EUROPEAN UNION – MEASURES AFFECTING TARIFF CONCESSIONS ON CERTAIN POULTRY MEAT PRODUCTS REPORT OF THE PANEL
Document: REPORT OF THE PANEL
Date: 28 March 2017
Document codes: WT/DS492/R
Complainant: China
Respondent: EU
Third parties: Brazil, Russia, U.S., Argentina, Canada, India, Thailand
Dispute stage: Mutually Agreed Solution
Agreements cited: Art. XXVIII, XIII, XIII:2, II:1, II:2, I:1  GATT 1994

EUROPEAN UNION – MEASURES AFFECTING TARIFF CONCESSIONS ON
CERTAIN POULTRY MEAT PRODUCTS
REPORT OF THE PANEL

LIST OF ANNEXES
ANNEX A
WORKING PROCEDURES
Contents Page
Annex A-1 Working Procedures of the Panel A-2
Annex A-2 Amended Working Procedures of the Panel A-7

ANNEX B
ARGUMENTS OF THE PARTIES
Contents Page
Annex B-1 First executive summary of the arguments of China B-2
Annex B-2 Second executive summary of the arguments of China B-9
Annex B-3 First executive summary of the arguments of the European Union B-16
Annex B-4 Second executive summary of the arguments of the European Union B-23

ANNEX C
ARGUMENTS OF THE THIRD PARTIES
Contents Page
Annex C-1 Executive summary of the arguments of Argentina C-2
Annex C-2 Executive summary of the arguments of Brazil C-6
Annex C-3 Executive summary of the arguments of Canada C-9
Annex C-4 Executive summary of the arguments of the Russian Federation C-13
Annex C-5 Executive summary of the arguments of Thailand C-15
Annex C-6 Executive summary of the arguments of United States C-22

WTO CASES CITED IN THIS REPORT
Short title Full case title and citation
Argentina – Poultry
Anti-Dumping Duties
Panel Report, Argentina – Definitive Anti-Dumping Duties on Poultry from Brazil,
, adopted 19 May 2003, DSR 2003:V, p. 1727
Argentina – Textiles and
Apparel
Appellate Body Report, Argentina – Measures Affecting Imports of Footwear,
Textiles, Apparel and Other Items, and Corr.1, adopted 22 April
1998, DSR 1998:III, p. 1003
Canada – Dairy Panel Report, Canada – Measures Affecting the Importation of Milk and the
Exportation of Dairy Products, , , adopted 27 October
1999, as modified by Appellate Body Report , ,
DSR 1999:VI, p. 2097
Canada –
Pharmaceutical Patents
Panel Report, Canada – Patent Protection of Pharmaceutical Products,
WT/DS114/R, adopted 7 April 2000, DSR 2000:V, p. 2289
Canada – Wheat Exports
and Grain Imports
Appellate Body Report, Canada – Measures Relating to Exports of Wheat and
Treatment of Imported Grain, WT/DS276/AB/R, adopted 27 September 2004, DSR
2004:VI, p. 2739
China – Auto Parts Appellate Body Reports, China – Measures Affecting Imports of Automobile Parts,
WT/DS339/AB/R / WT/DS340/AB/R / WT/DS342/AB/R, adopted 12 January 2009,
DSR 2009:I, p. 3
China – Publications and
Audiovisual Products
Panel Report, China – Measures Affecting Trading Rights and Distribution Services
for Certain Publications and Audiovisual Entertainment Products, WT/DS363/R and
Corr.1, adopted 19 January 2010, as modified by Appellate Body Report
WT/DS363/AB/R, DSR 2010:II, p. 261
China – Rare Earths Appellate Body Reports, China – Measures Related to the Exportation of Rare
Earths, Tungsten, and Molybdenum, WT/DS431/AB/R / WT/DS432/AB/R /
WT/DS433/AB/R, adopted 29 August 2014, DSR 2014:III, p. 805
China – Rare Earths Panel Reports, China – Measures Related to the Exportation of Rare Earths,
Tungsten, and Molybdenum, WT/DS431/R and Add.1 / WT/DS432/R and Add.1 /
WT/DS433/R and Add.1, adopted 29 August 2014, upheld by Appellate Body
Reports WT/DS431/AB/R / WT/DS432/AB/R / WT/DS433/AB/R, DSR 2014:IV, p.
1127
Colombia – Textiles Appellate Body Report, Colombia – Measures Relating to the Importation of
Textiles, Apparel and Footwear, WT/DS461/AB/R and Add.1, adopted 22 June 2016
Dominican Republic –
Import and Sale of
Cigarettes
Appellate Body Report, Dominican Republic – Measures Affecting the Importation
and Internal Sale of Cigarettes, WT/DS302/AB/R, adopted 19 May 2005, DSR
2005:XV, p. 7367
EC – Bananas III Appellate Body Report, European Communities – Regime for the Importation, Sale
and Distribution of Bananas, WT/DS27/AB/R, adopted 25 September 1997, DSR
1997:II, p. 591
EC – Bananas III Panel Reports, European Communities – Regime for the Importation, Sale and
Distribution of Bananas, WT/DS27/R/ECU (Ecuador) / WT/DS27/R/GTM,
WT/DS27/R/HND (Guatemala and Honduras) / WT/DS27/R/MEX (Mexico) /
WT/DS27/R/USA (US), adopted 25 September 1997, as modified by Appellate Body
Report WT/DS27/AB/R, DSR 1997:II, p. 695 to DSR 1997:III, p. 1085
EC – Bananas III
(Article 21.5 – Ecuador)
Panel Report, European Communities – Regime for the Importation, Sale and
Distribution of Bananas – Recourse to Article 21.5 of the DSU by Ecuador,
WT/DS27/RW/ECU, adopted 6 May 1999, DSR 1999:II, p. 803
EC – Bananas III
(Article 21.5 – Ecuador
II) /
EC – Bananas III
(Article 21.5 – US)
Appellate Body Reports, European Communities – Regime for the Importation, Sale
and Distribution of Bananas – Second Recourse to Article 21.5 of the DSU by
Ecuador, WT/DS27/AB/RW2/ECU, adopted 11 December 2008, and Corr.1 /
European Communities – Regime for the Importation, Sale and Distribution of
Bananas – Recourse to Article 21.5 of the DSU by the United States,
WT/DS27/AB/RW/USA and Corr.1, adopted 22 December 2008, DSR 2008:XVIII,
p. 7165
EC – Bananas III
(Article 21.5 – Ecuador
II)
Panel Report, European Communities – Regime for the Importation, Sale and
Distribution of Bananas – Second Recourse to Article 21.5 of the DSU by Ecuador,
WT/DS27/RW2/ECU, adopted 11 December 2008, as modified by Appellate Body
Report WT/DS27/AB/RW2/ECU, DSR 2008:XVIII, p. 7329

Short title Full case title and citation
EC – Bed Linen
(Article 21.5 – India)
Panel Report, European Communities – Anti-Dumping Duties on Imports of Cotton-
Type Bed Linen from India – Recourse to Article 21.5 of the DSU by India,
WT/DS141/RW, adopted 24 April 2003, as modified by Appellate Body Report
WT/DS141/AB/RW, DSR 2003:IV, p. 1269
EC – Chicken Cuts Appellate Body Report, European Communities – Customs Classification of Frozen
Boneless Chicken Cuts, WT/DS269/AB/R, WT/DS286/AB/R, adopted 27 September
2005, and Corr.1, DSR 2005:XIX, p. 9157
EC – Export Subsidies
on Sugar (Australia)
Panel Report, European Communities – Export Subsidies on Sugar, Complaint by
Australia, WT/DS265/R, adopted 19 May 2005, as modified by Appellate Body
Report WT/DS265/AB/R, WT/DS266/AB/R, WT/DS283/AB/R, DSR 2005:XIII, p.
6499
EC – Fasteners (China) Appellate Body Report, European Communities – Definitive Anti-Dumping Measures
on Certain Iron or Steel Fasteners from China, WT/DS397/AB/R, adopted 28 July
2011, DSR 2011:VII, p. 3995
EC – Hormones Appellate Body Report, EC Measures Concerning Meat and Meat Products
(Hormones), WT/DS26/AB/R, WT/DS48/AB/R, adopted 13 February 1998, DSR
1998:I, p. 135
EC – IT Products Panel Reports, European Communities and its member States – Tariff Treatment of
Certain Information Technology Products, WT/DS375/R / WT/DS376/R /
WT/DS377/R, adopted 21 September 2010, DSR 2010:III, p. 933
EC – Poultry Appellate Body Report, European Communities – Measures Affecting the
Importation of Certain Poultry Products, WT/DS69/AB/R, adopted 23 July 1998,
DSR 1998:V, p. 2031
EC – Tariff Preferences Panel Report, European Communities – Conditions for the Granting of Tariff
Preferences to Developing Countries, WT/DS246/R, adopted 20 April 2004, as
modified by Appellate Body Report WT/DS246/AB/R, DSR 2004:III, p. 1009
EC and certain member
States – Large Civil
Aircraft
Panel Report, European Communities and Certain Member States – Measures
Affecting Trade in Large Civil Aircraft, WT/DS316/R, adopted 1 June 2011, as
modified by Appellate Body Report, WT/DS316/AB/R, DSR 2011:II, p. 685
Guatemala – Cement II Panel Report, Guatemala – Definitive Anti-Dumping Measures on Grey Portland
Cement from Mexico, WT/DS156/R, adopted 17 November 2000, DSR 2000:XI, p.
5295
India – Additional
Import Duties
Panel Report, India – Additional and Extra-Additional Duties on Imports from the
United States, WT/DS360/R, adopted 17 November 2008, as reversed by Appellate
Body Report WT/DS360/AB/R, DSR 2008:XX, p. 8317
India – Patents (US) Appellate Body Report, India – Patent Protection for Pharmaceutical and
Agricultural Chemical Products, WT/DS50/AB/R, adopted 16 January 1998, DSR
1998:I, p. 9
India – Solar Cells Appellate Body Report, India – Certain Measures Relating to Solar Cells and Solar
Modules, WT/DS456/AB/R and Add.1, circulated to WTO Members 16 September
2016, adopted 14 October 2016
Indonesia – Autos Panel Report, Indonesia – Certain Measures Affecting the Automobile Industry,
WT/DS54/R, WT/DS55/R, WT/DS59/R, WT/DS64/R, Corr.1 and Corr.2, adopted 23
July 1998, and Corr.3 and Corr.4, DSR 1998:VI, p. 2201
Japan – Alcoholic
Beverages II
Appellate Body Report, Japan – Taxes on Alcoholic Beverages, WT/DS8/AB/R,
WT/DS10/AB/R, WT/DS11/AB/R, adopted 1 November 1996, DSR 1996:I, p. 97
Korea – Alcoholic
Beverages
Appellate Body Report, Korea – Taxes on Alcoholic Beverages, WT/DS75/AB/R,
WT/DS84/AB/R, adopted 17 February 1999, DSR 1999:I, p. 3
Korea – Dairy Appellate Body Report, Korea – Definitive Safeguard Measure on Imports of Certain
Dairy Products, WT/DS98/AB/R, adopted 12 January 2000, DSR 2000:I, p. 3
Russia – Tariff
Treatment
Panel Report, Russia – Tariff Treatment of Certain Agricultural and Manufacturing
Products, WT/DS485/R, Corr.1, Corr.2, and Add.1, adopted 26 September 2016
US – 1916 Act Appellate Body Report, United States – Anti-Dumping Act of 1916,
WT/DS136/AB/R, WT/DS162/AB/R, adopted 26 September 2000, DSR 2000:X, p.
4793

Short title Full case title and citation
US – 1916 Act (EC) Panel Report, United States – Anti-Dumping Act of 1916, Complaint by the
European Communities, WT/DS136/R and Corr.1, adopted 26 September 2000,
upheld by Appellate Body Report WT/DS136/AB/R, WT/DS162/AB/R, DSR 2000:X,
p. 4593
US – 1916 Act (Japan) Panel Report, United States – Anti-Dumping Act of 1916, Complaint by Japan,
WT/DS162/R and Add.1, adopted 26 September 2000, upheld by Appellate Body
Report WT/DS136/AB/R, WT/DS162/AB/R, DSR 2000:X, p. 4831
US – Anti-Dumping and
Countervailing Duties
(China)
Appellate Body Report, United States – Definitive Anti-Dumping and Countervailing
Duties on Certain Products from China, WT/DS379/AB/R, adopted 25 March 2011,
DSR 2011:V, p. 2869
US – Carbon Steel
(India)
Appellate Body Report, United States – Countervailing Measures on Certain Hot-
Rolled Carbon Steel Flat Products from India, WT/DS436/AB/R, adopted 19
December 2014, DSR 2014:V, p. 1727
US – Certain EC
Products
Appellate Body Report, United States – Import Measures on Certain Products from
the European Communities, WT/DS165/AB/R, adopted 10 January 2001, DSR
2001:I, p. 373
US – COOL Appellate Body Reports, United States – Certain Country of Origin Labelling (COOL)
Requirements, WT/DS384/AB/R / WT/DS386/AB/R, adopted 23 July 2012, DSR
2012:V, p. 2449
US – COOL (Article 21.5
– Canada and Mexico)
Panel Reports, United States – Certain Country of Origin Labelling (COOL)
Requirements – Recourse to Article 21.5 of the DSU by Canada and Mexico,
WT/DS384/RW and Add.1 / WT/DS386/RW and Add.1, adopted 29 May 2015, as
modified by Appellate Body Reports WT/DS384/AB/RW / WT/DS386/AB/RW
US – COOL (Article 22.6
– United States)
Decisions by the Arbitrator, United States – Certain Country of Origin Labelling
(COOL) Requirements – Recourse to Article 22.6 of the DSU the United States,
WT/DS384/ARB and Add.1 / WT/DS386/ARB and Add.1, circulated to WTO
Members 7 December 2015
US – Corrosion-
Resistant Steel Sunset
Review
Panel Report, United States – Sunset Review of Anti-Dumping Duties on Corrosion-
Resistant Carbon Steel Flat Products from Japan, WT/DS244/R, adopted 9 January
2004, as modified by Appellate Body Report WT/DS244/AB/R, DSR 2004:I, p. 85
US – FSC (Article 21.5 –
EC)
Appellate Body Report, United States – Tax Treatment for "Foreign Sales
Corporations" – Recourse to Article 21.5 of the DSU by the European Communities,
WT/DS108/AB/RW, adopted 29 January 2002, DSR 2002:I, p. 55
US – Gambling Appellate Body Report, United States – Measures Affecting the Cross-Border Supply
of Gambling and Betting Services, WT/DS285/AB/R, adopted 20 April 2005, DSR
2005:XII, p. 5663 (and Corr.1, DSR 2006:XII, p. 5475)
US – Large Civil Aircraft
(2nd complaint)
Panel Report, United States – Measures Affecting Trade in Large Civil Aircraft
(Second Complaint), WT/DS353/R, adopted 23 March 2012, as modified by
Appellate Body Report WT/DS353/AB/R, DSR 2012:II, p. 649
US – Line Pipe Panel Report, United States – Definitive Safeguard Measures on Imports of Circular
Welded Carbon Quality Line Pipe from Korea, WT/DS202/R, adopted 8 March 2002,
as modified by Appellate Body Report WT/DS202/AB/, DSR 2002:IV, p. 1473
US – Shrimp Appellate Body Report, United States – Import Prohibition of Certain Shrimp and
Shrimp Products, WT/DS58/AB/R, adopted 6 November 1998, DSR 1998:VII, p.
2755
US – Softwood Lumber
IV
Appellate Body Report, United States – Final Countervailing Duty Determination
with Respect to Certain Softwood Lumber from Canada, WT/DS257/AB/R, adopted
17 February 2004, DSR 2004:II, p. 571
US – Steel Plate Panel Report, United States – Anti-Dumping and Countervailing Measures on Steel
Plate from India, WT/DS206/R and Corr.1, adopted 29 July 2002, DSR 2002:VI, p.
2073
US – Tuna II (Mexico) Appellate Body Report, United States – Measures Concerning the Importation,
Marketing and Sale of Tuna and Tuna Products, WT/DS381/AB/R, adopted 13 June
2012, DSR 2012:IV, p. 1837
US – Tuna II (Mexico)
(Article 21.5 – Mexico)
Appellate Body Report, United States – Measures Concerning the Importation,
Marketing and Sale of Tuna and Tuna Products – Recourse to Article 21.5 of the
DSU by Mexico, WT/DS381/AB/RW and Add.1, adopted 3 December 2015

Short title Full case title and citation
US – Wool Shirts and
Blouses
Appellate Body Report, United States – Measure Affecting Imports of Woven Wool
Shirts and Blouses from India, WT/DS33/AB/R, adopted 23 May 1997, and Corr.1,
DSR 1997:I, p. 323
US – Zeroing (EC)
(Article 21.5 – EC)
Appellate Body Report, United States – Laws, Regulations and Methodology for
Calculating Dumping Margins ("Zeroing") – Recourse to Article 21.5 of the DSU by
the European Communities, WT/DS294/AB/RW and Corr.1, adopted 11 June 2009,
DSR 2009:VII, p. 2911

GATT CASES CITED IN THIS REPORT
Short title Full case title and citation
Canada – Lead and Zinc GATT Panel Report, Canada – Withdrawal of Tariff Concessions (Lead and Zinc),
L/4636, adopted 17 May 1978, BISD 25S/42
EEC – Apples (Chile I) GATT Panel Report, EEC Restrictions on Imports of Apples from Chile, L/5047,
adopted 10 November 1980, BISD 27S/98
EEC – Dessert Apples GATT Panel Report, European Economic Community – Restrictions on Imports of
Dessert Apples – Complaint by Chile, L/6491, adopted 22 June 1989, BISD 36S/93
US/EEC – Poultry GATT Panel Report, US/EEC – Panel on Poultry, L/2088, 21 November 1963,
unadopted

ABBREVIATIONS USED IN THIS REPORT

Abbreviation Description
AI Avian Influenza
CN Combined Nomenclature
DSB Dispute Settlement Body
DSU Understanding on Rules and Procedures Governing the Settlement of Disputes
EU Schedule Schedule CXL - European Communities
First Modification Package Modifications to the European Union's tariff concessions notified on 29 May
2009 (G/SECRET/25 ADD.1)
GATT 1994 General Agreement on Tariffs and Trade 1994
MFN Most-Favoured-Nation
Procedures for Negotiations
under Article XXVIII
Procedures for Negotiations under Article XXVIII, adopted by the Council on
10 November 1980, C/113 and Corr. 1, BISD 27S/26-29.
Procedures for Modification
and Rectification of Schedules
Decision of 26 March 1980, Procedures for Modification and Rectification of
Schedules of Tariff Concessions, GATT document L/4962, BISD S27/25
PSI Principal supplying interest
Second Modification Package Modifications to the European Union's tariff concessions notified on 17
December 2012 (G/SECRET/32/ADD 1)
SPS Agreement Agreement on the Application of Sanitary and Phytosanitary Measures
SSI Substantial supplying interest
TRQ Tariff rate quota
Understanding Understanding on the Interpretation of Article XXVIII of the GATT 1994
Vienna Convention Vienna Convention on the Law of Treaties, Done at Vienna, 23 May 1969,
1155 UNTS 331; 8 International Legal Materials 679
WTO Agreement Marrakesh Agreement Establishing the World Trade Organization

EXHIBITS CITED IN THIS REPORT

Exhibit Number Title
CHN-5/EU-15 Commission Decision 2002/69/EC, of 30 January 2002, concerning certain protective
measures with regard to the products of animal original imported from China, OJ L 30/50
of 31.1.2002
CHN-6/EU-19 Commission Decision 2004/122/EC of 6 February 2004 concerning certain protective
measures in relation to Avian Influenza in several Asian countries (O.J. L 36, 7 February
2004, p. 59).
CHN-8/EU-13 Commission Decision 2007/777/EC of 29 November 2007 laying down the animal and
public health conditions and model certificates for imports of certain meat products and
treated stomachs, bladders and intestines for human consumption from third countries
and repealing Decision 2005/432/EC (O.J. L 312, 20 November 2007, p. 49).
CHN-9/EU-23 Commission Decision 2008/638/EC of 30 July 2008, amending Decision 2007/777/EC
concerning the authorisation of China for the importation of heat treated poultrymeat
products, OJ L 207/24 of 5.8.2008
CHN-10/EU-22 Commission Decision 2008/640/EC of 30 July 2008, concerning certain protection
measures in relation to avian influenza in several third countries, OJ L 207/32 of
5.8.2008
CHN-15 Article XXVIII:5 negotiations sc hedule CXL — European Communities, G/SECRET/25
(15 June 2006).
CHN-16 Note Verbale from China to the EU (6 September 2006).
CHN-17 Letter from Amb. Carlo Trojan to Amb. Sun (18 October 2006).
CHN-18 Letter from Amb. Sun to Amb. Trojan (16 November 2006).
CHN-19 Letter from Vice Minister Yi to DG O'Sullivan (19 April 2007).
CHN-20 / EU-34 Council Decision of 29 May 2007 on the conclusion of agreements in the form of agreed
minutes between the European Community and the Federative Republic of Brazil, and
between the European Community and the Kingdom of Thailand pursuant to
Article XXVIII of the General Agreement on Tariffs and Trade 1994 (GATT 1994) relating
to the modification of concessions with respect to poultry meat (2007/360/EC).
CHN-22
Council Regulation of 29 May 2007 concerning the implementation of Agreements in the
form of Agreed Minutes between the European Community and Brazil, and between the
European Community and Thailand pursuant to Article XXVIII of General Agreement on
Tariffs and Trad e 1994 (GATT 1994), amending and supplementing Annex I to
Regulation (EEC) No 2658/87 on the tariff and statistical nomenclature and on the
Common Customs Tariff, O.J. L 138, 30 May 2007, p. 1.
CHN-23 Commission Regulation (EC) No 616/2007 of 4 June 2007 opening and providing for the
administration of Community tariff quotas in the sector of poultry meat originating in
Brazil, Thailand and other third countries, OJ L 142/5 of 5.6.2007
CHN-24 Commission Regulation (EC) No 1549/2007 of 20 December 2007 amen ding Regulation
(EC) 616/2007 opening and providing for the administration of certain Community tariff
quotas in the sector of poultry meat originating in Brazil, Thailand and other third
countries, OJ L 337/75 of 21.12.2007
CHN-25 Article XXVIII:5 notifi cations, G/SECRET/32 dated 11 June 2009 and circulated on
16 June 2009
CHN-27 Council Decision 2012/231/EU of 23 April 2012 on the signing on behalf of the EU of the
Agreement in the Form of an Exchange of Letters between the EU and Brazil pursuant to
Article XXVIII of the GATT 1994 relating to the modification of concessions with respect
to processed poultry meat provided for in the EU Schedule annexed to GATT 1994, and
of the Agreement in the Form of an Exchange of Letters between the EU and Thailand
pursuant to Article XXVIII of the GATT 1994 relating to the modification of concessions
with respect to processed poultry meat provided for in the EU Schedule annexed to GATT
1994 (O.J. L 117, 1 May 2012, p. 1).
CHN-28 / EU-35 Regulation (EU) No 1218/2012 of the European Parl iament and of the Council of
12 December 2012 concerning the implementation of the Agreement in the Form of an
Exchange of Letters between the EU and Brazil pursuant to Article XXVIII of the General
Agreement on Tariffs and Trade (GATT) 1 994 relating to the modification of concessions
with respect to processed poultry meat provided for in the EU Schedule annexed to GATT
1994, and of the Agreement in the Form of an Exchange of Letters between the EU and

Exhibit Number Title
Thailand pursuant to Article XXVIII o f the General Agreement on Tariffs and Trade
(GATT) 1994 relating to the modification of concessions with respect to processed
poultry meat provided for in the EU Schedule annexed to GATT 1994, and amending and
supplementing Annex I to Council Regulation ( EEC) No 2658/87 on the tariff and
statistical nomenclature and on the Common Customs Tariff (O.J. L 351, 20 December
2012, p. 36).
CHN-29 Letter from China to the EU requesting to enter into negot iations under Article XXVIII
(9 May 2012)
CHN-30 Letter from China to the EU (2 October 2012)
CHN-31 Letter from the EU to China responding to China's request for negotiation (1 June 2012)
CHN-32 Letter from the EU to China (12 October 2012)
CHN-34 Council Decision 2012/792/EU of 6 December 2012, on the conc lusion of the Agreement
in the form of an Exchange of Letters between the EU and Brazil pursuant to
Article XXVIII of the General Agreement on Tariffs and Trade (GATT) 1994 relating to the
modification of concessions with respect to processed poultry meat provided for in the
EU Schedule annexed to GATT 1994, and of the Agreement in the form of an Exchange
of Letters between the EU and Thailand pursuant to Article XXVIII of the General
Agreement on Tariffs and Trade (GATT) 1994 relating to the modification o f concessions
with respect to processed poultry meat provided for in the EU Schedule annexed to GATT
1994, OJ L 351/44 of 20.12.20012
CHN-36 O.J. L 352, 21 December 2012, p. 16
CHN-37 O.J. L 90, 28 March 2013, p. 86
CHN-38 O.J. L 56, 28 February 2013, p. 2
CHN-39 Letter of 19 December 2013 requesting consultation under Article XIII:4 of the GATT
1994
CHN-40 Response letter from the EU to China dated 21 February 2014
CHN-47 Summary of EU 's SPS measures with heat treatment requirements applicable to t ariff
lines at issue
CHN-48 China's claims of supplying interests for the poultry meat products concerned
CHN-49 The all other share of the tariff rate quotas are below the share obtained based on
paragraph 6 of the Understanding even for the reference periods selected by the EU
CHN-50 Letter from China to the European Union requesting to enter into negotiations under
Article XXVIII (9 May 2012), i.e. Ex CHN 29 but with trade data attached
CHN-52 Statistical data from Eurostat on imports into the EU fro m Brazil, China, Thailand, and
Extra EU28, per tariff line for the period 1996 – 2015 (collected for EU15 for 1996-1998,
and EU 28 for 1999-2015)
CHN-54 Detailed timeline for the EU's SPS measures
EU-1
Letter from the Permanent Mission of Brazil to the U nited Nations in Geneva to
Ambassador Trojan, Permanent Representative of the European Communities to the
WTO, dated 24 July 2006
EU-2 Letter from the Permanent Mission of Thailand to the WTO to Ambassador Trojan,
Permanent Representative of the European Communities to the WTO, dated 11 August
2006
EU-3 Agreed Minutes initialled in Geneva by J.L Demarty (Commission of the EC) and Roberto
C. De Azevedo (Delegation of Brazil), 26 October 2006
EU-4 Agreed Minutes initialled in Bangkok by F. Coturni (Commiss ion of the EC) and B.
Chutima (Delegation of Thailand), 23 November 2006
EU-5 Agreed Minutes initialled in Geneva by J.L Demarty (Commission of the EC) and Roberto
C. De Azevedo (Delegation of Brazil), 6 December 2006
EU-6 G/SECRET/25/Add.1, 29 May 2009
EU-7 Letter from the Permanent Mission of Thailand to the Ambassador of the Permanent
Mission of the European Communities to the WTO, 18 August 2009
EU-8 Letter from the Ambassador of the Permanent Mission of Brazil to the WTO to the
Ambassador of the Pe rmanent Mission of the European Communities to the WTO, 8
September 2009
EU-9 G/SECRET/32/ADD 1, 20 December 2012
EU-16 Commission Decision 2002/994/EC, of 20 December 2002, concerning certain protective
measures with regard to products of animal origin imported from China

Exhibit Number Title
EU-17 Commission Decision 2008/639/EC, of 30 July 2008, amending Decision 2002/994/EC
concerning certain protective measures with regard to products of animal origin imported
from China, OJ L 207/30, of 5.8.2008
EU-20 Commission Decision 2004/84/EC, of 23 January 2004, concerning protection measures
relating to avian influenza in Thailand, OJ L 17/57 of 24.1.2004
EU-21 Commission Decision 2005/692/EC, of 6 October 2005, concerning certain protection
measures in relation to avian influ enza in several third countries, OJ L 263/20 of
8.10.2005
EU-24 Commission Decision 2005/432/EC, of 3 June 2005, laying down the animal and public
health conditions and model certificates for imports of meat products for human
consumption from third count ries and repealing Decisions 97/41/EC, 97/221/EC and
97/222/EC, OJ L 151/3 of 14.6.2005
EU-25 Commission Decision 97/222/E C, of 28 February 1997, laying down the list of third
countries from which the Member States authorize the importation of meat produc ts, OJ
L 89/39 of 4.4.1997
EU-28 Letter from David O 'Sullivan (Director General of DG TRADE) to Mr Yi, Vice -Minister of
MOFCOM (Chinese Ministry of Commerce), 8 May 2007
EU-30 Import statistics for the products concerned into the EU, 1995-2015
EU-39 Table summarising the various sanitary measures applied to imports from China from
1995 until 2010
EU-41 WTO documents circulating the communications of the European Union reserving its
rights under Article XXVIII:5 for the periods 2009-2011 and 2012-2014
EU-43 (corr.) TRQs: Salted Processed Poultrymeat – EU28 Imports from the World 1996-2015
EU-44 (corr.) Import data for tariff lines 16023940 and 16023980 during the period 1999 -2015

1 INTRODUCTION
1.1 Complaint by China
1.1. On 8 April 2015 , China requested consu ltations with the European Union pursuant to
Articles 1 and 4 of the Understanding on Rules and Procedures Governing the Settlement of
Disputes (DSU) and Article XXIII:1 of the General Agreement on Tariffs and Trade 1994
(GATT 1994) with respect to the measures and claims set out below.1
1.2. Consultations were held on 26 May 2015.
1.2 Panel establishment and composition
1.3. On 8 June 2015 , China requested the establishment of a panel pursuant to Articles 4.7
and 6 of the DSU and Article XXIII of the GATT 1994 with stan dard terms of reference. 2 At its
meeting on 20 July 2015, the Dispute Settlement Body (DSB) established a panel pursuant to the
request of China, in accordance with Article 6 of the DSU.3
1.4. The Panel's terms of reference are the following:
To examine, in the light of the relevant provisions of the covered agreements cited by
the parties to the dispute, the matter referred to the DSB by China in document s
WT/DS492/2 and WT/DS492/ 2/Corr.1 and to make such findings as will assist the
DSB in making the recommenda tions or in giving the rulings provided for in those
agreements.4
1.5. On 23 November 2015 , China requested the Director -General to determine the composition
of the panel, pursuant to Article 8.7 of the DSU. On 3 December 2015 , the Director -General
composed the Panel as follows:
Chairperson: Mr Hugo Cayrús

Members: Mr Masanori Hayashi
 Ms Penelope Ridings

1.6. Argentina, Brazil, Canada, India, the Russian Federation , Thailand and the United States
notified their interest to participate as third parties in the Panel proceedings.
1.3 Panel proceedings
1.3.1 General
1.7. After consultation with the parties, the Panel adopted the Working Procedures 5 and the
timetable for these proceedings on 16 December 2015 . The Panel adopted Amended Working
Procedures6 on 3 February 2016 to refle ct the Panel 's d ecision to grant enhanced third -party
rights.
1.8. The Panel held a first substantive meeting with the parties on 22-23 March 2016. The third-
party session took place on 23 March 2016. The Panel held a second substantive meeting with the
parties on 5-6 July 2016. On 12 August 2016, the Panel issued the descriptive part of its Report to
the parties. The Panel issued its Interim Report to the parties on 21 October 2016 . The Panel
issued its Final Report to the parties on 2 December 2016.

1 See China's request for consultations, WT/DS492/1. The European Union replaced and succeeded the
European Communities as of 1 December 2009. In their submissions in these proceedings, the parties have
generally referred to the "European Union" when describing events that took place prior to 2009. This Report
follows the same approach.
2 WT/DS492/2 and WT/DS492/2/Corr.1.
3 See WT/DSB/M/365.
4 WT/DS492/3.
5 See the Panel's Working Procedures in Annex A-1.
6 See the Panel's Amended Working Procedures in Annex A-2.

1.3.2 Requests for enhanced third-party rights
1.9. On 17 December 2015, Brazil, Canada and Thailand each requested enhanced third-party
rights in these proceedings. The Panel considered the request s and consulted the parties on this
matter. On 3 February 2016, the Panel infor med the parties and third parties that for reasons to
be elaborated in its Report, it had decided to grant the following enhanced rights to all third parties
in these proceedings:
a. the right to be present and observe the entirety of the first and second su bstantive
meetings with the parties; and,
b. the right to receive the parties ' first and second written submissions, written responses
to questions and comments thereupon, and related exhibits.
1.10. The reasoning for the Panel's decision is elaborated in section 7 of this Report.
1.3.3 Requests for preliminary rulings
1.11. In its first written submission of 9 February 2016, the European Union requested the Panel
to make preliminary ruling s that two issues raised by China in its first written submission were
outside the scope of the Panel's terms of reference. At the invitation of the Panel, China submitted
its response to the European Union 's requests on 26 February 2016. The third parties were also
invited to comment on the European Union's requests in their third-party written submissions. On
7 March 2016, the Panel informed the parties that it had decided not to make a ruling on the
European Union 's request s prior to the first substantive meeting with the parties. At the first
substantive meeting held on 2 2-23 March 2016, th e Panel sought further clarification from the
parties on several issues relating to the European Union 's request s. In a communication dated
15 April 2016, the Panel ruled on one of the issues raised by the European Union, and reserved
judgment until the Pa nel Report on the other issue. The Panel's rulings and reasoning regarding
the European Union's requests for preliminary rulings are set forth in section 7 of this Report.
2 FACTUAL ASPECTS
2.1. This section of the Report aims to provide a brief description of t he measures at issue in this
dispute. The facts relating to the measures at issue are elaborated in the context of our Findings in
section 7 of this Report.
2.2. The claims brought by China concern the modification by the European Union of tariff
concessions on certain p oultry products pursuant to negotiations held under Article XXVIII of the
GATT 1994. The European Union modified its concessions on the poultry products relevant to this
dispute through two distinct negotiation exercises . The first negotiation e xercise was initiated
in 2006 and covered the modification of the tariff concessions on poultry products falling under
tariff items 0210 99 39, 1602 31 and 1602 32 19 (the "First Modification Package "). The second
negotiation exercise was initiated in 2009 and covered the modification of the tariff concessions on
poultry products falling under tariff items 1602 20 10 7, 1602 32 1 1, 1602 32 30, 1602 32 90,
1602 39 21, 1602 39 29, 1602 39 40 and 1602 39 808 (the "Second Modification Package").
2.3. In both negotiation exercises, the European Union notified its intention to modify its tariff
concessions under Article XXVIII of the GATT 1994. It subsequently entered into negotiations with
Brazil and Thailand, which the European Union considered to have the requisite l egal interest to
participate in the negotiations. Pursuant to agreements reached with Brazil and Thailand , the
European Union replaced its previous tariff concessions on the poultry products concerned with
tariff rate quotas (TRQs). The TRQs and their allocation among supplying countries are as follows:

7 As noted in China's panel request, "no change was made to the existing tariff rate for tariff subheading
1602 20 10" (China's request for the establishment of a panel, footnote 3, p. 2).
8 As noted in China's panel request, "[t]ariff subheadings 1602 39 40 and 1602 39 80 were combined in
2012 to create a new tariff subheading 1602 39 85" (China's request for the establishment of a panel,
footnote 2, p. 2).

With respect to the First Modification Package:
Tariff item
number
Description of
product
Prior
tariff
rate
New
in-
quota
tariff
rate
New
out-of-
quota
tariff
rate
TRQ
volume
(metric
tons)
Allocation
(metric
tons)
0210 9939 Salted poultry meat 15.4% 15.4% 1,300
EUR/MT

264,245 Brazil:
170,807
Thailand:
92,610
Others:
828
1602 31 Prepared turkey meat 8.5% 8.5% 1,024
EUR/MT

103,896 Brazil:
92,300
Others:
11,596
1602 32 19 Cooked chicken meat 10.9% 8.0% 1,024
EUR/MT

250,953 Brazil:
79,477
Thailand:
160,033
Others:
11,443

With respect to the Second Modification Package:
Tariff item
number
Description of the
product
Prior
tariff rate
New in-
quota
tariff
rate
New out-
of-quota
tariff rate
TRQ
volume
(metric
tons)
Allocation
(metric
tons)
1602 32 11 Processed chicken meat,
uncooked, containing 57%
or more by weight of
poultry meat or offal
867
EUR/MT
630
EUR/MT
2,765
EUR/MT
16,140 Brazil:
15,800
Others:
340

1602 32 30 Processed chicken meat,
containing 25% or more
but less than 57% by
weight of poultry meat or
offal
10.9% 10.9% 2,765
EUR/MT

79,705 Brazil:
62,905
Thailand:
14,000
Others:
2,800
1602 32 90 Processed chicken meat,
containing less than 25%
by weight of poultry meat
or offal
10.9% 10.9% 2,765
EUR/MT

2,865 Brazil:
295
Thailand:
2,100
Others:
470
1602 39 21 Processed duck, geese,
guinea fowl meat,
uncooked, containing 57%
or more by weight of
poultry meat or offal
867
EUR/MT
630
EUR/MT
2,765
EUR/MT
10 Thailand:
10
1602 39 29 Processed duck, geese,
guinea fowl meat, cooked,
containing 57% or more
by weight of poultry meat
or offal
10.9% 10.9% 2,765
EUR/MT

13,720 Thailand:
13,500
Others:
220
1602 39 40 Processed duck, geese,
guinea fowl meat,
containing 25% or more
but less than 57% by
weight of poultry meat or
offal
10.9% 10.9% 2,765
EUR/MT

748 Thailand:
600
Others:
148
1602 39 80 Processed duck, geese,
guinea fowl meat,
containing less than 25%
by weight of poultry meat
or offal
10.9% 10.9% 2,765
EUR/MT

725 Thailand:
600
Others:
125

2.4. According to China's panel request, the measures at issue are "the modifications of the EU's
tariff concessions and the institution of the TRQs as part of the modification packages ", and "the
following instruments and decision" that implement the modifications and the TRQs9:
"A. For The 2007 Modification Package [10]:
(i) Council Regulation (EC) No 580/2007 of 29 May 2007 concerning the implementation
of agreements in the form of Agreed Minutes between the European Community and
Brazil, and between the European Community and Thailand pursuant to Article XXVIII
of the GATT 1994, amending and supplementing Annex I to Regulation (EEC)
No 2658/87 on the tariff and statistical nomenclature a nd on the Common Customs
Tariff.
(ii) Commission Regulation (EC) No 616/2007 of 4 June 2007 opening and providing for
the administration of Community tariff quotas in the sector of poultry meat originating
in Brazil, Thailand and other third countries.
(iii) Commission Regulation (EC) No 1549/2007 of 20 December 200 7 amending
Regulation (EC) No 616/2007 opening and providing for the administration of certain
Community tariff quotas in the sector of poultry meat originating in Brazil, Thailand
and other third countries.
B. For The 2012 Modification Package [11]:
(i) Regulation (EU) No 1218/2012 of the European Parl iament and of the Council of
12 December 2012 amending and supplementing Annex I to Council Regulation (EEC)
No 2658/87 on the tariff and statistical nomenclature and on the Common Customs
Tariff which was adopt ed after the adoption of Council Decision 2012/792/EU of 6
December 2012 approving the conclusion of the Agreement in the form of an
Exchange of Letters between the European Union and Brazil pursuant to Article XXVIII
of the General Agreement on Tariffs an d Trade (GATT) 1994 relating to the
modification of concessions with respect to processed poultry meat provided for in the
EU Schedule annexed to GATT 1994, and of the Agreement in the form of an
Exchange of Letters between the European Union and Thailand pursuant to
Article XXVIII of the General Agreement on Tariffs and Trade (GATT) 1994 relating to
the modification of concessions with respect to processed poultry meat provided for in
the EU Schedule annexed to GATT 1994.
(ii) Commission Regulation (EU) No 1246 /2012 of 19 December 2012 amending
Regulation (EC) No 616/2007 opening and providing for the administration of
Community tariff quotas in the sector of poultry meat originating in Brazil, Thailand
and other third countries and derogating from that Regulation for 2012-2013.
(iii) Commission Implementing Regulation (EU) No 302/2013 of 27 March 2013 amending
Regulation (EC) No 616/2007 opening and providing for the administration of
Community tariff quota in the sector of poultry meat originating in Brazil, Thailand and
other countries.
Whilst this Commission Regulation entered into force on 31 March 2013, a notice
published on 28 February 2013 indicated that the agreements between the EU and
Brazil on the one hand, and the EU and Thailand on the other hand, entered into force
on 1 March 2013.
(iv) Refusal by the European Union in consultations held on 19 May 2014 under Article XIII
of GATT 1994 to adjust the TRQs on the basis of recent import statistics establishing
China's substantial supplying interests as had been requested by letter of Ambassador
Yu of 19 December 2013.

9 China's request for the establishment of a panel, p. 2.
10 China's reference to the 2007 Modification Package is a reference to the First Modification Package.
11 China's reference to the 2012 Modification Package is a reference to the Second Modification Package.

In addition to the measures cited in the above paragraphs, this request also covers any
amendments, supplements, extensions, replacement measures, renewal measures, related
measures, or implementing measures."12
3 PARTIES' REQUESTS FOR FINDINGS AND RECOMMENDATIONS
3.1. In its panel request, China claims that "the above measures appear to be inconsistent with
the EU's obligations under Articles I, II, XIII and XXVIII of the GATT 1994", as follows:
"A. Claims With Respect To The 2007 Modification Package:
(i) The modification negotiation initiated by the EU in 2006 is inconsistent with
Article XXVIII:1 of the GATT 1994, read in conjunction with Ad Article XXVIII and with
the Understanding on the Interpretation of Article XXVIII, as the EU failed to negotiate
or consult with all the WTO Members having a principal supplying interest or a
substantial interest, or that could have had such an interest in the absence of a
discriminatory quantitative restriction.
(ii) The tariff rates and the TRQs negotiated and then implemented by the EU in the
measures identified above are inconsistent with Article XXVIII:2, read in conjunction
with the Understanding on the Interpretation of Article XXVIII and in particular
Paragraph 6 thereof, because they failed to maintain a general level of reciprocal and
mutually advantageous concessions not less favorable to trade than that existing prior
to the modification.
(iii) The country-specific TRQs allocated by the EU to two of the WTO M embers and then
implemented by the EU in the measures identified above violate GATT 1994
Article XIII by diminishing for the other WTO Members the market access
commitments that the EU undertook to maintain on a non-discriminatory basis.
(iv) The allocation of all or the vast majority of the TRQs to two of the WTO Members
implemented by the EU in the measures identified above, is inconsistent with GATT
1994 Article XIII:1 because the importation of the like product from the WTO
Members is not similarly prohibited or restricted as a result.
(v) The allocation of all or the vast majority of the TRQs to two of the WTO Members as
implemented by the EU in the measures identified above is inconsistent with the
chapeau of GATT 1994 Article XIII:2 read in conjunction wit h the Understanding on
the Interpretation of Article XXVIII and in particular Paragraph 6 thereof , which
requires the allocation of a TRQ to approach as closely as possible the shares that the
WTO Members might be expected to obtain in the absence of the TRQs.
(vi) The allocation of all or the vast majority of the TRQs to two of the WTO Members as
implemented by the EU in the measures identified above is inconsistent with GATT
1994 Article XIII:2(d) because the EU failed to seek agreement with all WTO Membe rs
having a substantial interest in supplying the product concerned, nor did it allot to
such Members shares based upon the proportions supplied by them during a previous
representative period, due account being taken of any special factors which affected
the trade in the product.
(vii) The allocation of all or the vast majority of the TRQs to two of the WTO Members as
implemented by the EU in the measures identified above is inconsistent with GATT
1994 Article XIII:2, including its chapeau, read in conjunc tion with Article XIII:4,
which confirms that the base period must be selected and special factors must be
taken into account such as to allot to Members a TRQ that approaches as closely as
possible the shares that they might be expected to obtain in the absence of the TRQs.
(viii) The EU violated GATT 1994 Article II:1 by adopting tariff rates that exceeded the
bound tariff rates in its Schedule for the three tariff subheadings at issue, as the tariff

12 China's request for the establishment of a panel, pp. 2-3. (footnotes omitted)

rates and the TRQs which the EU negotiated and then i mplemented under
Article XXVIII in 2007 are inconsistent with GATT 1994 Articles XIII and XXVIII:2, and
are, therefore, ineffectual to replace the bound rates in its Schedules preceding its
implementation of the 2007 Modification Package.
(ix) In the abse nce of notification for certification, notification of the date on which the
changes to the goods schedule come into force to the WTO Secretariat, and
notification of the draft modification to its Schedule, the EU acted inconsistently with
the procedures s et forth in paragraph 7 of the Procedures for Negotiations under
Article XXVIII and paragraph 1 of the Procedures for Modification and Rectification of
Schedules and Tariff Concessions. The absence of a notification for certification of the
modified schedule and of the certification following notification and the other violations
mentioned herein, results in the EU having acted inconsistently with GATT 1994
Articles II:1 and II:2 by affording imports of poultry meat from China less favorable
treatment than that provided for in its Schedule.
(x) The tariff rates and the TRQs negotiated and then implemented by the EU in the
measures identified above are inconsistent with GATT 1994 Article I:1 which requires
that any advantage, favor, privilege or immunity gran ted by any WTO Member to any
product originating in any other country shall be accorded immediately and
unconditionally to the like product originating in the territories of all other WTO
Members.
B. Claims With Respect to the 2012 Modification Package:
(i) The modification negotiation initiated by the EU in 2009 is inconsistent with
Article XXVIII:1 of the GATT 1994 , read in conjunction with Ad Article XXVIII, and
with the Understanding on the Interpretation of Article XXVIII, as the EU failed to
negotiate or consult with all the WTO Members having a principal supplying interest or
a substantial interest or that could have had such an interest in the absence of a
discriminatory quantitative restriction.[13]
(ii) The tariff rates and the TRQs negotiated and then implemented by the EU in the
measures identified above are inconsistent with Article XXVIII:2, read in conjunction
with the Understanding on the Interpretation of Article XXVIII and in particular
Paragraph 6 thereof, because they fail to maintain a g eneral level of reciprocal and
mutually advantageous concessions not less favorable to trade than that existing prior
to the modification.
(iii) The country -specific TRQs allocated by the EU to two of the WTO Members as
implemented in the measures and deci sion mentioned above [14] violate GATT 1994
Article XIII by diminishing for the other WTO Members the market access
commitments that the EU undertook to maintain on a non-discriminatory basis.
(iv) The allocation of all or the vast majority of the TRQs to two of the WTO Members as
implemented in the measures and decision mentioned above [15] is inconsistent with
GATT 1994 Article XIII:1 as the importation of the like product of all the WTO
Members is not similarly prohibited or restricted as a result.

13 In a footnote to this item, China states that "[t]he EU refused to change the TRQs and its allocation
mentioned in (ii) above so as to reflect China's recent shares of importation into the EU. In letters dated 1 June
2012 and 12 October 2012 addressed by EU Ambassador Pangratis to Ambassador Yi of China in response to
letters from Ambassador Yi dated 9 May 2012 and 2 October 2012, respectively, the EU refused China's
request to enter into consultations under Article XXVIII of the GATT 1994 on the grounds that China had
become the biggest supplier in a certain number of poultry products based on EU statistical data for the period
from 2009 – 2011" (China's request for the establishment of a panel, footnote 12).
14 In a footnote to this item of its panel request, China states: "See Section I.B(iv) for the referred
decision" (China's request for the establishment of a panel, footnote 13). Section I.B(iv) of China's panel
request refers to "[t]he refusal by the EU in consultations held on 19 May 2014 under Article XIII of GATT 1994
to adjust the TRQs on the basis of recent import statistics establishing China's substantial supplying interests",
as had been requested by China.
15 Ibid.

(v) The allocation of all or the vast majority of the TRQs to two of the WTO Members as
implemented in the measures and decision mentioned above [16] is inconsistent with
the chapeau of GATT 1994 Article XIII:2 read in conjunction with the Understanding
on the Interpretation of Article XXVIII and in particular Paragraph 6 thereof , because
the allocation of the TRQs do not approach as closely as possible the shares that the
WTO Members might be expected to obtain in the absence of the TRQs.
(vi) The allocation of all o r the vast majority of the TRQs to two of the WTO Members as
implemented by the EU in the measures and decisions identified above is inconsistent
with GATT 1994 Article XIII:2(d) because the EU failed to seek agreement with all
WTO Members having a substan tial interest in supplying the product concerned, nor
did it allot to such Members shares based upon the proportions supplied by them
during a previous representative period, due account being taken of any special
factors which may have affected or may be affecting the trade in the product.
(vii) The allocation of all or the vast majority of the TRQs to two of the WTO Members as
implemented by the EU in the measures identified above is inconsistent with GATT
1994 Article XIII:2, including its chapeau, read in conjunction with Article XIII:4,
which confirms that the base period for the determination of the TRQs must be
selected and special factors must be taken into account so as to allot to Members a
TRQ that approaches as closely as possible the shares that they might be expected to
obtain in the absence of the TRQs.
(viii) The EU's refusal in consultations with China on 19 May 2014 to consider an adjustment
of the allocation of the TRQs based on a change in the base period or a reappraisal of
the special factors involved is inconsistent with GATT 1994 Article XIII:4.
(ix) The EU violated GATT 1994 Article II:1 by adopting tariff rates that exceeded the
bound tariff rates in its Schedule for the tariff subheadings at issue, as the tariff rates
and the TRQs wh ich the EU negotiated and then implemented under Article XXVIII in
2013 are inconsistent with GATT 1994 Articles XIII and XXVIII:2, and are, therefore,
ineffectual to replace the EU 's bound rates in its Schedules preceding its
implementation of the 2012 Modification Package.
(x) In the absence of notification for certification, notification of the date on which the
changes to the goods schedule come into force to the WTO Secretariat, and
notification of the draft modification to its Schedule, the EU acted inconsistently with
the procedures set forth in paragraph 7 of the Procedures for Negotiations under
Article XXVIII and paragraph 1 of the Procedures for Modification and Rectification of
Schedules and Tariff Concessions. The absence of a notification for certification of the
modified schedule and of the certification following notification and the other violations
mentioned herein, results in the EU having acted inconsistently with GATT 1994
Articles II:1 and II:2 by affording imports of poultry meat from China less favorable
treatment than that provided for in its Schedule.
(xi) The tariff rates and the TRQs negotiated and then implemented by the EU in the
measures identified above are inconsistent with GATT 1994 Article I:1 which requires
that any advantage, favor, privilege or immunity granted by any WTO Member to any
product originating in any other country shall be accorded immediately and
unconditionally to the like product originating in the territories of all other WTO
Members.
The EU's measures and decision also nullify or impair the benefits accruing to China directly
or indirectly under the cited agreements."17
3.2. The European Union requests the Panel to reject all of China's claims.

16 Ibid.
17 China's request for the establishment of a panel, pp. 3-6.

4 ARGUMENTS OF THE PARTIES
4.1. The arguments of the parties are reflected in their executive summaries, provided to the
Panel in accordance with paragraph 20 of the Amended Working Procedures adopted by the Pan el
(see Annexes B-1, B-2, B-3 and B-4).
5 ARGUMENTS OF THE THIRD PARTIES
5.1. The arguments of Argentina, Brazil, Canada, the Russian Federation, Thailand and the United
States are reflected in their executive summaries, provided in accordance with paragraph 21 of the
Amended Working Procedures adopted by the Panel (see Annexes C -1, C -2, C-3, C -4, C -5
and C-6). India did not submit written or oral arguments to the Panel.
6 INTERIM REVIEW
6.1. On 21 October 2016, the Panel issued its Interim Report to the parties. On 4 November
2016, China and the European Union each submitted written requests for the Panel to review
aspects of the Interi m Report. On 11 November 2016, each party submitted comments on the
other's requests for review. Neither party requested an interim review meeting.
6.2. In accordance with Article 15.3 of the DSU, this section of the Report sets out our response
to the parties' requests for review of precise aspects of the Report made at the interim review
stage. We discuss the parties' requests for substantive modifications below, in sequence according
to the sections and paragraphs to which the requests pertain. In addition to the substantive
requests that are discussed below, various editorial and drafting improvements were made to the
Report.
6.3. The numbering of some of the footnotes in the Final Report has changed from the numbering
in the Interim Report. The discussion below refers to the numbering in the Interim Report and,
where it differs, includes the corresponding numbering in the Final Report.
6.4. Before proceeding on a section -by-section basis, we note that the European Union raised a
cross-cutting issue with reference to paragraphs 7.380, 7.386, 7.399, 7.402, and 7.406 and
8.1(e). The European Union observes that the Panel uses different expressions to indicate
apparently the same thing, including "the size of the 'all others' share" (para. 7.380), "amount of
the 'all others' share" (para. 7.380), or "the amount of the 'all others' shares" (para. 7.402) and
"the size of the TRQ shares to be allocated to countries that were not recognized as substantial
suppliers" (para. 7.406). For the sake of clarity, the European Union pro poses that the panel
replace those expressions with the simpler and clearer expression "the TRQ(s) share(s) allocated
to 'all others'" , or "the TRQ(s) share(s) to be allocated to ''all others'" , as appropriate. China
considers that the most accurate expression would be "the size of the TRQ(s) share(s) allocated to
'all others'", or "the size of the TRQ(s) share(s) to be allocated to 'all others'" . We note that these
different expressions were used to indicate the same thing. In the interest of consistent
expression, we have harmonized the expressions used in these paragraphs.
6.1 Factual aspects and General overview of China's claims and horizontal arguments
6.5. China requests the Panel to revise the first sentence of paragraph 2.2 and the first sentence
of paragraph 7.2 to reflect that the claims brought by China in this dispute are not only about the
modification by the European Union of its tariff concessions on certain poultry products, "but also
about the administration, allocation in particular, by the Eur opean Union through its legislations
and other domestic measures of the tariff rate quotas opened as a result of the modification". The
European Union does not comment on China's request. We note that these sentences are not
intended to provide a thorough description of the scope of China's claims in this dispute.
Furthermore, we consider that the terminology proposed by China in its request to revise these
sentences, in particular the reference to the "administration" of the tariff rate quotas, does not
correspond to the panel request and could potentially prejudge some of the disputed issues in this
case. Accordingly, we have not adjusted the wording of these sentences.
6.6. China requests the Panel to revise paragraph 7.3 by adding the words "by the European
Union" after the words "during the reference period s selected", for greater clarity. The European

Union does not comment on China's request. We have adjusted the wording of paragraph 7.3, as
requested by China.
6.7. With respect to paragraph 7.6, the European Union suggests the following drafting change:
"Following a relaxation of the SPS measures by the European Union in July 2008, imports of heat
treated poultry products from China into the European Union were allowed increased significantly
under some of the t ariff lines at issue ." China considers that these words should not be deleted,
because the fact that imports of heat treated products increased significantly under some of the
tariff lines is factually correct. Moreover, China considers that the statement supports the analysis
of the Panel that China held a substantial supplying interest as regards these tariff lines. We
consider that the change requested by the European Union would introduce imprecision into this
sentence and potentially alter its meaning, and have therefore left it unchanged.
6.2 The tariff rate quotas and the SPS measures
6.8. The European Union suggests five drafting changes to the description of the SPS measures:
(i) with respect to paragraph 7.85, first sentence, specifying that the requiremen ts referenced
therein are "sanitary" requirements; (ii) adding the words "due to animal health reasons" at the
end of the third sentence of paragraph 7.86 ; (iii) clarifying that the decision referred to in
paragraph 7.88 provides for the importation of pou ltry products subject to a declaration
"amongst other sanitary requirements (i.e. heat treatment)"; (iv) revising paragraph 7.89, third
sentence, to clarify that the importation of the products referred to therein are still subject to heat
treatment "B", " amongst other sanitary requirements"; and (v) revising paragraph 7.92 by
replacing the words "at the time of" with the word "until" in the second sentence, and revising the
formulation of the condition relating to heat treatment "B" in the last sentence by adding the
words "… and fulfil the other applicable sanitary requirements". China does not comment on any of
the foregoing drafting suggestions. We have made drafting changes along the lines proposed by
the European Union.
6.9. With respect to paragraph 7.91, fourth sentence, the European Union suggests deleting the
words "under the heat treatment measure". China considers that the words should not be deleted
because they are necessary to ensure clarity and completeness, and notes that the European
Union has not provided reasons for deleting these words. We consider that the change requested
by the European Union would introduce imprecision into this sentence and potentially alter its
meaning, and we have therefore left it unchanged.
6.10. China requests the Panel to modify the discussion in paragraph 7.97 concerning the
discrepancies between the 2000-2006 import statistics submitted by the parties for tariff line 1602
39 80. China notes that the Panel generally uses the import statistics provided by China for the
reasons set out there, but that for tariff line 1602 39 80, the Panel decides to use the statistics
provided by the European Union for 2005 and 2006 based on the fo llowing two considerations:
(i) China's statistics appear implausibly large (17.6% and 30.5% of the total EU imports), given
the SPS measures in place at the time; and (ii) the final statistics that China submitted in Exhibit
CHN-52 are inconsistent with the statistics it submitted previously in Exhibit CHN -43. As regards
the second consideration, C hina notes that in both Exhibits CHN -52 and CHN -43, China
consistently reported Chinese imports of 101.4 metric tonnes and 201.5 metric tonnes for 2005
and 2006, respectively, and there is thus no discrepancy between the statistics reported in these
two Exhibits. China also notes that it obtained the statistics directly from Eurostat, which China
understood to be the source of the European Union's statistics as well. China submits that it
retrieved trade statistics multiple times from Eurostat during the co urse of this dispute settlement
proceeding, and the data it retrieved are consistent. The European Union recalls that, as explained
by the European Union (second written submission, para. 85), the discrepancy is due to the fact
that China's statistics incl ude imports into Bulgaria, Romania and Croatia made before those
countries became Member States of the European Union, whereas the EU statistics do not include
those imports. We have revised paragraph 7.97, along with a consequential change to
footnote 207, in the light of the parties' comments.
6.3 Terms of reference issues
6.11. Regarding paragraph 7.106 , the European Union invites the Panel to amend this
paragraph by adding some additional text summarizing an additional argument that had been

presented by the Eur opean Union on this issue. China does not object to the addition, but offers
several drafting suggestions for the new text proposed by the European Union. We have added
text along the lines requested by the European Union.
6.12. Beginning with the title of Secti on 7.3.2.3 , China requests that it be changed from
"China's contention that the European Union violated Article XI II:1 and the chapeau of
Article XIII:2 by failing to annually review and reallocate the TRQ shares" to "China's contention
that the European U nion violated Article XIII with respect to the allocation of the TRQs in the
subsequent years" to more accurately describe China's complaint. The European Union "firmly
opposes China's attempt to reformulate one of the claims that it has formulated during the
litigation, and notably in its second written submission, as cl early demonstrated in
paragraph 7.128 of the interim report". The European Union submits that it "is clear from
paragraphs 7.128 and 7.130 that the Panel has made an objective reading of Ch ina's submission
and now China tries to move the focus of its claim to what it now pretends to be the essence of
China's complaint". The European Union submits that "[i]n reality, what China is doing is to
perpetuate its litigation tactics of formulating i ts claims in an ambiguous and constantly evolving
manner in order to take advantage from this situation, in an attempt to avoid its claims being
dismissed". We consider that the title of section 7.3.2.3 precisely reflects our understanding of
China's claim. Our understanding of China's claim is based on our analysis of the argumentation
presented by China in its submissions in the course of these proceedings. Accordingly, we decline
to make the change requested by China.
6.13. China notes the Panel's statement i n paragraph 7.133 that "having carefully reviewed
Section I of the panel request, we do not see any reference to the European Union's failure to
annually review and reallocate the TRQs from quota year to quota year to take account of trade
developments as one of the challenged measures at issue", and the Panel's statement in
paragraph 7.135 that "Section I.B(iv) does not identify, as a measure at issue in this dispute, the
failure by the European Union to annually review and reallocate the TRQs from year to year, on its
own initiative". China submits that it " appears that the Panel has considered that, in order for
China's claim to fall within its terms of reference, China should have explicitly mentioned in
Section I of the panel request the European Union' s "failure to annually review and reallocate the
TRQs from quota year to quota year to take account of trade developments" as a separate and
distinct measure at issue." In China's view, however, "[s]uch a standard goes significantly beyond
the requirement under Article 6.2 of the DSU, which does not require the complainant to set out
the arguments in support of a particular claim in the panel request". In the European Union's view,
the comments made by China concerning these paragraphs do not require the Pa nel to amend its
interim report "as they constitute a mere attempt to reargue the case by trying to convince the
Panel once again" that the claim discussed in the relevant part of the interim report was within the
Panel's terms of reference. Our view is in deed that in order for China's claim that the European
Union violated the provisions of Article XIII by failing to annually review and reallocate the TRQs
from quota year to quota year to take account of trade developments, the corresponding omission
should have been identified, in China's words, as "a separate and distinct measure at issue" in
Section I.B(iv) of the panel request. We do not agree with China's view that such a standard goes
beyond the requirement under Article 6.2 of the DSU because we do not agree with China that this
is properly characterized as an "argument[] in support of a particular claim in the panel request".
6.14. China requests the deletion of paragraphs 7.136 and 7.137 , in which the Panel suggests
that China's arguments in respect of the subsequent allocation by the European Union of the TRQs
were "apparently only in response to" the European Union's submission about some kind of "time
limit" on the validity of the allocation or a " periodic review mechanism". According to China, this
suggestion "has no basis". China states that in its panel request, China claimed that "the allocation
of TRQs by the EU, which naturally includes both initial allocation and subsequent allocation, was
inconsistent with Article XIII". China submits that altho ugh "it might be true that China reinforced
arguments to support its challenge against the subsequent allocation when it noticed that the EU
overlooked the ongoing nature of the Article XIII obligations", it "does not follow that China did not
properly mak e such a claim in its panel request and that such arguments of China were
"apparently only in response to" the EU's submission merely because of sequence of these two
events". The European Union submits that paragraph 7.136 "makes an objective description of the
evolution of China's claims during the litigation", and that "China does not argue that this
description is incorrect". The European Union submits that in paragraph 7.137, the Panel makes
clear what understanding it draws from such evolution and con cludes that such an understanding
reinforces the conclusion, derived from the text of the Panel request, that these are new claims.

The European Union submits that China's observation that the Panel's understanding "has no
basis" is therefore unwarranted a nd "constitutes an attempt to reargue the case". We decline
China's request to delete these paragraphs. They set forth an objective description of the evolution
of China's claims and argumentation during these proceedings. The basis for that description is our
analysis of the panel request and the subsequent argumentation presented by China in the course
of these proceedings. To avoid any misunderstanding, we wish to clarify that it was not "merely
because of the sequence of these two events" that we reache d the conclusion that China did not
properly make the relevant claim in its panel request, and that such arguments were made only in
response to the European Union's submissions.
6.4 Claims under Article XXVIII:1 of the GATT 1994
6.15. China requests the Panel to r evise its statement in paragraph 7.178 that "China does not
claim that the European Union violated Article XXVIII:1 by applying a 10% import share
benchmark to determine which Members held a 'substantial interest '", and the statement that
"there is no issu e regarding the 10% benchmark per se that we are called upon to resolve in the
present dispute". China recalls that it has argued that what is a substantial interest in one case
might not be a substantial interest in another case, and that a 10% import sha re benchmark
cannot be used as a "bright line". With reference to its arguments in paragraphs 74 -84 of its
second written submission as well as paragraphs 16 -17 and 19 of its response to Panel question
No. 68, China states that it "submitted and continues to consider that the application of a bright
line test of 10% violates Article XXVIII when - as was done by the EU in the present instance - the
circumstances of the case were not considered". China requests the Panel "to consider the issue
whether there is a 10% bright line benchmark, no matter it is an actual share or a counter -factual
share, in determining a substantial supplying interest, and to consider this issue separately from
the issue of the existence and impact of discriminatory quantitative rest rictions". The European
Union responds that t his paragraph "neither states nor suggests in any way that the 10% import
threshold should be considered as a bright line test to assess whether a Member holds a
substantial supplying interest for the purposes o f Articles XXVIII and XIII GATT". Rather, the
European Union submits that this paragraph provides "a description of the evolution of China's
arguments concerning the 10% import threshold in the context of China's claims, as well as of the
European Union's arguments". According to the European Union, that description is correct and
based on the parties' submissions, and here again "China tries to move the focus of its claims
pointing to certain paragraphs of its submissions and ignoring others". In the light of China's
comments on the interim report, which implies that China now considers that the use of a 10%
benchmark is an ipso facto violation of Article XXVIII and Article XIII, we have revised paragraph
7.178 to clarify the basis for our understanding tha t "China does not claim that the European
Union violated Article XXVIII:1 by applying a 10% import share benchmark to determine which
Members held a 'substantial interest'".
6.16. China submits that there is an inconsistency between the statements made by the P anel in
paragraphs 7.195 and 7.201. China notes that paragraph 7.195 states that the cited passage
from Canada – Wheat Exports and Grain Imports "supports the proposition that the term
'discrimination' may be interpreted relatively narrowly, so as to cover only unjustifiable
distinctions, or relatively broadly, so as to also cover distinctions that are legitimate and justifiable.
To that extent, we agree that the word 'discrimination' may be given different meanings depending
on the context in which that wo rd appears, and depending on the context, may have a broad
meaning that covers legitimate and justifiable distinctions". China submits that this is inconsistent
with the Panel's statement in paragraph 7.201 that "when the term 'discrimination' is accompanied
by the qualifying terms 'arbitrary or unjustifiable ' (or comparable terms) and 'where the same
conditions prevail' (or comparable terms) in certain provisions, these additional terms serve the
purpose of bringing greater precision to how the general con cept and legal standard of
'discrimination' is to be applied in a given provision or context. These qualifying terms do not, in
our view, serve the purpose of narrowing the ordinary meaning of the term 'discrimination' in the
manner suggested by China." Ch ina submits that there is an inconsistency between these
statements because "language that brings greater precision of necessity eliminates certain possible
interpretations that a more general term may allow and is therefore necessarily narrowing". In
addition, China finds an inconsistency "between the Panel stating that the sole word
'discrimination' may have a broad meaning and then to say that the absence of qualifying terms
may mean that it does not have a broad meaning". The European Union does not com ment on
China's observation. We do not apprehend the alleged inconsistency between the propositions
presented in paragraph 7.195 (read together with paragraph 7.196) and paragraph 7.201. Among

other things, we do not equate the notion of " bringing greater precision to how the general
concept and legal standard of 'discrimination' is to be applied in a given provision or context" to
the notion of " narrowing the ordinary meaning of the term 'discrimination'". Accordingly, we have
made no change to these paragraphs.
6.17. China requests the Panel to add a new sentence at the beginning of paragraph 7.202 to
more accurately summarize its argument, stating that "[i]n addressing the European Union's
argument that China and a third country that was not subject to similar import
prohibitions/restrictions are not similarly situated, China submits that in determining if two
countries are similarly situated, only the conditions that are relevant for the purpose of the
provision concerned should be considered ." China submits t hat this would more accurately
summarize the arguments presented at paragraphs 29 -31 of its oral statement at the first
meeting. The European Union believes that the Panel has summarized correctly China's position.
In any event, the European Union disagree s with the phrasing of the additional sentence proposed
by China. The European Union reiterates that all third countries are subject to the same sanitary
regulatory requirements; if all third countries are not "similarly situated", it is because their
sanitary situation is different and not because they are "not subject to similar import
restrictions/prohibitions". We have not added the additional text requested by China. The focus of
this paragraph, and the one that follows, is not on China's argument abou t the meaning and
application of the "similarly situated" standard; rather, the focus of these paragraphs is on China's
argument that the term "discriminatory" must be interpreted in the context of Article XXVIII:1 and
paragraphs 4 and 7 of its accompanyin g Ad Note, which in no way prohibit or require the
elimination of any measure characterized as a "discriminatory quantitative restriction" within the
meaning of those provisions. However, in the light of China's comment, we have added a reference
to paragraph 31 of China's opening statement at the first meeting, and also revised paragraph
7.203, to clarify the focus of these paragraphs. Furthermore, we have added a reference to
paragraphs 29-31 of China's opening statement at the first meeting in paragraph 7.204, which is
where we address China's argument regarding the meaning of "similarly situated".
6.18. Regarding the statement in paragraphs 7.205 and 7.206 that "China has not attempted
to argue that imports from any other similarly situated country were not s ubject to the same
restrictions", China reiterates that it "is of the view that the sanitary situation is not the condition
that is relevant for the purpose of the provisions concerned in this dispute, i.e. Article XXVIII:1
and its accompanying Ad Notes, a nd thus would not permit to conclude [sic] whether China and
other countries are or are not similarly situated for the purpose of these provisions". In China's
view, for the purpose of these provisions, "the fact that Chinese poultry meat products and poul try
meat products originated in other countries are like products is the condition that is relevant and
this fact is sufficient to establish that China and other countries are similarly situated". In view of
this, China considers that it is incorrect for t he Panel to find that China "has not attempted to
argue that imports from any other similarly situated country were not subject to the same
restrictions". On the contrary, China has submitted that "given that Chinese poultry meat products
and poultry meat products originated in other countries are like products, they are similarly
situated". As a result, China submits that "because poultry meat products originating in other
countries were not subject to the same or similar restrictions, the restrictions were discriminatory".
China therefore requests the Panel to modify the sentence quoted above. China requests that, t o
the extent that the Panel intends to say that China has not attempted to argue that imports from
any other country that is in the same sanitary situation were not subject to the same restrictions,
"it is appropriate for it to explicitly say so". The European Union believes that the Panel has
summarized correctly China's position, and disagrees with China's request. The European Union
reiterates that all third countries are subject to the same sanitary regulatory requirements. The
European Union states that if all third countries are not "similarly situated", it is because their
sanitary situation is different and not because they are "not subjec t to similar import
restrictions/prohibitions". We agree with China that the clarity of the analysis would benefit from
drawing out the Panel's assessment of China's argument on the notion of "similarly situated" more
explicitly. We have done so by revising paragraphs 7.204, 7.205, and 7.206.
6.19. Regarding paragraph 7.206 , China requests the Panel not to exercise judicial economy
with respect to the parties' disagreement as to: (i) whether the scope of the terms "discriminatory
quantitative restrictions" in th e context of paragraphs 4 and 7 of the Ad Note to Article XXVIII:1
covers only unjustifiable distinctions, or is broad enough to also cover justifiable distinctions; (ii)
whether the SPS measures at issue constitute "quantitative restrictions"; and (iii) w hat share of
imports into the European Union market China could reasonably be expected to have had, in the

absence of the SPS import prohibitions, over period 2002 -2008. China requests the Panel "to
engage [in] analysis in these respects even on an arguendo basis". The European Union does not
comment on China's request. We note that it is well established that a panel has "the discretion to
address only those arguments it deems necessary to resolve a particular claim" (Appellate Body
Report, EC – Poultry, para. 135). We consider that a panel "may be guided by a range of different
considerations when deciding whether to address arguments beyond those strictly necessary to
resolve the matter, and the manner in which a panel may do so, including the scope and n ature of
any such other alternative findings, may also vary depending on the issues before the panel"
(Panel Report, India – Solar Cells, para. 7.76). We are not convinced that addressing the above
issues on an arguendo basis will assist the DSB in making the recommendations or in giving the
rulings provided for in the covered agreements. Accordingly, we decline China's request.
6.20. China considers that, contrary to the Panel's assessment in paragraph 7.219, there is no
lack of clarity in China's argumentation regarding "the scope and nature of an obligation of re -
appraisement". With reference to its response to Panel question No. 23 and paragraph 40 of its
opening statement at the second meeting, China states that its view "has consistently been that if
the negotiations / consultations last beyond six months, the Member withdrawing the concession
should assess whether a re-appraisement should be made", and that a "re -appraisement need not
necessarily be made after each period of six months, but must occur when m aterial trade
developments have occurred that influence the supplying interest status of the WTO Members".
The European Union does not comment on China's request. We have adjusted paragraph 7.219
and its accompanying footnotes in the light of China's comment.
6.21. With regard to paragraphs 7.224 -7.227, China states that the Panel gives a cursory
conclusion in the first sentence of paragraph 7.227 by stating that "[i]t appears to us that, if
anything, prior practice does not support China's contention that there is a legal obligation of re -
appraisement". China observes that the Panel "fails to determine on which basis this conclusion
was taken". In addition, China states that the Panel "fails to consider and respond to China's full
argumentation and in particular to that set forth in its response to the Panel's question 106". The
European Union does not comment on China's request. We have revised paragraph 7.227 to clarify
the basis for this assessment.
6.22. China makes several interrelated requests relating to the Pa nel's discussion, in
section 7.4.3.3, of whether the European Union's refusal to recognize China as a Member holding
a supplying interest was justified by the timing of China's claim. First, China requests that the
Panel rule on whether the European Union's decision not to recognize China as a Member holding a
principal or substantial supplying interest was justified in the absence of a claim of supplying
interest by China within the 90 -day period. China states that this "is particularly because China
considers that the Panel should revise its analysis on the existence of discriminatory quantitative
restrictions and on the re -appraisement of the interest based on the latest import data for the
reasons mentioned above". The European Union does not comment on China's request. We recall
that it is well established that a panel has the discretion to address only those arguments it deems
necessary to resolve a particular claim. We are not convinced that addressing the above issues on
an arguendo basis will assist the DSB in making the recommendations or in giving the rulings
provided for in the covered agreements. Accordingly, we decline China's request.
6.23. With regard to paragraph 7.233 in particular, China requests that the Panel clarify that
paragraph 4 of the Procedures for Negotiations under Article XXVIII and paragraphs 2 and 5 of the
Understanding on the Interpretation of Article XXVIII are not couched in mandatory terms. China
submits that the current paragraph is phrased as if this 90 -day is mandatory, which i n China's
view it is not. The European Union does not comment on China's request. We do not see the basis
for China's comment in the text of paragraph 7.233, as this paragraph refers to the 90 -day
"guideline". Accordingly, we have not amended this paragraph.
6.24. China requests that paragraph 7.234 be revised to state in clear terms that China's claim
of a substantial supplying interest for the First Modification Package was filed within the 90 -day
period. The European Union does not comment on China's request. We have made the change
requested by China.

