Document: WT/DS286/R Page A-1 ANNEX A EXECUTIVE SUMMARY BY THAILAND AFTER THE FIRST SUBSTANTIVE MEETING (21 October 2004) I. INTRODUCTION ................................................................................................................... .2
Date: 21 October 2004
Document codes: WT/DS286/R
Complainant: Thailand
Respondent: EU
Third parties: Brazil, China, U.S.
Dispute stage: Appellate Body
Agreements cited: Art. II, XXII  GATT 1994

I. INTRODUCTION
1. The basic legal issue in this case is that, as a result of the EC's classification of frozen salted
chicken cuts with a salt content of 1.2% by weight or more in a manner inconsistent with the correct
interpretation of headings 0210 and 0207 in the EC 's Schedule of Concessions, the EC provides to
Thai exports of frozen salted chicken cuts treatment less favourable than that accorded to that product
in the EC's Schedule of Concessions. The EC's me asure is therefore inconsistent with the basic
obligations set out in Article II:1(a) and Article II:1(b) of the GATT.

2. Tariff concessions are the cornerstone of th e multilateral trading system. Article II of the
GATT requires WTO Members to limit their ordinary customs duties or tariffs on a particular good as
described in its Schedule of Concessions up to the maximum level specified therein. As recognised
by the Appellate Body, "[a] basic object and pur pose of GATT 1994 as reflected in Article II, is to
preserve the value of tariff c oncessions negotiated by a Memb er with its trading partners, and bound
in that Member's Schedule." (Emphasis added)
1

3. Thus, a Member's obligation under Article II is to provide on products from other Members
tariff treatment "no less favourable" than that describ ed and bound on that product in its Schedule. A
tariff concession is comprised of at least four essen tial elements: (i) the numerical heading, (ii) the
description of the product, (ii) the maximum bound tariff level and, (iv) the method of valuation of the
good for customs purposes. A Member's tariff concession would be rendered meaningless if that
Member were able to alter unilate rally any of those elements in such a manner as to provide "less
favourable treatment" to the products of other Members.

4. Thailand submits that the terms of the EC 's concession cover chicken cuts deeply and
homogenously impregnated in all parts with a total sa lt content of 1.2% or more by weight. The EC
argues that this chicken meat is "salted" within the meaning of its tariff concession only if the salt was
added for the purpose of long-term preservation . The EC argues that if long-term preservation is
achieved through freezing, the Thai chicken meat can no longer be deemed to be "salted" and should
not benefit from the EC's concession.

5. The basic interpretative issue is wh ether the term "salted" describes the physical
characteristics of the products benefiting from the tariff concession - as claimed by Thailand - or
whether that term refers to the objective or purpose for which the product has been salted – as argued
by the EC. The EC's argument is entirely novel and would mean that in order to determine the
customs classification of a product, it would no longer be sufficient to examine the physical
characteristics of the product. Instead, it w ould also be necessary to examine for what purpose the
product was given its physical characteristics. The EC's novel approach is no t supported by the term
"salted", is completely foreign to the Harmonised System, deviates from the normal practice of
customs classification of Members and would, if introduced into WTO law, create great uncertainty in
the determination of the scope of the tariff concessions.

6. There are also important practical reasons why classification must depend on the physical
characteristics of the product: a customs officer clearing products upon import would not be in the
best position to determine whether the characteri stics of the product presented achieve a certain
purpose or objective. The EC's first written su bmission to the Panel, citing judgments of the
European Court of Justice, recognises this basic principle, stating that it is the "objective

1 Appellate Body Report, Argentina – Measures Affecting Import s of Footwear, Textiles, Apparel and
other Items ("Argentina – Textiles and Apparel"), WT/DS56/AB/R, para. 47.

characteristics and properties" of products at the time of customs clearance that is the "decisive
criterion" for the purposes of customs classification.2

II. BACKGROUND
A. FACTUAL BACKGROUND
7. During the Uruguay Round, the EC bound the products that fit the description of frozen
boneless poultry cuts under subheading 0207.41.10 at the rate of 1024 ECU/T and designated those
products as subject to the special safeguard provision s of Article 5 of the Agreement on Agriculture.
The EC also bound the products that fit the descrip tion of salted meat under subheading 0210.90.20 at
the ad valorem rate of 15.4%, but did not designate those products as being subject to the special
safeguard provisions. In 1994, when the EC fi nalised its Schedule of Concessions, the prevailing
view of the EC as defined in its own domestic Customs classification law ("Combined Nomenclature"
or "CN") was that the product "salted meat" was meat that had been "deeply and homogeneously
impregnated in all parts with a minimum salt content of 1.2%." 3 Therefore, Thailand's understanding
was that the product that the EC had bound in it s Schedule LXXX as sa lted meat of heading
0210.90.20 was consequently the product which met th e EC's own definition of salted meat as stated
in its own laws at that time.

8. In 1996, Thailand started exporting salted ch icken to the EC in response to requests from
European food processors for salted chicken meat that could be used directly in the manufacture of
processed chicken products. These chicken products were deeply and homogenously impregnated
with a minimum salt content of 1.2%. Due to th e geographic distance between Thailand and the EC
and the fact that the duration of transportation by ship takes between 21-28 days, Thai salted chicken
exports by ship also have to be frozen. Even thou gh the Thai salted chicken exports had always been
frozen, the EC did not classify these products as frozen chicken. The EC considered it sufficient that
the Thai exports met the EC's own definition of sal ted meat as set out in its Combined Nomenclature
and, consequently, the EC's Schedule LXXX. As a result, from 1996 to mid-2002, Thai frozen salted
boneless chicken cuts were classified by the EC as 'salted meat' under heading 0210.90.20 at the
ad valorem tariff rate of 15.4%.

9. In November 2001, a Member of the Eur opean Parliament drew the attention of EC
Agriculture Commissioner Fischler to an increase in EC imports of salted chicken and asked whether
the EC could "unilaterally change the import duty on salted chicken fillet by raising the stipulated salt
content of 1.2%".
4

10. Commissioner Fischler replied that:

[T]he Commission follows with great interest the evolution of imports on the market
for all types of meat … The Honourable Memb er assumes that the meat in question is
lightly salted and the salt may be shaken off. This fact would not be inconformity
with the definition in the Combined Nomenc lature which reads: 'For the purposes of
heading 0210, the terms "meat and edible meat offal, salted, in brine, mean meat and
edible meat offal, deeply and homogeneously impregnated in all parts having a total
salt content of not less than 1.2% by weight." The Commission is however not aware

2 As set out in the Dinter and Gausepohl judgements of the European Court of Justice, referred to in the
EC's First Written Submission, para. 82.
3 Commission Regulation (EC) No. 535/94 of 9 March 1994, published in the Official Journal of the
European Communities No. L 68, 11 March 1994, p. 15. ("Regulation 535/94") Exhibit THA-3.
4 Written Question E-3046/01 by Albert Maat (PPE-DE) to the Commission,
15 November 2002/C147/081. Exhibit THA-4.

