EUROPEAN COMMUNITIES – CUSTOMS CLASSIFICATION OF FROZEN BONELESS CHICKEN CUTS
Document: Complaint by Brazil Report of the Panel
Date: 30 May 2005
Document codes: WT/DS269/R
Complainant: Brazil
Respondent: EU
Third parties: China, Thailand, U.S.
Dispute stage: Appellate Body
Agreements cited: Art. II:1, XXIII  GATT 1994

EUROPEAN COMMUNITIES – CUSTOMS CLASSIFICATION
OF FROZEN BONELESS CHICKEN CUTS

Complaint by Brazil

Report of the Panel

I. INTRODUCTION
1.1 On 11 October 2002, Brazil requested consultations with the European Communities pursuant
to Article 4 of the Understanding on the Rules a nd Procedures Governing the Settlement of Disputes
(DSU) and Article XXII of the General Agre ement on Tariffs and Trade 1994 (GATT 1994)
(). The request concerned an EC Co mmission Regulation that Brazil alleged provided a
new description of the products at issue under th e EC's Combined Nomenclature (CN) Code
0207.14.10 namely, EC Commission Regulation No. 1223/2002 (EC Regulation No. 1223/2002),
which Brazil describe in its request for consultations as "frozen, boneless cuts of poultry impregnated
with salt in all parts, with a salt content by weight of 1.2%".
1.2 Consultations were held between Brazil and the European Communities on 5 December 2002
and 19 March 2003 but did not lead to a resolution of the dispute. As a result, in a communication
dated 19 September 2003
1, Brazil requested the establishment of a panel. Accordingly, the Dispute
Settlement Body (DSB) at its meeting of 7 Novemb er 2003 established the Panel with standard terms
of reference.
1.3 On 25 March 2003, Thailand requested cons ultations with the European Communities
pursuant to Article 4 of the DSU and Article XXII of the GATT 1994 () regarding the
"customs reclassification set out in the EC Regulation No. 1223/2002 of 8 July 2002". Thailand states
in its request for consultations that "frozen boneless chicken cuts impregnated with salt in all parts,
with a salt content by weight of 1.2% to 1.9% are reclassified as frozen boneless chicken cuts under
code 0207.14.10 of the EC's combined nomenclature (CN)" under EC Regulation No. 1223/2002.
1.4 Consultations were held between Thailand and the European Communities on 21 May 2003
but did not lead to a resolution of the dispute. As a result, in a communication dated 27 October
20032, Thailand requested the establishment of a panel. Accordingly, at its meeting of 21 November
2003, the DSB established the Panel with standard terms of reference. At that meeting, it was agreed
that, as provided for in Article 9.1 of the DSU in respect of multiple complainants, the Panel
established on 7 November 2003 to examine the comp laint by Brazil would also examine Thailand's
complaint (WT/DSB/M/158).
1.5 The terms of reference for the Panel are, therefore, the following:
"To examine, in the light of the relevant provisions of the covered agreements cited
by Brazil in document WT/DS269/3 and Thailand in document WT/DS286/5, the
matter referred to the DSB by Brazil and Thailand in those documents, and to make
such findings as will assist the DSB in ma king the recommendations or in giving the
rulings provided for in those agreements."
1.6 On 17 June 2004, Brazil and Thailand requested the Director-General to determine the
composition of the Panel, pursuant to paragraph 7 of Article 8 of the DSU. That paragraph provides:
"If there is no agreement on the panelists within 20 days after the date of the
establishment of a panel, at the request of either party, the Director-General, in
consultation with the Chairman of the DSB and the Chairman of the relevant Council
or Committee, shall determine the com position of the panel by appointing the
panelists whom the Director-General consid ers most appropriate in accordance with
any relevant special or additional rules or procedures of the covered agreement or
covered agreements which are at issue in th e dispute, after consulting with the parties
to the dispute. The Chairman of th e DSB shall inform the Members of the

1 WT/DS269/3 contained in Annex E.
2 WT/DS286/5 contained in Annex E.

composition of the panel thus formed no later than 10 days after the date the
Chairman receives such a request."
1.7 Accordingly, on 28 June 2004, the Director-General composed the Panel as follows:
Chairman: Mr Hugh McPhail

 Members: Ms Elizabeth Chelliah
 Mr Manzoor Ahmad

1.8 Brazil (in respect of Thailand's complaint), China, Thailand (in respect of Brazil's complaint)
and the United States reserved their third-party rights to participate in the Panel's proceedings. Chile
and Colombia withdrew as third parties prior to the Panel's first substantive meeting with the parties.
1.9 The Panel held the first substantive meeting with the parties on 28 and 29 September 2004.
The session with the third parties took place on 29 Se ptember 2004. The Panel's second substantive
meeting with the parties was held on 17 and 18 November 2004.
1.10 On 23 December 2004, the Panel issued the Descriptive Part of its Panel Report.
II. FACTUAL ASPECTS
2.1 This dispute concerns the question of whethe r a number of EC measures pertaining to the
classification of certain salted chicken cuts result in treatment for those chicken cuts that is less
favourable than that provided for in EC Schedule L XXX (the EC Schedule) in violation of Article II
of the GATT 1994
3.
A. EC SCHEDULE LXXX
2.2 EC Schedule LXXX was the subject of negotiations during the Uruguay Round between 1986
and 1994. The nomenclature used in the EC Sc hedule followed the 1992 version of the Harmonized
Commodity Description and Coding System (HS) . The European Communities currently respects
Schedule CXL, which is identical to Schedule LXXX in all respects that are relevant to this case.
2.3 Reproduced below are the two concessions (tariff lines 0207.41.10 and 0210.90.20) contained
in the EC Schedule to which reference has been made in this dispute:
 0207 Meat and edible offal, of the poultry of heading No. 0105,
 fresh, chilled or frozen:

 0207.41 -- Of fowls of the species Gallus domesticus:

 --- Cuts:

 0207.41.10 ---- Boneless

 0210.90 - Other, including edible flours and meals of meat or meat offal:

 - - M e a t :

 0210.90.20 --- Other

2.4 Products falling under the tariff line 0207.41.10 ar e subject to a bound specific duty rate of
1024 ECU/T or 102.4€/100kg/net. In addition, those products may be subject to a special safeguard
mechanism provided for in Article 5 of the Agre ement on Agriculture. Products falling under the
tariff line 0210.90.20 are subject to a final bound duty rate of 15.4 per cent.
B.
THE EUROPEAN COMMUNITIES' COMBINED NOMENCLATURE
2.5 The European Communities' CN was establis hed by a Council Regulation, namely EEC
Council Regulation No. 2658/87 of 23 July 1987 (EEC Regulation No. 2658/87).4 Pursuant to Article
1(2) of that Regulation, the CN comprises: (a) the HS nomenclature; (b) EC subdivisions to that
nomenclature, referred to as "CN subheadings"; an d (c) preliminary provisions, additional section or
chapter notes and footnotes relating to CN subheadings. Therefore, each subheading in the CN has an
eight-digit code number with the first six digits representing the corresponding digits in the HS and
the last two digits identifying CN subheadings. Addi tionally, a ninth digit is reserved for the use of
national statistical subdivisions and a tenth and eleventh digit for an EC integrated tariff, known as the
"Taric". The CN consists of 21 sections, covering 99 chapters. The CN is contained in Annex I of
EEC Regulation No. 2658/87.
2.6 EEC Regulation No. 2658/87 bestows certain powers to adopt measures in respect of the CN.
In particular, pursuant to Article 9, the EC Commission has power to adopt measures, inter alia ,
relating to:
 – the classification of goods;

 – explanatory notes;

 – amendments to the CN to take account of changes in requirements relating to statistics
or to commercial policy;

 – amendments to the CN and adjustment s to duties in accordance with decisions
adopted by the EC Council or the EC Commission;

 – amendments to the CN intended to adapt it to take account of technological or
commercial developments or aimed at the alignment or clarification of texts;

 – amendments to the CN resulting from changes to the HS nomenclature; and,

 – questions relating to the application, f unctioning and management of the HS to be
discussed within the Customs Cooperation Council [now the World Customs
Organization (WCO)], as well as their implementation by the EC.

4 OJ L 256, 7.9.1987, p.1.

2.7 The CN is supplemented by EC Council Regulation No. 2913/1992 establishing the
Community Customs Code
5, which is, in turn, supplemented by EC Commission Regulation
No. 2454/1993 laying down provisions for th e implementation of EC Council Regulation
No. 2913/1992.6 Article 12 of the Community Customs Code establishes the possibility for economic
operators to request "binding tariff information" (BTI) from the EC member States' customs
authorities.
2.8 The European Communities is a customs union. It has a common customs tariff between EC
member States and third countries. The EC member State administrations are responsible for all
operations relating to the implementation on a day-to -day basis of the CN. Economic operators can
challenge classification decisions in the courts of member States. Where such challenges take place,
the courts of member States can, and in specific ci rcumstances set out in the EC Treaty, are obliged,
to refer the matter to the European Court of Justice (ECJ).
C. HARMONIZED SYSTEM
2.9 The Harmonized Commodity Description and Coding System, generally referred to as the
"Harmonized System" or simply the "HS", is a multipurpose international product nomenclature
developed by the World Customs Organization (WCO ). It comprises about 5,000 commodity groups,
each identified by a 6-digit code, arranged in a le gal and logical structure and is supported by well-
defined rules to achieve uniform classification. Th e system is used by more than 190 countries and
economies as a basis for their customs tariffs and fo r the collection of international trade statistics. 7
The HS is governed by the International Conve ntion on the Harmonized Commodity Description and
Coding System (the HS Convention).
2.10 The HS originates from the "Geneva Nomenclatu re" (GN), which came into existence on 1
July 1937 in the form of the 1937 Draft Customs No menclature of the League of Nations. The GN
was replaced in 1959 by the Brussels Convention on No menclature for the Classification of Goods in
Customs Tariffs (BTN) 8, which was subsequently renamed as the Customs Co-operation Council
Nomenclature in 1974 (CCCN). The CCCN was replaced by the HS in 1988.
2.11 The HS is administered by the HS Committee, which was established under the auspices of
the WCO. The HS Committee is composed of representatives from each of the HS contracting
parties. The HS Committee may propose amendments to the HS and may prepare explanatory notes,
classification opinions, or provide other advice to be used as guidance in the interpretation of the HS.9
2.12 The EC became a contracting party to the HS on 22 September 1987, Brazil on 8 November
1988 and Thailand on 16 December 1992. The HS en tered into force for the European Communities
on 1 January 1988, for Brazil on 1 January 1989 and for Thailand on 1 January 1993.10
2.13 The HS has been amended three times since 1988 in order to take account of changes in
technology or in patterns of international trade. The first amendment occurred in 1992, the second in
1996 and the last in 2002. Like those of many ot her participants, the EC Schedule followed the 1992
version of the HS, that being the version in fo rce during the final stages of the Uruguay Round
negotiations.

5 OJ L 302, 19.10.1992, p.1.
6 OJ L 253, 11.10.1993, p.1.
7 Preamble to the HS Convention.
8 The BTN came into force on 11 September 1959, following the adoption on 1 July 1955 of a Protocol
of Amendment establishing a revised version of the Nomenclature.
9 Articles 6 and 7 of the HS Convention.
10 Position regarding Contracting Parties (on 30 June 2003) International Convention on the HS,
Document NG0087E1 of 6 October 2003.

2.14 Article 1 of the HS Convention states that th e HS "means the Nomenclature comprising the
headings and subheadings and their related numeric al codes, the Section, Chapter and Subheading
Notes and the General Rules for the interpretation of the Harmonized System, set out in the Annex to
this Convention." The HS Convention contains si x General Rules for the interpretation of the HS
(General Rules).
2.15 The main obligations of contracting parties to the HS Convention are set out in Article 3 of
the Convention, which reads as follows:
"1. Subject to the exceptions enumerated in Article 4:
(a) Each Contracting Party undertakes, except as provided in
subparagraph (c) of this para graph, that from the date on
which this Convention enters into force in respect of it, its
Customs tariff and statistical nomenclatures shall be in
conformity with the Harmonized System. It thus undertakes
that, in respect of its Customs tariff and statistical
nomenclatures:
 (i) it shall use all the headings and subheadings of the
Harmonized System without addition or modification,
together with their related numerical codes;
 (ii) it shall apply the General Rules for the interpretation
of the Harmonized System and all the Section, Chapter and
Subheading Notes, and shall not modify the scope of the
Sections, Chapters, headings or subheadings of the
Harmonized System; and
 (iii) it shall follow the numerical sequence of the
Harmonized System;
(b) Each Contracting Party shall also make publicly available its
import and export trade statistics in conformity with the six-
digit codes of the Harmonized System, or, on the initiative of
the Contracting Party, beyond that level, to the extent that
publication is not precluded for exceptional reasons such as
commercial confidentiality or national security;
(c) Nothing in this Article sha ll require a Contracting Party to
use the subheadings of the Harmonized System in its
Customs tariff nomenclature provided that it meets the
obligations at (a) (i), (a) (ii) and (a) (iii) above in a combined
tariff/statistical nomenclature.
2. In complying with the undertakings at paragraph 1 (a) of this Article, each
Contracting Party may make such textual adaptations as may be necessary to
give effect to the Harmonized System in its domestic law.
3. Nothing in this Article shall preven t a Contracting Party from establishing, in
its Customs tariff or statistical nomenclatures, subdivisions classifying goods
beyond the level of the Harmonized System, provided that any such
subdivision is added and coded at a level beyond that of the six-digit
numerical code set out in the Annex to this Convention."

2.16 Chapter 2 of the HS, being the Chapter primarily at issue in this dispute, is contained in
Annex D.
D.
EC REGULATIONS AND DECISIONS
2.17 The measures identified in Brazil's and Th ailand's respective Panel requests are EC
Regulation No. 1223/2002 and EC Commission Decision 2003/97/EC of 31 January 2003 (EC
Decision 2003/97/EC). Relevant excerpts of these two measures, as well as of several other EC
Regulations to which reference was made subsequen tly in the course of these proceedings, are set out
below. The various EC legal instruments are dealt with in chronological order.
1. EEC Regulation No. 2658/8711
2.18 As noted in paragraph 2.5 above, the C ouncil Regulation, EEC Regulation No. 2658/87
established a goods nomenclature called the CN, whic h is contained in Annex I of EEC Regulation
No. 2658/87.
2.19 Article 12 of EEC Regulation No. 2658/87 provides that:
"The Commission shall adopt each year by means of a Regulation a complete version
of the combined nomenclature together with the corresponding autonomous
conventional rates of duty of the Common Customs Tariff, as it results from measures
adopted by the Council or by the Commission. The said Regulation shall be
published not later than 31 October in the Official Journal of the European
Communities and it shall apply from 1 January of the following year."
2.20 Section I of the CN contain rules for the interpretation of the CN. Rule 1 states that:
"The titles of sections, chapters and sub-ch apters are provided for ease of reference
only; for legal purposes, classification shall be determined according to the terms of
the headings and any relative section or chapter notes ..."
2. EC Regulation No. 535/1994
12
2.21 An EC Commission Regulation, Commission Regulation (EC) No. 535/1994 (EC Regulation
No. 535/94), was adopted on 9 March 1994 and was publis hed in the Official Journal of the European
Communities on 11 March 1994. EC Regulation No. 535/94, which amended Annex I to EEC
Regulation No. 2658/87 containing the CN, introduced Additional Note 8 to Chapter 2 of the CN.
2.22 The preamble to EC Regulation No. 535/94 states that:
"Whereas, to ensure uniform application of the Combined Nomenclature, provisions
should be laid down for the classification of salted meat and edible meat offal falling
within CN code heading 0210, in order to distinguish them from fresh, chilled or
frozen meat and edible meat offal; whereas a total salt content of 1,2% or more by
weight appears an appropriate criterion fo r distinguishing between these two types of
products;

11 Council Regulation (EEC) No. 2658/87 of 23 July 1987, on the tariff and statistical nomenclature
and on the Common Customs Tariff, published in the Official Journal of the European Communities No. L 256,
7 September 1987, p. 1.
12 Commission Regulation (EC) No. 535/94, of 9 March 1994, amending Annex I to Council
Regulation (EEC) No. 2658/87 on the tariff and statistical nomenclature and on the Common Customs Tariff,
published in the Official Journal of the European Communities No. L 68, 11 March 1994, p.15.

Whereas an additional note to this effect should be inserted in Chapter 2 of the
Combined Nomenclature; whereas Annex I to Regulation (EEC) No. 2658/87 should
therefore be amended ...;"
2.23 Article 1 of EC Regulation No. 535/94 provides that:
"The following additional note shall be inserted in Chapter 2 of the Combined
Nomenclature annexed to Regulation (EEC) No 2658/87:
For the purposes of heading No 0210, the term 'salted' means meat or
edible meat offal which has been deeply and homogenously
impregnated with salt in all parts, having a total salt content no less
than 1.2% by weight."
2.24 EC Regulation No 535/94 entered into force on 1 April 1994.
3. EC Regulation No. 3115/199413
2.25 An EC Commission Regulation, Commission Regulation (EC) No. 3115/1994 (EC
Regulation No. 3115/94), was adopted on 20 D ecember 1994 and was published in the Official
Journal of the European Communities on 31 Dece mber 1994. EC Regulation No. 3115/94 amended
Annexes I and II to EEC Regulation No. 2658/87 in order to take into account, inter alia, changes
relating to statistics or commercial policy resulting from the Uruguay Round.
2.26 More precisely, the preamble to EC Regulation No. 3115/94 states that:
"Whereas it is necessary to amend the combined nomenclature to take account of:
– changes in requirements relating to statistics or commercial policy, in
particular by virtue of Council Decisi on bringing into force simultaneously
the acts implementing the results of the Uruguay Round of multilateral trade
negotiations and Council Regulation c oncerning certain measures resulting
from the conclusion of negotiations under Article XXIV:6 and other
measures necessary for simplification purposes;
– the need to align or clarify texts;
Whereas Article 12 of Regulation (EEC) No. 2658/87 provides for the Commission to
adopt each year by means of a regulation, to apply from 1 January of the following
year, a complete version of the combined nomenclature together with the
corresponding autonomous and conventional rates of duty of the Common Customs
Tariff, as it results from measures adopted by the Council or by the Commission;
..."
2.27 Article 3 of EC Regulation No. 3115/94 provides that:
"This Regulation shall enter into force on 1 January 1995.
This Regulation shall be binding in its entir ety and directly applicable in all Member
States. ...

13 Commission Regulation (EC) No. 3115/94 of 20 December 1994, amending Annexes I and II to
Council Regulation (EEC) No. 2658/87 on the tariff and statistical nomenclature and on the common customs
tariff, published in the Official Journal of the European Communities No. L 345, 31 December 1994.

Incorporated in Annex I to this Regu lation are amendments resulting from the
adoption of the following measures:

– Commission Regulation (EC) No. 535/94 of 9 March 1994 (OJ No L 68,
11.3.1994, p. 15);
..."
2.28 Additional Note 8 to Chapter 2 of the CN, introduced through EC Regulation No. 535/94 and
subsequently incorporated into the CN for 1995 in EC Regulation No. 3115/94, was renumbered in
1995 as Additional Note 7 to Chapter 2 of the CN.
14
4. EC Regulation No. 1223/200215
2.29 An EC Commission Regulation, EC Regulation No. 1223/2002, was adopted on 8 July 2002
and was published in the Official Journal of the European Communities on 9 July 2002. EC
Regulation No. 1223/2002 concerns the classification of certain goods in the CN. Recital (1) of EC
Regulation No. 1223/2002 states that:
"In order to ensure the uniform applicati on of the Combined Nomenclature annexed
to Regulation (EEC) No. 2658/87, it is necessary to adopt measures concerning the
classification of the goods referred to in the Annex to this Regulation".
2.30 Article 1 of EC Regulation No. 1223/2002 provides that:
"The goods described in column 1 of the table set out in the Annex are classified
within the Combined Nomenclature under the CN code indicated in column 2 of that
table."

14 See Recital (2) of Commission Regulation (EC) No. 1871/2003 of 23 October 2003, amending
Annex I to Council Regulation (EEC) No. 2658/87 on the tariff and statistical nomenclature and on the
Common Customs Tariff, published in the Official Journal of the European Communities No. L 275, 25 October
2003, p. 5.
15 Commission Regulation (EC) No. 1223/2002 of 8 July 2002, concerning the classification of certain
goods in the Combined Nomenclature, published in the Official Journal of the European Communities No.
L 179, 9 July 2002, p. 8.

2.31 The Annex to EC Regulation No. 1223/2002 is reproduced below:
ANNEX

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

The product is deep-frozen and has
to be stored at a temperature of
lower than - 18°C to ensure a shelf-
life of at least one year.

0207 14 10
Classification is determined by the
provisions of the General Rules 1 and
6 for the interpretation of the
Combined Nomenclature and by the
wording of CN codes 0207, 0207 14
and 0207 14 10.

The product is chicken meat frozen for
long-term conservation. The addition
of salt does not alter the character of
the product as frozen meat of heading
0207.
 Source: Annex to EC Regulation No. 1223/2002.

5. EC Decision 2003/97/EC 16
2.32 On 12 February 2003, the EC Commission published EC Decision 2003/97/EC concerning
the validity of certain BTIs issued by the Federal Republic of Germany. More particularly, Article 1
of the Decision, which is addressed to the Federal Republic of Germany 17, requires the withdrawal of
66 BTI notices issued by the German customs authority classifying products under heading 02.10 of
the CN.
18
2.33 Recital (3) of EC Decision 2003/97/EC state that, after publication of EC Regulation
No. 1223/2002, all BTIs previously issued by EC member States classifying the products covered by
that Regulation with a salt content between 1.2% and 1.9% as "salted meat" under heading 02.10 of
the CN ceased to be valid. 19 Recital (5) explains that, based on EC Regulation No. 1223/2002, some
member States later issued BTIs classifying frozen products of the same kind as those covered by that
Regulation, but with a salt content of between 1.9% and 3% by weight of salt, under heading 02.10 of
the CN.20 Recital (7) indicates that products consisti ng of boneless chicken cuts, which have been
frozen for long-term conservation and have a salt cont ent of 1.9% to 3%, are similar to the products
covered by EC Regulation No. 1223/2002. It also st ates that the addition of salt in such quantities is
not such as to alter the products' character as frozen poultry meat of heading 02.07 of the CN. Recital
(8) states that, in order to safeguard equality be tween operators, which woul d be endangered if like
cases were not treated alike and to ensure unifo rm application of the CN, the Federal Republic
Germany is required to withdraw the BTIs issued on frozen poultry meat containing between 1.9%
and 3% by weight of salt.21

16 Commission Decision 2003/97/EC of 31 January 2003, concerning the validity of certain binding
tariff information (BTI) issued by the Federal Republic of Germany, published in the Official Journal of the
European Communities No. L 36, 12 February 2003, p. 40.
17 Article 2 of Commission Decision.
18 Article 1 and Annex.
19 Recital (3).
20 Recital (5).
21 Recital (8).

6. EC Regulation No. 1871/2003
22
2.34 An EC Commission Regulation, Commission Regulation (EC) No. 1871/2003
(EC Regulation No. 1871/2003), was adopted on 23 Oc tober 2003 and was published in the Official
Journal of the European Communities on 25 Oc tober 2003. EC Regula tion No. 1871/2003 amended
Annex I to EEC Regulation No. 2658/87. In pa rticular, EC Regulation No. 1871/2003 amended
Additional Note 7 to Chapter 2 of the CN.
2.35 Recital (3) of EC Regulation No. 1871/2003 states that:
"[T]he classification in Chapter 2 of the Combined Nomenclature depends essentially
on the process employed to ensure long-term preservation of a given product. The
General Harmonized System explanatory note to Chapter 2 describes the structure of
that chapter. Chapter 2 covers uncooked meat and meat offal which are fresh or
chilled or have undergone one of the various processes required for long-term
preservation, i.e., uncooked meat which are frozen or salted, in brine, dried or
smoked."
23
2.36 Recital (4) notes that:
"According to the said explanatory note, fresh meat remains classified as such even if
it has been packed with salt as a temporar y preserving agent during transport. This
reasoning applies equally to frozen meat, ot herwise any meat to which salt has been
added would be considered as salted meat of heading 0210. For the purposes of
heading 0210, salting must be sufficien t to ensure long-term preservation for
purposes other than transportation. In this connection, it should be noted that the
other processes listed in heading 0210, i.e. in brine, drying or smoking, are intended
to ensure long-term preservation rather than to act as a temporary preserving agent for
transport."24
2.37 Recital (5) states that the EC Commission considered it "appropriate to clarify and confirm
further that salting, within the meaning of head ing 0210, is a process used to ensure long-term
preservation".25 It did so by means of Article 1 of EC Regulation No. 1871/2003, which provides that
Additional Note 7 to Chapter 2 of the Combined Nomenclature is replaced by the following:
"For the purposes of heading 0210, the terms 'meat and edible meat offal, salted, in
brine' mean meat and edible meat offal deeply and homogeneously impregnated with
salt in all parts and having a total salt content of not less than 1.2% by weight,
provided it is the salting which ensures long-term preservation."
7. EC Regulation No. 1789/2003
26
2.38 An EC Commission Regulation, Commission Regulation (EC) No. 1789/2003 (EC
Regulation No. 1789/2003), was adopted on 11 Se ptember 2003 and was published in the Official
Journal of the European Communities on 30 Oc tober 2003. EC Regula tion No. 1789/2003 amended

22 Commission Regulation (EC) No. 1871/2003 of 23 October 2003, amending Annex I to Council
Regulation (EEC) No. 2658/87 on the tariff and statistical nomenclature and on the Common Customs Tariff,
published in the Official Journal of the European Communities No. L 275, 25 October 2003, p. 5.
23 Recital (3) of EC Regulation No. 1871/2003.
24 Recital (4) of EC Regulation No. 1871/2003.
25 Recital (5) of EC Regulation No. 1871/2003.
26 Commission Regulation (EC) No. 1789/2003 of 11 September 2003, amending Annex I to Council
Regulation (EEC) No. 2658/87 on the tariff and statistical nomenclature and the Common Customs Tariff,
published in the Official Journal of the European Communities No. L 281, 30 October 2003, p. 1.

Annex I to EEC Regulation No. 2658/87 by replaci ng Annex I to EEC Regulation No. 2658/87 with
the Annex to EC Regulation No. 1789/2003 (the 2004 CN).
2.39 In Annex I of EC Regulation No. 1789/2003, Additional Note 7 to Chapter 2 stated that:
"For the purposes of heading 0210, the terms 'meat and edible meat offal, salted, in
brine' mean meat and edible meat offal deeply and homogeneously impregnated with
salt in all parts, having a total salt content of not less than 1.2% by weight."
8. EC Regulation No. 2344/200327
2.40 An EC Commission Regulation, Commission Regulation (EC) No. 2344/2003 (EC
Regulation No. 2344/2003), was adopted on 30 D ecember 2003 and was published in the Official
Journal of the European Communities on 31 D ecember 2003. EC Regulation No. 2344/2003
amended Annex I to EC Regulation No. 2658/87 . EC Regulation No. 2344/2003 was adopted to
ensure that the CN to be applied as of 1 Janua ry 2004 as contained in EC Regulation No. 1789/2003
included, inter alia, the amendment made by EC Regulation No. 1871/2003.28
2.41 Thus, the Annex to EC Regulation No. 2344/ 2003 amended the Anne x to EC Regulation
No. 1789/2003, with respect to Additional Note 7 of Chapter 2 of the CN, as follows:
"1. Additional note 7 of Chapter 2 of the Combined Nomenclature shall be
replaced by the following:
7. For the purposes of heading 0210 , the terms 'meat and edible
meat offal, salted or in brine' mean meat and edible meat offal deeply
and homogeneously impre gnated with salt in all parts and having a
total salt content by weight of 1.2% or more, provided that it is the
salting which ensures the long-term preservation."
III. PARTIES' REQUESTS FOR FINDINGS, RECOMMENDATIONS AND
SUGGESTIONS
A. BRAZIL29
3.1 Brazil requests the Panel to:
(a) find that EC Regulation No. 1223/2002 and EC Decision 2003/97/EC are inconsistent
with Articles II:1(a) and II:1(b) of the GATT 1994;
(b) recommend that the DSB request the Eur opean Communities to bring these measures
into conformity with Articles II:1(a) and II:1(b) of the GATT 1994;
(c) use its right to make suggestions on ways in which the European Communities could
implement the Panel's recommendations as provided in Article 19.1 of the DSU; and
(d) suggest that, in light of the nullification a nd impairment of the benefits accruing to
Brazil under the EC Schedule in respect of its commerce of salted chicken meat to the

27 Commission Regulation (EC) No. 2344/2003 of 30 December 2003, amending Annex I to Council
Regulation (EEC) No. 2658/87 on the tariff and statistical nomenclature and the Common Customs Tariff,
published in the Official Journal of the European Communities No. L 346, 31 December 2003, p. 38.
28 Recital (3) of EC Regulation No. 2344/2003.
29 Brazil's first written submission, para. 192.

European Communities, that the Europ ean Communities immediately repeal EC
Regulation No. 1223/2002 and EC Decision 2003/97/EC.
B.
THAILAND30
3.2 Thailand requests the Panel to:
(a) find that the European Communities is acting inconsistently with its obligations under
Article II:1(b) and II:1(a) of the GATT 1994 by according "less favourable treatment"
to the chicken product in question than that provided for in the EC Schedule; and
(b) recommend, in accordance with Article 19.1 of the DSU, that the DSB request the
European Communities to bring the measure at issue into conformity with the GATT
1994.
C. EUROPEAN COMMUNITIES31
3.3 The European Communities requests the Panel to:
(a) reject Brazil's and Thailand's claims;
(b) find that the treatment accorded by the European Communities to frozen boneless
chicken cuts with a salt content between 1.2% and 3% by EC Regulation No.
1223/2002 and EC Decision 2003/97/EC respec ts the bindings contained in the EC
Schedule; and
(c) find that the treatment accorded by the European Communities to frozen boneless
chicken cuts with a salt content between 1.2% and 3% by EC Regulation No.
1223/2002 and EC Decision 2003/97/EC involves no infringement of Articles II:1(a)
and (b) of the GATT 1994.
IV. ARGUMENTS OF THE PARTIES
4.1 Paragraph 12 of the Panel's Working Proce dures, which were adopted on 7 July 2004,
provides for the submission by the parties of executive summaries of the facts and arguments
presented to the Panel in writing and orally. These su mmaries were to be used to assist the Panel in
drafting the factual and arguments section of the Panel's Report.
4.2 In a letter dated 7 October 2004, the European Communities requested the Panel "to make a
simple reference in the descriptive part to the facts and arguments as summarized by the Panel in the
findings section of its report", thereby dispensing w ith the need for the parties to prepare executive
summaries. Brazil accepted the request, noting at th e same time that this should not constitute a
precedent for future cases. Thailand was of the view that there was no need to change the Working
Procedures at that stage of the Panel's proceedings.
4.3 Taking into account the parties' views on the matter, on 13 October 2004, the Panel informed
the parties that it had decided the following:
(a) Submission of executive summaries by the parties would be on a voluntary basis;

30 Thailand's first written submission, paras. 157-158.
31 EC's first written submission, para. 211.

(b) As advised to the parties at the first s ubstantive meeting (28 29 September 2004), the
Panel's intention was to reproduce the ex ecutive summaries of the parties and third
parties in the descriptive part of its Report. This would remain the Panel's intention
in case such submissions were received. In the alternative case, a reference would be
made in the descriptive part to the facts and arguments as summarized by the Panel in
the findings section of its Report; and
(c) As also indicated at the first substantive mee ting, parties' and third parties' replies to
the Panel's questions as well as to each ot her's questions would be attached to the
Report in an annex.
4.4 Thailand is the only party to this dispute that submitted an executive summary. Therefore, in
accordance with the Panel's decision set out in the preceding paragraph, Thailand's executive
summary has been reproduced in Annex A. The argu ments made by all the parties are reflected in the
findings section of the Panel's Report.
4.5 The parties' written answers to questions posed by the Panel and by each other have been
reproduced in Annex C. Written answers by the WCO to questions posed by the Panel have also been
reproduced in Annex C. In addition, the parties' comments on the parties' and the WCO's replies to
the Panel's questions following the second substantive meeting have been reproduced in Annex C.
The parties' exhibits have been listed in Annex F but have not been reproduced in this Report due to
the confidential nature of a number of those exhibits.
V. ARGUMENTS OF THE THIRD PARTIES
5.1 The arguments of China, as contained in its executive summary, have been reproduced in
Annex B. On 7 October 2004, the United States requested that the US third party oral statement made
at the first substantive meeting be considered as the US executive summary contemplated by
paragraph 12 of the Working Procedures. The US oral statement has, therefore, also been reproduced
in Annex B.
5.2 Written answers by the third parties to questions posed by the Panel have been reproduced in
Annex C.
VI. INTERIM REVIEW
6.1 The Panel's Interim Report was issued to the parties on 17 February 2005. Pursuant to Article
15.2 of the DSU and paragraph 16 of the Panel's Wo rking Procedures, the parties were given until 3
March 2005 to provide their comments on the In terim Report. The European Communities'
comments were provided on 24 February 2005 and Brazil's and Thailand's comments were provided
on 3 March 2005. None of the parties requested a meeting to review part(s) of the Panel's Report. On
10 March 2005, the parties submitted further written comments on the comments that had been
provided by the parties on 24 February and 3 March.
6.2 Pursuant to Article 15.3 of the DSU, this sec tion of the Panel Report contains the Panel's
response to the comments made by the parties in relation to the Interim Report.
A.
PARTIES' ARGUMENTS
6.3 All of the parties to this dispute requested certain changes to the representation of their
respective arguments in the findings section of the Interim Report. The Panel accepted these changes
to the extent that they did not result in repetition of arguments that had already been represented in the
Report and to the extent that they were consiste nt with what the parties stated in the various
submissions they made to the Panel during the course of the Panel proceedings.

6.4 Brazil also suggested an addition to paragraph 3.1(d) of the Interim Report, which contains
the parties' requests for findings, recommendations a nd suggestions. The Panel declined to include
the suggested change because, in the Panel's view, the proposed text contains argumentation that does
not add to what is already contained in paragr aph 3.1(d) and the summary of Brazil's arguments
elsewhere in the Report.
B.
CLERICAL AND EDITORIAL CHANGES
6.5 Brazil suggested certain changes to correct clerical errors contained in the Interim Report. All
these suggested changes were accepte d by the Panel. The Panel also accepted Brazil's suggestion to
reproduce in Annex C the parties' comments on the pa rties' written answers to questions posed by the
Panel following the second substantive meeting and the parties' comments on the WCO's replies to the
Panel's questions following the second substantive meeting. The Panel also made some additional
minor clerical and editorial changes.
C. MEASURES AT ISSUE
6.6 In its comments on the Interim Report, Brazil confirmed the arguments it had made
previously to the effect that EC Regulation No. 1871/2003 and EC Regulation No. 2344/2003 should
be included in the Panel's terms of reference. Brazil also put forward additional arguments and
requested the Panel to reconsider its analysis a nd conclusion to exclude those measures from its terms
of reference in light of its additional arguments. In its comments on Brazil's comments, the European
Communities submitted that the Panel should not accep t Brazil's additional arguments because they
amounted to an attempt to relitigate legal and factual issues, which the Panel had already decided. In
the Panel's view, the additional arguments do not alter the conclusion we reached in our Interim
Report that EC Regulation No. 1871/2003 and EC Re gulation No. 2344/2003 are outside our terms of
reference for the reasons explained below.
6.7 First, Brazil submits that it could not reasona bly be expected to have anticipated the
enactment of EC Regulation No. 1871/2003 an d EC Regulation No. 2344/2003 at the time it
submitted its request for establishment of a panel. Brazil explains that, since the measures the Panel
considered to be within its terms of reference were not amendments to the CN, when drafting its Panel
request, there was no reason for Brazil to anticipat e that additional measures related to the ones
identified – that is, EC Regulation No. 1871/20 03 and EC Regulation No. 2344/2003 – would be
enacted. Brazil argues that, therefore, it cannot be expected to have included a reference to those
measures in its request for establishment of a panel.
6.8 The Panel notes that a fundamental rationale for the requirements contained in Article 6.2 of
the DSU concerning the contents of a request for establishment of a panel 32 is to ensure that a
responding Member is provided adequate notice of th e measure(s) being challenged so that it is able
to properly defend itself. In US – Carbon Steel, the Appelate Body stated that:
"... the terms of reference, and the request for the establishment of a panel on which
they are based, serve the due process objective of notifying the parties and third
parties of the nature of a complainant's case. 33 When faced with an issue relating to
the scope of its terms of reference, a panel must scrutinize carefully the request for

32 Article 6.2 of the DSU provides that: "The request for the establishment of a panel shall be made in
writing. It shall indicate whether consultations were he ld, identify the specific meas ures at issue and provide a
brief summary of the legal basis of the complaint sufficient to present the problem clearly. In case the applicant
requests the establishment of a panel with other than standard terms of reference, the written request shall include
the proposed text of special terms of reference."
33 (original footnote) Appellate Body Report, Brazil – Dessicated Coconut , at 186. See also, Appellate
Body Report, EC – Bananas III, para. 142.

establishment of a panel 'to ensure its compliance with both the letter and the spirit of
Article 6.2 of the DSU.'"
3435 (emphasis in original)
6.9 In light of the foregoing, even if Brazil coul d not reasonably have anticipated the enactment
of EC Regulation No. 1871/2003 and EC Regulation No . 2344/2003 at the time it made its request for
establishment of a panel, we do not consider that the due process objective underlying Article 6.2 of
the DSU can be compromised in this case. Brazil its elf indicated in its interim review comments that
it was mindful of the due process concern associated with adjustment of pleadings during dispute
settlement proceedings. As pointed out in the Pane l's Interim Report, complaining parties in other
WTO cases have chosen to use broad, generic a nd/or inclusive language in their requests for
establishment of a panel so as to cover measures that they may not have necessarily expected or
anticipated at the time they filed their request fo r establishment of a panel while at the same time
meeting their due process obligations under Article 6.2 of the DSU. Brazil did not do so in this case.
6.10 Secondly, Brazil refers to the Appellate Body's decision in Chile – Price Band System and
suggests that, on the basis of that decision, EC Regulation No. 1871/2003 and EC Regulation No.
2344/2003 should be included in the Panel's terms of reference because they clarify measures
specifically identified in its request for establis hment of a panel. The European Communities
responds that the purpose of EC Regulation No. 1871 /2003 was to clarify heading 02.10 and not EC
Regulation No. 1223/2002.
6.11 The Appellate Body's comments in Chile – Price Band System upon which Brazil relies are
set out below:
"... We understand the Amendment as having cl arified the legislation that established
Chile's price band system. However, the Amendment does not change the price band
system into a measure different from the price band system that was in force before
the Amendment. Rather, as we have pointed out, Article 2 of Law No. 19.772 simply
amends Article 12 of Law No. 18.525 by adding a final paragraph to that provision.

36
We understand that, like the safeguard measure in the Argentina – Footwear (EC)
case, Chile's price band system remains essen tially the same after the enactment of
Law 19.772. The measure is not, in its essence, any different because of that
Amendment. Therefore, we conclude that the measure before us in this appeal
includes Law 19.772, because that law ame nds Chile's price band system without
 changing its essence." 37 (emphasis in original)
6.12 We note that the above comments were made in the context of a request for establishment of a
panel that expressly referred to amendments to the law in question in that case – namely, Law
No. 18.525. Indeed, the Appellate Body stated that:
"[W]e note that Argentina's request for th e establishment of a panel refers to the
measure in issue as the price band sy stem 'under Law 18.525, as amended by Law
18.591 and subsequently by Law 19.546, as well as the regulations and
complementary provisions and/or amendments ' (emphasis added). Such
 amendments, in our view, include Law 19.772. The broad scope of the Panel
request suggests that Argentina intended th e request to cover the measure even as

34 (original footnote) Appellate Body Report, EC – Bananas III, para. 142.
35 Appellate Body Report, US – Carbon Steel, para. 126.
36 Appellate Body Report, Chile – Price Band System, para. 137.
37 Appellate Body Report, Chile – Price Band System, para. 139.

amended. Thus, we conclude that Law 19.772 falls within the Panel's terms of
reference."
38 (emphasis in original)
6.13 As pointed out in our Interim Report, Brazil's request for establishment of a panel contrasts
with the one at issue in Chile – Price Band System. Unlike the request for establishment of a panel in
the latter case, the identification of the measures at issue in Brazil's request for establishment of a
panel is specific and narrow and does not appear to anticipate inclusion of any measures in addition to
those specifically identified, namely EC Regulation No. 1223/2002 and EC Decision 2003/97/EC.
Therefore, we do not consider that the Appellate Body's comments in Chile – Price Band System that
have been relied upon by Brazil are apposite for this case.
6.14 Thirdly, Brazil argues that the Panel's decision not to include EC Regulation No. 1871/2003
and EC Regulation No. 2344/2003 in its terms of reference may not secure a positive solution to the
dispute and that the Panel's findings may not be su fficiently precise to allow for prompt compliance.
In this regard, the Panel notes that 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". We understand that the term
"dispute" in Article 3.7 is the dispute as defined by the request for establishment of a panel. As we
have previously noted, Brazil's request for establis hment of a panel only identifies EC Regulation No.
1223/2002 and EC Decision 2003/97/EC. In accordan ce with Article 3.7 of the DSU, our Report
seeks to secure a positive solution to Brazil's claims regarding those measures identified in Brazil's
request for establishment of a panel and we cons ider that our recommendations regarding those
measures are precise enough so as to ensure prompt compliance.
6.15 The Panel recalls that, in its Interim Report, the Panel concluded that EC Regulation No.
1871/2003 and EC Regulation No. 2344/2003 are outsid e our terms of reference. We confirm that
conclusion here. We recall that, nevertheless, in our Interim Report, we stated that EC Regulation No.
1871/2003 and EC Regulation No. 2344/2003 provide d useful context for the consideration of
measures that are within our terms of refere nce, namely EC Regulation No. 1223/2002 and EC
Decision 2003/97/EC. In fact, we used the former measures in our assessment of whether the latter
measures are in violation of Article II of the GATT 1994. We reaffirm the conclusion we reached in
the Interim Report that the subs tantive effect of EC Regulati on No. 1223/2002 and EC Decision
2003/97/EC is the same as the substantive effect of EC Regulation No. 1871/2003 and EC Regulation
No. 2344/2003 as far as frozen boneless chicken cuts that have been impregnated with salt are
concerned.
D.
PRODUCTS AT ISSUE
6.16 Brazil contests the Panel's conclusion in the In terim Report that the products at issue are
frozen boneless chicken cuts impregnated with salt, w ith a salt content of 1.2% – 3%. Brazil points,
inter alia , to its description of the products at issue in its request for establishment of a panel and
argues that the products at issue are, rather, frozen boneless chicken cuts impregnated with salt, with a
salt content of 1.2% or more. The European Communities submits that the measures at issue concern
chicken with a salt content of 1.2% – 3%.
6.17 The Panel notes at the outset that the products at issue in this dispute are the products within
the Panel's terms of reference. In other words, they are the specific products affected by the findings
and recommendations made by us in this Report. We recall that Article 6.2 of the DSU sets out the
requirements for requests for establishment of a panel, which, in turn, form the basis of a panel's terms
of reference. Pursuant to Article 6.2, a complain ant is required to identify the specific "measures at
issue". Article 6.2 does not stipulate that a complain ant must describe in its request for establishment
of a panel the products that are within a panel's term s of reference in a particular dispute. Brazil's and
Thailand's requests for establishment of a panel clearly identify certain measures – namely, EC

38 Appellate Body Report, Chile – Price Band System, para. 135.

Regulation No. 1223/2002 and EC Decision 2003/97/E C – and it is these measures that define our
terms of reference for this dispute.
6.18 Even though Brazil may have referred to frozen boneless chicken cuts impregnated with salt,
with a salt content of 1.2% or more, in its request for establishment of a panel, as noted, our terms of
reference are defined by EC Regulation No. 12 23/2002 and EC Decision 2003/97/EC. Since these
measures only relate to frozen bone less chicken cuts impregnated w ith salt, with a salt content of
1.2% – 3%, the Panel concludes that those are th e products within our terms of reference for the
purposes of this case.
E. SEPARATE PANEL REPORTS
6.19 By letter to the Panel dated 5 July 2004, th e European Communities requested the Panel to
issue separate Reports with respect to the complain ts made respectively by Brazil and by Thailand.
However, in light of the fact that a single Pa nel had been established to examine both Brazil's and
Thailand's complaints in this dispute, the fact that Brazil's and Thailand's claims are identical and the
fact that both complainants endorsed their r espective arguments during the course of these
proceedings39, at the conclusion of the second substan tive meeting with the parties, the Panel
indicated its intention to issue a single Panel Report in relation to the complaints made by both Brazil
and by Thailand, unless advised otherwise. None of the parties indicated their objection at that stage
of the Panel's proceedings. Accordingly, on 17 Fe bruary 2005, the Panel issued a single Interim
Report to the parties.
6.20 In its comments on the Interim Report, the European Communities made reference to its letter
to the Panel dated 5 July 2004 and stated that it woul d be obliged if separate Reports could be issued.
In their comments on the European Communities' co mments on the Interim Report, neither Brazil nor
Thailand objected to this request but, noting that the complainants' endorsed each other's arguments
during these proceedings, they submit that the se parate Reports should contain the complete
arguments made by both complainants.
6.21 The Panel acknowledges that the European Comm unities reserved its right to separate Panel
Reports under Article 9.2 of the DSU in July 2004, shortly after this Panel was composed. Further,
the complainants have not objected to the European Communities' request. Therefore, the Panel has
decided to issue two separate Panel reports – one for the complaint made by Brazil against the
European Communities and the other for the comp laint made by Thailand against the European
Communities. However, as noted previously, Brazil and Thailand endorsed their respective
arguments in these proceedings. Further, at th e European Communities' request, the parties'
arguments are contained in the findings section of the Panel's Report. Accordingly, the Panel notes
that the only material difference between the sep arate Panel reports in respect of Brazil's and
Thailand's complaints will be the cover page and th e conclusions; the descriptive part and the findings
will be common to both Reports.
VII. FINDINGS
A. SUMMARY OF THE MAIN ISSUE FOR THE PANEL'S DETERMINATION
7.1 The fundamental issue for the Panel's determ ination in this case is whether certain EC
measures result in treatment for certain products that is less favourable than that provided for in EC
Schedule LXXX (the EC Schedule) in violation of Ar ticle II:1(a) and/or Article II:1(b) of the GATT
1994. More particularly, the Panel is required to determine whether those measures result in the

39 Brazil endorsed the arguments put forward by Tha iland in Brazil's second written submission, para.
95 and Thailand endorsed the arguments put forward by Brazil in Thailand's oral statement at the first
substantive meeting, para. 55.

