EUROPEAN COMMUNITIES – SELECTED CUSTOMS MATTERS
Document: Report of the Appellate Body
Date: 13 November 2006
Document codes: WT/DS315/AB/R
Complainant: U.S.
Respondent: EU
Third parties: Argentina, Australia, Brazil, China, Taiwan, Hong Kong, India, Japan, South Korea
Dispute stage: Appellate Body
Agreements cited: Art. X:3, X:1  GATT 1994

EUROPEAN COMMUNITIES – SELECTED CUSTOMS MATTERS

AB-2006-4

Report of the Appellate Body

APPELLATE BODY

United States, Appellant/Appellee
European Communities, Appellant/Appellee

Argentina, Third Participant
Australia, Third Participant
Brazil, Third Participant
China, Third Participant
Hong Kong, China, Third Participant
India, Third Participant
Japan, Third Participant
Korea, Third Participant
Separate Customs Territory of Taiwan, Penghu,
Kinmen, and Matsu, Third Participant
 AB-2006-4

 Present:

 Ganesan, Presiding Member
 Janow, Member
 Taniguchi, Member

I. Introduction
1. The United States and the European Communities ea ch appeal certain issues of law and legal
interpretations developed in the Panel Report, (the
"Panel Report").
1 The Panel was established to consider a complaint by the United States concerning
the European Communities' system of customs admini stration under Articles X:3(a) and X:3(b) of the
General Agreement on Tariffs and Trade 1994 (the "GATT 1994").
2. Before the Panel, the United States claimed th at the European Communities administers the
following instruments of its customs law in a non-unif orm manner, in violation of Article X:3(a) of
the GATT 1994:
• Council Regulation (EEC) No. 2913/92 of 12 October 1992 establishing the Community
Customs Code, including all annexes thereto, as amended (the "Community Customs Code");
• Commission Regulation (EEC) No. 2454/93 of 2 July 1993 laying down provisions for the
implementation of Council Regulation (EEC) No. 2913/92 of 12 October 1992 establishing
the Community Customs Code, including all annexes thereto, as amended (the "Implementing
Regulation");

1WT/DS315/R, 16 June 2006.

• Council Regulation (EEC) No. 2658/87 of 23 Ju ly 1987 on the tariff and statistical
nomenclature and on the Common Customs Tariff, including all annexes thereto, as amended
(the "Common Customs Tariff");
• the Integrated Tariff of the European Commun ities established by virtue of Article 2 of
Council Regulation (EEC) No. 2658/87 of 23 Ju ly 1987 on the tariff and statistical
nomenclature and on the Common Customs Tariff, including all annexes thereto, as amended
(the "TARIC"); and
• for each of the above laws and regulations, all amendments, "implementing measures and
other related measures".
2
3. The United States submitted that various instan ces of alleged non-uniform administration of
European Communities customs law illustrate that the European Communities' system of customs
administration as a whole is inconsistent with the requirement of uniform administration contained in
Article X:3(a) of the GATT 1994. In addition, the United States claime d that the European
Communities does not provide for the prompt review and correction of administrative action relating
to customs matters as required by Article X:3(b) of the GATT 1994.3
4. In the Panel Report, circulated to Members of the World Trade Organization (the "WTO") on
16 June 2006, the Panel concluded that its terms of reference aut horized it to consider only "the
manner of administration by the national customs au thorities of the member States of the Community
Customs Code, the Implementing Regulation, the Common Customs Tariff, the TARIC and related
measures in the areas of customs administration specifically identified in the United States' request for
establishment of a panel." 4 These areas of customs administration were "the classification and
valuation of goods, procedures for the classification and valuation of goods, procedures for the entry
and release of goods, procedures for auditing entr y statements after goods are released into free
circulation, penalties and procedures regarding th e imposition of penalties for violation of customs
rules and record-keeping requirements".5 The Panel held that it was "authorized to examine particular
cases or instances of administration of the Commun ity Customs Code, the Implementing Regulation,

2Request for the Establishment of a Panel by th e United States, WT/DS315/8, 14 January 2005
(attached as Annex III to this Report), p. 1; Panel Report, para. 2.1. These laws and regulations are contained in
Exhibits US-5, US-6, EC-16, and US-7, respectively, submitted by the United States and the European
Communities to the Panel.
3Panel Report, paras. 2.1 and 7.492.
4Ibid., para. 7.64.
5Ibid., para. 7.33.

the Common Customs Tariff and the TARIC and related measures in those areas of customs
administration specifically identified in the United States' request".6
5. The Panel found that it was "precluded from considering 'as such' challenges of the design
and structure of the [European Communities'] system of customs administration as a whole, and also
the design and structure of the [European Co mmunities'] system in the areas of customs
administration … specifically identified in the Un ited States' request for the establishment of a
panel."
7 However, at the conclusion of its analysis of the United States' claim under Article X:3(a) of
the GATT 1994, the Panel observed that, even if it were authorized by its term s of reference to make
findings on the design and structure of the European Communities' system of customs administration
"as such", the United States had not demonstrated that the design and structure of the European
Communities' system of customs administration, in cluding components thereof, necessarily results in
a violation of Article X:3(a). According to the Pane l, the United States merely referred to "a number
of apparently random instances of alleged violation of Article X:3(a) ..., without demonstrating ... that
those examples are symptomatic and representative of underlying structural deficiencies in the
[European Communities'] system of customs administration."
8
6. The Panel examined individual instances of alleged non-uniform administration of European
Communities' customs law in three different areas: customs classification , customs valuation , and
customs procedures .9 First, the Panel examined the Un ited States' claims alleging non-uniform
administration in the area of customs classification. The Panel found no violation of Article X:3(a) of
the GATT 1994 with respect to the tariff classifi cation of network cards for personal computers 10 and
no violation regarding the tariff classification of drip irrigation products.11 The Panel found, however,
that the administrative process leading to decisions on tariff classification of blackout drapery lining
by German customs authorities amounts to non-un iform administration and therefore constitutes a
violation of Article X:3(a) of the GATT 1994. 12 The Panel also found a violation of the same

6Panel Report, para. 7.64.
7Ibid.
8Ibid., para. 7.490.
9The Panel found that Article 221 of the Community Customs Code, which is entitled "Recovery of the
amount of the Customs Debt", was not covered by any of the areas of customs administration specifically
identified in the United States' request for the establis hment of a panel and therefore fell outside the Panel's
10Ibid., para. 7.207.
11Ibid., para. 7.218.
12Ibid., para. 7.276.

provision with respect to the tariff classification of liquid crystal display ("LCD") monitors with
digital video interface ("DVI").
13
7. The Panel also found that the United States had not proved any violation of Article X:3(a) of
the GATT 1994 with respect to: (i) the tariff classification of unisex articles or shorts 14; (ii) the
failure of customs authorities in one member State to treat Binding Tariff Information ("BTI") issued
in other member States as binding 15; (iii) the refusal to withdraw the revocation of BTI by the United
Kingdom's customs authorities with respect to the tariff classification of the Sony PlayStation2 in the
context of the Sony PlayStation2 case 16; or (iv) the interpretation and application of the amended
Explanatory Notes to the Common Customs Tariff concerning camcorders in the context of the
Camcorders case.17
8. Secondly, the Panel examined individual instan ces of customs administ ration in the area of
customs valuation . The Panel found that the administration of Article 147(1) of the Implementing
Regulation (the "successive sales provision") amounts to a violation of Article X:3(a), because some
member States impose a "form of prior a pproval" requirement while others do not.
18 The Panel found
no violation with respect to the administration of Article 29(3)(a) of the Community Customs Code
concerning vehicle repair costs covered under warranty. 19 The Panel found that the United States had
not proved that differences among member States regarding the manner in which royalties are
apportioned to the customs value of identical goods imported by the same company according to
Article 32(1)(c) of the Community Customs Code am ount to a violation of Article X:3(a) of the
GATT 1994.
20 The Panel also found that the United States had not proved that the administration of
Article 29 of the Community Customs Code and Article 143(1)(e) of the Implementing Regulation
concerning the circumstances in which parties are to be treated as "related" for customs valuation
purposes is non-uniform within the meaning of Article X:3(a) of the GATT 1994.21

13Panel Report, para. 7.305.
14Ibid., para. 7.228.
15Ibid., para. 7.329.
16Ibid., para. 7.343 (referring to Sony Computer Entertainment Europe Ltd. v. Commissioners of
Customs and Excise , Judgment of the High Court of Justice, Chancery Division (2005), EWHC 1644 (Ch)
(Exhibit US-70 submitted by the United States to the Panel)).
17Ibid., para. 7.354 (referring to Explanatory Notes to the Combined Nomenclature of the European
Communities, Official Journal of the European Communities (13 July 2000), 316 (Exhibit US-62 submitted by
the United States to the Panel)).
18Ibid., para. 7.385.
19Ibid., para. 7.403.
20Ibid., para. 7.371.
21Ibid., para. 7.418.

9. Thirdly, the Panel examined individual instan ces of customs administration in the area of
customs procedure . The Panel found no violation of Article X:3(a) with respect to the manner of
administration of Article 78(2) of the Community Customs Code, which allows customs authorities to
conduct audits following release of goods for fr ee circulation within the European Communities. 22
The Panel also found no violation of Article X:3(a) with respect to "the substantive differences in
penalty laws between member States" on the ground th at "the substantive content of penalty laws ...
cannot be viewed as acts of administration" under Article X:1. 23 The Panel further found that the
United States had not proved that "the manner of administration of Article 133 of the Community
Customs Code and Articles 502(3) and 552 of the Implementing Regulation regarding processing
under customs control is non-uniform among member States in violation of Article X:3(a) of
the GATT 1994."24 Finally, the Panel found that "the United States ha[d] not proved that
Articles 263-267 of the Implementing Regulation ar e administered in a non-uniform manner in
violation of Article X:3(a) of the GATT 1994."25
10. Finally, with respect to the United States' claim of violation of Article X:3(b) of the
GATT 1994, the Panel found that the European Co mmunities does not violate the obligation to
provide prompt review and correction of administ rative action relating to customs matters "merely
because the decisions regarding review of administ rative action relating to customs matters ... do not
apply to all agencies in the [European Communities] and do not have effect throughout the territory of
the European Communities".26
11. The Panel therefore recommended:
… that the Dispute Settlement Body request the European
Communities to bring itself into conformity with respect to:
(a) the administration of the Common Custom[s] Tariff
regarding the administrative process leading to the tariff
classification of blackout drapery lining;
(b) the administration of the Common Customs Tariff regarding
the tariff classification of liquid crystal display monitors with
digital video interface;

22Panel Report, para. 7.434.
23Ibid., para. 7.444.
24Ibid., para. 7.465.
25Ibid., para. 7.477.
26Ibid., para. 7.556.

(c) the administration of Article 147(1) of the Implementing
Regulation regarding the imposition by customs authorities in
some member States of a form of prior approval with respect
to the successive sales provision in the context of customs
valuation.
27
12. On 14 August 2006, the United States notified the Dispute Settlement Body (the "DSB") of
its intention to appeal certain issues of la w covered in the Panel Report and certain legal
interpretations developed by the Pane l, pursuant to Article 16.4 of the Understanding on Rules and
Procedures Governing the Settlement of Disputes (the "DSU"), and filed a Notice of Appeal 28
pursuant to Rule 20 of the Working Procedures for Appellate Review (the " Working Procedures").29
On 21 August 2006, the United States filed an appellant's submission. 30 On 28 August 2006, the
European Communities notified the DSB of its intention to appeal certain issues of law covered in the
Panel Report and certain legal interp retations developed by the Panel, pursuant to Article 16.4 of the
DSU, and filed a Notice of Other Appeal 31 pursuant to Rule 23(1) and (2) of the Working Procedures.
On 29 August 2006, the European Communitie s filed an other appellant's submission. 32 On
11 September 2006, the United States and the Eu ropean Communities each filed an appellee's
submission.33 On the same day, Japan and Korea each filed a third participant's submission 34, and
Argentina, Australia, Brazil, China, Hong Kong, Chin a, India, and the Separate Customs Territory of
Taiwan, Penghu, Kinmen, and Matsu each notified the Appellate Body Secretariat of its intention to
appear at the oral hearing as a third participant.35
13. By letter dated 15 September 2006, Japan request ed authorization from the Appellate Body
Division hearing the appeal to correct a "clerical erro r" in its third participant's submission, pursuant
to Rule 18(5) of the Working Procedures . On 18 September 2006, the Division invited all
participants and third participants to comment on Ja pan's request. None of th e participants or third
participants objected to Japan's request. On 20 September 2006, the Division authorized Japan,
pursuant to Rule 18(5), to correct the clerical error in its third participant's submission.

27Panel Report, para. 8.2.
28WT/DS315/11 (attached as Annex I to this Report).
29WT/AB/WP/5, 4 January 2005.
30Pursuant to Rule 21(1) of the Working Procedures.
31WT/DS315/12 (attached as Annex II to this Report).
32Pursuant to Rule 23(3) of the Working Procedures.
33Pursuant to Rules 22 and 23(4) of the Working Procedures.
34Pursuant to Rule 24(1) of the Working Procedures.
35Pursuant to Rule 24(2) of the Working Procedures.

14. The oral hearing in this appeal was held on 28 and 29 September 2006. The participants and
the third participants presented oral arguments (w ith the exception of Argentina, Brazil, Hong Kong,
China, India, Korea, and the Separate Customs Territory of Taiwan, Penghu, Kinmen, and Matsu) and
responded to questions posed by the Members of the Division hearing the appeal.
II. Arguments of the Participants and the Third Participants
A. Claims of Error by the United States – Appellant
1. The Panel's Terms of Reference
15. The United States requests the Appellate Body to reverse the findings of the Panel concerning
its terms of reference. According to the United Stat es, the Panel erred in three respects: first, in
finding that, under Article 6.2 of the DSU, the measure at issue must be the "manner of
administration" when a claim is made under Article X:3(a) of the GATT 1994; secondly, in finding
that the specific measure at issue in this di spute was confined to the six areas of customs
administration identified in the third paragraph of the request for the establishment of a panel by the
United States (the "panel request")
36; and finally, in concluding that, due to the wording and content
of the panel request, the United States was prec luded from challenging the European Communities'
system of customs administration "as a whole".
(a) The "Measures at Issue" for Purposes of a Claim under Article X:3(a)
of the GATT 1994
16. According to the United States, the Panel erroneously found that, when a violation of
Article X:3(a) of the GATT 1994 is alleged, the meas ure to be identified in the panel request must be
a "manner of administration". 37 For the United States, in making this finding, the Panel relied
primarily on what it described as "an inter-linkage between the reference to the term 'measure' in
Article 19.1 of the DSU and to the term 'measu res at issue' in Article 6.2 of the DSU." 38 The Panel
also reasoned that, under Article 19.1 of the DS U, a Member breaching Article X:3(a) of the
GATT 1994 would be required "to alter the manner in which the relevant laws, regulations, decisions
and/or rulings are being administered in order to abide by that recommendation."39

36Request for the Establishment of a Panel by the United States, WT/DS315/8 (attached as Annex III to
this Report).
37Panel Report, para. 7.20.

17. The United States contends that this reasoning of the Panel is flawed because a "manner of
administration" is not a "measure" but, rath er, a description of how a measure operates.
40 The United
States adds that this approach blurs th e distinction between measures and claims. 41 By finding the
"manner of administration" to be the measure at issu e, the Panel confused the measure at issue in an
Article X:3(a) dispute with the obligation under that provision. The United States also argues that the
Panel's reasoning leads to illogical consequences fo r complaints under other WTO provisions as well,
because, under such an approach, the measure at issue is not "distinguishable" from the legal basis of
the complaint for purposes of Article 6.2 of the DSU. 42 Regarding the "inter-linkage" between
Articles 6.2 and 19.1 of the DSU identified by the Panel, the United States points out that the mere
fact that a breach of Article X:3(a) may be rem oved by changing a law's administration cannot be a
basis for concluding that the law is not the measure at issue.43 The United States argues that, although
Article 19.1 of the DSU contemplates a recomm endation that a Member bring a measure into
conformity with a covered agreement, it is silent as to how this is to be done.44
(b) Confinement of the Measures at Issue to Certain Areas of Customs
Administration
18. The United States contends that the Panel erred in confining the specific measures at issue to
the areas of customs administration indicated in the panel request, because the Panel failed to construe
the panel request "as a whole". The United States also argues that the Panel confused arguments, on
the one hand, with measures and claims, on the other hand. 45 For the United States, had the Panel
construed the panel request "as a whole", it could not have avoided the conclusion that, first, the
specific measures at issue were the Community Customs Code, the Implementing Regulation, the
Common Customs Tariff, the TARIC, and, for each of these measures, all amendments,
"implementing measures, and other related measures" ; and, secondly, that the legal basis of the
complaint was the administration of those measures in a manner inconsistent with Article X:3(a) of
the GATT 1994.
46 The United States emphasizes that the list of areas of customs administration
provided in the panel request was only illustrative, aimed to give an indication of the argument
underlying the United States' claim, and did not cons titute the claim itself or the specific measures at

41Ibid.
42Ibid., para. 49.
43Ibid., para. 48.
44Ibid.
45Ibid., para. 52.
46Ibid., paras. 54-55.

issue.47 According to the United States, the Panel read individual phrases in the panel request in
isolation, focusing on "particular te xt ... taken out of its context". 48 The United States maintains that
the Panel's characterization of the illustrative list as a specification of the measures at issue "ignored
the introduction to the list, which stated that '[l]ack of uniform, im partial and reasonable
administration of the above-identified measures is manifest in differences among member States in a
number of areas, including, but not limited to, the following.'"49
19. The United States also points out that the Pane l gave no consideration to the fact that the
request included a claim that the absence of m echanisms or institutions to secure uniform
administration in the European Communities' system of customs administration "as a whole" results in
a breach of Article X:3(a). 50 For the United States, the Panel missed the fundamental point that
"nowhere in the system as a whole … are there mechanisms or instituti ons which achieve the
uniformity in administration which Article X:3(a) requires". 51 With respect to the analogy made by
the Panel to the EC – Computer Equipment dispute, the United States considers that the Panel erred
because, in EC – Computer Equipment, the scope of the measures at issue depended on the identity of
the products subject to the measures; also, the cl aim put forward in that case was not "systemic" and
did not relate to the system "as a whole".52
20. The United States considers that the Panel's a pproach led to a confusion of claims and
measures, on the one hand, with arguments, on the other hand. The United States does not believe it
was required to list the areas in which the manner of administration of the specific measure at issue
was inconsistent with Article X:3(a); however, in the view of the United States, such a list made the
panel request more transparent, in that it anticip ated certain arguments the United States would make
in its submissions and statements to substantiate its claims. For the United States, rather than
understanding the discussion in the panel request as intended, the Panel mischaracterized it as "an
elaboration of what it understood to be the measure at issue".53

48Ibid., para. 58.
49Ibid., para. 59.
50Ibid., para. 61.
51Ibid.
52Ibid., para. 62.
53Ibid., para. 66.

(c) Challenging the European Communities' System of Customs
Administration "As a Whole"
21. The United States contends that the Panel erred by construing the panel request to exclude a
claim that the European Communities' system of customs administration "as a whole" results in non-
uniform administration of European Communities cu stoms law in breach of Article X:3(a) of the
GATT 1994. For the United States, the Panel erred in considering that, in order to challenge the
European Communities' system of customs administration "as a whole", the United States would have
had to list separately "each and every area of customs administration".
54 This aspect of the Panel's
reasoning, the United States argues, would make it "virtually impossible" to challenge a responding
Member's system "as a whole" or overall.
55
22. The United States maintains that the panel request made it clear that its claim related to the
European Communities' system of customs admini stration "as a whole", because it identified the
measures that constitute the main instruments of European Communities customs legislation and
addressed the manner of administratio n of these instruments collectively. 56 For the United States, the
heart of the problem is that "the [European Co mmunities] administers its customs law through 25
separate, independent customs authorities and doe s not provide any institution or mechanism to
reconcile divergences automatically and as a matter of right when they occur." 57 The United States
underlines that, throughout the panel request, the measu res at issue were discussed collectively, and
that this "is precisely what one would expect in a panel request challenging a system of customs
administration as a whole."58
23. According to the United States, the Panel's inte rpretation of the panel request rested on its
view that the word "manner", as used in the panel request, was not related to "the design and structure
of something"59, and the Panel assumed that a challenge to the design and structure of the European
Communities' system of customs administration must refer to "actions take n and/or procedures and
institutions existing at the [European Communities] level". 60 For the United States, these aspects of
the Panel's reasoning are problematic; given that th e very essence of the Article X:3(a) obligation is
the "manner" of administration of certain types of measures, it would be "illogical to assume that [the]
use of the word 'manner' in a claim involving Article X:3(a) of the GATT 1994 necessarily suggests

55Ibid.
56Ibid., para. 72.
57Ibid., para. 69.
58Ibid., para. 74.

that the claim does not relate to a Member's system of customs administration as a whole." 61
Furthermore, the United States is of the view that , because "the defining characteristic of the design
and structure of the [European Communities'] system of customs administration ... is the absence of
procedures and institutions" at the European Co mmunities level, a challenge to the design and
structure of this system must necessarily address ad ministration undertaken by member State customs
authorities.62
24. The United States considers that it clearly articulated a challenge to the European
Communities' system of customs administration in the panel request.63 The United States submits that
the absence of an explicit reference to the terms "as such" or " per se" in the panel request does not
preclude a claim with respect to the European Co mmunities' system of customs administration "as a
whole". What is important, the United States argues, is that the responding party be aware of the
claim against it so that its ability to defend itself is not prejudiced. 64 For the United States, it is clear
from statements by the European Communities at meetings of the DSB, and from the European
Communities' submissions and statements during the Panel proceedings, that the European
Communities was aware that the United States ha d made a claim with respect to the European
Communities' system of customs administration "as a whole".
65 For the United States, the "consistent
articulation" by the United States throughout th e Panel proceedings of a claim concerning the
European Communities' system of customs administration "as a whole" is "a strong indication [that
the European Communities] did not suffer any prejud ice on account of any lack of clarity in the panel
request".66
2. Claims regarding Article X:3(a) of the GATT 1994
(a) The Panel's Interpretation of the Term "Administer" in Article X:3(a)
of the GATT 1994
25. The United States submits that the Panel erred in its interpretation and application of the term
"administer" in Article X:3(a) of the GATT 1994, and its consequent treatment of differences in
penalty provisions and audit pr ocedures among the member Stat es of the European Communities. 67
The Panel itself noted that the existence of subs tantive differences in penalty provisions and audit

62Ibid., para. 78. (original emphasis)
63Ibid., para. 82.
64Ibid., paras. 83-84.
65Ibid., paras. 86-87, 88-91, and 93-97.
67Ibid., para. 109. See also Panel Report, paras. 7.444, 8.1(d)(ii), 7.434, and 8.1(d)(i), respectively.

procedures among member States is not disputed between the parties.
68 In the United States' view,
these divergences in laws among the member States, in and of themselves, lead to non-uniform
administration of European Communities cu stoms law in breach of Article X:3(a). 69 The United
States asserts that the arguments it made with respect to the Panel's approach to divergences in penalty
laws apply equally with respect to the Panel's approach to audit procedures.70
26. The United States agrees with the Panel that me asures are administered when they are "put
into practical effect". 71 The United States contends that penalty and audit regimes put the measures
subject to those regimes into practical effect because they encourage compliance with, and deter
breaches of, those measures. 72 The United States submits that the different penalty regimes put
European Communities customs law into effect di fferently among the member States and that this
amounts to a failure by the European Communities to administer its customs law in a uniform
manner.73
27. Further, the United States refers to the Panel's finding that "the substantive content of penalty
laws of the member States used to enforce [European Communities] customs law cannot be viewed as
acts of administration". 74 The United States contends that a breach of Article X:3(a) can be
substantiated not only by particular "acts of ad ministration", but also by the laws themselves.
According to the United States, if divergences between individual acts of administration (for example,
individual impositions of penalties for identical breaches of European Communities customs law)
constitute non-uniform administration, then, a fortiori , divergences in the penalty provisions that
govern the individual acts of administration carried out by different customs authorities must also
constitute non-uniform administration.
28. The United States alleges that the Panel's findings in the present case are inconsistent with the
findings regarding Article X:3(a) of the GATT 1994 made by the panel in Argentina – Hides and
Leather. In the view of the United States, the Panel should have recognized the distinction that the
panel in Argentina – Hides and Leather recognized between measures of general application whose

69Ibid., para. 110.
70Ibid., paras. 111 and 150.
72Ibid., para. 120.
73Ibid., paras. 121 and 123.

manner of administration is at issue under Article X: 3(a), and measures of general application that put
the measures at issue into practical effect.75
29. Furthermore, the United States submits that th e Panel's reasoning concerning penalty laws is
contradicted by other parts of the Panel Report. In the United States' view, the Panel recognized that a
measure of general application may be put into prac tical effect through an instrument that happens
also to be a measure of general application, and that it is appropriate to consider the substance of that
instrument to determine how the measure at issue is being administered. In this respect, the United
States mentions two aspects of the Panel Report: fi rst, with respect to the tariff classification of
blackout drapery lining, the Panel referred to the f act that one customs authority (in Germany) relied
on an interpretative aid not relied on by customs authorities of other member States; and secondly,
with respect to LCD monitors with DVI, the Panel referred to the substance of a Tariff Notice issued
by the United Kingdom customs authority and a decree issued by the Dutch customs authority as
showing a lack of uniform administration of the Eu ropean Communities classification rules at issue.
The United States submits that the Panel itself cons idered the substance of a measure of general
application concerning blackout drapery lining and LCD monitors with DVI to determine how the
Common Customs Tariff was being administered. In the United States' view, the same rationale
should have been applied to the administration of penalty provisions.
76
30. With respect to the Panel's finding concerni ng differences in audit procedures among the
member States of the European Communities, the United States submits that the Panel erred in
limiting the scope of the claim to the non-uniform administration of Article 78(2) of the Community
Customs Code. The United States submits further that , even if the Panel had been correct in limiting
its examination to Article 78(2) of the Community Customs Code, the Panel's reasoning was based on
an incorrect interpretation of the term "administer" in Article X:3(a) of the GATT 1994. The United
States contends that the error in the Panel's analysis is essentially the same as the error in its analysis
of penalty provisions. Therefore, the United States considers the arguments it presented in the context
of penalty provisions equally valid in the context of audit proceedings.
77
31. In the event that the Appellate Body reverses the Panel's findings regarding penalty provisions
and audit procedures, the United States requests the Appellate Body to complete the Panel's analysis
and to find that divergences in penalty provisions and audit procedures in the European Communities

75United States' appellant's submission, para. 132 (referring to Panel Report, Argentina – Hides and
Leather, paras. 11.72, 11.94, and 11.101).
76Ibid., paras. 134-139.
77Ibid., para. 154.

amount to non-uniform administration of Euro pean Communities customs law in breach of
Article X:3(a).
78
(b) Completing the Analysis with respect to the "As a Whole" Challenge
of the United States under Article X:3(a) of the GATT 1994
32. In the event the Appellate Bo dy reverses the Panel's finding that its terms of reference
regarding the United States' claim under Article X: 3(a) of the GATT 1994 do not include a challenge
to the European Commun ities' system of customs administration "as a whole", or an "as such"
challenge with respect to the design and structur e of this system, the United States requests the
Appellate Body to complete the analysis and fi nd that the design and structure of the European
Communities' system of customs administration "as a whole" is inconsistent with Article X:3(a). 79
The United States submits that, in this dispute, "a reversal of the Panel's findings without a completion
of the analysis would fail 'to secure a positive solution to [the] dispute'".80
33. The United States submits that the analysis can be completed on the basis of undisputed facts
and the Panel's findings of fact regarding the European Communities' system of customs
administration.81 The United States recalls that "[t]he crux of the [United States'] claim ... was that the
existence of a system of customs administratio n in which 25 separate, independent authorities
exercise judgment in interpreting and applying [E uropean Communities] customs law, without any
procedures or institutions to ensure against divergen ces or to reconcile them promptly and as a matter
of right when they occur necessarily constitutes a lack of uniform administration, in breach of
Article X:3(a)."82 The United States points to statements made by the Panel with respect to various
mechanisms and institutions in the European Communities that , according to the European
Communities, are supposed to ensure against dive rgences or to reconcile divergences when they
occur.83 The United States mentions as particular examples, the Customs Code Committee 84,
Article 10 of the Treaty Establishing the European Communities (the "EC Treaty"), and the system of
preliminary reference of questions of European Co mmunities customs law to the Court of Justice of
the European Communities (the "ECJ"). 85 The United States also refers to the Panel's statement that
the European Communities' system of customs admini stration "as a whole" is "complicated and, at

79Ibid., para. 99.
80Ibid., para. 101.
81Ibid., para. 102.
82Ibid. (footnote omitted)
83Ibid.
84Committee established by Articles 247a(1) and 248a(1) of the Community Customs Code.
85United States' appellant's submission, paras. 103, 104, and 105.

times, opaque and confusing". 86 According to the United States, by these various statements, the
Panel rejected the European Communities' argument that the institutions and procedures to which the
European Communities referred ensure the unifo rm administration of European Communities
customs law. 87 Thus, for the United States, in the light of the Panel's statements regarding "the
institutions and mechanisms the [European Communities] held out as securing uniform administration
of [European Communities] customs law, comp letion of the Panel's analysis should be
straightforward"88 and should lead to the conclusion that "the [European Communities'] system of
customs administration as a whole is inconsistent with the [European Communities'] obligation of
uniform administration under Article X:3(a) of the GATT 1994."89
3. The Panel's Interpretation of Article X:3(b) of the GATT 1994
34. The United States submits that the Panel erred in finding that the tribunals and procedures for
review of customs administrative actions in the European Communities are consistent with
Article X:3(b) of the GATT 1994, despite the fact th at their decisions do not govern the practice of
all the agencies entrusted with administrative enforcement throughout the territory of the European
Communities.
35. The United States notes that review tribunals or procedures of the European Communities
consist of the courts of various member States. Each court issues decisions that govern the practice of
only the agency in the respective member State. 90 The United States claims that, in reaching its
conclusion concerning interpretation and application of Article X:3(b), the Panel made a number of
interpretive errors. In the United States' view, th e Panel misconstrued the ordinary meaning of the
terms "the agencies" and "such agencies"; confu sed the concepts of "implement" and "govern the
practice of"; and failed to take into account the context provided by Article X:3(a) of the
GATT 1994.91 The United States submits that the Panel e ffectively disregarded the ordinary meaning
of those terms when it stated that "it is difficult to know what significance should be attached, if any,
to the reference to agencies in the plural." 92 The United States submits that the ordinary meaning of
the plural form encompasses "the agencies"—without limitation—as opposed to only one such agency

87Ibid., para. 108.
88Ibid.
89Ibid.
90Ibid., para. 31.
91Ibid., para. 163.

or just "some of" or a subset of "the agencies".
93 The United States argues that the use of the plural
form contemplates multiple agencies and, given the absence of any basis in the text for distinguishing
among multiple agencies, it must contemplate al l the agencies entrusted with administrative
enforcement.94
36. Furthermore, in the United States' view, Article X:3(b) must be read in the light of the
obligation of uniform administration in Article X: 3(a) of the GATT 1994. According to the United
States, the review of decisions that are inconsistent with "established principles of law or the actual
facts" contemplated by Article X:3(b) also embodies the principle of uniform administration. 95 The
United States submits that procedures leading to deci sions that have effect only in particular regions
of a WTO Member's territory are therefore inconsiste nt with Article X:3(b). In addition, the United
States alleges that the Panel did not give meaning to the two distinct requirements of "govern the
practice" and "implement" in Article X:3(b). 96 In the United States' view, the Panel assumed
incorrectly that, if a decision can be implemente d by a single agency, then the decision need govern
the practice of only that agency, even though, purs uant to Article X:3(b), it must be effectuated by
"such agencies" entrusted with administrative enforcement. 97 The United States submits that
Article X:3(b) does not contemplate such a geogr aphical limitation of the "govern the practice"
requirement.98
37. With respect to the Panel's assessment of what is "reasonable" in the light of "most legal
systems", the United States submits that the Panel i gnored the feature that distinguishes the system of
the European Communities from most legal systems, namely, that most legal systems have only one
central agency entrusted with enforcement of custom s law. The United States points out that this is
not the case in the European Communities because its legal system combines review tribunals with
geographically limited jurisdiction with customs aut horities whose practice is limited to particular
geographical regions. 99 In the United States' view, this results in a geographically fragmented
administration of the customs law in the European Communities.100

94Ibid., para. 166.
95Ibid., para. 181.
96Ibid., para. 174.
97Ibid.
98Ibid., para. 191.
99Ibid., para. 189.
100Ibid.