that imported salted poultry meat does not comply with this definition . The
Commission has drawn the attention of Me mber States to monitor closely the
compliance of these poultry meat imports with the relevant Community provisions in
customs or veterinary legislation. Furthermore, the options to deal with any
problems that may arise regarding the products in question are being examined at
present by the various departments of the Commission. (Emphasis added.)
5
11. In response to protectionist concerns, howev er, the EC adopted Regulation 1223/2002, which
alters the description of the product by classify ing "boneless chicken cuts , frozen and impregnated
with salt in all parts with a salt content of 1.2 to 1.9%" under the subheading of 0207.14.10. As a
result, chicken that previously met the definition of "salted meat" by virtue of its minimum salt
content of 1.2% in all parts is now classified as "frozen chicken." Prior to Regulation 1223/2002,
when the same chicken product was classified as salte d meat, it was accorded tariff treatment at an
ad valorem rate of 15.4%. Following Regulation 1223/2002, this same product - now classified as
frozen chicken – is accorded the bound tariff rate of 102.4€/100 kg/net. 6 Based on 2003 chicken
prices, the specific tariff rate is equivalent to an ad valorem rate of 58.9% -- much higher than the
15.4% ad valorem rate. On the basis of the average annual price of salted chicken exported from
Thailand to the EC from 1997 to 2002, the equivalent ad valorem rate was 43.9%. This tariff rate is
much higher than the bound rate of 15.4% that th e EC committed to in its Schedule of Concessions
for salted meat.

12. Nothing in the WTO Agreement allows a WT O Member to address an anomalous influx of
imports by changing the description of a product so th at it falls under a different tariff heading with a
higher tariff level. Nevertheless, it is clear from ex changes in the European Parliament and other fora
that this was precisely the EC's goal in its classificat ion of Thai chicken. In this case, by modifying
the description of frozen salted chicken, so that it is now classified as frozen chicken rather than salted
meat, the EC has raised the tariff ra te on that product from 15.4% to the ad valorem equivalent of
58.9% (based on the price of chicken in June 2003)
7 and effectively rendered its tariff concession on
salted meat meaningless.

B.
EC REGULATIONS AND COMMISSION DECISION
1. Regulation No. 2658/87 of 23 July 1987 as amended by Regulation No. 535/94 of
9 March 19948
13. The applicable EC customs regime at the time of the conclusion of the Uruguay Round was
set out in the Combined Nomenclature published in Annex I to Council Regulation 2658/87 on the
tariff and statistical nomenclature and on the co mmon customs tariff. Article 12 of Regulation
2658/87 provides that the Commission shall adopt each year no later than 31 October, by means of a
Regulation, a complete version of the Combined Nomenclature together with the corresponding
autonomous and conventional rates of duty. The most important element of the annual update is the
amendment to Annex I to Regulation 2658/87, which contains the complete Combined Nomenclature.

5 Ibid.
6 Under Schedule LXXX the tariff rate provided for products under subheading 0207.41.10 is
1024 ECU/T, whereas under the EC's Combined Nomenclature, the tariff rate provided for products under
subheading 0207.14.10 (the successor of heading 0207.41.10) is 102.4 € /100 kg/net.
7 Thai chicken exports to the EC stopped in June 2003 as a result of the avian flu problem. In
June 2003, the price of chicken was 1738.78€/tonne. Exhibit THA-2.
8 Council Regulation (EEC) No. 2658/87, of 23 July 1987, on the tariff and statistical nomenclature and
on the Common Customs Tariff, published in the Official Journal of the European Communities No. L 256,
7 September 1987, p. 1 ("Regulation No. 2658/87"). Exhibit THA-6 (only relevant portion).

14. The structure of the Combined Nomenclature was based on that of the Harmonized System.
Prior to the conclusion of the Uruguay Round, the Combined Nomenclature was amended by
Regulation 535/94 which inserted the following additional note to Chapter 2 of the CN (originally
additional note 8, renumbered in 1995 as additional note 7):

For the purposes of heading 0210, the term " salted" means meat or edible meat offal
which has been deeply and homogeneously im pregnated with salt in all parts, having
a total salt content not less than 1.2% by weight.
15. Regulation 535/94 provides that "… to ensu re uniform application of the CN, provisions
should be laid down for the classification of salted meat and edible meat offal falling within CN code
heading 0210, in order to distinguish them from fresh, ch illed or frozen meat and edible meat offal;
whereas a total salt content of 1. 2% or more by weight appears to be an appropriate criterion for
distinguishing between these two types of products " (emphasis added). At this point, therefore, the
EC considered that a product with a salt content of 1.2% satisfied the criterion to be met for a product
to be classified as salted meat under heading 0210 and served to distinguish that product from
products that were fresh, chilled or frozen.

16. The verification process of tariff schedules among all Uruguay Round negotiating parties took
place from 15 February to 25 March 1994.
9 It was during this period of verification of tariff
schedules, that, by way of Regulation 535/94, the EC clarified the scope of its tariff concession under
heading 0210, in particular, with respect to the term "salted." Th is additional note was published in
Regulation 535/94 on 11 March 1994 and remained va lid in the EC Combined Nomenclature until
13 November 2003.10

2. Regulation No. 3115/94 of 29 December 1994
17. The definition of "salted" as set out in Re gulation 535/94 was incor porated into Regulation
2658/87 through Regulation 3115/94.11 The Preamble of Regulation 3115/94 states the need to:

… amend the combined nomenclature to take account of:
- changes in requirements relating to statisti cs or commercial policy, in particular by
virtue of Council Decision bringing into force simultaneously the acts implementing
the results of the Uruguay Round of multilateral trade negotiations and Council
Regulation concerning certain measures resu lting from the conclusion of negotiations
under Article XXIV:6 and other measures necessary for simplification purposes,
- the need to align or clarify texts; (emphasis added.)
18. Regulation 3115/94 was enacted in order to me et the requirements of Article 12 of Regulation
2658/87 which provides for the Commission to adopt each year a complete version of the Combined
Nomenclature.

9 Informal Meeting of Heads of Delegation of 20 January 1994, Statem ent of the Chairman,
MTN.TNC/W/131, 21 January 1994. Exhibit THA-7.
10 Regulation 535/94 was only re placed on 14 November 2003 by Regulation 1871/2003, which
entered into force on the 20th day following the day of its publication in the Official Journal on
25 October 2003.
11 Commission Regulation (EC) No. 3115/94 of 20 December 1994, amending Annexes I and II to
Council Regulation (EEC) No. 2658/87 on the tariff and statistical nomenclature and on the common customs
tariff, published in the Official Journal of the Eu ropean Communities, No. L 345 , 31 December 1994, p. 1.
("Regulation 3115/94"). Exhibit THA-8.

3. Regulation No. 1223/2002 of 8 July 2002
12
19. Regulation 1223/ 2002, concerning the classification of certain goods, states that its adoption
is necessary to ensure the uniform application of the Combined Nomenclature pursuant to the general
rules for the interpretation of the Combined Nomenclature laid down in Regulation 2658/87.13

20. Article 1 of Regulation 1223/2 002 sets forth that goods described in column 1 of the table set
out in the Annex to the Regulation should be classi fied under the CN code indicated in column 2, by
virtue of the reasons set out in column 3. The Annex to Regulation 1223/2002 is reproduced below:

Description of Goods CN Code Reasons
(1) (2) (3)
Boneless chicken cuts, frozen and
impregnated with salt in all parts. They
have a salt content by weight of 1.2 to
1.9%.

