Document: WT/DS375/R WT/DS376/R WT/DS377/R Page A-1 ANNEX A SUBMISSIONS OF THE UNITED STATES CONTENTS PAGE A-1 Executive Summary of the first written submission by the United States
Document codes: WT/DS375/R; WT/DS376/R; WT/DS377/R
Complainant: Taiwan
Respondent: EU
Third parties: Australia, Brazil, China, Costa Rica, Hong Kong, India, Japan, South Korea, Philippines, Singapore, Thailand, Turkey, U.S., Vietnam
Dispute stage: Panel
Agreements cited: Art. II:1, X:1, X:2, XXIII  GATT 1994

ANNEX A

SUBMISSIONS OF THE UNITED STATES

CONTENTS PAGE
A-1 Executive Summary of the first written submission by the
United States
A-2
A-2 Executive Summary of the opening oral statement by the
United States at the first substantive meeting
A-10
A-3 Closing oral statement by the United States at the
first substantive meeting
A-19
A-4 Executive Summary of the second written submission by
the United States
A-22
A-5 Executive Summary of the oral statement by
the United States at the second substantive meeting
A-31

ANNEX A–1

EXECUTIVE SUMMARY OF THE FIRST WRITTEN SUBMISSION
BY THE UNITED STATES

1. The Information Technology Agreement (ITA) remains a crowning achievement of the
post-Uruguay Round WTO system, widely hailed for eliminating duties on a vast range of
information technology (IT) products and promoting the spread of innovative technologies throughout
the developed and developing world. As a result of the ITA, the European Communities ("EC"), in its
WTO Schedule of tariff concessions, committed to permit the importation of certain IT products
duty-free. This dispute centers on recent actions by the EC and its member States to methodically
dismantle tariff commitments that they made as part of the ITA.
I. SET-TOP BOXES WITH A COMMUNICATION FUNCTION
2. "Set top boxes with a communication function" are included in both Attachment A and
Attachment B of the ITA. Under GATT 1994 Article II:1 and pursuant to the headnote, the EC is
obliged to accord duty-free treatme nt to set top boxes with a communication function – as defined in
Attachment B of the ITA – wherever they are classified . Following implementation of the ITA, set
top boxes with a communication function imported into the EC were generally classified in CN line
8528 71 13 or its predecessor lines, and entered duty -free. However, as a result of the STB CNEN
Amendments approved in 2006 and 2007, which impose a variety of arbitrary technical restrictions on
qualifying for duty-free treatment, the EC and its member States began applying duties of 14% to set
top boxes with a communication function.
3. Under the amendments, any set top box having a communication function – i.e., a
microprocessor based device, incorporating a modem fo r gaining access to the Internet and capable of
interactive information exchange – is excluded from the duty-free heading and subject to a 13.9%
duty – merely if it also happens to have a hard disk. These actions do not accord with the
commitment in the EC Schedule to provide duty-free treatment to set top boxes with a communication
function, wherever classified. The EC Schedule provides a definition of a "set top box with a
communication function." This definition is reflected in ITA Attachment B. Under the terms of the
Schedule, when a device has the following thr ee characteristics, it is a set top box with a
communication function (and thus is to be accorded duty-free treatment): (1) it is a microprocessor-
based device; (2) incorporating a modem for gaining access to the Internet; and (3) having a function
of interactive information exchange.
4. The devices the EC subjects to duties are "set top boxes with a communication function," and
the EC has conceded as much. They are micr oprocessor-based devices (i.e., devices based on an
electronic circuit (or chip) performing functions with assistance of internal memory). They
incorporate modems for gaining access to the Internet , and have a function of interactive information
exchange. Indeed, the EC conced es in the CNEN that devices subject to duties are "set top boxes,"
and also has acknowledged that they have a communication function.
5. In effect, the EC appears to read its obligations as if the definition in Attachment B and its
WTO Schedule contained an additional requirement that , in order for a device to be considered a set-
top box with a communication function, it must not be equipped with a hard disk. In no respect does
the text of the EC Schedule support the view that STBs with a communication function may no longer
qualify as such merely due to the presence of a hard disk or other "recording or reproducing"
apparatus. Rather, the text sets forth three straightforward criteria – if present, the product qualifies as
a set top box with a communication function, and is entitled to duty-free treatment.

6. This interpretation of the EC's tariff concession is consistent with, for example, the view of
the Group of Experts in the GATT dispute Greek Increase in Bound Duty . As was the case with
respect to gramophone records, ITA participants did not qualify the words "set top box with a
communication function" other than by specifying the three attributes described above. Thus, by
arbitrarily excluding set top boxes with a communication function from duty-free treatment due to the
presence of a hard disk or other apparatus, the EC and its member States have acted inconsistently
with their obligations.
7. The amendments to the EN for 8528 71 13 add itionally operate to exclude from duty-free
treatment devices that have particular types of modems. STBs with a communication function that do
not have "modems" as the EC defines the term receive a 14% duty. Thus, under the EC measure, a set
top box with a communication func tion is disqualified from duty-free treatment merely because it
gains access to the Internet with a device that opera tes through an Ethernet or network connection, a
wireless based connection (i.e., WLAN or "wireless LAN"), or a digital communications network
(ISDN), using an RJ-45 connector, rather than an RJ -11 connector. The EC also states that STBs of
the duty-free tariff line must incorporate a video tuner, and that "IP-streaming boxes" – STBs which
use decoders and other technology instead of a tune r to enable a television set to display television
signals sent by the service provider – are classified in a dutiable tariff line, notwithstanding the fact
that these devices have all the attributes of a set top box with a communication function.
8. Both from a technical standpoint and based on the ordinary meaning of the terms in its
Schedule, the EC measure is contradictory and lacks basis in logic. First, there is no basis to
conclude, based on the ordinary meaning of the terms, that devices that communicate using ISDN-,
WLAN- or Ethernet technology are not "set top boxes which have a communication function" –
devices which, among other things, "incorporat[e] a modem for gaining access to the Internet." A
"modem" is equipment that connects data terminal equipment to a communication line. Devices that
operate through an Ethernet or network connection, a wireless based connection (i.e., WLAN or
"wireless LAN"), or a digital communications ne twork (ISDN) are modems — they connect the set
top box to a communication line and convert signals produced by one type of device to a form
compatible with another.
9. In the amended CNEN, the EC claims that these devices "perform[] a similar function to that
of a modem" but "do not modulate and demodulate signals," and therefore are not entitled to duty-free
treatment. Even as a technical matter this asserti on is incorrect. Each of the devices in question
modulates and demodulates signals — that is, they vary some characteristic of the electrical signal as
the information to be transmitted on the communica tion medium varies, which is precisely what
enables the device to communicate with another source.
10. The context in which the term "modem" appears in the EC Schedule (which under
Article 31(1) of the Vienna Convention is also rele vant to its interpretation) provides further support
for this reading of the text. The text does not limi t the term "modem" to devi ces of a particular type,
and indeed the phrase "communication function" is br oad. In this context, modems, of any type,
which enable a set top box to gain access to the Internet, qualify as such. By arbitrarily singling out
devices with certain types of modems (and certain connectors), the EC measure results in the
imposition of 14% duties on set top boxes with a communication function.
11. Furthermore, as a technical matter, it is meaningless to rely on the type of connector – RJ-11
versus RJ-45 – as a basis to distinguish between the categories of devices that the EC claims are and
are not modems. Indeed, cable modems (which the EN recognizes as a type of modem) typically have
an RJ 45 connector. By treating the presence of an RJ 45 connector as indicative of whether or not
the product has a modem, the EC measure results in th e application of duties to products that even in

the EC's view have modems. Likewise, by excluding all devices that do not have a tuner – and, in
particular, STBs with a communication function that r eceive signals via Internet Protocol (TCP/IP) –
the EC imposes duties on STBs covered by its tariff concessions. An IPTV STB converts the
television signals sent by the service provider to vi deo and sound that can be displayed on a television
– the mere fact the STB receives the signal over a broadband connection and does not rely on a tuner
provides no basis to conclude that it is something other than a set top box with a communication
function.
12. The commitments at issue were incorporated into the EC Schedule as a result of the
conclusion of the ITA, and indeed, the headnote in the EC Schedule expressly refers to the ITA.
Article 1 of the ITA in turn provides that Member s' tariff regimes should "evolve" in a manner that
"enhances market access for informati on technology products". This context further supports the
conclusion that the EC's interpretation of the commitm ents in its Schedule is incorrect. Nor would it
accord with other language contained in the Preambl e to the ITA, including the stated desire of
participants to "achieve maximum freedom of worl d trade in information technology products" and to
"encourage the continued technological development of the information technology industry on a
world-wide basis." In this regard, as explained previously, the negotiators of the ITA were well aware
of the issue of technological development, and the possibility that customs authorities might reclassify
merchandise covered by the Agreement. The text of the ITA – including Attachment B – and the EC
tariff concessions incorporated into its Schedul e as a result – including the ITA headnote affirming
that certain products receive duty-free treatment "whe rever...classified" – are written to ensure that
duty-free treatment would be maintained, even as, for example, technology evolved and a single
digital product came to have additional purposes previously assigned to other products. Indeed, under
the headnote to the Schedule, these products are entitled to duty-free treatment "wherever classified" –
even when the addition of functions or technologies such as a hard drive re sults in reclassification
within the EC CN, the EC is obliged to maintain the tariff treatment contemplated by the Schedule for
any device meeting the description of a "set top box with a communication function". It has failed to
do so.
13. In addition to its obligation under the headnote to provide duty treatment to set top boxes with
a communication function "wherever...classified", the EC also committed to provide duty-free
treatment to goods described by individual tariff lin es in its Schedule. In order to implement its
obligations under the ITA, the EC bound three su bheadings at zero duty that the EC identified as
including STBs with a communication function, within the meaning of Attachment B. Each of these
tariff lines has a bound duty rate of zero in the EC Schedule. In 2000, the EC modified its Schedule to
add another tariff line – 8528 12 91 – which it also identified as including set top boxes with a
communication function within the meaning of Attachment B, and which it bound at zero duty. The
EC's failure to provide duty-free treatment to set top boxes with a communication function is also
inconsistent with its obligation to provide duty-free treatment to the goods described in these tariff
lines.
14. The CNEN amendments discussed above were approved by the Tariff and Statistical
Nomenclature Section of the Customs Code Co mmittee (Customs Committee) in October 2006 and
May 2007, respectively. Yet the EC failed to publ ish the amendments in its official journal until
May 2008, over a year after the amendments had been approved. This delay is not consistent with
GATT 1994 Article X:1. These amendments, which pl ainly pertain to the classification of products
for customs purposes, and affect the rates of duty for those products, were not published "promptly"
as required by GATT 1994 Article X:1. Indeed, they did not appear in the EC's official gazette for
over a year after approval, making it virtually impossible for affected companies and other Members
to access them in a reasonable manner.

15. At the same time, member States were applying duties on imports of set top boxes with a
communication function using the reasoning set forth in the amendments. Article 12(5) of the
Community Customs Code provides that BTI shall cease to be valid "where it is no longer compatible
with the interpretation of one of the nomenclatures referred to in Article 20(6)." Indeed, according to
BTI Guidelines, "Member States should not issue new BTIs that are contradictory to a legal measure
which has been voted in the Customs Code Committee, even if this measure is not yet published ."
Consistent with this view, during a discussion at the October 2007 meeting of the Customs Code
Committee of "the use of statements in the minut es of the Committee and the application of voted
measures before their publication," the Chairman noted that "as soon as the Committee has rendered
an opinion on the classification of a specific type of product, no BTI should be issued contrary to that
opinion and... this opinion should be respected by a ll member States. It follows from the above that
as soon as an opinion has been voted, member States can issue BTIs for the products concerned, even
before the measure has been adopted by the Commission and published in the Official Journal."
16. The EC's action is also inconsistent with GATT 1994 Article X:2. The CNEN constitutes a
"measure of general application" – it is applied by EC and member State customs authorities in
determining classification for all importers of flat panel display devices. The application of the
CNEN resulted in the reclassification of STBs from a duty-free tariff line into a tariff line with duties
of up to 14%, and thereby the CNEN "effect[ed] an advance in a rate of duty...on importers." The
EC's failure to promptly publish these measures, while imposing duties on importers using the
reasoning contained in them, created an untenable situation for importers and Members alike.
Through its actions, the EC failed to accord to tr aders the treatment to which they are entitled, and
thus the EC acted inconsistently with GATT 1994 Articles X:1 and X:2.
II. CERTAIN FLAT PANEL DISPLAY DEVICES
17. Flat panel display devices are included in both Attachment A and Attachment B of the ITA.
Attachment B describes certain flat panel displa y devices as "Flat panel display devices (including
LCD, Electro Luminescence, Plasma, Vacuum-Fluorescence and other technologies) for products
falling within this agreement, and parts thereof." Based on the ordinary meaning in context of the
terms in the EC's Schedule, LCD monitors are "fla t panel display devices...for products falling within
this agreement." In the ITA, the parenthetical following the terms "flat panel display devices"
specifically identifies LCD flat panel display devices as one example of a flat panel display device.
Computers ("automatic data processing machines") ar e among the "products falling within" the ITA.
LCD monitors "for" computers are therefore among the devices covered by the EC's commitment
with respect to flat panel display devices. Ther efore, under the headnote, the EC and its member
States are obliged to accord duty-free treatment to flat panel display devices for ITA products, and in
particular LCD monitors, wherever they are classified.
18. Under the EC measures, any device with DVI is excluded from its tariff concession,
ostensibly because in the EC's view it is not for a computer. Yet this single physical attribute
provides little if any information about whether a FPD is "for" products falling within the ITA. DVI
is a standard computer connector. As explained in paragraphs 45-55, supra, DVI was developed as a
standard connector for the computer industry to allow computers to transmit digital signals to a
display device. Approximately half of all LCD monitors have a DVI connector. Indeed, some
devices with a DVI connector must be connected to a computer in order to receive video signals. For
example, certain monitors with DVI are configured to accept a single signal and a single bandwidth.
As their product manuals indicate, these devices cannot
operate without a computer to convert the
signal from one frequency to another. Yet even thes e devices are subject to duties in the EC simply
because they have DVI.

