WORLD TRADE  
ORGANIZATION  WT/DS315/AB/R 
13 November 2006 
 (06-5450) 
 Original: English 
    
 
     
 
    
 
EUROPEAN COMMUNITIES – SELECTED CUSTOMS MATTERS 
 
  
AB-2006-4 
 
     
 
    
 
Report of the Appellate Body 
  WT/DS315/AB/R 
 Page i 
 
 
 
I. Introduction................................................................................................................ .................1 
II. Arguments of the Participants  and the Third Participants ..........................................................7 
A. Claims of Error by the United States – Appellant .........................................................7 
1. The Panel's Terms of Reference .......................................................................7 
2. Claims regarding Article X:3(a) of the GATT 1994 ......................................11 
3. The Panel's Interpretation of Article X:3(b) of the GATT 1994.....................15 
B. Arguments of the European Communities – Appellee .................................................17  
1. The Panel's Terms of Reference .....................................................................17 
2. Claims regarding Article X:3(a) of the GATT 1994 ......................................20 
3. The Panel's Interpretation of Article X:3(b) of the GATT 1994.....................23 
C. Claims of Error by the European Communities – Other Appellant .............................26  
1. The Panel's Terms of Reference .....................................................................26 
2. Claims regarding Article X:3(a) of the GATT 1994 ......................................27 3. Conditional Appeal of th e European Communities ........................................33 
D. Arguments of the United States – Appellee ..................................................................34  
1. The Panel's Terms of Reference .....................................................................34 
2. Claims regarding Article X:3(a) of the GATT 1994 ......................................36 3. Conditional Appeal of th e European Communities ........................................41 
E. Arguments of the Third Participants ............................................................................42  
1. Japan ...............................................................................................................43 
2. Korea...............................................................................................................44 
III. Issues Raised in This Appeal .............................................................................................. ......45 
IV. The Panel's Term s of Reference ............................................................................................. ..48 
A. Interpretation of the Term "Measures at Issue" under Article 6.2 of the DSU ............48  
B. Confinement of the Measures at Issu e to Areas of Customs Administration ...............54  
C. The United States' Claim Challenging the European Communities' System of 
Customs Administration "As a Whole" ........................................................................62  
1. Challenging a Legal System "Overall" or "As a Whole"................................66 
2. Whether the Panel Request Included a Challenge to the European 
Communities' System of Customs Administration "As a Whole" or "Overall" .........................................................................................................67 
3. The Panel's Finding with respect to the "Design and Structure" of the 
European Communities' System of Customs Administration.........................69 
D. Temporal Limitations of th e Panel's Terms of Reference ............................................71  
V. Claims regarding Article X:3(a) of the GATT 1994.................................................................76 
A. Administration of European Communities Customs Law through Penalty 
Provisions and Audit Procedures of Member States ...................................................76  
1. Whether the Substantive Content of a Legal Instrument May Be 
Challenged under Article X: 3(a) of the GATT 1994......................................76 
2. Differences in Penalty Provis ions and Audit Procedures ...............................79 
B. The Administrative Process and th e Requirement of Uniformity in 
Article X:3(a) of the GATT 1994 .................................................................................84  WT/DS315/AB/R 
Page ii  
 
C. The Administrative Process Leading to the Tariff Classification of Blackout 
Drapery Lining ............................................................................................................88  
D. Tariff Classification of Liquid Crystal  Display Flat Monitors with a Digital 
Video Interface .............................................................................................................94  
E. Administration of the Successive Sales Provision ......................................................100  
F. Completing the Analysis with respect to  the "As a Whole" Challenge of the 
United States under Article X:3(a) of the GATT 1994 ...............................................104  
VI. The Panel's Interpretation of Article X:3(b) of the GATT 1994.............................................111 
VII. Conditional Appeal of the European Communities ................................................................116 
VIII. Findings and Conclusions................................................................................................. ......117 
 
ANNEX I Notification of an Appeal by the United States ANNEX II Notification of an Other A ppeal by the European Communities 
ANNEX III Request for the Establishmen t of a Panel by the United States 
 
  WT/DS315/AB/R 
 Page iii 
 
 
TABLE OF CASES CITED IN THIS REPORT 
 
Short Title Full Case Title and Citation 
Argentina – Hides and Leather  Panel Report, Argentina – Measures Affecting the Export of Bovine Hides and 
Import of Finished Leather , WT/DS155/R and Corr.1, adopted 16 February 2001, 
DSR 2001:V, 1779 
Australia – Salmon  Appellate Body Report, Australia – Measures Affecting Importation of Salmon , 
WT/DS18/AB/R, adopted 6 November 1998, DSR 1998:VIII, 3327 
Brazil – Desiccated Coconut  Appellate Body Report, Brazil – Measures Affe cting Desiccated Coconut , 
WT/DS22/AB/R, adopted 20 March 1997, DSR 1997:I, 167 
Canada – Dairy  
(Article 21.5 – New Zealand and US)
  Appellate Body Report, Canada – Measures Affecting the Importation of Milk 
and the Exportation of Dairy Products – Recourse to Article 21.5 of the DSU by New Zealand and the United States , WT/DS103/AB/RW, WT/DS113/AB/RW, 
adopted 18 December 2001, DSR 2001:XIII, 6829 
Canada – Gold Coins GATT Panel Report, Canada – Measures Affecting the Sale of Gold Coins , 
L/5863, 17 September 1985, unadopted 
Chile – Price Band System  Appellate Body Report, Chile – Price Band System and Safeguard Measures 
Relating to Certain Agricultural Products , WT/DS207/AB/R, adopted 23 October 
2002, DSR 2002:VIII, 3045 
Dominican Republic – Import 
and Sale of Cigarettes Appellate Body Report, Dominican Republic – Measures Affecting the 
Importation and Internal Sale of Cigarettes , WT/DS302/AB/R, adopted 19 May 
2005 
EC – Bananas III  Appellate Body Report, European Communities – Regime for the Importation, 
Sale and Distribution of Bananas , WT/DS27/AB/R, adopted 25 September 1997, 
DSR 1997:II, 591 
EC – Bed Linen  (Article 21.5 – India)  Appellate Body Report, European Communities – Anti-Dumping Duties on 
Imports of Cotton-Type Bed Linen from I ndia – Recourse to Article 21.5 of the 
DSU by India , WT/DS141/AB/RW, adopted 24 April 2003, DSR 2003:III, 965 
EC – Chicken Cuts Appellate Body Report, European Communities – Customs Classification of 
Frozen Boneless Chicken Cuts , WT/DS269/AB/R, WT/DS286/AB/R, and Corr.1, 
adopted 27 September 2005 
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 22 June 1998, DSR 1998:V, 1851 
EC – Computer Equipment  Panel Report, European Communities – Customs Classification of Certain 
Computer Equipment , WT/DS62/R, WT/DS67/R, WT/DS68/R, adopted 22 June 
1998, modified by Appellate Body Report, WT/DS62/AB/R, WT/DS67/AB/R, WT/DS68/AB/R, DSR 1998:V, 1891 
EC – Hormones  Appellate Body Report, EC Measures Concerning Meat and Meat Products 
(Hormones) , WT/DS26/AB/R, WT/DS48/AB/R, adopted 13 February 1998, 
DSR 1998:I, 135 
EC – Poultry  Appellate Body Report, European Communities – Measures Affecting the 
Importation of Certain Poultry Products , WT/DS69/AB/R, adopted 23 July 1998, 
DSR 1998:V, 2031 
EC – Sardines  Appellate Body Report, European Communities – Trade Description of Sardines , 
WT/DS231/AB/R, adopted 23 October 2002, DSR 2002:VIII, 3359 
EC – Selected Customs 
Matters Panel Report, European Communities – Selected Customs Matters , WT/DS315/R, 
16 June 2006 WT/DS315/AB/R 
Page iv  
 
Short Title Full Case Title and Citation 
India – Patents (US)  Appellate Body Report, India – Patent Protection for Pharmaceutical and 
Agricultural Chemical Products , WT/DS50/AB/R, adopted 16 January 1998, 
DSR 1998:I, 9 
Japan – Apples  Appellate Body Report, Japan - Measures Affecting the Importation of Apples , 
WT/DS245/AB/R, adopted 10 December 2003, DSR 2003:IX, 4391 
Japan – Film  Panel Report, Japan – Measures Affecting Consumer Photographic Film and 
Paper , WT/DS44/R, adopted 22 April 1998, DSR 1998:IV, 1179 
Korea – Dairy  Appellate Body Report, Korea – Definitive Safeguard Measure on Imports of 
Certain Dairy Products , WT/DS98/AB/R, adopted 12 January 2000, 
DSR 2000:I, 3 
Mexico – Anti-Dumping Measures on Rice Appellate Body Report, Mexico – Definitive Anti-Dumping Measures on Beef and 
Rice, Complaint with Respect to Rice , WT/DS295/AB/R, adopted 20 December 
2005 
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/DS122/AB/R, adopted 5 April 2001, DSR 2001:VII, 2701 
US – Carbon Steel  Appellate Body Report, United States – Countervailing Duties on  
Certain Corrosion-Resistant Carbon Steel Flat Products from Germany , 
WT/DS213/AB/R and Corr.1, adopted 19 December 2002, DSR 2002:IX, 3779 
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, DSR 2004:I, 3  
US – Cotton Yarn  Appellate Body Report, United States – Transitional Safeguard Measure on 
Combed Cotton Yarn from Pakistan , WT/DS192/AB/R, adopted 5 November 
2001, DSR 2001:XII, 6027 
US – FSC  
(Article 21.5 – EC II) Appellate Body Report, United States – Tax Treatment for "Foreign Sales 
Corporations" – Second Recourse to Article 21.5 of the DSU by the European 
Communities , WT/DS108/AB/RW2, adopted 14 March 2006 
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 modified by 
Appellate Body Report, WT/DS184/AB/R, DSR 2001:X, 4769 
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 
US – Section 211 
Appropriations Act  Appellate Body Report, United States – Section 211 Omnibus Appropriations 
Act of 1998 , WT/DS176/AB/R, adopted 1 February 2002, DSR 2002:II, 589 
US – Upland Cotton Appellate Body Report, United States – Subsidies on Upland Cotton , 
WT/DS267/AB/R, adopted 21 March 2005 
US – Upland Cotton Panel Report, United States – Subsidies on Upland Cotton , WT/DS267/R, and 
Corr.1, adopted 21 March 2005, modified by Appellate Body Report, 
WT/DS267/AB/R 
US – Wool Shirts and Blouses Appellate Body Report, United States – Measure Affecting Imports of Woven 
Wool Shirts and Blouses from India , WT/DS33/AB/R and Corr.1, adopted 
23 May 1997, DSR 1997:I, 323 
US – Zeroing (EC) Appellate Body Report, United States – Laws, Regulations and Methodology for 
Calculating Dumping Margins ("Zeroing") , WT/DS294/AB/R, adopted 9 May 
2006  WT/DS315/AB/R 
 Page v 
 
 
LIST OF ABBREVIATIONS USED IN THIS REPORT 
 
Abbreviation Description 
BTI Binding Tariff Information 
CFI Court of First Instance of the European Communities 
Common Customs Tariff Council Regulation (EEC) No . 2658/87 of 23 July 1987 on the tariff and 
statistical nomenclature and on the Common Customs Tariff 
Community Customs Code Council Regulation (EEC ) No. 2913/92 of 12 October 1992 establishing 
the Community Customs Code 
Court of Auditors Report Court of Auditors, Sp ecial Report No. 23/2000 concerning valuation of 
imported goods for customs purposes (cus toms valuation), together with 
the Commission's replies, reproduced in Official Journal of the 
European Communities , C Series, No. 84, pp. 1-18 (14 March 2001)  
DSB Dispute Sett lement Body 
DSU Understanding on Rules and Procedures Governing the Settlement of 
Disputes  
DVI digital video interface 
EBTI European Binding Tariff Information 
EC Regulation 2171/2005 Commission Regulati on (EC) No. 2171/2005 of 23 December 2005 
concerning the classification of certain goods in the Combined Nomenclature 
EC Treaty Treaty Establishing the European Communities 
ECJ Court of Justice of the European Communities 
GATT 1994 General Agreement on Tariffs and Trade 1994  
Implementing Regulation Commission Regulation (EEC) No. 2454/93 of 2 July 1993 laying  
down provisions for the implementation of Council Regulation (EEC) No. 2913/92 of 12 October 1992 establishing the Community Customs Code 
LCD liquid crystal display 
Panel Report Panel Report, EC – Selected Customs Matters  
Panel request European Communities – Selected Customs Matters , Request for the 
Establishment of a Panel by the United States, WT/DS315/8, 14 January 2005 
TARIC Integrated Tariff of the Eur opean Communities established by Council 
Regulation (EEC) No. 2658/87 of 23 July 1987 on the tariff and statistical nomenclature and on the Common Customs Tariff  
Working Procedures Working Procedures for Appellate Review , WT/AB/WP/5, 4 January 
2005 
WTO World Trade Organization 
WTO Agreement  Marrakesh Agreement Establishi ng the World Trade Organization   
 
  WT/DS315/AB/R 
 Page 1 
 
 
 WORLD TRADE ORGANIZATION  
APPELLATE BODY 
 
 European Communities – Selected Customs 
Matters  
 
United States, Appellant/Appellee  
European Communities, Appellant/Appellee  
 Argentina, Third Participant 
Australia,  Third Participant  
Brazil, Third Participant  
China, Third Participant   
Hong Kong, China,  Third Participant  
India, Third Participant  
Japan, Third Participant  
Korea, Third Participant 
Separate Customs Territo ry of Taiwan, Penghu, 
Kinmen, and Matsu, Third Participant   AB-2006-4 
  Present:  
 Ganesan, Presiding Member 
 Janow, Member  Taniguchi, Member  
  
I. Introduction 
1. The United States and the European Communities ea ch appeal certain issues of law and legal 
interpretations develope d in the Panel Report, European Communities – Se lected Customs Matters  (the 
"Panel Report").
1  The Panel was established to consider a complaint by the United States concerning 
the European Communities' system of customs admini stration under Articles X:3(a) and X:3(b) of the 
General Agreement on Tariffs and Trade 1994 (the "GATT 1994"). 
2. Before the Panel, the United States claimed th at the European Communities administers the 
following instruments of its customs law in a non-unif orm manner, in violation of Article X:3(a) of 
the GATT 1994:   
• Council Regulation (EEC) No. 2913/92 of 12 October 1992 establishing the Community 
Customs Code, including all annexes thereto, as amended (the "Community Customs Code"); 
• Commission Regulation (EEC) No. 2454/93 of 2 July 1993 laying down provisions for the 
implementation of Council Regulation (EEC) No. 2913/92 of 12 October 1992 establishing 
the Community Customs Code, including all anne xes thereto, as amended (the "Implementing 
Regulation"); 
                                                      
1WT/DS315/R, 16 June 2006. WT/DS315/AB/R 
Page 2  
 
 • Council Regulation (EEC) No. 2658/87 of 23 Ju ly 1987 on the tariff and statistical 
nomenclature and on the Common Customs Tariff,  including all annexes thereto, as amended 
(the "Common Customs Tariff"); 
• the Integrated Tariff of the European Commun ities established by virtue of Article 2 of 
Council Regulation (EEC) No. 2658/87 of 23 Ju ly 1987 on the tariff and statistical 
nomenclature and on the Common Customs Tariff,  including all annexes thereto, as amended 
(the "TARIC");  and 
• for each of the above laws and regulations, all amendments, "implementing measures and 
other related measures".
2   
3. The United States submitted that various instan ces of alleged non-uniform administration of 
European Communities customs law illustrate that the European Communities' system of customs 
administration as a whole is inconsistent with the requirement of uniform administration contained in 
Article X:3(a) of the GATT 1994.  In addition,  the United States claime d that the European 
Communities does not provide for the prompt review  and correction of administrative action relating 
to customs matters as required by  Article X:3(b) of the GATT 1994.3 
4. In the Panel Report, circulated to Members of the World Trade Organization (the "WTO") on 
16 June 2006, the Panel concluded that its terms of reference aut horized it to consider only "the 
manner of administration by the national customs au thorities of the member States of the Community 
Customs Code, the Implementing Regulation, the Common Customs Tariff, the TARIC and related 
measures in the areas of customs administration specifi cally identified in the Un ited States' request for 
establishment of a panel."4  These areas of customs administration were "the classification and 
valuation of goods, procedures for the classification and valuation of goods, procedures for the entry 
and release of goods, procedures for auditing entr y statements after goods are released into free 
circulation, penalties and procedures regarding th e imposition of penalties for violation of customs 
rules and record-keeping requirements".5  The Panel held that it was "authorized to examine particular 
cases or instances of administration of the Commun ity Customs Code, the Implementing Regulation, 
                                                      
2Request for the Establishment of a Panel by th e United States, WT/DS315/8, 14 January 2005 
(attached as Annex III to this Report), p. 1;  Panel Report, para. 2.1.  These laws and regulations are contained in 
Exhibits US-5, US-6, EC-16, and US-7, respectively, submitted by the United States and the European 
Communities to the Panel. 
3Panel Report, paras. 2.1 and 7.492. 
4Ibid., para. 7.64. 
5Ibid., para. 7.33.  WT/DS315/AB/R 
 Page 3 
 
 
 the Common Customs Tariff and the TARIC and related measures in those areas of customs 
administration specifically identifie d in the United States' request".6 
5. The Panel found that it was "precluded from considering 'as such' challenges of the design 
and structure of the [European Communities'] system of customs administration as a whole, and also the design and structure of the [European Co mmunities'] system in the areas of customs 
administration … specifically identified in the Un ited States' request for the establishment of a 
panel."
7  However, at the conclusion of its analysis of  the United States' claim under Article X:3(a) of 
the GATT 1994, the Panel observed that, even if it were  authorized by its term s of reference to make 
findings on the design and structure of the European Communities' system of customs administration "as such", the United States had not demonstrated that the design and structure of the European 
Communities' system of customs administration, in cluding components thereof, necessarily results in 
a violation of Article X:3(a).  According to the Pane l, the United States merely referred to "a number 
of apparently random instances of alleged violation of Article X:3(a) ..., without demonstrating ... that 
those examples are symptomatic and representative of underlying structural deficiencies in the 
[European Communities'] system of customs administration."
8 
6. The Panel examined individual instances of alleged non-uniform administration of European 
Communities' customs law in three different areas:  customs classification , customs valuation , and 
customs procedures .9  First, the Panel examined the Un ited States' claims alleging non-uniform 
administration in the area of customs  classification .  The Panel found no violation of Article X:3(a) of 
the GATT 1994 with respect to the tariff classifi cation of network cards for personal computers10 and 
no violation regarding the tariff classification of drip irrigation products.11  The Panel found, however, 
that the administrative process leading to decisions  on tariff classification of blackout drapery lining 
by German customs authorities amounts to non-un iform administration and therefore constitutes a 
violation of Article X:3(a) of the GATT 1994.12  The Panel also found a violation of the same 
                                                      
6Panel Report, para. 7.64. 
7Ibid. 
8Ibid., para. 7.490. 
9The Panel found that Article 221 of the Community Customs Code, which is entitled "Recovery of the 
amount of the Customs Debt", was not covered by any of the areas of customs administration specifically 
identified in the United States' request for the establis hment of a panel and therefore fell outside the Panel's 
terms of reference. ( Ibid., para. 7.487) 
10Ibid., para. 7.207. 
11Ibid., para. 7.218. 
12Ibid., para. 7.276. WT/DS315/AB/R 
Page 4  
 
 provision with respect to the tariff classification of liquid crystal display ("LCD") monitors with 
digital video interface ("DVI").
13 
7. The Panel also found that the United States had not proved any violation of Article X:3(a) of 
the GATT 1994 with respect to:  (i) the tariff classification of unisex articles or shorts14;  (ii) the 
failure of customs authorities in one member State to treat Binding Tariff Information ("BTI") issued 
in other member States as binding15;  (iii) the refusal to withdraw the revocation of BTI by the United 
Kingdom's customs authorities with respect to the tariff classification of the  Sony PlayStation2  in the 
context of the Sony PlayStation2  case16;  or (iv) the interpretation and application of the amended 
Explanatory Notes to the Common Customs Tariff concerning camcorders in the context of the 
Camcorders  case.17 
8. Secondly, the Panel examined individual instan ces of customs administ ration in the area of 
customs valuation .  The Panel found that the administration of Article 147(1) of the Implementing 
Regulation (the "successive sales provision") amounts to a violation of Article X:3(a), because some member States impose a "form of prior a pproval" requirement while others do not.
18  The Panel found 
no violation with respect to the administration of  Article 29(3)(a) of the Community Customs Code 
concerning vehicle repair costs covered under warranty.19  The Panel found that the United States had 
not proved that differences among member States  regarding the manner in which royalties are 
apportioned to the customs value of identical goods imported by the same company according to Article 32(1)(c) of the Community Customs Code am ount to a violation of Article X:3(a) of the 
GATT 1994.
20  The Panel also found that the United States had not proved that the administration of 
Article 29 of the Community Customs Code and Article 143(1)(e) of the Implementing Regulation 
concerning the circumstances in which parties are to  be treated as "related" for customs valuation 
purposes is non-uniform within the meaning of Article X:3(a) of the GATT 1994.21 
                                                      
13Panel Report, para. 7.305. 
14Ibid., para. 7.228. 
15Ibid., para. 7.329. 
16Ibid., para. 7.343 (referring to Sony Computer Entertainment Europe Ltd. v. Commissioners of 
Customs and Excise , Judgment of the High Court of Justice, Chancery Division (2005), EWHC 1644 (Ch) 
(Exhibit US-70 submitted by the United States to the Panel)). 
17Ibid., para. 7.354 (referring to Explanatory Notes to  the Combined Nomenclature of the European 
Communities, Official Journal of the European Communities  (13 July 2000), 316 (Exhibit US-62 submitted by 
the United States to the Panel)). 
18Ibid., para. 7.385. 
19Ibid., para. 7.403. 
20Ibid., para. 7.371. 
21Ibid., para. 7.418.  WT/DS315/AB/R 
 Page 5 
 
 
 9. Thirdly, the Panel examined individual instan ces of customs administration in the area of 
customs procedure .  The Panel found no violation of Article X:3(a) with respect to the manner of 
administration of Article 78(2) of the Community Customs Code, which allows customs authorities to 
conduct audits following release of goods for fr ee circulation within the European Communities.22 
The Panel also found no violation of Article X:3(a)  with respect to "the substantive differences in 
penalty laws between member States" on the ground th at "the substantive content of penalty laws ... 
cannot be viewed as acts of administration" under Article X:1.23  The Panel further found that the 
United States had not proved that "the manner of  administration of Article 133 of the Community 
Customs Code and Articles 502(3) and 552 of the Implementing Regulation regarding processing 
under customs control is non-uniform among member States in violation of Article X:3(a) of 
the  GATT  1994."24  Finally, the Panel found that "the United States ha[d] not proved that 
Articles 263-267 of the Implementing Regulation ar e administered in a non-uniform manner in 
violation of Article X:3(a) of the GATT 1994."25   
10. Finally, with respect to the United States' claim of violation of Article X:3(b) of the 
GATT 1994, the Panel found that the European Co mmunities does not violate the obligation to 
provide prompt review and correction of administ rative action relating to customs matters "merely 
because the decisions regarding review of administ rative action relating to customs matters ... do not 
apply to all agencies in the [European Communities] and do not have effect th roughout the territory of 
the European Communities".26 
11. The Panel therefore recommended: 
… that the Dispute Settlement Body request the European 
Communities to bring itself into conformity with respect to: 
(a) the administration of the Common Custom[s] Tariff 
regarding the administrative process leading to the tariff classification of blackout drapery lining; 
(b) the administration of the Common Customs Tariff regarding 
the tariff classification of liquid crystal display monitors with 
digital video interface; 
                                                     
 
22Panel Report, para. 7.434. 
23Ibid., para. 7.444. 
24Ibid., para. 7.465. 
25Ibid., para. 7.477. 
26Ibid., para. 7.556. WT/DS315/AB/R 
Page 6  
 
 (c) the administration of Article 147(1) of the Implementing 
Regulation regarding the imposition by customs authorities in some member States of a form of prior approval with respect to the successive sales provision in the context of customs valuation.
27 
12. On 14 August 2006, the United States notified the Dispute Settlement Body (the "DSB") of 
its intention to appeal certain issues of la w covered in the Panel Report and certain legal 
interpretations developed by the Pane l, pursuant to Article 16.4 of the Understanding on Rules and 
Procedures Governing the Settlement of Disputes  (the "DSU"), and filed a Notice of Appeal28 
pursuant to Rule 20 of the Working Procedures for Appellate Review  (the " Working Procedures ").29  
On 21 August 2006, the United States filed an appellant's submission.30  On 28 August 2006, the 
European Communities notified the DSB of its intention to appeal certain issues of law covered in the 
Panel Report and certain legal interp retations developed by the Panel,  pursuant to Article 16.4 of the 
DSU, and filed a Notice of Other Appeal 31 pursuant to Rule 23(1) and (2) of the Working Procedures .  
On 29 August 2006, the European Communitie s filed an other appellant's submission.32  On 
11 September 2006, the United States and the Eu ropean Communities each filed an appellee's 
submission.33  On the same day, Japan and Korea each  filed a third participant's submission34, and 
Argentina, Australia, Brazil, China, Hong Kong, Chin a, India, and the Separate Customs Territory of 
Taiwan, Penghu, Kinmen, and Matsu each notified the Appellate Body Secretariat of its intention to 
appear at the oral hearing as a third participant.35 
13. By letter dated 15 September 2006, Japan request ed authorization from the Appellate Body 
Division hearing the appeal to correct a "clerical erro r" in its third participant's submission, pursuant 
to Rule 18(5) of the Working Procedures .  On 18 September 2006, the Division invited all 
participants and third participants to comment on Ja pan's request.  None of th e participants or third 
participants objected to Japan's request.  On 20 September 2006, the Division authorized Japan, 
pursuant to Rule 18(5), to correct the clerical error in its third participant's submission.   
                                                      
27Panel Report, para. 8.2. 
28WT/DS315/11 (attached as Annex I to this Report). 
29WT/AB/WP/5, 4 January 2005. 
30Pursuant to Rule 21(1) of the Working Procedures . 
31WT/DS315/12 (attached as Annex II to this Report). 
32Pursuant to Rule 23(3) of the Working Procedures . 
33Pursuant to Rules 22 and 23(4) of the Working Procedures . 
34Pursuant to Rule 24(1) of the Working Procedures.  
35Pursuant to Rule 24(2) of the Working Procedures .  WT/DS315/AB/R 
 Page 7 
 
 
 14. The oral hearing in this appeal was held on 28 and 29 September 2006.  The participants and 
the third participants presented oral arguments (w ith the exception of Argentina, Brazil, Hong Kong, 
China, India, Korea, and the Separate Customs Te rritory of Taiwan, Penghu, Kinmen, and Matsu) and 
responded to questions posed by the Members of the Division hearing the appeal. 
II. Arguments of the Participants  and the Third Participants 
A. Claims of Error by the United States – Appellant 
1. The Panel's Terms of Reference  
15. The United States requests the Appellate Body to reverse the findings of the Panel concerning 
its terms of reference.  According to the United Stat es, the Panel erred in three respects:  first, in 
finding that, under Article 6.2 of the DSU, the measure at issue must be the "manner of administration" when a claim is made under Article X:3(a) of the GATT 1994;  secondly, in finding that the specific measure at issue in this di spute was confined to the six areas of customs 
administration identified in the third paragraph of the request for the establishment of a panel by the 
United States (the "panel request")
36;  and finally, in concluding that, due to the wording and content 
of the panel request, the United States was prec luded from challenging the European Communities' 
system of customs administration "as a whole".  
(a) The "Measures at Issue" for Purposes of a Claim under Article X:3(a) 
of the GATT 1994 
16. According to the United States, the Panel erroneously found that, when a violation of 
Article X:3(a) of the GATT 1994 is alleged, the meas ure to be identified in the panel request must be 
a "manner of administration".37  For the United States, in making this finding, the Panel relied 
primarily on what it described as "an inter-linkage between the reference to the term 'measure' in 
Article 19.1 of the DSU and to the term 'measu res at issue' in Article 6.2 of the DSU."38  The Panel 
also reasoned that, under Article 19.1 of the DS U, a Member breaching Article X:3(a) of the 
GATT 1994 would be required "to alter the manner  in which the relevant laws, regulations, decisions 
and/or rulings are being  administered  in order to abide by that recommendation."39   
                                                      
36Request for the Establishment of a Panel by the United States, WT/DS315/8 (attached as Annex III to 
this Report). 
37Panel Report, para. 7.20. 
38United States' appellant's submission, para. 45 (referring to Panel Report, para. 7.14). 
39Ibid., para. 46 (referring to Panel Report para. 7.21). (original emphasis) WT/DS315/AB/R 
Page 8  
 
 17. The United States contends that this reasoning of  the Panel is flawed because a "manner of 
administration" is not a "measure" but, rath er, a description of how a measure operates.
40  The United 
States adds that this approach blurs th e distinction between measures and claims.41  By finding the 
"manner of administration" to be the measure at issu e, the Panel confused the measure at issue in an 
Article X:3(a) dispute with the obligation under that  provision.  The United States also argues that the 
Panel's reasoning leads to illogical consequences fo r complaints under other WTO provisions as well, 
because, under such an approach, the measure at issue is not "distinguishable" from the legal basis of 
the complaint for purposes of Article 6.2 of the DSU.42  Regarding the "inter-linkage" between 
Articles 6.2 and 19.1 of the DSU identified by the Panel, the United States points out that the mere 
fact that a breach of Article X:3(a) may be rem oved by changing a law's administration cannot be a 
basis for concluding that the law is not the measure at issue.43  The United States argues that, although 
Article 19.1 of the DSU contemplates a recomm endation that a Member bring a measure into 
conformity with a covered agreement, it is  silent as to how this is to be done.44   
(b) Confinement of the Measures at Issue to Certain Areas of Customs 
Administration 
18. The United States contends that the Panel erred in confining the specific measures at issue to 
the areas of customs administration indicated in the panel request, because the Panel failed to construe 
the panel request "as a whole".  The United States also argues that the Panel confused arguments, on 
the one hand, with measures and claims, on the other hand.45  For the United States, had the Panel 
construed the panel request "as a whole", it could not have avoided the conclusion that, first, the 
specific measures at issue were the Community Customs Code, the Implementing Regulation, the 
Common Customs Tariff, the TARIC, and, for each of these measures, all amendments, "implementing measures, and other related measures" ;  and, secondly, that the legal basis of the 
complaint was the administration of those measures in a manner inconsistent with Article X:3(a) of 
the GATT 1994.
46  The United States emphasizes that the list of areas of customs administration 
provided in the panel request was only illustrative, aimed to give an indication of the argument underlying the United States' claim, and did not cons titute the claim itself or the specific measures at 
                                                     
 
40United States' appellant's submission, para. 47.  
41Ibid. 
42Ibid., para. 49. 
43Ibid., para. 48. 
44Ibid. 
45Ibid., para. 52. 
46Ibid., paras. 54-55.  WT/DS315/AB/R 
 Page 9 
 
 
 issue.47  According to the United States, the Panel read individual phrases in the panel request in 
isolation, focusing on "particular te xt ... taken out of its context".48  The United States maintains that 
the Panel's characterization of the illustrative list as a specification of the measures at issue "ignored 
the introduction to the list, which stated that  '[l]ack of uniform, im partial and reasonable 
administration of the above-identified measures is manifest in differences among member States in a 
number of areas, including, but not limited to, the following.'"49   
19. The United States also points out that the Pane l gave no consideration to the fact that the 
request included a claim that the absence of m echanisms or institutions to secure uniform 
administration in the European Communities' system of customs administration "as a whole" results in 
a breach of Article X:3(a).50  For the United States, the Panel missed the fundamental point that 
"nowhere in the system as a whole … are there mechanisms or instituti ons which achieve the 
uniformity in administration which Article X:3(a) requires".51  With respect to the analogy made by 
the Panel to the  EC – Computer Equipment  dispute, the United States considers that the Panel erred 
because, in  EC – Computer Equipment , the scope of the measures at issue depended on the identity of 
the products subject to the measures;  also, the cl aim put forward in that case was not "systemic" and 
did not relate to the system "as a whole".52   
20. The United States considers that the Panel's a pproach led to a confusion of claims and 
measures, on the one hand, with arguments, on the other hand.  The United States does not believe it 
was required to list the areas in which the manner of administration of the specific measure at issue 
was inconsistent with Article X:3(a);  however, in the view of the United States, such a list made the 
panel request more transparent, in that it anticip ated certain arguments the United States would make 
in its submissions and statements to substantiate its claims.  For the United States, rather than 
understanding the discussion in the panel request as  intended, the Panel mischaracterized it as "an 
elaboration of what it understood to be the measure at issue".53 
                                                      
47United States' appellant's submission, para. 57. 
48Ibid., para. 58. 
49Ibid., para. 59. 
50Ibid., para. 61. 
51Ibid. 
52Ibid., para. 62. 
53Ibid., para. 66. WT/DS315/AB/R 
Page 10  
 
 (c) Challenging the European Communities' System of Customs 
Administration "As a Whole" 
21. The United States contends that the Panel erred by construing the panel request to exclude a 
claim that the European Communities' system of customs administration "as a whole" results in non-uniform administration of European Communities cu stoms law in breach of Article X:3(a) of the 
GATT 1994.  For the United States, the Panel erred in  considering that, in order to challenge the 
European Communities' system of customs administ ration "as a whole", the United States would have 
had to list separately "each and every area of customs administration".
54  This aspect of the Panel's 
reasoning, the United States argues, would make it "virtually impossible" to challenge a responding Member's system "as a whole" or overall.
55 
22. The United States maintains that the panel request  made it clear that its claim related to the 
European Communities' system of customs admini stration "as a whole", because it identified the 
measures that constitute the main instruments of  European Communities customs legislation and 
addressed the manner of administratio n of these instruments collectively.56  For the United States, the 
heart of the problem is that "the [European Co mmunities] administers its customs law through 25 
separate, independent customs authorities and doe s not provide any institution or mechanism to 
reconcile divergences automatically and as a matter of right when they occur."57  The United States 
underlines that, throughout the panel request, the measu res at issue were discussed collectively, and 
that this "is precisely what one would expect in  a panel request challenging a system of customs 
administration as a whole."58 
23. According to the United States, the Panel's inte rpretation of the panel request rested on its 
view that the word "manner", as used in the panel request, was not related to "the design and structure 
of something"59, and the Panel assumed that a challenge to the design and structure of the European 
Communities' system of customs administration must  refer to "actions take n and/or procedures and 
institutions existing at the [European Communities] level".60  For the United States, these aspects of 
the Panel's reasoning are problematic;  given that th e very essence of the Article X:3(a) obligation is 
the "manner" of administration of certain types of measures, it would be "illogical to assume that [the] use of the word 'manner' in a claim involving Article X:3(a) of the GATT 1994 necessarily suggests                                                      
 
54United States' appellant's submission, para. 70. 
55Ibid. 
56Ibid., para. 72. 
57Ibid., para. 69. 
58Ibid., para. 74. 
59Ibid., para. 76 (quoting Panel Report, para. 7.59). 
60Ibid., para. 78 (quoting Panel Report, para. 7.60).  WT/DS315/AB/R 
 Page 11 
 
 
 that the claim does not relate to a Member's system of customs administration as a whole."61  
Furthermore, the United States is of the view that , because "the defining characteristic of the design 
and structure of the [European Communities'] system of customs administration ... is the  absence  of 
procedures and institutions" at the European Co mmunities level, a challenge to the design and 
structure of this system must necessarily address ad ministration undertaken by member State customs 
authorities.62 
24. The United States considers that it clearly articulated a challenge to the European 
Communities' system of customs administration in the panel request.63  The United States submits that 
the absence of an explicit reference to the  terms "as such" or " per se " in the panel request does not 
preclude a claim with respect to the European Co mmunities' system of customs administration "as a 
whole".  What is important, the United States argues, is that the responding party be aware of the 
claim against it so that its ability to defend itself is not prejudiced.64  For the United States, it is clear 
from statements by the European Communities at meetings of the DSB, and from the European 
Communities' submissions and statements during the Panel proceedings, that the European Communities was aware that the United States ha d made a claim with respect to the European 
Communities' system of customs administration "as a whole".
65  For the United States, the "consistent 
articulation" by the United States throughout th e Panel proceedings of a claim concerning the 
European Communities' system of customs administration "as a whole" is "a strong indication [that 
the European Communities] did not suffer any prejud ice on account of any lack of clarity in the panel 
request".66 
2. Claims regarding Article X:3(a) of the GATT 1994  
(a) The Panel's Interpretation of the Term  "Administer" in Article X:3(a) 
of the GATT 1994 
25. The United States submits that the Panel erred in its interpretation and application of the term 
"administer" in Article X:3(a) of the GATT 1994, and its consequent treatment of differences in 
penalty provisions and audit pr ocedures among the member Stat es of the European Communities.67  
The Panel itself noted that the existence of subs tantive differences in penalty provisions and audit 
                                                      