6.5 Claims under Article XXVIII:2 read in conjunction with paragraph 6 of the
Understanding on Article XXVIII of the GATT 1994
6.25. Regarding paragraph 7.261 , China states that "[f]irst of all, in making its analysis, the
Panel has omitted to take into account and should do so that the global TRQs for several tariff lines
do not reflect the future trade prospects of the WTO Members". In this regard, China refers to
paragraph 106 of its second written submission and to p aragraph 50 of the China's opening
statement at the second substantive meeting. China submits that it "has therefore shown that the
total amount of imported poultry products into the European Union from all sources would have
been greater had a representat ive period been chosen", and "requests the Panel to take this data
into account". The European Union observes that the calculations cited by China purport to show
that the amount of compensation provided by the European Union was below the compensation
that would have resulted from the application of the formulae of paragraph 6 of the Understanding
on the basis of a different reference period, but that those calculations "do not prove that the total
trade during the reference period used by the European Uni on would have been larger in the
absence of the SPS measures applied to China". We have revised paragraph 7.261 to more clearly
draw out the premise that, assuming that the amount of imports supplied from China would have
been greater in the absence of the SPS measures, there may well have been a corresponding
decrease in the amount of imports supplied from other sources in the absence of any change in
overall demand.
6.26. With respect to paragraph 7.272, China requests the Panel to identify the legal ground on
which it concludes that "it cannot be the case that the Members engaged in the negotiations would
be legally obliged to change the benchmark defined in that provision from year to year until the
negotiations have been concluded". China states that "[i]f, a s the Panel admits, the benchmark
must not necessarily be fixed in advance of the negotiations, then, there is no legal ground on
which to claim that it must be a three -year period or year preceding the negotiations". China
further states that the wording of paragraph 6 of the Understanding o n the Interpretation of
Article XXVIII "is what it is" and requires the use of "the most recent" three -year period or year
"and that, as mentioned above, is the period preceding the replacement of the tariff concession by
the tariff quota". China adds that "to adjust the benchmark year -to-year is not as complicated as
the Panel seems to believe", and this "is the result of a simple mathematical formula applied to
import statistics". The European Union does not comment on China's request. We have revised
paragraph 7.272 to more clearly draw out the problem that we see with requiring the Members
engaged in the negotiations to change the benchmark defined in that provision from year to year
until the negotiations have been concluded.
6.27. China additionally requests that the Panel clarify the basis on which it drew the conclusion,
in the accompanying footnote to this paragraph ( footnote 412 of the Interim Report,
footnote 426 of the Final Report), that the fact that the European Union agreed not to base the
calculation of the compensation on calendar year 2005, but rather to base it on a more recent
twelve-month period of July 2005 to June 2006, does not lend support to the conclusion that the
most recent period can be the most rec ent period preceding the conclusion of the negotiations.
The European Union does not comment on China's request. We have rephrased footnote 412 of
the Interim Report (footnote 426 of the Final Report) in the light of China's request.
6.28. Regarding paragraph 7 .275, China states that the Panel appears to support "without
analysis and without reference to the data and analysis submitted by China the assertion of the EU
that the amount of trade covered by each of the TRQs in the Second Modification Package exceeds
largely the greatest of the amounts that would result from each of the three formulae of paragraph
6 of the Understanding on the Interpretation of Article XXVIII". China requests the Panel to
provide an analysis on why it supports this assertion by the Eu ropean Union, and to consider and
take into account China's data showing that the global TRQs for several tariff lines do not reflect
the future trade prospects of the WTO Members. Reference is made to paragraph 106 of China's
Second Written Submission, to paragraph 50 of the China's opening statement at the second
substantive meeting, and to China's response to Panel question No. 71. The European Union
recalls that it has rebutted China's arguments in its second written submission (at paras. 77 -85).
We not e that the purpose of the statement that is the subject of China's comment was not to
make a finding on the question of whether the amount of trade covered by each of the TRQs in the
Second Modification Package "exceeds largely the greatest of the amounts" that would result from
each of the three formulae of paragraph 6 of the Understanding on the Interpretation of
Article XXVIII. The point was simply to illustrate, with actual examples, that paragraph 6 of the

Understanding establishes the basis for determ ining the minimum amount of compensation that
must be provided, and that it is always open for the Members involved in negotiations under
Article XXVIII to agree on compensation that exceeds the minimum amount required. We have
deleted this sentence in the light of China's comment.
6.29. With reference to paragraphs 7.291 and 7.293 , China submits that the arguments
developed by the Panel do not respond to China's argument that " it would not make any sense to
fix a global TRQ taking into account overall future pr ospects without taking into account future
trade prospects at the level of the separate TRQs in which the global TRQ is broken down", and
that to do otherwise "would result in over -compensation for some and under -compensation for
others, thereby creating d iscrimination" (China's first written submission, para. 138; China's
second written submission, para. 110). The European Union does not comment on China's request.
We have added a reference to this argument in paragraph 7.291. We have added additional
language in paragraph 7.299 to more explicitly address this argument.
6.30. China offers several observations on paragraph 7.301 . First, China states that "[i]n
response to the Panel's question in paragraph 7.301, China refers to paragraph 43 of its Opening
Statement at the Second Substantive Meeting. China submits that the Panel has not responded to
the example given in that case which addresses the issue raised by the Panel in paragraph 7.301."
Second, China takes issue with the statement that "China has not expla ined why it would be the
case that, in a situation where a Member replaces an unlimited tariff concession with a TRQ that is
not allocated among supplying countries, it could be presumed that the value of that compensation
for each single Member would be e quivalent to the value, for that Member, of the concession prior
to its modification or withdrawal" (emphasis added). The European Union does not comment on
China's request. We do not see how paragraph 43 of China's opening statement at the second
meeting is relevant to the focus of paragraph 7.301. Howev er, we have rephrased
paragraph 7.301 in the light of the second point made by China.
6.31. Regarding paragraph 7.302 , China requests the Panel "to complete its analysis on an
arguendo basis that Article XXVIII:2 and paragraph 6 of the Understanding apply to the allocation
of TRQ shares among supplying countries". China disagrees with the Panel's statement that
"China's claims of violation relating to the allocation of the TRQs are for the most part based on
the same grounds as its claims relating to the total amount of the TRQs. Having rejected China's
claims of violation relating to the total amount of the TRQs, the same conclusions would apply
mutatis mutandis to these additional claims insofar as they are the same". Specifically, China
states that it does not consider that "the same conclusions would apply mutatis mutandis to these
additional claims insofar as they are the same". China gives two examples of reasoning by the
Panel that "applies solely with regar d to the total amount of the TRQs" and not to the share of
TRQs assigned to China or "all others". The European Union does not comment on China's request.
We recall that it is well established that a panel has the discretion to address only those arguments
it deems necessary to resolve a particular claim. We are not convinced that addressing the above
issues on an arguendo basis will assist the DSB in making the recommendations or in giving the
rulings provided for in the covered agreements. Accordingly, we decline China's request. However,
in the light of China's comment, we have rephrased this paragraph and we have deleted the
statement referred to above.
6.6 Claims under Article XIII:2(d) of the GATT 1994
6.32. With respect to paragraph 7.320, China requests the Panel to indicate the factual basis for
the statement that negotiations on the total amount of the TRQs under Article XXVIII "frequently
occur simultaneously" with negotiations on the allocation of the TRQs under Article XIII:2(d). The
European Union does not comment on China's request. The basis for our statement is cited in the
accompanying footnote, namely Canada's observation in its third -party submission that " [i]f
Article XXVIII is being used, it is very likely that allocation under Article XIII will o ccur coincident
with the establishment of a TRQ under Article XXVIII." However, in the light of China's comment,
we have rephrased the wording of this sentence to clarify that the Panel is not making any factual
finding on the frequency with which negotiat ions under Article XXVIII and XIII:2(d) occur
simultaneously.
6.33. With reference to paragraphs 7.332 and 7.333 , China requests the Panel to clarify why
the fact that the import restrictions may have included WTO -inconsistent measures in EEC –
Apples (Chile I) or the fact that import restrictions in the form of WTO -consistent SPS measures

"has any link with the assessment of whether a representative period was selected". China notes
that, as mentioned by the Panel, Article XIII:2(d) does not have a qualificatio n of "discriminatory
quantitative restrictions" and hence, whether or not the import restrictions are discriminatory or
not or whether they are WTO -consistent or not, has no relevance in the view of China. The
European Union does not comment on China's req uest. We consider that although the WTO -
consistency of any import restrictions in place during a period selected is not a decisive factor for
the purpose of determining whether that period is "representative", it is a relevant consideration.
Therefore, we have clarified this point in paragraph 7.333.
6.34. China also requests that the Panel clarify its analysis in paragraph 7.337, as China does
not see the link that the Panel attempts to establish between the fact that the objective of the EU
measures was to mak e sure that domestic and foreign suppliers respect the same sanitary
requirements, and the issue of whether these SPS measures are "special factors" or not. The
European Union considers that "unless a measure is WTO inconsistent or it can be said to be out of
the ordinary, unusual, exceptional for some other reasons, than it cannot be characterised as a
special factor". The European Union recalls the dictionary definition of "special": "Of an abstract
concept, immaterial thing, etc.: out of the ordinary, un usual; exceptional in quality or degree" or
"Of a material thing, event, etc.: out of the ordinary; excelling in some (usu. positive) quality". We
have clarified this point in paragraph 7.337 in the light of China's comment.
6.35. China requests clarification o f the Panel's suggestion in paragraph 7.350 that the
consideration of "special factors" would be redundant if a TRQ allocation must as a rule always be
based on a representative period immediately preceding the opening of the TRQ. In this regard,
China submits that the determination of "a previous representative period" and of "special factors"
are separate determinations and it must be determined whether a previous representative period
was affected by special factors. In China's view, there is "no automat ism between a period
preceding the allocation of the TRQ and the existence of special factors". The European Union does
not comment on China's request. We did not intend to suggest that consideration of "special
factors" would be redundant if a TRQ allocat ion must as a rule always be based on a
representative period immediately preceding the opening of the TRQ. In order to clarify that our
interpretation of the terms "special factors" in Article XIII:2 does not rest on that premise, we
have modified this paragraph in the light of China's comment.
6.7 Claims under the chapeau of Article XIII:2 of the GATT 1994
6.36. The European Union observes that paragraphs 7.313, 7.379, and 7.388 all convey the idea
that the Panel's findings in relation to China's claims under the chapeau of Article XIII:2 are made
in the alternative to the findings that the panel reached (in the first place) on China's claims under
Article XIII:2(d). However, the European Union considers that when one reads the finding of the
Panel in paragraph 7. 406 and the conclusion in paragraph 8.1(e) , that idea is not clearly
conveyed. For the sake of clarity, the European Union suggests that the Panel recall in
paragraph 7.406 and again in the conclusion in paragraph 8.1(e) that those findings and
conclusion are made in the alternative to the findings concerni ng China's claims under
Article XIII:2(d), i.e. they are relevant to the extent that the conclusion reached by the panel in
paragraph 7.378 and recalled in paragraph 8.1(d) would be incorrect. The European Union submits
in this regard that if the Panel is right in concluding that the European Union violated
Article XIII:2(d) by not recognising China as a Member holding a substantial interest in supplying
the products under tariff lines 1602 39 29 and 1602 39 80 and by failing to seek agreement with
China, then the European Union cannot be faulted at the same time for not having allocated a
greater "all others" share under the same tariff lines. China sees no reason to make the
amendments requested by the Eu ropean Union, "precisely because the Panel's findings and
conclusions are clear". We consider that our findings and conclusions are sufficiently clear, and we
therefore see no need to amend these paragraphs as suggested by the European Union.
6.37. The European Union notes that paragraph 7.409 states that "… establishing an 'all others'
share in a TRQ without regard to the actual import shares held over a previous representative
period would, unless agreed by all substantial suppliers, be at odds with the general rule that TRQ
shares should be allocated in a way that approaches 'as closely as possible the shares which the
various Members might be expected to obtain in the absence of such restrictions '." The European
Union observes, however, that in the Panel's vie w the general rule of the chapeau of Article XIII:2
applies also when allocation of the TRQ is agreed with all substantial suppliers. Accordingly, the
European Union suggests that the Panel qualify the phrase "unless agreed by all substantial

suppliers" or delete it altogether. The European Union notes that this applies mutatis mutandis to
paragraph 7.418 . China does not comment on the European Union's suggestion. We have
deleted the reference to "unless agreed by all substantial suppliers" in paragraphs 7. 409 and
7.418.
6.38. With respect to paragraph 7.418, China notes the Panel's assessment that nowhere in the
statements invoked by China from EC – Bananas III did the Panel or the Appellate Body mention
or imply the obligation to reserve a share in the TRQ to "all other" suppliers of any specific
magnitude. However, China states that "the issue that China brought up is not about the specific
magnitude of the share" reserved for "all others", but rather "the fact that there should not be a
permanent allocation of tariff rate quotas". The European Union comments that China "again tries
to alter the claim it presented during the Panel proceedings, by arguing that it did not bring up the
issue of a minimum size of the TRQ share to be allocated to 'all others '. Howev er, this was
precisely one of China's claims (see para. 7.407 which contains a reference to China's submissions
and it is not contested by China) which was discussed at length during the Panel's meetings with
the parties." Moreover, the European Union cons iders that the Panel has also adequately
addressed China's argument that without a minimum "all others" share the TRQs allocation would
be frozen (see paragraph 7.419). Therefore, the European Union considers that whilst objectively
speaking there is no ne ed to amend this point of the panel interim report, it does not oppose any
clarification that the Panel may consider appropriate in this respect. We have rephrased paragraph
7.418 in the light of China's comment.
6.39. China asks the Panel to revise paragraph 7 .419, which states in relevant part: "As the
European Union observes, the objective of preventing a long -term freeze of the allocation cannot
necessarily be prevented by reserving a given share to 'all others' in the TRQ, but may instead
require other mean s, such as setting a time limit to the validity of the allocation (or a periodic
review thereof). As we explained elsewhere in our Report, China's response to this argument was
to claim that the European Union violated Article XIII:1 and XIII:2 by failing to annually review
and reallocate the TRQ shares based on the most recent trade developments." Specifically, China
requests the deletion of the final sentence. China submits that, as noted above in the comments
made with regard to paragraphs 7.136 and 7.137, China's arguments in respect of the subsequent
allocation by the E uropean Union of the TRQs "were not in response to the EU's relevant
argument". The European Union responds that, for the same reasons explained above concerning
China's comments to parag raphs 7.136 and 7.137, the European Union does not agree with
China's request to delete the last sentence of this paragraph. However, the European Union adds
that "it could be helpful if the Panel referred to the precise points of China's submissions where
this claim is presented as a response to the European Union's argument", including paragraph 102
of China's first oral statement (reference is also made in this connection to the EU second written
submission, para. 144). We decline China's request to delete this sentence. As noted above, it sets
forth an objective description of the evolution of China's claims and argumentation during these
proceedings. The basis for that description is our analysis of the panel request and the subsequent
argumentation pre sented by China in the course of these proceedings. We have added an
additional reference to China's submissions to sustain the conclusion presented.
6.8 Claims under Article XIII:1 of the GATT 1994
6.40. Regarding the discussion of China's claim under Article XIII :1 (paragraphs 7.422-7.437),
China submits that the Panel's analysis on Article XIII:1 is incomplete "inasmuch as it does not
address the arguments that China advanced in its response to the Panel's question 64(b) and in
particular to the section on Articl e XIII:1 therein". China recalls that it "raised therein the
arguments and examples of an allocation of shares in a TRQ that would meet the requirements of
Article XIII:2(d) but still violate Article XIII:1". China requests the Panel to also "complete its
analysis" on this point. The European Union states that it does not understand the purpose of
China's request to the Panel to examine the two abstract examples it fo rmulated in its response to
Panel question No. 64(b). Moreover, the European Union states t hat those two examples have
nothing to do with the facts of the present case, so it is really hard to grasp their relevance for
solving the present dispute. The European Union observes that "China itself, also in its comments
on the interim report, is unable to explain the relevance of those examples for the present dispute
and it does not suggest how any possible position that the Panel might take in replying to them
would impact on its findings". In these circumstances, the European Union believes that th e
Panel's thorough analysis contained in this section is complete as it addresses all the arguments
raised by the parties "that are objectively relevant to respond to the claim raised by China". We

note that our findings summarize the parties' arguments to the extent necessary to facilitate
understanding of our own assessment and reasoning, and do not aim to fully reproduce the
parties' arguments as set forth in their submissions. We consider that paragraph 7.435 provides an
adequate exposition of China's a rgumentation on the relationship between Article XIII:1 and
Article XIII:2.
6.41. Regarding paragraph 7.434, China requests the Panel to modify the statement that "[a]ll
of China's argumentation under Article XIII:1 relates to the amount of the TRQ shares alloc ated to
'all others '". In this regard, China recalls that it also claims that the European Union acted
inconsistently with Article XIII:1 "by allocating country -specific shares only to Brazil and/or
Thailand but not to China which was also a substantial su pplier". Reference is made to
paragraph 127 of China's second written submission, and to the fact that the Panel itself also
acknowledges this at paragraph 7.423 of its Interim Report. The European Union does not
comment on China's request. We have revised the wording of this paragraph in the light of China's
comment.
6.9 Claims under Article I:1 of the GATT 1994
6.42. Regarding paragraph 7.448 , China requests the Panel to clarify why it surmises from
China's response to the Panel's question 59(c) that whether a TRQ allocation is "disproportionate"
under Article I:1 is to be assessed on a basis that is different from the TRQ rules set forth in
Article XIII:2. In this respect, China notes that "all China stated was that its claim under Article I:1
does not depend on t he outcome of claims under Article XIII or XXVIII". And in support, China
referred to paragraph 344 of the Appellate Body's decision in EC – Bananas III (Article 21.5 –
Ecuador II) in which it is stated that the ACP duty -free quota is not a limitation on a tariff
preference that is subject only to Article I:1 but a tariff quota subject also to Article XIII. In
addition, China observes that the Panel claims that China has not elaborated its argument that the
TRQ allocation to Brazil and Thailand is "dispropo rtionate". China nevertheless refers to its
response to Panel question No. 59 and to paragraph 207 of its second written submission and
requests the Panel to take this into account. According to the European Union, China's comments
"appear to be the result of a hasty reading of the interim report". The European Union notes that
the Panel's reasoning is explained in clear terms in this paragraph, and China's arguments
(developed in Panel question 59 and in paragraph 207 of its second written submission) are
properly summed up in this section of the interim report. Accordingly the European Union does not
see the need to amend this paragraph of the interim report. We consider that paragraph 7.448
already sets forth the basis upon which "it might be surmised" th at, in China's view, whether a
TRQ allocation is "disproportionate" under Article I:1 is to be assessed on a basis that is different
from the TRQ allocation rules set forth in Article XIII:2. In addition, having reviewed China's
response to Panel question No. 59 and to paragraph 207 of its second written submission, we still
do not find any additional substantial elaboration of its argument beyond stating that the TRQ
allocation is "disproportionate". Accordingly, we have not revised paragraph 7.448.
6.43. Regarding paragraph 7.449 , China requests the Panel to add ", while other substantial
suppliers such as China are not" at the end of the first sentence to accurately reflect China's
arguments as acknowledged by the Panel at paragraph 7.438 of the Report. The European Union
does not comment on China's request. We have adjusted the wording of this paragraph, as
requested by China. We have also added an accompanying citation to paragraph 208 of China's
second written submission.
6.10 Claims under Article XIII:4 of the GATT 1994
6.44. The European Union considers that given that import figures postdating December 2013 are
irrelevant for the present dispute, they should be deleted from the tables contained in the panel
report (paragraph 7.466). China objects to such deletion, and observes that these import figures
were provided in response to questions from the Panel; they are part of the record and should, as
a result, remain in the tables contained in the report to accurately reflect the data supplied by
China and the Europea n Union. We note that our findings under Article XIII:2 and XIII:4 are not
based on import statistics post-dating December 2013. However, we do not see why it follows that
those figures should be deleted from the tables contained in the panel report. Accordingly, we
have not deleted the data from the tables.

6.45. Regarding paragraph 7.491, China notes the Panel's statement th at "China's request to
enter into consultations under Article XIII:4 does not contain a reference to the specific tariff lines
upon which i ts request is based." China observes that the request to enter into consultations is
contained in Exhibit CHN -39. The Note Verbal e refers to Council Regulation (EC) No. 1218/2012,
through which a new tariff regime on the tariff items concerned had been ado pted. In the Note
Verbale, China referred to "the tariff lines" concerned, as the tariff lines that were affected by
Council Regulation (EC) No. 1218/2012. China submits that it was therefore abundantly clear to
the European Union, on 19 December 2013, tha t China had requested to enter into consultations
on all the tariff lines affected by Council Regulation (EC) No. 1218/2012. China requests the Panel
"to clarify whether its analysis took into account the fact that Exhibit CHN -39 contains an explicit
reference to the document containing information on the tariff lines that China sought to consult
on". Moreover, if the Panel confirms that it took Exhibit CHN -35 into account in its analysis, China
requests the Panel "to clarify whether it considers that the r equest to enter into consultations
under Article XIII:4 itself should contain an explicit reference to the relevant tariff lines and
whether a reference to the document directly implementing the changes to those tariff lines is
insufficient". The European Union states that China "tries once again to amend its arguments and
claim at this stage of the proceedings". The European Union observes that "the interim report
recalls, in its comments to the EU response to question 123 of the panel, China recognised th at its
request was addressing tariff lines 1602 39 29 and 1602 39 85". The European Union observes
that now China argues instead that the European Union should have understood that its request
was addressing all of the tariff lines concerned by Council Regulation (EC) No. 1218/2012, because
its Note Verbal e contains a cross reference to that Regulation. Hence, the European Union
considers that not only is China trying to reargue the case by attempting to amend its claim", but
it is also explicitly admitting that its request to enter into consultations with the European Union
under Article XIII:4 did not identify "in a clear and unequivocal manner the specific tariff line(s)
upon which that request was based, as in order to guess what those tariff lines are o ne should
refer to other documents mentioned in that request". Furthermore, the European Union observes
that as recalled by the Panel in paragraph 7.492, in its Note Verbal e China claimed to have "a
substantial supplying interest in several of the tariff i tems concerned" by Council Regulation (EC)
No. 1218/2012 (emphasis added). Therefore, the European Union submits that "this Note Verbal e
made clear one thing only i.e. that China did not claim an SSI on all the tariff lines concerned by
Council Regulation (EC) No. 1218/2012, but on several of those tariff lines, without specifying
which ones". The European Union states that this "contradicts openly" China's new argument to
the effect that it was abundantly clear to the European Union, on 19 of December 2013, that China
had requested to enter into consultations "on all the tariff lines affected by that Regulation". We
have adjusted paragraphs 7.491 and 7.492 in the light of the parties' comments.
6.46. Regarding paragraph 7.492 , China observes that the Panel cont inues its analysis by
observing that China took an "all inclusive" approach with respect to its claims of interest in
supplying the products covered by the First and Second Modification Packages. China requests the
Panel to clarify its understanding of an "all inclusive" approach, which the Panel refers to again in
the eighth sentence of this paragraph. China also requests the Panel to clarify how a WTO Member
can ensure that it meets the Panel's proposed standard of "specificity" regarding which tariff lin es
and special factors were concerned, other than by referring to the very document that
implemented the changes to the tariff regime. We have adjusted paragraph 7.492 to clarify what
we mean by an "all inclusive" approach. We have also revised paragraph 7.492 to clarify that there
is no general standard of "specificity" that we are reading into Article XIII:4.
6.11 Claims under Article II:1 of the GATT 1994
6.47. China observes, in relation to paragraph 7.527, that WTO Members and in particular the
European Union distinguish between the "entry into force" and the "application" of legal
instruments, with the entry into force being capable of preceding the application by several years.
China respectfully requests the Panel "to consider this in the context of its anal ysis in
paragraph 7.527 and to determine whether and how this impacts its analysis". The European
Union does not comment on China's request. We have considered the distinction referred to by
China, but we do not see how it impacts on our analysis in paragr aph 7.527 or this section more
generally. Accordingly, we have made no change as a consequence of China's comment.

7 FINDINGS
7.1 General
7.1.1 General overview of China's claims and horizontal arguments
7.1. This section aims to provide a general overview of several horizontal arguments that underlie
China's claims in this dispute. The measures at issue, and the distinct claims that China advances,
are elaborated in greater detail in the subsequent sections of this Report.
7.2. The claims brought by China concern the modification by the European Union of bound duties
inscribed in its Schedule of concessions on certain poultry products pursuant to negotiations with
Brazil and Thailand held under Article XXVIII:5 of the GATT 1994. A first negotiation exercise (the
"First Modif ication Package "), which was initiated in 2006 and sa w the negotiations concluded
in 2006, resulted in the European Union replacing its ad -valorem duties with tariff rate quotas
(TRQs) on poultry products classified under three tariff items. A second negot iation exercise (the
"Second Modification Package"), which was initiated in 2009 and according to the European Union
concluded at negotiators ' level in late -201118, resulted in the European Union replacing its ad -
valorem bound duties with TRQs for poultry products classified under seven other tariff items.
7.3. In each negotiation exercise, the European Union determined that Brazil and Thailand were
the only WTO Members that held a "principal supplying interest " or "substantial interest", within
the meaning of A rticle XXVIII:1, in any of the tariff concessions at issue and entered into
negotiations under Artic le XXVIII:5 with these Members. The European Union based its
determination of which Members held a principal or substantial supplying interest on actual imp ort
data covering the three-years preceding the initiation of each of the two negotiation exercises (i.e.
2003-2005 for the First Modification Package, and 2006 -2008 for the Second Modification
Package). It is not in dispute that, during the reference peri ods selected by the European U nion,
imports of the poultry products concerned from China into the European Union were negligible.
7.4. Each of the TRQs agreed with Brazil and Thailand provides for an in -quota tariff at a rate that
is equal to or lower than the European Union's previously bound rate of duty, together with an out-
of-quota tariff rate that is in all cases higher than the European Union 's bound rate of duty before
the modification. Under all of the TRQs resulting from the First Modification Package, Brazil and/or
Thailand are each allocated their own country -specific share, with an "all others" share set aside
for all other countries. The situation is similar for all of the TRQs resulting from the Second
Modification Package, whereby Brazil and/or Thailand are each allocated their own country-specific
share, with an "all others" share set aside for all other countries (except for one tariff line (HS1602
3921) where there is no "all others" share and the entirety of the TRQ is allocated to Thailand ).
The majority of each TRQ, and in some cases the vast majority (or all) of the TRQ, is allocated to
Brazil and/or Thailand (the "all others" TRQ share is below 20% in all cases).
7.5. The total volume of each TRQ and the allocation of TRQ shares among supplying countries
was determined, with some exceptions, on the basis of actual import data for the three -year
period preceding the initiation of each of the two negotiation exercises (i.e. 2003-2005 for the First
Modification Package 19, and 2006 -2008 for the Secon d Modification Package). As noted above,
during these reference periods, imports of the poultry products concerned from China into the
European Union were negligible.
7.6. As elaborated in greater detail later in our Report, the European Union had applied sever al
SPS measures throughout the period concerned by the two Article XXVIII negotiations, i.e.
2003-2008. Following a relaxation of the SPS measures by the European Union in July 2008,
imports of heat treated poultry products from China into the European Uni on increased
significantly under some of the tariff lines at issue. This increase was taking place while the
European Union 's negotiations with Brazil and Thailand in relation to the Second Modification
Package were still ongoing. The European Union did no t update the reference period selected for
the purpose of determining which Members to negotiate with regarding the modification of its

18 See footnote 128 below.
19 EU's first written submission, para 32, page 9. In the case of the TRQs for tariff lines 0210 9939 and
1602 3219, the European Union agreed, at the request of Brazil and Thailand, to use a different reference
period. See paras. 33-35.

concessions, or for the purpose of calculating the total volume of the TRQs or the respective TRQ
shares allocated to di fferent countries. With respect to the TRQs under the Second Modification
Package, the European Union made no adjustment to the TRQ allocations to reflect more recent
data and the increase in China's share of imports.
7.7. Against this background, China claim s that the European Union acted inconsistently with
various articles of the GATT 1994 by basing the above determinations on actual import levels over
the periods 2003 -2005 and 2006 -2008. China advances distinct claims of violation under
Article XXVIII:1, A rticle XXVIII:2 in conjunction with paragraph 6 of the Understanding on the
Interpretation of Article XXVIII, Article XIII:1, the chapeau and paragraph (d) of Article XIII:2,
Article XIII:4, Article II:1, and Article I:1. In these findings, the Panel will consider China's claims
and arguments on a provision-by-provision basis, so as to ensure that due account is taken of the
applicable legal standard and subject -matter of each provision. However, there is significant
degree of overlap in China 's argumentation under these provisions, and many of its claims under
these provisions rest on one or more of the same grounds. Therefore, it is helpful to provide an
overview of three fundamental arguments that underlie China 's claims in this dispute. Each
argument rel ates in one way or another to the European Union 's use of data regarding actual
import levels over the periods 2003-2005 and 2006-2008.
7.8. First, China argues that the European Union was prohibited from basing its determinations on
actual import levels during the periods 2003-2005 and 2006-2008 on the grounds that, throughout
both of these periods, there were SPS measures in place that prohibited or significantly restricted
the importation of poultry products from China into the European Union. According to C hina, the
European Union was obligated to base its determinations under these provisions on either a
different reference period, or on an estimate of the import shares that China would have had in the
absence of those SPS measures. China argues that in determining the share that China would have
had absent the import ban, the European Union should have taken into account factors such as
China's production capacity and investment in the affected products, estimates of export growth,
and forecasts of demand i n the European Union . China provides information on the level of its
poultry exports before, during and after the ban, both to the European Union and other countries,
to support its contention that China could reasonably be expected to have had a significa nt share
of the EU market in the absence of the SPS measures that were in place. China claims that by not
basing its determinations under these provisions on an estimate of the import shares that China
would have had in the absence of those SPS measures, t he European Union violated
Article XXVIII:1, Article XXVIII:2 read in conjunction with paragraph 6 of the Understanding,
Article XIII:1, and the provisions of Article XIII:2.
7.9. Second, China argues that the European Union was required to use the most recent reference
period of 2009-2011 as the basis for its determinations in the context of the Second Modification
Package. As noted above, the negotiations under the Second Modification Package were initiated in
2009, but did not conclude at the negotiators ' level until September 2011, according to the
European Union, and the completion of the negotiations was not notified to the WTO until
December 2012. During that period, China's share of imports under several tariff lines increased
following the relaxation of the SPS measures. China submits that the European Union was under
an obligation to base its determinations on the most recent three -year period preceding the
conclusion of the negotiations (2009 -2011), not the three -year period preceding the initiation of
the negotiations (2006 -2008). China claims that by not doing so in respect of its initial TRQ
allocations, the European Union violated Article XXVIII:1, Article XXVIII:2 read in conjunction with
paragraph 6 of the Understanding, and Article XIII:2 (d) and the chapeau of A rticle XIII:2. China
further claims that by subsequently making no adjustment to the TRQ allocation following a
request for reappraisal by China in 2013, the European Union violated Article XIII:4.
7.10. Third, China argues that the European Union was obligated to set aside an "all others" share
of at least 10% when allocating the TRQs among supplying countries, regardless of the actual level
of imports and whatever the reference period selected. According to China, the amount set aside
for "all others" must be sufficient to allow at least one other Member going forward to achieve a
substantial interest as a supplier of the products subject to the TRQs. In this case, the European
Union recognised Members as holding a substantial supplying interest if they accounted for 10%
share of imports in the tariff line concerned. Accordingly, China claims that by not setting aside an
"all others" rate of at least 10% within each TRQ, the European Union violated Article XIII:1 and
Article XIII:2.

7.11. In addition to these three horizontal arguments, China advances various additional claims
and arguments under Article XXVIII:2 read in conjunction with paragraph 6 of the Understanding,
Article XIII:1, Article II:1, and Article I:1. These are elaborated in the context of analysing China's
claims under those provisions.
7.1.2 Order of analysis
7.12. A panel enjoys a degree of discretion to structure the order of its analysis as it deems
appropriate.20 In exercising that discretion, a panel may decide to follow, but is not bound by, the
manner in which the complainant presented its claims.21
7.13. We begin by examining China 's claims that the European Union violated Article XXVIII:1 by
failing to recognize China as a Member with a principal or substantial supplying interest for
purposes of the negotiations under Article XXVIII. We then examine China 's claims that the
compensation provided by the European Union, including the total amount of the TRQs and their
allocation among supplying countries, is inconsistent with Article XXVIII:2 read i n conjunction with
paragraph 6 of the Understanding on the Interpretation of Article XXVIII.
7.14. We will then examine China 's claims under Article XIII regarding the European Union 's
allocation of TRQs among supplying countries. We first consider China 's clai ms under the
provisions of Article XIII:2, as both parties agree that Article XIII:2 refers specifically to the
allocation of TRQs.22 After addressing China's claims regarding the initial TRQ allocation under the
provisions of Article XIII:2(d) followed by China's claims under the chapeau of Article XIII:2, we
will then proceed to address China's claims regarding the initial TRQ allocation under Article XIII:1
and Article I:1. After we have addressed China's claims regarding the initial TRQ allocation, we will
then turn to China 's claim that, following the entry into force of the TRQs under the Second
Modification Package, the European Union violated Article XIII:4 by failing to enter into meaningful
consultations with China regarding the need for an adjustme nt of the TRQ shares allocated among
supplying countries.
7.15. Finally, we address China's claims that the European Union violated Article II:1 by applying
the modifications agreed in the Article XXVIII negotiations prior to those changes being
incorporated into the text of its Schedule of concessions through the certification process.
7.1.3 Function of the Panel
7.16. According to Article 11 of the DSU, the function of a panel is "to assist the DSB in
discharging its responsibilities under this Understanding and the cov ered agreements." The same
Article provides that a panel is to make an "objective assessment of the matter before it ",
including:
[A]n objective assessment of the facts of the case and the applicability of and
conformity with the relevant covered agreemen ts, and make such other findings as
will assist the DSB in making the recommendations or in giving the rulings provided
for in the covered agreements.
7.17. Regarding the requirement to conduct an "objective assessment" of the facts, the Appellate
Body has state d that it is not for panels to undertake a de novo review, nor to show
total deference to the findings of the national authorities. 23 On the specific subject of the
assessment of evidence, the Appellate Body has stated that:
[I]n accordance with Article 11 of the DSU, a panel is required to "consider all the
evidence presented to it, assess its credibility, determine its weight, and ensure that
its factual findings have a proper basis in that evidence ". It must further provide in its
report "reasoned and ade quate explanations and coherent reasoning " to support its
findings. Within these parameters, "it is generally within the discretion of the [p]anel

20 Appellate Body Report, Colombia – Textiles, para. 5.20.
21 Appellate Body Report, US – Zeroing (EC) (Article 21.5 – EC), para. 277. See, e.g., Panel Report, US
– Large Civil Aircraft (2nd complaint), footnote 1005.
22 See e.g. China's response to Panel question No. 29(b), para. 147.
23 Appellate Body Report, EC – Hormones, para. 117.

to decide which evidence it chooses to utilize in making findings ". Although a panel
must consider evidence b efore it in its totality, and "evaluate the relevance and
probative force" of all of the evidence, a panel is not required "to discuss, in its report,
each and every piece of evidence " put before it, or to "accord to factual evidence of
the parties the same meaning and weight as do the parties".24 (footnotes omitted)
7.18. A panel's obligation to make an objective assessment of the matter also refers to the legal
assessment, that is, the analysis of the consistency or inconsistency of the challenged measures
with the applicable provisions.25 To that end, a panel is free "to use arguments submitted by any
of the parties – or to develop its own legal reasoning – to support its own findings and conclusions
on the matter under its consideration."26
7.1.4 Interpretation of the GATT 1994
7.19. Article 3.2 of the DSU states that the WTO dispute settlement system serves to "clarify the
existing provisions of those agreements in accordance with customary rules of interpretation of
public international law ". The "customary rules of interpr etation of public international law "
referred to by the DSU include Articles 31, 32 and 33 of the Vienna Convention on the Law of
Treaties (the Vienna Convention).
7.20. Article 31(1) of the Vienna Convention provides that "[a] treaty shall be interpreted in g ood
faith in accordance with the ordinary meaning to be given to the terms of the treaty in their
context and in the light of its object and purpose ".27 It is well established that a treaty interpreter
must "read all applicable provisions of a treaty in a w ay that gives meaning to all of them,
harmoniously".28
7.21. Under the terms of Article 31(2) of the Vienna Convention, the context for the purpose of
the interpretation of a treaty shall comprise the text of the relevant agreement, including its
preamble and ann exes, along with agreements or instruments made in connection with the
conclusion of the treaty. The text of the GATT 1994 includes not only the articles contained
therein, but also the Ad Notes contained in Annex I of the GATT. In this connection, we reca ll that
the articles of the GATT and the accompanying Ad Notes "have equivalent treaty status in that
both are treaty language which was negotiated and agreed at the same time ", and that they must
"be read together in order to give them proper meaning ".29 By virtue of paragraph 1(c)(vi) of the
GATT 1994, the Understanding on the Interpretation of Article XXVIII of the GATT 1994 (the
Understanding) is also an integral part of the GATT 1994. Thus, there can be no question that
Article XXVIII of the GATT 1994, and any related provisions, must be interpreted harmoniously
with the relevant Ad Notes and the Understanding.
7.22. In their submissions, the parties have referred to the Procedures for Negotiations under
Article XXVIII30 and the Procedures for Modification and Rectification of Schedules.31 Both of these
procedures were adopted in 1980, in the context of the GATT 1947. In these proceedings, diverse
views have been presented by the parties and third parties on the proper legal characterization of
these procedures. However, it is common ground between the parties and third parties expressing

24 Appellate Body Reports, US – COOL, para. 299.
25 Appellate Body Report, EC – Hormones, para. 118.
26 Appellate Body Report, EC – Hormones, para. 156.
27 With respect to good faith, the Appellate Body has indicated that "[t]hat means, inter alia, that terms
of a treaty are not to be interpreted based on the assumption that one party is seeking to evade its obligations
and will exercise its rights so as to cause injury to the other party" (Appellate Body Report, US – Anti-Dumping
28 Appellate Body Report, Korea – Dairy, para. 81.
29 Appellate Body Report, Japan – Alcoholic Beverages II, p. 24.
30 Procedures for Negotiations under Article XXVIII, adopted by the Council on 10 November 1980,
C/113 and Corr. 1, BISD 27S/26-29.
31 Decision of 26 March 1980, Procedures for Modification and Rectification of Schedules of Tariff
Concessions, GATT document L/4962, BISD S27/25

a view on the matter that, at a minimum, both procedures qualify as "decisions", "procedures" or
"customary practices" within the meaning of Article XVI:1 of the WTO Agreement.32
7.23. Article XVI:1 instructs that:
Except as otherwise provided under this Agreement or the Multilateral Trade
Agreements, the WTO shall be guided by the decisions, procedures and customary
practices followed by the CONTRACTING PARTIES to GATT 1947 and the bo dies
established in the framework of GATT 1947.
7.24. The Appellate Body has stated that "Article XVI:1 of the WTO Agreement … bring[s] the
legal history and experience under the GATT 1947 into the new realm of the WTO in a way that
ensures continuity and consis tency in a smooth transition from the GATT 1947 system ", and
"acknowledges the continuing relevance of that experience to the new trading system served by
the WTO".33
7.25. We agree with the parties and third parties that both sets of procedures qualify as
"decisions", "procedures" or "customary practices" within the meaning of Article XVI:1 of the WTO
Agreement. First, we see no basis to question that these procedures qualify either as "decisions",
"procedures" or "customary practices" within the meaning of Article XVI:1 of the WTO Agreement.
Second, it is clear that both sets of procedures were "followed by the CONTRACTING PARTIES to
GATT 1947 and the bodies established in the framework of GATT 1947 " since their adoption in
1980. Third, neither the WTO Agreement nor the GATT 1994 made provision for any new
procedures to supersede these procedures. To the contrary, the Procedures for Negotiations under
Article XXVIII continue to serve as the basis for all negotiations under Article XXVIII.34 These same
procedures ar e expressly referred to, in whole or in part, in several WTO instruments. 35 The
Procedures for Modification and Rectification of Schedules continue to apply under the WTO as
well. This is evidenced, inter alia, by the fact that they have been applied in sev eral prior disputes
by WTO panels and the Appellate Body.36
7.26. Article XVI:1 states that "the WTO " shall be guided by the decisions, procedures and
customary practices followed by the CONTRACTING PARTIES to GATT 1947 and the bodies
established in the framework of GATT 1947. This reference to the WTO would include the Dispute
Settlement Body, and we therefore see no reason why the sphere of application of Article XVI:1
would not extend to a dispute settlement panel. Accordingly, we consider that we are under a d uty
("shall be guided by ") to take account of these procedures in our interpretation of the relevant
provisions of the GATT 1994.
7.27. In this case, diverse views have been presented on whether one or both of these procedures
might additionally be characterize d as "decisions of the CONTRACTING PARTIES to GATT 1947 "
within the meaning of paragraph 1(b)(iv) of the GATT 1994 37, as a "subsequent agreement

32 China's response to Panel question No. 10, paras. 62, 70; EU's response to Panel question No. 10,
para. 33. In response to Panel question No. 1 to the third parties, Argentina, Brazil, Canada, Russia, and
Thailand expressed the view that both procedures fall within the scope of Article XVI:1 of the WTO Agreement.
33 Appellate Body Report, Japan— Alcoholic Beverages II, p. 14.
34 EU's first written submission, para. 99.
35 For example, see paragraphs 2 and 5 of the Understanding on the Interpretation of Article XXVIII;
paragraph 4 of the Understanding on the Interpretation of Article XXIV; paragraph 6 of the Marrakesh Protocol
to the GATT 1994; and the decisions adopted by the General Council for introducing Harmonized System
changes into the Schedules (i.e. the Decision of 30 November 2011, WT/L/831, footnote 3; the Decision of 18
July 2001, WT/L/407, footnote 10; the Decision of 15 December 2006, WT/L/673, footnote 4).
36 For example, see Panel Report, Russia – Tariff Treatment, para. 7.52; Panel Report, EC – Bananas III
(Article 21.5 – Ecuador II), para. 7.452; Appellate Body Reports, EC – Bananas III (Article 21.5 – Ecuador II) /
EC – Bananas III (Article 21.5 – US), para. 451.
37 China considers that the Procedures for Negotiations under Article XXVIII do not fall within the scope
of paragraph 1(b)(iv) of the GATT 1994, whereas the Procedures for Modification and Rectification of Schedules
do fall within the scope of paragraph 1(b)(iv) of the GATT 1994 (China's response to Panel question No. 10,
paras. 61, 64-70). The European Union considers that neither of these procedures falls within the scope of
paragraph 1(b)(iv) (EU's response to Panel question No. 10, paras. 34-39, and to No. 102(b)). In response to
Panel question No. 1 to the third parties, Argentina and the United States expressed the view that both
procedures fall within the scope of paragraph 1(b)(iv) of the GATT 1994; Canada and Russia expressed the
view that the Procedures for Negotiations under Article XXVIII do not, whereas the Procedures for Modification

between the parties regarding the interpretation of the treaty or the application of its provisions "
within the meaning of Article 31(3)(a) of the Vienna Convention, or form the basis for "subsequent
practice in the application of the treaty which establishes the agreement of the parties regarding
its interpretation" within the meaning of Article 31(3)(b) of the Vienna Convention.38 Recalling that
there is no disagreement that both procedures fall within the scope of Article XVI:1 of the WTO
Agreement, and thus no disagreement that the Panel should take them into account in its
examination of China's claims under the GATT 1994, we see no need to decide on whether any of
the foregoing may constitute additional legal justifications for taking the two procedures into
account.39 We note that there have been several prior cases in which panels and the Appellate
Body referred to these procedures without elaborating on their legal status.40
7.28. We recall that Article 32 of the Vienna Convention provides that recourse may be had to
supplementary means of interpretation, including the "preparatory work" of the treaty and "the
circumstances of its conclusion", in order to confirm the meaning resulting from the application of
Article 31, or to determine the meaning when the interpretation according to Article 31 leaves the
meaning ambiguous or obscure, or leads to a result that is mani festly absurd or unreasonable. 41
The Appellate Body has stressed that Article 32 does not define exhaustively the supplementary
means of interpretation, so that an interpreter has a certain degree of flexibility in considering
relevant supplementary means i n a given case so as to assist in ascertaining the common
intentions of the parties.42
7.1.5 Burden of proof
7.29. The DSU does not contain any express provision governing the burden of proof. However,
by application of general principles of law the WTO dispute settlem ent system has recognized that
the burden of proof lies with the party asserting a fact, whether that party is the complainant or
the responding Member.43
7.30. The burden of proving that a challenged measure is inconsistent with the relevant provisions
of the covered agreements lies with the complaining party. Once the complaining party has made
a prima facie case of such inconsistency, the burden shifts to the defending party, which must then
refute the alleged inconsistency.44 Precisely how much and precisely wh at kind of evidence will be

and Rectification of Schedules do; Thailand expressed the view that neither of the procedures falls within the
scope of paragraph 1(b)(iv).
38 China considers that both procedures constitute "subsequent agreements" within the scope of Article
31(3)(a) of the Vienna Convention (China's response to Panel question No. 10, paras. 63, 71). The European
Union considers that it is "debatable whether they can be regarded as a 'subsequent' agreement within the
meaning of Article 31(3)(a)" of the Vienna Convention, and that "[g]iven that, in any event, the Procedures fall
clearly within the scope of Article XVI:1 of the WTO Agreement, it seems that the Panel need not reach this
issue" (EU's response to Panel question No. 102(c), para. 74). Without reference to Article 31(3)(b) of the
Vienna Convention, the European Union observes in respect of the Procedures for Negotiations under Article
XXVIII that "[a]ll renegotiations under Article XXVIII are now being conducted under those procedures" (EU's
first written submission, para. 99).
In response to Panel question No. 1 to the third parties, Argentina and Thailand expressed the view that
neither of the procedures falls within the scope of Article 31(3)(a) or 31(3)(b) of the Vienna Convention;
Canada expressed the view that the Procedures for Negotiations under Article XXVIII constitute a subsequent
agreement in the context of Article 31(3)(a) of the Vienna Convention, and that because Members have
followed the Procedures "they have created a significant body of subsequent acts that Canada submits
constitute subsequent practice" under Article 31(3)(b) of the Vienna Convention; Russia stated that the
Procedures for Modification and Rectification of Schedules may constitute a "subsequent agreement" within the
meaning of Article 31(3)(a) or (b) of the Vienna Convention.
39 If a claim of violation of either of these procedures was properly before the Panel, it would then be
necessary to resolve whether either of these procedures is part of a "covered agreement" as defined in
Appendix 1 to the DSU. To resolve that issue, we would need to arrive at a conclusion as to whether either of
these procedures are "decisions of the CONTRACTING PARTIES to GATT 1947" within the meaning of
paragraph 1(b)(iv) of the GATT 1994. However, for the reasons set out further below in section 7.3.3.1, we do
not consider any such claim to be properly before the Panel in this case.
40 See footnote 36.
41 Appellate Body Report, EC – Chicken Cuts, para. 282.
42 Appellate Body Report, EC – Chicken Cuts, para. 283.
43 Appellate Body Report, US – Wool Shirts and Blouses, pp. 12-16.
44 Appellate Body Report, EC – Hormones, para. 98.

required for the complaining party to establish its case will necessarily vary from measure to
measure, provision to provision and case to case.45 In any event, it should be borne in mind that:
A prima facie case must be based on "evidence and legal argument" put forward by
the complaining party in relation to each of the elements of the claim. A complaining
party may not simply submit evidence and expect the panel to divine from it a claim
of WTO -inconsistency. Nor may a complain ing party simply allege facts without
relating them to its legal arguments.46
7.31. In the matter before us, the burden is on China to persuade the Panel that the measures at
issue are inconsistent with the provisions of the GATT 1994 allegedly violated.
7.32. In thi s dispute, China claims that all ten of the TRQs arising from the First and Second
Modification Packages are inconsistent with the GATT 1994 and for that reason, in order to meet
its burden of proof, China is required to prove its claims in respect of each of the TRQs at issue.
The European Union requests the Panel to make, "in respect of each claim, a separate finding with
regard to each of the TRQs at issue ".47 By this, we understand the European Union to mean that
"China should not be allowed to make its case in respect of a TRQ on the basis of argument or
evidence pertaining to another TRQ ".48 We do not understand the European Union to suggest that
our Report should be structured so as to present a separate, individualized analysis of each of the
TRQs at i ssue under each of the different GATT provisions at issue. Leaving aside the degree of
repetition that this would involve in a case involving ten different TRQs that share many common
features49, neither party has structured its own submissions in that way. Of course, where claims
or arguments are specific to only one or a few of the TRQs, our analysis will make that clear.
7.1.6 Request for enhanced third-party rights
7.33. On 17 December 2015, Brazil, Canada and Thailand each requested the Panel to grant
enhanced third-party rights in these proceedings. The scope of the rights requested by these three
third parties was similar, but not identical. The rights requested were the following: (i) the right to
be present for the entirety of all substantive meetings with the parties50; (ii) the right to receive all
submissions and statements of the parties, including responses to questions from the Panel,
throughout the proceedings51; (iii) the right to respond to questions from the Panel52; and, (iv) the
right in the substantive meetings to ask questions, at the invitation of the Panel, to the parties or
the other third parties without any obligation to respond on the part of the parties or the other
third parties.53
7.34. Brazil and Thailand based their requests on the understanding t hat the measures
challenged by China concern the TRQ shares that were allocated to them by the European Union.
Furthermore, they note that these TRQs were adopted by the European Union to implement the
separate bilateral agreements reached with Brazil and Thailand as a result of negotiations to

45 Appellate Body Report, US – Wool Shirts and Blouses, p. 14.
46 Appellate Body Report, US – Gambling, para. 140. (emphasis original, footnotes omitted)
47 EU's first written submission, para. 2. See also EU's opening statement at the first meeting of the
Panel, para. 9.
48 EU's first written submission, para. 2.
49 Panels may structure their reports in a manner that avoids repetition. This is commonly achieved by
grouping together measures or claims that raise the same issues. See e.g. Panel Reports, Guatemala – Cement
II, para. 7.5; EU – Footwear, para. 7.114. Naturally, care must be taken to ensure that such grouping does not
lead to important differences being obscured. Appellate Body Report, Korea – Taxes on Alcoholic Beverages,
para. 142.
50 Request by Brazil (Letter from Brazil dated 17 December 2015, p. 2), request by Canada (Letter from
Canada dated 17 December 2015, p.2) and request by Thailand (Letter from Thailand, p. 7).
51 Request by Brazil (Letter from Brazil dated 17 December 2015, p. 2), request by Canada (Letter from
Canada dated 17 December 2015, p.2) and request by Thailand (Letter from Thailand dated 17 December
2015, p. 7). Thailand also requested the right to receive the exhibits related to all submissions and statements
by the parties.
52 Brazil requested the right to respond to questions from the Panel "whenever it finds appropriate"
(Letter from Brazil dated 17 December 2015, p. 2). Thailand requested the right to respond to questions from
the Panel "during the proceedings, up to immediately prior to the issuance of the interim report" (Letter from
Thailand dated 17 December 2015, p. 7).
53 Request by Thailand (Letter from Thailand dated 17 December 2015, p. 7).

modify the European Union 's concessions pursuant to Article XXVIII of the GATT 1994. 54 Brazil
additionally points out that China's panel request specifically referred to these bilateral agreements
in the context of identifying the measures at issue.55 Brazil and Thailand consider that any possible
modification or withdrawal of the TRQs negotiated with the European Union as a result of the
Panel's rulings could negatively affect their economic interests, as well as their legal rights
pursuant to these bilateral agreements. 56 In addition, both Brazil and Thailand noted that the
negotiations under Article XXVIII of the GATT 1994 were related to the European Union 's
implementation of the DSB 's recommendations and rulings in EC – Chicken Cuts, a prior dispute
brought against the European Union by Thailand and Brazil. Finally, Thailand and Brazil submit
that they are significant exporters of poultry products, both globally and to the European Union. 57
In these circumstances, Braz il argued that it had "a direct and concrete interest in participating
appropriately in this dispute"58, and Thailand likewise argued that it "ha[d] a unique economic and
legal interest" in these proceedings.59
7.35. Canada requested enhanced third-party rights on the basis that the dispute raises important
issues for the modification of tariff commitments and the administration of TRQs. Since Canada
administers TRQs in the agriculture sector, it argued that "the outcome of this dispute could have
important legal and policy implications for Canada".60
7.36. The European Union did not object to Brazil 's, Canada 's and Thailand 's requests for
enhanced third-party rights.61 However, China considered that the circumstances of this dispute
did not warrant the grant of enhanced t hird-party rights, as requested by Brazil, Canada or
Thailand.62 China noted that previous panels have only granted requests for additional third -party
rights when the requesting third party could show "specific reasons " that differentiated it from
other th ird parties to the proceedings, all of which may be presumed to have a "substantial
interest" in the proceedings before a panel.63 According to China, a potential and indirect impact of
a panel ruling on the economic interests of the third party making a re quest for enhanced rights,
as in the present case, is not a sufficient reason to grant those rights.64
7.37. The Panel considered the requests of Brazil, Canada and Thailand, and the views of the
parties. On 3 February 2016, the Panel informed the parties and third parties that it had decided to
grant the following enhanced rights to all third parties in these proceedings:
a. the right to be present and observe the entirety of the first and second substantive
meetings with the parties; and
b. the right to receive the p arties' first and second written submissions, written responses
to questions and comments thereupon, and related exhibits.65
7.38. In its communication, the Panel indicated that it would provide its reasoning on this matter
in its Report. Our reasons are as follows.
7.39. The Panel recalls that Articles 10.2 and 10.3 of the DSU and paragraph 6 of Appendix 3 of
the DSU provide for the rights of third parties in panel proceedings. Pursuant to these provisions,
third parties have the right to receive the parties ' first written submission to the panel, and to
present their views orally to the panel during the first substantive meeting. It is well established

54 Letter from Brazil dated 17 December 2015, p.1; Letter from Thailand dated 17 December 2015,
paras. 2.2, 2.3 and 4.6.
55 See China's request for the establishment of a panel, Section I, items (i) and (ii).
56 See letter from Brazil dated 17 December 2015, pp. 1-2; Letter from Thailand dated 17 December
2015, para. 4.6.
57 Letter from Brazil dated 17 December 2015, p. 2; Letter from Thailand dated 17 December 2015,
para. 4.2.
58 Letter from Brazil dated 17 December 2015, p. 2.
59 Letter from Thailand dated 17 December 2015, para. 1.1.
60 Letter from Canada dated 17 December 2015, p. 1.
61 Letter from the European Union dated 12 January 2016.
62 Letter from China dated 19 January 2016, para. 1.
63 Letter from China dated 19 January 2016, para. 3, citing to Panel Report, US – Large Civil Aircraft (2nd
Complaint), para. 7.16.
64 Letter from China dated 19 January 2016, para. 7.
65 Letter from the Panel to the parties and third parties dated 3 February 2016.

that a panel may exercise the discretion afforded to it under Article 12.1 of the DSU 66 to grant
enhanced third-party rights in a dispute, provided that the additional rights are consistent with the
provisions of the DSU and the principles of due process. 67 Panels have exercised this discretion
where there were special circumstances that justified the grant of enhanced thi rd-party rights. We
consider that decisions on whether to grant enhanced third-party rights should be made on a case-
by-case basis, and that any such decision should be informed by the factors considered in previous
disputes.68 We also recall the need to maintain the distinction drawn in the DSU between the rights
afforded to parties and those afforded to third parties.69
7.40. One of the special circumstances that have led previous panels to grant enhanced third -
party rights was when "third parties enjoyed certai n economic benefits that were directly
implicated by the measure at issue ".70 This was the basis for granting enhanced third -party rights
in the proceedings in EC – Bananas III and EC – Tariff Preferences.
7.41. We consider that, for present purposes, there are significant similarities between the
measures at issue in EC – Bananas III and the measures at issue in the current dispute. In EC –
Bananas III, the measures at issue included the allocation of a TRQ to certain countries, with ACP
countries benefitting fr om a relatively large share of the lower in -quota rate.71 The complainants
claimed that the TRQ shares were determined and allocated in a discriminatory manner, and
violated the European Union's obligations under Article XIII of the GATT 1994. 72 The panel agreed
to grant a request for enhanced third -party rights made by the countries benefitting from the TRQ
allocation on the basis that, among other considerations, "the economic effect of the disputed EC
banana regime on certain third parties appeared to be v ery large", and "the economic benefits to
certain third parties from the EC bananas regime were claimed to derive from an international
treaty between them and the European Communities ".73 The international treaty referred to was
the Bananas Framework Agree ment signed between the European Communities and certain ACP
countries that established a TRQ with respect to the importation of bananas and the country -
specific allocation of the TRQ.74
7.42. We consider that, for present purposes, there are also some significan t similarities between
the measures at issue in EC – Tariff Preferences and the measures at issue in the current dispute.
In EC – Tariff Preferences, certain third parties were beneficiaries of the tariff preference scheme
at issue in that case. They reque sted enhanced third-party rights because, according to them, the
tariff preferences in dispute determined the conditions of access of their exports to the European
market.75 The panel granted those rights considering, among others factors, the economic impact
of the tariff preference programmes on third -party developing countries. The panel found it
significant that "those third parties that are beneficiaries under the EC 's [tariff preferences] and
those that are excluded have a significant economic interest in the matter before the Panel."76
7.43. The TRQs at issue in this dispute, as is generally the case for all TRQs, comprise a two -
tiered tariff rate in which the in -quota tariff rate is lower than the out -of-quota tariff rate. The
TRQs have been allocated by the European Union in varying amounts among supplying countries.
More precisely, under most of the TRQs at issue, Brazil and Thailand have each been allocated
their own country-specific share of the TRQ, whereas all other Members are able to export at the
lower in-quota tariff rate only within the "all others" share that is provided for under the relevant

66 Article 12.1 of the DSU provides that "[p]anels shall follow the Working Procedures in Appendix 3
unless the panel decides otherwise after consulting the parties to the dispute."
67 Appellate Body Reports, US – 1916 Act, para. 150, EC – Hormones, para. 154, and US – FSC
(Article 21.5 – EC), para. 243.
68 See Panel Report, China – Rare Earths, para. 7.7.
69 Panel Reports, US – 1916 Act (EC), para. 6.33, and US – 1916 Act (Japan), para. 6.33, and EC –
Export Subsidies on Sugar (Australia), para. 2.5.
70 Panel Report, China – Rare Earths, para. 7.8. Other circumstances mentioned by that panel are "(ii)
the economic and social impact of the measures in third countries; (iii) whether enhanced third-party rights
had been granted in previous disputes relating to the measure; (iv) the impact of the dispute on other
Members maintaining similar measures; (v) the similarity of the dispute to related disputes; and/or (vi) the
71 Panel Report, EC – Bananas III, para. 7.64.
72 Panel Report, EC – Bananas III, paras. 4.9, 4.10.
73 Panel Report, EC – Bananas III, para. 7.8.
74 Panel Report, EC – Bananas III, para. 3.30.
75 Panel Report, EC – Tariff Preferences, Annex A, para. 1.
76 Panel Report, EC – Tariff Preferences, Annex A, para. 7.

TRQs. What this means is that Brazil and Thailand are entitled to export the volumes set out in
their country specific shares at the lower, in-quota tariff rate, as compared with other Members. In
this case, therefore, Brazil and Thailand enjoy economic benefits that are directly implicated by the
measures at issue. China directly challenges the allocation of shares under the TRQs at issue. In
this regard, Chi na's panel request claims that the tariff rates and the TRQs that the European
Union negotiated with Brazil and Thailand violate several provisions of the GATT 1994, and
contains ten different claims of violation of the GATT 1994 arising from "[t]he allocation of all or
the vast majority of the TRQs to two of the WTO Members" (i.e. Brazil and Thailand).77
7.44. In the Panel 's view, the foregoing is sufficient to establish that Thailand and Brazil enjoy
certain economic benefits that are directly implicated by the measures at issue. In addition, these
benefits are derived from international agreements entered into between these Members and the
European Union. We also note that one of the disputing parties indicated that it had no objection
to the Panel granting enh anced third-party rights. We consider that the foregoing constitutes a
prima facie basis for concluding that there are special circumstances that support the grant of
enhanced third-party rights to Brazil and Thailand in these proceedings.
7.45. China sought t o distinguish the present case from the circumstances in EC – Bananas III
and EC – Tariff Preferences . China noted that in both cases, the measure at issue was "a
preferential scheme the withdrawal of which would have a direct and automatic impact on the
TRQs afforded by the European Union to other exporting countries ".78 China further argued that
unlike the claims in EC – Bananas III, China in the current proceedings is not challenging Brazil 's
and Thailand's "share in the EU TRQ allocation as such ". Rather, China states that it "considers
that the EU should have negotiated or consulted with China as [a] country with principal or
substantial supplying interests and that in the determination of the global TRQ and the attribution
of the TRQ to China individual ly or as part of the all other countries, the impact of the EU 's SPS
measures on Chinese poultry meat products should have been taken into account".79
7.46. In our view, China has not explained how or why the modification or withdrawal of the
TRQs, or their all ocation among different supplying countries, would not have a "direct and
automatic impact " on the TRQ shares allocated to Brazil and Thailand. Furthermore, although
China states that it is not challenging Brazil 's and Thailand 's "share in the EU TRQ alloc ation as
such", as we have already noted, China's panel request contains a number of claims based on "the
allocation of all or the vast majority of the TRQs to two of the WTO Members " (Brazil and
Thailand). We have no intention, in the context of deciding on the preliminary procedural question
of whether to grant enhanced third -party rights, of either prejudging the merits of China 's claims,
or opining on how the European Union might potentially bring its measures into conformity with
the GATT 1994 should C hina's claims be upheld. However, given the way that China has defined
the alleged violations, it stands to reason that compliance would likely entail either a reduction of
the share of the TRQs currently allocated to Brazil or Thailand in order to allow f or a country -
specific share for China or a relatively larger share of the "all others" category to accommodate
China's exports, the withdrawal of country -specific shares and the opening of the TRQ on a global
basis, or even the complete withdrawal of the T RQs. In any of those scenarios, there would be a
"direct and automatic impact" on the TRQ shares allocated to Brazil and Thailand.
7.47. In light of the foregoing, the Panel decided that there were special circumstances that
warranted the granting of enhanced th ird-party rights in these proceedings. In accordance with
previous practice and as a matter of due process 80, the Panel decided to extend the enhanced
rights to all third parties to this dispute. For this reason, combined with the fact that Canada did
not request any enhanced third -party rights going beyond those requested by Brazil or Thailand,
the Panel did not consider it necessary to separately examine Canada's request for enhanced third-
party rights.

77 See China's request for the establishment of a panel, pp. 3-5, items A(iii), A(iv), A(v), A(vi), A(vii),
and B(iii), B(iv), B(v), B(vi) and B(vii).
78 Letter from China dated 19 January 2016, para. 8.
79 Letter from China dated 19 January 2016, paras. 13, 16.
80 Panel Report, EC – Tariff Preferences, Annex A, para. 7. See also Panel Report, EC – Export Subsidies
on Sugar, para. 2.7 and Panel Report, Dominican Republic — Safeguard Measures, para. 1.8 (enhanced third-
party rights not granted in that case).

7.48. As noted above, the Panel decided to grant all third parties the right to be present and
observe the entirety of the first and second substantive meetings with the parties, and the right to
receive the parties ' first and second written submissions, written responses to questions and
comments thereupon, and related exhibits. The Panel considered that in the circumstances of this
case, the granting of these additional rights to third parties would not impose additional burdens
on the parties, the Panel or the Secretariat, and would not result in any delays.
7.49. However, the Panel declined to grant third parties the right in the substantive meetings to
ask questions to the parties or the other third parties. In the Panel 's view, granting such a right to
third parties would risk blurring the distinction between thir d parties and parties established in the
DSU. Nor did the Panel consider it necessary to grant third parties the right to respond to written
questions from the Panel during the proceedings, up to the issuance of the interim report. In the
Panel's view, thi s would be redundant in light of paragraph 11 of the Working Procedures, which
already states that "[t]he Panel may at any time pose questions to the parties and third parties,
orally or in writing, including prior to each substantive meeting."81
7.2 The tariff rate quotas and the SPS measures
7.2.1 The First Modification Package
7.50. On 7 June 2006, the European Union notified WTO Members of its intention to modify its
concessions on certain poultry products, pursuant to Article XXVIII:5 of the GATT 1994. 82 The
notification covered the products classified in the following tariff lines: (i) 0210 99 39 83 (salted
poultry meat); (ii) 1602 31 (prepared turkey meat); and (iii) 1602 32 19 (cooked chicken meat).84
In this notification, the European Union stated that it was "prepared to enter into negotiations and
consultations with the appropriate Members under Article XXVIII for the modification of
concessions with respect to the above -mentioned tariff lines".85 The European Union's notification
indicated that it intended to "replace with tariff rate quotas " the concessions on the above -
mentioned tariff lines. 86 The notification provided import statistics by country of origin, for the
period 2003-2005, for each of the tariff lines covered by the notification. These statistics indicated
that Brazil accounted for the largest share of imports into the European Union of products under
tariff lines 0210 99 39 and 1602 3187, and that Thailand accounted for the largest share of imports
to the European Union of products under tariff line 1602 32 19.88
7.51. On 24 July 2006, Brazil reserved its rights under Article XXVIII of the GATT 1994 to enter
into negotiations or consultations with the European Union for the modifications of these
concessions, claiming a principal supplying interest on tariff lines in Harmonized System
headings 0210 and 1602.89 On 11 August 2006, Thailand requested to "enter into negotiations on
compensatory adjustments " with the European Union, claiming a principal supplying interest in
products falling under tariff lines 0210 99 39 and 1602 32 19.90
7.52. The European Union agreed to enter into negotiations with Brazil and Thailand, recognizing
that Brazil held a principal supplying interest in tariff lines 0210 99 39 and 1602 31 and a
substantial su pplying interest in tariff line 1602 32 19, and recognizing that Thailand held a

82 Article XXVIII:5 Negotiations, Schedule CXL – European Communities, G/SECRET/25, circulated on 15
June 2006 ("G/SECRET/25")(Exhibit CHN-15). In its legislation, the European Union distinguishes between
fresh poultry meat and poultry meat products (EU's first written submission, para. 71). In this Report, we use
the term "poultry meat" to cover these two categories.
83 The notification indicated that item 0210 90 20 was "now 0210 99 39".
84 The descriptions of the products are taken from Council Regulation (EC) No 580/2007 of 29 May 2007
concerning the implementation of the Agreements in the form of Agreed Minutes between the European
Community and Brazil, and between the European Community and Thailand, pursuant to Article XXVIII of GATT
1994 amending and supplementing Annex I to Regulation (EEC) 265/87, OJ L 138/1 of 30.05.2007 (Exhibit
CHN-22).
85 G/SECRET/25, p. 2 (Exhibit CHN-15).
86 G/SECRET/25, p. 2 (Exhibit CHN-15).
87 G/SECRET/25, pp. 3-4 (Exhibit CHN-15).
88 G/SECRET/25, p. 5 (Exhibit CHN-15).
89 Letter from the Permanent Mission of Brazil to the United Nations in Geneva to Ambassador Trojan,
Permanent Representative of the European Communities to the WTO, dated 24 July 2006 (Exhibit EU-1).
90 Letter from the Permanent Mission of Thailand to the WTO to Ambassador Trojan, Permanent
Representative of the European Communities to the WTO, dated 11 August 2006 (Exhibit EU-2).

principal supplying interest in tariff line 1602 32 19 and a substantial supplying interest in tariff
lines 0210 99 39 and 1602 31.91
7.53. On 6 September 2006, China requested the European Union to enter into bilateral
negotiations on the proposed modifications. China claimed to hold a substantial supplying
interest.92 The European Union informed China that it did not recognize its claim of substantial
supplying interest, "given that China [did] not have a significant shar e in the trade affected by
these concessions".93 China subsequently requested the European Union to reconsider its position,
arguing that its smaller share in the European poultry market was due to the imposition by the
European Union of an import ban on Ch ina's poultry products over the last five years. 94 The
European Union reiterated its refusal to recognize China 's claim of substantial interest, noting that
China did not "have a significant share in the trade affected by the modification of the concessions
on these products".95
7.54. On 26 October 2006, the European Union concluded an agreement with Brazil pursuant to
Article XXVIII of the GATT 1994. 96 On 23 November 2006, the European Union concluded an
agreement with Thailand, also pursuant to Article XXVIII of the GATT 1994. 97 These agreements
were approved by the European Council in Council Decision 2007/360/EC 98 and implemented
through several regulations:
i. Council Regulation (EC) No 580/2007 99, which amends the tariff legislation of the
European Union and sup plements it with the duties and volumes resulting from the
agreements with Brazil and Thailand;
ii. Commission Regulation (EC) No 616/2007, which opens the TRQs for the products
covered by the First Modification Package originating in Brazil, Thailand, ot her third
countries, and provides for their administration100; and
iii. Commission Regulation (EC) 1549/2007, which amends Commission Regulation (EC)
No. 616/2007.101

91 EU's first written submission, paras. 20-25 and Council Decision 2007/360/EC of 29 May 2007 on the
conclusion of Agreements in the form of Agreed Minutes between the European Community and the Federative
Republic of Brazil, and between the European Community and the Kingdom of Thailand pursuant to
Article XXVIII of the General Agreement on Tariffs and Trade 1994 (GATT 1994) relating to the modification of
concessions with respect to poultry meat, OJ L 138/10 of 30.5.2007, 3rd preamble (Exhibits CHN-20 and CHN-
21 and Exhibit EU-34).
92 Note Verbale from China to the EU, 6 September 2006 (Exhibit CHN-16). See also China's opening
statement at the second meeting of the Panel, para. 25.
93 Letter from Amb. Trojan to Amb. Sun (18 October 2006) (Exhibit CHN-17).
94 Letter from Amb. Sun to Amb. Trojan (16 November 2006) (Exhibit CHN-18); see also Letter from
Vice Minister Yi to David O'Sullivan, Director-General for Trade, European Commission (19 April 2007) (Exhibit
CHN-19).
95 Letter from David O'Sullivan to Vice Minister Yi (8 May 2007) (Exhibit EU-28). The EU referred the
rules set out in Article XXVIII of the GATT 1994 and stated that "China is not in the same situation as certain
other WTO Members (Brazil, Thailand) who historically have delivered substantial quantities of chicken meat
into the European Union and were therefore invited to negotiate compensation in return for lost market access
resulting from the tariff increase."
96 Agreed Minutes initialled in Geneva by J.L Demarty (Commission of the EC) and Roberto C. De
Azevedo (Delegation of Brazil), 26 October 2006 (Exhibit EU-3); EU's first written submission, para. 21. This
agreement was revised on 6 December 2006 (EU's first written submission, para. 21 and Agreed Minutes
initialled in Geneva by J.L Demarty (Commission of the EC) and Roberto C. De Azevedo (Delegation of Brazil),
6 December 2006 (Exhibit EU-5).
97 Agreed Minutes initialled in Bangkok by F. Coturni (Commission of the EC) and B. Chutima
(Delegation of Thailand), 23 November 2006 (Exhibit EU-4).
98 Exhibits CHN-20 and CHN-21 and Exhibit EU-34.
99 Exhibit CHN-22.
100 Commission Regulation (EC) No 616/2007 of 4 June 2007 opening and providing for the
administration of Community tariff quotas in the sector of poultry meat originating in Brazil, Thailand and other
third countries, OJ L 142/5 of 5.6.2007 (Exhibit CHN-23).
101 Commission Regulation (EC) No 1549/2007 of 20 December 2007 amending Regulation (EC)
616/2007 opening and providing for the administration of certain Community tariff quotas in the sector of
poultry meat originating in Brazil, Thailand and other third countries, OJ L 337/75 of 21.12.2007 (Exhibit CHN-
24).

7.55. These measures opened the TRQs for the importation of products classified under the three
tariff lines covered by the First Modification Package, and provided for their administration. These
TRQs replaced the tariff rates previously applicable to these products.102
7.56. The total amount of the TRQs and their allocation were determined by the European Union
in agreement with Brazil and Thailand in the context of the negotiations held pursuant to
Article XXVIII:5 of the GATT 1994. According to the European Union, it sought to calculate the
total amounts of the TRQs "on the basis of the guidelines provide d in paragraph 6 of the
Understanding on the Interpretation of Article XXVIII of the GATT 1994, using as a reference
period the three -year period immediately preceding the notification of the European Union 's
intention to modify the concessions, i.e. 2003-2005".103
7.57. With respect to tariff line 0210 99 39, the European Union agreed, at the request of Brazil
and Thailand, to calculate the total amount of the TRQ on the basis of the average import volume
for the period 2000 -2002, increased by the annual average growth rate for the same period. This
period was chosen instead of the period 2003 -2005, as this was a period during which the imports
of products originating from Brazil and Thailand were restricted. 104 The European Union allocated
that TRQ among supplying countries on the basis of the average import shares held by Brazil,
Thailand, and other supplying countries during the period 2000 -2002.105 The total amount of the
TRQ applicable to products classified under tariff line 1602 31 was calculated using the refer ence
period 2003-2005, based on the import volume for calendar year 2005 increased by 10%. 106 The
European Union allocated that TRQ among supplying countries on the basis of the import shares
for 2005.107 The total amount of the TRQ applicable to tariff line 1602 32 19 was calculated "on the
basis of the import volume for the last twelve -month period, instead of the last calendar year,
preceding the initiation of the negotiations (i.e. July 2005-June 2006) increased by the growth rate
of imports during the same period".108 According to the European Union, Thailand requested the
use of this formula, which led to a TRQ amount that is greater than the amount that would have
resulted from the application of the formulas in paragraph 6. 109 The European Union allocated that
TRQ among supplying countries on the basis of the import shares for the same period, July 2005 -
June 2006.
7.58. The tariff rates, the total volume of the TRQs and their allocation among supplying countries
are as follows110:
Tariff line Prior tariff
rate
New in-
quota tariff
New out-of-
quota tariff
TRQ volume
(metric
tons)
Allocation
(metric tons)
Allocation
share
0210 99 39 15.4% 15.4% 1,300
EUR/MT

264,245 Brazil:
170,807
Thailand:
92,610
Others:
828
Brazil:
64.64%
Thailand:
35.05%
Others:
0.031%
1602 31 8.5% 8.5% 1,024
EUR/MT

103,896 Brazil:
92,300
Others:
11,592
Brazil:
88.84%
Others:
11.16%
1602 32 19 10.9% 8.0% 1,024
EUR/MT

250,953 Brazil:
79,477
Thailand:
160,033
Others:
11,443
Brazil:
31.67%
Thailand:
63.77%
Others:
4.56%

102 China's first written submission, para. 136; EU's first written submission, para. 30.
103 EU's first written submission, para. 32.
104 EU's first written submission, para. 33. The restrictions applicable to these products resulted from
the changes to the EU's customs classification, which were the subject of the EC – Chicken Cuts disputes.
105 EU's first written submission, para. 33.
106 EU's first written submission, para. 34.
107 EU's first written submission, para. 34.
108 EU's first written submission, para. 35.
109 EU's first written submission, paras. 35-36.
110 EU's first written submission, Table EU-2: Old and New Tariff Bindings in the First Modification
Package (para. 30) and Table EU-3: Agreed TRQs in the First Modification Package (para. 31).

7.59. The TRQs under the First Modification Package entered into force on 4 June 2007. 111 Two
years later, on 27 May 2009, the European Union notified the WTO that it had concluded its
negotiations for the modification of concessions under Article XXVIII of the GATT 1 994.112 The
notification referred to the bilateral agreements concluded with Brazil and Thailand, indicated the
bound rates that were to be modified on the products, and contained the final report of
negotiations under Article XXVIII of the GATT 1994. The no tification was circulated to WTO
Members on 29 May 2009. 113 The European Union explained that the delay in notifying the
completion of the negotiations and the bilateral agreements with Brazil and Thailand, which were
concluded in 2006, was "largely due to an administrative oversight".114
7.60. In the notification, the European Union stated that it also held consultations with Argentina,
China, and the United States. However, the European Union determined that these Members "did
not have either Initial Negotiating Ri ghts, principal supplying interest or substantial interest in any
of the products that the EC had notified in its proposal for modifying existing bindings ", and
therefore "there was no need to hold substantive Article XXVIII negotiations " with them.115 The
notification states that "[s]ince no other WTO Member expressed its interest to enter into
negotiations, the EC considers its negotiations under Article XXVIII to be completed."116
7.61. On 24 March 2014, the European Union communicated for certification a revised schedule of
concessions which contained "consolidations, modifications and rectifications in this Schedule, in
relation to the previous certified CXL schedule of the EU " (Schedule CXL – EC15).117 The draft
schedule of the European Union (Schedule CLXXIII – EU25) was circulated to the WTO Membership
on 25 April 2014, in document G/MA/TAR/RS/357. 118 The European Union confirmed in these
proceedings that the modifications resulting from the First Modification Package are included in this
draft schedule.119 At the time of this Report, the draft schedule has not yet been certified.120
7.2.2 The Second Modification Package
7.62. On 11 June 2009, the European Union notified WTO Members of its intention to modify its
tariff concessions applicable to a number of other poultry product s pursuant to Article XXVIII:5 of
the GATT 1994. 121 The products covered by the notification were those classified in tariff lines:
(i) 1602 20 10 (goose duck or liver); (ii) 1602 32 11 (processed chicken meat, uncooked,
containing 57% or more by weight of poultry meat or offal); (iii) 1602 32 30 (processed chicken
meat, containing 25% or more but less than 57% by weight of poultry meat or offal); (iv) 1602 32
90 (processed chicken meat, containing less than 25% by weight of poultry meat or offal);
(v) 1602 39 21 (processed duck, geese, guinea fowl meat, uncooked, containing 57% or more by
weight of poultry meat or offal); (vi) 1602 39 29 (processed duck, geese, guinea fowl meat,
cooked, containing 57% or more by weight of poultry meat or offal); (vii) 1602 3 9 40 (processed
duck, geese, guinea fowl meat, containing 25% or more but less than 57% by weight of poultry
meat or offal ); and (viii) 1602 39 80 (processed duck, geese, guinea fowl meat, containing less
than 25% by weight of poultry meat or offal).122

111 Commission Regulation (EC) No 616/2007 of 4 June 2007 opening and providing for the
administration of Community tariff quotas in the sector of poultry meat originating in Brazil, Thailand and other
third countries, OJ L 142/5 of 5.6.2007 (Exhibit CHN-23).
112 G/SECRET/25/Add.1, 29 May 2009 (Exhibit EU-6).
113 G/SECRET/25/Add.1., 29 May 2009 (Exhibit EU-6).
114 EU's response to Panel question No. 53, para. 156.
115 G/SECRET/25/Add.1, 29 May 2009, page 6 (Exhibit EU-6).
116 G/SECRET/25/Add.1, 29 May 2009, page 6 (Exhibit EU-6).
117 G/MA/TAR/RS/357, 25 April 2014, page 1.
118 A corrigendum (G/MA/TAR/RS/357/Corr.1) was circulated on 19 February 2015, an addendum
(G/MA/TAR/RS/357/Add.1) was circulated on 1 September 2016, and a corrigendum to the addendum was
circulated on 19 September 2016.
119 EU's response to Panel question No. 54, para. 158.
120 The European Union confirmed that the certification process of the changes to the draft schedule
communicated on 24 March 2014 is ongoing (EU's first written submission, para. 299).
121 Article XXVIII:5 Negotiations, Schedule CXL – European Communities, G/SECRET/32, dated 11 June
2009 and circulated 16 June 2009 ("G/SECRET/32") (Exhibit CHN-25).
122 The product descriptions of tariff lines 1602 32 11, 1602 32 30, 1602 32 90, 1602 39 21 and 1602
39 29 are taken from Exhibits CHN-28 and CHN-35, as well as China's second written submission, para. 6. The
product description of tariff line 1602 20 10 is taken from the European Union's Customs Code available at
http://ec.europa.eu.

7.63. In the notification, the European Union noted that it was "prepared to enter into
negotiations and consultations with the appropriate Members under Article XXVIII for the
modification of concessions with respect to the above -mentioned tariff lines ".123 The notification
provided import statistics by country of origin, for the period 2006 -2008, for each of the products
classified under the tariff lines covered by the notification. These statistics indicated that Thailand
accounted for the largest share of imports into the European Union of products under tariff lines
1602 32 90, 1602 39 21, 1602 39 29, 1602 39 40, and 1602 39 80 124, and that Brazil accounted
for the largest share of imports into the European Union of products under tariff lines 1602 32 11
and 1602 32 30.125
7.64. On 18 August 2009, Thailand requested to enter into negotiations with the European Union,
claiming a "principal" supplying interest in products classified under five tariff lines (1602 32 90,
1602 39 21, 1602 39 29, 1602 39 40 and 1602 39 80), and a "substantial interest" in products
classified under one tariff line (1602 32 30). 126 On 8 September 2009, Brazil sent a letter to the
European Union claiming a principal supplying interest in products classified under two tariff lines
(1602 32 11 and 1602 32 30), and a substantial interest in products falling under tariff line 1602
32 90.127 Brazil reserved its rights to enter into negotiations or consultations with the European
Union regarding the modification of these concessions.
7.65. The European Union held bil ateral negotiations with Brazil and Thailand. According to the
European Union, negotiations were completed "at the negotiators' level" on 23 September 2011.128
The agreement resulting from the Article XXVIII negotiations with Thailand was initialled on
22 November 2011, and the agreement resulting from the Article XXVIII negotiations with Brazil
was initialled on 7 December 2011. 129 The two agreements were authorised for signature by the
Council of the European Union on 23 April 2012.130
7.66. On 9 May 2012, China requ ested to enter into negotiations with the European Union under
Article XXVIII on the basis that it was a Member with a principal supplying interest "with respect to
relevant tariff lines ".131 China also provided statistics on imports into the European Union from
China of products classified under four tariff lines (1602 20 10, 1602 39 29, 1602 39 40 and
1602 39 80) for the years 2009, 2010 and 2011.

123 G/SECRET/32, p. 1 (Exhibit CHN-25).
124 G/SECRET/32, pp. 2-3 (Exhibit CHN-25).
125 G/SECRET/32, p. 2 (Exhibit CHN-25).
126 Letter from the Permanent Mission of Thailand to the Ambassador of the Permanent Mission of the
European Communities to the WTO, 18 August 2009 (Exhibit EU-7).
127 Letter from the Ambassador of the Permanent Mission of Brazil to the WTO to the Ambassador of the
Permanent Mission of the European Communities to the WTO, 8 September 2009 (Exhibit EU-8).
128 EU's first written submission, para. 40; EU's response to Panel question No. 107(b), para. 85. China
does not consider that the negotiations were concluded in September 2011 (China's opening statement at the
second meeting of the Panel, para. 7; China's response to Panel question No. 107, paras. 96-98). In this
regard, China does not contest the European Union's explanations that negotiations were completed "at the
negotiators' level" on 23 September 2011, or that the agreements with Thailand and Brazil were initialled at
the time that the European Union claims. Rather, China argues that because the European Union did not
complete its internal processes to give legal effect to changes agreed with Thailand and notify other WTO
Members of the completion of the negotiations until December 2012, it is legally incorrect to characterize the
negotiations as having been concluded prior to that time. Further, China suggests that because China claimed
a principal supplying interest in May 2012, and the European Union never entered into negotiations with China
under Article XXVIII, the European Union's negotiations under Article XXVIII were never actually completed
(China's opening statement at the second meeting of the Panel, para. 7).
129 EU's response to Panel question No. 107, para. 83. See also Council Decision 2012/231/EU of 23
April 2012 on the signing on behalf of the EU of the Agreement in the Form of an Exchange of Letters between
the EU and Brazil pursuant to Article XXVIII of the GATT 1994 relating to the modification of concessions with
respect to processed poultry meat provided for in the EU Schedule annexed to GATT 1994, and of the
Agreement in the Form of an Exchange of Letters between the EU and Thailand pursuant to Article XXVIII of
the GATT 1994 relating to the modification of concessions with respect to processed poultry meat provided for
in the EU Schedule annexed to GATT 1994 (O.J. L 117, 1 May 2012, p. 1) (Exhibit CHN-27).
130 Exhibit CHN-27.
131 Letter from China to the EU requesting to enter into negotiations under Article XXVIII (9 May 2012)
(Exhibit CHN-50).