The product is deep-frozen and has to
be stored at a temperature of lower than
- 18°C to ensure a shelf-life of at least
one year.
0207 14 10 Classification is determined by the
provisions of the General Rules 1 and 6
for the interpretation of the Combined
Nomenclature and by the wording of
CN codes 0207, 0207 14 and
0207 14 10.

The product is chicken meat frozen for
long-term conservation. The addition of
salt does not alter the character of the
product as frozen meat of heading 0207.

21. Article 2 of Regulation 1223/2002 further est ablished that binding tariff information (BTI)
issued by customs authorities of EC Member Stat es, which was not in accordance with the provisions
of the Regulation, could continue to be invoked fo r a period of three months. Regulation 1223/2002
entered into force on 29 July 2002 and is binding in its entirety and directly applicable in all EC
Member States.
14

4. Commission Decision of 31 January 2003 addressed to the Federal Republic of
Germany15
22. On 12 February 2003, the Commission of the EC adopted Commission Decision of
31 January 2003 ("Decision") concerning the validity of certain BTIs issued by Germany. The
Decision noted that Regulation 1223/2002 was adopted to clarify and confirm the classification of the
products described as frozen poultrymeat of heading 0207, under CN subheading 0207.14.10
"[b]oneless chicken cuts, frozen and impregnated with salt in all parts. They have a salt content by

12 Commission Regulation (EC) No.1223/2002 of 8 July 2002 concerning the classification of certain
goods in the Combined Nomenclature. Official Journal of the European Communities L 179, 9 July 2002, p.8
("Regulation 1223/2002"). Exhibit THA-9.
13 Recital (2) of Regulation 1223/2002.
14 On 13 August 2002, the EC issued a Corrigendum regarding recital (5) of Regulation No. 1223/2002.
Recital (5) of Regulation No. 1223/2002 stated that the measures provided for in Regulation No. 1223/2002
were in accordance with the opinion of the Customs Code Committee. Pursuant to the Corrigendum, recital (5)
now provides that "[t]he Customs Code Committee has not issued an opinion within the time limit set by its
Chairman." Official Journal of the European Communities, L 217, 13 August 2002, p.8. Exhibit THA-10.
15 Commission Decision of 31 January 2003 concerning the validity of certain binding tariff
information issued by the Federal Republic of Germany. Official Journal of the European Communities
No. L 36, 12 February 2003. Exhibit THA-11.

weight of 1.2 to 1.9%. The product is deep-frozen and has to be stored at a temperature of lower than
-18° to ensure conservation for at least one year."

23. According to the Decision, following the publication of Regulation 1223/2002, all BTIs
previously issued by Member States classifying the products concerned as salted meat of heading
0210 ceased to be valid. Pursuant to Regulation 1 223/2002, some Member States later issued BTIs
for frozen chicken cuts containing 2 to 2.7% of salt, under heading 0207. Nevertheless, there were a
number of cases in which Germany was issuing BT Is classifying frozen boneless chicken cuts
containing between 1.9 and 3% by weight of salt, under heading 0210.

5. Regulation No. 1871/2003 of 23 October 2003
24. On 25 October 2003, the EC published Co mmission Regulation (EC) No.1871/2003 of
23 October 2003, amending Annex I to Council Regulation (EEC) 2658/87.
16 Recital 3 of Regulation
1871/2003 maintains that classification in Chapte r 2 of the Combined Nomenclature depends
essentially on the process employed to ensure the long-term preservation of a given product. Recital 4
states that, according to the Harmonized System expl anatory notes to Chapter 2, "fresh meat remains
classified as fresh meat if it has been packed with salt as a temporary preserving agent during
transport and that this reasoning equally applies to frozen meat." Recital 4 adds that for the purposes
of heading 0210 (which comprises the EC's con cession under heading 0210.90.20), salting must be
sufficient to ensure long-term preservation for purposes other than transportation.

25. Recitals 5 and 6 reiterate th at salting, within the meaning of heading 0210, is a process used
to ensure long-term preservation and noted that a dditional note 7 to Chapter 2 of the CN should be
amended accordingly. Therefore, Article 1 of Regulation 1871/2003 provides that the additional
note 7 to Chapter 2 of the Combined Nomenclature is replaced by the following:

For the purposes of heading 0210, the terms ‘meat and edible meat offal, salted, in
brine' mean meat and edible meat offal deeply and homogeneously impregnated with
salt in all parts and having a total salt content of not less than 1.2% by weight,
provided it is the salting which ensures long-term preservation.
6. Regulation No. 2344/2003 of 30 December 2003
26. In light of these changes, the EC adopted Article 1 of Regulation 2344/2003, which, amends
Annex I to Regulation 2658/87, including the amendment made by Regulation 1789/2003. Regulation
2344/2003 came in to force on 1 January 2004 and is binding in its entirety and directly applicable in
all EC Member States.

C.
EXPORTS OF POULTRY FROM THAILAND TO THE EC
27. Thailand began exporting sa lted chicken to the EC in 1996 in response to specific
requirements of importers. Salted chicken is not sold to the average consumer. Rather, it is sold to the
food processing industry. The salted chicken is used in the manufacturing of processed chicken
products, such as chicken nuggets. For this end-u se, salted chicken helps the manufacturers reduce
preparation time and costs. The salt serves to reduce moisture loss during the cooking process, and
results in meat with better processing properties.

16 Commission Regulation (EC) No. 1871/2003, of 23 October 2003, amending Annex I to Council
Regulation (EEC) No. 2658/87 on the tariff and statistical nomenclature and on the Common Customs Tariff,
published in the Official Journal of the European Union No. L 275, 25 October 2003, p. 5 ("Regulation
No. 1871/2003"). Exhibit THA-13. All references to the recitals are made to this document.

III. LEGAL ARGUMENTS
A.
THE EC'S CLASSIFICATION OF FROZEN SALTED CHIC KEN IS INCONSISTENT WITH THE CORRECT
INTERPRETATION OF THE RELEVANT HEADINGS IN SCHEDULE LXXX
28. The EC's Schedule LXXX is an annex to th e GATT and must be interpreted in accordance
with the Vienna Convention on the Law of Tr eaties. As the Appellate Body confirmed in EC –
Customs Classification of Certain Computer Equipment:

A Schedule is made an integral part of th e GATT 1994 by virtue of Article II:7 of the
GATT 1994. Therefore, the concessions provided for in that Schedule are part of the
terms of the treaty. As such, the only rules which may be applied in interpreting the
meaning of a concession are the general rules of treaty interpretation set out in the
Vienna Convention.17
29. Applying Articles 31 and 32 of the Vienna Conve ntion, Thailand submits that the scope of the
EC's concessions under 0210 includes the Thai chicken product at issue here.

