AUSTRALIA – CERTAIN MEASURES CONCERNING TRADEMARKS, GEOGRAPHICAL INDICATIONS AND OTHER PLAIN PACKAGING REQUIREMENTS APPLICABLE TO TOBACCO PRODUCTS AND PACKAGING AB-2018-4 AB-2018-6
Document: AB-2018-6 Reports of the Appellate Body Note: The Appellate  Body is issuing these Reports in the form of a single document constituting two separate Appellate  Body Reports: WT/DS435/AB/R; and WT/DS441/AB/R. The cover page, preliminary pages, sections 1 through 7, and the annexes are common to both Reports. The page header throughout the document bears the two document symbols WT/DS435/AB/R and WT/DS441/AB/R.
Date: 9 June 2020
Document codes: WT/DS435/AB/R; WT/DS441/AB/R; WT/DS435/AB/R; WT/DS441/AB/R.; WT/DS435/AB/R; WT/DS441/AB/R.
Complainant: Honduras
Respondent: Australia
Third parties: Argentina, Brazil, Canada, Chile, China, Cuba, Dominican, EU, India, Indonesia, Japan, South Korea, New Zealand, Nicaragua, Nigeria, Norway, Oman, Panama, Philippines, South Africa, Taiwan, Thailand, Ukraine, U.S., Uruguay, Zimbabwe, Guatemala, Singapore, Guatemala, Malawi, Malaysia, Mexico, Singapore, Turkey, Zambia, Peru, Ecuador
Dispute stage: Appellate Body
Agreements cited: Art. 20, 16.1, 15.4, 2.1, 24.3, 22.2(b), 3.1  Intellectual Property (TRIPS)Art. 2.1, 2.2  Technical Barriers to Trade (TBT)Art. III:4  GATT 1994Art. 8, 17  Intellectual Property (TRIPS)

AUSTRALIA – CERTAIN MEASURES CONCERNING TRADEMARKS,
GEOGRAPHICAL INDICATIONS AND OTHER PLAIN PACKAGING
REQUIREMENTS APPLICABLE TO TOBACCO PRODUCTS AND PACKAGING
AB-2018-4
AB-2018-6
Reports of the Appellate Body
Note:

The Appellate Body is issuing these Reports in the form of a single document constituting
two separate Appellate Body Reports: ; and The cover page,
preliminary pages, sections 1 through 7, and the annexes are common to both Reports. The page
header throughout the document bears the two document symbols and

 •

ABBREVIATIONS USED IN THESE REPORTS
Abbreviation Description
ASSAD Australian Secondary Students Alcohol Smoking and Drug
CCA Cancer Council Australia
CCQ Cancer Council Queensland
CCV Cancer Council Victoria
CPMA Consumer Packaging Manufacturers Alliance
Doha Declaration Declaration on the TRIPS Agreement and Public Health, WT/MIN(01)/DEC/2
(14 November 2001)
DSB Dispute Settlement Body
DSU Understanding on the Rules and Procedures Governing the Settlement of
Disputes
FCTC Framework Convention on Tobacco Control
GATT 1994 General Agreement on Tariffs and Trade 1994
GHW graphic health warnings
GI geographical indications
HAC heteroskedasticity- and autocorrelation-consistent
IMS/EOS In-Market-Sales/Exchange of Sales
INTA International Trademark Association
IPE Institute for Policy Evaluation
MLPA minimum legal purchasing age
NHS National Health Survey
NPHT National Preventative Health Taskforce
NSWPHS New South Wales Population Health Survey
NTPPTS National Tobacco Plain Packaging Tracking Survey
Paris Convention Paris Convention for the Protection of Industrial Property
Paris Convention (1967) Stockholm Act of the Paris Convention for the Protection of Industrial
Property of 14 July 1967
RMSE root mean squared error
RMSS Roy Morgan Single Source
SCI strictly confidential information
TBT Agreement Agreement on Technical Barriers to Trade
TM Act Trade Marks Act 1995 (Cth)
TMA Act Trade Marks Amendment (Tobacco Plain Packaging) Act 2011 (Cth)
TMA Bill Trade Marks Amendment (Tobacco Plain Packaging) Bill 2011 (Cth)
TPA Taxpayers Protection Alliance
TPP Act Tobacco Plain Packaging Act 2011 (Cth)
TPP Bill Tobacco Plain Packaging Bill 2011 (Cth)
TPP literature tobacco plain packaging literature
TPP measures Tobacco Plain Packaging Act 2011 (Cth); Tobacco Plain Packaging
Regulations 2011 (Cth), as amended by the Tobacco Plain Packaging
Amendment Regulation 2012 (No. 1) (Cth); Trade Marks Amendment
(Tobacco Plain Packaging) Act 2011 (Cth)
TPP Regulations Tobacco Plain Packaging Regulations 2011 (Cth), as amended by the
Tobacco Plain Packaging Amendment Regulation 2012 (No. 1) (Cth)
WT/DS435/AB/R • WT/DS441/AB/R

Abbreviation Description
TRIPS Agreement Agreement on Trade-Related Aspects of Intellectual Property Rights (as
amended on 23 January 2017)
UICC Union for International Cancer Control
Vienna Convention Vienna Convention on the Law of Treaties, done at Vienna, 23 May 1969,
VIF variance inflation factors
Working Procedures Working Procedures for Appellate Review
WHO World Health Organization
WIPO World Intellectual Property Organization
WTO World Trade Organization
WT/DS435/AB/R • WT/DS441/AB/R

PANEL EXHIBITS CITED IN THESE REPORTS
Exhibit Number Short Title Description
AUS-1, JE-1 TPP Act Tobacco Plain Packaging Act 2011 (Cth)
AUS-2, JE-7 TPP Bill
Explanatory
Memorandum
Explanatory Memorandum, Tobacco Plain Packaging Bill 2011
(Cth)
AUS-3, JE-2 TPP Regulations Tobacco Plain Packaging Regulations 2011 (Cth), as amended
by the Tobacco Plain Packaging Amendment Regulation 2012
(No. 1) (Cth)
AUS-4, JE-3 TMA Act Trade Marks Amendment (Tobacco Plain Packaging) Act 2011
(Cth)
AUS-5, JE-5 TMA Bill
Explanatory
Memorandum
Explanatory Memorandum, Trade Marks Amendment
(Tobacco Plain Packaging) Bill 2011 (Cth)
AUS-7 Samet Report Expert Report of J. Samet (5 March 2015)
AUS-9

F. Chaloupka, Expert Report on Australia's Plain Packaging
Legislation (7 March 2015)
AUS-10 Tavassoli
Report
N. Tavassoli, Report on the World Trade Organization Dispute
Settlement Proceedings Concerning Australia's Tobacco Plain
Packaging Legislation (10 March 2015)
AUS-11

Expert Report of Dr Jean-Pierre Dubé (9 March 2015)
AUS-12 Slovic Report Expert Report of Dr Paul Slovic (4 March 2015)
AUS-14 Fong Report Expert Report of Dr Geoffrey T. Fong (4 March 2015)
AUS-18 Katz Report M. Katz, An Economic Assessment of the Effects of Tobacco
Plain Packaging (9 March 2015)
AUS-19 (SCI)

HoustonKemp, Competition and Trade for Tobacco Products
in Australia (9 March 2015)
AUS-23 British American Tobacco, Packaging Brief (2 January 2001),
Bates Nos. 325211963-3252121964
AUS-38 Union for International Cancer Control and Cancer Council
Australia, Written Submission of Non-Party Amici Curiae
(11 February 2015)
AUS-42 (revised) World Health Organization and the WHO Framework
Convention on Tobacco Control Secretariat, Information for
Submission to the Panel by a Non-Party (16 February 2015)
AUS-44, JE-19 FCTC World Health Organization, Framework Convention on
Tobacco Control (2003)
AUS-67, JE-14 NPHT – The
Roadmap for
Action
National Preventative Health Taskforce, Australia: The
Healthiest Country by 2020 – National Preventative Health
Strategy – The Roadmap for Action, Australian Government
(30 June 2009)
AUS-76

US Department of Health and Human Services, Preventing
Tobacco Use Among Youth and Young Adults: A Report of the
Surgeon General (Atlanta, 2012)
AUS-81, CUB-61 Chantler Report C. Chantler, Standardised Packaging of Tobacco: A Report of
the Independent Review Undertaken by Sir Cyril Chantler
(April 2014)
AUS-140, HND-130, CUB-59 Stirling Review C. Moodie, M. Stead, L. Bauld, A. McNeill, K. Angusa,
K. Hinds, I. Kwan, J. Thomas, G. Hastings, and
A. O'Mara-Eves, Plain Tobacco Packaging: A Systematic
Review, UK Centre for Tobacco Control Studies, University of
Stirling (2012)
AUS-186, DOM-235 White et al.
2015a
V. White, T. Williams, and M. Wakefield, "Has the
Introduction of Plain Packaging with Larger Graphic Health
Warnings Changed Adolescents' Perceptions of Cigarette
Packs and Brands?" Tobacco Control, Vol. 24 (2015), ii42-49
WT/DS435/AB/R • WT/DS441/AB/R

Exhibit Number Short Title Description
AUS-206, DOM-306 Wakefield et al.
2015
M. Wakefield, K. Coomber, M. Zacher, S. Durkin, M. Brennan,
and M. Scollo, "Australian Adult Smokers' Responses to Plain
Packaging with Larger Graphic Health Warnings One Year
After Implementation: Results from a National
Cross-Sectional Tracking Survey", Tobacco Control, Vol.24
(2015), ii17-ii25
AUS-207, HND-132,
DOM-199
Dunlop et al.
2014
S. Dunlop, T. Dobbins, J. Young, D. Perez, and D. Currow,
"Impact of Australia's Introduction of Tobacco Plain Packs on
Adult Smokers' Pack-Related Perceptions and Responses:
Results from a Continuous Tracking Survey", BMJ Open,
Vol. 4 (2014), doi:10.1136/bmjopen-2014-005836
AUS-215 (revised),
DOM-305
Durkin et al.
2015
S. Durkin, E. Brennan, M. Coomber, M. Zacher, M. Wakefield,
and M. Scollo, "Short-Term Changes in Quitting-Related
Cognitions and Behaviours After the Implementation of Plain
Packaging with Larger Health Warnings: Findings from a
National Cohort Study with Australian Adult Smokers",
Tobacco Control, Vol. 24 (2015), ii26-ii32
AUS-216, CUB-60 Stirling Review
2013 Update
C. Moodie, K. Angus, M. Stead, and L. Bauld, "Plain Tobacco
Packaging Research: An Update", Centre for Tobacco Control
Research, Institute for Social Marketing, University of Stirling
(2013)
AUS-234 Letter dated 6 July 1994 from D. Latham of Lovell, White,
Durrant to J. Smithson, Public Affairs Manager, Rothmans
International Services Limited, attaching letter dated 5 July
1994 from L. Baeumer, Director, Industrial Property Law
Department, WIPO, to D. Latham of Lovell, White, Durrant,
Bates Nos. 502592535-502592536
AUS-259 Acts Interpretation Act 1901 (Cth)
AUS-501

S. Ulucanlar, G. Fooks, J. Hatchard, and A. Gilmore,
"Representation and Misrepresentation of Scientific Evidence
in Contemporary Tobacco Regulation: A Review of Tobacco
Industry Submissions to the UK Government Consultation on
Standardised Packaging", PLoS Medicine, Vol. 11 (2014),
doi:101371/journal.pmed.1001629
AUS-515 Healthy Caribbean Coalition, Amicus Curiae Brief (22 April
2015)
AUS-531 Fong
Supplemental
Report
G. Fong, Supplemental Report in Response to Professor Ajzen
(8 September 2015)
AUS-535 (SCI) Chipty Rebuttal
Report
Rebuttal Report of Dr Tasneem Chipty (14 September 2015)
AUS-555 Hammond
Review
D. Hammond, Standardized Packaging of Tobacco Products:
Evidence Review, prepared for the Irish Department of Health
(March 2014)
AUS-582

F. Chaloupka, Rebuttal Report on Selected Issues Raised in
Ongoing Challenges to Australia's Tobacco Plain Packaging
Measure (26 October 2015)
AUS-585 Fong Second
Supplemental
Report
G. Fong, Supplementary Report in Response to Professors
Inman and Kleijnen (27 October 2015)
AUS-586 Surrebuttal Report of Dr Tasneem Chipty (26 October 2015)
AUS-588 N. Tavassoli, Rebuttal to Arguments Raised in Exhibit
DOM/HND-14 (26 October 2015)
AUS-590 F. Chaloupka, Report on Selected Issues Raised in Ongoing
Challenges to Australia's Tobacco Plain Packaging Measure
(7 December 2015)
AUS-591 Chipty Second
Rebuttal Report
Second Rebuttal Report of Dr Tasneem Chipty (8 December
2015)
AUS-605 Chipty Third
Rebuttal Report
Third Rebuttal Report of Dr Tasneem Chipty (1 February
2016)
WT/DS435/AB/R • WT/DS441/AB/R

Exhibit Number Short Title Description
AUS-624 Tobacco Plain
Packaging PIR
Department of Health, Post-Implementation Review: Tobacco
Plain Packaging 2016, Australian Government (2016)
CUB-58

M. Stead, C. Moodie, K. Angus, L. Bauld, A. McNeill, J.
Thomas, G. Hastings, K. Hinds, A. O'Mara-Eves, I. Kwan,
R. Purves, and S. Bryce, "Is Consumer Response to
Plain/Standardised Tobacco Packaging Consistent with
Framework Convention on Tobacco Control Guidelines?
A Systematic Review of Quantitative Studies", PLoS One,
Vol. 8 (2013), doi:10.1371/journal.pone.0075919
DOM-65 WIPO, WIPO Intellectual Property Handbook, 2nd edn
(Geneva, 2004; reprinted 2008)
DOM-100 IPE Report D. Afshartous, M. Hagedorn, A. Kaul, and M. Wolf, Empirical
Assessment of Australia's Plain Packaging Regime, Institute
for Policy Evaluation (7 October 2014)
DOM-232 R. Bonnie, K. Stratton, and L. Kwan (eds.), Public Health
Implications of Raising the Minimum Age of Legal Access to
Tobacco Products, US Institute of Medicine (The National
Academies Press, 2015) (Pre-publication copy: uncorrected
proofs)
DOM-303 IPE Updated
Report
D. Afshartous, M. Hagedorn, A. Kaul, and M. Wolf, Updated
Empirical Assessment of Australia's Plain Packaging Regime,
Institute for Policy Evaluation (14 September 2015)
DOM-361 IPE Second
Updated Report
D. Afshartous, M. Hagedorn, A. Kaul, and M. Wolf, Updated
Empirical Assessment of Australia's Plain Packaging Regime,
Institute for Policy Evaluation (27 October 2015)
DOM-375 IPE Third
Updated Report
D. Afshartous, M. Hagedorn, A. Kaul, and M. Wolf,
Empirical Assessment of Australia's Plain Packaging Regime,
Institute for Policy Evaluation (8 December 2015)
DOM-379 IPE Summary
Report

D. Afshartous, M. Hagedorn, A. Kaul, and M. Wolf, Summary
of Findings: Empirical Assessment of Australia's Plain
Packaging Regime, Institute for Policy Evaluation (1 February
2016)
DOM-382 Yong et al.
2015
H. Yong, R. Borland, D. Hammond, J. Thrasher,
K. Cummings, and G. Fong, "Smokers' Reactions to the New
Larger Health Warning Labels on Plain Cigarette Packs in
Australia: Findings from the ITC Australia Project", Tobacco
Control (19 February 2015), doi:10.1136/tobaccocontrol-
2014-05197
DOM/HND-3 Inman et al.
Peer Review
Report
J. Inman, Plain Packaging Literature Peer Review Project
(3 October 2014)
DOM/HND-4 Kleijnen
Systematic
Review
J. Kleijnen, A. Bryman, and M. Bosnjak, Quality of the
Empirical Evidence Testing the Impact of Plain Packaging on
Tobacco Consumption: A Systematic Review (6 October
2014)
DOM/HND-10 Steinberg
Rebuttal Report
L. Steinberg, Adolescent Decision-Making and the Prevention
of Underage Smoking: The Role of Plain Packaging:
A Response to Expert Evidence Submitted on Behalf of
Australia (3 July 2015)
DOM/HND-15 Steinberg
Second
Rebuttal Report
L. Steinberg, Adolescent Decision-Making and the Prevention
of Underage Smoking: The Role of Plain Packaging: A Second
Response to Expert Evidence Submitted on Behalf of Australia
(23 October 2015)
DOM/HND/IDN-1 Amicus curiae submissions from intellectual property and
business associations supporting the arguments of the
Dominican Republic
DOM/HND/IDN-2 Moldova's third party submission
DOM/HND/IDN-3 Ajzen Report I. Ajzen, Examination of Australia's Reliance on Behavioral
Theories to Support its Tobacco Plain Packaging Legislation"
(31May 2015)
WT/DS435/AB/R • WT/DS441/AB/R

Exhibit Number Short Title Description
DOM/HND/IDN-4 Ajzen
Supplemental
Report
I. Ajzen, Supplemental Report: Pre-Implementation Empirical
Testing of Behavioral Theories Relied on by Australia to
Justify Plain Packaging (7 July 2015)
DOM/HND/IDN-5 Ajzen Rebuttal
Report
I. Ajzen, The Role of Theory and Empirical Evidence in
Evaluating the Effectiveness of Plain Packaging: Response to
Australia and its Experts (27 October 2015)
DOM/HND/IDN-6 Ajzen Response
to Panel
question
Nos. 146, 202,
and 203
I. Ajzen, Response to Questions 146, 202, and 203 by the
Panel (8 December 2015)
DOM/IDN-1 List Report J. List, A Consideration of the Empirical Evidence on the
Effects of Australia's Tobacco Plain Packaging Legislation
(1 June 2015)
DOM/IDN-2 Ajzen et al.
Data Report
I. Ajzen, A. Hortaçsu, J. List, and A. Shaikh, Reconsideration
of Empirical Evidence on the Effectiveness of Australian Plain
Packaging Legislation: Evidence from the National Plain
Packaging Tracking Survey (NPPTS) and Other Datasets
(15 September 2015)
DOM/IDN-3 List Rebuttal
Report
J. List, A Further Consideration of the Empirical Evidence on
the Effects of Australia's Tobacco Plain Packaging Legislation
(16 September 2015)
DOM/IDN-5 List Second
Supplemental
Report
J. List, A Synthesis of the Evidence on Australia's Plain
Packaging Policy (28 October 2015)
DOM/IDN-7 List Third
Supplemental
Report
J. List, A Further Synthesis of the Newly-Available Evidence
on Australia's Plain Packaging Policy (8 December 2015)
DOM/IDN-9 List Summary
Report
J. List, Concluding Summary on Australia's Plain Packaging
Policy (2 February 2016)
HND-2, DOM-50 Australian Government Preventative Health Taskforce,
"Terms of Reference", available at
http://www.preventativehealth.org.au/internet/preventativeh
ealth/publishing.nsf/Content/terms-of-reference-1lp
(accessed 7 October 2014)
HND-118 J. Klick, Rebuttal Report – A Reply to Dr Chipty (8 July 2015)
HND-122 J. Klick, Supplemental Rebuttal Report – A Review of New
and Updated Australian Survey and Market Data
(16 September 2015)
HND-133, DOM-237,
DOM-311
Scollo et al.
2015a
M. Scollo, M. Zacher, K. Coomber, M. Bayly, and
M. Wakefield, "Changes in Use of Types of Tobacco Products
by Pack Sizes and Price Segments, Prices Paid and
Consumption Following the Introduction of Plain Packaging in
Australia", Tobacco Control, Vol. 24 (2015)
HND-165 Klick Second
Supplemental
Rebuttal Report
J. Klick, Second Supplemental Rebuttal Report – A Review of
Australian Survey Data From New South Wales (28 October
2015)
HND-166 Klick Third
Supplemental
Rebuttal Report
J. Klick, Third Supplemental Rebuttal Report – A Reply to
Dr Chipty and Professor Chaloupka (8 December 2015)
HND-169 Klick Fourth
Supplemental
Rebuttal Report
J. Klick, Fourth Supplemental Rebuttal Report – Comments
on Additional Arguments Raised by Dr Chipty (3 February
2016)
JE-6 TM Act Trade Marks Act 1995 (Cth)
JE-20 Guidelines for Implementation of Article 11 (Packaging and
Labelling of Tobacco Products), Document FCTC/COP3(10),
excerpted from Conference of the Parties to the WHO FCTC,
"Decisions", Third Session, held in Durban, South Africa,
17 to 22 November 2008, Document FCTC/COP/3/DIV/3
(16 February 2009)
WT/DS435/AB/R • WT/DS441/AB/R

Exhibit Number Short Title Description
JE-22 TPPA Regulation
Explanatory
Statement
Explanatory Statement, Tobacco Plain Packaging Amendment
Regulation 2012 (No. 1) (Cth)
UKR-5

J. Klick, The Effect of Australia's Plain Packaging Law on
Smoking: Evidence from Survey and Market Data (26 July
2014)
UKR-6 Klick TPP
Literature
Report
Report by J. Klick on Plain Packaging Literature and Research
Methodology (2 October 2014)
WT/DS435/AB/R • WT/DS441/AB/R

CASES CITED IN THESE REPORTS
Short Title Full Case Title and Citation
Argentina – Footwear (EC) Appellate Body Report, Argentina – Safeguard Measures on Imports of
Footwear, WT/DS121/AB/R, adopted 12 January 2000, DSR 2000:I, p. 515
Australia – Apples Appellate Body Report, Australia – Measures Affecting the Importation of
Apples from New Zealand, WT/DS367/AB/R, adopted 17 December 2010,
DSR 2010:V, p. 2175
Australia – Salmon Appellate Body Report, Australia – Measures Affecting Importation of Salmon,
WT/DS18/AB/R, adopted 6 November 1998, DSR 1998:VIII, p. 3327
Australia – Salmon Panel Report, Australia – Measures Affecting Importation of Salmon,
WT/DS18/R and Corr.1, adopted 6 November 1998, as modified by
Appellate Body Report WT/DS18/AB/R, DSR 1998:VIII, p. 3407
Australia – Tobacco Plain
Packaging (Panel Report)
Panel Report, Australia – Certain Measures concerning Trademarks,
Geographical Indications and other Plain Packaging Requirements applicable to
Tobacco Products and Packaging, WT/DS435/R, Add.1 and Suppl.1, circulated
to WTO Members 28 June 2018 [appealed by Honduras 19 July 2018]
Panel Report, Australia – Certain Measures concerning Trademarks,
Geographical Indications and other Plain Packaging Requirements applicable to
Tobacco Products and Packaging, WT/DS441/R, Add.1 and Suppl.1, circulated
to WTO Members 28 June 2018 [appealed by the Dominican Republic
23 August 2018]
Panel Report, Australia – Certain Measures concerning Trademarks,
Geographical Indications and other Plain Packaging Requirements applicable to
Tobacco Products and Packaging, WT/DS458/R, Add.1 and Suppl.1, adopted
27 August 2018
Panel Report, Australia – Certain Measures concerning Trademarks,
Geographical Indications and other Plain Packaging Requirements applicable to
Tobacco Products and Packaging, WT/DS467/R, Add.1 and Suppl.1, adopted
27 August 2018
Brazil – Retreaded Tyres Appellate Body Report, Brazil – Measures Affecting Imports of Retreaded
Tyres, WT/DS332/AB/R, adopted 17 December 2007, DSR 2007:IV, p. 1527
Brazil – Retreaded Tyres Panel Report, Brazil – Measures Affecting Imports of Retreaded Tyres,
WT/DS332/R, adopted 17 December 2007, as modified by Appellate Body
Report WT/DS332/AB/R, DSR 2007:V, p. 1649
Canada – Aircraft Appellate Body Report, Canada – Measures Affecting the Export of Civilian
Aircraft, WT/DS70/AB/R, adopted 20 August 1999, DSR 1999:III, p. 1377
Canada – Continued
Suspension
Appellate Body Report, Canada – Continued Suspension of Obligations in the
EC – Hormones Dispute, WT/DS321/AB/R, adopted 14 November 2008,
DSR 2008:XIV, p. 5373
Canada – Continued
Suspension
Panel Report, Canada – Continued Suspension of Obligations in the
EC – Hormones Dispute, WT/DS321/R and Add.1 to Add.7, adopted
14 November 2008, as modified by Appellate Body Report WT/DS321/AB/R,
DSR 2008:XV, p. 5757
Canada – Dairy (Article 21.5
– New Zealand and US II)
Appellate Body Report, Canada – Measures Affecting the Importation of Milk
and the Exportation of Dairy Products – Second Recourse to Article 21.5 of the
DSU by New Zealand and the United States, WT/DS103/AB/RW2,
WT/DS113/AB/RW2, adopted 17 January 2003, DSR 2003:I, p. 213
Canada – Renewable Energy
/ Canada – Feed-in Tariff
Program
Appellate Body Reports, Canada – Certain Measures Affecting the Renewable
Energy Generation Sector / Canada – Measures Relating to the Feed-in Tariff
Program, WT/DS412/AB/R / WT/DS426/AB/R, adopted 24 May 2013,
DSR 2013:I, p. 7
Chile – Price Band System Appellate Body Report, Chile – Price Band System and Safeguard Measures
Relating to Certain Agricultural Products, WT/DS207/AB/R, adopted 23 October
2002, DSR 2002:VIII, p. 3045 (Corr.1, DSR 2006:XII, p. 5473)
Chile – Price Band System
(Article 21.5 – Argentina)
Appellate Body Report, Chile – Price Band System and Safeguard Measures
Relating to Certain Agricultural Products – Recourse to Article 21.5 of the DSU
by Argentina, WT/DS207/AB/RW, adopted 22 May 2007, DSR 2007:II, p. 513
WT/DS435/AB/R • WT/DS441/AB/R

Short Title Full Case Title and Citation
China – HP-SSST (Japan) /
China – HP-SSST (EU)
Appellate Body Reports, China – Measures Imposing Anti-Dumping Duties on
High-Performance Stainless Steel Seamless Tubes ("HP-SSST") from Japan /
China – Measures Imposing Anti-Dumping Duties on High-Performance
Stainless Steel Seamless Tubes ("HP-SSST") from the European Union,
WT/DS454/AB/R and Add.1 / WT/DS460/AB/R and Add.1, adopted 28 October
2015, DSR 2015:IX, p. 4573
China – Intellectual Property
Rights
Panel Report, China – Measures Affecting the Protection and Enforcement of
Intellectual Property Rights, WT/DS362/R, adopted 20 March 2009,
DSR 2009:V, p. 2097
China – Rare Earths Appellate Body Reports, China – Measures Related to the Exportation of Rare
Earths, Tungsten, and Molybdenum, WT/DS431/AB/R / WT/DS432/AB/R /
WT/DS433/AB/R, adopted 29 August 2014, DSR 2014:III, p. 805
Colombia – Textiles Appellate Body Report, Colombia – Measures Relating to the Importation of
Textiles, Apparel and Footwear, WT/DS461/AB/R and Add.1, adopted 22 June
2016, DSR 2016:III, p. 1131
Dominican Republic – Import
and Sale of Cigarettes
Appellate Body Report, Dominican Republic – Measures Affecting the
Importation and Internal Sale of Cigarettes, WT/DS302/AB/R, adopted 19 May
2005, DSR 2005:XV, p. 7367
Dominican Republic – Import
and Sale of Cigarettes
Panel Report, Dominican Republic – Measures Affecting the Importation and
Internal Sale of Cigarettes, WT/DS302/R, adopted 19 May 2005, as modified
by Appellate Body Report WT/DS302/AB/R, DSR 2005:XV, p. 7425
EC – Asbestos Appellate Body Report, European Communities – Measures Affecting Asbestos
and Asbestos-Containing Products, WT/DS135/AB/R, adopted 5 April 2001,
DSR 2001:VII, p. 3243
EC – Bananas III Appellate Body Report, European Communities – Regime for the Importation,
Sale and Distribution of Bananas, WT/DS27/AB/R, adopted 25 September
1997, DSR 1997:II, p. 591
EC – Bed Linen
(Article 21.5 – India)
Appellate Body Report, European Communities – Anti-Dumping Duties on
Imports of Cotton-Type Bed Linen from India – Recourse to Article 21.5 of the
DSU by India, WT/DS141/AB/RW, adopted 24 April 2003, DSR 2003:III,
p. 965
EC – Fasteners (China) Appellate Body Report, European Communities – Definitive Anti-Dumping
Measures on Certain Iron or Steel Fasteners from China, WT/DS397/AB/R,
adopted 28 July 2011, DSR 2011:VII, p. 3995
EC – Fasteners (China)
(Article 21.5 – China)
Appellate Body Report, European Communities – Definitive Anti-Dumping
Measures on Certain Iron or Steel Fasteners from China – Recourse to
Article 21.5 of the DSU by China, WT/DS397/AB/RW and Add.1, adopted
12 February 2016, DSR 2016:I, p. 7
EC – Hormones Appellate Body Report, European Communities – Measures Concerning Meat
and Meat Products (Hormones), WT/DS26/AB/R, WT/DS48/AB/R, adopted
13 February 1998, DSR 1998:I, p. 135
EC – Poultry Appellate Body Report, European Communities – Measures Affecting the
Importation of Certain Poultry Products, WT/DS69/AB/R, adopted 23 July
1998, DSR 1998:V, p. 2031
EC – Sardines Appellate Body Report, European Communities – Trade Description of
Sardines, WT/DS231/AB/R, adopted 23 October 2002, DSR 2002:VIII, p. 3359
EC – Seal Products Appellate Body Reports, European Communities – Measures Prohibiting the
Importation and Marketing of Seal Products, WT/DS400/AB/R /
WT/DS401/AB/R, adopted 18 June 2014, DSR 2014:I, p. 7
EC – Selected Customs
Matters
Appellate Body Report, European Communities – Selected Customs Matters,
WT/DS315/AB/R, adopted 11 December 2006, DSR 2006:IX, p. 3791
EC – Trademarks and
Geographical Indications
(Australia)
Panel Report, European Communities – Protection of Trademarks and
Geographical Indications for Agricultural Products and Foodstuffs, Complaint by
Australia, WT/DS290/R, adopted 20 April 2005, DSR 2005:X, p. 4603
EC – Trademarks and
Geographical Indications
(US)
Panel Report, European Communities – Protection of Trademarks and
Geographical Indications for Agricultural Products and Foodstuffs, Complaint by
the United States, WT/DS174/R, adopted 20 April 2005, DSR 2005:VIII,
p. 3499
WT/DS435/AB/R • WT/DS441/AB/R

Short Title Full Case Title and Citation
EC – Tube or Pipe Fittings Appellate Body Report, European Communities – Anti-Dumping Duties on
Malleable Cast Iron Tube or Pipe Fittings from Brazil, WT/DS219/AB/R,
adopted 18 August 2003, DSR 2003:VI, p. 2613
EC and certain member
States – Large Civil Aircraft
Appellate Body Report, European Communities and Certain Member States –
Measures Affecting Trade in Large Civil Aircraft, WT/DS316/AB/R, adopted
1 June 2011, DSR 2011:I, p. 7
EC and certain member
States – Large Civil Aircraft
(Article 21.5 – US)
Appellate Body Report, European Communities and Certain Member States –
Measures Affecting Trade in Large Civil Aircraft – Recourse to Article 21.5 of
the DSU by the United States, WT/DS316/AB/RW and Add.1, adopted 28 May
2018
India – Patents (US) Appellate Body Report, India – Patent Protection for Pharmaceutical and
Agricultural Chemical Products, WT/DS50/AB/R, adopted 16 January 1998,
DSR 1998:I, p. 9
India – Solar Cells Panel Report, India – Certain Measures Relating to Solar Cells and Solar
Modules, WT/DS456/R and Add.1, adopted 14 October 2016, as modified by
Appellate Body Report WT/DS456/AB/R, DSR 2016:IV, p. 1941
Indonesia – Import Licensing
Regimes
Panel Report, Indonesia – Importation of Horticultural Products, Animals and
Animal Products, WT/DS477/R, WT/DS478/R, Add.1 and Corr.1, adopted
22 November 2017, as modified by Appellate Body Report WT/DS477/AB/R,
WT/DS478/AB/R, DSR 2017:VII, p. 3131
Indonesia – Iron or Steel
Products
Panel Report, Indonesia – Safeguard on Certain Iron or Steel Products,
WT/DS490/R, WT/DS496/R, and Add.1, adopted 27 August 2018, as modified
by Appellate Body Report WT/DS490/AB/R, WT/DS496/AB/R
Japan – Agricultural
Products II
Appellate Body Report, Japan – Measures Affecting Agricultural Products,
WT/DS76/AB/R, adopted 19 March 1999, DSR 1999:I, p. 277
Japan – Alcoholic
Beverages II
Appellate Body Report, Japan – Taxes on Alcoholic Beverages, WT/DS8/AB/R,
WT/DS10/AB/R, WT/DS11/AB/R, adopted 1 November 1996, DSR 1996:I,
p. 97
Japan – Alcoholic
Beverages II
Panel Report, Japan – Taxes on Alcoholic Beverages, WT/DS8/R, WT/DS10/R,
WT/DS11/R, adopted 1 November 1996, as modified by Appellate Body Report
WT/DS8/AB/R, WT/DS10/AB/R, WT/DS11/AB/R, DSR 1996:I, p. 125
Japan – Apples Appellate Body Report, Japan – Measures Affecting the Importation of Apples,
WT/DS245/AB/R, adopted 10 December 2003, DSR 2003:IX, p. 4391
Japan – DRAMs (Korea) Panel Report, Japan – Countervailing Duties on Dynamic Random Access
Memories from Korea, WT/DS336/R, adopted 17 December 2007, as modified
by Appellate Body Report WT/DS336/AB/R, DSR 2007:VII, p. 2805
Korea – Alcoholic Beverages Appellate Body Report, Korea – Taxes on Alcoholic Beverages, WT/DS75/AB/R,
WT/DS84/AB/R, adopted 17 February 1999, DSR 1999:I, p. 3
Korea – Dairy Appellate Body Report, Korea – Definitive Safeguard Measure on Imports of
Certain Dairy Products, WT/DS98/AB/R, adopted 12 January 2000,
DSR 2000:I, p. 3
Korea – Pneumatic Valves
(Japan)
Appellate Body Report, Korea – Anti-Dumping Duties on Pneumatic Valves
from Japan, WT/DS504/AB/R and Add.1, adopted 30 September 2019
Korea – Various Measures on
Beef
Appellate Body Report, Korea – Measures Affecting Imports of Fresh, Chilled
and Frozen Beef, WT/DS161/AB/R, WT/DS169/AB/R, adopted 10 January
2001, DSR 2001:I, p. 5
Mexico – Anti-Dumping
Measures on Rice
Appellate Body Report, Mexico – Definitive Anti-Dumping Measures on Beef
and Rice, Complaint with Respect to Rice, WT/DS295/AB/R, adopted
20 December 2005, DSR 2005:XXII, p. 10853
Mexico – Corn Syrup
(Article 21.5 – US)
Appellate Body Report, Mexico – Anti-Dumping Investigation of High Fructose
Corn Syrup (HFCS) from the United States – Recourse to Article 21.5 of the
DSU by the United States, WT/DS132/AB/RW, adopted 21 November 2001,
DSR 2001:XIII, p. 6675
Peru – Agricultural Products Appellate Body Report, Peru – Additional Duty on Imports of Certain
Agricultural Products, WT/DS457/AB/R and Add.1, adopted 31 July 2015,
DSR 2015:VI, p. 3403
Philippines – Distilled Spirits Appellate Body Reports, Philippines – Taxes on Distilled Spirits,
WT/DS396/AB/R / WT/DS403/AB/R, adopted 20 January 2012,
DSR 2012:VIII, p. 4163
WT/DS435/AB/R • WT/DS441/AB/R

Short Title Full Case Title and Citation
Russia – Commercial
Vehicles
Appellate Body Report, Russia – Anti-Dumping Duties on Light Commercial
Vehicles from Germany and Italy, WT/DS479/AB/R and Add.1, adopted 9 April
2018
Thailand – Cigarettes
(Philippines)
Appellate Body Report, Thailand – Customs and Fiscal Measures on Cigarettes
from the Philippines, WT/DS371/AB/R, adopted 15 July 2011, DSR 2011:IV,
p. 2203
Thailand – H-Beams Appellate Body Report, Thailand – Anti-Dumping Duties on Angles, Shapes and
Sections of Iron or Non-Alloy Steel and H-Beams from Poland,
WT/DS122/AB/R, adopted 5 April 2001, DSR 2001:VII, p. 2701
US – Anti-Dumping and
Countervailing Duties (China)

Appellate Body Report, United States – Definitive Anti-Dumping and
Countervailing Duties on Certain Products from China, WT/DS379/AB/R,
adopted 25 March 2011, DSR 2011:V, p. 2869
US – Carbon Steel Appellate Body Report, United States – Countervailing Duties on Certain
Corrosion-Resistant Carbon Steel Flat Products from Germany,
WT/DS213/AB/R and Corr.1, adopted 19 December 2002, DSR 2002:IX,
p. 3779
US – Carbon Steel (India) Appellate Body Report, United States – Countervailing Measures on Certain
Hot-Rolled Carbon Steel Flat Products from India, WT/DS436/AB/R, adopted
19 December 2014, DSR 2014:V, p. 1727
US – Clove Cigarettes Appellate Body Report, United States – Measures Affecting the Production and
Sale of Clove Cigarettes, WT/DS406/AB/R, adopted 24 April 2012, DSR
2012:XI, p. 5751
US – Clove Cigarettes Panel Report, United States – Measures Affecting the Production and Sale of
Clove Cigarettes, WT/DS406/R, adopted 24 April 2012, as modified by
Appellate Body Report WT/DS406/AB/R, DSR 2012:XI, p. 5865
US – Continued Suspension Appellate Body Report, United States – Continued Suspension of Obligations in
the EC – Hormones Dispute, WT/DS320/AB/R, adopted 14 November 2008,
DSR 2008:X, p. 3507
US – Continued Suspension Panel Report, United States – Continued Suspension of Obligations in the
EC – Hormones Dispute, WT/DS320/R and Add.1 to Add.7, adopted
14 November 2008, as modified by Appellate Body Report WT/DS320/AB/R,
DSR 2008:XI, p. 3891
US – Continued Zeroing

Appellate Body Report, United States – Continued Existence and Application of
Zeroing Methodology, WT/DS350/AB/R, adopted 19 February 2009,
DSR2009:III, p. 1291
US – Continued Zeroing

Panel Report, United States – Continued Existence and Application of Zeroing
Methodology, WT/DS350/R, adopted 19 February 2009, as modified as
Appellate Body Report WT/DS350/AB/R, DSR 2009:III, p. 1481
US – COOL Appellate Body Reports, United States – Certain Country of Origin Labelling
(COOL) Requirements, WT/DS384/AB/R / WT/DS386/AB/R, adopted 23 July
2012, DSR 2012:V, p. 2449
US – COOL Panel Reports, United States – Certain Country of Origin Labelling (COOL)
Requirements, WT/DS384/R / WT/DS386/R, adopted 23 July 2012, as
modified by Appellate Body Reports WT/DS384/AB/R / WT/DS386/AB/R,
DSR 2012:VI, p. 2745
US – COOL
(Article 21.5 – Canada and
Mexico)
Appellate Body Reports, United States – Certain Country of Origin Labelling
(COOL) Requirements – Recourse to Article 21.5 of the DSU by Canada and
Mexico, WT/DS384/AB/RW / WT/DS386/AB/RW, adopted 29 May 2015,
DSR 2015:IV, p. 1725
US – COOL (Article 21.5 –
Canada and Mexico)
Panel Reports, United States – Certain Country of Origin Labelling (COOL)
Requirements – Recourse to Article 21.5 of the DSU by Canada and Mexico,
WT/DS384/RW and Add.1 / WT/DS386/RW and Add.1, adopted 29 May 2015,
as modified by Appellate Body Reports WT/DS384/AB/RW /
WT/DS386/AB/RW, DSR 2015:IV, p.2019
US – FSC (Article 21.5 – EC) Appellate Body Report, United States – Tax Treatment for "Foreign Sales
Corporations", WT/DS108/AB/R, adopted 20 March 2000, DSR 2000:III,
p. 1619
US – FSC (Article 21.5 – EC) Panel Report, United States – Tax Treatment for "Foreign Sales
Corporations" – Recourse to Article 21.5 of the DSU by the
European Communities, WT/DS108/RW, adopted 29 January 2002, as
modified by Appellate Body Report WT/DS108/AB/RW, DSR 2002:I, p. 119
WT/DS435/AB/R • WT/DS441/AB/R

Short Title Full Case Title and Citation
US – Gambling Appellate Body Report, United States – Measures Affecting the Cross-Border
Supply of Gambling and Betting Services, WT/DS285/AB/R, adopted 20 April
2005, DSR 2005:XII, p. 5663 (and Corr.1, DSR 2006:XII, p. 5475)
US – Gasoline Appellate Body Report, United States – Standards for Reformulated and
Conventional Gasoline, WT/DS2/AB/R, adopted 20 May 1996, DSR 1996:I, p. 3
US – Hot-Rolled Steel Appellate Body Report, United States – Anti-Dumping Measures on Certain
Hot-Rolled Steel Products from Japan, WT/DS184/AB/R, adopted 23 August
2001, DSR 2001:X, p. 4697
US – Large Civil Aircraft (2nd
complaint)
Appellate Body Report, United States – Measures Affecting Trade in Large Civil
Aircraft (Second Complaint), WT/DS353/AB/R, adopted 23 March 2012,
DSR 2012:I, p. 7
US – Offset Act (Byrd
Amendment)
Appellate Body Report, United States – Continued Dumping and Subsidy Offset
Act of 2000, WT/DS217/AB/R, WT/DS234/AB/R, adopted 27 January 2003,
DSR 2003:I, p. 375
US – Oil Country Tubular
Goods Sunset Reviews
Appellate Body Report, United States – Sunset Reviews of Anti-Dumping
Measures on Oil Country Tubular Goods from Argentina, WT/DS268/AB/R,
adopted 17 December 2004, DSR 2004:VII, p. 3257
US – Poultry (China) Panel Report, United States – Certain Measures Affecting Imports of Poultry
from China, WT/DS392/R, adopted 25 October 2010, DSR 2010:V, p. 1909
US – Section 211
Appropriations Act
Appellate Body Report, United States – Section 211 Omnibus Appropriations
Act of 1998, WT/DS176/AB/R, adopted 1 February 2002, DSR 2002:II, p. 589
US – Shrimp Appellate Body Report, United States – Import Prohibition of Certain Shrimp
and Shrimp Products, WT/DS58/AB/R, adopted 6 November 1998,
DSR 1998:VII, p. 2755
US ‒ Softwood Lumber VI
(Article 21.5 – Canada)
Appellate Body Report, United States – Final Countervailing Duty
Determination with Respect to Certain Softwood Lumber from Canada –
Recourse by Canada to Article 21.5 of the DSU, WT/DS257/AB/RW, adopted
20 December 2005, DSR 2005:XXIII, p. 11357
US – Steel Safeguards Appellate Body Report, United States – Definitive Safeguard Measures on
Imports of Certain Steel Products, WT/DS248/AB/R, WT/DS249/AB/R,
WT/DS251/AB/R, WT/DS252/AB/R, WT/DS253/AB/R, WT/DS254/AB/R,
WT/DS258/AB/R, WT/DS259/AB/R, adopted 10 December 2003, DSR
2003:VII, p. 3117
US – Tuna II (Mexico) Appellate Body Report, United States – Measures Concerning the Importation,
Marketing and Sale of Tuna and Tuna Products, WT/DS381/AB/R, adopted
13 June 2012, DSR 2012:IV, p. 1837
US – Tuna II (Mexico)
(Article 21.5 – Mexico)
Appellate Body Report, United States – Measures Concerning the Importation,
Marketing and Sale of Tuna and Tuna Products – Recourse to Article 21.5 of
the DSU by Mexico, WT/DS381/AB/RW and Add.1, adopted 3 December 2015,
DSR 2015:X, p. 5133
US – Tuna II (Mexico)
(Article 21.5 – US) /
US – Tuna II (Mexico)
(Article 21.5 – Mexico II)
Appellate Body Report, United States – Measures Concerning the Importation,
Marketing and Sale of Tuna and Tuna Products – Recourse to Article 21.5 of
the DSU by the United States, WT/DS381/AB/RW/USA and Add.1 /
United States – Measures Concerning the Importation, Marketing and Sale of
Tuna and Tuna Products – Second Recourse to Article 21.5 of the DSU by
Mexico, WT/DS381/AB/RW2 and Add.1, adopted 11 January 2019
US – Upland Cotton Appellate Body Report, United States – Subsidies on Upland Cotton,
WT/DS267/AB/R, adopted 21 March 2005, DSR 2005:I, p. 3
US – Upland Cotton
(Article 21.5 – Brazil)
Appellate Body Report, United States – Subsidies on Upland Cotton – Recourse
to Article 21.5 of the DSU by Brazil, WT/DS267/AB/RW, adopted 20 June
2008, DSR 2008:III, p. 809
US – Washing Machines Appellate Body Report, United States – Anti-Dumping and Countervailing
Measures on Large Residential Washers from Korea, WT/DS464/AB/R and
Add.1, adopted 26 September 2016, DSR 2016:V, p. 2275
US – Wheat Gluten Appellate Body Report, United States – Definitive Safeguard Measures on
Imports of Wheat Gluten from the European Communities, WT/DS166/AB/R,
adopted 19 January 2001, DSR 2001:II, p. 717
US – Wool Shirts and
Blouses
Appellate Body Report, United States – Measure Affecting Imports of Woven
Wool Shirts and Blouses from India, WT/DS33/AB/R, adopted 23 May 1997,
and Corr.1, DSR 1997:I, p. 323
WT/DS435/AB/R • WT/DS441/AB/R

APPELLATE BODY

Australia – Certain Measures Concerning
Trademarks, Geographical Indications and
Other Plain Packaging Requirements
Applicable to Tobac co Products and
Packaging

Honduras, Appellant1
Dominican Republic, Appellant2
Australia, Appellee

Argentina, Third Participant
Brazil, Third Participant
Canada, Third Participant
Chile, Third Participant
China, Third Participant
Dominican Republic, Third Participant3
Ecuador, Third Participant
European Union, Third Participant
Guatemala, Third Participant
India, Third Participant
Indonesia, Third Participant
Japan, Third Participant
Korea, Third Participant
Malawi, Third Participant
Malaysia, Third Participant
Mexico, Third Participant
New Zealand, Third Participant
Nicaragua, Third Participant
Nigeria, Third Participant
Norway, Third Participant
Oman, Third Participant
Panama, Third Participant
Peru, Third Participant
Philippines, Third Participant
Russian Federation, Third Participant
Singapore, Third Participant
South Africa, Third Participant
Chinese Taipei, Third Participant
Thailand, Third Participant
Turkey, Third Participant
Ukraine, Third Participant
United States, Third Participant
Uruguay, Third Participant
Zambia, Third Participant
Zimbabwe, Third Participant

AB-2018-4
AB-2018-6

Appellate Body Division:

Servansing, Presiding Member
Bhatia, Member
Graham, Member

1 INTRODUCTION
1.1. Honduras and the Dominican Republic each appeal certain issues of law and legal
interpretations developed in the Panel Report, Australia – Certain Measures Concerning Trademarks,
Geographical Indications and Other Plain Packaging Requirements Applicable to Tobacco Products

1 In DS435 only.
2 In DS441 only.
3 In DS435.
WT/DS435/AB/R • WT/DS441/AB/R

and Packaging4 (Panel Report5). The Panel was established to consider complaint s by Honduras6,
the Dominican Republic7, Cuba 8, Indonesia 9, and Ukraine 10 with respect to certain restrictions,
imposed by Australia, on trademarks, geographical indications (GIs), and other plain packaging
requirements, applicable to all tobacco products sold, offered for sale, or otherwise supplied in
Australia. The measures at issue in these disputes (the TPP measures) are "one of the means by
which the Australia[n] Government will give effect to Australia's obligations under the [World Health
Organization Framework Convention on Tobacco Control (2003) (FCTC)]" and, in particular
Articles 5, 11, and 13 of the FCTC.11
1.2. The factual aspects of these disputes are set forth in greater detail in section 2 of the
Panel Report. The factual aspects pertaining to the products and measures at issue in these disputes
are also set forth in section 5 of these Reports.
1.3. The Dispute Settlement Body (DSB) established separate panels to address the matters
brought by each of the five complainants.12 On 24 April 2014, Australia sent a communication to the
Chair of the DSB on behalf of the parties to all five disputes.13 This communication concerned certain
arrangements for the establishment and composition of the panels, and the panels' timetable in
these disputes. The communication stated , inter alia, that: (i) Australia would request the
Director-General to compose the panels to address the complaints brought by the
Dominican Republic and Cuba14; and (ii) pursuant to Article 9.3 of the Understanding on the Rules
and Procedures Governing the Settlement of Disputes ( DSU), the parties had agreed to the
harmonization of the timetable for the Panel proceedings in all five disputes.15 On 5 May 2014, the
Director-General composed five panels, with the same persons serving as panelists on each of the
separate panels.16
1.4. On 7 May 2014, Australia submitted requests to the Panel for preliminary rulings with respect
to the consistency, with Article 6.2 of the DSU, of the Dominican Republic's, Cuba's, and Indonesia's

4 WT/DS435/R, WT/DS441/R, WT/DS458/R, WT/DS467/R, 28 June 2018.
5 The Panels that addressed the complaints by Honduras (DS435), the Dominican Republic (DS441),
Cuba (DS458), and Indonesia (DS467) issued their Reports in the form of a single document constituting
four separate Panel Reports. For ease of reference, the Panels and Panel Reports are herein collectively
referred to as the Panel and the Panel Report, respectively. The Panel Report has a separate "Conclusions and
Recommendations" section (section 8) with respect to each complaint. Thus, where these Appellate Body
Reports make a reference to section 8 of the Panel Report, the Appellate Body Reports will specify which
Panel Report is being referred to.
6 Request for the Establishment of a Panel by Honduras, WT/DS435/16 (Honduras' panel request).
7 Request for the Establishment of a Panel by Dominican Republic, WT/DS441/15 (Dominican Republic's
panel request).
8 Request for the Establishment of a Panel by Cuba, WT/DS458/14 (Cuba's panel request).
9 Request for the Establishment of a Panel by Indonesia, WT/DS467/15 (Indonesia's panel request).
10 Request for the Establishment of a Panel by Ukraine, WT/DS434/11 (Ukraine's panel request).
11 Panel Report, para. 2.16 (quoting Explanatory Memorandum, Tobacco Plain Packaging Bill 2011 (Cth)
(TPP Bill Explanatory Memorandum) (Panel Exhibits AUS-2, JE-7), p. 2 (emphasis omitted)). Article 5 of the
FCTC requires each FCTC Party to develop, implement, periodically update and review comprehensive
multisectoral national tobacco control strategies, plans and programmes in accordance with this Convention
and the Protocols to which it is a party. (Panel Report, para. 2.101) Part III of the FCTC, which includes
Articles 11 and 13, addresses measures relating to the reduction of demand for tobacco. Article 11 concerns
packaging and labelling of tobacco products, while Article 13 concerns tobacco advertising, promotion and
sponsorship. (Panel Report, paras. 2.103-2.105 (quoting World Health Organization, Framework Convention on
Tobacco Control (2003) (FCTC) (Panel Exhibits AUS-44, JE-19), Articles 11 and 13))
12 Panel Report, paras. 1.10, 1.14, 1.18, and 1.22; WT/DSB/M/322.
13 Australia's communication to the DSB was sent before the establishment of the panels in the disputes
brought by the Dominican Republic and Cuba The DSB established the panels to address the complaints by the
Dominican Republic and Cuba on 25 April 2014. (Panel Report, paras. 1.13 and 1.17) With respect to Cuba's
complaint, the DSB established the panel in a meeting at which Cuba's panel request first appeared as an item
on the DSB agenda. (WT/DSB/M/344)
14 On 24 March 2014, Ukraine requested the Director-General to determine the composition of the panel
to hear its dispute (DS434). On 26 March and 23 April, respectively, Australia requested the Director-General
to determine the composition of the panel to hear the disputes brought by Honduras (DS435) and Indonesia
(DS467). On 25 April 2014, Australia requested the Director-General to determine the composition of the
panels to hear the disputes brought by the Dominican Republic (DS441) and Cuba (DS458). (WT/DS434/12,
WT/DS435/17, WT/DS441/16, WT/DS458/15, WT/DS467/16)
15 Panel Report, para. 1.26.
16 Panel Report, para. 1.27.
WT/DS435/AB/R • WT/DS441/AB/R

panel requests.17 On 19 August 2014, the Panel issued its preliminary rulings to the parties and the
third parties, with an indication that these would become an integral part of the Panel Report, subject
to any modifications or elaboration of the reasoning, either in a subsequen t ruling or in the
Panel Report.18 These preliminary rulings were circulated to the DSB on 27 October 2014.19
1.5. The Panel adopted its Working Procedures 20 and timetable on 17 June 2014. The Panel's
Working Procedures were amended on 1 October 2014, to reflect the Panel's adoption of additional
procedures for the protection of strictly confidential information (SCI) 21. The Panel's Working
Procedures were further amended on 15 December 2014, to reflect the Panel's decision to grant the
third parties the following a dditional rights: (i) access to the parties' rebuttal submissions; and
(ii) access to the final written versions of the parties' opening and closing statements at the first and
second substantive meetings.22
1.6. On 28 May 2015, the Panel received a request from Ukraine to suspend the Panel proceedings
in DS434 pursuant to Article 12.12 of the DSU. In a letter dated 29 May 2015, Australia indicated
that it "support[ed] the request by Ukraine to suspend proceedings, on the basis that … the
suspension will be 'with a view to finding a mutually agreed solution'". 23 On 30 May 2015, after
consulting with the parties in DS435, DS441, DS458, and DS467, the Panel sent a communication
to the parties informing them that it had accepted Ukraine's request and had suspended the work in
DS434. In its communication, the Panel noted that Ukraine remained entitled to participate in the
Panel proceedings, as a third party, in disputes DS435, DS441, DS458, and DS467. The Panel also
took note of the shared understanding between Ukraine and the other parties that Ukraine's
first written submission in DS434, and related evidence, would remain on the record as validly filed
third-party submissions in DS435, DS441, DS458, and DS467.24
1.7. The Panel in DS434 was not requested to resume its work during the 12 months following
suspension. Pursuant to Article 12.12 of the DSU, the authority for the establishment of the Panel
in DS434 lapsed on 30 May 2016.25
1.8. Following consultation with the parties, the Panel contacted Ecuador, Egypt, and Moldova .
These three WTO Members were third parties in the dispute initiated by Ukraine, but not in the
disputes initiated by Honduras, the Dominican Republic, Cuba, or Indonesia. The Panel informed
Ecuador, Egypt, and Moldova that they would need to notify their interest to the DSB pursuant to
Article 10.2 of the DSU with respect to DS435, DS441, DS458, and DS467 should they wish to
participate in the proceedings of one or more of these disputes, including the third-party session of
the first substantive meeting. Ecuador notified its third-party interest with respect to DS435, DS441,

17 Panel Report, para. 1.33.
18 Panel Report, para. 1.37. As regards the Dominican Republic's, Cuba's, and Indonesia's
panel requests, the Panel found that "the terms 'including', 'complement' and 'add to', as used in [these] panel
request[s], are not, on their face, inconsistent with the requirement under Article 6.2 of the DSU to identify the
specific measures at issue." (Panel Report, para. 1.38) With respect to Cuba's panel request, the Panel also
held that the additional claims introduced by Cuba in its panel request were closely related to those that
formed the legal basis of its request for consultations and could reasonably be said to have evolved from the
legal basis that formed the subject of consultations. Therefore, the Panel considered that Cuba's claims under
Article 16.3 of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement) and
Article 6bis of the Paris Convention (through Article 2.1 of the TRIPS Agreement) remained "within the bounds
of the 'measure of flexibility' accorded to Members in formulating their complaints in their panel request".
(Panel Report, para. 1.39 (quoting Communication from the Panel, dated 27 October 2014, WT/DS458/18,
para. 3.53))
19 Panel Report, para. 1.40 (referring to Communications from the Panel, dated 27 October 2014,
WT/DS441/19, WT/DS458/18, and WT/DS467/19).
20 Panel Report, para. 1.30, and Annex A-1.
21 Panel Report, paras. 1.30 and 1.41, and Annex A-2. None of the participants in these appellate
proceedings requested us to adopt additional procedures for the protection of SCI.
22 Panel Report, paras. 1.30 and 1.42-1.43.
23 Panel Report, para. 1.51.
24 Panel Report, para. 1.52.
25 Panel Report, para. 1.54 (referring to Lapse of Authority for the Establishment of the Panel, 30 June
2016, WT/DS434/17).
WT/DS435/AB/R • WT/DS441/AB/R

DS458, and DS467 to the Chair of the DSB. By contrast, Moldova informed the Panel that it did not
wish to participate in these disputes as a third party.26
1.9. A number of amici curiae submissions were presented to the Panel. On 20 August 2014, the
Panel received an unsolicited amicus curiae submission from a group of US business organizations.27
On 15 December 2014, the Panel informed the parties and third parties that it "would not be in a
position to consider unsolicited information submitted to it after 27 April 2015".28 The Panel received
35 additional unsolicited amici curiae submissions on or before 27 April 2015 and five unsolicited
amici curiae submissions after that date.29 Australia submitted, as exhibits, three of the amici curiae
submissions, provided by the World Health Organization (WHO) and the FCTC Secretariat 30; the
Healthy Caribbean Coalition; and the Union f or International Cancer Contr ol (UICC) and Cancer
Council Australia (CCA).31 The Dominican Republic, Honduras, and Indonesia submitted, as an
exhibit, 36 amici curiae submissions.32

26 Panel Report, para. 1.53. The text of Moldova's third-party submission was submitted by Honduras,
the Dominican Republic, and Indonesia as an exhibit in the Panel proceedings on 1 June 2015. (Panel Report,
fn 55 to para. 1.53 (referring to Moldova's third-party submission (Panel Exhibit DOM/HND/IDN-2)))
Additionally, it appears that Egypt did not respond to the Panel's prompting about Egypt's continued
participation as a third party.
27 This submission was made jointly by the following organizations: Emergency Committee for American
Trade; National Association of Manufacturers of the United States; National Foreign Trade Council; Paperboard
Packaging Council; Printing Industries of America; Independent Packaging Association; United States Chamber
of Commerce; and United States Council for International Business.
28 Panel Report, para. 1.48 (quoting letter from the Panel to the parties and third parties dated
15 December 2014 concerning, inter alia, amicus curiae briefs).
29 Panel Report, para. 1.49 and fn 47 thereto. The Panel received amici curiae submissions dated on or
before 27 April 2015 from: Emergency Committee for American Trade, National Association of Manufacturers of
the United States, National Foreign Trade Council, Paperboard Packaging Council, Printing Industries of
America, Independent Packaging Association, United States Chamber of Commerce, and United States Council
for International Business; Associação Brasileira da Propriedade Intelectual; American Chamber of Commerce
in the Netherlands; Federation of Philippine Industries; Confederação Nacional da Indústria (Brazil); Federation
of Attica and Piraeus Industries; Cámara Nacional de Comercio y Servicios del Uruguay; Federação des
Industrias do Estado da Bahia; Japan Business Federation; Association of South-East Asian Nations (ASEAN)
Intellectual Property Association; Institute of Public Affairs; Cámara de Industria de Guatemala; Trade-related
IPR Protection Association; Indonesian Chamber of Commerce and Industry; Montenegrin Employers
Federation; Taxpayers Association of Europe; International Trademark Association; Australian Retailers
Association; Japan Intellectual Property Association; Association of European Businesses in Russia, American
Chamber of Commerce in Russia, and RusBrand; International Tobacco Growers' Association; Patent and
Trademark Attorneys Association – Turkey; Aegean Exporters Association; European Association of Trade Mark
Owners (MARQUES); United States Chamber of Commerce; EU-ASEAN Business Council, EU-Malaysia Chamber
of Commerce and Industry, European Chamber of Commerce in Singapore, European Chamber of Commerce of
the Philippines, European Chamber of Commerce and Industry in Lao PDR, and European Association of
Business and Commerce in Thailand; American Chamber of Commerce in Thailand; Romanian Small and
Medium Retailers Association; Association of Trademarks and Design Rights Practitioners; Canadian
Manufacturers and Exporters; Federation of Korean Industries; Polish Chamber of Trade; Union des Fabricants;
Healthy Caribbean Coalition; Union for International Cancer Control; Cancer Council Australia; and World
Health Organization and WHO Framework Convention on Tobacco Control Secretariat. The Panel received
amici curiae submissions dated after 27 April 2015 from: Russian Union of Industrialists and Entrepreneurs;
Graphic Association Denmark; American Chamber Mexico; Malaysian International Chamber of Commerce and
Industry; and Confederation of Danish Industry.
30 Panel Report, para. 1.50 and fn 48 thereto. World Health Organization and the WHO Framework
Convention on Tobacco Control Secretariat, Information for Submission to the Panel by a Non-Party
(16 February 2015) (Panel Exhibit AUS-42 (revised)).
31 Healthy Caribbean Coalition, Amicus Curiae Brief (22 April 2015) (Panel Exhibit AUS-515); Union for
International Cancer Control and Cancer Council Australia, Written Submission of Non-Party Amici Curiae
(11 February 2015) (Panel Exhibit AUS-38).
32 Panel Report, para. 1.50 and fn 50 thereto. Briefs from the following amicus curiae were submitted as
Exhibit DOM/HND/IDN-1: Emergency Committee for American Trade, National Association of Manufacturers of
the United States, National Foreign Trade Council, Paperboard Packaging Council, Printing Industries of
America, Independent Packaging Association, United States Chamber of Commerce, and United States Council
for International Business; Associação Brasileira da Propriedade Intelectual; American Chamber of Commerce
in the Netherlands; Federation of Philippine Industries; Confederação Nacional da Indústria (Brazil); Federation
of Attica and Piraeus Industries; Cámara Nacional de Comercio y Servicios del Uruguay; Federação des
Industrias do Estado da Bahia; Japan Business Federation; ASEAN Intellectual Property Association; Institute of
Public Affairs; Cámara de Industria de Guatemala; Trade-related IPR Protection Association; Indonesian
Chamber of Commerce and Industry; Montenegrin Employers Federation; Taxpayers Association of Europe;
WT/DS435/AB/R • WT/DS441/AB/R

1.10. Additionally, the parties requested the Panel to exercise its authority to seek information
under Article 13 of the DSU on various occasions, regarding information relating to evidence
submitted by another party. The Panel also exercised its authority under Article 13 to seek
information from the WHO and the FCTC Secretariats, the International Bureau of the World
Intellectual Property Organization (WIPO), Cancer Council Queensland (CCQ), and Cancer Council
Victoria (CCV).33
1.11. Honduras requested the Panel to find that Australia's plain packaging trademark restrictions
in the TPP measures are inconsistent with Article 2.1 of the Agreement on Trade-Related Aspects of
Intellectual Property Rights ( TRIPS Agreement) (incorporating Article 6quinquies of the Stockholm
Act of the Paris Convention for the Protection of Industrial Property of 14 July 1967 )
(Paris Convention (1967) ) and Articles 15.4, 16.1, 17, 20, 22.2(b), and 24.3 of the
TRIPS Agreement. Honduras also requested the Panel to find that Australia's plain packaging
measures are inconsistent with Article 2.2 of the Agreement on Technical Barrie rs to Trade
(TBT Agreement). Additionally, Honduras requested the Panel to find that Australia had acted
inconsistently with Article 10bis of the Paris Convention (1967) (as incorporated into the
TRIPS Agreement through Article 2.1) and Articles 22.2(b) and 24.3 of the TRIPS Agreement.34
1.12. The Dominican Republic requested the Panel to find that, by its adoption and imposition of
the TPP measures, Australia had acted inconsistently with Article 2.2 of the TBT Agreement,
Article 10bis of the Paris Convention (1967) (as incorporated into the TRIPS Agreement through
Article 2.1), and Articles 15.4, 16.1, 16.3, 20, 22.2(b), and 24.3 of the TRIPS Agreement.35
1.13. Cuba requested the Panel to find that the TPP measures are inconsistent with Article 2.2 of
the TBT Agreement, Ar ticle 10bis of the Paris Convention (read with Article 2.1 of the
TRIPS Agreement), Articles 15.4, 16.1, 16.3, 20, 22.2(b), and 24.3 of the TRIPS Agreement, as well
as Article IX:4 of the General Agreement on Tariffs and Trade 1994 ( GATT 1994).36 Indonesia
requested the Panel to find that the TPP measures, collectively and individually, are inconsistent with
Article 2.2 of the TBT Agreement, Article 2.1 of the TRIPS Agreement (incorporating Article 10bis of
the Paris Convention), and Articles 15.4, 16.1, 16.3, 20, 22.2(b), and 24.3 of the TRIPS Agreement.
Indonesia also requested the Panel to find that the TPP measures, collectively and individually, are
inconsistent with Article XXIII:1(a) of the GATT 1994 because they have nullified or impaired
benefits accruing directly or indirectly to Indonesia under the TBT Agreement.37
1.14. The Panel circulated its Report to Members of the World Trade Organization (WTO) on 28 June
2018. In its Report, the Panel found that Honduras, the Dominican Republic, Cuba, and Indonesia
(the complainants) had not demonstrated that Australia's measures are inconsistent with Article 2.2
of the TBT Agreement, Articles 6quinquies and 10 bis of the Paris Convention (1967) (read in
conjunction with Article 2.1 of the TRIPS Agreement), Articles 15.4, 16.1, 16.3, 20, 22.2(b),
and 24.3 of the TRIPS Agreement, and Article IX:4 of the GATT 1994. In light of these findings, the
Panel declined the complainants' requests that the Panel recommend that Australia bring its
measures into conformity with its obligations under the TRIPS Agreement, the TBT Agreement, and
the GATT 1994.38

International Trademark Association; Australian Retailers Association; Japan Intellectual Property Association;
Association of European Businesses in Russia, American Chamber of Commerce in Russia, and RusBrand;
International Tobacco Growers' Association; Patent and Trademark Attorneys Association – Turkey; Aegean
Exporters Association; European Association of Trade Mark Owners (MARQUES); United States Chamber of
Commerce; EU-ASEAN Business Council, EU-Malaysia Chamber of Commerce and Industry, European Chamber
of Commerce in Singapore, European Chamber of Commerce of the Philippines, European Chamber of
Commerce and Industry in Lao PDR, and European Association of Business and Commerce in Thailand;
American Chamber of Commerce in Thailand; Romanian Small and Medium Retailers Association; Association
of Trademarks and Design Rights Practitioners; Canadian Manufacturers and Exporters; Federation of Korean
Industries; Polish Chamber of Trade; Union des Fabricants; Russian Union of Industrialists and Entrepreneurs;
American Chamber Mexico; and Malaysian International Chamber of Commerce and Industry.
33 Panel Report, paras. 1.56-1.57.
34 Panel Report, para. 3.1.
35 Panel Report, para. 3.3.
36 Panel Report, para. 3.5.
37 Panel Report, para. 3.7.
38 Panel Report, section 8.
WT/DS435/AB/R • WT/DS441/AB/R

1.15. On 19 July 2018, Honduras notified the DSB, pursuant to Articles 16.4 and 17 of the DSU, of
its intention to appeal certain issues of law covered in the Panel Report in DS435, and certain legal
interpretations developed by the Panel, and filed a Notice of Appeal39 and an appellant's submission
pursuant to Rule 20 and Rule 21, respectively, of the Working Procedures for Appellate Review 40
(Working Procedures). On 23 August 2018, the Dominican Republic notified the DSB, pursuant to
Articles 16.4 and 17 of the DSU, of its intention to appeal certain issues of law covered in the
Panel Report in DS441, and certain legal interpretations developed by the Panel, and filed a Notice
of Appeal41 and an appellant's submission, pursuant to Rule 20 and Rule 21, respectively, of the
Working Procedures.42 On 2 October 2018, Australia filed an appellee's submission in response to
the appeals by Honduras and the Dominican Republic.43
1.16. On 11-12 October 2018, 19 WTO Members – Argentina, Brazil, Canada, China,
Dominican Republic44, European Union, Indonesia, Japan, Malawi, Mexico, New Zealand, Nigeria,
Norway, Philippines, Singapore, Thailand, United States, Zambia, and Zimbabwe 45 – each filed a
third participant's submission.46 On 12 October 2018, 10 WTO Members – Chile, Guatemala, India,
Korea, Malaysia, Peru, Russia n Federation (Russia), South Africa, Chinese Taipei, and Uruguay –
notified their intention to appear at the oral hearing as third parti cipants.47 Between 15 October
2018 and 19 November 2019, six WTO Members – Ecuador, Oman, Nicaragua, Panama, Turkey, and
Ukraine – notified their intention to appear at the oral hearing as third participants.48
1.17. On 13 July 2018, after Honduras filed its appeal49 but before the Dominican Republic did50,
the Appellate Body received a joint communication from Australia, Honduras, and the
Dominican Republic (the participants) in relation to these appellate proceedings. This
communication was also sent to Cuba and Indonesia and to all the third parties in the four disputes
before the Panel. In their joint communication, the parti cipants requested that, in the event of
multiple appeals, the Appellate Body allow Australia to file a single Notice of Other Appeal, a single
other appellant's submission, and a single appellee's submission in relation to all appeals. The
participants also requested the Appellate Body to consider adopting a schedule for the filing of
appellees' and third participants' submissions that would give all participants and third participants
sufficient time to review and respond to possible appeals from any of the participants. On 16 July
2018, the Chair of the Appellate Body, on behalf of the Appellate Body Division that would hear the
appeals51 (the Division), invited Cuba, Indonesia, and the third parties in the four disputes before
the Panel to comment on the joint request. Brazil, Canada, China, Cuba, Indonesia, Japan, Korea,
Mexico, New Zealand, and Russia submitted comments. None of them objected to the joint proposal
by the participants. No comments were received from the other third parties.
1.18. On 23 July 2018, the Chair of the Appellate Body issued a Procedural Ruling on behalf of the
Division. Given the envisaged consolidation of Honduras' appeal with any other appeals that would
be filed by the other three complainants, the Division agreed to modify the filing of a Notice of Other
Appeal, other appellant's submission, appellees' submissions, and third participants' submissions in

39 WT/DS435/23.
40 WT/AB/WP/6, 16 August 2010.
41 WT/DS441/23.
42 Cuba, Indonesia, and Australia did not appeal the Panel Reports in DS458 and DS467. Nor did
Australia file other appeals with respect to the Panel Reports in DS435 and DS441.
43 Pursuant to Rule 22 of the Working Procedures.
44 In WT/DS435.
45 Zimbabwe filed its third participant's submission on 11 October 2018.
46 Pursuant to Rule 24(1) of the Working Procedures.
47 Pursuant to Rule 24(2) of the Working Procedures.
48 Pursuant to Rule 24(4) of the Working Procedures. On 6 and 7 June 2019, respectively, Ukraine and
Panama submitted their delegation lists for the first oral hearing to the Appellate Body Secretariat and the
participants and third participants in these disputes. On 14 and 19 November 2019, respectively, Panama and
Oman submitted their delegation lists for the second oral hearing to the Appellate Body Secretariat and the
participants and third participants in these disputes. For purposes of these appellate proceedings, we have
interpreted Oman's, Panama's, and Ukraine's actions to be notifications expressing their intention to attend the
oral hearings pursuant to Rule 24(4) of the Working Procedures.
49 In WT/DS435/23.
50 In WT/DS441/23.
51 At the time of the issuance of this Procedural Ruling, the composition of the Division hearing the
appeal in DS435 had not yet been announced. The composition of the Division was announced only after the
Dominican Republic filed its Notice of Appeal in DS441.
WT/DS435/AB/R • WT/DS441/AB/R

order to ensure fairness and orderly procedure in the conduct of these appeals. Moreover, in order
to safeguard Australia's due process rights, which would risk being affected if a complaining party
were to file its Notice of Appeal and appellant's submission after having seen Australia's
first appellee's submission, the Division authorized Australia to file any Notice of Other Appeal and
other appellant's submission in a single document no later than by 3 September 2018. In addition,
the Division set a single deadli ne for appellees' submissions in these disputes for 2 October 2018.
With respect to the extension of the deadline for filing third participants' submissions, the Division
set a single deadline for third participants' submissions in these disputes for 12 October 2018.52
1.19. Between 25 July 2018 and 20 May 2019, the Appellate Body received eight amici curiae
submissions in connection with these appellate proceedings. On 25 July 2018, the Appellate Body
received an amicus curiae submission from the Consumer Choice Center. On 30 July 2018, the
Appellate Body received an amicus curiae submission from Bienvenido S. Oplas, Jr., president of
Minimal Government Thinkers. On 7 August 2018, the Appellate Body received two amici curiae
submissions: from Sinclair Davidson, professor of institutional economics at the Blockchain
Innovation Hub in Australia; and from the Consumer Packaging Manufacturers Alliance (CPMA). On
8 August 2018, the Appellate Body received a further two amici curiae submissions: from the
Australian Taxpayers' Alliance; and from the Taxpayers Protection Alliance (TPA). On 28 November
2018, the Appellate Body received a joint amicus curiae submission from the UICC and CCA. Finally,
on 10 January 2019, the Appellate Body received an amicus curiae submission from the
International Trademark Association (INTA).53
1.20. By letter dated 17 September 2018, the Chair of the Appellate Body notified the Chair of the
DSB that the Appellate Body would not be able to circulate its Report s within the 60 -day period
pursuant to Article 17.5 of the DSU, or within the 90 -day period pursuant to the same provision,
due to the exceptional size and complexity of these consolidated proceedings, the backlog of appeals
pending with the Appellate Body at present, and the overlap in the composition of all divisions
resulting in part from the reduced number of Appellate Body Members.54 On 31 March 2020, the
Presiding Member of the Division notified the Chair of the DSB that the Appellate Body Report in
these proceedings would be circulated to WTO Members by early June 2020. The Presiding Member
indicated that the Division would communicate the specific date in the weeks preceding such date
of circulation.55 On 4 June 2020, the Presiding Member of the Division notified the Chair of the DSB
that the Appellate Body Report in these proceedings would be circulated to WTO Members no later
than 9 June 2020.56
1.21. The two hearings in these appellate proceedings were held on 11-14 June 2019 and
19-22 November 2019, respectively. At both hearings, the participants and third participants made
oral statements and responded to questions posed by the Members of the Division. At the request
of Honduras, the Division allowed a member of Honduras' delegation to participate in the reading of
the closing statements at the second hearing via video conference.
1.22. By letter dated 16 August 2019, Australia requested the Division to provide guidance on the
presence and role of individuals that Australia referred to as "fact experts", at the second hearing of
these appellate proceedings. Australia request ed that the Division either: (i) exclude, from the
second hearing, individuals who appeared as "fact experts" before the Panel; or (ii) issue clear
guidance concerning the role of these individuals at the second hearing. On 20 August 2019, the
Division invited the Dominican Republic, Honduras , and the third participants to comment on
Australia's letter by 23 August 2019. The Dominican Republic, Honduras, Canada, the
European Union, and the United States submitted comments on 23 August 2019. China submitted
its comments on 26 August 2019.
1.23. By letter dated 30 August 2019, the Division reiterated the Presiding Member's clarification,
provided at the first hearing, that each Member has the right to determine who will form part of its

52 Procedural Ruling of 23 July 2018.
53 Copies of these submissions were not simultaneously provided to the participants and
third participants in these appellate proceedings. Therefore, as a matter of courtesy, the Appellate Body
forwarded electronic copies of these eight amici curiae submissions to the participants and third participants.
However, the Appellate Body emphasized that this transmission was without prejudice to the legal status or to
any action the Appellate Body would take in connection with these submissions.
54 WT/DS435/24 and WT/DS441/25.
55 WT/DS435/25 and WT/DS441/26.
56 WT/DS435/26 and WT/DS441/27.
WT/DS435/AB/R • WT/DS441/AB/R

delegation and who speaks on its behalf. The Division added that, when responding to questions
from the Division, every individual member of a delegation responds as an advocate representing
that participant. Moreo ver, as all individuals included in participants' delegations at the
second hearing would be present as representatives of their governments, they would be subject to
the provisions of the DSU, including the scope of appellate review as delineated by Article 17.6 of
the DSU. In this regard, the Members of the Division indicated th at they would be proactive in
disciplining participants' responses to questions and would intervene whenever they deemed it
necessary. The Division provided further guidance as to the conduct of the second hearing at the
start of that hearing.
1.24. By letter da ted 28 September 2018, the participants and third participants were informed
that, in accordance with Rule 15 of the Working Procedures, the Chair of the Appellate Body had
notified the Chair of the DSB of the Appellate Body's decision to authorize Appella te Body Member
Mr Shree Baboo Chekitan Servansing to complete the disposition of these appeals, to which he had
been assigned before the expiry of his term of office. On 10 December 2019, the participants and
third participants were informed that, in accor dance with Rule 15 of the Working Procedures, the
Chair of the Appellate Body had informed the Chair of the DSB that Messrs Thomas R. Graham and
Ujal Singh Bhatia would complete the disposition of these appeals, to which they had been assigned
before the expiry of their second terms of office, and "for which hearings ha[d] been completed".57
2 ARGUMENTS OF THE PARTICIPANTS
2.1. The claims and arguments of the participants are reflected in the executive summaries of their
written submissions provided to the Appella te Body.58 The Notice of Appeal and the executive
summaries of the participants' claims and arguments are contained in Annexes A and B of the
Addendum to these Reports, WT/DS435/AB/R/Add.1, WT/DS441/AB/R/Add.1.
3 ARGUMENTS OF THE THIRD PARTICIPANTS
3.1. The arguments of the third participants that filed a written submission 59 are reflected in the
executive summaries of their written submissions provided to the Appellate Body60 and are contained
in Annex C of the Addendum to these Reports, WT/DS435/AB/R/Add.1, WT/DS441/AB/R/Add.1.
4 ISSUES RAISED IN THESE APPEALS
4.1. The following issues are raised in these appeals:
a. whether the Panel erred in finding that the complainants had not demonstrated that the
TPP measures are more trade -restrictive than necess ary to fulfil a legitimate objective,
within the meaning of Article 2.2 of the TBT Agreement, specifically:
i. with respect to the contribution of the TPP measures to Australia's objective, whether
the Panel erred in finding that the TPP measures, in combination with other
tobacco-control measures maintained by Australia, are apt to, and do in fact,
contribute to Australia's objective of reducing the use of, and exposure to, tobacco
products. In this regard:
• whether the Panel erred in its application of Article 2.2; and
• whether the Panel failed to make an objective assessment of the facts of the case
as provided for under Article 11 of the DSU, in its assessment of the evidence
pertaining to the contribution of the TPP measures to Australia's objective;

57 WT/DSB/79.
58 Pursuant to the Appellate Body's communication on "Executive Summaries of Written Submissions in
Appellate Proceedings" and "Guidelines in Respect of Executive Summaries of Written Submissions in
Appellate Proceedings" (WT/AB/23, 11 March 2015).
59 See para. 1.16. above.
60 Pursuant to the Appellate Body's communication on "Executive Summaries of Written Submissions in
Appellate Proceedings" and "Guidelines in Respect of Executive Summaries of Written Submissions in
Appellate Proceedings" (WT/AB/23, 11 March 2015).
WT/DS435/AB/R • WT/DS441/AB/R

ii. with respect to the trade restrictiveness of the TPP measures, whether the Panel erred
in finding that: (i) a reduction in the opportunity to differentiate among tobacco
products on the basis of brands d id not demonstrate the trade restri ctiveness of the
TPP measures; and (ii) the TPP measures did not affect the overall value of imported
tobacco products. In this regard:
• whether the Panel erred in its interpretation and application of Article 2.2; and
• whether the Panel failed to make an objective assessment of the facts of the case
as provided for under Article 11 of the DSU , in finding that the part of the
downward substitution that occurred after the implementation of the TPP measures
was attributable to the overall reduction in cigarette consumption caused by the
TPP measures (Dominican Republic only);
iii. with respect to the proposed alternative measures , whether the Panel erred in its
findings concerning two of these alternatives, namely, an increase in the minimum
legal purchasing age (MLPA) and an increase in taxation. In this regard:
• whether the Panel erred in its interpretation and application of Article 2.2 in finding
that the complainants had not demonstrated that the two proposed alternative
measures are less trade-restrictive than the TPP measures;
• whether the Panel erred in its interpretation and application of Article 2.2 in finding
that, in the particular context of tobacco control and the regulatory efforts of
Australia to improve public healt h, none of the alternatives proposed by the
complainants would contribute to Australia's objective to an equivalent degree as
would the TPP measures; and
• whether the Panel failed to make an objective assessment of the matter , as
provided for under Article 11 of the DSU (Dominican Republic only);
b. whether the Panel erred in finding that the complainants had not demonstrated that the
TPP measures are inconsistent with Article 16.1 of the TRIPS Agreement, specifically:
i. whether the Panel erred in its interpretation and application of Article 16.1; and
ii. whether the Panel failed to make an objective assessment of the matter as provided
for under Article 11 of the DSU; and
c. whether the Panel erred in finding that the complainants had not demonstrated that the
TPP measures are inconsistent with Australia's obligations under Article 20 of the
TRIPS Agreement, specifically:
i. whether the Panel erred in its interpretation of the word "unjustifiably" in Article 20;
ii. whether the Panel erred in its application of Article 20; and
iii. whether the Panel acted inconsistently with Articles 7.1 and 11 of the DSU by failing
to address the Dominican Republic's claim regarding cigarette sticks
(Dominican Republic only).
5 RELEVANT BACKGROUND INFORMATION
5.1 The products at issue
5.1. The products at issue in these disputes are tobacco products. The term "tobacco product" is
defined in the Tobacco Plain Packaging Act 2011 (TPP Act) to mean "processed tobacco, or any
product that contains tobacco" that is "manufactured to be used for smoking, sucking, chewing or
snuffing" and "not included in the Australian Register of Therapeutic Goods maintained under the
WT/DS435/AB/R • WT/DS441/AB/R

Therapeutic Goods Act 1989 ".61 This definition encompasses not only cigarettes, but also
"non-cigarette" products, such as cigars, little cigars (also known as cigarillos), and bidis.62
5.2. Before the Panel, Australia indicated that the total volumes of cigarette and cigar imports had
increased steadily following the introduction of tobacco plain packaging. This increase in imports of
tobacco products into Australia was mostly attributable to domestic producers moving production
out of Australia and shifting production offshore.63 The shifting of production offshore was a response
to the Australian government's reduced-fire-risk requirements introduced in 2010, which negatively
impacted local manufacturing.64 The Panel observed that "imports will soon represent the entirety
of Australia's tobacco product market, with domestic production bei ng phased out ."65 Thus,
Australia's domestic market for tobacco products "is supplied entirely through imported products".66
5.2 The measures at issue
5.2.1 Overview
5.3. The legislative process in Australia, which led to the adoption of the measures at issue in these
disputes, started in 2008 with the establishment of the National Preventative Health Taskforce
(NPHT). The NPHT was responsible for developing a "National Pre ventive Health Strategy", to
"provide a blueprint for tackling the burden of chronic disease currently caused by obesity, tobacco,
and excessive consumption of alcohol".67 In 2009, the NPHT released its final report.68 With respect
to tobacco control, this r eport identified 11 "key action areas", including: (i) making tobacco
products significantly more expensive; (ii) ending all remaining forms of advertising and promotion
of tobacco products (which included a specific action to eliminate promotion of tobacc o products
through design of packaging); and (iii) eliminating exposure to second -hand smoke in public
places.69

61 Panel Report, para. 2.12 (quoting Tobacco Plain Packaging Act 2011 (Cth) (TPP Act) (Panel Exhibits
AUS-1, JE-1), Section 4(1)). In footnote 189 thereto, the Panel noted that the definitions stated in
paragraph 2.12 are also applicable to the TPP Regulations, in addition to its own list of definitions. (Tobacco
Plain Packaging Regulations 2011 (Cth), as amended by the Tobacco Plain Packaging Amendment Regulation
2012 (No. 1) (Cth) (TPP Regulations) (Panel Exhibits AUS-3, JE-2), Note to Regulation 1.1.3; TPP Bill
Explanatory Memorandum (Panel Exhibits AUS-2, JE-7), p. 9; FCTC (Panel Exhibits AUS-44, JE-19),
Article 1(f)).
62 Panel Report, para. 2.12 (quoting TPP Bill Explanatory Memorandum (Panel Exhibits AUS-2, JE-7),
p. 9). Other covered "non-cigarette" products include roll-your-own (RYO) tobacco, kreteks, and dissolvable
tobacco products, such as tablets containing tobacco for sucking. (Ibid.) Some of these types of
tobacco products (such as cigarettes, cigars, and bidis), and their specific packaging, are also defined in the
TPP Act and TPP Regulations. (Panel Report, fn 190 to para. 2.12 (referring to TPP Act (Panel Exhibits AUS-1,
JE-1), Section 4(1); TPP Regulations (Panel Exhibits AUS-3, JE-2), Regulation 1.1.3))
63 Australia's response to Panel question No. 5, paras. 29-30.
64 Panel Report, para. 7.1217 (referring to Dominican Republic's second written submission to the Panel,
para. 948; response to Panel question No. 5, paras. 36-39; Australia's response to Panel question No. 117,
para. 125; HoustonKemp, Competition and Trade for Tobacco Products in Australia (9 March 2015) (Panel
Exhibit AUS-19 (SCI)), pp. 27 and 50).
65 Panel Report paras. 7.420 and 7.1145. See also paras. 7.1203-7.1204.
66 Panel Report, para. 7.1196.
67 Panel Report, para. 2.6 (quoting Australian Government Preventative Health Taskforce, "Terms of
Reference", available at http://www.preventativehealth.org.au/internet/preventativehealth/publishing.nsf/
Content/terms-of-reference-1lp (accessed 7 October 2014) (Panel Exhibits HND-2, DOM-50)).
68 Panel Report, para. 2.7 (referring to National Preventative Health Taskforce, Australia: The Healthiest
Country by 2020 – National Preventative Health Strategy – The Roadmap for Action, Australian Government
(30 June 2009) (NPHT – The Roadmap for Action) (Panel Exhibits AUS-67, JE-14)).
69 Panel Report, para. 2.7 (referring to NPHT – The Roadmap for Action (Panel Exhibits AUS-67, JE-14),
pp. 174 and 182).
WT/DS435/AB/R • WT/DS441/AB/R

5.4. In addressing these key action areas, Australia maintains a series of tobacco -control-related
measures, most of which are not at issue in these disputes.70 The Panel identified the measures at
issue in these disputes as comprising the following:
a. the Tobacco Plain Packaging Act 2011 (Cth)71 (TPP Act);
b. the Tobacco Plain Packaging Regulations 2011 (Cth), as amended by the Tobacco Plain
Packaging Amendment Regulation 2012 (No. 1) (Cth)72 (TPP Regulations)73; and
c. the Trade Marks Amendment (Tobacco Plain Packaging) Act 2011 (Cth)74 (TMA Act).75
5.5. The Panel used the term "TPP measures" to refer to these instruments taken together. 76
Tobacco products manufactured or packaged in Australia for domestic consumption were required
to comply with the TPP measures from 1 October 2012. As of 1 December 2012, all tobacco products
sold, offered for sale, or otherwise supplied in Australia were required to comply with the
TPP measures.77
5.6. As the Panel noted, the TPP Act is, by its own terms, "[a]n Act to discourage the use of tobacco
products, and for related purposes". 78 Pursuant to Section 3 of the TPP Act, this Act regulates the

70 Section 2.2 of the Panel Report describes certain of Australia's tobacco-related measures that are not
at issue in these disputes, but that are relevant to an understanding of the regulatory context within which the
measures at issue operate.
71 TPP Act (Panel Exhibits AUS-1, JE-1).
72 TPP Regulations (Panel Exhibits AUS-3, JE-2). The amendment to the TPP Regulations was adopted
on 8 March 2012. The "purpose of the regulation is to amend the Principal Regulations to expand their
application to non-cigarette tobacco products and to prescribe specific requirements for the retail packaging
and appearance of non-cigarette tobacco products". (Panel Report, fn 185 to para. 2.9 (quoting Explanatory
Statement, Tobacco Plain Packaging Amendment Regulation 2012 (No. 1) (Cth) (TPPA Regulation Explanatory
Statement) (Panel Exhibit JE-22), p. 1))
73 Section 109 of the TPP Act provides that "[t]he Governor-General may make regulations prescribing
matters: (a) required or permitted by this Act to be prescribed; or (b) necessary or convenient to be prescribed
for carrying out or giving effect to this Act". The TPP Regulations were made pursuant to this provision.
(Panel Report, para. 2.14 (quoting TPP Act (Panel Exhibits AUS-1, JE-1), Section 109(1); referring to TPPA
Regulation Explanatory Statement (Panel Exhibit JE-22), p. 2))
74 The Trade Marks Amendment (Tobacco Plain Packaging) Act 2011 (Cth) (TMA Act) (Panel
Exhibits AUS-4, JE-3). The TMA Act amends the Trade Marks Act 1995 (Cth) by inserting a new provision,
Section 231A. According to the TMA Bill Explanatory Memorandum, the amendment was introduced so that, if
necessary, the Australian government could quickly remedy any unintended interaction between the TPP Act
and the Trade Marks Act 1995. The objective of any such exercise of power under the TMA Act would be to
ensure that applicants for trade mark registration and registered owners of trade marks were not
disadvantaged by the practical operation of the TPP Act. Regulations made under new Section 231A were not
intended to have any effect on the operation of the Trade Marks Act in relation to goods or services not
governed by the TPP Act. (Panel Report, paras. 2.45-2.47 (referring to TMA Act (Panel Exhibits AUS-4, JE-3);
quoting Explanatory Memorandum, Trade Marks Amendment (Tobacco Plain Packaging) Bill 2011 (Cth) (TMA
Bill Explanatory Memorandum) (Panel Exhibits AUS-5, JE-5), p. 1))
75 Panel Report, paras. 2.1-2.4.
76 An important aspect of the TPP measures is that the Explanatory Memoranda accompanied the
respective Bills of Parliament before they were passed into law. As the Panel noted, the TPP Bill and TMA Bill
were accompanied by Explanatory Memoranda. (TPP Bill Explanatory Memorandum (Panel Exhibits AUS-2,
JE-7); TMA Bill Explanatory Memorandum (Panel Exhibits AUS-5, JE-5)) Such documents assist members of
Parliament, officials, and the public to understand the objectives and detailed operation of the clauses of a Bill.
In Australia, an Explanatory Memorandum may also serve as "extrinsic material" that can be used as an aid to
judicial interpretation of Acts. (Panel Report, para. 2.13 (referring to Acts Interpretation Act 1901 (Cth) (Panel
Exhibit AUS-259), Section 15AB(2)(e); Australia's first written submission to the Panel, fn 775 to para. 601))
The TPP Regulations were accompanied by a similar document, an Explanatory Statement, which may also
serve as an extrinsic aid to judicial interpretation. (Panel Report, para. 2.13 (referring to TPPA Regulation
Explanatory Statement (Panel Exhibit JE-22)))
77 Panel Report, para. 2.10 (referring to Australia's first written submission to the Panel, para. 123;
TPP Regulations (Panel Exhibits AUS-3, JE-2), Regulation 1.1.2; TPP Act (Panel Exhibits AUS-1, JE-1),
Section 9).
78 Panel Report, para. 2.11 (quoting TPP Act (Panel Exhibits AUS-1, JE-1)).
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retail packaging and appearance of tobacco products in order to: (i) improve public health; and
(ii) give effect to certain obligations in the WHO FCTC.79
5.2.2 Requirements for the retail packaging of tobacco products
5.7. Pursuant to the TPP measures, all outer and inner surfaces of certain retail packaging of
tobacco products80 must have a matt finish .81 The TPP measures further stipulate that the outer
surfaces of these packages must be the colour Pantone 448C (drab dark brown), and that the inner
surfaces of a cigarette pack or cigarette carton must be white. The inner surface of these packages
(other than a cigarette pack or cigarette carton) must be either white or the colour of the packaging
material in its natural state. The lining of a cigarette pack must be silver -coloured foil with a white
paper backing.82 However, as the Panel noted, the colour requirements in the TPP measures do not
apply to health warnings; the text of the brand, business or company name, or variant name; or the
text of relevant legislative requirements.83
5.8. In addition, the TPP measures prohibit the appearance of trademarks 84 and marks anywhere
on the retail packaging of tobacco products, with the exception of the brand name, business or
company name, variant name, the relevant legislative requirements, and other trademarks and
marks permitted by the TPP measures.85 The TPP measures make provision for the appearance of
origin marks, calibration marks, a measurement mark and trade description, a barcode, a fire -risk
statement, a locally made product statement, the name and address of the person who packed the
product or on whose behalf it was packed, and a consumer contact number.86 These markings must
not obscure any relevant legislative requirement, or constitute or provide access to tobacco
advertising and promotion.87
5.9. Section 21 of the TPP Act, operating together with the TPP Regulations, prescribes the
requirements for the manner in which the brand, business or company, or variant names for tobacco
products may appear on the retail packaging of a tobacco product. 88 With respect to cigarette
packaging, any of these names must be printed in the Lucida Sans typeface in fonts no larger than

79 Panel Report, paras. 2.11 and 2.15 (referring to TPP Act (Panel Exhibits AUS-1, JE-1), Section 3). The
TPP Act identifies certain safety or information standards that prevail to the extent of any inconsistency
between them and the TPP Act. The Act also provides that it "does not exclude or limit the operation of a
relevant tobacco law of a State or Territory that is capable of operating concurrently with this Act".
(Panel Report, para. 2.43 (referring to TPP Act (Panel Exhibits AUS-1, JE-1), Sections 10-11))
80 The TPP measures contain specific definitions for certain types of tobacco packaging, such as
"cigarette pack", "cigarette carton", "cigar tube", and "pouch". A cigarette pack is "any container for retail sale
in which cigarettes are directly placed". Reference to an outer surface of a cigarette pack (such as its "front
outer surface") "is a reference to all of that outer surface, including the part of that outer surface that forms
part of the flip-top lid". Further, the "inside lip" of a cigarette pack "means the part of the outer surfaces of the
pack that is obscured when the flip-top lid is closed". A cigarette carton is "any container for retail sale that
contains smaller containers in which cigarettes are directly placed". Additionally, "[i]f a cigarette carton has
one or more flaps with surfaces that become visible only when the carton is opened, those surfaces are taken
to be inner surfaces of the carton". A cigar tube means "a tube for packaging one cigar". A pouch means
"primary packaging" that "is made from flexible material" and "takes the form of a rectangular pocket with a
flap that covers the opening". (Panel Report, fn 202 to para. 2.17 (quoting TPP Act (Panel Exhibits AUS-1,
JE-1), Sections 4(1), 6(1)-(2); TPP Regulations (Panel Exhibits AUS-3, JE-2), Regulation 1.1.3))
81 Panel Report, para. 2.23.
82 Panel Report, para. 2.23 (referring to TPP Act (Panel Exhibits AUS-1, JE-1), Section 19;
TPP Regulations (Panel Exhibits AUS-3, JE-2), Regulation 2.2.1).
83 Panel Report, para. 2.23 (referring to TPP Act (Panel Exhibits AUS-1, JE-1), Section 19(3)).
84 Section 17 of the Trade Marks Act 1995 (Cth) (TM Act) defines a trademark as "a sign used, or
intended to be used, to distinguish goods or services dealt with or provided in the course of trade by a person
from goods or services so dealt with or provided by another person". The TM Act defines a "sign" as including
"any letter, word, name, signature, numeral, device, brand, heading, label, ticket, aspect of packaging, shape,
colour, sound or scent", or any combination thereof. (Panel Report, paras. 2.77-2.78 (quoting TM Act
(Panel Exhibit JE-6), Sections 6 and 17))
85 Panel Report, para. 2.24 (referring to TPP Act (Panel Exhibits AUS-1, JE-1), Section 20).
86 Panel Report, para. 2.24 (referring to TPP Regulations (Panel Exhibits AUS-3, JE-2),
Regulations 2.3.1(1)-2.3.1(2) and 2.3.8(1)).
87 Panel Report, para. 2.24 (referring to TPP Regulations (Panel Exhibits AUS-3, JE-2),
Regulation 2.3.1(5)).
88 Panel Report, para. 2.25 (referring to TPP Act (Panel Exhibits AUS-1, JE-1)). Section 21(5) of the
TPP Act stipulates that Section 21 does not apply to wrappers, which are governed by Section 22.
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14-point size (for a brand , business, or company name) or 10 -point size (for a variant name).
The font must be normal weighted and in the colour Pantone Cool Gray 2C. In addition, the
first letter in each word must be capitalised. No other upper case letters may be used.89 With respect
to re tail packaging other than retail packaging of cigarettes, names must meet the same
specifications, but can be printed on the packaging or on an adhesive label fixed to the packaging.90
Such adhesive label must be in the colour Pantone 448C (drab dark brown) , be no larger than
reasonably necessary to print the permitted names, be fastened firmly to the retail packaging so as
not to be easily removable, and not obscure any relevant legislative requirement.91
5.10. Importantly, the requirements set out in the TPP Act and the TPP Regulations operate in
conjunction with other legislative requirements that are not challenged in these disputes, including
graphic health warnings (GHWs).92
5.2.3 Requirements for the appearance of tobacco products
5.11. In addition to regulating the appea rance of the retail packaging of tobacco products, the
TPP measures regulate various elements affecting the appearance of tobacco products themselves.
Section 26 of the TPP Act provides that no trademark or mark may appear anywhere on a tobacco
product, other than as permitted by the TPP Regulations. Section 27 of the TPP Act provides that
the TPP Regulations may prescribe additional requirements in relation to the appearance of tobacco
products to further the objects of the TPP Act.93
5.12. Pursuant to the TPP Regulations, the paper casing and lowered permeability band (if any) of
cigarettes must be white, or white with an imitation cork tip.94 No trademark may appear anywhere
on a cigarette. However, a cigarette may be marked with an alphanumeric code, which may appear
only once on the cigarette. The alphanumeric code must not: (i) constitute, or provide access to,
tobacco advertising and promotion; (ii) be "false, misleading, deceptive or likely to create an
erroneous impression about the cigarette's characteristi cs, health effects, hazards or emissions";
(iii) "directly or indirectly create a false impression that a particular tobacco product is less harmful
than other tobacco products"; (iv) "represent, or be linked or related in any way to, the emission
yields of the cigarette"; or (v) "represent, or be related in any way to, the brand or variant name of
the cigarette".95
5.13. With respect to cigars, the TPP Regulations prescribe that a single band may appear around
the circumference of a cigar in the colour Pantone 44 8C (drab dark brown). The band may feature
the brand, business or company name, and variant name of the cigar ; the name of the country in
which the cigar was made or produced; and an alphanumeric code. These marks must appear only
once on the band. The bra nd, business or company name , and variant name must be placed
horizontally along the length of the band so that they run around the circumference of the cigar.
Similar restrictions to those applied to the alphanumeric code that appears on a cigarette also apply
to the alphanumeric code that appears on a cigar. In addition, the band of a cigar may contain a
covert mark, not visible to the naked eye, that does not provide access to tobacco advertising and
promotion.96

89 Panel Report, para. 2.25 and fn 231 thereto (referring to TPP Regulations (Panel Exhibits AUS-3,
JE-2), Regulation 2.4.1).
90 Panel Report, para. 2.25 (referring to TPP Regulations (Panel Exhibits AUS-3, JE-2),
Regulation 2.4.2(2)).
91 Panel Report, para. 2.25 (referring to TPP Regulations (Panel Exhibits AUS-3, JE-2),
Regulation 2.4.2(3)).
92 Panel Report, para. 2.32.
93 Panel Report, para. 2.33 (referring to TPP Act (Panel Exhibits AUS-1, JE-1), Sections 26
and 27(1)(b)).
94 TPP Regulations (Panel Exhibits AUS-3, JE-2), Regulation 3.1.1.
95 Panel Report, para. 2.34 (quoting TPP Regulations (Panel Exhibits AUS-3, JE-2), Regulation 3.1.2).
96 Panel Report, paras. 2.35-2.37 (referring to TPP Regulations (Panel Exhibits AUS-3, JE-2),
Regulation 3.2.1). A covert mark is a type of origin mark, similar to the alphanumeric code.
WT/DS435/AB/R • WT/DS441/AB/R

6 ANALYSIS OF THE APPELLATE BODY
6.1. Honduras ap peals certain aspects of the Panel's findings under Article 2.2 of the
TBT Agreement and Articles 16.1 and 20 of the TRIPS Agreement.97 The Dominican Republic also
appeals certain aspects of the Panel's findings under Article 2.2 of the TBT Agreement and Article 20
of the TRIPS Agreement.98 We begin by addressing the appellants' claims that the Panel erred in its
analysis under Article 2.2 of the TBT Agreement. Next, we discuss the appellants' claims of error
relating to the Panel's interpretation and application of Articles 16.1 and 20 of the TRIPS Agreement.
6.1 Article 2.2 of the TBT Agreement
6.1.1 Overview
6.2. Honduras and the Dominican Republic (th e appellants) request us to reverse the Panel's
conclusion that the appellants had "not demonstrated that the TPP measures are inconsistent with
Australia's obligations under Article 2.2 of the TBT Agreement".99 Article 2.2 provides that:
Members shall ensure that technical regulations are not prepared, adopted or applied
with a view to or with the effect of creating unnecessary obstacles to international trade.
For this purpose, technical regulations shall not be more trade -restrictive tha n
necessary to fulfil a legitimate objective, taking account of the risks non-fulfilment would
create. Such legitimate objectives are, inter alia: national security requirements; the
prevention of deceptive practices; protection of human health or safety, animal or plant
life or health, or the environment. In assessing such risks, relevant elements of
consideration are, inter alia : available scientific and technical information, related
processing technology or intended end-uses of products.
6.3. For purposes of establishing that a measure is inconsistent with Article 2.2, a complainant100
must demonstrate that: (i) the measure at issue constitutes a "technical regulation" within the
meaning of the TBT Agreement101; and (ii) the measure is "more trade-restrictive than necessary to
fulfil a legitimate objective, taking account of the risks non-fulfilment would create". With respect to
the second element, the Appellate Body has said that a panel must determine the objective that the
Member seeks to achieve by means of t he technical regulation at issue and whether that objective
is "legitimate". 102 A panel must also determine whether the technical regulation is "more
trade-restrictive than necessary" to fulfil the legitimate objective. The Appellate Body has said that
the assessment of "necessity", in the context of Article 2.2, involves a "relational analysis" of the
following factors: (i) the trade restrictiveness of the technical regulation; (ii) the degree of

97 Honduras' Notice of Appeal, pp. 1-6. In its Notice of Appeal, the Dominican Republic states that it
"incorporates by reference into this appeal the claims on appeal made by Honduras". (Dominican Republic's
Notice of Appeal, para. 16) In addition, the "Introduction" section of its appellant's submission, in the context
of summarizing its claim of error under Article 20 of the TRIPS Agreement, the Dominican Republic asserts that
it "incorporates by reference into this appeal the claims on appeal, and arguments, made by Honduras."
(Dominican Republic's appellant's submission, para. 30) Furthermore, in response to questioning at the
first hearing of these appellate proceedings, the Dominican Republic confirmed that it incorporated all of
Honduras' claims and arguments on appeal. Accordingly, any reference to Honduras' claims and arguments
throughout these Reports should be understood as also including a reference to the claims and arguments of
the Dominican Republic.
98 Dominican Republic's Notice of Appeal, pp. 1-3.
99 Honduras' Notice of Appeal, p. 6 (referring to Panel Report (DS435), paras. 7.1724-7.1732 and
8.1.a); Dominican Republic's Notice of Appeal, para. 5 (quoting Panel Report (DS441), paras. 7.1732 and
8.1.b.i.).
100 The burden of proof under Article 2.2 rests on the complainant. (Appellate Body Report,
101 Annex 1.1 to the TBT Agreement defines a "technical regulation" as follows:
Document which lays down product characteristics or their related processes and production
methods, including the applicable administrative provisions, with which compliance is mandatory.
It may also include or deal exclusively with terminology, symbols, packaging, marking or
labelling requirements as they apply to a product, process or production method.
102 Appellate Body Report, US – Tuna II (Mexico), para. 314. The third sentence of Article 2.2 provides
an illustrative list of "legitimate objectives", which includes "protection of human health".
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contribution that the technical regulation makes to the achievement of a legitimate objective; and
(iii) the risks non-fulfilment would create.103
6.4. The phrase in the second sentence of Article 2.2 that "technical regulations shall not be more
trade-restrictive than necessary" implies that "some" trade restrictiveness is allowed.104 Establishing
whether a technical regulation is "more trade-restrictive than necessary" may involve a comparison
between: (i) the trade restrictiveness and the degree of contribution of the measure at issue to the
legitimate objective; and (ii) the trade restrictiveness and the degree of contribution of possible
alternative measures that are reasonably available to the legitimate objective – taking account of
the risks non -fulfilment would create. 105 However, there are certain instances when such a
comparative analysis might not be required, such as, when the measure is not trade -restrictive at
all, or when a trade -restrictive measure makes no contribution to the achievement of the relevant
legitimate objective. 106 Likewise, a comparative analysis mig ht not be required where it can be
demonstrated that, by its design, a trade -restrictive measure is incapable of contributing to the
achievement of the relevant legitimate objective.107
6.5. Before the Panel, the complainants claimed that the TPP measures are inc onsistent with
Article 2.2 because they are more trade -restrictive than necessary to fulfil a legitimate objective,
taking account of the risks non -fulfilment would create. The complainants submitted two sets of
arguments in support of their claims under Article 2.2. In their main set of arguments, the
complainants asserted that the TPP measures are not apt to contribute, and make no contribution,
to Australia's objective.108 In their alternative set of arguments, the complainants contended that,
even if the TPP measures make some contribution to Australia's objective, the TPP measures are
more trade-restrictive than necessary because "certain less trade-restrictive alternative measures
would be reasonably available to Australia to achieve an equivalent contribution to its objective,
taking account of the risks that non-fulfilment of the objective would create."109 Australia responded
to the complainants' claims by asserting that the TPP measures fall outside the scope of Article 2.2
and, to the extent tha t they do fall within the scope of this provision, the complainants failed to
make a prima facie case that they are inconsistent with Article 2.2.110
6.6. The Panel accepted that the TPP measures fall within the scope of the TBT Agreement111 and
that these measures constitute a technical regulation within the meaning of that Agreement.112 The
Panel also found that Australia had not demonstrated that the TPP measures are "in accordance with
relevant international standards" for the purpose of the second sentence of Art icle 2.5 of the

103 Appellate Body Reports, US – COOL, para. 374 (referring to Appellate Body Report, US – Tuna II
(Mexico), para. 318).
104 Appellate Body Reports, US – COOL, para. 375.
105 Appellate Body Reports, US – COOL, para. 376 (referring to Appellate Body Report, US – Tuna II
(Mexico), paras. 320-322). The Appellate Body has said that the comparison with reasonably available
alternative measures is merely a "conceptual tool" to be used for the purpose of ascertaining whether a
challenged measure is more trade-restrictive than necessary. (Appellate Body Reports, US – COOL
(Article 21.5 – Canada and Mexico), paras. 5.328, 5.334, and 5.338; US – COOL, fn 749 to para. 376;
106 Appellate Body Reports, US – COOL, fn 748 to para. 376 (referring to Appellate Body Report,
US – Tuna II (Mexico), fn 647 to para. 322).
107 In Colombia – Textiles, when addressing a defence under Article XX(a) of the GATT 1994, the
Appellate Body considered that, "[w]ith respect to the analysis of the 'design' of the measure", an initial
threshold examination should be conducted "to determine whether there is a relationship between an otherwise
GATT-inconsistent measure" and the objective it purports to achieve. The Appellate Body explained that if the
"threshold examination reveals that the measure is incapable" of contributing to the objective, then further
examination as to whether this measure is "necessary" to achieve the stated objective "would not be required".
(Appellate Body Report, Colombia – Textiles, para. 5.68) We consider this reasoning to be equally apposite to
the analysis under Article 2.2 of the TBT Agreement.
108 Panel Report, paras. 7.426, 7.437-7.438, and 7.485.
109 Panel Report, para. 7.1325. (emphasis original) In response to questioning at the second hearing,
the appellants confirmed that: (i) their main assertion before the Panel was that the TPP measures are "more
trade-restrictive than necessary" because they do not, and are not apt to, make any contribution to Australia's
objective while being trade-restrictive; and (ii) they had argued, in the alternative, that, even if the
TPP measures were found to make some contribution, they would still be "more trade-restrictive than
necessary" in light of the proposed alternative measures.
110 Panel Report, paras. 7.16 and 7.48.
111 Panel Report, para. 7.106.
112 Panel Report, para. 7.182.
WT/DS435/AB/R • WT/DS441/AB/R

TBT Agreement.113 Therefore, the Panel found that the TPP measures could not be "rebuttably
presumed not to create an unnecessary obstacle to international trade".114 These Panel findings are
not challenged on appeal.
6.7. Additionally, before the Panel, it was undisputed among the parties that "the objective of the
TPP measures relates to public health protection and more specifically to the protection of public
health in relation to the use of tobacco products in Australia." 115 However, the parties d iffered in
their understanding of the particular objective of the TPP measures.116 Following its evaluation of
the parties' arguments and the relevant evidence before it, the Panel considered "the objective
pursued by Australia by means of the TPP measures to be to improve public health by reducing the
use of, and exposure to, tobacco products".117 The Panel's finding regarding Australia's objective is
not challenged on appeal.
6.8. Having identified Australia's objective, the Panel indicated that it would "conduct a relational
analysis of different factors, including the degree to which the TPP measures contribute to this
objective, the extent to which they are trade-restrictive, and the nature of the risks of non-fulfilment
of the objective pursued and the gravity of the consequences that would arise from such
non-fulfilment".118 The Panel considered it appropriate to examine the following factors 119: (i) the
degree of contribution of the TPP measures to Australia's objective120; (ii) the trade restrictiveness
of the TPP measures121; (iii) the nature and gravity of the "risks of non -fulfilment" within the
meaning of the second sentence of Article 2.2 of the TBT Agreement122; and (iv) whether any less
trade-restrictive alternative measures capable of making an equivalent contri bution are reasonably
available to Australia.123
6.9. The Panel found that:
a. The complainants had failed to demonstrate that the TPP measures are not apt to make a
contribution to Australia's objective of improving public health by reducing the use of, and
exposure to, tobacco products124;
b. The evidence before the Panel, taken in its totality, supported the view that the
TPP measures, in combination with other tobacco -control measures maintained by
Australia (including the enlarged GHWs introduced simultaneously with TPP), are apt to,
and do in fact, contribute to Australia's objective of reducing the use of, and exposure to,
tobacco products125;
c. The TPP measures are trade -restrictive, insofar as, by reducing the use of tobacco
products, they reduce the volume of imported tobacco products on the Australian market,
and thereby have a "limiting effect" on trade126;
d. While it is plausible that the TPP measures may also, over time, affect the overall value of
tobacco imports, the evidence before the Panel did not show this to have been the case
yet. The Panel was also not persuaded that the complainants had demonstrated that the
TPP measures impose conditions on the sale of tobacco products in Australia or compliance
costs of such magnitude that they would amount to a limiting effect on trade127;

113 Panel Report, para. 7.397.
114 Panel Report, para. 7.402.
115 Panel Report, para. 7.213.
116 Panel Report, para. 7.214.
117 Panel Report, para. 7.232. See also ibid., paras. 7.243, 7.246, 7.251, and 7.495.
118 Panel Report, para. 7.419.
119 Panel Report, paras. 7.420-7.422.
120 Panel Report, section 7.2.5.3.
121 Panel Report, section 7.2.5.4.
122 Panel Report, section 7.2.5.5.
123 Panel Report, section 7.2.5.6.
124 Panel Report, para. 7.1025
125 Panel Report, paras. 7.1025 and 7.1043.
126 Panel Report, paras. 7.1208 and 7.1255.
127 Panel Report, para. 7.1255.
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e. The risk that non -fulfilment of the objective of the TPP measures would create is that
public health would not be improved as the use of, and exposure to, tobacco products
would not be reduced. Such public health consequences of not fulfilling this objective are
particularly grave128; and
f. The complainants had not demonstrated that any of the four proposed alternative
measures is a less trade-restrictive alternative measure that is reasonably available to
Australia that would make a contribution to the objective equivalent to that of the
TPP measures129, nor had Honduras or the Dominican Republic established that the
"cumulative" appl ication of these alternatives would constitute a less trade -restrictive
alternative.130
6.10. Based on the foregoing, the Panel arrived at its overall conclusion that the complainants had
not demonstrated that the TPP measures are more trade -restrictive than neces sary to fulfil a
legitimate objective, taking account of the risks non-fulfilment would create, within the meaning of
Article 2.2.131
6.11. On appeal, the appellants claim that the Panel's intermediate and overall conclusions under
Article 2.2 of the TBT Agreement should be reversed, because the Panel erred in its findings with
respect to: (i) the contribution by the TPP measures to Australia's legitimate objective; (ii) the
trade-restrictive nature of the TPP measures; and (iii) the availability of less trade -restrictive
alternative measures that provide an equivalent contribution to Australia's legitimate objective. In
addition, the appellants claim that the Panel failed to make an objective assessment of the matter,
as required under Article 11 of the DSU, with r espect to all the challenged aspects of its findings
under Article 2.2 of the TBT Agreement.132 We address the appellants' claims of error pertaining to
each aspect of the Panel's analysis in turn. In doing so, we bear in mind that these aspects of the
Panel's analysis relate to distinct but interrelated elements of the single legal standard applicable
under Article 2.2, described in paragraphs 6.3. -6.4. above.
6.1.2 The contribution of the TPP measures to Australia's objective
6.12. Honduras argues that, while the Panel set out the correct legal standard under Article 2.2 of
the TBT Agreement, the Panel "erred in law as it failed to apply this legal standard to the facts of
the case" in making its findings on the degree of contribution of the TPP measures to Australia's
objective.133 However, the majority of the a ppellants' claims of error relating to this aspect of the
Panel's analysis challenge the Panel's objectivity in its assessment of the facts of the case, with the
appellants arguing that the Panel failed in its duty under Article 11 of the DSU.134 Australia requests
us to reject the claim under Article 2.2 of the TBT Agreement and the claims under Article 11 of the
DSU in their entirety.135
6.13. In order to situate the appellants' claims in their proper context, we begin by providing a brief
background to the Panel's analysis and findings on the degree of contribution of the TPP measures
to Australia's objective. Next, we address Honduras' claim that the Panel erred in applying Article 2.2
of the TBT Agreement to the facts of this case. Thereafter, we introduce the appellants' claims under
Article 11 of the DSU, setting out the order of analysis of these claims. This is followed by a
discussion of the claims of error raised by the appellants under Article 11 of the DSU.