7.67. On 1 June 2012, the European Union informed China that it did not recognize China 's claims
of a principal supplying interest or substantial interest under Article XXVIII. 132 More specifically,
the European Union informed China that:
Following the Understanding on the Interpretation of the Article XXVIII GATT and the
Procedures for the Negotiations under Article X XVIII GATT adopted on 10 November
1980 (BISD27S/26-28), a principal supplying interest is recogni sed only for the WTO
Member which had, for a given concession and in the most recent representative
period prior to the notification of a WTO Member 's intentio n to modify concessions
included in its tariff schedule, the largest share in the market of the WTO Member
seeking to modify concessions. Likewise, substantial supplying interest is recognised
only for those WTO Members which had in that period a significa nt share, i.e. at least
10 per cent according to continuous practice of WTO Members, in the market of the
WTO Member seeking to modify concessions.
The European Union 's notification G/SECRET/32 dated 16 June 2009 included import
data for the 2006-2008 period, during which imports from China did not correspond to
10 per cent or more of total imports. Therefore, the European Union is not in a
position to recognize China's claims under Article XXVIII GATT.133
7.68. The European Union signed the agreement resulting fr om the negotiations under
Article XXVIII with Thailand on 18 June 2012, and it signed the agreement with Brazil on 26 June
2012.134
7.69. On 2 October 2012, China reiterated its request to enter into consultations with respect to
"relevant tariff lines of poultry products" as notified by the European Union.135 China contested the
European Union's reliance on import statistics covering the period 2006 -2008 to determine which
Members held the right to participate in consultations and negotiations pursuant to Article X XVIII,
stating that:
China believes that 2006 -2008 period does not constitute the representative three -
year period in this case. Before 2008, the EU prohibited imports from China for SPS
reasons, which completely stopped any exports of poultry from China. However, since
the release of the SPS measures against China in 2008, China 's export of poultry has
increased rapidly. According to the EU statistics, from 2009 -2011, China has become
the biggest supplier in a certain number of poultry products in the EU market, the
percentage of which has exceeded 10%, with some products even reaching 86%. All
above-mentioned facts and evidences show that 2006-2008 period is inconsistent with
the provisions on the most recent representative three-year period as stipulated in the
Understanding on the Interpretation of Article XXVIII of the GATT 1994.136
7.70. On 12 October 2012, the European Union responded that it had already provided
explanations of why China 's claims could not be recognized, in writing as well as in bilateral
meetings. The European Union also noted that it had not received a claim of interest from China
within ninety days following the June 2009 notification of its intention to modify its concessions,
contrary to the time -period provided in paragraph 4 of the Pro cedures for Negotiations under
Article XXVIII. The European Union further stated that:

132 Letter from the EU to China responding to China's request for negotiation (1 June 2012) (Exhibit
CHN-31).
133 Letter from the EU to China responding to China's request for negotiation (1 June 2012) (Exhibit
CHN-31).
134 EU's response to Panel question No. 107, para. 83. See also Council Decision 2012/792/EU of
6 December 2012 on the conclusion of the Agreement in the form of an Exchange of Letters between the EU
and Brazil pursuant to Article XXVIII of the General Agreement on Tariffs and Trade (GATT) 1994 relating to
the modification of concessions with respect to processed poultry meat provided for in the EU Schedule
annexed to GATT 1994, and of the Agreement in the form of an Exchange of Letters between the EU and
Thailand pursuant to Article XXVIII of the General Agreement on Tariffs and Trade (GATT) 1994 relating to the
modification of concessions with respect to processed poultry meat provided for in the EU Schedule annexed to
GATT 1994, OJ L 351/44 of 20.12.2012 (Exhibit CHN-34).
135 Letter from China to the EU (2 October 2012) (Exhibit CHN-30). See also China's opening statement
at the first meeting of the Panel, para. 37.
136 Exhibit CHN-30. See also China's opening statement at the first meeting of the Panel, para. 37.

The statistics contained in communication G/Secret/32 have been defined in
accordance with paragraph 4 of the procedures for the negotiations under
Article XXVIII which provides that "the notification or request should be accompanied
by statistics of imports of the products involved, by country of origin, for the last three
years for which statistics are available ". In this case, the "last three years" preceding
the notification dated 16 June 2009 are 2006, 2007, 2008. The argument developed
by China in its letter of 2 October 2012 according to which the "2006-2008 period
does not constitute the representative three year period " is therefore in contradiction
with the proce dures for the negotiations under Article XXVIII. The statistics of the
period 2009-2011 -posterior to the notification - cannot be taken into consideration.
Using a different period for China would not only be in breach of Article XXVIII but
would also resu lt in a discriminatory treatment vis -a-vis the other WTO Members. 137
(emphasis original)
7.71. The European Union Council approved the agreements with Brazil and Thailand on
6 December 2012.138 The agreements were implemented through several regulations:
i. Council Regulation (EU) 1218/2012 139, which amends the tariff legislation of the
European Union to add the new duties applicable to the poultry products and amends
and supplements the TRQ legislation of the European Union 140 with the duties and
volumes resulting from the agreements with Brazil and Thailand;
ii. Commission Regulation (EU) 1246/2012 141, which amends Commission Regulation
(EC) No 616/2007, and opens the TRQs for the products covered by the Second
Modification Package originating from Brazil, Thailand and o ther third countries, and
provides for the administration of the TRQs;
iii. Notice of entry into force of the Agreement in the form of an Exchange of Letters
between the European Union and Brazil, and between the European Union and
Thailand pursuant to Art icle XXVIII of the GATT 1994, which provides that the
agreements signed with Thailand and Brazil will enter into force on 1 March 2013 142;
and,
iv. Commission Regulation (EU ) No 302/2013 143, which also amends Commission
Regulation (EC) No 616/2007.
7.72. These measures opened the TRQs on the importation of the products classified under the
tariff lines covered by the Second Modification Package, and provided for their administration. The
TRQs replaced the tariff rates previously applicable to these products.144
7.73. The total amounts of the TRQs and their allocation were determined by the European Union
in agreement with Brazil and Thailand, using import data for the period 2006 -2008. The European
Union allocated the TRQs based on the average import shares for the same period.145
7.74. The tariff rates, the volume of the TRQs and their allocation among supplying countries are
as follows146:

137 Letter from the EU to China (12 October 2012) (Exhibit CHN-32).
138 Exhibit CHN-34 and EU's response to Panel question No. 107, para. 83.
139 Exhibit CHN-28 and Exhibit CHN-35.
140 Regulation (EEC) No 2658/87, Part Three, Section III, Annex 7 (Exhibits CHN-28 and CHN-35).
141 O.J. L 352, 21 December 2012, p. 16 (Exhibit CHN-36).
142 O.J. L 56, 28 February 2013, p. 2. (Exhibit CHN-38).
143 O.J. L 90, 28 March 2013, p. 86 (Exhibit CHN-37).
144 China's first written submission, para. 136; EU's first written submission, para. 56.
145 EU's first written submission, paras. 59-60.
146 EU's first written submission, Table EU-6: Old and New Tariff Bindings in the Second Modification
Package (para. 56) Table EU-7: Agreed TRQs in the Second Modification Package (para. 57).

Tariff line Prior tariff
rate
New in-
quota
tariff rate
New out-
of-quota
tariff rate
TRQ
volume
(metric
tons)
Allocation
(metric
tons)
Allocation
share
1602 32 11 867 EUR/MT 630
EUR/MT
2,765
EUR/MT
16,140 Brazil:
15,800
Others:
340
Brazil:
97.89%
Others:
2.11%
1602 32 30 10.9% 10.9% 2,765
EUR/MT

79,705 Brazil:
62,905
Thailand:
14,000
Others:
2,800
Brazil:
78.92%
Thailand:
17.56%
Others:
3.51%
1602 32 90 10.9% 10.9% 2,765
EUR/MT

2,865 Brazil:
295
Thailand:
2,100
Others:
470
Brazil:
10.3%
Thailand:
73.3%
Others:
16.4%
1602 39 21 867 EUR/MT 630
EUR/MT
2,765
EUR/MT
10 Thailand:
10
Thailand:
100%
1602 39 29 10.9% 10.9% 2,765
EUR/MT

13,720 Thailand:
13,500
Others:
220
Thailand:
98.4%
Others:
1.6%
1602 39 40 10.9% 10.9% 2,765
EUR/MT

748 Thailand:
600
Others:
148
Thailand:
80.21%
Others:
19.79%
1602 39 80 10.9% 10.9% 2,765
EUR/MT

725 Thailand:
600
Others:
125
Thailand:
82.76%
Others:
17.24%
7.75. Tariff line 1602 20 10 was included in the European Union 's notification to modify the
concessions under the Second Modification Package, but this tariff line was not the subject of
subsequent negotiations with Brazil and Thailand. 147 China confirmed that it is not challenging any
measure related to this tariff line. 148 Two of the tariff lines included in the Second Modification
Package, 1602 39 40 and 1602 39 80, were merged into a single tariff line, 1602 39 85 (processed
duck, geese, g uinea fowl meat, containing less than 57% by weight of poultry meat or offal)
effective on 1 January 2012. 149 Although these two tariff lines were merged, the European Union
has explained that it opened and continues to apply two separate TRQs for the produc ts previously
covered by tariff lines 1602 39 40 and 1602 39 80.150
7.76. On 17 December 2012, the European Union notified the WTO that it had concluded its
negotiations pursuant to Article XXVIII:5. 151 The notification referred to the bilateral agreements
concluded with Brazil and Thailand, indicated the bound rates that were to be modified on the
products, and included the final report of negotiations under Article XXVIII. It was circulated to
WTO Members on 20 December 2012. 152 The notification states that Argentina contacted the
European Union to enter into consultations. The European Union, however, "did not hold
consultations with Argentina as Argentina did not have Initial Negotiating Rights, a principal
supplying interest or a substantial interest in any of the products" covered by the Second
Modification Package.153 The notification also states that:

147 EU's first written submission, footnote 25. The European Union noted that "there were no imports
under that subheading during the reference period" (2006-2008).
148 China's response to Panel question No. 4, para. 12.
149 EU's response to Panel question No. 63 (c), para. 4.
150 EU's response to Panel question No. 63 (c), para. 6.
151 G/SECRET/32/Add.1, circulated 20 December 2012 (Exhibit EU-9).
152 G/SECRET/32/Add.1 (Exhibit EU-9).
153 G/SECRET/32/Add.1, p. 7 (Exhibit EU-9).

No other WTO Member expressed its interest to enter into negotiations in accordance
with the provisions of Article XXVIII GATT 1994 within the 90 day period referred to in
paragraph 4 of the Guidelines on Procedures for Negotiations under Article XXVIII
(documents C/113 and Corr.1 of 10 November 1980); therefore, the E U considers its
negotiations under Article XVIII to be completed.154
7.77. At the time of this Report, t he European Union has not yet submitted for certification the
changes to its schedule of concessions resulting from the Article XXVIII:5 negotiations relating to
the Second Modification Package. The European Union explained that as the Second Modification
Package was concluded in 2012, after the enlargement of the European Union to 27 member
States, it was considered "more appropriate to submit for certification the changes included in that
package as part of the draft schedule EU27 " which will be submitted "as soon as the draft EU25
schedule is certified".155
7.78. The TRQs negotiated under the Second Modification Package ent ered into force on 1 March
2013.156
7.79. On 19 December 2013, China requested to enter into consultations with the European Union
pursuant to Article XIII:4 of the GATT 1994.157 In its request, China noted that the European Union
had "adopted a new tariff regime […] whereby the duties rates are increased significantly while a
tariff rate quota is open for each item " and allocated the "majority and even all shares of the tariff
quotas to Brazil and/or Thailand " and "very limited shares to other Members, including China. "158
China recalled that it had previously raised concerns with regard to these modifications, and had
requested the European Union to enter in to negotiations or consulta tions with China, under
Article XXVIII, on 9 May 2012 and 2 October 2012. In its letter, China stated:
China has a substantial supplying interest in several of the tariff items concerned, as
evidenced by the statistics of imports of the European Union from China in the most
recent years prior to the adopting of the new tariff regime …
As required by Article XIII:4 of GATT 1994, a Member applying a tariff quota shall,
upon the request of any other Member having a substantial supplying interest, consult
promptly with the other Member regarding, inter alia, the need for an adjustment of
the proportion determined or of the base period selected, or for the reappraisal of the
special factors involved. Without prejudice to China 's rights under other provisions of
GATT 1994 as well as other covered agreements, China hereby requests the European
Union to enter into consultations with China in accordance with Article XIII:4.159
7.80. On 21 February 2014, the European Union responded that:
[T]he Eur opean Union has recently completed a tariff re -binding exercise, in
accordance with Article XXVIII of the GATT. Representatives of the European Union
have discussed trade in processed poultry meat with representatives of China on a
number of occasions, at technical and senior official level as well as in the Committee
on Agriculture. Some of these discussions included representatives of the Chinese
industry. There has also been extensive correspondence on this matter. We conclude
that China did not meet the conditions for participation in the relevant negotiations.160

154 G/SECRET/32/Add.1, 20 December 2012 p. 7 (Exhibit EU-9).
155 EU's response to Panel question No. 54(c), para 160.
156 O.J. L 56, 28 February 2013, p. 2. (Exhibit CHN-38). In its response to Panel question No. 107(b),
the European Union notes that: "[i]nitially, the implementing EU domestic legislation provided that the TRQs
would enter into force on 1 January 2013. But, due to a delay in the completion of the internal procedures in
Brazil, the entry into force was post-poned until 1 March 2013" (para. 86).
157 Letter of 19 December 2013 requesting consultation under Article XIII:4 of the GATT 1994 (Exhibit
CHN-39).
158 Letter of 19 December 2013 requesting consultation under Article XIII:4 of the GATT 1994 (Exhibit
CHN-39).
159 Letter of 19 December 2013 requesting consultation under Article XIII:4 of the GATT 1994 (Exhibit
CHN-39).
160 Response letter from the EU to China dated 21 February 2014 (Exhibit CHN-40).

7.81. The European Union informed China that it was willing to continue the discussions with
China in a spirit of cooperation and good faith, "without prejudice to the position of the European
Union as regards the interpretation or application of Articles XIII or XXVIII of the GATT ". On 19
May 2014, a meeting was held between China and the European Union. 161 In its panel request,
China claims that during the meeting the European Union refused to adjust to TRQs, as had been
previously requested by China.162
7.2.3 The SPS measures applicable to poultry products from China
7.82. China's claims in this dispute are related to a number of SPS measures 163 adopted by the
European Union which have restricted or prohibited the importation of certain poultry products
from China. The SPS measures applied to a number of products, including those poultry products
included in the First and Second Modification Packages.
7.83. At the outset, the Panel notes that China is not challenging the consistency of the SPS
measures with any provision of the covered agreements. The panel request does not include any
claims of violation relating to the SPS measures, and China stated in these proceedings that "it is
not China's intention nor the focus of this dispute to examine the SPS measures taken by the EU in
relation to imports of poultry meat products ".164 The SPS measures are relevant to this dispute
because China argues that the European Union should have taken these SPS measures into
account when making its determinations of: which Members held a principal or substantial interest
in supplying in the products covered by the First and Second Modification Packages; the amount of
compensation under Article XXVIII:2; and the allocation of TRQ shares among supplying countries.
Essentially, China claims that the European Union should not have relied on import statistics based
on time periods during which the SPS measures were in effect, as they had a negative impact on
the importation of poultry products from China. According to China, the two reference periods used
by the European Union in its notifications of modification of concessions under Article XXVIII:5
(2003-2005 for the First Modification Package and 2006 -2008 for the Second Modification
Package) were not representative, since these periods were "tainted"165 by the existence of the
SPS measures affecting the importation of poultry products from China.
7.84. In this section, we will briefly describe the SPS measures that were applicable, and which in
some instances are still applicable, to the poultry products at issue in this dispute. We focus on
three SPS measures that were in place during the periods at issue and which, according to China,
should have been taken into account by the European Union. As elaborated below, these measures
are the "heat treatment measure", the "residues measure" and the "avian influenza measure". We
describe these SPS measures to the extent that they are relevant to our assessment of the
arguments of the parties in this case.
7.85. According to the European Union, in order to ensure that imported poultry products "comply
with the same or equivalent sanitary requirements as domestic products ", the imported products
must originate from a country included in a list of approved countries an d must satisfy sanitary
requirements, including a heat treatment measure. 166 The heat treatment measure that applies to
the products originating from the listed countries differs in terms of the severity of requirements.
In the case of China, the importation of poultry products into the European Union was authorised
on the condition that the products undergo the most severe heat treatment known as "treatment
B".167 According to the European Union, the requirement that poultry products from China undergo

161 China's first written submission, para. 48; EU's first written submission, para. 54.
162 China's request for the establishment of a panel, Section II.B.(viii), p. 5.
163 Throughout these proceedings, various terms have been used by the parties to refer to these
measures. Both parties agree that it is appropriate in this Report to refer to them as "SPS measures" (China's
response to Panel question No. 81, para. 44; EU's response to Panel question No. 81, para. 40).
164 China's first written submission, para. 31. See also China's opening statement at the first meeting of
the Panel, para.5; China's second written submission, paras. 46; China's response to Panel question No. 6,
165 China's first written submission, paras. 78, 80, 194, and 246.
166 EU's first written submission, para. 69. See also paras. 70-71.
167 Part 4 of Annex II of Commission Decision 2007/777/EC distinguishes 6 categories of heat
treatment: one non-specific treatment (called treatment "A" under which any specific heat treatment is not
required) and five specific treatments, from "B" to "F", in descending order of severity. Treatment "B", which is
the most severe heat treatment measure, is defined as "treatment in a hermetically sealed container to an Fo
value of three or more" (Exhibit CHN-8 and Exhibit EU-13) and China's first written submission, footnote 24.

"treatment B " had been in force since 1997. 168 The heat treatment measure applicable to the
importation of meat products into the European Union is currently provided in Commission
Decision 2007/777/EC (as amended). 169 In addition to the heat treatment measure, "if there is
evidence that imported products from a listed country no longer comply with the same or
equivalent sanitary requirements as those prescribed for the EU products, the European
Commission may adopt protective measures restricting those imports "170, including the two types
of SPS measures as described below.
7.86. On 30 January 2002, the European Union suspended the importation of all products of
animal origin from China, including poultry products. 171 The measure applied to animal products
intended for human consumption or animal feed use, and was adopted to protect against the risks
posed by deficiencies in the regulation of veterinary medicine and the control of residues in
China.172 This prohibition initially provided for a derogation for certain animal product s, but these
products did not include the poultry products at issue in this dispute, due to animal health reasons.
All products classified under the tariff lines included in the First and Second Modification Packages
originating from China were prohibited under this measure.173 We refer to this measure, which was
specific to China, as the "residues measure".
7.87. On 6 February 2004, the European Union suspended the importation of fresh poultry meat,
meat preparations and meat products consisting of or containing any parts of poultry originating
from China and several other Asian countries. 174 This measure was adopted in response to an
outbreak of avian influenza in the region.175 This prohibition applied in addition to the above-noted
prohibition imposed due to residu e concerns, and it also covered all products falling under the
tariff lines included in the First and Second Modification Packages. A derogation applied to the
products of certain countries, but not to the products from China. 176 We refer to this measure,
which was not specific to China, as the "avian influenza measure".

168 EU's first written submission, footnote 65; Commission Decision 97/222/EEC, of 28 February 1997,
laying down the list of third countries from which the Member States authorize the importation of meat
products, OJ L 89/39 of 4.4.1997 (Exhibit EU-25); Commission Decision 2005/432/EC, of 5 June 2005, laying
down the animal and public health conditions and model certificates for imports of meat products for human
consumption from third countries and repealing Decisions 97/41/EC, 97/221/EC and 97/222/EC, OJ L 151/3 of
14.6.2005 (Exhibit EU-24). During the same period, treatment A applied to the products of Thailand. The heat
treatment measure applicable to the products of China was amended in 2008, as described in paragraph 7.89.
169 Exhibit CHN-8 and Exhibit EU-13. See Commission Decision 2008/640/EC of 30 July 2008 amending
Decision 2005/692/EC concerning certain protection measures in relation to Avian Influenza in several third
countries (O.J. L 207, 5 August 2008, p. 32) (Exhibit CHN-10 and Exhibit EU-22).
170 EU's first written submission, para. 72.
171 Commission Decision 2002/69/EC of 30 January 2002 concerning certain protective measures with
regard to the products of animal origin imported from China (O.J. L 30, 31 January 2012, p. 50) (Exhibit
CHN-5 and Exhibit EU-15), replaced by Commission Decision 2002/994/EC, of 20 December 2002, concerning
certain protective measures with regard to products of animal origin imported from China (Exhibit EU-16). This
decision was amended several times. See also China's first written submission, para. 23 and footnote 18;
China's second written submission, footnotes 13 and 66; Exhibits CHN-47 and CHN-54; EU's first written
submission, paras.74-75; EU's response to Panel question No. 6, para. 7; Exhibit EU-39.
172 EU's first written submission, para. 73; Exhibit CHN-5 and EU-15, 5th and 6th recitals.
173 At that time, poultry products from Thailand were authorised, subject to chemical testing and heat
treatment "D". See China's second written submission, para. 21; EU's response to Panel question No. 6,
paras. 8 et seq.
174 Commission Decision 2004/122/EC of 6 February 2004 concerning certain protection measures in
relation to avian influenza in several Asian countries, OJ L 36/59 of 7.2.2004 (Exhibit CHN-6 and Exhibit
EU-19).See also China's first written submission, para. 24; EU's first written submission, para.77. Commission
Decision 2004/122/EC was replaced by Commission Decision 2005/692/EC of 6 October 2005 concerning
certain protection measures in relation to Avian Influenza in several third countries (O.J. L 263, 8 October
2005, p. 20) (Exhibit EU-21). It maintained the prohibitions against the importation of products from China and
other Asian countries.
175 China's first written submission, para. 24; EU's first written submission, para. 77.
176 China pointed out that Thailand also suffered from the outbreak of avian influenza but its products
were not subject to the same heat treatment measure (China's first written submission, para. 31). The
European Union explained that the imports from Thailand that had undergone treatment "D" were authorised
for importation because that treatment was effective against avian influenza (EU's first written submission,
paras. 82-83; EU's response to Panel question No. 8, para. 18, Commission Decision 2004/84/EC, of 23
January 2004, concerning protection measures relating to avian influenza in Thailand, OJ L 17/57 of 24.1.2004
(Exhibit EU-20)).

7.88. On 30 July 2008, the European Union "relaxed"177 the above SPS measures that applied to
the importation of poultry products from China. The European Union amended the residues
measure which addressed the risks posed by residues in animal products, because an "appropriate
residue monitoring plan" had been provided by China and the result of verification was
favourable.178 The amended decision allows for the importation of poultry products from Chi na,
provided that the products are accompanied by a declaration of the Chinese competent authority
that each consignment has been subjected to a chemical test , among other sanitary requirements
(including the heat treatment measure).179
7.89. The European Union also modified the heat treatment measure applicable to Chinese poultry
products. The specific heat requirement was modified from treatment "B" to the less severe
treatment "D" for poultry products originating from the province of Shandong, on the basis that
the competent authority of the province of Shandong complied with the specific animal health
requirement.180 The importation of poultry products originating from the rest of the Chinese
territory is still subject to heat treatment "B", among other sanitary requirements. The European
Union additionally modified the avian influenza measure and authorized the importation of poultry
products from China, subject to the same specific heat treatment measure noted above, on the
basis that "such heat treatment is sufficient to inactivate the avian influenza virus".181
7.90. The European Union has indicated that "[t]he scope of application of the EU sanitary
measures is not defined by reference to CN or HS codes. "182 In order to evaluate the effects of the
above-noted SPS measur es on the importation of Chinese poultry products, we use the product
categories "uncooked" and "cooked", upon which both parties agree.183
7.91. The category of "uncooked poultry products" covers tariff item 0210 99 39 (salted poultry
meat), 1602 32 11 (process ed chicken meat, uncooked, containing 57% or more by weight of
poultry meat or offal) and 1602 39 21 (processed duck, geese, guinea fowl meat, uncooked,
containing 57% or more by weight of poultry meat or offal). 184 According to China, these
"uncooked" poultry products by definition cannot be subjected to a heat treatment measure, and
therefore remain subject to an import ban. 185 The European Union has confirmed that these three
tariff lines cover uncooked products.186 The Panel understands from the parties' submissions in this
regard that the importation into the European Union of products classified under tariff lines 0210
99 39, 1602 32 11 and 1602 39 21 and originating from China were prohibited under the heat
treatment measure at the time of the application o f the residue measure in January 20 02. The
imports of these products from China in the European Union remain prohibited until the present
since they were not affected by the lifting of the prohibition under the residue measure , the avian
influenza measure and the modification of the heat treatment measure on 30 July 2008.187
7.92. The poultry products falling under tariff lines 1602 32 19 (cooked chicken meat) and 1602
39 29 (processed duck, geese, guinea fowl meat, cooked, containing 57% or more by weight of

177 China's first written submission, para. 93.
178 Third and fourth recitals of Commission Decision 2008/639/EC of 30 July 2008 amending Decision
2002/994/EC concerning certain protective measures with regard to products of animal origin imported from
China, OJ L 207/30, of 5.8.2008 (Exhibit EU-17).
179 Second recital of Commission Decision 2008/638/EC (Exhibit EU-17).
180 Third recital of Commission Decision 2008/638/EC of 30 July 2008 (O.J. L 207, 5 August 2008, p. 24)
(Exhibit CHN-9 and Exhibit EU-23). See also China's second written submission, para. 21; EU's opening
statement at the second meeting of the Panel, para. 83.
181 Third recital of Commission Decision 2008/640/EC of 30 July 2008 amending Decision 2005/692/EC
concerning certain protection measures in relation to Avian Influenza in several third countries (O.J. L 207, 5
August 2008, p. 32) (Exhibit CHN-10 and Exhibit EU-22).
182 EU's response to Panel question No. 8, para. 20.
183 China's second written submission, para. 16; EU's response to Panel question No. 77(b), para. 35.
184 China's response to Panel question No. 5, paras. 17-19 and question No. 8, paras. 37-38; China's
second written submission, para. 15.
185 China's second written submission, paras. 13-15. See also China's response to Panel question No. 8,
para. 35; China's opening statement at the first meeting of the Panel, para. 50.
186 EU's response to Panel question No. 77(b), para. 35.
187 China's second written submission, para.15. See also China's opening statement at the first meeting
of the Panel, para. 50; China's response to Panel question No. 5, paras. 17-19 and question No. 8, paras. 37-
38; China's comments on the EU's responses to the Panel' question No. 77(b), para. 22. The Panel also notes
the EU's response to Panel question No. 79, at para. 36 that "[i]mports of fresh poultry meat from China are
currently not authorised."

poultry meat or offal) are "cooked poultry products".188 We understand that these products were
authorized for importation into the European Union if they had undergone treatment "B", until the
application of the residue measure in 2002. Since 30 July 2008, thes e products are authorized for
importation into the European Union if they are accompanied by the required veterinary
certification and declaration of chemical testing, and have undergone heat treatment "D" (if the
products are from the province of Shandong ), or treatment "B" (if the products originate from
other parts of China and fulfil the other applicable sanitary requirements).
7.93. The remaining four tariff lines comprise both cooked and uncooked poultry products: these
include tariff lines 1602 31 (prepar ed turkey meat); 1602 32 30 (processed chicken meat,
containing 25% or more but less than 57% by weight of poultry meat or offal); 1602 32 90
(processed chicken meat, containing less than 25% by weight of poultry meat or offal) and 1602
39 85 ( processed duck, geese, guinea fowl meat, containing less than 57% by weight of poultry
meat or offal).189 We understand that the importation into the European Union of poultry products
originating from China that is classified in these tariff lines were and are subject to the SPS
measures described above, depending on which category they fall (cooked or uncooked).
7.94. As noted above, it is not in dispute that these measures are SPS measures. 190 China agrees
that:
[T]he EU's SPS measures discussed in this dispute are "sanitary measures" within the
meaning of Annex A:1 of the SPS Agreement, and that it would be appropriate to refer
to them as "SPS measures " in the Panel Report. Without conducting a detailed
examination of the EU's SPS measures given that the measures are not th e subject of
this dispute, China would like to briefly note that the EU 's measures are applied (1)
"to protect human life or animal life or health within the territory of the Member from
risks arising from additives, contaminants, toxins or disease -causing organisms in
foods, beverages or feedstuffs ", as described in Annex A:1(b), and (2) in the form of
regulations, as provided in the second paragraph of Annex A:1.191
7.2.4 Import statistics
7.95. The parties have each provided the Panel with information on the import sh ares held by
Brazil, China, Thailand, and other countries over the period 1996 -2015. China has provided the
percentages in Exhibit CHN-52, and the European Union has provided these percentages in Exhibit
EU-43.192 The European Union also separately provided, in Exhibit EU -44193, the volumes of
imports from different countries under tariff lines 1602 39 40 and 1602 39 80 up until the merger
of these two tariff lines into tariff line 1602 39 85 , effective 1 January 2012. This exhibit does not
however present data expressed in percentages of shares.
7.96. We note the existence of multiple discrepancies between the import shares submitted in
Exhibit CHN-52 and Exhibit EU -43, and also with the information in Exhibit EU -44. For the most
part, it appears that these discrepa ncies are not material to our analysis of China 's claims in this
dispute. We further note that the data on import percentages provided to the Panel by both parties
(in Exhibits CHN -52 and EU -43) appear to be derived from data covering EU28 imports, which
includes "the imports into Romania, Bulgaria and Croatia made into those countries before they
joined the European Union."194 However, as discussed later in our Report, we understand from the
parties that the use of EU28 data may be expected to have a negligi ble impact on the overall
import shares.195

188 China's second written submission, para. 17.
189 Tariff line 1602 39 85 results from the merger of tariff line 1602 39 40 (processed duck, geese,
guinea fowl meat, containing 25% or more but less than 57% by weight of poultry meat or offal) and tariff line
1602 39 80 (processed duck, geese, guinea fowl meat, containing less than 25% by weight of poultry meat or
offal) effective 1 January 2012.
190 See above, footnote 163.
191 China's response to Panel question No. 81, para. 44.
192 We note that Exhibit EU-43 is mistakenly identified, on its cover page, as EU-44.
193 We note that Exhibit EU-44 is mistakenly identified, on its cover page, as EU-45.
194 EU's second written submission, para. 81.
195 See section 7.5.3.2.3.

7.97. In relation to tariff line 1602 39 80, there is a significant discrepancy between the
information provided in Exhibit CHN -52 and the information contained in Exhibit EU -44 regarding
the import shares held by differ ent countries over the years 2000 -2006. Among other things, the
information in Exhibit CHN -52 indicates that in the years 2005 and 2006, China accounted for
17.6% and 30.5% of imports into the European Union under tariff line 1602 39 80. We recall that
during this period, the SPS measures generally prohibited importation of poultry products into the
European Union from China, and at no point in these proceedings has China indicated that it would
have been able to or did export products under 1602 32 80 in s ignificant quantities during that
period. We understand that the discrepancy is due to the fact that China's statistics in Exhibit
CHN-52 (and Exhibit CHN -43) include imports into Bulgaria, Romania and Croatia made before
those countries became Member Stat es of the European Union, whereas the EU statistics do not
include those imports. For the foregoing reasons, the figures in the table below for 1602 39 80 for
the years 2000-2006 are based on the data provided in Exhibit EU-44.
7.98. The shares of imports into the European Union of Brazil, China and Thailand of the products
classified under the tariff lines covered by the First and Second Modification Packages for years
2000-2015 are reproduced below. The year 2000 was the earliest year included by the European
Union in one of the reference periods (for tariff line 0210 99 39).196 Throughout these proceedings,
the parties have made reference to the percentage of import shares based on the quantity of
imports, as well as the value of imports. Both parties have subse quently confirmed that for the
purposes of determining which Member holds a substantial supplying interest, it is more
appropriate to examine import shares based on quantity, rather than value. 197 The import shares
in the table that follows are based on quan tity. The figures in the table below are rounded to the
nearest decimal point.

196 EU's first written submission, para. 33.
197 EU's response to Panel question No. 61(a), para. 1; China's response to Panel question No. 61(a),
para. 4.

First Modification Package: Shares of imports into the EU of Brazil, China, Thailand and other countries, 2000-2015 (in quantity)

Tariff line 0210 99 39198
Share 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Brazil 52.2% 63.3% 72.9% 64.4% 98.9% 98.8% 98.2% 98.3% 95.8% 94.3% 95% 92.1% 83.1% 75.2% 70.4% 66.5%
China 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Thailand 47.8% 36.3% 26.6% 34.5% 0.0% 0.0% 0.0% 0.0% 0.1% 0.0% 0.0% 0.1% 10.1% 22.6% 28.3% 31.9%
Others 0.0% 0.4% 0.5% 1.1% 1.1% 1.2% 1.8% 1.7% 4.1% 5.7% 5% 7.9% 6.8% 2.2% 1.3% 1.6%
Tariff line 1602 31199
Share 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Brazil 72.4% 76.4% 85.8% 85.6% 86.4% 89.5% 94.4% 91.3% 87.8% 90.8% 93.3% 93.7% 93.4% 92.3% 94.8% 97.2%
China 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Thailand 0.6% 0.2% 0.1% 0.3% 0.0% 0.0% 0.1% 0.0% 0.0% 0.0% 0.1% 0.0% 0.0% 0.0% 0.0% 0.0%
Others 27.0% 23.4% 14.1% 14.1% 13.6% 10.5% 5.5% 8.7% 12.2% 9.2% 6.6% 6.3% 6.6% 7.7% 5.2% 2.8%
Tariff line 1602 32 19200
Share 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Brazil 16.9% 20.8% 29.2% 34.7% 32.2% 31.7% 33.2% 32.0% 32.1% 27.8% 23.4% 24.9% 19.9% 23.2% 26.9% 26.7%
China 0.0% 0.2% 0.6% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 1.5% 2.8% 3.7% 3.5% 5.2% 5.9% 4.8%
Thailand 77.2% 73.6% 65.8% 62.4% 64.9% 65.8% 64.6% 65.3% 66.2% 69.1% 72.4% 69.9% 75.2% 70.8% 66.1% 67.0%
Others 5.9% 5.4% 4.4% 2.9% 2.9% 2.5% 2.2% 2.7% 1.7% 1.6% 1.4% 1.5% 1.4% 0.8% 1.1% 1.5%

Second Modification Package: Shares of imports into the EU of Brazil, China, Thailand and other countries, 2000-2015 (in quantity)

Tariff line 1602 32 11201
Share 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Brazil 77.1% 56.0% 73.3% 55.0% 92.7% 96.7% 99.2% 93.1% 99.2% 99.7% 99.3% 96.7% 96.1% 97.7% 99.6% 99.7%
China 0.0% 0.0% 0.2% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Thailand 13.5% 22.8% 14.3% 17.8% 2.0% 0.3% 0.2% 0.3% 0.4% 0.1% 0.7% 0.0% 1.5% 0.0% 0.1% 0.0%
Others 9.4% 21.2% 12.2% 27.2% 5.3% 3.0% 0.6% 6.6% 0.4% 0.2% 0.0% 3.3% 2.4% 2.3% 0.3% 0.3%
Tariff line 1602 32 30202
Share 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Brazil 1.1% 0.3% 0.0% 3.3% 64.1% 92.2% 93.3% 77.3% 75.4% 79.0% 79.5% 72.7% 70.4% 75.6% 75.8% 73.7%
China 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.4% 0.9% 0.9% 0.8% 3.1% 4.2% 5.0%
Thailand 68.5% 96.8% 98.4% 90.7% 33.3% 7.2% 6.0% 21.9% 23.8% 19.9% 19.0 26.0% 28.3% 21.0% 19.9% 21.1%
Others 30.4% 2.9% 1.6% 6% 2.6% 0.6% 0.7% 0.8% 0.8% 0.7% 0.6% 0.4% 0.5% 0.3% 0.1% 0.2%

198 These figures are based on Exhibit CHN-52. However, Exhibit CHN-52 appears to be missing data for the years 2000-2001 for tariff line 0210 99 39. The information
presented in this table for these years is based on the information presented in Exhibit EU-43 for tariff line 0210 99 39.
199 These figures are based on Exhibit CHN-52. However, Exhibit CHN-52 appears to be missing data for the year 2000 for tariff line 1602 31. The information presented in
this table for this year is based on the information presented in Exhibit EU-43 for tariff line "1602 31 11".
200 These figures are based on Exhibit CHN-52.
201 These figures are based on Exhibit CHN-52.
202 These figures are based on Exhibit CHN-52.

Tariff line 1602 32 90203
Share 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Brazil 28.8% 0.0% 17.3% 28.7% 18.3% 11.1% 8.8% 13.2% 12.0% 4.8% 9.5% 10.6% 8.6% 0.0% 0.3% 0.0%
China 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.2% 0.8% 0.0% 2.8% 1.5% 2.9% 0.8% 0.0% 1.6% 0.0%
Thailand 55.8% 84.0% 39.9% 69.3% 80.3% 85.9% 88.6% 82.8% 84.8% 90.8% 88.5% 86.3% 90.5% 99.9% 98.0% 99.7%
Others 15.4% 16% 42.8% 2.0% 1.4% 3% 2.4% 3.2% 3.2% 1.7% 0.5% 0.2% 0.1% 0.1% 0.1% 0.3%
Tariff item 1602 39 21204
Share 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Brazil 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 100.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
China 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Thailand 0.0% 0.0% 0.0% 0.0% 0.0% 100.0% 0.0% 100.0% 100.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Others 100% 100% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Tariff item 1602 39 29205
Share 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Brazil 2.6% 0.4% 0.0% 0.1% 2.9% 1.3% 0.8% 0.0% 0.2% 0.0% 0.0% 0.2% 0.1% 0.0% 0.0% 0.0%
China 0.0% 0.0% 0.0% 0.0% 0.6% 0.4% 0.3% 0.2% 0.0% 27.1% 40.7% 52.8% 62.0% 58.4% 59.0% 59.4%
Thailand 91.9% 88.6% 96.3% 96.8% 92.7% 96.6% 97.8% 99.0% 99.6% 72.8% 57.2% 46.7% 37.9% 41.6% 40.9% 40.6%
Others 5.5% 11% 3.7% 3.1% 3.8% 1.7% 1.1% 0.8% 0.2% 0.1% 2.1% 0.3% 0.0% 0.0% 0.1% 0.0%
Tariff item 1602 39 40206 (merged with 1602 39 80 into tariff line 1602 39 85 effective 1 January 2012)
Share 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Brazil 0.0% 94.1% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% - - - -
China 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 25.3% - - - -
Thailand 0.0% 0.0% 100.0% 98.3% 96.0% 99.6% 99.3% 90.8% 100.0% 95.1% 100% 74.7% - - - -
Others 100% 5.9% 0.0% 1.7% 4.0% 0.4% 0.7% 9.2% 0.0% 4.9% 0.0% 0.0% - - - -

203 These figures are based on Exhibit CHN-52.
204 These figures reflect the information contained in Exhibit CHN-52 read in conjunction with the information contained in Exhibit EU-30 for the years 2000 and 2001.
According to Exhibit EU-30, there were imports from unspecified Members in 2000 and 2001. We note that according to Exhibit EU-30, there was 1 tonne of imports under 1602 39
21 in the year 2009. According to Exhibit CHN-43, there was 1.2 tonnes of imports from Brazil for that same year. Exhibit CHN-52 also suggests that these imports originated in
Brazil. Exhibit EU-43 only indicates the percentage of imports into the European Union held by Thailand for this product.
205 These figures are based on Exhibit CHN-52.
206 These figures are based on Exhibit CHN-52.

Tariff item 1602 39 80207 (merged with 1602 39 40 into tariff line 1602 39 85 effective 1 January 2012)
Share 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Brazil 0.0% 4.2% 0.0% 0.0% 0.0% 0.0% 0.0% 2.3% 19.3% 0.0% 0.0% 0.0% - - - -
China 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 8.7% 17.6% 61.1% - - - -
Thailand 50.0% 95.8% 50.0% 95.0% 81.4% 99.6% 76.0% 96.6% 72.4% 88.7% 78.8% 38.8% - - - -
Others 50.0% 0.0% 50.0% 5.0% 18.6% 0.4% 24.0% 1.1% 8.3% 2.6% 3.6% 0.1% - - - -
Tariff item 1602 39 85208 (merged from tariff lines 1602 39 40 and 1602 32 80 effective 1 January 2012)
Share 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Brazil (0.0%) (8.5%) (0.0%) (0.0%) (0.0%) (0.0%) (0.0%) (1.6%) (11.6%) (0.0%) (0.0%) (0.0%) 0.0% 0.0% 0.0% 0.0%
China (0.0%) (0.0%) (0.0%) (0.0%) (0.0%) (0.0%) (0.0%) (0.0%) (0.0%) (3.9%) (8.3%) (52.8%) 82.5% 81.7% 80.9% 86.2%
Thailand (36.4%) (87.7%) (61.4%) (97.9%) (91.7%) (99.6%) (92.9%) (95.8%) (83.5%) (92.2%) (90.0%) (47.1%) 17.1% 11.2% 10.1% 6.4%
Others (63.6%) (3.8%) (38.6%) (2.1%) (8.3%) (0.4%) (7.1%) (2.6%) (4.9%) (3.9%) (1.7%) (0.1%) 0.4% 7.1% 9.0% 7.4%

207 These figures are based on Exhibit EU-44 for the years 2000-2006, and on Exhibit CHN-52 for the years 2007-2011. We note that the figures provided by the parties
generally align for the years 2007, 2008, 2009, 2010, and 2011. As already noted, however, there are significant discrepancies between the information provided in Exhibit CHN-
52 and Exhibit EU-44 regarding the share of imports into the European Union under tariff line 1602 39 80 in the years 2000-2006. More specifically: (i) Exhibit CHN-52 indicates
that Thailand accounted for 37.9% of imports into the European Union in 2000; however, according to Exhibit EU-44, in 2000, Thailand accounted for 6 of the 12 tonnes imported
(i.e. 50%); (ii) Exhibit CHN-52 indicates that Thailand and Brazil respectively accounted for 17.9% and 0.5% of imports into the EU in 2001; however, according to Exhibit EU-44,
in 2001, Thailand accounted for 23 of the 24 tonnes imported (i.e. 95.8%) and Brazil accounted for the remaining 4.2%; (iii) according to Exhibit CHN-52, Thailand accounted for
21.1% of imports into the European Union in 2002; however, according to Exhibit EU-44, in 2002, Thailand accounted for 74 of the 128 tonnes imported into the EU (i.e. 57.8%);
(iv) Exhibit CHN-52 indicates that Thailand accounted for 37.6% of imports into the European Union in 2003; however, according to Exhibit EU-44, in 2003, Thailand accounted for
134 of the 141 tonnes imported (i.e. 95.0%); (v) Exhibit CHN-52 indicates that Thailand accounted for 38.1% of imports into the European Union in 2004; however, according to
Exhibit EU-44, in 2004, Thailand accounted for 162 of the 199 tonnes imported (i.e. 81.4%); (vi) Exhibit CHN-52 indicates that Thailand and China respectively accounted for
46.2% and 17.6% of imports into the European Union in 2005; however, according to Exhibit EU-44, in 2005, Thailand accounted for 266 of the 267 tonnes imported in 2005
(99.6%), and China exported no poultry products under tariff line 1602 32 80 (i.e. 0.0%); and (vii) Exhibit CHN-52 indicates that Thailand and China respectively accounted for
31.5% and 30.5% of imports into the European Union in 2006; however, according to Exhibit EU-44, in 2006, Thailand accounted for 209 of the 275 tonnes imported (76.0%), and
China exported no poultry products under tariff line 1602 32 80 (i.e. 0.0%). We understand that the discrepancy may be due to the fact that China's statistics in Exhibits CHN-52
(and Exhibit CHN-43) include imports into Bulgaria, Romania and Croatia made before those countries became Member States of the European Union, whereas the EU statistics do
not include those imports.
208 These figures are based on Exhibit CHN-52. This average is based on Exhibit EU-43, which provides merged statistics for tariff line 1602 39 85 including for years prior to
the merger of tariff lines 1602 39 40 and 1602 39 80 (effective 1 January 2012). Exhibit CHN-52 does not provide merged statistics for the tariff lines 1602 3940 and 1602 39 80
prior to their merger effective 1 January 2012.

7.3 Terms of reference issues
7.3.1 Introduction
7.99. According to the European Union, China has advanced certain claims of violation in the
course of the proceedings that are not identified in the panel request, and which therefore fall
outside of the Panel's terms of reference.
7.100. In its first written submission, the European Union requested that the Panel make a
preliminary ruling that the following claims advanced by China in its first written submission fall
outside of the scope of the Panel's terms of reference:
a. China's claim that European Union violated the chapeau of Article XIII:2 by allocating
small TRQ shares to "all others ", at levels that do not allow these countries going
forward to achieve substantial supplying interest status209; and
b. China's claim that the European Union violated the chapeau of Article XIII:2, and Article
XIII:4, by not explicitly identifying the data that it took into account to determine the
TRQs.210
7.101. During the second meeting of the Panel, and in its responses and associated comments to
the second set of questions, the European Union argued that two other issues fall outside of the
Panel's terms of reference:
c. China's claim s, developed in its second written submission, that the Eur opean Union
violated Article XIII:1 and the chapeau of Article XIII:2 by failing to annually review and
adjust the TRQ allocations on an ongoing basis to reflect recent trade developments 211;
and,
d. any claim by China that the European Union violated parag raph 7 of the Procedures for
Negotiations under Article XXVIII or paragraph 1 of the Procedures for Modification and
Rectification of Schedules.212
7.102. We recall that Article 6.2 of the DSU establishes the requirements that apply to a panel
request. Article 6.2 provides that a panel request "shall be made in writing ", "shall indicate
whether consultations were held ", "identify the specific measures at issue " and "provide a brief
summary of the legal basis of the complaint sufficient to present the problem clearly".
7.103. With respect to each of the issues identified above, the European Union has indicated that
China's panel request fails to satisfy the requirements of Article 6.2 of the DSU. 213 However, we
understand the European Union to be arguing that the issues raise d by China are "new claims"
that fall outside of the scope of the panel request, and not that there is any defect in the panel
request itself.214 Thus, the terms of reference issues before us are not about the adequacy of one
or more items of the panel reque st judged against the requirements of Article 6.2 , but rather
about whether the complaining party has broadened the scope of the measures or claims in the
dispute by advancing new claims as compared with those identified in the panel request.

209 EU's first written submission, para. 7. See also paras. 239-249.
210 EU's first written submission, para. 8. See also paras. 269-270.
211 EU's opening statement at the second meeting of the Panel, paras. 33-35. See also the EU's
comments on China's response to Panel question No. 121, paras. 58-67.
212 EU's response to Panel question No. 100, paras. 61-64.
213 EU's first written submission, paras. 239, 270; EU's response to Panel question No. 100, para. 63;
EU's comments on China's response to Panel question No. 121(b), para. 67.
214 At the first meeting, the Panel asked the European Union to clarify whether it was arguing that one
or more items of the panel request itself failed to meet the requirements of Article 6.2 (and if so, to specify
which items of the panel request fail to meet which requirement of Article 6.2), or instead that the panel
request itself may meet the requirements of Article 6.2, but that China's first written submission challenged
new measures or claims that fall outside of the scope of the panel request (Question 1(a) of the set of
questions sent to the parties in advance of the first meeting). The European Union responded that China's first
written submission developed legal claims that were not mentioned in the panel's request, and therefore
constitute "new claims" falling outside of the Panel's terms of reference.

7.104. China conside rs that some of the issues that the European Union characterizes as new
"claims" are arguments in support of claims identified in the panel request. We recall that
Article 6.2 of the DSU requires that the claims, but not the arguments in support of those c laims,
must be identified in the panel request in order to allow the defending party and any third parties
to know the legal basis of the complaint. 215 In this regard, the Appellate Body has consistently
distinguished between claims of violation and the arguments presented in support of those
claims.216
7.3.2 The scope of China's claims under Article XIII of the GATT 1994
7.3.2.1 China's contention that the European Union violated the chapeau of
Article XIII:2 because it did not set the shares of the TRQs allocated to the "all others"
category at sufficient levels
7.105. In its first written submission, China contends that the European Union violated the
chapeau of Article XIII:2 because the shares of the TRQs allocated to the "all others" category are
not sufficient to allow other WTO Members to obtain a substantial supplying interest going forward
in the products covered by the TRQs. 217 According to China, the chapeau of Article XIII:2 requires
that the determination of the TRQs be a "dynamic process based on market developments " and
not be "cast in stone"218, as evidenced by the possibility to request adjustments to the base period
and reappraisal of special factors under Article XIII:4. For that reason, China argues, the shares of
TRQs afforded to the "all others" category must be large enough to ensure that countries which did
not receive a country -specific share are able to use their comparative advantages to achieve a
substantial supplying interest in the future. China claims that by not allocating an "all others "
share of at leas t 10% for all of the TRQs, the European Union violated the chapeau of
Article XIII:2.219
7.106. The European Union submits that this is a new claim that falls outside the Panel 's terms of
reference because it was not identified in China 's panel request. 220 The European Union submits
that China's panel request only claims a violation of the chapeau of Article XIII:2 in connection
with other provisions or paragraphs of Article XIII, including Article XIII:4, by using the
expressions "including the chapeau" and "read in conjunction with".221 According to the European
Union, there is no "stand-alone", independent claim of violation of the chapeau of Article XIII:2 in
China's panel request based on the purported obligation of a country establishing a TRQ to set
aside a share for "all others" at levels sufficient to allow these countries going forward to obtain a
substantial supplying interest. 222 The European Union submits that there is nothing in the panel
request hinting at that obligation, or at how or why the measure at issu e might be considered by
China to violate such an obligation, nor is there mention of such a dynamic interpretation of the
chapeau.223 In this regard, the European Union notes that the chapeau "does not impose a clear
cut obligation whose contours are easily understandable from its wording ", and that China 's itself
"reads in the chapeau of Article XIII:2 several distinct obligations with a very different content ".224
Moreover, the European Union considers that item (vii) of China’s panel request alleges that th e
chapeau of Article XIII:2, together with Article XIII:4, have been violated because the European

215 Appellate Body Report, EC – Bananas III, paras. 141 - 143.
216 See, e.g., Appellate Body Reports, China – Raw Materials, para. 220; Appellate Body Report,
Dominican Republic — Import and Sale of Cigarettes, para. 121.
217 China's first written submission, paras. 208 et seq, section IV.3.c., entitled "the EU violated the
chapeau of Article XIII:2 because it did not establish the level of the TRQs for all other countries at levels that
allow these countries going forward to achieve a substantial interest as suppliers of the products subject to the
TRQs." See also China's first written submission, para. 280(8).
218 China's first written submission, para. 209.
219 China claims that this also violates Article XIII:1. The European Union has not argued that the claim
under Article XIII:1 falls outside of the scope of the Panel's terms of reference.
220 EU's first written submission, paras. 238-248 and EU's opening statement at the first substantive
221 See China's request for the establishment of a panel, items (v) (vii) of Sections II.A. and II.B. See
EU's first written submission, paras. 246-247 and EU's opening statement at the first substantive meeting of
the Panel, paras. 38 et seq.
222 EU's first written submission, para. 247; EU's opening statement at the first substantive meeting of
the Panel, para. 43.
223 EU's first written submission, para. 248, EU's opening statement at the first substantive meeting of
the Panel, para. 45.
224 EU's opening statement at the first substantive meeting, paras. 32-33.

Union has not ensured that the base period is selected and special factors are taken into account
such as to allot to Members a TRQ that approaches as close as possible the shares that they might
be expected to obtain in the absence of the TRQs. Hence, the references to Article XIII:4, to the
base period and to special factors are not described in the panel request as mere examples, but
constitute defining fea tures of the obligation described in item (vii) of China’s panel request,
which, according to China, the E uropean Union has violated.225 China’s claim that the European
Union violated the chapeau of Article XIII:2 because the shares of the TRQs allocated to the "all
others" category are not sufficient to allow other WTO Members to obtain a substantial supplying
interest going forward in the products covered by the TRQs is completely independent from the
need to make adjustments to the base period selected and reappraise special factors in accordance
with Article XIII:4.226
7.107. According to China, its contention that the European Union violated the chapeau of
Article XIII:2 by failing to allocate an adequate "all others " share sufficient to allow other WTO
Members to obtain a substantial supplying interest going forward is an argument in support of the
claim presented in item (vii) of Section II.A and item (vii) of Section II.B of its panel request. 227
Item (vii) sets forth the claim that "the allocation of all or the vast majority of the TRQs to two of
the WTO Members " is inconsistent with "Article XIII:2, including its chapeau, read in conjunction
with Article XIII:4". According to China, the panel request thus makes clear that the consistency of
the TRQs with the cha peau of Article XIII:2 is challenged, even if the words "including the
chapeau" are used.228 China also considers that the chapeau of Article XIII:2 contains a single,
distinct obligation that requires Members to "aim at a distribution of trade in such produ ct
approaching as closely as possible the shares which the various contracting parties might be
expected to obtain in the absence of such restrictions. "229 While China recognizes that it has
alleged several different violations of the chapeau of Article XIII :2, it explains that this is not
because the provision of the chapeau contains several distinct obligations, but because the sole
requirement that it contains was violated in several different ways by the European Union.230
7.108. The main issue before the Panel is whether China's contention that the European Union
violated the obligation in the chapeau of Article XIII:2 by failing to allocate the "all others" shares
at a levels sufficient to allow other Members to obtain a substantial supplying interest is properly
characterized as a new claim, in which case it would fall outside the Panel 's terms of reference, or
rather as an argument in support of the claim included in item (vii) of China's panel request.
7.109. We note that China 's panel request is divided into two sec tions. Section I identifies the
measures at issue, and Section II identifies the legal basis for the complaint. Section II.A presents
the claims of violation in respect of the First Modification Package, and Section II.B presents the
claims of violation in respect of the Second Modification Package. Items II.A(vii) and II.B(vii) set
forth the following claim:
The allocation of all or the vast majority of the TRQs to two of the WTO Members as
implemented by the EU in the measures identified above is inconsi stent with GATT
1994 Article XIII:2, including its chapeau , read in conjunction with Article XIII:4,
which confirms that the base period must be selected and special factors must be
taken into account such as to allot to Members a TRQ that approaches as cl osely as
possible the shares that they might be expected to obtain in the absence of the TRQs.
(emphasis added)
7.110. First, we observe that item (vii) specifies that the violation arises from "the allocation of all
or the vast majority of the TRQs to two of the WTO Members", i.e. to Brazil and Thailand. While
the European Union argues that there is nothing in the panel request to suggest a claim that the
chapeau of Article XIII:2 contains an obligation to allocate a share of the TRQ to an "all others"
category so as to allow other countries going forward to achieve a substantial interest, we consider
that item (vii) of China 's panel request clearly alleges a violation on the basis of the "allocation of
all or vast majority of the TRQs to two of the WTO Members ". The contention that the European

225 EU's opening statement at the first substantive meeting of the Panel, paras. 39-42.
226 EU's opening statement at the first substantive meeting of the Panel, paras. 43 and 45.
227 China's response to the EU's request for preliminary rulings, para. 4.
228 China's response to the EU's request for preliminary rulings, para. 6.
229 China's response to the EU's request for preliminary rulings, para. 11.
230 China's response to the EU's request for preliminary rulings, para. 13.

Union did not "allocate a share for 'all other' countries at levels sufficient to allow these countries
going forward to achieve a substantial interest " is closely related to the contention that the
European Union failed to allocate a sufficiently large amount of the TRQ shares to the "all others"
category, and instead allocated "all or the vast majority of the TRQs to two of the WTO Members ".
In our view, it is an elaboration of why China considers that "the allocation of a ll or the vast
majority of the TRQs to two Members" violates the chapeau of Article XIII:2.
7.111. Second, we observe that item (vii) states that the allocation of all or the vast majority of
the TRQs to two Members "is inconsistent with GATT 1994 Article XIII:2 , including its chapeau ".
We consider that the claim of violation of "GATT Article XIII:2, including its chapeau, read in
conjunction with Article XIII:4 " is not a model of clarity in drafting. However, we do not consider
that the phrase "read in conjuncti on with Article XIII:4 " negates the express claim based on the
chapeau of Article XIII:2. In this regard, we note that item (vii) of the panel request not only
references "Article XIII:2, including its chapeau ", but also reproduces the actual wording of th e
obligation that is provided for in the chapeau, namely to "allot to Members a TRQ that approaches
as closely as possible the shares that they might be expected to obtain in the absence of the
TRQs".
7.112. Third, to the extent that the European Union 's objection is grounded on the premise that
the chapeau of Article XIII:2 contains multiple, distinct obligations, we disagree. In our view,
Article XIII is an example of a provision that contains multiple, distinct obligations as set forth in
Article XIII:1, the c hapeau of Article XIII:2, the sub -paragraphs of Article XIII:2, the sub -
paragraphs of Article XIII:3, and Article XIII:4. However, we read the chapeau of Article XIII:2 as
containing a single obligation, namely, that in applying import restrictions to any product,
Members "shall aim at a distribution of trade in such product approaching as closely as possible
the shares which the various Members might be expected to obtain in the absence of such
restrictions".
7.113. The Panel considers that, based on the wording of item (vii) of the panel request, China 's
contention that the European Union violated the chapeau of Article XIII:2 by failing to set aside
TRQ shares for "all others " at levels that allow other WTO Members to achieve a substantial
supplying interest status going forward falls within the scope of the panel's terms of reference.
7.3.2.2 China's contention that the European Union violated the chapeau of
Article XIII:2 and Article XIII:4 because it failed to disclose the trade data it used to
determine the TRQs
7.114. In its first written submission, China contends that the European Union violated the
chapeau of Article XIII:2 and Article XIII:4 by not disclosing the data that it took into account to
determine the TRQs. More precisely, China submits that none of the inst ruments, regulations or
decisions adopted by the European Union with respect to the First and Second Modification
Packages "describe with any degree of precision the historical trade data " relied upon by the
European Union to determine the TRQs allocated to specific countries and the TRQs allocated to all
other countries.231 China contends that there is no indication of how the European Union calculated
the amount of the TRQs under paragraph 6 of the Understanding on the Interpretation of
Article XXVIII, and that this violates the chapeau of Article XIII:2. 232 China also contends that the
European Union violated Article XIII:4 by failing to disclose the representative period taken into
account to determine the TRQS, and whether "special factors" were considered.233
7.115. The European Union submits that these are new claims that fall outside the scope of the
Panel's terms of reference. The European Union argues that nothing in China 's panel request,
including in the claims listed in items (v) and (vii) of Section II.A reg arding the First Modification
Package, and the corresponding claims in items (v) and (vii) of Section II.B regarding the Second
Modification Package, indicate that the European Union violated the chapeau of Article XIII:2 or
Article XIII:4 by failing to disclose the data that it took into account to determine the shares in the
TRQs.234 The European Union submits that the text of the chapea u of Article XIII:2, of
Article XIII:4 and of paragraph 6 of the Understanding do not refer to any obligation to disclose

231 China's first written submission, para. 217.
232 China's first written submission, para. 218.
233 China's first written submission, para. 222.
234 EU's first written submission, para. 268.

the trade data upon which the allocation of the TRQ is made. The European Union argues that "a
simple reference to those provisions did not allow the European Union to anticipate that China
intended to refer to the violation of the alleged disclosure obligation".235
7.116. China responds that these are not new claims, but rather an argument in support of
China's claims in items (v) and (vii) of Section II.A and Section II.B of its panel request. In these
items of China's panel request, China claims that "the allocation of all or the vast majority of the
TRQs to two Members " violates "Article XIII:2 read in conjunction with the Understanding on the
Interpretation of Article XXVIII and in particular Paragraph 6 thereof " (item (v) of the panel
request), and "Article XIII:2, including its chapeau, read in conjunction with Article XIII:4 " (item
(vii) of the panel request). 236 China submits that compliance with these obligations "requires
disclosure of the basis and data taken into account for the determination of the TRQs ".237 Thus,
China considers that its contention that the European Union violated these provisions by failing to
disclose the data used to determine the TRQs are properly characterized as arguments in support
of its claims under these provisions.
7.117. According to China, its contention that the European Union violated the chapeau of
Article XIII:2 and Article XIII:4 because it failed to disclose the data used to determine the TRQs is
an argument in support of the claim set forth items II.A(v) and (vii) and II.B(v) and (vii) of the
panel request. The main issue before the Panel is whether China 's contention that the European
Union violated the obligation in the chapeau of Article XIII:2 and Article XIII:4 by failing to
disclose the data used to determine the TRQs is properly characterized as a new claim that is
outside the Panel's terms of reference, or rather as an argument in support of the claims included
in items (v) and (vii) of China's panel request.
7.118. We have already examined item (vii) of the panel request abo ve, in the context of
examining the first terms of reference issue raised by the European Union. We recall that item (vii)
of the panel request reads as follows:
The allocation of all or the vast majority of the TRQs to two of the WTO Members as
implemented by the EU in the measures identified above is inconsistent with GATT
1994 Article XIII:2, including its chapeau, read in conjunction with Article XIII:4 ,
which confirms that the base period must be selected and special factors must be
taken into account such as to allot to Members a TRQ that approaches as closely as
possible the shares that they might be expected to obtain in the absence of the TRQs.
(emphasis added)
7.119. Item (v) of the panel request also concerns the "allocation of all or the vast majority of the
TRQs to two Members". It reads as follows:
The allocation of all or the vast majority of the TRQs to two of the WTO Members as
implemented by the EU in the measures identified above is inconsistent with the
chapeau of GATT 1994 Article XIII:2 read in conjunction with the Understanding on
the Interpretation of Article XXVIII and in particular Paragraph 6 thereof , which
requires the allocation of a TRQ to approach as closely as possible the shares that the
WTO Members might be expected to obtain in the absence of the TRQs . (emphasis
added)
7.120. First, we observe that items (v) and (vii) of the panel request make no reference to the
disclosure of data, or to any alleged failure by the European Union to disclose historical trade data,
or to disclose any other type of information. Rather, items (v) and (vii) both specify that the
violation of the cited provisions arises from "the allocation of all or the vast majority of the TRQs to
two of the WTO Members ", i.e. to Brazil and Thailand. In addition, none of the p rovisions of the
GATT 1994 cited in these items of the panel request make reference to the disclosure of data.
Furthermore, the manner in which the panel request summarizes the obligations in the chapeau of
Article XIII:2, Article XIII:4 and paragraph 6 of the Understanding makes no reference to any
obligation in these provisions, express or implied, to disclose information.

235 EU's opening statement at the first meeting of the Panel, para. 55.
236 China's response to the EU's request for preliminary rulings, para. 22; China's response to Panel
question No. 91, para. 61.
237 China's response to the EU's request for preliminary rulings, para. 26.

7.121. In addition, we note that the alleged omission at issue – the failure by the European Union
to disclose certain data – is not identified as one of the challenged measures listed in Section I of
China's panel request. As noted above, China 's panel request is separated into two sections.
Section I identifies the measures at issue, and Section II identifies the legal basis for the
complaint. The scope of China 's claims must be discerned by reading the relevant items in
Sections II .A and II.B of the panel request, together with the identification of the measures at
issue in Section I of the panel request. We do not see in the measures listed in Section I of China's
panel request any reference to the European Union 's failure to disclose the historical trade data,
the selection of a base period and how special factors were appraised.
7.122. Throughout its submissions in these proceedings, China has p resented the alleged failure
to disclose data as the action or omission that constitutes the viol ation of the chapeau of
Article XIII:2 and Article XIII:4, and not as an explanation of why some other action or omission is
inconsistent with these provisions . In this regard, we observe that the section of China 's first
written submission developing this claim is entitled "The EU violated the chapeau of Article XIII:2
and Article XIII:4 by not explicitly identifying the data that it took into account to determ ine the
TRQs".238 In its first written submission, China requests a finding that "By not explicitly identifying
the data that it took into account to determine the TRQs, the EU violate[d] the chapeau of
Article XIII:2 and Article XIII:4 ".239 The corresponding section of its second written submission is
entitled, "The chapeau of Article XIII:2 and Article XIII:4 Were Violated By Not Explicitly
Identifying The Data That The European Union Took Into Account To Determine The Tariff Rate
Quotas".240 The requirement of disclosure, as advanced by China throughout its submissions, is
presented as a constitutive element of its claim of violation under the chapeau of Article XIII:2 and
Article XIII:4.
7.123. Based on the foregoing, the Panel considers that China 's contentions tha t the European
Union violated the chapeau of Article XIII:2 and Article XIII:4 by failing to proactively disclose the
historical trade data, the reference period selected and how special factors were appraised are new
claims that fall outside the Panel's terms of reference.
7.124. In any event, the Panel considers that there is no textual basis to conclude that either the
chapeau of Article XIII:2 or the provisions of Article XIII:4 impose an obligation on a Member
adopting a TRQ to proactively disclose the historical trade data which was relied upon to determine
the TRQ allocation, the representative period selected or the special factors considered.
7.125. No such obligation is identified in the text of either provision. Beginning with the obligation
in the chapeau Article XIII:2, we note that the text of this provision does not explicitly or implicitly
refer to the disclosure of any information. It refers to the obligation applicable to a Member
imposing a TRQ "to aim at a distribution of trade in such product approac hing as closely as
possible the shares which the various Members might be expected to obtain in the absence of such
restrictions". The Panel cannot read these words to suggest an obligation to proactively disclose
the import data used by a Member to determ ine and allocate TRQs. Article XIII:4 provides for the
possibility for a Member holding a substantial interest in supplying a product that is subject to an
import restriction to request consultations "regarding the need for an adjustment of the proportion
determined or of the base period selected , or for the reappraisal of the special factors involved ".
There is nothing in the wording of Article XIII:4 that suggests in any way that the Member
imposing a TRQ must "explicitly identify", or proactively disclos e, any information. Article XIII:4
rather empowers a Member holding a substantial interest to undertake a certain action, which is to
request consultations with the Member imposing the TRQ. It also obliges the Member imposing the
TRQ to "consult promptly" upon request. A requirement to proactively disclose certain information
relating to the historical trade data, the reference period and the consideration of special factors, if
any, is not mentioned in the text of Article XIII:4.
7.126. Turning to the context of these provisions, the Panel notes that other provisions of the
GATT 1994 contain express disclosure and publication obligations which are applicable to TRQs.
Notably, Article XIII:3(b) states that Members "applying restrictions shall give public notice of the
total quantity or value of the product or products which will be permitted to be imported during a
specified future period and of any change in such quantity or value ". Article XIII:3(c) requires that

238 China's first written submission, section IV.B.3.d.
239 China's first written submission, para. 280(9).
240 China's second written submission, section IV.D.

Members allocating TRQs among supplying countries "shall promptly inform all other Members
having an interest in supplying the product concerned of the shares in the quota currently
allocated, by quantity or value, to the various supplying countries and shall give public notice
thereof". These provisions, which apply to a Member imposing a TRQ, do not refer to any
requirement to proactively disclose the historical trade data upon which the TRQ was determined,
or of the selection of the base period or consideration of special factors. More generally, Article X:1
obliges Members to ensure that trade regulations pertaining to rates of duty and restrictions on
imports "be published promptly in such a manner as to enable governments or traders to become
acquainted with them ". The existence of these other provisio ns of the GATT 1994 that expressly
require the disclosure or publication of information precludes us from reading disclosure
obligations into the chapeau of Article XIII:2 or Article XIII:4, especially insofar as such proactive
disclosure obligations would be of a more far -reaching scope than those expressly provided for in
Article XIII:3(b) and (c), and Article X:1 of the GATT 1994.
7.127. Based on the foregoing, even if the Panel were to find th at the panel request covers these
claims, the Panel would be compelled to reject China's claims that the European Union violated the
chapeau of Article XIII:2 and Article XIII:4 by failing to proactively disclose the data that it took
into account to determine the TRQs in the instruments, regulations or decisions adopted by the
European Union with respect to the First and Second Modification Packages.
7.3.2.3 China's contention that the European Union violated Article XIII:1 and the
chapeau of Article XIII:2 by failing to annually review and reallocate the TRQ shares
7.128. In its second written submission, China claimed that the failure by the European Union to
update and reallocate the TRQ shares annually was inconsistent with Article XIII:1 and
Article XIII:2(d).241 More precisely, China stated that TRQ shares had to be reviewed and ad justed
"from time to time "242; "before a new quota year starts "243; "preceding each allocation"244; "when
trade developments occur and the allocated shares are no longer representative of the import of a
WTO Member in the absence of the TRQs "245; and "over time ".246 China explained that in this
dispute, it advances two categories of claims regarding the allocation of shares in the TRQs:
China makes claims under Article XIII challenging the initial allocation of shares in the
TRQs in the First and the Second Modificat ion Packages but also challenges the
ongoing application thereof from quota year to quota year without adjustment in light
of trade developments such that the allocated shares in the TRQs no longer reflect the
shares WTO Members would have had in the absen ce of the TRQs. China submits that
(i) the allocated shares in the TRQs as applied by the European Union since 2007 and
2012 respectively and going forward during their period of validity must be updated
from time to time to reflect the share that each WTO Member could have had without
the TRQs and (ii) such updating must be based on trade flows during a representative
period preceding the continued application of the allocated shares. 247 (emphasis
original)
7.129. At the second meeting with the Panel, the European Union indicated that China's challenge
to the ongoing application of the TRQs from quota year to quota year, without adjustment in light
of trade developments, is a new claim which "has not been made before, either in China 's Panel
request, or in its first written submission, or elsewhere. It is therefore manifestly outside the
Panel's terms of reference."248
7.130. In its responses to the second set of questions 249, China indicated that these claims are
covered by items (iii), (iv), (v), (vi), (vii) of Section II.B o f the panel request, regarding the
Second Modification Package, read together with the footnotes accompanying some of these items.
China recalled that "[t]he allocation of all or the vast majority of the TRQs to two of the WTO

241 China's second written submission, paras. 127 and 175.
242 China's second written submission, para. 121.
243 China's second written submission, para. 127.
245 China's second written submission, para. 165.
246 China's second written submission, para. 196.
247 China's second written submission, para. 121.
248 EU's opening statement at the second meeting of the Panel, para. 33.
249 China's response to Panel question No. 121(b); China's response to the EU's question No. 1(a).

Members as implemented in the measures and decision mentioned above " is the aspect of the
measures being challenged. China observed that the allocation of all or the vast majority of the
TRQs to two of the WTO Members has remained in place in the years 2013 -2015, and that this
TRQ share allocation was implemented in the measures and decisions mentioned in Section I.B of
the panel request. China notes that the measures identified in that section, e.g. Commission
Regulation (EU) No 1246/2012 of 19 December 2012, were in effect in the yea rs 2013-2015 and
are still effective now.
7.131. In its comments on China's response250, the European Union responded, inter alia, that the
panel request shows that what is challenged is only the initial allocation of the TRQ shares by the
European Union at the mo ment of opening those TRQs, and that the panel request makes no
reference to any obligation to periodically review and adjust the allocation.
7.132. Beginning with the text of China 's panel request, we note that the claims under
Article XIII:1 and Article XIII:2 as set forth in section II.B of the panel request all refer to the
"allocation of all or the vast majority of the TRQs to two Members ".251 We consider that the
reference to the "allocation of all or the vast majority of the TRQs to two Members", if taken alone,
is broad enough to embrace a claim of violation not only in respect the initial allocation of shares
in the TRQs in the First and the Second Modification Packages, but also a claim of violation in
respect of a failure to annually review and reallocate the TRQs from quota year to quota year to
take account of trade developments. The items referring to the "allocation of all or the vast
majority of the TRQs to two Members " are not temporally limited in a way that would confine the
scope of the claims only to the initial TRQ allocation.
7.133. However, we consider that the scope of China 's claims must be discerned by reading the
relevant items in Section II.B of the panel request together with the identification of the measures
at issue in Section I of the panel request. And, having carefully reviewed Section I of the panel
request, we do not see any reference to the European Union 's failure to annually review and
reallocate the TRQs from quota year to quota year to take account of trade developments as one
of the challenged measures at issue. These claims pertain to a measure in the form of an
omission, namely, the failure by the European Union to update and reallocate the TRQ shares set
forth in the measures identified in Section I of the panel request. This omis sion is not identified as
one of the measures at issue in Section I of the panel request. In our view, the identification of the
regulations as the measures at issue does not, by implication, encompass claims relating to the
European Union 's subsequent fai lure to modify the TRQ allocations provided for in those
instruments.
7.134. China points out that the items in Section II.B advancing claims under Article XIII:1 and
Article XIII:2 refer to the "allocation of all or the vast majority of the TRQs to two Members ", and
are accompanied by a cross -reference back to the following "decision" that is identified in Section
I.B(iv) of the panel request:
Refusal by the EU in consultations held on 19 May 2014 under Article XIII of
GATT 1994 to adjust the TRQs on the basis o f recent import statistics establishing
China's substantial supplying interests as had been requested by letter of Ambassador
Yu of 19 December 2013.
7.135. We agree that, by virtue of its inclusion in Section I.B(iv) of the panel request, this alleged
refusal to adjust the TRQs in consultations held on 19 May 2014 is a measure at issue in this
dispute. We further note that items (iv), (v), and (vi) of Section II.B of the panel request each
explicitly refers back to this decision, either in the body text of the it em or in an accompanying
footnote. However, we do not consider that this supports China 's argument that the ongoing
application of the TRQs from quota year to quota year, without adjustment, is a claim identified in

250 EU's comments on China's response to Panel question No. 121(b).
251 See items (iv), (v), (vi) and (vii) of Section II.A of the panel request, and items (iv), (v), (vi) and
(vii) of Section II.B of the panel request. Item (iii) of the panel request states that "[t]he country-specific TRQs
allocated by the EU to two of the WTO Members as implemented in the measures and decision mentioned
above violate GATT 1994 Article XIII by diminishing for the other WTO Members the market access
commitments that the EU undertook to maintain on a non-discriminatory basis". This item contains no
reference to any subparagraph of Article XIII, and it is not clear which of the various paragraphs and
obligations of Article XIII would be linked to "diminishing for the other WTO Members the market access
commitments that the EU undertook to maintain on a non-discriminatory basis".

the panel request. To the contrary, the specific measure identified in Section I.B(iv) is the
European Union's refusal, in May 2014, following a request for consultations under Article XIII:4
dated 19 December 2013, to adjust the TRQs on the basis of recent import statistics establishing
China's substantial supplying interest. The "recent import statistics " referred to in the
19 December 2013 letter were statistics "in the most recent years prior to the adoption of the new
tariff regime".252 Section I.B(iv) does not identify, as a measure at issue in this dispute, the failure
by the European Union to annually review and reallocate the TRQs from year to year, on its own
initiative.253
7.136. Furthermore, we consider that the evolution of China 's claims in its submissions reinforces
the conclusion that these are new claims that were developed in the course of the proceedings. In
its first written submission, China argued that in order to avoid a long -term freeze in the allocation
of TRQ shares among supplying countries, Article XIII:1 and the chapeau of Articl e XIII:2 should
be interpreted as requiring a Member to reserve at least a 10% share of the TRQ allocation to an
"all others " category. In its first written submission, China did not refer to any obligation in
Article XIII:1 or XIII:2 to annually review an d reallocate the TRQs, and did not refer to any
violation of those provisions arising from the European Union 's failure to do so in this case. In the
context of responding to the argument that China made in its first written submission, the
European Union pointed out that allocating a minimum 10% TRQ share to "all others" would not
necessarily prevent a permanent freeze in the allocation of TRQ shares among supplying countries,
because one or more countries might proceed to capture the entirety of that "all others" share.
The European Union explained that the way to avoid a permanent freeze would not therefore be to
always allocate an "all others" share at a certain minimum level, as proposed by China, but rather
by having some kind of "time-limit" on the v alidity of the allocation, or a "periodic review
mechanism"; the European Union emphasized, however, that there is no such obligation in
Article XIII.254 In its second written submission, China then explained that it is also challenging the
absence of any an nual review and adjustment of the TRQs at issue by the European Union. China
subsequently explained that it "considered it unnecessary to explicitly draw a distinction between
its challenges to the initial TRQ allocations and those against the continuous a pplication of these
allocations without change in the subsequent periods, until it noticed that the EU overlooked the
ongoing nature of the obligations in Articles XIII:1 and XIII:2".255
7.137. We understand that a claim or defence being raised for the first time in a party 's second
written submission is not, in and of itself, grounds for a panel declining to rule on such claim or
defence.256 However, in this case China did not articulate any claims of violation based on the
"ongoing" obligations in Article XIII:1 or the chapeau of Article XIII:2 prior to its second written
submission, and then did so apparently only in response to the European Union 's argument that
the only way to avoid a permanent freeze in the allocation of TRQs would be through by having
some kind of "time-limit" on the validity of the allocation, or a "periodic review mechanism ". The
manner in which China ' raised its claims regarding an alleged ongoing obligation under
Article XIII:1 and XIII:2 to annually reallocate TRQ shares reinforces the conc lusion, derived from
the text of the panel request, that these are new claims.
7.138. Based on the foregoing, and in particular our analysis of the text of the panel request, we
conclude that China 's claims that the European Union violated Article XIII:1 and the chapeau of
Article XIII:2 by failing to annually update the initial TRQ allocations constitute new claims that are
not identified in the panel request, and which therefore fall outside of the panel 's terms of
reference.
7.139. We note that in the present case, China has advanced several claims under Article XIII in
connection with the absence of any adjustment to the initial TRQ allocation following the opening
of the TRQs. These claims include, in addition to those under consideration here, China's claim that
the European Union violated Article XIII:4 by refusing to enter into "meaningful consultations" with

252 Letter of 19 December 2013 requesting consultation under Article XIII:4 of the GATT 1994 (Exhibit
CHN-39). See paragraph 7.79.
253 We recall that panels may apply the rule of interpretation expressio unius est exclusio alterius, i.e. to
express or include one thing implies the exclusion of the other, when determining whether a particular claim is
covered by a panel request. See Panel Reports, China – Publications and Audiovisual Products, para. 7.60;
254 EU's first written submission, para. 263.
255 China's response to the EU's question No. 1(b).
256 See, e.g., Appellate Body Report, US – Gambling, paras. 270-273.