61United States' appellant's submission, para. 77. 
62Ibid., para. 78. (original emphasis) 
63Ibid., para. 82. 
64Ibid., paras. 83-84. 
65Ibid., paras. 86-87, 88-91, and 93-97. 
66Ibid., para. 98 (quoting Appellate Body Report, Thailand – H-Beams , para. 95). 
67Ibid., para. 109.  See also Panel Report, paras. 7.444 , 8.1(d)(ii), 7.434, and 8.1(d)(i), respectively. WT/DS315/AB/R 
Page 12  
 
 procedures among member States is not disputed between the parties.
68  In the United States' view, 
these divergences in laws among the member States, in and of themselves, lead to non-uniform 
administration of European Communities cu stoms law in breach of Article X:3(a).69  The United 
States asserts that the arguments it made with respec t to the Panel's approach to divergences in penalty 
laws apply equally with respect to th e Panel's approach to audit procedures.70   
26. The United States agrees with the Panel that me asures are administered when they are "put 
into practical effect".71  The United States contends that penalty and audit regimes put the measures 
subject to those regimes into practical effect because they encourage compliance with, and deter 
breaches of, those measures.72  The United States submits that the different penalty regimes put 
European Communities customs law into effect di fferently among the member States and that this 
amounts to a failure by the European Communities to administer its customs law in a uniform 
manner.73   
27. Further, the United States refers to the Panel's finding that "the substantive content of penalty 
laws of the member States used to enforce [European Communities] customs law cannot be viewed as 
acts of administration".74  The United States contends that a breach of Article X:3(a) can be 
substantiated not only by particular "acts of ad ministration", but also by the laws themselves.  
According to the United States, if divergences between  individual acts of administration (for example, 
individual impositions of penalties for identical breaches of European Communities customs law) 
constitute non-uniform administration, then, a fortiori , divergences in the penalty provisions that 
govern the individual acts of administration carried out by different customs authorities must also 
constitute non-uniform administration. 
28. The United States alleges that the Panel's findings  in the present case are inconsistent with the 
findings regarding Article X:3(a) of  the GATT 1994 made by the panel in Argentina – Hides and 
Leather .  In the view of the United States, the Panel should have recognized the distinction that the 
panel in  Argentina – Hides and Leather  recognized between measures of  general application whose 
                                                      
68United States' appellant's submission, para. 109 (referring to Panel Report, para. 7.444). 
69Ibid., para. 110. 
70Ibid., paras. 111 and 150. 
71Ibid., para. 118 (quoting Panel Report, para 7.104). 
72Ibid., para. 120. 
73Ibid., paras. 121 and 123. 
74Panel Report, para. 7.444 (quoted in United States' appellant's submission, para. 113).  WT/DS315/AB/R 
 Page 13 
 
 
 manner of administration is at issue under Article X: 3(a), and measures of general application that put 
the measures at issue into practical effect.75 
29. Furthermore, the United States submits that th e Panel's reasoning concerning penalty laws is 
contradicted by other parts of the Panel Report.  In  the United States' view, the Panel recognized that a 
measure of general application may be put into prac tical effect through an instrument that happens 
also to be a measure of general application, and that  it is appropriate to consider the substance of that 
instrument to determine how the measure at issue is  being administered.  In this respect, the United 
States mentions two aspects of the Panel Report:  fi rst, with respect to the tariff classification of 
blackout drapery lining, the Panel referred to the f act that one customs authority (in Germany) relied 
on an interpretative aid not relied on by customs authorities of other member States;  and secondly, with respect to LCD monitors with DVI, the Panel referred to the substance of a Tariff Notice issued 
by the United Kingdom customs authority and a decree issued by the Dutch customs authority as 
showing a lack of uniform administration of the Eu ropean Communities classification rules at issue.  
The United States submits that the Panel itself cons idered the substance of a measure of general 
application concerning blackout drapery lining and LCD monitors with DVI to determine how the 
Common Customs Tariff was being administered.  In the United States' view, the same rationale 
should have been applied to the ad ministration of penalty provisions.
76 
30. With respect to the Panel's finding concerni ng differences in audit procedures among the 
member States of the European Communities, the United States submits that the Panel erred in 
limiting the scope of the claim to the non-uniform administration of Article 78(2) of the Community 
Customs Code.  The United States submits further that , even if the Panel had been correct in limiting 
its examination to Article 78(2) of the Community Customs Code, the Panel's reasoning was based on an incorrect interpretation of the term "administer"  in Article X:3(a) of the GATT 1994.  The United 
States contends that the error in the Panel's analysis  is essentially the same as the error in its analysis 
of penalty provisions.  Therefore,  the United States considers the arguments it presented in the context 
of penalty provisions equa lly valid in the context of audit proceedings.
77   
31. In the event that the Appellate Body reverses the Panel's findings regarding penalty provisions 
and audit procedures, the United States requests the Appellate Body to complete the Panel's analysis 
and to find that divergences in penalty provisions  and audit procedures in the European Communities 
                                                      
75United States' appellant's submission, para. 132 (referring to Panel Report, Argentina – Hides and 
Leather , paras. 11.72, 11.94, and 11.101). 
76Ibid., paras. 134-139. 
77Ibid., para. 154. WT/DS315/AB/R 
Page 14  
 
 amount to non-uniform administration of Euro pean Communities customs law in breach of 
Article X:3(a).
78   
(b) Completing the Analysis with respect to the "As a Whole" Challenge 
of the United States under Article X:3(a) of the GATT 1994 
32. In the event the Appellate Bo dy reverses the Panel's finding that its terms of reference 
regarding the United States' claim under Article X: 3(a) of the GATT 1994 do not include a challenge 
to the European Commun ities' system of customs administration "as a whole", or an "as such" 
challenge with respect to the design and structur e of this system, the United States requests the 
Appellate Body to complete the analysis and fi nd that the design and structure of the European 
Communities' system of customs administration "as a whole" is inconsistent with Article X:3(a).79  
The United States submits that, in this dispute, "a reversal of the Panel's findings without a completion 
of the analysis would fail 'to secure a positive solution to [the] dispute'".80 
33. The United States submits that the analysis can be completed on the basis of undisputed facts 
and the Panel's findings of fact regarding the European Communities' system of customs 
administration.81  The United States recalls that "[t]he crux of  the [United States'] claim ... was that the 
existence of a system of customs administratio n in which 25 separate, independent authorities 
exercise judgment in interpreting and applying [E uropean Communities] customs law, without any 
procedures or institutions to ensure against divergen ces or to reconcile them promptly and as a matter 
of right when they occur necessarily constitutes a lack of uniform administration, in breach of 
Article X:3(a)."82  The United States points to statements made by the Panel with respect to various 
mechanisms and institutions in  the European Communities that , according to the European 
Communities, are supposed to ensure against dive rgences or to reconcile divergences when they 
occur.83  The United States mentions as particular examples, the Customs Code Committee84, 
Article 10 of the Treaty Establishing the European Communities  (the "EC Treaty"), and the system of 
preliminary reference of questions of European Co mmunities customs law to the Court of Justice of 
the European Communities (the "ECJ").85  The United States also refers to the Panel's statement that 
the European Communities' system of customs admini stration "as a whole" is "complicated and, at 
                                                      
78United States' appellant's submission, para. 159. 
79Ibid., para. 99. 
80Ibid., para. 101. 
81Ibid., para. 102. 
82Ibid. (footnote omitted) 
83Ibid. 
84Committee established by Articles 247a(1) and 248a(1) of the Community Customs Code. 
85United States' appellant's submission, paras. 103, 104, and 105.  WT/DS315/AB/R 
 Page 15 
 
 
 times, opaque and confusing".86  According to the United States,  by these various statements, the 
Panel rejected the European Communities' argument that the institutions and procedures to which the 
European Communities referred ensure the unifo rm administration of European Communities 
customs law.87  Thus, for the United States, in the light of the Panel's statements regarding "the 
institutions and mechanisms the [European Communities] held out as securing uniform administration 
of [European Communities] customs law, comp letion of the Panel's analysis should be 
straightforward"88 and should lead to the conclusion that "the [European Communities'] system of 
customs administration as a whole is inconsistent  with the [European Communities'] obligation of 
uniform administration under Article X:3(a) of the GATT 1994."89 
3. The Panel's Interpretation of Article X:3(b) of the GATT 1994  
34. The United States submits that the Panel erred in  finding that the tribunals and procedures for 
review of customs administrative actions in the European Communities are consistent with 
Article X:3(b) of the GATT 1994, despite the fact th at their decisions do not govern the practice of  
all  the agencies entrusted with administrative enforcement  throughout the territory  of the European 
Communities. 
35. The United States notes that review tribunals or procedures of the European Communities 
consist of the courts of various member States.  Each court i ssues decisions that govern the practice of 
only the agency in the respective member State.90  The United States claims that, in reaching its 
conclusion concerning interpretation and application of Article X:3(b), the Panel made a number of 
interpretive errors.  In the United States' view, th e Panel misconstrued the ordinary meaning of the 
terms "the agencies" and "such agencies";  confu sed the concepts of "implement" and "govern the 
practice of";  and failed to take into account the context provided by Article X:3(a) of the 
GATT 1994.91  The United States submits that the Panel e ffectively disregarded the ordinary meaning 
of those terms when it stated that "it is difficult to  know what significance should be attached, if any, 
to the reference to agencies in the plural."92  The United States submits that the ordinary meaning of 
the plural form encompasses "the agencies"—without  limitation—as opposed to only one such agency 
                                                      
86United States' appellant's submission, para. 107 (quoting Panel Report, para. 7.191). 
87Ibid., para. 108. 
88Ibid. 
89Ibid. 
90Ibid., para. 31. 
91Ibid., para. 163. 
92Panel Report, para. 7.528 (quoted in United States' appellant's submission, para. 164). WT/DS315/AB/R 
Page 16  
 
 or just "some of" or a subset of "the agencies".
93  The United States argues that the use of the plural 
form contemplates multiple agencies and, given the absence of any basis in the text for distinguishing 
among multiple agencies, it must contemplate al l the agencies entrusted with administrative 
enforcement.94   
36. Furthermore, in the United States' view, Article X:3(b) must be read in the light of the 
obligation of uniform administration in Article X: 3(a) of the GATT 1994.  According to the United 
States, the review of decisions that are inconsistent with "established principles of law or the actual 
facts" contemplated by Article X:3(b) also embodies the principle of uniform administration.95  The 
United States submits that procedures leading to deci sions that have effect only in particular regions 
of a WTO Member's territory are therefore inconsiste nt with Article X:3(b).  In addition, the United 
States alleges that the Panel did not give meaning to the two distinct requirements of "govern the 
practice" and "implement" in Article X:3(b).96  In the United States' view, the Panel assumed 
incorrectly that, if a decision can be implemente d by a single agency, then the decision need govern 
the practice of only that agency, even though, purs uant to Article X:3(b), it must be effectuated by 
"such agencies" entrusted with administrative enforcement.97  The United States submits that 
Article X:3(b) does not contemplate such a geogr aphical limitation of the "govern the practice" 
requirement.98 
37. With respect to the Panel's assessment of what  is "reasonable" in the light of "most legal 
systems", the United States submits that the Panel i gnored the feature that distinguishes the system of 
the European Communities from most legal systems, namely, that most legal systems have only one 
central agency entrusted with enforcement of custom s law.  The United States points out that this is 
not the case in the European Communities because its legal system combines review tribunals with 
geographically limited jurisdiction with customs aut horities whose practice is limited to particular 
geographical regions.99  In the United States' view, this results in a geographically fragmented 
administration of the customs la w in the European Communities.100 
                                                      
93United States' appellant's submission, para. 165. 
94Ibid., para. 166. 
95Ibid., para. 181. 
96Ibid., para. 174. 
97Ibid. 
98Ibid., para. 191. 
99Ibid., para. 189.  
100Ibid.  WT/DS315/AB/R 
 Page 17 
 
 
 38. In the United States' view, should the Appellate Body reverse the Panel's finding on 
Article X:3(b) of the GATT 1994, it should also comp lete the Panel's analysis and find the European 
Communities to be in breach of its obligation unde r Article X:3(b) "by fa iling to provide review 
tribunals or procedures whose decisions govern the pr actice of all of the agencies that the [European 
Communities] entrusts with administrati ve enforcement of its customs laws."101 
B. Arguments of the European Communities – Appellee 
1. The Panel's Terms of Reference  
39. The European Communities submits that the Panel did not err in finding that the measure at 
issue was only the "manner of administration" of European Communities cust oms law in the specific 
areas identified by the United States in the panel request.  Furthermore, the European Communities 
agrees with the Panel's conclusion that its terms of reference did not include a claim against the 
European Communities' system of customs administration "as a whole", or "as such". 
(a) The "Measures at Issue" for Purposes of a Claim under Article X:3(a) 
of the GATT 1994 
40. The European Communities agrees with the Panel th at the measure at issu e with respect to the 
United States' claim under Article X:3(a) of the GATT 1994 is the "manner of administration" of 
European Communities customs law.102  The European Communities cons iders that, by referring to 
the "manner of administration", the Panel did not blur  the distinction between the measure at issue and 
the claims under Article X:3(a).  The Panel used th e term "manner of administration" to distinguish 
"administration" (the measure at issue in this dispute) from the laws and regulations of general 
application under Article X:1 of the GATT 1994, which are the subject of administration.  According to the European Communities, the Panel used the term "manner of  administration" synonymously 
with "administration".
103  The European Communities is of th e view that this "minor ambiguity"104 is 
not enough to reverse the Panel's finding that when a violation of Article X:3(a) is claimed, the panel 
request must identify a "manner of administration". 
41. The European Communities contends that the Unite d States is trying to confuse the laws to be 
administered with their administration.105  In this respect, the Europ ean Communities observes that, in 
                                                      
101United States' appellant's submission, para. 200. 
102European Communities' appellee's submission, para. 97. 
103Ibid., para. 91.  
104Ibid., para. 92. 
105Ibid., para. 94 (referring to Appellate Body Report, EC – Bananas III , para. 200). WT/DS315/AB/R 
Page 18  
 
 EC – Bananas III , the Appellate Body distinguished, in th e context of Article X:3(a), between the 
administration of the laws and the laws to be administered.
106  According to the European 
Communities, the panel request refers to the manner of administration107, "clearly distinguishes the 
administration from the laws which are being administer ed", and, thus, "identifies the 'administration', 
rather than those laws, as the me asure at issue in the dispute."108  
(b) Confinement of the Measures at Issue to Certain Areas of Customs 
Administration 
42. For the European Communities, the Panel was fully  justified in concluding that the measure at 
issue was only the administration of customs law in the areas identified in the third paragraph of the 
panel request.  The European Commun ities reiterates that, in this case, the measure at issue is not the 
set of legal instruments listed in the first pa ragraph of the panel request but, rather, their 
administration.109  The European Communities submits that th e United States is trying to engage in a 
selective reading of the panel request by asking the A ppellate Body to ignore the third paragraph of 
the panel request.110  Furthermore, given the "vast body of law"111 referred to by the United States in 
the first paragraph of the panel request, it wo uld not have been possible for the European 
Communities to prepare adequately its defence purely on the basis of a challenge against the 
administration of European Communities customs la w "as a whole" without specifying the relevant 
provisions or sectors.  In the view of the Europ ean Communities, "an identification of the specific 
issue or provision with respect to which a claim of non-uniform administration is made was ... 
necessary ... to protect [its] due process rights".112   
43. The European Communities contends that the Pane l correctly referred to the general principle 
set out in EC – Computer Equipment  that "what is necessary for identification of the 'specific 
measures at issue' depends on the circumstance of the case."113  In the circumstances of the present 
case, given the vast body of law to which the Un ited States referred, the Panel was justified in 
requiring specification of areas of customs administration. 
                                                      
106European Communities' appellee's submission, para. 94. 
107Ibid., para. 95. 
108Ibid., para. 96. 
109Ibid., para. 99. 
110Ibid., para. 100. 
111Ibid., para. 103. 
112Ibid. (footnote omitted) 
113Ibid., para. 105.  WT/DS315/AB/R 
 Page 19 
 
 
 44. Regarding the terms "including but not limited to" contained in the third paragraph of the 
panel request, the European Communities relies on the Appellate Body Report in India – Patents (US)  
in asserting that "these words cannot have the effect  of including, contrary to the requirements of 
Article 6.2 [of the] DSU, the administration of the entire body of [European Communities] customs 
law into the Panel's terms of reference."114  The European Communities adds that the United States' 
interpretation of this phrase would reduce the th ird paragraph of the panel request to inutility115 and 
would "prejudice [the defendant's] due process rights by leaving the actual subject matter of the case 
unclear."116 
(c) Challenging the European Communities' System of Customs 
Administration "As a Whole" 
45. According to the European Communities, th e Appellate Body should uphold the Panel's 
findings that the United States' claims regarding th e European Communities' system "as a whole" and 
"as such" are outside its terms of reference.  Th e European Communities considers the "as a whole" 
claim to be outside the Panel's terms of reference because the measure at issu e is "only the [European 
Communities'] manner of administration in the areas of customs law specifically identified in [the] 
Panel request".117  The European Communities al so maintains that "[i]t is thus incorrect to suggest 
that the [European Communities'] system of customs administration could be assessed 'as a whole', 
independently of the specific needs and requirements of the sector or area in question, and the tools 
and mechanisms existing in such area."118  
46. The European Communities argues that the pane l request did not indicate that the United 
States intended to challenge the European Communitie s' system of customs administration "as such".  
For the European Communities, the panel request id entified as the measure at issue the "manner of 
administration", and these terms are "diametrically opposed to those which one could have expected 
to be used in the case of a challenge against a measure 'as such'."119  Regarding the United States' 
argument that the measures at issu e were the instruments listed in the first paragraph of the panel 
request, and that they constitute the main in struments of the European Communities customs 
legislation, the European Communities reiterates its  view that the measures at issue are not these 
instruments but, rather, their administration in the areas listed in the third paragraph of the panel 
                                                      
114European Communities' appellee's submission, para. 106. 
115Ibid., para. 108. 
116Ibid., para. 109. 
117Ibid., para. 113. 
118Ibid., para. 117. 
119Ibid., para. 125. WT/DS315/AB/R 
Page 20  
 
 request.  The European Communities adds that its sy stem of customs administration is broader than 
the instruments listed in the first paragraph of th e panel request, because it includes other instruments 
such as the EC Treaty itself and more specific instruments existing in the field of customs 
cooperation, or budgetary  and financial control.
120 
47. With respect to the United St ates' reliance on a number of statements made by the parties 
during or outside the Panel proceedings121, the European Communities reca lls that "the compliance of 
a [p]anel request with Article 6.2 [of the] DSU must  be assessed primarily on the face of the [p]anel 
request".122  The European Communities reiterates that at no point did it recognize or acknowledge 
that its system of customs administration "as su ch" was the measure at issue in this dispute.123 
2. Claims regarding Article X:3(a) of the GATT 1994  
(a) The Panel's Interpretation of the Term  "Administer" in Article X:3(a) 
of the GATT 1994 
48. The European Communities submits that the Pa nel was correct to distinguish between the 
laws to be administered and the administration of those laws, and disagrees with the United States that 
laws themselves can constitute administration.  According to the European Communities, the 
administration of a law or a regulation of general app lication, by definition, implies its application in 
concrete cases.124   
49. The European Communities argues that the Pane l did not err in finding that substantive 
differences in the penalty laws of the member States of the European Communities, in and of 
themselves, do not constitute a violati on of Article X:3(a) of the GATT 1994. 
50. According to the European Communities, th e United States did not demonstrate that 
differences in the penalty laws of the member States lead to non-conformity in the administration of European Communities customs law.  The Eu ropean Communities explains that, although 
administrative or penalty provisions applicable to  violations of customs law are set out in the 
individual laws of the member States, the memb er States do not have complete freedom in the 
determination of the appropriate level of penalties.  Rather, in accordance with the binding principles 
of European Communities customs law, sanctions for the violation of customs law that member States 
                                                     
 
120European Communities' appellee's submission, para. 128. 
121United States' appellant's submission, paras. 84-98. 
122European Communities' appellee's submission , para. 131.  See also paras. 87 ff. 
123Ibid., para. 133. 
124Ibid., paras. 207-215.  WT/DS315/AB/R 
 Page 21 
 
 
 provide must be effective,  proportionate, and dissuasive.125  In the European Communities' view, 
these principles ensure uniform application of customs law throughout the European Communities.126 
51. The European Communities emphasizes that the objective of ensuring uniform application of 
European Communities customs law does not require full harmonization of penalty provisions among the member States, and that differences in penalties do not necessarily lead to a lack of uniformity in 
the application of the provisions.
127  The European Communities submits that, if sanctions are 
dissuasive and effective, then it must be assumed that the related substantive provisions will be 
respected, regardless of differences in the level of  sanctions applicable.  The European Communities 
contends that the United States has not provided an y evidence concerning the actual nature and level 
of sanctions imposed by the laws of member Stat es for specific violations of customs provisions.  
Therefore, in the European Comm unities' view, the United States h as not established that differences 
in penalty laws result in differences in the ad ministration of European Communities customs law.128 
52. With respect to the administration of audit procedures, the European Communities submits 
that the Panel was correct to find no violation of Article X:3(a).129  The European Communities 
disagrees with the United States th at the same arguments it submitted when challenging the Panel's 
findings with respect to penalty laws apply with eq ual force to the Panel's findings with respect to 
audit procedures.  In the European Communities' view, these claims are substantially different, 
because audit procedures are not primarily set out in member States' laws.130  The European 
Communities asserts that uniform practice in this  respect is ensured by  the Community Customs 
Audit Guide.131 
53. The European Communities notes the discretionary character of Article 78(2) of the 
Community Customs Code but argues that, nevertheless,  the mere exercise of discretion in one way or 
another does not constitute non-uniform administration.132  The European Communities submits that 
"the [United States] has not provided any evidence to substantiate its allegation that there are 
significant differences in the audit pro cedures followed by the … [m]ember States"133, and "has also 
                                                      
125European Communities' appellee's submission, paras. 202 and 222. 
126Ibid., para. 222. 
127Ibid., para. 223. 
128Ibid., paras. 221-232. 
129Ibid., paras. 46 and 233. 
130Ibid., para. 234. 
131Ibid., para. 237 (referring to Community Customs Au dit Guide, a framework for post-clearance and 
audit-based controls (Exhibit EC-90 submitted by the European Communities to the Panel)). 
132Ibid., para. 241. 
133Ibid., para. 249. WT/DS315/AB/R 
Page 22  
 
 not been able to demonstrate what impact, if any, such differences would have on the uniform 
administration of [European Communities] customs law."
134 
54. Regarding the United States' request that the Appellate Body complete the analysis under 
Article X:3(a) with respect to penalty provisions  and audit procedures, the European Communities 
maintains that the Panel did not make the necessary findings of fact and that there are no undisputed facts on the record that would enable the Appellate Body to complete the analysis.
135  
(b) Completing the Analysis with respect to the "As a Whole" Challenge 
of the United States under Article X:3(a) of the GATT 1994 
55. In the event that the Appellate Body reverses the Panel's findings re garding its terms of 
reference, the European Communities submits that th e Appellate Body is not in a position to complete 
the legal analysis and should d ecline to find that the European  Communities' system of customs 
administration "as a whole" and "as such" is in consistent with Article X:3(a) of the GATT 1994.136  
56. The European Communities disagre es with the United States that there are enough factual 
findings made by the Panel, or enough undisputed facts on record, that would enable the Appellate 
Body to find that the European  Communities' system of customs administration "as such" and "as a 
whole" is inconsistent with Article X:3(a).  A ccording to the European Communities, the Panel's 
statements to which the United States refers are is olated remarks in the Panel Report where the Panel 
commented on individual aspects of the European Communities' system of customs administration.137  
These statements, the European Co mmunities argues, would not allow the Appellate Body to assess 
whether the European Communities' system of cust oms administration "as a whole" and "as such" is 
in conformity with Article X:3(a) of the GATT 1994, given that they do  not contain findings of fact in 
this regard, and were not intended by the Panel to constitute such findings.138  The European 
Communities notes that these statements are contai ned in a section where the Panel set out its 
understanding of the European Communities' system  of customs administration as "context" for the 
evaluation of the United States' claims rega rding individual instances of application.139 
57. Furthermore, the European Communities emphasizes that the Panel observed, inter alia , that 
"the United States did not demonstrate that the d esign and structure of the [European Communities'] 
                                                      
134European Communities' appellee's submission, para. 250. 
135Ibid., paras. 231 and 251. 
136Ibid., paras. 141-142. 
137Ibid., para. 159. 
138Ibid., para. 160. 
139Ibid.  WT/DS315/AB/R 
 Page 23 
 
 
 system of customs administration, including compone nts thereof, necessarily result in a violation of 
Article X:3(a) of the GATT 1994".140  Thus, in the European Communities' view, the Panel explicitly 
confirmed that the United States did "not even come close" to establishing that the European 
Communities' system of customs administration "as such" and "as a whole" entails a violation of Article X:3(a) of the GATT 1994.
141  
58. Finally, the European Communities submits th at the United States' claim regarding the 
European Communities' system of customs administra tion "as a whole" is a claim that has not been 
explored by the Panel, and the Panel has therefor e not made any legal findi ngs and interpretations on 
this claim that the Appellate Body could reverse.  For the European Communities, a claim of violation 
of the obligation of uniform administration directed against individual instances of application is fundamentally different from a claim directed agai nst a system of customs administration "as such" 
and "as a whole".
142  Adjudging the claim regarding the European Communities' system of customs 
administration "as such" and "as a whole" would, therefore, violate the due process rights of the participants, and of the European Communities in particular.  Appellate Body proceedings have to 
take place within a narrow time-fra me, and are focused on issues of law and legal interpretations.  For 
the European Communities, such proceedings are manifestly not suited for investigating a claim 
against a system of customs administration "as a whole" and "as such".
143 
3. The Panel's Interpretation of Article X:3(b) of the GATT 1994  
59. The European Communities argues that the Panel was correct in  finding that the European 
Communities has not violated Article X:3(b) of  the GATT 1994, because this provision does not 
require that the review of administrative action relating to customs matters must have effect 
throughout the territory of the European Communities.144   
60. As a general matter, the European Communities notes that all disputes concerning European 
Communities law that are not subject to the jurisdic tion of the ECJ and the Court of First Instance of 
the European Communities (the "CFI") fall within  the competence of the national courts of the 
member States.  The European Communities explains that national courts have a dual function:  when 
deciding a dispute governed by national law, they form part of the national legal order;  when 
                                                      
140European Communities' appellee's submission, pa ra. 29 (quoting Panel Report, para. 7.490). 
141Ibid., paras. 171-172. 
142Ibid., paras. 188-189. 
143Ibid., paras. 193-195. 
144Ibid., paras. 257 and 342. WT/DS315/AB/R 
Page 24  
 
 deciding a case governed by European Communities la w, they belong, from the functional point of 
view, to the European Communities' legal order.
145   
61. The European Communities points out that, in the case of actions brought before a national 
court that relate to the interpretation of an issu e of European Communities law, the national court may 
request the ECJ to interpret a question of Europ ean Communities law (referred to as "references for a 
preliminary ruling").146  Member State courts, against whose decisions there is no judicial remedy 
under national law, are required to refer issues of interpretation of European Communities law to the 
ECJ.147  Since European Communities customs law is implemented through the customs authorities of 
the member States, an appeal for judicial review is  lodged before the court of  the member State whose 
customs authorities have issued the decision.148  According to the Europ ean Communities, the main 
objective of the preliminary reference procedure is  to guarantee the proper and uniform interpretation 
and application of European Communities law thr oughout all the member States, while avoiding the 
establishment of a long and expensive appellate system before the ECJ.149  The European 
Communities notes that a preliminary ruling by the EC J is binding on the national court hearing the 
case in which the ruling is given, and that it has eff ect also on persons who are not parties to the case 
referred.150  The European Communities points out that, in  exceptional cases, a right of appeal against 
member State customs decisions may also  be available directly to the CFI.151 
62. The European Communities submits that the Panel gave the correct meaning to the terms "the 
agencies entrusted with administration enforcement"  and "such agencies" in Article X:3(b) of the 
GATT 1994.  In the European Communities' view, the Panel correctly explained that the use of the 
plural when referring to "agencies" in Article X: 3(b) could flow from the fact that the review 
"tribunals and procedures" required under the same  provision are also referred to in the plural.152  The 
European Communities disagrees with  the United States' argument that the use of the singular in the 
proviso  indicates that only one entity within a WT O Member should be permitted "to pursue" the 
                                                      
145European Communities' appellee's submission, paras. 260-261. 
146Ibid., para. 266. 
147Ibid., para. 267. 
148Ibid., para. 274. 
149Ibid., para. 270. 
150Ibid., para. 272. 
151Ibid., para. 279.  This is the case when the European  Commission takes decisions that are of direct 
and individual concern to individuals.  
152Ibid., para. 288 (referring to Panel Report, para. 7.527).  WT/DS315/AB/R 
 Page 25 
 
 
 review.  In the European Communities' view, the proviso  covers the "central administration of any of 
those agencies existing in the WTO [M]ember".153 
63. In response to the United States' argument that th e Panel failed to give meaning to the distinct 
requirements in Article X:3(b) that review deci sions must be "implemented by" and "govern the 
practice of" such agencies154, the European Communities submits that the differences between the 
terms "to implement" and "govern the practice of" are irrelevant for interpreting the term "the 
agencies".  Furthermore, the European Communities notes that the absence of an express reference to 
Article X:3(a) in Article X:3(b) of the GA TT 1994 contrasts with the explicit reference by 
Article X:3(c) to Article X:3(b) of the GATT 1994.  The European Communities agrees with the 
Panel that this absence precludes an inference that the obligation to ensure review of administrative 
action under Article X:3(b) could be read as si multaneously requiring uniform administration in 
accordance with Article X:3(a) of the GATT 1994, because "such an interpretation would amount to 
merging different requirements that are currently co ntained in separate subparagraphs of Article X of 
the GATT 1994."155  The European Communities argues that th is interpretation is also supported by 
the negotiating history of Article X.156  The European Communities conc urs with the Panel that it 
would not be reasonable to infer that "first inst ance independent review tribunals and bodies, whose 
jurisdiction in most legal systems is normally lim ited in substantive and ge ographical terms, should 
have the authority to bind all agencies entruste d with administrative enforcement throughout the 
territory of a Member".157 
64. Finally, the European Communities submits that  the United States' interpretation would lead 
to a major conflict between the Marrakesh Agreement Establishing the World Trade Organization  
(the " WTO Agreement ") and the EC Treaty, because the crea tion of a central European Communities 
customs court of first instance would require a profound constitutional ame ndment of the EC Treaty 
that would require ratification by its 25 member States.  The European Communities recalls that, 
when the  WTO Agreement  was negotiated and concluded, the Unite d States never raised any concern 
about the European Communities' system of judici al review, which had alre ady existed for almost 
40 years.158 
                                                      
153European Communities' appellee's submission, para. 291. 
154Ibid., para. 293 (referring to United States' appellant's submission, para. 174). 
155Ibid., para. 302 (quoting Panel Report, para. 7.534). 
156See ibid., paras. 313-322. 
157Ibid., para. 325 (referring to United States' appellant's submission, para. 188). 
158Ibid., para. 339. WT/DS315/AB/R 
Page 26  
 
 C. Claims of Error by the European Communities – Other Appellant 
1. The Panel's Terms of Reference
 
(a) Temporal Limitations of the Panel's Terms of Reference 
65. The European Communities contends that the Pa nel took an excessively wide approach to the 
temporal reach of its terms of reference.159  For the European Communities, a panel may, in principle, 
consider only measures that are in existe nce at the time of its establishment160 and, therefore, the 
Panel erred in considering that it had "a general competence to also consider measures which 'pre-
date' or 'post-date' its establishment."161  The European Communities refers to past Appellate Body 
and panel reports in support of its arguments.162  The European Communities argues that, furthermore, 
the manner of administration "cannot be regarded  as a 'continuum' without [a] clear start or end 
point", contrary to what the Panel suggests.163  According to the European Communities, the Panel's 
approach would produce absurd results:  it would impl y that "violations which occurred far in the past 
and which no longer have any current effect c ould be claimed to be continuing because 
'administration has no end point'"164;  similarly, "violations which had not yet occurred at the time the 
Panel was established might be regarded as indi cative of violations pre-dating the Panel's 
establishment because administration 'has no starting point'."165 
66. The European Communities considers that, on the basis of the panel request, it was entitled to 
assume that the complainant's case related to me asures in existence at the time of the Panel's 
establishment.  The European Communities conte nds that, by defining "administration" under 
Article X:3(a) of the GATT 1994 as a "phenomenon without any boundaries in time", the Panel 
violated the due process rights of the defendant pr otected by Article 6.2 of the DSU, because the 
preparation of the defence for past instances of administration is "unduly difficult", and including 
                                                      
159European Communities' other appellant's submission, para. 40. 
160Ibid., para. 46 (referring to Appellate Body Report, EC – Chicken Cuts , para. 156). 
161Ibid., para. 47. 
162The European Communities refers to Appellate Body Reports in Chile – Price Band System , 
para. 139;  EC – Chicken Cuts , para. 56;  EC – Computer Equipment , para. 81;  and US – Upland Cotton , 
paras. 262-263 and 272;  and to Panel Reports in  EC – Computer Equipment , para. 8.14;  Japan – Film , 
para. 10.58;  and US – Upland Cotton , paras. 7.158-7.160. ( Ibid., paras. 46-59) 
163Ibid., para. 63;  Panel Report, para. 7.37. 
164European Communities' other appellant's submission, para. 65. 
165Ibid.  WT/DS315/AB/R 
 Page 27 
 
 
 future instances of administration in the measure at  issue would make the subject matter of the case a 
"moving target".166 
67. The European Communities also argues that th e Panel's reasoning would render establishing 
compliance almost impossible.  If administration has no clear start or end point, it would be difficult 
for a WTO Member found to be in violation of Article  X:3(a) to establish that it has altered its manner 
of administration so that compliance with Article X:3(a) is achieved.167  The European Communities 
contends that "the Panel's approach to the temp oral limitations to its terms of reference is 
incompatible with Article[s] 7.1 and 6.2 [of the] DSU"168 and requests the Appellate Body to reverse 
the Panel's findings on the temporal li mitations of its terms of reference.169 
2. Claims regarding Article X:3(a) of the GATT 1994  
(a) The Administrative Process and the Requirement of Uniformity  
68. The European Communities submits th at the Panel erred in finding that "Article X:3(a) of the 
GATT [1994] requires uniformity of administrative processes irrespective of their impact on the uniform administration of the laws."
170 
69. The European Communities agrees with the Panel that the term "to administer" relates to the 
application of laws, and that this  may potentially include both the administrative processes as well as 
their results.  However, for the European Commun ities, Article X:3(a) does not require that the 
administrative process "be fully uniform in all cases and respects".171  The European Communities 
emphasizes that "[i]n most administrations, procedures are not fully regulated or harmonised."172  The 
European Communities doubts that a total uniformity of  administrative procedures is required in order 
to ensure that traders are treated fairly and consis tently.  In the view of the European Communities, 
whether the requirement of uniform administration in Article X:3(a) is met should be evaluated 
primarily on the basis of the administrative outco me.  The European Communities argues that "[a]part 
from the case that the administrative process is regulat ed in laws or regulations of general application 
themselves, the obligation of uniform administration only extends to the administrative process to the 
                                                      
166European Communities' other appellant's submission, para. 66. 
167Ibid., para. 68. 
168Ibid., para. 69. 
169Ibid., para. 70;  Panel Report, paras. 7.36-7.37. 
170European Communities' other appellant's submission, para. 82;  Panel Report, paras. 7.102-7.113 
and 7.119.   
171European Communities' other appellant's submission, para. 76. 
172Ibid., para. 78. WT/DS315/AB/R 
Page 28  
 
 extent that the administrative process has a dir ect and significant impact on the outcome of the 
process".
173  Accordingly, the European Communities re quests the Appellate Body to reverse the 
Panel's finding that Article X:3(a) of the GATT 1994 requires uniformity of administrative processes 
irrespective of their impact on the uniform administration of the laws.174 
(b) The Administrative Process Leading to the Tariff Classification of 
Blackout Drapery Lining 
70. The European Communities submits that the Pa nel erred in finding that the European 
Communities has violated Article X:3(a) of the GA TT 1994 with respect to the tariff classification of 
blackout drapery lining.175  In particular, the European Communities challenges the Panel's findings 
relating to the administrative process governing the tariff classification of blackout drapery lining.  
The European Communities notes that the Panel re ached these findings "even though it also found 
that there was no evidence of an actual divergence in the tariff classification of [blackout drapery 
lining]".176  For the European Communities, the Pane l erred because it overstepped its terms of 
reference by making findings with respect to expired measures, failed to make an objective 
assessment of the facts as required by Article 11 of the DSU, and misapplied the requirements of 
Article X:3(a) of the GATT 1994. 
71. The European Communities contends that the findings of the Panel concerning blackout 
drapery lining are outside its terms of reference because they are exclusively based on the reasoning 
of the decisions and letters of the German cust oms authorities in two isolated past cases.  The 
European Communities points out that the letter of  the Main Customs Office Hamburg to Ornata 
GmbH dates from July 1998, the opinion of the ZPLA Hamburg in the Bautex-Stoffe GmbH case 
dates from February 2003, and the decision of th e Main Customs Office Hamburg in the same case 
dates from September 2004.177  For the European Communities, th ese decisions and letters are expired 
measures because they concern past transactions and th ey no longer have any effects for the future.  
The European Communities submits that the Panel' s findings regarding the "administrative process" 
relating to the tariff classification of blackout dr apery lining are outside its terms of reference and 
should be reversed.178 
                                                      
173European Communities' other appellant's submission, para. 81. 
174Ibid., para. 82. 
175Ibid., para. 148.   
176Ibid., para. 95 (referring to Panel Report, para. 7.265). 
177Ibid., para. 106. 
178Ibid., para. 110.  WT/DS315/AB/R 
 Page 29 
 
