RESTRICTED  WORLD TRADE  
ORGANIZATION  WT/DSB/M/223 
15 January 2007 
 (07-0164) 
Dispute Settlement Body 
11 December 2006  
 
 
MINUTES OF MEETING 
 
Held in the Centre William Rappard  
on 11 December 2006  
 
Acting Chairman:  Mr. Eirik Glenne (Norway) 
 
  Prior to the adoption of the agenda
, Ambassador Eirik Glenne (Norway), the Chairman of the 
General Council welcomed delegati ons and said that he had the pleasure of chairing the present 
meeting at the request of the Chairman of the Dispute Settlement Body, Ambassador Muhamad Noor 
who had asked him to preside on his behalf due to his absence from Geneva.  He noted that this was 
in accordance with the Rules of Procedure for meetings of the Dispute Settlement Body which 
provided that:  "If the DSB Chairperson is absent from any meeting or part thereof, the Chairperson of 
the General Council or in the latter's absence, the Chairperson of the Trade Policy Review Body, shall 
perform the functions of the DSB Chairperson." 
 
1. European Communities – Selected customs matters 
(a) Report of the Appellate Body (WT/DS315/AB /R) and Report of the Panel (WT/DS315/R) 
1. The Chairman  drew attention to the communication from the Appellate Body contained in 
document WT/DS315/14 transmitting the Appellate Body Report on:  "European Communities – 
Selected Customs Matters", which had been  circulated on 13 November 2006 in document 
WT/DS315/AB/R, in accordance with Article 17.5 of the DSU.  He recalled that the Appellate Body 
Report and the Panel Report pertaining to this dis pute had been circulated as unrestricted documents.  
He noted that Article 17.14 of the DSU required tha t:  "An Appellate Body report shall be adopted by 
the DSB and unconditionally accepted by the part ies to the dispute unless the DSB decides by 
consensus not to adopt the Appellate Body report within 30 days following its circulation to 
Members.  This adoption procedure is without prej udice to the right of Me mbers to express their 
views on an Appellate Body report".  
2. The representative of the United States  said that his country wished to thank the Panel, the 
Appellate Body, and the Secretariat for their hard wo rk.  This dispute raised several novel issues, and 
the United States appreciated the thoughtfulness with which these issues had been considered.  In this 
dispute, the United States had raised concerns about the way in which the EC administered its 
customs law and the way in which EC courts reviewed customs administrative actions.  The United States had focused on administration by 25 separate, independent customs agencies without 
mechanisms or procedures to adequately reconcile differences among them.  It had also focused on 
review by 25 different judicial systems, no one of which had the power to issue decisions that 
governed the practice of customs agencies througho ut the EC.  The United States called Members' 
attention to the Panel's detailed discussion of key el ements of the EC's customs administration system, 
culminating with the finding that the system was "c omplicated and, at times, opaque and confusing".  
The Panel had gone on to state: "We can imagine th at the difficulties we encountered in our efforts to 
understand the EC system of customs administration would be multiplied manifold for traders in WT/DSB/M/223 
Page 2  
 