China concerning the need for an adjustment of the TRQ shares, the reference period selected, or
the appraisal of special factors.
7.140. It is not in dispute tha t China's claim under Article XIII:4, regarding the European Union 's
alleged refusal to enter into "meaningful consultations ", falls within the scope of our terms of
reference. Accordingly, we address the merits of that claim in our Report. 257 In the course of
addressing the merits of that claim, we are confronted with the same fundamental legal issue that
we would be confronted with in the event that we were to reach the merits of the claims under
consideration here. That issue is whether, in cases where a T RQ has been allocated among
supplying countries on the basis of historical market shares in accordance with Article XIII:2(d),
there is a legal obligation on the importing Member to reallocate TRQ shares among supplying
countries to reflect an updated refe rence period or a reappraisal of special factors, and if so,
whether there is a requirement that such reallocation occur within any particular time-frame.
7.141. In the course of addressing China 's claim under Article XIII:4 regarding the absence of
"meaningful consultations", we conclude that in cases where a TRQ has been allocated among
supplying countries on the basis of historical market shares, there is no legal obligation on the
importing Member to reallocate TRQ shares among supplying countries to reflect an updated
reference period or a reappraisal of special factors, or at least not within any particular time -frame
or with any particular frequency. Therefore, even if we were to find that the panel request includes
China's claims that the European Union v iolated Article XIII:1 and Article XIII:2 by failing to
annually update the initial TRQ allocations, we would be compelled to reject those claims on the
merits.
7.3.3 The scope of China's claims relating to certification
7.142. China claims that the European Union 's application of the higher out -of-quota tariff rates
arising from the First and Second Modification Packages are in violation of Article II:1 of the GATT
1994 because they exceed the bound rates currently inscribed in the European Union 's schedule of
concessions. This is so, China argues, because the changes agreed with Brazil and Thailand in the
Article XXVIII negotiations have not yet been incorporated into the text of the European Union 's
schedule through the certification procedure, and therefore are leg ally ineffective to replace the
existing bound duties. In China 's view, the absence of certification means that the bound rates
that existed in the Schedule prior to the completion of the Article XXVIII negotiations remain
unchanged, from which it follows that the European Union's application of the higher out -of-quota
tariff rates violates Article II:1.
7.143. It is not in dispute that the above claim falls within the scope of our terms of reference,
and we address the merits of that claim elsewhere in our Repor t.258 In the course of presenting its
arguments in support of that claim, however, China has made statements that might be construed
as advancing additional claims of violation relating to the European Union 's alleged failure to
respect certain requirements contained in the Procedures for Negotiations under Article XXVIII,
and in the Procedures for Modification and Rectification of Schedules. In this section of our Report,
we will consider whether any additional claims of violation stemming from the European Union's
alleged failure to respect these requirements are properly before the Panel.
7.3.3.1 China's contentions that the European Union did not respect paragraph 7 of the
Procedures for Negotiations under Article XXVIII and paragraph 1 of the Procedures for
Modification and Rectification of Schedules
7.144. In its panel request and in the course of these proceedings, China has made several
statements relating to the European Union not respecting the requirements of paragraph 7 of the
Procedures for Negotiations under A rticle XXVIII, and paragraph 1 of the Procedures for
Modification and Rectification of Schedules.
7.145. Paragraph 7 of the Procedures for Negotiations under Article XXVIII provides that:

257 See section 7.10 below.
258 See section 7.11 below.

Contracting parties will be free to give effect to the changes agreed upon in the
negotiations as from the first day of the period referred to in Article XXVIII:1, or in
the case of negotiations under paragraph 4 or 5 of Article XXVIII, as from the date on
which the conclusion of all the negotiations have been notified as set ou t in
paragraph 6 above. A notification shall be submitted to the secretariat, for circulation
to contracting parties, of the date on which these changes will come into force .
(emphasis added)
7.146. Paragraph 1 of the Procedures for Modification and Rectification of Schedules provides
that:
Changes in the authentic texts of Schedules annexed to the General Agreement which
reflect modifications resulting from action under Article II, Article XVIII, Article XXIV,
Article XXVII or Article XXVIII shall be certified by means of Certifications. A draft of
such change shall be communicated to the Director -General within three months after
the action has been completed. (emphasis added)
7.147. In its panel request, China suggests that the European Union acted inconsistently with
Article II as a result of the European Union having acted inconsistently with paragraph 7 of the
Procedures for Negotiations under Article XXVIII and paragraph 1 of the Procedures for
Modification and Rectification of Schedules.259 The panel request states in relevant part:
In the absence of notification for certification, notification of the date on which the
changes to the goods schedule come into force to the WTO Secretariat, and
notification of the draft modification to its Schedule, the EU acted incon sistently with
the procedures set forth in paragraph 7 of the Procedures for Negotiations under
Article XXVIII and paragraph 1 of the Procedures for Modification and Rectification of
Schedules and Tariff Concessions. The absence of a notification for certi fication of the
modified schedule and of the certification following notification and the other violations
mentioned herein, results in the EU having acted inconsistently with GATT 1994
Articles II:1 and II:2 by affording imports of poultry meat from China less favorable
treatment than that provided for in its Schedule.260 (emphasis added)
7.148. In its subsequent submissions in these proceedings, however, China did not request any
findings of violation under paragraph 7 of the Procedures for Negotiations under Arti cle XXVIII or
paragraph 1 of the Procedures for Modification and Rectification of Schedules. Instead, China
argued that the European Union violated Article II because the changes agreed to in the
Article XXVIII negotiations had not been formally incorporat ed into the European Union's Schedule
of concessions through certification, and were therefore legally ineffective to replace its existing
bound duties.261 In the concluding section of its first written submission, there is no reference to
paragraph 7 of the Procedures for Negotiations under Article XXVIII or paragraph 1 of the
Procedures for Modification and Rectification of Schedules, and China requested the Panel to make
the following findings in relation to the claims under Article II:
By applying the tar iffs and TRQs that have not been certified, have not been given
formal effect and are thus ineffectual to replace the EU 's obligations under the
unmodified schedule, the EU acts in violation of Article II:1 of the GATT 1994;
By applying tariffs in excess o f the bound level, the EU acts in violation of Article II:1
of the GATT 1994.262

259 China's request for the establishment of a panel, item (ix) of Section II.A and item (x) of
Section II.B.
260 China's request for the establishment of a panel, item (ix) of Section II.A and item (x) of
Section II.B.
261 China's arguments in relation to this claim were set forth in Section IV.C of its first written
submission, under the heading "The EU's Tariffs And TRQs Implemented Under Article XXVIII Of The
GATT 1994 Are Inconsistent With Article II Of GATT 1994 Because They Exceed The EU's Current Schedule Of
Concessions". Section V of China's second written submission, entitled "The EU's Tariffs and TRQs Implemented
Under Article XXVIII Of The GATT 1994 Are Inconsistent With Article II Of GATT 1994 Because They Exceed
The EU's Current Schedule Of Concessions".
262 China's first written submission, para. 280, subparagraphs (14) and (15).

7.149. In its first written submission, China did refer to paragraph 8 of the Procedures for
Negotiations under Article XXVIII and to paragraphs 1 and 3 of the Procedures for Modification and
Rectification of Schedules, observing that the European Union had not communicated the draft of
the changes to its Schedule to the Director -General and that the European Union failed to obtain
certification of its modified concessions.263 China did not, however, explicitly request that the Panel
make any finding that the European Union acted inconsistently with any of these provisions under
the respective Procedures; nor did it argue that the alleged inconsistency with Article II arose by
virtue of a ny such inconsistency with the Procedures. Rather, the reference to the procedures
appeared to be in the nature of factual observations and explanations as to why the changes had
not yet been certified.264
7.150. In its second written submission, China reiterated that the requirement in the second
sentence of paragraph 1 "has in fact not been respected by the European Union either for the First
or for the Second Modification Package ".265 However, here again, China did not argue explicitly
that this gave rise to the i nconsistency with Article II:1; rather, this statement was made in the
context of the section of its submission with the heading, "The EU's Tariffs and TRQs Implemented
Under Article XXVIII Of The GATT 1994 Are Inconsistent With Article II Of GATT 1994 Bec ause
They Exceed The EU 's Current Schedule Of Concessions ". This statement apparently served to
reiterate why the changes resulting from the First and Second Modification Package s have not yet
been certified.
7.151. At the second meeting with the Panel, the Pane l sought to resolve any ambiguity as to the
existence of any claims of violation relating to paragraph 7 of the Procedures for Negotiations
under Article XXVIII or paragraph 1 of the Procedures for Modification and Rectification of
Schedules, by asking Chi na to clarify whether it was requesting the Panel to find a violation of
these provisions. China indicated that it would respond in its written responses to the panel 's
second set of questions. This prompted the European Union to comment that it was operat ing on
the understanding that no such claims of violation were being made by China in these proceedings,
and that depending on China 's forthcoming written response to this question, it may have to raise
issues relating to the Panel's terms of reference and due process.
7.152. The second set of questions from the Panel to the parties included several questions
pertaining to the requirements in paragraph 7 of the Procedures for Negotiations under
Article XXVIII and paragraph 1 of the Procedures for Modification and Rectification of Schedules,
and the question of whether any claims of violation were being requested under these procedures.
In response to a question from the Panel regarding the second sentence of paragraph 7, the
European Union indicated that although i t had informed all of the Members with a principal or
substantial supplying interest of the date of entry into force of the changes arising from the Article
XXVIII negotiations, "[t]he date [of] entry into force of those changes has not been notified under
paragraph 7 of the Procedures ".266 In its subsequent comments on the EU response, China
observed that "[t]he notification to the secretariat is intended to allow the secretariat to notify the
date to all WTO Members and not only to the Members holding a PSI or a SSI", and that "[o]ther
Members not holding a PSI or SSI were accordingly not informed of the date notwithstanding their
immediate interest in the matter ".267 However, China did not request any finding of inconsistency
with this provision.
7.153. To the contrary, in its written response to Panel question No. 99, China clarified that:
For the purpose of finding whether the EU acted inconsistently with Article II, the
Panel needs to ascertain whether paragraph 1, read together with paragraph 8,
provides certification as a mandatory precondition for the modified concessions come

263 China's first written submission, paras. 264, 270.
264 For example, in its response to the first set of questions, China stated that it had previously "noted"
that "the three month period set forth in paragraph 1 has in fact not been respected by the EU" (China's
265 China's second written submission, para. 199.
266 EU's response to Panel question No. 97.
267 China's comments on the 'EU's response to Panel question No. 97.

into effect. The Panel is not required nor requested to make a finding that the EU
acted inconsistently with paragraph 7 and paragraph 1.268 (emphasis added)
7.154. In a response to a question fro m the Panel, the European Union elaborated on its
understanding that China was not making any claims of violation under paragraph 7 of the
Procedures for Negotiations under Article XXVIII or paragraph 1 of the Procedures for Modification
and Rectification of Schedules. The European Union set forth its understanding that the panel
request "did not raise separate claims of violation of either of those two provisions ", and that
China had not asked the Panel to rule on any such claims in its previous submission s, but rather
that China "relied on those provisions in support of its claim under Article II:1 ". According to the
European Union, the fact "[t]that the Panel considered it necessary to raise this question at this
very late stage of the proceedings confirm s the lack of clarity of the Panel request on this point ",
and reiterated that "making those claims for the first time in response to a Panel question after the
second hearing would raise issues of due process".269
7.155. In its comments on the EU response, China reproduced the text of the items in its panel
request referring to paragraphs 7 and 1 of the above-mentioned Procedures, and stated:
The EU is thus wrong in its response to the above question stating that China made no
claims based on the two Procedures. To the contrary, two of China 's claims are
directly based on these two Procedures, as well as other provisions of the GATT 1994.
China further refers to its response to the Panel's question 99.
Considering that China and the EU hold different views on whet her the Modification
Procedures qualify as "decisions" within the meaning of paragraph 1(b)(iv) of the
GATT 1994, an issue decides directly the legal status of the Modification Procedures
where China's claims are hinged upon, China sees no reason for the P anel not to rule
on this issue.270
7.156. We recall that it was in its response to Panel question No. 99 that China had clarified that
the Panel "is not required nor requested to make a finding that the EU acted inconsistently with
paragraph 7 and paragraph 1".271
7.157. We consider that while the identification of a claim in a panel request is a necessary
condition for a Panel to rule on that claim, it is not always a sufficient condition for a Panel to rule
on that claim. In some circumstances, a panel may be precluded fr om ruling on a claim, even
where it is included in the panel request, if the complainant does not articulate the claim in a clear
and timely manner in its subsequent submissions.
7.158. In EU – Fasteners (China) the Appellate Body found that a claim under Articl e 6.5 of the
Anti-Dumping Agreement was identified in the panel request, and thus within the Panel 's terms of
reference. However, the Appellate Body found that the panel erred in ruling on this claim. After
reviewing the manner in which the particular clai m was pursued, the Appellate Body explained
that:
[T]he Panel record shows that China asserted its claim … only in response to questions
from the Panel, and articulated this claim only after the parties had provided the Panel
with written submissions and h ad attended a substantive meeting. We do not find
that assertions made so late in the proceedings, and only in response to questioning
by the Panel, can comply with either Rule 4 of the Panel 's Working Procedures, or the
requirements of due process of law . The late assertion of a claim …, and the absence
of proper argumentation and of the provision of relevant evidence in support of this
assertion, demonstrates that the European Union was not called upon to respond to
China's claim under Article 6.5.272

268 China's response to Panel question No. 99. See also China's response to Panel question No. 100.
269 EU's response to Panel question No. 100, paras. 61-63.
270 China's comments on the EU response to Panel question No. 102(a).
271 China's response to Panel question Nos. 99 and 100.
272 Appellate Body Report, EC – Fasteners (China), para. 574.

7.159. In India – Additional Import Duties, the panel found that a claim under Article III:2 of the
GATT 1994 was identified in the panel request, and therefore fell within the scope of its terms of
reference. The panel noted that in its submissions to the panel, th e complainant had referred to
this provision, and even to the alleged inconsistency of the measures with this provision. However,
the panel was unable to discern from the complainant's submissions any arguments in support of a
separate and independent clai m under Article III:2. In addition, the panel noted that the
complainant did not request any findings under this provision in the concluding section of its first
or second written submissions. The panel noted that the statements alleging a lack of consiste ncy
with this provision were embedded in a discussion of a different claim and argument, and that it
"would be improper for the Panel proprio motu to take these statements out of their specific
context and rely on them to rule on an alternative claim " under Article III:2, especially where the
complainant "has not requested any findings in relation to a claim " under this provision. 273 In
these circumstances, the panel found that the claim under Article III:2 was not properly before it,
and made no findings on the merits of any such claim.274
7.160. In US – Steel Plate, the panel request identified a claim under Article 6.6, Article 6.8 and
Annex II(7) of the Anti -Dumping Agreement regarding the failure to exercise special
circumspection in using information supplied in the petition. The complainant explicitly abandoned
these claims in its first written submission. It subsequently stated its intention, prior to the first
meeting with the panel, to pursue one of those claims. Despite the lack of a specific objection by
the responding party, the panel found that the complainant could not "resurrect" this claim. The
panel considered that "[w]hile it is true that the claim in question was set out in the request for
establishment, and is therefore within our terms of reference, we are not persuaded that fact alone
requires us to rule on it".275 The panel found that in the absence of any extenuating circumstances
to justify the reversal of its abandonment of this claim, the complainant should not be allowed to
resurrect it.
7.161. In the present case, the items of China 's panel request alleging a violation of Article II
include the statement that "the EU acted inconsistently with the procedures set forth in
paragraph 7 of the Procedures for Negotiations under Article XXVIII and paragraph 1 of the
Procedures for Modification and Rectification of Schedules and Tariff Concessions ". However, in its
subsequent submissions, China never requested a finding that the European Union acted
inconsistently with either of these provisions, nor did it ever argue that the alleged inconsistency
with Article II arose as a result of any inconsistency with paragraph 1 or paragraph 7 of the above-
mentioned procedures. To the contrary, we understand that China 's claim under Article II is not
dependant on the p remise that the European Union acted inconsistently with paragraph 1 or
paragraph 7.276 Furthermore, as noted above, in response to a question posed by the panel at the
second meeting, China clarified that the Panel "is not required nor requested to make a f inding
that the EU acted inconsistently with paragraph 7 and paragraph 1".277
7.162. Based on the foregoing, we do not understand China to be requesting a finding that the
European Union acted inconsistently with paragraph 7 of the Procedures for Negotiations unde r
Article XXVIII or paragraph 1 of the Procedures for Modification and Rectification of Schedule.
Insofar as China is making any such claims, then we conclude that such claim has not been made
in a sufficiently clear and timely manner, and is therefore not properly before the Panel.

273 Panel Report, India – Additional Import Duties, para. 7.412.
274 Panel Report, India – Additional Import Duties, paras. 7.402-7.418.
275 Panel Report, US – Steel Plate, para. 7.26.
276 At paragraph 73 of its response to Panel question No. 99, China explained that "China takes the view
that in accordance with paragraph 1 of the Procedures for Modification and Rectification of Schedules and Tariff
Concessions, read together with paragraph 8 of the Procedures for Negotiations under Article XXVIII,
modifications of a schedule of concessions are subject to certification, without which the new modified
concessions are not yet given legal effect and the original concessions remain in force. Based on this legal
interpretation as well as the fact that the EU's modified concessions have not been certified, China claims that
the EU violated Article II of the GATT 1994 by applying customs duties in excess of the current bound rates
that are still in effect".
277 China's response to Panel question Nos. 99 and 100, paras. 74 and 75.

7.3.3.2 China's contention of a possible violation of Article II:1 in the period 2007-2009
arising from the European Union applying new rates prior to notifying all Members of the
completion of the negotiations
7.163. Paragraph 6 of the Procedures for Negotiations under Article XXVIII provides that:
Upon completion of all its negotiations the contracting party referred to in paragraph 1
above should send to the secretariat, for distribution in a secret document, a final
report on the lines of the model in Annex C attached hereto.
7.164. As noted earlier, the first sentence of paragraph 7 of those procedures states that in the
case of negotiations under Article XXVIII:5, Members "will be free to give effect to the changes
agreed upon in the negotiations … as from the date on which the conclusion of all the negotiations
have been notified" in accordance with paragraph 6 of those procedures.
7.165. As elaborated later in our Report in the context of addressing the merits of China 's claim
under Article II:1, China's position is that changes agreed in Article XXVIII negotiations cannot be
implemented, insofar as they exceed the bound rates inscribed in a Member 's Schedule, until such
time as those changes are formally incorporated into its Schedule through certif ication.278 The
European Union disagrees, and argues that the first sentence of paragraph 7 reflects the right of
Members to apply tariff rates in excess of those set forth in the text of the Schedule prior to the
changes being formally incorporated through certification.279 In its second written submission,
China notes, in the context of responding to that argument, that the European Union implemented
the higher out-of-quota rates over the period 2007 -2009, prior to notifying other Members of the
conclusion of the negotiations on 27 May 2009. Thus, China submits that even if the European
Union's position regarding paragraph 7 were correct, which in China's view it is not, then there was
still a violation of Article II:1, in respect of the First Modification Pac kage, over that 2007 -2009
period.280
7.166. We recall that the European Union notified the WTO of the conclusion of the negotiations
relating to the First Modification Package on 27 May 2009, and of the conclusion of the
negotiations relating to the Second Modific ation Package on 17 December 2012.281 We note that it
is not in dispute that the European Union implemented the higher out -of-quota rates established
by the First Modification Package nearly two years before it notified the WTO Membership of the
conclusion of the negotiations on 29 May 2009. 282 In response to a question from the Panel, the
European Union explained that this was "largely due to an administrative oversight" on its part.283
7.167. We observe that China 's panel request does not appear to articulate any clai m that the
European Union violated Article II:1 on the grounds that it gave effect to the results of the First
Modification Package prior to notifying other Members of the completion of the negotiations. The
relevant item of the panel request, already repr oduced further above, refers to the absence of
"notification for certification", "notification of the date on which the changes to the goods schedule
come into force", and "notification of the draft modification to its Schedule".284
7.168. In any event, even if th e panel request could be read as including such a claim, we
consider that any violation of Article II:1 arising from the European Union 's implementation of the
results of the Article XXVIII negotiations prior to notifying Members would have ceased to exist on
29 May 2009, which was more than six years prior to the panel request in these proceedings. In
EC – Chicken Cuts, the Appellate Body confirmed that "[t]he term 'specific measures at issue ' in
Article 6.2 suggests that, as a general rule, the measures i ncluded in a panel's terms of reference
must be measures that are in existence at the time of the establishment of the panel. "285 We

278 China's first written submission, paras. 260-264, para. 268.
279 EU's first written submission, para. 300.
280 China's second written submission, para. 200.
281 See, respectively, G/SECRET/25/Add.1, circulated on 29 May 2009 (Exhibit EU-6) and
G/SECRET/32/Add.1., circulated on 20 December 2012 (Exhibit EU-9).
282 G/SECRET/25/Add.1, 29 May 2009 (Exhibit EU-6).
283 EU's response to question 53, para. 156.
284 China's request for the establishment of a panel, item (x) of Section II.A and item (x) of Section II.B.
285 Appellate Body Report, EC – Chicken Cuts, para. 156. For a review of WTO jurisprudence dealing
with measures that were withdrawn, repealed, or expired prior to the request for the establishment of a panel,
see Panel Report, China – Electronic Payment Services, paras. 7.224-7.229.

recognize that there may well be particular circumstances in which a panel would be justified in
making findings in respect o f a measure that ceased to exist prior to its establishment. However,
in this case China has not advanced any argument as to why the Panel should rule on whether the
European Union violated Article II:1 by implementing the higher out-of-quota rates over the period
2007-2009.286
7.169. Based on the foregoing, we do not understand China to be requesting a finding that the
European Union violated Article II:1 by implementing the higher out-of-quota rates over the period
2007-2009, prior to the point in time when it not ified other Members of the conclusion of the
negotiations (on 29 May 2009). Insofar as China's statement to that effect287 is to be construed as
making such a claim, then for the reasons above we conclude that it is not properly before us.
7.4 Claims under Article XXVIII:1 of the GATT 1994
7.4.1 Introduction
7.170. China claims that the European Union violated Article XXVIII:1 of the GATT 1994 by
refusing to recognize China 's "principal supplying interest " and "substantial interest " in the
concessions at issue in the First a nd Second Modification Packages. 288 In China 's view, the
reference periods used by the European Union to determine which Members held a principal or
substantial supplying interest were inconsistent with Article XXVIII:1 for two different reasons.
First, we u nderstand China to claim that the European Union violated Article XXVIII:1 by not
determining which Members held a principal or substantial supplying interest on the basis of an
estimate of what Members' shares would have been in the absence of the SPS measures restricting
poultry imports from China. Second, we understand China to claim that the European Union
violated Article XXVIII:1 by not re -determining which Members held a relevant supplying interest
on the basis of the increase in imports from China over the period 2009-2011.
7.171. The European Union responds that its determinations of which Members held a principal or
substantial supplying interest were entirely consistent with the requirements of Article XXVIII:1. 289
The European Union submits that it was un der no obligation to determine which Members held a
supplying interest on the basis of an estimate of what Members ' shares would have been in the
absence of the SPS measures restricting poultry imports from China, or to re -determine which
Members held a su pplying interest on the basis of the increase in imports from China over the
period 2009-2011. In addition, the European Union submits that it was entitled not to take into
account China's claims of supplying interest insofar as China did not claim any pri ncipal supplying
interest in the First Modification Package, and failed to make a timely claim of either principal or
substantial supplying interest in respect of the Second Modification Package.
7.4.2 Relevant provisions
7.172. Article XXVIII is entitled "Modification of Schedules". China's claim of violation is based on
Article XXVIII:1, which reads as follows:
On the first day of each three -year period, the first period beginning on 1 January
1958 (or on the first day of any other period* that may be specified by [the
CONTRACTING PARTIES] by two-thirds of the votes cast) a Member (hereafter in this
Article referred to as the "applicant Member") may, by negotiation and agreement
with any Member with which such concession was initially negotiated and with any

286 In response to Panel question No. 53, the European Union acknowledged the delayed notification, but
then stated that "the notification to the WTO was made well before the establishment of the present Panel"
(para. 157). China did not subsequently advance any counterargument, or raise the issue concerning the
2007-2009 period again.
287 China's second written submission, para. 64.
288 China's first written submission, paras. 49-117; China's opening statement at the first meeting of the
Panel, paras. 11-55; China's responses to Panel question Nos. 13-20, 22-23; China's second written
submission, paras. 31-95; China's opening statement at the second meeting of the Panel, paras. 3-40; China's
responses, or comments on EU's responses, to Panel question Nos. 68-70, 72-75, 82-84, 106-110.
289 EU's first written submission, paras. 86-153; EU's opening statement at the first meeting of the
Panel, paras. 10-17; EU's responses to Panel question Nos. 14-16, 18, 21-22, 24; EU's second written
submission, paras. 2-59; opening statement at the second meeting of the Panel, paras. 3-40; EU's responses,
or comments on China responses, to Panel question Nos. 68-70, 72-75, 82-84, 106-110.

other Member determined by [the CONTRACTING PARTIES ] to have a principal
supplying interest * (which two preceding categories of Members, together with the
applicant Member, are in this Article hereinafter referred to as the "Members primarily
concerned"), and subject to consultation with any other Member determined by [the
CONTRACTING PARTIES] to have a substantial interest* in such concession, modify or
withdraw a concession* included in the appropriate schedule annexed to this
Agreement. (emphasis added)
7.173. Thus Arti cle XXVIII:1 establishes certain conditions as to when modifications of
concessions contained in a Schedule can be made, as well as when concessions can be withdrawn.
It also indicates which Members are entitled to participate in negotiations or consultati ons
regarding the proposed modification or withdrawal. This includes any Member with which the
concession was initially negotiated, any Member determined to have a "principal supplying
interest", and any other Member determined to have a "substantial inter est" in the concession
subject to renegotiation. In this case, the European Union stated that China did not possess initial
negotiating rights in any of the concessions at issue under the First or Second Modification
Packages. China 's claim in relation to the First Modification Package was to be recognized as a
Member with a substantial supplying interest in the three tariff lines at issue. 290 With regard to the
Second Modification Package, China has claimed a principal supplying interest with regard to all
the relevant tariff lines and provided import statistics with respect to four tariff lines. 291 As noted
earlier, the European Union did not recognize China as a Member holding a principal or substantial
supplying interest in any of the concessions at issue.
7.174. The Ad Note to Article XXVIII:1 provides additional information on which Members should
be determined to hold a principal supplying interest and a substantial supplying interest. With
regard to the concept of a principal supplying interest, paragraph 4 of the Ad Note sets forth the
following objectives:
The object of providing for the participation in the negotiation of any Member with a
principal supplying interest, in addition to any Member with which the concession was
originally negotiated, is to ensure that a Member with a larger share in the trade
affected by the concession than a Member with which the concession was originally
negotiated shall have an effective opportunity to protect the contractual right which it
enjoys under this Agreement . On the o ther hand, it is not intended that the scope of
the negotiations should be such as to make negotiations and agreement under Article
XXVIII unduly difficult nor to create complications in the application of this Article in
the future to concessions which re sult from negotiations thereunder… (emphasis
added)
Paragraph 4 then sets out the criteria to define the principal supplying interest:
…. Accordingly, [the CONTRACTING PARTIES ] should only determine that a Member
has a principal supplying interest if that Member has had, over a reasonable period of
time prior to the negotiations , a larger share in the market of the applicant Member
than a Member with which the concession was initially negotiated or would , in the
judgement of [the CONTRACTING PARTIES], have had such a share in the absence of
discriminatory quantitative restrictions maintained by the applicant Member. It would
therefore not be appropriate for [the CONTRACTING PARTIES] to determine that more
than one Member, or in those exceptional cases where there is near equality more
than two Members, had a principal supplying interest. (emphasis added)
7.175. Paragraph 4 of the Ad Note to Article XXVIII:1 clarifies several important points. The first
is that a Member with a principal supplying interest must "have an effective opportunity to protect
the contractual right which it enjoys " under the GATT, but at the same time, the scope of the
negotiations should not be such as to make "negotiations and agreement under Article XXVIII
unduly difficult nor to create co mplications in the application " of A rticle XXVIII. Second,
paragraph 4 clarifies that, as a general rule, a Member should only be found to hold a principal

290 China's response to Panel question No. 17, para. 101 and Exhibit CHN-16.
291 China's response to Panel question No. 17, para. 102 and Exhibits CHN-29 and CHN-50. In Exhibit
CHN-48, China identified the type of supplying interest that it claimed with respect to the ten tariff lines at
issue under both of the modification packages.

supplying interest based on its share of the market "over a reasonable period of time prior to the
negotiations" or based on the market share it would be expected to have in the absence of
"discriminatory quantitative restrictions".
7.176. Regarding the meaning of the term "substantial interest", paragraph 7 of the Ad Note to
Article XXVIII:1 states that:
The e xpression "substantial interest " is not capable of a precise definition and
accordingly may present difficulties for [the CONTRACTING PARTIES]. It is, however,
intended to be construed to cover only those Members which have, or in the absence
of discriminatory quantitative restrictions affecting their exports could reasonably be
expected to have, a significant share in the market of the Member seeking to modify
or withdraw the concession. (emphasis added)
7.177. Thus, as a general rule, a Member should be determi ned to have a substantial supplying
interest only where it has, or would expect to have in the absence of discriminatory quantitative
restrictions affecting its exports, a significant share of the market. 292 The notion of a significant
share of the market is not further clarified in the text of paragraph 7.
7.178. The ordinary meaning of the word significant is "[i]mportant, notable; consequential ".293
Thus, the general standard seems to be whether a Member has, or in the absence of
discriminatory quantitative restrictions could reasonably be expected to have, an important share
in the market of the importing Member. In the context of Article XXVIII:1, a 10% import share
benchmark has been applied for the purpose of determining which Members hold a substantial
supplying interest.294 In this case, China argues that the 10 % import share benchmark cannot be
invoked to exclude a Member whose import share is below the 10% benchmark, insofar as that
Member demonstrates a substantial supplying interest taking into account the e xistence of
discriminatory quantitative restrictions in the context of Article XXVIII, and taking into account any
"special factors" in the context of determining which Members hold a substantial supplying interest
under Article XIII:2. However, subject to this understanding, China states that it "does not
consider that it is an ipso facto violation of Articles XXVIII and XIII for a member to use the 10
percent threshold to determine SSI status".295 Thus, based on its submissions in these proceedings
that the use of the 10 % import share threshold is not an ipso facto violation of Article XXVIII or
Article XIII, our understanding is that China does not claim that the European Union violated
Article XXVIII:1 by applying a 10% import share benchmark to determine which Members held a
"substantial interest ".296 For its part, the European Union does not argue that the 10% import

292 The Understanding on the Interpretation of Article XXVIII provides further guidance on the
interpretation of the terms "principal supplying interest" and "substantial interest" with regard to three specific
issues. Paragraph 1 of the Understanding, elaborating on paragraph 5 of the Ad Note to Article XXVIII:1,
broadens the definition of "principal supplying interest" to also include the Member which has the highest ratio
of its exports affected by the concession. Paragraph 3 clarifies the conditions under which trade in the affected
product that did not take place on an MFN basis should be taken into account when determining which
Members hold a "principal supplying interest". Finally, paragraph 4 clarifies how "principal" and "substantial"
supplying interest is to be determined in respect of a "new product" for which three years' trade statistics are
not available.
293 Shorter Oxford English Dictionary, 5th ed, W.R. Trumble, A. Stevenson (eds.) (Oxford University
Press, 2002), Vol. 2, p. 2835.
294 See e.g. Negotiating Rights under Article XXVIII of the GATT, Note by the Secretariat, 2 July 1987,
GATT Doc. MTN.GNG/NG7/W/9, pp. 2-3 ("In actual practice, contracting parties which have invoked
Article XXVIII, have in their bilateral negotiations interpreted the term ꞌsignificant share in the marketꞌ to be at
least 10 per cent, although nothing would prevent a country from recognizing substantial interest for a lower
percentage."); A. Hoda, Tariff Negotiations under the GATT and the WTO, Procedures and Practices, Cambridge
UP 2001, p. 14 ("[i]n practice, contracting parties (Members) having 10 per cent or more of the trade shares
have been recognized as having a substantial interest."); Panel Report, EC – Bananas III, paragraphs 7.83-
7.85 and footnote 369 (finding that the EC's determinations of which Members held a substantial supplying
interest, on the basis of the 10% market share benchmark, was not unreasonable).
295 China's response to Panel question No. 68(a) and 68(b).
296 In the course of the proceedings, China stated that what is "a significant share" varies "depending on
the market", and that if the Member concerned uses a particular threshold, e.g. 10%, that is higher than the
appropriate threshold which reflects "a significant share" in the particular market, e.g. 9%, the Member may
violate Articles XXVIII and XIII (China's response to Panel question No. 68(a), para. 17). That might be
understood to mean that, in China's view, the use of a 10% import share benchmark for determining which
Members hold a "substantial interest" would indeed constitute an ipso facto violation of Article XXVIII and
Article XIII.. However, China's clarification that it "does not consider that it is an ipso facto violation of

share benchmark can be applied without taking account of discriminatory quantitative restrictions
or special factors. Accordingly, there is no issue regarding the 10% benchmark per se that we are
called upon to resolve in the present dispute.297
7.179. The parties agree on the meaning of the term "consultation" in the context of
Article XXVIII:1. The text of this provision specifies that the applicant Me mber may modify or
withdraw a concession "by negotiation and agreement " with any Member with which the
concession was initially negotiated and with any Member determined by the Members to have a
principal supplying interest298, and "subject to consultation" with any other Member determined to
have a substantial interest in the concession. In this case, t he parties agree that the obligation to
consult with Members holding a substantial interest is not the same as an obligation to negotiate
with Members holding a principal supplying interest (or initial negotiating rights). 299 However, the
European Union has not suggested that the exchanges that occurred between the European Union
and China amounted to consultation (or, a fortiori , negotiation) within the meaning of
Article XXVIII:1.300
7.180. Both parties also agree that the failure to negotiate or consult with a Member that has a
duly justified claim of a principal or substantial supplying interest is cognizable under the DSU. In
this regard, the European Union does not question that Article XXVIII:1 imposes, on the Member
seeking the modification of a concession, an obligation to recognize any duly justified claim of
principal or substantial supplying interest and to negotiate or consult with the parties holding such
claims.

Articles XXVIII and XIII for a member to use the 10 percent threshold to determine SSI status" leads us to
conclude that China does not claim that the European Union violated Article XXVIII:1 by applying a 10% import
share benchmark to determine which Members held a "substantial interest". We note that insofar as any such
claim has been made by China, as the party alleging a violation it would have the burden of proof in connection
with any such claim. That means that it would be for China to, at a minimum, clearly articulate what
alternative percentage import share (e.g. 9%) or other alternative criterion or benchmark should have been
used in the market(s) at issue, if not the 10% import share benchmark that was used by the European Union.
The fact that China has not done so reinforces our understanding that it is not advancing any such claim, and
in any event would mean that China has not discharged its burden of proof in relation to any such claim.
297 Accordingly, we consider it unnecessary to rule on whether the 10% benchmark constitutes
"subsequent practice in the application of the treaty which establishes the agreement of the parties regarding
its interpretation" within the meaning of Article 31(3)(b) of the Vienna Convention, or a "customary practice"
within the meaning of Article XVI:1 of the WTO Agreement. The European Union, Brazil, Canada, and Thailand
all consider that there is subsequent practice establishing the agreement of Members, within the meaning of
Article 31(3)(b) of the Vienna Convention, that an importing Member may rely on a 10% import share
benchmark to determine which Members have a "substantial interest" under Article XXVIII. The European
Union and these third parties, and also Russia, further consider that this qualifies as a "customary practice"
within the meaning of Article XVI:1 of the WTO Agreement. China and Argentina disagree with both
conclusions. See China's first written submission, paras. 56, 214-215; China's response to Panel question Nos.
10-11; China's second written submission, paras. 74-78; EU's first written submission, paras. 91, 191, 282;
EU's response to Panel question No. 10; responses of Argentina, Brazil, Canada, Russia, Thailand, and the
United States to Panel question No. 1 to third parties.
298 If agreement cannot be reached, paragraph 3(a) of Article XXVIII of the GATT 1994 provides that the
Member can still modify or withdraw its concession. However, if it does, the Members primarily concerned (i.e.
the Members with initial negotiating rights or a principal supplying interest) can withdraw substantially
equivalent concessions initially negotiated with the Member modifying the concession. It must be noted that,
even if Members with initial negotiating rights or a principal supplying interest have the right to negotiate,
whereas Members with substantial supplying interest have the right be consulted, the latter category of
Members is also entitled to withdraw equivalent concessions if they are not satisfied with the proposed
modification. See Article XXVIII:3(b).
299 At paragraph 229 of its first written submission, China contrasts the obligation to negotiate with the
obligation to consult, in the context of contrasting Article XXVIII and Article XIII:2(d). See also EU's first
written submission, para. 109.
300 In its response to Panel question No. 18(a), the European Union confirms that "[t]he European Union
consulted with China on the justification of its claims of interest. Since the European Union did not recognize
those claims, it did not consult with China on the compensation to be provided for the intended modification of
concessions." In its response to the same question, China states that "the exchange on whether or not China is
a WTO Member with a substantial supplying interest is not the same as consultations on the withdrawal of the
concession itself and the maintenance of the balance of concessions."

7.181. Although there is no disagreement between the parties, the United States raised the
question of whether that is so because t he original text of Article XXVIII:1 of the GATT 1947 301 as
incorporated by reference into the GATT 1994 establishes an obligation to negotiate or consult only
with those Members "determined by the CONTRACTING PARTIES" to have a principal or substantial
supplying interest (and p aragraphs 3, 4, 5, and 7 of the original Ad Note to Article XXVIII:1 also
contain language to the same effect). Moreover, in the present case, there was no determination
by the Council for Trade in Goods or the General Council 302 that China had a principal or
substantial supplying interest in the concessions at issue because China never referred the matter
to the Council. In the United States ' view, the foregoing casts doubt on whether a Member 's
refusal to recognize such a claim is justiciable before a dispute settlement panel.303
7.182. In response to the question raised by the United States, China responds that the
"determination by the CONTRACTING PARTIES " could take place through dispute settlement 304,
and points out the consequences that would arise from finding that only the Council on Trade in
Goods or General Council could make such a determination. 305 The European Union considers that
the text of Article XXVIII:1 must be interpreted in the light of paragraph 4 of the Procedures for
Negotiations under Article XXVIII, which provides that where a claim of interest is recognized by
the Member seeking the withdrawal or modification of a concession, such recognition "will
constitute a determination by the CONTRACTING PARTIES in the sense of Article XXVIII:1".306
7.183. We are obligated to consider the issue of our jurisdiction on our own initiative. 307 However,
we do not consider i t necessary to address this issue in any great detail in the absence of any
disagreement between the disputing parties. We note that while the original text of
Article XXVIII:1 of the GATT 1947 (and its related Ad Note) as incorporated by reference into th e
GATT 1994 refers to a determination by the CONTRACTING PARTIES as to which Members hold a
principal or substantial supplying interest, the text of paragraph 4 of the Procedures for
Negotiations under Article XXVIII blurs the distinction between determina tions by the
CONTRACTING PARTIES and determinations by the applicant Member. We further note that the
Understanding on the Interpretation of Article XXVIII, negotiated in the Uruguay Round, makes no
reference to determinations of a principal or substantial supplying interest being made by the
CONTRACTING PARTIES (today, the Genera l Council or the Council for Trade in Goods) . In the
absence of any disagreement between the disputing parties on this issue, we proceed on the
premise that we have jurisdiction to review China 's claims that the European Union violated
Article XXVIII:1 by refusing to recognize its claims of principal or substantial supplying interest.
7.184. The parties also agree that the applicable provisions that regulate the determination of
which Members hold a supplying interest in the context of Article XXVIII negotiations apply both to
negotiations under Article XXVIII:1 and "reserved" negotiations under Article XXVIII:5. The tariff
renegotiations under the First and the Second Modification Package s were reserved negotiations

301 We note that Article XXVIII is part of the original GATT 1947, but the text was extensively revised in
the 1954-1955 Review Session. See Analytical Index: Guide to GATT Law and Practice, 6th edition (1995),
pp. 963-964.
302 Paragraph 2(b) of the Explanatory Note to the GATT 1994 provides that certain functions assigned to
the CONTRACTING PARTIES under the GATT 1947, including this one, shall be allocated by the Ministerial
Conference. The Panel understands that this function under Article XXVIII:1 would be carried out either by the
Council for Trade in Goods or the General Council. In response to Panel question No 14(b), China confirms that
it did not refer the European Union's refusal to grant a supplying interest status to China to the General Council
or the Council on Trade in Goods. China notes that paragraph 4 of the Procedures for Negotiations under
Article XXVIII, which provides that where a claim of interest is not recognized the party making the claim "may
refer the matter to the Council", is "permissive but not mandatory"(China's response to Panel question No. 14,
paras. 83, 85).
303 United States' third-party statement, paras. 5-12.
304 China's response to Panel question No. 14, para. 87.
305 China's response to Panel question No. 14, para. 88. In China's view, these consequences would
include the fact that an importing Member's failure to take "discriminatory quantitative restrictions" into
account could never be reviewed in proceedings initiated under the DSU.
306 EU's response to Panel question No. 14, para. 48. See also China's response to Panel question No. 14
and also parties' responses to Panel question No. 15.
307 As the Appellate Body has observed, "it is a widely accepted rule that an international tribunal is
entitled to consider the issue of its own jurisdiction on its own initiative, and to satisfy itself that it has
jurisdiction in any case that comes before it"(Appellate Body Report, US – 1916 Act, footnote 30). See also
Decision by the Arbitrator, US – COOL (Article 22.6 – United States), paras. 2.6-2.7.

conducted pursuant to Article XXVIII:5, not Article XXVIII:1. 308 The text of Article XXVIII:5
provides that reserved negotiations conducted pursuant to that provision are to be conducted "in
accordance with the procedures of paragraph 1 to 3 " of Article XXVIII. 309 The parties agree that
the initial determination of which Members hold a principal or substantial supplying interest in the
context of reserved negotiations conducted pursuant to Article XXVIII:5 is governed by the same
provisions that apply in the case of negotiations under Article XXVIII:1. These provisions include,
as indicated above, paragraphs 4 and 7 of the Ad Note to Article XXVIII:1.
7.4.3 Analysis by the Panel
7.185. Turning to the issues in dispute, China's claims under Artic le XXVIII:1 and the arguments
of the parties present three main issues. The first issue is w hether the SPS measures that
restricted Chinese poultry imports over the reference periods used by the European Union in both
the First and Second Modification Pack ages constitute "discriminatory quantitative restrictions "
within the meaning of the Ad Note to Article XXVIII:1. The second issue is whether the European
Union additionally violated Article XXVIII:1 in the Second Modification Package by not re -
determining, prior to the conclusion of the negotiations, which Members held a principal or
substantial supplying interest on the basis of the increase in imports from China over the period
2009-2011. The third issue is whether the European Union was entitled to disregard China's claims
of a principal and substantial supplying interest on the grounds that they were not presented in a
timely manner.
7.4.3.1 Whether the SPS measures at issue constitute "discriminatory quantitative
restrictions"
7.4.3.1.1 Main arguments of the parties
7.186. China claims that the European Union violated Article XXVIII:1 by determining which
Members held a principal or substantial supplying interest on the basis of the import statistics over
the three years preceding the notification of its intention to modify its concessions (2003-2005 for
the First Modification and 2006 -2008 for the Second Modification Package) when imports from
China were subject to the European Union's SPS measures. China submits that the European Union
was under a legal obligation to estimate what Members' shares would have been in the absence of
the SPS measures restricting poultry imports from China. The reason, according to China, is that
the European Union's SPS measures on Chinese poultry imports were "discriminatory quantitative
restrictions" within the meaning of paragraphs 4 and 7 of the Ad Note to Article XXVIII:1 and, as
such, they should have been taken into account by the European Union when determining which
Members had a supplying interest in the concessions subject to renegotiations.
7.187. China interprets the term "discriminatory" so as to include situations where imports from a
WTO Member are "treated differently from imports from other WTO Members, irrespective of the
ground of such disparate treatment and, in particular, whether such difference in treatment was
justified or not".310 In arguing that the SPS measures are discriminatory, China considers that it is
legally irrelevant whether those measures are unjustified, or WTO -inconsistent. In China 's view,
"discriminatory quantitative restrictions" in the context of the Ad Note to Article XXVIII:1 "covers
not only those discriminatory restrictions that are prohibited by the covered agreements, but also
others that are justifiable under relevant provisions of the covered agreements".311

308 In the course of the proceedings, China stated that the European Union had provided no evidence to
prove that the negotiations resulting in the Second Modification Package were conducted under paragraph 5 of
Article XXVIII, and that "[i]ts notification for this negotiation only referred to Article XXVIII in general" (China's
second written submission, para. 54 (citing Exhibit CHN-25)). However, we note that both the WTO document
circulating the notice of the EU's intention to modify the concessions (Exhibit CHN-25) and the WTO document
circulating the communication by the European Union of the results of the negotiations (Exhibit EU-9) refer to
"Article XXVIII:5 Negotiations". As additional evidence, the European Union has provided the WTO documents
circulating the communications of the European Union reserving its rights under Article XXVIII:5 for the periods
2009-2011 and 2012-2014 (Exhibit EU-41). In the light of the foregoing, we do not see the basis for
questioning whether the negotiations were conducted under Article XXVIII:5.
309 Paragraph 1 of the Procedures for Negotiations under Article XXVIII reiterates that the procedures of
Article XXVIII:1 "are also applicable to negotiations under paragraph 5".
310 China's first written submission, para. 65.
311 China's first written submission, para. 64.

7.188. The European Union submits that it was entitled to determine which Members held a
principal or substantial supplying interest on the basis of actual import levels over the three years
preceding the notification of its intention to modify its concessions (2003-2005 and 2006-2008). It
was under no legal obligation to estimate what Members ' shares would have been in the absence
of the SPS measures restricting poultry imports from China. The reason, according to the
European Union , is that the SPS measures a t issue are not "discriminatory quantitative
restrictions", and therefore the European Union was not required to estimate what Members '
imports shares would have been in the absence of those measures. According to the European
Union, whether imports from a given country are restricted "will depend on the sanitary situation
in each country of origin".312 The European Union considers that a restriction on imports based on
SPS grounds is discriminatory within the meaning of the Ad Note to Article XXVIII:1 "if, and only if,
imports from two countries posing similar sanitary risks are not similarly treated ".313 According to
the European Union, it follows that if a quantitative restriction on imports is applied consistently
with all the relevant provisions of the WTO Agreement (including in particular provisions such as
Article XX of the GATT 1994, Article 2.3 of the SPS Agreement or Article 2.1 of the TBT
Agreement) it would not be "discriminatory" according to the discrimination test described
above.314
7.189. Regarding the second element of the term "discriminatory quantitative restrictions", China
argues that, as import prohibitions, the SPS measures are clearly "quantitative restrictions" within
the meaning of Article XI of the GATT 1994. 315 China submits that even if the SP S requirements
are compliant with Article III, it would not follow that the import bans do not fall under the scope
of Article XI:1. China submits that various panels and the Appellate Body have found that
measures that affected both imported and domestic products, but resulted in an import ban, may
fall within the scope of "[import] prohibitions or restrictions, other than duties, taxes or other
charges" in violation of Article XI:1.316
7.190. In response, the European Union argues that the SPS measures at issue ar e not
quantitative restrictions. The European Union agrees with China that the term "quantitative
restrictions", as used in the Ad Note to Article XXVIII:1, must be interpreted in the light of
Article XI:1.317 However, the European Union argues that Article XI:1 must in turn be interpreted
in the light of the introductory paragraph to the Ad Note to Article III, which provides that a
measure that is applied to an imported product and to the like domestic product, and which is
enforced in the case of the impor ted product at the time or point of importation, "is nevertheless
to be regarded as an internal tax or other internal charge subject to Article III ". In the present
case, the European Union submits that its SPS regime for animal products (including poultry
products) "is based on the fundamental principle that imported products must comply with the
same or equivalent sanitary requirements as the EU domestic products ".318 The European Union
reasons that, in accordance with the Ad Note to Article III, such measu res are not "quantitative
restrictions" within the meaning of either Article XI:1 or, conseque ntly, of the Ad Note to
Article XXVIII:1.
7.191. Proceeding on the premise that the European Union was required to estimate the import
share that China could reasonably be expected to have in the absence of the SPS measures, China
observes that the Ad Note to Article XXVIII does not clarify how such a determination is to be
made. Arguing by analogy on the basis of paragraph 4 of the Understanding, concerning "new
products" for which trade statistics from the prior three years are not available, China argues that,
to determine the share that China could reasonably be expected to have had absent the SPS
import bans, the European Union should have taken into account factors s uch as production
capacity, investment in the product, estimates of export growth, and forecasts of demand in the
European Union. China provides information on the level of its poultry exports before, during and

312 EU's first written submission, para. 118. The European Union adds that "[w]here the sanitary
situation in any two countries is the same or equivalent the European Union will treat imports from those two
countries in the same manner".
313 EU's response to Panel question No. 21, para. 63.
314 EU's response to Panel question No. 21, para. 64.
315 China's first written submission, para. 60.
316 China's opening statement at the first meeting of the Panel, paras. 8-12, 14-18; China's second
written submission, para. 34.
317 EU's first written submission, paras. 59-60.
318 EU's first written submission, para. 117.

after the prohibition – both to the European Union and globally – to support its contention that
China could reasonably be expected "to at least have had an SSI in the EU market".319
7.192. The European Union disagrees with China on this point as well. The European Union
submits that even if the import data relied upon by the European Union had been "tainted" by the
application of those SPS measures, the other evidence available at the time when the European
Union notified its intention to negotiate the modification of the concessions would not have
warranted recognizing that China held either a principal or substantial supplying interest in any of
the concessions at issue under both renegotiations. According to the European Union , the
existence of a principal or substantial supplying interest cannot be determ ined on the basis of
evidence that was not provided to the European Union at the relevant time in support of China 's
claims of interest pursuant to paragraph 4 of the Procedures for Negotiations under Article XXVIII,
or on the basis of evidence post-dating the opening of the negotiations. Thus, the European Union
submits that the import data concerning the period immediately preceding the entry into force of
the SPS measure in 2002 is both the most pertinent and the most reliable source of evidence in
order to estimate the import share that China would have had in the absence of the SPS measures
for both Modification Packages. The European Union submits that during the years preceding 2002,
China's import shares in the European Union for all the tariff lines concerned were negligible.320
7.4.3.1.2 Findings of the Panel
7.193. The threshold legal issue raised by China 's claim is w hether the SPS measures that
restricted Chinese poultry imports over the reference periods used by the European Union in both
the First and Second Modi fication Packages constitute "discriminatory quantitative restrictions "
within the meaning of the Ad Note to Article XXVIII:1. The relevant facts 321 are not in dispute, and
the parties ' disagreement turns on their opposing interpretations of the terms "discriminatory
quantitative restrictions". We will begin our analysis by interpreting the term "discriminatory" in
the context of the Ad Note to Article XXVIII:1, taking into account the ordinary meaning of the
term "discriminatory", the immediate and wider co ntext in which it appears, and the object and
purpose of Article XXVIII.
7.194. In its first written submission, China referred to a passage from the Appellate Body Report
in Canada – Wheat Exports and Grain Imports to support its contention that the "ordinary
meaning" of the concept of "discrimination" may, depending on the context of the provision, be
interpreted broadly. The Appellate Body stated:
When viewed in the abstract, the concept of discrimination may encompass both the
making of distinctions between s imilar situations, as well as treating dissimilar
situations in a formally identical manner. 322 The Appellate Body has previously dealt
with the concept of discrimination and the meaning of the term "non-
discriminatory"323, and acknowledged that, at least ins ofar as the making of
distinctions between similar situations is concerned , the ordinary meaning of
discrimination can accommodate both drawing distinctions per se, and drawing
distinctions on an improper basis .324 Only a full and proper interpretation of a
provision containing a prohibition on discrimination will reveal which type of
differential treatment is prohibited.325 (emphasis added)
7.195. China cites this passage as support for the proposition that "[t]he concept of
'discriminatory' quantitative restrictions covers not only those discriminatory restrictions that are
prohibited by the covered agreements, but also others that are justifiable under relevant

319 China's first written submission, para. 109.
320 EU's first written submission, paras. 134-140.
321 See section 7.2.3 above.
322 (footnote original) See the reasoning of the Appellate Body with respect to Article III:4 of the GATT
1994 in its Report in Korea – Various Measures on Beef, para. 136, referring to the GATT Panel Report, US –
Section 337. As this case does not include any claim based on discrimination arising from formally identical
treatment, we do not address this type of discrimination in our discussion.
323 (footnote original) Appellate Body Report, EC – Tariff Preferences, paras. 142–173. In that case, the
Appellate Body examined the meaning of the term "non-discriminatory" in footnote 3 to paragraph 2(a) of the
Enabling Clause.
324 (footnote original) Appellate Body Report, EC – Tariff Preferences, para. 153.
325 Appellate Body Report, Canada – Wheat Exports and Grain Imports, para. 87.

provisions of the covered agreements".326 In our view, the above passage supports the proposition
that the term "discrimination" may be interpreted relatively narrowly, so as to cover only
unjustifiable distinctions, or relatively broadly, so as to also cover distinctions that are legitimate
and justifiable. To that extent, we agree that t he word "discrimination" may be given different
meanings depending on the context in which that word appears, and depending on the context,
may have a broad meaning that covers legitimate and justifiable distinctions.
7.196. However, the passage above and prior Appellate Body jurisp rudence establishes that,
under both the relatively narrow meaning of "discrimination" and this relatively broad meaning of
"discrimination", the outer limit of the ordinary meaning of the term "discrimination" only extends
to situations in which different ial treatment, whether justified or not, is accorded to entities that
are similarly situated. In other words, we read the Appellate Body to say that even where the term
"discrimination" is to be interpreted relatively broadly, in a way that would cover "both drawing
distinctions per se, and drawing distinctions on an improper basis", this would still only be "insofar
as the making of distinctions between similar situations is concerned".327
7.197. In addition to what the Appellate Body stated in the above passage f rom Canada – Wheat
Exports and Grain Imports in the context of interpreting the term "discriminatory" in
Article XVII:1(a) of the GATT 1994, this was the essence of the prior finding in the Appellate Body
Report that was being summarized in Canada – Wheat Exports and Grain Imports . In EC –Tariff
Preferences, the Appellate Body addressed the meaning of the term "discrimination" in the context
of footnote 3 of the Enabling Clause. The Appellate Body recognized that the ordinary meaning of
the term may include a relatively broad and "neutral" meaning "of making a distinction ", or a
relatively narrow and "negative" meaning "carrying the connotation of a distinction that is unjust
or prejudicial". However, the Appellate Body clarified that under both the broad an d the narrow
meaning of the term "discrimination", the sine qua non is that the different treatment must be
accorded to "similarly-situated" entities. This is apparent from the following passage of its Report
in EC – Tariff Preferences:
[W]e are able to di scern some of the content of the "non-discrimination" obligation
based on the ordinary meanings of that term . Whether the drawing of distinctions is
per se discriminatory, or whether it is discriminatory only if done on an improper
basis, the ordinary mea nings of "discriminate" converge in one important respect :
they both suggest that distinguishing among similarly-situated beneficiaries is
discriminatory. For example, India suggests that all beneficiaries of a particular
Member's GSP scheme are similarly-situated, implicitly arguing that any differential
treatment of such beneficiaries constitutes discrimination. The European Communities,
however, appears to regard GSP beneficiaries as similarly -situated when they have
"similar development needs". Although the European Communities acknowledges that
differentiating between similarly-situated GSP beneficiaries would be inconsistent with
footnote 3 of the Enabling Clause, it submits that there is no inconsistency in
differentiating between GSP beneficiaries w ith "different development needs ". Thus,
based on the ordinary meanings of "discriminate", India and the European
Communities effectively appear to agree that, pursuant to the term "non-
discriminatory" in footnote 3, similarly-situated GSP beneficiaries s hould not be
treated differently. The participants disagree only as to the basis for determining
whether beneficiaries are similarly-situated.328 (emphasis added)
7.198. The Appellate Body explained that "the convergence of those definitions on the fact that
similarly-situated entities should not be treated differently " finds reflection in the use of the term
"discrimination" in general international law.329 The Appellate Body, applying that interpretation of

326 China's first written submission, para. 64.
327 Appellate Body Report, Canada – Wheat Exports and Grain Imports, para. 87. (emphasis added)
328 Appellate Body Report, EC – Tariff Preferences, para. 153.
329 Appellate Body Report, EC – Tariff Preferences, footnote 318. (emphasis added) As examples, the
Appellate Body quoted from R. Jennings and A. Watts (eds.), Oppenheim's International Law, 9th ed.
(Longman, 1992), Vol. I, p. 378 ("Mere differences of treatment do not necessarily constitute discrimination …
discrimination may in general be said to arise where those who are in all material respects the same are
treated differently, or where those who are in material respects different are treated in the same way"); and
from E.W. Vierdag, The Concept of Discrimination in International Law, (Martinus Nijhoff, 1973), p. 61
("Discrimination occurs when in a legal system an inequality is introduced in the enjoyment of a certain right,

the term "discrimination", concluded that "preference-granting countries are required, by virtue of
the term "non-discriminatory", to ensure that identical treatment is available to all similarly-
situated GSP beneficiaries".330
7.199. Based on the foregoing, we consider that the ordinary meaning of the term
"discriminatory" is somewhat elastic and may be interpreted narrowly or broadly, depending on
the context. However, even if this concept is stretched to include the broader meaning of
discrimination, the ordinary meaning of the term "discriminatory quantitative restrict ions" would
still only cover, in the context of paragraphs 4 and 7 of Note Ad Article XXVIII:1, quantitative
restrictions that draw distinctions between imports from different countries that are similarly -
situated.
7.200. Turning to the context of paragraphs 4 a nd 7 of the Ad Note to Article XXVIII:1, the
concept of "discrimination" appears in numerous provisions of the GATT 1994 and the other
covered agreements. The term "discrimination" is used in some WTO provisions accompanied by
the associated terms "arbitrary or unjustifiable " (or comparable terms) and "where the same
conditions prevail " (or comparable terms). 331 In the context of certain provisions, the term
discrimination is accompanied by one of those associated terms, but not the other. 332 In the
context of some other provisions, such as paragraphs 4 and 7 of the Ad Note to Article XXVIII:1,
the term "discriminatory" or "discrimination" is not accompanied by the qualifying terms "arbitrary
or unjustifiable", or by the terms "between countries where the same c onditions prevail". China
argues that the phrase "discriminatory quantitative restrictions" should therefore be interpreted to
cover "both arbitrary or unjustifiable discrimination, as well as non -arbitrary or justifiable
discrimination -- regardless of the application to countries where the same conditions prevail".333
7.201. We agree with the premise that when the same term is accompanied by qualifying terms
that narrow or broaden the ordinary meaning of that term in the context of some provisions, but
that same t erm is used in the context of other provisions unaccompanied by any such qualifying
language, then the omission of the qualifying language must be given meaning and, all else being
equal, it must be interpreted in accordance with its unqualified ordinary m eaning. However, the
function of qualifying terms is not always to narrow or broaden the ordinary meaning of the term.
To the contrary, qualifying language may serve the purpose of bringing greater precision to how a
general concept or legal standard is to be applied in a given provision or context, when the
ordinary meaning of that term is general enough to accommodate an interpretative range with
different shades of meaning. The foregoing consideration is particularly relevant in the context of
interpreting a general concept such as "discrimination".334 It appears to us that when the term
"discrimination" is accompanied by the qualifying terms "arbitrary or unjustifiable" (or comparable
terms) and "where the same conditions prevail" (or comparable terms) in certain provisions, these
additional terms serve the purpose of bringing greater precision to how the general concept and
legal standard of "discrimination" is to be applied in a given provision or context. These qualifying
terms do not, in our view, serve the purpose of narrowing the ordinary meaning of the term
"discrimination" in the manner suggested by China.

or in a duty, while there is no sufficient connection between the inequality upon which the legal inequality is
based, and the right or the duty in which this inequality is made.")
330 Appellate Body Report, EC – Tariff Preferences, para. 173. (emphasis added) The Appellate Body's
interpretation of the ordinary meaning of term "discrimination" in the above cases is consistent with the
meaning given to the term in other contexts. For example, as regards the term "discrimination" in the context
of Article XX, the Appellate Body has explained that "discrimination results not only when countries in which
the same conditions prevail are differently treated, but also when the application of the measure at issue does
not allow for any inquiry into the appropriateness of the regulatory program for the conditions prevailing in
those exporting countries"(Appellate Body Report, US – Shrimp, para. 165).
331 For example, the chapeau of Article XX of the GATT 1994 refers to "arbitrary or unjustifiable"
discrimination between countries "where the same conditions prevail", and the sixth recital of the preamble to
the TBT Agreement uses identical terminology, as does the first recital to the SPS Agreement; the chapeau of
Article XIV of the GATS refers to "arbitrary or unjustifiable" discrimination between countries "where like
conditions prevail"; Article 2.3 of the SPS Agreement refers to "arbitrary or unjustifiable" discrimination
between counties "where identical or similar conditions prevail".
332 For example, Article 5.5 of the SPS Agreement refers to certain "arbitrary or unjustifiable
distinctions", insofar as such distinctions "result in discrimination".
333 China's response to Panel question No. 82, para. 46.
334 Panel Report, Canada – Pharmaceutical Patents, paras. 7.94 and 7.98.

7.202. China argues that the provisions of relevance in this case are Article XXVIII:1 and
paragraphs 4 and 7 of its accompanying Ad Note, and points ou t that these provisions in no way
prohibit or require the elimination of any measure characterized as a "discriminatory quantitative
restriction" within the meaning of those provisions. China emphasizes that these provisions are
simply about the impact tha t restrictions have had on the imports from supplying WTO Members,
and therefore any import restriction that has affected the shares of imports should be taken into
account and allowance should be made for such restriction. In its view, "for the purpose of Article
XXVIII:1, the similarity or dissimilarity in sanitary situations is not relevant. What is relevant is the
existence of import restrictions on some products and not on others whilst all products whichever
their origin, are like products".335
7.203. The term "discriminatory" must be interpreted in the particular context of Article XXVIII:1
and paragraphs 4 and 7 of its accompanying Ad Note. In our view, characterizing a measure as
discriminatory in the context of the Ad Note triggers significant legal consequ ences. Specifically,
when a quantitative restriction is characterized as a "discriminatory quantitative restriction" for the
purpose of the Ad Note to Article XXVIII:1, the legal consequence is that actual import shares that
Members held over a reference p eriod cannot be used as the basis to determine which Members
hold a principal or substantial supplying interest. Rather, such determination must be made either
on the basis of a different reference period, or on the basis of a counterfactual estimate of wh at
import shares Members would reasonably be expected to have in the absence of the quantitative
restriction. Thus, the broader the interpretation of the term "discriminatory", the wider the
universe of measures that would fall into that category of discri minatory quantitative restrictions,
and the more complex the ensuing counterfactual analysis. 336 We agree with China that such
complexity is not a reason in and of itself for adopting a narrower interpretation of the term
"discriminatory".337 However, such com plexity cannot be regarded as insignificant, especially
taking into account that one of the objectives of Article XXVIII:1 is to ensure that negotiations and
agreement under Article XXVIII are not "unduly difficult" and that "complications in the application
of this Article" are avoided.
7.204. Having examined the ordinary meaning of the term "discriminatory", and having further
examined the context and object and purpose of paragraphs 4 and 7 of the Ad Note to
Article XXVIII:1, we conclude that the terms "discriminatory quantitative restrictions " only cover
situations in which differential treatment is accorded to imports from Members that are similarly
situated. Applying this general concept of discrimination to the SPS measures, we consider that
restrictions applied to imports based on sanitary grounds are "discriminatory", within the meaning
of paragraphs 4 and 7 of the Ad Note to Article XXVIII:1, only if imports from different countries
that are similarly situated in terms of the sanitary situation or sanitary risks are not similarly
restricted.338 Thus, we do not agree with China's view that China and other countries are "similarly

335 China's oral statement at the first meeting, para. 31.
336 This is illustrated by China's arguments in the present case. China argues that all of the import bans
applying to Chinese poultry imports constitute discriminatory quantitative restrictions. In response to questions
from the Panel, China has confirmed that the heat treatment measure, including the limitation on the
production areas (see paragraphs 7.85 and 7.91-93), also falls within its definition of "discriminatory
quantitative restriction" (China's response to Panel question Nos. 9(b), 19, and 76). If this definition of
"discriminatory quantitative restrictions" is accepted, this would mean that all of the tariff lines at issue were
subject to "discriminatory quantitative restrictions" even before the import prohibition in 2002, and also after
the relaxation of the SPS measures in 2008. The European Union submits that under China's definition of
discriminatory quantitative restriction, the European Union would have been obligated to take into account not
only the specific SPS measures applied to China which are of concern to China, "but also for the SPS measures
applied to many other WTO Members and, more generally, for the entire sanitary regime applied to imports of
poultry products" (EU's first written submission, para. 132). The European Union submits that estimating what
poultry imports would be without any of the SPS measures "would be an extremely complex task involving the
use of highly speculative estimates" (EU's first written submission, para. 131; EU's second written submission,
para. 29; EU's response to Panel question No. 74).
337 China's response to Panel question No. 74(a), para. 15.
338 In this regard, Annex A:1 of the SPS Agreement explicitly defines SPS measures in relation to the
"risks" they seek to prevent. We also note that in the context of the chapeau of Article XX, the Appellate Body
has clarified that the assessment of whether or not a measure is applied in a manner that gives rise to
discrimination "between countries where the same conditions prevail" may focus on the extent to which the
same risks are posed. See e.g. Appellate Body Report, US – Tuna II (Art. 21.5 – Mexico), para. 7.308 (finding
that "the prevailing conditions between countries are the risks of adverse effects on dolphins arising from tuna
fishing practices").

situated" by virtue of the fact that Chinese poultry meat products and poultry meat products
originating in other countries are "like products".339
7.205. In this case, in response to the European Union’s argument that its import restrictions
depend on the sanitary situation or sanitary risks of different countries, China has not attempted
to argue that imports from any other similarly situat ed country were not subject to the same
restrictions. Accordingly, we find, on the basis of our interpretation of the term "discriminatory",
that China has not demonstrated that the SPS measures at issue are "discriminatory quantitative
restrictions". Therefore, we reject China 's claim that the European Union violated Article XXVIII:1
by determining which Members held a principal or substantial supplying interest on the basis of
actual import levels over the three years preceding the notification of its int ention to modify its
concessions (2003 -2005 and 2006 -2008), rather than on the basis of an estimate of what
Members' shares would have been in the absence of the SPS measures restricting poultry imports
from China.
7.206. Our interpretation of the terms " discriminatory quantitative restrictions " and the resulting
conclusions that we have reached renders it unnecessary to rule on several disputed issues raised
by the parties. First, we have concluded that the sine qua non of characterizing a measure as a
"discriminatory quantitative restriction" is the existence of differential treatment between countries
that are similarly situated, and that in this case China has not attempted to argue that imports
from any other similarly situated country (in the sense referred t o above) were not subject to the
same restrictions. Accordingly, it is not necessary for us to resolve the parties ' disagreement as to
whether the scope of the terms " discriminatory quantitative restrictions " in the context of
paragraphs 4 and 7 covers onl y unjustifiable distinctions in treatment accorded to countries that
are similarly situated, or is broad enough to also cover justifiable distinctions in treatment
accorded to countries that are similarly situated. 340 Second, given that China has not
demonstrated that the SPS measures are discriminatory, it is not necessary to rule on the disputed
issue of whether these measures constitute "quantitative restrictions". Finally, having found that
the SPS measures do not constitute "discriminatory quantitative restrictions" within the meaning of
paragraphs 4 and 7 of the Ad Note to Article XXVIII:1, it is not necessary to resolve the parties '
disagreement as to what share of imports into the European Union market China could reasonably
be expected to have had, in the absence of the SPS import prohibitions, over period 2002-2008.
7.4.3.2 Whether the European Union was obliged to re-determine which Members held a
supplying interest to reflect changes in import shares that took place following the
initiation of the negotiations
7.207. We now turn to the second ground for China 's claim that the European Union violated
Article XXVIII:1.
7.208. China argues that in light of the lapsing of substantial time between the notification of its
intention to modify its concessions in 2009 and the co nclusion of the negotiations three years later
in the case of the Second Modification Package, it was necessary for the European Union to engage
in a re-determination of which Members held a principal or substantial supplying interest, based on
actual impo rts from the most recent three -year reference period, which in China 's view is
2009-2011.341 According to China, where negotiations and consultations under Article XXVIII
extend beyond the six -month period provided for in paragraph 3 of the Ad Note to
Article XXVIII:1, the determination of which WTO Members hold a principal or substantial
supplying interest must be updated to reflect changes in import shares. 342 China submits that
because the Article XXVIII negotiations were not concluded until 2012, the European Union should

339 China's oral statement at the first meeting, paras. 29-31.
340 In this regard, the basis for our conclusion is similar to the basis for the conclusion reached by the
Appellate Body in EC – Tariff Preferences. In deciding to rule on the issues relating to the interpretation of the
term "discriminatory" that are necessary to resolve the question before us, our approach is also similar to that
followed by the panel in Canada – Pharmaceutical Patents. In the context of examining the term
"discrimination", that panel observed that "[g]iven the very broad range of issues that might be involved in
defining the word", it would "be better to defer attempting to define that term at the outset, but instead to
determine which issues were raised by the record before the Panel, and to define the concept of discrimination
to the extent necessary to resolve those issues"(Panel Report, Canada – Pharmaceutical Patents, para. 7.98).
341 China's first written submission, para. 88.
342 China's first written submission, para. 79; China's response to Panel question No. 22.

have re -determined which Members held a principal or substantial supplying interest based on
import levels over the most recent period of 2009-2011.
7.209. The European Union submits that it was not required to re -determine which Members had
a principal or substantial supplying interest on the basis of import data for a period subsequent to
the initial determination. According to the European Union , China 's claim has no basis in any
provision of Article XXVIII or the Procedures for Negotiations und er Article XXVIII, or on past
practice, and would undermine the objective pursued by Article XXVIII:1.
7.210. The fundamental legal issue raised by China 's claim is whether, in the context of
negotiations under Article XXVIII:5, the importing Member is under a legal obligation to reappraise
which WTO Members hold a principal or substantial supplying interest to reflect changes in import
shares that have taken place following the initiation of the negotiations. 343 The parties have
presented a series of arguments in support of their respective positions. The starting point of our
analysis is the ordinary meaning of the applicable provisions that regulate the determination of
which Members hold a supplying interest in the context of Article XXVIII negotiations. We will then
examine these provisions in the light of the parties ' arguments concerning the context of those
provisions, their object and purpose, and their prior application.
7.211. The text of Article XXVIII:1 itself does not go into detail on the modalities of negoti ations
to modify concessions, and is silent on the question of when and how determinations of principal
and supplying interest are to be made. This is elaborated in its Ad Note. Specifically, paragraph 4
of the Ad Note to Article XXVIII:1 provides that a M ember should only be determined to have a
principal supplying interest if it "has had, over a reasonable period of time prior to the
negotiations", the requisite market share (or would have had such a share in the absence of
discriminatory quantitative restrictions).344 Although this applies only to the determination of which
Members hold a principal supplying interest, we see no reason why a different approach to the
reference period should be followed for the purpose of determining which Members hold a
substantial supplying interest.345
7.212. The Procedures for Negotiations under Article XXVIII set forth guidelines for determining
which Members hold a principal or supplying interest. They specify when such a determination is to
be made, and on what basis. Paragraph 1 of these Procedures provides that the Member intending
to negotiate the modification or withdrawal of concessions should transmit a notification to that
effect for circulation to all Members. Paragraph 2 provides that the notification should be
accompanied "by statistics of imports of the products involved, by country of origin, for the last
three years for which statistics are available ".346 Furthermore, paragraph 4 of these Procedures
provides that any Member which considers that it has a principal or sub stantial supplying interest
in the concessions that have been identified in the notification should communicate its claim in
writing to the applicant Member, and that the claim should be made "within ninety days following
the circulation of the import stat istics referred to in paragraph 2 ". The Understanding on the
Interpretation of Article XXVIII provides that the guidelines provided in paragraph 4 of the
Procedures for Negotiations under Article XXVIII are equally applicable when determining the
existence of a principal or substantial supplying interest in the particular situations identified in
paragraph 1 (highest ratio of exports) and paragraph 4 (new products) of the Understanding.347
7.213. What emerges from the foregoing is that the determination of which Me mbers hold a
principal or substantial supplying interest in the concessions subject to renegotiations is to be
made on the basis of the data preceding the initiation of the negotiations, and more specifically,
the data for the last three years accompanying the notification which the importing Member
circulates to initiate the process. These provisions do not directly speak to the separate issue of
whether, having made this initial determination, a Member may then be required to subsequently
reappraise that determination, at a later stage, to reflect any changes in import shares that have

343 We recall that the negotiations were conducted under Article XXVIII:5. See footnote 308 above.
344 Emphasis added.
345 We note that the paragraph 4 of the Ad Note regarding determinations of which Members hold a
principal supplying interest is considerably more detailed than paragraph 7, which concerns substantial
supplying interest. Thus, the omission of this particular element from paragraph 7 would not suggest that the
drafters intended for a different approach to apply under paragraph 7.
346 Emphasis added.
347 See paragraphs 2 and 5 of the Understanding.

taken place following the initiation of the negotiations. The absence of any guidance on that issue
is notable for the following reasons.
7.214. First, t he identification of the M embers having a supplying interest would seem to be a
necessary pre -condition for the opening of negotiations. Therefore, such a determination must
obviously be made before the initiation of the negotiations. It is also relatively straightforward that
such a determination must, given this timing, be made on the basis of a reference period covering
a period of time prior to the negotiations. Notwithstanding, the Procedures for Negotiations under
Article XXVIII contain the above -mentioned provisions elaborating on the length of that reference
period and related trade statistics and on the modalities and time -frame for making a claim of
interest. We consider that if Members were under a far less -obvious legal obligation to reappraise
and re -determine which othe r Members hold a principal or substantial supplying interest, one
would expect the Ad Note, the Procedures for Negotiations under Article XXVIII, or the
Understanding to also provide at least some form of guidance on when and on what basis such a
reappraisal is to be made. They do not. This serves as an indication that no such requirement
exists.
7.215. Second, this indication is reinforced by the existence of other provisions of the covered
agreements that expressly indicate when there may be a requirement to review and reappraise the
reference period used to determine the existence of a supplying interest. Notably, Article XIII:4 of
the GATT 1994348 expressly provides for such a mechanism in the context of allocating TRQs, and
quantitative restrictions more genera lly, among supplying countries. This provision indicates what
may be reappraised (the reference period selected, special factors, and other points); what
procedure is to be followed (a request, followed by consultations); and which Members are be
involved (those with a substantial supplying interest). The absence of any provision akin to
Article XIII:4 in the context of Article XXVIII is not dispositive. However, it reinforces the
impression that emerges from the text of the applicable provisions relating t o the determination of
supplying interests.
7.216. Turning to the object and purpose of Article XXVIII, which must inform our analysis, we
are of the view that the rules applicable to the determination of which Members hold a supplying
interest under Article XXV III should be interpreted in a way that strikes a balance between the
several competing objectives that find expression in the text of the Ad Note to Article XXVIII:1. On
the one hand, it is important to ensure that negotiations and agreement under Article XXVIII are
not "unduly difficult", that "complications in the application of this Article " are avoided, and that
the negotiations should "come to an end as quickly as possible".349 On the other hand, it is equally
important to ensure that any Member that ho lds a principal supplying interest "shall have an
effective opportunity to protect the contractual right which it enjoys under this Agreement "350, and
we recognize that Article XXVIII "is not only about an expeditious conclusion of modification
negotiations".351
7.217. We consider that there would be circumstances in which it would not be "unduly difficult"
or complicated to reappraise which Members hold a substantial supplying interest. For example, it
could be the case that for some reason, and shortly after the sta rt of the negotiations, a Member
that had previously been determined to hold a principal supplying interest is rendered unable to
supply that product at all in the long term. 352 On the other hand, we consider that there would be
other circumstances in which the balance between these competing objectives would tilt the other

348 Article XIII:4 provides that:
With regard to restrictions applied in accordance with [Article XIII:2(d)] or under [Article
XI:2(c)] the selection of a representative period for any product and the appraisal of any special
factors affecting the trade in the product shall be made initially by the Member applying the
restriction; Provided that such Member shall, upon the request of any other Member having a
substantial interest in supplying that product or upon the request of the [CONTRACTING
PARTIES], consult promptly with the other Member or the [CONTRACTING PARTIES] regarding
the need for an adjustment of the proportion determined or of the base period selected, or for
the reappraisal of the special factors involved, or for the elimination of conditions, formalities or
any other provisions established unilaterally relating to the allocation of an adequate quota or its
unrestricted utilization.
349 Paragraph 4 of the Ad Note to Article XXVIII:1. EU's first written submission, para. 153; China's
response to Panel question No. 22(c), paras. 126-127.
350 Paragraph 4 of the Ad Note to Article XXVIII:1.
351 China's second written submission, para. 45.
352 Canada's response to Panel question No. 4(b) to third parties.

way, and mitigate against re -determining which WTO Members hold a principal or substantial
supplying interest in the midst of ongoing negotiations. For example, it could be the case that l ong
after the initiation of negotiations, a relatively minor change in the import shares leads to one
Member temporarily overtaking another as the supplier with a principal interest, such that a re -
determination would lead to negotiations that have reached an advanced stage having to be
restarted again, with a different Member.353
7.218. The issue before the Panel is not, however, whether, in the circumstances of this case, the
European Union should have re -determined which Members held a principal or substantial
supplying interest. In this regard, both parties agree that this particular issue should not be
resolved on the basis of a "reasonableness" standard.354 Rather, the issue is whether or not there
is a legal rule that applies to all cases, putting a Member under a legal obligation, in all cases, to
reappraise which WTO Members hold a principal or substantial supplying interest to reflect changes
in import shares that have taken place following the initiation of the negotiations. We have already
noted the absence of any guidance in the text of the Ad Note and the Procedures for Negotiations
under Article XXVIII on when and how a Member might reappraise which WTO Members hold a
principal or substantial supplying interest following the initiation of the negotiations . When this
silence is read in the light of the need to strike a delicate balance between the different objectives
of Article XXVIII, it leads us to the conclusion that we cannot, as treaty interpreters, formulate a
general rule on this matter.
7.219. In this regard, we note that there is a lack of clarity in China 's own argumentation
regarding the scope and nature of such an obligation. China states that w hether the three-year
period prior to the notification seeking to modify or withdraw a concession is repre sentative, or
another representative period must be used, "will depend on the circumstances and the facts of
each case ".355 China also suggests that the obligation to re -determine which Members hold a
principal or substantial supplying interest following the initiation of negotiations would be triggered
where the negotiations were protracted and substantial time lapsed between the notification of the
intention to withdraw or amend a concession and the conclusion of negotiations and/or
consultations.356 With ref erence to paragraph 3 of the Ad Note to Article XXVIII:1, China has
argued that if the negotiations under Article XXVIII:5 continue past six months, " the assessment
on the WTO Members holding principal or substantial supplying interests and the relevant
reference period must be re -assessed", and that the "re-determination should occur after the
expiry of the six -month deadline" .357 China then added that, "[a] t the very least", the "re -
assessment" should occur as soon as there is evidence of the "developments materially affecting"
the determination of who holds a principal or substantial supplying interests or affecting the
determination of the future trade prospects. 358 We are not faulting China's argumentation. Rather,
we believe that China 's argumentation on t his issue illustrates the difficulty in fashioning an