38. In the United States' view, should the Appellate Body reverse the Panel's finding on
Article X:3(b) of the GATT 1994, it should also comp lete the Panel's analysis and find the European
Communities to be in breach of its obligation unde r Article X:3(b) "by fa iling to provide review
tribunals or procedures whose decisions govern the pr actice of all of the agencies that the [European
Communities] entrusts with administrative enforcement of its customs laws."101
B. Arguments of the European Communities – Appellee
1. The Panel's Terms of Reference
39. The European Communities submits that the Panel did not err in finding that the measure at
issue was only the "manner of administration" of European Communities customs law in the specific
areas identified by the United States in the panel request. Furthermore, the European Communities
agrees with the Panel's conclusion that its terms of reference did not include a claim against the
European Communities' system of customs administration "as a whole", or "as such".
(a) The "Measures at Issue" for Purposes of a Claim under Article X:3(a)
of the GATT 1994
40. The European Communities agrees with the Panel that the measure at issue with respect to the
United States' claim under Article X:3(a) of the GATT 1994 is the "manner of administration" of
European Communities customs law. 102 The European Communities cons iders that, by referring to
the "manner of administration", the Panel did not blur the distinction between the measure at issue and
the claims under Article X:3(a). The Panel used th e term "manner of administration" to distinguish
"administration" (the measure at issue in this dispute) from the laws and regulations of general
application under Article X:1 of the GATT 1994, which are the subject of administration. According
to the European Communities, the Panel used the term "manner of administration" synonymously
with "administration".
103 The European Communities is of th e view that this "minor ambiguity" 104 is
not enough to reverse the Panel's finding that when a violation of Article X:3(a) is claimed, the panel
request must identify a "manner of administration".
41. The European Communities contends that the United States is trying to confuse the laws to be
administered with their administration.105 In this respect, the European Communities observes that, in

103Ibid., para. 91.
104Ibid., para. 92.

EC – Bananas III , the Appellate Body distinguished, in th e context of Article X:3(a), between the
administration of the laws and the laws to be administered.
106 According to the European
Communities, the panel request refers to the manner of administration 107, "clearly distinguishes the
administration from the laws which are being administer ed", and, thus, "identifies the 'administration',
rather than those laws, as the measure at issue in the dispute."108
(b) Confinement of the Measures at Issue to Certain Areas of Customs
Administration
42. For the European Communities, the Panel was fully justified in concluding that the measure at
issue was only the administration of customs law in the areas identified in the third paragraph of the
panel request. The European Commun ities reiterates that, in this case, the measure at issue is not the
set of legal instruments listed in the first pa ragraph of the panel request but, rather, their
administration.109 The European Communities submits that th e United States is trying to engage in a
selective reading of the panel request by asking the A ppellate Body to ignore the third paragraph of
the panel request.110 Furthermore, given the "vast body of law" 111 referred to by the United States in
the first paragraph of the panel request, it wo uld not have been possible for the European
Communities to prepare adequately its defence purely on the basis of a challenge against the
administration of European Communities customs la w "as a whole" without specifying the relevant
provisions or sectors. In the view of the Europ ean Communities, "an identification of the specific
issue or provision with respect to which a claim of non-uniform administration is made was ...
necessary ... to protect [its] due process rights".112
43. The European Communities contends that the Pane l correctly referred to the general principle
set out in EC – Computer Equipment that "what is necessary for identification of the 'specific
measures at issue' depends on the circumstance of the case." 113 In the circumstances of the present
case, given the vast body of law to which the Un ited States referred, the Panel was justified in
requiring specification of areas of customs administration.

107Ibid., para. 95.
108Ibid., para. 96.
109Ibid., para. 99.
110Ibid., para. 100.
111Ibid., para. 103.
112Ibid. (footnote omitted)
113Ibid., para. 105.

44. Regarding the terms "including but not limited to" contained in the third paragraph of the
panel request, the European Communities relies on the Appellate Body Report in India – Patents (US)
in asserting that "these words cannot have the effect of including, contrary to the requirements of
Article 6.2 [of the] DSU, the administration of the entire body of [European Communities] customs
law into the Panel's terms of reference." 114 The European Communities adds that the United States'
interpretation of this phrase would reduce the th ird paragraph of the panel request to inutility 115 and
would "prejudice [the defendant's] due process rights by leaving the actual subject matter of the case
unclear."116
(c) Challenging the European Communities' System of Customs
Administration "As a Whole"
45. According to the European Communities, th e Appellate Body should uphold the Panel's
findings that the United States' claims regarding th e European Communities' system "as a whole" and
"as such" are outside its terms of reference. Th e European Communities considers the "as a whole"
claim to be outside the Panel's terms of reference because the measure at issu e is "only the [European
Communities'] manner of administration in the areas of customs law specifically identified in [the]
Panel request". 117 The European Communities al so maintains that "[i]t is thus incorrect to suggest
that the [European Communities'] system of customs administration could be assessed 'as a whole',
independently of the specific needs and requirements of the sector or area in question, and the tools
and mechanisms existing in such area."118
46. The European Communities argues that the pane l request did not indicate that the United
States intended to challenge the European Communitie s' system of customs administration "as such".
For the European Communities, the panel request id entified as the measure at issue the "manner of
administration", and these terms are "diametrically opposed to those which one could have expected
to be used in the case of a challenge against a measure 'as such'." 119 Regarding the United States'
argument that the measures at issu e were the instruments listed in the first paragraph of the panel
request, and that they constitute the main in struments of the European Communities customs
legislation, the European Communities reiterates its view that the measures at issue are not these
instruments but, rather, their administration in the areas listed in the third paragraph of the panel

115Ibid., para. 108.
116Ibid., para. 109.
117Ibid., para. 113.
118Ibid., para. 117.
119Ibid., para. 125.

request. The European Communities adds that its sy stem of customs administration is broader than
the instruments listed in the first paragraph of th e panel request, because it includes other instruments
such as the EC Treaty itself and more specific instruments existing in the field of customs
cooperation, or budgetary and financial control.
120
47. With respect to the United St ates' reliance on a number of statements made by the parties
during or outside the Panel proceedings 121, the European Communities reca lls that "the compliance of
a [p]anel request with Article 6.2 [of the] DSU must be assessed primarily on the face of the [p]anel
request".122 The European Communities reiterates that at no point did it recognize or acknowledge
that its system of customs administration "as such" was the measure at issue in this dispute.123
2. Claims regarding Article X:3(a) of the GATT 1994
(a) The Panel's Interpretation of the Term "Administer" in Article X:3(a)
of the GATT 1994
48. The European Communities submits that the Pa nel was correct to distinguish between the
laws to be administered and the administration of those laws, and disagrees with the United States that
laws themselves can constitute administration. According to the European Communities, the
administration of a law or a regulation of general app lication, by definition, implies its application in
concrete cases.124
49. The European Communities argues that the Pane l did not err in finding that substantive
differences in the penalty laws of the member States of the European Communities, in and of
themselves, do not constitute a violation of Article X:3(a) of the GATT 1994.
50. According to the European Communities, th e United States did not demonstrate that
differences in the penalty laws of the member States lead to non-conformity in the administration of
European Communities customs law. The Eu ropean Communities explains that, although
administrative or penalty provisions applicable to violations of customs law are set out in the
individual laws of the member States, the memb er States do not have complete freedom in the
determination of the appropriate level of penalties. Rather, in accordance with the binding principles
of European Communities customs law, sanctions for the violation of customs law that member States

121United States' appellant's submission, paras. 84-98.
122European Communities' appellee's submission, para. 131. See also paras. 87 ff.
123Ibid., para. 133.
124Ibid., paras. 207-215.

provide must be effective, proportionate, and dissuasive. 125 In the European Communities' view,
these principles ensure uniform application of customs law throughout the European Communities.126
51. The European Communities emphasizes that the objective of ensuring uniform application of
European Communities customs law does not require full harmonization of penalty provisions among
the member States, and that differences in penalties do not necessarily lead to a lack of uniformity in
the application of the provisions.
127 The European Communities submits that, if sanctions are
dissuasive and effective, then it must be assumed that the related substantive provisions will be
respected, regardless of differences in the level of sanctions applicable. The European Communities
contends that the United States has not provided an y evidence concerning the actual nature and level
of sanctions imposed by the laws of member Stat es for specific violations of customs provisions.
Therefore, in the European Comm unities' view, the United States h as not established that differences
in penalty laws result in differences in the administration of European Communities customs law.128
52. With respect to the administration of audit procedures, the European Communities submits
that the Panel was correct to find no violation of Article X:3(a). 129 The European Communities
disagrees with the United States th at the same arguments it submitted when challenging the Panel's
findings with respect to penalty laws apply with eq ual force to the Panel's findings with respect to
audit procedures. In the European Communities' view, these claims are substantially different,
because audit procedures are not primarily set out in member States' laws. 130 The European
Communities asserts that uniform practice in this respect is ensured by the Community Customs
Audit Guide.131
53. The European Communities notes the discretionary character of Article 78(2) of the
Community Customs Code but argues that, nevertheless, the mere exercise of discretion in one way or
another does not constitute non-uniform administration. 132 The European Communities submits that
"the [United States] has not provided any evidence to substantiate its allegation that there are
significant differences in the audit pro cedures followed by the … [m]ember States" 133, and "has also

125European Communities' appellee's submission, paras. 202 and 222.
126Ibid., para. 222.
127Ibid., para. 223.
128Ibid., paras. 221-232.
129Ibid., paras. 46 and 233.
130Ibid., para. 234.
131Ibid., para. 237 (referring to Community Customs Au dit Guide, a framework for post-clearance and
audit-based controls (Exhibit EC-90 submitted by the European Communities to the Panel)).
132Ibid., para. 241.
133Ibid., para. 249.

not been able to demonstrate what impact, if any, such differences would have on the uniform
administration of [European Communities] customs law."
134
54. Regarding the United States' request that the Appellate Body complete the analysis under
Article X:3(a) with respect to penalty provisions and audit procedures, the European Communities
maintains that the Panel did not make the necessary findings of fact and that there are no undisputed
facts on the record that would enable the Appellate Body to complete the analysis.
135
(b) Completing the Analysis with respect to the "As a Whole" Challenge
of the United States under Article X:3(a) of the GATT 1994
55. In the event that the Appellate Body reverses the Panel's findings re garding its terms of
reference, the European Communities submits that the Appellate Body is not in a position to complete
the legal analysis and should d ecline to find that the European Communities' system of customs
administration "as a whole" and "as such" is inconsistent with Article X:3(a) of the GATT 1994.136
56. The European Communities disagre es with the United States that there are enough factual
findings made by the Panel, or enough undisputed facts on record, that would enable the Appellate
Body to find that the European Communities' system of customs administration "as such" and "as a
whole" is inconsistent with Article X:3(a). A ccording to the European Communities, the Panel's
statements to which the United States refers are is olated remarks in the Panel Report where the Panel
commented on individual aspects of the European Communities' system of customs administration. 137
These statements, the European Co mmunities argues, would not allow the Appellate Body to assess
whether the European Communities' system of cust oms administration "as a whole" and "as such" is
in conformity with Article X:3(a) of the GATT 1994, given that they do not contain findings of fact in
this regard, and were not intended by the Panel to constitute such findings. 138 The European
Communities notes that these statements are contai ned in a section where the Panel set out its
understanding of the European Communities' system of customs administration as "context" for the
evaluation of the United States' claims regarding individual instances of application.139
57. Furthermore, the European Communities emphasizes that the Panel observed, inter alia, that
"the United States did not demonstrate that the d esign and structure of the [European Communities']

135Ibid., paras. 231 and 251.
136Ibid., paras. 141-142.
137Ibid., para. 159.
138Ibid., para. 160.
139Ibid.

system of customs administration, including compone nts thereof, necessarily result in a violation of
Article X:3(a) of the GATT 1994". 140 Thus, in the European Communities' view, the Panel explicitly
confirmed that the United States did "not even come close" to establishing that the European
Communities' system of customs administration "as such" and "as a whole" entails a violation of
Article X:3(a) of the GATT 1994.
141
58. Finally, the European Communities submits th at the United States' claim regarding the
European Communities' system of customs administra tion "as a whole" is a claim that has not been
explored by the Panel, and the Panel has therefor e not made any legal findi ngs and interpretations on
this claim that the Appellate Body could reverse. For the European Communities, a claim of violation
of the obligation of uniform administration directed against individual instances of application is
fundamentally different from a claim directed agai nst a system of customs administration "as such"
and "as a whole".
142 Adjudging the claim regarding the European Communities' system of customs
administration "as such" and "as a whole" would, therefore, violate the due process rights of the
participants, and of the European Communities in particular. Appellate Body proceedings have to
take place within a narrow time-frame, and are focused on issues of law and legal interpretations. For
the European Communities, such proceedings are manifestly not suited for investigating a claim
against a system of customs administration "as a whole" and "as such".
143
3. The Panel's Interpretation of Article X:3(b) of the GATT 1994
59. The European Communities argues that the Panel was correct in finding that the European
Communities has not violated Article X:3(b) of the GATT 1994, because this provision does not
require that the review of administrative action relating to customs matters must have effect
throughout the territory of the European Communities.144
60. As a general matter, the European Communities notes that all disputes concerning European
Communities law that are not subject to the jurisdic tion of the ECJ and the Court of First Instance of
the European Communities (the "CFI") fall within the competence of the national courts of the
member States. The European Communities explains that national courts have a dual function: when
deciding a dispute governed by national law, they form part of the national legal order; when

141Ibid., paras. 171-172.
142Ibid., paras. 188-189.
143Ibid., paras. 193-195.
144Ibid., paras. 257 and 342.

deciding a case governed by European Communities la w, they belong, from the functional point of
view, to the European Communities' legal order.
145
61. The European Communities points out that, in the case of actions brought before a national
court that relate to the interpretation of an issue of European Communities law, the national court may
request the ECJ to interpret a question of Europ ean Communities law (referred to as "references for a
preliminary ruling"). 146 Member State courts, against whose decisions there is no judicial remedy
under national law, are required to refer issues of interpretation of European Communities law to the
ECJ.147 Since European Communities customs law is implemented through the customs authorities of
the member States, an appeal for judicial review is lodged before the court of the member State whose
customs authorities have issued the decision. 148 According to the Europ ean Communities, the main
objective of the preliminary reference procedure is to guarantee the proper and uniform interpretation
and application of European Communities law thr oughout all the member States, while avoiding the
establishment of a long and expensive appellate system before the ECJ. 149 The European
Communities notes that a preliminary ruling by the EC J is binding on the national court hearing the
case in which the ruling is given, and that it has eff ect also on persons who are not parties to the case
referred.150 The European Communities points out that, in exceptional cases, a right of appeal against
member State customs decisions may also be available directly to the CFI.151
62. The European Communities submits that the Panel gave the correct meaning to the terms "the
agencies entrusted with administration enforcement" and "such agencies" in Article X:3(b) of the
GATT 1994. In the European Communities' view, the Panel correctly explained that the use of the
plural when referring to "agencies" in Article X: 3(b) could flow from the fact that the review
"tribunals and procedures" required under the same provision are also referred to in the plural. 152 The
European Communities disagrees with the United States' argument that the use of the singular in the
proviso indicates that only one entity within a WT O Member should be permitted "to pursue" the

145European Communities' appellee's submission, paras. 260-261.
146Ibid., para. 266.
147Ibid., para. 267.
148Ibid., para. 274.
149Ibid., para. 270.
150Ibid., para. 272.
151Ibid., para. 279. This is the case when the European Commission takes decisions that are of direct
and individual concern to individuals.

review. In the European Communities' view, the proviso covers the "central administration of any of
those agencies existing in the WTO [M]ember".153
63. In response to the United States' argument that th e Panel failed to give meaning to the distinct
requirements in Article X:3(b) that review deci sions must be "implemented by" and "govern the
practice of" such agencies 154, the European Communities submits that the differences between the
terms "to implement" and "govern the practice of" are irrelevant for interpreting the term "the
agencies". Furthermore, the European Communities notes that the absence of an express reference to
Article X:3(a) in Article X:3(b) of the GA TT 1994 contrasts with the explicit reference by
Article X:3(c) to Article X:3(b) of the GATT 1994. The European Communities agrees with the
Panel that this absence precludes an inference that the obligation to ensure review of administrative
action under Article X:3(b) could be read as si multaneously requiring uniform administration in
accordance with Article X:3(a) of the GATT 1994, because "such an interpretation would amount to
merging different requirements that are currently co ntained in separate subparagraphs of Article X of
the GATT 1994." 155 The European Communities argues that th is interpretation is also supported by
the negotiating history of Article X. 156 The European Communities conc urs with the Panel that it
would not be reasonable to infer that "first inst ance independent review tribunals and bodies, whose
jurisdiction in most legal systems is normally lim ited in substantive and ge ographical terms, should
have the authority to bind all agencies entruste d with administrative enforcement throughout the
territory of a Member".157
64. Finally, the European Communities submits that the United States' interpretation would lead
to a major conflict between the Marrakesh Agreement Establishing the World Trade Organization
(the "WTO Agreement") and the EC Treaty, because the crea tion of a central European Communities
customs court of first instance would require a profound constitutional ame ndment of the EC Treaty
that would require ratification by its 25 member States. The European Communities recalls that,
when the WTO Agreement was negotiated and concluded, the United States never raised any concern
about the European Communities' system of judici al review, which had alre ady existed for almost
40 years.158

156See ibid., paras. 313-322.
158Ibid., para. 339.

C. Claims of Error by the European Communities – Other Appellant
1. The Panel's Terms of Reference

(a) Temporal Limitations of the Panel's Terms of Reference
65. The European Communities contends that the Pa nel took an excessively wide approach to the
temporal reach of its terms of reference. 159 For the European Communities, a panel may, in principle,
consider only measures that are in existe nce at the time of its establishment 160 and, therefore, the
Panel erred in considering that it had "a general competence to also consider measures which 'pre-
date' or 'post-date' its establishment." 161 The European Communities refers to past Appellate Body
and panel reports in support of its arguments.162 The European Communities argues that, furthermore,
the manner of administration "cannot be regarded as a 'continuum' without [a] clear start or end
point", contrary to what the Panel suggests. 163 According to the European Communities, the Panel's
approach would produce absurd results: it would impl y that "violations which occurred far in the past
and which no longer have any current effect c ould be claimed to be continuing because
'administration has no end point'" 164; similarly, "violations which had not yet occurred at the time the
Panel was established might be regarded as indi cative of violations pre-dating the Panel's
establishment because administration 'has no starting point'."165
66. The European Communities considers that, on the basis of the panel request, it was entitled to
assume that the complainant's case related to me asures in existence at the time of the Panel's
establishment. The European Communities conte nds that, by defining "administration" under
Article X:3(a) of the GATT 1994 as a "phenomenon without any boundaries in time", the Panel
violated the due process rights of the defendant pr otected by Article 6.2 of the DSU, because the
preparation of the defence for past instances of administration is "unduly difficult", and including

159European Communities' other appellant's submission, para. 40.
161Ibid., para. 47.
162The European Communities refers to Appellate Body Reports in Chile – Price Band System ,
paras. 262-263 and 272; and to Panel Reports in EC – Computer Equipment , para. 8.14; Japan – Film ,
para. 10.58; and US – Upland Cotton, paras. 7.158-7.160. (Ibid., paras. 46-59)
163Ibid., para. 63; Panel Report, para. 7.37.
164European Communities' other appellant's submission, para. 65.
165Ibid.

future instances of administration in the measure at issue would make the subject matter of the case a
"moving target".166
67. The European Communities also argues that th e Panel's reasoning would render establishing
compliance almost impossible. If administration has no clear start or end point, it would be difficult
for a WTO Member found to be in violation of Article X:3(a) to establish that it has altered its manner
of administration so that compliance with Article X:3(a) is achieved. 167 The European Communities
contends that "the Panel's approach to the temp oral limitations to its terms of reference is
incompatible with Article[s] 7.1 and 6.2 [of the] DSU" 168 and requests the Appellate Body to reverse
the Panel's findings on the temporal limitations of its terms of reference.169
2. Claims regarding Article X:3(a) of the GATT 1994
(a) The Administrative Process and the Requirement of Uniformity
68. The European Communities submits th at the Panel erred in finding that "Article X:3(a) of the
GATT [1994] requires uniformity of administrative processes irrespective of their impact on the
uniform administration of the laws."
170
69. The European Communities agrees with the Panel that the term "to administer" relates to the
application of laws, and that this may potentially include both the administrative processes as well as
their results. However, for the European Commun ities, Article X:3(a) does not require that the
administrative process "be fully uniform in all cases and respects". 171 The European Communities
emphasizes that "[i]n most administrations, procedures are not fully regulated or harmonised." 172 The
European Communities doubts that a total uniformity of administrative procedures is required in order
to ensure that traders are treated fairly and consis tently. In the view of the European Communities,
whether the requirement of uniform administration in Article X:3(a) is met should be evaluated
primarily on the basis of the administrative outcome. The European Communities argues that "[a]part
from the case that the administrative process is regulat ed in laws or regulations of general application
themselves, the obligation of uniform administration only extends to the administrative process to the

166European Communities' other appellant's submission, para. 66.
167Ibid., para. 68.
168Ibid., para. 69.
169Ibid., para. 70; Panel Report, paras. 7.36-7.37.
170European Communities' other appellant's submission, para. 82; Panel Report, paras. 7.102-7.113
and 7.119.
171European Communities' other appellant's submission, para. 76.
172Ibid., para. 78.

extent that the administrative process has a dir ect and significant impact on the outcome of the
process".
173 Accordingly, the European Communities re quests the Appellate Body to reverse the
Panel's finding that Article X:3(a) of the GATT 1994 requires uniformity of administrative processes
irrespective of their impact on the uniform administration of the laws.174
(b) The Administrative Process Leading to the Tariff Classification of
Blackout Drapery Lining
70. The European Communities submits that the Pa nel erred in finding that the European
Communities has violated Article X:3(a) of the GA TT 1994 with respect to the tariff classification of
blackout drapery lining. 175 In particular, the European Communities challenges the Panel's findings
relating to the administrative process governing the tariff classification of blackout drapery lining.
The European Communities notes that the Panel re ached these findings "even though it also found
that there was no evidence of an actual divergence in the tariff classification of [blackout drapery
lining]".176 For the European Communities, the Pane l erred because it overstepped its terms of
reference by making findings with respect to expired measures, failed to make an objective
assessment of the facts as required by Article 11 of the DSU, and misapplied the requirements of
Article X:3(a) of the GATT 1994.
71. The European Communities contends that the findings of the Panel concerning blackout
drapery lining are outside its terms of reference because they are exclusively based on the reasoning
of the decisions and letters of the German cust oms authorities in two isolated past cases. The
European Communities points out that the letter of the Main Customs Office Hamburg to Ornata
GmbH dates from July 1998, the opinion of the ZPLA Hamburg in the Bautex-Stoffe GmbH case
dates from February 2003, and the decision of th e Main Customs Office Hamburg in the same case
dates from September 2004.177 For the European Communities, these decisions and letters are expired
measures because they concern past transactions and th ey no longer have any effects for the future.
The European Communities submits that the Panel' s findings regarding the "administrative process"
relating to the tariff classification of blackout dr apery lining are outside its terms of reference and
should be reversed.178

173European Communities' other appellant's submission, para. 81.
174Ibid., para. 82.
175Ibid., para. 148.
177Ibid., para. 106.
178Ibid., para. 110.

72. With respect to the Panel's findings that the German customs authorities relied on an
interpretative aid that is particular to Germany, the European Communities argues that the description
of the facts made by the Panel does not correspond to an objective assessment of the facts, as required
by Article 11 of the DSU. 179 The European Communities argues that the decisions and letters to
which the Panel referred did not rely on a German e xplanatory aid or on certain classification criteria
in a way that would have been incompatible with the uniform application of European Communities
customs law.180 The European Communities also recalls th at the interpretive aid referred to by the
Panel "is purely a non-binding text which does not in any way derogate from the application of
[European] Communit[ies] law".181
73. With respect to the alleged failure of the Germ an customs authorities to take into account the
decisions of customs authorities of other member States, the European Co mmunities argues that the
decisions and letters to which the Panel referred do not indicate that the German customs authorities
wished to ignore the decisions of other customs authorities. 182 The European Communities adds that
the factual basis for the Panel's findings is "extremely tenuous" 183, because the Panel based its
findings on one single case and ignored a letter that clearly illustrates that the German customs
authorities do take into account the practice of ot her customs authorities concerning the classification
of similar goods when they are made aware of them. 184 The European Communities contends that the
Panel's statement that "German customs authorities ar e not obliged to make reference to the decisions
of other customs authorities when classifying blackou t drapery lining, even in cases where there is a
possibility that the products … subject [to] those decisions are the same or similar" 185, contradicts
Articles 6(3) and 2(1) of the Community Customs Code.
74. For the European Communities, even if the facts set out in the Panel Report were correct, they
would not amount to an "act of non-uniform admini stration" within the meaning of Article X:3(a). 186
The European Communities considers that the Pane l's findings are based on the "motivation" of
decisions and letters issued by the German authoriti es, which can hardly be regarded as part of the
"administration process". 187 Even if it were to be regarded as such, not every variation in the

179European Communities' other appellant's submission, para. 111.
180Ibid., paras. 114-115.
182Ibid., paras. 118-119 and 141.
183Ibid., para. 144.
184Ibid., paras. 120-121.
185Panel Report, para. 7.276 (quoted in European Communities' other appellant's submission,
para. 122).
186European Communities' other appellant's submission, para. 124.
187Ibid., paras. 126-127 and 138.

reasoning of the decisions of customs authorities could be regarded as amounting to non-uniform
administration, because a violation of that ob ligation can only be assumed to exist where the
divergence has a direct impact on administrative outcomes.
188 In the European Communities' view,
Article X:3(a) does not require the reasoning of deci sions of customs authorities to be uniform; this
would be contrary to the very purpose of the "motivation", which is to set out the reasons that led to
the decision in the circumstances of the particular case.
189 The European Communities points out that
the Panel recognized that "there was no evidence th at there had been a lack of uniformity as regards
the actual tariff classification."190
(c) Tariff Classification of Liquid Crysta l Display Monitors with Digital
Video Interface
75. The European Communities submits that the Pa nel erred in finding that the European
Communities has violated Article X:3(a) of the GA TT 1994 with respect to the tariff classification of
LCD monitors with DVI. 191 According to the European Comm unities, "[t]he Pa nel overstepped its
terms of reference by basing its findings of violation primarily on instances of administration which
post-date its establishment".192 Specifically, the European Commun ities refers to the Dutch decree of
8 July 2005 and the German BTI of 19 July 2005. 193 The European Communiti es also argues that the
Panel did not make an objective assessment of th e facts, as required by Article 11 of the DSU,
because "the Panel did not have an y evidence before it to support a finding that at the time of its
establishment, there was a lack of uniform administ ration with regard to the tariff classification of
LCD monitors."194
76. The European Communities submits that, "even if ... the Panel was justified in considering
instances of administration which post-dated the time of its establishment", it nevertheless erred in
finding a violation of Article X:3(a). 195 The European Communities notes that uniformity under
Article X:3(a) must be established "within a reasonable period of time" 196, and maintains that this has

188European Communities' other appellant's submission, paras. 128 and 138.
189Ibid., para. 19.
190Ibid., para. 128.
191Ibid., para. 202.
192Ibid., para. 150.
193Ibid., para. 166 (referring to Douanerechten. Indeling van bepaalde LCD monitoren in de
gecombineerde nomenclatuur [Customs Law: Classification of certain LCD monitors in the Combined
Nomenclature], No. CPP2005/1372 M, 8 July 2005; and BTI DEM/2975/05-1, 19 July 2005 (Exhibits US-77
and US-78, respectively, submitted by the United States to the Panel).
194Ibid., para. 182.
195Ibid., para. 183.
196Ibid., para. 185.

been achieved with the adoption of Commissi on Regulation (EC) No. 2171/2005 ("EC Regulation
2171/2005") on 23 December 2005, as well as with the withdrawal, in January 2006, of the Dutch
decree and the German BTI. 197 In this respect, the European Communities submits that the Panel
erred in failing to take into account draft EC Regulation 2171/2005, because it had not yet been
formally adopted. 198 Also, the European Communities argu es, the Panel erred in rejecting the
evidence contained in exhibits provided by the Eu ropean Communities at the interim review stage. 199
According to the European Communities, the Panel's decision was not in accordance with Article 15.2
of the DSU, because this evidence related to precise aspects of the Panel's Interim Report. 200 T h e
European Communities considers that the strict approach taken by the Panel with respect to the
evidence submitted by the European Communities duri ng the interim review stage is "incompatible
with its duty to make an objective assessment of th e facts ... [g]iven the Panel's own liberal attitude
towards its terms of reference, as well as the late admission of evidence provided by the United
States".201 The European Communities, therefore, requ ests the Appellate Body to find that the Panel
erred in rejecting exhibits submitted by the European Communities at the interim review stage.202
(d) Administration of the Successive Sales Provision
77. The European Communities appeals the Panel's finding that the administration of
Article 147(1) of the Implementing Regulation (the "successive sales provision") amounts to a
violation of Article X:3(a) of the GATT 1994 because some member States of the European
Communities impose a "form of prior approval" requirement while others do not.203
78. The European Communities submits that, in reaching this finding, the Panel failed to make an
objective assessment of the facts and misapplied Article X:3(a). 204 The European Communities
claims that the Panel erred, in particular, in concluding that the United States had established a

197European Communities' other appellant's submission, para. 186 (referring to Commission Regulation
(EC) No. 2171/2005 of 23 December 2005 concerning the classification of certain goods in the Combined
Nomenclature; Dutch Ministry of Finance, Telefaxbericht, No. BCPP 2006/389 M, dated February 2006, on the
withdrawal of decree No. CPP2005/1372 M; extract from the EBTI data base on the expired BTI
DEM/2975/05-1 (Exhibits EC-167, EC-168, and EC-169, respectively, submitted by the European Communities
to the Panel)). See also Panel Report, para. 6.3.
198European Communities' other appellant's submission, para. 190.
199The European Communities refers to Exhibits EC-167, EC-168, and EC-169, supra, footnote 197.
See also Panel Report, paras. 6.3 and 6.6.
200European Communities' other appellant's submission, paras. 196-197.
201Ibid., para. 199.
202Ibid., para. 201 (referring to Panel Report, para. 6.6 and Exhibits EC-167, EC-168, and EC-169
submitted by the European Communities to the Panel).
203Ibid., paras. 203-229.
204Ibid., para. 204.

prima facie case that certain member States were imposing a requirement of prior approval.
205 In the
European Communities' view, the Panel erred in shifting the burden of proof from the United States to
the European Communities.206
79. The European Communities subm its that the United States supported its claim exclusively
with a statement in the Europ ean Communities Court of Auditors Special Report No. 23/2000
concerning the valuation of imported goods for customs purposes 207 (the "Court of Auditors Report").
The European Communities contends that the Court of Auditors' observation was not shared by other
institutions of the European Communities and that, in particular, the European Commission confirmed
that member States do not impose any requirement of prior approval.208
80. The European Communities contends that the C ourt of Auditors Report was not sufficient to
establish a prima facie case of non-uniform administration of Article 147(1) of the Implementing
Regulation, which does not contain a requirement of prior approval. The European Communities
submits that: first, the statements relied upon by the Panel are excessively vague, because the Court
of Auditors Report does not specify the precise natu re of the "form of prior approval"; secondly, the
Court of Auditors Report reflects the opinion of only one institution of the European Communities
and does not take into account the opinions of ot her institutions, such as the European Commission;
and thirdly, in the European Communities' view , the United States should have demonstrated non-
uniform administration with evidence of actual admini stration rather than with the Court of Auditors
Report.209 Finally, the European Communities argues that the Court of Auditors detected only "minor
variations" in administrative practices, which do no t "automatically translate" into a violation of
Article X:3(a).210 In the European Communities' view, such variations will violate the obligation of
uniform administration only if they are shown to have an impact on administrative outcomes.211
81. The European Communities submits that, even if the Panel was correct to assume that the
burden of proof had shifted to the European Co mmunities, it failed to give due weight to the

205European Communities' other appellant's submission, para. 204.
206See ibid., paras. 214-222.
207Court of Auditors, Special Report No. 23/2000 concerning valuation of imported goods for customs
purposes (customs valuation), together with the Commission's replies, reproduced in Official Journal of the
European Communities, C Series, No. 84, pp. 1-18 (14 March 2001) (Exhibit US-14 submitted by the United
States to the Panel).
208European Communities' other appellant's submissi on, para. 207 (referring to Court of Auditors
Report, supra, footnote 207, p. 17).
209Ibid., paras. 217-221.
210Ibid., para. 221.
211Ibid.

information provided by the European Communities regarding the practice of its member States. 212
As a result, the Panel erred in rejecting as evidence the communication between the European
Communities and its member States, which the Eu ropean Communities provided in its comments on
the Panel's Interim Report.213
3. Conditional Appeal of the European Communities
82. The European Communities conditionally appeals the Panel's finding that Article XXIV:12 of
the GATT 1994 cannot be relied upon to attenuate or to derogate from the provisions of Article X:3 of
the GATT 1994. The European Communities requests a review of this finding only in the event that
the Appellate Body's conclusions imply that the European Communities should "create a centralised
customs agency replacing its [m]ember States in the implementation of [European Communities]
customs law", or that the Eur opean Communities should "create [a European Communities]-level
tribunal for the first-instance review of customs decisions".214
83. The European Communities does not contest that it is obliged to ensure uniform
administration of its customs law, even where this law is being administered by its member States. 215
However, the European Communiti es disagrees with the Panel's interpretation that Article XXIV:12
of the GATT 1994 "does not constitute an exception nor a derogation from the obligation of uniform
administration in Article X:3(a) of the GATT 1994". 216 The European Communities submits that the
question is not whether Article XXIV:12 is a "positive obligation" but, rather, what the content of this
obligation is.217 The European Communities refers to the ge neral principle of international law that
States are responsible for the acts of all their orga ns and emanations, including their sub-federal and
regional governments. 218 According to the European Commun ities, this general principle did not
require a specific confirmation in the GATT.