128 Panel Report, para. 7.1322.
129 Panel Report, paras. 7.1471, 7.1545, 7.1624, and 7.1716.
130 Panel Report, paras. 7.1717-7.1723.
131 Panel Report, para. 7.1732.
132 Honduras' Notice of Appeal, pp. 3-6; Dominican Republic's Notice of Appeal, pp. 1-3.
134 Honduras' appellant's submission, paras. 695-1080 and 1082-1086; Honduras' appellant's
submission, paras. 32-1216 and 1224-1243.
135 Australia's appellee's submission, paras. 355 and 915.
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6.1.2.1 Background to the Panel's analysis and findings o n the contribution of the
TPP measures to Australia's objective
6.14. Before the Panel, Honduras argued that the TPP measures make no contribution to Australia's
objective, nor are they apt to do so.136 The Dominican Republic contended that well-accepted axioms
of social and medical science confirm that the TPP measures will not be effective in achieving
Australia's stated goals.137 The Dominican Republic also argued that, at this stage, evidence of actual
operation of the TPP measures is far more valuable than mere expectations.138 Australia argued that
the TPP measures improve public health by impacting the three mechanisms identified in the
TPP Act, namely: (i) reducing the attractiveness of tobacco packaging; (ii) reducing positive
perceptions of taste; and (iii) reducing positive perceptions of smokers.139 Australia argued further
that, with regard to the nature of the objective of the TPP measures, their characteristics as revealed
by their design and structure, and the nature, quantity, and quality of evidence available, the Panel
should determine the measure's degree of contribution in qualitative terms.140
6.15. The Panel sought to determine the degree to which the TPP measures, "as written and applied,
contribute, if at all, to Australia's legitimate objective of improving public health by reducing the use
of, and exposure to, tobacco products".141 Although the Panel conducted its analysis in several steps,
it emphasized that its overall assessment would "be based on the entirety of the relevant evidence,
taken together".142 The Panel indicated that it would assess the evidence before it on the design,
structure, and intended operation of the TPP measures, before addressing the evidence relating to
their actual application. In carrying out its analysis, the Panel considered th at it had a duty to
examine all the evidence before it and to "evaluate the relevance and probative force of each piece
thereof".143 Of particular relevance to how the Panel approached its analysis was
Australia's indication that the TPP measures are intended to contribute to Australia's objectives in
the following manner:
a. Tobacco plain packaging is intended to: (i) reduce the appeal of tobacco products to
consumers; (ii) increase the effectiveness of the health warnings; and (iii) reduce the
ability of the p ackaging to mislead consumers about the harmful effects of smoking.
Australia referred to these processes as the TPP mechanisms, as did the Panel.144
b. If the TPP measures operate as intended upon any one or any combination of the above
three mechanisms, then Australian consumers are expected to be discouraged from taking
up smoking (initiation) or resuming smoking (relapse), and to be encouraged to stop
smoking (cessation) and reduce exposure to second -hand smoke. The Panel referred to
initiation, relapse, and cessation as, more generally, smoking behaviours relating to the
use of tobacco products.145

136 Panel Report, para. 7.426.
137 Panel Report, para. 7.437.
138 Panel Report, para. 7.438. We take note of a tension in the appellants' claims of error on appeal.
With respect to the Panel's assessment of the contribution of the TPP measures to Australia's objective, the
appellants claim that the Panel erred, inter alia, by according too much weight to the evidence of the
anticipated effects of the TPP measures, and insufficient weight to the evidence of actual effects of the
TPP measures. Conversely, with respect to the Panel's assessment of the trade restrictiveness of the
TPP measures, the appellants claim that the Panel erred, inter alia, by according too much weight to the
evidence of the actual effects of the TPP measures, and insufficient weight to the evidence of the anticipated
effects of the TPP measures. (See para. 6.423. and fn 1223 thereto below.)
139 Panel Report, para. 7.451.
140 Panel Report, para. 7.455.
142 Panel Report, para. 7.507.
144 Panel Report, para. 7.490.
145 The Panel explained that, for the purpose of its Report, "smoking behaviours" are those directly
related to the use of tobacco products, including, for example, initiation, cessation, relapse, and consumption.
"Smoking-related behaviours" are those associated with smoking behaviours, such as purchasing tobacco
products, calling a Quitline, concealing a pack in public, and directing eye movements to GHWs. (Panel Report,
fn 1442 to para. 7.490)
WT/DS435/AB/R • WT/DS441/AB/R

c. As a consequence, positive public health outcomes – specifically reduced use of, and
exposure to, tobacco products, and an associated reduction in tobacco-related disease and
deaths – would arise.146
6.16. The Panel began by assessing the anticipated effect of the TPP measures, based on their
design, structure, and expected operation.147 Thereafter, the Panel assessed the evidence relating
to the actual effects of the TPP measures following their entry into force. Specifically, the Panel
assessed the impact of the TPP measures on: (i) "non-behavioural" or "proximal" outcomes (i.e. the
appeal of packaging, the effectiveness of the GHWs, and the ability of packaging to mislead
consumers)148; (ii) "distal" outcomes (i.e. intention and behavioural outcomes, such as increased
intentions to quit and increased quit attempts)149; and (iii) smoking behaviour (i.e. prevalence and
consumption).150
6.17. Throughout its analysis, the Panel emphasized that the operation of the TPP measures,
including their contribution to Australia's objective, must be viewed in the broader context of other
tobacco control measures maintained by Australia. The Panel explained that, while this broader
context does not remove or reduce the need "to identify the contribution that the challenged
measures themselves make to Australia's objective", it was a relevant consideration in the Panel's
assessment, to the extent that "it informs and affects the manner in which the measures are applied
and operate, as a component of a broader suite of complementary tobacco control measures."151
6.18. Following the Panel's examination of: (i) the design, structure, and intended operation of the
TPP measures; (ii) the actual application of the TPP measures; and (iii) the impact of the
TPP measures on illicit trade, the Panel concluded that:
7.1025. Overall … the complainants have not demonstrated that the TPP measures are
not apt to make a contribution to Australia's objective of improving public health by
reducing the use of, and exposure to, tobacco products. Rather, we find that the
evidence before us, taken in its totality, supports the view that t he TPP measures, in
combination with other tobacco-control measures maintained by Australia (including the
enlarged GHWs introduced simultaneously with TPP), are apt to, and do in fact,
contribute to Australia's objective of reducing the use of, and exposu re to, tobacco
products.
…
7.1043. Taken as a whole, therefore, we consider that the evidence before us supports
the view that, as applied in combination with the comprehensive range of other tobacco
control measures maintained by Australia and not challen ged in these proceedings,
including a prohibition on the use of other means through which branding could
otherwise contribute to the appeal of tobacco products and to misleading consumers
about the harmful effects of smoking, the TPP measures are apt to, a nd do, make a
meaningful contribution to Australia's objective of reducing the use of, and exposure to,
tobacco products.152
6.19. The Panel emphasized that its conclusion was based on the evidence available to the Panel at
the time of its assessment and was not intended to prejudge the future evolution of the contribution
of the TPP measures to the reduction of the use of, and exposure to, tobacco products. At the same
time, the Panel indicated that it was mindful that "the impact of the TPP measures may evolve over
time."153 In particular, the Panel considered "reasonable Australia's suggestion that the measures
may be expected to have an impact in particular on future generations of young people whose

146 Panel Report, para. 7.490.
147 Panel Report, section 7.2.5.3.5.
148 Panel Report, para. 7.491.
149 The Panel noted that "distal" outcomes relate more closely to smoking behaviours such as initiation,
relapse, cessation, and exposure to second-hand smoke. (Panel Report, para. 7.491)
150 Panel Report, section 7.2.5.3.6. The Panel also examined the impact of the TPP measures on illicit
trade. (Panel Report, section 7.2.5.3.7)
151 Panel Report, para. 7.506 (referring to Appellate Body Report, Brazil – Retreaded Tyres, para. 154).
152 Panel Report, paras. 7.1025 and 7.1043.
153 Panel Report, para. 7.1044.
WT/DS435/AB/R • WT/DS441/AB/R

exposure to tobacco advertising or promotion in Australia will have been generally limited, and that
impacts on smoking cessation for existing smokers will also take some time to produce their full
effects".154
6.1.2.2 Claim that the Panel erred in its application of Article 2.2 of the TBT Agreement
6.20. Honduras acknowledges that the Panel "set out the correct legal standard"155 of how to assess
the "degree to which a Member's technical regulation, as adopted, written, and applied, contributes
to the legitimate objective pursued by that Member". 156 However, Honduras claims that the Panel
erred in law because it failed to apply this legal standard to the facts of the case.157 Honduras argues
that, "generally", the Panel considered that an examination of the "totality of the evidence" meant
that it was relieved of its obligation "to conduct a proper analysis of the probative value of the
evidence regarding the measures' actual impact on the relevant smoking behaviour".158 In response
to questioning at the second hearing, Honduras expressed the view that if a panel sets a particular
"legal standard" for how to approach and assess the evidence, then failing to adhere to that approach
in its examination of the evidence would constitute an incorrect application of the law to the facts
by the panel.
6.21. Australia submits that Honduras' claims relate to the Panel's appreciation of the evidence and
arguments and the relative weight that the Panel attributed to specific pieces of evidence, rather
than the Panel's engagement with issues of law and legal interpretation. In support of its assertion,
Australia points to Honduras' "failure to develop legal arguments in relation to any of its purported
application claims".159 Accordingly, Australia requests the Appellate Body to reject Honduras' claim
that the Panel erred in its application of Article 2.2 of the TBT Agreement in its assessment of the
contribution of the TPP measures to Australia's objective.160
6.22. We observe that, in elaborating its claims that the Panel erred under Article 2.2 of the
TBT Agreement in its analysis of the contribution of the TPP measures to Australia's objective,
Honduras makes arguments that overlap entirely with those made in support of its claims under
Article 11 of the DSU. Specifically, in support of its claim that the Panel failed to apply the correct
legal standard under Article 2.2 to the facts of this case, Honduras submits that the Panel:
a. did not focus on the actual impact "on smoking behaviour" and "on the use of tobacco
products", but gave equal or more weight to perceptions and intentions not corroborated
by evidence on actual behaviour;
b. did not focus on the actual impact of the measures on the use of tobacco products, but
included "baseless" speculation about an uncertain future impact of the measures over
time in light of uncorroborated statements about perceptions and intentions;
c. did not make findings about the contribution of "the challenged [plain packaging
measures] themselves", but rather about the challenged measures in combination with all
other tobacco control measures adopted by Australia;
d. did not examine and consider the degree of contribution by evaluating "the relevance and
probative force of each piece thereof"; rather, it simply summari zed the evidence
presented and noted certain weaknesses without drawing any conclusions from these
weaknesses in terms of the weight to be attached to this evidence, ultimately giving equal
weight to all evidence;
e. did not engage in any serious or objective assessment of the "scientific and methodological
rigor" of the evidence on the degree of contribution presented "in application of t he

154 Panel Report, para. 7.1044.
156 Honduras' appellant's submission, para. 549 (quoting Appellate Body Reports, US – COOL,
para. 390).
159 Australia's appellee's submission, para. 352.
160 Australia's appellee's submission, para. 355.
WT/DS435/AB/R • WT/DS441/AB/R

SPS test" it considered to be applicable, but simply included all of the evidence – or at
least all of the evidence that was submitted by Australia – and effectively gave it all equal
weight; and
f. despite its repeated statements about its approach to the econometric evidence, the Panel
conducted "its own (flawed) econometric assessment of the evidence" as it developed
certain calculation and estimation methods that were never discussed with the parties and
that remain unexplained even in the Panel's own final Report.161
6.23. In certain circumstances, some of the issues identified by Honduras' allegations may implicate
a panel's application of the legal standard under Article 2.2 to the facts of the case.162 Moreover, as
the Appellate Body has said in the past, it is sometimes difficult to distinguish clearly between issues
that are purely legal or purely factual or are mixed issues of law and fact.163 However, in most cases,
an issue will be either one of application of the law to the facts or an issue of the objecti ve
assessment of facts, but not both.164
6.24. In these appellate proceedings, several factors contribute to our view that Honduras'
challenges to the Panel's analysis relate to the Panel's appreciation of the evidence before it, rather
than to the Panel's applica tion of the legal standard under Article 2.2 to the facts of this case. We
highlight Honduras' use of the following terminology in the arguments that it makes in support of its
claim that the Panel erred in applying the legal standard under Article 2.2 to the facts of this case:
(i) "the Panel … gave equal or more weight to perceptions and intentions not corroborated by
evidence on actual behaviour" 165; (ii) "[t]he Panel [did not evaluate] 'the relevance and probative
force of each piece thereof'" 166; (iii) "[the Panel] simply summarised the evidence presented and
noted certain weaknesses without drawing any conclusions from these weaknesses in terms of the
weight to be attached to this evidence, ultimately giving equal weight to all evidence"167; (iv) "[t]he
Panel did not engage in any serious or objective assessment of the 'scientific and methodological
rigor' of the evidence"168; and (v) the Panel "conduct[ed] its own (flawed) econometric assessment
of the evidence". 169 Moreover, the arguments raised by Honduras are accompanied by footnotes
referencing Honduras' arguments made in support of its claims under Article 11 of the DSU. 170 In
the same vein, Honduras indicates that the "Panel's actions", which are the subject of the claim that
the Panel erred in its application of Article 2.2, "also amount to a failure to undertake an objective
assessment of the matter" under Article 11 of the DSU.171
6.25. For these reasons, we consider that Honduras' claims implicate the Panel's appreciation of the
facts and evidence, rather than its application of the legal standard under Article 2.2 to the facts of
this case. Accordingly, we find that Honduras has not substantiated its claim that the Panel erred in
its application of Article 2.2 to the facts of this case.
6.26. Rather, as mentioned in paragraph 6.24. above, in elaborating its claims that the Panel erred
under Article 2.2 of the TBT Agreement in its analysis of the cont ribution of the TPP measures to
Australia's objective, Honduras makes arguments that overlap entirely with those made in support

162 For instance, Honduras highlights that the Panel borrowed a standard that has been applied in cases
involving the SPS Agreement, in reasoning that "[t]o the extent that scientific evidence is relied upon, [the
Panel's] assessment may include in particular a consideration of whether such evidence … has the 'necessary
scientific and methodological rigor to be considered reputable science'." (Honduras response to questioning at
the second hearing; Panel Report, para. 7.516 (quoting Appellate Body Report, US – Continued Suspension,
para. 591)) According to Honduras, the Panel did not apply this test "but simply included all of the evidence –
or at least all of the evidence that was submitted by Australia – and effectively gave it all equal weight".
(Honduras' appellant's submission, para. 554.v)
163 Appellate Body Report, EC and certain member States – Large Civil Aircraft, para. 872.
164 Appellate Body Report, EC and certain member States – Large Civil Aircraft, para. 872. The
Appellate Body made similar observations in EC – Seal Products and China – Rare Earths. See Appellate Body
165 Honduras' appellant's submission, para. 554.i.
166 Honduras' appellant's submission, para. 554.iv.
167 Honduras' appellant's submission, para. 554.iv.
168 Honduras' appellant's submission, para. 554.v.
169 Honduras' appellant's submission, para. 554.vi.
170 Honduras' appellant's submission, fns 303-308 to para. 554.
171 Honduras' appellant's submission, fn 302 to para. 554.
WT/DS435/AB/R • WT/DS441/AB/R

of its claims under Article 11 of the DSU. Given the complete overlap between these two sets of
arguments, and the focus of both sets of arguments on the Panel's engagement with the facts and
appreciation of the evidence before it, we address all of Honduras' challenges to the Panel's
contribution analysis under the rubric of its claims under Article 11 of the DSU.
6.1.2.3 Claims under Article 11 of the DSU
6.1.2.3.1 Introduction
6.27. The appellants request us to reverse the Panel's conclusion that "the TPP measures are apt
to, and do, make a meaningful contribution to Australia's objective of reducing the use of, and
exposure to, tobacco products."172 The appellants' request is based, primarily173, on their claims that
the Panel failed in its duty under Article 11 of the DSU to make an objective assessment of the
matter before it, with the appellants' focus being on the Panel's assessment of the facts of the case.
6.28. Article 11 of the DSU provides that:
The function of panels is to assist the DSB in discharging its responsibilities under this
Understanding and the covered agreements. Accordingly, a panel should make an
objective assessment of the matter before it, including an objective assessment of the
facts of the case and the applicability of and conformity with the relevant covered
agreements, and make such other findings as will assist the DSB in making the
recommendations or in giving the rulings p rovided for in the covered agreements.
Panels should consult regularly with the parties to the dispute and give them adequate
opportunity to develop a mutually satisfactory solution.
6.29. Honduras contends that "the Panel fail[ed] to conduct an 'objective exami nation' of the
evidence on the plain packaging measures' contribution to the objective of reducing the use of
tobacco products."174 The Dominican Republic, for its part, appeals the Panel's "overall findings and
intermediate findings" resulting from its asse ssment of the: (i) post-implementation evidence "on
the actual impact of the TPP measures on smoking behaviours"175; (ii) pre-implementation evidence
"on the anticipated impact of the TPP measures"176; (iii) post-implementation evidence "on the
actual impact of the TPP measures on proximal and distal outcomes" 177; and (iv) "potential future
impact of the TPP measures".178
6.30. When introducing its claims under Article 11 of the DSU, the Dominican Republic indicates
that, "[i]n accordance with the Appellate Body's guidance", the Dominican Republic has carefully
considered whether, and in which specific instances, to challenge the lack of objectivity of the Panel's
assessment of the matter.179 The Dominican Republic states that it "challenges solely those errors
for which the Panel has 'exceeded the bounds of its discretion, as the trier of facts', and that are
consequential to the Panel's findings". 180 Honduras, for its part, contends that the "failures of the

172 Honduras' appellant's submission, paras. 533, 615, 721, 740, and 766; Dominican Republic's
appellant's submission, paras. 32, 587, and 1593 (quoting Panel Report, para. 7.1043).
173 As discussed in section 6.1.2.2 above, Honduras also claims that the Panel erred in its application of
Article 2.2 of the TBT Agreement to the facts of the case in its analysis of the contribution of the TPP measures
to Australia's objective.
174 Honduras' Notice of Appeal, p. 5, section III.
175 Dominican Republic's Notice of Appeal, para. 7. (emphasis original; fns omitted)
176 Dominican Republic's Notice of Appeal, para. 8. (emphasis original)
177 Dominican Republic's Notice of Appeal, para. 9. (emphasis original)
178 Dominican Republic's Notice of Appeal, para. 10. As described in footnote 97 above, in addition to
these specific claims of error, the Dominican Republic, in its Notice of Appeal, states that it "incorporates by
reference into this appeal the claims on appeal made by Honduras". (Dominican Republic's Notice of Appeal,
para. 16) In response to questioning at the first hearing of these appellate proceedings, the
Dominican Republic confirmed that it incorporated all of Honduras' claims and arguments on appeal.
Accordingly, any reference to Honduras' claims and arguments throughout these Reports should be understood
as also including a reference to the claims and arguments of the Dominican Republic.
179 Dominican Republic's appellant's submission, para. 33 (referring to Appellate Body Reports,
China – Rare Earths, para. 5.228).
180 Dominican Republic's appellant's submission, para. 33 (quoting Appellate Body Reports,
EC and certain member States – Large Civil Aircraft (Article 21.5 – US), para. 5.148; US – Wheat Gluten,
para. 151).
WT/DS435/AB/R • WT/DS441/AB/R

Panel, taken individually and together", are of such a nature and magnitude as to cast serious doubt
on the required "objective assessment" of the Panel in the context of this dispute.181
6.31. Australia asks us to reject all of the appellants' claims under Article 11 of the DSU,
characterizing them as an "unprecedented assault on a panel's performance of its fact -finding
function".182 In Australia's view, the appellants' assurance that they have followed "the
Appellate Body's guidance" and "carefully considered whether, and in which specific instances, to
challenge the lack of objectivity of the Panel's assessment of the matter" rings hollow given both the
scale and nature of their claims under Article 11 of the DSU.183 Rather, Australia contends that the
appellants' claims are an invitation to the Appellate Body to determine whether the Panel's factual
findings are correct, rather than whether the Panel was objective in making its assessment of the
facts of the case. 184 For Australia, the appellants' approach to their claims under Article 11 of the
DSU undermines the Appellate Body's recognition that the "credibility and weight of the evidence is
within the panel's discretion as the trier of facts". 185 In this regard, Australia recalls the
Appellate Body's explanation that it would not "interfere lightly" with the p anel's fact -finding
authority186, and would not "second -guess the [p]anel in appreciating either the evidentiary value
of … studies or the consequences, if any, of alleged defects in [the evidence]".187
6.32. At the outset, we wish to highlight certain preliminary considerations that inform our approach
to the appellants' claims under Article 11 of the DSU. These considerations pertain to: (i) the burden
of proof under Article 2.2 with respect to the assessment of the contribution of the TPP measures to
Australia's objective; (ii) the nature of the Panel's overall conclusion, and the scope of the appellants'
appeals in respect thereof; and (iii) cross-cutting themes underpinning the appellants' claims under
Article 11 of the DSU.
6.1.2.3.1.1 Burden of proof
6.33. As noted in paragraph 6.5. above, before the Panel, the complainants claimed that the
TPP measures are inconsistent with Article 2.2 because they are more trade -restrictive than
necessary to fulfil a legitimate objective, taking account of the risks non -fulfilment would create.
The complainants submitted two sets of arguments in support of their claims under Article 2.2. In
their main set of arguments, the complainants assert ed that the TPP measures are not apt to
contribute and make no contribution to Australia's objective.188 In their alternative set of arguments,
the complainants contended that, even if the TPP measures make some contribution to Australia's
objective, the TPP measures are more trade -restrictive than necessary because "certain less
trade-restrictive alternative measures would be reasonably available to Australia to achieve an
equivalent contribution to its objective, taking account of the risks that non -fulfilment of the
objective would create."189

182 Australia's appellee's submission, para. 424.
183 Australia's appellee's submission, para. 424.
184 Australia's appellee's submission, para. 431. See also Canada's third participant's submission,
para. 52; New Zealand's third participant's submission, para. 15; United States' third participant's submission,
para. 31.
185 Australia's appellee's submission, para. 437 (quoting Appellate Body Reports, US – Upland Cotton
186 Australia's appellee's submission, para. 437 (quoting Appellate Body Report, EC and certain member
187 Australia's appellee's submission, fn 558 to para. 437 (quoting Appellate Body Report,
Korea – Alcoholic Beverages, para. 161).
188 Panel Report, paras. 7.426, 7.437-7.438, and 7.485.
189 Panel Report, para. 7.1325. (emphasis original) In response to questioning at the second hearing,
the appellants confirmed that: (i) their main assertion before the Panel was that the TPP measures are "more
trade-restrictive than necessary" because they do not and are not apt to make any contribution to Australia's
objective while being trade-restrictive; and (ii) they had argued, in the alternative, that, even if the
TPP measures were found to make some contribution, they would still be "more trade-restrictive than
necessary" in light of the proposed alternative measures.
WT/DS435/AB/R • WT/DS441/AB/R

6.34. It is well settled that "the party who asserts a fact, whether the claimant or the respondent,
is responsible for providing proof thereof."190 Thus, the burden of proving that the TPP measures are
inconsistent with Article 2.2 of the TBT Agreement rested on the complainants.191 An implication of
this allocation of the burden of proof is that, with respect to their main set of arguments, the
complainants were required to adduce sufficient evidence to persuade the Panel that the
TPP measures are not apt to, and do not, make any contribution to Australia's legitimate objective.192
6.35. In their alternative set of arguments, the complainants contended that, even if the
TPP measures make some contribution to Australia's objective, the TPP measures are more
trade-restrictive than necessary because "certain less trade-restrictive alternative measures would
be reasonably available to Australia to achieve an equivalent contribution to its objective, taking
account of the risks that non-fulfilment of the objective would create."193 We recall that the degree
of contribution is only one factor of a panel's overall weighing and balancing for determining
"necessity" under Article 2.2, and there is no predetermined threshold of contribution for purposes
of demonstrating an inconsistency with Article 2.2.194 A panel's overall weighing and balancing
exercise need not be quantitative, and is often a qualitative assessment. Indeed, the Appellate Body
has said that "[i]n assessing the relevant factors with respect to the technical regulation itself, …
while a complainant must be held to fulfil its burden to present a prima facie case that the technical
regulation is more trade restrictive than necessary under Article 2.2, it will not always be possible
to quantify a particular factor, or to do so with precision."195 Thus, with respect to the complainants'
alternative set of arguments, we do not consider that the complainants needed to demonstrate a
precise quantifiable degree of contribution that the TPP measures make to Australia's objective, in
order to meet their burden of demonstrating that the TPP measures are "more trade-restrictive than
necessary". Rather, the complainants had to demonstrate that the TPP measures are more
trade-restrictive than neces sary because an equivalent degree of contribution could be achieved
through less trade-restrictive alternative means.
6.36. This leads us to our next consideration: the nature of the Panel's overall conclusion, and the
scope of the appellants' appeals in respect thereof.
6.1.2.3.1.2 The nature of the Panel's overall conclusion and the scope of the appellants'
appeals
6.37. We recall that, before the Panel, and in connection with the complainants' main set of
arguments, Honduras argued that the TPP measures make no contribution to Australia's objective,
nor are they apt to do so.196 The Dominican Republic contended that well-accepted axioms of social
and medical science confirm that the TPP measures will not be effective in achieving Australia's
stated goals.197 The Panel understood the parties' arguments as follows:
In essence, the complainants consider that the TPP measures cannot contribute to their
objective through the mechanisms identified in the TPP Act, and that
post-implementation evidence shows that smoking prevalence has not in fact been
reduced as a result of the TPP measures. Australia in essence responds that, contrary
to the complainants' assertions, the measures are designed on the basis of a sound

190 Appellate Body Report, US – Wool Shirts and Blouses, p. 14, DSR 1997:I, p. 335. See also
Appellate Body Reports, US – Carbon Steel (India), para. 446; US – Gambling, paras. 138-140; US – Carbon
191 Appellate Body Report, US – Tuna II (Mexico), para. 323. (fn omitted) See also Appellate Body
Reports, US – COOL (Article 21.5 – Canada and Mexico), para. 5.208.
192 This is in line with the Appellate Body's explanation that "under the usual allocation of the burden of
proof, a responding Member's measure will be treated as WTO-consistent, until sufficient evidence is presented
to prove the contrary." (Appellate Body Report, Canada – Dairy (Article 21.5 – New Zealand and US II),
para. 66) (emphasis original))
193 Panel Report, para. 7.1325; Honduras' first written submission to the Panel, paras. 853, 859,
and 911; Dominican Republic's first written submission to the Panel, paras. 736-737, 980, and 1019-1021.
194 Appellate Body Reports, US – COOL, para. 374; US – COOL (Article 21.5 – Canada and Mexico),
para. 5.216.
195 Appellate Body Reports, US – COOL (Article 21.5 – Canada and Mexico), para. 5.208.
196 Panel Report, para. 7.426.
197 Panel Report, para. 7.437.
WT/DS435/AB/R • WT/DS441/AB/R

evidence base, and that available post -implementation evidence confirms th at the
measures are contributing to their objective of reducing smoking.198
6.38. The Panel sought to determine the degree to which the TPP measures, "as written and applied,
contribute, if at all, to Australia's legitimate objective of improving public health by reducing the use
of, and exposure to, tobacco products".199 In its overall conclusion, the Panel answered this question
as follows:
7.1024. We have considered … the evidence before us in relation to the contribution of
the TPP measures to their objective of improving public health by reducing the use of,
and exposure to, tobacco products. We have considered the relevant evidence relating
both to the design, structure and intended operation of the TPP measures, and the
available evidence relating to their application since their entry into force in December
2012.
7.1025. Overall, we find that the complainants have not demonstrated that the
TPP measures are not apt to make a contribution to Australia's objective of improving
public health by reducing the use of, and exposure to, tobacco products. Rather, we
find that the evidence before us, taken in its totality, supports the view that the
TPP measures, in combination with other tobacco -control measures maintained by
Australia (including the enlarged GHWs introdu ced simultaneously with TPP), are apt
to, and do in fact, contribute to Australia's objective of reducing the use of, and exposure
to, tobacco products.
…
7.1043. Taken as a whole, therefore, we consider that the evidence before us supports
the view that, as applied in combination with the comprehensive range of other tobacco
control measures maintained by Australia and not challenged in these proceedings,
including a prohibition on the use of other means through which branding could
otherwise contribute to the appeal of tobacco products and to misleading consumers
about the harmful effects of smoking, the TPP measures are apt to, and do, make a
meaningful contribution to Australia's objective of reducing the use of, and exposure to,
tobacco products.200
6.39. We observe first that the Panel arrived at its "overall conclusion" following its consideration
of the relevant evidence before it "relating both to the design, structure and intended operation of
the TPP measures, and the available evidence relating to their application since their entry into force
in December 2012".201 Second, we note that paragraph 7.1025 contains two sentences. In the
first sentence, the Panel concluded that "the complainants have not demonstrated that the
TPP measures are not apt to make a contribution to Australia's objective of improving public health
by reducing the use of, and exposure to, tobacco products." 202 In the second sentence, the Panel
continued to state that the evidence before it supported the view that "the TPP measures, in
combination with other tobacco -control measures maintained by Australia (including the enlarged
GHWs introduced simultaneously with TPP), are apt to, and do in fact, contribute to Australia's
objective of reducing the use of, and exposure to, tobacco products ."203 None of the appellants'
submissions expressly referred to the first sentence of paragraph 7.1025. However, in response to
questioning at the second hearing, the appellants, as well as Australia, all shared the view that the
two sentences of paragraph 7.1025 were not to be read in isolation from each other. Rather, in their
view, both sentences, read together, reflected the Panel's rejection of the complainants' proposition
that the TPP measures are not apt to, nor do they, make a contribution to Austral ia's objective of

198 Panel Report, para. 7.485. We note that the Panel's characterization of the parties' arguments is not
challenged on appeal.
200 Panel Report, paras. 7.1024-7.1025 and 7.1043.
201 Panel Report, para. 7.1024.
203 Panel Report, para. 7.1025.
WT/DS435/AB/R • WT/DS441/AB/R

reducing the use of, and exposure to, tobacco products. Honduras added that paragraph 7.1043
confirmed the Panel's main finding, as reflected in the second sentence of paragraph 7.1025.
6.40. We agree with the participants that both sentences o f paragraph 7.1025, read together, are
a rejection of the complainants' proposition that the TPP measures are not apt to, nor do they make
a contribution to Australia's objective of reducing the use of, and exposure to, tobacco products.
However, we do not share Honduras' view that the content of paragraph 7.1043 is the same as that
of the second sentence of paragraph 7.1025. As we read it, there is an additional nuance to the
Panel's finding in paragraph 7.1043. Between paragraphs 7.1025 and 7.1043, the Panel summarized
the key points 204 that justify its conclusion that "the TPP measures are apt to, and do, make a
meaningful contribution to Australia's objective of reducing the use of, and exposure to, tobacco
products."205 We do not consider the Panel's addition of the word "meaningful" to be happenstance.
While paragraph 7.1025 addressed and rejected the proposition by the complainants that "the
TPP measures are not apt to make a contribution to Australia's objective"206, the Panel's conclusion
in paragraph 7.1043 goes further by speaking to the question of the "degree" of the contribution
that the TPP measures, in concert with Australia's other tobacco -control measures, make to
Australia's objective. In this regard, the Panel's conclusion that "the TPP measures are apt to, and
do, make a meaningful contribution to Australia's objective of reducing the use of, and exposure to,
tobacco products"207 relates to the alternative set of the complainants' arguments. In other words,
we understand the Panel to have made this conclusion as a gateway to addressing the complainants'
alternative proposition that, even if the Panel were to conclude that the TPP measures make a
contribution to Australia's objective, the TPP measures would still be "more trade -restrictive than
necessary" because various alternative measures would be available to Australia that are less
trade-restrictive and could achieve an equivalent degree of contribution to Australia's objective.208
Indeed, the Panel highlighted this conclusion about the measures' " meaningful contribution to
Australia's objective" in its assessment of the complainants' proposed alternative measures.209
6.1.2.3.1.3 Cross-cutting themes underpinning the appellants' claims under Article 11
6.41. While the appellants have made numerous claims against specific statements, analyses, and
findings of the Panel, they have largely addressed these claims under the rubric of broad
cross-cutting themes. For instance, when introducing its claims under Article 11 of the DSU,
Honduras claims that the Panel, in its asses sment of the evidence, "acted in violation of Article 11
of the DSU" by failing to make an objective assessment of the matter before it, including an objective
assessment of the evidence presented to it on the degree of actual contribution of the measures to
the fulfilment of the legitimate objective of Australia.210 Specifically, Honduras asserts that the Panel
failed to make an objective assessment of the facts, as required under Article 11 of the DSU because
the Panel allegedly, inter alia:
a. failed to provide a reasoned and adequate explanation of how the facts supported the
determination that the TPP measures resulted in a reduction in smoking prevalence and
in consumption of tobacco products;
b. disregarded, misrepresented, and distorted material pieces of Honduras' evidence;
c. failed to examine the evidence in an even-handed manner, applying a double standard of
proof; and
d. failed to respect the basic principles of due process and procedural fairness in the following
manner – rather than appointing an expert to assist it in a transparent manner in exercise
of its powers under Article 13 of the DSU or Article 14.2 of the TBT Agreement, the Panel

204 We observe that, in these paragraphs, the Panel emphasized the robust nature of the
pre-implementation evidence before it, while highlighting the limitations of the evidence relating to the actual
impact of the TPP measures following their entry into force.
206 Panel Report, para. 7.1025.
208 Honduras' first written submission to the Panel, para. 911; Dominican Republic's first written
submission to the Panel, paras. 1019 and 1021 (referring to para. 736 et seq., in particular para. 737).
209 Panel Report, para. 7.1386.
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relied on a "ghost expert" who developed criticisms of the parties' evidence that the parties
were never given an opportunity to comment on and that are never explained in the
Panel Report thus shielding them from proper scrutiny.211
6.42. According to Honduras, "[t]hese failures of the Panel, taken individually and together, are of
such a nature and magnitude as to cast serious doubt on the required 'objective assessment' of the
Panel in the context of this dispute that related to a controversial product and possibly well-intended
but in any case unlawful, ineffective, and disproportionate measures."212
6.43. For its part, the Dominican Republic asserts that, in assessing the contribution of the
TPP measures to Australia's objective, the Panel allegedly committed errors of the following nature:
a. the Panel failed to respect the requirements of due process, including the requirements to
provide the parties with a meaningful opportunity to comment and to test evidence with
the parties, and to seek further in formation if necessary, in order to determine whether
the evidence satisfies a party's burden of proof;
b. the Panel made the case for Australia;
c. the Panel treated competing evidence submitted by the parties inconsistently;
d. the Panel developed reasoning that is internally incoherent;
e. the Panel failed to provide "reasoned and adequate explanations" for its findings;
f. the Panel made findings that lack a basis in the evidence contained on the Panel record;
and
g. the Panel failed to engage with evidence from the Domi nican Republic that was material
to its case.213
6.44. In responding to the appellants' allegations, Australia also clusters its arguments around
several cross-cutting themes, including: (i) the allocation of the burden of proof214; (ii) denial of due
process215; (iii) the Panel's alleged failure to provide "'reasoned and adequate' explanations"216; and
(iv) the materiality of the appellants' claims under Article 11 of the DSU.217
6.45. We recall that, with respect to the Panel's analysis of the contribution of the TPP measures to
Australia's objective, the appellants' claims under Article 11 of the DSU concern the Panel's
assessment of the facts of the case. Article 11 provides that, in carrying out its function to assist the
DSB in discharging its responsibilities under the DSU, "a panel should make an objective assessment
of the matter before it, including an objective assessment of the facts of the case." 218 In these
appellate proceedings, the issue that we are required to address is whether the appellants have
demonstrated that the Panel, in conducting its analysis leading to its overall conclusion on the
contribution of the TPP measures to Australia's objective, made an objective assessment of the facts
of the case in accordance with Article 11 of the DSU. The appellants' myriad claims and arguments
pertain to this single issue, but are not in and of themselves, discrete "issues" within the meaning
of Articles 17.6 and 17.12. 219 Accordingly, we need not address, separately, each claim of error

213 Dominican Republic's appellant's submission, para. 34.
214 Australia's appellee's submission, paras. 430 and 478.
215 Australia's appellee's submission, paras. 428-430.
216 Australia's appellee's submission, para. 431.
217 Australia's appellee's submission, para. 449.
218 Emphasis added.
219 Article 17.6 of the DSU limits an appeal to "issues of law covered in the panel report and legal
interpretations developed by the panel". Article 17.12 of the DSU provides that "[t]he Appellate Body shall
address each of the issues raised in accordance with paragraph 6 during the appellate proceeding."
WT/DS435/AB/R • WT/DS441/AB/R

raised by the appellants under Article 11 of the DSU. Rather, we consider that it would suffice for us
to address, jointly, clusters of claims based on cross-cutting themes underpinning these claims.
6.46. Still in connection with the cross -cutting themes underpinning the appellants' claims under
Article 11, we take note of the Dominican Republic's assertion that, "[i]n accordance with the
Appellate Body's guidance", the Dominican Republic has carefully considered whether, and in which
specific instances, to challenge the lack of objectivity of the Panel's assessment of the matter. 220
The Dominican Republic states that it "challenges solely those errors for which the Panel has
'exceeded the bounds of its discretion, as the trier of facts', and that are consequential to the Panel's
findings".221 Honduras, for its part, contends that the "failures of the Panel, taken individually and
together", are of such a nature and magnitude as to cast serious doubt on the required "objective
assessment" of the Panel in the context of this dispute.222
6.47. We observe that the Panel's analysis of the contribution of the TPP measures to Australia's
objective was quite detailed, covering 166 pages in its Report223, and 125 pages in Appendices A-D
to its Report. Yet, as Australia points out, the appellants' claims under Article 11 of the DSU,
challenging the Panel's analysis of the contribution of the TPP measures to Australia's objective, form
the bulk of their appeal, "collectively comprising nearly 450 pages of their appellants'
submissions".224 Moreover, with the exception of the Pa nel's findings on the impact of the
TPP measures on illicit trade, the appellants have challenged all of the intermediate findings that the
Panel made in its analysis, as well as the Panel's overall conclusion on the contribution of the
TPP measures to Australia's objective.
6.48. The sheer volume of the appellants' claims under Article 11 of the DSU in these appellate
proceedings is unprecedented. We recall that a claim that a panel has failed to conduct an objective
assessment of the matter before it is "a very serious allegation".225 Not every error by a panel
amounts to a failure by the panel to comply with its duties under Article 11, only those which, taken
together or singly, undermine the objectivity of the panel's assessment of the matter before it. 226
Indeed, as an example of the grave implications of claims brought under Article 11, the
Appellate Body has considered that a panel's "[d]isregard", "distortion", and "misrepresentation" of
evidence, "in their ordinary signification in judicial and quasi-judicial processes, imply not simply an
error of judgment in the appreciation of evidence but rather an egregious error that calls into
question the good faith of a panel".227 For these reasons, the Appellate Body has urged Members to
consider carefully "when and to what extent to challenge a panel's assessment of a matter pursuant
to Article 11".228 This is in keeping with the objective of the prompt settlement of disputes, and the
requirement in Article 3.7 of the DSU that Members "exercise judgement in deciding whether action
under the WTO dispute settlement procedures would be fruitful".229
6.49. Furthermore, the Appellate Body has said that, in carrying out its duty to make an objective
assessment of the facts of the case, a panel is required to "consider all the evidence presented to it,
assess its credibility, determine its weight, and ensure that [the panel's] factual findings have a
proper basis in that evidence". 230 Within these parameters, "it is generally within the discretion of

220 Dominican Republic's appellant's submission, para. 33 (referring to Appellate Body Reports,
China – Rare Earths, para. 5.228).
221 Dominican Republic's appellant's submission, para. 33 (quoting Appellate Body Reports,
EC and certain member States – Large Civil Aircraft (Article 21.5 – US), para. 5.148; US – Wheat Gluten,
para. 151).
223 Panel Report, pp. 253-419.
224 Australia's appellee's submission, para. 424; Dominican Republic's appellant's submission,
pp. 25-321 and 346-358 (308 pages); Honduras' appellant's submission, pp. 193-315 and 317-340
(146 pages).
225 Appellate Body Report, Peru – Agricultural Products, para. 5.66 (quoting Appellate Body Reports,
China – Rare Earths, para. 5.227 (fn omitted)).
226 Appellate Body Reports, Peru – Agricultural Products, para. 5.66; EC and certain member States –
Large Civil Aircraft, para. 1318; US – COOL, paras. 300 and 321.
227 Appellate Body Report, EC – Hormones, para. 133. (emphasis added)
228 Appellate Body Reports, China – Rare Earths, para. 5.228.
229 Appellate Body Reports, China – Rare Earths, para. 5.228.
230 Appellate Body Reports, China – Rare Earths, para. 5.178 (quoting Appellate Body Report,
Brazil – Retreaded Tyres, para. 185; referring to Appellate Body Reports, EC – Hormones, paras. 132-133;
Australia – Salmon, para. 266; EC – Asbestos, para. 161; EC – Bed Linen (Article 21.5 – India), paras. 170,
WT/DS435/AB/R • WT/DS441/AB/R

the [p]anel to decide which ev idence it chooses to utilize in making findings." 231 Moreover, when
assessing the probative value of the evidence, a panel is not required to "accord to factual
evidence … the same meaning and weight as do the parties".232 As such, a challenge under Article 11
of the DSU "cannot be made out simply by asserting that a panel did not agree with arguments or
evidence".233
6.50. In this vein, we emphasize that we will not entertain attempts by the appellants to resubmit
their factual arguments under the guise of challenging the objectivity of the Panel's assessment of
the facts of the case. In our view, entertaining such factual arguments would undermine the Panel
in its role as the trier of facts and the adjudicator of first instance in WTO dispute settlement. To our
minds, entertaining the appellants' factual arguments would not only fail to respect the role, and
discretion, of the Panel as the trier of facts, but it would also not be in line with the Appellate Body's
caution that we: (i) will not "interfere lightly" with t he panel's fact-finding authority234; (ii) will not
"second-guess the [p]anel in appreciating either the evidentiary value of … studies or the
consequences, if any, of alleged defects in [the evidence]" 235; and (iii) will not reach "a finding of
inconsistency under Article 11 simply on the conclusion that [ we] might have reached a different
factual finding from the one the panel reached".236
6.1.2.3.1.4 Approach to addressing the appellants' claims under Article 11 of the DSU and
order of analysis
6.51. Based on the foregoing prel iminary considerations, and our review of the participants'
submissions, we do not consider it necessary to address, separately, each discrete claim raised by
the appellants under Article 11 of the DSU. Rather, we address, jointly, clusters of claims based on
cross-cutting themes underpinning these claims. That said, we have identified certain of the
appellants' claims that are not captured sufficiently by the cross -cutting themes, and we shall
address these discretely. We also consider the Panel's findings on the anticipated effects of the
TPP measures to be so seminal to the Panel's overall's conclusion 237 such that the appellants'
challenges to these findings warrant discrete examination.
6.52. Additionally, we recall that Article 3.4 of the DSU indicates that "[r]ecommendations or rulings
made by the DSB shall be aimed at achieving a satisfactory settlement of the matter ." Article 3.7
states that "[t]he aim of the dispute settlement mechanism is to secure a positive solution to a
dispute." These overarching aims of the WTO dispute settlement mechanism suggest to us that,
while we are required to address each issue on appeal in accordance with Article 17.12, we have the
discretion not to rule on the substance of certain claims when doing so is not necessary to reso lve
the dispute.238 We consider that we need not rule on the substance of certain of the appellants'
claims in order to provide a positive solution to the dispute before us.
6.53. In sum, following our review of the participants' submissions, we consider it approp riate to
address the appellants' claims on the basis of these three approaches: (i) a minority of the
appellants' claims warrant discrete examination (the appellants' claims regarding anticipated effects
of the TPP measures, as well as a few claims regardi ng the actual effects of the TPP measures);
(ii) with respect to the majority of the appellants' claims under Article 11 of the DSU, we address,
jointly, clusters of claims based on cross -cutting themes underpinning these claims; and (iii) with

Japan – Agricultural Products II, paras. 141-142; Korea – Alcoholic Beverages, paras. 161-162; Korea – Dairy,
231 Appellate Body Reports, China – Rare Earths, para. 5.178 (quoting Appellate Body Report,
EC – Hormones, para. 135).
232 Appellate Body Report, EC – Fasteners (China) (Article 21.5 – China), para. 5.61.
233 Appellate Body Reports, China – Rare Earths, para. 5.227 (referring to Appellate Body Report,
Chile – Price Band System (Article 21.5 – Argentina), para. 238).
234 Appellate Body Report, EC and certain member States – Large Civil Aircraft, para. 881.
235 Appellate Body Report, Japan – Apples, para. 222 (quoting Appellate Body Report, EC – Asbestos,
para. 177, in turn quoting Appellate Body Report, Korea – Alcoholic Beverages, para. 161).
236 Appellate Body Report, EC and certain member States – Large Civil Aircraft, para. 881. (fn omitted)
237 See fn 204 above.
238 Appellate Body Reports, US – Tuna II (Mexico) (Article 21.5 – US) / US – Tuna II (Mexico)
(Article 21.5 – Mexico II), para. 6.318; US – Upland Cotton, paras. 510-511.
WT/DS435/AB/R • WT/DS441/AB/R

respect to the remainder of the appellants' claims under Article 11 of the DSU, we need not rule on
the substance of these claims in order to provide a positive solution to the dispute before us.
6.54. Accordingly, we proceed with the following order of analysis, addressin g claims concerning:
(i) the Panel's assessment of the pre -implementation evidence pertaining to the design, structure,
and intended operation of the TPP measures; (ii) the Panel's assessment of the post-implementation
evidence pertaining to the application of the TPP measures; (iii) the Panel's statements on the future
impact of the TPP measures; (iv) the Panel's assessment of the post -implementation evidence,
which need not be addressed in order to provide a positive resolution to the dispute before us; and
(v) the Panel's overall conclusion.
6.1.2.3.2 The Panel's assessment of the pre -implementation evidence pertaining to the
design, structure, and intended operation of the TPP measures
6.1.2.3.2.1 Overview
6.55. The appellants have brought several claims under Article 11 of the DSU in relation to the
Panel's consideration of the evidence pertaining to the design, structure, and intended operation of
the TPP measures (pre -implementation evidence239), as an element of the Panel's overall
assessment of the degree of contribution of the TPP measures to Australia's objective. 240 The
appellants' claims can be broadly categorized into two groups, namely: (i) claims pertaining to the
validity of the Panel's intermediate conclusion241, reached on the basis of the pre -implementation
evidence, that the complainants failed to demonstrate that the TPP measures would be incapable of
contributing to Australia's public health objective through the three "mechanisms" by which the
measures are designed to operate, i.e. reducing the appea l of tobacco products, enhancing the
effectiveness of the GHWs, and reducing the ability of tobacco packaging to mislead consumers 242;
and (ii) claims pertaining to whether these intermediate conclusions, together with the evidence
pertaining to the application of the TPP measures (or the "post-implementation" evidence), provided
sufficient support to the Panel's overall conclusion on contribution243 - that the complainants failed
to demonstrate that the TPP measures are not apt to make a contribution to Austra lia's objective,
but rather, they are apt to, and do, make a meaningful contribution to that objective, as applied in
combination with other tobacco control measures maintained by Australia.244
6.56. In this section, we address the appellants' claims pertaining to whether the Panel acted
inconsistently with Article 11 in reaching its intermediate conclusions based on its assessment of the
pre-implementation evidence (i.e. item (i) above). The claims falling under item (ii) above are
addressed in section 6.1.2.3.4 below, in which we determine whether the Panel failed to make an
objective assessment of the matter in arriving at its overall conclusion on contribution.
6.57. Honduras and the Dominican Republic each challenge different aspects of the Panel's analysis
leading to its intermediate conclusions based on the pre-implementation evidence. Honduras claims
that, in reaching these intermediate conclusions, the Panel failed to provide a reasoned and adequate

239 In their written submissions to the Panel, the parties used the term "pre-implementation evidence"
to refer to the evidence pertaining to the TPP measures' design, structure, and intended operation, including in
particular the studies that provided an evidentiary base for Australia's adoption of tobacco plain packaging
measures (TPP literature). The parties used the term "post-implementation evidence" to refer to the evidence
pertaining to the measures' application since their entry into force. At the same time, we note that although
the Panel stated that the TPP literature "mostly" consists of studies predating the implementation of the
TPP measures in Australia, the Panel observed that some of those studies were published after the
implementation of the TPP measures. (See Panel Report, paras. 7.521 and 7.539) As such, technically
speaking, the implied distinction between the terms "pre-implementation evidence" and "post-implementation
evidence" may not be entirely accurate. However, given the practical utility of these terms, we also use them
as a shorthand to refer to the evidence pertaining to the design, structure, and intended operation of the
TPP measures, and to the evidence pertaining to their actual application since their entry into force,
respectively.
240 See Panel Report, section 7.2.5.3.5.
241 Panel Report, paras. 7.929-7.930.
242 Honduras' appellant's submission, section VIII.2.1.2(a) and paras. 1008-1014; Dominican Republic's
appellant's submission, section II.E.2.
243 Panel Report, paras. 7.1025 and 7.1043.
244 Honduras' appellant's submission, sections VIII.2.1.2(b) and VIII.2.1.2(c); Dominican Republic's
appellant's submission, section II.E.3.
WT/DS435/AB/R • WT/DS441/AB/R

explanation245 and treated the evidence in a one -sided manner in favour of Australia 246, when it
reasoned that, while there may be "serious limitations" inherent in the individual studies that
provided an evidentiary base for the adoption of the TPP measures, any such limitations can be
overlooked by considering their "combined strength".247 The Dominican Republic, for its part, claims
that the Panel failed to engage with the Dominican Republic's evidence that directly contradicted the
Panel's intermediate conclusion, and, by doing so, the Panel based its conclusion on "incoherent
reasoning".248
6.1.2.3.2.2 Summary of the Panel's findings
6.58. Before the Panel, Australia explained that the design of the TPP measures reflects a "causal
chain model " or "mediational model" 249, whereby the measures are intended to affect smoking
behaviour through three "mechanisms" – or "proximal" or "non-behavioural" outcomes – identified
in the TPP Act. These three mechanisms are: (i) reducing the ap peal of tobacco products to
consumers; (ii) enhancing the effectiveness of GHWs; and (iii) reducing the ability of the pack to
mislead consumers about the harmful effects of smoking. According to the "causal chain" model, the
three "proximal" outcomes are expected in turn to have an impact on "distal" outcomes, such as
increased intentions to quit and increased quit attempts, which relate more closely to ultimate
smoking behaviours, such as initiation, relapse, and cessation, and exposure to second -hand
smoke.250
6.59. The complainants' main c laim251 before the Panel was that the TPP measures are more
trade-restrictive than necessary within the meaning of Article 2.2 because they do not, and are not
apt to, make any contribution to Australia's objective through any of the three mechanisms, while
entailing considerable trade restrictiveness. 252 In this context, the complainants argued that the
assumption underlying the adoption of tobacco plain packaging measures in Australia rests on
fundamental misconceptions regarding behavioural theories.253
6.60. Specifically, the complainants argued that the body of studies – mostly predating the
implementation of the TPP measures – that provided the evidentiary base for the adoption of the
measures (the TPP literature254) was not of a quality or methodological rigour sufficient to provide a
reliable basis to support the measures. 255 The complainants also argued that, even assuming that
the measures would, as Australia argued, be apt to have an impact on the "proximal" outcomes
(i.e. reduce the appeal of tobacco products, increase the effectiveness of GHWs, or limit the ability
of packaging to mislead consumers about the harmful effects of smoking), this w ould not have an
impact on relevant smoking behaviour.256 Instead, the complainants contended that the proposition
underlying the TPP measures had been refuted by the post -implementation empirical evidence

245 Honduras' appellant's submission, paras. 796-797 and 802.
246 Honduras' appellant's submission, paras. 1006 and 1018.
247 Honduras' appellant's submission, paras. 799-801, 805, 1010-1011, and 1013.
248 Dominican Republic's appellant's submission, section II.E.2 (see, in particular, para. 658).
249 Panel Report, para. 7.488.
250 Panel Report, para. 7.491 and fn 1443 thereto.
251 The complainants argued in the alternative that, even if the Panel were to conclude that the
TPP measures make some contribution to Australia's objective, the TPP measures would still be "more
trade-restrictive than necessary" because various alternative measures would be available to Australia that are
less trade-restrictive and could achieve an equivalent degree of contribution. (Honduras' first written
submission to the Panel, para. 911; Dominican Republic's first written submission to the Panel, paras. 1019
252 Panel Report, paras. 7.426 and 7.434.
253 Panel Report, paras. 7.426 and 7.434.
254 We note the Panel's explanation that the term "TPP literature" was used in the Panel Report "without
implying a specific list of relevant studies". The Panel noted that the complainants had presented a set of
68 studies that they had referred to as "the PP literature" (Panel Exhibits JE-24(1)-(68)), as well as a number
of expert reports containing reviews of relevant TPP-related studies. The Panel further noted that these lists
overlapped partially with the literature referred to by Australia. The Panel stated that it referred to this body of
studies generally as "the TPP literature". (Panel Report, fn 1485 to the title of section 7.2.5.3.5.1. See also
255 Panel Report, paras. 7.518-7.521.
256 Panel Report, para. 7.520.
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available at the time of the Panel proceedings, which purportedly demonstrated that smoking
prevalence had not been reduced as a result of the TPP measures.257
6.61. The Panel began its assessment of the evidence pertaining to the design, structure, and
intended operation of the TPP measures by addressing the complainants' overall critique of the
TPP literature.258 The Panel considered the complainants' crit ique to be unpersuasive, and instead
found that "the studies forming the TPP literature come from respected and qualified sources, focus
on relevant outcomes and have not been shown to be, overall, so methodologically flawed that they
should be dismissed i n their entirety as an unreliable evidentiary base in support of tobacco plain
packaging."259
6.62. The Panel then proceeded to examine, with extensive references to the individual studies
constituting the TPP literature, whether and to what extent the TPP measures were expected to have
an impact on the three proximal outcomes (or mechanisms) and, ultimately, on smoking behaviour.
With respect to the three proximal outcomes, the Panel was not persuaded that:
a. the complainants had shown that the TPP measures would not be capable of reducing the
appeal of tobacco products, and thereby contribute to Australia's objective of improving
public health by reducing the use of, and exposure to, tobacco products260;
b. the complainants had demonstrated that the TPP measures would not be capable of
increasing the effectiveness of GHWs, and thereby contribute to Australia's objective of
improving public health by reducing the use of, and exposure to, tobacco products261; and
c. the complainants had demonstrated that the TPP measures, by their design, would not be
capable of reducing the ability of tobacco packaging to mislead consumers about the
harmful effects of smoking; or that any such contribution could add nothing to what can
be achieved under the Australian Consumer Law.262
6.63. Accordingly, the Panel found that, overall, the complainants had failed to demonstrate that
the TPP measures would be incapable of contributing to Australia's objective of improving public
health by reducing the use of, and exposure to, tobacco p roducts, through the operation of the
three mechanisms identified in the TPP Act, in combination with other relevant tobacco control
measures applied by Australia.263 Rather, the Panel considered that:
[I]n a regulatory context where tobacco packaging would otherwise be the only
opportunity to convey a positive perception of the product through branding, as is the
case in Australia, it appears to us reasonable to hypothesize some correlation between
the removal of such design features and the appeal of the pr oduct, and between such
reduced product appeal and consumer behaviours. It also does not appear
unreasonable, in such a context, in light of the evidence before us, to anticipate that
the removal of these features would also prevent them from creating a conflicting signal
that would undermine other messages that seek to raise the awareness of consumers
about the harmfulness of smoking that are part of Australia's tobacco control strategy,
including those arising from GHWs.264
6.64. The Panel stressed that these conclusions were intermediate in nature, and that the probative
value of the pre -implementation evidence was to be assessed in light of the Panel's subsequent
examination of the actual impact of the TPP measures, based on the evidence pertaining to their
application following the measures' entry into force (i.e. the "post-implementation" evidence).265

257 Panel Report, paras. 7.485-7.486.
258 Panel Report, section 7.2.5.3.5.1.
259 Panel Report, para. 7.639.
260 Panel Report, para. 7.777.
261 Panel Report, para. 7.868.
262 Panel Report, para. 7.927.
265 See, for example, Panel Report, paras. 7.495-7.500, 7.644, 7.779, 7.870, and 7.928.
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6.1.2.3.2.3 Whether the Panel acted inconsistently with Article 11 of the DSU by
inappropriately attaching probative value to the TPP literature
6.65. Honduras claims that the Panel failed in its duty under Article 11 of the DSU – including by
failing to provide a reasoned and adequate explanation and by treating the evidence in a one-sided
manner in favour of Australia – because it inappropriately attached probative value to the stu dies
forming the TPP literature.266 In particular, Honduras highlights that the Panel acknowledged that
the studies forming this literature focus on "non -behavioural" outcomes (i.e. "proximal" outcomes
or the "mechanisms" of the TPP measures) and that, there fore, they alone are not informative of
the ultimate question of whether the TPP measures contribute to Australia's objective of reducing
the use of, and exposure to, tobacco products.267 Honduras also notes that the Panel accepted that
the ideal test for examining the effectiveness of the TPP measures would have been a randomized,
longitudinal, and counterfactual study, but that this was not the methodology used in the
pre-implementation studies.268 Honduras observes that, notwithstanding the "serious limitations" of
the pre-implementation studies, the Panel stated that such individual flaws were not "fatal" because
the studies should not be assessed in isolation but, rather, in the wider context of the entire body
of studies, taking into consideration their "c ombined strength" and consistency with the wider
literature.269 In Honduras' view, however, "[t]here is no logic in saying that one bad study would be
more reliable if it is bundled with other bad studies", and, to the contrary, "no probative value or
weight can be given" to such "bad" studies.270
6.66. Australia disagrees wi th Honduras' contention that the Panel failed to conduct an objective
assessment of the matter before it by assigning probative value to the pre-implementation evidence
despite its "serious limitations". As Australia sees it, Honduras' claims of error are directed at the
Panel's discretion to assess the credibility, determine the weight, and make findings on the basis of
the evidence on the Panel record. 271 As such, Australia claims that Honduras is asking us to
effectively reweigh that evidence. 272 Australia stresses that, contrary to Honduras' assertion, the
Panel carefully scrutinized the complainants' criticisms of the TPP literature273 – which were based
on the focus of the TPP literature; the lack of randomized, longitudinal, and counterfactual studies;
and the alleged lack of methodological rigour – and explained why it did not find these criticisms
persuasive.274
6.67. We note at the outset that Honduras' claim concerns only a portion of the Panel's analysis of
the evidence pertaining to the design, structure, and intended operation of the TPP measures,
namely, the section of the Panel Report where the Panel assessed the overall quality and reliability
of the TPP literature.275 Indeed, in its appellant's submission, Honduras refers primarily to the
paragraphs276 of sec tion 7.2.5.3.5.1 of the Panel Report, titled "Critique of the 'plain packaging
literature' (TPP literature)", where the Panel addressed the complainants' pre -emptive argument
that this body of evidence, as a whole , suffers from serious methodological flaws and lacks the

266 Honduras' appellant's submission, paras. 800 and 805.
267 Honduras' appellant's submission, para. 799 (quoting Panel Report, paras. 7.553, 7.564, and 7.642).
268 Honduras' appellant's submission, para. 799 (quoting Panel Report, paras. 7.557, 7.588, and 7.605,
269 Honduras' appellant's submission, paras. 800 and 1010 (quoting Panel Report, paras. 7.627
and 7.641).
270 Honduras' appellant's submission, para. 801. Honduras also argues that, by adopting a one-sided
"totality of evidence" approach, the Panel allowed non-scientific and sub-standard evidence to remain included
in the overall analysis whenever it supported Australia's case, while rejecting evidence submitted by the
complainants as soon as it identified an individual flaw in it. (Ibid., paras. 801-803. See also ibid.,
paras. 1005-1006 and 1018)
271 Australia's appellee's submission, para. 535.
272 Australia's appellee's submission, para. 537.
273 Australia's appellee's submission, para. 536 (referring to Panel Report, paras. 7.539-7.644).
274 Australia's appellee's submission, para. 536 (referring to Panel Report, paras. 7.555,
7.561-7.562, 7.610, and 7.638-7.639).
275 See Panel Report, para. 7.639.
276 See, for example, Panel Report, paras. 7.499, 7.553, 7.557, 7.562, 7.564, 7.588, 7.605, 7.627,
and 7.641.
WT/DS435/AB/R • WT/DS441/AB/R

scientific rigour and objectivity required to form a reliable evidentiary base for a policy intervention
of this kind.277
6.68. As regards Honduras' contention that the Panel acknowledged the "serious limitations"
inherent in the individual studies forming the TPP literature, we note that Honduras identifies
two features of those studies as constituting such limitations: (i) the focus of the TPP literature on
"proximal" or "non -behavioural" outcomes, rather than on the ultimate question of whether t he
TPP measures affect smoking behaviour; and (ii) the lack of randomized, longitudinal, and
counterfactual studies that the Panel suggested would have been "ideal".278
6.69. We observe that, contrary to what Honduras asserts on appeal, the Panel rejected, rather
than acknowledged, the view that these features constituted a flaw in the individual studies forming
the TPP literature, of such nature as to fundamentally undermine their probative value.
6.70. Specifically, with respect to the focus of the TPP literature on no n-behavioural outcomes
(item (i) in paragraph 6.68. above), the Panel noted that much of the TPP literature focuses on the
ability of plain packaging to have an impact on the three "mechanisms" (or "proximal" or
"non-behavioural" outcomes) through which the TPP measures are intended to act, rather than on
the measures' impact on smoking behaviour 279, which is the ultimate target of the TPP measures.
Nonetheless, the Panel considered that the focus of the TPP literature on non-behavioural outcomes
"does not … constitute an inherent flaw , provided that this is understood as constituting
one component of a broader evidence base". 280 The Panel explaine d that the TPP measures were
designed to act on these "non -behavioural" or "proximal" outcomes, with a view to ultimately
affecting smoking behaviours, and that the three "mechanisms" identified in the TPP Act closely
reflect the specific "non -behavioural" outcomes that were studied in a large portion of the
TPP literature predating the measures' adoption. 281 The Panel also considered that, while a
consideration of the impact of the measures on smoking behaviour is "directly relevant" to its
assessment282, ther e is no reason to exclude , ex ante, that the evidence relating to "proximal"
outcomes also informs that assessment, to the extent that it would inform the impact of the
measures on smoking behaviour.283
6.71. With respect to the alleged lack of randomized, longitu dinal, and counterfactual studies
(item (ii) in paragraph 6.68. above), the Panel noted that there is "some convergence" among
researchers that the "ideal test" of the effectiveness of plain packaging would have been "a
longitudinal randomi zed controlled trial in a population -based setting, where packaging is
manipulated in some markets but not in others". 284 However, t he Panel observed that the
evidence – including the Dominican Republic's own evidence 285 indicated that there are important
limitations to the feasibility or utility of conducting such randomized controlled experiments, as well

277 See Panel Report, para. 7.523. Honduras does not challenge particular aspects of the Panel's
subsequent examination, with reference to the individual studies forming the TPP literature and other evidence,
of whether and to what extent the TPP measures are expected to have an impact on each of the
three "mechanisms" (or "proximal" outcomes) identified in the TPP Act (i.e. reducing the appeal of tobacco
products, enhancing the effectiveness of GHWs, and reducing the ability of the pack to mislead consumers),
and, in turn, on smoking behaviour.
279 Panel Report, paras. 7.552-7.553.
281 Panel Report, para. 7.555.
282 Panel Report, para. 7.495.
283 Panel Report, para. 7.498.
284 Panel Report, para. 7.557.
285 For example, the Panel noted that one of the complainants' experts, Professor Ajzen, explained that
"the difficulty lies in the fact that the experimental situation created prior to implementation of the [TPP] Act is
not an exact reproduction of the situation that would be encountered afterwards" and that this can jeopardize
the experiment's external validity. (Panel Report, para. 7.558 (quoting I. Ajzen, Supplemental Report:
Pre-Implementation Empirical Testing of Behavioral Theories Relied on by Australia to Justify Plain Packaging
(7 July 2015) (Ajzen Supplemental Report) (Panel Exhibit DOM/HND/IDN-4), para. 56) Professor Ajzen further
observed that "a limitation on the study of smoking behavior is of an ethical nature", and that the "practical
limitations of studying the impact of plain packaging on behavior prior to implementation of the [TPP] Act draw
attention to the importance of the research … regarding the impact of plain packaging on the theoretical
determinants of smoking behavior". (Panel Report, paras. 7.559-7.560 (quoting Ajzen Supplemental Report
(Panel Exhibit DOM/HND/IDN-4), paras. 57 and 59) (emphasis original)))
WT/DS435/AB/R • WT/DS441/AB/R

as ethical issues that would arise in conducting such experiment s.286 As such, the Panel was not
persuaded that "the absence of a study, prior to the implementation of the measures, that utilized
an 'ideal' experimental design allowing an observation of actual smoking behaviours constitutes a
flaw in the TPP literature, of such nature as to fundamentally undermine its probative value and the
evidentiary base underlying the adoption of the TPP measures."287
6.72. Accordingly, we disagree with Honduras that the Panel acknowledged that either of the
two features of the studies forming the TPP literature constitutes an inherent flaw that is so fatal as
to fundamentally undermine the probative value of the TPP literature as a whole.
6.73. Honduras also takes issue with the Panel's reasoning that, while some of the studies forming
the TPP literature may suffer from certain methodological flaws or limitations, these limitations were
not "fatal" when taking into account the studies' "combined strength" and consistency with the wider
literature.288 According to Honduras, "[t]here is no logic in saying that one bad study would be more
reliable if it is bundled with other bad studies."289
6.74. We disagree. Indeed, rather than offering "no logic" in finding that the TPP literature comes
from respected and qualified sources, the Panel offered a detailed explanation for why it considered
that the studies forming this literature, as a whole, provided a reasonable basis in support of the
proposition underlying the adoption of the TPP measures in Australia. For example, in the context
of addressing the complainants' argument that the studies forming the TPP literature are biased and
lack objectivity290, the Panel took note of Australia's suggestion that this body of studies, "taken
together as a whole", supports the effectiveness of tobacco plain packaging.291 The Panel agreed
with Australia, stating that "to the extent that convergent research outcomes would reflect the
results of a range of studies consistent with accepted standards in their respective fields, this may
confirm the strength of the conclusions reached in individual studies, rather than demonstrate
publication or researcher bias." 292 In doing so, the Panel cited specific evidence in support of its
view, namely, several expert opinions suggesting that "consistency of association" an d "coherence

286 Panel Report, para. 7.558 (referring to Ajzen Supplemental Report (Panel Exhibit DOM/HND/IDN-4),
paras. 56-57; G. Fong, Supplemental Report in Response to Professor Ajzen (8 September 2015) (Fong
Supplemental Report) (Panel Exhibit AUS-531), paras. 167-168; C. Moodie, M. Stead, L. Bauld, A. McNeill,
K. Angusa, K. Hinds, I. Kwan, J. Thomas, G. Hastings, and A. O'Mara-Eves, Plain Tobacco Packaging:
A Systematic Review, UK Centre for Tobacco Control Studies, University of Stirling (2012) (Stirling Review)
(Panel Exhibits AUS-140, HND-130, CUB-59), pp. 17-18 and 88-89; M. Stead, C. Moodie, K. Angus, L. Bauld,
A. McNeill, J. Thomas, G. Hastings, K. Hinds, A. O'Mara-Eves, I. Kwan, R. Purves, and S. Bryce, "Is Consumer
Response to Plain/Standardised Tobacco Packaging Consistent with Framework Convention on Tobacco Control
Guidelines? A Systematic Review of Quantitative Studies", PLoS One, Vol. 8 (2013),
doi:10.1371/journal.pone.0075919 (Panel Exhibit CUB-58), p. 8; S. Ulucanlar, G. Fooks, J. Hatchard, and
A. Gilmore, "Representation and Misrepresentation of Scientific Evidence in Contemporary Tobacco Regulation:
A Review of Tobacco Industry Submissions to the UK Government Consultation on Standardised Packaging",
PLoS Medicine, Vol. 11 (2014), doi:10.1371/journal.pmed.1001629 (Panel Exhibit AUS-501), p. 6; C. Chantler,
Standardised Packaging of Tobacco: A Report of the Independent Review Undertaken by Sir Cyril Chantler
(April 2014) (Chantler Report) (Panel Exhibits AUS-81, CUB-61), para. 1.19; D. Hammond, Standardized
Packaging of Tobacco Products: Evidence Review, prepared for the Irish Department of Health (March 2014)
(Hammond Review) (Panel Exhibit AUS-555), p. 35). See also ibid., para. 7.561.
287 Panel Report, para. 7.562.
288 Honduras' appellant's submission, paras. 800 and 1010 (quoting Panel Report, paras. 7.627
and 7.641).
290 See Panel Report, paras. 7.543-7.551 (under the heading "Objectivity of the TPP literature").
291 Panel Report, para. 7.536 (referring to Australia's first written submission to the Panel, Annex E,
para. 4; Expert Report of Dr Geoffrey T. Fong (4 March 2015) (Fong Report) (Panel Exhibit AUS-14); G. Fong,
Supplemental Report in Response to Professor Ajzen (8 September 2015) (Fong Supplemental Report) (Panel
Exhibit AUS-531); G. Fong, Supplementary Report in Response to Professors Inman and Kleijnen (27 October
2015) (Fong Second Supplemental Report) (Panel Exhibit AUS-585), para. 8; Expert Report of J. Samet
(5 March 2015) (Samet Report) (Panel Exhibit AUS-7); F. Chaloupka, Expert Report on Australia's Plain
Packaging Legislation (7 March 2015) (Panel Exhibit AUS-9); F. Chaloupka, Report on Selected Issues Raised in
Ongoing Challenges to Australia's Tobacco Plain Packaging Measure (7 December 2015) (Panel
Exhibit AUS-590); Expert Report of Dr Paul Slovic (4 March 2015) (Slovic Report) (Panel Exhibit AUS-12)).
WT/DS435/AB/R • WT/DS441/AB/R

of association" are of "particular relevance to evaluating the evidence related to plain packaging",
and that the TPP literature studies demonstrated both.293
6.75. In addition, the Panel examined several expert reports that reviewed the methodologica l
rigour of the individual TPP studies, in the context of addressing the complainants' argument that
these studies fail to meet the accepted standards of methodological rigour. These expert reports
comprised: (i) three expert reports commissioned by the co mplainants, namely, the Inman et al.
Peer Review Project294, the Kleijnen Systematic Review 295, and the Klick TPP Literature Report 296;
and (ii) external reviews of the TPP literature conducted outside the Panel proceedings, including in
particular the Stirling Review297 and the Chantler Report.298 The reviews commissioned by the
complainants (item (i) above) concluded that the TPP studies do not provide a sound basis on which
to base claims about the expected effects of the TPP measures in Australia 299, whereas the
Stirling Review and the Chantler Report (item (ii) above) concluded that the TPP literature
reasonably suggests that plain packaging has the potential to contribute to reducing the harm caused
by tobacco smoking.300
6.76. Having examined these expert reports, overa ll, the Panel "accord[ed] particular weight" to
the assessments contained in the Chantler Report.301 The Panel considered it significant that this
report was commissioned outside the context of th ese disputes, and included a process whereby
independent reviewers assessed the quality of individual studies comprising the TPP literature, as
well as the quality of the systematic review of this literature in the Stirling Review. 302 By contrast,
the Panel questioned the conclusions stated in the complainants' commiss ioned reviews. For
example, the Panel noted that the Inman et al. Peer Review Project concluded that the plain
packaging literature "is of surprisingly low quality", such that the studies forming this literature are
"unacceptable for publication in a major consumer research journal in their current form".303 In the
Panel's view, however, the fact that most of the papers at issue had in fact been published in various
specialized public health and medical journals raised "serious doubts" about the criteria and
benchmarks used by Professor Inman.304 The Panel considered that a similar criticism applied to the
Kleijnen Systematic Review. 305 In short, we observe that, while the Panel ultimately lent more
credence to the expert opinions in support of Australia's proposi tion (in particular the

293 Panel Report, para. 7.550 (referring to Samet Report (Panel Exhibit AUS-7), paras. 117, 119, 125,
and 128; Stirling Review (Panel Exhibits AUS-140, HND-130, CUB-59), p. 90; Fong Report
(Panel Exhibit AUS-14), para. 71; Fong Second Supplemental Report (Panel Exhibit AUS-585), para. 31;
Hammond Review (Panel Exhibit AUS-555), p. 31).
294 J. Inman, Plain Packaging Literature Peer Review Project (3 October 2014) (Inman et al. Peer Review
Report) (Panel Exhibit DOM/HND-3).
295 J. Kleijnen, A. Bryman, and M. Bosnjak, Quality of the Empirical Evidence Testing the Impact of Plain
Packaging on Tobacco Consumption: A Systematic Review (6 October 2014) (Kleijnen Systematic Review)
(Panel Exhibit DOM/HND-4).
296 Report by J. Klick on Plain Packaging Literature and Research Methodology (2 October 2014)
(Klick TPP Literature Report) (Panel Exhibit UKR-6).
297 Stirling Review (Panel Exhibits AUS-140, HND-130, CUB-59); C. Moodie, K. Angus, M. Stead, and
L. Bauld, "Plain Tobacco Packaging Research: An Update", Centre for Tobacco Control Research, Institute for
Social Marketing, University of Stirling (2013) (Stirling Review 2013 Update) (Panel Exhibits AUS-216,
CUB-60).
298 Chantler Report (Panel Exhibits AUS-81, CUB-61).
299 Panel Report, paras. 7.567, 7.571, and 7.578.
300 Panel Report, paras. 7.591 (referring to Stirling Review (Panel Exhibits AUS-140, HND-130, CUB-59),
p. v; Stirling Review 2013 Update (Panel Exhibits AUS-216, CUB-60), p. 2) and 7.600 (referring to Chantler
Report (Panel Exhibits AUS-81, CUB-61), para. 18).
302 Panel Report, para. 7.633.
303 Panel Report, para. 7.567 (quoting Inman et al. Peer Review Report (Panel Exhibit DOM/HND-3),
para. 69, p. 47).
304 Panel Report, para. 7.569 (referring to Inman et al. Peer Review Report (Panel Exhibit DOM/HND-3),
para. 13).
305 Panel Report, para. 7.577. The Panel noted "the extreme nature of the results of the Kleijnen
Systematic Review, which identified fatal flaws in each of the assessed 31 papers (most of which were
otherwise published in peer-reviewed journals)". This caused the Panel to "question the standard by which the
studies were judged, and whether the particular context of tobacco control research was taken into account".
(Ibid.)
WT/DS435/AB/R • WT/DS441/AB/R

Chantler Report) than to the expert opinions commissioned by the complainants, it explained why
the former are more reliable than the latter, instead of offering "no logic" in this regard.
6.77. In light of the foregoing, we do not agree with Honduras that the Panel erred because it failed
to offer a reasoned and adequate explanation, or treated evidence in a one -sided manner, in
reaching its conclusion that the TPP literature can be considered as coming from respected and
qualified sources, and therefore should not be dismissed in its entirety. 306 Nor do we consider that
any such alleged error would be so material as to undermine the objectivity of the Panel's
assessment of the matter before it. In this regard, we emphasize that it was the c omplainants, not
the Panel, who bore the burden of adducing credible evidence to prove their proposition that the
TPP measures are incapable of contributing to Australia's objective. Thus, even assuming that the
pre-implementation evidence had not been of sufficient probative value as argued by Honduras, it
would not necessarily mean that the Panel erred in reaching its intermediate conclusion, based on
that evidence, that the complainants had failed to demonstrate that the TPP measures would not be
capable of contributing to Australia's objective.307
6.78. Accordingly, we find that Honduras has failed to demonstrate that the Panel acted
inconsistently with Article 11 of the DSU by relying on the TPP literature as part of its broader
evidentiary base for assessing the contribution of the TPP measures.
6.1.2.3.2.4 Whether the Panel acted inconsistently with Article 11 of the DSU by
disregarding the Dominican Republic's evidence
6.79. The Dominican Republic claims that the Panel acted inconsistently with Article 11 of the DSU
by disreg arding the Dominican Republic's evidence that directly contradicted the Panel's
intermediate conclusions that the TPP measures would be apt to affect smoking behaviour by:
(i) reducing the appeal of tobacco products ( the first mechanism of the TPP measures); and
(ii) enhancing the effectiveness of GHWs (the second mechanism of the TPP measures).308 On that
basis, the Dominican Republic requests us to reverse these intermediate conclusions, as well as
other related findings.309
6.80. The Dominican Republic highlights that the Panel's intermediate conclusion that the
TPP measures would be capable of reducing the appeal of tobacco products (the first mechanism)
was premised on its proposition that tobacco packaging can function as a mean s to convey
positive perceptions to consumers .310 Similarly, the Dominican Republic observes that the Panel
relied on the same proposition when it concluded that the TPP measures would increase the
effectiveness of GHWs (the second mechanism) 311 by "remov[ing], or at least significantly
reduc[ing], the competition (both in terms of attention, and between different goals) between the
negative message conveyed by the GHW, and branded elements of the package".312
6.81. However, in the Dominican Republic's view, such a proposition was directly refuted by several
pieces of evidence it submitted to the Panel 313, which purportedly demonstrated that, based on

306 Panel Report, paras. 7.638-7.639.
307 Panel Report, para. 7.929.
308 Dominican Republic's appellant's submission, paras. 657-658 (referring to Panel Report,
para. 7.1034). We note that the Dominican Republic takes issue with the Panel's findings regarding the
TPP measures' anticipated contribution through the first and second mechanisms only, and not the
third mechanism (i.e. reducing the ability of the pack to mislead consumers). See Dominican Republic's
appellant's submission, para. 726.
309 Dominican Republic's Notice of Appeal, para. 8 (referring to Panel Report, paras. 7.518-7.929, 7.931,
7.1024-7.1034, and 7.1038).
310 Dominican Republic's appellant's submission, paras. 685-694.
311 Dominican Republic's appellant's submission, paras. 695-696.
312 Dominican Republic's appellant's submission, para. 696 (quoting Panel Report, para. 7.860).
313 In its appellant's submission, the Dominican Republic refers to five expert reports it submitted to the
Panel as constituting the evidence that contradicted the Panel's conclusions. These expert reports are:
(i) I. Ajzen, Examination of Australia's Reliance on Behavioral Theories to Support its Tobacco Plain Packaging
Legislation (31 May 2015) (Ajzen Report) (Panel Exhibit DOM/HND/IDN-3) (in particular paras. 22, 174-176,
and 178); (ii) I. Ajzen, The Role of Theory and Empirical Evidence in Evaluating the Effectiveness of Plain
Packaging: Response to Australia and its Experts (27 October 2015) (Ajzen Rebuttal Report) (Panel Exhibit
DOM/HND/IDN-5) (in particular sections 3.2.2 and 3.2.3); (iii) I. Ajzen, Response to Questions 146, 202,
and 203 by the Panel (8 December 2015) (Ajzen Response to Panel question Nos. 146, 202, and 203)
WT/DS435/AB/R • WT/DS441/AB/R

Australia's own surveys, tobacco packaging conveyed negative, rather than positive, perceptions to
adults and adolescents in the context of Australia's market before the implementation of the
TPP measures.314 The Dominican Republic thus considers that, in reaching its intermediate
conclusions by assuming that tobacco packaging can convey positive perceptions in Australia, the
Panel failed to engage with evidence that was material to the Dominican Republic's case because it
directly contradicted the Panel's conclusions. 315 The Dominican Republic also considers that the
Panel's disregard of its evidence amounts to " incoherent" reasoning because the Panel failed to
reconcile the importance it attached to the ability of tobacco packaging to convey positive
associations in the Australian context, with the empirical evidence showing that partially branded
tobacco packaging, with large GH Ws, was actually perceived negatively in the Australian context
before the implementation of the TPP measures.316
6.82. Australia considers that the Dominican Republic's claim that the Panel failed to engage with
its evidence "constitutes a thinly disguised attemp t to discredit the Panel's finding that tobacco
packaging has been used by the industry for decades to convey positive perceptions of tobacco
products".317 As Australia sees it, the Panel's findings are amply documented in the Panel Report
and duly supported by credible evidence from recognized and reputable sources.318 Thus, according
to Australia, the Panel had not exceeded the bounds of its discretion under Article 11 simply by not
attributing to the Dominican Republic's evidence the weight and significance that the
Dominican Republic attributed to it, or by failing to include an express reference to a specific piece
of evidence in reaching its findings. 319 Australia also disagrees with the Dominican Republic's
proposition that there is an internal contradiction between the Panel's finding that branded tobacco
packaging can convey positive associations, on the one hand, and evidence of negative perceptions
of branded tobacco products among many Australians prior to implementation of the TPP measures,
on the othe r hand. 320 Australia notes in this context that White et al. 2015a (on which the
Dominican Republic's evidence relied) found that tobacco plain packaging both "reduced the appeal
of tobacco packs to adolescents" and "increased negative perceptions of packs" 321, which in

(Panel Exhibit DOM/HND/IDN-6) (in particular para. 49); (iv) L. Steinberg, Adolescent Decision-Making and the
Prevention of Underage Smoking: The Role of Plain Packaging: A Response to Expert Evidence Submitted on
Behalf of Australia (3 July 2015) (Steinberg Rebuttal Report) (Panel Exhibit DOM/HND-10) (in particular
paras. 35 and 37); and (v) L. Steinberg, Adolescent Decision Making and the Prevention of Underage Smoking:
The Role of Plain Packaging: A Second Response to Expert Evidence Submitted on Behalf of Australia
(23 October 2015) (Steinberg Second Rebuttal Report) (Panel Exhibit DOM/HND-15) (in particular paras. 26,
33, and 39). (Dominican Republic's appellant's submission, fn 617 to para. 701) The Dominican Republic also
cites various parts of its written submissions to the Panel in which it referred to this evidence, namely,
Dominican Republic's second written submission to the Panel, paras. 443-456; response to Panel question
No. 134, para. 134; opening oral statement at the second substantive meeting of the Panel, para. 50;
comments on Australia's response to Panel question No. 170, paras. 273-274; comments on Australia's
response to Panel question No. 196, paras. 585-601, 633-634, 663-665, and 669; comments on Australia's
response to Panel question No. 200, paras. 783, 797, and 804-806; comments on Australia's response to Panel
question No. 201, paras. 878-880; comments on Australia's response to Panel question No. 204, para. 898.
(Ibid.)
314 Dominican Republic's appellant's submission, paras. 703-704, 710, 713, 715, 731, 733, and 745.
315 Dominican Republic's appellant's submission, paras. 701 and 728.
316 Dominican Republic's appellant's submission, paras. 740-746.
317 Australia's appellee's submission, para. 513.
318 Australia's appellee's submission, paras. 514-516 (referring to Panel Report, para. 7.660, in turn
referring to US Department of Health and Human Services, Preventing Tobacco Use Among Youth and Young
Adults: A Report of the Surgeon General (Atlanta, 2012) (Panel Exhibit AUS-76); British American Tobacco,
Packaging Brief (2 January 2001), Bates Nos. 325211963-325211964 (Panel Exhibit AUS-23); N. Tavassoli,
Report on the World Trade Organization Dispute Settlement Proceedings Concerning Australia's Tobacco Plain
Packaging Legislation (10 March 2015) (Tavassoli Report) (Panel Exhibit AUS-10); Expert Report of
Dr Jean-Pierre Dubé (9 March 2015) (Panel Exhibit AUS-11); Slovic Report (Panel Exhibit AUS-12);
N. Tavassoli, Rebuttal to Arguments Raised in Exhibit DOM/HND-14 (26 October 2015)
319 Australia's appellee's submission, para. 516.
320 Australia's appellee's submission, para. 525.
321 Australia's appellee's submission, para. 526 (quoting V. White, T. Williams, and M. Wakefield, "Has
the Introduction of Plain Packaging with Larger Graphic Health Warnings Changed Adolescents' Perceptions of
Cigarette Packs and Brands?", Tobacco Control, Vol. 24 (2015), ii42-49 (White et al. 2015a) (Panel Exhibits
AUS-186, DOM-235), p. ii48).
WT/DS435/AB/R • WT/DS441/AB/R

Australia's view is consistent with the Panel finding that in the Australian context, branded packaging
can be used to convey positive perceptions to consumers.322
6.83. While the Dominican Republic presents rather lengthy arguments as to how the Panel failed
to make an objective assessment of the matter before it as required under Article 11 of the DSU323,
these arguments hinge on its proposition that the body of evidence it presented to the Panel directly
contradicted the Panel's intermediate conclusions that the measures would be apt to contribute to
Australia's objective by reducing the appeal of tobacco packaging (the first mechanism) and by
increasing the effectiveness of the GHWs (the second mechanism). Indeed, the Dominican Republic
repeatedly asserts and explains that: (i) the Panel's conclusion rests on the assumption that tobacco
packaging can function as a means to convey positive perceptions; and (ii) such an assumption was
refuted by the Dominican Republic's evidence purportedly demonstrating that tobacco packaging
conveyed negative perceptions in Australia before the implementation of the TPP measures.324
6.84. We review the relevant Panel findings, as well a s the nature and scope of the evidence in
question, in order to confirm whether there is indeed such a contradiction.
6.85. Looking first at the Panel's findings, we note that the Panel stated that a relevant assumption
underlying the first mechanism through whi ch the TPP measures are designed to contribute to
Australia's objective (i.e. reducing the appeal of tobacco products to consumers) is that, where
branding features are available on tobacco products or their retail packaging, they may act as
advertising an d thereby influence perceptions of tobacco products. 325 The Panel noted that the
complainants disagreed with such an assumption, and alleged that packaging is not a form of
advertising and does not have an impact on the decision to smoke.326
6.86. The Panel examined relevant evidence, and rejected the complainants' view that tobacco
packaging cannot act as an advertising or promotional tool, "including in Australia's 'dark market'"327,
i.e. in the market where product packaging is effectively the only means of brand co mmunication
due to the significant restrictions on advertising.328 Rather, the Panel found that tobacco packaging
"may be used, and has in fact been used" by the tobacco industry "to generate positive perceptions
of tobacco products". 329 In making these findin gs, the Panel underscored that a number of
documents coming from the tobacco industry itself recognize that "a key purpose of the use of
branding on tobacco products, including packaging, is to generate certain positive perceptions in
relation to the product in the eyes of the consumer", and that, in order to attract new consumers, it
is important to "mak[e] their products appealing to those most likely to initiate tobacco use
(i.e. youth), including through branded packaging".330 The Panel added that this observation is not
affected by the presence of Australia's expanded GHWs, which occupy 75% of the front pack face.331
6.87. With respect to the second mechanism of the TPP measures (i.e. enhancing the effectiveness
of GHWs), the Panel took note of paragraph 46 of the Article 11 FCTC Guidelines, which states that
the adoption of plain packaging measures "may increase the noticeability and effectiveness of health
warnings and messages, prevent the package from detracting attention from them, and address
industry package design techniques that may suggest that some products are less harmful than
others".332 In this regard, the Panel observed that the negative message conveyed by GHWs could

322 Australia's appellee's submission, para. 527 (referring to Panel Report, para. 7.1034). See also
ibid., paras. 528-531.
323 Dominican Republic's appellant's submission, section II.E.2.
324 Dominican Republic's appellant's submission, paras. 703, 707, 711-713, 715, 718, 724, 726-728,
730, 732, 740, and 743-746.
325 Panel Report, para. 7.647.
326 Panel Report, paras. 7.647 and 7.649.
328 Panel Report, para. 7.659.
330 Panel Report, paras. 7.660 and 7.1032. (emphasis added) See also ibid., para. 7.732.
331 Panel Report, para. 7.660.
332 Panel Report, para. 7.800 (quoting Guidelines for Implementation of Article 11 (Packaging and
Labelling of Tobacco Products), Document FCTC/COP3(10), excerpted from Conference of the Parties to the
WHO FCTC, "Decisions", Third Session, held in Durban, South Africa, 17 to 22 November 2008,
Document FCTC/COP/3/DIV/3 (16 February 2009) (Panel Exhibit JE-20), Annex, para. 46).
WT/DS435/AB/R • WT/DS441/AB/R

be contradicted by the positive imagery conveyed by branding elements on tobacco pac kaging333,
such that "the removal of the branding elements that may constitute a cause for adolescents to
associate tobacco products with positive imagery and rewards … would remove, or at least
significantly reduce, the competition … between the negative message conveyed by the GHW, and
branding elements of the package. "334 The Panel also stated that, "in a regulatory context where
tobacco packaging would otherwise be the only opportunity to convey a positive perception of the
product through branding", it is not unreasonable to anticipate that the removal of the design
features from tobacco packaging "would … prevent them from creating a conflicting signal that would
undermine other messages that seek to raise the awareness of consumers about the harmfulness of
smoking that are part of Australia's tobacco control strategy, including those arising from GHWs".335
6.88. The Panel's reasoning makes two points clear. First, the Panel found that branding elements
on tobacco packaging may be used, and indeed have been used, t o communicate positive imagery
to attract consumers (especially youth) and affect their smoking behaviour (e.g. initiation, cessation,
and relapse), including in Australia's "dark market" and in the presence of large GHWs. The Panel
therefore considered that removing the branding elements from tobacco packaging would be apt to
reduce the relative appeal of tobacco packaging (the first mechanism). Second, the Panel found
that, in the presence of both branding elements and GHWs, tobacco packaging would carry
two conflicting signals, namely, the positive imagery conveyed by the branding elements and the
negative message conveyed by GHWs. Thus, removing the branding elements from tobacco
packaging would allow GHWs to communicate the message about health risks more effectively,
without being disturbed by the positive perceptions generated by the branding elements (the
second mechanism).
6.89. In reaching these determinations, the Panel did not discuss, or make any finding regarding,
whether tobacco packaging as a whole – encompassing both the branding elements and the
GHWs – would, overall, be perceived positively or negatively by an average person. Instead, the
Panel's findings speak only to whether the portion of tobacco packaging not covered by health
warnings could be exploited for purposes of communicating positive imagery to consumers, so as to
increase the relative appeal of tobacco packaging, and to mitigate or undermine the negative
message conveyed by the GHWs.
6.90. Turning to the Dominican Republic's evidence to determine whether it directly contradicted
the Panel's findings in question, we note that, in its appellant's submission, the Dominican Republic
points to five reports prepared by two experts for the complainants (including
the Dominican Republic), na mely, Professor Ajzen and Professor Steinberg. 336 In these expert
reports, both professors observe that tobacco packaging was perceived negatively by both
adolescents337 and adults 338 in the Australian market, before the implementation of the
TPP measures. As th e Dominican Republic highlights, these observations are based on Australia's
survey data, namely, the results from the Australian Secondary Students Alcohol Smoking and Drug

333 For example, the Panel noted Professor Tavassoli's discussion of the notion of "selective attention",
meaning that human brains are not capable of attending to numerous elements that may simultaneously
compete for attention. (Panel Report, para. 7.858 (referring to Tavassoli Report (Panel Exhibit AUS-10),
paras. 110-113)) The Panel also noted the discussion of the theory of "goal competition", according to which
plain packaging can increase GHWs' effectiveness by "allowing GHWs to activate more effectively already held
beliefs at critical moments, i.e. by limiting the activation of competing goals that momentarily inhibit the goal
of staying healthy", without "requir[ing] GHWs to change consumer beliefs about the health benefits of not
334 Panel Report, para. 7.860.
335 Panel Report, para. 7.1034. (emphasis added; original emphasis omitted) See also ibid., para. 7.860
(stating that, in the presence of tobacco plain packaging, "the only message communicated by the packaging is
the GHW", and "no association with rewards is communicated" (emphasis original)).
336 These expert reports are: (i) Ajzen Report (Panel Exhibit DOM/HND/IDN-3) (in particular paras. 22,
174-176, and 178); (ii) Ajzen Rebuttal Report (Panel Exhibit DOM/HND/IDN-5) (in particular sections 3.2.2
and 3.2.3); (iii) Ajzen Response to Panel question Nos. 146, 202, and 203 (Panel Exhibit DOM/HND/IDN-6)
(in particular para. 49); (iv) Steinberg Rebuttal Report336 (Panel Exhibit DOM/HND-10) (in particular paras. 35
and 37); and (v) Steinberg Second Rebuttal Report (Panel Exhibit DOM/HND-15) (in particular paras. 26, 33,
and 39). (Dominican Republic's appellant's submission, fn 617 to para. 701)
337 Ajzen Report (Panel Exhibit DOM/HND/IDN-3), paras. 22, 174, and 177; Steinberg Second Rebuttal
Report (Panel Exhibit DOM/HND-15), para. 26.
338 See, for example, Ajzen Response to Panel question Nos. 146, 202, and 203 (Panel Exhibit
DOM/HND/IDN-6), para. 49.
WT/DS435/AB/R • WT/DS441/AB/R

(ASSAD) survey reported in White et al. 2015a (for adolescents)339, and the results from the National
Tobacco Plain Packaging Tracking Survey (NTPPTS) (for adults).340
6.91. There is an important limitation in the scope of the evidence referred to by the
Dominican Republic: the observations offered by Professors Ajzen and Steinberg in their respective
expert reports address the appeal of tobacco packaging as a whole, encompassing both the branding
elements and the GHWs, as opposed to the branding elements alone. Indeed, in the ASSAD survey341
on which Professors Ajzen and Steinberg relied, the respondents were asked to rate the appeal of
actual cigarette packs that they had seen in the previous six months, as well as of photographic
images of four brands of Australian cigarettes .342 Both the cigarette packs and the photographic
images included a GHW as mandated at that time. 343 Thus, when Professors Ajzen and Steinberg
state that tobacco packaging was perceived negatively by adolescents based on the results from the
ASSAD survey, they are discussing whether the overall perception of tobacco packaging as a whole,
including both the branding elements and GHWs, was positive or negative. T he same observation
applies also to the NTPPTS survey, on the basis of which Professor Ajzen observed that tobacco
packaging was perceived negatively by adults before the implementation of the TPP measures.344
6.92. In light of these observations, we disagree with the Dominican Republic that there is a direct
contradiction between the Panel's finding that tobacco packaging can be used, and indeed has been
used, to convey positive perceptions, on the one hand, and the proposition of the
Dominican Republic's evidence that tobacco packaging was perceived negatively before the
implementation of the TPP measures, on the other hand. This is because, while the Panel's finding
spoke to whether the branding elements of tobacco packaging can generate positive imagery, the
Dominican Republic's evidence pertained to the overall perception of tobacco packaging,
encompassing both the positive perceptions conveyed by the branding elements and the negative
message conveyed by the GHWs. We do not consider that saying that the brandin g elements of
tobacco packs can create positive imagery necessarily means that such positive imagery cannot,
overall, be outweighed by the negative perception conveyed by the GHWs, such that the overall
average appeal rating of tobacco packs remains negative.
6.93. We also do not see any problem with the Panel stating that removal of the branding elements
by the TPP measures would reduce the appeal of tobacco packaging/products, even if the overall
appeal rating of tobacco packs was not positive before the implem entation of the TPP measures.
Indeed, we would read such a statement simply to mean that tobacco packs that were not attractive
(or had negative appeal) before the implementation of the TPP measures would become even less
attractive (or have increased negative appeal) due to the TPP measures. Indeed, this is exactly what
the Dominican Republic's own expert, Professor Ajzen, observed when he stated that "there was
never any reason to doubt that plain packs, with larger GHWs, would be less visually appealing than
the packs previously marketed with branding and smaller GHWs." 345 He confirmed that proposition
empirically, explaining that the TPP measures and enlarged GHWs have resulted in degrees of

339 Ajzen Report (Panel Exhibit DOM/HND/IDN-3), paras. 22 and 174 (referring to White et al. 2015a
(Panel Exhibits AUS-186, DOM-235)); Steinberg Second Rebuttal Report (Panel Exhibit DOM/HND-15),
para. 26 (referring to White et al. 2015a (Panel Exhibits AUS-186, DOM-235)).
340 Ajzen Response to Panel question Nos. 146, 202, and 203 (Panel Exhibit DOM/HND/IDN-6), para. 49
(referring to the NTPPTS data). See also Dominican Republic's appellant's submission, para. 676.
341 The data from this survey relate to adolescents' perceptions of cigarette packs and brand appeal,
before and after the implementation of the TPP measures and the enlarged GHWs (i.e. in 2011 and 2013).
(White et al. 2015a (Panel Exhibits AUS-186, DOM-235), p. ii43)
342 White et al. 2015a (Panel Exhibits AUS-186, DOM-235), pp. ii43-ii44.
343 As regards the perception of cigarette packs, we recall that GHWs were required for almost all
tobacco products in Australia as of 1 March 2006. (Panel Report, para. 2.534). As regards the perception of
brand appeal, White et al. 2015a explicitly states that the photographic images shown to the respondents
included a GHW as mandated at the time. (White et al. 2015a (Panel Exhibits AUS-186, DOM-235), p. ii43)
344 The NTPPTS survey assessed, inter alia, the extent to which the respondents liked the look of
tobacco packs, as well as the relative perceptions by smokers of the appeal of the packaging of their current
cigarettes or tobacco before and after the implementation of the TPP measures. (M. Wakefield, K. Coomber,
M. Zacher, S. Durkin, M. Brennan, and M. Scollo, "Australian Adult Smokers' Responses to Plain Packaging with
Larger Graphic Health Warnings One Year After Implementation: Results from a National Cross-Sectional
Tracking Survey", Tobacco Control, Vol. 24 (2015), ii17-ii25 (Wakefield et al. 2015) (Panel Exhibits AUS-206,
DOM-306), p. ii18)
345 Ajzen Response to Panel question Nos. 146, 202, and 203 (Panel Exhibit DOM/HND/IDN-6), para. 44.
(emphasis added) See also Ajzen Rebuttal Report (Panel Exhibit DOM/HND/IDN-5), para. 175.
WT/DS435/AB/R • WT/DS441/AB/R

"declines in appeal" of tobacco packs that are "statistically sig nificant" for adolescents346 and even
larger for adult smokers.347
6.94. For these reasons, we disagree with the premise underlying the Dominican Republic's claim
on appeal that the body of evidence that it identifies in these appellate proceedings directly
contradicted the Panel's finding that the branding elements on tobacco packaging can convey
positive perceptions to consumers, such that their removal would be apt to reduce the appeal of
packaging (the first mechanism) and enhance the effectiveness of GHWs (the s econd mechanism).
To the contrary, a careful review of the Panel's findings, as well as of the nature and scope of the
Dominican Republic's evidence, reveals that the Dominican Republic's claim does not reflect a
correct understanding of the Panel's reasoning or its own evidence.
6.95. Accordingly, we find that the Dominican Republic has failed to demonstrate that the Panel
acted inconsistently with Article 11 of the DSU by disregarding the evidence that contradicted the
Panel's conclusion, or by offering incoher ent reasoning when it failed to address the evidence
pertaining to the issue that the Panel itself acknowledged was crucial to its analysis.
6.1.2.3.2.5 Conclusion
6.96. We have found that Honduras has not demonstrated that the Panel failed to offer a reasoned
and adequate explanation, or treated evidence in a one -sided manner, in reaching its conclusion
that the TPP literature can be considered as coming from respected and qualified sources, and
therefore should not be dismissed in its entirety.
6.97. We have also found that the Dominican Republic has not demonstrated that the Panel failed
to engage with the Dominican Republic's evidence or to provide coherent reasoning. In particular,
we have rejected the core premise underlying the Dominican Republic's claim that the evidence in
question directly contradicted the Panel's intermediate conclusions that the TPP measures would be
apt to reduce the appeal of tobacco products (the first mechanism) and to increase the effectiveness
of the GHWs (the second mechanism).
6.98. Accordingly, we uphold the Panel's intermediate conclusion regarding the evidence pertaining
to the design, structure, and intended operation of the TPP measures that the complainants failed
to demonstrate that the TPP measures are incapable of contributing to Australia's objective through
the three mechanisms by which the measures are designed to operate (i.e. reducing the appeal of
tobacco products, enhancing the effectiveness of GHWs, and reducing the ability of the pack to
mislead consumers) and that, to the contrary, thi s evidence is consistent with the proposition that
the TPP measures are apt to affect smoking behaviour through these three mechanisms.348
6.1.2.3.3 The Panel's assessment of the post-implementation evidence pertaining to the
application of the TPP measures
6.99. We recall that the Panel conducted its analysis of the contribution of the TPP measures to
Australia's objective in several distinct steps. The Panel first examined evidence concerning the
measures' design, structure, and intended operation.349 The Panel then examined the impact of the
TPP measures based on their application.350 This evidence essentially looked at the actual effects of

346 Ajzen Report (Panel Exhibit DOM/HND/IDN-3), para. 176.
347 Ajzen Response to Panel question Nos. 146, 202, and 203 (Panel Exhibit DOM/HND/IDN-6),
paras. 48-49. See also Ajzen Report (Panel Exhibit DOM/HND/IDN-3), figure 6, para. 175 (based on White
et al. 2015a (Panel Exhibits AUS-186, DOM-235)).
We also note that, in the context of assessing the TPP measures' actual impact on proximal outcomes,
the Panel stated that the available empirical evidence relating to the application of the TPP measures since
their entry into force referred to by Ajzen et al. "confirms, rather than discredits, the 'hypothesized direction',
i.e. the hypothesis reflected in the TPP literature that plain packaging would reduce the appeal of tobacco
products". (Panel Report, para. 7.954 (referring to I. Ajzen, A. Hortaçsu, J. List, and A. Shaikh, Reconsideration
of Empirical Evidence on the Effectiveness of Australian Plain Packaging Legislation: Evidence from the National
Plain Packaging Tracking Survey (NPPTS) and Other Datasets (15 September 2015) (Ajzen et al. Data Report)
(Panel Exhibit DOM/IDN-2), paras. 90-91) (emphasis added))
348 Panel Report, paras. 7.929-7.931 and 7.1034.
349 Panel Report, paras. 7.518-7.931.
350 Panel Report, paras. 7.932-7.986 and Appendices A-E.
WT/DS435/AB/R • WT/DS441/AB/R

the TPP measures in Australia in the approximately three years from the implementation of the
TPP measures up to t he establishment of the Panel. 351 In this respect, the Panel examined the
parties' evidence purporting to demonstrate the actual effects of the TPP measures on so -called
"proximal" outcomes (Appendix A to the Panel Report) and "distal" outcomes ( Appendix B to the
Panel Report). The Panel also looked evidence regarding the effects of the TPP measures on
"smoking behaviours" in Australia. The Panel's assessment of the impact of the TPP measures on
smoking behaviour was based on data and analysis presented by th e parties regarding smoking
prevalence (Appendix C to the Panel Report) and consumption of tobacco products (Appendix D to
the Panel Report). The Panel then assessed the parties' arguments and evidence regarding the
impact of the TPP measures on illicit tr ade.352 Finally, the Panel formed an overall conclusion
regarding the degree of contribution of the TPP measures to Australia's objective.353
6.100. The Panel considered its findings in Appendices A -D, concerning the post -implementation
evidence of actual effects of the TPP measures, to be relevant to its determination of the degree of
contribution of the TPP measures.354 The Panel stated that the evidence of the TPP measures' impact
on proximal and distal outcomes was "consistent with the view that, together with the e nlarged
GHWs, [the TPP] measures have led in particular to a reduction in the appeal of tobacco products,
as hypothesized in the TPP literature, and to a greater noticeability of GHWs".355 Regarding smoking
prevalence and consumption, the Panel considered that:
The fact that pre-existing downward trends in smoking prevalence and overall sales and
consumption of tobacco products have not only continued but accelerated since the
implementation of the TPP measures, and that the TPP measures and enlarged GHWs
had a negative and statistically significant impact on smoking prevalence and cigarette
wholesale sales, is also consistent with the hypothesis that the measures have had an
impact on actual smoking behaviours, notwithstanding the fact that some of the
targeted behavioural outcomes could be expected to manifest themselves over a longer
period of time.356
6.101. Overall, the Panel considered the evidence of actual smoking behaviour in Australia since
the entry into force of the TPP measures to be "consistent with a fi nding that the TPP measures
contribute to a reduction in the use of tobacco products, to the extent that it suggests that, together
with the enlarged GHWs introduced at the same time, plain packaging has resulted in a reduction in
smoking prevalence and in consumption of tobacco products".357 The Panel found that this evidence,
taken together with the evidence of the TPP measures' design, structure, and operation, supported
the view that "the TPP measures are apt to, and do, make a meaningful contribution to Australia's
objective of reducing the use of, and exposure to, tobacco products."358
6.102. The appellants argue that the Panel acted inconsistently with Article 11 of the DSU in its
determination of the contribution of the TPP measures to Australia's objective. A large number of
the appellants' arguments in support of this claim relate to the Panel's assessment of the
post-implementation evidence, concerning the actual effects of the TPP measures in the three years
from implementation to the establishment of the Panel.359 In our view, a number of the appellants'
claims and arguments share common themes, such that it is appropriate and sufficient for us to
address these arguments thematically. At the same time, certain other arguments either do not
implicate such commo n themes or are sufficiently nuanced such that a certain level of detail is
required in our analysis of these issues. We therefore proceed with our analysis by addressing, in
turn: (i) a number of discrete claims raised by the appellants; and (ii) certain claims and arguments
that are grouped based on cross-cutting themes.

351 The evidence covered the period from the entry into force of the measures in December 2012 up to
September 2015, "with some variations in the exact period covered, depending on the data used".
(Panel Report, para. 7.933)
352 Panel Report, paras. 7.987-7.1023.
353 Panel Report, paras. 7.1024-7.1045.
354 Panel Report, para. 7.984.
355 Panel Report, para. 7.985.
356 Panel Report, para. 7.986.
357 Panel Report, para. 7.1037.
358 Panel Report, para. 7.1043.
359 Honduras' appellant's submission, paras. 695-794 and 848-1086; Dominican Republic's appellant's
submission, paras. 104-651 and 826-1151.
WT/DS435/AB/R • WT/DS441/AB/R

6.1.2.3.3.1 Discrete claims regarding the Panel's analysis of the actual effects of the
TPP measures
6.103. In this section, we address a number of claims and arguments raised by the appellants
regarding the actual effects of the TPP measures since implementation. We note, at the outset, that,
with the exception of the parties' arguments regarding certain due process concerns underlying the
Panel's assessment of the post -implementation evidence, the argumen ts and claims addressed in
this section predominantly pertain to the Panel's analysis of the impact of the TPP measures on
smoking behaviour, contained in Appendices C and D to the Panel Report.
6.104. To that end, we recall that the Panel's analysis of the evid ence submitted by the parties
regarding the contribution of the TPP measures to reducing smoking prevalence is set forth in
Appendix C to the Panel Report.360 The Panel conducted this analysis in three steps, assessing:
(1) whether smoking prevalence decreased following the implementation of the TPP measures;
(2) whether the decline in smoking prevalence accelerated after the implementation of the
TPP measures; and (3) whether the TPP measures contributed to the decline in smoking prevalence.
The Panel concluded that: (i) "[t]here is evidence that overall smoking prevalence in Australia
continued to decrease following the introduction of the TPP measures; (ii) "[t]he downward trend in
overall smoking prev alence in Australia appears to have accelerated in the post -TPP period"; and
(iii) although it is not possible to distinguish between the impact of TPP and the impact of enlarged
GHWs on the basis of the empirical evidence submitted, "there is some econome tric evidence
suggesting that the TPP measures, together with the enlarged GHWs implemented at the same time,
contributed to the reduction in overall smoking prevalence ", including cigar smoking prevalence,
since their entry into force.361
6.105. In Appendix D to its Report, the Panel assessed the parties' evidence regarding the
contribution of the TPP measures to reducing consumption of tobacco products. 362 The Panel
distinguished in its analysis between the evidence related to cigarettes and the evidence concerning
cigars.363 With respect to cigarettes, s imilarly to its analysis of smoking prevalence, the Panel
proceeded in three steps, assessing in turn: (1) whether cigarette consumption had declined
(measured in terms of cigarette sales volumes) following the implementation of the TPP measures;
(2) whether the decline in cigarette consumption had accelerated following the implementation of
the TPP measures; and (3) whether the TPP measures contributed to the decline in cigarette
consumption. The Panel then assessed s eparately the parties' evidence and arguments as they
related to the impact of the TPP measures on consumption of cigars. The Panel concluded that:
(i) "[t]here is some evidence that cigarette sales in Australia continued to decrease following the
introduction of the TPP measures"; (ii) "[t]he downward trend in cigarette sales in Australia appears
to have accelerated in the post-TPP period"; (iii) "[a]lthough it is impossible to distinguish between
the impact of TPP and enlarged GHWs, there is some economet ric evidence suggesting that the
TPP measures, in combination with the enlarged GHWs implemented at the same time, contributed
to the reduction in wholesale cigarette sales, and therefore cigarette consumption, after their entry
into force"; and (iv) "[t]he evidence … on the evolution of consumption of cigars in the post -TPP
period is more limited" and did not allow the Panel "to draw clear conclusions on the effect of the
TPP measures on cigar consumption in Australia".364
6.106. With this background in mind, we pr oceed to address, as discrete claims, the arguments
raised by the appellants regarding: (i) step 1 of the Panel's analysis of smoking prevalence;
(ii) step 2 of the Panel's analysis of cigarette consumption; (iii) step 3 of the Panel's analyses of both
smoking prevalence and cigarette consumption; ( iv) certain due process concerns underlying the
Panel's analysis of the actual effects of the TPP measures; and (v) the consequences of any errors
by the Panel.

363 The Panel noted that three of the complainants had initially argued that the TPP measures
"'backfired' by increasing tobacco sales"; however, this argument was "not developed later in the proceedings".
(Panel Report, Appendix D, para. 4) (fn omitted) The Panel also noted that the data pertaining to cigarette
consumption primarily looked at cigarette sales volumes, although some studies looked at reported cigarette
consumption. (Ibid., para. 2)
WT/DS435/AB/R • WT/DS441/AB/R

6.107. Before turning to address these issues, we briefly note, for the sake of clarity, that many of
the parties' arguments addressed below relate to the evidence provided by experts on behalf of
certain parties. These experts included: for the Dominican Republic, the Institute for Policy
Evaluation (IPE) and Professor List; for Honduras, Professor Klick; and, for Australia, Dr Chipty.
Step 1 of the Panel's smoking prevalence analysis
6.108. In step 1 of its analysis of whether the TPP measures reduced smoking prevalence, the Panel
assessed the parties' evidence r egarding whether smoking prevalence decreased following the
implementation of the TPP measures.365 The Panel's review of the datasets revealed that "smoking
prevalence fluctuates."366 The Panel also noted that, "in the presence of small sample sizes … it can
be particularly difficult to interpret trends ."367 The Panel found, however, that "most of the
datasets …, including the [Roy Morgan Single Source] RMSS data, OECD Dataset on Non -Medical
Determinants, and [National Health Survey] NHS, show continuing declines in smoking prevalence
at the national level in the period following the introduction of the TPP measures."368 The Panel
concluded that "[t]here is evidence that overall smoking prevalence in Australia continued to
decrease following the introduction of the TPP measures."369
6.109. The Dominican Republic argues that, in step 1 of its smoking prevalence analysis, the Panel
"defined the rate of decline as 'a downward trend in smoking prevalence that has accelerated since
July 2006'".370 According to the Dominican Republic, in the second and third steps of its smoking
prevalence analysis, the Panel did not take into account its finding in the first step that the rate of
decline in smoking accelerated since July 2006. 371 The Dominican Republic argues that, in the
absence of any explanation for this by the Panel, the Panel's reasoning is internally incoherent and
inconsistent with the duty under Article 11 of the DSU to make an objective assessment of the
matter.372
6.110. Australia submits that the focus of the Dominican Republic's arguments – the "pre-existing
rate of decline" – was relevant only to the second and third steps of the Panel's analysis.373 Australia
submits that the Panel did not identify a pre-existing rate of decline in step 1 because step 1 merely
examined whether smoking prevalence had declined following implementation of the TPP measures,
meaning that it was unnecessary to identify a benchmark rate of decline.374 Australia highlights that
the Panel made no reference to a benchmark rate of decline in step 1 of its analysis and the Panel
was clear that its findings in step 1 "did not inform the question of acceleration, i.e. the question
that actually required a 'benchmark rate of decline'". 375 Australia considers that the
Dominican Republic misrepresents the Panel's findings by superimposing a green trend line on
Figure C.1 of the Panel's findings that is absent from the Panel's actual Figure C.1 contained in the
Panel Report.376 Since the Panel made no such finding in step 1 of its analysis, Australia asserts,
there is no inconsistency in the Panel's findings.377

365 Panel Report, Appendix C, section 1.
366 Panel Report, Appendix C, para. 40. The Panel also noted "the usefulness of relying on the most
recent available … and comparable data to analyse trends in smoking prevalence", and considered this
"particularly important", because the datasets provided by the parties did not always cover the same period.
(Ibid., para. 39) The Panel further highlighted the importance of distinguishing between smoking prevalence
and smoking incidence (smoking prevalence measures the proportion of smokers in the population; smoking
incidence measures the proportion of smokers in a population of smokers and recent quitters). (Ibid.)
368 Panel Report, Appendix C, para. 40. (fn omitted)
369 Panel Report, Appendix C, para. 123.a.
370 Dominican Republic's appellant's submission, para. 187 (quoting Panel Report, Appendix C, para. 8).
(emphasis added by the Dominican Republic)
371 Dominican Republic's appellant's submission, paras. 181-184 and 188. The Dominican Republic
elaborates that "in steps 2 and 3 of its analysis, without any acknowledgement or explanation, the Panel did
not apply the rate of decline that it had defined in step 1". (Ibid., para. 188)
372 Dominican Republic's appellant's submission, paras. 185-186 and 191.
373 Australia's appellee's submission, para. 677.
374 Australia's appellee's submission, para. 682.
375 Australia's appellee's submission, para. 682. (emphasis original)
376 Australia's appellee's submission, para. 683.
377 Australia's appellee's submission, paras. 678 and 703.
WT/DS435/AB/R • WT/DS441/AB/R

6.111. We recall that the specific issue that the Panel addressed in step 1 of Appendix C was
whether, after the implementation of the TPP measures, smoking prevalence had declined. In order
to assess this straightforward question of whether smoking prevalence declined, it was only
necessary for the Panel to compare smoking prevalence after the implementation of the
TPP measures to smoking prevalence as it existed at the time of the TPP measures' implementation.
Thus, in step 1 of its smoking prevalence analysis, the Panel was not required to make any findings
regarding the rate of decline in smoking prevalence prior to the implementation of the
TPP measures.378
6.112. We further note that the Dominican Republic's assertion that the Panel found that smoking
prevalence had declined since July 2006 is based exclusively on the Panel's statement in paragraph 8
of Appendix C that: "the RMSS data reveal a downward trend in smoking prevalence that has
accelerated since July 2006." 379 Paragraph 8 of Appendix C appears in a subsection of the Panel's
analysis in step 1, titled "Datasets and related analyses". 380 This subsection appears equivalent to
other subsections titled "Datasets and related studies", which are present in other sections of
Appendix C. All such "datasets" subsections precede subsections titled "Analysis by the Panel". This
structure is similar to the structure of the other Appendices, which also include distinct "Datasets
and related analyses" subsections that precede "Analysis by the Panel" subsections.
6.113. From our review of the Appendices, it appears that all such "datasets" subsections describe
the evidence and arguments provided by the parties to the Panel, and do not appear to contain any
independent reasoning or findings by the Panel itself. This remains true for all three steps of the
Panel's analysis in Appendix C.381 We also note that the v ery same subsection in which the Panel
allegedly found a break in the trend line also contains a "finding" that "the last eight [National Drug
Strategy Household Survey (NDSHS)] reports indicate … that smoking prevalence … has decreased
along a roughly linear trend since 1993", and the subsequent sentence states that "[t]he most recent
NDSHS survey reveals that smoking rates … have evolved according to this trend without 'break',
'shift' or 'kink' in the trend line that could be attributable to the TPP measures."382
6.114. We see no reason to presume that the Panel made directly contradictory factual findings
within five paragraphs of one another, when a plain reading of the Panel Report indicates that these
so-called findings merely contain descriptions of what the evidence purported to show, and do not
amount to affirmative findings of fact by the Panel itself. In our view, the "Datasets and related
analyses" subsection in which the Panel stated that "the RMSS data reveal a downward trend in
smoking prevalence that has accelerated since July 2006" is, on its face, a summary of the evidence
provided by the parties. Consequently, this so -called "finding" by the Panel is not an affirmative
finding of fact based on its assessment of the evidence, but simply a description of what the evidence
purports to represent.