 
 72. With respect to the Panel's findings that the German customs authorities relied on an 
interpretative aid that is particular to Germany,  the European Communities argues that the description 
of the facts made by the Panel does not correspond to  an objective assessment of the facts, as required 
by Article 11 of the DSU.179  The European Communities argues that the decisions and letters to 
which the Panel referred did not rely on a German e xplanatory aid or on certain classification criteria 
in a way that would have been incompatible with  the uniform application of European Communities 
customs law.180  The European Communities also recalls th at the interpretive aid referred to by the 
Panel "is purely a non-binding text which does not in any way derogate from the application of 
[European] Communit[ies] law".181 
73. With respect to the alleged failure of the Germ an customs authorities to take into account the 
decisions of customs authorities of other member States, the European Co mmunities argues that the 
decisions and letters to which the Panel referred do not indicate that the German customs authorities 
wished to ignore the decisions  of other customs authorities.182  The European Communities adds that 
the factual basis for the Panel's findings is "extremely tenuous"183, because the Panel based its 
findings on one single case and ignored a letter that clearly illustrates that the German customs 
authorities do take into account the practice of ot her customs authorities concerning the classification 
of similar goods when they are made aware of them.184  The European Communities contends that the 
Panel's statement that "German customs authorities ar e not obliged to make reference to the decisions 
of other customs authorities when classifying blackou t drapery lining, even in cases where there is a 
possibility that the products … subject [to] those decisions are the same or similar"185, contradicts 
Articles 6(3) and 2(1) of the Community Customs Code. 
74. For the European Communities, even  if the facts set out in the Panel Report were correct, they 
would not amount to an "act of non-uniform admini stration" within the meaning of Article X:3(a).186  
The European Communities considers that the Pane l's findings are based on the "motivation" of 
decisions and letters issued by the German authoriti es, which can hardly be regarded as part of the 
"administration process".187  Even if it were to be regarded as such, not every variation in the 
                                                      
179European Communities' other appellant's submission, para. 111. 
180Ibid., paras. 114-115. 
181Ibid., para. 132 (referring to Panel Report, para. 7.239). 
182Ibid., paras. 118-119 and 141. 
183Ibid., para. 144. 
184Ibid., paras. 120-121. 
185Panel Report, para. 7.276 (quoted in European Communities' other appellant's submission, 
para. 122). 
186European Communities' other appellant's submission, para. 124. 
187Ibid., paras. 126-127 and 138. WT/DS315/AB/R 
Page 30  
 
 reasoning of the decisions of customs authorities could be regarded as amounting to non-uniform 
administration, because a violation of that ob ligation can only be assumed to exist where the 
divergence has a direct impact on administrative outcomes.
188  In the European Communities' view, 
Article X:3(a) does not require the reasoning of deci sions of customs authorities to be uniform;  this 
would be contrary to the very purpose of the "motivation", which is to set out the reasons that led to the decision in the circumstances of the particular case.
189  The European Communities points out that 
the Panel recognized that "there was no evidence th at there had been a lack of uniformity as regards 
the actual tariff classification."190 
(c) Tariff Classification of Liquid Crysta l Display Monitors with Digital 
Video Interface  
75. The European Communities submits that the Pa nel erred in finding that the European 
Communities has violated Article X:3(a) of the GA TT 1994 with respect to the tariff classification of 
LCD monitors with DVI.191  According to the European Comm unities, "[t]he Pa nel overstepped its 
terms of reference by basing its findings of violation primarily on instances of administration which 
post-date its establishment".192  Specifically, the European Commun ities refers to the Dutch decree of 
8 July 2005 and the German BTI of 19 July 2005.193  The European Communiti es also argues that the 
Panel did not make an objective assessment of th e facts, as required by Article 11 of the DSU, 
because "the Panel did not have an y evidence before it to support a finding that at the time of its 
establishment, there was a lack of uniform administ ration with regard to the tariff classification of 
LCD monitors."194   
76. The European Communities submits that, "even if  ... the Panel was justified in considering 
instances of administration which post-dated the time  of its establishment", it nevertheless erred in 
finding a violation of Article X:3(a).195  The European Communities notes that uniformity under 
Article X:3(a) must be established "within a reasonable period of time"196, and maintains that this has 
                                                      
188European Communities' other appellant's submission, paras. 128 and 138. 
189Ibid., para. 19. 
190Ibid., para. 128. 
191Ibid., para. 202.   
192Ibid., para. 150. 
193Ibid., para. 166 (referring to Douanerechten. Indeling van bepaalde LCD monitoren in de 
gecombineerde nomenclatuur [Customs  Law: Classification of certain LCD monitors in the Combined 
Nomenclature], No. CPP2005/1372 M, 8 July 2005;  and BTI DEM/2975/05-1, 19 July 2005 (Exhibits US-77 
and US-78, respectively, submitted by the United States to the Panel). 
194Ibid., para. 182. 
195Ibid., para. 183. 
196Ibid., para. 185.  WT/DS315/AB/R 
 Page 31 
 
 
 been achieved with the adoption of Commissi on Regulation (EC) No. 2171/2005 ("EC Regulation 
2171/2005") on 23 December 2005, as well as with the withdrawal, in January 2006, of the Dutch 
decree and the German BTI.197  In this respect, the European Communities submits that the Panel 
erred in failing to take into account draft EC Regulation 2171/2005, because it had not yet been 
formally adopted.198  Also, the European Communities argu es, the Panel erred in rejecting the 
evidence contained in exhibits provided by the Eu ropean Communities at the interim review stage.199  
According to the European Communities, the Panel' s decision was not in accordance with Article 15.2 
of the DSU, because this evidence related to  precise aspects of the Panel's Interim Report.200  T h e  
European Communities considers that  the strict approach taken by the Panel with respect to the 
evidence submitted by the European Communities duri ng the interim review stage is "incompatible 
with its duty to make an objective assessment of th e facts ... [g]iven the Panel's own liberal attitude 
towards its terms of reference, as well as the late admission of evidence provided by the United 
States".201  The European Communities, therefore, requ ests the Appellate Body to find that the Panel 
erred in rejecting exhibits submitted by the Eu ropean Communities at the interim review stage.202 
(d) Administration of the Successive Sales Provision  
77. The European Communities appeals the Panel's finding that the administration of 
Article 147(1) of the Implementing Regulation (the  "successive sales provision") amounts to a 
violation of Article X:3(a) of the GATT 1994 because some member States of the European 
Communities impose a "form of prior approval" requirement while others do not.203   
78. The European Communities submits that, in reachin g this finding, the Panel failed to make an 
objective assessment of the facts and misapplied Article X:3(a).204  The European Communities 
claims that the Panel erred, in particular, in concluding that the United States had established a 
                                                      
197European Communities' other appellant's submission, para. 186 (referring to Commission Regulation 
(EC) No. 2171/2005 of 23 December 2005 concerning the classification of  certain goods in the Combined 
Nomenclature;  Dutch Ministry of Finance, Telefaxbericht, No. BCPP 2006/389 M, dated February 2006, on the 
withdrawal of decree No. CPP2005/1372 M;  extract from the EBTI data base on the expired BTI DEM/2975/05-1 (Exhibits EC-167, EC-168, and EC-169, respectively, submitted by the European Communities 
to the Panel)).  See also Panel Report, para. 6.3. 
198European Communities' other appellant's submission, para. 190. 
199The European Communities refers to Exhibits EC-167, EC-168, and EC-169, supra , footnote 197.  
See also Panel Report, paras. 6.3 and 6.6. 
200European Communities' other appellant's submission, paras. 196-197. 
201Ibid., para. 199. 
202Ibid., para. 201 (referring to Panel Report, para. 6.6 and Exhibits EC-167, EC-168, and EC-169 
submitted by the European Communities to the Panel). 
203Ibid., paras. 203-229.   
204Ibid., para. 204. WT/DS315/AB/R 
Page 32  
 
 prima facie  case that certain member States were imposing a requirement of prior approval.
205  In the 
European Communities' view, the Panel erred in sh ifting the burden of proof from the United States to 
the European Communities.206 
79. The European Communities subm its that the United States supported its claim exclusively 
with a statement in the Europ ean Communities Court of Auditors Special Report No. 23/2000 
concerning the valuation of imported goods for customs purposes207 (the "Court of Auditors Report").  
The European Communities contends that the Court of Auditors' observation was not shared by other 
institutions of the European Communities and that, in particular, the European Commission confirmed 
that member States do not impose any requirement of prior approval.208 
80. The European Communities contends that the C ourt of Auditors Report was not sufficient to 
establish a prima facie  case of non-uniform administration of Article 147(1) of the Implementing 
Regulation, which does not contain a requirement of prior approval.  The European Communities 
submits that:  first, the statements relied upon by the Panel are excessively vague, because the Court 
of Auditors Report does not specify the precise natu re of the "form of prior approval";  secondly, the 
Court of Auditors Report reflects the opinion of only one institution of the European Communities 
and does not take into account the opinions of ot her institutions, such as the European Commission;  
and thirdly, in the European Communities' view , the United States should have demonstrated non-
uniform administration with evidence of actual admini stration rather than with the Court of Auditors 
Report.209  Finally, the European Communities argues that  the Court of Auditors detected only "minor 
variations" in administrative practices, which do no t "automatically translate" into a violation of 
Article X:3(a).210  In the European Communities' view, such  variations will violate the obligation of 
uniform administration only if they are shown to have an impact on administrative outcomes.211 
81. The European Communities submits  that, even if the Panel was correct to assume that the 
burden of proof had shifted to the European Co mmunities, it failed to give due weight to the 
                                                      
205European Communities' other appellant's submission, para. 204. 
206See ibid., paras. 214-222. 
207Court of Auditors, Special Report No. 23/2000 concerning valuation of imported goods for customs 
purposes (customs valuation), together with the Commission's replies, reproduced in Official Journal of the 
European Communities , C Series, No. 84, pp. 1-18 (14 March 2001) (Exhibit US-14 submitted by the United 
States to the Panel). 
208European Communities' other appellant's submissi on, para. 207 (referring to Court of Auditors 
Report, supra , footnote 207, p. 17). 
209Ibid., paras. 217-221. 
210Ibid., para. 221. 
211Ibid.  WT/DS315/AB/R 
 Page 33 
 
 
 information provided by the European Communities regarding the practice of its member States.212  
As a result, the Panel erred in rejecting as evidence the communication between the European 
Communities and its member States, which the Eu ropean Communities provided in its comments on 
the Panel's Interim Report.213 
3. Conditional Appeal of the European Communities  
82. The European Communities conditionally appeals the Panel's finding that Article XXIV:12 of 
the GATT 1994 cannot be relied upon to a ttenuate or to derogate from th e provisions of Article X:3 of 
the GATT 1994.  The European Communities requests a review of this finding only in the event that 
the Appellate Body's conclusions imply that the European Communities should "create a centralised 
customs agency replacing its [m]ember States in the implementation of [European Communities] 
customs law", or that the Eur opean Communities should "create [a European Communities]-level 
tribunal for the first-instance review of customs decisions".214   
83. The European Communities does not contest that it is obliged to ensure uniform 
administration of its customs law, even where this  law is being administered by its member States.215  
However, the European Communiti es disagrees with the Panel's interpretation that Article XXIV:12 
of the GATT 1994 "does not constitute an exception nor a derogation from the obligation of uniform 
administration in Article X:3(a) of the GATT 1994".216  The European Communities submits that the 
question is not whether Article XXIV:12 is a "positive obligation" but, rather, what the content of this 
obligation is.217  The European Communities refers to the ge neral principle of international law that 
States are responsible for the acts of all their orga ns and emanations, including their sub-federal and 
regional governments.218  According to the European Commun ities, this general principle did not 
require a specific confirmation in the GATT.   
                                                      
212European Communities' other appellant's submission, para. 223. 
213Ibid., para. 227 (referring to Panel Report, paras. 6.6 and 7.427;  and Exhibit EC-170 submitted by 
the European Communities to the Panel). 
214Ibid., para. 235. 
215Ibid., para. 233. 
216Panel Report, para. 7.145 (quoted in European Communities' other appellant's submission, 
para. 241). 
217European Communities' other appellant's submission, para. 242. 
218The European Communities refers, in paragraph 243 of its other appellant's submission, to Article 4 
of the Articles on the Responsibility of States for Internationally Wrongful Acts 2001. (Text adopted by the 
International Law Commission at its fifty-third session, in August 2001, and submitted to the General Assembly 
as a part of the Commission's report covering the work  of that session.) The re port, which also contains 
commentaries on the draft ar ticles, appears in the Official Records of the General Assembly, Fifty-sixth Session, 
Supplement No. 10  (A/56/10).  The text is reproduced in the annex to General Assembly Resolution 56/83 of 
12 December 2001. WT/DS315/AB/R 
Page 34  
 
 84. The European Communities emphasizes the sp ecific reference in Article XXIV:12 to 
"reasonable measures as may be available" and subm its that this language not only confirms the 
responsibility of WTO Members for their local and regional governments, it also sets out a standard 
for the type of measures that must be taken by WT O Members with respect to their local and regional 
governments.
219  In the European Communiti es' view, the GATT panel in Canada – Gold Coins  
recognized this fact when it stated that "t he consequences of ... non-observance [of GATT 
obligations] by the local government for trade rela tions with other [Members] are to be weighed 
against the domestic difficulties of securing observance".220  Therefore, the European Communities 
submits that Article XXIV:12 of the GATT 1994 serves as a "useful and necessary safeguard" in cases where a WTO Member is faced with claims that  could be addressed only through major changes in 
the federal system within that WTO Member, as would be the case for a requirement to create a 
European Communities customs agency or customs court.
221 
D. Arguments of the United States – Appellee 
1. The Panel's Terms of Reference  
(a) Temporal Limitations of the Panel's Terms of Reference 
85. The United States is of the view that the Panel did not err in its approach to the temporal 
scope of its terms of reference.222  The United States observes that th e legal instruments it identified as 
the measures at issue in the panel request were  in existence on the date when the Panel was 
established.223  For the United States, the Eur opean Communities' argument "confuses   administration  
of [European Communities] customs law in existenc e when the Panel was established with individual 
acts of administration  that occurred prior to establishment and with evidence  that came to light during 
the panel proceeding that confirm the existence of  non-uniform administration at the time of panel 
establishment."224  For the United States, the Panel correctly explained that "it would take account of 
individual instances of administration pre-dating an d post-dating panel establis hment not to determine 
whether each established a WTO-inconsistency in its own right, but as a means of elucidating the 
manner of administration that may be in existence at the time of panel establishment."225  The United 
                                                      
219European Communities' other appellant's submission, para. 243. 
220GATT Panel Report, Canada – Gold Coins , para. 69 (quoted in European Communities' other 
appellant's submission, para. 244). 
221European Communities' other appellant's submission, para. 247. 
222United States' appellee's submission, para. 51. 
223Ibid., para. 17. 
224Ibid., para. 15. (original emphasis;  footnote omitted) 
225Ibid., para. 18 (referring to Panel Report, paras. 7.36-7.37).  WT/DS315/AB/R 
 Page 35 
 
 
 States considers that the Panel referred to indi vidual acts of administration that pre-dated its 
establishment " not as potential breaches of Article X:3(a) of  the GATT 1994 in and of themselves, but 
as evidence of the manner of administration of the relevant provisions of [European Communities] 
customs law."226   
86. The United States is also of the view that the European Communities misreads the logical 
distinction the Panel made between admini stration as an ongoing phenomenon and individual 
instances of administration.227  For the United States, although the European Communities has 
referred to the general principle that a panel may c onsider only measures in existence at the time of 
panel establishment, it made "no distinction be tween acts of administration themselves being 
considered as potential breaches of Article X:3(a) and acts of administration being considered as 
evidence of an ongoing course of administration th at potentially is a breach of Article X:3(a)."228  The 
United States points out that nothing in the text of Ar ticle X:3(a) or its context suggests that a breach 
of Article X:3(a) "is demonstrated only when indivi dual acts of administration in existence on the date 
a panel is estab lished diverge."229  According to the United States, the European Communities' view is 
that administration is not a continuum, and that only individual acts of administration in existence at 
the time of panel establishment can be challenged as breaching Article X:3(a).  If this understanding 
were correct, the United States argu es, the obligation of uniform administration under Article X:3(a) 
would be rendered "ineffective"230 and would not meet the minimum standards of predictability for 
traders set out in Article X:3(a).231 
87. Regarding the European Communities' argument c oncerning events that post-dated the Panel's 
establishment, the United States maintains that, cont rary to the European Communities' assertions, the 
Panel's references to evidence post-dating its estab lishment do not show the Panel overstepping its 
terms of reference.  According to the United Stat es, "[t]hey show the Panel properly [took] account of 
evidence relevant to understanding the manner of ad ministration of [European Communities] customs 
law existing at the time of panel establishment."232 
                                                      
226United States' appellee's submission, para. 22. (original emphasis) 
227Ibid., para. 23. 
228Ibid., para. 27. 
229Ibid., para. 31. 
230Ibid., para. 35. 
231Ibid., paras. 32 and 41. 
232Ibid., para. 46. WT/DS315/AB/R 
Page 36  
 
 2. Claims regarding Article X:3(a) of the GATT 1994
 
(a) The Administrative Process and the Requirement of Uniformity  
88. The United States asks the Appellate Body to re ject the European Communities' request for a 
reversal of the Panel's finding that Article X:3(a) of the GATT 1994 "requires uniformity of 
administrative processes irrespective of their impa ct on the uniform administration of the laws".233   
89. The United States disagrees with the European Communities' view that "the obligation of 
uniform administration only extends to the administ rative process to the extent  that the administrative 
process has a direct and significant impact on the outcome of the process".234  The United States 
points out that the European Communities failed to explain what it means by "administrative outcome" and how to distinguish administrative outcomes from administrative processes.
235  For the 
United States, the exclusion of administrative pro cesses from the obligation of uniform administration 
has no basis in the text of Article X:3(a).236  The United States considers that the European 
Communities' approach is too restrictive and wo uld imply that significant areas of customs 
administration could be conducted in a non-unif orm manner without breaching Article X:3(a).237  For 
the United States, from the trader's view, ther e is no basis for assuming that the outcome of 
administrative processes consists only of the release of an imported good with a particular 
classification and valuation into the customs territory  of the European Communities, and does not also 
include the burden associated with the administrative process. 238   
90. According to the United States, whether requiring uniformity of administrative processes 
under Article X:3(a) would exclude de minimis variations in the administration of customs law is not 
at issue in this dispute.239  Indeed, the United States maintain s that, where the Panel found divergences 
in administrative processes inconsistent with Article  X:3(a), the divergences were material to traders' 
decisions to convey goods into the European Co mmunities through one region rather than through 
another.240   
                                                      
233United States' appellee's submission, para. 63 (refe rring to European Communities' other appellant's 
submission, para. 82). 
234European Communities' other appellant's submission, para. 81. 
235United States' appellee's submission, paras. 53-54.  
236Ibid., para. 55. 
237Ibid., para. 58. 
238Ibid., para. 59.  
239Ibid., paras. 60-61. 
240Ibid., para. 61.   WT/DS315/AB/R 
 Page 37 
 
 
 (b) The Administrative Process Leading to the Tariff Classification of 
Blackout Drapery Lining 
91. The United States submits that the Panel did not err in its findings regarding the tariff 
classification of blackout drapery lining.  In th e United States' view, the European Communities 
attempts to reargue certain factual issues, and in so doing misrepresents the relevant facts.241  T h e  
United States disagrees with the European Communiti es' assertion that the product considered by the 
German customs authorities in the instances of administration the Panel reviewed was different from 
the product considered by other customs author ities in other member States of the European 
Communities.242  Regarding the European Communities' alle gation that the Panel was mistaken when 
it stated that all decisions or letters of the Germ an customs authorities relied on an interpretative aid 
particular to Germany, the United States points out th at there was an explicit reference to that aid in 
the documents issued by the German customs authorities.243  The United States requests the Appellate 
Body not to disturb the Panel's factual findings  or reweigh the evidence that was before it.244 
92. The United States asserts that the case of tariff classification of blackout drapery lining is a 
specific example of the European Communities' mi stake of confusing administration as an ongoing 
phenomenon with individual acts of administration.   For the United States,  divergence in how the 
German customs authorities and customs authorities in other member States administer the Common 
Customs Tariff constitutes a lack of uniform administration.245   
93. The United States argues that the Panel correctly found that non-uniform administrative 
processes in classifying blackout drapery lining are inconsistent with Article X:3(a).  The United 
States observes that the Panel did not find that differences between the blackout drapery lining presented to the German customs authorities and the blackout drapery lining presented to other 
customs authorities in the European  Communities justified different ta riff classifications;  rather, the 
United States asserts that what the Panel found w as an absence of evidence to support a finding of 
divergent tariff classifications between  Germany and the other member States.
246  The United States 
contends that a finding of insufficient evidence of di vergent classifications is not the same as a finding 
that different customs authorities correctly reached  different tariff classifications.  For the United 
States, the European Communities' argument regardi ng the classification of blackout drapery lining is 
                                                      
241United States' appellee's submission, para. 73. 
242Ibid., para. 77.  
243Ibid., para. 80.  
244Ibid., para. 85. 
245Ibid., para. 86.  
246Ibid., para. 90. WT/DS315/AB/R 
Page 38  
 
 a variation of its general argument that the obliga tion of uniform administration under Article X:3(a) 
covers administrative processes only to the extent that they have a direct and significant impact on 
administrative outcomes.
247  Finally, according to the United States, the distinction the European 
Communities seeks to draw between the "motivation" of a decision and "administrative processes" is 
without basis.248 
94. The United States agrees with the Panel's findi ng that the German customs authorities failed 
to take into account the decisions of customs authorities of other member States regarding the 
classification of blackout drapery lining.249  For the United States, it is important to consider the 
context in which German customs authorities admi nister European Communities customs law, as it 
does not include any requirement of "reference by  customs authorities to decisions taken by other 
customs authorities operating within the same system".250  The United States considers it important 
that "the German [customs] authority by its ow n admission was aware of other authorities [in the 
European Communities] having classified 'comparabl e goods', yet gave scant consideration to such 
classification and apparently undertook no inves tigation of those other authorities' findings."251 
(c) Tariff Classification of Liquid Crysta l Display Monitors with Digital 
Video Interface  
95. The United States requests the Appellate Body to  uphold the Panel's finding that the European 
Communities has violated Article X:3(a) of the GA TT 1994 with respect to the tariff classification of 
LCD monitors with DVI.  For the United States, th e European Communities' claim misrepresents key 
facts and ignores the distinction between administration and evidence of administration.  The United 
States also disagrees with the Eur opean Communities' argument that the Panel erred by declining to 
consider new evidence introduced following the issuance of the Panel's Interim Report.252   
96. The United States submits that the Panel' s finding that the European Communities 
acknowledged tariff classification of LCD monitors with DVI to be non-uniform in 2004 was based 
on an objective assessment of the facts.253  The United States emphasizes that it had established this 
fact before the Panel, and that various statements  made by the European Communities in the course of 
                                                      
247United States' appellee's submission, para. 89. 
248Ibid., para. 94. 
249Ibid., para. 107.  
250Ibid., para. 100 (quoting Panel Report, para. 7.272). 
251Ibid., para. 102 (quoting Panel Report, paras. 7.273-7.274). 
252Ibid., para. 108.  
253Ibid., para. 109.  WT/DS315/AB/R 
 Page 39 
 
 
 the Panel proceedings suggested that the Europ ean Communities "was aware of the issue and was 
working to address it".254   
97. The United States notes that the European Comm unities argued before the Panel that it had 
taken three steps to address the non-uniform admini stration with respect to the classification of LCD 
monitors with DVI:  the June/July 2004 "conclu sions" of the Customs Code Committee;  Council 
Regulation (EC) No. 673/2005 of 25 April 2005 estab lishing additional customs duties on imports of 
certain products originating in the United States;  and Commission Regulation (EC) No. 634/2005 of 
26 April 2005 concerning the classification of certain goods in the Combined Nomenclature.255  The 
United States maintains that the Panel made an obj ective assessment of the facts as it considered each 
of these measures and found that none of them r esolved the problem of non-uniform administration.256 
98. For the United States, the Panel did not overstep its terms of reference by referring to acts of 
administration that post-dated the Panel's establishment, because the Panel did not refer to these acts 
as breaches of Article X:3(a) in their own right, but as evidence of the manner of administration in breach of Article X:3(a) that was in existe nce at the time the Panel was established.
257  Thus, the 
United States argues, the European Communities ag ain confuses administration with individual acts 
of administration.  According to the United Stat es, the Dutch decree of 8 July 2005 and the German 
BTI of 19 July 2005 are relevant evidence supporting the Panel's finding that "measures put into place 
since 2004 have not resolved the problem of non-uniform administration and may well have increased confusion."
258 
99. According to the United States, the Panel prope rly gave no weight to draft EC Regulation 
2171/2005 concerning the tariff classification of LCD m onitors and was correct to decline considering 
new evidence the European Communities introduced at the interim review stage.259  Regarding draft 
EC Regulation 2171/2005, the United States argues th at the European Commun ities' characterization 
of this piece of evidence as a new instance, rather  than a continuation, of non-uniform administration 
in existence since 2004 is unfounded, and that th e Panel could not have assumed that this draft 
Regulation would be adopted.260  The United States adds that th e European Communities' argument 
                                                      
254United States' appellee's submission, para. 110. 
255Ibid., para. 117 (referring to European Communitie s' first written submission to the Panel, 
paras. 351-353, 356, and 361). 
256Ibid., para. 123. 
257Ibid., para. 125. 
258Ibid., para. 126 (referring to Panel Report, para. 7.300). 
259Ibid., paras. 128, 132, and 140 (referring, inter alia , to Exhibits EC-167, EC-168, and EC-169 
submitted by the European Communities to the Panel). 
260Ibid., paras. 129 and 131. WT/DS315/AB/R 
Page 40  
 
 regarding the draft Regulation is "self-contradictory"
261 because, on the one hand, it argues that the 
relevant point in time for establishing a violation is  the date of panel establishment while, on the other 
hand, it faults the Panel for not taking account of draft EC Regulation 2171/2005, which came into 
existence late in the Panel proceedings.  Regardi ng the Panel's decision not to consider new evidence 
introduced at the interim review stage, the United States emphasizes that the interim review stage is 
not an appropriate time to introduce new eviden ce, and disagrees with the European Communities' 
assertion that there should be an exception for ev idence introduced to correct errors of fact.262 
(d) Administration of the Successive Sales Provision 
100. The United States requests the Appellate Body to  uphold the Panel's finding that the European 
Communities has violated Article X:3(a) of the GATT 1994 as a result of the imposition of a form of 
prior approval with respect to the successive sales provision by customs authorities of some member States of the European Communities.
263 
101. The United States asserts that the statement of the European Communities' Court of Auditors 
Report that, "in practice, some customs authorities do impose a form of prior approval even though this has no basis in [European] Communit[ies] law"
264, amounts to an admission of non-uniform 
administration by the European Communities.265  With respect to th e European Commission's 
comment on this statement in the Court of Auditors Report266, the United States submits that the 
European Communities has not accurately render ed the Commission's co mment, because the words 
"in some member States" were omitted from the European Communities' quotation of the 
Commission's comment.  In the United States' view, this reveals that the European Commission did 
not disagree with the Court of Auditors  on the existence of divergent practices.267  For the United 
States, the very fact that, in its replies to the C ourt of Auditors Report, the Commission disagreed with 
the Court of Auditors on a variety of issues but not on the Court's finding of divergent administration among customs authorities of member States, supports the Panel's view that the Court's finding was an admission of non-uniform administration in the European Communities.
268  The United States 
considers that it did not need to adduce a dditional evidence in order to establish its  prima facie  case, 
                                                      
261United States' appellee's submission, para. 130. 
262Ibid., paras. 134-136.  The United States makes reference to Appellate Body Report, EC – Sardines , 
para. 301, in support of its argument. 
263United States' appellee's submission, para. 141.  
264Court of Auditors Report, supra , footnote 207, para. 64;  Panel Report, para. 7.381. 
265United States' appellee's submission, para. 143. 
266See  supra , para. 79.  
267United States' appellee's submission, para. 145. 
268Ibid., para. 146.  WT/DS315/AB/R 
 Page 41 
 
 
 because it had provided the Panel with an admission of non-uniform administration by the European 
Communities. 
102. The United States maintains that the Panel prope rly declined to consid er evidence introduced 
by the European Communities at the interim revi ew stage to rebut its admission of non-uniform 
administration, because this evidence could have been  submitted at an earlier stage.  Furthermore, 
according to the United States, even under the Eu ropean Communities' own reasoning, it was proper 
for the Panel not to consider this new evidence c oncerning the administration of the successive sales 
provision, because the European Communities had not  clarified that this evidence was intended 
merely to correct an error of fact.269  Finally, the United States alle ges that the e-mail correspondence 
the European Communities sought to introduce at the interim review stage consisted of statements 
made by persons with a vested interest in the outcome of the dispute.270  
3. Conditional Appeal of the European Communities  
103. The United States requests the Appellate B ody to reject the European Communities' 
conditional appeal to reverse the Panel's findi ng that Article XXIV:12 of the GATT 1994 cannot be 
relied upon to attenuate or to  derogate from the provisions of the GATT 1994, including 
Article X:3.271   
104. The United States asserts that the question of the possible relevance of Article XXIV:12 to the 
European Communities' obligations un der Article X:3(b) is outside th e scope of appellate review as 
circumscribed by Article 17.6 of the DSU.272  According to the United States, the European 
Communities never raised the issue of the releva nce of Article XXIV:12 to its obligations under 
Article X:3(b), but referred to it only in relation to the obligation of uniform administration under 
Article X:3(a) of the GATT 1994.273 
105. The United States maintains that Article XXIV:12 of the GATT 1994 is not relevant to this 
dispute, because that provision applies to the " observance of the provisions of [the GATT 1994] by 
the regional and local governments and authoriti es within [each Member's] territories" whose 
measures "the federal government cannot control be cause they fall outside its jurisdiction under the 
                                                      
269United States' appellee's submission, para. 157.  
270Ibid., para. 158.  
271Ibid., para. 160;  Panel Report, para. 7.145. 
272United States' appellee's submission, para. 161. 
273Ibid. (referring to European Communities' first written submission to the Panel, para. 220;  and 
European Communities' response to Question 68 posed by the Panel, para. 113, Panel Report, pp. A-65 and 
A-66). WT/DS315/AB/R 
Page 42  
 
 constitutional distribution of competences."
274  In the United States' view, this dispute does not 
concern the observance of Article X:3(a) of the GATT 1994 by regional and local governments within 
the European Communities;  but, rather, that the European Communities itsel f has failed to establish 
institutions or other mechanisms ne cessary to ensure uniform administration of its customs law.  In 
this regard, the United States distinguishes the present dispute from the dispute in  Canada – Gold 
Coins , which involved a measure adopted by a provincial government that put Canada in breach of its 
obligation under Article III of the GATT 1947.275 
106. Finally, the United States argues that, even if Ar ticle XXIV:12 were applicable to this dispute, 
and even if it could potentially attenuate or de rogate from the European Communities' obligations 
under Article X:3(a), it would not do so in this di spute, because the European Communities offered no 
evidence to show that the measures it is taking to ensure observance of Article X:3(a) by regional and 
local governments within its territories are "such reasonable measures as may be available to it", as 
required by Article XXIV:12.276  With respect to the European Communities' argument that the 
"safeguards and mechanisms"277 under its system of customs administration constitute such 
"reasonable measures", the United States submits that  a mere assertion does not amount to proof, and 
that the question of whether the measures a Me mber is taking satisfy the requirements of 
Article XXIV:12 is not "self-judging".278 
E. Arguments of the Third Participants 
107. Pursuant to Rule 24(2) of the Working Procedures , Argentina, Australia, Brazil, China, 
Hong Kong, China, India, and the Separate Cu stoms Territory of Taiwan, Penghu, Kinmen, and 
Matsu chose not to submit a third participant's s ubmission but attended the oral hearing.  In its 
statement at the oral hearing, Australia presented its  views regarding the Panel's terms of reference, 
the interpretation of the scope of the term "admin ister" in Article X:3(a) of the GATT 1994, and the 
irrelevance of Article XXIV:12 of the GATT 1994 to the facts of this dispute.  China, in its statement 
at the oral hearing, addressed issues rela ting to the Panel's terms of reference. 
                                                      
274United States' appellee's submission, paras. 164 and 163, respectively (referring to GATT Panel 
Report, Canada – Gold Coins , para. 56). 
275Ibid., para. 164 (referring to European Communities'  other appellant's submission, paras. 234 
and 244). 
276Ibid., para. 174. 
277European Communities' other appellant's submission, para. 235. 
278United States' appellee's submission, para. 174.  WT/DS315/AB/R 
 Page 43 
 
 
 1. Japan  
108. Japan agrees with the Panel that "the measure at  issue", for purposes of Article X:3(a) of the 
GATT 1994, can be the "manner of administration" ra ther than certain laws, regulations, decisions, 
and rulings themselves.279  According to Japan, previous WTO ju risprudence has indicated that "[i]n 
principle, any act or omission  attributable to a WTO Member can be a measure of that Member for 
purposes of dispute settlement proceedings".280  Japan submits that the United States' distinction 
between a "measure" and a "claim" is not convincing.281  Japan considers that the manner of 
administration "can be described objectively" and that the "description of how a government 
administers laws, regulations and [other instruments] is nothing more than a description of an act or 
omission attributable to a WTO Member."282 
109. Japan maintains that the Panel failed to prov ide sufficient reasoning for its finding that 
Article 6.2 of the DSU requires the complainant to identify specific areas of customs administration in 
the panel request, because the United States challeng ed before the Panel the administration of laws 
and regulations that cumulatively contai n "thousands of different provisions".283  Japan submits that 
the Panel's reasoning in this respect was insuffici ent, because "the Panel did not explain why the 
specification of the 'areas' of customs administration, each one of which still contains numerous different provisions to be administered, was sufficien t to inform the defendant and the third parties of 
the legal basis of complaints."
284  In Japan's view, the Panel also failed to explain why it relied on the 
Appellate Body's finding in EC – Computer Equipment , despite the differences between that case and 
the present case.  Japan is of the opinion that th e Panel ought to have provided "sufficient reasoning 
for its finding, since fixing the scope of the terms of  reference of a panel is quite important in that it 
will directly affect the rights and obligations of the parties to disputes."285 
110. Japan also considers that the Panel failed to  give due consideration to the European 
Communities' understanding of the claim against it in  making findings on the sc ope and nature of the 
United States' challenge under Article X:3(a) of the European Communities' system of customs 
administration.286  Japan asserts that the Panel must give fu ll effect to the specificity requirements in 
                                                      
279Japan's third participant's submission, paras. 8-17. 
280Ibid., para. 11 (referring to Appellate Body Report, US – Corrosion-Resistant Steel Sunset Review , 
para. 81). (emphasis added by Japan) 
281Ibid., para. 10. 
282Ibid., para. 12. 
283Ibid., para. 14;  Panel Report, para. 7.30. 
284Japan's third participant's submission, para. 16. 
285Ibid., para. 17. 
286Ibid., para. 18. WT/DS315/AB/R 
Page 44  
 
 Article 6.2 of the DSU, and that it must assess whet her or not the defendant was sufficiently informed 
of the legal basis of the claim against it. 
111. Japan is "sceptical" about the Panel's finding  that expired measures may properly be the 
subject of recommendations by a panel, since "it is  practically impossible for a defendant to bring a 
measure into conformity with its WTO obligations  when the measure is no longer in existence."
287  
112. With regard to the relevance of Article XXI V:12 of the GATT 1994 for the interpretation of 
Article X:3(a), Japan asserts that the Panel properly concluded that "Article XXIV:12 ... is drafted as a 
positive obligation rather than a defence", and that Article XXIV:12 "imposes an obligation on 
Members to take all reasonable measures to en sure that local authorities comply with WTO 
obligations."288 
2. Korea  
113. Korea asserts that the Panel failed to take into  account "the panel request of the United States, 
and the comments and arguments submitted during the underlying panel proceeding"289, which 
unequivocally challenged the European Communities' system of customs administration "as a whole" 
rather than individual instances of non-uniform custom s administration.  As a result, Korea argues, the 
Panel erroneously narrowed its terms of referenc e by addressing only the individual instances of 
alleged non-uniformity.  Korea submits that "a pane l must construe a panel request as a whole and ... 
it must consider how the different parts of  a panel request relate to one another."290 
114. With respect to the United St ates' claim concerning Article X:3(b) of the GATT 1994, Korea 
contends that the European Communities has failed to provide a mechanism for the prompt review 
and correction of administrative actions related to customs matters.  Korea submits that the terms "the 
agencies" and "such agencies" without any quali fication unambiguously refer to the collective 
government entity in charge of customs matters w ithin a Member's territory.  In addition, Korea 
submits that Article X:3(a) of the GATT 1994, wh en read as context to Article X:3(b) of the 
GATT 1994, indicates that the obligation contained in Artic le X:3(b) relates to all, rather than only to 
some, of the agencies.291 
                                                      
287Japan's third participant's submission, paras. 24 and 26 (referring to Panel Report, para. 7.36). 
288Ibid., para. 28 (quoting Panel Report, para. 7.144). 
289Korea's third participant' s submission, para. 5. 
290Ibid., para. 12.  Korea makes reference to Appellate Body Report, US – FSC (Article 21.5 – EC II) , 
paras. 66-68, and Appellate Body Report, US – Carbon Steel , para. 127, in support of its argument. 
291Korea's third participant' s submission, para. 18.  WT/DS315/AB/R 
 Page 45 
 
 
 115. Finally, Korea supports the United States' requ est that the Appellate Body complete the 
Panel's analysis and find that the European Co mmunities' system of customs administration as a 
whole is inconsistent with the European Comm unities' obligation under Article X:3(a) of the 
GATT 1994.292  Korea also supports the United States' request that the Appellate Body complete the 
analysis with regard to Article X:3(b) of th e GATT 1994 and find that the European Communities 
fails to provide review tribunals or procedur es whose decisions govern the practice of "all the 
agencies entrusted with administrative enforcem ent" within the territory of the European 
Communities.293 
III. Issues Raised in This Appeal 
116. The following issues are ra ised in this appeal: 
(a) with respect to the Panel's terms of reference: 
(i) whether the Panel erred in finding that the "measure at issue" for the 
purposes of a claim under Article X:3(a) of the GATT 1994 must necessarily 
be "the manner of administration that is  allegedly non-uniform, partial and/or 
unreasonable"294; 
(ii) whether the Panel erred in finding th at the specific measure at issue in this 
dispute is "the manner of administra tion ... of the Community Customs Code, 
the Implementing Regulation, the Common Customs Tariff, the TARIC and 
related measures"295, and, furthermore, that it was confined to "the areas of 
customs administration specifically identified in the United States' request for establishment of a panel"
296; 
(iii) whether the Panel erred in finding that, due to the wording and content of the 
panel request, it was precluded from considering "as such" challenges of the design and structure of the European Communities' system of customs administration as a whole or overall
 297;  and 
                                                      