19. Furthermore, by relying on individual technical characteristics to exclude devices simply
because they might be used with something other than a computer, the EC and its member States fail
to accord duty-free treatment to LCD monitors "for " a computer. As noted above, under the EC and
member State measures, even if a monitor is ma inly for use with an automatic data processing
machine, it is dutiable if it is merely capable of being connected to a non-ADP machine. The text,
however, contains no such limitation. Rather, th e commitment uses the general term "for" – "a
function word to indicate purpose." Indeed, the EC's own position on how the devices are used is
contradictory – while the EC states in Regulation 493/2005 that LCD monitors are "mainly used as
output units of automatic-data processing mach ines", it then finds that the devices are not
"principally" used in an automatic data processing sy stem. In essence, the EC has concluded that the
devices in question both are and are not principally fo r use with a computer, and in either event, are
not entitled to duty-free treatment. Similarly, the EC's reliance on a "sole or principal" use standard
cannot be reconciled with its repeated assertion that monitors "capable" of connecting to a device
other than a computer are not entitled to duty-free treatment. Thus, the EC's position, even setting
aside the ordinary meaning of the tariff concession and simply focusing on its own description of its
measures, accords neither with logic nor the facts.
20. By providing duty-free treatment only to devices that are "solely" for use with a computer
(and even excluding devices that are solely for use with a computer merely because they have a DVI
connector), the EC and its member States fail to accord duty-free treatment to many LCD monitors
that are "for" ITA products.
21. As noted previously, Article 1 of the ITA provides that Members' tariff regimes should
"evolve" in a manner that "enhances market access fo r information technology products." The tariff
commitments in the ITA were designed to ensure th at duty-free treatment would be maintained, even
as new technologies, such as DVI, developed. Flat panel display devices for ITA products are entitled
to duty-free treatment "wherever classified" – even when the addition of technologies such as DVI
results in reclassification within the EC CN, the EC and its member States are obliged to maintain the
tariff treatment contemplated by the Schedule for any device meeting the description of a "flat panel
display device for" an ITA product. They have failed to do so.
22. In addition to its obligation under the headnote to provide duty-free treatment to flat panel
display devices for ITA products "wherever...classi fied", the EC and its member States also
committed to provide duty-free treatment to goods iden tified in individual tariff lines in the Schedule.
In particular, tariff line 8471 60 90 (HS96) describes "input or output units, whether or not containing
storage units in the same housing, other, other." LCD monitors are "input or output units" of this
tariff line. The mere fact that a device uses a DVI connector to transmit the information displayed
does not render it something other than an input or output unit.
23. Beyond the language used in the individual ta riff line, other relevant context supports the
conclusion that an LCD computer monitor, whethe r or not equipped with DVI and whether or not
solely capable of being used with a computer, meets the description in 8471.60 (HS96).
Heading 84.71 includes several subheadings that d escribe different types of computers, computer
systems, and devices used in connection with co mputers, including printers, scanners, and other
devices. Each one of these subheadings was include d in the ITA, and all were included in the EC
schedule of concessions. All types of computers and all types of computer units – separately or in
various combinations – fall within heading 84.71. All of these items were included in the concessions
negotiated and codified in the EC Schedule. Nothin g in the language or structure of heading 84.71
would support the conclusion that by virtue of the presence of a DVI connector, monitors fall outside
the scope of heading 84.71 and its associated tari ff commitments. Nor does the language or structure
of heading 84.71 limit coverage to LCD monitors that can only receive input from an ADP machine.

24. Note 5(B-C) to Chapter 84 of HS(1996) confirms that the mere possibility that a monitor
could be connected to something other than an au tomatic data processing machine is not sufficient to
exclude it from heading 8471. Rather, a device that is either "solely" or "principally" used in an
automatic data processing system may be considered a "unit" for purposes of heading 8471. Under
the EC and member State measures, however, as expl ained above, any device that is not "solely" for
use with an ADP machine (and indeed some devices that are "solely" for use with an ADP machine)
are excluded from heading 8471 and from duty-free treatment.
25. Therefore, in addition to failing to adhere to their obligations under the headnote incorporated
into the EC Schedule by virtue of Attachment B, by imposing duties on these products, the EC and its
member States have acted inconsistently with its obligation to provide duty-free treatment for
products described in tariff line 8471 60 90 (HS96) of the EC Schedule.
26. The EC and its member States have also provided less favorable treatment within the meaning
of Article II:1(a) of GATT 1994 to products subject to the temporary duty suspension. By providing
flat panel display devices of 19 inches or less with a duty suspension, rather than permanent duty-free
treatment, the EC and its member States provide treat ment "less favorable" than that provided in its
Schedule for these devices as well. The headnote to the EC Schedule provides that the duties on
Attachment B products, such as flat panel display de vices, shall be "bound and eliminated". The duty
suspension, however, is temporary – as the regulation states, it is provided "for a limited period" only,
lasting at most two years at a time. Furthermore, it is conditional: it may be terminated unilaterally at
such time that the EC considers that the conditions for its continuation are no longer fulfilled. These
conditions, it should be noted, are not contained in the EC Schedule.
27. The EC's failure to provide permanent duty-fr ee treatment to the products adversely affects
imports – for instance, companies have no certa inty that LCD monitors will receive duty-free
treatment upon importation into the EC, particularly as the termination date of the duty suspension
draws near. After the duty suspensi on has terminated (as is currently the case), they are subject to
duties. As with divergent tariff classification, the EC 's use of duty suspensions rather than permanent
duty-free treatment adversely affects the trading envi ronment in the EC, and results in less favorable
treatment than the bound duty-free treatment accorded by the EC Schedule.
III. CERTAIN MULTIFUNCTION DIGITAL MACHINES
28. Multifunction digital machines – devices that pe rform multiple functions such as printing,
facsimile transmission, scanning, and digital copying – were included in Attachment A of the ITA,
which provides for duty-free treatment for a wide range of computer peripherals and facsimile
machines, including goods of s ubheading 8471.60 (HS96) ("Automatic data processing machines and
units thereof" … "Input or output units, whether or not containing storage units in the same housing,")
and subheading 8517.21 (HS96) ("Elec trical apparatus for line telephony … and telecommunications
apparatus for carrier-current line systems or for digital line systems" … "Facsimile machines").
29. Through these commitments, the parties agreed to treat as duty-free both (1) computer
("automatic data processing machine") peripherals (" input or output units") such as printers and
scanners; and (2) facsimile machines. Pursuant to the ITA, the EC modified its Schedule to bind the
duty rate for these products at zero. As a resu lt of these tariff concessions, multifunction digital
machines are entitled to duty-free treatment.
30. The EC and its member States impose duties on certain MFMs which are "input or output
units". An "input or output" unit is a device whic h "accepts new data, sends it into the computer for
processing, receives the results, and translates them into a useable medium." Multifunction digital

machines which connect to computers are input or output units – they, for example, receive signals
from the computer and provide the results to the user in the form of a printed page, and take
information from a hard copy and process it into an electronic file provided to the computer for
storage or transmission, or to be converted into a printed image and deleted.
31. The number of pages per minute that a device produces has absolutely no bearing on the
ordinary meaning of "input or output unit," nor any significance from a practical standpoint – most
MFMs currently sold which connect to computers ar e capable of producing copies at a rate of more
than 12 pages per minute. Instead, the ordinary meaning of the term focuses on the manner in which a
device interacts with a computer. Thus, a page per minute standard, such as that adopted by the EC,
does not provide a meaningful basis on which to iden tify "input or output units " eligible for duty-free
treatment. The terms of heading 8471 and its s ubheadings provide strong contextual support for the
conclusion that MFMs with computer connectivity are included within the scope of the EC's tariff
concession for "input or output units". First, as noted above, the ITA covered a wide range of
computer peripherals, including printers and scanners, as well as facsimile machines and some
photocopiers. All types of computers and all type s of computer units – separately or in various
combinations – fall within heading 84.71 (HS96), a ll of which was included in the EC's ITA tariff
concessions. MFMs operate by combining a scan ner and a printer – both devices covered by
heading 8471 and included in the ITA. The notion that two devices that are computer units covered
by heading 8471 (HS96) and entitled to duty-free treatment would no longer be entitled to duty-free
treatment merely because they are combined into a single product (and one that itself constitutes a
computer unit) does not accord with a proper read ing of heading 8471. Nothing in the language or
structure of heading 84.71 (HS96) would support excluding MFMs – devices combining a scanner
and printer, used in connection with computer s both for inputting data through scanners and for
outputting data through the printer unit – from the scope of heading 84.71 (HS96).
32. Furthermore, the terms of heading 9009 – the provision in which the EC claims these devices
fall – in fact supports the conclusion that th e tariff concession in line 8471.60 (HS96), not
heading 90.09 (HS96), covers MFMs. In particular, heading 9009 uses the term " photocopying."
MFMs are not "photocopiers". First, MFMs pe rform a range of functions, including scanning and
printing, that are not performed by a photocopier. The printer function of the device is in many
respects the most significant. While an MFM also typically performs a copying function, the manner
in which it does so sets it apart from a "photocopi er" in important ways. Digital copiers do not
perform the function of photo copying – they do not use light to reproduce an image. Other relevant
headings in Chapter 90 are consistent with this interpretation of the term "photocopying" – all of
which refer to optical and photographic technologies . Each of these headings, like heading 9009,
pertains to optical technologies – not digital devices such as an MFM.
33. Insofar as it may be considered relevant cont ext, the HS provides additional support for the
above interpretation of heading 8 471. Consistent with note 5 to Chapter 84 of the HS, the
multifunction digital machines in question are of a kind solely or principally used in an automatic data
processing system, are connectable to the central processing unit (CPU) of an automatic data
processing machine, and are able to accept or deliver data in a form (codes or signals) which can be
used by the system. The Harmonized System Explanatory Note ("HSEN") to heading 90.09 (HS96) is
also consistent with the interpretation of the term "photocopying" advanced above. An MFM is not a
"photocopier" as this term is defined in the HSEN – an optical image of the original document is not
projected onto a photosensitive surface to produce a copy. Therefore, these devices do not fall within
heading 90.09 (HS96).
34.
As has been noted with respect to the other IT A products of concern in this dispute, the ITA
provides relevant context for interpreting the obligati ons at issue. As such, it equally supports the

conclusion that the obligation in the EC Schedule with respect to heading 8471, and subheading
8471.60 in particular, includes MFMs. In particular, Article 1 of the ITA provides that Members'
tariff regimes should "evolve" in a manner that "enhances market access for information technology
products." Given this language, it is appropriate to interpret the ITA tariff concessions reflected in the
EC Schedule broadly, including the concessions for heading 8471. In view of this and the clear
language of the commitments described above, MFMs which are connectable to computers fall within
the EC concession for "input or output units".
35. As part of its tariff concessions following c onclusion of the ITA, the EC provided for
duty-free treatment for all products in heading 85 .17, including "facsimile machines" of tariff
line 8517 21 00. Certain facsimile machines – in particular devices that do not have the ability to
connect to a computer or computer network, but have a scanner device and are able to reproduce more
than 12 pages per minute with that device – have been subjected to duties of 6%. The facsimile
machines in question have scanners, which are used to convert an original document into digital data
that can be sent as a facsimile. As explained prev iously, while these devices ma y be able to digitally
reproduce files, none of them perform a photocopying function. Thus, devices combining a printer,
scanner, and facsimile machine, which are not cove red by heading 8471, are otherwise covered by the
terms of heading 8517, as "facsimile machines".

ANNEX A-2

EXECUTIVE SUMMARY OF THE OPENING ORAL STATEMENT BY
THE UNITED STATES AT THE FIRST SUBSTANTIVE MEETING

1. This dispute centers on concessions made in c onnection with and following the conclusion of
the Information Technology Agreement, or ITA. The ITA remains a major achievement of the post-
Uruguay Round WTO system. Through the ITA, Members eliminated duties on a wide range of
information technology products, in order to fost er development, innovation, and the spread of
technology across the globe. In the Preamble of the Agreement, Ministers acknowledged these vital
goals.
I. EC IMPLEMENTATION OF ITA AND IMPOSITION OF DUTIES ON ITA
PRODUCTS
2. One of the ITA's more significant features is a dual approach to product coverage: using
tariff nomenclature as well as general product descriptions (Attachment B) to ensure duty-free
treatment for information technology products "where ver...classified." Products may be covered by
one or both of Attachments A and B. As a result of the ITA, the EC and certain of its member States
modified their Schedules of Concessions in two wa ys: first they bound at zero duties on individual
tariff items and second, they incorporated a head note to their Schedules providing for duty-free
treatment for Attachment B products "wherever...classi fied". In the process, the EC and its member
States bound themselves to provide duty free treatment to a wide range of IT products, including the
three products at issue in this case: set top box es with a communication function, flat panel display
devices, and multifunction digital machines. Yet, notwithstanding these express commitments, the
EC and its member States (hereafter, "EC") now imposes duties on these products.
3. They have done so through a steady stream of measures singling out arbitrary technical
characteristics to exclude a product from duty free treat ment – such as the presence of a hard disk or
the type of modem technology a product uses to co mmunicate, the presence of a DVI interface, or the
ability to reproduce more than 12 pages per minute. As products with these particular technical
characteristics become increasingly ubiquitous, the e ffect of the measures becomes more pernicious.
Half of LCD monitors today are equipped with a DV I plug, and therefore they in the EC's view fall
outside the coverage of their concessions resulting from the ITA. A large and growing majority of
MFMs can reproduce more than 12 pages per minute – ergo, they are subject to EC duties. Set top
boxes increasingly use newer modem technologies or in corporate a hard disk and are thus according
to the EC excluded from its duty-free obligations. Under the EC measures, the more industry
innovates — even incremental improvements such as faster print speed or a new connector cable —
the more duties will be levied on IT products enteri ng the EC. As we will discuss, this approach is
flatly inconsistent with the letter of the EC's WT O tariff schedule. It is also a perverse upending of
the ITA and inconsistent with Ministers' stated intent to "encourage continued technological
development."
II. OVERVIEW OF KEY THEMES IN EC SUBMISSION
4. Before responding to the EC's arguments on pa rticular products, I would like to begin by
briefly discussing three key themes evident in the EC's response, reflecting an overarching effort on
the EC's part to distract from the core legal i ssues at hand: first, professing confusion about what
products are at issue, when the measures themselves define the products; second, professing confusion
about what concessions are at issue, despite indivi dual tariff lines and a headnote that are identified
clearly in the panel request and complainants' subm issions; and third, professing uncertainty about the