378 Panel Report, Appendix C, paras. 41-42. The issue of what smoking prevalence had looked like prior
to the implementation of the TPP measures only arose at the second step of the Panel's analysis. This is
because, at the second step of the analysis, the Panel assessed whether the decline in smoking prevalence had
accelerated after the implementation of the TPP measures. In other words, step 1 assessed in absolute terms
whether smoking prevalence had declined at all, following implementation of the TPP measures, while step 2
assessed whether in relative terms smoking prevalence had declined more after implementation of the
TPP measures than it had been decreasing prior to TPP implementation.
380 Panel Report, Appendix C, section 1.1.
381 Indeed, in all sections of Appendix C, the Panel clearly describes the evidence provided by the parties
in the "Datasets and related studies" subsection, and then proceeds to consider and form conclusions regarding
the probative value of that evidence in the subsequent "Analysis by the Panel" subsection. For example, in the
"Datasets and related studies" subsection of section 3, the Panel states that, "[o]verall, IPE concludes that the
TPP measures had no statistically significant effect on general smoking prevalence and on cigar smoking
prevalence." (Panel Report, Appendix C, para. 64) (fn omitted) Pursuant to the Dominican Republic's logic, this
would appear to be an affirmative finding by the Panel that "the TPP measures had no statistically significant
effect on … smoking prevalence." (Ibid.) However, in its subsequent "Analysis by the Panel" subsection, the
Panel stated that it was "not persuaded that these econometric results can be taken at face value". (Ibid.,
para. 103) This would appear to confirm that the so-called "findings" appearing in the "Datasets and related
analyses/studies" subsections are not affirmative findings by the Panel, but descriptions of the parties'
arguments and evidence.
WT/DS435/AB/R • WT/DS441/AB/R

6.115. In our view, the Panel's assessment of the evidence and its factual findings based on that
evidence, pertinent to step 1 of its analysis, are contained entirely in the subsequent subsection,
titled "Analysis by the Panel".383 In that "Analysis by the Panel" subsection, the Panel assessed the
evidence it had described in the previous subsection and concluded that "despite different estimates
and fluctuations of smoking prevalence, most of the datasets …, including the RMSS data, OECD
Dataset on Non-Medical Determinants, and NHS, show continuing declines in smoking prevalence at
the national level in the period following the introduction of the TPP measures."384 The Panel's
reliance on all of these datasets confirms that the Panel did not make an affirmative finding of fact
that the "downward trend in smoking prevalence … has accelerated since July 2006."385
6.116. We therefore do not see any inconsistency between the Panel's actual findings in step 1 and
the remainder of its analysis in Appendix C.386
Step 2 of the Panel's cigarette consumption analysis
6.117. As indicated above, in Appendix D to the Panel Report, the Panel assessed the parties'
evidence regarding the contribution of the TPP measures to reducing tobacco product
consumption.387 The Panel distinguished between evidence concerning cigarettes and evidence
concerning cigars. 388 The Panel assessed the evidence concerning cigarette consumption in
three steps, assessing in turn: (1) whether consumption had declined following the implementation
of the TPP measures; (2) whether the decline in consumption had accelerated following the
implementation of the TPP measures; and (3) whether the TPP measures contributed to the decline
in consumption. In step 2 of its analysis of cigarette consumption, the Panel questioned the validity
of the econometric results provided by the complainants' exper t, Professor List, for several
reasons.389 The Panel noted that Australia's expert, Dr Chipty, re-estimated Professor List's dynamic
model, using the In-Market-Sales/Exchange of Sales ( IMS/EOS) data, and replacing the price
variable with a dummy variable, wh ich "reverse[d] Professor List's conclusion", showing a
"statistically significant shift in the post -implementation downward trend". 390 The Panel observed,
however, that this shift was "no longer statistically significant when the excise tax changes and
strategic inventory management associated with such changes [we]re taken into account". 391 The
Panel considered that although Dr Chipty's model was "slightly more accurate []" in predicting
per capita sales in the pre -implementation period, it continued to perform poorly, and the Panel
"continue[d] to have doubts about" its reliability in predicting the per capita sales that would have
occurred in the absence of the TPP measures.392 The Panel nevertheless noted that average cigarette
sales volumes in the post -implementation period were "statistically significantly lower than in the
pre-implementation period", and highlighted that "the cigarette sales trend in the
post-implementation period has bec ome steeper compared to the pre -implementation trend,

383 The equivalent subsections in the other sections of Appendix C are also titled "Analysis by the Panel".
386 We note that aspects of the Dominican Republic's appellant's submission might be read as indicating
that the Panel's findings are incoherent as between steps 2 and 3 of its analysis of smoking prevalence. For
example, the Dominican Republic states that, "for each step, the Panel applied a rate of decline that differed
from the rate of decline found in the previous step" refers to an apparent inconsistency between the Panel's
findings in steps 2 and 3 of its analysis of smoking prevalence. (Dominican Republic's appellant's submission,
para. 188. See also ibid., paras. 189-193) The Dominican Republic's claim that the Panel erred, however,
focuses exclusively on the apparent inconsistency between the Panel's findings in step 1 and its subsequent
findings in steps 2 and 3, and most particularly focuses on the Panel's findings in step 2 as compared to step 1.
(See ibid., paras. 185-212) We therefore do not consider that the Dominican Republic has asserted that the
Panel acted inconsistently with Article 11 of the DSU with respect to any alleged incoherence as between the
Panel's findings in steps 2 and 3. In any event, to the extent that such an assertion could be read as implied, it
is unsubstantiated by any supporting argumentation.
388 The Panel noted that three of the complainants had initially argued that the TPP measures
"'backfired' by increasing tobacco sales"; however, this argument was "not developed later in the proceedings".
(Panel Report, Appendix D, para. 4) (fn omitted) The Panel also noted that the data pertaining to cigarette
consumption primarily looked at cigarette sales volumes, although some studies looked at reported cigarette
consumption. (Ibid., para. 2)
389 Panel Report, Appendix D, paras. 40-44.
WT/DS435/AB/R • WT/DS441/AB/R

implying that the fall in cigarette sales has accelerate d in the post-implementation period."393 The
Panel observed that the same conclusion could be drawn from the Aztec scanner data.394 On this
basis, the Panel concluded that "[t]he downward trend in cigarette sales in Australia appears to have
accelerated in the post-TPP period."395
6.118. Honduras considers that, "without any analysis or explanation, and apparently on the basis
of its own re-working of the back-up data provided by IPE, the Panel in one short paragraph reaches
an affirmative conclusion based on its own 'standard mean comparison test' that is simply not
supported by the facts on the record."396 Honduras further highlights that the Panel itself indicated
that its conclusion was contradicted by the Nielsen data, as w ell as the IMS/EOS data if a shorter
time period were used.397 Honduras considers that the Panel's "strong affirmative conclusion" is not
supported by any explanation or calculation details that would allow the parties to understand its
finding, and highlights that "even the evidence of Australia is not affirmative on this point" and the
Panel's "own re -calculation only holds true for certain datasets under certain conditions". 398
Honduras highlights that Figure D.14 was prepared by the Panel based on backup material provided
by IPE, and there is no explanation as to how it was developed, nor is there any way of testing its
accuracy.399 In Honduras' view, the fact that it is impossible to review the Panel's findings is a
"fundamental problem of due process".400 Honduras argues that the Panel "violated the essence of
its task under Article 11 of the DSU" by failing to engage with the parties "in earnest" on any of the
technical debates that took place before it, simply "dump[ing] its final analysis on the parties in i ts
findings", depriving the parties of a meaningful opportunity to comment during the Panel
proceedings, and failing to include the technical details necessary to review the Panel's findings.401
6.119. We note that, in assessing Dr Chipty's evidence concerning whether the decline in cigarette
consumption accelerated after the implementation of the TPP measures, the Panel made two distinct
sets of findings:
a. The Panel first noted that Dr Chipty's re-specification of Professor List's dynamic model ,
relying on excise tax dummies instead of a price variable, showed a statistically significant
negative effect of the TPP measures on cigarette sales. The Panel acknowledged that this
effect was no longer statistically significant when excise tax changes, and strategic
inventory management associated with those tax changes, were taken into account "in
the post-implementation estimation".402 The Panel recalled that it had doubts about the
reliability of the dynamic model, given that it was not very accurate in predicting actual
sales, and considered that this was only "slightly" improved in Dr Chipty's specification
than it had been in Professor List's model.403 The Panel stated that it "continue[d] to have
doubts" about the accuracy of the model.404
b. Second, the Panel observed that, under a standard mean -comparison test, "the average
cigarette sales volumes based on the IMS/EOS data in the post-implementation period are
statistically significantly lower than in the pre -implementation period." 405 The Panel,
referring to Figure D.14, considered that this observation was confirmed based on the fact
that "the cigarette sales trend in the post -implementation period has become steeper
compared to the pre -implementation trend, implying that the fall in cigarette sales has
accelerated in the post -implementation period." 406 The Panel stated that the same

393 Panel Report, Appendix D, para. 46. (fn omitted)
395 Panel Report, Appendix D, para. 137.b.
398 Honduras' appellant's submission, para. 894. Specifically, Honduras notes the Panel's finding that a
"minor change to Dr Chipty's analysis … leads to the conclusion that … [t]here has not been any statistically
significant shift in consumption". (Honduras' appellant's submission, para. 892 (referring to Panel Report,
Appendix D, para. 45))
WT/DS435/AB/R • WT/DS441/AB/R

conclusion could be drawn based on the Aztec data. The Panel acknowledged that applying
this test to the Nielsen data showed no difference between the pre - and
post-implementation period trends. The Panel emphasized that the Nielsen data was
available only for the period of February 2011 to December 2013, and when the test was
applied to the IMS/EOS data for that same period it also showed no shift, even though
that conclusion was reversed when the data was extended to September 2015. The Panel
therefore did not consider the result using Nielsen data to be relevant.407
6.120. We understand that, with respect to the first part of the Panel's analysis, Honduras considers
not only that the Panel "uncritically accept[ed] the conclusions and approaches of Dr Chipty", but
that the Panel's findings indicate that a "minor change t o Dr Chipty's analysis … leads to the
conclusion that [t]here has not been any statistically significant shift in consumption".408 In our view,
the first of these assertions is a significant distortion of the Panel's findings, in part because we
agree with the second assertion. Indeed, the Panel appears to consider Dr Chipty's evidence in this
respect to be of questionable probative value, much like Professor List's own expert evidence.
Specifically, the Panel's findings indicate that it considered Dr Chipty's and Professor List's models
to be equally unreliable.
6.121. We note, however, that the Panel did not end its analysis there. The Panel proceeded with
its analysis, and ultimately concluded that the downward trend in cigarette sales accelerated in the
post-implementation period, on the basis of two observations: (i) on the basis of a "standard
mean-comparison" test, the Panel concluded that "average cigare tte sales volumes … in the
post-implementation period are statistically significantly lower than in the pre -implementation
period"; and (ii) the Panel found that this was confirmed based on the fact that "the cigarette sales
trend in the post-implementation period has become steeper compared to the pre -implementation
trend."409
6.122. Regarding the Panel's reliance on a standard mean -comparison test, which Honduras
challenges on the basis that the Panel provided no explanation or details of its calculation, we
understand that a mean -comparison test is a simple statistical test that the Panel could have
conducted when verifying that the parties' methodologies did indeed reveal the results asserted by
the parties. Indeed, the application of statistical testing to verify statistical results seems to us be
very much in accordance with the duty of a panel to review the evid ence adduced by the parties.
We therefore do not consider that the Panel's application of a mean -comparison test indicates that
the Panel failed to act objectively. To the contrary, it seems perfectly plausible that the Panel's
mean-comparison test could have revealed that the complainants were correct in asserting that the
decline in cigarette consumption had not accelerated after the implementation of the TPP measures.
6.123. Regarding the Panel's confirmation of its mean-comparison test by assessing the steepness
of the tobacco consumption trend pre- and post-TPP implementation, we address this issue in greater
detail below.410 It suffices to note here that we do not consider that a panel acts inconsistently with
Article 11 of the DSU simply by depicting the part ies' evidence in graphical form. Furthermore, we
do not see how a graphical representation of evidence that was in the parties' possession to begin
with could imply that the Panel compromised the parties' due process rights. Since the evidence was
in their possession, the parties were free to prepare such graphs on their own initiative. Their
reluctance to do so should not preclude a panel from graphically representing data for the purpose
of elucidating factual findings.
6.124. Finally, we do not consider that t he Panel lacked any reasoning or explanation for its
conclusions in step 2 of its analysis of cigarette consumption, including why it considered the Nielsen
data to be less relevant to its consideration of this issue.411 While the appellants may disagree with
the Panel's review of the factual evidence, as well as its conclusion, the Panel's explanation for how
it reviewed the evidence and its reasons for its ultimate conclusion are quite clearly expressed. There

407 Panel Report, Appendix D, fn 50 to para. 46.
410 See paras. 6.326. 6.328. below.
411 See para. 6.119. above.
WT/DS435/AB/R • WT/DS441/AB/R

is no doubt, in our view, about how and why the Panel concluded that "[t]he downward trend in
cigarette sales in Australia appears to have accelerated in the post-TPP period."412
6.125. For these reasons, we consider that Honduras has not demonstrated that the Panel failed to
make an objective assessment of the matter before it in assessing whether the decline in cigarette
consumption accelerated after the implementation of the TPP measures.
Step 3 of the Panel's smoking prevalence and cigarette consumption analyses
6.126. In step 3 of its analyses of smoking prevale nce and cigarette consumption, the Panel
assessed whether the TPP measures had contributed to the acceleration in the decline in,
respectively, smoking prevalence and cigarette consumption. The evidence presented by the parties
consisted primarily of econo metric models that sought to distinguish and assess the impact of the
TPP measures and other determining factors on, respectively, smoking prevalence and
consumption.413 In this respect, as elsewhere, the Panel noted that its task was not to conduct its
own econometric assessment, but rather "to review the robustness of the econometric evidence
submitted by the parties".414
6.127. In step 3 of its smoking prevalence analysis, the Panel first explained that, of the different
datasets provided by the parties, it consid ered the RMSS data to be "most suited … to analyse the
impact of the TPP measures on smoking prevalence". 415 The Panel then turned to assess the
robustness of the complainants' experts' econometric models. The Panel identified a large number
of different con cerns that it had regarding these models. 416 Turning to the econometric models
provided by Australia's expert, Dr Chipty, the Panel "note[d] that a number of concerns that [it]
raised while reviewing the complainants' approaches and results [were] addressed by Dr Chipty".417
The Panel considered that the "most recent" econometric evidence submitted by Australia suggested
that the TPP measures and enlarged GHWs contributed to the reduction in overall smoking
prevalence in Australia, including cigar smoking preva lence.418 On that basis, the Panel ultimately
concluded that "there is some econometric evidence suggesting that the TPP measures, together
with the enlarged GHWs implemented at the same time, contributed to the reduction in overall
smoking prevalence as well as in cigar smoking prevalence observed after their entry into force."419
6.128. In step 3 of its cigarette consumption analysis, the Panel first addressed the different
datasets provided by the parties. The Panel found that, "while … no data are perfect, … the
IMS/EOS data [are] the most suitable available market data ."420 Similarly to its analysis of the
smoking prevalence evidence, the Panel proceeded to examine the econometric models provided by
the complainants' experts, and identified different concerns with respect to the robustness of these
models.421 Regarding the models provided by Australia's expert, Dr Chipty, the P anel considered
that "some" of the concerns that it had raised regarding the complainants' experts' approaches were

412 Panel Report, Appendix D, para. 137.b.
416 Panel Report, Appendix C, paras. 103-119.
417 Panel Report, Appendix C, para. 120. The Panel highlighted that Dr Chipty addressed the issue of
overfitting and relied on dummy variables to avoid the problems of multicollinearity and endogeneity
(associated with the use of a price variable) as well as non-stationarity (associated with the use of either price
or tax level variables). (Ibid.) The Panel also considered that Dr Chipty's econometric results were "robust to
alternative specifications, including different TPP starting date[s] …, the use of an excise tax level variable …
and sample reweighting dummies", and consistently showed a negative and statistically significant impact of
the TPP measures on overall smoking prevalence. (Ibid., para. 121) (fn omitted) The Panel further observed
that "in most specifications", Dr Chipty's analysis continued to show a negative and statistically significant
impact of the TPP measures on smoking prevalence even when using Professor List's procedure to compute
standard errors. (Ibid.)
419 Panel Report, Appendix C, para. 123.c. The Panel noted that no post-implementation empirical
evidence was provided regarding the impact of the TPP measures regarding smoking prevalence with respect
to cigarillos. (Ibid., para. 124)
421 Panel Report, Appendix D, paras. 101-114.
WT/DS435/AB/R • WT/DS441/AB/R

"to some extent" addressed by Dr Chipty.422 The Panel considered that, "[o]verall, based on the
most recent econometric evidence submitted by Australia, there is some econometric evidence
suggesting that TPP and enlarged GHWs contributed to the reduction in wholesale cigarette sales in
Australia."423 On that basis, the Panel concluded ultimately that "[a]lthough it is impossible to
distinguish between the impact of TPP and enlarged GHWs, there is some econometric evidence
suggesting that the TPP measures, in combination with the enlarged GHWs implemented at the same
time, contributed to the reduction in wholesale cigarette sales, and therefore cigarette consumption,
after their entry into force."424
6.129. We proceed to address below a number of the appellants' arguments that the Panel acted
inconsistently with Article 11 of the DSU in its analyses of whether the TPP measures contributed to
the decline in smoking prevalence and cigarette consumption.425
Impact of tobacco costliness on smoking behaviour
6.130. In step 3 of its smoking prevalence analysis in Appendix C, the Panel observed that the
Dominican Republic's econometric results could not "be taken at face value, mainly because most of
their model specifications are unable to detect the impact of tobacco costliness (including excise tax
increases) on smoking prevalence", even though "all parties consider tobacco excise tax to be one of
the most effective tobacco control policies."426 In its cigarette consumption analysis in Appendix D,
the Panel did not indicate whether any of the parties' models were able to detect the impact of
tobacco costliness.427
6.131. In the Dominican Republic's view, the Panel acted inconsistently with Article 11 of the DSU
by: (i) treating the parties' evidence inconsistently; and (ii) failing to engage with the
Dominican Republic's evidence and arguments. 428 Regarding the Panel's allegedly inconsistent
treatment of the parties' evidence, the Dominican Republic argues that: (i) the Panel did not address
the Dominican Republic's models that were able to detect the impact of tobacco costliness, although
it accepted Australia's models that were able to detect the impact of tobacco costliness; and (ii) the
Panel rejected the Dominican Republic's models because they were not able to detect the impact of
tobacco costliness, but did not reject any of Australia's models even when such a model detected
the wrong impact of tobacco costliness. 429 As to the Panel's alleged failure to engage with the

422 Panel Report, Appendix D, para. 115. In particular, the Panel noted that Dr Chipty used dummy
variables to capture the excise tax increases, thus avoiding the endogeneity problems (associated with the use
of a price variable) and the unit root problem (associated with the use of the price or tax level variables). The
Panel also observed that Dr Chipty's model, while based on IPE's first specification, was modified to account for
strategic inventory management as well as the 2006 GHW regulation. (Ibid.) The Panel considered that
Dr Chipty's results were "robust to alternative specifications, including different TPP starting date[s] …, and to
Professor List's procedure to compute standard errors". (Ibid., para. 116) The Panel observed that replacing
the excise tax hike dummy variables with a tax level variable resulted in the TPP measures' effects no longer
being statistically significant, but emphasized its earlier explanation that "specification testing suggests tax
levels are not appropriate", and also observed that "the tax levels variable is likely to be non-stationary."
(Ibid.)
423 Panel Report, Appendix D, para. 117.c.
425 For the reasons explained above, our discussion of these issues does not capture every argument
raised by the appellants concerning these aspects of the Panel's findings.
427 See, generally, Panel Report, Appendix D.
428 The Dominican Republic notes the Appellate Body's statement that "a panel's choice not to discuss a
piece of evidence that on its face appears to be favourable to the arguments of one of the parties might
suggest bias or lack of even-handedness in the treatment of the evidence by the panel, even if in fact the
panel is making an objective assessment of the facts." (Dominican Republic's appellant's submission, para. 505
(quoting Appellate Body Report, Australia – Apples, para. 270))
429 Dominican Republic's appellant's submission, paras. 490-497. The Dominican Republic argues that,
with respect to cigarette smoking prevalence, "the Panel accepted Dr Chipty's … model …, despite the fact that
the specification was unable to detect the impact of two excise tax increases." (Dominican Republic's
appellant's submission, para. 498 (referring to Panel Report, Appendix C, para. 121)) The Dominican Republic
argues that, with respect to cigar smoking prevalence, "the Panel accepted Dr Chipty's model … despite the
fact that the cigar smoking models were, again, unable to detect the impact of the 2013 tax increases on cigar
smoking prevalence." (Dominican Republic's appellant's submission, para. 500 (referring to Third Rebuttal
Report of Dr Tasneem Chipty (1 February 2016) (Chipty Third Rebuttal Report) (Panel Exhibit AUS-605),
para. 29 and Table 3, Rows [A] and [C])) With respect to cigarette smoking consumption, "the Panel accepted
WT/DS435/AB/R • WT/DS441/AB/R

Dominican Republic's arguments, the Dominican Republic refers to a supplemental submission which
the Panel agreed to take into consideration, in w hich the Dominican Republic identified that
Dr Chipty's consumption model provided to the Panel in her final reports showed that an increase in
excise tax in 2013 led to an increase in cigarette consumption. 430 The Dominican Republic submits
that this result was nonsensical, based on Dr Chipty's own views, and that it explained as much to
the Panel.431 The Dominican Republic argues, however, that "[w]ithout engaging with this evidence,
the Panel relied on Dr Chipty's updated consumption model as a basis for its finding that the
TPP measures have reduced cigarette consumption."432
6.132. Regarding the Dominican Republic's arguments that the Panel treated the same class of
evidence inconsistently, Australia submits that the Dominican Republic mischaracterizes the
"purpose" for which Australia submitted its evidence.433 According to Australia, "[t]he Panel did not
need to find – nor did it find – that Dr Chipty's revisions to the complainants' econometric models
fully resolved the complainants' problems with tobacco costliness in order to draw these conclusions
from Dr Chipty's submissions."434 In any event, Australia submits that the Panel did address all
relevant models, and critiqued the parties' models on grounds other than just whether they detected
the impact of tobacco costliness.435 As to the Dominican Republic's arguments regarding the alleged
failure of the Panel to address the parties' evidence and arguments, Australia notes that this
argument relates to a letter to the Panel of 17 February 2016 that was styled as a requ est for the
Panel to take steps to protect the due process rights of the parties, but included in and of itself
"substantive comments" on Dr Chipty's Third Rebuttal Report. 436 According to Australia, the Panel
accepted these comments and provided Australia w ith an opportunity to respond. 437 On
16 March 2016, Australia commented on the Dominican Republic's comments.438 Australia argues
that the Panel summarized these events but, "in light of the fact that the Dominican Republic's
additional comments had not raised any issues that the parties had not already debated extensively,
the Panel did not discuss the parties' post -proceeding submissions elsewhere in its Report." 439
Australia considers that "the Panel's decision not to refer to these events further speaks for i tself:
the Panel reviewed the parties' additional submissions and concluded, correctly, that these

Dr Chipty's updated consumption model … even though it reached the 'nonsensical' finding that an increase in
excise tax led to an increase in smoking consumption." (Ibid., para. 499 (referring to Dominican Republic's
Communication to the Panel (17 February 2016); Response by the Dominican Republic to the Panel's
Communication of 2 March 2016 (4 March 2016)) (emphasis omitted))
430 Dominican Republic's appellant's submission, para. 506 (referring to Dominican Republic's
Communication to the Panel (17 February 2016)).
431 Dominican Republic's appellant's submission, paras. 63-64 (referring to Rebuttal Report of
Dr Tasneem Chipty (14 September 2015) (Chipty Rebuttal Report) (Panel Exhibit AUS-535 (SCI)), para. 39).
432 Dominican Republic's appellant's submission, para. 510. In the Dominican Republic's view, "[n]othing
in the Panel's reasoning 'reveals that it has nevertheless assessed the significance of [the
Dominican Republic's] evidence' that Dr Chipty's model produced 'nonsensical' tax results." (Ibid., para. 511
(quoting Appellate Body Reports, Philippines – Distilled Spirits, para. 135)).
433 Australia's appellee's submission, para. 809. Australia submits that the Dominican Republic's
arguments treat Dr Chipty's rebuttal evidence "as if she set out – and was required – to fix all of the flaws in
the complainants' econometric models". (Ibid., para. 810 (emphasis original))
434 Australia's appellee's submission, para. 810. (emphasis original; fn omitted) In Australia's view, the
Panel "properly evaluated all of the econometric evidence on the record in relation to the burden of proof and
in relation to the purposes for which the evidence was submitted". (Ibid., para. 811)
435 Regarding the Dominican Republic's first alleged inconsistency, Australia submits that the
Dominican Republic's reference to the Panel not mentioning the model specifications that were able to detect
the impact of tobacco costliness is misleading given that accepting Professor List and IPE's models required
"acceptance of one or more methodological choices that the Panel specifically faulted". (Australia's appellee's
submission, para. 800 (emphasis omitted)) Australia considers that the Panel did indeed address the
Dominican Republic's models that were able to detect the impact of tobacco costliness. Australia highlights in
particular the Panel's rejection of the position that the sample period should begin in July 2006, as well as the
Panel's observation that the Dominican Republic's model suffered from overfitting. (Ibid., para. 800) As to the
second alleged inconsistency in the Panel's treatment of the evidence, Australia similarly explains that "the
notion that the Dominican Republic's experts came up with models 'that detected the impact of tobacco
costliness' overlooks the fact that the Panel identified numerous problems with all of the Dominican Republic's
models – not just 'those filed early in the proceedings' – that led the Panel to question their validity and
probative value." (Ibid., para. 808 (emphasis original))
436 Australia's appellee's submission, para. 814.
437 Australia's appellee's submission, para. 816.
438 Australia's appellee's submission, para. 817.
439 Australia's appellee's submission, para. 818. (emphasis omitted)
WT/DS435/AB/R • WT/DS441/AB/R

post-proceeding submissions had not added anything to the extensive evidence that the parties had
already submitted on this topic."440
6.133. We note at the outset that the Dominican Republic's position that the Panel "rejected" certain
models is misleading. The Panel did not "reject" or "accept" any model per se on the basis of any
individual criterion of robustness. The different criteria applied by the Panel to test robustness were
not "silver bullets" used to accept/reject models such that there could be only one (or even none)
left standing at the end of the day. Rather, the Panel assessed the parties' evidence, starting with
the complainants' evidence, and noted multiple reasons to doubt the reliability of that evidence. 441
When compar ing the co mplainants' evidence to Australia's evidence, which showed an entirely
different outcome, the Panel considered that Australia's evidence was, in relative terms, more
credible and reliable than the complainants' evidence, all the while recognizing that no model
submitted by any expert was perfect. 442 Based on its examination of the different evidence, the
Panel ultimately considered that Dr Chipty's models were sufficiently reliable to conclude that "there
is some econometric evidence suggesting that the TPP measures, together with the enlarged GHWs
implemented at the same time, contributed to the reduction in overall smoking prevalence and
cigarette consumption .443 The appellants have not argued, much less demonstrated, that this
approach by the Panel was in error.
6.134. We further note that, in assessing the parties' smoking prevalence evidence, although the
Panel had doubts about certain of the complainants' models on the ground that they were unable to
detect the impact of tobacco costliness, the Panel did not explicitly indicate that Australia's models
were able to detect this impact. In other words, the Panel did not rely on this as a reason for finding
that Australia's models were more reliable than the complainants' models. This was despite
Australia's expert explicitly arguing that her smoking prevalence models revealed that "both tax
policies and Plain Packaging have significantly reduced smoking prevalence."444 Since the Panel did
not rely on this as a reason to find Australia's models more credible than the complainants' models,
we see no inconsistency in the Panel's treatment of the parties' smoking prevalence evidence with
respect to this "criterion" of robustness.445 Consequently, we do not consider that the Panel treated
the parties' evidence inconsistently with respect to its ass essment that Australia's smoking
prevalence evidence was more credible than the complainants' evidence and its overall conclusion
that there was some evidence suggesting that the TPP measures contributed to the reduction in
smoking prevalence.
6.135. Turning to the Panel's analysis of the consumption evidence, we note that the Panel did not
identify whether any of the models submitted by any party was able to detect the impact of tobacco
costliness on consumption. Since this was not relevant to the Panel's determination that Dr Chipty's

440 Australia's appellee's submission, para. 820. (emphasis original) Australia also argues that the
Dominican Republic "seeks to turn a discretionary act by the Panel – one necessitated by the
Dominican Republic's own litigation tactics – into a basis for challenging the Panel's good faith". (Ibid.,
para. 819)
441 See also para. 6.272. below.
442 This is evidenced by the Panel's statements in comparing Dr Chipty's models to those of the
complainants that Dr Chipty only resolved "a number" and "some" of its concerns with the complainants'
444 Chipty Third Rebuttal Report (Panel Exhibit AUS-605), para. 3(d).
445 We note that certain of the Panel's findings might be understood as implicitly suggesting that
Australia's models were able to detect an impact of tobacco costliness. The Panel appeared to attribute the
complainants' models' failure to detect an impact of tobacco costliness on smoking prevalence to various
concerns the Panel noted in those models, including "overfitting" of the smoking prevalence trend, the manner
in which the tobacco price control policy is specified, issues of multicollinearity and non-stationarity, the
manner in which the population sampling corrections in the RMSS data were controlled for, and the manner in
which the complainants' experts calculated standard error (for purposes of assessing the statistical significance
of the independent variables). (See Panel Report, Appendix C, paras. 104-110) When assessing Australia's
evidence, the Panel noted that Dr Chipty addressed a number of these concerns. (Ibid., para. 120) In our view,
however, there is a clear distinction in the Panel's findings between these different concerns, and the Panel's
overarching observation that the complainants' models were unable to detect the impact of tobacco costliness.
We therefore do not consider that the Panel's findings that Dr Chipty addressed these specific concerns are
sufficient for us to conclude that the Panel also considered Dr Chipty's models' ability to detect the impact of
tobacco costliness as a reason to consider Australia's models to be more robust than the complainants' models.
WT/DS435/AB/R • WT/DS441/AB/R

models were more credible than the complainants', we see no reason to conclude that the Panel's
treatment of the parties' evidence, on its face, was inconsistent.
6.136. Having said that, we note that, on appeal, the Dominican Republic h as identified a
communication that it sent to the Panel in which it alleged that Dr Chipty's consumption models
showed that excise tax increases led to an increase in consumption. 446 Specifically, on
17 February 2016, the Dominican Republic wrote a communica tion to the Panel in which it stated
that "[w]ith the submission of the parties' respective Comments on 3 February 2016, the briefing
phase of these Panel proceedings has now come to an end."447 The Dominican Republic further noted
that, in those comments, " the complainants and Australia … provided the Panel with considerable
further material, including several expert reports and other exhibits." 448 The Dominican Republic
stated that "there are many comments that could now be made in respect of Australia's new
argument and evidence", and noted "[a]s an example", a "material inconsistency" in Dr Chipty's
analysis.449 According to the Dominican Republic, Dr Chipty – who had previously stated that a result
in which excise tax increases are shown to cause an increase in prevalence or consumption is
"nonsensical" – had nonetheless made such a finding in her final report.450 The Dominican Republic
further claimed that Dr Chipty's finding that the September 2013 tax increase had led to an increase
in consumption also explai ned her conclusion that the TPP measures had led to a statistically
significant reduction in consumption. 451 The Dominican Republic requested that the Panel take
appropriate steps "to ensure that the parties' due process interests are respected".452
6.137. The Panel, after having invited and received comments from Australia on the
Dominican Republic's request453, sent a communication on 2 March 2016 to the parties in which it
noted several considerations to be taken into account.454 The Panel considered that "an appropriate
balance" could be struck, by which it would "accept the Dominican Republic's comments of
17 February 2016 with respect to the specific criticisms of [Dr Chipty's Third Rebuttal Report]
expressly identified in that communication regarding the use of tax dummies to control for the
costliness of tobacco products in Dr Chipty's event study on tobacco consumption using IMS data as
being on the record". 455 On this basis, the Panel requested the Dominican Republic to provide the
Panel with the econometric results in support of its observations. 456 The Panel also gave Australia
the opportunity to respond to the Dominican Republic's comments and noted that such comments
"shall be strictly limited to addressing the specific criticisms … identified in the Dominican Republic's
communication of 17 February 2016".457 The Panel "stress[ed] the very limited scope" of the
opportunity to "provide further comments".458
6.138. On 4 March 2016, the Dominican Republic sent a communication to the Panel containing the
statistical results in support of its arguments regarding Dr Chipty's model.459 In that submission, the
Dominican Republic explained that "as the effect of the 2013 tax increase becomes more positive

446 Dominican Republic's Communication to the Panel, 17 February 2016, p. 2.
447 Dominican Republic's Communication to the Panel, 17 February 2016, p. 1.
448 Dominican Republic's Communication to the Panel, 17 February 2016, p. 1.
449 Dominican Republic's Communication to the Panel, 17 February 2016, p. 1.
450 Dominican Republic's Communication to the Panel, 17 February 2016, p. 2.
451 Dominican Republic's Communication to the Panel, 17 February 2016, p. 2.
452 Dominican Republic's Communication to the Panel, 17 February 2016, p. 3.
453 Australia objected to the Dominican Republic's request. (See Communication from Australia to the
Panel, 19 February 2016)
454 Specifically, the Panel highlighted: (i) the fact that "the Panel's timetable [was] already protracted
far beyond that which is envisaged by the DSU"; (ii) the "considerable amount of argumentation and evidence
[that had] already been exchanged"; (iii) the observation that "a panel, in pursuing prompt resolution of a
dispute, needs to 'exercise control over the proceedings in order to bring an end to the back and forth
exchange of competing evidence by the parties'"; and (iv) the fact that the Dominican Republic had not
specifically requested an opportunity to comment on Dr Chipty's report but had "nonetheless identified certain
criticisms" of the report in its letter of 17 February 2016. (Communication from the Panel to the Parties,
2 March 2016, pp. 2-3)
455 Communication from the Panel to the Parties, 2 March 2016, p. 3.
456 Communication from the Panel to the Parties, 2 March 2016, p. 3.
457 Communication from the Panel to the Parties, 2 March 2016, p. 3.
458 Communication from the Panel to the Parties, 2 March 2016, p. 3.
459 Dominican Republic's Communication to the Panel, 4 March 2016.
WT/DS435/AB/R • WT/DS441/AB/R

and more significant, the [T]PP effect for the same start date becomes more negative and more
significant."460
6.139. On 16 March 2016, Australia responded to the Dominican Republic's criticism of Dr Chipty's
model. Australia explained that IPE had previously made similar criticisms, which Dr Chipty had
previously addressed by explaining that "the inability to estimate precisely an effect from the 2013
excise increase was not due to any issue with her model, but rather was a result of insufficient data
following the 2013 excise [tax] increase."461 According to Australia, Dr Chipty only had "five months
of data … available to estimate the 2013 tax effect", and the imprecision identified by IPE did not
affect the estimated effect of the TPP measures.462 Australia also stated that "the results that the
Dominican Republic present[ed] in Table 1 of its 4 March 2016 submission [we]re based on the
backup production for Dr Chipty's December 2015 report – not her latest report"463 and that, given
that the modified analysis in Dr Chipty's final report was identical to the result presented in her
December 2015 report, the Dominican Republic had had an adequate opportunity to review that
finding and respond previously, but chose not to do so. 464 Australia also provided considerable
additional arguments specifically addressing the claims that the positive 2013 tax effect was a
nonsensical result and that the negative effects of the TPP measure were "driven" by the positive
2013 tax effect.465
6.140. It is uncontested that the Panel did not explicitly address the parties' arguments relating to
the factual allegation that Australia's consumption model showed a positive effect of the 2013 tax
increase on consumption. The Panel's decision not to address these arguments was notwithstanding
the considerable debate between the parties over this issue and the fact that the Panel had explicitly
indicated that such arguments and evidence were "on the record".466 We note Australia's argument,
on appeal, that the Panel implicitly addressed this issue by refraining from addressing it, because
the Dominican Republic's letter and supplementary submission "had not added anyt hing to the
extensive evidence that the parties had already submitted on this topic". 467 In our view, however,
the Panel's decision not to explicitly address the Dominican Republic's arguments and evidence
regarding Australia's consumption evidence is brough t into question by virtue of the fact that the
Panel relied on almost identical reasoning to critique the complainants' smoking prevalence models.
6.141. In other words, even though the Panel did not rely on the impact of tobacco costliness as a
reason to consid er Australia's smoking prevalence models more credible than the complainants'
models, such that the Panel did not act inconsistently in assessing the parties' smoking prevalence
models, the Panel did indicate that the inability of a model to detect the impact of tobacco costliness
is a reason to doubt its results. 468 The Panel came to this conclusion on the basis that "all parties
consider tobacco excise tax to be one of the most effective tobacco control policies." 469 Yet, when
the Dominican Republic presented evidence in support of its argument that Australia's consumption
model showed that tobacco excise tax led to an increase in consumption, the Panel did not address
this argument and proceeded to find that Australia's consumption model was more credible than the
complainants' consumption models, sufficient for the Panel to conclude that there was some
econometric evidence that the TPP measures contributed to reducing cigarette consumption.
6.142. We note Australia's argument that the Panel was not required to find that Australia had
resolved all flaws that were present in the complainants' own models. We agree. If the Panel had
found that the complainants' consumption models were doubtful on the gr ound that those models
failed to show a statistically significant effect of tobacco costliness on consumption, and then

460 Dominican Republic's Communication to the Panel, 4 March 2016, para. 5. (emphasis original)
461 Australia's Communication to the Panel, 16 March 2016, para. 10.
462 Australia's Communication to the Panel, 16 March 2016, para. 10 (referring to Surrebuttal Report of
Dr Tasneem Chipty (26 October 2015) (Panel Exhibit AUS-586), para. 62(c)).
463 Australia's Communication to the Panel, 16 March 2016, para. 12. (emphasis omitted)
464 Australia's Communication to the Panel, 16 March 2016, para. 12.
465 Australia's Communication to the Panel, 16 March 2016, paras. 14-27.
466 Communication from the Panel to the Parties, 2 March 2016, p. 3. We emphasize that Australia
acknowledges that, other than summarizing the procedural events as they occurred, the Panel did not "refer to
these events further". (Australia's appellee's submission, para. 820)
467 Australia's appellee's submission, para. 820. (emphasis omitted)
469 Panel Report, Appendix C, para. 103 (referring to Australia's first written submission to the Panel,
para. 719; Honduras' first written submission to the Panel, para. 589; Dominican Republic's first written
submission to the Panel, paras. 758 and 1027; Cuba's first written submission to the Panel, para. 276;
Indonesia's first written submission to the Panel, para. 63).
WT/DS435/AB/R • WT/DS441/AB/R

refrained from referring to this shortcoming as a reason to consider Australia's models to be more
credible (just as the Panel treated t he parties' smoking prevalence evidence), there would be no
inconsistency or issue with the Panel's treatment of the parties' evidence. This is because the Panel
openly acknowledged that Dr Chipty's models did not resolve all issues present in the complainants'
models, implying that her models indeed retained some of the shortcomings of the complainants'
models. However, in the absence of any factual finding indicating whether the complainants'
consumption models failed to show a statistically significant e ffect of tobacco costliness , one can
only speculate. Indeed, bearing in mind that Australia's models were deliberately specified differently
to those of the complainants' models, this issue identified by the Dominican Republic may have been
specific to Australia's models and may not have been present in the complainants' models, which,
by virtue of the Panel's own reasoning, would seem to be a reason to doubt the merits of Australia's
consumption models as compared to the complainants' consumption models.
6.143. We therefore consider that the Panel's failure to address the Dominican Republic's argument
and supporting evidence alleging that Dr Chipty's consumption models showed that excise tax
increases led to an increase in cigarette consumption constituted an error in the Panel's appreciation
of the evidence. However, not every error constitutes a violation of Article 11 of the DSU. We assess
the consequences and materiality of the Panel's error below.470
6.144. We emphasize, however, that the Panel's error in this respect is limited to the Panel's
assessment of whether the TPP measures contributed to the decline in cigarette consumption. In
our view, the Dominican Republic's arguments do not suggest that the Panel acted unobjectively in
relying on this as a measure of robustness, or credibility, in the contex t of assessing the relative
merits of the parties' smoking prevalence evidence. Furthermore, since the Dominican Republic did
not raise any concerns about Dr Chipty's smoking prevalence models in its letter of 17 February
2016, the Panel could not have fai led to address any such arguments. Thus, the Panel's error only
implicates the Panel's conclusion in step 3 of its cigarette consumption analysis.
Proportionality assumption
6.145. In step 3 of its smoking prevalence analysis, the Panel observed that two of the
complainants' experts, namely IPE and Professor List, had used different types of variables to
account for tobacco excise tax increases (i.e. tobacco costliness) in different smoking prevalence
models. Specifically, they had used, at various times, dummy variables, tax level variables, and
price variables. Regarding the use of tax level variables, the Panel observed that such variables rely
on the "assumption that the effect of the tax increase on prevalence is proportional to the size of
the tax increase". 471 Subsequently, in step 3 of its cigarette consumption analysis, the Panel
observed that one of the reasons to doubt certain of IPE's results was that IPE "ignore[d] the fact
that the proportionality assumption underlying the use of the tax level in the analysis of the IMS/EOS
data is rejected".472 In assessing Australia's evidence, in the form of Dr Chipty's models, the Panel
noted that Dr Chipty "specifie[d] excise tax increases dummy variables".473 The Panel observed that
replacing her dummy variables with a tax level variable result ed in the TPP measures' effects
no longer being statistically significant. 474 The Panel recalled, however, that "specification testing
suggests tax levels are not appropriate in the model specification."475
6.146. The Dominican Republic considers that the Panel failed to provide a reasoned and adequate
explanation for its findings regarding the proportionality assumption. 476 According to the
Dominican Republic, the Panel criticized IPE for ignoring the fact that the proportionality assumption
was rejected, notwithstanding that IPE could not have addressed this issue because "it was asserted,
for the first time, in Dr Chipty's final submission, at the closing of the written exchange between the

470 See paras. 6.258. 6.267. below.
472 Panel Report, Appendix D, para. 106. The Panel also observed that when IPE's model used excise tax
dummy variables, "which were initially proposed by IPE itself in its first report but later rejected as inferior
control variables, most results suggest the TPP measures had a negative and statistically significant impact on
wholesales cigarette sales". (Ibid.)
475 Panel Report, Appendix D, para. 116. (fn omitted)
476 Dominican Republic's appellant's submission, para. 572.
WT/DS435/AB/R • WT/DS441/AB/R

parties."477 Furthermore, according to the Dominican Republic, Dr Chipty's conclusion that the
proportionality assumption was rejected was based on her updated consumption model, which the
Dominican Republic had shown included a finding that the 2013 excise tax hike had increased
consumption of tobacco produc ts. The Dominican Republic submits that Dr Chipty's model was
mis-specified and consequently her "testing of whether there was proportionality between the size
of a tax increase and its effect on consumption was inevitably distorted by her model's finding that
an increase in excise tax led to an increase in consumption."478 The Dominican Republic argues that
"the Panel accepted the results of Dr Chipty's testing for the proportionality assumption … without
engaging with the Dominican Republic's evidence and argument that Dr Chipty's model estimated
that Australia's 2013 tax increase … increased consumption", and "failed to … reconcile its
acceptance of Dr Chipty's proportionality testing … with evidence demonstrating that Dr Chipty's
model was mis-specified precisely because it failed correctly to estimate the impact of one of those
three tax increases".479
6.147. Australia submits that the Dominican Republic "misapprehends the purpose for which each
side submitted expert evidence … as well as the role of the Pa nel in evaluating that evidence". 480
Australia notes that it is uncontested that the proportionality assumption was required in order for
the Dominican Republic's models to be valid. According to Australia, the Dominican Republic's
arguments imply that "its experts were allowed to lack an understanding of their own model's
assumptions … unless and until Australia's experts pointed out the problem" and that "the Panel had
no choice but to accept the validity of these models unless and until Australia submitted rebuttal
evidence highlighting the problem."481 Australia submits that such propositions are "fundamentally
untenable … in light of the Panel's duty to scrutinise the evidence" and assess its probative value.482
As to the Dominican Republic's argument that Dr Chipty's model did not correctly estimate the
impact of tax increases on tobacco consumption, such that her test of the proportionality assumption
was distorted, Australia submits that this argument is "merely a reversion back to the arguments
that [the D ominican Republic] made when it submitted comments on Dr Chipty's third rebuttal
report after the period for substantive submissions had ended".483 Australia submits that it addressed
this "issue" in responding to the Dominican Republic's arguments regarding tobacco costliness.484
6.148. Regarding the Dominican Republic's argument that IPE could not have addressed the
proportionality assumption because Dr Chipty identified this issue too late in the proceedings, we
note that the Dominican Republic itself fully acknowl edges the importance of satisfying the
proportionality assumption in order for a model's results to be meaningful (to the extent that the
model uses tax level variables). 485 It follows that the reliability of a model's results is called into
question when the proportionality assumption is not respected, regardless of whether or when this
issue is identified by a party engaged in WTO dispute settlement proceedings. Furthermore,
regardless of whether and when anybody identified this issue, the complainants' exp erts had the
responsibility to check the robustness of their results and, if necessary, modify or change their

477 Dominican Republic's appellant's submission, para. 575. (fn omitted)
478 Dominican Republic's appellant's submission, para. 576. According to the Dominican Republic,
"[w]hen using a model to test whether the proportionality assumption holds, a key assumption is that the
model is capable of accurately estimating the impact of the different tax increases." (Ibid., para. 578
(emphasis original)) The Dominican Republic elaborates that, "[t]o be proportionate, relative to the size of
each tax increase, the three tax increases [included in IPE and Dr Chipty's models] must have a similar
(i.e. proportionate) impact on consumption", and "[i]f the estimate for one tax increase goes in the wrong
direction, … the three tax increases will never have a similar … impact on consumption in the right direction."
(Ibid., para. 580 (italics and underlining original))
479 Dominican Republic's appellant's submission, para. 581. (emphasis original)
480 Australia's appellee's submission, para. 840. Australia also notes that "Dr Chipty discussed the issue
of proportionality in her final submission because it was necessitated by IPE's use of tax level variables in its
immediately preceding submission." (Ibid., fn 1085 to para. 840 (emphasis original))
481 Australia's appellee's submission, para. 840. (emphasis original)
482 Australia's appellee's submission, para. 840.
483 Australia's appellee's submission, para. 841.
485 The Dominican Republic accepts that "[t]he use of tax levels as a control for tobacco costliness
implicitly assumes that the proportionality assumption holds" and that "if there is no proportionality between
the size of a tax increase and its effect, the use of tax levels is inappropriate as a control for tobacco
costliness." (Dominican Republic's appellant's submission, para. 561)
WT/DS435/AB/R • WT/DS441/AB/R

models in order to make their evidence as credible as possible. 486 We see no error in the Panel
relying on Dr Chipty's observations (observations which the Dominican Republic itself considers to
be relevant) to question the credibility of the complainants' models.
6.149. Turning to the Dominican Republic's argument that "the Panel failed to explain how it could
reconcile its acceptance of Dr Chipty's proportionality testing … with evidence demonstrating that
Dr Chipty's model was mis -specified"487, we note that, with the exception of the interim review
process, the Dominican Republic should not have been given the opportunity to raise such
arguments in the pa nel process, given that Dr Chipty's Third Rebuttal Report was Australia's final
filing in the dispute. It cannot be ignored, however, that the Dominican Republic did notify the Panel
of at least one concern that it had relating to Dr Chipty's Third Rebuttal Report, a concern which the
Panel proceeded to accept and considered to be "on the record". 488 In that letter the
Dominican Republic did not identify Dr Chipty's treatment of IPE's evidence in the Third Rebuttal
Report as a concern.489 Rather, the Dominican Republic's 17 February 2016 communication alleged
only that Dr Chipty's consumption model showed that the 2013 excise tax hike led to an increase in
consumption. In our view, the Dominican Republic had the opportunity to raise its argument
regarding the proportionality assumption to the Panel and failed to do so. Its failure to do so means
that the factual arguments that the Dominican Republic now makes on appeal essentially constitute
the Dominican Republic's rebuttal of Dr Chipty's evidence. This amounts to relitigating a factual
issue, and would require us to second-guess the Panel's appreciation of the evidence. We decline to
do so.
6.150. For these reasons, we consider that the Dominican Republic has not demonstrated that the
Panel erred in referring to the p roportionality assumption in its assessment of the credibility of the
evidence.
The use of a linear trend versus a quadratic trend
6.151. In step 3 of its smoking prevalence analysis, after highlighting that most of the models
provided by the Dominican Republic and Indonesia's experts – IPE and Professor List – were unable
to detect the impact of tobacco costliness, the Panel elaborated that, "[t]he manner in which the
smoking prevalence trend is modelled with respect to the sample period considered … has an
important consequence on whether the econometric analysis is able to identify the impact of other
variables."490 The Panel noted that the relevant variables can contribute to creating the smoking
prevalence trend, a problem the Panel referred to as "overfitt ing".491 Turning to assess the models
provided by Honduras' expert, Professor Klick, the Panel questioned his results on the basis that,
inter alia, "as demonstrated by Dr Chipty, the use of a quadratic trend to capture the downward
trend in smoking prevalence leads the predicted tobacco price variable to be not significant."492 The
Panel elaborated that, "[a]s explained above, specifying an excessively flexible smoking prevalence
trend (i.e. quadratic trend) is likely to overfit the data on smoking prevalence and make redundant
any other variables, such as individual tobacco control policies, that can potentially have also an
impact on smoking prevalence."493 Subsequently, in comparing Dr Chipty's models to those of the
complainants, the Panel highlighted that "D r Chipty acknowledges and addresses the issue of
overfitting associated with a too flexible trend" and, by using dummy variables instead of a price
variable to capture the impact of excise tax increases, Dr Chipty "avoids the problems of

486 We note that, unlike the Panel's concerns regarding multicollinearity and non-stationarity (which the
Panel developed of its own accord), the problem of the proportionality assumption was identified by one of the
parties' experts in the course of the Panel proceedings. In our view, the mere fact that the Panel proceedings
entails a back-and-forth of views from the parties should not preclude a Panel from relying on the concerns and
views expressed by whomever has the last word. In our view, a distinct concern is raised when a Panel
identifies concerns with the parties' evidence of its own accord. We address the parties' due process arguments
in paras. 6.226. 6.257. below.
487 Dominican Republic's appellant's submission, para. 581.
488 Communication from the Panel to the Parties, 2 March 2016, p. 3.
489 Nor did the Dominican Republic raise this issue in its subsequent elaboration of those arguments on
4 March 2016, in response to the Panel's request for the Dominican Republic to provide the statistical basis for
its argument.
WT/DS435/AB/R • WT/DS441/AB/R

multicollinearity and endogeneity associated with the inclusion of the price variable (in combination
with a quadratic trend variable)".494
6.152. Honduras claims that the Panel disregarded expert rebuttal evidence offered by Professor
Klick against criticism by Dr Chipty as to the use of a quadratic trend to analyse the RMSS data. 495
Honduras points to Professor Klick's argument that the use of a linear trend is incorrect because the
data rejected the hypothesis that the background trend in smoking prevalence was linear. 496
Honduras not es that the Panel Report failed to address this argument and instead rejected the
robustness of Honduras' model, based on Dr Chipty's arguments.497
6.153. Australia argues that "Professor Klick failed to persuade the Panel that the use of a quadratic
trend variable instead of a linear trend variable … was appropriate ."498 Australia submits that
Honduras disregards "the Panel's carefully documented reasons for rejecting Professor Klick's
evidence".499 Australia also argues that this aspect of Honduras' arguments relates to the
Panel's authority to weigh the evidence, and that a "panel does not err simply because it declines to
accord to the evidence the weight that one of the parties believes should be accorded to it".500
6.154. We note that, before the Panel, Honduras provided e xpert evidence in which its expert,
Professor Klick, stated that "the RMSS data pretty clearly reject the hypothesis that the background
trend in smoking prevalence is linear", on the basis of "a locally weighted regression of the average
(weighted) prevalence by month in the RMSS data on a time indicator", which revealed a "quadratic
curvature with respect to the time variable". 501 Professor Klick backed up this analysis with graphs
visually depicting how the RMSS data followed a curved trend rather than a l inear trend. Professor
Klick also provided the results of his regression analysis, which showed that (although the linear
trend was also statistically significant), "the quadratic trend is statistically significant … [and]
generates a higher adjusted R2 than the competing models, suggesting that it explains more of the
variation in the data, and it generates a lower R oot Mean Squared Error (RMSE) than the other
models, which implies that it does a better job predicting the observed data."502
6.155. The Panel did not explicitly address this argument. We note, however, that the Panel
questioned Professor Klick's model on the basis that the price variable was not statistically
significant, and that this might be attributable to overfitting (for example, by using a quadr atic
trend).503 Specifically, the Panel stated that "specifying an excessively flexible smoking prevalence
trend (i.e. quadratic trend) is likely to overfit the data on smoking prevalence and make redundant
any other variables, such as individual tobacco con trol policies, that can potentially have also an
impact on smoking prevalence." 504 Thus, we understand that the Panel considered that the very
thing that, in Professor Klick's view, made his quadratic trend superior to a linear trend was, in fact,
problematic because it might have resulted in a lack of statistical significance with respect to the
price variable. In other words, the Panel did explain why it considered a linear trend to be more
useful. While Honduras may disagree with the Panel's conclusion in that respect, we do not consider
that Honduras has demonstrated that the Panel erred in appreciating the relative merits of a
quadratic trend versus a linear trend.

495 Honduras' appellant's submission, para. 1085 (referring to J. Klick, Third Supplemental Rebuttal
Report – A Reply to Dr Chipty and Professor Chaloupka (8 December 2015) (Klick Third Supplemental Rebuttal
Report) (Panel Exhibit HND-166), paras. 16-19, 29-32, and 46-48).
496 Honduras' appellant's submission, para. 1085 (referring to Klick Third Supplemental Rebuttal Report
(Panel Exhibit HND-166), para. 16).
497 Honduras' appellant's submission, para. 1085 (referring to Panel Report, Appendix C, para. 112).
498 Australia's appellee's submission, para. 941 (referring to Panel Report, Appendix C, para. 112).
(fns omitted)
499 Australia's appellee's submission, para. 942. (fn omitted)
500 Australia's appellee's submission, para. 943 (referring to Appellate Body Report, US – Tuna II
(Mexico) (Article 21.5 – Mexico), para. 7.219).
501 Klick Third Supplemental Rebuttal Report (Panel Exhibit HND-166), paras. 16-17.
502 Klick Third Supplemental Rebuttal Report (Panel Exhibit HND-166), para. 19.
WT/DS435/AB/R • WT/DS441/AB/R

Endogeneity
6.156. In step 3 of its smoking prevalence analysis, concerning whether the TPP measures
contributed to reducing smoking prevalence, the Panel observed that IPE and Professor List's
specifications of one of the independent variables, specifically the "tobacco price control policy"
(i.e. excise taxes), had at various times included the use of dummy variables, tax level variables,
and price variables. 505 In assessing the merits of these different types of variables, the Panel
highlighted that a price variable (unlike a dummy variable or a tax level var iable) accounts for
all factors that influence price, including, but not limited to, excise tax increases. 506 The Panel
referred to this as a problem of "endogeneity". 507 The Panel observed that, unlike another of the
complainants' experts (Professor Klick), neither IPE nor Professor List "address[ed] the fact that the
TPP measures might affect the price variable", and consequently their models were "unable to
distinguish between the impact specific to the price variable and the TPP measures", leading the
Panel to "question the econometric results based on the price variable".508 The Panel contrasted this
problem, which in this context appears specific to the use of a price variable, with the "exogenous"
nature of a dummy variable or a tax level variable. 509 The Pan el noted that Dr Chipty's model
specification used dummy variables to capture excise tax increases, and thus avoided the problem
of endogeneity.510
6.157. Subsequently, in step 3 of its cigarette consumption analysis, in assessing whether the
TPP measures contribu ted to a decline in consumption of tobacco products, the Panel similarly
observed that IPE's analysis of the IMS/EOS data, which also included a price variable to take
account of excise tax increases, "fail[ed] to take into account the potential impact of the
TPP measures on tobacco prices".511 The Panel also "question[ed] the validity of IPE's results based
on the Nielsen data for … the use of the price variable". 512 Again, the Panel noted that Dr Chipty's
model was specified with dummy variables to capture ex cise tax increases, thus avoiding the
problem of endogeneity in the use of a price variable.513
6.158. The Dominican Republic argues that the Panel's treatment of the evidence was inconsistent,
because: (i) while the Panel found that Australia's model using tax -based (tax dummies and tax
levels) control variables avoided the problem of endogeneity, it did not extend that finding to the
models provided by the Dominican Republic that used tax-based variables514; and (ii) while the Panel
rejected the models provided by the Dominican Republic that used a price-based variable, the Panel
did not reject the Australian models using a price-based control variable.515
6.159. Regarding the Panel's alleged failure to address the Dominican Republic's models that used
tax dummies or tax lev els, Australia argues that the Panel did address IPE's "'later' [smoking]
prevalence models and identified multiple reasons for questioning the validity and probative value

505 Panel Report, Appendix C, paras. 106-107.
507 See, for example, Panel Report, Appendix C, paras. 117 and 120; ibid., Appendix D, paras. 57, 76,
514 Dominican Republic's appellant's submission, para. 550. The Dominican Republic refers, specifically,
to its aggregate prevalence and one-stage prevalence models for cigarettes, as well as its aggregate
prevalence model for cigars. (Ibid. (referring to D. Afshartous, M. Hagedorn, A. Kaul, and M. Wolf, Empirical
Assessment of Australia's Plain Packaging Regime, Institute for Policy Evaluation (8 December 2015)
(IPE Third Updated Report) (Panel Exhibit DOM-375), paras. 30, 64-66, 84, and 109-112))
515 Dominican Republic's appellant's submission, para. 553. The Dominican Republic refers specifically to
the two-stage prevalence models submitted by the Dominican Republic and Australia. (Ibid. (referring to
Second Rebuttal Report of Dr Tasneem Chipty (8 December 2015) (Chipty Second Rebuttal Report) (Panel
Exhibit AUS-591), Table 5, Row [B]; J. List, A Further Synthesis of the Newly-Available Evidence on Australia's
Plain Packaging Policy (8 December 2015) (List Third Supplemental Report) (Panel Exhibit DOM/IDN-7)),
Table 5). According to the Dominican Republic, "while the Panel rejected Professor List's approach, it
considered Dr Chipty's model to be sufficiently robust to rely on it as a basis for its smoking prevalence
findings." (Ibid.)
WT/DS435/AB/R • WT/DS441/AB/R

of the results that these models produced". 516 Australia similarly submits that the
Dominican Republic's later consumption models were also critiqued on multiple grounds.517 As to the
argument that the Panel did not address Australia's two-stage prevalence model that relied on price
levels, Australia submits that "Dr Chipty never endorsed th e use of price as a control", and
"consistently identified problems with the use of price as a control".518 Furthermore, Australia argues
that the so-called "model" identified by the Dominican Republic as Dr Chipty's two-stage model is in
fact "a single row in a table where Dr Chipty conducted a sensitivity analysis of various model results"
that was included in order to be "comprehensive".519
6.160. We recall that the Panel did not reject outright any individual model on the basis of perceived
flaws. Rather, the Panel assessed the parties' evidence, starting with the complainants', and noted
multiple reasons to doubt the reliability of that evidence. The Panel considered that Australia's
evidence was, in relative terms, more credible and reliable than the complainants' evidence, all the
while recognizing that no model submitted by any expert was perfect. Consequently, any
inconsistency in the Panel's treatment of the parties' evidence can only relate to the reasons the
Panel provided for concluding that Australia's ev idence was, in relative terms, more credible than
the complainants' evidence.
6.161. We recall, in this respect, that the Panel provided several reasons that it considered
Australia's evidence to be more credible than those of the complainants. 520 The Panel's reasoning
with respect to endogeneity related specifically to the complainants' price-specified models, and the
fact that Dr Chipty's primary model was not specified with a price variable (thereby avoiding the
problem of endogeneity). We under stand that the Dominican Republic's concerns with the Panel's
approach relate to: (i) the Panel's treatment of the Dominican Republic's models that were
not specified with price variables; and (ii) the Panel's treatment of Australia's models that were
specified with a price variable.
6.162. With respect to the Panel's treatment of the Dominican Republic's models that were not
specified with a price variable, we note that the Panel's reasons for preferring Dr Chipty's
specification included the fact that Dr Chipty: (i) addressed the issue of overfitting; and (ii) avoided
the issue of non -stationarity of the tax level variables. 521 These reasons alone would appear to
indicate that the Panel did indicate its reasons for preferring Dr Chipty's non-price specified model
to the Dominican Republic's non-price specified models. In any event, the Panel proceeded to also
note that Dr Chipty's results were robust to alternative specifications, including different TPP starting
dates, the use of a tax level variable, the use of s ample reweighting dummies, and the fact that
when Dr Chipty used Professor List's procedure to calculate standard error (a procedure about which
the Panel had previously expressed its doubts 522), the impact of the TPP measures on smoking
prevalence remained negative and statistically significant in most specifications.523 We therefore do
not consider that the Panel disregarded the Dominican Republic's models specified with tax level
variables and tax dummy variables, and the Panel clearly explained its reasons for concluding that
Dr Chipty's models were more credible than the Dominican Republic's models.
6.163. Turning to the Dominican Republic's argument that the Panel rejected the models provided
by the Dominican Republic that used a price -based variable524, but did n ot reject the Australian

516 Australia's appellee's submission, para. 830. Australia refers specifically to those models' use of
"inappropriate sample periods [and] … trend variables that overfit the data". (Ibid.) Australia also considers
that, in its assessment of smoking prevalence, IPE relied on tax dummy variables in its later models, but
"made multiple other changes … that the Panel expressly identified as additional reasons for questioning the
results". (Ibid. (emphasis original))
517 Australia's appellee's submission, para. 830. Australia refers to those models' reliance on the
proportionality assumption. (Ibid.)
518 Australia's appellee's submission, para. 833.
519 Australia's appellee's submission, para. 833 (referring to Dominican Republic's appellant's
submission, fn 476, in turn referring to Chipty Second Rebuttal Report (Panel Exhibit AUS-591), Table 5,
Row [B]).
520 See Panel Report, Appendix C, paras. 120-121.
522 Panel Report, Appendix C, paras. 109-110, and fns 131-132 to para. 110.
524 We recall that the Panel questioned the results of price-based models on the basis of endogeneity,
multicollinearity, and non-stationarity.
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models using a price-based variable525, we again note that the Panel did not "reject" any models on
the basis of any individual criterion, but rather weighed the credibility of the evidence provided by
the different parties. In any e vent, we understand that this aspect of the Dominican Republic's
arguments is based on the assertion that the Panel gave probative value to Dr Chipty's so-called
"two-stage model".
6.164. We note that the Panel's analysis of Dr Chipty's evidence consists of thre e paragraphs. In
the first paragraph, the Panel considers that Dr Chipty addressed several of its concerns with the
complainants' approaches, and emphasizes that "Dr Chipty's model specification … includes
the excise tax increases dummy variables and thus avoids the problems of multicollinearity and
endogeneity … [as well as] the issue of non-stationarity of the price or tax level variables."526 In the
second paragraph, the Panel notes that Dr Chipty's evidence showed that "alternative specifications"
also showed a "negative and statistically significant impact of the TPP measures on overall smoking
prevalence".527 The Panel specifically explains that such alternative specifications included a
"different TPP starting date", the use of "excise tax level variable[ s]", and "sample reweighting
dummies".528 In support of these statements, the Panel refers to a page in Dr Chipty's Third Rebuttal
Report containing "sensitivity analys es" of three models, which purport to show that "[w]hen the
proportionality assumption is valid, both models with tax indicators and models with a tax level
variable produce reliable model estimates."529 None of the models referred to in the Third Rebuttal
Report are based on price level variables. The Panel also refers to two pages in Dr Chipty's
Second Rebuttal Report.530 Both pages contain Dr Chipty's re-analysis of five models presented by
the complainants, one of which is indeed Professor List's two-stage analysis that incorporated price
level variables. We note that three of these five models are very similar (if not identical) to the
models that Dr Chipty subsequently re -assessed in her sensitivity analysis in the Third Rebutta l
Report. Finally, in the third paragraph of its analysis, the Panel concluded that "based on the most
recent econometric evidence submitted by Australia, there is econometric evidence suggesting that
TPP and enlarged GHWs contributed" to reducing smoking prevalence.531
6.165. We understand that the Dominican Republic considers that the Panel gave probative value
or weight to Dr Chipty's alleged two-stage model, because this is one of the models referred to in
those pages of the Chipty Second Rebuttal Report that is cited by the Panel in the second paragraph
of its analysis. We note, however, that in the first paragraph of its analysis, the Panel clearly indicates
that one of the advantages of "Dr Chipty's model specification" is that it does not rely on price level
variables.532 This paragraph therefore shows no indication that the Panel gave any weight to any
model using a price level variable and, in fact, suggests that the Panel did not give any weight to
any such model. Furthermore, in its second paragraph, when the Panel noted that Dr Chipty's
econometric results were "robust to alternative specifications, includin g … the use of an excise tax
level variable"533, the Panel identified certain specifications that led it to this conclusion, and while
it specifically mentioned a specification using tax level variables, the Panel did not mention any
models using price level variables. Additionally, the Panel's conclusion on Dr Chipty's evidence states
that "the most recent econometric evidence submitted by Australia" suggests that the TPP measures
contributed to reducing smoking prevalence.534 Dr Chipty's final econometric model was presented
in her Third Rebuttal Report. The Dominican Republic has not identified anywhere in the
Third Rebuttal Report that Dr Chipty relied on a model specified with a price variable. We note that
the only reason to consider that the Panel did, in fact, give any prob ative weight to Dr Chipty's
two-stage specification is that it is one of five models identified in the relevant pages of Dr Chipty's
Second Rebuttal Report that are referred to by the Panel in its footnote indicating that Dr Chipty's

525 Dominican Republic's appellant's submission, para. 553. The Dominican Republic refers specifically to
the two-stage prevalence models submitted by the Dominican Republic and Australia. (Ibid. (referring to Chipty
Second Rebuttal Report (Panel Exhibit AUS-591), Table 5, Row [B]; List Third Supplemental Report (Panel
Exhibit DOM/IDN-7)), Table 5) According to the Dominican Republic, "while the Panel rejected Professor List's
approach, it considered Dr Chipty's model to be sufficiently robust to rely on it as a basis for its smoking
prevalence findings." (Ibid.)
526 Panel Report, Appendix C, para. 120. (emphasis added)
529 Chipty Third Rebuttal Report (Panel Exhibit AUS-605), para. 30, and Table 4 on p. 22.
530 Chipty Second Rebuttal Report (Panel Exhibit AUS-591), pp. 33 and D.2.
534 Panel Report, Appendix C, para. 122. (emphasis added)
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results were robust to alternative specifications. However, it is plausible that that footnote is
intended to refer exclusively to the four other models identified on that page of Dr Chipty's
Second Rebuttal Report (none of which included a price variable).
6.166. On balance, we do not consider that the Panel gave any weight to Dr Chipty's price-specified
model, and consequently the Panel did not treat the parties' price -specified models inconsistently.
We also note that, even if the Panel did give any weight to Dr Chipty's price-specified model, it was
only by way of support for Dr Chipty's primary model, specified with dummy variables. 535 We see
no inconsistency between the Panel giving most weight to Dr Chipty's tax dummy model, over and
above price -specified models prepared by both the Dominican Republic and Dr Chipty. In other
words, the fact that the Panel considered Dr Chipty's tax dummy model to be the most relevant and
probative model is not called into question by the fact that there may have been an inferior,
price-specified model that contradicted the Dominican Republic's similarly inferior price -specified
model.
6.167. For these reasons, we do not consider that the Domi nican Republic has demonstrated that
the Panel erred in referring to endogeneity in its assessment of the parties' econometric evidence.536
Multicollinearity
6.168. In step 3 of its smoking prevalence analysis, in addition to identifying the endogeneity of
the pri ce variable as a potential concern, the Panel also observed "evidence of multicollinearity
between the price variable and the linear trend variable, in particular when the sample period is
restricted to July 2006 to September 2015". 537 The Panel explained, w ithout reference to any
evidence on or off the Panel record, that multicollinearity arises when "two (or more) explanatory
variables convey the same information", in which case "the predictive power of the model remains
unchanged, but the confidence interval of the coefficient estimates may increase" and "the coefficient
estimates may become very sensitive to minor changes in the model specification or data." 538 The
Panel considered that one way to mitigate multicollinearity is to increase the sample period, but that
"including a second linear trend specific to the July 2006 -September 2015 period, as suggested by
IPE, would not resolve th[e] issue."539 The Panel also observed that "[e]vidence of multicollinearity
is confirmed by the variance inflation factors [( VIF)] statistic." 540 Given that the complainants'
experts did not address the issues of multicollinearity and endogeneity, the Panel called into question
the econometric results based on the price variable. 541 In assessing Dr Chipty's analysis, the Panel
observed that her use of dummy variables to capture excise tax increases avoided the problems of
both multicollinearity and endogeneity associated with the price variable.542
6.169. In step 3 of its cigarette consumption analysis, the Panel highlighted that IPE's modifi ed
trend analysis and autoregressive integrated moving average with explanatory variable ( ARIMAX)
model included "both a price variable and a time trend variable, which happen to be highly collinear
with each other". 543 The Panel similarly noted that in different stages of Professor Klick's
difference-in-difference model, based on different datasets, th ere was multicollinearity between

535 Panel Report, Appendix C, paras. 120-121. The Panel's findings show that the Panel gave the most
weight to the latter model specification and only considered Dr Chipty's alternative specifications to be relevant
to the extent that they confirmed the robustness of Dr Chipty's dummy variable model.
536 We note the Dominican Republic's argument that the Panel's findings were insufficiently reasoned
and adequate, because the Panel failed to address the fact that IPE demonstrated that "even when it used the
tax dummies to control for tobacco costliness in … aggregate and one-stage models, it did not find a
TPP effect", and consequently IPE "concluded that there was no evidence of 'endogeneity"'.
(Dominican Republic's appellant's submission, para. 531 (emphasis original). See also ibid., paras. 555-557;
Australia's appellee's submission, para. 835) In our view, this aspect of the Dominican Republic's arguments
constitutes relitigating the factual aspects of the case on appeal.
540 Panel Report, Appendix C, fn 119 to para. 107.
543 Panel Report, Appendix D, para. 106. The Panel also observed that multicollinearity appeared to be
"even more marked when the … ARIMAX model include[d] five lags of the logarithm of per capita sales
variables and of the price variable". (Ibid.)
WT/DS435/AB/R • WT/DS441/AB/R

different variables.544 The Panel did not refer to multicollinearity when assessing Australia's models,
prepared by Dr Chipty.545
6.170. The appellants argue that, in relying on the notion of multicollinearity to critique the parties'
models, the Panel acted inconsistently with Article 11 of the DSU by compromising the complainants'
due process rights, making the case for Australia, treating the parties' evidence inconsistently, and
failing to provide reasoned and adequate explanations for its findings.546
6.171. We address the appellants' arguments regarding due process (including the
Dominican Republic's arguments that the Panel made the case for Australia) in
paragraphs 6.226. -6.257. below. As to the Dominican Republic's arguments that the Panel failed
to provide a reasoned and adequ ate explanation for its findings 547, we consider that the Panel
adequately explained the basis for its concerns related to multicollinearity. 548 Having explained in
paragraphs 116 of Appendix B and 107 of Appendix C why it considered the presence of
multicollinearity in a model to be a reason to doubt the reliability of that model, the Panel identified
throughout its analysis certain models that di d or did not suffer from this shortcoming. We see no
reason for the Panel not to apply well-known statistical tests of rigour to evidence that is statistical
in nature, insofar as the Panel ensures that the due process rights of the parties are respected, and,
in our view, the appellants have not demonstrated how the brevity of the Panel's explanation for
why and how it tested for multicollinearity implies that it failed to make an objective assessment of
the matter.
6.172. Turning to the appellants' arguments th at the Panel treated the evidence inconsistently in
its reliance on multicollinearity, both appellants argue that the Panel faulted the analyses of
Honduras' and the Dominican Republic's experts for suffering from the problem of multicollinearity,
but fail ed to assess Australia's models for that same problem. 549 Honduras notes the Panel's
statement that Dr Chipty's smoking prevalence models "avoid[ed] the problems of multicollinearity
and endogeneity"; however, Honduras submits that "there is no analysis of a ny kind" to show that
the Panel actually examined Dr Chipty's models for multicollinearity. 550 Honduras also argues that
the Panel contradicts itself by finding at one point that the issue of multicollinearity is "less severe"
when using tax dummies yet noting later that Dr Chipty "avoids" the problem of multicollinearity by
using those same dummies.551 The Dominican Republic similarly argues that "the Panel stated that
Australia's smoking prevalence models were not affected by multicollinearity" and "accepted the
model specifications as robust evidence that the TPP measures had reduced smoking prevalence",
without "stat[ing] whether it had applied a VIF test to these models and, if it did so, what the results
of the test were" and addressing "whether Australia' s consumption models were affected by
multicollinearity".552

544 Panel Report, Appendix D, paras. 109-110.
545 Panel Report, Appendix D, paras. 115-117. We also note that, in step 2 of its cigarette consumption
analysis, the Panel indicated that the only explanatory variable that was statistically significant in Professor
List's dynamic models based on IMS/EOS data was the "time trend variable when the price variable [wa]s
omitted or replaced by a tax level variable", which suggested that "the price variable and the time trend might
be collinear", rendering "one of them … redundant". (Panel Report, Appendix D, para. 43) Similarly to its
analysis in step 3, the Panel did not refer to multicollinearity in comparing Australia's evidence to the
complainants' evidence, and, in fact, the Panel indicated that it "continue[d] to have doubts" about Australia's
546 Honduras' appellant's submission, paras. 1036-1045; Dominican Republic's appellant's submission,
paras. 362-424.
547 Dominican Republic's appellant's submission, paras. 413-418.
548 See Panel Report, Appendix B, para. 116; Appendix C, paras. 107-108 and 120, fn 119 to para. 107,
and fn 122 to para. 108; Appendix D, paras. 43, 106, and 109-110. See also Appendix E, paras. 29 and 51-54.
549 Honduras' appellant's submission, para. 1038; Dominican Republic's appellant's submission,
paras. 407-408 (referring to Panel Report, Appendix C, paras. 107 and 120) and 411.
550 Honduras' appellant's submission, paras. 1043-1044 (quoting Panel Report, Appendix C, para. 120).
551 Honduras' appellant's submission, para. 1044 (quoting Panel Report, Appendix C, fn 122 to
para. 108).
552 Dominican Republic's appellant's submission, paras. 407-408 (referring to Panel Report, Appendix C,
Dominican Republic further argues that, by applying the VIF test statistic with the same VIF threshold of 14 to
Australia's models, "each of Australia's one-stage models and each of the prevalence models that controlled for
reweighting, on which the Panel relied to find an actual impact of the TPP measures on smoking prevalence,
have a VIF of 14 or above", which means that they are also "affected by the type of multicollinearity problem
WT/DS435/AB/R • WT/DS441/AB/R

6.173. Australia argues that the Panel's treatment of the econometric evidence submitted by the
appellants was entirely consistent with the allocation of the burden of proof.553 Australia argues that,
since the appellants did not meet their initial burden of proof, there was no need for the Panel to
assess the Australian models with the rigour reserved for rebuttal evidence, as would be appropriate
if the burden of proof had shifted to Australia. 554 Australia therefore considers that the Panel
appropriately assessed the evidence for the purpose of determining whether the burden of proof was
met. Consequently, in Australia's view, there is no violation of Article 11 of the DSU for lack of
even-handedness in its inquiry.555
6.174. We recall that the Panel did not "reject" any models or evidence on the basis of
multicollinearity. Rather, the Panel considered that models suffering from multicollinearity may be
less reliable than models not suffering from multicollinearity. Importantly, the Panel assessed the
reliability of different models on the basis of a number of different considerations, one of which was
the presence of multicollinearity. In comparing Dr Chipty's smoking prevalence and consumption
models to the complain ants' smoking prevalence and consumption models, the Panel did not find
that Dr Chipty's models were flawless or cured all of the problems present in the complainants'
models. Rather, the Panel stated that Dr Chipty's models addressed some of the concerns that it
had raised with respect to the complainants' evidence. 556 Consequently, it does not follow that the
Panel considered that Dr Chipty's models were superior on the basis that they did not suffer from
multicollinearity, except to the extent that the Panel explicitly indicated this.
6.175. With this in mind, we note that, in the context of comparing the participants' smoking
prevalence models, the Panel's only reference to multicollinearity as a reason to prefer Dr Chipty's
models was very specific to the fact that Dr Chipty's model specified with dummy variables avoided
the problem of multicollinearity present in a price-specified model.557 We see no way to doubt the
veracity of this finding without second -guessing the Panel's appreciation of the evidence. In any
event, this finding does not suggest that Dr Chipty's alternative specifications (i.e. those models
specified with tax levels) did not suffer from precisely the same issue of multicollinearity as the
complainants' models.
6.176. As to Honduras' consideration that the Panel's findings are contradictory because the Panel
found that "the issue of mul ticollinearity is less severe when excise tax increase dummies … are
used", we note that Honduras is seeking to generalize an observation that the Panel made in the
specific context of assessing the level of multicollinearity present in Professor List's mo dels when
seeking to control for reweighting corrections in the RMSS data.558 Thus, the Panel did not find that
every single model submitted by every party suffered from multicollinearity, and, in any event, even
if the Panel had made such a generic finding we would see no contradiction between that finding
and the Panel's ultimate conclusion that Dr Chipty's dummy variable model avoided the problem of
multicollinearity present in a price -specified model. 559 In short, the Panel's reliance on

identified by the Panel". (Dominican Republic's appellant's submission, para. 410 (emphasis original)) We note
that the Dominican Republic's arguments related to its own testing of the VIF statistic are inappropriate on
appeal and essentially require the Appellate Body to second-guess the Panel's appreciation of the evidence. We
therefore decline to take such arguments into account. (See paras. 6.329. -6.331. below)
553 Australia's appellee's submission, paras. 737-738.
554 Australia's appellee's submission, paras. 741-742.
555 Australia's appellee's submission, paras. 744-745.
556 In comparing the participants' smoking prevalence models, the Panel stated that "a number of
concerns that [it] raised while reviewing the complainants' approaches and results [were] addressed by
Dr Chipty." (Panel Report, Appendix C, para. 120) In comparing the participants' consumption models, the
Panel stated that "some concerns that [it] raised regarding the experts of the Dominican Republic's,
Honduras's and Indonesia's approaches and results of the market data [were] to some extent addressed by
Dr Chipty." (Ibid., Appendix D, para. 115)
558 Panel Report, Appendix C, fn 122 to para. 108.
559 To the extent that the Panel's statement that "the issue of multicollinearity is less severe when
excise tax increase dummies … are used" is a universally applicable statement, this would actually appear to
support the Panel's conclusion that a model specified with tax dummies is more robust than a model specified
with price variables. (Panel Report, Appendix C, fn 122 to para. 108) This is because the Panel did not appear
to consider multicollinearity to be a binary issue whereby a model must be "accepted" or "rejected" depending
whether or not it suffered from any multicollinearity. Rather, the Panel considered that a model might suffer
"more" or "less" such that a model specified with dummy variables "avoids" the specific multicollinearity
problem present in a model specified with a price-variable. (Panel Report, Appendix C, para. 120) This follows
WT/DS435/AB/R • WT/DS441/AB/R

multicollinearity as a reason to favour Dr Chipty's models was extremely limited and shows no lack
of even-handedness.
6.177. As to the Panel's comparison of the participants' consumption models, the Panel did not, in
any way, suggest that Dr Chipty's models were more credible tha n the complainants' on the basis
that Dr Chipty's models did not suffer from multicollinearity. 560 Since the Panel's reasons for
considering Dr Chipty's consumption models to be more reliable than the complainants' consumption
models were unrelated to multicollinearity, it follows that the Panel did not apply a different standard
of robustness in assessing Dr Chipty's models than it applied to the complainants' models.
6.178. We therefore consider that the Panel did not treat the participants' evidence inconsistent ly
in assessing the relative merits of the complainants' econometric evidence and Australia's
econometric evidence with respect to multicollinearity.
Non-stationarity
6.179. As stated above, in step 3 of its smoking prevalence analysis, the Panel "call[ed] into
question the econometric results based on the price variable" because the Dominican Republic's
experts had not addressed the issue of multicollinearity or the potential impact of the TPP measures
on prices.561 The Panel "also note[d] that the expert reports submitted by the Dominican Republic,
Honduras and Indonesia (and Australia) failed to mention that standard unit root tests suggest that
the tax level and the price variables are not stationary".562 The Panel explained that "[a] variable is
said to be stationary, when its statistical properties, such as mean and variance are all constant over
time."563 The Panel stated that "econometric theory recommends not estimating a model when the
dependent variable (i.e. smoking prevalence) is stationary and one of the explanatory variables
(i.e. tax level or price) is not stationary in order to avoid spurious and biased results."564 The Panel's
findings suggest that a "standard unit root test" can reveal whether a variable is stationary. 565 In
assessing Australia's evidence, the Panel observed that Dr Chipty's use of tax dummy variables
"avoid[ed] the issue of non-stationarity of the price or tax level variables".566 The Panel noted that,
in any event, Dr Chipty's results were robust to alternative specifications, including the use of a tax
level variable.567
6.180. In step 3 of its cigarette consumption analysis, the Panel highlighted that, in its analysis of
the IMS/EOS data, IPE did "not address the fact that the price variable and the tax level variable
appear to be non -stationary".568 With respect to Professor Klick's analysis, the Panel questioned
one of his models on the ground that "none of the explanatory variables, except the constant, are
statistically significant." 569 The Panel observed, in this respect, that the "variable reporting the
number of stores covered by the Aztec data is not stationary". 570 In its analysis of Australia's
evidence, the Panel observed that Dr Chipty's model specified with excise tax dummy variab les
"avoids … the unit root problem of the price or tax level variables". 571 The Panel noted that
Dr Chipty's results were robust to some alternative specifications, but highlighted that the
TPP measures' effects were no longer statistically significant when the tax dummy variables were
replaced with a tax level variable. 572 The Panel further noted, however, that "specification testing

from the very fact that the Panel considered it relevant to note that the problem of multicollinearity was "less
severe" in Professor List's models when tax dummies were used.
560 Panel Report, Appendix D, paras. 115-116.
563 Panel Report, Appendix C, fn 120 to para. 107.
565 See, for example, Panel Report, Appendix C, para. 107; ibid., Appendix D, fn 46 to para. 43.
569 Panel Report, Appendix D, para. 109. (fn omitted)
570 Panel Report, Appendix D, fn 146 to para. 109.
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suggests tax levels are not appropriate" and , "[f]urthermore, the tax levels variable is likely to be
non-stationary."573
6.181. The appellants assert that the Panel's reliance on non -stationarity to critique the parties'
models was inconsistent with Article 11 of the DSU because it: (i) compromised the complainants'
due process rights; (ii) made the case for Australia; (iii) treated the parties' evidence inconsistently;
and (iv) failed to provide reasoned and adequate explanations for its findings.574
6.182. We address the appellants' arguments regarding due process (including the argument that
the Panel made the case for Australia) below.575 As to the Dominican Republic's arguments that the
Panel failed to provide a reasoned and adequate explanation for its findings576, we consider that the
Panel adequately explained the basis for its concerns related to non-stationarity.577 We see no reason
for the Panel not to apply well-known statistical tests of rigour to evidence that is statistical in nature
insofar as the Panel ensures that the due process rights of the parties are respected, and, in our
view, the appellants have not demonstrated how the brevity of the Panel's explanation for why and
how it tested for non-stationarity implies that it failed to make an objective assessment of the matter
before it.
6.183. Turning to the appellants' arguments regarding the Panel's allegedly inconsistent reliance on
non-stationarity in assessing the parties' evidence, the appellants argue that the Panel faulted
several of the complainants' models on the basis that they suffered from non-stationarity, but failed
to assess whether Australia's models suffer from the same problem.578 In Honduras' view, the Panel
did not indicate whether it had "examined whether Australia's evidence suffered from a similar
problem of stationarity".579 The Dominican Republic, for its part, submits that the Panel's treatment
of the evidence was inconsistent for three reasons. First, the Dominican Republic asserts that the
Panel relied on non -stationarity to reject the robustness of the Dominican Republic's models that
used price or tax level variables, but relied on Australia's econometric models even when those
models used price variables.580 Second, the Dominican Republic submits that the standard unit root
tests applied to Dr Chipty's models using tax dummy variables show that the tax dummy variables
were non-stationary.581 Third, the Dominican Republic submits that the Panel was inconsistent in
accepting Dr Chipty's models using tax dummies but disregarding the Dominican Republic's models
that relied on tax dummies.582

574 Honduras' appellant's submission, paras. 1046-1052; Dominican Republic's appellant's submission,
paras. 267-361.
575 See paras. 6.226. -6.257. below.
576 Dominican Republic's appellant's submission, paras. 347-353.
577 Having explained, in paragraph 107 of Appendix C, why it considered the presence of
non-stationarity in a model to be a reason to doubt the reliability of that model, the Panel identified throughout
its analysis certain models that did or did not suffer from this shortcoming. (See Panel Report, Appendix C,
paras. 107 and 120, and fn 120 to para. 107; ibid., Appendix D, paras. 44, 106, and 116, fn 46 to para. 43,
and fn 146 to para. 109)
578 Honduras' appellant's submission, paras. 1046-1051; Dominican Republic's appellant's submission,
paras. 330-346. Honduras refers to the Panel's finding that standard unit root tests suggested that the tax
level and price variables were non-stationary. (Honduras' appellant's submission, para. 1047 (referring to
Panel Report, Appendix C, para. 107)) Honduras also refers to several consumption models that the Panel
allegedly rejected on the basis of non-stationarity. (Ibid., paras. 1048-1050 (referring to Panel Report,
Appendix D, paras. 44 and 106))
580 Dominican Republic's appellant's submission, para. 336 (referring to Panel Report, Appendix C,
para. 120). The Dominican Republic specifically refers to the Panel's finding that Professor List's two-stage
model was affected by non-stationarity and might produce biased results since it used price as a control for
tobacco costliness, and its finding that "Dr Chipty's two-stage model, which … used price as a control for
tobacco costliness, was not affected by non-stationarity …, and produced reliable results." (Ibid.,
paras. 337-338 (referring to Panel Report, Appendix C, paras. 107 and 120) (italics and underlining original))
581 Dominican Republic's appellant's submission, para. 342. The Dominican Republic submits that the
Panel "should have reached the same conclusion for Australia's models as it did for the Dominican Republic's
models". (Ibid., para. 343) The Dominican Republic also notes that, "[i]n any event, the Panel … failed to
provide any explanation for its assertion that the use of tax dummies 'avoids the issue of non-stationarity of
the price or tax level variables'." (Ibid., para. 342) (fn omitted)
582 Dominican Republic's appellant's submission, para. 345 (referring to IPE Third Updated Report (Panel
Exhibit DOM-375), Tables 2.1-1, 2.1-4, 2.1-7, 2.2-1 to 2.2-4, 2.2-6, and 2.3-1 to 2.3-4; D. Afshartous,
WT/DS435/AB/R • WT/DS441/AB/R

6.184. Australia argues that the Dominican Republic's argument "misapprehends the burden of
proof in this dispute, as well as the purpose for which Australia submitted Dr Chipty's rebuttal
evidence".583 According to Australia, given that Dr Chipty was simply rebutting the
Dominican Republic's expert evidence, the Panel "did not need to find that Dr Chipty's rebuttal
evidence corrected all deficiencies in the complainants' econometric models … in order to find that
the complainants' evidence was insufficient to sustain their burden of proving that no portion of the
observed declines in prevalence and consumption could be attributed to the TPP measures".584
Australia also submits that the Panel was not required to find that Dr Chipty cured all defects in the
complainants' models in order to find that those models, "as revised by Dr Chipty in certain important
respects, provided 'some econometric evidence' to suggest that the TPP measures had made a
statistically significant contribution to the observed declines in prevalence and consumption".585
6.185. We recall that the Panel was not seeking to assess whether any model was flawless, but
rather was assessing the credibility of the complainants' evidence and Australia's competing
evidence. The Panel did not have to find that Australia's evidence cured all shortcomings in the
Dominican Republic's evidence in order to find that Australia's evidence was more credible. We
therefore proceed to examine whether it acted inconsistently in assessing the evidence, to the extent
that it relied on non-stationarity as a specific reason to consider Australia's evidence more credible
than the complainants' evidence.
6.186. In this respect, we note that the Panel relied on the notion of non -stationarity, amongst
other things, in both its smoki ng prevalence and consumption analyses to find that Australia's
evidence was more credible than the complainants' evidence. With this in mind, we turn to the
different allegations of inconsistency alleged by the appellants.
6.187. First, regarding the argument t hat the Panel relied on Dr Chipty's model specified with a
price variable while rejecting the complainants' price -specified models on the basis of, inter alia,
non-stationarity, we have addressed a similar argument above and concluded that the Panel gave
no weight to Dr Chipty's two-stage (price-specified) model in its smoking prevalence analysis.586 To
the extent that the Panel gave any weight in its smoking prevalence analysis to Dr Chipty's model
specified with price variables, it was merely to note that t his alternative (and inferior) model
supported the conclusion in Dr Chipty's main, superior model (specified with tax dummy
variables).587 We see no indication in the Panel's cigarette consumption analysis that it relied on any
price-specified model at all. 588 We therefore see no inconsistency in the Panel's treatment of the
parties' price-specified models.
6.188. As to the argument that the Panel should have found that Australia's models specified with
tax dummy variables suffered from non-stationarity, we note that the Panel's findings, read on their
face, indicate that the Panel did assess all models for non -stationarity.589 On appeal, the
Dominican Republic has argued that, as a factual matter, the Panel was incorrect, and Australia's
models specified with dummy variables do suffer from non-stationarity.590 In our view, this argument

M. Hagedorn, A. Kaul, and M. Wolf, Summary of Findings: Empirical Assessment of Australia's Plain Packaging
Regime, Institute for Policy Evaluation (1 February 2016) (IPE Summary Report) (Panel Exhibit DOM-379),
Tables 3.1-2, Row [A], 3.1-3, 3.2-2 to 3.2-4, and 3.3-2, Row [A]).
583 Australia's appellee's submission, para. 771.
584 Australia's appellee's submission, para. 771. (emphasis original)
585 Australia's appellee's submission, para. 771.
586 See paras. 6.163. 6.166. above.
587 See para. 6.166. above.
588 Panel Report, Appendix D, paras. 115-116. We note, in particular, that the Panel specifically
addressed the fact that Dr Chipty's models specified with a tax level variable did not give the same result as
her model specified with a tax dummy variable. The Panel explained why it considered that this was not a
critical flaw. (Panel Report, Appendix D, para. 116) The fact that the Panel did not refer to any price-specified
model reinforces our understanding that the Panel did not give any probative weight to any model specified
with prices, including any such model adduced by Australia.
589 This follows from the Panel's statements in both Appendices C and D that the use of the tax dummy
variables avoids the issue of non-stationarity of the price or tax level variables. (Panel Report, Appendix C,
590 The Dominican Republic states that when it applied standard unit root tests to Dr Chipty's models
using tax dummies, "the results consistently show that the tax dummies were non-stationary." (Dominican
Republic's appellant's submission, para. 342) See also paras. 6.329. 6.331. below.
WT/DS435/AB/R • WT/DS441/AB/R

merely constitutes relitigating the facts and expects the Appellate Body to second-guess the Panel's
factual findings. We decline to do so.
6.189. Finally, regarding the argument that the Panel accepted Australia's models specified with tax
dummy variables but disregarded the complainants' models specified with tax dummy variables, we
recall that non-stationarity was merely one concern relied on by the Panel to weigh the credibility of
the parties' evidence. In the Panel's smoking prev alence analysis, the Panel highlighted that
Dr Chipty's tax dummy variables model avoided the problem of overfitting and was robust to
alternative specifications.591 Similarly, in its consumption analysis, the Panel highlighted that "part
of Dr Chipty's model specification is based on the first specification proposed by the IPE but modified
to account for strategic inventory management and the 2006 GHWs regulation ."592 The Panel also
noted that Dr Chipty's results were robust to certain alternative specificatio ns.593 In our view, this
explanation by the Panel shows why it accorded greater weight to Dr Chipty's consumption model
specified with tax dummy variables than it did to the complainants' models specified with tax dummy
variables.
6.190. We therefore consider that the appellants have not demonstrated that the Panel treated the
parties' evidence inconsistently with respect to the Panel's reliance on the notion of non-stationarity
to test the complainants' models.594
Reweighting events in the data
6.191. In step 3 of its smoking prevalence analysis, the Panel noted the importance of "attempting
to control for sample re-weighting events in the RMSS data", and stated that, in their initial reports,
neither IPE nor Professor List controlled for this issue. 595 Furthermore, the Panel highlighted that
IPE's and Professor List's proposed solutions to this issue "increase[d] the issue of multicollinearity,
in particular when the price (or tax level) and trend variables are included in the specification". 596
The Panel emphasize d how few of the explanatory variables were statistically significant (at 5%)
when accounting for this sample reweighting issue and explained that "[s]ome results of IPE's
modified trend analysis even suggest that the TPP measures have led to a statistical ly significant
increase in cigar smoking prevalence", without being able to explain why this would be the case.597
For these reasons, the Panel considered that "[o]verall, and based on the above, [it had] doubts
about the reliability of the results obtained when the price variable, time trend and sample
reweighting dummies [we]re included in the model specifications."598
6.192. The Dominican Republic argues that the Panel violated Article 11 of the DSU by: (i) treating
the parties' evidence inconsistently with no exp lanation; and (ii) reasoning in an internally
incoherent manner.599 We address each set of arguments in turn.

591 Panel Report, Appendix C, paras. 120-121.
594 We note that, in step 2 of its cigarette consumption analysis in Appendix D to its Report, the Panel
observed that, inter alia, Professor List's dynamic model based on Aztec data was affected by non-stationarity.
(See Panel Report, Appendix D, para. 44) The Panel did not, however, rely on non-stationarity to find in favour
of Australia in step 2 of its analysis. (See Panel Report, Appendix C, paras. 45-46)
595 Panel Report, Appendix C, para. 108. We understand that this issue related to the fact that the
RMSS data underwent periodic "reweighting" in order to ensure that it was representative of the Australian
population, and in order to conduct a meaningful econometric analysis of that data, it is necessary to control
for such reweighting events when analysing the data. The Dominican Republic elaborates that "[a]s
demographic changes to the underlying population occur, data providers periodically reweight the surveyed
sample, to ensure that it remains representative of the population it purports to represent."
(Dominican Republic's appellant's submission, para. 431 (emphasis original)) We understand that this is
uncontested by Australia. (See Australia's appellee's submission, para. 782)
597 Panel Report, Appendix C, para. 108. (fn omitted; emphasis added)
599 Dominican Republic's appellant's submission, paras. 446, 453, 457, and 461. In terms of inconsistent
treatment, the Dominican Republic asserted that the Panel "treated 'the same class of quantitative evidence'
inconsistently". (Dominican Republic's appellant's submission, para. 461 (quoting Appellate Body Report,
US – Upland Cotton (Article 21.5 – Brazil), para. 294)) We note that the Appellate Body in US – Upland Cotton
(Article 21.5 – Brazil), in relevant part, found that "[t]he Panel's internally incoherent treatment of the same
WT/DS435/AB/R • WT/DS441/AB/R

6.193. The Dominican Republic raises several arguments in support of its view that the Panel
treated the parties' evidence inconsistently. The Dominican Republic first submits that the Panel
accepted Dr Chipty's two-stage model that controlled for reweighting, but rejected the robustness
of the same model when presented by Professor List. 600 Second, the Dominican Republic asserts
that the Panel relied on Dr Chipty's use of the two-stage model in a specification that did not even
control for the declining trend in smoking601, even though the Panel elsewhere took the position that
"an econometric model (when presented by the complainants) must not only control for the declining
trend …, but … must also be able to detect that this trend has a statistically significant downward
effect on smoking prevalence."602 Third, the Dominican Republic submits that the Panel rejected the
robustness of the Dominican Republic's models on the grounds that their approach to control for
reweighting increased multicollinearity, even though the Panel accepted Australia's econometric
models that controlled for reweighting despite the presence of multicollinearity.603
6.194. Australia submits that the Dominican Republic's claims "depend heavily upon the proposition
that Australia was required to prove" that the decline in smoking prevalence and consumption was
attributable to the TPP measures.604 Australia submits that the Panel's role was to assess wh ether
the complainants had "proven their assertion that no portion of the observed declines in prevalence
and consumption could be attributed to the TPP measures".605 Australia therefore submits that the
Panel was not required to find that Australia's expert s had fixed the reweighting problem in the
complainants' models, in order to question the validity of those models. 606 Australia further argues
that the Dominican Republic's assertion that Dr Chipty relied on Professor List's results is incorrect.
Rather, Australia explains, Dr Chipty merely demonstrated that "Professor List's own results showed
a negative and statistically significant effect of the TPP measures when reported under the normal
convention" for reporting statistically significant events.607 Australia elaborates that the footnote to
the Panel's statement that "Dr Chipty's econometric results further show[] that the negative and
statistically significant effect of the TPP measures on overall smoking prevalence is robust to
alternative specifications" reveals that the Panel was referring to "tables in which Dr Chipty
summarised the results of the complainants' experts' models, accepting one or more of the
methodological choices that Dr Chipty considered erroneous".608 In Australia's view, the Panel did
not endorse these methodological choices that it criticized elsewhere, but rather observed that, even
accepting the results of those models, such models showed a negative and statistically significant
effect of the TPP measures.609
6.195. We note that the first and second alleged inconsistencies identified by the
Dominican Republic610 relate specifically to the Panel's purported reliance on Dr Chipty's specification
of Professor List's two -stage model, in the context of its smoking prevalence analysis. As stated
above, the Panel did not give any weight to Dr Chipty's results based on her examination of the
two-stage model.611 Moreover, even if the Panel did give weight to Australia's price-specified model,
it plainly considered such model to be of substantially inferior value to Australia's model specified
with tax dummy variables. 612 We therefore do not consider that the Panel treated the parties'
evidence inconsistently in assessing the price-specified models of the complainants and Australia.
6.196. As to the third inconsistency alleged by the Dominican Republic – that the Panel rejected the
Dominican Republic's models on the basis that controlling for reweighting increased multicollinearity,
but accepted Australia's models that suffered from exactly the same problem – we recall that the

class of quantitative evidence thus vitiates the conclusion it drew based on the financial data submitted by the
parties." (Appellate Body Report, US – Upland Cotton (Article 21.5 – Brazil), para. 294)
600 Dominican Republic's appellant's submission, paras. 441-445 and 449-453 (referring to Panel Report,
Appendix C, paras. 108 and 121, and fn 143 to para. 121; Chipty Second Rebuttal Report (Panel Exhibit
AUS-591), p. D.2).
601 Dominican Republic's appellant's submission, para. 454.
602 Dominican Republic's appellant's submission, para. 455. (emphasis original)
603 Dominican Republic's appellant's submission, para. 461.
604 Australia's appellee's submission, para. 789. (emphasis original)
605 Australia's appellee's submission, para. 789.
606 Australia's appellee's submission, para. 790.
607 Australia's appellee's submission, para. 792. (emphasis original)
608 Australia's appellee's submission, para. 793 (quoting Panel Report, Appendix C, para. 121).
(emphasis original)
609 Australia's appellee's submission, para. 794.
610 See para. 6.193. above.
611 See paras. 6.163. 6.166. above.
612 See para. 6.166. above.
WT/DS435/AB/R • WT/DS441/AB/R

Panel did not "accept" or "reject" the various models that were put to it on the basis of any
one factor. Rather, the Panel assessed the relative merits and credibility of the parties' competing
evidence. We therefore do not consider that the Panel rejected the complainants' models on this
basis; rather, the Panel indicated a number of reasons to consider tha t Australia's evidence was
more credible than the complainants' evidence. The fact that Dr Chipty's primary model, specified
with tax dummy variables, was robust to alternative specifications, notwithstanding that those other
specifications may have suffer ed from many of the same issues that affected the complainants'
models, appears to be secondary to the fact that her primary model was more credible and
convincing than the complainants' models. We also note that there is a difference between a
specification that increases the issue of multicollinearity in a particular model, and the presence of
multicollinearity in a particularly specified model. We therefore do not consider that the
Dominican Republic has demonstrated that the Panel treated the parties' e vidence inconsistently
with respect to sample reweighting.
6.197. We next address the Dominican Republic's arguments that the Panel's findings were
internally incoherent. In this respect, the Dominican Republic argues that "the data provider
identified four instances of reweighting in the RMSS sample …, each of which could affect the model's
estimate of the impact of the TPP measures on smoking prevalence." 613 The Dominican Republic
submits that, unlike Dr Chipty, who controlled only for three of the four reweighting events, the
Dominican Republic's experts controlled for all four reweighting events.614 On the Panel's finding that
"Australia's evidence was 'robust' to controlling for reweighting events," 615 the Dominican Republic
asserts that the Panel "ignored that Dr Chipty's models did not 'attempt[…] to control' for all
four reweighting events".616 The Dominican Republic submits that this is in conflict with the P anel's
recognition of "the importance of attempting to control for sample re -weighting events in the
RMSS data".617 The Dominican Republic further submits that "the Panel's error seems to be
consequential in particular for the Panel's cigar prevalence findin g" because "if the control for the
fourth reweighting event … is added to Dr Chipty's cigar prevalence model, the model no longer finds
any impact of the TPP measures on cigar prevalence."618
6.198. Australia submits that, for the same reasons that the Panel did not treat the parties' evidence
inconsistently, the Panel's reasoning was not internally incoherent. Australia submits, in this respect,
that the Panel was simply not required to find that Dr Chipty had controlled for all RMSS reweighting
events in order to take into account her sensitivity analysis, which was based on Professor List's
models. Australia also states that Dr Chipty's sensitivity anal ysis "controlled for only
three reweighting events due to the sample period [Professor List] chose".619
6.199. In our view , the Dominican Republic's arguments are based on a misunderstanding
regarding the Panel's findings with respect to the importance of accounting for reweighting events
in the RMSS data. We recall that the Panel did indeed "recognize the importance of attem pting to
control for sample re-weighting events in the RMSS data".620 This, however, is different to a finding
by the Panel that the absence of any attempt to control for such re -weighting events would render
a model completely useless or unreliable. Further more, when examining how the complainants'
experts sought to control for such reweighting events, the Panel highlighted that the inclusion of
dummy variables increased the issue of multicollinearity, "in particular when the price (or tax level)
and trend v ariables are included in the specification", and further noted that the problem was
"accentuated when a fully flexible reweighting correction [was] adopted". 621 The Panel highlighted
other concerns regarding the complainants' experts' attempts to control for reweighting, including
the lack of statistical significance of explanatory variables, and the fact that at least one model
showed a statistically significant increase in cigar smoking prevalence caused by the

613 Dominican Republic's appellant's submission, para. 463.
614 Dominican Republic's appellant's submission, paras. 463-464.
615 Dominican Republic's appellant's submission, para. 465.
616 Dominican Republic's appellant's submission, para. 465 (quoting Panel Report, Appendix C,
para. 108).
617 Dominican Republic's appellant's submission, para. 464 (referring to Panel Report, Appendix C,
para. 108).
618 Dominican Republic's appellant's submission, para. 467.
619 Australia's appellee's submission, para. 795.
WT/DS435/AB/R • WT/DS441/AB/R

TPP measures.622 The Panel ultimately concluded that, overall, it had "doubts about the reliability of
the results obtained when the price variable, time trend and sample reweighting dummies are
included in the model specifications". 623 We therefore understand that, although the Panel
recognized the importance of attempting to control for sample reweighting events, IPE and Professor
List were unable to account for such reweighting events without raising other concerns about the
reliability of their results. This was one of the reasons that the Panel had do ubts regarding their
models.
6.200. Turning to Australia's evidence, the Panel did not mention sample reweighting at all in the
context of noting that Dr Chipty had addressed "a number of [its] concerns" with the complainants'
evidence.624 In other words, the Pane l did not consider that Dr Chipty had resolved the problems
related to either accounting for the reweighting events or not accounting for those reweighting
events.625 The Panel did note, however, that Dr Chipty's model was "robust to alternative
specifications", including "sample reweighting dummies". 626 This analysis by Dr Chipty appears to
have been directly based on Professor List's own models in which he controlled for three sample
reweighting corrections (in 2009, 2010, and 2014) by adding dummy variables.627 It was on the
basis of these specifications that Dr Chipty ran her own analysis, albeit with a longer sample period,
stretching back to 2001 (instead of 2006). We note, in this respect, that it was Professor List who
identified that the RMSS data had been subject to such population corrections in the first place, and
that when he identified these corrections, he indeed referred to only three such corrections, in 2009,
2010, and 2014.628 Subsequently, in IPE's final submission, after which time the parties in principle
no longer had the opportunity to submit additional evidence 629, IPE indicated that RMSS had made
a reweighting correction in 2004. 630 Thus, by the time that there was any evidence on the record
indicating that there had been a reweighting correction in 2004, the opportunity for Dr Chipty to
re-specify Professor List's models in order to account for the 2004 correction had already passed.
6.201. The question, therefore, is whether the Panel erred by taking into account Dr Chipty's
alternative specification as support for its conclusion that Australia's models were more reliable than
the complainants' models, notwithstanding that the Panel had recognized the importance of
accounting for reweighting events and Dr Chipty's alternative specification o nly accounted for
three of the four reweighting events for which there was evidence on the Panel record. We note that,
although the evidence of the fourth reweighting event was only provided at the final hour, the Panel
could have given Dr Chipty and Professor List the opportunity to resubmit their models in order to
account for the fourth reweighting event. Notwithstanding the Panel's failure to do so, we do not
consider that the Panel's decision to take into account Dr Chipty's alternative specification is per se
incoherent. The Panel's findings indicate that the Panel had reservations about controlling for
reweighting, regardless of the number of reweighting events taken into account. Thus, the Panel did
not consider the parties' models, in which they acc ounted for reweighting events, to be dispositive
of anything. Furthermore, the Panel did not fault Professor List's evidence on the grounds that it

625 We note that the Panel's silence on this issue stands in contrast to Dr Chipty's own arguments that
her one-stage microeconometric model controlled for demographics, meaning that there was "no concern
about the reweighting of RMSS data because the model adequately control[led] for changes in the population
composition". (Chipty Third Rebuttal Report (Panel Exhibit AUS-605), fn 155 to para. 70(c)(ii)) Dr Chipty had
previously stated that, "[w]ith the right microeconometric model that controls for demographics (like the
one-stage microeconometric model I have presented), there is no need to worry about the reweighting
because the model adequately controls for changes in the population composition." (Chipty Second Rebuttal
Report (Panel Exhibit AUS-591), para. 37) Dr Chipty elaborated that all of her models in her final submission to
the Panel controlled for a "set of sociodemographic characteristics". (Chipty Third Rebuttal Report (Panel
Exhibit AUS-605), para. 71)
626 Panel Report, Appendix C, para. 121 (referring to Chipty Third Rebuttal Report (Panel
Exhibit AUS-605), p. 22; Chipty Second Rebuttal Report (Panel Exhibit AUS-591), p. D2). (emphasis added)
627 Chipty Second Rebuttal Report (Panel Exhibit AUS-591), para. 34. See also J. List, A Synthesis of the
Evidence on Australia's Plain Packaging Policy (28 October 2015) (List Second Supplemental Report) (Panel
Exhibit DOM/IDN-5), para. 141; Panel Report, Appendix C, para. 108 (referring to List Second Supplemental
Report (Panel Exhibit DOM/IDN-5), Table 8 on p. 43; List Third Supplemental Report (Panel Exhibit
DOM/IDN-7), Table 13 on p. 32).
628 List Second Supplemental Report (Panel Exhibit DOM/IDN-5), Appendix B.
629 Notwithstanding that the Panel made a special exception regarding the Dominican Republic's
communication to the Panel of 17 February 2016. (See paras. 6.136. -6.139. above)
630 See IPE Summary Report (Panel Exhibit DOM-379), fn 53 to para. 53.
WT/DS435/AB/R • WT/DS441/AB/R

failed to account for all reweighting events. The Panel therefore showed no indication that a failure
to account for one reweighting event was a fatal error in assessing the merits of a given model.
Finally, the Panel merely relied on Dr Chipty's alternative specification as a supporting reason to
take into account her results. Since the failure to account for a reweighting event was not fatal, we
see no error or incoherence in the Panel considering that Dr Chipty's alternative specification
supported her results.
6.202. For these reasons, we consider that the appellants have not demonstrated that the Panel
erred in assessing the parties' efforts to account for reweighting events in the RMSS data.
The procedure for calculating standard error
6.203. In step 3 of its smoking prevalence analysis, the Panel addressed the issue of how the
parties' experts calculated standard error for purposes of assessing the statistical significance of the
different variables in their models. The Panel explained that "a standard error is required to
determine the estimated coefficient's level of statistical significance", and that "statistical
significance is essential because, as well as being the variable's estimated coefficient, it is also
important to determine whether the coefficient's variable is statistically different from zero."631 The
Panel highlighted "the importance of computing standard errors that are robust to heteroscedasticity
and autocorrelation".632 The Panel elaborated that, the parties' "treatment of standard errors evolved
over the course of the proceedings."633 According to the Panel:
Initially, Professor List and IPE chose to apply the STATA software command ivreg2 to
calculate standard errors that are robust to heteroscedasticity and serial correlation
using the automatic bandwidth selection procedure by Newey and West (1994).
Subsequently, Professor List, and later on IPE, applied an alternative way of calculating
standard errors, that, according to Professor List, is adjusted to reflect more accurately
the original suggestion by Newey and West (1994). Technically speaking, the
disagreement between Professor List (as well as IPE and Professor Klick) and Dr Chipty
concern[ed] the procedure to correct for autocorrelation, in particular the choice of the
maximum amount of time, defined as the maximum lag, that the data can be correlated
over time. Professor List propose[d] to set a smaller parameter value, resulting also in
a smaller maximum lag than the one specified in the ivreg2 command. A careful review
of the evidence and discussions shows that the choice of the maximum lag is not well
established in the statistics and econometric literature, as pointed out … in an email
exchange with STATA developers. As a result, it is unclear whether the results
associated with Professor List's procedure would have changed for a range of parameter
values, taking into consideration the fact that the maximum lag should be able to take
into account all lags until the serial correlation in the data vanishes.634
6.204. The Panel also observed that, in the email exchange between the parties and the
STATA software developers, the developers explai ned that "the automatic choice of the maximum

634 Panel Report, Appendix C, para. 110 (referring to D. Afshartous, M. Hagedorn, A. Kaul, and M. Wolf,
Empirical Assessment of Australia's Plain Packaging Regime, Institute for Policy Evaluation (7 October 2014)
(IPE Report) (Panel Exhibit DOM-100); D. Afshartous, M. Hagedorn, A. Kaul, and M. Wolf, Updated Empirical
Assessment of Australia's Plain Packaging Regime, Institute for Policy Evaluation (14 September 2015)
(IPE Updated Report) (Panel Exhibit DOM-303); J. List, A Consideration of the Empirical Evidence on the Effects
of Australia's Tobacco Plain Packaging Legislation (1 June 2015) (List Report) (Panel Exhibit DOM/IDN-1);
J. List, A Further Consideration of the Empirical Evidence on the Effects of Australia's Tobacco Plain Packaging
Legislation (16 September 2015) (List Rebuttal Report) (Panel Exhibit DOM/IDN-3); D. Afshartous,
M. Hagedorn, A. Kaul, and M. Wolf, Updated Empirical Assessment of Australia's Plain Packaging Regime,
Institute for Policy Evaluation (27 October 2015) (IPE Second Updated Report) (Panel Exhibit DOM-361);
IPE Third Updated Report (Panel Exhibit DOM-375); IPE Summary Report (Panel Exhibit DOM-379); List
Second Supplemental Report (Panel Exhibit DOM/IDN-5); List Third Supplemental Report (Panel Exhibit
DOM/IDN-7); J. List, Concluding Summary on Australia's Plain Packaging Policy (2 February 2016) (List
Summary Report) (Panel Exhibit DOM/IDN-9); IPE Summary Report (Panel Exhibit DOM-379), p. 70;
Chipty Second Rebuttal Report (Panel Exhibit AUS-591), pp. B1-B2). (fns omitted)
WT/DS435/AB/R • WT/DS441/AB/R

lag in the command ivreg2 is in line with the criteria necessary for asymptotic optimality." 635 The
Panel further noted that Professor List had "present[ed] the results of simulations to compare the
frequency of so-called false positives using [his] procedure and the ivreg2's automatic selection
procedure".636 The Panel considered that, although "Professor List conclude[d] that the
STATA ivreg2's automatic selection procedure leads to a wrong finding of a statistica lly significant
result 16% of the time, instead of 5%", his results were based on a sample size of 111 observations
(from July 2006 to September 2015), while Dr Chipty considered a larger sample period of
177 observations (from January 2001 to September 2015).637 The Panel considered that it was
"unclear to what extent Professor List's results would change if the sample size increases, taking
into account the fact that according to the STATA developers the formulae used in ivreg2 meet the
criteria necessary for asymptotic optimality".638
6.205. In assessing Australia's smoking prevalence and consumption evidence, the Panel did not
refer to Dr Chipty's use of the STATA ivreg2 formula as a reason to consider her results more reliable
than those of the complainants' experts.639 The Panel did, however, note that, in Dr Chipty's smoking
prevalence models, "the impact of the TPP measures on overall smoking prevalence remains
negative and statistically significant in most specifications when Professor List's procedure to
compute standard errors is implemented."640 Similarly, the Panel noted that, in Dr Chipty's cigarette
consumption models, "the negative and statistically significant impact of the TPP measures on
wholesale cigarette sales is robust to alternative specifications, including … Professor List's procedure
to compute standard errors."641
6.206. Honduras contends that "the complainants' experts expressed concern over the … use of the
erroneous IVREG formula", and that the Panel did not "explain how it deal[t] with these concerns".642
Honduras argues that the Panel completely ignored Professor Klick's argument that "there is no
support for the approach used by Dr Chipty and that the very literature she relies on makes clear
that her use of an outlier approach was inappropriate."643 Honduras notes that "[t]he Panel does not
even mention this exhibit in this context." 644 Honduras also argues that the Panel misrepresented
the evidence. According to Honduras, "Professor List responded to a criticism [by] Dr Chipty about
an alleged error in the STATA program used and when Professor List started to examine this
allegation, he found that it was Dr Chipty that had simply taken something off the internet that was
wrong and that he stood by the results in his September and June reports." 645 According t o
Honduras, "[t]he Panel misrepresents this entire discussion as one of technical experts not being
able to agree about a technical issue that the community in general is not in agreement about." 646
Honduras submits that, in reality, Dr Chipty "made a mistake in taking a command off the internet"
and "Professor List exposed this error and double -checked his original results by going back to the
authors of the method followed by all experts which confirmed his analysis."647 Honduras considers
that the Panel's findings were insufficiently reasoned and adequate; that the Panel mischaracterized