353 In the present case, the European Union points out that "[i]n the case at hand the negotiations were
difficult and long because of the demanding requests put forward by Brazil and Thailand for the benefit of all
Members. Negotiations would have been even longer if the European Union had been required to discard the
results of two years of negotiations with those two Members and to start over again the negotiations on the
basis of the claim of a principal supplying interest submitted by China in May 2012, nearly three years after the
initiation of the negotiations" (EU's second written submission, para. 153). In its third-party written
submission, Brazil states that "it was only after long negotiations with the European Union that it was possible
to agree on the shared administration of quotas", and that "[b]oth negotiations proved highly complex and
time-consuming, in particular the second process, which took three years to be completed" (Brazil's third-party
written submission, paras. 9, 23).
354 Parties' responses to Panel question No. 106(a).
355 China's first written submission, para. 76.
356 China's first written submission, para. 82.
357 China's response to Panel question Nos. 22 and 23, paras. 125, 128.
358 China's response to Panel question No. 23, para. 129. In its opening statement at the second
meeting, China subsequently stated that "[c]ontrary to the EU’s groundless assertion that China believes the
determination of Members with a principal or substantial supplying interest would have to occur every six
months", China's view is rather that "such redetermination must occur at such periods of time when material
trade developments have occurred" that influence the supplying interest status of the WTO Members" (China's
opening statement at the second meeting of the Panel, para. 40). In its comments on the Interim Report,
China stated that its position is that "if the negotiations / consultations last beyond six months, the Member
withdrawing the concession should assess whether a re-appraisement should be made", but that a "re-
appraisement need not necessarily be made after each period of six months, but must occur when material
trade developments" have occurred that influence the supplying interest status of the WTO Members (China's
comments on the Interim Report, para. 29) (emphasis original).

unwritten rule on this matter, in the absence of any textual guidance and in the light of the
competing objectives of Article XXVIII.
7.220. China has argued that even if the negotiations under the Second Mod ification Package
were conducted under Article XXVIII:5, the six -month time -limit for negotiations envisaged in
paragraph 3 of the Ad Note, which applies to negotiations under Article XXVIII:1, is nonetheless
directly applicable.359 We observe that t he text of Article XXVIII specifies that the modification or
withdrawal of concessions can be done at three different points in time. 360 The main difference
between the three different kinds of Article XXVIII negotiations relates to the time limits for
concluding such negotiations. Paragraph 3 of the Ad Note is explicitly linked to the time limits in
Article XXVIII:1 negotiations. In the case of negotiations under Article XXVIII:1, the parties must
aim to reach an agreement before the end of the triennial period, and the Member wishing to
modify a concession should notify other Members "not earlier than six months, nor later than three
months prior to … the termination date of any subsequent period " of its intention to do so. 361 In
this context, there is a six -month tim e-limit. However, in the case of reserved negotiations
pursuant to Article XXVIII:5, there are no time -limits specified regarding when such negotiations
are to be concluded. Indeed, this is the defining feature of reserved negotiations under
Article XXVIII:5.362 Accordingly, insofar as China is arguing that negotiations under
Article XXVIII:5 are subject to the same time -limit that applies in the case of Article XXVIII:1
negotiations, we consider, based on the above explanation, that there is no time -limit specified for
reserved negotiations under Article XXVIII:5.
7.221. China further argues that an adjustment of the reference period to take account of
changes in import shares following the initiation of the negotiations is "all the more necessary "
where the three -year period preceding the notification of the intention to withdraw or amend a
concession was tainted by the existence of discriminatory quantitative restrictions, and where data
for a more recent period have become available before the end of the negotiati ons and
consultations showing developments for a period that reflects the consequences of the partial
lifting of the discriminatory restrictions. 363 We agree that an adjustment of some kind to the
2006-2008 reference period, used in the Second Modification Package, would have been necessary
if, as argued by China, import data from this period was tainted by the existence of discriminatory
quantitative restrictions. However, we recall that we have already found that China has failed to
demonstrate that the SPS measures at issue constitute discriminatory quantitative restrictions
within the meaning of paragraphs 4 and 7 of the Ad Note to Article XXVIII:1.
7.222. China advances an additional argument based on paragraph 3 of the Understanding on the
Interpretation of Article XXVIII. This provision states that in the determination of which Members
have a principal supplying interest or substantial interest, only trade in the affected product which
has taken place on a most-favoured-nation (MFN) basis shall be taken into co nsideration. It adds
that trade in the affected product which has taken place under non -contractual preferences "shall
also be taken into account if the trade in question has ceased to benefit from such preferential
treatment, thus becoming MFN trade, at t he time of the negotiation for the modification or

359 China's opening statement at the first meeting of the Panel, para. 52; China's response to Panel
question No. 22(a), paras 121-123, China's statement at the second meeting of the Panel, para. 39. China's
position is not clear. The Panel asked China to clarify the difference between reserved negotiations under
Article XXVIII:5 and Article XXVIII:1 if both are subject to the same time-limit. China responded that "[t]he
difference is one of timing. If they reserve their rights to rebinding, WTO Members are not limited to the timing
set forth for modifications under Article XXVIII:1. The explicit reference in Article XXVIII:5 to the applicability
of the procedures of paragraphs 1 to 3 makes it clear that the negotiations of the modifications under Article
XXVIII:1 or Article XXVIII:5 are the same in other respects" (China's response to Panel question No. 109).
360 These are: (i) on the first day of each three-year period, the first of which began on 1 January 1958
(so-called "open season" negotiations, provided for in Article XXVIII:1); (ii) at any time in special
circumstances with the authorization of the CONTRACTING PARTIES (so called "special circumstances"
negotiations, provided for in Article XXVIII:4); or (iii) during the three-year period referred to above if the
Member concerned has, before the beginning of the period, elected to reserve the right to renegotiate (so-
called "reserved" negotiations, provided for in Article XXVIII:5).
361 In the case of negotiations authorized under Article XXVIII:4, an agreement must be reached within
"60 days or any longer period" depending on the number of items to renegotiate (Article XXVIII:4(c) and Ad
Article XXVIII:4).
362 A. Hoda, Tariff negotiations and renegotiations under the GATT and the WTO, Procedures and
Practices, Cambridge University Press, 2001, at p. 11 (stating that, in the case of reserved negotiations, "there
are no time limits at all regarding when they are to be begun or concluded").
363 China's first written submission, para. 80.

withdrawal of the concession, or will do so by the conclusion of that negotiation ".364 China
observes that although this provision applies in the case of the transition of preferential trade to
non-preferential trade, it demonstrates that trade levels at the time of the negotiations or by the
conclusion of negotiations will be taken into account in the determination of which Members hold a
principal or substantial supplying interest.365
7.223. From a grammatical persp ective, we consider that the wording of paragraph 3 could
accommodate China's reading of this provision. However, we also agree with the European Union
that, from a grammatical perspective, paragraph 3 can be read to mean that a determination of
whether trade in the affected product "has ceased" to benefit from preferences or "will do so" by
the conclusion of the negotiations is to be made when the negotiations are opened; and that, if
that is the case, the trade to be taken into account is the trade "which has taken place" under the
preferences prior to the initiation of the negotiations, rather than the subsequent non -preferential
trade.366 We note that paragraph 3 applies to "the determination of which Members have a
principal supplying interest (whether un der paragraph 1 above or in paragraph 1 of
Article XXVIII)", and determinations of a principal supplying interest under those provisions are to
be made in accordance with the guideline in paragraph 4 of the Procedures for Negotiations under
Article XXVIII. As we emphasized earlier, paragraph 4 provides that a claim of interest is to be
made "within ninety days following the circulation of the import statistics referred to in
paragraph 2". Those import statistics, as stated in paragraph 2 of the Procedures f or Negotiations
under Article XXVIII, are statistics of imports for the last three years for which statistics are
available as from the time that the Member notifies its intention to modify its concessions. Insofar
as paragraph 3 is open to two different r eadings, we must adopt the reading that is harmonious
with these elements of the Procedures for Negotiations under Article XXVIII. In addition, we note
that paragraph 3 refers, in the singular, to "the determination" of which Members have a principal
or substantial supplying interest.
7.224. In support of its contention that an importing Member is under a legal obligation to
reappraise which WTO Members hold a principal or substantial supplying interest to reflect changes
in import shares that have taken place fo llowing the initiation of the negotiations, China relies on
the following statement by the GATT panel in Canada – Lead and Zinc:
The Panel does not consider that full statistics for the applicable base period must be
available at the very beginning of the negotiations, provided that these data become
available later in the negotiations and the latter are not unduly delayed.367
7.225. The European Union counters that the panel report in Canada – Lead and Zinc confirms
that it is a long -standing practice to determine the value of tariff concessions on the basis of the
three-year period prior to the initiation of the negotiations pursuant to Article XXVIII. 368 The
European Union notes that in that case, the GATT panel had agreed with the parties that the entire
calendar y ear of 1974 was part of the three -year base period preceding the initiation of the
negotiations, even if the notification of the intention to withdraw the concessions had been
circulated only on 23 December 1974, since negotiations had not effectively star ted until 1975.369
The European Union notes that, on this premise, the GATT panel went on to find that the EEC
should have taken into account the statistics for the first 10 or 11 months of 1974 when they
became available in the course of 1975. 370 Thus, the Eu ropean Union submits that, contrary to
what China alleges, "nothing in these findings suggests that the EEC should have taken into
account import data for the period after the effective initiation of the negotiations (i.e. 1975 and
onwards)".371 On the contr ary, the European Union notes that "the whole report is based on the
uncontested assumption that only data pre -dating the effective opening of the negotiations

364 Emphasis added.
365 China's first written submission, para. 84; China's opening statement at the first meeting with the
Panel, para. 37.
366 EU's second written submission, para. 47.
367 GATT Panel Report, Canada – Lead and Zinc, para. 17.
368 At paragraph 15 of its Report, the panel "noted that as a general principle, Article XXVIII
negotiations had in the past been based on the most recent three-year period for which trade statistics were
available, for the purpose of determining principal or substantial supplier rights".
369 GATT Panel Report, Canada – Lead and Zinc, para. 16.
370 GATT Panel Report, Canada – Lead and Zinc, para. 17.
371 EU's first written submission, para. 181. (emphasis added)

in 1975 was relevant for the determination of the value of the concession".372 In addition, Thailand
has drawn the Panel's attention to the fact that, in that case, the panel report also reflects that the
EEC was of the view that "there was no precedent in Article XXVIII negotiations for bringing
forward the base period to incorporate statistical data becoming available after negotiations had
begun", and that the EEC had voluntarily agreed "in a desire to adopt a reasonable approach, to
take account of the trends in trade and in prices in 1974 " instead of using only the reference
period of 1971-1973.373
7.226. China also notes that the GATT panel in US/EEC – Poultry lends further support to its
position, as that panel had stated that "[i]n its choice of a reference period, the Panel was guided
by the practice normally followed by contracting parties in tariff neg otiations, namely to lay
particular emphasis on the period for which the latest data were available ".374 The European Union
responds that in US/EEC –Poultry, the GATT panel was requested by the parties to issue an
advisory opinion on the question of the value of a tariff concession, as of 1 September 1960, in the
context of negotiations under Article XXIV:6 of the GATT. The European Union notes that the panel
decided to use, as a reference period, the 12-month period from 1 July 1959 to 30 June 1960. The
European Union notes that the reason why the parties requested the panel to determine the value
of the concession as of 1 September 1960, rather than as of the date when the establishment of
the panel was requested in 1963, is not explained in the report. As a result, the European Union
states that "this advisory opinion provides little guidance in relation to the issue raised in this
claim".375
7.227. We observe that in practice, most negotiations under Article XXVIII have been conducted
as reserved negotiations under Article XXVIII:5. 376 The European Union has indicated that it is
unaware that, in practice, any such re -determination of the Members having a principal or
substantial supplying interest has ever been made, either under the GATT 1947 or under the GATT
1994. We recognize, as Argentina has pointed out 377, that Members participating in a procedure
under Article XXVIII should conduct the negotiations and consultations "with the greatest possible
secrecy"378, and that given this secrecy, there is some difficulty in ac cessing information
concerning instances where the Member seeking to modify a concession has, during the course of
the negotiations, proceeded to re -determine the Members having a principal or substantial
suppling interest on the basis of more recent impor t data. For that reason, in the course of these
proceedings we sought information on this point from China and the third parties. China states
that it "has no information to discern whether an updating of data is done " in prior cases where
the negotiations took several years .379 Furthermore, no third party indicated that it was aware
that, in practice, any re -determination of the Members having a principal or substantial supplying
interest has ever been made, either under the GATT 1947 or under the GATT 1994. 380 Based on
all of the foregoing, it appears to us that, if anything, prior GATT/WTO practice does not support
China's contention that there is a legal obligation to reappraise which WTO Members hold a
principal or substantial supplying interest to reflect changes in import shares that have taken place
following the initiation of the negotiations.

372 EU's first written submission, para. 181.
373 GATT Panel Report, Canada – Lead and Zinc, para. 8. See Thailand's response to Panel question
No. 4(a) to third parties.
374 China's first written submission, para. 83. Panel Report, US/EEC Poultry, L/2088, 21 November 1963,
BISD 12S/65, para. 6. (emphasis added)
375 EU's first written submission, para. 181.
376 A. Hoda, Tariff negotiations and renegotiations under the GATT and the WTO, Procedures and
Practices, Cambridge University Press, 2001, p. 88; see also Committee on Market Access, Factual report on
the status of renegotiations under Article XXVIII of the GATT 1994 – Report by the Secretariat, WTO Doc.
G/MA/W/123, dated 12 May 2016.
377 Argentina's response to Panel question No. 4(a) to third parties.
378 The chapeau of Ad Article XXVIII states that parties "should arrange to conduct the negotiations and
consultations with the greatest possible secrecy in order to avoid premature disclosure of details of prospective
tariff changes". It adds that "[t]he [CONTRACTING PARTIES] shall be informed immediately of all changes in
national tariffs resulting from recourse to this Article".
379 A. Hoda, Tariff negotiations and renegotiations under the GATT and the WTO, Procedures and
Practices, Cambridge University Press, 2001, p. 92 (with regard to the Article XXVIII:5 negotiations held
between 1958 and 1994, that "in some cases the process was concluded within a few months while in others it
took up to six years or more"); see also Committee on Market Access, Factual report on the status of
renegotiations under Article XXVIII of the GATT 1994 – Report by the Secretariat, WTO Doc. G/MA/W/123,
dated 12 May 2016.
380 See responses by Argentina, Brazil, Canada, Thailand to Panel question No. 4(a) to third parties.

7.228. Based on all of the foregoing, we are unable to agree with China that an importing Member
is under a legal obligation to reappraise which WTO Members hold a princ ipal or substantial
supplying interest to reflect changes in import shares that have taken place following the initiation
of the negotiations. Therefore, we reject China claims that the European Union violated
Article XXVIII:1 by not re -determining which M embers held a relevant supplying interest on the
basis of the increase in imports from China over the period 2009-2011.
7.4.3.3 Whether the European Union's decision not to recognize China as a Member
holding a supplying interest was justified by the timing of China's claim
7.229. The European Union submits that it was "not required to take into account "381 China's
claims of a principal supplying interest in respect of the concessions included in the First
Modification Package, which China has raised for the first time in t his dispute. The European Union
submits that it was also not required to take into account China 's claims of a principal or
substantial supplying interest in respect of the concessions included in the Second Modification
Package, which China did not raise until May 2012, i.e. nearly three years after the expiry of the
90-day time limit mentioned in Paragraph 4 of the Procedures for Negotiations under
Article XXVIII.
7.230. The European Union submits that, by the time China made its claims of interest in respect
of the Second Modification Package, "the negotiations had already been concluded with both
Thailand and Brazil and the EU Council had already approved the signature of the agreements
reached with those two Members ".382 The European Union submits that while th e term "should"
used in paragraph 4 of the Procedures may suggest that the 90 -day time limit is a guideline, from
which it may be possible to depart with "due cause", there are no circumstances in this case that
would justify such a departure. The European Union observes that China has not invoked any
circumstances to justify its failure to submit its claims of a "principal" supplying interest within the
90-day time-limit in the context of the First Modification Package 383, and that the circumstances
invoked by China in respect of the Second Modification Package do not justify the delay in
submitting its claims of "principal" and "substantial" supplying interest.384
7.231. China does not dispute that Paragraph 4 of the Procedures for Negotiations under
Article XXVIII provides for the filing of a claim of interest as a WTO Member holding a principal or
substantial supplying interest. However, China submits that the 90 -day period for making a claim
of interest is not couched in mandatory terms and, as a result, does not s et an absolute
deadline.385 China notes that the European Union does not deny that China 's claim of a
"substantial" supplying interest for the First Modification Package was introduced within the 90-day
period.386
7.232. As regards the Second Modification Package, C hina argues that several circumstances
justify the fact that it did not submit any claim of a principal or substantial supplying interest
within the 90-day period, including: (i) the European Union's refusal to recognise China's claims of
a substantial sup plying interest in respect of the First Modification Package 387; (ii) at the time
where the European Union notified its intention to modify concessions on 16 June 2009, "the
favourable effects of the relaxation of the import bans on 30 July 2008 were barely felt"388; and
(iii) following the notification of the European Union 's intention to modify the concessions, "no
information transpired", so that China did not become aware that negotiations were "carried out"
until the publication of the agreements with Brazil and Thailand.389
7.233. We note that Article XXVIII of the GATT 1994 does not explicitly identify the time -period
during which a claim of principal or supplying interest must be made. However, as already
discussed, paragraph 4 of the Procedures for Negotiations under Article XXVIII sets out a 90 -day
guideline, running from the date that the Member seeking to modify its concession circulates

381 EU's second written submission, para. 2.
382 EU's second written submission, para. 2.
383 EU's second written submission, para. 6.
384 EU's second written submission, paras. 8-12.
385 China's second written submission, para. 86.
386 China's second written submission, para. 87.
387 China's response to Panel Question No 16, para. 97; China's second written submission, para. 88.
388 China's response to Panel Question No 16, para. 97; China's second written submission, para. 88.
389 China's response to Panel Question No 16, para. 97; China's second written submission, para. 88.

import statistics for the last three years for which statistics are available. 390 The Understanding on
the Interpretation of A rticle XXVIII clarifies that the same 90 -day guideline is applicable in the
special cases provided for in paragraphs 1 and 4 of the Understanding.391
7.234. In this case, China's claim of a substantial supplying interest for the First Modification
Package was file d within the 90 -day period. China's claims of a "principal" supplying interest in
respect of the concessions at issue in the First Modification Package were raised for the first time
in this dispute, notwithstanding that the European Union had notified WTO Members of its
intention to modify those tariff concessions in June 2006. China 's claims of a supplying interest
(whether "principal" or "substantial") in respect of the concessions at issue in the Second
Modification Package were not made until May 2012, notwithstanding that the European Union had
notified its intention to modify its concessions and circulated the accompanying import statistics in
June 2009.392
7.235. We have already found that the SPS measures in place over the reference periods selected
by the European Union did not constitute "discriminatory quantitative restrictions " within the
meaning of paragraphs 4 and 7 of the Ad Note to Article XXVIII:1. We have also found that , for
the purpose of the Article XXVIII negotiations, the European Union was under no legal obligation to
re-determine which Members held a principal or substantial supplying interest based on the latest
available import data for 2009-2011. In the light of these findings on the two grounds upon which
China alleges a violation of Arti cle XXVIII:1, it is unnecessary, for the purpose of assessing
whether the European Union acted consistently with Article XXVIII:1, to additionally rule on
whether the European Union's decision not to recognize China as a Member holding a principal or
substantial supplying interest was justified by the absence of a timely claim of supplying interest
by China.393
7.4.4 Conclusion
7.236. Based on the foregoing, the Panel finds that China has failed to demonstrate that the
European Union violated Article XXVIII:1 of the GATT 1994 by not recognizing that China held a
principal or substantial supplying interest in the concessions at issue in the First and Second
Modification Packages.
7.5 Claims under Article XXVIII:2 read in conjunction with paragraph 6 of the
Understanding on Article XXVIII of the GATT 1994
7.5.1 Introduction
7.237. China claims that the TRQs negotiated in the First and Second Modification Packages are
inconsistent with Article XXVIII:2, read in conjunction with paragraph 6 of the Understanding on
the Interpretation of Article XXVIII ("the Understanding").394 According to China, the TRQs do not
maintain "a general level of reciprocal and mutually advantageous concessions not less favourable

390 Paragraph 4 provides in relevant part:
Any contracting party which considers that it has a principal or a substantial supplying interest in
a concession which is to be the subject of negotiation and consultation under Article XXVIII
should communicate its claim in writing to the contracting party referred to in paragraph 1 above
[the Member seeking to modify or withdraw a concession] and at the same time inform the
secretariat. … Claims of interest should be made within ninety days following the circulation of
the import statistics referred to in paragraph 2 above.
391 See paragraphs 2 and 5 of the Understanding on the Interpretation of Article XXVIII of the General
Agreement on Tariffs and Trade 1994.
392 China's claims of supplying interests for the poultry meat products concerned (Exhibit CHN-48).
393 The European Union raises the timeliness of China's claims in the context of rebutting China's claims
under both Article XXVIII:1 and Article XIII:2. The European Union has confirmed that the issue of the timing
of China's claims of principal or substantial supplying interest is not relevant to the assessment of China's
claims under Article XXVIII:2 and paragraph 6 of the Understanding, Article XIII:1, or Article XIII:4 (EU's
response to Panel question No. 69(b), para. 17). Insofar as the European Union raises the timing of China's
claim of supplying interest under Article XXVIII as a defence to China's claims under Article XIII:2, we will
address that issue in the context of our evaluation of China's claims under Article XIII:2.
394 China's first written submission, paras. 118-146, 280(3)-(5); China's opening statement at the first
meeting of the Panel, paras. 56-75; China's responses to Panel question Nos. 26-29, 31; China's second
written submission, paras. 96-119; China's opening statement at the second meeting of the Panel, paras. 41-
50; parties' responses, and comments on one another's responses, to Panel question Nos. 64, 66-67, 85, 111.

to trade than that provided for in this Agreement prior to such negotiations " within the meaning of
Article XXVIII:2. That is because, China argues, the TRQs do not reflect "future trade prospects "
calculated in accordance with paragraph 6 of the Understanding. We understand China 's claims
under Article XXVIII:2 and paragraph 6 to rest on multip le grounds, relating both to the total
amount of the TRQs and the allocation of the TRQs among supplying countries.
7.238. The European Union responds that there is no violation of Article XXVIII:2 and paragraph 6
of the Understanding.395 The European Union submits that the total amount of the TRQs equals or
exceeds the greatest of the amounts that would result from applying each of the three formulae
set out in paragraph 6 of the Understanding based on the relevant reference periods and import
data. The European U nion submits that the allocation of TRQs among supplying countries is not
governed by Article XXVIII:2 or paragraph 6 of the Understanding.
7.5.2 Relevant legal provisions
7.239. Article XXVIII:2 of the GATT 1994 reads:
2. In such negotiations and agreement, which ma y include provision for
compensatory adjustment with respect to other products, the Members concerned
shall endeavour to maintain a general level of reciprocal and mutually advantageous
concessions not less favourable to trade than that provided for in this Agreement prior
to such negotiations. (emphasis added)
7.240. Paragraph 6 of the Understanding on the Interpretation of Article XXVIII of the GATT 1994
refers to the amount of compensation to be provided when, as in the First and Second Modification
Packages, an unlimited tariff concession is replaced by a TRQ. Paragraph 6 of the Understanding
requires that compensation be provided insofar as the "level of the quota", i.e. the total volume of
imports subject to the lower in -quota tariff rates, is less than the amount of "future trade
prospects". Paragraph 6 reads as follows:
6. When an unlimited tariff concession is replaced by a tariff rate quota , the
amount of compensation provided should exceed the amount of the trade actually
affected by the modification of the concession . The basis for the calculation of
compensation should be the amount by which future trade prospects exceed the level
of the quota. It is understood that the calculation of future trade prospects should be
based on the greater of:
(a) the av erage annual trade in the most recent representative three -year
period, increased by the average annual growth rate of imports in that same
period, or by 10 per cent, whichever is the greater; or
(b) trade in the most recent year increased by 10 per cent.
In no case shall a Member 's liability for compensation exceed that which would be
entailed by complete withdrawal of the concession. (emphasis added)
7.241. For the purpose of determining the amount of compensation to be provided,
subparagraphs (a) and (b) of p aragraph 6 sets out three different formulae for calculating the
amount of future trade prospects against which the level of the quota must be compared. These
formulae provide that future trade prospects are to be calculated on the basis of historical trad e
levels, in either "the most recent representative three-year period", or the "most recent year". The
resulting amount is to be increased either by the average annual growth rate of imports in the
same period (in case a three -year period is selected), or by 10%. Whichever formula yields the
greatest amount in the circumstances is to be used.

395 EU's first written submission, paras. 154-182; EU's opening statement at the first meeting of the
Panel, paras. 18-19; EU's responses to Panel question Nos. 25-28, 30; EU's second written submission, paras.
60-85; EU's opening statement at the second meeting of the Panel, paras. 21-31; parties' responses, and
comments on one another's responses, to Panel question Nos. 64, 66-67, 85, 111.

7.242. Article XXVIII:2 provides that Members "shall endeavour to maintain " a general level of
reciprocal and mutually advantageous concessions not less favourable to trade than that provided
for in this Agreement prior to such negotiations. The European Union refers to Article XXVIII:2 as a
"best efforts" obligation and considers that in assessing the level of compensation the "negotiating
Members must be accorded a wide mar gin of discretion".396 China responds that Members are not
accorded "a wide margin of discretion " in determining the appropriate level of compensation, and
notes that the word "endeavour" used in Article XXVIII:2 is accompanied by the verb "shall",
meaning t hat Members are compelled to work towards the maintenance of the general level of
reciprocal concessions.397 However, it does not appear to us that the parties' disagreement on how
best to characterize Article XXVIII:2, to the extent that there is such a dif ference, raises any issue
for the Panel to resolve. 398 For its part, the European Union has not argued that China 's claims of
violation under Article XXVIII:2 read in conjunction with paragraph 6 of the Understanding should
be dismissed on the basis that Article XXVIII:2 reflects a "best efforts " obligation. In addition,
China appear s to accept that the meaning of Article XXVIII:2 and paragraph 6 of the
Understanding is that "it may be difficult to have a compensation that is mathematically the exact
counterfactual of the concession being withdrawn ", and that what is required is that Members "do
all in their power to reach that goal".399
7.243. Furthermore, the European Union does not contest that Article XXVIII:2 "establishes a
mandatory obligation which is cognizable under the DSU".400 The European Union also agrees with
China that, regardless of which Members are involved in the negotiations under Article XXVIII, any
WTO Member has the right to challenge the compensation agreed pursuant to Article XXVIII under
the DSU, if they consider that it is not adequate in view of Article XXVIII:2 and paragraph 6 of the
Understanding.401 In sum, whatever the differences between the parties ' respective positions on
certain aspects relating to the contours of this obligation, there i s no disagreement that Article
XXVIII:2 establishes a legally enforceable obligation.
7.244. The parties agree that if compensation is calculated in accordance with paragraph 6 of the
Understanding, it would normally be presumed to be compliant with Article XXVI II:2.402 We see no
reason to disagree. Article XXVIII:2 is a generally worded provision. Article XXVIII:2 does not
include any specific rules in order to determine the amount of compensation to be accorded by the
Member seeking the modification of a concessi on, and in practice assessments of the "level of
concessions" may be a very complex and difficult task, which can be approached by the
negotiating Members in very different ways. 403 The Understanding is an integral part of the GATT
1994, the purpose of which is to set forth an agreed interpretation among Members on the
meaning to be given to certain aspects of Article XXVIII, including Article XXVIII:2. Moreover,
paragraph 6 specifically addresses the question of the level of compensation to be provided when,
as in the present case, an unlimited tariff concession is replaced with a TRQ. As China notes,
"[t]he EU's unlimited tariff concessions with regard to the poultry products at issue were replaced
by TRQs in the 2007 and 2012 Modification Packages. As such, paragraph 6 of the Understanding
on the Interpretation of Article XXVIII of the GATT 1994 is clearly applicable."404
7.245. Consistent with this understanding of the relationship between Article XXVIII:2 and
paragraph 6 of the Understanding, China 's claims of viol ation in this case are based on
Article XXVIII:2, "read in conjunction " with the Understanding "and in particular paragraph 6

396 EU's response to Panel question No. 25, para. 78.
397 China's second written submission, paras. 96-101.
398 In our view, China's claims in this case under Article XXVIII:2 read in conjunction with paragraph 6
of the Understanding could be characterized in terms of the European Union not endeavouring to achieve the
result set forth in Article XXVIII:2, and would thus fall within the scope of the obligation in that provision
insofar as it is characterized as a "best efforts" obligation. Thus, in the circumstances of this case, whether
Article XXVIII:2 is properly characterized as a "best efforts" obligation is not an issue we need to resolve.
399 China's second written submission, para. 101.
400 EU's response to Panel question No. 25, para. 78.
401 See EU's response to Panel question No. 12, para. 42.
402 China considers that "where paragraph 6 of the Understanding is strictly adhered to, the resulting
tariff rate quota should normally be in compliance with Article XXVIII:2"(China's response to Panel question
No. 26(b), para. 132). The European Union also considers that "if compensation is consistent with paragraph 6
of the Understanding it must be deemed compliant with Article XXVIII:2" (EU's response to Panel question No.
403 A. Hoda, Tariff Negotiations under the GATT and the WTO, Procedures and Practices, CUP 2001,
pp. 52-53.
404 China's first written submission, para. 136.

thereof".405 China has claimed that the total amount of the TRQs and their allocation among
supplying countries is inconsistent with these provisions in a number of different respects. China
has clarified that each of those claims rests on the same legal basis, namely Article XXVIII:2 taken
together with paragraph 6 of the Understanding, as opposed to some claims being based on the
obligation in Article XXVIII:2, and others being based on the terms of paragraph 6 of the
Understanding.406
7.246. Finally, in accordance with the findings of the panel and the Appellate Body in EC – Poultry,
the parties agree that compensation negotiated within the framework of Article XXVIII is not
"exempt from compliance with the non -discrimination principle inscribed in Articles I and XIII of
the GATT 1994 ", and if "preferential treatment of a particular trading partner not elsewhere
justified is permitted under t he pretext of 'compensatory adjustment ' under Article XXVIII:2, it
would create a serious loophole in the multilateral trading system ".407 The European Union agrees
with China that, in accordance with EC – Poultry, the "compensation provided pursuant to an
agreement under Article XXVIII is not meant to compensate exclusively the Member which has
negotiated the compensation and must be made available to all Members on a MFN basis".408
7.5.3 Analysis by the Panel
7.247. Turning to the issues that are in dispute, o ur understanding is that China 's claims under
Article XXVIII:2 and paragraph 6 of the Understanding rest on several different grounds, relating
both to the total amount of the TRQs and to the allocation of the TRQs among supplying countries.
7.248. The precise scope and na ture of China 's claims of violation under Article XXVIII:2 have
been clarified in the course of the proceedings. Initially, the European Union understood that
China's claims under Article XXVIII:2 and paragraph 6 of the Understanding did "not relate to the
overall size of the TRQs at issue, but instead to the allocation of each of those TRQs among
different supplying Members ".409 In the course of the proceedings, it has become apparent that
China's claims under Article XXVIII:2 and paragraph 6 of the Understa nding relate not only to the
allocation of the TRQs among supplying countries, but also to the total amount of the TRQs.
7.249. The parties agree that the obligation in Article XXVIII:2 read in conjunction with
paragraph 6 of the Understanding applies to the cal culation of the total amount of the TRQs. We
further note that China's claims of violation relating to the allocation of the TRQs among supplying
countries are for the most part based on the same grounds as its claims relating to the total
amount of the TR Qs. Accordingly, we consider it logical to first examine the claims that China
advances regarding the total amount of the TRQs, and thereafter, in the light of the findings that
we have reached, proceed to examine China 's claims under Article XXVIII:2 and paragraph 6 of
the Understanding relating to the allocation of the TRQs among supplying countries.
7.250. Before turning to the analysis of China 's claims relating to the total amount of the TRQs
and their allocation among supplying countries, however, we briefl y recall our findings under
Article XXVIII:1, and the implications that these findings have on our assessment of China's claims
under Article XXVIII:2 read in conjunction with paragraph 6 of the Understanding.
7.5.3.1 Whether different reference periods can be us ed for the determinations under
Article XXVIII:1 and Article XXVIII:2 read in conjunction with paragraph 6 of the
Understanding
7.251. China's principal claims under Article XXVIII:2 and paragraph 6 of the Understanding, both
at the level of the total amount of the TRQs and at the level of their allocation among supplying

405 China's request for the establishment of a panel, items (ii) of section II.A and (ii) of section II.B.
406 China's response to the Panel's Question 26, para.131. The European Union shares this
understanding as well. See EU's response to Panel question No. 26, para. 81; EU's second written submission,
para. 60.
407 Appellate Body Report, EC – Poultry, paras. 100-101.
408 China's first written submission, paras. 120-129; EU's response to Panel question No. 30, para. 87
(citing Appellate Body Report, EC – Poultry, paras. 96-102).
409 EU's first written submission, para. 163. In its response to Panel question No. 26, the European
Union still understood that "the allegations made by China in both section IV.A.2(a) and section IV.A.2(b) do
not relate to the amount of compensation provided by the European Union, but instead to the allocation of
such compensation among supplying countries" (EU's response to Panel question No. 26, para. 82).

countries, include the same two horizontal arguments that we have already considered in the
context of examining China 's claims under Article XXVIII:1. First, we understand China to argue
that for both the First and Second Modification Packages, the European Union was under a legal
obligation to estimate what the import levels would have been in the absence of the SPS measures
restricting poultry imports from China. Second, we understand China to argue that the European
Union was required to base its determinations , of the total amount and allocation of the TRQs for
the Second Modification Package , on actual imports from the most recent three -year reference
period preceding the conclusion of the n egotiations. China considers that the Article XXVIII
negotiations concluded in December 2012, and therefore the three preceding years are
2009-2011.
7.252. China has claimed that the European Union violated Article XXVIII:1 on essentially the
same two grounds. We have already rejected China's claims under Article XXVIII:1, and instead
found that the European Union was free to determine which Members held a principal and
substantial supplying interest in the concessions at issue in the First and Second Modification
Packages on the basis of actual imports into the European Union over the three -year period
preceding the European Union notification of its intention to modify concessions under
Article XXVIII. Given that finding, we consider it is necessary to explain ou r understanding of the
implications that this finding has on our assessment of China 's claims under Article XXVIII:2 read
in conjunction with paragraph 6 of the Understanding, given the significant degree of overlap in
China's argumentation under these provisions.
7.253. We do not consider that the conclusions that we have reached in relation to China 's claims
under Article XXVIII:1 necessarily dispose of China 's claims under Article XXVIII:2 read in
conjunction with paragraph 6 of the Understanding. The reason is that each provision contains its
own applicable legal standard, which applies to a different subject -matter. We are well aware that
the subject matter of Article XXVIII:2 and paragraph 6 of the Understanding is distinct from the
subject matter of Article XXVIII:1.
7.254. Accordingly, having found that the European Union was free to base its determinations of
which Members held a relevant supplying interest on actual imports over the reference periods
that it selected for that purpose (2003 -2005 and 2006 -2008), w e do not a priori exclude the
possibility that the European Union might have been obligated to calculate the compensation
required under Article XXVIII:2 and paragraph 6 of the Understanding on the basis of a different
period.410
7.5.3.2 Whether the total amount of the TRQs is consistent with paragraph 6 of the
Understanding
7.255. China submits that the total amount of the TRQs is less than the minimum levels
calculated in accordance with paragraph 6 of the Understanding. China presents a series of
arguments in this regard. First, we understand China to argue that the total amount s of the TRQs
are not based on a "representative" period within the meaning of paragraph 6 because they were
calculated on the basis of reference periods during which Chinese poultry products wer e subject to
SPS import bans. Second, China submits that the total amounts of the TRQs for four of the TRQs
under the Second Modification Package (tariff lines 1602 32 11, 1602 32 30, 1602 32 90 and 1602
39 29) fall below the minimum amount required by par agraph 6 when applied to imports into the
European Union over the 2009-2011 period, which in China 's view is "the most recent three -year
period" within the meaning of paragraph 6 of the Understanding. Third, China argues that even if
the 2006-2008 period is used, the total amounts of the TRQs should have been calculated on the

410 China's views on this matter appear to have evolved in the course of these proceedings. In its first
written submission, China stated that "the determination of the existence of a PSI or SSI in one period and the
calculation of compensation on a different period would seem illogical", and that "[d]iscussions with WTO
Members that may have PSI or SSI rights during one reference period, whilst agreeing on compensation based
on data for another reference period, would create an imbalance that is neither logical nor reasonable" (China's
first written submission, para. 86). At the first substantive meeting of the Panel, China stated that "the base
period to be taken into account for the calculation of the compensation … may then be a period that is different
from the period used to determine the WTO members with principal or substantial supplying interests" (China's
opening statement at the first meeting of the Panel, para. 70). Along the same lines, at the second meeting of
the Panel, China stated that "[l]egally speaking, the reference period used to determine Members with a PSI or
SSI is different from that used to calculate compensation" (China's opening statement at the second meeting of
the Panel, para. 48).

basis of imports into all EU28 countries over the 2006 -2008 period, and that the total amount of
one of the TRQs in the First Modification Package (tariff line 1602 31) falls below th e minimum
amount required by paragraph 6 of the Understanding when EU28 data is used.
7.256. The European Union rejects China 's arguments. First, the European Union submits that
there is no evidentiary basis for China 's contention that, in the absence of the SPS measures
applied to imports from China, the total amount of the TRQs deter mined on the basis of
paragraph 6 of the Understanding would have been larger than the total amount of the TRQs
agreed by the European Union. Second, the European Union submits that "the most recent
representative three-year period" in paragraph 6 of the Understanding refers to the most recent
years preceding the initiation of the negotiations under Article XXVIII, and not the three -year
period preceding the conclusion of the negotiat ions as maintained by China. Accordingly, the
European Union submits that it was under no obligation to calculate the total amount s of the TRQs
for the Second Modification Package on the basis of import levels over the 2009 -2011 period.
Third, the European Union rejects China 's contention that it was required to account for poultry
imports into Romania, Bulgaria, or Croatia in the years prior to these countries becoming Members
of the European Union.
7.257. In the light of the foregoing, we understand China to c laim that the total amount of the
TRQs is inconsistent with Article XXVIII:2 and paragraph 6 of the Understanding on three separate
grounds. To resolve these claims, the Panel must resolve the following issues. First, whether the
European Union was obliged to calculate the total amount of the TRQs for the First and Second
Modification Packages on the basis of an estimate of what import levels would have been in the
absence of the SPS measures prohibiting or restricting certain poultry imports from China. Second,
whether the European Union was obliged to calculate the total amount of the TRQs for the Second
Modification Package on the basis of import levels over the 2009 -2011 period. Third, whether the
European Union was required, in the context of the Second Modification Package, to account for
poultry imports into Romania, Bulgaria and Croatia in the years before they acceded to the
European Union. We will proceed to examine these issues in turn.
7.5.3.2.1 Whether the European Union was obliged to calculate the total amount of the
TRQs on the basis of an estimate of what import levels would have been in the absence
of the SPS measures
7.258. China claims that where as in this case SPS import bans are imposed, the period of
application of these import bans cannot be used as a representative basis for determining the
amount of compensation under Article XXVIII:2 and paragraph 6. Otherwise "it is impossible to
provide compensation that [is] based on the future trade prospects of China ".411 Rather, China
considers that the period selected "must be representative of China's future trade prospects which
must be trade prospects free from import bans ".412 China submits that this applies both to the
determination of "the global TRQs " (i.e. the total amount of each TRQ, as distinguished fro m the
shares of the TRQ) and also the TRQ allocations among supplying countries. 413 In other words,
China contends that, "pursuant to Article XXVIII:2, for the global TRQ volume to restore the
general balance of concessions, the future trade prospects of par agraph 6 of the Understanding on
the Interpretation of Article XXVIII of the General Agreement on Tariffs and Trade 1994 should
take into account the future trade prospects of all WTO Members exempt from the impact of
import bans".414
7.259. We recall that paragra ph 6 of the Understanding requires that when an unlimited tariff
concession is replaced by a TRQ, the amount of compensation provided should be based on a
calculation of the amount by which "future trade prospects " exceed the level of the quota.
Paragraph 6 specifies how "future trade prospects" are to be calculated, based on the formulae in
sub-paragraphs (a) and (b). Paragraph 6(a) provides that if "future trade prospects" are calculated
based on average annual trade over a three -year period, that period must be a "representative"
three-year period.

411 China's first written submission, para. 143.
412 China's first written submission, para. 143.
413 China's first written submission, para. 145.
414 China's second written submission, para. 102.

7.260. We consider that, for the purpose of calculating the total amount of the TRQ s under
paragraph 6 of the Understanding, a three -year period would be "representative" if the total
amount of the average annual tra de during that period is typical of, and serves to represent, the
total amount of annual trade in the product which has occurred in the past or could be expected to
occur in the future. Conversely, for the purpose of calculating the total amount of the TRQs under
paragraph 6 of the Understanding, a three -year period may not be "representative" if the total
amount of the average annual trade during that period is not typical of, and could not serve to
represent, the total amount of annual trade in the produc t which has occurred in the past or could
be expected to occur in the future.
7.261. Accordingly, we consider that in order to find that the reference periods selected by the
European Union were not "representative" for the purpose of calculating the total amount of the
TRQs because of the SPS measures that were in place during this time, it would be necessary to
establish that these SPS import restrictions significantly altered the total amount of annual trade in
the poultry products concerned from all sources, a nd not merely that the amount from China
would have been greater . However, China has not asserted that in the absence of the SPS
measures applied to imports from China, the total amount of imported poultry products into the
European Union from all sources would have been any greater. We cannot assume that this would
have been so, because imports from China compete directly with imports from other sources,
which were not subject to those measures. 415 Assuming that the amount of poultry imports
supplied from China into the European Union would have been greater in the absence of the SPS
measures at issue, one might expect to find a corresponding decrease in the amount of imports of
the like products supplied from other sources into the European Union in the abse nce of any
change in overall demand for those products in the European Union . In the absence of any
assertion or demonstration by China that the total amount of imports into the European Union
from all sources of the poultry products concerned would have been any different in the absence of
the SPS measures, China has not provided any calculation of whether the total amount of the
TRQs determined on the basis of paragraph 6 of the Understanding would have been larger than
the total amount of the TRQs agreed by the European Union for any of the tariff lines at issue in
the First or Second Modification Packages.
7.262. While our analysis of this claim could stop at this point, we recall our prior finding that
China has failed to demonstrate that the SPS measures at issue are "discriminatory quantitative
restrictions" within the meaning of paragraphs 4 or 7 of the Ad Note to Article XXVIII:1. The same
legal standard is not directly referenced in the text of Article XXVIII:2 or paragraph 6 of the
Understanding. However , paragraph 6 of the Ad Note to Article XXVIII:1, which relates to the
amount of compensation that is negotiated, links back to the concept of "discriminatory
quantitative restrictions". Paragraph 6 of the Ad Note to Article XXVIII:1 states:
"It is not in tended that provision for participation in the negotiations of any Member
with a principal supplying interest, and for consultation with any Member having
substantial interest in the concession which the applicant is seeking to modify or
withdraw, should have the effect that it should have to pay compensation or suffer
retaliation greater than the withdrawal or modification sought, judged in the light of
the conditions of trade at the time of the proposed withdrawal or modification, making
allowance for any discriminatory quantitative restriction maintained by the applicant
Member." (emphasis added)
7.263. The Ad Note suggests that, when calculating the amount of the compensation for the
purpose of Article XXVIII:2 and paragraph 6 of the Understanding, there is no requirement to
make allowance for each and every measure that may have had the effect of restricting the
importation of the products concerned under that concession, but only for those measures that
constitute "discriminatory quantitative restrictions".416
7.264. Based on the foregoing, we reject China 's claims that the European Union acted
inconsistently with Article XXVIII:2 read in conjunction with paragraph 6 of the Understanding by
calculating "future trade prospects " and the total amount of the TRQs, on the b asis of actual
imports of the products concerned into the European Union over the periods selected by the

415 EU's comments on China's response to Panel question No. 71(a), para. 14.
416 EU's first written submission, para. 160.

European Union, rather than on an estimate of what those import levels would have been in the
absence of the SPS measures.
7.5.3.2.2 Whether the European Union was obliged to calculate the total amount of the
TRQs on the basis of import levels over the three years preceding the conclusion of the
Article XXVIII negotiations
7.265. We now turn to the second ground of China 's claim that the total amount of the TRQs is
inconsistent with Article XXVIII:2 read in conjunction with paragraph 6 of the Understanding.
7.266. China claims that based on the more recent representative period 2009 –2011 for the
Second Modification Package, the total amount of the TRQs determined by the Europ ean Union
falls short of the total amount that China calculated, pursuant to paragraph 6 of the
Understanding, for tariff lines 1602 32 11, 1602 32 30, 1602 32 90 and 1602 39 29. 417 China
stresses that, according to paragraph 6 of the Understanding, compensa tion should be based on
trade data for the "most recent representative three-year period" or for the "most recent year".418
According to China, these terms must be understood to mean the most recent year, or three -year
period, before the conclusion of the ne gotiations on compensation. 419 As noted above, China
considers that the Article XXVIII negotiations under the Second Modification Package concluded in
December 2012, and therefore the three preceding years are 2009-2011.
7.267. It is not in dispute that under para graph 6 of the Understanding, the compensation should
be based on trade data for the "most recent" representative three-year period or for the "most
recent" year. The legal issue raised by China 's claim is whether these terms should be interpreted
to mean the most recent period or year preceding the conclusion of the negotiations, as China
contends, or rather the most recent period or year preceding the initiation of the negotiations, as
the European Union contends.
7.268. Before commencing with our analysis of t his issue, we recall that we have already found,
in the context of our examination of China 's claims under Article XXVIII:1, that the European
Union was free to determine which Members held a principal and substantial supplying interest on
the basis of act ual imports into the European Union over the three -year period preceding the
European Union 's notification of its intention to modify concessions under Article XXVIII. The
European Union was under no obligation to re-determine that issue to take into account changes in
import shares over the period 2009-2011.420 In the course of analysing that issue, we addressed a
number of arguments that are specific to the legal standards that apply to the determination of
which Members hold a principal or substantial supp lying interest under Article XXVIII:1. However,
some of the arguments that we addressed have been reiterated by the parties in their
argumentation under Article XXVIII:2 and paragraph 6 of the Understanding. To avoid addressing
the same arguments multiple times, our analysis of China 's parallel claim under Article XXVIII:2
and paragraph 6 of the Understanding will focus on those arguments and interpretative elements
that are specific to paragraph 6 of the Understanding and Article XXVIII:2, and that we have not
already addressed in the context of our findings under Article XXVIII:1.421
7.269. Paragraph 6 of the Understanding states that the amount of the compensation and future
trade prospects must be based on the "most recent" three-year period or year, but is sile nt on
whether this refers to the most recent period or year preceding the initiation of negotiations under
Article XXVIII, the most recent period or year preceding the conclusion of negotiations under
Article XXVIII, or the most recent period or year prece ding some other point in time. 422 Thus, we

417 China's response to Panel question No. 29, paras. 144-145; China's second written submission,
para. 106.
418 China's second written submission, para. 106.
419 China's first written submission, paras. 86 and 111; China's response to Panel question No. 29,
para. 149; China's opening statement at the second meeting of the Panel, para. 48; China's response to Panel
question No. 107(a), para. 96.
420 See section 7.4.3.2 above.
421 We see nothing to be gained, and a potential for confusion, from reproducing the same analysis
multiple times through the Report in respect of overlapping arguments.
422 Paragraph 6 of the Understanding does not contain comparable language to, for example,
paragraphs 2 and 3 of Annex IV of the Agreement on Subsidies and Countervailing Measures, which refers to
"the most recent 12-month period … preceding the period in which the subsidy is granted".

consider that, as a textual matter, the ordinary meaning of the terms "the most recent" three-year
period or year is inconclusive with regard to the question before us.423
7.270. Turning to the context of paragraph 6 of the Understanding, both parties submit that their
opposing interpretations are supported by paragraph 6 of the Ad Note to Article XXVIII:1.
Paragraph 6 of the Ad Note reads as follows:
It is not intended that provision for participation in the negotiations of any Member
with a principal supplying interest, and for consultation with any Member having
substantial interest in the concession which the applicant is seeking to modify or
withdraw should have the effect that it should have to pay compensation or suffe r
retaliation greater than the withdrawal or modification sought, judged in the light of
the conditions at the time of the proposed withdrawal or modification, making
allowance for any discriminatory quantitative restriction maintained by the applicant
Member. (emphasis added)
7.271. According to the European Union, this paragraph "makes it clear that the adequacy of
compensation must be judged in the light of the conditions prevailing at the moment where the
modification of the schedule is proposed, rather than a t the time where the modification is
eventually agreed", and submits that this is confirmed by the wording of the French and Spanish
versions of paragraph 6 .424 China disagrees with the European Union 's reading of paragraph 6 of
the Ad Note, and instead cons iders that the moment of the "proposed withdrawal or modification"
is not the moment of the notification of the mere intention to withdraw or modify concessions, but
rather the moment at which the details of the withdrawal or modification are agreed immedi ately
preceding their implementation. 425 In our view, the parties ' arguments show that the ordinary
meaning of the wording of paragraph 6 of the Ad Note is capable of accommodating both of those
interpretations. Accordingly, while we agree that this provisio n is relevant context, we consider
that it is of limited assistance in resolving the interpretative issue before us.
7.272. However, we do not consider that China 's interpretation of paragraph 6 of the
Understanding can be reconciled with the object and purpose of this provision and Article XXVIII:2.
In particular, paragraph 6 of the Understanding seeks to facilitate the negotiations under
Article XXVIII:2 by providing a benchmark that the negotiating Members can use as a basis for the
calculation of compensation in the case of TRQs. We do not agree with the European Union that
the benchmark must necessarily be "known in advance of the negotiations " and "fixed", insofar as
this would suggest that the Members concerned could not agree, as part of the ir negotiations, to
use a different period.426 However, we consider that, in order to achieve the purpose of facilitating
the negotiations under Article XXVIII:2 by providing a benchmark that the negotiating Members
can use as a basis for the calculation of compensation, i t cannot be the case that the Members
engaged in the negotiations would be legally obliged to change the benchmark defined in that
provision from year to year until the negotiations have been concluded. We note that to adjust the
benchmark year-to-year would not be complicated as such, insofar as it would be the result of a
simple mathematical formula applied to import statistics. The difficulty that would arise is that the

423 We note that the immediate context of these terms is also inconclusive, insofar as the content of the
three formulae set forth in paragraph 6(a) and (b) are neutral as to whether the calculation called for is to be
based on the most recent period or year preceding the initiation of negotiations under Article XXVIII, or the
most recent period or year preceding the conclusion of negotiations under Article XXVIII.
424 EU's first written submission, paras. 159, 177. The French and Spanish versions refer, respectively,
425 China's opening statement at the first meeting, para. 69; China's second written submission,
para. 104.
426 EU's first written submission, para. 179. As China observes, in the First Modification Package (tariff
line 0210 99 39), the European Union modified the reference period that covered initially 2003-2005 to the
period of 2000-2002 due to changes to the European Union customs classification regulations adopted in 2002,
and that for another line of the First Modification Package (tariff line 1602 32 19), the European Union
admitted that it agreed, "upon the insistence of Thailand", not to base the calculation of the compensation on
the most recent calendar year preceding the initiation of the negotiations, i.e. 2005, but to base it on a more
recent twelve-month period preceding the initiation of negotiations, i.e. July 2005 to June 2006. This does not,
in our view, lend support to the conclusion that "the most recent" period or year can be interpreted to mean
"the most recent" period or year preceding the conclusion of the negotiations. However, it does show that the
period or year used to calculate the compensation need not necessarily "be known in advance of the
negotiations" and "fixed".

benchmark is meant to serve as the basis for negotiations and the calculation of com pensation. To
require the negotiating Members to use of a continually moving benchmark as the basis for
negotiations could perpetuate negotiations indefinitely.
7.273. We consider that Article XXVIII:2 is relevant context for the interpretation of paragraph 6
of the Understanding, given the close relationship between these two provisions. Therefore, we
have also considered whether a requirement to base the calculation of the total amount of a TRQ
on the most recent three-year period preceding the conclusion of the negotiations would serve the
objective, reflected in Article XXVIII:2, of the Members concerned to "endeavour to maintain a
general level of reciprocal and mutually advantageous concessions not less favourable to trade "
than that provided for prior to the modification. For the reasons that follow, we are not persuaded
that it would necessary serve this objective.
7.274. First, as the European Union has pointed out, there is no reason why the import volumes
following the initiation of negotiations should necessarily be higher than the pre -initiation import
volumes. For example, according to China's data and calculations, the amount of the TRQs for two
of the tariff items included in the Second Modification Package (1602 39 21 and 1602 39 80) is
lower if the formulae of paragraph 6 of the Understanding are applied on the basis of import data
for the period 2009 -2011, instead of import data for the reference period 2006 -2008.427
Furthermore, we consider that a "moving" benchmark would have the potential to create an
incentive for the parties to delay the conclusion of negotiations while waiting for more favourable
trade data to emerge.428
7.275. Second, we note that the benchmark in paragraph 6 of the Understanding establishes the
basis for calculating the minimum amount of compensation that must be provided. In this regard,
paragraph 6 states that the calculation of future trade prospects must be "based on the greater" of
the three formulae contained in subparagraphs (a) and (b). Because paragraph 6 establishes the
formulae for defining the minimum amount of the TRQ, we consider that it is not necessary to
interpret the terms the "most recent" three-year period in paragraph 6 of the Understanding to
mean the most recent period preceding the conclusion of the negotiations in orde r to provide for
the possibility that the amount of the TRQs is adjusted to reflect an y increase in imports that may
take place in the course of the negotiations. It is always open for the Members involved in
negotiations under Article XXVIII to agree on c ompensation that exceeds the minimum amount
required.
7.276. Finally, with regard to prior practice, the Panel has asked the parties whether, in prior
cases where the negotiations under Article XXVIII took several years, it is possible to discern
whether the Mem bers concerned determined the level of compensation under Article XXVIII:2 on
the basis of import data that became available during the negotiations. China responds that it "has
no information to discern whether an updating of data [was] done".429
7.277. Based on the foregoing, we conclude that the European Union was not obliged to calculate
the total amount of the TRQs on the basis of import levels over the three years preceding the
conclusion of the Article XXVIII negotiations. Accordingly, we reject China 's clai ms that the
European Union acted inconsistently with Article XXVIII:2 read in conjunction with paragraph 6 of
the Understanding by calculating "future trade prospects" and the total amount of the TRQs on the
basis of imports of the products concerned into the European Union over the period 2006-2008 in
the context of the Second Modification Package, and not on the basis of imports over the 2009 -
2011 period.
7.5.3.2.3 Whether the European Union was required to account for poultry imports into
Romania, Bulgaria and Croatia in the years before they acceded to the European Union
7.278. China submits that even using the reference periods selected by the European Union, i.e.
2006-2008, the total amount of one of the TRQs in the First Modification Package (tariff line 1602

427 EU's second written submission, para. 76.
428 EU's first written submission, para. 180.
429 China's response to Panel question No. 111, para. 104.

31) falls below the minimum amount required by paragraph 6 of the Understanding when EU28
data is used.430
7.279. We recall that the total amount of the TRQ for tariff line 1602 31 was determined in the
context of the First Modification Package. The negotiations in the Fi rst Modification Package took
place in 2006. Romania and Bulgaria did not accede to the European Union until 1 January 2007.
Croatia acceded to the European Union on 1 January 2013. The European Union confirms that it
did not account for imports into these countries when determining the total amount of the TRQs.
7.280. China argues that the European Union was required to do so. Firstly, as regards Romania
and Bulgaria, China submits that when the First Modification Package was negotiated in 2006, the
European Uni on knew that the two countries would be joining the European Union in 2007. 431
Secondly, as regards Croatia, China agrees that, "technically the EU was not required to take into
account Croatia 's imports when the First Modification Package was negotiated and reached in
2006, as there was uncertainty as to whether and when Croatia would become a member ";
however, China nonetheless submits "for the purpose of this dispute settlement, the Panel should
use the import data that includes those of Croatia, as the EU is obliged to increase the Union
concession level when Croatia became a member, in exchange for Croatia 's withdrawal of its own
concession".432
7.281. China observes, however, that "whether or not to include import data for these three
countries will have a negli gible impact on the present dispute ".433 In this regard, China explains
that throughout the period 2000-2012, Croatia imported only 6.8 tonnes under tariff line 1602 31,
and all of these imports took place in 2012. By way of comparison, China notes that the
corresponding EU28 imports under 1602 31 in 2012 alone were 77,659 tonnes. For Romania and
Bulgaria, China explains that for tariff line 1602 31, total imports of 25.4 metric tonnes were
recorded for Romania in 2003 and 8.3 metric tonnes for Bulgaria in 20 05. By way of comparison,
China notes that the corresponding EU28 imports under tariff line 1602 31 were 63,883 tonnes in
2003, and 94,500 tonnes in 2005.434
7.282. The European Union submits that it was under no obligation to account for imports into
these countri es in the years preceding their accession to the European Union, and that to the
extent that the accession of those countries to the European Union resulted in an increase of the
applicable duty rates, the European Union would have been required to provide compensation in
accordance with Article XXIV:6 of the GATT 1994. 435 In addition, the European Union notes that
the difference arising from using import data including imports into these three countries only
leads to a minimal difference. Specifically, the E uropean Union observes that the total amount of
the TRQ agreed by the European Union for tariff line 1602 31 covers 103,896 tonnes. According to
China's alternative calculation in Exhibit CHN -49, the compensation required pursuant to
paragraph 6 of the Understanding including imports into these countries would amount to 103,953
tonnes, i.e. a difference of just 57 tonnes per year.436
7.283. We are not persuaded that the European Union was obliged to account for imports into
Romania, Bulgaria, or Croatia when determining in the total amount of the TRQ for tariff line 1602
31 in the context of the First Modification Package. As noted above, Romania and Bulgaria did not
accede to the European Union until 2007, and Croatia did not accede until 2013. However, the
initiation and conclusion of the Article XXVIII negotiations under the First Modification Package
occurred in 2006. 437 Furthermore, the total amount of the TRQ for tariff line 1602 31 was
determined on the basis of imports over the period 2003-2005.438
7.284. In addition, China acknowledges that including the import data for these three countries
would have a negligible impact on the total amount of the TRQ . We note that insofar as the

430 China's response to Panel question No. 29, paras. 144-145; China's second written submission,
para. 106.
431 China's response to Panel question No. 71(b), para. 24.
432 China's response to Panel question No. 71(b), para. 25.
433 China's response to Panel question No. 71(b), para. 26.
434 China's response to Panel question No. 71(b), para. 26.
435 EU's second written submission, paras. 81-82.
436 EU's second written submission, para. 80.
437 See paragraphs 7.50 to 7.54.
438 See paragraph 7.57.

information contained in Exhibit CHN-49 is accurate439, it would follow that the total amount of the
TRQ for 1602 31 is 0.05% less than required by Article XXVIII:2 and paragraph 6 of the
Understanding. However, we understand China to accept that the meaning of Article XXVIII:2 and
paragraph 6 of the Understanding is that "it may be difficult to have a compensation that is
mathematically the exact counterfactual of the concession being withdrawn ", and that what is
required is that Members "do all in their power to reach that goal".440
7.285. In addition, we note the argument by the European Union that to the extent that the
accession of those countries to the European Union resulted in an increase of the applicable duty
rates, the European Union would have been required to provide compensation in accordance with
Article XXIV:6 of the GATT 1994.
7.286. Based on th e foregoing, we are not persuaded that the European Union acted
inconsistently with Article XXVIII:2 read in conjunction with paragraph 6 of the Understanding by
calculating "future trade prospects " and the total amount of the TRQs on the basis of import
statistics that exclude imports into Romania, Bulgaria and Croatia which took place in the years
before they acceded to the European Union.
7.5.3.3 Whether the allocation of the TRQs is inconsistent with Article XXVIII:2 read in
conjunction with paragraph 6 of the Understanding
7.287. Having addressed China's claims regarding the total amount of the TRQs, w e now turn to
China's claims that the allocation of the TRQs among supplying countries is inconsistent with
Article XXVIII:2 and paragraph 6 of the Understanding.
7.288. China argues that if a TRQ resulting from Article XXVIII negotiations is allocated among
supplying countries, the provisions of Article XXVIII:2 and paragraph 6 of the Understanding apply
at the level of the individual shares allocated. China submits that t he allocation of all or the vast
majority of the TRQs to Brazil and Thailand, with a relatively small "all others " share and no
country-specific share allocated to China, does not reflect China 's future trade prospects. In this
connection, China argues that there are several different violations of paragraph 6. First, China
submits that by using reference periods during which Chinese poultry products were subject to
SPS measures, the TRQ allocation is not based on a "representative" period within the meaning of
paragraph 6. Second, China submits that by basing the TRQ allocation for the Second Modification
Package on the 2006 -2008 period, the TRQ allocations are not based on "the most recent three -
year period" within the meaning of paragraph 6. Third, China ar gues that the "all others" share for
one of the TRQs (tariff line 1602 30 80) is less than that required if EU28 data is used. 441 Fourth,
China contends that the absence of any "all others " share for one of the TRQs (tariff line
1602 39 21) violates paragraph 6.442
7.289. The European Union submits that Article XXVIII:2 and paragraph 6 regulate the overall
value for all Members of the compensation provided, and apply only at the level of the total
amount of each TRQ. The European Union submits that Article XXVIII and paragraph 6 of the
Understanding do not address or apply to the allocation of TRQs among supplying countries, which
is specifically and exhaustively addressed by Article XIII of the GATT. Without prejudice to this
position, the European Union submits that China has in any event failed to demonstrate that any
of the TRQ allocations are inconsistent with the requirements of paragraph 6.
7.290. The threshold legal issue raised by China 's claims is whether Article XXVIII:2 and
paragraph 6 of the Understanding apply to the allocation of TRQ shares among supplying
countries, as China contends, or merely apply to the total amount of the TRQs, as the European
Union contends.

439 It is not entirely clear how these figures relate to the figures that China presents in its response to
440 China's second written submission, para. 101.
441 China's response to Panel question No. 29(a), paras. 144-145.
442 China's response to Panel question No. 29(a), paras. 144-145. China accepts that there were no
imports from countries falling under the category of "all others", and that a "technical application of the
formulas of Paragraph 6 of the Understanding thus results in zeros, as indicated in Exhibit CHN-49". However,
China explains that "even when there were actually no imports during the reference period, the EU is required
to create a TRQ that is larger than the trade actually affected, namely larger than zero imports". China's
response to Panel question No. 71(c), paras. 27-28.

7.291. Beginning with the text of paragraph 6 of the Understanding, we note that it contains no
reference to the shares of a TRQ allocated to certain supplying countries or group of countries.
Rather, paragraph 6 refers in the singular to "a tariff rate quota " in its first sentence, and to "the
quota" in its second sentence. When read as a whole, paragraph 6 establishes the basis for
calculating the total amount of the TRQ. However, China submits that where "a global TRQ " is
broken down into what China terms "country-specific TRQs" and what China terms "an 'all others'
TRQ", it follows that the provisions of paragraph 6 of the Understanding must be applied "at the
level of each TRQ", as well as at the level of "the global TRQ".443 Thus, China refers to each of the
shares of a TRQ as a "TRQ" on its own, and refers to each of the TRQs as a "global TRQ ".
Proceeding on the basis of this terminology, China argues that the use of the singular in relation "a
tariff rate quota" and "the quota" actually signifies that the calculations provided for in paragraph
6 should be applied for each of the TRQ shares allocated amon g supplying countries. In China's
view, "it would not make any sense to fix a global TRQ taking into account overall future prospects
without taking into account future trade prospects at the level of the separate TRQs in which the
global TRQ is broken down", and that to do otherwise "would result in over-compensation for some
and under-compensation for others, thereby creating discrimination".444
7.292. We are not persuaded by China 's interpretation of paragraph 6 of the Understanding.
Beginning with the ordinary meaning of the terms used, it is evident that the term "tariff quota" is
not the same as a "share" of an allocated tariff quota. China rightly notes that paragraph 6 does
not refer to the "total amount of compensation ".445 However, in our view this does not h ave the
implications drawn by China. As discussed above, paragraph 6 refers to "a tariff rate quota " and
"the quota", but not to the shares of TRQ allocated among supplying countries. In the absence of
any juxtaposition of these different terms in the text of paragraph 6, there would be no need, in
the text of paragraph 6, to include such qualifiers as the "global" or the "total" quota, or level of
compensation.
7.293. Turning to the context of paragraph 6 of the Understanding, we consider that paragraph 6
can be presumed to use the term "tariff quota" with the same meaning as that term is elsewhere
used in the GATT 1994. That includes Article XIII:5 of the GATT 1994, which states that the
provisions of Article XIII apply "to any tariff rate quota" instituted or maintained by a Member. We
consider that the term "tariff rate quota " cannot, in the context of Article XIII, be used
interchangeably with the concept of a "share" of an allocated tariff quota. Article XIII:2(d)
distinguishes "a quota " which is allocated a mong supplying countries from the "shares in the
quota" that has been allocated. We note that interpreting the two terms interchangeably in the
context of Article XIII:2(d) would lead to the absurd result that any share of a TRQ allocated to
one country would then have to be allocated among different supplying countries.
7.294. We consider that Article XXVIII:2 is relevant context for the interpretation of paragraph 6
of the Understanding, given the close relationship between these two provisions. Therefore, we
next consider whether the text of Article XXVIII:2 supports the conclusion that if a withdrawing
Member allocates a tariff rate quota during Article XXVIII negotiations, "compliance with
Article XXVIII:2 requires a comparison at the level of the WTO Member s to which the quota was
allocated rather than at the global level only ".446 For the reasons that follow, we do not consider
that Article XXVIII:2 supports that conclusion.
7.295. Article XXVIII:2 states that the Member concerned must endeavour to maintain a "general
level" of reciprocal and mutually advantageous concessions not less favourable to trade than that
provided for prior to the modification. In calling for an examination of whether the "general level"
of concessions has been maintained, the text of Artic le XXVIII:2 suggests that the overall value of
the compensation for all Members should be equivalent to the overall value for all Members of the
modified concession. This is reinforced by the focus being on whether the compensation maintains
a "general level" of concessions not less favourable to "trade", without any further precision.
7.296. China recognizes that the use of the word "general" implies that "what must be done is to
aggregate the level of concessions of each WTO Member ".447 However, China points out that the

443 China's first written submission, para. 137.
444 China's first written submission, para. 138; China's second written submission, para. 110.
445 China's response to Panel's question No 29, para. 141.
446 China's opening statement at the first meeting of the Panel, para. 64.
447 China's comments on the EU's response to Panel question No. 67, para. 7.

text of Article XXVIII:2 does not simply state that the Member concerned should endeavour to
maintain the "general level" of tariff concessions, but refers rather to a general level of "reciprocal
and mutually advantageous" concessions not less favourable to trade than that provided for in this
Agreement prior to such negotiations.448
7.297. We consider that China 's argument seeks to read too much into the term "reciprocal" in
Article XXVIII:2. The ordinary meaning of the term "reciprocal" is "[o]f the na ture of a return
made for something; given, felt, shown, etc., in return", and "[e]xisting on both sides; mutual; (of
two or more things) done, made, etc., in exchange ".449 Other provisions of the GATT 1994 refer to
"reciprocal and mutually advantageous " concessions and arrangements. Notably, the preamble to
both the GATT 1994 and the WTO Agreement recognize the objective of entering into "reciprocal
and mutually advantageous arrangements " directed to the substantial reduction of tariffs and
other barriers to trade and to the elimination of discriminatory treatment in international trade
relations.450 It seems to us that they basically convey the notion of balanced concessions and
arrangements. As the Panel in EC – Chicken Cuts observed:
Taken together, the rel evant aspects of the WTO Agreement and the GATT 1994
indicate that concessions made by WTO Members should be interpreted so as to
further the general objective of the expansion of trade in goods and the substantial
reduction of tariffs. It is also clear th at such an interpretation is limited by the
condition that arrangements entered into by Members be reciprocal and mutually
advantageous. In other words, the terms of a concession should not be interpreted in
such a way that would disrupt the balance of concessions negotiated by the parties.451
7.298. In the context of Article XXVIII:2, the use of the term "reciprocal" does not shed any light
on whether : (i) the value of the compensation resulting from the negotiations , for each single
Member, must be equivalent to the value , for that Member , of the concession prior to its
modification or withdrawal, or rather (ii) the value of the overall compensation resulting from the
negotiations, for all other Members, must be equivalent to the overall value, for all other Members,
of the concession as it existed prior to its modification or withdrawal. The term "reciprocal" can be
just as easily understood as referring to the relationship between the Member modifying the
concession, on the one side, and all other Members, on th e other side, rather than to each of the
multiple relationships between the Member modifying the concession and every other Member.
7.299. Continuing with our textual analysis, both parties agree that Article XIII:2 refers
specifically to the allocation of TRQs. 452 In our view, Article XIII:2 is therefore also relevant
context for the purpose of the interpretation of Article XXVIII:2 and paragraph 6 of the
Understanding. Specifically, if the allocation of TRQ shares among supplying countries is not
regulated by Arti cle XXVIII:2 and paragraph 6 of the Understanding, it does not follow that the
allocation of TRQ shares among supplying countries is unregulated, or "would result in over -
compensation for some and under -compensation for others, thereby creating discriminat ion".453
Rather, it would mean that the allocation of TRQs shares among supplying countries is regulated
only by the relevant obligations in Article XIII. Interpreting Article XXVIII:2 and paragraph 6 of the
Understanding as also regulating the allocation of TRQs among supplying countries would thus
mean that there are two sets of requirements in the GATT 1994 regulating the allocation of TRQ
shares among supplying countries. To the extent that the requirements of paragraph 6 of the
Understanding would be int erpreted differently from the TRQ allocation requirements found in
Article XIII:2, this would mean that there are different and potentially conflicting requirements
regulating the allocation of TRQ shares among supplying countries.
7.300. According to China, par agraph 6 of the Understanding applies "at the level of the share
allocation of each tariff rate quota as well as at the level of the global tariff rate quota ".454
However, we recall that paragraph 6 contains three different formula e for calculating future tr ade

448 China's opening statement at the first meeting of the Panel, para. 64.
449 Shorter Oxford English Dictionary, 5th ed, W.R. Trumble, A. Stevenson (eds.) (Oxford University
Press, 2002), Vol. 2, p. 2487.
450 We also note that Article XVII:3 of the GATT 1994 and Article XXVIIIbis both refer to negotiations on
a "reciprocal and mutually advantageous basis" to reduce obstacles to trade.
451 See Panel Reports, EC – Chicken Cuts, para. 7.320.
452 See e.g. China's response to Panel question No. 29(b), para. 147.
453 China's first written submission, para. 138; China's second written submission, para. 110.
454 China's response to Panel question No. 29, para. 143.

prospects, and the importing Member is required to select the formula that yields the greatest
amount. Therefore, if paragraph 6 of the Understanding applies at the level of the share allocation,
the importing Member would have to apply different formu lae to different Members insofar as that
would yield a greater amount in any case . Based on the text of paragraph 6 of the Understanding,
we consider that the application of the formulae set forth in paragraph 6(a) and 6(b) at the level of
TRQ allocation w ould not only lead to results that conflict with the allocation rules set forth in
Article XIII:2, but which would also be unworkable.
7.301. Before concluding, we recall that China stresses that "[t]o be clear, China is not suggesting
that a Member is required to allocate among supplying countries the compensation provided in the
form of TRQs under Article XXVIII:2 and paragraph 6 of the Understanding". Rather, China clarifies
that "in cases where the Member chooses to allocate or break down the total compensa tion among
supplying countries and records the shares of the compensation of various supplying countries as
part of its modification of the concessions, the compensation is provided not only at the global
level, but also at the level of each supplying country or group of countries".455 However, we do not
understand the basis for the distinction that China draws between how Article XXVIII:2 would
apply to assessing the adequacy of the value of compensation in the form of a TRQ that is not
allocated among suppl ying countries , and how Article XXVIII:2 would apply to assessing the
adequacy of the value of compensation in the form of a TRQ allocated among supplying countries.
If Article XXVIII:2 is interpreted to require that the value of the compensation resulting from the
negotiations for each single Member be equivalent to the value for that Member of the concession
prior to its modification or withdrawal, then that general principle would apply irrespective of the
form of the compensation. A global TRQ that is n ot allocated among supplying countries would
therefore be subject to that same principle. In this regard, we do not consider that, in a situation
where a Member replaces an unlimited tariff concession with a TRQ that is not allocated among
supplying countries, the value of that compensation for each single Member would necessarily be
equivalent to the value, for that Member, of the concession prior to its modification or withdrawal.
7.302. Based on the foregoing, we conclude that Article XXVIII:2 and paragraph 6 of the
Understanding do not apply to the allocation of TRQ shares among supplying countries. Therefore
it is not necessary to consider China 's claims relating to the allocation of TRQ shares further. In
any event, we note that China 's claims of violation r elating to the allocation of the TRQs are to
some extent based on the same grounds as its claims relating to the total amount of the TRQs.
Accordingly, we reject China 's claims that the European Union acted inconsistently with Article
XXVIII:2 read in conjunction with paragraph 6 of the Understanding by allocating the TRQs among
supplying countries in a manner that does not reflect China's "future trade prospects".
7.5.4 Conclusion
7.303. The Panel finds that China has failed to demonstrate that the tariff rates and th e TRQs
negotiated and implemented by the European Union are inconsistent with Article XXVIII:2, read in
conjunction with paragraph 6 of the Understanding on the Interpretation of Article XXVIII of the
GATT 1994, by failing to maintain a general level of re ciprocal and mutually advantageous
concessions not less favourable to trade than that existing prior to the modification.
7.6 Claims under Article XIII:2(d) of the GATT 1994
7.6.1 Introduction
7.304. China claims that by allocating "all or the vast majority of the TRQs to two of the WTO
Members" (i.e. Brazil and Thailand), the European Union acted inconsistently with Article XIII:2(d)
of the GATT 1994. 456 According to China, it had a "substantial interest in supplying the product
concerned", and the European Union therefore violated Article XIII:2(d) because it failed to seek
agreement with all WTO Members having a substantial interest in supplying the product
concerned, and did not allocate to all such Members shares based upon the proportions supplied

455 China's opening statement at the second meeting of the Panel, para. 42.
456 China's first written submission, paras. 223-252; China's opening statement at the first meeting of
the Panel, paras. 109-112; China's responses to Panel question Nos. 41-42; China's second written
submission, paras. 172-175; China's opening statement at the second meeting of the Panel, paras. 76-81;
parties' responses, and comments on one another's responses, to Panel question Nos. 69, 72-74, 106-109,
111-120.

by them during a previ ous representative period, due account being taken of any special factors
which affected the trade in the product.
7.305. China argues that all of the determinations under Article XIII:2 must be based on a
"previous representative period ", taking due account of "special factors which may have affected
or may be affecting the trade in the product", including not only the allocation of TRQ shares vis-à-
vis substantial suppliers under Article XIII:2(d) in accordance with the second sentence of
Article XIII:2(d), but also the initial, threshold determination of which Members have a "substantial
interest" in supplying the products concerned under Article XIII:2(d). In this case, China argues
that the reference periods upon which the European Union made those determinati ons were not
"representative", and that China 's reduced ability to export as a result of import bans due to SPS
measures, as well as its increased ability to export after the relaxation of the SPS measures in July
2008, were "special factors" that had to b e taken into account. With respect to both the First and
Second Modification Packages, China claims that the European Union should have determined that
China was a substantial supplier and sought an agreement with China on the TRQ share allocations
based on an estimate of the share of imports that China would have had in the absence of the SPS
measures that restricted Chinese poultry imports over the reference periods used. With respect to
the Second Modification Package, China additionally claims that the European Union was obligated
to seek an agreement with China on the TRQ share allocations taking into account the increase in
poultry imports from China over the 2009 -2011 period, which China considers to be the most
recent three-year period preceding the determination of the TRQs.
7.306. The European Union responds that China 's claims rest on an incorrect interpretation of
Article XIII:2(d).457 Regarding the determination of which Members are substantial suppliers for
the purpose of Article XIII:2(d), the European Union submits that there is no reason for
interpreting the term "substantial interest " differently in the context of Article XXVIII:1 and
Article XIII:2, especially in cases where the negotiations on the total amount of the TRQs pursuant
to Article XXVIII take place concurrently with the negotiations on the allocation of those same
TRQs pursuant to Article XIII:2(d). In addition to questioning whether consideration of "special
factors" is required when determining which Members are substantial suppliers un der Article
XIII:2(d), the European Union considers that the SPS measures mentioned by China are not
"special factors " within the meaning of Article XIII:2(d), and that the European Union was
therefore under no obligation to determine which Members held a substantial supplying interest on
the basis of an estimate of what China 's share of imports into the European Union would have
been in the absence of the SPS measures. The European Union also rejects China 's claim that, in
respect of the Second Modificatio n Package, it was required to determine which Members held a
substantial supplying interest based on more recent data regarding imports over the period 2009 -
2011.
7.6.2 Relevant provisions
7.307. China advances separate claims of violation under the chapeau of Articl e XIII:2, and under
Article XIII:2(d). The chapeau of Article XIII:2 provides that:
In applying import restrictions to any product, Members shall aim at a distribution of
trade in such product approaching as closely as possible the shares which the various
Members might be expected to obtain in the absence of such restrictions and to this
end shall observe the following provisions…
7.308. The provisions that follow include paragraphs (a) through (d) of Article XIII:2. Of
relevance to the present case is paragraph (d), which clarifies how the chapeau of Article XIII:2 is
to be complied with as regards WTO Members that hold a "substantial interest" in supplying the
product concerned. Article XIII:2(d) states:
In cases in which a quota is allocated among supplying countries the Member applying
the restrictions may seek agreement with respect to the allocation of shares in the
quota with all other Members having a substantial interest in supplying the product

457 EU's first written submission, paras. 278-287; EU's opening statement at the first meeting of the
Panel, paras. 20-25; EU's responses to Panel question Nos. 39, 42; EU's second written submission, paras.
163-176; EU's opening statement at the second meeting of the Panel, paras. 97-99; parties' responses, and
comments on one another's responses, to Panel question Nos. 69, 72-74, 106-109, 111-120.

concerned. In cases in which this method is not reasonably p racticable, the Member
concerned shall allot to Members having a substantial interest in supplying the product
shares based upon the proportions, supplied by such Members during a previous
representative period, of the total quantity or value of imports of the product, due
account being taken of any special factors which may have affected or may be
affecting the trade in the product. No conditions or formalities shall be imposed which
would prevent any Member from utilizing fully the share of any such total quantity or
value which has been allotted to it, subject to importation being made within any
prescribed period to which the quota may relate. (emphasis added)
7.309. In EC – Bananas III (Art. 21.5 – Ecuador II) / EC – Bananas III (Art. 21.5 – US), the
Appellate Body clarified that Article XIII:2(d) is a permissive "safe harbour" insofar as substantial
suppliers are concerned. However, the Appellate Body explained that even where a TRQ is
allocated among supplying countries in accordance with Article XIII:2(d), t hat allocation must also
respect the requirement in the chapeau of Article XIII:2 vis -à-vis non-substantial suppliers (i.e.
countries not recognized as having a "substantial interest" in supplying the product concerned ).
The Appellate Body stated:
The prov isions of Article XIII:2(a)-(d) are specific instances of authorized forms of
allocation when a Member chooses to allocate shares of the tariff quota.
Article XIII:2(d) allows for the case where a quota is allocated among supplying
countries, either by way of agreement or, where this is not reasonably practicable, by
allotment to Members having a substantial interest in supplying the product
concerned, and in accordance with the proportions supplied by those Members during
a previous representative period, taking due account of "special factors ". In other
words, Article XIII:2(d) is a permissive "safe harbour "; compliance with the
requirements of Article XIII:2(d) is presumed to lead to a distribution of trade as
foreseen in the chapeau of Article XIII:2, as far as substantial suppliers are
concerned.408
Agreement".460 Another Ad Note that is speci fic to Article XIII:2(d) clarifies that no mention was
made of "commercial considerations " as a rule for the allocation of quotas because "it was
considered that its application by governmental authorities might not always be practicable ", and
because "in cases where it is practicable, a Member could apply these considerations in the

458 Appellate Body Reports, EC – Bananas III (Article 21.5 – Ecuador II) / EC – Bananas III (Article 21.5
– US), para. 338 and fn 408.
459 The term is also found in several other provisions of the covered agreements, including
Article XI:2(c) of the GATT 1994 (providing that "the Member shall pay due regard to the proportion prevailing
during a previous representative period and to any special factors which may have affected or may be affecting
the trade in the product concerned"); Article XII:2(a) and Article XVIII:9 of the GATT 1994 (both providing that
"[d]ue regard shall be paid in either case to any special factors which may be affecting the reserves of such
Member"); Article XVI:3 of the GATT 1994 (referring to "account being taken of the shares of the Members in
such trade in the product during a previous representative period, and any special factors which may have
affected or may be affecting such trade in the product"). Article 5.2(a) of the Agreement on Safeguards refers,
reiterates the relevant portion of the second sentence of Article XIII:2(d), including the reference to "special
factors".
460 The Ad Note applies to the term "special factors" in Article XI:2, but applies to Article XIII:2(d) and
Article XIII:4 by virtue of an Ad Note to Article XIII:4 that cross-references the Ad Note to Article XI:2.

process of seeking agreement, consistently with the general rule laid down in the opening
sentence of paragraph 2".
7.311. By its own terms, Article XIII:2(d) provides that a Member seeking to allocate a TRQ
among supplying countries may seek agreement with respect to the allocation of shares in the
quota "with all other Members " having a substantial interest in supplying the product concerned.
In EC – Poultry, the Appellate Body con firmed that for a TRQ allocation to be in conformity with
the first method set forth in Article XIII:2(d), the Member concerned cannot enter into agreements
with some substantial suppliers and not others. In that case, the Appellate Body found that:
To conform to Article XIII:2(d), all other Members having a "substantial interest" in
supplying the product concerned would have to agree. That is not the case here. As
the European Communities did not seek an agreement with Thailand, the other
contracting party having a substantial interest in the supply of frozen poultry meat to
the European Communities at that time, the Oilseeds Agreement cannot be considered
an agreement within the meaning of Article XIII:2(d) of the GATT 1994.461
7.6.3 Analysis by the Panel
7.312. Turning to the issues in dispute, w e understand China 's claims under Article XIII:2(d) to
rest on two different grounds, raising the following issues. First, whether the European Union was
obliged to determine which Members held a "substantial interest" on the basis of an estimate of
what import shares would have been in the absence of the SPS measures. Second, whether the
European Union was obliged to determine which Members held a substantial supplying interest
taking into account changes in import shares tha t occurred in the course of the negotiations under
the Second Modification Package concurrently addressing the total amount of the TRQs and their
allocation among supplying countries.
7.6.3.1 Separate analysis of China 's claims under Article XIII:2(d) and the cha peau of
Article XIII:2
7.313. In this case, China has advanced one set of claims of violation under Article XIII:2(d), and
another set of parallel claims of violation under the chapeau of Article XIII:2. These appear to be
claims in the alternative, insofar as Ch ina's claims under Article XIII:2(d) are directed at
establishing that it was a Member with a substantial supplying interest, whereas its claims under
the chapeau of Article XIII:2 are premised on the assumption that "it was not WTO Member with
an SSI".462
7.314. The parties have presented their argumentation in respect of these two sets of claims in
separate sections of their first and second written submissions, notwithstanding that there is a
substantial degree of overlap between China 's claims and the parties ' arguments under
Article XIII:2(d) and the chapeau of Article XIII:2. China has clarified that its claim that the
European Union was under an obligation to allocate an "all others" share of at least 10% within
each of the TRQs under the First and Second Mo dification Package s is relevant only to China 's
claims under the chapeau of Article XIII:2. However, it would appear that China's other claims
under the chapeau of Article XIII:2 rest on the same supporting arguments as its claim that it had
a "substantial interest" within the meaning of Article XIII:2(d). 463 The overlap between China 's
arguments under these provisions derives from the fact that, in China 's view, there is significant
overlap between the legal standards that apply under paragraph (d) and the c hapeau of
Article XIII:2. In particular, China considers that the European Union was required to determine
which Members had a "substantial interest " within the meaning of Article XIII:2(d) based on a
previous "representative" period, taking due account of "special factors which may have affected
or may be affecting the trade in the product ", and that the same legal standards apply in the
context of the chapeau of Article XIII:2 when determining the amount of the TRQ share to be
allocated to "all others".