measures at issue, claiming variously that the me asures do not mean what they say because of CN
amendments, court judgments, temporary duty suspensi ons, et cetera. What the EC never does in its
148 page submission, however, is face up squarely to the complainants' challenge of its measures and
defend them on their own terms.
5. First, there is the matter of the product. Th roughout its submission, the EC claims confusion
about the products at issue in the dispute, and on this basis proceeds to recast the dispute as one over
entirely different products than the ones the compla inants have identified in their panel request and
submissions. The EC's apparent confusion is curi ous, given that the EC's own measures define the
scope of products that they improperly assume to be dutiable. In any event, the complainants have
been clear. To supplement our discussion of the EC measures, we have offered detailed descriptions
and supporting evidence concerning each of the products affected by those measures: (1) set top
boxes which have a communication function – a type of electronic apparatus that sits atop (or below)
a TV with the ability to communicate over the Inte rnet, (2) multifunction digital machines – computer
peripherals that can scan, print, copy and/or fax; and (3) flat panel display devices for computers –
computer displays using technology such as LCD allowing them to achieve a thinner profile than
conventional cathode ray tube monitors. These are th e products described in and affected by the EC
measures – not, as the EC claims, video recorders, or photocopiers, or so-called "multifunction
monitors."
6. Beyond simple obfuscation, the EC's apparent insistence on a model-by-model description of
each product appears either intended to convert th is case into a classification matter (which it
decidedly is not) or to set an impossibly high burden for demonstrating an "as such" breach of
Article II. This is a tariff dispute. The ques tion is whether the measures result in imposition of a
tariff that is not consistent with Article II. To show that the measures are "as such" inconsistent, we
are not required to demonstrate that they result in duties on every single model of FPD, STB, or MFM
that crosses the EC border – rather, we need to s how that the measures necessarily lead EC customs
authorities to impose duties on one or more products subject to their commitments. As the United
States demonstrated in its submission, by excluding from duty free treatment any FPD, or STB, or
MFM, with a given technical characteristic – such as DVI, or a particular type of modem or presence
of a hard drive, or the ability to reproduce more than 12 pages per minute – the measures result in the
imposition of duties on products covered by the EC 's duty-free tariff obligations. Thus, the EC
measures do not accord with Article II.
7. Second, the EC ignores the text of the concessions at issue, contrary to the customary rules of
interpretation reflected in the Vienna Convention on the Law of Treaties (VCLT). Sometimes it does
so in favor of other concessions d escribing products that are not at issue in this dispute (such as CRT
monitors or photocopiers). In other cases, it focu ses on various extraneous material – miscellaneous
ITA committee meeting documents, uninformative negotiating material, or assorted US customs
classification opinions. Most of this material is simp ly irrelevant to interpreting the text at issue, and
more careful review makes clear that none in fact even supports the EC interpretation. In the one
instance in which the EC takes interest in the actua l text of a concession that is the subject of this
dispute – the Attachment B description of set top b oxes – its argument is flatly contradicted by the
text of a related concession it made in 2000. As we will shortly describe, "set top boxes with a
communication function" was a concession that the EC itself drafted and formally added to its
Schedule in 2000. The complainants have misquoted nothing; it is the EC that appears intent on
disregarding the terms of its commitments.
8. The EC avoids directly addressing other important text in its Schedule: its commitment, made
to implement ITA Attachment B, to provide duty free treatment to the products in question
"wherever…classified." As the United States explained in its First Submission, this sentence was

incorporated into the EC's Schedules of Concessi ons, as a headnote. The concession in question was
repeatedly quoted throughout the US submission and is contained in Exhibit US-7. Thus, when the
United States and the co-complainants refer to th is commitment, there shoul d be no confusion about
where the obligation rests. The commitment is explicit in the EC's Schedules. Rather than discuss the
relevant concession, the EC claims confusion and instead focuses on particular tariff lines or
provisions relating to entirely different products. Ne ither the concessions in particular tariff lines nor
those for other products substitute for the overarchi ng obligation to provide duty-free treatment to the
Attachment B products in question "wherever …classified". Furthermore, while the EC concedes that
the logic of the Harmonized System is not releva nt to interpreting Attachment B concessions, it
nonetheless relies on the HS throughout its submission – even when discussing Attachment B.
9. Finally, throughout its submission, the EC attemp ts to distract from the very actions that
prompted this dispute: the Regulations, Explanatory Notes, provisions of the CN, et cetera, that have
resulted in WTO-inconsistent tariff treatment. Instead, it describes the recent extension of a
temporary duty suspension on monitors without even responding to complainants' claim that a
temporary duty suspension provides less favorable tr eatment than that required by the EC's Schedule.
It offers – and mischaracterizes – a handful of US customs classification opinions. Perhaps most
remarkably, it attempts to defend its actions w ith two recent ECJ opinions that decidedly do not
support the EC's position. The United States invites th e Panel to review those opinions, some of the
more salient elements of which are excerpted by Si ngapore in its third party submission. With regard
to the measures at issue, the EC variously clai ms that they are not binding, that, owing to
clarifications of "current EC law" provided by the ECJ, they do not mean what they say, that they
have "effectively" lost their relevance due to modifi cations of the CN, or that the EC is "reviewing"
them and may make "adjustments." If anything, these statements merely suggest that even the EC
recognizes the flaws inherent in its own measures.
10. With these general themes in mind, I will now proceed to discuss the US claims regarding set-
top boxes, responding to significant assertions by the EC. After that, I will turn briefly to highlight
some of the more significant issues relating to FPDs and MFMs.
III. SET TOP BOXES "WITH" A COMMUNICATION FUNCTION (AND SET TOP
BOXES "WHICH HAVE" A COMMUNICATION FUNCTION)
11. As the United States explained in its first submission, set top boxes which have a
communication function were included in the ITA. In the headnote to its Schedules, the EC
committed to provide duty-free treatment to these pr oducts "wherever...classified." Furthermore, it
bound at zero duty four individual tariff lines which it identified as including the STBs described in
Attachment B. As explained in the US submission, three of those lines were bound in 1997; the
fourth was added in 2000, covering set top boxes "with" a communication function. However, as a
result of the EC measures, any such device with a hard disk is no longer entitled to duty-free treatment
when imported into the EC. Likewise, any such device with an Ethernet, WLAN, or ISDN modem,
including any device that does not have a tuner, is subject to duties.
12. The EC first claims that the CNEN that led to th is result is not binding. While we of course
would be pleased if the CNEN did not apply, ampl e evidence submitted by complainants – including
BTI, statements of the Customs Code Committee, ECJ opinions, and the EC's own statements in
previous WTO disputes – demonstrates its legal ef fect. Following the CNEN, member State customs
authorities consistently impose duties on any device with a hard disk or the particular modems
described above. In some cases, they have even cited to the Customs Code Committee decision
approving the CNEN as a basis for their action. Th e EC offers no evidence to the contrary. Related
to its argument that the CNEN is non-binding, the EC asserts in this proceeding that the presence of a

hard disk can be a "significant" element in its consid eration of where to classify a product, but is not
"taken in isolation of the other elements." Yet again, the EC points to no instance since the CNEN
was issued in which an STB with a hard disk h as been accorded duty-free treatment by the EC. We
can only conclude that this is because the CNEN h as had its intended effect. The EC also points to
nothing in the plain language of the CNEN that supports its insinuation that the presence of a hard
disk is not dispositive – to the contrary, as the United States explains in its written submission, the
text of the CNEN provides that if a set-top box contains a hard disk it is to be classified in a dutiable
category. And this is precisely what EC customs authorities have done – any device with a hard disk
is classified in the dutiable heading, regardless of other "objective characteristics" the product may
have.
13. Beyond claiming (without support) that the measure does not result in the imposition of duties
on STBs, the EC now attaches great significance to the use of the phase "which have" rather than
"with" in Attachment B. It argues that this limits the concession to products that are solely comprised
of the three characteristics enumerated after the colon in Attachment B. First, contrary to what the EC
suggests, the United States has accurately quoted A ttachment B in our submission. Furthermore, the
substantive distinction between "with" and "which have " the EC now claims exists is without basis.
The EC itself recognizes this. It added a tariff line to its Schedule in 2000, which it bound at zero,
covering – and I quote – "set top boxes with a communication function." In that tariff line, the EC
itself used the phrase "set top boxes with a communication function." Thus, the EC's Schedule also
contains a concession with respect to "set top boxes with a communication function." Moreover, the
EC indicated that goods meeting the Attachment B de scription of set top boxes were classified in that
tariff line. If "which have" had the meaning the EC now attaches to it, this begs the question of why
the EC itself opted to use "with" in place of "which have" when modifying its Schedule in 2000.
14. More remarkably, in addition to ignoring the text of its Schedule as modified in 2000, the EC
claims that the 2000 modification covered a product not included in the ITA. It does so
notwithstanding the fact that its own notification rep eatedly refers to the product at issue as an "ITA
product" and attaches the tariff line in question to the description of STBs in Attachment B. The EC
now argues that set top boxes with a tuner "were not initially supposed to be covered by the ITA," and
claims that it provided duty free treatment to this "new" product merely in response to a request from
the United States. (I would note that this argument is rather ironic, given that, as the United States
explained in its submission, the EC is also denying duty-free treatment to STBs without a tuner – the
IP-streaming STB.) In any event, these assertions are quite simply contradicted by the facts, and in
particular the notification submitted by the EC in 2000 and contained in Exhibit US-26. We would
encourage the Panel to review this document. Furthermore, even if there were a substantive
distinction between "which have" and "with" (and ther e is not), with the resulting modification to its
Schedule, the EC is obliged to prov ide duty free treatment to set top boxes which have a
communication function, by virtue of the headnote and Attachment B, and is obliged to provide
duty-free treatment to set top boxes with a communication function by virtue of the tariff concession it
made for tariff line 8528 71 13. Both phrases are in its Schedule, and therefore both may be used to
describe the EC's obligations.
15. This begs the question of why the EC now goes to such lengths to disavow the action it took
in 2000. Considering the rest of its argument, th e reason is clear. The EC's acknowledgment in 2000
that STBs with tuners were covered by Attachment B is at odds with its assertion today that, if a
device has components beyond the three elements contained in the Attachment B description, it is
excluded from the ITA. Just as a device with a tuner may meet the terms of the description of an STB
in Attachment B, even though the text does not speci fy tuners as one of the required attributes of an
STB, a device with a hard disk or different type of modem may meet the terms of Attachment B,
provided it has the three attributes specified therein.

16. The EC proceeds to protest that covered de vices "cannot endlessly assume other additional
features and technical elements" – yet this misses the point, and distorts the US position. The STBs in
question do not "endlessly assume" additional features or technologies. They are STBs which have a
communication function, within the ordinary meaning of the concession: they are
microprocessor-based devices, incorporating a modem for gaining access to the Internet, and having a
function of interactive information exchange. For th e EC, it is irrelevant that they have all of these
essential attributes. The presence of but one additional feature – a hard disk – or the fact that they rely
on a different modem technology is, according to th e EC, a basis to deem them a "new" product and
exclude them from duty-free treatment. Thus, the i ssue in this dispute is not, as the EC claims,
whether a device is 1% STB and 99% "other." Under the EC measures, customs authorities look no
further than the presence of a hard disk or a par ticular type of modem to exclude the devices from
duty-free treatment.
17. The EC's position regarding modems illustra tes how far from its "99%" hypothetical the
measures in question in fact operate. For example, the EC concedes that, just like some of the devices
it considers modems, an ISDN modem communicates using a telephone line. Yet, according to the
EC, because it uses a technology "allowing for a fast er transfer" than other telephony-based modems,
it is not a modem. On that basis alone, it ex cludes any device with an ISDN modem from duty-free
treatment. Yet, as explained in the US submission, all the devices in question, including ISDN
modems, meet the ordinary meaning of the term "modem" – they modulate and demodulate signals.
As this example illustrates, we are not confronted with devices so far afield even from those on the
market when the concession was negotiated as to po se the difficult questions the EC claims are now
presented. The devices in question contain fairly simple but important improvements over those that
were available on the market at the time the ITA was negotiated – faster modem technologies, a hard
disk. Most importantly, they meet the description in the text of the concession. The EC's tariff
concessions do not disappear merely because a technol ogy improves. Rather, provided the product in
question meets the terms of the text, it is covered by the concession.
18. As with the other claims at issue in this di spute, the EC introduces various other ancillary
material in what can only be described as an attempt to distract from the ordinary meaning of the core
obligations at issue. First, in an apparent attemp t to suggest that the scope of the concession is more
limited than the ordinary meaning of the text itself, the EC describes a number of documents that were
prepared during the negotiations. Some of these items describe proposals made during the
negotiations, others offer an example of a product – WebTV – that Japan suggested would be covered.
On the basis of this document, the EC claims th at this proposal meant that only "WebTV-like"
products were covered by the final concession. Yet another document appears to reflect notes
prepared by an EC delegate which the EC asserts re presents a failed proposal to modify the text of the
concession from "which have" to "with". Strange ly enough, after introduc ing these documents, the
EC concedes that none sheds any light on the mean ing of the actual terms used in the concession to
which participants ultimately agreed.
19. Nevertheless, it must be emphasized that this mate rial is at most negotiating history. The EC,
in an attempt to elevate its importance, characterizes it as "surrounding circumstances" and claims that
it may be used to understand the ordinary meaning of the text. This interpretative sleight of hand
cannot be accepted: It is well established that , under VCLT Article 32, negotiating history and the
circumstances of conclusion of a treaty may only be resorted to in order to confirm the ordinary
meaning, or where the ordinary meaning is ambiguous or leads to a manifestly absurd or unreasonable
result. The EC has failed to demonstrate that either is the case here, and therefore, even if it qualifies
as negotiating history, the material in question is irrelevant.

