer monitor and as a video monitor.  It is therefore difficult 
for customs authorities to establish on an objective basis the precise purpose for which a particular 
monitor is intended. 
4.277  In addition, there are a high number of different  types of LCD monitors on the market.  These 
monitors differ in various aspects, including their size, the interfaces they po ssess and the signals they 
can process, and their general design.  To the exte nt that such features may have an impact on their 
use, such differences between different types of m onitors may also need to  be taken into account. 
4.278  The US claims that the EC does not ensure a uniform classification practice in respect of LCD 
monitors must be regarded as unfounded.  In fact , the EC institutions have kept this particular 
classification issue under very close review from th e outset, and have taken the necessary measures to 
ensure a correct and uniform classi fication practice in this respect.  WT/DS315/R 
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 4.279  The Customs Code Committee was seized of the issue for the first time in April 2004 and has 
reviewed the situation at regular intervals since.  Since the classification issue also requires technical 
input from industry, the Committee also has, in accord ance with Article 9 of its Rules of Procedure, 
heard representatives of the industry.  At its meeting of 30 June to 2 July 2004, the Customs Code Committee concluded that unless an importer can demons trate that a monitor is only to be used with 
an ADP machine (heading 8471) or to be used as an indicator panel (heading 8531), it has to be 
classified under heading 8528. 
4.280  The allegation that the Netherlands wrongly classifies LCD Monitors as Video Monitors is 
therefore misplaced.  In principle, such a classifi cation is in line with the CN, as confirmed by the 
Customs Code Committee.  It must of course also be  taken into account that the actual classification 
of LCD monitors depends on the concrete monitor.  
4.281  The EC institutions have taken further measures to ensure a uniform practice.  The first such 
measure is Council Regulation (EC) 493/2005 of 16 March 2005.  The purpose of this measure is to 
provide certainty about tariff treatment to the con cerned importers through a suspension of duties for a 
transitional period of time.  From a practical purpose, the suspension of the duties fulfils exactly the 
same purpose as that of a classification regulation, since it assures traders that, regardless of whether 
the goods fall under heading 8471 or  8528, their goods will receive the same tariff treatment. 
4.282  The US claim that the example of LCD Vide o Monitors shows that the Customs Code 
Committee is inadequate to reconcile differences in member States interpretations is misplaced.  The 
Customs Code Committee has shown itself perfectly able to adopt the necessary conclusions, and it 
continues to be involved in the continuous monitoring of the situation.  
4.283  The EC has adopted another relevant measure , namely Regulation 634/2005, which classifies 
LCD monitors of a particular type under headi ng 8528.  Currently, the Commission keeps monitoring 
the situation, and may adopt further classification regulations for LCD Monitors or other appropriate 
measures as and when the need arises. 
4.284  The US customs authorities have also found it difficult to properly classify LCD monitors.  
For instance, in a ruling of June 3, 2003, US Cust oms found that it was not possible to determine the 
principal function of a particular type of LCD monitor, and therefore decided to classify it under heading 8528 in application of General Interpre tative note 3(c), which foresees classification under 
the heading which occurs last in numerical order.  
4.285  Of the two cases which the United States has raised , neither shows any lack of uniformity in 
the EC's administration of tariff classification.  Both cases involve classification questions of a high 
technical complexity, with which the United States  has had its own difficulties. Accordingly, the 
United States is far from having established any sign ificant pattern of non-uniformity in EC tariff 
classification practice.  On the contrary, the preceding discussion has shown that the EC customs administration has the necessary mechanisms in place to  ensure uniformity in tariff classification.  
(ii) Customs valuation 
The uniform administration of valuation rules in the EC
 
4.286  Valuation questions are regulated in Articles 28 through 36 of the CCC and in Articles 141 to 
181 a of the Implementing Regulation, with further de tails being contained in Annexes 23 to 29 to the 
Implementing Regulation.  These provi sions constitute an exhaustive re gulation of customs valuation, 
which overall does not leave room for discretion to member States' administration. WT/DS315/R 
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 4.287  The EC rules are based on, and fully integrate,  all the rules contained in the WTO Valuation 
Agreement.  According to the third preambular paragraph of the WTO Va luation Agreement, the 
central objective of the WTO Valuation Agreement w as to "provide greater uniformity and certainty" 
in  the implementation of valuation rules. The EC wonders how the WTO Valuation Agreement can 
achieve this objective if, as the US argues, it leav es "significant discretion" to WTO Members in the 
valuation of goods for customs purposes. 
4.288  There is no obligation under WTO law to ins titute a system of binding information for 
valuation matters.  Article X:3(a) GATT does not prescribe the specific ways in which WTO Member must implement their customs laws.  This is partic ularly obvious in the area of customs valuation, 
which is governed by the WTO Valuation Agreement.   If WTO Members had wished to provide for a 
specific obligation to introduce or maintain system s of binding information on valuation matters, it 
would have been natural to include such a an oblig ation in the Valuation Agreement.  Further support 
for this view comes from the fact that the US itsel f has, in the context of the Doha Negotiations on 
trade facilitation, proposed to s upplement Article X GATT by creating an obligation to provide for 
advance rulings on customs issues including customs valuation. 
4.289  The case for binding valuation information as a to ol for ensuring uniformity is far less clear 
than it is for binding tariff information.  Speci fic goods do not change much over time, and are 
certainly identical regardless of the place of import.   On the other hand, customs valuation is based on 
sets of data which can change from transaction to transaction, and from importer to importer.  This 
makes the matter of direct comparability between transactions, and importers, rather difficult.  
Moreover, valuation data is of a relatively temporal nature, since sales contracts, prices and other 
factors such as relationships between parties, and the details of royalty and licence fee agreements, 
can change very frequently. 
4.290  For these reasons, the content of binding va luation information would have to differ 
considerably from the content of binding tariff in formation.  In particular, unlike for tariff 
information, where it is possible to provide in the abstract for the classification of a good 
corresponding to a particular description, it is not po ssible to lay down in the abstract the value of a 
good.  Rather, binding information on valuation wo uld have to take on a much more nuanced and 
specific character, focussing for instance on the char acterization of specific elements inherent in 
certain recurrent transactions between the same parties. 
4.291  Classification and valuation have  inherent differences which mu st be taken into account.  
Therefore, elements such as classification regula tions and binding tariff information are not easily 
transposable to the area of valu ation.  Instead, the Commission can carry out necessary clarifications 
through amendments to the Implementing Regulati on.  Such amendments can be seen as fulfilling a 
function which is rather similar to that of cl assification regulations or EC explanatory notes.  
Moreover, the Customs Code Committee, and in partic ular its valuation section, has a very important 
role in the area of valuation, and has contributed to uniformity in particular by elaborating 
commentaries and conclusions on numerous topical i ssues relating to the administration of valuation 
rules. 
4.292  The general mechanisms for providing for a unifo rm application of EC law also apply in the 
area of customs valuation.  First, if an individual trader feels incorrectly treated by a decision of a 
member States' customs authority, he can bring an  action against such decision before the member 
States' court.  If there is an issue of Community la w to be clarified, such question can, and in certain 
circumstances must be, referred to the European Court of  Justice.  In this way, the Court of Justice has 
clarified numerous issues of Community law in the area of customs valuation. 
4.293
 Second, if the Commission finds that a member  State applies Community provisions in the 
field of customs valuation incorrectly, the Europ ean Commission can bring infringement proceedings  WT/DS315/R 
 Page 59 
 
 
 against such member State in accordance with Article 226 EC Treaty.  There is no evidence 
whatsoever that this system of administration do es not suffice to ensure a uniform administration of 
EC valuation rules. 
4.294  It is remarkable that the United States has never raised any problem regarding the 
administration of EC valuation law in the WTO Committee on Customs Valuation, nor in the 
Technical Committee.  Moreover, not a single case h as ever been brought under the DSU against the 
EC for a violation of the WTO Valuation Agreement.  
Report 23/2000 of the EC Court of Auditors  
4.295  The Court of Auditors is an institution which, through its examination and reporting activity, 
equally contributes to the uniform application of Community customs law.  Therefore, 
Report 23/2000 is evidence for the ability of the EC sy stem to detect difficulties wherever they occur.  
4.296  Report 23/2000 is only th e expression of the views of one EC institution, which are not 
necessarily shared by other institutions, or by the EC  as a whole.  Moreover, it is clear that the Report 
of the Court of Auditors also contains certain  political and technical judgments, which cannot 
necessarily be assumed to be correct. 
4.297  The objective of the Court of Auditors is to en sure the optimal collection and utilization of the 
Community's own resources.  This is entirely unrelate d to the question of whether the EC is compliant 
with Article X:3(a) of the GATT. Therefore, it ca nnot simply be assumed, as the United States seems 
to do, that a criticism made by the Court of Aud itors in its Report translates into a violation of 
Article X:3(a) GATT. 
4.298  Report 23/2000 relates to a set of facts as examined  by the Court in 1999-2000.  It is striking 
that the United States in its First Written Submissi on never asks the question as to what the EC might 
have done in order to address the criticisms or suggesti ons raised by the Court of Auditors.  As the EC 
will show, the EC has in fact systematically wo rked through the issues raised by the Court of 
Auditors, and wherever necessary ta ken the measures to ensure uniformity.  A clear example for this 
is the adoption of Commission Regulation 444/2002, which now clarifies the issue of warranties.  
Even to the extent that any lack of uniformity actually existed, it cannot therefore be assumed that 
such situation continues to exist today. 
4.299  The Report of the Court of Auditors is a highl y synthetic document, which reflect the results 
of a number of audits carried out by the Court at  the time.  Consequently, the conclusions in the 
Court's report are of a certain leve l of generality.  For this reason also, they are not adequate for 
addressing the question of the EC's compliance w ith its obligations under Article X:3(a) GATT. 
4.300  Accordingly, the United States should not be a llowed to rely on the Report of the Court of 
Auditors, but rather be required to establish its prima facie case.  In any event, Report 23/2000 of the 
EC Court of Auditors does not show that the EC is in any way non-compliant with its obligations 
under Article X:3(a) GATT. 
The Reebok case  
4.301  The only concrete example that the United Stat es provides in support of its allegation of non-
uniform administration of EC valuation rules is  a case concerning Reebok International Limited 
(RIL).  However, this case does not support the US cl aim that the EC fails to administer its valuation 
laws in a uniform manner. WT/DS315/R 
Page 60  
 
 4.302  The case, which is relatively complex, is curre ntly being examined by the Commission.  
Moreover, the Commission submitted the issue to the Customs Code Committee (Valuation Section), 
where it was discussed at two instances in Oct ober and December 2004.  On the basis of the 
information which had been submitted by RIL, the Committee did not establish any incompatibility with EC law, or lack of uniformity between EC member States. 
4.303  In any event, the EC notes that if the Span ish customs authorities had erred in assessing the 
conditions of Article 143(1)(e) of the Implementing Regulation, RIL can appeal this decision before 
the competent Spanish courts, and such an appeal is currently pending.  If there are questions of 
Community law arising, such questions can then be referred to the Court of Justice via a request for a 
preliminary ruling. 
4.304  Overall, the Reebok case provides any support fo r the US allegation that the EC fails to 
administer is customs valuation rules in a uniform manner.  The EC institutions have taken the necessary action in response to the concerns of Ree bok.  Moreover, and appeal is currently pending. 
The Customs Code Committee is not a substitute for the normal appeals mechanisms before the 
national courts.  
(iii) Processing under customs control 
4.305  The US claim that the UK authorities apply tests that go beyond the requirements of 
Community law in respect of processing under customs control is wrong.  The UK requirements are exactly the same two laid down by Article 133(e) CCC. 
4.306  Article 502(3) of the Implementing Regulation repe ats the first part of the sentence and this 
has to be considered as an abbrev iated reference to the requirements laid down in Article 133(e) CCC.  
It cannot be otherwise considering that this Regul ation, which has been adopted by the Commission, 
is implementing legislation and cannot modi fy the requirements laid down by the CCC. 
4.307  Indeed, both documents, the CCC and the UK gui dance, require the same two conditions 
(amongst others) for the granting of an authoriza tion for processing under customs control, which are 
named as "economic conditions.  Furthermore, it is wo rth noting that, contrary to what the US states, 
the French "Bulletin officiel des douanes" also refers to the test relating to the absence of harm to 
competitors in the EC.  The US claim on Article X: 3(a) is not founded in relation to processing under 
customs control. 
(iv) Local clearance procedure 
4.308  The US presentation is flawed in that it does not  differentiate between the three steps of the 
summary declaration, the local clearance notificatio n and the supplementary declaration.  All goods 
brought into the EC customs territory have to be presented to customs and the summary declaration is 
the act by which this presentation is formalized.  Th e lodging of the summary declaration is, therefore, 
not a formality which is part of the local clearance procedure.  Moreover, contrary to the US claims, 
all these declarations may be lodged either under a paper-based or an electronic procedure. 
4.309  Due to this confusion between the general obligations stemming from border crossing and 
those attached to LCP, the description of the situa tion in the UK in the US First Written Submission is 
inaccurate and does not correspond to the actua l situation in this Member State.  
4.310  In relation to the customs involvement prior to release, the fact that, at the frontier, anti-
smuggling and admissibility checks are made electronically does not mean that there is no involvement of customs.  Moreover, if the goods do  not fulfil these checks, there will be a customs  WT/DS315/R 
 Page 61 
 
 
 action (physical check, seizure…). It is therefore wr ong to state that there is no customs involvement 
prior to release in the UK. 
4.311  Concerning the requirements after release, th e United States makes a misleading description 
of the use of electronic clearance systems versus pa per-based systems.  Both systems can be used in 
all member States.  As far as LCP is concerned,  detailed Community rules for paper-based clearance 
can be found in Articles 263 to 267 of the Implementing Regulation.  Where the clearance system 
used is electronic, additional rules are applicable  and can be found in Articles 4(a) to (c) and 
Articles 222-224 of the same Regulation. 
4.312  As regards supporting document requirements, a ll EC member States apply identical rules. 
The issue raised by the United States concerni ng the valuation form "DV1" again stems from a 
confusion, since all member States allow operators having regular trade flows with the same suppliers 
to submit only once the relevant DV1 together w ith the initial application to benefit from LCP. 
4.313  In relation to the document retention require ments, the information on the Netherlands 
provided by the United States is wrong.  Moreover,  Article 16(1) CCC provides that the requisite 
documents shall be retained for a minimum period of three years, but leaves member States the 
possibility to stipulate longer periods taking into account their general administrative and fiscal needs 
and practices.  The resulting time-frame differences between the EC member States for which the United States submits evidence are not fundamental.  Besides, the EC has already explained above 
that Article X:3(a) GATT concerns the administration of customs laws, not the customs laws themselves and this provision does not impose an ob ligation to harmonize legislation within a WTO 
member.  
4.314  In addition, in the light of the GATT Panel in EEC – Dessert Apples , the EC considers that 
any such differences are not substantial in natu re and do not entail a lack of uniformity in the 
application of customs laws cont rary to Article X:3(a) GATT. 
(v) Penalties for violations of customs law 
4.315  The US claim that the EC violates is obligati ons under Article X:3(a) GATT by not providing 
for a uniform administration of penalties for violati ons of customs laws must fail for three reasons.  
First, penalty provisions are not covered by Article  X:3(a) GATT.  Second,  Article X:3(a) does not 
require the harmonization of member States' pena lty provisions.  Third, EC law does ensure a 
sufficient degree of uniformity of member States' penalty provisions. 
4.316  The obligation of uniform administration in Article X:3(a) GATT applies only to the 
administration of the laws referred to in Article X:1 GATT.  In this respect, it is necessary to 
distinguish between the customs laws themselves, and the provisions which set out the nature and 
level of the penalty applicable for a violation of su ch laws.  This is regardless of whether the penalty 
is criminal or administrative in character, or whether it involves a fine, a prison term, or another 
sanction.  Therefore, penalty provisions, which pr ovide for a sanction in the case of a violation of a 
provision of customs laws, are not themselves custom s laws. It must also be noted that the imposition 
of sanctions concerns illegal behaviour, i.e. it concerns illegitimate actions rather than legitimate 
trade, which is the focus of Article X:3(a) GATT.  
4.317  Moreover, Article X:3(a) GATT concerns only the administration
 of customs laws, not the 
substance of the customs laws themselves.  This means in particular that Article X:3(a) GATT does 
not create an obligation to harmonize laws which ma y exist within a WTO Member at the sub-federal 
level.  It merely requires that such laws be admini stered uniformly within the territory in which they 
apply. WT/DS315/R 
Page 62  
 
 4.318  The penalties applicable for violations of custom s laws are set out in the national laws of the 
member States, which of course must respect the pr inciples set out by Community law.  Accordingly, 
it is not the administration of penalty provisions wh ich varies within the EC; it is the laws themselves 
which are different, albeit within the limits set by Community law.  
4.319  The United States has not shown that the admini stration of those penalty provisions varies 
within the member States which have adopted them.  Rather, the United States is effectively requiring 
a harmonization of penalty provisions within the EC.  Article X:3(a) provides no legal basis for such a 
claim. 
4.320  The European Court of Justice has develope d clear guidelines for penalty provisions for 
violations of EC customs law, which must be  effective, proportionate, and dissuasive. These 
principles have also been confirmed by the Council of the European Union. 
4.321  Contrary to the US submission, in Andrade , the Court confirmed that member States cannot 
act freely when laying down penalty provisions, but  must ensure that the penalty is effective, 
proportionate and dissuasive.  In other words, memb er States are limited in two directions. They 
cannot lay down penalties which are excessively sev ere and therefore violate the principle of 
proportionality.  On the other hand, they cannot lay down penalties which are so lenient that they have 
no dissuasive effect and therefore do not ensure the effective application of Community law. 
4.322  These fundamental principles are sufficient to ensu re uniformity in the application of customs 
laws.  This is also confirmed by Article V III:3 GATT, which specifically addresses the issue of 
sanctions for violations of customs regulations , by merely laying down minimum standards of 
proportionality. 
4. The US claim under Article X:3(b) GATT 
(a) The requirements of Article X:3(b) GATT 
4.323  Article X:3(b) GATT requires the WTO member s to have tribunals or procedures of a 
judicial, arbitral or administrative nature with th e main purpose of reviewing and correcting promptly 
administrative decisions in customs matters.  There ar e, therefore, four conditions laid down in the 
provision: the material scope of the control (adminis trative decisions in customs matters), its nature 
(tribunals or procedures of a judicial, arbitral or administrative nature), its purpose (review and correction), and a time requirement principle (promptness). 
4.324  In relation to the nature of the control, the pr ovision allows a certain margin of discretion to 
the WTO members.  The control may consist not onl y in tribunals but also in procedures, which 
implies that there is no obligation to create a separa te body to ensure the control.  Furthermore, the 
nature of the control may be not judicial but also ar bitral or administrative.  But what is particularly 
important in our case is that Article X:3(b) refers to each of these controls in plural: WTO members are obliged to have "tribunals or procedures" not "a tribunal" or "a procedure".  The Spanish and 
French versions of the provision also use the equivale nt terms in plural.  This clearly allows the WTO 
members to have several tribunals, each of them c overing a part of its geography and being competent 
for the review of the administrative decisions  taken by their different customs offices. 
4.325  Finally, the Appellate Body's interpretation of Article X GATT in EC – Poultry  and EC – 
Bananas III  further supports that this provision does not impose any specific structure for the review 
system (specific type of courts or procedures, number of instances, degree of centralization of the review system…).  WT/DS315/R 
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 4.326  The EC may also comply with its obligation under X:3(b) through the courts of its member 
States, as it has al ready been recognized by the Panel in EC – Trademarks and Geographical 
Indications (US).  The reasoning of this Panel does not only apply to the executive authorities, but 
also to the judicial authorities of the member St ates when they apply and interpret Community law. 
4.327  As to the time requirement, Article X:3(b) GATT requires a "prompt  review and correction" 
(emphasis added).  Though the three linguistic versi ons of Article X:3(b) do not have exactly the same 
meaning, all of them have a common denominator: the period of time to review a customs decision has to be reasonably short.  To be more precise  on this question will certainly require making an 
analysis on a case by case basis. 
4.328  The EC does not agree with the US argument that the relevant context for the interpretation of 
Article X:3(b) GATT includes the immediately preced ing subparagraph in the paragraph in which the 
obligation at issue appears, and that therefore th e decisions of the tribunals or procedures must 
provide for the review and correction of customs matt ers for the EC as a whole, not just within limited 
geographical regions within the EC.  Subparagraphs (a) and (b) lay down different obligations: one of 
uniform administration, the other on remedies. From  a legal point of view, Article X:3 GATT does 
not make any link between both subparagraphs, whic h should, therefore be considered as separate 
obligations. 
(b) The EC provides for prompt review of customs decisions 
(i) The claim regarding the absence of an EC customs court 
4.329  The United States affirms that the EC fails "t o provide for an EC court […] to which a 
member State customs decision can be promptly app ealed".  This is clearly wrong. Article X:3(b) 
GATT does not require a central court or procedure to appeal administrative decisions in customs 
matters.  There is no obligation under the GATT for the WTO members to establish a court similar to the US Court of International Trade. Decisions of  the member States' customs authorities, which are 
based on EC law, are reviewed by the national cour ts and tribunals acting as the ordinary judges for 
EC law.  Customs decisions adopted by the EC ins titutions are reviewed by the Court of Justice (and, 
in some cases, by the Court of First Instance) throug h direct actions or preliminary rulings on validity.  
There is, therefore, a complete system of judicial protection in place. 
4.330  Furthermore, the US analysis of the review system established by the EC and its member 
States relies on an erroneous interpretation of Article  X:3(b), which is based on the existence of a link 
between this provision and Article X:3(a).  However, there is no such link. Assuming, ad arguendo , 
that there were a link between those two provisions , the US analysis would be partial and biased 
because it does not take into account the EC mechan isms to ensure uniform administration in the 
customs sector.  
4.331  The Bantex decision mentioned by the United States shows the artificial analysis made by the 
United States. In the absence of a real problem in the EC remedies system, the United States relies on 
an individual case and tries to transform it into a systemic problem by relying on two hypotheses ("if 
another member State's authorities had correctly classified Bantex's products" and "if a trader in 
Bantex's position invokes the United Kingdom BTI in th e territory of another member State").  None 
of these two situations have occurred in Bantex and, therefore, the US arguments have to be rejected 
as not based on real facts. 
4.332  On the contrary, the final outcome of the Bantex case shows that EC legal remedies ensure 
uniform administration in customs matters.  Following the UK High Court judgment, the HM 
Customs and Excise decided on 23 March 2004 to revoke the BTIs on the basis of 
Articles 12(5)(a)(iii) and 9 CCC and in the light of the Judgment of the Court of Justice in WT/DS315/R 
Page 64  
 
 Timmermans .  This case proves that preliminary rulings gi ven by the Court of Justice are taken into 
consideration by national authorities other than those directly involved in the specific case.  It also 
shows that the Timmermans Judgment in fact contributes to the uniform administration of EC law. 
4.333  The United States misunderstands the EC system  when it claims that "at the top of the 
structure for reviewing customs authorities' administration of EC customs law is the ECJ".  This is not 
correct.  The European Court of Justice does not re view national customs administrations decisions.  
On the contrary, as we have already explained sever al times, it helps the national courts in such a 
review through the preliminary ruling procedur e.  This procedure is based on a cooperation 
relationship between the Court of Justice and national courts, not on a hierarchical one. 
(ii) Promptness in the review 
4.334  The US First Written Submission provides no arguments for why customs decisions are 
appealed before the national courts of the EC memb er States in a manner that cannot be qualified as 
"prompt".  The only argument of the United States is  that "the time periods for first instance reviews 
conducted by member State customs authorities can vary widely", for which purpose it compares the 
time period for administrative reviews in three memb er States.  Three other eventual divergences 
between member States are mentioned in the US First Written Submission but the United States 
neither develops these allegations in its argumenta tion nor provides representative specific examples 
in the  member States mentioned. 
4.335  The EC recalls, first, that the burden is on the United States, as complainant, to make a prima 
facie  case in support of its position, and that, therefore,  this burden cannot be shifted on the EC, as 
respondent, by using the tactics of maki ng general and unsubstantiated assertions. 
4.336  In relation to the time periods for first instance administrative reviews conducted by member 
State customs authorities, the only US claim is that  they vary widely in the three member States 
mentioned above.  Again, the United States does not gi ve the reasons to conclu de that the three time 
periods do not comply with the Article X:3(b) GATT requirement for a "prompt" review.  Differences 
as to time periods are not contrary to that pr ovision, which does not impose the obligation on the 
WTO to harmonize time periods in administrative, judicial or arbitral reviews of customs 
administrative decisions.  A different interpretation would be contrary to the intrinsic nature of 
Article X GATT, which is a provision, as it is spelle d in its heading, on publication and administration 
of trade rules, not on their contents. 
C. 
FIRST ORAL STATEMENT OF THE UNITED STATES  
4.337  In its First Written Submission, the United States demonstrated that the European 
Communities fails to administer its customs laws in  the uniform manner required by Article X:3(a) of 
the GATT.  The United States also demonstrated th at the EC fails to provide the tribunals or 
procedures for the prompt review and correction of  administrative action relating to customs matters 
that Article X:3(b) of the GATT requires.   
4.338  The EC responded to the US claims in part by  re-casting them, incorrectly, as either broad-
based attacks on European federalism or narrow comp laints about the particular outcomes of specific 
cases.  To the extent that the EC confronted the US  arguments directly, its responses appeared to fall 
into five categories: (1) that Article X:3(a) is  a narrow provision setting out "minimum" obligations; 
(2) that material divergences in member State administration of customs laws do not occur or are systematically reconciled when they do occur; (3) th at various principles, instruments, and institutions 
in the EC ensure the uniform administration that Article X:3(a) requires; (4) that where certain 
material differences admittedly exist among member State practices, these differences do not concern 
administration of customs law at all but, rather, matters of general member State administrative law;  WT/DS315/R 
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 and (5) that, with respect to Article X:3(b), the EC fu lfills its obligation by virtue of the fact that each 
member State provides a separate forum for review of customs administrative decisions. 
4.339  The claims of the United States are straightforwar d.  Both claims stem from the fact that the 
EC, as a Member of the WTO in its own right – as distinct from its constituent member States – is 
bound by the obligations set forth in Articles X:3(a) and X:3(b).  With respect to Article X:3(a), the 
EC provides for the administration of its customs la w by each of its 25 member States while failing to 
ensure that the member States administer that law uniformly.  That divergences among the member 
States occur is undeniable.  This fact is admitte d by the EC even in its own Written Submission.  
Outside the context of this dispute, it has been ac knowledged by EC officials and has been a constant 
complaint of traders.  The claim of the United Stat es is that no EC institution systematically provides 
for the reconciliation of such divergences, so as to  achieve the uniformity of administration required 
by Article X:3(a). 
4.340  The US Article X:3(b) claim is that the EC fa ils to provide any forum for the prompt review 
and correction of administrative action by member State customs authorities.  While review is provided for under the laws of individual member States, that review does not meet the EC's 
obligation under Article X:3(b).  Fragmentation of review, on a member State-by-member State basis, 
is not consistent with Article X:3(b).  That obligatio n must be interpreted in light of its context, which 
includes Article X:3(a).  
4.341  The issues raised by these claims are not new.  C ontrary to the EC's suggestion, this dispute is 
not the first time the United States has raised these issues with the EC.  In fact, the United States has 
raised these issues routin ely in the context of EC trade policy reviews since 1997.  The United States 
also has raised these issues in other WTO and b ilateral settings.  The United States has decided to 
pursue its claims through dispute settlement precise ly because the underlying problems persist despite 
its efforts to address them in other fora. 
4.342  It is important to make clear what this dispute is not about.  The United States complaint is 
not that the very decision to retain competence ove r customs administration in the hands of member 
State authorities is per se inconsistent with the obligation of uniform administration under 
Article X:3(a).  The US complaint is that because the retaining of competence over customs administration in the hands of member State author ities is not coupled with the systematic reconciling 
of divergences among member State authorities, it is  inconsistent with the obligation of uniform 
administration under Article X:3(a).  The EC is not subject to a lower requirement of uniform administration than every other WTO Member simply by  virtue of its "executive federalist" structure.  
4.343  Just as this dispute is not about the EC's ri ght to adopt an executive federalist form of 
government, it also is not about the particular decisions of individual member State authorities in particular cases.  In its First Submission, the United States set forth a number of illustrations to 
demonstrate the lack of uniform administration of customs law in the EC.  In its First Submission, the EC treats these cases not as illustrations but as actual ma tters in dispute.  The US argument is not that 
any particular good should be classified or valued one  way or another.  Rather, the argument is that 
the system for administering customs law in the EC does not ensure the uniformity that Article X:3(a) 
requires.  
4.344  In its First Submission, the United States iden tified the obligation of uniform administration 
in Article X:3(a) and explained the scope of th at obligation applying customary rules of treaty 
interpretation of public internati onal law.  In particular, the Unit ed States considered the ordinary 
meaning of the operative terms in Article X:3(a) in their context and in light of the object and purpose 
of the GATT 1994.  Applying this rule, the United St ates identified the relevant question as whether 
the EC manages, carries on, or executes its customs law in a manner that is the same in different 
places or circumstances, or at different times.  Th e United States also discussed the report of the panel WT/DS315/R 
Page 66  
 
 in Argentina – Hides and Leather , which confirmed this understandi ng of the concept of uniform 
administration. 
4.345  In its First Submission, the EC entirely avoids the ordinary meaning of the operative terms of 
Article X:3(a).  Tellingly, its discussion under the he ading "The meaning of 'uniform administration'" 
does not actually discuss the meaning of "uniform  administration."  Instead, it discusses supposed 
limitations on the obligation of uniform administrati on.  Thus, the EC asserts that the obligation of 
uniform administration must be qualified by "practical realities," that "a minimum degree of non-uniformity is de facto  unavoidable," and that "uniformity can be assessed only on the basis of an 
overall pattern of customs administration." 
4.346  Not only does the EC's explanation of "uniform ad ministration" fail to come to grips with the 
ordinary meaning of those words, but the limitati ons that it posits would effectively render the 
obligation of uniform administration meaningless.  For example, the EC suggests a limitation of 
"practical realities," but identifies no standard by wh ich that limitation might be assessed.  Similarly, 
while it asserts that "a minimum degree of non-uniformity is de facto  unavoidable," it offers no 
standard for judging the degree of non-uniformity  that may exist without running afoul of 
Article X:3(a). 
4.347  Moreover, the EC's contention that non-uniformity is impermissible only when it amounts to 
a pattern
 of non-uniformity is entirely misplaced.  The EC draws this proposition from two reports 
that are not at all on point.  First, it purports  to rely on the Appellate Body's report in EC – Poultry .  
However, the relevant issue there was not the meaning of "uniform administration," but rather, the applicability of Article X at all to a particular im port license issued with respect to a particular 
shipment. 
4.348  Similarly, in the panel report in US - Hot-Rolled Steel  on which the EC relies, the panel did 
not reach the question of what "uniform administ ration" means.  As is clear from the sentence 
immediately preceding the extract on which the EC re lies, the relevant issue was "whether the final 
anti-dumping measure before [the panel] in [that] dispute can be considered a measure of 'general 
application.'" 
4.349  More importantly, neither of the reports from which the EC seeks support concerned the issue 
presented by this dispute, wh ich is lack of geographical
 uniformity in administration of a Member's 
customs laws.  Whatever the relevance of show ing a pattern of non-uniformity may be in other 
contexts, the EC has failed to demonstrate its re levance to establishing a breach of Article X:3(a) 
based on geographical non-uniformity. 
4.350  The EC's other arguments attempting to narrow the obligation of uniform administration are 
similarly flawed.  For example, the EC charact erizes as "highly important for the present case" the 
distinction between the substance of customs laws and their administration.  The significance the EC 
apparently attaches to this distinction is that di fferences among member States' laws – as, for example, 
in the area of penalties – are beyond the purview of Article X:3(a), as they are differences of 
substance rather than differences of administration. 
4.351  The problem with this argument is that it ig nores the different forms that administration can 
take.  It assumes that laws cannot be instruments that administer other measures.  That assumption, 
however, is plainly incorrect.  Customs laws may be administered through instruments which are 
themselves laws.  This is the case with respect  to penalty laws, which are instruments for 
administering customs laws by enforcing compliance with those laws.  To the extent different EC 
member States use different penalty measures to enforce compliance with EC customs laws, they 
administer EC customs laws non-uniformly.   WT/DS315/R 
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 4.352  This latter observation is suppor ted by the panel report in Argentina – Hides and Leather .  In 
that dispute, the EC had challenge d as inconsistent with Article X:3( a) an Argentinian measure that 
provided for private persons to be present during th e customs clearance for export of certain goods.  
Argentina defended in part on the ground that the EC  really was complaining about the substance of a 
measure rather than its administration.  In reje cting Argentina's argument, the panel stated:  "Of 
course, a WTO Member may challenge the substan ce of a measure under Article X.  The relevant 
question is whether the substance of such a measure  is administrative in nature or, instead, involves 
substantive issues more properly dealt with under other provisions of the GATT 1994. . . .  If the 
substance of a rule could not be challenged, even if  the rule was administrative in nature, it is unclear 
what could ever be challenged under Article X. . . ." 
4.353  Likewise, in the present dispute, the line the EC draws between substance and administration 
would render Article X:3(a) meaningless.  By charact erizing all laws, regulati ons, and rules pertaining 
to customs matters as substantive measures, the EC would put all laws, regulations, and rules that are 
instruments of customs administration beyond the reach  of the disciplines Members have agreed to in 
Article X:3.  It defies logic to suggest that a GA TT obligation can be eliminated simply by virtue of 
such characterization. 
4.354  In its second line of argument, the EC challeng es the proposition that in the administration of 
customs law, divergences among member State author ities occur and are not systematically reconciled 
by the EC.  In our First Submission, we demonstr ated this point through evidence of the EC's own 
admissions, statements by traders, and illustrations  of particular cases in which divergences have 
occurred.  The EC's response does not rebut this evidence. 
4.355  When it comes to admissions by the EC or EC o fficials, the EC does not deny the truth of the 
statements asserted.  At most, it belittles them.  For example, a statement by the EC's Commissioner 
for Taxation and Customs Union recognizing that the Community Customs Code "may result in divergent application of the common rules" is su mmarily dismissed by the EC as "reflect[ing] the 
ongoing process of reform and review of EC customs la w."  Statements by the EC's Court of Auditors 
identifying systemic problems in reconciling diverg ent administration of customs valuation laws are 
similarly tossed aside as "the expression of the views of one EC institution."  Admissions by the EC in the context of another recent dispute – European Communities – Customs Classification of Frozen 
Boneless Chicken Cuts  – regarding institutional difficulties in monitoring divergences in binding tariff 
information issued by different member States are not acknowledged at all. 
4.356  Unlike the EC, the United States finds statements  by EC institutions and officials highly 
relevant to the matter at hand.  These statements are blunt acknowledgments of how the system of 
customs law administration operates by persons who are in positions to have the information and 
experience to know.  The cumulative message that there is a problem of divergent administration and no mechanism to systematically reconcile divergences is undeniable. 
4.357  Nor is the EC's treatment of the illustrativ e cases cited by the United States any more 
effective at rebutting this point.  For example, in its First Submission the United States laid out an 
illustrative case concerning divergent classification of LCD monitors.  The United States noted that a 
regulation by the Council of the European Union susp ended duties on a subset of such monitors, but 
that member States continued to apply different clas sifications to other monitors.  In particular, the 
United States noted that the Netherlands continues to classify monitors with a diagonal measurement 
of greater than 19 inches as video monitors, whereas other member State classify them as computer 
monitors.  The EC's terse response is that the classi fication by the Dutch authorities "is in line with the 
CN, as confirmed by the Customs Code Committee." 
4.358  
That response is quite revealing for at least  three reasons.  First, it does not deny the 
divergence among member State authorities on this matter.  Second and relatedly, by characterizing WT/DS315/R 
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 the Dutch classification as "in line" with the CN, the EC suggests that more than one classification 
may be "in line" with the CN.  But this is precisely  the point of the illustration:  Where more than one 
classification is "in line" with the CN, the EC does not provide a mechanism for systematically 
reconciling different classifications adopted by different member State authorities.  Third, the Customs Code Committee conclusion with which the Dutch classification supposedly is "in line" is 
not itself in line with the relevant Chapter Note  from the Common Customs Tariff.  Specifically, the 
Committee conclusion would prohibit a monitor from be ing classified as a computer monitor (under 
Tariff heading 8471) unless an importer can demonstrate that it is "only
 to be used with an ADP 
machine" – a computer machine.  However, under th e relevant Tariff chapter notes, a monitor may be 
classified as a computer monitor if "it is of a kind solely or principally  used in an automatic data-
processing system."  It hardly is conducive to uniform administration for member State authorities to 
have to reconcile notes to the Common Customs Tariff that say one thing and a Customs Code 
Committee conclusion that says something entirely different. 
4.359  To take another example, in its First Subm ission the United States described the illustrative 
case of differential administration of EC valuation rul es with respect to Reebok International Limited.  
The United States described a situation in which different member State authorities have reached 
different conclusions as to whether RIL's contr acts with non-EC suppliers establish a control 
relationship for customs valuation purposes, and EC institutions have not rec onciled the divergence.  
The EC dismisses this case as "relatively comple x" and states without explanation that, upon its 
consideration of the matter, the Customs Code Co mmittee "did not establish any incompatibility with 
EC law, or lack of uniformity between EC Member States."  Then, the EC goes on to state that "the 
Customs Code Committee is not a substitute for th e normal appeals mechanisms before the national 
courts." 
4.360  This response is notable for at least two reas ons.  First, the EC does not deny the essential 
facts as described in the US First Submission.  It merely calls them "complex" and states that the Customs Code Committee found no lack of uniformity.  Second, in stressing that "the Customs Code 
Committee is not a substitute for th e normal appeals mechanis ms before the national courts" the EC in 
effect reinforces the crux of the US argument: There is no EC mechanism for ensuring uniform 
administration.  In any case, in numerous other parts of its First Submission, the EC readily acknowledges that divergences among member States exist. 
4.361  In its third line of argument, the EC challeng es the proposition that there is no EC mechanism 
to ensure uniform administration of EC customs la w.  In its First Submission, the United States 
demonstrated that customs law in the EC is admini stered by 25 different member State authorities, 
that this results in divergences of administration, and that no EC institution exists to systematically 
reconcile those divergences.  To demonstrate this last point, the United States focused on the role of 
the Commission and the Court of Justice in matters of customs administration.  The United States 
focused on these two institutions, because the EC ha d asserted to the DSB that it was through the 
operation of these two institutions that uniform admi nistration is enforced.  The United States showed 
that neither institution functions in a way that results  in uniform administration.  Its discussion of the 
role of the Commission logically led the United States to focus on the Customs Code Committee which, as the EC acknowledges, "is an integral part of the Community's regulatory process."  
4.362  Because of the integral part played by the Committee, it is important to understand how the 
Committee functions.  The United States demonstr ated that various aspects of the Committee's 
operation make it ineffective as a mechanism to syst ematically bring uniformity to the administration 
of customs law.  These include the absence of any right for a trader affected by a member State's 
administration of the law to petition the Committee and the difficulty of obtaining answers to technical questions of divergence in member St ate customs administration where those answers 
require the support of qualified majorities of 25 member State representatives.  WT/DS315/R 
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 4.363  With respect to the ECJ, the United States dem onstrated that limitations on the ability to get 
questions reviewed by the ECJ, procedural hurdles that must be passed before doing so, and the time 
it takes to get questions answered by the ECJ make this institution, too, an ineffective mechanism to 
systematically bring uniformity to the administration of customs law. 
4.364  The EC challenges the US understanding of the operation of EC law and institutions, 
contending that in seeking to id entify EC mechanisms that ensure  uniformity of administration the 
United States has focused inappropriately on th e Customs Code Committee and given inadequate 
attention to principles of EC law as well as EC in stitutions and instruments of administration.  The 
main problem with this argument is that, on closer inspection, the individual elements that the EC describes as contributing to uniform administration do not add up to a mechanism that systematically 
leads to uniform administration where administration in the first instance is the responsibility of 25 
different member State authorities. 
4.365  For example, the EC refers to the existence of detailed substantive laws.  But, detailed 
substantive laws surely do not themselves ensure uniform administ ration.  Indeed, the EC itself 
stresses the distinction between substance and admi nistration.  Moreover, the cataloging of divergent 
administration in the EC Court of Auditors report on customs valuation (Exhibit US-14) demonstrates 
that detailed laws are not themselves a substitute for uniform administration. 
4.366  In other instances, the mech anisms the EC identifies represent an ideal of uniform 
administration to which the EC aspires.  For instance,  the EC refers to the "duty of cooperation" in 
Article 10 of the EC Treaty.  It also attaches importance to the principles of supremacy and direct effect as doctrines that are "essential for the effec tive and uniform application of Community law."  
However, it cannot be assumed that by virtue of the duty of cooperation or the doctrines of supremacy 
and direct effect uniformity of administration necessarily is achieved.  Indeed, these principles do not answer the question of what happens when EC  law itself permits more than one manner of 
administration. 
4.367  Another instrument for achieving uniform admini stration that the EC describes is the ability 
of traders to address matters of concern to the Co mmission or to member State representatives, which 
may or may not, in turn, address them to the Customs Code Committee.  As the EC itself acknowledges, the Commission and member State representatives are under no obligation to bring any given matter before the Committee.  
4.368  The EC also emphasizes the role of appeals to national courts, with the possibility of 
preliminary references to the ECJ, as a means of ensuring uniform administration.  Where a trader 
encounters a lack of uniform administration, its rec ourse is to appeal one or more of the divergent 
actions to a national court which (unless it is a cour t from which there is no recourse) may or may not 
make a preliminary reference to the ECJ.  Even if  the court does make a preliminary reference to the 
ECJ, the matter still may take years to decide.   
4.369  In short, where a trader detects a lack of unifo rm administration it has no right to appeal to an 
EC institution to correct the lack of uniformity.  In stead, it must proceed through "the normal appeals 
mechanisms before the national courts" in the hope that  this may lead eventually to an elimination of 
the non-uniformity.  The proposition that the norma l appeals mechanism is a key instrument of 
uniform administration is notable for at least th ree reasons.  First, litigation is a particularly 
cumbersome tool to achieve the day-to-day operational uniformity of administration that Article X:3(a) contemplates.  Second, the EC's cont ention in this regard is at odds with its separate 
contention – in discussing the US Article X:3(b) clai m – that the obligation of uniform administration 
and the obligation to provide remedies from admini strative action are discrete obligations without any 
inherent link to one another.  Here, the EC suggests that they are inherently intertwined.  Third, the 
EC's emphasis on the normal appeals mechanisms leaves open the critical question of what happens if WT/DS315/R 
Page 70  
 