635 Panel Report, Appendix C, fn 131 to para. 110 (referring to IPE Summary Report (Panel
Exhibit DOM-379), p. 70; Chipty Second Rebuttal Report (Panel Exhibit AUS-591), pp. B1-B2).
636 Panel Report, Appendix C, fn 132 to para. 110 (referring to List Summary Report (Panel
Exhibit DOM/IDN-9), paras. 95-98).
637 Panel Report, Appendix C, fn 132 to para. 110.
638 Panel Report, Appendix C, fn 132 to para. 110.
639 Specifically, we note that the Panel considered that Dr Chipty resolved a number of the concerns that
it had identified with the complainants' models. The Panel proceeded to identify those particular concerns. The
Panel did not mention the manner in which Dr Chipty calculated standard error as resolving any concerns.
643 Honduras' appellant's submission, para. 944 (referring to J. Klick, Fourth Supplemental Rebuttal
Report – Comments on Additional Arguments Raised by Dr Chipty (3 February 2016) (Klick Fourth
Supplemental Report) (Panel Exhibit HND-169), para. 18).
645 Honduras' appellant's submission, para. 943 (referring to List Second Supplemental Report
(Panel Exhibit DOM/IDN-5, paras. 98-102)).
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and misstated the facts on the record and made findings that lacked a basis in the Panel Record;
and that the Panel disregarded, distorted, and misrepresented certain evidence.648
6.207. Australia submits that the Panel's description of the event s surrounding how the parties'
experts calculated standard error is accurate.649 Australia argues that, based on its review of the
evidence, the Panel "expressed 'reservations regarding IPE and Professor List's methodologies' for
calculating standard errors and therefore 'question[ed] their results, based on these
methodologies'".650 Australia further submits that the Panel made similar findings with respect to
the complainants' consumption evidence.651 In Australia's view, "it was entirely appropriate for the
Panel to take into account the inconsistency of the complainants' experts on an important
methodological issue when evaluating the weight to attribute to the evidence they submitted."652
6.208. In addressing these issues, we note at the outset that the Panel Report does not express
any firm opinion on the correct procedure for calculating standard error. Rather, the Panel expressed
its doubts regarding both Professor List's procedure for calculating standard error 653 and his
argument that Dr Chipty's procedure (using the STATA ivreg2 command) was flawed. 654
Nevertheless, our review of the Panel's f indings shows that the Panel appears to have given both
Professor List's procedure and the ivreg2 procedure roughly equivalent weight when comparing the
credibility of the complainants' evidence to Australia's evidence. This follows because the Panel did
not identify Dr Chipty's procedure for calculating standard error as a reason to consider Australia's
evidence more credible than the complainants' evidence. 655 To the contrary, the Panel took into
account the fact that Dr Chipty's models continued to show a negative statistically significant impact
of the TPP measures on smoking prevalence and consumption, even when using Professor List's
procedure to compute standard error. 656 We therefore understand that Honduras' arguments on

648 Honduras' appellant's submission, paras. 942-946.
649 According to Australia, IPE had originally indicated the importance of accounting for
heteroscedasticity and autocorrelation in calculating standard error, and IPE had relied on a command in the
STATA computer programme known as "ivreg2", which "automatically accounts for autocorrelation but requires
an additional command to account for heteroscedasticity". (Australia's appellee's submission, para. 663)
Australia submits that both IPE and Professor List failed to account for heteroscedasticity, with the
consequence that their standard errors "were significantly overstated". (Ibid. (referring to Chipty Second
Rebuttal Report (Panel Exhibit AUS-591), fn 24)) Australia argues that, after Professor List accounted for the
problem of heteroscedasticity in calculating standard error, he claimed to have discovered an error in the
ivreg2 command that affected how it accounted for autocorrelation. (Ibid., para. 664) Australia considers that
"Professor List's professed identification of an 'error' in ivreg2 was a red herring to distract attention away from
the fact that his own models, as with IPE's original model results, showed a negative and statistically
significant effect of plain packaging upon prevalence and consumption once autocorrelation and
heteroscedasticity were taken into account using the method they originally proposed." (Ibid., para. 665
(emphasis original)) According to Australia, Dr Chipty showed that all of IPE and Professor List's models
showed statistically significant declines in prevalence and consumption when relying on the ivreg2 command,
and further showed that "in any event, using Professor List's newly-adopted methodology for calculating
standard errors, and fixing other issues in his models, the estimated effects of tobacco plain packaging were
still negative and the majority of those estimated effects were still statistically significant." (Ibid.)
650 Australia's appellee's submission, para. 667 (quoting Panel Report, Appendix C, para. 111)
651 Australia's appellee's submission, para. 668 (referring to Panel Report, Appendix D, para. 107 and
fn 141 to para. 108).
652 Australia's appellee's submission, para. 669.
653 The Panel explained that a "careful review of the evidence and discussions shows that the choice of
the maximum lag is not well established in the statistics and econometric literature, as pointed out … in an
email exchange with STATA developers", and considered that, as a result, it was "unclear whether the results
associated with Professor List's procedure would have changed for a range of parameter values, taking into
consideration the fact that the maximum lag should be able to take into account all lags until the serial
correlation in the data vanishes." (Panel Report, Appendix C, para. 110 (fns omitted))
654 The Panel noted that, although "Professor List conclude[d] that the STATA ivreg2's automatic
selection procedure leads to a wrong finding of a statistically significant result 16% of the time, instead of 5%",
his results were based on sample size of 111 observations (from July 2006 to September 2015), while
Dr Chipty considered a larger sample period of 177 observations (from January 2001 to September 2015).
(Panel Report, Appendix C, fn 132 to para. 110) The Panel considered that it was "unclear to what extent
Professor List's results would change if the sample size increases, taking into account the fact that according to
the STATA developers the formulae used in ivreg2 meet the criteria necessary for asymptotic optimality".
(Ibid.)
655 Panel Report, Appendix C, paras. 120-121; ibid., Appendix D, paras. 115-116.
656 Panel Report, Appendix C, para. 121; ibid., Appendix D, para. 116. We note that, with respect to
Dr Chipty's smoking prevalence models, the impact of the TPP measures on overall smoking prevalence
WT/DS435/AB/R • WT/DS441/AB/R

appeal are essentially challenging the merits of the Panel's conclusion that Dr Chipty's procedure for
calculating standard error was not inferior to Professor List's methodology.
6.209. We first address Honduras' argument that the Panel lacked a reasoned and adequate
explanation for its findings.657 In our view, the Panel fully explained its reasons for both questioning
Professor List's procedure and for considering the ivreg2 procedure to be relatively reliable. 658 We
do not see how Honduras' disagreement with either the merits of the Panel's reasoning or the Panel's
weighing and balancing of the evidence implies that the Panel failed to make an objective assessment
of the matter before it. In our view, it is outside the scope of our mandate to second -guess the
Panel's appreciation of the evidence.
6.210. Turning to Honduras' argument that the Panel disregarded certain evidence, we understand
that Honduras has identified a sentence from an exhibit submitted to the Panel, where Professor Klick
stated that, "[g]iven that the literature on this issue (inclu ding the very paper cited by Dr Chipty)
indicates that the normal distribution is inappropriate, Dr Chipty's p values are incorrect and her
claims of statistical significance are likewise wrong in any case."659 We agree with Honduras that the
Panel does not appear to have addressed this argument. We note, however, that a panel's summary
of a party's evidence does not have to be comprehensive and, indeed, a panel could not be expected
to reflect each and every aspect of every argument set forth in every exhibi t submitted by every
party in order to comply with the obligation to make an objective assessment of the matter before
it. In any event, we do not consider that Honduras has demonstrated that the Panel's failure to
explicitly address Professor Klick's argu ment in the Panel Report constitutes a material error. We
highlight, in particular, that the Panel identified its own reasons for doubting Professor List's
methodology, yet ultimately appears to have given equal weight to Professor List's methodology as
it does to the ivreg2 methodology.
6.211. Regarding Honduras' argument that the Panel misrepresented the evidence of the parties,
we understand that Honduras considers that "the treatment of standard errors did not just 'evolve
over the course of the proceedings'" and that "[t]he Panel misrepresents this entire discussion as
one of technical experts not being able to agree about a technical issue that the comm unity in
general is not in agreement about." 660 According to Honduras, "Dr Chipty was looking for a way to
change the results of Professor List and she made a mistake in taking a command off the internet in
order to do so. Professor List exposed this error a nd double-checked his original results by going
back to the authors of the method followed by all experts which confirmed his analysis."661
6.212. We note that, according to the Panel:
Initially, Professor List and IPE chose to apply the STATA software command ivr eg2 to
calculate standard errors that are robust to heteroscedasticity and serial correlation
using the automatic bandwidth selection procedure by Newey and West (1994).
Subsequently, Professor List, and later on IPE, applied an alternative way of calculating

remained negative and statistically significant in most specifications when using Professor List's procedure for
calculating standard error. (Ibid., Appendix C, para. 121)
657 In this respect, Honduras argues that "Professor List showed that [Dr Chipty's] approach was
incorrect as it led to many more false positives than did his approach." (Honduras' appellant's submission,
para. 946) Honduras recognizes that the "the Panel rejects the evidence submitted by Professor List that shows
the high number of false positive[s] associated with the method used by Dr Chipty based on a sample of
111 observations because '[i]t is… unclear to what extent Professor List's results would change if the sample
size increases' noting that Dr Chipty relies on 177 observations." (Ibid., quoting Panel Report, Appendix C,
fn 132 to para. 110) Honduras submits that that "is hardly a reasoned and adequate explanation for concluding
this debate in favour of Australia's expert", and highlights that "Dr Chipty did not show that if you apply the
same test to her 177 observations, the false positives would be less", which demonstrates, in Honduras' view,
that the Panel applied a "double standard of proof". (Ibid.)
658 See paras. 6.203. 6.204. above.
659 Honduras' appellant's submission, para. 944 (quoting Klick Fourth Supplemental Report
(Panel Exhibit HND-169), para. 18).
660 Honduras' appellant's submission, para. 943 (quoting Panel Report, Appendix C, para. 110).
WT/DS435/AB/R • WT/DS441/AB/R

standard errors, that, according to Professor List, is adjusted to reflect more accurately
the original suggestion by Newey and West (1994).662
6.213. We proceed by reviewing whether this statement by the Panel misrepresents the evidence.
We note that the Panel referred to both Professor List and IPE. With respect to IPE, we note that
IPE's first report to the Panel states that it employed " heteroskedasticity- and
autocorrelation-consistent (HAC) standard errors … implemented in the STATA command 'ivreg2'".663
IPE's second report similarly states that it used "autocorrelation-robust standard errors", and in the
case of heteroskedasticity, "heteroskedasticity-robust standard errors", and that the procedure was
"implemented in the STATA command 'ivreg2', version 04.1 .08".664 IPE therefore clearly relied on
ivreg2 in its first and second reports. It is uncontested that, subsequently, IPE changed from relying
on ivreg2 to Professor List's approach to calculating standard error. We therefore understand that
the Panel's characterization of IPE's methodology for calculating standard error is correct.
6.214. Turning to Professor List's procedure for calculating standard error, we note that, in 2015,
Professor List submitted four reports to the Panel, in June, September, October, and December. In
his fourth report, Professor List addressed Dr Chipty's concerns regarding his calculations for
standard error. In this respect, Professor List explained that, "in my June and September Reports,
I mirrored the statistical procedures conducted by IPE, which sought to report standard errors that
were robust to two sources of potential bias: heteroskedasticity and autocorrelation."665 He further
stated that, upon revisiting his previous calculations of standard error he "decided to move away
from the open source add -on ( 'ivreg2') that Chipty uses to correct our standard errors in the
Stata software package".666 We further note that Dr Chipty asserted that Professor List initially used
ivreg2.667 Thus, there was ample evidence before the Panel indicating that Professor List initially
used ivreg2 before implementing a new procedure to calculate standard error. We therefore
understand that the Panel correctly characterized the "evolution" of both the Dominican Republic's
and Honduras' experts' evidence, and that it is Honduras who now, on appeal, appears to
mischaracterize that evolution.
6.215. Before concluding, we briefly note Honduras' assertion that the Panel's statement that "there
is uncertainty about the appropriate method to use and … that 'according to the STATA developers
the formulae used in ivreg2 meet the criteria necessary for asymptotic optimality'" is a false
reflection of the email exchange between Dr Chipty's team and the STATA developers.668 Honduras
asserts that "[t]he STATA developers simply responded to the specific question about lag times that
Dr Chipty posed and replied that there is no golden rule but that one needs to adapt th is where
necessary. The STATA developers did not say that the 20 lag time that Dr Chipty used was accurate;
they did not say that Ivrge2 [sic] was appropriate and they in fact insisted on the need to check this
issue on a case by case basis."669
6.216. We note tha t this argument concerns the Panel's finding that "according to the
STATA developers the formulae used in ivreg2 meet the criteria necessary for asymptotic
optimality."670 We observe that, subsequent to Dr Chipty's communications with the

662 Panel Report, Appendix C, para. 110 (referring to IPE Report (Panel Exhibit DOM-100); IPE Updated
Report (Panel Exhibit DOM-303); List Report (Panel Exhibit DOM/IDN-1); List Rebuttal Report (Panel
Exhibit DOM/IDN-3); IPE Second Updated Report (Panel Exhibit DOM-361); IPE Third Updated Report
(Panel Exhibit DOM-375); IPE Summary Report (Panel Exhibit DOM-379); List Second Supplemental Report
(Panel Exhibit DOM/IDN-5); List Third Supplemental Report (Panel Exhibit DOM/IDN-7); List Summary Report
(Panel Exhibit DOM/IDN-9)). (fns omitted)
663 IPE Report (Panel Exhibit DOM-100), fn 83 on p. 70.
664 IPE Updated Report (Panel Exhibit DOM-303), fn 52 to para. 65.
665 List Third Supplemental Report (Panel Exhibit DOM/IDN-7), para. 44.
666 List Third Supplemental Report (Panel Exhibit DOM/IDN-7), para. 46.
667 According to Dr Chipty, "Professor List himself used the same Stata code, in both his June 2015 and
September 2015 reports." (Chipty Second Rebuttal Report (Panel Exhibit AUS-591), para. 13) (emphasis
omitted)
668 Honduras' appellant's submission, para. 946 (quoting Panel Report, Appendix C, fn 132 to
para. 110).
670 Panel Report, Appendix C, fn 132 to para. 110 (referring to List Summary Report (Panel
Exhibit DOM/IDN-9), paras. 95-98).
WT/DS435/AB/R • WT/DS441/AB/R

STATA developers671, IPE communicated with the developers. 672 In their response to
IPE's communication, the STATA developers stated that "the choice of this parameter is not
well-established in the literature, and the formulae we use meet the criteria necessary for asymptotic
optimality."673 In our view, Honduras seems to have simply based its argument on appeal on
Dr Chipty's correspondence with the STATA developers and completely ignored IPE's correspondence
with the developers. The Panel plainly based its finding on the evidence before it.
6.217. We therefore consider that Honduras has not demonstrated that the Panel erred with respect
to the Panel's assessment of the parties' disagreement regarding the procedure to calculate standard
error.
Scollo et al. 2015a
6.218. In step 3 of its cigarette consumption analysis, in summarizing the "[d]atasets and related
studies" provided by the parties, the Panel noted that "Scollo et al. 2015a used the NTPPTS data to
assess changes in reported price paid and changes in reported numbers of cigarettes co nsumed
following the introduction of TPP and enlarged GHWs in the period up to and after the large increase
in excise duty on 1 December 2013."674 The Panel explained that, "[o]verall, Scollo et al. 2015a
conclude, among other [] things, that the introduction of TPP and enlarged GHWs [was] not
associated with a change in consumption among daily, regular or current smokers or among smokers
of brands in any market segment during the first year of implementation of the TPP measures."675
6.219. Honduras argues that, in step 3 of the Panel's cigarette consumption analysis, the Panel did
not attempt "to square Dr Chipty's conclusion with all of the evidence that points in the opposite
direction, including the peer-reviewed article by Dr Scollo which was published in Tobacco Control,
despite its stated 'totality of evidence' approach". 676 Honduras argues that the Panel zeroed the
contrary evidence and "fail[ed] to provide a reasoned and adequate conclusion of how its 'overall
conclusions' fit with the rest of the facts on the record including but not limited to this important
study by Dr Scollo".677
6.220. Australia submits that a panel does not "exceed the scope of its fact-finding authority when
it assesses contradictory expert evidence and determines that one expert's evidence is more
persuasive or reliable".678 Australia elaborates that "a panel does not 'zero' or 'disregard' or 'ignore'
evidence merely because it ultim ately determines that evidence should be weighed less heavily or
rejected."679
6.221. We note that, in step 3 of its cigarette consumption analysis, the Panel did not make any
specific observations regarding the independent merits of the Scollo et al. 2015 article . We further
note, however, that the Scollo study was based on NTPPTS data, whereas Dr Chipty's results relied
on IMS/EOS data. 680 In this respect, the Panel explicitly indicated that it "agree[d] with Australia
that the IMS/EOS data is the most suitable available market data submitted by the parties".681 The
Panel stated that "the other market data sources … suffer from a number of drawbacks in comparison
with the IMS/EOS data", and elaborated on why the other market data sources were inferior to the

671 See Chipty Second Rebuttal Report (Panel Exhibit AUS-591), figures B.1 and B.2 on pp. B.1 and B.2.
672 IPE Summary Report (Panel Exhibit DOM-379), Figure 6.1-3 on p. 70.
673 IPE Summary Report (Panel Exhibit DOM-379), Figure 6.1-3 on p. 70.
674 Panel Report, Appendix D, para. 89 (referring to M. Scollo, M. Zacher, K. Coomber, M. Bayly, and
M. Wakefield, "Changes in Use of Types of Tobacco Products by Pack Sizes and Price Segments, Prices Paid and
Consumption Following the Introduction of Plain Packaging in Australia", Tobacco Control, Vol. 24 (2015)
(Scollo et al. 2015a) (Panel Exhibits HND-133, DOM-237, DOM-311)).
675 Panel Report, Appendix D, para. 90. The Panel also observed that "the authors find that reported
consumption among regular smokers declined significantly following the December 2013 tax increase." (Ibid.)
678 Australia's appellee's submission, para. 438 (referring to Appellate Body Reports, China – Rare
679 Australia's appellee's submission, para. 438 (quoting Honduras' appellant's submission, paras. 728,
775, 793, 813, 885, 903, and 1034; Dominican Republic's appellant's submission, paras. 746, 874, 906, and
934; referring to Appellate Body Reports, Brazil – Retreaded Tyres, para. 202; China – Rare Earths,
680 Panel Report, Appendix D, paras. 60 and 89.
WT/DS435/AB/R • WT/DS441/AB/R

IMS/EOS data.682 We therefore understand that the Panel's findings do address the relative merits
of the Scollo article vis -à-vis Dr Chipty's econometric results, and consequently Honduras has not
demonstrated that the Panel disregarded that evidence or failed to exp lain why it considered
Dr Chipty's econometric results to be more credible than those of Scollo et al. 2015a.
Brevity of the Panel's explanation for its reliance on Australia's evidence
6.222. Honduras submits that "[t]wo conclusory and short paragraphs to 'explain' a determination
that closes a debate that continued over more than a year and involved about 15 expert reports and
rebuttal reports [are] not adequate under any standard."683
6.223. Australia does not specifically address this argument.
6.224. We understand that thi s argument refers to the Panel 's description of Dr Chipty's
econometric models in both its smoking prevalence and its cigarette consumption analyses, each of
which is only two paragraphs long (excluding a brief concluding paragraph for each analysis). 684 In
our view, there may be any number of reasons for a panel to be concise in its treatment of the
evidence (for example, a panel may consider an entire swathe of evidence to be inapposite to the
question at hand). In the present dispute, a review of the Panel's findings indicates that the Panel's
overall conclusion was formed on the basis of its assessment of the merits of all the evidence,
including both Australia 's and the complainants ' evidence. Indeed, it was only on the basis of
comparing the robustness of Australia's models to the complainants' models that the Panel was able
to consider Australia's models to be more credible. We see nothing unobjective per se about the fact
that the Panel was able to summarize, in two paragraphs, its reasons for considering that Australia's
evidence was more credible than the complainants' evidence.
6.225. We therefore do not consider that Honduras has demonstrated how the brevity of the Panel's
explanation for its reliance on Australia's evidence demonstrates any lack of objectivity in the Panel's
assessment of the matter before it.
Due process concerns
6.226. The appellants claim that the Panel failed to make an objective assessment of the facts of
the case, as required under Article 11 of the DSU, when assessing certain p ost-implementation
econometric evidence submitted by the parties.685
6.227. Honduras submits that, in exercise of its powers under Article 13 of the DSU and Article 14.2
of the TBT Agreement, the Panel should have appointed an expert to assist it in addressing the

682 Panel Report, Appendix D, paras. 103-104. We also note, in this respect, the Panel's distinction
between market data and survey datasets, and highlight that the NTPPTS dataset consisted of survey data
rather than market data. (Panel Report, Appendix D, paras. 23 and 87-88) The Panel stated that the survey
datasets on cigarette consumption that were used by some of the complainants' experts to analyse the impact
of the TPP measures would be "reviewed in detail when discussing the econometric analysis". (Ibid.,
Appendix D, para. 23) While the Panel did not further critique the NTPPTS data in Appendix D, the Panel did
state, in the context of assessing the merits of the CITTS data, that "survey data, such as the CITTS data,
may… be more suited to analysing the impact of the TPP measures on proximal outcomes … than more distal
outcomes, such as smoking behaviours." (Ibid., Appendix D, para. 112) In Appendix B, which referred to
CITTS data, as well as NTPPTS data, the Panel observed, without distinction, that "survey data … may … be
more suited to analysing the impact of the TPP measures and enlarged GHWs on proximal outcomes … than
more distal outcomes." (Ibid., Appendix B, para. 118) That statement by the Panel followed very closely an
argument by Australia that "the structure of the NTPPTS is likely to be more suited to detecting changes in
proximal outcomes than in more distal variables, such as quitting-related behaviours." (Ibid., Appendix B,
para. 73 (emphasis added)) Furthermore, in Appendix C, in the context of criticizing the data sources
considered by Professor Klick, the Panel stated that the NTPPTS dataset "do[es] not actually measure smoking
prevalence, because the sample is based only on smokers and recent quitters". (Ibid., Appendix C, para. 100)
In our view, there is no reason to consider that the foregoing criticisms by the Panel of survey datasets,
including the NTPPTS dataset, are not equally applicable to the Panel's assessment of the Scollo et al. 2015a
study.
684 Panel Report, Appendix C, paras. 120-121; ibid., Appendix D, paras. 115-116.
685 Honduras' appellant's submission, paras. 696, 709, 719, and 1055-1071; Dominican Republic's
appellant's submission, paras. 51-52, 304, 390-391, and 395.
WT/DS435/AB/R • WT/DS441/AB/R

post-implementation evidence in Appendices A -E to the Panel Report.686 Instead, the Panel relied
"on a 'ghost' expert of some kind to assist it". 687 As a result, "the parties were not in a position to
respond to a number of the (misguided) criticisms that the Panel independently developed through
this 'ghost expert'."688 Honduras claims that, by taking upon itself the task of assessing the probative
nature of the econometric evidence without seeking the advice of an expert, the Panel acted
inconsistently with Article 11 of the DSU.689
6.228. The Dominican Republic claims that the Panel's assessment of non -stationarity and
multicollinearity was conducted without respecting the Dominican Republic's due process rights.690
The Dominican Republic points out that the concepts of non-stationarity and multicollinearity were
never discussed with the parties during the briefing phase of the Panel proceedings.691 Yet, according
to the Dominican Republic, the Panel rejected the complainants' econometric evidence because of
non-stationarity and multicollinearity concerns that the Panel identified by itself, using an
econometric test that the Panel had developed and executed on its own initiative, without giving the
parties any opportunity to comment. 692 In the Dominican Republic's view, this resulted in "a
fundamental denial of due process rights, which lie at the heart of any fair and independent dispute
resolution system".693 The Dominican Republic also submits that, by coming up with these concerns
on its own initiative, the Panel "made the case" for Australia, inconsistently with Article 11 of the
DSU.694
6.229. Australia responds that at no point in the more than two years of Panel proceedings did the
appellants request the Panel to exercise its authority under Article 13 of the DSU or Article 14.2 of
the TBT Agreement to appoint an expert or group of experts to examine the econometric evidence
submitted to the Panel. 695 Australia submits that a panel's discretionary authority under Article 13
of the DSU and Article 14.2 of the TBT Agreement extends to deciding whether and when to seek
additional information. 696 Moreover, Australia asserts that an important part of a panel's
discretionary authority relates to the reasoning that it adopts in addressing the parties' claims and
that the panel has the authority to develop its own reasoning and is not limited to the arguments
advanced by the parties.697 For Australia, a panel does not "make the case" for one party where that
party has put forward relevant substantiating arguments and evidence and the panel proceeds to
"fully scrutinize such evidence and argumentation". 698 Australia refers to the Appellate Body's
explanation that "a panel is not required to test its intended reasoning with the parties", so long as
the panel does not "adopt[] an approach that departs so radically from the cases put forward by the
parties that the parties are left guessing as to what proof they need to adduce".699 Finally, Australia
points out that Honduras and the Dominican Republic could have used the interim review procedures
under Article 15 of the DSU to request the Panel to review the relevant parts of the Panel Report,
but did not do so.700
6.230. As a preliminary issue, we take note of a difference in the scope of the appellants' claims.
In response to questioning at the second heari ng, Honduras clarified that its claim concerns both:
(i) who undertook the analysis on behalf of the Panel (with Honduras alleging that it was a "ghost

686 Honduras' appellant's submission, paras. 1055 and 1068-1069. For Honduras, the arguments of the
parties were of such a technical and fundamental nature that the Panel was "under an obligation to have
sought the assistance of an expert, or group of experts, to support the assessment of the probative nature of
690 Dominican Republic's appellant's submission, para. 57.
691 Dominican Republic's appellant's submission, paras. 41, 296, and 382-383.
692 Dominican Republic's appellant's submission, paras. 42, 298-299, and 390.
693 Dominican Republic's appellant's submission, para. 49.
694 Dominican Republic's appellant's submission, paras. 354-361 and 419-424.
695 Australia's appellee's submission, para. 429.
696 Australia's appellee's submission, paras. 469-470.
697 Australia's appellee's submission, para. 439 (referring to Appellate Body Report,
EC – Hormones, para. 156).
698 Australia's appellee's submission, para. 440 (referring to Appellate Body Report, EC – Fasteners
(China), para. 566).
699 Australia's appellee's submission, para. 441 (quoting Appellate Body Report, US – Tuna II (Mexico)
(Article 21.5 – Mexico), para. 7.177).
700 Australia's appellee's submission, paras. 458-466.
WT/DS435/AB/R • WT/DS441/AB/R

expert" instead of an expert or a group of experts appointed under Article 13 of the DSU or
Article 14.2 of the TBT Agreement); and (ii) the alleged failure by the Panel to provide the parties
with a meaningful opportunity to comment on the Panel's analysis.701 In its appellant's submission,
Honduras indicated that its claims pertain to the entirety of the Pan el's analysis in Appendices A-E
to the Panel Report.702
6.231. By contrast, in its submissions, and as it confirmed in response to questioning at the
second hearing, the Dominican Republic indicates that its claim is narrower in scope. According to
the Dominican Republic, its claim is limited to the second of the concerns raised by Honduras, i.e. the
alleged failure by the Panel to provide the parties with a meaningful opportunity to comment on the
Panel's analysis. Specifically, the Dominican Republic alleges that the Panel developed and executed
certain econometric tests "on its own, without giving the parties any opportunity whatsoever to
comment".703 The focus of the Dominican Republic's claim is the Panel's employment of the
econometric tools of "multicollinearity " and "non -stationarity".704 Nonetheless, we recall the
Dominican Republic's confirmation at the first hearing that it had incorporated by reference into its
appeal, without exception, all of Honduras' claims and arguments on appeal.705
6.232. Turning to Honduras' assertion that its claims pertain to the Panel's analysis in the entirety
of Appendices A-E to the Panel Report706, we observe that Appendices A-E comprise 150 pages of
the Panel's analysis. In substantiating its claims on appeal, Honduras refers only to particular aspects
of the Panel's analysis, specifically the Panel's reliance on "new" robustness criteria
(i.e. multicollinearity and non -stationarity) "that were not even raised by Australia and that were
never discussed during the two years that this proceed ing was ongoing". 707 Hence, our analysis
focuses on the Panel's reliance on these two criteria.
6.233. We start by addressing Honduras' argument that the Panel was obliged to appoint experts
under Article 13 of the DSU and Article 14.2 of the TBT Agreement and that, by not doing so, it failed
to conduct an objective assessment of the matter, as required under Article 11 of the DSU. 708 We
note that Honduras did not raise a claim under Article 13 of the DSU or Article 14.2 of the
TBT Agreement. Instead, Honduras conside rs that a panel's discretion to appoint experts under
these provisions "is not boundless".709 In Honduras' view, given the nature of the evidence at issue,
the Panel was under an obligation to appoint experts to conduct an objective assessment of the
matter under Article 11 of the DSU.710
6.234. We recall that Article 13.1 of the DSU711 identifies the "right", not obligation, of a panel to
seek information and technical advice from any individual or body which it deems appropriate. 712

701 See also Honduras' appellant's submission, paras. 696, 719, 938, and 980.
703 Dominican Republic's appellant's submission, para. 42. (emphasis omitted)
704 Dominican Republic's appellant's submission, paras. 42 and 377. In addition, in response to
questioning at the second hearing, the Dominican Republic indicated that it also had concerns as to the Panel's
development of a number of statistically significant variables and graphical analyses. We understand that the
Dominican Republic is referring to its arguments regarding the Panel's reliance on Figure C.19 of Appendix C to
the Panel Report. (See Dominican Republic's appellant's submission, paras. 202-212) We address this issue in
paras. 6.344. 6.345. below.
705 We recall that, in its Notice of Appeal, the Dominican Republic stated that it "incorporate[d] by
reference into this appeal the claims on appeal made by Honduras". (Dominican Republic's Notice of Appeal,
para. 16) Furthermore, in response to questioning at the first hearing of these appellate proceedings, the
Dominican Republic confirmed that it incorporated all of Honduras' claims and arguments on appeal.
Accordingly, we understand that any reference to Honduras' claims and arguments throughout these Reports
also includes a reference to the claims and arguments of the Dominican Republic.
708 Honduras' appellant's submission, paras. 1068-1069.
710 Honduras' appellant's submission, paras. 938 and 1055-1063.
711 Article 13.1 of the DSU provides, in relevant part, that "[e]ach panel shall have the right to seek
information and technical advice from any individual or body which it deems appropriate."
712 Appellate Body Reports, US – Carbon Steel, para. 153; EC – Sardines, para. 302; US – Continued
Zeroing, paras. 343-344.
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Similarly, both Article 13.2 of the D SU713 and Article 14.2 of the TBT Agreement714 employ the
auxiliary verb "may" to express the permissive intent of these provisions. Moreover, the panel's
authority under Article 13 of the DSU is "comprehensive"715, and it "includes the authority to decide
not to seek such information or advice at all".716
6.235. In light of the comprehensive authority to seek information vested into the panel under
Article 13 of the DSU, we consider that it was within the Panel's discretion to decide whether to seek
expert assistance.717 We do not consider that the technical nature of the evidence addressed in
Appendices A-E automatically implies that the Panel was "under an obligation" to seek external
expert advice in order to assess this evidence. Moreover, with respect to the econometric evidence
that the Panel assessed in Appendices A-E to its Report, we note that none of the complainants
requested the Panel to engage experts, pursuant to Article 14.2 of the TBT Agreement, "to assist in
questions of a technical nature". Absent a request by the complainants under Article 14.2 of the
TBT Agreement, we cannot accept Honduras' argument on appeal that the Panel somehow
compromised the parties' due process rights by failing to seek expert assistance on its own initiative.
If the parties were of the view that it was, as Honduras puts it, "indispensably necessary"718 for the
Panel to seek expert assistance, they were free to request the Panel to do exactly that. The Panel
did not act inconsistently with its duty to conduct an objective assessment of the matter under
Article 11 of the DSU simply by seeking to assess the evidence put before it without engaging
experts.
6.236. We now turn to address the appellants' claims regarding the Panel's alleged failure to grant
due process to the complainants by not providing them with an opportunity to comment on the
Panel's concerns over multicollinearity and non-stationarity.
6.237. We recall the Panel's explanation that multicollinearity arises when "two (or more)
explanatory variables convey the same information", in which case "the predictive power of the
model remains unchanged, but the confidence interval of the coefficient estimates may increase"
and "the coefficient estimates may become very sensitive to minor changes in the model specification
or data."719 The Panel considered that one way to mitigate multicollinearity is to increase the sample
period.720 The Panel also observed that "[e]vidence of multicollinearity is confirmed by the variance
inflation factors statistic."721 With respect to non-stationarity, the Panel explained that "[a] variable
is said to be stationary, when its statistical properties, such as mean and variance are all constant
over time."722 The Panel stated that "econometric theory recommends not estimating a model when
the dependent variable (i.e. smoking prevalence) is stationary and one of the explanatory variables
(i.e. tax level or price) is not stationary in order to avoid spurious and biased results."723
6.238. In the present dispute, the Panel relied on multicollinearity as a robustness criterion to test
the weight and probative value of certain of the parties' econometric models addressed in
Appendices B-E.724 The Panel also relied on the concept of non-stationarity as a robustness criterion

713 Article 13.2 of the DSU provides, in relevant part, that "[p]anels may seek information from any
relevant source and may consult experts to obtain their opinion on certain aspects of the matter."
714 Article 14.2 of the TBT Agreement states that, "[a]t the request of a party to a dispute, or at its own
initiative, a panel may establish a technical expert group to assist in questions of a technical nature, requiring
detailed consideration by experts."
715 Appellate Body Report, US – Shrimp, para. 104.
716 Appellate Body Report, US – Shrimp, para. 104. (emphasis original) See also Appellate Body
Reports, Canada – Continued Suspension, para. 439; US – Continued Suspension, para. 439; EC – Hormones,
para. 147.
717 We further recall that the Panel made extensive use of the facility under Article 13 of the DSU.
During the Panel proceedings, the parties requested the Panel to exercise its authority to seek information
under Article 13 of the DSU on various occasions, regarding information relating to evidence submitted by
another party. The Panel also exercised its authority under Article 13 to seek information from the WHO and
the FCTC Secretariats, the International Bureau of WIPO, CCQ, and CCV. (Panel Report, paras. 1.56-1.57)
721 Panel Report, Appendix C, fn 119 to para. 107; ibid., Appendix D, fn 143 to para. 109.
722 Panel Report, Appendix C, fn 120 to para. 107.
724 Panel Report, Appendix B, para. 116; ibid., Appendix C, paras. 107-108 and 120; ibid., Appendix D,
paras. 106-110; ibid., Appendix E, paras. 29, 51, and 54. We observe that, with respect to its assessment of
WT/DS435/AB/R • WT/DS441/AB/R

to test the weight and probative value of certain of the parties' econometric models addressed in
Appendices C-D.725
6.239. Importantly, in its examination of the post-implementation evidence of smoking prevalence
and consumption, the Panel did not reject any econometric models submitted by the parties on the
basis of any individual robustness criteria.726 Rather, the Panel identified a number of concerns with
the complainants' econometric evidence, noted that Australia's evidence addressed a number of
these concerns, and proceeded to reach conclusions on the basis of Australia's evidence. We further
recall that multicollinearity and non-stationarity were two of the concerns identified by the Panel in
the complainants' evidence. 727 The Panel considered that certain smoking prevalence and
consumption models provided by Australia's expert, Dr Chipty, avoided the problems of
multicollinearity and non-stationarity.728 The Panel relied on this consideration, inter alia, to conclude
that Dr Chipty's smoking prevalence and consumption evidence was more credible than the
complainants' evidence, which was sufficient for the Panel to conclude that there was some
econometric evidence that the TPP measures had contributed to the reduction in smoking prevalence
and consumption.729
6.240. The review of empirical and econometric evidence has routinely been undertaken by
WTO panels. In US – Upland Cotton (Article 21.5 – Brazil), the Appellate Body commented on a
panel's duty when reviewing econometric evidence and models submitted by parties, noting that
"the relative complexity of a model and its parameters is not a reason for a panel to remain agnostic
about them."730 Rather, a panel should "reach conclusions with respect to the probative value it
accords to economic simulations or models presented to it".731
6.241. However, in support of its claim, Honduras indicates that it "is deeply concerned about the
Panel's novel and technical analysis of the evidence presented".732 Likewise, the Dominican Republic
states that it "d oes not take issue with the Panel's decision to use the robustness criterion [of
multicollinearity] per se, but instead with the process that the Panel followed, which lacked
objectivity".733 These statements, as well as the appellants' responses to question s at the
second hearing, suggest to us that neither Honduras nor the Dominican Republic considers that the
Panel's use of the econometric tools of multicollinearity and non -stationarity was prohibited under
Article 11 of the DSU, per se. Rather, the appell ants contend that the Panel's appreciation and
assessment of the facts before it , leading to its factual findings, and particularly its reliance on
multicollinearity and non-stationarity, should have been tested with the parties.

the post-implementation evidence on distal outcomes, in Appendix B to its Report, the Panel made a single
reference to "multicollinearity". Specifically, the Panel questioned the Ajzen et al. estimation results, which had
been obtained with the resampled data based on the multiple testing procedure. The Panel noted that the
results "could suggest that the resample data are subject to multicollinearity". This singular reference to
"multicollinearity" and the statement in which it is contained appears anecdotal, as the Panel does not rely on
this statement or any consideration of "multicollinearity" in arriving at its conclusion on the association
between proximal outcomes and distal outcomes based on the NTPPTS data. (Panel Report, Appendix B,
paras. 111-116) Accordingly, we do not consider that the Panel's reference to "multicollinearity" in Appendix B
warrants further scrutiny.
725 Panel Report, Appendix C, para. 107; ibid., Appendix D, paras. 44, 106, and 116.
726 See para. 6.133. above.
727 Regarding multicollinearity, see Panel Report, Appendix B, para. 116; ibid., Appendix C,
paras. 107-108 and 120, fn 119 to para. 107, and fn 122 to para. 108; ibid., Appendix D, paras. 43, 106, and
109-110; ibid., Appendix E, paras. 29 and 51-54. Regarding non-stationarity, see Panel Report, Appendix C,
paras. 107 and 120, and fn 120 to para. 107; ibid., Appendix D, paras. 44, 106, and 116, fn 46 to para. 43,
and fn 146 to para. 109.
730 Appellate Body Report, US – Upland Cotton (Article 21.5 – Brazil), para. 357.
731 Appellate Body Report, US – Upland Cotton (Article 21.5 – Brazil), para. 357. In this regard, not only
should the panel "examine[] the model, the parameters used by each party, and the arguments made by the
parties, [noting] the different results generated by the simulations conducted by each party, the Panel [can go]
further in its evaluation and comparative analysis of the economic simulations and the particular parameters
used". (Ibid., paras. 357-358) (fn omitted)
733 Dominican Republic's appellant's submission, para. 364.
WT/DS435/AB/R • WT/DS441/AB/R

6.242. For its part, Australia p osits that a panel, in developing its reasoning, is free to examine
certain evidence more intensively if doing so is warranted by the facts.734 In the same vein, Australia
submits that panels may conduct additional analyses of statistical evidence in order to resolve more
fully certain factual issues735, and a panel does not exceed its discretion in attributing less probative
value to or rejecting certain evidence in light of concerns regarding reliability.736
6.243. In performing its function under Article 11 of the DSU to "make … an objective assessment
of the facts of the case", a panel "has the duty to examine and consider all the evidence before it,
not just the evidence submitted by one or the other party, and to evaluate the relevance and
probative force of each piece thereof".737 While a panel may not "make affirmative findings that lack
a basis in the evidence contained in the panel record" 738, in assessing the probative value of the
evidence, it is not required to "accord to factual evidence … the same meaning and weight as do the
parties".739 In addition, "[a] panel might well be unable to carry out an objective assessment of the
matter, as mandated by Article 11 of the DSU, if in its reasoning it had to restrict itself solely to
arguments presented by the parties to the dispute."740 We further recall that a complainant must
satisfy its burden of proof by adducing evidence and arguments sufficient to make a prima facie case
in relation to each of the elements of its claims. Where the complainant has made out a prima facie
case, a panel may "in principle draw from arguments and evidence on the record, or develop its own
reasoning in reaching its findings, provided that it does so consistently with the requirements of due
process".741
6.244. The Appellate Body has addressed the importance of due process many times. Among the
things said is that the protection of due process is "an essential feature of a rules -based system of
adjudication, such as that established under the DSU", and that "due process is fundame ntal to
ensuring a fair and orderly conduct of dispute settlement proceedings."742 Moreover, due process is
intrinsically connected to notions of fairness, impartiality, and "the rights of parties to be heard and
to be afforded an adequate opportunity to pur sue their claims, make out their defences, and
establish the facts in the context of proceedings conducted in a balanced and orderly manner,
according to established rules".743 While making an objective assessment of the matter before it, a
panel should explore with the parties all pertinent issues arising in the dispute over the course of
the proceedings.744 At the same time, this does not oblige the panel to test its intended reasoning
with the parties or engage with the parties on the findings and conclusion s that it intends to adopt
in resolving the dispute.745 However, due process could be compromised in circumstances where the
panel adopts an approach that departs so radically from the cases put forward by the parties that
the parties are left guessing as to what proof they would have needed to adduce.746

734 Australia's appellee's submission, para. 440.
735 Australia's appellee's submission, para. 439 and fn 569 thereto (referring to Appellate Body Report,
US – Upland Cotton (Article 21.5 – Brazil), paras. 357-358).
736 Australia's appellee's submission, para. 438 (referring to Appellate Body Reports, China – Rare
Earths, paras. 5.197 and 5.212).
737 Appellate Body Report, Korea – Dairy, para. 137.
738 Appellate Body Report, US – Carbon Steel, para. 142.
739 Appellate Body Report, EC – Fasteners (China) (Article 21.5 – China), para. 5.61.
740 Appellate Body Report, EC – Hormones, para. 156.
741 Appellate Body Report, US – Tuna II (Mexico) (Article 21.5 – Mexico), paras. 7.176-7.177 (referring
to Appellate Body Reports, Canada – Aircraft, para. 192; EC – Hormones, paras. 98 and 156; Chile – Price
Band System, paras. 166 and 181; US – Gambling, para. 140, 270, 280, and 282; Mexico – Anti-Dumping
Measures on Rice, para. 156; Canada – Renewable Energy / Canada – Feed-in Tariff Program, para. 5.215;
US – Wool Shirts and Blouses, p. 16, DSR 1997:I, p. 336; Japan – Apples, para. 159; Japan – Agricultural
Dominican Republic – Import and Sale of Cigarettes, para. 121; US – Large Civil Aircraft (2nd complaint),
fn 2323 to para. 1137; US – Continued Zeroing, paras. 343 and 347).
742 Appellate Body Reports, Canada – Continued Suspension, para. 433; US – Continued Suspension,
743 Appellate Body Report, Thailand – Cigarettes (Philippines), para. 147.
744 Appellate Body Report, US – Large Civil Aircraft (2nd complaint), para. 1137.
745 Appellate Body Report, US – Tuna II (Mexico) (Article 21.5 – Mexico), para. 7.177.
746 Appellate Body Report, US – Tuna II (Mexico) (Article 21.5 – Mexico), para. 7.177. See also
Appellate Body Reports, US – Large Civil Aircraft (2nd complaint), fn 2323 to para. 1137; US – Continued
Zeroing, para. 347.
WT/DS435/AB/R • WT/DS441/AB/R

6.245. Turning back to the circumstances of this case, we recall that, in its examination of the
post-implementation evidence of smoking prevalence and consumption 747, multicollinearity and
non-stationarity were two of the concerns identified by the Panel pertaining to certain evidence
provided by the complainants.748 Moreover, the Panel relied on, inter alia, the fact that certain pieces
of Australia's evidence did not suffer from these concerns, in order to conclude tha t the
TPP measures contributed to reducing smoking prevalence and consumption.749 Our review of the
Panel record suggests that these concerns were not identified by the parties, but were introduced
by the Panel itself. Furthermore, the Panel did not pose questions to the parties or otherwise invite
them to comment on the use of these robustness criteria in a ddressing the parties' evidence. It
appears that the parties first became aware of possible concerns relating to multicollinearity and
non-stationarity when the Panel issued its Interim Report to the parties on 2 May 2017.750 At the
interim review stage, the complainants did not raise concerns regarding the Panel's identification of
these concerns.751
6.246. We note that, in order to identify the concerns regarding mu lticollinearity and
non-stationarity in the parties' evidence, the Panel was obliged to conduct VIF and unit root tests.752
The Panel's reliance on these technical tests was relevant to its assessment of the credibility of the
evidence, and its ultimate dete rmination that the TPP measures contributed to reducing smoking
prevalence and consumption. These complex technical tests thus had an important role in the Panel's
assessment of the evidence. We further note that the application of these tests involved a c ertain
degree of discretion on the part of the Panel as to whether, and to what extent, concerns regarding
multicollinearity and non -stationarity were legitimate reasons to question the reliability of the
evidence.753 Given that these concerns were not introduced by the parties, but emanated from the
Panel itself, and in light of their highly technical nature and of the Panel's discretion in relying on
these concerns, we consider that the Panel should have explored these issues with the parties.
6.247. We take note of Australia's argument that the complainants could have used the interim
review stage to request the Panel to review the relevant parts of the Panel Report pursuant to
Article 15 of the DSU, but chose not to do so.754 Australia points out that the "conduct of the parties"
is a relevant consideration in the evaluation of a party's due process claim and that such a claim
should be rejected where the party failed to raise its objections notwithstanding an opportunity to
do so.755
6.248. We recall that Article 15.2 of the DSU provides, in relevant part:
Within a period of time set by the panel, a party may submit a written request for the
panel to review precise aspects of the interim report prior to circulation of the final
report to the Members. At the request of a party, the panel shall hold a further meeting
with the parties on the issues identified in the written comments. If no comments are
received from any party within the comment period, the interim report shall be
considered the final Panel Report and circulated promptly to the Members.
6.249. Article 15.2 concerns the panel's Interim Report and the interim review stage of the panel
proceedings. The second sentence of Article 15.2 permits parties, during the interim review stage of
panel proceedings, "to submit comments on the draft report issued by the panel, and to make
requests 'for the panel to review precise aspects of the interim report'". 756 In addition, the

747 Panel Report, Appendices C and D.
748 See fn725 to para. 6.239. above.
749 See para. 6.239. above.
750 Panel Report, para. 1.32.
751 Panel Report, paras. 6.1-6.103.
para. 109.
753 By contrast, we understand that the Panel's application of, and reliance on, a mean-comparison test
in step 2 of its cigarette consumption analysis did not entail such discretion in interpreting the results, but
rather amounted to simply verifying whether the parties' competing assertions were borne out by the evidence.
(See para. 6.122. above)
754 Australia's appellee's submission, para. 464.
755 Australia's appellee's submission, para. 466.
756 Appellate Body Report, EC – Sardines, para. 301. (fn omitted)
WT/DS435/AB/R • WT/DS441/AB/R

third sentence grants parties the right to request a meeting "on the issues identified in the written
comments".757
6.250. Panels have understood Article 15.2 to imply that the "purpose of the interim review stage
is to consider specific and particular aspects of the interim report".758 Along these lines, panels have
declined requests for a "whole of report review" 759 or "whole sections of the report". 760 Likewise,
panels have considered that interim review is "not the appropriate forum for relitigating arguments
already put before a panel". 761 Furthermore, the Appellate Body has explained that "[t]he interim
review stage is not an appropriate time to introduce new evidence."762
6.251. We recall that the parties appear to have first become aware of the Panel's reliance on
multicollinearity and non -stationarity when the Panel issued its Interim Report to the parties on
2 May 2017.763 In its letter to the parties forwarding the Interim Report, the Panel invited the parties
to submit any comments on the Interim Report, or request an interim review meeting by 6 June
2017. Absent any request for an interim review meeting, the Panel invited the parties to submit
further written comments on the other parties' requests for review on 4 July 2017.
6.252. On 6 June 2017, the Dominican Republic submitted its comments on the Interim Report to
the Panel. The Dominican Republic did not request an interim review meeting. Instead, in its cover
letter, the Dominican Republic "record[ed] its disappointment with the Panel's interim report". 764
The Dominican Republic also submitted, as interim comments, a table, which by the
Dominican Republic's own description, "con tain[ed] an indicative list of typographical, clerical and
grammatical errors in the interim reports". 765 In the table, the Dominican Republic made
one reference to "collinearity", pointing out that in paragraph 52 of Appendix E the Panel had
omitted the article "the" before the word "collinearity". The Dominican Republic made no reference
at all to the Panel's reliance on "non-stationarity".
6.253. On 6 June 2017, Honduras submitted its comments on the Interim Report to the Panel. As
with the Dominican Republic, Honduras did not request an interim review meeting. In its comments
on the Interim Report, Honduras made no mention of the Panel's reliance on "multicollinearity" or
"non-stationarity".
6.254. Indeed, it appears that, as Australia argues, while the complainants bec ame aware of the
Panel's use of multicollinearity and non-stationarity when they received the Panel's Interim Report,
they did not request a review of the relevant aspects of the Interim Report. In our view, if a party
disagrees with certain aspects of the Interim Report, requesting the panel "to review precise aspects"
of its Interim Report would be the normal course of action.766 We consider it unfortunate that the
parties did not raise their concerns regarding multicollinearity and non -stationarity at the interim
review stage.

757 We note that the panel in Canada – Continued Suspension explained that it is for a party, and not for
a panel, to decide whether an additional interim review meeting would be useful. (Panel Report,
Canada – Continued Suspension, para. 6.2. See also Panel Report, US – Continued Suspension, para. 6.2)
758 Panel Report, Japan – Alcoholic Beverages II, para. 5.2, DSR 1996:I, p. 125.
760 Panel Reports, Canada – Continued Suspension, paras. 6.16-6.17; US – Continued Suspension,
paras. 6.17-6.18.
761 Panel Report, US – Poultry (China), para. 6.32 (referring to Panel Report, Japan – DRAMs (Korea),
para. 6.2).
762 Appellate Body Report, EC – Sardines, para. 301.
763 Panel Report, para. 1.32.
764 Dominican Republic's letter to the Panel, forwarding the Dominican Republic's comments on the
Panel's Interim Report, 6 June 2017.
765 Dominican Republic's letter to the Panel, forwarding the Dominican Republic's comments on the
Panel's Interim Report, 6 June 2017.
766 We underscore that Article 15 of the DSU refers to "precise aspects of the interim report", which
suggests that such aspects must be sufficiently specific. Previous panels and the Appellate Body understood
that, at the interim review stage, the parties cannot introduce new evidence, ask for a review of a whole
report, or enter into a debate about the merits of a panel's interpretation of relevant legal provisions.
(See Appellate Body Report, EC – Sardines, para. 301; Panel Reports, Australia – Salmon, para. 7.3;
Indonesia – Iron or Steel Products, Annex A-3, paras. 2.3-2.4)
WT/DS435/AB/R • WT/DS441/AB/R

6.255. We are mindful that the Appellate Body has previously indicated that, when a Member wishes
to raise an objection in dispute settlement proceedings, "it is always incumbent on that Member to
do so promptly." 767 We also recall that the Ap pellate Body in Thailand – Cigarettes (Philippines)
considered that the conduct of the parties is among the considerations that are germane to a party's
claim under Article 11 of the DSU. 768 Importantly, in Thailand – Cigarettes (Philippines) , the
Appellate Body explained that it rejected Thailand's claim of due process violation, in particular,
because the evidence at issue "did not raise or relate to a new issue, previously unknown to Thailand
or unexplored by the Panel, and it was not the only evidence sup porting the Panel's conclusion".769
The Appellate Body noted that the exhibit in question "related to a key and highly disputed issue"
and that the parties would have been aware of the importance of this piece of evidence when it was
submitted.770 By contrast, in the present case, the parties only became aware of the Panel's use of
multicollinearity and non -stationarity to reject some of the complainants' evidence at the interim
review stage.
6.256. Moreover, we emphasize that the Panel's reliance on the concerns over multicollinearity and
non-stationarity entailed a degree of discretion on the part of the Panel in applying and interpreting
the results of the technical tests regarding the relative robustness of different econometric models.
In our view, although Hondu ras and the Dominican Republic could have raised their concerns
regarding the Panel's reliance on these econometric tools during the interim review stage, in the
circumstances of the present dispute, their failure to do so does not detract from the Panel's due
process violation in its treatment of certain evidence submitted by the complainants. While the
interim review affords parties an opportunity to raise and address numerous aspects of a Panel's
findings, in our view, the interim review process contemplated under Article 15 would not have been
sufficient to enable the parties to adequately explore these issues, given the review's limited nature
and late stage.771
6.257. In light of the above, we consider that, by introducing in its Interim Report novel econometric
criteria that it had not tested with the parties, in its examination of the post-implementation evidence
of smoking prevalence and consumption, the Panel denied the parties their due process rights and
thus acted incon sistently with its duty to conduct an objective assessment of the facts under
Article 11 of the DSU. 772 We thus find that the Panel erred in the instances where it relied on
multicollinearity and non-stationarity in its assessment of the parties' post-implementation evidence
of smoking prevalence and consumption.
Consequences of the Panel's errors in Appendices C and D
6.258. We have found certain errors in the Panel's analysis of the impact of the TPP measures on
smoking prevalence and cigarette consumption. Specifically, we have found that the Panel erred
with respect to its assessment of multicollinearity, non -stationarity, and the impact of tobacco
costliness, in finding that Australia's econometric evidence was more credible than the complainants'
econometric e vidence. In the view of the appellants, these errors implicat e: (i) the Panel's
intermediate conclusion regarding the evidence of actual effects; and (ii) the Panel's overall
conclusion regarding the degree of contribution of the TPP measures. Specifically , the

767 Appellate Body Report, Mexico – Corn Syrup (Article 21.5 – US), para. 50.
768 Appellate Body Report, Thailand – Cigarettes (Philippines), para. 155. In that dispute, Thailand
argued that the Panel violated Thailand's due process rights and acted inconsistently with Article 11 of the DSU
by accepting and relying on an exhibit without affording Thailand the right to comment on that piece of
evidence. The Appellate Body rejected Thailand's claim, inter alia, because "Thailand could have requested an
opportunity to respond when the Philippines submitted the exhibit in question, but it did not." (Ibid., para. 160
(fn omitted))
769 Appellate Body Report, Thailand – Cigarettes (Philippines), para. 160.
770 Appellate Body Report, Thailand – Cigarettes (Philippines), para. 158.
771 The Appellate Body in EC – Sardines underscored the limited nature of the interim review by pointing
out that the interim review "cannot properly include an assessment of new and unanswered evidence".
(Appellate Body Report, EC – Sardines, para. 301)
772 In light of this finding, we do not consider it necessary to address the Dominican Republic's argument
that the Panel "made the case" for Australia. (Dominican Republic's appellant's submission, paras. 354-361 and
419-424) Having said that, we wish to emphasize that we would see no due process issues arising if the Panel
had, in fact, explored the issues of non-stationarity and multicollinearity with the parties prior to the issuance
of the Interim Report and in a manner sufficient to substantiate the complainants' due process rights of notice
and an opportunity to respond to the case against them.
WT/DS435/AB/R • WT/DS441/AB/R

Dominican Republic requests to reverse the Panel's finding that the TPP measures have reduced
smoking prevalence and consumption of tobacco products.773
6.259. Australia argues that, even assuming that the Panel made any errors, the appellants are
required to demonstrate that such errors materially undermine the Panel's findings.774 In Australia's
view, materiality "turns on whether 'other elements of the Panel's analysis' support its conclusion".775
In Australia's view, the appellants failed to demonstrate that any errors by the Panel were material
to its intermediate findings.776 Australia further submits that, in any event, the appellants also failed
to demonstrate how any errors, even to the extent that they were material to the Panel's
intermediate findings, were also material to the Panel's overall finding on contribution. 777 Australia
emphasizes the Panel's findings that the post -implementation evidence was "consistent with a
finding that the TPP measures contribute to a reduction in the use of tobacco products" and that the
complainants had failed to demonstrate the TPP measures are not apt to make a contribution to the
objective.778 In Australia's view, the pre-implementation evidence and the undisputed aspects of the
Panel's findings on the post -implementation evidence are sufficient to support the Panel's overall
finding on the contribution of the measures, notwithstanding any errors by the Panel.779
6.260. We note that the Panel's errors in assessing the evidence relate to two very specific aspects
of its analysis of the impact of the TPP measures on smoking prevalence and cigarette consumption,
specifically: (i) the Panel failed to examine the Dominican Republic's arguments and evidence
indicating that Australia's consumption models showed a positive impact of tobacco costliness on
cigarette consumption; and (ii) the Panel compromised the parties' due process rights by failing to
explore the issues of multicollinearity and non -stationarity with the parties prior to the issuance of
the interim report. In our view, it is important to examine the implications of the Panel's errors for
its findings that there was some econometric evidence indicating that the TPP measures contributed
to reducing smoking prevalence and cigarette consumption.
6.261. With respect to the Panel's reliance on the impact of tobacco costliness to critique the parties'
evidence, we recall our finding that the Panel's error in this respect is limited to step 3 of the Panel's
cigarette consumption analysis (i.e. whether the TPP measures reduced cigarette consumption), and
does not implicate the Panel's smoking prevalence findings. This is because, as explained above, the
appellants have failed to identify any errors in this respect regarding the Panel's appreciation of the
parties' smoking prevalence evidence.780 Having said that, we note that the Panel's smoking
prevalence findings reveal the importance that the Panel attached to the question of whether a given
model indicated an impact of tobacco costliness. The Panel stated that it was "not persuaded that
[the parties' smoking prevalence] econometric results can be taken at face value, mainly because
most of their model specifications are unable to detect the impact of tobacco costliness … on smoking
prevalence".781 Thus, the Panel's findings indicate that t he impact of tobacco costliness was a
primary consideration in assessing the probative value of the parties' evidence.
6.262. It follows, by virtue of the Panel's own reasoning, that if Australia's consumption models had
indicated an incorrect impact of tobacco costliness on consumption (as asserted by the
Dominican Republic), while the complainants' models did not, this would have been a significant
reason for the Panel to conclude that Australia's models were less credible than the complainants'
models. We ther efore consider that the Panel's failure to address the
Dominican Republic's arguments in this respect fatally undermine s the Panel's determination that
Australia's evidence was more credible than the complainants' evidence, on which it based its
conclusion that "there is some econometric evidence suggesting that the TPP measures …

773 Dominican Republic's appellant's submission, paras. 584-586.
774 Australia's appellee's submission, para. 884. (emphasis omitted)
775 Australia's appellee's submission, para. 884 (quoting Appellate Body Report, US – Large Civil Aircraft
(2nd complaint), para. 722).
776 Australia's appellee's submission, paras. 866 and 874.
777 Australia's appellee's submission, para. 893.
778 Australia's appellee's submission, paras. 901-903 (referring to Panel Report, paras. 7.1025
and 7.1037).
779 Australia's appellee's submission, paras. 905-914.
780 See paras. 6.134. 6.144. above.
WT/DS435/AB/R • WT/DS441/AB/R

contributed to the reduction in wholesale cigarette sales, and therefore cigarette consumption ."782
We therefore conclude that the Panel's error vitiates this factual finding.
6.263. Regarding multicollinearity and non -stationarity, we note that the Panel partially relied on
concerns related to non -stationarity and multicollinearity in step 3 of both its smoking prevalence
and cigarette consumption analyses, in order to conclude that Australia's evidence was more reliable
than the complainants' evidence.783 We have already concluded above that the Panel's factual finding
in step 3 of its cigarette consumption analysis is vitiated by the Panel's failure to address the
Dominican Republic's assertion that Australia's consumption evidence indicated an incorrect impact
of tobacco costliness. We therefore do not consider it necessary to further assess the implications
for the Panel 's consumption analysis of the Panel's errors with respect to non -stationarity and
multicollinearity.
6.264. Turning to the Panel's smoking prevalence analysis, we recall that the Panel's reasons for
favouring Australia's evidence were that: (i) Australia's expert, Dr Chipty, addressed "a number of
concerns" that the Panel had raised while assessing the complainants' evidence; and (ii) Dr Chipty's
results were robust in a number of alternative specifications. 784 We note that the Panel's only
references to multicollinearity and non -stationarity were in concluding that dummy variables were
preferable to price or tax level variables, to account for tobacco costliness. Specifically, the Panel
noted that "Dr Chipty's model specification … includes the excise tax increases dummy variables and
thus avoids the problems of multicollinearity an d endogeneity associated with the inclusion of the
price variable (in combination with a quadratic trend variable)". 785 The Panel also highlighted that,
"[i]n addition, the use of the tax dummies avoids the issue of non -stationarity of the price or tax
level variables."786
6.265. We recall that we have found no errors in the Panel's references to endogeneity in concluding
that dummy variables were preferable to a price variable. 787 Since the Panel relied on
multicollinearity (at least in its smoking prevalence analysis) only in comparing dummy variables to
price variables, and since the Panel's preference for dummy variables over price variables stands on
the basis of endogeneity al one, it follows that vitiating the Panel's reliance on multicollinearity has
no impact on the Panel's conclusion that Australia's smoking prevalence evidence was more reliable
than the complainants' evidence.
6.266. By contrast, we note that the Panel's only rea son (in its smoking prevalence analysis) to
prefer dummy variables to tax level variables was on the basis of non-stationarity.788 Consequently,
vitiating the Panel's reliance on non -stationarity does indeed suggest that an aspect of the Panel's
reasoning falls away, in that there is no basis for the Panel's preference for dummy variables over
tax levels. In our view, however, this is not sufficient to call into question the Panel's determination
that Australia's evidence was more credible than the complainants' evidence. We highlight that the
Panel also considered it relevant that Dr Chipty addressed "the issue of overfitting associated with a
too flexible trend" and, moreover, the Panel highlighted that Dr Chipty's results were robust to
alternative specifications, including the use of an excise tax level variable.789 It thus follows, in our
view, that vitiating the Panel's reliance on non -stationarity and multicollinearity has no impact on
the Panel's conclusion that "there is econometric evidence suggesting t hat [the TPP measures]
contributed to the reduction in overall smoking prevalence in Australia."790
6.267. We have concluded above that the Panel's errors vitiate its factual finding in step 3 of its
cigarette consumption analysis in Appendix D that "there is some econometric evidence suggesting
that the TPP measures … contributed to the reduction in wholesale cigarette sales, and therefore
cigarette consumption ."791 We assess in section 6.1.2.3.4 below the question of whether this

782 Panel Report, Appendix D, para. 137.c.
784 Panel Report, Appendix C, paras. 120-121.
787 See paras. 6.156. 6.167. above.
789 Panel Report, Appendix C, paras. 120-121.
790 Panel Report, Appendix C, para. 122. (fn omitted)
791 Panel Report, Appendix D, para. 137.c.
WT/DS435/AB/R • WT/DS441/AB/R

implicates the Panel's overall conclusion on the degree of contribution of the TPP measures, and the
Panel's overall conclusion in its application of Article 2.2 of the TBT Agreement.
6.1.2.3.3.2 Groups of claims based on cross-cutting themes
6.268. As mentioned in paragraph 6.51. above, following a review of the participants' submissions,
we do not consider it necessary to address, separately, each discrete claim raised by the appellants
under Article 11 of the DSU. Rather, we address, jointly, clusters of claims based on the cross-cutting
themes that underpin these claims. In addressing these claims, we recognize that there may be
some overlap in certain of these themes. Likewise, certain of these themes have also been
highlighted in sections 6.1.2.3.2 and 6.1.2.3.3.1 above.
Representation of the Panel findings
6.269. We observe that a number of the appellants' allegations are based on an apparent
misapprehension of the Panel's findings.792 For example, Honduras argues that the Panel materially
misrepresented and distort ed Honduras' evidence by implying that "the econometric evidence
submitted by … Honduras … suggests that the TPP measures have increased pack concealment
among adult cigarette smokers" 793, without including a footnote indicating which econometric
evidence by Honduras this assertion could refer to. 794 By providing an incomplete quotation,
Honduras mischaracterizes the Panel's statement and implies that the Panel attributed the quoted
"suggestion" to Honduras' evidence. 795 We note, instead, that the Panel statement in question
followed the Panel's extensi ve engagement with the evidence submitted by the parties. At the
beginning of its analysis section, the Panel offered the following summary of its finding before
identifying, in subsequent paragraphs796, the bases in the parties' evidence for its finding:
A careful assessment of Durkin et al. 2015, Yong et al. 2015 and Zacher et al. 2014,
2015 and the econometric evidence submitted by the Dominican Republic, Honduras
and Indonesia suggests that the TPP measures have increased pack concealment
among adult ciga rette smokers. However, empirical evidence of the impact of the
TPP measures on stubbing out cigarettes before finishing them due to thoughts about
the harms caused by smoking and stopping smoking among adult cigarette smokers is
much more limited and mixed.797
6.270. As a second example, we note the Dominican Republic's argument that "the Panel accepted
the robustness of Australia's econometric models, without indicating whether, and if so, how it had
tested for multicollinearity." 798 However, in Appendix C to its Re port, the Panel stated, inter alia,
that:
Dr Chipty's model specification also includes the excise tax increases dummy variables
and thus avoids the problems of multicollinearity and endogeneity associated with the

792 With respect to the Panel's analysis of proximal and distal outcomes, Honduras' appellant's
submission, Annex, paras. 1082-1084; Dominican Republic's appellant's submission, paras. 887-888 and 923.
With respect to the Panel's analysis of smoking behaviour, Honduras' appellant's submission, paras. 877-880,
883-885, 931, 933, 974, and 1083; Dominican Republic's appellant's submission, paras. 407-408. We note
that Australia also takes issue with the appellants' representation of the Panel's findings. For example, with
respect to the Dominican Republic's claims challenging the Panel's analysis of the evidence concerning Quitline
calls in Appendix B to its Report, Australia's appellee's submission, paras. 588-596 (referring to
Dominican Republic's appellant's submission, paras. 926-934). With respect to Honduras' claims concerning the
Panel's treatment of Professor Klick's evidence, Australia's appellee's submission, paras. 858-859 and Annex 2
(referring to Honduras' appellant's submission, section VIII.2.2).
793 Honduras' appellant's submission, Annex, p. 322, para. 1084 (quoting Panel Report, Appendix B,
para. 72).
794 Honduras' appellant's submission, Annex, p. 322, para. 1084 (referring to J. Klick, The Effect of
Australia's Plain Packaging Law on Smoking: Evidence from Survey and Market Data (26 July 2014) (Panel
Exhibit UKR-5), pp. 54-56).
795 Honduras' appellant's submission, Annex, p. 322, para. 1084 (referring to Panel Report, Appendix B,
para. 72).
796 Panel Report, Appendix B, paras. 73-77.
798 Dominican Republic's appellant's submission, para. 408 (referring to Panel Report, Appendix C,
para. 120).
WT/DS435/AB/R • WT/DS441/AB/R

inclusion of the price variable (in combi nation with a quadratic trend variable). In
addition, the use of the tax dummies avoids the issue of non-stationarity of the price or
tax level variables.799
6.271. Thus, it is incorrect for the Dominican Republic to suggest that the Panel simply accepted
the robustness of Australia's econometric models. Nor is it correct for the Dominican Republic to
assert that the Panel failed to indicate whether it had tested Dr Chipty's models for multicollinearity.
6.272. As a third example, we note that the appellants make several a llegations challenging the
Panel's assessment of the evidence on smoking behaviour, on the grounds that the Panel erroneously
rejected the complainants' econometric models on the basis of an individual robustness criterion
(endogeneity, multicollinearity, non-stationarity, or reweighting). 800 These allegations ignore the
fact that the Panel did not accept or reject the models submitted by the parties. Rather, the Panel
assessed the relative merits of each model, comparing the flaws in Dr Chipty's models to the flaws
in the complainants' models, and finding the former to be more credible than the latter. The Panel
did not apply an absolute standard of "robustness".801
6.273. In light of the foregoing, we reject the appellants' allegations that are based on a
misapprehension of the Panel's findings, including the three examples cited above.802
6.274. Still under the broad rubric of allegations that incorrectly represent the Panel's findings, we
take note of Honduras' contention that the Panel was not "even -handed" in its assessmen t of the
facts of the case because, unlike in its evaluation of the TPP measures, the Panel did not combine
the effect of the alternative measure with the effect of the unchallenged large GHWs when it
examined the alternative measures proposed by the compl ainants.803 In particular, we highlight
Honduras' assertion that "the Panel clearly did not combine the effect of the alternative measure
with the effect of the unchallenged large GHW."804
6.275. Honduras' assertion appears to suggest that the separate effect of the enlarged GHWs, which
came into force in Australia at the same time as the TPP measures, was not only perceptible but was
also identified on the Panel record. However, this suggestion is inaccurate. In response to
questioning at the second hearing, the par ticipants all agreed that there was no evidence on the
Panel record showing the separate effects of the TPP measures and the enlarged GHWs. Indeed, the
Panel Report expressly states that the post-implementation evidence submitted by the parties to the
Panel, especially the empirical econometric evidence relating to smoking prevalence (Appendix C)805,
consumption (Appendix D)806, and down -trading (Appendix E)807, did not distinguish between the
impact of the TPP measures and the impact of the enlarged GHWs. Consequently, absent such
evidence by the parties, the Panel could not have been expected to disentangle the impact of the
TPP measures from that of the enlarged GHWs.
The allocation of the burden of proof under Article 2.2 of the TBT Agreement
6.276. We recall t hat "the party who asserts a fact, whether the claimant or the respondent, is
responsible for providing proof thereof." 808 Significantly, the burden of proving that a Member's

800 Honduras' appellant's submission, paras. 887, 939, 959, 970, and 975-976; Dominican Republic's
appellant's submission, paras. 548-551 and 555-559.
801 See, for example, Panel Report, Appendix C, paras. 104, 108, 110, and 120-122.
802 With respect to the Panel's analysis of proximal and distal outcomes in Appendices A and B to its
Report, Honduras' appellant's submission, para. 757, and Annex, paras. 1082-1084; Dominican Republic's
appellant's submission, paras. 887-888 and 923. With respect to the Panel's analysis of smoking behaviour in
Appendices C and D to its Report, Honduras' appellant's submission, paras. 877-880, 883-885, 931, 933, 974,
1026-1035, and 1083; Dominican Republic's appellant's submission, paras. 407-408 and 926-934.
803 Honduras' appellant's submission, paras. 1021-1025.
805 Panel Report, Appendix C, paras. 1-2.
806 Panel Report, Appendix D, paras. 1-3.
807 Panel Report, Appendix E, paras. 1-2.
808 Appellate Body Report, US – Wool Shirts and Blouses, p. 14, DSR 1997:I, p. 335. See also
Appellate Body Reports, US – Carbon Steel (India), para. 446; US – Gambling, paras. 138-140; US – Carbon
WT/DS435/AB/R • WT/DS441/AB/R

measure is inconsistent with specific provisions of covered agreements rests on the complainant.809
This is in line with the Appellate Body's explanation that "under the usual allocation of the burden of
proof, a responding Member's measure will be treated as WTO -consistent, until sufficient evidence
is presented to prove the contrary."810
6.277. Turning back to the case before us, we recall that the burden of demonstrating that the
TPP measures are inconsistent with Article 2.2 of the TBT Agreement rested on the complainants.811
Specifically, as regards the main set of the complainants' arguments vis-à-vis the contribution of the
TPP measures to Australia's objective, Honduras argued before the Panel that the TPP measures
make no contribution to Australia's objective, nor are they apt to do so. 812 The Dominican Republic
contended that well-accepted axioms of social and medical science confirm that the TPP measures
will not be effective in achieving Australia's stated goals. 813 The Dominican Republic also argued
that, at this stage, evidence of actual operation is far more valuable than mere expectations o f the
effects of the TPP measures.814 Australia argued that the TPP measures improve public health by
impacting the three mechanisms identified in the TPP Act, namely: (i) reducing the attractiveness of
tobacco packaging; (ii) reducing positive perceptions of taste; and (iii) reducing positive perceptions
of smokers. 815 Australia argued further that, with regard to the nature of the objective of the
TPP measures, their characteristics as revealed by their design and structure, and the nature,
quantity, and quality of evidence available, the Panel should determine the measure's degree of
contribution in qualitative terms.816
6.278. The fact that the complainants bore the burden of proving that the TPP measures are
inconsistent with Article 2.2 of the TBT Agreement implies, inter alia, that, in order to prevail on
their main contention of no contribution, the complainants were required to adduce sufficient
evidence to persuade the Panel that the TPP measures are not apt to, and do not, make any
contribution to Australia's l egitimate objective. Given that the burden of proof rests on the
complainant, where a panel finds that a complainant's proposition that the challenged measures
makes no contribution is contradicted by evidence (e.g. because the respondent has presented
credible evidence suggesting that the measure does make some contribution), then the panel is
required to reject the complainant's proposition of no contribution. This was the determination of
the Panel in these proceedings when it found that:
[T]he complainants have not demonstrated that the TPP measures are not apt to make
a contribution to Australia's objective of improving public health by reducing the use of,
and exposure to, tobacco products. Rather, we find that the evidence before us, taken
in its tota lity, supports the view that the TPP measures, in combination with other
tobacco-control measures maintained by Australia (including the enlarged GHWs
introduced simultaneously with TPP), are apt to, and do in fact, contribute to Australia's
objective of reducing the use of, and exposure to, tobacco products.817

809 As the Appellate Body stated in US – Gambling:
The complaining party bears the burden of proving an inconsistency with specific provisions of
the covered agreements. …
Where the complaining party has established its prima facie case, it is then for the responding
party to rebut it. …
A prima facie case must be based on "evidence and legal argument" put forward by the
complaining party in relation to each of the elements of the claim. A complaining party may not
simply submit evidence and expect the panel to divine from it a claim of WTO-inconsistency. Nor
may a complaining party simply allege facts without relating them to its legal arguments.
(Appellate Body Report, US – Gambling, paras. 138-140. (emphasis original; fns omitted))
810 Appellate Body Report, Canada – Dairy (Article 21.5 – New Zealand and US II), para. 66. (emphasis
original)
811 Appellate Body Report, US – Tuna II (Mexico), para. 323. (fn omitted) See also Appellate Body
Reports, US – COOL (Article 21.5 – Canada and Mexico), para. 5.208.
812 Panel Report, para. 7.426.
813 Panel Report, para. 7.437.
814 Panel Report, para. 7.438.
815 Panel Report, para. 7.451.
816 Panel Report, para. 7.455.
817 Panel Report, para. 7.1025.
WT/DS435/AB/R • WT/DS441/AB/R

6.279. However, as Australia points out818, certain of the appellants' arguments challenging discrete
aspects of the Panel's intermediate findings and its overall conclusion appear to be premised on the
Appellate Body accepting a reversal of the burden of proof under Article 2.2 of the TBT Agreement.819
Such a reversal would imply that the primary burden of proof was on Australia to establish that the
TPP measures are apt to, and do, make a contribution to Australia's objective, rather than the onus
of establishing the lack of contribution of the TPP measures to Australia's objective being on the
complainants.
6.280. For example, Honduras submits that, even "taking them as a given", the Panel's "limited"
findings on proximal and distal outcomes, addressed in Appendices A and B to the Panel Report, are
insufficient to support the Panel's overall conclusion that the TPP measures contribute to Australia's
objective.820 According to Honduras, there is therefore no basis for the Panel to have concluded that
the TPP measures "are apt to and actually do contribute to the 'ultimate target' of reducing use of
tobacco products".821 In a similar vein, the Dominican Republic notes the Panel's explanation that
the TPP measures were expected to work through a "causal chain"
(proximal outcomes → distal outcomes → smoking behaviours), and that it was insufficient to look
exclusively at the impact of the TPP measures on proximal outcomes. 822 The Dominican Republic
contends that the Panel failed to assess the post -implementation evidence on the impact of the
TPP measures on proximal and distal outcomes in light of the expected "causal chain".823
6.281. We recall that the Panel's analysis was aimed primarily at establishing "'to what degree, or
if at all' the TPP measures contribute to Australia's objective of improving public health by reducing
the use of, and exposure to, tobacco products" .824 In this regard, the Panel acknowledged that the
"fulfilment of this objective through the TPP measures is predicated on their ability to influence
smoking behaviours, such as initiation, cessation, and relapse." 825 For this reason, the Panel
considered that the impact of the measures on such behaviours is , "a priori, directly relevant to an
assessment of the degree of contribution of the measures to this objective".826 Moreover, the Panel
made it clear t hat they did not "exclude" that "evidence relating to 'proximal' outcomes reflecting
the three mechanism[s] of the TPP Act"827, in combination with other relevant evidence before the
Panel, could inform the Panel's assessment of the degree of contribution of the measures to
Australia's objective.828 However, the Panel also made it clear that such evidence was only relevant
"to the extent that it would inform the impact of the measures on the smoking behaviours that are
the ultimate target of the measures".829
6.282. Thus, while the "causal chain" model was a useful prism through which the Panel examined
the impact of the TPP measures insofar as post-implementation evidence of the various mechanisms
in the chain was available to the Panel, we understand the focus of the Panel's analysis to have been
on the impact of the TPP measures on smoking behaviours. As such, the possible absence of
convincing evidence with respect to a certain step in the chain would not, by itself, diminish the
probative value of the other evidence , including in particular the evidence of the impact of the
TPP measures on smoking behaviours. Moreover, we view the Panel's evaluation of the evidence
through the prism of the causal chain as an analytical tool that the Panel employed. We do not
understand the Panel to have considered the "causal chain" to be a rigid model or the only way by
which it could have assessed the contribution of the TPP measures to Australia's objective. We find
support for this view in the Panel's explanation that, while it did not "exclude" that "evidence relating
to 'proximal' outcomes reflecting the three mechanism [s] of the TPP Act"830, in combination with

818 Australia's appellee's submission, paras. 478-492.
819 For example, see Honduras' appellant's submission, section VIII.2.1.1.2; Dominican Republic's
appellant's submission, paras. 777, 872-875, 882-885, and 894-895.
820 Honduras' appellant's submission, paras. 746-747.
822 Dominican Republic's appellant's submission, para. 883 (referring to Panel Report, paras. 7.488,
7.491, 7.519, 7.580, 7.610, 7.648, 7.684, and 7.1030).
823 Dominican Republic's appellant's submission, para. 885.
824 Panel Report, para. 7.483.
826 Panel Report, para. 7.495.
827 Panel Report, para. 7.498.
828 Panel Report, para. 7.498.
829 Panel Report, para. 7.498.
830 Panel Report, para. 7.498.
WT/DS435/AB/R • WT/DS441/AB/R

other relevant evidence before the Panel, could inform the Panel's assessment of the degree of
contribution of the measur es to Australia's objective 831, such evidence was only relevant "to the
extent that it would inform the impact of the measures on the smoking behaviours that are the
ultimate target of the measures".832
6.283. As noted above, it was the complainants, not Australia or the Panel, that bore the burden of
proving that the TPP measures are not apt to, and do not, make a contribution to Australia's objective
of improving public health by reducing the use of, and exposure to, tobacco products. This allocation
of the burden of proof informs the question of whether the Panel's conclusion that "the complainants
have not demonstrated that the TPP measures are not apt to make a contribution to Australia's
objective"833 is supported by the Panel's intermediate findings. As we see it, the Panel's function was
to assess objectively whether the complainants' proposition of the absence of any contribution was
supported or undermined by the evidence before it. Contrary to what the appellants' arguments
suggest, in answering the question be fore it, the Panel was not itself supposed to demonstrate,
throughout its intermediate findings, that the TPP measures made a precise or quantifiable degree
of positive contribution to Australia's objective.
6.284. Thus, to the extent that these claims by the appellants are premised on the reversal of the
allocation of the burden of proof, we reject this premise. Consequently, we find that these claims
lack merit and warrant no further scrutiny.834
The Panel's discretion as the trier of facts
6.285. Australia alleges that "this dispute is overwhelmingly an attack on the Panel's findings of fact
and, in particular, the findings of the Panel on the post -implementation evidence." 835 Australia
contends that, having failed to persuade the Panel that the TPP measures are not apt to contribute
to Australia's legitimate public health objective, "the appellants have used their right to appellate
review under Article 17.6 of the DSU to try to discredit the manner in which the Panel evaluated
nearly every piece of contested evidence, especially the available quantitative evidence of
contribution in the limited period following the implementation of the TPP measures."836 For
Australia, the appellants' attacks on the objectivity of the Panel in evaluating this evidence are
completely unfounded and, more broadly, "implicate grave systemic concerns about the use of
appellate review to re-litigate a panel's findings of fact".837 Australia underlines its concern with the
following explanation:
[T]he appellants have simply resumed the li tigation tactics they pursued before the
Panel. During the panel proceedings, the complainants inundated Australia and the
Panel with over 3,500 pages of submissions, 1,000 exhibits and more than 50 expert
reports authored by some 25 separate experts, appa rently with the intention of
overwhelming both Australia and the Panel with the sheer volume of evidence and
expert testimony. Having failed completely in that exercise before the Panel, the
appellants have evidently decided to nonetheless rely on that sam e strategy in their
appeals. Their apparent goal is to convince the Appellate Body that the magnitude of
their challenges to the panel's fact-finding must mean that at least some of their claims
have merit.838
6.286. We recall that, in carrying out its duty to make an objective assessment of the facts of the
case, a panel is required to "consider all the evidence presented to it, assess its credibility, determine
its weight, and ensure that [the panel's] factual findings have a proper basis in that evidence". 839

831 Panel Report, para. 7.498.
832 Panel Report, para. 7.498.
833 Panel Report, para. 7.1025.
834 Honduras' appellant's submission, section VIII.2.1.1.2; Dominican Republic's appellant's submission,
paras. 777, 872-875, 882-885, and 894-895.
835 Australia's appellee's submission, para. 20.
836 Australia's appellee's submission, para. 20. (emphasis added)
837 Australia's appellee's submission, para. 20.
838 Australia's appellee's submission, para. 425.
839 Appellate Body Reports, China – Rare Earths, para. 5.178 (quoting Appellate Body Report,
Brazil – Retreaded Tyres, para. 185; referring to Appellate Body Reports, EC – Hormones, paras. 132-133;
Australia – Salmon, para. 266; EC – Asbestos, para. 161; EC – Bed Linen (Article 21.5 – India), paras. 170,
WT/DS435/AB/R • WT/DS441/AB/R

Within these parameters, "it is generally within the discretion of the [p]anel to decide which evidence
it chooses to utilize in making findings." 840 Moreover, when assessing the probative value of the
evidence, a panel is not required to "accord to factual evidence … the same meaning and weight as
do the parties".841 As such, a challenge under Article 11 of the DSU "cannot be made out simply by
asserting that a panel did not agree with arguments or evidence". 842 Crucially, the Appellate Body
has cautioned that it: (i) will not "interfere lightly" with the panel's fact-finding authority843; (ii) will
not "second -guess the [p]anel in appreciating either the evidentiary value of … studies or the
consequences, if any, of alleged defects in [the evidence]" 844; and (iii) will not reach "a finding of
inconsistency under Article 11 simply on the conclusion that [it] might have reached a different
factual finding from the one the panel reached". 845 The Appellate Body has also considered it
unacceptable for an appellant to simply reca st factual arguments that it made before the panel in
the guise of an Article 11 claim.846 Instead, an appellant must identify specific errors regarding the
objectivity of the panel's assessment847, and "it is incumbent on a participant raising a claim under
Article 11 on appeal to explain why the alleged error meets the standard of review under that
provision."848
6.287. Turning to the case before us, we take note of several instances with respect to which it
appears that the appellants' arguments are not focused on the objectivity of the Panel's assessment
of the facts of the case. Instead, the appellants' arguments seem to challenge the accuracy or merit
of the Panel's factual findings following its weighing of the parties' evidence.849
6.288. For example, the appellants alleg e that the Panel merely accepted "Australia's argument
that the dataset was ill suited to provide information on distal outcomes" 850, and that the Panel
"failed to engage with the Dominican Republic's evidence showing that the datasets are not less
suited to measuring the impact on distal outcomes". 851 Contrary to the appellants' assertions, we
note that in its evaluation of the post-implementation evidence on quitting-related and other distal
outcomes in Appendix B to its Report, the Panel engaged repeatedly w ith the parties' respective
views of the limitations or otherwise of the NTPPTS dataset. For instance, in its evaluation of the
evidence concerning quitting-related cognitions, the Panel took account of the concerns about the
"particular features of the NT PPTS data" raised by Australia's expert, Professor Chaloupka, as well
as the rebuttal to Professor Chaloupka that was proffered by the complainants' (Dominican Republic
and Indonesia) experts, Ajzen et al.852 The Panel also took note of the contention of Ajzen et al. that
Professor Chaloupka's assertion that the NTPPTS data underestimated changes in some measures

Japan – Agricultural Products II, paras. 141-142; Korea – Alcoholic Beverages, paras. 161-162; Korea – Dairy,
841 Appellate Body Report, EC – Fasteners (China) (Article 21.5 – China), para. 5.61.
842 Appellate Body Reports, China – Rare Earths, para. 5.227; (referring to Appellate Body Report,
Chile – Price Band System (Article 21.5 – Argentina), para. 238).
843 Appellate Body Report, EC and certain member States – Large Civil Aircraft, para. 881.
844 Appellate Body Report, Japan – Apples, para. 222 (quoting Appellate Body Reports, EC – Asbestos,
845 Appellate Body Report, EC and certain member States – Large Civil Aircraft, para. 881. (fn omitted)
846 Appellate Body Reports, China – Rare Earths, para. 5.178; EC – Fasteners (China), para. 442;
US – Steel Safeguards, para. 498; Chile – Price Band System (Article 21.5 – Argentina), para. 238.
847 Appellate Body Reports, China – Rare Earths, para. 5.178; EC – Fasteners (China), para. 442
(referring to Appellate Body Reports, US – Steel Safeguards, para. 498; Chile – Price Band System
(Article 21.5 – Argentina), para. 238).
848 Appellate Body Reports, China – Rare Earths, para. 5.178 (quoting Appellate Body Report,
EC – Fasteners (China), para. 442). (emphasis original)
849 With respect to proximal and distal outcomes, Honduras' appellant's submission, paras. 781-783;
Dominican Republic's appellant's submission, paras. 1015-1016. With respect to smoking behaviours,
Honduras' appellant's submission, paras. 908-910, 916-920, 931-933, and 1026-1035; Dominican Republic's
appellant's submission, paras. 555-559. With respect to the Panel's overall conclusions, Honduras' appellant's
submission, paras. 734, 753, and 759-769; Dominican Republic's appellant's submission, paras. 908-915. With
respect to the Panel's discussion of GHWs, Honduras' appellant's submission, para. 1021. With respect to the
Panel's assessment of the cigar-specific evidence, Honduras' appellant's submission, paras. 853 and 856-858;
Dominican Republic's appellant's submission, paras. 213, 797, and 1073-1074.
851 Dominican Republic's appellant's submission, para. 1016. (emphasis original)
852 Panel Report, Appendix B, paras. 15-18.
WT/DS435/AB/R • WT/DS441/AB/R

of intention because recent quitters who gave up smoking had not been asked was unfounded.
According to Ajzen et al., the TPP measures did not increase quitting behaviours in the short term.853
In its analysis, the Panel highlighted this point of contention about the NTPPTS data, and expressed
the following view:
Ajzen et al. further report a small and statistically significant decrease in the proportion
of adult smokers reporting their interest in quitting and intention to quit. We note that
Ajzen et al. do not offer an explanation as to why the TPP measures would have
decreased smokers' interest in quitting and intention to quit. We note that it is
conceivable that these findings could partly result from the fact that, as observed by
Australia, questions on quitting intention were not asked of recent quitters, contrary to
Ajzen et al.'s claim that the question was asked to both smokers and recent quitters,
although it is not clear, in the absence of specific evidence relating to the number of
recent quitters, to what extent this circumstance may account for the results.854
6.289. The Panel also took account of the parties' concerns about reliance on the NTPPTS data in
the context of the Panel's evaluation of the evidence relating to pack concealment and
micro-indicators of concern. 855 Likewise, the Panel took account of the parties' concerns about
reliance on the NTPPTS data in the context of the Panel's evaluation of the evidence relating to
relating to quit attempts.856
6.290. These paragraphs in Appendix B to the Panel Report undermine the suggestion by the
appellants that the Panel failed to engage with the complainants' evidence concerning the reliability
of the NTPPTS data in the context of quitting -related and other distal outcomes. Rather, it appears
that the Panel was not persuaded by the complainants' views in this respect.
6.291. As the Appellate Body has found, a challenge under Article 11 of the DSU "cannot be made
out simply by asserting that a panel did not agree with arguments or evidence". 857 Thus, the mere
fact that the Panel did not agree with the arguments put forward by the complainant rega rding the
reliability of the NTPPTS data with respect to quitting -related and other distal outcomes is not, by
itself, sufficient to sustain a claim that the Panel failed to "objectively assess the facts of the case"
in accordance with Article 11 of the DSU.
6.292. In a similar vein, Honduras challenges a number of aspects of the Panel's treatment of the
complainants' expert reports in Appendix C. Honduras characterizes the Panel as having " wilfully
ignored" the complainants' evidence and takes issue with the Pane l's reasons for doing that. 858
However, we do not read the Panel as having " wilfully ignored" or "disregarded" the complainants'
models. Rather, we understand that the Panel assessed the credibility of competing evidence, and
selected one set of evidence (specifically, Australia's evidence) on the basis that it was more credible
than the complainants' evidence.
6.293. For these reasons, we reject the attempts by the appellants to resubmit their factual
arguments under the guise of challenging the objectivity of the Panel's assessment of the facts of
the case. As noted in paragraph 6.50. above, if the Appellate Body were to entertain such factual
arguments, this would undermine the Panel in its role as the trier of facts and the adjudicator of
first instance in WTO dispute settlement.859

854 Panel Report, Appendix B, para. 39. (emphasis original; fn omitted)
855 Panel Report, Appendix B, paras. 50-51 and 73.
856 Panel Report, Appendix B, paras. 84-85 and 101.
857 Appellate Body Reports, China – Rare Earths, para. 5.227 (referring to Appellate Body Report,
Chile – Price Band System (Article 21.5 – Argentina), para. 238).
858 Honduras' appellant's submission, paras. 931-933 (referring to Panel Report, Appendix C, paras. 102
and 105).
859 Appellate Body Report, EC and certain member States – Large Civil Aircraft, para. 881.
WT/DS435/AB/R • WT/DS441/AB/R

Honduras' allegations that the Panel disregarded, significantly misrepresented, or
distorted Honduras' evidence
6.294. Honduras submits th at "on many occasions" the Panel disregarded, significantly
misrepresented, and distorted the evidence as presented by Honduras in the form of expert reports
by Professor Klick related to the various aspects of the degree of contribution of the TPP measure to
Australia's objective.860 Australia does not address each "occasion" identified by Honduras. Instead,
Australia contends that, first, as a factual matter, the Panel did in fact examine the arguments
presented by Professor Klick that Honduras claims it "d isregarded".861 Second, Australia reiterates
that the types of grievances alleged by Honduras with respect to the Panel's treatment of Professor
Klick's evidence do not constitute errors under Article 11 of the DSU. 862 For Australia, the Panel's
treatment of P rofessor Klick's evidence lies squarely within the bounds of its proper discretionary
authority. Australia considers that Honduras' allegations that the Panel "materially misrepresented"
and "distorted" Professor Klick's evidence, and did not "objectively assess" Professor Klick's critiques
of Australia's evidence863, do nothing more than challenge the weight that the Panel accorded to his
evidence.864 Likewise, Australia contends that Honduras' numerous allegations that the Panel
"disregarded" Professor Klick's rebuttals do nothing more than challenge the particular evidence that
the Panel chose to rely on and cite in its final report. 865 For Australia, since such allegations fail to
meet the requirements of a claim under Article 11, they must be rejected.866
6.295. In our view, a significant number of Honduras' allegations that the Panel disregarded,
significantly misrepresented, or distorted Honduras' evidence 867 are yet another attempt by
Honduras to relitigate, before us, its factual case before the Panel under the guise of a claim under
Article 11 of the DSU. As discussed above, in making an objective assessment of the facts of the
case, a panel is required to "consider all the evidence presented to it, assess its credibility, determine
its weight, and ensure that [the panel's] factual findings have a proper basis in that evidence".868 In
this regard, a panel "has the duty to examine and consider all the evidence b efore it, not just the
evidence submitted by one or the other party, and to evaluate the relevance and probative force of
each piece thereof".869 Within these parameters, "it is generally within the discretion of the [p]anel
to decide which evidence it chooses to utilize in making findings."870 Moreover, an allegation that a
panel has failed to conduct the "objective assessment of the matter before it" required by Article 11
is "a very serious allegation".871 In this vein, the Appellate Body has considered that allegations that
there was "'disregard' and 'distortion' and 'misrepresentation' of the evidence" by a panel "imply not
simply an error of judgment in the appreciation of evidence but rather an egregious error that calls
into question the good faith of a pa nel".872 Bearing these considerations in mind, we highlight
two examples of allegations that the Panel disregarded, distorted, or misrepresented evidence.

860 Honduras' appellant's submission, Annex, p. 315, para. 1082.
861 Australia's appellee's submission, Annex 2, para. 941.
862 Australia's appellee's submission, Annex 2, para. 943.
863 Australia's appellee's submission, Annex 2, para. 944 and fn 1214 thereto (quoting Honduras'
appellant's submission, Annex, pp. 318-319, 321, 324-325, 328, and 340).
864 Australia's appellee's submission, Annex 2, para. 944 (referring to Honduras' appellant's submission,
Annex, pp. 319-320 and 324).
865 Australia's appellee's submission, Annex 2, para. 944 (referring to Honduras' appellant's submission,
Annex, p. 318, 337, and 330).
866 Australia's appellee's submission, Annex 2, para. 944.
867 Honduras' appellant's submission, paras. 879-890; ibid., Annex, paras. 1082-1084.
868 Appellate Body Reports, China – Rare Earths, para. 5.178 (quoting Appellate Body Report,
Brazil – Retreaded Tyres, para. 185; referring to Appellate Body Reports, EC – Hormones, paras. 132-133;
Australia – Salmon, para. 266; EC – Asbestos, para. 161; EC – Bed Linen (Article 21.5 – India), paras. 170,
Japan – Agricultural Products II, paras. 141-142; Korea – Alcoholic Beverages, paras. 161-162; Korea – Dairy,
869 Appellate Body Report, Korea – Dairy, para. 137.
870 Appellate Body Reports, China – Rare Earths, para. 5.178 (quoting Appellate Body Report,
EC – Hormones, para. 135).
871 Appellate Body Reports, China – Rare Earths, para. 5.227 (quoting Appellate Body Report,
EC – Poultry, para. 133).
872 Appellate Body Report, EC – Hormones, para. 133. (fn omitted)
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6.296. First, we take note of Honduras' assertion that the Panel failed to reflect and address relevant
expert evidence prepared by Professor Klick rebutting arguments by Australia's expert, Professor
Chaloupka, in relation to the NTPPTS data. 873 In Honduras' view, Professor Klick addressed and
rebutted the allegations by Professor Chaloupka that his analyses and re liance on the NTPPTS data
were flawed, demonstrating that the survey data from the NTPPTS regarding smoker perceptions
and intentions did not indicate a systematic improvement following the introduction of the
TPP measures.874 Honduras maintains that "nowhere in the Panel Report is there an indication that
the Panel objectively assessed this material evidence."875
6.297. Before the Panel, Honduras relied on Professor Klick's Third Supplemental Rebuttal Report
in support of its arguments relating to the post -implementation evidence on smoking behaviours,
not proximal outcomes. This is why the Panel referred extensively to this exhibit in its evaluation of
the post -implementation evidence on smoking behaviours 876, and not in relation to proximal
outcomes. We recall that th e mere fact that a panel has not explicitly referred to each and every
piece of evidence in its reasoning is insufficient to establish a claim under Article 11 of the DSU .
Rather, an appellant "must explain why such evidence is so material to its case that the panel's
failure to address it explicitly has a bearing on the objectivity of its factual assessment". 877 In this
regard we note that, in connection with proximal outcomes, the Panel did in fact take account of
Professor Klick's and Professor Chaloupka's divergent opinions regarding the NTPPTS data. 878
Following its review of the available evidence, the Panel "agree[d] with Professor Chaloupka that the
impact of the TPP measures is likely to be smaller for the less proximal outcomes, when looking at
the imp act in an overall survey sample composed of smokers and recent quitters". 879 As the
Appellate Body has stated, a challenge under Article 11 of the DSU "cannot be made out simply by
asserting that a panel did not agree with arguments or evidence".880
6.298. Second, we highlight Honduras' challenge to the Panel's conclusion, in Appendix C to its
Report, that "there is some econometric evidence suggesting that the TPP measures … contributed
to the reduction in overall smoking prevalence." 881 Honduras contends that the Pane l's conclusion
was "based exclusively on one dataset and one expert's re-assessment of the analysis presented by
the complainants of that dataset". 882 Honduras elaborates that, even though the Panel considered
the RMSS dataset to be the "most suitable", that does not explain why the Panel's conclusions were
based exclusively on that dataset, and did not take into account the other datasets (such as the
official prevalence data of New South Wales, the most populous state in Australia). 883 Australia
argues that the Panel "provided a detailed explanation for its RMSS finding but nevertheless
examined other models that were not based on the RMSS data". 884 Australia also considers more
generally that the Panel examined all the evidence and found the complainants' evidence
unpersuasive.885

873 Honduras' appellant's submission, Annex, p. 316, para. 1083 and fn 676 thereto (referring to
Panel Report, Appendix A, paras. 34-41).
874 Honduras' appellant's submission, Annex, pp. 316-317, para. 1083 (referring to Klick Third
Supplemental Rebuttal Report (Panel Exhibit HND-166), section III).
875 Honduras' appellant's submission, Annex, p. 317, para. 1083.
876 See, for example, Panel Report, Appendix C, paras. 69-70, 101, and 112; ibid., Appendix D,
paras. 20, 56-59, and 71.
877 Appellate Body Report, EC and certain member States – Large Civil Aircraft (Article 21.5 – US),
para. 5.147. (fn omitted) See also Appellate Body Reports, Australia – Apples, paras. 275-276; US – COOL,
878 Panel Report, Appendix A, paras. 39-41.
879 Panel Report, Appendix A, para. 68 (referring to F. Chaloupka, Rebuttal Report on Selected Issues
Raised in Ongoing Challenges to Australia's Tobacco Plain Packaging Measure (26 October 2015) (Panel
Exhibit AUS-582), para. 9).
880 Appellate Body Reports, China – Rare Earths, para. 5.227 (referring to Appellate Body Report,
Chile – Price Band System (Article 21.5 – Argentina), para. 238).
881 Panel Report, Appendix C, para. 123.c.
884 Australia's appellee's submission, fn 1102 to para. 853 (referring to Panel Report, Appendix C,
paras. 113-116).
885 Australia's appellee's submission, para. 853.
WT/DS435/AB/R • WT/DS441/AB/R

6.299. We observe that the Panel examined the results of Professor Klick's models based on all the
relevant datasets submitted to it. 886 The Panel did not ignore any models that were not based on
the RMSS data. At the same time, one of the Panel's criticisms (among several others) of Professor
Klick's models based on non-RMSS data was that they were based on non-RMSS data. This, among
other things, led the Panel to question the credibility of those models. We recall that the Panel's
analysis was aimed at assessing the contribution of the TPP measures to Australia's objective.
6.300. We further note that some of the evidence before the Panel indicated that the TPP measures
did indeed contribute to reducing smoking prevalence, while other evidence before the Panel
indicated that the measures made no contribution. Honduras seems to consider that, even though
the Panel considered one set of evide nce to be more credible than the other, unless there was a
reason to completely disregard the other evidence, the less credible evidence should have also been
taken into account.887
6.301. We disagree. Given that the two sets of evidence were directly contradictory (one indicating
that the TPP measures resulted in a reduction in smoking prevalence and the other showing no
contribution), it would appear to be internally incoherent and contradictory for the Panel to have
based its conclusions on both sets of contradictory evidence, notwithstanding that it had determined
that one set of evidence was more credible than the other. Moreover, the fact that a panel considers
one set of evidence to be more credible than a contradictory set of evidence does not imply that it
failed to take account of the less credible evidence. Rather, in emphasizing one set of evidence over
another, the Panel simply exercised its discretion as the trier of fact "to decide which evidence it
chooses to utilize in making findings" .888 Indeed, to the extent that Honduras' arguments suggest
that the Panel erred in attributing little to no relevance to one set of evidence adduced by the parties,
such argument seems to us to be a disguised attempt to challenge the Panel's assessment of the
probative value of the evidence before it.
6.302. As the two examples above illustrate, a significant number of Honduras' allegations that the
Panel disregarded, significantly misrepresented, or distorted Honduras' evidence889 are yet another
attempt by Honduras to relitigate its factual arguments, which were rejected by the Panel, under
the guise of a claim under Article 11.
Connection between Honduras' evidence and arguments before the Panel
6.303. Honduras makes several allegations that the Panel failed to take account of certain evidence
submitted in support of its arguments during the Panel proceedings. However, we observe that with
respect to a number of these allegations, the evidence that Honduras refers to was not plainly
connected, during the Panel proceedings, to the arguments that Honduras refers to on appeal.890
6.304. For example, in relation to the Panel's findings on proximal and distal outcomes, Honduras
claims that the Panel disregarded important findings by Professor Klick concerning the Cancer
Institute New South Wales Trackin g Survey (CITTS), and particularly Professor Klick's statements
that the claims relied on by Australia were the result of "cherry-picking" CITTS results.891 Honduras
considers this to be evidence that was "material" to demonstrating the lack of robustness an d
probative value of Dunlop et al. 2014. Honduras argues that Dunlop et al. 2014 formed the basis for
the Panel's finding that "there is some empirical evidence suggesting that the TPP measures have
reduced the appeal of tobacco products among adult cigare tte smokers, in terms of pack dislike,

886 See Panel Report, Appendix C, paras. 112-118.
887 Honduras' appellant's submission, paras. 877-880.
888 Appellate Body Reports, China – Rare Earths, para. 5.178 (quoting Appellate Body Report,
EC – Hormones, para. 135).
889 Honduras' appellant's submission, paras. 879-890; ibid., Annex, paras. 1082-1084.
890 With respect to proximal and distal outcomes, Honduras' appellant's submission, Annex, para. 1083.
With respect to smoking behaviours, Honduras' appellant's submission, paras. 949 and 1072. See also ibid.,
Annex, paras. 1085-1086.
891 Honduras' appellant's submission, Annex, para. 1083 (referring to Panel Report, Appendix A,
paras. 17-19; J. Klick, Second Supplemental Rebuttal Report – A Review of Australian Survey Data From
New South Wales (28 October 2015) (Klick Second Supplemental Rebuttal Report) (Panel Exhibit HND-165),
paras. 35-61).
WT/DS435/AB/R • WT/DS441/AB/R

product dislike, perceived lower quality, satisfaction and value, lower brands' prestige, and
connection and identification."892
6.305. We note the Panel's explanation that the CITTS is a weekly tracking telephone survey of
smokers and recent quitters (who quit in the past 12 months), involving approximately 50 interviews
conducted per week throughout the year. The CITTS monitors smoking -related thoughts and
behaviours among adult smokers and recent quitters in New South Wales. 893 The Panel observed
that Dunlop et al. 2014 used the CITTS data to investigate the impact of Australia's TPP measures
on two of the specific mechanisms: (i) decreasing the promotional appeal of packaging; and
(ii) increasing the impact of health warnings. 894 The Panel noted that, overall, Dunlop et al. 2014
had concluded that the TPP measures had an "early statistically significant effect" in reducing the
promotional appeal of the packaging among adult smokers. 895 Following its review of the evidence
relating to the appeal of tobacco products, the Panel stated that:
A careful review of Wakefield et al. 2015 and Dunlop et al. 2014 and the econometric
evidence submitted by the Dominican Republic, Honduras and Indones ia leads us to
conclude that there is some empirical evidence suggesting that the TPP measures have
reduced the appeal of tobacco products among adult cigarette smokers, in terms of
pack dislike, product dislike, perceived lower quality, satisfaction and v alue, lower
brands' prestige, and connection and identification.896
6.306. The Panel observed, in a footnote to the above conclusion, that "in his review of
Dunlop et al.'s 2014 analysis, Professor Klick did not discuss and re -analyse the questions of the
CITTS related to appeal." 897 The Panel noted further that "Professor Klick did not mention in his
reports whether the commissioned Roy Morgan Research Survey also asked questions related to the
appeal of tobacco products." 898 Thus, the Panel's engagement with Professor Klick's evidence was
limited to noting that it did not relate to the inquiry in question, i.e. the appeal of tobacco products.
6.307. On appeal, Honduras submits that Professor Klick's conclusions concerning the
"cherry-picking" of specific CITTS results apply to Dunlop et al. 2014 as a whole and should therefore
have been objectively assessed by the Panel. 899 Rather tellingly, in its appellant's submission,
Honduras does not cite any of its arguments before the Panel. Instead, in support of its allegation,
Honduras identifies the last 26 paragraphs of Professor Klick's Second Supplemental Rebuttal
Report.900 This exhibit accompanied Honduras' opening statement at the Panel's second substantive
meeting with the parties. Honduras relied on this exhibit to address the p ost-implementation
evidence of "actual smoking behaviours" and "quitting behaviours". 901 It does not appear that
Honduras relied on this exhibit when making its submissions regarding the post -implementation
evidence relating to the appeal of tobacco products . In response to questioning at the
second hearing, Honduras confirmed that during the Panel proceedings, it did not link its arguments
on the appeal of tobacco products to Professor Klick's Second Supplemental Rebuttal Report.
6.308. The Appellate Body has said that "[a] complaining party may not simply submit evidence
and expect the panel to divine from it a claim of WTO -inconsistency. Nor may a complaining party

892 Honduras' appellant's submission, Annex, para. 1083 (quoting Panel Report, Appendix A, para. 29).
894 Panel Report, Appendix A, para. 18 (referring to S. Dunlop, T. Dobbins, J. Young, D. Perez, and
D. Currow, "Impact of Australia's Introduction of Tobacco Plain Packs on Adult Smokers' Pack-Related
Perceptions and Responses: Results from a Continuous Tracking Survey", BMJ Open, Vol. 4 (2014),
doi:10.1136/bmjopen 2014 005836 (Dunlop et al. 2014) (Panel Exhibits AUS-207, HND-132, DOM-199).
895 Panel Report, Appendix A, para. 19 (referring to Department of Health, Post-Implementation Review:
Tobacco Plain Packaging 2016, Australian Government (2016) (Tobacco Plain Packaging PIR) (Panel Exhibit
AUS-624), paras. 77-80).
896 Panel Report, Appendix A, para. 29 (referring to Wakefield et al. 2015 (Panel Exhibits AUS-206,
DOM-306); Dunlop et al. 2014 (Panel Exhibits AUS-207, HND-132, DOM-199); Ajzen et al. Data Report (Panel
Exhibit DOM/IDN-2), paras. 89-97 and 148-150, and Appendix A, pp. 78-80).
897 Panel Report, Appendix A, fn 36 to para. 29.
898 Panel Report, Appendix A, fn 36 to para. 29.
899 Honduras' appellant's submission, Annex, p. 316, para. 1083.
900 Honduras' appellant's submission, Annex, p. 315, para. 1083 (referring to Panel Report, Appendix A,
paras. 17-19; Klick Second Supplemental Rebuttal Report (Panel Exhibit HND-165), paras. 35-61).
901 Honduras' opening statement at the second Panel meeting, as delivered, paras. 41-42.
WT/DS435/AB/R • WT/DS441/AB/R

simply allege facts without relating them to its legal arguments." 902 Given the sheer volume of
evidence and submissions submitted to the Panel in these proceedings, it would be unreasonable to
have required the Panel to have engaged with every argument in every piece of evidence presented
to it, in the absence of a party asserting, to the Panel, the relevance of that particular aspect of the
evidence.
6.309. In any event, a review of Professor Klick's Second Supplemental Rebuttal Report 903 shows
that Professor Klick indicated that he would "examine the CITTS data on the non-behavioral metrics
that led Dunlop et al. to come to [their] conclusion about the increased effectiveness of health
warnings resulting from plain packaging and the reduction of the promotional appeal of tobacco
products that allegedly moved consumers 'closer to cessation'" .904 However, Professor Kl ick's
Second Supplemental Rebuttal Report includes no discussion specific to the appeal of tobacco
products. This observation is supported by Honduras' own assertion that Professor Klick's conclusions
concerning the "cherry-picking" of specific CITTS results apply to Dunlop et al. 2014 as a whole and
should therefore have been objectively assessed by the Panel. 905 These arguments seem to imply
that even if Honduras did not make a specific connection between Professor Klick's
Second Supplemental Rebuttal Report and its arguments concerning the appeal of tobacco products,
the Panel failed to carry out its function under Article 11 of the DSU by not making this connection
and addressing the concerns in Professor Klick's report.
6.310. We recall that "[a] prima facie case must be based on 'evidence and legal argument' put
forward by the complaining party in relation to each of the elements of the claim."906 Thus, the onus
was on Honduras to connect its arguments to its evidence, and not "expect the panel to divine",
from the totality of Honduras' evidence and arguments, "a claim of WTO-inconsistency".907
Panels need not address every argument raised by the parties
6.311. We recall that "a panel is not obligated to consider each and every argument put forward by
the parties in support of their respective claims, as long as it completes an objective assessment of
the matter before it, in accordance with Article 11 of the DSU." 908 Thus, where an appellant
challenges a panel's failure to address a particular argument, the appellant must exp lain why such
argument or evidence "is so material to its case that the panel's failure to address it explicitly has a
bearing on the objectivity of its factual assessment".909
6.312. In this regard, we note that Honduras makes several claims alleging that the Panel
disregarded certain of Professor Klick's rebuttals to Dr Chipty's evidence.910 For example, Honduras
claims that the Panel disregarded Professor Klick's rebuttals to Dr Chipty's argument that the
RMSS data showed that Australians cited health concerns as the primary reason for quitting while
New Zealanders cited costs as the primary reason for quitting.911 We note that, although Dr Chipty
made such an argument, the Panel did not appear to rely on this argument anywhere in its analysis.
Honduras has not id entified any such instance, although Honduras does point to the fact that the
Panel at least acknowledged Dr Chipty's arguments in summarizing the experts' opinions, whereas
the Panel did not acknowledge Professor Klick's rebuttal.912 Given that the Panel did not actually rely
on Dr Chipty's argument in its own analysis of Professor Klick's evidence, we are not persuaded that

902 Appellate Body Report, US – Gambling, para. 140. (fn omitted)
903 Honduras' appellant's submission, Annex, p. 315, para. 1083 (referring to Panel Report, Appendix A,
paras. 17-19; Klick Second Supplemental Rebuttal Report (Panel Exhibit HND-165), paras. 35-61).
904 Klick Second Supplemental Rebuttal Report (Panel Exhibit HND-165), para. 35.
905 Honduras' appellant's submission, Annex, p. 316, para. 1083.
906 Appellate Body Report, US – Gambling, para. 140. (emphasis original, fn omitted)
907 Appellate Body Report, US – Gambling, paras. 140. (fn omitted)
908 Appellate Body Report, Colombia – Textiles, fn 71 to para. 5.18.
909 Appellate Body Report, EC and certain member States – Large Civil Aircraft (Article 21.5 – US),
para. 5.147. (fn omitted) See also Appellate Body Reports, Australia – Apples, paras. 275-276; US – COOL,
910 Honduras appellant's submission, Annex, paras. 1085-1086.
911 Honduras' appellant's submission, Annex, pp. 328-329, para. 1085 (referring to J. Klick, Rebuttal
Report – A Reply to Dr Chipty (8 July 2015) (Panel Exhibit HND-118), paras. 71-75).
912 Honduras' appellant's submission, Annex, p. 328, para. 1085 (referring to Panel Report, Appendix C,
para. 23).
WT/DS435/AB/R • WT/DS441/AB/R

the Panel's failure to explicitly acknowledge Professor Klick's rebuttal undermines the objectivity of
the Panel's assessment.
6.313. As a second example, we take note of Honduras' claim that the Panel disregarded Professor
Klick's rebuttal of Dr Chipty's criticisms of his smoking prevalence analysis using data from the
New South Wales Population Health Survey ( NSWPHS).913 According to Honduras, P rofessor Klick
"comprehensively" responded to Dr Chipty's criticisms: "(i) [that] the RMSS dataset is more suitable
than the NSW data; (ii) that the timeframe of the NSW data is inadequate to properly study the
effects of plain packaging and, relatedly, that the tax increases in Australia make the data unsuitable
for a pre/post-implementation analysis; and (iii) that the change in survey methodology of how the
NSW data was collected limits the usability of the data". 914 We recall that the Panel's only criticism
of Professor Klick's analysis of the NSWPHS data was that "the nature of the data (i.e. yearly
observations) limits the number of observations to two post-packaging observations (2013 and
2014), which prevents distinguishing between the TPP measures and tobacco excise tax increases
in 2013 and 2014."915 The Panel also considered that only two observations are "extremely short in
comparison with the RMSS data encompassing up to 34 post -TPP observations (December
2012-September 2015)".916 We therefore understa nd the Panel as not having relied on the other
aspects of Dr Chipty's criticism of Professor Klick's analysis of the NSWPHS data (such as the change
in survey methodology). Thus, similar to the first example cited above, given that the Panel did not
rely on Dr Chipty's argument in its own analysis of Professor Klick's evidence, we are not persuaded
that the Panel's failure to explicitly acknowledge Professor Klick's rebuttal undermines the objectivity
of the Panel's assessment.
6.314. In sum, and in line with the examples discussed above, in instances where the Panel did not
rely on Dr Chipty's argument in its own analysis of Professor Klick's evidence, we are not persuaded
that the Panel's failure to address a counter -argument raised by Professor Klick in response to
Dr Chipty's argument amounts to a failure by the Panel to make an objective assessment of the
facts of the case. In this vein, we find that Honduras has not demonstrated that Professor Klick's
arguments that were not reflected in the Panel Report were "so material to its case that the [P]anel's
failure to address [them] explicitly has a bearing on the objectivity of its factual assessment".917
Allegations that the Panel's findings are based on "incoherent reasoning" or lacked
a "reasoned and adequate explanation"
6.315. With respect to several of their claims under Article 11 of the DSU, the appellants allege that
the Panel failed to provide "reasoned and adequate explanations" or "coherent reasoning" for its
findings.918 For example, Honduras claims that the Panel erred under Article 11 of the DSU by failing
to provide a reasoned and adequate explanation919, because the Panel's limited findings on the actual
impact of the TPP measures on proximal and distal outcomes were inconsistent with the Panel's
proposition that the TPP measures are "working as intended". 920 Similarly, the Dominican Republic
claims that the Panel erred under Article 11 because the Panel's findings on the actual impact of the
TPP measures on proximal and distal outcomes were incoherent with its find ing that the

