MEXICO – TAX MEASURES ON SOFT DRINKS AND OTHER BEVERAGES
Document: Notification of an Appeal by Mexico under Article 16.4 and Article 17 of the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU) and Rule 20(1) of the Working Procedures for Appellate Review
Date: 6 December 2005
Document codes: WT/DS308/10
Complainant: U.S.
Respondent: Mexico
Third parties: Canada, China, EU, Guatemala, Japan
Dispute stage: Appellate Body
Agreements cited: Art. III  GATT 1994

MEXICO – TAX MEASURES ON SOFT DRINKS AND
OTHER BEVERAGES

Notification of an Appeal by Mexico under Article 16.4 and Article 17 of the

Understanding on Rules and Procedures Governing the Settlement of
Disputes (DSU) and Rule 20(1) of the Working
Procedures for Appellate Review

 The following notification dated 6 December 2005, from the delegation of Mexico, is being
circulated to Members.

 Pursuant to Article 16 of the Understanding on Rules and Procedures Governing the
Settlement of Disputes ("DSU") and Rule 20 of the Working Procedures for Appellate Review ,
Mexico hereby notifies its decision to appeal to the Appellate Body certain issues of law dealt with in
the Report of the Panel on
() (the "Panel Report") and certain legal interpretations developed by the Panel in this
dispute.

1. Mexico seeks review by the Appellate Body of the Panel's legal conclusion that it has no
discretion to decline to exercise jurisdiction in this case and its determination that, even if it had such
discretion, the facts in the record do not justify a re fusal by the Panel to exercise jurisdiction in this
case. This conclusion is in error and is based on erroneous findings on issues of law and related legal
interpretations concerning Articles 3, 7, 11 and 19 of the DSU and Articles XXII and XXIII of the
GATT 1994. These errors are contained, inter alia, in paragraphs 7.1 to 7.18, 8.215 to 8.230 and 9.1
of the Panel Report.
2. Mexico seeks review by the Appellate Body of the Panel's legal conclusion that the
challenged tax measures are not justified under Article XX of the GATT 1994 as measures necessary
to secure United States compliance with laws or regulations which are not inconsistent with the
provisions of the GATT 1994. This conclusion is in error and is based on erroneous findings on
issues of law and related legal interpretations c oncerning Article XX of the GATT 1994. Paragraphs
8.168 to 8.204 and 9.3 of the Panel Report, among others, contain such errors, including the
following:
(a) The Panel's interpretation and application of the expression "to secure compliance" in
Article XX(d) of the GATT 1994 and its conclusion that it does not apply to measures
taken by a Member in order to induce another Member to comply with obligations
owed to it under a non-WTO treaty.
1

1 Panel Report, paragraphs 8.170 to 8.181.

(b) The Panel's conclusion that the challenged tax measures "are not designed to secure
compliance" within the meaning of Article XX(d) of the GATT 1994 and are not
eligible for consideration under Article XX(d) of the GATT 1994.
2
(c) The Panel's interpretation and applica tion of the phrase "laws or regulations"
contained in Article XX(d) of the GATT 1994 and its conclusion that this phrase does
not cover international treaties such as NAFTA.3
(d) The Panel's failure to consider whether the Mexican measures are "necessary" to
secure compliance with a law that is not inconsistent with the provisions of the
GATT 1994.4
3. Mexico seeks review by the Appellate Body, in the light of DSU Article 11, of the Panel's
conclusion that "Mexico has not established that its measures contribute to securing compliance in the
circumstances of this case".5 This conclusion does not reflect an objective approach to analysis of the
available evidence on the effects of the Mexican m easures, and is inconsistent with the treatment
given by the Panel to relevant evidence. Accordingl y, this conclusion is inc onsistent with the Panel's
duty to make an objective assessment of the matter before it.
4. Mexico considers that the Panel also failed to make an objective assessment of the matter
before it, including the facts of the case, inconsis tently with its obligatio n under Article 11 of the
DSU, with respect to Mexico's request for determin ations of fact, status and relevance of the NAFTA
dispute between the parties.6
5. Mexico also considers that, in concluding th at international countermeasures cannot qualify
for consideration as measures designed to "secure co mpliance" within the meaning of Article XX(d)
of the GATT 1994 7, the Panel improperly increased the obligations of WTO Members and reduced
the rights of Members under the covered agreements.
6. In the event that the Appellate Body rever ses the Panel's conclusion that Mexico's tax
measures are not justified under Article XX(d) of the GATT 1994, Mexico requests that the Appellate
Body complete the legal analysis under Article XX of the GATT 1994.
 Those provisions of the covered agreements which Mexico considers the Panel to have
interpreted or applied erroneously include Articles XX, XXII and XXIII of the GATT 1994 and
Articles 3, 7, 11 and 19 of the DSU.