212European Communities' other appellant's submission, para. 223.
213Ibid., para. 227 (referring to Panel Report, paras. 6.6 and 7.427; and Exhibit EC-170 submitted by
the European Communities to the Panel).
214Ibid., para. 235.
215Ibid., para. 233.
216Panel Report, para. 7.145 (quoted in European Communities' other appellant's submission,
para. 241).
217European Communities' other appellant's submission, para. 242.
218The European Communities refers, in paragraph 243 of its other appellant's submission, to Article 4
of the Articles on the Responsibility of States for Internationally Wrongful Acts 2001. (Text adopted by the
International Law Commission at its fifty-third session, in August 2001, and submitted to the General Assembly
as a part of the Commission's report covering the work of that session.) The re port, which also contains
commentaries on the draft articles, appears in the Official Records of the General Assembly, Fifty-sixth Session,
Supplement No. 10 (A/56/10). The text is reproduced in the annex to General Assembly Resolution 56/83 of
12 December 2001.

84. The European Communities emphasizes the sp ecific reference in Article XXIV:12 to
"reasonable measures as may be available" and subm its that this language not only confirms the
responsibility of WTO Members for their local and regional governments, it also sets out a standard
for the type of measures that must be taken by WT O Members with respect to their local and regional
governments.
219 In the European Communiti es' view, the GATT panel in Canada – Gold Coins
recognized this fact when it stated that "t he consequences of ... non-observance [of GATT
obligations] by the local government for trade rela tions with other [Members] are to be weighed
against the domestic difficulties of securing observance". 220 Therefore, the European Communities
submits that Article XXIV:12 of the GATT 1994 serves as a "useful and necessary safeguard" in cases
where a WTO Member is faced with claims that could be addressed only through major changes in
the federal system within that WTO Member, as would be the case for a requirement to create a
European Communities customs agency or customs court.
221
D. Arguments of the United States – Appellee
1. The Panel's Terms of Reference
(a) Temporal Limitations of the Panel's Terms of Reference
85. The United States is of the view that the Panel did not err in its approach to the temporal
scope of its terms of reference.222 The United States observes that the legal instruments it identified as
the measures at issue in the panel request were in existence on the date when the Panel was
established.223 For the United States, the Eur opean Communities' argument "confuses administration
of [European Communities] customs law in existenc e when the Panel was established with individual
acts of administration that occurred prior to establishment and with evidence that came to light during
the panel proceeding that confirm the existence of non-uniform administration at the time of panel
establishment."224 For the United States, the Panel correctly explained that "it would take account of
individual instances of administration pre-dating and post-dating panel establishment not to determine
whether each established a WTO-inconsistency in its own right, but as a means of elucidating the
manner of administration that may be in existence at the time of panel establishment." 225 The United

219European Communities' other appellant's submission, para. 243.
220GATT Panel Report, Canada – Gold Coins , para. 69 (quoted in European Communities' other
appellant's submission, para. 244).
221European Communities' other appellant's submission, para. 247.
223Ibid., para. 17.
225Ibid., para. 18 (referring to Panel Report, paras. 7.36-7.37).

States considers that the Panel referred to indi vidual acts of administration that pre-dated its
establishment "not as potential breaches of Article X:3(a) of the GATT 1994 in and of themselves, but
as evidence of the manner of administration of the relevant provisions of [European Communities]
customs law."226
86. The United States is also of the view that the European Communities misreads the logical
distinction the Panel made between admini stration as an ongoing phenomenon and individual
instances of administration. 227 For the United States, although the European Communities has
referred to the general principle that a panel may c onsider only measures in existence at the time of
panel establishment, it made "no distinction be tween acts of administration themselves being
considered as potential breaches of Article X:3(a) and acts of administration being considered as
evidence of an ongoing course of administration th at potentially is a breach of Article X:3(a)." 228 The
United States points out that nothing in the text of Ar ticle X:3(a) or its context suggests that a breach
of Article X:3(a) "is demonstrated only when individual acts of administration in existence on the date
a panel is established diverge."229 According to the United States, the European Communities' view is
that administration is not a continuum, and that only individual acts of administration in existence at
the time of panel establishment can be challenged as breaching Article X:3(a). If this understanding
were correct, the United States argu es, the obligation of uniform administration under Article X:3(a)
would be rendered "ineffective" 230 and would not meet the minimum standards of predictability for
traders set out in Article X:3(a).231
87. Regarding the European Communities' argument concerning events that post-dated the Panel's
establishment, the United States maintains that, contrary to the European Communities' assertions, the
Panel's references to evidence post-dating its estab lishment do not show the Panel overstepping its
terms of reference. According to the United Stat es, "[t]hey show the Panel properly [took] account of
evidence relevant to understanding the manner of ad ministration of [European Communities] customs
law existing at the time of panel establishment."232

226United States' appellee's submission, para. 22. (original emphasis)
227Ibid., para. 23.
228Ibid., para. 27.
229Ibid., para. 31.
230Ibid., para. 35.
231Ibid., paras. 32 and 41.
232Ibid., para. 46.

2. Claims regarding Article X:3(a) of the GATT 1994

(a) The Administrative Process and the Requirement of Uniformity
88. The United States asks the Appellate Body to re ject the European Communities' request for a
reversal of the Panel's finding that Article X:3(a) of the GATT 1994 "requires uniformity of
administrative processes irrespective of their impact on the uniform administration of the laws".233
89. The United States disagrees with the European Communities' view that "the obligation of
uniform administration only extends to the administ rative process to the extent that the administrative
process has a direct and significant impact on the outcome of the process". 234 The United States
points out that the European Communities failed to explain what it means by "administrative
outcome" and how to distinguish administrative outcomes from administrative processes.
235 For the
United States, the exclusion of administrative pro cesses from the obligation of uniform administration
has no basis in the text of Article X:3(a). 236 The United States considers that the European
Communities' approach is too restrictive and wo uld imply that significant areas of customs
administration could be conducted in a non-unif orm manner without breaching Article X:3(a). 237 For
the United States, from the trader's view, ther e is no basis for assuming that the outcome of
administrative processes consists only of the release of an imported good with a particular
classification and valuation into the customs territory of the European Communities, and does not also
include the burden associated with the administrative process. 238
90. According to the United States, whether requiring uniformity of administrative processes
under Article X:3(a) would exclude de minimis variations in the administration of customs law is not
at issue in this dispute.239 Indeed, the United States maintains that, where the Panel found divergences
in administrative processes inconsistent with Article X:3(a), the divergences were material to traders'
decisions to convey goods into the European Co mmunities through one region rather than through
another.240

233United States' appellee's submission, para. 63 (refe rring to European Communities' other appellant's
submission, para. 82).
234European Communities' other appellant's submission, para. 81.
235United States' appellee's submission, paras. 53-54.
236Ibid., para. 55.
237Ibid., para. 58.
238Ibid., para. 59.
239Ibid., paras. 60-61.
240Ibid., para. 61.

(b) The Administrative Process Leading to the Tariff Classification of
Blackout Drapery Lining
91. The United States submits that the Panel did not err in its findings regarding the tariff
classification of blackout drapery lining. In th e United States' view, the European Communities
attempts to reargue certain factual issues, and in so doing misrepresents the relevant facts. 241 T h e
United States disagrees with the European Communiti es' assertion that the product considered by the
German customs authorities in the instances of administration the Panel reviewed was different from
the product considered by other customs author ities in other member States of the European
Communities.242 Regarding the European Communities' alle gation that the Panel was mistaken when
it stated that all decisions or letters of the Germ an customs authorities relied on an interpretative aid
particular to Germany, the United States points out th at there was an explicit reference to that aid in
the documents issued by the German customs authorities. 243 The United States requests the Appellate
Body not to disturb the Panel's factual findings or reweigh the evidence that was before it.244
92. The United States asserts that the case of tariff classification of blackout drapery lining is a
specific example of the European Communities' mi stake of confusing administration as an ongoing
phenomenon with individual acts of administration. For the United States, divergence in how the
German customs authorities and customs authorities in other member States administer the Common
Customs Tariff constitutes a lack of uniform administration.245
93. The United States argues that the Panel correctly found that non-uniform administrative
processes in classifying blackout drapery lining are inconsistent with Article X:3(a). The United
States observes that the Panel did not find that differences between the blackout drapery lining
presented to the German customs authorities and the blackout drapery lining presented to other
customs authorities in the European Communities justified different ta riff classifications; rather, the
United States asserts that what the Panel found w as an absence of evidence to support a finding of
divergent tariff classifications between Germany and the other member States.
246 The United States
contends that a finding of insufficient evidence of divergent classifications is not the same as a finding
that different customs authorities correctly reached different tariff classifications. For the United
States, the European Communities' argument regardi ng the classification of blackout drapery lining is

242Ibid., para. 77.
243Ibid., para. 80.
244Ibid., para. 85.
245Ibid., para. 86.
246Ibid., para. 90.

a variation of its general argument that the obliga tion of uniform administration under Article X:3(a)
covers administrative processes only to the extent that they have a direct and significant impact on
administrative outcomes.
247 Finally, according to the United States, the distinction the European
Communities seeks to draw between the "motivation" of a decision and "administrative processes" is
without basis.248
94. The United States agrees with the Panel's findi ng that the German customs authorities failed
to take into account the decisions of customs authorities of other member States regarding the
classification of blackout drapery lining. 249 For the United States, it is important to consider the
context in which German customs authorities admi nister European Communities customs law, as it
does not include any requirement of "reference by customs authorities to decisions taken by other
customs authorities operating within the same system". 250 The United States considers it important
that "the German [customs] authority by its ow n admission was aware of other authorities [in the
European Communities] having classified 'comparabl e goods', yet gave scant consideration to such
classification and apparently undertook no investigation of those other authorities' findings."251
(c) Tariff Classification of Liquid Crysta l Display Monitors with Digital
Video Interface
95. The United States requests the Appellate Body to uphold the Panel's finding that the European
Communities has violated Article X:3(a) of the GA TT 1994 with respect to the tariff classification of
LCD monitors with DVI. For the United States, th e European Communities' claim misrepresents key
facts and ignores the distinction between administration and evidence of administration. The United
States also disagrees with the Eur opean Communities' argument that the Panel erred by declining to
consider new evidence introduced following the issuance of the Panel's Interim Report.252
96. The United States submits that the Panel' s finding that the European Communities
acknowledged tariff classification of LCD monitors with DVI to be non-uniform in 2004 was based
on an objective assessment of the facts. 253 The United States emphasizes that it had established this
fact before the Panel, and that various statements made by the European Communities in the course of

248Ibid., para. 94.
249Ibid., para. 107.
252Ibid., para. 108.
253Ibid., para. 109.

the Panel proceedings suggested that the Europ ean Communities "was aware of the issue and was
working to address it".254
97. The United States notes that the European Comm unities argued before the Panel that it had
taken three steps to address the non-uniform admini stration with respect to the classification of LCD
monitors with DVI: the June/July 2004 "conclu sions" of the Customs Code Committee; Council
Regulation (EC) No. 673/2005 of 25 April 2005 estab lishing additional customs duties on imports of
certain products originating in the United States; and Commission Regulation (EC) No. 634/2005 of
26 April 2005 concerning the classification of certain goods in the Combined Nomenclature. 255 The
United States maintains that the Panel made an obj ective assessment of the facts as it considered each
of these measures and found that none of them resolved the problem of non-uniform administration.256
98. For the United States, the Panel did not overstep its terms of reference by referring to acts of
administration that post-dated the Panel's establishment, because the Panel did not refer to these acts
as breaches of Article X:3(a) in their own right, but as evidence of the manner of administration in
breach of Article X:3(a) that was in existe nce at the time the Panel was established.
257 Thus, the
United States argues, the European Communities ag ain confuses administration with individual acts
of administration. According to the United Stat es, the Dutch decree of 8 July 2005 and the German
BTI of 19 July 2005 are relevant evidence supporting the Panel's finding that "measures put into place
since 2004 have not resolved the problem of non-uniform administration and may well have increased
confusion."
258
99. According to the United States, the Panel prope rly gave no weight to draft EC Regulation
2171/2005 concerning the tariff classification of LCD monitors and was correct to decline considering
new evidence the European Communities introduced at the interim review stage. 259 Regarding draft
EC Regulation 2171/2005, the United States argues th at the European Commun ities' characterization
of this piece of evidence as a new instance, rather than a continuation, of non-uniform administration
in existence since 2004 is unfounded, and that th e Panel could not have assumed that this draft
Regulation would be adopted. 260 The United States adds that th e European Communities' argument

255Ibid., para. 117 (referring to European Communitie s' first written submission to the Panel,
paras. 351-353, 356, and 361).
256Ibid., para. 123.
257Ibid., para. 125.
259Ibid., paras. 128, 132, and 140 (referring, inter alia , to Exhibits EC-167, EC-168, and EC-169
submitted by the European Communities to the Panel).
260Ibid., paras. 129 and 131.

regarding the draft Regulation is "self-contradictory"
261 because, on the one hand, it argues that the
relevant point in time for establishing a violation is the date of panel establishment while, on the other
hand, it faults the Panel for not taking account of draft EC Regulation 2171/2005, which came into
existence late in the Panel proceedings. Regardi ng the Panel's decision not to consider new evidence
introduced at the interim review stage, the United States emphasizes that the interim review stage is
not an appropriate time to introduce new eviden ce, and disagrees with the European Communities'
assertion that there should be an exception for evidence introduced to correct errors of fact.262
(d) Administration of the Successive Sales Provision
100. The United States requests the Appellate Body to uphold the Panel's finding that the European
Communities has violated Article X:3(a) of the GATT 1994 as a result of the imposition of a form of
prior approval with respect to the successive sales provision by customs authorities of some member
States of the European Communities.
263
101. The United States asserts that the statement of the European Communities' Court of Auditors
Report that, "in practice, some customs authorities do impose a form of prior approval even though
this has no basis in [European] Communit[ies] law"
264, amounts to an admission of non-uniform
administration by the European Communities. 265 With respect to th e European Commission's
comment on this statement in the Court of Auditors Report 266, the United States submits that the
European Communities has not accurately render ed the Commission's co mment, because the words
"in some member States" were omitted from the European Communities' quotation of the
Commission's comment. In the United States' view, this reveals that the European Commission did
not disagree with the Court of Auditors on the existence of divergent practices. 267 For the United
States, the very fact that, in its replies to the Court of Auditors Report, the Commission disagreed with
the Court of Auditors on a variety of issues but not on the Court's finding of divergent administration
among customs authorities of member States, supports the Panel's view that the Court's finding was an
admission of non-uniform administration in the European Communities.
268 The United States
considers that it did not need to adduce a dditional evidence in order to establish its prima facie case,

262Ibid., paras. 134-136. The United States makes reference to Appellate Body Report, EC – Sardines,
para. 301, in support of its argument.
266See supra, para. 79.
268Ibid., para. 146.

because it had provided the Panel with an admission of non-uniform administration by the European
Communities.
102. The United States maintains that the Panel prope rly declined to consid er evidence introduced
by the European Communities at the interim revi ew stage to rebut its admission of non-uniform
administration, because this evidence could have been submitted at an earlier stage. Furthermore,
according to the United States, even under the Eu ropean Communities' own reasoning, it was proper
for the Panel not to consider this new evidence c oncerning the administration of the successive sales
provision, because the European Communities had not clarified that this evidence was intended
merely to correct an error of fact. 269 Finally, the United States alle ges that the e-mail correspondence
the European Communities sought to introduce at the interim review stage consisted of statements
made by persons with a vested interest in the outcome of the dispute.270
3. Conditional Appeal of the European Communities
103. The United States requests the Appellate B ody to reject the European Communities'
conditional appeal to reverse the Panel's findi ng that Article XXIV:12 of the GATT 1994 cannot be
relied upon to attenuate or to derogate from the provisions of the GATT 1994, including
Article X:3.271
104. The United States asserts that the question of the possible relevance of Article XXIV:12 to the
European Communities' obligations un der Article X:3(b) is outside th e scope of appellate review as
circumscribed by Article 17.6 of the DSU. 272 According to the United States, the European
Communities never raised the issue of the releva nce of Article XXIV:12 to its obligations under
Article X:3(b), but referred to it only in relation to the obligation of uniform administration under
Article X:3(a) of the GATT 1994.273
105. The United States maintains that Article XXIV:12 of the GATT 1994 is not relevant to this
dispute, because that provision applies to the " observance of the provisions of [the GATT 1994] by
the regional and local governments and authoriti es within [each Member's] territories" whose
measures "the federal government cannot control be cause they fall outside its jurisdiction under the

270Ibid., para. 158.
271Ibid., para. 160; Panel Report, para. 7.145.
273Ibid. (referring to European Communities' first written submission to the Panel, para. 220; and
European Communities' response to Question 68 posed by the Panel, para. 113, Panel Report, pp. A-65 and
A-66).

constitutional distribution of competences."
274 In the United States' view, this dispute does not
concern the observance of Article X:3(a) of the GATT 1994 by regional and local governments within
the European Communities; but, rather, that the European Communities itsel f has failed to establish
institutions or other mechanisms ne cessary to ensure uniform administration of its customs law. In
this regard, the United States distinguishes the present dispute from the dispute in Canada – Gold
Coins, which involved a measure adopted by a provincial government that put Canada in breach of its
obligation under Article III of the GATT 1947.275
106. Finally, the United States argues that, even if Article XXIV:12 were applicable to this dispute,
and even if it could potentially attenuate or de rogate from the European Communities' obligations
under Article X:3(a), it would not do so in this dispute, because the European Communities offered no
evidence to show that the measures it is taking to ensure observance of Article X:3(a) by regional and
local governments within its territories are "such reasonable measures as may be available to it", as
required by Article XXIV:12. 276 With respect to the European Communities' argument that the
"safeguards and mechanisms" 277 under its system of customs administration constitute such
"reasonable measures", the United States submits that a mere assertion does not amount to proof, and
that the question of whether the measures a Me mber is taking satisfy the requirements of
Article XXIV:12 is not "self-judging".278
E. Arguments of the Third Participants
107. Pursuant to Rule 24(2) of the Working Procedures , Argentina, Australia, Brazil, China,
Hong Kong, China, India, and the Separate Cu stoms Territory of Taiwan, Penghu, Kinmen, and
Matsu chose not to submit a third participant's s ubmission but attended the oral hearing. In its
statement at the oral hearing, Australia presented its views regarding the Panel's terms of reference,
the interpretation of the scope of the term "admin ister" in Article X:3(a) of the GATT 1994, and the
irrelevance of Article XXIV:12 of the GATT 1994 to the facts of this dispute. China, in its statement
at the oral hearing, addressed issues relating to the Panel's terms of reference.

274United States' appellee's submission, paras. 164 and 163, respectively (referring to GATT Panel
275Ibid., para. 164 (referring to European Communities' other appellant's submission, paras. 234
and 244).
276Ibid., para. 174.
277European Communities' other appellant's submission, para. 235.

1. Japan
108. Japan agrees with the Panel that "the measure at issue", for purposes of Article X:3(a) of the
GATT 1994, can be the "manner of administration" ra ther than certain laws, regulations, decisions,
and rulings themselves. 279 According to Japan, previous WTO ju risprudence has indicated that "[i]n
principle, any act or omission attributable to a WTO Member can be a measure of that Member for
purposes of dispute settlement proceedings". 280 Japan submits that the United States' distinction
between a "measure" and a "claim" is not convincing. 281 Japan considers that the manner of
administration "can be described objectively" and that the "description of how a government
administers laws, regulations and [other instruments] is nothing more than a description of an act or
omission attributable to a WTO Member."282
109. Japan maintains that the Panel failed to prov ide sufficient reasoning for its finding that
Article 6.2 of the DSU requires the complainant to identify specific areas of customs administration in
the panel request, because the United States challeng ed before the Panel the administration of laws
and regulations that cumulatively contai n "thousands of different provisions". 283 Japan submits that
the Panel's reasoning in this respect was insuffici ent, because "the Panel did not explain why the
specification of the 'areas' of customs administration, each one of which still contains numerous
different provisions to be administered, was sufficien t to inform the defendant and the third parties of
the legal basis of complaints."
284 In Japan's view, the Panel also failed to explain why it relied on the
Appellate Body's finding in EC – Computer Equipment, despite the differences between that case and
the present case. Japan is of the opinion that th e Panel ought to have provided "sufficient reasoning
for its finding, since fixing the scope of the terms of reference of a panel is quite important in that it
will directly affect the rights and obligations of the parties to disputes."285
110. Japan also considers that the Panel failed to give due consideration to the European
Communities' understanding of the claim against it in making findings on the sc ope and nature of the
United States' challenge under Article X:3(a) of the European Communities' system of customs
administration.286 Japan asserts that the Panel must give fu ll effect to the specificity requirements in

279Japan's third participant's submission, paras. 8-17.
280Ibid., para. 11 (referring to Appellate Body Report, US – Corrosion-Resistant Steel Sunset Review ,
281Ibid., para. 10.
282Ibid., para. 12.
283Ibid., para. 14; Panel Report, para. 7.30.
284Japan's third participant's submission, para. 16.
285Ibid., para. 17.
286Ibid., para. 18.

Article 6.2 of the DSU, and that it must assess whet her or not the defendant was sufficiently informed
of the legal basis of the claim against it.
111. Japan is "sceptical" about the Panel's finding that expired measures may properly be the
subject of recommendations by a panel, since "it is practically impossible for a defendant to bring a
measure into conformity with its WTO obligations when the measure is no longer in existence."
287
112. With regard to the relevance of Article XXI V:12 of the GATT 1994 for the interpretation of
Article X:3(a), Japan asserts that the Panel properly concluded that "Article XXIV:12 ... is drafted as a
positive obligation rather than a defence", and that Article XXIV:12 "imposes an obligation on
Members to take all reasonable measures to en sure that local authorities comply with WTO
obligations."288
2. Korea
113. Korea asserts that the Panel failed to take into account "the panel request of the United States,
and the comments and arguments submitted during the underlying panel proceeding" 289, which
unequivocally challenged the European Communities' system of customs administration "as a whole"
rather than individual instances of non-uniform customs administration. As a result, Korea argues, the
Panel erroneously narrowed its terms of referenc e by addressing only the individual instances of
alleged non-uniformity. Korea submits that "a pane l must construe a panel request as a whole and ...
it must consider how the different parts of a panel request relate to one another."290
114. With respect to the United St ates' claim concerning Article X:3(b) of the GATT 1994, Korea
contends that the European Communities has failed to provide a mechanism for the prompt review
and correction of administrative actions related to customs matters. Korea submits that the terms "the
agencies" and "such agencies" without any quali fication unambiguously refer to the collective
government entity in charge of customs matters w ithin a Member's territory. In addition, Korea
submits that Article X:3(a) of the GATT 1994, wh en read as context to Article X:3(b) of the
GATT 1994, indicates that the obligation contained in Artic le X:3(b) relates to all, rather than only to
some, of the agencies.291

287Japan's third participant's submission, paras. 24 and 26 (referring to Panel Report, para. 7.36).
289Korea's third participant's submission, para. 5.
290Ibid., para. 12. Korea makes reference to Appellate Body Report, US – FSC (Article 21.5 – EC II) ,
paras. 66-68, and Appellate Body Report, US – Carbon Steel, para. 127, in support of its argument.
291Korea's third participant's submission, para. 18.

115. Finally, Korea supports the United States' requ est that the Appellate Body complete the
Panel's analysis and find that the European Co mmunities' system of customs administration as a
whole is inconsistent with the European Comm unities' obligation under Article X:3(a) of the
GATT 1994.292 Korea also supports the United States' request that the Appellate Body complete the
analysis with regard to Article X:3(b) of th e GATT 1994 and find that the European Communities
fails to provide review tribunals or procedur es whose decisions govern the practice of "all the
agencies entrusted with administrative enforcem ent" within the territory of the European
Communities.293
III. Issues Raised in This Appeal
116. The following issues are raised in this appeal:
(a) with respect to the Panel's terms of reference:
(i) whether the Panel erred in finding that the "measure at issue" for the
purposes of a claim under Article X:3(a) of the GATT 1994 must necessarily
be "the manner of administration that is allegedly non-uniform, partial and/or
unreasonable"294;
(ii) whether the Panel erred in finding th at the specific measure at issue in this
dispute is "the manner of administration ... of the Community Customs Code,
the Implementing Regulation, the Common Customs Tariff, the TARIC and
related measures"295, and, furthermore, that it was confined to "the areas of
customs administration specifically identified in the United States' request
for establishment of a panel"
296;
(iii) whether the Panel erred in finding that, due to the wording and content of the
panel request, it was precluded from considering "as such" challenges of the
design and structure of the European Communities' system of customs
administration as a whole or overall
 297; and

292Korea's third participant's submission, para. 14.
293Ibid., para. 20.
294Panel Report, para. 7.20.
295Ibid., para. 7.33. These laws and regulations are defined supra, para. 2 and footnote 2 thereto.
296Ibid., para. 7.64.
297Ibid., paras. 7.50, 7.63, and 7.64.

(iv) whether the Panel erred in its interpre tation of the temporal scope of its terms
of reference in respect of "steps and acts of administration that pre-date or
post-date the establishment of a panel"
298;
(b) with respect to Article X:3(a) of the GATT 1994:
(i) whether the Panel erred in finding that the term "administer" in
Article X:3(a) of the GATT 1994 "relates to the application of laws and
regulations, including administrative processes and their results, but not to
laws and regulations as such" 299, and whether, consequently, the Panel erred
in finding that different penalty pr ovisions and audit procedures found
among the member States of the European Communities are not inconsistent
with Article X:3(a) of the GATT 1994
 300;
(ii) whether the Panel has made an interpre tation to the effect that Article X:3(a)
of the GATT 1994 requires uniformity of "administrative processes";
whether the Panel erred in finding, in paragraph 7.119 of the Panel Report,
that the term "administer" relates to administrative processes; and whether
the Panel erred in finding that the ad ministrative process leading to the tariff
classification of blackout drapery lining amounts to non-uniform
administration within the meaning of Article X:3(a) of the GATT 1994, and
that the European Communities has violated Article X:3(a) of the
GATT 1994 with respect to the tariff classification of blackout drapery
lining
301;
(iii) whether the Panel erred in finding that the European Communities has
violated Article X:3(a) of the GATT 1994 with respect to the tariff
classification of liquid crystal display flat monitors with a digital video
interface
 302;

298Panel Report, paras. 7.36-7.37.
299Ibid., para. 7.119.
300Ibid., paras. 7.434 and 7.444.
301Ibid., para. 7.276.
302Ibid., para. 7.305.

(iv) whether the Panel erred in find ing that the European Communities'
administration of the "successive sales provision" 303 amounts to a violation
of Article X:3(a) of the GATT 1994 because some member States of the
European Communities impose a "form of prior approval" requirement while
others do not
 304; and
(v) in the event that the Appellate Body concludes that the Panel erred in its
identification of the specific measures at issue in this dispute, and in the
event that the Appellate Body conclu des that the United States was not
precluded from challenging the European Communities' system of customs
administration as a whole or overall, whether the Appellate Body is in a
position to complete the analysis regarding this claim;
(c) with respect to Article X:3(b) of the GATT 1994:
whether the Panel erred in finding that "Article X:3(b) [of the GATT 1994] does not
necessarily mean that the decisions of the j udicial, arbitral or administrative tribunals
or procedures for the review and correc tion of administrative action relating to
customs matters must govern the practice of all the agencies entrusted with
administrative enforcement throughout the territory of a particular [WTO]
Member"
305; and
(d) with respect to Article XXIV:12 of the GATT 1994:
in the event that the conditions posited by the European Communities' appeal are
fulfilled, whether the Panel erred in its interpretation of Article XXIV:12 of the
GATT 1994.306
117. We proceed to analyze these issues in the order set out above.

303Article 147(1) of the Implementing Regulation.
304Panel Report, para. 7.385.
305Ibid., paras. 7.539, 7.556, and 8.1(e). (original emphasis)
306Ibid., para. 7.145.

IV. The Panel's Terms of Reference
118. With respect to the Panel's terms of reference, the United States' appeal can be divided into
three issues.
119. The first issue raised is whether the Panel erred in finding that, "when a violation of
Article X:3(a) of the GATT 1994 is being claimed, the relevant request for establishment of a panel
must identify the manner of administration th at is allegedly non-uni form, partial and/or
unreasonable."
307 (infra, Section IV.A) The second issue is whether the Panel erred in finding that the
specific measure at issue in this dispute is "t he manner of administration ... of the Community
Customs Code, the Implementing Regulation, the Common Customs Tariff, the TARIC and related
measures" and, furthermore, that it was confined to the six areas of customs administration
specifically identified in the third paragraph of th e request for the establishment of a panel by the
United States (the "panel request")
 .308 (infra, Section IV.B) While these two issues relate to the
identification of the specific measure at issue, the third issue raised by the United States relates to the
Panel's construction of the nature and scope of the claim set out in the panel request. With respect to
this third issue, the United States contends that th e Panel erred in finding that, due to the wording and
content of the panel request, the United States was precluded from challenging the European
Communities' system of customs administration "as a whole" or "as such". (infra, Section IV.C)
120. In its other appeal, the European Communitie s contends that the Panel erred in its
interpretation of the temporal scope and limitations of its terms of re ference in respect of "steps and
acts of administration that pre-date or post-date the establishment of a panel".
309 (infra, Section IV.D)
121. We now examine these four issues in detail.
A. Interpretation of the Term "Measures at Issue" under Article 6.2 of the DSU
122. The first issue is whether the Panel erred in finding that the "measure at issue" for purposes of
a claim under Article X:3(a) of the GATT 1994 must be the "manner of administration" that is
allegedly non-uniform, partial, and/or unreasonable.310

307Panel Report, para. 7.20.
308Ibid., para. 7.33.
309Ibid., para. 7.37.
310Ibid., paras. 7.20 and 7.22.