913 Honduras' appellant's submission, Annex, pp. 331-332, para. 1085 (referring to J. Klick,
Supplemental Rebuttal Report – A Review of New and Updated Australian Survey and Market Data
(16 September 2015) (Panel Exhibit HND-122), para. 42; Klick Third Supplemental Rebuttal Report (Panel
Exhibit HND-166), paras. 9-28).
914 Honduras' appellant's submission, Annex, pp. 331-332, para. 1085 (referring to Klick Third
Supplemental Rebuttal Report (Panel Exhibit HND-166), paras. 9-28).
917 Appellate Body Report, EC and certain member States – Large Civil Aircraft (Article 21.5 – US),
para. 5.147. (fn omitted) See also Appellate Body Reports, Australia – Apples, paras. 275-276; US – COOL,
918 Honduras' appellant's submission, paras. 696, 753, 880, 889-890, 916-917, 940-941, 949-951,
958-959, 962-963, 968, 971-972, 976, 979, and 987-989; Dominican Republic's appellant's submission,
paras. 34, 555-559, and 893.
919 See Honduras' appellant's submission, para. 734.
920 Honduras' appellant's submission, section VIII.2.1.1.2. See ibid., para. 753.
WT/DS435/AB/R • WT/DS441/AB/R

TPP measures are expected to contribute to Australia's objective through the operation of the
hypothesized "causal chain".921
6.316. Australia challenges the appellants' claims that the Panel failed to provide "reasoned and
adequate explanations" for its findings, arguing that, in raising such claims, "the appellants dispense
with even the pretence of a legitimate grievance."922 Australia highlights that the appellants indicate
that they are "not request[ing] the Appellate Body to reach any conclusions as to whether the Panel
was correct" in its factual analysis, while at the same time the appellants "devote so much space to
a panel's alleged failure to provide 'reasoned and adequate' explanations". 923 For Australia, the
appellants' claims to this effect dem onstrate that their strategy for this appeal is simply to put as
much as possible of the complainants' factual evidence before the Appellate Body to relitigate the
issues they lost before the Panel.924
6.317. We recall that, in making an objective assessment of the facts of the case, a panel is required
to "consider all the evidence presented to it, assess its credibility, determine its weight, and ensure
that [the panel's] factual findings have a proper basis in that evidence". 925 The Appellate Body has
also highlighted that an "essential part of a panel's task under Article 11 is to explain its objective
assessment of the matter before it".926 Hence, demonstrating that a panel's reasoning is internally
inconsistent may, in some instances be sufficient to implicate the objectivity of a panel's assessment
under Article 11.927
6.318. In the present proceedings, we observe that, with respect to a large number of their claims,
when Honduras or the Dominican Republic refers to the Panel's failure to provide a reasoned and
adequate explanation, they are contending either that: (i) the Panel's reasoning was internally
inconsistent or lacked coherence 928; (ii) the Panel disregarded, distorted, or misrepresented
evidence929; (iii) the Panel's findings lacked a sufficient evidentiary basis on the Panel record930; or
(iv) the Panel was not even-handed in its treatment of the parties' evidence.931 It is noted that when
an appeal is brought under Article 11 of the DSU, the Appellate Body examines a panel's
explanations, not to verify the correctness of these explanations, but as a means of checking whether
the panel was objective in its assessment of the facts. To this end, the Appellate Body may consider
that a panel's objectivity is implicated if the appellant successfully demonstrates that (i) the panel's
reasoning was internally inconsistent or lacked coherence 932; (ii) the panel disregarded, distorted,
or misrepresented evidence933; (iii) the panel's findings lacked a sufficient evidentiary basis on the

921 Dominican Republic's appellant's submission, paras. 893 (referring to Panel Report, para. 7.1030)
and 895.
922 Australia's appellee's submission, para. 431.
923 Australia's appellee's submission, para. 431 (quoting Dominican Republic's appellant's submission,
para. 325).
924 Australia's appellee's submission, para. 431.
925 Appellate Body Reports, China – Rare Earths, para. 5.178 (quoting Appellate Body Report,
Brazil – Retreaded Tyres, para. 185; referring to Appellate Body Reports, EC – Hormones, paras. 132-133;
Australia – Salmon, para. 266; EC – Asbestos, para. 161; EC – Bed Linen (Article 21.5 – India), paras. 170,
Japan – Agricultural Products II, paras. 141-142; Korea – Alcoholic Beverages, paras. 161-162; Korea – Dairy,
926 Appellate Body Report, US – Continued Zeroing, para. 338 (quoting Panel Report, US – Continued
Zeroing, para. 7.180). (emphasis original)
927 Appellate Body Reports, EC and certain member States – Large Civil Aircraft, para. 894;
Russia – Commercial Vehicles, paras. 5.81-5.82; US – Upland Cotton (Article 21.5 – Brazil), para. 295.
928 See, for example, Honduras' appellant's submission, paras. 734, 753, and 797; Dominican Republic's
appellant's submission, paras. 177 and 888.
929 See, for example, Honduras' appellant's submission, para. 717 and Annex; Dominican Republic's
appellant's submission, paras. 559 and 574-577.
930 See, for example, Honduras' appellant's submission, paras. 13, 696, 721, and 772;
Dominican Republic's appellant's submission, paras. 194-197, 293, and 416-417.
931 See, for example, Honduras' appellant's submission, paras. 729-730; Dominican Republic's
appellant's submission, paras. 257 and 797.
932 Appellate Body Reports, EC and certain member States – Large Civil Aircraft, para. 894;
Russia – Commercial Vehicles, paras. 5.81-5.82; US – Upland Cotton (Article 21.5 – Brazil), para. 295.
933 Appellate Body Report, EC – Hormones, para. 133.
WT/DS435/AB/R • WT/DS441/AB/R

panel record934; or (iv) the panel was not even-handed in its treatment of the parties' evidence. 935
Accordingly, the appellants' references to "reasoned and adequate explanation" insofar as they relate
to the means of testing the Panel's objectivity could be viewed as a p urely semantic issue, given
that the substance of these allegations fall s squarely within the scope of appellate review with
respect to claims under Article 11 of the DSU.
6.319. Having said that, we take note of Honduras ' assertion that, where a panel reviews th e
determinations of domestic investigating authorities, the Appellate Body has held that a panel must
assess whether the explanations provided by the authority are "reasoned and adequate", and that
the panel must also assess "the coherence of its reasoning ".936 According to Honduras, the
Appellate Body has clarified that essentially the same standard that is imposed on domestic
authorities applies "in cases where a panel operates as the initial trier of facts, such as this one".937
Honduras requests that the Appellate Body "be equally critical and searching of the Panel's alleged
'careful review' and fault the Panel for failing to provide a reasoned and adequate explanation of
how the facts supported the determination made."938
6.320. As we see it, this line of argumenta tion invites us to engage in a factual assessment of the
evidence that was before the Panel in order to determine whether the Panel provided a "reasoned
and adequate explanation" of its findings. Such a proposition fails to recogni ze the differences
between: (i) the role of the Appellate Body and its scope of appellate review, as governed by
Article 17.6 of the DSU, on the one hand 939; and (ii) the role of a panel, as trier of fact, when
reviewing an investigating authority's determinations under the SCM Agreement and the
Anti-Dumping Agreement, on the other hand. 940 Given these differences, we reject Honduras'
assertion that the standard of review that applies to a panel's factual assessment, when a panel is
reviewing the determinations of domestic authorities, applies equally to the scope of appellate review
"in cases where a panel operates as the initial trier of facts, such as this one".941
Allegations challenging the Panel's graphical representation of the parties'
evidence
6.321. These allegations concern Figure B.1 in Appendix B and Figure D.14 in Appendix D to the
Panel Report.
6.322. With respect to Appendix B, the Dominican Republic contests the Panel's findings that "the
empirical evidence on the impact of the TPP measures on calls to Quitline is unambiguous", and that
"the TPP measures and enlarged GHWs have statistically significantly increased calls to Quitline."942
In support of its claims, the Dominican Republic challenges the Panel's reliance on Figure B.1. The

934 Appellate Body Reports, China – Rare Earths, para. 5.178; Brazil – Retreaded Tyres, para. 185;
EC – Hormones, paras. 132-133; Australia – Salmon, para. 266; EC – Asbestos, para. 161; EC – Bed Linen
(Article 21.5 – India), paras. 170, 177, and 181; EC – Sardines, para. 299; EC – Tube or Pipe Fittings,
para. 125; Japan – Apples, para. 221; Japan – Agricultural Products II, paras. 141-142; Korea – Alcoholic
Beverages, paras. 161-162; Korea – Dairy, para. 138; US – Carbon Steel, para. 142; US – Gambling,
para. 363; US – Oil Country Tubular Goods Sunset Reviews, para. 313; EC – Selected Customs Matters,
para. 258.
935 Appellate Body Report, Korea – Alcoholic Beverages, para. 163.
936 Honduras' appellant's submission, para. 703 (quoting Appellate Body Report, US – Softwood
937 Honduras' appellant's submission, para. 703 (quoting Appellate Body Report, US – Upland Cotton
938 Honduras' appellant's submission, para. 707 (referring to Appellate Body Report, US – Wheat Gluten,
paras. 160-161).
939 Specifically, Article 17.6 of the DSU provides no fact-finding role for the Appellate Body. Hence, the
scope of appellate review, as it pertains to claims under Article 11 of the DSU, is limited to evaluating the
objectivity of a panel's assessment and does not extend to a usurping of the role of the panel as trier of fact.
940 Appellate Body Reports, Korea – Pneumatic Valves (Japan), para. 5.221; China – HP-SSST (Japan) /
China – HP-SSST (EU), para. 5.255; Russia – Commercial Vehicles, para. 5.102; US – Washing Machines,
Countervailing Duties (China), para. 379; US ‒ Softwood Lumber VI (Article 21.5 – Canada), para. 93.
941 Honduras' appellant's submission, para. 703 (quoting Appellate Body Report, US – Upland Cotton
942 Dominican Republic's appellant's submission, para. 959 (quoting Panel Report, para. 7.963.c; ibid.,
Appendix B, para. 103).
WT/DS435/AB/R • WT/DS441/AB/R

Dominican Republic avers that "[a]lthough the Panel attributes Figure B.1 to Ajzen et al., the figure
does not appear in Ajzen et al. Therefore, the Panel itself must have produced Figure B.1 on its own
initiative, without testing it with the parties during the proceedings."943
6.323. In this regard, we highlight the Panel's statement that "Ajzen et al. find that, as reported in
Figure B.1, there was a statistically significant increase in the number of calls to the Quitline after
the introduction of the TPP measures, which occurred approximately three weeks before the sale of
plain packs with enlarged GHWs became mandatory." 944 The Dominican Republic's assertion is
correct insofar as it reads this statement by the Panel as suggesting that Figure B.1 in Appendix B
is copied from the Ajze n et al. Data Report. There are clear visual differences between the Panel's
graph and that of Ajzen et al. First, the time period covered in Ajzen et al. is from 6 March 2005 to
4 March 2013, while the Panel's graph is limited to the period between January 2011 and April 2013.
Second, the Panel's graph, as the Panel itself notes 945, moves the position of the TPP line (the red
line in Ajzen et al.) to December 2012, in order to reflect accurately when the TPP measures came
into effect with respect to imported tobacco products. That said, the visible differences between the
two graphs do not necessarily mean that the data depicted in both graphs covering the period from
January 2011 to March 2013 are different.
6.324. We understand the Panel to have used the graph me rely as a visual aid to illustrate its
observation that, as Ajzen et al. had found, "there was a statistically significant increase in the
number of calls to the Quitline after the introduction of the TPP measures."946 In fact, beyond stating
that the Panel produced the graph "on its own initiative"947, the Dominican Republic does not appear
to contest the accuracy of what is depicted in the graph. Moreover, in response to questioning at
the second hearing, the Dominican Republic clarified that it does not ques tion the accuracy of the
information depicted in the graph, and that it understands this information to have been extracted
from the parties' evidence. Indeed, the Dominican Republic appears to presume the accuracy of the
Panel's graph in Figure B.1 when it states that, "[a]s both Young et al. 2014 and Ajzen et al. found,
the blue spike shows that Quitline calls peaked several weeks after the sale of plain packs was
permitted (October 2012) but before the sale of plain packs became mandatory
(December 2012)."948
6.325. We recall that in making an objective assessment of the facts of the case, a panel is required
to "consider all the evidence presented to it, assess its credibility, determine its weight, and ensure
that [the panel's] factual findings have a proper basis in that evidence".949 Within these parameters,
"it is generally within the discretion of the panel to decide which evidence it chooses to utilize in
making findings."950 In the same vein, as long as the panel's reasoning is based on the parties'
evidence on the panel record, we consider it to be within the discretion of the panel to decide how
it represents its analysis and reasoning. Thus, nothing prohibits panels from using visual aids in
representing their understanding and analysis of the evidence submitted by the parties.
6.326. With respect to Appendix D, Honduras challenges several aspects of the Panel's analysis of
Dr Chipty's evidence with respect to step 2 of its cigarette consumption analysis in Appendix D to
the Panel Report. This step concerned whether the decline in cigarette sales accelerated after the
implementation of the TPP measures. Among its arguments, Honduras highlights that Figure D.14
was prepared by the Panel based on backup material provi ded by IPE, and there is no explanation

943 Dominican Republic's appellant's submission, para. 969. (fn omitted)
945 Panel Report, Appendix B, para. 93, note to Figure B.1.
946 Panel Report, Appendix B, para. 93. See also ibid., para. 103; Ajzen et al. Data Report (Panel
Exhibit DOM/IDN-2), para. 250.
947 Dominican Republic's appellant's submission, para. 969.
948 Dominican Republic's appellant's submission, para. 969. (emphasis original)
949 Appellate Body Reports, China – Rare Earths, para. 5.178 (quoting Appellate Body Report,
Brazil – Retreaded Tyres, para. 185; referring to Appellate Body Reports, EC – Hormones, paras. 132-133;
Australia – Salmon, para. 266; EC – Asbestos, para. 161; EC – Bed Linen (Article 21.5 – India), paras. 170,
Japan – Agricultural Products II, paras. 141-142; Korea – Alcoholic Beverages, paras. 161-162; Korea – Dairy,
950 Appellate Body Reports, China – Rare Earths, para. 5.178 (quoting Appellate Body Report,
EC – Hormones, para. 135).
WT/DS435/AB/R • WT/DS441/AB/R

as to how it was developed, nor is there any way of testing its accuracy. 951 In Honduras' view, the
fact that it is impossible to review the Panel's findings is a "fundamental problem of due process".952
Honduras argues that the Panel "violated the essence of its task under Article 11 of the DSU" by
failing to engage with the parties "in earnest" on any of the technical debates that took place before
it, "simply dump[ing] its final analysis on the parties in its findings" , depriving the parties of a
meaningful opportunity to comment during the Panel proceedings, and failing to include the technical
details necessary to review the Panel's finding.953
6.327. Figure D.14 is a graphical representation of the trends in cigarette sales volumes pre- and
post-implementation of the TPP measures. In the Panel Report, the stated source for Figure D.14 is
the backup material to the IPE Summary Report, which included the entire contents of the RMSS,
IMS/EOS, and Aztec data. As we understand it, the Panel constructed Figure D.14 on its own, relying
on the data submitted by the parties. We therefore understand that the Panel developed this line of
reasoning of its own accord, constructed the graph itself, based on the data, and concluded that the
trend lines were different. As discussed above, we see nothing wrong with this approach. As long as
the Panel's reasoning is based on the parties' evidence on the Panel record, we consider it to be
within the discretion of the Panel to decide how it repres ents its analysis and reasoning. Honduras
has failed to demonstrate that Figure D.14 is not based on the evidence on the Panel record.
Honduras has also not demonstrated that Figure D.14 serves any purpose beyond serving as a visual
aid for the Panel to re present its understanding and analysis of the evidence submitted by the
parties.
6.328. Accordingly, with respect to the Panel's inclusion of Figures B.1 and D.14 in its Report, we
find that Honduras has not demonstrated that the Panel failed to make an objective assessment of
the facts of the case.
Submitting facts that are not on the Panel record
6.329. It is well settled that the Appellate Body's review of any issues raised on appeal must be
based on the factual findings of the panel or uncontested facts on the panel record.954 This limitation
is especially relevant in the context of our evaluation of whether a panel failed to make an objective
assessment of the facts of the case as required under Article 11 of the DSU. We recall that, in
carrying out its duty under Arti cle 11 of the DSU, a panel is required to "consider all the evidence
presented to it , assess its credibility, determine its weight, and ensure that [the panel's] factual
findings have a proper basis in that evidence".955 Hence, an assessment of whether a panel failed to
make an objective assessment of the facts of the case is limited to those facts that were presented
to the panel. Consequently, any facts not on the panel record are be yond the remit of
appellate review.
6.330. In this regard, we observe that, in con nection with smoking prevalence, Honduras'
appellant's submission contains factual information pertaining to the "most recent official prevalence
data of Australia", drawn from "[t]he latest Australian government data (National Drug Strategy

954 Appellate Body Report, US – Hot-Rolled Steel, paras. 174 and 180. As the Appellate Body said in
US – Offset Act (Byrd Amendment):
Article 17.6 is clear in limiting our jurisdiction to issues of law covered in panel reports and legal
interpretations developed by panels. We have no authority to consider new facts on appeal. The
fact that the documents are "available on the public record" does not excuse us from the
limitations imposed by Article 17.6. We note that the other participants have not had an
opportunity to comment on those documents and, in order to do so, may feel required to adduce
yet more evidence. We would also be precluded from considering such evidence.
(Appellate Body Report, US – Offset Act (Byrd Amendment), para. 222)
955 Appellate Body Reports, China – Rare Earths, para. 5.178 (quoting Appellate Body Report,
Brazil – Retreated Tyres, para. 185). (emphasis added) See also Appellate Body Reports, EC – Hormones,
paras. 132-133; Australia – Salmon, para. 266; EC – Asbestos, para. 161; EC – Bed Linen (Article 21.5 –
India), paras. 170, 177, and 181; EC – Sardines, para. 299; EC – Tube or Pipe Fittings, para. 125;
Japan – Apples, para. 221; Japan – Agricultural Products II, paras. 141-142; Korea – Alcoholic Beverages,
Country Tubular Goods Sunset Reviews, para. 313; EC – Selected Customs Matters, para. 258.
WT/DS435/AB/R • WT/DS441/AB/R

Household Surv ey) from 2016". 956 Likewise, in connection with the Panel's reliance on
multicollinearity, the Dominican Republic indicates that, "[s]ince obtaining the Panel Report, the
Dominican Republic has applied the VIF test statistic to Australia's models using the t echniques
described in the literature ."957 Similarly, in support of its claim challenging the Panel's findings in
Appendix B958, the Dominican Republic refers to factual information contained in the amicus curiae
submission of Professor Sinclair Davidson, rece ived by the Appellate Body on 7 August 2018. The
Dominican Republic states that "[i]n his submission to the Appellate Body, Professor Sinclair
Davidson has explained, pursuant to information obtained under Australia's Freedom of Information
Act, that, in the contract commissioning the NTPPTS, the Australian Government required that the
NTPPTS address distal outcomes, such as 'quit intentions' and 'quit attempts'."959
6.331. This information, submitted by the appellants, did not form part of the Panel record.
Consequently, in accordance with Article 17.6 of the DSU, in deciding this appeal, we are precluded
from taking into account any factual information submitted by the participants that was not on the
Panel record.
6.1.2.3.3.3 Claims concerning the Panel's statements on the f uture impact of the
TPP measures
6.332. Honduras alleges that the Panel failed to make an objective assessment of the facts of the
case by accepting "the speculative assertion of a 'future generation' effect" of the TPP measures,
"without a reasoned and adequate explanation of how this conclusion was supported by the facts on
the record".960 The Dominican Republic, for its part, indicates that in the event that the Division does
not reverse the Panel's overall conclusion on contribution for other reasons, the Dominican Republic
raises the conditional appeal that the Panel erred in the application of Article 2.2 of the
TBT Agreement and failed to conduct an objective assessment of the matter under Article 11 of the
DSU in reviewing the potential future impact of the T PP measures.961 Specifically, the
Dominican Republic contends that "the Panel simply accepted Australia's 'suggestion' that the
TPP measures would, in future, contribute to Australia's objective, on the basis that it found this
suggestion 'reasonable'." 962 In the Dominican Republic's view,"[t]he Panel did not address any
evidence to establish that Australia's hypotheses were properly 'tested and supported by sufficient
evidence', as required by the Appellate Body."963 The Dominican Republic requests that the
Appellate Body declares the Panel findings regarding the future impact moot and of no legal effect
if it finds unnecessary to address this ground of appeal. 964 In response to questioning at the
second hearing, the Dominican Republic indicated that it did not consider the Panel's statements on
the future impact of the TPP measures to be findings or conclusions, but rather more akin to mere
"remarks". The Dominican Republic also stated that it did not consider the Panel's remarks to be an
integral part of the Panel 's assessment of the contribution of the TPP measures to Australia's
objective.
6.333. We recall that, in its analysis of the contribution of the TPP measures to Australia's objective
under Article 2.2 of the TBT Agreement, the Panel examined the relevant evidenc e relating to the
design, structure, and intended operation of the TPP measures and the evidence relating to the
application of the TPP measures since their entry into force in December 2012. 965 On the basis of
such evidence, the Panel reached its overall co nclusion that "the TPP measures are apt to, and do,
make a meaningful contribution to Australia's objective of reducing the use of, and exposure to,

957 Dominican Republic's appellant's submission, paras. 410-412.
958 Dominican Republic's appellant's submission, para. 1015 (quoting Panel Report, Appendix B,
paras. 39 and 118).
959 Dominican Republic's appellant's submission, para. 1028. (emphasis omitted)
961 Dominican Republic's appellant's submission, para. 1182.
962 Dominican Republic's appellant's submission, para. 1220 (quoting Panel Report, paras. 7.940 and
7.1044).
963 Dominican Republic's appellant's submission, para. 1220 (quoting Panel Report, para. 7.982, in turn
quoting Appellate Body Report, Brazil – Retreaded Tyres, para. 151).
964 Dominican Republic's appellant's submission, para. 1183.
965 Panel Report, para. 7.1024.
WT/DS435/AB/R • WT/DS441/AB/R

tobacco products."966 Having reached this conclusion, in the penultimate paragraph of the section
on its overall conclusions, the Panel made the following observation:
In making this determination, we are also mindful that the impact of the TPP measures
may evolve over time. Our determination is based on the evidence available to us at
the time of our assessment and is not intended to prejudge the future evolution of the
contribution of the TPP measures to the reduction of the use of, and exposure to,
tobacco products. We note, however, that we find reasonable Australia's suggestion
that the measures may be expect ed to have an impact in particular on future
generations of young people whose exposure to tobacco advertising or promotion in
Australia will have been generally limited, and that impacts on smoking cessation for
existing smokers will also take some time to produce their full effects.967
6.334. To our minds, given that the TPP measures had been in force for a very brief period by the
time the Panel proceedings got under way, the Panel's observation that "the impact of the
TPP measures may evolve over time" seems reasonable. Moreover, we note that the Panel made the
observation that the impact of the TPP measures may evolve over time only after it had concluded
that "the TPP measures are apt to, and do, make a meaningful contribution to Australia's objective
of reducing the use of, and exposure to, tobacco products."968 Moreover, in making this observation,
the Panel stated that its conclusion was "based on the evidence available to [the Panel] at the time
of [the Panel's] assessment and is not intended to prejudge the future evolution of the contribution
of the TPP measures to the reduction of the use of, and exposure to, tobacco products".969
6.335. Furthermore, to the extent that the Panel made intermediate observations regarding the
future effects of the TPP measures, in section 7.2.5.3.6 of its Report, we read these statements in
the context of the Panel's weighing of the probative value of the post -implementation evidence, as
compared to the pre -implementation evidence. We note that, after finding persuasive Australia's
suggestion that, in the early period of application, the data and evidence relating to actual smoking
behaviours "may not provide a complete picture of the extent to which the measures contribute"970,
the Panel stated that:
We also consider that, in this context , and in light of the nature of the design of the
measures, as discussed in preceding sections, available empirical evidence relating to
the impact of the measures on "proximal" outcomes, as well as evidence relating to
"distal outcomes" that may be precur sors of actual smoking behaviours, may usefully
inform our assessment of the actual contribution of the TPP measures to their objective,
together with evidence before us relating to actual smoking behaviours since the entry
into force of the measures.971
6.336. Likewise, later in its analysis, the Panel stated that it would "consider the evidence before
[it] in relation to the application of the TPP measures with awareness that the time-period for which
evidence of application of the measures is available may have a n impact on the nature and extent
of the conclusions that may be drawn from this evidence".972
6.337. We understand the Panel's statements as suggesting that, because it was too early to
evaluate conclusively the contribution of the TPP measures to Australia's objective, the Panel would
rely on the evidence pertaining to the design and structure of the TPP measures to inform its
understanding of the limited evidence available to it of the actual impact of the TPP measures,
following their entry into force. Thus, in making these statements, the Panel addressed and rejected
the complainants' arguments that evidence regarding the TPP measures' actual effects should be
given more weight than the pre-implementation evidence in the Panel's assessment.
6.338. In sum, given the limited period following the entry into force of the TPP measures and the
possibility of the evolution of the impact of the TPP measures over time, the Panel did not consider

966 Panel Report, para. 7.1043.
967 Panel Report, para. 7.1044.
968 Panel Report, para. 7.1043.
969 Panel Report, para. 7.1044.
970 Panel Report, para. 7.940.
971 Panel Report, para. 7.940.
972 Panel Report, para. 7.943.
WT/DS435/AB/R • WT/DS441/AB/R

the evidence regarding the actual effects of the TPP measures to be dispositive. Moreover, the Panel
did not take account of "evidence" of the future impact of TPP measures. Nor were its general
remarks regarding possible evolution over time decisive for its overall conclusion regarding
contribution of the TPP measures to Australia's objective. For these reasons, we are not persuaded
that the appellants' claims challenging the Panel's statements on the possible future impact of the
TPP measures warrant further scrutiny.
6.1.2.3.3.4 Claims that we need not address for purposes of resolving these disputes
6.339. The following treaty provisions are relevant to our consideration of whether, in order to
resolve these disputes, it is necessary for us to address certain allegations of error put forward by
the appellants. Article 17.12 of the DSU provides that "[t]he Appellate Body shall address each of
the issues raised in accordance with paragraph 6 during the appellate proceeding."973 Article 3.4 of
the DSU indicates that "[r]ecommendations or rulings made by the DSB shall be aimed at achieving
a satisfactory settlement of the matter", while Article 3.7 of the DSU states that "[t]he aim of the
dispute settlement mechanism is to secure a positive solution to a dispute." These overarching aims
of the WTO dispute settlement mechanism suggest to us that, while we are required to address each
issue on appeal, we have the discretion not to rule on certain claims when doing so is not necessary
to resolve the dispute.974
The Dominican Republic's claims concerning the Panel's assessment of the
evidence relating to the NTPPTS and ITC datasets in proximal and distal outcomes
6.340. The Dominican Republic notes that the parties presented, to the Panel, evidence and
arguments based on the NTPPTS and ITC datasets, which measured the impact of the TPP measures
on a number of proximal and distal outcomes. Australia's evidence was based on published papers
that analysed these datasets (Wakefield et al. 2015, Durkin et al. 2015, and Yong et al. 2015 975),
while the Dominican Republic's evidence was based on a re -analysis of these datasets by
Ajzen et al., which was presented in several expert reports.976 According to the Dominican Republic,
"the Panel criticized Ajzen et al.'s analysis in a manner that failed to respect the Dominican Republic's
due process rights and that lacked even -handedness."977 Despite these allegations, the
Dominican Republic expressly states that it "has decided not to challenge the Panel's failure to
conduct an objective assessment of Ajzen et al, because these errors are not consequential for the
Panel's findings on proximal and distal outcomes".978
6.341. In order to reverse a panel's finding on the basis of Article 11, we must "be satisfied that
the Panel's errors, taken together or singly, undermine the objectivity of the Panel's assessment",
such that the panel's factual finding "no longer ha[s] a sufficient evidentiary and objective basis".979
Given the Dominican Republic's own admission that any potential errors made by the Panel in its
criticisms of Ajzen et al. are "not consequential for the Panel's findings on proximal and dist al
outcomes"980, we consider it unnecessary to address the Dominican Republic's allegations in this
regard.

973 Article 17.6 limits an appeal to "issues of law covered in the panel report and legal interpretations
developed by the panel".
974 Appellate Body Reports, US – Tuna II (Mexico) (Article 21.5 – US) / US – Tuna II (Mexico)
(Article 21.5 – Mexico II), para. 6.318; US – Upland Cotton, paras. 510-511.
975 Wakefield et al. 2015 (Panel Exhibits AUS-206, DOM-306); H. Yong, R. Borland, D. Hammond,
J. Thrasher, K. Cummings, and G. Fong, "Smokers' Reactions to the New Larger Health Warning Labels on Plain
Cigarette Packs in Australia: Findings from the ITC Australia Project", Tobacco Control (19 February 2015),
doi:10.1136/tobaccocontrol-2014-05197 (Yong et al. 2015) (Panel Exhibit DOM-382); S. Durkin, E. Brennan,
M. Coomber, M. Zacher, M. Wakefield, and M. Scollo, "Short-Term Changes in Quitting-Related Cognitions and
Behaviours After the Implementation of Plain Packaging with Larger Health Warnings: Findings from a National
Cohort Study with Australian Adult Smokers", Tobacco Control, Vol. 24 (2015), ii26-ii32 (Durkin et al. 2015)
(Panel Exhibits AUS-215 (revised), DOM-305).
976 Dominican Republic's appellant's submission, para. 948. See also ibid., fn 861 to para. 949.
977 Dominican Republic's appellant's submission, para. 949.
978 Dominican Republic's appellant's submission, para. 949 (referring to Panel Report, Appendix A,
para. 101 and fn 39 thereto).
979 Appellate Body Report, EC and certain member States – Large Civil Aircraft, para. 1318.
980 Dominican Republic's appellant's submission, para. 949.
WT/DS435/AB/R • WT/DS441/AB/R

GHWs
6.342. Honduras contends that the Panel was not "even -handed" in its assessment of the facts of
the case because, unlike in its evaluation of the TPP measures, the Panel did not combine the effect
of the alternative measure with the effect of the unchallenged increase in the mandatory size of the
GHWs on tobacco packaging when it examined the alternative measures proposed by the
complainants.981 Honduras contends that "if the Panel had, in the required even -handed manner,
examined the alternative measures in combination with the enlarged GHWs which were never
challenged by the complainants, it would not have made the findings it made on 'equivalent
contribution' and should not have rejected these alternatives."982
6.343. As discussed in paragraph 6.313. above, in response to questioning at the second hearing,
the participants all agreed that there was no evidence on the Panel record that showed the separate
effects of the TPP measures and the enlarged GHWs.983 In any event, we observe that this contention
by Honduras, brought as a claim under Article 11 of the DSU, challenges the objectivity of the Panel's
assessment of the facts in relation to the Panel's analysis of the contribution of the TPP measures to
Australia's objective. This claim mirrors another of Honduras' claims, in which Honduras alleges that
"the Panel's failure to compare the degree of contribution of the alternati ve measure in light of the
other tobacco control measures that were not challenged constitutes an additional error of law"
under Article 2.2 of the TBT Agreement.984 This claim by Honduras challenges the Panel's analysis
of the contribution of the proposed a lternative measures, and is discussed in
section 6 6.1.4.3 below. In response to questioning at the second hearing, Honduras clarified that
it was not challenging the Panel's failure to separate the effects of the TPP measures from the effects
of the GHWs. Rather, its appeal was about the lack of even-handedness in the context of the Panel's
examination of alternative measures, where, according to Honduras, the Panel did not even consider
the possibility that GHWs may have some effect. Given this clarification by Honduras, we do not
consider it necessary or appropriate, for purpose of resolving th ese disputes to address it s claim
under Article 11 of the DS U in the context of the Panel's analysis of the contribution of the
TPP measures.
Step 2 of the Panel's smoking prevalence analysis
6.344. The Dominican Republic argues that "[t]he Panel's finding in step 2 [of its smoking
prevalence analysis] that the rate of decline accelerated in the post-TPP period appears to be based
on the Panel's own original analysis of the RMSS data, which is depicted in Figure C.19 of its
Report."985 According to the Dominican Republic, "the Panel did not present Figure C.19 … to the
parties during the proceedings" nor did the Panel explain in its Report "how it produced
Figure C.19".986 The Dominican Republic considers that the Panel's conclusion in step 2 was not
based on reasoned or adequate findings, lacked a basis in the evidence conta ined on the Panel
record, failed to respect the Dominican Republic's due process rights, and inappropriately made the
case for Australia, which demonstrates that the Panel failed to make an objective assessment of the
matter before it.987
6.345. The Panel's conclusion in step 2 of its smoking prevalence analysis states that, based on the
most recent available RMSS data, smoking prevalence in Australia "has not only continued to

981 Honduras' appellant's submission, paras. 1021-1025.
982 Honduras' appellant's submission, para. 1024. (emphasis omitted)
983 We emphasize that, even if the isolated effect of the unchallenged large GHWs were to be
established, as Australia points out, Honduras bore the burden of establishing, before the Panel, that the
combined effects of its proposed alternative measures and the enlarged GHWs would make an equivalent
contribution to Australia's objective, to the contribution resulting from the combined effects of the
TPP measures and the enlarged GHWs. As the Appellate Body has stated, "the party who asserts a fact,
whether the claimant or the respondent, is responsible for providing proof thereof." (Appellate Body Report,
US – Wool Shirts and Blouses, p. 14, DSR 1997:I, p. 335. See also Appellate Body Reports, US – Carbon Steel
(India), para. 446; US – Gambling, paras. 138-140; US – Carbon Steel, para. 157; Canada – Dairy
984 Honduras' appellant's submission, paras. 645-657.
985 Dominican Republic's appellant's submission, para. 159.
986 Dominican Republic's appellant's submission, para. 162 (referring to Panel Report, Appendix C,
para. 51).
987 Dominican Republic's appellant's submission, para. 194.
WT/DS435/AB/R • WT/DS441/AB/R

decrease following the introduction of the TPP measures, but … has accelerated with a steeper slope
of the smoking prevalence trend between December 2012 and September 2015 … compared to the
pre-TPP periods".988 The Panel did not explicitly refer to Figure C.19 when forming this conclusion.
We note that, in summarizing Dr Chipty's arguments in the relevant "[d]atasets and related studies"
subsection989, the Panel not only purported to visually depict the RMSS data in Figure C.19, but also
referred to two graphs submitted to the Panel by Australia, namely , Figure 2 of the
Chipty Second Rebuttal Report and a "similar graphic for the period January 2001-September 2015"
that was included in the Tobacco Plain Packaging Post -Implementation Review (PIR).990 We further
note that Figure C.19 of the Panel Report, Figure 2 of the Chipty Second Rebuttal Report, and
Figure 3 of the Tobacco Plain Packaging PIR all indicate a steepening trend after the implementation
of the TPP measures. Since all three graphs substantiate the Panel's finding that "the downward
trend in smoking prevalence has accelerated with a stee per slope of the smoking prevalence trend
between December 2012 and September 2015", and there is no reason to question two of those
three graphs, we do not consider it necessary to examine whether the Panel erred in relying on
Figure C.19.991
6.1.2.3.4 Whether the P anel erred in its overall conclusion on the contribution of the
TPP measures to Australia's objective
6.346. Honduras asserts that, in reaching its overall conclusion on the contribution of the
TPP measures to Australia's objective, the Panel failed to provide a reasoned and adequate
explanation of the quality and probative value of the pre -implementation evidence in light of the
post-implementation evidence.992 In addition, Honduras claims that the Panel erred under Article 11
of the DSU by failing to provide a reasoned and adequate explanation of how the facts supported
the determination made993 because the Panel's findings relating to the TPP measures' actual effects
on smoking behaviour do not support its overall conclusion that the measures actually "do" make a
meaningful contribution to Australia's objective.994
6.347. The Dominican Republic claims that the Panel erred under Article 11 of the DSU by offering
internally incoherent reasoning in relation to whether the actual effects of the TPP measures
confirmed its findings on the measures' anticipated effects reached on the basis of the
pre-implementation evidence.995 The Dominican Republic submits that the Panel did not address
these "discrepancies" between the predicted effects and the actual affects resulting from the
operation of the TPP measures, or offer any justification for adopting a different approach to
assessing those outcomes for which the predicted effects were discredited, rather than confirmed,
by the evidence on the actual impact of the TPP measures.996 The Dominican Republic adds that, if
the Appellate Body were to reverse the Panel's findings on the actual effects of the TPP measures
on smoking prevalence and consumption, none of the remaining intermediate Panel findings –
i.e. neither the Panel's findings on the anticipated impact of the TPP measures nor its findings on
the actual impact of the measures on "proximal" and "distal" outcomes – would be sufficient to
sustain its overall conclusion on the contribution of the TPP measures.997
6.348. Australia considers that, contrary to what the appellants assert, the Panel did assess the
pre-implementation evidence against the post-implementation evidence.998 Australia also maintains
that Honduras' allegation, that the Panel's findings concerning smoking prevalence and consumption

989 Panel Report, Appendix C, section 2.1, paras. 43-52.
990 Panel Report, Appendix C, para. 51 and fn 48 thereto (referring to Australia's comments on the
complainants' responses to Panel question No. 146, para. 15; Chipty Second Rebuttal Report (Panel
Exhibit AUS-591), paras. 8-12; Tobacco Plain Packaging PIR (Panel Exhibit AUS-624), p. 35).
994 Honduras' appellant's submission, paras. 735-737. See also ibid., paras. 724 and 726.
995 Dominican Republic's appellant's submission, para. 763.
996 Dominican Republic's appellant's submission, paras. 777.
997 See Dominican Republic's appellant's submission, para. 593.
998 Australia's appellee's submission, para. 540.
WT/DS435/AB/R • WT/DS441/AB/R

do not support the Panel's overall conclusion, is based on a "mischaracterization" of the Panel's
actual findings and conclusions.999
6.349. We recall that, before the Panel, Honduras' main contention1000 was that the TPP measures
make no contribution to Australia's objective, nor are they apt to do so.1001 The Dominican Republic
contended that well-accepted axioms of social and medical science confirm that the TPP measures
will not be effective in achieving Australia's stated goals. 1002 The Panel understood the parties'
arguments as follows:
In essence, the complainants consider that the TPP measures cannot contribute to their
objective through the mechanisms identified in the TPP Act, and that
post-implementation evidence shows that smoking prevalence has n ot in fact been
reduced as a result of the TPP measures. Australia in essence responds that, contrary
to the complainants' assertions, the measures are designed on the basis of a sound
evidence base, and that available post -implementation evidence confirms that the
measures are contributing to their objective of reducing smoking.1003
6.350. Hence, in addressing the parties' arguments, the Panel sought to determine the degree to
which the TPP measures, "as written and applied, contribute, if at all, to Australia's leg itimate
objective of improving public health by reducing the use of, and exposure to, tobacco products".1004
In this regard, the Panel acknowledged that the "fulfilment of this objective through the
TPP measures is predicated on their ability to influence smo king behaviours, such as initiation,
cessation, and relapse."1005 For this reason, the Panel considered that the impact of the measures
on such behaviours, is "a priori, directly relevant to an assessment of the degree of contribution of
the measures to this objective".1006 Moreover, the Panel made it clear that it did not "exclude" that
"evidence relating to 'proximal' outcomes reflecting the three mechanism[s] of the TPP Act"1007, in
combination with other relevant evidence before the Panel, could inform the Panel 's assessment of
the degree of contribution of the measures to Australia's objective.1008 However, the Panel also made
it clear that such evidence was relevant only "to the extent that it would inform the impact of the
measures on the smoking behaviours that are the ultimate target of the measures".1009
6.351. Bearing in mind the TPP Act's depiction of the intended operation of the TPP measures, the
Panel first assessed the anticipated effect of the TPP measures, based on their design, structure ,
and expected operation.1010 Thereafter, the Panel assessed the evidence relating to the actual effects
of the TPP measures following their entry into force. Specifically, the Panel assessed the impact of
the TPP measures on: (i) "non-behavioural" or "proximal" outcomes (i.e. the appeal of packaging,
the effectiveness of the GHWs, and the ability of packaging to mislead consumers) 1011; (ii) "distal"
outcomes (i.e. intention and behavioural outcomes, such as increased intentions to quit and
increased quit attempts)1012; and (iii) smoking behaviour (i.e. prevalence and consumption).1013 The
Panel also examined the impact of the TPP measures on illicit trade.1014 In carrying out this task, the
Panel considered that it had a duty to examine and consider all the evidence before it and to
"evaluate the relevance and probative force of each piece thereof".1015

999 Australia's appellee's submission, para. 843.
1000 We recall that the complainants made two sets of arguments in the alternative in support of their
claim under Article 2.2. See para. 6.5. above.
1001 Panel Report, para. 7.426.
1002 Panel Report, para. 7.437.
1003 Panel Report, para. 7.485. We note that the Panel's characterization of the parties' arguments is not
challenged on appeal.
1006 Panel Report, para. 7.495.
1007 Panel Report, para. 7.498.
1008 Panel Report, para. 7.498.
1009 Panel Report, para. 7.498.
1010 Panel Report, section 7.2.5.3.5.
1011 Panel Report, para. 7.491.
1012 Panel Report, para. 7.491.
1013 Panel Report, section 7.2.5.3.6.
1014 Panel Report, section 7.2.5.3.7. The Panel's findings on illicit trade are not appealed.
WT/DS435/AB/R • WT/DS441/AB/R

6.352. Throughout its analysis, the Panel emphasized that the operation of the TPP measures,
including their contribution to Australia's objective, must be viewed in the broader conte xt of other
tobacco control measures maintained by Australia. The Panel explained that, while this broader
context does not remove or reduce the need "to identify the contribution that the challenged
measures themselves make to Australia's objective", it w as a relevant consideration in the Panel's
assessment, to the extent that "it informs and affects the manner in which the measures are applied
and operate, as a component of a broader suite of complementary tobacco control measures."1016
6.353. Following its examina tion of the pre - and post-implementation evidence before it 1017, the
Panel concluded as follows:
7.1025. Overall, we find that the complainants have not demonstrated that the
TPP measures are not apt to make a contribution to Australia's objective of improvin g
public health by reducing the use of, and exposure to, tobacco products. Rather, we
find that the evidence before us, taken in its totality, supports the view that the
TPP measures, in combination with other tobacco -control measures maintained by
Australia (including the enlarged GHWs introduced simultaneously with TPP), are apt
to, and do in fact, contribute to Australia's objective of reducing the use of, and exposure
to, tobacco products.
…
7.1043. Taken as a whole, therefore, we consider that the evidence before us supports
the view that, as applied in combination with the comprehensive range of other tobacco
control measures maintained by Australia and not challenged in these proceedings,
including a prohibition on the use of other means through which branding could
otherwise contribute to the appeal of tobacco products and to misleading consumers
about the harmful effects of smoking, the TPP measures are apt to, and do, make a
meaningful contribution to Australia's objective of reducing the use of, and exposure to,
tobacco products.1018
6.354. We observe that, in its summary of the bases for its overall conclusion, the Panel emphasized
the significance of the pre -implementation evidence pertaining to the anticipated effects of the
TPP measures1019, while highlighting the limitations of the post-implementation evidence pertaining
to the actual impact of the TPP measures.1020 For instance, in connection with the evidence of the
anticipated effects of the TPP measures, the Panel provided the following explanation:
7.1027. [W]e are not persuaded that the complainants have established that the largely
convergent conclusions reflected in the body of studies at issue, and the overall
conclusions drawn from them, should be considered to be so fundamentally flawed as
to provide no support for the proposition that the TPP measures are capable of
contributing to their objective through these mechanisms.
7.1028. We are comforted in this conclusion by the fact that this body of literature has
been subject to various reviews conducted outside the context of these proceedings,
which have concluded that the body of studies at issue supports the proposition that
tobacco plain packaging would be apt to reduce the appeal of tobacco products, enhance
the effectiveness of GHWs and reduce the ability of tobacco packaging to mislead
consumers about the risks of smoking. We note in particular the conclusions of the
independent review conducted on behalf of the UK Government [*], which considered
both the quality of a previous systematic review of the evidence base relating to tobacco
plain packaging and the quality of the underlying evidence itself, and concluded that
the quant itative studies reviewed were "conducted to a high standard", that "the
conclusions that were drawn are a reasonable reflection of the evidence available" and
that the review of the qualitative studies at issue was "a high quality systematic review",

1016 Panel Report, para. 7.506 (referring to Appellate Body Report, Brazil – Retreaded Tyres, para. 154).
1017 Panel Report, para. 7.1024.
1018 Panel Report, paras. 7.1025 and 7.1043.
1019 Panel Report, paras. 7.1026-7.1034.
1020 Panel Report, paras. 7.1035-7.1039.
WT/DS435/AB/R • WT/DS441/AB/R

which was "clearly documented and follows recognised best practice for such
reviews".1021
[*fn original] 2648 We attach particular weight to this assessment conducted by independent
reviewers who are no t among the frequently cited "plain packaging" authors and were
commissioned for the purposes of making an independent assessment of the relevant literature.
6.355. While, as quoted above, the Panel expressed confidence in the strength of its conclusions
based on the evidence of the anticipated effects of the measures, we observe that the Panel was
rather more circumspect concerning the evidence of the actual effects of the TPP measures following
their entry into force. For example, as regards the post -implementation evidence of smoking
prevalence and consumption, the Panel was careful to note that "the extent to which the data
available at the time of our assessment can inform an overall assessment of the actual and expected
contribution of the measures to their objective is disputed. The data before us in these proceedings
relate[] to a period of up to three years following the entry into force of the TPP measures."1022 In
addition to the limitation of time affecting the availability of the post -implementation evidence, the
Panel observed further that:
The overall impact of the TPP measures is difficult to quantify in terms of the magnitude
of changes in smoking behaviours attributable to the measures, on the basis of the
evidence available to us. In particular, this impact … is difficult to isolate empirically, on
the basis of the evidence before us, from other factors that also affect the evolution of
smoking behaviours, including other tobacco control measures applied simultaneously
with the TPP measures.1023
6.356. Based on the foregoing, we understand the Panel to have identified the limited time following
the entry into force of the TPP measures, as well as the difficulty of isolating the effects of the
TPP measures, as factors undermining the quality of the available post-implementation evidence on
the actual effects of the TPP measures. By contrast, the Panel's explanations suggest that the Panel
accorded greater probative weight to the pre-implementation evidence pertaining to the anticipated
effects of the TPP measures.
6.357. Furthermore, we recall the Panel's observation that the impact of the TPP measures may
evolve over time. The Panel made this observation only after it had concluded that "the
TPP measures are apt to, and do, make a meaningful contribution to Australia's objective of reducing
the use of, and exposure to, tobacco products ."1024 As stated above, given that the TPP measures
had been in force for a very brief period by the time the Panel proceedings got under way, the
Panel's observation that "the impac t of the TPP measures may evolve over time" 1025 seems
reasonable.
6.358. In our view, having examined properly all the relevant evidence before it, the Panel was well
within the bounds of its discretion, as the trier of fact, to accord greater probative weight to th e
evidence of the anticipated effects of the TPP measures than to the evidence of the actual effects of
the TPP measures. For these reasons, we reject Honduras' assertion that, in reaching its overall
conclusion on the contribution of the TPP measures to A ustralia's objective, the Panel failed to
provide a reasoned and adequate explanation of the quality and probative value of the
pre-implementation evidence in light of the post-implementation evidence.1026
6.359. Moreover, as discussed in sections 6.1.2.3.2 6.1.2.3.3 above, we are not persuaded that
the appellants have demonstrated that the Panel, in arriving at its intermediate findings, failed to
make an objective assessment of the facts of the case. We also do not agree with t he
Dominican Republic's assertion that, if the Panel's findings on the actual effects of the TPP measures

1021 Panel Report, paras. 7.1027-7.1028 (referring to Chantler Report (Panel Exhibits AUS-81, CUB-61));
ibid., Annex D, p. 49 (referring to Stirling Review (Panel Exhibits AUS-140, HND-130, CUB-59)); ibid.,
Annex E, p. 56 (referring to Stirling Review (Panel Exhibits AUS-140, HND-130, CUB-59)).
1022 Panel Report, para. 7.1037.
1023 Panel Report, para. 7.1040.
1024 Panel Report, para. 7.1043.
1025 Panel Report, para. 7.1044.
WT/DS435/AB/R • WT/DS441/AB/R

on smoking prevalence and consumption are reversed, none of the Panel's remaining intermediate
findings – i.e. neither the Panel's findings on the anticipated impact of the TPP measures nor its
findings on the actual impact of the measures on "proximal" and "distal" outcomes – would be
sufficient to sustain its overall conclusion on the contribution of the TPP measures.1027
6.360. In this regard, we recall our finding in section 6.1.2.3.2 above that the complainants have
not demonstrated that the Panel failed to make an objective assessment of the case with respect to
its assessment of the evidence of the anticipated effects of the TPP measures. Accordingly, the
complainants have not demonstrated that the Panel erred in finding as follows:
7.929. Overall, our review of the evidence before us in relation to the design, structure
and intended operation of the TPP measures does not persua de us that, as the
complainants argue, they would not be capable of contributing to Australia's objective
of improving public health by reducing the use of, and exposure to, tobacco products,
through the operation of the mechanisms identified in the TPP Act, in combination with
other relevant tobacco control measures applied by Australia.
7.930. Rather, our review of the relevant evidence suggests that it is recognized that
various branding features are capable of being used on tobacco packaging in order t o
convey certain positive associations with the products, and that a body of research
exists, that sought to investigate the impact of removing this type of feature[] through
plain packaging of tobacco products, on the types of "proximal outcomes" now reflected
in the TPP Act. …
7.931. We also take note of the body of research devoted to the study of the relationship
between product perceptions, intentions and behaviours discussed by the parties …[.]
Overall, this evidence, while it makes clear the complex ity and multiplicity of factors
driving smoking behaviours, is consistent, in our view, with the proposition underlying
the design and structure of TPP measures that relevant behaviours may be influenced
by a reduction in the appeal of tobacco products or an improved awareness and
understanding of health risks of smoking, or both.1028
6.361. Likewise, as reflected in section 6.1.2.3.3.2 above, we are not persuaded by any of the
appellants' challenges to the Panel's analysis of the post -implementation evidence relating to
proximal and distal outcomes. Accordingly, the Panel's findings in Appendices A and B to its Report,
summarized in paragraphs 7.958 and 7.963 of the Panel Report, stand. As discussed above, we
consider that the Panel, having examined properly all the relevant evidence before it, was well within
the bounds of its discretion as trier of fact to accord greater probative weight to the evidence of the
anticipated effects of the TPP measures than to the evidence of the actual effects of the
TPP measures. Accordingly, in our view, the Panel's findings on the anticipated effects, together with
its findings on the actual impact of the TPP measures on proximal and distal outcomes support the
Panel's overall conclusion that "the TPP measures, in combination with other tobacco -control
measures maintained by Australia (includ ing the enlarged GHWs introduced simultaneously with
TPP), are apt to, and do in fact, contribute to Australia's objective of reducing the use of, and
exposure to, tobacco products."1029
6.362. Moreover, in section 6.1.2.3.3.1 above, we have rejected the vast majority of the
appellants' challenges to the Panel's analysis of smoking behaviour. That said, we have found two
errors in the Panel's assessment of the p ost-implementation evidence on smoking prevalence and
consumption. First, we have found that the Panel erred in its reliance on non -stationarity and
multicollinearity.1030 However, as discussed above, we consider that this error by the Panel has no
impact on the Panel's ultimate conclusion that "there is econometric evidence suggesting that [the
TPP measures] contributed to the reduction in overall smoking prevalence in Australia."1031 Second,
with respect to the Panel 's reliance on the impact of tobacco costline ss to critique the parties'
evidence, we find that the Panel erred by failing to address the Dominican Republic's arguments

1027 See Dominican Republic's appellant's submission, para. 593.
1028 Panel Report, paras. 7.929-7.931. (emphasis original)
1029 Panel Report, para. 7.1025.
1030 See para. 6.257. above.
1031 Panel Report, Appendix C, para. 122. (fn omitted)
WT/DS435/AB/R • WT/DS441/AB/R

regarding Australia's consumption model. We consider that this error fatally undermines the Panel's
determination that Australia's evidence was more credible than the complainants' evidence, on which
the Panel based its conclusion that "there is some econometric evidence suggesting that the
TPP measures … contributed to the reduction in wholesale cigarette sales, and therefore cigarett e
consumption."1032 In our view, the Panel's error vitiates this factual finding.
6.363. Having found these errors in the Panel's analysis, we take note of Australia's contention that
even if the appellants could establish that the Panel exceeded the bounds of its discretion as the
trier of facts, they would still need to demonstrate that the Panel's errors undermined the objectivity
of the Panel's assessment.1033 For Australia, in order for the appellants to prevail on their claims of
error under Article 11, they must show that the Panel exceeded the bounds of its discretion and that
the consequences for the Panel's findings are material. In Australia's view, "none of the appellants'
alleged errors, individually or cumulatively, materially undermine the Panel's ultimat e legal
conclusion that the complainants failed to meet their burden of proving that the TPP measures are
not apt to make a contribution to Australia's legitimate objective."1034
6.364. The Appellate Body has said that not every error in the appreciation of evidence, or error of
law, constitutes a failure on the part of the panel to make an objective assessment of the matter
before it.1035 Rather, "[t]o succeed in its challenge under Article 11, an appellant must show that the
statement was material to the panel 's legal conclusion." 1036 Hence, in order to reverse a panel's
finding on the basis of Article 11, the Appellate Body has said that it must "be satisfied that the
[p]anel's errors, taken together or singly, undermine the objectivity of the [p]anel's assessment",
such that the panel's factual finding "no longer ha[s] a sufficient evidentiary and objective basis".1037
6.365. Turning back to the facts of this case, we recall our finding that the Panel's errors vitiate
only the Panel's factual findings with respect to step 3 of its cigarette consumption analysis in
Appendix D to its Report. However, the question remains whether vitiating this factual finding
undermines the Panel's overall conclusion that the TPP measures are apt to, and do, contribute to
Australia's objective. In this respect, we recall that the Panel's ultimate conclusion on the degree of
contribution took into account the evidence of the anticipated ef fects of the TPP measures (i.e. the
pre-implementation evidence regarding the design, structure , and inten ded operation of the
measures).1038 The Panel considered that, on the basis of this evidence, the appellants had failed to
demonstrate that the TPP measures are incapable of contributing to Australia's objective. Moreover,
the Panel considered it reasonable to hypothesize that the TPP measures will contribute to Australia's
objective by reducing the appeal of tobacco products. 1039 The Panel also took into account the

1032 Panel Report, Appendix D, para. 137.c.
1033 Australia's appellee's submission, para. 448 (referring to Appellate Body Reports, EC and certain
member States – Large Civil Aircraft (Article 21.5 – US), para. 5.157; China – Rare Earths, para. 5.178;
EC ‒ Fasteners (China), para. 442).
1034 Australia's appellee's submission, para. 449.
1035 Appellate Body Reports, US – Steel Safeguards, para. 497; Japan – Apples, para. 222. In
EC – Hormones, the Appellate Body stated that, "not every error in the appreciation of the evidence (although
it may give rise to a question of law) may be characterized as a failure to make an objective assessment of the
facts." (Appellate Body Report, EC – Hormones, para. 133)
1036 Appellate Body Report, US – Large Civil Aircraft (2nd complaint), para. 722. (emphasis added)
1037 Appellate Body Report, EC and certain member States – Large Civil Aircraft, para. 1318. Likewise, in
EC – Fasteners (China), the Appellate Body stated that:
An attempt to make every error of a panel a violation of Article 11 of the DSU is an approach
that is inconsistent with the scope of this provision. In particular, when alleging that a panel
ignored a piece of evidence, the mere fact that a panel did not explicitly refer to that evidence in
its reasoning is insufficient to support a claim of violation under Article 11. Rather, a participant
must explain why such evidence is so material to its case that the panel's failure explicitly to
address and rely upon the evidence has a bearing on the objectivity of the panel's factual
assessment.
(Appellate Body Report, EC – Fasteners (China), para. 442)
1038 Panel Report, paras. 7.1026-7.1034.
1039 The Panel stated that:
[I]n a regulatory context where tobacco packaging would otherwise be the only opportunity to
convey a positive perception of the product through branding, as is the case in Australia, it
appears to us reasonable to hypothesize some correlation between the removal of such design
features and the appeal of the product, and between such reduced product appeal and consumer
behaviours. It also does not appear unreasonable, in such a context, in light of the evidence
before us, to anticipate that the removal of these features would also prevent them from creating
WT/DS435/AB/R • WT/DS441/AB/R

post-implementation evidence of the actual effects of the TPP measures. The Panel considered it
relevant that the TPP measures have reduced the appeal of tobacco products and contributed to
reducing smoking prevalence and consumption of tobacco products. 1040 Specifically, the Panel
considered such evidence to be "consistent with" the view that the TPP measures contributed to
Australia's objective.1041
6.366. We note that, in forming its conclusion that the evidence of smoking prevalence and
consumption was consistent with the hypothesized impact of the TPP measures, the Panel
highlighted "[t]he fact that pre -existing downward trends in smoking prevalence and overall sales
and consumption of tobacco products have not only continued but accelerated since the
implementation of the TPP measures, and that the TPP measures and enlarged GHWs had a negative
and statistically significant impact on smoking prevalence and cigarette wholesale sales" .1042 The
Panel's reasoning with respect to smoking prevalence and consumption was therefore formed on the
basis of the Panel's conclusions in steps 2 and 3 of its smoking prevalence analysis (in Appendix C)
and steps 2 and 3 of its cigarette consumption analysis (in Appendix D). As indicated, the Panel also
considered it relevant that the evidence indicated that the TPP measures had reduced the appeal of
tobacco products.1043 Of these five different aspects of its analysis that the Panel relied on in forming
its conclusion that the post -implementation evidence was consistent with the hypothesized impact
of the TPP measures, the appellants have demonstrated that the Panel erred with respect to
one aspect only, namely, step 3 of the Panel's cigarette consumption analysis.
6.367. Furthermore, we recall that smoking prevalence and consumption were merely two metrics
through which the Panel assessed whether the TPP measures had had an actual effect on smoking
behaviours (initiation, cessation, and relapse). In our view, the appellants have not demonstrated
how any errors by the Panel in its assessment of consumption would also demonstrate that the Panel
erred in its assessment of smoking prevalence. We also highlight, in this respect, that although the
Panel considered that the evidence on cigar consumption was mixed, the Panel relied exclusively on
the cigar smoking prevalence evidence in concluding that the "econometric evidence … suggesting
that the TPP measures … contributed to a reduction i n cigar smoking prevalence is also consistent
with a conclusion that the measures have an impact on relevant smoking behaviours with respect
to cigars."1044 To our minds, it follows that the Panel did not require evidence of an affirmative impact
of the TPP measures on tobacco product consumption in order to conclude that the
post-implementation evidence was "consistent with" the hypothesized contribution of the
TPP measures to Australia's objective.
6.368. Finally, we take note of Honduras' claim that "the Panel's o wn limited findings"1045 relating
to the TPP measures' actual effects on smoking behaviour do not support its overall conclusion that
the measures actually "do" make a meaningful contribution to Australia's objective. 1046 Honduras
pointed out, that in its approach to the evidence on contribution, the Panel highlighted the need to
examine "actual behaviour" and "emphasise[d] the importance of empirical evidence on the use of
tobacco products in order to reach a conclusion on the actual contribution of the measures to their
objective".1047 However, Honduras asserts that the Panel's findings in the Appendices to its Report
are "cautiously worded and suggest uncertainty about the general conclusions to draw from the
evidence".1048 For Honduras, even taking the Panel's findings as a given, these "limited" findings do
not support the Panel's overall conclusion on the "actual contribution" of the TPP measures to
Australia's objective.1049

a conflicting signal that would undermine other messages that seek to raise the awareness of
consumers about the harmfulness of smoking that are part of Australia's tobacco control
strategy, including those arising from GHWs.
1040 Panel Report, paras. 7.1036-7.1037
1041 Panel Report, paras. 7.1036-7.7037.
1042 Panel Report, para. 7.986.
1043 Panel Report, para. 7.1036.
1046 Honduras' appellant's submission, paras. 735-737. See also ibid., paras. 724 and 726.
1049 Honduras' appellant's submission, paras. 739-745.
WT/DS435/AB/R • WT/DS441/AB/R

6.369. We recall that, before the Panel, "the complainants consider[ed] that the TPP measures
cannot contribute to their objective through the mechanisms identified in the TPP Act, and that
post-implementation evidence shows that smoking prevalence has not in fact been reduced as a
result of the TPP measures."1050 The Panel sought to determine the degree to which the
TPP measures, "as written and applied, contribute, if at all, to Australia's legitimate objective of
improving public health by reducing the use of, and exposure to, tobacco products".1051 In its overall
conclusion, the Panel answered this question as follows:
7.1025. Overall, we find that the complainants have not demonstrated that the
TPP measures are not apt to make a contribution to Australia's objective of improving
public health by reducing the use of, and exposure to, tobacco products. Rather , we
find that the evidence before us, taken in its totality, supports the view that the
TPP measures, in combination with other tobacco -control measures maintained by
Australia (including the enlarged GHWs introduced simultaneously with TPP), are apt
to, and do in fact, contribute to Australia's objective of reducing the use of, and exposure
to, tobacco products.
…
7.1043. Taken as a whole, therefore, we consider that the evidence before us supports
the view that, as applied in combination with the comprehensive range of other tobacco
control measures maintained by Australia and not challenged in these proceedings,
including a prohibition on the use of other means through which branding could
otherwise contribute to the appeal of tobacco products and to mis leading consumers
about the harmful effects of smoking, the TPP measures are apt to, and do, make a
meaningful contribution to Australia's objective of reducing the use of, and exposure to,
tobacco products.1052
6.370. We observe that paragraph 7.1025 contains two sentences. In the first sentence, the Panel
concluded that "the complainants have not demonstrated that the TPP measures are not apt to make
a contribution to Australia's objective of improving public health by reducing the use of, and exposure
to, tobacco products."1053 In the second sentence, the Panel continued to state that the evidence
before it supported the view that "the TPP measures, in combination with other tobacco -control
measures maintained by Australia (including the enlarged GHWs introduced simul taneously with
TPP), are apt to, and do in fact, contribute to Australia's objective of reducing the use of, and
exposure to, tobacco products." 1054 None of the appellants' submissions expressly referred to the
first sentence of paragraph 7.1025. However, in response to questioning at the second hearing, the
appellants as well as Australia all seemed to share the view that the two sentences of
paragraph 7.1025 were not to be read in isolation from each other. Rather, in their view, both
sentences, read together, reflected the Panel's rejection of the complainants' proposition that the
TPP measures are not apt to, nor do they, make a contribution to Australia's objective of reducing
the use of, and exposure to, tobacco products. Honduras went on to add that para graph 7.1043
confirmed the Panel's main finding, as reflected in the second sentence of paragraph 7.1025.
6.371. We agree with the participants that both sentences of paragraph 7.1025, read together, are
a rejection of the complainants' proposition that the TPP measures are not apt to, nor do they make
a contribution to Australia's objective of reducing the use of, and exposure to, tobacco products.
However, we do not share Honduras' view that the content of paragraph 7.1043 is the same as that
of the second sente nce of paragraph 7.1025. As we read it, there is an additional nuance to the
Panel's finding in paragraph 7.1043. Between paragraphs 7.1025 and 7.1043, the Panel summarized
the key points 1055 that justify its conclusion that "the TPP measures are apt to, and do, make a
meaningful contribution to Australia's objective of reducing the use of, and exposure to, tobacco

1050 Panel Report, para. 7.485. We note that the Panel's characterization of the parties' arguments is not
challenged on appeal.
1052 Panel Report, paras. 7.1025 and 7.1043.
1054 Panel Report, para. 7.1025.
1055 We observe that, in these paragraphs, the Panel emphasized the robust nature of the
pre-implementation evidence before it, while highlighting the limitations of the evidence relating to the actual
impact of the TPP measures following their entry into force.
WT/DS435/AB/R • WT/DS441/AB/R

products."1056 We do not consider the Panel's addition of the word "meaningful" to be happenstance.
While paragraph 7.1025 addressed and rejected the proposition by the complainants that "the
TPP measures are not apt to make a contribution to Australia's objective"1057, the Panel's conclusion
in paragraph 7.1043 goes further by speaking to the question of the "degree" of the contribution
that the TPP measures, in concert with Australia's other tobacco -control measures, make to
Australia's objective. In this regard, and as discussed in paragraph 6.40. above, we understand
the Panel to have concluded that "the TPP measures are apt to, and do, make a meaningful
contribution to Australia's objective of reducing the use of, and exposure to, tobacco products" 1058
as a gateway to addressing the complainants' al ternative proposition. We recall that the
complainants argued, in the alternative, that even if the Panel were to conclude that the
TPP measures make a contribution to Australia's objective, the TPP measures would still be "more
trade-restrictive than nece ssary" because various alternative measures would be available to
Australia that are less trade-restrictive and could achieve an equivalent degree of contribution1059 to
Australia's objective. Indeed, the Panel highlighted this conclusion about the measures' "meaningful
contribution to Australia's objective" in its assessment of the complainants' proposed alternative
measures.1060
6.372. Hence, given the specific circumstances of this case and the manner in which the
complainants put forward their claims before the Panel, it is our view that the degree of the
contribution of the TPP measures (i.e. whether the contribution is "meaningful") is pertinent only to
the Panel's comparison of the trade restrictiveness of, and the degree of achievement of Australia's
objective by, the TPP measures, with that of the proposed possible alternative measures that may
be reasonably available and that are less trade-restrictive than the TPP measures – taking account
of the risks non-fulfilment would create.1061 Accordingly, in the specific circumstances of this case,
the Panel's overall conclusion on the contribution of the TPP measures to Australia's objective is not
affected by the qualification of "meaningful".
6.373. In light of the foregoing, we find that the appellants have not demonstrated that the Panel
erred in finding, in paragraphs 7.1025 and 7.1043 of the Panel Report, that:
7.1025. Overall … the complainants have not demonstrated that the TPP measures are
not apt to make a contribution to Australia's objective of improving public health by
reducing the use of, and exposure to, tobacco products. Rather, we find that the
evidence before us, taken in its tota lity, supports the view that the TPP measures, in
combination with other tobacco-control measures maintained by Australia (including the
enlarged GHWs introduced simultaneously with TPP), are apt to, and do in fact,
contribute to Australia's objective of r educing the use of, and exposure to, tobacco
products.
…
7.1043. Taken as a whole, therefore, we consider that the evidence before us supports
the view that, as applied in combination with the comprehensive range of other tobacco
control measures maintaine d by Australia and not challenged in these proceedings,
including a prohibition on the use of other means through which branding could
otherwise contribute to the appeal of tobacco products and to misleading consumers
about the harmful effects of smoking, the TPP measures are apt to, and do, make a
meaningful contribution to Australia's objective of reducing the use of, and exposure to,
tobacco products.1062

1056 Panel Report, paras. 7.1024-7.1025 and 7.1043. (emphasis added)
1057 Panel Report, para. 7.1025.
1058 Panel Report, para. 7.1043.
1059 Honduras' first written submission to the Panel, para. 911; Dominican Republic's first written
submission to the Panel, paras. 1019 and 1021 (referring to para. 736 et seq., in particular para. 737).
1060 Panel Report, para. 7.1386.
1061 Appellate Body Reports, US – COOL, para. 376 (referring to Appellate Body Report, US – Tuna II
(Mexico), paras. 320-322).
1062 Panel Report, paras. 7.1025 and 7.1043.
WT/DS435/AB/R • WT/DS441/AB/R

6.1.3 The trade restrictiveness of the TPP measures
6.374. We address, in turn, whether the Panel: (i) erred in its interpretation of Article 2.2 as it
pertains to the element of "trade restrictiveness"; (ii) erred in applying Article 2.2 in its
determination of the trade restrictiveness of the TPP measures; and (iii) acted inconsistently with
Article 11 of the DSU.
6.1.3.1 Whether the Panel erred in its interpretation of Article 2.2 of the TBT Agreement
6.375. Before assessing the degree of trade restrictiveness of the TPP measures, the Panel defined
the standard by which to assess trade restrictiveness, within the meaning of Article 2.2. The Panel
emphasized that "a technical regulation is 'trade-restrictive' within the meaning of Article 2.2 when
it has a limiting effect on international trade".1063 The Panel further observed that "past panels, and
the Appellate Body, have assessed the trade-restrictiveness of specific technical regulations with
reference to their limiting effect on the 'competitive opportunities' available to imported products"
in disputes where "a separate assessment [was made] of whether the technical regulation accorded
less favourable treatment to imported products under Article 2.1 of the TBT Agreement."1064
However, the Panel considered that "[t]he manner in which an assertion of trade -restrictiveness is
substantiated may vary from case to case" and "an assertion that a technical regulation is
trade-restrictive might be substantiated on the basis of whether the technical regulation has a
limiting effect on competitive opportunities 'in qualitative terms … in the particular circumstances of
a given case'."1065
6.376. The Panel further noted that, "in certain cases, 'a detrimental modification of competitive
opportunities may be self-evident with respect to certain de jure discriminatory measures, whereas
supporting evidence and argumentati on of actual trade effects might be required to demonstrate
the existence and extent of trade-restrictiveness in respect of non-discriminatory internal measures
that address a legitimate objective'."1066 Consequently, "[w]hile the existence of discrimination may
contribute to the establishment of 'trade-restrictiveness' within the meaning of Article 2.2, a
determination of 'trade -restrictiveness' is not dependent on the existence of discriminatory
treatment of imported products."1067 The Panel considered, therefore, that "[h]ow the existence and
extent of trade-restrictiveness is to be demonstrated in respect of technical regulations that are not
alleged to be discriminatory will depend … on the circumstances of a given case" and "in the absence
of any allegation of de jure restriction on the opportunity for imports to compete on the market or
of any alleged discrimination in this respect (between imports or between imported and domestic
products), a sufficient demonstration will be required to establish the existe nce and extent of any
'limiting effect' on international trade ."1068 The Panel added that a demonstration of trade
restrictiveness "could be based on qualitative or quantitative arguments and evidence, or both,
including evidence relating to the characteristics of the challenged measure as revealed by its design
and operation".1069
6.377. Honduras argues that the Panel erred in its interpretation of Article 2.2 of the TBT Agreement
by failing to rely on a legal standard based on the conditions of competition and competi tive
opportunities.1070 According to Honduras, the Panel "bas[ed] its analysis … on whether the
[TPP] measures are discriminatory" and "favoured a 'trade effects' test based on the extent to which
the measures actually reduced the volume of sales and thus of imports".1071 In Honduras' view, the

1064 Panel Report, para. 7.1073 (referring to Panel Reports, US – COOL (Article 21.5 – Canada and
Mexico), paras. 7.367-7.370; US – COOL, para. 7.572; Appellate Body Reports, US – COOL
(Article 21.5 – Canada and Mexico), para. 5.208 and fn 643 thereto; US – COOL, para. 477; EC – Seal
1065 Panel Report, para. 7.1074 (quoting Appellate Body Reports, US – COOL (Article 21.5 – Canada and
Mexico), para. 5.208).
1066 Panel Report, para. 7.1074 (quoting Appellate Body Reports, US – COOL (Article 21.5 – Canada and
Mexico), fn 643 to para. 5.208).
1067 Panel Report, para. 7.1074.
1068 Panel Report, para. 7.1075 (referring to Appellate Body Reports, US – COOL (Article 21.5 – Canada
and Mexico), para. 5.208).
1069 Panel Report, para. 7.1076.
1070 Honduras' appellant's submission, paras. 465-529.
1071 Honduras' appellant's submission, para. 466. See also ibid., paras. 465, 484, and 506-529.
WT/DS435/AB/R • WT/DS441/AB/R

Panel's "'trade effects' test is inconsistent with established WTO jurisprudence and constitutes an
error of law".1072 For Honduras, "by holding non -discriminatory technical regulations to a different
and higher standard, eff ectively requiring a demonstration of actual trade effects in the period
following the implementation of the TPP measures, the Panel erred in its interpretation of Article 2.2
of the TBT Agreement."1073
6.378. The Dominican Republic, for its part, argues that the Panel correctly "articulated the proper
interpretation of 'trade -restrictive' at the outset of its analysis of Article 2.2".1074 The
Dominican Republic considers that "the Panel explained that prior assessments [of trade
restrictiveness] were focused on whethe r a technical regulation had a 'limiting effect on the
"competitive opportunities" available to imported products'."1075 The Dominican Republic highlights
the Panel's findings that "the TPP measures limit the opportunity for producers to differentiate their
product", that such "differentiation engenders consumer loyalty and increases consumers'
willingness to pay", and that "the TPP measures limit the opportunity for tobacco manufacturers to
compete on the basis of such brand differentiation ."1076 In the Dominican Republic's view, by
concluding that it was unpersuaded that "this modification of the competitive environment for all
tobacco products on the entire market (which may in principle increase competition on the market)
constitutes, in itself, a restriction on 'competitive opportunities' for imported tobacco products that
must be assumed to have a 'limiting effect' on international trade", the Panel effectively concluded
that the "evidence that the TPP measures, by their very design, limit com petitive opportunities for
imported tobacco products was not sufficient to demonstrate trade-restrictiveness."1077 According to
the Dominican Republic, "had the Panel properly applied the legal standard of trade restrictiveness,
it would have found that the loss of competitive opportunities for tobacco products arising from the
design, structure and intended operation of the TPP measures constitutes trade restrictiveness,
within the meaning of Article 2.2 of the TBT Agreement."1078
6.379. Australia argues that the Panel correctly interpreted Article 2.2 as reflecting a legal standard
of a limiting effect on international trade and not a standard related to conditions of competition.
Australia considers that the Panel's interpretation is consistent with the ordinary mean ing and
context of Article 2.2, the object and purpose of the TBT Agreement, and the Appellate Body's prior
statements on the legal standard under Article 2.2.1079 In Australia's view, the appellants' focus on
a "competitive opportunities" standard of trade r estrictiveness "would read the terms
'trade-restrictive' and 'obstacles to international trade' out of the text of Article 2.2".1080 In
Australia's view, "the Panel correctly held that it was incumbent upon the complainants to
demonstrate 'how such effects on the conditions of competition on the market give rise to a limiting
effect on international trade in tobacco products.'" 1081 Australia also argues that, in interpreting
Article 2.2, the Panel did not find that only discriminatory measures can be inconsistent with
Article 2.2, nor did the Panel find that evidence of actual trade effects is required in order to
demonstrate that a non -discriminatory technical regulation has a limiting effect on international
trade.1082
6.380. We understand from the appellants' responses t o questioning at the first hearing that the
Panel's basic articulation of the legal standard, as set forth above 1083, is not contested by either
Honduras or the Dominican Republic.1084 In particular, neither Honduras nor the Dominican Republic

1074 Dominican Republic's appellant's submission, para. 1245.
1075 Dominican Republic's appellant's submission, para. 1267 (quoting Panel Report, para. 7.1073, in
turn quoting Appellate Body Reports, US – COOL, para. 477).
1076 Dominican Republic's appellant's submission, para. 1270 (quoting Panel Report, para. 7.1167).
(emphasis omitted)
1077 Dominican Republic's appellant's submission, para. 1272 (quoting Panel Report, para. 7.1167).
(emphasis omitted)
1078 Dominican Republic's appellant's submission, para. 1246.
1079 Australia's appellee's submission, paras. 289-296.
1080 Australia's appellee's submission, para. 303.
1081 Australia's appellee's submission, para. 304 (quoting Panel Report, para. 7.1168). (emphasis
original)
1082 Australia's appellee's submission, paras. 308-309 and 319-320.
1083 See para. 6.375. above.
1084 See also Honduras' appellant's submission, para. 469; Dominican Republic's appellant's submission,
para. 1281.
WT/DS435/AB/R • WT/DS441/AB/R

contests the Panel's explanation that the legal standard under Article 2.2 requires a demonstration
of "a limiting effect on international trade". 1085 Having said that, we observe that, as explained
below, several fundamental aspects of the Panel's interpretation of Article 2.2 are indeed contested
by the appellants.
6.381. First, we note Honduras' statements that the Panel "agree[d] that 'a detrimental modification
of competitive opportunities' is at the heart of the concept of trade restrictiveness", and that "[t]he
Panel reiterate [d] the general rule that a limiting effect on competitive opportunities is what
characterises a trade restriction ."1086 In Honduras' view, the Panel's determination that the
TPP measures had modified the conditions of competition in the Australian market "should have been
the end of matter". 1087 For its part, the Dominican Republic considers that the Panel erred by
applying Article 2.2 "such that demonstrating limitations on competitive opportunities is not
sufficient for demonstrating that a measure is 'trade -restrictive'".1088 Like Honduras, the
Dominican Republic's argument that the Panel erred in its application of Article 2.2 appears to be
premised on its view that, under the legal standard of Article 2.2, any limitation on so -called
"competitive opportunities" is sufficient to demonstrate trade restrictiveness.1089
6.382. We therefore understand that both appellants consider that a demonstration of a
"modification of the conditions of competition" in a particular market (in Honduras' words) 1090 or of
a "limitation on compe titive opportunities" of products (in the Dominican Republic's words) 1091
suffices to demonstrate that a measure is trade -restrictive.1092 While the Dominican Republic
considers that this is reflected in the Panel's interpretation of Article 2.2, Honduras considers that
the Panel erred in its interpretation of Article 2.2 in this respect.1093
6.383. In our view, the Panel plainly did not consider that a determination of the trade
restrictiveness of a technical regulation is "focused on" 1094 assessing the conditions of competition
or competitive opportunities of products. Rather, the Panel explained that prior claims of
inconsistency with Article 2.2 of the TBT Agreement had been raised in circumstances where a claim
had also been raised with respect to whether the measures accorded to imported products treatment
less favourable than that accorded to like domestic products within the meaning of Article 2.1 of the
TBT Agreement, and that, in those disputes, the determination of trade restrictiveness was focused
on the limiting effect of the measures on the competitive opportunities of imported products.1095 The
Panel thereafter stated that, depending on the specific circumstances of the dispute, an assertion of
trade restrictiveness "might be substantiated on the basis of whether the technical regulation has a

1085 Panel Report, para. 7.1072 (referring to Appellate Body Report, US – Tuna II (Mexico), para. 319);
Honduras' and the Dominican Republic's responses to questioning at the first hearing. We also observe that
this definition accords with the Dominican Republic's description of the term "trade restriction" as referring to a
"limiting condition", as well as the dictionary definitions of restriction as "[a] thing which restricts someone or
something, a limitation on action, a limiting condition or regulation" and "restrict" as "limit, bound, confine".
(Dominican Republic's appellant's submission, para. 1281; Shorter Oxford English Dictionary, 5th edn.,
W.R. Trumble and A. Stevenson (eds.) (Oxford University Press, 2002), Vol. 2, p. 2554) The first sentence of
Article 2.2 also refers to "unnecessary obstacles to international trade", and the word "obstacle" is defined as a
"thing that stands in the way and obstructs progression; a hindrance, an obstruction". (Shorter Oxford English
Dictionary 5th edn, W.R. Trumble and A. Stevenson (eds.) (Oxford University Press, 2002), Vol. 2, p. 1970)
1088 Dominican Republic's appellant's submission, para. 1286.
1089 See, for example, Dominican Republic's appellant's submission, para. 1288 ("the
Dominican Republic showed that the design and structure of the TPP measures, in and of themselves, impose a
limitation on competitive opportunities, thereby demonstrating the trade-restrictiveness of those measures").
1091 Dominican Republic's appellant's submission, para. 1288. (fn omitted)
1092 To the extent that Honduras (or the Dominican Republic) considers that the legal standard under
Article 2.2 does not require a demonstration of a limiting effect on international trade, such an interpretation
would directly contradict the Appellate Body's prior interpretation that "the word 'restriction' refers generally to
something that has a limiting effect" and "[a]s used in Article 2.2 in conjunction with the word 'trade', the term
means something having a limiting effect on trade." (Appellate Body Report, US – Tuna II (Mexico), para. 319
(fn omitted)) Neither Honduras nor the Dominican Republic has raised any arguments demonstrating that the
Appellate Body's interpretation in that dispute was in error.
1093 See paras. 6.377. 6.378. above.
1094 Dominican Republic's appellant's submission, para. 1267.
1095 Panel Report, para. 7.1073.
WT/DS435/AB/R • WT/DS441/AB/R

limiting effect on competitive opportunities".1096 It is therefore incorrect to assert, as Honduras does,
that the Panel "agree[d] that 'a detrimental modification of competitive opportunities' is at the heart
of the concept of trade restrictiveness".1097
6.384. As to whether we agree with this aspect of the Panel's interpretation, we recall that the legal
standard under Article 2.2 entails demonstrating that the technical regulation at issue imposes a
limiting effect on international trade.1098 The question therefore arises as to whether a demonstration
of a modification in the conditions of competition (or a limitation on the competitive opportunities of
certain products) suffices to demonstrate a limiting effect on international trade. We see a significant
difference between, on the one hand, panels and the Appellate Body's reliance on the concept of
conditions of competition in the context of Article 2.2 in prior disputes and, on the other hand, the
appellants' reliance on that concept in these disputes.
6.385. We recall the Appellate Body's prior statement that in "assessing the trade -restrictiveness
of a technical regulation under Article 2.2 … [a] demonstration of a limiting effect on competitive
opportunities in qualitative terms might suffice in the particular circumstances of a given case ".1099
The Appellate Body has generally relied on the term "competitive opportunities" to refer to the
conditions of competition of imported products vis -à-vis domestic products (i.e. national
treatment)1100 or as between imported products from one Member and imported products from
another Member (i.e. most-favoured-nation treatment).1101 In the specific context of Article 2.2, the
Appellate Body has indicated that a panel's determination that a measure modifies the conditions of
competition for imported products as a group vis-à-vis domestic products as a group (for instance,
in the context of assessing a claim under Article 2.1 of the TBT Agreement) would suffice to indicate
that the technical regulation is trade -restrictive within the meaning of Article 2.2.1102 However,
"evidence of actual trade effects may also be probative" to a panel's determinati on of trade
restrictiveness and, while "a detrimental modification of competitive opportunities may be
self-evident in respect of certain de jure discriminatory measures, … supporting evidence and
argumentation of actual trade effects might be required to demonstrate the existence and extent of
trade-restrictiveness in respect of non-discriminatory internal measures".1103

1098 See para. 6.380. above.
1099 Appellate Body Reports, US – COOL (Article 21.5 – Canada and Mexico), para. 5.208. (fn omitted;
emphasis added) According to Honduras, "in US – COOL, the Appellate Body recalled that 'trade restrictiveness'
focuses on the competitive opportunities available to imported products" and, "in US – COOL
(Article 21.5 – Canada and Mexico), the Appellate Body reiterated that the issue of trade restrictiveness
requires a demonstration of a limiting effect on competitive opportunities." (Honduras' appellant's submission,
para. 491 (referring to Appellate Body Reports, US – COOL, para. 477; US – COOL (Article 21.5 – Canada and
Mexico), para. 5.208)) We disagree. The Appellate Body's statement in US – COOL that the panel's "findings
suggest it considered the measure to have a considerable degree of trade-restrictiveness insofar as it has a
limiting effect on the competitive opportunities for imported livestock as compared to the situation prior to the
enactment of the COOL measure" does not imply, as asserted by Honduras, that "'trade restrictiveness' focuses
on the competitive opportunities available to imported products." (Appellate Body Reports, US – COOL,
1100 See, for example, Appellate Body Reports, EC – Seal Products, 5.101, 5.105, and 5.108;
Thailand – Cigarettes (Philippines), para. 134; US – Clove Cigarettes, para. 179 and fn 372 thereto;
US – COOL, para. 270; US – Tuna II (Mexico), para. 214 and fn 457 thereto; Korea – Various Measures on
Beef, para. 137.
1101 See, for example, Appellate Body Reports, EC – Seal Products, paras. 5.82, 5.84, 5.87-5.88, and
5.90.
1102 For instance, in US – COOL, the Appellate Body referred to the panel's finding that "'by imposing
higher segregation costs on imported livestock' the COOL measure negatively affects the conditions of
competition of imported livestock vis-à-vis like domestic livestock in the US market." (Appellate Body Reports,
US – COOL, para. 477 (quoting Panel Reports, US – COOL, para. 7.574)) The Appellate Body relied on this
finding to conclude that the measure in that dispute had a "considerable degree of trade-restrictiveness".
(Ibid., para. 479) Thus, the Appellate Body was concerned with the competitive opportunities of imported
products vis-à-vis like domestic products. Subsequently, in US – COOL (Article 21.5 – Canada and Mexico), the
Appellate Body also referred to the competitive opportunities of imported products vis-à-vis like domestic
products. (Appellate Body Reports, US – COOL (Article 21.5 – Canada and Mexico), para. 5.208 and fn 643
thereto (referring to the Appellate Body Reports, US – COOL, para. 477))
1103 Appellate Body Reports, US – COOL (Article 21.5 – Canada and Mexico), fn 643 to para. 5.208
(referring to Appellate Body Report, EC – Poultry, paras. 126-127). (emphasis added)
WT/DS435/AB/R • WT/DS441/AB/R

6.386. Thus, a showing of a reduction in the competitive opportunities of imported products is only
relevant to the assessment of trade restrictiveness to the extent that it reveals a limiting effect on
international trade. For instance, where a measure is shown to reduce the competitive opportunities
of imported products as a group, from a Member 1104, vis-à-vis competing domestic products, that
would suffice for a panel to conclude that the measure is indeed trade -restrictive.1105 In our view,
the Panel's articulation of the legal standard under Article 2.2 reflects this understanding.1106
6.387. We further understand that the appellants seek to import a new and different notion of
"competitive opportunities" and "conditions of competition" into the test of a measure's trade
restrictiveness. The appellants appear to consider that a showing of a reduction in the competitive
opportunities of some imported products vis-à-vis all other products in the market, including other
imported products from the same Member , suffices to demonstr ate trade restrictiveness. Both
appellants insist that the measure reduced competitive opportunities for imported products, that this
sufficed to demonstrate trade restrictiveness, and that the fact that the TPP measures were not
shown to discriminate against imported products is irrelevant. 1107 In their view, a reduction in the
competitive opportunities of products associated with individual brands suffices to show trade
restrictiveness.1108 Thus, under the appellants' approach, it is not the competitive opportu nities of
imported products as a group that must be shown to suffer, but rather the competitive opportunities
of any imported product vis-à-vis other products (including other imported products from the same
Member), in order for a panel to find that a measure is trade-restrictive.
6.388. We note that the Panel did not explicitly address this aspect of the complainants' arguments
as a question of interpretation. As we understand it, however, the Panel's finding in
paragraph 7.1167 of its Report (which is appealed) reveals the Panel's interpretative view on this
issue. Specifically, the Panel stated that "the TPP measures limit the opportunity for producers to
differentiate their products" and that "by restricting the opportunity for brands to differentiate
themselves, the TPP measures limit the opportunity for tobacco manufacturers to compete".1109 The
Panel concluded, however, that this merely amounted to a "modification of the competitive
environment for all tobacco products on the entire market", which did not const itute, "in itself, a

1104 We note the Panel's finding that trade-restrictiveness need not be assessed "only on the basis of the
of the effect of the measure on trade of all WTO Members, in all products that are the subject of the technical
regulation". (Panel Report, para. 7.1078. See also ibid., para. 7.1088) This finding is not appealed.
1105 Consistently with this understanding, the Appellate Body, in referring to Article 2.2 as context to
interpret Article 2.1, implied that discriminatory measures could be considered an obstacle to trade within the
meaning of Article 2.2. (Appellate Body Report, US – Clove Cigarettes, para. 171)
1106 See paras. 6.375. 6.376. above.
1107 Honduras' appellant's submission, paras. 508-511; Dominican Republic's appellant's submission,
paras. 1310-1315.
1108 Both appellants consider that the Panel erred by failing to find that a reduction in the opportunity for
manufacturers to differentiate their products on the basis of brands was sufficient to demonstrate trade
restrictiveness. (Honduras' appellant's submission, para. 476; Dominican Republic's appellant's submission,
paras. 1286-1287) Honduras states that, "as the Panel had accepted … that the TPP measures affected the
conditions of competition on the Australian market (e.g. through reduced opportunities to differentiate
products), that should have been the end of the matter." (Honduras' appellant's submission, para. 520
(emphasis added)) Honduras also states that "the TPP measures had an obvious limiting effect on competitive
opportunities for, among others, imported tobacco products … The fact that this limiting effect on trade equally
applied to all tobacco products on the Australian market is irrelevant to a determination of trade
restrictiveness." (Honduras' appellant's submission, para. 511 (emphasis added)) Since Honduras does not
consider that discrimination is relevant to the analysis, the reduced competitive opportunities to which
Honduras is referring appear to be changes in the conditions of competition for (the products of) individual
producers in the market. The Dominican Republic explains that the Panel erred in considering that an
evaluation of competition in international trade "should be focused on the ability of producers to compete
based on lower prices, rather than on other factors, such as quality, reputation, etc." (Dominican Republic's
appellant's submission, para. 1294 (italics original; underlining added)) The Dominican Republic also states
that "[m]easures like the TPP measures – which fundamentally erode the opportunities for foreign producers to
win loyal consumers willing to pay for their preferred products – place a commercially significant limitation on
the competitive opportunities that are the lifeblood of international trade." (Dominican Republic's appellant's
submission, para. 1289 (emphasis added)) We also note that, before the Panel, the Dominican Republic was
clear that the relevant competitive opportunities at issue are the "competitive opportunities for producers of
tobacco products". (Dominican Republic's first written submission to the Panel, para. 1022 (emphasis added))
The Dominican Republic also stated that, "Australia's [TPP] measures are designed, structured, and
implemented to eliminate the opportunity for producers to differentiate their products." (Dominican Republic's
second written submission to the Panel, para. 933 (emphasis added))
1109 Panel Report, para. 7.1167.
WT/DS435/AB/R • WT/DS441/AB/R

restriction on 'competitive opportunities' for imported tobacco products". 1110 The Panel considered
that "it need[ed] to be shown how such effects on the conditions of competition on the market give
rise to a limiting effect on internatio nal trade". 1111 We therefore understand that the Panel
distinguished between a reduction in the competitive opportunities of brand -owners/producers and
a reduction in the competitive opportunities of imported products vis -à-vis domestic products. The
Panel considered that the latter would suffice to demonstrate trade restrictiveness, but that the
former, by itself, would be insufficient.
6.389. We agree with the Panel that the mere fact of a modification of the conditions of competition
in a market would not necessa rily suffice for a panel to conclude on the degree of trade
restrictiveness, if any, of a particular technical regulation. We recall that a determination of the
degree of trade restrictiveness requires a panel to assess the degree to which the measure caus es
a limiting effect on international trade . We note the Panel's interpretative finding that, "when
considering the effects of a technical regulation (including whether the technical regulation has a
limiting effect on trade), consideration might be given to … 'both import -enhancing and
import-reducing effects on the trade of other Members'." 1112 None of the participants has appealed
this finding, and, in response to questioning at the first hearing, all participants agreed with this
finding.1113 In our view, a non-discriminatory modification of conditions of competition in a market
may have both tra de-enhancing and trade -reducing effects on trade, such that it could plausibly
have a net positive effect on trade between Members. In a situation where a measure merely
modifies the conditions of competition of individual producers within a market, and a panel is unable
to anticipate the impact of the measure on the conditions of competition for imported products, as
a group, from a Member, we do not see how the panel could conclude that the measure will
necessarily have a limiting effect on international trade, much less determine the overall degree of
trade restrictiveness of the measure in question, which could in turn inform the panel's assessment
of whether there is a possible alternative measure that is less trade-restrictive than that
measure.1114 We therefore consider that the Panel did not err in considering that a demonstration of
a reduction in the competitive opportunities of certain imported products vis-à-vis all other products
in the market (including other imported products) would not necessarily suffice to demonstrate the
degree of trade restrictiveness of a measure.
6.390. The appellants' arguments regarding conditions of competition and competitive opportunities
might also be understood as suggesting that, in a situation where all imported products suffer the
same detrimental impact (for instance, as alleged in these disputes, a reduction in the opportunity
to differentiate), such a "general limitation" that is equally applicable to all products in the market
would suffice to demonstrate trade restrictiveness.1115 Under this understanding of their arguments,
the appellants' simultaneous argument s that the "conditions of competition" in the market have
been altered and that all products have suffered the same detrimental impact are misleading, if not
contradictory. Notions of conditions of competition necessarily concern competition between goods
in the market rather than a generic detrimental impact applicable to an equal extent to all goods in

1110 Panel Report, para. 7.1167.
1113 We recognize that the Panel's use of the word "might" could be read as indicating that panels have
discretion as to whether to take into account import-enhancing effects when determining the trade
restrictiveness of a technical regulation. This would seem to imply that different panels could potentially apply
different legal standards when applying Article 2.2. In our view, panels are not at liberty to arbitrarily apply
distinct legal standards of the same provision. However, we note that the word "might" could also be read as
indicating that a panel should take into account both trade-enhancing and trade-reducing aspects of a technical
regulation when both such effects are present. This appears to be the meaning attributed by the participants to
the Panel's finding on this issue, and we also consider this to be the appropriate standard under Article 2.2. We
note that the Panel itself applied this standard when assessing the degree of trade restrictiveness of the
TPP measures in these disputes. (See Panel Report, para. 7.1235)
1114 The essential question is whether the panel is able to determine, or anticipate, the limiting effect of
the measure on international trade.
1115 We note, for example, Honduras' reference to a "general limitation on the opportunity to compete"
and its statement that "[t]he fact that this limiting effect on trade equally applied to all tobacco products … is
irrelevant to a determination of trade restrictiveness", as well as the Dominican Republic's statement that it is
"the high-end products that suffer from the greatest loss of competitive opportunity", thereby implying
simultaneously that low-end products also suffer some detrimental impact but that such detrimental impact is
less severe for low-end products than it is for high-end products. (Honduras' appellant's submission,
paras. 507 and 511; Dominican Republic's appellant's submission, para. 1308)
WT/DS435/AB/R • WT/DS441/AB/R

the market. In any event, the burden of demonstrating the existence of such a general limitation as
well as its limiting effect on international trade rests on the complainant. We return to this issue
when addressing the appellants' claims that the Panel erred in its application of Article 2.2.1116
6.391. We recall that both appellants consider that the Panel erred by effectively requiring that, in
situations where a non-discriminatory measure is challenged under Article 2.2, it is necessary for a
complainant to provide evidence of actual trade effects in order to demonstrate the trade
restrictiveness of the measure. 1117 The Panel found that, "[h]ow the existence and extent of
trade-restrictiveness is to be demonstrated in respect of technical regulations that are not alleged
to be discriminatory will depend, as is the case for other technical regulations, on the circumstances
of a given case ."1118 The Panel elaborated that a demonstration of trade restrictiveness "could be
based on qualitative or quantitative arguments and evidence, or both, including evidence relating to
the characteristics of the challenged measure as revealed by its design and operation" .1119 In our
view, these statements by the Panel are accurate in describing the legal standard under Article 2.2,
as articulated by the Appellate Body in US – COOL (Article 21.5 – Canada and Mexico).1120 Indeed,
there is little disagreement amongst the participants that how to demonstrate trade restrictiveness
depends on the circumstances of each case.1121 We therefore consider that the Panel did not interpret
Article 2.2 such that evidence of "actual trade effects" is always required for a complainant to
demonstrate the trade restrictiveness of a non -discriminatory measure.1122 We also return to this
issue in addressing whether the Panel erred in its application of Article 2.2 in the particular
circumstances of these disputes.1123
6.392. We note further that certain statements by Honduras might be read as suggesting that there
is no circumstance in which any evidence other than the design and structure of a measure is
necessary for a complainant to demonstrate the trade restrictiveness of the measure within the
meaning of Article 2.2.1124 We disagree. In certain circumstances, a measure's design and structure

1116 See para. 6.408. below.
1117 Honduras' appellant's submission, paras. 514-527; Dominican Republic's appellant's submission,
paras. 1247 and 1310-1316. Honduras also argues that, "according to the Panel, there is only a 'limiting effect'
or 'restriction' on international trade when a restriction is imposed at the border (i.e. de jure limits competitive
opportunities of imported products) or when it affects imported products more than domestic products, or
certain imported products more than others (i.e. it limits competitive opportunities in a discriminatory
manner)." (Honduras' appellant's submission, para. 507)
1118 Panel Report, para. 7.1075.
1119 Panel Report, para. 7.1076. The Panel also highlighted that "it will not always be possible to quantify
a particular factor analysed under Article 2.2, or to do so with precision." (Panel Report, para. 7.1076
(referring to Appellate Body Reports, US – COOL (Article 21.5 – Canada and Mexico), para. 5.208))
1120 Specifically, the Appellate Body explained that "the demonstration of a limiting effect on competitive
opportunities in qualitative terms might suffice in the particular circumstances of a given case."
(Appellate Body Reports, US – COOL (Article 21.5 – Canada and Mexico), para. 5.208 (referring to
Appellate Body Reports, US – COOL, para. 477) (emphasis added)) The Appellate Body also stated that:
At the same time, evidence of actual trade effects may also be probative in making this
assessment. … For instance, a detrimental modification of competitive opportunities may be
self-evident in respect of certain de jure discriminatory measures, whereas supporting evidence
and argumentation of actual trade effects might be required to demonstrate the existence and
extent of trade-restrictiveness in respect of non-discriminatory internal measures that address a
legitimate objective.
(Appellate Body Reports, US – COOL (Article 21.5 – Canada and Mexico), fn 643 to para. 5.208 (referring to
Appellate Body Report, EC – Poultry, paras. 126-127)) (emphasis added)
1121 See, for example, Honduras' appellant's submission, paras. 496-497; Dominican Republic's
appellant's submission, para. 1288.
1122 Honduras' appellant's submission, para. 507; Dominican Republic's appellant's submission,
para. 1310. We also disagree with Honduras that the Panel considered that a limiting effect on international
trade can only consist of a restriction imposed at the border or a discriminatory measure. (Honduras'
appellant's submission, para. 507)
1123 See para. 6.409. below.
1124 According to Honduras, "there is nothing in the Appellate Body's report in US – COOL (Article 21.5 –
Canada and Mexico) that suggests that a demonstration of actual trade effects would ever be required."
(Honduras' appellant's submission, para. 523) Honduras states, also in reference to the Appellate Body's
findings in US – COOL (Article 21.5 – Canada and Mexico) that "[n]owhere in footnote 643 … did the
Appellate Body state that actual trade effects are 'necessary', 'required' or 'dispositive' to ascertain a technical
regulation's trade restrictiveness." (Ibid., para. 497) In Honduras' view, "established WTO jurisprudence
underscores that a demonstration of a 'limiting effect' need not be based on quantitative evidence but can
sufficiently be based on qualitative evidence such as the measure's design and architecture." (Ibid., para. 494
WT/DS435/AB/R • WT/DS441/AB/R

may be insufficient for a panel to anticipate whether and to what extent the measure will have a
limiting effect on international trade.1125 If a panel is unable to anticipate whether and to what extent
a measure is trade -restrictive based exclusively on its examination of the design and structure of
the measure (for instance, because the measure's design and structure leads the panel to conclude
that the measure could have both trade-enhancing and trade-reducing effects), then the panel must
take into account the additional evidence and arguments adduced by the parties.1126 Such additional
evidence might include evidence of actual trade effects or evidence of a qualitative or quantitative
nature that may inform the panel's determination of the anticipated effects of the measure.
6.393. In any event, there is no obligation on a panel to cease its analysis of the trade
restrictiveness of a measure after examining only a subset of the evidence (such as the design and
structure of the measure, or mor e generally the evidence related to the anticipated effects of the
measure). Indeed, it is appropriate for panels to take into account all relevant evidence adduced by
the parties before concluding on the degree of trade restrictiveness. For instance, in US – COOL, the
Appellate Body considered the Panel's examination of the actual trade effects to be relevant to the
determination of the degree of trade restrictiveness, notwithstanding that the design and structure
of the measure revealed that it was trade-restrictive.1127 In short, there is no obligation on a panel
to exclude any evidence in assessing the trade restrictiveness of the measure and an examination
of additional available evidence (such as evidence of actual trade effects) may be necessary in order
for the panel to determine the trade restrictiveness of the measure.
6.394. On the basis of the foregoing, we conclude that the appellants have not demonstrated that
the Panel erred in its interpretation of Article 2.2 of the TBT Agreement.
6.1.3.2 Whether the Panel erred in its application of Article 2.2
6.1.3.2.1 Overview
6.395. In order to determine the degree of trade restrictiveness of the TPP measures, the Panel
began by addressing the complainants' argument that the TPP measures were trade-restrictive on
the basis that it was "ev ident from the design, structure, and expected operation of the measures
that [they] severely limit[] competitive opportunities to differentiate tobacco products". 1128 The
Panel agreed with the complainants that the TPP measures would limit the opportunity for producers
to differentiate their products. However, the Panel considered that it was unclear how this
modification of the conditions of competition in the entire tobacco product market amounted to a
limiting effect on international trade. The Panel also observed that this alteration in the competitive
environment might, in fact, increase competition in the market.1129 In the Panel's view, it needed to
be shown how such effects on the conditions of competition in the market amount to a limiting effect
on international trade.1130
6.396. The Panel proceeded with its analysis by addressing separately the complainants' arguments
relating to: (i) the effects of the TPP measures on barriers to entry into the Australian market 1131;
(ii) the effects of the TPP measures on the volu me and value of trade in tobacco products 1132;

(referring to Panel Report, Indonesia – Import Licensing Regimes, para. 7.50)) For its part, and
notwithstanding its incorporation by reference of Honduras' claims and arguments, the Dominican Republic
considers that "the Panel correctly pointed out that evidence of the actual trade effects may sometimes be
necessary to show a limitation on competitive opportunities." (Dominican Republic's appellant's submission,
1125 This is exactly what the Appellate Body stated in US – COOL (Article 21.5 – Canada and Mexico).
1126 A failure by the panel to do so would not only prejudice a complainant, rather than a respondent,
but would be inconsistent with the panel's duty under Article 11 of the DSU to make an objective assessment
of the matter before it.
1127 Appellate Body Reports, US – COOL, para. 477.
1128 Panel Report, para. 7.1164 (quoting Dominican Republic's response to Panel question No. 117,
para. 233).
1129 Panel Report, para. 7.1167.
1130 Panel Report, para. 7.1168.
1131 Panel Report, paras. 7.1172-7.1187.
1132 Panel Report, paras. 7.1188-7.1225.
WT/DS435/AB/R • WT/DS441/AB/R

(iii) compliance costs arising from the TPP measures1133; and (iv) penalties under the
TPP measures.1134
6.397. Regarding the argument that the TPP measures raise barriers to entry into the Australian
market, the complainants had argued that the "communication effect" of plain packaging (whereby
"successful entry for potential entrants becomes significantly more difficult without the possibility to
create brand awareness") and the "competitive effect" (whereby "producers need to reduce prices
to address consumers' reduced willingness to pay") increase barriers to entry.1135 The Panel rejected
these arguments, noting that, in addition to the communication and competitive effects of the
TPP measures, there is also a "contestability effect" that will have a positive effect on entry to the
market.1136 The Panel considered there to be "significant uncertainty about the strength and the
relative weight of each of the three effects on entry", and was unpersuaded that "the TPP measures
have raised or will significantly raise the barriers to entry into the Australian market."1137 The Panel
concluded that the complainants had not demonstrated that the TPP measures would have "an
adverse impact on the opportunity for imported product s to gain access to and compete on the
Australian market for tobacco products".1138
6.398. The Panel proceeded to consider the impact of the TPP measures on the volume and value
of trade in tobacco products. Regarding the volume of trade, the Panel found that the TPP measures
resulted in a reduction in the volume of imports of premium tobacco products both in relative and
absolute terms.1139 The Panel did not consider that the decrease in the consumption and imports of
premium tobacco products was exclusively the resul t of "downtrading".1140 The Panel rejected the
argument that decreased demand for imported tobacco products, in and of itself, amounts to a
limiting effect on trade.1141 The Panel considered that, "in order to demonstrate that TPP measures
are trade-restrictive, a demonstration of alleged effects of the TPP measures on demand would not
be sufficient. Instead, a demonstration of effects on consumption would be needed."1142 The Panel
found, however, that the TPP measures did indeed contribute to the reduction of cigar ette
consumption1143, noted that "the Australian market is in fact supplied entirely through imported
tobacco products" 1144, and concluded that, "by reducing the use of tobacco products, [the
TPP measures] reduce the volume of imported tobacco products on the Au stralian market, and
thereby have a 'limiting effect' on trade."1145
6.399. The Panel then addressed the parties' arguments regarding the value of trade in tobacco
products, namely, that a "reduction in brand differentiation possibilities caused by the TPP measures
will lead to an increase in price competition and a fall in prices, and consequently to a decrease in
the sales value of tobacco products and the total value of imports". 1146 The Panel found that the
"evidence suggests that the measures have led to an increa se in the price of cigarettes which has
more than offset the decrease in the quantity of cigarettes consumed and has thereby contributed

1133 Panel Report, paras. 7.1226-7.1246.
1134 Panel Report, paras. 7.1247-7.1254.
1135 Panel Report, para. 7.1173. Indonesia also argued that the TPP measures make it "more difficult for
imported products to establish an identity with consumers who are already familiar with domestic brands".
(Panel Report, para. 7.1175)
1136 Panel Report, para. 7.1179.
1137 Panel Report, para. 7.1183.
1138 Panel Report, para. 7.1187.
1139 Panel Report, para. 7.1196.
1140 Panel Report, paras. 7.1197-7.1198. Regarding whether the TPP measures had caused
"downtrading", whereby "consumers buy a cheaper brand than the brand that they bought before the
TPP measures were introduced", the Panel concluded that the "reduction in the ratio of higher- to low-priced
cigarette wholesale sales observed since the entry into force of the TPP measures results at least in part from
the intended operation of the TPP measures and their effect on the consumption of tobacco products more
generally." (Ibid., paras. 7.1109 and 7.1196) The Panel also defined downtrading as "consumers shift[ing]
from the more expensive brands to the less expensive brands because they have a higher willingness to switch
brands and a lower willingness to pay". (Ibid., para. 7.1123 (referring to Indonesia's response to Panel
question No. 117))
1141 Panel Report, paras. 7.1199-7.1201.
1143 Panel Report, para. 7.1205.
1144 Panel Report, para. 7.1207.
1146 Panel Report, para. 7.1209.
WT/DS435/AB/R • WT/DS441/AB/R

to an increase in the value of the market."1147 The Panel rejected the Dominican Republic's argument
that the TPP measures had already resulted in switching from higher- to lower-priced cigarettes (and
consequently a reduction in the value of trade), on the basis that "brands in the higher priced
segments generally maintained or increased their pricing premiums over brands in the lower-priced
segments in the first year following the implementation of plain packaging, and have not exhibited
a marked drop."1148 The Panel also considered whether prices will "ultimately decline" over time.1149
The Panel noted the difficulties of predicting "the evolution of competitive interactions", but
highlighted that cigarette prices have increased since the introduction of the T PP measures and
brands in higher priced market segments have maintained or increased their pricing premiums over
lower-priced brands, suggesting that price competition has not increased.1150 The Panel nevertheless
considered that the evidence did not allow it "to exclude the possibility that the TPP measures may
have reinforced price competition, which does not seem unreasonable, nor … that they may reinforce
it in the future". 1151 The Panel therefore concluded that, "while the complainants have not
demonstrated that the TPP measures have reduced the value of imported tobacco products on the
Australian market, it cannot be excluded that this may happen in the future, either as a result of the
effect of the measures on consumption only or as a result of this effect combined with a fall in
prices."1152
6.400. Regarding the argument that the TPP measures are trade -restrictive because they entail
compliance costs, the Panel considered that, while some compliance costs may be of such a
magnitude or nature as to be trade-restrictive, technical regulations might also create a regulatory
environment in which "operating costs are reduced, thereby enhancing competitive opportunities
and facilitating trade."1153 The Panel considered that the complainants had done little to substantiate
their general assertions concerning the compliance costs of the TPP measures.1154 Overall, the Panel
considered that the complainants failed to identify how the costs of complying with the TPP measures
are of such a nature or magnitude as to have a limiting effect on trade.1155
6.401. Finally, regarding the argument that "a penalty itself may operate as a restriction on
international trade" and that, in this case, the penalties imposed under the TPP measures are
trade-restrictive1156, the Panel did not exclude the possibilit y "that a technical regulation imposing
costly penalties on importation may, in the circumstances of a given case, have a limiting effect on
trade and, as a result, be 'trade -restrictive' within the meaning of Article 2.2".1157 However, in the
circumstances of this case, the Panel did not consider that "the imposition of penalties to ensure
compliance with the requirements of the TPP measures results, in itself, in an 'additional' limiting
effect on imports beyond what would be induced by full compliance with the TPP requirements
themselves."1158
6.402. Overall, the Panel concluded that the TPP measures are trade -restrictive insofar as they
reduce the volume of imported tobacco products on the Australian market, thereby having a "limiting
effect" on trade.1159 The Panel considered it plausible that the measures could, over time, affect the
overall value of tobacco imports, but did not consider that the evidence demonstrate d that to have
occurred to date.1160 The Panel further concluded that the complainants had not demonstrated that
"the TPP measures impose conditions on the sale of tobacco products in Australia or compliance
costs of such magnitude that they would amount to a limiting effect on trade."1161

1147 Panel Report, para. 7.1218.
1148 Panel Report, para. 7.1221.
1149 Panel Report, para. 7.1222.
1150 Panel Report, para. 7.1224.
1151 Panel Report, para. 7.1224.
1152 Panel Report, para. 7.1225.
1153 Panel Report, para. 7.1235. (emphasis original; fn omitted)
1154 Panel Report, paras. 7.1241-7.1246.
1155 Panel Report, para. 7.1242.
1156 Panel Report, paras. 7.1247-7.1254.
1157 Panel Report, para. 7.1248.
1158 Panel Report, para. 7.1254. The Panel was therefore not persuaded that "the existence of these
penalties, or their level, lead[s] to a greater degree of trade-restrictiveness than that arising from compliance
with the relevant requirements of the TPP measures." (Ibid.)
1159 Panel Report, para. 7.1255.
1160 Panel Report, para. 7.1255.
1161 Panel Report, para. 7.1255.
WT/DS435/AB/R • WT/DS441/AB/R

6.403. On appeal, both appellants claim that the Panel erred in its application of Article 2.2 of the
TBT Agreement by failing to find that a reduction in the opportunity for products to differentiate on
the basis of brands sufficed to demonstrate the trade restrictiveness of the TPP measures.1162 The
appellants also claim that the Panel erred in its application of Article 2.2 in determining the effect of
the TPP measures on the value of imported tobacco products. 1163 We proceed by addressing each
set of arguments in turn.
6.1.3.2.2 The reduced opportunity for products to differentiate on the basis of brands
6.404. The appellants argue that the Panel erred in its application of Article 2.2 of the
TBT Agreement by finding that, although the TPP measures reduced the opportunity for products to
differentiate on the basis of brands, this did not demonstrate the trade restrictiveness of the
TPP measures.1164 Both appellants consider that the Panel found that the reduction in the opportunity
to differentiate products on the basis of brands did not demonstrate trade restrictiven ess because
the TPP measures were not shown to discriminate against imported products.1165 In their view, this
is an incorrect application of Article 2.2, and instead the Panel's finding that the TPP measures
reduced the opportunity for products to compete on the basis of brands should have sufficed for the
Panel to determine the trade restrictiveness of the TPP measures.1166 Both appellants also consider
that the Panel incorrectly required the complainants to adduce evidence of "actual trade effects" in
order to find that the TPP measures are trade-restrictive.1167 Additionally, the Dominican Republic
argues that the Panel's reason for rejecting the complainants' argument based on the design and
structure of the TPP measures (namely, that the reduced opportunity to differentiate "may in
principle increase competition on the market" 1168) "wrongly implies that an evaluation of
'competition' and 'competitive opportunity' in international trade should be focused on the ability of
producers to compete based on lower prices, rather than on other factors, such as quality,
reputation, etc.".1169
6.405. Australia submits that, in its application of Article 2.2, the Panel "neither required that the
TPP measures were discriminatory, nor applied a 'heightened' evidentiary standard of actual t rade
effects for non -discriminatory measures".1170 Australia considers that if the Panel had imposed a
"discrimination requirement" under Article 2.2, "it would have concluded that the absence of any
discrimination between imported and domestic tobacco produc ts under the TPP measures was
dispositive of 'trade-restrictiveness'."1171 However, in Australia's view, the Panel did not do that, but
rather examined "the three distinct bases upon which the complainants argued that the
TPP measures were trade -restrictive".1172 Australia further argues that the Panel did not require
evidence of "actual trade effects" and rather examined the qualitative evidence on its own terms,
concluding that such evidence was insufficiently persuasive.1173
6.406. We recall that the legal standard under Article 2.2 requires a panel to determine the extent
to which a technical regulation has a limiting effect on international trade. Where a measure modifies
the conditions of competition in the market, a panel must be satisfied that such modification will
have a limiting effect on trade in order to conclude that the measure is trade -restrictive. Such a