imposition of duties and conditions on such products that are in excess of those provided for in the EC
Schedule.
7.2 The EC Schedule provides for a tariff of 102.4€/100kg/net for products covered by
subheading 0207.14.10 and allows the European Communities to use special safeguard measures
under Article 5 of the Agreement on Agriculture in respect of such products. The EC Schedule
provides for a tariff of 15.4% ad valorem for products covered by subheading 0210.90.20 and there is
no reservation for the use of special safeguard measures under Article 5 of the Agreement on
Agriculture in respect of such products.
7.3 Brazil and Thailand (the complainants) submit that less favourable treatment has been
accorded to frozen boneless salted chicken cuts in viol ation of Article II:1(a) and Article II:1(b) of the
GATT 1994 because, through the relevant EC meas ures, the European Communities changed its
customs classification so that those products, whic h had previously been classified under subheading
0210.90.20 and were subject to an ad valorem tariff of 15.4%, are now classified under subheading
0207.14.10 and are subject to a tariff of 102.4€/100kg/net as well as being potentially subject to
special safeguard measures pursuant to Article 5 of the Agreement on Agriculture.
B.
BACKGROUND FOR THE PANEL'S ANALYSIS
7.4 By way of background for the Panel's analysis , the Panel sets out its understanding of the
interrelationship between the EC Schedule, the European Communities' Combined Nomenclature
(CN) and the Harmonized Commodity Description and Coding System (HS)40.
1. Relationship between the EC Schedule and the European Communities' Combined
Nomenclature
7.5 The schedules of WTO Members are currently annexed to the GATT 1994. Through these
schedules, Members commit to bind tariff levels on va rious goods. Reductions in tariff levels have
occurred at the multilateral level since 1947 throug h successive rounds of tariff negotiations. EC
Schedule LXXX was the subject of negotiations during the Uruguay Round between 1986 and 1994.
7.6 Article II:7 of the GATT 1994 provides that the schedules annexed to the GATT 1994 are
made an integral part of the GATT 1994. The Appellate Body in EC – Computer Equipment clarified
that Article II:7 means that the concessions provided for in such schedules are part of the terms of the
treaty, namely the GATT 1994. 41 Article II:2 of the WTO Agreement provides that the Agreements
contained in the Annexes to the WTO Agreement, which includes the GATT 1994, are integral parts
of the WTO Agreement. Therefore, on the basis of Article II:7 of the GATT 1994 and Article II:2 of
the WTO Agreement, concessions contained in th e EC Schedule are treaty terms of the GATT 1994
and the WTO Agreement.
7.7 Article XVI:4 of the WTO Agreement provides that "[e]ach Member shall ensure the
conformity of its laws, regulations and administra tive procedures with its obligations as provided in
the annexed Agreements ". Article XVI:4 means that, for the pur poses of this dispute, the European
Communities is obliged to ensure that its domestic legislation is consistent with the relevant
concessions contained in the EC Schedule.
7.8 The CN contains the European Communities' domestic tariff nomenclature, which, as
explained in further detail below, was establishe d through the enactment of EEC Regulation No.
2658/87. The Panel will need to determine whether the treatment of the products at issue in the CN is
less favourable than that provided for in th e EC Schedule for the purposes of assessing the

40 The HS is described below in para. 7.9 et seq.
41 Appellate Body Report, EC – Computer Equipment, para. 84.

complainants' claim that the Europ ean Communities has violated Article II:1(a) and/or Article II:1(b)
of the GATT 1994.
2. Relationship between the European Comm unities' Combined Nomenclature and the
Harmonized System
7.9 The Harmonized Commodity Description and Coding System, generally referred to as the
"Harmonized System" or simply the "HS", is a multipurpose international product nomenclature
developed by the World Customs Organization (WCO ). It comprises about 5,000 commodity groups,
each identified by a 6-digit code, arranged in a le gal and logical structure and is supported by well-
defined rules to achieve uniform classification. Th e system is used by more than 190 countries and
economies as a basis for their customs tariffs and for the collection of international trade statistics.
The HS is governed by the International Conve ntion on the Harmonized Commodity Description and
Coding System (the HS Convention).
7.10 Article 3.1 of the HS Convention requires each cont racting party to ensure that its laws are in
conformity with the HS. In particular, HS contracting parties are required to use the headings and
subheadings of the HS without addition or modification, together with the HS numerical codes
42 and
to apply the General Rules for the interpretation of the HS (General Rules) and all the section, chapter
and subheading notes.43 Moreover, HS contracting parties are required to ensure that they follow the
numerical sequence of the HS in their respective domestic tariff nomenclatures.44
7.11 The European Communities is a signatory to th e HS Convention. Therefore, pursuant to
Article 3.1 of the HS Convention, the European Co mmunities is obliged to u se the HS headings and
subheadings at the 6-digit level. The European Communities does, however, have flexibility to add
headings and subheadings beyond the 6-digit level.
7.12 The European Communities implemented its ob ligations under the HS Convention through
the enactment of EEC Regulation No. 2658/87, wh ich, as mentioned above in paragraph 7.8,
established the CN. Article 1 of EEC Regulation No . 2658/87 states that the CN comprises: (a) the
HS nomenclature; (b) EC subdivisions/headings to that nomenclature; and (c) preliminary provisions,
additional sections or chapter notes and footnotes re lating to subheadings. In addition to the HS
headings at the 6-digit level, the CN contains at least an additional two digits for each heading, which
identify CN subheadings. The six General Rules cont ained in the HS form the basis of the general
rules for the interpretation of the CN.
C. THE PANEL'S TERMS OF REFERENCE
1. Defining the scope of the Panel's terms of reference
7.13 The Panel commences its substantive analysis with a discussion of its terms of reference.
Such a discussion is necessary given that the parti es have advanced conflicting arguments regarding
the scope of the Panel's terms of reference.
7.14 The Panel recalls that its terms of reference are based upon Article 7 of the DSU and are set
out in WT/DS269/4/Rev.1 and WT/DS286/6/Rev.1, whic h provide in relevant part that the Panel's
terms of reference are:
"To examine, in the light of the relevant provisions of the covered agreements cited
by Brazil in document WT/DS269/3 and Thailand in document WT/DS286/5, the

42 Article 3.1(a)(i) of the HS Convention.
43 Article 3.1(a)(ii) of the HS Convention.
44 Article 3.1(a)(iii) of the HS Convention.

matter referred to the DSB by Brazil and Thailand in those documents, and to make
such findings as will assist the DSB in ma king the recommendations or in giving the
rulings provided for in those agreements."
7.15 Therefore, the Panel's terms of reference are defined by the requests for establishment of a
panel filed respectively by Brazil and Thailand (P anel requests). These requests are contained in
Annex E to this Report.
2. Measures
7.16 The first issue for our determination is what are the specific measures within our terms of
reference? We will commence our analysis with a consideration of the measures that have been
specifically identified in the complainants' Panel re quests. We will subsequently consider a number
of measures that have not been specifically identif ied in the complainants' Panel requests but which
have been referred to by the parties in the course of the Panel proceedings.
(a) Measures specifically identified in the Panel requests
7.17 Brazil's Panel request states in relevant part that:
"The specific measures at issue are Commission Regulation (EC) No. 1223/2002,
published in the Official Journal of the EC on 9 July 2002, concerning the
classification of certain goods in the Comb ined Nomenclature (CN), and the EC
Commission Decision, published in the Official Journal of the EC on 12 February
2003, concerning the validity of certain binding tariff information (BTI) issued by the
Federal Republic of Germany."
45
7.18 Thailand's Panel request states in relevant part that:
"The measure at issue is the classification of frozen boneless salted chicken cuts as
provided in the EC Regulation No.1223/2002 of 8 July 2002 ('Regulation 1223/2002')
published in the Official Journal of the EC on 9 July 2002 concerning the
classification of certain goods in the Combin ed Nomenclature (CN) and elaborated in
the EC Commission Decision ('Decision') of 31 January 2003 published in the
Official Journal of the EC on 12 February 2003 concerning the validity of certain
binding tariff information ('BTI') issued by the Federal Republic of Germany."46
7.19 Brazil's and Thailand's Panel requests specifically refer to two measures, namely, EC
Regulation No. 1223/2002 and EC Decision 2003/97/ EC. The parties do not dispute that these
measures are within the Panel's terms of reference.
(b) Measures not specifically identified in the Panel requests
(i) Arguments of the parties
7.20 Brazil argues that EC Regulation No. 1871/2 003 and EC Regulation No. 2344/2003 are
within the Panel's terms of reference even though they were not mentioned in Brazil's Panel request
and that, in order to secure a positive solution to the dispute, as is required by Article 3.7 of the DSU,
they should also be brought into conformity if found to be in violation of the WTO Agreement. 47
Brazil notes that EC Regulation No. 1871/2003 and EC Regulation No. 2344/2003 were issued after

45 WT/DS269/3.
46 WT/DS286/5.
47 Brazil's reply to Panel question No. 1.

the establishment of the Panel and that, therefore, these Regulations could not have been mentioned in
Brazil's Panel request.48
7.21 According to Brazil, EC Regulation No. 18 71/2003 and EC Regulation No. 2344/2003 are
measures that are "closely related" or "subsidiary" to the ones specifically identified in Brazil's Panel
request so much so that they may be considered as "part of the application" of those measures. 49 In
particular, Brazil argues that EC Regulation No . 1871/2003 and EC Regulation No. 2344/2003 were
enacted as a result of changes in classification and tariff treatment brought about by EC Regulation
No. 1223/2002 and EC Decision 2003/97/EC. Brazil submits that, since EC Regulation No.
1223/2002 and EC Decision 2003/97/EC modified or provided a new interpretation of the scope and
definition of products falling under subheading 0207.14.10 of the CN so as to include "other salted
meat" of subheading 0210.90.20, the European Comm unities was required to adjust the then existing
definition of "salted meat" of heading 02.10 to avoid conflict with the new interpretation of the
definition and scope of subheadi ng 0207.14.10. Brazil submits that the European Communities did
this through EC Regulation No. 1871/2003 and EC Regulation No. 2344/2003.
50
7.22 Thailand submits that the European Communities fi rst introduced the principle of long-term
conservation for the classification of boneless chic ken cuts under subheadi ng 0207.14.10 in EC
Regulation No. 1223/2002. According to Thaila nd, EC Decision 2003/97/EC maintained the same
reasoning provided in EC Regulation No. 1223/2002, namely that, because th e boneless chicken cuts
"have been frozen for the purposes of long-term preservation", they must be classified under
subheading 0207.14.10.51 Thailand submits that the European Communities' position that the long-
term preservation of "chicken cuts" must determ ine its classification was confirmed and further
expanded to "all meats" under heading 02.10 by EC Regulation No. 1871/2003, which was then
incorporated into the CN by EC Regulation No. 23 44/2003. Thailand submits that, therefore, even
though EC Regulation No. 1871/2003 and EC Re gulation No. 2344/2003 were not specifically
mentioned in Thailand's Panel request, they must , nevertheless, be considered as part of the
challenged measures before the Panel. According to Thailand, EC Regulation No. 1871/2003 and EC
Regulation No. 2344/2003 are based on the same principle as that set out in EC Regulation No.
1223/2002 and EC Decision 2003/97/EC, namely, that the criterion of long-term preservation must
determine the classification of the product. Thailand cites Argentina – Footwear (EC) to submit that
the measures are "closely related." Thailand cons iders that, if the Panel finds that the customs
classification of frozen boneless chicken cuts as pr ovided in EC Regulation No. 1223/2002 and EC
Decision 2003/97/EC is inconsistent with the Eur opean Communities' obligations under Article II of
the GATT 1994, then it should also find that EC Regulation No. 1871/2002 and EC Regulation No.
2344/2003 – which are based on the same criterion of long-term preservation for the classification of
a product – should also be held to be WTO-inconsistent.52
7.23 The European Communities responds that neither EC Regulation No. 1871/2003 nor EC
Regulation No. 2344/2003 are within the sc ope of the Panel's terms of reference. 53 The European
Communities submits that the complainants' Pane l requests only identified two EC measures –
namely, EC Regulation No. 1223/2002 and EC Decisi on 2003/97/EC – and that these requests delimit
the Panel's jurisdiction.54 The European Communities argues that there are no substantive grounds to
justify widening the scope of the Panel's terms of re ference, particularly given that the issue of the
Panel's terms of reference was not addressed in th e complainants' first written submissions, nor in

48 Brazil's reply to Panel question No. 11.
49 Brazil's oral statement at the second substantive meeting, para. 5.
50 Brazil's reply to Panel question No. 1.
51 Thailand's second written submission, para. 6.
52 Thailand's second written submission, paras. 9-11.
53 EC's reply to Panel question No. 20(a).
54 EC's second written submission, para. 15.

their oral statements to the Panel during the first substantive meeting.
55 The European Communities
submits that the inclusion of acts other th an EC Regulation No. 1223/2002 and EC Decision
2003/97/EC in the Panel's terms of reference woul d infringe the European Communities' due process
rights as well as those of third parties.56
7.24 In response, Brazil submits that EC Regulation No . 1871/2003 and EC Regulation No.
2344/2003 are so closely related to the measures refe rred to in the complainants' Panel requests that
the European Communities must be found to have received adequate notice of them. Brazil also
submits that the content and relevance of EC Regulation No. 1871/2003 and EC Regulation No.
2344/2003 were highlighted by Brazil throughout these proceedings.57
(ii) Analysis by the Panel
7.25 As noted above in paragraph 7.19, the complain ants' Panel requests specifically refer to two
measures – namely, EC Regulation No. 1223/200 2 and EC Decision 2003/97/EC. However, the
complainants also discussed a number of other me asures in their first written submissions, including
EC Regulation No. 1871/2003 and EC Regulation No. 2344/2002. In an effort to determine what
significance should be attached, if any, to those me asures, the Panel requested the complainants to
indicate whether or not they were seeking to specifically challenge those measures in these
proceedings.58 Both complainants confirmed that that was their wish and that, further, those measures
fall within the Panel's terms of reference. The European Communities disput es that those measures
are within our terms of reference.
7.26 The Panel notes that, in Chile – Price Band System, the Appellate Body stated that:
"[G]enerally speaking, the demands of due process are such that a complaining party
should not have to adjust its pleadings th roughout dispute settlement proceedings in
order to deal with a disputed measure as a 'moving target'. If the terms of reference in
a dispute are broad enough to include amendments to a measure – as they are in this
case – and if it is necessary to consider an amendment in order to secure a positive
solution to the dispute – as it is here – then it is appropriate to consider the measure
 as amended in coming to a decision in a dispute."
59
7.27 In other words, the Appellate Body stated that , in order for a panel's terms of reference to
include amendments to measures included in a pa nel request, the following conditions must be met:
(a) the terms of reference must be broad enough; and (b) such in clusion is necessary to secure a
positive solution to the dispute. While these conditions were enunciated by the Appellate Body with
respect to amendments to the measure that had been specifi cally identified in the relevant panel
request, we do not see any reason why they should not be equally applicable to measures that do not
constitute amendments. Indeed, it is the Panel's view that, if an amendment may be included in a
panel's terms of reference only if the terms of th e panel request are broad enough, it would seem that
the case for application of this requirement is as strong, if not stronger, in respect of measures for

55 EC's second written submission, para. 19.
56 EC's second written submission, pa ra. 20; EC's oral statement at the second substantive meeting,
para. 4.
57 In particular, Brazil points to its first written submission, paras. 36, 37, 38, 39, 99, 126, 135, 142 and
143; Brazil's oral statement at the first substantive meeting, para. 37; Brazil's replies to Panel question Nos. 1
and 11; Brazil's second written submission, paras. 52-59 and 87-90.
58 Panel question No. 11.
59 Appellate Body Report, Chile – Price Band System, para. 144.

which a relationship with measures specifically iden tified in the panel request is less apparent, as in
the present case, in order to preserve a responding Member's due process rights.60
7.28 Turning now to the question of whether the co mplainants' Panel requests are broad enough to
include EC Regulation No. 1871/2003 and EC Regu lation No. 2344/2003, we refer to the specific
terms of Brazil's and Thailand's Pa nel requests, relevant excerpts of which are set out above in
paragraphs 7.17 and 7.18 respectively. We consider that those terms contrast with the terms of the
panel requests at issue in a number of previous case s where the various panels included in their terms
of reference measures that had not been specifically identified in the panel requests. The relevant
aspects of the panel requests in each of those cases were broadly worded, referring to the challenged
measures in generic terms and/ or using inclusive language. 61 In comparison, Brazil's and Thailand's
Panel requests are much more narrowly drafted and, in our view, are not broad enough to include EC
Regulation No. 1871/2003 and EC Regulation No. 2344/2003.
7.29 In particular, the identification of the measures at issue in Brazil's Panel request is specific
and narrow and does not appear to anticipate in clusion of any measures in addition to those
specifically identified, namely EC Regulation No. 1223/2002 and EC Decision 2003/97/EC.
7.30 Thailand's Panel request also specifically refers to those measures. However, in contrast to
Brazil's Panel request, Thailand's reference to those measures is made in the context of its challenge
of a measure, which Thailand labels as "the classification of frozen boneless salted chicken cuts". The
Panel posed a question to Thailand in an attempt to clarify what Thailand meant by the reference to
"classification" in its Panel request. 62 Even though Thailand did not respond to the Panel's question,
the Panel considers that the reference to "the cl assification of frozen boneless salted chicken cuts" in
Thailand's Panel request could only be interpreted in one of thr ee ways. Firstly, it could be
interpreted as meaning that Tha iland was seeking to challenge th e European Communities' tariff
classification in respect of a particular shipment or particular shipments of frozen boneless salted
chicken cuts. Secondly, it could be interpreted as meaning that Thailand was seeking to challenge the
European Communities' customs classification practi ce with regard to frozen boneless salted chicken
cuts in general whether under EC Regulation No. 1223/2002 and EC Decision 2003/97/EC or under
any other measure that might affect such prac tice, such as EC Regulation No. 1871/2003 and EC
Regulation No. 2344/2003. Thirdly, the reference to "classification" in Thailand's Panel request could

60 Such rights were affirmed by the Appellate Body in US – Carbon Steel. Appellate Body Report, US
– Carbon Steel, para. 126.
61 For example, in Chile – Price Band System , the panel request referred to "Law 18.525, as amended
by Law 18.591 and subsequently by Law 19.546, as well as the regulations and complementary provisions
and/or amendments" (emphasis added). In EC – Bananas III , the panel request referred to "a regime for the
importation, sale and distribution of bananas established by Regulation 404/93 (OJ L47 of 25 February 1993,
p. 1), and subsequent EC legislation, regulations and administrative measures , including those reflecting the
provisions of the Framework Agreement on bananas, which implement, supplement and amend that regime"
(emphasis added). The panel request in Argentina – Textiles and Apparel referred to "1. Resolutions 304/95,
305/95, 103/96, 299/96, Decree 998/95 and other measures which impose specific duties on various textile,
apparel or footwear items in excess of the bound rate of 35 per cent ad valorem provided in Argentina'a [ sic]
Schedule LXIV; 2. Decrees 2277/94, 389/95 and other measures which impose a statistical tax of 3 per cent ad
valorem, effective March 1995, on imports from all sources other than MERCOSUR countries; and 3.
Resolutions 622/95, 26/96, 850/96 and other measures which were imposed without proper notification and a
meaningful opportunity to comment being afforded and which impose unnece ssary obstacles to trade, such as
requirements relating to affidavits of product components mandating that, among other things, footwear, textile
and apparel items be labelled with the number of the corresponding affidavit of product components assigned by
the Undersecretariat of Foreign Trade" (emphasis added). In Australia – Salmon , the panel request referred to
"the Australian Government's measures prohibiting the importation of fresh, chilled or frozen salmon ... include
Quarantine Proclamation 86A, dated 19 February 1975, and any amendments or modifications to it " (emphasis
added).
62 Panel question No. 6.

be interpreted as adding nothing to the specific reference to EC Regulation No. 1223/2002 and EC
Decision 2003/97/EC.
7.31 In our view, even if Thailand intended to challenge the European Communities' tariff
classification in respect of a particular shipment or particular shipments of frozen boneless salted
chicken cuts, this intention is not supported by the terms of Thailand's Panel request. In particular, we
note that the reference to "the classification of frozen boneless salted chicken cuts" in Thailand's Panel
request is immediately followed by " as provided in the EC Regulation No. 1223/2002 ... and
elaborated in the EC Commission Decision ("Decisi on") of 31 January 2003" (emphasis added). In
our view, EC Regulation No. 1223/2002 and EC Decision 2003/97/EC cannot be interpreted as
relating to one or more specific shipme nts of frozen boneless salted chicken cuts.
63 In addition, even
if Thailand intended to challenge the European Communities' customs classification practice with
regard to frozen boneless salted chicken cuts in ge neral whether under EC Regulation No. 1223/2002
and EC Decision 2003/97/EC or under any other measure that might affect such practice, such as EC
Regulation No. 1871/2003 and EC Regul ation No. 2344/2003, it is our view that this intention is not
supported by the terms of Thailand's Panel request eith er. We consider that the specific reference to
EC Regulation No. 1223/2002 and EC Decision 2003/97/ EC following the more general reference to
"classification" without additional language in Thai land's Panel request to indicate that any measure
that could affect such practice was also included in the Panel's terms of reference militates against
such an interpretation. Therefore, in our view, th e reference to "the classification of frozen boneless
salted chicken cuts" in Thailand's Panel request adds nothing to the specific reference to EC
Regulation No. 1223/2002 and EC Decision 2003/97/EC.
7.32 The Panel concludes that the terms of the co mplainants' respective Panel requests are not
broad enough to include EC Regulation No. 1871/2003 and EC Regulation No. 2344/2003.
Accordingly, we consider that EC Regulation No. 1871/2003 and EC Regulation No. 2344/2003 are
outside the Panel's terms of reference. However, in our view, this does not mean that the content and
effect of EC Regulation No. 1871/2003 and EC Regulation No. 2344/2003 cannot provide us with
useful context for our consideration of the measures that are within our terms of reference.
3. Products
7.33 The next issue for our determination is what are the specific products within our terms of
reference?
(a) Arguments of the parties
7.34 Brazil and Thailand argue that the products at issue – th at is, those that have been accorded
less favourable treatment for the purposes of Article II of the GATT 1994 – are frozen boneless salted
chicken cuts that have been deep ly and homogeneously impregnated with salt in all parts with a total
salt content of not less than 1.2% by weight.64
7.35 The European Communities submits that this dispute concerns frozen boneless chicken cuts
to which salt has been added resulting in a salt content by weight of 1.2% – 3%. 65 The European
Communities submits that Brazil's and Thailand's Pa nel requests confirm that the complainants are
concerned with meat having a salt content of greater than 1.2% but not more than 3%.66

63 We explain our interpretation of these measures in more detail below in paragraph 7.38 et seq.
64 Brazil's reply to Panel question No. 10; Thailand's second written submission, para. 12.
65 EC's first written submission, para. 17.
66 EC's first written submission, para. 18; EC's reply to Panel question No. 22.

(b) Analysis by the Panel
7.36 The Panel considers that, in this case, the measures within our terms of reference determine
the products that are within our te rms of reference. Since we ha ve concluded that our terms of
reference are restricted to EC Regulation No. 1223/2002 and EC Decision 2003/97/EC, it follows that
the products covered by our terms of reference are frozen boneless chicken cuts impregnated with
salt, with a salt content of 1.2% – 3%.67
4. Summary and conclusions regarding the Panel's terms of reference
7.37 The Panel concludes that the measures within our terms of reference are EC Regulation No.
1223/2002 and EC Decision 2003/97/EC. Hereafter, we refer to these measures collectively as the
"measures at issue". The Panel also concludes that the products included in our terms of reference are
those covered by EC Regulation No. 1223/2002 and EC Decision 2003/97/EC – namely, frozen
boneless chicken cuts impregnated with salt, with a sa lt content of 1.2% – 3%. Hereafter, we refer to
these products as the "products at issue".
D. INTERPRETATION OF THE EFFECT OF THE MEASURES AT ISSUE
(i) EC Regulation No. 1223/2002
7.38 The parties do not appear to dispute the content and effect of EC Regulation No. 1223/2002.
In particular, EC Regulation No. 1223/2002 concer ns the classification of frozen boneless chicken
cuts that have been impregnated with salt in all part s, with a salt content by weight of 1.2% – 1.9%.
In particular, recital (3), Article 1 and the Anne x of the EC Regulation No. 1223/2002 make it clear
that such chicken cuts are to be classifi ed under subheading 0207.14.10 of the European
Communities' CN.68 In addition, Article 2 effectively provides that BTIs 69 for products covered by
the Regulation ceased to be valid fo llowing the expiration of a period of three months after the entry
into force of the Regulation.
(ii) EC Decision 2003/97/EC
Arguments of the parties
7.39 Thailand argues that EC Decision 2003/97/EC elaborates upon EC Regulation No.
1223/2002 because the former measure uses the same reasoning to revoke BTIs for frozen boneless
chicken cuts with a salt content of 1.9% – 3% as th at used in the latter for the classification of frozen
boneless chicken cuts with a salt content of 1.2% – 1.9%. Thailand submits that, therefore, the legal
effect of EC Decision 2003/97/EC is that frozen bon eless chicken cuts with a salt content of 1.9% –
 3% must also be classified under subheading 0207.14.10 of the CN.70

67 In this regard, we note that, in paragraph 7.47 below, we conclude that the measures within our terms
of reference have the practical effect of classifying frozen boneless chicken cuts that have been deeply and
homogenously impregnated with salt, with a salt content of 1.2% - 3%, under subheading 0207.14.10 of the
European Communities' CN.
68 Article 1 and the Annex of EC Regulation No. 1223/2002 are set out respectively in paragraphs 2.30
and 2.31 above. Recital (3) states that "[p]ursuant to the said general rules, the goods described in column 1 of
the table set out in the Annex to this Regulation should be classified under the CN code indicated in column 2,
by virtue of the reasons set out in column 3".
69 BTI notices provide economic operators with binding tariff information including, inter alia ,
information regarding the classification of the goods in question: "EC Customs Classification Rules: Should Ice
Cream Melt?", Michigan Journal of International Law , (1994), Vol. 15, No. 4 contained in Exhibit THA-18,
page 1264.
70 Thailand's second written submission, para. 6.

7.40 The European Communities submits that Article 1 of EC Decision 2003/97/EC limits the
legal effect of that Decision to the revoc ation of BTIs listed in the Annex thereto.
71 According to the
European Communities, the recitals in an EC Commission Decision, including EC Decision
2003/97/EC, have no legal effect. The European Communities submits that such recitals only provide
the reasons for which a particular decision has been adopted.72
Analysis by the Panel
7.41 Thailand has submitted that the legal effect of EC Decision 2003/97/EC is to classify frozen
boneless chicken cuts impregnated with salt, with a salt content of 1.9% – 3%, under subheading
0207.14.10 of the CN, in addition to frozen boneless chicken cuts impregnated with salt with a salt
content of 1.2% – 1.9%, the latter of which are classified under subheading 0207.14.10 pursuant to
EC Regulation No. 1223/2002.73
7.42 The Panel notes that EC Decision 2003/97/EC contains two legally operative Articles –
namely, Article 1 and Article 2. These Articles provide that:
"Article 1
The binding tariff information notices listed in column 1 of the table annexed issued
by the customs authorities shown in column 2 for the tariff classification shown in
column 3 must be withdrawn at the earliest possible date, and in any case not later
than 10 days from the notification of this decision.
Article 2
This Decision is addressed to the Federal Republic of Germany."
7.43 Articles 1 and 2 of EC Decision 2003/97/EC indicate to the Panel that the sole legal effect of
the Decision is to mandate Germany to revoke 66 BT Is issued by German cu stoms authorities, which
are referred to in the table annexed to the Deci sion. The BTIs covered by EC Decision 2003/97/EC
classified frozen boneless chicken cuts impregnated w ith salt, with a salt content of 1.9% - 3%, under
heading 02.10 of the CN.
74
7.44 The Panel notes that the recitals to EC Deci sion 2003/97/EC refer to similarities that are said
to exist between, on the one hand, frozen boneless ch icken cuts impregnated with salt, with a salt
content of 1.2% - 1.9%, and, on the other hand, frozen boneless chic ken cuts impregnated with salt,
with a salt content of 1.9% - 3%. In particular, re cital (7) states that "[p] roducts also consisting of
boneless chicken cuts which have been frozen for l ong-term conservation and have a salt content of
1.9% - 3% are similar to the products covered by Regulation 1223/2002. The addition of salt in such
quantities is not such as to alter the products' char acter as frozen poultry meat of heading 0207".
Recital (8) goes on to state that "[i]n order to saf eguard equality between ope rators, which would be
endangered if like cases were not treated alike, and to ensure uniform application of the CN, the BTIs
issued by Germany on frozen poultry meat, containing 1.9% - 3% salt, listed in the annex, must be
withdrawn".
7.45 The Panel understands that recitals to an EC D ecision, including the recitals to EC Decision
2003/97/EC, have no legal effect other than to ensure that the provisions of the Decision that do have

71 EC's reply to Panel question No. 19(a).
72 EC's reply to Panel question No. 19(c).
73 Thailand's second written submission, para. 6.
74 While it is not entirely clear from the text of EC D ecision 2003/97/EC that the BTIs affected by that
Decision concern frozen boneless chicken cuts impregnated with salt, with a salt content of 1.9% - 3%, the
European Communities has indicated that that is the case: EC's first written submission, paras. 96-98.

legal effect, are interpreted and app lied in a manner that is in keeping with the spirit of the law and to
provide reasons for which the Decision has been adopted, as has been subm itted by the European
Communities.75
7.46 To the extent that all frozen boneless chicken cu ts impregnated with salt, with a salt content
of 1.9% - 3%, are covered by the BTIs that have been revoked pursuant to that Decision, we
understand from Articles 1 and 2 of the Decision when r ead together with the relevant recitals that, as
a matter of practice, EC Decision 2003/97/EC prohib its classification of such products under heading
02.10 of the CN. We also understand that such pr oducts are, as a matter of fact, classified by the
European Communities under subheading 0207.14.10 of the CN. 76 Therefore, the Panel understands
that, as a factual matter, as a result of EC Decision 2003/97/EC, frozen boneless chicken cuts
impregnated with salt, with a salt content of 1.9% - 3%, will be classified under subheading
0207.14.10 of the CN.
(iii) Summary and conclusions regarding the effect of the measures at issue
7.47 In summary, it is the Panel's view that the me asures at issue have the practical effect of
classifying frozen boneless chicken cuts that have been deeply and homogenously impregnated with
salt, with a salt content of 1.2% – 3%, under su bheading 0207.14.10 of the European Communities'
CN. We note that this view is confirmed by a statement made by the European Communities to the
effect that the products covered by EC Regula tion No. 1223/2002 and EC Decision 2003/97/EC fall
under heading 02.07 of the EC Schedule.77
E. CHARACTERIZATION OF PANEL'S TASK IN THIS CASE
1. Arguments of the parties
7.48 Brazil and Thailand submit that they decided to bring the present dispute to the WTO, and
not the WCO, because they understand this to be a case of less favourable tariff treatment, within the
meaning of Article II of the GATT 1994, and not a reclassification case per se.78 More particularly,
Thailand submits that the issue in this dispute is not whether the products at issue fall within heading
02.10 of the HS, which issue the WCO may be compet ent to assess. Rather, the issue is whether the
products at issue fall within the terms of head ing 02.10 of the EC Schedule as the European
Communities understood the heading in 1994, a matter which Thailand submits the WCO is not
competent to assess. Brazil adds that, in assessing whether the Eu ropean Communities has violated
Article II of the GATT 1994, the Panel must examine the EC Schedule according to the rules of treaty
interpretation found in the Vienna Convention. Brazil submits that, while the HS and its Explanatory
Notes are relevant context and that WCO decisions may be relevant as subsequent practice in the
interpretation of the EC Schedule, they are only pa rt of the interpretative exercise the Panel must
undertake.79 Thailand further submits that any decision by the WCO would not be determinative of
the rights and obligations of Members in terms of tariff treatment. 80 Brazil adds that decisions by the
HS Committee of the WCO, including those that arise from dispute settlement, are not binding and

75 The Panel notes that, pursuant to Article 11 of the DSU (which is set out in full in para. 7.55 below),
we are required to undertake an "objective" assessment of the matter before us. In our view, since the European
Communities is in the best po sition to interpret the meanin g and effect of its own laws, we accept its argument
that the recitals in an EC Commissi on Decision, including EC Decision 2003/97/EC, have no legal effect: EC's
reply to Panel question No. 19(c).
76 EC's reply to Panel question No. 25.
77 EC's reply to Panel question No. 25.
78 Brazil's reply to Panel question No. 9; Thailand's second written submission, para. 17.
79 Brazil's comments on the WCO's replies to the Panel's questions to the WCO dated 2 December
2004; Thailand's comments on the WCO's replies to the Panel's questions to the WCO dated 2 December 2004.
80 Thailand's second written submission, para. 18.

there are no effective mechanisms that guarantee impl ementation or enforcement of decisions in that
forum.
81
7.49 Thailand also argues that Article 3.2 of the DSU makes clear that the WTO's dispute
settlement system is the forum to resolve dis putes between WTO Members concerning their rights
and obligations under the covered agreements. 82 Thailand argues that, furthermore, Article 23 of the
DSU provides that, when Members seek redress of a violation of obligations under the covered
agreements, they must have recourse to and abide by the rules and procedures of the WTO dispute
settlement system.
83 Brazil adds that, since the WTO is a Member-driven organization, it does not
have the power, or mandate, to act on behalf of its Members; nor has any WTO representative or body
been empowered to solve a dispute concerning two or more WTO Members outside the scope of the
WTO. Brazil and Thailand submit that, while the Panel has the right to seek information and
technical advice from any individual or body which it deems appropriate, as provided under Article
13.1 of the DSU, it does not have the right to abdicate its function under Article 11 of the DSU, which
is to assist the DSB in discharging its respons ibilities under the DSU and the covered agreements.
Brazil argues that, accordingly, it is the Panel's task, rather than th e task of the HS Committee, to
make an objective assessment of the matter before it, including the assessment of the facts of the case
and the applicability of, and conformity with, the covered agreements.84
7.50 The European Communities submits that both complain ants refused the European
Communities' suggestion, made at the consultation stage, to take this dispute to the WCO to the extent
that it concerns matters of classification. 85 The European Communities argues that, given the
respective institutional frameworks of the WTO and the WCO, it is important that the nature of WTO
dispute proceedings should remain distinct fro m decision-making in the context of the WCO. 86 The
European Communities argues that, nevertheless, the task facing the Panel in this case is different
from that which the WCO would face were the matte r to come before that body. The European
Communities explains that the WCO would use th e procedures of the HS Committee to determine
under which heading the products at issue fall. Th e European Communities submits that, in contrast,
the Panel does not need to make a positive ruling of this kind. Rather, it simply has to determine
whether the complainants have discharged their burden of proving that the European Communities
failed to accord to the product at issue the treatment agreed under its Schedule by not providing it the
tariff treatment envisioned under heading 02.10.87
7.51 In response, Brazil argues that, just prior to making its request for consultations at the WTO,
it sought guidance and clarification from the WCO with respect to the meaning of headings 02.07 and
02.10, in view of the matter at issue in this case. Brazil submits that, at that time, the WCO did not
provide any clarification with respect to the in terpretation of these headings but, rather, simply
directed Brazil to the WCO dispute settlement provision found in the HS Convention.88
2. Comments by the World Customs Organization
7.52 At the conclusion of the Panel's first substantiv e meeting with the parties, the Panel indicated
its intention to seek information from the WCO pursuant to Article 13.1 of the DSU. 89 The parties

81 Brazil's reply to Panel question No. 9.
82 Thailand's second written submission, para. 19.
83 Thailand's second written submission, para. 20.
84 Brazil's comments on the WCO's replies to the Panel's questions to the WCO dated 2 December
2004; Thailand's comments on the WCO's replies to the Panel's questions to the WCO dated 2 December 2004.
85 EC's reply to Panel question No. 74.
86 EC's oral statement at the second substantive meeting, para. 13.
87 EC's oral statement at the second substantive meeting, para. 12.
88 Brazil's reply to Panel question No. 9 referring to Exhibit BRA-28.
89 Article 13.1 of the DSU, entitled "Right to Seek Information", provides that: "Each panel shall have
the right to seek information and t echnical advice from any individual or body which it deems appropriate.

were invited to make comments in this regard . The Panel sought such information from the WCO
through questions posed in letters from the Pa nel dated 30 September 2004 and 19 November 2004.
The responses to those letters are contained in Annex C to this Report.
7.53 By way of general comment in its replies to the Panel's letter of 19 November 2004, the WCO
states that it appears that the present dispute c oncerns a classification question involving several
contracting parties to the HS Convention. The WCO refers to Article 10 of the HS Convention, which
stipulates that "any dispute between Contracting Parties concerning the interpretation or application of
this Convention shall, so far as possible, be se ttled by negotiation between them" and "any dispute
which is not so settled shall be referred by the Parties to the dispute to the Harmonized System
Committee which shall thereupon consider the dispute and make recommendations for its settlement."
The WCO suggests that the settlement procedures contained in the HS Convention should be followed
by the parties to this dispute before the Panel makes its decision.90
3. Analysis by the Panel
7.54 The Panel recalls that it is called upon in th is dispute to determine whether or not the
measures at issue violate Article II:1(a) and Article II:1(b) of the GATT 1994. In the process of
making such a determination, we will need to determine whether the measures at issue result in
treatment that is less favourable than that provide d for in the EC Schedule and whether the imposition
of duties and conditions on the products at issue is in excess of the duties and conditions provided for
in the EC Schedule. As explained in greater detail below 91, this task involves the interpretation of a
treaty term of the WTO Agreement and the GATT 1994, namely the WTO concession contained in
heading 02.10 of the EC Schedule.
92
7.55 The Panel notes that it is bound by Article 11 of the DSU. Article 11 provides that:
"The function of panels is to assist th e DSB in discharging its responsibilities under
this Understanding and the covered agreements. Accord ingly, 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 findi ngs as will assist the DSB in making the
recommendations or in giving the rulings pr ovided 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."
7.56 We understand that, once seized of a matter, Ar ticle 11 prevents a panel from abdicating its
responsibility to the DSB. In other words, in the c ontext of the present case, we lack the authority to
refer the dispute before us to the WCO or to any other body.93

However, before a panel seeks such information or advice from any individual or body within the jurisdiction of
a Member it shall inform the authorities of that Member. A Member should respond promptly and fully to any
request by a panel for such information as the pane l considers necessary and appropriate. Confidential
information which is provided shall not be revealed without formal authorization from the individual, body, or
authorities of the Member providing the information."
90 WCO's general comments in its replies to the Panel's questions to the WCO dated 2 December 2004.
91 See paragraph 7.87 et seq below.
92 We recall that in para. 7.6 above, we concluded that concessions contained in the EC Schedule are
treaty terms of the GATT 1994 and the WTO Agreement.
93 The Panel notes that, in India – Quantitative Restrictions , the panel submitted to the IMF a number
of questions regarding India's balance-of-payments situation. The panel gave considerable weight to the views
expressed by the IMF in its reply to these questions. India claimed on appeal that the panel improperly
delegated to the IMF its duty to make an objective assessm ent of the matter and, theref ore, acted inconsistently
with Article 11 of the DSU. The Appellate Body stated that: "[N]othing in the Panel Report supports India's

7.57 In addition, we note that all the parties to th is dispute, including the respondent, appear to
consider that this case is appropriately adjudicated by us.
94 In this regard, we note that Article 23.1 of
the DSU provides that:
"When Members seek the redress of a violation of obligations or other nullification or
impairment of benefits unde r the covered agreements or an impediment to the
attainment of any objective of the covered agreements, they shall have recourse to,
and abide by, the rules and procedures of this Understanding."
7.58 In the Panel's view, Article 23.1 supports the view that, in the context of this dispute, which
involves the question of whether the measures at issu e result in treatment that is less favourable than
that provided for in the EC Schedule in c ontravention of Article II of the GATT 1994, the
complainants have a right to recourse to the WTO dispute settlement mechanism.
7.59 The Panel is mindful of the respective jurisdiction and competence of the WCO and the WTO
and, in fact, we specifically raised this issue w ith the parties during the course of these proceedings. 95
Nevertheless, we consider that we have been ma ndated by the DSB in this dispute to determine
whether the European Communities has violated Article II of the GATT 1994 with respect to the
products at issue. As mentioned a bove in paragraph 7.54, in so doing, we will need to interpret the
WTO concession contained in heading 02.10 of the EC Schedule.
F. ARTICLE II OF THE GATT 1994
1. Main claims of the parties
(a) Parties' claims
7.60 Brazil and Thailand claim that, through EC Regulation No. 1223/2002 and EC Decision
2003/97/EC, the European Communities is acting inconsistently with its obligations under
Article II:1(a) and Article II:1(b) of the GATT 1994 by according less favourable treatment to the
products at issue than that provided for in the EC Schedule.96
7.61 The European Communities claims that the treatment accorded by the European
Communities to frozen boneless chicken cuts impregnated with salt, with a salt content of 1.2% – 3%,
under EC Regulation No. 1223/2002 and EC Decision 2003/97/EC respects the bindings contained in
the EC Schedule and involves no infringement of Article II:1(a) and Article II:1(b) of the GATT
1994.97
(b) Analysis by the Panel
7.62 Article II:1 of the GATT 1994 provides that:

argument that the Panel delegated to the IMF its judicial function to make an objective assessment of the matter.
A careful reading of the Panel Report makes clear that the Panel did not simply accept the views of the IMF.
The Panel critically assessed these views and also considered other data and opinions in reaching its
conclusions." Appellate Body Report, India – Quantitative Restrictions , para. 149. We understand the
Appellate Body's comments in that case to support the view expressed by us in paragraph 7.56.
94 See, for example, Brazil's comments on the WCO's replies to the Panel's questions to the WCO dated
2 December 2004; Thailand's comments on the WCO's replies to the Panel's questions to the WCO dated
2 December 2004; EC's oral statement at the second substantive meeting, para. 12.
95 See Panel question No. 9.
96 Brazil's first written submission, para. 192; Thailand's first written submission paras. 157-158.
97 EC's first written submission, para. 211.

"(a) Each contracting party shall accord to the commerce of the other contracting
parties treatment no less favourable than that provided for in the appropriate Part of
the appropriate Schedule annexed to this Agreement.
(b) The products described in Part I of the Schedule relating to any contracting
party, which are the products of territories of other contracting parties, shall, on their
importation into the territory to which the Sc hedule relates, and subject to the terms,
conditions or qualifications set forth in that Schedule, be exempt from ordinary
customs duties in excess of t hose set forth and provided therein. Such products shall
also be exempt from all other duties or charges of any kind imposed on or in
connection with the importation in excess of those imposed on the date of this
Agreement or those directly and mandator ily required to be imposed thereafter by
legislation in force in the importing territory on that date."
7.63 The Appellate Body in Argentina – Textiles and Apparel elaborated upon the meaning and
scope of Article II of the GATT 1994:
"The terms of Article II:1(a) require that a Member 'accord to the commerce of the
other Members treatment no less favourable than that provided for' in that Member's
Schedule…. Paragraph (a) of Article II:1 contains a general prohibition against
according treatment less favourable to imports than that provided for in a Member's
Schedule. Paragraph (b) prohibits a specific kind of practice that will always be
inconsistent with paragraph (a ): that is, the application of ordinary customs duties in
excess of those provided for in the Schedule."
98
7.64 As for the relationship between subparagraphs (a) and (b) of Article II of the GATT 1994, the
Appellate Body in Argentina – Textiles and Apparel stated that:
"In accordance with the general rules of treat y interpretation set out in Article 31 of
the Vienna Convention, Article II:1(b), first sentence, must be read in its context and
in light of the object and purpose of the GATT 1994. Article II:1(a) is part of the
context of Article II:1(b); it requires that a Member must accord to the commerce of
the other Members 'treatment no less favourable than that provided for' in its
Schedule. It is evident to us that the application of customs duties in excess of those
provided for in a Member's Schedule, in consistent with the first sentence of
Article II:1(b), constitutes 'less favourab le' treatment under the provisions of
Article II:1(a) … ."
99
7.65 In light of the foregoing, in determining whethe r or not the measures at issue are inconsistent
with Article II:1(a) and Article II:1(b) of the GA TT 1994, we will need to ascertain: (a) the treatment
accorded to the products at issue under the EC Sche dule; (b) the treatment accorded to the products at
issue under the measures at issue; and (c) whethe r the measures at issue result in less favourable
treatment of the products at issue than that provide d for in the EC Schedule and, more particularly,
whether those measures result in the imposition of duties and conditions on the products at issue in
excess of those provided for in the EC Schedule.

98 Appellate Body Report, Argentina – Textiles and Apparel, para. 45.
99 Appellate Body Report, Argentina – Textiles and Apparel, para. 47.

2. Treatment of the products at issue
(a) Arguments of the parties
7.66 Brazil and Thailand submit that less favourable treatment has been accorded to the products
at issue in this case in violation of Article II of the GATT 1994 because the European Communities
changed its customs classification so that frozen sa lted chicken that had previously been classified
under subheading 0210.90.20 and subject to an ad valorem tariff of 15.4% is now classified as frozen
chicken under subheading 0207.14.10 and is subject to a tariff of 102.4€/100kg/net as well as being
potentially subject to special safeguard measures pursuant to Article 5 of the Agreement on
Agriculture. They argue that the application of a specific rate of 102.4€/100kg/net leads to a tariff
rate in excess of the bound rate for salted chic ken provided for in the EC Schedule and constitutes
"treatment less favourable" within the meaning of Article II of the GATT 1994.
100 Thailand submits
that the European Commun ities has not disputed the validity of price data demonstrating that the ad
valorem equivalent of the specific duty of 102.4€/100kg/net for the products at issue following the
introduction of the measures at issue exceeds 15.4%. 101 Furthermore, Thailand submits that the
European Communities has not established a mechan ism to ensure that, in respect of the new
description of the products at issue, the speci fic duty of 102.4€/100 kg/net would not exceed the
15.4% ad valorem bound rate previously applied to that product. 102 Thailand submits that, therefore,
the measures at issue have resulte d in treatment less favourable than that provided for in the EC
Schedule.103 Brazil and Thailand argue, in addition, th at the fact that the same product is now
potentially subject to the application of a sp ecial safeguard measur e under the Agreement on
Agriculture is also "treatment less favourable" than that provided for in the EC Schedule for "salted"
meat.104
7.67 The European Communities submits that the products c overed by EC Regulation No.
1223/2002 and EC Decision 2003/97/EC fall under headi ng 02.07 of the EC Schedule and are subject
to a duty of 102.4€ per 100 kilogram. 105 The European Communities notes that, in addition, these
products may be subject to the special safeguard mechanism provided for in Article 5 of the
Agreement on Agriculture. The European Commun ities also notes that it has a tariff rate quota
covering this tariff line of 15,500 tonnes from whic h Brazil and Thailand bene fit, among others. The
European Communities notes that the in-quota rate is zero. 106 The European Communities
acknowledges that, currently, it has no mechanism in place that would subject the products covered by
EC Regulation No. 1223/2002 and EC Deci sion 2003/97/EC to a duty not exceeding 15.4%
ad valorem. However, the European Communities submits that it is not necessary to have such a
mechanism in place becau se the products at issue are not entitled to benefit from the European
Communities' concession of a 15.4% ad valorem rate under subheading 0210.90.20 of the EC
Schedule.107

100 Brazil's first written submission, paras. 9, 54 an d 59; Thailand's first written submission, paras. 19-
20, 54, 58 and 155.
101 Indeed, in its reply to Panel question No. 95, the EC confirmed that it did not dispute the pricing
data provided by the complainants.
102 Thailand's first written submission, para. 12.
103 Brazil's first written submission, paras. 9, 54 and 59; Thailand's first written submission,
paras. 19-20, 54, 58 and 155.
104 Brazil's first written submission, paras. 9, 54 and 59; Thailand's first written submission,
paras. 19-20, 54.
105 EC's reply to Panel question No. 25.
106 EC's reply to Panel question No. 94.
107 EC's reply to Panel question No. 25.