292Korea's third participant' s submission, para. 14. 
293Ibid., para. 20. 
294Panel Report, para. 7.20. 
295Ibid., para. 7.33.  These laws and regulations are defined  supra , para. 2 and footnote 2 thereto. 
296Ibid., para. 7.64. 
297Ibid., paras. 7.50, 7.63, and 7.64. WT/DS315/AB/R 
Page 46  
 
 (iv) whether the Panel erred in its interpre tation of the temporal scope of its terms 
of reference in respect of "steps and acts of administration that pre-date or 
post-date the establishment of a panel"
298; 
(b) with respect to Article X:3(a) of the GATT 1994: 
(i) whether the Panel erred in finding  that the term "administer" in 
Article X:3(a) of the GATT 1994 "relates to the application of laws and 
regulations, including administrative processes and their results, but not to 
laws and regulations as such" 299, and whether, consequently, the Panel erred 
in finding that different penalty pr ovisions and audit procedures found 
among the member States of the European Communities are not inconsistent with Article X:3(a) of the GATT 1994
 300; 
(ii) whether the Panel has made an interpre tation to the effect that Article X:3(a) 
of the GATT 1994 requires uniformity of "administrative processes";  whether the Panel erred in finding, in  paragraph 7.119 of the Panel Report, 
that the term "administer" relates to  administrative processes;  and whether 
the Panel erred in finding that the ad ministrative process leading to the tariff 
classification of blackout drapery lining amounts to non-uniform administration within the meaning of Article X:3(a) of the GATT 1994, and that the European Communities has violated Article X:3(a) of the 
GATT 1994 with respect to the tariff classification of blackout drapery 
lining
301; 
(iii) whether the Panel erred in finding that the European Communities has 
violated Article X:3(a) of the GATT 1994 with respect to the tariff classification of liquid crystal display flat monitors with a digital video 
interface
 302;   
                                                      
298Panel Report, paras. 7.36-7.37. 
299Ibid., para. 7.119. 
300Ibid., paras. 7.434 and 7.444. 
301Ibid., para. 7.276. 
302Ibid., para. 7.305.  WT/DS315/AB/R 
 Page 47 
 
 
 (iv) whether the Panel erred in find ing that the European Communities' 
administration of the "successive sales provision"303 amounts to a violation 
of Article X:3(a) of the GATT 1994 because some member States of the 
European Communities impose a "form of prior approval" requirement while others do not
 304;  and 
(v) in the event that the Appellate Body  concludes that the Panel erred in its 
identification of the specific measures at  issue in this dispute, and in the 
event that the Appellate Body conclu des that the United States was not 
precluded from challenging the European Communities' system of customs administration as a whole or overall, whether the Appellate Body is in a position to complete the analysis regarding this claim; 
(c) with respect to Article X:3(b) of the GATT 1994: 
whether the Panel erred in finding that "Article X:3(b) [of the GATT 1994] does not 
necessarily mean that the decisions of the j udicial, arbitral or administrative tribunals 
or procedures for the review and correc tion of administrative action relating to 
customs matters must govern the practice of all the agencies entrusted with 
administrative enforcement throughout the territory  of a particular [WTO] 
Member"
305;  and 
(d) with respect to Article XXIV:12 of the GATT 1994: 
in the event that the conditions posited by  the European Communities' appeal are 
fulfilled, whether the Panel erred in its interpretation of Article XXIV:12 of the 
GATT 1994.306 
117. We proceed to analyze these issues in the order set out above. 
                                                      
303Article 147(1) of the Implementing Regulation. 
304Panel Report, para. 7.385. 
305Ibid., paras. 7.539, 7.556, and 8.1(e). (original emphasis) 
306Ibid., para. 7.145. WT/DS315/AB/R 
Page 48  
 
 IV. The Panel's Terms of Reference 
118. With respect to the Panel's terms of reference,  the United States' appeal can be divided into 
three issues. 
119. The first issue raised is whether the Panel erred in finding that, "when a violation of 
Article X:3(a) of the GATT 1994 is being claimed, the relevant request for establishment of a panel 
must identify the manner of administration th at is allegedly non-uni form, partial and/or 
unreasonable."
307 (infra , Section IV.A)  The second issue is whether the Panel erred in finding that the 
specific measure at issue in this dispute is "t he manner of administration ... of the Community 
Customs Code, the Implementing Regulation, the Common Customs Tariff, the TARIC and related 
measures" and, furthermore, that it was confined to the six areas of customs administration specifically identified in the third paragraph of th e request for the establishment of a panel by the 
United States (the "panel request")
 .308 (infra , Section IV.B)  While these two issues relate to the 
identification of the specific measure  at issue, the third issue raised by the United States relates to the 
Panel's construction of the nature and scope of the  claim  set out in the panel request.  With respect to 
this third issue, the United States contends that th e Panel erred in finding that, due to the wording and 
content of the panel request, the United States was precluded from challenging the European Communities' system of customs administration "as a whole" or "as such". ( infra , Section IV.C) 
120. In its other appeal, the European Communitie s contends that the Panel erred in its 
interpretation of the temporal scope and limitations of its terms of re ference in respect of "steps and 
acts of administration that pre-date or post-date the establishment of a panel".
309 (infra , Section IV.D) 
121. We now examine these four issues in detail. 
A. Interpretation of the Term "Measures at  Issue" under Article 6.2 of the DSU  
122. The first issue is whether the Panel erred in finding that the "measure at issue" for purposes of 
a claim under Article X:3(a) of the GATT 1994 must be the "manner of administration" that is 
allegedly non-uniform, partial, and/or unreasonable.310 
                                                      
307Panel Report, para. 7.20. 
308Ibid., para. 7.33. 
309Ibid., para. 7.37. 
310Ibid., paras. 7.20 and 7.22.  WT/DS315/AB/R 
 Page 49 
 
 
 123. The Panel was of the view that the term "measu res at issue" in Article 6.2 of the DSU should 
be interpreted in the light of the specific WTO oblig ation that is allegedly being violated by that 
measure in a particular dispute.  The Panel consid ered that this approach is necessary because the 
"measure at issue" identified in the panel request will be the subject of a recommendation, pursuant to 
Article 19.1 of the DSU, if that measure is found to be in violation of a WTO obligation.311     
124. Based on this general proposition, the Panel turned  to the interpretation of the nature of a 
"measure at issue" with respect to the obligation contained in Article X:3(a) of the GATT 1994.  The 
Panel considered that the essence of the obligation under this Article is to "administer [the legal 
instruments of the kind described in Article X:1]  in a uniform, impartial and reasonable manner".312  
For the Panel, "this essential aspect of the obliga tion contained in Article X:3(a) of the GATT 1994 
[implies that] when a violation of Article X:3(a)  of the GATT 1994 is being claimed, the ... request 
for establishment of a panel must identify the manne r of administration that is allegedly non-uniform, 
partial and/or unreasonable."313  The Panel further reasoned that, if a WTO Member were found to be 
in violation of Article X:3(a), this would mean that the manner in which the legal instruments are 
being administered by that Member is not uniform, impartial, or reasonable.  In order to comply with 
a recommendation made under Article 19.1 of the DSU to bring the measure at issue into conformity 
with Article X:3(a) of the GATT 1994, "t he Member would need to alter the manner  in which the 
relevant laws, regulations, decisi ons and/or rulings are being  administered ".314  Thus, for the Panel, 
the specific WTO obligation alleged to be violated and the means of compliance with a 
recommendation made under Article 19.1 of the DSU should govern the identification of the specific 
measure at issue under Article 6.2 of the DSU.   The Panel therefore found that, for purposes of a 
claim under Article X:3(a), the "measure at issu e" to be identified in the panel request under 
Article 6.2 of the DSU must be the "manner of ad ministration" of the legal instruments of the kind 
described in Article X:1 of the GATT 1994.315  
125. On appeal, the United States challenges this interp retation of the Panel.  For the United States, 
"manner of administration" is not a "measure"316;  rather, it is, "[a]s the Panel uses the term, ... a 
description  of how a measure operates so as to breach an Agreement provision."317  The United States 
                                                      
311Panel Report, para. 7.17. 
312Ibid., para. 7.20. 
313Ibid. 
314Ibid., para. 7.21. (original emphasis) 
315Ibid. 
316United States' appellant's submission, para. 47.  See also United States' response to Question 1 posed 
by the Panel, Panel Report, p. A-2. 
317United States' appellant's submission, para. 47. (original emphasis) WT/DS315/AB/R 
Page 50  
 
 emphasizes that the Panel's reasoning blurs the distinction between "measures" and "claims".
318  The 
United States also finds fault with the Panel's rec ourse to Article 19.1 of the DSU in identifying the 
measure at issue.  The United States point out  that, "because DSU Article 19.1 requires that the 
breaching 'measure' be brought into conformity", it do es not follow that "the measure in the case of 
Article X:3(a) must be the 'manner of administrati on' of 'laws, regulations, judicial decisions or 
administrative rulings,' rather than the laws, regula tions, judicial decisions, or administrative rulings 
themselves."319  For the United States, "[t]he mere fact that a breach of Article X:3(a) may be 
removed by changing a law's administration is not a basis for concluding that the law is not the measure at issue."
320  The United States also argues that the Panel's reasoning leads to illogical 
consequences for complaints not only under Artic le X:3(a) of the GATT 1994 but under other WTO 
provisions as well, because, under this approach, th e measure at issue will not be "distinguishable" 
from the legal basis of the complaint, name ly, the claim under Article 6.2 of the DSU.321 
126. The European Communities agrees with the Panel th at the measure at issu e with respect to the 
United States' claim under Article X:3(a) in this disp ute is the "manner of administration" of European 
Communities customs law.322  The European Communities argues that, by referring to the "manner of 
administration", the Panel did not blur the distin ction between the measure at issue and the claim 
under Article X:3(a).  According to the European Communities, the Panel used the term "manner of 
administration" to distinguish "administration"—whi ch is the measure at issue under Article X:3(a)—
from the laws, regulations, judicial decisions, and ad ministrative rulings of general application under 
Article X:1 of the GATT 1994, which are the subject of administration.323  The European 
Communities is of the view that the Panel used the term "manner of administration" synonymously with "administration"
324, and submits that this "minor ambiguity"325 is not enough to reverse the 
Panel's finding that, when a violation of Article X:3( a) is claimed, the panel request must identify the 
"manner of administration".  The European Communiti es contends that the United States is trying to 
confuse the laws to be administ ered with their administration.326  The European Communities points 
out that the panel request itself refers sp ecifically to the manner of administration327, "clearly 
                                                      
318United States' appellant's submission, para. 47. 
319Ibid., para. 48. 
320Ibid. 
321Ibid., para. 49. 
322European Communities' appellee's submission, para. 97. 
323Ibid., para. 91. 
324Ibid. 
325Ibid., para. 92. 
326Ibid., para. 94. 
327Ibid., para. 95.  WT/DS315/AB/R 
 Page 51 
 
 
 distinguishes the administration from the laws which are being administered"328, and, thus, "identifies 
the 'administration', rather than [the] laws , as the measure at issue in the dispute".329 
127. We are thus called upon to determine whether the Panel erred in finding that, when a violation 
of Article X:3(a) of the GATT 1994 is being claimed, the "measure at issue" must necessarily be the 
"manner of administration" of the legal instruments of  the kind described in Article X:1, and that such 
legal instruments cannot themselves be id entified as the "measures at issue".   
128. We begin our analysis with the text of Article 6.2 of the DSU, which provides: 
The request for the establishment of a panel shall be made in writing.  
It shall indicate whether consultati ons were held, identify the specific 
measures at issue and provide a brief summary of the legal basis of 
the complaint sufficient to present th e problem clearly.  In case the 
applicant requests the establishment of a panel with other than standard terms of reference, the written request shall include the proposed text of special terms of reference. 
129. Article 6.2 sets forth the requirements applicable to a request for the establishment of a panel.  
As the Appellate Body stated in  US – Carbon Steel , there are two distinct requirements, namely: 
... identification of the specific measures at issue , and the provision 
of a brief summary of the  legal basis of the complaint (or the 
claims ).
330 (original emphasis) 
130. These two requirements relate to different aspect s of the complainant's challenge to measures 
taken by another Member.  The "specific measure" to be identified in a panel request is the object of 
the challenge, namely, the measure that is allege d to be causing the violation of an obligation 
contained in a covered agreement.  In other words, the measure at issue is  what   is being challenged 
by the complaining Member.  In contrast, the le gal basis of the complaint, namely, the "claim" 
pertains to the specific provision of the covered agre ement that contains the obligation alleged to be 
violated.  A brief summary of the legal basis of th e complaint required by Article 6.2 of the DSU aims 
to explain succinctly how or why the measure at issue is considered  by the complaining Member to be 
violating the WTO obligation in question.  This brief summary must be sufficient to present the 
problem clearly.  Taken together, these different aspects  of a panel request serve not only to define the 
scope of a dispute, but also to meet the due process requirements. 
                                                      
328European Communities' appellee's submission, para. 96. 
329Ibid. 
330Appellate Body Report, US – Carbon Steel , para. 125. WT/DS315/AB/R 
Page 52  
 
 131. Pursuant to Article 7.1 of the DSU, a panel's terms of reference are governed by the request 
for the establishment of a panel.  In other word s, the panel request identifies the measures and the 
claims that a panel will have the authority to exam ine and on which it will have the authority to make 
findings.  The question of whether a measure falls w ithin a panel's terms of reference is a threshold 
issue, distinct from the question of whether the measure  is consistent or not with the legal provision(s) 
of the covered agreement(s) to which the panel requ est refers.  Therefore, questions pertaining to the 
identification of the "measures at issue" and th e "claims" relating to a lleged violation of WTO 
obligations, set out in a panel request, should be analyzed separately. 
132. At the heart of the Panel's reasoning stands the proposition that the term "measure at issue" in 
Article 6.2 of the DSU should be interpreted in the light of the specific WTO obligation that is raised 
in a particular claim.  This reasoning appears to  us to be flawed.  The Panel's proposition would 
introduce uncertainty because the identification of the measure would vary depending on the 
substance of the legal provision invoked by a comp lainant and the interpretation that a panel might 
give to that provision.  As we noted above, Article 6.2 of the DSU sets out "two distinct requirements" 
applicable to requests for the establishment of a panel:  "identification of  the specific measures at 
issue , and the provision of a  brief summary of the  legal basis of the complaint (or the claims )" 
sufficient to present the problem clearly.
331  These two requirements are conceptually different and 
they should not be confused.  In finding that the term "measures at issue" in Article 6.2 should be interpreted in the light of the specific WTO obligation that is alleged to be violated, the Panel blurred 
the distinction between  measures   and  claims .   
133. In our view, a complainant is entitled to incl ude in its panel request an allegation of 
inconsistency with a covered ag reement of any measure that ma y be submitted to WTO dispute 
settlement.  In US – Corrosion-Resistant Steel Sunset Review , the Appellate Body provided guidance 
on the types of measures that may be the s ubject of dispute settlement.  Relying on, inter alia , 
Article 3.3 of the DSU, which refers to "situations  in which a Member considers that any benefits 
accruing to it directly or indirectly under the covered agreements are being impaired by  measures  
taken by another Member ", the Appellate Body stated that "[i]n principle, any act or omission 
attributable to a WTO Member can be a measure of  that Member for purposes of dispute settlement 
proceedings."
332  As long as the specificity requirements of  Article 6.2 are met, we see no reason why 
a Member should be precluded from setting out in a pane l request "any act or omission" attributable to 
another Member as the measure at issue.   
                                                      
331Appellate Body Report, US – Carbon Steel , para. 125. (original emphasis) 
332Appellate Body Report, US – Corrosion-Resistant Steel Sunset Review , para. 81. (emphasis added;  
footnote omitted)  WT/DS315/AB/R 
 Page 53 
 
 
 134. The Panel considered that, when a violation of  Article X:3(a) of the GATT 1994 is claimed, 
the measure at issue must necessarily be a "manner of  administration" because, if such a violation is 
found, the WTO Member concerned would need to alter the manner of administration in order  
to comply with a recommendation made pursuant to Article 19.1 of the DSU.  In our view, this 
reasoning of the Panel is flawed because it conflat es the threshold question of whether a measure falls 
within a panel's terms of reference with the questi on of the means of implementation in the event that 
a violation is found.  Through the recommendati on under Article 19.1, the Member found to have 
violated a provision of a covered agreement is re quired to take corrective action to remove the 
violation.  The recommendation envisaged in Artic le 19.1 concerns the stage of implementation and 
not the question of whether a measure falls within  a panel's terms of reference.  Moreover, the 
Member concerned has a degree of discretion with r espect to the nature and type of action that it 
undertakes in order to achieve compliance.  Theref ore, we have difficulty in understanding how the 
means of compliance with a recommendation under Article 19.1 of the DSU should govern the identification of the specific measure at issue in a panel request.  We agree, in this respect, with the 
United States that "[t]he mere fact that a breach of  Article X:3(a) may be removed by changing a law's 
administration is not a basis for concluding th at the law is not the measure at issue."
333   
135. In US – Upland Cotton , the Appellate Body emphasized that the nature of a recommendation 
a panel may make under Article 19.1 of the DSU with respect to a measure "is not ... dispositive of the 
preliminary question of whether a panel can a ddress claims in respect of that measure".334  I n  t h a t  
case, the Appellate Body had to address the issue of wh ether an expired measure can be a "measure at 
issue" within the meaning of Article 6.2 of the DS U.  The Appellate Body rejected the United States' 
argument that, because an expired measure is not susceptible to a recommendation under Article 19.1 
of the DSU, it cannot be a "measure at issue" under Article 6.2.  For the Appellate Body, the question 
of whether a panel can address claims in respect of an  expired measure is to be distinguished from the 
question of whether that measure is suscep tible to a recommendation under Article 19.1.335  Although 
the issue addressed by the Appellate Body in  US – Upland Cotton   is not identical to that raised by 
the United States' appeal in this case,  the Appellate Body's reasoning in  US – Upland Cotton   
supports our position that Article 19.1 of the DSU do es not place restrictions on the type of measure 
that can be identified in a panel request under Article 6.2 of the DSU. 
                                                      
333United States' appellant's submission, para. 48. 
334Appellate Body Report, US – Upland Cotton , para. 272. (footnote omitted) 
335Ibid., para. 222. WT/DS315/AB/R 
Page 54  
 
 136. Interpreting the term "measure at issue" in Artic le 6.2 of the DSU in the light of the substance 
of the specific WTO obligation that is allegedly being violated
 336 would generate uncertainty and 
complexity in WTO dispute settlement proceedings.  When drafting a request for the establishment of 
a panel, the complainant would have to foresee the po ssible restrictions that the substance of the legal 
provisions might impose on the type of measure that  could be challenged.  The identification of the 
measures at issue in the panel request might prove  to be even more complex where the challenge 
concerns a plurality of provisions of the covered agreements.  Moreover,  the existence, nature, and 
scope of possible restrictions would depend on the panel's interpretation of the substance of those 
legal provisions.  The respondent might also be pl aced in an uncertain situation in presenting its 
defence because it would have to guess what the panel would identify as the measure at issue on the 
basis of the panel's interpretation of the substance of the alleged vi olation.  This could lead to 
unnecessary litigation on a panel's terms of reference, as the responding party may choose to contend 
at a preliminary stage that, in the light of the su bstance of the legal provision on which a specific 
claim is based, the measure identified in the pane l request does not fall within the panel's terms of 
reference.  
137. In the light of these considerations, we reverse  the Panel's finding, in paragraph 7.20 of the 
Panel Report, that the "measure at issue" for purposes of a claim under Article X:3(a) of the 
GATT 1994 must necessarily be "the manner of admini stration that is allegedly non-uniform, partial 
and/or unreasonable."  
B. Confinement of the Measures at Issue to Areas of Customs Administration 
138. We next address the issue of whether the Panel erred in finding that the specific measure at 
issue in this dispute was "the manner of administration ... of the Community Customs Code, the 
Implementing Regulation, the Common Custom s Tariff, the TARIC and related measures"337, and 
furthermore, that it was confined to the areas of  customs administration identified in the third 
paragraph of the panel request. 
139. In the first paragraph of the panel request, the United States stated that it "considers that the 
manner in which the European Communities ... administ ers its laws, regulations, decisions and rulings 
of the kind described in Article X:1 of the ... GA TT 1994 ... is not uniform, im partial and reasonable, 
and therefore is inconsistent with  Article X:3(a) of the GATT 1994."338  Also, in the third paragraph 
                                                      
336Panel Report, para. 7.17. 
337Ibid., para. 7.33. 
338Request for the Establishment of a Panel by the United States (attached as Annex III to this Report), 
p. 1.  WT/DS315/AB/R 
 Page 55 
 
 
 of the panel request, the United States asserted that the lack of uniform, impartial, and reasonable 
administration of measures relating to customs ma tters is manifest in differences among member 
States of the European Communities in a number of areas.  The United States went on to state that 
these areas include, but are not limited to:   
• classification and valuation of goods; 
• procedures for the classification and valuation of goods, including 
the provision of binding classification and valuation information 
to importers; 
• procedures for the entry and release of goods, including different 
certificate of origin requirements, different criteria among member States for the physical inspection of goods, different licensing requirements for importation of food products, and 
different procedures for processing express delivery shipments;   
• procedures for auditing entry stat ements after goods are released 
into the stream of commerce in the European Communities; 
• penalties and procedures regardi ng the imposition of penalties for 
violation of customs rules; and 
• record-keeping requirements.339 
140. The Panel was of the view that "[t]he terms of  the United States' request for establishment of 
a panel indicate that it challenges the manner of administration of certain aspects of [European 
Communities] customs law."340  According to the Panel, "[t]he re quest clarifies that the administration 
challenged by the United States is that undertaken by the 'national customs authorities of [European 
Communities] member States'", and that "the spec ific forms of administration by national customs 
authorities challenged by the United States under Article X:3(a) of the GATT 1994 include, inter alia , 
laws, regulations, hand books, manuals and administrative practices."341 
141. The Panel stated that "the requirements in Article 6.2 of the DSU, including the obligation to 
specifically  identify the 'measure at is sue', serve the important due process objective of notifying the 
parties and third parties to a dispute of the nature of the complainant's case".342  The Panel noted that 
the United States had challenged measures that "cumula tively contain, literally, thousands of different 
provisions [that] relate to a vast array of different customs areas, and may entail administration in a 
                                                      
339Request for the Establishment of a Panel by the United States, p. 2. 
340Panel Report, para. 7.25. 
341Ibid. 
342Ibid., para. 7.27. (original emphasis) WT/DS315/AB/R 
Page 56  
 
 multitude of diverse ways."
343  In the light of this, the Panel cons idered that, "in the context of this 
dispute, the specificity requirement in Article 6. 2 of the DSU additionally requires the identification 
of the customs areas in the context of which th e obligation contained in Article X:3(a) of the 
GATT 1994 is alleged by the United States to be  violated", because "without such additional 
specificity regarding the customs areas at issue,  the European Communities would not have been 
accorded its due process right to be informed of  the nature of the United States' claim under 
Article X:3(a) of the GATT 1994."344   
142. Also, the Panel drew an analogy with the Appellate Body Report in EC – Computer 
Equipment , where the Appellate Body noted that, even though "Article 6.2 does  not  explicitly 
require that the products to which the 'specific measure s' at issue apply be identified ... with respect to 
certain WTO obligations, in order  to identify 'the specific measures at issue', it may ... be necessary to 
identify the products subject to the measures in dispute".345  According to the Panel, because, in the 
context of the present case, the "measure at issue" is the manner of administration of instruments relating to customs matters, the "identification of  the areas of customs administration at issue is 
necessary to  specifically  identify the 'measures at issue' in  the same way as suggested by the 
Appellate Body in  EC – Computer Equipment " with respect to the products  subject to the measure at 
issue in that case.
346   
143. The Panel noted: 
[T]he list of the areas of customs administration contained in the 
United States' request for establishment of a panel is preceded by the following text: "Lack of uniform, impartial and reasonable administration of the above-identified measures is manifest in differences among member States in a number of areas, including, 
but not limited to, the following ...".
347 (emphasis added by the Panel) 
However, the Panel was of the view that the phr ase "including, but not limited to" on its own does not 
have the legal effect of incor porating into the Panel's terms of  reference all areas of customs 
administration in the European Communities' system of customs administration, in addition to those 
specifically identified in the panel request.  For th e Panel, interpreting that phrase as having the legal 
effect of including areas not specifically identified in the panel request "would undermine an important due process objective of the requirements of Article 6.2 of the DSU—namely, to provide 
                                                     
 
343Panel Report, para. 7.30. 
344Ibid. 
345Appellate Body Report, EC – Computer Equipment , para. 67. (original emphasis) 
346Panel Report, para. 7.31. (original emphasis) 
347Ibid., para. 7.49.  WT/DS315/AB/R 
 Page 57 
 
 
 sufficient notice and information to the responding party and third parties to a dispute of the nature of 
the complainant's case."348 
144. On this basis, the Panel concluded: 
[T]he United States' request for establishment of a panel indicates 
that the "specific measure at issue"  in this dispute for the purposes of 
Article 6.2 of the DSU is the manner of administration by the 
national customs authorities of the member States of the Community 
Customs Code, the Implementing Regulation, the Common Customs Tariff, the TARIC and related measures in the areas of customs administration specifically identified in the United States' request for establishment of a panel – namely, the classification and valuation of 
goods, procedures for the classification and valuation of goods, 
procedures for the entry and release of goods, procedures for auditing entry statements after goods are released into free circulation, penalties and procedures regardi ng the imposition of penalties for 
violation of customs rules and record-keeping requirements.
349 
145. On appeal, the United States contends that the Panel erred in finding the specific measure at 
issue to be confined to areas of customs administ ration listed in the panel request, because the Panel 
failed to construe the panel request as a whole.350  The United States also argues that the Panel 
confused arguments, on the one hand, with  measures and claims, on the other hand.351  For the United 
States, had the Panel construed the panel request as a whole, it could not have avoided the conclusion 
that, first, the specific measures at issue were  the Community Customs Code, the Implementing 
Regulation, the Tariff Regulation, the TARIC, and, for each of these instruments, all amendments, "implementing measures, and other related measure s";  and secondly, that the legal basis of the 
complaint was the administration of those measures in a manner inconsistent with Article X:3(a) of 
the GATT 1994.
352  The United States emphasizes that the list of areas provided in the third paragraph 
of the panel request was merely illustrative, aimed to give an indication of the argument underlying 
the United States' claim, and did not constitute th e claim itself or the specific measure at issue.353  
According to the United States, the Panel made a se lective reading of the panel request, focusing on 
particular text taken out of its context.354  The Panel's characterization of the illustrative list as a 
specification of the measures at issue "ignored the intr oduction to the list, which stated that '[l]ack of 
                                                      
348Panel Report, para. 7.49 
349Ibid., para. 7.33.   
350These areas of customs administration are presented  supra , para. 139. 
351United States' appellant's submission, paras. 52 and 66. 
352Ibid., paras. 54-55. 
353Ibid., para. 57. 
354Ibid., para. 58. WT/DS315/AB/R 
Page 58  
 
 uniform, impartial and reasonable administration of  the above-identified measures is manifest in 
differences among member States in a number of areas, including, but not limited to, the 
following.'"
355  The United States argues that such a listing of the areas was not required;  the list 
merely made the panel request more transparent, in that it anticipated certain arguments the United 
States would make in its submissions and st atements to substantiate its claims.   
146. The United States also argues that "the Panel gave no consideration to the fact that the request 
included a claim that the absence of mechanisms or institutions in the European Communities' system 
of customs administration as a whole results in the non-uniform administration of the measures at 
issue, in breach of Article X:3(a) of the GATT 1994."356  The United States considers that the Panel 
erred in drawing an analogy between the  EC – Computer Equipment  dispute and the present case 
because, in  EC – Computer Equipment ,  the scope of the measures at issue depended on the identity 
of the products subject to the measures;  also, the claim put forward in that  case was not "systemic" 
and did not relate to a system as a whole.357  In these respects, EC – Computer Equipment  is to be 
distinguished from this case. 
147. For the European Communities, th e Panel correctly concluded that the measure at issue was 
only the administration of European Communities cu stoms law in the areas identified in the third 
paragraph of the panel request.  The European Comm unities asserts that, in th is case, the measure at 
issue is not the set of legal instruments listed in th e first paragraph of the panel request but, rather, 
their administration.358  The European Communities submits that the United States attempts to engage 
a selective reading of the panel request by asking the Appellate Body to ignore the third paragraph of 
the panel request.359  Furthermore, given the "vast body of law"360 referred to by the United States in 
the first paragraph of the panel request, it wo uld not have been possible for the European 
Communities to prepare adequately its defence purely on the basis of a challenge against the 
administration of European Communities customs la w "as a whole" without an indication of the 
relevant provisions or sectors.  In the view of the European Communities, "an identification of the 
specific issue or provision with respect to which a claim of non-uniform administration is made was ... 
necessary to protect ... [its] due process rights."361   
                                                      
355United States' appellant's submission, para. 59. 
356Ibid., para. 61. 
357Ibid., para. 62. 
358European Communities' appellee's submission, para. 99. 
359Ibid., para. 100. 
360Ibid., para. 103. 
361Ibid.  WT/DS315/AB/R 
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 148. The European Communities contends that the Pane l correctly referred to the general principle 
set out in the Appellate Body Report in EC – Computer Equipment  that "what is necessary for 
identification of the 'specific measures at issu e' depends on the circumstances of the case."362  In the 
circumstances of the present case, given the vast body  of law to which the United States referred, the 
Panel was justified in requiring specification of ar eas of customs administration.  Regarding the terms 
"including but not limited to" contained in the th ird paragraph of the panel request, the European 
Communities relies on the Appellate Body Report in  India – Patents (US)  in asserting that "these 
words cannot have the effect of including, contrary to the requirements of Article 6.2 of the DSU, the 
administration of the entire body of [European Comm unities] customs law into the Panel's terms of 
reference."363  The European Communities adds that the United States' interpretation of this phrase 
would reduce the third paragraph of the panel request to inutility364 and would "prejudice its due 
process rights by leaving the actual subject matter of the case unclear".365 
149. We begin our analysis by recalling that, "[i]n pr inciple, any act or omission attributable to a 
WTO Member can be a measure of that Member for purposes of dispute settlement proceedings."366  
Under Article 6.2 of the DSU, a complaining Member enjoys certain discretion in the identification of 
the specific measure at issue.  Having said this, we  must determine what is identified in the panel 
request as the specific measure at issue in this case.  
150. We note that the first paragraph of the panel requ est contains a list of instruments, introduced 
by the phrase "[t]he measures consist of:"  Th e United States lists the following instruments: 
• Council Regulation (EEC) No. 2913/92 of 12 October 1992 establishing the Community 
Customs Code, including all annexes thereto, as amended (the "Community Customs Code"); 
• Commission Regulation (EEC) No. 2454/93 of 2 July 1993 laying down provisions for the 
implementation of Council Regulation (EEC) No 2913/92 of 12 October 1992 establishing the 
Community Customs Code, including all annex es thereto, as amended (the "Implementing 
Regulation"); 
                                                      
362European Communities' appellee's submission, para. 105. 
363Ibid., para. 106. 
364Ibid., para. 108. 
365Ibid., para. 109. 
366Appellate Body Report, US – Corrosion-Resistant Steel Sunset Review , para. 81. (footnote omitted) WT/DS315/AB/R 
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 • Council Regulation (EEC) No. 2658/87 of 23 Ju ly 1987 on the tariff and statistical 
nomenclature and on the Common Customs Tariff,  including all annexes thereto, as amended 
(the "Common Customs Tariff"); 
• the Integrated Tariff of the European Commun ities established by virtue of Article 2 of 
Council Regulation (EEC) No. 2658/87 of 23 Ju ly 1987 on the tariff and statistical 
nomenclature and on the Common Customs Tariff,  including all annexes thereto, as amended 
(the "TARIC");  and 
• for each of the above laws and regulations367, all amendments, "implementing measures and 
other related measures".  
Subsequently, in the panel request, the United States  referred to the instru ments listed in the first 
paragraph with the expressions "these measures" (i n the second paragraph of the panel request) and 
"the above-identified measures" (in th e third and fourth paragraphs).   
151. We further note, as the Panel did, that the panel request refers repeatedly and consistently to 
the  administration  of the legal instruments listed in the first paragraph of the panel request.  The 
panel request begins by stating that the Unite d States "considers that the manner in which the 
European Communities ... administers  its laws, regulations, decisions and rulings of the kind 
described in Article X:1 of the ... GATT 1994". (emph asis added)  In the second sentence of the first 
paragraph, the United States submits that  "the European Communities fails to  administer ", in a 
manner consistent with Article X:3(a), the legal in struments cited therein. (emphasis added)  The 
second paragraph of the panel request, in each of its sen tences, also refers to the "administration" of 
the legal instruments listed in the first paragraph;   so does the introductory sentence of the third 
paragraph of the panel request.  T hus, the panel request makes it clear that the United States does not 
challenge under Article X:3(a) the substantive content of the legal instruments listed in the first 
paragraph of the panel request, but their administra tion collectively.  The United States confirmed at 
the oral hearing that it had challenged unde r Article X:3(a) these legal instruments as administered  
collectively.368   
                                                      
367These laws and regulations are defined  supra , para. 2 and footnote 2 thereto. 
368See also United States' responses to Questions 1 and 4 posed by the Panel, Panel Report, pp. A-1 
and A-4.  In its response to Question 1, the United States  stated that, "[i]n this dispute, the United States is 
challenging the manner in which [European Communities] customs law is  administered ." (emphasis added)  In 
its response to Question 4, the United States explained that it is, "indeed, challenging the absence of uniformity 
overall with respect to the  administration   of the [European Communities'] customs system." (emphasis added)  WT/DS315/AB/R 
 Page 61 
 
 
 152. We recall that Article 6.2 of the DSU requires the identification of the "specific measures at 
issue" in the request for the establishment of a panel.   The word "specific" in Article 6.2 establishes a 
specificity requirement regarding the identifica tion of the measures that serves the due process 
objective of notifying the parties and the third parti es of the measure(s) that constitute the object of 
the complaint.  We therefore examine the question whether the presentation in the panel request meets 
the specificity requirement in Article 6.2 of the DSU.   In our view, this specificity requirement is met 
with respect to the Community Customs Code, the Implementing Regulation, the Common Customs 
Tariff, and the TARIC.  For each of these instruments, a specific citation is provided.  Also, the panel request indicates clearly that the United States was challenging the manner in which these legal 
instruments are administered collectively.  In our view, the first paragraph of the panel request is 
sufficiently specific to give notice to the parties and the third parti es of the measures that constitute 
the object of the complaint.
369   
153. We turn next to the question whether the panel request confines the measure at issue to areas 
of customs administration.  We read the third para graph of the panel request as an illustrative list of 
areas where the United States considers European Co mmunities customs law is not administered in a 
uniform way.  Thus, the substance of the third para graph of the panel request should be viewed as an 
anticipation of the United States' arguments.  In this paragraph, the United States explains—briefly 
and in general terms—why it considers that the legal instruments listed in the first paragraph of the 
panel request are administered in a manner that is inconsistent with the uniformity requirement in 
Article X:3(a).  Article 6.2 of the DSU requires that the  claims —not the arguments —be set out in a 
panel request in a way that is sufficient to present the problem clearly.370  Nothing in Article 6.2 
prevents a complainant from making statements in th e panel request that foreshadow its arguments in 
substantiating the claim.  If the complainant chooses to do so, these arguments should not be 
interpreted to narrow the scope of the measures or th e claims.  Accordingly, we are of the opinion that 
the Panel erred when it found that the list of areas of  customs administration in the third paragraph of 
the panel request limits the scope of the "specific measures at issue".371 
                                                      
369We observe that the first paragraph of the panel request also lists among the measures at issue the 
"implementing measures and other related measures" for the Community Customs Code, the Implementing 
Regulation, the Common Customs Tariff, and the TARIC.  This reference is vague and does not allow the 
identification of  the specific instruments that the referenc e aims to cover.  We are of  the view that the phrase 
"implementing measures and other related measures" doe s not "identify the specific measures at issue", as 
required in Article 6.2 of the DSU. 
370Appellate Body Report, EC – Bananas III , para. 143.  See also Appellate Body Report, India – 
Patents (US) , para. 88;  Appellate Body Report, Korea – Dairy , para. 139;  and Appellate Body Report, 
Dominican Republic – Import and Sale of Cigarettes , para. 121. 
371Panel Report, para. 7.33. WT/DS315/AB/R 
Page 62  
 
 154. In the light of these considerations, we reverse  the Panel's finding, in paragraphs 7.33 
and 8.1(a)(i) of the Panel Report, that "the specific measure at issue in this dispute ... is the manner of 
administration ... of the Community Customs Co de, the Implementing Regulation, the Common 
Customs Tariff, the TARIC and related measures in the areas of customs administration specifically 
identified in the United States' requ est for establishment of a panel."
372  We  find, instead, that the 
specific measures at issue identified in the pane l request are the Community Customs Code, the 
Implementing Regulation, the Common Customs Tariff,  and the TARIC, as administered collectively. 
C. The United States' Claim Challenging the European Communities' System of Customs 
Administration "As a Whole" 
155. We now turn to the question whether the Panel e rred in finding that, due to the terms of the 
panel request, the United States was precluded from challenging the European Communities' system 
of customs administration  as a whole or overall . 
156. The Panel made separate findings regarding the scope and the nature of the United States' 
challenge under Article X:3(a) of the GATT 1994 of the European Communities' system of customs 
administration.373  With respect to the scope of the United States' challenge, the Panel found that, due 
to the wording and content of the panel request, the United States was precluded from challenging the 
European Communities' system of customs administra tion as a whole or overall, and that its terms of 
reference regarding the scope of the United States' claim under Article X:3(a) were restricted to the 
specific areas of customs administration referred to in the panel request.374  Although the Panel 
acknowledged the permissibility of challenging "a  responding Member's system as a whole or 
overall"375, it considered that, in this case, the reference in the panel request to a number of areas of 
customs administration indicated that the United Stat es' claim under Article X:3(a) extends to some, 
but not all, areas of customs administration.376  In reaching its conclusion, the Panel noted that the 
areas of customs administration listed in the panel request did not cover the totality of the European 
Communities' system of customs administration.377 
                                                      