30. The ordinary meaning of the terms of Schedule LXXX provides a clear description of the
products falling under headi ngs 0210 and 0207, respectively. H eading 0210 covers "meat and edible
meat offal, salted, in brine, dried or smoked; edib le flours and meals of meat or meat offal." The
ordinary meaning of "meat" includes poultry. The ordi nary meaning of "salted" is "impregnated with,
containing or tasting of salt." 18 The term "salted "is followed by the terms "in brine, dried, or
smoked." The definitions of these terms are the following:

• in brine: "water, saturated or strongly impregnated with salt or to soak in or to saturate in
brine"19;
• dried: "to make or to become dry by wiping, evaporation, draining, etc., or to preserve
(food, etc) by removing the moisture"20;
• smoked: "to cure or darken by the action of smoke."21

31. The common element in these terms and in th e term "salted" denotes an additional process to
the natural state of the meat. That process could be either salting the meat, putting it in brine, drying
it or smoking it. In other words, the common el ement is that the product undergoes a process that
changes its natural condition by preparing it.

32. In contrast, heading 0207 covers "meat and ed ible meat offal of the poultry of heading 0105,
fresh, chilled or frozen." The heading 0105 covers " live poultry, that is to say, fowls of the species
Gallus domesticus, ducks, geese, turkey and guinea fowls." Do mestic chicken is a fowl of the species
Gallus domesticus.

(a) The ordinary meaning
33. The ordinary meaning of "fresh" refers to food "…not preserved by salting, tinning, freezing,
etc."
22, "recently made, produced or harvested; not stale or spoiled" and "not preserved, as by canning

17 Appellate Body Report, European Communities – Customs Classification of Certain Computer
Equipment ("EC – Computer Equipment") WT/DS62/AB/R, WT/DS67/AB/R, WT/DS68/AB/R, para. 84.
18 The Concise Oxford Dictionary, 9th Edition, Oxford University Press 1995, p. 1218.
19 Ibid., p. 163.
20 Ibid., p. 147.
21 Ibid., p. 1313.
22 Ibid., p. 541.

or freezing." 23 The ordinary meaning of "chilled" is to "preserve by cooling." 24 The ordinary
meaning of frozen is to "…preserve (f ood) by refrigeration below freezing point" 25 or "to preserve
(food for example) by subjecting to freezing temperatures".26

34. Based on the ordinary meaning of these three terms, heading 0207 covers poultry meat that is
either fresh, chilled or frozen, which are the va rious stages in which the poultry meat may be
maintained so that it is in its original natural state or may be easily returned to its original state. As
noted, "[f]reezing is one of the easiest and least time-consuming methods of food preservation. Most
foods retain their natural color, flavour, texture better than when other methods of food preservation
are used" (such as canning).
27 There is no indication from the ordinary meaning of the terms in the
headings that the state of freshness or the state of preservation by cooling is a more important criterion
to determine classification than the state of prepar ation. Furthermore, even assuming preservation
were the relevant criterion, there is certainly no reference to long-term preservation or conservation as
being the decisive factor to determine the eventual classification of the product.

35. The term "frozen" refers to the preservation of the product by cooling or refrigeration. The
verb "preserve" means "to maintain (a thing) in its existing condition"
28 or "to prevent (organic
bodies) from decaying or spoiling." 29 In the light of these definitions, a "frozen" product that can be
maintained in or returned to its original state without any change in its physical or chemical
characteristics. If a product is frozen, it can easily be thawed in order to return the product to its
original state.

36. In contrast to freezing, the salting of a product entails a process which alters the original state
of the product. Meat of heading 0210 is "meat … sal ted, in brine, dried, smoked." Chicken that has
been subject to one of these preparation processes: salt impregnation, salt-water immersion, removal
of moisture or darkening caused by smoke falls under 0210.

37. Moreover, the processes listed in heading 02 07 can be clearly distinguished from those in
heading 0210. A process is defined in the New Shorter Oxford English Dictionary as, inter alia, "[a]
thing that goes on or is carried on; a continuous series of actions, events or changes; a course of
action, a procedure; esp. a continuous and regular action or succession of actions occurring or
performed in a definite manner; a systematic series of actions or operations directed to some end, as in
manufacturing, printing, photography, etc." Headi ng 0207 covers products that are "fresh, chilled, or
frozen." If a product is fresh it cannot be said to have undergone a process. Chilling and freezing
may be considered as processes. Of the three st ates (fresh, chilled or frozen) listed in the note to
heading 0207, chilling and freezing relate to a pro cess to ensure the purpose of preservation.
However, all of the processes in heading 0207 relate to the temperature of the product. The note to
heading 0207 states:

This heading covers only fresh, chilled or frozen meat and edible offal of domestic
poultry which, when live are classified in heading 01.05.

23 The American Heritage College Dictionary, 3rd edition, Houghton Mifflin Company, 1993, p. 545.
24 The Concise Oxford Dictionary, 9th edition, Oxford University Press, 1995, p. 228.
25 Ibid., p. 539.
26 American Heritage College Dictionary, 3rd edition, Houghton Mifflin Company, 1993, p.544.
27 B.J. Willenberg, Department of Food Science and Human Nutrition, University of Missouri-
Columbia, http://muextension.missour i.edu/xplor/hesguide/foodnut/gh1501.htm, last accessed 3 August 2004.
Exhibit THA-14.
28 The Concise Oxford Dictionary, 9th edition, Oxford University Press 1995, p. 1081.
29 American Heritage College Dictionary, 3rd edition, Houghton Mifflin Company, 1993, p. 1082.

38. In contrast, the processes in heading 0210 relate to the preparation of the product rather than
its temperature. The note to heading 0210 states:

This heading note applies to all kinds of meat and edible meat offal which have been
prepared as described in the heading , other than pig fat, free of lean meat, and
poultry fat, not rendered or otherwise ex tracted (heading 02.09). The heading
includes streaky pork and similar meats interl arded with a high proportion of fat, and
fat with an adhering layer of meat, provided they have been p repared as described in
the heading. (Emphasis added).
39. Chicken is salted by placing the meat in a dr um-shaped container to wh ich the salt is added.
The container with the meat is slightly shaken ("tumbled") until the salt is dissolved. The meat is then
left in the solution for a specified period of time. Th is process causes the meat to be salted to the very
core of the product. Once the meat is salted in th is manner, it cannot be completely washed off or
otherwise thoroughly de-salted. The salt has two main effects on poultry: "[i]t dissolves protein in
muscle, and the salt and protein reduce moisture loss in cooking. This makes the meat juicier, more
tender and improves the flavour. The low levels of salt enhance the other natural levels of poultry."
30
High levels of salt are known to increase th e water-binding properties of a meat product. 31 Thus, a
frozen boneless chicken cut, once thawed and cooked, will taste the same as a fresh boneless chicken
cut once cooked. However, a chicke n cut that is salted, put in brine, dried or smoked would taste
quite different once cooked after having undergone such a process.

40. Following the advent of refrigeration, there are more modern ways of preserving food than
the use of salt. Therefore, today, salt is used prim arily to flavour or to prepare food. Indeed, the EC
has acknowledged that that "the exclusive use of salting of meat products for preservation is now
relatively rare,"
32 and that "[p]roducts preserved by salting (or a combination of salting, drying and
smoking) remain popular today primarily by virtue of their taste and other characteristics , regardless
of the fact that they are preserved by methods which have been surpassed (at least technologically) by
freezing" (emphasis added).33 Thailand agrees with these EC statements.

41. Thailand emphasises that this dispute concerns tariff treatment under Article II of the GATT,
therefore, requires an examination of the EC's concession in heading 0210 and an assessment of
whether the product at issue has the physical char acteristics of the product described in the EC's
Schedule of Concessions. While the production pro cesses that impart these characteristics and the
end-uses of the product might be relevant to a de termination of the likeness of products under GATT
Article III, they are not relevant to the issue in this dispute.