(b) Analysis by the Panel
(i) Treatment in the EC Schedule
7.68 As noted above in paragraph 7.65, the first matter for the Panel's determination is the
treatment accorded to the products at issue under the EC Schedule. Of relevance to this dispute is the
treatment granted in the EC Schedule for subh eading 0207.14.10 and for subheading 0210.90.20.
Excerpts of these subheadings from the EC Schedule are set out below:
Tariff item
number
Description of products Final bound rate
of duty
Special
safeguard

0207 Meat and edible offal, of the poultry of heading No.
0105, fresh, chilled or frozen:

(…)
 - Poultry cuts and offal other than livers, frozen:
0207.41 -- Of fowls of the species Gallus domesticus:
 --- Cuts:
0207.41.10 ---- Boneless 1024 ECU/T SSG
(…)

Tariff item
number
Description of products Final bound rate
of duty
Special
safeguard

0210 Meat and edible meat offal, salted, in brine, dried,
smoked; edible flours and meals of meat or meat
offal

(…)
0210.90 - Other, including edible flours and meals of meat or
meat offal:

 -- Meat:
(…)
0210.90.20 --- Other 15.4% --
(…)

7.69 The Panel notes as a preliminary matter that most of the argumentation that has been
advanced by the parties in this case relates to the 4- digit level of the headings in question – that is,
concerning headings 02.07 and 02.10 rather th an, respectively, subheadings 0207.41.10 and
0210.90.20. As explained in more detail below in paragraphs 7.84 et seq, this focus is associated with
the fact that the current dispute appears to turn on the meaning of the term "salted", a reference to
which is found at the 4-digit level in heading 02.10.
7.70 It is clear to the Panel from the excerpts of the EC Schedule set out above in paragraph 7.68
that products falling within the scope of subhead ing 0207.41.10 are subject to a bound specific duty
rate of 1024 ECU/T (i.e. 102.4€/100kg/net). In add ition, such products may be subject to a special
safeguard measure provided for in Article 5 of the Agreement on Agriculture. Products falling under
subheading 0210.90.20 are subject to a final bound duty rate of 15.4% ad valorem.
(ii) Treatment under the measures at issue
7.71 The Panel indicated above in paragraph 7.65 th at the second matter for our determination is
the treatment accord ed to the products at issue under the me asures at issue. We found above in
paragraph 7.47 that EC Regulation No. 1223/2002 a nd EC Decision 2003/97/EC have the effect of
classifying frozen boneless chicken cuts that have been deeply and homogenously impregnated with
salt, with a salt content of 1.2% – 3%, under su bheading 0207.14.10 of the European Communities'

CN. In addition, the European Communities has informed us that the products at issue – that is, those
covered by EC Regulation No. 1223/2002 and EC Decision 2003/97/EC – are subject to a duty of
102.4€ per 100 kilogram.
108 In light of the foregoing, it is clear that the measures at issue treat the
products at issue as if they fall under heading 02.07 of the European Communities' CN.109
(iii) Less favourable treatment
7.72 As noted above in paragraph 7.65, the third matter for our determination is whether the
measures at issue result in less favourable treatment of the products at issue than that provided for in
the EC Schedule and, more particularly, whether those measures result in the imposition of duties and
conditions on the products at issue in excess of those provided for in the EC Schedule.
7.73 Regarding the question of what may constitute less favourable treatment for the purposes of
Article II of the GATT 1994, the Appellate Body in Argentina – Textiles and Apparel stated that:
"A tariff binding in a Member's Schedule provides an upper limit on the amount of
duty that may be imposed, and a Member is permitted to impose a duty that is less
than that provided for in its Schedule. The principal obligation in the first sentence of
Article II:1(b) ... requires a Member to refrain from imposing ordinary customs duties
in excess of those provided for in that Member's Schedule."110
In other words, if duty is levied on a product in ex cess of that provided for in a Member's schedule,
"less favourable treatment" will exist within the meaning of Article II of the GATT 1994.
7.74 The Panel notes that the imposition of a specific duty on a product in cases where the relevant
Member's schedule provides for an ad valorem duty or vice versa will not necessarily lead to a
violation of Article II of the GATT 1994. In Argentina – Textiles and Apparel , the Appellate Body
stated that "the application of a type of duty different from the type provided for in a Member's
Schedule is inconsistent with Article II:1(b), firs t sentence, of the GATT 1994 to the extent that it
results in ordinary customs duties being levied in excess of those provided for in that Member's
Schedule." 111
7.75 In this case, the Panel recalls that, under the measures at issue, the products at issue are
treated as if they fall under heading 02.07 of the CN. In our view, there is clearly a possibility that the
price of the products at issue will be sufficiently low so as to produce an ad valorem equivalent that
exceeds that applicable for products covered by th e concession contained in heading 02.10 of the EC
Schedule. Indeed, pricing data before the Panel indi cate that the duty levied on the products at issue
can and has in the past exceeded 15.4% ad valorem, being the bound duty rate for products covered
by heading 02.10. 112 The European Communities has indicated that it does not dispute such pricing

108 EC's reply to Panel question No. 25.
109 In this regard, we note that the European Communities has stated that the products covered by EC
Regulation No. 1223/2002 and EC Decision 2003/97/EC fall under heading 02.07 of the EC Schedule: EC's
reply to Panel question No. 25.
110 Appellate Body Report, Argentina – Textiles and Apparel, para. 46.
111 Appellate Body Report, Argentina – Textiles and Apparel , para. 55. That case concerned
Argentina's commitment to bind imports of textiles, apparel and footwear at an ad valorem r a t e o f 3 5 % .
However, following the conclusion of the Uruguay Round, imports of textiles and apparel into Argentina were
subject to either an ad valorem tax of 35% or a minimum specific duty, whichever was the higher. The panel
found that, because Argentina bound an ad valorem duty of 35%, it could not then apply a specific minimum
duty. As noted above in paragraph 7.74, the Appellate Body did not agree with the panel in this respect.
112 In paragraph 57 of its first written submission, Brazil submits that, on the basis of average annual
prices of salted chicken meat exported from Brazil to the EC from 1998 - 2002, the equivalent ad valorem rate
of duty imposed on such meat ranged from 42.17% to 58 .4%. In paragraph 11 of its first written submission,
Thailand submits that, on the basis of the average annual price of salted chicken exported from Thailand to the

data.113 Further, the European Communities has acknowledged that, currently, it has no mechanism in
place that would subject the products covered by EC Regulation No. 1223/2002 and EC Decision
2003/97/EC to a duty not exceeding 15.4% ad valorem.114 In light of the foregoing, if we conclude
that the products at issue are covered by the concession contained in h eading 02.10 of the EC
Schedule rather than the concession contained in heading 02.07, there is no question that the treatment
accorded to those products under the me asures at issue is less favourable than that provided for in the
EC Schedule.
3. Burden of proof
7.76 In order for the Panel to determine whether, in fact, the products at issue have been accorded
less favourable treatment in violation of Article II of the GATT 1994, it is the Panel's view that it is
necessary to first determine what must be proved by the complainants to justify their claims under
Article II.
7.77 The Panel notes that, in US – Wool Shirts and Blouses, the Appellate Body stated that:
"[I]t is a generally-accepted canon of evidence in civil law, common law and, in fact,
most jurisdictions, that the burden of proof rests upon the party, whether complaining
or defending, who asserts the affirmative of a particular claim or defence. If that
party adduces evidence sufficient to raise a presumption that what is claimed is true,
the burden then shifts to the other party, who will fail unless it adduces sufficient
evidence to rebut the presumption.
In the context of the GATT 1994 and the WTO Agreement, precisely how much and
precisely what kind of evidence will be required to establish such a presumption will
necessarily vary from measure to measure, provision to provision, and case to
case."
115
7.78 The complainants' fundamental claim in this dis pute is that the products at issue fall within
the scope of the concession contained in headi ng 02.10 of the EC Schedule whereas, under the
measures at issue, they are currently classified as if they fall within the scope of the concession
contained in heading 02.07 of the EC Schedule. 116 In light of the rules governing the burden of proof,
it is our view that the complainants bear the burden to prove that the products at issue are, in fact,
covered by the concession contained in heading 02.10 of the EC Schedule.
4. Summary and conclusions regarding the interpretation of Article II of the GATT 1994
7.79 The key issue for the Panel's determination in this dispute is whether the measures at issue
result in less favourable treatment of the products at issue and, more particularly, whether those
measures result in the imposition of duties and conditi ons on the products at issue in excess of those
provided for in the EC Schedule. As noted previ ously, the complainants' f undamental claim is that
the products at issue are covered by the concessi on contained in heading 02.10 of the EC Schedule

EC from 1997-2002, the equivalent ad valorem rate imposed on such chicken was 43%. Thailand also submits
that, following the entry into force of EC Regulation No. 1223/2002 on 29 July 2002, on the basis of the annual
price of salted chicken exported from Thailand, the ad valorem equivalent rate of duty was 51.2% in 2002 and
58.9% in 2003: Thailand's first written submission, paras. 150-151. See also Exhibit THA-2.
113 EC's reply to Panel question No. 95.
114 EC's reply to Panel question No. 25.
115 Appellate Body Report on US – Wool Shirts and Blouses, p. 14 (DSR 1997:I, 323 at 325).
116 See, for example, Brazil's second written submission, para. 1 and Thailand's first written
submission, para. 66. We recall that we determined above in paragraph 7.47 that the measures at issue have the
effect of classifying frozen boneless chicken cuts that have been deeply and homogenously impregnated with
salt, with a salt content of 1.2%-3%, under subheading 0207.14.10 of the European Communities' CN.

whereas they are currently treated as if they are covered by the co ncession contained in heading 02.07
of the EC Schedule pursuant to the measures at i ssue. Therefore, the Panel considers that the
complainants bear the burden to prove that the products at issue are, in fact, covered by the concession
contained in heading 02.10 of the EC Schedule. If the Panel concludes that the products at issue are
so covered, there is no question that the treatme nt accorded to those products under the measures at
issue is less favourable than that provided for in the EC Schedule because undisputed pricing data
indicate that the duty levied on the produc ts at issue can and has exceeded 15.4% ad valorem, being
the bound duty rate for products covered by the concession contained in heading 02.10.
7.80 We turn now to the relevant aspects of the EC Schedule, which we must interpret in order to
determine whether the terms of the concession contai ned in heading 02.10 of that Schedule cover the
products at issue.
G.
INTERPRETATION OF THE EC SCHEDULE
1. The essence of the interpretative issue
(a) Arguments of the parties
7.81 The European Communities denies that the products at issue are covered by heading 02.10
of the EC Schedule. 117 The European Communities explains that it is not arguing that, because the
products at issue are frozen, and heading 02.07 of the EC Schedule covers "frozen" chicken, therefore
they should be included under that heading regardl ess of whether they had been preserved by salting.
The European Communities clarifies that, rather, the products at issue are not "salted" because, in
order to qualify under heading 02. 10, through salting, th e product must have undergone a process in
order to place it in a state of preservation. 118 According to the European Communities, the key
element of heading 02.10 is the notion of preservation. 119 In addition, the European Communities
submits that, in order to be preserved with salt, meat should be deeply and homogenously
impregnated with a level of salt suffici ent to ensure long-term preservation. 120 The European
Communities also argues that, with regard to headin g 02.10, the principle of long-term preservation is
well-entrenched and was confirmed as early as 1983 in the ECJ Dinter judgement.121
7.82 Thailand submits that the European Communities' argument that only meat products salted
for the purpose of long-term preservation are "salte d" within the meaning of heading 02.10 of its
Schedule implies a novel approach to customs classifi cation. To determine the customs classification
of a product, it would no longer be sufficient to examine the physical characteristics of the product
presented to customs; it would also be necessary to examine for what purpose the product was given
its physical characteristics. Thailand submits th at the European Communities' novel approach cannot
be implied into the term "salted". Thailand also argu es that such an approach is completely foreign to
the HS and deviates from the normal practice of customs classification of Members. According to
Thailand, such an approach would, if introduced into WTO law, create great uncertainty in the
determination of the scope of the tariff concessions.
122
7.83 Brazil submits that, in assessing the meaning, scope and content of the EC tariff concession at
issue, the Panel should bear in mind that interpre tative principles according to which the Panel is
called upon to interpret the EC Schedule "neither re quire nor condone the imputation into a treaty of
words that are not there or the importation into a tr eaty of concepts that were not intended". Brazil

117 EC's oral statement at the second substantive meeting, para. 14.
118 EC's oral statement at the second substantive meeting, para. 16.
119 EC's second written submission, para. 23.
120 EC's reply to Panel question No. 88.
121 EC's reply to Panel question No. 109. The Dinter judgement is discussed in more detail below in
paragraph 7.372 et seq.
122 Thailand's oral statement at the first substantive meeting, para. 5.

argues that, in this case, the principles of interpre tation cannot attribute to heading 02.10 of the EC
Schedule the non-existent term or unintended concept of preservation.123
(b) Analysis by the Panel
7.84 The Panel recalls that, in paragraph 7.47 above, we concluded that the measures at issue – EC
Regulation No. 1223/2002 and EC Decision 2003/97/E C – have the practical effect of classifying
frozen boneless chicken cuts that have been deeply and homogenously impregnated with salt, with a
salt content of 1.2% – 3%, under subheading 0207.14.10 of the European Communities' CN. Both
measures state that the products covered by those me asures (i.e. the products at issue) are "frozen for
long-term conservation".124
7.85 With respect to heading 02.10, the European Communities has submitted that, in its regime,
that heading is characterized by the notion of preservation. 125 The European Communities argues
more particularly that, in order for a product to be salted for the purposes of heading 02.10, the salt
must be sufficient to ensure "long-term preservation". 126 The Panel notes that the principle of "long-
term preservation" is referred to in EC Regulation No. 1871/2003 127 and EC Regulation No.
2344/2003.128
7.86 The European Communities has confirmed that the substantive effect of the measures at issue
is the same as the substantive effect of EC Regulation No. 1871/2003 and EC Regulation No.
2344/2003, at least as far as frozen boneless chicken cu ts that have been impregnated with salt are
concerned.129 In our understanding, these measures, like EC Regulation No. 1223/2002 and EC

123 Brazil's oral statement at the first substantive meeting, para. 22 citing Appellate Body Report,
India – Patents (US), para. 45 and Appellate Body Report, EC – Tube or Pipe Fittings, para. 98.
124 See, in particular, column 3 of the Annex of EC Regulation No. 1223/2002 set out above in
paragraph 2.31 and recital (7) of EC Decision 2003/97/EC set out above in paragraph 2.33.
125 EC's second written submission, para. 23.
126 EC's reply to Panel question No. 88.
127 Article 1 of EC Regulation No. 1871/2003 provides that: "Additional note 7 to Chapter 2 of the
Combined Nomenclature annexed as Annex I to Regula tion (EEC) No 2658/87 is replaced by the following:
'For the purposes of heading 0210, the terms "meat and edible meat offal, salted, in brine" mean meat and edible
meat offal deeply and homogeneously impregnated with salt in all parts and having a total salt content of not
less than 1.2% by weight, provided it is the salting which ensures long-term preservation.'"
128 According to the European Communities, EC Regulation No. 2344/2003 makes certain changes to
the CN in order to incorporate changes proposed to the CN after 11 September 2003, being the date when the
annual revision to the CN for 2004 was introduced. (The annual revision to the CN for 2004 was contained in
EC Regulation No. 1789/2003, which was adopted on 11 September 2003 and was published on 30 October
2003.) The European Communities submits that EC Regulation 1871/2003 of 23 October 2003 was one such
change (EC's replies to Panel question Nos. 20(a) and 33), which appears to be supported by the text of EC
Regulation No. 2344/2003. In accord ance with the amendment proposed in EC Regulation No. 1871/2003, EC
Regulation No. 2344/2003 amends Additional Note 7 to Chapter 2 of the CN as follows: "For the purposes of
heading 0210, the terms 'meat and edible meat offal, salted or in brine' mean meat a nd edible meat offal deeply
and homogeneously impregnated with salt in all parts an d having a total salt content by weight 1.2% or more,
provided that it is the salting which ensures the long-term preservation.": EC Regulation No. 2344/2003,
Annex, para. 1.
129 In particular, the European Communities indicated that frozen chicken cuts that have been deeply
and homogeneously impregnated with salt, with a salt content of 1.2% or more would be classified under
subheading 0210.90.20 of the European Communities' CN pursuant to EC Regulation No. 1871/2003 and
EC Regulation No. 2344/2003 provided that the goods were salted for preservation: EC's reply to Panel question
No. 20 (b). To compare the substantive effect of EC Regulation No. 1871/2003 and EC Regulation No.
2344/2003 with the measures at issue, the Panel notes that EC Regulation No. 1871/2003 and EC Regulation
No. 2344/2003 relate to all "meat and edible meat offal" covered by heading 02.10 of the CN. The Panel recalls
its conclusion in paragraph 7.47 above that EC Regulation No. 1223/2002 and EC Decision 2003/97/EC
concern the classification of "boneless chicken cuts, frozen and impregnated with salt in all parts" under heading
02.07 of the CN. While, on their face, the two sets of measures appear quite different as regards the products

Decision 2003/97/EC, have the effect of treating frozen boneless chicken cuts that have been
impregnated with salt, with a salt content of 1. 2% – 3%, as if they are covered by the concession
contained in heading 02.07 of the EC Schedule ra ther than the concession contained in heading 02.10
of the EC Schedule, unless the salt ensures "long-term preservation" of those chicken cuts. Therefore,
the critical question for us in interpreting the EC Sche dule in this case is whether the term "salted" in
the concession contained in heading 02.10 covers th e products at issue which, in turn, will entail a
determination of whether that concession includes th e requirement that salting is for preservation and,
more particularly, is for long-term preservation.
130
7.87 The answer to this question will clearly be governed by the results of the Panel's interpretation
of the tariff concession at issue, namely, the concession contained in heading 02.10 of the EC
Schedule. As noted above in paragraph 7.6, in view of Article II:7 of the GATT 1994 and Article II:2
of the WTO Agreement, the concessions contained in the EC Schedule are treaty terms of the GATT
1994 and the WTO Agreement. In other words, the content of the EC Schedule must be considered
treaty language.
7.88 Article 3.2 of the DSU provides that:
"The dispute settlement system of the WTO is a central element in providing security
and predictability to the multilateral tradin g system. The Members recognize that it
serves to preserve the rights and obligations of Members under the covered
agreements, and to clarify the existing provi sions of those agreements in accordance
with customary rules of interpretation of public international law. Recommendations
and rulings of the DSB cannot add to or diminish the rights and obligations provided
in the covered agreements."
The Panel notes that Articles 31 and 32 of the Vienna Convention on the Law of Treaties ( Vienna
Convention) contain "customary rules of interpretati on of public international law" within the
meaning of Article 3.2 of the DSU.
131 These Articles comprise the legal framework within which this
interpretative exercise must take place.
7.89 Article 31 of the Vienna Convention provides that:
"General rule of interpretation
1. A treaty shall be interpreted in goo d faith in accordance with the ordinary
meaning to be given to the terms of the trea ty in their context and in the light of its
object and purpose.

and headings of the CN to which they relate, it is clear to us that both sets of measures have the effect of
classifying frozen boneless chicken cuts that have been impregnated with salt, with a salt content of 1.2%-3%,
under heading 02.07 rather than heading 02.10, unless the salt ensures long-term preservation of those chicken
cuts. Therefore, the Panel sees no relevant difference between, on the one hand, EC Regulation No. 1223/2002
and EC Decision 2003/97/EC and, on the other hand, EC Regulation No. 1871/2003 and EC Regulation
No. 2344/2003 as far as they concern the classification of the products at issue.
130 In this regard, we note that, in response to a question from the Panel, the European Communities
submits that "[w]hereas EC law on classification contains the term 'long-term preservation', the word
'preservation' is not to be found in HS heading 02.10. Rather, the EC has shown that heading 02.10 has at its
heart a concept which the EC in these proceedings has te rmed 'preservation' but which it might have as easily
have referred to as 'long-term preservation'. ... 'Long-ter m preservation' is the phrase that the EC has used to
represent the preservation criterion that is inherent in heading 02.10, whether in the Harmonised System, or the
EC's Schedule, or the EC's Combined Nomenclature." EC's reply to Panel question No. 118.
131 See, for example, Appellate Body Report, US – Gasoline , p. 17 (DSR 1996: I, 3 at 16); Appellate
Body Report, India – Patents (US), para. 45; Appellate Body Report, US – Shrimp, para. 114.

2. The context for the purpose of the inte rpretation of a treaty shall comprise, in
addition to the text, including its preamble and annexes:
(a) any agreement relating to the treaty which was made between all the parties
in connection with the conclusion of the treaty;
(b) any instrument which was made by one or more parties in connection with
the conclusion of the treaty and accepted by the other parties as an instrument related
to the treaty.
3. There shall be taken into account, together with the context:
(a) any subsequent agreement between the parties regarding the interpretation of
the treaty or the application of its provisions;
(b) any subsequent practice in the appli cation of the treaty which establishes the
agreement of the parties regarding its interpretation;
(c) any relevant rules of international la w applicable in the relations between the
parties.
4. A special meaning shall be given to a te rm if it is established that the parties
so intended."
7.90 Article 32 provides that:
"Supplementary means of interpretation
Recourse may be had to supplementary me ans of interpretation, including the
preparatory work of the treaty and the circumstances of its conclusion, in order to
confirm the meaning resulting from the application of article 31, or to determine the
meaning when the interpretation according to article 31:
(a) leaves the meaning ambiguous or obscure; or
(b) leads to a result which is manifestly absurd or unreasonable."
7.91 Reliance upon Articles 31 and 32 of the Vienna Convention to interpret WTO treaty
provisions is supported by jurisprudence of the Ap pellate Body and panels under the GATT 1994, the
Agreement on Agriculture and the Agreement on G overnment Procurement. For example, in EC –
Computer Equipment , the Appellate Body set out interpretative rules concerning tariff concessions
contained in a WTO Member's GATT schedule:
"Tariff concessions provided for in a Member's Schedule – the interpretation of which
is at issue here – are reciprocal and result from a mutually-advantageous negotiation
between importing and exporting Members. A Schedule is made an integral part of
the GATT 1994 by Article II:7 of the GATT 1994. Therefore, the concessions
provided for in that Schedule are part of the terms of the treaty. As such, the only
rules which may be applied in interpreting the meaning of a concession are the
general rules of treaty interpretation set out in the Vienna Convention."
132

132 Appellate Body Report, EC – Computer Equipment, para. 84.

7.92 In US – Shrimp , the Appellate Body referred to a hierarchy between the various elements
contained in Article 31 of the Vienna Convention:
"A treaty interpreter must begin with, a nd focus upon, the text of the particular
provision to be interpreted. It is in the wo rds constituting that provision, read in their
context, that the object and purpose of the states parties [sic] to the treaty must first be
sought. Where the meaning imparted by the text itself is equivocal or inconclusive,
or where confirmation of the correctness of the reading of the text itself is desired,
light from the object and purpose of the treaty as a whole may usefully be sought."
133
In other words, the Appellate Bo dy indicated that the object and purpose should be considered after
the treaty interpreter has determined the meaning of the words constituting the treaty obligation in
question when read in their context.
7.93 In addition, the Appellate Body has stated that one of the corollaries of the general rule of
interpretation in Article 31 is that "interpretation [o f a treaty] must give meaning and effect to all the
terms of a treaty." 134 Therefore, an interpreter may not adopt a reading that would result in reducing
whole clauses or paragraphs of a treaty to redundancy or inutility.
7.94 The Panel also understands that the primary pur pose of treaty interpretation is to identify the
common intention of the parties and that the rules contained in Articles 31 and 32 of the Vienna
Convention have been developed to help assessing, in obj ective terms, what was or what could have
been the common intention of the parties to a treaty . We are aware that the various steps provided for
in Articles 31 and 32 are meant to be viewed as one integrated rule of interpretation rather than as a
series of separate tests and that, accordingly, the va rious criteria contained in those Articles are not to
be applied in isolation of each other. However, fo r the sake of clarity, we consider it appropriate to
explain our conclusions step by step under Article 31 beginning with an analysis of the ordinary
meaning of the concession contained in heading 02. 10 and then reviewing the ordinary meaning of
that concession in its context and, finally, in light of the object and purpose. We will turn to
Article 32 to confirm the meaning of the concessi on contained in heading 02.10 under Article 31 if
the meaning of the concession under Article 31 does not yield a clear meaning or leads to a result that
is manifestly absurd or unreasonable.
2. Time-frame for interpretation
(a) Arguments of the parties
7.95 Brazil and Thailand submit that the relevant point in tim e at which the meaning of headings
in the EC Schedule should be assessed is 15 April 1994, when the GATT Contracting Parties signed
the Final Act of the Uruguay Round and when Member s' schedules were annexed to the Marrakesh
Protocol. Brazil argues that, in principle, 15 April 1994 was the last opportunity a Contracting Party
had to refuse or accept adherence to the Protocol.
135 Thailand also notes that, in US – Shrimp, the
Appellate Body stated that the relevant time fo r the interpretation of the treaty at issue was 1994,
being the time when Members assumed their obligations under the WTO Agreement.136
7.96 The European Communities argues that the Panel is tasked to assess the meaning of its
concessions pursuant to Article 31 of the Vienna Convention as of the date of Panel establishment
according to Articles 3.2 and 11 of the DSU. 137 The European Communities submits that, insofar as

133 Appellate Body Report, US – Shrimp, para. 114.
134 Appellate Body Report, US – Gasoline, p. 23.
135 Brazil's reply to Panel question No. 56; Thailand's reply to Panel question No. 56.
136 Thailand's reply to Panel question No. 56.
137 EC's replies to Panel question Nos. 56 and 87.

EC law is relevant to determining the scope of the EC Schedule under Article 32 of the Vienna
Convention as part of the circumstances of its conclu sion, the common intention of the parties as
expressed in the WTO Modalities for the Establishm ent of Specific Binding Commitments under the
Reform Programme (Modalities Agreement) indicates that the commencement of the Uruguay Round
negotiations, i.e. 1 September 1986, should be used as the relevant date when such law should be
considered.138
7.97 In response, Thailand argues that, while the determination of whether there is a violation of
the European Communities' obligations must be made on the basis of the situation existing at the date
of the establishment of the Panel, a treaty interp reter is required to assess the scope of the tariff
commitment the European Communities made fo r heading 02.10 when it concluded the WTO
Agreement on 15 April 1994 in order to ascertain the European Communities' WTO obligations. 139
Thailand submits that 15 April 1994 is the relevant da te for examining the scope of the headings in a
Member's schedule because that is the date that the then Contracting Parties signified their consent to
be bound by the WTO Agreement and the time their schedules were annexed thereto. 140 With respect
to the European Communities' arguments regardin g the time for assessment of EC law, Thailand
submits that Article 32 of the Vienna Convention does not make any reference to legislation or court
judgements in a Member's jurisdiction applicable as of the date of the launch of negotiations or at the
time of the conclusion of the negotiations. According to Thailand, Article 32 of the Vienna
Convention only makes reference to the circumst ances surrounding the conclusion of the treaty. 141
Thailand also submits that the Modalities Agreement merely requires that products subject to ordinary
customs duties be bound at the level applied as of 1 September 1986. Thailand argues that this does
not have any implications for the scope of the tariff concession in question.142
(b) Analysis by the Panel
7.98 The Panel recalls that the complainants argue that the meaning of concessions contained in
the EC Schedule should be assessed as at 15 Apr il 1994. The European Communities submits that,
for the purposes of the Panel's analysis under Article 31 of the Vienna Convention, the meaning of
tariff headings in the EC Schedule should be assesse d as at the date of Pane l establishment whereas,
for the purposes of the Panel's analysis of EC law as part of the circumstances of the conclusion of the
EC Schedule under Article 32 of the Vienna Convention, 1 September 1986 is the date for assessment
of the meaning of concessions contained in the EC Schedule.143
7.99 The Vienna Convention does not expressly stipulate the time at which or period during which
the common intentions of the parties are to be asses sed when interpreting a treaty term. However, the
Panel notes that the various sources to which a trea ty interpreter may have regard under Articles 31
and 32 of the Vienna Convention are, in general terms, identified by reference to when they were
created, finalized and/or existed as compared to when the treaty being interpreted was concluded. The
Panel infers from this that the relevant tim e for assessment under Articles 31 and 32 of the Vienna
Convention depends upon the source for treaty interpreta tion being referred to. In our view, the
"ordinary meaning" is to be assessed at the time of conclusion of the treaty in question, being the time

138 EC's second written submission, para. 97 et seq; EC's oral statement at the second substantive
meeting, para. 72; EC's reply to Panel question No. 87. See also the European Communities' arguments set out
in paragraph 7.337 below. The Modalities Agreement is contained in Exhibit EC-9.
139 Thailand's comments on the EC's reply to Panel question No. 87.
140 Thailand's second written submission, para. 77.
141 Thailand's oral statement at the second substa ntive meeting, para. 29; Thailand's comments on the
EC's reply to Panel question No. 87.
142 Thailand's second written submission, para. 76.
143 In this regard, the European Communities' arguments are set out in further detail in paragraph 7.337
below.

which is at the focus of both Articles 31 and 32 of the Vienna Convention.
144 Regarding "context"
under Article 31(2), Article 31(2)(a) refers to "any agreement relating to the treaty which was made
between all the parties in connection with the conclusion of the treaty " and Article 31(2)(b) refers to
"any instrument which was made by one or more parties in connection with the conclusion of the
treaty...". The terms of Article 31(2) suggest that s ources considered under that Article must have
been created, finalized and/or existed contemporaneously with the conclusion of the treaty.
Article 31(3)(a) refers to "any subsequent agreement" and Article 31(3)(b) refers to "any subsequent
practice". The terms of Article 31(3) suggest that sources considered under that Article must have
been created, finalised and/or existed following conclusion of the treaty. Article 32 refers to "the
preparatory work of the treaty and the circumstances of its conclusion ", suggesting that such sources
considered under Article 32 must have been created, finalized and/or existed in preparation of or in
the lead up to the conclusion of the treaty.
7.100 With respect to the date or period during which the "conclusion" of the treaty at issue in this
case (i.e. the EC Schedule) took place, the Panel notes that the Uruguay Round negotiations
concluded on 15 December 1993. Indeed, the minutes of the Thirty Sixth Meeting of The Trade
Negotiations Committee of 15 December 1993 expr essly state that: "The Trade Negotiations
Committee [at the meeting of 15 December 1993] fo rmally adopted the Fi nal Act of the Uruguay
Round Negotiations in document MTN/FA".
145 The verification process of the results of those
negotiations took place from 15 February until 25 Marc h of 1994. On 15 April 1994, the Final Act
was signed and it was at that time that schedules, the subject of negotiations during the Uruguay
Round, were annexed to the Marrakesh Protocol.
146 The Final Act came into force on 1 January
1995.147
7.101 In our view, the process of authentication or verification of treaties forms an important part of
the conclusion process. In particular, it allows signatories to verify and ensure that the common
intentions have been properly reflected in the terms of the relevant treaty. 148 If we were to find that

144 The Panel notes that this view appears to be supported by a number of leading international law
commentators. Ian Sinclair states that: "The ordinary meaning of a treaty provision should in principle be the
meaning which would be attributed to it at the time of the conclusion of the treaty ... termed the 'principle of
contemporaneity' requiring that 'the terms of a treaty mu st be interpreted according to the meaning which they
possessed, or which would have been attributed to them, and in the light of current linguistic usage, at the time
when the treaty was originally concluded'": Ian Sinclair, The Vienna Convention on the Law of Treaties ,
Manchester University Press, 2
nd edition (1984) p. 124 quoting Fitzmaurice in 33 BYIL (1957), p. 212. Mustafa
Yasseen states that "Unless the treaty reveals a different intention, the ordinary meaning must be that of the time
of conclusion of the treaty.": Mustafa Yasseen, "L'int erprétation des Traités d'après la Convention de Vienne
para. 7. The Panel is aware that there is WTO jurisprudence to suggest that an "evolutionary" approach to treaty
interpretation is required in some cases to take account of changing factual circumstan ces. In particular, in the
case of US – Shrimp , in interpreting Article XX(g) of the GATT 19 94, the Appellate Body stated that: "From
the perspective embodied in the preamble of the WTO Agreement, we note that the generic term 'natural
resources' in Article XX(g) is not 'static ' in its content or reference but is rather 'by definition, evolutionary'."
Appellate Body Report, US – Shrimp , para. 130. However, none of the parties to this dispute have advocated
such an "evolutionary" approach for the EC concession in question.
145 MTN.TNC/40 contained in Exhibit EC-28.
146 The Marrakesh Protocol is contained in Exhibit BRA-5.
147 W/Let/1.
148 In their book on public international law, Nguy en Quoc Dinh, Patrick Daillier and Alain Pellet state
that: "The adoption of the text of the treaty marks the end of the drafting stage. From an intellectual standpoint,
adoption can be broken down into two distinct operations: deciding on the text – i.e. the negotiations have come
to an end and the negotiators consider that they have produced a text which, on the face of it, appears acceptable
– and authentication, a procedure which consists in declaring that the text that has been drafted corresponds to
the intention of the negotiators and that they consider it de finitive. In principle, authenticated text is no longer
subject to amendment." Nguyen Quoc Dinh, Patrick Daillier and Alain Pellet, Droit International Public ,
Librairie Générale de Droit et de Jurisprudence, 3rd edition (1987) p. 124.

GATT schedules were concluded before the verifica tion process took place, this would undermine the
important role that the verification process is aimed at playing in the conclusion process. Therefore,
in the context of the present case, given that ther e was a possibility for verification and modification
of schedules during the verification period to ensure that they reflected the negotiated results and,
therefore, the common intentions of WTO Member s, the Panel finds that the EC Schedule was
concluded following expiration of th e verification process. More specifically, we consider that the
EC Schedule was "concluded" when the Final Act was signed and when the Uruguay Round
schedules were annexed to the Marrakesh Protocol on 15 April 1994.149
7.102 Therefore, we will ascertain the ordinary m eaning of the concession contained in heading
02.10 of the EC Schedule as at 15 April 1994. This date will also serve as the reference point for our
consideration under Articles 31 and 32 of the Vienna Convention of other sources for the
interpretation of the concession contained in heading 02.10 of the EC Schedule.
7.103 Regarding the European Communities' argument th at the date for interpretation of the EC
Schedule is the date of establishment of the Panel under Article 31 of the Vienna Convention, we note
that the European Communities refers to Article 3.2 150 and Article 11 151 of the DSU. However, we
find no support in either of those Articles for the vi ew that the date for interpretation of a WTO treaty
obligation should be the date of establishment of a pane l. With respect to the EC's argument that the
date for interpretation of EC law as part of the "circumstances of the conclusion" of the EC Schedule
under Article 32 of the Vienna Convention is 1 September 1986 152, we understand the European
Communities to mean that events, acts or other inst ruments that may be considered as "circumstances
of conclusion" under Article 32 of the Vienna Convention must be considered as at 1 September 1986.
This argument concerns the temporal scope of the meaning of the term "circumstances of conclusion"
under Article 32 of the Vienna Convention and is dealt with below in paragraphs 7.342 et seq.
3. Application of the Vienna Convention to the EC Schedule
(a) Ordinary meaning: Article 31(1) of the Vienna Convention
7.104 The Panel recalls that the concession we are re quired to interpret for the purposes of this
dispute – namely, the concession contained in subhe ading 0210.90.20 of th e EC Schedule – provides
as follows:
"Meat and edible meat offal, salted, in br ine, dried, smoked; edible flours and meals
of meat or meat offal
- Other, including edible flours and meals of meat or meat offal:
-- Meat:

149 We note that this conclusion appears to be supported by a statement made by the Appellate Body in
US – Shrimp to the effect that it was in 1994 (and, therefore, not in 1993) that the intentions of signatories to the
WTO Agreement had to be ascertained to determine the m eaning to be ascribed to Article XX(g) of the GATT
1994. Appellate Body Report, US – Shrimp, para. 129.
150 Article 3.2 of the DSU provides that: "The di spute settlement system of the WTO is a central
element in providing security and predictability to the multilateral trading system. The Members recognize that
it serves to preserve the rights and obligations of Me mbers under the covered agreements, and to clarify the
existing provisions of those agreem ents in accordance with customary rules of in terpretation of public
international law. Recommendations and rulings of the DSB cannot add to or diminish the rights and
obligations provided in the covered agreements."
151 Article 11 of the DSU is set out in para. 7.55 above.
152 In relation to this point, the European Communities' arguments are set out in further detail in
paragraph 7.337 below

--- Other"
7.105 The Panel notes that our starting point in dete rmining the ordinary meaning of the concession
contained in heading 02.10 of the EC Schedule is to ascertain the meaning of the terms contained in
that concession. While dictionaries are the primary source for determination of the ordinary meaning
of treaty terms, we consider it necessary in this case to test the appropriateness of those dictionary
definitions against the factual context in which the concession in question exists and is being
applied.
153 To be clear, when we refer to factual context, this is distinct from legal context within the
meaning of Article 31(2) of the Vienna Convention. The factual context could include, for example,
aspects associated with the physical characteristics of the products at issue and those that are known
to be covered by the concession in question in this dispute. The purpose for taking these aspects into
account is to test any claim of ordinary meaning by the parties against the relevant factual setting to
ensure that the ordinary meaning that is being c onsidered corresponds to the reality of the factual
context at the relevant point in time.
(i) Ordinary meaning to be determined of which term(s)?
Arguments of the parties
7.106 Brazil and Thailand submit that the ordinary meaning of all the terms in heading 02.10 must
be assessed because what is under examination by the Panel is the scope and meaning of the tariff
concession of heading 02.10 in the EC Schedule. Nevertheless, Brazil and Thailand do not consider
that the result of the interpretative exercise will differ depending upon whether the terms other than
"salted" in heading 02.10 are assessed as part of the "ordinary meaning" under Article 31(1) of the
Vienna Convention or as "context" under Article 31(2).154
7.107 The European Communities takes the view that the terms other than "salted" in heading
02.10 should be treated as "context" under Article 31(2) of the Vienna Convention because it is the
term "salted" that is directly at issue in this case.155
Analysis by the Panel
7.108 Since it is the meaning of the term "salted" in the concession contained in heading 02.10 of
the EC Schedule that is in issue in this dispute, the Panel will seek to ascertain the ordinary meaning
of that term. The Panel will consider the remain ing relevant terms in that concession – namely, "in
brine", "dried" and "smoked" – as context under Article 31(2) of the Vienna Convention . In this
regard, we note that the complainants do not consider that the result of the interpretative exercise will
differ depending upon whether the terms other than "salted" in h eading 02.10 are assessed as part of
the ordinary meaning under Article 31(1) of the Vienna Convention or as context under
Article 31(2).156
(ii) Ordinary meaning of the term "salted" in subheading 0210.90.20 of the EC Schedule
Arguments of the parties
7.109 Brazil and Thailand refer to a number of dictionary definitions of the term "salted " in an
effort to shed light on the ordinary meaning of that term. On the basis of these dictionary definitions,

153 We find support for the view that the factual context should be taken into consideration in the
writings of a leading international law commentator, who st ates that "[t]he true meaning of a text has to be
arrived at by taking into account all the consequences which normally and reasonably flow from that text.": Ian
Sinclair, The Vienna Convention on the Law of Treaties, Manchester University Press, 2nd edition (1984) p. 121.
154 Brazil's reply to Panel question No. 66; Thailand's reply to Panel question No. 66.
155 EC's reply to Panel question No. 66.
156 Brazil's reply to Panel question No. 66; Thailand's reply to Panel question No. 66.

Brazil concludes that the term "salted" is associated with food to indicate the content of salt, the taste
and smell, the treatment or whether or not the food has been preserved. 157 Brazil and Thailand argue
that, in essence, the term "salted" refers to m eat that contains or is impregnated with salt. 158 Brazil
also submits that the ordinary meaning of the term "salting" indicates that it is a process that prepares
meat for different purposes 159 and that what distinguishes meat of heading 02.10 from meat of other
headings of Chapter 2 of the EC Schedule is not the process of preservation employed but, rather, the
process of preparation. 160 Thailand further submits that it does not consider that the purpose for
which a product undergoes the process of salting is rele vant to determine the or dinary meaning of the
term "salted". Thailand argues that, since the salting of a meat product may be carried out for
different purposes, the ordinary meaning of salted must be the description that refers neutrally to the
most basic feature of the term – that is, that the product contains salt.
161 Brazil and Thailand also
argue that nothing in the ordinary meaning of the term "salted" suggests that it is exclusively a process
used to ensure (long-term) preservation. They submit that to interpret the term "salted" as a process to
ensure (long-term) preservation is to give that term an overly narrow interpretation that is not
consistent with the ordinary meaning of th e term under heading 02.10 of the EC Schedule. 162 On the
basis of the various dictionary definitions referred to by Brazil and Thailand, they conclude that the
term "salted" does not have a single meaning an d that, therefore, one cannot conclude from the
ordinary meaning of the term that salting only relates to preservation, much less to long-term
preservation. They submit that, therefore, it is necessary to assess the other means of interpretation
under the Vienna Convention in order to arrive at the correct interpretation.163
7.110 The European Communities also refers to a number of di ctionary definitions of the term
"salted" and concludes that the question of whethe r the term "salted" means that a product has been
preserved by salt or has had its flavour altered by the addition of salt must be resolved through an
analysis of the "context".164 With respect to the type of salt encompassed by the ordinary meaning of
the term "salted", the European Communities submit s that it is relatively uncommon for common salt
alone to be used for the preservation of products that are commercially traded. 165 More specifically,
the European Communities observes that it knows of no meat that is preserved by the use of common
salt alone.166
7.111 The various dictionary definitions of "salted" relied upon by the parties in the context of their
discussion of the ordinary meaning of the concession in question are contained in the table set out
immediately below.167

157 Brazil's first written submission, para. 73.
158 Brazil's second written submission, paras. 19 and 20; Brazil's oral statement at the second
159 Brazil's oral statement at the first substantive meeting, para. 30.
160 Brazil's oral statement at the first substantive meeting, para. 44.
161 Thailand's second written submission, para. 21.
162 Brazil's first written submission, para. 100; Thailand's first written submission, para. 82.
163 Brazil's oral statement at the first substantive meeting, para. 30; Thailand's oral statement at the first
substantive meeting, para. 12.
164 EC's first written submission, para. 122.
165 EC's reply to Panel question No. 64.
166 EC's reply to Panel question No. 97.
167 Brazil's first written submission, para. 72; Brazil' s second written submission, para. 19; Thailand's
first written submission, para. 68; EC's first written submi ssion, para. 115. We note that the EC also made
general references to the Larousse Gastronomique Ency clopaedia (excerpts of which are contained in Exhibit
EC-3) and to Arnold Bender's Dictionary of Nutrition and Food Technology (excerpts of which are contained in
Exhibit EC-16).

 Brazil Thailand EC
Dictionaries
Relied Upon
Concise Oxford
Dictionary (1995),
American Heritage
College Dictionary (1993)
& Merriam Webster's
Collegiate Dictionary
(1993)
Concise Oxford Dictionary
(1995)

New Shorter Oxford
English Dictionary
(1996)
 -Impregnated with,
containing or tasting of
salt; cured or preserved or
seasoned with salt;
containing or filled with
salt; having a salty taste
or smell; preserved in salt
or a salt solution
-To cure or preserve with
salt or brine; season with
salt; to add, treat season,
or sprinkle with salt; or to
cure or preserve by
treating with salt or a salt
solution
-To treat with a solution
of salt or a mixture of
salts
-To treat, provide, or
season with common salt
-Impregnated with,
containing or tasting of salt
-Treated with or stored
in salt as a preservative;
cured or preserved with
salt or salt water (brine)
-Seasoned with salt
-Treated with chemical
salts

Analysis by the Panel
7.112 The Panel notes that the verb "to salt" is defi ned as follows in the various dictionaries to
which the Panel has made reference:
Dictionaries
Relied Upon
Concise Oxford
Dictionary (1999)
Webster's New
Encyclopaedic Dictionary
(1993)
New Shorter Oxford
English Dictionary
(1993)
 -Season or to preserve
with salt
-Make piquant or more
interesting
-To treat, flavour or supply
with salt
-To preserve (food) with
salt
-To add flavour or zest
-Treat with or store in
salt as a preservative;
cure or preserve (esp.
meat or fish) with salt or
salt water (brine)
-Season with salt
-Flavour as with salt,
make biting, piquant, or
less bland

7.113 The dictionary definitions of the verb "to salt" referred to by the parties and by the Panel
indicate to us that this term encompasses a range of meanings, including to season, to add salt, to

flavour with salt, to treat, to cure or to preserve. 168 The dictionary definitions also suggest that the
ordinary meaning of the term "salted" is not necessarily limited to salting with common salt (NaCl).
7.114 Regarding the question of whether salting concer ns "preparation" processes as submitted by
the complainants or, rather, "preservation" processes as submitted by the European Communities, we
note that "to preserve" is defined, inter alia, as "to keep from or prevent decay or decomposition" or
as "to treat or prepare food for future use by boiling with sugar, salting, pickling or canning". 169 The
term "to prepare" is defined, inter alia, as "to put together or make by combining various elements or
ingredients" or "to make ready for use or consid eration; make (food) ready for cooking or eating". 170
In the Panel's view, the dictionary definitions of the term "salted" indicate that salting includes
"preservation" processes given the express reference to "preservation" in those definitions. Further, it
is our view that "salting" also includes "preparati on" processes given that, for example, seasoning and
flavouring with salt, both of which are referred to in the dictionary definitions for the term "salted",
fall within the scope of the definition of "preparation" processes.
7.115 We see no reference in the dictionary definitions for the verb "to salt" to the amount of salt
that must be added in order for a product to qua lify as "salted". With respect to the reference to
"preservation" in the various dictionary definitions for "salted", we note that there is no reference to
the length of time for which a product must be pr eserved in order for that product to qualify as
"salted".
7.116 On the basis of the dictionary definitions referre d to by the parties and by the Panel, the Panel
concludes that the ordinary meaning of the term "s alted" includes to season, to add salt, to flavour
with salt, to treat, to cure or to preserve. In our view, the ordinary meaning is broader than
"preservation". The ordinary meaning of the term "salted" is not necessarily limited to salting with
common salt (NaCl).
(iii) Factual context for the consideration of the ordinary meaning
7.117 As noted above in paragraph 7.105, to complete our analysis of the ordinary meaning of the
concession contained in heading 02.10 of the EC Sc hedule, the Panel will also consider the factual
context for the term "salted" to test the appropr iateness of our conclusions regarding the ordinary
meaning of that term.171

168 We note that, in a response to a question from the Panel, the WCO stated that, with regard to
lexicographic definitions for the products at issue in this case, the Concise Oxford Dictionary (2001) describes
the term "salted" as to "season or preserve with salt": WCO's reply to Panel question No. 1 to the WCO.
169 More specifically, the term "preserve" is defined as "prepare (fruit, meat, etc.) by boiling with sugar,
salting, or pickling to prevent decomposition or fermentation; treat (esp. food) to prevent these processes;
prepare (food) for future use, as by canning or salting; to prevent (organ ic bodies) from decay ing or spoiling"
(American Heritage College Dictionary, 1993, p. 1082); "maintain in its original or existing state; treat (food) to
prevent its decomposition" ( Concise Oxford Dictionary , 1999, p. 1131); "to keep from decomposition; to
prepare (as by canning or pickling) for future use" ( Webster's New Encyclopaedic Dictionary , 1993, p.797);
"keep from decay; prepare (fruit, met, etc.) by boiling with sugar, salting or pickling to prevent decomposition
or fermentation; treat (esp. food) to prevent these processes" ( The New Shorter Oxford English Dictionary ,
1993, p. 2342).
170 More specifically, the term "to prepare" is defined as "to put together or make by combining various
elements or ingredients" ( American Heritage College Dictionary , 1993, p. 1080.); "to make ready for use or
consideration; make (food) ready for cooking or eating" ( Concise Oxford Dictionary, 1999, p. 1129); "to make
or get ready; to put together" ( Webster's New Encyclopaedic Dictionary, 1993, p. 796); and "make ready (food,
a meal) for eating; cook or assemble in eatable form and serve" ( The New Shorter Oxford English Dictionary,
1993, p. 2337).
171 The Panel notes that, since it is tasked to ascertain the ordinary meaning of heading 02.10 of the
EC Schedule at the time the Schedule was concluded – i.e. on 15 April 1994 – we will not consider factual
context that clearly did not exist at that point in time.

