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 app eal 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 issu e (referred to hereafter collectively as "EC customs 
law"), and the Panel did not find against the United States on this ground.  
(B)  Having incorrectly found "manner of administration" 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 WT/DS315/11 
Page 2  
 
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 errone ous 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 custom s administration overall or as a whole under Article 
X:3(a) of the GATT 1994."  The Panel made a simila rly erroneous finding in paragraph 7.63, stating 
that "the United States is precluded from making an 'as such' challenge with respect to the design and 
structure of the EC system of customs administra tion as a whole and also with respect to the design 
and structure of the EC system in the areas of cu stoms 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 fro m its terms of reference the U.S. challenge with respect to 
the EC system of customs administration as a whole di d 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 manner, contrary to Article X:3(a) of the GATT 
1994.  That central aspect of the U.S. complain t – 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). 
 
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  WT/DS315/11 
Page 3 
 
 
various institutions and mechanisms that the EC he ld out as securing the uniform administration of its 
customs laws – in an environment where admi nistration 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 Artic le 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 inconsiste nt 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 Artic le X:3(a) obligation of uniform administration 
to the extent that it puts EC customs law into practi cal effect through divergent penalty laws and audit 
procedures, the Panel erred in its in terpretation of the 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 relate d legal interpretations containe d in paragraphs 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 err oneous 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 A ppellate 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.  
  The United States asks the Appellate Body to reverse the Panel's err oneous 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 th e 25 EC member States).  In light of these WT/DS315/11 
Page 4  
 
undisputed facts, the Appellate Body should find that  the EC is in breach of its obligation under 
Article X:3(b) of the GATT 1994.  
__________