372Panel Report, para. 8.1(a)(i). 
373Ibid., paras. 7.50 and 7.63. 
374Ibid., para. 7.46. 
375Ibid., para. 7.44. 
376Ibid., para. 7.47. 
377Ibid., para. 7.48.  In this respect, the Panel noted that areas of customs administration, such as transit 
procedures, customs debt, inward processing, outward processing, exportation, and re-exportation, were absent 
from that list.  WT/DS315/AB/R 
 Page 63 
 
 
 157. With respect to the nature of the United Stat es' challenge, the Panel concluded that, on the 
basis of the language and content of the panel request, the United States was precluded from making 
an "as such" challenge to the design and structure of the European Communities' system of customs 
administration as a whole, as well as in the areas of  customs administration specifically identified in 
the panel request.378  For the Panel, "there is nothing in the text of the United States' request for 
establishment of a panel that could be construed as clearly suggesting that the United States' challenge 
under Article X:3(a) of the GATT 1994 relates to the design and structure of the [European 
Communities'] system of customs administration."379  The Panel further held that, in the panel request, 
the United States was concerned with the manner of administration by member State customs 
authorities, rather than with the design and struct ure of the customs administration system at the 
European Communities level "as such"380;  in addition, such a challenge "is not obviously linked to 
the essence of the obligation contained in Article  X:3(a) of the GATT 1994—namely, the obligation 
to administer in a uniform manner".381  Finally, the Panel observed that the panel request makes no 
explicit reference to the terms "as such" or " per se ".382 
158. On appeal, the United States contends that the Panel erred by construing the panel request to 
exclude a claim that the European Communities' system of customs administration as a whole results 
in non-uniform administration of European Communiti es customs law, in breach of Article X:3(a) of 
the GATT 1994.383  For the United States, the Panel erred in considering that, in order to challenge the 
European Communities' system of customs admini stration as a whole, the United States would have 
had to list separately each and ev ery area of customs administration.384  The United States maintains 
that the panel request made it clear that its clai m related to the European Communities' system of 
customs administration as a whole, because it id entified the measures that constitute the main 
instruments of European Communities customs legislation and addressed the manner of administration of these instruments collectively.
385  For the United States, the crux of its claim was 
that "the [European Communities] administers its  customs law through 25 separate, independent 
customs authorities and does not provide any instit ution or mechanism to reconcile divergences 
automatically and as a matter of right when they occur."386  In the United States' view, the Panel failed 
                                                      
378Panel Report, para. 7.63. 
379Ibid., para. 7.58. 
380Ibid., paras. 7.59-7.60. 
381Ibid., para. 7.61. 
382Ibid., para. 7.62. 
383United States' appellant's submission, para. 67. 
384Ibid., para. 70. 
385Ibid., para. 72. 
386Ibid., para. 69.  See also paras. 2, 19, 21, and 102. WT/DS315/AB/R 
Page 64  
 
 to consider the panel request "as a whole".
387  The United States emphasizes that the measures at issue 
were discussed collectively throughout the panel requ est, and that this is "precisely what one would 
expect in a panel request challenging a system of customs administration as a whole".388   
159. According to the United States, it clearly articulated a challenge of the European 
Communities' system of customs administration as a whole, as evident from the very first sentence of 
the panel request.389  It would be "illogical to assume that [the] use of the word 'manner' in a claim 
involving Article X:3(a) of the GATT 1994 necessarily suggests that the claim does not relate to a 
Member's system of customs administration as a whole."390  Furthermore, the United States is of the 
view that, because "the defining characteristic of  the design and structure" of the European 
Communities' system of customs administration is the absence of procedures and institutions at the 
European Communities level, a challenge to the desi gn and structure of this system necessarily must 
address administration undertaken by member State customs authorities.391 
160. The United States also points out that the absen ce of an explicit reference to the  terms 
"as such" or " per se " in the panel request does not preclude a claim with respect to the European 
Communities' system of customs administration as a whole:  what is important, is that the responding 
party be aware of the claim against it so that  its ability to defend itself is not prejudiced.392  T h e  
United States maintains that the European Commun ities was aware that the United States had made a 
claim with respect to the European Communities' system of customs administration, as can be seen 
from the statements of the European Communities at meetings of the DSB393 and the European 
Communities' submissions and statements during the Panel proceedings.394  
161. According to the European Communities, th e Appellate Body should uphold the Panel's 
finding that the United States' claims regarding the European Communities' system of customs 
administration "as a whole" and "as such" are ou tside its terms of reference.  The European 
Communities considers the "as a whole" claim to be outside the Panel's terms of reference, because 
the measure at issue set out in the panel request  is "only the [European Communities'] manner of 
administration in the areas of customs law specifically identified in [the] Panel Request".395  T h e  
                                                      
387United States' appellant's submission, para. 73. 
388Ibid., para. 74. 
 389Ibid., para. 82. 
390Ibid., para. 77. 
391Ibid., para. 78. 
392Ibid., para. 83. 
393Ibid., paras. 86-87. 
394Ibid., paras. 88-91. 
395European Communities' appellee's submission, para. 113.  WT/DS315/AB/R 
 Page 65 
 
 
 European Communities also mainta ins that "[i]t is incorrect to  suggest that the [European 
Communities'] system of customs administration coul d be assessed 'as a whole', independently of the 
specific needs and requirements of the sector or area in question, and the tools and mechanisms 
existing in such area."396  
162. The European Communities argues that the pane l request did not indicate that the United 
States intended to challenge the European Communitie s' system of customs administration "as such".  
For the European Communities, the panel request identified, as the measure at issue, only the "manner 
of administration".  In the European Communities'  view, the term "manner of administration" is 
"diametrically opposed to [what] one  could have expected to be used in the case of a challenge against 
a measure 'as such'."397  The European Communities adds that its system of customs administration is 
broader than the instruments listed in the first pa ragraph of the panel request, because it includes other 
instruments such as the Treaty Establishing the European Communities  (the "EC Treaty") and more 
specific instruments existing in the field of cust oms cooperation or budgetary and financial control.398 
163. With respect to the United St ates' reliance on a number of statements made by the parties 
during or before the Panel proceedings399, the European Communities submits that "the compliance of 
a [p]anel request with Article 6.2 [of the] DSU must  be assessed primarily on the face of the [p]anel 
request."400  The European Communities also asserts that at no point did it recognize or acknowledge 
that the European Communities' system of customs administration "as such" was the measure at 
issue.401 
164. The United States' appeal raises three questions that we address in turn.  First, is a Member 
allowed to challenge within the WTO dispute settle ment proceedings another Member's legal system 
as a whole  or  overall ?  Secondly, assuming that such a challenge  could be made, did the Panel err in 
finding that, due to the wording and content of the panel request, the United States was "precluded 
from challenging the [European Communities'] syst em of customs administration as a whole or 
overall"?402  Thirdly, did the Panel err in considering that the United States' contention on the "design 
and structure" of the European Communities' system of customs administration as a whole was outside its terms of reference?   
                                                     
 
396European Communities' appellee's submission, para. 117. 
397Ibid., para. 125. 
398Ibid., para. 128. 
399United States' appellant's submission, paras. 84-98. 
400European Communities' appellee's submission, para. 131. 
401Ibid., para. 133. 
402Panel Report, para. 7.46. WT/DS315/AB/R 
Page 66  
 
 1. Challenging a Legal System "As a Whole" or "Overall"
 
165. The United States contends that its claim rela tes to the European Communities' system of 
customs administration "as a whole or overall".  As a preliminary observation, we do not think that, 
by challenging the European Communities' system of customs administration as a whole, the United 
States made an "as such" claim.403  Indeed, before the Panel, the United States made it clear that it was 
"not challenging the substance  of the measures mentioned in its request for establishment of a 
panel".404  This was confirmed by the United States in r esponse to questioning at the oral hearing.  
Also at the oral hearing, the United States explained that, in this dispute, the claim made by the United 
States under Article X:3(a) is not readily classifiable  in the categories of "as such" and "as applied" 
claims, that it would be inaccurate to characterize it s claim as an "as such" claim, and that it did not 
wish to add a further category of claims. 
166. We agree with the Panel that "there is nothing  in the DSU nor in the other WTO agreements 
that would prevent a complaining Member from challenging a responding Member's system as a 
whole or overall."405  We also agree with the Panel that a challenge that a system "as a whole or 
overall" is WTO-inconsistent must be presented in a manner that meets the two distinct requirements 
in Article 6.2 of the DSU.406  A panel request must identify, with  a sufficient degree of specificity, the 
measures that constitute or underlie  the legal system challenged "as a whole or overall", and must also 
provide the legal basis of the complaint (or th e claims) so as to present the problem clearly.407  We 
already concluded in the previous section that, in  the panel request, the United States has identified 
the measures at issue in this dispute in a manner that  satisfies the specificity requirement in Article 6.2 
of the DSU.  We also disagreed with the Panel's view that, in the context of this dispute, the 
specificity requirement in Article 6.2 of the DS U "additionally requires the identification of ... 
customs areas".408  We also recognize, as the Panel did, that, in this case, the legal instruments 
referred to by the United States in the panel requ est, "cumulatively, contain" a vast number of 
provisions that relate to a variety of customs ar eas and that "entail administration in ... diverse 
ways".409  However, the essence of the United States' cl aim was not the administration or application 
                                                      
403See also our explanation  infra , para. 174. 
404Panel Report, para. 7.5. (emphasis added)  We r ecall that an "as such" claim challenges an "act[] 
setting forth rules or norms that are intended to have general and prospective application". (Appellate Body 
Report, US – Corrosion-Resistant Steel Sunset Review , para. 82.  See also Appellate Body Report, US – Oil 
Country Tubular Goods Sunset Reviews , para. 172)  In other words, an "as such" claim in WTO parlance 
challenges the substantive content of the measure at issue regardless its application in individual instances. 
405Panel Report, para. 7.44. 
406Ibid. 
407See Appellate Body Report, US – Carbon Steel , para. 125. 
408Panel Report, para. 7.30. 
409Ibid.  WT/DS315/AB/R 
 Page 67 
 
 
 of individual provisions of these legal instruments, but the absence of any mechanism or procedure at 
the European Communities level to reconcile dive rgences in the administration of these instruments 
by the member States of the European Communities.410  Therefore, we do not think that the due 
process rights of the European Communities were infringed merely because the claim of the United 
States related to the manner of administration of the European Communities customs law as a whole or overall. 
167. Under Article 6.2 of the DSU, a panel request mu st also provide a brief summary of the legal 
basis of the complaint sufficient to  present the problem clearly.  In other words, a panel request must 
summarize the claim made in a manner that will "serve the  due process  objective of notifying the 
parties and third parties to a dispute of  the nature of the complainant's case".
411  As the Appellate 
Body stated in  Thailand – H-Beams , the due process objective is "fundamental to ensuring a fair and 
orderly conduct of disput e settlement proceedings".412  I n  Korea – Dairy , the Appellate Body 
emphasized that, although Article 6.2 of the DSU de mands only a summary of the legal basis of the 
complaint (or the claim), this summary must be "sufficient to present the problem clearly", and it is not enough only to "summarily identi fy" the legal basis of the complaint.
413  Compliance with the 
requirement of summarizing the claim in the panel request in a manner that "presents the problem 
clearly"414 must be demonstrated, in principle, on the face of the panel request.415  With these general 
considerations in mind, we address the question of whether the panel request included a challenge to 
the European Communities' system of customs administration as a whole or overall under 
Article X:3(a) of the GATT 1994. 
2. Whether the Panel Request Included a Challenge to the European 
Communities' System of Customs Administration "As a Whole" or "Overall"  
168. The United States' appeal requires us to ex amine the wording and content of the panel 
request.   Determining the scope of the claims that are set out in a panel request requires that the panel 
request be construed as a whole.416  We will be able to conclude that the panel request included a 
challenge to the European Communities' system of customs administration as a whole or overall only 
                                                      
410United States' appellant's submission, paras. 2, 19, 21, 69, and 102. 
411Appellate Body Report, US – Carbon Steel , para. 126. (original emphasis)  See also Appellate Body 
Report, Brazil – Desiccated Coconut , at 186;  and Appellate Body Report, EC – Bananas III , para. 142. 
412Appellate Body Report, Thailand – H-Beams , para. 88. 
413Appellate Body Report, Korea – Dairy , para. 120. 
414Article 6.2 of the DSU. 
415Appellate Body Report, US – Carbon Steel , para. 127. 
416See Appellate Body Report, US – FSC (Article 21.5 – EC II) , paras. 66-68;  and Appellate Body 
Report, US – Carbon Steel , para. 127.   WT/DS315/AB/R 
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 if we are convinced that the panel request, read as a w hole, states this claim in a way that is "sufficient 
to present the problem clearly". 
169. As we concluded earlier, the specific measures at  issue identified in the panel request are the 
Community Customs Code, the Implementing Regulation, the Common Customs Tariff, and the TARIC, as administered   collectively.
417  It is not in dispute that these are major instruments of 
European Communities customs legislation.  Togeth er, they delineate the legal architecture of the 
European Communities' customs regime.  In ot her words, the administration of these legal 
instruments covers, if not the entirety, almost th e whole of the European Communities' system of 
customs administration.418 
170. The wording and content of the panel request shows that the United States' challenge under 
Article X:3(a) of the GATT 1994 concerns the manner of administration of these measures 
collectively  or  as a whole .  The panel request begins by stati ng: "the manner in which the European 
Communities ... administers its laws, regulations, d ecisions and rulings of the kind described in 
Article X:1 of [the GATT 1994] is not uniform."  The second sentence of the first paragraph begins, 
"[f]or purposes of this request, the laws, regulations , decisions and ruling (collectively, 'measures')". 
171. In turn, the second paragraph of the panel re quest states that "[a]dministration of these 
measures in the European Communities is carried out by the national customs authorities of [European Communities] member States" and that "[s]uch administration takes numerous different 
forms."  In this paragraph, it is further stated that "the myriad forms of administration of these 
measures include, but are not limited to, laws, re gulations, handbooks, manuals, and administrative 
practices of customs authorities of member Stat es of the European Communities."  The third 
paragraph of the panel request states that th e "[l]ack of uniform, im partial and reasonable 
administration of the above-identified measures is manifest in differences among member States in a 
number of areas."  In our view, these statements in the panel request present with sufficient clarity the 
complaint of the United States, namely, that the in struments identified in the first paragraph of the 
panel request are administered collectively, or as a w hole, in breach of Article X:3(a).  The fact that 
the panel request does not refer, explicitly or implic itly, to the manner of administration of particular 
                                                     
 
417See supra , para. 154. 
418In this respect, we note the European Communities' contention that the European Communities' 
system of customs administration is somewhat broader than the administration of the four legal instruments to 
which the first paragraph of the pane l request refers, and that the European Communities' system of customs 
administration rests as well on other measures such as  "the EC Treaty itself" and "more specific instruments 
existing in the field of customs cooperation or budg etary and financial control". (European Communities' 
appellee's submission, para. 128)    WT/DS315/AB/R 
 Page 69 
 
 
 provisions or instruments supports the view that the claim of the United States relates to the manner in 
which these instruments are administered collectively or as a whole. 
172. In its appellant's submission as well as in r esponse to questioning at the oral hearing, the 
United States has emphasized that the crux of its clai m under Article X:3(a) is that "the existence of a 
system of customs administration in which 25 separ ate, independent authorities exercise judgment in 
interpreting and applying [European Communities] customs law, without any procedures or 
institutions to ensure against divergences or to re concile them promptly and as a matter of right when 
they occur, necessarily constitutes a lack of uniform administration, in breach of Article X:3(a)."419  
Before the Panel, the United States also stressed the  absence  of such a reconciliation mechanism at 
the European Communities level.  We observe that  the panel request does not state in the same way 
this central element of the challenge the United Stat es makes of the European Communities' system of 
customs administration.  We think that the panel requ est could have been drafted with more precision.  
Had the United States explicitly stated in the panel request that the heart of the problem is the  
absence  of any procedures or institutions or mechanisms  to ensure against divergences or to reconcile 
them promptly and as a matter of right when they  occur, there would have been little doubt as to 
whether the panel request set out a claim under Ar ticle X:3(a) against the European Communities' 
system of customs administration as a whole.  Nevertheless, as we indicated above, by highlighting the nature and extent of the differences that ex ist in the administration of European Communities 
customs law by the member States, the panel reque st presents with sufficient clarity, as required by 
Article 6.2 of the DSU, that the claim made under Article X:3(a) concerned the European 
Communities' system of customs administration as a whole or overall.  
3. The Panel's Finding with respect to the "Design and Structure" of the 
European Communities' System of Customs Administration  
173. The Panel concluded that, on the basis of the language and content of the panel request, the 
United States was precluded from making an "as su ch" challenge with respect to the "design and 
structure" of the European Communities' system of customs administration.420  T h i s  f i n d i n g  i s  
challenged on appeal by the United States. 
174. As we concluded earlier, the specific measur es at issue are the four legal instruments 
identified in the first paragraph of the panel request , as administered collectively.  The United States' 
claim is that the European Communities' system of  customs administration as a whole results in non-
uniform administration of European Communities cust oms law, in breach of Article X:3(a) of the 
                                                      
419United States' appellant's submission, para. 102.  See also paras. 2, 19, 21, and 69. 
420Panel Report, para. 7.63. WT/DS315/AB/R 
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 GATT 1994.  As we noted earlier, the claim of the Un ited States in this dispute is not an "as such" 
claim, in the sense that it does not challenge th e substantive content of the measures at issue.
421     
175. Before the Panel, and again in this appellate  proceeding, the United States argues that the 
"design and structure" of the European Communities' system of customs administration  necessarily  
result in non-uniform administration, because cu stoms laws are administered by "25 separate, 
independent authorities ... without any procedures or institutions to ensure against divergences or to 
reconcile them promptly and as a matter of right when they occur."422  By referring to the "design and 
structure" of the European Communities' system of  customs administration, the United States sought 
to demonstrate how and why the instruments identifie d in the first paragraph of the panel request, as a 
whole, are administered in a manner leading to  a lack of uniformity in their administration.423  Thus, 
the United States' contention on the "design and stru cture" of the European Communities' system of 
customs administration was made as an argument to s ubstantiate its "as a whole" challenge set out in 
the panel request.  We therefore disagree with the Panel's characterization of the United States' contention on the "design and structure" of th e European Communities' system of customs 
administration as a claim in itself.  We noted earlie r that the "as a whole" challenge of the United 
States is set out in the panel re quest consistently and according to the specificity requirements 
contained in Article 6.2 of the DSU.  We ther efore see no reason why the Panel was precluded from 
                                                     
 
421On the distinction between challenging a set of measures or a legal system as a whole and an 
"as such" claim, see also  supra , para. 165 and footnote 404 thereto.   
422United States' response to Question 126 posed by the Panel concerning the European Communities' 
system of customs administration, Panel Report, p. B-4.  We note that, in its response to Question 126, the 
United States stated that it under stands the "design and structur e" to mean the following:   
- Customs law in the [European Communities] is prescribed by [European 
Communities] institutions:  the Council and the Commission. 
- [European Communities] customs law is  administered by 25 different 
authorities, each responsible for a diff erent part of the territory of the 
[European Communities]. 
- The [European Communities] has in  place certain procedures and 
institutions which it contends secure uniform administration among the 25 different authorities.  These include a general duty of cooperation 
among member States, guidelines on various matters (e.g., the conduct 
of customs audits), discretionary mechanisms (e.g., referral of questions to the Customs Code Committee), and the opportunity for traders to 
appeal customs administrative action to member State courts, with the 
possibility of such courts eventually referring questions of [European 
Communities] law to the ECJ. 
The United States further noted:  "[ W]ithout any mechanism or other means even ostensibly present to ensure 
that the different authorities acted uniformly". 
423We note that, in response to questioning by the Panel, the United States stated that "the support for 
the [United States'] claim under Artic le X:3(a) includes evidence of  both  the design and structure of the 
[European Communities'] system of customs administration and specific instances of non-uniform 
administration." (United States' response to Question 173 posed by the Panel, Panel Report, p. B-29 (original 
emphasis))  WT/DS315/AB/R 
 Page 71 
 
 
 considering the United States' arguments on the "desi gn and structure" of the European Communities' 
system of customs administration.  
176. In the light of these considerations, we  reverse  the Panel's finding, in paragraphs 7.50, 7.64, 
and 8.1(a)(iii) of the Panel Report, that, due to the wording and content of the panel request, the 
United States was precluded from challenging the European Communities' system of customs administration as a whole or overall.  We also reverse  the Panel's finding, in paragraphs 7.63, 7.64, 
and 8.1(a)(iii) of the Panel Report, that the Pa nel was precluded from considering the United States' 
argument that the "design and structure" of th e European Communities' system of customs 
administration necessarily result in a violation of Article X:3(a) of the GATT 1994. 
D. Temporal Limitations of the Panel's Terms of Reference 
177. The European Communities requests the Appellate Body to review whether the Panel erred in 
its interpretation of the temporal scope and limitations  of its terms of reference in respect of "steps 
and acts of administration that pre-date or  post-date the establishment of a panel".
424  The European 
Communities' other appeal focuses on the Panel's reasoning on the temporal scope of its terms of 
reference as set out in paragraphs 7. 36 and 7.37 of the Panel Report.   
178. The European Communities argues that the Pa nel took an excessively wide approach in 
interpreting the temporal limitati ons on its terms of reference.425  For the European Communities, a 
panel may, in principle, consider only measures that  are in existence at the time of its establishment426 
and, therefore, the Panel erred in considering that  it had "a general competence to also consider 
measures which 'pre-date' or ' post-date' its establishment".427  The European Communities also 
contends that the manner of admini stration "cannot be regarded as a 'continuum' without [a] clear start 
or end point"428, contrary to what the Panel suggests.429  According to the European Communities, the 
Panel's approach would produce awkward results:  it would imply that "violations which occurred far 
in the past and which no longer have any current e ffect could be claimed to be continuing because 
'administration has no end point'."430  Similarly, "violations which had not yet occurred at the time the 
                                                      
424Panel Report, para. 7.37. 
425European Communities' other appellant's submission, para. 40. 
426Ibid., para. 46. 
427Ibid., para. 47. 
428Ibid., para. 63. 
429Panel Report, para. 7.37. 
430European Communities' other appellant's submission, para. 65. WT/DS315/AB/R 
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 Panel was established might be regarded as indi cative of violations pre-dating the Panel's 
establishment because administration 'has no starting point'."
 431 
179. The European Communities considers that, on the basis of the panel request, it was  
entitled to assume that the complainant's case rela ted to measures in existence at the time of the 
Panel's establishment.  By defining "administration" under Article X:3(a) of the GATT 1994 as "a phenomenon without any boundaries in time", the Panel violated the due process rights of the 
defendant protected by Article 6.2 of the DSU, be cause preparation of the defence for past instances 
of administration is "unduly difficult", and the incl usion of future instances of administration in the 
measure makes the subject matter of the case a "moving target".
432 
180. The European Communities also argues that the Panel's reasoning would make compliance 
almost impossible.  If administration has no clear starting or ending point, it would be difficult for a 
WTO Member found to be in violation of Article X: 3(a) to establish that it has altered its manner of 
administration so as to achieve compliance with Article X:3(a).433  The European Communities 
submits that "the Panel's approach to the temporal li mitations to its terms of reference is incompatible 
with Article[s] 7.1 and 6.2 [of the] DSU"434 and therefore requests the Appellate Body to "reverse the 
Panel's findings in paragraphs 7.36 and 7.37".435 
181. The United States is of the view that the Panel did not err in its approach to the temporal 
scope of its terms of reference.436  The United States observes that th e legal instruments identified in 
the panel request were in existence on the date when the Panel was established.437  According to the 
United States, the European Communities' argument "confuses administration  of [European 
Communities] customs law in existence when the Panel was established with individual  acts of 
administration   that occurred prior to establishment and with  evidence  that came to light during the 
panel proceeding that confirm the existence of non-uniform administration at the time of panel 
establishment."438  For the United States, the Panel correctly explained that "it would take account of 
individual instances of administration pre-dating an d post-dating panel establis hment not to determine 
                                                      
431European Communities' other appellant's submission, para. 65. 
432Ibid., para. 66. 
433Ibid., para. 68. 
434Ibid., para. 69. 
435Ibid., para. 70.  
436United States' appellee's submission, para. 51. 
437Ibid., para. 17. 
438Ibid., para. 15. (original emphasis)  WT/DS315/AB/R 
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 whether each established a WTO-inconsistency in its own right, but as a means of elucidating the 
manner of administration that was in exis tence at the time of panel establishment."439   
182. The United States is also of the view that th e European Communities misreads the distinction 
the Panel made between administration as an  ongoing phenomenon and individual instances of 
administration.440  For the United States, although the Eur opean Communities has referred to the 
principle that a panel may consider only measures in  existence at the time of panel establishment, it 
made "no distinction between acts of administ ration themselves being considered as potential 
breaches of Article X:3(a) and acts of administration being considered as evidence of an ongoing course of administration that potentially is a breach of Article X:3(a)".
441  The United States 
underscores that nothing in the text of Article X:3(a) or its context suggests that a breach of that provision "is demonstrated only when individual acts of administration in existence on the date a 
panel is established diverge".
442   
183. With respect to the European Communities' argu ment concerning events that post-dated panel 
establishment, the United States main tains that, contrary to the European Communities' assertion, the 
Panel's references to evidence post-dating panel est ablishment do not show th e Panel overstepped its 
terms of reference.  According to the United St ates, these references "show the Panel properly [took] 
account of evidence relevant to understanding the manner of administration of [European 
Communities] customs law existing at the time of panel establishment."443  
184. We begin our analysis by recalling the Appellate Body's statement in  EC – Chicken Cuts : 
The term "specific measures at issue" in Article 6.2 suggests that, as 
a general rule, the measures included in a panel's terms of reference 
must be measures that are in existence at the time of the establishment of the panel.
444 (footnote omitted)   
This general rule, however, is qualified by  at least two exceptions.  First, in Chile – Price Band 
System , the Appellate Body held that a panel has the authority to examine a legal instrument enacted 
after the establishment of the panel that amends a measure identified in the panel request, provided 
that the amendment does not change the essence of the identified measure.445  Secondly, in US – 
                                                      
439United States' appellee's submission, para. 18 (referring to Panel Report, paras. 7.36-7.37). 
440Ibid., para. 23. 
441Ibid., para. 27. 
442Ibid., para. 31. 
443Ibid., para. 46. 
444Appellate Body Report, EC – Chicken Cuts , para. 156. 
445Appellate Body Report, Chile – Price Band System , para. 139. WT/DS315/AB/R 
Page 74  
 
 Upland Cotton , the Appellate Body held that panels are allowed to examine a measure "whose 
legislative basis has expired, but whose effects are al leged to be impairing the benefits accruing to the 
requesting Member under a covered agreement" at  the time of the establishment of the panel.
446  The 
summary presented by the Panel in paragraph 7.36 of the Panel Report is in line with what the 
Appellate Body said in  EC – Chicken Cuts , Chile – Price Band System , and  US – Upland Cotton .447  
Therefore, we see no error in the Panel's legal inte rpretation contained in pa ragraph 7.36 of the Panel 
Report. 
185. Turning to paragraph 7.37 of the Panel Report, we note that the Panel sought to apply in the 
specific context of this dispute the legal interpretati on it had set out in paragraph 7.36 of its Report.  
The Panel recalled first its view that, in this case, the specific measure at issue "comprises the  manner 
of administration  of the Community Customs Code, the Implementing Regulation, the Common 
Customs Tariff, the TARIC and related measures."448  As the Panel identified the measure at issue as 
the manner of administration , it went on to discuss the temporal scope of the manner of 
administration for purposes of defining its terms of reference.   In particular, the Panel said that "the 
manner of administration in a particular case may not  have a clear starting poi nt or end point", and 
that "administration may comprise a continuum of steps and acts, some of which may pre-date or 
post-date the step or act of administration that is considered by a panel at the time of establishment of that panel."
449  On this basis, the Panel concluded that "the steps and acts of administration that pre-
date or post-date the establishment of a panel ma y be relevant to determining whether or not a 
violation of Article X:3(a) of the GATT 1994 exists at the time of establishment." 
186. We agree with the conclusion of the Panel that "the steps and acts of administration that pre-
date or post-date the establishment of a panel ma y be relevant to determining whether or not a 
violation of Article X:3(a) of the GATT 1994 exists at the time  of establishment."450  We are, 
however, of the view that the reasoning that led the Panel to this conclusion is incorrect.   
                                                      
446Appellate Body Report, US – Upland Cotton , para. 263. 
447See Appellate Body Report, Chile – Price Band System , para. 139;  Appellate Body Report, EC – 
Chicken Cuts , para. 156;  and Appellate Body Report, US – Upland Cotton , para. 263. 
448(original emphasis)   
449(footnote omitted)   
450Panel Report, para. 7.37.  WT/DS315/AB/R 
 Page 75 
 
 
 187. In our opinion, the Panel's reasoning is incorrect to the extent that the Panel assumed that the 
measure at issue is the  manner of administration .451  As we concluded earlier, the measure at issue in 
this dispute is not the  manner of administration   but, rather, the legal instruments identified in the 
first paragraph of the panel request, as administered collectively or as a whole.  In the light of the 
principles set out by the Panel in paragraph 7.36  of the Panel Report, the Panel's review should 
therefore have focused on these legal instruments as they  existed and were administered at the time of 
establishment of the Panel.   
188. In order to determine whether the measures at i ssue have been administered at the time of the 
Panel's establishment in a manner that is incons istent with Article X:3(a) of the GATT 1994, the 
Panel was, however, entitled to rely on  evidence  of acts of administration.  Thus, it is important to 
distinguish between, on the one hand, the measur es at issue and, on the other hand, acts of 
administration that have been presented as evidence to substantiate the claim that the measures at 
issue are administered in a manner inconsistent with Article X:3(a) of the GATT 1994.  The Panel 
failed to make the distinction between  measures   and pieces of  evidence .  While there are temporal 
limitations on the measures that may be within a pa nel's terms of reference, such limitations do not 
apply in the same way to eviden ce.  Evidence in support of a claim challenging measures that are 
within a panel's terms of reference may pre-date or post-date the establishment of the panel.  A panel 
is not precluded from assessing a piece of evidence for the mere reason that it pre-dates or post-dates its establishment.
452  In this case, the United States was not precluded from presenting evidence 
relating to acts of administration before and after th e date of Panel establishment.  A panel enjoys a 
certain discretion to determine the relevance and pr obative value of a piece of evidence that pre-dates 
or post-dates its establishment.   
189. We therefore uphold , albeit for different reasons, the Pane l's interpretation, in paragraph 7.37 
of the Panel Report, that "the steps and acts of  administration that pre-date or post-date the 
establishment of a panel may be relevant to determin ing whether or not a violation of Article X:3(a) 
of the GATT 1994 exists at the time of [panel] establishment." 
                                                      
451As we explained above, we disagree with the Panel' s interpretations of Article 6.2 of the DSU and its 
reading of the panel request that led the Panel to this assumption.   
452However, we recall that, in US – Cotton Yarn , the Appellate Body stated (when reviewing a textile 
safeguards determination) that a Member cannot be expected to examine "evidence that did not exist and that, 
therefore, could not possibly have been taken into account when the Member made its determination.  ...  
Consequently, a panel must not consider evidence which did not exist  at that point in time ." (Appellate Body 
Report, US – Cotton Yarn , paras. 77 and 78 (original emphasis;  footnote omitted))  We also note the Appellate 
Body's statement in  EC – Sardines  that "[t]he interim review stage is not an appropriate time to introduce new 
evidence." (Appellate Body Report, EC – Sardines , para. 301) WT/DS315/AB/R 
Page 76  
 
 V. Claims regarding Article X:3(a) of the GATT 1994 
A. Administration of European Communities Cu stoms Law through Penalty Provisions 
and Audit Procedures of Member States 
1. Whether the Substantive Content of a Legal Instrument May Be Challenged 
under Article X:3(a) of the GATT 1994  
190. We now turn to the question whether the Panel e rred in finding that the term "administer" in 
Article X:3(a) of the GATT 1994 relates to the appl ication of laws and regulations, but not to laws 
and regulations themselves, and wh ether, consequently, the Panel erred in finding that divergent 
penalty provisions and audit procedures found in me mber States of the Eur opean Communities are not 
inconsistent with Article X:3(a) of the GATT 1994.  We first address the Panel's interpretation of the 
term "administer".  Subsequently, we address the qu estion of differences in penalty provisions and 
audit procedures among the member States. 
191. The Panel found that the text of Article X:3(a)  does not contemplate the possibility that laws 
and regulations can  simultaneously  qualify as laws, regulations, judicial decisions, and administrative 
rulings of the kind described in Article X:1 of the GATT 1994 and as acts of administration within the 
meaning of Article X:3(a).  The Panel concluded:  
[T]he term "administer" in Artic le X:3(a) of the GATT 1994 relates 
to the application of laws and re gulations, including administrative 
processes and their results but not to laws and regulations as such.453 
192. The Panel arrived at this interpretation after its analysis of the ordinary meaning of the term 
"administer":  
[T]here would appear to be nothing in the ordinary meaning of the 
term "administer" that would suggest that it covers laws and 
regulations as such .  On the contrary, the relevant dictionary 
definitions indicate that the term  "administer" refers to positive 
action or steps taken to put into effect measures such as laws and regulations, but not the laws a nd regulations themselves, which 
merely exist without effect until they are actually applied in 
practice.
454 (original emphasis) 
                                                      
453Panel Report, para. 7.119. 
454Ibid., para. 7.106.  WT/DS315/AB/R 
 Page 77 
 
 
 193. The Panel found that this understanding of Article  X:3(a) was confirmed by the context of the 
provision.  In the Panel's view, Article X of th e GATT 1994 contains a "due process theme", which 
suggests that the aim of Article X:3(a) is to ensure that traders are treated fairly and consistently when 
seeking to import from or export to a particular WTO Member.  In this respect the Panel concluded: 
[T]he term "administer" in Artic le X:3(a) of the GATT 1994 relates 
to the application  of laws in particular cases and, particularly, to 
administrative processes and their results , since the application of 
the obligation of uniformity (and, for that matter, the obligation of 
reasonableness and impartiality) to such processes and their result 
pursuant to Article X:3(a) of the GATT 1994, helps to ensure that traders are treated fairly and consistent ly.  ...  It is not clear that it 
should be inferred from this objective that Article X:3(a) of the GATT 1994 requires laws and regulations themselves to also be 
uniform, reasonable and impartial.
455 (original emphasis) 
194. On appeal, the United States contends that the Panel erred in its interpretation of the term 
"administer".  According to the United States, pena lty provisions and audit procedures of the member 
States of the European Communities are themsel ves acts of administration in the sense of 
Article X:3(a) and, therefore, divergences in th ese provisions and procedures from member State to 
member State, by themselves, constitute non-uniform  administration of customs laws in breach of 
Article X:3(a).456   
195. The European Communities submits that the Pa nel was correct to distinguish between the 
laws to be administered and the administration of those laws, and disagrees with the United States that 
laws themselves can constitute administration within  the meaning of Article X:3(a).  The European 
Communities maintain that it would be "incompatible w ith the internal logic, wording, and purpose of 
Article X [of the] GATT" to assume that a law or regulation of genera l application could be 
"executed" or "put into effect" by anothe r law or regulation of general application.457   
196. We begin our analysis by recalling the text of Article X:3(a) of the GATT 1994: 
Each Member shall administer in a uniform, impartial and reasonable 
manner all its laws, regulations, d ecisions and rulings of the kind 
described in paragraph 1 of this Article. 
                                                      
455Panel Report, para. 7.108. 
456United States' appellant's submission, para. 110. 
457European Communities' appellee's submission, paras. 209-210. WT/DS315/AB/R 
Page 78  
 
 197. With respect to the scope of Article X: 3(a), the Appellate Body stated in  EC – Bananas III :  
The text of Article X:3(a) clearly  indicates that the requirements of 
"uniformity, impartiality and reasonableness" do not apply to the laws, regulations, decisions and rulings  themselves , but rather to the 
administration  of those laws, regulations, decisions and rulings.  The 
context of Article X:3(a) within Article X, which is entitled "Publication and Administration of Trade Regulations", and a 
reading of the other paragraphs of Article X, make it clear that 
Article X applies to the administration  of laws, regulations, decisions 
and rulings.  To the extent that the laws, regulations, decisions and 
rulings themselves are discriminatory , they can be examined for their 
consistency with the relevant  provisions of the GATT 1994.
458 
(original emphasis) 
198. In  EC – Poultry , the Appellate Body made a reference to the above statement and concluded: 
[T]o the extent that Brazil' s appeal relates to the  substantive content   
of the [European Communities'] rules themselves and not to their publication  or administration , that appeal falls outside the scope of 
Article X of the GATT 1994.  The WTO-consistency of such substantive content must be determined by reference to provisions of the covered agreements other than Article X of the GATT 1994.
459 
(original emphasis) 
199. Thus, in  EC – Bananas III  and  EC – Poultry , the Appellate Body distinguished between, on 
the one hand, the laws, regulations, judicial d ecisions, and administrati ve rulings of general 
application set out in Article X:1 of the GATT 199 4 and, on the other hand, the administration of 
these legal instruments.  The Appellate Body reas oned that, as Article X:3(a) establishes disciplines 
on the  administration  of the legal instruments of the kind  described in Article X:1, claims 
concerning the  substantive content  of these Article X:1 legal instruments fall outside the scope of 
Article X:3(a).   
200. The statements of the Appellate Body in  EC – Bananas III  and  EC – Poultry  do not 
exclude, however, the possibility of challenging under Ar ticle X:3(a) the substantive content of a legal 
instrument that regulates the administration of a legal instrument of the kind described in Article X:1.  Under Article X:3(a), a distinction must be made between the legal in strument being administered and 
the legal instrument that regulates the application or implementation of that instrument.  While the 
substantive content of the legal instrument being administered is not challengeable under 
Article X:3(a), we see no reason why a legal in strument that regulates the application or 
                                                     