123. The Panel was of the view that the term "measu res at issue" in Article 6.2 of the DSU should
be interpreted in the light of the specific WTO oblig ation that is allegedly being violated by that
measure in a particular dispute. The Panel consid ered that this approach is necessary because the
"measure at issue" identified in the panel request will be the subject of a recommendation, pursuant to
Article 19.1 of the DSU, if that measure is found to be in violation of a WTO obligation.311
124. Based on this general proposition, the Panel turned to the interpretation of the nature of a
"measure at issue" with respect to the obligation contained in Article X:3(a) of the GATT 1994. The
Panel considered that the essence of the obligation under this Article is to "administer [the legal
instruments of the kind described in Article X:1] in a uniform, impartial and reasonable manner". 312
For the Panel, "this essential aspect of the obliga tion contained in Article X:3(a) of the GATT 1994
[implies that] when a violation of Article X:3(a) of the GATT 1994 is being claimed, the ... request
for establishment of a panel must identify the manne r of administration that is allegedly non-uniform,
partial and/or unreasonable."313 The Panel further reasoned that, if a WTO Member were found to be
in violation of Article X:3(a), this would mean that the manner in which the legal instruments are
being administered by that Member is not uniform, impartial, or reasonable. In order to comply with
a recommendation made under Article 19.1 of the DSU to bring the measure at issue into conformity
with Article X:3(a) of the GATT 1994, "t he Member would need to alter the manner in which the
relevant laws, regulations, decisi ons and/or rulings are being administered ".314 Thus, for the Panel,
the specific WTO obligation alleged to be violated and the means of compliance with a
recommendation made under Article 19.1 of the DSU should govern the identification of the specific
measure at issue under Article 6.2 of the DSU. The Panel therefore found that, for purposes of a
claim under Article X:3(a), the "measure at issu e" to be identified in the panel request under
Article 6.2 of the DSU must be the "manner of ad ministration" of the legal instruments of the kind
described in Article X:1 of the GATT 1994.315
125. On appeal, the United States challenges this interpretation of the Panel. For the United States,
"manner of administration" is not a "measure" 316; rather, it is, "[a]s the Panel uses the term, ... a
description of how a measure operates so as to breach an Agreement provision." 317 The United States

311Panel Report, para. 7.17.
312Ibid., para. 7.20.
313Ibid.
314Ibid., para. 7.21. (original emphasis)
315Ibid.
316United States' appellant's submission, para. 47. See also United States' response to Question 1 posed
by the Panel, Panel Report, p. A-2.
317United States' appellant's submission, para. 47. (original emphasis)

emphasizes that the Panel's reasoning blurs the distinction between "measures" and "claims".
318 The
United States also finds fault with the Panel's rec ourse to Article 19.1 of the DSU in identifying the
measure at issue. The United States point out that, "because DSU Article 19.1 requires that the
breaching 'measure' be brought into conformity", it do es not follow that "the measure in the case of
Article X:3(a) must be the 'manner of administrati on' of 'laws, regulations, judicial decisions or
administrative rulings,' rather than the laws, regula tions, judicial decisions, or administrative rulings
themselves."319 For the United States, "[t]he mere fact that a breach of Article X:3(a) may be
removed by changing a law's administration is not a basis for concluding that the law is not the
measure at issue."
320 The United States also argues that the Panel's reasoning leads to illogical
consequences for complaints not only under Artic le X:3(a) of the GATT 1994 but under other WTO
provisions as well, because, under this approach, th e measure at issue will not be "distinguishable"
from the legal basis of the complaint, namely, the claim under Article 6.2 of the DSU.321
126. The European Communities agrees with the Panel that the measure at issue with respect to the
United States' claim under Article X:3(a) in this dispute is the "manner of administration" of European
Communities customs law.322 The European Communities argues that, by referring to the "manner of
administration", the Panel did not blur the distin ction between the measure at issue and the claim
under Article X:3(a). According to the European Communities, the Panel used the term "manner of
administration" to distinguish "administration"—whi ch is the measure at issue under Article X:3(a)—
from the laws, regulations, judicial decisions, and ad ministrative rulings of general application under
Article X:1 of the GATT 1994, which are the subject of administration. 323 The European
Communities is of the view that the Panel used the term "manner of administration" synonymously
with "administration"
324, and submits that this "minor ambiguity" 325 is not enough to reverse the
Panel's finding that, when a violation of Article X:3( a) is claimed, the panel request must identify the
"manner of administration". The European Communiti es contends that the United States is trying to
confuse the laws to be administ ered with their administration. 326 The European Communities points
out that the panel request itself refers sp ecifically to the manner of administration 327, "clearly

319Ibid., para. 48.
320Ibid.
321Ibid., para. 49.
323Ibid., para. 91.
324Ibid.
325Ibid., para. 92.
326Ibid., para. 94.
327Ibid., para. 95.

distinguishes the administration from the laws which are being administered" 328, and, thus, "identifies
the 'administration', rather than [the] laws, as the measure at issue in the dispute".329
127. We are thus called upon to determine whether the Panel erred in finding that, when a violation
of Article X:3(a) of the GATT 1994 is being claimed, the "measure at issue" must necessarily be the
"manner of administration" of the legal instruments of the kind described in Article X:1, and that such
legal instruments cannot themselves be identified as the "measures at issue".
128. We begin our analysis with the text of Article 6.2 of the DSU, which provides:
The request for the establishment of a panel shall be made in writing.
It 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 th e problem clearly. In case the
applicant requests the establishment of a panel with other than
standard terms of reference, the written request shall include the
proposed text of special terms of reference.
129. Article 6.2 sets forth the requirements applicable to a request for the establishment of a panel.
As the Appellate Body stated in US – Carbon Steel, there are two distinct requirements, namely:
... identification of the specific measures at issue , and the provision
of a brief summary of the legal basis of the complaint (or the
claims).
330 (original emphasis)
130. These two requirements relate to different aspect s of the complainant's challenge to measures
taken by another Member. The "specific measure" to be identified in a panel request is the object of
the challenge, namely, the measure that is allege d to be causing the violation of an obligation
contained in a covered agreement. In other words, the measure at issue is what is being challenged
by the complaining Member. In contrast, the le gal basis of the complaint, namely, the "claim"
pertains to the specific provision of the covered agre ement that contains the obligation alleged to be
violated. A brief summary of the legal basis of the complaint required by Article 6.2 of the DSU aims
to explain succinctly how or why the measure at issue is considered by the complaining Member to be
violating the WTO obligation in question. This brief summary must be sufficient to present the
problem clearly. Taken together, these different aspects of a panel request serve not only to define the
scope of a dispute, but also to meet the due process requirements.

329Ibid.
330Appellate Body Report, US – Carbon Steel, para. 125.

131. Pursuant to Article 7.1 of the DSU, a panel's terms of reference are governed by the request
for the establishment of a panel. In other word s, the panel request identifies the measures and the
claims that a panel will have the authority to exam ine and on which it will have the authority to make
findings. The question of whether a measure falls w ithin a panel's terms of reference is a threshold
issue, distinct from the question of whether the measure is consistent or not with the legal provision(s)
of the covered agreement(s) to which the panel requ est refers. Therefore, questions pertaining to the
identification of the "measures at issue" and th e "claims" relating to a lleged violation of WTO
obligations, set out in a panel request, should be analyzed separately.
132. At the heart of the Panel's reasoning stands the proposition that the term "measure at issue" in
Article 6.2 of the DSU should be interpreted in the light of the specific WTO obligation that is raised
in a particular claim. This reasoning appears to us to be flawed. The Panel's proposition would
introduce uncertainty because the identification of the measure would vary depending on the
substance of the legal provision invoked by a comp lainant and the interpretation that a panel might
give to that provision. As we noted above, Article 6.2 of the DSU sets out "two distinct requirements"
applicable to requests for the establishment of a panel: "identification of the specific measures at
issue, and the provision of a brief summary of the legal basis of the complaint (or the claims)"
sufficient to present the problem clearly.
331 These two requirements are conceptually different and
they should not be confused. In finding that the term "measures at issue" in Article 6.2 should be
interpreted in the light of the specific WTO obligation that is alleged to be violated, the Panel blurred
the distinction between measures and claims.
133. In our view, a complainant is entitled to incl ude in its panel request an allegation of
inconsistency with a covered ag reement of any measure that ma y be submitted to WTO dispute
settlement. In US – Corrosion-Resistant Steel Sunset Review , the Appellate Body provided guidance
on the types of measures that may be the s ubject of dispute settlement. Relying on, inter alia ,
Article 3.3 of the DSU, which refers to "situations in which a Member considers that any benefits
accruing to it directly or indirectly under the covered agreements are being impaired by measures
taken by another Member ", the Appellate Body stated that "[i]n principle, any act or omission
attributable to a WTO Member can be a measure of that Member for purposes of dispute settlement
proceedings."
332 As long as the specificity requirements of Article 6.2 are met, we see no reason why
a Member should be precluded from setting out in a panel request "any act or omission" attributable to
another Member as the measure at issue.

331Appellate Body Report, US – Carbon Steel, para. 125. (original emphasis)
332Appellate Body Report, US – Corrosion-Resistant Steel Sunset Review , para. 81. (emphasis added;
footnote omitted)

134. The Panel considered that, when a violation of Article X:3(a) of the GATT 1994 is claimed,
the measure at issue must necessarily be a "manner of administration" because, if such a violation is
found, the WTO Member concerned would need to alter the manner of administration in order
to comply with a recommendation made pursuant to Article 19.1 of the DSU. In our view, this
reasoning of the Panel is flawed because it conflat es the threshold question of whether a measure falls
within a panel's terms of reference with the questi on of the means of implementation in the event that
a violation is found. Through the recommendati on under Article 19.1, the Member found to have
violated a provision of a covered agreement is re quired to take corrective action to remove the
violation. The recommendation envisaged in Artic le 19.1 concerns the stage of implementation and
not the question of whether a measure falls within a panel's terms of reference. Moreover, the
Member concerned has a degree of discretion with r espect to the nature and type of action that it
undertakes in order to achieve compliance. Theref ore, we have difficulty in understanding how the
means of compliance with a recommendation under Article 19.1 of the DSU should govern the
identification of the specific measure at issue in a panel request. We agree, in this respect, with the
United States that "[t]he mere fact that a breach of Article X:3(a) may be removed by changing a law's
administration is not a basis for concluding that the law is not the measure at issue."
333
135. In US – Upland Cotton , the Appellate Body emphasized that the nature of a recommendation
a panel may make under Article 19.1 of the DSU with respect to a measure "is not ... dispositive of the
preliminary question of whether a panel can a ddress claims in respect of that measure". 334 I n t h a t
case, the Appellate Body had to address the issue of wh ether an expired measure can be a "measure at
issue" within the meaning of Article 6.2 of the DS U. The Appellate Body rejected the United States'
argument that, because an expired measure is not susceptible to a recommendation under Article 19.1
of the DSU, it cannot be a "measure at issue" under Article 6.2. For the Appellate Body, the question
of whether a panel can address claims in respect of an expired measure is to be distinguished from the
question of whether that measure is suscep tible to a recommendation under Article 19.1. 335 Although
the issue addressed by the Appellate Body in US – Upland Cotton is not identical to that raised by
the United States' appeal in this case, the Appellate Body's reasoning in US – Upland Cotton
supports our position that Article 19.1 of the DSU do es not place restrictions on the type of measure
that can be identified in a panel request under Article 6.2 of the DSU.

334Appellate Body Report, US – Upland Cotton, para. 272. (footnote omitted)
335Ibid., para. 222.

136. Interpreting the term "measure at issue" in Artic le 6.2 of the DSU in the light of the substance
of the specific WTO obligation that is allegedly being violated
 336 would generate uncertainty and
complexity in WTO dispute settlement proceedings. When drafting a request for the establishment of
a panel, the complainant would have to foresee the po ssible restrictions that the substance of the legal
provisions might impose on the type of measure that could be challenged. The identification of the
measures at issue in the panel request might prove to be even more complex where the challenge
concerns a plurality of provisions of the covered agreements. Moreover, the existence, nature, and
scope of possible restrictions would depend on the panel's interpretation of the substance of those
legal provisions. The respondent might also be pl aced in an uncertain situation in presenting its
defence because it would have to guess what the panel would identify as the measure at issue on the
basis of the panel's interpretation of the substance of the alleged vi olation. This could lead to
unnecessary litigation on a panel's terms of reference, as the responding party may choose to contend
at a preliminary stage that, in the light of the su bstance of the legal provision on which a specific
claim is based, the measure identified in the pane l request does not fall within the panel's terms of
reference.
137. In the light of these considerations, we reverse the Panel's finding, in paragraph 7.20 of the
Panel Report, that the "measure at issue" for purposes of a claim under Article X:3(a) of the
GATT 1994 must necessarily be "the manner of admini stration that is allegedly non-uniform, partial
and/or unreasonable."
B. Confinement of the Measures at Issue to Areas of Customs Administration
138. We next address the issue of whether the Panel erred in finding that the specific measure at
issue in this dispute was "the manner of administration ... of the Community Customs Code, the
Implementing Regulation, the Common Custom s Tariff, the TARIC and related measures" 337, and
furthermore, that it was confined to the areas of customs administration identified in the third
paragraph of the panel request.
139. In the first paragraph of the panel request, the United States stated that it "considers that the
manner in which the European Communities ... administers its laws, regulations, decisions and rulings
of the kind described in Article X:1 of the ... GA TT 1994 ... is not uniform, im partial and reasonable,
and therefore is inconsistent with Article X:3(a) of the GATT 1994." 338 Also, in the third paragraph

336Panel Report, para. 7.17.
337Ibid., para. 7.33.
338Request for the Establishment of a Panel by the United States (attached as Annex III to this Report),
p. 1.

of the panel request, the United States asserted that the lack of uniform, impartial, and reasonable
administration of measures relating to customs ma tters is manifest in differences among member
States of the European Communities in a number of areas. The United States went on to state that
these areas include, but are not limited to:
• classification and valuation of goods;
• procedures for the classification and valuation of goods, including
the provision of binding classification and valuation information
to importers;
• procedures for the entry and release of goods, including different
certificate of origin requirements, different criteria among
member States for the physical inspection of goods, different
licensing requirements for importation of food products, and
different procedures for processing express delivery shipments;
• procedures for auditing entry stat ements after goods are released
into the stream of commerce in the European Communities;
• penalties and procedures regarding the imposition of penalties for
violation of customs rules; and
• record-keeping requirements.339
140. The Panel was of the view that "[t]he terms of the United States' request for establishment of
a panel indicate that it challenges the manner of administration of certain aspects of [European
Communities] customs law."340 According to the Panel, "[t]he request clarifies that the administration
challenged by the United States is that undertaken by the 'national customs authorities of [European
Communities] member States'", and that "the spec ific forms of administration by national customs
authorities challenged by the United States under Article X:3(a) of the GATT 1994 include, inter alia,
laws, regulations, handbooks, manuals and administrative practices."341
141. The Panel stated that "the requirements in Article 6.2 of the DSU, including the obligation to
specifically identify the 'measure at is sue', serve the important due process objective of notifying the
parties and third parties to a dispute of the nature of the complainant's case". 342 The Panel noted that
the United States had challenged measures that "cumula tively contain, literally, thousands of different
provisions [that] relate to a vast array of different customs areas, and may entail administration in a

339Request for the Establishment of a Panel by the United States, p. 2.
340Panel Report, para. 7.25.
341Ibid.
342Ibid., para. 7.27. (original emphasis)

multitude of diverse ways."
343 In the light of this, the Panel cons idered that, "in the context of this
dispute, the specificity requirement in Article 6. 2 of the DSU additionally requires the identification
of the customs areas in the context of which th e obligation contained in Article X:3(a) of the
GATT 1994 is alleged by the United States to be violated", because "without such additional
specificity regarding the customs areas at issue, the European Communities would not have been
accorded its due process right to be informed of the nature of the United States' claim under
Article X:3(a) of the GATT 1994."344
142. Also, the Panel drew an analogy with the Appellate Body Report in EC – Computer
Equipment, where the Appellate Body noted that, even though "Article 6.2 does not explicitly
require that the products to which the 'specific measure s' at issue apply be identified ... with respect to
certain WTO obligations, in order to identify 'the specific measures at issue', it may ... be necessary to
identify the products subject to the measures in dispute". 345 According to the Panel, because, in the
context of the present case, the "measure at issue" is the manner of administration of instruments
relating to customs matters, the "identification of the areas of customs administration at issue is
necessary to specifically identify the 'measures at issue' in the same way as suggested by the
Appellate Body in EC – Computer Equipment" with respect to the products subject to the measure at
issue in that case.
346
143. The Panel noted:
[T]he list of the areas of customs administration contained in the
United States' request for establishment of a panel is preceded by the
following text: "Lack of uniform, impartial and reasonable
administration of the above-identified measures is manifest in
differences among member States in a number of areas, including,
but not limited to, the following ...".
347 (emphasis added by the Panel)
However, the Panel was of the view that the phr ase "including, but not limited to" on its own does not
have the legal effect of incor porating into the Panel's terms of reference all areas of customs
administration in the European Communities' system of customs administration, in addition to those
specifically identified in the panel request. For th e Panel, interpreting that phrase as having the legal
effect of including areas not specifically identified in the panel request "would undermine an
important due process objective of the requirements of Article 6.2 of the DSU—namely, to provide

343Panel Report, para. 7.30.
344Ibid.
345Appellate Body Report, EC – Computer Equipment, para. 67. (original emphasis)
346Panel Report, para. 7.31. (original emphasis)
347Ibid., para. 7.49.

sufficient notice and information to the responding party and third parties to a dispute of the nature of
the complainant's case."348
144. On this basis, the Panel concluded:
[T]he United States' request for establishment of a panel indicates
that the "specific measure at issue" in this dispute for the purposes of
Article 6.2 of the DSU is the manner of administration by the
national customs authorities of the member States of the Community
Customs Code, the Implementing Regulation, the Common Customs
Tariff, the TARIC and related measures in the areas of customs
administration specifically identified in the United States' request for
establishment of a panel – namely, the classification and valuation of
goods, procedures for the classification and valuation of goods,
procedures for the entry and release of goods, procedures for auditing
entry statements after goods are released into free circulation,
penalties and procedures regardi ng the imposition of penalties for
violation of customs rules and record-keeping requirements.
349
145. On appeal, the United States contends that the Panel erred in finding the specific measure at
issue to be confined to areas of customs administ ration listed in the panel request, because the Panel
failed to construe the panel request as a whole. 350 The United States also argues that the Panel
confused arguments, on the one hand, with measures and claims, on the other hand. 351 For the United
States, had the Panel construed the panel request as a whole, it could not have avoided the conclusion
that, first, the specific measures at issue were the Community Customs Code, the Implementing
Regulation, the Tariff Regulation, the TARIC, and, for each of these instruments, all amendments,
"implementing measures, and other related measure s"; and secondly, that the legal basis of the
complaint was the administration of those measures in a manner inconsistent with Article X:3(a) of
the GATT 1994.
352 The United States emphasizes that the list of areas provided in the third paragraph
of the panel request was merely illustrative, aimed to give an indication of the argument underlying
the United States' claim, and did not constitute th e claim itself or the specific measure at issue. 353
According to the United States, the Panel made a se lective reading of the panel request, focusing on
particular text taken out of its context. 354 The Panel's characterization of the illustrative list as a
specification of the measures at issue "ignored the intr oduction to the list, which stated that '[l]ack of

348Panel Report, para. 7.49
349Ibid., para. 7.33.
350These areas of customs administration are presented supra, para. 139.
351United States' appellant's submission, paras. 52 and 66.
352Ibid., paras. 54-55.
353Ibid., para. 57.
354Ibid., para. 58.

uniform, impartial and reasonable administration of the above-identified measures is manifest in
differences among member States in a number of areas, including, but not limited to, the
following.'"
355 The United States argues that such a listing of the areas was not required; the list
merely made the panel request more transparent, in that it anticipated certain arguments the United
States would make in its submissions and statements to substantiate its claims.
146. The United States also argues that "the Panel gave no consideration to the fact that the request
included a claim that the absence of mechanisms or institutions in the European Communities' system
of customs administration as a whole results in the non-uniform administration of the measures at
issue, in breach of Article X:3(a) of the GATT 1994." 356 The United States considers that the Panel
erred in drawing an analogy between the EC – Computer Equipment dispute and the present case
because, in EC – Computer Equipment , the scope of the measures at issue depended on the identity
of the products subject to the measures; also, the claim put forward in that case was not "systemic"
and did not relate to a system as a whole. 357 In these respects, EC – Computer Equipment is to be
distinguished from this case.
147. For the European Communities, th e Panel correctly concluded that the measure at issue was
only the administration of European Communities cu stoms law in the areas identified in the third
paragraph of the panel request. The European Comm unities asserts that, in th is case, the measure at
issue is not the set of legal instruments listed in th e first paragraph of the panel request but, rather,
their administration.358 The European Communities submits that the United States attempts to engage
a selective reading of the panel request by asking the Appellate Body to ignore the third paragraph of
the panel request.359 Furthermore, given the "vast body of law" 360 referred to by the United States in
the first paragraph of the panel request, it wo uld not have been possible for the European
Communities to prepare adequately its defence purely on the basis of a challenge against the
administration of European Communities customs la w "as a whole" without an indication of the
relevant provisions or sectors. In the view of the European Communities, "an identification of the
specific issue or provision with respect to which a claim of non-uniform administration is made was ...
necessary to protect ... [its] due process rights."361

356Ibid., para. 61.
357Ibid., para. 62.
359Ibid., para. 100.
360Ibid., para. 103.
361Ibid.

148. The European Communities contends that the Pane l correctly referred to the general principle
set out in the Appellate Body Report in EC – Computer Equipment that "what is necessary for
identification of the 'specific measures at issu e' depends on the circumstances of the case." 362 In the
circumstances of the present case, given the vast body of law to which the United States referred, the
Panel was justified in requiring specification of ar eas of customs administration. Regarding the terms
"including but not limited to" contained in the th ird paragraph of the panel request, the European
Communities relies on the Appellate Body Report in India – Patents (US) in asserting that "these
words cannot have the effect of including, contrary to the requirements of Article 6.2 of the DSU, the
administration of the entire body of [European Comm unities] customs law into the Panel's terms of
reference."363 The European Communities adds that the United States' interpretation of this phrase
would reduce the third paragraph of the panel request to inutility 364 and would "prejudice its due
process rights by leaving the actual subject matter of the case unclear".365
149. We begin our analysis by recalling that, "[i]n pr inciple, any act or omission attributable to a
WTO Member can be a measure of that Member for purposes of dispute settlement proceedings." 366
Under Article 6.2 of the DSU, a complaining Member enjoys certain discretion in the identification of
the specific measure at issue. Having said this, we must determine what is identified in the panel
request as the specific measure at issue in this case.
150. We note that the first paragraph of the panel requ est contains a list of instruments, introduced
by the phrase "[t]he measures consist of:" The United States lists the following instruments:
• Council Regulation (EEC) No. 2913/92 of 12 October 1992 establishing the Community
Customs Code, including all annexes thereto, as amended (the "Community Customs Code");
• Commission Regulation (EEC) No. 2454/93 of 2 July 1993 laying down provisions for the
implementation of Council Regulation (EEC) No 2913/92 of 12 October 1992 establishing the
Community Customs Code, including all annex es thereto, as amended (the "Implementing
Regulation");

363Ibid., para. 106.
364Ibid., para. 108.
365Ibid., para. 109.
366Appellate Body Report, US – Corrosion-Resistant Steel Sunset Review, para. 81. (footnote omitted)

• Council Regulation (EEC) No. 2658/87 of 23 Ju ly 1987 on the tariff and statistical
nomenclature and on the Common Customs Tariff, including all annexes thereto, as amended
(the "Common Customs Tariff");
• the Integrated Tariff of the European Commun ities established by virtue of Article 2 of
Council Regulation (EEC) No. 2658/87 of 23 Ju ly 1987 on the tariff and statistical
nomenclature and on the Common Customs Tariff, including all annexes thereto, as amended
(the "TARIC"); and
• for each of the above laws and regulations 367, all amendments, "implementing measures and
other related measures".
Subsequently, in the panel request, the United States referred to the instru ments listed in the first
paragraph with the expressions "these measures" (i n the second paragraph of the panel request) and
"the above-identified measures" (in the third and fourth paragraphs).
151. We further note, as the Panel did, that the panel request refers repeatedly and consistently to
the administration of the legal instruments listed in the first paragraph of the panel request. The
panel request begins by stating that the Unite d States "considers that the manner in which the
European Communities ... administers its laws, regulations, decisions and rulings of the kind
described in Article X:1 of the ... GATT 1994". (emph asis added) In the second sentence of the first
paragraph, the United States submits that "the European Communities fails to administer", in a
manner consistent with Article X:3(a), the legal in struments cited therein. (emphasis added) The
second paragraph of the panel request, in each of its sen tences, also refers to the "administration" of
the legal instruments listed in the first paragraph; so does the introductory sentence of the third
paragraph of the panel request. T hus, the panel request makes it clear that the United States does not
challenge under Article X:3(a) the substantive content of the legal instruments listed in the first
paragraph of the panel request, but their administra tion collectively. The United States confirmed at
the oral hearing that it had challenged unde r Article X:3(a) these legal instruments as administered
collectively.368

367These laws and regulations are defined supra, para. 2 and footnote 2 thereto.
368See also United States' responses to Questions 1 and 4 posed by the Panel, Panel Report, pp. A-1
and A-4. In its response to Question 1, the United States stated that, "[i]n this dispute, the United States is
challenging the manner in which [European Communities] customs law is administered." (emphasis added) In
its response to Question 4, the United States explained that it is, "indeed, challenging the absence of uniformity
overall with respect to the administration of the [European Communities'] customs system." (emphasis added)

152. We recall that Article 6.2 of the DSU requires the identification of the "specific measures at
issue" in the request for the establishment of a panel. The word "specific" in Article 6.2 establishes a
specificity requirement regarding the identifica tion of the measures that serves the due process
objective of notifying the parties and the third parti es of the measure(s) that constitute the object of
the complaint. We therefore examine the question whether the presentation in the panel request meets
the specificity requirement in Article 6.2 of the DSU. In our view, this specificity requirement is met
with respect to the Community Customs Code, the Implementing Regulation, the Common Customs
Tariff, and the TARIC. For each of these instruments, a specific citation is provided. Also, the panel
request indicates clearly that the United States was challenging the manner in which these legal
instruments are administered collectively. In our view, the first paragraph of the panel request is
sufficiently specific to give notice to the parties and the third parti es of the measures that constitute
the object of the complaint.
369
153. We turn next to the question whether the panel request confines the measure at issue to areas
of customs administration. We read the third para graph of the panel request as an illustrative list of
areas where the United States considers European Co mmunities customs law is not administered in a
uniform way. Thus, the substance of the third para graph of the panel request should be viewed as an
anticipation of the United States' arguments. In this paragraph, the United States explains—briefly
and in general terms—why it considers that the legal instruments listed in the first paragraph of the
panel request are administered in a manner that is inconsistent with the uniformity requirement in
Article X:3(a). Article 6.2 of the DSU requires that the claims—not the arguments—be set out in a
panel request in a way that is sufficient to present the problem clearly. 370 Nothing in Article 6.2
prevents a complainant from making statements in th e panel request that foreshadow its arguments in
substantiating the claim. If the complainant chooses to do so, these arguments should not be
interpreted to narrow the scope of the measures or the claims. Accordingly, we are of the opinion that
the Panel erred when it found that the list of areas of customs administration in the third paragraph of
the panel request limits the scope of the "specific measures at issue".371

369We observe that the first paragraph of the panel request also lists among the measures at issue the
"implementing measures and other related measures" for the Community Customs Code, the Implementing
Regulation, the Common Customs Tariff, and the TARIC. This reference is vague and does not allow the
identification of the specific instruments that the referenc e aims to cover. We are of the view that the phrase
"implementing measures and other related measures" doe s not "identify the specific measures at issue", as
required in Article 6.2 of the DSU.
370Appellate Body Report, EC – Bananas III , para. 143. See also Appellate Body Report, India –
Patents (US) , para. 88; Appellate Body Report, Korea – Dairy , para. 139; and Appellate Body Report,
Dominican Republic – Import and Sale of Cigarettes, para. 121.
371Panel Report, para. 7.33.

154. In the light of these considerations, we reverse the Panel's finding, in paragraphs 7.33
and 8.1(a)(i) of the Panel Report, that "the specific measure at issue in this dispute ... is the manner of
administration ... of the Community Customs Co de, the Implementing Regulation, the Common
Customs Tariff, the TARIC and related measures in the areas of customs administration specifically
identified in the United States' requ est for establishment of a panel."
372 We find, instead, that the
specific measures at issue identified in the pane l request are the Community Customs Code, the
Implementing Regulation, the Common Customs Tariff, and the TARIC, as administered collectively.
C. The United States' Claim Challenging the European Communities' System of Customs
Administration "As a Whole"
155. We now turn to the question whether the Panel e rred in finding that, due to the terms of the
panel request, the United States was precluded from challenging the European Communities' system
of customs administration as a whole or overall.
156. The Panel made separate findings regarding the scope and the nature of the United States'
challenge under Article X:3(a) of the GATT 1994 of the European Communities' system of customs
administration.373 With respect to the scope of the United States' challenge, the Panel found that, due
to the wording and content of the panel request, the United States was precluded from challenging the
European Communities' system of customs administra tion as a whole or overall, and that its terms of
reference regarding the scope of the United States' claim under Article X:3(a) were restricted to the
specific areas of customs administration referred to in the panel request. 374 Although the Panel
acknowledged the permissibility of challenging "a responding Member's system as a whole or
overall"375, it considered that, in this case, the reference in the panel request to a number of areas of
customs administration indicated that the United Stat es' claim under Article X:3(a) extends to some,
but not all, areas of customs administration. 376 In reaching its conclusion, the Panel noted that the
areas of customs administration listed in the panel request did not cover the totality of the European
Communities' system of customs administration.377

372Panel Report, para. 8.1(a)(i).
373Ibid., paras. 7.50 and 7.63.
374Ibid., para. 7.46.
375Ibid., para. 7.44.
376Ibid., para. 7.47.
377Ibid., para. 7.48. In this respect, the Panel noted that areas of customs administration, such as transit
procedures, customs debt, inward processing, outward processing, exportation, and re-exportation, were absent
from that list.

157. With respect to the nature of the United Stat es' challenge, the Panel concluded that, on the
basis of the language and content of the panel request, the United States was precluded from making
an "as such" challenge to the design and structure of the European Communities' system of customs
administration as a whole, as well as in the areas of customs administration specifically identified in
the panel request. 378 For the Panel, "there is nothing in the text of the United States' request for
establishment of a panel that could be construed as clearly suggesting that the United States' challenge
under Article X:3(a) of the GATT 1994 relates to the design and structure of the [European
Communities'] system of customs administration."379 The Panel further held that, in the panel request,
the United States was concerned with the manner of administration by member State customs
authorities, rather than with the design and struct ure of the customs administration system at the
European Communities level "as such" 380; in addition, such a challenge "is not obviously linked to
the essence of the obligation contained in Article X:3(a) of the GATT 1994—namely, the obligation
to administer in a uniform manner". 381 Finally, the Panel observed that the panel request makes no
explicit reference to the terms "as such" or "per se".382
158. On appeal, the United States contends that the Panel erred by construing the panel request to
exclude a claim that the European Communities' system of customs administration as a whole results
in non-uniform administration of European Communiti es customs law, in breach of Article X:3(a) of
the GATT 1994.383 For the United States, the Panel erred in considering that, in order to challenge the
European Communities' system of customs admini stration as a whole, the United States would have
had to list separately each and ev ery area of customs administration. 384 The United States maintains
that the panel request made it clear that its clai m related to the European Communities' system of
customs administration as a whole, because it id entified the measures that constitute the main
instruments of European Communities customs legislation and addressed the manner of
administration of these instruments collectively.
385 For the United States, the crux of its claim was
that "the [European Communities] administers its customs law through 25 separate, independent
customs authorities and does not provide any instit ution or mechanism to reconcile divergences
automatically and as a matter of right when they occur."386 In the United States' view, the Panel failed

378Panel Report, para. 7.63.
379Ibid., para. 7.58.
380Ibid., paras. 7.59-7.60.
381Ibid., para. 7.61.
382Ibid., para. 7.62.
384Ibid., para. 70.
385Ibid., para. 72.

to consider the panel request "as a whole".
387 The United States emphasizes that the measures at issue
were discussed collectively throughout the panel requ est, and that this is "precisely what one would
expect in a panel request challenging a system of customs administration as a whole".388
159. According to the United States, it clearly articulated a challenge of the European
Communities' system of customs administration as a whole, as evident from the very first sentence of
the panel request. 389 It would be "illogical to assume that [the] use of the word 'manner' in a claim
involving Article X:3(a) of the GATT 1994 necessarily suggests that the claim does not relate to a
Member's system of customs administration as a whole." 390 Furthermore, the United States is of the
view that, because "the defining characteristic of the design and structure" of the European
Communities' system of customs administration is the absence of procedures and institutions at the
European Communities level, a challenge to the desi gn and structure of this system necessarily must
address administration undertaken by member State customs authorities.391
160. The United States also points out that the absen ce of an explicit reference to the terms
"as such" or " per se" in the panel request does not preclude a claim with respect to the European
Communities' system of customs administration as a whole: what is important, is that the responding
party be aware of the claim against it so that its ability to defend itself is not prejudiced. 392 T h e
United States maintains that the European Commun ities was aware that the United States had made a
claim with respect to the European Communities' system of customs administration, as can be seen
from the statements of the European Communities at meetings of the DSB 393 and the European
Communities' submissions and statements during the Panel proceedings.394
161. According to the European Communities, th e Appellate Body should uphold the Panel's
finding that the United States' claims regarding the European Communities' system of customs
administration "as a whole" and "as such" are ou tside its terms of reference. The European
Communities considers the "as a whole" claim to be outside the Panel's terms of reference, because
the measure at issue set out in the panel request is "only the [European Communities'] manner of
administration in the areas of customs law specifically identified in [the] Panel Request". 395 T h e

388Ibid., para. 74.
 389Ibid., para. 82.
390Ibid., para. 77.
391Ibid., para. 78.
392Ibid., para. 83.
393Ibid., paras. 86-87.
394Ibid., paras. 88-91.

European Communities also mainta ins that "[i]t is incorrect to suggest that the [European
Communities'] system of customs administration coul d be assessed 'as a whole', independently of the
specific needs and requirements of the sector or area in question, and the tools and mechanisms
existing in such area."396
162. The European Communities argues that the pane l request did not indicate that the United
States intended to challenge the European Communitie s' system of customs administration "as such".
For the European Communities, the panel request identified, as the measure at issue, only the "manner
of administration". In the European Communities' view, the term "manner of administration" is
"diametrically opposed to [what] one could have expected to be used in the case of a challenge against
a measure 'as such'."397 The European Communities adds that its system of customs administration is
broader than the instruments listed in the first paragraph of the panel request, because it includes other
instruments such as the Treaty Establishing the European Communities (the "EC Treaty") and more
specific instruments existing in the field of customs cooperation or budgetary and financial control.398
163. With respect to the United St ates' reliance on a number of statements made by the parties
during or before the Panel proceedings399, the European Communities submits that "the compliance of
a [p]anel request with Article 6.2 [of the] DSU must be assessed primarily on the face of the [p]anel
request."400 The European Communities also asserts that at no point did it recognize or acknowledge
that the European Communities' system of customs administration "as such" was the measure at
issue.401
164. The United States' appeal raises three questions that we address in turn. First, is a Member
allowed to challenge within the WTO dispute settle ment proceedings another Member's legal system
as a whole or overall? Secondly, assuming that such a challenge could be made, did the Panel err in
finding that, due to the wording and content of the panel request, the United States was "precluded
from challenging the [European Communities'] syst em of customs administration as a whole or
overall"?402 Thirdly, did the Panel err in considering that the United States' contention on the "design
and structure" of the European Communities' system of customs administration as a whole was
outside its terms of reference?

397Ibid., para. 125.
398Ibid., para. 128.
399United States' appellant's submission, paras. 84-98.
401Ibid., para. 133.
402Panel Report, para. 7.46.