Arguments of the parties

Products covered by the concession contained in heading 02.10
7.118 The European Communities points to the products listed in Exhibit EC-5 and submits that
those products together with bacon are representative examples of products covered by heading 02.10.
The European Communities submits th at, in respect of the various meats indicated in Exhibit EC-5
and in respect of bacon, salting w ith common salt does not provide the sole basis for preservation. In
this regard, the European Communities notes that it knows of no meat that is preserved by the use of
common salt alone.172 The European Communities further subm its that all existing practice suggests
that products covered by heading 02.10 must be pr epared in such a way that places the meat in a
recognizably different state, normall y one identified by a specific name. 173 The European
Communities explains that by "recognizably different", it means meat that is obviously different from
raw meat in appearance and texture. The Eur opean Communities submits that a customs officer
examining the goods would have no difficulty recognizing them for what they are. 174 The European
Communities argues that, while the meats classifiable under heading 02.10 share this characteristic
(for example, they all have speci al names like "bacon" or "Parma ham"), frozen chicken cuts with
added salt do not constitute a product that is instan tly recognizable in the same way. Nor do they
have a distinguishing name.175
7.119 Thailand submits that Exhibit EC-5 is entitled a " Non-Exhaustive List of Traditional
European salted and dried/smoked meat pr oducts." Thailand argues that this would imply that there
are other products not contained in this list that could, neve rtheless, fall under heading 02.10. 176
Further, Thailand argues that the basis for the Eu ropean Communities' assertion that the criterion of
preparation must result in the prepared meat being given a different name in order to be classified
under heading 02.10 is unclear.177
7.120 Brazil points to a list from the WCO on-line datab ase of products traditionally traded under
the 1996 version of subheading 0210.90 of the HS. 178 Brazil and Thailand submit that none of the
listed salted meats have general or specific names. 179 Brazil also notes that the list includes products
that do not meet the European Communities' criter ion that the preparation must place meat in a
"recognizably different state", such as salted edible offal of reindeer, salted meat of beavers, salted
frogs' legs, salted meat of pigeons and salted meat of hares. Brazil and Thailand also note that that list
includes "salted meat of chicken" and "salted meat of poultry".180
Flavour, texture, other physical properties
7.121 Brazil and Thailand submit that salt has the following effects on meat: (a) the meat retains
more water (i.e. drip losses are reduced), which serv es to improve the quality and texture of the meat;
(b) the salt dissolves proteins, which contributes to th e binding of meat particles in order to emulsify
the fat, reduce moisture loss during cooking and make meat juicier; (c) the meat possesses a distinct,
salty flavour that limits the end-use of the produc t because of health concerns and consumer taste-
tolerance; (d) the meat is preserved when the sa lt content ranges from 9% - 11% and above but a salt

172 EC's reply to Panel question No. 97.
173 EC's second written submission, para. 35.
174 EC's reply to Panel question No. 100.
175 EC's second written submission, para. 35; EC's reply to Panel question No. 100.
176 Thailand's comments on the EC's reply to Panel question No. 100.
177 Thailand's oral statement at the second substantive meeting, para. 15.
178 Excerpted in Exhibit BRA-43.
179 Brazil's comments on the EC's reply to Panel question No. 100; Thailand's comments on the EC's
reply to Panel question No. 100.
180 Brazil's reply to Panel question No. 119; Thailand's comments on the EC's reply to Panel question
No. 100.

content of 1.2% – 3% may also have some preserva tive effect; and (e) the meat develops rancidity
more rapidly than cuts without salt because sodium from salt favours the oxidation of fats.181
7.122 In response, the European Communities submits that, while the addition of salt to the
products at issue might arguably have an effect on ta ste, it cannot be considered that such addition is
made with the objective of changing the taste since the taste of the products at issue is changed to
conform to the manufacturers' requirements upon further processing which is performed in the
European Communities.182 As for the assertion that the additi on of salt reduces moisture loss during
cooking, the European Communities notes that the cooking is done by the EC processing industry
once the products at issue have been imported in to the European Communities. Therefore, the
European Communities questions why the addition of salt before export gives the product any
distinguishing characteristics.183 Further, the European Communiti es submits that the issue of "drip
loss" does not concern the loss of water (which ca n be replaced in the course of further processing)
but of protein when thawing and, therefore, only arises in respect of frozen food. The European
Communities argues that, moreover, low levels (0.5%) of salt are regarded in the industry as sufficient
for the purposes of preventing "drip loss". Accordin g to the European Communities, there is no need
for a salt content of 1.2% or above. Therefore, even if drip loss were relevant, it does not require that
the salt content be greater than 0.5%.
184
7.123 Thailand responds that, while the "drip loss" effect of salt is an important technical reason
why EC importers of the products at issue prefer salted chicken, the amount of salt that may or may
not be required for "drip loss" to be prevented is an ex post facto consideration and is not relevant to
the issue before the Panel, namely, the scope of the European Communities' tariff concession
contained in heading 02.10 of the EC Schedule at the time of the conclusion of the WTO
Agreement.185
7.124 Brazil submits that the European Communities' alle gations that 0.5% of salt is regarded by
the industry as sufficient to prevent drip loss is uns ubstantiated by evidence. Brazil argues that it, on
the other hand, has provided letters from European companies attesting that salted meat exported from
Brazil to the European Communities – that is, meat impregnated with a minimum of 1.2% salt – is
favoured over unsalted chicken precisely because it re duces drip loss. Brazil argues that technical
literature submitted by it explains that, up to a certain limit, the more salt one adds to meat, the greater
the water-holding capacity and the lower the drip loss. 186 Brazil submits that, in any event, the fact
that the impregnation of salted chicken meat with 1.2% salt reduces drip loss is a commercial reason
why there is a demand for the product in the European Communities.187
Desalting
7.125 Thailand submits that, unlike the chilling or freezing of chicken, which, according to
Thailand, may easily be reversed, the salting of ch icken deeply and homogeneously in all parts cannot
be thoroughly removed. Thailand submits that once a product is salted, it cannot be completely

181 Brazil's first written submission, paras. 3, 84-87, 102, Brazil's oral statement at the first substantive
meeting, para. 26; Brazil's reply to Panel question No . 14(b); Brazil's second written submission, para. 15;
Brazils' oral statement at the second substantive meeting, para. 2 referring to Exhibits BRA-16 and BRA-30;
Brazil's replies to questions posed by the EC following the second substantive meeting; Thailand's first written
submission, paras. 53, 77 and 128 and Thailand's reply to Panel question No. 14(b) referring to Exhibits
THA-15 and THA-16.
182 EC's first written submission, para. 49.
183 EC's first written submission, para. 22.
184 EC's second written submission, paras. 14 and 36.
185 Thailand's reply to Panel question No. 86.
186 Brazil's reply to Panel question No. 86.
187 Brazil's reply to Panel question No. 86.

unsalted by immersion in water. The essential charac ter of the chicken product is changed as a result
of the salting.
188
7.126 Brazil acknowledges that some desalting is possible. However, Brazil su bmits that Brazilian
salted chicken cuts, which are deeply and evenly impregnated with a salt content of over 1.2%, cannot
be completely desalted to the point that the chicken returns to the state of being unsalted chicken with
the same basic characteristics and use that existed prior to salting. According to Brazil, once deeply
and evenly impregnated with salt, chicken meat wi ll always present itself as salted meat, even after
desalting. Brazil adds that, because desalting entails the addition of water to meat for a certain period,
when part of the salt is removed by the water, certain important muscle proteins, vitamins and
minerals are also removed. As a result, the desalting process depletes meat of fundamental
characteristics and sometimes even leaves it inadequa te to be used as raw material for the processing
of meat products. Further, Brazil submits that Br azilian producers and exporte rs would have raised
the salt content in meat so as to meet the Europ ean Communities' new definition of "salted meat" of
heading 02.10 if salted chicken meat exported from Br azil could be desalted. Brazil submits that they
have not done so because the salting process carried out by Brazilian producers irreversibly renders
the product salted, and, therefore, different from the product without salt.189
7.127 The European Communities submits that, as a matter of theory, common salt (sodium
chloride, NaCl) that has been added to meat can be entirely removed through a process of osmosis. 190
The European Communities also subm its that press reports regarding the products at issue suggest
that salt can be removed from a salted product. 191 Nevertheless, the European Communities
acknowledges that such removal would require sophi sticated techniques and would be expensive.
The European Communities accepts that, therefor e, desalting does not occur commercially. The
European Communities also notes that the preservation of meat by "salting" often involves the use not
only of sodium chloride, but also of sodium n itrate and nitrite. The European Communities also
acknowledges that this process cannot be reversed a lthough residual sodium chloride can be reduced
by osmosis.
192 The European Communities submits that, ne vertheless, the fact that, as a matter of
theory, it is not commercially viable to desalt a pr oduct, does not imply that the products at issue are
not desalted. According to the European Communi ties, since those products are used for processed
chicken products that contain a substantial salt content, it will rarely be necessary, as a matter of
commercial practice, to completely desalt th em. The European Communities submits that,
nevertheless, the salt content is reduced either by tumbling with water or by tumbling with other
unsalted products.193 In addition to the foregoing, the European Communities acknowledges that the
process of preservation caused by drying or smoki ng products cannot be re versed because these
processes bring about irreversible chemical and physical changes in the meat.194
7.128 Brazil argues that the possibility of desalting the products at issue is irrelevant for the
purposes of product classification at the border. According to Brazil, the customs authority is charged
with the task of classifying a product based on its objective characteristics at the time it crosses the

188 Thailand's first written submission, paras. 77, 79 and 128; Thailand's reply to Panel question No. 61.
189 Brazil's first written submission, para. 83; Brazil's oral statement at the first substantive meeting,
paras. 14-15; Brazil's reply to Panel question No. 61; Br azil's second written submission, paras. 6, 11-14. See
also Exhibit BRA-36 and Exhibit BRA-38.
190 EC's reply to Panel question No. 37.
191 EC's first written submission, para. 14 referring to Exhibit EC-1.
192 EC's reply to Panel question No. 37.
193 EC's reply to Panel question No. 37; EC's oral statement at the second substantive meeting, para. 8.
194 EC's reply to Panel question No. 36.

border, not based on whether the product is subse quently further transformed nor on the use each
particular importer will make of the product.195
Preparation or preservation?
7.129 Brazil argues that, for the purposes of heading 02.10, salt is used to "prepare" meat rather
than to "preserve" it.196
7.130 In response, the European Communities submits that the addition of salt for the purposes of
heading 02.10 is for preservation. 197 The European Communities submits that preservation of
foodstuffs does not necessarily imply that an object must be maintained in its existing condition.
Instead, it implies that the process of spoilage and d ecay is prevented or inhibited. This may or may
not involve changes to the object that has been preserved. 198 The European Communities notes that
salting a product reduces the water ac tivity and, hence, reduces the ability of microbes to proliferate.
The European Communities also submits that the panel on Argentina – Hides and Leather recognized
that salting is a means of preservation of organic bodies.199
7.131 Brazil submits that scientific literature establishes that, in order for meat to be properly
preserved by salting alone, it should contain 9% – 11% of salt.200
7.132 In response, the European Communities submits that scientific literature cited by the
complainants makes it clear that salting can pres erve a meat product on its own (i.e. without the
additional need for freezing). 201 The European Communities relies upon an expert's opinion to argue
that a minimum 7% of common salt is necessary to preserve meat on its own. 202 The European
Communities submits that, in any event, there is no dispute between the parties that a salt content of
1.2% – 3% is insufficient to ensure preservation. 203 The European Communities further notes that,
while the shelf-life of preserved meats may be extende d by cooling or freezing such meats, there is no
suggestion that these products need to be preserved by freezing.204
7.133 Thailand submits that there is an apparent in consistency between, on the one hand, the
European Communities' expert opinion that a mini mum 7% salt content is necessary to preserve meat
and, on the other hand, that provided in the Gausepohl case 205 by the Federal Office for Meat
Research, which stated that 4% - 5% salt was necessary to preserve meat. Thailand submits that, in
any event, the European Communities has stated that meat salted at the level of 3% or more would
have no commercial market in the European Communities. 206 Therefore, the European Communities
is requiring that meat be salted for the purposes of preservation at such high levels that the meat
would be inedible and unsuitable for human consump tion. Thailand notes that the Note to Chapter 2
to the HS, upon which the EC's CN is based, states that "[t]his chapter does not cover … products of
the kinds described in headings 0201 to 0208 or 02 10, unfit or unsuitable for human consumption."
Thailand submits that meat salted at the level of 7% would be "unfit or unsuitable for human

195 Brazil's oral statement at the firs t substantive meeting, para. 16. Brazil notes that the EC uses the
"objective characteristics" criterion when classifying products at the border. In this regard, Brazil refers to
Exhibit EC-12, page 969, Exhibit THA-18, page 1276 and Exhibit BRA-27.
196 Brazil's first written submission, paras. 75, 90-103.
197 EC's first written submission, para. 50; EC's second written submission, para. 23.
198 EC's first written submission, para. 35.
199 EC's first written submission, para. 37.
200 Brazil's first written submission, para. 103.
201 EC's first written submission, para. 9.
202 EC's reply to Panel question No. 97 referring to Exhibit EC-32.
203 EC's reply to Panel question No. 26 referring to Brazil's first written submission, para. 85.
204 EC's reply to Panel question No. 49.
205 This case is discussed below in para. 7.372 et seq.
206 Thailand referring to EC's reply to Panel question No. 27.

consumption." Therefore, according to Thailand, the European Communities is seeking to establish a
criterion for "salted meat" (i.e., 7% salt content) th at, if applied, would render the product ineligible
for coverage under Chapter 2.
207
7.134 Brazil acknowledges that it is possible for some meat, prepared by salting, drying or
smoking, to also be preserved by those processes. 208 However, Brazil notes that, in the case of some
products that the European Communities categori zes under heading 02.10, the relevant processes are
insufficient to inhibit outgrowth of certain poisono us organisms and, therefore, freezing from the time
of production until cooking and/or consumption is necessary.209
7.135 Similarly, Thailand submits that some salted products require an additional means of
preservation. Thailand points to Exhibits THA-25(a), THA-25(b) and THA-25(c), which include
packages of parma ham, prosciutto and jamón serrano, to illustrate that they must be conserved at a
temperature below that of ambient temperature, namely at a chilled level.210
7.136 In response, the European Communities indicates that the products referred to by Thailand
would be classified by the European Communities under heading 02.10 but disputes that these types
of products require add itional means of preservation. 211 The European Communities submits that, in
any event, the possibility of appl ying the means to ensure further preservation to meat covered by
heading 02.10 would not affect the classification of that meat. 212 Further, according to the European
Communities, the fact that the useful life of meat s preserved by salting can be extended by the use of
chilling or freezing does not mean that they have not been preserved. 213 In this regard, the European
Communities submits that the complainants' argume nts appear to be premised on the notion that
"preservation" means protection against deteri oration and decay for an indefinite period. 214 I n
addition, the European Communities submits that pr eserved meat is often sliced and packaged in
preparation for retail sale and that this may cont aminate the meat. The European Communities notes
that it is not arguing that meat retains the same qualities following such processing. The European
Communities submits, however, that such meat has been preserved by salting, and customs authorities
would have no difficulties recognizing it as such. Finally, the European Communities submits that the
use of additional preservation techniques for meat falling within the scope of heading 02.10 is
explicitly envisaged in the HS E xplanatory Notes to Chapter 2 which provide that vacuum packing
(Modified Atmosphere Packing) and the application of this additional preservation technique does not
alter the classification of a product under Chapter 2.215
7.137 Regarding the question of for how long a product should be preserved in order for it to be
covered by heading 02.10, the European Communities submits that the shelf life of preserved meats is
many months at ambient temperatures. 216 The European Communities submits that meats that are
preserved for several months are clearly preserved for the purposes of heading 02.10.217

207 Thailand's comments on the EC's reply to Panel question No. 97.
208 Brazil's oral statement at the first substantive meeting, para. 40.
209 Brazil's oral statement at the first substantive meeting, para. 42; Brazil's reply to Panel question
No. 4.
210 Thailand's oral statement at the first substantive meeting, para. 19; Thailand's second written
submission, para. 37.
211 EC's reply to Panel question No. 96 referring to Exhibit EC-31 and Exhibit EC-32.
212 EC's second written submission, para. 30.
213 EC's oral statement at the second substantive meeting, para. 9.
214 EC's second written submission, para. 41.
215 EC's oral statement at the second substantive m eeting, para. 9; EC's replies to Panel question
Nos. 96 and 98.
216 EC's replies to Panel question Nos. 49 and 96.
217 EC's reply to Panel question No. 102.

7.138 In response, Brazil submits that, while the European Communities appears to have defined
long-term preservation for the purposes of heading 02.10 as many or several months, the Annex to EC
Regulation No. 1223/2002 indicates preservation for one year. Brazil also notes that recital (4) of EC
Regulation No. 1871/2003 suggests preservation for a period other than transportation. In Gausepohl,
long-term preservation was described as "preserva tion considerably exceeding the time required for
transportation".
218 Brazil notes that, in that case, the period of preservation was two days. Brazil also
notes that, in Exhibit EC-32, the European Communitie s' expert has asserted that salted chicken meat
is preserved for a few days without refrigeration. 219 Brazil argues that preservation is not an absolute
and unequivocal concept. According to Brazil, a product may undergo a process that allows
preservation for entirely different time spans: from a few hours to indefinite duration. 220 In addition,
Brazil submits that the expert opinion submitted by the European Communities in Exhibit EC-32
should be disregarded because, inter alia, it was provided at a late st age of the proceedings, which
made it impossible for the complainants to fully address the information presented in that Exhibit.221
7.139 The European Communities submits that defining heading 02.10 by reference to the
criterion of preservation is straightforward; the varie ties of meat that would qualify according to this
criterion are well-established and easily identifiable. The European Communities submits that, in
contrast, the vague criterion of "some salting", or "some drying", or "some smoking" implicit in the
complainants' submissions would create inevitable problems of defining the borderline – that is, the
degree of salting etc. that would be sufficient to qualify a product under heading 02.10. Further, even
if a borderline could be defined, it would be impossible to say whether it had been achieved in a
particular case.
222 The European Communities also submits that there are no national rules specifying
percentages of salt etc. for the purposes of headi ng 02.10 and there are no subheadings in national
tariffs that rely on such criteria. Nor are there decisions of customs authorities providing individual
importers with rulings on such questions.223
Analysis by the Panel
Products covered by the concession contained in heading 02.10
7.140 The Panel notes that the dictionary definitions to which it referred in determining the ordinary
meaning of the term "salted" did not indicate the particular types of products that would necessarily
qualify as "salted". The European Communities app ears to suggest that the category of "salted
products" is a closed list including those referre d to in the European Communities' Exhibit EC-5
224,
products that are "similar" to those contained in Exhibit EC-5 and bacon. 225 However, we have seen
no evidence to indicate that salted products covered by the concession contained in heading 02.10 are
necessarily limited to those identified by the European Communities. In this regard, we note that the
1996 version of subheading 0210.90 of the HS is te xtually similar to subheading 0210.90 of the EC
Schedule. The WCO on-line database of products traditionally traded under the 1996 version of

218 Brazil's reply to Panel question No. 118.
219 Brazil's comments on the EC's reply to Panel question No. 97.
220 Brazil's reply to Panel question No. 4.
221 Brazil's comments on the EC's reply to Panel question No. 97.
222 EC's oral statement at the second substantive meeting, para. 36.
223 EC's second written submission, para. 122.
224 Exhibit EC-5, identified by the European Co mmunities as a "Non-exhaus tive list of Traditional
European salted and dried/smoked meat products", refers to bünder fleisch/viande de grisons, parma ham, san
daniele, prosciutto, jamon serrano, jamon iberico, bayonne ham, südtiroler speck and schwarzwälder schinken.
225 EC's reply to Panel question No. 97. In question 97, the European Communities was asked to
indicate whether or not Exhibit EC-5 contained an exhaustive list of all products traditionally traded under
heading 02.10. The European Communities was also asked to identify any other products that are currently
traded under heading 02.10 in the event that Exhibit EC-5 did not contain an exhaustive list. In response to this
question, the only products referred to by the Europe an Communities were those listed in Exhibit EC-5,
products that are "similar" to those contained in Exhibit EC-5 and bacon.

subheading 0210.90 of the HS
226 includes "salted meat of chicken" and "salted meat of poultry".
Therefore, the Panel concludes that chicken or pou ltry to which salt has been added is not necessarily
precluded from coverage under the concession contained in heading 02.10 of the EC Schedule.227
Flavour, texture, other physical properties
7.141 In the Panel's view, the factual context indicat es that, in order for a product to be "salted"
within the meaning of the concession contained in h eading 02.10 of the EC Schedule, the character of
that product must have been altered through the add ition of salt as compared to that product's fresh
state prior to the addition of salt. In particular, the evidence before us indicates that the addition of
salt to meat changes the meat's physical characteri stics. For example, the literature indicates that,
inter alia, salt enhances flavour 228; reduces the aqueous or water level of food 229; contributes to the
solubilization of muscle proteins and the emulsification of fats 230; eliminates water-soluble
ingredients, such as body minerals, vitamins and proteins 231; reduces the solubility of oxygen in
water232; acts as a pro-oxidant of fats233; and favours the development of rancidity234.
7.142 We also note that the European Communities appears to accept that salt changes certain
physical properties of the meat to which the sa lt has been added. For example, the European
Communities does not appear to dispute that the a ddition of salt to meat changes its taste. The
European Communities does, however, argue that the purpose of the addition of salt to the products at
issue is not to change their taste. 235 In our view, the fact that the purpose for the addition of salt may
not have been to change the physical properties (e .g. taste) of the meat to which the salt has been
added does not detract from the conclusion that such physical properties have been changed.
7.143 In addition, the European Communities does not appear to dispute that moisture loss is
reduced through the addition of salt. However, it argu es that this moisture loss is the concern of the
EC processing industry importing the products at issue. 236 Again, we do not consider that this factor
undermines the conclusion that salt changes the phys ical properties of meat to which salt has been

226 Excerpted in Exhibit BRA-43.
227 The Panel notes that there is nothing in the WCO response to Panel question No. 10 to the WCO
(relating to the kinds of products the WCO Secretariat considers would clearly qualify under heading 02.10 of
the HS, which is textually identical to heading 02.10 of the EC Schedule) to indicate that such products would
be excluded from coverage under heading 02.10 of the HS.
228 Exhibit BRA-16: Lück, E. & Jager, M., Chemical Food Preservation, 2nd Edition, p. 86; Pardi, Dos
Santos, De Souza, Pardi, Meat Science, Technology and Hygiene , Vol. II, p. 721; Silva, João, Topics on Food
Technology, p. 181; Montana Meat Processors Convention, Ingredients in Processed Meat Products , April 27 -
29 2001, p. 11. Exhibit THA-15.
229 Exhibit BRA-16: Evangelista, José, Food Technology, 2nd Edition, p. 409; Lück, E. & Jager, M.,
Chemical Food Preservation, 2nd Edition, p. 80. Exhibit THA-15.
230 Exhibit BRA-16: Pardi, Dos Santos, De Souza, Pardi, Meat Science, Technology and Hygiene ,
Vol. II, p. 721; Price, J.F. & Schweigert, B.S., Science of Meat and Meat Products , pp. 420-421; Silva, João,
Topics on Food Technology , p. 181; Montana Meat Processors Convention, Ingredients in Processed Meat
Products, April 27 - 29 2001, p. 11.
231 Exhibit BRA-16: Lück, E. & Jager, M., Chemical Food Preservation, 2nd Edition, p. 86; Price, J.F.
& Schweigert, B.S., Science of Meat and Meat Products, pp. 380 - 381.
232 Exhibit BRA-16: Evangelista, José, Food Technology, 2nd Edition, p. 409; Lück, E. & Jager, M.,
Chemical Food Preservation, 2nd Edition, p. 81; Silva, João, Topics on Food Technology, p. 182.
233 Exhibit BRA-16: Lawrie, R.A., Meat Science, pp. 301 - 302.
234 Exhibit BRA-16: Price, J.F. & Schweigert, B.S., Science of Meat and Meat Products, pp. 420-421.
235 EC's first written submission, para. 49.
236 EC's first written submission, para. 22.

added, for example through its contribution to th e solubilization of muscle proteins and the
emulsification of fats.237
7.144 That the character of a product is altered thro ugh the addition of salt is, in our view, also
confirmed by the fact that desalting such prod ucts would, by the European Communities' own
admission, require sophisticated techniques and would be expensive. 238 The European Communities
has also stated that desalti ng does not occur commercially. 239 We consider that the fact that
tumbling240 with water or with other unsalted products may reduce the relative salt content by volume
for a particular product does not detract from the conclusion that the product in question cannot, as a
practical matter, be completely desalted.
7.145 The Panel does not consider it necessary to provide a comprehensive list of the ways in which
salt may alter the character of a product. Nor do we consider it necessary to express a view on the
extent to which the addition of salt ch anges meats' physical characteristics.
241 In our view, for the
purposes of our determination of the ordinary meani ng of "salted" in heading 02.10, our main concern
here is whether salt changes the character of the pr oduct to which the salt has been added. For the
reasons outlined in the immediatel y preceding paragraphs, we consider that the answer to this
question is in the affirmative.
Preservation
7.146 The Panel recalls, that in paragraph 7.116 above , we found that the ordinary meaning of the
term "salted" includes preservation. The factual info rmation that has been presented to us confirms
that salt may act as a preservative. 242 The Panel further recalls that the term "preserve" has a range of
meanings, including "maintaining a product in its original or existing state" as well as "preventing a
product from decomposing". 243 The Panel understands from this ra nge of meanings that there is a
spectrum of degrees to which a product may be preserved. The information available to us indicates
that the preservative effect of salt may differ de pending upon the amount of salt that is added.
244

237 Exhibit BRA-16: Pardi, Dos Santos, De Souza, Pardi, Meat Science, Technology and Hygiene ,
Vol. II, p. 721; Price, J.F. & Schweigert, B.S., Science of Meat and Meat Products , pp. 420-421; Silva, João,
Topics on Food Technology , p. 181; Montana Meat Processors Convention, Ingredients in Processed Meat
Products, April 27 - 29 2001, p. 11.
238 EC's reply to Panel question No. 37.
239 EC's reply to Panel question No. 37.
240 Brazil describes the "tumbling" process as the tumbling of chicken cuts that have been manually
salted in a tumbling barrel: Brazil's reply to Panel ques tion No. 14(a). Thailand describes the "tumbling"
process as the mixing of chicken cuts with salted water in a vacuum tumble machine: Thailand's reply to Panel
question No. 14(a).
241 For example, we do not consider it necessary to determine how much salt is needed to achieve drip
loss to the satisfaction of the EC further processing industry.
242 Exhibit BRA-16: Evangelista, José, Food Technology , 2 nd Edition, pp. 408-409; Forrest, Aberle,
Hedrick, Judge, Merkel, Meat Science Foundations, p. 246; Lawrie, R.A., Meat Science, pp. 303-305; Lück, E.
& Jager, M., Chemical Food Preservation , 2nd Edition, pp. 77, 84; Pardi, Dos Santos, De Souza, Pardi, Meat
Science, Technology and Hygiene , Vol. II, pp. 704, 721, 722; Price, J.F. & Schweigert, B.S., Science of Meat
and Meat Products , pp. 365, 420-421; Silva, João, Topics on Food Technology , p. 181; Montana Meat
Processors Convention, Ingredients in Processed Meat Products, April 27 - 29 2001, p. 11.
243 See paragraph 7.114 above, including footnotes thereto.
244 Exhibit BRA-16: Pardi, Dos Santos, De Souza, Pardi, Meat Science, Technology and Hygiene ,
Vol. II, p. 723; Silva, João, Topics on Food Technology , p. 182. Mr Silva states that "in sufficiently high
concentrations, salt inhibits microbial growth by increasing the osmotic pressure of the environment, with the
consequent reduction of the water activity; low concen trations of salt, between 1.0%-3%, already exert a
significant antimicrobial action, du e to the reduction in the water activity of the environment. Low
concentrations, such as 2.0% inhibit the growth of some bacteria, while the majority of molds and yeasts are
capable of growing in salt concentrations close to saturation. However, for the development of halophilic
microorganisms salt concentrations higher than 10% are required. For a good preservation, the maximum

Further, different types of meat may require di fferent amounts of salt in order for them to be
preserved.
245 Finally, the application of the food in question may affect the salt content required for
its preservation. 246 For example, it appears that 2% - 3% salt content is the level usually found in
commercially processed meat products 247 whereas a salt content level of 26.5% eliminates larvae of
cisticercos bovis and celulosae.248 In other words, it appears that even small quantities of salt may
have a preservative effect, although the preservative e ffect is less effective and less long-lasting than
in cases where greater quantities of salt have been added.249
7.147 In light of the foregoing, the Panel considers that the amount of salt needed to preserve a
product will differ depending upon for how long a particular product must be preserved. As noted
above in paragraph 7.115, the dic tionary definitions of the term "salted" do not cast any light on for
how long a product must be preserved in order to be "salted". More specifically, those definitions do
not indicate whether this period is to be determin ed by reference to the period of transportation as
indicated by the ECJ in the Gausepohl case250 or many or several months as indicated by the European
Communities during these proceedings251 or for any other period of time. Therefore, in our view, it is
difficult to draw any conclusions regarding the amount of salt that must be added to a product in order
for it to be "salted" within the ordinary meaning of the concession contained in heading 02.10 of the
EC Schedule.252

amount of water in the product should not exceed 55%. Salt contents between 9% and 10% nearly saturate the
aqueous phase. The preservation of products with salt concentrations lower than this value should be made by
means of refrigeration (cooling)". In an expert opinion, contained in Exhibit EC-32, Professor Honikel states
that "[i]n the raw and chilled state 3% salt is too low to prevent spoilage for more than a few days. If salt alone
is used the final salt concentration must be above 7% salt in the product as a whole or above 11% in the water
part with a water activity of 0.91 and lower".
245 Exhibit BRA-16: Price, J.F. & Schweigert, B.S., Science of Meat and Meat Products, p. 394.
246 Exhibit BRA-16: Price, J.F. & Schweigert, B.S., Science of Meat and Meat Products , pp. 420-421.
The authors state that mature processed products generally contain 3% - 5% of salt whereas fresh processed
products contain 1.5%-2.0% of salt. They add that th e great majority of cooked processed products contain
2%-2.5% of salt.
247 Exhibit BRA-16: Forrest, Aber le, Hedrick, Judge, Merkel, Meat Science Foundations, p. 246. The
authors state that "with respect to today's commercially processed meat products, salt only exerts a limited
preserving effect, whereas these products need other methods of preservation in order to have their shelf-life
extended". In addition, Lück, E. & Jager, M. in Chemical Food Preservation, 2
nd Edition contained in Exhibit
BRA-16 at page 84 state that common salt exerts a good microbicidal effect at concentrations as low as 1%-3%.
The authors also state that these relatively small additions reduce water activity sufficiently to prevent the
growth of important putrefaction bacteria, such as those in sausages, hams and salted meats. Further, Pardi, Dos
Santos, De Souza, Pardi in Meat Science, Technology and Hygiene , Vol. II contained in Exhibit BRA-16 at
p. 722 state that salt concentrations of 1%-3% exert a good antimicrobial action.
248 Exhibit BRA-16: Evangelista, José, Food Technology , 2 nd Edition p. 409. See also Lück, E. &
Jager, M., Chemical Food Preservation, 2nd Edition, p. 80 contained in Exhibit BRA-16 which indicates that the
salt content may affect the types of micro organizms that can survive.
249 We do not consider that these comments are inconsistent with those made by the EC's expert,
Professor Honikel, which are contained in Exhibit EC-32. In particular, Professor Honikel states that "[i]n the
raw and chilled state 3% salt is too low to prevent spoilage for more than a few days." In other words, Professor
Honikel appears to accept that 3% salt may prevent spoilage, albeit for a period of only a few days.
250 Exhibit EC-14: Gausepohl-Fleisch GmbH v Oberfinanzdirektion Hamburg , ECR [1993], I -3047.
At p. I-3066, para. 11, the ECJ stated that "meat of bovine animals to which a quantity of salt has been added
merely for the purpose of transportation cannot be regarded as salted for the purposes of heading 0210. On the
other hand, salting as a method of preserving meat of bovine animals for a longer period must be applied evenly
to all parts of the meat." The Gausepohl judgement is discussed in more detail below in paragraph 7.372 et seq.
251 EC's replies to Panel question Nos. 49 and 96.
252 Accordingly, the Panel does not consider it necessary to address Thailand's argument that the EC is
seeking to establish a salt content for "salted meat" under heading 02.10 (i.e. 7%) that, if applied, would render
the product ineligible for coverage under Chapter 2: Thailand's comments on the EC's reply to Panel question
No. 97.

7.148 In fact, on the basis of the ordinary meaning of the term "salted" in the concession contained
in heading 02.10 when considered in light of the relevant factual context, it is the Panel's view that the
amount of salt added to products qualifying as "salted" under this concession may well vary
depending upon the meat product in question and the sp ecific application of that product, which will,
in turn, affect the period for which a product must be preserved. While the evidence indicates that the
more salt that is added, the longer the period fo r which the product in question will be preserved 253,
there is nothing to suggest that products preserved by salt for relatively short periods of time are
precluded from qualifying under the concession contained in heading 02.10 of the EC Schedule.
7.149 The variable salt content and period of preserva tion that is, in our view, permissible on the
basis of the ordinary meaning of the concession cont ained in heading 02.10 when read in its factual
context would seem to explain, at least in part, why certain products that the European Communities
categorizes under heading 02.10 such as parma ha m, prosciutto and jamón serrano may require
additional means of preservation. Indeed, we consider that the European Communities'
acknowledgement that products covered by headin g 02.10 may require means of preservation in
addition to that effected through the addition of salt 254 provides some support for the view that a
product preserved by salt for relatively short periods of time is not necessarily precluded from
qualifying under heading 02.10 of the EC Schedule.
(iv) Summary and conclusions regarding the "ordinary meaning"
7.150 In summary, on the basis of the dictionary de finitions for the term "salted", the Panel
concludes that the ordinary meaning of that term includes a range of meanings – namely, to season, to
add salt, to flavour with salt, to treat, to cure or to preserve. The dictionary definitions also suggest
that the ordinary meaning of the term "salted" is not necessarily limited to salting with common salt
(NaCl). The Panel considers that, in essence, the ordinary meaning of the term "salted" when
considered in its factual context indicates that th e character of a product has been altered through the
addition of salt.
7.151 The Panel considers that there is nothing in the range of meanings comprising the ordinary
meaning of the term "salted" that indicates that chicken to which salt has been added is not covered by
the concession contained in heading 02.10 of the EC Schedule. Nevertheless, it is our view that the
ordinary meaning of the term "salted" in headi ng 02.10 is not dispositive regarding the question of
whether or not the specific products at issue in this dispute, to which salt has been added and which
are frozen, are covered by this concession. Therefore, we now turn to an analysis of the context for
the concession contained in heading 02.10 of th e EC Schedule pursuant to Article 31(2) of the Vienna
Convention for further guidance in this regard.
(b) Context: Article 31(2) of the Vienna Convention
(i) What qualifies as "context" for the interpretation of the EC Schedule?
7.152 Article 31(2) of the Vienna Convention provides that:
"The context for the purpose of the interp retation of a treaty shall comprise, in
addition to the text, including its preamble and annexes:
(a) any agreement relating to the treaty which was made between all the parties
in connection with the conclusion of the treaty;

253 For example, the EC's expert, Professor Honikel suggests that while a 3% salt content may prevent
spoilage for a few days, a 7% salt content is necessary to completely preserve the product in question.
254 EC's oral statement at the second substantive m eeting, para. 9; EC's replies to Panel question
Nos. 96 and 98.

(b) any instrument which was made by one or more parties in connection with
the conclusion of the treaty and accepted by the other parties as an instrument related
to the treaty."
7.153 The chapeau of Article 31(2) indicates that the te xt of the treaty, the terms of which are being
interpreted, including its preamble and annexes, qualify as "context" under Article 31(2) of the Vienna
Convention. Regarding other agreements or instrume nts that may qualify under Article 31(2), the
International Law Commission stated that:
"[T]he principle on which [Article 31(2)] is based is that a unilateral document cannot
be regarded as forming part of the context [...] unless not only was it made in
connexion with the conclusion of the treaty, but its relation to the treaty was accepted
in the same manner by the other parties . [...] What is proposed in paragraph 2 is
that, for purposes of interpreting the treaty, these categories of documents should not
be treated as mere evidence to which recourse may be had for the purpose of
resolving an ambiguity or obscurity, but as part of the context for the purpose of
arriving at the ordinary meaning of the terms of the treaty."
255 (emphasis added)
7.154 Further, a leading international law commentator suggests that, in order to be related to the
treaty, and thus be part of the "context" as opposed to the negotiating history, which is dealt with in
Article 32 of the Vienna Convention , an instrument "must be concerned with the substance of the
treaty and clarify certain concepts in the treaty or limit its field of application. It must equally be
drawn up on the occasion of the conclusion of the treaty."256
7.155 In light of the foregoing, the Panel will first c onsider the terms of relevant aspects of the EC
Schedule to ascertain whether they assist in the in terpretation of the concession contained in heading
02.10 of the EC Schedule. The Panel will then c onsider whether there are any other agreements or
instruments that qualify as "context" under Article 31(2) of the Vienna Convention that may also
assist us in the interpretative exercise we are required to undertake.
(ii) The text of the EC Schedule
7.156 As noted above in paragraph 7.108, the complain ants discussed the terms other than "salted"
in the concession contained in heading 02.10 of the EC Schedule in their examination of the "ordinary
meaning" of that concession whereas the European Communities did so in the "context" section of its
arguments. As we stated previously, we have adopted the approach suggested by the European
Communities regarding these other terms, recalling that it is the term "salted" that is in issue in this
dispute and that the complainants have submitted th at they do not consider that the result of the
interpretative exercise will differ depending upon wh ether the terms other than "salted" in heading
02.10 are assessed as part of the "ordinary meaning" under Article 31(1) of the Vienna Convention or
as "context" under Article 31(2).257
Other terms contained in heading 02.10 of the EC Schedule
Arguments of the parties
7.157 Brazil and Thailand refer to a number of dictionary definitions of "salted", "in brine"
"dried", and "smoked" and conclude that, taken to gether, these terms share a common attribute. In
particular, according to Brazil and Thailand, they all relate to how food is prepared – that is, the way

255 Yearbook of the International Law Commission, 1966, Vol. II, p. 221, para. 13.
256 Ian Sinclair, The Vienna Convention on the Law of Treaties , Manchester University Press, 2 nd
edition (1984) p. 129.
257 Brazil's reply to Panel question No. 66; Thailand's reply to Panel question No. 66.

in which the natural condition of the product has been altered – regardless of the purpose for the
preparation of meat (e.g. for treatment, seasoning, flavouring, preservation).258
7.158 The European Communities submits that the dictionary definitions cited by the
complainants for the terms "in brine", "dried" a nd "smoked" indicate that these terms denote methods
of preservation of meat products. 259 In particular, the European Communities argues that "in brine"
refers to preservation by salt water, "dried" refers to preserved by the removal of natural moisture, and
"smoking" refers to drying, curing, or tainting by exposure to smoke. 260 According to the European
Communities, the terms "salted", "in brine", "dried " and "smoked" all concern traditional methods for
preserving meat and they are the only traditional methods for preserving meat that are of any
significance.
261 The European Communities argues that, therefore, heading 02.10 is based on a
comprehensive and exclusive list of traditional methods of preserving meat.262
7.159 The various dictionary definitions relied upon by the parties are contained in the table set out
immediately below:263
 Brazil Thailand EC
Dictionaries
Relied Upon
Concise Oxford
Dictionary (1995)

Concise Oxford Dictionary
(1995)

New Shorter Oxford
English Dictionary
(1996)
"In Brine" -[brine] Water saturated
or strongly impregnated
with salt or to soak in or
saturate in brine
-Water saturated or strongly
impregnated with salt or to
soak in or saturate in brine

"Dried" -To make or become dry
by wiping, evaporation,
draining, etc. or to
preserve (food etc.) by
removing the moisture
(dried egg; dried fruit;
dried flowers)
-To make or to become dry
by wiping, evaporation,
draining, etc., or to preserve
(food, etc) by removing the
moisture
-Spec. of food:
preserved by the
removal of its natural
moisture
"Smoked" -To cure or darken by the
action of smoke (smoked
salmon)
-To cure or darken by the
action of smoke
-Of meat, fish, etc.:
dried, cured, or tainted
by exposure to smoke,
or loosely by a process
that produces a similar
effect

Analysis by the Panel
7.160 The Panel notes that the terms other than "salte d" in heading 02.10 are defined as follows in
the various dictionaries to which the Panel has made reference:

258 Brazil's first written submission, paras. 74 and 75; Thailand's first written submission, paras. 68-69;
Thailand's oral statement at the first substantive meeting, para. 13.
259 EC's first written submission, pa ras. 128, 135 and 136; EC's sec ond written submission, para. 31;
EC's oral statement at the second substantive meeting, para. 29.
260 EC's first written submission, paras. 129, 130, and 132.
261 EC's oral statement at the second substantive meeting, para. 30.
262 EC's oral statement at the second substantive meeting, para. 31.
263 Brazil's first written submission, para. 74; Thailand 's first written submission, para. 68; EC's first
written submission, paras. 130 and 132.

Dictionaries
Relied Upon
Concise Oxford
Dictionary (1999)
Webster's New
Encyclopaedic Dictionary
(1993)
New Shorter Oxford English
Dictionary (1993)
"In Brine" -[brine] Water
saturated or strongly
impregnated with salt;
-(technical) A strong
solution of a salt or
salts
-[brined] soak in or
saturate with brine
-[brine] Water containing
a great deal of salt
-[brine] Water saturated or
strongly impregnated with
salt; salt water
"Dried" -[dry] Free from
moisture or liquid
-preserve by
evaporating the
moisture from
-[dry] Free or freed from
water or liquid
-Characterized by loss or
lack of water
-[dried] To make or
become dry
-Deprived of moisture,
desiccated
-Spec. of food: preserved by
the removal of its natural
moisture
"Smoked" -[smoke] Cure or
preserve (meat or fish)
by exposure to smoke
-[smoke] To cure by
exposure to smoke
(smoked meat)
-Of meat, fish, etc: dried,
cured, or tainted by exposure
to smoke

7.161 The key issue for the Panel's determination he re is whether there is any intrinsic notion
common to all terms referred to in the concession c ontained in heading 02.10 of the EC Schedule that
may assist in clarifying the meaning of the term "salte d" in that concession. In this regard, we recall
that the complainants submit that the intrinsic notion common to all terms referred to in heading 02.10
is that of "preparation" to change the natural condition of meat whereas the European Communities
argues that the intrinsic notion is that of "preservation".
7.162 In the Panel's view, it is difficult to identify a notion that characterizes all the terms in the
concession contained in heading 02.10 of the EC Schedule. While the notion of "preservation"
appears in the dictionary definitions for the term s "dried" and "smoked" (and, as previously noted,
also "salted"), this notion does not appear in the dict ionary definitions for "in brine". Even in respect
of those terms for which the notion of "preservation" does appear, the dictionary definitions indicate
that their respective meanings are broader than just pertaining to preservation. Further, it is not clear
to us that preservation is necessarily the dominant characteristic that should be used to characterize
those processes. In addition, in our view, the de finitions for each of th e terms in the concession
contained in heading 02.10 of the EC Schedule may be characterized as pertaining to "preparation" as
well as to "preservation". We recall that there appears to be a certain degree of overlap between these
two concepts in that, for example, a product may be "prepared" for the purposes of "preservation" and
"preserve" is defined, inter alia, as to "prepare food for future use".
264
7.163 In light of the foregoing, the Panel does not cons ider that the definitions of the terms other
than "salted" point to any single notion that is in trinsic to or characterizes all the terms in the
concession contained in heading 02.10 of the EC Sc hedule. Nor does the Panel find that these terms
can be defined as pertaining exclusively either to "preparation" or "preservation" or, for that matter, to
long-term preservation. In conclusion, it is the Panel's view that an examination of the terms
contained in that concession other than "salted" do es not clarify the ordinary meaning of the term
"salted".

264 See paragraph 7.114 above.

Structure of Chapter 2 of the EC Schedule
Arguments of the parties
7.164 Thailand submits that the structure of the ten headings contained in Chapter 2 of the EC
Schedule, of which headi ng 02.10 is one, indicates that products are either classified as "fresh",
"chilled" or "frozen" (the first eight headings) or as "salted", "in brine", "dried" or "smoked" (heading
02.10); and that only heading 02.09 specifically lists all the various states. According to Thailand, the
fact that heading 02.10 does not list all the states but, rather, only lists the states of "salted", "in brine",
"dried" or "smoked" – which Thailand submits ar e methods of preparation – indicates that, for
heading 02.10, it is the type of "preparation" that is the determining factor for the classification of that
product.265 According to Thailand, an analysis of the st ructure of the headings in Chapter 2 indicates
that heading 02.10 is specific for all types of meat th at are salted, in brine, dried or smoked. Thailand
argues that that heading is not meant to be a residua l category. In contrast to heading 02.08, which
applies to "other meat" not specified in headings 02. 01 – 02.07, heading 02.10 applies to all meat and
edible meat offal as long as the meat is salted, in brine, dried or smoked. Thailand submits that all
such meat is to be classified under heading 02.10 re gardless of the state in which it is presented, i.e.
fresh, chilled or frozen.266
7.165 In response, the European Communities argues that an examination of Chapter 2 as a whole
shows that it is divided into different forms of "prese rvation" rather than into meat that has undergone
a process and meat that has not. 267 More particularly, the European Communities argues that the
headings in Chapter 2 of the EC Schedule form tw o categories based on whether or not meat has been
subjected to the processes listed in heading 02.10. 268 According to the European Communities,
chilling and freezing is an important feature of th e headings in the first category comprising all
headings in Chapter 2 except heading 02.10, because it is made explicit that the headings in that
category include meat that is chilled and frozen. As for the second category, consisting of heading
02.10 on its own, the European Communities submits that the omission of freezing or chilling exists
because the purpose achieved by chilling and freezi ng – that is, preservation – has already been
achieved by salting, drying or smoking. The European Communities also submits that, even though
meat of heading 02.10 may be "further preserve d" by other methods (such as freezing), chilling or
freezing is, nevertheless, not a significant considerati on in relation to such meat, which explains why
the terms "chilled" or "frozen" are absent from heading 02.10. 269 The European Communities argues
that, therefore, the context of heading 02.10, viewed in this schematic manner, gives powerful support
to the view that all the processes referred to in Chapter 2 serve to preserve meat from decay.
Therefore, according to the European Communities, the meaning of the term "salted", viewed in its
context, and in light of its object and purpose, means that "salting" is for the purpose of
preservation.270 The European Communities clarifies that preserving a foodstuff does not imply that it
has not been subject to some form of process. Rather it simply means that the process of
decomposition has in some way been inhibited.271
7.166 Brazil and Thailand disagree with the European Commun ities' argument that Chapter 2 of
the EC Schedule is structured on the basis of preser vation processes. Brazil submits that if "salting",
"drying" and "smoking" were meant as means of pr eservation, these terms would have been placed at
the subheading level together with the terms "fresh ", "chilled" and "frozen" found in Chapter 2, but

265 Thailand's first written submission, para. 89; Thailand's second written submission, paras. 24-25.
266 Thailand's second written submission, para. 27.
267 EC's first written submission, para. 138.
268 EC's oral statement at the first substantive meeting, paras. 12-16.
269 EC's first written submission, para. 138; EC's second written submission, paras. 27, 30, 41 and 45.
270 EC's oral statement at the first substantive meeting, paras. 12-16.
271 EC's first written submission, para. 137.

not separately as a different heading.
272 Thailand questions how Chapter 2 could be structured on the
basis of preservation methods given that the state of "fresh", being one of the states of meat products
covered by Chapter 2, could not qualify as a form of preservation. 273 Brazil and Thailand
acknowledge that freezing is not a significant consider ation in relation to meat of heading 02.10.
However, according to Brazil, this is so because wh at is important in relation to meat of heading
02.10 is the fact that it is a different type of m eat from the non-prepared meat of headings 02.01 to
02.08, irrespective of whether it is chilled or frozen. 274 Thailand submits that the fact that salted meat
is subsequently frozen should not aff ect its classification under heading 02.10. 275 Brazil questions
why further preservation would be necessary for meat under heading 02.10 if the processes of heading
02.10 themselves ensure long-term preservation as ar gued by the European Communities. Brazil and
Thailand argue that, therefore, long-term preservati on is not a concept that defines the structure of
Chapter 2 or the processes of heading 02.10.276
Analysis by the Panel
7.167 The Panel considers that the structure of Chapter 2 of the EC Schedule as a whole may
provide textual context from which inferences may be drawn regarding the interpretation of the term
"salted" in the concession contained in heading 02.10 of the EC Schedule, pursuant to Article 31(2) of
the Vienna Convention.
7.168 Chapter 2 of the EC Schedule consists of ten headings – i.e., headings 02.01 through 02.10 –
which are set out below:
"02.01 Meat of bovine animals, fresh or chilled
02.02 Meat of bovine animals, frozen
02.03 Meat of swine, fresh, chilled or frozen
02.04 Meat of sheep or goats, fresh, chilled or frozen
02.05 Meat of horses, asses, mules or hinnies, fresh, chilled or frozen
02.06 Edible offal of bovine animals, swine, sheep, goats, horses, asses, mules or hinnies,
fresh, chilled or frozen
02.07 Meat and edible offal, of the poultry of heading No 0105, fresh, chilled or frozen
02.08 Other meat and edible meat offal, fresh, chilled or frozen
02.09 Pig fat free of lean meat and poultry fa t (not rendered), fresh, chilled frozen, salted, in
brine, dried or smoked
02.10 Meat and edible meat offal, salted, in brine, dried or smoked; edible flours and meals
of meat or meat offal."
7.169 The Panel recalls that, on the one hand, the complainants argue that the headings are
structured in a way such as to distinguish meat "prepared" by the processes listed in heading 02.10

272 Brazil's oral statement at the second substantive meeting, para. 22.
273 Thailand's second written submission, para. 35.
274 Brazil's oral statement at the second substantive meeting, para. 24.
275 Thailand's oral statement at the second substantive meeting, para. 15.
276 Brazil's oral statement at the second substan tive meeting, para. 29; Thailand's second written
submission, para. 35.

from non-prepared meat referred to in the other head ings of Chapter 2 of the EC Schedule. On the
other hand, the European Communities argues that preservation is an important feature for all the
headings in Chapter 2. More particularly, the Eu ropean Communities submits that an examination of
Chapter 2 as a whole shows that it is divided into di fferent forms of "preservation". In the European
Communities' view, heading 02.10 does not refer to other preservation methods such as "chilling" and
"freezing" because the processes of "salting", " brining", "drying" and "smoking" achieve preservation
on their own.
7.170 Generally speaking, the headings within Chapte r 2 are structured as follows: (a) they identify
the type of meat or meat product concerned by the heading in question; and (b) they indicate the
state(s) of the meat that are covered by the head ing – namely, the states of being "fresh", "chilled"
and/or "frozen". An important exception to this generalisation is heading 02.10, which covers all
types of meat listed in headings 02.01 through 02.08 and states that the meat covered by that heading
must be "salted, in brine, dried or smoked".
277 What is not clear to us is the rationale for and
significance of the unique formulation used in heading 02.10.
7.171 Indeed, in the Panel's view, there is nothing in the terms of Chapter 2 that clearly indicates
which of the approaches put forward by the parti es is the correct one, if either. The European
Communities itself appears to have cast doubt on th e view that the processes referred to in heading
02.10 result in "preservation" in the same manner that "chilling" or "freezing" achieves preservation.
In particular, the European Communities has ac knowledged that meat of heading 02.10 may be
"further preserved" by other methods, such as freezing. 278 Counterbalancing the foregoing, however,
is the absence of any compelling evidence derivi ng from the structure of Chapter 2 to indicate
definitively that the concession contained in head ing 02.10 is characterized by the notion of
"preparation" rather than "preservation", as has been submitted by the complainants.
7.172 In our view, there may be a host of reasons th at, individually and/or in combination, could
explain the unique formulation used in heading 02.10. In particular, it may be that it is based on the
fact that, in contrast to other processes referred to in the headings of Chap ter 2, the processes referred
to in heading 02.10 "prepare" meat so that the meat's natural condition is altered, as has been
submitted by the complainants; and/or the unique fo rmulation may be linked to the fact that the
processes referred to in heading 02.10 on their own "preserve" the meat to which those processes are
applied, as has been submitted by the European Communities; and/or , the formulation may be based
on a factor that is completely different from the "preparation" and "preservation" theories that have
been put forward by the parties. For example, th e terms and structure of heading 02.10 may merely
reflect international trade patterns.279 The Panel considers that, on the basis of the terms and structure
of heading 02.10, it is difficult to know which of the above-mentioned reasons is the applicable one, if
any.
7.173 In conclusion, the Panel considers that the stru cture of Chapter 2 of the EC Schedule does not
provide any insights regarding the question of whethe r "preservation" and/or "p reparation", if either,
characterize Chapter 2 and, more particularly, the concession contained in heading 02.10 of the EC
Schedule. In addition, the Panel's view is that th e structure of Chapter 2 of the EC Schedule does not
indicate that the concession containe d in heading 02.10 is necessarily characterized by the notion of
long-term preservation.