1162 Honduras' appellant's submission, paras. 511 and 517-518; Dominican Republic's appellant's
submission, paras. 1290 and 1308-1309.
1163 Dominican Republic's appellant's submission, paras. 1317-1338; Honduras' and the
Dominican Republic's responses to questioning at the first hearing. Neither appellant has challenged the Panel's
findings regarding barriers to entry into the Australian tobacco market, compliance costs, or penalties.
1164 Honduras' appellant's submission, paras. 511 and 517-518; Dominican Republic's appellant's
submission, paras. 1290 and 1308-1309.
1165 Honduras' appellant's submission, paras. 507-513; Dominican Republic's appellant's submission,
paras. 1310-1316.
1166 Honduras' appellant's submission, paras. 476 and 485-486; Dominican Republic's appellant's
submission, paras. 1308 and 1315.
1167 Honduras' appellant's submission, paras. 514-527; Dominican Republic's appellant's submission,
paras. 1247 and 1312-1315.
1169 Dominican Republic's appellant's submission, para. 1294. (emphasis original) See also ibid.,
paras. 1290-1309.
1170 Australia's appellee's submission, para. 305.
1171 Australia's appellee's submission, para. 310.
1172 Australia's appellee's submission, para. 310.
1173 Australia's appellee's submission, paras. 321-330.
WT/DS435/AB/R • WT/DS441/AB/R

limiting effect on trade may be self -evident in cases of de jure discriminatory measures. However,
a non -discriminatory modification of conditions of compet ition in a market may have both
trade-enhancing and trade -reducing effects on trade, such that a panel could not necessarily
anticipate whether the measure will have a limiting effect on trade based exclusively on its design
and structure. If a panel's examination of a subset of the evidence (such as the design and structure
of the measure) leaves it unable to determine whether the measure will have a limiting effect on
trade, the panel must proceed to examine all additional arguments and evidence. In any event, even
if a panel considers a subset of the evidence (such as the design and structure of the measure)
sufficient to determine the trade restrictiveness of the measure, the panel is not precluded from
examining additional arguments and evidence for pur poses of defining the degree of trade
restrictiveness.1174
6.407. In these disputes, the Panel considered that it was not able to determine, exclusively on the
basis of its examination of the design and structure of the TPP measures, whether the TPP measures
are tr ade-restrictive. The Panel agreed with the complainants that "the TPP measures limit the
opportunity for producers to differentiate their products" and that, "by restricting the opportunity
for brands to differentiate themselves, the TPP measures limit the opportunity for tobacco
manufacturers to compete on the basis of such brand differentiation."1175 The Panel stated, however,
that it was not persuaded that "this modification of the competitive environment for all tobacco
products on the entire market (which may in principle increase competition on the market)
constitutes, in itself, a restriction on 'competitive opportunities' for imported tobacco products that
must be assumed to have a 'limiting effect' on international trade."1176
6.408. We note that, in forming this conclusion, the Panel highlighted that brand differentiation is
valuable in international trade because "differentiation engenders consumer loyalty and increases
consumers' willingness to pay."1177 This indicates that the impact of the reduction in the opportunity
to differentiate will be different for different producers depending on the specific degree of customer
loyalty associated with different producers' brands.1178 Thus, while a reduction in the opportunity to
differentiate might harm the competitive opportunities of some products, it would necessarily seem
to improve the competitive opportunities of other competing products. These findings by the Panel
indicate that, to the extent that the competitive opportunities of some imported products might be
adversely affected by a reduction in the opportunity to brand -differentiate, the competitive
opportunities of other imported products (including other imported products from the same Member)
that compete with such products would simultaneously benefit. 1179 We therefore do not consider
that, on appeal, the appellants have demonstrated that the Panel erred by failing to find that the
reduction in the opportunity to differentiate between different products caused by the TPP measures
necessarily amounts to a limiting effect on international trade.
6.409. Having upheld the Panel's determination that it was unable to conclude on the degree of
trade restrictiveness on the basis of its examination of the design and structure of the TPP measures,
we also disagree with the appellants that the Panel required evidence of "actual trade effects" or
applied a " higher evidentiary burden" on the basis that the TPP measures were not shown to be

1174 See para. 6.393. above.
1175 Panel Report, para. 7.1167.
1177 Panel Report, para. 7.1167.
1178 We note that, although aspects of the appellants' arguments might be understood as focusing on
the detrimental impact of the measure on producers, the Panel did indeed find that the TPP measures impact
producers' products, when it stated that "the TPP measures limit the opportunity for producers to differentiate
their products." (Panel Report, para. 7.1167 (emphasis added))
1179 Indeed, this precise effect of the measure was asserted by the complainants in the context of their
downtrading arguments. Honduras, for example, argued that the TPP measures "caused a downward
substitution effect, whereby 'consumers purchase relatively fewer higher-quality and higher-priced products,
and instead purchase relatively more lower-quality and lower-priced products'." (Panel Report, para. 7.1189
(quoting Honduras' first written submission to the Panel, paras. 372-379)) (See also Panel Report,
paras. 7.1190-7.1192 (referring to Dominican Republic's first written submission to the Panel, para. 978;
second written submission to the Panel, para. 938; response to Panel question Nos. 117, 125-126, and 151;
comments on Australia's response to Panel question No. 151; Cuba's comments on Australia's response to
Panel question No. 165, para. 26; Indonesia's first written submission to the Panel, paras. 397-399;
second written submission to the Panel, para. 270; response to Panel question Nos. 117 and 165))
WT/DS435/AB/R • WT/DS441/AB/R

discriminatory.1180 There is no indication that the Panel's conclusions with respect to brand
differentiation were exclusively based on the fact that the TPP measures were non-discriminatory.
To the contrary, the Panel's rejection of the argument that t he reduction in the opportunity to
brand-differentiate demonstrated trade restrictiveness was on the basis that this fact alone was
insufficient for it to anticipate whether the net effect of the TPP measures would be
trade-restrictive.1181 For this reason, t he Panel proceeded to examine the additional evidence and
arguments adduced by the parties. Furthermore, the Panel did not require such additional evidence
or argumentation to be in the form of "actual trade effects" (by which we understand the parties to
refer to evidence of "actual" effects to date, as opposed to evidence of an "anticipated" effect in the
future). To the contrary, having rejected the parties' arguments based exclusively on the design and
structure of the measure, the Panel examined all evidence regarding both the actual effects to date
as well as evidence informing the expected operation of the measure (i.e. the anticipated effects of
the measure).1182 This included both quantitative and qualitative evidence regarding the anticipated
impact of the measures.1183 The Panel therefore did not require evidence of actual trade effects or
apply a different legal standard to non -discriminatory measures than that applicable to
discriminatory measures. Rather, the Panel correctly sought to determine the extent to which the
TPP measures have a limiting effect on international trade.
6.410. Finally, we note that the Dominican Republic considers that the Panel's reasoning "focused
on the ability of producers to compete based on lower prices, rather than on other factors, such as
quality, reputation, etc.".1184 We understand that this aspect of the Dominican Republic's arguments
focuses on the parenthetical in the Panel's rejection of the complainants' brand -differentiation
argument, where it stated that i t was not persuaded that the "modification of the competitive
environment for all tobacco products on the entire market ( which may in principle increase
competition on the market ) constitutes, in itself, a restriction on 'competitive opportunities' for
imported tobacco products that must be assumed to have a 'limiting effect' on international
trade."1185 In our view, the Panel's parenthetical reference to the TPP measures potentially increasing
competition in the market simply reflects the Panel's view that it s examination of only the design
and structure of the TPP measures was insufficient for it to anticipate the effect of the measure on
international trade. Neither the Dominican Republic nor Honduras has explained, on appeal, how the
fact of a reduction in brand differentiation was sufficient for the Panel to have anticipated the effect
of the measure on trade. We therefore do not consider that the appellants have demonstrated that
the Panel failed to apply Article 2.2 correctly in forming its conclusion tha t the reduction in the
opportunity to differentiate was insufficient for it to determine the degree of trade restrictiveness of
the TPP measures.
6.411. In sum, we can see no reason to question the Panel's conclusion that it was unable to
anticipate, solely on the basis of the design and structure of the measures, whether the anticipated
reduction in the opportunity to differentiate would have an overall negative impact on trade, as

1180 See, for example, Honduras' appellant's submission, para. 490; Dominican Republic's appellant's
submission, para. 1310.
1181 Specifically, the Panel stated that, the limitation on "the opportunity for tobacco manufacturers to
compete on the basis of such brand differentiation" amounted to a "modification of the competitive
environment for all tobacco products on the entire market". (Panel Report, para. 7.1167 (fn omitted)) The
Panel was not convinced that such a modification of the competitive environment in the market "constitutes, in
itself, a restriction on 'competitive opportunities' for imported tobacco products that must be assumed to have
a 'limiting effect' on international trade". (Ibid.)
1182 Panel Report, paras. 7.1172-7.1254. See also paras. 6.397. 6.401. above.
1183 In our view, the complainants' arguments regarding alleged barriers to entry, the expected effect of
the TPP measures on the value of imported products, and the compliance costs and penalties associated with
the TPP measures all relate to the anticipated effects of the TPP measures. We note Honduras' argument that
the Panel dismissed some of the qualitative evidence on the basis that it was unsupported by "evidence
showing the actual effects of the TPP measures". (Honduras' appellant's submission, para. 519 (referring to
Panel Report, para. 7.1181)) A review of the Panel's findings reveals that Honduras' concern pertains to a
single aspect of the complainants' qualitative evidence and concerns the Panel's conclusion that such
qualitative evidence was simply not conclusive in light of contradictory empirical evidence. In short, Honduras
appears to consider that, by concluding that the complainants' qualitative evidence was not persuasive, the
Panel somehow misapplied the legal standard under Article 2.2. We cannot see how the Panel's determination
of the persuasiveness of certain evidence in the face of contradictory evidence implies that the Panel somehow
misapplied the legal standard under Article 2.2.
1184 Dominican Republic's appellant's submission, para. 1294. (emphasis original)
1185 Panel Report, para. 7.1167. (italics original; fn omitted; underlining added)
WT/DS435/AB/R • WT/DS441/AB/R

claimed by the complainants. We therefore reject the appellants' argument that th e Panel erred in
its application of Article 2.2 by concluding that it was unable to anticipate the impact of the
TPP measures on trade based exclusively on the fact that the TPP measures reduce the opportunity
for producers to differentiate their products on the basis of brands.
6.1.3.2.3 The effect of the TPP measures on the value of imported tobacco products
6.412. The appellants argue that the Panel erred in applying Article 2.2, in its assessment of the
impact of the TPP measures on the value of imported tobacco products. Many of the arguments
raised by the appellants in this respect relate to the Panel's findings with respect to so -called
"downtrading". The concept of "downtrading" refers to "[d]ownward substitution from higher - to
low-priced brands" 1186, an d, in the context of the TPP measures, downtrading caused by the
TPP measures refers to "consumers buy[ing] a cheaper brand than the brand that they bought before
the TPP measures were introduced". 1187 We also note that, in its appellant's submission, the
Dominican Republic refers to the extent to which the shift in the ratio of high -end to low -end
cigarette sales was "caused" by downtrading. 1188 Since downtrading, per the Panel's definition, is
the non-attributable shift in the ratio of high-end to low-end cigarette sales, we understand that the
Dominican Republic's use of the term "downtrading" refers specifically to the shift that is attributable
to the TPP measures. For the sake of simplicity, we use the term "downtrading" to refer generically
to the phenomenon of consumers shifting from high-end to low-end cigarettes, without specifically
attributing such downtrading effect to the TPP measures. Where we refer to this downtrading effect
as being caused by the TPP measures, we do so explicitly.
6.413. We observe that the Panel's findings regarding the impact of the TPP measures on value
appear in the subsection of its Report titled "Whether the TPP measures have a limiting effect on the
volume and value of trade in tobacco products". At the first hearing, the participa nts extensively
discussed the correct way to understand the structure and content of the Panel's findings in this
subsection. We observe, in particular, the Dominican Republic's view that the Panel's analysis was
in four parts, consisting of: (i) "downtrading" in paragraphs 7.1189-7.1198; (ii) "demand" in
paragraphs 7.1199-7.1201; (iii) "volume" in paragraphs 7.1202-7.1208; and (iv) "price
competition" in paragraphs 7.1209-7.1225. For the reasons explained below, we consider that the
plain language of the Panel Report indicates that the Panel's analysis of the impact of the
TPP measures on volume and value was, in fact, in three parts: (i) whether the TPP measures caused
downtrading to occur; (ii) the impact of the TPP measures on the volume of imported tobacco
products; and (iii) the impact of the TPP measures on the value of imported tobacco products.
6.414. Before the Panel, the complainants presented several different arguments regarding the
impact of the TPP measures on the volume and value of imported tobacco products. Several of these
arguments relied on the notion that the TPP measures had caused downtrading to occur. In order to
address these arguments, the Panel first assessed the parties' econometric evidence regarding
whether the TPP measures had caused downtrading in the Australian cigarette market. The Panel's
findings in this respect are contained in Appendix E to the Panel Report. The Panel concluded that
the TPP measures contributed to the shift in ratio of higher - to low-priced cigarette sales.1189 The
Panel further stated that it was "unclear to what extent this reduction in the quantity ratio
attributable to the TPP measures represents only downward substitution" and "at least part of the
reduction in the quantity ratio is due to the overall redu ction in the total wholesale sales volume"
attributable to the TPP measures.1190 In other words, the Panel concluded that the TPP measures
contributed to a shift in the ratio of high -end to low -end cigarette sales, and found that the

1186 Panel Report, para. 7.1109.
1187 Panel Report, para. 7.1109 (referring to Dominican Republic's response to Panel question Nos. 117,
125-126, and 151). Alternatively, "[a]s consumers shift from the more expensive brands to the less expensive
brands because they have a higher willingness to switch brands and a lower willingness to pay, downtrading
occurs." (Ibid., para. 7.1123 (referring to Indonesia's response to Panel question No. 117))
1188 See, for example, Dominican Republic's appellant's submission, paras. 1323 and 1329.
1189 This is reflected in the Panel's statements that "the TPP measures appear to have had a negative
impact on the ratio of higher- to low-priced cigarette wholesale sales", and "there is some econometric
evidence suggesting that the TPP measures contributed to the reduction in the ratio of higher- to low-priced
cigarette wholesale sales." (Panel Report, para. 7.1196 (fn omitted); ibid., Appendix E, para. 56.c)
1190 Panel Report, Appendix E, para. 56.c. See also ibid., Appendix E, para. 55.
WT/DS435/AB/R • WT/DS441/AB/R

mechanisms by which the TPP measures contributed to this shift were both downward substitution
(i.e. downtrading) and a general decline in tobacco product sales.1191
6.415. In the main body of the Panel Report, the Panel addressed the complainants' arguments that
the TPP measures are trade -restrictive by reducing the volume and value of imported tobacco
products. The complainants' arguments included, inter alia, arguments that downtrading caused by
the TPP measures: (i) led to a decline in the volume of premium tobacco product sales in
Australia1192; and (ii) led to, or would lead to, a decline in the overall value of tobacco product sales
in Australia. 1193 In our view, the Panel did not assess the "volume" and "value" aspects of the
complainants' downtrading arguments together, but rather assessed them separately. Specifically,
we understand that the Panel conducted its analysis by first considering all arguments regarding the
impact of the TPP measures on the volume of imported tobacco products , and then turning to
address the impact of the TPP measures on the value of imported tobacco products.1194
6.416. First, regarding the impact of the TPP measures on volume, t he Panel stated that the
complainants "demonstrated that the TPP measures have contributed to a reduction of the volume
of imports of premium tobacco products both in relative and in absolute terms". 1195 The Panel
elaborated that "there is some evidence, albe it limited, that together with the enlarged GHWs
introduced on the same date, the TPP measures appear to have had a negative impact on the ratio
of higher- to low-priced cigarette wholesale sales."1196 The Panel considered it "reasonable to expect"
that the reduction in ratio of higher- to low-priced cigarette sales observed since the entry into force
of the TPP measures resulted "at least in part" from the TPP measures.1197 The Panel also noted that
"overall consumption of tobacco products" has diminished, that "this is at least partly attributable"
to the TPP measures, and that, since the Australian market is "supplied entirely through imported
products", there will be a reduction in imports of such premium products.1198 The Panel highlighted,
however, that this de crease in consumption and imports of premium tobacco products was not
exclusively caused by downtrading, since (i) the overall consumption of tobacco products has
decreased (meaning that "at least some part of the decrease in the consumption of premium tobacco
products has not been substituted"), and (ii) "the higher- and lower-priced segments of the market

1191 We address in section 6 6.1.3.3 below the Dominican Republic's claims that this factual finding by
the Panel was inconsistent with Article 11 of the DSU.
1192 Before the Panel, Cuba argued that downtrading caused by the TPP measures would impact the
volume of Cuba's trade in cigars. (Panel Report, para. 7.1191) The Panel also appeared to consider that other
arguments raised by the Dominican Republic, Honduras, and Indonesia also implicated the effects of
downtrading on the volume of premium imported tobacco products. (Panel Report, paras. 7.1189-7.1195)
1193 Panel Report, para. 7.1209.
1194 We note that the entirety of the Panel's analysis in paragraphs 7.1196 to 7.1208 concerns the
impact of the TPP measures on volume. Furthermore, paragraph 7.1208 contains a general conclusion on the
trade restrictiveness of the TPP measures with respect to their impact on volume. Almost the entirety of the
remainder of the Panel's analysis in that subsection, from paragraphs 7.1209 to 7.1225, relates to the Panel's
analysis of the impact of the TPP measures on the value of imported tobacco products, and similarly culminates
in a general conclusion regarding the trade restrictiveness of the TPP measures in terms of their impact on
value. The only exception to this is paragraph 7.1219, which concerns "overall imports of cigars and cigarillos",
"the impact of the TPP measures on cigar imports", and "the reduction in cigar smoking prevalence in
Australia". Paragraph 7.1219 concludes that "the TPP measures are trade-restrictive also vis-à-vis cigars."
While we acknowledge that this paragraph does not relate to the impact of the TPP measures on value, but
rather on volume, we note that under the Dominican Republic's understanding of the structure of this section,
paragraph 7.1219 would fall within the Panel's analysis of "price competition". Given that this paragraph plainly
refers to the impact of the TPP measures on the volume of cigar imports, and does not refer to price
competition at all, the location of paragraph 7.1219 is as anomalous under the Dominican Republic's
understanding of the Panel's structure as it is under our own understanding. Essentially, no matter how one
views the structure of the Panel's analysis, paragraph 7.1219 appears to be misplaced. We can see no other
way to reconcile the Panel's conclusion in paragraph 7.1208 on the volume of imported tobacco products
generally with its subsequent, yet apparently preliminary, discussion in paragraph 7.1219 of the impact of the
TPP measures on the volume of cigar products.
1195 Panel Report, para. 7.1196.
1196 Panel Report, para. 7.1196. The Panel based this finding on its analysis in Appendix E to the
Panel Report. Specifically, in Appendix E, the Panel examined whether the TPP measures had caused
consumers to shift from high-end (i.e. more expensive, premium) cigarettes to low-end (i.e. less expensive,
non-premium) cigarettes, and concluded that "there is some econometric evidence suggesting that the
TPP measures contributed to the reduction in the ratio of higher- to low-priced cigarette wholesale sales."
(Panel Report, Appendix E, para. 56.c)
1197 Panel Report, para. 7.1196.
1198 Panel Report, para. 7.1196.
WT/DS435/AB/R • WT/DS441/AB/R

have evolved on the basis of distinct trends … even before the implementation of the
TPP measures."1199 The Panel also concluded that there was no evidence of cigar downtrading, or
any causal link between cigar downtrading and the TPP measures.1200
6.417. The Panel proceeded to address the argument that, as consumers downtrade, demand for
imported tobacco products will decline, and this decline in demand amounts to a limiting effect on
trade (i.e. a "disincentive to export tobacco products to Australia"). 1201 The Panel noted that the
TPP measures can indeed contribute to reducing demand for tobacco products, but considered that,
because the TPP measures will have supply -side implications, with consequences for overall
consumption, a demonstration of effects on demand alone are not sufficient to demonstrate that the
TPP measures are trade -restrictive.1202 The Panel next recalled its finding that "the TPP measures
are apt to, and do in fact, reduce the appeal of tobacco products to the consumer, and that this may
in turn have an impact on smoking behaviours ."1203 The Panel noted that "it is undisputed that the
Australian market is in fact supplied entirely through imported tobacco products"1204, and, on that
basis, concluded that "the TPP measures are trade -restrictive, insofar as, by reducing the use of
tobacco products, they reduce the volume of imported tobacco products on the Australian market,
and thereby have a 'limiting effect' on trade."1205
6.418. The Panel then assessed the impact of the TPP measures on the value of imports.1206 The
Panel agreed with the complainants that, "to the extent that they restrict the use of branding features
on tobacco products and their retail packaging, the TPP measures reduce opportunities for producers
to differentiate their products on the basis of these features ."1207 The Panel proceeded to consider
whether "such reduced opportunity for brand differentiation has led to an increase in price
competition and a fall in prices and consequently to a decrease in the sales value of tobacco products
and the total value of imports." 1208 The Panel concluded that "the empirical evidence … does not
validate the complainants' argument that the TPP measures wil l lead to an increase in price
competition and a fall in prices, and consequently to a decrease in the sales value of tobacco products
and the total value of imports." 1209 In that context, the Panel also concluded that the "evidence
suggests that the measures have led to an increase in the price of cigarettes which has more than
offset the decrease in the quantity of cigarette [s] consumed and has thereby contributed to an
increase in the value of the market."1210
6.419. Thereafter, the Panel addressed the Dominican Republic's argument that, "by reducing brand
differentiation, the TPP measures have already led to switching from higher - to lower -priced
cigarettes and, hence, to a reduction in the value of the trade, without reducing smoking prevalence
or consumption."1211 The Panel considered that the Dominican Republic's argument was "based on
the assumption that the TPP measures would either keep the price of cigarettes constant or reduce
it".1212 The Panel noted that "evidence shows that brands in the higher priced segments g enerally
maintained or increased their pricing premiums over brands in the low er-priced segments in the
first year following the implementation of plain packaging, and have not exhibited a marked drop,
in line with the observation that the average price of cigarettes had increased sufficiently to offset
the decrease in consumption."1213 The Panel concluded that the facts before it did not support the
Dominican Republic's argument.1214 Before concluding with respect to the impact on value, the Panel

1199 Panel Report, para. 7.1197.
1200 Panel Report, para. 7.1198.
1201 Panel Report, paras. 7.1199-7.1201 (referring to Honduras' first written submission to the Panel,
paras. 875-876; response to Panel question No. 117).
1202 Panel Report, paras. 7.1199-7.1201.
1203 Panel Report, para. 7.1206.
1205 Panel Report, para. 7.1208.
1206 Panel Report, paras. 7.1209-7.1218 and 7.1220-7.1225. Regarding paragraph 7.1219 of the
Panel Report, see fn 1192 to para. 6.415. above.
1207 Panel Report, para. 7.1214.
1208 Panel Report, para. 7.1214.
1209 Panel Report, para. 7.1218.
1210 Panel Report, para. 7.1218.
1211 Panel Report, para. 7.1221.
1212 Panel Report, para. 7.1221.
1213 Panel Report, para. 7.1221 (referring to M. Katz, An Economic Assessment of the Effects of Tobacco
Plain Packaging (9 March 2015) (Katz Report) (Panel Exhibit AUS-18), para. 66).
1214 Panel Report, para. 7.1221.
WT/DS435/AB/R • WT/DS441/AB/R

also addressed the argument that, over time, prices will ultimately decline as a consequence of the
TPP measures.1215 The Panel noted that, "at least in the period of observation covered, price
competition has not increased."1216 However at the same time, the evidence did not allow the Panel
"to exclude the possibility that the TPP measures may have reinforced price competition, which does
not seem unreasonable, nor, if this hasn't happened yet, that they may reinforce it in the future".1217
The Panel ultimately concluded that, " while the complainants have not demonstrated that the
TPP measures have reduced the value of imported tobacco products on the Australian market, it
cannot be excluded that this may happen in the future."1218
6.420. The appellants, and predominantly the Dominican Republic, make several sets of arguments
asserting that the Panel erred in determining the trade restrictiveness of the TPP measures based
on their impact on the value of imported tobacco products. Before turning to address these
arguments, we observe that they all relate to the complainants' reliance on the notion of downtrading
to demonstrate, before the Panel, that the value of imported tobacco products declined. Although
the Panel also made findings regarding the impact of downtrading on volume, the appell ants'
arguments on appeal relate exclusively to the impact of downtrading on value.1219
6.421. We understand that the complainants' primary argument before the Panel was that the
TPP measures were trade -restrictive on the basis that they reduced the opportunity for
manufacturers to differentiate on the basis of brands. The Panel accepted that the TPP measures
reduce the opportunity for brand differentiation but considered that this was insufficient to
demonstrate a limiting effect on international trade. We understand that the complainants'
arguments in relation to downtrading sought to demonstrate that the TPP measures' effects on brand
differentiation would indeed have a limiting effect on international trade, including by reducing the
value of imported tobacco products.
6.422. Value is a function of price and quantity. In order to demonstrate that the TPP measures
reduced the value of imported tobacco products, it would have sufficed for the complainants to
adduce quantitative evidence of the average price and aggregate quantity of their imported tobacco
products before and after the implementation of the TPP measures, and explain causation. The
complainants' reliance on the notion of downtrading, however, hypothesized that the TPP measures
would necessarily lead to a decline in value, as a consequence of consumers shifting from premium
to non-premium products in response to the TPP measures. We understand that the Panel based its
ultimate assessment of the effect of the TPP measures on value on all the evid ence provided to it,
including both qualitative and quantitative evidence.
6.423. In this respect, we consider it useful to briefly address, at the outset, the appellants'
argument that the Panel erred in its application of Article 2.2 by concluding that the TPP measures
will not lead to a reduction in the value of imported products, even though (in the appellants' view)
the qualitative evidence indicated that such an effect would occur in the future.1220 We note that the
Panel did indeed take into account the future impact of the TPP measures on value.1221 The Panel
did not consider, however, that the evidence was sufficient to conclude that the TPP measures did,
or necessarily would, lead to a reduction in value. We recall that there is no obligation on a panel to
base its assessment of the degree of trade restrictiveness on a subset of the relevant evidence. 1222
Bearing in mind that the weighing and balancing of the evidence is the province of the Panel in its

1215 Panel Report, paras. 7.1222-7.1225
1216 Panel Report, para. 7.1224.
1217 Panel Report, para. 7.1224.
1218 Panel Report, para. 7.1225.
1219 See paras. 6.416. 6.417. above. In response to questioning at the first hearing, the
Dominican Republic clarified that its arguments regarding the Panel's findings on downtrading relate exclusively
to the impact of downtrading on the value of imported tobacco products.
1220 Honduras' and the Dominican Republic's responses to questioning at the first hearing.
1221 The Panel concluded that, "while the complainants have not demonstrated that the TPP measures
have reduced the value of imported tobacco products on the Australian market, it cannot be excluded that this
may happen in the future." (Panel Report, para. 7.1225)
1222 See para. 6.393. above. We similarly see no reason that a panel's determination of the anticipated
effects of a measure (i.e. the "expected operation" of the measure) should not be based on all evidence before
it, including empirical evidence of the effects of the measure to date.
WT/DS435/AB/R • WT/DS441/AB/R

role as factfinder1223, we do not consider that this aspect of the appellants' arguments demonstrates
that the Panel erred in applying Article 2.2.1224
6.424. Having addressed this aspect of the appellants' arguments, we note that the
Dominican Republic has raised three additional sets of arguments alleging that the Panel erred in its
application of Article 2.2, with respect to its determination that the TPP measures have not reduced
the value of imported tobacco products. The Dominican Republic argues, first, that the Panel erred
in assessing the complainants' downtrading argument by rejecting that argument on the basis that
the TPP measures were not the exclusive cause of downward substitution by consumers.1225 Second,
the Dominican Republic submits that any separate reasons that the Panel had for rejecting the
complainants' downtrading argument were also in error. 1226 Third, the Dominican Republic posits
that the Panel erred by taking into account the reaction of producers to the TPP measures.1227
We address each set of arguments in turn.
6.1.3.2.3.1 The causation standard applied by the Panel
6.425. The Dominican Republic argues that the Panel erred by requiring that downtrading (caused
by the TPP measures) be the sole cause of the downward shift in the ratio of high -end to low-end
cigarette sales. 1228 In the Dominican Republic's view, paragraphs 7.1196 and 7.1197 of the
Panel Report indicate that the Panel rejected the complainants' argument that downtrading (caused
by the TPP measures) led to a reduction in value on the basis that the shift in the ratio was not
exclusively caused by downtrading ( caused by the TPP measures).1229 In the Dominican Republic's
view, the fact that the Panel considered that the shift in ratio was at least partially attributable to
downtrading caused by the TPP measures should have been sufficient, and the Panel applied an
inappropriately rigid standard of causation.1230
6.426. Australia disagrees with the Dominican Republic's interpretation of the Panel Report.
Australia considers that the Panel did not find that the TPP measures caused downtrading to
occur.1231 Australia also argues th at, in any event, the Panel rejected the Dominican Republic's
downtrading argument because the argument was based on the assumption that the TPP measures
would keep the price of cigarettes constant or reduce it, and, "contrary to this assumption, the Panel
found that average tobacco prices net of taxes increased in the period following the implementation
of the TPP measures."1232 Australia does not consider that the Panel applied a "rigid 'exclusive cause'
standard in its analysis of trade-restrictiveness".1233
6.427. We recall that, with respect to the complainants' argument that downtrading would lead to
a decline in the value of imported tobacco products, the Panel rejected the argument that such effect
had occurred.1234 However, the Panel did not preclude the possibility that such an effect could occur
in the future.1235
6.428. In our view, the Dominican Republic's arguments are based on an incorrect understanding
of the Panel's findings on downtrading. We understand that the Dominican Republic's argument on
appeal is essentially premised on its view that the Panel, in paragraphs 7.1196 and 7.1197 of the

1223 We also recall that, in the context of claiming that the Panel erred in determining the degree of
contribution of the TPP measures to Australia's objective, the appellants argue the opposite (namely, that the
Panel erred by according too much weight to the evidence of anticipated effects, and insufficient weight to the
evidence of actual effects). (See paras. 6.346. 6.347. above).
1224 Neither appellant has raised this argument in the context of challenging the Panel's findings under
Article 11 of the DSU and, in any event, it is not the role of the Appellate Body to second-guess the Panel's
appreciation of the evidence.
1225 Dominican Republic's appellant's submission, paras. 1317-1330.
1226 Dominican Republic's responses to questioning at the first hearing.
1227 Dominican Republic's appellant's submission, paras. 1331-1338.
1228 Dominican Republic's appellant's submission, paras. 1317-1330.
1229 Dominican Republic's appellant's submission, paras. 1322, 1329 and fn 1256 thereto, and 1330.
1230 Dominican Republic's appellant's submission, paras. 1323-1330.
1231 Australia's responses to questioning at the first hearing.
1232 Australia's opening statement at the first hearing, para. 49 (referring to Panel Report, paras. 7.1215
and 7.1221). (emphasis original)
1233 Australia's appellee's submission, para. 332.
1234 See paras 6.418. 6.419. above.
1235 See para. 6.419. above.
WT/DS435/AB/R • WT/DS441/AB/R

Panel Report, rejected the complainants' argument that downtrading reduced the value of imported
tobacco products. The Dominican Republic considers that the Panel rejected this ar gument on the
basis that the reduction in the ratio of high-end to low-end cigarette sales was not exclusively caused
by downward substitution by consumers in response to the TPP measures, but was at least in part
caused by the overall reduction in consumption, also caused by the TPP measures.1236 As described
above, however, paragraphs 7.1196 and 7.1197 of the Panel Report refer to the impact of the
TPP measures on the volume of imported tobacco products, and not the impact on value.1237
6.429. Part of the Dominican Republic's confusion may relate to the fact that paragraphs 7.1196
and 7.1197 of the Panel Report refer to the decline in the volume of imported premium tobacco
products being partially attributable to downtrading and partially attributable to the overall decline
in consumption caused by the TPP measures.1238 These findings are very similar, yet different, to
certain findings made by the Panel in its analysis of whether the TPP measures caused downtrading,
in Appendix E to the Panel Report.1239 We address below certain issues arising in relation to the
Panel's findings in Appendix E.1240 It suffices for the moment, however, to note that the Panel's
findings in paragraphs 7.1196 and 7.1197 concern the impact of downtrading on volume and do not
refer to the impact of downtrading on value.
6.430. Furthermore, paragraph 7.1221 of the Panel Report does address the "effects of
downtrading on value" argument. The first sentence of paragraph 7.1221 specifically refers to this
argument, stating that "[i]n the Domin ican Republic's view, the complainants['] argument is
that… the TPP measures have already led to switching from higher - to lower-priced cigarettes and,
hence, to a reduction in the value of … trade."1241 The Panel reasoned that this argument was "based
on the assumption that the TPP measures would either keep the price of cigarettes constant or
reduce it".1242 According to the Panel, "evidence shows that brands in the higher priced segments
generally maintained or increased their pricing premiums over brands in the lower-priced segments
in the first year following the implementation of plain packaging, and have not exhibited a marked
drop, in line with the observation that the average price of cigarettes had increased sufficiently to
offset the decrease in consump tion."1243 Consequently, in the Panel's view, "the facts … do not
support the Dominican Republic's argument."1244
6.431. In short, the relevant paragraph that directly addresses the argument that downtrading led
to a reduction in the value of imported cigarette products, is neither paragraph 7.1196 nor 7.1197,
but rather paragraph 7.1221. Critically, for the purposes of addressing the Dominican Republic's
claim on appeal, paragraph 7.1221 does not reject the "downtrading led to a decrease in value"

1236 Dominican Republic's appellant's submission, para. 1319.
1237 See para. 6.416. above. We emphasize that paragraphs 7.1196 and 7.1197 refer to the decline in
consumption and imports of premium tobacco products, and neither paragraph, at any point, refers to the
impact of either downtrading or the TPP measures on value.
1238 The last sentence of paragraph 7.1196 states that "consumption of premium tobacco products has …
decreased in absolute terms, which may be expected to lead, in turn, to a reduction in imports of premium
products." (Panel Report, para. 7.1196 (emphasis added)) The following sentence, the first sentence of
paragraph 7.1197, plainly refers to this decrease in consumption of premium tobacco products in absolute
terms, when it states that the Panel is "not persuaded … that this decrease in the consumption and imports of
premium tobacco products is exclusively the result of 'downtrading' as the complainants describe it".
(Panel Report, para. 7.1197 (emphasis added)) The second sentence of paragraph 7.1197 explains that "given
that the overall consumption of tobacco products has decreased, at least some part of the decrease in the
consumption of premium tobacco products has not been substituted with the consumption of non-premium
products." (Panel Report, para. 7.1197 (emphasis added))
1239 In paragraphs 55 and 56.c of Appendix E to the Panel Report, the Panel stated that the shift in ratio
of high-end to low-end sales was partially attributable to the TPP measures, and, to the extent that shift is
attributable to the TPP measures, it resulted from both downward substitution and an overall decline in
wholesale sales. Thus, in Appendix E, the Panel was referring to the impact of the TPP measures on the ratio of
sales. By contrast, in paragraphs 7.1196 and 7.1197 of its Report, the Panel found that, to the extent that the
TPP measures reduced the volume of imported premium tobacco products, they did so through downward
substitution caused by the TPP measures, as well as a more general decline in wholesale sales volume, also
caused by the TPP measures. We note that a decline in the ratio of high-end to low-end sales is not the same
thing as a decline in the absolute volume of high-end sales.
1240 See section 6 6.1.3.3 below.
1241 Panel Report, para. 7.1221.
1242 Panel Report, para. 7.1221.
1243 Panel Report, para. 7.1221 (referring to Katz Report (Panel Exhibit AUS-18), para. 66).
1244 Panel Report, para. 7.1221.
WT/DS435/AB/R • WT/DS441/AB/R

argument on the basi s of the extent to which downward substitution by the TPP measures caused
the shift in ratio of cigarette sales. We also note that the Panel's ultimate conclusion in
paragraph 7.1225 on the impact of the TPP measures on the value of imported tobacco produc ts
took into account the possible future impact of downtrading on value. Specifically, the Panel stated
that, "while the complainants have not demonstrated that the TPP measures have reduced the value
of imported tobacco products on the Australian market, it cannot be excluded that this may happen
in the future, either as a result of the effect of the measures on consumption only or as a result of
this effect combined with a fall in prices ."1245 In our view, these findings fully capture the Panel's
conclusions on the impact of downtrading on the value of imported tobacco products.
6.432. We are aware of the Dominican Republic's argument, raised at the first hearing, that
paragraphs 7.2572 and 7.2573 of the Panel Report demonstrate that the Panel addressed the
"downtrading led to a decrease in value" argument in paragraphs 7.1196 and 7.1197.
Paragraphs 7.2572 and 7.2573, appearing in the context of the Panel's analysis under Article 20 of
the TRIPS Agreement, summarize the Panel's earlier findings on, respectively, "price competition"
and "downward substitution", in its assessment of trade restrictiveness. 1246 In neither
paragraph 7.2572 nor 7.2573 does the Panel refer to its fi ndings in paragraph 7.1221. This is
particularly significant given that paragraph 7.2573, which contains the Panel's own summary of its
findings on "downward substitution", does describe almost word for word the Panel's findings in
paragraphs 7.1196 and 7. 1197 regarding the impact of downtrading on the volume of imported
tobacco products, and also describes the Panel's statement in paragraph 7.1225 regarding the
possible future impact of the TPP measures on value. In other words, paragraphs 7.1196 and 7.1197
contain the Panel's findings on the impact of downtrading on volume, paragraphs 7.1221 and 7.1225
contain the Panel's findings on the impact of downtrading on value, and paragraphs 7.2572 and
7.2573 claim to summarize the Panel's findings on downtrading, but omit any mention of its findings
contained in paragraph 7.1221.
6.433. We agree with the Dominican Republic that it is concerning that the Panel's own summary
of its findings on downtrading omits any mention of paragraph 7.1221. Indeed, the
Dominican Republic has identified a tension between the plain text of the Panel's findings and its
subsequent summary of those findings.1247 In our view, however, the Panel's subsequent summary
of its earlier findings is not a sufficient basis to simply disregard the plain t ext of those earlier
findings.1248 We note that not only does the Dominican Republic's interpretation of the Panel Report
ignore the plain text of paragraphs 7.1196, 7.1197, and 7.1221, but it also would render
paragraph 7.1221 entirely redundant. We disagree with this understanding of the Panel Report.
6.434. As indicated, the text of paragraphs 7.1221 and 7.1225 reveals that the Panel did not reject
the Dominican Republic's downtrading argument on the basis that the TPP measures were not the
sole cause of the downw ard substitution. Such reasoning is absent from paragraph 7.1221, and
indeed paragraph 7.1225 allows for the possibility that the TPP measures may, in fact, lead to a

1245 Panel Report, para. 7.1225.
1246 We note that the Panel made this summary of its findings in the context of assessing the
complainants' arguments that the TPP measures affect the ability of trademark owners to "extract economic
value from those trademarks". (Panel Report, para. 7.2571)
1247 On the one hand, under the Dominican Republic's interpretation of the Panel Report,
paragraphs 7.1196 and 7.1197 contain the Panel's operative reasoning for rejecting the argument that
downtrading led to a decline in value, which is plainly contradicted by the plain text of those paragraphs as well
as the fact that paragraph 7.1221 on its face appears to be the operative paragraph addressing this argument.
On the other hand, to the extent that paragraph 7.1221 is indeed the operative paragraph in which the Panel
rejected the argument that downtrading led to a decline in value, then paragraph 7.2573 is a confusing
summary by the Panel of its own findings, and is incomplete to the extent that it does not refer to
paragraph 7.1221.
1248 We find further support for our understanding of the Panel Report when we take into account the
Panel's distinct findings on the impact of downtrading on cigars, rather than cigarettes. In paragraph 7.1198,
the Panel concluded that there was no evidence that the TPP measures had caused downtrading to occur in the
cigar market. That paragraph, like paragraphs 7.1196-7.1197, does not refer to any impact of downtrading on
value, but only to the impact of downtrading on "imports" and "sales". Having indicated in paragraph 7.1198
that there is no evidence that downtrading of cigars is occurring, the Panel at no point returns to examine
whether downtrading has had any impact on the value of imported cigars. This approach to the impact of
downtrading on trade in cigars stands in stark contrast to the Panel's findings with respect to the impact of
downtrading on trade in cigarettes. Indeed, in paragraph 7.1196, the Panel explicitly finds that the
TPP measures have caused some downtrading in the cigarette market, and subsequently in paragraph 7.1221
the Panel concludes that downtrading has not led to a reduction in the value of the cigarette market.
WT/DS435/AB/R • WT/DS441/AB/R

reduction in value in the future. A close reading of the Panel Report shows that the Pane l
first concluded in Appendix E (and restated in paragraph 7.1196) that the TPP measures were at
least partially responsible for downtrading in Australia. On that basis, the Panel proceeded to
examine whether downtrading did, or would, lead to a reduction in either the volume or value of
imported tobacco products . The P anel rejected the argument that downtrading caused by the
TPP measures reduced the value of imported tobacco products for reasons unconnected from the
extent to which downward substitution caused the decrease in ratio of cigarette sales. The Panel
was also sufficiently persuaded by the downtrading argument to conclude that value might be
reduced in the future.
6.435. We therefore understand that the Panel applied the exact standard of causation that the
Dominican Republic considers appropriate under Article 2.2, simply requiring that the TPP measures
be at least partially responsible for downtrading in order to assess whether that downtrading effect
caused by the TPP measures led, or would lead in the future, to a reduction in value. Consequently,
the Dominican Republic has not demonstrated that the Panel erred by relying on an inappropriate
standard of causation in applying Article 2.2.
6.1.3.2.3.2 The Panel's reasoning in paragraph 7.1221 of the Panel Report
6.436. As explained above, paragraph 7.1221 of the Panel Report contains the Panel's operative
findings regarding the impact of downtrading (caused by the TPP measures) to date on the value of
imported tobacco products. That paragraph states the following:
In the Dominican Republic's view, the complainants['] argument is that, by reducing
brand differentiation, the TPP measures have already led to switching from higher - to
lower-priced cigarettes and, hence, to a reduction in the value of the trade, without
reducing smoking prevalence or consumption. However, at the same time the
Dominican Republic adds that "[t]his disagreement on the actual trade effects resulting
from the [TPP] measures is not material to the Panel's finding of trade -restrictiveness
under Article 2.2, because it is evident from the design, structure, and expected
operation of the measures that it severely limits competitive opportunities to
differentiate tobacco pro ducts". The Dominican Republic's argument is based on the
assumption that the TPP measures would either keep the price of cigarettes constant or
reduce it. However, evidence shows that brands in the higher priced segments generally
maintained or increased their pricing premiums over brands in the lower -priced
segments in the first year following the implementation of plain packaging, and have
not exhibited a marked drop, in line with the observation that the average price of
cigarettes had increased suffici ently to offset the decrease in consumption. In other
words, the facts before us do not support the Dominican Republic's argument.1249
6.437. At the first hearing, the Dominican Republic argued that, in the event that the Appellate Body
considered paragraph 7.1221 to contain the Panel's findings on the complainants' "downtrading has
reduced value" argument, the Panel in any event erred in applying Article 2.2. The
Dominican Republic argued, first, that its downtrading argument did not rely on the Panel's
assumption t hat prices would remain constant or fall. According to the Dominican Republic,
downtrading could still lead to a reduction in value even if prices increased. Second, the
Dominican Republic argued that the Panel's references to high -end products maintaining or
increasing their pricing premiums is insufficient to reject the downtrading argument, because an
increasing price differential between high -end and low -end cigarettes only enhances the negative
impact of the TPP measures on the value of imported products, since for every unit that shifts down
there is a bigger loss of value on the sale. Third, according to the Dominican Republic, the Panel
used an effect that was not attributable to the TPP measures (specifically the increase in the average
price of cig arettes) to offset an effect that is attributable to the TPP measures (i.e. downtrading
itself).1250
6.438. Australia considers that the Panel's findings in paragraph 7.1221 are not appealed, and
therefore are not within the scope of this appeal. In any event, Aust ralia submits that the Panel

1249 Panel Report, para. 7.1221 (quoting Dominican Republic's response to Panel question No. 117,
para. 233; referring to Katz Report (Panel Exhibit AUS-18), para. 66). (fns omitted)
1250 Dominican Republic's responses to questioning at the first hearing.
WT/DS435/AB/R • WT/DS441/AB/R

correctly considered that it could not simply defer to the Dominican Republic's key price assumption,
and the Panel correctly found that the empirical evidence indicated that the TPP measures led to an
increase in the price of cigarettes.1251
6.439. Regarding the Dominican Republic's first argument on appeal, we note that the "assumption"
that the Panel ascribed to the Dominican Republic's argument – that "the TPP measures would either
keep the price of cigarettes constant or reduce it" 1252 – was not an assumption that the
Dominican Republic necessarily acknowledged in making its downtrading argument. Rather, we
understand that this assumption was a necessary implication of its arguments. Specifically, we
understand the Dominican Republic's argument before the Panel to have been that, because the
TPP measures cause consumers to shift from more expensive to less expensive cigarettes, the
overall value of cigarette sales will necessarily go down. The Panel's reference to the "assumption"
underlying this argument is based on the fact that the TPP measures could theoretically lead to an
increase in prices such that any downward shift in consumption is offset by the price increase,
resulting in no reduction in the total value of imported products. In other words, the only way in
which downtrading in and of itself could suffice for the Panel to conclude that the TPP measures have
reduced the value of imported tobacco products is if prices were to remain constant or decline.
6.440. We do not read the Panel' s findings as disagreeing with the Dominican Republic that it is
possible that an increase in prices, accompanied by downtrading, could result in a reduction of overall
value. Rather, the Panel's point was that, if prices increase, then it is not necessarily the case that
the predicted reduction in overall value will occur. In other words, as a matter of logic, the Panel
was not stating that downtrading will not lead to a reduction in value – rather, by rejecting a
necessary premise of the Dominican Republic's argument, the Panel was refuting the argument that
downtrading must necessarily lead to a reduction in value. We see no error in the Panel's reasoning.
6.441. With respect to the Dominican Republic's second argument – that increases in the
price differential between high-end and low-end products aggravate the loss in value – we consider
that this argument ignores the fact that for each lost sale by a high-end producer, the loss in value
of that particular sale may be offset by the increase in price paid by other consumers who continue
to purchase the high-end product. In other words, while the total quantity of high-end sales may go
down as a result of down trading, the simultaneous increase in price means that total value
(i.e. quantity multiplied by price) could plausibly remain constant , or even increase. It therefore
does not follow that an increase in price necessarily reduces value.1253
6.442. As to the Dominican Republic's third argument, that the Panel relied on an effect that was
not caused by the TPP measures (price increase) to offset an effect that was caused by the
TPP measures (downtrading), we consider this argument to be contradicted by the Panel 's explicit
finding that the price increase was caused by the TPP measures themselves.1254 To the extent that
the Dominican Republic's arguments at the first hearing contest the correctness of the Panel's finding
of causation, we note that the Dominican Republic did not appeal this factual finding under Article 11
of the DSU, and it therefore falls outside the scope of this appeal.1255

1251 Australia's responses to questioning at the first hearing.
1252 Panel Report, para. 7.1221.
1253 Importantly, neither we nor the Panel considers that price increases will necessarily lead to an
increase in value. Rather, the Panel's findings merely indicate that downtrading could plausibly lead to no
change (or an increase) in value, if prices increased. The fact that prices increased was sufficient for the Panel
to reject the argument that downtrading necessarily reduced the value of imported tobacco products.
1254 Specifically, the Panel found that the "evidence suggests that the measures have led to an increase
in the price of cigarettes which has more than offset the decrease in the quantity of cigarette[s] consumed and
has thereby contributed to an increase in the value of the market." (Panel Report, para. 7.1218) We therefore
disagree with the Dominican Republic's assertion that the Panel simply found that there was an upward trend
in the value of tobacco products following the implementation of the TPP measures, without assessing whether
the TPP measures caused that upward trend.
1255 At the first hearing, the Dominican Republic compared the Panel's analysis of causation in attributing
the price increases to the TPP measures to the Panel's analysis of the extent to which downtrading occurred
(i.e. the extent to which the shift in ratio of cigarette sales was caused by the TPP measures). The
Dominican Republic pointed out that, in assessing the causes of the shift in ratio, the Panel assessed not only
whether that downward shift occurred and increased following the implementation of the TPP measures, but
whether the TPP measures had caused that increase. By contrast, in the context of assessing the impact of the
TPP measures on prices, the Dominican Republic asserts that the Panel merely found that prices had increased,
WT/DS435/AB/R • WT/DS441/AB/R

6.443. For these reasons, w e consider that, even if the Dominican Republic's first two arguments
regarding paragraph 7.1221 of the Panel Report are properly within the scope of this appeal, the
Dominican Republic has failed to demonstrate that the Panel's reasoning in that paragraph
constituted a misapplication of the legal standard under Article 2.2.
6.1.3.2.3.3 The reaction of private actors to the TPP measures
6.444. The Dominican Republic argues that, as a general matter (i.e. without reference to
paragraph 7.1221 in particular), the Panel erred by taking into account price increases. 1256 The
Dominican Republic submits that "[a] measure does not cease to be trade -restrictive just because
private actors may be able to adapt their commercial strategy in the face of the measure." 1257 The
Dominican Republic refers to certain Appellate Body and panel jurisprudence standing for the
proposition that actions by private actor s to mitigate the harmful effects of a measure will not
preclude a finding of WTO-inconsistency.1258 In the Dominican Republic's view, the Panel erred "by
allowing for the conduct of private actors to be a means for undoing, or mitigating, the
trade-restrictive effects of a measure".1259
6.445. Australia argues that the Panel did not consider that the trade restrictiveness of the
TPP measures could be cured or mitigated, but rather "relied on the complainants' expert evidence
of the effects of the TPP measures on the market to inform its assessment of the measures' trade
restrictiveness".1260 Australia sees "no reason why the Panel should have excluded consumption data
from its analysis", given that the assessment of trade restrictiveness entails assessing whether there
is a limiting effect on international trade.1261 Australia considers that it was appropriate for the Panel
"to ascertain the effects of the TPP measures in the marketplace, where the forces of supply and
demand interact" .1262 Australia also notes that, previously, in the context of Article 2.1 of the
TBT Agreement, the Appellate Body found it appropriate "to review both supply and demand
side evidence in determining how a technical regulation affects the conditions of competition in the
marketplace".1263
6.446. In our view, the jurisprudence cited by the Dominican Republic stands for the principle that
a determination of a measure's consistency must be based on all relevant facts, such that the fact
that private actors may adapt their behaviour in order to mitigate negative c onsequences does not
alter a finding of inconsistency when the facts indicate that a measure is WTO -inconsistent.1264 In

without verifying whether this price increase accelerated after the implementation of the TPP measures or
whether the TPP measures caused that shift.
1256 Dominican Republic's appellant's submission, paras. 1331-1338.
1257 Dominican Republic's appellant's submission, para. 1333.
1258 Dominican Republic's appellant's submission, paras. 1334-1336 (referring to Appellate Body
Reports, Thailand – Cigarettes (Philippines), para. 117; Korea – Various Measures on Beef, para. 14; US – FSC
(Article 21.5 – EC), para. 220; Panel Reports, Indonesia – Import Licensing Regimes, para. 7.11; India – Solar
1259 Dominican Republic's appellant's submission, para. 1333. According to the Dominican Republic, "the
Panel found that the possibility of suppliers/producers counteracting the distortions on demand for high-end
tobacco products (resulting from the TPP measures) by adjusting prices[] can immunize a measure against any
finding of trade restrictiveness evident from the design, nature and anticipated operation of the measure."
(Ibid., para. 1337)
1260 Australia's appellee's submission, para. 339. (emphasis original)
1261 Australia's appellee's submission, para. 340.
1262 Australia's appellee's submission, para. 340.
1263 Australia's appellee's submission, para. 340 (referring to Appellate Body Reports, US – COOL,
para. 349).
1264 In Korea – Various Measures on Beef, the Appellate Body stated that the "central consequence" of
the dual retail system on imported products was a "drastic reduction of commercial opportunity to reach, and
hence to generate sales to, the same consumers served by the traditional retail channels for domestic beef",
and that, "[i]n these circumstances, the intervention of some element of private choice does not relieve Korea
of responsibility under the GATT 1994 for the resulting establishment of competitive conditions less favourable
for the imported product than for the domestic product." (Appellate Body Report, Korea – Various Measures on
Beef, paras. 145-146) In US – FSC (Article 21.5 – EC), the Appellate Body found that "the fair market value
rule provide[d] a considerable impetus, and, in some circumstances, in effect, a requirement, for
manufacturers to use domestic input products, rather than like imported ones. As such, the fair market value
rule treats imported products less favourably than like domestic products." (Appellate Body Report, US – FSC
(Article 21.5 – EC), para. 220) The Appellate Body elaborated that this conclusion was "not nullified by the fact
that the fair market value rule will not give rise to less favourable treatment for like imported products in each
WT/DS435/AB/R • WT/DS441/AB/R

other words, the application of any provision of a covered agreement should be based on the facts
of the case, and, where the application of the relevant legal standard reveals that its constituent
elements have been satisfied, other factors (such as possible actions by private actors) do not trump,
mitigate, or offset the ensuing finding of inconsistency.
6.447. In the present dispute, in light of the complainants' own arguments that the value of trade
had decreased as a result of the measure, the Panel considered it relevant to examine the impact of
the measure on prices. This followed from the fact that import value is a function of the quantity of
imported products multiplied by the average price of those products. Thus, it is inescapable that
price is a r elevant consideration in assessing value. Price, for its part, is a function of market
dynamics, including the maximum price that consumers are willing to pay and the minimum price
that producers are willing to accept. It seems clear that a measure can hav e a causal impact on
price by affecting various actors in the market. Consequently, in our view, by looking at the impact
of the TPP measures on prices, the Panel was effectively examining the relevant facts in order to
conclude on the degree of trade rest rictiveness of the TPP measures, based on the complainants'
own arguments that the TPP measures led to a decrease in value.
6.448. With this in mind, the jurisprudence cited by the Dominican Republic regarding the possible
actions of private entities to mitigate a finding of WTO-inconsistency does not appear to be relevant.
Rather, the Panel simply examined the facts of the case in order to determine whether and to what
extent the TPP measures are trade -restrictive, for the purpose of assessing whether the
TPP measures are inconsistent with Article 2.2. Indeed, the Dominican Republic's arguments imply
that the Panel should have ignored the actual dynamics of the marketplace and formed a factual
conclusion regarding either prices in the marketplace or value (which itself represents price
multiplied by quantity) without examining the actual effect of the TPP measures on prices. We
disagree. We also note that, if the Panel had found that prices had remained constant or declined,
then it seems that the Panel would indeed have found that the measure reduced the value of trade
and was trade-restrictive in this way. Thus, far from "immunizing" the measure from a finding of
trade restrictiveness (or inconsistency with Article 2.2), the Panel, in examining the impact of the
TPP measures on prices, simply examined whether the evidence and facts supported the assertions
made by the complainants that the TPP measures had reduced the value of trade.1265

and every case". (Ibid., para. 221) In India – Solar Cells, the panel noted that "[t]he fact that all [Solar Power
Developers] participating in the National Solar Mission could use (and the fact that some in fact are using)
certain types of foreign cells and modules (e.g. thin film solar modules under Phase I) does not negate the fact
that the [domestic contest requirements] under the challenged measures accord less favourable treatment to
the other types of foreign cells and modules whose use is prohibited by the requirements in question."
(Panel Report, India – Solar Cells, para. 7.94 (emphasis original)) In Thailand – Cigarettes (Philippines), in
considering a claim under Article III:2 of the GATT 1994, the Appellate Body considered that, as a factual
matter, "Thailand's measure provides for circumstances in which resellers of imported cigarettes will be subject
to VAT liability, to which resellers of domestic cigarettes will never be subject." (Appellate Body Report,
Thailand – Cigarettes (Philippines), para. 117) Thus, the possibility for private actors to "take action to avoid
the imposition of VAT liability" did not alter the assessment of whether, as a factual matter, "imported
cigarettes are subject to internal taxes or other internal charges in excess of those applied to domestic
cigarettes." (Ibid.) In Indonesia – Import Licensing Regimes, the respondent argued that the "the challenged
measures [were] the result of private actions and not measures instituted or maintained by a Member."
(Panel Report, Indonesia – Import Licensing Regimes, para. 7.4) The panel considered that "the fact that
private actors are able to make decisions about their import needs does not immunize Indonesia's measures
from challenge", and that "the intervention of some element of private choice does not necessarily relieve a
Member of responsibility." (Panel Report, Indonesia – Import Licensing Regimes, para. 7.11 (fn omitted)) The
panel concluded that all challenged measures were measures "taken by" Indonesia. (Ibid., paras. 7.11-7.12,
7.16-7.17, 7.20-7.21, and 7.24-7.25)
1265 As the European Union states in its third participant's submission, "the Panel appropriately
considered both demand and supply effects, since the question here is not whether producers of some
negatively affected products may avoid the impact of the measure, but rather how the impact on the
competitive opportunities in the market in general will be, and how, as a consequence, this would impact trade
volumes" and value. (European Union's third participant's submission, para. 42)
WT/DS435/AB/R • WT/DS441/AB/R

6.449. We therefore do not consider that the Panel erred by taking into account the im pact of the
TPP measures on prices, notwithstanding that such effect was a consequence of market dynamics
involving consumers as well as producers/suppliers.1266
6.1.3.2.4 Conclusion on the Panel's application of Article 2.2
6.450. On the basis of the foregoing, we conclude that the appellants have not demonstrated that
the Panel erred in its application of Article 2.2 of the TBT Agreement in assessing the trade
restrictiveness of the TPP measures.
6.1.3.3 Claims under Article 11 of the DSU
6.451. The Dominican Republic argues that the Panel failed to make an objective assessment of the
matter as required under Article 11 of the DSU in finding that "the complainants had not shown that
the decrease in sales of high -end cigarettes relative to low -end cigarettes reveals 'only' or
'exclusively' consumer downtrading, as opposed to the results of other market phenomena."1267 The
Dominican Republic refers specifically to the Panel's finding that part of the reduction in the ratio of
sales was due to "the overall reduction in the total wholesale sales volume following and due to the
introduction of the TPP measures".1268 According to the Dominican Republic, the Panel failed to make
an objective assessment of the matter, by: (i) failing to provide a reasoned and adequate
explanation for this finding; (ii) compromising the Dominican Republic's due process rights; and
(iii) making the case for Australia.1269
6.452. Australia considers that the Panel acted within the bounds of its discretion, consistently with
Article 11 of the DSU. In Australia's view, the Panel took the complainants' downtrading evidence
into account, but attributed to it a different weight and significance than the complainants would
have preferred.1270
6.453. All three of the Dominican Republic's claims under Article 11 concern alleged substantive
and procedural errors underlying the Panel's factual finding, contained in paragraphs 55 and 56.c of
Appendix E of the Panel Report , that the TPP measures contributed to the decrease in the ratio of
high-end to low-end cigarette sales through both downtrading and the reduction in overall wholesale
sales caused by the TPP measures.1271 In the main body of the Panel Report, the Panel made a
similar (but different) finding, stating that the decline in volume of premium cigarette sales was
attributable to the TPP measures through both downtrading and the reduction in overall wholesale
sales caused by the TPP measures.1272 The similarity between these findings may be responsible for
much of the confusion amongst the participants regarding the correct understand ing of the Panel's
findings.1273 However, the ratio of high-end to low-end sales and the absolute volume of high-end
sales are plainly two different things.

1266 We note that this approach accords with the Appellate Body's finding in US – COOL that the trade
restrictiveness of a particular measure may depend on whether producers incur the costs of the measure, or
whether those costs are passed on to consumers. (Appellate Body Reports, US – COOL, para. 483)
1267 Dominican Republic's appellant's submission, para. 1340.
1268 Panel Report, Appendix E, para. 55. See also ibid., Appendix E, para. 56.c.
1269 Dominican Republic's appellant's submission, paras. 1356-1357. According to the
Dominican Republic, the Panel relied on a graph, Figure E.6 in Appendix E to the Panel Report, in order to
conclude that part of the shift in cigarette sales was attributable to a decline in overall wholesale sales caused
by the TPP measures. (Dominican Republic's appellant's submission, paras. 1348-1354) The
Dominican Republic does not appear to challenge the accuracy of this graph per se, but rather asserts that the
Panel erred both procedurally and substantively by relying on this graph to conclude that at least part of the
reduction in the ratio of higher to low-priced cigarette sales was due to the overall reduction in consumption
resulting from the TPP measures. (Dominican Republic's appellant's submission, paras. 1366-1382; responses
to questioning at the first hearing)
1270 Australia's appellee's submission, para. 343.
1271 Panel Report, Appendix E, paras. 55 and 56.c. We disagree with Australia's reading of Appendix E,
and consider that the Panel did find that the TPP measures contributed to the shift in ratio of high-end to
low-end sales and that the TPP measures caused this shift through both downtrading and a more general
reduction in wholesale sales. (Australia's responses to questioning at the first hearing; Panel Report,
Appendix E, paras. 55 and 56.c)
1272 Panel Report, para. 7.1197.
1273 See paras. 6.428. 6.429. above.
WT/DS435/AB/R • WT/DS441/AB/R

6.454. The Dominican Republic's challenge under Article 11 of the DSU relates to the Panel's finding
that at least some part of the TPP measures' impact on the ratio is attributable to the overall
reduction in cigarette wholesale sales caused by the TPP measures.1274 We note that the
Dominican Republic considers this to be a material error by the Panel because, in its view, the Panel
rejected the value aspect of their downtrading argument on the ground that "the complainants had
not shown that the decrease in sales of high -end cigarettes relative to low -end cigarettes reveals
'only' or 'exclusively' consumer downtra ding, as opposed to the results of other market
phenomena."1275 As we have explained above, this is an incorrect understanding of the
Panel Report.1276 The only aspect of the Panel's findings in Appendix E that was relevant to the
Panel's analysis of the impact of downtrading on the value of imported tobacco products was the
finding that the TPP measures at least contributed to the shift in ratio of cigarette sales, including
through downtrading.1277 We therefore disagree with the Dominican Republic that the Panel's finding
concerning the different mechanisms by which the TPP measures caused the shift in ratio was
relevant to the Panel's analysis of trade restrictiveness. Indeed, the Panel's finding in Appendix E
that the reduction in the ratio of higher - to low-priced cigarette wholesale sales represents both
"downward substitution" caused by the TPP measures as well as "the overall reduction in the total
wholesale sales volume following and due to the introduction of the TPP measures and
enlarged GHWs"1278 is essentially an unnecessary finding of fact by the Panel.1279
6.455. We have reservations regarding this unnecessary finding by the Panel. The Panel's finding
that part of the shift in ratio is attributable to the decline in overall wholesale sales means that, if
downtrading had not occurred, then there still would have been a decline in the ratio of high-end to
low-end sales. In our view, the Panel failed to indicate any basis for this factual finding.
6.456. We note that the Panel's sole reason for stating that part of the ratio decline is attributable
to a general decline in wh olesale sales is that "the reduction in high er-priced segment wholesale
sales has decreased at a much faster rate than the sales of low-priced cigarettes."1280 Although this
statement is not footnoted, it appears to be based on the Panel's findings in paragraph 14 of
Appendix E, that: (i) "the share of smokers preferring higher-priced brands has decreased, while the
share of smokers preferring low-priced brands has experienced a small but positive increase"; and
(ii) "the share of smokers preferring higher -priced brands has, on average, decreased at a much
faster rate than the share of smokers preferring low -priced brands has increased, confirming the
decrease in smoking prevalence."1281 The Panel elaborated in that paragraph that this explained why

1274 See para. 6.451. above. We also take note of the Dominican Republic's argument that the Panel
erred by relying on its analysis in Appendix E to conclude that the TPP measures led to a reduction in overall
wholesale sales. (See, for example, Dominican Republic's appellant's submission, paras. 1372-1374 and 1379)
We disagree. In our view, the Panel's factual finding that the TPP measures led to a reduction in wholesale
cigarette sales is based entirely on its analysis in Appendix D, which concludes that: "the TPP measures …
contributed to the reduction in wholesale cigarette sales." (See Panel Report, Appendix D, para. 137.c)
1275 Dominican Republic's appellant's submission, para. 1340. (fn omitted)
1276 See paras. 6.428. 6.434. above.
1277 See para. 6.434. above. We recall, in particular, the Panel's findings that the complainants
"demonstrated that the TPP measures … contributed to a reduction of the volume of imports of premium
tobacco products both in relative and in absolute terms", and that, "as explained in more detail in Appendix E,
a detailed analysis of the econometric results submitted by the complainants has led us to conclude that there
is some evidence, albeit limited, that together with the enlarged GHWs introduced on the same date, the
TPP measures appear to have had a negative impact on the ratio of higher- to low-priced cigarette wholesale
sales." (Panel Report, para. 7.1196 (fn omitted)) This was sufficient for the Panel to proceed to examine the
extent to which downtrading caused by the TPP measures had resulted in a decrease in the volume and value
of imported tobacco products. (Ibid., paras. 7.1196-7.1197 and 7.1221)
1278 Panel Report, Appendix E, para. 56.c. See also ibid., Appendix E, para. 55.
1279 At the first hearing, the Dominican Republic clarified that, in its view, even if the Panel did not rely
on an "exclusive cause" standard, the Panel's findings in Appendix E are nevertheless inconsistent with
Article 11 of the DSU because the Panel misattributed some part of the shift in ratio to an overall reduction in
wholesale sales caused by the TPP measures, and such an error remains relevant to the correct determination
of the precise degree of trade restrictiveness of the TPP measures. We note that the Panel attributed the
reduction in the ratio of sales to downtrading as well as a reduction in total wholesale sales volume, and
further attributed both of these effects to the TPP measures. Thus, the Panel's dichotomy between the precise
mechanisms by which the TPP measures affected the shift in ratio would not appear to be relevant to the
degree of trade restrictiveness of the TPP measures.
1280 Panel Report, Appendix E, para. 55. See also ibid., Appendix E, para. 56.c.
1281 Panel Report, Appendix E, para. 14. (fn omitted)
WT/DS435/AB/R • WT/DS441/AB/R

"the difference between the shares of smokers preferring higher -priced brands and low -priced
brands has, on average, continued to decrease after the introduction of the TPP measures."1282
6.457. We observe, however, that these findings in paragraph 14 of Appendix E refer to the share
of smokers in the population, measured as a percentage of the total population. 1283 Those findings
explain that, since the TPP measures caused the overall volume of cigarette sales to decline, it makes
sense that the percentage of the population smoking high-end cigarettes (as well as the percentage
of the population smoking low -end cigarettes) would decline. Thus, the combined effect of
downtrading and the decline in overall wholesale sales was a more pronounced decrease in the share
of high-end smokers than in the share of low-end smokers. These findings formed the basis for the
Panel's conclusion, in paragraph 7.1197 of the Panel Report, that the decline in the volume of
premium tobacco product sales could be attributed to the TPP measures through both downtrading
and the overall decline in wholesale sales. 1284 However, these findings do not, in any way, reveal
how or why the Panel considered that the decline in wholesale sales contributed to the shift in the
ratio of high -end sales to low -end sales. 1285 Indeed, in light of the Panel's findings in
paragraphs 7.1196 and 7.1197 of the Panel Report, as well as in paragraph 14 of Appendix E, it
seems likely that paragraphs 55 and 56.c of Appendix E should have referred to the reduction in the
quantity of high-end cigarette wholesale sales being partially due to downtrading and partially due
to the overall reduction in the total wholesale sales volume, rather than to the decrease in the
quantity ratio being attributable to these causes.
6.458. Given that (i) the Panel's unnecessary factual finding that part of the shift in ratio was caused
by a decline in overall wholesale sales was not material to the Panel's conclusions with respect to
trade restrictiveness, and (ii) this factual finding lacks any basis in the Panel Report, we moot the
Panel's finding in paragraphs 55 and 56.c of Appendix E that the decrease in the ratio of high -end
to low-end cigarette sales was partially caused by the decrease in overall wholesale cigarette sales
volumes attributable to the TPP measures. Having mooted the relev ant finding upon which the
Dominican Republic's claims under Article 11 are based, we do not need to address these claims.
6.1.3.4 Conclusion
6.459. For the reasons explained above, we find that the appellants have not demonstrated that
the Panel erred in finding, in paragraph 7.1255 of the Panel Report, that:
[T]he TPP measures are trade -restrictive, insofar as, by reducing the use of tobacco
products, they reduce the volume of imported tobacco products on the Australian
market, and thereby have a "limiting effect" on trade. We also conclude that, while it is
plausible that the measures may also, over time, affect the overall value of tobacco
imports, the evidence before us does not show this to have been the case to date. We
are also not persuaded that the complainants have demonstrated that the TPP measures
impose conditions on the sale of tobacco products in Australia or compliance costs of
such magnitude that they would amount to a limiting effect on trade.1286

1283 See Panel Report, Appendix E, para. 14 and Figure E.6.
1284 Specifically, the Panel stated that the decrease in consumption of premium tobacco products could
not have been exclusively caused by downtrading, because "given that the overall consumption of tobacco
products has decreased, at least some part of the decrease in the consumption of premium tobacco products
has not been substituted with the consumption of non-premium products." (Panel Report, para. 7.1197)
1285 It stands to reason that, in the absence of downtrading, in a market where overall consumption is
declining, the ratio of high-end to low-end sales could remain perfectly constant. In this respect, we do not
preclude the possibility, as a factual matter, that a reduction in wholesale sales volume can, in and of itself,
lead to changes in consumption patterns with respect to high-end and low-end products, whether by some
quirk of a market or even as a more general phenomenon. However, the Panel's findings do not reveal why
such an outcome would occur, nor does such an outcome appear to us to be intuitive or necessary such that
the Panel's factual finding is self-substantiating.
1286 Panel Report, para. 7.1255.
WT/DS435/AB/R • WT/DS441/AB/R

6.1.4 Alternative measures
6.1.4.1 Overview
6.460. The appellants request us to reverse the Panel's findings that two of the alternative measures
that the complainants proposed – namely, an increase in the MLPA for tobacco products and an
increase in taxation of tobacco products in Australia – were not reasonably available alternative
measures that would be l ess trade-restrictive than the TPP measures while making an equivalent
contribution to Australia's legitimate objective. 1287 As a consequence, the appellants request us to
reverse the Panel's overall conclusion under Article 2.2 of the TBT Agreement1288 that the
complainants failed to demonstrate that the TPP measures are more trade-restrictive than necessary
to fulfil a legitimate objective, within the meaning of that provision.1289
6.461. The Appellate Body has said that a comparison of the challenged technical regulation with
possible alternative measures is a conceptual tool used to ascertain whether the challenged measure
is more trade -restrictive than necessary. 1290 In particular, as part of its prima facie case that a
technical regulation is more trade-restrictive than necessary, a complainant1291 may seek to identify
a possible alternative measure that: (i) is less trade -restrictive than th e challenged technical
regulation; (ii) makes a contribution to the legitimate objective equivalent to that of the challenged
technical regulation; and (iii) is reasonably available to the responding Member.1292
6.462. With respect to the two alternative measures a t issue in these appellate proceedings, the
Panel noted that Honduras and the Dominican Republic described the first proposed measure as an
increase in Australia's MLPA for tobacco products from 18 years to 21 years1293, and the
second proposed measure as an increase in excise taxes on tobacco products calibrated to achieve
the degree of reduction in tobacco use achieved by the TPP measures.1294 Australia argued that
these measures are "precise replicas" of measures that Australia had already implemented as part
of its comprehensive tobacco control policy (for an increase in taxation), or only "slight variations"
of such measures (for an increase in the MLPA). 1295 On that basis, Australia submitted that neither

1287 Before the Panel, the complainants proposed four alternative measures that they considered as
being less trade-restrictive than the TPP measures while also being capable of making an equivalent
contribution to Australia's objective: (i) an increase in the MLPA for tobacco products in Australia; (ii) an
increase in taxation of tobacco products in Australia; (iii) "improvements to", or "effective", social marketing
campaigns in Australia; and (iv) a pre-vetting mechanism for tobacco packaging. (Panel Report, paras. 7.1392,
7.1472, 7.1546, and 7.1625-7.1627) Only measures (i) and (ii) are at issue in these appellate proceedings.
1288 Panel Report (DS435), paras. 7.1732 and 8.1.a; Panel Report (DS441), paras. 7.1732 and 8.1.b.i.
1289 Honduras' Notice of Appeal, p. 5 (referring to Panel Report (DS435), paras. 7.1468-7.1471,
7.1542-7.1545, and 7.1724-7.1732); Dominican Republic's Notice of Appeal, paras. 4 and 12-13 (referring to
Panel Report (DS441), paras. 7.1362-7.1391, 7.1398-7.1402, 7.1411-7.1418, 7.1432-7.1464, 7.1468-7.1471,
7.1476-7.1480, 7.1490-7.1496, 7.1506-7.1531, 7.1542-7.1545, 7.1717-7.1723, 7.1732, and 8.1.b.i).
1290 Appellate Body Report, US – Tuna II (Mexico), para. 320.
1291 We recall that the burden of demonstrating that a technical regulation is inconsistent with Article 2.2
rests with the complainant. (Appellate Body Report, US – Tuna II (Mexico), para. 323)
1292 Appellate Body Reports, US – Tuna II (Mexico), para. 323; US – COOL, para. 379; US – COOL
1293 Panel Report, para. 7.1395. The Panel also noted the Dominican Republic's argument that, should
the Panel consider that a greater reduction in smoking achieved by an increase in the MLPA from 18 to
21 years, on its own, necessarily means greater trade restrictiveness, the Dominican Republic offers a
"calibrated" approach by which the MLPA could be raised to 19 or 20, instead of 21, so that the contribution to
reducing smoking made by increasing the MLPA would remain equivalent to any contribution that the
TPP measures might make. (Panel Report, para. 7.1396 (referring to Dominican Republic's response to Panel
question No. 157, para. 133))
1294 Panel Report, para. 7.1474. The Panel noted that, instead of prescribing a precise level of taxation
or manner of implementation, Honduras and the Dominican Republic contended that the increase in taxation
could be set at the level needed to make the desired contribution to Australia's objective. (Ibid.) As such, the
Panel stated that it would proceed on the basis that the alternative measure proposed by the complainants is
"an increase of the excise tax levied on tobacco products, with flexibility as to the exact magnitude and manner
of such tax increase depending on the degree of contribution found to be achieved by the TPP measures".
(Ibid., para. 7.1475)
1295 Panel Report, paras. 7.1353, 7.1355, and 7.1377.
WT/DS435/AB/R • WT/DS441/AB/R

of the two proposed measures can be considered a "true" alternative for purposes of the legal
assessment under Article 2.2.1296
6.463. The Panel found that, although the two alternative measures in question are variations of
measures that already exist in Australia (i.e. the existing MLPA of 18 years and the past and planned
increases in taxation on tobacco products in Australia), they still qualify as "alternatives" to the
TPP measures1297, in that they "do not yet exist in the Member in question, or at least not in the
particular form proposed by the complainant ".1298 The Panel also found that both measures are
reasonably available to Australia.1299 These findings are not challenged on appeal.
6.464. By contrast, the Panel found that the complainants had failed to demonstrate that: (i) each
of the two alternative measures would be less trade-restrictive than the TPP measures1300; and
(ii) each alternative measure would make a contribution to Australia's objective equivalent to that
of the TPP measures.1301
6.465. The appellants claim that the Panel erred in law under Article 2.2 in reaching these
conclusions. In addition, the Dominican Republic raises separate claims under Article 11 of the DSU,
challenging certain aspects of the Panel's assessment of the relative trade restrictiveness and
contribution of the alternative measures. Australia requests us to dismiss the appellants' claims in
their entirety.1302
6.466. We address each of the appellants' claims in turn.
6.1.4.2 Whether the Panel erred under Article 2.2 in its assessment of the relative trade
restrictiveness of the alternative measures
6.467. The appellants claim t hat the Panel erred in law 1303 under Article 2.2 in finding that the
complainants had not demonstrated that the two alternative measures at issue would be less
trade-restrictive than the TPP measures, because those conclusions were based on the Panel's
erroneous findings, made earlier in its Report, regarding the degree of trade restrictiveness of the
TPP measures. According to the appellants, in its assessment of the trade restr ictiveness of the
TPP measures, the Panel adopted too narrow an understanding of the concept of
"trade restrictiveness", and, rather than focusing on the measures' impact on the competitive
opportunities for tobacco products based on their design, structur e, and intended operation, it
required empirical evidence of the TPP measures' actual trade effects. 1304 The appellants consider
that, had the Panel properly found that the TPP measures are trade -restrictive in that they, by
design, reduce the competitive opp ortunities arising from brand differentiation, it would have
reached a different conclusion, namely, that the TPP measures are more trade-restrictive than the
alternative measures because the latter measures do not similarly limit competitive opportunities
for tobacco products.1305
6.468. Australia observes that the appellants' claims of error in relation to the Panel's analysis of
the trade restrictiveness of the proposed alternative measures are "entirely consequential" to their

1296 Panel Report, para. 7.1377.
1297 Panel Report, paras. 7.1400-7.1402 (for an increase in the MLPA) and 7.1468 (for an increase in
taxation).
1298 Panel Report, para. 7.1385 (quoting Appellate Body Reports, US – COOL (Article 21.5 – Canada and
Mexico), para. 5.328). (emphasis added by the Panel)
1299 Panel Report, paras. 7.1467 (for an increase in the MLPA) and 7.1541 (for an increase in taxation).
1300 Panel Report, paras. 7.1417 (for an increase in the MLPA) and 7.1495 (for an increase in taxation).
1301 Panel Report, paras. 7.1464 (for an increase in the MLPA) and 7.1531 (for an increase in taxation).
1302 Australia's appellee's submission, para. 423.
1303 Honduras claims that the Panel erred in its interpretation and application of Article 2.2 of the
TBT Agreement in its assessment of the relative trade restrictiveness of the two alternative measures.
(Honduras' Notice of Appeal, pp. 4-5; appellant's submission, section VII) The Dominican Republic claims that
the Panel erred in its application of Article 2.2. (Dominican Republic's Notice of Appeal, para. 12; appellant's
submission, para. 1394)
1304 Honduras' appellant's submission, paras. 562-564; Dominican Republic's appellant's submission,
paras. 1395 and 1418-1420.
1305 Honduras' appellant's submission, paras. 560, 565, and 574; Dominican Republic's appellant's
submission, paras. 1390 and 1419.
WT/DS435/AB/R • WT/DS441/AB/R

claim that the Panel applied an erroneous legal standard in ascertaining the trade restrictiveness of
the TPP measures.1306 Accordingly, Australia argues that, if we were to uphold the Panel's finding
that the TPP measures are trade-restrictive only insofar as they have a limiting effect on the volume
of imported tobacco products, we would necessarily conclude that the proposed alternative measures
are at least as trade-restrictive as the TPP measures.1307 This is because, given that the Australian
market is supplied entirely through imported tobac co products1308, any equivalent contribution to
Australia's objective of reducing the use of, and exposure to, tobacco products would necessarily
entail an equivalent limiting effect on international trade in terms of the volume of imported tobacco
products.1309
6.469. The Appellate Body has said that an assessment of the degree of trade restrictiveness of a
measure can be done either in quantitative or qualitative terms, as appropriate in the particular
circumstances of a given case. 1310 The Panel in these proceedings assessed and compared the
respective degrees of trade restrictiveness of the TPP measures and each alternative measure in
qualitative terms.
6.470. We recall that, with respect to the trade restrictiveness of the TPP measures, the
complainants argued before the Panel that the reduced opportunities for tobacco manufacturers to
compete on the basis of brand differentiation, resulting from the TPP measures, amount to a limiting
effect on international trade (i.e. trade restrictiveness) within the meaning of Article 2.2.1311 The
complainants also argued that the TPP measures are trade-restrictive because: (i) they raise barriers
to entry into the Australian market 1312; (ii) they have a limiting effect on the volume and value of
trade in tobacco products1313; (iii) they entail compliance costs1314; and (iv) the penalties under the
TPP measures amount to a restriction on international trade. 1315 The Panel disagreed with the
proposition that the modification of the competitive environment by the TPP measures, affecting all
tobacco products on the entire market, in and of itself, suffices to establish the trade restrictiveness
of the TPP measures.1316 Rather, the Panel considered that "it needs to be shown how such effects
on the conditions of competition on the market give rise to a limiting effect on international trade in
tobacco products."1317 On that basis, the Panel proceeded to examine the complain ants' individual
arguments set out under items (i) through (iv) above.1318
6.471. The Panel rejected the complainants' assertions that the TPP measures are trade-restrictive
as set out under items (i), (iii), and (iv) above.1319 These findings have not been appealed. W ith
respect to item (ii), the Panel found that, to the extent that the TPP measures contribute to
Australia's objective of reducing the use of, and exposure to, tobacco products, they reduce the
volume of imported tobacco products on the Australian market, and therefore are trade-restrictive
in that respect.1320 With respect to the measures' impact on the value of imported tobacco products,
the Panel found that the complainants did not demonstrate that the TPP measures had reduced the
value of those imports on the Australian market. 1321 On the contrary, the Panel noted that the
evidence indicated that the measures have so far led to an increase in the price of cigarettes, which
has more than offset the decrease in the quantity of cigarettes consumed and has thereb y

1306 Australia's appellee's submission, para. 369. (emphasis omitted)
1307 Australia's appellee's submission, para. 372.
1308 Panel Report, para. 7.1207.
1309 Australia's appellee's submission, paras. 372-373. Australia further submits that there would be no
need for us to examine the Panel's findings regarding the contribution of the alternative measures if we upheld
the Panel's findings regarding the trade restrictiveness of the TPP measures. (Ibid., para. 374)
1310 See Appellate Body Reports, US – COOL (Article 21.5 – Canada and Mexico), para. 5.208 (referring
to Appellate Body Reports, Brazil – Retreaded Tyres, para. 145; US – COOL, para. 477; EC – Poultry,
paras. 126-127).
1311 See, for example, Panel Report, paras. 7.1090 and 7.1105.
1312 Panel Report, para. 7.1172.
1313 Panel Report, paras. 7.1189-7.1190.
1314 Panel Report, para. 7.1228.
1315 Cuba is the only complainant that made this argument before the Panel. (Panel Report,
para. 7.1247)
1316 Panel Report, para. 7.1167.
1318 Panel Report, paras. 7.1172-7.1254.
1319 Panel Report, paras. 7.1187, 7.1246, and 7.1254.
1320 Panel Report, para. 7.1208.
1321 Panel Report, paras. 7.1225 and 7.1255.
WT/DS435/AB/R • WT/DS441/AB/R

contributed to an increase in the overall value of the market.1322 At the same time, though, the Panel
did not "exclude[]" that the TPP measures may, over time, affect the overall value of tobacco imports
as a result of a fall in prices through downtrading.1323
6.472. Turning to the trade restrictiveness of the two alternative measures in question, the Panel
considered whether each of these measures would be less trade-restrictive than the TPP measures,
by examining each measure's impact on the volume of imported tobacco products, as well as certain
other considerations.
6.473. With respect to an increase in the MLPA, the Panel noted that this alternative measure would
"eliminate the ability of tobacco companies to sell their products to people under the age of 21 years,
and any competitive opportunities associated with such sales, including for imported tobacco
products".1324 The Panel noted in this context "the importance of younger smokers to the tobacco
industry".1325 The Panel further stated that, to the extent that an increase in the MLPA would make
a contribution to Australia's objective of improving public health by reducing the use of, and exposure
to, tobacco products equivalent to that of the TPP measures by reducing overall consumption of
tobacco products, it would affect the overall volume of imports of tobacco products to an extent
commensurate with that of the TPP measures.1326 In addition, the Panel stated that, given that the
evidence provided "only a very limited basis" upon which to assess "with any degree of precision "
the potential impact of an increase in the MLPA, the Panel had no reason to assume that the impact
of this measure on the total value of imports would be less than that observed in relation to the
TPP measures.1327 In light of these elements, the Panel conc luded that the complainants had not
demonstrated that an increase in the MLPA to 21 years would necessarily be less trade -restrictive
than the TPP measures.1328
6.474. Regarding an increase in taxation, the Panel stated that, to the extent that a taxation
increase would be calibrated to have the same degree of contribution as the TPP measures in
reducing the use of, and exposure to, tobacco products 1329, and would therefore have an equ al
impact on overall consumption of such products, it would be as trade-restrictive as the TPP measures
in terms of its impact on the volume of trade in tobacco products.1330 The Panel further stated that
certain types of taxation measures may give rise to the same type of downtrading as the
complainants had argued would arise from the TPP measures.1331 The Panel also stated that the
elevation of prices resulting from taxation may entail other effects on product and brand competition,
such as greater market share of low -cost brands, altering the relative competitive positions of
cigarette suppliers, and a consumer shift to roll-your-own tobacco.1332 In light of these elements, it
was "not clear to [the Panel] how an increase in taxation levels would address or avoid the concerns
about 'downtrading'/downward substitution that the complainants ha[d] expressed in connection
with the TPP measures, or any resulting impact on the total value of trade in tobacco products".1333
Accordingly, "[o]verall", the Panel concluded that the complainants had not demonstrated that an
increase in tobacco taxation would be less trade-restrictive than the TPP measures.1334
6.475. As we have noted above1335, the appellants link their claims of error regarding the relative
trade restrictiveness of the alternative measures to their claims of error regarding the trade
restrictiveness of the TPP measures. In particular, we understand the appellants' key contention to

1322 Panel Report, paras. 7.1218, 7.1221, and 7.1224. With respect to cigars and cigarillos, the Panel
noted that evidence before it was "somewhat less clear" and that none of the parties had provided econometric
evidence assessing the impact of the TPP measures on cigar imports. (Panel Report, para. 7.1219)
1324 Panel Report, para. 7.1413.
1325 Panel Report, para. 7.1413.
1326 Panel Report, para. 7.1414.
1327 Panel Report, para. 7.1416.
1328 Panel Report, para. 7.1417.
1329 As noted in paragraph 6.462. above and footnote 1294 thereto, the complainants characterized the
proposed increase in taxation as an excise tax increase calibrated to achieve any reduction in tobacco use
resulting from the TPP measures. (Panel Report, para. 7.1474)
1330 Panel Report, paras. 7.1490-7.1491.
1331 Panel Report, para. 7.1492.
1332 Panel Report, para. 7.1493.
1333 Panel Report, para. 7.1494.
1334 Panel Report, para. 7.1495.
1335 See para. 6.467. above.
WT/DS435/AB/R • WT/DS441/AB/R

be that, be cause the TPP measures reduce the competitive opportunities arising from
brand differentiation, these measures are, by design, trade -restrictive.1336 The Dominican Republic
also considers that the Panel erred by finding that empirical evidence did not show co nsumer
downtrading due to the TPP measures, which the Dominican Republic argued confirmed the lost
competitive opportunities.1337
6.476. We have already found, in section 6.1.3 of these Reports, that the appellants have not
demonstrated that the Panel erred in its interpretation or application of Article 2.2 by rejecting, in
the particular circumstances of these disputes, the complainants' propositions that: (i) the reduction
in brand differentiation (i.e. a modification of the competitive environment in the tobacco product
market), in and of itself, sufficed to establish the requisite limiting effect on international trade; and
(ii) the TPP measures are trade -restrictive due to their impact on the overall value of imported
tobacco products.1338
6.477. Under these circumstances, we do not see a sufficient basis to find that the Panel erred in
concluding that neither measure was demonstrated to be less trade-restrictive than the
TPP measures. We highlight, in particular, the Panel's finding that the TPP measures are
trade-restrictive insofar as they affect the volume of imported tobacco products. We note in this
regard that the Panel found that the Austr alian market is supplied entirely by imported tobacco
products.1339 The Panel thus considered that an alternative measure that is capable of making a
degree of contribution to the objective of reducing the use of, and exposure to, tobacco products
equivalent to that of the TPP measures would be as trade-restrictive as the TPP measures, as far as
the import volume is concerned. In these appellate proceedings, the appellants have not explained
specifically why this is not the case with respect to the two alternative measures in question.
6.478. In addition, even if the TPP measures could be considered trade -restrictive because they
modify the competitive environment in the Australian tobacco product market and/or affect the
overall value/price of the tobacco products1340, as argued by the appellants, we note that the Panel
addressed considerations pertinent to whether, and to what extent, each alternative measure would
also impact the competitive environment and/or the overall value and price of imported tobacco
products, and found that such impacts were, overall, not demonstrated to be less significant than
the impacts of the TPP measures.1341 We note in this regard that, in their appellant's submissions,
the appellants have presented little argumentation as to precisely how t he Panel erred in law in
making these findings, or why it should have found that the complainants had demonstrated that
the TPP measures are more trade-restrictive than the two alternative measures in these additional
aspects.
6.479. In light of these considerations, we find that the appellants have not demonstrated that the
Panel erred in its interpretation or application of Article 2.2 in rejecting the complainants' proposition
that the two alternative measures in question are less trade-restrictive than the TPP measures.
6.1.4.3 Whether the Panel erred under Article 2.2 in its assessment of the relative
contribution of the alternative measures
6.480. The appellants claim that the Panel erred in law1342 under Article 2.2 of the TBT Agreement
in finding that the complainants had failed to demonstrate that each of the two alternative measures

1336 Honduras' appellant's submission, paras. 563-565 and 573-574; Dominican Republic's appellant's
submission, paras. 1390 and 1418-1419.
1337 Dominican Republic's appellant's submission, para. 1418.
1338 See para. 6.459. above.
1339 Panel Report, para. 7.1207.
1340 As noted, the Panel acknowledged that the TPP measures limit the opportunity for tobacco
manufacturers to compete on the basis of brand differentiation. (Panel Report, para. 7.1167) The Panel also
did not "exclude[]" that such modification of the competitive environment might, over time, affect the overall
value and/or price of imported tobacco products, although it found that the evidence did not show this to be
the case "to date". (Panel Report, paras. 7.1225 and 7.1255)
1341 See paras. 6.473. 6.474. above.
1342 In its Notice of Appeal, Honduras claims that the Panel erred in both the interpretation and
application of Article 2.2 of the TBT Agreement. (Honduras' Notice of Appeal, pp. 4-5) The Dominican Republic
claims that the Panel erred in its application of Article 2.2. (Dominican Republic's Notice of Appeal, para. 13)
WT/DS435/AB/R • WT/DS441/AB/R

would make a contribution to Australia's objective equivalent to the contribution of the
TPP measures.
6.481. The appellants observe that the Panel found that the objective of the TPP measures relevant
for its analysis under Article 2.2 is "a reduction in the use of, and exposure to, tobacco products"1343,
or "reducing smoking".1344 The appellants underscore that, in relation to that objective, the Panel
found that the TPP measures and the two alternative me asures are similarly apt to make a
"meaningful" contribution. 1345 Nonetheless, the Panel concluded that the contribution of each
alternative measure would not be equivalent to the contribution of the TPP measures. As the
appellants see it, the Panel's conclus ions were reached in error because: (i) the Panel rejected
equivalence on the basis of the fact that the alternative measures contribute to Australia's objective
through mechanisms different from the TPP measures1346; and (ii) the Panel failed to make a proper
comparison between the contributions of the challenged and alternative measures, by taking into
account the "synergies" purportedly created between the TPP measures and Australia's other
existing tobacco control measures, while neglecting to consider any synergies that each of the
alternative measures could newly create with the same existing measures.1347
6.482. Australia disputes the appellants' contention that, by using the same word, "meaningful",
the Panel found that the proposed alternative measures would mak e equivalent degrees of
contribution to Australia's objective as that of the TPP measures.1348 Australia highlights in this
regard that the Panel stated that an increase in the MLPA to 21 years "would in principle be apt to
make a meaningful contribution to Australia's objective", and that an increase in excise taxes "could,
in principle, make a meaningful contribution to Australia's objective", but did not find that these
alternative measures would achieve a degree of contribution equivalent to that made by t he
TPP measures.1349 In any event, Australia observes that the Panel did not reject equivalence because
of the different mechanisms by which the alternative measures operate. On the contrary, the Panel
explicitly stated that it sought to ascertain the extent to which the alternative measures could
contribute to Australia's objective of "improving public health by reducing the use of, and exposure
to, tobacco products" or "reducing the use of tobacco products"1350, and that "a proposed alternative
measure may achi eve an equivalent degree of contribution in ways different from the technical
regulation at issue."1351 Furthermore, Australia considers it correct for the Panel to have found that
an alternative measure that merely substitutes an existing element of a comprehensive strategy for

1344 Dominican Republic's appellant's submission, para. 1435.
1345 Honduras' appellant's submission, para. 616; Dominican Republic's appellant's submission,
para. 1495 (referring to Panel Report, paras. 7.1453 (for an increase in the MLPA) and 7.1523 (for an increase
in taxation)).
1346 More specifically, Honduras argues that: (i) the Panel erroneously considered the alternative
measures' contribution not in the light of the legitimate objective determined by the Panel, but in light of the
specific mechanisms by which the plain packaging measures were assumed to operate to meet this objective;
and (ii) by using the term "substitute" throughout its analysis of equivalence, the Panel erroneously examined
whether the alternative measure provides an identical contribution through the same mechanism as the
challenged measure. (Honduras' appellant's submission, paras. 620 and 632-634) The Dominican Republic
argues that the Panel erred in rejecting the proposed alternatives on the basis that they contributed to
Australia's objective of reducing smoking through different means than the TPP measures.
(Dominican Republic's appellant's submission, para. 1492)
1347 More specifically, Honduras argues that the Panel erred because: (i) it failed to compare the degree
of contribution of the alternative measure in isolation with the contribution of the TPP measures in combination
with Australia's other tobacco control measures; and (ii) it erroneously introduced a "different and more
demanding standard" for assessing equivalence for measures that are part of a "comprehensive strategy" or
"suite of measures". (Honduras' appellant's submission, paras. 645-646, 658, and 662) The
Dominican Republic argues that the Panel erred by assessing "synergies" on an "entirely one-sided basis"
because it considered the synergies allegedly arising from interactions between the TPP measures and other
Australian tobacco control measures, but neglected to consider synergies that could result from the enactment
of the proposed alternatives measures. (Dominican Republic's appellant's submission, paras. 1526-1527)
1348 Australia's appellee's submission, para. 392.
1349 Australia's appellee's submission, para. 392 (quoting Panel Report, paras. 7.1453 and 7.1523).
(emphasis added by Australia)
1350 Australia's appellee's submission, para. 379 (quoting Panel Report, paras. 7.1432 and 7.1511).
(emphasis omitted)
1351 Australia's appellee's submission, para. 379 (quoting Panel Report, para. 7.1454, in turn referring to
Appellate Body Reports, US – COOL (Article 21.5 – Canada and Mexico), para. 5.215).
WT/DS435/AB/R • WT/DS441/AB/R

the TPP measures may weaken the policy by reducing the synergies between its components, as
well as its total effect, as the Appellate Body stated in Brazil – Retreaded Tyres.1352
6.483. We first note that all participants agree1353 with the Panel's formulation of the legal standard,
applicable to an assessment of "equivalence", that what is relevant for such an assessment is "the
overall degree of contribution that the technical regulation makes to the objective pursued … rather
than any individual isolated aspect or component of contribution" 1354, and that "a proposed
alternative measure may achieve an equivalent degree of contribution in ways different from the
technical regulation at issue and there is a margin of appreciation in this assessment." 1355 The
participants also agree that the standard by which to assess equivalence remains the same where
the challenged measure is implemented as part of a responding Member's comprehensive policy to
address a "multifaceted"1356 problem, such as smoking.1357
6.484. We further recall that the Panel determined that the objective of the TPP measures relevant
for its analysis under Article 2.2 in these disputes is "to improve public health by reducing the use
of, and exposure to, tobacco products". 1358 As we und erstand it, the Panel's qualification of the
phrase "to improve public health" by the phrase "by reducing the use of, and exposure to, tobacco
products" suggests that the focus of an assessment of the degree of contribution that a measure
makes to that objective is the extent to which the measure contributes to "reducing the use of, and
exposure to, tobacco products", rather than to improving public health generally. We further note
that the Panel observed that the objective of reducing "exposure" to tobacc o products is "directly
linked to, and consequential to", the achievement of the objective of reducing "use" of tobacco
products.1359 In this sense, the degree to which a measure reduces the use of tobacco products –
or, in other words, reduces smoking – can be considered the core element of the objective of the
TPP measures, for purposes of an assessment of equivalence. We thus consider that Honduras and
the Dominican Republic are not incorrect in explaining that the Panel found that the objective of the
TPP measures is "a reduction in the use of, and exposure to, tobacco products" 1360, or "reducing
smoking".1361 Australia does not contest this view.1362
6.485. In addition, with respect to the scope of the objective of the TPP measures, we take note of
the Panel's rejection o f Australia's proposition that the relevant objective also encompasses what
Australia referred to as the three "specific objectives" or "mechanisms" of the measures, namely:
(i) reducing the appeal of tobacco products; (ii) increasing the effectiveness of GHWs; and
(iii) reducing the ability of packages to mislead consumers about the harms of smoking. According
to the Panel, "these 'specific objectives' are more properly described as the means, or 'mechanisms',
as Australia itself describes them, by which t he measures are intended to achieve Australia's
objective of improving public health."1363
6.486. We recall that the Panel assessed the degree of contribution that the TPP measures and each
of the alternative measures make to the above objective. As the appellants h ighlight, the Panel

1352 Australia's appellee's submission, paras. 381-383 (referring to Appellate Body Report,
1353 Honduras' appellant's submission, para. 585; Dominican Republic's appellant's submission,
1354 Panel Report, para. 7.1368 (quoting Appellate Body Reports, US – COOL (Article 21.5 – Canada and
Mexico), paras. 5.216 and 5.255 (emphasis omitted by the Panel)).
1355 Panel Report, para. 7.1369 (referring to Appellate Body Reports, US – COOL, para. 373; US – COOL
(Article 21.5 – Canada and Mexico), paras. 5.215 and 5.254). (emphasis added)
1356 See, for example, Panel Report, para. 7.1528.
1357 See, for example, Honduras' appellant's submission, para. 658; Dominican Republic's appellant's
1358 Panel Report, para. 7.232.
1359 Panel Report, para. 7.1045. This is because "a reduced use of tobacco products by those who
consume them will lead to a reduction in the exposure to these products for non-users." (Ibid.)
1361 Dominican Republic's appellant's submission, para. 1435.
1362 See, for example, Australia's appellee's submission, paras. 379, 383, and 392.
1363 Panel Report, para. 7.227. The Panel added that "the means should not be confused with the ends
in this context." (Ibid. (referring to European Union's third-party submission to the Panel, para. 68;
Panel Reports, US – COOL (Article 21.5 – Canada and Mexico), para. 7.326))
WT/DS435/AB/R • WT/DS441/AB/R

qualified in each instance the measure's contribution by using the same adjective "meaningful".1364
Specifically, with respect to the contribution of the TPP measures, the Panel found that:
Taken as a whole, therefore, we consider that the evidence before us supports the view
that, as applied in combination with the comprehensive range of other tobacco control
measures maintained by Australia and not challenged in these proceedings, including a
prohibition on the use of other means through which branding could otherwise
contribute to the appeal of tobacco products and to misleading consumers about the
harmful effects of smoking, the TPP measures are apt to, and do, make a meaningful
contribution to Australia's objective of reducing the use o f, and exposure to, tobacco
products.1365
6.487. With respect to an increase in the MLPA, the Panel found that:
Overall, in light of the above, we find that the evidence before us suggests that,
notwithstanding the difficulty associated with making precise projections on the basis
of the evidence before us from other jurisdictions, an increase in the MLPA to 21 years
would in principle be apt to make a meaningful contribution to Australia's objective of
improving public health by reducing the use of, and exposure to, tobacco products.1366
6.488. With respect to an increase in taxation, the Panel found that:
Taking these considerations into account, we agree that an increase in tobacco excise
taxes in Australia could, in principle, make a meaningful contribution to Australia's
objective of improving public health by reducing the use of, and exposure to, tobacco
products.1367
6.489. However, the Panel ultimately concluded that the complainants failed to demonstrate that
the contribution of each alternative measure would be equivalent to that of the TPP measures.
6.490. While the specific reasoning for rejecting equivalence differs slightly for the two measures,
we generally share the appellants' view that the Panel referred to the following two points in each
instance: (i) the alternative measures do not address the design features of tobacco packaging that
the TPP measures seek to address 1368; and (i i) this would leave one aspect of Australia's
comprehensive approach to tobacco control unaddressed, and reduce the "synergies" between the
different components of that policy. 1369 At the same time, we note that the Panel's drafting of its
reasoning is somewhat complicated, and there is some ambiguity as to precisely how, in the Panel's
view, the contribution of each alternative measure (which the Panel described as "meaningful")
cannot be considered equivalent to that of the TPP measures (which the Panel also described as
"meaningful"). In this regard, the appellants observe that the Panel found that each alternative
measure would be apt to make the same or a similar degree of "meaningful" contribution to the
relevant objective of reducing the use of, and expo sure to, tobacco products as the TPP measures,
and yet such contribution still could not be considered equivalent because of the two considerations
mentioned above.
6.491. We recall that, in the specific circumstances of these proceedings, the Panel decided to
assess the respective degrees of contribution of the challenged and alternative measures in
qualitative, rather than quantitative, terms.1370 With respect to the contribution of the TPP measures,

1364 Panel Report, paras. 7.1043 (for the TPP measures), 7.1453 (for an increase in the MLPA),
and 7.1523 (for an increase in taxation).
1368 Panel Report, paras. 7.1459 (for an increase in the MLPA) and 7.1526 (for an increase in taxation).
1369 Panel Report, paras. 7.1461 (for an increase in the MLPA) and 7.1526-7.1528 (for an increase in
taxation). The Panel relied on the Appellate Body's statement in Brazil – Retreaded Tyres that "[s]ubstituting
one element of [Brazil's] comprehensive policy for another would weaken the policy by reducing the synergies
between its components, as well as its total effect." (Ibid., para. 7.1461 and fn 3502 thereto, and para. 7.1528
and fn 3633 thereto (referring to Appellate Body Report, Brazil – Retreaded Tyres, para. 172))
1370 See, for example, Panel Report, paras. 7.1040 (for the TPP measures), 7.1452 (for an increase in
the MLPA), and 7.1518-7.1522 (for an increase in taxation).
WT/DS435/AB/R • WT/DS441/AB/R

the Panel made the finding of a "meaningful" contribution in the context of setting out its "[o]verall
conclusion on the degree of contribution of the TPP measures to Australia's objective".1371 Similarly,
the Panel used the adjective "meaningful" to describe the contribution of each alternative measure,
despite Australia's request in the interim review not to do so.1372 In this context, the Panel explained
that its use of this adjective "reflects the Panel's assessment of the degree of contribution that [each]
alternative is apt to make to Australia's objective". 1373 Under these circumstances, it seems
reasonable to interpret the Panel to suggest that the ("meaningful") degree to which each alternative
measure would be apt to contribute to Australia's objective of reducing the use of, and exposure to,
tobacco products is similar or comparable to the ("meaningful") degree to which the TPP measures
contribute to the same objective.1374
6.492. This view is also confirmed by a closer examination of how the Panel arrived at its findings
of "meaningful" contribution for the TPP measures and each of the two alternative measures.
Specifically, with respect to the TPP measures, we recall that, in reaching its overall finding of a
"meaningful" contribution for these measures, the Panel examined: (i) the evidence relating to their
design, structure, and intended operation; and (ii) the evidence relating to their application since
their entry into force.1375 With respect to item (i), the Panel found that the evidence supported the
proposition that plain packaging of tobacco products has the capacity to have an impact on the
three "proximal" outcomes mentioned above 1376 (i.e. reducing the appeal of tobacco products,
increasing the effectiveness of GHWs, and reducing the ability of the pack to mislead consumers).1377
The Panel then assessed the extent to which these "proximal" outcomes will in turn have an impact
on smoking behaviour, and found that, while the relationship between perceptions, atti tudes, and
behaviour is complex, "it is reasonable to expect that reducing the appeal of tobacco products and
enhancing clarity about their harmful effects will influence at least some consumers in their smoking
behaviours."1378 With respect to item (ii), the Panel assessed the voluminous body of available
empirical evidence1379 and found that this evidence largely "is consistent with a finding that the
TPP measures contribute to a reduction in the use of tobacco products, to the extent that it suggests
that, together with the enlarged GHWs introduced at the same time, plain packaging has resulted in
a reduction in smoking prevalence and in consumption of tobacco products".1380
6.493. To us, these intermediate findings by the Panel appear to suggest that, by using the phrase
"meaningful contribution" for the TPP measures, the Panel did not consider that the measures
necessarily make a particularly large contribution to the objective of reducing the use of, and
exposure to, tobacco products. Rather, the Panel's statements, su ch as that the TPP measures are
expected to "influence at least some consumers" and that the available empirical evidence is
"consistent" with a finding that the TPP measures, together with the enlarged GHWs, contribute to

1371 Panel Report, title of section 7.2.5.3.8. (emphasis added)
1372 Panel Report, paras. 6.58 and 6.62.
1374 In this connection, Australia seems to suggest that the Panel's use of language suggesting
possibility – such as "would in principle be apt to" and "could, in principle" – for the two alternative measures
indicates that their contributions would be less than "meaningful". (Australia's appellee's submission, para. 392
(referring to Panel Report, paras. 7.1453 and 7.1523) (emphasis omitted)) We do not take such a view,
because the Panel's use of the language suggesting possibility could also be understood to reflect the fact that
these alternative measures are "a conceptual tool for the purpose of ascertaining whether a challenged
measure is more trade restrictive than necessary" and are "of a hypothetical nature" in the sense that "they do
not yet exist in the Member in question, or at least not in the particular form proposed by the complainant."
(Appellate Body Reports, US – Tuna II (Mexico), para. 320; US – COOL (Article 21.5 – Canada and Mexico),
para. 5.328)
1375 See Panel Report, para. 7.1024.
1376 See para. 6.485. above.
1377 Panel Report, para. 7.1026.
1378 Panel Report, para. 7.1031. (emphasis original) See also ibid., paras. 7.697, 7.756, 7.776, 7.849,
7.854, and 7.927.
The Panel also stated that, in a regulatory context where tobacco packaging would otherwise be the
only opportunity to convey a positive perception of the product through branding, as is the case in Australia, "it
appears … reasonable … to hypothesize some correlation between the removal of such design features and the
appeal of the product, and between such reduced product appeal and consumer behaviours." (Panel Report,
para. 7.1034 (emphasis added))
1379 Panel Report, Appendices A-C.
1380 Panel Report, para. 7.1037. See also ibid., paras. 7.972 and 7.986.
WT/DS435/AB/R • WT/DS441/AB/R

"a reduction" in the use of tobacco products, suggest that the Panel considered that the contribution
of the TPP measures is rather modest, while it could still be considered "meaningful".
6.494. Turning to the two alternative measures in question, we note that the Panel reached its
finding of a "meaningful" contribution for an increase in the MLPA by considering, inter alia, certain
studies that estimated the impact of an increase in the MLPA from 18 to 21 years on smoking
initiation rates for adolescents and adult smoking prevalence in the Unit ed States, which indicated
considerable long-term decreases in both parameters.1381 While the Panel stated that it was reluctant
to assume that these results can be "transposed directly" to provide "an exact measure" of the
degree of contribution that this me asure would be apt to make in the Australian market 1382, the
Panel did not mention any consideration suggesting that an increase in the MLPA to 21 years would
be significantly less effective in Australia than in the United States. With respect to an increase in
taxation, we note that the Panel's finding of a "meaningful" contribution was made by considering,
inter alia, the price elasticity of demand for tobacco products, which the parties agreed to converge
at around -0.4, and which the Panel considered "indicative of the potential contribution of increased
taxation to Australia's objective".1383 In addition, in the context of examining whether the proposed
tax increase is reasonably available to Australia, the Panel observed that this relatively low price
elasticity (less than -1.0) "is indicative that there may be room to increase excises in a manner that
would increase revenues while still reducing tobacco consumption".1384
6.495. In light of these observations regarding how the Panel reached its finding of a "meaningful"
contribution in each instance, we see no clear indication in the Panel's analysis that the overall
degree of reduction in the use of, and exposure to, tobacco products achieved by each alternative
measure (in addition to any reduction attributable to Aus tralia's other existing tobacco control
measures) would be materially smaller than that achieved by the TPP measures, such that the level
of protection pursued by the TPP measures and Australia's other tobacco control measures 1385
necessarily goes beyond what could reasonably be achieved with one of the alternative measures
used as a substitute for the TPP measures.
6.496. For these reasons, we agree with the appellants that the Panel Report can be read as
indicating that, while each alternative measure may be considered apt to achieve a ("meaningful")
degree of reduction in the use of, and exposure to, tobacco products similar or comparable to the
("meaningful") degree of reduction achieved by the TPP measures, the alternative measures'
contributions would still fall short of being "equivalent" because such alternative measures: (i) do
not address the design features of tobacco packaging; and (ii) undermine the comprehensive nature
of Australia's policy by leaving unaddressed the particular aspect of the multifaceted problem that
the TPP measures seek to address. This understanding of the Panel's reasoning is supported by the
Panel's statement, made in the context of addressing the contribution of an increase in taxation,
that, "even assuming that the exact reduction in overall consumption caused by the TPP measures
could be isolated and quantified, an increase in taxation designed to achieve the same overall
reduction"1386 in consumption would still fail to achieve an equivalent contribution because it "would
necessarily leave in place those aspects of tobac co product and retail packaging that the

1381 See Panel Report, paras. 7.1448-7.1451.
1382 Panel Report, para. 7.1452.
1383 Panel Report, paras. 7.1515-7.1518.
1384 Panel Report, para. 7.1538.
1385 We note that the Panel did not identify the specific level of protection Australia seeks to achieve in
its assessment of equivalence. At the same time, we note that, in the context of its determination of the
relevant objective of the TPP measures, the Panel took note of Cuba's and Indonesia's contention that the
TPP Bill Explanatory Memorandum referred to the "performance benchmarks" of "reducing the national
smoking rates to 10 per cent of the population by 2018 and halving the Aboriginal and Torres Strait Islander
smoking rate". (Panel Report, para. 7.231, quoting TPP Bill Explanatory Memorandum (Panel Exhibits AUS-2,
JE-7), p. 1) The Panel disagreed with Cuba and Indonesia that these "benchmarks" form a component of the
TPP measures' objective itself, but accepted that they "constitute general targets set in relation to the
reduction of smoking rates in Australia, through the TPP measures and other tobacco control measures" and
"thus identify a certain targeted level of achievement of the objective". (Panel Report, para. 7.231 (emphasis
original; fn omitted))
1386 Panel Report, para. 7.1526. (emphasis added) At the same time, we note that, in the specific
circumstances of these disputes, the Panel found that the impact of the TPP measures is difficult to "quantify in
terms of the magnitude of changes in smoking behaviours attributable to the measures" or "isolate
empirically … from other factors that also affect the evolution of smoking behaviours, including other tobacco
control measures applied simultaneously with the TPP measures". (Panel Report, para. 7.1040)
WT/DS435/AB/R • WT/DS441/AB/R

TPP measures address as 'part of a more complex suite of measures directed at the same objective'
of tobacco control".1387
6.497. Based on our understanding of the Panel's reasons for concluding that the contribution of
each alternative measure would not be equivalent to that of the TPP measures, we agree with the
appellants that the two points mentioned by the Panel in rejecting equivalence do not reflect the
correct legal standard under Article 2.2.
6.498. Specifically, with respect to the first point mentioned by the Panel (i.e. that the alternative
measures do not address the design features of tobacco packaging), we recall that what is relevant
to an assessment of equivalence is "the overall degree of contribution that the techni cal regulation
makes to the objective pursued" 1388 and that "a proposed alternative measure may achieve an
equivalent degree of contribution in ways different from the technical regulation at issue." 1389 We
have also noted that the Panel identified the relevant objective of the TPP measures to be "to
improve public health by reducing the use of, and exposure to, tobacco products".1390 In this regard,
as noted, the Panel expressly rejected the proposition that the relevant objective encompasses the
three specific "mechanisms" of the TPP measures, which relate to addressing the design features of
tobacco packaging.1391 Under these circumstances, we see no reason why, despite the uncontested
finding that these mechanisms are not part of the objective pursued by the TPP measures, the
proposed alternative measures would not make an equivalent contribution because they do not
address the design features of tobacco packaging.1392
6.499. Turning to the second point referred to in the Panel's reasoning (i.e. that substituting one of
the al ternative measures for the TPP measures would undermine the comprehensiveness of
Australia's policy and reduce the synergies), we have noted the participants' general agreement
that, even in the context of a comprehensive policy, what is relevant for asses sing equivalence
remains the overall degrees of contribution that the challenged and alternative measures make to
the relevant objective.1393 This objective was identified by the Panel to be "to improve public health
by reducing the use of, and exposure to, t obacco products" 1394 or, put more simply, reducing
smoking.1395 Therefore, if the alternative measure in question is found apt to achieve, in addition to
any reduction in smoking attributable to Australia's other existing tobacco control measures, a
degree of re duction in smoking similar or comparable to the degree of reduction achieved by the
TPP measures, then whether the TPP measures form part of Australia's broader policy and whether