1. Challenging a Legal System "As a Whole" or "Overall"

165. The United States contends that its claim rela tes to the European Communities' system of
customs administration "as a whole or overall". As a preliminary observation, we do not think that,
by challenging the European Communities' system of customs administration as a whole, the United
States made an "as such" claim.403 Indeed, before the Panel, the United States made it clear that it was
"not challenging the substance of the measures mentioned in its request for establishment of a
panel".404 This was confirmed by the United States in r esponse to questioning at the oral hearing.
Also at the oral hearing, the United States explained that, in this dispute, the claim made by the United
States under Article X:3(a) is not readily classifiable in the categories of "as such" and "as applied"
claims, that it would be inaccurate to characterize it s claim as an "as such" claim, and that it did not
wish to add a further category of claims.
166. We agree with the Panel that "there is nothing in the DSU nor in the other WTO agreements
that would prevent a complaining Member from challenging a responding Member's system as a
whole or overall." 405 We also agree with the Panel that a challenge that a system "as a whole or
overall" is WTO-inconsistent must be presented in a manner that meets the two distinct requirements
in Article 6.2 of the DSU.406 A panel request must identify, with a sufficient degree of specificity, the
measures that constitute or underlie the legal system challenged "as a whole or overall", and must also
provide the legal basis of the complaint (or th e claims) so as to present the problem clearly. 407 We
already concluded in the previous section that, in the panel request, the United States has identified
the measures at issue in this dispute in a manner that satisfies the specificity requirement in Article 6.2
of the DSU. We also disagreed with the Panel's view that, in the context of this dispute, the
specificity requirement in Article 6.2 of the DS U "additionally requires the identification of ...
customs areas". 408 We also recognize, as the Panel did, that, in this case, the legal instruments
referred to by the United States in the panel requ est, "cumulatively, contain" a vast number of
provisions that relate to a variety of customs ar eas and that "entail administration in ... diverse
ways".409 However, the essence of the United States' cl aim was not the administration or application

404Panel Report, para. 7.5. (emphasis added) We r ecall that an "as such" claim challenges an "act[]
setting forth rules or norms that are intended to have general and prospective application". (Appellate Body
Report, US – Corrosion-Resistant Steel Sunset Review , para. 82. See also Appellate Body Report, US – Oil
Country Tubular Goods Sunset Reviews , para. 172) In other words, an "as such" claim in WTO parlance
challenges the substantive content of the measure at issue regardless its application in individual instances.
405Panel Report, para. 7.44.
406Ibid.
407See Appellate Body Report, US – Carbon Steel, para. 125.
408Panel Report, para. 7.30.
409Ibid.

of individual provisions of these legal instruments, but the absence of any mechanism or procedure at
the European Communities level to reconcile dive rgences in the administration of these instruments
by the member States of the European Communities. 410 Therefore, we do not think that the due
process rights of the European Communities were infringed merely because the claim of the United
States related to the manner of administration of the European Communities customs law as a whole
or overall.
167. Under Article 6.2 of the DSU, a panel request mu st also provide a brief summary of the legal
basis of the complaint sufficient to present the problem clearly. In other words, a panel request must
summarize the claim made in a manner that will "serve the due process objective of notifying the
parties and third parties to a dispute of the nature of the complainant's case".
411 As the Appellate
Body stated in Thailand – H-Beams, the due process objective is "fundamental to ensuring a fair and
orderly conduct of disput e settlement proceedings". 412 I n Korea – Dairy , the Appellate Body
emphasized that, although Article 6.2 of the DSU de mands only a summary of the legal basis of the
complaint (or the claim), this summary must be "sufficient to present the problem clearly", and it is
not enough only to "summarily identi fy" the legal basis of the complaint.
413 Compliance with the
requirement of summarizing the claim in the panel request in a manner that "presents the problem
clearly"414 must be demonstrated, in principle, on the face of the panel request. 415 With these general
considerations in mind, we address the question of whether the panel request included a challenge to
the European Communities' system of customs administration as a whole or overall under
Article X:3(a) of the GATT 1994.
2. Whether the Panel Request Included a Challenge to the European
Communities' System of Customs Administration "As a Whole" or "Overall"
168. The United States' appeal requires us to ex amine the wording and content of the panel
request. Determining the scope of the claims that are set out in a panel request requires that the panel
request be construed as a whole. 416 We will be able to conclude that the panel request included a
challenge to the European Communities' system of customs administration as a whole or overall only

410United States' appellant's submission, paras. 2, 19, 21, 69, and 102.
411Appellate Body Report, US – Carbon Steel, para. 126. (original emphasis) See also Appellate Body
Report, Brazil – Desiccated Coconut, at 186; and Appellate Body Report, EC – Bananas III, para. 142.
412Appellate Body Report, Thailand – H-Beams, para. 88.
414Article 6.2 of the DSU.
415Appellate Body Report, US – Carbon Steel, para. 127.
416See Appellate Body Report, US – FSC (Article 21.5 – EC II) , paras. 66-68; and Appellate Body

if we are convinced that the panel request, read as a whole, states this claim in a way that is "sufficient
to present the problem clearly".
169. As we concluded earlier, the specific measures at issue identified in the panel request are the
Community Customs Code, the Implementing Regulation, the Common Customs Tariff, and the
TARIC, as administered collectively.
417 It is not in dispute that these are major instruments of
European Communities customs legislation. Togeth er, they delineate the legal architecture of the
European Communities' customs regime. In ot her words, the administration of these legal
instruments covers, if not the entirety, almost th e whole of the European Communities' system of
customs administration.418
170. The wording and content of the panel request shows that the United States' challenge under
Article X:3(a) of the GATT 1994 concerns the manner of administration of these measures
collectively or as a whole. The panel request begins by stati ng: "the manner in which the European
Communities ... administers its laws, regulations, d ecisions and rulings of the kind described in
Article X:1 of [the GATT 1994] is not uniform." The second sentence of the first paragraph begins,
"[f]or purposes of this request, the laws, regulations, decisions and ruling (collectively, 'measures')".
171. In turn, the second paragraph of the panel re quest states that "[a]dministration of these
measures in the European Communities is carried out by the national customs authorities of
[European Communities] member States" and that "[s]uch administration takes numerous different
forms." In this paragraph, it is further stated that "the myriad forms of administration of these
measures include, but are not limited to, laws, re gulations, handbooks, manuals, and administrative
practices of customs authorities of member Stat es of the European Communities." The third
paragraph of the panel request states that th e "[l]ack of uniform, im partial and reasonable
administration of the above-identified measures is manifest in differences among member States in a
number of areas." In our view, these statements in the panel request present with sufficient clarity the
complaint of the United States, namely, that the in struments identified in the first paragraph of the
panel request are administered collectively, or as a w hole, in breach of Article X:3(a). The fact that
the panel request does not refer, explicitly or implic itly, to the manner of administration of particular

417See supra, para. 154.
418In this respect, we note the European Communities' contention that the European Communities'
system of customs administration is somewhat broader than the administration of the four legal instruments to
which the first paragraph of the pane l request refers, and that the European Communities' system of customs
administration rests as well on other measures such as "the EC Treaty itself" and "more specific instruments
existing in the field of customs cooperation or budg etary and financial control". (European Communities'
appellee's submission, para. 128)

provisions or instruments supports the view that the claim of the United States relates to the manner in
which these instruments are administered collectively or as a whole.
172. In its appellant's submission as well as in r esponse to questioning at the oral hearing, the
United States has emphasized that the crux of its clai m under Article X:3(a) is that "the existence of a
system of customs administration in which 25 separ ate, independent authorities exercise judgment in
interpreting and applying [European Communities] customs law, without any procedures or
institutions to ensure against divergences or to re concile them promptly and as a matter of right when
they occur, necessarily constitutes a lack of uniform administration, in breach of Article X:3(a)." 419
Before the Panel, the United States also stressed the absence of such a reconciliation mechanism at
the European Communities level. We observe that the panel request does not state in the same way
this central element of the challenge the United States makes of the European Communities' system of
customs administration. We think that the panel requ est could have been drafted with more precision.
Had the United States explicitly stated in the panel request that the heart of the problem is the
absence of any procedures or institutions or mechanisms to ensure against divergences or to reconcile
them promptly and as a matter of right when they occur, there would have been little doubt as to
whether the panel request set out a claim under Ar ticle X:3(a) against the European Communities'
system of customs administration as a whole. Nevertheless, as we indicated above, by highlighting
the nature and extent of the differences that ex ist in the administration of European Communities
customs law by the member States, the panel reque st presents with sufficient clarity, as required by
Article 6.2 of the DSU, that the claim made under Article X:3(a) concerned the European
Communities' system of customs administration as a whole or overall.
3. The Panel's Finding with respect to the "Design and Structure" of the
European Communities' System of Customs Administration
173. The Panel concluded that, on the basis of the language and content of the panel request, the
United States was precluded from making an "as su ch" challenge with respect to the "design and
structure" of the European Communities' system of customs administration. 420 T h i s f i n d i n g i s
challenged on appeal by the United States.
174. As we concluded earlier, the specific measur es at issue are the four legal instruments
identified in the first paragraph of the panel request , as administered collectively. The United States'
claim is that the European Communities' system of customs administration as a whole results in non-
uniform administration of European Communities cust oms law, in breach of Article X:3(a) of the

419United States' appellant's submission, para. 102. See also paras. 2, 19, 21, and 69.
420Panel Report, para. 7.63.

GATT 1994. As we noted earlier, the claim of the Un ited States in this dispute is not an "as such"
claim, in the sense that it does not challenge the substantive content of the measures at issue.
421
175. Before the Panel, and again in this appellate proceeding, the United States argues that the
"design and structure" of the European Communities' system of customs administration necessarily
result in non-uniform administration, because cu stoms laws are administered by "25 separate,
independent authorities ... without any procedures or institutions to ensure against divergences or to
reconcile them promptly and as a matter of right when they occur." 422 By referring to the "design and
structure" of the European Communities' system of customs administration, the United States sought
to demonstrate how and why the instruments identifie d in the first paragraph of the panel request, as a
whole, are administered in a manner leading to a lack of uniformity in their administration. 423 Thus,
the United States' contention on the "design and stru cture" of the European Communities' system of
customs administration was made as an argument to s ubstantiate its "as a whole" challenge set out in
the panel request. We therefore disagree with the Panel's characterization of the United States'
contention on the "design and structure" of th e European Communities' system of customs
administration as a claim in itself. We noted earlie r that the "as a whole" challenge of the United
States is set out in the panel re quest consistently and according to the specificity requirements
contained in Article 6.2 of the DSU. We ther efore see no reason why the Panel was precluded from

421On the distinction between challenging a set of measures or a legal system as a whole and an
"as such" claim, see also supra, para. 165 and footnote 404 thereto.
422United States' response to Question 126 posed by the Panel concerning the European Communities'
system of customs administration, Panel Report, p. B-4. We note that, in its response to Question 126, the
United States stated that it understands the "design and structure" to mean the following:
- Customs law in the [European Communities] is prescribed by [European
Communities] institutions: the Council and the Commission.
- [European Communities] customs law is administered by 25 different
authorities, each responsible for a diff erent part of the territory of the
[European Communities].
- The [European Communities] has in place certain procedures and
institutions which it contends secure uniform administration among the
25 different authorities. These include a general duty of cooperation
among member States, guidelines on various matters (e.g., the conduct
of customs audits), discretionary mechanisms (e.g., referral of questions
to the Customs Code Committee), and the opportunity for traders to
appeal customs administrative action to member State courts, with the
possibility of such courts eventually referring questions of [European
Communities] law to the ECJ.
The United States further noted: "[ W]ithout any mechanism or other means even ostensibly present to ensure
that the different authorities acted uniformly".
423We note that, in response to questioning by the Panel, the United States stated that "the support for
the [United States'] claim under Artic le X:3(a) includes evidence of both the design and structure of the
[European Communities'] system of customs administration and specific instances of non-uniform
administration." (United States' response to Question 173 posed by the Panel, Panel Report, p. B-29 (original
emphasis))

considering the United States' arguments on the "desi gn and structure" of the European Communities'
system of customs administration.
176. In the light of these considerations, we reverse the Panel's finding, in paragraphs 7.50, 7.64,
and 8.1(a)(iii) of the Panel Report, that, due to the wording and content of the panel request, the
United States was precluded from challenging the European Communities' system of customs
administration as a whole or overall. We also reverse the Panel's finding, in paragraphs 7.63, 7.64,
and 8.1(a)(iii) of the Panel Report, that the Pa nel was precluded from considering the United States'
argument that the "design and structure" of th e European Communities' system of customs
administration necessarily result in a violation of Article X:3(a) of the GATT 1994.
D. Temporal Limitations of the Panel's Terms of Reference
177. The European Communities requests the Appellate Body to review whether the Panel erred in
its interpretation of the temporal scope and limitations of its terms of reference in respect of "steps
and acts of administration that pre-date or post-date the establishment of a panel".
424 The European
Communities' other appeal focuses on the Panel's reasoning on the temporal scope of its terms of
reference as set out in paragraphs 7.36 and 7.37 of the Panel Report.
178. The European Communities argues that the Pa nel took an excessively wide approach in
interpreting the temporal limitati ons on its terms of reference. 425 For the European Communities, a
panel may, in principle, consider only measures that are in existence at the time of its establishment 426
and, therefore, the Panel erred in considering that it had "a general competence to also consider
measures which 'pre-date' or ' post-date' its establishment". 427 The European Communities also
contends that the manner of administration "cannot be regarded as a 'continuum' without [a] clear start
or end point"428, contrary to what the Panel suggests. 429 According to the European Communities, the
Panel's approach would produce awkward results: it would imply that "violations which occurred far
in the past and which no longer have any current e ffect could be claimed to be continuing because
'administration has no end point'."430 Similarly, "violations which had not yet occurred at the time the

424Panel Report, para. 7.37.
425European Communities' other appellant's submission, para. 40.
426Ibid., para. 46.
427Ibid., para. 47.
428Ibid., para. 63.
429Panel Report, para. 7.37.
430European Communities' other appellant's submission, para. 65.

Panel was established might be regarded as indi cative of violations pre-dating the Panel's
establishment because administration 'has no starting point'."
 431
179. The European Communities considers that, on the basis of the panel request, it was
entitled to assume that the complainant's case rela ted to measures in existence at the time of the
Panel's establishment. By defining "administration" under Article X:3(a) of the GATT 1994 as
"a phenomenon without any boundaries in time", the Panel violated the due process rights of the
defendant protected by Article 6.2 of the DSU, be cause preparation of the defence for past instances
of administration is "unduly difficult", and the incl usion of future instances of administration in the
measure makes the subject matter of the case a "moving target".
432
180. The European Communities also argues that the Panel's reasoning would make compliance
almost impossible. If administration has no clear starting or ending point, it would be difficult for a
WTO Member found to be in violation of Article X: 3(a) to establish that it has altered its manner of
administration so as to achieve compliance with Article X:3(a). 433 The European Communities
submits that "the Panel's approach to the temporal li mitations to its terms of reference is incompatible
with Article[s] 7.1 and 6.2 [of the] DSU" 434 and therefore requests the Appellate Body to "reverse the
Panel's findings in paragraphs 7.36 and 7.37".435
181. The United States is of the view that the Panel did not err in its approach to the temporal
scope of its terms of reference. 436 The United States observes that th e legal instruments identified in
the panel request were in existence on the date when the Panel was established. 437 According to the
United States, the European Communities' argument "confuses administration of [European
Communities] customs law in existence when the Panel was established with individual acts of
administration that occurred prior to establishment and with evidence that came to light during the
panel proceeding that confirm the existence of non-uniform administration at the time of panel
establishment."438 For the United States, the Panel correctly explained that "it would take account of
individual instances of administration pre-dating and post-dating panel establishment not to determine

431European Communities' other appellant's submission, para. 65.
432Ibid., para. 66.
433Ibid., para. 68.
434Ibid., para. 69.
435Ibid., para. 70.
437Ibid., para. 17.
438Ibid., para. 15. (original emphasis)

whether each established a WTO-inconsistency in its own right, but as a means of elucidating the
manner of administration that was in existence at the time of panel establishment."439
182. The United States is also of the view that th e European Communities misreads the distinction
the Panel made between administration as an ongoing phenomenon and individual instances of
administration.440 For the United States, although the Eur opean Communities has referred to the
principle that a panel may consider only measures in existence at the time of panel establishment, it
made "no distinction between acts of administ ration themselves being considered as potential
breaches of Article X:3(a) and acts of administration being considered as evidence of an ongoing
course of administration that potentially is a breach of Article X:3(a)".
441 The United States
underscores that nothing in the text of Article X:3(a) or its context suggests that a breach of that
provision "is demonstrated only when individual acts of administration in existence on the date a
panel is established diverge".
442
183. With respect to the European Communities' argu ment concerning events that post-dated panel
establishment, the United States main tains that, contrary to the European Communities' assertion, the
Panel's references to evidence post-dating panel est ablishment do not show th e Panel overstepped its
terms of reference. According to the United St ates, these references "show the Panel properly [took]
account of evidence relevant to understanding the manner of administration of [European
Communities] customs law existing at the time of panel establishment."443
184. We begin our analysis by recalling the Appellate Body's statement in EC – Chicken Cuts:
The term "specific measures at issue" in Article 6.2 suggests that, as
a general rule, the measures included in a panel's terms of reference
must be measures that are in existence at the time of the
establishment of the panel.
444 (footnote omitted)
This general rule, however, is qualified by at least two exceptions. First, in Chile – Price Band
System, the Appellate Body held that a panel has the authority to examine a legal instrument enacted
after the establishment of the panel that amends a measure identified in the panel request, provided
that the amendment does not change the essence of the identified measure. 445 Secondly, in US –

439United States' appellee's submission, para. 18 (referring to Panel Report, paras. 7.36-7.37).
440Ibid., para. 23.
441Ibid., para. 27.
442Ibid., para. 31.
443Ibid., para. 46.
444Appellate Body Report, EC – Chicken Cuts, para. 156.
445Appellate Body Report, Chile – Price Band System, para. 139.

Upland Cotton , the Appellate Body held that panels are allowed to examine a measure "whose
legislative basis has expired, but whose effects are al leged to be impairing the benefits accruing to the
requesting Member under a covered agreement" at the time of the establishment of the panel.
446 The
summary presented by the Panel in paragraph 7.36 of the Panel Report is in line with what the
Appellate Body said in EC – Chicken Cuts, Chile – Price Band System , and US – Upland Cotton .447
Therefore, we see no error in the Panel's legal inte rpretation contained in pa ragraph 7.36 of the Panel
Report.
185. Turning to paragraph 7.37 of the Panel Report, we note that the Panel sought to apply in the
specific context of this dispute the legal interpretati on it had set out in paragraph 7.36 of its Report.
The Panel recalled first its view that, in this case, the specific measure at issue "comprises the manner
of administration of the Community Customs Code, the Implementing Regulation, the Common
Customs Tariff, the TARIC and related measures." 448 As the Panel identified the measure at issue as
the manner of administration , it went on to discuss the temporal scope of the manner of
administration for purposes of defining its terms of reference. In particular, the Panel said that "the
manner of administration in a particular case may not have a clear starting poi nt or end point", and
that "administration may comprise a continuum of steps and acts, some of which may pre-date or
post-date the step or act of administration that is considered by a panel at the time of establishment of
that panel."
449 On this basis, the Panel concluded that "the steps and acts of administration that pre-
date or post-date the establishment of a panel ma y be relevant to determining whether or not a
violation of Article X:3(a) of the GATT 1994 exists at the time of establishment."
186. We agree with the conclusion of the Panel that "the steps and acts of administration that pre-
date or post-date the establishment of a panel ma y be relevant to determining whether or not a
violation of Article X:3(a) of the GATT 1994 exists at the time of establishment." 450 We are,
however, of the view that the reasoning that led the Panel to this conclusion is incorrect.

446Appellate Body Report, US – Upland Cotton, para. 263.
447See Appellate Body Report, Chile – Price Band System , para. 139; Appellate Body Report, EC –
Chicken Cuts, para. 156; and Appellate Body Report, US – Upland Cotton, para. 263.
448(original emphasis)
449(footnote omitted)
450Panel Report, para. 7.37.

187. In our opinion, the Panel's reasoning is incorrect to the extent that the Panel assumed that the
measure at issue is the manner of administration.451 As we concluded earlier, the measure at issue in
this dispute is not the manner of administration but, rather, the legal instruments identified in the
first paragraph of the panel request, as administered collectively or as a whole. In the light of the
principles set out by the Panel in paragraph 7.36 of the Panel Report, the Panel's review should
therefore have focused on these legal instruments as they existed and were administered at the time of
establishment of the Panel.
188. In order to determine whether the measures at i ssue have been administered at the time of the
Panel's establishment in a manner that is incons istent with Article X:3(a) of the GATT 1994, the
Panel was, however, entitled to rely on evidence of acts of administration. Thus, it is important to
distinguish between, on the one hand, the measur es at issue and, on the other hand, acts of
administration that have been presented as evidence to substantiate the claim that the measures at
issue are administered in a manner inconsistent with Article X:3(a) of the GATT 1994. The Panel
failed to make the distinction between measures and pieces of evidence. While there are temporal
limitations on the measures that may be within a pa nel's terms of reference, such limitations do not
apply in the same way to eviden ce. Evidence in support of a claim challenging measures that are
within a panel's terms of reference may pre-date or post-date the establishment of the panel. A panel
is not precluded from assessing a piece of evidence for the mere reason that it pre-dates or post-dates
its establishment.
452 In this case, the United States was not precluded from presenting evidence
relating to acts of administration before and after th e date of Panel establishment. A panel enjoys a
certain discretion to determine the relevance and pr obative value of a piece of evidence that pre-dates
or post-dates its establishment.
189. We therefore uphold, albeit for different reasons, the Pane l's interpretation, in paragraph 7.37
of the Panel Report, that "the steps and acts of administration that pre-date or post-date the
establishment of a panel may be relevant to determin ing whether or not a violation of Article X:3(a)
of the GATT 1994 exists at the time of [panel] establishment."

451As we explained above, we disagree with the Panel's interpretations of Article 6.2 of the DSU and its
reading of the panel request that led the Panel to this assumption.
452However, we recall that, in US – Cotton Yarn , the Appellate Body stated (when reviewing a textile
safeguards determination) that a Member cannot be expected to examine "evidence that did not exist and that,
therefore, could not possibly have been taken into account when the Member made its determination. ...
Consequently, a panel must not consider evidence which did not exist at that point in time ." (Appellate Body
Report, US – Cotton Yarn, paras. 77 and 78 (original emphasis; footnote omitted)) We also note the Appellate
Body's statement in EC – Sardines that "[t]he interim review stage is not an appropriate time to introduce new
evidence." (Appellate Body Report, EC – Sardines, para. 301)

V. Claims regarding Article X:3(a) of the GATT 1994
A. Administration of European Communities Cu stoms Law through Penalty Provisions
and Audit Procedures of Member States
1. Whether the Substantive Content of a Legal Instrument May Be Challenged
under Article X:3(a) of the GATT 1994
190. We now turn to the question whether the Panel e rred in finding that the term "administer" in
Article X:3(a) of the GATT 1994 relates to the appl ication of laws and regulations, but not to laws
and regulations themselves, and wh ether, consequently, the Panel erred in finding that divergent
penalty provisions and audit procedures found in member States of the European Communities are not
inconsistent with Article X:3(a) of the GATT 1994. We first address the Panel's interpretation of the
term "administer". Subsequently, we address the qu estion of differences in penalty provisions and
audit procedures among the member States.
191. The Panel found that the text of Article X:3(a) does not contemplate the possibility that laws
and regulations can simultaneously qualify as laws, regulations, judicial decisions, and administrative
rulings of the kind described in Article X:1 of the GATT 1994 and as acts of administration within the
meaning of Article X:3(a). The Panel concluded:
[T]he term "administer" in Artic le X:3(a) of the GATT 1994 relates
to the application of laws and re gulations, including administrative
processes and their results but not to laws and regulations as such.453
192. The Panel arrived at this interpretation after its analysis of the ordinary meaning of the term
"administer":
[T]here would appear to be nothing in the ordinary meaning of the
term "administer" that would suggest that it covers laws and
regulations as such . On the contrary, the relevant dictionary
definitions indicate that the term "administer" refers to positive
action or steps taken to put into effect measures such as laws and
regulations, but not the laws a nd regulations themselves, which
merely exist without effect until they are actually applied in
practice.
454 (original emphasis)

453Panel Report, para. 7.119.
454Ibid., para. 7.106.

193. The Panel found that this understanding of Article X:3(a) was confirmed by the context of the
provision. In the Panel's view, Article X of th e GATT 1994 contains a "due process theme", which
suggests that the aim of Article X:3(a) is to ensure that traders are treated fairly and consistently when
seeking to import from or export to a particular WTO Member. In this respect the Panel concluded:
[T]he term "administer" in Artic le X:3(a) of the GATT 1994 relates
to the application of laws in particular cases and, particularly, to
administrative processes and their results , since the application of
the obligation of uniformity (and, for that matter, the obligation of
reasonableness and impartiality) to such processes and their result
pursuant to Article X:3(a) of the GATT 1994, helps to ensure that
traders are treated fairly and consistent ly. ... It is not clear that it
should be inferred from this objective that Article X:3(a) of the
GATT 1994 requires laws and regulations themselves to also be
uniform, reasonable and impartial.
455 (original emphasis)
194. On appeal, the United States contends that the Panel erred in its interpretation of the term
"administer". According to the United States, pena lty provisions and audit procedures of the member
States of the European Communities are themsel ves acts of administration in the sense of
Article X:3(a) and, therefore, divergences in th ese provisions and procedures from member State to
member State, by themselves, constitute non-uniform administration of customs laws in breach of
Article X:3(a).456
195. The European Communities submits that the Pa nel was correct to distinguish between the
laws to be administered and the administration of those laws, and disagrees with the United States that
laws themselves can constitute administration within the meaning of Article X:3(a). The European
Communities maintain that it would be "incompatible w ith the internal logic, wording, and purpose of
Article X [of the] GATT" to assume that a law or regulation of genera l application could be
"executed" or "put into effect" by another law or regulation of general application.457
196. We begin our analysis by recalling the text of Article X:3(a) of the GATT 1994:
Each Member shall administer in a uniform, impartial and reasonable
manner all its laws, regulations, d ecisions and rulings of the kind
described in paragraph 1 of this Article.

455Panel Report, para. 7.108.
457European Communities' appellee's submission, paras. 209-210.

197. With respect to the scope of Article X:3(a), the Appellate Body stated in EC – Bananas III:
The text of Article X:3(a) clearly indicates that the requirements of
"uniformity, impartiality and reasonableness" do not apply to the
laws, regulations, decisions and rulings themselves, but rather to the
administration of those laws, regulations, decisions and rulings. The
context of Article X:3(a) within Article X, which is entitled
"Publication and Administration of Trade Regulations", and a
reading of the other paragraphs of Article X, make it clear that
Article X applies to the administration of laws, regulations, decisions
and rulings. To the extent that the laws, regulations, decisions and
rulings themselves are discriminatory, they can be examined for their
consistency with the relevant provisions of the GATT 1994.
458
(original emphasis)
198. In EC – Poultry, the Appellate Body made a reference to the above statement and concluded:
[T]o the extent that Brazil' s appeal relates to the substantive content
of the [European Communities'] rules themselves and not to their
publication or administration, that appeal falls outside the scope of
Article X of the GATT 1994. The WTO-consistency of such
substantive content must be determined by reference to provisions of
the covered agreements other than Article X of the GATT 1994.
459
(original emphasis)
199. Thus, in EC – Bananas III and EC – Poultry, the Appellate Body distinguished between, on
the one hand, the laws, regulations, judicial d ecisions, and administrati ve rulings of general
application set out in Article X:1 of the GATT 199 4 and, on the other hand, the administration of
these legal instruments. The Appellate Body reas oned that, as Article X:3(a) establishes disciplines
on the administration of the legal instruments of the kind described in Article X:1, claims
concerning the substantive content of these Article X:1 legal instruments fall outside the scope of
Article X:3(a).
200. The statements of the Appellate Body in EC – Bananas III and EC – Poultry do not
exclude, however, the possibility of challenging under Article X:3(a) the substantive content of a legal
instrument that regulates the administration of a legal instrument of the kind described in Article X:1.
Under Article X:3(a), a distinction must be made between the legal instrument being administered and
the legal instrument that regulates the application or implementation of that instrument. While the
substantive content of the legal instrument being administered is not challengeable under
Article X:3(a), we see no reason why a legal in strument that regulates the application or

458Appellate Body Report, EC – Bananas III, para. 200.

implementation of that instrument cannot be examined under Article X:3(a) if it is alleged to lead to a
lack of uniform, impartial, or reasonable administration of that legal instrument.
201. This distinction has implications for the type of evidence required to support a claim of a
violation of Article X:3(a). If a WTO Member challenges under Article X:3(a) the substantive
content of a legal instrument that regulates the administration of a legal instrument of the kind
described in Article X:1, it will have to prove that this instrument necessar ily leads to a lack of
uniform, impartial, or reasonable administration. It is not sufficient for the complainant merely to cite
the provisions of that legal instrument. The comp lainant must discharge the burden of substantiating
how and why those provisions necessarily lead to impermissible administration of the legal instrument
of the kind described in Article X:1.
2. Differences in Penalty Provisions and Audit Procedures

202. We now turn to the question whether divergences in penalty provisions and audit procedures
among member States necessarily lead to non-uniform administration in breach of Article X:3(a) of
the GATT 1994.
203. First, with respect to penalty provisions, the Panel observed that neither the Community
Customs Code nor the Implementing Regulation defin es offences at the European Communities level.
It further noted the statement by the Court of Jus tice of the European Communities (the "ECJ") in the
case José Teodoro de Andrade v. Di rector da Alfândega de Leixões that, "[as] regards customs
offences, the [ECJ] has pointed out that in the ab sence of harmonization of the Community legislation
in that field, the member States are empowered to choose the penalties which seem appropriate to
them."460 The Panel then made a reference to its own interpretation of the term "administer"
(summarized above) and concluded:
For the purposes of Article X:3(a) of the GATT 1994, the substantive
content of penalty laws of the member States used to enforce
[European Communities] customs law cannot be viewed as acts of
administration with respect to laws, regulations, decisions and rulings
covered by Article X:1 of the GATT. Therefore, substantive
differences in penalty laws between member States cannot be
considered to be in violation of Article X:3(a) of the GATT 1994.
461

460Panel Report, para. 7.443 (quoting case C-213/99, José Teodoro de Andrade v. Director da
Alfândega de Leixões, [2000] ECR I-11083 (7 Decembe r 2000) (Exhibit US-31 submit ted by the United States
to the Panel), para. 20).
461Ibid., para. 7.444.

204. Secondly, with respect to the question whethe r substantive differences in audit procedures
among member States lead to non-uniform administration of the Community Customs Code and the
Implementing Regulation in viola tion of Article X:3(a) of the GATT 1994, the Panel found no such
violation in audit procedure requirements of Article 78(2) of the Community Customs Code
462, based
on the following reasoning:
[D]ivergences resulting from the ex ercise of discretion in the law
being administered do not necessarily fall foul of Article X:3(a) of
the GATT 1994 provided that the existence and exercise of discretion
do not unduly compromise the underlying due process objective of
Article X:3(a) of the GATT 1994 and do not render the trading
environment insecure and unpredictable without just cause.
463
205. The United States challenges the Panel's finding th at penalty provisions and audit procedures
are not themselves acts of administration and, therefore, divergences in those provisions or procedures
cannot constitute a lack of uniform administration of European Communities customs law. 464 With
respect to penalty provisions, the United States subm its that, if divergences between individual acts of
administration (for example, the imposition of different penalties for the same breaches of European
Communities customs law) constitute non-uniform administration, then, a fortiori , divergences
between the penalty provisions that govern the individual acts of administration carried out by
different customs authorities must also constitute non-uniform administration.
465
206. With respect to audit procedures, the United States submits that the Panel erred in limiting the
scope of the United States' claim to the non-uniform administration of Article 78(2) of the
Community Customs Code. The United States furthe r submits that, even if the Panel had been
correct in limiting its examination to Article 78( 2) of the Community Customs Code, the Panel's
reasoning is based on an incorrect interpretation and a pplication of the term "administer" contained in

462Article 78(2) of the Community Customs Code provides:
The customs authorities may, after releasing the goods and in order to
satisfy themselves as to the accuracy of the particulars contained in
the declaration, inspect the commer cial documents and data relating
to the import or export operations in respect of the goods concerned
or to subsequent commercial operations involving those goods. Such
inspections may be carried out at the pr emises of the declarant, of any other
person directly or indirectly involved in the said operations in a business
capacity or of any other person in possession of the said document and data
for business purposes. Those authorities may also examine the goods where
it is still possible for them to be produced.
463Panel Report, para. 7.434.
465Ibid., para. 125.

