EUROPEAN COMMUNITIES – EXPORT SUBSIDIES ON SUGAR
Document: Notification of an Appeal by the European Communities under paragraph 4 of Article 16 of the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU)
Date: 13 January 2005
Document codes: WT/DS265/25; WT/DS266/25; WT/DS283/6
Complainant: Thailand
Respondent: EU
Third parties: Australia, Barbados, Belize, Brazil, Canada, China, Colombia, Cuba, Fiji, Guyana, India, Jamaica, Kenya, Madagascar, Malawi, Mauritius, New Zealand, Paraguay, Saint Kitts and Nevis, Eswatini, Tanzania, Trinidad and Tobago, U.S., Côte d’Ivoire
Dispute stage: Appellate Body
Agreements cited: Art. 3.3, 8, 9.1, 10.1  AgricultureArt. 3.1, 3.2  Subsidies and Countervailing Measures (SCM)

EUROPEAN COMMUNITIES – EXPORT SUBSIDIES ON SUGAR

Notification of an Appeal by the European Communities
under paragraph 4 of Article 16 of the Understanding on Rules
and Procedures Governing the Settlement of Disputes (DSU)

 The following notification, dated 13 January 2005, from the Permanent Delegation of the
European Commission, is being circulated to Members.

Pursuant to Article 16 of the Understanding on Rules and Procedu res Governing the Settlement of
Disputes ("DSU") and Rule 20 of the Working Pro cedures for Appellate review, the European
Communities ("EC") hereby notifies its decision to a ppeal to the Appellate Bo dy certain issues of
law covered in the reports of the Panel established in response to the requests from Australia, Brazil
and Thailand in the disputes (,
 and ).

The European Communities seeks review of:

 1) The conclusion, and the related legal findings and interpretations, contained in
paragraphs 7.12-7.16 and 7.24-7.37 of the Pa nel reports, that the alleged "payments"
in the form of sales of C beet were within the terms of reference of the Panel.

 2) The conclusion, and the related legal findi ngs and interpretations set out in paragraphs
7.120 to 7.222, 7.235 to 7.238 and 8.1(a), (b) and (c) of the Panel reports that
Footnote 1 to Section II, Part IV of the EC's Schedule has no legal effect and that, as a
consequence, the EC's quantity commitment level for exports of sugar is 1,273,500
tonnes and the EC's budgetary outlay commi tments is €499.1 million from marketing
year 2000/2001.

 This conclusion is based on the following erroneous findings:

- that Articles 3.3 and 8 of the Agreement on Agriculture require in all
circumstances that a Member specify both budgetary and quantity
commitments;

- that Footnote 1 to Section II, Part IV of the EC's Schedule is not a
commitment limiting subsidisation, and does not cover exports equivalent to
the volume of ACP/India sugar imported into the EC;

- that even if Footnote 1 to Section II, Part IV of the EC's Schedule is a
commitment limiting subsidisation it w ould remain inconsistent with the
Agreement on Agriculture; and
- that the jurisprudence of US – Sugar Headnote applies to export subsidy
commitments
 3) The conclusion, and the related lega l findings and interpretations, set out in
paragraphs 7.251-7335 and 8.1(f) of the Pane l reports, that exports of C sugar benefit
from export subsidies falling within Article 9.1(c) of the Agreement on Agriculture.

This conclusion is based on the following erroneous findings:

- that so-called "cross-subsidization" constitutes a payment on the exports of C
sugar, which provides an export subsidy within the meaning of Article 9.1(c);

- that the supply of C beet is a paymen t on the exports of C sugar financed by
virtue of Government action, which provides an export subsidy within the
meaning of Article 9.1(c).

 4) The overall conclusion, and the related le gal findings and interpretations set out in
paragraphs 7.336-7.340, 8.2 and 8.3 of the Pa nel reports, that the EC exported sugar
in excess of its commitment levels in marketing year 2000/2001 and, therefore, has
acted inconsistently with Articles 3.3 and 8 of the Agreement on Agriculture.

 This conclusion is based on the erroneous conclusions mentioned above under 1), 2)
and 3).

 5) The conclusion, and the related lega l findings and interpretations, set out in
paragraphs 7.61-7.75 and 7.348-7.354 of th e Panel reports, that, by claiming that
exports of C sugar were in excess of the EC's commitment levels the Complainants
did not act inconsistently with Article 3.10 DSU and the principle of good faith.

 6) The conclusion, and the related lega l findings and interpretations, set out in
paragraphs 7.366-7.374 and 8.4 of the Pane l Reports that the alleged violations
resulting from the exports of C sugar nullif y or impair benefits accrued to the
Complainants under the Agreement on Agriculture.

The provisions of the covered agreements which th e European Communities consider to have been
erroneously interpreted or applied by the Panel include:

• Section II, Part IV of the EC's Schedule;
• Articles 3.3, 8 and 9.1 of the Agreement on Agriculture;
• Articles 3.7, 3.8, 3.10, 6.2, 7.1, 7.2, 9.2, 11 and 12.7 of the DSU.