461 Appellate Body Report, EC – Poultry, para. 93.
462 China's second written submission, para. 144.
463 The Panel asked China to clarify whether its China's claim under the chapeau of Article XIII:2 rests
on the same argument as its claim that it had a "substantial interest" within the meaning of Article XIII:2(d).
China responded that "[t]he argument in Section IV-B-3-b is the same as that under Article XIII:2(d)" (China's
response to Panel question No. 41(b), para. 173).

7.315. Notwithstanding the substantial degree of overlap between China 's claims and the parties '
arguments under Article XIII:2(d) and the chapeau of Article XIII:2, we shall address these claims
separately, in the same manner as the parties have in their submissions.
7.6.3.2 Relevance of "special factors " to the determination of which Members hold a
"substantial interest" within the meaning of Article XIII:2(d)
7.316. An important interpretative issue that arises in connection with China 's claim under
Article XIII:2(d) is wh ether consideration of "special factors" is relevant to the determination of
which WTO Members hold a substantial interest under Article XIII:2(d).
7.317. We recognize that the text of the first sentence of Article XIII:2(d) does not explicitly state
that "special factors" must be taken into account for that purpose. However, in our view this does
not imply that "special factors" can be ignored in the context of determining which Members hold a
substantial supplying interest. If that were the case, then followin g that same logic, the
determination of which Members hold a substantial supplying interest would also not need to be
based on a "previous representative period ", because this legal criterion, like "special factors", is
only referred to explicitly in the second sentence of Article XIII:2(d).
7.318. Furthermore, we can see no reason why Article XIII:2(d) would establish a legal obligation
to take due account of "special factors " only when unilaterally allocating the shares of a TRQ
among WTO Members having a "substantial interest" in supplying a product, but not in the initial,
threshold determination of which Members hold a substantial supplying interest under the first
sentence of Article XIII:2(d). We consider that the explicit reference to a "previous representative
period" and "special factors" in the second sentence of Article XIII:2(d) can be explained by the
need to "set the minimum standards for the determination of the TRQs if no negotiations are
held", and that Article XIII:2(d) "assumes that, where there are negotiations, the negotiating WTO
Members with [substantial supplying interests] will defend their interests and make certain that
special factors are taken into account for the determination of the TRQs".464
7.319. In addition, we consider that Article XIII:4 offers some contextual support for the view that
consideration of "special factors " is relevant to the determination of which Members hold a
"substantial interest" for the purpose of the first sentence of Article XIII:2(d). As elaborated later
in our Rep ort in the course of addressing China 's claim of inconsistency with Article XIII:4, we
conclude that Article XIII:4 applies to both the first and second sentences of Article XIII:2(d). 465
The obligation in Article XIII:4 relates to the subsequent "reappraisal" of the "special factors "
involved. This implies that consideration of "special factors " cannot be ignored in the initial
appraisal of which Members hold a "substantial interest" for the purpose of the first sentence of
Article XIII:2(d).
7.320. The European Union argues that that there is no reason to interpret the notion of a
"substantial interest" in different ways in Article XXVIII and Article XIII. 466 To be clear, we are not
suggesting that the meaning of the terms "substantial interest" in the context of Article XIII:2(d)
should be interpreted without regard to the parallel determination that must be made in the
context of Article XXVIII negotiations. We consider that the need for a harmonious interpretation is
particularly important taking into account the existence of situations where, as in the present case,
negotiations on the total amount of the TRQs under Article XXVIII occurs simultaneously with
negotiations on the allocation of the TRQs under Article XIII:2(d). 467 Thus, we consider that these
two provisions should be interpreted harmoniously.

464 China's second written submission, para. 174.
465 See paragraph 7.464.
466 EU's first written submission, paras. 279-283. In its response to Panel question No. 118(a), the
European Union agrees that although the first sentence of Article XIII:2(d) does not make any reference to
"special factors", "a method that disregards special factors affecting any of the suppliers of a given product
would not be objective as it would be biased against the suppliers affected by those factors and in favour of the
others". In its comments on the EU's response to Panel question No. 118(a), China sets forth its understanding
that "it is not disputed between China and the EU that special factors should be taken into account in
determining which Members are "'substantial suppliers"' under the first sentence of Article XIII:2(d)".
467 At paragraph 33 of its third-party written submission, Canada observes that "[i]f Article XXVIII is
being used, it is very likely that allocation under Article XIII will occur coincident with the establishment of a
TRQ under Article XXVIII."

7.321. More specifically, we consider that a determination of which Members hold a principal or
substantial supplying interest under Article XXVIII based on trade statistics for the last three -year
period preceding the notification of the intention to modify concessions, in accordance with
paragraph 4 of the Procedures for Negotiations under Article XXVIII, would generally satisfy the
requirement, in Article XIII:2(d), that the determination be based on a "previous representative
period". Furthermore, there are the attractions of methodological ease and consistency in using a
10% import share benchmark as the means of determining "substantial interest" in Article XIII as
has been done in the context of Article XXVIII. 468 In this regard, China stated that it "does not
consider that it is an ipso facto violation of Articles XXVIII and XIII for a member to use the 10%
threshold to determine SSI status ".469 In these and other respects, we consider that the
determination of which Members hold a "substantial interest" under Article XIII:2(d) may generally
rely on the determination that has been made in the context of Article XXVIII.
7.322. However, in the context of Article XIII:2, we consider that the determination of which
Members hold a "substantial supplying interest" under Article XIII:2(d) must be supplemented by
the cumulative consideration of whether there are "special factors " within the meaning of
Article XIII:2. In our view, this reading seeks a harmonious interpretation and appl ication of
Article XIII:2 and Article XXVIII, and at the same time gives due regard to the particular legal
standards reflected in the text of the provisions concerned.
7.6.3.3 Whether different reference periods can be used for the determinations under
Article XXVIII:1, Article XXVIII:2, and Article XIII:2(d)
7.323. China's claims under Article XIII:2(d) are founded on the same two horizontal arguments
that we have already considered in the context of examining China's claims under Article XXVIII:1,
and also in the con text of examining China's claims under Article XXVIII:2 and paragraph 6 of the
Understanding. First, we understand China to argue that, in respect of both the First and Second
Modification Packages, the European Union was obligated to estimate what import shares into the
European Union would have been in the absence of the SPS measures restricting poultry imports
from China. Second, we understand China to argue that, in respect of the Second Modification
Package, the European Union was required to base its determinations on actual imports from the
most recent three -year reference period prior to the conclusion of the negotiations. China
considers that the negotiations concluded when the European Union notified Members of the same
in December 2012, and theref ore in its view the determinations under Article XIII:2(d) should
have used 2009-2011 as the reference period.
7.324. China has claimed that the European Union violated Article XXVIII:1 and Article XXVIII:2
on essentially the same grounds. We have already rejected China's claims under Article XXVIII:1,
finding that the European Union was free to determine which Members held a principal and
substantial supplying interest in the First and Second Modification Packages on the basis of actual
imports into the European Union over the three -year period preceding the European Union
notification of its intention to modify concessions under Article XXVIII (i.e. 2003 -2005 and
2006-2008). We have also rejected China 's claims under Article XXVIII:2 and paragraph 6 of the
Understanding, again finding that the European Union was free to determine the total amount of
the TRQs in the First and Second Modification Packages on the basis of actual imports into the
European Union over the three -year period preceding the European Union notification of its
intention to modify concessions under Article XXVIII (i.e. 2003-2005 and 2006-2008).
7.325. However, we do not consider that the conclusions that we have reached in relation to
China's claims under Article XXVIII:1 and Article XXVIII:2 are ne cessarily dispositive of China 's
claims under Article XIII:2(d). The reason is that each of these provisions contains its own
applicable legal standard, as elaborated in the different terms used in each provision. In addition,
each of these provisions appl ies to a different subject. The subject -matter of China's claims under
Article XXVIII:1 is the reference period used to determine which Members hold a principal or
substantial supplying interest for the purpose of entering into negotiations or consultations under
Article XXVIII. This is distinct from the subject-matter of China's claims under Article XXVIII:2 and

468 Canada's third-party written submission, para. 35. We note that the panel in EC-Bananas III
(Ecuador) found the approach of the European Union in that case (to interpret this language in conformity with
Ad Article XXVIII:1 paragraph 7 and the 10% rule developed in that context) to be reasonable(Panel Report
469 China's response to Panel question No. 68(a).

paragraph 6 of the Understanding, which is the reference period used to determine the total
amount of the TRQs. Both of the foregoing are distinct from the subject -matter of China 's claims
under Article XIII:2(d), which is the reference period used to determine which Members held a
"substantial interest " in supplying the products at issue for the purpose of determining the
allocation of the TRQ shares among supplying countries.
7.326. Accordingly, having found that the European Union was free to base its determinations
under Article XXVIII:1 and Article XXVIII:2 on actual imports over the reference periods that it
selected for that purpose (2003 -2005 and 2006-2008), we cannot a priori exclude the possibility
that the European Union might have been obligated to allocate the TRQ shares among supplying
countries on the basis of a different reference period taking into account the particular legal
standards that apply in the context of Article XIII:2(d). Specifically, we do not exclude a priori that
a different reference period could be used for the different determinations, insofar as that
conclusion would be warranted on the basis of the legal standard that applies under
Article XIII:2(d).
7.327. We are presented with a number of arguments that are specific to the legal standards that
apply under Article XIII:2, and in particular the notion of "special factors which may have affected
or may be affecting the trade i n the product". Some of the arguments presented by the parties in
relation to China 's claims under Article XIII:2 reiterate arguments that were also advanced, and
that we have already addressed, in the context of addressing China's claims under Article XXVIII:1
and Article XXVIII:2 and paragraph 6 of the Understanding. To avoid addressing the same
arguments multiple times, our analysis of China's claims under Article XIII:2(d) will focus on those
arguments and interpretative elements that are specific to Ar ticle XIII:2, and that we have not
already addressed in the context of our findings under Article XXVIII:1 and Article XXVIII:2.
7.6.3.4 Whether the European Union was obliged to determine which Members were
substantial suppliers based on an estimate of what their import shares would have been
in the absence of the SPS measures
7.328. China claims that where SPS import bans are imposed, the period of application of these
import bans cannot be used as a previous "representative" period for the purpose of determining
which Members have a "substantial interest" in supplying that product. In addition, China argues
that "its reduced ability to export as a result of import bans due to SPS measures " was a "special
factor that affected trade in the products" concerned, and that had to be taken into account by the
European Union. With respect to both the First and Second Modification Package s, we understand
China to claim that the European Union acted inconsistently with Article XIII:2(d) by not
determining which Members held a substantial supplying interest on the basis of an estimate of the
share of imports that China would have had in the absence of the SPS measures.
7.329. As we understand it, China 's contention is that the European Union was obligated to
estimate what other Members' poultry import shares into the European Union would be without
any of the SPS measures on Chinese poultry imports, at a time when those SPS measures were
still in force, and then determine that China held a "substantial interest " on the basis of that
counterfactual estimate. We understand this contention to be distinct from China 's additional
claim, which we address in the next subsection, that the European Union was obliged to determine
which Members held a substantial interest taking into account changes in import shares into the
European Union in some poultry products after those SPS measures were relaxed in July 2008. We
will analyse China's contention first in the light of the notion of a "previous representative period",
and then in the light of the concept of "special factors".
7.330. We understand China 's view to be that for a period to be "representative" within the
meaning of Article XIII:2, the "period cannot be affected by an import ban ".470 We agree with
China that the European Union was obliged to base its determinations under Article XIII:2(d) on a
"previous representative period ". We also consider that the existence of one or more import
restrictions during the reference period selected for the purpose of Article XIII:2(d) could,
depending on the facts of a case, warrant the conclusion that the reference period selected might
not be "representative". The GATT panel report in EEC – Apples I (Chile) supports this
understanding. When considering the representative period for the imposition of quantitative
restrictions, the years 1975, 1977 and 1978 were taken into account by the panel, while 1976 was

470 China's first written submission, para. 252.

excluded because it was not "representative" as voluntary restraint agreements with the EEC were
in effect at that time. In these circumstances, the panel stated:
Due to the existence of restrictions in 1976, the Panel held that that year could not be
considered as representative, and that the year immediately preceding 1976 should
be used instead. The Panel thus chose the years 1975, 1977 and 1978 as a
"representative period".471
7.331. Likewise, we note that the panel in EC – Bananas III (Art. 21.5 – Ecuador) considered that
a period during which some EC member States applied "import restrictions or prohibitions " could
not serve as a previous representative period.472
7.332. However, we do not read either of these prior reports to say that the existence of any
import restrictions during a previous period means that ipso facto , such a period cannot be
"representative". Thus, we do not agree with the sweeping conclusion that for a period to be
"representative" within the meaning of Article XIII:2, the "period cannot be affected by an import
ban".473 Our reasons are as follows.
7.333. Firstly, it appears that the import restrictions in question in both of these previous cases
may have inc luded WTO -inconsistent measures. In this regard, we recall that in EEC – Apples
(Chile I), the restrictions were described as "voluntary restraint agreements". In the present case,
China is not challenging the consistency of the SPS measures with any provi sion of the covered
agreements.474 Moreover, we have found that the SPS measures were not "discriminatory
quantitative restrictions " within the meaning of paragraphs 4 and 7 of the Ad Note to
Article XXVIII:1. Accordingly, the present case is one in which th e import restrictions that were
maintained during the reference periods must be presumed to be WTO -consistent. In our view,
there is nothing unusual about Members maintaining measures that may, directly or indirectly ,
affect the importation of certain prod ucts. It follows, for the purpose of calling into question the
representativeness of the period selected, that a relevant consideration would be whether those
measures are WTO-consistent or not.
7.334. Secondly, if it were the case that the existence of any impor t restriction during a previous
period meant that ipso facto such a period cannot be considered "representative" for the purpose
of Article XIII:2, we would expect this limitation to be reflected in some way in the text of
Article XIII:2, just as the conce pt of "discriminatory quantitative restrictions " is explicitly
mentioned in the context of Article XXVIII. However, Article XIII:2(d) contains only a reference to
a "previous representative period", with no such qualification. While the chapeau of Article XIII:2
refers to "the shares which the various Members might be expected to obtain in the absence of
such restrictions", when applied to a tariff rate quota, this means the shares which the various
Members might be expected to obtain in the absence of the tariff rate quota. In other words, the
chapeau refers to "such restrictions", and not to import restrictions in general.
7.335. Thirdly, whether the existence of certain import restrictions over a period mean s that the
period is one that is not "representative" depends on the particular factual circumstances of a
case. In the present case, it is not in dispute that all tariff items at issue were prohibited or
restricted before and after the period 2002-2008, when importation of all Chinese poultry products
was prohibited.475 It appears that EU imports from China under all of the tariff lines at issue had
been at 0% or negligible levels over the 1999 -2002 period, and that EU imports from China under
a number of the tariff lines at issue were still prohibited as a con sequence of the heat treatment
measure, until 2015 at least.476 From this perspective, we are not persuaded by the argument that
the existence of the SPS measures in place during the reference periods 2003 -2005 and
2006-2008 means that these periods were, in the circumstances of this case, not "representative".

471 Panel Report, EEC – Apples I (Chile), para. 4.8.
472 Panel Report, EC – Bananas III (Art. 21.5 – Ecuador), para. 6.42.
473 China's first written submission, para. 252.
474 China's first written submission, para. 31. See also China's opening statement at the first meeting of
the Panel, para.5; China's second written submission, paras. 42, 46; China's response to Panel question No. 6,
475 See section 7.2.3 above.
476 See the import statistics in section 7.2.4 above.

7.336. We turn now to the concept of "special factors". China contends that by using a reference
period that was tainted by the existence of import prohibitions due to the SPS measures, the
European Union di d not base its determinations of which Members held a substantial supplying
interest, or the TRQ allocation, taking due account of "special factors which may have affected or
may be affecting the trade in the product ". According to China, the "special factor" in this regard
was "the reduced ability to export as a result of import bans due to SPS measures".477
7.337. In this respect , we find it difficult to characterize the SPS measures as such as "special
factors", insofar as they apply equally to imports from all M embers in the same situation .478 As
already noted, in our view, there is nothing unusual about Members applying WTO -consistent
measures which may, directly or indirectly, affect the importation of certain products. It is not in
dispute that "the reduced abil ity to export as a result of import bans due to SPS measures " was
the result of the determination that Chinese poultry producers had not complied with the
applicable SPS measures maintained by the European Union. We have some difficulty with the
notion that a Member setting a TRQ would need to make allowance for import restrictions arising
from foreign producers' non-compliance with applicable SPS measures.
7.338. In our view, the Ad Note to Article XIII:2(d) is relevant context to the interpretation of the
concept of "special factors" in Article XIII:2. The Ad Note clarifies that:
No mention was made of "commercial considerations" as a rule for the allocation of
quotas because it was considered that its application by governmental authorities
might not always be practicable. Moreover, in cases where it is practicable, a Member
could apply these considerations in the process of seeking agreement, consistently
with the general rule laid down in the opening sentence of paragraph 2. (emphasis
added)
7.339. The ordinary meani ng of the word "practicable" is "[a]ble to be put into practice; able to
be effect, accomplished or done; feasible ".479 The Ad Note makes clear that in requiring that due
account be taken of "special factors", but including no mention of "commercial considerations", the
intention was to avoid establishing a rule for the allocation of quotas whose application "might not
always be practicable ". The Ad Note clarifies that commercial considerations could be applied
"where it is practicable " in the process of see king agreement. Likewise, Article XIII:2(d) provides
that a Member seeking to allocate a TRQ among supplying countries may seek agreement with all
Members holding a substantial supplying interest, but has the right to unilaterally allocate the TRQ
among su bstantial suppliers in cases where allocation by agreement is not reasonably
"practicable".
7.340. We consider that the Ad Note to Article XIII:2(d), and the text of that provision itself,
convey that the rules governing the allocation of TRQs among supplying co untries should not be
interpreted in a manner that would establish requirements that governmental authorities cannot
put into practice, or which are otherwise not feasible. This mirrors the objective, expressed in the
text of paragraph 4 of the Ad Note to Article XXVIII:1, of ensuring that negotiations and
agreement under Article XXVIII are not "unduly difficult" and that "complications in the application
of this Article" are avoided.480
7.341. In our view, treating the SPS measures that were in place over the 2003 -2005 and
2006-2008 periods as "special factors" would result in a rule for the allocation of the TRQs that is
not practicable. The reason is that estimating what poultry imports would be without any of the
SPS measures affecting Chinese poultry imports would be an extremely complex task involving the
use of highly speculative estimates. 481 Under such an approach, the European Union would have
been obligated to take into account not only the range of SPS measures that applied to China and
which are of concern to China (including the residues measure, the avian influenza measure, and

477 China's response to Panel question No. 119, para. 108.
478 EU's first written submission, para. 232.
479 Shorter Oxford English Dictionary, 5th ed, W.R. Trumble, A. Stevenson (eds.) (Oxford University
Press, 2002), Vol. 2, p. 2309.
480 See the import statistics in section 7.2.4 above.
481 EU's first written submission, para. 131; EU's second written submission, para. 29

the heat treatment measure), but also the SPS measures applied to many other WTO Members
and, more generally, for its entire sanitary regime applied to imports of poultry products.482
7.342. Furthermore, we note that imports of all of the poultry products under the First
Modification Package were still prohibited at the time of the allocation of the TRQs among
supplying countries, and it appears that imports of a majority of the products und er the Second
Modification Package remained prohibited at the time of the allocation as well. 483 Therefore,
accepting China's interpretation of Article XIII:2(d) would lead to the result that the European
Union was obliged to recognize China as a substantia l supplier of poultry products that China was
prohibited from exporting to the European Union, obliging the European Union to seek agreement
with China on the TRQ allocation in respect of such products, and ultimately allocating an unusable
country-specific share of the TRQs for such products to China, reducing the size of the shares
allocated to imports from other sources. Alternatively, the European Union would have been
obliged to increase the amount of the "all others" share to reflect the amount that C hina would be
able to export, if and when the import restrictions affecting poultry imports from China under
those tariff lines were removed.
7.343. Based on the foregoing, we find that China has not demonstrated that the European Union
acted inconsistently with Article XIII:2(d) by determining which countries had a substantial
interest in supplying the products concerned on the basis of their actual share of imports into the
European Union, rather than on the basis of an estimate of what import shares into the European
Union would have been in the absence of the SPS measures restricting poultry imports from China.
7.6.3.5 Whether the European Union was obliged to determine which Members were
substantial suppliers taking into account changes in import shares following th e
initiation of the negotiations on TRQ allocation
7.344. With respect to the Second Modification Package, we understand China to claim that the
European Union acted inconsistently with Article XIII:2(d) by not recognizing that China was a
substantial supplier, and seeking an agreement with China on the TRQ allocation , on the basis of
changes in import shares over the period 2009-2011.
7.345. We understand this second claim to rest on two different lines of argument. First, we
understand China to argue that, as a general rule, Article XIII:2(d) requires that the determination
of which Members hold a "substantial interest" must always be based on a reference period closely
preceding the entry into force of the TRQ. Second, we understand China to argue that, in the
particular circumstances of this case, China 's increased ability to export after the relaxation of the
SPS measures in July 2008 was a "special factor " that had to be taken into account by the
European Union when making its determination of which Members held a "substantial interest" in
supplying the products at issue.
7.346. We consider that China 's claims and the arguments of the parties raise several issues,
which we will proceed to examine in turn. We will begin by examining whether, as a general rule,
Article XIII:2(d) requires that the determination of which Members hold a substantial interest in
supplying the products concerned must always be based on a period immediately preceding the
entry into force of the TRQ in situations where, as in a case like the prese nt one, there is a period
of several years between the initiation of the negotiations with substantial suppliers aimed at
allocating the TRQs, and the subsequent entry into force of the TRQ. If we conclude that there is
no such rule requiring the use of th e most recent three-year period prior to the entry into force of
the TRQs, we will then consider whether, in the particular circumstances of this case, China 's
increased ability to export following the relaxation of the SPS measures in July 2008 was a "special
factor" within the meaning of Article XIII:2. If we conclude that China 's increased ability to export
following the relaxation of the SPS measures in July 2008 was a "special factor ", we will then
proceed to examine whether the European Union was obli gated to take into account the increased

482 EU's response to Panel question No. 74(a), para. 23. The European Union also stated in its response
to Panel question No. 74, para. 29, that "if China's interpretation is followed, that type of estimate will be far
more complicated and speculative, because of the very large number of factors that could have to be controlled
for: not just for WTO inconsistent measures, but any SPS measure or any other regulatory requirements that
may have the effect of restricting imports from certain countries".
483 After the relaxation of the SPS measures in July 2008, "uncooked" poultry products remained
prohibited as a consequence of the heat treatment. See paragraphs 7.85 and 7.91-7.93.

imports of Chinese poultry products over the period 2009 -2011 on its own initiative and in the
absence of any related request by China until May 2012 and, on the basis of those increased
imports, have recognized Chi na as a substantial supplier in respect of any of the TRQs at issue in
the Second Modification Package.
7.347. Beginning with the first issue, China submits that the European Union was required to base
its determination under Article XIII:2(d) on a reference period preceding the entry into force of the
TRQs, and in China 's view that reference period was the period 2009 -2011 for the Second
Modification Package.484 China considers that the existence of a general rule requiring the use of
the most recent data that beco mes available in the course of the negotiations is supported by the
chapeau of Article XIII:2, which requires that the allocation of a TRQ must aim at a distribution of
trade in such product "approaching as closely as possible the shares which the various Members
might be expected to obtain in the absence of " the allocation. In China 's view, the trade in the
period immediately preceding the TRQ allocation provides an objective basis to measure the
shares Members might be expected to obtain in the absence of the TRQ. China finds additional
support for its interpretation of Article XIII:2 in the statement by the panel in US – Line Pipe that
"trade flows before the imposition of a safeguard measure provide an objective, factual basis for
projecting what might h ave occurred in the absence of that measure ".485 In addition, China notes
that the GATT panel in EEC – Apples (Chile I) considered appropriate to use as a "representative
period" a three -year period previous to 1979, "the year in which the EEC measures were in
effect".486
7.348. We recall that in the present case, in June 2009 the European Union notified Members of
its intention to modify certain tariff concessions under Article XXVIII, accompanied by statistics on
imports from other Members for the last three years (2006-2008) in accordance with the
Procedures for Negotiations under Article XXVIII. Following the EU notification in 2009 , Thailand
and Brazil each claimed a principal or substantial supplying interest in the concessions at issue in
the Second Modificati on Package. The European Union entered into negotiations with Brazil and
Thailand, and following five rounds of negotiations, reached agreement with Thailand and Brazil on
both the total amount of the TRQs, and the allocation of the TRQs among supplying co untries.
According to the European Union, negotiations at negotiators ' level were concluded with Brazil and
Thailand in September 2011. 487 The draft agreements with Thailand and Brazil were initialled on
22 November 2011 and 7 December 2011, respectively. Th is was followed by approval of the
bilateral agreements by each party in accordance with its internal procedures. The TRQs ultimately
entered into force in March 2013. Thus, there was a period of several years in between the
initiation of the negotiations with substantial suppliers in 2009 , and the subsequent entry into
force of the TRQs.
7.349. Beginning with the text of Article XIII:2(d), we consider that if the drafters intended for a
general rule requiring the use of the most recent data that becomes availabl e in the course of the
negotiations to apply to the determination of which Members hold a "substantial interest", then a
fortiori that same rule would also apply to the allocation of TRQs among substantial suppliers in
cases falling under the second senten ce of Article XIII:2(d). However, the second sentence of
Article refers only to "a previous representative period ", and does not specify that such period
must precede the opening of the TRQs. In addition, the reference to "a" previous representative
period in Article XIII:2(d) implies that there is no general rule that applies in all cases regarding
the selection of the reference period. 488 Furthermore, Article XIII:4 envisages the "the selection of

484 China's first written submission, paras. 198, 248. In its response to Panel question No. 107(a),
para. 97, China explains that "[i]n the context of Article XIII, the reference period for the initial allocation in
the first quota year should be a period preceding the entry into force of the TRQ. It is acknowledged that the
importing Member needs some time to determine the allocation and to make necessary arrangement for the
implementation, and therefore the reference period should not necessarily be a period immediately preceding
the entry into force of the TRQ, to the extent '"immediately'" means one day or very few days." We note that
the TRQs under the Second Modification Package entered into force in March 2013. Accordingly, if the use of a
reference period immediately preceding the entry into force is required, this would be the period 2010-2012,
and not 2009-2011.
485 Panel Report, US – Line Pipe, para. 7.55. (emphasis added)
486 GATT Panel Report, EEC – Apples (Chile I), para. 4.8. (emphasis added)
487 See footnote 128 above.
488 By way of analogy, we note that in Argentina – Poultry Anti-Dumping Duties, the panel considered
the requirement, in Article 2.4.2 of the Anti-Dumping Agreement, that the existence of margins of dumping
shall normally be established on the basis of a comparison of "a weighted average normal value with a
weighted average of prices of exports". The Panel stated that "Article 2.4.2 refers to a weighted average

a representative period " being made "initially" by the impor ting Member, subject to reappraisal.
The clear implication is that there is no general rule , applicable to all cases, regarding the
reference period that must be used for the purpose of Article XIII:2(d).
7.350. Turning to the wider context of Article XIII, we r ecall that we have already found that a
Member is entitled to base its determinations under Article XXVIII:1 and Article XXVIII:2 on a
reference period covering the three years preceding the notification of the intention to modify
concessions, and is under no obligation to update those determinations based on changes in
import levels and shares that may occur in the course of negotiations. In our view, to read such a
general requirement into Article XIII:2, as a general rule applicable in all cases, would b e
incoherent and impracticable. Furthermore, we consider that reading such a far -reaching rule into
Article XIII:2 would potentially render the concept of "special factors" redundant. As we discuss
further below, we consider that changes which may have occ urred since the representative period
may have to be taken into account in re -determining which Members hold a "substantial interest"
under Article XIII:2(d), insofar as those changes qualify as "special factors which may have
affected or may be affecting trade in the product concerned".
7.351. In addition, we consider that there are other practical difficulties that would arise from
mandating, as a general rule, the use of a reference period immediately preceding the opening of
a TRQ for the purpose of re -determining which Members hold a "substantial interest " under
Article XIII:2(d). In this regard, the European Union has elaborated on how there is necessarily a
time-lag between the conclusion of the negotiations leading to bilateral agreements pursuant to
Articles XXVIII and XIII:2(d), and the adoption of domestic legislation implementing those
agreements. The European Union has explained how the approval of international agreements
pursuant to Articles XXVIII and XIII in the context of EU law involves a rather complex process
with different procedural stages, which usually takes more than one year. 489 We consider that the
determination of which Members are substantial suppliers could not be based on a reference
period that is after the conclusion of the negotiatio ns with the Members recognized as substantial
suppliers, let alone after the approval of the agreements by those negotiating Members in
accordance with their internal procedures.
7.352. Finally, we do not consider that China 's interpretation of Article XIII:2(d) finds support in
the statement by the panel in US – Line Pipe that "trade flows before the imposition of a safeguard
measure provide an objective, factual basis for projecting what might have occurred in the
absence of that measure "490, or with the fact tha t the GATT panel in EEC – Apples (Chile I)
considered it appropriate to use as a "representative period" a three-year period previous to 1979,
"the year in which the EEC measures were in effect ".491 In both of those cases, the TRQ was
imposed unilaterally by the importing Member. Neither panel was confronted with a situation in
which there was a time -lag of several years between the initiation of the negotiations with
substantial suppliers aimed at allocating the TRQs, and the subsequent determination and ent ry
into force of a TRQ.
7.353. For these reasons, we conclude that there is no general rule always requiring the use of
the most recent three -year period prior to the entry into force of a TRQ to determine which
Members hold a substantial supplying interest. We will now consider whether, in the particular
circumstances of this case, China 's increased ability to export following the relaxation of the SPS
measures in July 2008 was a "special factor" within the meaning of Article XIII:2. We will first set
out our interpretation of the term "special factors", and then turn to the facts of this case.
7.354. Article XIII:2(d) refers to "special factors which may have affected or which may be
affecting the trade in the product". Similar formulations are used in other provisions of the covered
agreements.492 We consider that, in certain circumstances, consideration of "special factors" in the
context of Article XIII:2(d) could require the Member allocating a TRQ among supplying countries
to take into account changes in the import shares held by different Members which may have

normal value, and not the weighted average normal value. In our view, use of the word "'a'" simply means
that there are various ways of establishing a weighted average" (Panel Report, Argentina – Poultry Anti-
Dumping Duties, para. 7.273).
489 EU's response to Panel question No. 107(a).
490 Panel Report, US – Line Pipe, para. 7.55.
491 Panel Report, EEC – Apples (Chile I), para. 4.8.
492 See footnote 459.

occurred between the end of the representative period selected and the time of the TRQ being
allocated. In other words, while for the reasons set forth above we consider that there is no
general requirement i n Article XIII:2 to always use more recent data taking into account
developments subsequent to the reference period to re -determine which Members hold a
substantial interest in supplying the products at issue, we are of the view this may be required in
particular circumstances insofar as such changes in import shares are linked to "special factors".
7.355. We consider that our understanding is supported by the ordinary meaning of the terms
accompanying "special factors" in the text of Article XIII:2(d). In this c onnection, we recall that
the text of Article XIII:2(d) refers to the proportions supplied by different countries during a
"previous" representative period, with due account being taken of any special factors "which may
have affected or may be affecting " the trade in the product. We consider that the reference to
special factors including not only those which may have affected trade in the previous reference
period, but also those which "may be affecting" trade, implies consideration of trade developments
which may have occurred between the end of the representative period selected and the time of
the TRQ being allocated.
7.356. We consider that this understanding is also consistent with the text of the Ad Note which
clarifies that the term "special factors " includes "changes" in relative productive efficiency as
between domestic and foreign producers, or as between different foreign producers, but not
"changes" artificially brought about by means not permitted under the Agreement. We understand
the basic thrust of this clarification to be that changes artificially brought about by certain forms of
unfair trade, e.g. dumping or subsidization, should not be taken into account under the rubric of
"special factors". In that respect, the Ad Note is not directly relevant to the circumstances in this
case. However, the fact that "special factors " is explicitly linked in the Ad Note to "changes
brought about" lends support to the view that an analysis of special factors is dynamic, and may
entail consideration of developmen ts that have taken place between the end of the reference
period selected and the time of the TRQ being allocated.
7.357. This understanding is also consistent with the following Ad Note that accompanied the
provisions of the Havana Charter corresponding to Article XIII:2(d):
The term "special factors" as used in [Article XIII:2(d)] includes among other factors
the following changes, as between the various foreign producers, which may have
occurred since the representative period:
(1) changes in relative productive efficiency;
(2) the existence of new or additional ability to export; and
(3) reduced ability to export.493 (emphasis added)
7.358. In addition to the clarification provided in this Ad Note, the Sub -Committee at the Havana
Conference which considered the provisions of the Havana Charter corresponding to Articles XI and
XIII of the General Agreement "agreed that it was desirable to make clear that, in cases where
separate import quotas were allotted to the various foreign suppliers, a country whose productive
efficiency or ability to export had increased relatively to other foreign suppliers since the
representative period on which import quotas were based should receive a relatively larger import
quota".494
7.359. Although the Ad Note that accompanied the provisions of the Havana Charter
corresponding to Article XIII:2(d) was ultimately not included in the General Agreement, several
panels have been guided by it when interpreting and applying the concept of "special factors" in
Article XIII:2. In two cases, GATT panels found that the existence of a new or additional ability to
export may constitute a "special factor" within the meaning of Article XIII:2(d). In EEC – Apples
(Chile I), the panel found that:

493 Havana Charter Interpretative Note ad Article 22, cited in GATT Analytical Index: Guide to GATT Law
and Practice, at 403. (emphasis added)
494 Havana Reports, page 95, para. 52, cited in GATT Analytical Index: Guide to GATT Law and Practice,
at 403. (emphasis added)

[E]xports from Chile into the EEC had been expanding rapidly . Chile had more than
doubled its share among Southern Hemisphere suppliers into the EEC market over a
recent period, accounting for 5 per cent in 1974, 10 per cent in 1975, 13 per cent in
1976, 14 per cent in 1977 and 17 per cent in 1978. The Panel believed tha t Chile's
increased export capacity should have been taken into account by the EEC in its
allocation of shares among the Southern Hemisphere suppliers. The Panel felt such a
consideration was in line with the interpretative note to the term "special factors" as
drafted in the Havana Charter, in particular with reference to "the existence of new or
additional ability to export" as between foreign producers.495
7.360. In EEC – Dessert Apples, the panel found that "the overall trend towards an increase in
Chile's relative productive efficiency and export capacity had not been duly taken into account, nor
had the temporary reduction in export capacity caused by the 1985 earthquake ", and therefore
"the Panel found that the account taken of special factors by the EEC in al locating Chile's quota
share did not meet the requirements of Article XIII:2(d)".496
7.361. We consider that our understanding of "special factors " is also consistent with the
immediate context, including the general rule in the chapeau of Article XIII:2. In our vi ew, taking
due account of changes in the relative import shares held by Members which may have occurred
between the end of the representative period and the time of the TRQ being allocated is consistent
with the requirement in the chapeau of ensuring that TRQ allocations "aim at a distribution of
trade in such product approaching as closely as possible the shares which the various Members
might be expected to obtain in the absence of" the TRQ.
7.362. Finally, we have carefully considered the practical difficulti es and complications that could
arise from re -determining which Members hold a "substantial interest " for the purpose of
Article XIII:2(d) on a different and more recent reference period and set of trade statistics from
those used to determine the total am ount of the TRQ, in a situation in which these matters are
being negotiated concurrently. We do not consider that doing so in exceptional circumstances
would be illogical, impossible, or impracticable. In this regard, we recall the Appellate Body 's
finding in EC – Bananas III (Art. 21.5 – Ecuador II) / EC – Bananas III (Art. 21.5 – US) that, in
principle, "the overall tariff quota quantity " and "the allocation of the quota shares among
suppliers" are "elements that distinct and severable from one another".497
7.363. Based on the foregoing, we consider that consideration of "special factors which may have
affected or which may be affecting the trade in the product " may include, in certain exceptional
(i.e. "special") circumstances, changes in the import shares held b y different Members that have
occurred between the end of the representative period selected and the time of the TRQ being
allocated.
7.364. Turning to the facts of the present case, we recall that the European Union determined
which Members held a "substantial interest" under the Second Modification on the basis of their
imports shares over the period 2006-2008. During that period, China held a 0% or negligible share
of imports into the European Union for all of the products concerned. 498 Following the relaxation of
the SPS measures in July 2008, it appears that imports of poultry products from China did not
increase over the remaining half of 2008. 499 However, over the period 2009 -2011, imports from
China increased significantly under several of the tariff lines at issue in the Second Modification
Package, including in particular 1602 39 29 and 1602 39 80 (the latter being merged with 1602 39
40, at the beginning of 2012, into 1602 39 85). For ease of reference, the import statistics are set
out below500:

495 GATT Panel Report, EEC – Apples (Chile I), para. 4.17 (citing Havana Charter Interpretative Note ad
Article 22, paragraphs 2(d) and 4). (emphasis added)
496 GATT Panel Report, EEC – Dessert Apples, para. 12.24.
497 Appellate Body Reports, EC – Bananas III (Art. 21.5 – Ecuador II) / EC – Bananas III (Art. 21.5 –
US), para. 426.
498 See the import statistics in section 7.2.4 above.
499 See the import statistics in section 7.2.4 above.
500 See the import statistics in section 7.2.4 above.

Tariff line China's share
of imports into
the EU in 2006 -
2008
China's
share of
imports into
the EU in
2009
China's
share of
imports into
the EU in
2010
China's
share of
imports into
the EU in
2011
TRQ share
allocation
1602 32 11 0.0% 0.0% 0.0% 0.0% Brazil: 97.89%
Others: 2.11%

1602 32 30 0.0% 0.4% 0.9% 0.9% Brazil: 78.92%
Thailand: 17.56%
Others: 3.51%

1602 32 90 0.0% 2.8% 1.5% 2.9% Brazil: 10.3%
Thailand: 73.3%
Others: 16.4%

1602 39 21 0.0% 0.0% 0.0% 0.0% Thailand: 100%
Others: 0.0%

1602 39 29 0.0% 27.1% 40.7% 52.8% Thailand: 98.4%
Others: 1.6%

1602 39 40 0.0% 0.0% 0.0% 25.3% Thailand: 80.21%
Others: 19.79%

1602 39 80 0.0% 8.7% 17.6% 61.1% Thailand: 82.76%
Others: 17.24%

7.365. The word "special" means "[e]xceptional in quality or degree; unusual; out of the
ordinary".501 The word "factor" refers to "[a] circumstance, fact, or influence which tends to
produce a result ".502 We consider that the increase in imports from China under the tariff lines
1602 39 29 and 1602 39 80 as set forth above is a development that f alls within the ordinary
meaning of an "unusual", or "out of the ordinary", "circumstance" or "fact".
7.366. The European Union argues that "special factors " alludes to "observable factual
circumstances directly affecting the ability of one country to produce a given product and to
compete with other suppliers ".503 We consider that China 's new ability to export after the
relaxation of the SPS measures in July 2008 also falls within that definition of a "special factor", as
an "observable factual circumstance directly affecting the ability of one country to produce a given
product and to compete with other suppliers ". It was observable from the dramatic increase in
imports into the European Union under tariff lines 1602 39 29 and 1602 39 80 (the latter merged
with 1602 39 40, in 2012, into 1602 39 85) that occurred in the years immediately following the
relaxation of the SPS measures in July 2008.
7.367. In this case, we consider that the changes in the import shares held by different Members
which occurred between the end of the representative period selected and the time of the TRQ
shares being allocated, which were a consequence of China 's increased ability to export certain
poultry products into the European Union following the relaxation of the SPS measures in July
2008, was a "special factor … affecting trade in the product ". We have agreed with the European
Union that the SPS measures are not themselves "special factors", but we must distinguish the
SPS measures per se from China's new ability to export after the rela xation of the SPS measures
in July 2008.
7.368. In sum, we have concluded that there is no rule in Article XIII:2 requiring that the
determination of which Members hold a substantial supplying interest always be based on a period

501 Shorter Oxford English Dictionary, 5th ed, W.R. Trumble, A. Stevenson (eds.) (Oxford University
Press, 2002), Vol. 2, p. 2945.
502 Shorter Oxford English Dictionary, 5th ed, W.R. Trumble, A. Stevenson (eds.) (Oxford University
Press, 2002), Vol. 1, p. 912.
503 See e.g. EU's response to Panel question No 117, para. 110. With respect to Article XIII:2, Canada
likewise considers that "the operation of this Article is based on information that can be documented, i.e. it
serves to adjust in light of observed developments, not hypothesized ones"(Canada's third-party written
submission, para. 38).

immediately preceding the entry into force of the TRQ in situations where, as in a case like the
present one, there is a period of several years between the initiation of the negotiations with
substantial suppliers aimed at allocating the TRQs, and the subsequent determination of the TRQ
allocation and entry into force of the TRQ. However, we have found that, in the particular
circumstances of this case, China 's increased ability to export poultry products under certain tariff
lines following the relaxation of the SPS measures in July 200 8 was a "special factor" within the
meaning of Article XIII:2(d). Having concluded that China 's increased ability to export following
the relaxation of the SPS measures in July 2008 was a "special factor ", we must now assess
whether the foregoing establishes that the European Union was obligated to take into account the
increased imports of Chinese poultry products over the period 2009 -2011 and, on the basis of
those increased imports, recognize China as having a substantial interest in supplying the products
concerned in respect of any of the TRQs at issue in the Second Modification Package.
7.369. We have already identified a number of issues with respect to the trade statistics provided
by the parties, and we therefore approach them with an appropriate degree o f caution. 504
However, it is clear that over the period 2009-2011, imports from China had increased significantly
under tariff lines 1602 39 29 and 1602 39 80 (the latter being merged with 1602 39 40, at the
beginning of 2012, into 1602 39 85). Imports from China under most of the other tariff lines in the
Second Modification Package remained at zero or negligible levels, as some or all of these products
were still restricted by the heat treatment measure in force. Accordingly, if the European Union
was under an obligation to take into account the changes in import shares that occurred following
the 2006 -2008 reference period, we see no basis to find any violation of Article XIII:2(d) in
respect of the TRQ for tariff lines 1602 32 11, 1602 32 30, 1602 32 90, o r 1602 39 21. While
imports from China under tariff line 1602 39 40 increased sharply in 2011, the increase only
occurred in 2011. In our view, this distinguishes the increase in imports under tariff line
1602 39 40 from the steady and continuous increase in imports under tariff lines 1602 39 29 and
1602 39 80 over the period 2009 -2011. As set out above, China 's share of imports into the
European Union under these two tariff lines increased steadily in 2009 (27.1% and 8.7%,
respectively), 2010 (40.7% and 17.6%, respectively), and 2011 (52.8% and 61.1%, respectively).
7.370. If the European Union was under an obligation to take into account the changes in import
shares that occurred following the 2006 -2008 reference period on its own initiative and in the
absence of any related request by China until May 2012, the issue that we will address below, we
consider that the most recent data to be taken into account would have been from the data
available to the European Union at the time that the negotiations with Thailan d and Brazil were
concluded. According to the European Union, negotiations at the negotiators ' level were effectively
concluded as of September 2011, and the draft agreements with Thailand and Brazil were initialled
on 22 November 2011 and 7 December 2011, respectively. As China points out, the European
Union did not notify the conclusion of the Article XXVIII negotiations until December 2012, after
the bilateral agreements negotiated with Thailand and Brazil had been approved in accordance
with each party 's respective internal procedures. However, as noted above, the European Union
has explained how under EU law the approval of international agreements pursuant to
Articles XXVIII and XIII involves a rather complex process with different procedural stages, which
usually takes more than one year. China has not contested that the negotiations at the
negotiators' level were already concluded in September 2011, or that the draft agreements
initialled before the end of 2011.505
7.371. We understand that in September 2011 , the European Union would have had available
preliminary import data on imports into the European Union covering approximately the first half
of 2011.506 Based on the trade statistics that were available to the European Union at that time,
the change in the import trends under tariff lines 1602 39 29 and 1602 39 80 (the latter being
merged with 1602 39 40, at the beginning of 2012, into 1602 39 85) would have already been
apparent. While the parties have provided us with annual and not monthly import statist ics,
China's share of imports into the European Union in the year 2011 was 52.8% for 1602 39 29,
and 61.1% for 1602 39 80. The trend over the period 2009 -2011 was similar in respect of each of

504 See the import statistics in section 7.2.4 above.
505 See footnote 128 above.
506 In its response to Panel question No. 107(c), the European Union explains that "preliminary" import
data "becomes generally available with a three-month delay". Thus, we understand that as of September 2011,
the European Union had preliminary import data on imports into the European Union covering approximately
the first half of 2011.

these tariff lines. Based on the foregoing, we consider that h ad the European Union been obliged
to take into account the trend of the increased imports from China as of at least September 2011,
that increase in China 's share of imports at that time would have required the European Union to
recognize China as having a "substantial interest " within the meaning of Article XIII:2(d) with
respect to tariff lines 1602 39 29 and 1602 39 80 (the latter being merged with 1602 39 40, at the
beginning of 2012, into 1602 39 85) to reflect the increased imports from China.
7.372. Turning now to the question of whether the European Union was under a legal obligation to
take into account the changes in import shares that occurred over the 2009 -2011 period, we have
already concluded that, in the particular circumstances of this case, China 's increased ability to
export poultry products under certain tariff lines following the relaxation of the SPS measures in
July 2008 was a "special factor" within the meaning of Article XIII:2. An additional question that
arises, however, is whether the Eu ropean Union was under an obligation to take this change in
import shares into account on its own initiative, in the course of the negotiations with Thailand and
Brazil, and in the absence of any related request from China until May 2012.
7.373. We recall that China requested the European Union to enter into Article XXVIII negotiations
in May 2012, claiming a principal supplying interest in all of the products at issue in the Second
Modification Package. We recall that by May 2012, the two agreements with Thailan d and Brazil
had already been initialled, and the domestic legal procedure to authorize their implementation
was already underway. The European Union has raised the issue of the timeliness of China's claims
of a supplying interest in the context of respond ing to China 's claims that the European Union
acted inconsistently with Article XXVIII:1. We have already concluded that for the purpose of
assessing whether the European Union acted consistently with Article XXVIII:1, it is unnecessary
for the Panel to rule on whether its decision not to recognize China as a Member holding a principal
or substantial supplying interest was justified by the absence of a timely claim of supplying
interest by China. 507 However, the European Union has also raised the issue of the timeliness of
China's claims of a principal or substantial supplying interest in the context of Article XIII:2.
Specifically, the European Union argues that while the 90-day time-limit that applies for making a
claim of supplying interest under Article XX VIII does "not apply to negotiations under
Article XIII:2", that deadline "is but one expression of a generally applicable due process
requirement".508 The European Union submits that "[o]nce a Member announces its intention to
negotiate the opening of a TRQ , the Members claiming a SSI must have made known their claims
within a reasonable period of time ".509 The European Union indicates that this is "[a]ll the more so
when such claims are not based on import data for a previous period but on other evidence not
immediately available to the Member opening the TRQ ".510 The European Union argues that in this
case China failed to make its claims known within a reasonable period of time, and that the
European Union "was not required to reopen the negotiations under Arti cle XIII:2 (d) already
concluded with Brazil and Thailand in order to take into account China 's manifestly untimely
claim".511
7.374. In our view, the issue raised by the foregoing is whether the European Union was under an
obligation to take into account the chang e in import shares that occurred over the 2009 -2011
period on its own initiative in the course of its negotiations with Thailand and Brazil, in the absence
of any related request from China being made prior to May 2012. We consider that the European
Union was under such an obligation for the following reasons.
7.375. First, we are not persuaded by the European Union 's suggestion that once a Member
announces its intention to negotiate the opening of a TRQ, other Members could be understood as
waiving a claim of substantial supplying interest for the purpose of Article XIII if they do not make
known "their claims within a reasonable period of time ".512 The European Union itself
acknowledges that the Procedures for Negotiations under Article XXVIII, including the 90 -day
time-limit mentioned in paragraph 4, do not apply to negotiations under Article XIII:2. 513 There is
no comparable provision in Article XIII:2(d) requiring a supplying Member to claim the status of a
substantial supplier at all, let alone to make such a cla im within any prescribed time -limit.

507 See section 7.4.3.3 above.
508 EU's response to Panel question No. 69(b), para. 18.
509 EU's response to Panel question No. 69(b), para. 18.
510 EU's response to Panel question No. 69(b), para. 18.
511 EU's response to Panel question No. 69(b), para. 18.
512 EU's response to Panel question No. 69(b), para. 18.
513 EU's response to Panel question No. 69(b), para. 18.

Furthermore, in the circumstances of this case, the European Union 's notification for the First
Modification had put Members on notice that it intended to "replace with tariff rate quotas " the
concessions at issue in th e First Modification Package .514 However, in the notification of its
intention to modify the concessions for the poultry products covered by the Second Modification
Package, the European Union did not put Members on notice that it intended to "replace with tariff
rate quotas" the concessions at issue. 515 Thus, in the case of the Second Modification Package,
nothing was disclosed to China as to whether the European Union would replace the concessions
with TRQs, nor whether it would allocate TRQs among supplying countries, nor whether
negotiations under Article XIII:2(d) would be conducted concomitantly with the negotiations under
Article XXVIII. 516 Moreover, given the requirement of secrecy that applies in Article XXVIII
negotiations517, the Panel does not consider t hat China was in a position of being aware of what
stage of the EU 's Article XXVIII negotiations were under way at any point in time prior to the
notification of the conclusion of those negotiations in December 2012. Thus, China had no reason
to claim substantial supplying interest status for the purpose of Article XIII:2(d) negotiations, nor
to request any reappraisal of "special factors" by the European Union in the course of its ongoing
negotiations with Thailand and Brazil.518
7.376. Secondly, the concept of "special factors which may have affected or which may be
affecting the trade in the product concerned " appears to be an inherently dynamic concept, and
thus it is not clear why an importing Member 's consideration of special factors would not be of an
ongoing nature in the course of the negotiations. Furthermore, if the reference period and
appraisal of special factors was appraised only at the point in time when the negotiations
commenced, and thereafter fixed, there would, in the words of the European Union, "be very little
to negotiate and agree about ".519 Where a TRQ is allocated by agreement, the subject -matter of
the negotiations leading to that agreement would include negotiations on the selection of a
previous representative period, and the extent to whic h there were any special factors to be taken
into account. Thus, it may be presumed that those matters may be subject to ongoing discussion
and reappraisal in the course of the negotiations, rather than being settled and fixed from the
outset.
7.377. Finally, in the present case, the "special factor" that we have found to exist was China 's
increased ability to export poultry products under certain tariff lines following the relaxation of the
SPS measures in July 2008. We recall that this manifested itself in a rapid and dramatic increase in
Chinese poultry imports into the European Union under tariff lines 1602 39 29 and 1602 39 80
(the latter being merged with 1602 39 40, at the beginning of 2012, into 1602 39 85) as
evidenced by the import shares set out further above. According to the European Union,
negotiations at the negotiators' level concluded in September 2011 ; at that time, these
developments in the preceding years cannot be regarded as a factual circumstance that the
European Union would have been unawa re of in the absence of any request for reappraisal by
China.
7.378. Based on the foregoing, we find that China has demonstrated that the increase in EU
imports from China over the period 2009 -2011 following the relaxation of the SPS measures in
July 2008 was a "special factor" that had to be taken into account by the European Union when
determining which countries had a substantial interest in supplying the products concerned, and
that the European Union acted inconsistently with Article XIII:2(d) by not recogniz ing China as a
Member holding a "substantial interest in supplying the products" under tariff lines 1602 39 29 and
1602 39 80520 and by failing to seek agreement with China on the allocation of the TRQs for those
particular tariff lines. However, we find tha t the European Union did not act inconsistently with
Article XIII:2(d) by failing to recognize China as holding a substantial interest in the other products
concerned in the Second Modification Package (i.e. tariff lines 1602 32 11, 1602 32 30,
1602 32 90, 1602 39 21, and 1602 39 40521).

514 G/SECRET/25, p. 2 (Exhibit CHN-15).
515 See G/SECRET/32 (Exhibit CHN-25).
516 China's comments on the EU's response to Panel question No. 69(b), para. 12.
517 See paragraph 7.227.
518 China's comments on EU response to Panel question No. 69(b), para. 12.
519 EU's first written submission, para. 226.
520 Merged with tariff line 1602 39 40 into tariff line 1602 39 85, effective 1 January 2012.
521 Merged with tariff line 1602 39 80 into tariff line 1602 39 85, effective 1 January 2012.

7.7 Claims under the chapeau of Article XIII:2 of the GATT 1994
7.7.1 Introduction
7.379. China claims that by allocating "all or the vast majority of the TRQs to two of the WTO
Members" (i.e. Brazil and Thailand), the European Union acted in consistently with the chapeau of
Article XIII:2. 522 The basis for China 's claims under the chapeau of Article XIII:2 is that "even
assuming that it was not "523 a Member with a substantial supplying interest, the allocation of TRQ
shares agreed with Thailand an d Brazil does not comply with the requirements of the chapeau of
Article XIII:2 vis-à-vis other WTO Members, including China, that were not recognized as having a
substantial interest in supplying the products concerned.
7.380. China argues that all of the deter minations under Article XIII:2 must be based on a
"previous representative period ", taking due account of "special factors which may have affected
or may be affecting the trade in the product ".524 These determinations include not only the
allocation of TRQ s hares vis-à-vis substantial suppliers under Article XIII:2(d) in accordance with
the second sentence of Article XIII:2(d) and the determination of which Members are substantial
suppliers under Article XIII:2(d), but also the allocation of TRQ shares vis -à-vis Members not
recognized as having a substantial interest.525 In this case, China argues that the reference periods
upon which the European Union made those determinations were not "representative"526, and that
China's reduced ability to export as a result o f import bans due to SPS measures, as well as the
increased ability to export after the relaxation of the bans in July 2008, were "special factors" that
had to be taken into account. 527 With respect to both the First and Second Modification Package s,
China claims that the European Union should have determined the TRQ shares allocated to "all
others" based on an estimate of the share of imports that China would have had in the absence of
the SPS measures that restricted Chinese poultry imports over the referen ce periods used.528 With
respect to the Second Modification Package, China additionally claims that the European Union
should have determined the TRQ shares allocated to "all others" taking into account the increase in
poultry imports from China over the 200 9-2011 period, which China considers to be the most
recent three-year period preceding the determination of the TRQs.529 Finally, China claims that the
European Union was in any event under an obligation to allocate an "all others" share of at least
10% for each of the TRQs under the First and Second Modification Package s, so as to enable at
least one other Member to achieve a substantial interest in supplying the products.530
7.381. The European Union responds that China 's claims rest on an incorrect interpretation of the
obligations in Article XIII:2. 531 We understand the European Union to accept that, although the
general rule in the chapeau of Article XIII:2 does not explicitly require that "special factors "
affecting non -substantial suppliers be taken into account , the chapeau of Article XIII:2 may be
violated if a TRQ allocation disregards a "special factor " affecting one or more non -substantial
suppliers, in a manner that was biased against non -substantial suppliers. 532 However, the
European Union considers that th e SPS measures mentioned by China are not "special factors"
within the meaning of Article XIII:2, and that it was therefore under no obligation to allocate a
greater "all others" TRQ share on the basis of an estimate of what China 's share of imports into

522 China's first written submission, paras. 169-207; China's opening statement at the first meeting of
the Panel, paras. 85-103; China's responses to Panel question Nos. 41-43; China's second written submission,
paras. 140-171; China's opening statement at the second meeting of the Panel, paras. 66-75; parties'
responses, and comments on one another's responses, to Panel question Nos. 69, 72-74, 86-90, 106-109,
111-120.
523 China's second written submission, para. 144.
524 China's second written submission, para. 145.
525 China's first written submission, para. 171; China's second written submission, para. 141.
526 China's second written submission, para. 151.
527 China's first written submission, paras. 193-194. See also China's response to Panel question
No. 119, para. 108.
528 China's first written submission, paras. 197, 199, 201; China's second written submission, paras.
147, 159-160.
529 China's first written submission, para. 198; China's second written submission, para. 160.
530 China's first written submission, paras. 212-216.
531 EU's first written submission, paras. 210-237; EU's opening statement at the first meeting of the
Panel, paras. 20-25; EU's responses to Panel question Nos. 39-40, 42, 44; EU's second written submission,
paras. 114-152; opening statement at the second meeting of the Panel, paras. 63-96; parties' responses, and
comments on one another's responses, to Panel question Nos. 69, 72-74, 86-90, 106-109, 111-120.
532 EU's response to Panel question No. 118(b), para. 118.

the European Union would have been in the absence of the SPS measures. 533 The European Union
also rejects China 's claim that in respect of the Second Modification Package, it was required to
allocate TRQ shares based on more recent data regarding imports ove r the period 2009 -2011.534
Finally, the European Union submits that there is no legal obligation in Article XIII:2 to always
allocate an "all others" share of a minimum amount, independently from the import data over the
reference period.535
7.7.2 Relevant provisions
7.382. We recall that the chapeau of Article XIII:2 provides that:
In applying import restrictions to any product, Members shall aim at a distribution of
trade in such product approaching as closely as possible the shares which the various
Members might be exp ected to obtain in the absence of such restrictions and to this
end shall observe the following provisions…
7.383. The chapeau states that Members "shall aim at a distribution of trade […] approaching as
closely as possible the shares which the various Members mi ght be expected to obtain in the
absence of such restrictions ". The wording of the chapeau ( "shall") suggests that it contains a
binding obligation, and this is reinforced by the fact that the Ad Note to Article XIII:2(d) refers to
the chapeau as containin g a "general rule". In this case, the parties agree that the chapeau of
Article XIII:2 imposes a mandatory legal obligation that must be respected when allocating a TRQ
among supplying countries. In that sense, we understand the European Union to agree wit h China
that the chapeau of Article XIII:2 "states a general rule capable of being violated separately from
the provisions of Article XIII:2(d)".536
7.384. We see no reason to disagree with the parties, taking into account that in several prior
cases, panels or t he Appellate Body have upheld claims of violation based on the chapeau of
Article XIII:2.537 In US – Line Pipe, the panel found that the measure at issue was "not consistent
with the general rule contained in the chapeau of Article XIII:2 because it has been applied
without respecting traditional trade patterns".538 The panel stated that:
In our view, the chapeau of Article XIII:2 contains a general rule, and not merely a
statement of principle. This is confirmed by the Note Ad Article XIII:2, which refers to
"the general rule laid down in the opening sentence of paragraph 2".539
7.385. This understanding is further confirmed by the Appellate Body 's finding that
Article XIII:2(d) is a permissive "safe harbour " only insofar "as substantial suppliers are
concerned", and th at a Member allocating shares to substantial suppliers in accordance with
Article XIII:2(d) "must also respect the requirement in the chapeau of Article XIII:2 ".540 We
understand this to mean that the general rule in the chapeau of Article XIII:2 contains a legal
requirement relating to the allocation of TRQ shares among supplying countries that is capable of
being violated separately from the provisions of Article XIII:2(d). We understand the parties to
agree on this point as well. Specifically, the European Union agrees with China that, even where
the allocation of TRQ shares among supplying countries has been agreed with the substantial
suppliers in accordance with Article XIII:2(d), this does not necessarily mean that the TRQ

533 EU's first written submission, para. 232; EU's second written submission, paras. 114-132.
534 EU's response to Panel question No. 106(a), para. 77; EU's response to Panel question No. 109(b),
para. 90.
535 EU's first written submission, paras. 250-266; EU's second written submission, para. 141.
536 EU's response to Panel question No. 40, paras. 114-116.
537 Appellate Body Report, EC – Bananas III, para. 163; Panel Report, US – Line Pipe, para. 7.55;
Appellate Body Reports, EC – Bananas III (Art. 21.5 – Ecuador II) / EC – Bananas III (Art. 21.5 – US),
para. 353.
538 Panel Report, US – Line Pipe, para. 8.1(1).
539 Panel Report, US – Line Pipe, footnote 64.
540 Appellate Body Reports, EC – Bananas III (Article 21.5 – Ecuador II) / EC – Bananas III (Article 21.5
– US), para. 338 and fn 408.

allocation complies with the g eneral rule in the chapeau in respect of the non -substantial
suppliers.541
7.7.3 Analysis by the Panel
7.386. Turning to the issues in dispute, w e understand China 's clai ms under the chapeau of
Article XIII:2 to rest on three different grounds, raising the following is sues. First, whether the
European Union was obliged to determine the TRQ shares allocated to "all others" on the basis of
an estimate of what import shares would have been in the absence of the SPS measures. Second,
whether the European Union was obliged t o determine the TRQ shares allocated to "all others"
taking into account changes in import shares that occurred in the course of the negotiations
regarding the total amount of the TRQs and their allocation among supplying countries. Third,
whether the Euro pean Union was under an obligation to allocate an "all others" share of at least
10% for each of the TRQs, so as to enable at least one other Member to achieve a substantial
supplying interest.
7.387. We will examine these issues in turn. Before doing so, howeve r, we will explain our
approach to examining China 's claims under Article XIII:2(d) and the chapeau of Article XIII:2,
and then address the interpretative issue of the relevance of "special factors" in the determination
of whether the allocation of the TRQ shares to "all others" complies with the general rule in the
chapeau of Article XIII:2. This interpretative issue relates to China 's first and second claims of
violation under the chapeau of Article XIII:2.
7.7.3.1 Separate analysis of China 's claims under Arti cle XIII:2(d) and the chapeau of
Article XIII:2
7.388. In this case, China has advanced one set of claims of violation under Article XIII:2(d), and
another set of parallel claims of violation under the chapeau of Article XIII:2. As explained in the
context of our evaluation of China's claims under Article XIII:2(d), these appear to be claims in the
alternative, insofar as China's claims under Article XIII:2(d) are directed at establishing that it was
a Member with a substantial supplying interest, whereas its clai ms under the chapeau of
Article XIII:2 are "even assuming that it was not".542
7.389. In examining China 's claims under Article XIII:2(d), we have already found that the
European Union acted inconsistently with Article XIII:2(d) by refusing to recognize China as a
Member holding a "substantial interest in supplying the products" under tariff lines 1602 39 29 and
1602 39 80 (the latter being merged with 1602 39 40, at the beginning of 2012, into 1602 39 85)
and by failing to seek agreement with China on the allocatio n of the TRQ shares for those
particular tariff lines. Given these findings, we recognize that it may not be strictly necessary for
the Panel to proceed to assess China 's alternative claims of violation under the chapeau of
Article XIII:2, insofar as they rest on the same grounds.
7.390. However, it is well established that panels have the discretion to address arguments and
make additional findings beyond those strictly necessary to resolve a particular claim or
defence.543 These could include, for example, altern ative findings that could serve to assist the

541 EU's response to Panel question No. 39, para. 111; EU's opening statement at the second meeting of
the Panel, paras. 68-69.
542 China's second written submission, para. 144.
543 The Appellate Body has confirmed that "[j]ust as a panel has the discretion to address only those
claims which must be addressed in order to dispose of the matter at issue in a dispute, so too does a panel
have the discretion to address only those arguments it deems necessary to resolve a particular claim"
(Appellate Body Report, EC – Poultry, para. 135). (emphasis original) The logical corollary of this proposition is
that a panel has the discretion based on the circumstances of each case to address certain claims and
arguments even where it is not strictly necessary to do so to resolve the matter at issue. We observe that
Article 11 of the DSU provides that a panel should make an objective assessment of the matter before it, "and
make such other findings as will assist the DSB in making the recommendations or in giving the rulings
provided for in the covered agreements". While Article 11 does not specify what "such other findings" might
include, the Appellate Body has confirmed that panels have the discretion to make alternative findings,
including alternative factual findings (Appellate Body Reports, US – Softwood Lumber IV, para. 118; Canada –
Wheat Exports and Grain Imports, para. 126; China – Auto Parts, para. 208; US – Carbon Steel (India),
para. 4.274; and India – Solar Cells, para. 5.152. See, e.g. Panel Reports, India – Patents (US), paras. 6.11-
6.12 and 7.44-7.50; Canada – Dairy, para. 7.119; EC – Bed Linen (Article 21.5 – India), paras. 6.234-6.246;

Appellate Body in completing the legal analysis should it disagree with legal interpretations
developed by a panel. 544 A panel may be guided by a range of different considerations when
deciding whether to address arguments beyond those strictly necessary to resolve the matter 545,
and the manner in which a panel may do so, including the scope and nature of any such other
alternative findings, may also vary depending on the issues before the panel.546
7.391. In this case, we consider it appropriate to make findings on all of China 's claims under the
chapeau of Article XIII:2. In assessing China 's claims under the chapeau of Article XIII:2, we are
presented with some issues that we have not already addressed in the context of ou r examination
of China's claims under Article XIII:2(d). This includes, most notably, the relevance of the notion
of "special factors which may have affected or may be affecting the trade in the product " in the
determination of whether the allocation of TRQ shares to "all others" complies with the general
rule in the chapeau of Article XIII:2. However, some of the arguments presented by the parties in
relation to China 's claims under the chapeau of Article XIII:2 reiterate arguments that were also
advanced, and that we have already addressed, in the context of China 's claims under
Article XIII:2(d). To avoid addressing the same arguments multiple times, our analysis of China 's
claims under the chapeau of Article XIII:2 will focus on those arguments and inter pretative
elements that are specific to the chapeau of Article XIII:2, and that we have not already addressed
in the context of our findings, in the previous section of this Report, under Article XIII:2(d).
7.7.3.2 Relevance of "special factors" in the determination of whether the allocation of
TRQ shares to "all others" complies with the general rule in the chapeau of Article XIII:2
7.392. We observe that reference to a "previous representative period " and "special factors" is
made only in the second sentence of Articl e XIII:2(d), in the context of the unilateral allocation of
TRQ shares among substantial suppliers. These terms are not referred to in the chapeau of
Article XIII:2, which refers in more general terms to an obligation to "aim at a distribution of trade
in such product approaching as closely as possible the shares which the various Members might be
expected to obtain in the absence of such restrictions ". The chapeau does not specify the criteria
by which one judges what shares the various Members might be expected to obtain in the absence
of the TRQ547, but the chapeau also states that "to this end" Members "shall observe the following
provisions" set forth in sub -paragraphs (a) through (d) of Article XIII:2. Thus, these provisions
must inform the interpretation of the chapeau.
7.393. The parties agree that a TRQ allocation agreed among substantial suppliers could
nonetheless be inconsistent with general rule in the chapeau vis-à-vis non-substantial suppliers, at
least insofar as a TRQ allocation was not based on actua l import shares held by different countries
during a "previous representative period " and taking due account of "special factors", in such a
way that was biased against one or more non -substantial suppliers.548 China considers that these
legal criteria set f orth explicitly in Article XIII:2(d) "form context for satisfying the chapeau of
Article XIII:2 as regards WTO Members that hold no substantial supplying interest ".549 The
European Union considers that "to remain reasonable and fair the method agreed with th e
substantial suppliers should also be applied to non -substantial suppliers and should be based on
objective and unbiased criteria ", and that "a method that disregards special factors affecting any
of the suppliers of a given product would not be objective as it would be biased against the
suppliers affected by those factors and in favour of the others ".550 On that basis, the European
Union accepts that although the chapeau of Article XIII:2 "does not require explicitly to take into
consideration special fact ors affecting non -SSI Members it would appear that if the TRQ is

US – Corrosion-Resistant Steel Sunset Review, paras. 7.172-7.184; China – Auto Parts, fn 641 to para. 7.371;
EC and certain member States – Large Civil Aircraft, para. 7.224; China – Raw Materials, paras. 7.229-7.230;
China – Rare Earths, para. 7.140; and US – COOL (Article 21.5 – Canada and Mexico), paras. 7.672).
544 See, e.g. Appellate Body Reports, US – Softwood Lumber IV, para. 118; US – Tuna II
(Mexico),para. 405.
545 See, e.g. Panel Reports, Canada – Dairy, para. 7.119, and China – Auto Parts, fn 641 to para. 7.371.
546 See, e.g. Panel Reports, US – COOL (Article 21.5 – Canada and Mexico), paras. 7.672.
547 John Jackson, World Trade and the Law of GATT (Bobbs-Merrill Company, Inc., 1969) p. 323.
548 China's first written submission, paras. 186-188; China's response to Panel question No. 41(a), para.
10; EU's opening statement at the second meeting of the Panel, para. 72; EU's response to Panel question No.
118.
549 China's response to Panel question No. 41(a), para. 10.
550 EU's response to Panel question No. 118(a), paras. 115-116.

allocated on the basis of a method that disregards a special factor affecting one or more non -
substantial suppliers, that method would not contribute to attain the objective of the chapeau".551
7.394. We see no reason to disagree with the parties. Indeed, we consider that this interpretation
is supported by the Appellate Body 's clarification of the relationship between Article XIII:2(d) and
the chapeau of Article XIII:2. When allocating a TRQ among su pplying countries, the amount of
any "all others" share allocated to non-substantial suppliers will be the amount of the TRQ that has
not been allocated among substantial suppliers. The Appellate Body has found that
Article XIII:2(d) is a permissive "safe harbour" only insofar "as substantial suppliers are
concerned", and that a Member allocating shares to substantial suppliers in accordance with
Article XIII:2(d) "must also respect the requirement in the chapeau of Article XIII:2 ".552 This
supports the unde rstanding that a TRQ allocation agreed among substantial suppliers could be
inconsistent with the rights of non -substantial suppliers under the general rule in the chapeau of
Article XIII:2 insofar as the basis for the allocation, as agreed by the substantial suppliers, was not
based on a "previous representative period " or did not take due account "special factors", in a
manner that was biased against one or more non-substantial suppliers.
7.395. In addition, without making express reference to any "special fact ors which may have
affected or may be affecting trade in the product ", we note that the panel in US – Line Pipe
suggested that "changed circumstances " may need to be taken into account in the context of
evaluating a TRQ allocation under the chapeau of Article XIII:2. The panel was of the view that:
In our view, Korea is correct to argue that a Member would violate the general rule
set forth in the chapeau of Article XIII:2 if it imposes safeguard measures without
respecting traditional trade patterns (at le ast in the absence of any evidence
indicating that the shares a Member might be expected to obtain in the future differ,
as a result of changed circumstances, from its historical share). Trade flows before the
imposition of a safeguard measure provide an o bjective, factual basis for projecting
what might have occurred in the absence of that measure.553 (emphasis added)
7.396. Based on the foregoing, we consider that to comply with the obligation in the chapeau of
Article XIII:2, "special factors which may have affec ted or may be affecting trade in the product "
cannot be disregarded in the determination of the TRQ shares allocated to "all others" in a manner
that would be biased against one or more non -substantial suppliers. We consider that this
interpretation reflects a harmonious interpretation of the chapeau of Article XIII:2 and paragraph
(d), and is in line with the Appellate Body 's prior statements regarding their relationship. Under
this interpretation, the general rule in the chapeau of Article XIII:2 serves to protect the rights and
interests of Members that are not recognized as having a substantial supplying interest under
Article XIII:2(d).
7.7.3.3 Whether the European Union was obliged to allocate a greater TRQ share to "all
others" based on an estimate of what t heir import shares would have been in the
absence of the SPS measures
7.397. China claims that where SPS import bans are imposed, the period of application of these
import bans cannot be used as a previous "representative" period for the purpose of the TRQ
allocation. In addition, China argues that "its reduced ability to export as a result of import bans
due to SPS measures " was a "special factor that affected trade in the products concerned ", and
that had to be taken into account by the European Union. With re spect to both the First and
Second Modification Package s, we understand China to claim that the European Union acted
inconsistently with the chapeau of Article XIII:2(d) by not allocating a greater "all others" share on
the basis of an estimate of the shar e of imports that China would have had in the absence of the
SPS measures.
7.398. In the context of examining China 's parallel claim under Article XIII:2(d), we found that
the European Union did not act inconsistently with Article XIII:2(d) by basing its determin ations of
which Members were substantial suppliers on their actual share of imports into the E uropean

551 EU's response to Panel question No. 118(b), para. 118.
552 Appellate Body Reports, EC – Bananas III (Article 21.5 – Ecuador II) / EC – Bananas III (Article 21.5
– US), para. 338 and fn 408.
553 Panel Report, US – Line Pipe, para. 7.54.