 a national court or, eventually, the ECJ finds that  both the administrative action appealed and the 
divergent administrative action to which it is compared  are consistent with the applicable provision of 
EC customs law.  In other words, the EC does not, and cannot, contend that lack of uniformity itself is 
grounds for appeal from and correction of administrative action.  Thus, the emphasis the EC places on a trader's right to pursue the "normal appeals mech anisms" does not really answer the question of how 
non-uniformity is eliminated when EC law permits  two or more non-uniform measures to co-exist. 
4.370  In a similar vein, the EC's reference to the Commission's power to bring infringement 
proceedings against member States that violate EC law is of little relevance.  It may be that there are 
instances in which a divergence in administration of  EC law is so extreme as to give rise to an 
infringement proceeding.  But, this extraordinar y tool hardly serves to achieve uniformity of 
administration where divergent practices do not give rise to breaches of EC law. 
4.371  In short, a large part of the EC's argument is  devoted to painting a picture of customs law 
administration in the EC in which various instrume nts combine to ensure uniformity.  But, when 
looked at closely, the elements of that picture do not add up to a mechanism that provides for the 
systematic reconciliation of divergences among member State customs authorities.  What is glaringly 
absent from this picture is any EC mechanism to systematically reconcile divergences in member 
State administrative actions.  
4.372  The EC's fourth line of argument is that certa in divergences in member State practice – in 
particular, penalty provisions and audit procedures – are not really matters of administration of EC 
customs law at all.  It characterizes such matters as part of the general administrative law of individual member States.  It follows, according to the EC 's reasoning, that the EC has no Article X:3(a) 
obligation with respect to these matters.  The only Ar ticle X:3(a) obligation applies to the particular 
member States in which the laws at  issue apply, according to the EC.  
4.373  By the EC's logic, one could define away almo st any obligation under Article X:3(a).  Where 
a divergence in administration takes the form of di fferent measures applicable in different regions 
within a Member's territory, the Member could la bel the measures as substantive law rather than 
instruments of administration of customs law and thus  avoid the obligation of Article X:3(a) entirely.  
The panel in Argentina – Hides and Leather  saw through and rejected a similar argument.  
4.374  The EC's argument in this dispute is even more  troubling than the argument that the panel 
rejected in Argentina – Hides and Leather , because the EC is suggesting that the obligation of 
uniform administration does not necessarily extend to the limits of each WTO Member's territory.  The obligation is mutable, according to the EC.  Fo r any given law being admi nistered, it applies only 
to the limits of the territory covered by that law.  By this logic, there is no obligation of uniform 
administration from region to region or even from locality to locality. 
4.375  This argument has no basis in Article X:3(a).  That Article applies to "each Member."  Like 
other GATT obligations, the obligation of uniform ad ministration is an obligation on the Member.  It 
is not a separate obligation on each individual region or  locality within the Member's territory.  Were 
it otherwise, any instance of geographical non-unifo rm administration could be argued away simply 
by sub-dividing the Member's territory and tr eating each sub-division separately for purposes of 
Article X:3(a).  
4.376  It is especially puzzling that the EC character izes penalty provisions and audit procedures as 
outside the scope of Article X:3(a).  Those instrume nts go to the heart of the way substantive customs 
rules are administered.  Indeed, that penalties are a critical tool for administering other laws is 
expressly acknowledged in the Council Resolution on penalties set forth in Exhibit EC-41.  WT/DS315/R 
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 4.377  The EC also asserts that penalties fall outside th e scope of Article X:3(a) because they pertain 
to "illegitimate actions rather than legitimate trad e."  That argument mischaracterizes both Article X 
and the concept of penalties.  Article X does not  make the distinction between legitimate and 
illegitimate trade that the EC posits.  Even if it did make such a distinction, it is not the case that 
penalties apply only to illegitimate trade.  The de Andrade  case cited in the US First Submission is a 
perfect example of the application of a penalty in th e context of legitimate trade.  The only offense at 
issue there was a failure to clear  goods through custom s within the time period specified in the 
Community Customs Code.  
4.378  The EC argues in the alternative that even if Article X:3(a) does apply to penalties, 
fundamental principles of EC law ensure that  penalties meet the requirements of uniform 
administration.  The fundamental principles to whic h the EC refers are requirements that penalties be 
"effective, proportionate, and dissuasive."  But, th ese very general principles permit a wide range of 
member State practices.  As the EC itself acknowledg es, "Specific offences may be considered in one 
Member State as a serious criminal act possibly leading to imprisonment, whilst in another Member State the same act may only lead to a small – or even no – fine."  
4.379  The same flaws attach to the EC's discussion of customs audits.  The US First Submission 
called attention to significant divergences in auditin g practices identified in the EC Court of Auditors 
report.  As with penalties, the EC summarily asserts th at "questions of auditing are not part of customs 
procedures, and therefore do not concern the admini stration of customs law as such."  Nowhere does 
the EC state the basis for its assertion, which is en tirely incorrect.  Like penalties, audits are essential 
tools in administering substantive customs laws.  
4.380  The US First Submission explained that, in connection with audits, some member State 
authorities provide traders with binding valuatio n guidance that may be relied upon in future 
transactions, while others do not.  Th e EC dismisses this observation by stating that "[w]hether such 
advise might be legally binding is a question of general administrative  law of the Member States."  By 
a simple act of characterization, the EC again purports to remove a matter from review under 
Article X:3(a).  The United States sees no basis for this assertion that different member State 
approaches to valuation guidance are not "significant from the point of view of Article X:3(a)." 
4.381  The United States turns, finally, to the EC's argu ment regarding Article X:3(b).  In its First 
Submission, the United States demonstrated that th e EC does not provide tribunals or procedures for 
the prompt review and correction of administrative action relating to customs matters.  The individual 
member States provide fora for review of custom s decisions, but the existence of these fora does not 
fulfill the obligation of the EC, as a WTO Member in its own right.  The United States argued that the 
Article X:3(b) obligation must be interpreted in ligh t of its context, which includes Article X:3(a), and 
that a fragmentation of review of customs decisions across the territory of a Member runs contrary to 
that provision's obligation of uniform administration. 
4.382  The EC's assertion that there is no link betwee n subparagraphs (a) and (b) of Article X:3 and 
no obligation to interpret the latter in light of th e former is especially surprising, given the EC's 
explanation of how uniformity of customs law ad ministration is achieved in the EC.  A theme 
repeated throughout the EC's First Submission is that  appeals of customs decisions to national courts, 
coupled with the possibility of national courts maki ng preliminary references to the ECJ, constitutes a 
critical instrument of ensuring uniform administra tion of customs law.  In other words, in its 
Article X:3(a) argument, the EC effectively contends that reviews of customs decisions and 
administration of customs laws are closely inte rtwined.  That position supports interpreting the 
obligation to provide reviews of customs decisions in light of the obligation to administer customs 
laws uniformly. WT/DS315/R 
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 4.383  Moreover, the EC simply is wrong to assert that Article X:3 "does not make any link" 
between subparagraphs (a) and (b).  The second sente nce of subparagraph (b) expressly states that the 
decisions of the tribunals or procedures maintained or instituted in accordance with that subparagraph 
"shall govern the practice of" "the agencies en trusted with administrative enforcement."  
Administrative enforcement, in turn, is  the subject of subparagraph (a).  
4.384  The EC's contention that use of the plural fo rm in Article X:3(b) "clearly allows" the 
provision of separate review tribunals covering diffe rent parts of a Member's territory is equally 
flawed.  Use of the plural form in Article X:3(b)  might allow for the possibility that a Member may 
provide different fora for different types of re view.  For example, a Member might provide an 
administrative tribunal for reviews of classification and valuation decisions and a separate judicial 
tribunal for reviews of penalty decisions.  This interp retation gives effect to use of the plural form in 
Article X:3(b) without running afoul of the obligation to interpret that provision in light of the context 
of Article X:3(a). 
4.385  Finally, the EC asserts that it fulfills its Ar ticle X:3(b) obligation, because member State 
courts are EC courts when it comes to the applicati on and interpretation of EC law.  To support this 
assertion, the EC refers to the panel report in EC – Trademarks and Geographical Indications (US) .  
There, the panel found that in the exercise of certain executive functions, member State authorities 
"'act de facto  as organs of the Community.'"  Without any explanation at all, the EC asserts that the 
panel's reasoning in that dispute applies with e qual force to member State judicial authorities 
exercising adjudicatory functions. 
4.386  The EC's assertion does not, in fact, flow from the statement it quotes from that panel report.  
First, the issue presented there was substantially different from the one presented here.  The issue 
there had absolutely nothing to do with obligations  of the EC; it had to do with obligations of 
particular member States.  The question was whet her an individual member State executing an EC 
regulation in a manner that discriminated between persons of other EC member States, on the one 
hand, and persons of non-EC member States, on the other, violated a most-favored-nation obligation.  
This very different context makes it impossible to ex trapolate from the finding in that dispute to the 
issue presented in this dispute. 
4.387  Second, the nature of the Article X:3(b) obliga tion is such that it cannot be carried out in a 
geographically fragmented way in a single Member, such as the EC.  It cannot be assumed that one 
panel's recognition of member State executive  authorities as de facto  EC authorities for one particular 
purpose in the context of one particular WTO oblig ation means that another panel must recognize 
member State judicial  authorities as de facto  EC authorities for a different purpose in the context of an 
entirely different WTO obligation. 
4.388  In short, the fact that the EC may consider member State courts to be acting as de facto  EC 
courts when they interpret and a pply EC law does not mean that the EC itself provides the tribunals or 
procedures required by Article X:3(b).  It remains th e fact that member State tribunals interpret and 
apply the law within the territory of their respec tive member States.  They can bind administrative 
agencies only within their respec tive member States.  This arrangement does not meet the EC's 
obligation under Article X:3(b).  WT/DS315/R 
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 D. FIRST ORAL STATEMENT OF THE EUROPEAN COMMUNITIES  
1. The significance of the case 
(a) The constitutional significance of the case for the EC 
4.389  The US case constitutes an unprecedented attack  on fundamental principles of the EC legal 
order.  By challenging the involvement of the customs authorities of the EC member States in the 
administration of EC customs law, the United Stat es is essentially requesting the EC to establish an 
EC customs agency.  This runs counter to the prin ciple of executive federalism in the EC legal order, 
according to which EC law is generally implemente d through the authorities of the member States.  
4.390  Similarly, the US claim that the EC is obliged to provide judicial review through "EC-level 
tribunals" is diametrically opposed to a fundamental structural principle of the EC judicial system, in 
which judicial review of decisions of the member States authorities is provided by the tribunals of the 
member States. Thus, on the sole basis of Artic le X:3(b) GATT, the United States is effectively 
requiring the EC to engage in a complete overhaul of  its judicial system, a task which could not be 
carried out without a modification of the founding treaties of the EC. 
4.391  The EC would like to emphasize that it rec ognizes and fully respects its obligations under 
Article X GATT.  The EC does not claim that it is in any way subject to different or lesser obligations 
under Article X GATT than other WTO Members.  However, the EC also believes that its 
constitutional arrangements for the administration of customs laws, and review of customs decisions, 
are fully compatible with the WTO Agreements.  Indeed, the WTO Agreements respect and uphold 
the constitutional autonomy of the WTO members.  It  is therefore a matter of great concern that, in 
the present case, fundamental constitutional arrange ments are as such made the subject of WTO 
dispute settlement. 
4.392  In fact, with its present challenge, the United St ates seems to expect the EC to establish a 
customs agency and a customs court similar to thos e existing in the United States.  The EC believes 
that Article X:3 GATT provides no legal basis for su ch a claim.  Moreover, whereas the EC fully 
respects the right of the United States to opt for a centralized system of customs administration and 
judicial review, it believes its own constitutional choice of a system based on federal principles 
deserves an equal measure of respect. 
(b) The systemic importance of the case for the WTO 
4.393  The present case is highly important for the WTO Membership at large.  Indeed, in its 
criticisms of specific instruments of EC customs administration, the United States adopts a maximalist 
approach that should be of genuine concern to WTO members.   
4.394  With this approach, the United States overstr etches the legal requirements of Article X:3 
GATT beyond all recognition.  Indeed, what is a st ake in the present dispute is essentially whether 
Article X:3 GATT should become a legal basis for the harmonization of the systems of customs administration of WTO Members through the DSU. 
4.395  The EC emphatically believes that it should no t.  The DSU is not a peer review process 
through which the optimal design of customs admini strations can be sought.  Rather, the purpose of 
the DSU is, in accordance with Article 3.2 DSU, to preserve the rights and obligations of the 
Members under the covered agreements , and thus prevent the nullificati on and impairment of benefits 
accruing to Members under such agreements. WT/DS315/R 
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 4.396  A rigorous focus on legal obligations is also  made necessary by the overlap between the 
present dispute and the ongoing negotiations on trad e facilitation of the Doha Round.  According to a 
public statement by the United States Trade Repr esentative, one of the essential objectives of the 
United States in the present dispute is to enha nce the Doha Trade Facilitation Negotiations "by 
pressing a major player in world trade".  This political motivation behind the US case is also 
illustrated by the overlap between some of the critic isms made by the United States in the present case 
and its own proposals in the context of the Doha Round. 
4.397  The EC is fully committed to the success of the Doha Round Negotiations, including the 
negotiations on trade facilitation.  However, as Japan has correctly pointed out in its Written 
Submission, specific initiatives to ensure a unifo rm administration of customs laws should be 
addressed through the Doha Negotiations, and not through the dispute settlement process. 
2. The uniform administration of EC customs law 
(a) The requirements of Article X:3(a) GATT 
4.398  Article X:3(a) GATT requires WTO Members to administer the laws and regulations referred 
to in Article X:1 GATT in a uniform manner.  In its First Submission, the United States significantly 
overstates the requirements imposed by Article X:3( a) GATT.  Moreover, the United States ignores 
almost completely the existing case law on this provision.  
4.399  First, it is consistent case law since the Appellate Body Report in EC – Bananas that 
Article X:3(a) GATT concerns only the administration of laws and regulations, and not those laws 
and regulations themselves.  This  is a highly important point fo r Members which have a federal 
structure, and where certain matters are regulated at  a sub-federal level.  Wh ere laws and regulations 
exist at a sub-federal level, all that Article X:3(a) GATT requires is that such laws are administered in 
a uniform manner in the area where they apply. Article X:3(a) GATT does not impose any requirement to harmonize sub-federal laws within a WTO Member. 
4.400  Second, Article X:3(a) GATT merely requires WTO Members to administer their laws and 
regulations in a uniform manner, but is neutral as  to the means which WTO Members employ for this 
purpose.  In other words, Article X:3(a) GA TT does not prescribe the specific instruments and 
structures which WTO Members should use in the admi nistration of their customs laws.  Accordingly, 
Article X:3(a) GATT does not have the purpose of harmonising the customs la ws and practices of 
WTO Members, and is not a legal basis for achieving such a result through the DSU. 
4.401  Third, as the Appellate Body has stressed in US – Shrimp , and as Japan has equally 
confirmed, Article X:3(a) GATT is a minimum standa rds provision.  It is a subsidiary  provision 
which provides WTO Members with certain minimum guarantees of uniformity in the administration 
of customs laws and regulations.  Wherever more  precise and ambitious disciplines were necessary, 
the corresponding obligations have been laid down in other provisions of the covered agreements. 
4.402  Fourth, given the character of Article X:3(a)  GATT as a minimum standards provision, not 
every minor variation in administrative law and prac tice constitutes a lack of uniformity contrary to 
Article X:3(a) GATT.  This follows clearly from the GATT Panel Report in EEC – Dessert Apples , 
where the Panel held that certain variations be tween EC member States in the implementation of 
import licensing arrangements were minor and th erefore did not amount to a violation of 
Article X:3(a) GATT.  In other words, there is a certain minimal threshold in Article X:3(a) GATT, 
which implies that a variation in administrative practice must have a significant impact on the 
administration of customs laws in order to constitute a breach of Article X:3(a) GATT.  WT/DS315/R 
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 4.403  Fifth, it is very important to recall the findings of the Panel in US – Hot Rolled Steel , 
according to which  it is not possible to establish a lack of uniformity solely on the basis of an 
individual instance of administration.  Rather, as Japan has convincingly explained, it is necessary to 
establish that there is a pattern of non-uniform administration with a significant impact on how 
customs laws are administered.  Such an interpretation of Article X:3(a) GATT is particularly 
necessary given that customs authorities have to operate in comple x and rapidly changing 
circumstances, to which they cons tantly need to adapt.  Moreover,  systems of customs administration 
are complex, and their outcomes are determined by many factors, not all of which can be controlled by the WTO Member in question.  For instance, wh ere an individual trader does not exhaust all the 
remedies and procedural possibilities afforded to him by the system of a WTO Member, a resulting 
lack of uniformity cannot be attributed  to a failure in that Member's syst em. Similarly, if a trader in an 
individual case abuses procedural possibilities, or violates provisions of the law of the Member in question, this cannot be regarded as proof of a lack  of uniformity contrary to Article X:3(a) GATT.  
(b) The burden of proof 
4.404  The burden of proof for establishing that there is a pattern of non-uniformity in the 
administration of the EC's customs laws is on the United States.  The United States does not even 
come close to discharging this burden of proof. 
4.405  The United States has not primarily focussed on the actual administration of customs laws in 
the EC, but rather on systemic aspects of the EC's system of customs administration.  At the most 
general level, the United States challenges the invol vement of the EC's member States authorities in 
the administration of EC customs law.  At a sec ond level, the United States criticizes the role or 
capacity of various EC institutions  and arrangements, such as the European Commission, the Court of 
Justice, or the Customs Code Committee.  Finally, at the management level, the United States also 
criticizes various aspects of the EC's system of cust oms administration, such as the design of the EC's 
EBTI system. 
4.406  None of these arguments are relevant for the app lication of Article X:3(a) GATT, and none of 
them amount to proof that there is a pattern of non-uniformity in the EC's customs administration.  To 
take the most fundamental point, the United States s ubmits to the Panel that the involvement of the 
authorities of EC member States in the administra tion of EC customs law is incompatible with 
Article X:3(a) GATT because "divergences inevita bly occur".  The EC strongly contests this 
statement.  The EC would also express its amaze ment that the United States would assert that a 
fundamental element of the EC legal order is inco mpatible with the GATT without offering any proof 
for such a statement.  
4.407  As regards the more specific instruments and ins titutions of the EC system,  and as the EC has 
already shown in its First Written Submission, th e US criticisms are based on misunderstandings or 
misrepresentations of the EC system.  In addition, Article X:3(a) GATT leaves WTO Members a large measure of freedom as to how they administer thei r customs law, provided they do so in a uniform 
manner.  Therefore, the US criticisms are irreleva nt for the purposes of assessing the EC's compliance 
with Article X:3(a) GATT. 
4.408  Moreover, in its First Written Submission, the United States presents an incomplete and 
distorted picture of the EC's system of customs ad ministration.  On the basis of this inadequate 
presentation of the facts, the United States chooses  to address only those specific issues where it 
perceives the EC system exhibits a weakness.  However, in order to assess whether there is a 
deficiency in the EC system, it is not sufficient to look at a particular issue or instrument in isolation.  
Rather, as Japan has aptly explained, it is necess ary to look at the EC's system as a whole. WT/DS315/R 
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 4.409  As regards the actual administration of EC customs law, the US Submission remains almost 
silent.  In essence, the United States presents the Pa nel with two examples of  alleged non-uniformity 
in the area of tariff classification, and with one exam ple in the area of customs valuation.  Even if 
these cases actually demonstrated a lack of non-un iformity, one or two cases in a particular area 
hardly amount to a statistically significant sample  on which to assess whether there is a pattern of 
non-uniformity.  Moreover, as the EC has shown in its First Written Submission, none of the 
examples adduced by the United States, all of whic h involve questions of customs administration of a 
high technical complexity, in fact shows a lack of uniformity in the EC's administration. 
4.410  No single fact could illustrate the weakness of  the US case more clearly than the tepid 
reaction which the USTR received when it launche d a call for comments following its consultation 
request in the present dispute.  In response to this call, USTR received a mere three submissions,  two 
of which the United States itself does not seem to have judged helpful for its case.  The EC would 
submit that if there indeed was a significant pattern of non-uniformity in the EC's practice, a stronger 
reaction from interested industry and traders could have been expected. 
4.411  Overall, the United States fails to establish that there is a pattern of non-uniformity in the EC's 
system of customs administration. 
(c) The claims raised by the United States  
(i) Tariff classification 
4.412  The first area in which the United States alleges that there exists a lack of uniformity is tariff 
classification.  The United States base s this claim essentially on a criticis m of the role of the Court of 
Justice, and of the EC system of binding tariff inform ation.  In addition, the US sets out two examples 
of classification of specific products, which it alleges demonstrate a lack of uniformity in the EC's 
practice.  
4.413  As regards the two systemic issues, the US cr iticisms are unwarranted.  The ECJ, acting in 
particular through the preliminary reference procedur e, plays an important role in ensuring a uniform 
interpretation and application of EC classification ru les, and will continue to do so in the future.  
4.414  Similarly, the EC's BTI system is an important tool for providing uniformity in tariff 
classification throughout the EC, and security to tr aders.  However, the EC is under no obligation 
under Article X:3(a) GATT to establish a BTI system, le t alone to design this system in a particular 
way. 
4.415  Moreover, as Japan as pertinently remarked, both  the ECJ and the EBTI system are only part 
of the EC's classification system.  As the EC has already noted, in order to assess whether the EC 
administers classification rules in a uniform manner, it is not sufficient to only consider two elements 
in isolation.  Rather, the EC system should be cons idered as a whole, including also instruments such 
as classification regulations, HS explanatory notes and opinions, and EC explanatory notes. 
4.416  The two specific examples given by the United States concern the classification of blackout 
drapery lining and of LCD monitors.  However, neit her case demonstrates a lack of uniformity in the 
EC's classification practice.  In fact, both cases invol ve classification issues of a high complexity, with 
which the United States itself has experienced cer tain difficulties.  Accordingly, rather than 
demonstrate a lack of uniformity in the EC's prac tice, these cases simply serve as an illustration of the 
technical complexities of tariff classification in the rapidly evolvi ng world of today.  WT/DS315/R 
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 (ii) Customs valuation 
4.417  The second field where the United States alleges a lack of uniformity is customs valuation.  
However, the US case here is  as unsubstantiated as its claim in the field of tariff classification.  
4.418  At a systemic level, the United States comp lains that the EC does not even provide for 
binding valuation rulings.  However, these complain ts are unjustified.  The EC is not obliged under 
Article X:3(a) GATT to provide for binding rulings  on valuation questions or any other issues. 
4.419  Moreover, there are considerable structural differences between tariff classification and 
customs valuation which explain why the EC provid es for binding information in the area of tariff 
classification, but not in the area of valuation.  In particular, customs valuation is normally based on the transaction value, and therefore involves data which can change from transaction to transaction, 
and from importer to importer. 
4.420  At the same time, EC valuation rules are quite  detailed, and guide the EC customs authorities 
in all relevant circumstances.  Wherever clarific ation is necessary, this can be achieved through 
amendments to the valuation rules contained in the Implementing Regulation or the Customs Code.  
Moreover, the European Commission, the Custom s Code Committee, and the European Court of 
Justice all play an important role in securing a uniform valuation practice. 
4.421  In order to substantiate its allegations, the United States mainly relies on a report of 2000 by 
the EC Court of Auditors.  However, this report does not support the US case.  In fact, as much as 
anything else, it is evidence of the EC's ability to itself ensure uniformity in its customs administration.  Where necessary, the report has given rise to the appropriate action by the EC institutions, and therefore does not constitute relevant evidence today.  In addition, the EC would also 
point out that the Court of Auditors did not in any way make judgments as to whether the EC was in 
compliance with Article X:3(a) GATT, and it cannot be assumed that the issues raised in the report of 
the Court of Auditors translate into a violation of the GATT. 
4.422  At the level of actual practice, the United States presents only one example, concerning a 
valuation dispute between Reebok International Lim ited (RIL) and the Spanish customs authorities.  
However, this is a complex valuation dispute con cerning the assessment of whether RIL has a control 
relationship with certain of its suppliers.  The European Commission has kept this case, which is 
currently pending before a Spanish court, under cl ose review, and has also discussed it in the Customs 
Code Committee.  However, it must also be reca lled that neither the European Commission nor the 
Customs Code Committee are a substitute for the normal appeals mechanisms before the national 
courts.  
(iii) Processing under customs control an d local clearance procedure 
4.423  The United States alleges that there is a lack of uniformity as regards two customs 
procedures, namely processing under customs contro l and the local clearance procedure.  These US 
arguments are based on wrong interp retations and factual errors. 
4.424  In relation to processing under customs control,  the reality is that Community customs 
legislation and the UK and French guidances requi re the same two "economic conditions" for the 
granting of an authorization for processing under cust oms control.  Therefore, there is no evidence 
showing that the EC customs authorities administer this procedure in a non-uniform manner. 
4.425  As to the local clearance procedure, the US First Written Submission is deficient in four 
aspects.  First, the United States does not provide a single exhibit to illustrate and support its claim.  
Second, from the description provided in the US Fi rst Written Submission, it is clear that the United WT/DS315/R 
Page 78  
 
 States has misunderstood the different steps in th e process followed when goods are imported through 
this procedure. Third, the US description of the procedure and of the documents retention 
requirements contains fundamental errors.  Finall y, any variations which might remain are not 
substantial in nature and theref ore do not exceed the minimal threshold of Article X:3(a) GATT.  
(iv) Penalties for violations of customs law 
4.426  Finally, the United States also claims that the EC fails to comply with its obligations by not 
administering penalties for violations of customs laws  in a uniform manner.  This US claim must be 
rejected for three reasons. 
4.427  First, the EC submits that provisions which establish the penalty for a violation of customs 
laws are not themselves related to the administration of customs laws and therefore do not fall within 
the scope of Article X:3(a) GATT. 
4.428  Second, it is important to note that the penalties applicable to violations of customs laws are 
set out in laws and regulations of the EC member St ates.  Accordingly, it is not the administration of 
the laws which varies, but rather it is the laws th emselves which are different.  However, as the EC 
has already explained, there is no requirement in Article X:3(a) GATT to harmonize laws which apply 
in a WTO Member at a sub-federal level. 
4.429  Finally, EC law does provide for a sufficien t degree of harmonization of sanctions for 
violations of customs law.  As the European Court of Justice has clarified in its case law, member States penalty provisions must be effective, propor tionate and dissuasive.  Through these principles, a 
uniform application of customs law throughout the EC is sufficiently safeguarded. 
3. The prompt review of customs decisions in the EC 
(a) The requirements of Article X:3(b) GATT 
4.430  Article X:3(b) GATT merely requires WTO Member s to ensure that administrative decisions 
in customs matters are reviewed promptly by an  independent tribunal or through an independent 
procedure.  The United States misrepresents the requirements imposed by Article X:3(b) GATT.  
4.431  The EC would like to recall once more that it is  consistent case law since the Appellate Body 
Reports in EC – Bananas and EC – Poultry that Article X GATT, and, therefore, its 
subparagraph 3(b), does not impose any requireme nt of harmonization of laws within a WTO 
Member.  This means that where, within a WTO Memb er, separate systems of judicial review exist at 
a sub-federal level, Article X:3(b) GATT does not re quire that such separate systems be harmonized.  
It merely requires that in each of these separate systems of judicial review, a prompt review of 
customs decisions is ensured. 
4.432  In addition, it should also be recalled that Article X:3(a) and (b) GATT are separate 
obligations.  Accordingly, Article X:3(b) GATT, un like Article X:3(a) GATT, is not concerned with 
questions of uniformity, but exclusively with  the prompt review of customs decisions. 
4.433  It should also be noted that in the EC, the revi ew of customs decisions currently takes place as 
part of the general systems for review of administra tive decisions in the field of administrative law or 
tax law.  Creating a separate jurisdiction for customs matters at EC level would, therefore, lead to 
more, rather than less fragmentation of procedures fo r judicial review.  This would not be in the 
interest of traders, who in this case, rather than being able to have recourse to lawyers qualified in 
general administrative or tax litigation in a particular  Member State, would have to have recourse to 
specialized lawyers experienced in  specific EC-level procedures.  WT/DS315/R 
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 4.434  Moreover, Article X:3(b) GATT is neutral as to the means which WTO Members employ for 
ensuring prompt review.  In other words, this  provision does not prescribe the specific bodies or 
instruments, structures and time periods which WTO Members should use to ensure prompt review of 
customs decisions.  Accordingly, Article X:3(b) GATT does not have the purpose of harmonising the 
laws of WTO Members, and is not a legal basi s for achieving such a result through the DSU. 
(b) The burden of proof  
4.435  The burden of proof for establishing that the EC does not guarantee a prompt review of 
customs decisions is on the United States.  Again, as  in the field of uniform administration, the United 
States does not come close to discharging this burden of proof. 
4.436  The United States has not primarily focussed on the actual review of customs decisions in the 
EC, but rather on a systemic question of the EC's co urt system.  At the most general level, the United 
States considers insufficient the involvement of the EC's member States' courts and tribunals in the 
review of customs decisions.  The United States su bmits to the Panel that the involvement of the 
courts and tribunals of EC member  States in the application of EC customs law is incompatible with 
Article X:3(b) GATT because "the burden to traders of non-uniform administration is not alleviated 
through the appeals process".  The EC strongly contests this statement. 
4.437  As regards the actual functioning of EC court system, the US Submission remains almost 
silent.  In essence, the United States refers only to  the maximum time-limits for the administrative 
reviews in three EC member States and one of these references is not even accurate. 
(c) The claims raised by the United States  
(i) The absence of an EC customs court 
4.438  The first US criticism is about the nature of the judicial review system established in the EC.  
According to the United States, the absence of an  EC-level review reinforces the divergences in 
interpretation between the authorities in two different member States. 
4.439  This interpretation is wrong in that it ma kes an unwarranted link between the two 
subparagraphs in Article X:3 GATT and because Ar ticle X:3(b) GATT does not require a central 
procedure or court, like the US Court of Intern ational Trade (USCIT), to appeal administrative 
decisions in customs matters.  In its Third Party Submission, Japan has supported the EC´s 
interpretation. 
4.440  Moreover, as the EC has explained in its Written Submission, where the tribunals of the 
member States provide judicial review of decisions taken by the member States' customs authorities, they act as organs of the EC, through which the EC  discharges its obligations under Article X:3(b) 
GATT.  This view also finds support in the recent Panel Report in EC – Geographical Indications and 
Trademarks (US) . 
(ii) The lack of promptness in the review 
4.441  The second criticism made by the United States of the EC system is that it does not guarantee 
a prompt review of customs decisions.  
4.442  First of all, this US allegation is based on the divergence of the maximum time periods for 
administrative reviews between three EC member St ates.  However, the information given by the 
United States in relation to the Netherlands is not fu lly correct.  Point 6.2.7 of the Regulation to the 
General Tax Act of the Netherlands provides that  the tax authorities, which include the customs WT/DS315/R 
Page 80  
 
 authorities, will in principle decide on all objecti ons within six weeks.  According to the same 
provision, the legal time limit of one year, which is la id down in a separate act, is only to be applied in 
exceptional cases, e.g., in the case of mass complaints , or where the complainant does not provide the 
necessary cooperation. 
4.443  Second, the US First Written Submission alleges that the time periods for administrative 
reviews in the EC member States can vary widely.  However, the United States provides no actual 
evidence for this statement.  In pa rticular, it should be kept in mind th at the periods referred to by the 
United States are purely maximum time limits, a nd do therefore not necessarily provide information 
on the actual length of administrative reviews.  
4.444  The EC has already explained that Article X:3(b) GATT does not impose an obligation of 
harmonization.  Besides, the fact that an EC Member provides a one-year period instead of the three-
months period of another Member State does not mean that the former does not guarantee a prompt 
review. 
4.445  Even in the United States, the statutory maximum time-limit for deciding on protests is two 
years.  The United States does not explain why this  maximum time limit would be compatible with 
Article X:3(b) GATT, whereas the shorter periods provided for in certain EC member States would 
not be.  As a further illustration, it is also instru ctive to consider the practice of the US Court of 
International Trade.  In three recent classification ca ses, the USCIT invested nearly four years as an 
average to take a decision.  
4.446  These examples illustrate that establishing what is "prompt" and what is no longer "prompt" 
may not be quite as straightforward as the United States would seem to suggest.  Indeed, the actual 
length for the administrative and judicial review of a customs decisions may depend on a number of 
factors, not all of which are always fully under th e control of the WTO Member concerned.  Such 
factors may include the caseload, the factual and le gal complexity of the case, the behaviour of the 
complainant, the involvement of other parties, as well as questions of administrative and judicial 
procedure and organization.  It is therefore highly difficult to provide abstract rules on the length of 
administrative and, even more so, judicial proce dures, since there may always be exceptional cases 
where a longer duration is justified by special circumstances of the case. 
4.447  For this reason, the EC also submits that whether a WTO Member complies with its 
obligation under Article X:3(b) GATT cannot be establis hed on the basis of isolated individual cases.  
Rather, it would have to be established that there is a general pattern of a lack of prompt review in 
order to consider that the obligation of Article X:3(b) GATT is violated. 
E. 
SECOND WRITTEN SUBMISSION OF THE UNITED STATES  
1. Introduction 
4.448  The 25 member States of the European Commun ities do not act as one when it comes to the 
administration of EC customs law or the review and correction of customs administrative decisions.   Even though the EC in this proceeding disputes the US claims, the EC and EC officials have readily 
acknowledged the underlying problem in statements  outside the dispute settlement context.  
4.449  Not surprisingly, uniformity is a goal to which the EC aspires.  For example, in the Decision 
adopting the EC's "Customs 2007" program (Exhib it EC-43), the European Parliament and the 
Council of the European Union called for the continu ous adaptation of customs policy "to ensure that 
national customs administrations operate as e fficiently and effectively as would one single 
administration."  However, the system of customs administration and review currently in place not  WT/DS315/R 
 Page 81 
 