42. Once a product is salted, it cannot be comple tely unsalted by immersion in water. The
essential character of the chicken product is changed as a result of the salting. This also limits its end-
uses. The salted chicken exported by Thailand to the EC is sold to the food processing industry in the
EC and is intended for use in the manufacture of va lue-added chicken products. The importers in the
EC market regard salted and unsalted chicken as completely different products.

43. The EC has stated that "[t]he addition of salt does not alter the character of the product as
frozen meat under 0207." If this rationale were to be adopted by other countries, it would mean that a
product such as Danish slab bacon which is sm oked and cured but nevertheless frozen for export

30 Dr. Alan Sam, Food Safety Feature, United States Department of Agriculture, December 1999,
http://www.fsis.usda.gov/OA/pubs/bastebrine.htm, last accessed 3 August 2004. Exhibit THA-15.
31 Effects of Preblending, Reduced Fat and Salt Levels on Frankfurter characteristics, Journal of Food
Science, Volume 52, No.5, p. 1149 -1151, at 1151. Exhibit THA-16.
32 EC's First Written Submission, para. 39.
33 Ibid., para. 41.

purposes would have to be classified as frozen rath er than smoked. Thailand has also submitted
evidence that other salted meat products, such as Pa rma ham, prosciutto and jamón serrano must be
conserved at a temperature below that of ambient te mperature, namely at a chilled level. In other
words, these products may be salted and dried but they are also chilled.

44. Moreover, the ordinary meaning of the term "salted" does not imply that the product must be
salted for the purpose of preservation. Despite the fact that this purpose is not found in the ordinary
meaning of "salted" and that the EC's own defi nition of salted for the purpose of heading 0210 (as
stated in Regulation 535/94) did not refer to preservation, or long-term preservation, the EC
nevertheless introduced in Regulati on 1871/2003 the requirement that salting, of heading 0210, "…is
a process used to ensure long-term preservation." The introduction of such a requirement is baseless
and without any textual support in heading 0210.

45. The EC must be presumed to have been aware of the percentage of salt required to preserve a
product for the purpose of long-term preservation. In its first definition of the terms "salted, in brine"
under heading 0210 in Regulation 535/94, the EC esta blished stipulated a minimum salt content of
1.2% deeply and homogeneously impregnated in all parts. At this low level, the product cannot be
preserved by salting alone, as the Preamble in Regulation 535/94 acknowledges in stating that
"provisions should be laid down for the classification of salted meat and edible meat offal falling
within CN code heading 0210, in order to distinguish them from fresh, chilled or frozen meat and
edible meat offal; whereas a total salt content of 1.2% or more by weight appears to be an
appropriate criterion for distinguishing between these two types of products. " If it were necessary to
establish a minimum level of salt to classify a produc t as salted rather than frozen, it is clear that the
EC assumed that such a product would enter the EC either in a salted and fresh state, or in a salted and
chilled state, or in a salted and frozen state. Othe rwise, there would be no need to distinguish these
products from each other.

46. The Appellate Body has stated that one of the corollaries of the "general rule of
interpretation" in Article 31 is that "interpretation [of a treaty] must give meaning and effect to all the
terms of a treaty." An interpreter may not adopt a reading that would result in reducing whole clauses
or paragraphs of a treaty to redundancy or inutility.
34 The EC's interpretation of requiring "salting" to
be carried out for the purpose of long-term preser vation reduces the ordinary meaning of the term
"salted" in heading 0210 and the EC's tariff conc essions under that heading (when a product is both
frozen and salted) to inutility.

47. Moreover, the EC has failed to demonstrate th at WTO Members agreed that only meat salted
for the purpose of long-term preservation would fall w ithin the definition of "salted." The Appellate
Body has said that the "[t]he duty of a treaty inte rpreter is to examine the words of the treaty to
determine the intentions of the parties … [p]rincipl es of interpretation neither require nor condone the
imputation into a treaty of words that are not there or the importation into a treaty of concepts that
were not intended".
35 There is no basis to impute the concep t of preservation into the definition of
"salted."

48. In addition, the EC itself acknowledges that the ordinary meaning of "salted" in heading 0210
can either refer to meat that has been "preserved by salt" or to meat for which "it's (sic) flavour has
been altered by the addition of salt".
36 There may be purposes for salting other than those cited by the
EC. However, the only common denominator between these meanings is that salt must be included in

34 Appellate Body Report, United States – Standards for Reformulated and Conventional Gasoline
WT/DS2/AB/R, page 23.
35 Appellate Body Report, India – Patent Protection for Pharmaceutical and Agricultural Chemical
Products (US), WT/DS50/AB/R, adopted 16 January 1998, para. 45.
36 EC's First Written Submission, para. 121.

the product. As acknowledged by the EC, the ordi nary meaning of "salted" does not resolve the
question of which meaning should be preferred
37 and the choice of which of the two possible
meanings it cites for "salted" in heading 0210 must be resolved through an analysis of the "context."

(b) The context
49. The context of the headings in the EC's sc hedule of concessions also supports Thailand's
arguments. Heading 0210.90 of the EC's Schedule of Concessions covers all salted meat other than
"meat of swine" and "meat of bovine animals." In turn, the subheading 0210.90.20 covers salted meat
other than "meat of swine" and "meat of bovine an imals" and "horsemeat, salted in brine" and meat
"of sheep and goats" as there are specific sub headings for such meat. "Salted meat" of chicken is not
excluded from the terms of heading 0210.90.20 under this contextual analysis. Applying the principle
expressio unius est exclusio alterius, this heading must be construed as including other types of meats
not expressly excluded ( e.g., chicken). Therefore, this context c onfirms that the ordinary meaning of
"salted meat" covers chicken.

50. Second, the structure of the headings at the 4-digit level indicates that the first 8 headings
refer to different types of meat and offal that are fresh, chilled or frozen. There is one heading,
namely that of 0209, pig fat, which covers not onl y fresh, chilled or frozen, but also salted, in brine,
dried or smoked. The last heading covers meat a nd edible meat offal, salted, in brine, dried or
smoked. Therefore, the products are either classifi ed as fresh, chilled or frozen (the first 8 headings)
or as salted, in brine, etc (heading 0210); only headi ng 0209, specifically lists all the various states.
However, the heading 0210 does not list all the states. It only lists the states of salted, in brine, dried
or smoked. This indicates that, for heading 0210, the type of preparation is the determining factor for
the classification of that product.

51. The EC alleges that an interpretation of the te rm "salted" in its context must mean exclusively
that meat is salted for the purpose of long-term preservation.
38 The context the EC examines is the
surrounding terms in heading 0210 of "in brine", "dri ed", and "smoked". From these three terms, the
EC attempts to infer that the common denominator is that of preservation. However, these terms also
go to the preparation of the product. An examination of the context of the other tariff headings, such
as headings 0812 and 0814 in the EC's Schedule LX XX shows that when preservation is the relevant
criterion, it is expressly stated. Thus, when the EC considers that a product must be classified on the
basis of its preservation characteristics, that objec tive characteristic of preservation is specifically
listed in the tariff heading itself. Heading 0210, in contrast, makes no reference at all to a
preservation requirement.