277 We note that heading 02.09 is also somewhat different from headings 02.01-02.08 in that, in
addition to identifying the type of meat product concerned by that heading and referring to the states of "fresh",
"chilled" and "frozen", it also refers to the states of "salted", "in brine", "dried" or "smoked".
278 EC's first written submission, para. 138; EC's second written submission, paras. 27, 30, 41 and 45.
279 In this regard, see the WCO's reply to Pa nel question No. 2 to the WCO referred to in
paragraph 7.196 below.

Other parts of the EC Schedule

Arguments of the parties
7.174 Thailand submits that headings 08.12 and 08.14 of the EC Schedule illustrate that, in the EC
Schedule, when the European Communities considers th at a product must be classified on the basis of
its preservative characteristics, those characteristics are specifically referred to in the relevant tariff
heading.280 In particular, Thailand refers to the following tariff headings from the EC Schedule:
"08.12 Fruit and nuts provisionally preserved (for example by sulphur dioxide gas, in
brine, in sulphur water or in other preserva tive solutions), but unsuitable in that state
for immediate consumption:
0812.10.00 Cherries
0812.20.00 Strawberries
0812.90 Other
08.14 Peel of citrus fruit or melons (incl uding watermelons) fresh, frozen, dried or
provisionally preserved in brine, in sulphur water or in other preservative solutions."
7.175 Thailand submits that, in contrast to head ings 08.12 and 08.14, heading 02.10 makes no
reference to "preservation". Thailand also submits that, under the general principles of interpretation
of Article 31 of the Vienna Convention , the Appellate Body has stated that an interpreter must not
"adopt a reading [of a treaty provision] that would r esult in reducing whole clauses or paragraphs of a
treaty to redundancy or inutility."
281 Therefore, according to Thailand, a reading of "salted" as
meaning for the purpose of long-term preservation w ould reduce to inutility the terms "preserved" in
headings 08.12 and 08.14. Accordingly, in the view of Thailand, the absence of a reference to
"preservation" in heading 02.10 means that preservation is not the defining characteristic.282
7.176 In response, the European Communities submits that the terms "dried", "salted", "smoked"
and "in brine" necessarily imply that a meat that has been subjected to these processes is preserved.
The European Communities submits that, conseque ntly, there is no need to explicitly mention
"preservation" with respect to th ese processes as such a reference w ould be redundant. Further, the
European Communities submits that the a contrario reading suggested by Thailand is baseless. The
European Communities submits that, moreover, a closer examination of Chapter 8 of the EC Schedule
supports the view that the processes described in heading 02.10 are meant for long-term preservation
because heading 08.14 juxtaposes peel of citrus fruit or melons that are "frozen" or "dried" with those
that are "provisionally preserved" in brine. A ccording to the European Communities, where the
preservation is only provisional, this has to be expressly indicated.283
Comments by the World Customs Organization
7.177 Regarding the importance to be attached to the reference to the term "provisionally preserved"
in heading 08.14 of the HS (which mirrors heading 08.14 of the EC Schedule), the WCO states that
the term "provisionally preserved" was understood to distinguish between finished products of
Chapter 20, on the one hand, and peel of citrus fruit or melons subjected only to certain preservation
processes, but not further prepared, on the other. Further, according to the WCO, this reference was

280 Thailand's oral statement at the first substantive meeting, para. 13.
281 Thailand's oral statement at the first substantiv e meeting, para. 14 referring to Appellate Body
Report, US – Gasoline, page 23 (DSR 1996: I, 3 at 21).
282 Thailand's oral statement at the first substantive meeting, paras. 14-15.
283 EC's reply to Panel question No. 39.

intended to widen the scope of heading 08.14 to in clude not only fresh, frozen and dried products but
also those provisionally preserved by processes listed in the text of the heading. The WCO opines
that the inclusion of a reference to the concept of "p reservation" in Chapter 8 is likely to be of limited
relevance for other headings in respect of which such a reference is absent.284
Analysis by the Panel
7.178 The Panel considers that parts of the EC Schedule other than Chapter 2 may also be
considered as relevant context for the interpretation of the term "salted" in the concession contained in
heading 02.10 of the EC Schedule, pursuant to Article 31(2) of the Vienna Convention.
7.179 The Panel notes that the headings referred to by Thailand in Chapter 8 of the EC Schedule are
mirror images of the same headings in the HS. 285 As noted above in paragraph 7.11, as a signatory to
the HS, the European Communities is obliged to use the HS headings and subheadings at the 6-digit
level. Therefore, we consider that it is reasonabl e to assume that the inclusion of the reference to
"preservation" in headings 08.12 and 08.14 in th e EC Schedule was not the result of an express
intention on the part of the European Communities to make such a reference but, rather, was a result
of the European Communities' obligations under the HS Convention to adopt the same headings in its
domestic tariff nomenclature. In other words, it woul d appear that the reference to "preservation" in
headings 08.12 and 08.14 originates from the HS rather than as a result of a desire on the part of the
European Communities to expressly incorporate the no tion of "preservation" into those two headings.
In addition, the Panel notes that, with regard to the analogues of headings 08.12 and 08.14 of the EC
Schedule in the HS, the WCO has suggested that limited significance should be attached, if any, to the
reference to "preservation" in specific headings (s uch as 08.12 and 08.14) for ot her headings (such as
heading 02.10), in which such a reference was omitte d. Therefore, on the basis of the foregoing, we
consider that inferences cannot be drawn from headi ngs 08.12 and 08.14 with respect to the meaning
of the term "salted" in the concession contained in heading 02.10 of the EC Schedule.
Summary and conclusions regarding the EC Schedule
7.180 In summary, the Panel concludes that the defin itions of the terms in the concession contained
in heading 02.10 of the EC Schedule other than "salted" do not indicate any intrinsic notion that
characterizes all the terms in that concession other than that they are in a state that is not simply fresh,
chilled or frozen. Nor does the Panel consider that these terms can be defined as pertaining
exclusively to "preparation" or to "preservation" pr ocesses. In addition, the Panel does not consider
that any inferences that are useful for the purposes of our interpretation of the concession contained in
heading 02.10 of the EC Schedule can be drawn from the structure of Chapter 2 of the EC Schedule
nor from other parts of the EC Schedule other than th e fact that they do not indicate that Chapter 2,
including heading 02.10, is necessarily characterized by the notion of long-term preservation. In
conclusion, it is the Panel's view that an examination of these various aspects of the EC Schedule does
not clarify the ordinary meaning of the term "salte d" in the concession contained in heading 02.10 of
the EC Schedule.
(iii) The Harmonized System
Does the Harmonized System qualify as "context" for the interpretation of the EC Schedule?

Arguments of the parties
7.181 Brazil, Thailand and the European Communities submit that the HS should be taken into
consideration in interpreting the EC Schedule. The complainants note that the HS is used by over 175

284 WCO's reply to Panel question No. 12 to the WCO.
285 The HS is discussed in greater detail below in section VII.G.3(b)(iii).

countries and customs territories as a basis for their customs tariffs and for the collection of trade
statistics. They also submit that the 1992 version of the HS was the basis for negotiation of the EC
Schedule.
286 Brazil is of the view that, in light of the foregoing, reference can be made to the terms of
the headings and subheadings of the 1992 version of the HS for clarification of the meaning of the EC
Schedule.287 Thailand submits that all the parties agr ee that an interpretation of the EC Schedule
under Article 31 of the Vienna Convention must take into account the HS and its Explanatory Notes
and emphasizes that the Appellate Body in EC – Computer Equipment stated that the HS and its
Explanatory Notes should have been considered by the panel in that case when interpreting the terms
of the EC Schedule.288
7.182 Brazil considers that the HS qualifies as "context" under Article 31(2)(b) of the Vienna
Convention. According to Brazil, the HS was an inst rument made by various parties to the WTO
Agreement "in connection with" the conclusion of the WTO Agreement, in the sense that it relates to
the WTO Agreement – because tariff negotiations were held on the basis of the HS – and not in the
sense that it was concluded at the same time as the WTO Agreement.289
7.183 Thailand does not consider that the HS is "context" within the meaning of Article 31(2) of
the Vienna Convention given that, in Thailand's view, the HS do es not fulfil the criteria set out in that
Article.290 However, Thailand submits that the HS could be taken into account under either
Article 31(1) of the Vienna Convention as "context" or under Article 31(3)(c) of the Vienna
Convention as "a relevant rule of international law". 291 Thailand notes that, in EC – Computer
Equipment, the Appellate Body expressed the view th at the HS should have been taken into
consideration by the panel in that case in its effort to interpret the terms of the EC Schedule but that
the Appellate Body did not specify the provision in the Vienna Convention under which the HS shoud
have been taken into account. 292 Thailand submits that it may not be necessary for the Panel in this
case to specify the provision in Article 31 of the Vienna Convention under which to address the HS.293
7.184 The European Communities submits that, in the context of this case, the HS qualifies as
"context" under Article 31(3)(c) of the Vienna Convention.294 In support, the European Communities
points out that the Appellate Body in EC – Computer Equipment considered the HS as part of the
context of the schedule at issue in that case.295
Analysis by the Panel
7.185 The Panel recalls that, pursuant to Article 3.1 of the HS Convention, the European
Communities is obliged to use the HS headings and s ubheadings at the 6-digit level. Therefore, the
European Communities' CN and the HS are identical at the 6-digit level.
7.186 The HS originates from the "Geneva Nomencla ture" (GN), which came into existence on
1 July 1937 in the form of the 1937 Draft Customs No menclature of the League of Nations. The GN
was replaced in 1959 by the Brussels Convention on No menclature for the Classification of Goods in

286 Brazil's first written submission, paras. 106-108; Th ailand's first written submission, paras. 97-101;
EC's reply to Panel question No. 73.
287 Brazil's first written submission, para. 111.
288 Thailand's second written submission, paras. 30 and 31; Thailand's oral statement at the second
substantive meeting, para. 25.
289 Brazil's reply to Panel question No. 73; Brazil's second written submission, para. 27.
290 Thailand's reply to Panel question No. 73; Thailand's second written submission, para. 31.
291 Thailand's second written submission, para. 32; Thailand's reply to Panel question No. 121.
292 Thailand's reply to Panel question, no. 73 referring to the Appellate Body Report in EC – Computer
Equipment, para 89.
293 Thailand's reply to Panel question No. 73; Thailand's second written submission, para. 31.
294 EC's reply to Panel question No. 73.
295 EC's oral statement at the second substantive meeting, para. 28.

Customs Tariffs (Brussels Tariff Nomenclature or BTN) 296, which was subsequently renamed as the
Customs Co-operation Council Nomenclature in 1974 (CCCN). The CCCN was replaced by the HS
in 1988. The HS has been amended three times since 1988 – in 1992, 1996 and in 2002.
7.187 The Panel notes that the membership of the HS is extremely broad and includes the vast
majority of WTO Members, including the parties to this dispute. 297 Further, the HS was used as a
basis for the preparation of the Uruguay Rou nd GATT schedules. This is apparent from the
Modalities Agreement 298, which provides that agricultural products in respect of which tariff
commitments are to be established are based on the HS 299 and from the fact that the HS has been used
to define product coverage under the Agreement on Agriculture.300
7.188 In addition, the Panel notes that, in EC – Computer Equipment, the Appellate Body stated that
the panel should have considered the HS and its E xplanatory Notes when interpreting the terms of the
schedule at issue in that case, which happens to be the same schedule that is at issue in this case –
namely, the EC Schedule. In particular, the Appellate Body stated that:
"We believe ... that a proper interpreta tion of [EC] Schedule LXXX should have
included an examination of the Harmonized System and its Explanatory Notes."301
7.189 In light of the foregoing, it is clear to the Panel that the 1992 version of the HS and its
Explanatory Notes are relevant to the interpretation of concessions contained in the EC Schedule. We
do not consider that the outcome of the interpreta tive exercise we are undertaking with respect to
heading 02.10 of the EC Schedule will be affect ed depending upon whether we classify the HS as
"context" under Article 31(2)(b) of the Vienna Convention as submitted by Brazil, or as "context"
under Article 31(1) as submitted by Thailand, or as a "relevant rule of international law" under Article
31(3)(c) as submitted by Thailand and the European Communities. Therefore, we will treat the HS as
if it qualifies as "context" under Article 31(2), recalling that the Appellate Body in EC – Computer
Equipment indicated that the HS should be taken into consideration for the interpretation of a
Member's schedule. We will now consider whether any relevant inferences can be drawn from the HS
for the purposes of the interpretation of the c oncession contained in heading 02.10 of the EC
Schedule.
Interpretation of the relevant aspects of the Harmonized System
Interpretative approach
7.190 In determining the relevance, if any, of the HS for the interpretation of the concession
contained in heading 02.10 of the EC Schedule, we w ill consider all relevant aspects of the HS – i.e.
the terms and structure of the HS, its Explanatory Notes and the General Rules. We will initially
consider each aspect individually bu t will finally appraise all these asp ects in totality. We consider
that we will be better-placed to draw relevant inferences from the HS for the purposes of our
interpretation of the EC Schedule if all relevant aspects of the HS are considered as a whole.

296 The BTN came into force on 11 September 1959, following the adoption on 1 July 1955 of a
Protocol of Amendment establishing a revised version of the Nomenclature.
297 The Panel notes that 102 out of 148 WTO Members are signatories to the HS Convention and the
vast majority of other WTO Members, although not signatories, apply the HS.
298 The Modalities Agreement is referred to above in para. 7.96.
299 See paragraph 3 of Annex 3 of the Modalities Agreement.
300 See paragraph 1 of Annex 1 of the Agreement on Agriculture.
301 Appellate Body Report, EC – Computer Equipment, para. 89.

Terms and structure of the HS
 Arguments of the parties
7.191 In relation to the terms of heading 02.10 of the HS, Brazil and Thailand submit that they are
identical to the terms of heading 02.10 of the EC Schedule.
302 In particular, Thailand submits that the
term "salted" in heading 02.10 of the HS is not qua lified in any way to clarify the threshold level of
salt that must be met to classify the product as "salted".303
7.192 Regarding the structure of Chapter 2 of the HS, Brazil notes that the WCO did not refer to
preservation or long-term preservation in its reply to Panel questions regarding the structure of
Chapter 2 of the HS.304
7.193 Brazil also refers to the predecessor nomencl ature to the HS – namely, the GN – and the
Explanatory Notes to that nomenclature to demonstrat e that Chapter 2 of the HS is structured on the
basis of "preparation" rather than "preservation". 305 First, Brazil submits that the GN shows that
Chapter 2 was structured in such a way that the more meats were prepared and/or processed, the
farther they were placed from live animals. 306 Secondly, Brazil submits that an Explanatory Note in
Chapter 2 of the GN only referred to two preservation categories – i.e ., "fresh/chilled" and "frozen",
but not to "salted", "dried" or "smoked". According to Brazil, had the drafters of the GN conceived of
"salted", "dried" or "smoked" as preservation met hods under Chapter 2, they would have placed them
as tertiary items next to "fresh/chilled" and "frozen". 307 Thirdly, Brazil argues that the same
Explanatory Note reflects a concern to avoid the drawing of distinctions in Chapter 2 that would result
in discrimination among the same type of meat coming from different places. 308 According to Brazil,
if preservation determined classification under head ing 02.10, that objective would be undermined.309
Fourthly, Brazil refers to the terms of the predece ssor of heading 02.10 in the GN. Brazil argues that
the reference to "simply prepared" in that heading means that the heading pertains to meat that was
"prepared", but not "preserved". 310 According to Brazil, this is further confirmed by the Explanatory
Note to that heading in the GN, which states that further processed meat such as hermetically sealed
and specifically packaged products, as opposed to simply prepared meat, fall under Chapter 16 as
meat of the preserved foods industries. 311 Brazil concludes that Chapter 2 of the GN was structured
according to the degree of preparation and that, und er the GN, "salted", "dried" and "smoked" meats
were regarded as "prepared" meat s rather than "preserved" meats. 312 Therefore, according to Brazil,
Chapter 2 of the HS is structured on the basis of the same principle – i.e. , the degree of "preparation"
rather than the degree of "preservation".313

302 Brazil's first written submission, para. 112; Thailand's first written submission, para. 107.
303 Thailand's first written submission, para. 109.
304 Brazil's oral statement at the s econd substantive meeting, para. 32; Brazil's closing statement at the
second substantive meeting, para. 14.
305 Brazil's second written submission, paras. 33- 47. Brazil submitted the GN and its Explanatory
Notes in Exhibit BRA-40(a).
306 Brazil's second written submission, para. 37; Brazil's closing statement at the second substantive
meeting, para. 14.
307 Brazil's second written submission, para. 40; Braz il's oral statement at the second substantive
meeting, para. 25; Brazil's reply to Panel question 121.
308 Brazil's second written submission, para. 41; Braz il's oral statement at the second substantive
meeting, para. 26; Brazil's reply to Panel question No. 121.
309 Brazil's oral statement at the second substantive meeting, para. 27.
310 Brazil's second written submission, para. 44.
311 Brazil's second written submission, para. 45.
312 Brazil's second written submission, para. 47.
313 Brazil's second written submission, paras. 46-47.

7.194 The European Communities quotes the WCO's reply to a question from the Panel, which the
European Communities submits indicates that the rati onale behind the product coverage in the HS
was to meet the needs of those involved in inte rnational trade by including goods or groups of goods
for which there was a significant volume of international trade. 314 According to the European
Communities, the WCO's response confirms that the drafters of the HS put meats which had been
"salted, in brine, dried or smoked" for preserva tion in a specific heading because they constituted a
significant category in international trade. The Eu ropean Communities further submits that trade in
meat "preserved" in the ways men tioned in heading 02.10 in the HS clearly qualifies as products with
a significant volume of international trade and this can be confirmed by the fact that European
countries were the principal participants in th e 1937 GN and the GN's su ccessor, the 1955 CCCN.
According to the European Communities, partially processed meats, such as the products at issue,
have played no role in international trade since they did not exist in 1937 nor in 1955. The European
Communities argues that, therefore, there was no reason for the drafters of the GN, the CCCN and the
HS to provide for a class of products that did not ex ist in international commerce. Rather, the type of
meats they had in mind when providing a separate h eading must have been "preserved" meats, the
varieties of which were well established and easily identifiable and comprised a fairly short list.
315
The European Communities also subm its that, despite the use of the terminology "prepared" in the
GN predecessor to heading 02.10 of the HS, it could not have referred to anything but meat that had
been processed in order to protect it from decay and deterioration given the almost total absence of
domestic refrigeration in pre-war Europe. The European Communities explains that, because the GN
heading included cooked meat along with meats that were salted etc., the term "simply prepared" was
used to cover all such pro cesses. The European Communities notes that "cooked meat" was
eventually placed together with other preparati ons of meat in Chapter 16 of the CCCN and,
subsequently, in the HS.316
 Comments by the World Customs Organization
7.195 The WCO states that Chapter 2 of the Harmonized System is based on the structure of the
CCCN. The CCCN, which had been used since 1959, was, to some extent, based on the former
"Geneva Nomenclature". The WCO further states th at the historical development of the two HS
headings at issue in this dispute (02.07 and 02.10) has been as follows:
Item 14 Dead poultry. (Geneva Nomenclature)
02.02 Dead poultry (that is to say, fowls, ducks, geese, turkeys and guinea fowls)
and edible offals thereof (except liver), fresh, chilled or frozen. (CCCN)
02.07 Meat and edible offal, of the pou ltry of heading 01.05, fresh, chilled or
frozen. (HS)

Item 18 Meat, salted, dried, smoked, cooked, or otherwise simply prepared.
(Geneva Nomenclature)
02.06 Meat and edible meat offals (except poultry liver), salted, in brine, dried or
smoked. (CCCN)

314 EC's oral statement at the second substantive m eeting, para. 32 referring to the WCO's reply to
Panel question No. 2 to the WCO.
315 EC's oral statement at the second substantive meeting, paras. 34-36.
316 EC's oral statement at the second substantive meeting, paras. 41-45.

02.10 Meat and edible meat offal, salted, in brine, dried or smoked; edible flours
and meals of meat or meat offal. (HS)
317
7.196 The WCO further states that, when the HS was developed, the separate identification of goods
or group of goods was, as a genera l rule, approved only if there w as agreement amongst participants
that the goods or group of goods were significant in international trade. Consequently, the rationale
behind the product coverage in the HS was to meet the needs of those involved in international trade
by including goods or groups of goods with a signi ficant volume of international trade, taking into
consideration the structure of the nomenclatures consulted.318
 Analysis by the Panel
7.197 The contents and structure of the HS are identical to the EC Schedule at the 6-digit level. The
Panel considers that, to the extent that the term s of heading 02.10 in the HS and the structure of
Chapter 2 of the HS are identical to the terms of the concession contained in heading 02.10 and
Chapter 2 of the EC Schedule, they do not provi de us with any helpful guidance regarding the
interpretation of the term "salted" in that concession in addition to what the Panel has already obtained
from its analysis thus far regardi ng the terms and structure of the EC Schedule. Therefore, in this
section, we will focus on elements of the terms and st ructure of the HS that do not appear in the EC
Schedule and which we have not been called upon to consider up until now.
7.198 Regarding the evolution of the structure of Chap ter 2 of the HS, we recall that the GN and the
BTN were concluded respectively in 1937 and 1959. The timing of their conclusion suggests to us
that they might be of limited relevance for the head ings contained in the HS given changes in trade
patterns and technology since their conclusion, wh ich may have necessitated changes in tariff
nomenclature. Having said this, we turn to the evol ution of the structure of Chapter 2 of the HS to
determine whether it may, nevertheless, assist us in the interpretation of the concession contained in
heading 02.10 of the EC Schedule.
7.199 We acknowledge that certain aspects associated wi th the evolution of Chapter 2 of the HS
may suggest that heading 02.10 was intended to relate to the "preparation" of meat. In this regard, we
note that the predecessor in the GN to heading 02.10 of the HS – i.e. Item 18 – referred to:
"Item 18 Meat, salted, dried, smoked, c ooked, or otherwise simply prepared:
 a. Ham
 b. Other.
 Note. – Meat imported in tins, terrines, crusts, or in
hermetically sealed recept acles is not included under
Item 18."319
7.200 In addition, the Explanatory Note to Item 18 stated that:
"The last basic item of this chapter includes all other meat, salted, dried, smoked,
cooked or otherwise simply prepared. ... th is item consists of very simply prepared
articles, the production of which is rather cl osely connected with that of fresh meat.
The joint expediency for th e simplification of and ready reference to the Customs
tariffs therefore makes it desirable that su ch meat should not be classified otherwise
than as simple preparations of fresh meat. On the other hand, this chapter does not
include meat in tins, jars, croûtes or in hermetically sealed containers, these actually

317 WCO's reply to Panel question No. 3 to the WCO.
318 WCO's reply to Panel question No. 2 to the WCO.
319 The GN is contained in Exhibit BRA-40(a).

being products of the preserved foods industries and therefore included in
Chapter 16."
7.201 It is true that the reference to "simply prepar ed" in Item 18 may be read as characterizing all
the terms preceding it. More specifically, that refere nce could imply that "salted", "dried", "smoked"
and "cooked" are all methods of "simple preparation" . Indeed, this view appears to be supported by
the term "otherwise", which immediately precedes "s imply prepared" as well as the Explanatory Note
to Item 18, which states that "this item consists of very simply prepared articles" and "does not
include meat in tins, jars, croûtes or in hermeti cally sealed containers ... products of the preserved
food industries".
7.202 Nevertheless, the Panel considers that, even if Item 18 of the GN and its successor heading in
the HS – namely, heading 02.10 – were intended to re late to "prepared" foods, in our view, there is
nothing in the GN nor in the HS that suggests that they could not concurrently relate to "preserved"
foods. In this regard, the Panel recalls its observatio n above in paragraph 7.114 that there is a certain
degree of overlap in the definitions of the terms "preparation" and "preservation".
7.203 In considering whether the evolution of th e HS supports the view that the concession
contained in heading 02.10 of the EC Schedule relates not only to "preparation" but also to
"preservation", we note that Brazil has submitted that the evolution of the GN indicates that the notion
of "preserve" cannot characterize heading 02.10 of the HS and its predecessors. In particular, Brazil
submits that, had the drafters of the GN conceive d of "salted", "dried" or "smoked" as preservation
methods, they would have placed them as tertiary items next to fresh/chilled and frozen.
320 Brazil also
submits that, if preservation determined classifica tion under heading 02.10, th is would undermine the
objective of avoiding discrimination among meat coming from different places. 321 Brazil bases both
arguments on the following Explanatory Note to Item 13 in the GN322:
"With regard to the subdivision of this item, there are, of course, two possibilities: the
four important kinds of animals for slaughter: the bovine species, sheep, pigs and the
equine species could be taken as a basis; or the two main categories of fresh and
chilled or frozen meat could be taken. The draft combines these two methods of
classification. It is no doubt essential that tariffs should show a discrimination
between the various kinds of animals and, as a matter of fact, this distinction is now
made in most tariffs. The draft, therefor e, applies the same rule with regard to
subdivisions, by providing, in the case of meat of the bovine species and sheep (large
quantities of which are imported frozen), te rtiary items which distinguish between
fresh and frozen meat. To proceed otherwise – i.e., to make a fundamental distinction
between fresh and frozen meat – would co mpel several countries to introduce into
their Customs tariffs a subdivision whic h they have so far regarded as unnecessary
and would lead to a discrimination being ma de between fresh meat, which is usually
produced by neighbouring countries, and frozen meat, which generally comes from
very remote parts of the world."
7.204 The Explanatory Note to Item 13 identifies two main categories of meat – namely,
"fresh/chilled meat" and "frozen meat". Even if those categories are categories of "preservation" as
has been submitted by Brazil, we see nothing in the Explanatory Note to suggest that they are
necessarily the only categories of preservation in Chapter 2. Further, the Panel notes that the
objective to avoid discrimination referred to in th e Explanatory Note, which Brazil submits militates

320 Brazil's second written submission, para. 40; Braz il's oral statement at the second substantive
meeting, para. 25; Brazil's reply to Panel question No. 121.
321 Brazil's oral statement at the second substantive meeting, para. 27.
322 Item 13 referred to: "Butcher's meat" (i.e., be ef, veal, mutton, lamb, pork excluding bacon and
horseflesh).

against an interpretation of Item 18 to include th e notion of "preservation", is expressed with respect
to fresh and frozen meat in Item 13 only and not with respect to the meats to which Item 18 applies.
Therefore, we do not consider that the expression of the concern regarding non-discrimination, which
is contained in the Explanatory Note to Item 13, necessarily indicates that the processes in Item 18
and, in turn, heading 02.10, exclude the concept of "preservation".
7.205 The Panel recalls again that, following our examination of the ordinary meaning of the
concession contained in heading 02.10 of the EC Schedule, we concluded that the term "salted" means
to season, to add salt, to flavour w ith salt, to treat, to cure or to preserve and encompasses the notion
of both "preservation" and "preparation".
323 In our view, the evolution of the terms and structure of
Chapter 2 of the HS does not definitively indicate whether or not the predecessor to heading 02.10 of
the HS was characterized by the notion of "prepa ration" and/or "preservation" and/or reflected
international trade patterns at the time the heading was finalised. Therefore, we consider that the
evolution of the terms and structure of Chapter 2 of the HS does not clarify the ordinary meaning of
the concession contained in heading 02.10 of the EC Sc hedule. Further, it is the Panel's view that the
terms and structure of the HS do not indicate that the concession contained in heading 02.10 is
necessarily characterized by the notion of long-term preservation.
Explanatory Notes to the HS
 Arguments of the parties
7.206 Brazil and Thailand acknowledge that Article 1(a) of the HS Convention does not define the
HS to include Explanatory Notes to the HS. Br azil and Thailand submit th at, nevertheless, knowing
that Explanatory Notes were not part of the HS, in EC – Computer Equipment , the Appellate Body
intentionally gave them the same interpretative wei ght and status as that given to the HS when it
stated that the panel in that case should have considered both the HS and its Explanatory Notes.
324
7.207 In response, the European Communities does not dispute that parts of the HS that do not
appear in the EC Schedule – that is, the various HS Notes including Chapter notes and the
Explanatory Notes – should be taken into account when interpreting the EC Schedule. 325 However,
the European Communities submits that the Explanatory Notes to the HS provide non-authoritative
guidance and should not be treated the same way as treaty provisions.326
7.208 With respect to the Explanatory Note to heading 02.10 in the HS , Brazil and Thailand state
that the Note makes it clear that heading 02.10 covers meat that h as been "prepared" in the manner
described in the heading – that is, through salting, brining, drying or smoking. 327 Thailand submits
that, therefore, any meat that has been prepared in a manner decribed in the heading must be classified
under heading 02.10. 328 Brazil adds that there is nothing in the Note to indicate that "salting" is a
process used to ensure [long-term] preservation sin ce the term "preserve" is not mentioned in the
Note.329 According to Brazil, to read in the requireme nt that salting is a process used to ensure long-

323 See para. 7.114 above.
324 Brazil's oral statement at the s econd substantive meeting, para. 35; Brazil's reply to Panel question
No. 121; Thailand's second written submission, para. 31; Thailand's reply to Panel question No. 121 referring to
Appellate Body Report, EC – Computer Equipment, para. 89.
325 EC's oral statement at the first substantive meeting, para. 17.
326 EC's first written submission, para. 156; EC's oral statement at the second substantive meeting,
para. 46.
327 Brazil's first written submission, paras. 118- 119; Brazil's second written submission, para. 29;
Brazil's oral statement at the second substantive meeting, para. 21; Thailand's first written submission, para. 120.
328 Thailand's first written submission, para. 120; Thailand's reply to Panel question No. 67.
329 Brazil's first written submission, para. 120; Brazil's oral statement at the first substantive meeting,
para. 33.

term preservation would have the effect of reading out the term "prepared" from the Note to heading
02.10 of the HS.
7.209 In response, the European Communities submits that, when viewed as a whole, it is doubtful
that the term "prepare" was used as a term of art in the Explanatory Note to heading 02.10 in the
HS.330 In addition, the European Communities subm its that the purpose of the Note is not to
distinguish between heading 02.10 and headings 02.01 - 02.08 (being the matter at issue in this
dispute) but, rather, it seeks to distinguish betwee n the specific meats covered by heading 02.09 (pig
and poultry fat) and all other kinds of meat in Chapter 2.331
7.210 Thailand submits in response that the fact that the Note makes reference to the delineation
between headings 02.09 and 02.10 does not detract from the intrinsic value of the description that is
used in that Note. According to Thailand, the Note makes it clear that the terms "salted, in brine,
dried or smoked" are descriptions of the manner in which meat and meat offal have been prepared.332
7.211 Brazil and Thailand refer to the Explanatory Notes to Chapter 2 in the HS , which provide
that the "fresh" state of meat may include meat and meat offal that is packed with salt as a temporary
preservative during transport and, therefore, refers to meat whose essential characteristics have not
been altered through the addition of salt. They su bmit that, in contrast, the products at issue have
been deeply and homogenously impregnated with salt. 333 Thailand submits that, since fresh meat
packed with salt as a temporary preservative must be classified as "fresh" meat, meat to which salt has
been added as more than a temporary preservative must be classified as something other than "fresh";
that is, it must be viewed as "salted" meat under heading 02.10. 334 Brazil also submits that nothing in
the Notes suggests that frozen meat impregnated or prepared in salt must be classified as "frozen"
meat rather than "salted" meat. Brazil submits th at, on the contrary, because the reference to salt in
the Notes is only made with respect to fresh meat, it shows the explicit intention to include salt only in
relation to fresh meat and in a specific circumstance.335
7.212 In response, the European Communities submits that salt cannot act as a preservative, even
for temporary preservation, if it does not have some type of reaction with the meat in transport. The
European Communities submits that, therefore, th e distinction between the addition of salt as a
temporary preservative and the addition of salt as an ingredient is not obvious. The European
Communities submits that the relevant aspect of the Explanatory Notes should be applied mutatis
mutandis to "frozen" meat, with an added salt content.336
7.213 Brazil and Thailand further submit that the Explanatory Notes to Chapter 2 of the HS
indicate that meat under Chapter 2 is classified acco rding to four states only: fresh; chilled; frozen;
and, salted/in brine/dried/smoked. 337 According to Brazil, this indicates that "frozen" meat and
"salted" meat are considered two different products that must be classified in separate headings of
Chapter 2.338 Brazil maintains that the Explanatory Notes to Chapter 2 do not provide that the "states"
represent methods of preservation. 339 Thailand adds that the state of "fresh" – one of the four states
listed in the Explanatory Notes – is not a state rela ted to preservation. Thailand submits that the state

330 EC's first written submission, para. 157.
331 EC's oral statement at the first substantive meet ing, para. 21; EC's oral statement at the second
substantive meeting, para. 39.
332 Thailand's reply to Panel question No. 67.
333 Brazil's first written submission, para. 141; Thailand's first written submission, para. 114.
334 Thailand's first written submission, para. 114.
335 Brazil's first written submission, para. 140.
336 EC's first written submission, para. 150.
337 Brazil's first written submission, para. 125; Thailand's reply to Panel question No. 79(a).
338 Brazil's first written submission, para. 125.
339 Brazil's first written submission, para. 127; Brazil's oral statement at the first substantive meeting,
paras. 36-37.

of "salted, in brine, dried or smoke d" is also not related to preservation.
340 Further, according to
Brazil, the Explanatory Notes to Chapter 2 and to heading 02.10 indicate that the term "salted" in
heading 02.10 of the EC Schedule does not mean salted for purposes of long-term preservation.341
7.214 Brazil also submits that, in illustrating what kind of meat should be classified under the
headings of Chapter 16 (as opposed to the headings of Chapter 2), the Explanatory Notes to Chapter 2
list meat "otherwise prepared or preserved by any process not provided for" in Chapter 2. 342 Brazil
submits that only headings 02.09 and 02.10 relate to meat that has undergone a process of
preparation.
343 Brazil also argues that the Explanatory No tes show that classification under Chapter 2
is determined either by a process of preparation or by a process of preservation. 344 Brazil argues that,
if a product has been "prepared" by a process in Chapter 2, and has also been "preserved" by a process
under that Chapter, the product will be classified acco rding to the process of "preparation", otherwise
the phrase "prepared or preserved" in the Notes to Chapter 2 would have no meaning. 345 Brazil
submits that, had the structure of Chapter 2 been based exclusively on "preservation", there would
have been no need for the inclusion of the term "prepared" in the Notes because any preparation –
including that provided for in heading 02.10 – would only serve the purpose of preservation.
However, according to Brazil, "preparation" is mean t to be something different from and broader than
"preservation" under the Notes.346
7.215 With regard to the Explanatory Notes to Chapter 16 in the HS , Thailand submits that these
Notes also make it clear that Chapter 2 refers to products that have undergone certain preparation
processes ("salted", "in brine", "dried" or "smoke d") or that have undergone preservation processes
("chilled" or "frozen") or which are in the natura l state and are not prepared or preserved by any
process ("fresh").347 Thailand states that the Note to Chapter 16 excludes products that are " prepared
or preserved by the processes specified in Chapter 2 or 3 or heading 0504." Thailand submits that,
since the terms "fresh", "chilled" a nd "frozen" relate to preservation, the terms "salted, in brine, dried
or smoked" cannot also be interpreted as relating to preservation because, otherwise, the reference to
"prepared" in the Note to Chapter 16 would be re ndered inutile. According to Thailand, the correct
interpretation would be to refer to "salted, in br ine, dried or smoked" as processes for the purposes of
preparation since this reading would give meaning to all the terms in the Explanatory Note to
Chapter 16.348
7.216 In response, the European Communities submits that the Explanatory Notes to Chapter 16
are inconclusive regarding the classification of the products at issue since they simply imply that meat
to which salt alone has been added in order to affe ct taste, as opposed to seasoned meat to which both
pepper and salt have been added, should be classified elsewhere than under Chapter 16. This can only
mean that such meat should be classified under Ch apter 2, but the Notes do not indicate under which
heading.349

340 Thailand's second written submission, para. 35.
341 Brazil's oral statement at the first substantive meeting, para. 5.
342 Brazil's first written submission, para. 128; Brazil's second written submission, para. 28.
343 Brazil's first written submission, para. 129.
344 Brazil's first written submission, para. 132.
345 Brazil's first written submission, para. 133; Brazil's oral statement at the first substantive meeting,
para. 39.
346 Brazil's oral statement at the first substantive meeting, para. 39.
347 Thailand's first written submission, para. 122.
348 Thailand's second written submission, para. 36; Thailand's reply to Panel question No. 121.
349 EC's first written submission, para. 154.

7.217 Brazil and Thailand conclude that the HS Explanatory Notes offer unequivocal confirmation
that heading 02.10 applies to meat that has been "prepared" by salting, brining, drying or smoking
rather than to meat that has been "preserved" by these processes.
350
 Comments by the World Customs Organization
7.218 The WCO states that the classification of products under the HS is based on the wording of
the legal texts – that is, the terms of the headi ngs and any relative Section, Chapter and Subheading
Notes and the General Rules of the HS. The WCO a dds that Explanatory Notes to the HS, which the
WCO describes as the "official interpretation of the HS", are taken into cons ideration in conjunction
with the legal texts.351
 Analysis by the Panel
7.219 Article 1(a) of the HS Convention provides that:
"[T]he 'Harmonized Commodity Description and Coding System', hereinafter referred
to as the 'Harmonized System', means the Nomenclature comprising the headings and
subheadings and their related numerical c odes, the Section, Chapter and Subheading
Notes and the General Rules for the interpretation of the Harmonized System, set out
in the Annex to this Convention."
7.220 The Panel notes that the Explanatory Notes are not referred to in Article 1(a) and, therefore,
do not appear to form part of the HS, which we have decided to consider as "context" for the
interpretation of the EC Schedule pursuant to Article 31(2) of the Vienna Convention. Nevertheless,
the Panel notes that, in EC – Computer Equipment, the Appellate Body explicitly stated that the panel
in that case should have considered the Explanator y Notes to the HS in its examination of the EC
Schedule, even though the non-binding status of thos e Notes had been brought to its attention by one
of the parties. 352 Further, we note that the WCO has indicat ed that the Explanat ory Notes to the HS
are taken into consideration in conjunction w ith the legal texts when interpreting the HS. 353
Therefore, on the basis of the foregoing, we will examine the Explanatory No tes to the HS for our
interpretation of the concession contained in heading 02.10 of the EC Schedule, bearing in mind as we
proceed that the Explanatory Notes do not form part of the HS and are non-binding.
7.221 The Panel first notes that certain aspects of th e Explanatory Notes may be read as indicating
that the processes referred to in th e concession contained in heading 02 .10 are to be characterized as
processes for "preparation". For example, the Expl anatory Note to heading 02.10 of the HS, which
appears to be most relevant to the present case, states that:
"This heading applies to all kinds of meat and edible meat offal which have been
prepared as described in the heading, other than pig fat, free of lean meat, and poultry
fat, not rendered or otherwise extracted (heading 02.09) ... ."354 (emphasis added)
7.222 In addition, the Explanatory Notes to Chapter 2 refer to the processes listed in Chapter 2 as
"prepared or preserved" and the Explanatory Notes to Chapter 16 exclude products that are "prepared
or preserved" by the processes specified, inter alia, in Chapter 2. These Explanatory Notes indicate

350 Brazil's second written submission, paras. 28 -29; Thailand's second written submission,
paras. 33-35.
351 WCO's reply to Panel question No. 1 to the WCO.
352 See United States' arguments in Appellate Body Report, EC – Computer Equipment, para. 38.
353 WCO's reply to Panel question No. 1 to the WCO.
354 The aspects of the Explanatory No tes to the HS upon which the complainants rely are contained in
Annex I to the EC's oral statement at the first substantive meeting. The full text of the Explanatory Notes to
Chapter 2 of the HS can be found in Exhibit BRA-24.

that at least some processes referred to in Chapte r 2 result in "preparation" and the Explanatory Note
to heading 02.10 suggests that the processes referred to in that heading are some such processes.
7.223 Even though the above Explanatory Notes may suggest that the processes referred to in
heading 02.10 are processes for the "preparation" of meat, we do not consider that they are
particularly helpful for our purposes in light of the fact that it is not clear to us whether the notions of
"preservation" and "preparation" are mutually exclusive in the context of heading 02.10.
355 Therefore,
we consider that the Explanatory Notes to the HS do not clarify the ordinary meaning of the term
"salted" in the concession contained in heading 02.10 of the EC Schedule. Further, it is our view that
the Explanatory Notes do not indicate that that concession is necessarily characterized by the notion
of long-term preservation.
General Rules

 Arguments of the parties
7.224 Brazil and Thailand note that Article 1(a) of the HS Convention provides that "the
'Harmonized System', means the Nomenclature co mprising the headings and subheadings and their
related numerical codes, the Section, Chapter and Subheading notes and the General rules for the
interpretation of the Harmonized System". Theref ore, according to Brazil and Thailand, the General
Rules of the HS are part of the HS and, conseque ntly, also qualify as "context" for the interpretation
of headings under the EC Schedule.356
7.225 The European Communities disputes the applicability of the General Rules for the
interpretation of the EC Schedule. According to the European Communities, an application of the
General Rules cannot displace any conclusions regard ing the interpretation of the EC Schedule that
might be reached through the application of Articles 31 and 32 of the Vienna Convention.357
7.226 Regarding General Rule 1, Thailand notes that it provides that the classification of a product
shall be determined according to the terms of th e headings and the releva nt Chapter and heading
notes. Thailand submits that the terms of the head ings and the relevant Chapter and heading notes in
the HS confirm the ordinary meaning of "salted" as relating to a product that contains salt and not a
product that is preserved by the method of salting.358
7.227 With respect to General Rule 3, Brazil, Thailand and the European Communities concur
that the condition for its application – namely, that the products at issue are prima facie classifiable
under two or more headings – has not been fulfilled in this case. The complainants consider that the
products at issue are classifiable under heading 02. 10 whereas the European Communities considers
that the products at issue are classifiable under heading 02.07.359

355 In this regard, we recall again our observation in paragraph 7.114 above that there is a certain degree
of overlap in the definitions of the terms "preparation" and "preservation".
356 Brazil's reply to Panel question No. 74; Brazil's second written submission, para. 48; Brazil's reply
to Panel question No. 121; Thailand's reply to Panel question No. 74; Thailand's reply to Panel question
No. 121.
357 EC's oral statement at the second substantive meeting, para. 54.
358 Thailand's first written submission, para. 124; Thailand's reply to Panel question No. 121.
359 Brazil's first written submission, para. 147; Brazil' s reply to Panel question No. 72; Brazil's second
written submission, para. 49; Thailand's oral statement at the first substantive meeting, para. 29; Thailand's
second written submission, para. 44; EC's reply to Panel question No. 72; EC's first written submission
para. 159.