20. With regard to the material the EC offers as c ontext, here again, the EC attempts to read a
concession out of the Agreement by relying on the tariff lines it and other participants identified in
1997 (as lines in which they classified the product) to define the universe of products covered today.
The EC misses the point: Attachment B products receive duty-free treatment "wherever …classified."
ITA participants did not limit the obligation to a single tariff line or group of tariff lines. Nor did they
all specify the same lines in whic h the product was at the time classi fied. To narrow the concession
based on participants' notification of the lines in whic h the products at the time were classified is to
render the headnote inutile. That is, if the ta riff lines themselves defined the scope of the
commitment, it would have been unnecessary for participants to include the Attachment B headnote in
their Schedules. They simply could have bound the relevant tariff lines at zero. Clearly, they did not
do so.
21. Finally, as the EC correctly notes, the United States, like the other complainants, has not
argued that the EC's classification of the products in question is otherwise inconsistent with its
classification law. That is because classification is a question for the EC and its courts to decide; it is
not a matter for this Panel to resolve. Yet the EC frequently confuses the issue of tariff treatment with
that of classification. For example, the EC's assertion that it would not be feasible for its customs
authorities to rely "solely on the narrative descr iptions in the ITA" to classify goods is a non sequitur.
The headnote to the EC's Schedule provides that th e EC must provide duty free treatment to set top
boxes with a communication function wherever classifi ed. How the EC accomplis hes that task is for
it to decide, provided it does so in a manner consiste nt with its WTO obligations. It has failed to do
so in this case.
22. Article X: As the United States explained in its submission, the set top box CNEN has not
only resulted in the imposition of duties on STBs co vered by the EC's duty-free concession, contrary
to Article II. In addition, the EC did not publish it for over a year after it was approved, and applied it
to collect the WTO-inconsistent duties even before it was published. The EC's response to the US
claim regarding Article X, and Artic le X paragraphs 1 and 2, is equa lly unavailing. The EC claims
that CNENs are not binding and that in any event votes of the Customs Code Committee are "merely
a step in the procedure" for adopting CNENs. With regard to the former issue, the legal and practical
consequences of CNENs are clear a nd I would refer the Panel to my earlier remarks on that subject.
On the latter, the EC asks this Panel to disregar d repeated statements by the chair of the Customs
Code Committee to the contrary, as well as the BTI Guidelines, and begs the question of why member
States would refer to the action of the Customs C ode Committee in their decisions (and indeed why
one would refer to it as a "decision"). The express reliance of member States on the CNEN, in
combination with the General Interpretative Rules and CN, demonstrate that the GIRs and CN alone
did not guide member State decisions.
23. Moreover, the fact that some member States were classifying devices in the dutiable heading
before the CNEN was voted on does not support the conclusion that the vote itself had no impact on
classification in the EC. If anything, it merely demonstrates that some member States had been acting
inconsistently with Article II even before the CN EN was issued. With the CNEN, the EC, as well as
all the member States, have come to act inconsistently with Article II. In effect, the EC attempts to
hide behind the WTO-inconsistent actions of certain member States to suggest that its own
WTO-inconsistent action has no consequence. This position is contradicted by multiple statements of
the Customs Code Committee, the references in th e BTI issued by member States, and the EC's own
statements in other settings, and should not be accepted by this Panel.
24. Finally, regarding the EC procedural account of the measure's adoption: publication of the
minutes of the Customs Code Committee meeting on the Internet is not, as the EC claims, sufficient to
satisfy the obligation in Article X to publish the me asure. The minutes of the meeting do not contain

the measure itself nor do they even contain enough de tail to allow a trader to know what rule is in
effect. Furthermore, the EC's claim that it wait ed until May 2008 to publish the final measure due to
the possibility of additional elements being added to it is premised on the notion that it could not have
published those elements that were in effect before applying them. This is quite simply wrong. Even
if the EC intended to adopt additional restrictions on duty-free treatment for STBs, it need not have
waited for an entire year to publish those already in effect, or to have imposed duties on imports based
on those decisions prior to their publication. Nor is doing so consistent with the obligations contained
in Article X.
IV. FLAT PANEL DISPLAY DEVICES
25. As it did with STBs, the EC mischaracterizes the products at issue – focusing on the so-called
"multifunctional monitor" and pointing to other concessi ons in its Schedule rather than the text of the
concessions complainants have identified. This is a dispute about the tariff treatment of flat panel
display devices for computers. The EC measures su bject those devices to duties, whenever they have
a DVI interface or are capable of connecting to a device other than a computer. This is not a dispute
concerning so-called "multifunctional monitors," as th e EC claims in its submission. Indeed, it is
unclear what the EC even means by "multifunctional m onitor." Whatever that term means, it fails to
capture the FPDs affected by the EC's measures, such as those that are primarily used with computers.
In fact, the EC measures even result in duties on de vices that are physically incapable of being used
without a computer – simply because they have DVI.
26. Furthermore, the EC has failed to demonstrat e that there is any ambiguity about the FPD
concession. Instead, the EC again distracts, by focusing on an irrelevant discussion in the ITA
Committee regarding whether "parts" were covered by the concession. This dispute pertains to
finished products and on that question the EC it self has taken the view that the ITA provision does
apply.
27. Moreover, while the EC attempts to attri bute great significance to the CRT monitor
concession in its Schedule, the concession at issue is that pertaining to flat panel display devices.
Neither the United States nor any of the other compla inants have contested in this dispute the EC's
treatment of CRT monitors. The EC claims that "it is not particularly important to distinguish
between immediate and broader cont ext," contradicting the approach that has been endorsed by the
Appellate Body on multiple occasions. The concessi on it discusses explicitly pertains to a device not
at issue in this case: monitors using CRT technology. The EC does not explain why the CRT monitor
concession is relevant "context" for the FPD conces sion, nor why a sentence in that provision which
does not appear in the FPD concession should nonetheless be read into the FPD concession.
28. Taken together, the EC's mischaracterization of the product as a "multifunctional monitor", its
insinuation that the FPD concession only covers parts, and its discourse on CRT monitors, lead to one
conclusion: the EC is attempting to argu e that the CRT monitor commitment is the only commitment
in Attachment B on "ADP monitors," suggesting that in its view it has no obligation under its
headnote to provide duty free treatment to any LCD monitors. This position is simply at odds with
the text of the concessions.
29. With respect to complainants' claim on the EC's tariff concession for subheading 8471 60 –
i.e., "input or output units" of ADP machines – the EC simply passes over the ordinary meaning of the
terms used therein. The EC asserts that "the re is no need to examine the arguments of the
complainants in respect of the ordinary meaning of the tariff term." Thus, it does not even attempt to
explain why it believes that FPDs do not fall within the ordinary meaning of terms used in the tariff
concession. It fails to explain why, for example, FPDs with a DVI connector, or FPDs merely capable

of connecting to a device other than an ADP sy stem, necessarily fall outside of that concession.
Instead, it discusses the text of various different concessions not relevant to complainants' claim, and
ignores the challenged measures entirely. In so doing, it fails to respond to complainants' claims.
V. MULTIFUNCTION DIGITAL MACHINES
30. Finally, with respect to multifunction digital machines, the EC's position appears to be as
follows: notwithstanding the fact that printers, scanners, and fax machines are all covered by the ITA,
when these products are combined into a single unit, that unit becomes a photocopier and falls outside
of the ITA, rather than an "input or output unit" or "facsimile machine". From a technical perspective
as well as based on the ordinary meaning of the text of the concessions, this position is unfounded.
31. As with the other claims in this dispute, the EC does not mount a direct defense to the claim
on multifunctional digital machines. Instead, the EC again seeks to point the Panel's attention to other
terms in its Schedule and inapposite, ancillary materials – rather than grappling with the language of
the EC measures and the text of the EC concessions that are subject to this dispute. For instance,
remarkably, the EC's argument on "ordinary meaning" is dedicated not to the ordinary meaning of the
phrase "input or output unit" – the concession complainants have identified as subject to this dispute –
but to an entirely different concession, that with respect to photocopiers.
32. Digital copiers are not "photocopiers". Only by characterizing the scanner as a system of
"lamps, lenses, and mirrors", ignoring the fact that an MFM does not use light to produce a copy but
rather to collect digital data, and incorrectly assertin g that an MFM projects the image of the original
document onto a photosensitive surface, can the EC r each the opposite conclusion. To be clear, an
MFM operates as follows: a scanner records individual points of light reflected from the image as it is
scanned, the scanned image is sent to the print controlle r, and is either stored as a file or is processed
by the print controller and sent to a print engine.
33. The EC makes much of the fact that in the lexicon of sales brochures and other nontechnical
sources, the term "photocopying" has acquired a popular usage that extends beyond its technical
meaning to include the act of reproducing documents on an MFM. This is akin to the popular usage
of the term "typing" to describe the act of word -processing on a computer, notwithstanding the fact
that no typewriter is involved. This popular meaning has no relevance to a proper interpretation of the
text of the concession, which is based on technical terminology.
34. Furthermore, as with the other products, the EC again relies on various ancillary documents in
an attempt to support its position. As a threshold matter, unless the EC demonstrates that the ordinary
meaning of the concession in context is ambiguous or leads to an absurd result, or is confirming the
ordinary meaning, there is no basis under the Vienna Convention to resort to the various
supplementary material it provides. The EC has not done so. Even were the material relevant, it does
not support the proposition that the EC advances.
35. Finally, while the EC offers a lengthy defense of the standard articulated by the European
Court of Justice in Kip for determining whether a product is clas sifiable in the duty-free heading, it
ignores the actual measure in dispute in this case: the provisions in the CCT imposing duties on any
device capable of copying more than 12 pages per minute (and, indeed, some devices regardless of
their speed). It nowhere explains how that measure is consistent with its obligations (or even with the
Kip standard), and indeed concedes that it may need to be amended. This aspect of the EC's
submission is most telling of all. In effect, the EC's argument may be read as an admission that the 12
page per minute standard constitutes an utterly ar bitrary criterion that results in the imposition of

duties on a significant share of MFMs on the market today, contrary to EC and member State
obligations.
VI. CONCLUSION
36. Throughout its submission, the EC reveals its view that any change to a device results in a
"new product" excluded from the ITA. This view is unsupported by the text of the concessions at
issue. Furthermore, if this position were accepted, virtually no products on the market today would be
covered by the ITA. Products ha ve improved over time, incorporat ed advanced features or improved
technologies, yet they still fall within the ordinary meaning of the original concessions. As the co-
complainants have explained in their submissions , the prospect of technological change was well
understood by the negotiators of the ITA. Had they believed that such change would rapidly
eviscerate the commitments made, as the EC appears to believe, one may question why so many
Members to this day attach such significance to th e Agreement. Indeed, just two years ago, the ITA
was characterized as a "major success since the establishment of the WTO." This sentiment cannot be
reconciled with the EC's belief that, with every t echnological improvement, every new feature added,
products fall out of the scope of the concessions, such that, from the moment the ink dried on the
page, the list of ITA-covered products has been steadily dwindling to nothing.

ANNEX A-3

CLOSING ORAL STATEMENT BY THE
UNITED STATES AT THE FIRST SUBSTANTIVE MEETING

1. In this closing statement I would like to highlight briefly a few aspects of our discussion over
the past several days that in our view are of particular importance to resolving this dispute.
2. To evaluate this case one must first evaluate the text – the text of the measures that
complainants have claimed give rise to a breach an d the text of the concessions complainants argue
have been breached. One must reason from the text.
3. First, with respect to the measures. Throughout its argument, the EC ignores the text of its
own measures. It claims that classification is done on a case by case basis, and that no single attribute
is dispositive, but that is not what the measures say. At times it appears to be defending two ECJ
opinions that were issued a few months ago – but these opinions, while helpful illustrations of the
numerous flaws in the EC measures, are not the me asures themselves. The measures at issue are
those identified in the panel request. They are in effect. The ECJ opinions did not result in their
withdrawal or modification. The EC may be in the process of modifying them or considering
modifying them, but it has not done so. Moreover, the measures mean what they say. They require
customs authorities to impose duties on products with particular arbitrary technical attributes. For
example, the STB CNEN states and I quote – "Set-top boxes which incorporate a device performing a
recording or reproducing function (for example, a hard disk or DVD drive) are excluded from this
subheading" (the duty-free subheading); it then identifies the dutiable subheading as the subheading in
which the product is classified. We have provided ample evidence, including a number of BTI, to
demonstrate that the CNEN has resulted in the appli cation of duties to any STB with these attributes.
The EC has offered no evidence to the contrary.
4. With respect to the concessions, the Vienna Convention recognizes the central importance of
the text, in particular in Article 31(1) which provi des that an interpreter consider "the ordinary
meaning" of the terms of the treaty in context and in light of its object and purpose. As the
complainants and virtually all of the third parti es have stressed, proper application of the Vienna
Convention is essential in interpreting the concessions at issue in this dispute. Yet, as we noted in our
opening statement, the EC continues to avoid th e text of the concessions the complainants have
identified as covering the products in question. It h as not offered an interpretation of the meaning of
the text "flat panel display devices for products falling within" the ITA. It has not offered an
interpretation of the meaning of "input or output unit." We can therefore only assume that the EC
accepts the argument of the complainants regarding the ordinary meaning of those phrases, both with
respect to flat panel display devices and with respect to multifunction digital machines.
5. As for the meaning of the set top boxes conces sions, the theory the EC offers is supported
neither by the text of Attachment B nor by the EC's modification in 2000. We do encourage the Panel
to review that document. The EC's claim th at it does not have a concession on STBs "with" a
communication function, that there is a substantiv e difference between "with" and "which have", and
that STBs with tuners were excluded from the Atta chment B description of STBs is wrong and flatly
contradicted by the 2000 modification.
6. What does the EC ask you to evaluate other than the text? Instead of the text, it would prefer
a hypothetical discourse on "functionality," on classifi cation, on various documents that say nothing
about the meaning of the treaty.

7. As our remarks throughout this session sugg est, the EC's discussion of "function" is
particularly troubling, and therefore I want to sp end a moment on it. The EC in essence appears to
believe that, regardless of the text, if a device come s to perform a function that is also performed by a
product for which the EC has not made a concession as a result of the ITA, that device becomes the
non-ITA product and falls out of the EC's duty-free commitments. This position is completely at odds
with the text of the concessions. I would like to spend a moment on it because it has deeply troubling
implications for the Agreement as a whole.
8. Our position is simple. What a product does is onl y relevant to determining whether or not it
is covered by a particular concession if the mean ing of the text of the concession specifies that a
product must do something to qualify or is disqualified if it does something else. One must look at
the text. And looking at the text of the concessions at issue, none define the products in the manner
suggested by the EC.
9. For example, the FPD concession states that an FPD must be "for" a product falling within the
agreement. "For" is a function word indicating pu rpose. The "purpose" in question is use with
another ITA product, e.g., a computer. The text of the concession does not, for example, exclude an
FPD "for" watching video or an FPD "for" television. Indeed, as some of the Chairman's comments
today suggest, today many people use their comput ers to watch video or even television. The
question, again, is whether it is for another ITA product. The EC measures provide that any FPD with
DVI and any FPD capable of receiving signals from some thing other than a computer is dutiable. As
we have argued, this rule necessarily results in the application of duties to FPDs that are "for"
computers. Just because something has a DVI plug, just because it could be connected to a device
other than a computer, does not mean it isn't "for" a computer.
10. Likewise, with respect to STBs, the concession covers STBs "which have a communication
function." Here, function is relevant only inso far as the STB must have a communication function –
and to know whether it has that function, it must meet the criteria listed after the colon. The text does
not provide that an STB may "only" have a commun ication function to qualify. It must be an STB,
and it must have a communication function. That is all. On the first criterion, I would emphasize that
the EC itself describes the products excluded from duty-free treatment as STBs. Thus we are not
talking about microwaves (as the EC posited yesterday) or video recorders. How do you know an
STB is an STB? By looking at the ordinary meani ng of the term and the objective characteristics of
the product in question.
11. To the EC, characteristics specifi ed by the agreement text are no t relevant. It is all about
function. The EC approach, however, does not respect the text of the agreement. The text of the EC
concessions was not written so as to enumerate even all of the functions that the products existing at
the time of the ITA's conclusion had. For exam ple, an STB may have the function of receiving
television signals, as we discussed earlier. The text doesn't say anything about receiving television
signals. Does this mean that these STBs were not c overed? No. Indeed, the EC in 2000 modified its
Schedule to add a new line containing these STBs and specifically attached this line to the Attachment
B description.
12. The fact is that the ITA covers products. It does not cover "functions" in the abstract, as the
EC at times suggests. Therefore, for example, when the EC says that the ITA excluded televisions it
cannot mean that the ITA excluded all devices on which you can watch TV. Watching TV on your
computer may rot your mind and keep you from getting your work done, but the ITA does not
penalize you for using your computer to do so, nor does it allow participants to impose duties on
computers that allow you to do so. Indeed, the IT A expressly includes computers with TV tuners in
them. There is no such thing as an ITA-covered function and a non-ITA-covered function.