(c) The object and purpose
52. The Appellate Body has stated that the object and purpose of the Article II of the GATT, is to
preserve the value of tariff c oncessions negotiated by a Memb er with its trading partners, and bound
in that Member's Schedule. It is therefore essen tial that the description of the products falling under a
particular subheading be maintained as they were established at the time of the negotiation of the
concession. Accordingly, not only the numerical headings and the tariffs levels, but also the
description of the products which give that tariff binding its complete scope and content must be
respected in order to preserve the value of a con cession.. A Member is not permitted, as the EC has
done here, to undermine its concessions in its Sc hedule by changing the description of products
falling under a particular heading.

37 Ibid., para. 122.
38 Ibid., para. 13.

(d) The Harmonized System and the Explanatory Notes
53. In EC – Computer Equipment , the Appellate Body made clear that a proper interpretation of
Schedule LXXX must include a consideration of the Harmonized System and its Explanatory Notes.
The EC's customs classification law, as set out in its Combined Nomenclature 39 is based on the
Harmonized System. In the present case, therefore, the Panel should examine the Harmonized System
and its Explanatory Notes in order to conduct a proper examination of the terms of Schedule LXXX.

54. Article 1 of the Harmonized System C onvention defines the Harmonized System as
comprising, inter alia , the General Rules for the Interpretation of the Harmonised System.
Article 3.1(a) obliges Contracting Parties to en sure that its "Customs tariff and statistical
nomenclatures shall be in conformity with the Ha rmonised System." Thus, if the Panel were to
consider the Harmonized System, it would need to rely upon the General Rules for the Interpretation
of the Harmonized System because they are an integral part of the Harmonized System.

55. In addition, the EC and Thailand as Cont racting Parties to the Harmonized System
Convention have accepted, inter alia , the following obligations under Article 3 of the Harmonized
System Convention:

(i) [they] shall use all the headings a nd subheadings of the Harmonized System
without addition or modification, together with their related numerical codes;
(ii) [they] shall apply the General Rul es for the interpretation of the Harmonized
System and all the Section, Ch apter and Subheading Notes, and shall not modify the
scope of the Sections, Chapters, headings or subheadings of the Harmonized System
… (emphasis added)
56. The EC has also agreed to apply the Genera l Rules for the Interpretation of the Harmonized
System
40, including, in particular, General Rule of Interpretation l, which provides that:

The titles of Sections, Chapters and sub-Ch apters are provided for ease of reference
only: for legal purposes, classification shall be determined according to the terms of
the headings and any relative Section or Ch apter Notes and, provided such headings
or Notes do not otherwise require, according to the following provisions: …
(i) Terms of headings HS 0207 and HS 0210
57. The classification of products under HS 0207 an d 0210 must be examined according to the
terms of the headings. 41 The terms in the headings 0207 and 0210 in Schedule LXXX and the
Harmonized System are identical. Under HS heading 0210, the term "salted" is not qualified in any
way. In particular, there is no quantitative specifica tion in the heading as to the threshold level of salt
that must be met to classify the product as salted.

39 See Regulation 2658/87.
40 General Rules for the Interpretation of the Harmonized System. Exhibit THA-20.
41 Therefore, as the titles of the Section (i.e. Live an imals, animal products) and of the Chapter (i.e.
Meat and edible meat offal) are provided for ease of refe rence only and have no legal status, they are not taken
into account here for the purposes of classification.

(ii) Chapter Notes to Chapter 2
58. The Section Note to Section 1 covering "Live Animals, Animal Products" (the Section within
which Chapter 2 falls) is not useful in the present case for the proper classification of the product at
issue.

59. The first item in the General Note to Chapte r 2 provides that the Chapter covers meat and
meat offal in the following states: (i) fresh; (ii) chilled; (iii) frozen; a nd (iv) salted, in brine, dried or
smoked. The state of "fresh" may include meat and m eat offal that is packed with salt as a temporary
preservative. The fact that the salt in this case is used as "packing" means that the salt has not
impregnated the product and may be easily washed off. Meat that has been temporarily packed with
salt does not have its essential characteristics modi fied. This temporary packing with salt is
completely different from the process of addi ng salt so that it is deeply and homogenously
impregnated with salt in all parts.
42 In Regulation 1871/2003, the EC extrapolates from the reasoning
in the first item in the Chapter Note to the effect that if the additio n of salt in fresh meat means that
the meat must be classified as fresh, then the addition of salt in meat that is frozen means that the meat
must be classified as frozen. However, this is incons istent with the EC's own definition of "salted" in
Regulation 535/94 meaning a product that is "deep ly and homogenously impre gnated with salt in all
parts and having a total salt content of not less than 1.2% by weight." It is also inconsistent with the
rationale in item 1 of the Chapter Note stating th at fresh meat that has b een packed with salt as a
temporary preservative must be classified as fresh m eat. Thai chicken exports are not 'packed' with
salt as a temporary preservative. They are deeply and homogenously impregnated with salt in all parts
at a minimum of 1.2% in order to prepare the produ ct. Therefore, once the salt is added as more than
a temporary preservative, it must be classified as some thing other than "fresh" or "frozen". It must be
classified as "salted."

(iii) Heading notes to 0207 and 0210
60. The note to heading 0207 (which the EC claims the product at issue falls under) provides, in
part, that:

This heading covers only fresh, chilled or frozen meat and edible offal of domestic
poultry which, when live, are classified in heading 01.05 (…) (Emphasis added.)
61. Chapter 2 covers the classification of meat in different states or which have undergone
different processes: fresh, chilled, frozen, salted, in brine, dried or smoked. However, the note to
heading 0207 makes clear that it applies only to meat in three of them – i.e., fresh, chilled or frozen.
In other words, heading 0207 clearly excludes meat that is salted, in brine, dried or smoked.

62. Applying the principle of treaty interpretation, expressio unius est exclusio alterius , the note
to heading 0207 expressly includes meat that is fresh, chilled or frozen out of all the possible different
states of meat covered by Chapter 2. Therefore, heading 0207 expressly excludes meat that is salted,
in brine, dried or smoked. Thailand submits that by adding meat that is salted to fall under the

42 Indeed, Commissioner Fischler recognised the difference between the usage of salt for temporary
purposes which could be easily washed off and the usage of salt for longer-lasting duration. As quoted above, in
his reply to the Member of Parliament referring to the imports of salted chicken from Thailand, among others,
he stated: "… [t]he Honourable Member assumes that th e meat in question is lightly salted and the salt may be
shaken off. This fact would not be in conformity with the definition in the Combined Nomenclature which
reads: 'For the purposes of heading 00210, the terms 'meat and edible meat offal, salted, in brine, mean meat and
meat offal deeply and homogeneously impregnated in all pa rts having a total salt content of not less than 1.2%
by weight'. The Commission is however not aware that imported salted poultry meat does not comply with this
definition … " See Exhibit THA-4.

classification of heading 0207, the EC is specifically modifying the scope of the HS heading 0207. By
modifying the scope of the HS heading, it is consequently modifying the scope of heading 0207 in
Schedule LXXX.