1387 Panel Report, para. 7.1526 (quoting Appellate Body Reports, US – COOL (Article 21.5 – Canada and
Mexico), fn 660 to para. 5.216).
1388 Panel Report, para. 7.1368 (quoting Appellate Body Reports, US – COOL (Article 21.5 – Canada and
Mexico), paras. 5.216 and 5.254-5.255 (emphasis omitted by the Panel)).
1389 Panel Report, para. 7.1369 (referring to Appellate Body Reports, US – COOL, para. 373; US – COOL
(Article 21.5 – Canada and Mexico), paras. 5.215 and 5.254). (emphasis added)
1390 Panel Report, para. 7.232.
1391 Panel Report, para. 7.227.
1392 In this connection, we take note of Australia's observation that, with specific respect to an increase
in the MLPA, the Panel offered an additional reason why the contribution of this measure could not be
considered "equivalent". (Australia's appellee's submission, para. 380 (referring to Panel Report,
para. 7.1459)) Specifically, the Panel noted that an increase in the MLPA would "address only the availability of
tobacco products to individuals below 21 years of age" and "not address initiation, cessation or relapse in any
age group over 21". By contrast, the Panel stated that "the TPP measures, in addition to making a contribution
to discouraging initiation by adolescents and young adults, are apt to contribute to encouraging cessation and
preventing relapse by smokers not falling within this age group." (Panel Report, para. 7.1459 (emphasis
original))
As we see it, however, the above statements by the Panel seem essentially no different from the
statement that an increase in the MLPA operates in ways different from the TPP measures, rather than qualifies
as an additional reason to reject equivalence. Indeed, it seems self-evident to us that an increase in the MLPA
from 18 to 21 years of age, by definition, aims to reduce smoking by eliminating legal access to tobacco
products by people between 18 and 20 years of age, whereas the TPP measures are designed to achieve the
same objective by nudging people of all age groups, while leaving intact legal access to tobacco products by
young people of 18 to 20 years of age. However, merely pointing to the different age groups targeted by the
challenged and alternative measures would not dispose of the core question of whether these measures are apt
to achieve equivalent degrees of overall reduction in the use of, and exposure to, tobacco products.
1393 See para. 6.483. above.
1394 Panel Report, para. 7.232.
1395 See para. 6.484. above.
WT/DS435/AB/R • WT/DS441/AB/R

their contribution arises partly from synergistic effects with the other com ponents of that policy
should not have been a decisive consideration in determining equivalence.
6.500. In this context, we consider highly relevant the Panel's qualification of its finding of
"meaningful" contribution for the TPP measures, namely, that these mea sures are apt to, and do,
make a meaningful contribution "as applied in combination with the comprehensive range of other
tobacco control measures maintained by Australia". 1396 As we see it, this indicates that the
"meaningful" contribution found with respect to the TPP measures already reflects, and captures,
any synergistic effects arising from their interactions with Australia's other measures. 1397 This is
contrasted with the Panel's findings of "meaningful" contribution for the alternative measures,
which – as the appellants correctly observe – were reached without referring to any potential
interactions of these measures with Australia's other existing measures. 1398 In this regard, we do
not see any indication in the Panel's analysis that the effectiveness of ea ch alternative measure
would somehow be undermined (or become less than "meaningful") if it were to operate in the
presence of Australia's other existing measures. 1399 Under these circumstances, we find it difficult
to understand, from the Panel's reasoning, how the overall degree of contribution of the
TPP measures, which the Panel found to be "meaningful" by taking into account their synergies with
Australia's other existing measures, is necessarily greater than that of each alternative measure,
which the Pa nel found "meaningful" without referring to any potential interaction with the same
existing measures.
6.501. We also do not consider that the Appellate Body's statement in Brazil – Retreaded Tyres, on
which the Panel relied1400, offers conclusive guidance for assessing equivalence in these proceedings.
To recall, the Appellate Body stated that "[s]ubstituting one element of [Brazil's] comprehensive
policy for another would weaken the policy by reducing the synergies between its componen ts, as
well as its total effect."1401 At the same time, we note that this statement was offered with respect
to certain measures1402, proposed by the European Communities, that the Appellate Body observed
"already figure[d] as elements of a comprehensive strateg y designed by Brazil to deal with waste
tyres".1403 Moreover, the Appellate Body's statement was offered in the context of upholding the
panel's finding that these measures, as existing elements of Brazil's policy, did not constitute valid
"alternatives" to the challenged import ban.1404 By contrast, in the present disputes, the Panel found
that both an increase in the MLPA and an increase in taxation, as strengthened variations of
Australia's existing measures, qualify as "alternatives" in that they "do not yet exist in the Member
in question, or at least not in the particular form proposed by the complainant". 1405 These findings

1397 See Panel Report, paras. 7.1041-7.1042.
1398 See Panel Report, paras. 7.1432-7.1453 (for an increase in the MLPA) and 7.1506-7.1523 (for an
increase in taxation).
1399 As noted in para. 6.494. above, the Panel's finding of a "meaningful" contribution for an increase in
the MLPA was reached by considering, for example, studies that estimated the impact of an increase in the
MLPA from 18 to 21 years of age on smoking initiation rates for adolescents and adult smoking prevalence in
the United States, which indicated considerable long-term decreases in both parameters. Although the Panel
was "reluctant" to "transpose[] directly" these studies to ascertain the exact degree of the contribution of an
MLPA increase in the Australian market, it did not mention any reason why the proposed increase in the MLPA
would be materially less effective in Australia than in the United States. (Panel Report, paras. 7.1448-7.1452)
With respect to an increase in taxation, the Panel's finding of a "meaningful" contribution was made by
considering the price elasticity of demand for tobacco products at around -0.4. (Panel Report,
paras. 7.1515-7.1518) The Panel further stated that this relatively low price elasticity (less than -1.0) suggests
that there may be room to increase excises without diminishing the measures' effectiveness in further reducing
1400 See fn 1369 above.
1401 Appellate Body Report, Brazil – Retreaded Tyres, para. 172.
1402 These measures comprised: (i) measures to encourage domestic retreading or improve the
retreadability of used tyres; and (ii) a better enforcement of the import ban on used tyres and of existing
collection and disposal schemes. (Appellate Body Report, Brazil – Retreaded Tyres, paras. 158 and 172)
1403 Appellate Body Report, Brazil – Retreaded Tyres, para. 172. See also Panel Report,
Brazil – Retreaded Tyres, para. 7.172.
1404 Appellate Body Report, Brazil – Retreaded Tyres, para. 172. See also Panel Report,
Brazil – Retreaded Tyres, paras. 7.172.
1405 Panel Report, para. 7.1385 (quoting Appellate Body Reports, US – COOL (Article 21.5 – Canada and
Mexico), para. 5.328). (emphasis omitted)
WT/DS435/AB/R • WT/DS441/AB/R

are not contested on appeal. Under these circumstances, we consider that the Panel's reliance on
the Appellate Body's statement in Brazil – Retreaded Tyres is inapposite.
6.502. Moreover, while the above statement by the Appellate Body can be read to suggest that
whether a measure operates in such a manner as to create synergies with other measures in the
context of a Member's broader policy is a relevant consideration in a panel's assessment of the
overall effectiveness of that measure, we do not consider it to be a decisive consideration in such
an assessment, or in a panel's determination of equivalence. Rather, in our view, whether and to
what extent a measure creates synergies with other measures is one of the factors informing the
overall degree of contribution that a measure makes to a legitimate objective, which all participants
agree is the central question in determining equivalence. Thus, even where the challenged measure
is implemented as part of a Member's comprehensive policy, a panel assessing equivalence will not
be relieved from its duty to objectively ascertain, and compare, the overall degrees of contribution
that the challenged and alternative measures make to the legitimate objective by taking into account
all pertinent factors. Depending on the case, such factors may include the relevant objective pursued
by a Member's policy, the overall level of protection that the Member seeks to achieve through that
policy1406, the respective degrees of contribution that the challenged and alternative measures are
apt make to the relevant objective, and whether and to what extent the contribution of each measure
would be enhanced (or diminished) in the presence of the other existing measures, including due to
the synergies created between different measures.
6.503. In this context, we consider it appropriate that the Panel in these disputes took into account
the synergies between the TPP measures and Aust ralia's other control measures in reaching its
finding of a "meaningful" contribution for the TPP measures.1407 At the same time, this could possibly
suggest that the TPP measures' contribution might be less than "meaningful" absent the measures'
interaction with Australia's other measures. Under these circumstances, we consider it illogical for
the Panel to have found that the TPP measures are necessarily more effective than the alternative
measures (that the Panel found to be apt to make a "meaningful" contribution on their own) because
of the very synergies that make the TPP measures' contribution "meaningful".
6.504. For all of these reasons, to the extent that the Panel suggested that each alternative measure
may be considered apt to achieve a similar or comparable degree of "meaningful" overall reduction
in smoking in Australia to that of the TPP measures, and yet its contribution would not be equivalent
because of its failure to address the design features of tobacco packaging that the TPP measures
seek to address in the context of Australia's broader tobacco control policy, we find that the Panel
erred in its application of the legal standard under Article 2.2 of the TBT Agreement.
6.505. We caution, however, that our conclusion is made in the particular circumstances of these
disputes. It should not be extrapolated that an increased MLPA or taxation on tobacco products will
necessarily qualify as a reasonably available alternative measure capable of making a contribution
equivalent to that of a plain packaging measure in another case or in another jurisdiction. Rather,
our conclusion is reached on the basis of the uncontested Panel finding in these proceedings that
the relevant objective pursued by the TPP measures is "to improve public health by reducing the use
of, an d exposure to, tobacco products" 1408 without encompassing the "specific objectives" of
addressing design features of tobacco packaging 1409, and the fact that Australia has not appealed
the Panel's findings that both alternative measures are reasonably available to Australia.1410

1406 We recall that, in Brazil – Retreaded Tyres, the Appellate Body considered it relevant that the
objective of the challenged import ban was the reduction of "'exposure to the risks to human, animal or plant
life or health … to the maximum extent possible'". The Appellate Body added that "a measure or practice will
not be viewed as an alternative unless it 'preserve[s] for the responding Member its right to achieve its desired
level of protection with respect to the objective pursued'." (Appellate Body Report, Brazil – Retreaded Tyres,
1407 See para. 6.500. above.
1408 Panel Report, para. 7.232.
1409 Panel Report, para. 7.227.
1410 Panel Report, paras. 7.1467 (for an increase in the MLPA) and 7.1541 (for an increase in taxation).
WT/DS435/AB/R • WT/DS441/AB/R

6.1.4.4 Claims under Article 11 of the DSU
6.506. The Dominican Republic raises two sets of claims under Article 11 of the DSU with respect
to the Panel's analyses of the relative trade restrictiveness and contribution of the two proposed
alternative measures (i.e. an increase in the MLPA and an increase in taxation).
6.507. First, with respect to the Panel's analysis of whether each of the two alternative measures
would make an equivalent contribution to Australia's objective, the Dominican Republic claims that
the Panel failed to make an objective assessment of the matter under Article 11 in finding that the
design features of tobacco packaging that convey messages would not be addressed "at all" 1411 in
the absence of the TPP measures. For the Dominican Republic, this finding: (i) is not reasoned and
adequate because it is "factually wrong"; (ii) is incoherent because it contradicts the Panel's own
finding elsewhere in the Panel Report1412; and (iii) was reached without considering the
Dominican Republic's evidence and arguments demonstrating the opposite.1413
6.508. In section 6.1.4.3 above, we have addressed the Dominican Republic's overlapping claim of
error under Article 2.2 of the TBT Agreement that similarly challenged the Panel's reference to the
failure of the alternative measures to address the design features of tobacco packaging. In this
regard, it is our view that the Panel used the phrase "at all" simply to emphasize its view that the
proposed alternative measures would not be as effective as the TPP measures because of their failure
to address the design features of tobacco packaging, rather than to make a factual finding that there
are no other measures in Australia that affect tobacco packaging. 1414 Under these circumstances,
we do not consider it necessary or appropriate for us to address this aspect of the
Dominican Republic's challenge under Article 11 of the DSU.
6.509. Second, the Dominican Republic appeals the Panel's findings regarding the trade
restrictiveness and contribution of an increase in the MLPA. Specifically, the Dominican Republic
observes that the Panel took into account the potential "future effects" of an increased MLPA in the
context of its analysis of this measure's trade restrictiveness when it noted "the importance of
younger smokers to the tobacco industry" who "determine the future trends" of the tobacco
industry.1415 The Dominican Republic submits that this reasoning was incoherent with the Panel's
observation, in the context of its analysis of the contribution of the same alternative measure, that
this measure does not address smoking behaviour "in any age group over 21". 1416 The
Dominican Republic also considers this latter observation by the Panel to be incoherent with the
Panel's assessment of the contribution of the TPP measures, with respect to which the Panel stated
that it "must take due account of the possibility that the effects o f certain measures may manifest
themselves over a longer period of time and into the future".1417
6.510. We agree with the Dominican Republic's view that the Panel referred to certain "future
effects" in its analysis of the trade restrictiveness of the proposed MLPA increase from 18 to
21 years.1418 We disagree, however, that the Panel neglected or denied such "future effects" in its
analysis of the contribution of an increase in the MLPA. On the contrary, when reaching its finding
that this alternative measure would be apt to make a "meaningful" contribution to Australia's

1412 Dominican Republic's appellant's submission, para. 1456.
1413 Dominican Republic's appellant's submission, para. 1472.
1414 Indeed, as the Dominican Republic itself highlights, the Panel recognized throughout its Report that
there are other measures in Australia that address tobacco packaging as a means of communication. (See
Dominican Republic's appellant's submission, para. 1457) We note in particular that, in section 2 of its Report
(titled "Factual aspects"), the Panel acknowledged the existence of such other measures, including the GHWs
requirements and the regulatory regime addressing misleading aspects of tobacco packaging.
1415 Dominican Republic's appellant's submission, paras. 1422-1423 and 1487-1488 (quoting
1416 Dominican Republic's appellant's submission, para. 1489 (quoting Panel Report, para. 7.1459).
(emphasis omitted)
1417 Dominican Republic's appellant's submission, paras. 1485-1486 (quoting Panel Report, para. 7.938).
(emphasis omitted)
1418 For example, the Panel stated that, although 18- to 21-year-olds make up only a segment of the
market of people who may, or do, use tobacco products, younger smokers are important to the tobacco
industry in that "[t]he future success of any cigarette brand is driven by its ability to attract younger adult
smokers, between the age of 18 and 24 years old", and that "smokers aged 18-24 determine the future trends
of the tobacco industry." (Panel Report, para. 7.1413 (fn omitted))
WT/DS435/AB/R • WT/DS441/AB/R

objective, the Panel took account of evidence indicating that raising the MLPA will not only likely
immediately improve the health of people within the targeted age group, but also reduce
intermediate and long-term adverse health effects as the initial birth cohorts affected by the policy
change grow into adulthood.1419 Moreover, while the Panel stated that the proposed MLPA increase
would not address smoking behaviour "in any age group over 21" 1420, it referred to the age group
targeted by this measure as being "important".1421 This seems comparable to the Panel's reference,
in the context of addressing the trade restrictiveness of this alternative measure, to "the importance
of younger smokers to the tobacco i ndustry" in determining the future trends of the industry. 1422
Therefore, we see no inconsistency in the Panel's treatment of future effects in its assessment of the
trade restrictiveness, on the one hand, and contribution, on the other hand, of an increase i n the
MLPA.
6.511. In addition, with respect to the contribution of the TPP measures, we note that the Panel
explicitly stated that its finding of a "meaningful" contribution was based on the evidence available
to it "at the time of [its] assessment".1423 In this regard, we note that the Dominican Republic itself
observes that the Panel's conclusion on this issue was reached " without taking potential future
effects into account".1424 As such, while the Panel stated that the impact of the TPP measures may
evolve over time1425, it is evident that such reference to the future effects was only ancillary to the
Panel's main reasoning. We thus do not see any basis for the Dominican Republic to argue that the
Panel offered "incoherent" reasoning by relying on the "future effects" in its analysis of the
contribution of the TPP measures, while neglecting or denying such future effects in its analysis of
the contribution of an increase in the MLPA.
6.512. Accordingly, we find that the Dominican Republic has not demonstrated that the Panel failed
to make an objective assessment of the matter before it, in accordance with Article 11 of the DSU.
6.1.4.5 Conclusion regarding the Panel's assessment of the alternative measures
6.513. With respect to the appellants' claims of error under Article 2.2 of the TBT Agreement
regarding the Panel's analysis of the trade restrictiveness of the two alternative measures at issue
on appeal (i.e. an increase in the MLPA and an increase in t axation) compared to that of the
TPP measures, we have found that the appellants have not demonstrated that the Panel erred in
rejecting the complainants' proposition that their alternative measures are less trade-restrictive than
the TPP measures. Rather, we consider that the Panel's conclusion was properly reached by
addressing relevant considerations, such as the respective measures' impacts on the volume, value,
and price of imported tobacco products.
6.514. With respect to the claims under Article 2.2 regarding the Panel's analysis of the contribution
of the alternative measures compared to that of the TPP measures, we have found that, to the extent
that the Panel suggested that each alternative measure may be considered apt to achieve a similar
or comparable degree of "meaningful" overall reduction in smoking in Australia to that of the
TPP measures, and yet its contribution would not be equivalent because of its failure to address the
design features of tobacco packaging that the TPP measures seek to address in the context of
Australia's broader tobacco control policy, the Panel erred in its application of Article 2.2.
6.515. In addition, with respect to the Dominican Republic's separate claims under Article 11 of the
DSU challenging certain aspects of the Panel's an alyses of the relative trade restrictiveness and
contribution of the alternative measures, we have found that the Dominican Republic has not
demonstrated that the Panel failed to make an objective assessment of the matter before it, although

1419 Panel Report, para. 7.1439 (referring to R. Bonnie, K. Stratton, and L. Kwan (eds.), Public Health
Implications of Raising the Minimum Age of Legal Access to Tobacco Products, US Institute of Medicine (The
National Academies Press, 2015) (Pre-publication copy: uncorrected proofs) (Panel Exhibit DOM-232), pp. S-6
and 8-20).
1420 Panel Report, para. 7.1459.
1421 Panel Report, para. 7.1460.
1422 Panel Report, para. 7.1413.
1423 Panel Report, para. 7.1044.
1424 Dominican Republic's appellant's submission, para. 1485. (emphasis original)
1425 Panel Report, para. 7.1044.
WT/DS435/AB/R • WT/DS441/AB/R

certain aspect s of its arguments are pertinent to considering its claim under Article 2.2 of the
TBT Agreement.
6.516. In light of the foregoing, we conclude that the Panel erred in finding that the complainants
failed to demonstrate that each of the two alternative measures would be apt to make a contribution
equivalent to that of the TPP measures.1426 At the same time, we have concluded that the Panel did
not err in finding that the complainants failed to demonstrate that these two alternative measures
are less trade-restrictive than the TPP measures.1427 Consequently, although we have concluded that
the Panel erred in its application of Article 2.2 with respect to the equivalence of the contribution of
each alternative measure, the Panel's findings, in paragraphs 7.1471 and 7.1545 of the
Panel Report, that the complainants did not demonstrate that an increase in the MLPA and an
increase in taxation would each be a less trade-restrictive alternative to the TPP measures that would
make an equivalent contribution to Australia's objective, stand.
6.1.5 Overall conclusion under Article 2.2 of the TBT Agreement
6.517. For purposes of establishing that a measure is inconsistent with Article 2.2 of the
TBT Agreement, a complainant must demonstrate that a technical regulation is "more
trade-restrictive th an necessary to fulfil a legitimate objective, taking account of the risks
non-fulfilment would create". The assessment of "necessity", in the context of Article 2.2, involves
a relational analysis of the following factors: (i) the trade restrictiveness of the technical regulation;
(ii) the degree of contribution that it makes to the achievement of a legitimate objective; and (iii) the
risks non-fulfilment would create. Moreover, establishing whether a technical regulation is "more
trade-restrictive than ne cessary" may involve a comparison between: (i) the trade restrictiveness
and the degree of contribution of the measure at issue to the legitimate objective; and (ii) the trade
restrictiveness and the degree of contribution of possible alternative measures that are reasonably
available to the legitimate objective, taking account of the risks non-fulfilment would create.
6.518. In its assessment of whether the complainants had demonstrated that the TPP measures are
inconsistent with Article 2.2, the Panel in these disputes examined, inter alia: (i) the contribution of
the TPP measures to Australia's objective; (ii) the trade restrictiveness of the TPP measures; and
(iii) whether the alternative measures proposed by the complainants are less trade -restrictive than
the TPP measures while making an equivalent contribution to Australia 's objective . We have
addressed the appellants' claims of error regarding each of these three aspects of the Panel's
analysis.
6.519. With respect to the contribution of the TPP measures to Australia's objective, we have found
that the appellants have not demonstrated that the Panel erred in finding, in paragraphs 7.1025 and
7.1043 of the Panel Report, that:
7.1025. Overall … the complainants have not demonstrated that the TPP measures are
not apt to make a contribution to Australia's objective of improving public health by
reducing the use of, and exposure to, tobacco products. Rather, we find that the
evidence before us, taken in its totality, supports the view that the TPP measures, in
combination with other tobacco-control measures maintained by Australia (including the
enlarged GHWs introduced simultaneously with TPP), are apt to, and do in fact,
contribute to Australia's objective of reducing the use of, and exposure to, toba cco
products.
…
7.1043. Taken as a whole, therefore, we consider that the evidence before us supports
the view that, as applied in combination with the comprehensive range of other tobacco
control measures maintained by Australia and not challenged in thes e proceedings,
including a prohibition on the use of other means through which branding could
otherwise contribute to the appeal of tobacco products and to misleading consumers
about the harmful effects of smoking, the TPP measures are apt to, and do, make a

1426 Panel Report, paras. 7.1464 and 7.1531.
1427 Panel Report, paras. 7.1417 and 7.1495.
WT/DS435/AB/R • WT/DS441/AB/R

meaningful contribution to Australia's objective of reducing the use of, and exposure to,
tobacco products.1428
6.520. With respect to the trade restrictiveness of the TPP measures, we find that the appellants
have not demonstrated that the Panel erred in finding , in paragraph 7.1255 of the Panel Report,
that:
[T]he TPP measures are trade -restrictive, insofar as, by reducing the use of tobacco
products, they reduce the volume of imported tobacco products on the Australian
market, and thereby have a "limiting effect" on trade. We also conclude that, while it is
plausible that the measures may also, over time, affect the overall value of tobacco
imports, the evidence before us does not show this to have been the case to date. We
are also not persuaded that the complainants have demonstrated that the TPP measures
impose conditions on the sale of tobacco products in Australia or compliance costs of
such magnitude that they would amount to a limiting effect on trade.1429
6.521. Finally, with respect to the alternative measures, w e recall that the appellants challenged
only the Panel's findings concerning two of the four proposed alternative measures that were
examined and rejected by the Panel: (i) an increase in the MLPA for tobacco products from 18 to
21 years of age; and (ii) an increase in the taxation of tobacco products in Australia. We have found
that the Panel erred in finding that the complainants failed to demonstrate that each of the
two alternative measures would be apt to make a contribution equivalent to that of the
TPP measures.1430 Specifically, to the extent that the Panel suggested that each alternative measure
may be considered apt to achieve a similar or comparable degree of "meaningful" overall reduction
in smoking in Australia to that of the TPP measures, and yet its contribution would not be equivalent
because of its failure to address the design features of tobacco packaging that the TPP measures
seek to address in the context of Australia's broader tobacco control policy, we have found that the
Panel erred in its application of Article 2.2. At the same time, we have found that the Panel did not
err in finding that the complainants failed to demonstrate that these two alternative measures are
less trade-restrictive than the TPP measures.1431 Consequently, although we have found that the
Panel erred in its application of Article 2.2 with respect to the equivalence of the contribution of each
alternative measure, the Panel's findings, in paragraphs 7.1471 and 7.1545 of the Panel Report, that
the complainants had not demonstrated that the increase in the MLPA and the increase in taxation
would each be a less trade-restrictive alternative to the TPP measures that would make an equivalent
contribution to Australia's objective, stand.
6.522. For these reasons, we uphold the Panel's conclusion, in paragraph 7.1732 of the
Panel Report, that:
[T]he complainants have not demonstrated that the TPP measures are more
trade-restrictive than necessary to fulfil a legitimate objective, within the meaning of
Article 2.2 of the TBT Agreement.1432
6.2 Separate opinion of one Division Member regarding Article 2.2 of the TBT Agreement
6.2.1 Introduction
6.523. It is well settled that not every error by a panel rises to the level of a breach of Article 11 of
the DSU. Under the DSU, panels enjoy consider able discretion with respect to fact -finding and the
evaluation of facts. This is underscored by the language of Article 11 that "a panel should make an
objective assessment of the matter before it, including an objective assessment of the facts of the
case", read in conjunction with Article 17.6 of the DSU, which says that "[a]n appeal shall be limited
to issues of law covered in the panel report and legal interpretations developed by the panel." In

1428 Panel Report, paras. 7.1025 and 7.1043.
1429 Panel Report, para. 7.1255.
1430 Panel Report, paras. 7.1464 and 7.1531.
1431 Panel Report, paras. 7.1417 and 7.1495.
1432 See also Panel Report (DS435), para. 8.1.a; Panel Report (DS441), para. 8.1.b.i.
WT/DS435/AB/R • WT/DS441/AB/R

other words, Article 11 claims on appeal should be reserv ed – and entertained – only for rare
instances of "egregious" errors by panels, which call into question the good faith of the panel.1433
6.524. With respect to the appellants' claims regarding the Panel's analysis under Article 2.2 of the
TBT Agreement, I concur with the majority's ultimate findings and conclusions. However, I disagree
on two points: (i) that it was necessary to examine in detail the appellants' claims that the Panel
erred in determining the degree of contribution of the TPP measures to Australia's objective; and
(ii) that the Panel's treatment of and reliance on multicollinearity and non -stationarity constituted
an error under Article 11 of the DSU.
6.2.2 Addressing the appellants' claims regarding the contribution of the TPP measures
was not necessary to resolve the dispute
6.525. The complainants' main argument before the Panel was that the TPP measures are more
trade-restrictive than necessary because: (i) they are trade-restrictive; and (ii) they are not apt to,
and do not, contribute to Australia's legitima te public health objective. 1434 In the alternative, the
complainants argued that, even assuming that the TPP measures contribute to Australia's legitimate
public health objective, they are still "more trade -restrictive than necessary" because there are
alternative measures that are reasonably available to Australia and that would be less
trade-restrictive while making an equivalent contribution to the objective.1435
6.526. The Panel rejected those arguments by the complainants, while noting that the
TPP measures are nec essarily trade -restrictive because all tobacco products are imported into
Australia, and that the TPP measures contribute to Australia's public health objective by reducing
consumption of tobacco products. The appellants challenge the Panel's rejection of their arguments.
My discussion of that challenge centres on the two sentences in paragraph 7.1025 of the
Panel Report.
6.527. In the first of these sentences, the Panel found that the complainants failed to demonstrate
that the TPP measures "are not apt to make a contribution to Australia's objective".1436 In the second
sentence, the Panel found that, "[r]ather, … the evidence … , taken in its totality, supports the view
that the TPP measures … are apt to, and do in fact, contribute to Australia's objective."1437
6.528. The appellants' appeals were silent regarding the first sentence. They addressed only the
second sentence. In doing that, the appellants have not explained how any errors undermining the
Panel's finding in the second sentence of paragraph 7.1025 would suffice to demonstrate that the
Panel erred in forming the conclusion in the first sentence of that paragraph.
6.529. In response to questioning at the second hearing, the appellants stated that it was
unnecessary to raise any independent appeal or challenge of the Panel's finding in the first sentence,
because the Panel's finding in that sentence is integrally linked to the Panel's finding in the
second sentence. The appellants underscored that the Panel conducted an integrated analysis of the
degree of contribution based on the evidence as a whole.1438
6.530. I read these two sentences as saying different things. The first sentence says that the
appellants failed to demonstrate that the TPP measures are not apt to make a contribution; the
second sentence says that the totality of evidence supports the view that the TPP measures are apt
to, and do in fact, make a contribution.

1433 Appellate Body Report, EC – Hormones, para. 133. See also Appellate Body Reports,
EC – Bed Linen (Article 21.5 – India), para. 177.
1434 See Panel Report, paras. 7.426, 7.437, 7.485 and 7.520; Honduras' and the Dominican Republic's
responses to questioning at the second hearing.
1435 See Honduras' first written submission to the Panel, paras. 853 and 911; Dominican Republic's
first written submission to the Panel, paras. 737-739, 980, and 1019.
1436 Panel Report, para. 7.1025.
1437 Panel Report, para. 7.1025.
1438 Honduras' and the Dominican Republic's responses to questioning at the second hearing (referring
to Panel Report, paras. 7.495-7.497).
WT/DS435/AB/R • WT/DS441/AB/R

6.531. Even assuming, arguendo, that the appellants are correct that the Panel relied on the totality
of the evidence in forming both conclusions in these two sentences of paragraph 7.1025, I do not
see how the errors alleged by the appellants pertaining to the Panel's second-sentence finding would
vitiate the Panel's finding in the first sentence. The mere fact that the Panel may have relied on the
same evidenc e for both findings does not mean that any errors in the Panel's
second determination – that the evidence supports the view that the TPP measures "are apt to, and
do in fact" make a contribution – also would undermine the Panel's conclusion that the complainants
failed to substantiate their burden of demonstrating that the TPP measures are not apt to contribute.
Those are two different conclusions.
6.532. Consequently, in order for us to overturn the Panel's conclusion that the complainants failed
to demonstrate that the TPP measures are not apt to contribute to Australia's objective – expressed
in the first sentence of paragraph 7.1025 – the appellants were required to demonstrate that the
Panel's errors in its examination of the evidence vitiated that conclusion, and did so in a manner so
egregious as to constitute a violation of Article 11 of the DSU.
6.533. As noted, the appellants did not appeal the Panel's finding in the first sentence of
paragraph 7.1025. They also did not otherwise address the question of whether any errors in the
Panel's evaluation of the second sentence in that paragraph would vitiate the first sentence, except
to argue that the two sentences "are linked" and that the Panel's evaluation of them was based on
the same evidence.
6.534. As a res ult, I consider that the Panel's determination that the complainants failed to
demonstrate that the TPP measures are not apt to contribute to Australia's objective is undisturbed
on appeal. Since measures are presumed to be WTO -consistent until shown other wise, it follows
that the TPP measures are presumed to be at least capable of making a contribution to Australia's
objective1439, whether or not the Panel might have erred in determining that the totality of evidence
supports the view that the TPP measures are apt to, and do in fact, make a contribution to Australia's
objective.
6.535. It follows that the Panel's finding , in the first sentence of paragraph 7.1025 of the
Panel Report, stands. Since the TPP measures are therefore presumed to be capable of contributing
to Australia's objective, it further follows that: (i) the appellants have failed to demonstrate that the
Panel erred in rejecting their principal argument; and (ii) with respect to their alternative argument,
whether or not the proposed alternatives make an equivalent contribution to the TPP measures, the
appellants did not present an alternative that is less trade-restrictive than the TPP measures1440,
and consequently there is no basis for us to overturn the Panel's overall conclusion that the
appellants failed to demonstrate that the TPP measures are inconsistent with Article 2.2.
6.536. Thus, I believe it was unnecessary, for purposes of resolving these disputes, for the majority
to consider in detail the appellants' claims regarding the Panel's assessment of the TPP measures'
contribution to Australia's objective. For that reason, I also believe that it was inadvisable for the
majority to consider in detail the appellants' contribution claims. This could have been a much
shorter report, I believe, based on the findings that the first sentence of paragraph 7.1025, regarding
aptness, stands, that the appellants' proposed alternatives would not be less trade -restrictive than
the TPP measures, and therefore that the appellants failed to demons trate that the TPP measures
are inconsistent with Article 2.2.

1439 Where a panel finds that the parties' evidence reveals that a measure is capable of contributing, or
the evidence is unclear or mixed as to whether the measure is capable of contributing, a panel should find that
the complainant has failed to demonstrate that the measure is incapable of contributing to the objective. This
would at the same time mean that, to the extent that the complainant also argues that the measure is
inconsistent with Article 2.2 on the basis that there are reasonably available less trade-restrictive alternative
measures capable of making an equivalent contribution, the presumption of WTO-consistency requires that a
panel presume that the measure is at least capable of making some contribution to the legitimate objective
and, on that basis, proceed to examine the remaining factors for determining "necessity", such as the degree
of the measure's trade restrictiveness and the availability of less trade-restrictive alternative measures.
1440 For the reasons set forth in sections 6.1.3-6.1.4 we have upheld the Panel's findings that the
alternative measures proposed by the complainants would not be less trade-restrictive than the TPP measures.
WT/DS435/AB/R • WT/DS441/AB/R

6.2.3 Due process and Article 11 of the DSU
6.537. I disagree with the majority's intermediate finding that, by introducing in its Interim Report
econometric analyses that had not been tested with the parti es, the Panel failed to observe due
process in a way that constitutes a violation of Article 11 of the DSU.
6.538. In my view, the Panel's reliance on multicollinearity and non -stationarity to test the
robustness of the parties' evidence was part of the Panel's reasoning, with respect to which a panel
enjoys considerable discretion. The parties to this case submitted to the Panel a large amount of
econometric evidence. It was appropriate for the Panel to assess the probative value of that
evidence. The Panel teste d the robustness of the econom etric studies submitted by the parties by
taking into account, inter alia , whether the models suffered from multicollinearity and
non-stationarity. The mere fact that these two so -called "criteria" were not specifically mentio ned
by the parties is not sufficient to warrant a different scrutiny of the Panel's reliance on them, as
compared to the Panel's reliance on other econometric concepts (e.g. overfitting and endogeneity)
that the parties had identified. I therefore consider that the Panel acted within the bounds of its
discretion as a trier of facts by not only examining the parameters used by each party, but also by
going further in its evaluation and testing the robustness of the parties' econometric evidence for
multicollinearity and non-stationarity.
6.539. With regard to the issue of due process, Australia argues that the complainants could have
used the interim review stage to request the Panel to review the relevant parts of the Panel Report
pursuant to Article 15 of the DSU but chose not to do so. 1441 The appellants submit that interim
review would not have provided them with a "meaningful opportunity" to comment on the Panel's
concerns regarding multicollinearity and non-stationarity.1442
6.540. Article 15.2 of the DSU says, in relevant part, that:
Within a period of time set by the panel, a party may submit a written request for the
panel to review precise aspects of the interim report prior to circulation of the final
report to the Members. At the request of a party, the panel shall hold a further meeting
with the parties on the issues identified in the written comments. If no comments are
received from any party within the comment period, the interim report shall be
considered the final panel report and circulated promptly to the Members.
6.541. The complainants became aware of the Panel's analysis of multicollinearity and
non-stationarity when they received the Panel's Interim Report on 2 May 2017. However, the
complainants did not raise any substantive concerns with respect to these aspects o f the Panel's
analysis in their comments on the Interim Report, nor did they request an interim review meeting.
It is reasonable to read Article 15.2 as placing responsibility on the complainants to have raised the
Panel's reliance on multicollinearity and non-stationarity at the interim review stage, especially given
the importance that the appellants attribute to these issues on appeal. In my view, the complainants'
failure to raise these issues at the interim review stage undermines the appellants' claim regarding
due process.
6.542. Thus, since the complainants had an opportunity to raise th ese issues and did not do so,
I do not agree with their claim that the Panel denied them due process by not "giv ing the parties
any opportunity whatsoever to comment".1443 Since the complainants did not attempt to raise their
concerns regarding the Panel's reliance on multicollinearity and non-stationarity at the interim review
stage, it is unnecessary to speculate about whether the alleged limited nature of the interim review
process, which I do not find to be expressed in the text of Article 15.2, would have been sufficient.
Consequently, I disagree with the majority's interim conclusion on this point.
6.543. In light of the above, I consider that the appellants have not demonstrated that the Panel
failed to make an objective assessment of the facts of the case as required under Article 11 of the

1441 Australia's appellee's submission, para. 464.
1442 Honduras' responses to questioning at the second hearing. In addition, the Dominican Republic
noted that, at the interim review stage, it could pose only "rhetorical questions" to the Panel.
(Dominican Republic's responses to questioning at the second hearing)
1443 Dominican Republic's appellant's submission, para. 42. (emphasis omitted)
WT/DS435/AB/R • WT/DS441/AB/R

DSU by denying the parties an opportunity to comment on the Panel's reliance on multicollinearity
and non-stationarity.
6.3 Claims under the TRIPS Agreement
6.544. On appeal, Honduras challenges the Panel findings under Articles 16.1 and 20 of the
TRIPS Agreement only.1444 The Dominican Republic appeals the Panel findings under Article 20 of
the TRIPS Agreement.1445
6.3.1 Article 16.1 of the TRIPS Agreement
6.545. Article 16.1 provides that:
The owner of a registered trademark shall have the exclusive right to prevent all
third parties not having the owner's consent from using in the course of trade identical
or similar signs for goods or services which are identical or similar to those in respect
of which the trademark is registered where such use would result in a likelihood of
confusion. In case of the use of an identical sign for identical goods or services, a
likelihood of confusion shall be presumed. The rights described above shall not prejudice
any existing prior rights, nor shall they affect the possibility of Members making rights
available on the basis of use.
6.546. Honduras requests us to reverse the Panel's finding that Honduras did not demonstrate that
the TPP measures are inconsistent with Article 16.1 of the TRIPS Agreement1446, on the grounds
that: (i) the Panel's interpretation of the "rights conferred" under Article 16.1 was in error; (ii) the
Panel erred in its application of Article 16.1 to the TPP measures; and (iii) the Panel failed to comply
with its obligation under Article 11 of the DSU to make an objective assessment of the matter.1447
6.547. Australia contests each of Honduras' claims. 1448 Australia asserts that if we uphold the
Panel's interpretative analysis, we "should reject Honduras' s argument that the Panel erred in its
application of Article 16.1, as well as Honduras's argument that the Panel's decision not to address
the complainants' factual allegations w as inconsistent with the Panel's obligation to make an
objective assessment of the matter under Article 11 of the DSU".1449
6.548. We begin with a summary of the Panel's findings. Thereafter, we address the claims of error
raised by Honduras.
6.3.1.1 Summary of the Panel's findings
6.549. The Panel understood the complainants to argue that, by prohibiting the use of certain
tobacco-related trademarks on tobacco packaging and tobacco products, the TPP measures erode
their distinctiveness, thereby "constraining trademark owners' abil ity to exercise their rights under
Article 16.1".1450 For the Panel, this argument by the complainants hinged on whether a reduction
in the distinctiveness of a registered trademark affects the rights that Members must provide to the

1444 Honduras' Notice of Appeal, pp. 1-3. Before the Panel, Honduras and the Dominican Republic
claimed that the TPP measures are inconsistent with Articles 6quinquies and 10bis of the Paris Convention
(1967) (read in conjunction with Article 2.1 of the TRIPS Agreement) and Articles 15.4, 16.1, 20, 22.2(b), and
24.3 of the TRIPS Agreement. The Panel found that the complainants had not demonstrated that the
TPP measures are inconsistent with any of the cited provisions. (Panel Report (DS435), para. 8.1.b-h;
Panel Report (DS441), para. 8.1.b) Two of the other complainants in the Panel proceedings, Cuba and
Indonesia, also raised a claim under Article 16.3 of the TRIPS Agreement. (Panel Report (DS458),
para. 8.1.b.v; Panel Report (DS441), para. 8.1.b.iv) Other than the Panel's findings under Articles 16.1 and 20
of the TRIPS Agreement, none of the other Panel findings under the TRIPS Agreement have been appealed.
1445 Dominican Republic's Notice of Appeal, paras. 14-15.
1446 Honduras' Notice of Appeal pp. 2-3 (referring to Panel Report (DS435), paras. 7.2051 and 8.1.d).
1447 Honduras' Notice of Appeal, pp. 2-3.
1448 Australia's appellee's submission, para. 80.
1449 Australia's appellee's submission, para. 145.
1450 Panel Report, para. 7.1971.
WT/DS435/AB/R • WT/DS441/AB/R

trademark owner under Article 16.1. The Panel therefore began by determining the content of the
rights under Article 16.1.1451
6.550. Taking note of the definition of the word "prevent", the Panel considered that Article 16.1
formulates an obligation on Members to provide to the owner of a registered trademark the right to
"stop [] or hinder" all those not having the owner's consent from using certain signs on certain goods
or services, where such use would result in a likelihood of confusion.1452 In the Panel's view, the text
of Article 16.1 does not formulate any other right of the trademark owner, nor does it mention the
use of the registered trademark by its owner.1453 In light of the ordinary meaning of the text and, in
its view, consistently with prior rulings1454, the Panel agreed with the parties that Article 16.1 does
not establish a trademark owner's right to use its registered trademark. Rather, Article 16.1 provides
only for a registered trademark owner's right to prevent certain activities by unauthorized
third parties under the conditions set out in the first sentence of Article 16.1.1455
6.551. With respect to the scope of the right that WTO Members are obliged to confer on owners of
registered trademarks under Article 16.1, the Panel noted that the trademark owner must have the
exclusive right to prevent: (i) all third parties not having the owner's consent; (ii) from using in the
course of trade, identical or similar signs for goods or services that are identical or similar to those
with respect to which the trademark is registered; (iii) such use where it would result in a likelihood
of confusion.1456 The Panel considered that, by setting out the conditions under which the trademark
owner must be able to prevent third parties' activities, Article 16.1 simultaneously defines what
must, at a minimum, constitute an infringement of a registered trademark.1457
6.552. The Panel recalled that, pursuant to Article 1.1 of the TRIPS Agreement, Members have the
obligation to "give effect to the provisions of this Agreement". According to the Panel, if the activities
of an unauthorized third party meet the conditions set out in the first sentence of Article 16.1, then
the trademark owner must have the right under a Member's domestic law to prevent such activities.
Therefore, the Panel found that the essence of the Article 16.1 obligation is to ensure that rights are
available to obtain relief against such infringing acts. In the Panel's view, it follows that, in order to
show that the TPP measures are inconsistent with Article 16.1, the complainants would have to
demonstrate that, under Australia's domestic law, the trademark owner does not have the right to
prevent third-party activities that meet the conditions set out in that provision.1458
6.553. The Panel then turned to the complainants' argument that, by prohibiting the use of
non-word trademarks on tobacco products, the TPP measures would reduce the distinctiveness of
registered non-word trademarks because consumers would no longer associate these trademarks
with the products for which they were registere d. The Panel understood the complainants to argue
that this reduction of distinctiveness would reduce the ability of the trademark owner to demonstrate
a "likelihood of confusion", a "condition precedent" 1459 for exercising rights under Article 16.1, and
thus to prevent unauthorized use of similar or identical signs on similar products in the market. The
complainants focused their claim on the purported effect that the TPP measures would have on the
ability to demonstrate confusion in cases where identical or similar signs were used on similar
products, which the complainants identified as "tobacco accessories like lighters, matches, cigarette
cases, or humidors".1460

1451 Panel Report, para. 7.1972.
1452 Panel Report, paras. 7.1973-7.1974.
1453 Panel Report, para. 7.1974.
1454 Panel Report, para. 7.1978 (referring to Appellate Body Report, US – Section 211 Appropriations
Act, para. 186; Panel Report, EC – Trademarks and Geographical Indications (Australia), para. 7.611 and
fn 564 thereto).
1455 Panel Report, para. 7.1978.
1456 Panel Report, para. 7.1979. See also ibid., paras. 7.1996-7.1998.
1457 Panel Report, para. 7.1980.
1458 Panel Report, para. 7.1980 and fn 4447 thereto.
1459 Panel Report, para. 7.1982.
1460 Panel Report, para. 7.1983 and fn 4450 thereto (referring to Indonesia's response to Panel question
No. 29, para. 32 and fn 28 thereto; Honduras' first written submission to the Panel, paras. 235-236 and 249;
Dominican Republic's first written submission to the Panel, para. 311; Dominican Republic's response to Panel
question No. 32, para. 148).
WT/DS435/AB/R • WT/DS441/AB/R

6.554. The Panel noted that the complainants were not challenging how the criteria for trademark
infringement are defined in Australia's domestic legislation. Nor were the complainants arguing that
the TPP measures have affected how the Australian legal system assesses whether a "likelihood of
confusion" exists. The Panel further noted that the complainants had not claimed that the
TPP measures affect the procedural or evidentiary means available to right holders in infringement
procedures to demonstrate that the infringement criteria are indeed fulfilled. To the Panel, the
complainants also appeared to acce pt that, when these infringement criteria are fulfilled, a
trademark owner is entitled to take legal action in Australia. Therefore, it was the Panel's
understanding that the situation that the complainants described as the basis for their claim was not
so much a reduction in the trademark owners' ability to demonstrate a "likelihood of confusion".
Instead, it was a reduction of the instances in which "likelihood of confusion" would arise in the
market with respect to tobacco-related trademarks whose use is affected by the TPP measures.1461
6.555. For the Panel, this argument consisted of two parts: (i) the factual allegation that the
TPP measures' prohibition of use of certain registered trademarks will result in a situation where
these marks will lose their distinct iveness and thus reduce the occurrence of situations in which
trademark owners can show a "likelihood of confusion" between the registered trademarks and
similar or identical signs on similar products; and (ii) the assertion that this factual consequence of
the TPP measures reduces or eliminates the exclusive rights that the trademark owner is to enjoy
under Australia's domestic law pursuant to Article 16.1.1462
6.556. With respect to what the Panel identified as "the factual allegation"1463 regarding the loss of
distinctiveness, the Panel observed that the "use" of a trademark, which is in principle relevant for
the acquisition and maintenance of distinctiveness, is not limited to use on packaging of a product,
but rather extends to a wider range of commercial, advertis ing, and promotion al activities. The
TPP measures constrain or prohibit the use of certain registered trademarks as applied to tobacco
retail packaging and products, but do not constrain other uses of trademarks, such as advertising
and promotion, also rel evant for acquiring and maintaining distinctiveness. 1464 The Panel recalled
that, in the Australian context, other measures, not at issue in these proceedings, limit or prohibit
advertising and promotion of tobacco products. According to the Panel, any assessment of the impact
of the regulation of packaging on a reduced likelihood of confusion would need to take place against
this factual context.1465
6.557. In addition, the Panel noted that Article 16.1 provides protection against the unauthorized
use of "similar or identical signs" on similar or identical products, which would result in a "likelihood
of confusion". The Panel considered that , while the "similarity of signs" describes the single
dimension of comparison between two signs, the criterion of "likelihood of c onfusion" is more
multi-faceted, depending, in addition, on the "similarity of goods and services" and on the specific
nature of the use.1466 Thus, for the Panel, an assessment of the "likelihood of confusion" with respect
to a given trademark in a given situation is a factual assessment that will involve a consideration of
the specific circumstances at issue, including the manner in which the potential for confusion arises
in the specific market at issue. The Panel was therefore not persuaded that the operati on of the
TPP measures would necessarily have the impact that the complainants alleged on the existence of
a "likelihood of confusion", or how this would be assessed in relation to a specific trademark. 1467 In
any event, the Panel considered that it would nee d to make a determination with respect to this
factual allegation only if it concluded that reducing the instances in which a trademark owner would
be able to prevent the unauthorized use of similar or identical trademarks in the market, because
such use is no longer likely to cause a "likelihood of confusion", leads to a violation of Article 16.1.1468
6.558. In this regard, the Panel highlighted that there is nothing in the text of the first sentence of
Article 16.1 to suggest – as the complainants had implied – an obligation by Members not only to
provide protection where likelihood of confusion does arise , but also to maintain market conditions

1461 Panel Report, paras. 7.1985-7.1987.
1462 Panel Report, para. 7.1988.
1463 Panel Report, para. 7.1988.
1464 Panel Report, para. 7.1989 (referring to WIPO, WIPO Intellectual Property Handbook, 2nd edn
(Geneva, 2004; reprinted 2008) (Panel Exhibit DOM-65), paras. 2.339-2.351).
1465 Panel Report, para. 7.1989.
1466 Panel Report, para. 7.1991.
1467 Panel Report, paras. 7.1992-7.1993.
1468 Panel Report, para. 7.1993.
WT/DS435/AB/R • WT/DS441/AB/R

that would enable the circumstances set out in this provision, including a likelihood of confusion, to
actually occur in any particular situation. Rather, Members must ensure that, in the event that these
circumstances do arise, a right to prevent such use is provided. According to the Panel, whether
unauthorized third parties actually use similar or identical signs on simila r goods or services in the
market, and whether such use actually does or does not result in a "likelihood of confusion" among
consumers, is immaterial to the assessment of whether a Member ensures that a trademark owner
has, at its disposal, the right to prevent such acts by third parties, in compliance with Article 16.1.1469
6.559. Rather, the Panel found that Members comply with the obligation under Article 16.1 if their
domestic legislation provides owners of registered trademarks with the exclusive right to preve nt
the activities by third parties proscribed in that provision. 1470 The Panel considered this
understanding to be consistent with the purpose of the exclusive rights conferred by Article 16.1,
which is to protect the right owner against infringements of its registered trademarks.1471 The Panel
cautioned that "[t]o conclude otherwise would effectively broaden the scope of Article 16.1 to
encompass an additional right to protect against reduction of distinctiveness of a trademark, or even
a right to protect against lesser awareness of a trademark among consumers."1472
6.560. Next, the Panel addressed the issue of whether the TPP measures are inconsistent with
Article 16.1 by impairing the distinctiveness of tobacco -related registered trademarks. The Panel
noted that Cuba, th e Dominican Republic, and Indonesia had claimed that Article 16.1 imposes a
general obligation on Members to refrain from adopting measures that would undermine or eliminate
the distinctiveness of trademarks and thus impair or eliminate the possibility to exercise the right to
exclude guaranteed under Article 16.1.1473
6.561. The Panel recalled its finding that Article 16.1 does not contain a right to use a trademark.
Rather, the Panel considered that WTO Members comply with the obligation under Article 16.1,
first sentence, by providing to the owner of a registered trademark the exclusive right to prevent
trademark infringements as described by the criter ia set out therein. Against this background, the
Panel found no indication in the text of Article 16.1, first sentence, of an obligation on Members to
maintain the distinctiveness of registered trademarks, or to refrain from regulatory conduct that
might negatively affect the distinctiveness of such trademarks through use.1474
6.562. In this regard, the Panel took note of the finding by the panel in EC – Trademarks and
Geographical Indications (Australia) cited by the Dominican Republic and Indonesia. The panel in
EC – Trademarks and Geographical Indications (Australia) stated that "[e]very trademark owner has
a legitimate interest in preserving the distinctiveness … of its trademark so that it can perform that
function. This includes its interest in using its own trademark in connection with the relevant goods
and services of its own and authorized undertakings." 1475 The Panel recalled that the panel in
EC – Trademarks and Geographical Indications (Australia) had made this finding in the context of
Article 17 of the TRIPS Agreement when examining what constitutes "legitimate interests" that need
to be taken into account to justify a limited exception under that provision.1476
6.563. The Panel understood the finding of the panel in EC – Trademarks and Geographical
Indications (Australia) as simply confirming that the trademark owner's interest in preserving the
distinctiveness of its trademark includes its interest in using its trademark in relation to the relevant
goods or services, and that "these interests need to be taken into ac count – not protected as a
right – when considering whether an exception in a Member's domestic law to the exclusive right to
prevent conferred by Article 16.1 meets the criteria for permissible exceptions as contained in
Article 17."1477 The Panel therefore reasoned that the panel finding in EC – Trademarks and
Geographical Indications (Australia) does not support the argument that the trademark owner's

1469 Panel Report, para. 7.2000.
1470 Panel Report, paras. 7.1999-7.2000.
1471 Panel Report, para. 7.2001 (referring to Appellate Body Report, US – Section 211 Appropriations
Act, para. 186).
1472 Panel Report, para. 7.2002.
1473 Panel Report, para. 7.2003.
1474 Panel Report, para. 7.2005.
1475 Panel Report, para. 7.2003 (quoting Panel Report, EC – Trademarks and Geographical Indications
(Australia), para. 7.664).
1476 Panel Report, para. 7.2006.
WT/DS435/AB/R • WT/DS441/AB/R

interest in preserving the distinctiveness of a registered trademark, and its interest in using the
trademark to that end, creates a general obligation under Article 16.1 for Members to refrain from
adopting measures that would undermine or eliminate the distinctiveness of trademarks.1478
6.564. The Panel emphasized that the focus of the trademark owner's right conferred by Article 16.1
is on preventing use by third parties that results in a "likelihood of confusion" in the market. For the
Panel, Article 16.1 is not intended to protect against waning distinctiveness due to other reasons,
such as changing market conditions , inaction of the trademark owner, or changing consumer
perception. Likewise, the Panel considered that Article 16.1 does not imply that Members have a
general obligation not to undermine the distinctiveness of registered trademarks through regulatory
measures.1479
6.565. In this regard, the Panel took note of another finding by the panel in EC – Trademarks and
Geographical Indications (Australia) to the effect that, because the TRIPS Agreement "provides for
the grant of negative rights to prevent certain acts" rath er than "positive rights to exploit or use",
"many measures to attain … public policy objectives lie outside the scope of intellectual property
rights and do not require an exception under the TRIPS Agreement."1480 The Panel considered that
this finding confirmed its view that, in the absence of a positive right to use a trademark, regulatory
measures that do not affect the negative right to prevent infringing uses are not prohibited by
Article 16. The Panel opined that its view was further confirmed by the co ntext of Article 16.1. The
Panel referred to Article 19, which expressly contemplates government measures that can constitute
an obstacle to trademark use. The Panel also noted that Article 20 permits certain encumbrances on
trademark use by special requirements.1481
6.566. Accordingly, the Panel disagreed with the claim that Article 16.1 contains a general obligation
on Members to refrain from regulatory measures that can negatively affect distinctiveness of
individual registered trademarks, whether such measures affect trademarks incidentally or directly.
The Panel highlighted that, since the TPP measures had not been found to be in violation of
Article 16.1, the question raised by Honduras and Indonesia of whether the TPP measures are
permissible as "limited exceptions" under Article 17 did not arise.1482
6.567. The Panel also addressed an argument raised by Cuba, which Honduras reiterates on
appeal.1483 Before the Panel, Cuba, relying on the principle of effective treaty interpretation, argued
that Article 16.1 obliges Members to provide registered trademark owners with a "minimum
opportunity" to use their trademarks, because otherwise the minimum rights required by Article 16.1
are not guaranteed.1484
6.568. The Panel posited that, while the TRIPS Agreement recognizes the trademark owner 's
legitimate interest in using the registered trademark, the legal operation of the "right to prevent" in
Article 16.1 does not per se require use of the registered trademark itself.1485 For the Panel, adopting
an interpretation of Article 16 that would require Members to safeguard a minimum opportunity to
use the registered trademark is not only without basis in the text of the provision itself, but would
also create disharmony with those provisions of the trademark section that: (i) expressly provide
for conditions under which use can be encumbered (Article 20); and (ii) address the consequences
of obstacles to use (Article 19). According to the Panel, these provisions clearly foresee potential
regulatory prevention of use. For these reasons, the Panel found that the obligation to give a legally
operative meaning to all the provisions in Section 2 of Part II of the TRIPS Agreement harmoniously,
without reducing any of them to redundancy, does not support an interpretation of the minimum

1478 Panel Report, para. 7.2008.
1479 Panel Report, paras. 7.2011 and 7.2014.
1480 Panel Report, para. 7.2015 (quoting Panel Report, EC – Trademarks and Geographical Indications
(Australia), para. 7.246).
1481 Panel Report, paras. 7.2015-7.2016.
1482 Panel Report, para. 7.2018 (referring to Honduras' first written submission to the Panel, para. 252;
Indonesia's second written submission to the Panel, para. 72).
1483 See, for example, Honduras' appellant's submission, paras. 153, 327-333, and 353.
1484 Panel Report, para. 7.2019.
WT/DS435/AB/R • WT/DS441/AB/R

rights in Article 16 as requiring Members to provide a minimum opportunity to use a registered
trademark.1486
6.569. The Panel concluded that the possibility of a reduced occurrence of a "likelihood of confusion"
in the market does not, in and of itself, constitute a violation of Article 16.1, because Members'
compliance with the obligation to provide the right to prevent trademark infringements under
Article 16.1 is independent of whether such infringements actually occur in the market. For the
Panel, Article 16.1 does not require Member s to refrain from regulatory measures that may affect
the ability to maintain distinctiveness of individual trademarks or to provide a "minimum
opportunity" to use a trademark to protect such distinctiveness.1487
6.570. The Panel also found that, in order to demonst rate that the TPP measures are inconsistent
with Article 16.1, the complainants would have to demonstrate that, under Australian national law,
the trademark owner does not have the right to prevent third -party activities that meet the
conditions set out in that provision. 1488 The Panel concluded that the complainants had not
demonstrated that the TPP measures are inconsistent with Article 16.1 of the TRIPS Agreement.1489
6.3.1.2 Whether the Panel erred in its interpretation of Article 16.1
6.571. Honduras claims that the Panel erred in its interpretation of Article 16.1.1490 Honduras'
appeal calls for us to identify the right that is protected under Article 16.1, the scope of that right,
and the corresponding obligation imposed on WTO Members with respect to that right.
6.572. As a preliminary matter, we observe that there appears to be a degree of internal tension in
Honduras' arguments on appeal. On the one hand, Honduras contends that "the dispute was never
about whether there exists an undefined 'positive right to use' a trademark."1491 On the other hand,
Honduras maintains that "the use of the trademark determines the mark's strength and thus directly
affects the scope of protection conferred by Article 16."1492 In the same vein, Honduras argues that
the Panel's findings on Article 16.1 divorce the means of protection from the end that the means
should serve (the ability to use the trademark and expand the trademark's distinctiveness, notoriety,
and goodwill). Honduras submits that, pursuant to Article 16.1, a trademark owner can sue in order
to protect its trademark, "so that the trademark can be used" to perform its important function in
the course of trade.1493
6.573. At the first hearing, we asked Honduras several questions aimed at eliciting a better
understanding of Honduras' position on app eal regarding the rights conferred under Article 16.1,
and its challenge to the Panel's interpretation of this provision. In response to our questions,
Honduras explained that it considers use to be "essential to all of the rights conferred to trademark
owners".1494 In Honduras' view, the rights conferred are a means to an end. Honduras emphasized
that the purpose of the right in Article 16.1 is "to protect the distinctiveness of the mark". 1495
Honduras added that use is essential in the maintenance of the distinctiveness of a trademark in the
marketplace. Honduras asserted that, by imposing a prohibition on use, thereby reducing the

1486 Panel Report, paras. 7.2028-7.2030.
1487 Panel Report, para. 7.2031. The Panel made two further findings that are not the subject of these
appellate proceedings: (i) that Cuba had not explained how the cancellation of a registered trademark that
consists of non-inherently distinctive non-word signs and that may have lost distinctiveness due to the
application of the TPP measures "constitutes a violation of Article 16.1" (Panel Report, para. 7.2040); and
(ii) that Indonesia, and Cuba, by reference, had not made a prima facie case that the TPP measures erode a
trademark owner's right under Article 16.1 by requiring the use of deceptively similar marks on identical
products and at the same time depriving owners of the remedy to prevent uses of similar signs that create a
"likelihood of confusion". (Panel Report, para. 7.2050)
1488 Panel Report, para. 7.2050.
1489 Panel Report, para. 7.2051.
1490 Honduras' Notice of Appeal, pp. 2-3.
1493 Honduras' appellant's submission, para. 325. (emphasis omitted)
1494 Honduras' response to questioning at the first hearing.
1495 Honduras' response to questioning at the first hearing.
WT/DS435/AB/R • WT/DS441/AB/R

distinctiveness of the trademarks at issue, the TPP measures have effectively "shrunk the scope of
protection".1496
6.574. Based on Honduras' Notice of Appeal, appellant's submission, and responses to questioning
at the first hearing, we understand the reasoning underpinning each of Honduras' arguments as
focusing on three central and interconnected themes: (i) Article 16.1 of the TRIPS Agreement (read
together with Articles 15, 17, 19, and 20 of the TRIPS Agreement) confers upon the owner of a
registered trademark the right to use its trademark; (ii) the distinctiveness of a trademark and the
"likelihood of confusion" in Article 16.1 are closely related concepts that impose a requirement on
Members to protect the distinctiveness of a trademark through use; and (iii) pursuant to Article 16.1,
Members must guarantee a minimum level of protection relating to the distinctiveness and use of
trademarks, which then "guarantee [s] particular outcomes". 1497 Accordingly, in addressing
Honduras' arguments, we also address, inter alia, these three recurring themes.
6.575. We begin with Honduras' contention that the Panel findings on Article 16.1 divorce the means
of protection from the end that the means should serve (the ability to use the trademark and expand
the trademark's distinctiveness, notoriety, and goodwill). Honduras submits that pursuant to
Article 16.1, a trademark owner can sue in order to protect its trade mark, "so that the trademark
can be used" to perform its important function in the course of trade.1498 Honduras argues that the
Panel ignored the importance of "use" to the enforcement of trademarks and read Article 16 without
considering the context of, in particular, Articles 15, 19, and 20, which, according to Honduras, put
the functional use of trademarks at the heart of the trademark rights protected by the
TRIPS Agreement.1499
6.576. For Australia, the necessary implication of Honduras' argument is that a tradema rk owner
has a right to use a trademark, so as to maintain the distinctiveness of that trademark, and therefore
maintain the owner's ability to demonstrate a "likelihood of confusion". 1500 In Australia's view,
Article 16.1 does not require Members to confer u pon the owner of a registered trademark a right
to use that trademark.1501
6.577. The starting point of our analysis is the text of the TRIPS Agreement. Given the unique
structure of the TRIPS Agreement as compared to the other covered agreements 1502, in order to
establish properly the right that is protected under Article 16.1 and the corresponding obligation on
WTO Members, we consider it useful to place Article 16.1 in its proper context in the
TRIPS Agreement.1503

1496 Honduras' response to questioning at the first hearing.
1498 Honduras' appellant's submission, para. 325. (emphasis omitted)
1500 Australia's appellee's submission, para. 123 and fn 135 thereto (referring to Honduras' appellant's
submission, para. 359).
1501 Australia's appellee's submission, para. 87.
1502 The TRIPS Agreement addresses intellectual property rights, which are private rights held by natural
or legal persons. (TRIPS Agreement, fourth recital of the Preamble) For purposes of the TRIPS Agreement, the
natural or legal persons that are the right holders must be nationals of WTO Members. (TRIPS Agreement, fn 1
to para. 3) In addition, the TRIPS Agreement derives a significant proportion of its content from pre-existing
international intellectual property agreements or conventions that were negotiated outside the
GATT 1947/WTO framework. Moreover, the TRIPS Agreement, as an agreement addressing intellectual
property rights, is principally concerned with the creation and protection of exclusive private rights. By
definition, these exclusive rights act to restrict commercial activity and require an active intervention of
government to enforce these restrictions. As the panels in EC – Trademarks and Geographical Indications
(Australia) and EC – Trademarks and Geographical Indications (US) stated, the TRIPS Agreement "does not
generally provide for the grant of positive rights to exploit or use certain subject matter, but rather provides
for the grant of negative rights to prevent certain acts". (Panel Reports, EC – Trademarks and Geographical
1503 As the Appellate Body has said, "a treaty interpreter must read all applicable provisions of a treaty
in a way that gives meaning to all of them, harmoniously." (Appellate Body Report, Argentina – Footwear (EC),
US – Gasoline, p. 3, DSR 1996:I, p. 23; Japan – Alcoholic Beverages II, p. 97, DSR 1996:I, p. 106) (emphasis
original))
WT/DS435/AB/R • WT/DS441/AB/R

6.578. Article 1.1 imposes an obligation on Members to "give e ffect to the provisions of" the
TRIPS Agreement. Specifically, as regards trademarks, Members have an obligation to give effect to
the provisions of Articles 15-21 of the TRIPS Agreement.
6.579. Article 15.1 defines the subject matter that is protectable as a trademark.1504 According to
Article 15.1, any sign, or any combination of signs, capable of distinguishing the goods or services
of one undertaking from those of other undertakings, shall be capable of constituting a trademark.
Thus, a trademark serves to distinguish the goods or services of one undertaking from those of other
undertakings. Article 15.1 also states that "[w]here signs are not inherently capable of distinguishing
the relevant goods or services, Members may make registrability depend on distinctiveness acquired
through use." Hence, Article 15.1 suggests that, in terms of eligibility for registration, the norm is
the presentation of signs that are "inherently" distinctive. It is only in situations when a sign is not
inherently distinctive that the "distinctiveness acquired through use" becomes relevant. We observe
that the "distinctiveness" of a sign, discussed in Article 15.1, relates to the eligibility for registration
of a sign as a trademark, and not to the rights conferred to the trademark owner once its trademark
is registered. We recall that the question whether a sign is eligible for registration as a trademark is
not at issue in these proceedings.
6.580. While Article 15 defines the subject matter that may be protected as a trademark and the
rules governing the eligibility for registration of a sign as a trademark, Article 16 addresses the rights
conferred on a trademark owner following such registration.1505 Article 16.1 states:
The owner of a registered trademark shall have the exclusive right to prevent all third
parties not having the owner's consent from using in the course of trade identical or
similar signs for goods or services which are identical or similar to those in respect of
which the trademark is registered where such use would result in a likelihood of
confusion. In case of the use of an identical sign for identical goods or services, a
likelihood of confusion shall be presumed. The rights described above shall not prejudice
any existing prior rights, nor shall they affect the possibility of Members making rights
available on the basis of use.1506
6.581. The first sentence of Article 16.1 identifies the holder of the exclusive right conferred under
this provision as the "owner of a registered trademark". The trademark owner can exercise its
exclusive right as against "all third parties not havi ng the owner's consent" (unauthorized third
parties). Thus, the owner of a registered trademark can exercise its exclusive right under Article 16.1
as against an unauthorized third party, but not against the WTO Member in whose territory the
trademark is protected. Rather, in accordance with Article 1.1, WTO Members are required to "give
effect" to Article 16.1 by ensuring that, in the Members' domestic legal regimes, the owner of a
registered trademark can exercise its exclusive right as against unauthorized third parties.1507
6.582. Pursuant to Article 16.1, the owner of a registered trademark has the exclusive right to
"prevent" all unauthorized third parties from behaving in a certain manner in the course of trade.
Hence, the exclusive right conferred under Articl e 16.1 is one that grants a trademark owner the
authority to "prevent" certain behaviour, which may be understood as the authority to "preclude,

1504 Panel Report, EC – Trademarks and Geographical Indications (Australia), para. 7.600. Article 15.1 of
the TRIPS Agreement provides that:
Any sign, or any combination of signs, capable of distinguishing the goods or services of one
undertaking from those of other undertakings, shall be capable of constituting a trademark. Such
signs, in particular words including personal names, letters, numerals, figurative elements and
combinations of colours as well as any combination of such signs, shall be eligible for registration
as trademarks. Where signs are not inherently capable of distinguishing the relevant goods or
services, Members may make registrability depend on distinctiveness acquired through use.
Members may require, as a condition of registration, that signs be visually perceptible.
1505 Articles 16.2 and 16.3, which are not at issue in these appellate proceedings, concern the protection
of well-known marks pursuant to Article 6bis of the Paris Convention (1967).
1506 We note that the Paris Convention (1967) contains no analogous provision to Article 16.1 of the
TRIPS Agreement.
1507 As the Appellate Body stated in US – Section 211 Appropriations Act, "Article 16 confers on the
owner of a registered trademark an internationally agreed minimum level of 'exclusive rights' that all
WTO Members must guarantee in their domestic legislation." (Appellate Body Report, US – Section 211
WT/DS435/AB/R • WT/DS441/AB/R

stop, or hinder"1508 such behaviour. As the panel in EC – Trademarks and Geographical Indications
(Australia) said, the TRIPS Agreement "does not generally provide for the grant of positive rights to
exploit or use certain subject matter, but rather provides for the grant of negative rights to prevent
certain acts".1509 Specifically, Article 16.1 grants a trademark owner the exclusive right to preclude
unauthorized third parties from using, in the course of trade, identical or similar signs for goods or
services that are identical or similar to those with respect to which the trademark is registered.1510
6.583. However, a trademark owner may only exercise its exclusive right under Article 16.1 against
an unauthorized third party once certain cumulative conditions are met: (i) the unauthorized third
party must be using the identical or similar signs for goods or services "in the cour se of trade";
(ii) the goods or services, with respect to which the unauthorized third party is using the identical
or similar signs, must be identical or similar to the goods or services with respect to which the
trademark is registered; and (iii) the unauthorized third party's use of the identical or similar signs
"would result in a likelihood of confusion".
6.584. With respect to this third condition, we recall that, pursuant to Article 15.1, for a sign to be
"eligible for registration" as a trademark, it must be "capable of distinguishing the goods or services
of one undertaking from those of other undertakings". In our view, the likelihood of confusion, which
may result from the conduct of unauthorized third parties identified in Article 16.1, relates to the
distinguishing function of the trademark in question. This view is supported by the second sentence
of Article 16.1, which clarifies that in the case of the use of an identical sign for identical goods or
services, a likelihood of confusion shall be presume d. Indeed, the use of identical signs would
effectively do away with the capability of a trademark to "distinguish[] the goods or services of
one undertaking from those of other undertakings", as reflected in Article 15.1.
6.585. Nonetheless, while we agree with Honduras that the risk of a "likelihood of confusion" in
Article 16.1 relates to the distinguishing function of a trademark, we caution against extrapolating
too broadly from this relationship. In this regard, we note Honduras' contention that the protection
of the distinctiveness through the use of a trademark is implied from the purpose of Article 16.1.
According to Honduras:
Article 16.1 provides private parties with a means to an end: the "rights conferred" are
to be guaranteed in order to allow the t rademark owner to protect the distinctiveness
of the trademark by taking legal action against unauthorised use of similar signs. But
the ability to take this legal action is not an end in itself; rather, it is ultimately only a
means that serves a particul ar purpose. The owner can sue in order to protect his or
her trademark, so that the trademark can be used to perform its important function in
the course of trade. This, in turn, will allow the trademark owner to further develop
goodwill based on that trademark.
The Panel's findings on Article 16.1 divorce the means of protection from the end that
the means should serve (the ability to use the trademark and expand the trademark's
distinctiveness, notoriety and goodwill). The result is a formalistic and exce edingly
narrow view of these means, viewed in near -total isolation, leading to minimal
protection that is devoid of meaning.1511
6.586. We note that, in putting forward this argument, Honduras makes no reference to the text of
Article 16 or indeed any other provision of the TRIPS Agreement. We too have not come across any

1508 Oxford English Dictionary online, definition of "prevent",
https://www.oed.com/view/Entry/151073?rskey=rO5lqh&result=2&isAdvanced=false#eid, accessed
24 February 2020.
1509 Panel Report, EC – Trademarks and Geographical Indications (Australia), para. 7.246; see also Panel
Report, EC – Trademarks and Geographical Indications (US), para. 7.210.
1510 We observe that the third sentence of Article 16.1 qualifies the right conferred by the first sentence.
(Panel Reports, EC – Trademarks and Geographical Indications (Australia), para. 7.602; EC – Trademarks and
Geographical Indications (US), para. 7.602) The third sentence notes that the exclusive rights described in the
first sentence "shall not prejudice any existing prior rights, nor shall they affect the possibility of Members
making rights available on the basis of use". This third sentence reflects the reality that, depending on a
Member's domestic legal regime, ownership of a trademark may be acquired through registration, or through
use. (Appellate Body Report, US – Section 211 Appropriations Act, para. 199)
1511 Honduras' appellant's submission, paras. 325-326. (emphasis omitted)
WT/DS435/AB/R • WT/DS441/AB/R

language in the TRIPS Agreement that endorses the position that the purpose of the exclusive right
articulated in Article 16.1 is to allow a trademark owner to protect the distinctiveness of the
trademark through the trademark owner's continued use of that trademark. In this vein, we recall
that Article 2.1 of the TRIPS Agreement provides that, "[i]n respect of Parts II, III and IV of this
Agreement, Members shall comply with Articles 1 through 12, a nd Article 19, of the
Paris Convention (1967)." None of these referenced provisions of the Paris Convention (1967) grant
a trademark owner a positive right to use its trademark, or a right to protect the distinctiveness of
that trademark through use.1512 Hence, neither the TRIPS Agreement nor the provisions of the Paris
Convention (1967) that are incorporated by reference into the TRIPS Agreement confer upon a
trademark owner a positive right to use its trademark or a right to protect the distinctiveness of that
trademark through use. Accordingly, there is no corresponding obligation on Members to "give
effect"1513 to such "rights". Rather, in accordance with Article 1.1 of the TRIPS Agreement, Members
are required to give effect to Article 16.1 by ensuring that, in the Members' domestic legal regimes,
the owner of a registered trademark can exercise its "exclusive right to prevent" the infringement
of its trademark by unauthorized third parties.
6.587. As the panel in EC – Trademarks and Geographical Indications (Austral ia) observed, the
TRIPS Agreement "does not generally provide for the grant of positive rights to exploit or use certain
subject matter, but rather provides for the grant of negative rights to prevent certain acts" .1514
Specifically, Article 16.1 grants a trademark owner the exclusive right to preclude unauthorized third
parties from using, in the course of trade, identical or similar signs for goods or services that are
identical or similar to those with respect to whic h the trademark is registered. The owner of a
registered trademark can exercise its "exclusive right" as against an unauthorized third party but
not against the WTO Member in whose territory the trademark is protected. Instead, in accordance
with Article 1.1, Members are required to give effect to Article 16.1 by ensuring that, in the Members'
domestic legal regimes, the owner of a registered trademark can exercise its "exclusive right to
prevent" the infringement of its trademark by unauthorized third part ies. Hence, for purposes of
WTO dispute settlement, in order to establish that a WTO Member has acted inconsistently with
Article 16.1, the complaining Member must demonstrate that, under the responding Member's
domestic legal regime, the owner of a regist ered trademark cannot exercise its "exclusive right to
prevent" the infringement of its trademark by unauthorized third parties.
6.588. For these reasons, we find that the Panel was correct in finding that:
Article 16.1 does not establish a trademark owner's righ t to use its registered
trademark. Rather, Article 16.1 only provides for a registered trademark owner's right
to prevent certain activities by unauthorized third parties under the conditions set out
in the first sentence of Article 16.1.1515
6.589. Honduras also ch allenges the Panel's finding that there is "no indication in the text of
Article 16.1, first sentence, of an obligation on Members to maintain the distinctiveness of registered
trademarks, or to refrain from regulatory conduct that might negatively affect the distinctiveness of
such trademarks through use" .1516 Honduras submits that this dispute was never about whether
there exists an undefined "positive right to use" a trademark, nor was the dispute about the
"entitlement to maintain or extend the distinctiveness of an individual trademark" in light of market
conditions.1517 According to Honduras, the question put before the Panel was whether measures that

1512 In this respect, we note that Australia submitted to the Panel a response by WIPO in 1994 to
enquiries from law firms as to whether the Paris Convention (1967) requires countries to permit the use of
trademarks. WIPO stated that the Paris Convention (1967) contains a number of provisions setting standards
for the registration and protection of trademarks. However, WIPO indicated that "[t]he Paris Convention does
not contain any obligation to the effect that the use of a registered trademark must be permitted." (Australia's
first written submission to the Panel, para. 246 (quoting Letter dated 6 July 1994 from D. Latham of Lovell,
White, Durrant to J. Smithson, Public Affairs Manager, Rothmans International Services Limited, attaching
letter dated 5 July 1994 from L. Baeumer, Director, Industrial Property Law Department, WIPO, to D. Latham
of Lovell, White, Durrant, Bates Nos. 502592535-502592536 (Panel Exhibit AUS-234)))
1513 Article 1.1 of the TRIPS Agreement.
1514 Panel Report, EC – Trademarks and Geographical Indications (Australia), para. 7.246; see also Panel
Report, EC – Trademarks and Geographical Indications (US), para. 7.210.
1515 Panel Report, para. 7.1978.
1517 Honduras' appellant's submission, paras. 348-349 (quoting Panel Report, para. 7.2015).
WT/DS435/AB/R • WT/DS441/AB/R

reduce the scope of the rights conferred by Article 16.1 in a direct and deliberate manner are
consistent with the obligation under Article 16.1 of guaranteeing minimum protection. Honduras
contends that the Panel "never addressed that question and made general findings that are
inapposite to the case at hand".1518 In this regard, Honduras refers to the Appellate Body's reasoning
in US – Section 211 Appropriations Act that "Article 16 confers on the owner of a registered
trademark an internationally agreed minimum level of 'exclusive rights' that all WTO Members must
guarantee in their domestic legislation" to asser t that Article 16 imposes an obligation on
WTO Members to guarantee particular outcomes.1519
6.590. Australia responds by asserting that an interpretation based on an implied "right of use",
"right of distinctiveness", or "right of confusion" has no foundation in the text. According to Australia,
a proper interpretative analysis under Article 31 of the Vienna Convention1520 establishes that none
of these "rights" is protected by Article 16.1, and Honduras' argument that the Panel erred by not
reading any of these non-existent "rights" into the text of that provision is without merit.1521
6.591. We note Honduras' reference to the Appellate Body's reasoning in US – Section 211
Appropriations Act.1522 The Appellate Body stated that:
As we read it, Article 16 confers on the owner of a re gistered trademark an
internationally agreed minimum level of "exclusive rights" that all WTO Members must
guarantee in their domestic legislation. These exclusive rights protect the owner against
infringement of the registered trademark by unauthorized third parties.1523
6.592. When referring to the "exclusive rights" that Members must guarantee in their domestic
legislation, the Appellate Body was careful to underline that these "exclusive rights" protect the
owner against infringement of the registered trademark b y unauthorized third parties. 1524 Indeed,
with respect to Article 16.1, Members must guarantee that, in their domestic legislation, the owner
of a registered trademark has the "exclusive right to prevent" unauthorized third parties from
infringing its trademark. Contrary to what Honduras suggests, Article 16.1 does not require Members
to "guarantee particular outcomes"1525, beyond what is expressly articulated in the provision. Thus,
we consider that the Panel was correct in finding that:
7.1980. … The essence of the Article 16.1 obligation is to ensure that rights are available
to obtain relief against such infringing acts. It follows that, in order to show that the
TPP measures violate Australia's obligation under Article 16.1, the complainants would
have to demonstrate that, under Australia's domestic law[*], the trademark owner does
not have the right to prevent third -party activities that meet the conditions set out in
that provision.
…
[*fn original] 4447 Under Article 1.1 of the TRIPS Agreement, Members have the obligation to
"give effect to the provisions of this Agreement".
7.2005. We recall our finding above that Article 16.1 does not contain a right to use a
trademark, and that Members comply with the obligation in Article 16.1, first sentence,

1519 Honduras' appellant's submission, para. 375 (quoting Appellate Body Report, US – Section 211
Appropriations Act, para. 186 (emphasis added by Honduras)).
1520 Vienna Convention on the Law of Treaties, done at Vienna, 23 May 1969, UN Treaty Series,
Vol. 1155, p. 331 (Vienna Convention).
1521 Australia's appellee's submission, para. 140.
1522 Honduras' appellant's submission, para. 375 (quoting Appellate Body Report, US – Section 211
Appropriations Act, para. 186 (emphasis added by Honduras)). We note that despite several exchanges at the
first hearing in these appellate proceedings, Honduras provided no specific response to what it considered to be
the "minimum rights that Members must protect under the TRIPS Agreement". (Honduras' appellant's
submission, para. 420)
1523 Appellate Body Report, US – Section 211 Appropriations Act, para. 186. (fn omitted; emphasis
omitted)
1524 Appellate Body Report, US – Section 211 Appropriations Act, para. 186.
WT/DS435/AB/R • WT/DS441/AB/R

by providing to the owner of a registered trademark the exclusive right to prevent
trademark infringements as described by the criteria set out therein. … [C]ompliance
with this obligation is independent of whe ther trademark infringements actually occur
in the market, or whether the right owners actually choose to exercise the right to
prevent available to them. Against this background, we find no indication in the text of
Article 16.1, first sentence, of an obligation on Members to maintain the distinctiveness
of registered trademarks, or to refrain from regulatory conduct that might negatively
affect the distinctiveness of such trademarks through use.1526
6.593. Still in connection with the text of Article 16.1, we take note of Honduras' argument
concerning the words "exclusive right to prevent" in this provision. Honduras refers to the panel
report in EC – Trademarks and Geographical Indications (Australia) . That panel noted that the
"exclusive right" referred to in Arti cle 16.1 indicates that "this right belongs to the owner of the
registered trademark alone, who may exercise it to prevent certain uses by 'all third parties' not
having the owner's consent."1527 Honduras suggests that the panel report in EC – Trademarks and
Geographical Indications (Australia), along with Sections 20 and 26 of Australia's Trade Marks Act
1995 (Cth) (TM Act), illustrates that "saying that the owner has the exclusive right to prevent use
by others is in fact no different from saying that the ow ner is the only one who is able to use the
mark."1528
6.594. Honduras' argument conflates the rights conferred to trademark owners in Australia under
Articles 20 and 26 of Australia's TM Act, with the rights conferred to trademark owners under
Article 16.1 of the TR IPS Agreement. On the one hand, pursuant to Article 16.1, the owner of a
registered trademark shall have the "exclusive right to prevent" all unauthorized third parties from
using in the course of trade identical or similar signs for goods or services that are identical or similar
to those with respect to which the trademark is registered where such use would result in a likelihood
of confusion. On the other hand, Section 20 of Australia's TM Act – which is not challenged in these
disputes – provides that "[i]f a trade mark is registered, the registered owner of the trade mark has,
subject to this Part, the exclusive rights: (a) to use the trade mark … in relation to the goods and/or
services in respect of which the trade mark is registered." 1529 Similarly, Section 26 of the TM Act
states that:
Subject to any agreement between the registered owner of a registered trade mark and
an authorised user of the trade mark, the authorised user may do any of the following:
(a) the authorised user may use the trade mark in relation to the goods and/or services
in respect of which the trade mark is registered, subject to any condition or limitation
subject to which the trade mark is registered[.]1530
6.595. The TM Act expressly refers to the right of the trademark owner, or its authorized user, to
"use" the trademark. No such language exists in Article 16.1 of the TRIPS Agreement. Moreover,
any allegation concerning the infringement of Australia's domestic laws is subject to adjudication
and enforcement under Australia's domestic legal regime. As stated in paragraph 6.587. above, in
accordance with Article 1.1, Members are required to give effect to Article 16.1 by ensuring that, in
the Members' domestic legal regimes, the owner of a registered trademark can exercise its "exclusive
right to prevent" the infringement of its trademark by unauthorized third parties. Hence, for purposes
of WTO dispute settlement, in order to establish that a WTO Member has acted inconsistently with
Article 16.1, the complaining Member must demonstrate that under the responding Member's
domestic legal regime, the owner of a registered trademark cannot exercise its "exclusive right to
prevent" the infringement of its trademark by unauthorized third parties. Thus, Honduras' reliance
on Australia's TM Act1531, which is not a measure at issue in these disputes, has no bearing on the

1526 Panel Report, paras. 7.1980 and 7.2005.
1527 Honduras' appellant's submission, para. 408 (quoting Panel Report, EC – Trademarks and
Geographical Indications (Australia), para. 7.602). (emphasis added by Honduras omitted)
1528 Honduras' appellant's submission, para. 411 and fns 190-191 thereto (referring to the TM Act (Panel
Exhibit JE-6), Sections 20 and 26).
1529 TM Act (Panel Exhibit JE-6), Section 20(1).
1530 TM Act (Panel Exhibit JE-6), Section 26(1)(a).
1531 Honduras' appellant's submission, para. 411 and fns 190-191 thereto (referring to the TM Act (Panel
Exhibit JE-6), Sections 20 and 26).
WT/DS435/AB/R • WT/DS441/AB/R

right conferred under Article 16.1. Nor does Australia's TM Act introduce a general obligation under
Article 16.1 for Members to protect a trademark owner's right to use its trademark.
6.596. Rather, we understand Australia, through its TM Act, to have provided for the "more
extensive protection" contemplated in the second sentence of Article 1.1 of the TRIPS Agreement.
The second sentence states that "Members may, but shall not be obliged to, implement in their law
more extensive protection than is required by this Agreement, provided that such protection does
not contravene the provisions of this Agreement."1532 Thus, when a Member individually provides for
"more extensive protection", this does not imply additional obligations under the TRIPS Agreement.
Rather, the "more extensive protection" becomes a matter for domestic adjudication and
enforcement. For these reasons, we reject Honduras' assertion that "saying that the owner has the
exclusive right to prevent use by others is in fact no different from saying that the owner is the only
one who is able to use the mark."1533
6.597. Honduras also refers to the phrase "likelihood of confusion" in Article 16.1 to argue that the
use of the t rademark determines the trademark's strength and thus directly affects the scope of
protection conferred by Article 16.1. Honduras maintains that an action against the infringement of
even an inherently distinctive mark is likely to fail because of an absence of a likelihood of confusion
as a result of the weak marketplace strength of the trademark. Rather, Honduras considers that
distinctiveness of a trademark, its use, and likelihood of confusion "are closely related concepts".1534
Thus, Honduras contends that "[t]reating 'likelihood of confusion' as a separate triggering condition
ignores this feature of trademark law."1535 In Honduras' view, a Member that directly and deliberately
seeks to reduce the strength of the mark, thereby making it impossible, over tim e, to demonstrate
a likelihood of confusion other than in the context of the use of identical signs on identical products
(when such a likelihood is presumed), acts inconsistently with Article 16.1.1536
6.598. In its appellant's submission, Honduras did not identify the aspects of the Panel's
interpretation that it was challenging under this rubric of "likelihood of confusion". In response to
questioning at the first hearing, Honduras indicated that the Panel conflated the notion of "likelihood
of confusion" in Artic le 16.1 of the TRIPS Agreement with the actual confusion that is prohibited
under Article 10bis of the Paris Convention (1967)1537, which is incorporated into the
TRIPS Agreement through Article 2.1. Specifically, Honduras pointed to the following statements by
the Panel:
There is nothing in the text of the first sentence of Article 16.1 to suggest – as the
complainants imply – an obligation by Members not only to provide protection where
likelihood of confusion does arise but also to maintain market condition s that would
enable the circumstances set out in this provision, including a likelihood of confusion,
to actually occur in any particular situation. Rather, Members must ensure that in the
event that these circumstances do arise, a right to prevent such use is provided.1538
6.599. First, contrary to Honduras' assertion, it is apparent from the quote above that the Panel did
not conflate the notions of "actual confusion" and "likelihood of confusion". Rather, in its own words,
the Panel was referring to the "market co nditions that would enable the circumstances set out in
this provision, including a likelihood of confusion, to actually occur".1539 Second, as discussed above,
a trademark owner may exercise its exclusive right under Article 16.1 only once certain cumulative
conditions are met. 1540 In accordance with Article 1.1, Members are required to give effect to

1532 See also Panel Report, China – Intellectual Property Rights, para. 7.513.
1533 Honduras' appellant's submission, para. 411 and fns 190-191 thereto (referring to the TM Act (Panel
Exhibit JE-6), Sections 20 and 26).
1536 Honduras' appellant's submission, paras. 429-435.
1537 Article 10bis (3)1 of the Paris Convention (1967) provides that "all acts of such a nature as to create
confusion by any means whatever with the establishment, the goods, or the industrial or commercial activities,
of a competitor" shall be prohibited.
1540 As noted in paragraph 6.583. , these cumulative conditions are that: (i) the unauthorized third
party must be using the identical or similar signs for goods or services "in the course of trade"; (ii) the goods
or services, with respect to which the unauthorized third party is using the identical or similar signs must be
WT/DS435/AB/R • WT/DS441/AB/R

Article 16.1 by ensuring that, in the Members' domestic legal regimes, the owner of a registered
trademark can exercise its "exclusive right to prevent" the infrin gement of its trademark by
unauthorized third parties in the event of the occurrence of these three cumulative conditions. For
this reason, we agree with the Panel's statement that "Members must ensure that in the event that
these circumstances do arise, a right to prevent such use is provided."1541
6.600. More substantively, based on our understanding of Honduras' appellant's submission and
responses to questioning at the first hearing, Honduras' position is that, if the owner of a registered
trademark is not permitted to use its trademark, then the factual situation leading to a "likelihood
of confusion" would be less likely to occur. Thus, Honduras posits that the reduction in the occurrence
of the factual scenario contemplated in Article 16.1 undermines the right conferred on the owner of
a registered trademark under Article 16.1. This understanding of Honduras' argument comports with
the Panel's explanation that "the complainants contend[ed] that under the TPP measures, the factual
situation of trademark infringement set forth in the first sentence of Article 16.1, will occur less
frequently and with respect to fewer signs than before, and that this constitutes a reduction of the
trademark owner's right in violation of Article 16.1."1542
6.601. We recall that the "l ikelihood of confusion", which may result from the conduct of
unauthorized third parties identified in Article 16.1, relates to the distinguishing function of the
trademark in question, described in Article 15.1. However, as the Panel observed, "Members ha ve
not taken on a general responsibility for safeguarding the distinctiveness of signs, either before or
after such signs have been registered as trademarks." 1543 Moreover, except for the situation
described in its second sentence, Article 16.1 does not delineate the criteria for the examination of
whether an unauthorized third party's use of similar signs "would result in a likelihood of confusion".
Thus, contrary to what Honduras suggests, Article 16.1 does not: (i) require Members to provide a
"minimum oppo rtunity" for a trademark owner to use its trademark in order to preserve or
strengthen the distinctiveness of the trademark; (ii) provide the criteria for assessing whether the
unauthorized use by third parties of similar signs has "result[ed] in a likelih ood of confusion" with
the registered trademark; or (iii) require Members to ensure that the factual scenario contemplated
by the cumulative conditions in Article 16.1 occurs.
6.602. For these reasons, we consider that the Panel did not err in finding that:
[T]he possibility of a reduced occurrence of a "likelihood of confusion" in the market
does not, in and of itself, constitute a violation of Article 16.1, because Members'
compliance with the obligation to provide the right to prevent trademark infringements
under Article 16.1 is independent of whether such infringements actually occur in the
market. Article 16.1 does not require Members to refrain from regulatory measures that
may affect the ability to maintain distinctiveness of individual trademarks or to provide
a "minimum opportunity" to use a trademark to protect such distinctiveness.1544
6.603. As regards the relevant context of Article 16.1, Honduras refers to Article 20 of the
TRIPS Agreement to assert that, when interpreting this provision, the Panel confirmed t hat "use is
protected by the TRIPS Agreement."1545 For Honduras, the "exclusive rights" under Article 16.1 are
conferred against the background of a presumption of unencumbered use, which finds reflection in
Article 20.1546 Thus, according to Honduras, the Panel found that any requirements that directly
affect the use and distinctiveness of trademarks are subject to a demonstration of "good reasons
sufficient to justify" the encumbrance. In Honduras' view, this "confirms that the object and purpose
of the TRIPS Agreement is the protection of intellectual property rights in general and the orderly
use of trademarks in commerce in particular". 1547 Honduras posits that "Article 20 is important
context for Article 16.1 and imposes the exact obligation on Members that the Panel refuses to read

identical or similar to the goods or services with respect to which the trademark is registered; and (iii) the
unauthorized third party's use of the identical or similar signs "would result in a likelihood of confusion".
1543 Panel Report, para. 7.2028.
1544 Panel Report, para. 7.2031.
WT/DS435/AB/R • WT/DS441/AB/R

into Article 16.1 or to incorporate as part of the context of this provision." 1548 Honduras considers
that the Panel's interpretation of Article 16.1 denied this important context "which confirms the
importance of use for purposes of un derstanding the nature and scope of the rights conferred by
Article 16.1".1549 Honduras emphasizes that a Member's encumbrances on the use of a trademark
"may affect also the private rights conferred to trademark owners per Article 16.1".1550 Honduras
contends t hat the relevant questions that the Panel should have asked were whether the
encumbrance is such as to reduce the level of protection below the minimum guarantee of
Article 16.1 and, if so, whether it could be justified as a limited exception under Article 17 of the
TRIPS Agreement. However, Honduras argues that the Panel did not even consider this possibility
based on its isolated reading of Article 16.1.1551
6.604. Australia disagrees with Honduras' argument that the Panel "ignores the importance of 'use'
to the en forcement of trademarks and reads Article 16 without considering the context of, in
particular, Articles 15, 19, and 20 which put the functional use of trademarks at the heart of the
trademark rights protected by the TRIPS Agreement".1552 Australia highlights that the Panel
"carefully considered" the context of the other relevant provisions in Part II, Section 2, of the
TRIPS Agreement and determined that each of those provisions supported its conclusion that
"regulatory measures that do not affect the negativ e right to prevent infringing uses are not
prohibited by Article 16."1553 Australia also agrees with the Panel finding that adopting an
interpretation of Article 16 that would require Members to " 'safeguard a minimum opportunity to
use the registered trademark' would be inconsistent with [Articles 19 and 20] that 'clearly foresee
potential regulatory prevention of use'".1554
6.605. Contrary to Honduras' contention, we do not read the Panel's interpretation as being "based
on its isolated reading of Article 16.1".1555 Nor does the Panel's interpretation "den[y] this important
context"1556 provided by the other provisions of Section 2 of Part II of the TRIPS Agreement. Instead,
in arriving at its interpretation of Article 16.1, the Panel provided the following explanation:
7.2027. Other provisions in Section 2 of Part II address the use of registered
trademarks. Among those is Article 19, which expressly contemplates that obstacles to
the use of trademarks may arise independently of the will of the trademark owner,
including on t he basis of government requirements. Article 20 prohibits special
requirements that unjustifiably encumber use of a trademark in the course of trade,
which – inversely – permits the encumbrance of use of a trademark in certain
circumstances. We further note that the trademark owners' interest in using its
trademark in relation to the relevant goods or services has been recognised as part of
its legitimate interest in preserving the distinctiveness of its trademark in the context
of Article 17, an d which thus needs to be taken into account when assessing the
legitimacy of exceptions to the exclusive rights provided by Article 16.1.
7.2028. … The importance of use of a trademark is recognized in the TRIPS Agreement
by conditioning measures that encu mber such use in the context of Article 20, and by
recognizing the right owner's interest in using the trademark to maintain distinctiveness
as a factor in determining permissible exceptions in the context of Article 17. At the
same time, it is clear that obstacles to trademark use can and do legitimately exist, and
that Members retain the authority to encumber the use of trademarks under certain
conditions.
7.2029. Adopting an interpretation of Article 16 that would require Members to
safeguard a minimum opportunity to use the registered trademark is therefore not only
without basis in the text of the provision itself, but would also create disharmony with
those provisions of the trademark section that (a) expressly provide for conditions under

1552 Australia's appellee's submission, para. 127 (quoting Honduras' appellant's submission, para. 366).
WT/DS435/AB/R • WT/DS441/AB/R

which use ca n be encumbered (Article 20); and (b) address the consequences of
obstacles to use (Article 19). These provisions clearly foresee potential regulatory
prevention of use. Further, to read Article 16 as imposing upon Members limitations on
regulations regard ing trademark use could potentially render Article 20 itself, which
addresses this point directly, inutile.1557
6.606. Article 19 of the TRIPS Agreement, titled "Requirement of Use", provides, in relevant part:
1. If use is required to maintain a registration, the r egistration may be cancelled only
after an uninterrupted period of at least three years of non -use, unless valid reasons
based on the existence of obstacles to such use are shown by the trademark owner.
Circumstances arising independently of the will of th e owner of the trademark which
constitute an obstacle to the use of the trademark, such as import restrictions on or
other government requirements for goods or services protected by the trademark, shall
be recognized as valid reasons for non-use.1558
6.607. The first sentence of Article 19.1 begins with the word "if" when identifying a particular
requirement in domestic legal regimes. This provision recognizes that, while some domestic legal
regimes may require "use" of a trademark to maintain its registration, not a ll do. Thus, the
conditional "if" confirms that the use of a registered trademark by its owner is not a requirement
imposed by the TRIPS Agreement. Importantly, even in domestic legal regimes where Article 19.1
applies, this provision notes that there may be obstacles to the use of a trademark that may provide
its owner with justification against cancellation of the registration of its trademark. The
second sentence of Article 19.1 provides examples of such obstacles, stating that "[c]ircumstances
arising independently of the will of the owner of the trademark which constitute an obstacle to the
use of the trademark, such as import restrictions on or other government requirements for goods or
services protected by the trademark, shall be recognized as valid reasons for non-use." Hence, far
from providing for the right of a trademark owner to use its trademark, as the Panel observed,
"Article 19 expressly contemplates government measures that can constitute an obstacle to
trademark use."1559
6.608. Article 20, titled "Other Requirements", provides that:
The use of a trademark in the course of trade shall not be unjustifiably encumbered by
special requirements, such as use with another trademark, use in a special form or use
in a manner detrimental to its capability to di stinguish the goods or services of one
undertaking from those of other undertakings. This will not preclude a requirement
prescribing the use of the trademark identifying the undertaking producing the goods
or services along with, but without linking it to, the trademark distinguishing the specific
goods or services in question of that undertaking.1560
6.609. We begin by addressing Honduras' assertion that "Article 20 is important context for
Article 16.1 and imposes the exact obligation on Members that the Panel ref uses to read into
Article 16.1 or to incorporate as part of the context of this provision."1561 Article 20, like Article 16.1,
concerns trademarks and forms part of Section 2 of Part II of the TRIPS Agreement. Hence, we
agree with Honduras that Article 20 serves as relevant context for the purpose of understanding the
right conferred under Article 16.1. Having said that, we disagree with Honduras' assertion that
Article 20 "imposes the exact obligation on Members that the Panel refuses to read into
Article 16.1".1562 As highlighted above, in accordance with Article 1.1, Members are required to give

1557 Panel Report, paras. 7.2027-7.2029. (fns omitted)
1558 Article 19 of the TRIPS Agreement is similar in content to Article 5(C)(1) of the Paris Convention
(1967), which states that, "[i]f, in any country, use of the registered mark is compulsory, the registration may
be cancelled only after a reasonable period, and then only if the person concerned does not justify his
inaction."
1559 Panel Report, para. 7.2016.
1560 We observe that the remaining sections of Part II of the TRIPS Agreement, which address the other
categories of intellectual property, do not include a provision that is equivalent to Article 20. This may be due
to the fact that only trademarks can be the subject of "special requirements" like "use with another trademark"
or "use in a special form".
WT/DS435/AB/R • WT/DS441/AB/R

effect to Article 16.1 by ensuring that, in the Members' domestic legal regimes, the owner of a
registered trademark can exercise its "exclusive right to prevent" the infringement of its trademark
by unauthorized third parties. Article 20, for its part, imposes a positive obligation on Members to
refrain from unjustifiably encumbering, by special requirements, "the use of a trademark in the
course of trade".
6.610. Furthermore, it is significant that unlike Article 171563, Article 20 is not identified as an
"exception" to the "rights conferred" on a trademark owner. Rather, Article 20 imposes a positive
obligation limiting the regulatory autonomy that Members otherwise enjoy. As noted above,
Article 20 imposes an obligation on Members to refrain from unjustifiably encumbering, by special
requirements, "the use of a trademark in the course of trade". Significantly, Article 20 does not state
that "the use of a trademark in the course of t rade" is a right conferred on a trademark owner.
Instead, this provision regulates the imposition of special requirements when a trademark owner is
using its trademark in the course of trade. In the factual scenario where a trademark is being used
in the course of trade, Article 20 protects such use from being unjustifiably encumbered by special
requirements. Moreover, the words "unjustifiably encumbered" in Article 20 suggest that justifiable
encumbrance by special requirements is compatible with that provision. Leaving aside the question
of the standard against which an adjudicator should test whether an encumbrance is
justifiable – which is at issue in these appellate proceedings 1564 – the fact that Members should
refrain from unjustifiable encumbrances does not suggest that Article 20 confers a right to use a
trademark when special requirements are not involved. On the contrary, the provision allows,
inversely, Members to justifiably encumber, by special requirements, the use of a trademark in the
course of trade. Moreover, the second sentence of Article 20 "expressly provide[s] for conditions
under which use can be encumbered" 1565 by indicating that the obligation outlined in the
first sentence of Article 20 does "not preclude a requirement prescribing the use of the trademark"
alongside another trademark. These reasons undermine Honduras' argument that "the 'exclusive
rights' conferred by Article 16.1 are conferred against the background of a presumption of
unencumbered use."1566
6.611. With respect to Article 17, we take note of Honduras' assertion that the Panel arrived at its
conclusion that "a Member may deny the 'rights conferred' on trademark owners by Article 16 …
without even examining whether such a derogation from the minimum rights of the mark owner can
be justified under Article 17 of the TRIPS Agreement."1567 Honduras argues that whether the
"deliberate weakening of the 'rights conferred' reduces the level of protection below the minimum
guaranteed by Article 16"1568 could be justified as a limited exception under Article 17 was a relevant
question that the Panel failed to engage with owing to "its isolated reading of Article 16.1".1569
6.612. Article 17 of the TRIPS Agreement identifies limited exceptions to the "rights conferred".1570
Given the situation of Article 17 in Section 2 of Part II of the TRIPS Agreement, which addresses
trademarks, these "rights conferred" may be understood as being a reference to the rights
articulated in Article 16, as this provision bears the heading "Rights Conferred". The "exclusive right
to prevent" infringement of a trademark by unauthorized third parties in Article 16.1 is the only
"right conferred" on trademark owners that is at issue in these appellate proceedings. Furthermore,
the status of Article 17 as a limited exception to the right conferred under Article 16.1 implies that
the need for a WTO Member to rely on Article 17 to defend its measure would be triggered only if
the Member failed to meet its obligation to give effect to Article 16.1 – by failing to ensure that, in
its domestic legal regime, the owner of a registered trademark can exercise its exclusive right to
prevent the infringement of its trademark by unauthorized third parties.