 
 only falls far short of that goal, it also falls far short of the requirements of GATT 1994 Article X:3, 
and therefore is in breach of that article. 
4.450  Before countering the key themes that have emer ged in the EC's response to US claims, it is 
necessary to discuss two general points that cut acro ss the EC's various arguments.  First, the EC 
repeatedly strikes an alarmist tone in responding to the US arguments.  The Panel should regard the 
EC's prediction of widespread upheaval with a h ealthy dose of skepticism.  Nowhere does the United 
States argue that Article X:3 compels WTO Members to have identical systems for customs administration and review, nor is that  the implication of US arguments.  
4.451  Similarly flawed is the proposition that accepting the US arguments will lead to a requirement 
of harmonization of non-customs-related provisions typi cally regulated at the regional or local level of 
government.  The EC draws that inference from the fact that the United States calls attention to 
certain tools of administration of EC customs la w – in particular, penalty provisions and audit 
procedures – which vary dramatically from member  State to member State.  However, the EC 
disregards that the US argument is directed at la ws and regulations at the sub-federal (i.e. member 
State) level that are used to verify and enforce compliance with laws and regulations prescribed at the 
federal (i.e . EC) level.  The US argument is not directed at  the vast body of laws and regulations at the 
sub-federal level that have nothing at all to do w ith verification and enforcement of compliance with 
other laws and regulations or that concern only ve rification and enforcement of compliance with other 
sub-federal laws and regulations.  
4.452  Moreover, in suggesting that the logic of the US argument on Article X:3(b) would force 
every WTO Member to have a single, centralized customs court, the EC again distorts the US 
position.  It is not the US view that Article X: 3(b) requires every WTO Member to have a single, 
centralized customs court.  It is the US view that Article X:3(b) requires every WTO Member to have review tribunals or procedures whose "decisions . . . govern the practice of" "the agencies entrusted 
with administrative enforcement" of its customs la ws.  A Member may be able to accomplish that 
where courts with regional jurisdiction review acti ons of a single customs authority.  But, this does 
not occur where, as in the EC, fragmentation of review is coupled with fragmentation of 
administration.  
4.453  Just as the Panel should not be swayed by the EC's prediction of a parade of horribles should 
it accept the US arguments, it also should not be swayed by the EC's contention that coming into 
compliance with its obligations would be difficult.   Difficulty of coming into compliance has no 
bearing on whether the EC is or is not currently  in compliance with its obligations under GATT 1994 
Article X:3.  Relative difficulty of compliance shed s no light on the ordinary meaning of the treaty's 
terms.  Nor is it an element of context or the treaty's object and purpose. 
2. GATT 1994 Article X:3 does not contain a relative, Member-specific standard 
(a) The obligations in GATT 1994 Article X:3 do not va ry according to the particular features of 
a Member's customs administration system 
4.454  The EC incorrectly urges on the Panel a relative view of Article X:3(a).  The EC suggests that 
the obligation of uniform administration may mean  different things for different WTO Members, 
depending on the design of each Member's customs administration system.  A relative standard is suggested by, among other statements, the EC's allusion to GATT 1994 Article XXIV:12.  That 
Article simply provides that each WTO Member "shall take such reasonable measures as may be 
available to it to ensure observance of the provisions of [the GATT 1994] by the regional and local 
governments and authorities within its territories."  It is not applicable here, because the present 
dispute does not concern "observance of the provisi ons of [the GATT 1994] by the regional and local WT/DS315/R 
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 governments and authorities" in the EC.  Rather , it concerns observance of the provisions of 
Article X:3 of the GATT 1994 by the EC itself. 
4.455  Moreover, the EC does not formally invoke Article XXIV:12, but it does argue that "any 
interpretation of Article X:3(a) which would aff ect the internal distribution of competence is 
incompatible with Article XXIV:12 GATT."  The EC appears to be trying to turn Article XXIV:12 on 
its head.  Paragraph 13 of the Understanding on the Interpretation of Article XXIV of the General 
Agreement on Tariffs and Trade 1994  makes it clear that Article XXIV:12 does not excuse or alter a 
Member's obligations.  That paragraph explicitly st ates that "[e]ach Member is fully responsible under 
GATT 1994 for the observance of all provisions of GATT 1994."  The EC instead seems to be saying that read in light of Article XXIV:12, Article X:3( a) will mean different things for different Members 
depending on whether, as a matter of "the internal  distribution of competence," a Member has decided 
that certain tools for the administration of its cu stoms law (such as penalties and audits) are to be 
prescribed and applied by regional governments. 
4.456  This construction of Article X:3(a) as applying  differently to different Members has no basis 
in Article X:3(a) or in Article XXIV:12.  Article XXIV:12 does not limit or otherwise qualify the 
obligation of uniform administration.  Indeed, Article XXIV:12 does not qualify the applicability  of 
GATT obligations at all.  Rather, it is a narrow provision concerning the implementation  of certain 
obligations, which must be construed to avoid  "i mbalances in rights and obligations between unitary 
and federal States."  (GATT Panel Report, Canada – Gold Coins , paras. 63-64) 
4.457  That GATT 1994 Article XXIV:12 does not support a construction of Article X:3(a) that 
varies from Member to Member is further demonstrat ed by contrasting that provision to a provision in 
another WTO agreement – the General Agreement on Trade in Services  ("GATS") – that does, in fact, 
qualify Members' obligations.  GATS Article VI :2(a), like GATT 1994 Article X:3(b), requires 
Members to provide tribunals or procedures for the prompt review of certain administrative decisions.  However, that obligation is expressly qualified in the next subparagraph, which states that 
"subparagraph (a) shall not be constr ued to require a Member to institu te such tribunals or procedures 
where this would be inconsistent with its constitutional structure or the nature of its legal system."  No 
similar exception appears in GATT 1994 Article X:3.  
4.458  Moreover, it should not pass without notice that  despite its oblique assertion of "constitutional 
implications" and its reference to "fundamental pr inciples of the EC legal order," the EC does not 
formally invoke Article XXIV:12.  Had it done so, it would have had the burden to demonstrate that 
lapses in the uniform administration of EC cu stoms law concern matters "which the central 
government cannot control under the constitutional di stribution of powers."  (GATT Panel Report, US 
– Beverages , para. 5.79)  Evidently this is a burden that the EC is not prepared to assume.  
(b) The United States does not seek the harmonization of WTO Members' customs administration 
systems 
4.459  Finally, an essential aspect of the EC's urgi ng a relative standard for application of 
Article X:3 is its mischaracterization of US claims as seeking "the harmonization of the systems of 
customs administration of WTO Members through th e DSU."  Contrary to the EC's assertion, the 
United States does not argue that Article X:3 requir es each Member to have a single customs agency 
and customs court.  The United States recognizes the diversity of systems of customs administration among WTO Members, which is evidenced in part by the responses to the Panel's Questions No. 10 
and 11 to third parties.  It is notable, however, that each of these third parties prominently identified 
the existence of a single, centralized custom s agency in explaining how it ensures uniform 
administration of customs laws across its territory.  Just as it would be improper for the United States 
to argue that Article X:3(a) requires harmonization of Members' systems of customs administrations, 
it is improper for the EC to argue that its unique status within the WTO as perhaps the only Member  WT/DS315/R 
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 without a single, centralized customs agency makes it subject to a different standard with respect to 
the obligation of uniform administration. 
3. GATT 1994 Article X:3(a) is not a "subsidiary ," "minimum standards provision" that is 
breached only when the non-uniform admi nistration of a Member's customs laws 
exhibits a discernible pattern 
(a) There is no basis for the EC's characterization of GATT 1994 Article X:3(a) as a "subsidiary," 
"minimum standards provision" 
4.460  The EC persists in characterizing Article X:3( a) as "a minimum standards provision" or "a 
subsidiary provision."  This characterization is b ased entirely on a passing reference by the Appellate 
Body in its report in US – Shrimp .  That statement, however, does not support the diminished 
significance the EC attaches to Article X:3(a). 
4.461  The EC misreads the phrase "minim um standards" as used in the US – Shrimp  report to mean, 
in effect, "low standards" or "minor standards."  In  context, however, it is clear that this was not the 
sense in which the Appellate Body used the term.  At issue was a law for which the United States had 
invoked an exception under Article XX of the GATT.  The Appellate Body looked to Article X:3 as a 
provision establishing requirements analogous to "due process" that would be relevant to analyzing 
whether the requirements in the chapeau of Article  XX had been met.  (para. 182)  However, the 
Appellate Body was not probing how strict or lenient th e Article X:3 standard is.  In fact, it found it to 
be clear that various aspects of the measure at issue were "contrary to the spirit, if not the letter, of 
Article X:3 of the GATT 1994."  (para. 183) 
4.462  Thus, in context, it is evident that in usi ng the phrase "minimum standards," the Appellate 
Body in US – Shrimp  was not making a judgment about how high or low the Article X:3 threshold is, 
only that there is a threshold that must be met.  
4.463  In any event, it is not clear how the EC's characterization of Article X:3(a) as a "minimum 
standards provision" translates into a legal standard  that may be applied by the Panel.   The EC 
suggests that in using "minimum standards" and similar phrases, what it really meant was that a 
breach of the obligation of uniform administ ration can be established only if non-uniform 
administration is shown on the basis of "an overa ll pattern" or "general patterns" of customs 
administration.  
(b) The United States is not required to demonstrate a "pattern" of non-uniform administration to 
establish that the EC is in breach of its GATT 1994 Article X:3(a) obligation 
(i) The "pattern" requirement asserted by the EC  has no basis in GATT 1994 Article X:3(a) 
4.464  The Appellate Body report in US –  Shrimp  on which the EC relies for its characterization of 
Article X:3 as a "minimum standards provision" mak es no reference at all to a pattern requirement.  
Indeed, the Appellate Body's finding that transpar ency and procedural fairness were lacking in 
administration of the measure at issue there was based on a finding that certain formal safeguards 
were absent from the system for administration of th at measure, rather than a finding of any "pattern" 
of non-transparency or lack of procedural fairness as a matter of practice. (para. 181)  Likewise, the 
EC provides no mechanism to safeguard against th e non-uniform administration of EC customs laws 
by 25 different member State authorities. 
4.465  More fundamentally, there is no basis in the text of Article X:3(a) (or any other WTO 
provision) for the proposition that a breach is established only when a pattern of non-uniform administration is shown.  The one panel to have examined in any depth the obligation of uniform WT/DS315/R 
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 administration in Article X:3(a) – the Argentina – Hides and Leather  panel – made no reference to a 
"pattern" requirement for establishing a breach of that  obligation.  (paras. 11.80-11.83)  That panel 
found it "obvious . . . that it is meant that Custom s laws should not vary, that every exporter and 
importer should be able to expect treatment of th e same kind, in the same manner both over time and 
in different places and with respect to other persons ."  (para. 11.83)  As the obligation of uniform 
administration was explained there, it plainly is capab le of being breached even if various instances of 
non-uniform administration do not exhibit a discernible pattern.  
(ii) The EC fails to even explain what it believes th e United States must establish to meet the so-
called "pattern" requirement 
4.466  The simple fact that "pattern" would be an el ement of a breach in addition to "non-uniform" 
administration demonstrates the fatal flaw in the EC's  proposed approach.  The text of Article X:3(a) 
does refer to administering in a "uniform manner."  It does not refer to a "pattern of non-uniform" 
administration.  
4.467  Furthermore, the EC's proposed approach does not make sense even divo rced from the agreed 
text of the GATT 1994.  The ordinary meaning of the word "pattern" as relevant here is "[a]n 
arrangement or order discernible in objects, actions, id eas, situations, etc."  Central to the concept of a 
pattern is discernability of arrangement or order.   Central to the concept of non-uniformity is the 
absence of these very qualities.  Thus, a pattern of non-uniform administration would appear to refer, 
paradoxically, to a discernability of arrangement or or der in something that lacks a discernability of 
arrangement or order (i.e. that is non-uniform).  Despite this apparent anomaly, the EC does not 
elaborate on the asserted "pattern" requirement.  
4.468  The EC does make oblique references to a "statistically significant sample" of non-
uniformity, occurrences of non-uniformity that are "so widespread and frequent as to constitute an 
overall pattern of non-uniformity,"  and occurrences of non-uniformity "on a large scale," as if to 
imply that it equates the existence of a pattern of  non-uniform administration with the frequency and 
scope of non-uniform administration.  However, these references shed little light on what the EC 
believes must be shown in order to satisfy  the so-called pattern requirement.   
4.469  More importantly, the suggestion that there is some quantitative criterion for assessing 
uniformity of administration is at odds with the EC's own acknowledgment that  "Article X:3(a) GATT 
does not require uniformity for its own sake, but rather intends to protect the interests of traders."  The 
interests of traders in uniform administration of  the customs laws do not depend on the statistical 
significance of occurrences of non-uniform administra tion, just as they do not depend on whether 
instances of non-uniform administration manifest a patte rn, in the ordinary sense of that term, or occur 
in a haphazard way.  
(iii) The reference to a "pattern" in the panel report in  US – Hot-Rolled Steel is not relevant to the 
present dispute 
4.470  Moreover, the EC's assertion of a pattern requirement relies on a single sentence from the 
panel report in US – Hot-Rolled Steel .  The concept of a pattern was relevant to the question at issue 
in that dispute in a way that it is not relevant in the present dispute. 
4.471  In any dispute involving a claim of non-uniform  administration, it must be asked what 
uniform  administration would look like.  In the present dispute, which concerns a claim of overall 
geographical non-uniformity of administration, the actual system in the EC is contrasted to a system 
in which traders can reasonably expect treatment of  the same kind, in the same manner when entering 
their goods through different EC member States.  To the extent that traders do not receive treatment of 
the same kind, in the same manner when entering goods through different EC  member States, that  WT/DS315/R 
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 state of affairs is recognizable as non-uniform administration, whether or not such non-uniform 
administration constitutes a pattern. 
4.472  Conversely, in US – Hot-Rolled Steel  the relevant claim was that a particular application of 
US antidumping law to particular producers in a particular investigation amounted to non-uniform administration of US antidumping law.  That proposition could be tested only if the panel had an 
understanding of what uniform administra tion of US antidumping law looked like.  
4.473  The claim at issue in the present dispute is far different.  The United States is arguing that the 
EC's system of customs law administration as a whole does not result in the uniform administration that Article X:3(a) requires.  Evidence of a pattern  is not necessary to distinguish the EC system of 
customs law administration as one that does not meet that obligation. 
4.474  Curiously, in arguing for a generic "pattern" requi rement, the EC cites the panel's summary of 
the US argument in US – Hot-Rolled Steel .  But, in that dispute, the United States was not arguing for 
a generic "pattern" requirement.  Quite to the contrary, the United States was arguing for a distinction 
to be made between the way the panel analyzed Jap an's Article X:3 claims and the way panels had 
analyzed Article X:3 claims in disputes challenging the overall administration of particular measures 
of general application.  The present dispute is one  in which the United States challenges the overall 
administration of EC customs law.  In that sense, the US claim is more like the claim at issue in US – 
Shrimp  than the claim at issue in US – Hot-Rolled Steel .  
(c) The EC acknowledges the existence of diverg ences among member State authorities in the 
administration of EC customs law 
4.475  Finally, it is important to recall that the EC itself acknowledges that divergences in 
administration of its customs law among the 25 different  member State authorities do in fact occur.  It 
submits that when they occur they either ar e reconciled through various EC instruments and 
institutions, or they simply are immaterial or not releva nt to the EC's Article X:3(a) obligation.  But, it 
acknowledges that divergences occur, and this point should not be lost. 
4.476  In addition to general acknowledgments by the EC  of divergences in the administration of EC 
customs law, it has made particular acknowledgments  of such divergences in the context of this 
dispute.  Specifically, it has acknowledged divergences in the areas of penalties and audit procedures, 
approaches to permitting certain customs valuatio n methods, and administration of the economic 
conditions test for use of the procedure known as processing under customs control.  
4.477  In calling attention to the EC's various ac knowledgments of non-uniform administration of 
EC customs law, the US purpose is to show that  the EC's argument concerning the US burden of 
proof is not written on a blank slate.  While the EC charges that the United States has not met its 
burden, its own statements preclude it from asserting that the 25 separate member State customs authorities administer EC customs law as would a single EC-wide authority.  
4. The instruments that the EC holds out as ensu ring uniform administration do not do so 
4.478  Central to the EC's argument that it complies with its obligation of uniform administration 
under GATT 1994 Article X:3(a) is its assertion that  certain EC instruments prevent divergences 
among member States from occurring or correct them when they do occur.   WT/DS315/R 
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 (a) Most of the instruments that the EC holds  out as securing uniform administration are non-
binding, discretionary, or extremely general in nature 
4.479  First, the EC's replies to the Panel's questi ons underscore the non-binding, discretionary, or 
extremely general nature of the instruments that  supposedly secure uniform administration.  For 
example: (a) The EC acknowledges that the Ad ministrative Guidelines on the European Binding 
Tariff Information (EBTI) System and its Operation "are not legally binding;" (b) When asked about 
"practical mechanisms" to deal with the s ituation in which member States disagree on the 
classification for a particular good, the EC replies that the member States " should  consult with one 
another," that if the disagreement persists the Customs Code Committee " may examine the question," 
and that "[i]n practice, the responsible official in the Member State concerned will submit the issue to 
the Commission" (though the EC does not say what rule will compel this submission); (c) When 
asked how, "in practical terms," the Customs C ode Committee reconciles differences in the 
application of EC rules on customs valuation, the EC explains that "[t]he Committee may issue opinions" which, it later explains, are not legally binding on member States' customs authorities; and (d) When asked to explain "in practical terms" a finding by the ECJ that EC law must be applied 
uniformly in all member States, the EC states that "this means that they [the authorities of the member 
States] should interpret and apply Community law in  accordance with all available guidance as to its 
proper meaning." 
4.480  Frequently, in referring to instruments that secu re uniform administration, the EC falls back 
on member States' general duty of cooperation under Ar ticle 10 of the EC Treaty.  That provision sets 
forth a general obligation of member States under EC law.  Tellingly, when the EC refers to it as an 
instrument to secure uniform administration, it does not refer to any measu res making that general 
obligation operational in the specific area of customs administration.  
(b) Binding tariff information does not secure uniform administration 
4.481  A more concrete instrument for securing uniform  administration that the EC identifies is 
binding tariff information. The EC's replies to questions confirm that BTI does not secure uniform 
administration. 
(i) The EC system permits "shopping" for favo rable BTI from among the 25 member State 
customs authorities 
4.482  One reason that BTI does not secure uniform administration is that traders may engage in BTI 
shopping.  That is, in a system where each of 25 different member State customs authorities is 
separately responsible for issuing BTI, traders may manipulate the system to obtain the optimal 
classification for their goods, regardless of whether such classification is uniformly agreed to among 
all member States.  The opportunity for manipulation is facilitated by the fact that under Article 12(2) 
of the Community Customs Code (Exhibit US-5), BTI is "binding on the customs authorities as 
against the holder of the information," but it is not binding on the holder.  
4.483  In fact, in its explanatory introduction accompanying the draft Modernized Community 
Customs Code (Exhibit US-32), the EC acknowledges the problem of BTI shopping as a factor 
detracting from uniform administration.  Thus it states that "it is proposed to extend the binding effect 
of the decision [i.e. the BTI] also to the holder(s) of the decision in order to avoid the system only 
being used where the applicant is sa tisfied with the result." (p. 12)  Similarly, in its arguments in the 
EC – Chicken  Cuts dispute, the EC explained that "it is possible under EC law to withdraw an 
application for a BTI where the outcome is consider ed unfavourable by the importer." (Panel Report, 
para. 7.261)  WT/DS315/R 
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 4.484  At the first Panel meeting, the United States ha d understood the EC to assert that the situation 
in which BTI is used only where the applicant is satisf ied with the result is a rather rare circumstance.  
In a question following the first Panel meeting, the United States asked the EC to substantiate that 
assertion.  The EC's terse response was that it "do es not have any evidence that would indicate that 
such situations are frequent," while also in effect conceding that it does not have evidence that such 
situations are "rare."  This response is not surprising.  A problem of BTI shopping from the point of 
view of uniform administration is precisely the fact that it is done in a way that does not generate 
evidence and thus is difficult to identify.  Traders hardly can be expected to come forward and openly 
admit that they are taking advantage of the opportunity to seek optimal classification of their goods from among 25 different customs authorities.  
(ii) The power of a member State customs authority to revoke BTI based on nothing more than its 
own reconsideration of the applicable classificati on rules, as affirmed in the Timmermans 
decision, detracts from  uniform administration 
4.485  The EC's discussion of the Timmermans  case and the possibility for member State authorities 
to amend or revoke BTI on their own initiative also  reinforces the point that BTI does not secure 
uniform administration of EC customs law.  Timmermans  was the case in which the Court held that a 
member State's customs authorities may amend or revoke BTI even where the only basis for 
amendment or revocation is the authorities' own rec onsideration of the applicable classification rules.  
The Court reached that conclusion despite the A dvocate General's observation (Exhibit US-21) that 
"the possibility of revoking BTI in this way is not readily compatible either with the objective of the 
uniform application of the customs nomenclature or  with the objective of legal certainty pursued by 
the introduction of BTI."  (para. 59) 
4.486  In explaining its disagreement with the Advocat e General's observation, the EC stated that 
"[t]he correct classification in the combined nomencl ature is not a matter of di scretion, and neither is 
the revocation of BTI which has been found to be incompatible with the combined nomenclature."  
The EC went on to point out that "the Court made  clear that the Customs authorities may revoke the 
BTI only if it is wrong." 
4.487  There is a serious flaw in the EC's logic.  It  assumes, without any b asis, that the correct 
classification of any given good will always be objectively known to all member State authorities and, therefore, "is not a matter of discretion."  Under this assumption, the application of classification rules is always a straightforward, mechanical exercise, a nd if a member State authority revokes BTI, it must 
be due to an obvious error in the performance of th at exercise, the correction of which necessarily will 
advance uniformity.  
4.488  The EC ignores the fact that applying classification rules to a particular good may require a 
customs authority to make certain judgments and that, especially in complex cases, these judgments 
may evolve upon further reflection.  It is not the case that the correct classification is a matter of discretion, but the findings leading to determination of the correct classification may entail exercises 
of discretion, in the sense of judgment.  It is inco rrect for the EC to assume that the classification of a 
particular good will always be objectively known and obvious to all 25 customs authorities.  In 
relying on the Court's finding that "the Customs authorities may revoke the BTI only if it is wrong," and asserting that discretion has no part in such action, the EC misunderstands the sense in which 
discretion is referred to a nd begs the question of who determines th at BTI is wrong.  Of course, absent 
a Commission regulation, it is the member State authority itself that determines that the original BTI 
is wrong.  Accordingly, it cannot be assumed th at, where a customs authority revokes BTI based on 
its revised assessment of the good's correct classi fication, such action will necessarily yield the 
objectively correct classification and thereby align it with the other member State customs authorities, 
resulting in uniform administration. WT/DS315/R 
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 4.489  Where a member State authority initially issues BTI – presumably believing it has applied the 
classification rules correctly – that BTI is supposed to be binding on other member State authorities with respect to the particular holder of the BTI a nd the goods concerned.  If that authority reconsiders 
its application of the classification rules – again, presumably believing that its revised application of 
the classification rules is correct – there is no mechanism to impose its reconsideration on a uniform 
basis.  It is in this sense that th e member State autonomy recognized in Timmermans  detracts from 
uniform administration.   
4.490  A final point that bears recalling with respect to  BTI is the very limited sense in which BTI is 
ostensibly binding at all.  As Korea underscores in its Third Party Submission, "The BTI from one 
member state does not necessarily bind another memb er state to classify similar or identical goods 
imported by a person other than the holder of the BTI in the same way, resulting in different 
classifications and treatment for the same or simila r product."  The EC itself called attention to this 
limited applicability of BTI in the EC – Chicken  dispute. 
(c) The availability of review by member State courts as the "normal" means of reconciling 
divergences in member State administration of  EC customs laws does not fulfill the EC's 
GATT 1994 Article X:3(a) obligation to administer its customs laws in a uniform manner 
4.491  The one instrument the EC holds out as securing uniform administration that is binding in 
character is review of customs administrative decisions by member State courts.  The emphasis that the EC puts on this instrument is problematic for at least three reasons.  First, as the decision of a member State court is binding only within that member State, an appeal to a member State court will not necessarily engender uniform administration.  It is notable that the EC confirms that it has in place 
no mechanism to notify the courts of other member  States of the outcome of review of a customs 
decision in one member State court.  Absent such a mechanism, it is difficult to see how one member 
State court would be able to take account of relevant decisions of other member State courts, let alone 
take the step of seeking to bring about uniform ad ministration by affirmatively aligning itself with 
other member State courts. 
4.492  Second, while the pursuit of an appeal before one  member State court might or might not lead 
to uniform administration in the case of a simple divergence between two member States, it does not address the situation of a divergence involving several member States.  In that case, the EC evidently 
would require a trader to pursue an appeal through each of several member State courts in order to 
achieve uniform administration.  This is a particul arly onerous burden to impose on traders to achieve 
a result – uniform administration – that they are entitled to as a matter of procedural fairness in the 
first instance, pursuant to GATT 1994 Article X:3(a). 
4.493  Third, the EC's emphasis on appeals to member  State courts in effect stands GATT 1994 
Article X:3(a) on its head.  It takes a GATT obligation under which traders are entitled to certain 
elements of procedural fairness in customs admi nistration and submits that it is fulfilled largely 
though a system that imposes a requirement on trader s to overcome legal hurdles in order to attain 
those elements of procedural fairness.  This can be seen, for example, in the EC's assertion in its 
statement at the first Panel meeting that "where an  individual trader does not exhaust all the remedies 
and procedural possibilities afforded to him by th e system of a WTO Member, a resulting lack of 
uniformity cannot be attributed to a failure in that Member's system."  
4.494  Article X:3 contains a pair of complementary ob ligations that afford procedural fairness to 
traders.  Pursuant to Article X:3(a), a trader may expect that, consistent with a Member's WTO 
obligations, its customs laws will be administered  in a uniform, impartial and reasonable manner 
across the Member's territory.  Pursuant to Article X:3(b), the trader may expect, consistent with the 
Member's WTO obligations, access to an independent forum for the prompt review and correction of 
particular instances of the uniform administration of  the Member's customs laws.  Pursuant to that  WT/DS315/R 
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 same provision, the trader may expect not only that  the decisions of such independent fora will be 
implemented by the authorities responsible for custom s administration, but also that they will govern 
the practice of all such authorities, such that the customs laws will c ontinue to be administered in a 
uniform manner in light of those decisions. 
4.495  Yet the EC appears to say that compliance w ith Article X:3(b) would in and of itself 
necessarily equate to compliance with Article X:3(a).  In other words, the EC's approach would mean 
that Article X:3(b) would render Article X:3(a) red undant.  As the EC describes it, the trader is not 
necessarily entitled to expect that th e EC's customs laws will be uniformly administered in the first 
instance.  Rather, it is through exercise of the right to review that the trader eventually may attain 
uniform administration.  
4.496  Moreover, according to the EC's explanation, a trader must be willing not only to pursue a 
first level of review in order to attain uniform administration, but to "exhaust all the remedies and 
procedural possibilities afforded to him by the system."   Unless a trader is prepared to pursue multiple 
layers of appeals, possibly in more than one member State, including opportunities for preliminary reference of questions to the ECJ – a process which itself takes an average of 19 to 20 months to 
complete – then any resulting lack of uniformity in  the administration of EC customs law "cannot be 
attributed to a failure in [the EC's] system." 
4.497  The United States submits that in emphasizing appeals to member State courts as a key 
instrument in securing uniform administration, the EC has taken an obligation of the EC to provide an 
important element of procedural fairness to trader s and shifted the obligation to traders to seek out 
that element of procedural fairness themselves.  Th is is contrary to the text of GATT 1994 Article X:3 
and the widely recognized focus of that Article on the interests of traders. 
5. In arguing that matters such as penalties a nd audit procedures are outside the scope of 
its obligation under GATT 1994 Article X:3(a), the EC relies on an erroneous understanding of what it means to "administer" customs laws 
4.498  There are no EC rules prescribing penalties for violations of EC customs laws.  As the EC 
Commission itself has acknowledged, "Specific offen ces may be considered in one Member State as a 
serious criminal act possibly leading to imprisonme nt, whilst in another Member State the same act 
may only lead to a small – or even no – fine."  (Exhibit US-32, p. 13) 
4.499  With respect to audit procedures, there ar e differences among working practices, including 
the balance between reliance on examinations of goods  at time of importation and post-release audits.  
As the EC Court of Auditors observed, due to such differences, "'individual customs authorities are 
reluctant to accept each other's decisions.'" (Exhibit US-14, para. 37)  At the conclusion of audits, 
some member State authorities provide traders what amounts to binding valuation information, which they may invoke in future transactions, while others do not. 
4.500  In dismissing the foregoing instances of non-uniform administration, the EC argued that they 
are outside the scope of its obligation under GA TT 1994 Article X:3(a) because penalties and audit 
procedures are not measures of the type described  in Article X:1, and because penalties and audit 
procedures do not constitute administration of me asures that are described in Article X:1.  
Alternatively, the EC argued that certain EC gui delines cause penalties and audit procedures to be 
uniform within the meaning of Article X:3(a).  Of these arguments, the main emphasis to have emerged is the proposition that differences among memb er States in penalties and audit procedures do 
not constitute non-uniform administration of EC measures that indisputably are within the scope of 
Article X:1.   WT/DS315/R 
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 (a) The EC relies on an erroneous un derstanding of what it means to "administer" customs laws 
4.501  In its reply to the Panel's Question No. 93, the EC refers to the definition of the term 
"administer" and states that, in light of that definitio n, "Article X:3(a) GATT refers to the execution in 
concrete cases of the laws, regulations, decisions and rulings of general application referred to in 
Article X:1 GATT."  It then reasons that since a law of a member State, such as a penalty law, "itself 
needs to be executed or applied," "it cannot be said th at such a law 'executes' or 'applies' another."  
This reasoning is flawed for several reasons. 
4.502  First and fundamentally, the EC relies on an ex ceedingly narrow, errone ous definition of the 
term "administer."  It begins correctly by referri ng to the dictionary definition of "administer" as 
"execute."  But, it then purports to paraphrase the definition and in so doing  introduces a concept from 
outside the dictionary definition and relies heavily on  that concept in its argument.  Specifically, it 
asserts that "in Article X:3(a) GATT, to 'admin ister' means to execute the general laws and 
regulations, i.e. to apply them in concrete cases ."  Thus the EC argues that only when a member State 
authority applies EC customs laws "in concrete  cases" is it administering those laws, and only 
divergences in the application of EC customs laws  "in concrete cases" ma y constitute non-uniform 
administration.  Conversely, according to the EC's reasoning, the mere employment of dramatically 
different tools by different member State customs authorities for giving effect to EC customs laws 
does not constitute non-uniform administration. 
4.503  Of course, the concept of "concrete cases" app ears nowhere in the definition of "administer" 
as quoted by the EC itself.  The Un ited States does not dispute that the application of laws and 
regulations in concrete cases is an action enco mpassed by the term "administer."  However, the 
United States disputes the EC's sugges tion that the term "administer" is limited  to application in 
concrete cases. 
4.504  In fact, the absence of any such limiting concept is evident from a closer examination of the 
term "administer."  The EC correctly quotes the dic tionary definition of "admin ister" as "execute."  
But, it does not probe further to define "execute."   In fact, the ordinary meaning of "execute" as 
relevant here is "[c]arry out, put into effect."  The question, then, is whether audit procedures and 
penalty provisions of different member States put EC  customs laws into effect, or whether it is only 
the application of those laws by customs authorities in concrete cases that puts them into effect.  The 
answer is that audit procedures and penalty provisi ons put EC customs laws into effect by verifying 
and enforcing compliance with those laws.  
(b) Penalties and audit procedures play a critical  role in carrying out EC customs laws 
4.505  The administration of EC customs laws depends  in large part on th e actions of traders 
themselves.  It is traders who make who make declarations and provide the customs authorities 
information concerning classification and valuatio n of goods.  It would be impossible for the 
authorities to thoroughly inspect every shipment or verify the contents of every declaration before 
clearance.  It is for this reason that tools for verifying and enforcing co mpliance with the customs 
laws are critical to "carrying out" or  "putting into effect" those laws.  
4.506  
Given the critical role that audits and penalties pl ay in giving effect to EC customs laws, it is 
somewhat surprising that the EC asserts, for exampl e, that "provisions which establish the penalty for 
a violation of customs laws are not themselves relate d to the administration of customs laws."  Indeed, 
in other contexts (e.g., Exhibit EC-41, p. 1) th e EC has acknowledged the cr itical relationship between 
penalties and the administration of customs laws.  
4.507  The EC's position with respect to audits is equa lly puzzling.  In its First Written Submission, 
the EC asserted that audits, like penalties, "are not  part of customs procedures, and therefore do not  WT/DS315/R 
 Page 91 
 
 
 concern the administration of customs laws as su ch."  In its response to the Panel's Question 
No. 64(e), the EC explained that it does not consider  audits to be customs procedures "[b]ecause they 
are not one of the procedures referred to in Article  3(16) CCC." However, the specific sense in which 
the EC uses the term "customs procedure" for purposes of the CCC has absolutely no bearing on 
whether audits are customs procedures for admini stering the CCC.  Indeed, the EC so acknowledged 
in response to the Panel's Question No. 64(c).  
4.508  In other contexts, the EC has acknowledged th at audits are tools for administering EC 
customs laws.  For example, the Customs Audit Gu ide contained in Exhibit EC-90 refers to CCC 
Articles 13 to 16 as "a legal basis for the undertaki ng of audits."  (A framework for post clearance and 
audit based controls, p. 4)  CCC Article 13, in turn , states that member Stat e customs authorities may 
"carry out all the controls they deem necessary to ensu re that customs legislation is correctly applied."  
(c) Member States' penalties and audit procedures are properly characterized as tools for the 
administration of EC customs laws 
4.509  The EC contends that, in describing member States' disparate penalty and audit provisions as 
tools of the administration of EC customs law which constitute the non-uniform administration of 
those laws, "the US is undermining the clear distin ction between the administration of laws and the 
laws themselves."  In the EC's view, penalty and audit provisions are themselves laws that are administered and therefore cannot be described as tools for administering other laws (in this case, EC customs laws). 
(i) A law may be a tool for administering other laws 
4.510  The flaw in the EC's reasoning is its assumption that a law can be viewed only one way, as 
the thing that is administered and not also as a tool for administering something else.  The United 
States does not disagree with the proposition that a law providing for penaltie s or audit procedures 
may be considered as something to be administer ed.  But that does not exclude the possibility of 
considering the same law as a tool for administering other laws, for example, by putting those laws into effect through verification and enforcement.  The EC itself recognized this precise point in 
Argentina – Hides and Leather , where it challenged the same Argentinian measure from the 
perspective of its substance and from the perspective of its character as a tool for administering other 
laws.  (Panel Report, para. 4.203)  
(ii) Basing a claim of non-uniform administration on differences among member State laws that 
are tools for administering the EC's customs la ws is not inconsistent with the Appellate 
Body's finding that a GATT 199 4 Article X:3(a) claim must concern the administration of 
customs laws rather than their substance 
4.511  The distinction between administration and substa nce that the Appellate Body referred to in 
EC – Bananas III  is not to the contrary.  The Appellate B ody there did not have occasion to consider 
whether the different licensing procedures at issue represented a non-uniformity in the administration of some other law.  That question simply was not at issue there, as it is here. 
4.512  By contrast, the panel in Argentina – Hides and Leather  did have occasion to consider 
whether a regulation could be cha llenged under Article X:3(a) as a tool for administering Argentina's 
customs laws in a manner inconsistent with that provision.  The EC in that dispute challenged a 
measure of Argentina (Resolution 2235) as a tool fo r administering Argentina's customs laws (set 
forth in other statutes and resolutions) in a manner inconsistent with Article X:3(a).  Argentina defended, just as the EC does here, by arguing th at the complaint was about the substance of a 
measure rather than its administration, and therefor e was outside the scope of Article X:3(a) under the 
Appellate Body's reasoning in EC – Bananas III .  The panel rejected that argument, noting that "[t]he WT/DS315/R 
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 relevant question is whether the substance of such a measure is administrative in nature or, instead, 
involves substantive issues more properly dealt with under other provisions of the GATT 1994."  (para. 11.70)  In finding that the measure in questi on was administrative in nature the panel observed, 
"Resolution 2235 does not create the classification requirements; it does not provide for export 
refunds; it does not impose export duties.  It merely  provides for a certain manner of applying those 
substantive rules."  (para. 11.72) 
4.513  Following the panel's reasoning in Argentina – Hides and Leather , the fact that tools for 
administration of EC customs laws themselves take the form of laws does not mean that the United 
States has ignored the difference between substance and administration highlighted in EC – 
Bananas III .  Like Resolution 2235 in Argentina – Hides and Leather , member States' penalty and 
audit provisions do not prescribe rules on classificati on and valuation, but they do provide means of 
"putting into effect" laws that do prescr ibe rules on classification and valuation. 
(iii) The findings of the panel in Argentina – Hid es and Leather are directly relevant to the 
present dispute 
4.514  The EC disputes the relevance of the panel report in Argentina – Hides and Leather .  First, it 
asserts that a distinguishing feature of the measure challenged in Argentina – Hides and Leather  was 
that it mandated administration in a manner inconsiste nt with Article X:3(a).  Second, it suggests that 
unlike the measure challenged in Argentina – Hides and Leather , penalty provisions are not 
recognizable as being administrative in nature.  Neither of these arguments is well founded.  
4.515  The question of whether the measure at issue in Argentina – Hides and Leather  mandated 
administrative behavior inconsistent with GATT 1994 Article X:3(a) or merely permitted it was 
entirely irrelevant to the panel's findings in that di spute.  The EC's suggestion that the panel report in 
Argentina – Hides and Leather  is irrelevant because unlike the measure at issue there penalty 
provisions are not readily distinguishable as "administr ative" or "substantive" is addressed in the US 
response to the Panel's Question No. 90.    
4.516  Of course, the relevant question for Article X:3(a) purposes is not whether a measure is either  
"administrative" or "substantive" in character.  A measu re may have both qualities depending on the 
perspective from which it is examined, as the EC argued in Argentina – Hides and Leather .  
Distinguishing a measure as "administrative" in charact er, as the panel in that dispute explained, is a 
matter of determining whether it prescribes the m eans for "executing" or "putting into effect" 
substantive rules on classification and valuation, for example, which themselves are set forth in other 
measures.  Like the measure at issue in Argentina – Hides and Leather , EC member State penalty and 
audit provisions do not prescribe substantive rules on classification and valuation, but they do put 
such substantive rules as prescribed in EC regulations into effect.  
4.517  Since, in the EC's view, a Member administer s its customs laws only when it applies those 
laws "in concrete cases," the EC cannot conceive of the possibility that non-uniform administration of 
customs laws may take the form of different a udit procedures and penalty provisions in different 
regions of the Member's territory.  The EC's  understanding ignores the ordinary meaning of 
"administer" as "execute," which in turn means "put into effect."  
4.518  The EC recognizes that the focus of Article X:3 is on protecting the interests of traders.  From 
traders' point of view, however, the liability they may face for misclassification of goods or technical 
errors in clearing goods through cu stoms, the likelihood of being audited, and the possibility that at 
the conclusion of an audit the customs authoriti es may issue binding guidance that the traders may 
rely upon in the future all are considerations that  can be as important as the consideration of how the 
customs authorities will classify and value their goods.   WT/DS315/R 
 Page 93 
 