63. Heading 0207 specifically excludes meat that is salted, in brine, dried or smoked because they
have undergone a process of preparation. Th is interpretation is supported by the note to
heading 0210, which states that " "This heading applies to all kinds of meat and edible meat offal
which have been prepared as described in the heading " (emphasis added). Therefore, any meat that
is prepared as described in the heading must be classified under heading 0210.

64. There is no textual justification in the Chapte r or heading notes in the HS to support the EC's
position that the method of conservation or preser vation alone should determine proper classification
of a product. The Chapter and heading notes confirm the ordinary meaning of salted to mean a
product that contains salt, and not a product that is preserved by the method of salting. Applying
General Rule of Interpretation 1, which provides th at classification shall be determined according to
the terms of the headings and the relevant notes, sal ted chicken, which is frozen, must be classified
under only one heading 0210, specifically under subheading 0210.90 of the Harmonized System
nomenclature.

65. Thailand also emphasises that the HS does not characterise "preservation and preparation" as
"processes." Rather, they are the purposes for which a particular process is undertaken. For example,
a product may be smoked by a particular process in order to achieve the purpose of preparation.
Thus, the Explanatory Note t o Chapter 2 makes a reference to "prepared or preserved by any
process". The Chapter Note to Chapter 16 makes a reference to "prepared or preserved by the
processes specified in Chapter 2 or 3 or heading 05.04." This means that the purposes of preservation
and preparation may be achieved by the processes which are specified in Chapter 2, Chapter 3 and in
heading 05.04.

66. Insofar as the purpose of the process is relevant to the scope of the EC's concession on 0210
in Schedule LXXX, the purpose of the processes in 0207 (chilling or freezing) would be that of
preservation. The purpose of the processes to wh ich products falling under h eading 0210 are subject
would be that of preparation. This is confirmed by the EC's own Additional Note 6 which states that:
"products falling within heading No. 0210 to which seasoning has been added during the process of
preparation remain classified therein, provided that the addition of seasoning has not changed the
character of the product"(emphasis added). This A dditional Note 6, which clearly refers to products
in heading 0210 as having undergone a process for th e purpose of preparation, has been included in
the EC's Combined Nomenclature since at least 1992 until 2003. This definition is still in the 2003
version of the Combined Nomenclature.

(iv) General Rule of Interpretation 3
67. General Rule of Interpretation 3(a) states th at the heading which provides the most specific
description of the product shall be pr eferred to headings providing a more general description. In this
case, salting, unlike freezing, modifies the characteristi cs of a product. Salted chicken has a different
flavour and texture that cannot be removed and makes it suitable for the manufacture of processed
chicken products. In contrast, frozen and unfro zen chicken are the same product and once a product
has been frozen it can be easily thawed to return to its original state. The EC has acknowledged this in
the context of an anti-dumping investigation on imports of Salmon from Norway, Chile and the
Faeroe Islands, where it noted that "freezing of salmon was [not] sufficient to alter the basic
characteristics of the product" and that "[r]ather than adding value to the product that was appreciated

by certain users, it was considered that one of the main reasons for freezing the product was to
facilitate its transport to the Community."
43

68. In addition, General Rule of Interpretation 3(b) is not applicable to an edible meat product as
it relates to "mixtures, composite goods consisting of different materials or made up of different
components." Rule 3(c) provides that when the classification of goods cannot be resolved by
reference to Rule 3(a) or Rule 3(b) they shall be classified under the heading which occurs last in
numerical order among those that equally merit consideration.

69. However, the minutes of the EC's Cust oms Code Committee state that the "… product
corresponds at the same time to the wording of the heading 0207 (fro zen) and to the wording of the
heading 0210 (salted)." In its First Written Subm ission, Thailand indicated that it did not consider
that Rule 3(c) is applicable in this case because the product at i ssue is only classifiable under heading
0210 as salted meat and not under the heading of 0207 for frozen chicken. Nonetheless, if the Panel
were to consider that the product is prima facie classifiable under both 0207 and 0210, then the
application of Rule 3(c) would be warranted. In th at event, between the two headings that equally
merit consideration in the view of the EC's Cust oms Code Committee, heading 0210 occurs last in
numerical order. Therefore, the Panel could find on this basis alone that the product frozen salted
chicken is classifiable under heading 0210.

(e) EC Court Judgments
70. The EC relies on the Gausepohl case, in which Court of Justice held that for meat of bovine
animals to be classified under heading 0210, the prod uct had to be (i) deeply and evenly impregnated
with salt in all its parts; (ii) for the purposes of long-term preservation; and (iii) with a minimum total
salt content of 1,2% by weight. However, when the EC codified the findings of the Gausepohl case in
Additional Note 8 through Regulation 535/94 (later renumbered as Additional Note 7), which was
published prior to the conclusion of the Uruguay Round, it retained the first and third of these criteria,
but specifically omitted the second criterion that th e product had to be for the purpose of long-term
preservation. This was not just an unintended omis sion; the EC deliberately decided to exclude the
notion of long-term preservation. Therefore, as of the time of the conclusion of the treaty, the EC
itself recognised that the "purpose of long-term preservation" was not a relevant factor for
determining whether a product shoul d be considered as salted, and therefore, classified, under 0210.
This confirms that the EC was of th e view at that time that products had to be classified on the basis
of the objective physical characteristics. This is presumably why the Commission "partly altered its
position in the course of the oral procedure by sugg esting a minimum salt content required for meat to
be classified under heading 0210, namely 1.2% of the weight."
44 The logic of the Gausepohl case
also contradicts the EC's claim that the purpose of preservation was so self-evident that it saw no need
to include specific reference to this criterion in Regulation 535/94.

71. Moreover, EC documents subm itted by Thailand directly contradict the EC's position. The
Minutes of the EC's Customs Code Committee of 25 January 2002 expressly acknowledged that the
element of long-term preservation was excluded from the final definition of "salted" meat for the
purposes of classification under heading 0210 in Regul ation 535/94 and subse quently in Additional
Note 7.
45

43 Council Regulation (EC) No. 930/2003 of 26 May 2003, terminating the anti-dumping and anti-
subsidy proceedings concerning the imports of farmed Atlantic salmon originating in Norway and the anti-
dumping proceedings concerning imports of farmed Atlantic salmon originating in Chile and the Faeroe Islands,
published in the Official Journal of the European Communities No. L 133, 29 May 2003, p.01. para. 19.
("Regulation 930/2003") Exhibit THA-21.
44 EC's First Written Submission, Exhibit EC-14, Opinion of the Advocate General Tesauro, para. 7.
45 Exhibit THA-22.

72. Under EC law, Additional notes, such as "Additional note 7", become part of the heading to
which they refer. As explained by the European Court of Justice,

[… an Additional Note] decided upon by the Council, becomes part of the heading to
which it refers and has the same binding effect whether it constitutes an authentic
interpretation of the heading or supplements it.
46 (emphasis added).
73. The EC has also specified quantitative levels th at must be met for a product to be considered
as "dried or smoked." Additional Note 2(E) in Chapter 2 provides that:

For the purposes of subheadings 0210 11 31, 0210 11 39, 0210 12 19 and 0210 19 60
to 0210 19 89, products in which the water/pr otein ratio in the meat (nitrogen content
x 6,25) is 2,8 or less shall be considered as 'dried or smoked.' The nitrogen content
shall be determined according to ISO method 937-1978.
74. The structure of Additional Note 2(E) is the sa me as that of Additional Note 7, in that the
classification of a product as "dried or smoked" or "salted" is dependent on a neutral and objective
criterion – here, a specific water/protein ratio. In both instances, these criteria for determining
whether a product would fall under heading 0210 could be easily assessed by a Customs Officer at the
border. In addition, there is no requirement in Add itional Note 2(E) that the product must be dried or
smoked for the purposes of long-term preservation.