Union, rather than on the basis of on an estimate of the share of imports that China would have
had in the absence of the SPS measures. We consider that o ur reasoning and conclusion applies
mutatis mutandis to China's alternative claim under the chapeau of Article XIII:2.
7.399. Based on the foregoing, we find that China has not demonstrated that the European Union
acted inconsistently with the chapeau of Article XIII:2 by determining the TRQ shares allocated to
"all others" on the basis of the actual share of imports into the European Union, rather than on the
basis of an estimate of what import shares would have been in the absence of the SPS measures
restricting poultry imports from China.
7.7.3.4 Whether the European Union was obliged to allocate a greater TRQ share to "all
others" taking into account changes in import shares following the initiation of the
negotiations on TRQ share allocations
7.400. With respect to the S econd Modification Package, we understand China to claim that the
European Union acted inconsistently with the chapeau of Article XIII:2 by not allocating a greater
share of the TRQs to "all others " to take into account the increase in imports over the pe riod
2009-2011 from countries that were not recognized as having a substantial interest (including, and
largely accounted for by, China).
7.401. In the context of examining China 's parallel claim under Article XIII:2(d), we found that
the changes in the import sh ares held by different Members which occurred between the end of
the representative period selected and the time of the TRQ being allocated, which were a
consequence of China 's increased ability to export certain poultry products into the European
Union following the relaxation of the SPS measures in July 2008, qualified as a "special factor …
affecting trade in the product " within the meaning of Article XIII:2(d). We further found that this
special factor had to be taken into account for the purpose of de termining which Members held a
"substantial interest" for the purpose of the first sentence of Article XIII:2(d). We found that the
European Union was obliged to take into account the trend of the increased imports from China,
and the resulting change in import shares at the time negotiations with Brazil and Thailand
concluded at negotiators level, in September 2011 . In our view, those aspects of the Panel 's
reasoning in the context of Article XIII:2(d) apply mutatis mutandis to China's alternative claim
under the chapeau of Article XIII:2, regarding the determination of the size of the "all others "
shares for the TRQs.
7.402. The separate issue that arises in the context of examining China 's claims under the
chapeau of Article XIII:2 is whether the TRQ shares a llocated to "all others" in the Second
Modification Package reflects the data showing the trend of the increased imports from China, and
the resulting change in import shares, that would have been available to the European Union in
September 2011.
7.403. Based on the trade statistics provided by the parties, the actual share of imports into the
European Union held by countries that were not allocated a country -specific share in the particular
TRQ in question554 was the following:

554 See the import statistics in section 7.2.4 above. In the case of tariff line 1602 32 11, "Others"
includes all countries other than Brazil (the only country allocated a country-specific share in this TRQ). In the
case of tariff lines 1602 32 30 and 1602 32 90, "Others" includes all countries other than Brazil and Thailand
(both of which were allocated their own country-specific shares in these two TRQs). In the case of tariff lines
1602 39 21, 1602 39 29, 1602 39 40, and 1602 39 80, "Others" includes all countries other than Thailand (the
only country allocated a country-specific share in these four TRQs).

Tariff line Share of
imports by
countries in
the "Others"
category into
the EU in
2006-2008
(average)
Share of
imports by
countries
in the
"Others"
category
into the EU
in 2009
Share of
imports by
countries in
the "Others"
category into
the EU in
2010
Share of
imports by
countries in
the "Others"
category into
the EU in
2011
TRQ share
allocation
1602 32 11 2.83% 0.3% 0.7% 3.3% Brazil: 97.89%
Others: 2.11%

1602 32 30 0.76% 1.1% 1.5% 1.3% Brazil: 78.92%
Thailand: 17.56%
Others: 3.51%

1602 32 90 7.7% 4.5% 2.0% 3.1% Brazil: 10.3%
Thailand: 73.3%
Others: 16.4%

1602 39 21 0.0% 0.0% 0.0% 0.0% Thailand: 100%
Others: 0.0%

1602 39 29 1.1% 27.2% 42.8% 53.1% Thailand: 98.4%
Others: 1.6%

1602 39 40 3.3% 4.9% 0.0% 25.3% Thailand: 80.21%
Others: 19.79%

1602 39 80 18.3% 11.3% 21.2% 61.2% Thailand: 82.76%
Others: 17.24%

7.404. We have already identified a number of issues with respect to the trade statistics provided
by the parties, and we therefore approach them with an appropriate degree of caution. 555
However, it is clear that over the period 2009 -2011, imports from countries that were not
allocated a country -specific share (including and largely accounted for by China) had increased
significantly under tariff lines 1602 39 29 and 1602 39 80 (the latter being merged with 1602 39
40, at the beginning of 2012, into 1602 39 85). Imports from countries that were not allocated a
country-specific share (including China) under most of the other tariff lines in the Second
Modification Package remained at zero or negligible levels, as some or all of these pro ducts
remained prohibited. Accordingly, as in the case of Article XIII:2(d), we see no basis for find ing
any violation of the chapeau of Article XIII:2 in respect of the TRQ for tariff lines 1602 32 11, 1602
32 30, 1602 32 90, or 1602 39 21. While imports from countries that were not allocated a
country-specific share (including and largely accounted for by China) under tariff line 1602 39 40
increased as well, the increase only occurred in 2011. In our view, this distinguishes the increase
in imports under tariff line 1602 39 40 from the steady and continuous increase in imports under
tariff lines 1602 39 29 and 1602 39 80 over the period 2009-2011. As set out above, imports from
countries that were not allocated a country -specific share (including and larg ely accounted for by
China) into the European Union under these two tariff lines increased steadily in 2009 (27.2% and
11.3%, respectively), 2010 (42.8% and 21.2%, respectively), and 2011 (53.1% and 61.2%,
respectively).
7.405. We recall our understanding that in September 2011, the European Union had preliminary
import data on imports into the European Union covering approximately the first half of 2011.
Based on the trade statistics that were available to the European Union as of that time, the change
in the import trends under tariff lines 1602 39 29 and 1602 39 80 was already apparent. While the
parties have provided us with annual and not monthly import statistics, the share of imports by
countries in the "all others" category into the European Union in 2011 w as 53.1% for 1602 39 29,
and 61.2% for 1602 39 80.
7.406. Based on the foregoing, we find that China has demonstrated that the increase in imports
from China over the period 2009 -2011 following the relaxation of the SPS measures in July 2008
was a "special factor" that had to be taken into account by the European Union when determining

555 See section 7.2.4 above.

the TRQ shares allocated to "all others", and that the European Union acted inconsistently with the
chapeau of Article XIII:2 by not allocating a greater "all others" share under tariff lines 1602 39 29
and 1602 39 80 (the latter tariff line was merged with tariff line 1602 39 40 into tariff line 1602 39
85, effective 1 January 2012).
7.7.3.5 Whether the European Union was under an obligation to allocate an "all others"
share of at least 1 0% for each of the TRQs under the First and Second Modification
Packages
7.407. We turn now to China 's third claim under the chapeau of Article XIII:2, which rests on an
additional, alternative line of argumentation from that which we have just considered. China
interprets Article XIII:2 as requiring a Member imposing a TRQ to always allocate a share to "all
others", independently from the factual situation considered, and without regard to the import
data over the reference period. 556 According to China, "the all o thers share should be at a level
that allows at least one Member within that group to reach SSI status if its products are
sufficiently competitive".557 China argues that because the European Union recognizes a country as
a substantial supplier only if it ac counts for 10 % of imports in the product concerned, the
European Union was accordingly required to allocate at least 10% of each TRQ to "all others".558
7.408. China claims that the TRQ for all other countries for several of the tariff headings
concerned is below a share of 10 %, and this is in violation of the general rule in the chapeau of
Article XIII:2.559 We understand China 's claims to include, in this regard, the six TRQs under the
First and Second Modification Packages for which the "all others" share was less than 10%. These
TRQs include 0210 9939 (0.31%), 1602 32 19 (4.56%), 1602 32 11 (2.11%), 1602 32 30
(3.51%), 1602 39 21 (0.0%), and 1602 39 29 (1.6%).
7.409. We begin our analysis with the text of the provision at issue. The chapeau of Article XIII:2
requires that the allocation of TRQ shares approach "as closely as possible the shares which the
various Members might be expected to obtain in the absence of such restrictions ". We see nothing
in the terms of the chapeau of Article XIII:2 establishing an obligation to allocate a minimum share
to an "all others" category in a TRQ. To the contrary, establishing an "all others" share in a TRQ
without regard to the actual import shares held over a previous representative period would be at
odds with the general rule that TRQ shares should be allocated in a way that approaches "as
closely as possible the shares which the various Members might be expected to obtain in the
absence of such restrictions". In this regard, we agree with the panel in US – Line Pipe that:
[A] Member would violate the general rule set forth in the chapeau of Article XIII:2 if
it imposes safeguard measures without respecting traditional trade patterns (at least
in the absence of any evidence indicating that the shares a Member might be
expected to obtain in the future differ, as a result of changed circumstances, from its
historical share). Trade flows before the imposition of a safeguard measure provide an
objective, factual basis for projecting what might have occurred in the absence of that
measure.560 (emphasis added)
7.410. Furthermore, we consider that an obligation to allocate a minimum share to "all others"
irrespective of actual historical import levels would conflict with the obligation in the second
sentence of Article XIII:2(d). This could have been the case if the European Union had , for
example, allocated an "all others" share for tariff line 1602 39 21, in respect of which there have
been no imports from any Member other than Thailand since 2001. The text of Article XIII:2(d),
second sentence, mandates that when allocating TRQ shares in cases where it is not practicable to
reach agreement with all substantial suppliers, the importing Member must allocate "the product
shares based on the proportions, supplied by such Members during a previous repres entative
period…".

556 China's second written submission, para. 146.
557 China's opening statement at the second meeting of the Panel, para. 65. See also China's response
to Panel question No. 88, and China's response to the EU's question No. 3.
558 China's response to Panel question No. 71(c), para. 30.
559 China's first written submission, para. 216.
560 Panel Report, US – Line Pipe, para. 7.54.

7.411. China relies on two statements made by the Appellate Body in EC – Bananas III
(Article 21.5 – Ecuador II) / EC – Bananas III (Article 21.5 – US) in support of its contention that a
Member allocating a TRQ among supplying countries must always allocate a share to the "all
others" category large enough to enable at least one Member to achieve a substantial supplying
interest. First, China refers to the Appellate Body's statement that:
If a Member allocates quota shares to Members with a s ubstantial interest in
supplying the product, in accordance with Article XIII:2(d), it must also respect the
requirement in the chapeau of Article XIII:2 - that distribution of trade approach as
closely as possible the shares that Members may be expected to obtain in the absence
of the restriction. This is usually done by allocating a share to a general "others"
category for all suppliers other than Members with a substantial interest in supplying
the product.561 (emphasis added)
7.412. We do not read the words "[t]his is usually done " in this passage to mean or imply that
there is an obligation "to allocate always a share to 'all others' … independently from the factual
situation considered, and notably the import data over the reference period ".562 It appears to us
that when the Appellate Body stated that "allocating a share to a general 'others' category for all
suppliers other than Members with a substantial interest " is what is "usually done", the Appellate
Body was merely stating that when Members allocate TRQ shares to non-substantial suppliers, that
is "usually done " through an "all others " share, as opposed to being done through individual,
country-specific allocations for all other countries.
7.413. The underlying panel report in EC – Bananas III (Article 21.5 – Ecuador) had explained this
point as follows:
The general rule laid down in Article XIII:2 of GATT requires Members to "aim at a
distribution of trade … approaching as closely as possible the shares which the various
Members might be expected to obtain in the absence of such restrictions ". To this
end, where the option of allocating a tariff quota among supplying countries is chosen,
Article XIII:2(d) provides that allocations of shares (i.e. country-specific allocations for
substantial suppliers; and a global allotment in an "other" category for non-substantial
suppliers unless country -specific allocations are allotted to each and every non -
substantial supplier) should be based upon the proportions supplied during a previous
representative period.563 (emphasis added)
7.414. This explanation by the panel in EC – Bananas III (Article 21.5 – Ecuador) followed on
from an earlier, and even more detailed explanation of the same point by the original panel in EC –
Bananas III. That panel explained why it is more practicable t o allocate a share to an "all others"
category, rather than giving every country its own country -specific share corresponding to its
historical import levels:
[I]f a Member wishes to allocate shares of a tariff quota to some suppliers without a
substantial interest, then such shares must be allocated to all such suppliers.
Otherwise, imports from Members would not be similarly restricted as required by
Article XIII:1. As to the second point, in such a case it would be required to use the
same method as was used to allocate the country -specific shares to the Members
having a substantial interest in supplying the product, because otherwise the
requirements of Article XIII:1 would also not be met.
The allocation of country-specific tariff quota shares to all supplying countries on the
basis of the first method (agreement) may in practice be difficult since there will likely
be demand for more than 100 per cent of the tariff quota and, furthermore, there
would be no possibility to make provision for new suppliers . This would leave the
second method as the only practical alternative - a result that, however, runs counter
to the provision of Article XIII:2(d) to first seek agreement with all Members having a
substantial interest in supplying the product concerned.

561 Appellate Body Report, EC – Bananas III (Article 21.5 – Ecuador II) / EC – Bananas III (Article 21.5
– US), footnote 408.
562 China's second written submission, para. 146.
563 Panel Report, EC – Bananas III (Article 21.5 – Ecuador), para. 6.27.

The consequence of the foregoing analysis is that Members may be effectively
required to use a general "others" category for all suppliers other than Members with
a substantial interest in supplying the product.564 (emphasis added)
7.415. In addition, we note that i mmediately after making the statement as to how the allocation
of TRQs shares is "usually done", the Appellate Body proceeded to find a violation of Article XIII:2
in that case on the grounds that the TRQ at issue was not "based on the respective shares of the
ACP and non -ACP supplier countries in the European Communities ' banana market".565 Thus, the
Appellate Body found a violation based on the fact that the TRQ allocation did not reflect actual
market shares. China has not identified any prior WTO panel or Appellate Body report that found a
violation of Article XIII:2 based on a failure to set aside a minimum "all others" share, irrespective
of actual imports shares held during the reference period.
7.416. China relies on a second statement from EC – Bananas III (Article 21.5 – Ecuador II) / EC
– Bananas III (Article 21.5 – US) in support of its argument. In that case, the Appellate Body
interpreted the terms of the EC Schedule and the Bananas Framework Agreement to mean that
the TRQ allocation agreed in 1994 was set to expire in 2002, but not the concessions in the EU
Schedule establishing the total amount of the TRQ. The Appellate Body observed that this reading
of Section I-B of the European Communities ' Schedule and, specifically, of paragraph 9 of the
Bananas Framework Agreement, was consistent with Article XIII:2(d) and Article XIII:4. In
connection with Article XIII:4, the Appellate Body recalled the statement by the original panel in
EC – Bananas III, that:
[A]lthough the EC reached an agreement with all Mem bers who had a substantial
interest in supplying the product at one point in time, under the consultation
provisions of Article XIII:4, the EC would have to consider the interests of a new
Member who had a substantial interest in supplying the product if t hat new Member
requested it to do so. The provisions on consultations and adjustments in Article
XIII:4 mean in any event that the [Bananas Framework Agreement] could not be
invoked to justify a permanent allocation of tariff quota shares. 566 (emphasis added)
The Appellate Body then stated that, in its view, paragraph 9 of the Bananas Framework
Agreement reflected the requirements of Article XIII:4.
7.417. China reads this passage from the Appellate Body to mean that Article XIII:4 prohibits a
"permanent allocation of tariff quota shares ", and therefore a TRQ allocation may not be "cast in
stone, but must be a dynamic process based on market developments ".567 China argues that this
in turn means "that a country -specific TRQ may not lead to long -term freezing of the s hares of
imported products and cannot be applied in such a way as to create an artificial hurdle preventing
the natural evolution of the import market structure".568 China argues that it follows from this that
"the TRQs for other countries must be fixed at l evels to allow a supplying WTO Member within the
all other category to compete and increase its share so as to allow it to request consultations to
recognize its SSI or PSI and obtain country-specific TRQs", and that in this way, "the TRQs will not
lead to a long -term freeze of the import shares, as the shares of the suppliers will evolve in
accordance with their comparative advantage".569
7.418. We consider that China reads too much into the statement that the provisions on
consultations and adjustments in Article XIII:4 mean in any event "that the [Bananas Framework
Agreement] could not be invoked to justify a permanent allocation of tariff quota shares ".570
Nowhere in the statements invoked by China did the panel or the Appellate Body mention or imply
any obligation to reserve a share in the TRQ to "all other" suppliers to prevent a long-term freeze
of the TRQ allocation . Furthermore, the statement was made in relation to Article XIII:4, and not

564 Panel Report, EC – Bananas III (Article 21.5 – Ecuador), paras. 7.73-7.75.
565 Appellate Body Report, EC – Bananas III (Article 21.5 – Ecuador II) / EC – Bananas III (Article 21.5
– US), para. 340.
566 Panel Report, EC – Bananas III (Ecuador), para. 7.92, cited in Appellate Body Report, EC – Bananas
III (Article 21.5 – Ecuador II); Appellate Body Report, EC – Bananas III (Article 21.5 – US), para. 427.
567 China's first written submission, para. 209.
568 China's first written submission, para. 210.
569 China's first written submission, para. 212.
570 Panel Report, EC – Bananas III (Ecuador), para. 7.92, cited in Appellate Body Report, EC – Bananas
III (Article 21.5 – Ecuador II); Appellate Body Report, EC – Bananas III (Article 21.5 – US), para. 427.

the terms of Article XIII:2 on which China 's claim of violation is based . To the extent that the
Appellate Body was recognizing that the objective of preventing a long -term freeze of the TRQ
allocation finds reflection in Article XIII:4, we do not see how this would justify reading into
Article XIII:2 a requirement to allocate a minimum share of a TRQ to the "all others", regardless of
actual import levels. As discussed at the outset, doing so would appear to violate the obligation
that is expressly contained in the chapeau of Article XIII:2.
7.419. In addition, we do not consider th at China has adequately responded to the European
Union's point that allocating a 10% share to the "all others" category, so as to enable at least one
other Member to achieve a substantial supplying interest, would not actually prevent a freezing of
the TR Q allocation, but merely postpone that effect. 571 As the European Union observes, the
objective of preventing a long -term freeze of the allocation cannot necessarily be achieved by
reserving a given share to "all others" in the TRQ, but may instead require o ther means, such as
setting a time limit to the validity of the allocation (or a periodic review thereof). 572 As we
explained elsewhere in our Report 573, China 's response to this argument was to claim that the
European Union violated Article XIII:1 and XIII:2 by failing to annually review and reallocate the
TRQ shares based on the most recent trade developments.574
7.420. Finally, in these proceedings China has suggested that the Panel should at least find an
inconsistency with the chapeau of Article XIII:2 in respect o f the one TRQ where there is a 0.0%
"all others" share (tariff line 1602 39 21). However, we see no legal basis for drawing this
distinction. Based on the trade data provided by the parties, it appears that there have been no
imports of the poultry products under tariff line 1602 39 21 from any Member other than Thailand
over the period 2006-2008, or from any other Member since 2001. Furthermore, leaving aside that
there appears to be no legal basis for requiring a Member to allocate an all others share, it is not
clear why a 0.0% share that reflects actual imports during the reference period should be treated
differently from a 0.31% share (0210 99 39), or from a 1.6% share (1602 39 29), or from a
2.11% share (1602 32 11) that reflects actual imports during the reference period.
7.421. Based on the foregoing, we find that China has failed to demonstrate that the European
Union acted inconsistently with the chapeau of Article XIII:2 by not allocating an "all others" share
of at least 10% for all of the TRQs under the First and Second Modification Packages.
7.8 Claims under Article XIII:1 of the GATT 1994
7.8.1 Introduction
7.422. China claims that the "allocation of all or the vast majority of the TRQs to two of the WTO
Members" (i.e. Brazil and Thailand) violates not only Article X III:2, but also Article XIII:1 of the
GATT 1994. According to China, this is so because the importation of the like product from other
WTO Members is not "similarly prohibited or restricted " as required by the terms of that
provision.575
7.423. China considers tha t like products are not "similarly prohibited or restricted " for the
following reasons. First, because the TRQ for tariff line 1602 39 21 was allocated entirely to
Thailand.576 Second, because for the other TRQs where the European Union has allocated a share
to "all others ", it did so in volumes and portions "that are so small as to allow no meaningful

571 We agree with the European Union that a non-substantial supplier could at a certain point capture
the whole "all others" share, which would then lead to a permanent freeze in the TRQ allocation unless the "all
others" share was a moving target and thus also the amount of the TRQ is a moving target (which would
transform a TRQ in an open ended tariff concession) (EU's second written submission, para. 146).
572 EU's first written submission, paras. 262-263.
573 See paragraph 7.136. See also China's opening statement at the first meeting of the Panel,
para. 102.
574 As explained in section 7.3.3.1 above, these claims are outside the Panel's terms of reference.
575 China's request for the establishment of a Panel, items II.A(iv) and II.B(iv). China's first written
submission, paras. 151-168; China's opening statement at the first meeting of the Panel, paras. 76-84; China's
responses to Panel question Nos. 35-38; China's second written submission, paras. 122-139; China's opening
statement at the second meeting of the Panel, paras. 56-65; parties' responses, and comments on one
another's responses, to Panel question Nos. 60, 64-65, 87-88.
576 China's first written submission, paras. 158-159; China's opening statement at the first meeting of
the Panel, para. 81; China's second written submission, paras. 129, 131-132.

access to or participation in the TRQs", rendering it significantly more difficult or impossible for the
WTO Members concerned to obtain SSI status going forwa rd.577 China submits that this
"reinforces" the effect of the very small "all others" share.578 Third, China argues that like products
are not similarly restricted on the basis that the European Union negotiated country -specific TRQ
shares with Brazil and Thai land, but not for other WTO Members that were substantial suppliers,
including China. 579 Finally, China submits that where the restrictions in the form of TRQs are
determined on the basis of a reference period tainted by SPS import bans that applied to only
some WTO Members, this means that imports from all third countries are not "similarly
restricted".580 According to China, "[t]he fact that Article XIII:2 regulates allocation of a TRQ does
not in any way preclude Article XIII:1 from regulating allocation ".581 In China's view, "the same
measure, including those relating to the allocation of TRQs, could violate Article XIII:1 and
Article XIII:2, simultaneously".582
7.424. The European Union responds that China 's claims under Article XIII:1 are unfounded
because Article XIII:1 generally does not deal with the allocation of TRQ shares among supplying
countries.583 More precisely, the European Union considers that Article XIII:2 is lex specialis584 vis-
à-vis Article XIII:1, in the sense that Article XIII:1 is applicable only "for aspects of the allocation
of TRQs that are not covered by Article XIII:2 ", and only "to the extent that its application does
not lead to results that would conflict with the outcome resulting from the application of
Article XIII:2".585 In the European Union's view, Article XIII:1 requires that a TRQ be "applied on a
product-wide basis and no Member is excluded from participation in the TRQ ", but this "does not
govern the level of access that each Member must have in a TRQ ".586 The European Union
observes that the TRQs at issue in this dispute "are defined only by reference to the tariff line,
which in turns refers to the intrinsic characteristics of the products, such as percentage of meat
contained in the product and whether or not the product is cooked".587
7.8.2 Relevant legal provisions
7.425. Article XIII:1 reads as follows:
No prohibition or restriction shall be applied by any Member on the importation of any
product of the territory of any other Member or on the exportation of any product
destined for the territory of a ny other Member, unless the importation of the like
product of all third countries or the exportation of the like product to all third countries
is similarly prohibited or restricted. (emphasis added)
7.8.3 Analysis by the Panel
7.426. China claims that the "allocation of all or the vast majority of the TRQs to two of the WTO
Members" (i.e. Brazil and Thailand) violates Article XIII:1 of the GATT 1994 because the

577 China's first written submission, paras. 161-164, 167; China's opening statement at the first meeting
of the Panel, paras. 81-82; China's second written submission, paras. 129-139.
578 China's second written submission, para. 135; China's response to Panel question No. 60.
579 China's first written submission, paras. 165-166; China's opening statement at the first meeting of
the Panel, paras. 79-80, 84; China's second written submission, para. 127; China's opening statement at the
second meeting of the Panel, para. 61. China agrees with the European Union "that there is no requirement to
negotiate with WTO Members not holding a substantial supplying interest" (China's response to Panel question
No. 37).
580 China's first written submission, para. 168.
581 China's opening statement at the second meeting of the Panel, para. 57. See also China's response
to Panel question No. 64(a), para. 3.
582 China's opening statement at the second meeting of the Panel, para. 59. See also China's responses
583 EU's first written submission, paras. 196-209; EU's responses to Panel question Nos. 32-34; EU's
second written submission, paras. 86-113; EU's opening statement at the second meeting of the Panel, paras.
42-62; parties' responses, and comments on one another's responses, to Panel question Nos. 60, 64-65, 87-
88.
584 EU's first written submission, paras. 186, 201, 204-205; EU's second written submission, paras. 90,
96; EU's opening statement at the second meeting of the Panel, para. 45; EU's response to Panel question
No. 64(a), paras. 7-9.
585 EU's response to Panel question No. 64(a), para. 10.
586 EU's first written submission, para. 198. (emphasis original)
587 EU's first written submission, para. 199.

importation of the like product from other WTO Members is not "similarly prohibited or restricted "
as required by the terms of that provision. China 's claim and the arguments of the parties raise
the issue of the relationship between the obligations found in Article XIII:1 and Article XIII:2, and
in particular whether the allocation of TRQ shares among supplyin g countries is governed by the
general non-discrimination obligation in Article XIII:1.
7.427. We note that the terms of Article XIII:1 could be read to mean that no tariff rate quota
may be applied by any Member on the importation of any product of the territo ry of any other
Member (e.g. poultry from China), unless the importation of the like product of all third countries
(e.g. Brazil and Thailand) is "similarly restricted ". However, Article XIII:1 does not provide any
specific guidance on how to administer TR Qs in a manner that avoids discrimination in the
allocation of shares.
7.428. A TRQ will, by definition, comprise a two -tier tariff rate in which the in -quota tariff rate is
lower than the out-of-quota tariff rate. In every case in which a TRQ is allocated among supplying
countries, some Member(s) will be allocated a share of the TRQ that is larger than the share that is
allocated to other Members. Taken together, this means that the Member(s) with the larger TRQ
shares will be entitled to export the volumes set out in their country specific shares at the lower,
in-quota tariff rate, as compared with other Members. That could be understood to mean that
products from different Members are not "similarly restricted". When a TRQ is allocated in varying
amounts among supplying countries, then each Member is not, and by definition cannot be,
"similarly restricted" vis-à-vis any other Member that is allocated a greater or smaller share (or no
share) of the TRQ.
7.429. Of course, it would follow from such an interpretation of A rticle XIII:1 that Members are
legally prohibited, by the terms of Article XIII:1, from ever allocating a TRQ among supplying
countries. This is because where a TRQ is allocated among supplying countries, the "similarly
restricted" requirement of Article XIII:1 would never be met, insofar as that requirement is applied
at the level of the amount of the shares allocated. It is axiomatic that the terms of Article XIII:1
cannot be read in isolation from Article XIII:2, which expressly authorizes a Member to al locate
shares in a TRQ, in varying amounts, among different supplying countries.588 Therefore, we cannot
interpret Article XIII:1 as prohibiting a Member from allocating shares in a TRQ in varying amounts
among different supplying countries insofar as this would conflict with Article XIII:2.
7.430. Prior panel and Appellate Body Reports have, unsurprisingly, interpreted Article XIII:1 so
as not to conflict with the obligations in Article XIII:2 relating to the allocation of TRQs. Notably,
the panel in EC – Bananas III explained:
While the requirement of Article XIII:2(d) is not expressed as an exception to the
requirements of Article XIII:1, it may be regarded, to the extent that its practical
application is inconsistent with it, as lex specialis in respect of Member s with a
substantial interest in supplying the product concerned.589
7.431. In EC – Bananas III (Article 21.5 – Ecuador II) / EC – Bananas III (Article 21.5 – US), the
Appellate Body sought to delineate the scope of Article XIII:1 from the scope of Article XIII:2.
Beginning with an examination of the terms of Article XIII:1 taken together with Article XIII:5, the
Appellate Body set forth its understanding of the scope of Article XIII:1:
Applying Article XIII:1 to a tariff quota requires that the word "restriction" be read as
a reference to a tariff quota. Article XIII:1 is then rendered thus: no tariff quota shall
be applied by a Member on the importation of any product of the territory of any other
Member, unless the importation of the like product of all third coun tries is similarly
made subject to the tariff quota . The application of the tariff quota is thus on a

588 We recall that Article XIII:2(d) provides that the importing Member "may seek agreement with
respect to the allocation of shares in the quota with all other Members having a substantial interest in
supplying the product concerned"; and provides that, in cases in which this method is not reasonably
practicable, the importing Member "shall allot to Members having a substantial interest in supplying the
product shares based upon the proportions, supplied by such Members during a previous representative period,
of the total quantity or value of imports of the product, due account being taken of any special factors which
may have affected or may be affecting the trade in the product".
589 Panel Report, EC-Bananas III, para. 7.75.

product-wide basis . The principle of non -discriminatory application captured by
Article XIII:1 requires that, if a tariff quota is applied to one Member, it must be
applied to all; and, consequently, the term "similarly restricted" means, in the case of
tariff quotas, that imports of like products of all third countries must have access to,
and be given an opportunity of, participation. If a Member is exclu ded from access to,
and participation in, the tariff quota , then imports of like products from all third
countries are not "similarly restricted".590 (emphasis added)
7.432. Thus, the Appellate Body did not read the "similarly restricted " requirement of
Article XIII:1 as applying at the level of the amount of the TRQ shares allocated among supplying
countries. Rather, the Appellate Body equated the term "restriction" in Article XIII:1 with the TRQ
as a whole, rather than at the level of the individual shares allocat ed among supplying countries.
The Appellate Body understood the obligation in Article XIII:1 to be that no tariff quota shall be
applied by a Member on the importation of any product from some Members, unless the
importation of the like product of all thir d countries is similarly "made subject to the tariff quota ".
Under this reading, a violation of Article XIII:1 would be established if the products from one
Member are "made subject to the tariff quota ", but the products of one or more other Members
are not made subject to the tariff quota.
7.433. After clarifying how Article XIII:1 applies to TRQs, the Appellate Body then immediately
turned to the subject-matter of Article XIII:2. The Appellate Body stated that:
Article XIII:2 regulates the distribution of the t ariff quota among Members . The
chapeau of Article XIII:2 requires that the tariff quota be distributed so as to serve
the aim of a distribution of trade approaching as closely as possible the shares that
various Members may be expected to obtain in the absence of the tariff quota. In this
way, all Members producing the like product are afforded access to, and competitive
opportunities under, the tariff quota in a manner that mimics their comparative
advantage vis -à-vis other Members who would participate u nder the quota. Thus,
while Article XIII:1 establishes a principle of non -discriminatory access to and
participation in the overall tariff quota, the chapeau of Article XIII:2 stipulates a
principle regarding the distribution of the tariff quota in the lea st trade -distorting
manner. The provisions of Article XIII:2(a) -(d) are specific instances of authorized
forms of allocation when a Member chooses to allocate shares of the tariff quota. 591
(emphasis added)
7.434. In the present case, China has not alleged that Bra zil or Thailand were not "made subject
to the tariff quota ". Nor has China alleged that the TRQ is applied other than "on a product-wide
basis". China has not articulated what are the different elements of the TRQs, or their allocation,
that China is chall enging under Article XIII:1, separately from that which China has already
challenged under Article XIII:2. Rather, China 's claims under Article XIII:1 appear to be based on
essentially the same elements as its claims regarding the TRQ allocation under the chapeau of
Article XIII:2. All of China 's argumentation under Article XIII:1 relates to the amount of the TRQ
shares allocated to "all others", or to the allocation of country-specific shares only to Brazil and/or
Thailand but not to China which claimed it was also a substantial supplier.
7.435. China did not expressly address the relationship between Article XIII:1 and XIII:2 in its
first written submission. The Panel solicited China's views of the relationship between Article XIII:1
and XIII:2 with regard to t he allocation of TRQ shares among supplying countries, with a view to
understanding the difference between China's claims and arguments under Article XIII:1 and those
China has advanced under Article XIII:2. China has stated that it disagrees with the Euro pean
Union that Article XIII:2 is lex specialis with respect to TRQ share allocation.592 However, in setting
forth its views on how Article XIII:1 applies to the allocation of TRQ shares among supplying
countries, China advanced an interpretation of Article XIII:1 under which this provision would
seem to impose essentially the same rule that is already expressed in Article XIII:2 (including both

590 Appellate Body Reports, EC – Bananas III (Article 21.5 – Ecuador II) / EC – Bananas III (Article 21.5
– US), para. 337.
591 Appellate Body Report, EC – Bananas III (Article 21.5 – Ecuador II) / EC – Bananas III (Article 21.5
– US), para. 338.
592 China's comments on the EU's response to Panel question No. 64(a).

its chapeau and paragraph (d)). 593 In addition to the requirements that China sees as being
common to both Article XIII:1 and Article XIII:2, China states that:
In addition, however, Article XIII:1 has a broader scope of application compared to
Article XIII:2 inasmuch as it also provides that no conditions or formalities are
established with regard to access to the tarif f rate quotas that differentiate between
WTO Members such that the importation from all WTO Members is not similarly
restricted. Thus, as mentioned in Question 34(a) above that was addressed to the EU,
China also believe that Article XIII:1 also requires s imilar treatment with respect to
matters such as the product coverage of the tariff rate quotas, applying the same in -
quota tariff rates, applying the same out -of-quota tariff rates or similarity in the
procedures and formalities to access the tariff rate quotas.594
7.436. We have already addressed the substance of all of the arguments that China advances
under Article XIII:1 in the context of addressing China 's arguments regarding the allocation of the
TRQs under Article XIII:2. As for the additional elements that China considers would fall within the
broader scope of application of Article XIII:1, and which may not be subject to Article XIII:2, China
has not alleged that there are any "conditions or formalities …established with regard to access to
the tariff rate quotas that differentiate between WTO Members ", or that the TRQs at issue accord
any dissimilar treatment "with respect to matters such as the product coverage of the tariff rate
quotas, applying the same in -quota tariff rates, applying the same out -of-quota tariff rates or
similarity in the procedures and formalities to access the tariff rate quotas".
7.8.4 Conclusion
7.437. Based on the foregoing, we find that China has failed to demonstrate that the "allocation of
all or the vast majority of the TRQs to two of the WT O Members" (i.e. Brazil and Thailand) violates
the requirement , in Article XIII:1 , that no tariff rate quota be applied by any Member on the
importation of any product of the territory of any other Member unless the importation of the like
product of all third countries is "similarly prohibited or restricted".
7.9 Claims under Article I:1 of the GATT 1994
7.9.1 Introduction
7.438. China claims that the "allocation of all or the vast majority of the TRQs to two of the WTO
Members" (i.e. Brazil and Thailand) violates not only Article XIII:2, but also the requirement in
Article I:1 that any "advantage, favour, privilege or immunity " granted to any Member be
"accorded immediately and unconditionally" to the like product originating in any other Member.595
According to China, the f irst "advantage" or "favour" granted to products of Brazil and Thailand
that is not "accorded immediately and unconditionally" to the like products from all other Members
is the "disproportionate high allocation " of the share in the TRQs to Brazil and Thai land together
with "the difference between the in -quota rates and the much higher out -of-quota rates".596 The
second "advantage" or "favour" is the granting of "a country -specific volume of the tariff rate
quotas" to Brazil and Thailand, whereas "[o]ther WTO Members with substantial supplying
interests, such as China, have a volume of imports that cannot be predicted since it is in
competition with imports originating in other countries ".597 China states that its claims under
Article I:1 are "independent legal claims", and "not a consequential claim that depends on the
outcome of claims under Articles XIII or XXVIII".598

593 China's response to Panel question No. 35, paras. 155, 157. See also China's second written
submission, paras. 127-128.
594 China's response to Panel question No. 35, para. 158.
595 China's first written submission, para. 280(16). The arguments in supports of China's claims under
Article I:1 are found in China's first written submission, paras. 271-279; China's responses to Panel question
Nos. 58-59; China's second written submission, paras. 202-208; parties' responses, and comments on one
another's responses, to Panel question Nos. 60, 64.
596 China's second written submission, para. 207.
597 China's second written submission, para. 208.
598 China's first written submission, para. 275; see also China's response to Panel question No.59(b),
and Panel question No. 59(c), para. 207; China's second written submission, para. 205.

7.439. The European Union responds that China 's claims under Article I:1 are unfounded because
this provision does not govern the allocation of TRQs amo ng supplying countries. 599 According to
the European Union, Article I:1 would only be implicated insofar as a Member imposes differential
in-quota duties on imports of like products from different supplier countries. 600 The European
Union submits that if China's claim were upheld, "it would mean that any time a Member allocates
a TRQ (regardless of whether it has complied with Article XIII:2 or not) there would be a violation
of Article I:1 because it would not grant immediately and unconditionally the same acc ess to the
TRQ to all other Members ".601 The European Union does not consider the relationship between
Article XIII:2 and Article I:1 to be one of lex specialis vs lex generalis , because the European
Union considers that even in the absence of Article XIII:2 , the terms of Article I:1 do not regulate
the allocation of TRQ shares among supplying countries.602
7.9.2 Relevant legal provisions
7.440. Article I of the GATT 1994 is entitled "Most-Favoured-Nation Treatment". Article I:1 states:
With respect to customs duties and c harges of any kind imposed on or in connection
with importation or exportation or imposed on the international transfer of payments
for imports or exports, and with respect to the method of levying such duties and
charges, and with respect to all rules and formalities in connection with importation
and exportation, and with respect to all matters referred to in paragraphs 2 and 4 of
Article III, any advantage, favour, privilege or immunity granted by any Member to
any product originating in or destined for any other country shall be accorded
immediately and unconditionally to the like product originating in or destined for the
territories of all other Members.
7.9.3 Analysis by the Panel
7.441. China claims that the "allocation of all or the vast majority of the TRQs to two of the WTO
Members" (i.e. Brazil and Thailand) violates the terms of Article I:1 because the TRQ allocation
results in an "advantage, favour, privilege or immunity " being accorded to Brazil and Thailand
which is not accorded "immediately and unconditi onally" to the like product originating in or
destined for the territories of all other Members. China 's claim and the arguments of the parties
raise the issue of the relationship between the obligations found in Article I:1 and Article XIII:2,
and in particular whether the allocation of TRQ shares among supplying countries is governed by
the general MFN obligation in Article I:1.
7.442. We note that the terms of Article I:1 require that, with respect to the tariffs applied to
poultry products ( "customs duties an d charges of any kind imposed on or in connection with
importation"), any "advantage, favour, privilege or immunity " granted by the European Union to
any poultry product originating in Brazil or Thailand must "be accorded immediately and
unconditionally" to the like poultry product originating in China or any other Member. However,
Article I:1 does not provide specific guidance on how to administer TRQs in a manner that avoids
discrimination in the allocation of shares.603
7.443. A TRQ will, by definition, comprise a two-tier tariff rate in which the in -quota tariff rate is
lower than the out-of-quota tariff rate. In every case in which a TRQ is allocated among supplying
countries, some Member(s) will be allocated a share of the TRQ that is larger than the share that is
allocated to other Members. Taken together, this means that the Member (s) with the larger TRQ

599 EU's first written submission, paras. 303-308; EU's opening statement at the first meeting of the
Panel, para. 6; EU's second written submission, paras. 189-195; EU's opening statement at the second
meeting of the Panel, para. 107; parties' responses, and comments on one another's responses, to Nos. 60,
64.
600 EU's first written submission, para. 306; EU's second written submission, paras. 190, 194. The
European Union submits that Article XIII:1 "does not necessarily require that the same in-quota tariff rates
applies to all Members as that matter is already regulated by Article I:1 of the GATT 1994. It would make little
sense to hold that two provisions of the same agreement impose the same identical obligation, because that
would imply that one of those provisions is redundant" (EU's response to Panel question No. 32 para. 97).
601 EU's first written submission para. 308.
602 EU's response to Panel question No. 64(a), paras. 8-9, 12.
603 Appellate Body Reports, EC – Bananas III (Article 21.5 – Ecuador II) / EC – Bananas III (Article 21.5
– US), para. 343.

shares will be entitled to export the volumes set out in their country specific shares at the lower,
in-quota tariff rate, as compared with other Members. Th at could be understood to constitute an
"advantage" or "favour" with respect to "customs duties and charges of any kind imposed on or in
connection with importation ". When a TRQ is allocated in varying amounts among supplying
countries, then such "advantage" or "favour" is not, and by definition cannot, be "accorded
immediately and unconditionally " to any other Member that is allocated a smaller share (or no
share) of the TRQ.
7.444. Of course, it would follow from such an interpretation of Article I:1 that Membe rs are
legally prohibited, by the terms of Article I:1, from ever allocating a TRQ among supplying
countries. This is because where a TRQ is allocated among supplying countries, the advantages
granted to those who receive the largest TRQ shares would not b e accorded "immediately and
unconditionally" to all other Members ".604 It is axiomatic that the terms of Article I:1 cannot be
read in isolation from Article XIII:2, which expressly authorizes a Member to allocate shares in a
TRQ, in varying amounts, among different supplying countries.605 Therefore, to interpret Article I:1
as prohibiting a Member from allocating shares in a TRQ in varying amounts among different
supplying countries would conflict with Article XIII:2.
7.445. Prior panel and Appellate Body Reports ha ve, unsurprisingly, interpreted Article I:1 so as
not to conflict with the obligations in Article XIII:2 specifically relating to the allocation of TRQs.
The panel in EEC – Apples (Chile I) considered it "more appropriate to examine the matter in the
context of Article XIII which deals with the non -discriminatory administration of quantitative
restrictions rather than Article I:1".606 Likewise, the panel in EEC – Dessert Apples also "considered
it more appropriate to examine the consistency of the EEC measure s with the most -favoured-
nation principles of the General Agreement in the context of Article XIII ", as "[t]his provision deals
with the non-discriminatory administration of quantitative restrictions and is thus the lex specialis
in this particular case ".607 In EC – Bananas III, the panel found that "it is more appropriate to
consider these issues under Article XIII because that is the more specific provision ", and
accordingly made "no finding on the compatibility of the EC's tariff quota share allocations and BFA
reallocation rules with Article I:1".608
7.446. In EC – Bananas III (Article 21.5 – Ecuador II) / EC – Bananas III (Article 21.5 – US), the
Appellate Body sought to delineate the scope of Article I:1 from the scope of Article XIII, indicating
that they are "distinct" and that the two provisions may apply to "different elements" of a measure
or import regime.609 The Appellate Body stated:
We consider that the notion of "non-discrimination" in the application of tariffs under
Article I:1 and the notion of non -discriminatory application of a "prohibition or
restriction" under Article XIII are distinct, and that Article XIII ensures that a Member
applying a restriction or prohibition does not discriminate among all other Members.
Article I:1, which applies to tarif fs, and Article XIII:1, which applies to quantitative
restrictions and tariff quotas, may apply to different elements of a measure or import
regime. Article XIII adapts the MFN-treatment principle to specific types of measures,
that is, quantitative restr ictions, and, by virtue of Article XIII:5, tariff quotas. Tariff

604 EU's first written submission para. 308.
605 We recall that Article XIII:2(d) provides that the importing Member "may seek agreement with
respect to the allocation of shares in the quota with all other Members having a substantial interest in
supplying the product concerned"; and provides that, in cases in which this method is not reasonably
practicable, the importing Member "shall allot to Members having a substantial interest in supplying the
product shares based upon the proportions, supplied by such Members during a previous representative period,
of the total quantity or value of imports of the product, due account being taken of any special factors which
may have affected or may be affecting the trade in the product".
606 GATT Panel Report, EEC – Apples (Chile I), para. 4.1.
607 GATT Panel Report, EEC – Dessert Apples, para. 12.28.
608 Panel Report, EC – Bananas III (Guatemala / Honduras), paras. 7.129-7.130. In EC – Bananas III,
the Appellate Body stated, in the context of a different issue, that "although Articles I and XIII of the GATT 1994
are both non-discrimination provisions, their relationship is not such" that a waiver from the obligations under
Article I implies a waiver from the obligations under Article XIII (Appellate Body Report, EC – Bananas III, para.
183). Apart from indicating that the relationship between these two provisions is such that a waiver of the
obligation under the former does not imply a waiver of the obligations under the latter, the Appellate Body did
not further elaborate on the different scope and subject-matter of these two provisions.
609 Appellate Body Reports, EC – Bananas III (Article 21.5 – Ecuador II) / EC – Bananas III (Article 21.5
– US), para. 343.

quotas must comply with the requirements of both Article I:1 and Article XIII of the
GATT 1994. This, in our view, does not make Article XIII redundant in respect of tariff
quotas: if a Membe r imposes differential in -quota duties on imports of like products
from different supplier countries under a tariff quota, Article I:1 would be implicated ;
if that Member fails to give access to or allocate tariff quota shares on a non -
discriminatory basis among supplier countries, the requirements of Articles XIII:1 and
XIII:2 would apply. In the absence of Article XIII, Article I would not provide specific
guidance on how to administer tariff quotas in a manner that avoids discrimination in
the allocation of shares.610 (emphasis added)
7.447. In the present case, China has not alleged that the TRQs impose "differential in -quota
duties on imports of like products from different supplier countries under a tariff quota ". Nor has
China articulated what are the "different elements" of the TRQs or their allocation that is being
challenged under Article I:1, as opposed to Article XIII. Rather, China 's claim under Article I:1
appears to be based on essentially the same elements as its claims regarding the TRQ allocation
under Article XIII:2, simply articulated in a more general way.
7.448. First, China asserts that the TRQ allocation to Brazil and Thailand is "disproportionate".
However, China does not articulate the basis upon which this "disproportionate" standard is to be
assessed. Given that China argues that its claims under Article I:1 are "independent legal claims"
that are "not a consequential claim that depends on the outcome of claims under Articles XIII or
XXVIII"611, it might be surmised that in China 's view , whether a TRQ allocation is
"disproportionate" under Article I:1 is to be assessed on a basis that is different from the TRQ
allocation rules set forth in Article XIII:2. However, China has not elaborated its argument beyond
stating that the TRQ allocation is "disproportionate". We see no basis in the text of Article I:1 for
applying a stand -alone "disproportionate" standard to assess the GATT -consistency of the
allocation of TRQ shares among supplying countries. Moreover, to read such a standard into Article
I:1 would mean that there are different and potentially conflicting requirements under Article I:1
and Article XIII governing the allocation of TRQs among supplying countries.
7.449. In the context of its argumentation under Article I:1, China also notes that Brazil an d
Thailand are granted a country -specific volume of the tariff rate quotas, with a volume that is
transparent, predictable, and free from competition from other supplying countries , while other
substantial suppliers such as China are not .612 However, as the European Union has observed,
these "are inherent features of any share allocated to any substantial supplier pursuant to
Article XIII:2(d)".613 Thus, to find a violation of Article I:1 on that basis would again require
interpreting Article I:1 to mean that M embers are legally prohibited, by the terms of Article I:1,
from allocating a TRQ among supplying countries.
7.450. The Appellate Body has clarified that Article I and XIII may apply to "different elements" of
a measure or import regime 614, and we do not exclude, a priori, that certain elements relating to
the allocation of a TRQ among supplying countries could potentially fall within the scope of the
general MFN obligation in Article I:1. However, in the present case, China has not identified any
elements of the TRQ allocation that fall within the scope of Article I:1.615
7.9.4 Conclusion
7.451. Based on the foregoing, we find that China has failed to demonstrate that the "allocation of
all or the vast majority of the TRQs to two of the WTO Members " (i.e. Brazil and Thailand) violates
the requirement in Article I:1 that any "advantage, favour, privilege or immunity " granted to any
Member be "accorded immediately and unconditionally" to the like product originating in any other
Member.

610 Appellate Body Reports, EC – Bananas III (Article 21.5 – Ecuador II) / EC – Bananas III (Article 21.5
– US), para. 343.
611 China's first written submission, para. 275; see also China's response to Panel question No.59(b),
and Panel question No. 59(c), para. 207; China's second written submission, para. 205.
612 China's second written submission, para. 208.
613 EU's second written submission, para. 193.
614 Appellate Body Reports, EC – Bananas III (Article 21.5 – Ecuador II) / EC – Bananas III (Article 21.5
– US), para. 343.
615 Appellate Body Report, US – Gambling, para. 140. (emphasis original, footnotes omitted)

7.10 Claims under Article XIII:4 of the GATT 1994
7.10.1 Introduction
7.452. China claims that the European Union violated Article XIII:4 of the GATT 1994 by refusing
to enter into "meaningful consultations" with China.616 We understand China to acknowledge that,
following its request for consultations under Article XIII:4, the parties did in fact hold consultations
on 19 May 2014. However, China claims that these were not "meaningful consultations", on the
grounds that the European Union "stated that Article XIII did not apply and failed to reappraise the
quota allocation to account for the SPS measures ".617 China disagrees with the European Union 's
position that Article XIII:4 only establishes a "procedural obligation" to consult, and argues that
"consultations followed by no adjustment when the conditions for an adjustment are met, would
mean that the consultations under Article XIII:4 are a dead letter".618 China considers that it made
a duly justified claim of substantial supplying interest pursuant to A rticle XIII:4, and that
Article XIII:4 applies when the allocation among substantial suppliers is based on either the first or
second sentences of Article XIII:2(d).619
7.453. The European Union responds that there is no violation of Article XIII:4 because it
discharged any obligation that it had to consult with China by meeting with China on 19 May
2014.620 In this regard, the European Union submits that Article XIII:4 only sets out a "procedural
obligation" to consult, and that "it is not required to adjust the allocation of the TRQ in response to
the requests from a Member having a SS I".621 The European Union additionally argues that China
did not make a duly justified claim of substantial supplying interest when it requested
consultations pursuant to Article XIII:4, and that Article XIII:4 only applies when the allocation
among substant ial suppliers is done unilaterally pursuant to the second sentence of
Article XIII:2(d).622
7.10.2 Relevant legal provisions
7.454. Article XIII:4 reads as follows:
4. With regard to restrictions applied in accordance with paragraph 2 (d) of this
Article or under paragrap h 2 (c) of Article XI, the selection of a representative period
for any product and the appraisal of any special factors affecting the trade in the
product shall be made initially by the Member applying the restriction; Provided that
such Member shall, up on the request of any other Member having a substantial
interest in supplying that product or upon the request of [the CONTRACTING
PARTIES], consult promptly with the other Member or [the CONTRACTING PARTIES]
regarding the need for an adjustment of the pro portion determined or of the base
period selected, or for the reappraisal of the special factors involved, or for the
elimination of conditions, formalities or any other provisions established unilaterally
relating to the allocation of an adequate quota or its unrestricted utilization.
7.455. Article XIII:4 refers explicitly to the request of "any other Member having a substantial
interest in supplying that product ". The parties agree that a WTO Member may, but is not
required, to consult under Article XIII:4 with a Member that does not hold a substantial interest.623

616 China's first written submission, paras. 253-257, 280(13); China's responses to Panel question
Nos. 48-49; China's second written submission, paras. 193-196; China's opening statement at the second
meeting of the Panel, para. 82; parties' responses, and comments on one another's responses, to Panel
question Nos. 123-128.
617 China's first written submission, para. 253; China's second written submission, para. 194.
618 China's response to Panel question No. 49(a), para. 191.
619 China's comment on the EU's response to Panel question No. 123(a), para. 73 and China's comment
on the EU's response to Panel question No. 127, paras. 82 et seq.
620 EU's first written submission, paras. 288-297; EU's responses to Panel question Nos. 47-48; EU's
second written submission, paras. 177-183; EU's opening statement at the second meeting of the Panel, paras.
104-106; parties' responses, and comments on one another's responses, to Panel question Nos. 123-128.
621 EU's first written submission, para. 195; see also EU's response to Panel question No. 123(a),
para. 119.
622 EU's responses Panel question No. 123(a), paras. 120-121 and Panel question No. 127, para. 143.
623 Parties' response to Panel question No. 48.

7.10.3 Analysis by the Panel
7.456. It is not in dispute that China sent a letter to the European Union on 19 December 2013
requesting to "enter into consultations with the European Union in accordance with
Article XIII:4".624 It is also not in dispute that a meeting was subsequently held between China and
the European Union pursuant to that request on 19 May 2014. 625 We understand that the
European Union refused to recognize that China had the requisite substantial supp lying interest
status to invoke Article XIII:4, and the European Union made no adjustment to the allocation of
TRQ shares among supplying countries following this meeting.
7.457. We consider that China 's claims under Article XIII:4 raise a number of disputed iss ues.
First, whether the obligation in Article XIII:4 is applicable to cases where the shares of a TRQ are
allocated among supplying countries by agreement with substantial suppliers pursuant to the first
sentence of Article XIII:2(d). Second, whether China was a Member having a substantial interest
in supplying that product, and thus entitled to invoke Article XIII:4 , at the time that it requested
consultations pursuant to Article XIII:4 . Third, whether Article XIII:4 establishes a legal obligation
on the i mporting Member to reallocate TRQ shares among supplying countries to reflect an
updated reference period or a reappraisal of special factors, as China contends, or merely a
procedural obligation to consult as the European Union argues. Fourth, whether the European
Union refused to consult with China in the sense of refusing to meet with China to consider the
need for an adjustment of the proportion determined or of the base period selected, or for the
reappraisal of the special factors involved. We will address these issues in turn.
7.10.3.1 Whether Article XIII:4 applies in cases where TRQ shares are allocated among
supplying countries by agreement with substantial suppliers pursuant to
Article XIII:2(d) first sentence
7.458. We understand the European Union to argue tha t the obligation to consult provided for in
Article XIII:4 only applies when the TRQ shares are allocated unilaterally pursuant to the second
sentence of Article XIII:2(d), and that in cases where a Member allocating the shares of a TRQ has
reached an agre ement with all Members having a substantial interest in supplying the product
under the terms of the first sentence of Article XIII:2(d), there is no obligation to enter into
consultations pursuant to Article XIII:4.
7.459. The scope of Article XIII:4 is set out in its introductory sentence, which states that it
applies "[w]ith regard to restrictions applied in accordance with paragraph 2(d) of this Article… ".
Paragraph 2(d) applies "in cases in which a quota is allocated among supplying countries ". The
text of Article XIII:4 does not distinguish between allocation by agreement under the first sentence
of paragraph 2(d), and unilateral allocation under the second sentence of paragraph 2(d). Rather,
it refers generally to restrictions imposed pursuant to paragraph 2(d). We believe that more
precise language would have been needed to exclude from the scope of application of Article XIII:4
the situation where a Member allocates the shares of a TRQ based on agreements reached
pursuant to Article XIII:2, first sentence.
7.460. The European Union argues that its interpretation of the scope of Article XIII:4 is
supported by the phrase "established unilaterally" appearing in the last sentence of Article XIII:4,
which, according to the European Union, refers back only to the unila teral allocation of the shares
under the second sentence of Article XIII:2(d). 626 We observe that the phrase "established
unilaterally" in Article XIII:4 appears in the phrase providing for consultations regarding "the
elimination of conditions, formalities or any other provisions established unilaterally relating to the
allocation of an adequate quota or its unrestricted utilization ".627 We note that this phrase is in
part linked to the last sentence of Article XIII:2(d), which provides that:
No conditions or formalities shall be imposed which would prevent any Member from
utilizing fully the share of any such total quantity or value which has been allotted to

624 Letter of 19 December 2013 requesting consultation under Article XIII:4 of the GATT 1994 (Exhibit
CHN-39).
625 See paragraph 7.81.
626 EU's response to Panel question No. 124(b)(i), paras. 131-132.
627 See China's comment on the EU's response to Panel question No. 127, para. 82.

it, subject to importation being made within any prescribed period to which the quota
may relate.
7.461. The phrase "established unilaterally " in Article XIII:4 is not specifically linked to the
allocation of shares among different supplying countries as provided under the first or the second
sentence of Article XIII:2. We also note that the word "unilateral" does not appear in the text of
the second sentence of Article XIII:2(d). Contrary to what the European Union argues, we do not
consider that the phrase "established unilaterally" qualifies all the matters which can be the object
of the consultations provided for in Article XIII:4, on the grounds that it is placed at the end of the
list of matters that are subject to consultations as specified in Article XIII:4. 628 Rather, we read
this language as relating more to the conditions or formalities regarding the utilization of the quota
as per the terms of the third sentence of Article XIII:2(d).
7.462. Continuing with our textual analysis of Article XIII:4, we note that it provides for
consultations regarding the need for an adjustment to the reference period selected (i.e. the "base
period"), or the reappraisal of special factors. The European Union observes that reference to a
"representative period " and "special factors " is explicitly made only in the second sentence of
Article XIII:2(d). 629 We agree that, if the subject -matter of the consul tations provided for in
Article XIII:4 were clearly confined to matters that only arise in cases of unilateral allocation of
TRQ shares under the second sentence of Article XIII:2(d), then it may follow, by necessary
implication, that the scope of the obligation to enter into consultations would not extend to cases
where TRQ shares are allocated by agreement. However, the European Union itself acknowledges
that consideration of " special factors" is also relevant in the context of allocatin g the shares of a
TRQ by agreement pursuant to the first sentence of Article XIII:2(d).630 We have found that due
account must be taken of a previous representative period and special factors in the context of
allocating the shares of a TRQ by agreement with substantial suppliers631, and also in determining
which Members are substantial suppliers, in the context of the first sentence of Article XIII:2(d).632
Therefore, we are not persuaded that consideration of the subject -matter of the consultations
under Article XIII:4 gives rise to the necessary implication that the scope of the obligation to enter
into consultations extends only to cases where shares of a TRQ are allocated unilaterally pursuant
to the second sentence of Article XIII:2(d).
7.463. We further note that the narrow interpretation of Article XIII:4 proposed by the European
Union has been previously rejected by the panel in EC – Bananas III. In that case, the shares of a
TRQ had been allocated by agreement with all the Members which held a substantial inter est in
supplying the product in question. The panel stated that:
While the provisions of Article XIII:4 on consultations and adjustments seem to be
primarily aimed at adjustments to quota shares allocated pursuant to Article XIII:2(d),
second sentence, they also apply in the case where agreements were reached
pursuant to Article XIII:2(d), first sentence, with Members having a substantial
interest in supplying the product concerned . In addition, in so far as a new Member
has a substantial interest in suppl ying that product, its share of the "others" category
can be viewed, for purposes of Article XIII:4, as a provision established unilaterally
relating to the allocation of an adequate quota.633 (emphasis added)
7.464. This finding supports our understanding that the re is nothing in the language of
Article XIII:4 to suggest that its scope of application is confined to the allocation of TRQ shares
under the second sentence of Article XIII:2(d). For these reasons, we find that the right to request
consultations under Article XIII:4 is available to Members holding a substantial supplying interest
in cases in which the allocation of TRQ shares among supplying countries is agreed pursuant to the
first sentence of Article XIII:2(d), and not only in those cases in which the T RQ shares are
allocated unilaterally pursuant to the second sentence of Article XIII:2(d).

628 EU's response to Panel question No. 124(b)(i), para. 132.
629 EU's response to Panel question No. 124(b)(i), para. 132.
630 See paragraph 7.393.
631 See paragraphs 7.392 to 7.396.
632 See paragraphs 7.316 to 7.322.
633 Panel Report, EC – Bananas III (Ecuador), footnote 373.

7.10.3.2 Whether China had a substantial interest in supplying the products concerned
at the time of its request under Article XIII:4
7.465. Article XIII:4 provides that a Member a llocating TRQ shares among supplying countries
pursuant to Article XIII:2(d) shall consult with any other Member having a substantial interest in
supplying the product (or the WTO Members acting jointly) upon request. We recall that China
sent a letter to the European Union on 19 December 2013 to request consultations under
Article XIII:4.634 In its letter, China stated that it was a Member with a substantial supplying
interest in several of the tariff lines covered by the Second Modification Package, "as evidenced by
the statistics of imports of the European Union from China in the most recent years prior to the
adoption of the new tariff regime ".635 On 21 February 2014, the European Union responded by
informing China that it did not meet the conditions to part icipate in the relevant negotiations. 636
The European Union has confirmed in these proceedings that it considered that, at the time of
China's request for consultations under Article XIII:4, China did not have the substantial supplying
interest necessary to request consultations under Article XIII:4.637
7.466. The parties have provided the Panel with import statistics for the period 1996 -2015. We
recall that China 's shares of imports into the European Union of the poultry products covered by
the Second Modification Package for years 2009-2015 were as follows638:
Tariff line 2009 2010 2011 2012 2013 2014 2015

1602 32 11 0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
1602 32 30 0.4% 0.9% 0.9% 0.8% 3.1% 4.2% 5.0%
1602 32 90 2.8% 1.5% 2.9% 0.8% 0.0% 1.6% 0.0%
1602 39 21 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
1602 39 29 27.1% 40.7% 52.8% 62.0% 58.4% 59.0% 59.4%
1602 39 40 0.0% 0.0% 25.3% - - - -
1602 39 80 8.7% 17.6% 61.1% - - - -
1602 39 85639 (resulting
from the merger of tariff
lines 1602 39 40 and
1602 39 80, effective 1
January 2012)
(3.9%) (8.3%) (52.8%) 82.5% 81.7%

80.9% 86.2%

7.467. We note from these statistics that when China requested consultations on 19 December
2013, China held significant import shares in tariff lines 1602 39 29 and 1602 39 85 (58.4% and
81.7% for the year 2013, respectively). We also note that imports from China into the European
Union under tariff lines 1602 39 29 and 1602 39 85 already accounted for more than 50% of
imports of those poultry products by 2011 and continued to account for more than 50% of i mports
in 2012 ( 62.0% and 82.5%, respectively) . Based on the import data submitted by the parties,
China held an average import share of 51.8% in the importation into the European Union of
products classified in tariff line 1602 39 29 for the years 2010 -2012. China also held an average
share of 47.9% of imports into the European Union of products under tariff line 1602 39 85 for the
years 2010-2012.

634 Letter of 19 December 2013 requesting consultation under Article XIII:4 of the GATT 1994 (Exhibit
CHN-39).
635 Letter of 19 December 2013 requesting consultation under Article XIII:4 of the GATT 1994 (Exhibit
CHN-39).
636 Response letter from the EU to China dated 21 February 2014 (Exhibit CHN-40).
637 EU's first written submission, para. 296; EU's response to Panel question No. 47, para. 147;
Response letter from the EU to China dated 21 February 2014 (Exhibit CHN-40). See paragraphs 7.79 to 7.81.
638 See the import statistics in section 7.2.4 above.
639 We note that when China made its request, tariff lines 1602 39 40 and 1602 39 80 had been merged
into tariff line 1602 39 85 (effective 1 January 2012). For this reason, in this section we consider it necessary
to also examine China's share of imports under the merged tariff line 1602 39 85.

7.468. These numbers indicate that China had a "substantial interest" in supplying the products
classified under tariff line 1602 39 29 and 1602 39 85 when it made its request for consultations in
2013. We understand that the complete definitive import data from the year 2013 was not
available to the European Union when China sent its request for consultations on 19 De cember
2013, or when the parties met to discuss the TRQs on 21 May 2014.640 However, even the data for
the year 2012 indicates that China had already achieved a substantial supplying interest in tariff
lines 1602 39 29 and 1602 39 85 by that time. In light of China's significant import shares in these
products during the years preceding the request for consultation, the Panel does not consider it
necessary to determine the precise import share that is required for a supplying interest of a
Member to be considered as "substantial" under Article XIII:4.641 When China made its request for
consultations under Article XIII:4 on 19 December 2013, China 's import shares in the European
Union market for the products classified under tariff lines 1602 39 29 and 1602 39 85 were clearly
large enough for China to be considered a Member with a "substantial interest" in supplying these
products (58.4% and 81.7%, respectively in 2013).
7.469. The European Union disagrees that China held a substantial supplying interest in these
products when it made its request for consultation. It submits that since the processes of opening
the TRQs and allocating the TRQ shares both occurred at the same time, "it follows that in 2014,
just after the termination of the rebinding exercise by the EU pur suant to Article XXVIII and the
implementation of the TRQs at issue, the EU was of the view that China did not hold a SSI
necessary to request consultations under Article XIII:4."642 In response to a question by the Panel,
the European Union indicated that, at least for the years 2012 to 2015, the import shares held by
China in tariff lines 1602 39 29 and 1602 39 85 were however sufficient to confer upon China the
status of substantial interest supplier under both Article XXVIII:1 and Article XIII:2, "provided that
imports were made during the relevant reference period ".643 Based on the above, we understand
the European Union to be arguing that, for the purpose of Article XIII:4, the determination of
which Members hold a substantial supplying interest may be bas ed on the same reference period
selected by the Member when it initially allocated the TRQ shares among supplying countries, in
this case 2006 -2008, and may disregard changes in import shares which may have occurred
subsequent to that time.
7.470. In our view, t he determination of which Members have a substantial supplying interest
under Article XIII:4 cannot be based solely on import shares held during the reference period
initially used to determine which Members held a substantial supplying interest under
Article XIII:2, without taking into account changes in market shares that occurred following the
initial TRQ share allocation. This is because Article XIII:4 aims in part to provide the opportunity
for a Member which has increased its market share in a product subject to a TRQ to request,
among other things, a readjustment of the TRQ shares based on more recent market
developments. As the panel in EC – Bananas III observed, where a Member not having a
substantial supplying interest is able to gain market share in the "others" category and possibly
achieve a substantial supplying interest, this, in turn, "would provide them the opportunity to
receive a country-specific allocation by invoking the provisions of Article XIII:4".644 This recognizes
that a Member that did not have a substantial supplier interest during the initial allocation of a TRQ
can nonetheless become a substantial supplier at a later point in time, such that it can request
consultations with the Member that imposed the TRQ to adjust the TRQ shares under
Article XIII:4. We note that the European Union itself recognizes that "a Member which was not a
substantial supplier at the moment of the opening of the TRQ, and which at a certain point in time
acquires an important import share in the product conc erned (in or outside the TRQ) could claim a

640 At the second meeting of the Panel, the European Union informed the Panel that import data for
products imported into the European Union becomes available within a delay of three months, on a preliminary
basis. Definitive data is available within one year. This was confirmed by the European Union in its response to
Panel question No. 107(c), para 87: "[i]mport data becomes generally available with a three-month delay. But
this is just preliminary data, which is subject to modification by the reporting authorities of the member States
for up to one year." The Panel understands that in December 2013, the European Union had at its availability
definitive data up to December 2012.
641 We note that the Panel in EC – Bananas III also did not consider it necessary to rule on the "precise
import share" that is required for a Member to have a substantial supplying interest in a product under
Article XIII (Panel Report, EC – Bananas III (Ecuador), para. 7.84).
642 EU's response to Panel question No. 47(c), para. 146.
643 EU's response to Panel question No.124(a), para. 129.
644 Panel Report, EC – Bananas III, para. 7.76.

substantial supplying interest under Article XIII:4 ".645 There is nothing in the text of Article XIII:4
to suggest that the possibility to request consultations is limited only to Members that held a
substantial su pplying interest when the TRQ was initially allocated under Article XIII:2(d). It
follows that the reference period used to determine which Members held a substantial supplying
interest at the moment of the initial TRQ allocation can be different from the reference period
relied upon to determine substantial supplying interest under Article XIII:4.
7.471. For these reasons, we conclude, on the basis of the import shares made available to the
Panel, that China was a Member having a substantial interest in supplying the products under tariff
lines 1602 39 29 and 1602 39 85 at the time of its request for consultations under Article XIII:4,
in December 2013. We disagree with the European Union insofar as it considers that, for the
purpose of Article XIII:4, the determination of which Members hold a substantial supplying interest
may be based on the reference period initially used to determine the TRQ share allocation, without
taking into account changes in market shares that occurred following the initial TRQ share
allocation.
7.10.3.3 Whether Article XIII:4 imposes an obligation to reallocate TRQ shares upon
request from a Member with a substantial interest in supplying the product
7.472. Having found that China was a Member with a substantial interest in supplying the
products under tariff lines 1602 39 29 and 1602 39 85 at the time of its request for consultations
under Article XIII:4 in December 2013, the next question we have to consider is whether
Article XIII:4 imposed an obligation on the European Union to reallocate the TRQ sh ares in respect
of these products to reflect China 's increased share of imports. As noted above, the European
Union submits that Article XIII:4 only sets out a "procedural obligation" to consult, and that the
Member maintaining a TRQ "is not required to ad just the allocation of the TRQ in response to the
requests from a Member having a SSI ".646 China disagrees, and submits that "consultations
followed by no adjustment when the conditions for an adjustment are met, would mean that the
consultations under Article XIII:4 are a dead letter".647
7.473. We recall that Article XIII:4 states that a Member imposing a TRQ shall "consult promptly"
upon request from a Member holding a substantial supplying interest. On its face, the wording of
Article XIII:4 only imposes a manda tory obligation to consult upon the request of a Member
holding a substantial supplying interest. The obligation to "consult" contained in Article XIII:4 is, in
accordance with its ordinary meaning, an obligation to "confer about ", "deliberate upon ", or
"consider" the matters listed in Article XIII:4. 648 There is nothing in the ordinary meaning of this
term, or in the text of Article XIII:4, to suggest that the consultations should lead to a specific
outcome, in this case the reallocation of the TRQ shares. We note that our reading of Article XIII:4
conforms to a general understanding of the term "consultations" as used elsewhere in the covered
agreements.649 Based on the ordinary meaning of the term "consult", we are therefore inclined to
agree with the Europea n Union that Article XIII:4 only imposes an obligation to "confer about",
"deliberate upon ", or "consider" the matters listed in Article XIII:4, and not an obligation to
reallocate TRQ shares upon request from a Member with a substantial supplying interest.650
7.474. In addition, we consider that the context of Article XIII:4 suggests that it only imposes an
obligation on the Member receiving a request from a substantial supplier to enter into
consultations, but not an obligation to reallocate TRQ shares. In partic ular, we have already
concluded that the obligation to enter into consultations under Article XIII:4 applies in the
situation where the Member imposing the TRQ has allocated the shares under the first sentence of
Article XIII:2(d) (allocation by agreement) , and not only in the situations falling under the second
sentence of Article XIII:2 (d) (unilateral allocation by the Member imposing the TRQ). It follows
from this interpretation that any Members with whom agreements are reached under the first

645 EU's response to Panel question No. 42, para. 124.
646 EU's first written submission, para. 195; EU's response to Panel question No. 123(a), para. 119.
647 China's response to Panel question No. 49(a), para. 191.
648 Shorter Oxford English Dictionary, 5th ed, W.R. Trumble, A. Stevenson (eds.) (Oxford University
Press, 2002), Vol. 1, p. 497.
649 Article 4 of the DSU, for example, also imposes a mandatory obligation to consult before requesting
the establishment of a panel, but this obligation to consult clearly does not require that a specific outcome
emanates from the consultations.
650 See the EU's first written submission, para. 295; EU's second written submission, para. 182; EU's
response to Panel question No. 123(a), para. 119.

sentence of Article XIII:2(d) are also substantial suppliers within the meaning of Article XIII:4, and
that these Members may also therefore request consultations under that provision. Thus, if
Article XIII:4 implied an obligation to reallocate the shares of a TRQ t o reflect changes in import
shares held by substantial suppliers, the beneficiaries of that obligation would include not only new
substantial suppliers, but also any Members that have already entered into allocation agreements
pursuant to the first sentence of Article XIII:2(d). Imposing an obligation on the Member allocating
the TRQ to readjust the shares allocated could deprive these agreements of any binding effect, and
these agreements would no longer constitute a "safe harbour" as far as these same sub stantial
suppliers are concerned, contrary to the findings of the Appellate Body in EC – Bananas III
(Article 21.5 – US I) / (Article 2 1.5 – Ecuador II).651 Thus, the applicability of Article XIII:4 to
situations where agreements regarding the TRQ allocation were reached with Members having a
substantial supplying interest, potentially following years of negotiations, suggests that the
Member imposing and allocating the TRQ must have a degree of discretion as to whether or not it
should reallocate the TRQ shares following a request for consultations under Article XIII:4.
7.475. However, we do not consider that this discretion is unfettered, such that a Member
maintaining a TRQ is free to ignore significant changes in imports shares held by different
countries following the opening of a TRQ. Our view is consistent with the fact that, in the same
report, the Appellate Body suggested that Article XIII:4 could require an adjustment of a TRQ
allocation, including in situations where the TRQ has been allocated by agreement. When
examining the allocation agreement originally entered into between the European Communities
and several other Members, as contained in paragraph 9 of the Bananas Framework Agreement,
the Appellate Body stated in passing that:
In our view, paragraph 9 of the Bananas Framework Agreement, which set an expiry
date for the agreement at 31 December 2002, provided for consultations between the
European Communities and "Latin American suppliers that are GATT Members " by
2001, and the review of the functionin g of the agreement within three years, reflects
the requirements of Article XIII:4 , which requires consultation with substantial
suppliers, reappraisal of special factors, and an adjustment of the allocation
agreement.652 (emphasis added)
7.476. Furthermore, we rec all that the panel in EC – Bananas III had also previously suggested
that if a Member not having a substantial supplying interest is able to gain market share in the
"others" category and possibly achieve a substantial supplying interest, this, in turn, "would
provide them the opportunity to receive a country -specific allocation by invoking the provisions of
Article XIII:4".653
7.477. We observe that Article XIII:4 was not at issue in either of those cases, and both
statements were in the nature of obiter dicta made in passing. We further note that the panel in
EC – Bananas III only stated that Article XIII:4 would provide such substantial suppliers with the
"opportunity to receive " a country-specific allocation, and did not say that the Member applying
the TRQ woul d have been obliged to allocate a specific share to that supplier in all
circumstances.654 However, these statements by the Appellate Body and the panel are both
consistent with our understanding that, although a Member maintaining a TRQ that has been
allocated among supplying countries must enjoy a degree of discretion as to whether or not to
reallocate the TRQ shares following a request for consultations under Article XIII:4, such discretion
is not unfettered.
7.478. Proceeding on the understanding that a Member does not have unfettered discretion to
refuse to reallocate the TRQ shares upon the request of a Member holding a substantial supplying
interest following a change in import shares, we do not however see any indication in the wording
of Article XIII:4 of any time frame as to when or how often such reallocation would have to take
place, or based on the occurrence of which events. There is no specific guidance in the text of
Article XIII:4 on whether, for example, the reallocation would have to be done yearl y or instead at

651 Appellate Body Report, EC – Bananas III (Article 21.5 – US I) / (Article 21.5 – Ecuador II),
para. 338.
652 Appellate Body Reports in EC – Bananas III (Article 21.5 – Ecuador II) / EC – Bananas III
(Article 21.5 – US), para. 428.
653 Panel Report, EC – Bananas III, para. 7.76.
654 EU's response to Panel question No. 123(b), para. 127.

some other regular interval, or whether it would have to be done when any Member that did not
receive a country -specific share experiences a surge in its import shares of the relevant product,
or even when a Member that has already received a country-specific share significantly increases
its share of imports beyond that which it has been allocated. We note in that regard that
paragraph 9 of the Bananas Framework Agreement, which was at issue in the EC – Bananas III
(Article 21.5 – US I) / (Article 21.5 – Ecuador II) dispute, provided that the initial allocation of the
TRQ shares was set to expire on 31 December 2002. We understand that the Bananas Framework
Agreement was agreed in 1994. Paragraph 9 also expressly provided that "full consultations with
the Latin American suppliers that are GATT Members should start no later than in year 2001. "655
As noted above, the Appellate Body suggested that the foregoing "reflects the requirements of
Article XIII:4 ".656 While the Appellate Body did not elabor ate, this suggests that an allocation
agreement which was set to remain in force for eight years was nonetheless considered to meet
the requirements of Article XIII:4, taking into account that it had an expiry date and provided for
consultations. Based on the foregoing, we do not see that any purported obligation to reallocate
TRQ shares arising under Article XIII:4 is subject to any particular time frame.
7.479. We note that China itself, in these proceedings, has been unable to clearly specify the time
frame, frequency and the basis upon which the redetermination of the TRQ allocation would have
to be made. In its second written submission, China stated for example that the allocation of TRQ
shares is not static, and must "develop and be updated over time ".657 In the context of its claims
under Article XIII:1 and XIII:2, China also submitted that the reassessment of the TRQ share
allocation had to be reviewed and adjusted "from time to time "658; "before a new quota year
starts"659; "preceding each allocation "660; and "when trade developments occur and the allocated
shares are no longer representative of the import of a WTO Member in the absence of the
TRQs."661 At the second meeting of the Panel, China stated that since the TRQs in dispute operate
on an annual basis, the European Union in this case is required to review the TRQ allocation every
year, so as to determine whether the allocation should be updated in light of trade
developments.662 China also submitted that depending on the conditions of the market, a Member
imposing a TRQ would also have the obligation under Article XIII to adjust the shares of the TRQ
"on an as-needed basis".663 We recall that we have ruled that China 's claims based on an ongoing
obligation under Article XIII:1 and XIII:2 to reallocate or reassess t he TRQs applicable to the
products covered by the First and Second Modification Packages are outside the Panel 's terms of
reference.664 Nevertheless, China 's inability, in this case, to clearly specify the time frame,
frequency and the basis upon which the r edetermination of the TRQ allocation should be made,
further highlights that insofar as there is an obligation to reallocate under Article XIII:4, there is
no indication, in the text of this provision, as to when that reallocation should be made.
7.480. Finally, we note that the prevalence and centrality of historical market shares in TRQ share
allocations also suggest that, insofar as there is indeed an obligation to reallocate the shares
allocated among supplying countries upon the request of a Member holding a substantial supplying
interest under Article XIII:4, there is no obligation to do within any specified time frame, or with
any particularly frequency.665

655 See paragraph 9 of the Bananas Framework Agreement, reproduced in Appellate Body Report, EC –
Bananas III (Article 21.5 – Ecuador II) / EC – Bananas III (Article 21.5 – US), para. 420.
656 Appellate Body Reports in EC – Bananas III (Article 21.5 – Ecuador II) / EC – Bananas III
(Article 21.5 – US), para. 428.
657 China's second written submission, para. 196.
658 China's second written submission, para. 121.
659 China's second written submission, para. 127.
661 China's second written submission, para. 165.
662 China's response to Panel question No. 121(a), para. 111. See also China's response to the EU's
question No.2, para. 14.
663 China's response to the EU's response to Panel question No.2, para. 14.
664 See section 7.3.2.3 above.
665 See e.g. J. Jackson, World Trade and the Law of GATT (Bobbs-Merrill Company, Inc., 1969) pp. 323-
324; P. Mavroidis, Trade in Goods, 2nd Edition (Oxford, 2012), p. 85 ("Art. XIII GATT thus, by preserving
historic shares, does not account for changes in supply and demand"); S. Schropp and D. Palmeter,
"Commentary on the Appellate Body Report in EC–Bananas III (Article 21.5): Waiver-Thin, or Lock, Stock, and
Metric Ton?" World Trade Review, Volume 9, Issue 01, January 2010, pp. 7-57, at p. 42 ("even after some
careful study, the authors are unaware of a single case where uncompensated reallocation among quota
holders occurred in accordance with Article XIII:2(d), first sentence"); T. Josling, "Agriculture and the Next

7.481. The issue raised in this case is whether Article XIII:4 can be interpreted as establishing a
legal obligation on the importing Member to reallocate TRQ shares among supplying countries, to
reflect an updated reference period or a reappraisal of special factors, in situations where import
shares held by different countries have changed in the years immediately following the initial TRQ
allocation agreed among substantial suppliers on the basis of historical market shares. For the
foregoing reasons, we conclude that insofar as such an obligation arises from Article XIII:4, there
is no obligation to reallocate the TRQ shares within any particular time frame, and at least not in
the years immediately following the initial TRQ allocation.
7.482. Accordingly, we find that the European Union did not violate Article XIII:4 when it refused
to reallocate the TRQ allocations arising from the Second Modification Package in May 2014.
Accordingly, we reject China's claim of violation under Article XIII:4, insofar as this claim is based
on the fact that the European Union did not reallocate the TRQ allocation among supplying
countries in May 2014, following China's request for consultations under Article XIII:4.
7.10.3.4 Whether the European Union refused to consider the need for an adjustment of
the TRQ shares or the reference period or reappraisal of special factors
7.483. The remaining issue i s whether the European Union failed to discharge its obligation to
consult with China in the sense of refusing to consider the need for an adjustment of the TRQ
shares determined, for an adjustment of the reference period selected, or for the reappraisal o f
the special factors involved. In approaching this issue, we are guided by several principles that
constitute the framework for our review of the facts before us.
7.484. First, we consider that the obligation to consult pursuant to Article XIII:4 should not be
interpreted in an overly formalistic manner. In our view, the fact that the European Union
apparently did not consider Article XIII:4 to be legally applicable in the circumstances, and agreed
to consult with China only on a "without prejudice" basis and wi thout acknowledging that China
was entitled to invoke Article XIII:4 666, does not suffice, in and of itself, to establish a violation of
this provision.667 On the other hand, the fact that the European Union held a meeting with China
on 19 May 2014 is not, in and of itself, sufficient to establish that the European Union discharged
its obligation to consider the need for an adjustment of the TRQ shares determined, the reference
period selected, or the reappraisal of special factors. Rather than adopting a forma listic approach,
we consider that it is necessary to consider the totality of the information provided to the Panel
regarding the exchanges that took place between the parties.
7.485. Second, we recall that as the complaining party alleging a violation of Articl e XIII:4, the
burden of proof is on China to demonstrate that the European Union refused to consider the need
for an adjustment of the proportion determined or of the base period selected, or for the
reappraisal of the special factors. We recognize that th is may not be an easy burden to discharge.