  general and small traders in par ticular who are trying to import into the European Communities."  
This conclusion and the findings that preceded it were important, as they had confirmed that traders faced a serious, structural barrier when they tried to bring goods into the EC.  The United States 
looked forward to the EC addressing the structural problems identified by the Panel.    
3. Regrettably, the Panel had declined to reach the legal question of whether the EC's customs 
administration system as a whole was inconsistent with Article X:3(a) of the GATT 1994.  As the 
Appellate Body had found, this was an error r esulting from the Panel's misunderstanding of the US 
panel request.  The Appellate Body had been unable to  reach this question either, given that the Panel 
had not made the necessary factual findings.  Therefore,  contrary to public statements by the EC, the 
EC system of customs administration had not been found to be consistent with the WTO.  That 
remained an open question which, given the Panel' s findings, had serious implications for traders. 
4. Of course, the Panel and the Appellate Body had found a breach of Article X:3(a) with regard 
to the EC's tariff classification of LCD monitors .  The United States was pleased that this finding 
demonstrated that, in the particular instance exam ined, the Panel and the Appellate Body had agreed 
that the EC administered its cu stoms laws in a non-uniform manner.  The United States highlighted 
two other key findings.  First, the A ppellate Body had clarified that if  divergent penalty laws and audit 
procedures regulated the application or implementa tion of EC customs laws, then those divergent 
provisions were susceptible to challenge under Artic le X:3(a).  Second, the Panel had recognized – 
and the Appellate Body had not disagreed – that th e non-uniform administration of classification rules 
was not cured by a temporary suspension of duties. 
5. Finally, the US claim under Article X:3(b) of the GATT 1994 was that there was no EC 
review tribunal whose decisions governed the practic e of "the agencies entrusted with administrative 
enforcement" in the EC – i.e. "the agencies," and not just some of them.  However, the Appellate 
Body had found that the use of the plural form in Article X:3(b) – "the agencies" – did not mean that 
the decisions of a given review tribunal must gove rn all of the EC's cust oms agencies.  In the 
Appellate Body's view, this would read the word "a ll" into the text.  In fact, it was the Appellate 
Body's construction that read words into the te xt.  Specifically, it seemed to read the unqualified 
phrase " the agencies" to mean instead " at least one of  the agencies."  Moreover , the Appellate Body's 
approach seemed at odds with its approach  in its recent Softwood Lumber V report 
(WT/DS264/AB/RW).  There, the Appellate Body had explained that reference to a thing (in that 
case, "export prices") "in the plural, without further qualification" must be understood as comprising "all" of that thing.  Although the United States had ra ised this point in its appeal, the Appellate Body 
had not addressed it in its report. 
6. The implication of the Article X:3(b) finding w as troubling.  It meant that a Member might 
establish different review tribunals within its terr itory that could reach conflicting decisions about 
administration of that Member's customs law.  Th e Appellate Body had allu ded to the possibility of 
conflicting decisions being reconciled through appeals.   However, as the Panel had noted, "Given the 
cost and time implicated by such an appeal, it is unc lear whether traders will r esort to such an option 
in all cases in which non-uniform application of EC  customs law among the customs authorities of the 
member States becomes apparent."  And, there was no requirement in Article X:3(b) to provide for 
the opportunity to appeal. 
7. The United States concluded by saying that it was pleased that the Panel and the Appellate 
Body had recognized the serious difficulties faced in  even trying to understand the EC system of 
customs administration, difficulties the United Stat es and several other Members believed to pose a 
serious impediment to trade.  Furthermore, those fi ndings provided useful clarifications with respect 
to the measures that were susceptible to claims unde r Article X:3(a) and with respect to how a panel 
identified its terms of reference.  WT/DSB/M/223 
 Page 3 
 
 
  8. The representative of the European Communities  said that the EC was overall satisfied with 
the Report of the Appellate Body.  This Report had confirmed that US claims on the EC system of 
customs administration "as a whole" had not been subs tantiated.  In this context, the Appellate Body 
had confirmed that WTO Members, including the EC, had the right to decide on the best way to organize their administration, provided they complie d with WTO standards.  The Appellate Body had 
equally confirmed that the EC's system of judicial  review of customs decisions was fully compatible 
with its WTO obligations.  As regards individual in stances of administration, the Appellate Body had 
reversed 2 out of 3 violation findings made by the Panel.  As a result, the only remaining finding of 
violation of Article X:3(a) GATT concerned the tariff classification of LCD monitors with DVI, a highly technical classification issue which the EC  had already been in the process of addressing 
during the Panel proceedings.  As a consequence, th is Report did not require any further action by the 
EC.  The EC was already in compliance with the Panel's finding on the tariff classification of LCD monitors with DVI.  Uniform classification of this product in the EC was ensured inter alia by the 
adoption of Commission Regulation 2172/2005, which ha d been followed by the repeal of the Dutch 
Decree and the German Binding Tariff Information (BT I) referred to in the Panel Report in support of 
the Panel's findings of violation.  Moreover, th e Commission had prepared an Explanatory Note on 
the classification of LCD monitors which would be published before the end of the year.  The EC hoped that this would bring this fruitless litigation to  an end and that the EC and the United States 
could now continue working on a more c ooperative basis on customs-related issues. 
9. The representative of Australia
 said that her country thanked the Appellate Body, the Panel 
and the Secretariat for their work on this case, in which Australia had partic ipated as a third party. 
Australia welcomed the guidance provided by the A ppellate Body on the interpretation of the term 
"measure at issue" under Article 6.2 of the DSU and the meanings accorded to "administer" and 
"uniform" in Article X:3(a) of the GATT 1994.  The Appellate Body's clarification of the 
requirements of Article 6.2 of the DSU was helpful to Members.  In particular, that the term "measure 
at issue" should not be interpreted in light of the specific WTO obligation raised in a particular claim.1  
Australia agreed with the Appellate Body that to have found otherwise would have resulted in future 
uncertainty for both complainants and respondents.  Australia also welcomed the Appellate Body's 
clarification of the interpretation of "administer"  and "uniform" in Article X:3(a) of GATT 1994.  
This included the finding that Article X:3(a) did not  exclude a challenge to a legal instrument that 
regulated the application or implementation of an instrument under Article X:1 if it necessarily led to 
a lack of uniform, impartial or unreasonable administration.2  Also, the finding that under 
Article X:3(a) it was the application of a legal instru ment of the kind described in Article X:1 that was 
required to be uniform, not the processes leading to administrative decisions, or the tools that might be used in the exercise of administration.
3  The Appellate Body's clarification of the scope and 
application of Article X would usefully serve to provide guidance for all WTO Members in the 
administration of trade regulations, especially those Members that had multi-tiered systems of 
customs administration. 
10. The representative of Korea  said that his country wished to express its deep gratitude to the 
Appellate Body and the Panel, as well as to the Secr etariat for devoting considerable time and effort 
to examine and make findings in this case.  Kore a had participated in this case as a third party, 
because several Korean exporters had complained that  they had problems with the lack of uniformity 
in terms of the ways that the various EC custom s authorities administered the relevant rules and 
regulations.  In particular, the conflicting cl assification practice of EC member States on LCD 
monitors with DVI was a grave concern, not only fo r the producers in question but also for the Korean 
Government since the EC was the largest market fo r Korean computers and television sets.  In this 
regard, Korea welcomed the Panel's finding, uphe ld by the Appellate Body, that the tariff 
                                                      