Article X:3(a) of the GATT 1994. The United States su bmits that the error in the Panel's analysis is
essentially the same as the error in its analysis of penalty provisions. Therefore, the arguments
presented by the United States in that context are equally valid in the context of audit procedures.466
207. In reply, the European Communities refers to the binding principles of European
Communities law, according to which penalties must be effective, proportionate, and dissuasive 467,
and submits that these principles ensure uniform application of customs laws throughout the European
Communities. The European Communities also poi nts out that the United States has not provided
concrete evidence concerning the nature and level of sanctions set out in member States' laws for
specific violations of customs provisions and thus has not established that, in practice, differences in
penalty laws result in differences in the administration of European Communities customs law.
468
208. With respect to the administration of audit procedures, the European Communities submits
that these claims are substantially different from the claims relating to differences in penalty
provisions, because audit procedures "are not set out in [m]ember States' law". 469 The European
Communities asserts that uniform practice in this respect is ensured by the Community Customs
Audit Guide.470 The European Communities also notes the discretionary character of Article 78(2) of
the Community Customs Code and argues that the me re exercise of discretion in one way or another
does not constitute non-uniform administration.471
209. In our analysis, we first note the Panel's ob servation that the existence of differences among
penalty provisions for violations of European Co mmunities customs law is not disputed between the
parties.472 The parties confirmed this understanding at th e oral hearing. We also recall the European

467European Communities' appellee's submission, paras. 202 and 222.
468Ibid., paras. 221-232.
469Ibid., para. 234.
470Ibid., para. 237 (referring to the Community Customs Audit Guide, a framework for post-clearance
and audit-based controls (Exhibit EC-90 submitted by the European Communities to the Panel)).
471Ibid., para. 241.
472Panel Report, para. 7.444.

Communities' assertion that, under European Communities customs law, sanctions for the violation of
customs laws which member States provide must be effective, proportionate, and dissuasive.
473
210. We already found that the substantive conten t of legal instruments that regulate the
application or implementation of la ws, regulations, decisions, and admi nistrative rulings of the kind
described in Article X:1 can be challenged under Article X:3(a). 474 We therefore consider that the
penalty laws of member States, as instruments of implementation of European Communities customs
law, can be examined under Article X:3(a). Howe ver, the United States must substantiate how and
why divergences in penalty laws among member States necessarily lead to non-uniform
administration of European Communities customs law.
211. In our view, differences in penalty provisions, in and of themselves, do not necessarily lead to
a violation of Article X:3(a). Whether differences would lead to non-uniform administration depends
on both the nature of the penalty provisions and the nature of the customs law provisions that they
seek to enforce. No ev idence was adduced by the United States be fore the Panel on either the degree
of differences in the penalty provisions of the member States or the impact of such differences in the
enforcement of the provisions of European Communities customs law.
212. Furthermore, the effects of the differences in penalty provisions would need to be evaluated
against the degree of uniformity in administrati on of European Communities customs law that is
envisaged by Article X:3(a). The effects of the differences among member States' laws on uniformity
in the administration of European Communities custom s law has not been established. Therefore, we
do not need to address the question of what degree of uniformity in the administration of laws of the
kind described in Article X:1 is required by Article X:3(a).
475
213. The United States' case rests essentially on the pl ea that, if divergences in the individual acts
of administration can constitute non-uniform administration, then, a fortiori, divergences in the
penalty provisions that govern the individual acts of administration carried out by different customs

473European Communities' appellee's submission, para. 202 (referring to Case C-68/88,
Commission/Greece, [1989] ECR 2965, paras. 23-25 (Exhibit EC-38 submitted by the European Communities
to the Panel); similarly, Case C-326/88, Hansen, [1990] ECR I-2911, para. 17 (Exhibit EC-39 submitted by the
European Communities to the Panel); Case C-36/94, Siesse, [1995] ECR I-3573, para. 20 (Exhibit EC-40
submitted by the European Communities to the Panel); Case C-213/99, Andrade, [2000] ECR I-11083,
paras. 19-20 (Exhibit US-31 submitted by the United States to the Panel); as well as to a Council Resolution of
29 June 1995 on the effective uniform application of Community law and on the penalties applicable for
breaches of Community law in the internal market, Official Journal of the European Communities , C Series,
No. 188, pp. 1-3 (22 July 1995) (Exhibit EC-41 submitted by the European Communities to the Panel)).
474Supra, para. 200.
475We note that this question is not before us, as neither the United States nor the European
Communities has appealed the Panel's findings relating to the interpretation of the term "uniform" in
Article X:3(a) of the GATT 1994.

authorities must also constitute non-uniform ad ministration. This argument presupposes that
differences between individual acts of administration are a reflection of differences between the
penalty provisions. However, in our view, this need not always be the case. The differences may
stem as well from the exercise of discretion in the application of the law and the specific
circumstances of the case.
214. The United States has not provided concrete examples of the application of penalty provisions
in member States that demonstrate non-uniform administration of European Communities customs
law. The United States referred only to a single sentence in the European Commission document
"An Explanatory Introduction to the modernized Customs Code", which reads:
Specific offences may be considered in one Member State as a
serious criminal act possibly leading to imprisonment, whilst in
another Member State the same act may only lead to a small—or
even no—fine.
 476
Clearly, this single sentence is not sufficient. Thus, the United States has not established that the
mere existence of differences in penalty provisions among member States, in and of themselves, has
led to non-uniform administration of European Communities customs law.
215. With respect to differences in audit pro cedures among member States of the European
Communities, we note at the outset that Article 78(2) of the Community Customs Code empowers
customs authorities to conduct audits following the release of goods for free circulation, but it does
not oblige them to do so.
477 We are also aware that a certain degree of uncertainty as to when and
under what conditions an audit will be carried out is in the interest of sound customs administration
and must be accepted by traders as part of a normal customs regime.478
216. As we indicated in relation to penalty laws, the mere existence of differences in the laws
themselves is not sufficient to show a breach of the uniformity requirement in Article X:3(a) with
respect to the administration of European Communiti es customs law. In order to establish its claim,
the United States would have had to show that differences in audit procedures necessarily lead to non-
uniform administration of European Communities cust oms law in particular cases. In our view, the
United States did not make such a demonstration before the Panel. Different results in the application
of a law or provision do not necessarily reflect non-uni form administration of the law itself, but may

476United States' appellant's submission, para. 123 (quoting European Commission document
Directorate-General for Taxation and Customs Union, TAXUD/447/2004 Rev 2, An Explanatory Introduction
to the modernized Customs Code (24 February 2005) (Exhibit US-32 submitted by the United States to the
Panel), p. 13).
477Panel Report, para. 7.429.
478Ibid., para. 7.432.

stem as well from the exercise of discretion in the app lication of the law or circumstances of the case.
The United States did not submit to the Panel any concrete example of the application of audit
procedures that led to non-uniform administration of European Communities customs law.
217. In the light of the above, we reverse the Panel's finding, in paragraph 7.119 of the Panel
Report, that, without exception, Article X:3(a) of the GATT 1994 always relates to the application of
laws and regulations, but not to laws and regulations as such.
479 In our view, the possibility of
challenging under Article X:3(a) the substantive c ontent of a legal instrument that regulates the
administration of a legal instrument of the kind descr ibed in Article X:1 cannot be excluded. Yet, we
consider that the Panel did not err when it foun d that differences in penalty provisions and audit
procedures, themselves, do not establish a breach of the uniformity requirement in Article X:3(a) of
the GATT 1994. We therefore uphold the Panel's conclusions, in para graphs 7.434, 7.444, 8.1(d)(i),
and 8.1(d)(ii) of the Panel Report, that substantiv e differences in penalty la ws and audit procedures
among the member States of the European Communities alone do not constitute a violation of
Article X:3(a) of the GATT 1994.
B. The Administrative Process and the Requiremen t of Uniformity in Article X:3(a) of
the GATT 1994
218. We now turn to the question whether Article X:3(a) of the GATT 1994 requires uniformity of
administrative processes.
219. The Panel found that the term "administer" in Article X:3(a) of the GATT 1994 relates to the
application of laws and regulations, including administrative processes and their results.
480 The Panel
reasoned that the ordinary meaning of this term implies that it "covers the application of laws,
regulations, decisions and rulings in particular cases" 481 and that "the application of a law in a
particular case encompasses the administrative process entailed in that application, because the
administrative process represents the series of steps, actions or events that are taken or occur in
pursuance of what is required by the law in question." 482 The Panel added that "the application of a
law in a particular case encompasses the results of administrative processes ... because [they] are the
final manifestation of the application of a law in a particular case."483

479Panel Report, para. 7.119.
480Ibid., para. 7.113.
481Ibid., para. 7.104. (original emphasis)
483Ibid. (original emphasis)

220. Moving to contextual interpretation, the Panel noted that "[t]he title as well as the content of
the various provisions of Article X of the GATT 1994 in dicate that that Article, at least in part, is
aimed at ensuring that due process is accorded to traders when they import or export." 484 For the
Panel, "[t]he due process theme underlying Article X of the GATT 1994" ultimately suggests that "the
term 'administer' in Article X:3( a) of the GATT 1994 relates to the application of laws in particular
cases and, particularly, to administrative processes and their results , since the application of the
obligation of uniformity (and, for that matter, the obligations of reasonableness and impartiality) to
such processes and their results pursuant to Article X:3(a) of the GATT 1994, helps to ensure that
traders are treated fairly and consistently."
485
221. In its other appeal, the European Communiti es considers that the Panel's reasoning is
incorrect because it implies that "the obligation of uniform administration in Article X:3(a) [of the]
GATT does not only apply to the outcomes of administration, but also to 'administrative
processes'."486 For the European Communities, Article X:3( a) does not require that the administrative
process "must be fully uniform in all cases and respects". 487 The European Communities also
emphasizes that, "[i]n most administrations, procedures are not fully regulated or harmonised."488 The
European Communities doubts that total uniformity of administrative procedures is required in order
to ensure that traders are treated fairly and consistently. 489 In the view of the European Communities,
whether the requirement of uniformity in Article X: 3(a) is fulfilled should be evaluated primarily on
the basis of the administrative outcome. 490 The European Communities ar gues that "[a]part from the
case that the administrative process is regulated in laws or regulations of general application
themselves, the obligation of uniform administration only extends to the administrative process to the
extent that the administrative process has a dir ect and significant impact on the outcome of the
process."491 Accordingly, the European Communities re quests the Appellate Body to reverse the
Panel's finding that Article X:3(a) of the GATT 1994 requires uniformity of administrative processes
irrespective of their impact on the uniform administration of the laws covered by Article X:1 of the
GATT 1994.492

484Panel Report, para. 7.107.
485Ibid., para. 7.108. (original emphasis)
486European Communities' other appellant's submission, para. 73.
487Ibid., para. 76.
488Ibid., para. 78.
489Ibid.
490Ibid., para. 81.
491Ibid.
492Ibid., para. 82.

222. The United States disagrees with the European Communities' view that "the obligation of
uniform administration only extends to the administ rative process to the extent that the administrative
process has a direct and significant impact on the outcome of the process."
493 The United States
points out that the European Communities failed to explain what it means by "administrative
outcome" and how to distinguish administrative outcomes from administrative processes.
494 For the
United States, the exclusion of administrative pro cesses from the obligation of uniform administration
has no basis in the text of Article X:3(a). 495 The United States considers that the European
Communities' approach is too restrictive and wo uld imply that significant areas of customs
administration could be carried out in a non-uni form manner without breaching Article X:3(a). 496
According to the United States, whether requiri ng uniformity of administrative processes under
Article X:3(a) would exclude de minimis variations in the administration of customs law is not an
issue that arises in this dispute. 497 Indeed, the United States mainta ins that, where the Panel found
divergences in administrative processes inconsiste nt with Article X:3(a), the divergences were
material to traders' decisions to convey goods in to the European Communities through one region
rather than through another.498
223. We first address the European Communities' contention that the Panel found that
Article X:3(a) of the GATT 1994 requires uniformity of the administrative processes. 499 We do not
see such a finding in the Panel Report. The Panel f ound that the term "administer" in Article X:3(a)
relates to administrative processes 500, but it did not find that Article X.3(a) requires uniformity as
regards administrative processes.
224. We turn to the question of whether the term "administer" in Article X:3(a) may include
administrative processes and whether it requires uni formity of administrative processes. We agree
with the Panel that the term "administer" may in clude administrative processes. In its broadest
sense, an administrative process may be understood as a series of steps, actions, or events that are
taken or occur in relation to the making of an admi nistrative decision. Given this broad definition of
administrative process, it appears to us that Artic le X:3(a) of the GATT 1994 does not contemplate
uniformity of administrative processes. In ot her words, non-uniformity or differences in

493European Communities' other appellant's submission, para. 81.
494United States' appellee's submission, paras. 53-54.
495Ibid., para. 55.
496Ibid., para. 58.
497Ibid., paras. 60-61.
498Ibid., para. 61.
499European Communities' other appellant's submission, heading IV.B.
500Panel Report, para. 7.119.

administrative processes do not, by themselves, constitute a violation of Article X:3(a). This Article
contains an obligation to administer in a uniform manner legal instruments of the kind described in
Article X:1—laws, regulations, judicial decisions, a nd administrative rulings of general application
pertaining to the subject matters set out in that pr ovision. We agree with the Panel that the term
"administer" in Article X:3(a) refers to putting into practical effect, or applying, a legal instrument of
the kind described in Article X:1. 501 Thus, under Article X:3(a), it is the application of a legal
instrument of the kind described in Article X:1 th at is required to be uniform, but not the processes
leading to administrative decisions, or the tools that might be used in the exercise of administration.
225. This does not mean that the characteristics of an administrative process are irrelevant for
purposes of assessing whether a legal instrument of the kind described in Article X:1 is uniformly
applied or put into practical effect in particular cases. The features of an administrative process that
govern the application of a legal instrument of the kind described in Article X:1 may constitute
relevant evidence for establishing uniform or non-unifo rm administration of that legal instrument.
The probative value of such evidence will, how ever, depend on the circumstances of each case and
will necessarily vary from case to ca se. Thus, we may conceive of cases where a panel might attach
much weight to differences that exist at the leve l of the administrative processes, because it considers
these differences to be so significant that they ha ve caused, or are likely to cause, the non-uniform
application of the legal instrument at issue. On the other hand, a panel might conclude, after an
overall assessment of the evidence, that the consistent nature of the results of the application of the
legal instrument shows that the measure at issue is administered in a uniform manner, even though
differences may exist at the level of the administrative process.
226. As the term "administer" in Article X:3(a) may include the administrative processes, evidence
relating to the features of an administrative process can be adduced in support of a claim of a violation
of Article X:3(a). However, in order to substan tiate a claim of violation based on an administrative
process, it is not sufficient that the complainant me rely recites the features of the administrative
processes; it will also have to show how and why tho se features necessarily lead to a lack of uniform,
impartial, or reasonable administration of a legal instrument of the kind described in Article X:1.
227. In the light of the foregoing consideration, we uphold the Panel's finding, in paragraph 7.119
of the Panel Report, that the term "administer" in Article X:3(a) of the GATT 1994 may include
administrative processes that put into effect the lega l instruments of the kind described in Article X:1
of the GATT 1994. We also find that Article X:3(a) of the GATT 1994 does not require uniformity of
administrative processes.

501Panel Report, para. 7.104.

C. The Administrative Process Leading to the Ta riff Classification of Blackout Drapery
Lining
228. We address next the question whether the Panel erred in finding that the European
Communities has violated Article X:3(a) of th e GATT 1994 with respect to "the administrative
process leading to the tariff classification of blackout drapery lining".
502
229. Regarding the tariff classification of blackout drapery lining, the Panel did not find that the
divergent classification decisions by, on the one hand, the German customs authorities and, on the
other hand, the customs authorities in the Unite d Kingdom, Ireland, the Netherlands, and Belgium
amounted to non-uniform administration in viol ation of Article X:3(a) of the GATT 1994. 503
However, the Panel noted that the "United States has also implicitly challenged the administrative
process that led to divergent classification decisions regarding blackout drapery lining" 504, and went
on to assess the consistency with Article X:3(a) of the administrative process followed by the German
customs authorities. Relying on decisions and letters in two cases, the Bautex-Stoffe GmbH case
("Bautex") and the Ornata GmbH case
 505, the Panel found that, with respect to the tariff classification
of blackout drapery lining, the German customs au thorities relied on an interpretative aid that is
particular to Germany 506 and that is not contained in the relevant chapters of the Common Customs
Tariff.507 The Panel also noted that it "has not been provided with any evidence to indicate that any
other member States are relying upon an aid akin to that used by the German customs authorities with
respect to the tariff classification of blackout drapery lining."508 For the Panel:
... a system of customs administration which allows or, at least, does
not prevent customs authorities from unilaterally relying upon
interpretative aids in carrying out their functions, which are not
provided for in the binding rules applicable to all customs authorities,
such as in the European Communities, could lead to non-uniform
administration in violation of Article X:3(a) of the GATT 1994 in
certain circumstances.
509

502Panel Report, para. 7.276.
503Ibid., para. 7.265.
504Ibid. (original emphasis)
505Ibid., paras. 7.268-7.270.
506Ibid., para. 7.268.
507Ibid., para. 7.271.
508Ibid.
509Ibid., para. 7.267.

On this basis, the Panel concluded that "t he German customs authorities' reliance upon the
interpretative aid in question amounts to non-uniform ad ministration in violation of Article X:3(a) of
the GATT 1994."510
230. The Panel also observed:
[A] customs administration system which does not require reference
by customs authorities to decisions taken by other customs
authorities operating within the same system and/or cooperation
between customs authorities before customs decisions are taken, such
as in the European Communities, could lead to non-uniform
administration in violation of Article X:3(a) of the GATT 1994 in
certain circumstances.
511 (original emphasis)
Relying on decisions and letters in the Bautex ca se, the Panel found that German customs authorities
failed to consider seriously classification decisions for blackout drapery lining by other customs
authorities. On this basis, the Panel concluded th at "the treatment by the German customs authorities
of classification decisions for blackout drapery lining issued by other customs authorities amounts to
non-uniform administration in violation of Article X:3(a) of the GATT 1994."
512
231. The European Communities challenges in its other appeal the Panel's findings on the
administrative process leading to the tariff classification of blackout drapery lining by the German
customs authorities. The European Communities not es first that the Panel reached these findings
"even though it also found that there was no ev idence of an actual divergence in the tariff
classification of [blackout drapery lining]."
513 For the European Communities, the Panel erred
because it overstepped its terms of reference by making findings with respect to expired measures,
failed to make an objective assessment of the facts as required by Article 11 of the DSU, and
misapplied the requirements in Article X:3(a) of the GATT 1994.
232. The European Communities argues that the findings of the Panel regarding blackout drapery
lining are outside its terms of reference because th ey are based exclusively on the reasoning of the
decisions and letters of the German customs au thorities in two isolated cases. The European
Communities point out that the letter of the Main Customs Office Hamburg to Ornata GmbH dates
from July 1998, the opinion of the ZPLA Hamburg in the Bautex case dates from February 2003, and
the decision of the Main Customs Office Hamburg in the same case dates from September 2004.
514

510Panel Report, para. 7.271.
511Ibid., para. 7.272. (footnote omitted)
512Ibid., para. 7.275.
513European Communities' other appellant's submission, para. 95.
514Ibid., para. 106.

For the European Communities, these decisions and lette rs are expired measures, relate to past cases,
and do not produce any effects for the future.
515
233. The European Communities contends that the desc ription of the facts made by the Panel with
respect to the reliance by the German customs author ities on an interpretative aid that is particular to
Germany does not correspond to an objective assessment of the facts, as required by Article 11 of the
DSU.516 According to the European Communities, the decision of the Main Customs Office Hamburg
in the Bautex case and the letter of the Bremen Ma in Customs Office to Ornata GmbH do not contain
any explicit reference to the interpretative aid alle gedly relied on by the German customs authorities,
contrary to what the Panel suggested. 517 With respect to the alleged failure of the German customs
authorities to take into account the decisions of other customs authorities, the European Communities
also contends that the assessment of the facts by th e Panel is flawed. With respect to the statements
made by the Bremen Main Customs Office a nd the Hamburg ZPLA regarding the classification
decisions of other customs authorities, the European Communities explains that these statements give
no indication that these customs authorities wished to dismiss the relevance of the classification
decisions of customs authorities of other member States. 518 According to the European Communities,
the Panel ignored a letter from the Main Customs Office Hamburg to Ornata GmbH 519, which clearly
illustrates that the German customs authorities do take into account the practice of other customs
authorities concerning the classification of similar goods when they are made aware of them.520
234. The European Communities considers that the Pa nel's findings are based on an assessment of
the "motivation" of the decisions and letters that were issued by the German customs authorities 521,
and that such reasoning cannot properly be rega rded as part of the "administrative process". 522 In any
event, not every divergence in the reasoning betw een the decisions of customs authorities could be
regarded as amounting to non-uniform administration, because a violation of that obligation caused by
differences in administrative process can only be assumed to exist where a divergence has a direct
impact on administrative outcomes. 523 In the European Communities' view, Article X:3(a) does not
require that the reasoning of decisions by customs authorities be uniform, since this would be contrary

515European Communities' other appellant's submission, para. 107.
516Ibid., para. 111.
517Ibid., para. 112.
518Ibid., para. 141.
519Exhibit US-50 submitted by the United States to the Panel.
520European Communities' other appellant's submission, paras. 120-121.
521Ibid., paras. 126 and 138.
522Ibid., paras. 127 and 138.
523Ibid., paras. 128 and 138.

to the very purpose of the "motivation", which is to set out the reasons for the decision in the
circumstances of the particular case.524
235. The United States submits that the Panel did not err in its findings regarding the tariff
classification of blackout drapery lining. In th e United States' view, the European Communities
attempts to reargue certain factual issues and, in so doing, misrepresents the relevant facts. 525
Regarding the European Communities' allegation th at the Panel was wrong to state that all the
decisions or letters of the German customs author ities regarding the classification of blackout drapery
lining relied on the German interpretative aid, the United States points out that there was an explicit
reference to that aid in the documents issued by the German customs authorities.526 The United States
requests the Appellate Body not to disturb the Pane l's factual findings or reweigh the evidence that
was before it.527
236. The United States contends that the Panel correctly found that differences in the
administrative processes leading to the classification of blackout drapery lining were inconsistent with
Article X:3(a). The United States observes that th e Panel did not find that differences between the
blackout drapery lining presented to the German customs authorities and the blackout drapery lining
presented to other customs authorities justified differe nt tariff classifications; but, rather, that there
was an absence of evidence to support a finding of divergent tariff classifications in Germany, on the
one hand, and in other member States, on the other hand.528 The United States argues that a finding of
insufficient evidence of divergent classification decisi ons is not the same as a finding that different
customs authorities correctly reached different tariff classification decisions. According to the United
States, the distinction the European Communities seeks to draw between the "motivation" of a
decision and "administrative processes" is unfounded.529
237. The United States agrees with the Panel's findi ng that the German customs authorities failed
to take into account the decisions of other customs authorities in the European Communities regarding
the classification of blackout drapery lining. 530 According to the United States, the German customs
authorities are not required to refer to decisions taken by other customs authorities operating within

524European Communities' other appellant's submission, para. 19.
526Ibid., para. 80.
527Ibid., para. 85.
528Ibid., para. 90.
529Ibid., para. 94.
530Ibid., para. 107.

the same system of European Communities customs administration.
531 The United States considers it
important that "the German customs authority by its own admission was aware of other authorities
having classified 'comparable goods', yet gave s cant consideration to such classification and
apparently undertook no investigation of those other authorities' findings."532
238. At the outset of our analysis, we observe that the Panel reached what seem to be two opposite
conclusions on the tariff classification of blackout drapery lining by the German customs authorities.
On the one hand, the Panel found that the decisions of the German customs authorities regarding the
tariff classification of blackout drapery lining did not amount to non-uniform administration in
violation of Article X:3(a) of the GATT 1994. Inde ed, the Panel considered that, on the basis of the
evidence before it, there was an objective factual b asis that justified the German customs authorities
to classify the product in a manner different from that of customs authorities in other member
States.
533 On the other hand, for the reasons we set out above, the Panel found that "the administrative
process leading to the tariff classification of blackout drapery lining amounts to non-uniform
administration within the meaning of Article X:3(a) of the GATT 1994."
534 As a result of this finding,
the Panel ultimately concluded that there was "a violation of Article X:3(a) of the GATT 1994 with
respect to the tariff classification of blackout drapery lining".535
239. As we explained in Section V.B of this Report, the term "administer" may include
administrative processes, but this does not mean that Article X:3(a) of the GATT 1994 requires
uniformity of administrative processes. In order to find that an administrative process has led to non-
uniform administration of a measure under Article X: 3(a), a panel cannot merely rely on identifying
the features of an administrative process that it may view as non-uniform; a panel must go further and
undertake an analysis to determine whether those features of the administrative process necessarily
lead to non-uniform administration of a legal instrument of the kind described in Article X:1.
536
240. In this case, the Panel highlighted and criticized the use by the German customs authorities of
an interpretative aid that is particular to Germany 537, as well as the absence of any formal requirement
for the customs authorities in Germany to refer to the decisions of customs authorities of other

532Ibid., para. 102.
533Panel Report, para. 7.265.
534Ibid., para. 7.276.
535Ibid.
536See our development on this issue in Section V.B of this Report.
537Panel Report, paras. 7.267-7.271.

member States when classifying blackout drapery lining. 538 In this respect, we observe that the Panel
viewed the resort to an interp retative aid that is particular to Germany and the absence of any
requirement to refer to tariff classification decisions issued in other member States as features of the
administrative process that German customs au thorities follow in making tariff classification
decisions regarding blackout drapery lining. Irrespec tive of whether this characterization is correct,
we note that the Panel did not explain how and why these two features of the administrative process
would necessarily lead to non-uniform classification of blackout drapery lining.
241. Indeed, as we noted earlier, the Panel found that the divergent decisions regarding the tariff
classification of blackout drapery lining by, on the one hand, the German customs authorities and, on
the other hand, customs authorities in other member States were justified by an "objective factual
basis" and, therefore, did not amount to non-uniform administration, in violation of Article X:3(a) of
the GATT 1994.
539 Given this opposite conclusion on the tariff classification decisions of the German
customs authorities on blackout drapery lining, we fail to see how, on the basis of the aforesaid two
features of the administrative process, the Panel coul d have come to the conc lusion of a violation of
Article X:3(a) of the GATT 1994.
540
242. Accordingly, we reverse the Panel's finding, in paragraphs 7.276 and 8.1(b)(iv) of the Panel
Report, that the administrative process leading to the tariff classification of blackout drapery lining
amounts to non-uniform administration within the m eaning of Article X:3(a) of the GATT 1994, and
that the European Commun ities has violated Article X:3(a) of the GATT 1994 with respect to the
tariff classification of blackout drapery lining.
243. The European Communities also claims that th e Panel's findings regarding the administrative
process leading to the tariff classification of black out drapery lining were not based on an objective
assessment of the facts as required by Article 11 of the DSU. As we concluded that the Panel erred in
finding a violation of Article X:3(a) of the GATT 1994 with respect to the tariff classification of
blackout drapery lining, we do not consider it necessar y, for purposes of resolving this dispute, to rule
on whether the Panel's findings regarding the admi nistrative process in question were based on an
objective assessment of the facts, as required by Article 11 of the DSU.

538Panel Report, paras. 7.272-7.275.
539Ibid., para. 7.265.
540Ibid., para. 7.276.

D. Tariff Classification of Liquid Crystal Disp lay Flat Monitors with a Digital Video
Interface
244. We now turn to the question whether the Panel erred in finding that the European
Communities has violated Article X:3(a) of the GA TT 1994 with respect to the tariff classification of
liquid crystal display ("LCD") flat monitors with digital video interface ("DVI").
245. This issue concerns the tariff classification of LCD monitors with DVI that are shipped
separately from computers. For these monitors, the qu estion is whether they are to be classified as
computer monitors or as video monitors. Video monitors fall under heading 8528 of the European
Communities' Common Customs Tariff and are subject to a duty rate of 14 per cent. Computer
monitors fall under heading 8471 of the Common Cu stoms Tariff and are imported duty-free (as they
are subject to the Information Technology Agr eement). The classification of these monitors has
acquired significance as a result of the increasing te chnological developments and the convergence of
information technology and consumer electronics. Be fore the Panel, the United States challenged the
divergence in the tariff classification of LCD monitors with DVI among the customs authorities of the
member States of the European Communities.
246. The Panel found that "the tariff classification of LCD monitors with DVI amounts to non-
uniform administration within the meaning of Article X:3(a) of the GATT 1994."
541 The Panel relied
on a divergence in the tariff classification of th is product between, on the one hand, the customs
authorities in the Netherlands, which classified LC D monitors with DVI as video monitors under
heading 8528, and, on the other hand, customs aut horities in other member States, which classified
this product as computer monitors under heading 8 471. The Panel also noted that the European
Communities did not "appear to dispute" the existence of this divergence. 542 The European
Communities argued before the Panel that certai n actions had been taken by the European
Communities since 2004 to resolve the divergence in the tariff classification of LCD monitors with
DVI among customs authorities of the member St ates. After analyzing the evidence placed

541Panel Report, para. 7.305.
542Ibid., para. 7.294.

before it 543, the Panel concluded that "t he action taken by the European Communities has not had the
effect of rectifying the divergence in the tariff classification of LCD monitors with DVI among
customs authorities of the member States."544
247. The Panel further noted "the existence of a draft Regulation [2171/2005] concerning the
classification of LCD monitors contained in Exhibit EC-163". 545 The Panel took the view that, "at the
time the Panel issued its Interim Report to the par ties, the Panel had not been provided with evidence
to indicate that that draft regulation had the effect of removing [the] divergence in tariff classification
of such monitors which became evident in 2004."546
248. In its comments on the Interim Report, the Eur opean Communities indicated to the Panel that
the draft Regulation contained in Exhibit EC-163 had been adopted as Commission Regulation (EC)
No. 2171/2005 ("EC Regulation 2171/2005") on 23 December 2005. It also informed the Panel that,
following the adoption of that Regulation, the decree of 8 July 2005 issued by the Dutch customs
authorities had been withdrawn and the German Bi nding Tariff Information ("BTI") dated 19 July
2005 had ceased to be valid. 547 These comments of the European Communities at the interim review
stage were supported by three new exhibits. 548 The Panel declined to consider these exhibits on the
ground that "the terms of Article 15.2 preclude[d] [it] from taking into consideration evidence which
is not reflected in the Interim Report." 549

543This evidence included:
- Council Regulation (EC) No. 483/2005 of 16 March 2005 (Exhibit US-62 submitted by the United
States to the Panel);
- Commission Regulation (EC) No. 634/2005 of 26 April 2005 (Exhibit EC-85 submitted by the
European Communities to the Panel);
- an opinion of the Customs Code Committee taken at its 346th Meeting of 30 June–2 July 2004
(European Communities' first written submission to the Panel, para. 353); and
- Tariff Notice 13/04 issued by th e customs authority of the United Kingdom (according to the Panel,
apparently published following the issuance of the opinion of the Customs Code Committee); the
decree of 8 July 2005 issued by the Dutch customs authority; and a BTI dated 19 July 2005 issued
by the German customs authority; Letters re spectively dated 2 September 2005 and 6 December
2005 from the Director-General of the European Information, Communications and Consumer
Electronics Technology In dustry Associations (EICTA) to a high-ranking official of the European
Commission (Exhibits US-76, US-77, US-78, US-7 5, and US-81, respectively, submitted by the
United States to the Panel).
544Panel Report, para. 7.304.
545Ibid., footnote 580 to para. 7.305.
546Ibid.
547European Communities' comments on the Interim Panel Report, paras. 67 and 69.
548Exhibits EC-167, EC-168, and EC-169 submitted by the European Communities to the Panel.
549Panel Report, para. 6.6.

249. In its other appeal, the European Communities ch allenges the Panel's finding that "the tariff
classification of LCD monitors with DVI amounts to non-uniform administration within the meaning
of Article X:3(a) of the GATT 1994."
550 For the European Communities, the Panel "overstepped its
terms of reference by basing its findings of violation primarily on instances of administration which
post-date its establishment".
551 Specifically, the European Commun ities refers to the Dutch decree of
8 July 2005 and the German BTI of 19 July 2005. 552 The European Communities also argues that the
Panel did not make an objective assessment of th e facts, as required by Article 11 of the DSU,
because "the Panel did not have an y evidence before it to support a finding that at the time of its
establishment, there was a lack of uniform administ ration with regard to the tariff classification of
LCD monitors." 553 The European Communities contends th at, "apart from one inconclusive press
release by a law firm, the United States did not provide any evidence as to the [European
Communities'] classification practice prior to the Panel's establishment."554
250. The European Communities considers that the Panel erred in finding a violation of
Article X:3(a), even assuming that it was justified to consider "instances of administration which post-
dated ... its establishment". 555 For the European Communities, uniformity under Article X:3(a) must
be "established within a reasonable period of time" 556, and maintains that this has been achieved with
the adoption of EC Regulation 2171/2005 on 23 Dece mber 2005, as well as with the withdrawal, in
January 2006, of the Dutch decree and the German BTI.557 In this respect, the European Communities
asserts that the Panel erred in failing to take in to account draft EC Regula tion 2171/2005. In the
European Communities' view, a regulation should no t be ignored simply because it has not yet been
adopted.558 The European Communities also argues that the Panel erred in rejecting the evidence
contained in exhibits provided by the European Communities at the interim review stage.559 Rejecting
this evidence was not in accordan ce with Article 15.2 of the DSU because the evidence related to
precise aspects of the Interim Report. 560 The European Communities, therefore, requests the

550Panel Report, para. 7.305.
551European Communities' other appellant's submission, para. 150.
552Ibid., para. 166 (referring to Exhibits US-77 and US-78 submitted by the United States to the Panel).
553Ibid., para. 182.
554Ibid., para. 21.
555Ibid., para. 183.
556Ibid., para. 185.
557Ibid., para. 186.
558Ibid., para. 190.
559The European Communities refers to Exhibits EC-167, EC-168, and EC-169 submitted to the Panel.
560European Communities' other appellant's submission, para. 197.