 
458Appellate Body Report, EC – Bananas III , para. 200. 
459Appellate Body Report, EC – Poultry , para. 115.  WT/DS315/AB/R 
 Page 79 
 
 
 implementation of that instrument cannot be examined under Article X:3(a) if it is alleged to lead to a 
lack of uniform, impartial, or reasonable administration of that legal instrument. 
201. This distinction has implications for the type  of evidence required to support a claim of a 
violation of Article X:3(a).  If a WTO Member challenges under Article X:3(a) the substantive 
content of a legal instrument that regulates the administration of a legal instrument of the kind described in Article X:1, it will have to prove that  this instrument necessar ily leads to a lack of 
uniform, impartial, or reasonable administration.  It is not sufficient for the co mplainant merely to cite 
the provisions of that legal instrument.  The comp lainant must discharge the burden of substantiating 
how and why those provisions necessarily lead to impe rmissible administration of the legal instrument 
of the kind described in Article X:1.  
2. Differences in Penalty Provisions and Audit Procedures  
 
202. We now turn to the question whether divergences in penalty provisions and audit procedures 
among member States necessarily lead to non-uniform administration in breach of Article X:3(a) of 
the GATT 1994.   
203. First, with respect to penalty provisions, the Panel observed that neither the Community 
Customs Code nor the Implementing Regulation defin es offences at the European Communities level.  
It further noted the statement by the Court of Jus tice of the European Communities (the "ECJ") in the 
case  José Teodoro de Andrade v. Di rector da Alfândega de Leixões that, "[as] regards customs 
offences, the [ECJ] has pointed out that in the ab sence of harmonization of the Community legislation 
in that field, the member States are empowered to choose the penalties which seem appropriate to 
them."460  The Panel then made a reference to its own interpretation of the term "administer" 
(summarized above) and concluded:  
For the purposes of Article X:3(a) of the GATT 1994, the substantive 
content of penalty laws of the member States used to enforce 
[European Communities] customs law cannot be viewed as acts of 
administration with respect to laws , regulations, decisions and rulings 
covered by Article X:1 of the GATT.  Therefore, substantive 
differences in penalty laws between member States cannot be considered to be in violation of Article X:3(a) of the GATT 1994.
461   
                                                      
460Panel Report, para. 7.443 (quoting case C-213/99, José Teodoro de Andrade v. Director da 
Alfândega de Leixões , [2000] ECR I-11083 (7 Decembe r 2000) (Exhibit US-31 submit ted by the United States 
to the Panel), para. 20). 
461Ibid., para. 7.444. WT/DS315/AB/R 
Page 80  
 
 204. Secondly, with respect to the question whethe r substantive differences in audit procedures 
among member States lead to non-uniform administration of the Community Customs Code and the 
Implementing Regulation in viola tion of Article X:3(a) of the GATT 1994, the Panel found no such 
violation in audit procedure requirements of Article 78(2) of the Community Customs Code
462, based 
on the following reasoning: 
[D]ivergences resulting from the ex ercise of discretion in the law 
being administered do not necessarily fall foul of Article X:3(a) of the GATT 1994 provided that the existence and exercise of discretion do not unduly compromise the underlying due process objective of Article X:3(a) of the GATT 1994 and do not render the trading 
environment insecure and unpredictable without just cause.
463 
205. The United States challenges the Panel's finding th at penalty provisions and audit procedures 
are not themselves acts of administration and, theref ore, divergences in those provisions or procedures 
cannot constitute a lack of uniform administration of European Communities customs law.464  With 
respect to penalty provisions, the United States subm its that, if divergences between individual acts of 
administration (for example, the imposition of different penalties for the same breaches of European Communities customs law) constitute non-uniform administration, then, a fortiori , divergences 
between the penalty provisions that govern the individual acts of administration carried out by 
different customs authorities must also constitute non-uniform administration.
465   
206. With respect to audit procedures, the United St ates submits that the Panel erred in limiting the 
scope of the United States' claim to the non-uniform administration of Article 78(2) of the 
Community Customs Code.  The United States furthe r submits that, even if the Panel had been  
correct in limiting its examination to Article 78( 2) of the Community Customs Code, the Panel's 
reasoning is based on an incorrect interpretation and a pplication of the term "administer" contained in 
                                                      
462Article 78(2) of the Community Customs Code provides: 
The customs authorities may, after releasing the goods and in order to 
satisfy themselves as to the accuracy  of the particulars contained in  
the declaration, inspect the commer cial documents and data relating  
to the import or export operations in respect of the goods concerned  
or to subsequent commercial operations involving those goods.  Such 
inspections may be carried out at the pr emises of the declarant, of any other 
person directly or indirectly involved  in the said operations in a business 
capacity or of any other person in possession of the said document and data 
for business purposes.  Those authorities may also examine the goods where 
it is still possible for them to be produced. 
463Panel Report, para. 7.434. 
464United States' appellant's submission, para. 109. 
465Ibid., para. 125.  WT/DS315/AB/R 
 Page 81 
 
 
 Article X:3(a) of the GATT 1994.  The United States su bmits that the error in the Panel's analysis is 
essentially the same as the error in its analysis of penalty provisions.  Therefore, the arguments 
presented by the United States in that context are e qually valid in the context of audit procedures.466   
207. In reply, the European Communities refers  to the binding principles of European 
Communities law, according to which penalties must  be effective, proportionate, and dissuasive467, 
and submits that these principles ensure uniform app lication of customs laws throughout the European 
Communities.  The European Communities also poi nts out that the United States has not provided 
concrete evidence concerning the nature and level of  sanctions set out in member States' laws for 
specific violations of customs provisions and thus has not established that, in practice, differences in penalty laws result in differences in the admi nistration of European Communities customs law.
468 
208. With respect to the administration of audit procedures, the European Communities submits 
that these claims are substantially different from the claims relating to differences in penalty 
provisions, because audit procedures "are not set out in [m]ember States' law".469  The European 
Communities asserts that uniform practice in this  respect is ensured by  the Community Customs 
Audit Guide.470  The European Communities also notes the discretionary character of Article 78(2) of 
the Community Customs Code and argues that the me re exercise of discretion in one way or another 
does not constitute non-uniform administration.471 
209. In our analysis, we first note the Panel's ob servation that the existence of differences among 
penalty provisions for violations of European Co mmunities customs law is not disputed between the 
parties.472  The parties confirmed this understanding at th e oral hearing.  We also recall the European 
                                                      
466United States' appellant's submission, para. 154. 
467European Communities' appellee's submission, paras. 202 and 222. 
468Ibid., paras. 221-232. 
469Ibid., para. 234. 
470Ibid., para. 237 (referring to the Community Customs Audit Guide, a framework for post-clearance 
and audit-based controls (Exhibit EC-90 submitte d by the European Communities to the Panel)). 
471Ibid., para. 241. 
472Panel Report, para. 7.444. WT/DS315/AB/R 
Page 82  
 
 Communities' assertion that, under European Communiti es customs law, sanctions for the violation of 
customs laws which member States provide must be effective, proportionate, and dissuasive.
473 
210. We already found that the substantive conten t of legal instruments that regulate the 
application or implementation of la ws, regulations, decisions, and admi nistrative rulings of the kind 
described in Article X:1 can be challenged under Article X:3(a).474  We therefore consider that the 
penalty laws of member States, as instruments of implementation of European Communities customs 
law, can be examined under Article X:3(a).  Howe ver, the United States must substantiate how and 
why divergences in penalty laws among member  States necessarily lead to non-uniform 
administration of European Communities customs law. 
211. In our view, differences in pena lty provisions, in and of themselves, do not necessarily lead to 
a violation of Article X:3(a).  Whether differences would lead to non-uniform administration depends 
on both the nature of the penalty provisions and the nature of the customs law provisions that they 
seek to enforce.  No ev idence was adduced by the United States be fore the Panel on either the degree 
of differences in the penalty provisions of the member  States or the impact of such differences in the 
enforcement of the provisions of Eu ropean Communities customs law.   
212. Furthermore, the effects of the differences in penalty provisions would need to be evaluated 
against the degree of uniformity in administrati on of European Communities customs law that is 
envisaged by Article X:3(a).  The effects of the differences among member States' laws on uniformity in the administration of European Communities custom s law has not been established.  Therefore, we 
do not need to address the question of what degree of uniformity in the administration of laws of the 
kind described in Article X:1 is required by Article X:3(a).
475 
213. The United States' case rests essentially on the pl ea that, if divergences in the individual acts 
of administration can constitute non-uniform administration, then, a fortiori , divergences in the 
penalty provisions that govern the individual acts of  administration carried out by different customs 
                                                      
473European Communities' appellee's submission, para.  202 (referring to Case C-68/88, 
Commission/Greece , [1989] ECR 2965, paras. 23-25 (Exhibit EC-38 submitted by the European Communities 
to the Panel);  similarly, Case C-326/88, Hansen , [1990] ECR I-2911, para. 17 (Exhibit EC-39 submitted by the 
European Communities to the Panel);  Case C-36/94, Siesse , [1995] ECR I-3573, para. 20 (Exhibit EC-40 
submitted by the European Communities to the Panel);  Case C-213/99, Andrade , [2000] ECR I-11083, 
paras. 19-20 (Exhibit US-31 submitted by the United States to the Panel);  as well as to a Council Resolution of 
29 June 1995 on the effective uniform application of Community law and on the penalties applicable for breaches of Community law in the internal market, Official Journal of the European Communities , C Series, 
No. 188, pp. 1-3 (22 July 1995) (Exhibit EC-41 submitted by the European Communities to the Panel)). 
474Supra , para. 200. 
475We note that this question is not before us, as neither the United States nor the European 
Communities has appealed the Panel's findings relating to the interpretation of the term "uniform" in 
Article X:3(a) of the GATT 1994.  WT/DS315/AB/R 
 Page 83 
 
 
 authorities must also constitute non-uniform ad ministration.  This argument presupposes that 
differences between individual acts of administration are a reflection of differences between the 
penalty provisions.  However, in  our view, this need not always be the case.  The differences may 
stem as well from the exercise of discretion in  the application of the law and the specific 
circumstances of the case.   
214. The United States has not provided concrete exam ples of the application of penalty provisions 
in member States that demonstrate non-uniform administration of European Communities customs 
law.  The United States referred only to a single sentence in the European Commission document "An Explanatory Introduction to the modernized Customs Code", which reads:   
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.
 476 
Clearly, this single sentence is not sufficient.  Thus, the United States has not established that the 
mere existence of differences in penalty provisions among member States, in and of themselves, has led to non-uniform administration of European Communities customs law.   
215. With respect to differences in audit pro cedures among member States of the European 
Communities, we note at the outset that Article 78(2) of the Community Customs Code empowers 
customs authorities to conduct audits following the release of goods for free circulation, but it does 
not oblige them to do so.
477  We are also aware that a certain degree of uncertainty as to when and 
under what conditions an audit will be carried out is  in the interest of sound customs administration 
and must be accepted by traders as part of a normal customs regime.478   
216. As we indicated in relation to  penalty laws, the mere existence of differences in the laws 
themselves is not sufficient to show a breach of the uniformity requirement in Article X:3(a) with respect to the administration of European Communiti es customs law.  In order to establish its claim, 
the United States would have had to show that diffe rences in audit procedures necessarily lead to non-
uniform administration of European Communities cust oms law in particular cases.  In our view, the 
United States did not make such a demonstration before  the Panel.  Different results in the application 
of a law or provision do not necessarily reflect non-uni form administration of the law itself, but may 
                                                     
 
476United States' appellant's submission, para. 123 (quoting European Commission document 
Directorate-General for Taxation and Customs Union, TAXUD/447/2004 Rev 2, An Explanatory Introduction 
to the modernized Customs Code (24 February 2005) (Exhibit US-32 submitted by the United States to the 
Panel), p. 13). 
477Panel Report, para. 7.429. 
478Ibid., para. 7.432. WT/DS315/AB/R 
Page 84  
 
 stem as well from the exercise of discretion in the app lication of the law or circumstances of the case.  
The United States did not submit to the Panel any concrete example of the application of audit 
procedures that led to non-uniform administration of European Communities customs law.   
217. In the light of the above, we  reverse   the Panel's finding, in paragraph 7.119 of the Panel 
Report, that, without exception, Article X:3(a) of the GATT 1994 always relates to the application of 
laws and regulations, but not to laws and regulations as such.
479  In our view, the possibility of 
challenging under Article X:3(a) the substantive c ontent of a legal instrument that regulates the 
administration of a legal instrument of the kind descr ibed in Article X:1 cannot be excluded.  Yet, we 
consider that the Panel did not err when it foun d that differences in penalty provisions and audit 
procedures, themselves, do not establish a breach of the uniformity requirement in Article X:3(a) of the GATT 1994.  We therefore  uphold  the Panel's conclusions, in para graphs 7.434, 7.444, 8.1(d)(i), 
and 8.1(d)(ii) of the Panel Report, that substantiv e differences in penalty la ws and audit procedures 
among the member States of the European Communities alone do not constitute a violation of Article X:3(a) of the GATT 1994.   
B. The Administrative Process and the Requiremen t of Uniformity in Article X:3(a) of 
the GATT 1994 
218. We now turn to the question whether Article X:3(a) of the GATT 1994 requires uniformity of 
administrative processes. 
219. The Panel found that the term "administer" in Article X:3(a) of the GATT 1994 relates to the 
application of laws and regu lations, including administrative processes and their results.
480  The Panel 
reasoned that the ordinary meaning of this term implies that it "covers the  application   of laws, 
regulations, decisions and rulings in particular cases"481 and that "the application of a law in a 
particular case encompasses the  administrative process   entailed in that application, because the 
administrative process represents the series of steps,  actions or events that are taken or occur in 
pursuance of what is required by the law in question."482  The Panel added that "the application of a 
law in a particular case encompasses the  results of administrative processes ... because [they] are the 
final manifestation of the application of a law in a particular case."483   
                                                      
479Panel Report, para. 7.119. 
480Ibid., para. 7.113. 
481Ibid., para. 7.104. (original emphasis) 
482Ibid., para. 7.105. (original emphasis;  footnote omitted) 
483Ibid. (original emphasis)  WT/DS315/AB/R 
 Page 85 
 
 
 220. Moving to contextual interpretation, the Panel noted  that "[t]he title as well as the content of 
the various provisions of Article X of the GATT 1994 in dicate that that Article, at least in part, is 
aimed at ensuring that due process is accorded  to traders when they import or export."484  For the 
Panel, "[t]he due process theme underlying Article X of the GATT 1994" ultimately suggests that "the term 'administer' in Article X:3( a) of the GATT 1994 relates to the  application   of laws in particular 
cases and, particularly, to  administrative processes and their results , since the application of the 
obligation of uniformity (and, for that matter, the obligations of reasonableness and impartiality) to 
such processes and their results pursuant to Article  X:3(a) of the GATT 1994, helps to ensure that 
traders are treated fairly and consistently."
485 
221. In its other appeal, the European Communiti es considers that the Panel's reasoning is 
incorrect because it implies that "the  obligation of uniform administration in Article X:3(a) [of the] 
GATT does not only apply to the outcomes of administration, but also to 'administrative 
processes'."486  For the European Communities, Article X:3( a) does not require that the administrative 
process  "must be fully uniform in all cases and respects".487  The European Communities also 
emphasizes that, "[i]n most administrations, pr ocedures are not fully regulated or harmonised."488  The 
European Communities doubts that total uniformity of  administrative procedures is required in order 
to ensure that traders are treated fairly and consistently.489  In the view of the European Communities, 
whether the requirement of uniformity in Article X: 3(a) is fulfilled should be evaluated primarily on 
the basis of the administrative outcome.490  The European Communities ar gues that "[a]part from the 
case that the administrative process is regulated in  laws or regulations of general application 
themselves, the obligation of uniform administration only extends to the administrative process to the 
extent that the administrative process has a dir ect and significant impact on the outcome of the 
process."491  Accordingly, the European Communities re quests the Appellate Body to reverse the 
Panel's finding that Article X:3(a) of the GATT 1994 requires uniformity of administrative processes 
irrespective of their impact on the uniform administration of the laws covered by Article X:1 of the 
GATT 1994.492 
                                                      
484Panel Report, para. 7.107. 
485Ibid., para. 7.108. (original emphasis) 
486European Communities' other appellant's submission, para. 73. 
487Ibid., para. 76. 
488Ibid., para. 78. 
489Ibid. 
490Ibid., para. 81.  
491Ibid. 
492Ibid., para. 82. WT/DS315/AB/R 
Page 86  
 
 222. The United States disagrees with the European Communities' view that "the obligation of 
uniform administration only extends to the administ rative process to the extent  that the administrative 
process has a direct and significant impact on the outcome of the process."
493  The United States 
points out that the European Communities failed to explain what it means by "administrative outcome" and how to distinguish administrative outcomes from administrative processes.
494  For the 
United States, the exclusion of administrative pro cesses from the obligation of uniform administration 
has no basis in the text of Article X:3(a).495  The United States considers that the European 
Communities' approach is too restrictive and wo uld imply that significant areas of customs 
administration could be carried out in a non-uni form manner without breaching Article X:3(a).496  
According to the United States, whether requiri ng uniformity of administrative processes under 
Article X:3(a) would exclude de minimis variations in the administration of customs law is not an 
issue that arises in this dispute.497  Indeed, the United States mainta ins that, where the Panel found 
divergences in administrative processes inconsiste nt with Article X:3(a), the divergences were 
material to traders' decisions to convey goods in to the European Communities through one region 
rather than through another.498    
223. We first address the European Communities'  contention that the Panel found that 
Article X:3(a) of the GATT 1994  requires  uniformity of the administrative processes.499  We do not 
see such a finding in the Panel Report.  The Panel f ound that the term "administer" in Article X:3(a)  
relates  to administrative processes500, but it did not find that Article X.3(a)  requires   uniformity as 
regards administrative processes. 
224. We turn to the question of whether the term "administer" in Article X:3(a) may include 
administrative processes and whether it requires uni formity of administrative processes.  We agree 
with the Panel that the term "administer" may in clude administrative processes.  In its broadest  
sense, an administrative process may be understood as a series of steps, actions, or events that are 
taken or occur in relation to the making of an admi nistrative decision.  Given this broad definition of 
administrative process, it appears to us that Artic le X:3(a) of the GATT 1994 does not contemplate 
uniformity of administrative processes.  In ot her words, non-uniformity or differences in 
                                                      
493European Communities' other appellant's submission, para. 81. 
494United States' appellee's submission, paras. 53-54.  
495Ibid., para. 55. 
496Ibid., para. 58. 
497Ibid., paras. 60-61. 
498Ibid., para. 61.  
499European Communities' other appellant's submission, heading IV.B. 
500Panel Report, para. 7.119.  WT/DS315/AB/R 
 Page 87 
 
 
 administrative processes do not, by themselves, constitute  a violation of Article X:3(a).  This Article 
contains an obligation to administer in a uniform manner legal instruments of the kind described in 
Article X:1—laws, regulations, judicial decisions, a nd administrative rulings of general application 
pertaining to the subject matters set out in that pr ovision.  We agree with the Panel that the term 
"administer" in Article X:3(a) refers to  putting into practical  effect , or  applying , a legal instrument of 
the kind described in Article X:1.501  Thus, under Article X:3(a), it is the  application   of a legal 
instrument of the kind described in Article X:1 th at is required to be uniform, but not the processes 
leading to administrative decisions, or the tools that mi ght be used in the exercise of administration.   
225. This does not mean that the characteristics of  an administrative process are irrelevant for 
purposes of assessing whether a legal instrument of the kind described in Article X:1 is uniformly applied or put into practical effect in particular cases.  The features of an administrative process that 
govern the application of a legal instrument of the kind described in Article X:1 may constitute 
relevant evidence for establishing uniform or non-unifo rm administration of that legal instrument.  
The probative value of such evidence will, how ever, depend on the circumstances of each case and 
will necessarily vary from case to ca se.  Thus, we may conceive of cases where a panel might attach 
much weight to differences that exist at the leve l of the administrative processes, because it considers 
these differences to be so significant that they ha ve caused, or are likely to cause, the non-uniform 
application of the legal instrument at issue.  On  the other hand, a panel might conclude, after an 
overall assessment of the evidence, that the consistent  nature of the results of the application of the 
legal instrument shows that the measure at issue is administered in a uniform manner, even though 
differences may exist at the level of the administrative process. 
226. As the term "administer" in Article X:3(a) ma y include the administrative processes, evidence 
relating to the features of an administrative process can be adduced in support of a claim of a violation 
of Article X:3(a).  However, in order to substan tiate a claim of violation based on an administrative 
process, it is not sufficient that the complainant me rely recites the features of the administrative 
processes;  it will also have to show how and why tho se features necessarily lead to a lack of uniform, 
impartial, or reasonable administration of a legal instrument of the kind described in Article X:1. 
227. In the light of the foregoing consideration, we  uphold  the Panel's finding, in paragraph 7.119 
of the Panel Report, that the term "administer"  in Article X:3(a) of the GATT 1994 may include 
administrative processes that put into effect the lega l instruments of the kind described in Article X:1 
of the GATT 1994.  We also find that Article X:3(a) of the GATT 1994 does not require uniformity of administrative processes. 
                                                     
 
501Panel Report, para. 7.104. WT/DS315/AB/R 
Page 88  
 
 C. The Administrative Process Leading to the Ta riff Classification of Blackout Drapery 
Lining 
228. We address next the question whether the Panel erred in finding that the European 
Communities has violated Article X:3(a) of th e GATT 1994 with respect to "the administrative 
process leading to the tariff classifi cation of blackout drapery lining".
502 
229. Regarding the tariff classification of blackout drapery lining, the Panel did not find that the 
divergent classification decisions by, on the one hand, the German customs authorities and, on the 
other hand, the customs authorities in the Unite d Kingdom, Ireland, the Netherlands, and Belgium 
amounted to non-uniform administration in viol ation of Article X:3(a) of the GATT 1994.503  
However, the Panel noted that the "United States has also implicitly challenged the administrative 
process  that led to divergent classification decisions regarding blackout drapery lining"504, and went 
on to assess the consistency with Article X:3(a) of the administrative process followed by the German 
customs authorities.  Relying on decisions and letters in two cases, the Bautex-Stoffe GmbH case ("Bautex") and the Ornata GmbH case
 505, the Panel found that, with respect to the tariff classification 
of blackout drapery lining, the German customs au thorities relied on an interpretative aid that is 
particular to Germany506 and that is not contained in the relevant chapters of the Common Customs 
Tariff.507  The Panel also noted that it "has not been provided with any evidence to indicate that any 
other member States are relying upon an aid akin to  that used by the German customs authorities with 
respect to the tariff classification of blackout drapery lining."508  For the Panel:  
... a system of customs administration which allows or, at least, does 
not prevent customs authorities from unilaterally relying upon 
interpretative aids in carrying out their functions, which are not 
provided for in the binding rules app licable to all customs authorities, 
such as in the European Communities, could lead to non-uniform administration in violation of Article X:3(a) of the GATT 1994 in certain circumstances.
509  
                                                      
502Panel Report, para. 7.276. 
503Ibid., para. 7.265. 
504Ibid. (original emphasis) 
505Ibid., paras. 7.268-7.270. 
506Ibid., para. 7.268. 
507Ibid., para. 7.271. 
508Ibid. 
509Ibid., para. 7.267.  WT/DS315/AB/R 
 Page 89 
 
 
 On this basis, the Panel concluded that "t he German customs authorities' reliance upon the 
interpretative aid in question amounts to non-uniform ad ministration in violation of Article X:3(a) of 
the GATT 1994."510 
230. The Panel also observed: 
[A] customs administration system which does not require  reference 
by customs authorities to decisions taken by other customs authorities operating within the same system and/or cooperation between customs authorities before cu stoms decisions are taken, such 
as in the European Communities,  could lead to non-uniform 
administration in violation of Article X:3(a) of the GATT 1994 in certain circumstances.
511 (original emphasis) 
Relying on decisions and letters in the Bautex ca se, the Panel found that German customs authorities 
failed to consider seriously classification decisions for blackout drapery lining by other customs authorities.  On this basis, the Panel concluded th at "the treatment by the German customs authorities 
of classification decisions for blackout drapery lining issued by other customs authorities amounts to 
non-uniform administration in violation of Article X:3(a) of the GATT 1994."
512 
231. The European Communities challenges in its other appeal the Panel's findings on the 
administrative process leading to the tariff classification of blackout drapery lining by the German customs authorities. The European Communities not es first that the Panel reached these findings 
"even though it also found that there was no ev idence of an actual divergence in the tariff 
classification of [blackout drapery lining]."
513  For the European Communities, the Panel erred 
because it overstepped its terms of reference by making findings with respect to expired measures, failed to make an objective assessment of the facts as required by Article 11 of the DSU, and 
misapplied the requirements in Article X:3(a) of the GATT 1994. 
232. The European Communities argues that the findings of the Panel regarding blackout drapery 
lining are outside its terms of reference because th ey are based exclusively on the reasoning of the 
decisions and letters of the German customs au thorities in two isolated cases.  The European 
Communities point out that the letter of the Main Customs Office Hamburg to Ornata GmbH dates 
from July 1998, the opinion of the ZPLA Hamburg in the Bautex case dates from February 2003, and 
the decision of the Main Customs Office Hamburg in the same case dates from September 2004.
514  
                                                      
510Panel Report, para. 7.271. 
511Ibid., para. 7.272. (footnote omitted) 
512Ibid., para. 7.275. 
513European Communities' other appellant's submission, para. 95. 
514Ibid., para. 106. WT/DS315/AB/R 
Page 90  
 
 For the European Communities, these decisions and lette rs are expired measures, relate to past cases, 
and do not produce any effects for the future.
515  
233. The European Communities contends that the desc ription of the facts made by the Panel with 
respect to the reliance by the German customs author ities on an interpretative aid that is particular to 
Germany does not correspond to an objective assessment  of the facts, as required by Article 11 of the 
DSU.516  According to the European Communities, the decision of the Main Customs Office Hamburg 
in the Bautex case and the letter of the Bremen Ma in Customs Office to Ornata GmbH do not contain 
any explicit reference to the interpretative aid alle gedly relied on by the German customs authorities, 
contrary to what the Panel suggested.517  With respect to the alleged failure of the German customs 
authorities to take into account the decisions of other customs authorities, the European Communities 
also contends that the assessment of the facts by th e Panel is flawed.  With respect to the statements 
made by the Bremen Main Customs Office a nd the Hamburg ZPLA regarding the classification 
decisions of other customs authorities, the European  Communities explains that these statements give 
no indication that these customs authorities wished to dismiss the relevance of the classification 
decisions of customs authorities of other member States.518  According to the European Communities, 
the Panel ignored a letter from the Main  Customs Office Hamburg to Ornata GmbH 519, which clearly 
illustrates that the German customs authorities do take into account the practice of other customs 
authorities concerning the classification of similar goods when they are made aware of them.520   
234. The European Communities considers that the Pa nel's findings are based on an assessment of 
the "motivation" of the decisions and letters that  were issued by the German customs authorities521, 
and that such reasoning cannot properly be rega rded as part of the "administrative process".522  In any 
event, not every divergence in the reasoning betw een the decisions of customs authorities could be 
regarded as amounting to non-uniform administration,  because a violation of that obligation caused by 
differences in administrative process can only be assumed to exist where a divergence has a direct 
impact on administrative outcomes.523  In the European Communities' view, Article X:3(a) does not 
require that the reasoning of decisions by customs au thorities be uniform, since this would be contrary 
                                                      
515European Communities' other appellant's submission, para. 107. 
516Ibid., para. 111. 
517Ibid., para. 112. 
518Ibid., para. 141. 
519Exhibit US-50 submitted by the United States to the Panel. 
520European Communities' other appellant's submission, paras. 120-121. 
521Ibid., paras. 126 and 138. 
522Ibid., paras. 127 and 138. 
523Ibid., paras. 128 and 138.  WT/DS315/AB/R 
 Page 91 
 
 
 to the very purpose of the "motivation", which is  to set out the reasons for the decision in the 
circumstances of the particular case.524     
235. The United States submits that the Panel did not err in its findings regarding the tariff 
classification of blackout drapery lining.  In th e United States' view, the European Communities 
attempts to reargue certain factual issues and, in so doing, misrepresents the relevant facts.525  
Regarding the European Communities' allegation th at the Panel was wrong to state that all the 
decisions or letters of the German customs author ities regarding the classifica tion of blackout drapery 
lining relied on the German interpretative aid, the United States points out that there was an explicit 
reference to that aid in the documents issued by the German customs authorities.526  The United States 
requests the Appellate Body not to disturb the Pane l's factual findings or reweigh the evidence that 
was before it.527 
236. The United States contends that the Panel correctly found that differences in the 
administrative processes leading to the classification of  blackout drapery lining were inconsistent with 
Article X:3(a).  The United States observes that th e Panel did not find that differences between the 
blackout drapery lining presented to the German customs authorities and the blackout drapery lining 
presented to other customs authorities justified differe nt tariff classifications;  but, rather, that there 
was an absence of evidence to support a finding of divergent tariff classifications in Germany, on the 
one hand, and in other member States, on the other hand.528  The United States ar gues that a finding of 
insufficient evidence of divergent classification decisi ons is not the same as a finding that different 
customs authorities correctly reached different tariff  classification decisions.  According to the United 
States, the distinction the European Communities seeks to draw between the "motivation" of a 
decision and "administrative processes" is unfounded.529 
237. The United States agrees with the Panel's findi ng that the German customs authorities failed 
to take into account the decisions of other custom s authorities in the European Communities regarding 
the classification of blackout drapery lining.530  According to the United States, the German customs 
authorities are not required to refer to decisions taken by other customs authorities operating within 
                                                      
524European Communities' other appellant's submission, para. 19. 
525United States' appellee's submission, para. 73. 
526Ibid., para. 80.  
527Ibid., para. 85. 
528Ibid., para. 90. 
529Ibid., para. 94. 
530Ibid., para. 107.  WT/DS315/AB/R 
Page 92  
 
 the same system of European Communities customs administration.
531  The United States considers it 
important that "the German customs authority by its own admission was aware of other authorities 
having classified 'comparable goods', yet gave s cant consideration to such classification and 
apparently undertook no in vestigation of those other authorities' findings."532 
238. At the outset of our analysis, we observe that the Panel reached what seem to be two opposite 
conclusions on the tariff classification of blackout drapery lining by the German customs authorities.  
On the one hand, the Panel found that the decisions  of the German customs authorities regarding the 
tariff classification of blackout drapery lining did not amount to non-uniform administration in violation of Article X:3(a) of the GATT 1994.  Inde ed, the Panel considered that, on the basis of the 
evidence before it, there was an objective factual b asis that justified the German customs authorities 
to classify the product in a manner different from that of customs authorities in other member 
States.
533  On the other hand, for the reasons we set out above, the Panel found that "the administrative 
process leading to the tariff classification of blackout drapery lining amounts to non-uniform administration within the meaning of Article X:3(a) of the GATT 1994."
534  As a result of this finding, 
the Panel ultimately concluded that there was "a violation of Article X:3(a) of the GATT 1994 with 
respect to the tariff classification of blackout drapery lining".535 
239. As we explained in Section V.B of this Report, the term "administer" may include 
administrative processes, but this does not mean that Article X:3(a) of the GATT 1994 requires  
uniformity of administrative processes.  In order to  find that an administrative process has led to non-
uniform administration of a measure under Article X: 3(a), a panel cannot merely rely on identifying 
the features of an administrative process that it may view as non-uniform;  a panel must go further and undertake an analysis to determine whether those features of the administrative process necessarily 
lead to non-uniform administration of a legal inst rument of the kind described in Article X:1.
536  
240. In this case, the Panel highlighted and criticized  the use by the German customs authorities of 
an interpretative aid that is particular to Germany 537, as well as the absence of any formal requirement 
for the customs authorities in Germany to refer to  the decisions of customs authorities of other 
                                                      
531United States' appellee's submission, para. 100 (quoting Panel Report, para. 7.272). 
532Ibid., para. 102. 
533Panel Report, para. 7.265. 
534Ibid., para. 7.276. 
535Ibid. 
536See our development on this issue in Section V.B of this Report. 
537Panel Report, paras. 7.267-7.271.  WT/DS315/AB/R 
 Page 93 
 
 
 member States when classifying blackout drapery lining.538  In this respect, we observe that the Panel 
viewed the resort to an interp retative aid that is particular to Germany and the absence of any 
requirement to refer to tariff classification decisions  issued in other member States as features of the 
administrative process that German customs au thorities follow in making tariff classification 
decisions regarding blackout drapery lining.  Irrespec tive of whether this characterization is correct, 
we note that the Panel did not explain how and why these two features of the administrative process 
would necessarily lead to non-uniform classification of blackout drapery lining.   
241. Indeed, as we noted earlier, the Panel found that  the divergent decisions regarding the tariff 
classification of blackout drapery lining by, on the one hand, the German customs authorities and, on the other hand, customs authorities in other member States were justified by an "objective factual 
basis" and, therefore, did not amount to non-uniform administration, in violation of Article X:3(a) of 
the GATT 1994.
539  Given this opposite conclusion on the tari ff classification decisions of the German 
customs authorities on blackout drapery lining, we fail to see how, on the basis of the aforesaid two features of the administrative process, the Panel coul d have come to the conc lusion of a violation of 
Article X:3(a) of the GATT 1994.
540   
242. Accordingly, we  reverse  the Panel's finding, in paragraphs 7.276 and 8.1(b)(iv) of the Panel 
Report, that the administrative process leading to the tariff classification of blackout drapery lining amounts to non-uniform administration within the m eaning of Article X:3(a) of the GATT 1994, and 
that the European Commun ities has violated Article X:3(a) of the GATT 1994 with respect to the 
tariff classification of blackout drapery lining. 
243. The European Communities also claims that th e Panel's findings regarding the administrative 
process leading to the tariff classification of black out drapery lining were not based on an objective 
assessment of the facts as required by Article 11 of the DSU.  As we concluded that the Panel erred in finding a violation of Article X:3(a) of the GATT 1994 with respect to the tariff classification of 
blackout drapery lining, we do not consider it necessar y, for purposes of resolving this dispute, to rule 
on whether the Panel's findings regarding the admi nistrative process in question were based on an 
objective assessment of the facts, as required by Article 11 of the DSU. 
                                                     
 
538Panel Report, paras. 7.272-7.275. 
539Ibid., para. 7.265. 
540Ibid., para. 7.276. WT/DS315/AB/R 
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 D. Tariff Classification of Liquid Crystal Disp lay Flat Monitors with a Digital Video 
Interface 
244. We now turn to the question whether the Panel erred in finding that the European 
Communities has violated Article X:3(a) of the GA TT 1994 with respect to the tariff classification of 
liquid crystal display ("LCD") flat monito rs with digital video interface ("DVI"). 
245. This issue concerns the tariff classification of LCD monitors with DVI that are shipped 
separately from computers.  For these monitors, the qu estion is whether they are to be classified as 
computer monitors or as video monitors.  Video monitors fall under heading 8528 of the European Communities' Common Customs Tariff and are subject  to a duty rate of 14 per cent.  Computer 
monitors fall under heading 8471 of the Common Cu stoms Tariff and are imported duty-free (as they 
are subject to the Information Technology Agr eement).  The classification of these monitors has 
acquired significance as a result of the increasing te chnological developments and the convergence of 
information technology and consumer electronics.  Be fore the Panel, the United States challenged the 
divergence in the tariff classification of LCD mon itors with DVI among the customs authorities of the 
member States of the European Communities. 
246. The Panel found that "the tariff classification of LCD monitors with DVI amounts to non-
uniform administration within the meaning of Article X:3(a) of the GATT 1994."
541  The Panel relied 
on a divergence in the tariff classification of th is product between, on the one hand, the customs 
authorities in the Netherlands, which classified LC D monitors with DVI as video monitors under 
heading 8528, and, on the other hand, customs aut horities in other member States, which classified 
this product as computer monitors under heading 8 471.  The Panel also noted that the European 
Communities did not "appear to dispute" the existence of this divergence.542  The European 
Communities argued before the Panel that certai n actions had been taken by the European 
Communities since 2004 to resolve the divergence in the tariff classification of LCD monitors with 
DVI among customs authorities of the member St ates.  After analyzing the evidence placed 
                                                      
541Panel Report, para. 7.305. 
542Ibid., para. 7.294.  WT/DS315/AB/R 
 Page 95 
 
 
 before it 543, the Panel concluded that "t he action taken by the European Communities has not had the 
effect of rectifying the divergence in the tariff classification of LCD monitors with DVI among 
customs authorities of the member States."544 
247. The Panel further noted "the existence of a draft Regulation [2171/2005] concerning the 
classification of LCD monitors contained in Exhibit EC-163".545  The Panel took the view that, "at the 
time the Panel issued its Interim Report to the par ties, the Panel had not been provided with evidence 
to indicate that that draft regulation had the effect of removing [the] divergence in tariff classification 
of such monitors which became evident in 2004."546 
248. In its comments on the Interim Report, the Eur opean Communities indicated to the Panel that 
the draft Regulation contained in Exhibit EC-163 had been adopted as Commission Regulation (EC) 
No. 2171/2005 ("EC Regulation 2171/2005") on 23 December 2005.  It also informed the Panel that, 
following the adoption of that Regulation, the decree of 8 July 2005 issued by the Dutch customs 
authorities had been withdrawn and the German Bi nding Tariff Information ("BTI") dated 19 July 
2005 had ceased to be valid.547  These comments of the European Communities at the interim review 
stage were supported by three new exhibits.548  The Panel declined to consider these exhibits on the 
ground that "the terms of Article 15.2 preclude[d] [it] from taking into consideration evidence which 
is not reflected in the Interim Report." 549 
                                                      