13. What lesson can one draw from this example? On e must look at the text of the relevant EC
concession to determine whether a product is covered. Function is only relevant insofar as the text of
the relevant EC concession in the Schedule places requirements on function.
14. I would note that the implications of the EC position are serious and cannot be ignored. A
key product that lies at the heart of the ITA is the computer. Think of all of the functions that
computers perform – for example, you can listen to music on your computer, watch TV or DVDs,
record video, do your taxes. Does that mean that a computer is now a stereo, a television, a video
recorder – an accountant? Acceptance of the EC position would eviscerate the tariff concessions
resulting from the ITA.
15. It may be for these reasons that so many Members have taken a keen interest in this dispute,
and why so many, including deve loping country Members, expressed their concerns so eloquently
yesterday in defense of complainants' position regarding the EC approach. The ITA concessions were
and remain a critical tool in encouraging devel opment, technological innovation, and expansion of
trade.
16. On behalf of the United States, I would like to thank you for this opportunity to present our
views on some of the important issues presented by this case, and for your time, hard work, and
patience. I would also like to thank the Secretariat for the time they have dedicated to this dispute; we
greatly appreciate your work. We look forward to answering your writte n questions; to submitting
our rebuttal submission; and to seeing you again at the second panel meeting.

ANNEX A-4

EXECUTIVE SUMMARY OF THE SECOND WRITTEN SUBMISSION
BY THE UNITED STATES

I. EC INTERPRETATION OF THE HEAD NOTE AS "EXHAUSTED" BY OTHER
PROVISIONS
1. A central pillar of the EC's response to the US complaint rests on a theory that is without
basis in the text and utterly contrary to basic prin ciples of treaty interpretation: that the headnote has
no meaning, and is a nullity, " exhausted" by other provisions in the EC Schedule. In its answers to
the Panel's questions, the EC could not be clearer on this point. The EC's response of course begs the
question as to why it included the headnote in its Schedule in the first place, if as it asserts, the HS
codes alone define its commitments. The EC's in sistence that the headnote be read as a nullity does
not accord with the approach to treaty interpretatio n providing that interpretations should not be
adopted that render entire provisions of the Agre ements inutile, and moreover, underscores two
persistent flaws in the EC's analysis of the concessi ons at issue. First, rather than evaluate the
meaning of the headnote and associated product descr iption in Attachment B, the EC repeatedly
conflates its analysis of the headnote with that for concessions for individual tariff lines, on the
assumption that those lines define its commitments. This material is quite simply irrelevant to an
analysis of the headnote — the headnote provides for duty free treatment for the goods in question "
wherever...classified" , and moreover the concessions in Attachment B for the products at issue are
not drafted using HS terminology. Therefore there is no basis to rely on the HS to interpret them.
II. DEFINING THE PRODUCT: THE UNITED STATES HAS ADEQUATELY
IDENTIFIED THE PRODUCTS AT ISSUE
2. Another assertion repeatedly made by the EC is that the United States has failed to " define
the product" with sufficient clarity for the EC to r espond to the claims. On this issue, the EC appears
to be again advancing an argument it unsuccessfully made in EC – Computer Equipment – that,
independent from the obligation to specify the measu res that complainants consider to breach the EC
concessions and the concessions that have been breached, complainants must also offer a " definition"
of the product at issue in the dispute. There is no such requirement. The EC now concedes that
"[c]learly...one can define the products at issu e through the challenged measures." While it then
proceeds to "comment" on the "complexity" of the products at issue, the number of criteria the
measures use in classifying them, and that the measures are "classification measures," all of these
points are non sequiturs . The products at issue in EC – Computer Equipment were equally
"complex", yet there as well the Appellate Body rej ected the EC's argument that the US description of
the product was insufficiently specific. As for its second "comment" , that assertion is simply
incorrect and again, its supposed relevance is nowhere explained. Finally, the fact that the measures
are classification measures is equally true of the measures at issue in EC – Computer Equipment and
EC – Chicken Cuts yet, as noted, the Appellate Body did not consider that that imposed any additional
hurdle to complainants in those cases. Furthermore, while the measures may pertain to classification,
this dispute, as both the relevant concessions and the relevant obligations reflect, is about the tariff
treatment of the products in question. The obligations at issue are those described in the EC's
concessions, which are tariff concessions, and in some cases, as noted previously, pertain to products
"wherever...classified."

III. TO DEMONSTRATE THAT THE MEASURES ARE " AS SUCH" INCONSISTENT,
THE UNITED STATES NEED NOT PROVE THAT MEASURES RESULT IN A
BREACH IN THEIR EVERY APPLICATION
3. Repeatedly, the EC attempts to to suggest that complainants can only prevail by
demonstrating that all products with the characteristic in question are subject to the concession, rather
than demonstrating that the measure results in the imposition of duties on products with the
characteristic in question, at least some of which are subject to the concession. Thus, for example,
with respect to flat panel displays, the EC char acterizes the US argument as being that "the mere
existence of the DVI interface makes an LCD monitor an ADP monitor" , and on this basis, urges the
panel to reject the US claim. Yet, even if some flat panel displays with a DVI interface are not
subject to the EC concession, this begs the qu estion of whether the EC measure results in the
imposition of duties on some products that are subj ect to its concession. As the United States
explains, by treating as dutiable any FPD with DVI, the EC measures result in the imposition of duties
on some products that are subject to the concession.
IV. SET TOP BOXES WHICH HAVE A COMMUNICATION FUNCTION
4. The EC's defense rests on two sleights of hand: first, complete disregard of the text of the
measures being challenged, and second, complete disregard of the text of the concessions at issue. As
a result of the amendments to the CNEN , EC customs authorities impose duties on any set top box
"which incorporate[s] a device performing a record ing or reproducing function (for example, a hard
disk or DVD drive)." The language of the CNEN fo r 8528 71 13 could not be clearer in this regard.
The United States has submitted over ten examples of BTI issued by various member States that
confirm this interpretation is shared by the EC's own customs authorities. Indeed, the EC itself
describes the language in the CNEN as "categorical" – an adjective meaning " absolute, unqualified."
5. When asked by the Panel how it would treat a set top box with a communication function and
a hard disk, the EC has proceeded to offer an abst ract discussion of EC classification practice. Of
course, the EC offers no evidence that the measure in fact permits its customs authorities to consider
other headings, nor is there any evidence that its customs authorities in fact opt for other headings, nor
indeed is there evidence that even if it did opt fo r one of these other headings that it would result in
duty-free treatment being accorded to the products. To the contrary, all the evidence indicates
otherwise.
6. More fundamentally, the EC position is misguided in three key respects, and appears again to
reflect an attempt to convert this dispute into a customs classification exercise. First, as a factual
matter, the EC's position ignores a basic technol ogical fact – a hard drive and a recording
functionality are additions to a set top box, not a different product. Second, the EC's position is
divorced from the text of its own measure, which does not by its terms distinguish between devices
that have a "main purpose" communication function and a "main purpose" recording function.
Third, the EC's analysis begs the question of whether the presence of a recording function is a
permissible basis, under its WTO tariff concessions , to exclude a product from duty-free treatment –
particularly where the EC is obliged to provide duty free treatment to set top boxes which have a
communication function "wherever...classified". The concession in question is by its terms not
limited to "main purpose communication function" devices.
7.
At the heart of the EC's argument is the notion that it is entitled to impose duties on products
that are set top boxes, and that have a communication function, merely because they also have a
recording function. This position simply does not accord with the ordinary meaning of the text of the
concessions, in context, and in light of the obj ect and purpose of the GATT 1994. While the EC

spends a great deal of time explaining its classification practice, nowhere does it even attempt to
explain how imposition of duties on these devices is consistent with the terms of its tariff concessions.
8. First, there is no dispute that the devices in question are "set top boxes". Throughout its
measure, the EC describes the products in question as "set top boxes." Even the EC recognizes that
the term used by the drafters of the ITA, and in turn, the term that delimits the EC's tariff concessions
pursuant to the headnote, is not confined to a particular subcategory of set top box (other than those
"which have a communication function"), nor does the EC dispute that the products in question meet
the ordinary meaning of the term. Likewise, in its answers to Panel questions, the EC repeatedly
states that the products on which it imposes duties are a "type of set top box product." Second, there
is no dispute that the products in question have "a communication function." The EC agrees that a set
top box with a hard disk "still has a communication f unction." Thus, while the EC appears to believe
that it is entitled to impose duties on any device that also happens to be able to record video, it points
to nothing in the text that would explain why this is so.
9. Quite simply, nothing in the text of the concession supports the EC's position. Nor is the EC's
position consistent with its own actions, in partic ular its acknowledgment in 2000 that STBs with
tuners were covered by the description of "set top boxes which have a communication function"
contained in Attachment B. The position of comp lainants is straightforward – the text of the
concession defines what is and is not covered, and th e text must be interpreted using the principles of
treaty interpretation reflected in the Vienna Conventi on. In this case, the pr oducts are "set top boxes"
and they "have a communication function." Importantly, the EC agrees.
10. In an effort to support its misguided interpretation of the text, the EC has offered a description
of the STB market during the ITA negotiations and various historical documents, which it
characterizes as informing the "surrounding circumst ances" of the treaty and in turn the "ordinary
meaning" within the meaning of VCLT Article 31. Much of the EC's description of the development
of STBs is offered without citation or support, and evidence before the Panel confirms that it is in fact
incorrect in a number of respects. As for the "ne gotiating history" the EC provides, the documents do
not provide any useful insight into the outcome of the negotiation, and do not constitute "preparatory
work of the treaty" within the meaning of VCLT Article 32, much less "surrounding circumstances"
relevant to interpreting the ordinary meaning of text under VCLT Article 31.
11. Just as the Amended CNEN directs customs authorities to impose duties on any STB which
has a communication function, merely because it h as a hard disk or other device "performing a
recording or reproducing function", the EC measure provides that STBs equipped with ISDN,
Ethernet or WLAN ("wireless LAN") modems are not entitled to duty-free treatment. The EC does
not dispute that these devices are per se excluded from duty-free treatment. With respect to " cable
modems" the EC argument is technically flawed and reveals fundamental contradictions in its own
interpretation of the term " modem." First, as a technical matter, as the United States explained in
detail in its answers to Panel questions, ISDN, Et hernet, and WLAN devices are "modems". The EC
by contrast offers no evidence to support its various assertions regarding modems.
12. The mere fact that a device modulates and demodulates digital signals without converting
analogue to digital signals does not support the conclusion that a device is not a " modem." The text
does not limit the term "modem" to devices of a particular type, and indeed the phrase
"communication function" is broad. With regard to the EC's assertion that only devices that "send
and receive data in the form of audible tones transferred by telephone lines" are modems, again,
nothing in the text of the concession, including the ordinary meaning of the term "modem", when read
in context, supports the EC position, nor has the EC offered any evidence to support its claim. Third,
while the EC concedes that at least some of the devices at issue are "technologies for gaining access to

the Internet", the EC asserts that Ethernet a nd WLAN devices are not modems because they do not
allow "direct" access to the Internet. Here again, no evidentiary support is offered for the EC position,
and as a factual matter, the EC is simply incorrect.
13. Finally, with regard to STBs that do not ha ve a tuner – and, in particular, STBs with a
communication function that receive signals via Inte rnet Protocol (TCP/IP) – the EC measure by its
terms excludes all such devices from duty-free treatmen t merely because they lack a tuner. In so
doing, the EC imposes duties on STBs covered by its tariff concessions. To date, the EC has offered
no defense of this aspect of its measure, other th an the statement that these devices connect to the
Internet through an Ethernet modem, nor indeed can its position be reconciled with the text of its tariff
concessions.
V. FLAT PANEL DISPLAY DEVICES
14. The EC now takes the position that it merely considered a DVI connector " a strong indicator"
that a monitor is not an output unit of a computer. The only support it offers for this proposition is
item 4 in the annex to the April 2005 Regulation and items 3 and 4 in the December 2005 Regulation,
which it claims support the view that "t he existence of a DVI has not been necessarily dispositive."
For each of these items the EC concluded that th e device in question is classified in a dutiable
heading. This does not support the conclusion that DVI is not dispositive – to the contrary, it simply
provides further confirmation that any device with DVI is dutiable. Furthermore, item 1 is a device
that is not equipped with DVI, or for that matter an y other connector that might be used by products
other than a computer. Quite simply, the EC has pointed to no evidence – whether from the text of its
measures or from the decisions of its customs aut horities applying the measures – demonstrating that
a device with DVI or a device actually capable of receiving signals from a source other than a
computer could be classified in the duty-free subhead ing. Furthermore, the EC's response ignores the
text of the CNEN entirely, which could not be clearer. As for the EC's discussion of its position since
Kamino, the EC has offered no evidence that EC law has changed as a result of the Kamino decision,
or that Kamino shows that the United States has misunderst ood EC law, and its repeated statements
that it is "reviewing" the measures and may modify or repeal them suggests the opposite is true, as do
prior opinions of the ECJ and other evidence submitte d by the United States regarding the legal effect
of an ECJ opinion on regulations that are not the subject of the case.
15. With regard to the concessions at issue, as the United States has explained, the products
affected by the EC measures are "flat panel display devices." As the United States has also explained,
the EC measures result in the imposition of duties on FPDs that are " for products falling within" the
ITA. All parties agree that " for" is "a function word to indicate purpose." Nor does the EC appear to
dispute that computers are among the products falling within the ITA. From this, it follows logically
that an FPD that is "for" a computer is covered by the concession. However, rather than arrive at a
conclusion based on the terms of the FPD concession r ead in context, the EC proceeds to argue that
the concession is narrower.
16. Regarding the CRT monitor concession, first and foremost, unlike the FPD provision, the
CRT monitor concession is expressly limited to a si ngle technology – CRT monitors – which are not
at issue in this dispute. The "exclusion" is not, th erefore, a "general" exclusion. Second, the sentence
does not constitute a "categorical exclusion" of all devices on which one can watch video – it refers
to "televisions" only. Thus, as the EC response to panel questions reveals, the EC must make several
additional logical leaps to draw the conclusion that not just televisions (the only product referenced)
but also "video monitors" (what it claims to be the product at issue in this case) are generally
excluded. Finally, as the United States noted dur ing the first panel meeting, insofar as the EC