 
 (d) Reference to "penalties" for "minor breaches" in GATT 1994 Article VIII:3 does not put 
penalties outside the scope of Article X:3(a) 
4.519  The EC makes the additional argument that the mention of "penalties for minor breaches of 
customs regulations or procedural requirement s" in GATT 1994 Article VIII:3 is evidence that 
penalties are not addressed by GATT 1994 Article X.  But this argument is a non-sequitur.  The fact 
that Article VIII:3 sets substantive parameters fo r penalties for certain types of breaches of customs 
regulations or procedural requirements – i.e. "minor breaches" – has nothing to do with whether penalties may be considered to be tools for administering a Member's customs laws.   
4.520  Carried to its logical extension, the EC's reas oning would lead to manifestly absurd results.  
For example, it would mean that a Member could discriminate among other Members by applying 
penalties to customs breaches involving products of some Members but not applying penalties to 
customs breaches involving like products of other Members.  This would not be a breach of GATT 
1994 Article I, according to the EC's logic, because that article, like Article X:1, refers only to 
"charges" and not expressly to "penalties." 
(e) The US argument does not imply a requirement of  harmonization of all sub-federal laws of 
WTO Members that have any similarity  in subject matter to federal laws 
4.521  Equally unavailing is the EC's argument that a finding that differences in member States' 
penalty and audit provisions cons titutes non-uniform administration of  EC customs laws would have 
dire implications for all WTO Members in a variet y of regulatory areas.  This argument is based on 
the erroneous premise that under the US argument a ny sub-federal law that had any similarity in 
subject matter with a federal law (i.e. a "link") "could be said to constitute 'administration' of the law."  
However, it is not the mere existence of a "link" between member States' penalty and audit provisions 
and EC customs laws that makes the former administ rative in nature.  Rather, it is the fact that the 
very purpose of member States' penalty and audit pr ovisions is to "execute" or "put into effect" EC 
customs laws that gives them that quality.   
6. The decisions of review tribunals in the EC do not govern the practice of "the agencies" 
entrusted with administrative enforcement of EC customs laws, contrary to GATT 1994 
Article X:3(b) 
4.522  The EC fails to comply with Article X:3(b) because the one review tribunal that it provides 
whose decisions have EC-wide effect is the ECJ, and review by the ECJ does not meet the requirement of promptness.  Review by member State courts does not fulfill the EC's obligation, as the decisions of each such court apply only within its respective member State.  The decisions of any 
given member State's courts do not "govern the practice of" "the agencies entrusted with 
administrative enforcement" of customs laws in the EC  as a whole.  Further, Article X:3(b) must be 
read in light of the obligation of uniform administ ration in Article X:3(a); accordingly, where review 
leads to decisions whose effect is limited to particul ar regions within a Member's territory such review 
is not consistent with Article X:3(b). 
(a) The decisions of the tribunals or proce dures a WTO Member provides pursuant to GATT 
1994 Article X:3(b) must govern the practice of "t he agencies" entrusted with administrative 
enforcement of the Member's customs laws 
4.523  The first sentence of Article X:3(b) requires Me mbers to provide tribunals or procedures for 
the prompt review and correction of administrativ e action relating to customs matters.  The second 
sentence requires that such tribunals or procedur es "be independent of the agencies entrusted with 
administrative enforcement" and that their decisions "be implemented by, and . . . govern the practice 
of, such agencies."  It is the requirement that th e decisions of review tribunals or procedures govern WT/DS315/R 
Page 94  
 
 the practice of the agencies entrusted with administ rative enforcement that ma kes clear that the EC 
does not fulfill its obligation under Article X:3(b), since each of the multiple review tribunals it 
provides renders decisions that govern the practi ce only of a subset of agencies entrusted with 
administrative enforcement within a particular region in the EC.  
4.524  The EC states that "Article X:3(b) GATT, unlik e Article X:3(a) GATT, is not concerned with 
questions of uniformity, but exclusively with the prompt review of customs decisions."  But if this 
were so, there would be no need for Article X:3(b) to specify that the decisions of review tribunals 
must "govern the practice of" the agencies entruste d with administrative enforcement.  It would 
suffice simply to require the provision of tribunal s or procedures whose decisions are "implemented 
by" the agencies entrusted with administrative enforcement.   
4.525  The ordinary meaning of the term "govern" as rele vant here is "[c]ontrol, influence, regulate, 
or determine" or "[c]onstitute a law, rule, standa rd, or principle for."  Accordingly, the distinct 
"govern the practice" requirement in Article X:3( b) looks beyond the simple implementation of a 
decision in the case at hand and requires that the de cision "control, influence, regulate or determine" 
the practice of or "constitute a law, rule, standard , or principle for" "the agencies entrusted with 
administrative enforcement" of the customs laws. 
4.526  Moreover, it is " the agencies entrusted with administrativ e enforcement" whose practice is 
required to be governed by the decisions of review tribunals or procedures.  That requirement is not 
fulfilled where the decisions of review tribuna ls or procedures govern the practice of only some of  the 
agencies entrusted with admi nistrative enforcement.  
4.527  This understanding is reinforced by the context provided by Article X:3(a).  The EC concedes 
that Articles X:3(a) and X:3(b) must be interpre ted "in a harmonious way."  Where the decisions of 
review tribunals govern the practice of the agencies entrusted with administrative enforcement, they 
become part of the agencies' administration of the Member's customs laws in future cases.  Since the 
Member's customs laws must be ad ministered in a uniform manner, th e decisions of review tribunals 
must govern the practice of "the agencies" throughout its territory.   
4.528  Australia put the point succinctly in its statement at the first Panel meeting when it observed 
that "the decisions and rulings of the review bodi es should be applied consis tently and be available 
equally throughout the territory of the WTO member."   That is not the case in the EC.  Not only are 
the decisions of individual member State courts applicable only within their respective member 
States, and therefore not applied consistently through out the EC's territory, but such decisions are not 
"available equally throughout the terr itory" of the EC.  As the EC expl ained in response to the Panel's 
Question No. 72, there is no mechanism to ensure that  member State courts are kept apprised of the 
customs review decisions of other member State courts. 
4.529  The only review tribunal decisions that govern the practice of "the agencies" entrusted with 
administrative enforcement of EC customs laws th roughout the EC's territory are decisions of the 
ECJ.  However, review by the ECJ can hardly be co nsidered to satisfy the Article X:3(b) requirement 
of prompt review.  The ordinary way for questions to  be put before the ECJ is through the preliminary 
reference procedure, in which it may take 19 to 20 mo nths for the ECJ to render a decision (and that is 
only an average). 
(b) The US argument does not imply a requirement for every WTO Member to establish a single, 
centralized customs court 
4.530
 The EC has indicated that the EC is not th e only WTO Member to provide for review of 
customs administrative actions on a regional basis and suggested that the US argument would imply 
an obligation for each WTO Member to establish a si ngle review tribunal with jurisdiction throughout  WT/DS315/R 
 Page 95 
 
 
 its territory.  However, whether or not there are other Members that provide for review of customs 
administrative action on a regional basis, the EC is the only WTO Member of which the United States is aware that has a combination of geographically fragmented customs administration and 
geographically fragmented review.  
4.531  The United States does not argue that Article X:3(b) requires every WTO Member to have a 
single, centralized tribunal for the prompt review and correction of customs administrative actions.  
What the United States does argue is that Article X:3(b) requires that the decisions of the tribunals that a Member provides for the prompt review and correction of customs administrative actions 
govern the practice of the agencies entrusted with administrative enforcement of the customs laws 
throughout the Member's territory .   
4.532  Where a Member has a single, centralized agen cy entrusted with the enforcement of its 
customs laws, it is conceivable that it may fulfill its obligation under Article X:3(b) even where it 
provides for review and correction through multiple tribunals each of whose jurisdiction is regionally 
limited.  In that case, where the court for a given re gion renders a decision, th e agency should be able 
both to implement that decision in the region and conf orm its practice throughout its territory.  In this 
way, the Member's administration of its customs laws would be governed by that decision, and its 
customs law administration would be uniform.  If the decision of a court in one region conflicts with a 
decision of a court in another region, the agency sh ould be able to resolve the conflict by appealing 
one or the other decision to a court or tribunal of superior jurisdiction, a possibility contemplated by 
the second sentence of Article X:3(b).   
4.533  Further evidence for the proposition that the re view and correction provided for pursuant to 
Article X:3(b) must result in decisions that govern  the administration of a Member's customs laws 
throughout its territory is the proviso  in the second sentence,  which states that " the central 
administration of such agency may take steps to obtain a review of  the matter in another proceeding if 
there is good cause to believe that the decision is inco nsistent with established principles of law or the 
actual facts."  (Emphasis added.)  The proviso  contemplates "the central administration" challenging a 
tribunal's decision collaterally – i.e. "in another proceeding" – when the central administration 
determines that "the decision is inconsistent with established principles of law or the actual facts."  
But, that possibility makes sense only if the decision in the original proceeding would otherwise have 
effect outside of that proceeding.  If the decision's effects were confined to the proceeding in which it 
was rendered, there would be no need or basis for a collateral challenge. 
4.534  As the possibility of collateral challenge to tribuna ls' decisions implies that the effects of such 
decisions are not confined to the particular proceed ings in which they are rendered, there is no basis 
for suggesting that Article X:3(b) contemplates these  effects having a scope that is narrower than the 
Member's entire territory.  Not only is there no basi s for such a suggestion, but the reference to "the 
central administration" of the agency entrusted wi th administrative enforcement itself supports the 
proposition that the effects of tribunals' decisions are contemplated as having a scope that covers the 
Member's entire territory. 
4.535  In sum, the combination of 25 separate EC member State customs authorities and review 
tribunals that are distinct to each member State r esults in review tribunal decisions that do not govern 
the practice of " the agencies entrusted with administrative en forcement" of the EC's customs laws.  
For this reason, the provision of review and co rrection of member State customs administrative 
decisions by member State tribunals fails to meet the EC's obligation under Article X:3(b). WT/DS315/R 
Page 96  
 
 F. 
SECOND WRITTEN SUBMISSION OF THE EUROPEAN COMMUNITIES  
1. The measures at issue in the present dispute 
4.536  The US claim under Article X:3(a) GATT re lates to "the manner in which the EC 
administers" its customs laws.  As regards th e US claim under Article X:3(b) GATT, the EC 
understands that the measure at issue is the allege d failure of the EC to provide for tribunals or 
procedures for the prompt review and correction of customs decisions.  
4.537  However, in relation to the claim under Artic le X:3(a) GATT, the United States goes on to 
add that "the specific measure at issue" within  the meaning of Article 6.2 DSU "are the laws 
regulations, decisions and rulings that make up EC customs law", i.e. the measures listed in the first 
paragraph of the US Panel request. 
4.538  The EC does not agree that the measure listed in  the first paragraph of the US panel request, 
which include notably the Community Customs Code, the Implementing Regulation, and the Community Customs Tariff, are the "measures at issu e" in the present dispute within the meaning of 
Article 6.2 DSU.  It follows clearly from the firs t sentence of the first paragraph of the US Panel 
request that the US claim relates to the manner in which the EC administers the measures listed, not to 
the measures themselves.  The enumeration at the e nd of the first paragraph of the US request serves 
merely the purpose of identifying the laws whic h the EC allegedly fails to administer in a non-
uniform manner.  However, this does not mean that  these laws themselves become measures at issue 
in the present dispute. 
4.539  The EC also does not share the view of the Unite d States that administration of laws "may not 
itself be a measure".  As the Appellate Body has confirmed in US – Corrosion-Resistant Steel Sunset 
Review , any act or omission attributable to a WTO Me mber can be a measure of that Member for 
purposes of WTO dispute settlement.  This also appli es to the administration of laws as referred to in 
Article X:3(a) GATT.  
4.540  Close attention to what is the measure at issu e in the present dispute is particularly necessary 
given the specific features of Article X:3(a) GAT T as the legal basis of the US claim.  As the 
Appellate Body has confirmed in EC – Bananas III , Article X:3(a) GATT relates only to the 
administration of the laws and regulations referred to in Article X:1 GATT, not to those laws and 
regulations themselves.  
4.541  The US suggestion that administration may not be  a measure would lead to the absurd result 
that non-compliance with Article X:3(a) GATT could never be challenged under the DSU.   
4.542  At the same time, the EC is concerned that th e United States is trying to blur the distinction 
between the administration of measures, and th e measures themselves, and thereby effectively 
attempts to enlarge the scope of the present dispute.   For these reasons, the Panel should hold that the 
acts of general application listed in the US pane l request are not measures at issue in the present 
dispute. 
4.543  On a further point, the United States has refu sed to identify the specific aspects of EC 
customs administration that it was challenging.  It has merely stated that it challenged the 
administration of the listed measures, which it descr ibed as "capturing the un iverse of measures that 
constitute EC customs law".  
4.544  This does not constitute a sufficiently precise description of the measure at issue in the 
present dispute.  EC customs legislation is a large and complex body of law.  It would therefore not  
be sufficient to describe the measure at issue in the present as the "administration of EC customs law".   WT/DS315/R 
 Page 97 
 
 
 Rather, the measure at issue in the present dispute is the administration of EC customs law in those 
respects referred to in the US Panel request, as fu rther refined in the US First Written Submission, 
notably tariff classification, customs valuation, processing under customs control, local clearance procedure, and penalties.  This is also confirmed by the title of the present dispute, which is "Selected
 
Customs Matters", and thus cannot in clude simply all customs matters. 
4.545  The United States attempts to keep the scope of  the present panel proceedings vague are also 
illustrated by the US's refusal to provide an exha ustive list of the customs procedures in respect of 
which it alleges a lack of uniform administration, and in stead claims that this lack is "not confined to 
any particular customs rule or group of rules".  In  this respect, the EC would remark that it cannot be 
expected to defend itself against nebulous charges of non-uniform administration in areas that the 
United States has not identified in its Panel request  and its First Written Submission.  Accordingly, 
the US attempt to keep the scope of the present proceedings vague should be rejected. 
2. The US claims under Article X:3(a) GATT 
(a) The requirements of Article X:3(a) GATT 
(i) Article X:3(a) GATT concerns the administrati on of customs laws, not the customs laws 
themselves 
4.546  The EC has explained, with reference to the relevant case law of the Appellate Body, that 
Article X:3(a) GATT does not concern the laws  and regulations themselves, but only their 
administration .  This means that Article X:3(a) GATT does not require a harmonization of laws 
within a Member where, for instance, different lega l regimes are applicable within different parts of 
the territory of a WTO Member.  This is relevant in all areas where matters at issue in the present 
dispute are governed by laws of the EC member Stat es, which is the case in particular with respect to 
penalties for vi c olations of customs law. 
4.547  The United States contests this interpretati on by arguing that "customs laws may be 
administered through instruments which are themselves laws". 
4.548  The EC considers this interpretation to be ma nifestly incompatible with the wording of 
Article X:3(a) GATT, which refers only to the administration of the laws, regulations, decisions and 
rulings of the kind referred to in Article X:1(a) GATT.  Article X:1  GATT specifies that these measures are all measures of general application .  The administration of such measures is thus their 
application in concrete cases.  La ws, which are of general application, can therefore not at the same 
time be regarded as measures of administration.  The US argument would also be incompatible with the clear distinction made by the Appellate Body in EC – Bananas III  between the administration of 
laws and the laws themselves. 
4.549  The United States tries to escape from this conclusion by drawing a distinction between 
"substantive" and "administrative" laws, for wh ich it claims as support the Panel Report in Argentina 
– Hides and Leather .  According to the United States, only laws which are of an administrative nature 
must be administered in a uniform manner, wherea s no such obligation would exist with respect to 
laws which are of a "substantive" character.  
4.550  Apart from the fact that the United States furnis hes no explanation of what it understands by 
"substantive" and what by "administrative" laws, the EC does not believe this interpretation to be 
correct.  The Panel Report in Argentina – Hides and Leather does not provide any support for the US 
interpretation.  The obligation of uniform applicati on applies to all the measures of the kind referred 
to in Article X:1 GATT, regardless of whether they are "substantive" or "administrative" in nature.  WT/DS315/R 
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 The real distinction for Article X:3(a) GATT is thus not between substantive and administrative 
measures, but between administration and the measures to be administered. 
4.551  This matter is of great importance for all WTO Members where certain matters covered by 
Article X:3(a) GATT may be regulated at the sub-fede ral level.  This is even more important since 
Article X:3(a) GATT does not only apply to the administration of customs laws, but also to laws 
regarding the internal taxation and internal sale of  products.  In many WTO Members, including the 
United States, such matters are frequently govern ed by sub-federal laws, which may result in the 
existence of divergent rules across the territory of  such WTO Members.  If the US arguments were 
accepted, differences in sub-federal legislation w ould have to be regarded as incompatible with 
Article X:3(a) GATT.  This would upset the fe deral balance in numerous WTO Members, and can 
therefore not be a reasonable interpretation of Article  X:3(a) GATT.  This would be incompatible also 
with the findings of the GATT Panel in Canada – Gold Coins , which held that the GATT respects the 
internal distribution of compet ences within each WTO Member. 
4.552  The United States has wrongly argued that the EC interpretation would put "all laws and 
regulations that are instruments of customs admi nistration beyond the reach of the disciplines of 
Articles X:3(a) GATT".  
4.553  First of all, the EC argument applies only to those matters which are the subject matter of sub-
federal legislation, which is in the EC the case not ably for penalties.  In the EC, as in other WTO 
members, most areas of customs law are governed by laws at the federal level. 
4.554  Moreover, even where a law exists at the sub-fe deral level, this does not mean it is "beyond 
the reach" of Article X:3(a) GATT.  On the contrary, Article X:3(a) GATT requires the uniform 
administration of all laws, including those which might exist in a WTO Member at the sub-federal 
level, within the area in which they apply. 
4.555  Finally, the United States looses sight of th e actual object and purpose of Article X:3(a) 
GATT.  The purpose of this provision to ensure a cer tain minimum level of predictability and security 
as regards the administration of the covered laws an d regulation to WTO Members and traders.  This 
objective is entirely respected if laws which apply at a sub-federal level within a WTO Member are 
applied in a uniform manner within the territory in wh ich they apply.  It is not compatible with this 
objective and purpose to transform Article X:3(a) GATT into a provision which requires legislative 
changes, and notably a harmonization of  sub-federal within a WTO Member.  
(ii) Article X:3(a) GATT does not prescribe the ways in which WTO Members must administer 
their customs laws 
4.556  Article X:3(a) GATT contains an obligation to administer customs laws in a uniform manner, 
but does not prescribe the specific way in which WTO Members should administer their customs 
laws.  
4.557  At the level of principle, the United States does not appear to contest this point.  In fact, it 
states on a number of occasions that "prescribing the method for the EC to come into compliance with 
Article X:3(a) GATT is not necessary to resolve this dispute". 
4.558  However, the reality of the US claims is rather  different.  In particular, the United States is 
effectively requiring the EC to establish a cust oms agency, which in addition should have 
competences to issue advance rulings for a number of matters.  A more prescriptive application of 
Article X:3(a) GATT is hardly imaginable.  WT/DS315/R 
 Page 99 
 
 
 4.559  It is also interesting to note that the United States has so far not provided any explanation of 
how its claims relate to its ow n proposal made in the context of  the Doha Round Trade Facilitation 
Negotiations, which in particular foresee the creati on of an obligation to provide for advance rulings 
on tariff classification and valuation matters.  The United States has also not contested that one of its essential motives behind the present case is to infl uence the Doha Trade Facilitation Negotiations.  
4.560  The EC therefore maintains its view that th e United States is seeking an application of 
Article X:3(a) GATT which would be highly prescriptive in character, and effectively transform Article X:3(a) GATT into a basis for the harmonizat ion of customs laws and practices along the US 
model.  The EC submits that such an interpretation should be rejected. 
(iii) Article X:3(a) GATT lays down minimum standards 
4.561  The United States has attempted to deny the im portance of the statement of the Appellate 
Body in US – Shrimp , and criticized in particular that the Appellate Body "did not elaborate on what it 
meant by minimum standards".  However, this do es not change the fact that the Appellate Body 
qualified Article X:3 GATT as a provision which lays down certain minimum standards of transparency and procedural fairness.  While this  does not replace the need to interpret the actual 
terms of Article X:3(a) GATT, it does shed some light on the limited objective underlying this 
provision, which is directly opposed to the highl y ambitious interpretation advocated by the United 
States.  
4.562  In its First Written Submission, the EC has also  explained, with reference to the GATT Panel 
Report in EEC – Dessert Apples , that minor administrative differences in treatment cannot be 
regarded as implying a violation of Article X:3(a) GA TT.  This view has also been shared by Japan.  
In its response to a question by the Panel, the EC h as explained that this means that it is for the United 
States, as the complaining party, to show that vari ations of administrative practice, even where they 
existed, have a significant impact on traders.  
4.563  The United States has tried to sweep this case law aside by claiming that it has "provided 
evidence of a system that engenders and fails to cu re myriad divergences of administration in matters 
that go to the core of customs administration and affect traders liability for customs duty, as well as 
other aspects of their operations".  The EC does not  contest, for instance, that where the liability for 
customs duty is affected, this is significant for th e competitive situation of a trader.  However, as the 
EC has already remarked, for some of the other a lleged differences, for instance as regards the local 
clearance procedure or valuation audits, the Unite d States has so far provided no explanation as to 
why such differences, even if they ex isted, would be significant for traders. 
(iv) The meaning of "uniform administration" 
4.564  As the Panel in US – Hot Rolled Steel has held, uniformity can be assessed only on the basis 
of an overall pattern of customs administration.  On ly if, on the basis of such general patterns, a WTO 
Member's administration of its customs laws can be shown to be non-uniform , is the standard of 
Article X:3(a) GATT violated.
  Very similar views have also been expressed by certain of the third 
parties in the present case, namely Australia and Japan. 
4.565  The United States has tried to distinguish the present case from US – Hot Rolled Steel and 
EC – Poultry by arguing that these cases were not concerned with "geographical uniformity".  
However, the US fails to explain why "geographi cal uniformity" should be treated any differently 
from other kinds of uniformity, e.g., uniformity acro ss time.  Nor is it clear why a different standard 
would apply to the requirement of uniform admini stration on the one hand, and the requirement of 
impartial and reasonable administration, on the other.  The EC would also like to recall that it has WT/DS315/R 
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 been the United States itsel f, which – in cases such as US – Hot Rolled Steel  – has argued against 
judging compliance with Article X:3(a) GATT only on the basis of individual cases. 
4.566   In response to a question from the Panel, the United States has further elaborated that in the 
present case, "the question is not whether a particular administrative authority is  applying a particular 
law in a uniform manner", but "whether different authorities across the territory of a WTO Member 
[...] are applying various laws uniformly".  Appare ntly, the United States is thus suggesting that a 
stricter standard should apply to WTO Member s with a decentralized system of customs 
administration compared to WTO Members with a centralized customs administration.  The EC sees no basis for such double standards, which should therefore be rejected.  
4.567  Finally, contrary to what the US claims, the EC has never suggested that the pattern of non-
uniformity needed to be "neat".  If instances of non- uniformity in the system of a WTO Member are 
so widespread and frequent as to have a significant impact on the administration of that Member's system, then this will amount to a pattern of non-unif orm administration.  There is no need for them to 
be arranged in a particular pattern.  Therefore, the US argument that the standard set out by the Panel 
in US – Hot Rolled Steel would make it impossible to challenge an overall absence of uniformity is 
simply incorrect. 
(b) The burden of proof 
4.568  The burden of proof rests on the United States as th e complainant in the present case.  It is for 
the United States to bring forward sufficient eviden ce to establish that there is a pattern of non-
uniform administration in respect of the aspects of  EC customs law raised by the United States. 
4.569  In its First Written Submission, the United States failed to bring forward any evidence to this 
effect.  It limited itself to raising a small number of cases on issues of tariff classification and customs 
valuation.  A limited number of cases in a particular area are insufficient for assessing the overall administration of the EC's system.  Moreover, the cases raised by the United States in fact do not constitute examples of lack of uniformity in the EC's system.  
4.570  The Panel asked the United States a number of questions aimed at obtaining from the United 
States evidence concerning the actual incidence of  non-uniform administration in the areas of EC 
customs law raised by the United States. 
4.571  In its responses, the United States does not furnish a single new piece of evidence of non-
uniformity in the EC's system.  Instead, it responds that its claim "does not turn on the statistical 
frequency of non-uniform administration".  Moreover, it claims "that it is the EC, rather than the 
United States, that is likely to have the informa tion sought in the question", and requests the Panel to 
exercise its authority under Article 13 of the DSU to seek relevant information from the EC.  For 
instance, the United States suggests that the EC s hould be requested to provide "a statistically 
significant sample of BTI and other classification decisions from various member States (including explanations of the bases for those decisions) in  order to determine the frequency of divergent 
administration".  As another example, the United States suggests that the "Panel might seek from the 
EC information of the type that enabled the EC's C ourt of Auditors to make the findings contained in 
its report on customs valuation". 
4.572  These responses must be regarded as transparent a ttempts of the United States to rid itself of 
the burden of proof, and should be rejected as such.  It is not credible for th e United States to claim, 
on the one hand, that there is a widespread pattern of non-uniform administration in the EC, and then to claim that it does not have any evidence to support this claim.   WT/DS315/R 
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 4.573  Instead, the United States wishes to pass the burde n of proof to the EC by requesting that it 
should be the EC which provides the information re quested.  With this request, the United States is 
essentially suggesting that the EC should proof its  own innocence.  This request is not only 
completely without basis in WTO law, it also am ounts to a logical impossibility.  Whereas it should 
be possible for the United States to provide eviden ce of instances of non-uniform administration, if 
such instances in fact existed, it is logically impo ssible for the EC to proof that such instances never 
occur. 
4.574  For this reason, it would be entirely impractical  for the Panel to request the EC, as suggested 
by the United States, to provide "a statistically significant sample of BTI and other classification 
decisions from various member States (including e xplanations of the bases for those decisions) in 
order to determine the frequency of divergent admini stration".  Similarly, it is impractical for the 
United States to suggest that the "Panel might seek from the EC information of the type that enabled 
the EC's Court of Auditors to make the findings contained in its report on customs valuation".  The 
Report of the Court of Auditors was based on a udit visits that took place on the premises of the 
Commission and the customs administrations of 12 EC member States in 1999-2000. The US 
suggestion therefore amounts in essence to request ing the EC to conduct a new audit of customs 
valuation.  This is not a reasonable request to make  of a defending party in the context of proceedings 
under the DSU. 
4.575  Moreover, the request made by the United Stat es goes considerably beyond the functions of a 
Panel under Articles 13 of the DSU.  Whereas the A ppellate Body has confirmed that Panel's have a 
certain investigative authority, this  authority also has its limits, which were clearly spelt out by the 
Appellate Body in Japan – Agricultural Products II .  In the present case, the United States is asking 
the Panel to do precisely what the Appellate Body sa id it should not.  Having failed to make its own 
prima facie case, the United States is asking the Panel to seek the relevant information from the EC.  
In this way, the Panel would relieve the United Stat es of its original burde n of proof, and make the 
case for the complainant.  
4.576  The United States seems to believe that it can establish a lack of uniformity by making broad 
allegations of absence of uniformity in particular areas.  However, the administration of customs law in areas such as tariff classification or customs valuation depends on the particular circumstances of each case.  Accordingly, whether administration is uniform or not cannot be established without knowledge of the "particular details of each case", and it is the responsibility of the United States as 
the complainant to provide these details. 
4.577  Finally, while the EC can certainly not be expected to prove that it administers its laws in a 
uniform manner, it would like to point out that cer tain elements of the context of the present case 
provide an indication that the factual allegations made by the United States are incorrect.  The EC has already, in its First Written Submission, pointed out the almost complete lack of reaction by US industry and traders to the request by USTR for input to the present case. 
4.578  A similarly interesting indication is provided by the reactions of other WTO Members, and 
notably the third parties, to the present dispute.  Of the nine WTO Members which have chosen to 
become a party to the present dispute, not one has po inted to the existence of any examples of lack of 
uniformity.  The only third party which claimed that a lack of uniformity in the EC's practice existed 
is Korea.  However, Korea refused to do so, invoking "the business confidential nature of the 
underlying business transactions".  The EC consid ers that if Korea had indeed information which 
might be helpful for the EC to ensure a uniform ad ministration of its customs laws, Korea should have 
shared this information in the first place with the EC.  This would also be in accordance with the 
customs cooperation agreement between the EC and Ko rea, which provides for obligations of mutual 
information and assistance .
 WT/DS315/R 
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 4.579  Finally, the United States keeps on referring to  what it calls "blunt acknowledgements of how 
the EC system operates" by certain EC officials of institutions, and claims that the "cumulative 
message is that there is a problem of divergent administration".  The United States is referring here to a handful of dispersed statements by EC officials and institutions, which are taken out of context, and 
are of no relevance for the present case.  Most  of these statements should be seen as a normal 
reflection of the process of self-monitoring and improvement which is necessary for any system of 
customs administration in the context of a rapidly evolving world.  If every critical comment made in the context of WTO Member's administrative and regulatory processes were immediately interpreted 
as evidence of WTO-incompatibility, this would creat e a serious chilling effect on the internal policy 
debates of WTO Members.  
(c) General issues underlying the US claims under Article X:3(a) GATT  
4.580  In its First Written Submission, the EC has already addressed a number of general issues 
underlying the US claims under Article X:3(a) GATT,  including the role of the member States, the 
Commission, the Court of Justice, and the Customs Code Committee.  The United States has so far not responded in detail to these expl anations of the EC.  Instead, its  subsequent interventions have 
highlighted two central tendencies underlying the US case: first, the US attempt to force the EC to 
create an EC customs agency; and second, its tendenc y to belittle and ignore the functioning of the EC 
institutions and procedures designed to ensure a uniform application of Community law throughout 
the EC. 
(i) The US case is aimed at compelling th e EC to create an EC customs agency 
4.581  The US submissions confirm that the US case is essentially aimed at compelling the EC to 
establish an EC customs agency.  While the United States has formally claimed that prescribing the 
method for the EC to come into compliance with its obligations under Article X:3(a) GATT is "not 
necessary to resolve this dispute", its claims a nd submissions in the present dispute tell a very 
different story.  Indeed, the alleged need for an  EC customs agency is a recurrent theme in the 
submissions of the United States.  Consequently, the United States has referred to the creation of such 
an agency as an "obvious option" for addressing its claims.  
4.582  That the US case is exclusively aimed at the creation of an EC customs agency is also 
illustrated by the US response to a Panel's questi on on the specific measures the United States would 
expect the EC to adopt to address its claims.  The United States referred only to creation of a customs agency.  While the United States indicated that it did not "rule out" that other options might exist for addressing its claims, it failed to identify any othe r concrete measures which the EC could take. 
4.583  The exclusive focus of the United States on the establishment of an EC customs agency is 
also revealed by the US respon se to a Question by the Panel, wh ere it asked the United States to 
comment on the EC's observation that the US criticisms of the ECJ judgment in Timmermans was 
inconsistent with its criticism of the decision of the UK Court in Bantex . In response, the United 
States explained that in the absence of a centralized  customs authority, any scenario would lead to 
non-uniform administration. 
4.584  In the view of the United States, in the absence of such an agency, no modification to the EC's 
rules and procedures in the areas of tariff classifi cation, customs valuation and customs procedures 
would be sufficient to address the US claims.  
4.585  Another confirmation of the nature of the US cl aims is the "wish list" which the United States 
addressed to the EC following the co nsultations in the present dispute.  This wish list included as its 
first point the  "establishment of a single, centraliz ed EC authority for issuing advance rulings, within  WT/DS315/R 
 Page 103 
 
 
 a brief, specified period following request, to traders regarding matters including classification, 
valuation, and origin (both preferential and non-preferential)". 
4.586  The United States has attempted to present this request as a sort of concession, since the 
agency in question would be responsible only for i ssuing advance rulings.  In response, the EC would 
recall that there is – with the exception of origin  matters – currently no obligation to provide for 
advance rulings on customs matters.  Accordingly, the suggestion that the EC should create an agency 
with a competence to issue such ruli ngs goes beyond current WTO commitments. 
4.587  Overall, it becomes clear that the US case is not concerned with the actual administration of 
EC customs law, but is an extremely ambitious case aimed at a complete overhaul of the EC's system 
of customs administration.  It would leave the EC  with almost no other choice but to establish an 
agency with operational tasks which are unprecedented in  the history of the EC.  Such an enterprise 
would entail profound changes in the way EC law is  administered, and have legal, financial and 
personnel implications which are very difficult to proj ect at the current stage.  The EC also doubts that 
this could be regarded as a "reasonable measure"  within the meaning of Article XXIV:12 GATT. 
4.588  More importantly still, executive federalism is a feature not just of EC customs law, but of EC 
law in general.  Since Article X:3(a) GATT applies not only to customs matters, but to all the matters 
referred to in Article X:1 GATT, the issues raised in the present case do not seem necessarily limited to the field of customs, but concern almost areas of EC law.  Accordingly, it is a frontal attack on the 
executive federalism of the EC legal order, with im plications that would go far beyond the area of 
customs. 
4.589  This claim cannot have a legal basis in Article  X:3(a) GATT.  This provision provides for 
certain minimum standards of procedural fairness  and transparency.  Like the WTO Agreements 
overall, it does not prejudge the internal autonom y of WTO Members on fundamental questions of 
internal organization and administration. 
(ii) The United States misrepresents the EC legal system 
4.590  In its First Written Submission, the EC has set out in detail how the EC legal system ensures 
the uniform interpretation and application of EC law through the EC.  The EC has also set out how the 
various institutions and actors involved contribute to the uniform application of EC customs law. 
4.591  In its subsequent submissions, the United St ates has provided almost no reaction to these 
explanations of the EC. Instead, the United States c hooses to persist in its highly selective reading of 
the EC legal system, and ignores everything that do es not fit into the negative picture it wishes to 
draw.  The dismissive approach of the United States  towards the EC legal system is reflected in a 
repeated statement, where the US cl aims that the EC system consists in "a loose web of principles, 
instruments, and institutions, including non-binding guidance, plus general ob ligations of cooperation 
between member States, plus discretionary referra ls of matters to the Customs Code Committee". 
4.592  The EC considers such statements to be de rogatory towards the EC as a whole.  The 
mechanisms which the EC has describ ed are typical not only for the area of customs law, but for the 
way in which the uniform interpretation and applica tion of EC law is ensured throughout the EC.  
Accordingly, if the United States considers the EC  customs union to constitute a "loose web", then 
presumably this must apply to the EC as a whole.  
4.593  Such statements betray a lack of understandi ng and appreciation of the history and success of 
European integration over the last 50 years.  It may also reflect the fact that there are considerable 
difference between the constitutional structures a nd processes of the United States on the one hand, WT/DS315/R 
Page 104  
 
 and the EC on the other.  However, such differen ces must be tolerated within the WTO, and cannot 
simply be presumed to amount to violations of Article X:3(a) GATT.  
4.594  As regards the role of the Commission, the Court of Justice, and the Customs Code 
Committee, the United States has so far not furthe r substantiated its criticisms.  As regards the 
Customs Code Committee the United States, when asked whether it had any evidence to proof its 
allegation that decision-making in the Committee h as become more difficult since the most recent 
enlargement on 1 May 2005, the United States failed to produce the requested  evidence, and instead 
stated that this was "evident".  In addition, it again referred to a statement from an EC official.  
However, this statement was made in a personal capacity and right after the entry into force of 
enlargement, and therefore can hardly be rega rded as "evidence" of what has happened since 
enlargement.  
(d) The US claims under Article X:3(a) GATT 
(i) Tariff classification 
Binding tariff information
 
The alleged risk of BTI shopping 
4.595  The Panel asked the United States to provide evidence that "picking and choosing" actually 
occurs in the EC's BTI system.  In response, th e United States failed to provide such evidence. 
Instead, it attempts to circumvent the question by referring to observations which are of no relevance 
to the question. 
4.596  First, the United States refers to a passage from Panel Report in EC – Chicken Cuts , in which 
the EC is reported to have stated that it is possibl e under EC law to withdraw an application for a BTI 
where the outcome is considered unfavourable by the importer.  However, this statement does not 
contain anything that would indicate that BTI shoppi ng occurs in the EC.  Since BTI is granted upon 
application, and in the interest of the applicant, it is normal that the application can be withdrawn until 
the BTI has been issued.  Before  the issuance of BTI, the appli cant will in most cases not know the 
tariff classification envisaged by the customs authori ties.  In contrast, once the BTI has been issued, 
the application can no longer be withdrawn.  In a ddition, it should be noted that all applications, 
including those which have been withdrawn, are en tered into the version of the EBTI data base to 
which the customs authorities have access. 
4.597  Second, the United States claims  that the issuance of BTI is  "heavily skewed in favor of 
certain member States", and claims that this "skewing suggest strategic selection of the member States in which importers apply for BTI".  The EC consid ers that the fact that the authorities of certain 
member States issue more BTIs than others simp ly reflects differences between member States in 
terms of market size, geographical location, tr ading patterns, other practical considerations.  
4.598  Finally, the US states that "importers regular ly approach the US embassies in EC Member 
States to enquire as to the optimal authorities from which to apply for BTI".  The EC would remark 
that even if such questions were asked, this is no pr oof that divergent practices in fact occur.  Indeed, 
there is no "optimal authority", and the applica tion should be submitted to the competent Member 
State authorities as determined by Article  6(1) of the Implementing Regulation. 
The alleged difficulties of detecting and correcting divergent BTIs 
4.599  The United States has also argued that the EC system does not provide for sufficient 
mechanisms to detect and correct diverg ences between BTIs, should they occur.   WT/DS315/R 
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 4.600  In its responses to the Panel's question, the Un ited States has criticized that the EBTI data 
base "does not reveal in any detail the rationale applied by different authorities in classifying a 
particular good in a particular way".  The EC is ast onished by this statement.  For each BTI issued, the 
EBTI data base (in both its versions) includes a detail ed description of the product sufficient to permit 
their identification and classification, the CNN c ode under which the product was classified, and the 
justification of this classification.  The justifica tion will typically identify th e interpretative rules and 
principles applied, and where appropriate other rele vant authority, such as case law of the Court of 
Justice.  The EC considers this information entirely sufficient to en sure full information about the BTI 
practice of EC customs authorities. 
4.601  The EC has also explained that the EBTI data ba se is very well received and intensively used 
by traders and by customs authorities, as eviden ced by the fact that the average number of 
consultations per month in the first half of 2005 was about 324.000.  The United States has argued 
that this number might "indicate anything from academic curiosity to collection of statistical 
information".  The EC finds the explanation th at 324.000 consultations per months would be 
generated by "academic curiosity" or "collection of st atistical information" remarkably far-fetched.  It 
is clear that the EC EBTI data base is a useful  tool for securing a uniform classification practice, 
which is widely used by trader s and customs authorities alike. 
The US claim that member States do not treat  BTI issued by other member States as 
binding 
4.602  In its First Written Submission, the United States has claimed that "Member States do not 
always treat BTI issued by other Member States as bi nding".  Once again, the United States has failed 
to provide specific examples to prove its allegati on.  Instead, it points to a survey of a trade 
association to which it has already referred to in  its First Written Submission.  According to this 
survey, one company reported that "binding tariff in formation from Germany is still not accepted by 
other EU countries, especially Greece and Portugal". 
4.603  The EC contests the existence of any probl em regarding the recognition of BTI from 
Germany in other EC member States.  The "survey"  referred to by the United States is no "evidence" 
to the contrary.  It merely reflects a comment made by one unidentified company which is not 
supported by any further explanation or evidence.  Ac cordingly, it is impossible to verify the accuracy 
of the statement.  The EC would remark that even  if an importer claims that BTI was not accepted, 
this might in fact reflect a range of problems of an entirely different kind,  for instance a lack of 
identity of the products imported with those described  in the BTI.  Moreover, if indeed a customs 
authority fails to recognize BTI issued by anothe r Member State, the importer can obtain judicial 
review.  The importer can also inform the European  Commission, but the EC is not aware of this 
having occurred. 
4.604  Second, the United States refers to a statemen t by the EC in the context of the dispute EC – 
Chicken Cuts , where the EC is quoted as asserting that a particular "interpretation" was not followed 
in other EC customs offices.  As the EC will ex plain further below, there was no difference of 
interpretation or application of EC classification ru les in this case.  However, for the purposes of the 
present discussion, it suffices to point out that the EC's statement related only to "interpretation". Nowhere in the Panel Report in EC – Chicken  Cuts has the EC said that BTI was not recognized when 
presented by the holder.  Accordingly, the statem ent quoted by the United States is not a pertinent 
answer to the Panel's question. 
4.605  Finally, the United States refers the Panel to the decision of the Main Customs Office Bremen 
in the Bantex  case, in which the Customs Office noted that "numerous binding customs tariff 
decisions have been handed down regarding compar able goods".  This remark once again betrays a 
misunderstanding of how the EC's BTI system works.  BTI is binding on the customs authorities only WT/DS315/R 
Page 106  
 
 as against the holder of the BTI and it does not appear that Bantex  GmbH was the holder of BTI for 
the products at issue.  Accordingly, once again,  the United States responds to the Panel's question 
with an example that is of no relevance to the question.  In addition, it is noted that in the Bantex  case, 
the question was not whether there existed BTI fo r comparable goods, but whether the goods were 
identical to those described in th e BTIs.  As this was not the case,  the example is even less apt to 
support the US claim. 
The legal effect of BTI 
4.606  In its First Written Submission, the United Stat es has also made numerous criticisms of the 
legal effects of BTI, which relate notably to the Timmermans case law of the European Court of 
Justice.  These criticisms are unfounded: the Timmermans  case in fact can contribute to the uniform 
application of EC customs law.  The EC has also poi nted out that the US' arguments were inconsistent 
with its criticisms of the decision by the UK Court in the Bantex case. 
4.607  When questioned by the Panel about this obvious  inconsistency, the United States responded 
that "in the absence of a centralized customs admini stration", both situations, i.e. either allowing the 
revocation of BTI or not allowing it, could lead to a lack of uniformity.  As the EC has already 
explained above, this US response demonstrates irrefutably that the specific features of the EC's BTI 
system are not in any way problematic from the poi nt of view of the uniform application of EC 
classification rules.  Rather, the US case is uniquely  aimed at compelling the EC to create an EC 
customs agency. 
4.608  That there is nothing wrong with the EC's BTI sy stem, and notably the effect of BTI in the EC 
legal order, is also borne out by a comparison with the US rules on advance rulings.  For instance, the 
United States has criticized in its First Written Subm ission that BTI in the EC is "specific to the 
holder".  Interestingly, exactly the same appears to  be true for advance rulings in the United States, 
where US law explicitly cautions that "no other pe rson [than the one to whom the ruling is addressed] 
should rely on the ruling letter or assume that th e principles of that ruling will be applied in 
connection with any transaction other th an the one described in the letter". 
4.609  Similarly, US law also provides that a ruling letter may only be invoked "in the absence of a 
change of practice or other modification or revoca tion which affects the principle of the ruling set 
forth in the ruling letter".  The EC fails to see how this is fundamentally different from the 
Timmermans case law. 
4.610  The rather limited effect of rulings issued by US Customs has also been confirmed by the US 
Supreme Court in United States v. Mead Corp , in which the Court held that ruling letters of US 
Customs have no legal force and that Customs ha s regarded a classification as conclusive only as 
between itself and the importer to whom it was issued. 
Alleged divergences in EC classification practice
 