2. The supplementary means of interpretation under Article 32 confirm that frozen salted
chicken should be classified under the HS heading 0210
75. In EC – Computer Equipment, the Appellate Body recognised that the classification practices
of the respondent "during the Uruguay Round negotia tions is 'part of the circumstances' of [the]
conclusion of the WTO Agreement and may be used as a supplementary means of interpretation within
the meaning of Article 32 of the Vienna Convention."
47 The Appellate Body further noted that "…[i]f
the classification practice of the importing Member at the time of the tariff negotiations is relevant in
interpreting tariff concessions in a Member's Schedule, surely that Member's legislation on customs
classification at that time is also relevant."48

76. Thus, the latest relevant time that the m eanings of the headings of EC's Schedule LXXX
should be assessed is 15 April 1994, namely the da te on which the Schedule was annexed to the
Marrakech Protocol and the EC thereby assumed its commitments under the Uruguay Round. As the
Appellate Body stated in United States – Import Prohibition of Certain Shrimp and Shrimp Products,
the key date for the interpretation of the treaty at issue was 1994, which was the time at Members
assumed their obligations under the WTO Agreement. In particular, the Appellate Body examined the
term "exhaustible natural resources" in GATT Artic le XX(g) in the light of the wording of the
Preamble of the WTO Agreement.
49

77. The EC's customs classification legislation at the time of the conclusion of the Uruguay
Round stated that for the purposes of heading 0210, th e term "salted" means meat or edible meat offal
which has been meat deeply and homogenously impre gnated with salt in all parts with a total salt
content not less than 1.2% by weight. Th e 1.2% threshold was specifically added to distinguish the
classification of salted meat and edible meat offal falling within heading 0210 from fresh, chilled or

46 Case 38-75, Douaneagent der NV Nederlandse Spoorwegen v Inspecteur der invoerrchten en
accijnzen, 19 November 1975, ECR 1975, page 01439, at para. 10.
47 Appellate Body Report, EC – Computer Equipment, para. 92.
48 Ibid., para. 94.
49 Appellate Body Report, US – Shrimp, para. 129.

frozen meat. The definition is silent as to the requirement that the product be salted for the purpose of
long-term preservation.

B.
THE EC 'S CLASSIFICATION OF THE PRODUCT AT ISSUE RESULTS IN TREATMENT LESS
FAVOURABLE FOR FROZEN SALTED CHIC KEN THAN THAT BOUND IN THE EC 'S SCHEDULE OF
CONCESSIONS AND IS THEREFORE INCONSISTENT WITH ARTICLE II:1(A) AND ARTICLE II :1(B)
OF THE GATT
78. In Argentina – Textiles and Apparel, the Appellate Body made clear that the "application of a
type of duty different from the type provided fo r in a Member's Schedule is inconsistent with
Article II:1(b), first sentence, of the GATT 1994, to the extent that it results in ordinary customs
duties being levied in excess of those provided for in that Member's Schedule."50 (Emphasis added).

79. The change from an ad valorem rate to a specific duty in this case is WTO-inconsistent to the
extent that it results in the application of du ties over the bound rates and where there was no ceiling
provided to ensure that the bound rate is not exceeded.

80. Thailand has demonstrated that the speci fic rate of 102.4€/100 kg/net would only be
equivalent to the ad valorem rate of 15.4% if the price for boneless chicken were 6.65 €/kg. Once the
price of chicken is lower than 6.65€/kg, then th e specific tariff rate of 102.4 €/100kg/net would
exceed the ad valorem bound rate of 15.4% and would therefore, result in "less favourable treatment"
being provided.

81. Thailand first began exporting chicken in 1996 to the EC. During the period between 1997
and mid-2002, the average price of chicken has been 2.3€/kg.
51 Thus, the application of the specific
duty of 102.4€/100 kg/net - given the price of chic ken in June 2003 and the average price of chicken
from 1997 to 2002, has always led - to the applicat ion of an ordinary customs duty in excess of the
bound rate of 15.4% ad valorem, provided for in the EC's Schedule of Concessions. This is
"treatment less favourable" within the meaning of GATT Article II:1(a).

82. The EC measure is inconsistent with Article II:1(b) of the GATT because the consequence of
the classification of chicken set out in Regula tion 1223/2002 and the Decision of 31 January 2003
leads to the same product being subject to th e application of duties higher than the EC's ad valorem
bound rate of 15.4%. The EC is free to use whatever system of customs classification it wishes, as
long as duties remain at or below the bound rates, for that product. Because the EC's classification
of frozen boneless chicken cuts as provided in Regul ation 1223/2002 and elaborated in the Decision
of 31 January 2003 leads to the application of duties higher than the bound rate for frozen salted
chicken, the EC is in violation of its Article II obligations.

IV. CONCLUSION
83. The EC's basic argument in this case is that Thailand is exporting an "artificial product" that
was "created only to avoid the tariff levels whic h the [EC] negotiated" during the Uruguay Round.
The EC argues that it negotiated a low tariff for h eading 0210 because it did not expect any trade in
that product
52 and that its purpose during the Uruguay Round was "to achieve a desirable level of
protection for frozen chicken." 53 To achieve this purpose, the EC apparently focussed on tariffs for
products classified under heading 0207. However, the EC cannot now use the classification process
to correct what it may now view as omissions or lacunae in its negotiated schedules.

50 Appellate Body Report, Argentina – Textiles, para. 55.
51 See Exhibit THA-2.
52 EC's First Written Submission, para. 163.
53 Ibid., para. 54.

84. Thus, the EC's argument that the addition of salt is a mere artifice designed to avoid the
higher tariff for frozen cuts is legally irrelevant. 54 As long as the product meets the description of the
tariff heading, the reasons why the exporter makes the product fall under that heading are irrelevant.
The motives of the exporter are simply irrelevant to the issue of determining the correct customs
classification of a product. As the EC acknowledg es, the purpose of the Harmonized System was to
ensure "greater uniformity among countries in customs classification." 55 For that reason, the
paramount consideration in determining the correct classification of a product has always been the
objective physical characteristics of the product at issue. The Panel should not allow the EC's
attempts to draw negative inferences from rationa l commercial behaviour to distract it from properly
analyzing the classification of this product based sole ly on its objective physical characteristics, in the
light of the EC's concession.

85. Thailand requests the Panel to find that the EC is acting inconsistently with its obligations
under Article II:1(b) and II:1(a) of the GATT by according "less favourable treatment" to the chicken
product in question than that provided for in the EC's Schedule of Concessions. Thailand requests the
Panel to recommend, in accordance with Article 19. 1 of the DSU, that the DSB request the EC to
bring the measure at issue into conformity with the GATT.

54 Ibid., para. 19.
55 Ibid., para. 61.