1563 Article 17 provides that "Members may provide limited exceptions to the rights conferred by a
trademark, such as fair use of descriptive terms, provided that such exceptions take account of the legitimate
interests of the owner of the trademark and of third parties."
1564 See section 6.3.2 below.
1565 Panel Report, para. 7.2029.
1570 Article 17 provides that "Members may provide limited exceptions to the rights conferred by a
trademark, such as fair use of descriptive terms, provided that such exceptions take account of the legitimate
interests of the owner of the trademark and of third parties."
WT/DS435/AB/R • WT/DS441/AB/R

6.613. As Honduras did not succeed in its claim before the Panel that Aust ralia had breached its
obligation under Article 16.1, we agree with the Panel that "the question … of whether the[]
[TPP measures] are permissible as 'limited exceptions' under Article 17 d[id] not arise." 1571
Accordingly, we see no merit in Honduras' assertion that the Panel erred by arriving at its conclusion
that "a Member may deny the 'rights conferred' on trademark owners by Article 16 … without even
examining whether such a derogation from the minimum rights of the mark owner can be justified
under Article 17 of the TRIPS Agreement."1572 Honduras' assertion warrants no further scrutiny.
6.614. For all of these reasons, we conclude that the Panel did not err in making the following
findings:
7.1978. In light of the ordinary meaning of the text and consistently with prior rulings,
we agree with the parties that Article 16.1 does not establish a trademark owner's right
to use its registered trademark. Rather, Article 16.1 only provides for a registered
trademark owner's right to prevent certain activities by unauthorized third parties under
the conditions set out in the first sentence of Article 16.1.
7.1980. … [I]n order to show that the TPP measures violate Australia's obligation under
Article 16.1, the complainants would have to demonstrate that, under Australia's
domestic law, the trademark owner does not have the right to prevent third -party
activities that meet the conditions set out in that provision.1573
6.615. We recall that the Panel considered that an assessment of the "likelihood of confusion" with
respect to a given trademark in a given situation was a factual assessment that would involve a
consideration of the specific circumstances at issue, including the manner in which the potential for
confusion arises in the specific market at issue.1574 The Panel considered that it would need to make
a determination with respect to this factual allegation only if it found that, from an interpretative
standpoint, reducing the instances in which a trademark owner would be able to prevent the
unauthorized use of similar or iden tical trademarks in the market, because such use is no longer
likely to cause a likelihood of confusion, "leads to a violation of Article 16.1".1575
6.616. We recall our conclusion, in paragraph 6.602. above, that the Panel did not err in finding
that "the possibility of a reduced occurrence of a 'likelihood of confusion' in the market does not, in
itself, constitute a violation of Article 16.1, because Members' compliance with the obligation to
provide the right to prevent trademark infringements under Article 16.1 is independent of whether
such infringements actually occur in the market." 1576 Consequently, we agree with the Panel that
there was "no need to examine further the complainants' factual allegation that the TPP measures'
prohibition on the use of certain tobacco -related trademarks will in fact reduce the distinctiveness
of such trademarks, and lead to a situation where a 'likelihood of confusion' with res pect to these
trademarks is less likely to arise in the market".1577
6.617. In this regard, we take note of Honduras' claim that the Panel erred in its application of the
law to the facts by allegedly failing to examine whether the TPP measures reduce the distinctiveness
of trademarks and thus reduce the scope of protection of the trademarks, such that the level of
protection falls below the minimum level guaranteed under Article 16.1578 Honduras adds that "[b]y
failing to apply the law to the facts, the Panel errs in l aw and, as a result of this false exercise of
judicial economy, it also fails to comply with its obligation under Article 11 of the DSU."1579
6.618. Having found no error in the Panel's interpretation, we agree with the Panel that there was
"no need to examine further the complainants' factual allegation that the TPP measures' prohibition
on the use of certain tobacco -related trademarks will in fact reduce the distinctiveness of such

1573 Panel Report, paras. 7.1978 and 7.1980. (fns omitted)
1574 Panel Report, para. 7.1992.
1575 Panel Report, para. 7.1993.
1576 Panel Report, para. 7.2031.
1577 Panel Report, para. 7.2032.
1578 Honduras' appellant's submission, paras. 443-444 (referring to Panel Report, para. 7.2032).
WT/DS435/AB/R • WT/DS441/AB/R

trademarks, and lead to a situation where a 'likelihood of confusion' with respect to these trademarks
is less likely to arise in the market" .1580 Honduras' claims that the Panel erred in its application of
Article 16.1 and failed to make an objective assessment of the matter as required by Article 11 of
the DSU are conditioned on our revers al of the Panel's interpretation. The condition on which
Honduras' appeal is predicated, i.e. the reversal of the Panel's interpretation, has not been satisfied.
Consequently, we need not address Honduras' remaining claims of error.
6.619. In light of the foregoing, we uphold the Panel's conclusion that "the complainants have not
demonstrated that the TPP measures are inconsistent with Australia's obligations under Article 16.1
of the TRIPS Agreement."1581
6.3.2 Article 20 of the TRIPS Agreement
6.3.2.1 Introduction
6.620. Honduras chall enges the Panel's analysis under Article 20 of the TRIPS Agreement on
two grounds. First, Honduras claims that the Panel erred in its interpretation of the term
"unjustifiably" in Article 20.1582 Second, assuming that the Panel's interpretation of Article 20 was
correct, Honduras submits an alternative claim that the Panel erred in applying the legal standard
that it had developed to the facts of the present dispute. 1583 In this respect, Honduras argues that
the Panel erred by: (i) focusing on the economic value of trademarks and in its assessment of the
allegedly mitigating factors1584; (ii) finding that the TPP measures contribute to the reduction in the
use of tobacco1585; (iii) rejecting the alternative less trademark-encumbering measures proposed by
the complainants1586; and (iv) attributing undue legal weight to the FCTC guidelines.1587
6.621. The Dominican Republic argues that, by failing to address the Dominican Republic's claim
regarding individual cigarette sticks, the Panel acted inconsistently with Articles 7.1 and 11 of
the DSU.1588 Moreover, the Dominican Republic submits that, to the extent that we reverse the
Panel's findings under Article 2.2 of the TBT Agreement, upon which the Panel relied in its analysis
under Article 20, we should also reverse the Panel's findings under Article 20 of the
TRIPS Agreement.1589
6.622. Australia responds that the Panel properly rejected Honduras' interpretation of the term
"unjustifiably" because such interpretation "finds no support in the ordinary meaning of this term,
properly interpreted in its context and in light of the object and purpose of the TRIPS Agreement".1590
Australia further observes that Honduras' interpretation of the term "unjustifiably" "is based on an
unfounded attempt to read a 'right of use'" into Part II, Section 2, of the TRIPS Agreement and to

1580 Panel Report, para. 7.2032.
1581 Panel Report (DS435), paras. 7.2051 and 8.1.d; Panel Report (DS441), paras. 7.2051 and 8.1.b.iii.
1582 Honduras' appellant's submission, paras. 102-259. Honduras does not challenge other elements of
the Panel's interpretation of Article 20 of the TRIPS Agreement.
1584 Honduras' appellant's submission, paras. 264-276.
1585 Honduras' appellant's submission, paras. 280-284.
1586 Honduras' appellant's submission, paras. 285-298.
1587 Honduras' appellant's submission, paras. 299-312.
1588 Dominican Republic's appellant's submission, paras. 1543-1545. We recall that, in its Notice of
Appeal, the Dominican Republic stated that it "incorporate[d] by reference into this appeal the claims on appeal
made by Honduras". (Dominican Republic's Notice of Appeal, para. 16) In addition, in the "Introduction"
section of its appellant's submission, in the context of summarizing its claim of error under Article 20 of the
TRIPS Agreement, the Dominican Republic stated that "it incorporate[d] by reference into this appeal the
claims on appeal, and arguments, made by Honduras." (Dominican Republic's appellant submission, para. 30)
In response to questioning at the first hearing, the Dominican Republic confirmed that it incorporated all of
Honduras' claims and arguments on appeal. Accordingly, we understand that any reference to Honduras' claims
and arguments under Article 20 of the TRIPS Agreement also includes a reference to the claims and arguments
of the Dominican Republic.
1589 Dominican Republic's appellant's submission, paras. 1546-1548. Specifically, the
Dominican Republic refers to the Panel's findings that: (i) the TPP measures made a contribution to Australia's
objective and (ii) none of the Dominican Republic's proposed alternatives would be apt to make an equivalent
contribution to Australia's objective. (Ibid., para. 1547)
1590 Australia's appellee's submission, para. 232.
WT/DS435/AB/R • WT/DS441/AB/R

interpret Article 20 "as a 'limited' exception" to that right. 1591 Australia further disagrees with
Honduras' claim that the Panel erred in applying the legal standard to the facts.1592 With respect to
the Dominican Republic's claim under Articles 7.1 and 11 of the DSU, Australia submits that it is
clear from the Panel Report that the Panel examined the Dominican Republic's claim under Article 20
of the TRIPS Agreement concerning cigarette sticks.1593
6.3.2.2 Summary of the Panel's findings
6.623. In addressing the complainants' claims under Article 20 of the TRIPS Agreement, the Panel
examined whether: (i) the TPP measures involve "special requirements"; (ii) the special
requirements imposed by the TPP measures "encumber" "[t]he use of a trademark in the course of
trade"; and (iii) the TPP measures encumber the use of trademarks in the course of trade
"unjustifiably".1594 In findings that are not appealed, the Panel concluded that "the trademark
requirements of the TPP measures amount to special requireme nts that encumber 'the use of a
trademark in the course of trade'."1595
6.624. The Panel started its analysis of whether the special requirements at issue "unjustifiably"
encumber the use of a trademark in the course of trade by elucidating the ordinary meaning of the
term "unjustifiably".1596 Having reviewed a number of definitions, the Panel concluded that the term
"unjustifiably" "connotes a situation where the use of a trademark is encumbered by special
requirements in a manner that lacks a justification or reason that is sufficient to support the resulting
encumbrance".1597 To the Panel, this indicated that "there may be circumstances in which good
reasons exist that sufficiently support the application of encumbrances on the use of a trademark in
a reasonable manner."1598 To determine what reasons may form the basis for "justifiability" of an
encumbrance, the Panel turned to the context provided by other provisions of the TRIPS Agreement.
6.625. The Panel examined, in particular, the contextual significance of the first recital of the
preamble to the TRIPS Agreement1599, as well as Articles 7 ("Objectives")1600 and 8 ("Principles") of
the TRIPS Agreement. In particular, the Panel considered that Article 8 offers "useful contextual
guidance for the interpretation of the term 'unjustifiably' in Article 20".1601 The Panel noted that "the
principles reflected in Article 8.1 express the intention of the drafters of the TRIPS Agreement to
preserve the ability for WTO Members to pursue certain legitimate societal interests, at the same
time as i t confirms their recognition that certain measures adopted by WTO Members for such
purposes may have an impact on IP rights, and requires that such measures be 'consistent with the
provisions of the [TRIPS] Agreement'."1602 The Panel was of the view that, whi le the objectives
expressly identified in Article 8.11603 do not necessarily exhaust the scope of what may constitute a

1591 Australia's appellee's submission, para. 232.
1592 Australia's appellee's submission, paras. 244-254.
1593 Australia's appellee's submission, para. 256.
1594 Panel Report, para. 7.2156.
1595 Panel Report, para. 7.2292.
1596 Panel Report, para. 7.2392.
1597 Panel Report, para. 7.2395.
1598 Panel Report, para. 7.2396.
1599 As the Panel noted, the first recital of the preamble to the TRIPS Agreement "expresses a key
objective of the TRIPS Agreement, namely to 'reduce distortions and impediments to international trade' and
takes into account the need, on the one hand, 'to promote effective and adequate protection of intellectual
property rights' and, on the other, 'to ensure that measures and procedures to enforce intellectual property
rights do not themselves become barriers to legitimate trade'". (Panel Report, para. 7.2398)
1600 Article 7 of the TRIPS Agreement provides: "The protection and enforcement of intellectual property
rights should contribute to the promotion of technological innovation and to the transfer and dissemination of
technology, to the mutual advantage of producers and users of technological knowledge and in a manner
conducive to social and economic welfare, and to a balance of rights and obligations."
1601 Panel Report, para. 7.2404.
1602 Panel Report, para. 7.2404.
1603 Article 8.1 of the TRIPS Agreement provides: "Members may, in formulating or amending their laws
and regulations, adopt measures necessary to protect public health and nutrition, and to promote the public
interest in sectors of vital importance to their socio-economic and technological development, provided that
such measures are consistent with the provisions of this Agreement."
WT/DS435/AB/R • WT/DS441/AB/R

basis for "justifiability" of encumbrances under Article 20, public health is "unquestionably" among
such interests.1604
6.626. The Panel then observed that paragraph 5(a) of the Declaration on the TRIPS Agreement
and Public Health (Doha Declaration) "is formulated in general terms, inviting the interpreter of the
TRIPS Agreement to read 'each provision of the TRIPS Agreement' in light of the object and purpose
of the Agreement, as expressed in particular in its objectives and principles".1605 In the Panel's view,
this provision "may … be considered to constitute a 'subsequent agreement' of WTO Members within
the meaning of Article 31(3)(a) of the Vi enna Convention".1606 According to the Panel, "[t]his
agreement, rather than reflecting a particular interpretation of a specific provision of the
TRIPS Agreement, confirms the manner in which 'each provision' of the Agreement must be
interpreted, and thus 'b ears specifically' on the interpretation of each provision of the
TRIPS Agreement."1607 According to the Panel, the fact that paragraph 5(a) of the Doha Declaration
is consistent "with the applicable rules of interpretation, which require a treaty interpreter to take
account of the context and object and purpose of the treaty being interpreted" confirmed the Panel's
view that Articles 7 and 8 of the TRIPS Agreement provide important context for the interpretation
of Article 20.1608
6.627. The Panel noted that, while the term "necessary" is used in a number of other provisions of
the TRIPS Agreement1609, the degree of connection between the societal interest and the measure
under appraisal under Article 20 is expressed through the term "unjustifiably". 1610 The Panel thus
did not consider that the term "unjustifiably" in Article 20 should be viewed as synonymous with the
term "unnecessarily".1611 The Panel also did not consider that "the term 'unjustifiably' as used in
Article 20 should be assumed to have exactly the same meaning as the term 'unjustifiable' as used
in the chapeau of Article XX of the GATT 1994."1612 The Panel considered that, "in the context of
Article 20 of the TRIPS Agreement, the term 'unjustifiably' should [not] be understood to require
only the existence of some ra tional connection between encumbrances imposed on the use of a
trademark and the reason for which they are imposed."1613 Rather, in the Panel's view, due account
must also be taken of the action that is to be justified, i.e. the encumbrance resulting from special
requirements.1614 The Panel further noted that the context provided by Article 17 of the
TRIPS Agreement, titled "Exceptions", confirms that, in assessing whether encumbrances are
unjustifiable, account must be taken of the legitimate interest of the tra demark owner in using the
trademark and the extent to which the relevant trademarks are prevented from performing their
function in the marketplace.1615
6.628. The Panel thus concluded that a determination of whether a trademark is being
"unjustifiably" encumbered involves a consideration of the following factors:

1604 Panel Report, para. 7.2406.
1605 Panel Report, para. 7.2408. Paragraph 5(a) of the Doha Declaration provides: "In applying the
customary rules of interpretation of public international law, each provision of the TRIPS Agreement shall be
read in the light of the object and purpose of the Agreement as expressed, in particular, in its objectives and
principles."
1606 Panel Report, para. 7.2409. The Panel recalled that the Doha Declaration was adopted by consensus
at the Fourth Ministerial Conference of the WTO. (Ibid., para. 7.2410)
1608 Panel Report, para. 7.2411.
1609 In particular, Articles 3.2, 8.1, 27.2, 39.3, 43.2, 50.5, and 73(b), as well as Article 11(3) of the
Paris Convention (1967) and Article 17 of the Berne Convention. The Panel observed that the term "necessary"
is also used in Article 31bis of the TRIPS Agreement, as well as in paragraphs 1(a) and 2(b)(i) of the Annex to
the TRIPS Agreement. (Panel Report, para. 7.2419)
1610 Panel Report, para. 7.2418-7.2419.
1611 Panel Report, para. 7.2419.
1612 Panel Report, para. 7.2420.
1614 Panel Report, para. 7.2423.
1615 Panel Report, para. 7.2427. The Panel recalled the statement of the panel in EC – Trademarks and
Geographical Indications (Australia) that "[e]very trademark owner has a legitimate interest in preserving the
distinctiveness, or capacity to distinguish, of its trademark so that it can perform that function. This includes its
interest in using its own trademark in connection with the relevant goods and services of its own and
authorized undertakings." (Ibid. (referring to Panel Report, EC – Trademarks and Geographical Indications
(Australia), para. 7.664))
WT/DS435/AB/R • WT/DS441/AB/R

a. the nature and extent of the encumbrance resulting from the special requirements, bearing
in mind the legitimate interest of the trademark owner in using its trademark in the course
of trade and thereby allowing the trademark to fulfil its intended function;
b. the reasons for which the special requirements are applied, including any societal interests
they are intended to safeguard; and
c. whether these reasons provide sufficient support for the resulting encumbrance.1616
6.629. The Panel further rejected the complainants' argument that the TPP measures are per se
inconsistent with Article 20 because they do not provide for an individual assessment of trademarks
and their specific features. The Panel was of the view that "[t]he extent to which an assessment of
the unjustifiability of specific encumbrances will require an assessment on the basis of individual
trademarks and their specific features will depend on the circumstances of the case." 1617 In the
Panel's view, "when a Member applies such requirements to a class of trademarks or to some specific
types of situations rather than to the specific features of particular trademarks, an assessment of
unjustifiability of such requirements may need to focus on their overall rationale as it relates to the
reason for adopting them."1618
6.630. The Panel then turned to examine the application of the legal interpretation it had developed
under Article 20 to the measures at issue. With respect to the nature and extent of the encumbrance
resulting from the TPP measures, the Panel observed, in particular, that the TPP measures "prevent
any non-word components of the relevant trademarks, such as fonts, size, colours and placement
of the trademark on the product, as well as all other distinctive visual content, from contributing to
distinguishing the products in the marketplace".1619 The Panel noted that "[t]he complainants have
not sought to demonstrate that consumers have in fact been unable to distinguish the commercial
source of tobacco products of one undertaking from those of other undertakings" as a result of the
TPP measures.1620 The Panel further observed that, while the TPP measures prevent a trademark
owner from extracting economic value from the design features of its trademark, the implications of
such prohibitions are "partly mitigated" by the us e of word trademarks. 1621 With regard to price
competition, the Panel concluded that the evidence before it did not support the complainants'
argument that the TPP measures would lead to an increase in price competition, a fall in prices, and,
consequently, a decrease in the sales value of tobacco products and the total value of imports. 1622
With regard to downward substitution, the Panel was not persuaded that the decrease in
consumption and imports of premium tobacco products was exclusively the result of downt rading
(i.e. a transfer of consumption/imports from premium to non -premium products) caused by the
TPP measures. The Panel took this view because: (i) due to the overall decrease in consumption of
tobacco products, at least some part of the decrease in con sumption of premium products was not
substituted with consumption of non -premium products; and (ii) it appeared to the Panel that the
higher- and lower-priced segments of the market have evolved on the basis of distinct trends even
before the implementation of the TPP measures.1623
6.631. As regards the reasons for the adoption of the TPP measures, for purposes of Article 20, the
Panel found that "the reason for which Australia applies the trademark requirements, as an integral

1616 Panel Report, para. 7.2430.
1617 Panel Report, para. 7.2505.
1618 Panel Report, para. 7.2505.
1619 Panel Report, para. 7.2558.
1621 Panel Report, paras. 7.2569-7.2570.
1622 Panel Report, para. 7.2572. The Panel noted, however, that, "[w]hile the complainants have not
demonstrated that the TPP measures have reduced the value of imported tobacco products on the Australian
market, it cannot be excluded that this may happen in the future, either as a result of the effect of the
measure on consumption only or as a result of this effect combined with a fall in prices." (Ibid. (fn omitted))
1623 Panel Report, para. 7.2573. We recall that, in its Article 20 analysis, the Panel did not refer to its
finding in its assessment of the trade-restrictiveness of the TPP measures, in the context of applying Article 2.2
of the TBT Agreement, that the facts did not support the Dominican Republic's argument that downtrading led
to a reduction in the value of trade, because the evidence showed that prices did not remain constant or
WT/DS435/AB/R • WT/DS441/AB/R

part of the TPP measures, is to improve public health by reducing the use of, and exposure to,
tobacco products."1624
6.632. The Panel then turned to consider whether the reasons for trademark requirements provide
sufficient support for the resulting encumbrances. The Panel noted that the fact that the s pecial
requirements under the TPP measures "are capable of contributing, and do in fact contribute, to
Australia's objective of improving public health by reducing the use of, and exposure to, tobacco
products[] suggests that the reasons for which these sp ecial requirements are applied provide
sufficient support for the application of the resulting encumbrances on the use of trademarks".1625
6.633. Thereafter, the Panel addressed the complainants' argument that the legal standard under
Article 20 requires assessing whether an alternative less trademark -encumbering measure that
would make an equivalent contribution could have been deployed.1626 The Panel considered that "the
term 'unjustifiably' in Article 20 provides a degree of latitude to a Member to choose an intervention
to address a policy objective, which may have some impact on the use of trademarks in the course
of trade, as long as the reasons sufficiently support any resulting encumbrance." 1627 In the Panel's
view, however, this did not mean that "the availability of an alternative measure that involves a
lesser or no encumbrance on the use of trademarks could not inform an assessment of whether the
reasons for which the special requirements are applied sufficiently support the resulting
encumbrance."1628 The Panel did "not exclude the possibility that the availability of an alternative
measure could, in the circumstances of a particular case, call into question the reasons a respondent
would have given for the adoption of a measure challenged under Article 20".1629 The P anel
considered that this could be possible in a case where "a readily available alternative would lead to
at least equivalent outcomes in terms of the policy objective of the challenged measure, thus calling
into question whether the stated reasons suffic iently support any encumbrances on the use of
trademarks resulting from the measure." 1630 In its examination of the available alternatives, the
Panel referred to its previous analysis under Article 2.2 of the TBT Agreement.1631
6.634. Overall, the Panel was "not persua ded that the complainants have demonstrated that
Australia has acted beyond the bounds of the latitude available to it under Article 20 to choose an
appropriate policy intervention to address its public health concerns". 1632 The Panel thus concluded
that the complainants have not demonstrated that the TPP measures are inconsistent with Australia's
obligations under Article 20 of the TRIPS Agreement.1633
6.3.2.3 Whether the Panel erred in its interpretation of the term "unjustifiably" in
Article 20 of the TRIPS Agreement
6.635. We recall that in setting out, its interpretation of the term "unjustifiably" in Article 20, the
Panel stated that:
[A] determination of whether the use of a trademark in the course of trade is being
"unjustifiably" encum bered by special requirements should involve a consideration of the
following factors:
a. the nature and extent of the encumbrance resulting from the special requirements, bearing
in mind the legitimate interest of the trademark owner in using its trademark in the course
of trade and thereby allowing the trademark to fulfil its intended function;

1624 Panel Report, para. 7.2586.
1625 Panel Report, para. 7.2592.
1626 Panel Report, para. 7.2597.
1627 Panel Report, para. 7.2598.
1628 Panel Report, para. 7.2598.
1629 Panel Report, para. 7.2598.
1630 Panel Report, para. 7.2598.
1631 Panel Report, para. 7.2600.
1632 Panel Report, para. 7.2604.
1633 Panel Report, paras. 7.2605-7.2606.
WT/DS435/AB/R • WT/DS441/AB/R

b. the reasons for which the special requirements are applied, including any societal interests
they are intended to safeguard; and
c. whether these reasons provide sufficient support for the resulting encumbrance.1634
6.636. Honduras challenges the Panel's interpretation of the term "unjustifiably" in Article 20 on
two main grounds.1635 First, Honduras claims that the Panel erred in setting out its understanding,
in paragraph 7.2430 of the Panel Report, of the factors that should be considered in a determination
of whether the use of a trademark in the course of trade is being unjustifiably encumbered by special
requirements.1636 Second, assuming that the Panel's interpretation is correct, Honduras submits an
alternative claim that the Panel erred by not considering it necessary for a Member to adopt less
trademark-encumbering special requirements. 1637 We address Honduras' arguments pertaining to
these two challenges in turn.
6.637. As its first g round of appeal, Honduras claims that the Panel "failed to read the term
'unjustifiably' in its proper trademark context and in the light of the object and purpose of the
TRIPS Agreement".1638 Honduras observes that the Panel read the term "unjustifiably" as referring
to an absence of "good reasons sufficient to support the measure".1639 In Honduras' view, by doing
so, "the Panel introduced a broad policy exception in Article 20 which is entirely decoupled from
trademark-specific concerns and which permits even the most far -reaching encumbrances
irrespective of the concerns allegedly raised by the specific trademarks affected by the measure."1640
For Honduras, "[t]he term 'unjustifiably' in Article 20 provides for a qualified exception to the general
rule that no special requirements shall be encumbering the use of a mark in the course of trade."1641
In Honduras' view, "the concerns that can permissibly trigger an encumbrance … are circumscribed
to those concerns that are directly linked to the trademark, such as, among others, its potentially
misleading nature." 1642 In this connection, Honduras recalls that the non -exhaustive list of
trademark-specific concerns that are contained in Article 6quinquies B of t he
Paris Convention(1967), as referred to in Article 15.2 of the TRIPS Agreement, "form[s] the basis
for a refusal to grant protection through registration, remove such protection or … prevent use of
the trademark in the course of trade".1643
6.638. Australia responds that "the ordinary meaning of the term 'unjustifiably' suggests that an
encumbrance upon the use of trademarks in the course of trade is 'unjustifiable' if there is no rational
connection between the measure and its objective, such that the encumbrance is 'able to be shown
to be just, reasonable, or correct' and 'within the limits of reason'."1644 Australia submits that, while
the complainants have sought to interpret the term "unjustifiably" as being equivalent to the
standard of necessity, the text of Article 20 does not use the term "unnecessarily", which connotes
a more stringent nexus between a measure and its objective.1645 Australia considers that "the Panel
interpreted and applied the term 'unjustifiably' in a manner that places this term much closer to a
standard of 'necessity' than Australia believes is warranted under a proper interpretation." 1646
Australia further observes that Honduras relied on contextual arguments to articulate the premise
that Article 20 articulates a prohibition/exception relations hip.1647 According to Australia, "[t]he

1634 Panel Report, para. 7.2430.
1642 Honduras' appellant's submission, para. 52. As examples of such misleading trademarks, Honduras
refers to a colourful logo that suggests that a dangerous chemical is an innocent household detergent or
trademarks that refer to tobacco products as "light" or "mild". (Ibid., para. 109)
1644 Australia's appellee's submission, para. 162 (quoting Australia's first written submission to the
Panel, para. 369; response to Panel question No. 107).
1645 Australia's appellee's submission, paras. 162 and 164.
1646 Australia's appellee's submission, para. 177. Australia notes, however, that, while it has
reservations with the Panel's interpretation of Article 20, the Panel's finding that the TPP measures are not
"unjustifiable" under Article 20 is correct, which is why Australia decided not to appeal the Panel's
interpretation and application of Article 20. (Ibid., paras. 178-179)
1647 Australia's appellee's submission, para. 195.
WT/DS435/AB/R • WT/DS441/AB/R

notion that the 'use' of a trademark is a 'protected right' under Part II of the TRIPS Agreement
suffuses Honduras' submission."1648 In Australia's view, contrary to what Honduras implies, the Panel
did not find that Artic le 20 confers a right of use upon the owners of registered trademarks. 1649
Australia submits that, even if Honduras is correct in its contention that the term "special
requirements" refers only to the requirements related to a trademark, it does not follow fr om this
that any encumbrance resulting from such special requirements will be justifiable if it is limited in
its effects and "based on the specific nature of the trademark".1650
6.639. Article 20 of the TRIPS Agreement provides:
Other Requirements
The use of a trademark in the course of trade shall not be unjustifiably encumbered by
special requirements, such as use with another trademark, use in a special form or use
in a manner detrimental to its capability to distinguish the goods or services of one
undertaking from those of other undertakings. This will not preclude a requirement
prescribing the use of the trademark identifying the undertaking producing the goods
or services along with, but without linking it to, the trademark distinguishing the specific
goods or services in question of that undertaking.
6.640. Article 20 contains two sentences that regulate the imposition of "special requirements" on
the "use" of trademarks. The first sentence of Article 20 prohibits Members from imposing "special
requirements" that "unjustifiably encumber[]" the use of a trademark in the course of trade. The
first sentence also provides an illustrative list of special requirements, such as "use with another
trademark, use in a special form or use in a manner detrim ental to its capability to distinguish the
goods or services of one undertaking from those of other undertakings". The second sentence of
Article 20 qualifies the obligation enshrined in the first sentence by identifying the type of "special
requirements" that a Member may impose, namely, "prescribing the use of the trademark identifying
the undertaking producing the goods or services along with, but without linking it to, the trademark
distinguishing the specific goods or services in question of that undertaking".
6.641. Article 20 does not prohibit all measures that impose encumbrances on the use of a
trademark in the course of trade. Rather, it proscribes only those special requirements that
"unjustifiably encumber" the use of a trademark in the course of trade. This implies that there may
be circumstances in which an "encumbrance" on the use of a trademark will be "justifiable". 1651
Accordingly, we do not share Honduras' view that Article 20 imposes a "general prohibition … on
governmental encumbrances on use" .1652 In this connection, we note that Article 19.1 of the
TRIPS Agreement, which concerns the requirement of use, provides that "[c]ircumstances arising
independently of the will of the owner of the trademark which constitute an obstacle to the use of
the tradema rk, such as import restrictions on or other government requirements for goods or
services protected by the trademark, shall be recognized as valid reasons for non-use." Article 19.1
thus contemplates that a Member may impose obstacles such as restrictions on goods or services
protected by a trademark, which would result in the non-use of the trademark by its owner.
6.642. We take note of Australia's argument that "[t]he notion that the 'use' of a trademark is a
'protected right' under Part II of the TRIPS Agreement suffuses Honduras' submission." 1653 In
Australia's view, contrary to what Honduras implies, the Panel did not find that Article 20 confers a
right of use upon the owners of registered trademarks. 1654 We share Australia's view that many of
Honduras' arguments o n appeal appear to be premised on the idea that Article 20 of the
TRIPS Agreement somehow reflects the trademark owner's right to use its trademark in the course
of trade. Indeed, in its appellant's submission, as well as in answering our questions at the first
hearing, Honduras suggested that there is a presumption of an unencumbered use of, or even a

1648 Australia's appellee's submission, para. 204.
1649 Australia's appellee's submission, para. 211.
1650 Australia's appellee's submission, para. 200. (fn omitted)
1651 The second sentence of Article 20 expressly provides for conditions under which use can be
encumbered by indicating that the obligation outlined in the first sentence of Article 20 does "not preclude a
requirement prescribing the use of the trademark" alongside another trademark.
1653 Australia's appellee's submission, para. 204.
1654 Australia's appellee's submission, para. 211.
WT/DS435/AB/R • WT/DS441/AB/R

right to use, a trademark under Article 20 of the TRIPS Agreement.1655 In section 6.3.1 above, we
have explained that Article 16.1 of the TRIPS Agreement, which addresses the rights conferred on
an owner of a trademark, does not confer upon the owner a positive right to use its trademark, or a
right to protect the distinctiveness of that trademark through use. Rather, Article 16.1 "provides for
a negative right to prevent all third parties from using signs in certain circumstances".1656 Likewise,
nothing in the text of Article 20 indicates that "the use of a trademark in the course of trade" is a
positive right conferred on a trademark owner. Rather, the opening clause of Article 20 ("[t]he use
of a trademark in the course of trade…") suggests that this provision regulates the impositi on of
special requirements in the factual scenario when there is a use of a trademark in the course of
trade. The fact that Article 20 presupposes that the use of a trademark may be encumbered
"justifiably" further indicates that there is no positive right of use of a trademark by its owner, nor
is there an obligation on Members to protect such a positive right.
6.643. Unlike Article 17 of the TRIPS Agreement, Article 20 is not identified as an "exception" to
the "rights conferred" on a trademark owner under the TRIPS Agreement. Rather, this provision
imposes a positive obligation on Members to refrain from unjustifiably encumbering the use of a
trademark in the course of trade by encumbrances resulting from special requirements. The
structure of the first sentence of Article 20 suggests that it establishes a single obligation, rather
than an obligation and exception thereto.1657 Accordingly, it is the complainant's burden to establish
a prima facie case of inconsistency with Article 20.1658 The text of Article 20 indicates that, in order
to establish an inconsistency with this provision, the following elements must be established: (i) the
existence of "special requirements"; (ii) such requirements must "encumber" "[t]he use of a
trademark in the course of trade"; and (iii ) they must do so "unjustifiably". Once the complainant
has made its prima facie case of inconsistency under Article 20, it is for the respondent to rebut the
complainant's case.
6.644. Honduras' appeal calls upon us to interpret the term "unjustifiably" used in the first sentence
of Article 20. In Article 20, the adverb "unjustifiably" qualifies the verb "encumbered".1659 What shall
not be "unjustifiably encumbered" is "[t]he use of a trademark in the course of trade".1660 The term
"unjustifiably" is also linked to the "special requirements". 1661 Thus, what should not be
"unjustifiabl[e]" is the encumbrance on the use of a trademark in the course of trade that results
from special requirements.
6.645. As regards the ordinary meaning, the term "unjustifiably" is an adverb that derives from the
adjective "unjustifiable", which has been defined as "not justifiable" or "indefensible". 1662 Other
definitions describe the term "unjustifiable" as "not able to be shown to be right or reasonable" 1663
or "unacceptable and wrong because there is no good or fair reason for it".1664 The antonym of the

1655 In particular, in its appellant's submission, Honduras stated that, "[b]y rejecting Australia's
arguments and findings that Article 20 covers prohibitions on use, the Panel is rightly confirming that
trademark 'use' is protected by the TRIPS Agreement." (Honduras' appellant's submission, para. 69) In
addition, Honduras observed that "[t]he term 'unjustifiably' in Article 20 provides for a qualified exception to
the general rule that no special requirements shall be encumbering the use of a mark in the course of trade."
(Ibid., para. 161)
1656 Panel Reports, EC – Trademarks and Geographical Indications (Australia), fn 564 to para. 7.611;
EC – Trademarks and Geographical Indications (US), fn 558 to para. 7.611. (emphasis added)
1657 The obligation under Article 20 is to not impose special requirements that "unjustifiably encumber"
the use of a trademark in the course of trade.
1658 See Appellate Body Report, US – Wool Shirts and Blouses, p. 14, DSR 1997:I, p. 335.
1659 The Panel provided its interpretation of the term "encumbered", which is not challenged on appeal,
in paragraphs 7.2234-7.2239 of the Panel Report.
1660 The Panel provided its interpretation of the what constitutes "use" of a trademark "in the course of
trade", which is not challenged on appeal, in paragraphs 7.2260-7.2264 and 7.2279-7-2286 of the
Panel Report.
1661 The Panel provided its interpretation of what constitutes "special requirements", which is not
challenged on appeal, in paragraphs 7.2221-7.2233 of the Panel Report.
1662 Shorter Oxford English Dictionary, 6th edn, L. Brown and A. Stevenson (eds.) (Oxford University
Press, 2007), Vol. 2, p. 3445.
1663 Oxford English Dictionary online, definition of "unjustifiable":
https://en.oxforddictionaries.com/definition/unjustifiable, accessed 24 February 2020.
1664 Cambridge Dictionary online, definition of "unjustifiable":
https://dictionary.cambridge.org/dictionary/english/unjustifiable, accessed 24 February 2020.
WT/DS435/AB/R • WT/DS441/AB/R

term "unjustifiable" is "justifiable", a word that denotes the existence of a "good reason" 1665 for
something or refers to something that is "able to be shown to be right or reasonable; defensible".1666
The vario us meanings attributed to the concept of justifiability thus indicate that it connotes
something that is fair and capable of being reasonably explained. By contrast, something is
"unjustifiable" when there is no fair reason for it and when it cannot be reasonably explained.1667
6.646. The term "unjustifiably" suggests the degree of rationalization that needs to be provided for
imposing encumbrances on the use of a trademark by special requirements under Article 20. By
contrast, several other provisions of the TRIPS Agreement refer to different permutations of the
concept of necessity. 1668 This indicates that a different meaning is sought to be reflected through
the use of the term "unjustifiably" as opposed to terms conveying the concept of necessity in the
sense of Article XX of the GATT 1994 or Article 2.2 of the TBT Agreement. We recall, in this respect,
that it is well established that different words in a treaty are generally intended to convey a different
meaning.1669 At the same time, the use of a similar term ("unjustifiable") in the provisions of other
covered agreements, such as the chapeau of Article XX of the GATT 1994, which refers to "arbitrary
or unjustifiable discrimination", does not imply that the meaning im parted to this term in other
contexts can be easily transplanted to the interpretation of Article 20 of the TRIPS Agreement.1670
6.647. In our view, the term "unjustifiably" in Article 20 of the TRIPS Agreement reflects the degree
of regulatory autonomy that Members enjoy in imposing encumbrances on the use of trademarks
through special requirements. The reference to the notion of justifiability rather than necessity in
Article 20 suggests that the degree of connection between the encumbrance on the use of a
trademark imposed and the objective pursued reflected through the term "unjustifiably" is lower
than it would have been had a term conveying the notion of "necessity" been used in this provision.
Accordingly, a consideration of whether the use of a trademark has n ot been "unjustifiably"
encumbered should not be equated with the necessity test within the meaning of Article XX of the
GATT 1994 or Article 2.2 of the TBT Agreement.
6.648. Honduras argues that only concerns that are directly linked to the trademark, such as it s
potentially misleading nature, can permissibly trigger an encumbrance on the trademark's use. 1671
According to Honduras, by failing to read the term "unjustifiably" in its proper trademark context,

1665 Cambridge Dictionary online, definition of "justifiable":
https://dictionary.cambridge.org/dictionary/english/justifiable, accessed 24 February 2020.
1666 Oxford English dictionary online, definition of "justifiable":
https://en.oxforddictionaries.com/definition/justifiable, accessed 24 February 2020.
1667 The French version of the TRIPS Agreement uses the term "de manière injustifiable", which likewise
connotes something that has been done in a way that cannot be justified, defended, or shown to be right or
reasonable. In a similar vein, the Spanish version of the TRIPS Agreement uses the adverb
"injustificablemente".
1668 For example, Article 41.2 of the TRIPS Agreement provides that procedures concerning the
enforcement of intellectual property rights "shall not be unnecessarily complicated or costly, or entail
unreasonable time-limits or unwarranted delays". The term "necessary" is used in Articles 3.2 ("exceptions are
necessary to secure compliance with laws and regulations"), 8.1 ("measures necessary to protect public health
and nutrition"), 27.2 ("inventions, the prevention within their territory of the commercial exploitation of which
is necessary to protect ordre public or morality"), 39.3 ("except where necessary to protect the public"),
43.2 ("a party to a proceeding voluntarily and without good reason refuses access to, or otherwise does not
provide necessary information"), 50.5 ("[t]he applicant may be required to supply other information necessary
for the identification of the goods"), and 73(b) ("[n]othing in this Agreement shall be construed … to prevent a
Member from taking any action which it considers necessary for the protection of its essential security
interests") of the TRIPS Agreement.
1669 Appellate Body Report, EC – Hormones, para. 164. In examining the operative terms of the different
paragraphs of Article XX of the GATT 1994 ("necessary", "relating to", "in pursuance of"), the Appellate Body
observed that "[i]t does not seem reasonable to suppose that the WTO Members intended to require, with
respect to each and every category, the same kind or degree of connection or relationship between the
measure under appraisal and the state interest or policy sought to be promoted or realized." (Appellate Body
Report, US – Gasoline, WT/DS2/AB/R, adopted 20 May 1996, DSR 1996:I, 3, pp. 17-18)
1670 The nature and purpose of the TRIPS Agreement is different from that of other covered agreements.
As noted in footnote 1502 above, the TRIPS Agreement is principally concerned with the creation and
protection of exclusive private rights, which may necessitate restricting commercial activity and requiring the
active intervention of Members to enforce these restrictions. By contrast, other covered agreements are
focused on the liberalization of international trade, effected through the progressive reduction, through mutual
agreement, of barriers to trade.
WT/DS435/AB/R • WT/DS441/AB/R

"the Panel introduced a broad policy exception in Article 20 which … opens the door potentially to
any policy considerations, and any type of encumbrances on trademarks."1672
6.649. In our view, reasons for the imposition of special requirements do not have to relate to the
trademark itself. Article 15.2 of the TRIPS Agreement and Article 6quinquies B of the
Paris Convention (1967), which Honduras refers to1673, set out trademark-specific concerns that may
serve as a basis for denying registration of a trademark or its invalidation, which include, inter alia,
concerns pertaining to a trademark's deceitful nature. 1674 In particular, Article 6quinquies of the
Paris Convention (1967) provides that registration of a trademark may be denied, or a trademark
may be invalidated, if it is contrary to morality or public order and is of such a nature as to deceive
the public. These concerns, however, are pertinent to the registration or invalidation of a trademark.
By contrast, Article 20, which regulates the imposition of encumbrances on the use of a trademark
through special requirements, is silent as to the reasons for which special requirements may be
imposed. In this connection, we note that Article 8 of the TRIPS Agreement, titled "Principles"1675,
provides, in paragraph 1, that Members may "adopt measures necessary to protect public health
and nutrition, and to promote the public interest in sectors of vital importance to their
socio-economic and technological dev elopment, provided that such measures are consistent with
the provisions of this Agreement". 1676 Measures seeking to protect public health and nutrition
encompass a range of measures specifically contemplated by the TRIPS Agreement, including
through exceptions to exclusive patent rights (Article 30), compulsory licences (Article 31), and the
disclosure to the public of test data (Article 39.3). In this vein, we agree with the Panel that
encumbrances on the use of trademarks by special requirements under Artic le 20 may also be
imposed in pursuit of public health objectives.1677
6.650. Honduras further argues that the context provided by Article 17 of the TRIPS Agreement
suggests that encumbrances on the use of trademarks under Article 20 cannot be determined by
public p olicy concerns and "must be 'limited' in nature". 1678 We recall that Article 17 of the
TRIPS Agreement stipulates that Members may provide "limited" exceptions to the rights conferred
by a trademark, provided that such exceptions "take account of the legitimate interests of the owner
of the trademark". Accordingly, pursuant to Article 17, Members should give consideration to such
"legitimate interests" along with other factors (including the legitimate interests of third parties)
before reaching a decision on whether to provide for a limited exception to the rights conferred by
a trademark.1679 As the panel in EC – Trademarks and Geographical Indications ( Australia) and
EC – Trademarks and Geographical Indications (US) observed, "[e]very trademark owner has a
legitimate interest in preserving the distinctiveness, or capacity to distinguish, of its trademark so
that it can perform that function. This includes its interest in using its own trademark in connection
with the relevant goods and services of its own and au thorized undertakings."1680 While Article 20,
unlike Article 17, is not an exception to the rights conferred by a trademark, both provisions concern
restrictions on trademarks. Furthermore, in these appellate proceedings it is uncontested that a

1674 According to Article 6quinquies B, a trademark registration may be denied, if a trademark: (i) is of
such a nature as to infringe rights acquired by third parties in the country where protection is claimed; (ii) is
devoid of any distinctive character, or consists exclusively of signs or indications that may serve, in trade, to
designate the kind, quality, quantity, intended purpose, value, place of origin of the goods, or the time of
production, or have become customary in the current language or in the bona fide and established practices of
the trade of the country where protection is claimed; or (iii) is contrary to morality or public order and, in
particular, of such a nature as to deceive the public. (Paris Convention (1967), Article 6quinquies B)
1675 We note that paragraph 5 of the Doha Declaration provides that "[i]n applying the customary rules
of interpretation of public international law, each provision of the TRIPS Agreement shall be read in the light of
the object and purpose of the Agreement as expressed, in particular, in its objectives and principles."
1676 TRIPS Agreement, Article 8.1. The scope of measures referred to in Article 8.1 is limited by
two conditions. First, a measure must be "necessary" to protect public health and nutrition, and second, it
must be consistent with the provisions of the TRIPS Agreement.
1677 Panel Report, para. 7.2406.
1679 As the panel in EC – Trademarks and Geographical Indications (Australia) and EC – Trademarks and
Geographical Indications (US) explained, "[g]iven that Article 17 creates an exception to the rights conferred
by a trademark, the 'legitimate interests' of the trademark owner must be something different from full
enjoyment of those legal rights." (Panel Reports, EC – Trademarks and Geographical Indications (Australia),
1680 Panel Reports, EC – Trademarks and Geographical Indications (Australia), para. 7.664;
EC – Trademarks and Geographical Indications (US), para. 7.664.
WT/DS435/AB/R • WT/DS441/AB/R

trademark owner has a "legitimate interest" in using its trademark in the course of trade. 1681 We
therefore consider that, in examining whether the use of a trademark has been unjustifiably
encumbered by special requirements under Article 20, the legitimate interests of t he trademark
owner in using the trademark and preserving its distinctiveness should be taken into account.
Therefore, while we agree with Honduras that Article 17 provides relevant context for the
interpretation of Article 20, we do not consider that it informs that provision in the way suggested
by Honduras.
6.651. By using the term "unjustifiably", Article 20 of the TRIPS Agreement provides to Members a
certain margin of discretion in imposing encumbrances on the use of trademarks. As noted, the term
"unjustifiably" connotes an action for which there is no fair reason, and which cannot be reasonably
explained. Accordingly, we understand that a Member that imposes encumbrances on the use of
trademarks through special requirements must be able to provide a reason able explanation of how
an objective pursued by introducing special requirements warranted the resulting encumbrances. At
the same time, we agree with the Panel that the term "unjustifiably" should not be understood to
"require only the existence of some rational connection between encumbrances imposed on the use
of a trademark and the reason for which they are imposed." 1682 Due account should also be taken
of the nature and extent of the encumbrance at issue, including the extent to which the relevant
trademarks are affected. Therefore, we agree with the Panel that a determination of whether the
use of a trademark in the course of trade is being "unjustifiably" encumbered by special requirements
could involve a consideration of: (i) the nature and extent of en cumbrances resulting from special
requirements, taking into account the legitimate interest of the trademark owner in using its
trademark in the course of trade; (ii) the reasons for the imposition of special requirements; and
(iii) a demonstration of how the reasons for the imposition of special requirements support the
resulting encumbrances.1683
6.652. Honduras further argues that, "even if the Panel's interpretation was correct that Article 20
enshrines a broad policy exception that could justify any blunt encum brance not linked to
trademark-specific concerns, the Panel errs by adopting an excessively low bar for considering
special requirements to be 'justifiably' encumbering the use of a trademark by failing to respect the
proportionality principle." 1684 In partic ular, Honduras considers that "the Panel errs by not
considering it necessary for a Member, when imposing such special requirements, to opt for a less
trademark-encumbering special requirement if such is available and provides an equivalent
contribution."1685 In Honduras' view, Article XX of the GATT 1994 and Article 2.2 of the
TBT Agreement lend context to this interpretation of Article 20 of the TRIPS Agreement.1686 For
Honduras, "to the extent that the measures affect trademark rights, they must at least be 'necessary'
in order to be 'justifiable'."1687
6.653. Honduras' suggestion that the encumbrances imposed by special requirements "must at
least be 'necessary' in order to be 'justifiable'"1688 presupposes that the standard of "unjustifiability"
under Article 20 should be at least equivalent to the standard of "necessity". As noted, the use of
the term "unjustifiably" in Article 20, as opposed to other provisions of the TRIPS Agreement, which
refer to the concept of necessity, indicates that the degree of discretion granted to Members through

1681 Honduras appellant's submission, para. 154; Australia's appellee's submission, paras. 90-93
(quoting Panel Report, EC – Trademarks and Geographical Indications (Australia), paras. 7.662 and 7.664).
1683 Panel Report, para. 7.2430. We note, however, that, in paragraph 7.2430 of its Report, the Panel
used the auxiliary verb "should" in introducing the factors pertinent to the examination of whether the use of a
trademark in the course of trade is unjustifiably encumbered by special requirements. Later, the Panel stated
that "a consideration of whether the use of a trademark is 'unjustifiably encumbered' will normally involve a
consideration of various elements, including the nature and extent of the encumbrance arising from the special
requirements at issue, the reasons for which these requirements are applied, and whether these reasons
sufficiently support them." (Panel Report, para. 7.2441 (emphasis added)) We wish to clarify that, while an
inquiry under Article 20 could include the consideration of the above-mentioned factors, the degree of
discretion vested in Members under Article 20 does not call for a rigid and exact set of considerations that are
relevant for the examination of whether the use of a trademark is unjustifiably encumbered by special
requirements.
WT/DS435/AB/R • WT/DS441/AB/R

the term "unjustifiably" is higher than it would have been, had a term conveying the notion of
"necessity" been used. Therefore, we do not consider that the test of necessity, which includes a
consideration of alternative measures, could be transposed into the examination of whether the use
of a trademark is unjustifiably encumbered by special requirements under Article 20 of the
TRIPS Agreement. This does not mean that, in the circumstances of a particular case, the existence
of an alt ernative measure involving a lesser degree of encumbrance on the use of a trademark
cannot be used as a consideration in evaluating the justifiability of special requirements and related
encumbrances on the use of a trademark. However, such an examination is not a necessary inquiry
under Article 20 of the TRIPS Agreement.
6.654. We recall that the Panel did not include the consideration of alternative measures into the
list of factors it considered to be relevant for an examination of whether the use of trademark is
unjustifiably encumbered by special requirements, as set out in paragraph 7.2430 of the
Panel Report. In applying the legal standard it had developed to the facts of this case, the Panel
stated that the latitude vested in Members under Article 20 "does not mean that the availability of
an alternative measure that involves a lesser or no encumbrance on the use of trademarks could
not inform an assessment of whether the reasons for which the special requirements are applied
sufficiently support the resulti ng encumbrance".1689 In particular, the Panel did "not exclude the
possibility that the availability of an alternative measure could, in the circumstances of a particular
case, call into question the reasons a respondent would have given for the adoption of a measure
challenged under Article 20".1690
6.655. In our view, the Panel did not err by not including an examination of alternative measures
as a requisite consideration for determining whether the use of a trademark has been "unjustifiably"
encumbered by special requirements. Indeed, as Australia argue s, if a consideration of alternative
measures was required under Article 20, this would equate the concept of justifiability reflected in
Article 20 of the TRIPS Agreement with the concept of necessity, withi n the meaning of Article 2.2
of the TBT Agreement and Article XX of the GATT 1994. In our view, this would defy the drafters'
intention to provide greater latitude to Members by using the term "unjustifiably" – as opposed to a
term reflecting the notion of necessity – in Article 20 of the TRIPS Agreement. Accordingly, while it
may be possible that, in the circumstances of a particular case, an alternative measure that would
lead to at least an equivalent contribution could call into question whether the rea sons for the
adoption of the special requirements sufficiently support the resulting encumbrances on the use of
the trademark, such an examination is not a necessary inquiry under Article 20.
6.656. Finally, Honduras asserts that the Panel erred in relying on the Doha Declaration in its
interpretation of Article 20. In Honduras' view, the Doha Declaration is not relevant to the
interpretation of Article 20 because "it relates to the question of access to medicines and patents,
and does not relate to any provisions of the TRIPS Agreement concerning trademarks."1691 According
to Honduras, "[t]he Doha Declaration is not, and was never intended to be, a more general
declaration that would seek to allow Members to adopt public health related measures in violation
of the TRIPS Agreement in general or of the section on trademarks in particular." 1692 Australia
responds that the Panel referred to the Doha Declaration to merely confirm that public health
considerations are "unquestionably" among the societal interests that can "justify" an encumbrance
upon the use of trademarks. 1693 In Australia's view, in any event, "[w]hether or not the Doha
Declaration constitutes a subsequent agreement … is ultimately beside the point" because
"Article 8.1 of the TRIPS Agreement, by itself, makes c lear that Members may adopt measures
necessary for the protection of public health."1694
6.657. We recall that paragraph 5(a) of the Doha Declaration provides that, "[i]n applying the
customary rules of interpretation of public international law, each provision of the TRIPS Agreement
shall be read in the light of the object and purpose of the Agreement as expressed, in particular, in

1689 Panel Report, para. 7.2598.
1690 Panel Report, para. 7.2598. The Panel clarified that "[t]his might be the case in particular if a readily
available alternative would lead to at least equivalent outcomes in terms of the policy objective of the
challenged measure, thus calling into question whether the stated reasons sufficiently support any
encumbrances on the use of trademarks resulting from the measure." (Ibid.)
1693 Australia's appellee's submission, para. 242.
1694 Australia's appellee's submission, para. 242.
WT/DS435/AB/R • WT/DS441/AB/R

its objectives and principles." We agree with the Panel that paragraph 5(a) of the Doha Declaration
reflects "the applicable rules of interpretation, which require a treaty interpreter to take account of
the context and object and purpose of the treaty being interpreted". 1695 Accordingly, regardless of
the legal status of the Doha Declaration, we see no error in the Panel's reliance on this general
principle of treaty interpretation.
6.658. Furthermore, we note that the Panel referred to paragraph 5(a) of the Doha Declaration to
confirm that "Articles 7 and 8 of the TRIPS Agreement provide important context for the
interpretation of Article 20."1696 It appears that the Panel had reached the conclusion about the
contextual relevance of Articles 7 and 8 of the TRIPS Agreement before it turned to paragraph 5(a)
the Doha Declaration and used the latter to simply reconfirm its view.1697 In particular, before turning
to the Doha Declaration, the Panel observed that "Article 8 offers … useful contextual guidance for
the interpretation of the term 'unjustifiably' in Article 20."1698 The Panel also remarked that the
societal interests referred to in Article 8 may provide a basis of the justification of measures under
Article 20.1699 Thus, we agree with Australia that, in any event, the reliance on the Doha Declaration
was not of decisive importance for the Panel's reasoning since the Panel had reached its conclusions
about the contextual relevance of Articles 7 and 8 of the TRIPS Agreement to the interpretation of
Article 20 before it turned to the Doha Declaration. The Panel relied on the Doha Declaration simply
to reconfirm its previous conclusions regarding the cont extual relevance of Articles 7 and 8 of the
TRIPS Agreement.
6.659. In sum, the ordinary meaning of the term "unjustifiably", as read in the context of other
provisions of the TRIPS Agreement, indicates that Members enjoy a certain degree of discretion in
imposing encumbrances on the use of trademarks under Article 20 of the TRIPS Agreement.1700 In
order to establish that the use of a trademark in the course of trade is being unjustifiably encumbered
by special requirements, the complainant has to demonstrate that a policy objective pursued by a
Member imposing special requirements does not sufficiently support the encumbrances that result
from such special requirements. We agree with the Panel that such a demonstration could include a
consideration of: (i) the nature and extent of encumbrances resulting from special requirements,
taking into account the legitimate interest of the trademark owner in using its trademark in the
course of trade; (ii) the reasons for the imposition of special requirements; and (iii) a demonstration
of how the reasons for the imposition of special requirements support the resulting encumbrances.
6.660. We therefore consider that the Panel did not err in its interpretation of the term
"unjustifiably" in Article 20 of the TRIPS Agreement. Consequentl y, we uphold the Panel's
interpretation, in paragraph 7.2430 of the Panel Report, of the term "unjustifiably".
6.3.2.4 Whether the Panel erred in its application of Article 20 of the TRIPS Agreement
6.661. In its appeal, Honduras focuses on two elements of the Panel's application of the legal
standard under Article 20 of the TRIPS Agreement. Specifically, Honduras argues that the Panel
erred in: (i) its focus on the economic value of trademarks and in its as sessment of the allegedly
mitigating factors1701, and (ii) its determination that "good reasons" provide "sufficient support" for
the encumbrance.1702 With respect to the lat ter part of its claim , Honduras argues that: (i) the
Panel's finding that the TPP measures contribute to reducing the use of tobacco is vitiated by several
errors of law 1703; (ii) the Panel erred by rejecting the reasonably available, less
trademark-encumbering measures proposed by the complainants1704; and (iii) the Panel gave undue

1695 Panel Report, para. 7.2411.
1696 Panel Report, para. 7.2411.
1697 Panel Report, paras. 7.2402-7.2406. In particular, before turning to paragraph 5(a) of the
Doha Declaration, the Panel concluded that Articles 7 and 8 of the TRIPS Agreement "provide relevant context"
to Article 20. (Ibid., para. 7.2399)
1698 Panel Report, para. 7.2404.
1699 Panel Report, para. 7.2406.
1700 The degree of discretion reflected through the term "unjustifiably" in Article 20 is higher than it
would have been, had the term reflecting the notion of "necessity" been used in this provision.
1701 Honduras' appellant's submission, paras. 264-276.
1702 Honduras' appellant's submission, paras. 277-317.
1703 Honduras' appellant's submission, paras. 280-284.
1704 Honduras' appellant's submission, paras. 285-298.
WT/DS435/AB/R • WT/DS441/AB/R

legal weight t o the FCTC Guidelines.1705 In addition, Honduras claims that the Panel, despite its
stated intention, did not engage in any weighing and balancing of the public health concerns
underlying the TPP measures against their implications on the use of trademarks in the course of
trade.1706
6.662. The Dominican Republic independently argues that the Panel's findings under Article 20 of
the TRIPS Agreement are in error because the Panel failed to make an objective assessment of the
matter under Article 11 of the DSU. 1707 In particular, the Dominican Republic takes issue with the
Panel's analysis of the contribution of the TPP measures and that of the proposed alternative
measures under Article 2.2 of the TBT Agreement, which the Panel subsequently referred to in its
analysis under Article 20. With respect to these findings, the Dominican Republic argues that, should
we reverse the relevant Panel's findings on contribution and less trade -restrictive alternative
measures under Article 2.2, we should also reverse the Panel's findings under Article 20 of the
TRIPS Agreement.1708
6.663. Australia argues that Honduras errs in considering that the Panel placed an "undue emphasis
on the loss of economic value of the trademarks rather than focusing on the impact of the
TPP measures on the us e of a trademark in terms of its distinguishing function" .1709 Australia
acknowledges that the Panel took into account the economic value of the trademarks in its
consideration of the impact of the TPP measures, but not to the exclusion of the distinguishing
function of trademarks. 1710 In Australia's view, the Panel's analysis did not detract from the
far-reaching nature of the encumbrances under the TPP measures, but rather examined their
"practical implications".1711 Australia further submits that the appellants' argument regarding the
Panel's analysis of possible alternatives wrongly presupposes that the examination of alternatives
under a standard of "unjustifiability" is identical to the examination under the standard of
"necessity".1712 With respect to Honduras' assertion that the Panel gave "undue legal weight"1713 to
the FCTC Guidelines, Australia considers that "[t]he Panel referred to the FCTC Guidelines merely to
'underscore[]' 'the importance of the public health reasons for which the trademark -related special
requirements under the TPP measures are applied', not to find that the existence of the Guidelines
could somehow overcome a finding of 'WTO-inconsistency'."1714
6.3.2.4.1 The Panel's examination of the nature and extent of encumbrances resulting
from the TPP measures
6.664. Honduras' first ground of appeal concerns the Panel's allegedly erroneous focus on the
economic value of trademarks in examining the nature and extent of the encumbrances resulting
from the special requirements under the TPP measures. In Honduras' view, the Panel erred by not
focusing on the use of a trademark in terms of its distinguishing function and by concluding that
there was a mitigating effect resulting from the permissible use of certain word marks.1715 Honduras
submits that the relevant inquiry under Article 20 of the TRIPS Agreement is not whether the
trademark owner can distinguish its goods in light of the encumbrances imposed, but how a
trademark and its function have been affected.1716 Honduras underscores that "[t]he prohibition on
the use of any figurative signs is the 'ultimate encumbrance' on the use of such trademarks."1717

1705 Honduras' appellant's submission, paras. 299-312.
1706 Honduras' appellant's submission, paras. 281-282 (referring to Panel Report,
paras. 7.2592-7.2594).
1707 Dominican Republic's appellant's submission, para. 1587.
1708 Dominican Republic's appellant's submission, para. 1588.
1709 Australia's appellee's submission, para. 246 (quoting Honduras' appellant's submission, para. 266).
1710 Australia's appellee's submission, para. 247.
1711 Australia's appellee's submission, para. 248 (quoting Panel Report, para. 7.2570). (emphasis added
by Australia)
1712 Australia's appellee's submission, para. 250.
1713 Australia's appellee's submission, para. 253 (quoting Honduras' appellant's submission, paras. 299
and 312).
1716 Honduras' response to questioning at the second hearing.
WT/DS435/AB/R • WT/DS441/AB/R

6.665. Australia responds that, in its analysis, the Panel focused exactly on what Honduras argues
it should have focused, i.e. "the implications of the TPP trademark requirements on a trademark's
ability to distinguish goods and services of undertakings in the course of trade".1718 Australia points
out that the Panel took into account the "far-reaching" encumbrances that the TPP measures impose
in evaluating whether the TPP measures impose an unjustifiable encumbrance upon the use of
trademarks.1719 In Australia's view, the Panel's consideration of the economic consequences "did not
detract from the 'far-reaching' encumbrance".1720 Rather, "[t]he Panel's point was that the 'practical
implications of those prohibitions' were 'partially mitigated' by the fact that tobacco companies can
still use word trademarks to distinguish their products from those of other undertakings."1721
6.666. We start by recalling that the first step of the legal test under Article 20 of the
TRIPS Agreement that the Panel set out for itself was to examine "the nature and extent of the
encumbrance resulting from the special requirements, bearing in mind the legitimate interest of the
trademark owner in using its trademark in the cours e of trade and thereby allowing the trademark
to fulfil its intended function". 1722 In applying this element of the test to the facts of the case, the
Panel agreed with the complainants that the trademark requirements of the TPP measures are
"far-reaching".1723 In this regard, the Panel recalled that "[t]he TPP measures eliminate the
possibility of applying figurative trademarks, or figurative or stylized elements of composite and
word marks to tobacco retail packaging and products, to distinguish the goods of o ne undertaking
in this manner from those of other undertakings." 1724 According to the Panel, in this way, "[t]he
TPP measures thus prevent any non -word components of the relevant trademarks … from
contributing to distinguishing the products in the marketplace."1725
6.667. Thereafter, the Panel recalled the panel's statement in EC – Trademarks and Geographical
Indications (US) that "[t]he function of trademarks can be understood by reference to Article 15.1
[of the TRIPS Agreement] as distinguishing goods and services of undertakings in the course of
trade" and that "[e]very trademark owner has a legitimate interest in preserving the distinctiveness,
or capacity to distinguish, of its trademark so that it can perform that function" 1726, which includes
its interest in using its trademarks. In the view of the panel in EC – Trademarks and Geographical
Indications (US), "[t]aking account of that legitimate interest will also take account of the trademark
owner's interest in the economic value of its mark arising from the reputation that it enjoys and the
quality that it denotes." 1727 While this statement was made by the panel in EC – Trademarks and
Geographical Indications (US) in the context of examining "the legitimate interests of the owner of
the trademark" in Article 17 of the TRIPS Agreement, the Panel considered it to be important
contextual guidance for the purposes of its analysis under Article 20 of the TRIPS Agreement.1728
The Panel recognized the legitimacy of the trademark owner's interest in using its trademark for
various purposes, including identification of the source of the product and communication of its
tangible or intangible benefits, and considered that it needed to examine the impact of the
TPP measures on the right holder's ability to use trademarks for these various purposes.1729
6.668. The Panel noted that "[t]he complainants have not sought to demonstrate that consumers
have in fact been unable to distinguish the commercial source of tobacco products of one undertaking
from those of other undertakings … as a result of the TPP trademark requirements."1730 The Panel
further noted the complainants' argument that the removal of the figurative elements under the
TPP measures undermined the ability of trademarks to signal individual tobacco products' quality,

1718 Australia's appellee's submission, para. 246 (quoting Panel Report, para. 7.2563). (emphasis added
by Australia)
1719 Australia's appellee's submission, para. 247.
1721 Australia's appellee's submission, para. 248. (emphasis original)
1722 Panel Report, para. 7.2430.a.
1723 Panel Report, para. 7.2557.
1724 Panel Report, para. 7.2557.
1725 Panel Report, para. 7.2558.
1726 Panel Report, para. 7.2560 (quoting Panel Report, EC – Trademarks and Geographical Indications
(US), para. 7.664).
1727 Panel Report, para. 7.2560 (quoting Panel Report, EC – Trademarks and Geographical Indications
(US), para. 7.664).
1728 Panel Report, para. 7.2562.
1729 Panel Report, para. 7.2562.
WT/DS435/AB/R • WT/DS441/AB/R

characteristics, and r eputation to consumers. 1731 In the Panel's view, however, preventing such
design features from creating positive product perceptions and discouraging the use of tobacco
products by consumers was "the very purpose of the TPP measures".1732
6.669. The Panel considered th at, "by disallowing the use of design features of trademarks … the
TPP measures prevent a trademark owner from extracting economic value from any design features
of its trademark."1733 The Panel therefore concluded that the TPP measures' prohibitions on the use
of figurative trademarks on tobacco retail packaging and products and of the figurative and stylized
elements of composite and word marks "are far-reaching in terms of the trademark owner's expected
possibilities to extract economic value from the use o f such features". 1734 The Panel remarked,
however, that "[t]he practical implications of those prohibitions are partly mitigated by the fact that
the TPP measures allow tobacco manufacturers to use word trademarks, including brand and variant
names, to distin guish their products from each other." 1735 The Panel further reiterated that "the
complainants have not sought to demonstrate that, as a result of the encumbrances resulting from
the trademark-related requirements of the TPP measures, consumers have in fact been unable to
distinguish tobacco products of one undertaking from those of other undertakings."1736
6.670. Honduras contends that, contrary to what the Panel found, the encumbrances imposed by
the TPP measures represented the "ultimate encumbrance" on the use of trademarks because the
TPP measures prohibit the use of any figurative signs on tobacco products and packaging.1737 In this
regard, we note that the Panel recognized that the TPP measures "eliminate the possibility of
applying figurative trademarks, or fi gurative or stylized elements of composite and word marks to
tobacco retail packaging and products" 1738 and that they thus prohibit "any non -word components
of the relevant trademarks". 1739 Having recognized that the TPP measures permit the use of word
marks tha t appear in the form prescribed by the TPP Regulations and prohibit the use of any
non-word components of the relevant trademarks, the Panel characterized the encumbrances as
"far-reaching".1740 In doing so, the Panel recognized the comprehensive nature of the TPP measures'
prohibition on the use of the non -word components of the relevant trademarks. At the same time,
the Panel referred to both permissive (i.e. use of word marks in the form prescribed by the
TPP Regulations) and prohibitive (i.e. prohibition o n the use of non -word components of the
trademarks) elements of the TPP measures. It appears to us that, considering the two elements
together, the Panel characterized the degree of the encumbrances at issue as "far -reaching" as
opposed to constituting an "ultimate encumbrance" on the use of trademarks.
6.671. Honduras argues that the Panel erred by not focusing on the use of an individual trademark
in terms of its distinguishing function and by focusing instead on a mitigating economic effect
resulting from the permissible use of certain word marks.1741 We recall that, pursuant to Article 15.1
of the TRIPS Agreement, "[a]ny sign, or any combination of signs, capable of distinguishing the
goods or services of one undertaking from those of other undertakings, shall be capable of
constituting a trademark." Distinctiveness of signs (as such or acquired through use) is thus key to
their eligibility to be registered as a trademark. 1742 Furthermore, as the panel in EC – Trademarks
and Geographical Indications (Australia) and EC – Trademarks and Geographical Indications (US)
observed in the context of its analysis under Article 17 of the TRIPS Agreement, a trademark owner
"has a legitimate interest in preserving the distinctiveness, o r capacity to distinguish" , of its
trademark, which "includes its interest in using its own trademark". 1743 The trademark owner's

1731 Panel Report, para. 7.2564.
1732 Panel Report, para. 7.2567.
1733 Panel Report, para. 7.2569.
1734 Panel Report, para. 7.2569.
1735 Panel Report, para. 7.2570.
1738 Panel Report, para. 7.2557.
1739 Panel Report, para. 7.2558.
1740 Panel Report, paras. 7.2557 and 7.2569.
1742 Appellate Body Report, US – Section 211 Appropriations Act, para. 154.
1743 Panel Reports, EC – Trademarks and Geographical Indications (Australia), para. 7.664;
EC – Trademarks and Geographical Indications (US), para. 7.664.
WT/DS435/AB/R • WT/DS441/AB/R

legitimate interest in preserving the distinctiveness and using its trademark in the course of trade
includes the interest in extracting the economic value from its trademark.1744
6.672. In this regard, we note that, in its analysis, the Panel reiterated several times that the
complainants had not sought to demonstrate before the Panel that, as a result of the
trademark-related requirements of the TPP measures, consumers have been unabl e to distinguish
the commercial source of tobacco products of one undertaking from those of other undertakings.1745
Given that the complainants did not seek to establish that, as result of the TPP measures, consumers
have been unable to distinguish the source of tobacco products at issue, we consider that it was
appropriate for the Panel to examine another aspect of the trademark owner's legitimate
interests – the potential for extracting economic value from its trademark. 1746 In examining the
ability of the trademark owners "to otherwise extract economic value from those trademarks", the
Panel addressed the arguments regarding price competition and downward substitution that the
complainants themselves had raised.1747
6.673. Honduras also takes issue with the Panel's s tatement that "[t]he practical implications [of
prohibitions on the use of any non-word components of the relevant trademarks] are partly mitigated
by the fact that the TPP measures allow tobacco manufacturers to use word trademarks … to
distinguish their products."1748 As noted, the Panel considered both prohibitive and permissive
elements of the TPP measures. In our view, in making this statement, the Panel recognized that,
despite the prohibition on the use of non -word components of trademarks, consumers ca n
distinguish the source of tobacco products due to the permission on the use of word marks. This
understanding is bolstered by the fact that, in the next sentence, the Panel reiterated that the
complainants had not sought to establish that consumers had been unable to distinguish the source
of the tobacco products.1749
6.674. Moreover, we do not consider that this observation affected or detracted from the Panel's
general characterization of the encumbrances on the use of trademarks resulting from the
TPP measures as "far-reaching".1750 In this respect we recall that, in paragraph 7.2604, summarizing
its analysis under Article 20 of the TRIPS Agreement, the Panel repeated its understanding that "the
special requirements are far -reaching in terms of the trademark owners ' possibilities to extract
economic value from the use of figurative or stylized features of trademarks."1751
6.675. In sum, we consider that, having assessed both prohibitive and permissive elements of the
trademark-related requirements of the TPP measures, the Panel characterized the nature and extent
of the encumbrance resulting from the special requirements under the TPP measures as
"far-reaching".1752 The Panel's observation that the "practical implications" of the prohibitions on the
use of non -word elements of tr ademarks were "partly mitigated" by the permission to use word
trademarks did not diminish this conclusion. 1753 Rather, in making this statement, the Panel
explained that, despite prohibitions on the use of non -word components of the trademarks,
consumers could still distinguish the source of tobacco products due to the use of word marks.
Furthermore, given that the complainants did not contest that it was possible to distinguish the
commercial source of the tobacco products at issue, the Panel addressed the legitimate interests of
the trademark owners by examining the owners' potential to extract economic value from their
trademarks.

1744 Panel Reports, EC – Trademarks and Geographical Indications (Australia), para. 7.664;
EC – Trademarks and Geographical Indications (US), para. 7.664.
1745 Panel Report, paras. 7.2564 and 7.2570.
1746 Panel Report, para. 7.2571.
1747 Panel Report, paras. 7.2571-7.2572.
1748 Panel Report, para. 7.2570.
1749 Panel Report, para. 7.2570.
1750 Panel Report, paras. 7.2557 and 7.2569.
1751 Panel Report, para. 7.2604.
1752 Panel Report, paras. 7.2557, 7.2569, and 7.2604.
1753 Panel Report, paras. 7.2570-7.2571.
WT/DS435/AB/R • WT/DS441/AB/R

6.3.2.4.2 The Panel's assessment of whether the reasons for the special requirements
provide sufficient support for the resulting encumbrances
6.676. Honduras' challenge of the Panel's conclusion that the reasons for special requirements
under the TPP measures sufficiently support the resulting encumbrances rests on several grounds.
First, Honduras argues that the Panel's finding that the TPP measures contribute to the reduction in
the use of tobacco was vitiated by several errors of law, including the lack of weighing and balancing
in the Panel's analysis and the lack of objectivity in the Panel's assessment of evidence under
Article 11 of the DSU.1754 Second, Honduras submits that the Panel erred by rejecting the reasonably
available, less trademark -encumbering alternative measures proposed by the complainants. 1755
We address each of these concerns in turn.
6.677. Honduras' first argument is that the Panel did not undertake the weighing and balancing of
the public health concerns and their implications on the use of trademarks in the course of trade.
Instead, Honduras argues that, "[i]n three short paragraphs, the Panel simply repeat[ed] the fact
that the prote ction of health is an important concern and recalls its (erroneous) finding made in
respect of the claim under Article 2.2 of the TBT Agreement that the plain packaging measures
contribute to the reduction of smoking." 1756 Australia responds that the Panel engaged in weighing
and balancing in section 7.3.5.5.3.4 of its Report.1757
6.678. We recall that, as a fi rst step of its analysis, the Panel defined the degree of encumbrance
resulting from the trademark-related requirements of the TPP measures as "far-reaching".1758 As a
second step of its analysis, the Panel established that, "for the purposes of Article 20, the reason for
which Australia applies the trademark requirements, as an integral part of the TPP measures, is to
improve public health by reducing the use of, and exposure to, tobacco products." 1759 The Panel
recalled the Appellate Body's observation that the preservation of human life and health is "both
vital and important in the highest degree".1760 Honduras does not take issue with this finding.
6.679. Thereafter, the Panel turned to its examination of whether the reasons for the application of
the trademark require ments under the TPP measures sufficiently support the resulting
encumbrances. In doing so, the Panel stated that it would have to assess the public health concerns
that underlie the TPP measures' trademark requirements against the resulting encumbrances.
Thereafter, the Panel stated that:
The fact that these special requirements, as part of the overall TPP measures and in
combination with other tobacco-control measures maintained by Australia, are capable
of contributing, and do in fact contribute, to Austr alia's objective of improving public
health by reducing the use of, and exposure to, tobacco products, suggests that the
reasons for which these special requirements are applied provide sufficient support for
the application of the resulting encumbrances on the use of trademarks.1761
6.680. The fact that the Panel made this statement upfront may have prompted Honduras'
allegation that the Panel did not conduct any weighing and balancing. We note, however, that, after
making that statement, the Panel elaborated on the reasons that led it to this conclusion. In
particular, the Panel recalled its finding, made in the context of analysis under Article 2.2 of the
TBT Agreement, that the rationale for the imposition of the TPP measures was that the removal of
design features on retail packaging and cigarettes had been determined to be apt to reduce the
appeal of tobacco products and increase the effectiveness of GHWs. The Panel then underscored
that the standardization of packaging was an integral part of th e TPP measures and recalled its
previous rejection of a pre -vetting mechanism as an alternative measure due to administrative
discretion embodied in such a mechanism. 1762 We consider that, by doing so, the Panel connected
the requirements of the TPP measures to the public health concern that they sought to address,
which demonstrated that Australia's public health objectives could be achieved only by uniform and

1754 Honduras' appellant's submission, paras. 280-284.
1755 Honduras' appellant's submission, paras. 285-298.
1756 Honduras' appellant's submission, para. 281 (referring to Panel Report, paras. 7.2592-7.2594).
1757 Australia's appellee's submission, para. 249.
1758 Panel Report, paras. 7.2557 and 7.2569.
1759 Panel Report, para. 7.2586.
1761 Panel Report, para. 7.2592.
1762 Panel Report, para. 7.2594.
WT/DS435/AB/R • WT/DS441/AB/R

standardized requirements that did not leave any space for possible administrative discretion or
non-uniform application. Thereafter, the Panel addressed the complainants ' arguments about the
possible alternative less trademark-encumbering measures.
6.681. In light of the above, we do not agree with Honduras that the Panel did not undertake any
weighing and balancing in its analysis. In our view, the Panel's analysis contains the basic elements
of the weighing and balancing exercise, such as an assessment of the objectives pursued and the
nature of the measures imposed, as well as an examination of the possible alternative measures.
Moreover, we do not consider that the weighing and balancing that the Panel was supposed to
undertake under Article 20 is the same as that under Article 2.2 of the TBT Agreement. The term
"unjustifiably" in Article 20 of the TRIPS Agreement cannot be equated with the term "unnecessary"
in Article 2.2 of the TBT Agreement, and consideration of less trademark -encumbering alternative
measures is not a necessary element in the assessment of justifiability under Article 20.
6.682. Honduras also takes issue with the Panel's treatment of the proposed alternative measures.
Honduras contends that, by finding that it is not always necessary to examine the availability of less
trademark-encumbering alternative measures, the Panel rejected the notion tha t a measure would
be "unjustifiably" encumbering the use of a trademark under Article 20, if the encumbrance goes
beyond what suffices to address the specific policy objective. 1763 Honduras further argues that the
Panel "failed to apply its own legal test to the facts of the case". 1764 Honduras recalls the Panel's
statement that the availability of an alternative measure could call into question the reasons for the
adoption of a measure challenged under Article 20 "if a readily available alternative would lead to at
least equivalent outcomes in terms of the policy objective of the challenged measure, thus calling
into question whether the stated reasons sufficiently support any encumbrances on the use of
trademarks resulting from the measure". 1765 However, Honduras c laims that later the Panel
effectively changed this legal test by demanding that the alternative measures proposed by
Honduras be "manifestly better in contributing towards Australia's public health objective, operating
in a manner comparable to the TPP measures as an integral part of Australia's comprehensive
tobacco control policies and at the level desired by Australia".1766
6.683. Australia points out that Honduras' argument assumes that, as a matter of law, "the
examination of alternatives under a standard of 'unjustifiability' should be identical in all respects to
the examination of alternatives under a standard of 'necessity'", which Australia disagrees with.1767
Australia also disputes Honduras' assertion that the Panel failed to "examine the alternative
measures' contribution in light of their lesser degree of trademark encumbrance".1768 Australia
considers that Honduras' position reflects the erroneous belief that the TRIPS Agreement establishes
a right to use the trademark.1769 Australia submits that, in any event, the Panel found that none of
the proposed alternatives would have made an equivalent contribution to Australia's objective in the
absence of the TPP measures.1770
6.684. As explained in paragraph 6.654. above, the Panel did not consider that an examination of
available less trademark -encumbering alternative measures is required in examining whether the
use of a trademark in the course of trade is unjustifiably encumbered by special requirements under
Article 20 of the TRIPS Agreement.1771 This is consistent with our understanding that an examination

1765 Honduras' appellant's submission, para. 286 (quoting Panel Report, para. 7.2598). (emphasis added
by Honduras)
1766 Honduras' appellant's submission, para. 288 (quoting Panel Report, para. 7.2601). (emphasis added
by Honduras)
1767 Australia's appellee's submission, para. 250. (fn omitted) See also Australia's appellee's submission,
part III.D.2(c).
1768 Australia's appellee's submission, para. 251 (quoting Honduras' appellant's submission, para. 290).
(emphasis original)
1769 Australia's appellee's submission, para. 251.
1770 Australia's appellee's submission, para. 252.
1771 In this regard, the Panel stated:
In our view, the term "unjustifiably" in Article 20 provides a degree of latitude to a Member to choose an
intervention to address a policy objective, which may have some impact on the use of trademarks in the
course of trade, as long as the reasons sufficiently support any resulting encumbrance. This, however,
does not mean that the availability of an alternative measure that involves a lesser or no encumbrance
on the use of trademarks could not inform an assessment of whether the reasons for which the special
WT/DS435/AB/R • WT/DS441/AB/R

of whether the use of a trademark is unjustifiably encumbered by special requirements under
Article 20 may include a consideration of less trademark-encumbering alternative measures, but this
is not a necessary element in the assessment of justifiability under Article 20 TRIPS. We thus see
no error in the Panel's approach.
6.685. We now turn to address Honduras' argument that the Panel failed to "examine the alternative
measures' contribution in light of their lesser degree of trademark encumbrance".1772 In Honduras'
view, the Panel erroneously transposed its analysis under Article 2.2 of the TBT Agreement, which
focuses on trade restrictiveness, to Article 20 of the TRIPS Agreement, which focuses on trademark
encumbrance.1773
6.686. We recall that Article 2.2 of t he TBT Agreement provides that Members shall ensure that
technical regulations are not prepared, adopted, or applied with a view to or with the effect of
creating "unnecessary obstacles to international trade", and that such regulations shall not be "more
trade-restrictive than necessary to fulfil a legitimate objective". In the context of an analysis under
Article 2.2, a comparison of the challenged technical regulation with possible alternative measures
is "a conceptual tool for the purpose of ascertainin g whether a challenged measure is more
trade-restrictive than necessary".1774 The Appellate Body has clarified that, in order for a possible
alternative measure to render the challenged measure inconsistent with Article 2.2, it must be
"reasonably available and less trade-restrictive than the challenged measure, taking account of the
risks non-fulfilment would create".1775 Moreover, the Appellate Body has stated that the obligation
to consider "the risks non -fulfilment would create" under Article 2.2 suggests a f urther element of
the analysis, namely, a determination of whether a possible alternative measure "would make an
equivalent contribution to the relevant legitimate objective", taking account of the risks of
non-fulfilment.1776
6.687. Unlike Article 2.2 of the TBT Agreement, which refers to " unnecessary obstacles to
international trade", Article 20 of the TRIPS Agreement requires that the use of a trademark in the
course of trade not be " unjustifiably encumbered" by special requirements. 1777 Thus, whereas the
aim of Article 2.2 is the prevention of unnecessary obstacles to international trade by ensuring that
technical regulations are not more trade -restrictive than necessary, the purpose of Article 20 is to
prevent the imposition of unjustifiable encumbrances on the use of trademarks. Indeed, the main
interest protected under Article 2.2 of the TBT Agreement is the unhindered flow of international
trade, while under Article 20 of the TRIPS Agreement it is the prevention of unjustifiable
encumbrances of the use of a trademark by its owner in the course of trade.1778 Accordingly, whereas
under Article 2.2 of the TBT Agreement an alternative measure must be reasonably available and
less trade-restrictive than the challenged measure, an alternative proposed under Article 20 of the
TRIPS Agreement should entail a lesser degree or no encumbrance on the use of a trademark. As a
result, a simple transplantation of an examination of the possible alternative measures under
Article 2.2 of the TBT Agreement into the analysis under Article 20 of the TRIPS Agreement would
not be apposite because the focus of the inquiries under the two provisions is different. At the same
time, the same alternative measure may have both trade -restrictive and trademark -encumbering

requirements are applied sufficiently support the resulting encumbrance. We do not exclude the
possibility that the availability of an alternative measure could, in the circumstances of a particular case,
call into question the reasons a respondent would have given for the adoption of a measure challenged
under Article 20. This might be the case in particular if a readily available alternative would lead to at
least equivalent outcomes in terms of the policy objective of the challenged measure, thus calling into
question whether the stated reasons sufficiently support any encumbrances on the use of trademarks
resulting from the measure.
(Panel Report, para. 7.2598)
1772 Honduras' appellant's submission, para. 290. (emphasis original)
1773 Honduras' appellant's submission, paras. 290-295.
1774 Appellate Body Report, US – Tuna II (Mexico), para. 320.
1775 Appellate Body Report, US – Tuna II (Mexico), para. 320 (referring to Appellate Body Report,
Korea – Various Measures on Beef, para. 166, addressing "necessity" in the context of Article XX of the
GATT 1994 and Article XIV of the GATS). (emphasis original)
1776 Appellate Body Report, US – Tuna II (Mexico), para. 321. The definition of the term "equivalent"
includes "[e]qual in value, significance, or meaning" and "having the same effect". (Shorter Oxford English
Dictionary, 5th edn, W. R. Trumble and A. Stevenson (eds.) (Oxford University Press, 2002), Vol. 1, p. 851)
1777 Emphasis added.
1778 We recall, in this respect that, according to the preamble to the TRIPS Agreement, intellectual
property rights are private rights.
WT/DS435/AB/R • WT/DS441/AB/R

aspects. In this case, the t rade-restrictive elements of such a measure would be examined under
Article 2.2 of the TBT Agreement, and the measure's potential to encumber the use of trademarks
would be examined under Article 20 of the TRIPS Agreement.
6.688. We recall that, in its analysis o f the alternative measures, the Panel first indicated that the
complainants "refer[red], in the context of their claims under Article 20 of the TRIPS Agreement, to
the same four measures as under Article 2.2 of the TBT Agreement".1779 These were: (i) an increase
in taxation of tobacco products; (ii) an increase in the MLPA; (iii) an improvement of anti-smoking
social marketing campaigns; and (iv) the creation of a pre -vetting mechanism for tobacco
packaging. The Panel considered that the first three of these alternatives would not involve any
encumbrances on the use of trademarks, while creation of a pre -vetting mechanism would involve
some encumbrances on the use of trademarks. 1780 As noted above, the Panel relied on its analysis
of the alternative measure s in the context of Article 2.2 of the TBT Agreement in its assessment
under Article 20 of the TRIPS Agreement.
6.689. As the Panel observed, the same four alternative measures had been put forward by the
complainants under Article 2.2 of the TBT Agreement and un der Article 20 of the
TRIPS Agreement.1781 As we observed above, even if an alternative measure had both
trade-restrictive and trademark -encumbering aspects, the focus of the inquiry under Article 20 of
the TRIPS Agreement is different from that under Article 2.2 of the TBT Agreement. The inquiry
under Article 20 of the TRIPS Agreement must focus on the trademark-encumbering aspects of the
alternative measure. In this respect, we note that the Panel did consider in its analysis whether the
proposed alternative measures would involve encumbrances on the use of trademarks. The Panel
found that "[t]hree of these alternatives would not involve any encumbrances on the use of
trademarks, while a pre -vetting mechanism would also involve encumbrances on the use of
trademarks."1782 Accordingly, contrary to what Honduras argues, the Panel did address the
alternative measures from a trademark perspective.
6.690. Honduras' third ground for challenging the Panel's analysis of the alternative measures
concerns the Panel's articulation of the degree of contribution that the proposed alternative
measures should achieve. In Honduras' view, the Panel first stated that the alternative measures
must "lead to at least equivalent outcomes", but then changed the standard by requiring that the
alternative measures be "manifestly better" than the TPP measures in contributing towards
Australia's objective.1783 Thus, in Honduras' view, "the Panel's finding is based on a standard that is
different from the one it appeared to have set for itself."1784
6.691. We recall that, in setting out its approach to the analysis of the alternative measures, the
Panel stated that the challenged measure would be called into question "if a readily available
alternative would lead to at least equivalent outcomes in terms of the po licy objective of the
challenged measure".1785 The Panel then recalled that, in its previous analysis of the alternative
measures under Article 2.2 of the TBT Agreement, it found that "none of these alternative measures
would be apt to make a contribution to Australia's objective equivalent to that of the
TPP measures."1786 In light of these previous findings under Article 2.2 of the TBT Agreement, the
Panel concluded that "the complainants have not shown that any of the proposed measures alone
or in combination would be manifestly better in contributing towards Australia's public health
objective."1787

1779 Panel Report, para. 7.2599.
1780 Panel Report, para. 7.2599.
1781 Panel Report, para. 7.2599.
1782 Panel Report, para. 7.2599.
1783 Honduras' appellant's submission, paras. 286 and 288 (quoting Panel Report, paras. 7.2598 and
7.2601). (emphasis omitted)
1785 Panel Report, para. 7.2598.
1786 Panel Report, para. 7.2600.
1787 Panel Report, para. 7.2601. The Panel addressed one of the proposed alternative measures – the
creation of a pre-vetting mechanism – in more detail. The Panel recalled that "the TPP trademark requirements
are not designed to address individual trademarks and their specific features, but to contribute, as an integral
part of the TPP measures, to the overall policy of standardizing packaging and product appearance." (Ibid.,
para. 7.2603) (fn omitted) The Panel concluded that, since Australia is not required to conduct and assessment
WT/DS435/AB/R • WT/DS441/AB/R

6.692. Indeed, the Panel's references to the level of contribution of the alternative measures were
not consistent. In articulating the standard by which it would abide, the Panel stated that the readily
available alternative measure should lead to " at least equivalent outcomes" as the challenged
measure.1788 By contrast, later in its analysis, the Panel concluded that the complainants have not
shown that any of the proposed alt ernative measures "would be manifestly better" in contributing
towards Australia's objective. 1789 However, we recall that, in its examination of the alternative
measures under Article 20 of the TRIPS Agreement, the Panel relied on its previous analysis of the
alternative measures in the context of Article 2.2 of the TBT Agreement. The Panel considered the
findings it had made under Article 2.2 of the TBT Agreement "relevant" for its analysis under
Article 20 of the TRIPS Agreement and made its conclusions with respect to the alternative measures
under Article 20 of the TRIPS Agreement "[i]n light of these earlier findings" under Article 2.2 of the
TBT Agreement.1790 Specifically, the Panel relied on its earlier finding under Article 2.2 of the
TBT Agreement that n one of the alternative measures "would be apt to make a contribution to
Australia's objective equivalent to that of the TPP measures".1791
6.693. In light of the above, we recognize that the language that the Panel used in referring to the
expected degree of contri bution of the alternative measures in its analysis under Article 20 of the
TRIPS Agreement was inconsistent. However, in reaching its conclusions regarding the contribution
of the alternative measures under Article 20 of the TRIPS Agreement, the Panel relied on its earlier
findings with respect to the contribution of the alternative measures under Article 2.2 of the
TBT Agreement, which were premised on the standard of equivalence. Accordingly, notwithstanding
the terminological inconsistency, we consider t hat, in fact, the standard by which the Panel abided
was the same as under Article 2.2 of the TBT Agreement – i.e. at least an equivalent contribution to
the stated objective.1792
6.694. We recall that we have found that the Panel erred in finding that the complainants failed to
demonstrate that two alternative measures – the MLPA for tobacco products and an increase in
taxation of tobacco products – would be apt to make a contribution equivalent to that of the
TPP measures.1793 Specifically, to the extent that the Panel suggested that each alternative measure
may be considered apt to achieve a similar or comparable degree of "meaningful" overall reduction
in smoking in Australia to that of the TPP measures, and yet its contribution would not be equivalent
because of its failure to address the design features of tobacco packaging that the TPP measures
seek to address in the context of Australia's broader tobacco control policy, we have found that the
Panel erred in its application of Article 2.2.1794 Having found that the Panel committed legal error in
its findings concerning the contribution of these two alternative measures in the context of Article 2.2
of the TBT Agreement, we consider that the Panel could not rely on these finding s in assessing the
contribution of these two alternative measures in the context of Article 20 of the
TRIPS Agreement.1795

of trademarks and their features on an individual basis, the availability of a pre-vetting mechanism, which
amounts to a method of conducting such an assessment, would not call into question whether Australia's public
health objective sufficiently supports the encumbrances resulting from the TPP trademark restrictions. (Ibid.)
1790 Panel Report, para. 7.2601.
1792 We recall that, in response to questioning at the second hearing, Honduras stated that it considered
the standard of equivalent contribution to be the correct standard for the examination of the alternative
measures under Article 20 of the TRIPS Agreement.
1793 Panel Report, paras. 7.1464 and 7.1531.
1794 At the same time, we have concluded that the Panel did not err in finding that the complainants
failed to demonstrate that these two alternative measures are less trade-restrictive than the TPP measures.
Consequently, although we have concluded that the Panel erred in its application of Article 2.2 with respect to
the equivalence of the contribution of each alternative measure, the Panel's findings, that the complainants
have not demonstrated that the increase in the MLPA and the increase in taxation would each "be a less trade-
restrictive alternative to the TPP measures, that would make an equivalent contribution to Australia's
1795 Having said so, we do not need to further address the Dominican Republic's claim that the Panel
made a consequential error by relying on its findings, made under Article 2.2 of the TBT Agreement, that none
of the alternative measures proposed by the Dominican Republic would achieve the same level of contribution
in the context of its analysis under Article 20 of the TRIPS Agreement. (Dominican Republic's appellant's
submission, para. 1547)
WT/DS435/AB/R • WT/DS441/AB/R

6.695. Having said that, we recall our understanding that, while it may be possible that, in the
circumstances of a particular case, an alternative measure that would lead to at least an equivalent
contribution could call into question whether the reasons for the adoption of the special requirements
sufficiently support the resulting encumbrances on the use of the trademark, such an examination
is not a necessary inquiry under Article 20. In our view, given the degree of regulatory autonomy
provided to Members under Article 20 through the use of the term "unjustifiably", an analysis of
alternative measures is not required in each and every case, and does not provide decisive guidance
in determining whether the encumbrances in question are imposed "unjustifiably". We further recall
our finding, in paragraph 6.655. above, that the Panel did not err in the interpretation of Article 20
of the TRIPS Agreement by not considering an examination of alternative measures to be a
necessary element of an inquiry under Article 20.
6.696. We recall that, before turni ng to the analysis of the alternative measures in the context of
Article 20, the Panel underlined that, through an overall standardization of tobacco packaging and
product appearance, the trademark requirements of the TPP measures make a contribution to
Australia's objective of improving public health by reducing the use of, and exposure to, tobacco
products.1796 For the Panel, "[t]his overall design of the TPP measures, of which the
trademark-related requirements are an integral part" provided support for the conclusion that the
reasons for their adoption sufficiently supported these requirements, and that they therefore were
not imposed unjustifiably.1797 The Panel thus may be seen as having reached the conclusion that the
reasons for the adoption of the TPP tra demark requirements sufficiently supported the resulting
encumbrances on the trademarks even before it turned to the examination of the proposed
alternative measures. Furthermore, in reaching its final conclusion as to whether the reasons for the
special requirements under the TPP measures supported the resulting encumbrances, the Panel did
not rely on its conclusions regarding the alternative measures under Article 20. Rather, having
recognized that trademarks "have substantial economic value" and that the special requirements
under the TPP measures "are far-reaching in terms of the trademark owners' possibilities to extract
economic value from the use of figurative or stylized features of trademarks", the Panel noted that
"the TPP measures, including their trademark restrictions, are an integral part of Australia's
comprehensive tobacco control policies, and designed to complement the pre -existing
measures."1798
6.697. In our view, the Panel's overall conclusion that the complainants have not demonstrated
that the t rademark-related requirements of the TPP measures unjustifiably encumber the use of
trademarks in the course of trade within the meaning of Article 20 would stand despite the Panel's
error in its analysis of the alternative measures. As noted, Members enjo y a certain degree of
regulatory autonomy in encumbering the use of trademarks by special requirements under Article 20
and an analysis of alternative measures is not required under this provision. 1799 In light of the
contribution to Australia's objective that the trademark requirements of the TPP measures make, we
consider that Australia's public health reasons for the adoption of the TPP measures sufficiently
supported the far-reaching encumbrances on the use of trademarks resulting from the trademark
requirements of the TPP measures.
6.698. Finally, we turn to address the appellants' consequential claims of error under Article 11 of
the DSU. The appellants submit that, as a result of the Panel's reliance on its findings regarding
contribution of the TPP measures made in the context of Article 2.2 of the TBT Agreement, which
the appellants challenge under Article 11 of the DSU, the Panel's conclusions regarding contribution
in the context of analysis under Article 20 are also flawed.1800 We recall that, in its analysis under
Article 20 of the TRIPS Agreement, the Panel relied on its conclusions that the TPP measures are apt
to and do make a contribution to Australia's objective, made in the context of Article 2.2 of the
TBT Agreement. In paragraph 6.373. above, we have upheld the Panel's findings under Article 2.2
of the TBT Agreement that the TPP measures are apt to and do make a contribution to Australia's
objective of reducing the use of, and exposure to , tobacco products. We therefore dismiss the

1796 Panel Report, para. 7.2593.
1797 Panel Report, para. 7.2593.
1798 Panel Report, para. 7.2604.
1799 As noted, while it may be possible that, in the circumstances of a particular case, an alternative
measure that would lead to at least an equivalent contribution could call into question whether the reasons for
the adoption of the special requirements sufficiently support the resulting encumbrances on the use of the
trademark, such an examination is not a necessary inquiry under Article 20.
1800 Honduras' appellant's submission, para. 284; Dominican Republic's appellant's submission,
para. 1547.
WT/DS435/AB/R • WT/DS441/AB/R

appellants' consequential claim under Article 11 of the DSU regarding these findings raised in the
context of Honduras' challenge under Article 20 of the TRIPS Agreement.
6.699. In light of all of the above, we consid er that the Panel did not err in its examination of
whether the reasons for special requirements under the TPP measures sufficiently support the
resulting encumbrances.
6.3.2.4.3 The weight attributed by the Panel to the FCTC Guidelines
6.700. Honduras claims that the Panel gave undue legal weight to the FCTC and its Guidelines.1801
Honduras considers that the Panel's conclusion that the "good reasons" of public health protection
"sufficiently support[ed]" the TPP measures was based on two main elements: (i) the contribution
to the reduction of smoking ; and (ii) Australia's pursuance of its "relevant domestic public health
objective in line with the emerging multilateral public health policies in the area of tobacco control
as reflected in the FCTC and the work under its auspic es, including the Article 11 and Article 13
FCTC Guidelines".1802 Honduras considers that the FCTC does not include any binding "commitment"
to adopt plain packaging1803, and that its Guidelines cannot be used to justify WTO-inconsistent plain
packaging measures, especially in situations where countries go beyond the requirements of the
FCTC, as Australia does.1804
6.701. Australia responds that no party ever argued that the FCTC mandated the adoption of
tobacco plain packaging, nor did the Panel find that the FCTC Guidelines could be used to justify
otherwise WTO -inconsistent measures. 1805 Australia points out that the adoption of the
recommendation by 180 countries is "highly relevant"1806 to the analysis of unjustifiability.1807
6.702. At the outset, we recall that Australia had argued before the Panel that Articles 11 and 13
of the FCTC Guidelines1808 constitute a "relevant international standard" for tobacco plain packaging
within the meaning of Article 2.5 of the TBT Agreement.1809 The Panel disagreed with Australia that
Articles 11 and 13 of the FCTC Guidelines constitute a "standard" within the meaning of Annex 1.2
to the TBT Agreement and considered that it did not have to further examine whether they are
"international".1810 The Panel remarked that "the FCTC and certain FCTC Guidelin es have been
specifically discussed and relied on as evidence in at least two previous WTO disputes", which are
Dominican Republic – Import and Sale of Cigarettes and US – Clove Cigarettes.1811 The Panel noted
that Australia and certain complainants referred to the FCTC and its Guidelines as "evidence in
support of specific arguments". 1812 The Panel saw no reason to assume that the FCTC and its
Guidelines "could not inform, together with other relevant evidence" , the Panel's understanding of
relevant aspects of t he matters at issue, such as "tobacco control measures … to reduce … the
prevalence of tobacco use". 1813 These preliminary observations about the FCTC and its Guidelines

1801 Honduras' appellant's submission, paras. 299-312.
1804 Honduras' appellant's submission, paras. 303-306.
1805 Australia's appellee's submission, paras. 253-254.
1806 Australia's appellee's submission, para. 254. (emphasis original)
1807 Australia's appellee's submission, para. 254.
1808 Article 11 of the FCTC Guidelines concerns packaging and labelling of tobacco products. Article 13 of
the FCTC Guidelines concerns measures against tobacco advertising, promotion, and sponsorship.
1809 Panel Report, para. 7.264.
1810 Panel Report, paras. 7.397 and 7.400.
1811 Panel Report, paras. 7.412-7.414 (referring to Panel Reports, Dominican Republic – Import and Sale
of Cigarettes, paras. 1.6, 4.370, and 7.216; US – Clove Cigarettes, paras. 2.2, 2.30, 7.4, and 7.229-7.232).
1812 Panel Report, para. 7.416. In particular, the Panel noted that "Honduras and Cuba cite[d] Article 11
of the FCTC in the course of their arguments regarding 'wear-out' effects of GHWs." (Panel Report, fn 1272 to
para. 7.416 (referring to Honduras' response to Panel question No. 126, p. 38 and fn 148 thereto;
second written submission to the Panel, para. 51 and fn 50 thereto; Cuba's second written submission to the
Panel, para. 155 and fn 56 thereto)). The Panel further noted that the Dominican Republic referenced
Article 11 of the FCTC and relied on Article 11 of the FCTC Guidelines. (Panel Report, fn 1272 to para. 7.416
(referring to Dominican Republic's comments on Australia's response to Panel question No. 148, para. 87 and
fn 105 thereto; comments on Australia's response to Panel question No. 204, para. 891 and fn 958 thereto,
1813 Panel Report, para. 7.416 (quoting FCTC (Panel Exhibits AUS-44, JE-19), Article 3).
WT/DS435/AB/R • WT/DS441/AB/R

suggest that the Panel intended to use the m, where relevant, "as evidence" rather than as an
interpretative tool.
6.703. In the part of its analysis under Article 20 of the TRIPS Agreement that examined whether
the reasons for the trademark requirements under the TPP measures sufficiently supported the
resulting incumbrances, the Panel made the following reference to the FCTC Guidelines:
7.2595. We recall that the Article 11 FCTC Guidelines provide that t he Parties to the
FCTC "should consider adopting measures to restrict or prohibit the use of logos, colours,
brand images or promotional information on packaging other than brand names and
product names displayed in a standard colour and font style (plain packaging)".
Similarly, the Article 13 FCTC Guidelines recommend that the Parties to the FCTC
"consider adopting plain packaging requirements to eliminate the effects of advertising
or promotion on packaging". The Guidelines elaborate on the standard features of plain
packaging as including nothing other than a brand or product name, without any logos
or other features, in a prescribed font style and size.
7.2596. We note the reference made in the TPP Act and its Explanatory Memorandum
to Australia's intention of giving effect to certain obligations under the FCTC through the
adoption of the TPP measures. In our view, the importance of the public health reasons
for which the trademark -related special requirements under the TPP measures are
applied is further underscored by the fact that Australia pursues its domestic public
health objective in line with its commitments under the FCTC, which "was developed in
response to the globalization of the tobacco epidemic" and has been ratified by
180 countries.1814
6.704. In this statement, having recalled the content of Articles 11 and 13 of the FCTC Guidelines,
the Panel observed that "the importance of the public health reasons" for the adoption of the
TPP measures "is further underscored by the fact that Australia purs ues its domestic public health
objective in line with its commitments under the FCTC".1815 We recall, in this respect, that the Panel
had previously established that the objective pursued by Australia through the TPP measures was
"to improve public health by reducing the use of, and exposure to, tobacco products". 1816 Contrary
to what Honduras argues, we do not see the Panel suggesting that the FCTC Guidelines, in particular
Articles 11 and 13, include a commitment to adopt TP P. Rather, as the Panel explicitly re cognized,
that Article 11 of the FCTC Guidelines provides "that the Parties to the FCTC 'should consider
adopting'" TPP measures and that "the Article 13 FCTC Guidelines recommend that the Parties to
the FCTC 'consider adopting plain packaging requirements'."1817
6.705. Further, in reaching its conclusion as to whether the reasons for the trademark requirements
under the TPP measures sufficiently supported the resulting incumbrances, the Panel made the
following observation:
Overall, we are not persuaded that the complainants have demonstrated that Australia
has acted beyond the bounds of the latitude available to it under Article 20 to choose an
appropriate policy intervention to address its public health concerns in relation to
tobacco products, in imposing certain special requirements under the TPP measures that
encumber the use of trademarks in the course of trade. … As noted above, the fact that
the special requirements, as part of the overall TPP measures and in combination with
other tobacco-control measures mai ntained by Australia, are capable of contributing,
and do in fact contribute, to Australia's objective of improving public health by reducing
the use of, and exposure to, tobacco products, suggests that the reasons for which these
special requirements are applied provide sufficient support for the application of the
resulting encumbrances on the use of trademarks. We further note that Australia, while
having been the first country to implement tobacco plain packaging, has pursued its
relevant domestic publi c health objective in line with the emerging multilateral public

1814 Panel Report, paras. 7.2595-7.2596. (fns omitted)
1817 Panel Report, para. 7.2595.
WT/DS435/AB/R • WT/DS441/AB/R

health policies in the area of tobacco control as reflected in the FCTC and the work under
its auspices, including the Article 11 and Article 13 FCTC Guidelines.1818
6.706. We note that, in the structu re of the Panel's analysis under Article 20 of the
TRIPS Agreement, the above statement is contained in the penultimate paragraph, before the
Panel's overall finding that the complainants failed to establish the inconsistency of the
trademark-related requirements of the TPP measures. Moreover, we note that, in the structure of
the paragraph at issue, the observation about the FCTC Guidelines comes in the last sentence, after
the Panel's conclusion that it was "not persuaded that the complainants have demons trated that
Australia has acted beyond the bounds of the latitude available to it under Article 20".1819 In this
sentence, the Panel recognizes, as a matter of fact, that Australia was the first country to implement
tobacco plain packaging and that it did so "in line with the emerging multilateral public health policies
in the area of tobacco control as reflected in the FCTC …, including the Article 11 and Article 13
FCTC Guidelines".1820 Moreover, this observation is introduced by the phrase "[w]e further note"1821,
which suggests that the Panel relied on it as a further confirmation of the findings that it had already
made about the importance of Australia's objective.
6.707. In light of the above, we do not agree with Honduras that the Panel attributed undue legal
weight to Articles 11 and 13 of the FCTC Guidelines in its analysis by relying on those provisions to
justify Australia's imposition of the TPP measures. In our view, the Panel referred to Articles 11 and
13 of the FCTC Guidelines as additional factual support to its previous conclusion that the
complainants failed to establish that Australia acted inconsistently with Article 20 of the
TRIPS Agreement.
6.3.2.5 Whether the Panel acted inconsistently with Articles 7.1 and 11 of the DSU in its
analysis of the TPP measures' requirements for individual cigarette sticks
6.708. The Dominican Republic claims that the Panel failed to assess its claim under Article 20 of
the TRIPS Agreement regarding the prohibition of all trademarks on individual cigarette sticks and
thus acted inconsis tently with Articles 7.1 and 11 of the DSU. 1822 The Dominican Republic argues
that such prohibition on the use of trademarks on cigarette sticks is "materially different" from the
prohibition regarding tobacco packaging and cigar sticks. 1823 In the Dominican Republic's view, the
Panel "entirely failed to consider the situation of cigarette sticks in the context of its analysis under
Article 20 of the TRIPS Agreement"1824 despite this important distinction and thus "disregarded the
Dominican Republic's claim against a discrete element of the TPP measures".1825 The
Dominican Republic thus requests that we reverse the Panel's findings under Article 20 of the
TRIPS Agreement because the Panel did not make " any assessment"1826 of the part of the matter
related to the appearance of individual cigarette sticks and that the Panel violated Articles 7.1 and 11
of the DSU in this regard.
6.709. Australia responds that the Panel did examine the Dominican Republic's claim concerning
individual cigarette sticks under Article 20 of the TRIPS Agreement.1827 Australia notes that the Panel
made findings with respect to the TPP measures, which include prohibitions on the use of any
trademarks on individual cigarette sticks. 1828 Australia also considers t hat the Panel's reasoning

1818 Panel Report, para. 7.2604.
1819 Panel Report, para. 7.2604.
1820 Panel Report, para. 7.2604.
1821 Panel Report, para. 7.2604.
1822 Dominican Republic's appellant's submission, para. 1545. The Dominican Republic argues that it
made sufficiently clear in its panel request and its first written submission to the Panel that the "matter" at
issue covered the appearance of individual cigarette sticks. (Ibid., paras. 1576-1578 (referring to
Dominican Republic's panel request, pp. 2-3; first written submission to the Panel, para. 648))
1823 Dominican Republic's appellant's submission, para. 1569. The Dominican Republic observes that the
Panel evaluated and made findings on the justifiability of the TPP measures' restrictions on the use of
trademarks on tobacco product packaging and cigar sticks. (Ibid., para. 1543)
1824 Dominican Republic's appellant's submission, para. 1569.
1825 Dominican Republic's appellant's submission, para. 1543.
1826 Dominican Republic's appellant's submission, para. 1582. (emphasis original)
1827 Australia's appellee's submission, para. 256.
1828 Australia's appellee's submission, para. 256.
WT/DS435/AB/R • WT/DS441/AB/R

encompasses the requirements affecting the appearance of both retail packaging and tobacco
products.1829
6.710. We recall that, in its panel request, the Dominican Republic stated that the TPP measures
establish comprehensive regulation of the appearance and form of the retail packaging of
tobacco products, as well as of the tobacco products themselves. The TPP measures, inter alia ,
"establish that individual cigarettes may not display trademarks, geographical indications or any
other marking other than an alphanumeric code for product identification purposes". 1830 We note,
however, that in its written submissions to the Panel, the Dominican Republic did not make a
separate case of inconsistency with Article 20 with respect to the TPP measures' requirements on
the appearance of cigarette sticks. 1831 Nor did it request that the Panel make separate findings
regarding whether this specific aspect of the TPP measures is inconsistent with Article 20. Rather,
the Dominican Republic requested the Panel to find that the TPP measures themselves are
inconsistent with Article 20.1832
6.711. In its examination of the nature and extent of the encumbrances resulting from the
TPP measures, the Panel first recalled that the TPP measures cover the retail packaging of tobacco
products and the appearance of tobacco products themselves (including individual cigarette sticks
and cigars). 1833 The Panel described the requirements that apply for each category of products
covered by the TPP measures.1834 In particular, the Panel noted that " [i]n respect of tobacco
products, the TPP measures prohibit the use of all trademarks on cigarettes."1835 This suggests that,
at the beginning of its analysis, the Panel indicated that its inquiry would cover the TPP measures'
requirements for the packaging of tobacco products and the tobacco products themselves, i.e. cigars
and cigarette sticks.
6.712. In its subsequent analysis, the Panel focused on the prohibition on the use of figurative
trademarks, as well as of the figurative and stylized elements of composite and word marks. The
Panel characterized the prohibitions under the TPP measures as "far-reaching" and underlined that
the TPP measures "prevent any non-word components of the relevant trademarks" from appearing
on tobacco packaging and products.1836 At the same time, the Panel noted that "the TPP measures

1829 Australia's appellee's submission, paras. 257-263 and 270.
1830 Dominican Republic's panel request, section A, p. 2. (emphasis original)
1831 The Dominican Republic's arguments focused on the lack of "evidence" for the imposition of
prohibitions on all trademarks on cigarette sticks (Dominican Republic's first written submission to the Panel,
paras. 43-44, 361, 648-649, 655, 659, and 869; second written submission to the Panel, para. 204, 548-549,
and 551-552) We note that, although the Dominican Republic argued that the requirement on cigarette sticks
is "formally distinct from the packaging requirements" and that the Panel should "consider this requirement
separately from trademark requirements relating to the packaging", in our view the Dominican Republic's
arguments regarding cigarette sticks were not materially different from its arguments regarding retail
packaging. (Dominican Republic's second written submission to the Panel, para. 549) Regarding cigarette
sticks, the Dominican Republic argued that there was no "evidence base" for the requirement pertaining to
cigarette sticks, that the mechanisms through which the [T]PP measures are intended to contribute to
Australia's objective do not apply to cigarette sticks, and that, even if they did, the evidence indicates that the
TPP measures have not made such a contribution. (Ibid., paras. 549-554) In our view, these arguments are
identical to the Dominican Republic's arguments that the plain packaging requirements were not "justifiable" on
the basis that "Australia's predictions regarding the expected impact of the PP measures were wrong",
"Australia's conceptual framework rests on fundamental misconceptions regarding behavioural theory", and the
evidence showed that "the PP measures have not even changed Australia's posited antecedents of behaviour,
which provide the foundation for Australia's case that the measure will change smoking behaviour in the
future." (Ibid., paras. 312-313 and 378)
1832 See Dominican Republic's first written submission to the Panel, para. 1032; second written
1833 Panel Report, para. 7.2556.
1834 The Panel noted that, with respect to the retail packaging, the TPP measures "permit the use of
word marks that denote the brand, business or company name, or the name of the product variant, so long as
these trademarks appear in the form prescribed by the TPP Regulations, but prohibit the use of stylized word
marks, composite marks and figurative marks". The Panel noted that, with respect to cigars, the TPP measures
"permit the use of trademarks denoting the brand, business, or company name, or the name of the product
variant, as well as the country of origin, so long as these trademarks appear in the form prescribed by the
TPP Regulations". (Panel Report, para. 7.2556) (fn omitted)
1835 Panel Report, para. 7.2556. We recall that, while all trademarks are prohibited from appearing on
individual cigarette sticks, a cigarette may be marked with an alphanumeric code, which may appear on the
1836 Panel Report, para. 7.2558.
WT/DS435/AB/R • WT/DS441/AB/R

allow undertakings to use word marks that denote the brand, business or company name, or the
name of the product variant on retail packaging of tobacco products for the purposes of
distinguishing their tobacco products from those of other undertakings." 1837 The Panel stated that
the complainants had "not sought to demonstrate that consumers have in fact been unable to
distinguish the commercial source of tobacco products of one undertaking from those of other
undertakings (i.e. the identity of the source or maker of the product) as a result of the TPP trademark
requirements".1838 Summarizing the complainants' claim further, the Panel added that "they argue
that the removal of figurative elements has undermined the ability of trademarks to signal individual
tobacco products' quality, characteristics and reputation to consumers."1839
6.713. In its reasoning, the Panel then focused on the "role played … by colours and other design
features, the use of which is prohibited by the TPP measures", recalling that "the TPP measures
prevent these trademark features from being used by trademark owners in the marketplace as a
means of product promotion or differentiation." 1840 The Panel nevertheless considered that these
prohibitions were "partly mitigated by the fact that the TPP measures allow[ed] tobacco
manufacturers to use word trademarks".1841 The Panel then analysed the effect of the TPP measures
on the trademark owners' ability to extract economic value from its trademark.1842
6.714. In its final conclusion regarding the consistency of the TPP measures with Article 20 of the
TRIPS Agreement, the Panel stated that "the complainants have not demonstrated that the
trademark-related requirements of the TPP measures unjustifiably encumber the use of trademarks
in the course of trade within the meaning of Article 20 of the TRIPS Agreement."1843
6.715. Having reviewed the relevant parts of the Panel's analysis, we note that, at the beginning of
the section addressing the nature and extent of the encumbrances at issue, in summarizing the
requirements of the TPP measures, the Panel indicated that its inquiry would cover the
TPP measures' requirements for, inter alia, the appearance of individual cigarette sticks.1844 We recall
our understanding, expressed above, t hat, in its analysis, the Panel examined the permissive and
prohibitive elements of the TPP measures together and that it reached its conclusion that the
encumbrances at issue were "far -reaching"1845, taking into account both the permissive and
prohibitive elements of the TPP measures. Moreover, it appears to us that the Panel examined the
consistency of the TPP measures with Article 20 of the TRIPS Agreement as a whole, without
differentiating between the specificities of their application to tobacco packaging and products.
6.716. We recall, in this respect, that, in our view, the Panel characterized the encumbrances
imposed by the TPP measures as "far-reaching" (as opposed to, for example, constituting an ultimate
degree of encumbrance) because, despite the prohibition on the use of figurative marks on tobacco
products and packaging and all marks on cigarette sticks, the TPP measures permitted the use of
word marks on tobacco packaging and cigars. Moreover, we consider that the fact that the Panel
placed an emphasis on the TPP measures' prohibition on the use of non-word marks can be explained
by the arguments raised by the complainants before the Panel. In this respect, we note that, in
summarizing the complainants' arguments, the Panel stated that "they argue[d] that the removal of
figurative elements has undermined the ability of trademarks to signal individual tobacco products'
quality, characteristics and reputation to consumers." 1846 Furthermore, as stated above, the
complainants do not appear to have made a separate case of inconsistency with Article 20 with
respect to the TPP measures' requirements on cigarette sticks.
6.717. Finally, we note that the Panel reached its conclusions under Ar ticle 20 with respect to the
TPP measures as whole. The Panel found that "the complainants have not demonstrated that the
trademark-related requirements of the TPP measures unjustifiably encumber the use of trademarks
in the course of trade within the mean ing of Article 20 of the TRIPS Agreement."1847 In our view,

1837 Panel Report, para. 7.2564.
1839 Panel Report, para. 7.2564.
1840 Panel Report, para. 7.2567.
1841 Panel Report, para. 7.2570.
1842 Panel Report, paras. 7.2571-7.2573.
1843 Panel Report, para. 7.2605.
1844 Panel Report, para. 7.2556.
1845 Panel Report, paras. 7.2557 and 7.2569.
1846 Panel Report, para. 7.2564.
1847 Panel Report, para. 7.2605.
WT/DS435/AB/R • WT/DS441/AB/R

this conclusion covers the trademark requirements of the TPP measures as they apply to packaging
of tobacco products as well as tobacco products themselves, including cigarette sticks.
6.718. In light of th e foregoing, we do not consider that the Panel failed to address the
Dominican Republic's claim that the TPP measures' requirements for individual cigarette sticks,
which prohibit the use of any trademarks on a cigarette, are inconsistent with Article 20 of the
TRIPS Agreement. We therefore reject the Dominican Republic's claim under Articles 7.1 and 11 of
the DSU.
6.3.2.6 Conclusion
6.719. In light of the above, we consider that the Panel did not err in its interpretation, in
paragraph 7.2430 of the Panel Report, of the term "unjustifiably" in Article 20 of the
TRIPS Agreement and in its application of this interpretation to the facts of the present dispute.
Consequently, we uphold the Panel's finding that the complainants have not demonstrated that the
TPP measures are i nconsistent with Australia's obligations under Article 20 of the
TRIPS Agreement.1848
7 FINDINGS AND CONCLUSIONS
7.1. For the reasons set out in these Reports, the Appellate Body makes the following findings and
conclusions:
7.1 Article 2.2 of the TBT Agreement
7.2. With respect to the contribution of the TPP measures to Australia's objective, we have found
that the appellants have not demonstrated that the Panel erred in finding, in paragraphs 7.1025 and
7.1043 of the Panel Report, that:
7.1025. Overall … the complainants have not demonstrated that the TPP measures are
not apt to make a contribution to Australia's objective of improving public health by
reducing the use of, and exposure to, tobacco products. Rather, we find that the
evidence before us, taken in its totality, supports the view that the TPP measures, in
combination with other tobacco-control measures maintained by Australia (including the
enlarged GHWs introduced s imultaneously with TPP), are apt to, and do in fact,
contribute to Australia's objective of reducing the use of, and exposure to, tobacco
products.
…
7.1043. Taken as a whole, therefore, we consider that the evidence before us supports
the view that, as applied in combination with the comprehensive range of other tobacco
control measures maintained by Australia and not challenged in these proceedings,
including a prohibition on the use of other means through which branding could
otherwise contribute to the appeal of tobacco products and to misleading consumers
about the harmful effects of smoking, the TPP measures are apt to, and do, make a
meaningful contribution to Australia's objective of reducing the use of, and exposure to,
tobacco products.1849
7.3. With respect to the trade restrictiveness of the TPP measures, we find that the appellants have
not demonstrated that the Panel erred in finding, in paragraph 7.1255 of the Panel Report, that:
[T]he TPP measures are trade -restrictive, insofar as, by reducing the us e of tobacco
products, they reduce the volume of imported tobacco products on the Australian
market, and thereby have a "limiting effect" on trade. We also conclude that, while it is
plausible that the measures may also, over time, affect the overall value of tobacco
imports, the evidence before us does not show this to have been the case to date. We

1848 Panel Report (DS435), paras. 7.2606 and 8.1.e; Panel Report (DS441), paras. 7.2606 and 8.1.b.iv.
1849 Panel Report, paras. 7.1025 and 7.1043.
WT/DS435/AB/R • WT/DS441/AB/R

are also not persuaded that the complainants have demonstrated that the TPP measures
impose conditions on the sale of tobacco products in Australia or complian ce costs of
such magnitude that they would amount to a limiting effect on trade.1850
7.4. With respect to the alternative measures, we have found that the Panel erred in finding
that the complainants failed to demonstrate that each of the two alternative measures would
be apt to make a contribution equivalent to that of the TPP measures.1851 Specifically, to the
extent that the Panel suggested that each alternative measure may be considered apt to
achieve a similar or comparable degree of "meaningful" overall reductio n in smoking in
Australia to that of the TPP measures, and yet its contribution would not be equivalent because
of its failure to address the design features of tobacco packaging that the TPP measures seek
to address in the context of Australia's broader tobacco control policy, we have found that the
Panel erred in its application of Article 2.2.
7.5. At the same time, we have found that the Panel did not err in finding that the
complainants failed to demonstrate that these two alternative measures are less
trade-restrictive than the TPP measures.1852 Consequently, although we have found that the
Panel erred in its application of Article 2.2 with respect to the equivalence of the contribution
of each alternative measure, the Panel's findings, in paragraphs 7.1471 and 7.1545 of the
Panel Report, that the complainants had not demonstrated that the increase in the MLPA and
the increase in taxation would each "be a less trade-restrictive alternative to the TPP measures
that would make an equivalent contribution to Australia's objective", stand.
7.6. For these reasons, we uphold the Panel's conclusion, in paragraph 7.1732 of the
Panel Report, that:
[T]he complainants have not demonstrated that the TPP measures are more
trade-restrictive than necessary to fulfil a legitimate o bjective, within the meaning of
Article 2.2 of the TBT Agreement.1853
7.2 Article 16.1 of the TRIPS Agreement
7.7. Article 16.1 of the TRIPS Agreement grants a trademark owner the exclusive right to preclude
unauthorized third parties from using, in the course of trad e, identical or similar signs for goods or
services that are identical or similar to those with respect to which the trademark is registered. The
owner of a registered trademark can exercise its "exclusive right" a s against an unauthorized
third party but not against the WTO Member in whose territory the trademark is protected. Neither
the TRIPS Agreement nor the provisions of the Paris Convention (1967) that are incorporated by
reference into the TRIPS Agreement confer upon a trademark owner a positive rig ht to use its
trademark or a right to protect the distinctiveness of that trademark through use. Accordingly, there
is no corresponding obligation on Members to give effect to such "rights". Instead, in accordance
with Article 1.1 of the TRIPS Agreement, Members are required to give effect to Article 16.1 by
ensuring that, in the Members' domestic legal regimes, the owner of a registered trademark can
exercise its "exclusive right to prevent" the infringement of its trademark by unauthorized
third parties. Hence, for purposes of WTO dispute settlement, i n order to establish that a
WTO Member has acted inconsistently with Article 16.1, the complaining Member must demonstrate
that, under the responding Member's domestic legal regime, the owner of a registered trademark
cannot exercise its "exclusive right to prevent" the infringement of its trademark by unauthorized
third parties.
7.8. For these reasons, we conclude that the Panel did not err in its interpretation in finding, in
paragraphs 7.1978, 7.1980, and 7.2031 of the Panel Report, that:
7.1978. In light of the ordinary meaning of the text and consistently with prior rulings,
we agree with the parties that Article 16.1 does not establish a trademark owner's right
to use its registered trademark. Rather, Article 16.1 only provides for a registered

1850 Panel Report, para. 7.1255.
1851 Panel Report, paras. 7.1464 and 7.1531.
1852 Panel Report, paras. 7.1417 and 7.1495.
1853 See also Panel Report (DS435), para. 8.1.a; Panel Report (DS441), para. 8.1.b.i.
WT/DS435/AB/R • WT/DS441/AB/R

trademark owner's right to prevent certain activities by unauthorized third parties under
the conditions set out in the first sentence of Article 16.1.
7.1980. [I]n order to show that the TPP measures violate Australia's obligation under
Article 16.1, the complainants would have to demonstrate that, under Australia's
domestic law, the trademark owner does not have the right to prevent third -party
activities that meet the conditions set out in that provision.
7.2031. [W]e therefore conclude that the possibility of a reduced occurrence of a
"likelihood of confusion" in the market does not, in itself, constitute a violation of
Article 16.1, because Members' compliance with the obligation to provide the right to
prevent trademark infringements under Article 16.1 is independent of whether such
infringements actually occur in the market. Article 16.1 does not require Members to
refrain from regulatory measures that may affect the ability to maintain distinctiveness
of individual trademarks or to provide a "minimum opportunity" to use a trademark to
protect such distinctiveness.1854
7.9. Having found no error in the Panel's interpretation, we agree with the Panel that there was "no
need to examine further the complainants' factual allegation that the TPP measures' prohibition on
the use of certain tobacco -related trademarks will in fact reduce the distinctiveness of such
trademarks, and lead to a situation where a 'likelihood of confusion' with respect to these trademarks
is less likely to arise in the market" .1855 Honduras' claims that the Panel erred in its application of
Article 16.1 and failed to make an objective assessment of the matter as required by Article 11 of
the DSU are conditioned on our reversal of the Panel's interpretat ion. The condition on which
Honduras' appeal is predicated, i.e. the reversal of the Panel's interpretation, has not been satisfied.
Consequently, we have found that we need not address Honduras' remaining claims of error.
7.10. In light of the foregoing, we uphold the Panel's conclusion, in paragraph 7.2051 of the
Panel Report, that "the complainants have not demonstrated that the TPP measures are inconsistent
with Australia's obligations under Article 16.1 of the TRIPS Agreement."1856
7.3 Article 20 of the TRIPS Agreement
7.11. The ordinary meaning of the term "unjustifiably", read in the context of other provisions of
the TRIPS Agreement, indicates that Members enjoy a certain degree of discretion in imposing
encumbrances on the use of trademarks under Article 20 of the TRIPS Agreement.1857 In order to
establish that the use of a trademark in the course of trade is being unjustifiably encumbered by
special requirements, the complainant has to demonstrate that a policy objective pursued by a
Member imposing special requirements does not sufficiently support the encumbrances that result
from such special requirements. Such a demonstration could include a consideration of: (i) the
nature and extent of encumbrances resulting from special requirements, taking into account the
legitimate interest of the trademark owner in using its trademark in the course of trade; (ii) the
reasons for the imposition of special requirements; and (iii) a demonstration of how the reasons for
the imposition of special requirements support the resulting en cumbrances.1858 Moreover, while in
the circumstances of a particular case, the existence of an alternative measure involving a lesser
degree of encumbrance on the use of a trademark could be used as a consideration in evaluating
the justifiability of special requirements and related encumbrances on the use of a trademark, such
an examination is not a necessary inquiry under Article 20 of the TRIPS Agreement.
7.12. We therefore consider that the Panel did not err in the interpretation of Article 20 of the
TRIPS Agreement in stating, in paragraph 7.2430 of the Panel Report, that:

1854 Panel Report, paras. 7.1978, 7.1980, and 7.2031. (fns omitted)
1855 Panel Report, para. 7.2032.
1856 Panel Report (DS435), paras. 7.2051 and 8.1.d; Panel Report (DS441), paras. 7.2051 and 8.1.b.iii.
1857 The degree of discretion reflected through the term "unjustifiably" in Article 20 is higher than it
would have been, had the term reflecting the notion of "necessity" been used in this provision.
1858 Panel Report, para. 7.2430.
WT/DS435/AB/R • WT/DS441/AB/R

[A] determination of whether the use of a trademark in the course of trade is being
"unjustifiably" encumbered by special requirem ents should involve a consideration of the
following factors:
a. the nature and extent of the encumbrance resulting from the special requirements, bearing
in mind the legitimate interest of the trademark owner in using its trademark in the course
of trade and thereby allowing the trademark to fulfil its intended function;
b. the reasons for which the special requirements are applied, including any societal interests
they are intended to safeguard; and
c. whether these reasons provide sufficient support for the resulting encumbrance.1859
7.13. We also find that the Panel did not err in it s application of this interpretation to the facts of
the present dispute. Consequently, we uphold the Panel's conclusion, in paragraph 7.2606 of the
Panel Report, that the complainants have not demonstrated that the TPP measures are inconsistent
with Australia's obligations under Article 20 of the TRIPS Agreement.1860
7.4 Recommendation
7.14. The Panel rejected the complainants' claims and found that Honduras and the
Dominican Republic had not demonstrated that the TPP measures are inconsistent with the
provisions of the covered agreements at issue. In light of these findings, the Panel declined
Honduras' and the Dominican Republic's requests that the Panel recommend, in accordance with
Article 19.1 of the DSU, that the DSB request Australia to bring the measures at issue into conformity
with the TRIPS Agreement and the TBT Agreement.
7.15. Having upheld the Panel's findings under Article 2.2 of the TBT Agreement and Articles 16.1
and 20 of the TRIPS Agreement, it follows that we also agree with the Panel that Honduras and the
Dominican Republic have not succeeded in establishing that Australia's TPP measures are
inconsistent with the provisions of the covered agreements at issue. Accordingly, we make no
recommendation to the DSB, pursuant to Article 19.1 of the DSU.
Signed in the original in Geneva this 31st day of March 2020 by:

 Shree B. C. Servansing
 Presiding Member

 _________________________ _________________________
 Ujal Singh Bhatia Thomas R. Graham
 Member Member

1859 Panel Report, para. 7.2430. We note, at the same time, that, in paragraph 7.2430 of its Report, the
Panel used the auxiliary verb "should" in introducing the factors pertinent to the examination of whether the
use of a trademark in the course of trade is unjustifiably encumbered by special requirements. We wish to
clarify that, while an inquiry under Article 20 could include the consideration of the above-mentioned factors,
the degree of discretion vested in Members under Article 20 does not call for a rigid and exact set of
considerations that are relevant for the examination of whether the use of a trademark is unjustifiably
encumbered by special requirements.
1860 Panel Report (DS435), paras. 7.2606 and 8.1.e; Panel Report (DS441), paras. 7.2606 and 8.1.b.iv.