Blackout Drapery Lining 
4.611  In its First Written Submission, the EC has alre ady demonstrated that the products at issue 
were not identical to the products described in th e BTI referred to by the United States, and that 
accordingly, this case does not demonstrate a lack of  uniformity in the EC's classification practice. 
4.612  When required by the Panel to comment on the EC 's explanations, the United States starts its 
observations by contesting the EC's statement that  the product "before the German authorities was not 
flocked".  In support, the United States refers to a "decision" of the Main Customs Office Hamburg on 
which the Main Customs Office Bremen is supposed to  have relied.  These statements are incorrect as  WT/DS315/R 
 Page 107 
 
 
 the letter of the Main Customs Office Hamburg rela ted to an administrative appeal introduced by a 
company called Ornata GmbH.  This appeal is in  any way related to the administrative appeal 
introduced by Bautex-Stoffe GmbH which was the subj ect of the decision of the Main Customs Office 
Bremen, let alone that the Main Customs Office Bremen relied on the letter of the Main Customs 
Office Hamburg.  
4.613  It is also noted that contrary to the US cl aims, that letter does not contain a decision, but 
rather requested the observations of the importer on the envisaged classification.  In response to this 
letter, the Ornata GmbH withdrew its protest by letter of 16.9.1998. 
4.614  As regards the substance, the United States ac cuses the decision of the Main Customs Office 
Bremen of being incompatible with an HS explanatory note to heading 59.07.  This statement is 
manifestly wrong.  HS explanatory note (G)(1) to heading 59.07 provides that the fabrics covered 
include "fabric, the surface of which is coated w ith glue (rubber glue or other), plastics, rubber or 
other materials and sprinkled with a fine layer of other materials such as (1) textile flock or dust to 
produce imitation suèdes".  Therefore, the presence of  textile flock or dust was a relevant criterion for 
the classification under heading 59.07.  The d ecision of the Main Customs Office Bremen took 
account of this factor and, since the product was not flocked, it could accordingly not be classified 
under heading 59.07.  
4.615  The United States also unwarrantedly criticises the decision of the Main Customs Office 
Bremen for having considered the density of the web of the product.  According to Note (2)(a)(5) to 
Chapter 59 of the CN, heading 5903 does not apply to plates, sheets, or strips of cellular plastics, 
combined with textile fabric, where the textile fabr ic is present merely for reinforcing purposes.  The 
question whether the web was fine is a relevant criterion for establishing whether it is present for 
reinforcement purposes or not.  
4.616  The United States has also criticized the EC fo r having referred to a classification regulation 
concerning a type of ski trousers.  This criticis m is unwarranted.  Commission Regulation 1458/97 
concerned the classification of garments under he ading 6210, which covers "garments made up of 
fabrics of heading 5602, 5603, 5903, 5906 or 5907".   Accordingly, the classification regulation in 
question concerned implicitly the classification of the fabric out of which the trouser was made.  In 
doing so, it had to apply Note 2(a)(5) to Chapter 59 of the combined nomenclature, i.e. determine whether the fabric serves merely for reinforcing pu rposes, and in this context took into account a.o. 
the "tight weave" of the fabric.  Accordingly, Commission Regulation 1458/97 was certainly a relevant precedent for the interpretati on of note 2(a)(5) to Chapter 59.   
4.617  For the same reason, the EC can also not find  anything contrary to Community law in the 
"interpretative aid" referred to by the lower German  customs office: the criteria of the density of the 
web mentioned in that text was fully compatible  with Community law and the German text was 
purely an interpretative aid without any legally binding character. 
4.618  Finally, the United States also alleges that by  relying on the tightness of the fabric, the Main 
Customs Office Bremen violated the chapeau of Note 2(a) to Chapter 59, which states that 
heading 5903 applies to "textile fabrics impregnate d, coated, covered or laminated with plastics, 
whatever the weight per square meter".  This criticism is equally unjustified because the weight 
referred to is the weight of the entire product, i. e. the fabric as impregnated, coated, covered or 
laminated.  The Main Customs Office Bremen did not  consider the weight of the product, but rather 
the density of the web of the polyester fabric, which is only a part of the product.  Accordingly, the 
decision of the Office is entirely compatible w ith the Chapeau of Note 2(a) to Chapter 59. 
4.619  Furthermore, the United States attempts to find fault with individual aspects of the reasoning 
of the German customs authorities are also irrele vant for the present case, which does not concern the WT/DS315/R 
Page 108  
 
 question under which heading a particular produc t should properly have been classified, but the 
question of uniformity of administration of EC classification rules.  Moreover, to the extent that the United States considers EC practice to be incompat ible with an HS explanatory note, it could raise 
this matter in the context of the WCO in acco rdance with Article 10 of the HS Convention. 
4.620  It is clear that the products as described in the decision of the Main Customs Office Bremen 
were not identical to the products described in the BTIs referred to by the United States, since the 
former were not flocked with textile flock, while  the products in the BTIs are described as having 
been flocked.  On the basis of these product descripti ons, the products had to be classified differently.  
Accordingly, this difference in tariff classification is  not a lack of uniformity, but on the contrary the 
result a correct application of the Combined Nomenclature. 
4.621  Moreover, if an error had occurred in respect of the description of the goods by the German 
customs authorities, the importers in question coul d have challenged the decision before the German 
courts.  However, no such action has been taken. 
LCD Monitors 
4.622  The EC has notably pointed to the fact that Council Regulation 493/2005, by suspending the 
tariff duties under heading 8528 for monitors up to a certain size, ensures a uniform tariff treatment 
for all the monitors covered by the Regulation.  Th e United States continues to criticize this regulation 
as being "provisional" and a "stop-gap measure" and it argues that a duty suspension is "far different 
from a classification regulation". 
4.623  The EC considers these objections to be unfounde d.  That the regulation is valid only until 
31 December 2006 reduces in nothing its value for ensuring a uniform tariff treatment throughout the 
EC today.  Moreover, before the expiration of the measure, the EC will examine the situation and will 
adopt the measures which are necessary.  The Unite d States cannot build an allegation of non-uniform 
administration on the mere speculation that the EC mi ght fail to take certain measures in the future.  
4.624  The United States is also wrong to claim that Regulation 493/2005 fails to ensure uniform 
administration because the measure concerns the suspension of a duty rate, rather than the 
classification of a product.  The United States fails to appreciate that Article X:3(a) GATT does not 
require uniform administration for its own sake, but rather in order to ensure uniform conditions of 
treatment for traders.  Accordingly, Article X:3( a) GATT can be held to be violated only where a 
variation of practice in fact has a significant impact  on traders.  In the case of LCD monitors, due to 
Regulation 493/2005, for the monitors covered by th e regulation, there is no difference in tariff duties 
between monitors classified under heading 8471 an d those classified under heading 8528, since the 
tariff rate for both will be 0%.  Nor are there any othe r relevant differences in treatment.  Accordingly, 
even if there were differences in tariff classificati on for the monitors at issue, this would have 
absolutely no impact on traders.  This is why the trading community was in fact strongly supportive of the measure. 
4.625  In addition, the EC considers that even if  the Panel were to hold that there was an 
incompatibility with Article X:3(a) GATT, this incompatibility could not be held to constitute 
nullification or impairment of any benefit accruing to the United States under Article X:3(a) GATT. Since the United States has not contested that th e tariff treatment for the monitors covered by 
Regulation 493/2005 is uniform, and the duty ra te is 0%, the presumption of nullification and 
impairment established by Article 3.8 DSU would therefore have to  be considered as rebutted in the 
present case. 
4.626  The United States also criticizes the conclusions  reached by the Customs Code Committee at 
its 346
th meeting of 30 June to 2 July 2004, according to which "unless an importer can demonstrate  WT/DS315/R 
 Page 109 
 
 
 that a monitor is only to be used with an ADP ma chine (heading 8471) or to be used as an indicator 
panel (heading 8531), its has to be classified in head ing 8528".  The US argues in particular that this 
conclusion is incompatible with Note 5 to Chapte r 84 of the Common Customs Tariff, according to 
which a unit is to be regarded as part of a complete sy stem if  "it is of a kind solely or principally used 
in an automatic data-processing system". 
4.627  The EC recalls that the present case does not concern the correctness of individual 
classifications, but rather the question of uniform administration.  The United States does not show 
that there is any lack of uniformity; rather, it qu estions the substantive classification practice of the 
EC.  Such arguments are not admissible under Article X:3(a) GATT.  This has also been confirmed by US – Hot Rolled Steel , in which the Panel held that it was not  "properly a Panel's task to consider 
whether a Member has acted consistently  with its own domestic legislation". 
4.628  Moreover, the US allegations that the conc lusions of the Customs Code Committee are 
incompatible with note 5(a) to Chapter 84 are fal se.  On the basis of several presentations by the 
industry concerned, the Committee concluded th at industry had not succeeded in presenting any 
criteria on which principal use could be established. 
4.629  The EC would add that it does not understand wh at purpose conclusions of the Customs Code 
Committee could have if, as the United States seems to suggest, they should be limited to restating the 
language of the Combined Nomenclature.  In order to provide for a uniform application of the CN, it 
must be possible for the Committee to reach, on th e basis of the facts available, and acting in 
conformity with the Combined Nomenclature, sp ecific conclusions concerning the classification of 
particular goods.  It is in this way that th e Committee can and does contribute to the uniform 
classification of goods throughout the EC.  The US  suggestion that the Committee's conclusions 
"actually detracts rather than promotes uniformity" is thus manifestly unfounded. 
4.630  The US' own practice does not seem to differ greatly  from that of the EC on this point.  In its 
First Written Submission, the EC had already point ed to a ruling in which US Customs had found it 
impossible to establish the "principal use" of a m onitor.  In another recent ruling on LCD monitors, 
US Customs found that "the dual purpose of the mon itors is indicative of a lack of principal use for 
this good", and accordingly classified the good under h eading 8528.  Similarly, in a recent guidance to 
traders on flat panel display modules, US Customs st ated the following: "The issue of principal/sole 
use has been difficult to ascertain in  the past.  As a result of this review by US Customs, it has been 
determined that only specific size flat panel display modules are principally used in ADP system [...]".  
Further examples of alleged non-uniformity in classification practice 
4.631  The Panel has asked the United States to prov ide evidence for its allegation that there are 
other instances of non-uniform administration in the cl assification practice of the EC.  In response, the 
United States refers to a limited number of largel y unsubstantiated statements which it had already 
made in its First Written Submission. 
4.632  First, the United States refers to a questionna ire of a trade association of March 2005, in 
which a respondent company is reported to have stated  that "[u]nisex articles or shorts have different 
classifications in Italy and Spain to those in Germ any".  This "survey" is based on a comment from a 
single unidentified company, and is not supported by fu rther evidence or explanations.  On this basis, 
it is impossible to ascertain the precise nature of the products concerned, or to identify the questions 
of tariff classification which might be involved.  A ccordingly, the EC considers that this statement 
does not provide any evidence of a lack of uniformity in EC classification practice. 
4.633  Second, the United States refers once again to Case C-339/98, 
Peacock , in which Germany 
had classified certain network cards differently fro m the classification envisaged in BTIs issued by WT/DS315/R 
Page 110  
 
 certain other member States.  The EC fails to se e how this case illustrat es an absence of uniform 
administration.  First, the EC would recall that th is case relates to importations carried out before 
1995.  In 1995, however, the European Commission had,  in order to ensure a uniform application of 
Community law, adopted Regulation 1165/95 foreseei ng the classification of the adapter cards in 
question under heading 8517 (electrical apparatus for line telegraphy). 
4.634  The classification by the German customs aut horities was appealed in the competent courts, 
which referred the question to the European Court of Justice.  By judgment of 19 October 2000 in case C-339/98, the Court of Justice decided that th e products in question had to be classified under 
heading 8471 (automatic data-processing machines a nd parts thereof).  In a further ruling, in case 
C-463/95, Cabletron , the Court of Justice confirmed th is interpretation and decided that 
Regulation 1165/95 was invalid.  
4.635  Overall, the case of network cards is a ca se in which the Commission had already in 1995 
taken the necessary measures to ensure a uniform cl assification practice.  As the United States itself 
has recognized, what is significant is not that a divergence may occur, but rather that it is addressed 
and removed once it occurs.  This is precisely what happened in Peacock . 
4.636  In addition, the EC would remark that the correct classification of network equipment is a 
complex technical question with which many custom s authorities have had to come to terms.  The 
United States itself experienced di fficulties in classifying networked equipment, and has revoked or 
modified numerous rulings concerning the classificati on of such equipment.  Finally, the classification 
of network equipment has also led to a WTO dispute between the EC and the United States 
concerning the correct classification of LAN equipm ent, in which the United States unsuccessfully 
alleged that due to its classification practice, the EC was not respecting its tariff concessions in respect 
of LAN equipment.  The EC does not find it appr opriate that the United States raises what is 
essentially a substantive classification question in the context of the present case, which is concerned 
with uniformity of administration under Article X:3(a) GATT. 
4.637  Third, the United States refers to the dispute EC – Chicken Cuts .  However, it must be 
recalled that EC – Chicken Cuts concerned the interpretation of the EC's tariff concessions, and 
incidentally the question of the correct classificati on of the products in question.  In contrast, in EC – 
Chicken Cuts , the complainants did not make any clai ms under Article X:3(a) GATT, and it was 
never alleged that the EC's classification practice ha d not been uniform.  On the contrary, the facts of 
the case show that for the entire period in questi on, the EC had measures in place which ensured the 
uniform tariff classification of the products.  On this  basis, the Panel and the Appellate Body came to 
the conclusion that the EC's classifi cation practice had been entirely uniform.  
4.638  Finally, the United States refers again to an alleged lack of uniformity regarding the 
classification of drip irrigation products.  This is a case of temporarily diverging BTI which was 
promptly addressed through the adoption of a classification regulation, and which is today resolved. 
4.639  Binding tariff information was issued by Fr ance on 6 July 1999 for a Roberts Irrigation 
Product (Ro-Drip) under CN code 8424 81 10.  On 9 February 2001, Spain issued BTI in which it 
classified the product under CN code 3917 32 99.  Th is issue of divergent BTI was discussed by the 
Tariff and Statistical Nomenclature Section of the Customs Code Committee.  During the process, Roberts Irrigation Systems made a submission to th e Committee.  Furthermore, the US government 
also made several submissions to the Commission.   The issue was resolv ed by the adoption of 
Commission Regulation (EC) No. 763/2002 of 3 Ma y 2002, which classified the product under 
heading 3917 32 99.  C onsequently, France revoked and replaced the previously issued binding tariff 
information.   WT/DS315/R 
 Page 111 
 
 
 4.640  The United States has alleged that this case suppor ts its claims because one or more member 
States did not treat as binding BTI issued by other me mber States.  This remark appears beside the 
point, since the BTI were not issued  for the same holders.  In any ev ent, as the United States has itself 
argued, what matters is not whether divergen ces occurred, but whether they are addressed and 
removed when they occur.  In the case of drip i rrigation products, this is precisely what happened.  
Once the divergent BTIs had been detected, the case was promptly addressed and solved within 
15 months, which is a period of time that is r easonable for for definitely resolving a complex 
classification issue. 
(ii) Customs valuation 
Report 23/2000 of the EC Court of Auditors  
4.641  The Panel asked the United States to provide  evidence as regards the incidence of non-
uniform administration with respect to the issues of customs valuation discussed in Report 23/2000 
and referred to by the United States.  In response, th e United States declined to provide such evidence, 
arguing that its claim "does not turn on the statis tical frequency of non-uniform administration". 
4.642  The EC disagrees with this response.  First of all, a violation of Article X:3(a) GATT requires 
the existence of a pattern of non-uniform administra tion.  Accordingly, the statistical incidence of 
instances of non-uniform administration in the areas in  question is a highly relevant question.  Since 
the United States has failed to provide su ch evidence, it has failed to establish a prima facie case of 
violation of Article X:3(a) GATT. 
4.643  More importantly still, with its references to Report 23/2000, the United States has not proved 
the existence of a lack of uniformity in the EC's sy stem.  The Report of the Court of Auditors did not 
have the purpose of assessing compliance with Articl e X:3(a) GATT.  Moreover, for all the issues 
raised in the report, the report has been followed up by the EC institutions , and wherever necessary, 
the appropriate measures have been taken. 
4.644  The US response to these remarks is to ask the Panel "to exercise its authority under 
Article of the 13 DSU [...] to seek information of th e type that was made available to the Court of 
Auditors in preparing its report on valuation".  As  the EC has already remarked, this request amounts 
to shifting the burden of proof to the EC, and should therefore be rejected.  
4.645  Moreover, the US request is also impracticable . Report 23/2000 was based on audit visits that 
took place on the premises of the Commission and the customs administrations of 12 EC member States in 1999-2000.  Whatever information the C ourt of Auditors, which is an independent EC 
institution, may have collected at that time is  in the possession of the Court of Auditors only.   In 
addition, such information would reflect the situ ation in 1999-2000, but not the situation today.  
Accordingly, the US suggestion therefore amounts in essence to requesting the EC to conduct a new 
audit of customs valuation.  In this way, the United States seems to want to transform an EC 
institution which is devoted to ensuring the prope r collection and administration of the EC's own 
resources into a mechanism intended to provide it with the necessary evidence for conducting a WTO 
challenge.  The US request must be regarded inadmissible.  
4.646  As regards the issue of repair costs covere d by a warranty, the United States now seems to 
accept that this issue has been resolved by Commission Regulation 44/2002, of 11 March 2002.  
However, the United States faults the EC for allegedly having taken mo re than 12 years to resolve the 
matter.  First of all, it is not accurate that the EC tolerated a lack of uniformity for 12 years.  More 
importantly still, what matters is that, on a complex issue of customs valuation, the EC itself detected 
the problem and took the necessary measures to correct  it.  Accordingly, rather than showing any 
failure in the EC's system, this case shows that the EC system functions properly. WT/DS315/R 
Page 112  
 
 4.647  The United States also refers agai n to the specific issue of valuation audits.  In particular, the 
United States refers to a statement in the report of the Court of Auditors according to which one 
member States lacked the authority to perform post-importation audits.  
4.648  In this respect, the EC would like to clar ify that under Article 76(2) CCC, every Member 
State may proceed to all necessary verifications in or der to satisfy themselves of the accuracy of the 
particulars contained in the declaration.  This al so includes all questions regarding the value of the 
goods.  The Member State referred to by the Cour t of Auditors was Greece, which, in 2000, has 
established a service with powers to conduct post-clear ance audits.  In addition, the EC has also 
referred to the EC Customs Audit Guide, which ensures a uniform audit practice across the EC. 
The Reebok case
 
4.649  The Panel has requested the United States to provide concrete evidence to support its 
submission that there is a lack of uniform applica tion as regards the treatmen t of related parties under 
Article 143(e) of the Implementing Regulation.  In  its response, the United States informs that its 
description of the case is based on a "narrative account  by the importer at issue".  Moreover, the US 
states that "due to concerns relating to the pe ndency of litigation over the matter at issue and the 
commercial sensitivity of the information that sup porting documentation would contain, the importer 
declined to provide documentation at this time". 
4.650  The United States does therefore not provide any ev idence for its claim that there is a lack of 
uniformity in the application of Article 143(1)(e) of  the Implementing Regulation.  The United States 
cannot justify this failure to discharge its burden of proof on the basis of the refusal of the importer in 
question to provide the necessary evidence.  It is fo r the United States itself, as the complaining party, 
to provide the evidence fo r the claims it makes. 
4.651  The United States has repeatedly stated that the "EC does not deny the essential facts". The 
EC has certainly not contested that it has been contacted by Reebok with a problem regarding the 
application of Article 143(1)(e) of the Implementin g Regulation by the Spanish customs authorities.  
However, the EC contests that there is a problem of non-uniform application of this provision.  
4.652  The United States also faults the EC for havi ng stated that the Commission and the Customs 
Code Committee cannot serve as substitutes for the nor mal appeal procedures applicable in individual 
cases, and has claimed that there is "no EC institu tion before which the trader has a right to obtain 
uniform treatment".  This is in stark contrast to th e fact that according to the US' own statements, the 
case is currently pending before the Spanish cour ts, and the importer concerned refuses to share 
information on account of this pendency.  Moreover, as the EC has explained repeatedly, where a 
court of a Member State applies Community law, it acts as an organ of the EC.  Finally, if there is a 
question of interpretation of Community law, th is question can – and in certain cases must – be 
referred to the European Court of Justice by way of  a request for a preliminary ruling, which ensures a 
uniform interpretation of EC law throughout the Community.  
4.653  In addition, the United States has referred to a decision by the European Ombudsman on a 
complaint by an individual importer.  The EC can confirm that the complaint was made on behalf of 
Reebok, which claimed that the European Commission was not properly discharging its responsibilities in respect of the admi nistration of customs valuation law.   
4.654  At the outset, the EC would like to point out that the Ombudsman did not take a decision on 
the substance of the complaint.  Rather, the compla inant withdrew the complaint indicating that the he 
"was satisfied with the position the Commission ha d adopted on the matter and with its proposal to 
look into pending problematic issues".   WT/DS315/R 
 Page 113 
 
 
 4.655  Second, the EC would like to recall that th e European Ombudsman is another mechanism 
which contributes to the proper administration of EC la w by the EC institutions.  The fact that there is 
a decision of the European Ombudsman is therefor e not as such problematic, but rather shows the 
working of the various mechanisms of the EC's system.  
4.656  Finally, the EC would remark that the facts as set out in the decision are not presented entirely 
correctly.  Notably, the United States quotes from a letter of the European Commission of 
20 December 2000, in which the Commission is supposed  to have stated "that the interpretation issues 
raised by the complainant were a matter for the national customs authorities".  This quotation is not 
correct.  In its letter of 20.12.2000, the Co mmission stated that "[t]he application  of this criterion [of 
Article 143(1)(e) Implementing Regul ation] in individual cases is of course a matter for national 
administrations and the Commission Services could onl y express an opinion if a detailed file on all 
aspects of the case was to be forwarded by the cust oms services in question.  However, our services 
do not, in general, have a respons ibility to undertake a detailed examination of very specific cases, 
this being the task of the national administrations".  
4.657  The EC considers that this statement reflects correctly the division of competences between 
the European Commission and the customs authorities of the member States, which are competent for 
the application of customs law in individual cases.  It is neither possible nor appropriate for the Commission to substitute itself for the competent au thority simply because in an individual case of 
application a trader is not satisfied with an appro ach taken by the customs au thority.  On the contrary, 
the European Commission is responsible for mon itoring and ensuring the correct and uniform 
interpretation and application of EC customs law.  
4.658  In the case in question, Reebok had simply not , at the time in question, submitted to the 
European Commission any evidence that showed an in correct application of EC law, or a divergence 
in the application of EC law.  Accordingly, th e Commission did not see any ne ed to intervene in the 
specific pending case.  
4.659  Where the Commission is informed of a wrong in terpretation of Community law, including 
Community customs law, the Commission will take the appropriate action.  A pertinent example is 
furnished by a complaint submitted by Reebok regard ing the imposition of compensatory interest by 
the Spanish customs authorities.  Since this comp laint showed an incompatibility with Community 
law, this complaint led the Commission to initiate infringement proceedings against Spain.  The EC 
would underline that Reebok did not lodge a si milar complaint as regards the application of 
Article 143(1)(e) CCC. 
(iii) Processing under customs control 
4.660  In relation to this customs procedure, the Unite d States has progressively limited its claims.  
In its First Written Submission, the United States identified an eventual contradiction between 
Article 133 CCC and Article 502(3) of the Implementi ng Regulation, in that the former requires an 
applicant to provide information both on the creat ion or maintenance of processing activities in the 
EC and an absence of harm to essential interests of Community producers of similar goods, while, in 
contrast, the Implementing Regulation requires the former but not the latter.
  At the same time, the 
United States highlighted that, according to its in terpretation, a guidance adopted by United Kingdom 
required both types of information, while the French guidance simply sets out the first condition. 
4.661  The EC explained in its First Written Submission that there is no contradiction between the 
CCC and the Implementing Regulation, because the latte r is subsidiary legislation and cannot modify 
the conditions laid down in the CCC.  The EC al so explained that both the United Kingdom and the 
French guidance required the importer to provide the two sets of information. WT/DS315/R 
Page 114  
 
 4.662  The United States insists that the French guida nce makes no reference to information on harm 
to Community producers, which is, on the cont rary, required by the United Kingdom's guidance. 
4.663  The EC considers that the US criticism is based on an isolated and incorrect interpretation of 
the French guidance, which has to be interpreted in  the context of the EC legislation.  The guidance 
refers to the economic conditions required to obtai n an authorization to process under customs control 
in the same way as Article 502(3) of the Implementi ng Regulation: by using an abbreviation of the 
requirements laid down in Article 133(e) CCC.  Th e French authorities require the same kind of 
information as the United Kingdom: the informa tion needed to assess whether "the necessary 
conditions for the procedure to help create or maintain a processing activity in the Community 
without adversely affecting  the essential inter ests of Community producers of similar goods 
(economic conditions) are fulfilled". 
4.664  This interpretation is also supported by paragra ph 78 of the French guidance, which, within 
Chapter III "Examination of economic conditions", play s the role of a chapeau to Section I, where 
paragraph 83 is located.  Contrary to what the United  States affirms, this pa ragraph 78 is more than 
simply an introductory paraphrase of certain provisions from the CCC.
  This paragraph reminds, for 
Section I as a whole, that the absence of adver se effects on the essential interests of Community 
producers is a general economic condition that is common to the three customs procedures therein 
covered (inward processing, outward processing a nd processing under customs control), as it is 
clearly laid down in Articles 117(c), 148(c) and 133(e) CCC, respectively. 
4.665  In the present case, the United States has not s ubmitted any evidence on the application of the 
guidance issued by the French authorities.  The EC would like to recall that according to the case law 
of the Appellate Body, it is the party which asserts th at a measure of another Member is inconsistent 
with WTO obligations which has the burden of prov ing that the measure in question has the alleged 
content or meaning.  Relevant evidence for est ablishing the meaning may also include evidence 
regarding the application of the measure.  Th is was explained by the Appellate Body in US – Carbon 
Steel and in US - Oil Country Tubular Goods Sunset Reviews . 
(iv) Local clearance procedure 
4.666  In response to two questions from the Panel, the United States has explained its understanding 
of the procedures applicable in th e EC for clearance of goods for free circulation and it has claimed 
that the lack of uniform administration described in its First Written Submission exists independently 
of the particular stages in which the clearance process is articulated. 
4.667  The description made by the United States is still  not correct.  The US states that simplified 
procedures are separated into thr ee groups (local clearance, warehous ing and simplified declaration), 
but the correct classification in relation to decl arations for release for free circulation should be 
"incomplete declarations" (Articles 254-259 of the Implementing Regulation), "simplified declaration 
procedure" (Articles 260-262) and "local clearance procedure" (Articles 263-267).  The US description mixes local clearance procedure for rel ease for free circulation and other simplifications 
for customs procedures with economic impact, like warehousing. In any case, the EC considers the 
United States has not explained the alleged di vergences between the practices of the customs 
authorities and whether the differences occur between  EC member States at equivalent steps in the 
same procedure. 
4.668  Besides, the EC would like to insist that para graphs 110 to 115 and the table in paragraph 116 
of the US First Written Submission describe inex istent divergences.  Thus, taking the United 
Kingdom and France as representative examples in re lation to inspection of goods by the customs 
authorities prior to release, there is no contradic tion between the practices in these two EC member 
States.  In both cases, customs o fficials may (or may not) inspect goods prior to release.  The EC  WT/DS315/R 
 Page 115 
 
 
 already explained this question in its First Written Submission, without receiving an answer from the 
United States either in its First Oral Statement or in its response to the questions from the Panel.  The 
same problems occur with the other divergences alleged by the United States.  
4.669  It is clear that, contrary to what the United States claims, the EC disputes the existence of 
divergences in the administration of local clearan ce procedures and that the United States has not 
provided a single exhibit to illustrate and support its claim.  
(v) Penalties for violations of customs law 
Penalty provisions are not covered by Article X:3(a) GATT  
4.670  The United States argues that penalty provisions are "tools" for the administration of customs 
laws.  Interestingly, the United States itself appears to concede that penalty provisions are not as such 
laws pertaining the matters referred to in Article X:1 GATT.  Indeed, the United States itself explains 
that "it is important to distinguish between the ad ministration of penal laws and the application of 
penal laws to administer customs laws of the type described in Article X:1". 
4.671  The EC does not contest that penalty provisions are relevant tools for ensuring a uniform 
administration of customs law.  This is precisely wh y EC law provides that penalty provisions must be 
effective and dissuasive.  However, the fact that  penalty provisions are "tools" for the uniform 
administration of customs laws does not mean that they are themselves laws or regulations pertaining to the matters  enumerated in Article X:1 GATT, in particular tariff classification, customs valuation, or rates of duty.  If, as the United States correctly argues, penalty provisions are merely "tools" to ensure a uniform administration of those laws, then  penalty provisions as such do not fall within the 
scope of Article X:3(a) GATT. 
4.672  The United States has tried to counter this argument by arguing that standards for penalty 
provision also are addressed in the Kyoto Convention.   However, the fact th at the Kyoto Convention, 
which is a Convention negotiated in the context of the WCO, may contain certain provisions or 
standards on penalty provisions has nothing to do w ith the scope of Article X:3(a) GATT.  On the 
contrary, the fact that the Kyoto Convention contai ns a harmonization of certain specific matters may 
rather provide an indication that the WCO Member s considered that such matters were not yet 
sufficiently addressed in the GATT. 
4.673  The United States has also contested the EC's argument that penalties are concerned with 
illegitimate actions rather than with legal trade.  In support, it has referred to the example of the 
judgment of the ECJ in de Andrade , where, according to the US, "t he only offense at issue was a 
failure to clear goods through customs within the period specified in the Community Customs Code". 
4.674  The EC fails to see the basis for the US objection.   Penalties for violations of customs law by 
definition are responses to contraventions of cu stoms law.  Penalties are sanctions for acts or 
omissions which are illegal.  Penalty provisions th erefore have a fundamentally different character 
from provisions which establish the conditions for legal trade, e.g., by setting tariff rates or 
establishing rules for customs valuation. 
4.675  The de Andrade case referred to by the United States confirms precisely this point.  In de 
Andrade , the importer had infringed Article 49 CCC, according to which, where goods are covered by 
a summary declaration, the fo rmalities necessary for them to be assigned a customs-approved 
treatment of use must be carried out within certain  specified time-limits.  The measures taken by the 
customs authorities in de Andrade were a sanction for the failure of the importer to comply with these 
time-limits.  The de Andrade case demonstrates simply that sanctions are a tool for ensuring 
compliance with EC law, and that EC member St ates apply the necessary sanctions.  In contrast, de WT/DS315/R 
Page 116  
 
 Andrade  does nothing to support the view that penalty provisions as such fall within the scope of 
Article X:1 GATT. 
Article X:3(a) GATT does not require the harmonization of member States' penalty 
provisions  
4.676  Article X:3(a) GATT concerns only the administ ration of customs laws, not the substance of 
the laws themselves.  This means in particular th at Article X:3(a) GATT does not create an obligation 
to harmonize laws which may exist within a WTO Member at the sub-federal level.  It merely 
requires that such laws be administered uniform ly within the territory in which they apply. 
4.677  The United States continues to cl aim that because penalty provisions are contained in laws of 
the EC member States, the EC administers its laws  in a non-uniform manner.  This is manifestly 
wrong.  As the EC has already stressed, it is not th e administration of penalty provisions which varies 
within the EC; it is the laws themselves which are di fferent, albeit within the limits set by Community 
law. 
4.678  In its submissions, the United States has not claimed that EC member States fail to administer 
their penalty provisions in a uniform manner.  Ind eed the United States has stated that "whether each 
individual member State administers its own penal law uniformly within its own territory is not 
relevant to our claim".  This is a striking admissi on, because it shows that the US claim in fact has 
nothing to do with the administration of penalty provisions.  Rather, the US claim is about the harmonization of legislation within  the EC, which is a claim which has no basis in Article X:3(a) 
GATT.   
4.679  The United States also reiterates its argument that the EC's reasoning would "dramatically 
diminish the effectiveness of Article X:3(a) GATT.  However, this statement is incorrect. 
Article X:3(a) GATT applies to the administration of all of the laws referred to in Article X:1 GATT, 
regardless of whether they apply in all or part of  the territory of a WTO Member. If Article X:3(a) 
GATT were held to apply penalty provisions, then it should apply to the administration of the penalty 
provisions of each Member State.  Accordingly, th e clear distinction drawn by the EC between the 
administration of measures and their content does not in any way diminish the effectiveness of 
Article X:3(a) GATT, but simply reflects the proper scope and content of this provision. 
Community law ensures a sufficient degree of uniformity of penalty provisions
 
4.680  Finally, to the extent that penalty provisions  can be regarded as relevant for ensuring a 
uniform administration of the laws referred to in Article X:1 GATT, the EC considers that EC law 
provides for a sufficient level of harmonization in this respect. 
4.681  As the EC has already explained, the Eur opean Court of Justice has developed clear 
guidelines for penalty provisions for violations of EC customs law, which must in particular be 
effective, proportionate, and dissuasive.  These princi ples have also been confirmed by the Council of 
the European Union. 
4.682  The United States has not shown that the fact that  penalty provisions are contained in laws of 
the member States leads in any way to a non-uniformity  in the administration of the laws covered by 
Article X:1 GATT, in particular laws regarding ta riff classification, customs valuation, and rates of 
duty. 
4.683  Instead, the United States has simply stated that "[t]o the extent that different member States 
have different penalty provisions that apply to the violation of EC customs law [...] they administer  WT/DS315/R 
 Page 117 
 
 
 EC customs law differently."  This argumentation is logically flawed, since the US fails to distinguish 
between the application of the penalty provisions, and the application of the rele vant substantive laws.  
4.684  Indeed, it is not correct to assume that differenc es in penalties would necessarily lead to a lack 
of uniformity in the application of the provisions the violation of which is sanctioned.  Such a 
consequence would result only if sanctions were not  dissuasive or effective.  If, on the contrary, 
sanctions are dissuasive and effective, then it must be assumed that the related substantive provisions 
will be respected, regardless of differen ces in the level of sanctions applicable. 
4.685  Is is true that differences in the level of penalties may also be important from the point of 
view of proportionality.  However, proportionality has nothing to do with the question of uniform 
administration under Article X:3(a) GATT.  Rather , the proportionality of penalties is addressed in 
Article VIII:3 GATT, and the United States has not ma de any claim that the EC does not comply with 
this provision. 
4.686  As the EC has explained, EC law requires th at sanctions be effective, proportionate, and 
dissuasive.  The United States has not shown that sanctions in the EC do not comply with these principles.  Moreover, the United States has not show n that divergences in penalty provisions of the 
member States in any way lead to a non-uniformity in the application of the laws of the member 
States.  The US case remains therefore purely theoretical, and unsupported by any facts. 
4.687  The United States has also again referred to th e EC's work on the modernized customs code, 
which includes proposals for a harmonization of administrative penalties for violations of customs law.  In this respect, it must be stressed that th e purpose of these proposals is to further develop and 
advance the EC the single market also in the field of  penalties.  This has nothing to do with the EC's 
obligations under Article X:3(a) GATT. 
3. The US claim under Article X:3(b) GATT 
(a) Nature of the review: indepe ndent tribunals or procedures 
4.688  The United States agrees with the EC that a WTO Member complies with this obligation 
under Article X:3(b) GATT only when the review sy stem is independent of the agencies entrusted 
with administrative enforcement in customs matters. 
4.689  In this respect, the United States has raised  no criticism about the independence of the 
remedies instituted by the EC, either at Community  level or at Member State level.  It should, 
however, be noticed that the United States applies a l ess strict standard of independence than the EC.  
The latter has considered that a body ensuring admini strative review is independent of the agencies 
entrusted with administrative enforcement only when it is not integrated into the organization of the 
agencies.  On the contrary, for the United States independence is already ensured when the office 
responsible for administrative review is functiona lly independent of the ports whose decisions it 
reviews, even if both offices form part of the same agency.
  The EC considers that the US 
interpretation is not in conformity with Article X: 3(b), which requires that the reviewing tribunals or 
procedures must be independent of the agencies entr usted with administrative  enforcement.  This 
provision imposes an external separation between th e tribunals or procedures and the agencies and an 
internal separation within an agen cy between the controller and the controlled is not sufficient to 
comply with Article X:3(b). 
4.690  The thrust of the US claim concentrates on the f act that the review decisions taken by the EC 
member States "have effect only within their re spective member States and not on EC agencies 
generally" and that "the provision of tribunals or procedures by individual member States within the 
EC does not satisfy the EC's obligations under Article X:3(b)".  WT/DS315/R 
Page 118  
 
 4.691  The United States relies on several arguments to  support that assertion.  First, the United 
States has constantly argued that the Article X:3(b)  GATT obligation must be interpreted in the light 
of Article X:3(a) GATT, which the United States considers to be its context. 
4.692  The EC has explained several times that each of those two subparagraphs in Article X:3 
GATT lay down separate obligations and that it cannot be  considered that there is a legal relationship 
between these two provisions (i.e: the obligations  from one provision cannot be imported into the 
other).
  