7.228 Nevertheless, Brazil and Thailand submit that the Panel may resort to General Rule 3 if it
considers that the products at issue fall to be classified under two or more headings of the HS. 360 In
this regard, Thailand notes that the European Comm unities itself appears to consider that the products
at issue are classifiable under two or more headings given that, in the minutes of a meeting of the EC
Customs Code Committee, the Committ ee stated that the "[products at issue] correspond at the same
time to the wording of the heading 02.07 (frozen) and to the wording of the heading 02.10 (salted)."
361
7.229 Brazil and Thailand note that Ge neral Rule 3(a) provides that the heading that provides the
most specific description of a good is to be preferred to a heading that provides a more general
description.
362 Brazil submits that the adjective "specifi c" means "clearly defined", "relating to,
characterizing, or distinguishing a species" or "special, distinctive, or unique". 363 Brazil and Thailand
submit that salting confers meat with specific, distin ctive characteristics that distinguish salted meat
from unsalted meat.364 In support, they point to the different flavour and texture of salted meat which
affects consumer choices, the fact that meat that has been deeply and homogenously impregnated with
salt cannot be thoroughly unsalted and the fact that such meat has more limited and specific uses. 365
Brazil and Thailand submit that, in contrast, the freezing of chicken does not modify the
characteristics of the meat.366
7.230 Further, Brazil submits that the reference to poultry in heading 02.07 does not make it more
specific than heading 02.10. Braz il submits that the European Comm unities has not disputed the fact
that both subheadings 0207.41.10 and 0210.90.20 incl ude chicken meat. Hence, there is no question
that chicken meat is a product covered by both s ubheadings. In addition, Brazil argues that, because
the term "meat" in heading 02.10 includes all kinds of meat, heading 02.10 could easily have referred
specifically to meat of swine, bovine animals, horses, lambs, goats, geese, turkeys, chicken, etc. 367
Thailand submits that while, in abstract terms, poultry is more specific than meat, this is not relevant
for the purposes of determining the appropriate head ing for the classification of the products at issue
in this dispute as an analysis of the headings show that heading 02.10 is more specific for all types of
meat that are salted, in brine, dried or smoked. 368 Brazil also points out that the term "salted" is what
specifically describes the product at issue in this case given the way Chapter 2 is structured. 369 Thus,
according to Brazil and Thailand, heading 02.10 is mo re specific within the meaning of General Rule
3(a) because, in their view, the fact that a product is "salted", "in brine", "d ried" or "smoked" is a
more specific criterion than the type of meat for purpose of customs classification.370
7.231 In response, the European Communities submits that all poultry is meat but not all meat is
poultry. Consequently, according to the European Communities, the re ference to "poultry" is more
specific for the purposes of General Rule 3(a). 371 The European Communities submits that, in any

360 Brazil's comments on EC's reply to Panel question No. 121 quoting EC's reply to Panel question
No. 76; Thailand's second written submission, paras. 42-44.
361 Thailand's second written submission, para. 46 referring to Exhibit THA-22. Exhibit THA-22
contains the Minutes of the EC's Customs Code Committee dated 25 January 2002.
362 Brazil's first written submission, para. 150; Thailand's first written submission, para. 127.
363 Brazil's first written submission, para. 150.
364 Brazil's second written submission, paras. 50-51; Thailand's second written submission, paras. 24-29
and 45-47.
365 Brazil's first written submission, paras. 152-153; Brazil's reply to Panel question No. 72; Thailand's
first written submission, paras. 128 and 131; Thailand's second written submission, paras. 24-29.
366 Brazil's first written submission, para. 154; Thailand's first written submission, para. 129.
367 Brazil's reply to Panel question No. 72.
368 Thailand's second written submission, paras. 26-27.
369 Brazil's second written submission, para. 50.
370 Brazil's second written submission, paras. 50 -51; Thailand's second written submission,
paras. 27-28; Thailand's oral statement at the second substantive meeting, para. 22.
371 EC's reply to Panel question No. 72.

event, it sees no reason why "salting" should be rega rded as more specific than "freezing" when the
words both refer to processes that can be applied to meat.
372
7.232 Brazil and Thailand submit that, if the classification of the products at issue cannot be
resolved by General Rule 3(a) and, given that General Rule 3(b) is not applicable in this case, General
Rule 3(c), should be applied. They note that Gene ral Rule 3(c) requires that the products at issue be
classified under the heading that occurs last in numerical order. 373 They submit that the application of
General Rule 3(c) will lead to the classification of frozen salted chicken under heading 02.10 since
that heading occurs after heading 02.07 in terms of numerical order.374
7.233 In response, the European Communities submits that the meaning of the term "salted" in
heading 02.10 in the EC Schedule must be interp reted in accordance with Article 3.2 of the DSU by
applying the customary rules of treaty interpretation set forth in Articles 31 and 32 of the Vienna
Convention. The European Communities submits that General Rule 3(c) is a mechanistic non liquet
rule, whose application is precluded by Article 3.2 of the DSU. According to the European
Communities, in a non liquet situation, the general rules regard ing the burden of proof in WTO law
would require the Panel to err on the side of the respondent – in this case, the European
Communities.
375
7.234 Thailand responds by submitting that the application of General Rule 3(c) does not lead to a
non liquet situation – that is, a situation resulting in "a tribunal's nondecision resulting from the lack
of clarity of the law applicable to the dispute at hand." 376 Thailand submits that the purpose of
General Rule 3(c) is not to determine the meani ng of heading 02.10. Rather, it assumes that the
product in question falls under the scope of two or more headings. Thailand submits that, in any
event, the characterization of a rule as a "mechanisti c" tool does not diminish its value as a means of
identifying the proper classification of a product. 377 Further, according to Thailand, General
Rule 3(c), is a general rule of interpretation, wh ich can be applied in a ha rmonious manner together
with the customary rules of interpretation of pub lic international law since the customary rules of
interpretation are commonly understood to mean those set out in the Vienna Convention and given
that the Appellate Body has specifically stated th at a panel should examine the HS, including its
General Rules.
 Comments by the World Customs Organization
7.235 The WCO states that, for the purposes of General Rule 3(a), it could be argued that heading
02.07 of the HS provides the more "specific" descri ption since it refers to "meat of poultry, frozen",
whereas heading 02.10 of the HS refers to "meat, salted", in general. However, the WCO states that it
could also be argued that the reference to the specific type of meat (poultry) in heading 02.07 should
not be taken into consideration since it is th e processing (freezing and salting) that matters when
determining the classification of the products at issue in this case, giving rise to a possibility of
heading 02.10 providing a more specific description.
378

372 EC's oral statement at the second substantive meeting, para. 58.
373 Brazil's oral statement at the second substan tive meeting, para. 34; Thailand's second written
submission, para. 48.
374 Brazil's first written submission, para. 158; Brazil's oral statement at the second substantive meeting,
para. 34; Thailand's first written submission, para. 132; Thailand's oral statement at the first substantive meeting,
para. 29; Thailand's second written submission, para. 48; Thailand's oral statement at the second substantive
meeting, para. 24.
375 EC's reply to Panel question No. 74.
376 Thailand's oral statement at the second substantiv e meeting, para. 25 referring to the definition of
"non liquet" in Black's Law Dictionary.
377 Thailand's second written submission, para. 49.
378 WCO's reply to Panel question No. 6 to the WCO.

 Analysis by the Panel
7.236 The Panel notes that Article 1(a) of the HS Convention provides that the HS is comprised of
the headings and subheadings of the HS and their related numerical codes, the Section, Chapter and
heading notes and the General Rules. Given that the General Rules clearly form a part of the HS and,
in light of our conclusion above in paragraph 7.189 that the HS is relevant to the interpretation of
heading 02.10 of the EC Schedule, we will examine the General Rules to determine whether they can
assist us in interpreting heading 02.10 of the EC Sc hedule. However, we note that, in light of our
mandate in this case, we will only examine those Ge neral Rules to which reference has been made by
the parties. In particular, we will only make refe rence to General Rule 1 and General Rule 3, being
the General Rules that have been specifically invo ked by the complainants in the context of this
dispute.379
7.237 We commence our analysis with General Rule 3, which provides that:
"When by application of Rule 2(b) or for any other reason, goods are, prima facie ,
classifiable under two or more headings, classification shall be effected as follows:
(a) The heading which provides the most sp ecific description shall be preferred to
headings providing a more general description. However, when two or more
headings each refer to part only of the mate rials or substances contained in mixed or
composite goods or to part only of the ite ms in a set put up for retail sale, those
headings are to be regarded as equally specific in relation to those goods, even if one
of them gives a more complete or precise description of the goods.
(b) Mixtures, composite goods consisting of different materials or made up of
different components, and goods put up in sets for retail sale, which cannot be
classified by reference to 3(a), shall be classified as if they consisted of the material
or component which gives them their essentia l character, insofar as this criterion is
applicable.
(c) When goods cannot be classified by refe rence to 3(a) or 3(b), they shall be
classified under the heading which occurs last in numerical order among those which
equally merit consideration."
7.238 As regards the question of whether or not General Rule 3 applies, all the parties appear to be
in agreement that a textual and contextual analysis of the relevant headings indicates that the products
at issue in this dispute are not prima facie classifi able under two or more headings. Accordingly, we
will proceed on the same assumption with the result that we will not apply General Rule 3. Given our
conclusion that General Rule 3 is inapplicable, we do not consider it necessary to address the various
arguments that have been advanced by the parties regarding that Rule.
7.239 General Rule 1 provides that:
"The titles of Sections, Chapters and sub-Ch apters are provided for ease of reference
only; for legal purposes, classification shall be determined according to the terms of
the headings and any relative Section or Ch apter Notes and, provided such headings
or Notes do not otherwise require, according to the following provisions ..."
7.240 With regard to General Rule 1, as explaine d above in paragraphs 7.205 and 7.223, we
consider that, on the basis of the evidence we have c onsidered thus far, the terms of the headings in

379 In any event, we note that General Rules other than Rules 1 and 3 do not appear to be relevant in
light of the facts of this case.

question and the relevant Chapter and heading notes of the HS do not provide us with guidance as to
what precisely is meant by the term "salted" in add ition to what we already learned from the ordinary
meaning of that term as it appears in the concession contained in heading 02.10 of the EC Schedule.
Overall appraisal of the Harmonized System

7.241 The Panel recalls that, in paragraph 7.190 a bove, we stated that we would consider each
aspect of the HS individually but that we would finally appraise all these aspects in totality. In the
Panel's view, the terms and structure of the HS a nd the evolution of heading 02.10 of the HS do not
provide indications as to what the term "salted" me ans in addition to what we already know following
our examination of the ordinary meaning of that term as it appears in the concession contained in
heading 02.10 of the EC Schedule. Further, the Pane l considers that the terms and structure of the HS
do not clearly indicate whether the notions of "p reservation" and/or "preparation" characterize
heading 02.10. In any event, the Panel is of the view that the terms and structure of the HS do not
indicate that heading 02.10 is necessarily characteri zed by the notion of long-term preservation. As
for the non-binding Explanatory Notes to the HS, the Panel considers that they do not help to clarify
the ordinary meaning of the term "salted" in the concession contained in heading 02.10 of the EC
Schedule. With respect to the General Rules i nvoked by the complainants, namely General Rule 1
and General Rule 3, we do not consid er that General Rule 3 is applicable to this case. With respect to
General Rule 1, on the basis of the evidence we have considered thus far, we do not consider that it
provides guidance as to what precisely is meant by th e term "salted" in addition to what we have
already learned from the ordinary meaning of that te rm as it appears in the relevant concession in the
EC Schedule. Therefore, overall, the Panel cons iders that the HS does not further clarify the
interpretation of the concession contained in heading 02.10 of the EC Schedule.
(iv) Other WTO Members' schedules
Arguments of the parties

7.242 Brazil refers to tariff concessions for heading 02.10 found in the schedules of some WTO
Members that are major importers of chicken products from Brazil. Brazil submits that, as far as it is
aware, there are no significant markets, other th an the European Commun ities, that import frozen
salted chicken cuts for further processing. Brazil s ubmits that, therefore, it was unable to obtain
details of classification practice of other Members regarding imports of frozen salted chicken meat.380
7.243 The European Communities submits that, because tariff headings in WTO Members'
schedules are derived from the HS, which was wi dely adopted among the parties to the Uruguay
Round negotiations, the European Communities assumes that the schedules of most, if not all, other
WTO Members are identical in so far as the headi ngs in Chapter 2 are concerned. The European
Communities submits that this is the case for a number of schedules including those of Brazil,
Thailand and the United States. The European Comm unities submits that the only countries that have
any practice of classifying the products at i ssue are Brazil, Thailand and the European
Communities.381
Analysis by the Panel
7.244 To the extent that the terms of the relevant concessions in other WTO Members' schedules are
identical to the terms of the concession contained in heading 02.10 of the EC Schedule and of the HS,
we do not consider that they can assist us any furthe r in the analysis we have undertaken thus far.
Regarding the importance that should be attach ed, if any, to classification practice under the

380 Brazil's reply to Panel question No. 59 referring to Exhibit BRA-37.
381 EC's reply to Panel question No. 59.

equivalent of heading 02.10 of the EC Schedule in other Members' schedules, this is discussed below
in section VII.G.3(c).
(v) Summary and conclusions regarding "context"
7.245 The Panel recalls that it considered various aspects of the EC Schedule as "context" under
Article 31(2) of the Vienna Convention to determine whether the terms other than "salted" in heading
02.10 of the EC Schedule, the structure of Chapte r 2 of the EC Schedule and other parts of the EC
Schedule could assist us in our interpretation of the term "salted" in the concession contained in
heading 02.10 of the EC Schedule. We also cons idered as "context" the terms and structure of the
HS, and particularly, the evolution of heading 02.10 of the HS, the non-binding Explanatory Notes to
the HS, and General Rules 1 and 3. Finally, we considered the schedules of other WTO Members as
"context". In our view, none of the foregoing added to conclusions that we already drew regarding
the ordinary meaning of the term "salted" in the concession contained in heading 02.10 of the EC
Schedule other than to indicate that, on the basis of the terms of heading 02.10, the structure and the
other parts of the EC Schedule as well as the terms and structure, the Explanatory Notes and the
General Rules of the HS do not indicate that that concession is necessarily characterized by the notion
of long-term preservation. Therefore, we will now tu rn to an analysis of matters to be taken into
account together with context pursuant to Article 31(3) of the Vienna Convention.
(c) Matters to be taken into account together with the context: Article 31(3) of the Vienna
Convention
(i) Subsequent practice: Article 31(3)(b) of the Vienna Convention
Classification practice since 1994

Whose classification practice should be cons idered for the interpretation of the EC
Schedule?
 Arguments of the parties
7.246 Brazil submits that, even though all Members must agree on the scope of a tariff concession
made by the European Communities in its Schedule, 382 what is under examination is the meaning and
scope of the tariff concession for h eading 02.10 in the EC Schedule. 383 Brazil submits that, therefore,
six years of concordant, common and consistent classification of frozen salted chicken cuts under
heading 02.10 by EC customs authorities is sufficient to establish subsequent practice for the purposes
of Article 31(3)(b) of the Vienna Convention .384 Brazil acknowledges that the subsequent
classification practice of other WTO Members in the a pplication of their schedules may be relevant in
interpreting tariff concessions in the EC Schedule in cases where, for example, other Members import
the product at issue and the scope and meaning of the tariff concession in the schedules of those other
Members is similar or identical to the scope and meaning of the tariff concession in the EC
Schedule.385 However, Brazil submits that this is not th e case for "salted" meat of heading 02.10 in
the EC Schedule because, through EC Regulation No. 535/94, the European Communities inserted a
specific definition that differs from that found in most, if not all, Members' schedules. 386 Brazil
submits that, therefore, heading 02.10 of the EC Schedule is unique and distinct from heading 02.10
of every other WTO Member's schedule.387

382 Brazil's reply to Panel's question No. 16.
383 Brazil's reply to Panel question No. 77; Brazil's second written submission, para. 75.
384 Brazil's second written submission, para. 69.
385 Brazil's oral statement at the second substantive meeting, para. 42.
386 Brazil's replies to Panel's question Nos. 16 and 77.
387 Brazil's oral statement at the second substantive meeting, para. 41.

7.247 Thailand submits that EC customs classification practice is not relevant in order to ascertain
the meaning of heading 02.10 because the unilate ral classification practices of Members cannot be
considered as subsequent practice establishing "t he agreement of the parties" regarding the
interpretation of the tariff heading at issu e for the purposes of Article 31(3)(b) of the Vienna
Convention.
388 Thailand is of the view that reliance upon such practice is of limited value in order to
determine the terms of a multilaterally agreed concession, such as heading 02.10 in the EC
Schedule.389
7.248 According to the European Communities , subsequent practice of one party alone cannot
determine the interpretation of a treaty. The Eu ropean Communities submits that, if matters were
otherwise, the European Communities could claim support for its interpretation of the EC Schedule by
reference to a post-2002 period during which there has been a consistent EC practice of classifying
frozen chicken cuts with added salt under headi ng 02.07. The European Communities argues that,
since all parties to this dispute accept the relevanc e of the HS in interpreting the EC Schedule, and
since the HS is also relevant to the interpretation of the schedules of all, or almost all, WTO Members,
the experience of all WTO Members is relevant.390
7.249 In response, Brazil submits that the fact that negotiations of WTO Members' schedules were
based on the HS does not mean that all concessions negotiated were the same because the starting
point and the end point of negotiations are not necessarily the same. Brazil submits that they were not
the same in the case of heading 02.10. 391 Brazil further submits that, even though part of the
European Communities' CN is based on the HS, one cannot say that the CN is identical to the HS.392
 Analysis by the Panel
7.250 The Panel recalls that Article 31(3)(b) of the Vienna Convention refers to "any subsequent
practice in the application of the treaty which est ablishes the agreement of the parties regarding its
interpretation". In Japan – Alcoholic Beverages II , the Appellate Body stated that "subsequent
practice" within the meaning of Article 31(3)(b) of the Vienna Convention entails a "concordant,
common and consistent" sequence of acts or pron ouncements which is sufficient to establish a
discernible pattern.393
7.251 In essence, Brazil argues that, in the context of th is case, since the EC Schedule is at issue, it
is only the European Communities' practice that is relevant for the identification of "subsequent
practice" within the meaning of Article 31(3)(b) of the Vienna Convention. On the other hand, the
European Communities argues that the subsequent practice of one party alone cannot determine the
interpretation of a treaty. Therefore, the main qu estion for the Panel's determ ination here is whether
the reference to "common" and "concordant" practic e by the Appellate Body necessarily means that
all WTO Members must have engaged in a particular practice in order for it to qualify as "subsequent

388 Thailand's oral statement at the first substantive meeting, para. 20; Thailand's second written
submission, para. 68.
389 Thailand's oral statement at the first substantive meeting, para. 21.
390 EC's second written submission, para. 50.
391 Brazil's oral statement at the second substantive meeting. para. 45.
392 Brazil's oral statement at the second substantive meeting. paras. 46-48.
393 Appellate Body Report, Japan – Alcoholic Beverages II , page 13 (DSR 1996: I, 97 at 106). The
Panel also notes that Ian Sinclair has stated that "[i] t should of course be stressed that paragraph 3(b) of
Article 31 of the Convention does not cover subsequent practice in general, but only a specific form of
subsequent practice – that is to say, concordant subsequent practice common to all the parties": Ian Sinclair, The
Vienna Convention on the Law of Treaties , Manchester University Press, 2
nd edition (1984) p. 138. In addition,
Anthony Aust has stated that "[h]owever precise a text appears to be, th e way in which it is actually applied by
the parties is usually a good indication of what they understand it to mean, provided the practice is consistent,
and is common to, or accepted by all th e parties": Anthony Aust, Modern Treaty Law and Practice, Cambridge
University Press, (2000) p. 194.

practice" under Article 31(3)(b) of the Vienna Convention or whether the practice of a sub-set of the
entire WTO-membership, including the practice of one Member only, may suffice.394
7.252 We note that the International Law Commission has stated that:
"The [original text of Article 31(3)(b)] spoke of a practice which 'establishes the
understanding of all the parties'. By omitti ng the word 'all', the Commission did not
intend to change the rule. It considered that the phrase 'the understanding of the
parties' necessarily means the 'parties as a w hole'. It omitted the word 'all' merely to
avoid any possible misconception that every party must individually have engaged in
the practice where it suffices that it should have accepted the practice."395
7.253 The above statement indicates that it is not n ecessary to show that all signatories to a treaty
must have engaged in a particular practice in order for it to qualify as subsequent practice under
Article 31(3)(b) of the Vienna Convention. Rather, it may be sufficient to show that all parties to the
treaty have accepted the relevant practice. In our view, such acceptance may be deduced from a
party's reaction or lack of reaction to the practice at issue. 396 We consider that such an approach
makes practical sense especially in the context of GATT schedules that are particular to each WTO
Member. If, in contrast, it were necessary to show the existence of practice common to all parties to a
treaty (in this case, all 148 Members of the WTO) in order to demonstrate the existence of
"subsequent practice" for the purposes of Article 31(3)(b) of the Vienna Convention , it is highly
unlikely that subsequent practice could ever be proved in the WTO context with respect to schedules.
7.254 That is not to say that, with respect to this case, other WTO Members' practice is necessarily
irrelevant. In this regard, we note that, in the EC – Computer Equipment case, the Appellate Body
stated that:
"The purpose of treaty interpretation is to establish the common intention of the
parties to the treaty. To establish this intention, the prior practice of only one of the
parties may be relevant, but it is clearly of more limited value than the practice of all
parties. In the specific case of interpretation of a tariff concession in a Schedule, the
classification practice of the importing Member, in fact, may be of great importance.
However, the Panel was mistaken in findi ng that the classification practice of the
United States was not relevant."
397
In our view, the Appellate Body's statement confirms the importance of the classification practice of
the importing Member whose schedule is being inte rpreted. However, the Appellate Body also
indicated that the classification practice of othe r WTO Members, including the exporting Member's
practice, may be relevant.
7.255 The Panel notes that it is the EC Schedule that is at issue in this case and not the schedules of
other WTO Members. The Panel further notes that it has not been provided any evidence to indicate
that WTO Members protested against the EC classification practice in question from 1996 - 2002,
being the period during which Brazil submits cons istent practice on the part of the European
Communities existed. (This classification practice is discussed by us in more detail below in
paragraph 7.265 et seq ). Further, the European Communiti es itself has stated that the only WTO
Members that have any practice of classifying th e products at issue are Brazil, Thailand and the

394 We deal with the question of "consistency" of practice in paragraph 7.258 et seq below.
395 Yearbook of the International Law Commission (1966) Vol. II, p. 222, para. 15.
396 Mustafa Yasseen states that: "... acceptance by a part y may be 'deduced from that party's reaction or
lack of reaction to the practice at i ssue'." Mustafa Yasseen, "L'interpréta tion des Traités d'après la Convention
p. 49, para. 18.
397 Appellate Body Report, EC – Computer Equipment, para. 93.

European Communities.
398 It appears that, among these Members, the European Communities is the
only one that imports the products at issue. 399 Therefore, in our view, it would be reasonable to
conclude that EC classification practice alone with respect to the concession at issue in this case could
be considered as "subsequent practice" for the purposes of Article 31(3)(b) of the Vienna Convention.
Nevertheless, in light of the comment s made by the Appellate Body in EC – Computer Equipment, to
the extent that we consider it relevant, we will al so make reference to the evidence of classification
practice of other WTO Members that is available to us.
7.256 Regarding the European Communities' argument that the subsequent practice of one party
alone cannot determine the interpretation of a tr eaty because, otherwise, the European Communities
could claim support for its interpretation of its Sc hedule by reference to a post-2002 period during
which it claims there has been a consistent EC prac tice of classifying frozen chicken cuts with added
salt under heading 02.07, we note that this argument tends to be undermined by the fact that the post-
2002 practice cannot be construed as "concordant" and "common" because the complainants have
objected to such practice and those objections are at the heart of this dispute.
7.257 The Panel now turns to the evidence of classification practice that is before us.
Classification practice: Imports into the EC
 Arguments of the parties
7.258 Regarding the evidence of "subsequent practice" that allegedly exists , Thailand submits that
from 1996 to mid-2002, Thai frozen salted boneless chic ken cuts were classified by the European
Communities as "salted" meat under subheading 0210.90.20 at the ad valorem tariff rate of 15.4%.400
7.259 Brazil refers to statistics to show that, from 1998 - 2002, until EC Regulation No. 1223/2002
became effective, EC customs authorities classified and issued BTIs for frozen salted chicken meat
from Brazil under subheading 0210.90.20 of the CN.401
7.260 The European Communities accepts that a number of BTIs were issued by EC member
State customs authorities (principally Hamburg in Germany, Rotterdam in the Netherlands and
various offices in the United Kingdom), which cl assified the products at issue under subheading
0210.90. The European Communities further accepts that, given the commercial importance of some
of the customs offices – namely, Hamburg and Rott erdam – substantial trade entered the European
Communities under this incorrect interpretation. However, the European Communities submits that
this interpretation was not follo wed in other EC customs offices. 402 The European Communities
further submits that BTIs issued by national customs authorities from 1996 onwards, which classified
frozen chicken cuts with added salt under heading 02 .10, must be seen against a background in which
a legal principle based on a criterion of preservation h as been repeatedly enunci ated by the European
Communities, both legislatively and judicially.
403
7.261 In response to a request by the Panel, th e European Communities submits that it cannot
identify any BTIs of instances where the products at issue were classified under heading 02.07 rather
than under heading 02.10 before the introduction of EC Regulation No. 1223/2002 and EC Decision
2003/97/EC.404 The European Communities argues that, in any event, information taken from BTIs

398 EC's reply to Panel question No. 59.
399 In its reply to Panel question No. 59, Brazil states that "[t]o the best of ou r knowledge, there are no
significant markets, other than the EC, that import frozen salted chicken cuts for further processing."
400 Thailand's first written submission, para. 7.
401 Brazil's first written submission, paras. 177-178; Exhibit BRA-14.
402 EC's first written submission, paras. 52, 91-92.
403 EC's first written submission, para. 178.
404 EC's reply to Panel question No. 117.

cannot be relied upon as an indicator of the pattern of trade since they merely enable importers to
have advance knowledge of the tariff classification which customs authorities consider is applicable to
their products.
405 The European Communities submits that a BTI gives no indication of the volume of
imports to which it is applied. 406 The European Communities adds that it is possible under EC law to
withdraw an application for a BTI where the outco me is considered unfavourable by the importer. 407
The European Communities further explains that traders who have doubts about a particular
classification are major users of BTIs whereas those dealing in well-established products do not
bother with them.
408 The European Communities submits that, for the most part, the classification of
products under heading 02.10 was uncontroversial and, therefore, did not lead to requests for BTIs.
The European Communities further submits that th e interpretation of heading 02.10 as applying to
products that were salted, but not for preservation, was only followed in a few member States whereas
a significant volume of trade of products classified under heading 02.10 which were salted, dried or
smoked for preservation continued. In support of th is latter point, the European Communities refers
to Exhibit EC-26 which contains a BTI issued by Spanish customs authorities. The European
Communities submits that this BTI clearly indicates that, in order for a product to be classified under
heading 02.10, it must be preserved.409
7.262 In response, Brazil submits that BTIs contain tariff info rmation issued by customs authorities
of EC member States that is binding on the admini stration of all EC member States. According to
Brazil, BTIs are easily accessible by EC authorities and BTI holders (importers) but not by non-EU
producers/exporters. Brazil also submits that, despite a request from the Panel and requests by Brazil,
the European Communities has not indicated the volum e of total imports of frozen salted chicken cuts
that were classified under heading 02.10 of the EC Schedule.
410 Further, according to Brazil, the
European Communities has failed to provide BTIs or any supporting material to support the allegation
that no customs office within the European Communities classified the product at issue under
subheading 0210.90. 411 Brazil notes that, under Article 13 of the DSU, the Panel has the right to
request this information from the European Communities. Brazil further notes that, in Canada –
Aircraft, the Appellate Body concluded that Members are "under a duty and an obligation to 'respond
promptly and fully' to requests made by panels for information under Article 13.1 of the DSU." 412
Brazil submits that, in addition, the Appellate B ody made clear that adverse inferences could and
should be drawn in cases of refusal to cooperate.413 Brazil also submits that, even if an application for
a BTI was withdrawn by the importer, the EC Commission – or customs authorities of EC member
States – would at least have access to the written application.
414 As regards the BTI referred to by the
European Communities contained in Exhibit EC-26, Brazil argues that the product the subject of that
BTI differs from the products at issue in this case. Brazil submits that, therefore, there is no evidence
that the products at issue were classified by certain EC customs offices under heading 02.07 rather
than under heading 02.10.415
7.263 As for how the evidence of practice that allegedly exists should be interpreted , according to
Brazil and Thailand, classification practice for the products at issue under heading 02.10 by EC

405 EC's second written submission, para. 51; EC's reply to Panel question No. 117.
406 EC's second written submission, para. 51.
407 EC's second written submission, para. 51; EC's reply to Panel question No. 117.
408 EC's second written submission, para. 51; EC's reply to Panel question No. 117.
409 EC's reply to Panel question No. 53.
410 Brazil's second written submission, para. 72.
411 Brazil's second written submission, para. 71; Braz il's reply to Panel question No. 120; Brazil's
comments on the EC's reply to Panel question Nos. 117 and 120.
412 Brazil's comments on the EC's reply to Panel ques tion No. 117 referring to Appellate Body Report,
Canada – Aircraft, para. 187.
413 Brazil's comments on the EC's reply to Panel ques tion No. 117 referring to Appellate Body Report,
Canada – Aircraft, para.204.
414 Brazil's comments on the EC's reply to Panel question No. 117.
415 Brazil's comments on the EC's reply to Panel question No. 117.

customs authorities constituted a concordant, common and consistent sequence of acts that lasted over
six years, beginning shortly after the conclusion of the Uruguay Round, i.e. in 1996, and ending in
2002, when the measures at issue were adopted by the European Communities.
416 Brazil submits that
this six-year practice was sufficient to establish a discernible pattern implying the agreement of all
Members on the scope of heading 02.10 of the EC Schedule.
417 Brazil submits that the European
Communities itself has acknowledged that a number of BTIs were issued by EC member State
customs authorities classifying the products at issue under heading 02.10, particularly in Germany, the
Netherlands, and the United Kingdom. According to Brazil, although the European Communities
alleges that not all customs authorities in the sa me or other EC member States followed that
interpretation, the European Communities has admitted that the customs offices that did classify the
product under heading 02.10 are commercially important in the European Communities and that
"substantial" trade entered the Community under heading 02.10 through them. 418 Thailand notes that
the EC Commission has an obligation under Article X:3(a) of the GATT 1994 to ensure that EC
customs laws are applied uniformly. The EC Commi ssion has the power to intervene if EC member
States do not apply a uniform classification but, according to Thailand, the EC Commission failed to
intervene in the matter at the heart of this dispute until 2002. Thailand submits that this suggests that
the European Communities had no objections to th e classification of the product at issue under
heading 02.10. Thailand further submits that the European Communities was aware that customs
authorities in several EC member States had issued BTIs classifying frozen salted chicken under
heading 02.10 in accordance with the criteria specified in Additional Note 7 of the CN.419
7.264 In response, the European Communities states that it does not accept that the erroneous
classification by certain EC customs offices co uld have altered the European Communities'
international obligations, nor that it could constitute practice that might be relevant in the sense of
Articles 31 or 32 of the Vienna Convention. The European Communities submits that it did not wait
until 2002 (when EC Regulation No. 1223/2002 was en acted) to address the problem of erroneous
classification, since it only became evident to EC officials that there was a problem during 2001.
According to the European Communities, this delay in becoming aware of the problem was
attributable to the fact that the tariff line under wh ich the imports were classi fied was "sa lted meats,
other" so that the EC Commission could not tell wh at products were entering under this heading, and
it was not until 2000 that there was a substantial l eap in the relevant statistics. The European
Communities submits that, even then, it was still no t known that the products the subject of the
erroneous classification were not salted for preserva tion. According to the European Communities,
this only became apparent after further investig ation. The European Communities also notes that
roughly 30,000 BTIs are issued each year, that th ere were substantial problems communicating BTIs
as a result of a lack of interoperability of computer systems and that the EC Commission only had one
official and two administrative assistants monitoring all issues with respect to the first 40 chapters of
the CN during the period prior to 2001. 420 The European Communiti es submits that it has both
imported and exported subs tantial quantities of frozen chicken meat for many years and that it was
always classified under heading 02.07.421

416 Brazil's second written submission, para. 76; Braz il's oral statement at the second substantive
417 Brazil's second written submission, para. 76.
418 Brazil's second written submission, para. 70.
419 Thailand's oral statement at the first substantive meeting, para. 42.
420 EC's reply to Panel question No. 54.
421 EC's first written submission, paras. 52, 57 and 91-92.

 Analysis by the Panel
7.265 Here, the Panel will consider whether or not there was evidence of "consistent" classification
practice on the part of the European Communities w ith respect to the products at issue during the
period 1996 - 2002.422
7.266 By way of background, we note that, in EC – Computer Equipment , the Appellate Body
pointed out that the panel in that case attributed special importance to the classification practice of
two EC member States, which the panel considered represented the "largest" and "major" markets for
the product in question. The Appellate Body criticized this approach noting that:
"[T]he European Communities constitutes a customs union, and as such, once goods
are imported into any Member State, they ci rculate freely within the territory of the
entire customs union. The export market, th erefore, is the European Communities,
not an individual Member State."423
The Appellate Body further suggested that practice mu st be truly consistent in order to qualify under
Article 31(3)(b) of the Vienna Convention. More particularly, the Appellate Body seemed to suggest
that evidence that products were "generally" classifi ed under a particular heading is insufficient if
there is also evidence of classification under another heading.424
7.267 While the Panel agrees that, in the context of the present case, it would be best to have
evidence of classification practice amongst all EC me mber States that is fully consistent, from a
practical perspective, in all like lihood, such evidence will be extremely difficult to obtain. In the
absence of such complete evidence, we consider th at evidence of consistent practice that covers a
major proportion of importation of the products at issue into the European Communities, at the least,
would provide a reasonable indication of consistent practice for the purposes of Article 31(3)(b) of the
Vienna Convention.425
7.268 Turning now to the facts of this case, the Pane l has at its disposal three separate sets of
evidence that have been adduced by the parties regarding EC classification practice relating to the
concession contained in heading 02.10 of the EC Sche dule. In particular, the Panel has before it:
(a) the European Communities' acknowledgement that, during the relevant period, certain EC customs
offices were classifying the products at issue under heading 02.10; (b) a number of BTIs relating to
the classification by EC customs authorities under head ing 02.10, including some BTIs relating to the
products at issue as well as to some other products; and (c) three sets of minutes of the meetings of the
EC Customs Code Committee concerning classifica tion under heading 02.10. In our view, it is
necessary to review the various pieces of evidence in their totality prior to forming a conclusion as to
whether or not the EC classification practice can be viewed as "consistent" for the purposes of
Article 31(3)(b) of the Vienna Convention. We deal with each of these sets of evidence in turn.

422 We recall our conclusion above in para. 7.255 that, for the purposes of this case, the EC's
classification practice alone may be considered as "concordant" and "common" subsequent practice under
Article 31(3)(b) of the Vienna Convention.
423 Appellate Body Report, EC – Computer Equipment, para. 96.
424 Appellate Body Report, EC – Computer Equipment , para. 95. citing paras. 8.41-8.43 of the panel
report in that case.
425 We note in this regard that Mustafa Yasseen refers to "a certain consistency" rather than to a more
demanding notion of absolute consistency. He states that: "[The condition of a certain consistency] is made
necessary by the very notion of 'practice'. A practice is a series of occurrences or acts, and cannot generally be
materialized by an isolated occurre nce or act, or even by a few scattered applications." Mustafa Yasseen,
l'Académie de Droit International, (1974) Vol. III, p. 48, para. 17.

7.269 Regarding the European Communities' acknowledgement, the Panel recalls that the European
Communities has stated that the pr oducts at issue had been classi fied under heading 02.10 by some
EC members States' customs offices up until 2002 – in particular, those in Germany, the Netherlands
and various offices in the United Kingdom.
426 In an effort to determine the volume of trade in the
products at issue affected by this classificati on practice, the Panel requested the European
Communities to provide details of: (a) the period during which this classification practice existed; and
(b) the volume of total imports affected. 427 The European Communities did not provide this
information but did acknowledge that "substantia l trade" entered the European Communities under
what the European Communities labels as an "incorrect interpretation" of heading 02.10.428
7.270 With respect to the BTIs available to the Panel, the Panel has been provided with a number of
BTIs concerning the products at issue. It has al so been provided with a BTI concerning another
product. Regarding BTIs that pertain to the products at issue, 429 these Exhibits indicate that, until
September 2002, the products at issue, which were apparently covered by these BTIs, were classified
under heading 02.10. 430 The BTIs relate to imports into Germany, the Netherlands and the United
Kingdom. The Panel also notes that it is evident from EC Decision 2003/97/EC that at least 66 BTIs
classified the products at issue (or a subset thereof) under heading 02.10. 431 The European
Communities has not produced any BTIs of instan ces where the products at issue were classified
under a heading other than heading 02.10, such as head ing 02.07. With respect to the BTI concerning
a product other than those directly at issue in th is case, the European Communities refers to a 1999
BTI relating to dried and salted ham wh ich was classified under heading 02.10. 432 The BTI relates to
imports into Spain. The BTI does not indicate the salt content of the product in question; nor does it
indicate whether the salt had the effect of preserving the product in question.
7.271 The Panel takes note of the European Communitie s' argument that BTIs are of limited value
for the purposes of the task before us here – name ly, to determine whether there has been consistent
classification practice with regard to the products at issue on the part of the European Communities.
However, we consider that BTIs may be useful to provide an indication of how products with a
particular set of characteristics are being classified by the importing Member. Trade data helps to
confirm or to verify such an indication.
7.272 In this case, in addition to the BTIs referred to above, we have trade data at our disposal. In
particular, Brazil433 and the European Communities 434 have provided trade statistics concerning trade
flows into the European Communities under headings 02.07 and 02.10 of the EC Schedule. Brazil has
provided statistics at the 8-digit level for the pe riod 1990 until 2001. The European Communities has
provided statistics at the 4 and 8-digit level for the period 1990 until 2003. When read in conjunction,
the trade data and the BTIs indicate that significan t trade volumes of the products at issue imported

426 EC's first written submission, paras. 52 and 91-92.
427 Panel question No. 54.
428 EC's first written submission, paras. 91-92.
429 These BTIs are contained in Exhibit EC-24, Exhibit BRA-31 and Exhibits THA-24(a), 24(b)
and 24(c).
430 The earliest BTI among the ones the Panel has been provided is contained in Exhibit THA-24(a) and
is dated May 1998.
431 All the BTIs covered by EC Decision 2003/97/EC were issued by German customs authorities. This
suggests that the total number of BTIs classifying th e products at issue under heading 02.10 during 1996-2002
exceeds 66 given that the EC has indicat ed that Dutch and UK customs author ities also issued BTIs classifying
the products at issue under heading 02.10.
432 This BTI is contained in Exhibit EC-26.
433 See Tables at para. 177 of Brazil's first written submission and Exhibit BRA-14.
434 See Tables 2 and 3 of the EC's first written submission.

from Brazil and Thailand to the European Comm unities were being classified under heading 02.10
during the relevant period.435
7.273 Concerning the minutes of meetings of the EC Customs Code Committee436, Brazil refers to an
extract of the minutes of a meeting of the EC Customs Code Committee held on 25-26 September
2003437 at which the classification of frozen salted/smoked bacon was discussed. 438 The minutes
suggest that a number of EC member States indicated at the meeting that that product should "remain"
classified under heading 02.10. There is no referen ce to the salt content of the bacon in question in
the minutes, nor is there any indication as to whethe r the salt had the effect of preserving the bacon.
Therefore, we do not consider that these minutes are particularly helpful for the present case.
7.274 Thailand submits what appear to be minut es of a meeting of the EC Customs Code
Committee dated 25 January 2002 439 and the minutes of a meeting of the EC Customs Code
Committee held on 18 - 19 February 2002 440.441 Brazil also refers to these minutes. 442 We note the
European Communities' statement that these minutes are non-binding. 443 Even so, we consider that
they provide useful insights into the EC classification practice regarding heading 02.10 as perceived
by the EC Customs Code Committee. In particul ar, the minutes dated 25 January 2002 indicate that
frozen boneless chicken cuts with a salt content of between 1.2% - 1.4% had been classified under
heading 02.10 since 1996. The minutes of the meeting of the EC Customs Code Committee held on
18 - 19 February 2002 indicate that frozen salted meat with a salt content of not less than 1.2% by
weight were "classifiable" under heading 02.10.
7.275 Having considered all the evidence before us relating to the EC classification practice
concerning heading 02.10 in general and, more sp ecifically, concerning the products at issue, it
remains for us to assess that evid ence in its totality. In our view, the evidence taken as a whole
indicates that, during 1996 - 2002, the European Communities engaged in a consistent practice of
classifying the products at issue under heading 02.10. In particular, the European Communities itself
has acknowledged that "substantial trade" of the pr oducts at issue entered the European Communities
under heading 02.10 during this period.
444 We also have before us copies of a number of BTIs that
indicate that, during the relevant period, the products at issue were being classified by the European

435 In this regard, we note that the European Co mmunities itself has submitted that imports into the
European Communities started to appear under heading 02.10 principally from Brazil and Thailand during the
relevant period: EC's first written submission, paras. 57 and 180. Incidentally, the Panel considers that the BTIs
and the trade statistics indicate that a real market demand existed for the products at issue prior to enactment of
the measures at issue. In addition, this is apparent, inter alia, from correspondence, invoices, bills of lading and
purchase orders relating to the importation of these products from Brazil and Th ailand into the European
Communities contained in Exhibits BRA-29, 30, 41 and 42 and Exhibit THA-26. Some of this documentation
also tends to confirm that the products at issue were being imported into the European Communities under
heading 02.10 during the relevant period.
436 The EC Customs Code Committee is composed of representatives of each of the EC member States:
EC's reply to Panel question No. 55.
437 These minutes are contained in Exhibit BRA-32.
438 Brazil's reply to Panel question No. 4.
439 Working Document TAXUD/1636/2002 of the Customs Code Committee of 25 January 2002
contained in Exhibit THA-22. The Panel notes that the electronic version of Exhibit THA-22, which was
submitted by Thailand to the Panel during the first substantive meeting, the document reference for which is
TAXUD/1815/2003, does not appear to correspond to the hard copy of that exhibit which was submitted by
Thailand during the first substantive meeting and relied upon by Thailand in its oral statement during that
meeting. In our Report, we have relied upon the hard copy version of Exhibit THA-22 submitted by Thailand
during the first substantive meeting.
440 These minutes are contained in Exhibit THA-23.
441 Thailand's oral statement at the first substantive meeting, para. 39.
442 Brazil's reply to Panel question No. 10 referring to Exhibit THA-22 and Exhibit THA-23.
443 EC's reply to Panel question No. 45.
444 EC's first written submission, paras. 52 and 91-92.

Communities under heading 02.10.
445 We have not been provided w ith any BTIs to indicate that the
products at issue were being classified under any ot her heading of the CN, such as heading 02.07.
When read together, trade data and the BTIs indicat e that significant trade volumes of the products at
issue imported from Brazil and Thailand to the European Communities were being classified under
heading 02.10 during the relevant period. Finally, we have evidence that, in 2002, prior to the
introduction of the measures at issue, the EC Customs Code Committee, which is a committee
comprising representatives of all EC member States, considered that products with characteristics
matching those possessed by the pro ducts at issue were "classifiable" and were also classified under
heading 02.10. It is the Panel's view that, when taken together, the various pieces of evidence before
us indicate that, during 1996 - 2002, the European Communities engaged in a consistent practice of
classifying the products at issue under heading 02.10. In this regard, we note that we have seen no
evidence that the products at issue were being classified under a heading other than heading 02.10
during this period.
7.276 Regarding the fact that the European Comm unities did not provide certain information
requested by the Panel, we recall that Brazil h as objected and submitted that the Panel would be
within its rights to draw adverse inferences under Article 13.2 of the DSU from this refusal. Given
the Panel's conclusion that the tota lity of evidence before it indicates th at a consistent practice existed
within the European Communities of classifying the products at issue under heading 02.10 rather than
under another heading such as heading 02.07, we do not consider it necessary to consider whether
adverse inferences should be drawn against the Eu ropean Communities, as has been suggested by
Brazil.
Classification practice: Imports into and exports from Brazil and Thailand
 Arguments of the parties
7.277 Brazil and Thailand submit that their respective classification practice is not relevant to the
present case. Brazil submits that its classification is not relevant for the interpretation of the EC
Schedule given that the treaty language being examined is contained in the EC Schedule and concerns
the EC's commitments and not any other Member's commitments. 446 Thailand argues that the
unilateral classification practice of Members cannot be considered as subsequent practice establishing
"the agreement of the parties" regarding the interpretation of the tariff heading at issue. 447 Thailand
also notes that the Appellate Body made clear that reliance on customs classification practice is only
relevant to the extent that it interprets a tariff concession.
448 Thailand submits that, consequently,
under WTO law, customs classification of a product would matter only if the classification were
germane to the granting of a concession agreed upon in the WTO Agreement.449
7.278 As regards import classification practice, Brazil submits that it does not import salted chicken
cuts and that, therefore, there is no classificati on practice in relation to imports of this product. 450
Thailand submits that, at the time of the conclusi on of the WTO Agreement, Thailand did not import
frozen salted chicken. 451 Further, Thailand submits that it has never imported salted frozen chicken

445 We do not consider that the BTI before us relating to a product different from those at issue in this
dispute is particularly relevant for the present case.
446 Brazil's reply to Panel question No. 16.
447 Thailand's second written submission, para. 68.
448 Thailand's second written submission, para. 70.
449 Thailand's second written submission, para. 72.
450 Brazil's reply to Panel question No. 16.
451 Thailand's second written submission, para. 70.

because it is a competitive supplier of chicken meat 452 and, therefore, has never classified the product
at issue for customs purposes.453
7.279 With respect to export classification practice, the European Communities notes that during
2000 - early 2002, while substantial imports into the European Communities started to appear under
heading 02.10 principally from Brazil and Thailand, this is not matched by a corresponding increase
in exports under that heading from those two count ries. The European Commu nities submits that an
analysis of exports from those countries shows a marked increase in exports under heading 02.07,
which corresponds to the total imports of th e European Communities under headings 02.07 and
02.10.454
7.280 Thailand submits that the classification of produc ts for exportation is not relevant to
determine the classification practice of a Member because only the practice of Members in
implementing their tariff concessions is relevant.455
7.281 Brazil submits that, in situations where duti es do not have to be assessed, authorities are
usually less rigorous about classification and will not always ascertain whether goods declared by a
producer/exporter correspond to what is actually bei ng exported. Therefore, because in most cases,
imports are subject to duties, import classification practice is a more reliable and accurate source of
classification information because producers are only aler t to classification issues when they have an
impact on their commercial operations or profits. 456 Brazil submits that, in Brazil, there are no export
duties assessed on exports of frozen salted ch icken meat nor on frozen chicken meat in natura .457
Brazil also submits that Brazil's export classification practice of frozen salted chicken was
inconsistent; sometimes the product was correctly classified under heading 02.10 and sometimes it
was incorrectly classified under heading 02.07.
458
7.282 Brazil also submits that, in Brazil, the expor ter is responsible for export documentation,
including identification of the appropriate cust oms classification although the Brazilian government
has the ability to monitor and control such documentation. 459 Similarly, Thailand submits that
shipping companies hired by exporters handle e xport procedures and paperwork, including custom
classification on export declaration forms.460
7.283 In response, the European Communities submits that the complainants' distinction between
classification of products for export and for import has no basis in law. According to the European
Communities, classification of products in both cases should follow the same principles. The
European Communities submits that this is recognized in Article 3.1(a) of the HS Convention, which
requires the customs tariff and statistical nomenclatures to be in conformity with the HS. The
European Communities notes that the preamble of the HS Convention envisages the promotion of "as
close a correlation as possible between import statistics and export trade statistics and production
statistics". The European Communities also submits that a market access negotia tor needs to rely on
accurate export/import data in negotiating tariff concessions. The European Communities submits

452 Thailand's oral statement at the first substantive meeting, para. 44.
453 Thailand's reply to Panel question No. 16.
454 EC's first written submission, paras. 57 and 180; EC's oral statement at the second substantive
meeting, para. 49.
455 Thailand's oral statement at the first substantive meeting, para. 44; Thailand's reply to Panel
question No. 16; Thailand's second written submission, para. 71.
456 Brazil's oral statement at the first substantive m eeting, para. 55; Brazil's reply to Panel's question
No. 16.
457 Brazil's reply to Panel's question No. 16.
458 Brazil's comments on the EC's reply to Panel que stion No. 120 referring to Exhibits BRA-42(c) and
BRA-42(d).
459 Brazil's reply to Panel question No. 85.
460 Thailand's reply to Panel question No. 85.

that GATT Contracting Parties recognized this in the GATT Council Decision of 12 July 1983 on
"GATT Concessions under the Harmonized System Commodity Description and Coding System".
461
In that Decision, the Contracting Parties noted that "[i]n addition to the benefits for trade facilitation
and analysis of trade statistics, from a GATT point of view adoption of the Harmonized System would
help ensure greater uniformity among countries in cu stoms classification and, thus, a greater ability
for countries to monitor and protect the value of tariff concessions." Th e European Communities
notes that the Appellate Body has held that tari ff negotiations are a process of "give and take"
between exporting and importing Members. A common basis of understanding for the classification
of the goods is, therefore, necessary. The Eur opean Communities submits that, in light of the
foregoing, the complainants are wrong to suggest that classification on export is any less relevant than
classification on import.
462
 Analysis by the Panel
7.284 The Panel notes that it does not have any import classification data for Brazil and Thailand in
respect of the products at issue because, apparen tly, these countries export rather than import these
products.463 As for export classification data, this appears to be inconsistent at least with respect to
Brazil.464 In any event, we are not convinced of the utility of making reference to export classification
data from Brazil and Thailand given that, evidentl y, export classification is less rigorous because
duties are not levied on products upon exportation. 465 In this regard, we note that Article 1(b) of the
HS Convention defines "customs tariff nomenclat ure" as "the nomenclature established under the
legislation of a Contracting Party for the purposes of levying duties of Customs on imported goods "
(emphasis added).
Classification practice: Imports into and exports from the US and China
 Arguments of the parties
7.285 Brazil refers to four US classification rulings during the period 1996 - 1998 which classify
bacon from Denmark under heading 02.10. 466 Brazil also refers to a US bill of lading, in which the
importer claimed tariff treatment for its frozen sliced bacon product under heading 02.10.467
7.286 In relation to the US bill of lading, the United States 468 notes that an importer's claim for
tariff treatment under a particular subheading does not represent an official statement by US customs
authorities on the correct classification of the produc t. The United States submits, however, that in a

461 L/5470/Rev. 1.
462 EC's reply to Panel question No. 28 citing Appellate Body Report, EC – Computer Equipment ,
para. 109.
463 Brazil's reply to Panel question No. 16; Thailand's oral statement at the first substantive meeting,
para. 44; Thailand's second written submission, para. 70. The European Communities does not dispute that
Brazil and Thailand are exporters rather than importers of the products at issue.
464 We note that the EC refers to data in Table 3 of its first written submission and in Exhibits EC-17
and EC-18, which it says indicates that the complainants consistently classified the products at issue under
heading 02.07 rather than under heading 02.10: EC's first written submission, para. 180. However, Brazil has
produced an October 2001 bill of ladi ng, export registration and export receipt (contained in Exhibit BRA-
42(c)) and a November 2001 bill of la ding, export registration and export receipt (contained in Exhibit BRA -
 42(d)) according to which, upon export from Brazil, th e products at issue were classi fied under heading 02.10.
This evidence indicates that the export classification of, at least, Brazil is not consistent with respect to the
products at issue.
465 Further, we note that, in Brazil and Thailand, ex porters rather than cust oms officers classify the
products at issue, at least in the first instance: Brazil' s reply to Panel question No. 85; Thailand's reply to Panel
question No. 85.
466 Exhibit BRA-39.
467 Exhibit BRA-19.
468 The United States is a third party to this dispute.