believes that any device on which one can watch television or video is per se excluded from its
obligations, this cannot be reconciled with the text of its concessions.
17. Specifically with regard to LCD monitors w ith DVI, the EC defends its approach on the
grounds that "the presence of a DVI connector indicates the presence of certain electronic components
inside the monitor that allows the LCD monitor to function with many different devices that are not
covered by the ITA." Some devices with a DVI connector are incapable of functioning with anything
other than a CPU. Thus, contrary to what the EC argues, the fact that a device has a DVI connector
does not "indicate[] the presence of certain electronic co mponents inside the monitor that allows the
LCD monitor to function with many different devic es not covered by the ITA." Second, the EC is
incorrect in asserting that DVI is a connector that was not developed for computers. The EC claims
that this view is supported by the fact that DVI is "display technology independent" and that therefore
it was "foreseen to function with monitors using th e CRT or LCD or other technologies." Of course,
the fact that DVI was not designed for a particular display technology begs the question of whether
the connector was in fact designed for computers (a nd, as is clear from the ITA itself, CRT as well as
LCD technology is used in computer monitors). Third, the EC offers a number of unsubstantiated and
factually incorrect assertions regarding the use of DVI in consumer electronics devices, in an attempt
to support its presumption that monitors equippe d with DVI are "multimedia" devices. The only
difference between DVI-I and DVI-D is that DVI-I accepts both analog and digital signals and DVI-D
accepts only digital signals. Moreover, even if th e prevalence of particular interfaces in non-ADP
devices could be enough to support a per se rule such as that established by the EC (which it could
not), the fact is that virtually no consumer electronics devices are today equipped with DVI, whether
DVI-D or DVI-I; a large share of computers, on the other hand, are equipped with a DVI connector.
18. As explained in the first submission and in res ponses to panel questions, the US argument is
not limited to flat panel display devices with DVI. As noted, the EC measures also provide for duties
on any product that is merely capable of accepting signals from a device other than a CPU (whether
through a DVI interface or another technology). This does not accord with the EC concession, which
requires it to provide duty-free treatment to any fl at panel display device "for" products falling within
the ITA.
19. In an effort to support its argument the EC c ites to various material that it describes as the
"specific classification practice of the United States, " the"practice" of the ITA parties following the
conclusion of the agreement, and various proposals to include products such as video monitors and a
"multimedia monitor" as part of the ITA II negotiations. None of this material is relevant and none in
fact supports the EC position. First, regarding cl assification, the concession at issue pertains to FPDs
for products falling within the ITA, "wherever...classified." Thus, classification is simply not relevant
to determining the scope of the concession. Rega rding the supposed classification practice of the
United States and other ITA participants, the EC refers to two documents , which provide no support
for the EC view that its measures are consistent with its obligations, nor indicate any particular
"practice" on the part of the United States regarding monitors. Likewise, the EC's description of
where other ITA participants classified FPDs is irrelevant – the EC argument is again premised on its
theory that the headnote is "exhausted" by individual tariff lines.
20. As for the negotiating documents the EC has subm itted, none is relevant to the interpretative
issue presented. For example, the fact that a pro posal was made in ITA II for "multimedia monitors"
and "video monitors" does not support the conclusion th at the products at issue in this dispute (FPDs
for computers) were not covered under the original concessions. The rest of the negotiating material
referenced simply beg the question of what products were ultimately covered by the concessions. Nor
would negotiating history be rele vant under VCLT Article 32 unless the EC demonstrates that it is
being used to "confirm" an interpretation or wh en the text as interpreted using VCLT Article 31

leaves the meaning obscure or produces a manifestly absurd or unreasonable result. The EC has
failed to demonstrate that either is the case.
21. In addition to its obligation under the headnote to provide duty treatment to flat panel display
devices for products falling within the ITA, "whereve r...classified", the EC also committed to provide
duty-free treatment to goods described by individual ta riff lines in its Schedule. In particular, the EC
committed to provide duty-free treatment to "input or output units, whether or not containing storage
units in the same housing...other...other", contained in HS96 8471 60. As the United States explained
in its first submission, the products described above fall within the terms of this concession, based on
the ordinary meaning of the text in context and in light of the object and purpose of the GATT 1994.
The United States has also pointed to Chapter Note 5(B-C) to Chapter 84 of HS(1996), which
provides, among other things, that devices that are either "solely" or "principally" used in an
automatic data processing system may be considered a unit for purposes of the heading. The EC now
claims that it is entitled to grant duty free treatme nt only to devices that are "solely" used with
computers based on an HS Explanatory Note. In the WCO, HS Explanatory Notes cannot supersede
Chapter Notes. Furthermore, the Explanatory Note does not state that the devices described therein
are the only devices covered by the subheading – rather , the Explanatory Note pertains to devices that
are "solely" used with computers and simply does not address devices that are "principally" used with
computers.
VI. MULTIFUNCTIONAL DIGITAL MACHINES
22. While the EC at last concedes that the challenge d regulations remain "formally in force" and
that the Customs Code Committee opinion has "some in terpretative value", as with FPDs, rather than
confront the text of its MFM measures, the EC relies on the ECJ's judgment in the Kip case to argue
that MFMs that can connect to computers and have "an equivalent copying function" (i.e., a copying
function that "is not secondary in relation to thei r ADP functions"), fall within its concession for
"photocopiers". As explained in the first subm ission and will be discussed below, even this
interpretation is flawed; yet, that aside, th e EC nowhere acknowledges that its measures do not
merely treat devices that have "an equivalent co pying function" as dutiable. Rather, under the EC
measures, any device capable of reproducing more than 12 pages per minute, and any device without
a fax feature (regardless of speed) is dutiable.
23. This begs the question of why the copying f unction on a device that can reproduce more than
12 pages per minute is necessarily "equivalent", as th e EC puts it, to the printing function, or why a
device that can print and copy but not fax can never be considered to have a " primary printing
function" (regardless of the number of pages per minute it reproduces). Again, the EC never explains
– because it cannot – how the 12 pages per minute output speed indicates the relative importance of
the functions a device performs, even if that qu estion were relevant to determining whether the
product falls within the terms of the concessions at issue.
24. As the United States has explained, the products in question fall within the concessions for
"input or output units" and "facsimile machines". Ag ain, the EC has failed to offer any interpretation
of the ordinary meaning of the text of these conc essions. Instead, it claims that all the products
subject to duty under its measures are photocopiers and provides an interpretation of the concession
for "photocopiers" of subheading (HS96) 9009.12.
25. None of the devices in question are "electro static photocopying apparatus." MFMs are
comprised of a print module ( i.e., print controller and print engine), and scanner; in some cases, they
also include a modem for facsimile transmission. Printers, scanners, and facsimile machines were all
included in the ITA and are entitled to duty-free treatment under the terms of the EC's concessions.

Yet according to the EC, when these technologies are combined in a single unit, that device becomes
an "indirect process photocopier", not covered by it s concessions. Beyond the fact that the EC has
failed to demonstrate that the products subject to duty under its measures do not meet the terms of the
concession for " input or output units" , this position does not accord with the ordinary meaning of the
description associated with subheading 9009.12. An "indirect process photocopier" as that term is
used in heading 9009 (and as it is used by technical experts) is a device that uses light to produce a
copy, exposing an optical image on a photosensitive surface. An MFM does not use light to produce
a copy, but rather to collect digital data into an elect ronic file that can then be printed, transmitted via
fax or through a network, or stored for later use. Thus, even the various dictionary definitions the EC
offers of photocopying do not accurately describ e the MFM process – paper copies are not produced
through the "electrical or chemical action of light," or "formed by the action of light," or "created on a
sensitized surface...by the action of radiant energy." Rather, light is used in the creation of a digital
file, which may then be stored, printed, or transmitted. The process for printing/producing "copies" of
this digital file is in fact no different than that involved when a user presses the command to "print" on
his or her computer and requests one or more "copies" of the original. Finally, what the EC claims to
be the "commercial and common usage" of the term "photocopying", based on various sales brochures
and newspaper articles, has no bearing on the meaning of the term in the EC's schedule of
concessions.
26. Nor do the devices incorporate an "optical system " as that term is used in the subheading.
Consistent with the text of heading 9009, the Explanatory Note to heading 9009 notes that a
photocopier "incorporates an optical system (compris ing mainly a light source, a condenser, lenses,
mirrors, prisms, or an array of optical fibers) which projects the optical image of an original document
on to a light sensitive surface, and components for de veloping and printing of image." Contrary to
what the EC claims, a scanner is not a system of "lamps, lenses, and mirrors" – as the EC's own
exhibit states, "the core component of the scanner is the CCD array...CCD is a collection of tiny light
sensitive diodes, which convert photons (light) into electrons (electrical charge)." A photocopier, on
the other hand, uses an optical image formed by a lens or mirror system from reflected, refracted, or
diffracted light waves.
27. The EC argument appears to be based not on the physical characteristics of the devices, but
rather the assumption that the "function" of maki ng copies is "of equivalent or higher importance"
than, for example, the printing or other functions performed by the machine. The EC offers no
evidence that the devices are in fact predominantly used to make copies, nor that their physical
characteristics are such to support this conclusion. As noted, the devices reproduce originals using a
scanner and printer – rather than "secondary," the scanner and print module are the primary
components that comprise the machine. This be gs the question of how the EC distinguishes, for
example, between the "copy function," the "scan" function, and the "print function", when all are
performed using the same components.
28. Finally, as noted, the term "indirect process" is only relevant if it can be established that the
product in question meets the terms of the heading. As noted in response to panel questions, even
from a customs classification persp ective, the EC's attempt to distinguish between inkjet MFMs and
laserjet MFMs based on the print engine ignores th e terms of the heading at the four-digit level,
contrary to GIR 1. Furthermore, the EC analysis does not accord with GIR 3(b), which provides that
composite goods which cannot be classified under GIR 3( a) "shall be classified as if they consisted of
the material or component which gives them thei r essential character." Rather than focus on the
physical component that gives the device its "essential charac ter," the EC attempts to divine the
"function" of the device – thus ignoring that the main components of the MFM are the print module,
and that the "function" of copying is performed by these elements operating in conjunction with a
scanner. Classification under GIR 3(b) cannot focu s on the MFM's "principal function", but rather

depends on the "component" which imparts the MFM's "essential character". C ontrary to this rule,
the EC's analysis focuses on the type of print technology of the print engine in making its distinction
at the 6-digit level for its views of heading 9009 but ignores the essential role that the print module
component imparts to the complete device.
29. As with the other products, the EC again relies on various ancillary documents in an attempt
to support its position, including the "practice" of the United States and the EC with respect to
classification, and material it claims is "negotiatin g history". First, with respect to the supposed
"practice" of the United States and the EC, the EC h as not demonstrated that there exists a "common,
concordant, and consistent practice" such that the material would be relevant as "subsequent practice"
for purposes of Vienna Convention Article 31. Indeed, the EC mischaracterizes both US
classification decisions and its own position in asserti ng that both parties considered MFMs to be
photocopiers during the ITA negotiations. While the EC claims that its authorities "have consistently
taken the view that digital copying is a form of photocopying within the meaning of HS96 9009," the
evidence before the Panel in fact shows that EC customs author ities issued decisions classifying
MFMs in heading 8471 60 during the ITA negotiations. As for the United States, the rulings
submitted by the EC in virtually all cases make no mention of 9009 and classify MFMs in 8471 60
(the EC claim to a "practice" is based solely on the reference to note 3 in those decisions as a legal
basis for the action). Furthermore, nothing in this material suggests that either the EC or the United
States believed or had a practice at the time of th e negotiations indicating that any device without a
facsimile function is a "photocopier" or that based on pages per minute (much less 12 pages per
minute) one could deem all MFMs with a fax function as "photocopiers."
30. Second, the EC offers a number of documents it characterizes as "negotiating history" – as
noted, none of these documents shed light on what was ultimately agreed upon by the parties. The EC
claim that the United States initia lly opposed including heading 9009 simply begs the question of
whether digital copiers were in fact considered in cluded in that heading (indeed in the document the
EC references, the term "digital photocopying" nowhe re appears). Other evidence suggests that at the
conclusion of the ITA, participants (including the Un ited States) agreed to include digital copiers, in
exchange for inclusion of digital cameras. More fundamentally, the EC has failed to show that (1) the
material is relevant to "confirm" a meaning provide d through application of VCLT Article 31, or that
VCLT Article 31 leaves the meaning obscure or mani festly absurd or unreasonable; or (2) the
material qualifies as "preparatory work" within the meaning of VCLT Article 32.
VII. EC'S FAILURE TO TIMELY PUBLISH STB CNEN
31. The EC argues that the measure was not in fact effective until it was "adopted" upon signature
by the Vice-President of the Commission, and that it was published "promptly" after it was signed.
However, this characterization of the facts is inc onsistent with ample evidence to the contrary: the
statements of the Customs Code Committee Chairm an as well as BTI issued by member States after
the vote both support the conclusion that the measure was in effect following the vote of the Customs
Code Committee. Furthermore, while the EC point s to additional work the Commission planned with
respect to other aspects of its classification practice regarding set top boxes in an attempt to argue that
the measure was not in effect, this is irrelevant to the question at hand: the facts demonstrate that the
EC position on set top boxes with a record or repr oducing function and set top boxes with certain
types of modems (including IP-streaming boxes) w as established definitively upon the vote of the
Committee. Indeed, the EC offers no evidence to indicate that any member States were not following
the CNEN amendments after the Committee vote and prior to publication – the only BTI before the
Panel suggest that member States relied on the CNEN in their classification decisions once the
Committee voted, and viewed it as a final decision.