4.693  The structure of Article X:3 GATT itself already justifies that interpretation.  First, 
subparagraph (b) does not make any reference to subparagraph (a), unlike subparagraph (c), which 
contains an explicit link to subparagraph (b).  Second, Article X:3 GATT is not introduced by a 
chapeau allowing to affirm that the two separate subparagraphs are linked and that the obligations 
therein instituted have to be interp reted in light of the each other. 
4.694  Moreover, contrary to what the United States claims, review of customs decisions by the 
courts of the EC member States does not run counte r to the obligation of uniform administration.   
That type of review is perfectly compatible with  the obligation of uniform administration, provided 
that the latter is ensured by other means that are appropriate to this aim. 
4.695  Finally, there is a substantial reason to reject th e US interpretation.  If we consider that, as the 
United States has accepted, the review established by Article X:3(b) is only a review of first instance, 
to require uniformity at first instance would necessar ily imply the establishment of a central court of 
first instance with jurisdiction over the whole terr itory of any WTO Member.  This conclusion finds 
no support in the wording of Article X:3(b) GATT,  which makes no reference to the obligation to 
establish such central court of first instance.  Arti cle X:3(b) GATT does not even require appeals to be 
decided by a central court or tribunal of superior ju risdiction.  The conclusion is that Article X:3(b) 
does not deal with uniform administration/applicati on of customs law, which is covered exclusively 
by subparagraph (a), but only with first instance remedies. 
4.696  The United States is interpreting Article X:3(b) through the glass of its own legal system and 
requiring all WTO Members to establish the equivalent to its Court of International Trade.  Japan has 
aligned with the EC in the rejection of this unilatera l interpretation.  It is worth noting that Australia 
has also argued that "Article X:3(b) is not a prescr iptive Article and includes no obligation to have a 
central court". 
4.697  Furthermore, the EC would like to recall that the establishment of a central customs court 
within the EC institutional framework runs cont rary to one of its fundamental constitutional 
principles: that the EC Court of Justice and the Cour t of First Instance are to act within the limits of 
the powers conferred upon them by the founding treati es and that the courts of the EC member States 
act as "ordinary" EC courts when applying Commun ity law.  In the absence of a provision in the 
Treaties attributing a competence to any or both of t hose Courts to review decisions taken by the EC 
member States and in the presence of the preliminar y reference system laid down by Article 234 of 
the EC Treaty, any modification in the boundaries betw een the competences of th e Court of Justice or 
the Court of First Instance and the nationals cour ts would require the amendment of the EC Treaty. 
4.698  The EC believes that similar problems, at least at legislative level, may arise in those WTO 
Members where a central tribunal or court of first instance in customs matters does not exist. 
4.699  The United States claims to have found an argument to justify a relationship between 
subparagraphs (a) and (b) of Article X:3 in the sec ond sentence of subparagraph (b), which states that 
the decisions of the tribunals or procedures shall govern the practice of the agencies entrusted with 
administrative enforcement.  WT/DS315/R 
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 4.700  The EC considers that sentence as a provision aimed at securing a fair implementation of 
tribunal decisions in administrative law matters.  To ensure respect by an administrative authority of 
the decisions taken by a tribunal, most of the le gal systems have develope d different methods to 
enforce the res iudicata  principle.  That is the sense that the EC gives to the "shall govern the 
practice" sentence.  It cannot mean, as it is sustaine d by the United States, that a first instance review 
decision on a specific case constitutes the source of  a general obligation upon the relevant agency. 
Article X:3(b) only sets up an obligation to implement in fair terms the decision given by an independent tribunal or through  an independent procedure. 
4.701  Second, the United States has contested the EC's argument that the use of the plural form in 
Article X:3(b) GATT means that a WTO Member is allowed to have several different review 
tribunals, each of them covering a part of its geography.  According to the United States, "the use of 
the plural form […] might allow for the possibility  that a Member State may provide for different 
types of review". 
4.702  The EC contests this argument, because it does not take into account that the United States 
and the EC interpretations are not mutually exclusive:  the use of the plural form may indicate that a 
WTO Member is entitled to maintain geographically limited tribunals and it may also indicate that a 
WTO Member is allowed to maintain multiple  fora for review of customs decisions. 
4.703  Third, in its First Written Submission, the EC has explained that when the courts of the 
member States apply Community law, they act as organs of the Community.  This is one of the cornerstone principles in the EC constitutional framework .  In support, the EC has also referred to the 
findings of the Panel in EC – Trademarks and Geogra phical Indications (US) . 
4.704  In its First Oral Statement, the United States has argued that the Panel Report in EC – 
Trademarks and Geographical Indications  (US) is not relevant, because "the issue presented there 
was substantially different from the one presente d here".  The EC disagrees.  The issue in EC – 
Trademarks and Geographical Indications was a US claim that, by applying an EC regulation, EC 
member States were granting each other advantages not  available to other third countries, and thus 
violating most-favoured nation obligations.  In respon se to this claim, the Pa nel held that member 
States authorities, when implementing Community la w, were acting as organs of the EC; for this 
reason, the Panel found that such application could not be regarded as the granting of advantages to 
"other countries".  The finding of the Panel in EC – Trademarks and Geographical Indications that 
member States' authorities, when implementing EC law,  act as organs of the EC , is highly relevant to 
the present case.  The fact that  in the present case, the Unite d States has made a claim under 
Article X:3(a) GATT, and not regarding most-fa voured national obligations , is no reason why the 
Panel should ignore this case law. 
4.705  In addition, the United States argues "that it ca nnot be assumed that one Panel's recognition of 
member States executive authorities as de facto EC authorities [...] means that another panel must 
recognize member States judicial 
authorities as de facto EC authorities".  The EC fails to see the basis 
of this distinction.  Both executive and judicial authorities are relevant public authorities in each WTO 
Member.  Both the actions of the executive and of the judicial branches may be relevant for 
compliance with WTO obligations.  Accordingl y, the EC sees no reason why only executive 
authorities, but not judicial authorities of the me mber States, should be recognized as authorities of 
the EC when implementing EC law. 
4.706  The US arguments are also incompatible w ith principles of general international law 
regarding responsibility for wrongful acts.  In this re gard, the EC would refer to Article 4(1) of the 
Articles on responsibility of States for internationall y wrongful acts elaborated by the International 
Law Commission (ILC).  WT/DS315/R 
Page 120  
 
 4.707  It follows clearly from this provision that , when it comes to the acts of a State under 
international law, there is no distinction between acts  of the legislative, executive and judicial organs.  
For this very same reason, it would seem unjustifia ble to consider that only the executive authorities 
of the member States, but not the judicial author ities of the member States, can act as EC organs. 
4.708  Similarly, it follows from the ILC's articles on state responsibility that the responsibility for 
internationally wrongful acts extends not only to orga ns of the central government, but also to organs 
of territorial units.  Accordingly, the EC has never contested that it is responsible in international law 
for the compliance by EC member States with the obligations of the EC under the WTO Agreements. 
4.709  With its argument that member States courts  cannot be regarded as EC courts, the United 
States seems to suggest that whereas the EC is re sponsible for the actions of EC member States, it 
cannot have recourse to organs of the EC member States for discharging its obligations, such as the 
one under Article X:3(b) GATT.  Such a result w ould be highly contradictor y.  Under the general 
principles of state responsibility, attribution of cond uct relates to all acts and omission, regardless of 
their legality.  Accordingly, not only must conduct be attributed for the purposes of establishing a violation of international obligations, but also in order to assess whether obligations have been 
complied with.  In other words, it is perfectly po ssible for the EC to have recourse to its member 
States for the purposes of discharging international obl igations, including the obligation to provide for 
prompt review under Article X:3(b) GATT. 
(b) Time requirement: promptness in the review 
4.710  Along these proceedings, the claim has been pr ogressively reduced by the United States. 
Indeed, the United States has lately explained that it is not arguing the lack of promptness of review 
and correction provided by the EC member States tribunals.  
4.711  As to the European Court of Justice and the Court of First Instance, the United States has 
never claimed that the proceedings before these tw o Courts, when reviewing decisions taken by the 
EC institutions, do not ensure prompt review.  Th e only criticism sustained by the United States refers 
to "preliminary rulings" (i.e.: references to the Co urt of Justice by national courts). The United States 
argues that "the time it takes for questions to ge t presented to and decided by the ECJ and the fact 
that, in general, referral of questions to the EC J is discretionary […] means that the ECJ is not a 
tribunal or procedure for the prompt review and correction of customs administrative decisions". 
4.712  The EC has already explained that this criticis m underlay the US misunderstanding of the EC 
system: the ECJ does not review national customs administrations decisions, but it helps the national courts in such a review through the preliminary ru ling procedure with the ai m of ensuring the uniform 
application of Community law throughout the Community.  Therefore, preliminary rulings by the ECJ 
are one of the EC mechanisms to ensure uniform administration of the EC trade laws, regulations, judicial decisions and administrative rulings of ge neral application, as required by Article X:3(a) 
GATT, and cannot be considered as such a mechan ism of "review" of national customs decisions. 
G. 
SECOND ORAL STATEMENT OF THE EUROPEAN COMMUNITIES  
1. The EC is not obliged to create an EC customs agency and a customs court 
4.713  The EC has already explained the significant constitutional implications of the present case 
for the EC as well as for the WTO Membership in gene ral.  It has also explained that the US claims 
under Article X:3 GATT are essentially directed at fo rcing the EC to create a centralized customs 
agency and a customs court.  WT/DS315/R 
 Page 121 
 
 
 4.714  The subsequent submissions of the United Stat es have entirely confirmed this assessment.  
The US has offered no evidence of non-uniform admini stration of EC customs law, or of judicial 
review which would be less than prompt.   Instead , it has focussed entirely on the involvement of the 
customs authorities of the EC member States in the administration of EC customs law, which it claims 
"as such" leads to a lack of uniformity contrary to Article X:3(a) GATT.  Similarly, in its claims under 
Article X:3(b) GATT, the US has focussed entir ely on the absence of an EC customs court. 
4.715  The US has protested this as a "caricature" of its claims.  However, as so often, caricature 
reveals the true nature of things.  Immediately after assuring the Panel that it does not argue that 
Article X:3(a) GATT requires WTO Members to have a single customs agency, the US retreats from this assurance by stating that "establishing such an agency is the principal manner by which the 
United States understands the vast majority of WTO Members (if not all WTO Members) to have 
undertaken to discharge their obligation" under Ar ticle X:3(a) GATT.  The US also claims that 
because the EC does not have a single customs agency, it is obliged to have a single customs court. 
4.716  The US fixation on the creation of a centralized  customs agency and a customs court has been 
a constant feature of the present proceedings.  Th e creation of such an agency, which should be 
equipped also with a competence to issue advance rulings on a number of issues, was the first demand 
made by the United States of the EC during the c onsultation phase of the present dispute.  The second 
demand was the creation of an EC customs court.  Moreover, when questioned by the Panel as to 
which measures, short of establishing a customs agency  and a customs court, the EC should take if the 
US were to prevail with its claims, the US fa iled to identify a single concrete measure.   
4.717  The US is therefore wrong to complain about the EC's misrepresenting its claims.  The US 
claim under Article X:3(a) GATT is clearly directed against the involvement of the customs 
authorities of the EC member States in the administration of EC customs law.  It is thus a direct challenge to the EC's system of executive federalism,  which is a general structural element of the EC 
legal order, and not only in the field of customs ad ministration.  The same is true for the US claim 
under Article X:3(b) GATT, which is aimed at replacing the courts of the member States by an EC 
customs court.  The EC cannot be faulted for clearly spelling out the US claim. 
4.718  The United States has accused the EC of advocatin g a relative view of Article X:3(a) GATT.  
This argument is unfounded.  The obligation of uniform, impartial and reas onable administration in 
Article X:3(a) GATT is the same for all WTO Memb ers, including the EC.  The EC has never argued 
that it is subject to standards which are differe nt from those applicable to other Members.   
4.719  In support of its view, the US has referred to  the fact that the EC, supported by Japan, has 
argued that whether there exists a lack of unifo rmity must be established taking into account the 
features of the system of customs administration in question.  This is equally unfounded.  It goes without saying that whether a lack of uniformity exists in a particular system of customs administration can only be determined on the basis of  all relevant facts, which necessarily include the 
features of the customs system in question.  This has nothing to do with advocating a relative 
standard, but is simply a requirement inherent  in an objective assessment of the facts. 
4.720  The US has claimed that "it is improper for the EC to argue that its unique status within the 
WTO as perhaps the only Member without a single cen tralized customs agency makes it subject to a 
different standard with respect to the obligation of  uniform administration".  The US has also stated 
that "the EC is the only WTO Member [...] that  has a combination of geographically fragmented 
customs administration and geographically fragmented re view".  As the EC has already remarked, it is 
not arguing that it is subject to a different standa rd than other WTO Members.  However, even if it 
were indeed the only WTO Member with a decentr alized system of customs administration and 
judicial review, this does not mean that its system is in any way incompatible with Article X:3 GATT. WT/DS315/R 
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 4.721  The EC is an original Member of the WTO.   When the EC became a party to the WTO 
Agreements, including the GATT 1994, its system of customs administration and judicial review was perfectly well known to all Contracting Parties.  With this knowledge, th e Contracting Parties, 
including the United States, agreed that the EC shoul d become an original Member of the WTO.  It 
cannot seriously be argued that a fundamental characte ristic of the EC such as the involvement of the 
EC member States in the administration of EC law,  including customs law, and in the provision of 
judicial review, is nonetheless to be regarded  as incompatible with Article X:3(a) GATT. 
4.722  This point deserves particular emphasis because it is not limited to the area of customs laws.  
Article X:3(a) GATT applies to all the laws referr ed to in Article X:1 GATT.  Accordingly, the 
interpretations of the US would not just apply to the area of customs law.  Rather, they would make 
the involvement of sub-federal entities in the executi on of federal laws generally impossible in large 
areas of economic regulation.   
4.723  This is of considerable concern to the entire WTO Membership.  While the US has a 
constitutional system in which the spheres of co mpetence of the federal government and of the 50 
states are clearly separated, other WTO Members ha ve systems which are marked by a system of 
executive federalism, in which federal laws are im plemented through sub-federal units.  As has been 
recognized even by Judges of the US Supreme Cour t, executive federalism is  a perfectly legitimate 
constitutional choice, and there is no reason why it could not also apply in the area of customs.  
Accordingly, the Panel should not accept an inte rpretation of Article X: 3 GATT which would impose 
a particular US view as to how federal laws  should be implemented on other WTO Members. 
4.724  The United States has also faulted the EC fo r having referred to Article XXIV:12 GATT.  
These criticisms are unwarranted.  The EC has invoke d this provision as support for its view that 
GATT commitments, including Article X:3(a), were undertaken by the Contracting Parties in full respect of their respective constitutional systems.  As the Panel in Canada – Gold Coins  has 
explained, Article XXIV:12 GATT is a provision which has the "function of allowing federal states to 
accede to the General Agreement without having to ch ange the federal distribution of competences".  
As a counterpart, Article XXIV:12 GATT requires every WTO Member to take such reasonable 
measures available to it to ensure observance of th e provisions of the GATT at the sub-federal level. 
4.725  The EC is fully committed to ensuring co mpliance by its member States with the 
requirements of Article X GATT, in accordance with Article XXIV:12 GATT.  However, this is not 
what the US is asking of the EC.  The US is ar guing that the EC should create a centralized customs 
agency, a customs court, and should replace all rele vant legislation of the member States, notably on 
the matter of penalties, by EC legislation.  This w ould result in a radical shift in the federal balance 
within the EC.  Such an interpretation is therefore not compatible with the purpose of 
Article XXIV:12 GATT.   
4.726  As regards specifically the issue of a cust oms court, the US has also referred to 
Article VI:2(b) GATS, and argued that the EC is tr ying to transpose this provision to Article X:3 
GATT.  This argument is manifestly unfounded.  Article VI:2(b) GATS contains a general exception 
which renders the obligation to institute the tribuna ls or procedures required by Article VI:2(a) GATS 
essentially facultative for certain members.  To this extent, the provision can be regarded as a more 
far-reaching equivalent to Article X:3(c) GATT, which gives the possibility to provide review also 
through procedures which are administered by bodies  which are not independent.  However, this has 
nothing to do with the EC's arguments in the present case.  The EC is not contesting that it is obliged 
to institute tribunals or procedures for the provision of judicial review which are independent of the 
agencies which they control.  The EC merely poi nts out that the question how the EC organizes its 
court system through which it provides judicial review is not prejudged by Article X:3 GATT.    WT/DS315/R 
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 4.727  The US has also argued that difficulties of co ming into compliance should have no bearing on 
assessing whether the EC is in compliance with Article X:3 GATT.  At a general level, the EC agrees that difficulties of compliance are not as such deci sive for the interpretation of an international 
obligation.  However, the US cannot expect that its claim should be accepted without any 
consideration of its  practical implications.  Wh ereas the Panel is not required to decide on which 
measures would be necessary for securing compliance, it should also not decide on this particular 
dispute without giving due consideration to the real-world implications of the US claims. 
2. The US claims under Article X:3(a) GATT 
(a) The United States misrepresents the requirements of Article X:3(a) GATT 
(i) Article X:3(a) GATT is a non-prescri ptive, minimum standards provision 
4.728  The US has disputed the EC's characterization of Article X:3(a) GATT as a minimum 
standards provision.  It also disputes the re levance of the Appellate Body Report in US – Shrimp , 
where the Appellate Body refers to the requi rements of Article X:3(a) GATT as "minimum 
standards".  In the view of the US, "minimum sta ndards" does not mean that these standards are "low 
standards".   
4.729  These US arguments amount to a mischaracterization of the EC's arguments.  The EC has not 
argued that Article X:3(a) GATT contains a "relativ e" standard, nor has it taken a position on whether 
it is a "low" or a "high" standard.  However, give n the highly ambitious application of Article X:3(a) 
GATT sought by the US, it is necessary to reflect  on the nature and purpose of the obligations 
contained in this provision.   
4.730  Article X:3(a) GATT is not a provision whic h prescribes in detail how WTO Members should 
administer their customs laws.  There are othe r provisions in the GATT, and in other covered 
agreements, which contain the de tailed substantive disciplines with which Members must comply.  
Article X:3(a) GATT complements these disciplines of  the GATT and its annexes in order to ensure 
that the enjoyment of the benefits of the GATT by  other Members is not frustrated through measures 
of administration which are unreasonable, partial, or  non-uniform.  It cannot be lightly assumed that 
the administration of a WTO Member falls below these minimum standards. 
4.731  This is confirmed by the Appellate Body in US – Oil Country Tubular Goods Sunset Reviews , 
in which it held as follows: "A claim under Article  X:3(a) of the GATT 1994 must be supported by 
solid evidence; the nature and the scope of the clai m, and the evidence adduced by the complainant in 
support of it, should reflect the gravity of the accu sations inherent in claims under Article X:3(a) 
GATT".  This clearly confirms that the Appellate Body considers that Article X:3(a) GATT sets out 
basic minimum standards, a violation of which canno t be assumed lightly.  Moreover, in a very recent 
case, the United States itself argued that the ev idence offered to support an Article X:3(a) GATT 
claim must reflect the gravity of such a claim. 
(ii) Article X:3(a) GATT requires the United States to demonstrate the existence of a pattern of 
non-uniform administration  
4.732  In its Second Written Submission, the United States  contests that it is required to demonstrate 
the existence of a pattern of non-uniform admini stration in order to establish a violation of 
Article X:3(a) GATT.  The United States has also contested that the Panel Report in US – Hot-Rolled 
Steel provides authority for such a requirement, and has claimed that the EC has based itself on "one 
single sentence" of this report.  This is mani festly untrue.  The reference by the Panel in 
US – Hot 
Rolled Steel  to the requirement of a pattern was not a mere dictum , but based on a considered 
reflection of the requirements of Article X:3(a) GATT.  It reflected the Panel's view that in order to WT/DS315/R 
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 amount to a violation of Article X:3(a) GATT, the actions in question must "have a significant impact 
on the overall administration of the law, and not simply on the outcome in the single case in question".  This, incidentally, was also the submission of the United States in US – Hot Rolled Steel . 
4.733  The US tries to distinguish US – Hot Rolled Steel by submitting that in the present case, it is 
not arguing that "a particular application" of EC customs law represents non-uniform administration, 
but rather that the "EC's system of customs la w administration as a whole" does not comply with 
Article X:3(a) GATT.  The EC is baffled by this argument.  The US seems to believe that because it 
makes more sweeping claims, it needs to present l ess evidence.  The EC submits that the opposite 
should be true.  It is not comprehensible to  the EC how the US can challenge the "overall 
administration" of the EC's system without actually showing how customs law is administered in that 
system.  It seems to the EC that in order to condemn the EC's system of customs administration as a 
whole as incompatible with Article X:3(a) GATT, a very clear pattern of non-uniform administration would have to be demonstrated. 
4.734  The US has also referred to the Panel Report in Argentina – Hides and Leather , and has stated 
that this Panel did not refer to the requi rement of a pattern.  However, the Panel Argentina – Hides 
and Leather provides no support for the US arguments.  The measure challenged in Argentina – Hides 
and Leather was a resolution which authorized representativ es of Argentinean industry to participate 
in certain parts of the administrative procedure.  It  thereby made it impossible for Argentina to ensure 
the protection of business confidential information, and administer its customs laws in an impartial 
and reasonable manner.  It was not contested that in the practical application of the resolution, industry representatives did indeed participate in the process.  Accordingly, since there was no doubt 
that the administration by Argentina was uniformly  unreasonable and partial, there was no reason for 
the Panel to examine whether there was a pattern.  This is entirely different from the present case, 
where no EC measure mandates non-uniform administ ration; quite on the contrary, EC measures 
ensure uniform administration, and the EC strongly contests that there is a lack of uniformity in the EC's administration of its customs laws. 
4.735  Finally, the US takes to misrepresenting the EC's argument by claiming that the EC had 
requested it to show the existence of a "neat pattern" of non-uniform administration.  The EC does not understand the Panel in US – Hot Rolled Steel  to have required the pattern of instances of 
administration to be arranged in any particular order,  or to be "neat".  A pattern can also be constituted 
by a repetition of similar acts or omissions.  Where such instances of administration become 
sufficiently widespread and frequent as to have an im pact on the overall administration of the law, this 
constitutes a lack of uniformity contrary to Article X:3(a) GATT.  This is the standard which the US 
must meet, no more, but also no less. 
4.736  The US has also argued that a pattern cannot be required because "the interests of traders in 
[....] uniform administration of the customs laws do not depend on the statistical significance of occurrences of non-uniform administration".  The EC disagrees.  Article X:3(a) GATT protects 
traders against an administration of customs la w in which they cannot reasonably predict the 
treatment they will receive.  It does not protect them against individual instances of administrative 
error, which can and should be corrected through mech anisms of administrative and judicial review.  
Accordingly, how widespread and frequent instances of non-uniform administration are is a relevant consideration under Article X:3(a) GATT. 
(b) The US has not provided any evidence of a lack of  uniformity in the EC's administration of its 
customs laws 
4.737  As the EC has already mentioned, the Appellate Body in US – Oil Country Tubular Goods 
Sunset Reviews has required that any claim under Article X: 3(a) GATT must be supported by "solid 
evidence".  The United States, which has the burden of proof as the complainant, has singularly failed  WT/DS315/R 
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 to discharge this burden.  Far from producing soli d evidence, it has not produced any evidence to 
support its claim of non-uniform administration in the EC's system of customs administration.   
4.738  When required by the Panel to provide eviden ce to support its claim, the United States has 
monotonously responded that such evidence was not releva nt to its claim, and th at if it were relevant, 
it should be the EC which should provide it.  As th e EC has already remarked, this is a transparent 
attempt to shift the burden of proof to the EC, which should be rejected by the Panel. 
4.739  The US claims that the EC has "acknowledged" instances of non-uniform administration in 
the areas of penalties and audit procedures are unfounde d.  As regards the issue of penalties, there is 
no non-uniform administration, rather, as the EC will s how further below, it is the laws of the member 
States containing sanctions provisions which are differe nt.  As regards the issue of audits, the EC has 
already contested, and continues to contest, that ther e is a lack of non-uniform  administration.   As 
explained, all member States have the necessary aud it capacity, and the audit practices of the member 
States are sufficiently harmonized, with guidance provided by the EC Customs Audit Guide.  This 
Guide also addresses the selection of audit targets, and the question of risk assessment.  It therefore 
addresses the issue of the balance between inspecti ons at import and post-clearance audits which has 
been raised by the US.  The US therefore has not s ubstantiated its allegation that there is a lack of 
uniformity in the EC's customs auditing practice. 
4.740  The US also claims to have demonstrated that  there is a lack of uniformity in the area of 
processing under customs control.  The EC does not see  the basis for this statement.  The US has 
merely referred to guidance on this procedure, which it claims to contain certain divergences as 
regards the application of the economic conditions.  The EC has contested this interpretation made by 
the US, which is not supported by the text of gui dance.  In contrast, the US has not provided any 
evidence of actual administration which would su pport its claim that there are differences in 
administration. 
4.741  The US alleges that the EC has recognized that such differences exist by explaining that in 
certain cases, the examination of the economic conditi ons takes place at EC level.  This statement is 
unfounded.  The EC has merely correctly expl ained the various ways in which the economic 
conditions for processing under customs control are a pplied in the EC.  That in certain cases, the 
conditions are examined at EC level, whereas in other cases, they are examined at member States 
level, does not mean that in the second case, there is a lack of uniform application.  It is also noted 
that in accordance with Article 522 of the Implemen ting Regulation, member States are obliged to 
communicate to the Commission the info rmation about authorizations i ssued and applications refused 
on the grounds that the economic conditions are not fu lfilled.  This allows the Commission to verify 
that the economic conditions are applied correctly. 
4.742  Overall, the US has therefore not shown the existence of any lack of uniformity in the 
administration of EC customs law, let alone the exis tence of a pattern of non-uniform administration. 
(c) The US criticisms of the EC's system of cu stoms administration are unjustified, and do not 
demonstrate any incompatibility with Article X:3(a) GATT 
4.743  Since the United States has been unable to dem onstrate any actual lack of uniformity in the 
EC's practice, it has instead tried to build its case on criticism of the various elements of the EC's 
system of customs administration.  Before a ddressing the specific arguments made by the United 
States, the EC would like to make three general remarks. 
4.744  First, systemic criticism cannot replace proof of actual lack of uniform administration.  As the 
EC has said time and time again, Article X:3( a) GATT does not prescribe how WTO Members should 
administer their laws.  The specific design of the EC's system could therefore become relevant under WT/DS315/R 
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 Article X:3(a) GATT only if it necessarily led to a lack of uniformity.  However, the US has provided 
no evidence for such a proposition.  In this regard, it is also necessary to recall the findings of the 
Appellate Body in US – Carbon Steel , according to which it is the responsibility of the complainant 
who alleges that the municipal law of another member  has a particular meaning or effect to provide 
evidence for such statement. 
4.745  Second, in order to assess whether the EC's sy stem ensures uniform administration of customs 
laws, it is not sufficient to look at one particular instrument or feature in isolation.  Rather, the 
question is whether the EC's system as a whole, in cluding all its relevant instruments, ensures uniform 
administration.  The approach followed by the Un ited States in its Second Written Submission is 
precisely the opposite.  The US selects a particul ar instrument, mischaracterises it, and then 
triumphantly declares that such instrument is not su fficient to ensure uniform administration.  It is 
obvious that such a way of proceeding does not cons titute a fair and objective way of appraising the 
EC's system. 
4.746  Third, the US shows a marked tendency to ig nore all elements that do not suit it for the 
purposes of its claims.  For instance,  in its discussions  of EC classification practice, the US focuses 
almost exclusively on the EBTI system, but does not acknowledge the existence of other binding 
instruments of Community law, such as classification regulations or explanatory notes.  Similarly, the 
US has not acknowledged with one word the EC instruments existing in the field of customs 
cooperation, or the budgetary and financial instruments.  To put it differently, whereas the US is 
happy to rely on a report of the Court of Auditors as alleged proof for a lack of uniformity in the EC's 
system, the US does not wish to acknowledge that such EC institutions might also contribute to 
uniformity, and therefore have to be taken into  account in the evaluation of the overall system. 
(i) Administrative guidance and the duty of cooperation 
4.747  As the first of its systemic criticisms, the Unite d States claims that "most of the instruments 
that the EC holds out as securing uniform administration are non-binding, discretionary, or extremely general in nature".   
4.748  This statement turns the EC's system ups ide down.  The EC's system of customs 
administration is based on a very comprehensive body of law, which is entirel y binding.  In all areas 
of customs law, the EC institutions dispose of th e necessary powers to adopt legally binding measures 
as and wherever the need arises.  This is compleme nted by a complete system of judicial protection 
and review, which includes rights of appeal of trader s, but also the possibility to bring infringement 
proceedings.  To claim, therefore, that the EC's system is primarily based on non-binding means is 
simply self-refuting. 
4.749  The US also criticizes the reliance of the EC, in certain cases, on administrative guidance and 
other instruments which are not legally binding, such  as the EBTI guidelines, or the conclusions of the 
Customs Code Committee.  This criticism is unw arranted.  The EC has recourse to non-binding 
guidance as a complement to binding measures whenev er this is warranted by the specific issue at 
hand, given for instance its technical character.  To take but one example, the EC does not see what 
would be gained by transforming the EBTI guidelines, which, for instance, contain instructions as to how and when to consult the EBTI data base, into  a legally binding instrument.  Moreover, more 
important is whether the guidelines are actually foll owed, and the US has produced no evidence to the 
contrary. 
4.750  As regards the duty of cooperation, the US has cr iticized that this obligation is too general in 
nature.  The EC does not agree.  What matters is  not that the duty of cooperation is a general 
obligation, but that it exists.  Moreover, it is lega lly binding, and can be sanctioned by the Court of 
Justice.  That cases before the Court may not be  very frequent does not mean that the duty of  WT/DS315/R 
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 cooperation does not have practical effect.  Quite on the contrary, it shows that it is generally 
respected. 
(ii) The EBTI system 
4.751  The second systemic aspect criticized by the US is  the EC's BTI system.  The EC has already 
intensively responded to the US arguments in this respect, and will therefore highlight only a number 
of new aspects in the US arguments. 
4.752  In its Second Written Submission, the US repeats its claim that the EC's system facilitates 
BTI shopping.   However, as the EC has already noted, the US does not provide any evidence for this statement.  In an apparent attempt to explain th is failure, the US now states that BTI shopping "is 
done in such a way that it is does not generate evid ence and thus is difficult to identify".  Moreover, 
the US remarks that "traders can  hardly be expect ed to come forward and openly admit that they are 
taking advantage of the opportunity to seek optimal classification of their goods".  The EC would 
submit that alleged difficulties of providing eviden ce are not a reason for exempting the United States 
from discharging its burden of proof.  The United St ates cannot expect the Panel to accept its claim on 
faith just because it states that pr oviding evidence is too difficult. 
4.753  Second, assuming for a moment that the United St ates presentation of the situation was right, 
the EC also wonders wherein precisely would lie the nu llification or impairment of  benefits to the US.  
It seems to the EC that if there is nullification a nd impairment, then the US should be able to support 
this with some evidence.  Inversely, if its trad ers have no interest in th e case, because they achieve 
optimal classification of their goods, then the US  has itself rebutted the presumption of nullification 
and impairment in Article 3.8 DSU. 
4.754  In its Second Written Submission, the US  also continues its criticisms of the Timmermans 
case law of the Court of Justice, which it claims is contrary to the uniform a pplication of EC customs 
law.  In this respect, the EC can largely refer to its earlier submissions.  However, a new element in 
the US arguments is that the US now appears to view classification a matter of discretion.  In fact, the US argues that tariff classification requires a custom s authority to make certain judgments, which may 
evolve over time.  In this way, the US seems to ta ke a highly dynamic approach to tariff classification, 
which for the US seems to be at least partially a policy issue.   
4.755  This approach may explain the frequent reconsiderations of classification issues in US 
practice.  It may also explain why the US seems to be much more concerned with geographical uniformity than with uniformity over time.  Howeve r, the EC does not agree with the US's point of 
departure.  Tariff classification, albeit complex, is  a legal issue which is fully subject to judicial 
review.  At any given moment, there is only one corr ect classification for a particular product, and this 
classification does not rapidly change on  the basis of policy considerations. 
4.756  Accordingly, the Timmermans case law does not in any way detract from the uniformity of 
EC law.  On the contrary, it allows member States  to correct errors, where such errors have been 
made.  Contrary to the US view, this has nothing  to do with applying the member States' "own 
interpretation", but rather with applying the correct in terpretation.  A perfect ill ustration for this is the 
Bantex  case, where the Timmermans case law allowed the UK authorities to bring their classification 
practice into line with an EC cl assification regulation they had overlooked.  Moreover, as the EC has 
already shown, US rules for the revocation of adva nce rulings in the event of error or change of 
practice do not seem to fundamentally differ from those in the EC. WT/DS315/R 
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 (iii) Judicial review by member States' Courts 
4.757  As the third and last issue, the US criticizes the EC for having referred to the judicial review 
of customs decisions as another mechanism for secu ring the uniform application of EC customs law. 
4.758  The US' first objection is that because decisions of member Stat es' courts are "binding only 
within that Member State", a decision in a particul ar case might be inconsistent with the decisions of 
the courts of other member States.  This objection is spurious.   Apart from the fact that there is no 
requirement, as the EC will show la ter, for first instance judgment s to be "binding throughout the 
Community", the US is forgetting that the EC memb er States courts are not operating in a vacuum.  
Precisely in order to avoid the danger to which the United States refers, the EC Treaty has established has the preliminary reference procedure.  This pr ocedure allows the Court of Justice, acting in 
constant dialogue with the member States' courts, to ensure a uniform  interpretation and application of 
Community law.  It is important to note that in deciding whether a question of Community law should be referred to the ECJ, or whether it can be rega rded as obvious, member States' courts must also 
consider whether the matter will be equally obvi ous to the courts of other member States.  
Accordingly, where courts of different member St ates have decided, or might decide, a question of 
Community law differently, this is a reason for referring the question to the European Court of 
Justice. 
4.759  Furthermore, the US has criticized the fact th at the EC has no system of notification of 
judgements between the courts of member States.  In order to counter the EC's argument that such a system would be burdensome and ineffective, the US has referred to the existence, in the United 
States, of data bases such as Lexis and Westlaw.  These remarks are beside the point.  The EC 
understands the Panel's Question No. 72  to have referred to mechanisms of formal "notification" of 
judgments of one court to another.  The EC does not understand the ques tion to have aimed at 
privately-run data bases such as Lexis and Westlaw.  As for such mechanism, similar data bases, as 
well as legal and technical journals , obviously also exist in the EC.  Moreover, typically traders and 
brokers interested in the classification of a par ticular good are well aware of relevant judicial 
decisions throughout the EC, and will bring them to th e attention of the courts, if these are not already 
aware of them. 
4.760  Second, the US argues that it is excessively burde nsome for a trader which operates in several 
member States to pursue his appeal in several courts .  The EC does not agree.  The situation described 
by the US is due to the fact that the competence of EC  tribunals is territorially limited, and, as the EC 
will show, there is nothing wrong with that.  More over, no trader is obliged to import the same good 
through various different ports in different member States, but if he does so, the result may be that 
different courts will be competent.  Finally, this still does not mean that the trader would normally 
have to conduct several appeals in parallel.  If a qu estion is referred to the Court of Justice, the normal 
situation will be that other procedures in which th e same question is relevant can be suspended until 
the Court has given judgment.  Once the Court has given judgment, this interpretation will guide all 
member States courts.  Moreover, each referral to the European Court of Justice, as well as judgments 
rendered, is published in the Official Journal of the European Union, which allows traders and judges 
of other EC member States to be fully informed  about cases which arose in another member State. 
4.761  Finally, the US complains that the EC should not be allowed to refer to judicial review as an 
instrument for securing uniform application si nce this is an "entitlement" of traders under 
Article X:3(b) GATT.  Moreover, the US claims that the EC  is arguing that compliance with 
Article X:3(b) would be sufficient for compliance with Article X:3(a) GATT. 
4.762  These allegations are entirely unfounded.  The EC has never claimed that the provision of 
judicial review is sufficient for complying with Ar ticle X:3(a) GATT.  On the contrary, the EC has 
acknowledged that a system which purely relies on priv ate rights of appeal would not normally appear  WT/DS315/R 
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 to be compliant with Article X:3(a) GATT.  This  is however not the case in the EC, where judicial 
review is only one out of many mechanisms which c ontribute to the uniform application of EC law.  
That judicial review is also at the same time an entitlement under Ar ticle X:3(b) GATT is irrelevant.  
First of all, this provision concentrates solely on first-instance review.  Secondly, there is nothing to 
prevent that it may also at the same time be a tool for securing uniform administration. 
4.763  Overall, the United States has failed to show that there are any features in the EC system 
which necessarily would lead to a lack of uniformity in the EC's system of customs administration.  
Quite on the contrary, the EC's system contains numerous, interlocking mechanisms which together 
provide a high degree of assurance for a uniform in terpretation and applicati on of EC customs law.  
The US claims should therefore be dismissed. 
(d) Article X:3(a) GATT does not require the EC to  harmonize member States' penalty provisions 
4.764  A final claim under Article X:3(a) GATT concerns the issue of penalties for customs 
violations.  This US claim has nothing to do with the administration of laws, but rather is aimed at 
forcing the EC to harmonize the member States laws which contain penalty provisions and replace them with EC laws.  This claim has no basis in Article X:3(a) GATT. 
(i) Penalty provisions are not covered by Article X:3(a) GATT 
4.765  First, the EC has explained that penalty provi sions are not among the laws which are referred 
to in Article X:1 GATT, and therefore are not cove red by Article X:3(a) GATT.  So far, the United 
States has not provided any explanation as to why penalty provisions should be regarded as laws 
within the meaning of Article X:1 GATT, i.e. laws  "pertaining to the classification or valuation of 
products for customs purposes, or to rates of  duty, taxes, or other charges".    
4.766  In fact, the United States does not even seem to argue that penalty provisions are laws within 
the meaning of Article X:1 GATT.  Instead, it merely states that penalty laws are "tools" for the administration of the laws referred to in Article  X:1 GATT.  However, if penalty provisions are 
merely tools for the administration of the laws in  Article X:1 GATT, they are not themselves such 
laws.   
4.767  In its Second Written Submission, the US has al so made an oblique reference to the term 
"charges" in Article X:1 GATT.  However, the EC do es not believe that this term covers penalties.  
"Charges" are contributions of a pecuniary nature , which are frequently "charged" in exchange for 
services rendered or goods provided.  Penalties respond  to illegal behaviour by imposing a sanction.  
Such sanctions may be financial in character, but can also take other forms.  For instance, criminal sanctions may include not just fines, but also impr isonment or social work.  Administrative sanctions 
may also include measures such as the destruction or  forfeiture of the goods.  It does not appear that 
all these different types of sanctions can be included under the term "charges".  This is also illustrated 
by Article VIII GATT, which clearly distinguishes between fees and charges on the one hand, and 
penalties, on the other. 
(ii) Article X:3(a) GATT does not require the harm onization of laws which exist in a WTO 
Member at sub-federal level 
4.768  The second problem with the US claim is that member States' laws which contain penalty 
provisions are themselves laws of general applicat ion.  Accordingly, even if these laws fell under 
Article X:1 GATT, it would be the administration of those laws to which Article X:3(a) GATT 
applies.  The alleged differences between member  States' penalty provisions to which the US has 
referred are not differences in administration, but differences between different legislative measures 
applicable in different territories.  That a particul ar topic may be regulated differently in different WT/DS315/R 
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 parts of the territory of a WTO Member has nothing to do with non-uniform administration.  
Accordingly, Article X:3(a) GATT cannot be used  to create a duty to harmonize sub-federal laws 
existing within a WTO Member. 
4.769  The United States has tried to escape this conclusi on by repeating its mantra that "laws can 
also be administered through laws", and that theref ore, member States' penalty provisions are to be 
regarded as "administration" for the purpose of Article X:3(a) GATT.  This interpretation is 
fundamentally at odds with the ordinary mean ing of the wording of Article X:3(a) GATT. 
4.770  The United States has defined the term to "adm inister" as "to execute", which in term it 
defines as "to carry out, put into effect".  The EC  can agree with these definitions.  However, the EC 
does not agree that a penalty provision "puts into effect" or "carries out" the substantive rule the 
violation of which it is intended to sanction.  For instance, a provision which provides for the 
imposition of a sanction for the failure to declare a good does not "carry out" or "put into effect" the provision which imposes the obligation to declare the good.  The penalty provision itself needs to be carried out through an administrative or judicial act imposing the sanction.  It is this latter act which can be regarded as executing the prohibition, and thus to constitute "administration".  In contrast, the 
penalty provision complements the  substantive provision, but does not itself put it into effect. 
4.771  Indeed, the United States itself has explicitly r ecognized that a penalty provision "may be 
considered as something to be administered".  This  exposes the logical fallacy of the United States.  A 
law that itself needs to be "put into effect" cannot be said to "put into effect" another law.  Rather, 
penalty provisions and substan tive provisions are both measures of general application which 
complement one another.  That the former exists at the member States level and the latter at the EC 
level does not mean that the former administers the latter. 
4.772  The US has criticized the EC for having defined "administration" as the execution of laws "in 
concrete cases".  This criticism is unjustified.  Th e administration of a law, which is defined as an act 
of general application, by definition implies its a pplication in concrete cases.  This follows clearly 
from the structure of Article X GATT.  Article X:1 GATT defines the laws of general application 
which must be published by WTO Members.  Article X:3(a) GATT then refers to these laws of 
general application as the acts to be administered in a uniform, impartial and reasonable manner.  It 
defies the internal logic of Article X GATT to argue th at laws to be administered can at the same time 
themselves constitute administration.  This wo uld undermine the clear distinction between 
"administration" and the laws to be admini stered recognized by the Appellate Body in EC – 
Bananas III .   
4.773  The US has sought support for its interpretation in the Panel Report in Argentina – Hides and 
Leather , in which the Panel found that a particular Ar gentinean resolution constituted a violation of 
the requirement of impartial and reasonable admi nistration.  However, as the EC has already 
explained, this was because the Argentinean measure made it impossi ble for Argentina to administer 
its customs laws in a manner that was reasonable and impartial.  Nowhere does the Panel Report in 
Argentina – Hides and Leather indicate that the Argentinean measure administered some other 
measure.  Accordingly, Argentina – Hides and Leather provides not support to the US interpretation 
in the present case. 
4.774  Overall, the US interpretation that "laws may implement other laws" is highly contrived and 
self-serving.  It is designed to achieve a c ondemnation of the EC in the present case while 
safeguarding those areas of economic activity which in  the United States itself are regulated in state 
law.   
4.775  In the United States, a wine exporter may have to deal with 50 different sets of state 
requirement for the sale of alcoholic beverages.  Th is is probably far more burdensome than the fact  WT/DS315/R 
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 that an importer in the EC may have to reckon w ith the penalty provisions of one out of 25 member 
States, depending on where the offence is committed.  It is therefore not clear why the EC should be 
obliged to harmonize its penalty provisions while the US is entitled to maintain sub-federal laws in 
numerous areas covered by Article X:3(a) GATT. 
4.776  Of course, the United States has a system of dual federalism where State law may never 
implement federal law.  However, this cannot m ean that all WTO Members in which the borderlines 
between federal and state competence are less strict, and federal and state laws may therefore be complementing one another, are somehow in violation of Article X:3(a) GATT.   
(iii) Community law ensures a sufficient degree of uniformity of penalty provisions 
4.777  Finally, the EC would clarify that whereas it does not accept that penalty laws can be 
regarded as "administration", it does not contest that  penalty laws may also be relevant for securing a 
uniform application of the laws referred to in Ar ticle X:1 GATT.  This is precisely why Community 
law, as clarified by the Court of Justice, lays down certain basic rules for penalty provisions, which 
must be effective, proportionate, and dissuasive. 
4.778  These general requirements are sufficient for secu ring a uniform application of EC customs 
laws, in accordance with Article X:3(a) GATT.  The United States does not provide any evidence 
which would show that the absence of a full harmon ization of penalty provisions in the EC leads to 
any lack of uniformity in the application of EC laws in areas referred to by Article X:1 GATT.   
4.779  The US has repeatedly referred to the fact that the EC, in the context of the discussions on the 
modernized customs code, has considered includi ng  a provision which would provide for a further 
harmonization of administrative sanctions in the customs area.  However, these discussions have 
nothing to do with the question of whether the EC is in compliance with the requirements of 
Article X:3(a) GATT.  Where this is beneficial for the functioning of the internal market, the EC has 
adopted harmonising measures in numerous areas, without this necessarily being a reaction to a WTO obligation.   
3. The US claim under Article X:3(b) GATT 
(a) The ECJ and the requirement of prompt review 
4.780  The US criticism on prompt review is limited to the role played by the ECJ through the 
preliminary reference procedure.  The US has not  presented any allegation concerning the actions for 
annulment of a Community measure, and, therefore,  the US seems to admit that, in this type of 
procedure, the ECJ and the Court of First Instance comply with the requirement of prompt review. 
4.781  It should be pointed out that preliminary refe rences serve the purpose of ensuring the uniform 
application and interpretation of Community law by th e tribunals of the member States.  In this sense, 
the Court of Justice, when acting through the pre liminary reference procedure, exercises a function, 
which is not dissimilar to that of a supreme court.  As the EC has repeatedly explained, preliminary 
reference procedures at the same time also serve as  one of the various instruments to ensure uniform 
administration in accordance with Article X:3(a) GA TT.  The EC has already affirmed that, in its 
view, "administer" means to execute the general laws and regulations, to apply th em in concrete cases.  
Therefore, uniformity is ensured through a panoply of administrative and legal mechanisms, including 
some judicial ones, like preliminary references or appeals to a second instance court.  In no respect, 
however, does the ECJ, through the preliminary refe rence procedure, provide "review" within the 
meaning of Article X:3(b) GATT, nor is this in any way required for the EC's compliance with this 
provision.  In this context, it shoul d be recalled that, as the US has already admitted, prompt review in 
Article X:3(b) GATT refers only to first instance. WT/DS315/R 
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 4.782  In any case, even if the requirement of promptness is applied to cases where preliminary 
references are requested, the accumulated time span it takes for a case to go through the ECJ and the 
relevant national court rarely arrives to the near ly four years average of the USCIT cases mentioned 
by the EC in its First Oral Statement.  In respon se to a question by the Panel, the US justifies these 
delays on "the fact that in the US courts the sch eduling of proceedings is, to a significant extent, 
conducted by mutual consent of the parties".  The EC  finds it difficult to justify an exception to the 
"prompt review" obligation on the basis a procedural  mechanism that relies on the discretionary will 
of the defending agency. 
4.783  Moreover, the EC would like to recall that the average periods for review by the USCIT to 
which it has referred do not include the periods necessar y for appeals to the US Court of Appeals for 
the Federal District or subsequently to the US Supreme Court.  It would thus seem to the EC that if 
the activity of the US Supreme Court were to be regarded as "review", it would certainly be no more 
prompt than that provided by the ECJ. 
(b) The requirement that the decisions of the tri bunals must govern the practices of the agencies 
4.784  The second US argument constitutes the core of its Second Written Submission in relation to 
Article X:3(b) GATT.  This argument refers to th e requirement that the decisions of the review 
tribunals govern the practice of the agencies entr usted with administrative enforcement of the WTO 
Member's customs law. 
4.785  This argument has only appeared in  these proceedings at a very last  stage.  The US used it for 
the first time in some of its replies to the firs t Panel questions, notably Question No. 35, where the 
Panel asked the US to identify what the US is challenging or alleging under Article X:3(b) GATT.  
This appears to replace the more general argument in the US First Written Submission, according to 
which "the opportunity for review and correction on a member-by-member State basis does not fulfil the EC's obligation under Article X:3(b)".  This chapter included some arguments, mainly on timing 
and variations in review procedures, all of which seem to have been discarded in the course of the 
proceedings.  Therefore, the US argument built on th e second sentence of Article X:3(b) seems to be a 
last-minute fall-back position. 
4.786  Although the late appearance of the argument ha s impeded a discussion between the parties, 
the EC will duly explain why the US position on the "govern the practice" requirement is a misrepresentation of Article X:3(b) GATT. 
4.787  The US interpretation that any decision of a first instance tribunal binds the whole 
organization of the customs agencies throughout a WT O Member's territory is based on four grounds: 
three are related to the literal interpretation of th e provision, namely the reference to two different 
obligations in the provision ("implement" and "gover n"), " the ordinary meaning of the term "govern" 
and the use of the Article "the" before the term "a gencies", while the fourth ground is based on the 
context provided by Article X:3(a) GATT. 
4.788  The EC cannot agree with these arguments advanced  by the US.  In the first place, the EC has 
already explained in its Second Written Submission the meaning of "govern" compared to the 
expression "implement", and how the former refers firs t of all to an obligation of fairness when taking 
a second administrative decision following the issu ance of an independent review decision. 
4.789  Second, to interpret the term "govern", the di fferent definitions of this term must be 
differentiated.  Should we admit that "govern" mean s "control, regulate, dete rmine, constitute a law, 
rule, standard or principle for", the decisions of fi rst instance tribunals would be considered as having 
binding effects, contrary to a common element that is shared by most of the "civil law" and "common  WT/DS315/R 
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 law" legal systems: that only high level or last inst ance tribunals take decisions that are considered as 
binding and, therefore, a general source of law. 
4.790  The EC can admit that a decision of a first instance regional tribunal plays the role of 
guidance to other first instance regional tribunals.  Thus, the ordinary meaning of "govern", among 
those provided by the US, would be "influence".  The decisions of a first instance tribunal are only 
binding for the specific cases decide d by the same tribunal and, therefore, contrary to an argument 
constantly repeated by the US, they are not an  instrument ensuring uniform administration. 
4.791  This interpretation reflects the situation in th ose third parties to the dispute having regional 
courts of first instance in customs matters, like Br azil, China, Japan and, partially, India.  On the 
contrary, as their submissions have shown, those third parties having centralized courts for first 
instance review of administrative decisions in cu stoms (Argentina, Australia and Korea) can easily 
share the far-reaching interpretation of Article X:3(b) that the US follows in this case. 
4.792  Third, the use of the term "the  agencies" in Article X:3(b) do es not mean that those agencies 
are all  the agencies throughout the WTO Member's territo ry, in our case the EC.  "The agencies" must 
be read in context with the term to which it relates,  "tribunals", which are tribunals of first instance.  
Therefore, "the agencies" must be understood as "the agencies" whose deci sions are reviewed by 
these tribunals of first instance.  In the EC, "the agencies" are those established in each of its member 
States, not the agencies established in the other member States. 
4.793  Moreover, the US fails to give a proper meani ng to the term "decision" in Article X:3(b) 
GATT.  The "decision" of a tribunal in a particular case must be distinguished from the reasoning which led it to this decision.  For instance, if a tribunal decides on an action for the annulment of a 
decision of the customs authorities, then the decision will be to annul the decision or not.  If the 
decision is to annul, then this decision will govern th e practice of the agency.  In contrast, there is no 
basis in Article X:3(a) GATT for assuming that all questions of interpretation which the tribunal may 
have considered in the course of its reasoning e qually become binding on the agency.  This would 
give a role to judicial precedent which would go  far beyond the practice of numerous WTO Members 
which do not have a legal system based on case law. 
4.794  This does not imply that the decisions of a tribunal of first instance, including the reasoning 
contained in the judgement, do not produce any effects in the EC system.  Such reasoning will constitute relevant judicial practice which will be  taken into account by the customs agencies.  
Moreover, if a customs agency or a court in a EC  member State does not share the interpretation of 
the EC legislation given by a court of another member State, it will take the initiatives that are proper 
to its respective position in the system: the customs ag ency shall consult and di scuss the issue with the 
Commission and the other member States, the court in  another member State will or shall refer to the 
EC Court of Justice. 
4.795  Fourth, the US considers that its understanding of X:3(b) is reinforced by the context 
provided by Article X:3(a).  The EC has already challenged any linkage between these to set of 
obligations in the course of these proceedings.  Th e EC considers that the US interpretation finds no 
support in the language, structure or objectives of Article X:3 GATT.  The fact that, as the US underlines, the EC has conceded that Articles X: 3(a) and X:3(b) must be interpreted "in an 
harmonious way" does not mean that we agree to an  interpretation that transforms Article X:3 GATT 
in a "totum revolutum" provision, where the differe nt obligations are melted, with the unwarranted 
consequence that the obligation to grant independent  review and correction of customs administrative 
decisions at first instance level is absorbed by th e obligation to ensure uniform administration of the 
legislation. WT/DS315/R 
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 4.796  Finally, it is not true, contrary to what the US  declares, that "if they [i.e. the decisions of 
review tribunals] govern the practice of only some of the agencies then, by definition, the administration of the Member's laws will not be uni form".  This categorical conclusion does not take 
into account that, as the EC has explained, there ar e other means of ensuring uniform administration 
and that the EC counts with a wide range of  instruments which contribute to the uniform 
interpretation and application of EC customs law. 
(c) The US interpretation of Article X:3(b) GATT requires the establishment, in every WTO 
Member, of a single and centralized customs court or a single and centralized customs agency. 
4.797  The US claims that it does not argue that Article X:3(b) requires every WTO Member to have 
a single, centralized tribunal for the prompt review  and correction of customs administrative actions.  
The US accepts the existence of first instance regi onal courts provided that the WTO Member has a 
single, centralized agency entruste d with the enforcement of customs law or that the various regional 
customs authorities take other steps to ensure that the decisions of review tribunals govern the practice 
of the agencies and that the Member continues to administer its customs laws in a uniform manner. 
4.798  It is unclear to the EC why the existence of a centralized customs agency, which at best is a 
question under Article X:3(a) GATT, should be li nked to the design of the court system under 
Article X:3(b) GATT.  The United States explains that "if the decision of a court in one region 
conflicts with a decision of a court in another region,  the agency should be able to resolve the conflict 
by appealing one or the other decision to a court or a tribunal of superior jurisdiction".  This explanation is revealing, because it shows that ev en according to the United States, judgments of 
courts of first instance are not binding on other c ourts, since otherwise, the conflict should not have 
occurred at all.  More importantly still, the US see ms to forget that it is the courts which should 
control the agency, not the agency which controls th e courts.  In the view of the US, it would be the 
agency which would be charged with ensuring the uniformity of the practice of the first instance 
tribunals, and which would select the judgment it wish es to appeal.  This is an interpretation which 
totally blurs the borderlines between the role of th e customs authorities and of the courts, and which 
should not be accepted. 
4.799  The only additional reason given by the US to su stain that a central agency would cure the 
lack of a central court is a proviso that c onstitutes the fourth phrase in the second sentence of 
Article X:3(b).  This proviso provides the possib ility, for the central administration of a customs 
agency, to request the review of a first instance cour t decision when there is go od cause to believe that 
the decision is inconsistent with established principl es of law or the actual facts.  The US considers 
that "that possibility makes sense only if the decisi on in the original proceeding would otherwise have 
effect outside of that proceeding". 
4.800  The US interpretation of this proviso is wrong in  that it misunderstands the role played by the 
review mechanism laid down in that proviso.  That mechanism is not established to rectify the effects 
of the original decision in the practice of the agencies but to provide a remedy, based on limited 
grounds, against a decision that is no more challeng eable through ordinary means because it is time 
barred.   
4.801  That is clear, first, from the structure of para graph (b).  The exception provided by the proviso 
refers to the time limits for appeals contained in the previous phrase in subparagraph (b) (the third 
phrase in the second sentence of the subparagraph), not to the "govern the practice" requirement, 
which is placed in the second phrase of th e second sentence of Article X:3(b) GATT. 
4.802  Second, that the proviso is not intended to rec tify the effects of the original decision in the 
practice of the agencies also deriv es from the nature of this type of exceptional review.  When the  WT/DS315/R 
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 review is based on the lack of c onsistency with established principles of law, its purpose is to protect 
the cornerstones of a legal system, with the view  to eliminate conflicts with the case-law of the 
highest courts, which are responsible for refining tho se principles of law.  When the review is based 
on the lack of consistency with the actual facts, its purpose is to annul a judicial decision on discovery 
of facts that were unknown to the court and to the party claiming the revision when the decision was 
given.  Neither of these two grounds  of review is linked to the even tual effects of a first instance 
judicial decision on the practice of the customs agencies.  The review based on the respect of 
principles has as its objective to en sure respect of the legal system and of the highest courts, the 
review based on the discovery of new facts produces its effects only on the original decision. 
4. Closing statement 
4.803  The EC will begin its closing remarks by fi rst presenting a number of general comments on 
the present case.  It will then present its closing arguments on the US claims under Article X:3(a) GATT.  The EC will subsequently present its closing arguments on the US claims under Article X:3(b) GATT. 
4.804  A first general remark the EC would like to make is that the present case is not like any other 
which has been litigated under the DSU.   It c onstitutes a fundamental challenge against the entire 
system of customs administration and judicial review of a WTO Member, namely the EC.  Contrary to what the US has alleged, this has nothing to do with "scare tactics", but simply describes the reality.  
From the discussions it can be seen that the case is not limited to issues of customs law and 
administration.  Rather, it touches upon fundamental  differences between legal traditions and cultures, 
between Members which have a federal structure and those who do not, between Members who have 
a system of executive federalism and others who do not, and between common law and continental 
law systems on the value of judicial precedent.  The EC believes that such issues are not properly 
litigated under the DSU, but should be left to the constitutional autonomy of each WTO Member.  
The EC is confident that the Panel will also be mi ndful of these considerations in its interpretation of 
Article X GATT, which is not a provision which s hould be used to interfere with fundamental 
questions regarding a Member's domestic legal system. 
4.805  A second general remark the EC would like to make  is that the Panel should not lose sight of 
the real implications of the US claims.  The US  case is, as the EC has repeatedly emphasized, aimed 
at the creation of an EC customs agency and an EC  Court, plus the harmonization of member States' 
laws in a number of areas.  Despite all US professions  to the contrary, this is the clear conclusion from 
numerous US statements where the US declared that  "in the absence" of an EC customs agency or a 
customs court, such and such issue necessarily lead s to a lack of uniformity.  This all-or-nothing 
nature of the US arguments is troubling, since it represents a highly prescriptive application of Article X:3(a) GATT on structural elements of the EC legal order which were well known at the time 
the EC became a WTO Member.   
4.806  As a third issue, the EC was planning to ra ise the issue of the US's late submission of 
evidence.  Given the Panel's decision to modify th e timetable, for which the EC would like to thank 
the Panel, the EC will not further enter into this que stion at this stage.  Nonetheless, the EC regrets 
that the US has not presented its evidence earlier, and that the EC does not feel to be in the same 
position as it would have been had the US presented its evidence as early as it should have.  The EC 
would also like to add that at the end of these pr oceedings, the feeling is still one of a lack of 
conclusion.  In fact, the EC feels as if it had been in a sort of trade policy review mechanism exercise, 
and it seems discussions could still have continued on the EC's system of customs administration 
forever.  It does not seem that this is really how the WTO dispute settlement mechanism should be 
used. 
4.807  The following are the EC's closing remarks on Article X:3(a) GATT. WT/DS315/R 
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 4.808  The present proceedings have shown that the pa rties have strongly different views of the 
requirements of Article X:3(a) GATT.  The US views this provision as a highly demanding legal 
standard, which can be used to prescribe in detail how a WTO Member administers its customs law.  Moreover, the US also appears to believe, desp ite its professions that divergences as such are not 
problematic, that a violation of Article X:3(a) can  already be demonstrated through reference to 
individual instances of administration.   
4.809  The EC does not agree with these views of the US.  In the view of the EC, Article X:3(a) is 
purely a non-prescriptive, minimum standards provision which complements the substantive 
disciplines of other provisions of the covered ag reements.  Moreover, given the high number of 
administrative instances in the day-to-day manage ment of customs, it cannot be assumed that a 
violation can already be accepted because of individual instances of non-uniform administration.  
Rather, as the Panel in US – Hot-Rolled Steel has stated, demonstration of a pattern of non-uniform 
administration is required.  Moreover, as the Appellate Body has clarified in US – Oil Country 
Tubular Goods Sunset Reviews , "solid evidence" is needed corresponding to the gravity of the 
allegation.   
4.810  In the bulk of its submissions, the United States has tried to base its case not on evidence of 
actual administration, but on systemic criticisms of EC's system of customs administration.   In its submissions, the EC has already responded in deta il to these allegations.  It has also provided a 
comprehensive description of the EC's system of customs administration, which it hopes will assist the Panel in its task of proceeding to  an objective assessment of the facts. 
4.811  The EC would therefore limit itself to addressing some systemic claims raised in the US 
Second Oral Statement.  First, there is the continue d insistence of the US on its arguments that the EC 
system encourages "BTI shopping".  In support, it refers  to what it calls "skewing" of the issuing of 
BTI, and in particular the fact that some member  States, notably Germany, issue a higher percentage 
of BTIs than other member States.  As the EC h as already remarked, this fact does not in any way 
prove that BTI shopping occurs.  Rather, it reflect s different commercial pa tterns and the general 
importance of Germany as the largest  economy in the EC internal market .  It may also reflect different 
habits of traders due to the fact that Germany w as the first member State to introduce BTI in the EC 
before its Community-wide introduction through the EC Customs Code. 
4.812  The US has also complained against a lack of  obligations on the part of one member State 
authority to take into account the BTI issued by othe r member States.  This statement distorts the legal 
situation in the EC.  As the EC has explaine d, where a member Stat e, for instance through 
consultation of the EBTI data base, learns of BTI divergent from the classification intended by it, the 
Member State may not simply go ahead issuing conflicting BTI, but rather must refer this matter to the Commission and/or the customs code committee. 
4.813  Finally, the US also has continued its criticis m of the preliminary reference procedure as a 
means for ensuring uniform administration.  In suppor t, it has, in its Second Oral Statement, referred 
to a recent judgment of the ECJ in Intermodal Transport , from which it has quoted very selectively.  
The EC had planed to comment on this issue in its  closing remarks, but given the additional time 
granted by the Panel for comments on Part III of th e US Second Oral Statement, the EC will reserve 
this for its written remarks.   
4.814  Leaving the systemic issues, the EC turns now to what should be the focus of the US case: 
namely the actual administration of EC customs law.  In other words, when one  takes stock of the US 
submissions, has the US shown that there is a pa ttern of non-uniform administration of EC customs 
law? The answer is a resounding "no".  WT/DS315/R 
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 4.815  As regards the area of tariff classification, th e US has essentially referred to only two single 
cases of application, namely LCD monito rs and blackout drapery lining (BDL). 
4.816  As regards LCD monitors, the US position was first that the duty suspension regulation did 
not ensure uniform application.  More recently, and notably in its Second Oral Statement, the US has 
shifted focus to the monitors not covered by this regul ation.  In this context, it has referred to some 
extremely recent developments which occurred durin g the Panel proceedings, for instance BTI issued 
by the German authorities in July 2005, and i ndustry comments addressed to the European 
Commission in September 2005.  In the EC's view, these recent developments do not show that there 
is a problem of non-uniform application contrary to Article X:3(a) GATT, but rather that there is an 
issue in the process of resolution.  In fact, the classification of the relevant monitors is an issue which 
is currently under review, and re levant measures will be submitted to the Customs Code Committee in 
the very near future. 
4.817  As regards BDL, the US has not shown any lack  of uniformity, either.  As the EC has said 
before, there is no evidence that the products befo re the German authorities were covered with textile 
flock, and thus identical to those described in the BTI issued by the Dutch, Irish and UK authorities.  
In a last-minute attempt to paper over this diffi culty, the US has submitted an affidavit by the 
Chairman of Rockland, the producer of BDL.  The EC  has already explained that this statement by a 
person with a clear interest in the classificati on of BDL has no probative value whatsoever.  
Moreover, the affidavit does not concern the questio n whether the products before the EC authorities 
were in fact identical.  Rather, it contains mere ly an assurance that Rockland has never produced any 
product that is not flocked.  This, however, is not th e issue, since it is not clear that the products were 
all produced by Rockland, nor that all of Rockla nd's products are indeed identical.  Overall, the 
question of whether the products were  flocked is purely a question of the examination of the physical 
goods by the competent customs authorities.  Moreover, the EC notes that both importers concerned by the German decisions, the Bautex GmbH and the Ornata GmbH, have not appealed the decisions.  
For this reason, the United States cannot now claim ther e to be a lack of uniformity attributable to the 
EC system. 
4.818  In the area of customs valuation, the US has b een even less forthcoming with evidence.  It has 
mainly referred to the report of the Court of Aud itors, which is however in itself a tool for ensuring 
uniform administration, has been implemented, and no longer represents an accurate description of the 
situation today.  As regards actual cases, the US  referred only to one single case, involving Reebok.  
However, it has entirely failed to substantiate this  case with evidence of non-uniform administration, 
and has thus not fulfilled its burden of proof. 
4.819  Finally, in the area of customs administrati on, the US seems to have entirely dropped its 
arguments regarding the local clearance procedure.  As regards processing under customs control, the 
US simply repeats its erroneous interpretations of th e French guidance, which it misinterprets so as to 
create the impression of a conflict with EC law.  However, if fails to support its doubtful 
interpretation with any evidence as regards the actual application of the guidance. 
4.820  When one passes in review the factual basis of the US claims, one must conclude that it is 
extremely thin.  From the beginning, the United St ates has struggled to come forward with evidence 
of non-uniform application.  It has started by bri nging two examples in the area of classification and 
one in the area of valuation.  When it saw these examples evaporate, it tried to add, in a last-ditch 
effort, two more cases, one of which even concerns  a matter outside the Panel's terms of reference. 
4.821  The EC submits that there is a stark mismatch between this lack of factual evidence, and the 
extremely broad allegations of the US.  Millions of customs issues are dealt with by the EC customs 
authorities every year.  If the EC's system of cu stoms administration were truly as deficient as the 
United States alleges, then evidence of non-unif orm administration should be abundant, and the US WT/DS315/R 
Page 138  
 