1996 ruling, US customs authorities ruled that frozen bacon from Denmark was properly classified
under heading 02.10.469
7.287 China470 notes that, in 2000 and 2001, there we re imports and expor ts under subheading
0210.90.00 of China's tariff classification nomenclature but there have been no more such imports or
exports since 2002.
471 China also submits that, in 2000, there were imports and exports under
subheading 0207.14.00 of China's tariff classificati on nomenclature but that there have been no more
such imports or exports since 2001.472
 Analysis by the Panel
7.288 During these proceedings, Brazil referred to certain examples of what could broadly be
referred to as US classification practice regarding the equivalent of heading 02.10 in the US schedule.
In addition, China provided some information regarding its classification practice for headings
equivalent to headings 02.10 and 02.07 of the EC Sc hedule. In the Panel's view, this evidence is too
limited to draw any conclusions regarding the cons istency or otherwise of classification practice of
other WTO Members. Further, with respect to th e evidence that is available of US classification
practice, the relevant US classification rulings do no t relate to products identical or similar to the
products at issue; they do not indicate the salt content of the products in question; nor do they indicate
whether the salt had the effect of preserving tho se products. Therefore, the usefulness of such
evidence for the purposes of this case is questionable. Similarly, with respect to the information that
was submitted by China, such information does not indicate the salt content of chicken cuts classified
under headings 02.07 and 02.10; nor does it indicate wh ether the salt had the effect of preserving the
products in question. Therefore, such evidence also appears to be of limited usefulness for this case.
Summary and tentative conclusions regarding "subsequent practice"
7.289 The Panel considers that, in this case, it is r easonable to rely upon EC classification practice
alone in determining whether or not there is "subse quent practice" that "establishes the agreement" of
WTO Members within the meani ng of Article 31(3)(b) of the Vienna Convention regarding the
interpretation of the concession contained in heading 02.10 of the EC Schedule. Among other reasons
for this approach, we note that the European Communities is apparently the only importing WTO
Member with any practice of classifying the products at issue. On the basis of evidence available to
us, the Panel concludes that the European Communities engaged in a consistent practice of classifying
the products at issue under heading 02.10 during 1996 – 2002. With respect to classification practice
of other WTO Members, the Panel finds that th ere is no evidence of the complainants' import
classification practice regarding the products at issu e given that they export rather than import these
products. The Panel considers that the evidence of the complainants' export classification practice is
limited. Further, its utility is qu estionable given that the classification of the products at issue for
export is less rigorous because they are not subject to duty upon export. In addition, the evidence of
classification practice by the United States and China is so limited that the Panel is not able to draw
any conclusions regarding the cons istency or otherwise of the classification practice of other WTO
Members.
7.290 Subject to what the Panel finds below with respect to WCO decisions and the Explanatory
Note to the CN referred to by the European Communities, the Panel tentatively concludes that the
European Communities' consistent practice of cl assifying the products at issue under heading 02.10
amounts to "subsequent practice" under Article 31(3)(b) of the Vienna Convention.

469 US reply to Panel question No. 85 referring to New York Ruling Letter NY A80393 (March 7,
1996), as modified by Customs Ruling Letter HQ 960585 (July 20, 1998) contained in Exhibit US-1.
470 China is a third party to this dispute.
471 China's reply to Panel question No. 81.
472 China's reply to Panel question No. 81.

WCO letters of advice

Arguments of the parties
 Qualification under Article 31(3)(b) of the Vienna Convention?
7.291 Brazil submits that a letter of advice or opinion provided by the WCO Secretariat as a
response to an inquiry made by a customs author ity does not constitute an official WCO position on
the interpretation of the HS nomenclature. Acco rding to Brazil, such a letter of advice merely
expresses the technical opinion of one indivi dual or possibly more, which does not bind WCO
members in any way and has no legal value. 473 Brazil also notes that the Appellate Body in EC –
Computer Equipment considered that "decisions of the WCO may be relevant" in the interpretation of
tariff concessions in the EC Schedule. According to Brazil, if, WCO decisions, which are taken by
the HS Committee and approved by the Customs Co -operation Council, are questionable (given the
use of the word "may" by the Appellate Body) as relevant means of interpretation, then opinions
given by the WCO Secretariat are even more so.474 Brazil submits that, if there are no WCO decisions
regarding the classification of headings 02.07 and 02.10, there is no practice of WCO Members that
qualifies as subsequent practice within the meaning of Article 31(3)(b) of the Vienna Convention.475
7.292 Thailand argues that subsequent practice under Article 31(3)(b) of the Vienna Convention
must establish the agreement of the parties regard ing the interpretation of the relevant treaty.
According to Thailand, none of the parties to th is dispute have submitted a WCO decision regarding
the interpretation of heading 02.10. Thailand submits that a WCO letter does not constitute
concordant subsequent practice that establishe s the agreement of the parties regarding the
interpretation of the terms of the treaty w ithin the meaning of Article 31(3)(b) of the Vienna
Convention.476
7.293 The European Communities submits that, in order to meet the legal threshold of relevant
practice under Article 31(3)(b) of the Vienna Convention for the purposes of this case, the Panel must
take into account that the dispute concerns the covera ge of a tariff binding at the 4-digit level, which
is internationally harmonized through the HS Convention and used by all WTO Members. 477 T h e
European Communities notes that the HS Conve ntion provides a specific mechanism for the
expression of concordant practice in the form of decisions of its HS Committee. 478 The European
Communities submits that the fact that such a proce dure exists calls for a particularly high standard
for demonstrating the existence of a coherent practic e relevant for the interp retation of the schedules
and concessions as based on the HS. Otherwise, a particular Member could unilaterally modify the
common nomenclature agreed amongst all the parti es to the HS Convention and, by consequence,
impact the interpretation of WTO schedules.
479 The European Communities acknowledges that letters
of advice or opinion written by the WCO Secretar iat are not the same as a classification ruling or
opinion made by the HS Committee. The Europ ean Communities submits that, nevertheless, they
cannot be ignored given that they contain the opinions of a neutral expert from the WCO
Secretariat.
480

473 Brazil's reply to Panel question No. 18.
474 Brazil's reply to Panel question No. 18; Brazil's second written submission, para. 62 referring to
Appellate Body Report, EC – Computer Equipment, para. 90.
475 Brazil's oral statement at the second substantive meeting, para. 37.
476 Thailand's second written submission, paras. 57-66.
477 EC's first written submission, para. 174.
478 EC's first written submission, para. 175.
479 EC's first written submission, para. 176.
480 EC's oral statement at the first substantive meeting, paras. 27-31.

 1997 letter of advice from the WCO
7.294 The European Communities refers to a 1997 letter of advice from the WCO Secretariat to
the Cypriot customs author ities. The European Communities notes that the matter at issue concerned
the headings in Chapter 3 of the HS, which covers fish, and in many respects parallel those being
examined in this dispute under Chapter 2. Regarding the type of salting necessary to bring fish within
the ambit of heading 03.05, the European Communiti es notes that the WCO Secretariat stated in its
letter that "salted" fish, classifi able in heading 03.05, is not no rmally lightly sa lted to render it
necessary for freezing. The WCO furthe r stated that salt is intended to penetrate the meat to give the
fish a long preservative life.481
7.295 Brazil submits that the 1997 WCO Secretariat lette r of advice regarding frozen salted fish is
not consistent with the 2003 WCO Secretariat letter of advice referred to by Brazil immediately below
regarding frozen salted swine meat and, theref ore, the former does not qualify as "subsequent
practice" in the interpretation of the EC Schedule. 482 Thailand submits that the 1997 WCO
Secretariat letter is of little probative value to th e dispute before the Panel as it conclusions are
tentative and are based on unclear facts.483
 2003 letter of advice from the WCO
7.296 Brazil points to a letter of advice from the WCO Secretariat dated May 2003 regarding the
meaning of the term "salted" in heading 02.10. 484 Brazil notes that the 2003 WCO Secretariat letter
was written in response to a question posed by th e Bulgarian customs administration on whether
imports "of bellies of swine, deboned, frozen, to which salt has been applie d on the surface before
freezing (sic)" should be classified under subhead ing 0203.29 or under subheading 0210.12. Brazil
notes that, in that case, "the results of the laborator y analysis, after thawing, show that the salt only
penetrated a very limited layer (just below the surface of the product), and not in depth (sic)", and the
authority believed, guided by the language under A dditional Note 7 of Chapter 2 of the European
Communities' CN, that the product should be cl assified under heading 02.03 because it was not
deeply and homogeneously impregna ted with salt. The importer, on the other hand, argued that the
product should be classified unde r heading 02.10 because the total salt content was approximately
1.9% by weight. Faced with this dilemma , the authority requested advice from the WCO
Secretariat.485 Brazil submits that the customs authority' s inquiry in that case was based on the fact
that the product only met part of the description/cr iterion for "salted meat" of heading 02.10, found in
Additional Note 7 of Chapter 2 of the CN. However, Brazil argues that, in the present case, there is
no doubt that the products at issue exported from Br azil fully met the definition of "salted meat" of
heading 02.10 under the CN. 486 Brazil also notes that, in that case, the WCO Secretariat stated that
there is no official definition in the HS and its Ex planatory Notes for the term "salted". However,
Brazil submits that the WCO acknowledged that the European Communities' CN had a specific
criterion to define salted meat of heading 02.10 an d that the Bulgarian authority should turn to the
European Communities for clarification. Brazil subm its that, even though the authority in question
specifically asked for guidance with respect to th e degree of salting and the method of salting for the
purposes of heading 02.10, no menti on was made of the fact that salting had to preserve the product
for it to merit classification under heading 02.10.487

481 EC's oral statement at the first substantive meeting, paras. 27-31 referring to Exhibit EC-19.
482 Brazil's second written submission, para. 65.
483 Thailand's second written submission, paras. 61 and 66.
484 Brazil's second written submission, para. 65 referring to Exhibit BRA-35.
485 Brazil's reply to Panel question No. 18.
486 Brazil's reply to Panel question No. 18.
487 Brazil's reply to Panel question No. 18; Brazil's or al statement at the second substantive meeting,
paras. 38-39.

7.297 In response, the European Communities submits that, although the issue dealt with in the
2003 WCO Secretariat letter might be relevant to the present dispute, the WCO Secretariat avoided
taking a position and did not provide classification advice to the Bulgarian authorities. The European
Communities submits that Brazil cannot, from the fact that the WCO Secretariat declined to take a
view, infer that it rejected "preservation" as the basis for heading 02.10. The European Communities
submits that, consequently, the letter in question is not relevant "subsequent practice" for the purposes
of Article 31(3)(b) of the Vienna Convention.
488
Analysis by the Panel
7.298 In EC – Computer Equipment , the Appellate Body specifically stated that decisions taken by
the HS Committee of the WCO might have been releva nt to the interpretation of the EC Schedule in
that case. The Panel considers that, even if not binding, WCO decisions concerning the headings at
issue provided after 1994 could well be a very useful source of information on the subsequent practice
of WTO Members, a large proportion of whom are signatories to the HS Convention and, therefore,
are members of the HS Committee. However, we ha ve been informed by the WCO Secretariat that
there are no existing WCO decisions in relation to heading 02.10 of the HS, which corresponds to
heading 02.10 of the EC Schedule.
489
7.299 The Panel has been called upon by the parties to take into consideration two letters written by
members of the WCO Secretariat – one dated 1997 and the other dated 2003 – as evidence of
"subsequent practice" under Article 31(3)(b) of the Vienna Convention . We recall that the
International Law Commission has indicated that "subsequent practice" qualifying under Article
31(3)(b) must be "concordant, subsequent practice common to all the parties". The Appellate Body
has also indicated that a "concordant, common and consistent" sequence of acts or pronouncements is
necessary for qualification under Article 31(3)(b). In our view, WCO Secretariat letters of advice or
opinion that are directed at individual customs authorities, which have no legally binding effect,
cannot be construed as constitu ting "concordant, subsequent practice common to all [WTO
Members]" for the purposes of Article 31(3)(b) of the Vienna Convention. In any event, we note that
the WCO Secretariat letters in question relate to products (fish and pigmeat) that are different from
the products at issue. Therefore, the Panel will not take the two WCO Secret ariat letters in question
into consideration in applying Article 31(3)(b) of the Vienna Convention.
490
Subsequent Explanatory Notes to the Combined Nomenclature
Arguments of the parties
7.300 The European Communities refers to an Explanatory Note to the CN of December 1994,
which refers to subheadings 0210. 11.11 and 0210.11.19. It provides inter alia that: "These
subheadings cover only hams, shoulde rs and parts thereof, with bone in, of domestic swine, which

488 EC's second written submission, para. 39; EC's oral statement at the second substantive meeting,
para. 48.
489 WCO's reply to Panel question No. 8 to the WCO.
490 The Panel notes that, in reply to questions posed by the Panel regarding the 1997 and 2003 WCO
Secretariat letters, the WCO itself counselled against re liance upon that correspon dence in the absence of
explicit authorization from the parties to those letters: WCO's replies to Panel question Nos. 13 and 14 to the
WCO. We note that the EC submits that, after having initially become aware of the 1997 letter from the WCO
to the Cypriot authorities when examining the WCO's archives, it sought and obtained the agreement of the
Cypriot customs authorities before submitting the correspondence to the Panel: EC's comments on the WCO's
replies to Panel question Nos. 13 and 14 to the WCO. Brazil submits that it gained unobstructed access to the
2003 WCO Secretariat letter and is not aware of any notification on the part of the Bulgarian customs authorities
requesting that the letter not be published by the WCO: Brazil's comments on the Panel's Interim Report, para.
51. In any event, we do not consider that this changes our conclusion that we should not consider the letters in
question pursuant to Article 31(3)(b) of the Vienna Convention.

have been preserved by deep dry salting or pickli ng in brine ...". The European Communities submits
that this Explanatory Note is relevant under Article 31(3)(b) of the Vienna Convention .491 T h e
European Communities submits that the importance of the Note lies in the fact that it assumes the
existence of the principle of long-term preservation with respect to heading 02.10.492
7.301 Brazil and Thailand submit that the Explanatory Note in question relates to salted meat of
domestic swine and not to all "salted meat" of head ing 02.10 and that, therefore, it cannot be applied
to poultry meat. 493 According to Brazil, had the Eur opean Communities desired to apply the
provisions regarding salted meat of domestic swine to all meat covered under heading 02.10 it would
have placed such provisions as a general Explanatory Note to heading 02.10 rather than as a Note to
particular subheadings. Brazil concludes that, therefore, there is no reason for the Panel to assume
that this Explanatory Note would be applicable to a product different from salted domestic swine. 494
Thailand also argues that it is the European Communities' established practice to state explicitly in the
Explanatory Notes whether a certain rule applies mutatis mutandis to other products. Thailand
submits that, while this was done explicitly for pr oducts of subheading 0210.12.11, there is no such
statement in the Explanatory Note for subheading 0210.90.20. Thailand concludes that, therefore, the
European Communities cannot assert that the concept of preservation is applicable to poultry falling
under heading 02.10. 495 Brazil also adds that the Explanat ory Notes to the European Communities'
CN are non-binding instruments and are not part of EC legislation.496
Analysis by the Panel
7.302 The Panel does not consider that a single non-binding Explanatory Note in the European
Communities' domestic legislation – i.e. the CN – sat isfies the requirement that "subsequent practice"
be "concordant, common and consistent" so as to establish the agreement of all WTO Members within
the meaning of Article 31(3)(b) of the Vienna Convention. In any event, the Note relates to products
(pigmeat) that are different from the products at i ssue. Therefore, the Panel will not take into
consideration the Explanatory Note to the CN of December 1994, which refers to subheadings
0210.11.11 and 0210.11.19, in applying Article 31(3)(b) of the Vienna Convention.
Final conclusion regarding "subsequent practice"
7.303 The Panel recalls the absence of WCO decisions th at are relevant to this dispute. The Panel
further recalls its decision not to take two WC O Secretariat letters and a single non-binding
Explanatory Note to the CN into consider ation when applying Article 31(3)(b) of the Vienna
Convention. In light of those decisions, we confirm the tentative conclusion we reached above in
paragraph 7.290 that the European Communities' cons istent practice of classifying the products at
issue under heading 02.10 amounts to "subsequent practice" under Article 31(3)(b) of the Vienna
Convention. In the Panel's view, such subsequent practi ce indicates that the products at issue in this
dispute are covered by the concession contained in heading 02.10 of the EC Schedule. To seek
confirmation of this indication, we turn to a consideration of object and purpose under Article 31(1) of
the Vienna Convention.

491 EC's reply to Panel question No. 75.
492 EC's oral statement at the second substantive meeting, para. 70.
493 Brazil's second written submission, para. 93; Thailand's second written submission, para. 92.
494 Brazil's second written submission, para. 94.
495 Thailand's second written submission, para. 92.
496 Brazil's second written submission, para. 93.

(d) Object and purpose: Article 31(1) of the Vienna Convention
(i) Arguments of the parties
The WTO Agreement and the GATT 1994

7.304 Brazil and Thailand submit that the security and predic tability of tariff concessions is the
main object and purpose of the GATT 1994. 497 According to Brazil, such security and predictability
ensures the importance and worth of these concessi ons because it means that concessions will not be
changed unilaterally without a proper remedy. Braz il submits that, if it were otherwise, Members
would be unwilling to enter into trade negotiations. 498 Brazil argues that when, by virtue of the
challenged measures, the European Communities un ilaterally changed the concession it provided for
salted meat under its Schedule, it disrupted this essential object and purpose of the WTO
Agreement.499
7.305 According to Thailand, the object and purpose of the GATT 1994, as reflected in Article II of
the GATT 1994, is to preserve the value of tariff concessions. Therefore, it is essential that the
description of the products falling under a particular s ubheading be maintained as it was at the time of
the negotiation of the relevant concession. Accord ing to Thailand, it would undermine the value of
the tariff concession if a Member were able to uni laterally modify the scope and coverage of the
product description for a specific tariff heading. This situation would diminish the security and
predictability that binding tariff concessions are intended to have in the multilateral trading system.500
7.306 Brazil and Thailand submit that, with respect specifically to the application of Article II of the
GATT 1994, the decisive criterion for characterization of a product is the "objective characteristics"
of the product at the time of importation. 501 Brazil argues that this criterion ensures legal certainty
and facilitates classification and verification by customs authorities at the border. 502 Thailand further
submits that customs classification must depend on the assessment of the objective characteristics of
the product at the border
503 and notes that this principle has been clearly recognised by the ECJ.504
7.307 The European Communities accepts that, under EC law, in implementing the HS, the
objective characteristics of a product are decisive for classification. According to the European
Communities, these objective characteristics are mostly based on the compositi on of the products or
the properties, which can be established by laboratory examination. 505 The European Communities
submits that, when a product arrives at the border, EC customs officials carry out: (a) inspection of
customs and sanitary documents accompanying the g ood, including any BTI; (b) physical inspection
by customs officers of container, packaging, labelling; (c) physical inspection of the product, in
particular its temperature, smell, taste, colour; and (d) if necessary, samples are sent to a laboratory
for analytical control to verify conformity of the product with relevant customs specifications.
506 The
European Communities notes that there are no sp ecific guidelines to assist customs officers in
determining whether or not a product should be cl assified under heading 02.10, i.e. to determine
whether or not salting achieves long-term preser vation. The European Communities argues that,
nevertheless, such guidelines have never been necessa ry because, with the exception of the facts at

497 Brazil's first written submission, para. 160; Thailand's first written submission, para. 90.
498 Brazil's first written submission, para. 160.
499 Brazil's first written submission, para. 161.
500 Thailand's first written submission, paras. 92-93.
501 Brazil's reply to Panel question No. 13; Thailand's oral statement at the first substantive meeting,
paras. 51-53; Thailand's second written submission, para. 39.
502 Brazil's reply to Panel question No. 13.
503 Thailand's oral statement at the first substantive meeting, paras. 8, 51-53.
504 Thailand's second written submission, para. 3.
505 EC's replies to Panel question Nos. 90 and 105.
506 EC's reply to Panel question No. 89.

issue in the Gausepohl case507 and in the present dispute, in practice, there has been little dispute
regarding the type of product that falls under heading 02.10. 508 Further, the European Communities
submits that the application of the principle of pr eservation has rarely been problematic because it is
normally obvious whether a product has been preserve d by one of the means mentioned in heading
02.10.509 The European Communities clarifies that th e preservation techniques referred to in heading
02.10 leave the meat with specific characteristics (e.g., colour, saltiness, dryness) that are readily
detectable (e.g., in Parma ham).510 The European Communities submits that it applies the principle of
preservation irrespective of the origin of imports.511
7.308 Brazil submits that, in the absence of HS Committe e decisions on practical aspects associated
with the verification of classification criteria fo r products covered by heading 02.10, classification
must be based simply on the wording of the legal text read in conjunction with the HS Explanatory
Notes.512
7.309 Thailand argues that, even if one assumed that a specified purpose may be relevant to
determine the classification of a product, the Eu ropean Communities' appr oach suggests that the
customs officers of the 25 EC member States would have to make individual judgements as to how
the features of the product clearing customs achiev e the purpose of long-term preservation, a concept
which, in Thailand's view, is vague and uncertain. Thailand submits that this defeats the object and
purpose of the WTO Agreement with respect to tariff concessions negotiated by the European
Communities under its Schedule – namely, to ensure the "security and predictability of the 'reciprocal
and mutually advantageous arrangements directed to the substantial reductio n of tariffs and other
barriers to trade'".513
The EC Schedule
7.310 The European Communities submits that the object and purpose underlying the scope and
content of its respective concessions on "frozen" chic ken meat and "salted" products is self-evident,
given the tariff structure and trade at the ti me the concessions were made. The European
Communities submits that, at the time it concluded it s Schedule, it was aware of the substantial trade
in "frozen" chicken cuts and that such cuts woul d enter into competition with domestically produced
chicken cuts for further processing. The European Communities argues that, therefore, it negotiated
with other WTO Members an appropriate level of protection from imports of "frozen" chicken cuts
including special safeguard measures under Article 5 of the Agreement on Agriculture. According to
the European Communities, it did so in the knowledge that, in order to qualify as a "salted" product
under heading 02.10, the product would have to be salted to ensure its preservation. The European
Communities submits that it satisfied itself with si gnificantly lower tariffs on salted products because
it was aware that few products were traded on an international basis under that heading. The
European Communities submits that, had it imagined that frozen chicken with added salt could have
been classified under heading 02.10, it would never have set such a low tariff. 514 In addition, the
European Communities submits that neither of the co mplainants have purported to show that, at the
time WTO Members were making their Uruguay Round market access concessions, there was a
common view that the market access being negotiated for "salted" products was not in respect of
products which had been salted for preservation, nor that the object and purpose of negotiating a
specific level of market access, suitable for importing and exporting interests was made on any other

507 This case is discussed below in paras. 7.372 et seq.
508 EC's reply to Panel question No. 23.
509 EC's reply to Panel question No. 44.
510 EC's reply to Panel question No. 91.
511 EC's reply to Panel question No. 44.
512 Brazil's comments on the WCO's reply to Panel question No. 11 to the WCO.
513 Thailand's second written submission, para. 41 referring to Appellate Body Report, EC – Computer
Equipment, para. 95; Thailand's reply to Panel question No. 118.
514 EC's first written submission, para. 163.

basis. The European Communities submits that, consequently, the object and purpose of the tariff
structure in question clearly supports the European Communities' interpretation of its obligations.
515
7.311 Brazil submits that the "object and purpose" of a concession contained in the schedule of a
particular Member must be determined on the basi s of the common understanding of all parties, not
just the alleged will or purpose of the party making the concession. Brazil submits that, for all intents
and purposes, when the European Communities clarified the scope of its tariff concession by means of
EC Regulation No. 535/94, it conceded that meat w ith a salt content of 1.2% would, by necessity, be
subject to some form of preservation other than salting.516 Brazil further argues that, at the time tariffs
are negotiated, Members define their offers and their obligations in terms that best suit their needs.
However, according to Brazil, a Member cannot po ssibly thoroughly foresee what its needs will be
ten or more years from the date it negotiated its tariffs. Brazil argues that it is precisely because trade
flow is dynamic that it is possible, and even likel y, that some new and unexpected trade pattern will
develop in a way that is contrary to or does not suit a Member's need. Brazil submits that the WTO
Agreements recognize this possibility and provide ways for Members to address unexpected trade
patterns, such as the imposition of safeguards, anti-dumping or countervailing measures or
modification of its schedule under the provisions of Article XXVIII of the GATT 1994. However,
Brazil submits that what a Member cannot do is to unilaterally change its commitments simply
because a new trade pattern has emerged and the corresponding concession in its schedule no longer
suits its needs.
517
7.312 Thailand submits that the European Communities ma y not use the classification process to
respond to changes in patterns of trade since it last negotiated its tariff schedules. 518 According to
Thailand, the principle of long-term preservation was introduced by the European Communities in
relation to heading 02.10 solely to narrow the sc ope of a tariff concession that had generated more
trade than the European Communities had expe cted. Thailand submits that the European
Communities should have addressed this concern by re-negotiating its concession under Article
XXVIII of the GATT 1994 rather than by excluding products from the tariff heading implementing
that concession.519
7.313 The European Communities accepts that trade flows may change after tariff commitments
are made. However, the European Communities subm its that this does not mean that such trade
developments are without parameters. According to the European Communities, any new trade flows
must fall under the scope of the tariff commitment they claim. The European Communities submits
that, in the present case, the new trade flow do es not fall under the European Communities' tariff
commitment in respect of "salted" meat.
520
(ii) Comments by the World Customs Organization
7.314 The WCO states that, when goods are classified under the HS, this is always done on the basis
of the objective characteristics of the product at the time of importation. The WCO states that the
factor which determines the essential character of a product will vary from one product to another.
The WCO adds that the determination of the essen tial character of a product may be done through a
visual inspection of the product including indications on the packing. Reference may also be made to
accompanying documents. The WCO states that, in so me cases, laboratory analysis may be required.
The WCO states that, since headings 02.07 and 02.10 cover "frozen" and "salted" products
respectively, it would have to be determined whether the products at issue essentially have the

515 EC's first written submission, para. 164.
516 Brazil's oral statement at the first substantive meeting, paras. 46-50.
517 Brazil's reply to Panel question No. 80.
518 Thailand's oral statement at the first substantive meeting, para. 46.
519 Thailand's oral statement at the first substantive meeting, para. 6.
520 EC's reply to Panel question No. 80.

character of a "frozen" or a "salted" product. The WCO surmises that it would probably be
straightforward to determine whether or not a product is "frozen" whereas recourse to laboratory
analysis might be required to determine whethe r a product can be regarded as a "salted" product
within the meaning of heading 02.10.
521 The WCO also notes that practical aspects associated with
the verification of classification criteria are taken into account for the purposes of classification of
commodities at the HS level once they have become part of the legal text or of the Explanatory
Notes.522
(iii) Analysis by the Panel
7.315 The Panel recalls that Article 31(1) of the Vienna Convention provides that:
"A treaty shall be interpreted in good faith in accordance with the ordinary meaning
to be given to the terms of the treaty in their context and in the light of its object and
purpose."
7.316 Article 31(1) of the Vienna Convention clearly indicates that a treaty must be interpreted in
light of that treaty's object and purpose. Notably, Article 31(1) of the Vienna Convention does not
indicate that the object and purpose of particular terms of a treaty must be determined, such as
heading 02.10 of the EC Schedule.
7.317 In our view, for the purposes of this case, Article 31(1) of the Vienna Convention instructs us
to consider the object and purpose of the treaty in wh ich the treaty terms that are the subject of this
dispute can be found. In particular, the treaty terms at issue in this case are contained in
heading 02.10 of the EC Schedule. As noted above in paragraph 7.6, on the basis of Article II:7 of the
GATT 1994 and Article II:2 of the WTO Agreement, the concessions contained in the EC Schedule
are treaty terms of the GATT 1994 and the WTO Agreemen t. Accordingly, we consider that our task
in this section is to determine the object and purpose of the WTO Agreement and the GATT 1994.523
The WTO Agreement and the GATT 1994
7.318 The object and purpose of the WTO Agreement can be deduced from the preambles of the
WTO Agreement and of the agreements annexed th ereto. The preamble of the WTO Agreement
specifies that one of the purposes of the Agreement is to "expand[] ... trade in goods and services." It
also states that Members should contribute to the above-mentioned expans ion "by entering into
reciprocal and mutually advantageous arrangements di rected to the substantial reduction of tariffs and
other barriers to trade." In addition, in EC – Computer Equipment, the Appellate Body stated that:
"[T]he security and predictability of 'the reciprocal and mutually advantageous
arrangements directed to the substantial reduc tion of tariffs and other trade barriers to

521 WCO's reply to Panel question No. 1 to the WCO.
522 WCO's reply to Panel question No. 11 to the WCO.
523 The Panel notes that, in theory , the object and purpose of the Agreement on Agriculture, being an
agreement that is annexed to the WTO Agreement, may also be releva nt for the interpretation of a WTO
Member's concession on an agricultural product. The pu rpose of the Agreement on Agriculture is to discipline
the progressive liberalization of trad e in agricultural products as agreed by Members. The preamble of the
Agreement on Agriculture notes that the negotiation of commitments is part of the reform process in the
agricultural trading system. It also provides that "the ... long-term objective is to provide for substantial
progressive reductions in agricultural support and protection sustained over an agreed period of time, resulting
in correcting and preventing restrictions and distortions in world agricultural markets. " This objective appears
to be of limited relevance to the pr esent case. Therefore, we will not pro ceed to further examine the object and
purpose of Agreement on Agriculture.

trade' is an object and purpose of the WTO Agreement, generally, as well as of the
GATT 1994."
524
The Appellate Body made clear in that case that s ecurity and predictability is not to be based on the
"subjective views" of exporting Members but, rather, on the common intentions of the parties at the
time of the conclusion of the negotiations. 525
7.319 With respect to the object and purpose of the GATT 1994, in Argentina – Textiles and
Apparel, the Appellate Body stated that:
"[A] basic object and purpose of the GATT 1994, as reflected in Article II, is to
preserve the value of tariff concessions negotiated by a Member with its trading
partners, and bound in that Member's Sc hedule. Once a tariff concession is agreed
and bound in a Member's Schedule, a re duction in its value by the imposition of
duties in excess of the bound tariff rate would upset the balance of concessions
among Members."
526
7.320 Taken together, the relevant aspects of the WTO Agreement and the GATT 1994 indicate that
concessions made by WTO Members should be interp reted so as to further the general objective of
the expansion of trade in goods and th e substantial reduction of tariffs. It is also clear that such an
interpretation is limited by the condition that arrangements entered into by Members be reciprocal and
mutually advantageous. In other words, the terms of a concession should not be interpreted in such a
way that would disrupt the balance of concessi ons negotiated by the parties. Finally, the
interpretation must ensure the security and predictab ility of the reciprocal and mutually advantageous
arrangements manifested in the form of concessions.
7.321 With respect to the last point referred to in the preceding paragraph, namely that an
interpretation of the WTO Agreement and the GATT 1994 must ensure the security and predictability
of the reciprocal and mutually advantageous arra ngements manifested in the form of concessions, the
question has arisen in this case as to whether the in terpretation of the concession contained in heading
02.10 of the EC Schedule to include a long- term preservation criterion could undermine this
objective. In this regard, we note that all the parties to this dispute, including the European
Communities, agree that, in characterizing a produc t for the purposes of tariff classification, it is
necessary to look exclusively at the "objective ch aracteristics" of the product in question when
presented for classification at the border. 527 The WCO has suggested that a visual inspection may
suffice for some products whereas laboratory analys es may be required for others. As regards the
present case, the WCO surmises that laboratory an alyses might be required to determine whether a
product can be regarded as "salted" within the meaning of heading 02.10 of the HS.
7.322 With respect to the products at issue, the Eu ropean Communities has stated that, if a product
has been "frozen" within the meaning of heading 02.07, it will s till be classified under heading 02.10
of the EC Schedule as a "salted" product provided that the salting has b een undertaken for the
purposes of "long-term preservation" within the m eaning of EC Regulation No. 1223/2002 and EC
Decision 2003/97/EC.528 However, despite questioning by the Panel and by Brazil 529, the European

524 Appellate Body Report, EC – Computer Equipment, para. 82.
525 Appellate Body Report, EC – Computer Equipment, paras. 82 and 84.
526 Appellate Body Report on Argentina – Textiles and Apparel, at para. 47.
527 Brazil's reply to Panel question No. 13; Thailand's oral statement at the first substantive meeting,
paras. 51-53; Thailand's second written submission, pa ras. 38-41; EC's replies to Panel question Nos. 90 and
105.
528 EC's replies to Panel question Nos. 49 and 70; EC's second written submission, paras. 27, 30, 41
and 45; EC's oral statement at the second substantive meeting, paras. 9, 14 and 15.
529 Panel question No. 118. Brazil's question Nos. 1-3 to the EC following the first substantive
meeting.

Communities has not provided the Panel with any clear idea of what is meant by "long-term
preservation" in practice. 530 In addition, the Panel notes th at the European Communities has
acknowledged that there are no specific guidelines to assist customs officers in determining whether
or not a particular product should be classified under heading 02.10 531 but submits that this is not
problematic because products classifiable under heading 02.10 are "readily detectable". 532 However,
if a product arrives at the EC border that is salted and then frozen, (as in the case of the products at
issue)533, the Panel questions how a customs officer at the border tasked with identifying the
appropriate heading under which the product should be classified is to know whether: (a) the product
has been preserved for the long-term; and (b) if so, whether the long-term preservation is the result of
salting, freezing or a combination of the two. While the first question may be addressed through
laboratory analyses, which the European Communities states th at it conducts when necessary, 534 it is
far from clear to us how the answer to the second qu estion will be determined. Yet, without a means
to determine the answer to the second question, th e customs officer will not be in a position to know
whether the product in question should be classifi ed under heading 02.10 (i.e, because the long-term
preservation is attributable to the salting) or u nder heading 02.07 (because the long-term preservation
is attributable to the freezing).
7.323 In the Panel's view, the lack of certainty associ ated with the application of the criterion of
long-term preservation with respect to the concessi on contained in heading 02.10 of the EC Schedule
runs counter to one of the objects and purpo ses of both the WTO Agreement and the GATT 1994,
namely that the security and predictability of the reciprocal and mutually advantageous arrangements
must be preserved. Therefore, the Panel concludes that an interpretation of the term "salted" in the
concession contained in heading 0.210 of the EC Schedule to include the criterion of long-term
preservation could undermine the object and purpose of security and predictability, which lies at the
heart of the WTO Agreement and the GATT 1994.
The EC Schedule
7.324 The Panel notes that, in Canada – Dairy, the Appellate Body stated that:
"[W]e do not share the Panel's view as to the significance of the object and purpose of
Article II of the GATT 1994 for the interpretive question at issue. It is true, as the
Panel said, that the object and purpose of Ar ticle II is 'to preserve the value of tariff
concessions...'. However, the issue facing the Panel was what was the scope and
content of the concession? The Panel's re ference to the object and purpose of Article
II appears to us to beg the very questi on that the Panel should have addressed:
namely, what is the meaning of that notation? That is, what is the shape and tenor of
the concession that Canada had set forth in its Schedule of Commitments?"
535
7.325 The European Communities relies upon this statement by the Appellate Body to argue that its
object and purpose when concluding the tariff heading in question must be taken into a consideration.
In our understanding, the above statement does not st and for this proposition. Rather, it stands for the
proposition that an interpreter's primary task is to determine the meaning of a scheduled commitment.
This principle is contained explicitly in Article 31 of the Vienna Convention.

530 The EC has merely stated that the shelf life of preserved meats is many months at ambient
temperature: EC replies to Panel question Nos. 49 and 96.
531 EC's reply to Panel question No. 23.
532 EC's replies to Panel question Nos. 44 and 91.
533 See Brazil's reply to Panel question No. 14(a) referring to Exhibit BRA-33 and Thailand's reply to
Panel question No. 14(a).
534 Indeed, Exhibit THA-23, which contains the minutes of a meeting of the EC Customs Code
Committee held on 18 - 19 February 2002, indicates that analyses had been undertaken by certain EC member
States regarding frozen salted chicken.
535 Appellate Body Report, Canada – Dairy, para. 137.

7.326 Besides, as noted above in paragraph 7.317, it is the Panel's view that, for the purposes of this
case, Article 31(1) of the Vienna Convention mandates us to consider the object and purpose of the
WTO Agreement and GATT 1994. We do not consider that Article 31(1) of the Vienna Convention
requires consideration of the object and purpose of par ticular terms of the treaties in question – in this
case, the term "salted" in heading 02.10 of the EC Sc hedule. In any event, we note that one Member's
unilateral object and purpose for the conclusion of a tariff commitment cannot form the basis of an
interpretation pursuant to Articles 31 and 32 of the Vienna Convention . Indeed, in interpreting
heading 02.10 of the EC Schedule, we are required to ascertain the common intentions of the
parties.
536
7.327 Therefore, in the context of the present case, we consider that Article 31(1) of the Vienna
Convention does not authorize us to consider the Eu ropean Communities' unilateral object and
purpose when it concluded its Schedule in interpreti ng the concession contained in heading 02.10 of
the EC Schedule.
(iv) Summary and conclusions regarding the "object and purpose"
7.328 In the Panel's view, the lack of certainty associ ated with the application of the criterion of
long-term preservation with respect to the concessi on contained in heading 02.10 of the EC Schedule
runs counter to one of the objects and purposes of the WTO Agreement and the GATT 1994, namely
that the security and predictability of the reciprocal and mutually advantageous arrangements must be
preserved. Therefore, the Panel concludes that an interpretation of the term "salted" in that
concession to include the criterion of long-term preservation could undermine the object and purpose
of security and predictability, which lie at the heart of both the WTO Agreement and the GATT 1994.
(e) Special meaning: Article 31(4) of the Vienna Convention
7.329 The Panel notes that Article 31.4 of the Vienna Convention provides that:
"A special meaning shall be given to a term if it is established that the parties so
intended."
7.330 The Panel notes that none of the parti es have referred to Article 31.4 of the Vienna
Convention. Nor have they advanced any argumentation to suggest that a "special meaning" of the
term "salted" in the concession contained in heading 02.10 of the EC Schedule exists.

536 We note that in EC – Computer Equipment , the Appellate Body stated that: "The purpose of treaty
interpretation under Article 31 of the Vienna Convention is to ascertain the common intentions of the parties.
These common intentions cannot be ascertained on the basis of the subjective and unilaterally determined
"expectations" of one of the parties to a treaty. Tariff concessions provided for in a Member's Schedule -- the
interpretation of which is at issue here -- are recipr ocal and result from a mutually-advantageous negotiation
between importing and exporting Members." Appellate Body Report, EC – Computer Equipment, para. 84.
Further, Ian Sinclair reasons that, in the case of multilateral treaties, some parties will have acceded to a treaty
and, therefore, must be assumed to have joined the tr eaty not on the basis of what the original negotiators
intended but, rather, on the basis of what the text actually says and means. He adds that in a dispute as to treaty
interpretation, the parties will obviously place differing constructions upon the text and, by so doing, they are
professing to having had different intentions from the ince ption of the text. Mr Sinclair concludes that it is the
text of the treaty that is the expression of the intention of the parties and it is to that expression of intent that one
must look in identifying its object and purpose: Ian Sinclair, The Vienna Convention on the Law of Treaties ,
Manchester University Press, 2nd edition (1984) pp. 130-131.

(f) Preliminary conclusions under Article 31 of the Vienna Convention
7.331 Following an analysis of the term "salted" in the concession contained in heading 02.10 of the
EC Schedule pursuant to Article 31 of the Vienna Convention, the Panel concludes on a preliminary
basis that:
(a) The "ordinary meaning" of the term "salted" is: to season, to add salt, to flavour with
salt, to treat, to cure or to preserve. The ordinary meaning of the term "salted" is not
necessarily limited to salting with common salt (NaCl).
(b) The factual context indicates that the ordinary meaning of the term "salted" is that the
character of a product has been altered through the addition of salt.
(c) The "context" of the term "salted" does not clarify the "ordinary meaning" of the term
"salted" in the concession contained in head ing 02.10 of the EC Schedule although it
does tend to indicate that the heading is not necessarily characterized by the notion of
long-term preservation.
(d) There is evidence of "subsequent practice" on the part of the European Communities
which indicates that the products at issue are covered by the concession contained in
heading 02.10 of the EC Schedule.
(e) An interpretation of the term "salted" in the concession contained in heading 02.10 of
the EC Schedule to include the criterion of long-term preservation could undermine
the "object and purpose" of security and pred ictability, which lie at the heart of the
WTO Agreement and the GATT 1994.
7.332 The foregoing indicates to the Panel that the concession contained in heading 02.10 of the EC
Schedule means that salt has been added to a product so as to season, to add salt, to flavour with salt,
to treat, to cure or to preserve. The ordinary meani ng of the term "salted" is not necessarily limited to
salting with common salt (NaCl). It also tends to indicate that the concession in question is not
characterized by the notion of long-term preservati on. Therefore, while the interpretation undertaken
by the Panel pursuant to Article 31 of the Vienna Convention suggests that the products at issue are
covered by the concession contained in heading 02.10 of the EC Schedule, we turn to supplementary
means of interpretation of the concession contained in heading 02.10 of the EC Schedule pursuant to
Article 32 of the Vienna Convention to seek confirmation that this is, in fact, the case.
(g) Supplementary means of interpretation: Article 32 of the Vienna Convention
(i) Preparatory work
Arguments of the parties

7.333 The European Communities considers the Modalities Agreement to be, at the very least,
"preparatory work" because its sets out the parameters of the negotiations and, as such, it can be taken
into account along with the "circumstances of conclusion" under Article 32 of the Vienna
Convention.537 The European Communities argues that th e effect of taking the Modalities Agreement
into account, is that the date for considering the sc ope of the relevant tariff headings in the EC
Schedule as evidenced through the circumstance s of its conclusion under Article 32 of the Vienna

537 The EC relies on paras. 6.72 et seq of the Panel Report on US – Gambling to suggest that the
Modalities Agreement may even qualify as "context" under Article 31(2) of the Vienna Convention: EC's oral
statement at the second substantive meeting, para. 72.