WTO Round", in J. Schott (ed.), The WTO After Seattle (Institute for International Economics, Washington, July
2000), pp. 91-118, at 101 ("[i]n some cases, allocation is done on a government-to-government basis, usually
in accordance with historical market shares. But this perpetuates distortions in trade"); S. Tangermann, "The
European Common Banana Policy", in T. Josling and T. Taylor (eds.), Banana Wars: The Anatomy of a Trade
Dispute (CABI Publishing, Cambridge, 2002), at p. 55 ("the systems based on a historical reference period …
tend to freeze the market"); D. Skully, "Tariff rate quotas" in W. Kerr and J. Gaisford (eds.), Handbook on
International Trade Policy (Edward Elgar, Cheltenham, 2007), at p. 273 ("[t]he prior-market-share rule,
although imperfect, has been deemed practical and legitimate. An obvious problem with the prior-market-share
rule is that things change: suppliers can gain or lose comparative advantage. Ideally, one would reallocate
quota shares to reflect such changes. But this proves difficult to negotiate, suppliers who face an erosion of
their quota shares tend to be adamantly opposed to any change. As a result, historical allocation is infrequently
revised"); A. Sykes, The WTO Agreement on Safeguards: A Commentary (Oxford University Press, 2006),
pp. 223-224 ("[t]o be sure, in dynamic industries where market shares change significantly and quickly, an
allocation of shares on historical information may be quite imperfect, but a workable alternative may be
difficult to devise"). At the second meeting of the Panel, the European Union posed the rhetorical question of
how it was possible "that all scholars that ever wrote about Article XIII have never seen this yearly updating
obligation?" (EU's opening statement at the second meeting of the Panel, para. 40)
666 See EU's first written submission, para. 291; Exhibit CHN-40
667 To find otherwise would mean that the European Union breached its obligation under Article XIII:4 to
enter into consultations, not on the grounds that it refused to enter into consultations, but on the grounds that
it entered those consultations without acknowledging that it was legally required to do so, and without
acknowledging that the consultations were being conducted, legally speaking, pursuant to Article XIII:4.

We note that in assessing whether China has discharged its burden, we are confined to the facts
that the parties have provided to us.
7.486. Third, we consider that consultations must be meaningful, and cannot be "mere
formalities".668 As indicated by the International Court of Justice in the North Sea Continental Shelf
cases, State parties to international negotiations "are under an obligation so to conduct
themselves that the negotiations are meaningful, which will not be the case when either of them
insist upon its own position without contemplating any modification to it ".669 While Article XIII:4
speaks of consultations, rather than negotiations, the principle that discussions between states be
meaningful also applies to consultations.
7.487. There is no disagreement between the parties that a meeting was held between them on
19 May 2014, subsequent to China's request for consultations under Article XIII:4 on 19 December
2013. In its panel request and first written submission, Ch ina even characterizes this meeting as
"consultations held on 19 May 2014 ".670 China claims, however, that the European Union refused
to enter into "meaningful consultations ", because the European Union denied during those
consultations that Article XIII:4 a pplied to the determination of the TRQs on the poultry products
at issue in this dispute, 671 and "failed to reappraise the quota allocation to account for the SPS
measures."672 According to China, its "right to consultation under Article XIII:4 was effectively
denied".673
7.488. The European Union responds however that China did not duly justify its claim of being a
Member with a substantial interest when it lodged its request. 674 It submits that China 's 19
December 2013 request was "formulated in very general terms"675, and did not provide any import
figures to justify its request nor did it indicate on which yearly period its request was based.
7.489. We recall that China's request for consultations under Article XIII:4 stated that:
China has a substantial supplying interest i n several of the tariff lines concerned, as
evidenced by the statistics of imports of the European Union from China in the most
recent years prior to the adopting of the new tariff regime. However, the new tariff
regime, particularly the discriminatory all ocation of tariff quotas contained therein,
seriously prejudiced China's export interest. Indeed, in the eight months starting from
March 1, 2013, imports from China under the tariff lines concerned declined by more
than 50% in value, compared with the same period in 2012.676
7.490. The letter also referred to China 's previous requests to enter into negotiations or
consultations under Article XXVIII, dated 9 May 2012 and 2 October 2012, and to the European
Union's notification of the conclusion of the Article XXVIII negotiations for the Second Modification
Package.
7.491. We note that China 's request to enter into consultations under Article XIII:4 does not
contain any reference to the specific tariff lines upon which its request is based. The Note Verbale
refers to Council Regulation (EC) No. 1218/2012, through which a new tariff regime on the tariff

668 See Lac Lanoux Arbitration (Spain v. France), (1957) 12 R.I.A.A. 281, 315 at para. 22; 24 I.L.R.
101, 139 at para. 22.
669 North Sea Continental Shelf (Federal Republic of Germany v. Denmark; Federal Republic of Germany
v. Netherlands), Judgment, I.C.J. Reports 1969, at para. 85.
670 The panel request includes, as the relevant measure, the "[r]efusal by the European Union in
consultations held on 19 May 2014 under Article XIII of the GATT 1994 to adjust the TRQs on the basis of
recent import statistics establishing China's substantial supplying interests as had been requested by letter of
Ambassador Yu of 19 December 2013" (China's request for the establishment of a panel, Section I.B item(v),
p. 3). The claim under Article XIII:4 likewise refers to "The EU's refusal in consultations with China on 19 May
2014 to consider an adjustment of the allocation of the TRQs based on a change in the base period or a
reappraisal of the special factors involved is inconsistent with GATT 1994 Article XIII:4" (China's request for
the establishment of a panel, Section II.B item (viii)). At paragraph 256 of its first written submission, China
states that the European Union "denied during consultations in May 2014 that Article XIII applied".
671 China's first written submission, paras. 253-257.
672 China's second written submission, para. 194.
673 China's first written submission, para. 256.
674 EU's response to Panel question No. 123, para. 121.
675 EU's response to Panel question No. 123, para. 124.
676 Exhibit CHN-39.

items concerned had been adopted , suggesting that the request for consultations may have been
in respect of a ll of the tariff lines concerned by Council Regulation (EC) No. 12 18/2012; however,
the Note Verbal e refers to China's substantial supplying interest in "several of the tariff lines
concerned", implying that in others it did not have a substantial supplying interest. It appears from
the submissions of the European Union that it was not until the meeting of 19 May 2014 that China
indicated that its request was more precisely based on its belief that it held a substantial supplying
interest in products classified in tariff lines 1602 39 29 and 1602 39 85. 677 This has been
recognized by China in these proceedings. 678 We also note that China 's request does not indicate
the issues on which China was seeking to consult upon under Article XIII:4. China simply referred
to the provisions of Article XIII:4 requiring a Member imposing a TRQ to consult upon request with
a Member holding a substantial interest regarding the need for an adjustment of the TRQ shares,
the selection of a base period and the consideration of special factors. It did not state on which of
these grounds, specifical ly, it sought to consult with the European Union. Again, it appears from
the record that it was not until the 19 May 2014 meeting that China informed the European Union
that it was seeking the readjustment of the TRQ shares of tariff lines 1602 39 29 and 1 602 39 85
on the basis of a different reference period, taken into account the existence of the SPS measures
as special factors.679 Furthermore, China's request for consultations under Article XIII:4 referred to
its multiple earlier requests to be recognized as a substantial supplier in the different context of
the negotiations under Article XXVIII, and those requests had been based on several different
grounds. In response to a question by the Panel, China has indicated that it did provide the
European Union with the trade data showing that it had, at least for tariff lines 1602 39 29 and
1602 39 80, a substantial supplying interest.680
7.492. We are sympathetic to China's argument that there is no specific guidance in Article XIII:4
on how a Member should make its r equest for consultations under that provision , and we do not
consider that there is any particular "specificity" requirement that can be read into
Article XIII:4.681 However, we note that China has consistently taken an "all inclusive" approach
with respect to its claims of interest in supplying the products covered by the First and Second
Modification Packages, in the sense of alleging a substantial or principal supplying interest in all of
the tariff lines at issue, without distinguishing between the differ ent products at issue, and the
different levels of importation into the European Union from China in respect of those products .
China's reference in its letter dated 19 December 2013 to its requests for negotiations or
consultations under Article XXVIII is illustrative in this regard. To recall, on 9 May 2012, China
requested to enter into negotiations with the European Union, under Article XXVIII, on the basis
that it was a Member with a principal supplying interest "with respect to relevant tariff lines ".682
China also provided statistics on imports into the European Union from China of products classified
under four tariff lines (1602 20 10, 1602 39 29, 1602 39 40 and 1602 39 80) for the years 2009,
2010 and 2011. On 2 October 2012, China reiterated its req uest to enter into consultations with
respect to "relevant tariff lines of poultry products " as notified by the European Union, and
contested the use of the 2006 -2008 reference period. 683 In these proceedings, China has
confirmed that it claimed a substantia l supplying interest under Article XXVIII "for all of the tariff
lines covered by the First Modification Package"684 and it claimed a "principal supplying interest
with regard to the relevant tariff lines mentioned in the EU 's notification of its intention t o
withdraw concessions" under the Second Modification Package .685 With respect to its request for
consultations under Article XIII:4, China has confirmed that it was claiming a substantial supplying
interest "for all of the tariff lines covered by the Second Modification Package ".686 These
statements by China highlight that China has consistently adopted an "all inclusive" approach to its
claims of interests in the products covered by both the First and the Second Modification Package.
China's general approach to extend its claims of interests to all the products covered by the

677 EU's first written submission, para 292; EU's response to Panel question No. 47(a), para. 140. See
also the EU's response to Panel question No. 123, para. 126.
678 China's comment on the EU's response to Panel question No. 123, para. 74.
679 EU's response to Panel question No. 47(a), para. 140. See also the EU's second written submission,
para. 179.
680 China's response to Panel question No. 128, para. 123.
681 China's comment on the EU's response to Panel question No. 123, para. 73.
682 Letter from China to the EU requesting to enter into negotiations under Article XXVIII (9 May 2012)
(Exhibit CHN-50).
683 Letter from China to the EU (2 October 2012) (Exhibit CHN-30). See also China's opening statement
at the first meeting of the Panel, para. 37.
684 China's response to Panel question No. 17(b), para. 101, referring to Exhibit CHN-16.
685 China's response to Panel question No. 17(b), para. 102, referring to Exhibit CHN-29.
686 China's response to Panel question No. 17 (b), para. 103.

modification packages further confirms that China 's request to consult under Article XIII:4, based
on its substantial supplying interest in "several of the lines concerned ", was lacking i n specificity
regarding which tariff lines and special factors were concerned, and on which grounds.
7.493. In addition, we note that there is disagreement between the parties as to the events that
took place after the 19 May 2014 meeting. The European Union has indicated that it invited China
to provide it with more information, including the trade figures upon which it based its claims, but
that China did not follow -up.687 China has indicated that the European Union did not seek
clarification or question China 's claim of substantial supplying interest for the purpose of
Article XIII:4, "either at or after the meeting ".688 China has also informed us that it again sought
to consult with the European Union regarding the need for a readjustment of the TRQ shares in
September 2015, after the beginning of the current proceedings.689 The European Union has for its
part indicated that the Article XIII:4 consultations between the parties could be considered as still
ongoing.690 China responds that the European Union agreed to "continue consultation in form, not
in substance".691
7.494. We have concluded that China held a substantial supplying interest in tariff lines 1602 39
29 and 1602 39 85 at the time of its request under Article XIII:4. However, having considered the
limited information that has been provided to the Panel regarding the issues touched upon at the
May 2014 meeting, and the limited information provided to the Panel regarding further exchanges
between the parties following that meeting, we consider that there are insuffici ent agreed facts
concerning the conduct of the consultations to determine whether the European Union acted
inconsistently with Article XIII:4. Accordingly, recalling that China has the burden of proof, we
conclude that China has failed to discharge its bur den of demonstrating that the European Union
refused to consider the need for an adjustment of the proportion determined or of the base period
selected, or for the reappraisal of the special factors involved.
7.10.4 Conclusion
7.495. Based on the foregoing, we find tha t China has failed to demonstrate that the European
Union violated Article XIII:4 by refusing to enter into meaningful consultations with China.
7.11 Claims under Article II:1 of the GATT 1994
7.11.1 Introduction
7.496. China claims that the European Union 's application of the higher out -of-quota tariff rates
arising from the First and Second Modification Packages is in violation of Article II:1 of the
GATT 1994 because those rates exceed the bound rates currently inscribed in the EU Schedule of
concessions.692 We understand C hina to argue that because the changes have not yet been
incorporated into the EU Schedule through the certification procedure, they have no legal effect to
replace the existing bound duties. In China 's view, therefore, the absence of certification means
that the bound rates that existed in the EU Schedule prior to the completion of the Article XXVIII
negotiations remain unchanged, and that the European Union's application of the higher out -of-
quota tariff rates violates Article II:1.
7.497. The European Union su bmits that its application of the higher out -of-quota rates does not
violate Article II:1. 693 We understand the European Union to argue that there is no violation of

687 EU's first written submission, para. 293; EU's second written submission, para. 179; EU's comment
on China's response to Panel question No. 128, para. 81.
688 China's comment on the EU's response to Panel question No. 125, para. 78.
689 China's second written submission, para. 195.
690 EU's opening statement at the second meeting of the Panel, para. 105, EU's comments on China's
response to Panel question No. 128, para. 80 and EU's response to Panel question No. 47, para. 139.
691 China's response to Panel question No. 128, para. 123.
692 China's arguments regarding its claim under Article II and related points are found in China's first
written submission, paras. 260-270; China's opening statement at the first meeting of the Panel, paras. 113-
118; China's responses to Panel question Nos. 50, 55-57; China's second written submission, paras. 197-201;
parties' responses, and comments on one another's responses, to Panel question Nos. 94-105.
693 The European Union's arguments regarding the claim under Article II and related points are found in
EU's first written submission, paras. 298-302; EU's responses to Panel question Nos. 51-54, 56-57; EU's

Article II:1 because, contrary to what China argues, the certification of the changes to its Schedule
is not a legal prerequisite for giving effect to the modifications agreed in Article XXVIII
negotiations.
7.11.2 Factual background
7.498. The in-quota tariff rate for each of the TRQs at issue in this dispute is the same or lower
than the bound rate currently inscribed in the EU Schedule for the tariff line in question. However,
it is not in dispute that the out -of-quota rates that the European Union currently applies to the
poultry products at issue resulting from its Article XXVIII negotiations are in exces s of the bound
rates currently inscribed in its Schedule.694
7.499. As regards the First and Second Modification Packages, we recall that, at the time of this
Report, the bound rates inscribed in its Schedule (the prior tariff rate) and the rates that the
European Union currently applies (the new out-of-quota tariff) are as follows695:
First Modification Package
Tariff item number Prior tariff rate New in-quota tariff rate New out-of-quota tariff
rate
0210 99 39 15.4% 15.4% 1,300 EUR/MT
1602 31 8.5% 8.5% 1,024 EUR/MT
1602 32 19 10.9% 8.0% 1,024 EUR/MT

Second Modification Package
Tariff item number Prior tariff rate New in-quota tariff rate New out-of-quota tariff
rate
1602 32 11 867 EUR/MT 630 EUR/MT 2,765 EUR/MT
1602 32 30 10.9% 10.9% 2,765 EUR/MT
1602 32 90 10.9% 10.9% 2,765 EUR/MT
1602 39 21 867 EUR/MT 630 EUR/MT 2,765 EUR/MT
1602 39 29 10.9% 10.9% 2,765 EUR/MT
1602 39 40 10.9% 10.9% 2,765 EUR/MT
1602 39 80 10.9% 10.9% 2,765 EUR/MT

7.500. As regards both the First and Second Modification Packages, the chang es that the
European Union, Thailand and Brazil agreed upon in the negotiations under Article XXVIII:5 have
been notified to all Members, but those changes have not yet been incorporated into the EU
Schedule by means of certification.
7.501. The European Union h as submitted for certification the changes to its Schedule resulting
from the Article XXVIII:5 negotiations relating to the First Modification Package, but at the time of
the Report the draft Schedule has not yet been certified. Specifically, on 24 March 2 014, the
European Union communicated for certification a re vised Schedule which contained
"consolidations, modifications and rectifications in this Schedule, in relation to the previous
certified CXL schedule of the EU " (Schedule CXL – EC15).696 The draft Sc hedule of the European
Union (Schedule CLXXIII – EU25), was circulated to the WTO Membership on 25 April 2014, in

second written submission, paras. 184-188; parties' responses, and comments on one another's responses, to
Panel question Nos. 94-105.
694 See EU's response to Panel question No. 51, para. 151, p. 44; China's second written submission,
para. 8.
695 See the import statistics in section 7.2.4 above.
696 G/MA/TAR/RS/357, 25 April 2014, page 1.

document G/MA/TAR/RS/357. 697 The European Union confirmed in these proceedings that the
results of the Article XXVIII negotiations under the Fir st Modification Package are included in this
draft Schedule 698, and that the certification process of the changes to the draft Schedule
communicated on 24 March 2014 was still ongoing.699
7.502. At the time of this Report, t he European Union has not yet submitted fo r certification the
changes to its Schedule resulting from the Article XXVIII:5 negotiations relating to the Second
Modification Package. The European Union explained that as the Second Modification Package was
concluded in 2012, after the enlargement of t he European Union to 27 member States, it was
considered "more appropriate to submit for certification the changes included in that package as
part of the draft schedule EU27" which will be submitted "as soon as the draft EU25 draft schedule
is certified".700
7.503. Furthermore, we recall that although China does not contest that the changes that the
European Union, Thailand and Brazil agreed upon in the negotiations under Article XXVIII:5 have
been notified to all Members in accordance with paragraph 6 of the Procedures for Negotiations
under Article XXVIII, the European Union confirms that it did not notify all Members of the date on
which the changes agreed in the negotiations under Article XXVIII:5 entered into force as referred
to in the second sentence of para graph 7 of those same procedures. Specifically, the European
Union indicated that although it had informed all of the Members with a principal or substantial
supplying interest, "[t]he date [of] entry into force of those changes has not been notified " under
paragraph 7 of the Procedures for Negotiations under Article XXVIII.701
7.11.3 Paragraph 1 of the Procedures for Modification and Rectification of Schedules
and paragraph 7 of the Procedures for Negotiations under Article XXVIII
7.504. The Procedures for Modification an d Rectification of Schedules and the Procedures for
Negotiations under Article XXVIII set forth a number of requirements that Members are expected
to follow when they seek to modify or withdraw concessions pursuant to Article XXVIII. In the light
of the im portance of the certification procedures and the objective of ensuring that the authentic
texts of Schedules annexed to the General Agreement are up to date and properly reflect the legal
rights and obligations of Members, it is important to recall at the outset that several issues fall
outside of the scope of the Panel's terms of reference in the present case.
7.505. Paragraph 1 of the Procedures for Modification and Rectification of Schedules confirms that
"[c]hanges in the authentic texts of Schedules annexed to the General Agreement which reflect
modifications resulting from action under … Article XXVIII shall be certified by means of
Certifications", and requires that a "draft of such change shall be communicated to the Director -
General within three months after the action has been completed".702 As regards both the First and
Second Modification Packages, the European Union accepts that the "action was completed " no
later than the time that it notified Members of the conclusion of the negotiations pursuant to
paragraph 6 of the Procedures for Negotiations under Article XXVIII.703
7.506. Paragraph 7 of the Procedures for Negotiations under Article XXVIII provides that Members
will be free to give effect to the changes agreed upon in negotiations under Article XXVIII:5 as
from the date on which the conclusion of all the negotiations have been notified, but then requires
that a "notification shall be submitted … of the date on which these changes will come into force ".
This requirement, set forth in the second sentence of pa ragraph 7, is linked to the requirement,

697 An addendum (G/MA/TAR/RS/357/Add.1) was circulated on 1 September 2016, and a corrigendum
to the addendum was circulated on 19 September 2016. In light of this addendum, the three-month period of
review is currently ongoing.
698 EU's response to Panel question No. 54, para. 158.
699 EU's first written submission, para. 299. See also the EU's response to Panel question No. 52,
para. 153.
700 EU's response to Panel question No. 54(c), para 159.
701 EU's response to Panel question No. 97.
702 Emphasis added.
703 EU's response to Panel question No. 52, para. 152. The European Union states that "[i]n the case at
hand, the relevant 'action' is the conclusion of modification agreements with Brazil and Thailand, as required by
Article XXVIII. As explained in the EU's first written submission (para. 302), such action has been completed
and notified to the WTO in accordance with paragraph 6 of the Procedures for negotiations under
Article XXVIII."

set forth in the chapeau of the Ad Note to Article XXVIII, that Members "shall be informed
immediately of all changes in national tariffs resulting from recourse to this Article ".704 These
requirements both support the objectives of transparency, security and predictability.
7.507. We recall that, in this case, China has stated that "[t]he Panel is not required nor
requested to make a finding that the EU acted inconsistently with paragraph 7 and
paragraph 1".705 We have found that insofar as China is making any claims of inconsistency with
these procedural requirements, such claims have not been made in a sufficiently clear and timely
manner, and are therefore not properly before the Panel. 706 Accordingly, our analysis of China 's
claims under Article II:1 of the GATT 1994 is confined to the issues that fall within the scope of the
Panel's terms of reference. This does not mean or imply that the European Union is in any way
absolved or exempted from complying with the requirements set forth in the Procedures for
Modification and Rectification of Schedules and the Procedures for Negotiations under
Article XXVIII.
7.11.4 Analysis by the Panel
7.508. The issue raised by China 's claim is whether the European Union has acted inconsistently
with Article II:1 by applying the higher out -of-quota tariff rates agreed with Brazil and Thailand in
the Article XXVIII:5 negotiations prior to the changes being incorporated into its Schedule through
the applicable certification procedure. To resolve this issue, the Panel must determine whether
certification is a legal prerequisite that must be completed before a Member modifying its
concessions can proceed to implement the changes agreed upon in Article XXVIII negotiations at
the national level, without violating Article II of the GATT 1994.
7.509. China's claims and the arguments of the parties concern the meaning of and relationship
between various provisions of the GATT 1994, the Procedures for Negotiations under
Article XXVIII, and the Procedures for Modification and Rectification of Schedules. We will begin
our analysis by examining the issue raised in the light of the relevant provisions of the GATT 1994,
and we will then proceed to consider the provisions found in the two sets of Procedures.
7.510. Article II is entitled "Schedules of Concessions". Article II:7 provides that "[t]he Schedules
annexed to this Agreement are hereby made an integral part of Part I of this Agreement ".
Article II:1 sets forth the following obligations:
(a) Each Member shall accord to the commer ce of the other Members treatment no
less favourable than that provided for in the appropriate Part of the appropriate
Schedule annexed to this Agreement.
(b) The products described in Part I of the Schedule relating to any Member, which
are the products of territories of other Members, shall, on their importation into the
territory to which the Schedule relates, and subject to the terms, conditions or
qualifications set forth in that Schedule, be exempt from ordinary customs duties in
excess of those set forth and provided therein.
7.511. Article II is one of the key provisions of the GATT 1994, and of the entire WTO legal
system. The importance of Schedules of concessions, as sources of predictable and enforceable
legal obligations, has been recognized by numer ous panels and by the Appellate Body. Among
other things, it has been recognized that "a basic object and purpose of the GATT 1994, as
reflected in Article II, is to preserve the value of tariff concessions negotiated by a Member with its
trading partners, and bound in that Member's Schedule".707
7.512. On the other hand, one of the specific objects and purposes of Article XXVIII is to allow
Members to make tariff concessions by providing them with flexibility to withdraw or modify those
concessions subsequently, if necessary, in accordance with the procedures provided for therein. In
this way, the right to modify or withdraw concessions supports the overarching object and
purpose, which finds reflection in the preambles of both the GATT 1994 and the WTO Agreement,

704 Emphasis added.
705 China's response to Panel question No. 99, para. 74.
706 See section 7.3.3.1.
707 Appellate Body Report, Argentina – Textiles and Apparel, para. 47.

of Members "entering into reciprocal and mutually advantageous arrangements directed to the
substantial reduction of tariffs and other barriers to trade".
7.513. Article II of the WTO Agreement stipulates that "[t]he agreements and associated legal
instruments included in Annexes 1, 2 and 3 (hereinafter referred to as "Multilateral Trade
Agreements") are integral parts of this Agreement, binding on all Members. " The general rule for
amending provisions of the covered agreements is set forth in Article X of the W TO Agreement,
entitled "Amendments". Article X:2 provides that amendments to certain provisions shall "take
effect only upon acceptance by all Members "; Article X:3 provides that amendments to other
provisions "shall take effect for the Members that have a ccepted them upon acceptance by two
third of the Members "; and Article X:4 states that amendments "of a nature that would not alter
the rights and obligations of Members " shall "take effect for all Members upon acceptance by two
thirds of the Members".
7.514. However, in EC – Bananas III (Article 21.5 – Ecuador II) / EC – Bananas III (Article 21.5 –
US), the Appellate Body confirmed that the modification of Schedules "does not require formal
amendment" pursuant to Article X of the WTO Agreement, and is not subjec t to the "formal
acceptance process" provided for in Article X:7 of the WTO Agreement. The Appellate Body set
forth its understanding of the relationship between Article X of the WTO Agreement and
Article XXVIII of the GATT 1994 as follows:
Article X of th e WTO Agreement sets out rules and procedures to amend the
provisions in the Multilateral Trade Agreements. Article X specifies the process and
quorum required to amend particular provisions or covered agreements.
Amendments, unlike waivers, are not limit ed in time and create new or modify
existing rights and obligations for WTO Members. Special rules on acceptance and
entry into force apply, depending on the provisions that are being amended and on
whether the amendment "would alter the rights and obligat ions of the Members ".
Amendments to the WTO Agreement and to a Multilateral Trade Agreement in Annex 1
enter into force following a formal acceptance process pursuant to Article X:7.
The modification of Schedules of Concessions, which are an integral part of the GATT
1994, does not require a formal amendment pursuant to Article X of the WTO
Agreement, but is enacted through a special procedure set out in Article XXVIII of the
GATT 1994 or through multilateral rounds of tariff negotiations. Pursuant to
Article XXVIII, a Member may modify or withdraw a concession annexed to the GATT
1994 by negotiation and agreement with other Members that are "primarily
concerned", and in consultation with Members that have a substantial interest in the
concession. Article XXVIII:2 provides that, in an agreement on the renegotiation of a
concession, which may include compensatory adjustment, WTO Members "shall
endeavour to maintain a general level of reciprocal and mutually advantageous
concessions not less favourable to trade than that provided for in this Agreement prior
to such negotiations ". If an agreement cannot be reached, the modifying Member is
free to modify or withdraw the concession, while other Members that are primarily
concerned or have a substantial interest in the concession are free to withdraw
substantially equivalent concessions initially negotiated with the modifying Member.708
7.515. Thus, the Appellate Body explained that Article XXVIII is a "special procedure " through
which the "modification" of a Schedule "is enacted". China has suggested that "[c]onsistent with
the principle set forth in Article 40 of the Vienna Convention on the Law of Treaties, unless the
treaty otherwise provides, amendments to a multilateral treaty can only occur with the
participation o f all contracting States ".709 We observe however that Article 40 of the Vienna
Convention is, by its own terms, a default rule that applies "[u]nless the treaty otherwise
provides".710 In stating that Article XXVIII is a "special procedure " through which the
"modification" of a Schedule "is enacted", the Appellate Body has recognized that Article XXVIII is
a sui generis procedure.

708 Appellate Body Reports, EC – Bananas III (Art. 21.5 – Ecuador II) / EC – Bananas III (Art. 21.5 –
US), paras. 384-385.
709 China's response to Panel question No. 50, footnote 70.
710 Article 40(1) of the Vienna Convention states that "[u]nless the treaty otherwise provides, the
amendment of multilateral treaties shall be governed by the following paragraphs."

7.516. Article XXVIII is entitled "Modification of Schedules". Paragraph 1 provides that on the first
day of every 3-year period a Member may seek to modify or withdraw a concession included in the
appropriate Schedule annexed to the Agreement through negotiation with those Members with
initial negotiating rights and a principal supplying interest, and in consultation with those Members
with a substantial supplying interest. Paragraph 3 of Article XXVIII addresses the situations in
which agreement cannot be reached with the Members engaged in the negotiations, or where the
agreement reached is not satisfactory to Members with a substantial su pplying interest. In the
case of reserved negotiations under paragraph 5, a Member may reserve "the right … to modify
the appropriate Schedule " in accordance with the procedures of paragraphs 1 to 3. Paragraph 5
states that if a Member so elects, other Me mbers with initial negotiating rights or the requisite
supplying interest "shall have the right ", during the same period, "to modify or withdraw ", in
accordance with the same procedures, concessions initially negotiated with that Member.
7.517. Paragraph 3(a) o f Article XXVIII provides that where agreement with the Members
concerned cannot be reached, the Member proposing to modify or withdraw the concession "shall,
nevertheless, be free to do so ". Paragraph 3(a) then stipulates that if such action is taken, the
Members concerned shall then be free "not later than six months after such action is taken, to
withdraw, upon the expiration of thirty days from the day on which written notice of such
withdrawal is received by the Members, substantially equivalent conces sions initially negotiated
with the applicant Member ". Article XXVIII:3(b) further provides that if agreement with Members
concerned is reached, but the agreement reached is not satisfactory to Members having a
substantial supplying interest, those Members "shall be free, not later than six months after the
action under such agreement is taken, to withdraw, up the expiration of thirty days from the day
on which written notice of such withdrawal is received by the Members, substantially equivalent
concessions initially negotiated with the applicant Member".
7.518. China considers that the prior incorporation of such changes into the Schedule through
certification is a legal prerequisite for giving effect to the changes in the context of
Article XXVIII:3.711 We have difficulty reconciling such an interpretation with the ordinary meaning
of this provision . The specification of a timeframe for the modification or withdrawal of
concessions, by reference to the point in time when "such action is taken " by the applicant
Member or when "action under such agreement is taken ", implies that this may be undertaken
prior to the changes being introduced into the Schedule through the certification process.
Article XXVIII:3 addresses situations in which agreement cannot be reached wi th the Members
engaged in the negotiations, or where the agreement reached is not satisfactory to Members with
a substantial supplying interest. Insofar as the terms of Article XXVIII:3 imply that Members
concerned are "free" to withdraw or modify concessi ons prior to certification of the changes to the
Schedule in those situations, then we consider that such a right must exist a fortiori where, as in
the present case, the modification has been agreed by the Members holding initial negotiating
rights, a principal supplying interest, and a substantial supplying interest.712
7.519. The Procedures for Modification and Rectification of Schedules, which we examine in
greater detail below, provide that changes in the authentic texts of Schedules annexed to the
General Agreement "which reflect modifications resulting from action under Article II, Article XVIII,
Article XXIV, Article XXVII or Article XXVIII " shall be certified by means of certifications. The
Articles specified in paragraph 1 of the Procedures all provide for actions that may be taken to
modify concessions, which are then submitted for certification under the Procedures. Articles XVIII,
XXIV and XXVII each use a similar phrase to that used in paragraph 3 of Article XXVIII, namely
that the Member concerned "shall be free to modify or withdraw " the concession, and affected
Members that do not agree to the modification of concession "shall be free to withdraw
substantially equivalent concessions ".713 These provisions specify the conditions, including the

711 China's response to Panel question No. 103(a).
712 We recall our earlier finding, in the context of examining China's claims under Article XXVIII:1 of the
GATT 1994, that China has failed to demonstrate that it held a principal or substantial supplying interest in the
concessions at issue in the First and Second Modification Packages.
713 Article XVIII relates to Governmental Assistance to Economic Development. Section A: paragraph 7
provides that countries with a low standard of economic development may, in order to promote the
establishment of a particular industry, negotiate with those Members with initial negotiating rights or
substantial supply interest. If agreement is reached "they shall be free to modify or withdraw concessions
under the appropriate Schedules to this Agreement in order to give effect to such agreement". Even if
agreement is not reached, in certain circumstances the Member "shall be free to modify or withdraw the
concession" or "shall be free to proceed with such modification or withdrawal". Paragraph 6 of Article XXIV

timeframes, when the Members concerned "shall be free to modify or withdraw" the concession. In
our view, the argument that prior incorporation of such changes into the Schedule through
certification is a legal prerequisite for giving effect to the changes in the context of Article XXVIII:3
is also difficult to reconcile with the terms of these other provisions of the GATT 1994.
7.520. Continuing with our examination of the text of the GATT 1994, we note that the chapeau
of the Ad Note to Article XXVIII states that negotiat ions to modify or withdraw concessions under
Article XXVIII should be conducted "with the greatest possible secrecy in order to avoid premature
disclosure of details of prospective changes ", and then states that Members "shall be informed
immediately of al l changes in national tariffs resulting from recourse to this Article ".714 Thus, the
chapeau distinguishes the "prospective changes " that are the subject of negotiations from the
subsequent "changes in national tariffs resulting from " those negotiations. By distinguishing the
"prospective changes " from the "changes in national tariffs resulting from " Article XXVIII, and
requiring that Members be informed immediately of the latter, the wording of the chapeau implies
that Members may be informed of those change s in national tariffs after they have already been
made.715
7.521. Thus, our review of the foregoing provisions of the GATT 1994 reinforces the Appellate
Body's statement that Article XXVIII is a special procedure through which the "modification" of a
Schedule "is enacted".716 We now turn to t he Procedures for Negotiations under Article XXVIII,
which set forth the procedural arrangements to be followed when a Member seeks to modify or
withdraw a concession in its Schedule. As explained earlier in our Report, we agre e with the
parties and third parties expressing a view on the matter that these procedures qualify, at a
minimum, as "decisions", "procedures" or "customary practices " within the meaning of
Article XVI:1 of the WTO Agreement.717
7.522. These Procedures provide in relevant part as follows:
6. Upon completion of all the negotiations the contracting party referred to in
paragraph 1 above should send to the secretariat, for distribution in a secret
document, a final report on the lines of the model in Annex C attached hereto.
7. Contracting parties will be free to give effect to the changes agreed upon in the
negotiations as from the first day of the period referred to in Article XXVIII:1, or, in
the case of negotiations under paragraph 4 or 5 of Article XXVIII, as from the date on
which the conclusion of all the negotiations have been notified as set out in paragraph

provides that in the establishment of a customs union or free trade area, where a Member proposes to increase
any rate of duty inconsistently with the provisions of Article II, "the procedure set forth in Article XXVIII shall
apply". Paragraph 5 of the Understanding on the Interpretation of Article XXIV of the General Agreement on
Tariffs and Trade 1994 elaborates on the procedures in paragraph 6 of Article XXIV. It includes the following:
"[w]here, despite such efforts, agreement in negotiations on compensatory adjustment under Article XXVIII of
GATT 1994 cannot be reached within a reasonable period from the initiation of negotiations, the customs union
shall, nevertheless, be free to modify or withdraw the concessions; affected Members shall then be free to
withdraw substantially equivalent concessions in accordance with Article XXVIII". Article XXVII, which deals
with countries which do not or cease to become WTO Members provides: "[a]ny Member shall at any time be
free to withhold or to withdraw in whole or in part any concession, provided for in the appropriate Schedule
annexed to this Agreement, in respect of which such Member determines that it was initially negotiated with a
government which has not become, or has ceased to be, a Member."
714 Emphasis added. We note that this Ad Note appears to be the basis for the requirement, in
paragraph 6 of the Procedures for Negotiations under Article XXVIII, that the Member concerned notify the
Secretariat of the completion of negotiations. As discussed further below, the text of paragraph 7 of those
Procedures for Negotiations under Article XXVIII provides that the Member shall be free to give effect to the
changes agreed from the date that the conclusion of negotiations has been notified pursuant to paragraph 6.
715 Furthermore, we note that Paragraph 1 of the Procedures for Modification and Rectification of
Schedules provides that the draft of the Schedule containing the changes resulting from Article XXVIII
negotiations shall be communicated by the Director-General to all Members. Insofar as the "changes in
national tariffs" correspond to the "changes resulting from Article XXVIII negotiations", then those changes in
national tariffs would have already been previously communicated to all Members in the course of the
certification procedure. Thus, if certification were a legal prerequisite for giving effect to the changes agreed in
Article XXVIII negotiations, then it is not clear why the chapeau of the Ad Note would require that all Members
be "informed" immediately of "all changes in national tariffs resulting from" recourse to Article XXVIII.
716 Appellate Body Reports, EC – Bananas III (Art. 21.5 – Ecuador II) / EC – Bananas III (Art. 21.5 –
US), para. 385.
717 See paragraphs 7.22 to 7.27.

6 above. A notification shall be submitted to the secretariat, for circulation to
contracting parties, of the date on which these changes will come into force.
8. Formal effect will be given to the changes in the schedules by means of
Certifications in accordance with the Decision of the CONTRACTING PARTIES of 26
March 1980. (emphasis added)
7.523. The current Procedures for Negotiations under Article XXVIII were adopted in 1980.
However, paragraphs 7 and 8 of those procedures are based on similar provisions in the
arrangements for Article XXVIII negotiations that had been followed since the 1950s. In the 1957
"Arrangements for Negotiations under Article XXVIII in 1957" (L/635), GATT Contracting Parties
agreed on the arrangements for the first three -year period referred to in the text of
Article XXVIII:1, which would begin 1 January 1958. The arrangements contained in L/635
subsequently served as a guideline for the procedural arrangements for all subsequent
negotiations under Article XXVIII for the next twenty years. 718 Paragraphs 7 and 8 of the 1980
Procedures for Negotiations under Article XXVIII are based on paragraphs 12 and 14 of L/635,
which provided that:
12. Contracting parties will be free to give effect to the changes agreed upon in the
negotiations as from 1 January 1958.

13. Contracting parties should notify the Executive Secretary of the date on which
they give effect to the agreed schedules, and compe nsatory concessions should be
made effective not later than that date.

14. Formal effect will be given to the changes in the schedules by a protocol of
rectifications and modifications. (emphasis added)

7.524. Paragraph 7 of the Procedures for Negotiations u nder Article XXVIII states that the
Member "will be free to give effect to the changes" agreed in Article XXVIII:5 negotiations "as from
the date on which the conclusion of all the negotiations ha ve been notified ". We consider that
there might well have be en reasons for the GATT Contracting Parties to have followed a different
approach, and drafted paragraph 7 so as to instead authorize Contracting Parties to be "free to
give effect to the changes agreed upon in the negotiations " only as from the date on wh ich the
changes have been introduced into the authentic text of the Schedule through certification (or
alternatively, only as from the date that the draft of such changes had been communicated to the
Director-General for certification in accordance with paragraph 1 of the Procedures for Modification
and Rectification of Schedules, or only from the date that the notification of the date when these
changes will come into force was made in accordance with the second sentence of paragraph 7 of
the Procedures for Negotiations under Article XXVIII). However, had the GATT Contracting Parties
intended to make certification of these other actions the legal prerequisite for a Contracting Party
being free to give effect to the changes agreed in Article XXVIII negotiati ons, we would expect
paragraph 7 of the Procedures for Negotiations under Article XXVIII to use different words to that
effect.
7.525. China has not attempted to argue that the phrase "as from the date on which the
conclusion of all the negotiations have been no tified" is capable of being understood in more than
one way. Rather, China focuses on the terms "free to give effect to the changes", and submits that
these terms must be interpreted to allow only "the adoption by the WTO Member of the national
legal provisions providing for the tariff rate quotas but not the actual implementation of these tariff
rate quotas until certification has occurred".719
7.526. We are unable to agree with China 's restrictive interpretation of the terms "free to give
effect to the changes ". China's interpretation of these terms, as we understand it, is that they
serve the limited purpose of allowing a Member to begin to put in place domestic legal provisions

718 The introductory note to the 1980 Procedures for Negotiations under Article XXVIII explained that
"[o]n 31 May 1957 the Executive Secretary in compliance with instructions given to him by the CONTRACTING
PARTIES (L/641, BISD 6S/158), issued a note concerning arrangements for negotiations under Article XXVIII in
1957 (document L/635). This note has served as a guideline for the procedural arrangements for all
subsequent negotiations under Article XXVIII."
719 China's response to Panel's Question No 50, para. 197-198.

or processes to eventually give effect to the changes agreed, but that Member could n ot actually
"give effect to " or "implement" the changes agreed (nor could a Member "give effect to " or
"implement" the domestic legal provisions being put in place). In our view, such a reading is at
odds with the ordinary meaning of the terms "free to give effect to the changes".
7.527. This reading is also at odds with the wording of paragraph 7 in the French and Spanish
versions of the Procedures. These provide, respectively, that "[i]l sera loisible aux parties
contractantes de mettre en vigueur les modificat ions agréées au cours des négociations ", and
"[l]as partes contratantes podrán poner en vigor las modificaciones acordadas en las
negociaciones". Furthermore, we consider that a WTO Member does not need to be 'allowed' by
the WTO to begin to put in place d omestic legal provisions or processes if they are not actually
implemented. Therefore, in addition to being at odds with the ordinary meaning of the terms used
in paragraph 7, China's restrictive interpretation of the terms "free to give effect" would appear to
render paragraph 7 legally redundant and inutile.
7.528. Of course, we must read all of the relevant provisions of the Procedures in a way that gives
meaning to all of them, harmoniously, rather than taking any one provision in isolation. 720 Thus,
we must r ead paragraph 7 in a manner that gives full weight to paragraph 8 of the same
Procedures, which provides that "[f]ormal effect will be given to the changes in the schedules by
means of Certifications in accordance with the Decision of the CONTRACTING PARTIES of 26 March
1980".721 The need for a harmonious interpretation of paragraphs 7 and 8 is compelled by the fact
that these provisions appear side -by-side in the same set of Procedures. In addition, the
Procedures for Modification and Rectification of Sched ules referenced in paragraph 8 and the
Procedures for Negotiations under Article XXVIII were adopted only a few months apart in 1980. It
is well established that "in public international law there is a presumption against conflict ", and
that "this presumption is especially relevant " in respect of instruments that "were negotiated at
the same time, by the same Members and in the same forum".722
7.529. Paragraph 8 refers to "formal effect " being given to the changes in a Schedule. The
ordinary meaning of the term "formal" includes "[o]f or pertaining to the form or constitutive
essence of a thing; essential ", "[o]f, pertaining to, or in accordance with recognized rules or
conventions…", "[m]ade in proper form, complete; veritable, unmistakable ", "[h]aving a definite
principle; regular, methodical", "[w]ell formed, regular, shapely", and "[v]alid or correctly so called
in virtue of its form; explicit and definite, not merely tacit or accepted as equivalent ".723 Thus, the
ordinary meaning does not in any way suggest a dimi nutive reading of the concept of "formal
effect", or of paragraph 8, or of certification more generally.
7.530. However, we do not consider that interpreting paragraph 7 in accordance with its ordinary
meaning conflicts with the fact, reflected in paragraph 8, t hat "formal effect " is given to the
changes "in the schedules" by means of certification. Rather, it appears to us that, if anything, the
interpretation of paragraph 7 arising from the ordinary meaning of its terms is reinforced by the
ordinary meaning of the terms of paragraph 8. By its terms, the subject -matter of paragraph 7 is
the point in time at which a Member is "free to give effect to the changes agreed upon " (i.e. "as
from the date that the conclusion of all the negotiations have been notified "). By its terms, the
subject-matter of paragraph 8 is something different, namely, the point in time when "formal
effect" will be given to the changes "in the schedules " (i.e. "by means of Certifications "). The
terms of paragraphs 7 and 8, and the very fact th at these two provisions are juxtaposed side -by-
side in the same set of Procedures, makes clear that each provision is addressing a different issue.
Thus, when read together, these provisions make clear that the question of when and under what
conditions a Member is "free to give effect to the changes agreed " in Article XXVIII negotiations is
different from the question of when and under what conditions "formal effect" will be given to the
changes "in the schedules ". If paragraph 8 served as the answer to bo th questions, then there
would be no need for paragraph 7 (and vice versa). The reference to "formal effect" in paragraph 8
further reinforces that the subject -matter of this provision concerns "changes in the Schedules ",
and that this is different from th e point in time that a Member is "free to give effect to the
changes".

720 Appellate Body Report, Korea – Dairy, para. 81.
721 Emphasis added.
723 Shorter Oxford English Dictionary, 5th ed, W.R. Trumble, A. Stevenson (eds.) (Oxford University
Press, 2002), Vol. 1, p. 1014.

7.531. We further note that paragraph 10 of the Procedures for Negotiations under Article XXVIII
states that "[t]hese procedures are in relevant parts also valid for renegotiations under
Article XVIII, paragraph 7, and Article XXIV, paragraph 6 ". Article XVIII:7 and the Understanding
on Article XXIV also provide, in terms similar to Article XXVIII:3, that the relevant Member is "free
to modify or withdraw " concessions. Paragraph 7 of the Proc edures for Negotiations would also
therefore be applicable to these negotiations, and is consistent with the language of those
provisions. It follows that the language of paragraph 3 of Article XXVIII, which provides that a
Member is "free to modify or withdraw" concessions (the same procedures which apply to reserved
negotiations under paragraph 5 of Article XXVIII), is consistent with the language in paragraphs 7
and 8 of the Procedures for Negotiations. This further suggests that certification is not a l egal
prerequisite for implementing the results of negotiations under Article XXVIII.
7.532. We note that the wording of paragraph 7 of the Procedures for Negotiations under
Article XXVIII is significantly different from the wording used in the context of the proc edures that
apply to the modification of Schedules annexed to the GATS. Paragraph 6 of the Procedures for the
Implementation of Article XXI, adopted by the Council for Trade in Services in 1999, states:
A modifying Member which has reached agreement with a ll Members that had
identified themselves under paragraph 3 above shall, no later than fifteen days after
the conclusion of the negotiations, send to the Secretariat a final report on
negotiations under Article XXI, which will be distributed to all Members in a secret
document. After completing the certification procedure under paragraphs 20 to 22,
such a modifying Member will be free to implement the changes agreed upon in the
negotiations and specified in the report, and it shall notify the date of implem entation
to the Secretariat, for circulation to the Members of the WTO. Such changes shall not
exceed the modification or withdrawal initially notified and shall include any
compensatory adjustment agreed upon in the negotiations.724 (emphasis added)
7.533. There is more than one possible explanation as to why this difference exists in the case of
services. It might be that Members considered that the drafting of paragraphs 7 and 8 of the
Procedures for Negotiations under Article XXVIII should be changed in the ligh t of the importance
of certification in the WTO legal system, and desired not to replicate the same approach, in the
services context. It might be that Members considered that a different approach was warranted in
the context of services as a consequence o f the different subject -matter and the differences
between the rules governing the modification of Schedules in Article XXI of the GATS, as compared
with those found in Article XXVIII of the GATT 1994. Whatever the reason, the wording of
paragraph 6 of the Procedures for the Implementation of Article XXI of the GATS stands in stark
contrast to the wording used in paragraphs 7 and 8 of the Procedures for Negotiations under
Article XXVIII of the GATT. The wording of paragraph 6 is that the Member modifying it s
concessions "will be free to implement the changes agreed upon " in the negotiations "[a]fter
completing the certification procedure ", whereas the wording of paragraph 7 is that the Member
"will be free to give effect to the changes agreed upon in the neg otiations … as from the date on
which the conclusion of all the negotiations have been notified " with paragraph 8 addressing the
separate question of when the formal effect is given to the changes "in the schedules".
7.534. China argues that allowing a Member to give effect to changes agreed in Article XXVIII
negotiations prior to those changes being introduced in its Schedule through certification would
reduce to inutility the certification procedures which, as China emphasizes, are mandatory in
nature.725 China states that such an interpretation would entail the consequence that "the process
of certification is meaningless and is reduced to no more than paper "726, and "would run contrary
to the object and purpose of all the WTO rules regarding certification, which i s to allow the entire
Membership to acquiesce in modifications to Schedules "727 and to "review and accept the
modifications that a WTO member proposes to make".728

724 Procedures for the Implementation of Article XXI of the General Agreement on Trade in Services,
adopted by the Council for Trade in Services on 19 July 1999, WTO doc. S/L/80, para. 6.
725 China's first written submission, paras. 262-263.
726 China's opening statement at the first meeting of the Panel, para. 116.
727 China's response to Panel question No. 50, para. 198.
728 China's response to Panel question No. 56, para. 200.

7.535. The 1980 Procedures for Modification and Rectification of Schedules, which supersede the
certification procedures originally adopted in 1968, set forth the procedures through which
rectifications and modifications to a Member 's Schedule are certified. As noted earlier in our
Report, we agree with the parties and third parties expressing a view on th e matter that these
procedures qualify, at a minimum, as "decisions", "procedures" or "customary practices" within the
meaning of Article XVI:1 of the WTO Agreement.729
7.536. In our view, a finding that Members are free to give effect to modifications to their
concessions in certain situations prior to those changes being given formal effect in its Schedule,
including in the situation where the changes have been agreed in Article XXVIII negotiations and
notified to all other Members, would not imply that "the process of certification is meaningless". As
we have already noted, the ordinary meaning of the terms "formal effect" does not in any way
suggest a diminutive reading of the concept of certification. Furthermore, we do not doubt that
there are other situations where the introduction of changes into the text of a Schedule is a legal
prerequisite for effecting any change in Members ' substantive rights and obligations. For example,
a proposed rectification to correct an alleged error in a Schedule would have no le gal effect until
such time as the text of the Schedule is changed through certification. 730 Likewise, an agreement
among Members to reduce tariffs may not be legally enforceable in WTO dispute settlement until
such time as the change has been introduced into the text of the Schedule through certification.731
In our view, however, t he legal consequence of certification varies in different situations, and
therefore must be analysed in relation to the particular situation at hand. In the present case, the
issue is whether certification is a legal prerequisite that must be completed before a Member
modifying its concessions can proceed to give effect to the changes agreed upon in negotiations
under Article XXVIII of the GATT 1994. With this in mind, we proceed to ex amine whether the
Procedures for Modification and Rectification of Schedules shed light on that issue, beginning with
the text of the Procedures.
7.537. We note that the preamble to the Procedures for Modification and Rectification of
Schedules emphasizes "the importance of keeping the authentic texts of Schedules annexed to the
General Agreement up to date and of ensuring that they tally with the texts of corresponding items
in national customs tariffs ". The preamble further states that, as a consequence, "changes in the
authentic texts of Schedules which record … modifications resulting from action taken under
Article XXVIII shall be certified without delay ". Paragraph 1 of the Procedures establishes that
"[c]hanges in the authentic texts of Schedules annexed to the General Agreement which reflect
modifications resulting from action under … Article XXVIII shall be certified by means of
Certifications", and requires that a "draft of such change shall be communicated to the Director -
General within three months aft er the action has been completed ". Paragraph 3 of the Procedures
establishes that the draft will then be communicated by the Director -General to all Members, and
become a Certification "provided that no objection has been raised by a contracting party with in
three months on the ground that, in the case of changes described in paragraph 1, the draft does
not correctly reflect the modifications ". Paragraph 4 of the Procedures provides that whenever
practicable, certifications "shall record the date of entry into force of each modification".
7.538. Thus, the Procedures generally speak to the question of how changes in the authentic texts
of Schedules are to be made. We understand the Procedures to clarify that certification is the legal
prerequisite for altering the authentic text of a Schedule annexed to the General Agreement.
However, the question before the Panel is not whether certification is a legal prerequisite for
introducing changes into the text of a Schedule in the context of Article XXVIII negotiations.
Rather, the question before the Panel is whether, a Member is free to give effect to the changes

729 See paragraphs 7.22 to 7.27.
730 See e.g. Panel Report, Russia – Tariff Treatment, para. 7.54 ("In responses to questions from the
Panel, Russia acknowledged that when its proposed rectification was circulated in document G/MA/TAR/RS/406
in accordance with its request, both the European Union and Japan objected to Russia's proposed rectification.
No further action was taken with respect to Russia's Schedule. In particular, no certification was circulated by
the Director-General. As indicated, Russia is not challenging the European Union's objection in the context of
the present proceedings and has not questioned Japan's objection. Thus, for the purposes of our task in this
dispute, Russia's Schedule remains unaltered.")
731 See e.g. Panel Report, EC – IT Products, paras. 7.18 ("In accordance with paragraph 2 of the ITA
Annex and the Decision of 26 March 1980 on Procedures for Modification and Rectification of Schedules of Tariff
Concessions (the "1980 Procedures"), each ITA participant submitted a proposed modification to its own
Schedule for review by all WTO Members. Each participant's schedule was certified following a three-month
review period for that particular schedule.") (footnotes omitted)

agreed in Article XXVIII negotiations prior to the changes having been introduced into the
authentic text of its Schedule. Our examination of the relevant provi sions of the GATT 1994 and
the Procedures for Negotiations under Article XXVIII supports the conclusion that the two
questions are distinct from one another. In our view, and as elaborated below, there are several
elements in the text of the Procedures for Modification and Rectification of Schedules, including the
preamble and paragraphs 1, 3, and 4 thereof, that also suggest that certification is not a legal
prerequisite for implementing the changes resulting from Article XXVIII negotiations.
7.539. The preamble of the Procedures states that the objective of certification is to keep the
authentic texts of the Schedules "up to date " and to ensure "that they tally with the texts of
corresponding items in national customs tariffs", and that, in consequence, to ensure that changes
in the authentic texts of Schedules to "record" modifications are certified without delay. We
consider that if a Member were not free to implement tariff changes agreed in Article XXVIII
negotiations (or any other specified articles of the GATT 1994, including Article XVIII, Article XXIV,
and Article XXVII) prior to introducing the changes into the authentic text of its Schedule through
certification, then it would arguably be unnecessary to ensure that the authentic text of the
Schedules are "kept up to date " and "tally with" the texts of the corresponding items in national
customs tariffs. Insofar as modifications are concerned, the latter could never diverge from the
former without violating Article II:1 of the GATT. In other words, if cert ification were a legal
prerequisite before a Member could implement changes resulting from Article XXVIII negotiations
at the national level, it would follow that Schedules would always be up to date and tally with the
texts of corresponding items in national customs tariffs.
7.540. Furthermore, we note that paragraph 1 of the Procedures refers to "[c]hanges in the
authentic texts of Schedules" being certified to "reflect" modifications "resulting from action under"
Article XXVIII (and the other articles of the GATT 1994 specified therein). However, if certification
were a legal prerequisite for being able to give effect to those modifications, then it would follow
that the introduction of the changes to the authentic texts of Schedules through certification wou ld
be the action that would "give effect to", and not "reflect", any modifications resulting from action
under Article XXVIII. In addition, the wording of paragraph 1 makes clear that certification reflects
"modifications resulting from action " that "has been completed" prior to certification, and this is
reinforced by the French and Spanish versions of paragraph 1, which respectively state that "[l]es
moment où l es mesures auront été mises en place ", and "[s]e enviará al Director General un
proyecto de dichos cambios dentro de los tres meses siguientes al momento en que hayan
quedado adoptadas las medidas ".732 This too seems to presuppose that changes resulting from
Article XXVIII negotiations may be implemented prior to certification.
7.541. We also find it significant that paragraph 3 of the Procedures for Modification and
Rectification of Schedules provides that, in the case of changes which reflect modifications
resulting from action under Article XXVIII (and also modifications resulting from the other specified
Articles of the GATT 1994), Members may object to a certification only "on the ground that … the
draft does not correctly reflect the modifications ". The fact t hat objections are confined to the
ground that "the draft does not correctly reflect the modifications " has at least two important
implications. The first, as pointed out by the European Union, is that the certification process does
not confer a "veto" right733 upon those Members which did not participate in the negotiations and
who may not be satisfied with the compensation agreed, or upon those Members which did
participate in the negotiations but failed to reach an agreement. The second implication is that the
absence of an objection on the part of another Member cannot be construed as a Member
"acquiescing" or "accepting" that the changes introduced into the authentic text of the Member 's
Schedule are consistent with the Member 's obligations under the GATT . In the light of the
foregoing, we are not persuaded by China 's argument that the "object and purpose " of the
certification procedure is to ensure that all Members have the opportunity to "acquiesce in" and
"review and accept the modifications that a WTO member proposes to make " in the context of
Article XXVIII negotiations.734

732 Emphasis added.
733 EU's second written submission, para. 186.
734 In response to a question from the Panel, China submits that it agrees that the grounds for raising
an objection in the context of certification are limited to the situation where the changes "do not correctly
reflect the modifications" agreed under Article XXVIII, but then China adds that "[i]n addition, for WTO

7.542. Continuing with our review of the text of the Procedures, we also find it significant that
paragraph 4 provides that "[w]herever practicable Certifications shall record the date of en try into
force of each modification and the effective date of each rectification". In our view, the significance
of paragraph 4 lies in the fact that it clarifies that the "entry into force" of a modification is distinct
from the point in time when the cor responding change in the authentic text of the Schedule is
certified. We further note that the French and Spanish versions of paragraph 4 respectively refer
to the "la date d'entrée en vigueur" and "la fecha de entrada en vigor", which recall the terms used
in the French and Spanish versions of paragraph 7 of the Procedures for Negotiations under
Article XXVIII ("de mettre en vigueur" and "poner en vigor").
7.543. In addition to these elements of the text of the Procedures for Modification and
Rectification, we consider that the history of those certification procedures sheds light on the issue
before us. Shortly after its adoption, the GATT 1947 and the annexed Schedules had been subject
to several amendments by the Contracting Parties. 735 In the early years of the GATT, attempts to
amend Schedules of concessions were carried out by means of "Protocols", providing that the
rectifications or modifications contained therein would "become an integral part of the General
Agreement on the day on which this Protocol has been signed by all the Governments which are on
that day contracting parties to the General Agreement. "736 A series of "Protocols of Rectifications
and Modifications" were circulated in the 1950s. 737 The Protocols were collections of rectifications
and modifica tions, and intended to amend the Schedules of concessions to reflect those
rectifications and modifications, including modifications arising from negotiations under
Article XXVIII. The preamble to most of the protocols that were circulated stated that thei r aim
was:
[T]o make certain modifications in the authentic text of certain Schedules to the
General Agreement, which reflect modifications of concessions which have already
been made effective in accordance with established procedures under the General
Agreement.738 (emphasis added)
7.544. This means that the GATT Contracting Parties considered that the modifications had
"already been made effective " by operation of the relevant provision of the General Agreement,
and that the purpose of modifying the text of the Schedule was to reflect those modifications.739

Members that did not participate in the negotiations or consultations of the changes, it is the only opportunity
to review and accept the modifications that a WTO Member proposes to make through changes to this
Member's Schedule" (China's response to Panel question No. 56, para. 200).
735 Due to their provisional nature, tariff commitments made in the 1947 Geneva negotiations had an
initial validity of three years. Consequently, the original drafting of GATT Article XXVIII contained no provision
for the modification or withdrawal of these commitments before 1 January 1951. Contracting Parties initially
extended the validity of these Schedules through "Declarations on the Continued Application of Schedules".
During the Torquay Tariff Conference of 1950 the negotiations for new concessions took place in parallel with
some renegotiations. The Review Session of the GATT that took place subsequently disposed of the need to
extend the validity of the Schedules periodically. It also proposed amendments to several Articles of the GATT
(including Article XXVIII) and proposed the incorporation of a new Article XXVIIIbis entitled "Tariff
negotiations". These amendments were formally adopted through the Protocol Amending the Preamble and
Parts II and III of the General Agreement of 10 March 1955, which entered into force on 7 October 1957.
736 GATT Analytical Index: Guide to GATT Law and Practice, p. 1005.
737 There were in all five protocols of rectifications, one protocol of modifications, and nine protocols of
rectifications and modifications.
738 See Fourth Protocol (7 March 1955); Fifth Protocol (3 December 1955); Sixth Protocol (11 April
1957); Seventh Protocol (30 November 1957); Eighth Protocol (18 February 1959); Ninth Protocol (17 August
1959).
739 See J.S. Stanford, "Treaty Amendment: the Problem of the GATT Tariff Schedules" (1969) The
Canadian Yearbook of Internal Law 1969, at 263-264:
The first and most obvious fact that the conduct of the parties discloses is that the right of the
parties to take internal action to modify their national tariffs following action taken pursuant to
one of the modification articles of the General Agreement does not depend upon the entry into
force of the protocols. If it did, the protocols could not refer to modifications "which have already
been made effective." Both the language of the protocols and the conduct of the contracting
parties make it clear that the entry into force of the protocols is not the measure which affects
the rights and obligations of the contracting parties under Article II:1. What then is the function
of the protocols? […] With respect to modifications they set out changes to be made to the
authentic text of the Schedules to reflect modifications which have already been made legally
effective in accordance with procedures established by the General Agreement. Both of these

7.545. On 29 August 1968, the Director -General circulated a draft decision establishing new
procedures for modifications and rectifications to Schedules (L/3062). The introduction to the new
draft procedures set forth the following understanding:
Several provisions of the GATT - contained in Articles II, XVIII, XXIV, XXVII and
XXVIII - permit action by contracting parties, in certain circumstances and subject to
specified procedures and conditions, to modify concessions in their schedules. The
modifications are legally valid upon the completion of the action and the contracting
parties are informed of the results of each action. But there remains the formality of
making the changes, in appropriate form, in the authentic texts of the schedules. It is
proposed that this be done by means of certifications issued by the Director -General
after all contracting parties have had an opportunity to examine the text.740 (emphasis
added)
7.546. Thus, it was understood that "[t]he modifications are legally valid upon the completion of
the action and the contracting parties are informed of the results of each action " with respect to
modifications under Article XXVIII (and also under Articles II, XVIII, XXIV, and XXVII). As we
noted earlier, Arti cles XVIII, XXIV and XXVII use a similar phrase to that used in paragraph 3 of
Article XXVIII, namely that the Member concerned "shall be free to modify or withdraw " the
concession, and affected Members that do not agree to the modification of concession "shall be
free to withdraw substantially equivalent concessions ". It was understood that certification relates
not to the legal validity of the modifications, which occurs "upon completion of the action" and the
GATT Contracting Parties being informed there of, but rather to "the formality of making the
changes, in appropriate form, in the authentic texts of the schedules".
7.547. The Procedures for Modification and Rectification of Schedules were adopted by the Council
on 19 November 1968.741 Similar to the language used in the earlier Protocols, paragraph 1 of the
1968 Procedures provided that changes in the authentic texts of the Schedules to "reflect
modifications which have entered into force in accordance with the provisions of paragraph 6 of
Article II, Article XVIII, Article XXIV, Article XXVII or Article XXVIII, shall be certified by means of
Certification."742 As we noted earlier in connection with the Protocols pre -dating the certification
procedures, if certification were a legal prerequisite for a Member bei ng free to give effect to
changes agreed in Article XXVIII negotiations, then it would not have been possible for those
modifications to "have entered into force " prior to certification. Thus, the wording of paragraph 1
of the 1968 Procedures suggests that GATT Contracting Parties adopted those Procedures on the
understanding that they could give effect to the agreed changes pursuant to Article XXVIII
negotiations prior to their incorporation into the Schedules of concessions through certification.743
7.548. On 26 March 1980, the revised Procedures for Modifications and Rectification of Schedules
were approved by the Council.744 The 1980 Procedures are similar to the 1968 Procedures in many
respects. However, one difference is that, in paragraph 1, the reference to cha nges to the
Schedules being made to reflect modifications "which have entered into force " in accordance with
Article XXVIII (and the other specified articles of the GATT) was replaced with a reference to

functions are textual and non-substantive. It is clear that the sole object of the protocols of
rectifications and modifications is to assure that the authentic texts of the Schedules constitute
an accurate and up-to-date reflection of the tariff obligations of the contracting parties as these
have been established in accordance with the terms of the General Agreement. […] once the
requirements of the appropriate article of the General Agreement have been fulfilled, the
modifying contracting party is then free to take internal action, if it wishes, to alter its national
tariff, and its Schedule no longer accurately represents its tariff obligations to all the other
contracting parties. Withholding of signature by a contracting party cannot alter this situation. Its
sole effect is to prevent the authentic text of the Schedule from accurately reflecting the duly
established legal rights and obligations of the modifying party, with the result that the "authentic
text" is out-of-date.
740 L/3062.
741 L/3131.
742 L/3131, paragraph 1. (emphasis added)
743 L/3062, pages 1-2. J.S. Stanford, "Treaty Amendment: the Problem of the GATT Tariff Schedules"
(1969) The Canadian Yearbook of Internal Law 1969, at 267 (stating, with regard the 1968 Procedures for
Modification and Rectification of Schedules, that "[t]he wording of the decision clearly establishes that the
certification relates only to effecting textual changes and does not relate to the actual implementation of
modifications in accordance with the General Agreement").
744 C/M/139 page 6. The Decision was circulated in L/4962.

changes to Schedules being made to reflect modificat ions "resulting from action " under the
respective provision.745 We are not aware of the reason for this change, but we do not see that it
signals that the Contracting Parties were seeking to effect a substantive change in the existing
procedures, so as to ma ke certification a legal prerequisite for giving effect to changes agreed in
Article XXVIII negotiations. Among other things, in the same year the revised Procedures for
Negotiations under Article XXVIII were adopted, with no substantive change to the prov ision
expressly authorizing that Contracting Parties "will be free to give effect to changes " agreed upon
in Article XXVIII negotiations "as from the first date of the period referred to in Article XXVIII:1 "
or, in the case of negotiations under Article XX VIII:4 or XXVIII:5, "as from the date on which the
conclusion of all the negotiations have been notified" as set out in accordance with paragraph 6.746
7.549. It appears to the Panel that there is no subsequent practice in the application of
Article XXVIII establi shing the agreement of Members on whether certification is a legal
prerequisite that must be completed before a Member modifying its concessions can proceed to
apply the changes agreed upon in Article XXVIII negotiations. China submits that "there is no
practice among Members whereby certification is not required for a modification reached under
Article XXVIII negotiations to enter into force and to take formal legal effect ", and notes that
"though there are instances where a modification entered into force before a certification was
officially issued ", "Members do submit requests for a certification prior to the planned
implementation date, and leave time for the certification process ".747 The European Union submits
that "[t]he certification of changes to a M ember's schedule is often delayed, sometimes for very
long periods of time, due to the unjustified reservations made by some Members", and that "[a]s a
result, the changes agreed in accordance with Article XXVIII are sometimes implemented many
months, or e ven years, prior to the certification of such changes ".748 The parties have provided
examples of cases in which certification occurred after the entry into force of changes resulting
from Article XXVIII negotiations, and where certification occurred before s uch changes were made
effective.749 The absence of agreement among Members on whether certification is a legal
prerequisite that must be completed before a Member modifying its concessions can proceed to

745 There appear to be three other differences between the 1980 Procedures and the 1968 Procedures:
(i) two paragraphs were added on the importance of "keeping the authentic texts of Schedules annexed to the
General Agreement up to date" and that "changes in the authentic texts of Schedules shall be certified without
delay"; (ii) also in paragraph 1, the time-bound submission of changes, which "shall be communicated to the
Director-General within three months after the action has been completed", was added for the first time; and
(iii) in paragraph 3, the time-limit for review and objection was changed to three months as compared to sixty
days under the 1968 procedures.
746 A 1978 "Explanatory Note" by the Secretariat explained that the new paragraphs 7 and 8 of the
Procedures for Negotiations under Article XXVIII were not meant to introduce any substantive change to the
corresponding provisions in L/635:
7. Paragraph 7 of document L/4651/Rev.1 corresponds to paragraph 12 of document L/635.
Since the old text was related to the particular situation in 1957, the new text has been made
more general. The essence of the text of paragraph 13 of document L/635 has also been
included in this paragraph.
8. Paragraph 8 of document L/4651/Rev.1 takes account of the modifications that have been
agreed upon as regards the legal instruments in question but has otherwise the same content as
paragraph 14 of document L/635. (Procedures for Negotiations under Article XXVIII, Explanatory
Note by the Secretariat, 13 September 1978, C/W/306.)
Furthermore, A. Hoda states the following with respect to the 1980 Procedures for Modification and
Rectification of Schedules:
An important aspect of the decision on the procedures for certification has to be highlighted here.
As in the case of protocols to which the list of modifications and rectifications was attached, the
certifications do not have any effect on the entry into force of the proposed modification or
rectification. The idea is to formally incorporate in the schedules of Members modifications and
rectifications which, in most cases, have already entered into force. In the case of modifications,
the procedures to bring about changes in the legal obligations of the Members have already to be
followed as a prerequisite for action to bring about changes in the authentic text. Thus, in the
case of renegotiations under Article XXVIII, for instance, the procedures for these renegotiations
should have already been complied with, before a request for modification of the schedule is
made. (emphasis added) (A. Hoda, Tariff negotiations and renegotiations under the GATT and
the WTO, Procedures and Practices (Cambridge University Press, 2001) pp. 115-116.)
747 China's response to Panel question No. 96, para. 70.
748 EU's response to Panel question No. 96, para. 55.
749 Parties' responses to Panel question No. 96.

apply the changes agreed upon in Article XXVIII negoti ations is also demonstrated by the diverse
views presented by the third parties in this case.750
7.550. We are well aware of the importance of certification in the context of the WTO legal
system. However, having carefully considered the existing provisions of the GATT 1994, the
Procedures for Negotiations under Article XXVIII, and the Procedures for Modification and
Rectification of Schedules, it does not appear to be the case that certification is a legal prerequisite
that must be completed before a Member modify ing its concessions can proceed to implement the
changes agreed upon in Article XXVIII negotiations at the national level.
7.11.5 Conclusion
7.551. In the present case, China has not suggested that the tariff rates applied by the European
Union exceed those agreed upon in the Article XXVIII negotiations with Brazil and Thailand. 751
Accordingly, having found that certification is not a legal prerequisite that must be completed
before a Member modifying its concessions can proceed to implement the changes agreed upon in
Article XXVIII negotiations at the national level, we are unable to uphold China 's claims that the
European Union violated Article II by giving effect to the modifications arising from the
Article XXVIII negotiations prior to the changes being reflected in the authentic text of its Schedule
through certification.
7.552. In arriving at this conclusion, we wish to stress that pursuant to Article 3.2 of the DSU, the
task of panels in the dispute settlement system of the WTO is "to preserve the rights and
obligations of M embers under the covered agreements, and to clarify the existing provisions of
those agreements in accordance with customary rules of interpretation of public international
law."752 As the Appellate Body has previously confirmed, determining what the applicable rules and
procedures ought to be is not "the responsibility of panels; it is clearly the responsibility solely of
the Members of the WTO".753
8 CONCLUSIONS AND RECOMMENDATION
8.1. For the reasons set forth in this Report, the Panel concludes as follows:
a. In respect of the Panel's terms of reference,
i. China's contention that the European Union acted inconsistently with the chapeau of
Article XIII:2 of the GATT 1994 by failing to set aside TRQ shares for "all others" at

750 See responses of Argentina, Brazil, Canada, Russia, Thailand and the United States to Panel question
No. 10 to third parties. Argentina states that "pursuant to Article II of the GATT and similar WTO provisions,
the lack of the fulfillment of the certification obligation could put into question the consistency of the change
introduced in the national custom tariff with a Member's Schedule of Concessions and, as a result, with its WTO
obligations". Russia agrees with China that "changes that were agreed upon in Article XXVIII negotiations and
include tariff rates in excess of a Member's bound rates cannot be implemented prior to certification" of the
modified schedule. Canada states that "[a]t the point where negotiations are concluded and the relevant period
(for negotiations under Article XXVIII:1) or notice (for negotiations conducted under Article XXVIII:4 or
Article XXVIII:5) has occurred, then the substantive changes to Schedules have been determined" and "[w]hat
remains is to formally incorporate the substantive changes into the Schedules through use of the 1980
Procedures". Thailand states that certification is "an administrative procedure that allows for the incorporation
of the new tariff concessions in the modifying Member's Schedule", and "is not a substantive requirement that
must be completed before a Member can implement the changes in its modified Schedule". Brazil states that
"[s]ince Schedules are an integral part to the covered Agreements, it is certainly useful that any changes to
them be certified accordingly", but then states that "[i]t seems, however, that GATT/WTO practice indicates
that the certification is not indispensable prior to the modification of the Schedule by the Member". The United
States indicates that the Member modifying concessions "may 'give effect to' such changes before they are
formally certified pursuant to paragraph 8 of the Procedures for Modification and Rectification of Schedules of
Tariff Concessions" (emphasis original); however, the United States then states that because "formal effect"
will only be given to those changes after the modified schedule is certified, then "so long as the modified
schedule remains uncertified, the prior, certified schedule would continue to constitute the formal legal basis
for the Member's rights and obligations under the WTO Agreements".
751 We recall that paragraph 7 of the Procedures for Negotiations under Article XXVIII provides that a
Member will be free to give effect to "the changes agreed upon" in the negotiations.
752 Appellate Body Report, US – Certain EC Products, para. 92. (emphasis original)
753 Appellate Body Report, US – Certain EC Products, para. 92.

levels that allow other WTO Members to achiev e a substantial supplying interest
going forward falls within the scope of the panel's terms of reference;
ii. China's contentions that the European Union acted inconsistently with the chapeau of
Article XIII:2 and Article XIII:4 of the GATT 1994 by failing to proactively disclose
the historical trade data, the representative period selected or the special factors
appraised are new claims that are outside the Panel's terms of reference;
iii. China's contentions that the European Union acted inconsistently with Arti cle XIII:1
and the chapeau of Article XIII:2 of the GATT 1994 by failing to annually update the
initial TRQ allocations constitute new claims that are outside the Panel 's terms of
reference;
iv. Insofar as China is claiming that the European Union acted incon sistently with
paragraph 7 of the Procedures for Negotiations under Article XXVIII or paragraph 1
of the Procedures for Modification and Rectification of Schedules, such claims are not
properly before the Panel;
v. Insofar as China is claiming that the Europ ean Union acted inconsistently with
Article II of the GATT 1994 by implementing the higher out -of-quota rates arising
from the First Modification Package over the period 2007 -2009, such claim is not
properly before the Panel;
b. China has not demonstrated tha t the European Union acted inconsistently with
Article XXVIII:1 of the GATT 1994 by not recognizing China as a Member holding a
principal or substantial supplying interest in the concessions at issue in the First and
Second Modification Packages;
c. China ha s not demonstrated that the tariff rates and the TRQs negotiated and
implemented by the European Union under the First and Second Modification Packages
are inconsistent with Article XXVIII:2 of the GATT 1994, read in conjunction with
paragraph 6 of the Und erstanding on the Interpretation of Article XXVIII of the GATT
1994, by failing to maintain a general level of reciprocal and mutually advantageous
concessions not less favourable to trade than that existing prior to the modification;
d. In respect of China's claims under Article XIII:2(d) of the GATT 1994,
i. China has not demonstrated that the European Union acted inconsistently with
Article XIII:2(d) by determining which countries had a substantial interest in
supplying the products concerned on the basis of their actual share of imports into
the European Union, rather than on the basis of an estimate of what import shares
would have been in the absence of the SPS measures restricting poultry imports
from China;
ii. China has demonstrated that the increase in imp orts from China over the period
2009-2011 following the relaxation of the SPS measures in July 2008 was a "special
factor" that had to be taken into account by the European Union when determining
which countries had a substantial interest in supplying the products concerned, and
the European Union acted inconsistently with Article XIII:2(d) by not recognizing
China as a Member holding a substantial interest in supplying the products under
tariff lines 1602 39 29 and 1602 39 80 754 and by failing to seek agreem ent with
China on the allocation of the TRQs for those particular tariff lines;
e. In respect of China's claims under the chapeau of Article XIII:2 of the GATT 1994,
i. China has not demonstrated that the European Union acted inconsistently with the
chapeau of Article XIII:2 by determining the TRQ shares allocated to "all others" on
the basis of actual share of imports into the European Union , rather than on the

754 Tariff line 1602 39 80 merged with tariff line 1602 39 40 into tariff line 1602 39 85, effective
1 January 2012.

basis of an estimate of what import shares would have been in the absence of the
SPS measures restricting poultry imports from China;
ii. China has demonstrated that the increase in imports from China over the period
2009-2011 following the relaxation of the SPS measures in July 2008 was a "special
factor" that had to be taken into account by the European Uni on when determining
the size of the TRQ shares to be allocated to "all other s", and that the European
Union acted inconsistently with the chapeau of Article XIII:2 by not allocating a
greater "all others" share under tariff lines 1602 39 29 and 1602 39 80755;
iii. China has failed to demonstrate that the European Union acted inconsistently with
the chapeau of Article XIII:2 by not allocating an "all others" share of at least 10%
for all of the TRQs under the First and Second Modification Packages;
f. China has not d emonstrated that the European Union acted inconsistently with
Article XIII:1 of the GATT by allocating all or the vast majority of the TRQs to Brazil and
Thailand;
g. China has not demonstrated that the European Union acted inconsistently with
Article I:1 of the GATT 1994 by allocating all or the vast majority of the TRQs to Brazil
and Thailand;
h. China has not demonstrated that the European Union acted inconsistently with
Article XIII:4 of the GATT 1994 by refusing to enter into meaningful consultations with
China; and
i. China has not demonstrated that the European Union acted inconsistently with
Article II:1 of the GATT 1994 by giving effect to the modifications resulting from the
Article XXVIII negotiations prior to the changes being reflected in the authentic text of
its Schedule through certification.
8.2. Under Article 3.8 of the DSU, in cases where there is an infringement of the obligations
assumed under a covered agreement, the action is considered prima facie to constitute a case of
nullification or impairmen t. We conclude that, to the extent that the measures at issue are
inconsistent with Article XIII:2(d) and the chapeau of Article XIII:2 of the GATT 1994, they have
nullified or impaired benefits accruing to China under the GATT 1994.
8.3. Pursuant to Article 19 .1 of the DSU, having found that the European Union has acted
inconsistently with its obligations under Article XIII:2(d) and the chapeau of Article XIII:2 of the
GATT 1994, the Panel recommends that the Dispute Settlement Body request that the European
Union bring its measures at issue into conformity with its obligations under the GATT 1994.