 should have been able to provide numerous ex amples.  But the opposite has been the case.  
Significantly also, of the numerous third parties in the present proceedings, none, not even those 
which in principle supported the US case, have point ed towards any examples of lack of uniformity in 
the EC's system.  This difficulty of the US to pr ovide evidence is essentially due to one fact: the EC's 
system is not anywhere near as bad as the US woul d want to make it appear, but on the contrary as a 
whole ensures a high degree of uniformity throughout the EC.  For this reason, the US claims should 
be rejected. 
4.822  Before concluding on Article X:3(a) GATT, the EC would like to make some last remarks on 
the issue of penalties.  It has by now become clear th at this US claim is rather different from the other 
claims in that it concerns not actual administration,  but different legislation which exists at Member 
States level.  As the EC has explained, this claim must fail for several reasons. 
4.823  First, penalty provisions are not among the laws  referred to in Article X:1 GATT.  The US 
explanations in its Second Oral Statement that pe nalties somehow "pertain to classification", or would 
be "charges" or "requirements on imports" simply have no basis in the text of Article X:1 GATT. 
4.824  Second, provisions which set out penalties do not  constitute "administra tion", but rather are 
themselves laws of general application.  That at th e same time, they may be related to the substantive 
law which they sanction is neither here nor ther e.  Laws may very well complement one another 
without for that reason becoming "administration".  
4.825  Finally, to the extent that penalty laws have an impact on the uniform application of customs 
laws, the EC has taken the necessary measures to ensu re that member States' legislation on sanctions 
does not undermine uniformity.  In particular, the requirement that sanctions be dissuasive and 
deterrent means that traders will normally respect th e substantive provisions of customs law; uniform 
application of these laws  is thus ensured. 
4.826  The US has, in its Second Oral Statement, argued that the uniform application of US customs 
laws "is not the point", because penalty laws still re main part of the "legal backdrop" against which 
traders decide into which member State of the Community they import.  This is wrong for two 
reasons.  First, because penalty provisions do not fall under Article X:1 GATT.  And second, because 
Article X:3(a) GATT only concerns the administration of laws, but does not give traders the right to 
expect that in all parts of the territory of a WTO Member, the same laws will apply.  In other words, 
the "legal backdrop" in a WTO Member with a federal structure may perfectly well include sub-
federal laws, provided of course that these laws are administered in accordance with Article X:3(a) GATT.   
4.827  Accordingly, the Panel should reject the US cl aim that the EC is obliged to harmonize the 
penalty laws of its member States. 
4.828  Concerning Article X:3(b) GATT, the EC will mainly concentrate on some arguments put 
forward by the US recently. 
4.829  First, the EC would like to insist that the US  arguments concerning Article X:3(b) have been 
recently shifted to the requirement "govern the practice". 
4.830  The EC will not repeat its arguments on this issu e, tough it is worth insisting on the fact that 
the US carries out an interpretation that does not take into account that the obligations in Article X:3(b) apply to first instance courts. 
4.831  The US claims that the "govern the practice"  requirement means "that the review court 
decisions must control the way agencies administer  the customs law".  This interpretation imposes  WT/DS315/R 
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 very far-reaching obligations for all WTO Members,  which do not correspond to the legal traditions 
of most of the WTO Members of both "civil law or roman-germanic law" and the "common law" 
families.  In the US interpretati on, first instance courts will deliver  judgments that will be binding 
outside the relevant proceedings and will participat e in the elaboration of a case-law or precedents that 
will constitute a general source of law. 
4.832  This surprising outcome is aggravated by th e fact, as the EC has heard from the present 
discussions, that the US understands the term "deci sion" to cover not only the operative part of a 
judgment but also its reasoning.  The US interpretati on would imply a radical change in the nature of 
those courts. 
4.833  The EC would insist on the need to reject the far-reaching interpretation of Article X:3(b) 
made by the US.  The EC has provided the Panel with  its own interpretation, which clearly confirms 
that the EC court system complies with the requirements of Article X:3(b). 
4.834  Second, the EC would like to note that, contrary to US claims, its position on the 
interpretation of the "govern the practice" requireme nt is not in conflict with its interpretation of 
Article X:3(b) GATT.   
4.835  In paragraph 89 of its Second Oral Statement, the US distorts the EC's arguments in this 
respect.  The EC has never referred to the review of  decisions of customs agencies by member States' 
courts of first instance as a key means to achieve th e aim of uniform administration.  What the EC has 
sustained is something which has nothing to do with the misleading summary presented by the US.  The EC has explained that preliminary rulings by  the European Court of Justice constitute an 
important instrument of ensuring uniform administra tion of customs law.  This role is played not 
because preliminary references are made by courts of first instance, but because of the effects that the 
resulting rulings by the ECJ have on all courts in the different member States.   
4.836  Third, the EC would like to refer to the US rebu ttal of the EC's argument that the creation of 
an EC Customs Court would breach fundamental EC constitutional principles.  The US has alleged in 
its Second Oral Statement that Article 225a of th e EC Treaty lays ground-work for the establishment 
of new EC courts like the new Civil Service Tribunal. 
4.837  This interpretation shows a total lack of understa nding of the EC judicial system by the US. 
4.838  Article 225a of the EC Treaty is just an or ganizational provision allowing the creation of 
judicial organs to decide at first instance certain classes of action or proceedings in specific areas.  In 
other words, the creation of a new court would on ly imply the redistribution of the work of the 
European Court of First Instance (CFI) and in no way entails the attribution of new competences to 
EC Courts. 
4.839  Therefore, no new court established according to Article 225a of the EC Treaty would be 
entitled to examine actions other than the actions fo r annulment of some acts of EC institutions for 
which the CFI has jurisdiction according to Articles 225 and 230 of the EC Treaty.  No such court 
would be entitled to review decisions taken by the member States' authorities.  This remains the task 
of the EC member States' courts under the system of  attribution of competences laid down in the EC 
Treaty, and will remain so unless an amendment to th e EC Treaty is ratified by all member States.   
4.840  The creation of a centralized customs court in th e EC, therefore, would require a reform of the 
EC Treaty. 
4.841  The US kindly offers the EC another option to comply with its ambitious reading of the 
obligation under Article X:3(b): instead of creati ng a central customs court, the EC can always WT/DS315/R 
Page 140  
 