32. The EC appears to be taking the position that an additional ministerial step in its process
allows it to delay publishing a measure, even wh en the Commission is expressly encouraging member
States to apply the measure and it is in fact being applied by member States. The consequences of the
EC argument are significant, as they suggest that, si mply by introducing an additional ministerial step
in the process of "adoption" of a measure, a Member can avoid publishing a measure until long after it
has come into effect. Furthermore, nothing in the te xt of Article X:1 suggests that that a measure that
is in effect and being applied by member States w ould, on that basis, be disqualified from constituting
an "administrative ruling[] of general application."
33. The EC also acted inconsistently with GATT 1994 Article X:2. The CNEN is a measure of
"general application" and "effect[s] an advance in a rate of duty," as the United States explained in its
first submission. In response, in addition to clai ming that the measure was not in effect until it was
officially published, the EC argues that the meas ure was not being enforced (notwithstanding four
BTI on the record citing to the measure as a basis fo r the classification of the goods in question) and
did not "effect...an advance in a rate of duty or other charge on imports under an established and
uniform practice." In support of the latter asserti on, the EC points to the four BTI the United States
submitted that were issued before the CNEN am endments were voted upon. These BTI provide no
support for the argument the EC is advancing – they say nothing about whether the measure was
effecting an advance in a rate of duty under an established and uniform practice. Again, all the BTI
on the record that were issued after the vote pr ovide for classification in the dutiable heading,
consistent with the requirements contained in the CNEN. Nor can the EC be suggesting that a CNEN,
once in effect, does not effect an advance in a rate of duty...under an established and uniform practice;
indeed, the EC has relied on CNEN in previous di sputes to argue that it administers its customs
regime uniformly.

ANNEX A-5

EXECUTIVE SUMMARY OF THE ORAL STATEMENT BY
THE UNITED STATES AT THE SECOND SUBSTANTIVE MEETING

1. At the center of this dispute lie certain tariff concessions made by the EC and its member
States in their Schedules of Concessions to the GATT 1994 (the "EC Schedules") with respect to three
ITA products: set top boxes which have a communica tion function, flat panel display devices, and
multifunctional digital machines. The question before this Panel is whether the EC and member State
measures – specifically, those identified by the compla inants in their panel request and subject to the
Panel's terms of reference – result in tariff treatment that is inconsistent with those concessions and
Article II:1(a) and (b) of the GATT 1994.
2. In its submissions to date, the United States h as explained each of the measures identified in
the panel request and provided evidence of how they operate. The United States has quoted language
from the measures at issue – language which the EC itself has characterized as "categorical" – that
directs customs authorities to impose duties on any product that has one or more of the particular
arbitrary characteristics outlined in the measur es. The United States has submitted BTI, which
support the conclusion that in every case , when a product has the particular arbitrary characteristics
outlined in the measures, EC customs authorities appl y duties to it. The EC's protestations to the
contrary, the United States has also explained in de tail the concessions at issue, and how the measures
result in the imposition of duties on products that are entitled to duty-free treatment under the terms of
concessions in the EC Schedules. As explained in the US submissions, these concessions include the
headnote in the EC Schedules, providing for duty-fr ee treatment of products "wherever...classified,"
as well as descriptions associated with individual tariff lines bound at zero duty. Using the principles
of treaty interpretation reflected in the Vienna Convention, the United States has explained how the
products in question fall within the ordinary meani ng of the terms of the concessions when read in
context and in the light of the object and purpose of the GATT 1994. Those products are therefore
entitled to duty free treatment. Yet they are denied duty free treatment as a result of the measures.
Consequently, the measures are inconsistent with GATT 1994 Article II:1(a) and (b) and the EC
Schedules of Concessions.
3. Beyond claiming confusion about the claims and measures at issue, the EC's response
continues to be premised on four key propositions: first, that th e complainants' claims and the
measures at issue are not clear, principally because th ey have failed to define in sufficient detail the
"products at issue" in the dispute; second, that its measures mean something other than what they say;
third, that the concessions complainants have identified have no meaning or should otherwise be
ignored in favor of concessions on entirely different products; and fourth, that the headnote, and thus
the commitment to provide duty free treatment to Attachment B products "whe rever...classified", is
meaningless. Each of these propositions is wrong as a matter of fact or law or both. When they are
rejected, there is nothing left to the EC's defense.
4. The EC's professed confusion about the core el ements in the case – elements articulated by
three different WTO Members and endorsed by a numb er of third parties – strains credibility. At
heart, the EC position appears to be premised on its incorrect view that, in addition to demonstrating
that its measures result in the breach of specific concessions, the complainants must provide a detailed
definition of a specific "product category" in order to prevail, and that only by showing that EC
customs authorities improperly impose duties on all products in this category can complainants
demonstrate that the EC is in breach of its obligations. As the United States explained in its second
written submission, this argument is without basis. It turns the test for de monstrating an "as such"

breach on its head, and appears to be nothing more th an an attempt to intro duce an additional legal
hurdle to establishing a breach of Article II – one already discredited by the Appellate Body in EC–
Computer Equipment . The fact that the EC in that dispute was raising an argument in relation to
Article 6.2 does not support the conclusion that the A ppellate Body's reasoning is inapplicable in this
case.
5. Second, the EC utterly ignores the text of its own measures. The EC focuses instead on
statements contained in two court decisions, vague generalities regarding its approach to
classification, and equally vague assertions regarding the legal effect of the measures in question. For
example, with respect to MFMs, not once in its en tire rebuttal submission does the EC refer to the
12 page per minute criterion contained in the text of the EC Combined Nomenclature for subheading
8443 31 – the measure that is the subject of the term s of reference of this Panel and that EC customs
authorities use to disqualify products from duty-free treatment. Its response instead centers around a
so-called "case-by-case" analysis or a sta ndard described by the ECJ in 2009 in the Kip case – a case
that did not itself address the measures before this Panel, articulating a standard that is nowhere
evidenced in those measures, in an opinion by an EC court evalua ting particular EC actions in light of
the EC classification laws before it, not the EC's WTO tariff obligations. The EC does not even
attempt to reconcile the measure as it exists – the CN – and the observations of the court in Kip. In
response to a direct question from the Panel, it fails even to offer an explanation of why the 12 page
per minute criterion was selected. As explained in the US submissions, the EC's argument regarding
FPDs, relying on the court opinion in Kamino, is equally at odds with its own measures and divorced
from reality.
6. Regarding the theory that the FPD and MFM me asures are "effectively inapplicable" due to
court opinions, as noted above, the United States has provided evidence showing that the court
opinions, while providing some useful illustrations of the flaws in the EC's logic, do not themselves
nullify the measures. The measures remain in effect . The EC's repeated assurances that it may at
some future date repeal the measures simply serves as further evidence of that reality. Likewise, as
for the EC's theory that some of the measures are "effectively inapplicable" due to changes in the EC's
domestic nomenclature in 2007, while the EC claims th at it would be "difficult" to apply some of the
measures due to renumbering and other changes, th e United States has presented BTI indicating that
member States have in fact continued to apply them notwithstanding those changes. The EC has
offered little or no response, stati ng rather incongruously that the BT I "refer" to the regulations as
"authority" but do not "apply" them. As for th e EC's claim that the CNENs are not binding, it
acknowledges that they are "important tools for th e interpretation of the CN" and that "customs
authorities naturally have to" consult them, and again offers no credible explanation in response to the
evidence before the Panel concerning their legal effect, including BTI demonstrating that member
States have in fact referred to CNENs as a legal "classification justification" for decisions to classify
products in dutiable headings, and the EC's own reliance on CNENs for compliance with DSB
recommendations and rulings in a prior dispute.
7. Finally, while the EC at times suggests that there exists some purported flexibility in the
measures themselves, it has offered no evidence indicating that the measures do anything other than
what they say: direct EC customs authorities, in what the EC itself describes as "categorical"
language, to impose duties on products with the speci fied technical characteristics. The EC has
submitted no evidence thus far showing that any customs authority in the EC has treated as duty-free
any product with the characteristics specified in its measures. The United States, on the other hand,
has provided ample evidence demonstrating that th ey in fact operate exactly as written, and deny
products duty-free treatment merely because they have certain arbitrary attributes. In this regard, the
United States has quoted language from the measur es and submitted an assortment of BTI, in
response to which the EC has identified no language in the measures that would permit the opposite

conclusion, nor any BTI classifying products with th e specified attributes in a duty free tariff line.
Thus, all of its theories and rhetoric notwithstandi ng, the measures are in effect and result in the
application of duties to products that should be duty free.
8. Third, the EC ignores the concessions the comp lainants argue it has breached, in favor of
other concessions for products not subject to this di spute, an assortment of completely irrelevant
documents it claims inform the "surrounding circumst ances" of its concessions, and what it claims to
be the classification "practice" of WTO Members. In the process, it advances a range of arguments
that simply do not accord with basic principles of treaty interpretation reflected in the Vienna
Convention.
9. Regarding the headnote, the EC ignores the co mmitment set forth in the headnote to its
Schedule – a key innovation of the ITA – to prov ide duty-free treatment to the descriptive list of
products specified in Attachment B of the ITA "whe rever...classified." The EC persists in its second
submission to take the view that the headnote is "exhausted," and thus has no meaning, despite the
fact that, as noted, its interpretation is flatly inconsistent with basic principles of treaty interpretation.
10. In addition, it now claims that there is so me difference in the argument advanced by the
complainants with respect to the st ructure of the concession in the headnote. To be clear, with regard
to the headnote, the United States is in agreement with the other complainants – all agree that the
headnote is a separate concession from the individual tariff line provisions in the EC Schedules, all
agree that the HS is not relevant context for interpreting the Attachment B product descriptions
referenced in the headnote, all agree that the table does not limit the scope of Attachment B
descriptions to particular enumerated subheadings but rather is illustrative, and all agree that there is
no difference even in the product descriptions for the pr oducts at issue in this dispute in Attachment B
proper and those transposed into th e table in the EC Schedules. Even the EC appears to agree with
this last point. Furthermore, the United States shares the other complainants' view that the EC
position – that the headnote is "exhaus ted" – is untenable, as it is contrary to the principle that entire
provisions of agreements should not be rendered inutile.
11. The United States in its submissions has expl ained why the EC's interpretation of the
headnote cannot be accepted. In response, the EC simply again recites its legal theory of
"exhaustion," without explaining why it is appropriate to read the headnote out of its Schedule – and
instead, remarkably, argues that the tariff subheadin gs next to the product de finitions in the table
under the headnote "cannot be read out from" its Schedule. Of course, this is not what the
complainants do – as each has explained, the subh eadings in the EC's Schedules indicate where the
EC classified the products in question at the time the ITA was concluded, and are useful illustrations
of the types of products covered by the product defi nitions. Indeed, with respect to STBs, the United
States has pointed out that one subheading in the EC 's Schedules associated with the Attachment B
description of STBs shows that the EC itself considered STBs with tuners among the products
covered by the Attachment B description. Plainly, in the view of the United States, the table has
meaning – it simply does not have the meaning that the EC advances.
I. SET TOP BOXES WHICH HAVE A COMMUNICATION FUNCTION
12. As noted previously, a discussion of products is relevant in two respects for purposes of this
proceeding: the products that are subject to duties under the measures, and whether at least some of
those products are entitled to duty-free treatment under the concessions. If some products subject to
duties under the measures are entitled to duty free treatment under the concessions, those measures
must be found inconsistent with Article II of th e GATT 1994. The United States has amply explained
the products subject to duties under the measures and why they are entitled to duty-free treatment

under the concessions. As the A ppellate Body concluded in EC – Computer Equipment, there exists
no obligation to provide a detailed definition of a "product category" in order to prevail under
Article II.
13. On the effect of the CNEN, as noted previ ously, the United States has submitted extensive
evidence demonstrating the legal effect of CNENs, including that with respect to STBs, to which the
EC has provided no convincing response to date. No thing in the EC's statement responds to those
points; instead, the EC has simply persisted in maki ng the same arguments it advanced in its previous
submissions. The EC in its second submission cites to an ECJ opinion simply stating that if the
content of a CNEN is not consistent with the CN "it could not be taken into consideration." Based on
this opinion, the EC argues that CNEN do not ha ve "mandatory power". Of course, the mere
possibility that a measure in effect today could hypothetically be found inconsistent with a Member's
domestic law in the future does not bar it from now being challenged "as such". This argument
equally begs the question of whether the STB CNEN is in fact inconsistent with the CN such that it
could not be taken into consideration; the EC has nowhere even argued that this is so. By contrast, the
evidence offered by the United States is clear regardi ng the effect of the CNEN: that it results in the
imposition of duties on STBs which have a communi cation function merely because they have a
particular type of modem or incorporate a device performing a recording or reproducing function.
14. Throughout its submissions, the EC persists in arguing that the phrase "which have" in the
STB concession limits the concession to STBs which have only a communication function; and thus,
that STBs that serve any purpose other than "communi cation" are excluded. As we have previously
explained, the word "only" does not appear in the relevant text. As the United States has also noted,
this position can be reconciled neither with the term s of the concession nor with the EC's own actions
in 2000, when it modified its Schedule. The EC in its second submission offe rs a new interpretation
of the modification it made in 2000 (one which, on careful review of the EC implementing measure,
the modification, and the Schedule, does not appear to be correct), but, moreover, which again cannot
be reconciled with its argument that there is a substantive difference between "which have" and
"with".
15. In its second submission, the EC concedes th at it added the line covering STBs "with" a
communication function to the list of lines associated with the STB description in Attachment B. If
STBs "with" a communication function were some thing different than STBs "which have" a
communication function, why would the EC have used "with" in its own description of a product that
it concedes it associated with the Attachment B descripti on? The EC offers no explanation. There
appears to be one point on which the United States and the EC can now agree: the Attachment B
description of STBs from the ITA was not modified as a result of the EC's change to its Schedule.
This fact, however suggests, not that these produc ts are excluded from the Attachment B concession,
but rather that the EC recognized that the products it described as "set top boxes with a
communication function" in 2000 were covered by the Attachment B description as agreed upon in
1997 – that "set top boxes with a communication function" were among the STBs referenced in the
ITA description of "set top boxes which have a communication function." Furthermore, it shows that
STBs with a tuner – i.e., STBs with a function of receiving television signals – were included in the
EC's own understanding of the Attachment B concession. Again, as the United States has explained
in previous submissions, the EC position that "which have" means "which have only" cannot be
reconciled with the terms of its concessions, nor with its own actions in 2000. The EC argument boils
down to this: a product it concedes is a "set top box" and which it concedes has a "communication
function" is nonetheless not covered by its concession. This position cannot be sustained.
16. In its second submission, the EC changes cour se, offering a number of arguments regarding
the term "modem" which contradict the position it set forth in its own measure, and are particularly