543This evidence included: 
- Council Regulation (EC) No. 483/2005 of 16 March 2005 (Exhibit US-62 submitted by the United 
States to the Panel);   
- Commission Regulation (EC) No. 634/2005 of 26 April 2005 (Exhibit EC-85 submitted by the 
European Communities to the Panel);   
- an opinion of the Customs Code Committee taken at its 346th Meeting of 30 June–2 July 2004 
(European Communities' first written submissi on to the Panel, para. 353);  and   
- Tariff Notice 13/04 issued by th e customs authority of the United Kingdom (according to the Panel, 
apparently published following the issuance of the opinion of the Customs Code Committee);  the 
decree of 8 July 2005 issued by the Dutch customs authority;  and a BTI dated 19 July 2005 issued by the German customs authority;  Letters re spectively dated 2 September 2005 and 6 December 
2005 from the Director-General of the European Information, Communications and Consumer 
Electronics Technology In dustry Associations (EICTA) to a high-ranking official of the European 
Commission (Exhibits US-76, US-77, US-78, US-7 5, and US-81, respectively, submitted by the 
United States to the Panel). 
544Panel Report, para. 7.304. 
545Ibid., footnote 580 to para. 7.305.  
546Ibid. 
547European Communities' comments on the Interim Panel Report, paras. 67 and 69. 
548Exhibits EC-167, EC-168, and EC-169 submitted by the European Communities to the Panel. 
549Panel Report, para. 6.6. WT/DS315/AB/R 
Page 96  
 
 249. In its other appeal, the European Communities ch allenges the Panel's finding that "the tariff 
classification of LCD monitors with DVI amounts to non-uniform administration within the meaning 
of Article X:3(a) of the GATT 1994."
550  For the European Communities, the Panel "overstepped its 
terms of reference by basing its findings of violation primarily on instances of administration which post-date its establishment".
551  Specifically, the European Commun ities refers to the Dutch decree of 
8 July 2005 and the German BTI of 19 July 2005.552  The European Communities also argues that the 
Panel did not make an objective assessment of th e facts, as required by Article 11 of the DSU, 
because "the Panel did not have an y evidence before it to support a finding that at the time of its 
establishment, there was a lack of uniform administ ration with regard to the tariff classification of 
LCD monitors."553  The European Communities contends th at, "apart from one inconclusive press 
release by a law firm, the United States did not provide any evidence as to the [European 
Communities'] classification practice prior to the Panel's establishment."554 
250. The European Communities considers that the Panel erred in finding a violation of 
Article X:3(a), even assuming that it was justified to  consider "instances of  administration which post-
dated ... its establishment".555  For the European Communities, uniformity under Article X:3(a) must 
be "established within a reasonable period of time"556, and maintains that this has been achieved with 
the adoption of EC Regulation 2171/2005 on 23 Dece mber 2005, as well as with the withdrawal, in 
January 2006, of the Dutch decree and the German BTI.557  In this respect, th e European Communities 
asserts that the Panel erred in failing to take in to account draft EC Regula tion 2171/2005.  In the 
European Communities' view, a regulation should no t be ignored simply because it has not yet been 
adopted.558  The European Communities also argues that the Panel erred in rejecting the evidence 
contained in exhibits provided by the Europ ean Communities at the interim review stage.559  Rejecting 
this evidence was not in accordan ce with Article 15.2 of the DSU because the evidence related to 
precise aspects of the Interim Report.560  The European Communities,  therefore, requests the 
                                                      
550Panel Report, para. 7.305. 
551European Communities' other appellant's submission, para. 150. 
552Ibid., para. 166 (referring to Exhibits US-77 and US-7 8 submitted by the United States to the Panel). 
553Ibid., para. 182. 
554Ibid., para. 21. 
555Ibid., para. 183. 
556Ibid., para. 185. 
557Ibid., para. 186. 
558Ibid., para. 190. 
559The European Communities refers to Exhibits EC-167, EC-168, and EC-169 submitted to the Panel. 
560European Communities' other appellant's submission, para. 197.  WT/DS315/AB/R 
 Page 97 
 
 
 Appellate Body to "reverse the Panel's decision in pa ragraph 6.6 of the [Panel Report] not to admit the 
evidence contained in Exhibits EC-167, EC-168 and EC-169."561 
251. The United States contends that the European Communities' other appeal misrepresents key 
facts and ignores the distinction between administration and evidence of administration.  The United States also disagrees with the Eur opean Communities' argument that the Panel erred by declining to 
consider new evidence introduced on ly at the interim review stage.
562 
252. In the United States' view, the Panel made an objective assessment of the facts when it found 
that, in 2004, the European Communities acknowledge d that tariff classification of LCD monitors 
with DVI was not uniform.563  The United States emphasizes that it had established this fact before the 
Panel and that various statements made by the European Communities in the course of the Panel 
proceedings suggested that "the [European Commun ities] was aware of the issue and was working to 
address it."564  The United States observes that the Eur opean Communities argued before the Panel 
that three steps were taken by European Commun ities institutions in order to address the non-uniform 
classification of LCD monitors with DVI (namel y, "the June/July 2004 Customs Code Committee 
'conclusions', the EU Council duty suspensi on regulation and EU Commission Regulation 
634/2005").565  The Panel analyzed each of these measures and found that none of them resolved the 
problem of non-uniform administration.566 
253. For the United States, the Panel did not overstep its terms of reference by referring to acts of 
administration that post-dated the Panel's establishm ent, because the Panel referred to these acts as 
evidence of the manner of administration at the time of Panel establishment that is alleged to be 
inconsistent with Article X:3(a).  According to th e United States, the Dutch decree of 8 July 2005 and 
the German BTI of 19 July 2005 are relevant evid ence supporting the Panel's finding that "measures 
put into place since 2004 have not resolved the pr oblem of non-uniform administration and may well 
have increased confusion."567  The United States contends that th e Panel was correct to attribute no 
weight to draft EC Regulation 2171/2005 on LCD mon itors and declined to consider new evidence 
                                                      
561European Communities' other appellant's submission, para. 201. 
562United States' appellee's submission, para. 108.  
563Ibid., para. 109. 
564Ibid., para. 110. 
565Ibid., para. 117. 
566Ibid., para. 123 (referring to European Communitie s' first written submission to the Panel, 
paras. 351-353, 356, and 361). 
567Ibid., para. 126 (referring to Panel Report, para. 7.300). WT/DS315/AB/R 
Page 98  
 
 introduced by the European Communi ties at the interim review stage.
568  Regarding the Panel's 
decision not to consider new evidence introduced at  the interim review stage, the United States 
underlines that the interim review stage is not an appropriate time to introduce new evidence, and 
disagrees with the European Communities' assertion that there should be an exception for evidence 
introduced to correct errors of fact.569 
254. As we explained above, had the Panel properly identified the measures at issue, its task would 
have been to determine whether the measures at issu e had been administered collectively in a uniform 
manner at the time the Panel was established 570, that is to say, in March 2005.  In order to make this 
determination, the Panel could rely on  evidence  that pre-dated or post-da ted the time of the Panel's 
establishment to the extent that it was evidence rele vant for the assessment of whether the European 
Communities acted consistently with Article X:3(a) at the time of the Panel's establishment.571  In our 
view, the Panel did not err in referring, in its analysis, to "evidence related to instances of 
administration which occurred after its establishment"572, because this evidence was relevant to the 
task of determining whether there was a violation of Article X:3(a) at the time of the establishment of 
the Panel.  The Dutch decree of 8 July 2005 and the German BTI of 19 July 2005 had come into 
existence within a short time after the establishm ent of the Panel.  In our view, it was not 
unreasonable for the Panel to consider that this  evidence was relevant for assessing how the measures 
at issue were administered at the time the Panel was established.  Accordingly, we reject the European 
Communities' argument that the Panel "overstepped its  terms of reference by basing its findings of 
violation primarily on instances of administ ration which post-date its establishment."573 
255. Another point raised by the European Communitie s' other appeal is whether the Panel failed 
to make an objective assessment of the facts, as requ ired by Article 11 of the DSU, because it did not 
have any evidence before it to support a finding that , at the time of the establishment of the Panel, 
there was a lack of uniform administration with re gard to the tariff classification of LCD monitors 
with DVI.  However, the Panel Report shows that the Panel did analyze various pieces of evidence 
and came to the conclusion that the divergence in  tariff classification of LCD monitors with DVI, 
                                                      
568United States' appellee's submission, paras. 128, 132, and 140 (referring, inter alia , to Exhibits 
EC-167, EC-168, and EC-169 submitted by the European Communities to the Panel). 
569Ibid., paras. 134-136 (referring to Appellate Body Report, EC – Sardines , para. 301). 
570See Section IV.D of this Report.  As we concluded in Section IV.B, the measures at issue in this 
dispute are the Community Customs Code, the Implementing Regulation, the Common Customs Tariff, and the 
TARIC, as administered   collectively. 
571See Section IV.D of this Report. 
572European Communities' other appellant's submission, para. 166. 
573Ibid., para. 150.  WT/DS315/AB/R 
 Page 99 
 
 
 found to have existed in 2004, had not been subsequently rectified.574  The Panel's analysis of the 
evidence also shows that some confusion did indeed exist in 2004 and 2005 among customs 
authorities of the member States on the tariff classification of LCD monitors with DVI, and that this 
confusion might also have caused divergences in tariff classification.575 
256. Thus, it seems to us not correct to state, as the European Communities does, that "the Panel 
did not have any evidence before it   to support a finding that at the time of its establishment, there was 
a lack of uniform administration with regard to the tariff classification of LCD monitors."576  T h e  
Panel did analyze various pieces of evidence, a nd we see nothing in the Panel's examination, 
weighing, and analysis of the evidence relating to the tariff classification of LCD monitors with DVI 
that would amount to a violation of its duty to ma ke "an objective assessment of the facts" within the 
meaning of Article 11 of the DSU. 
257. Finally, we turn to the last question raised  by the European Communities' other appeal, 
namely, whether the Panel erred in failing to take into account draft EC Regulation 2171/2005, and in 
declining to consider Exhibits EC-167, EC-168,  and EC-169 submitted by the European Communities 
at the interim review stage. 
258. With respect to draft EC Regulation 2171/200 5, we disagree with the European Communities 
that the Panel did not consider this draft Regul ation.  Draft EC Regulation 2171/2005 was discussed 
by the Panel in footnote 580 to paragraph 7.305 of the Panel Report.  The European Communities 
might have wished the Panel had attached more wei ght than it did to this piece of evidence.  It is, 
however, well-established that the weighing of the ev idence is, in principle, within the discretion of 
the panel as the trier of facts.577  Thus, the Panel was "not required to accord to factual evidence of the 
parties the same meaning and weight as do the parties".578  We also recall that "a mere divergence of 
views between a party and a panel on the inferences  to be drawn from pieces of evidence is not a 
sufficient ground to conclude that the Panel failed to  'make ... an objective assessment of the facts of 
the case'."579 
259. With respect to Exhibits EC-167, EC-168, a nd EC-169 (which relate to the adoption of 
EC Regulation 2171/2005 and its con sequences), we are of the view that the Panel did not err in 
                                                      
574This evidence is presented  supra , footnote 543. 
575Panel Report, paras. 7.300-7.303. 
576European Communities' other appellant's submission, para. 182. (emphasis added) 
577See Appellate Body Report, EC – Bed Linen (Article 21.5 – India) , para. 181. 
578Appellate Body Report, Japan – Apples , para. 221;  Appellate Body Report, Australia – Salmon , 
para. 267. 
579Appellate Body Report, Dominican Republic – Import and Sale of Cigarettes , para. 84. WT/DS315/AB/R 
Page 100  
 
 declining to consider these pieces of evidence.
580  As the Appellate Body stated in  EC – Sardines , 
"[t]he interim review stage is not an a ppropriate time to introduce new evidence."581  The Panel's 
decision to decline to consider Exhibits EC-167, EC -168, and EC-169 appears to us to be in line with 
the Appellate Body's statement in  EC – Sardines   that "only ... 'precise aspects' of the [interim] report 
... must be verified during the interim review ... [a ]nd this ... cannot properly include an assessment of 
new and unanswered evidence."582  In any event, although Exhibits EC-167, EC-168, and EC-169 
might have arguably supported the view that unifo rm administration had been achieved by the time 
the Panel Report was issued, we fail to see how these exhibits showed uniform administration at the time of the establishment of the Panel.   
260. In the light of the above considerations, we  uphold  the Panel's finding, in paragraphs 7.305 
and 8.1(b)(v) of the Panel Report, that "[t]he tariff classification of  liquid crystal display monitors 
with digital video interface amounts to non-uniform administration within the meaning of 
Article X:3(a) of the GATT 1994." 
E. Administration of the Successive Sales Provision 
261. We now turn to the question whether the Eu ropean Communities' administration of the 
successive sales provision (Article 147(1) of the Implementing Regulation)
583 leads to a violation of 
Article X:3(a) of the GATT 1994 because some memb er States of the European Communities impose 
a "form of prior approval" requi rement while others do not. 
                                                      
580See Panel Report, para. 6.6. 
581Appellate Body Report, EC – Sardines , para. 301. 
582Ibid. 
583Article 147 of the Implementing Regulation sets out the conditions under which a sale other than the 
last sale that led to the introduction of the goods into the European Communities may be used as the basis for the valuation of the goods.  It provides, in relevant part: 
For the purposes of Article 29 of the 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 were sold for export to the customs territory of 
the Community. In the case of successive sales before valuation, only the 
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. 
Where a price is declared which relates to a sale taking place before the last 
sale on the basis of which the goods were introduced into the customs territory of the Community, it must be demonstrated to the satisfaction of 
the customs authorities that this sale of goods took place for export to the 
customs territory in question.  WT/DS315/AB/R 
 Page 101 
 
 
 262. The Panel concluded: 
The imposition by customs authorities in some member States of a 
form of prior approval with respect to the successive sales provision, which is inconsistent with [European Communities] customs  law and which is not imposed by customs authorities in other member States means that the European Communities does not 
administer its customs law concerning successive sales—in 
particular, Article 147(1) of th e Implementing Regulation—in a 
uniform manner in violation of Article X:3(a) of the GATT 1994.
584 
263. In reaching its conclusion, the Panel relied on the European Communities' Court of Auditors 
Special Report No. 23/2000 concerning valu ation of imported goods for customs purposes 585 (the 
"Court of Auditors Report") submitted by the United St ates to the Panel as Exhibit US-14.  The Court 
of Auditors Report suggests that, "in practice, some customs authorities do impose a form of prior 
approval even though this has no basis in [European  Communities] law."  At the same time, however, 
the European Commission, it its replies to the C ourt of Auditors Report, contests the Court of 
Auditors' assertion that, "in practice, some cust oms authorities do impose a form of prior approval".586  
The Panel Report reflects that the Panel took into ac count the Court of Auditor's statement that only 
some customs authorities impose a "form of prior approval".  However, it is not clear from the Panel Report that the Panel also took into account the European Commission's replies to the Court of Auditors Report, which are an integral part of E xhibit US-14.  The Panel considered that, since the 
United States had presented a section of the Court of Auditors Report to sustain its claim, it was 
incumbent on the European Communities to submit evid ence to rebut the Court of Auditors' assertion.  
The Panel stated: 
... at the time the Panel issued its Interim Report to the parties, the 
European Communities had not submitted any evidence to substantiate its assertion in this regard.* 
587 
  
       *The Panel considers that it was incumbent upon the European 
Communities to submit such evidence in the light of aspects of the [European Communities'] Court of Au ditor's report referred to in 
paragraph 7.383 above, which tend to call the European Communities 
assertion in this regard into question. 
                                                      
584Panel Report, para. 7.385. 
585Court of Auditors Report, supra , footnote 207. 
586The Commission's replies are published together w ith the Court of Auditors Report pursuant to 
Article 248(4) second subpar agraph of the EC Treaty. 
587Panel Report, para. 7.382 and original footnote 671 thereto. WT/DS315/AB/R 
Page 102  
 
 264. On appeal, the European Communities claims th at the Panel "unduly shifted the burden of 
proof from the United States to the European Commun ities" to establish whether or not there was a 
lack of uniformity in the application of Article  147(1) of the Implementing Regulation.  In the 
European Communities' view, the United States had not established a  prima facie  case of violation 
of Article X:3(a) of the GATT 1994 with respect  to the administration of the successive sales 
provision.  The European Communities also submits that, by shifting the burden of proof, the Panel 
failed to make an objective assessment of the matte r before it as required by Article 11 of the DSU.
588 
265. In the view of the United States, the statemen t in the Court of Auditors Report that, "in 
practice, some customs authorities do impose a form of prior approval even though this has no basis 
in Community law"589, amounts to an admission of non-uniform administration by the European 
Communities.590  The United States considers that it did not need to adduce additional evidence in 
order to establish its  prima facie  case, given that it had provided th e Panel with an admission by the 
European Communities.591 
266. We begin our analysis by recalling that th e Appellate Body addressed the question of 
allocation of the burden of proof in  US – Wool Shirts and Blouses .  In that case, the Appellate Body 
held:  
The burden of proof rests upon the party, whether complaining or 
defending, who asserts the affirmative of a particular claim or 
defence.  If that party adduces evidence sufficient to raise a 
presumption that what is claimed is true, the burden then shifts to the other party, who will fail unless it adduces sufficient evidence to rebut the presumption. (footnote omitted) 
In the context of the GATT 1994 and the WTO Agreement , precisely 
how much and precisely what kind of evidence will be required to 
establish such a presumption will n ecessarily vary from measure to 
measure, provision to provision, and case to case.
592   
                                                      
588European Communities' other appellant's submission, para. 214.  
589Court of Auditors Report, supra , footnote 207, para. 64;  Panel Report, para. 7.381. 
590United States' appellee's submission, para. 143. 
591Ibid., para. 147. 
592Appellate Body Report, US – Wool Shirts and Blouses , p. 14, DSR 1997:I, 323, at 335.   WT/DS315/AB/R 
 Page 103 
 
 
 267. The Appellate Body defined the nature of a  prima facie  case in  EC – Hormones .  It stated: 
[A] prima facie  case is one which, in the absence of effective 
refutation by the defending party, re quires a panel, as a matter of law, 
to rule in favour of the complaining party presenting the  prima facie  
case.593 (footnote omitted) 
268. Bearing this in mind, we examine whether the United States had established a  prima facie  
case in assessing non-uniform administration of th e successive sales provision.  The United States 
submitted to the Panel one document to substa ntiate its claim, that is, Exhibit US-14.594  
Exhibit US-14 contains two opposing statements:  firs t, the Court of Auditors Report suggests that, in 
practice, some customs authorities do impose a form of prior approval even though this has no basis 
in European Communities law;  and second, the European Commission's replies to the Court of 
Auditors Report, in which the Commission contest s the Court of Auditor's assertion by saying that 
"customs authorities in some member States do not 'impose' such a notification".595  T h e  C o u r t  o f  
Auditors Report and the Commission's replies are contained in the same document submitted to  
the Panel as Exhibit US-14.  Given this rebutta l, we cannot agree with the United States that 
Exhibit US-14 amounts to an admission by the Europ ean Communities of the fact that some member 
States impose a prior approval requirement in the administration of the successive sales provision.   
                                                      
593Appellate Body Report, EC – Hormones , para. 104.  See also Appellate Body Report, US – Wool 
Shirts and Blouses , p. 14, DSR 1997:I, 323, at 335.   
The Appellate Body has subsequently relied on this statement in various inst ances. (See, for example, 
Appellate Body Report, US – Zeroing (EC) , para. 217;  and Appellate Body Report, Mexico – Anti-Dumping 
Measures on Rice , para. 167 and footnote 160 thereto) 
594The Court of Auditors Report states, in relevant part: 
The Court was unable to identify the full extent to which importers use or 
seek to use the successive sales provisio n. One reason for this is that, in 
order to apply the successive sales provision, unlike some other customs 
provisions, there is no legal requirement for an importer to obtain prior 
permission or authorisation. However, the Court found that, in practice, some customs authorities do impose a form of prior approval even though 
this has no basis in Community law. As in other aspects of customs 
valuation the Court found variations in the extent to which customs authorities allow the use of  the provision or consu lt with each other. The 
Court has established that certain importers use the successive sales 
provision in one or more Member States but not in others and has drawn 
some significant examples of inconsistency to the attention of the 
Commission.  
... 
The Commission's view is that customs authorities in some Member States 
do not 'impose' such a notification. 
(Court of Auditors Report, supra , footnote 207, para. 64, and Commission's replies thereto, p. 17) 
595European Commission's comments on paragraphs 62-64 of the Court of Auditors Report, supra , 
footnote 207, p. 16. WT/DS315/AB/R 
Page 104  
 
 269. Furthermore, we observe that the United Stat es has not provided suffi cient evidence for its 
assertion.  It has not specified, for example, which member States impose "a form of prior approval";  
what "forms of prior approval" the customs aut horities of those member States impose;  or how 
frequently such a requirement has been imposed.  In  addition, the United States has made no specific 
reference to instances of administration of the successive sale provision, or given examples where prior approval was imposed by, or would have b een required by, a member State in practice.   
270. In the light of these considerations, we disag ree with the Panel that the United States has 
established a  prima facie  case with respect to its claim alleging lack of uniform administration of the 
successive sales provision.  We therefore reverse  the Panel's finding, in paragraphs 7.385 
and 8.1(c)(ii) of the Panel Report, that "the Eu ropean Communities does not administer its customs 
law concerning successive sales—in particular, Article 147(1) of the Implementing Regulation—in a 
uniform manner, in violation of Article X:3(a) of the GATT 1994."  In the light of this finding, we do 
not consider it necessary, for purposes of resolving th is dispute, to rule on whether the Panel's finding 
with respect to the administration of the su ccessive sales provision was based on an objective 
assessment of the matter as required by Article 11 of the DSU. 
F. Completing the Analysis with respect to th e "As a Whole" Challenge of the United 
States under Article X:3(a) of the GATT 1994 
271. We now examine whether the Appe llate Body is in a position to complete the analysis and to 
determine whether the measures at issue (that is , the Community Customs Code, the Implementing 
Regulation, the Common Customs Tariff, and the TARIC), collectively or "as a whole", are 
administered by the European Communities in a manner inconsistent with its obligation under 
Article X:3(a) of the GATT 1994.   
272. The Panel concluded that, "based on the langua ge and content of the Panel's terms of 
reference, the Panel is precluded from considering ' as such' challenges of the design and structure of 
the [European Communities'] system of customs administration as a whole and also the design and 
structure of the [European Commun ities'] system in the areas of customs administration that have 
been specifically identified in the [panel request]."
596  For the reasons we set out in Section IV.C of 
this Report, we reversed this findi ng of the Panel.  In our view, the terms of the panel request indicate 
that the United States properly made a claim th at the Community Customs Code, the Implementing 
Regulation, the Common Customs Tariff, and the TA RIC, collectively, are administered in a non-
uniform manner, in violation of Article X:3(a) of the GATT 1994.  The Panel should have examined 
                                                      
596Panel Report, para. 7.64.  WT/DS315/AB/R 
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 this claim, but it did not.  Consequently, we have now to determine whether we are in a position to 
complete the analysis with respect to the United States' claim under Article X:3(a) of the GATT 1994. 
273. The United States is of the view that the Appe llate Body should complete the analysis, and 
find that the European Communities' system of cust oms administration "as a whole" is inconsistent 
with Article X:3(a).597  For the United States, in this dispute, "a reversal of the Panel's findings 
without a completion of the Panel's analysis w ould fail 'to secure a positive solution to [the] 
dispute.'"598  The United States submits that the analysis  can be completed on the basis of undisputed 
facts and the Panel's findings of fact regardi ng the European Communities' system of customs 
administration.599  The United States recalls that "[t]he crux of the [United States'] claim ... was that 
the existence of a system of customs administration in which 25 separate, independent authorities exercise judgment in interpreting and applying [E uropean Communities] customs law, without any 
procedures or institutions to ensure against divergen ces or to reconcile them promptly and as a matter 
of right when they occur necessarily constitutes a lack of uniform administration, in breach of 
Article X:3(a)."
600  The United States points to statements made by the Panel with respect to various 
mechanisms and institutions in  the European Communities that , according to the European 
Communities, ensure against divergences or reconcile them when they occur.601  The United States 
also refers to the Panel's "overall assessment" that the European Communities system of customs 
administration "as a whole" is "complicated  and, at times, opa que and confusing".602  According to the 
United States, by these statements, the Panel reject ed the European Communities' argument that the 
institutions and procedures to which the Eur opean Communities referred ensure the uniform 
administration of European Communities customs law.603  For the United States, in the light of the 
Panel's statements regarding "the institutions a nd mechanisms the [European Communities] held out 
as securing uniform administration of [European Communities] customs law, completion of the Panel's analysis should be straightforward"
604, and should lead to the conclusion that "the [European 
Communities'] system of customs administration as a whole is inconsistent with the [European 
Communities'] obligation of uniform administration under Article X:3(a) of the GATT 1994."605 
                                                      
597United States' appellant's submission, paras. 29, 99, and 204(a). 
598Ibid., para. 101. 
599Ibid., para. 102. 
600Ibid. (footnote omitted) 
601Ibid., paras. 103-106 (referring to Panel Report, paras. 7.156-7.192). 
602Ibid., para. 107 (referring to Panel Report, para. 7.191). 
603Ibid., para. 108. 
604Ibid. 
605Ibid. WT/DS315/AB/R 
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 274. The European Communities disagre es with the United States that there are enough factual 
findings made by the Panel, or undisputed facts on record, that would enable the Appellate Body to 
make the finding requested by the United States re garding the European Communities' system of 
customs administration "as such" and "as a whole" .  According to the European Communities, the 
Panel's statements to which the United States refers are isolated remarks in the Panel Report where the 
Panel comments on individual aspects of the European Communities' system of customs 
administration.
606  These comments, the European Commun ities argues, do not allow the Appellate 
Body to assess whether the Europ ean Communities' system of customs administration "as a whole" 
and "as such" is in conformity with Article X: 3(a) of the GATT 1994, because they do not contain 
findings of fact with respect to the European Communities' system of customs administration, and were not intended by the Panel to constitute such findings.
607  The European Communities observes 
that these comments are contained in a section of the Panel Report where the Panel set out its 
understanding of the European Communities' system  of customs administration as "context" for the 
evaluation of the United States' claims re garding individual instances of application.608  The European 
Communities also emphasizes that, if the Unite d States' challenge concerns the European 
Communities' system of customs administration as a whole, then the "system must be evaluated with 
all its constituent interlocking elements and mechanis ms, and not individual elements in isolation."609 
275. Furthermore, the European Communities emphasi zes that, in paragraph 7.490 of the Panel 
Report, the Panel observed, inter alia , that "the United States did not demonstrate that the design and 
structure of the [European Communities'] system of customs administration, including components 
thereof, necessarily result in a violation of Article  X:3(a) of the GATT 1994."  Thus, according to the 
European Communities, the Panel found that "the  [United States] has not even come close to 
establishing that the [European Comm unities'] system 'as such' and 'as a whole' entails a violation of 
Article X:3(a) [of the] GATT."610  
276. Finally, the European Communities submits th at the United States' claim regarding the 
European Communities' system of customs administra tion "as a whole" is a claim that has not been 
explored by the Panel, and on which the Pane l has therefore not made any legal findings and 
interpretations that the Appellate Body could reve rse.  For the European Communities, a claim of 
violation of the obligation of uniform administration directed against individual instances of 
application is fundamentally different from a claim directed against a system of customs 
                                                      
606European Communities' appellee's submission, para. 159. 
607Ibid., para. 160. 
608Ibid. (referring to Panel Report, paras. 7.156-7.191). 
609Ibid., para. 163. (footnote omitted) 
610Ibid., para. 172.  See also para. 171.  WT/DS315/AB/R 
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 administration "as such" and "as a whole".611  Adjudging the claim regarding the European 
Communities' system of customs administration "as such" and "as a whole" would, therefore, violate 
the due process rights of the participants, and of the European Communities in particular.612 
277. In response to questioning at the oral heari ng, the United States confirmed that it does not 
consider that Article X:3(a) requires a centralized system of customs administration at the European Communities level.  Therefore, for the United St ates, the administration of European Communities 
customs law by 25 national customs authorities does not, in itself, constitute a breach of 
Article X:3(a).  According to the United States,  the structural shortcoming that undermines the 
European Communities' system of customs administ ration is, rather, the absence of "any procedures 
or institutions to ensure against divergences or to reconcile them promptly and as a matter of right 
when they occur."
613  The United States contends that the ab sence of any procedures, institutions, or 
mechanisms to ensure uniform administration necessar ily results in a breach of Article X:3(a) of the 
GATT 1994 by the European Communities.614   
278. It is well settled that the Appellate Body will be in a position to complete the legal analysis if 
it has before it sufficient factual findings of the panel or undisputed facts on the panel record.615  In 
this case, the Panel did not examine the United States ' claim that the measures at issue, collectively, 
are administered in a non-uniform manner.  Theref ore, we have to consider whether the factual 
findings or general observations made by the Panel w ith respect to the claims it did examine, can be 
utilized in the context of completing the analysis.  In  considering this question,  we also have to take 
into account the nature and breadth of the United St ates' challenge, that is, whether the Community 
Customs Code, the Implementing Regulation, the Common Customs Tariff, and the TARIC, 
collectively, are administered in a non-uniform manner, in violation of Article X:3(a) of the GATT 1994. 
279. We begin our analysis by noting that, before th e Panel, the European Communities referred to 
certain institutions and mechanisms existing in the European Communities to secure uniformity of 
administration of European Communities customs la w.  According to the European Communities, 
these institutions and mechanisms play "an instrument al role in achieving uniform administration of 
                                                     
 
611European Communities' appellee's submission, paras. 188-189. 
612Ibid., paras. 193-195. 
613United States' appellant's submission, para. 102. 
614Ibid.  See also paras. 2, 19, 21, and 69;  United States' opening statement at the oral hearing;  and 
United States' response to Question 126 posed by the Panel, Panel Report, pp. B-4 and B-5. 
615See Appellate Body Report, US – Hot-Rolled Steel , para. 235;  Appellate Body Report, Canada – 
Dairy (Article 21.5 – New Zealand and US) , para. 98;  and Appellate Body Report, US – Section 211 
Appropriations Act , para. 343. WT/DS315/AB/R 
Page 108  
 
 [European Communities] customs law by the customs authorities of the member States."
616  The Panel 
took the view that it was not authorized to make any findings in relation to these institutions and 
mechanisms given that it had found that its terms of reference precluded it from considering 
challenges to the design and structure of th e European Communities' system of customs 
administration, including components thereof.617  Nevertheless, the Panel chose to discuss these 
institutional mechanisms in a section of the Panel Report entitled "Relevant Aspects of the EC System 
of Customs Administration".  It did so because it w as of the view that "its understanding of certain 
aspects of the manner in which the [European Co mmunities'] system of customs administration 
functions ... is important context  for the examination of the particular instances of alleged violations 
of Article X:3(a) of the GATT 1994 in respect  of which such aspects have been raised."618   
280. The institutions and mechanisms of the Eu ropean Communities' system of customs 
administration that the Panel addressed include th e following:  (i) the Customs Code Committee;  
(ii) Article 10 of the EC Treaty;  (iii) the preliminary reference system (Article 234 of the EC Treaty);  (iv) infringement proceedings;   (v)  the European Ombudsman;   (vi)  complaints to the European 
Commission;  (vii) restrictions on the adoption of national measures by customs authorities of the 
member States;  (viii) consultations and mutual assi stance between member State customs authorities;  
and (ix) best practice guidelines, such as the Eu ropean Binding Tariff Information (the "EBTI") 
guidelines, which refer to the EBTI database, and the Compendium of Customs Valuation texts.  
281. The European Communities identified the Cu stoms Code Committee as "an important 
institution that helps to ensure uniform administration of [European Communities] customs law 
among the customs authorities of the member States."
619  The Panel noted that "the opinions of the 
Customs Code Committee are not legally binding on  the customs authorities of the member States."620  
After considering certain other features of the Comm unity Customs Code, the Pa nel concluded that "it 
would appear that the Customs Code Committee h as limited power to impose uniform administration 
of [European Communities] customs law on customs authorities of the member States."621   
                                                      
616Panel Report, para. 7.489. 
617Ibid., para. 7.490. 
618Ibid., para. 7.155. (emphasis added) 
619Ibid., para. 7.157. (footnote omitted) 
620Ibid., para. 7.160. 
621Ibid. (footnote omitted)  WT/DS315/AB/R 
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 282. With respect to the "duty of cooperation" contai ned in Article 10 of the EC Treaty, the Panel 
observed that "the extent to which Article 10 of the EC Treaty contributes to the uniform 
administration of [European Communities] customs law is unclear."622  The European Communities 
also cited Article 234 of the EC Treaty, according to which national courts of the member States may refer any question regarding the interpretation of European Communities law to the ECJ (the 
preliminary reference system).  The European Co mmunities submitted that "it is through preliminary 
rulings issued by the ECJ, which are binding on a ll courts of the member States, that divergences ... 
can be avoided and the effective applicati on of European Communities law be assured."
623  The Panel 
noted, however, that "a trader is not authorized under [European Communities] law to proceed directly to the ECJ for a preliminary ruling"
624, and that "the use of the preliminary reference system 
to secure uniform administration ... in the area of  customs administration during the period of 1995–
2005 appears low."625 
283. With respect to the infringement proceedings th at may be instituted before the ECJ against 
member States for failure to fulfil an obligatio n under European Communities law, and the role 
played by the European Ombudsman, the Panel noted that the use of both mechanisms appeared to be 
"low"626, and opined that "the extent to which th e European Ombudsman is effective in ensuring 
uniform administration ... is unclear."627  The Panel made observations that were largely descriptive in 
nature with respect to:  the possibility of bringi ng a complaint to the European Commission;  the 
existence of restrictions on the adoption of nati onal measures by customs authorities of the member 
States;  the mechanisms of consultation and mu tual assistance between member State customs 
authorities;  and best practice guidelines.  In particular, the Panel noted that the customs authorities of the member States are not obliged to consult w ith one another before making customs decisions
628, 
that there is no obligation on the part of customs au thorities of the member States to consult the EBTI 
database when they classify a good 629, and that "the commentaries contained in the Compendium of 
Customs Valuation texts have no legal status and, therefore, do not have binding effect."630   
                                                      
622Panel Report, para. 7.164. 
623Ibid., para. 7.166. 
624Ibid., para. 7.167. 
625Ibid., para. 7.168. 
626Ibid., paras. 7.170 and 7.172. 
627Ibid., para. 7.172. 
628Ibid., paras. 7.177, 7.180, 7.187, and 7.190. 
629Ibid., para. 7.181. 
630Ibid., para. 7.186. (footnote omitted) WT/DS315/AB/R 
Page 110  
 
 284. Finally, under a section of the Panel Repor t entitled "General observations regarding the 
institutions and mechanisms involved in the administ ration of the EC customs laws", the Panel noted 
that, "in its consideration of the [European Co mmunities'] system of customs administration as a 
whole, the Panel found the system complicated and, at times, opaque and confusing."
631  Later, in a 
section entitled, "Overall observations regarding th e United States' allegations of non-uniform 
administration under Article X:3(a) of the GATT 1994 ", the Panel observed that "certain features 
associated with a number of those institutions and mechanisms would not necessarily enhance 
uniform administration of [European Communities] customs law by the customs authorities of the 
member States and, at worst, might even cause non-uniform administration."632 
285. From the description of the institutions and m echanisms involved in the administration of the 
European Communities customs law provided in paragraphs 7.157 to  7.191 of the Panel Report, it 
appears that there are institutions and mechanisms  in the European Communities that seek to ensure 
that divergences in administration among the customs authorities of the member States do not occur or are reconciled in the event that they do occur.  What is less clear from these general observations is 
whether the Panel made factual findings or reached  definitive conclusions with respect to these 
institutions and mechanisms.  Certainly, the Pa nel raised doubts about the effectiveness of these 
institutions and mechanisms in bringing about uni formity of administration of European Communities 
customs law.  However, the Panel did not find that  these institutions and mechanisms are structurally 
flawed in such a way that th e European Communities' system of customs administration would 
necessarily lead to non-uniform administration, in a violation of Article X:3(a) of the GATT 1994.  
On the contrary, the Panel stated that, "even if the Panel were authorized to make such findings, ... the 
United States did not demonstrate that the design and structure of the [European Communities] system of customs administration, including compone nts thereof necessarily result in a violation of 
Article X:3(a) of the GATT 1994."
633  Accordingly, it appears to us that these general observations of 
the Panel do not constitute a suffi cient foundation of factual findings or undisputed facts upon which 
we can rely for completing the analysis.   
286. Further, as we said above, these general observations by the Panel with respect to the 
institutions and mechanisms involved in the admi nistration of European Communities customs law 
were made in the context of an analysis based on the Panel's narrow interpretation of the measure at 
issue and the claim set out in the panel request.634  We have reversed this interpretation of the Panel.  
                                                      