1 Appellate Body Report, para. 132. 
2 Appellate Body Report, paras. 200-201. 
3 Appellate Body Report, para. 224. WT/DSB/M/223 
Page 4  
 
  classification of LCD monitors with DVI amounted to non-uniform administration within the meaning 
of Article X:3(a) of the GATT 1994.  Korea noted th at a new EC regulation on the LCD monitors had 
been introduced to rectify this classification discrep ancy.  Korea hoped that the new regulation would 
be implemented in a uniform manner and the EC would ensure that similar problems were not 
repeated.  Even though the Panel and the Appellate Body had not found an obligation that the EC had 
to establish an integrated and overall customs aut hority with the EC-wide territorial jurisdiction, 
Korea believed that the EC had to continuously pay particular attention to the ways and practices of 
how its customs rules and regulations were admini stered by each of the customs authorities of its 
member States.  The individual customs regimes with in the EC might be inherently susceptible to less 
uniformity in the administration of customs ma tters since the EC system was composed of 
fragmented, independent, and local authorities within  sovereign member States.  Divergence in the 
administration of customs matters could and actua lly happened even in a country which adopted a 
central government system.  That was why the customs authority of many countries continuously educated their staff, shored up a prompt reconc iliation mechanism, and computerized the customs 
procedures with an electronic database.  The indi vidual customs systems within the EC required the 
EC to be even more diligent than other WTO Members in its efforts to maintain uniform 
administration of customs matters irrespective of time, place and even individual officers with whom 
traders were interacting.  Korea trusted that the EC  would not be complacent with the results of this 
case.  Korea believed that the EC, spurred by this  case, would step up its continued efforts to 
minimize possible divergences of administration am ong the individual customs authorities of the 25 
member States.   
11. The representative of the United States
 said that his country was not in a position to agree 
with the EC's statement that it had already come  into compliance with its WTO obligations.  The 
United States would need to consider the matter further.  However, the EC statement raised a 
procedural question.  The United States wished to  know if the EC's assertion that the EC was in 
compliance should be understood as its statement of  intentions in respect of implementation as 
required by Article 21.3 of the DSU.  
12. The representative of European Communities  said that his delegation had not spoken about 
the EC's intention to comply, but about the fact th at the EC was in compliance.  He recalled that a 
similar situation had occurred wh en the DSB had adopted the Panel and the Appellate Body Reports 
in the "US – Steel Safeguard" dispute.    
13. The DSB took note  of the statements, and adopted  the Appellate Body Report contained in 
WT/DS315/AB/R and the Panel Report contained in WT/DS315/R, as modified by the Appellate 
Body Report. 
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