Appellate Body to "reverse the Panel's decision in paragraph 6.6 of the [Panel Report] not to admit the
evidence contained in Exhibits EC-167, EC-168 and EC-169."561
251. The United States contends that the European Communities' other appeal misrepresents key
facts and ignores the distinction between administration and evidence of administration. The United
States also disagrees with the Eur opean Communities' argument that the Panel erred by declining to
consider new evidence introduced only at the interim review stage.
562
252. In the United States' view, the Panel made an objective assessment of the facts when it found
that, in 2004, the European Communities acknowledge d that tariff classification of LCD monitors
with DVI was not uniform.563 The United States emphasizes that it had established this fact before the
Panel and that various statements made by the European Communities in the course of the Panel
proceedings suggested that "the [European Commun ities] was aware of the issue and was working to
address it."564 The United States observes that the Eur opean Communities argued before the Panel
that three steps were taken by European Commun ities institutions in order to address the non-uniform
classification of LCD monitors with DVI (namel y, "the June/July 2004 Customs Code Committee
'conclusions', the EU Council duty suspensi on regulation and EU Commission Regulation
634/2005").565 The Panel analyzed each of these measures and found that none of them resolved the
problem of non-uniform administration.566
253. For the United States, the Panel did not overstep its terms of reference by referring to acts of
administration that post-dated the Panel's establishm ent, because the Panel referred to these acts as
evidence of the manner of administration at the time of Panel establishment that is alleged to be
inconsistent with Article X:3(a). According to th e United States, the Dutch decree of 8 July 2005 and
the German BTI of 19 July 2005 are relevant evid ence supporting the Panel's finding that "measures
put into place since 2004 have not resolved the pr oblem of non-uniform administration and may well
have increased confusion." 567 The United States contends that th e Panel was correct to attribute no
weight to draft EC Regulation 2171/2005 on LCD mon itors and declined to consider new evidence

561European Communities' other appellant's submission, para. 201.
563Ibid., para. 109.
564Ibid., para. 110.
565Ibid., para. 117.
566Ibid., para. 123 (referring to European Communitie s' first written submission to the Panel,
paras. 351-353, 356, and 361).

introduced by the European Communi ties at the interim review stage.
568 Regarding the Panel's
decision not to consider new evidence introduced at the interim review stage, the United States
underlines that the interim review stage is not an appropriate time to introduce new evidence, and
disagrees with the European Communities' assertion that there should be an exception for evidence
introduced to correct errors of fact.569
254. As we explained above, had the Panel properly identified the measures at issue, its task would
have been to determine whether the measures at issu e had been administered collectively in a uniform
manner at the time the Panel was established 570, that is to say, in March 2005. In order to make this
determination, the Panel could rely on evidence that pre-dated or post-da ted the time of the Panel's
establishment to the extent that it was evidence rele vant for the assessment of whether the European
Communities acted consistently with Article X:3(a) at the time of the Panel's establishment. 571 In our
view, the Panel did not err in referring, in its analysis, to "evidence related to instances of
administration which occurred after its establishment" 572, because this evidence was relevant to the
task of determining whether there was a violation of Article X:3(a) at the time of the establishment of
the Panel. The Dutch decree of 8 July 2005 and the German BTI of 19 July 2005 had come into
existence within a short time after the establishm ent of the Panel. In our view, it was not
unreasonable for the Panel to consider that this evidence was relevant for assessing how the measures
at issue were administered at the time the Panel was established. Accordingly, we reject the European
Communities' argument that the Panel "overstepped its terms of reference by basing its findings of
violation primarily on instances of administration which post-date its establishment."573
255. Another point raised by the European Communitie s' other appeal is whether the Panel failed
to make an objective assessment of the facts, as requ ired by Article 11 of the DSU, because it did not
have any evidence before it to support a finding that , at the time of the establishment of the Panel,
there was a lack of uniform administration with re gard to the tariff classification of LCD monitors
with DVI. However, the Panel Report shows that the Panel did analyze various pieces of evidence
and came to the conclusion that the divergence in tariff classification of LCD monitors with DVI,

568United States' appellee's submission, paras. 128, 132, and 140 (referring, inter alia , to Exhibits
EC-167, EC-168, and EC-169 submitted by the European Communities to the Panel).
569Ibid., paras. 134-136 (referring to Appellate Body Report, EC – Sardines, para. 301).
570See Section IV.D of this Report. As we concluded in Section IV.B, the measures at issue in this
dispute are the Community Customs Code, the Implementing Regulation, the Common Customs Tariff, and the
TARIC, as administered collectively.
571See Section IV.D of this Report.
572European Communities' other appellant's submission, para. 166.
573Ibid., para. 150.

found to have existed in 2004, had not been subsequently rectified. 574 The Panel's analysis of the
evidence also shows that some confusion did indeed exist in 2004 and 2005 among customs
authorities of the member States on the tariff classification of LCD monitors with DVI, and that this
confusion might also have caused divergences in tariff classification.575
256. Thus, it seems to us not correct to state, as the European Communities does, that "the Panel
did not have any evidence before it to support a finding that at the time of its establishment, there was
a lack of uniform administration with regard to the tariff classification of LCD monitors." 576 T h e
Panel did analyze various pieces of evidence, a nd we see nothing in the Panel's examination,
weighing, and analysis of the evidence relating to the tariff classification of LCD monitors with DVI
that would amount to a violation of its duty to ma ke "an objective assessment of the facts" within the
meaning of Article 11 of the DSU.
257. Finally, we turn to the last question raised by the European Communities' other appeal,
namely, whether the Panel erred in failing to take into account draft EC Regulation 2171/2005, and in
declining to consider Exhibits EC-167, EC-168, and EC-169 submitted by the European Communities
at the interim review stage.
258. With respect to draft EC Regulation 2171/200 5, we disagree with the European Communities
that the Panel did not consider this draft Regul ation. Draft EC Regulation 2171/2005 was discussed
by the Panel in footnote 580 to paragraph 7.305 of the Panel Report. The European Communities
might have wished the Panel had attached more wei ght than it did to this piece of evidence. It is,
however, well-established that the weighing of the ev idence is, in principle, within the discretion of
the panel as the trier of facts.577 Thus, the Panel was "not required to accord to factual evidence of the
parties the same meaning and weight as do the parties". 578 We also recall that "a mere divergence of
views between a party and a panel on the inferences to be drawn from pieces of evidence is not a
sufficient ground to conclude that the Panel failed to 'make ... an objective assessment of the facts of
the case'."579
259. With respect to Exhibits EC-167, EC-168, a nd EC-169 (which relate to the adoption of
EC Regulation 2171/2005 and its con sequences), we are of the view that the Panel did not err in

574This evidence is presented supra, footnote 543.
575Panel Report, paras. 7.300-7.303.
576European Communities' other appellant's submission, para. 182. (emphasis added)
577See Appellate Body Report, EC – Bed Linen (Article 21.5 – India), para. 181.
578Appellate Body Report, Japan – Apples , para. 221; Appellate Body Report, Australia – Salmon ,
para. 267.
579Appellate Body Report, Dominican Republic – Import and Sale of Cigarettes, para. 84.

declining to consider these pieces of evidence.
580 As the Appellate Body stated in EC – Sardines ,
"[t]he interim review stage is not an a ppropriate time to introduce new evidence." 581 The Panel's
decision to decline to consider Exhibits EC-167, EC -168, and EC-169 appears to us to be in line with
the Appellate Body's statement in EC – Sardines that "only ... 'precise aspects' of the [interim] report
... must be verified during the interim review ... [a ]nd this ... cannot properly include an assessment of
new and unanswered evidence." 582 In any event, although Exhibits EC-167, EC-168, and EC-169
might have arguably supported the view that unifo rm administration had been achieved by the time
the Panel Report was issued, we fail to see how these exhibits showed uniform administration at the
time of the establishment of the Panel.
260. In the light of the above considerations, we uphold the Panel's finding, in paragraphs 7.305
and 8.1(b)(v) of the Panel Report, that "[t]he tariff classification of liquid crystal display monitors
with digital video interface amounts to non-uniform administration within the meaning of
Article X:3(a) of the GATT 1994."
E. Administration of the Successive Sales Provision
261. We now turn to the question whether the Eu ropean Communities' administration of the
successive sales provision (Article 147(1) of the Implementing Regulation)
583 leads to a violation of
Article X:3(a) of the GATT 1994 because some memb er States of the European Communities impose
a "form of prior approval" requirement while others do not.

580See Panel Report, para. 6.6.
582Ibid.
583Article 147 of the Implementing Regulation sets out the conditions under which a sale other than the
last sale that led to the introduction of the goods into the European Communities may be used as the basis for
the valuation of the goods. It provides, in relevant part:
For the purposes of Article 29 of the Code, the fact that the goods which are
the subject of a sale are declared for free circulation shall be regarded as
adequate indication that they were sold for export to the customs territory of
the Community. In the case of successive sales before valuation, only the
last sale, which led to the introduction of the goods into the customs
territory of the Community, or a sale taking place in the customs territory of
the Community before entry for free circulation of the goods shall constitute
such indication.
Where a price is declared which relates to a sale taking place before the last
sale on the basis of which the goods were introduced into the customs
territory of the Community, it must be demonstrated to the satisfaction of
the customs authorities that this sale of goods took place for export to the
customs territory in question.

262. The Panel concluded:
The imposition by customs authorities in some member States of a
form of prior approval with respect to the successive sales provision,
which is inconsistent with [European Communities] customs
law and which is not imposed by customs authorities in other
member States means that the European Communities does not
administer its customs law concerning successive sales—in
particular, Article 147(1) of th e Implementing Regulation—in a
uniform manner in violation of Article X:3(a) of the GATT 1994.
584
263. In reaching its conclusion, the Panel relied on the European Communities' Court of Auditors
Special Report No. 23/2000 concerning valu ation of imported goods for customs purposes 585 (the
"Court of Auditors Report") submitted by the United St ates to the Panel as Exhibit US-14. The Court
of Auditors Report suggests that, "in practice, some customs authorities do impose a form of prior
approval even though this has no basis in [European Communities] law." At the same time, however,
the European Commission, it its replies to the C ourt of Auditors Report, contests the Court of
Auditors' assertion that, "in practice, some customs authorities do impose a form of prior approval". 586
The Panel Report reflects that the Panel took into ac count the Court of Auditor's statement that only
some customs authorities impose a "form of prior approval". However, it is not clear from the Panel
Report that the Panel also took into account the European Commission's replies to the Court of
Auditors Report, which are an integral part of E xhibit US-14. The Panel considered that, since the
United States had presented a section of the Court of Auditors Report to sustain its claim, it was
incumbent on the European Communities to submit evidence to rebut the Court of Auditors' assertion.
The Panel stated:
... at the time the Panel issued its Interim Report to the parties, the
European Communities had not submitted any evidence to
substantiate its assertion in this regard.*
587

 *The Panel considers that it was incumbent upon the European
Communities to submit such evidence in the light of aspects of the
[European Communities'] Court of Au ditor's report referred to in
paragraph 7.383 above, which tend to call the European Communities
assertion in this regard into question.

584Panel Report, para. 7.385.
585Court of Auditors Report, supra, footnote 207.
586The Commission's replies are published together w ith the Court of Auditors Report pursuant to
Article 248(4) second subparagraph of the EC Treaty.
587Panel Report, para. 7.382 and original footnote 671 thereto.

264. On appeal, the European Communities claims th at the Panel "unduly shifted the burden of
proof from the United States to the European Commun ities" to establish whether or not there was a
lack of uniformity in the application of Article 147(1) of the Implementing Regulation. In the
European Communities' view, the United States had not established a prima facie case of violation
of Article X:3(a) of the GATT 1994 with respect to the administration of the successive sales
provision. The European Communities also submits that, by shifting the burden of proof, the Panel
failed to make an objective assessment of the matter before it as required by Article 11 of the DSU.
588
265. In the view of the United States, the statemen t in the Court of Auditors Report that, "in
practice, some customs authorities do impose a form of prior approval even though this has no basis
in Community law" 589, amounts to an admission of non-uniform administration by the European
Communities.590 The United States considers that it did not need to adduce additional evidence in
order to establish its prima facie case, given that it had provided th e Panel with an admission by the
European Communities.591
266. We begin our analysis by recalling that th e Appellate Body addressed the question of
allocation of the burden of proof in US – Wool Shirts and Blouses . In that case, the Appellate Body
held:
The burden of proof rests upon the party, whether complaining or
defending, who asserts the affirmative of a particular claim or
defence. If that party adduces evidence sufficient to raise a
presumption that what is claimed is true, the burden then shifts to the
other party, who will fail unless it adduces sufficient evidence to
rebut the presumption. (footnote omitted)
In the context of the GATT 1994 and the WTO Agreement, precisely
how much and precisely what kind of evidence will be required to
establish such a presumption will n ecessarily vary from measure to
measure, provision to provision, and case to case.
592

588European Communities' other appellant's submission, para. 214.
591Ibid., para. 147.
592Appellate Body Report, US – Wool Shirts and Blouses, p. 14, DSR 1997:I, 323, at 335.

267. The Appellate Body defined the nature of a prima facie case in EC – Hormones. It stated:
[A] prima facie case is one which, in the absence of effective
refutation by the defending party, requires a panel, as a matter of law,
to rule in favour of the complaining party presenting the prima facie
case.593 (footnote omitted)
268. Bearing this in mind, we examine whether the United States had established a prima facie
case in assessing non-uniform administration of th e successive sales provision. The United States
submitted to the Panel one document to substa ntiate its claim, that is, Exhibit US-14. 594
Exhibit US-14 contains two opposing statements: firs t, the Court of Auditors Report suggests that, in
practice, some customs authorities do impose a form of prior approval even though this has no basis
in European Communities law; and second, the European Commission's replies to the Court of
Auditors Report, in which the Commission contest s the Court of Auditor's assertion by saying that
"customs authorities in some member States do not 'impose' such a notification". 595 T h e C o u r t o f
Auditors Report and the Commission's replies are contained in the same document submitted to
the Panel as Exhibit US-14. Given this rebutta l, we cannot agree with the United States that
Exhibit US-14 amounts to an admission by the Europ ean Communities of the fact that some member
States impose a prior approval requirement in the administration of the successive sales provision.

593Appellate Body Report, EC – Hormones , para. 104. See also Appellate Body Report, US – Wool
Shirts and Blouses, p. 14, DSR 1997:I, 323, at 335.
The Appellate Body has subsequently relied on this statement in various inst ances. (See, for example,
Appellate Body Report, US – Zeroing (EC) , para. 217; and Appellate Body Report, Mexico – Anti-Dumping
Measures on Rice, para. 167 and footnote 160 thereto)
594The Court of Auditors Report states, in relevant part:
The Court was unable to identify the full extent to which importers use or
seek to use the successive sales provisio n. One reason for this is that, in
order to apply the successive sales provision, unlike some other customs
provisions, there is no legal requirement for an importer to obtain prior
permission or authorisation. However, the Court found that, in practice,
some customs authorities do impose a form of prior approval even though
this has no basis in Community law. As in other aspects of customs
valuation the Court found variations in the extent to which customs
authorities allow the use of the provision or consu lt with each other. The
Court has established that certain importers use the successive sales
provision in one or more Member States but not in others and has drawn
some significant examples of inconsistency to the attention of the
Commission.

The Commission's view is that customs authorities in some Member States
do not 'impose' such a notification.
(Court of Auditors Report, supra, footnote 207, para. 64, and Commission's replies thereto, p. 17)
595European Commission's comments on paragraphs 62-64 of the Court of Auditors Report, supra,
footnote 207, p. 16.

269. Furthermore, we observe that the United Stat es has not provided suffi cient evidence for its
assertion. It has not specified, for example, which member States impose "a form of prior approval";
what "forms of prior approval" the customs aut horities of those member States impose; or how
frequently such a requirement has been imposed. In addition, the United States has made no specific
reference to instances of administration of the successive sale provision, or given examples where
prior approval was imposed by, or would have been required by, a member State in practice.
270. In the light of these considerations, we disag ree with the Panel that the United States has
established a prima facie case with respect to its claim alleging lack of uniform administration of the
successive sales provision. We therefore reverse the Panel's finding, in paragraphs 7.385
and 8.1(c)(ii) of the Panel Report, that "the Eu ropean Communities does not administer its customs
law concerning successive sales—in particular, Article 147(1) of the Implementing Regulation—in a
uniform manner, in violation of Article X:3(a) of the GATT 1994." In the light of this finding, we do
not consider it necessary, for purposes of resolving th is dispute, to rule on whether the Panel's finding
with respect to the administration of the su ccessive sales provision was based on an objective
assessment of the matter as required by Article 11 of the DSU.
F. Completing the Analysis with respect to th e "As a Whole" Challenge of the United
States under Article X:3(a) of the GATT 1994
271. We now examine whether the Appe llate Body is in a position to complete the analysis and to
determine whether the measures at issue (that is , the Community Customs Code, the Implementing
Regulation, the Common Customs Tariff, and the TARIC), collectively or "as a whole", are
administered by the European Communities in a manner inconsistent with its obligation under
Article X:3(a) of the GATT 1994.
272. The Panel concluded that, "based on the langua ge and content of the Panel's terms of
reference, the Panel is precluded from considering ' as such' challenges of the design and structure of
the [European Communities'] system of customs administration as a whole and also the design and
structure of the [European Commun ities'] system in the areas of customs administration that have
been specifically identified in the [panel request]."
596 For the reasons we set out in Section IV.C of
this Report, we reversed this finding of the Panel. In our view, the terms of the panel request indicate
that the United States properly made a claim th at the Community Customs Code, the Implementing
Regulation, the Common Customs Tariff, and the TA RIC, collectively, are administered in a non-
uniform manner, in violation of Article X:3(a) of the GATT 1994. The Panel should have examined

596Panel Report, para. 7.64.

this claim, but it did not. Consequently, we have now to determine whether we are in a position to
complete the analysis with respect to the United States' claim under Article X:3(a) of the GATT 1994.
273. The United States is of the view that the Appe llate Body should complete the analysis, and
find that the European Communities' system of cust oms administration "as a whole" is inconsistent
with Article X:3(a). 597 For the United States, in this dispute, "a reversal of the Panel's findings
without a completion of the Panel's analysis w ould fail 'to secure a positive solution to [the]
dispute.'"598 The United States submits that the analysis can be completed on the basis of undisputed
facts and the Panel's findings of fact regardi ng the European Communities' system of customs
administration.599 The United States recalls that "[t]he crux of the [United States'] claim ... was that
the existence of a system of customs administration in which 25 separate, independent authorities
exercise judgment in interpreting and applying [E uropean Communities] customs law, without any
procedures or institutions to ensure against divergen ces or to reconcile them promptly and as a matter
of right when they occur necessarily constitutes a lack of uniform administration, in breach of
Article X:3(a)."
600 The United States points to statements made by the Panel with respect to various
mechanisms and institutions in the European Communities that , according to the European
Communities, ensure against divergences or reconcile them when they occur. 601 The United States
also refers to the Panel's "overall assessment" that the European Communities system of customs
administration "as a whole" is "complicated and, at times, opaque and confusing".602 According to the
United States, by these statements, the Panel reject ed the European Communities' argument that the
institutions and procedures to which the Eur opean Communities referred ensure the uniform
administration of European Communities customs law. 603 For the United States, in the light of the
Panel's statements regarding "the institutions a nd mechanisms the [European Communities] held out
as securing uniform administration of [European Communities] customs law, completion of the
Panel's analysis should be straightforward"
604, and should lead to the conclusion that "the [European
Communities'] system of customs administration as a whole is inconsistent with the [European
Communities'] obligation of uniform administration under Article X:3(a) of the GATT 1994."605

597United States' appellant's submission, paras. 29, 99, and 204(a).
598Ibid., para. 101.
599Ibid., para. 102.
600Ibid. (footnote omitted)
601Ibid., paras. 103-106 (referring to Panel Report, paras. 7.156-7.192).
603Ibid., para. 108.
604Ibid.
605Ibid.

274. The European Communities disagre es with the United States that there are enough factual
findings made by the Panel, or undisputed facts on record, that would enable the Appellate Body to
make the finding requested by the United States re garding the European Communities' system of
customs administration "as such" and "as a whole" . According to the European Communities, the
Panel's statements to which the United States refers are isolated remarks in the Panel Report where the
Panel comments on individual aspects of the European Communities' system of customs
administration.
606 These comments, the European Commun ities argues, do not allow the Appellate
Body to assess whether the Europ ean Communities' system of customs administration "as a whole"
and "as such" is in conformity with Article X: 3(a) of the GATT 1994, because they do not contain
findings of fact with respect to the European Communities' system of customs administration, and
were not intended by the Panel to constitute such findings.
607 The European Communities observes
that these comments are contained in a section of the Panel Report where the Panel set out its
understanding of the European Communities' system of customs administration as "context" for the
evaluation of the United States' claims re garding individual instances of application.608 The European
Communities also emphasizes that, if the Unite d States' challenge concerns the European
Communities' system of customs administration as a whole, then the "system must be evaluated with
all its constituent interlocking elements and mechanisms, and not individual elements in isolation."609
275. Furthermore, the European Communities emphasi zes that, in paragraph 7.490 of the Panel
Report, the Panel observed, inter alia, that "the United States did not demonstrate that the design and
structure of the [European Communities'] system of customs administration, including components
thereof, necessarily result in a violation of Article X:3(a) of the GATT 1994." Thus, according to the
European Communities, the Panel found that "the [United States] has not even come close to
establishing that the [European Comm unities'] system 'as such' and 'as a whole' entails a violation of
Article X:3(a) [of the] GATT."610
276. Finally, the European Communities submits th at the United States' claim regarding the
European Communities' system of customs administra tion "as a whole" is a claim that has not been
explored by the Panel, and on which the Pane l has therefore not made any legal findings and
interpretations that the Appellate Body could reve rse. For the European Communities, a claim of
violation of the obligation of uniform administration directed against individual instances of
application is fundamentally different from a claim directed against a system of customs

607Ibid., para. 160.
608Ibid. (referring to Panel Report, paras. 7.156-7.191).
609Ibid., para. 163. (footnote omitted)
610Ibid., para. 172. See also para. 171.

administration "as such" and "as a whole". 611 Adjudging the claim regarding the European
Communities' system of customs administration "as such" and "as a whole" would, therefore, violate
the due process rights of the participants, and of the European Communities in particular.612
277. In response to questioning at the oral heari ng, the United States confirmed that it does not
consider that Article X:3(a) requires a centralized system of customs administration at the European
Communities level. Therefore, for the United St ates, the administration of European Communities
customs law by 25 national customs authorities does not, in itself, constitute a breach of
Article X:3(a). According to the United States, the structural shortcoming that undermines the
European Communities' system of customs administ ration is, rather, the absence of "any procedures
or institutions to ensure against divergences or to reconcile them promptly and as a matter of right
when they occur."
613 The United States contends that the ab sence of any procedures, institutions, or
mechanisms to ensure uniform administration necessar ily results in a breach of Article X:3(a) of the
GATT 1994 by the European Communities.614
278. It is well settled that the Appellate Body will be in a position to complete the legal analysis if
it has before it sufficient factual findings of the panel or undisputed facts on the panel record. 615 In
this case, the Panel did not examine the United States ' claim that the measures at issue, collectively,
are administered in a non-uniform manner. Theref ore, we have to consider whether the factual
findings or general observations made by the Panel w ith respect to the claims it did examine, can be
utilized in the context of completing the analysis. In considering this question, we also have to take
into account the nature and breadth of the United St ates' challenge, that is, whether the Community
Customs Code, the Implementing Regulation, the Common Customs Tariff, and the TARIC,
collectively, are administered in a non-uniform manner, in violation of Article X:3(a) of the
GATT 1994.
279. We begin our analysis by noting that, before the Panel, the European Communities referred to
certain institutions and mechanisms existing in the European Communities to secure uniformity of
administration of European Communities customs la w. According to the European Communities,
these institutions and mechanisms play "an instrument al role in achieving uniform administration of

611European Communities' appellee's submission, paras. 188-189.
612Ibid., paras. 193-195.
614Ibid. See also paras. 2, 19, 21, and 69; United States' opening statement at the oral hearing; and
United States' response to Question 126 posed by the Panel, Panel Report, pp. B-4 and B-5.
615See Appellate Body Report, US – Hot-Rolled Steel , para. 235; Appellate Body Report, Canada –
Dairy (Article 21.5 – New Zealand and US) , para. 98; and Appellate Body Report, US – Section 211
Appropriations Act, para. 343.

[European Communities] customs law by the customs authorities of the member States."
616 The Panel
took the view that it was not authorized to make any findings in relation to these institutions and
mechanisms given that it had found that its terms of reference precluded it from considering
challenges to the design and structure of th e European Communities' system of customs
administration, including components thereof. 617 Nevertheless, the Panel chose to discuss these
institutional mechanisms in a section of the Panel Report entitled "Relevant Aspects of the EC System
of Customs Administration". It did so because it w as of the view that "its understanding of certain
aspects of the manner in which the [European Co mmunities'] system of customs administration
functions ... is important context for the examination of the particular instances of alleged violations
of Article X:3(a) of the GATT 1994 in respect of which such aspects have been raised."618
280. The institutions and mechanisms of the Eu ropean Communities' system of customs
administration that the Panel addressed include th e following: (i) the Customs Code Committee;
(ii) Article 10 of the EC Treaty; (iii) the preliminary reference system (Article 234 of the EC Treaty);
(iv) infringement proceedings; (v) the European Ombudsman; (vi) complaints to the European
Commission; (vii) restrictions on the adoption of national measures by customs authorities of the
member States; (viii) consultations and mutual assi stance between member State customs authorities;
and (ix) best practice guidelines, such as the Eu ropean Binding Tariff Information (the "EBTI")
guidelines, which refer to the EBTI database, and the Compendium of Customs Valuation texts.
281. The European Communities identified the Cu stoms Code Committee as "an important
institution that helps to ensure uniform administration of [European Communities] customs law
among the customs authorities of the member States."
619 The Panel noted that "the opinions of the
Customs Code Committee are not legally binding on the customs authorities of the member States."620
After considering certain other features of the Community Customs Code, the Panel concluded that "it
would appear that the Customs Code Committee h as limited power to impose uniform administration
of [European Communities] customs law on customs authorities of the member States."621

616Panel Report, para. 7.489.
617Ibid., para. 7.490.
618Ibid., para. 7.155. (emphasis added)
619Ibid., para. 7.157. (footnote omitted)
620Ibid., para. 7.160.
621Ibid. (footnote omitted)

282. With respect to the "duty of cooperation" contai ned in Article 10 of the EC Treaty, the Panel
observed that "the extent to which Article 10 of the EC Treaty contributes to the uniform
administration of [European Communities] customs law is unclear." 622 The European Communities
also cited Article 234 of the EC Treaty, according to which national courts of the member States may
refer any question regarding the interpretation of European Communities law to the ECJ (the
preliminary reference system). The European Co mmunities submitted that "it is through preliminary
rulings issued by the ECJ, which are binding on a ll courts of the member States, that divergences ...
can be avoided and the effective applicati on of European Communities law be assured."
623 The Panel
noted, however, that "a trader is not authorized under [European Communities] law to proceed
directly to the ECJ for a preliminary ruling"
624, and that "the use of the preliminary reference system
to secure uniform administration ... in the area of customs administration during the period of 1995–
2005 appears low."625
283. With respect to the infringement proceedings th at may be instituted before the ECJ against
member States for failure to fulfil an obligatio n under European Communities law, and the role
played by the European Ombudsman, the Panel noted that the use of both mechanisms appeared to be
"low"626, and opined that "the extent to which th e European Ombudsman is effective in ensuring
uniform administration ... is unclear."627 The Panel made observations that were largely descriptive in
nature with respect to: the possibility of bringi ng a complaint to the European Commission; the
existence of restrictions on the adoption of nati onal measures by customs authorities of the member
States; the mechanisms of consultation and mu tual assistance between member State customs
authorities; and best practice guidelines. In particular, the Panel noted that the customs authorities of
the member States are not obliged to consult w ith one another before making customs decisions
628,
that there is no obligation on the part of customs au thorities of the member States to consult the EBTI
database when they classify a good 629, and that "the commentaries contained in the Compendium of
Customs Valuation texts have no legal status and, therefore, do not have binding effect."630

622Panel Report, para. 7.164.
623Ibid., para. 7.166.
624Ibid., para. 7.167.
625Ibid., para. 7.168.
626Ibid., paras. 7.170 and 7.172.
627Ibid., para. 7.172.
628Ibid., paras. 7.177, 7.180, 7.187, and 7.190.
629Ibid., para. 7.181.
630Ibid., para. 7.186. (footnote omitted)

284. Finally, under a section of the Panel Repor t entitled "General observations regarding the
institutions and mechanisms involved in the administ ration of the EC customs laws", the Panel noted
that, "in its consideration of the [European Co mmunities'] system of customs administration as a
whole, the Panel found the system complicated and, at times, opaque and confusing."
631 Later, in a
section entitled, "Overall observations regarding th e United States' allegations of non-uniform
administration under Article X:3(a) of the GATT 1994 ", the Panel observed that "certain features
associated with a number of those institutions and mechanisms would not necessarily enhance
uniform administration of [European Communities] customs law by the customs authorities of the
member States and, at worst, might even cause non-uniform administration."632
285. From the description of the institutions and m echanisms involved in the administration of the
European Communities customs law provided in paragraphs 7.157 to 7.191 of the Panel Report, it
appears that there are institutions and mechanisms in the European Communities that seek to ensure
that divergences in administration among the customs authorities of the member States do not occur
or are reconciled in the event that they do occur. What is less clear from these general observations is
whether the Panel made factual findings or reached definitive conclusions with respect to these
institutions and mechanisms. Certainly, the Pa nel raised doubts about the effectiveness of these
institutions and mechanisms in bringing about uniformity of administration of European Communities
customs law. However, the Panel did not find that these institutions and mechanisms are structurally
flawed in such a way that th e European Communities' system of customs administration would
necessarily lead to non-uniform administration, in a violation of Article X:3(a) of the GATT 1994.
On the contrary, the Panel stated that, "even if the Panel were authorized to make such findings, ... the
United States did not demonstrate that the design and structure of the [European Communities]
system of customs administration, including compone nts thereof necessarily result in a violation of
Article X:3(a) of the GATT 1994."
633 Accordingly, it appears to us that these general observations of
the Panel do not constitute a suffi cient foundation of factual findings or undisputed facts upon which
we can rely for completing the analysis.
286. Further, as we said above, these general observations by the Panel with respect to the
institutions and mechanisms involved in the admi nistration of European Communities customs law
were made in the context of an analysis based on the Panel's narrow interpretation of the measure at
issue and the claim set out in the panel request. 634 We have reversed this interpretation of the Panel.

631Panel Report, para. 7.191.
632Ibid., para. 7.489.
633Ibid., para. 7.490.
634Ibid., para. 7.33.

Therefore, the general observations made by the Pa nel in paragraphs 7.157 to 7.191 of the Panel
Report do not provide a sufficient foundation for us to complete the analysis. Moreover, the Panel
examined the operation of these institutions and me chanisms in isolation and did not discuss how
these institutions and mechanisms interact in th e administration of European Communities customs
law. Finally, given the breadth and the nature of the claim set out by the United States in the panel
request, we are of the view that paragraphs 7.1 57 to 7.191 of the Panel Report do not constitute a
sufficient basis to enable us to complete the analysis.
287. In the light of all these considerations, we are unable to complete the analysis.
VI. The Panel's Interpretation of Article X:3(b) of the GATT 1994
288. We now turn to the question whether Article X:3(b) of the GATT 1994 requires that decisions
of the judicial, arbitral, or administrative tribunals , or procedures for the review and correction of
administrative action relating to customs matters, must govern the practice of all the agencies
entrusted with administrative enforcement throughout the territory of a particular WTO Member.
289. The Panel found:
[N]either the ordinary meaning of th e various terms of Article X:3(b)
of the GATT 1994 nor the legal context for the interpretation of
Article X:3(b) of the GATT 1994 provide a clear answer to the
specific question the Panel has been called upon to address—namely,
whether Article X:3(b) of the GATT 1994 requires the decisions of
the judicial, arbitral or administrative tribunals or procedures for the
review and correction of administrative action relating to customs
matters to govern the practice of all the agencies entrusted with
administrative enforcement throughout the territory of a particular
[WTO] Member.
635 (original emphasis)
290. The Panel considered, however, that it would not be "reasonable" to infer that first instance
independent review tribunals and bodies, whose jurisd iction in most legal systems is normally limited
in substantive and geographical te rms, should have the authority to bind all agencies entrusted with
administrative enforcement throughout the territo ry of a WTO Member, such as the European
Communities.636

635Panel Report, para. 7.537.
636Ibid., para. 7.538. We note that the European Communities and its member States are WTO
Members in their own rights.