revealing of the fundamental flaws in its position. First, it may be recalled that, in its measure, the EC
describes modems as follows: "[m]odems modulate and demodulate outgoing as well as incoming
data signals...enabl[ing] bidirectional communica tion for the purposes of gaining access to the
Internet." The measure then asserts that ISDN, WLAN and Ethernet modems are not modems
because they "do not modulate and demodulate signals." The United States showed in its answers to
the Panel's questions that this statement is simply incorrect.
17. Remarkably, the EC in its second submission ch anges its tune – apparently realizing the
fallacy in its measure, it does not dispute that the devices in fact modulate and demodulate signals.
Rather, it introduces an entirely new requirement for a device to be considered a modem: the device
must not only modulate and demodulate signals, but must do so from analogue to digital, and not only
allow a computer to gain access to the Internet, but allow access through a telephone line. The EC
position is simply at odds with the meaning of the term "modem". It is at odds even with the
definition the EC itself used in its own measure. And it creates an utterly arbitrary dividing line that
even the EC's own measure does not support – cable modems, for example, do not communicate
through a telephone line, yet the EC considers cable modems to be "modems". If as the EC has
argued this morning, modems must convert analog to digital and must use telephone lines, then why
does the EC measure consider cable modems to be modems? The EC offers no response.
18. With respect to ISDN modems, the EC describ es six documents from the Internet that it
claims support its view that ISDN modems are not "modems". Only two of the documents even
arguably address the question of whether ISDN m odems are "modems" – the remainder simply
describe how ISDN modems work. As for the two, one does not explain why an ISDN modem is not
"technically" a modem – the United States by contrast has submitted sources stating that ISDN
modems are "technically" modems, and further explaining, based on standards from the IEEE, how
they modulate and demodulate signals. The other sour ce is quoted out of context – in fact, the author
earlier offers a definition of modulation that is id entical to that provided by the United States.
Furthermore, the source was identified by the EC through a search of GoogleBooks; another search
of GoogleBooks reveals that it selectively cited to this source and omitted a number of sources
confirming that ISDN modems are modems.
19. The EC then points to a document ostensibly prepared by Japan during the ITA negotiations
containing one product example of an STB – to argue that the word "modem" must instead be used
"in the same sense as used by that document." Yet the document does not even contain a definition of
the term modem. The EC's argument simply comes dow n to this: rather than assume that negotiators
used the term "modem" properly, the EC asks this Panel to assume that the negotiators used it
improperly. This position simply strains credulity. Even the EC uses a technical definition of
"modem" in its measure that encompasses all of the devices at issue.
20. Thus, with respect to STBs, the conclusion is clear: for the devices subject to duty because
they have a hard disk, the EC concedes that th ey are "set top boxes" and "have a communication
function" and has otherwise failed to show that ther e are limits to the concession that would exclude
such devices from its terms. On devices subject to duty because they have certain modems, the EC
has simply reversed course in the face of facts that it cannot dispute, but its new position still does not
address, let alone overcome, the complainants' argumentation.
21. On the Article X claim, the EC continues to re ly on the notion that a measure cannot be in
effect merely because the EC has not taken a minister ial step. We have responded to this point in our
second submission. Evidence shows that member States relied on the measure to classify products
and were encouraged to do so by the Customs Code Committee before that step was taken. Thus the
EC's position is simply contradicted by the facts.

II. FLAT PANEL DISPLAY DEVICES
22. First, the EC continues to protest that it does not understand the "scope" of the US claim,
because it believes the United States has not provided a detailed definition of the "product." Again,
the United States has been clear: under the measures, customs authorities in the EC and its member
States impose duties on any FPD with DVI and any FPD capable of receiving signals from a device
other than a computer. As a result, the EC and its member States have breached their obligations to
provide duty free treatment to flat panel display de vices for products falling within the ITA, wherever
classified (as contained in the headnote), as well as their obligation to provide duty-free treatment to
"input or output units" of ADP machines. The questi on is not whether a particular product is within
the so-called "scope of the claim" – the question is whether the EC measures result in the imposition
of duties on products that are entitled to duty free treatment under its concessions. The United States
has explained in detail how they do so in its submissi ons. With respect to the purported obligation to
first define the product, the Appellate Body in EC – Computer Equipment rejected the same argument
the EC now advances, and it should again be rejected by this Panel.
23. Regarding the measures, the EC in its second s ubmission again claims that, notwithstanding
what the measures say, they do not require its customs authorities to impose duties on all products
with DVI or all products capable of receiving signals from a device other than a computer. Again, the
EC relies on Kamino to argue that its measures have ch anged, now citing to portions of the Kamino
opinion in which the court critiques the Commission 's arguments that devices capable of connecting
to something other than a computer cannot be clas sified in subheading 8471 60 and that "the number
and type of sockets with which monitors are equi pped cannot, alone, constitute decisive criteria" for
the classification of monitors. Notably, many of the arguments the court criticizes are among those
the EC has continued to advance in this pro ceeding, including the EC's reliance on the HS
Explanatory Notes to defend its measures. Nothing in the quoted portions of the opinion, however,
indicate that, as a consequence of the issuance of the opinion, the HS2007 CNEN (in whole or in part)
is no longer in effect in the EC. As the United States has repeatedly explained, while Kamino
illustrates a number of the flaws in the EC's reasoni ng, the court did not address the measures at issue
in this dispute (its reference to the ENs relates to the 2004 version of the ENs), nor did it modify those
measures, nothing in the record supports the conclu sion that it did, and the EC's own account of its
process for "reviewing" the measures demonstrates that they remain in effect.
24. The EC also now appears to rely on the "mut atis mutandis" reference in the CNEN to
subheading 8528 51 00, to suggest that the criteria identified by complainants may not in fact be
incorporated into the CNEN for that subheading. Sp ecifically, the EC points to the fact that when the
CNEN was placed in the HS2007 nomenclature, the de tailed criteria were set out in subheading 8528
41 00, and rather than repeat those criteria verbatim in subheading 8528 51 00, the CNEN for
subheading 8528 51 00 indicates that the criteria apply "mutatis mutandis". Based on this, the EC
suggests that perhaps the criteria complained of do not apply to imports of flat panel display devices
but only to CRT monitors. Of course, the EC does not go so far as to assert that the DVI criterion or
the criterion regarding connectability are not in f act reflected in the CNEN for subheading 8528 51
00; it merely states that "it is necessary to distingui sh between the technical cr iteria that are relevant
only in relation to CRT technology."
25. In fact, the BTI on the record demonstrate that member States have in fact applied both the
DVI and the connectability criteria in classifying goods under 8528 51 00 (a nd the EC in another
dispute has referred to the CNEN as ensuring uniform classification of LCD monitors). The record
does not support any conclusion other than that "mut atis mutandis" simply means that technically
inapplicable language such as the criteria specifica lly identified as describing monitors "of the CRT
type" would not be reflected in the CNEN for purposes of subheading 8528 51 00.

26. Finally, with respect to the FPD regulations, the EC simply repeats its argument that the
regulations have "effectively lost their appli cability" as a result of the implementation of HS2007,
simply due to changes in the nomenclature. It offers no response to the evidence provided by the
United States, including evidence showing that re gulations using pre-HS20 07 nomenclature have
been relied upon by EC customs authorities in decisi ons issued since HS2007 was adopted. It is also
somewhat remarkable that the EC insists that regulations using pre-HS2007 nomenclature have no
effect today, even as it persists in arguing that court opinions using pre-HS2007 nomenclature and
interpreting pre-HS2007 measures, such as Kamino, have profound effects on measures drafted in
HS2007 nomenclature.
27. Regarding the concessions, in its second submis sion the EC again advances an interpretation
that does not correspond to the text. In this case, th e EC attempts to use "context," to read language
into the flat panel display device commitment that it does not contain. Not only does the EC claim
that language in the CRT monitor provision regarding the exclusion of televisions must be read into
the FPD provision, it also asserts that this langua ge must be read to "necessarily" exclude video
monitors (even though even the CRT provision does not refer to video monitors). Quite simply, a
proper interpretation of the CRT provision as "contex t" to interpret the FPD concession supports the
opposite conclusion: had the negotiators intended th e language in the CRT provision to apply to all
provisions of Attachment B, they would not have placed it in the CRT provision only, and had they
intended to include "video monitors" in that exclusion, they would have done so expressly.
III. MULTIFUNCTION DIGITAL MACHINES
28. First, as noted earlier, the EC's second submissi on is strikingly bereft of any discussion of its
measures, in particular the CN provisions that result in the imposition of duties on any indirect
process MFM capable of reproducing more than 12 pages per minute. As the United States has
explained, these measures are in effect. As a result of the measures, the EC imposes duties on any
indirect process MFM capable of reproducing more than 12 pages per minute, and any MFM without
a facsimile feature, regardless of the number of pages per minute it can reproduce. In so doing it
subjects to duties certain "input or output units" and "facsimile machines." The United States has
explained why the devices in question fall within the concessions under subheading 8471 60 or 8517
21. The only response the EC offers is that, to fall within 8471 60, the devices must be "solely or
principally" used in an ADP system, as provided in note 5 to Chapter 84. Co ntrary to what the EC
suggests, the United States has discussed note 5 in its submissions and has provided evidence showing
that the printer function is the most significant func tion. Rather than contend with this evidence, the
EC instead claims that it is entitled to impose du ties on MFMs because they are "photocopiers." As
the United States has explained, MFMs operate th rough a scanner and print module (print engine and
print controller), and in some cases, incorporate a modem allowing them to transmit facsimiles. They
are not "photocopiers". Moreover, nowhere has the EC explained why the mere fact that a device is
capable of reproducing more than 12 pages per minute means that it is always a "photocopier" and
never an "input or output unit" or "facsimile machine. " Likewise, nowhere has the EC explained why
the mere fact that a device that connects to a com puter or network but lacks a facsimile feature is
always a "photocopier" and never an "input or output unit." Yet this is precisely what the EC
measures provide.
29.
With regard to the EC's argument that the de vices in question are in fact "photocopiers"
classifiable in HS96 subheading 9009 12, the United States notes with interest the EC's newfound
desire to focus first on the text of HS heading 90 09 in conducting its analysis rather than subheading
9009 12. As the Panel may recall, this is precisely the approach the United States used to demonstrate
that the EC's position cannot be sustained. As the United States also explained in its second
submission, the EC's argument in fact is not supporte d by the terms of the heading. An MFM is not

an "indirect process photocopier." It does not use li ght to produce a copy, but rather to collect digital
data. It does not incorporate "an optical system" – rather it consists of a scanner and print module.
30. The EC does not in its second submission respond to most of the arguments the United States
has made to date on MFMs, including: (1) that the number of pages per minute that a device produces
has absolutely no bearing on the ordinary meaning of "input or output unit," nor any significance
from a practical standpoint, and that most MFMs currently sold which connect to computers are
capable of producing copies at a rate of more than 12 pages per minute; (2) that the printer unit is by
far the largest component of the MFM, is able to operate independently from the scanner or fax unit,
and represents the largest portion of the cost of manufacturing a typical MFM; and that typical MFM
users print far more often than they make digita l copies; and (3) that heading 8471 expressly covers
combined devices, and therefore simply combining a print module and scanner – two devices covered
by heading 8471 – provides no basis to exclude the e nd product – an MFM – from that heading. (The
EC does respond to the purported US argument that CCD is not a "light sensitive surface"; however,
the United States never in fact made that argument.)
31. The EC argues, for example, that "all the eviden ce made available to the Panel by the parties
and third parties points to the conclusion that prio r to the conclusion of the ITA, all WTO members,
and not just the European Communities, classified digital copiers under HS96 9009." If one were to
read the EC's statements that follow, one might believe that some Members were in fact classifying all
MFMs in heading 9009 during the ITA negotiations. Yet a more careful look at the material cited in
fact reveals that this characterization of Members' positions is, at best, profoundly misleading.
32. First, the EC asserts that Chinese Taipei, al ong with Singapore, has "recognized explicitly
that, prior to the conclusion of the ITA, it classi fied all digital copiers as photocopying apparatus
under HS96 9009." The EC cites for this conclusion a response to a question from the EC regarding
the classification of what the EC described as " single-function digital copiers" – i.e., devices that are
not MFMs, the product at issue in this dispute. In fact, with respect to MFMs, Chinese Taipei states
that it classified the devices on a "case by case basis" and Singapore states that it classified devices
based on the physical component which imparted the device its essential character. Thus these
answers do not support the conclusion that there exis ts a "practice" with respect to classification of
MFMs, nor do the materials cited otherwise support th e conclusion that the EC measure is consistent
with its obligations. Certainly nothing in the mate rials indicates a "practice" akin to what the EC
measure provides – imposing duties on any indirect process MFM capable of reproducing more than
12 pages per minute, or any indirect process MFM without a facsimile function, as its measure
provides.
33. The second item the EC cites to is the supposed classification practice of the United States.
However, the EC's evidence that the United States had a "practice" of treating MFMs as photocopiers
under heading 9009 is an assortment of classificatio n opinions issued by the United States that do not
classify products in heading 9009 or even refer to heading 9009. The EC in fact points to nothing
more than two opinions predating the ITA negotiati ons – while ignoring the large number of opinions
before the Panel in which US Customs and Border Protection (CBP) treated MFMs as "input or output
units" of subheading 8471 60.
34. Finally, the third item that the EC attempts to rely on is the absence of classification practice,
in particular that of Japan and certain third parties. Regarding Japan, the EC again refers to a proposal
Japan made during the ITA II negotiations – as the United States explained in its second submission,
it was recognized that a number of products proposed for inclusion in ITA II may already have been
covered by the ITA. Thus a negotiating propos al says little about what was covered by the
concessions at issue in this dispute, and certain ly does not indicate a "common, concordant, and

consistent" practice even on the part of Japan, th e Member putting forward the proposal. Likewise,
the absence of evidence regarding classificati on by third parties or other WTO Members cannot
support the conclusion that there exists a "common, concordant, and consistent" practice on the part of
other WTO Members. Even with respect to th e EC's "practice", the evidence demonstrates
inconsistencies. In sum, the EC fails to dem onstrate that there exists a "practice" among WTO
Members, much less one that supports its interpretation of the concession.