631Panel Report, para. 7.191. 
632Ibid., para. 7.489. 
633Ibid., para. 7.490. 
634Ibid., para. 7.33.  WT/DS315/AB/R 
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 Therefore, the general observations made by the Pa nel in paragraphs 7.157 to 7.191 of the Panel 
Report do not provide a sufficient foundation for us to complete the analysis.  Moreover, the Panel 
examined the operation of these institutions and me chanisms in isolation and did not discuss how 
these institutions and mechanisms interact in th e administration of European Communities customs 
law.  Finally, given the breadth and the nature of the claim set out by the United States in the panel 
request, we are of the view that paragraphs 7.1 57 to 7.191 of the Panel Report do not constitute a 
sufficient basis to enable us to complete the analysis.   
287. In the light of all these considerations, we are unable to complete the analysis. 
VI. The Panel's Interpretation of Article X:3(b) of the GATT 1994 
288. We now turn to the question whether Article X:3(b) of the GATT 1994 requires that decisions 
of the judicial, arbitral, or administrative tribunals , or procedures for the review and correction of 
administrative action relating to customs matters, must govern the practice of  all  the agencies 
entrusted with administrative enforcement  throughout the territory  of a particular WTO Member.  
289. The Panel found:  
[N]either the ordinary meaning of th e various terms of Article X:3(b) 
of the GATT 1994 nor the legal context for the interpretation of Article X:3(b) of the GATT 1994 provide a clear answer to the 
specific question the Panel has b een called upon to address—namely, 
whether Article X:3(b) of the GATT 1994 requires the decisions of the judicial, arbitral or administrative tribunals or procedures for the review and correction of administrative action relating to customs matters to govern the practice of all the agencies entrusted with 
administrative enforcement throughout the territory  of a particular 
[WTO] Member.
635 (original emphasis) 
290. The Panel considered, however, that it would not  be "reasonable" to infer that first instance 
independent review tribunals and bodies, whose jurisd iction in most legal systems is normally limited 
in substantive and geographical te rms, should have the authority to bind all agencies entrusted with 
administrative enforcement throughout the territo ry of a WTO Member, such as the European 
Communities.636   
                                                      
635Panel Report, para. 7.537. 
636Ibid., para. 7.538.  We note that the European Communities and its member States are WTO 
Members in their own rights. WT/DS315/AB/R 
Page 112  
 
 291. On appeal, the United States claims that the Pa nel failed to give meaning to the terms "the 
agencies entrusted with administrative enforcem ent" and "such agencies" in Article X:3(b).
637  In the 
United States' view, the Panel effectively disregar ded the ordinary meaning of these terms when it 
stated that "it is difficult to know what significance  should be attached, if any, to the reference to 
agencies in the plural."638  The United States submits that the or dinary meaning of the plural form 
encompasses "the agencies"—without limitation—as opposed  to only one such agency, or just "some 
of" or "a subset of" the agencies.  The use of the plural form contemplates multiple agencies and, 
given the absence of any basis in the text fo r distinguishing among multiple agencies, it must 
contemplate  all  the agencies entrusted with  administrative enforcement.639  Furthermore, the United 
States maintains that Article X:3(b) must be re ad in the light of the requirement of uniform 
administration in Article X:3(a) of the GATT 1994, and that it follows from this context that 
procedures leading to decisions that have effect only in particular regions of a Member's territory are 
inconsistent with Article X:3(b) of the GATT 1994. 
292. In the European Communities' view, the Panel co rrectly explained that the use of the plural 
form when referring to "agencies" in Article X:3(b) could flow from the fact that the review "tribunals 
and procedures" required under the same provision are also referred to in the plural.640  The European 
Communities concurs with the Panel that it would not  be reasonable to infer "that first instance 
independent review tribunals and bodies, whose jurisd iction in most legal systems is normally limited 
in substantive and geographical te rms, should have the authority to bind all agencies entrusted with 
administrative enforcement throughout the territory of a [WTO] Member."641  Furthermore, the 
European Communities submits that the absence of  an express reference to Article X:3(a) in 
Article X:3(b) of the GATT 1994 contrasts with the explicit reference in Article X:3(c) to 
Article X:3(b) of the GATT 1994, and argues that this absence precludes an inference that the 
obligation to ensure review of administrative action under Article X:3(b) could be read as 
simultaneously requiring uniform administration w ithin the meaning of Article X:3(a) of the 
GATT 1994. 
                                                      
637United States' appellant's submission, paras. 164-172. 
638Panel Report, para. 7.528. 
639United States' appellant's submission, para. 166. 
640European Communities' appellee's submission, para. 288 (referring to Panel Report, para. 7.527). 
641Ibid., para. 325 (referring to United States' appellant's submission, para. 188).  WT/DS315/AB/R 
 Page 113 
 
 
 293. Our analysis begins with the text of Article X:3(b) of the GATT 1994, which stipulates:  
Each Member shall 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 relating to customs matters.  Such tribunals or procedures shall be independent of  the agencies entrusted with 
administrative enforcement and their decisions shall be implemented 
by, and shall govern the practice of, such agencies unl ess an appeal is 
lodged with a court or tribunal of superior jurisdiction within the time 
prescribed for appeals to be lodged by importers;  Provided  that the 
central administration of such agen cy may take steps to obtain a 
review of the matter in another proceeding if there is good cause to 
believe that the decision is inconsis tent with established principles of 
law or the actual facts. (original emphasis) 
294. At the outset, we note that both parties agree that Article X:3(b) relates to first instance 
review.  The Panel agreed with th is interpretation.  It found support for this interpretation in the 
separate reference in Article X:3(b) to the possibility of filing an appeal with "a court or tribunal of 
superior jurisdiction within the time prescribed for a ppeals to be lodged by importers".  We agree that 
the phrase "unless an appeal is lodged with a court or  tribunal of superior jurisdiction" contemplates 
the possibility that there may be an appeal to bodies  of "superior jurisdiction" and confirms the view 
that Article X:3(b) relates to first instance review.  We note that the Panel also relied on the proviso of 
Article X:3(b), which provides that the "central ad ministration 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 inconsistent with established prin ciples of law or the actual facts."
642   
295. Article X:3(b) requires that first instance review decisions "shall be implemented by, and 
shall govern the practice of, such agencies" (that is , agencies entrusted with the administration of 
customs matters).  The question before us is whether, as argued by the United States, Article X:3(b) requires that first instance review d ecisions must govern the practice of  all  the agencies entrusted 
with administrative enforcement  throughout the territory  of a WTO Member.   
296. The United States emphasizes that Article X:3(b) contains two separate references to 
"agencies" in the plural:  the first reference is  to "the agencies entrusted with administrative 
enforcement";  and the second re ference is to "such agencies".
643  From that, the United States infers 
that review decisions should govern the practice of " all  of the agencies entrusted with administrative 
enforcement".  We address each of these references in turn.  
                                                      
642Panel Report, para. 7.521.  
643United States' appellant's submission, para. 166.  WT/DS315/AB/R 
Page 114  
 
 297. The use in Article X:3(b) of the term "t he agencies entrusted with administrative 
enforcement" in the plural form suggests that re ference is made to more than a single agency.  
However, it does not follow from the use of the plural  that first instance review decisions concerning 
administrative action taken by an agency must neces sarily be binding on all other agencies throughout 
a WTO Member's territory.  In our view, the interp retation proposed by the United States would mean 
reading words into the treaty text that are not there.   We can conceive of se veral explanations for the 
use of the plural when referring to "agencies" in  Article X:3(b) of the GATT 1994:  there could be 
several agencies in a WTO Member having different  areas of substantive competence;  various 
agencies could also have competence for different geographical areas.  The use of the plural for 
"agencies" might also be a consequence of the reference to "tribunals" and "procedures" in the 
plural.
644  The reference to "tribunals" and "procedures" in the plural suggests to us that WTO 
Members are free to establish several first instance review tribunals a nd procedures that have different 
substantive or geographic areas of competence.  Ar ticle X:3(b) does not, in our view, preclude a WTO 
Member from establishing first instance review tr ibunals and procedures governing the practice of all 
administrative agencies in their en tire territory;  however, it also does not require WTO Members to 
do so.  Therefore, we are not convinced that the refere nce to "agencies" in the plural implies that first 
instance review decisions must govern the practice of " all  agencies" of a WTO Member.   
298. The United States also argues that the absence of  criteria for distinguishing among multiple 
"agencies" implies that the reference to "such ag encies" means all agencies.  A plain reading of 
Article X:3(b) suggests that "such agencies" are not  all agencies, but only th ose agencies whose action 
has been subject to review by a tribunal or pro cedure and that are bound by the decisions of that 
tribunal or procedure "with respect to identical fa ctual situations that may arise in the future 
concerning identical legal issues".645  We agree with the Panel that what is required by Article X:3(b) 
is that "the decisions of judicial, arbitral or administrative tribunals and procedures for the prompt 
review and correction of administrative action must  govern the practice of the agency whose action 
was the subject of review by a tribuna l or procedure in a particular case."646  Article X:3(b) leaves the 
specific structure of the review mechanism to the discretion of the Member concerned.  Therefore, 
"such agencies" may encompass more or fewer ag encies depending on the structure of the review 
mechanism.  However, we do not see why the jurisd iction of a review tribunal or procedure and the 
binding effect of a review decision of that tribuna l would always or necessarily have to extend to all 
agencies of a Member. 
                                                      
644European Communities' appellee's submission, para. 288. 
645Panel Report, para. 7.531.  
646Ibid., para. 7.528.  WT/DS315/AB/R 
 Page 115 
 
 
 299. In addition, we recall that Article X:3(b) rela tes to first instance review and contemplates the 
possibility of appeals to bodies of "superior jurisdic tion" as well as the seeking of "a review of the 
matter" by a centralized agency.  This would also suggest that the first instance review required by 
that provision need not necessarily cover the entire territory of a WTO Member. 
300. Accordingly, we are of the view that it does not follow from the ordinary meaning of 
Article X:3(b) that decisions of judicial, arbitral, or administrative tribunals or procedures for first 
instance review and correction of administrative action relating to customs matters must govern the 
practice of  all  the agencies entrusted with administrative enforcement  throughout the territory   of a 
WTO Member. 
301. We address next the question whether  context  suggests otherwise.  We consider that 
Article X:3(a) of the GATT 1994 is relevant as  context.  The Panel, however, noted that 
Article X:3(b) of the GATT 1994 does not contain an  express textual link to the obligation of uniform 
administration of customs laws in Article X:3(a).  Th e Panel contrasted this with Article X:3(c) of the 
GATT 1994, which explicitly cross-references Article X:3(b).647  Against this background, the Panel 
considered that it was not possible to infer that the drafters of the GATT 1994 intended the obligation 
of Article X:3(b) to be read as simultaneously requiring uniform administration in accordance with 
Article X:3(a).  In the Panel's view, this would amount to "merging different requirements that are 
currently contained in separate sub-paragraphs of Article X".648  We see no reason to disagree with the 
Panel's interpretation.  We are also of the view that the requirement of "uniformity" contained in 
Article X:3(a) does not imply that under Article X:3( b) decisions of review tribunals must govern the 
practice of all agencies entrusted with customs enforcement throughout the territory of a WTO 
Member.  Article X:3(a) requires, inter alia , uniformity of administration.  In contrast, Article X:3(b) 
relates to the review and correction of admini strative action by independent mechanisms.   
302. Finally, turning briefly to the treaty's object and purpose, we note the Panel's view that the 
due process objective underlying Article X:3(b) is that "a trader who has been adversely affected by a 
decision of an administrative agency has the ability to have that adverse decision reviewed."649  We 
believe this due process objective is not undermined even if first instance review decisions do not 
govern the practice of all the agencies entrusted w ith customs enforcement throughout the territory of 
a WTO Member, so long as there is a possibility of  an independent review and correction of the 
administrative action of every agency. 
                                                      
647Likewise, this is in contrast with Article X:3(a) , which contains a cross-reference to Article X:1. 
648Panel Report, paras. 7.534. 
649Ibid., para. 7.538. WT/DS315/AB/R 
Page 116  
 
 303. For these reasons, we are of the view that Article X:3(b) of the GATT 1994 requires a WTO 
Member to establish and maintain  independent mechanisms for pr ompt review and correction of 
administrative action in the area of customs administration.  However, neither text nor context nor the 
object and purpose of this Article require that the d ecisions emanating from such first instance review 
must govern the practice of  all  agencies entrusted with administrative enforcement  throughout the 
territory  of a particular WTO Member.   
304. We therefore  uphold  the conclusion of the Panel, in para graphs 7.539, 7.556, and 8.1(e) of 
the Panel Report, that "Article X:3(b) of the GA TT 1994 does not necessarily mean that the decisions 
of the judicial, arbitral or administrative tribuna ls or procedures for the review and correction of 
administrative action relating to customs matters must govern the practice of  all  agencies entrusted 
with administrative enforcement  throughout the territory  of a particular [WTO] Member."
650  We  
conclude  that the Panel did not err in finding the tr ibunals and procedures for review of customs 
administrative action provided by th e European Communities to be consistent with Article X:3(b) of 
the GATT 1994.   
VII. Conditional Appeal of the European Communities 
305. The Panel found that Article XXIV:12 of th e GATT 1994 cannot be relied upon to attenuate 
or to derogate from the provisions of the GATT 1994 (including Article X:3(a)), to which 
Article XXIV:12 refers.651  In the light of this reasoning, the Panel concluded:  
Article XXIV:12 of the GATT does not constitute an exception nor a 
derogation from the obligation of uniform administration in Article X:3(a) of the GATT 1994. Therefore, Article XXIV:12 of the 
GATT 1994 has no impact upon our examination of the United 
States' claims under Article X:3(a) of the GATT 1994.
652 (footnote 
omitted) 
306. The European Communities conditionally appeals th is finding in the event that the Appellate 
Body's conclusions on the United States' appeal im ply that the European Communities should "create 
a centralised customs agency replacing its [m]emb er States in the implementation of [European 
Communities] customs law"653, or that the European Communities should "create an [European 
Communities]-level tribunal for the first- instance review of customs decisions".654   
                                                      
650(original emphasis) 
651Panel Report, para. 7.144. (footnote omitted) 
652Ibid., para. 7.145. 
653European Communities' other appellant's submission, para. 235. 
654Ibid.  WT/DS315/AB/R 
 Page 117 
 
 
 307. The United States requests the Appellate B ody to reject the European Communities' 
conditional appeal because the question of the possible relevance of Article XXIV:12 of the 
GATT 1994 is outside the scope of these appellate proceedings and because this provision applies to 
the observance of GATT 1994 laws by regional and lo cal governments and authorities, which is not at 
issue in this appeal. 
308. We already found that we were unable to comple te the analysis with respect to whether the 
measures at issue, taken as a whole, have been administered in a manner inconsistent with the 
requirements in Article X:3(a) of the GATT 1994.  In  addition, we upheld the Panel's conclusion that 
the European Communities did not breach Article X:3( b) of the GATT 1994.  It thus follows that the 
conditions on which this aspect of the European Comm unities' appeal is predicated are not satisfied.  
Therefore we do not consider it further.   
VIII.  Findings and Conclusions 
309. For the reasons set out in this Report, the Appellate Body: 
(a) with respect to the Panel's terms of reference: 
(i) reverses  the Panel's finding, in paragraph 7.20 of the Panel Report, that the 
"measure at issue" for purposes of a claim under Article X:3(a) of the GATT 1994 must necessarily be "the manner of administration that is 
allegedly non-uniform, par tial and/or unreasonable"; 
(ii) reverses
 the Panel's finding, in paragraphs  7.33 and 8.1(a)(i) of the Panel 
Report, that the specific measure at issue in this dispute is "the manner of administration ... of the Community Customs Code, the Implementing 
Regulation, the Common Customs Tariff, the TARIC and related measures in 
the areas of customs administration specifi cally identified in the United States' 
request for establishment of a panel"
655;  and finds , instead, that the specific 
measures at issue identified in the pa nel request are the Community Customs 
Code, the Implementing Regulation, the Common Customs Tariff, and the 
TARIC, as administered collectively; 
                                                      
655Panel Report, para. 8.1(a)(i). WT/DS315/AB/R 
Page 118  
 
 (iii) reverses
 the Panel's finding, in paragraphs 7.50, 7.64, and 8.1(a)(iii) of the 
Panel Report, that, due to the wording and content of the panel request, the 
United States was precluded from challenging the European Communities' 
system of customs administration as a whole or overall;  and reverses  also the 
Panel's finding, in paragra phs 7.63, 7.64, and 8.1(a)( iii) of the Panel Report, 
that the Panel was precluded from considering the United States' argument 
that the "design and structure" of the European Communities' system of 
customs administration necessarily result in a violation of Article X:3(a) of the GATT 1994;  and 
(iv) upholds
, albeit for different reasons, th e Panel's interpretation, in 
paragraph 7.37 of the Panel Report, that "the steps and acts of administration 
that pre-date or post-date the establis hment of a panel may be relevant to 
determining whether or not a violatio n of Article X:3(a) of the GATT 1994 
exists at the time of [panel] establishment"; 
(b) with respect to claims under Article X:3(a) of the GATT 1994: 
(i) reverses  the Panel's finding, in paragraph 7.119 of the Panel Report, that, 
without exception, Article X:3(a) of the GATT 1994 always relates to the application of laws and re gulations, but not to laws and regulations as such;  
but upholds
 the Panel's conclusions, in paragr aphs 7.434, 7.444, 8.1(d)(i), 
and 8.1(d)(ii) of the Panel Report, that substantive differences in penalty laws 
and audit procedures among the member  States of the European Communities 
alone do not constitute a violation of  Article X:3(a) of the GATT 1994; 
(ii) concludes  that the Panel did not find that Article X:3(a) of the GATT 1994 
requires uniformity of "administrative processes";  upholds  the Panel's 
finding, in paragraph 7.119 of the Panel Report, that the term "administer" in 
Article X:3(a) of the GATT 1994 may include administrative processes that put into effect the legal instruments of the kind described in Article X:1 of the  GATT 1994;  but reverses
 the Panel's finding, in paragraphs 7.276 
and 8.1(b)(iv) of the Panel Report, that  the administrative process leading to 
the tariff classification of blackout drapery lining amounts to non-uniform administration within the meaning of Article X:3(a) of the GATT 1994, and that the European Communities has violated Article X:3(a) of the GATT 1994 with respect to the tariff classification of blackout drapery lining;  WT/DS315/AB/R 
 Page 119 
 
 
 (iii) upholds  the Panel's finding, in paragraphs  7.305 and 8.1(b)(v) of the Panel 
Report, that "[t]he tariff classification of  liquid crystal display monitors with 
digital video interface amounts to non-uniform administration within the 
meaning of Article X:3(a) of the GATT 1994"; 
(iv) reverses  the Panel's finding, in paragraphs 7.385 and 8.1(c)(ii) of the Panel 
Report, that "the European Communiti es does not administer its customs law 
concerning successive sales—in particular, Article 147(1) of the 
Implementing Regulation—in a uniform manne r, in violation of Article X:3(a) 
of the GATT 1994";  and 
(v) is unable to complete  the analysis with respect to  the United States' claim that 
the European Communities' system of customs administration as a whole or 
overall is not administered in a uniform manner, as required by Article X:3(a) 
of the GATT 1994; 
(c) with respect to Article X:3(b) of the GATT 1994: 
upholds  the conclusion of the Panel, in para graphs 7.539, 7.556, and 8.1(e) of the 
Panel Report, that "Article X:3(b) of the GATT 1994 does not necessarily mean that 
the decisions of the judicial, arbitral or administrative tribunals or procedures for the review and correction of administrative action relating to customs matters must 
govern the practice of all the agencies entrusted with administrative enforcement 
throughout the territory  of a particular [WTO] Member"
656;  and 
(d) with respect to Article XXIV:12 of the GATT 1994: 
finds  that the conditions on which the Europ ean Communities' appeal is predicated 
are not satisfied, and therefore does not consider  it. 
310. The Appellate Body recommends  that the DSB request the European Communities to bring 
its measures, which have been found in this Report,  and in the Panel Report as modified by this 
Report, to be inconsistent with the GATT 1994, in to conformity with its obligations under that 
Agreement. 
                                                      
656(original emphasis) WT/DS315/AB/R 
Page 120  
 
 Signed in the original in Geneva this 27th day of October 2006 by:  
 
    
_________________________ 
A.V. Ganesan 
Presiding Member 
 
 
 
 
 _________________________ _________________________ 
 Merit E. Janow Yasuhei Taniguchi 
 Member Member 
  WT/DS315/AB/R 
 Page 121 
 
 
 ANNEX I  
 
 WORLD TRADE  
ORGANIZATION  WT/DS315/11 
17 August 2006 
 (06-3905) 
 Original:   English 
  
EUROPEAN COMMUNITIES – SELECTED CUSTOMS MATTERS 
 
Notification of an Appeal by the United States
 
under Article 16.4 and Article 17 of the Understanding on Rules  
and Procedures Governing the Settlement of Disputes (DSU),  
and under Rule 20(1) of the Working Procedures for Appellate Review  
 
  The following notification, dated 14 August 2006,  from the Delegation of the United States, is 
being circulated to Members.  
_______________ 
 
 
Pursuant to Article 16 of the Understanding on Rules and Procedures Governing the 
Settlement of Disputes ("DSU") and Rule 20 of the Working Procedures for Appellate Review , the 
United States hereby notifies its decision to appeal  to the Appellate Body certain issues of law 
covered in the Report of the Panel on  European Communities – Selected Customs Matters 
(WT/DS315/R) and certain legal interp retations developed by the Panel. 
 
The United States seeks review by the Appellate Body of the following aspects of the Report 
of the Panel.    
I. Terms of Reference
 
 
The United States seeks review of three sets of errors committed by the Panel with respect to 
its analysis of its terms of reference.   
(A)  As the first step in its analysis the Pane l found, in paragraph 7.20 of the Report, that 
"when a violation of Article X:3(a) of the [ General Agreement on Tariffs and Trade 1994 ] is being 
claimed," the "measure at issue" that Article 6. 2 requires to be identified in the request for 
establishment of a panel is "the manner of administra tion that is allegedly non-uniform, partial and/or 
unreasonable."  This finding is in error and is based  on erroneous findings on issues of law and related 
legal interpretations contained in paragraphs 7.8 through 7.22 of th e Panel Report.  In making this 
finding, the Panel misinterpreted or misapplied Article 6.2 of the DSU. 
 While the Panel's finding that "manner of administ ration" is the measure at issue in a dispute 
involving Article X:3(a) of the General Agreement on Tariffs and Trade 1994  ("GATT 1994") was in 
error and should not be allowed to stand, the U.S.  panel request did in fact identify the manner of 
administration of European Communities ("EC") laws , regulations, decisions, and rulings of the kind 
described in Article X:1 of the GATT 1994 at issue (referred to hereafter collectively as "EC customs 
law"), and the Panel did not find against the United States on this ground. WT/DS315/AB/R 
Page 122  
 
  
(B)  Having incorrectly found "manner of admini stration" to be the measure at issue in a 
dispute involving Article X:3(a) of the GATT 1994, the Panel also misconstrued the specific measures 
at issue identified in the U.S. panel request as conf ined to the manner of administration of EC customs 
law in certain specific areas, as opposed to the manne r of administration of such measures irrespective 
of area.  Thus, the Panel found in paragraph 7.33 of  the Report that the "specific measure at issue" in 
this dispute, within the meaning of Article 6.2 of the DSU, was: 
 
[T]he manner of administration by the national customs authorities of the member States of the Community Customs Code, the 
Implementing Regulation, the Common Customs Tariff, the TARIC 
and related measures in the areas of customs administration specifically identified in the Unite d States' request for establishment 
of a panel – namely, the classification and valuation of goods, procedures for the classification and valuation of goods, procedures 
for the entry and release of goods, procedures for auditing entry 
statements after goods are released into free circulation, penalties and 
procedures regarding the imposition of penalties for violation of 
customs rules and record-keeping requirements. 
This finding is in error and is  based on erroneous findings on issues of law and related legal 
interpretations contained in paragr aphs 7.23 through 7.32 and 8.1(a)(i) of the Panel Report.  In making 
this finding, the Panel misinterpreted or misapplied Articles 6.2 and 7.1 of the DSU.  
 
(C)  The Panel then made the erroneous legal conclusion that its terms of reference excluded 
the U.S. claim that the design and structure of th e EC system of customs administration as a whole 
results in the administration of EC customs law in  a non-uniform manner, contrary to Article X:3(a) 
of the GATT 1994.  For example, paragraph 7.50 of its Report, the Panel made the erroneous finding 
that "its terms of reference regarding the U.S.  claim under Article X:3(a) of the GATT 1994 do not 
include a challenge to the EC system of cu stoms administration overall or as a whole under 
Article X:3(a) of the GATT 1994."  The Panel made  a similarly erroneous finding in paragraph 7.63, 
stating that "the United States is precluded from maki ng an 'as such' challenge  with respect to the 
design and structure of the EC system of customs administration as a whole and also with respect to 
the design and structure of the EC system in the areas of customs administration that have been 
specifically identified in the United States' request."  This finding is repeated at paragraph 8.1(a)(iii) 
of the Panel's Report.  
These findings are in error and are based on e rroneous findings on issues of law and related 
legal interpretations contained in  paragraphs 7.11 through 7.20, 7.23 through 7.32, 7.40 through 7.50, 
7.53 through 7.63, and 8.1(a)(iii) of the Pane l Report.  In making these findings, the Panel 
misinterpreted or misapplied Articles 6.2 and 7.1 of the DSU.   
The Panel's error in excluding from its terms of reference the U.S. challenge with respect to 
the EC system of customs administration as a whole did not depend on its first two errors with respect 
to its terms of reference.  Even if the first two findi ngs in the Panel's analysis of its terms of reference 
were correct (which we contend they were not),  the Panel still should not have excluded the U.S. 
challenge with respect to the EC's system of cust oms administration as a whole.  The U.S. claim was 
about features that are absent from the EC system of customs administration, which result in the EC 
administering its customs laws in a non-uniform ma nner, contrary to Article X:3(a) of the GATT 
1994.  That central aspect of the U.S. compla int – which was evident from the panel request, 
elaborated in U.S. submissions and statements, and well understood by the EC as evidenced by its 
submissions and statements – was part of the U.S. panel request whether that request is understood as 
encompassing the administration of EC customs law in  all areas or only in certain areas (as the Panel 
found).  WT/DS315/AB/R 
 Page 123 
 
 
  
Accordingly, the United States asks the Appellate Body to reverse the Panel's finding that this 
claim was outside the Panel's terms of reference.  Additionally, the United States asks the Appellate 
Body to complete the Panel's analysis based on th e undisputed facts and the Panel's factual findings 
regarding the EC system of customs administration.  In light of the Panel's factual findings that the 
various institutions and mechanisms that the EC he ld out as securing the uniform administration of its 
customs laws – in an environment where admini stration is the responsibility of 25 separate, 
independent customs authorities – do not actually do so, the Appellate Body should find that the EC 
system of customs administration as a whole results in the non-uniform administration of EC customs law, in breach of Article X:3(a) of the GATT 1994. 
 
II. Interpretation of the term "administer" in Ar ticle X:3(a) of the GATT 1994 as it relates to the 
existence of divergent penalty  laws and audit procedures  
 
The United States seeks review of the Panel's lega l conclusions that the existence of divergent 
penalty laws and audit procedures are not inconsistent with Article X:3(a) of the GATT 1994, and the 
related issues of law and legal interpretation.  At  paragraph 7.444, for example, the Panel found "no 
violation of Article X:3(a) of the GATT 1994 with respect to the substantive differences in penalty 
laws between member States."  At paragraph 7.434 , for example, the Panel found "no violation of 
Article X:3(a) of the GATT 1994 with respect to th e manner of administration of the audit procedure 
requirements in the European Communities by the me mber States applicable to goods following their 
release for free circulation." 
 
In finding that the EC does not breach its Article X:3(a) obligation of uniform administration 
to the extent that it puts EC customs law into prac tical effect through divergent penalty laws and audit 
procedures, the Panel erred in its interpretation of th e term "administer" as used in that provision.  The 
Panel's error regarding its approach to differences  in customs penalty laws is based on erroneous 
findings on issues of law and related legal interp retations contained in pa ragraphs 7.113 through 
7.119, 7.442 through 7.444, and 8.1(d)(ii) of the Panel Report.  Its error regarding its approach to 
differences in audit procedures is based on errone ous findings on issues of law and related legal 
interpretations contained in paragr aphs 7.113 through 7.119, 7.425 through 7.434, and 8.1(d)(i) of the 
Panel Report. 
 
The United States asks the Appellate Body to re verse the Panel's legal conclusions that the 
existence of divergent penalty laws and audit proce dures are not inconsistent with Article X:3(a) of 
the GATT 1994.  The United States further asks the Appe llate Body to complete the Panel's analysis.  
In light of the Panel's findings and undisputed facts regarding the existence of divergent penalty laws 
and audit procedures, the Appellate Body should find  that the EC fails to administer EC customs law 
in a uniform manner, in breach of Article X:3(a) of  the GATT 1994, to the extent it gives effect to EC 
customs law through the maintenance of dive rgent penalty laws and audit procedures. 
 III. Interpretation of Article X:3(b) of the GATT 1994
 
 
The United States seeks review of the Panel's legal conclusion that "the European 
Communities does not violate Article X:3(b) of the GATT 1994 merely because the decisions regarding review of administration action relating to  customs matters, which are taken by authorities 
in the member States acting as organs of the Eu ropean Communities, do not apply and have effect 
throughout the territory of the European Communities."  Panel Report, para. 7.554; id., paras. 7.539, 
7.556, and 8.1(e).  That conclusion represents an erroneous interpretation of Article X:3(b) of the 
GATT 1994, which was based on erroneous findings on i ssues of law and related legal interpretations 
contained in paragraphs  7.526 through 7.538.  
 WT/DS315/AB/R 
Page 124  
 
  The United States asks the Appellate Body to reverse the Panel's erroneous interpretation of 
and conclusion under Article X:3(b).  Further, the United States asks the Appellate Body to complete 
the Panel's analysis.  It is undisputed that each of the tribunals and procedures the EC provides is 
limited to reviewing the administrative actions of the customs authority within a particular EC member State.  It also is undisputed that none of  these tribunals or procedures issues decisions that 
govern the practice of all of the agencies entruste d with administrative enforcement of the EC's 
customs law (that is, the customs authorities of the 25 EC member States).  In light of these 
undisputed facts, the Appellate Body should find th at the EC is in breach of its obligation under 
Article X:3(b) of the GATT 1994.  
 
_______________ 
  
    WT/DS315/AB/R 
 Page 125 
 
 
 ANNEX II  
 
 WORLD TRADE  
ORGANIZATION  WT/DS315/12 
28 August 2006 
 (06-4123) 
 Original:   English 
  
EUROPEAN COMMUNITIES – SELECTED CUSTOMS MATTERS 
 
Notification of an Other Appeal by the European Communities
 
under Article 16.4 and Article 17 of the Understanding on Rules  
and Procedures Governing the Settlement of Disputes (DSU),  
and under Rule 23(1) of the Working Procedures for Appellate Review  
 
  The following notification, dated 28 August 2006, from the Delegation of the European Commission, is being circulated to Members.  
_______________ 
 
 1. Pursuant to Article 16.4 and Article 17 of the DSU and to Rule 23.1 of the Working 
Procedures for Appellate Review, the European Co mmunities submits its Notice of Other Appeal on 
certain issues of law in the Report of the Panel on European Communities – Selected Customs 
Matters
1 and certain legal interpreta tions developed by the Panel.  
2. The European Communities seeks review by the Appellate Body of the following: 
(a) the Panel’s decision not to admit cert ain evidence submitted by the European 
Communities during the interim review stage,  and in particular Exhibits EC-167 to 
EC-170 (paragraphs 6.5 and 6.6 of the Pane l report). This decision is incompatible 
with Article 15.2 of the DSU and with the Panel’s duty to make an objective 
assessment of the facts as required by Article 11 of the DSU;    
(b) the Panel’s finding regarding the temporal  limitations of its terms of reference, 
according to which it may consider measures, including acts of administration, which were no longer in existence, or not yet in existence, at the time of its establishment 
(paragraph 7.36 to 7.37 of the Panel Repor t). These findings are inconsistent with 
Articles 6.2 and 7.1 of the DSU; 
(c) the Panel’s finding that Article X:3(a) GATT requires uniformity of administrative 
processes irrespective of their impact on the uniform administration of the laws 
(paragraphs 7.102 to 7.113 and 7.119 of the Report). This finding is based on an 
incorrect interpretation of Article X:3(a) GATT; 
                                                     
 
1 WT/DS315/R, circulated on 16 June 2005. WT/DS315/AB/R 
Page 126  
 
 (d) the Panel’s finding that Article XXIV:12 GA TT cannot be relied upon to attenuate or 
to derogate from the provisions of the GATT 1994, including Article X:3 GATT, and does not constitute an exception from such provisions (paragraphs 7.140 to 7.145 of 
the Panel Report). This finding is based on an incorrect interpretation Article XXIV:12 GATT;  
(e) the Panel’s finding that the EC has violated  Article X:3(a) GATT with respect to the 
process leading to the tariff classification of blackout drapery lining (paragraphs 7.266 to 7.276, 8.1(b)(iv) and 8. 2(a) of the Panel Report). In reaching this 
finding, the Panel has erred in its interpreta tion of Article X:3(a) GATT, and failed to 
make an objective assessment of the facts as required by Article 11 of the DSU; 
(f) the Panel’s finding that the EC has violated  Article X:3(a) GATT with respect to the 
tariff classification of LCD Monitors with  DVI (paragraphs 7.291 to 7.305, 8.1(b)(v) 
and 8.2(b) of the Pane l Report). In reaching this finding, the Panel has erred in its 
interpretation of Article X:3(a) GATT, and failed to make an objective assessment of 
the facts as required by Article 11 of the DSU; 
(g) the Panel’s finding that the EC has violated  Article X:3(a) GATT with respect to the 
imposition by the customs authorities of certain Member States of a form of prior approval with respect to the successive sales provision (paragraphs 7.376 to 7.385, 
8.1(c)(ii) and 8.2(c) of the Panel Report). In reaching this finding, the Panel has erred 
in its interpretation of Article X:3(a)  GATT, and failed to make an objective 
assessment of the facts as required by Article 11 of the DSU. 
_______________ 
  WT/DS315/AB/R 
 Page 127 
 
 
 ANNEX III  
 
 WORLD TRADE  
ORGANIZATION  WT/DS315/8 
14 January 2005  
 
(05-0192) 
 Original:   English 
   
EUROPEAN COMMUNITIES – SELECTED CUSTOMS MATTERS 
 
Request for the Establishment of  a Panel by the United States
 
  
 The following communication, dated 13 January 2005, from the delegation of the 
United States to the Chairperson of the Dispute Settle ment Body, is circulated pursuant to Article 6.2 
of the DSU.  
_______________ 
  
 The United States considers that the manner in which the European Communities ("EC") 
administers its laws, regulations, decisions and rulin gs of the kind described in Article X:1 of the 
General Agreement on Tariffs and Trade 1994 ("GATT 1994") is not uniform, impartial and 
reasonable, and therefore is inconsistent with Ar ticle X:3(a) of the GATT 1994.  For purposes of this 
request, the laws, regulations, decisions and rulings  (collectively, "measures") that the European 
Communities fails to administer in such a manner pertain to the classification and valuation of 
products for customs purposes and to requirements, restrictions or prohibitions on imports.  The 
measures consist of:    
• Council Regulation (EEC) No 2913/92 of 12 October 1992 establishing the 
Community Customs Code, including all anne xes thereto, as amended (the "Code"); 
 
• Commission Regulation (EEC) No 2454/93 of  2 July 1993 laying down provisions 
for the implementation of Council Regula tion (EEC) No 2913/92 of 12 October 1992 
establishing the Community Customs Code , including all annexes thereto, as 
amended (the "Commission Regulation"); 
 
• Council Regulation (EEC) No 2658/87 of 23 July 1987 on the tariff and statistical 
nomenclature and on the Common Customs 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 Customs Tariff, including all annexes thereto, as 
amended (the "TARIC"); and 
 
• for each of the above laws and regulati ons, all amendments, implementing measures 
and other related measures. 
 WT/DS315/AB/R 
Page 128  
 
  Administration of these measures in the Europ ean Communities is carried out by the national 
customs authorities of EC member States.  Such administration takes numerous different forms.  The United States understands that the myriad forms of  administration of these measures include, but are 
not limited to, laws, regulations , handbooks, manuals, and administrative practices of customs 
authorities of member States of the European Communities.  
 
 Lack of uniform, impartial and reasonable admi nistration of the above-identified measures is 
manifest in differences among member States in a number of areas, including, but not limited to, the following:   
• classification and valuation of goods; 
 
• procedures for the classification and valua tion of goods, including the provision of 
binding classification and valuation information to importers; 
 
• procedures for the entry and release of goods, including different certificate of origin 
requirements, different criteria among member States for the physical inspection of goods, different licensing requirements fo r importation of food products, and 
different procedures for processing express delivery shipments;   
 
• procedures for auditing entry statements afte r goods are released into the stream of 
commerce in the European Communities; 
 
• penalties and procedures regarding the im position of penalties for violation of 
customs rules; and 
 
• record-keeping requirements. 
  In addition, the European Communities has failed to maintain, or institute as soon as 
practicable, judicial, arbitral or administra tive tribunals or procedures for the purpose, inter alia , of 
the prompt review and correction of administra tive action relating to customs matters.  The 
above-identified measures, including in particul ar Articles 243 through 246 of the Code, expressly 
provide that EC member States are responsible for the implementation of procedures for appeals from 
decisions by member State customs authorities.  Accordingly, the ability to obtain review of a customs decision by a tribunal of the European Co mmunities does not arise until after an importer or 
other interested party has pursued review through na tional administrative and/or judicial tribunals.  
For this reason, the European Communities is in breach of Article X:3(b) of the GATT 1994. 
 
 The EC measures are also inconsistent with Article X:1 of the GATT 1994.   On 21 September 2004, the United States requ ested consultations with the European 
Communities pursuant to Articles 1 and 4 of the Understanding on Rules and Procedures Governing 
the Settlement of Disputes  ("DSU") and Article XXII:1 of the GATT 1994 (WT/DS315/1).  The 
United States held consultations with the Eur opean Communities in Geneva on 16 November 2004.  
Unfortunately, these consultations did not resolve the dispute.     Accordingly, the United States respectfully re quests the Dispute Settlement Body to establish 
a panel pursuant to Article 6 of the DSU to examine this matter with standard terms of reference as set 
out in Article 7.1 of the DSU. 
 
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