291. On appeal, the United States claims that the Pa nel failed to give meaning to the terms "the
agencies entrusted with administrative enforcem ent" and "such agencies" in Article X:3(b).
637 In the
United States' view, the Panel effectively disregar ded the ordinary meaning of these terms when it
stated that "it is difficult to know what significance should be attached, if any, to the reference to
agencies in the plural." 638 The United States submits that the or dinary meaning of the plural form
encompasses "the agencies"—without limitation—as opposed to only one such agency, or just "some
of" or "a subset of" the agencies. The use of the plural form contemplates multiple agencies and,
given the absence of any basis in the text fo r distinguishing among multiple agencies, it must
contemplate all the agencies entrusted with administrative enforcement. 639 Furthermore, the United
States maintains that Article X:3(b) must be re ad in the light of the requirement of uniform
administration in Article X:3(a) of the GATT 1994, and that it follows from this context that
procedures leading to decisions that have effect only in particular regions of a Member's territory are
inconsistent with Article X:3(b) of the GATT 1994.
292. In the European Communities' view, the Panel co rrectly explained that the use of the plural
form when referring to "agencies" in Article X:3(b) could flow from the fact that the review "tribunals
and procedures" required under the same provision are also referred to in the plural. 640 The European
Communities concurs with the Panel that it would not be reasonable to infer "that first instance
independent review tribunals and bodies, whose jurisd iction in most legal systems is normally limited
in substantive and geographical te rms, should have the authority to bind all agencies entrusted with
administrative enforcement throughout the territory of a [WTO] Member." 641 Furthermore, the
European Communities submits that the absence of an express reference to Article X:3(a) in
Article X:3(b) of the GATT 1994 contrasts with the explicit reference in Article X:3(c) to
Article X:3(b) of the GATT 1994, and argues that this absence precludes an inference that the
obligation to ensure review of administrative action under Article X:3(b) could be read as
simultaneously requiring uniform administration w ithin the meaning of Article X:3(a) of the
GATT 1994.

637United States' appellant's submission, paras. 164-172.
638Panel Report, para. 7.528.

293. Our analysis begins with the text of Article X:3(b) of the GATT 1994, which stipulates:
Each Member shall maintain, or institute as soon as practicable,
judicial, arbitral or administrative tribunals or procedures for the
purpose, inter alia , of the prompt review and correction of
administrative action relating to customs matters. Such tribunals or
procedures shall be independent of the agencies entrusted with
administrative enforcement and their decisions shall be implemented
by, and shall govern the practice of, such agencies unless an appeal is
lodged with a court or tribunal of superior jurisdiction within the time
prescribed for appeals to be lodged by importers; Provided that the
central administration of such agen cy may take steps to obtain a
review of the matter in another proceeding if there is good cause to
believe that the decision is inconsis tent with established principles of
law or the actual facts. (original emphasis)
294. At the outset, we note that both parties agree that Article X:3(b) relates to first instance
review. The Panel agreed with th is interpretation. It found support for this interpretation in the
separate reference in Article X:3(b) to the possibility of filing an appeal with "a court or tribunal of
superior jurisdiction within the time prescribed for a ppeals to be lodged by importers". We agree that
the phrase "unless an appeal is lodged with a court or tribunal of superior jurisdiction" contemplates
the possibility that there may be an appeal to bodies of "superior jurisdiction" and confirms the view
that Article X:3(b) relates to first instance review. We note that the Panel also relied on the proviso of
Article X:3(b), which provides that the "central ad ministration of such agency may take steps to
obtain a review of the matter in another proceeding if there is good cause to believe that the decision
is inconsistent with established principles of law or the actual facts."
642
295. Article X:3(b) requires that first instance review decisions "shall be implemented by, and
shall govern the practice of, such agencies" (that is , agencies entrusted with the administration of
customs matters). The question before us is whether, as argued by the United States, Article X:3(b)
requires that first instance review d ecisions must govern the practice of all the agencies entrusted
with administrative enforcement throughout the territory of a WTO Member.
296. The United States emphasizes that Article X:3(b) contains two separate references to
"agencies" in the plural: the first reference is to "the agencies entrusted with administrative
enforcement"; and the second re ference is to "such agencies".
643 From that, the United States infers
that review decisions should govern the practice of " all of the agencies entrusted with administrative
enforcement". We address each of these references in turn.

642Panel Report, para. 7.521.

297. The use in Article X:3(b) of the term "t he agencies entrusted with administrative
enforcement" in the plural form suggests that re ference is made to more than a single agency.
However, it does not follow from the use of the plural that first instance review decisions concerning
administrative action taken by an agency must necessarily be binding on all other agencies throughout
a WTO Member's territory. In our view, the interp retation proposed by the United States would mean
reading words into the treaty text that are not there. We can conceive of se veral explanations for the
use of the plural when referring to "agencies" in Article X:3(b) of the GATT 1994: there could be
several agencies in a WTO Member having different areas of substantive competence; various
agencies could also have competence for different geographical areas. The use of the plural for
"agencies" might also be a consequence of the reference to "tribunals" and "procedures" in the
plural.
644 The reference to "tribunals" and "procedures" in the plural suggests to us that WTO
Members are free to establish several first instance review tribunals and procedures that have different
substantive or geographic areas of competence. Article X:3(b) does not, in our view, preclude a WTO
Member from establishing first instance review tr ibunals and procedures governing the practice of all
administrative agencies in their en tire territory; however, it also does not require WTO Members to
do so. Therefore, we are not convinced that the refere nce to "agencies" in the plural implies that first
instance review decisions must govern the practice of "all agencies" of a WTO Member.
298. The United States also argues that the absence of criteria for distinguishing among multiple
"agencies" implies that the reference to "such ag encies" means all agencies. A plain reading of
Article X:3(b) suggests that "such agencies" are not all agencies, but only those agencies whose action
has been subject to review by a tribunal or pro cedure and that are bound by the decisions of that
tribunal or procedure "with respect to identical fa ctual situations that may arise in the future
concerning identical legal issues". 645 We agree with the Panel that what is required by Article X:3(b)
is that "the decisions of judicial, arbitral or administrative tribunals and procedures for the prompt
review and correction of administrative action must govern the practice of the agency whose action
was the subject of review by a tribuna l or procedure in a particular case." 646 Article X:3(b) leaves the
specific structure of the review mechanism to the discretion of the Member concerned. Therefore,
"such agencies" may encompass more or fewer ag encies depending on the structure of the review
mechanism. However, we do not see why the jurisd iction of a review tribunal or procedure and the
binding effect of a review decision of that tribuna l would always or necessarily have to extend to all
agencies of a Member.

645Panel Report, para. 7.531.
646Ibid., para. 7.528.

299. In addition, we recall that Article X:3(b) rela tes to first instance review and contemplates the
possibility of appeals to bodies of "superior jurisdic tion" as well as the seeking of "a review of the
matter" by a centralized agency. This would also suggest that the first instance review required by
that provision need not necessarily cover the entire territory of a WTO Member.
300. Accordingly, we are of the view that it does not follow from the ordinary meaning of
Article X:3(b) that decisions of judicial, arbitral, or administrative tribunals or procedures for first
instance review and correction of administrative action relating to customs matters must govern the
practice of all the agencies entrusted with administrative enforcement throughout the territory of a
WTO Member.
301. We address next the question whether context suggests otherwise. We consider that
Article X:3(a) of the GATT 1994 is relevant as context. The Panel, however, noted that
Article X:3(b) of the GATT 1994 does not contain an express textual link to the obligation of uniform
administration of customs laws in Article X:3(a). Th e Panel contrasted this with Article X:3(c) of the
GATT 1994, which explicitly cross-references Article X:3(b). 647 Against this background, the Panel
considered that it was not possible to infer that the drafters of the GATT 1994 intended the obligation
of Article X:3(b) to be read as simultaneously requiring uniform administration in accordance with
Article X:3(a). In the Panel's view, this would amount to "merging different requirements that are
currently contained in separate sub-paragraphs of Article X".648 We see no reason to disagree with the
Panel's interpretation. We are also of the view that the requirement of "uniformity" contained in
Article X:3(a) does not imply that under Article X:3( b) decisions of review tribunals must govern the
practice of all agencies entrusted with customs enforcement throughout the territory of a WTO
Member. Article X:3(a) requires, inter alia, uniformity of administration. In contrast, Article X:3(b)
relates to the review and correction of administrative action by independent mechanisms.
302. Finally, turning briefly to the treaty's object and purpose, we note the Panel's view that the
due process objective underlying Article X:3(b) is that "a trader who has been adversely affected by a
decision of an administrative agency has the ability to have that adverse decision reviewed." 649 We
believe this due process objective is not undermined even if first instance review decisions do not
govern the practice of all the agencies entrusted w ith customs enforcement throughout the territory of
a WTO Member, so long as there is a possibility of an independent review and correction of the
administrative action of every agency.

647Likewise, this is in contrast with Article X:3(a), which contains a cross-reference to Article X:1.
648Panel Report, paras. 7.534.
649Ibid., para. 7.538.

303. For these reasons, we are of the view that Article X:3(b) of the GATT 1994 requires a WTO
Member to establish and maintain independent mechanisms for pr ompt review and correction of
administrative action in the area of customs administration. However, neither text nor context nor the
object and purpose of this Article require that the d ecisions emanating from such first instance review
must govern the practice of all agencies entrusted with administrative enforcement throughout the
territory of a particular WTO Member.
304. We therefore uphold the conclusion of the Panel, in para graphs 7.539, 7.556, and 8.1(e) of
the Panel Report, that "Article X:3(b) of the GA TT 1994 does not necessarily mean that the decisions
of the judicial, arbitral or administrative tribuna ls or procedures for the review and correction of
administrative action relating to customs matters must govern the practice of all agencies entrusted
with administrative enforcement throughout the territory of a particular [WTO] Member."
650 We
conclude that the Panel did not err in finding the tr ibunals and procedures for review of customs
administrative action provided by th e European Communities to be consistent with Article X:3(b) of
the GATT 1994.
VII. Conditional Appeal of the European Communities
305. The Panel found that Article XXIV:12 of th e GATT 1994 cannot be relied upon to attenuate
or to derogate from the provisions of the GATT 1994 (including Article X:3(a)), to which
Article XXIV:12 refers.651 In the light of this reasoning, the Panel concluded:
Article XXIV:12 of the GATT does not constitute an exception nor a
derogation from the obligation of uniform administration in
Article X:3(a) of the GATT 1994. Therefore, Article XXIV:12 of the
GATT 1994 has no impact upon our examination of the United
States' claims under Article X:3(a) of the GATT 1994.
652 (footnote
omitted)
306. The European Communities conditionally appeals th is finding in the event that the Appellate
Body's conclusions on the United States' appeal im ply that the European Communities should "create
a centralised customs agency replacing its [m]emb er States in the implementation of [European
Communities] customs law" 653, or that the European Communities should "create an [European
Communities]-level tribunal for the first-instance review of customs decisions".654

650(original emphasis)
651Panel Report, para. 7.144. (footnote omitted)
652Ibid., para. 7.145.
653European Communities' other appellant's submission, para. 235.
654Ibid.

307. The United States requests the Appellate B ody to reject the European Communities'
conditional appeal because the question of the possible relevance of Article XXIV:12 of the
GATT 1994 is outside the scope of these appellate proceedings and because this provision applies to
the observance of GATT 1994 laws by regional and local governments and authorities, which is not at
issue in this appeal.
308. We already found that we were unable to comple te the analysis with respect to whether the
measures at issue, taken as a whole, have been administered in a manner inconsistent with the
requirements in Article X:3(a) of the GATT 1994. In addition, we upheld the Panel's conclusion that
the European Communities did not breach Article X:3( b) of the GATT 1994. It thus follows that the
conditions on which this aspect of the European Comm unities' appeal is predicated are not satisfied.
Therefore we do not consider it further.
VIII. Findings and Conclusions
309. For the reasons set out in this Report, the Appellate Body:
(a) with respect to the Panel's terms of reference:
(i) reverses the Panel's finding, in paragraph 7.20 of the Panel Report, that the
"measure at issue" for purposes of a claim under Article X:3(a) of the
GATT 1994 must necessarily be "the manner of administration that is
allegedly non-uniform, partial and/or unreasonable";
(ii) reverses
 the Panel's finding, in paragraphs 7.33 and 8.1(a)(i) of the Panel
Report, that the specific measure at issue in this dispute is "the manner of
administration ... of the Community Customs Code, the Implementing
Regulation, the Common Customs Tariff, the TARIC and related measures in
the areas of customs administration specifically identified in the United States'
request for establishment of a panel"
655; and finds , instead, that the specific
measures at issue identified in the pa nel request are the Community Customs
Code, the Implementing Regulation, the Common Customs Tariff, and the
TARIC, as administered collectively;

655Panel Report, para. 8.1(a)(i).

(iii) reverses
 the Panel's finding, in paragraphs 7.50, 7.64, and 8.1(a)(iii) of the
Panel Report, that, due to the wording and content of the panel request, the
United States was precluded from challenging the European Communities'
system of customs administration as a whole or overall; and reverses also the
Panel's finding, in paragra phs 7.63, 7.64, and 8.1(a)( iii) of the Panel Report,
that the Panel was precluded from considering the United States' argument
that the "design and structure" of the European Communities' system of
customs administration necessarily result in a violation of Article X:3(a) of the
GATT 1994; and
(iv) upholds
, albeit for different reasons, th e Panel's interpretation, in
paragraph 7.37 of the Panel Report, that "the steps and acts of administration
that pre-date or post-date the establis hment of a panel may be relevant to
determining whether or not a violatio n of Article X:3(a) of the GATT 1994
exists at the time of [panel] establishment";
(b) with respect to claims under Article X:3(a) of the GATT 1994:
(i) reverses the Panel's finding, in paragraph 7.119 of the Panel Report, that,
without exception, Article X:3(a) of the GATT 1994 always relates to the
application of laws and re gulations, but not to laws and regulations as such;
but upholds
 the Panel's conclusions, in paragr aphs 7.434, 7.444, 8.1(d)(i),
and 8.1(d)(ii) of the Panel Report, that substantive differences in penalty laws
and audit procedures among the member States of the European Communities
alone do not constitute a violation of Article X:3(a) of the GATT 1994;
(ii) concludes that the Panel did not find that Article X:3(a) of the GATT 1994
requires uniformity of "administrative processes"; upholds the Panel's
finding, in paragraph 7.119 of the Panel Report, that the term "administer" in
Article X:3(a) of the GATT 1994 may include administrative processes that
put into effect the legal instruments of the kind described in Article X:1 of
the GATT 1994; but reverses
 the Panel's finding, in paragraphs 7.276
and 8.1(b)(iv) of the Panel Report, that the administrative process leading to
the tariff classification of blackout drapery lining amounts to non-uniform
administration within the meaning of Article X:3(a) of the GATT 1994, and
that the European Communities has violated Article X:3(a) of the GATT 1994
with respect to the tariff classification of blackout drapery lining;

(iii) upholds the Panel's finding, in paragraphs 7.305 and 8.1(b)(v) of the Panel
Report, that "[t]he tariff classification of liquid crystal display monitors with
digital video interface amounts to non-uniform administration within the
meaning of Article X:3(a) of the GATT 1994";
(iv) reverses the Panel's finding, in paragraphs 7.385 and 8.1(c)(ii) of the Panel
Report, that "the European Communiti es does not administer its customs law
concerning successive sales—in particular, Article 147(1) of the
Implementing Regulation—in a uniform manne r, in violation of Article X:3(a)
of the GATT 1994"; and
(v) is unable to complete the analysis with respect to the United States' claim that
the European Communities' system of customs administration as a whole or
overall is not administered in a uniform manner, as required by Article X:3(a)
of the GATT 1994;
(c) with respect to Article X:3(b) of the GATT 1994:
upholds the conclusion of the Panel, in para graphs 7.539, 7.556, and 8.1(e) of the
Panel Report, that "Article X:3(b) of the GATT 1994 does not necessarily mean that
the decisions of the judicial, arbitral or administrative tribunals or procedures for the
review and correction of administrative action relating to customs matters must
govern the practice of all the agencies entrusted with administrative enforcement
throughout the territory of a particular [WTO] Member"
656; and
(d) with respect to Article XXIV:12 of the GATT 1994:
finds that the conditions on which the Europ ean Communities' appeal is predicated
are not satisfied, and therefore does not consider it.
310. The Appellate Body recommends that the DSB request the European Communities to bring
its measures, which have been found in this Report, and in the Panel Report as modified by this
Report, to be inconsistent with the GATT 1994, in to conformity with its obligations under that
Agreement.

656(original emphasis)

Signed in the original in Geneva this 27th day of October 2006 by:

A.V. Ganesan
Presiding Member

 _________________________ _________________________
 Merit E. Janow Yasuhei Taniguchi
 Member Member

ANNEX I

17 August 2006
 (06-3905)
 Original: English

Notification of an Appeal by the United States

under Article 16.4 and Article 17 of the Understanding on Rules
and Procedures Governing the Settlement of Disputes (DSU),
and under Rule 20(1) of the Working Procedures for Appellate Review

 The following notification, dated 14 August 2006, from the Delegation of the United States, is
being circulated to Members.

Pursuant to Article 16 of the Understanding on Rules and Procedures Governing the
Settlement of Disputes ("DSU") and Rule 20 of the Working Procedures for Appellate Review , the
United States hereby notifies its decision to appeal to the Appellate Body certain issues of law
covered in the Report of the Panel on
(WT/DS315/R) and certain legal interpretations developed by the Panel.

The United States seeks review by the Appellate Body of the following aspects of the Report
of the Panel.

I. Terms of Reference

The United States seeks review of three sets of errors committed by the Panel with respect to
its analysis of its terms of reference.

(A) As the first step in its analysis the Pane l found, in paragraph 7.20 of the Report, that
"when a violation of Article X:3(a) of the [ General Agreement on Tariffs and Trade 1994 ] is being
claimed," the "measure at issue" that Article 6. 2 requires to be identified in the request for
establishment of a panel is "the manner of administra tion that is allegedly non-uniform, partial and/or
unreasonable." This finding is in error and is based on erroneous findings on issues of law and related
legal interpretations contained in paragraphs 7.8 through 7.22 of th e Panel Report. In making this
finding, the Panel misinterpreted or misapplied Article 6.2 of the DSU.

While the Panel's finding that "manner of administ ration" is the measure at issue in a dispute
involving Article X:3(a) of the General Agreement on Tariffs and Trade 1994 ("GATT 1994") was in
error and should not be allowed to stand, the U.S. panel request did in fact identify the manner of
administration of European Communities ("EC") laws , regulations, decisions, and rulings of the kind
described in Article X:1 of the GATT 1994 at issue (referred to hereafter collectively as "EC customs
law"), and the Panel did not find against the United States on this ground.

(B) Having incorrectly found "manner of admini stration" to be the measure at issue in a
dispute involving Article X:3(a) of the GATT 1994, the Panel also misconstrued the specific measures
at issue identified in the U.S. panel request as confined to the manner of administration of EC customs
law in certain specific areas, as opposed to the manner of administration of such measures irrespective
of area. Thus, the Panel found in paragraph 7.33 of the Report that the "specific measure at issue" in
this dispute, within the meaning of Article 6.2 of the DSU, was:

[T]he manner of administration by the national customs authorities of
the member States of the Community Customs Code, the
Implementing Regulation, the Common Customs Tariff, the TARIC
and related measures in the areas of customs administration
specifically identified in the Unite d States' request for establishment
of a panel – namely, the classification and valuation of goods,
procedures for the classification and valuation of goods, procedures
for the entry and release of goods, procedures for auditing entry
statements after goods are released into free circulation, penalties and
procedures regarding the imposition of penalties for violation of
customs rules and record-keeping requirements.
This finding is in error and is based on erroneous findings on issues of law and related legal
interpretations contained in paragraphs 7.23 through 7.32 and 8.1(a)(i) of the Panel Report. In making
this finding, the Panel misinterpreted or misapplied Articles 6.2 and 7.1 of the DSU.

(C) The Panel then made the erroneous legal conclusion that its terms of reference excluded
the U.S. claim that the design and structure of th e EC system of customs administration as a whole
results in the administration of EC customs law in a non-uniform manner, contrary to Article X:3(a)
of the GATT 1994. For example, paragraph 7.50 of its Report, the Panel made the erroneous finding
that "its terms of reference regarding the U.S. claim under Article X:3(a) of the GATT 1994 do not
include a challenge to the EC system of cu stoms administration overall or as a whole under
Article X:3(a) of the GATT 1994." The Panel made a similarly erroneous finding in paragraph 7.63,
stating that "the United States is precluded from maki ng an 'as such' challenge with respect to the
design and structure of the EC system of customs administration as a whole and also with respect to
the design and structure of the EC system in the areas of customs administration that have been
specifically identified in the United States' request." This finding is repeated at paragraph 8.1(a)(iii)
of the Panel's Report.

These findings are in error and are based on e rroneous findings on issues of law and related
legal interpretations contained in paragraphs 7.11 through 7.20, 7.23 through 7.32, 7.40 through 7.50,
7.53 through 7.63, and 8.1(a)(iii) of the Pane l Report. In making these findings, the Panel
misinterpreted or misapplied Articles 6.2 and 7.1 of the DSU.

The Panel's error in excluding from its terms of reference the U.S. challenge with respect to
the EC system of customs administration as a whole did not depend on its first two errors with respect
to its terms of reference. Even if the first two findi ngs in the Panel's analysis of its terms of reference
were correct (which we contend they were not), the Panel still should not have excluded the U.S.
challenge with respect to the EC's system of cust oms administration as a whole. The U.S. claim was
about features that are absent from the EC system of customs administration, which result in the EC
administering its customs laws in a non-uniform ma nner, contrary to Article X:3(a) of the GATT
1994. That central aspect of the U.S. compla int – which was evident from the panel request,
elaborated in U.S. submissions and statements, and well understood by the EC as evidenced by its
submissions and statements – was part of the U.S. panel request whether that request is understood as
encompassing the administration of EC customs law in all areas or only in certain areas (as the Panel
found).

Accordingly, the United States asks the Appellate Body to reverse the Panel's finding that this
claim was outside the Panel's terms of reference. Additionally, the United States asks the Appellate
Body to complete the Panel's analysis based on th e undisputed facts and the Panel's factual findings
regarding the EC system of customs administration. In light of the Panel's factual findings that the
various institutions and mechanisms that the EC he ld out as securing the uniform administration of its
customs laws – in an environment where admini stration is the responsibility of 25 separate,
independent customs authorities – do not actually do so, the Appellate Body should find that the EC
system of customs administration as a whole results in the non-uniform administration of EC customs
law, in breach of Article X:3(a) of the GATT 1994.

II. Interpretation of the term "administer" in Ar ticle X:3(a) of the GATT 1994 as it relates to the
existence of divergent penalty laws and audit procedures

The United States seeks review of the Panel's legal conclusions that the existence of divergent
penalty laws and audit procedures are not inconsistent with Article X:3(a) of the GATT 1994, and the
related issues of law and legal interpretation. At paragraph 7.444, for example, the Panel found "no
violation of Article X:3(a) of the GATT 1994 with respect to the substantive differences in penalty
laws between member States." At paragraph 7.434 , for example, the Panel found "no violation of
Article X:3(a) of the GATT 1994 with respect to th e manner of administration of the audit procedure
requirements in the European Communities by the me mber States applicable to goods following their
release for free circulation."

In finding that the EC does not breach its Article X:3(a) obligation of uniform administration
to the extent that it puts EC customs law into prac tical effect through divergent penalty laws and audit
procedures, the Panel erred in its interpretation of the term "administer" as used in that provision. The
Panel's error regarding its approach to differences in customs penalty laws is based on erroneous
findings on issues of law and related legal interp retations contained in pa ragraphs 7.113 through
7.119, 7.442 through 7.444, and 8.1(d)(ii) of the Panel Report. Its error regarding its approach to
differences in audit procedures is based on errone ous findings on issues of law and related legal
interpretations contained in paragraphs 7.113 through 7.119, 7.425 through 7.434, and 8.1(d)(i) of the
Panel Report.

The United States asks the Appellate Body to re verse the Panel's legal conclusions that the
existence of divergent penalty laws and audit proce dures are not inconsistent with Article X:3(a) of
the GATT 1994. The United States further asks the Appe llate Body to complete the Panel's analysis.
In light of the Panel's findings and undisputed facts regarding the existence of divergent penalty laws
and audit procedures, the Appellate Body should find that the EC fails to administer EC customs law
in a uniform manner, in breach of Article X:3(a) of the GATT 1994, to the extent it gives effect to EC
customs law through the maintenance of divergent penalty laws and audit procedures.

III. Interpretation of Article X:3(b) of the GATT 1994

The United States seeks review of the Panel's legal conclusion that "the European
Communities does not violate Article X:3(b) of the GATT 1994 merely because the decisions
regarding review of administration action relating to customs matters, which are taken by authorities
in the member States acting as organs of the Eu ropean Communities, do not apply and have effect
throughout the territory of the European Communities." Panel Report, para. 7.554; id., paras. 7.539,
7.556, and 8.1(e). That conclusion represents an erroneous interpretation of Article X:3(b) of the
GATT 1994, which was based on erroneous findings on i ssues of law and related legal interpretations
contained in paragraphs 7.526 through 7.538.

 The United States asks the Appellate Body to reverse the Panel's erroneous interpretation of
and conclusion under Article X:3(b). Further, the United States asks the Appellate Body to complete
the Panel's analysis. It is undisputed that each of the tribunals and procedures the EC provides is
limited to reviewing the administrative actions of the customs authority within a particular EC
member State. It also is undisputed that none of these tribunals or procedures issues decisions that
govern the practice of all of the agencies entruste d with administrative enforcement of the EC's
customs law (that is, the customs authorities of the 25 EC member States). In light of these
undisputed facts, the Appellate Body should find th at the EC is in breach of its obligation under
Article X:3(b) of the GATT 1994.

ANNEX II

28 August 2006
 (06-4123)
 Original: English

Notification of an Other Appeal by the European Communities

under Article 16.4 and Article 17 of the Understanding on Rules
and Procedures Governing the Settlement of Disputes (DSU),
and under Rule 23(1) of the Working Procedures for Appellate Review

 The following notification, dated 28 August 2006, from the Delegation of the European
Commission, is being circulated to Members.

Procedures for Appellate Review, the European Co mmunities submits its Notice of Other Appeal on
certain issues of law in the Report of the Panel on
1 and certain legal interpretations developed by the Panel.
2. The European Communities seeks review by the Appellate Body of the following:
(a) the Panel’s decision not to admit cert ain evidence submitted by the European
Communities during the interim review stage, and in particular Exhibits EC-167 to
EC-170 (paragraphs 6.5 and 6.6 of the Pane l report). This decision is incompatible
with Article 15.2 of the DSU and with the Panel’s duty to make an objective
assessment of the facts as required by Article 11 of the DSU;
(b) the Panel’s finding regarding the temporal limitations of its terms of reference,
according to which it may consider measures, including acts of administration, which
were no longer in existence, or not yet in existence, at the time of its establishment
(paragraph 7.36 to 7.37 of the Panel Repor t). These findings are inconsistent with
Articles 6.2 and 7.1 of the DSU;
(c) the Panel’s finding that Article X:3(a) GATT requires uniformity of administrative
processes irrespective of their impact on the uniform administration of the laws
(paragraphs 7.102 to 7.113 and 7.119 of the Report). This finding is based on an
incorrect interpretation of Article X:3(a) GATT;

1 WT/DS315/R, circulated on 16 June 2005.

(d) the Panel’s finding that Article XXIV:12 GATT cannot be relied upon to attenuate or
to derogate from the provisions of the GATT 1994, including Article X:3 GATT, and
does not constitute an exception from such provisions (paragraphs 7.140 to 7.145 of
the Panel Report). This finding is based on an incorrect interpretation
Article XXIV:12 GATT;
(e) the Panel’s finding that the EC has violated Article X:3(a) GATT with respect to the
process leading to the tariff classification of blackout drapery lining
(paragraphs 7.266 to 7.276, 8.1(b)(iv) and 8.2(a) of the Panel Report). In reaching this
finding, the Panel has erred in its interpreta tion of Article X:3(a) GATT, and failed to
make an objective assessment of the facts as required by Article 11 of the DSU;
(f) the Panel’s finding that the EC has violated Article X:3(a) GATT with respect to the
tariff classification of LCD Monitors with DVI (paragraphs 7.291 to 7.305, 8.1(b)(v)
and 8.2(b) of the Pane l Report). In reaching this finding, the Panel has erred in its
interpretation of Article X:3(a) GATT, and failed to make an objective assessment of
the facts as required by Article 11 of the DSU;
(g) the Panel’s finding that the EC has violated Article X:3(a) GATT with respect to the
imposition by the customs authorities of certain Member States of a form of prior
approval with respect to the successive sales provision (paragraphs 7.376 to 7.385,
8.1(c)(ii) and 8.2(c) of the Panel Report). In reaching this finding, the Panel has erred
in its interpretation of Article X:3(a) GATT, and failed to make an objective
assessment of the facts as required by Article 11 of the DSU.

ANNEX III

14 January 2005

(05-0192)
 Original: English

Request for the Establishment of a Panel by the United States

 The following communication, dated 13 January 2005, from the delegation of the
United States to the Chairperson of the Dispute Settle ment Body, is circulated pursuant to Article 6.2
of the DSU.

 The United States considers that the manner in which the European Communities ("EC")
administers its laws, regulations, decisions and rulin gs of the kind described in Article X:1 of the
General Agreement on Tariffs and Trade 1994 ("GATT 1994") is not uniform, impartial and
reasonable, and therefore is inconsistent with Ar ticle X:3(a) of the GATT 1994. For purposes of this
request, the laws, regulations, decisions and rulings (collectively, "measures") that the European
Communities fails to administer in such a manner pertain to the classification and valuation of
products for customs purposes and to requirements, restrictions or prohibitions on imports. The
measures consist of:

• Council Regulation (EEC) No 2913/92 of 12 October 1992 establishing the
Community Customs Code, including all annexes thereto, as amended (the "Code");

• Commission Regulation (EEC) No 2454/93 of 2 July 1993 laying down provisions
for the implementation of Council Regula tion (EEC) No 2913/92 of 12 October 1992
establishing the Community Customs Code , including all annexes thereto, as
amended (the "Commission Regulation");

• Council Regulation (EEC) No 2658/87 of 23 July 1987 on the tariff and statistical
nomenclature and on the Common Customs Tariff, including all annexes thereto, as
amended (the "Tariff Regulation");

• the Integrated Tariff of the European Communities established by virtue of Article 2
of Council Regulation (EEC) No 2658/87 of 23 July 1987 on the tariff and statistical
nomenclature and on the Common Customs Tariff, including all annexes thereto, as
amended (the "TARIC"); and

• for each of the above laws and regulati ons, all amendments, implementing measures
and other related measures.

 Administration of these measures in the Europ ean Communities is carried out by the national
customs authorities of EC member States. Such administration takes numerous different forms. The
United States understands that the myriad forms of administration of these measures include, but are
not limited to, laws, regulations , handbooks, manuals, and administrative practices of customs
authorities of member States of the European Communities.

 Lack of uniform, impartial and reasonable admi nistration of the above-identified measures is
manifest in differences among member States in a number of areas, including, but not limited to, the
following:

• classification and valuation of goods;

• procedures for the classification and valua tion of goods, including the provision of
binding classification and valuation information to importers;

• procedures for the entry and release of goods, including different certificate of origin
requirements, different criteria among member States for the physical inspection of
goods, different licensing requirements fo r importation of food products, and
different procedures for processing express delivery shipments;

• procedures for auditing entry statements afte r goods are released into the stream of
commerce in the European Communities;

• penalties and procedures regarding the im position of penalties for violation of
customs rules; and

• record-keeping requirements.

 In addition, the European Communities has failed to maintain, or institute as soon as
practicable, judicial, arbitral or administra tive tribunals or procedures for the purpose, inter alia, of
the prompt review and correction of administra tive action relating to customs matters. The
above-identified measures, including in particul ar Articles 243 through 246 of the Code, expressly
provide that EC member States are responsible for the implementation of procedures for appeals from
decisions by member State customs authorities. Accordingly, the ability to obtain review of a
customs decision by a tribunal of the European Co mmunities does not arise until after an importer or
other interested party has pursued review through na tional administrative and/or judicial tribunals.
For this reason, the European Communities is in breach of Article X:3(b) of the GATT 1994.

 The EC measures are also inconsistent with Article X:1 of the GATT 1994.

 On 21 September 2004, the United States requ ested consultations with the European
Communities pursuant to Articles 1 and 4 of the Understanding on Rules and Procedures Governing
the Settlement of Disputes ("DSU") and Article XXII:1 of the GATT 1994 (WT/DS315/1). The
United States held consultations with the Eur opean Communities in Geneva on 16 November 2004.
Unfortunately, these consultations did not resolve the dispute.

 Accordingly, the United States respectfully re quests the Dispute Settlement Body to establish
a panel pursuant to Article 6 of the DSU to examine this matter with standard terms of reference as set
out in Article 7.1 of the DSU.