 establish a centralized customs agency which, among ot her duties, will be in charge of ensuring that 
review decisions of courts of first instance "c ontrol" how agencies administer EC customs laws. 
4.842  The EC has been repeatedly accused by the US of calling fo r a special standard in the 
application of Article X:3 GATT, accusation from wh ich we have duly defended ourselves.  It seems 
to the EC that it is rather the US who is tr ying to impose its own standard on the whole WTO 
membership, since their interpretation of the oblig ations under Article X:3(b) leads always to the 
imposition of one or the other body or institution fou nd in the US system (a central customs agency 
and/or a central customs court).  By contrast, the EC 's interpretation of Article X:3(b) allows the US 
and other WTO Members to maintain their systems as long as they fulfill the important but distinct obligations of uniform administration and prompt review of administrative decisions. 
H. 
SECOND ORAL STATEMENT OF THE UNITED STATES  
1. Introduction 
4.843  This dispute is about two things:  first, the fact that the EC, through its 25 different customs 
authorities, does not administer EC customs law in a uniform manner; and, second , the fact that the 
EC fails to provide tribunals and procedures fo r the prompt review and correction of customs 
administrative actions as required by Article X:3(b) of the GATT 1994.   
4.844  With respect to Article X:3(a), the United States has shown that EC customs law is 
administered by 25 separate, independent customs authorities.  Absent some process or institution to 
prevent divergences among these authorities or reconcile them when they occur, such a system plainly 
would not satisfy the EC's obligation of uniform administration.  And, indeed, such a process or 
institution does not exist.  
4.845  The EC asserts that such pr ocesses and institutions do exist.   However, the processes and 
institutions that the EC holds out as securing uniform administration do nothing of the sort.  They are 
either extremely general (e.g., the overarching duty of cooperation in EC  Treaty Article 10), non-
binding (e.g.,  explanatory notes, guidance, and other "sof t law" instruments to which the EC has 
referred), or discretionary in nature (e.g., the possi bility that a question may or may not be referred to 
the Customs Code Committee).  The one process of a binding nature that the EC holds out as securing 
uniform administration – appeals to member State c ourts with the possibility of referral to the ECJ – 
in effect puts a heavy burden on the trader to seek out uniform administration, rather than providing 
for uniform administration in the first instance, as  GATT Article X:3(a) requires.  And, even this 
process does not actually secure uniform administration.   
4.846  The EC and individual EC officials acknowledge  that the instruments purported to secure 
uniform administration do not in fact do so.  Trad ers share this view.  In some areas (e.g., penalties 
and audit procedures) the tools of administration differ from member State to member State such that administration of EC customs law is undeniably non-uniform.  The US has supported its arguments 
with illustrations of particular instances in which member States have administered EC customs law 
in a non-uniform way and the EC has failed to e ffectively and timely reconcile the divergences.  
4.847  Moreover, the only tribunals or procedures availa ble for the prompt review and correction of 
customs administrative action in the EC are member  State courts.  The decisions of these courts 
govern only the actions of the customs authorities in  the member States concer ned.  As there is no 
tribunal for the prompt review and correction of  customs administrative actions whose decisions 
govern the practice of customs authorities throughout th e EC, the EC fails to meet its obligation under 
Article X:3(b) of the GATT 1994.  WT/DS315/R 
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 4.848  It is important to keep in mind that this dis pute stems from the fact that the EC is a Member 
of the WTO in its own right.  This dispute coul d not have been brought under the GATT 1947, as the 
EC itself (as distinct from individual member States) was not a Contracting Party to the GATT 1947.  EC arguments ranging from the timing of the US claim to the intentions of the drafters of Article X:3 need to be understood with this fact in mind. 
2. The EC fails to rebut evidence supporting US Claims 
4.849  The EC mistakenly asserts that th ere is a lack of evidence to support the US claims.  In fact, 
the US claims are amply supported by un-rebutted evidence of:  the manner of operation of the very 
"procedures and institutions of the EC legal system " that the EC claims "provide for a uniform 
application and interpretation of EC law"; admission s by the EC and EC officials; statements of 
traders; and illustrations of particular cases of non-uniform administration. 
(a) EC admissions of non-uniform administration 
4.850  Somewhat awkwardly, the EC attempts to distance itself from its own past admissions or 
admissions by senior EC officials.  In some cases, the EC dismisses such statements as irrelevant on 
the theory that the speaker was not addressing th e consistency of EC ac tions with Article X:3 per se .  
In the EC's view, it seems that an admission is rele vant evidence only if the speaker actually draws the 
legal conclusion that the action or inac tion in question breaches Article X:3.  
4.851  Thus, even though the EC Court of Auditors made a number of critical findings 
demonstrating lack of uniform administration of EC customs valuation rules, the EC dismisses those findings because "the Court of Auditors did not in any way make judgments as to whether the EC was 
in compliance with Article X:3(a) GATT."   Likewise, even though the explanatory note 
accompanying the EC's draft Modernized Customs Code observed that "[s]pecific offences may be 
considered in one member State as a serious criminal act possibly leading to imprisonment, whilst in another member State the same act may only lead to a small – or even no – fine" (Exhibit US-32, p. 13) the EC asserts that acknowledgment to be i rrelevant because it did not  draw a legal conclusion 
with respect to GATT Article X:3(a). 
4.852  An admission by the EC or an EC official n eed not state a legal conclusion in order to 
constitute relevant evidence.  What matters is that  the representations concerning factual matters tend 
to support a legal conclusion relevant to the dispute.  
4.853  Similarly, the Panel should decline the EC's sugges tion that it pay no heed to the statements of 
individual officials simply because they were not sp eaking officially on behalf of the EC.  The point 
that the EC consistently misses is that in each  of these cases, a senior official with extensive 
knowledge of the administration of EC customs la w – whether the Commission's Head of Customs 
Legislation Unit or an Advocate General of the Court of Justice, for example – was speaking 
authoritatively on that subject.  
4.854  Yet another instance of the EC distancing itself from its own admissions is its discussion of 
the EC – Chicken Cuts dispute.  In that dispute, where it was convenient to its immediate interests, the 
EC asserted an absence of uniform administration (i.e . lack of consistent classification of the product 
at issue under one Tariff heading).  And now, where a lack of uniform administration does not serve 
the EC's immediate purpose, it latches onto the Pa nel's finding of consistent classification and 
disavows its earlier statements.    WT/DS315/R 
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 (b) There is no requirement to show a "pattern" of non-uniform administration 
4.855  In addition to distancing itself from its own ad missions, the EC responds to US evidence in 
support of its Article X:3(a) claim by arguing th at the evidence does not exhibit a "pattern."  
However, such a "pattern" requirement has no basis in  Article X:3(a).  Nor is it supported by the Panel 
report in US – Hot-Rolled Steel , on which the EC heavily relies.  
(c) Difficulty of certain customs administrati on questions does not counter evidence of non-
uniform administration and, in fact, highlights the problem 
4.856  A further line of EC argument asserts that the cases identified by the United States as 
illustrating non-uniform administration concerned "difficult" or "complex" matters of customs 
administration and that US Customs, too, has enco untered problems in grappling with these matters.  
But Article X:3(a) does not excuse non-uniform administration in difficult or complex cases.  In fact, 
it is precisely the difficult or complex cases that highlight most prominently the lack of uniform 
administration in the EC. 
4.857  In dealing with simple, commodity-type products, for example, the risk of non-uniform 
administration of classification rules would seem to be less than for more sophisticated products.  But, 
when confronted with more sophisticated products  or products embedding new technologies, the fact 
that classification decisions are being made by 25 different authorities increases the likelihood of 
divergent administration.  
4.858  Moreover, far from supporting the EC's argu ment, its assertion that US Customs has 
encountered difficulty in grappling with certain  issues actually underscores the difference between 
non-uniform administration of EC customs law and uniform administration of US customs law.  
Whatever challenges US Customs may have enc ountered in dealing with difficult-to-classify 
products, its decisions applied throughout the customs territory of the US  
(d) Resolution of divergences among member States after months or years does not counter 
evidence of non-uniform administration. 
4.859  Another EC line of argument is that illustra tions of non-uniform administration identified by 
the US are inapposite, because the non-uniformities at issue were resolved.  This argument does not 
rebut evidence of non-uniform administration, because in each instance non-uniform administration 
existed and, moreover, was allowed to  persist for months or years.  
4.860  It cannot be the case that a Member fulfills its obligation of uniform administration under 
Article X:3(a) as long as it reconciles instances of non-uniform administration eventually, even if it takes many months or years to do so.  Such a construction would deprive Article X:3(a) of any 
meaning, as a Member could respond to any instance of non-uniform administration simply by 
asserting that it was in the process of resolving it.   
3. Recent cases confirm that processes EC hold s out as securing uniform administration 
fail to do so 
4.861  The EC accuses the United States of basing its claims on "theoretical" scenarios.  A poignant 
rebuttal of that critique is evident in the presenta tion made by a seasoned EC customs law practitioner, 
Mr. Philippe De Baere, at a recent forum sponsor ed by the American Ba r Association (ABA).  
(Exhibit US-59). 
4.862  The EC has referred to explanatory notes and conclusions of the Customs Code Committee as 
instruments to secure the uniform administration of EC  customs law.  In fact, what Mr. De Baere's   WT/DS315/R 
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 presentation shows (p. 14) is just the opposite.  In some member States, an explanatory note may be 
treated the same as a regulation and given prospective effect only.  In others, an explanatory note may 
be treated as a clarification and given retrospective effect. 
4.863  In particular, Mr. De Baere describes a r ecent case involving the classification of video 
camera recorders (i.e. camcorders) which demons trates not only differences among member States in 
the treatment of EC explanatory notes, but also the problem of non-recognition of BTI from member 
State to member State, the problem of non-uniform administration of the EC law (CCC Article 221(3)) prescribing the period following importation during which a customs debt may be collected, and the problem of recourse to member State courts as a supposed tool of securing uniform administration.  At issue in this case is the ques tion whether certain camcorders should be classified 
under Tariff heading 8525.40.91 or 8525.40.99.  A camcorder qualifies under the former heading if it 
is "[o]nly able to record sound and images taken by the television camera."  (Exhibit US-60).  "Other" camcorders qualify under heading 8525.40.99. 
4.864  In July 2001, the Commission adopted an am endment to an explanatory note covering 
heading 8525.40.99.  The amendment provided that this heading includes "'ca mcorders' in which the 
video input is obstructed by a plate, or in anot her way, or in which the video interface can be 
subsequently activated as video input by means of software."  (Exhibit US-61).  The amended note led 
to non-uniform administration of customs laws in at least three respects.  
4.865  First, in view of the amended explanatory note, two member States (France and Spain) 
reached back to collect additional duty on certain camcorders imported prior to the amendment and 
classified under heading 8525.40.91.  By contrast, other member States (in particular, the United 
Kingdom and Germany) have expressly declined to gi ve retroactive effect to explanatory notes.  
(Exhibits US-63 and US-64).  
4.866  Second, subsequent to issuance of the amende d note, in June 2004, the Spanish customs 
authority issued BTI classifying 19 camcorder m odels produced by a particular company under 
heading 8525.40.91.  (Exhibit US-65).  In July 200 4, the French affiliate of the Spanish importer 
informed the French customs author ity of the existence of these BTI during the course of an audit by 
the French authority.  Notwithstanding this info rmation, in November 2005, the French authority 
informed the company that it intended to collect a dditional duty retroactively on certain camcorders, 
including cameras, that is, models covered by the Spanish BTI. 
4.867  Third, in deciding to give retroactive effect to the July 2001 explanatory note, the French 
authority followed an interpretation of EC rules not followed by other member States on the period 
after importation during which a customs debt may be collected.  Article 221(3) of the CCC 
(Exhibit US-5) sets that period as three years.  The only exception to this rule is the lodging of an 
appeal, which suspends the three-year period.  However, beginning with a 1998 judgment of the 
French Cour de Cassation (Exhibit US-66) concerning the predecessor to Article 221(3), the French customs authority has taken the position that any administrative proceeding (procès-verbal) 
investigating a possible customs infraction also has th e effect of suspending the three-year period.  In 
appeals from decisions following that position, litiga nts have consistently failed to persuade the 
French court to refer to the ECJ the question of  whether this position is consistent with CCC 
Article 221(3) (Exhibits US-67 and US-68).  And, indeed, as of December 2002, France's national interpretation of Article 221(3) has become entren ched through an amendment to France's customs 
law (Exhibit US-69).  The refusal of even France's c ourt of last instance to refer this question to the 
ECJ, even in the face of eviden ce that other member States interpret Article 221(3) differently, is 
further demonstration that the availability of appeal s to member State courts is not the instrument of 
securing uniform administration that the EC claims.  WT/DS315/R 
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 4.868  A second illustration in the De Baere presentation reinforces the point that, contrary to the 
EC's argument, the opportunity to appeal customs administrative decisions to member State courts, 
with the possibility of eventual referral to the EC J, does not secure uniform administration.  The case 
involves classification of the Sony PlayStation2 (PS2 ).  The UK customs authority had issued BTI for 
a good and then revoked it based on an EC Commissi on regulation adopting a different classification 
for the good.  When that regulation was annulled by th e EC Court of First Instance, rather than restore 
the BTI, the authority kept it revoked based on a re-eva luation of its original classification decision.  It 
confirmed the BTI's continued revocation on new,  national grounds only weeks after the ECJ's 
Timmermans  decision.  But for that action, the PS2 would have been subject to classification 
instruments with (in theory) uniform EC-wide effect  continuously, beginning with issuance of the UK 
BTI, continuing with issuance of the Commission regulation, and continuing after the annulment of 
that regulation with restoration of the BTI.  The Timmermans  judgment permitted the UK to disrupt 
that presumably continuous uniformity by keeping the BTI revoked on grounds other than the Commission regulation that had led to its revocation in the first place.  Compounding this disruption 
of uniform administration is the fact that the UK High  Court of Justice declined to refer to the ECJ the 
question of whether the customs authority could do this.  
4.869  A third recent case that calls into question the e ffectiveness of appeals to member State courts 
with the possibility of referral to the ECJ as a tool  of uniform administration is the judgment of the 
ECJ in Intermodal Transports  (Exhibit US-71).  That case concerned the classification of certain 
tractors by the Dutch customs authority.  Contra ry to the importer's request, the authority had 
classified the tractors under heading 8701 rather than  heading 8709.  In its appeal, the importer called 
to the Dutch court's attention the fact that the Finnish customs authority had classified similar goods 
under heading 8709.  Despite the apparent divergence,  the court declined to refer the matter to the 
ECJ.  When the appeal reached the Supreme Court of the Netherlands, that court referred to the ECJ 
the question of whether a member State court should make a preliminary refere nce to the ECJ when a 
party brings to its attention conflicting BTI fo r similar goods issued by another member State 
authority to a third party and the court believes that the BTI wrongly classified those goods. 
4.870  The ECJ found that a national court is under no su ch obligation to refer.   With respect to 
courts other than courts of last instance, the ECJ sa id that evidence of divergent BTI "cannot limit the 
freedom of assessment thus vested in [the nati onal] court under Article 234 EC."  (Exhibit US-71, 
paras. 32 and 45).  Moreover, it said that even a cour t of last instance is under no obligation to refer if, 
for example, it finds correct classification of the goods in question to be "so obvious as to leave no 
scope for any reasonable doubt." (paras. 33 and 45).  It went on to note that the national court has 
"sole responsibility" for determining whether the corr ect classification of goods is "so obvious as to 
leave no scope for any reasonable doubt."  (para. 37). 
4.871  Perhaps the EC's advisor, Mr. Vermulst, put it best in his article, "EC Customs Classification 
Rules: Does Ice-Cream Melt?" (Exhibit US-72, p. 21) when he said:  
The EC system with respect to judicial revi ew in classification matters and, more in 
general, all customs issues is not only expensive and time-consuming for affected 
parties, it also may lead to inconsistent j udgments by national courts, at least in first 
instance.  This problem is exacerbated by the fact that courts of certain member States are much less likely to request preliminary ru lings than those of other member States. 
4. It is appropriate for the Panel to exercise its authority under DSU Article 13 
4.872  With respect to the US suggestion that the Pa nel exercise its authority under Article 13.1 of 
the DSU, the United States was not asking the Panel to make its 
prima facie  case.  The United States 
has already done that with the evidence and arguments  it has put before the Panel.  Rather, the United 
States was suggesting that if an understanding  of the statistical incidence of non-uniform  WT/DS315/R 
 Page 145 
 
 
 administration of EC customs law would help the Pa nel to evaluate the evidence, it should exercise its 
authority under Article 13.1 to obtain certain informat ion, which is exclusively in the hands of the EC 
or EC member States.  As the panel in US – Upland Cotton  recently explained, "Any suggestion that 
a panel 'makes the complainant's case', wh en it merely exercises its powers under the DSU , is entirely 
inaccurate."  (para. 7.633).  
5. The EC fails to rebut evidence that classification rules are administered in a non-
uniform manner 
(a) BTI does not secure uniform administration 
4.873  With respect to US arguments showing that BTI does not secure uniform administration, the 
EC first denies that the ability of an importer to obtain BTI from any of 25 different member State 
customs authorities, without any centralized contro l, encourages "BTI shopping."  In particular, it 
contends that its acknowledgment in the EC – Chicken Cuts dispute that "it is possible under EC law 
to withdraw an application for BTI where the outco me is considered unfavourable by the importer" 
(para. 7.261) does not indicate that BTI shopping occurs.  But that contention is illogical.  In a system in which the administration of customs law was uni form, there would be little point in an importer's 
withdrawing a request for a classification ruling up on learning the authority's proposed decision.  
4.874  The EC also contends that the heavy skewing of BTI issuance in fa vour of certain member 
States does not indicate BTI shopping, but merely differences in various commercial factors from 
member State to member State.  Such factors might be a logical explanation if the skewing were not as dramatic as it actually is.  However, it seems rema rkable that in a system  which, according to the 
EC, does not encourage BTI shopping, a single member State (Germany), representing just over 19% 
of imports into the EC by value in 2004, issued a bout 37% of all BTI with a start date in 2004, while, 
for example, another member State (Italy), representi ng about 11% of imports, issued less than 1% of 
all BTI with a start date in 2004, and a member Stat e representing almost 2% of imports into the EC 
(Greece), issued only a single BTI with a start date in 2004 (and only 10 with a start date in 2003 and 
17 with a start date in 2002). 
4.875  As the EC's advisor, Mr. Vermulst, has remarked (Exhibit US-74, pp. 1314-15):   
Unfortunately, the same disparity with respect to the origin of preliminary rulings is 
reflected in the requests for BTI, with sever al times more rulings issued by Germany 
than by any other country.  Such a disparity of numbers of proceedings has several regrettable consequences.  It implies th at Germany has proportionally too much 
influence in this part of customs law.  Moreover, the authority of a procedure is not 
enhanced if most member States barely apply it. 
4.876  Moreover, it is not just the opportunity to shop for a favourable classification that makes BTI 
an inadequate instrument for securing uniform admi nistration of customs classification rules.  The 
lack of narrative explanation in BTI makes it di fficult to see how a given member State authority 
came to its classification decision and thus for ot her authorities to determine whether they should 
follow that decision in classifying similar goods.  
4.877  Further limiting the utility of BTI as a means of securing uniform administration is the very 
narrow sense in which BTI issued by one member  State authority governs the actions of other 
member State authorities.  BTI issued by one memb er State authority is binding on other member 
State authorities only to the extent that the person invoking the BTI is the person to whom it was issued (the "holder") and the goods at issue are identi cal to those described in the BTI.  But for such 
cases, there is no obligation on the part of one memb er State authority to take account of BTI issued 
by other member State authorities for similar goods wh en such BTI is brought to its attention.  This WT/DS315/R 
Page 146  
 
 problem is evident in the EC's response to the US discussion of the EC – Chicken Cuts dispute.  
Despite the EC's acknowledgment there that differe nt customs offices classified the identical goods 
differently, the EC now states that "[n]owhere in the Panel Report in EC – Chicken Cuts  has the EC 
said that BTI was not recognized when presented by the holder."  
4.878  The point is illustrated again by the EC's di scussion of the blackout drapery lining case.  In 
response to evidence that the EC  customs office in Germany faile d to explain why it was not 
following the classification decisions reflected in othe r offices' BTI, the EC simply states that "BTI is 
binding on the customs authorities only as against the holder of the BTI." 
4.879  The EC attempts to draw a comparison to the practice of US Customs.  However, the very 
regulation that the EC cites as evidence of US practice illustrates the difference between the US 
advance ruling system, which promotes uniformity, and the EC BTI system, which does not.  Thus, 
section 177.9(a) of the regulation (Exhibit EC-129) st ates that where US Customs issues a ruling letter 
with respect to a particular transaction or issue, "the  principle of the ruling set forth in the ruling letter 
... may be cited as authority in the disposition of transactions involving the same circumstances."  The EC BTI system contains no such provision. 
(b) LCD monitors 
4.880  With respect to evidence showing that the LCD monitors case is an important example of the 
lack of uniform administration of EC rules on customs classification, the EC first asserts that the duty suspension regulation concerning LCD monitors with  DVI has resolved the lack of uniformity of 
administration with respect to this particular cla ssification question and that the trading community is 
satisfied with the outcome.  In fact, this asserti on simply glosses over the fact that the suspension 
regulation applies only to monitors below a certain size threshold, that it does not actually resolve the 
underlying classification question, and that, for monitors above the size threshold, a state of non-uniformity with serious financial consequences remain s.  Moreover, the implication that the trading 
community is satisfied is belied by recent statem ents from the very industry concerned with this 
classification question (Exhibit US-75). 
4.881  The EC next contests the US argument that an  EC Customs Code Committee conclusion that 
conflicts with an applicable chapter note in the Combined Nomenclature detracts from rather than 
promotes uniform administration.  The Committee's c onclusion stated that a monitor should not be 
classified under Tariff heading 8471 unless an importer can show that it is " only to be used with an 
ADP machine," whereas the applicable  chapter note states that a mon itor is classifiable under heading 
8471 if "it is of a kind solely or principally used in an automatic data-processing system."  The 
Committee's conclusion has put member State authorities in the quandary of having to decide what 
weight to give the conclusion in view of an apparently conflicting chapter note.   
4.882  For example, in a Tariff Notice issued in 2 004, the UK authority, evidently following the 
Customs Code Committee's conclusion, stated th at "from October 2004, LCD/TFT Monitors that 
incorporate a DVI connector are to be classified in Combined Nomenclature (CN) code 8528 21 90."  
(Exhibit US-76).  The Netherlands, by contrast, has taken a very different approach.  In a decree of 
July 2005, the Dutch customs authority explained that since April 2004 it had been classifying LCD 
monitors with DVI under Tariff heading 8528, in vi ew of a Commission regulation concerning plasma 
monitors.  It then went on to state (Exhibit US-77) that 
[n]ot all member States are following this policy.  The result is a diverted flow of 
business, which is harmful to the competitiv eness of Dutch industry in the logistics 
and services sector.  For this reason, The Netherlands is making the policy as regards 
classification of certain LCDs in the Combined Nomenclature more precise.   WT/DS315/R 
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 Accordingly, the decree set forth criteria that the Netherlands follows as of 22 November 2004. 
 
4.883  Moreover, despite the Customs Code Committee' s conclusion, the German authority, too, 
appears to have continued classifying LCD monitors  with DVI under heading 8471, even where they 
are principally though not solely for use with computers (Exhibit US-78). 
4.884  Finally, the EC once again tries to divert the focus from its own practice to the practice of US 
Customs.  However, unlike the EC, where US Cu stoms found LCD monitors difficult to classify, its 
rulings still applied throughout the territory of the United States.  
(c) Blackout drapery lining 
4.885  Similarly, the EC fails to rebut evidence dem onstrating that the blackout drapery lining case is 
yet another example of non-uniform administrati on of customs classification rules.  The EC 
erroneously calls into question whether the lining produced by Rockland Indu stries at issue in the 
decision by the Main Customs Office in Bremen, which was classified under Tariff heading 3921, was 
materially identical to lining that other member  States had classified under heading 5907.  In 
particular, the EC asserts that th e product before the Bremen Customs Office lacked a textile flocking, 
while the product at issue in other classification d ecisions contained flocking.  In fact, however, as 
Rockland's President and Chief Executive Officer a ttests under oath (Exhibit US-79), "All coated 
products produced by Rockland incorporate textile flocking as part of the coating process.  Rockland 
has never produced a coated product that does not inco rporate textile flocking. . . .  Textile flocking is 
required to prevent the fabric from sticking together." 
4.886  Moreover, in context it appears that the Brem en Customs Office did not find an absence of 
flocking per se  but, rather, that flocking did not constitute  a distinct layer in the Rockland product at 
issue.  What was relevant to the Bremen Customs Office was the existence of plastic in the coating, 
regardless of whether textile flocking or other elem ents were mixed into that coating.  That the 
German customs authority takes this approach, contra ry to the approach taken by other member State 
authorities, is confirmed by the letter from the Ha mburg customs office concerning Rockland's lining 
product (Exhibit US-50). 
4.887  Having ruled out classification of the lining unde r heading 5907, apparently based on its view 
that the existence of plastic in the coating preclude d such classification, th e German authority then 
looked to a German interpretive aid, which the EC states was derived by analogy to an EC regulation 
classifying ski trousers.  Though the EC states th at the interpretive aid was "without any legally 
binding character," the German authority relied on it in a way that turned out to be determinative.  In 
any event, it is not consistent with uniform ad ministration for the German authority to classify a 
textile product based on the selection of one prong from a three-prong test for the classification of an apparel item, where no other member State authority has done this. 
4.888  Finally, the EC asserts without any basis th at density of weave, the key criterion under 
Germany's interpretive aid, is relevant to determ ining whether textile fabric is present merely for 
reinforcing purposes.  In fact, the notes pertaining to Chapter 39 of the Tariff make no reference to 
density of weave as a relevant criterion, an d the notes to Chapter 59 expressly provide that 
classification under that chapter is to be determined regardless of weight per square meter.  The EC 
asserts without basis that the reference to weight per square meter is different from density of weave.  
In fact, however, weight per square meter n ecessarily is a function of density of weave. WT/DS315/R 
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 6. The EC fails to rebut evidence that valuat ion rules are administered in a non-uniform 
manner 
4.889  Nor does the EC succeed in rebuttin g evidence that EC valuation rules are administered in a 
non-uniform manner.  In addition to the EC's failure to explain away the findings of non-uniformity in 
the Court of Auditors report, two other points should be noted. 
4.890  First, as previously noted, one of the ways in which member States administer the EC's 
customs valuation rules non-uniformly is through di fferent auditing practices.  In response, the EC 
states that "under Article 76(2) CCC, every Member State may proceed to all necessary verifications 
in order to satisfy themselves of the accuracy of the particulars contained in the declaration."  But, the 
fact that member States "may" do this proves nothing.  It does not change the fact that member States' 
audit practices in fact vary dramatically such that , as the EC Court of Auditors put it, "individual 
customs authorities are reluctant to accept each ot her's decisions." (Exhibit US-14, para. 37). 
4.891  The EC also claims that the EC Customs Aud it Guide "ensures a uniform practice across" the 
EC.  However, given that the Guide was only "recently finalized," and, in any event, given that it is 
merely "intended as an aid to member States," ra ther than a binding obligation on them, there is no 
basis for this assertion. 
4.892  Second, with respect to the Reebok case, the EC fails to rebut that this is a stark illustration of 
non-uniform administration of valuation rules.  The EC states that RIL's appeals to Spanish courts show that there is indeed a forum to which this tr ader can go to seek uniform administration.  But, the 
EC cannot seriously contend that, from the point of view of uniform administration, the right to appeal a dispute to a member State court is comparable to a right to take a matter directly to an 
institution with authority to give an answer that is  definitive for the entire EC – a right which does not 
now exist.  GATT Article X:3(a) does not concer n a trader's right to appeal adverse customs 
decisions; it concerns a Member's requirement to ad minister specified laws uniformly, whether or not 
traders appeal administrative actions in particular cases. 
4.893  Further, the EC mistakenly suggests that b ecause RIL withdrew its complaint to the EC 
Ombudsman the problem with respect to non-uniform administration has been resolved.  That simply 
is not so.  RIL's decision to withdraw its co mplaint does not change the Commission's evident 
avoidance of the non-uniformity for over three years.   Nor does it change the fact that there is a 
divergence between the Spanish authority's administ ration of EC valuation rules and other member 
States' administration of those rules. 
7. The EC fails to rebut evidence that cust oms procedures are administered in a non-
uniform manner 
(a) Processing under customs control 
4.894  With respect to processing under customs contro l, the United States has shown that certain 
member States approach the economic conditions assessment in very different ways.  The United Kingdom, for example, makes a two-prong assessment, looking first at whether processing under 
customs control will enable processing activities to be  created or maintained in the EC, and second at 
whether it will harm essential interests of Community  producers of similar goods.  In contrast, France 
applies only the first prong. 
4.895  The EC's response to this evidence is that th e United States mis-reads the customs bulletin 
explaining how France applies the economic conditions  assessment.  The EC a sserts that the bulletin 
in fact makes reference to harm to Community pr oducers.  However, that reference is merely an 
introductory paraphrase of the CCC provision on processing under customs control.  The operative  WT/DS315/R 
 Page 149 
 
 
 text of the French bulletin sets forth a one-prong t est, referring only to the creation or maintenance of 
processing activity in the EC. 
4.896  The EC replies with a circular argument.  It says that "the French guidance . . . has to be 
interpreted in the context of the EC legislation".  In other words, even though the text of the French 
guidance plainly says something different from the te xt of the UK guidance, the EC contends that in 
fact it should not be read as diverging from the UK guidance because that would be inconsistent with 
EC law.  However, the EC fails to substantiate its  assertion that inconsistency with the applicable EC 
regulation automatically causes non-uniformity in memb er State administration of that regulation to 
disappear.   
4.897  The EC also faults the United States for not providing "evidence on the application of the 
guidance issued by the French authorities".  Howe ver, there was no need for the United States to do 
so.  This is not a case in which th e United States is alleging that e ither the French guidance or the UK 
guidance is itself inconsistent with WTO obligatio ns and therefore, according to the EC, "has the 
burden of proving that the measure in question has the alleged content or meaning".  Rather, the 
inconsistency with WTO obligations that the Un ited States is alleging is a lack of uniform 
administration on the EC's part and, in the case of processing under customs control, the lack of 
uniformity is evident on the face of divergent guidance from two different member States. 
(b) Penalties 
4.898  With respect to penalties, the EC first asserts  that the GATT Article X:3(a) obligation of 
uniform administration does not apply to penalties because penalties "are not among the matters referred to in Article X:1 GATT".  Contrary to the EC's claim, the United States does not concede this 
point.  On the contrary, the terms of Article X:1 pl ainly encompass penalty provisions.  For example, 
a law imposing a penalty for negligence in mis-decl aring a good's classification or valuation certainly 
"pertain[s] to the classification or valuation of prod ucts for customs purposes".  A penalty also may be 
considered an "other charge[] . . . on imports".  Or, considered as a consequence for failing to make a 
truthful declaration, for example, a penalty pertains to "requirements . . . on imports". 
4.899  A key flaw in the EC's argument is that it assumes that a law or regulation must either be the 
thing being administered or a tool of administration.  But, according to the EC, it cannot have one aspect or the other, depending on one's pers pective.  That contention is groundless. 
4.900  Further, although the EC appears to admit that  penalties "ensur[e] compliance with EC law", 
which is another way of saying that they administer EC law by giving effect to that law, the EC goes 
on to avoid the US argument, which is that the diversity of member State penalty laws for giving 
effect to EC customs law is an important instance of non-uniform administration of EC customs law.  
Instead, the EC responds to an argument that the United States does not make.  It contends that 
"Article X:3(a) GATT does not create an obligatio n to harmonize laws which may exist within a 
WTO Member at the sub-federal level".  The US asserts no such generic requirement.  It simply argues that Article X:3(a) requires that the EC's  customs law be administered uniformly.  Since 
different member States deploy different tools – that is, different penalty provisions – to give effect to 
EC customs law, the EC does not administer its customs law uniformly.  
4.901  Additionally, the EC errs in arguing that pena lties are outside the scope of Article X:3(a) 
because they apply to actions that violate customs laws.  Article X:3(a) does not make the distinction 
between "illegitimate actions" and "legitimate trade" th at the EC posits.  In any event, contrary to the 
EC's assertion, penalty provisions do "establish the conditions for legal tr ade."  In a system that relies 
heavily on the actions of traders at every step of  the way, penalty provisions administer the customs 
laws – that is, they give effect to those laws – by setting consequences for the breach of those laws.  WT/DS315/R 
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 The problem is that in the EC those consequences vary dramatically from member State to member 
State. 
4.902  The EC argues in the alternative that while penalty provisions vary from member State to 
member State, this does not mean that there is a l ack of uniform administration.  Its basis for this 
statement is the proposition that to the extent member  State penalty laws must meet the test of being 
"dissuasive and effective," pursuant to ECJ "guideli nes," they administer EC customs law uniformly, 
regardless of differences among them.  The EC's theo ry seems to be that as long as two different 
penalty provisions both secure compliance with EC  customs laws, any differences between them 
simply are irrelevant. 
4.903  But, the possibility that traders generally comp ly with the customs laws in two different 
member States, despite differences in penalties, is be side the point.  It does not change the fact that a 
trader must take such difference into account, mu ch the same way that it takes into account the 
likelihood that an authority will interpret classifica tion or valuation rules in a favorable way.    
8. Member State courts, whose decisions govern  only the customs authorities in their 
respective territories, do not fulfil the EC's  obligation under Article X:3(b) of the GATT 
1994 
4.904  The EC fails to meet its Article X:3(b) oblig ation, because the decisions of member State 
courts "govern the practice" of only a subset of  the agencies entrusted with enforcement of EC 
customs laws, and because the fragmentation of re view is inconsistent with the context of 
Article X:3(b), which includes the requirement of uniform administration of EC customs law.  
4.905  The EC argues that "govern the practice" means not hing more than "implement in fair terms".  
However, Article X:3(b) already contains a separ ate requirement that agencies "implement[]" the 
decisions of review tribunals or procedures.  Th e EC's construction of "govern the practice" would 
make it redundant with the separat e "implement[]" requirement.  
4.906  The decisions of an EC member State court gove rn the practice only of agencies within that 
member State.  Even where a court is presented w ith a clear divergence between practice within its 
member State and practice in other member States – as was the case in Intermodal Transport  and the 
French cases on CCC Article 221(3) – there is no ob ligation to make a reference to the ECJ.  
Moreover, as the EC has acknowledged, there is no mechanism in the EC for courts to be kept 
apprised of customs review decisions of other member State courts, much less a mechanism for customs authorities to be kept apprised of the decisi ons of courts other than those in their respective 
member States. 
4.907  The EC also argues incorrectly that Article X:3(b) should not be read in the light of 
Article X:3(a) as context.  In the EC's view, the absence of an "explicit link" or a "chapeau" means the 
latter is not context for the former, even though th e two provisions are adjoining subparagraphs.  This 
position is in stark contrast to the EC's invocation of Article XXIV:12 as context for the interpretation 
of Article X:3(a).  And, while no rule of treaty interpretation  requires an "explicit link" or a 
"chapeau" for one provision to constitute context for th e interpretation of another, there is in fact an 
explicit link between the provisions at issue here.   
4.908  Article X:3(a) requires a Member to administer its customs laws in a uniform manner.  
Article X:3(b) requires that the decisions of review  tribunals or procedures "govern the practice" of 
the agencies entrusted with administrative enforcem ent.  The "govern the practice" requirement means 
that review court decisions must control the way ag encies administer the customs laws.  In this sense, 
the two provisions are linked.     WT/DS315/R 
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 4.909  The EC rejects the proposition that review of customs decisions by member State courts 
whose decisions govern only certain  customs agencies is inconsistent  with the obligation of uniform 
administration.  However, its argument in this respect  is in conflict with its Article X:3(a) argument.  
It states that review by member State courts "is perfectly compatible with the obligation of uniform 
administration, provided that the latter is ensured by ot her means that are appropriate to this aim ."  
Yet, in its Article X:3(a) argument the EC itself contends that review by member State courts is a key 
means to achieving the aim of uniform administrati on.  Now it is arguing that that aim must be 
achieved by "other means" and that review by memb er State courts is merely "compatible" with that 
aim. 
4.910  Additionally, the EC wrongly purports to draw from the US argument an implicit requirement 
for "the establishment of a central court of first in stance with jurisdiction over the whole territory of 
any WTO Member".  However, that is not the logical implication of the US argument.  The logical implication of the US argument is that under Ar ticle X:3(b), every WTO Member must give effect 
throughout its territory to the decisions of its review tribunals.  Where a Member has a single customs administration it may well be able to do this ev en though it provides for multiple regional customs 
courts.  In the EC, perhaps uniquely, fragmented ad ministration is coupled with fragmented review, 
and the result is inconsistent with Article X:3(b).  
4.911  The EC also wrongly accuses the United States of "interpreting Article X:3(b) through the 
glass of its own legal system".  Ironically, in the very next breath the EC urges an interpretation of Article X:3(b) through the glass of its own legal system.  It asserts that establishing an EC customs 
court – assuming that this would be the only way fo r the EC to comply with its Article X:3(b) 
obligation – would "run[] contrary to one of [t he EC's] fundamental constitutional principles" .  
4.912  Finally, while the EC has cons istently professed that creating an EC customs court would 
breach "fundamental constitutional principles", it shoul d be noted that the Treaty of Nice (inserting 
Article 225a into the EC Treaty) in fact laid the groundwork for the establishment of new EC courts.  
Also, its amendment of EC Treaty Article 220 contempl ates that "judicial panels may be attached to 
the Court of First Instance under the conditions laid down in Article 225a".  In light of the authority to 
create special courts established by the Treaty of Nice, it seems that establishment of a court as one 
option that would bring the EC into compliance with its GATT Article X:3(b) obligation would not breach "fundamental constitutional principles". 
9. Closing statement 
4.913  The manner in which the EC has argued this di spute gives the impression that the issues are 
far more complicated than they actually are.  At ti mes, the EC has contended that the dispute is about 
larger philosophical questions, such as differenc es in the doctrines undergirding federalism in the 
United States and in the EC.  At other times, th e EC has contended that the dispute is about the 
minutiae of whether one or another EC customs author ity decided a particular question correctly.  It is 
easy to get lost in the back-and-forth between politi cal theory and technical arcana.  But when the 
arguments on questions that have no bearing on this dispute are cleared away, the case is in fact very 
simple. 
4.914  With respect to Article X:3(a), the EC has an obligation to administer its customs laws in a 
uniform manner.  In practice, it administers its laws  through 25 different authorities in different parts 
of its territory.  The decisions of any one authority do not bind any of the other authorities.  If the EC 
authority in Spain issues binding tariff information classifying a good in a particular way, the EC 
authority in Germany is under no obligation to give any weight at all to that decision (other than in the 
very limited case in which the BTI is invoked by its hol der).  If a third party urges the EC authority in 
Germany to follow the classification decision of the EC authority in Spain, even if that third party is 
an affiliate of the holder, the EC authority in German y is under no obligation to do so.  In short, one WT/DS315/R 
Page 152  
 
 part of the EC customs administration apparatus is under no obligation to act consistently with other 
parts of the EC customs administration apparatus. 
4.915  The EC states that this is not so.  It states th at processes and institutions are in place to ensure 
that different parts of the EC customs administra tion apparatus act uniformly.  But this assertion does 
not withstand scrutiny.  With one exception (app eals to member State courts), the processes and 
institutions are general obligations, non-binding guid ance, and discretionary mechanisms.  This point 
was well illustrated in the EC's preliminary respons e to the Panel's question 164(a).  When asked to 
comment on the observation that the EC refers to no measures making EC Treaty Article 10 – the general duty of member State coope ration – operational in the context of customs administration, the 
EC still referred to no specific measu res.  It stated simply that the duty of cooperation in Article 10 is 
a binding legal obligation, which can be enforced  through infringement proceedings.  Repeatedly, the 
EC states that matters may
 get referred to the Customs Code Committee, that infringement actions 
may be brought, that member States may  give deference to the decisions of other member States.  But, 
the constant theme is that all of these so-called tools are discretionary. 
4.916  In the absence of any processes or institutions that obligate  different parts of the EC customs 
administration apparatus to act uniformly, the desi gn and structure of the EC customs administration 
system is such as to necessarily  result in non-uniform administration.  Even the one binding 
instrument to which the EC has alluded does not cure this problem.  Even when confronted with direct 
evidence of a divergence in member State administ ration of customs law, a member State court is 
under no obligation to refer a question to the ECJ. 
4.917  In its opening statement at this Panel m eeting, in discussing a point pertaining to 
classification, the EC stated that "[a]t any given moment, there is only one correct classification for a 
particular product".  The United States does not disagr ee.  But, the question is: Who decides what that 
correct classification is?  In the EC, each of the 25 different customs authorities decides, each only 
with respect to a particular territory, and none w ith the power to bind the others.  The processes and 
institutions to which the EC refers do not change th is.  For this reason, the EC does not comply with 
its obligation under GATT Article X:3(a). 
4.918  With respect to Article X:3(b), the EC has an obligation to provide tri bunals or procedures for 
the prompt review and correction of administra tive action relating to customs matters, and the 
decisions of such tribunals or procedures must be  implemented by and govern the practice of the 
agencies entrusted with administrativ e enforcement.  The tribunals that the EC points to as providing 
for the review and correction of administrative act ion relating to customs matters are the member 
State courts.  The decisions of each member State cour t apply only within the territory of that member 
State.  The EC customs authority in France is not  required to follow the decisions of UK courts.  
Indeed, there is not even a mechanism to make member State courts aware of customs review 
decisions by other member State courts. 
4.919  Under the foregoing structure, the decisions of the tribunals that the EC provides do not 
govern the practice of the EC's agencies entrusted with administrative enforcement.  Each court's 
decisions govern the practice only of a discrete subset of such agencies.  Not only is this inconsistent 
with the text of Article X:3(b), but it also is incons istent with the context provided by Article X:3(a), 
which indicates that the obligation to provide review tribunals should be read in a manner consistent 
with the obligation to administer customs laws unifo rmly.  The EC's only response is to argue that the 
phrase "govern the practice" really means "implement  in fair terms". (Second Submission, para. 230).  
As this interpretation would render the separat e "implement" requirement in Article X:3(b) 
superfluous, it should be rejected.  Accordingly, the EC fails to meet its obligation to provide review 
tribunals consistent with Article X:3(b).  WT/DS315/R 
 Page 153 
 
 
 4.920  The second point the United States makes in closing is that the Panel should not be distracted 
by the EC's constant reference to dire conse quences that supposedly would flow from making the 
findings the United States requests.  Not only are th e EC's predictions not relevant, but they are not 
accurate. 
4.921  The first 19 paragraphs of the EC's Oral Statem ent at this meeting were devoted to recasting 
the US claims incorrectly as claims that GATT Article  X:3(a) requires the EC "to set up a centralized 
customs agency and a customs court".  (Second Oral Statement, para. 3).  Having thus misstated the U.S. claims, the EC went on to accuse the Unite d States of seeking to change "a fundamental 
characteristic of the EC" and to bring about "a radi cal shift in the federal balance within the EC". 
4.922  Moreover, the cataclysmic scenario the EC predicts  is not confined to its own system.  It 
contends that the findings the United States se eks "would make the involvement of sub-federal 
entities in the execution of federal laws generally impossible in large areas of economic regulation".  
It claims that "[t]his is of considerab le concern to the entire WTO membership". 
4.923  These themes have been echoed throughout the EC 's submissions and interventions.  The EC 
is trying to dissuade the Panel from drawing the obvious conclusions that the facts and the law compel 
by resorting to scare tactics.  In effect, the EC is  saying that its obligations under Article X:3 should 
be interpreted in light of the consequences that an y given interpretation would have.  This was evident 
when the EC said at one and the same time that GATT Article XXIV:12 is not relevant to interpretation of GATT Article X:3(a), but that it woul d be relevant to interpre tation of Article X:3(a) 
if it were found that Article X:3(a) requires the EC to create a centraliz ed customs agency and 
customs court.  (EC provisional response to Panel Provisional Question No. 155).  
4.924  In the EC's view, an interpretation should be rejected if, for example, it would require a 
radical shift in the federal balance within the EC.  Bu t this is simply backwards.  Relative difficulty of 
compliance is not a basis for adopting or rejectin g a given interpretation of a treaty provision.  
Moreover, under customary international law, as re flected in Article 27 of the Vienna Convention on 
the Law of Treaties, "[a] party may not invoke the provi sions of its internal law as justification for its 
failure to perform a treaty".   
4.925  At paragraph 12 of the EC's Opening Statement at this Panel meeting, the EC reminded the 
Panel that "the EC is an original Member of the WTO", and that when the Contracting Parties agreed 
that the EC should become an original Member, th ey did so with knowledge of the EC's "system of 
customs administration and judicial review".  The EC  reasons that in light of  this knowledge, it cannot 
be argued that the EC's system is inconsistent w ith GATT Article X:3.  But, again, the EC has it 
exactly backwards.  It is not the case that the othe r original Members of the WTO must be considered 
to have acquiesced in the EC's breach of a GATT obligation by having agreed that the EC should 
become an original Member.  Rather, the EC had to have considered and accepted the consequences 
of Article X:3 when it decided to become a Member of the WTO in its own right.  The EC is not now 
free to argue that it does not like those consequences  and so should be relieve d of the obligations it 
freely accepted. 
4.926  In short, the picture that the EC portrays of the institutional changes that would have to be 
made in the EC if the Panel were to make the fi ndings the United States requests is pure hyperbole, 
with no bearing at all on the issue at hand.  The Pa nel should decline the EC's invitation to interpret 
Article X:3 in light of the EC's prediction of what it would take for the EC to come into compliance 
with its obligations.  It also should give no credit to  the proposition that the US claims will have dire 
consequences for other WTO Members.  The US claims are directed at a problem unique to the EC, 
given its unique combination of geographically  fragmented administration and geographically 
fragmented review.