Convention is 1 September 1986.
538 In this regard, the European Communities submits that
agricultural tariffs were established on the basis of the Modalities Agreement, pursuant to which there
was a significant reliance upon information dating from the commencement of the Uruguay Round. 539
Furthermore, according to the European Communities, the use of the starting date of negotiations as a
basis for agreed changes has been common practice in the GA TT/WTO system. The European
Communities submits that such a date has the advant age of providing certainty and preventing parties
from changing their law and/or practice in order to improve their negotiating positions. The European
Communities contends that, in the absence of any ot her expression of intention by the parties, the
parties to the Uruguay Round negotiations must be ta ken to have intended this date as the principal
point at which the scope of individual tariff concessions should be defined. 540 The European
Communities submits that, therefore, it is not plausible to argue that the common intention of the
negotiating parties could be affected by unilateral acts, absent some eviden ce from the complainants
(such as a footnote in the EC Schedule) to the contrary. 541 The European Communities submits that,
consequently, in so far as EC law and practice on the scope of headings is to be taken into account as
"circumstances of conclusion", they should be the law and practice as they stood on 1 September
1986.542 According to the European Communities, in an y event, the critical date should not be later
than 15 December 1993 when the Uruguay Round negotiations formally terminated. 543 The European
Communities submits that, throughout this period, both EC law and practice supported the principle
of long-term preservation with respect to heading 02.10 of the EC Schedule.544
7.334 Thailand submits that the Modalities Agreement may theoretically be considered as
"preparatory work" within the meaning of Article 32 of the Vienna Convention. However, Thailand
questions the probative value of this document as a supplementary means of interpretation. 545
Thailand submits that paragraph 3 of the Modalities Agreement states th at "[f]or agricultural products
currently subject to ordinary customs duties onl y, the reduction commitment shall be implemented
…only on the level applied as at 1 September 1986". According to Thailand, this statement merely
requires that products subject to ordinary cust oms duties be bound at the level applied as at 1
September 1986.546 Thailand argues that it is common to agree at the beginning of multilateral trade
negotiations on a date in the past to be used to de termine the tariff levels to which any agreement on
tariff reductions would be applied. According to Thailand, Members, therefore, did agree in the
Modalities Agreement to use the level of duties a pplied as at 1 September 1986. However, that
agreement cannot be taken to mean that the scope of the EC Schedule should be determined as at the
beginning of the Uruguay Round.547
7.335 Brazil does not consider that the Modalities Ag reement is "preparatory work" under
Article 32 of the Vienna Convention . Brazil notes in this regard that the introductory note to the
Modalities Agreement states that "[t]he revised text is being re-issued on the understanding of
participants in the Uruguay Round that these negotia ting modalities shall not be used as a basis for
dispute settlement proceedings under the MTO Agreement (sic)."548 Brazil submits that, through this
statement, WTO Members unequivocally expressed their intention not to use the Modalities
Agreement as a basis for dispute settlement pro ceedings under the WTO Agreement and, given that
the WTO dispute settlement system serves "to clarif y the existing provisions of those agreements in

538 EC's second written submission, para. 107.
539 EC's second written submission, paras. 103 and 107 relying upon Exhibit EC-9.
540 EC's second written submission, paras. 104-105.
541 EC's reply to Panel question No. 58.
542 EC's second written submission, para. 107.
543 EC's second written submission, paras. 96 and 110.
544 EC's second written submission, para. 118.
545 Thailand's reply to Panel question No. 78.
547 Thailand's comments on the EC's reply to Panel question No. 87.
548 The Modalities Agreement is contained in Exhibit EC-9.

accordance with customary rules of interp retation of public international law" 549, Members
determined that the Modalities Agreement may not be used as "preparatory work" within the meaning
of Article 32 of the Vienna Convention for purposes of dispute settlement proceedings. In addition,
Brazil points out that "preparatory work" is to be used in the interpretation of a treaty – in this case the
EC Schedule – and not in the interpretation of the European Communities' import practice at the
conclusion of the Uruguay Round.550
Analysis by the Panel
7.336 The Panel recalls that the European Commun ities argues that the effect of taking the
Modalities Agreement into account is that the date fo r considering the scope of the relevant tariff
headings in the EC Schedule as evidenced through the circumstances of its conclusion under Article
32 of the Vienna Convention is 1 September 1986.551 As noted previously, this argument concerns the
temporal scope of the term "circumstances of conclusion" in Article 32 of the Vienna Convention. As
explained in greater detail below in paragraphs 7.340 et seq , we do not consider that the term is
limited in temporal terms. Since the reason for the European Communities' reliance on the Modalities
Agreement is to argue that the date for consider ing the meaning of heading 02.10 of the EC Schedule
as evidenced through the "circumstances of its c onclusion" under Article 32 is 1 September 1986, in
light of our conclusions regarding the temporal scope of Article 32, we do not consider it is necessary
to determine whether the Moda lities Agreement should be taken into consideration in our
interpretation of the EC Schedule as "preparatory work" within the meaning of Article 32 of the
Vienna Convention.
(ii) Circumstances of conclusion of the EC Schedule
Substantive and temporal scope of "circumstances of conclusion"
Arguments of the parties
7.337 The European Communities submits that Article 32 of the Vienna Convention has its origins
in the principle of good faith. According to th e European Communities, Ar ticle 32 ensures that the
"reality of the situation" upon which parties' common intent is based may be relevant in interpreting
an agreement. 552 The European Communities argues that, wh ether a particular event is a relevant
circumstance which should determine the interpreta tion of a treaty, is a question of fact to be
determined in each case.553 As noted previously, the European Communities submits that, in so far as
EC law and practice on the scope of headings is to be taken into account as "circumstances of
conclusion", they should be the law and practice as they stood on 1 September 1986. 554 According to
the European Communities, in any event, the critical date should not be later than 15 December
1993.555 The European Communities submits that it was on 15 December 1993 that the substantive
market access negotiations pursuant to the Mi nisterial Declaration on the Uruguay Round were
concluded. The European Communities submits that the subsequent period was for "verifying that the
draft final schedules reflected accurately the agreed results of the negotiations". 556 The European
Communities concedes that, strictly speaking, ev ents occurring after 15 December 1993 may qualify
as "circumstances of the conclusion". 557 The European Communities clarifies that it does not claim
that the negotiating parties could not have agreed that changes in national law during the verification

549 Article 3.2 of the DSU.
550 Brazil's reply to Panel question No. 78.
551 EC's reply to Panel question No. 58; EC's second written submission, para. 107.
552 EC's second written submission, para. 62.
553 EC's second written submission, para. 109.
554 EC's second written submission, para. 107.
555 EC's second written submission, paras. 96 and 110.
556 EC's second written submission, paras. 110-111.
557 EC's second written submission, para. 96.

phase would affect parties' obligations since the Ap pellate Body emphasized that the "circumstances
of conclusion" could arise at any time up to the actual conclusion.
558 However, the European
Communities submits that a party seeking to invoke such an event would need to prove that the
relevant issue was raised during the verification period, e.g., through a specific request.559
7.338 In response, Brazil submits that dictionaries define the term "conclusion" as "the result or
outcome of an act or process" or simply "a final result". 560 Brazil suggests that there would be no
point to negotiations if 1 Septem ber 1986 was accepted as the date at which the "circumstances of
conclusion" were to be determined. Brazil submits that there is no reason to assume that negotiating
parties could not, and did not, make any changes in their classification nomenclatures from 1986 to
1994, when negotiations on tari ff concessions were concluded.
561 Brazil submits that it is also wrong
to state that the conclusion of the EC Schedul e occurred on 15 December 1993. Brazil submits that
this understanding diminishes, or even rejects, the importance of the period of verification of
schedules as a stage in the process leading to the establishment of formal schedules. 562 Brazil argues
that, in reality, the conclusion of negotiations occu rs the moment parties to a negotiation have agreed
to and sanctioned the result of such negotiation. 563 Brazil further submits that the Appellate Body
unequivocally attached importance to the special process of "check and control" of Members'
schedules of concessions, a process that ended on 25 March 1994. 564 Brazil also notes that the
European Communities admits that the period for ve rification of schedules may qualify in the strict
legal sense as circumstances of the conclusion but subj ect to the caveat that proof must be given that
the issue was raised during the verification period. Brazil submits that such burden of proof does not
exist and, in any event, does not make sense. Members could have verified each others' schedules and
come to the conclusion that there were no issues to further discuss or raise during the verification
process.565
7.339 Brazil, Thailand and the European Communities submit that actual knowledge during
negotiations of a document or instrument is not ne cessary on the part of some or all negotiators in
order for that document or instrument to qualify as "circumstances of the conclusion" under Article 32
of the Vienna Convention. Thailand explains that, from a practical perspective, it would be extremely
difficult to prove actual knowledge am ong all negotiators. Brazil also submits that, since instruments
or documents may be drafted during the negotiations of a treaty without the participation of all
contracting parties, one cannot presume that such documents are not part of the historical background
of the treaty simply because some States did not or we re not able to participate in the drafting of such
documents.566 Brazil and the European Communities submit that, rather, in order for a document or
instrument to qualify for consideration as "prepara tory work" and/or "circumstances of conclusion"
pursuant to Article 32 of the Vienna Convention, that document or instrument must have been in the
public domain or accessible to WTO Members.567
Analysis by the Panel
7.340 In the Panel's view, for the purposes of Article 32 of the Vienna Convention , the
"circumstances of conclusion" may provide insights into the historical background against which the

558 EC's second written submission, para. 112.
559 EC's second written submission, para. 96.
560 Brazil's oral statement at the second substantive meeting, para. 64.
561 Brazil's oral statement at the second substantive meeting, para. 66.
562 Brazil's oral statement at the second substantive meeting, para. 67.
563 Brazil's oral statement at the second substantive meeting. para. 68.
564 Brazil's oral statement at the second substantive meeting. para. 69 referring to Appellate Body
565 Brazil's oral statement at the second substantive meeting, para. 70.
566 Brazil's reply to Panel question No. 122; Thailand's reply to Panel question No. 122; EC's reply to
Panel question No. 122.
567 Brazil's reply to Panel question No. 122.

EC Schedule was negotiated. The historical bac kground comprises the collection of events, acts and
other instruments that characterize the prevailing situation in the European Communities.568
7.341 With respect to the events, act s and other instruments that may be taken into account as
"circumstances of conclusion" under Article 32 of the Vienna Convention , in EC – Computer
Equipment, the Appellate Body expressly recognized that the relevant Member's legislation on
customs classification that existed at the time the tariff concessions were ne gotiated as well as that
Member's classification practices during negotiations are part of the circumstances of the conclusion
of the WTO Agreement and may be used as a suppl ementary means of interpretation within the
meaning of Article 32 of the Vienna Convention.569
7.342 The European Communities has rais ed the issue of the point in time when the "circumstances
of conclusion" under Article 32 of the Vienna Convention should be ascertained. In our view, there is
not necessarily a single point in time when the "cir cumstances of conclusion" should be ascertained.
Rather, we consider that it relates to a period starting some time prior to the conclusion of the treaty in
question and ending at the point of conclusion.570
7.343 Regarding the question of how far back in time a treaty interpreter may go in identifying the
events, acts or other instruments that may qualify as "circumstances of conclusion" under Article 32,
in our view, in theory, there is no temporal limitation in this regard. We consider that "relevance" is
the more appropriate criterion to judge whether a particular event, acts or other instrument qualifies as

568 When describing the "circumstances of conclusion" under Article 32 of the Vienna Convention,
Mustafa Yasseen states that: "They ar e the historical background that comp rises the collection of events which
led the parties to conclude the treaty in order to main tain or confirm the status quo, or to bring about an
alteration made necessary by a new situation." Mustafa Yasseen, "L'interprétation des Traités d'après la
(1974) Vol. III, p. 90, para. 3. International law co mmentaries also provide suppo rt for the view that, in
identifying the "circumstances of conclu sion" of a treaty under Article 32 of the Vienna Convention , it is
necessary to consider the "reality of the situation" and that this situation may vary from case to case. In
particular, Mustafa Yasseen states that: "Treaties as a social phenomenon are the consequence of a series of
causes. It is, therefore, useful to know the conditions of the parties and the reality of the situation that the
parties wished to resolve, the importance of the problem they wanted to settle and the scope of the dispute they
wanted to terminate through the Treaty being interpreted." Mustafa Yasseen, "L'interprétation des Traités
International, (1974) Vol. III, p. 90, para. 4. Similarly, Ian Sinclair states: "... the reference in Article 32 ... to
the circumstances of the conclusion of a treaty may have some value in emphasising the need for the interpreter
to bear constantly in mind the historical background against which the treaty has been negotiated. ... It may also
be necessary to take into account the individual attit udes of the parties – their economic, political and social
conditions, their adherence to certain groupings or their status, for example, as importing or exporting country in
the particular case of a commodity agreement – in seekin g to determine the reality of the situation which the
parties wished to regulate by means of the treaty." Ian Sinclair, The Vienna Convention on the Law of Treaties ,
Manchester University Press, 2
nd edition (1984) p. 141.
569 Appellate Body Report, EC – Computer Equipment, paras. 92 and 94.
570 Mustafa Yasseen states that: "It is the circumst ances in which the treaty was concluded; it could
therefore be said that it is the circumstances of a certain period in time, that is to say the period during which the
treaty was concluded. But does this mean that the possibility of historical research into an earlier period must be
ruled out? We think not. Indeed, it is useful, and some times even necessary, to carry out such research in order
to acquire a better understanding of the actual cirumstan ces in which the treaty was co ncluded. In any case, an
overall examination of the treaty's historical background may be considered as a supplementary means of
interpretation, given the series of events leading to its conclusion. Let us not forget that the list of
supplementary means of interpretation contained in Article 32 of the Vienna Convention on the Law of Treaties
is not exhaustive. If the circumstances in which the treaty was concluded are expressly mentioned, it is to
underline their importance in the elaboration of the Treaty, and not to exclude the possibility of wider-ranging
and more thorough historical research into a period preceding that of the co nclusion of the treaty…. " Mustafa
Cours de l'Académie de Droit International, (1974) Vol. III, p. 92, paras. 10-11.

part of the "circumstances of conclusion".
571 As for how such relevance may be demonstrated, it is
the Panel's view that it must be shown that the ev ent, act or other instrument has or could have
influenced the specific aspects of the ultimate text of a treaty that are in issue.572
7.344 Having stated that, in theory, there is no temporal limitation on what may qualify as
"circumstances of conclusion" and that relevance is the more appr opriate criterion for determining
such qualification, we acknowledge that there ma y be some correlation between the timing of an
event, act or other instrument (i.e. how far back in the past they took place, were enacted or were
adopted) and their relevance to the treaty in question. It would be fair to state that, generally
speaking, the further back in time that an event, act or other instrument took place, was enacted or was
adopted relative to the conclusion of a treaty, it is less likely to have influenced the ultimate text of the
treaty and, therefore, it is less likely that it is relevant to the interpretation of that treaty. Furthermore,
the fact that Article 32 of the Vienna Convention refers to "circumstances of conclusion" indicates to
us that the event, act or other instrument should be temporally proximate to the conclusion of a treaty
in order for it to be taken into account for the interpretation of that treaty under Article 32 as
"circumstances of conclusion". In our view, what is considered temporally proximate will vary from
treaty provision to treaty provision.
7.345 With respect to the end date of the period of "conclusion", we note that the European
Communities draws a distinction between the time wh en the text of the EC Schedule was finalized
(i.e. on 15 December 1993) and the period during which the contents of that Schedule were verified
by WTO Members (between 15 February until 25 March of 1994). The European Communities
seems to suggest that the former ra ther than the latter should be taken as the end date of the period
during which the "circumstances of conclusion" of the treaty can be assessed unless it can be shown
that a party seeking to invoke a later event prov es that it was raised during the verification period,
e.g., through a specific request.
573 We refer to our reasoning in paragraphs 7.100-7.101 above and
recall that, in paragraph 7.101, we found that the EC Schedule was concluded on 15 April 1994. That
finding is equally applicable here . Therefore, it is our view that, in the context of the present case,
events, acts and other instruments that took place, we re enacted or were adopted at any time up until
15 April 1994 may be considered as "circumstanc es of conclusion" under Article 32 of the Vienna
Convention, provided that they have been shown to be relevant.
7.346 In relation to the issue of whether knowledge on the part of all parties of an event, act or other
instrument is necessary in order for that event, act or instrument to qualify as "circumstances of
conclusion" under Article 32 of the Vienna Convention, it is our view that actual knowledge is not
necessary. The Panel considers that, if actual par ticipation in the conclusion of a treaty (which may
be equated with actual knowledge) we re to determine whether account may be taken of a particular
event, act or other instrument to which only those pa rticipating were privy, this would imply that the
results of the interpretative process may differ depe nding upon whether or not a party participated in
negotiations in the lead up to the conclusion of the treaty. In the Panel's view, this result cannot be
desirable if a coherent and consiste nt approach to the interpretation of a given treaty obligation is to

571 We note that Ian Sinclair states that "no would be interpreter of a treaty, whatever his doctrinal point
of departure, will deliberately ignore any material which can usefully serve as a guide towards establishing the
meaning of the text with which he is confronted": Ian Sinclair, The Vienna Convention on the Law of Treaties ,
Manchester University Press, 2nd edition (1984) p. 116.
572 In support, we note that Mustafa Yasseen states th at: "It is only logical that the circumstances in
which the treaty was concluded should influence the wa y in which it was drafted. An examination of these
circumstances can therefore shed a certain amount of light on the intention of the parties and thus help explain
the formulas they adopted." Mustafa Yasseen, "L'interprétation des Traités d'après la Convention de Vienne sur
573 EC's second written submission, paras. 96, 107 and 11 0. In this regard, we recall that the European
Communities argues that, as far as EC law and practice on the scope of headings is to be taken into account as
"circumstances of conclusion", they should be the law and practice as they stood on 1 September 1986 and, in
any event, the critical date should not be later than 15 December 1993.

be achieved. In our view, provided that parties ha ve deemed notice of a particular event, act or
instrument through publication, they may be consid ered to have had constr uctive knowledge and that
such knowledge suffices for the purposes of Article 32 of the Vienna Convention.574
7.347 In light of the foregoing, we will consider EC law and the EC's classification practice during
the Uruguay round negotiations to the extent that they are relevant to the conclusion of the EC
Schedule pursuant to Article 32 of the Vienna Convention.
EC law
EC Regulation No. 535/94
 Arguments of the parties
7.348 With respect to the question of whether or not EC Regulation No . 535/94 qualifies as
"circumstances of conclusion" under Article 32 of the Vienna Convention, Brazil and Thailand
submit that EC Regulation No. 535/94 is part of the circumstances surrounding the conclusion of the
EC Schedule within the meaning of Article 32 of the Vienna Convention and should, therefore, be
considered in interpreting the terms of the European Communities' concession under heading 02.10.575
They submit that, from 15 February until 25 Marc h of 1994, Members were given the opportunity to
check and control the scope and defin ition of each other's tariff concessions. 576 They argue that, prior
to the end of the verification process for tariff schedules during the Uruguay Round and the
conclusion of the EC Schedule, the European Comm unities amended the CN as contained in Annex I
to EEC Regulation No. 2658/87 through EC Regulation No. 535/94.
577 Brazil points out that the
definition of the term "salted" for heading 02.10 contained in EC Regulation No. 535/94 was the only
existing definition of "salted" for heading 02. 10 in the CN at the time the EC Schedule was
concluded.578 According to Brazil and Thailand, WTO Members negotiated tariff concessions based
on that definition of "salted" meat. 579 As for the significance of the fact that EC Regulation No.
535/94 only entered into force after the verificati on period had ended, Brazil submits that previous
WTO and adopted GATT panels "have always consid ered that mandatory legislation of a Member,
even if not yet in force or not applied, can be challenged by another WTO Member". 580 Brazil
submits that, if mandatory legislation not yet in force can be challenged by another WTO Member,
the European Communities' definition of "salted" me at in EC Regulation No. 535/94, that was public
but not in force during the period of verification of schedules, could also have been challenged by a
negotiating partner during the period of verification. Brazil explains that, even though the European
Communities' definition of "salted" meat of heading 02 .10 was not yet in force, thus not applicable to

574 In support, we note that Ian Sinclair has stated that: "... recourse to travaux préparatoires does not
depend on the participation in the drafting of the text of the State against whom the travaux are invoked. To
hold otherwise would disrupt the unity of a multilateral treaty, since it would imply that two different methods
of interpretation should be employed, the one for States who participated in the travaux prèparatoires and the
other for States who did not so participate. One qualification should, however, be made. The travaux
préparatoires should be in the public domain so that States which have not participated in the drafting of the
text should have the possibility of consulting them. Travaux préparatoires which are kept secret by negotiating
States should not be capable of being invoked against subsequently acceding States." Ian Sinclair, The Vienna
Convention on the Law of Treaties , Manchester University Press, 2 nd edition (1984) p. 144. We see no reason
why these comments would not be equally applicable with respect to "circumstances of conclusion" under
Article 32 of the Vienna Convention.
575 Brazil's reply to Panel question No. 58; Thailand's first written submission, paras. 135-136.
576 Brazil's reply to Panel question No. 56; Thailand's reply to Panel question No. 75; Thailand's second
written submission, para. 78.
577 Brazil's first written submission, para. 21; Thailand's first written submission, paras. 136-137.
578 Brazil's first written submission, para. 98.
579 Brazil's first written submission, para. 176; Thailand's second written submission, para. 79.
580 Brazil refers to Panel Report on Turkey – Textiles , para. 9.37 and footnote 263; and GATT Panel
Report on US – Superfund, paras. 5.2.1-5.2.2.

current trade, it would, nevertheless, be applicable to future trade. Therefore, according to Brazil, the
mere knowledge by the European Communities' negotiating partners of what the European
Communities considered to be "salted" meat of heading 02.10 was enough for the purposes of check
and control of the scope and definition of tariff concessions.
581
7.349 In response, the European Communities submits that all of the i ssues dealt with during the
verification process concerned matters that were apparent in the texts of the schedules and none
concerned aspects of national practice. 582 The European Communities argues that, therefore, parties
must have assumed that national developments w ould not change the substance of concessions, at
least unless they were specifically brought to the attention of negotiators.583
7.350 Brazil understands that EC Regulation No. 535/94 was not enacted as a response to requests
made by WTO Members to the European Communiti es for clarification regarding heading 02.10 in
the EC Schedule. 584 Brazil submits that, nevertheless, it is reasonable to expect that a Regulation
defining "salted" meat for heading 02.10 of the EC Schedule, issued by the European Communities at
the end of the Uruguay Round negotiations, set out th e criteria adopted by the European Communities
in its Schedule with respect to that product. 585 Thailand submits that EC Regulation No. 535/94
provided a definition of "salted" meat that set out the criteria for the classification of a product under
heading 02.10.586 Brazil submits that the definition of the term "salted" in EC Regulation No. 535/94
comprised the European Communities' understanding of what constitutes "salted" meat of heading
02.10 and negotiating partners accepted and underst ood that the tariff being negotiated for heading
02.10 in the EC Schedule applied to the products that fit the definition of "salted" meat as contained in
the European Communities' CN. 587 Brazil argues that the tariff concession and corresponding
definition were accepted by the other Member s when they signed the Marrakesh Protocol. 588
According to Brazil, the evidence of such acceptance is the signature of the Marrakesh Protocol on 15
April 1994.589
7.351 In response, the European Communities submits that compelling legal and factual evidence
existed at the time of the Uruguay Round nego tiations pointing to a common understanding that
"salted" in heading 02.10 referred to salt added for the purpose of preservation. 590 The European
Communities argues that EC Regulation No. 535/94 is a further act, in the context of a series of
legislative acts and judicial decisions, which confirm and elaborate on the principle of preservation as
the appropriate interpretation of heading 02.10.
591 The European Communities submits that, given the
compelling evidence that "salted" under heading 02. 10 meant salting for long-term preservation, it is
not plausible to pretend that the common intention of the negotiating parties could have been affected
by EC Regulation No. 535/94 or by any other su ch unilateral acts, absent some evidence from the
complainants to the contrary.592

581 Brazil's reply to Panel question No. 56.
582 In support, the EC refers to the minutes of the Trade Negotiations Committee, held on 30 March
1994 (MTN.TNC/43, 1994) contained in Exhibit EC-37. The EC submits that, for example, the US complained
that the Korean Schedule did not reflect the commitment made during the negotiations regarding the "chemical
harmonization initiative", and that the EC did not intend to commence the implementation of its agriculture
concessions until mid-1995.
583 EC's comments on Brazil's reply to Panel question No. 81.
584 Brazil's reply to Panel question No. 58.
585 Brazil's rely to Panel question No. 77.
586 Thailand's first written submission., para. 30.
587 Brazil's reply to Panel question No. 77.
588 Brazil's reply to Panel question No. 57.
589 Brazil's reply to Panel question No. 81.
590 EC's oral statement at the first substantive meeting, paras. 39-43.
591 EC's second written submission, para. 8.
592 EC's reply to Panel question No. 58.

7.352 Thailand submits that EC Regulation No. 535/94 was incorporated into the CN through
EC Regulation No. 3115/94. Thailand notes that the preamble of EC Regulation No. 3115/94 refers,
inter alia , to the need to "amend the combined nomen clature to take account of ... changes in
requirements relating to statistics or commercial polic y, in particular by virtue of Council Decision
bringing into force simultaneously the acts implementing the results of the Uruguay Round of
multilateral trade negotiations and Council Regulation concerning certain measures resulting from the
conclusion of negotiations under Article XXIV:6 and other measures necessary for simplification
purposes." Thailand asserts that, therefore, EC Regulation No. 3115/94 recognizes that
EC Regulation No. 535/94 – defining the term "sa lted" under heading 02.10 – was one of the acts
implementing the results of the Uruguay Round. 593 Thailand also notes that the content of
EC Regulation No. 535/94 was enacted many tim es as a Council Regulation through the annual
issuance of the European Communities' CN. 594 Thailand submits that EC customs authorities in the
EC member States relied on this definition of "salted" to classify chicken meat, frozen and
impregnated with a salt content of over 1.2% under 02.10 of the CN from 1996 - 2002, when
EC Regulation No. 1223/2002 entered into force.
595
7.353 In response, the European Communities disputes that EC Regulation No. 535/94 was an act
implementing the Uruguay Round Agreements.596 According to the European Communities, the mere
fact that EC Regulation No. 535/94 was refe rred to in EC Regulation No. 3115/94, which
implemented the annual revision of the European Communities' CN in 1994, does not mean that it
was intended to implement the Uruguay Round Agre ements since EC Regulation No. 3115/94 also
consolidated changes made to the CN during 1994. 597 The European Communities argues that
EC Regulation No. 535/94 is a unilateral act, which ca nnot determine the scope of a tariff concession,
because the Appellate Body has insisted in EC – Computer Equipment that the commitment of a
particular Member must reflect the "common intent" of all the parties.598
7.354 With respect to whether or not WTO Member s can be taken to ha ve had knowledge of
EC Regulation No. 535/94 prior to conclusion of the EC Schedule, Brazil submits that the Regulation
was in the public domain as of 11 March 1994 and a ll EC negotiating partners had the possibility of
consulting the European Communities' understanding/ definition of "salted meat" of heading 02.10
prior to the conclusion of the EC Schedule. 599 Similarly, Thailand submits that, at the conclusion of
the WTO Agreement, negotiators could be deemed to have had knowledge of legislation in the
European Communities, such as EC Regulation No. 535/94, which was published and in force at the
time of the conclusion of the treaty.600
7.355 Regarding the relevance of EC Regulation No. 535/94 for the interpretation of the EC
Schedule in this case , Brazil and Thailand submit that the definition of "salted" in EC Regulation
No. 535/94 was necessary so as to distinguish the classification of, on the one hand, salted meat and
edible meat offal falling within heading 02.10 from, on the other hand, fresh, chilled or frozen meat
falling within heading 02.07.
601 According to Thailand, EC Regulation No. 535/94 acknowledges that
products may possess characteristics associated with bot h headings 02.07 and 02.10. In particular, a
product could be both salted and fresh, salted and chilled, or salted and frozen. According to
Thailand, it was necessary to enact EC Regulation No. 535/94 in order to distinguish salted meat from
meat in the other states and to properly classify such products. 602 Brazil and Thailand note that the

593 Thailand's first written submission, paras. 33-35.
594 Thailand's comments on the EC's reply to Panel question No. 113.
595 Thailand's first written submission, para. 139.
596 EC's first written submission, paras. 88-89.
597 EC's first written submission, paras. 88-89.
598 EC's first written submission, para. 206.
599 Brazil's reply to Panel question No. 122.
600 Thailand's comments on the EC's reply to Panel question No. 87.
601 Thailand's first written submission, para.137; Brazil's first written submission, para. 172.
602 Thailand's first written submission, para.137.

terms "preservation" and "long-term preservation" were not included in the definition of "salted" for
heading 02.10 contained in EC Regulation No. 535/94.
603 Further, Thailand refers to the minutes of a
meeting of the EC Customs Code Committee dated 25 January 2002 to argue that the EC Commission
expressly acknowledged that the principle of long-term preservation was excluded from the final
definition of "salted" meat for the purposes of classification under heading 02.10 in EC Regulation
No. 535/94 and, subsequently, in Additional Note 7, which was introduced into the CN through EC
Regulation No. 535/94.
604 Thailand notes that, according to ECJ jurisprudence, an Additional Note
constitutes an authentic interpretation of a heading in the EC's CN as it becomes part of the heading to
which it refers with binding effect. Therefore, Thailand considers that Additional Note 7 – introduced
at the time of the conclusion of the WTO Agreemen t – constituted an authentic interpretation of the
EC's concession under heading 02.10 as it became part of that heading with binding effect.605
7.356 The European Communities submits that EC Regulation No. 535/94 is part of a consistent
pattern of treating preservation as the basic cr iterion for classification under heading 02.10. 606 The
European Communities submits that, throughout the Uruguay Round negotiations, the European
Communities' Explanatory Notes to the CN contained a number of provisions emphasizing that
"salting" must be for preservation, which was a reflection of the ordinary practice of EC customs
authorities.607 Further, the European Communities argues that, in Gausepohl608, the ECJ interpreted
heading 02.10 as requiring salting for preservation. According to the European Communities, ECJ
rulings are binding on the EC Commission and cons titute the authoritative interpretation of the CN. 609
The European Communities submits that the effect of EC Regulation No. 535/94 and the Gausepohl
judgement when read in conjunction is that the figu re of a 1.2% salt content was conceived of as a
minimum salt content above which it was possible th at a meat product could be preserved by salting
alone. The European Communities argues that, in other words, in order to be classified under
heading 02.10, a product had to meet the criteria of EC Regulation No. 535/94 and be salted in order
to ensure its preservation as required by heading 02.10 of the CN. 610 The European Communities
submits that the specific salt content that would make a product salted would depend on the nature of
the meat in question, its preparation, and other environmental factors.611
7.357 In response, Brazil submits that the 1.2% threshold in EC Regulation No. 535/94 was not a
pragmatic minimum salt content rule below wh ich a product was not salted for preservation.
According to Brazil, no WTO Member looking at EC Regulation No. 535/94 could presume that it
established a minimum salt content below which it co uld not be considered that a product was salted
for preservation.
612 Further, according to Brazil, the European Communities itself has indicated that it
does not know of any type of meat deeply and homogeneously salted with 1.2% salt, which is
preserved for many or several months.613
7.358 The European Communities submits that, while Additional Note 7 may have contained a
condition, nevertheless, as a matter of logic, it could have stood alongside a requirement of long-term
preservation given that it was not, by its terms, exclusive. 614 Further, the European Communities
rejects the argument that EC Regulation No. 535/ 94 excluded the principle of preservation because

603 Brazil's first written submission, para. 98; Brazil' s reply to Panel question No. 77; Thailand's first
written submission, para.137.
604 Thailand's oral statement at the first substantive meeting, para. 27.
605 Thailand's second written submission, paras. 80-81.
606 EC's first written submission, para. 201.
607 EC's first written submission, para. 203.
608 This case is dealt with in paragraph 7.372 et seq.
609 EC's reply to Panel question No. 45.
610 EC's first written submission, paras. 88-89; EC's reply to Panel question No. 93.
611 EC's first written submission, paras. 88-89; EC's reply to Panel question No. 93.
612 Brazil's comments on the EC's reply to Panel question No. 108.
613 Brazil's comments on EC's reply to Panel question No. 93.
614 EC's second written submission, paras. 85-86.

the European Communities had made a policy decision to no longer interpret heading 02.10 in such a
way.615 The European Communities submits that the minutes referred to by Thailand reflect
preparatory discussions for EC Regulation No. 1871/ 2003, not for any of the measures at issue, nor
for EC Regulation No. 535/94. The European Commun ities adds that such minutes are not legislative
acts of the European Communities, nor do they repr esent the reasons justifying legislative action by
the European Communities, nor are they au thoritative interpretations of EC acts. 616 The European
Communities submits that, therefore, such documents provide no basis for interpreting EC law.617
 Analysis by the Panel
7.359 The first question for determination by th e Panel is whether EC Regulation No. 535/94
qualifies as "circumstances of conclusion" of the EC Schedule within the meaning of Article 32 of the
Vienna Convention.
7.360 The Panel recalls that, when discussing s upplementary means of interpretation under
Article 32, the Appellate Body stated in EC – Computer Equipment that "[i]f the classification
practice of the importing Member at the time of the tariff negotiations is relevant in interpreting tariff
concessions in a Member's Schedule, surely that Member's legislation on customs classification at that
time is also relevant."618 Accordingly, the mere fact that an act, such as EC Regulation No. 535/94, is
unilateral, does not mean that that act is au tomatically disqualified from consideration under
Article 32 of the Vienna Convention.
7.361 The Panel notes that EC Regulation No. 535/94 was adopted on 9 March 1994, was published
on 11 March 1994 and came into force on 1 April 1994. 619 In other words, EC Regulation No. 535/94
was introduced, adopted and published during th e verification period of the Uruguay Round
negotiations and came into force just prior to th e conclusion of the EC Schedule on 15 April 1994. In
our view, since EC Regulation No. 535/94 was publishe d prior to the conclusion of the EC Schedule,
the WTO Membership may be considered to have had constructive knowledge of that Regulation at
the time the EC Schedule was concluded for the purposes of Article 32 of the Vienna Convention. In
this regard, we disagree with the European Co mmunities that Members should have specifically
raised EC Regulation No. 535/94 during the verifica tion period in order for it to form part of the
"circumstances of conclusion".620
7.362 Further, it appears to us that EC Regulation No. 535/94 was enacted in the context of the
conclusion of the Uruguay Round negotiations. This is apparent from the preamble to EC Regulation
No. 3115/94,621 which constituted the 1994 a nnual revision to the CN and incorporated into the CN,
inter alia , the amendments proposed by EC Regulation No. 535/94. In particular, the preamble
provides that:
"Whereas it is necessary to amend the combined nomenclature to take account of:
– changes in requirements relating to statistics or commercial policy, in
particular by virtue of Council Decisi on bringing into force simultaneously
the acts implementing the results of the Uruguay Round of multilateral trade

615 EC's reply to Panel question No. 45.
616 EC's reply to Panel question No. 45.
617 EC's second written submission, para. 87.
618 Appellate Body Report, EC – Computer Equipment, para. 94.
619 Article 2 of EC Regulation No. 535/94 provides that: "This Regulation shall come into force on the
twenty-first day following its publication in the Offici al Journal of the European Communities.", i.e. on
1 April 1994.
620 EC's second written submission, paras. 96 and 112.
621 EC Regulation No. 3115/94 was adopted on 20 December 1994 and was published on 31 December
1994.

negotiations and Council Regulation concerning certain measures resulting
from the conclusion of negotiations under Article XXIV:6 and other
measures necessary for simplification purposes;
– the need to align or clarify texts;
Whereas Article 12 of Regulation (EEC) No. 2658/87 provides for the Commission to
adopt each year by means of a regulation, to apply from 1 January of the following
year, a complete version of the combined nomenclature together with the
corresponding autonomous and conventional rates of duty of the Common Customs
Tariff, as it results from measures adopted by the Council or by the Commission;
..." (emphasis added)
7.363 In addition, Article 3 of EC Regulation No. 3115/94 states that:
"Incorporated in Annex I to this Regulation are amendments resulting from the
adoption of the following measures:

– Commission Regulation (EC) No 535/94 of 9 March
..." (emphasis added)
7.364 In light of the foregoing, we consider that EC Regulation No. 535/94 is relevant to the
conclusion of the EC Schedule and, therefore, qua lifies as "circumstances of conclusion" of the EC
Schedule within the meaning of Article 32 of the Vienna Convention.
7.365 The second question for determination by the Panel is the impact of the definition of "salted"
in EC Regulation No. 535/94 on the interpretation of the concession contained in heading 02.10 of the
EC Schedule.
7.366 We note that Article 1 of EC Regulation No. 535/94 provides that:
"The following additional note shall be inserted in Chapter 2 of the Combined
Nomenclature annexed to Regulation (EEC) No 2658/87:
For the purposes of heading No 0210, the term 'salted' means meat or
edible meat offal which has been deeply and homogenously
impregnated with salt in all parts, having a total salt content no less
than 1.2% by weight."
Article 1 makes it clear that an effect of EC Re gulation No. 535/94 was to insert an Additional Note
into the CN. As is evident from Article 1, the Add itional Note in question related to the definition of
"salted" in heading 02.10 of the CN.
7.367 The preamble to EC Regulation No. 535/94 states that:
"Whereas, to ensure uniform application of the Combined Nomenclature, provisions
should be laid down for the classification of salted meat and edible meat offal falling
within CN code heading 0210, in order to distinguish them from fresh, chilled or
frozen meat and edible meat offal; whereas a total salt content of 1,2% or more by

weight appears an appropriate criterion fo r distinguishing between these two types of
products;
..."
This excerpt of the preamble to EC Regulation No. 535/94 suggests to us that, if the criteria contained
in the definition of "salted" in EC Regulation No . 535/94 had been met, the meat product in question
would be "distinguished" from "fresh, chilled or frozen meat and edible meat offal". In other words,
that product would be classified under heading 02.10 rather than under other headings concerning
"fresh, chilled or frozen meat and edible meat offal".
7.368 The criteria for qualification as "salted" unde r EC Regulation No. 535/94 and, therefore,
under the Additional Note which it introduced into the CN, are referred to in Article 1 of
EC Regulation No. 535/94 set out above in paragra ph 7.366. We understand that the reference to
"deep and homogenous impregnation with salt" in that Article would exclude, for example, meat that
has been lightly packed with sa lt. In this regard, we note that the European Communities has
submitted that the term "impregnated with salt" serves, inter alia, to distinguish products that have
been simply sprinkled with salt. 622 Further, Article 1 indicates that meat must have a salt content of
"not less than 1.2% by weight" in order to qualify as "salted" under heading 02.10 of the CN. In other
words, EC Regulation No. 535/94 indicates that meat would be "salted" for the purposes of heading
02.10 if it contained at least 1.2% salt. In our view, the Regulation does not by its terms indicate that
the reference to the 1.2% salt content is a minimum salt content above which it would be possible that
a meat product could be considered "salted". No r does the Regulation indicate that the minimum salt
content would vary from meat to meat. Finally, th e Regulation does not state that, for the purposes of
heading 02.10, salting must be for long-term preservation.
7.369 In summary, we understand that EC Regulati on No. 535/94 introduced an Additional Note
into the CN. The effect of that Regulation, throug h the Additional Note that it introduced, was that if
meat had been deeply and homoge neously impregnated with salt, with a minimum salt content of
1.2% by weight, it would meet the requirements of that Regulation and would qualify as "salted" meat
under heading 02.10 of the CN.
7.370 The Panel considers that its interpretation of EC Regulation No. 535/94 is consistent with
other evidence available to us. In particular, we have evidence to indicate that, during the period of
1996 - 2002, EC customs authorities considered that the products at issue – frozen boneless chicken
cuts deeply and homogeneously impregnated with salt, with a salt content of 1.2% – 3% – qualified as
"salted" products for the purposes of the concession contained in heading 02.10 of the EC Schedule.
623
Further, we note that the minutes of the mee ting of the EC Customs Code Committee dated
25 January 2002, state in relation to Additional Note 7 as it existed following enactment of EC
Regulation No. 535/94 that:
"[I]n addition the criterion of salting for the purpose of long-term preservation has not
been introduced into [Additional Note 7 to Chapter 2]."624
While non-binding in nature, we consider that the above-mentioned minutes provide compelling
evidence that the principle of long-term preservation w as not included in the definition of "salted" in
EC Regulation No. 535/94.

622 EC's reply to Panel question No. 32. The Panel also notes that the European Communities has
stated that it does not contest the fact that the products at issue are deeply and homogeneously impregnated with
salt in all parts: Footnote 8, EC's oral statement at the second substantive meeting; EC's reply to Panel question
No. 93.
623 We refer to our conclusions regarding EC classi fication practice for the products at issue during
1996-2002 in paragraph 7.303.
624 Exhibit THA-22.

7.371 We turn now to the question of whether or not the effect of EC Regulation No. 535/94 should
be considered in the context of other EC acts and instruments.
Dinter and Gausepohl judgements
 Arguments of the parties
7.372 With respect to the question of whether or not the ECJ Dinter and Gausepohl judgements
qualify as "circumstances of conclusion" under Article 32 of the Vienna Convention, Brazil and
Thailand submit that they do not so qualify.
625 Brazil submits that the EC Schedule is not about the
European Communities' historical treatment of a certain product. Rather, it is about what was
negotiated among Members during the Uruguay Round. Brazil further submits that, while the
Appellate Body established that the importing Memb er's legislation on customs classification is
relevant in interpreting tariff concessions in a Memb er's schedule, it did not establish that past ECJ
cases are relevant for this purpose.626
7.373 In response, the European Communities submits that the Dinter and Gausepohl judgements
form part of the European Communities' practic e, to be considered under Article 32 of the Vienna
Convention as "circumstances of conclusion" of its Schedule. 627 According to the European
Communities, the Appellate Body's comments in EC – Computer Equipment to which Brazil refers,
were made in the context of a particular set of circumstances and were not phrased in the form of an
exclusive list. 628 The European Communities argues that the Appellate Body's reference to
"legislation" as constituting the "circumstances of c onclusion" must surely mean legislation as it is
interpreted in the Member in question.629
7.374 With respect to the Dinter judgement, Brazil and Thailand argue that it existed prior to the
launch of the Uruguay Round and, therefore, should be disqualified from cons ideration under Article
32 of the Vienna Convention.630
7.375 In response, the European Communities submits that, in EC – Computer Equipment , the
Appellate Body criticised the panel for not having c onsidered legislation that had been enacted in
1987 and which was applicable during the Uruguay Round. The European Communities submits that
the Dinter judgement was applicable throughout the Uruguay Round.631
7.376 In relation to whether or not WTO Members can be taken to have had knowledge of the
Dinter and Gausepohl judgements prior to conclusion of the EC Schedule, the European Communities
notes that ECJ judgements are publicly accessible on the day of delivery. The European Communities
also notes that ECJ judgements are published in the European Communities' Official Journal. 632 The
European Communities submits that, if parties ha d knowledge of EC Regulation No. 535/94 during
the Uruguay Round negotiations, they must also have had knowledge of the preservation criterion at
the heart of EC law.633
7.377 In response, Brazil submits that a Member is not required to know another Member's entire
case law at the time of tariff negotiations. 634 Thailand explains that negotiato rs could not have been

625 Brazil's reply to Panel question No. 75; Thailand's reply to Panel question No. 75.
626 Brazil's oral statement at the first substantive meeting, para. 57.
627 EC's reply to Panel question No. 75.
628 EC's second written submission, para. 68.
629 EC's second written submission, para. 73.
630 Brazil's second written submission, para. 84; Thailand's reply to Panel question No. 75.
631 EC's second written submission, para. 76.
632 EC's reply to Panel question No. 110.
633 EC's reply to Panel question No. 122.
634 Brazil's reply to Panel question No. 75.

expected to be aware of every ECJ judgement b ecause each ECJ judgement is related to a specific
factual situation. Thailand submits that, in c ontrast, amendments made by legislation are more
generally applicable in a variety of situations, su ch as EC Regulation No. 535/94, which applies to all
types of meat falling under heading 02.10.635
7.378 Regarding the relevance of the ECJ Dinter and Gausepohl judgements for the interpretation
of the EC Schedule in this case , in relation specifically to the Dinter judgement, Brazil submits that it
does not relate to heading 02.10, nor to subheading 0210.90.20 636, nor to the products at issue. 637
Further, Thailand submits that the remark made by the ECJ in that case that Chapter 2 "comprises
poultry meat which has undergone a preserving process" was obiter to its final decision and,
moreover, was reversed in the same year by Addi tional Note 6(a) to the European Communities'
CN.638 Brazil also refers to the comments made by the Advocate-General in that case during his
analysis of the structure of Chapter 2. Accordi ng to Brazil, the Advocate-General did not consider
that all processes listed in heading 02.10 served a long-term preservation purpose. Rather, he
considered smoking to be a preparation process. Brazil submits that this undermines the European
Communities' contention that Chapter 2 has consis tently been understood as applying to products,
which, if not fresh or chilled, have been preserved.
639
7.379 In response, the European Communities submits that the Advocate-General's opinion
confirms the European Communities' position. The European Communities notes that the Advocate-
General distinguishes between the addition of salt under Chapter 2 as "the better to preserve the
product" as opposed to adding of salt by way of seas oning. According to the European Communities,
the Advocate-General expressly stated that "salting" for the purposes of heading 02.10 clearly requires
salting for preservation. The European Communiti es adds that, in any event, the case concerned
seasoning with salt and pepper and not smoking. Mo reover, the European Communities submits that,
in its judgement, the ECJ confirmed that Chapte r 2 "comprises poultry meat which has undergone a
preserving process".640
7.380 With respect to the Gausepohl judgement, Brazil and Thailand submit that, in that case, the
ECJ only provided its interpretation of heading 02.10 w ith respect to bovine meat. Therefore, in their
view, that case cannot be viewed as the ECJ's in terpretation for all meat falling under heading
02.10.641 Thailand further submits that the findings on the importance of preservation were based on
the specific wording of the Explanatory Notes in the European Communities' CN for swine meat.642
7.381 Brazil and Thailand also submit that the issue discussed in the Gausepohl case was
subsequently addressed in EC Regulation No. 535/94 and, consequently, the reigning definition of
"salted meat" of heading 02.10 when the EC Sche dule was concluded was that contained in that
Regulation.643 Brazil and Thailand submit that, when it enacted EC Regulation No. 535/94, the
European Commission chose not to apply the same standard referred to by the ECJ in Gausepohl. In
particular, by means of EC Regulation No. 535/ 94, the EC Commission fixed a minimum 1.2% salt
content required to classify meat as "salted" under h eading 02.10, fully conscious that this percentage

635 Thailand's comments on the EC's reply to Panel question No. 87.
636 We note that, due to changes in numbering in the HS, what was formerly subheading 0210.90.20 in
the CN, is now subheading 0210.99.39.
637 Brazil's oral statement at the first substantive meeting, para. 66.
638 Thailand's oral statement at the second substantive meeting. para. 3.
639 Brazil's second written submission, para. 90.
640 EC's reply to Panel question No. 111.
641 Brazil's oral statement at the first substantive meeting, paras, 78 and 80; Thailand's comments on the
EC's reply to Panel question No. 113.
642 Thailand's second written submission, para. 93.
643 Brazil's second written submission, para. 91; Thailand's reply to Panel question No. 75.

was not sufficient to ensure "long-term preservation".
644 According to Brazil and Thailand, the EC
Commission chose to apply the minimum salt content to all salted meat of heading 02.10 even though
it itself had warned the ECJ about the different salt contents required to preserve different types and
cuts of meat in the Gausepohl case.645 In Brazil's and Thailand's view, the EC Commission purposely
left out the "long-term preservation" criterion fro m EC Regulation No. 535/ 94 because, as advanced
by the Advocate-General in Gausepohl, that is not a criterion that can be objectively assessed at the
time of importation and may lead to discrimination am ong imports of the same type of meat, with the
same salt content, but coming from different places.646 Thailand submits that, therefore, as at the time
of the conclusion of the EC Schedule, the European Comm unities itself recognized that the "purpose
of long-term preservation" was not a relevant f actor for determining whether a product should be
considered as salted, and therefore, classified, under heading 02.10. 647 Brazil accepts that all parties
in the Gausepohl case assumed that salting constitutes a meat preserving process.648
7.382 In response, the European Communities submits that, in the Gausepohl case, while there
were significant doubts among the participants in th e proceedings as to the possibility of fixing a salt
content for which all meat could be considered preser ved, none of the participants had any doubt that
the process of salting mentioned under heading 02. 10 must lead to preservation. The European
Communities submits that the ECJ considered that , in all cases, it could be excluded that salting
below 1.2% could lead to long-term preservation. 649 In other words, it considered that 1.2% salt
content would be an appropriate minimum below wh ich it would not be necessary to enquire whether
the meat in question had been salted for preservation. 650 According to the European Communities, it
is implicit in such a principle that the amount of salt required for such preservation would vary from
meat to meat. If there were no such variation, th en the necessary percentage could be calculated and
published.651 Further, noting that the ECJ found support for its interpretation of heading 02.10 to
require salting for long-term preservation in an Explanatory Note relating to swine meat, the European
Communities submits that that Explanatory Note stat es that the salt content "may vary considerably
between different types and cuts of meat". 652 Finally, the European Communities submits that the
Gausepohl judgement is relevant to the "classification practice" of not merely salted beef, but all
salted meat, including chicken.653
7.383 Brazil and Thailand submit that Explanatory Notes, which are non-binding instruments, of a
specific subheading cannot be applied mutatis mutandis to another subheading without an explicit
provision indicating so. 654 Thailand submits that, as there is no such provision in the Explanatory
Note relied upon by the ECJ in Gausepohl, the European Communities cannot assert that the concept
of preservation is applicable to poultry falling under heading 02.10. 655 Brazil and Thailand submit
that, in any event, the relevant Explanatory Note upon which the Gausepohl judgement was based
provides that "the period of such preservation mu st considerably exceed the time required for

644 Brazil's oral statement at the first substantive mee ting, paras. 79-82; Thailand's oral statement at the
first substantive meeting, paras. 24-27 referring to Exhibit THA-22.
645 Brazil's oral statement at the first substantive meeting, paras. 79-82; Thailand's second written
submission, para. 93.
646 Brazil's oral statement at the first substantive mee ting, paras. 79-82; Thailand's oral statement at the
first substantive meeting, paras.24-26.
647 Thailand's oral statement at the first substantive meeting, paras.24-26.
648 Brazil's oral statement at the first substantive meeting, para. 70.
649 EC's reply to Panel question No. 40.
650 EC's reply to Brazil question No. 11.
651 EC's reply to Panel question No. 47.
652 EC's reply to Panel question No. 112.
653 EC's second written submission, para. 74.
654 Brazil's comments on the EC's reply to Pane l question No. 112; Thailand's second written
submission, para. 92.

transportation."656 According to Brazil, nowhere is it stated that the period exceeding transportation is
equal to "many" or "several" months, being th e period of time the European Communities has
apparently equated with long-term preservation. Brazil notes that, in Gausepohl, the "period
considerably exceeding the time required for trans portation" was only two days. Brazil submits that
the European Communities' expert has attested that the products at issue can be preserved for that
period and, therefore, may be considered as pr eserved for the long-term when transported from
Switzerland to Germany, for example. 657 Since the European Comm unities has submitted that a
salted/dried/smoked product can be further preser ved by chilling/freezing and still fall under heading
02.10, and given that a product may be considered preserved for the long term when transported from
Switzerland to Germany, Brazil submits that it is only fair that the same products would also be
considered preserved for the long term when trans ported from Brazil to Germany, even if further
preserved by chilling or freezing.658
7.384 The European Communities submits that, within the European Communities, the
authoritative source of interpretation of the HS is the ECJ. 659 The European Communities submits
that, should any conflict occur between EC legal instruments and ECJ judgements interpreting the HS,
ECJ judgements would prevail.660 The European Communities submits that, therefore, EC Regulation
No. 535/94 cannot be viewed in isolation from th e European Communities' institutional framework
and, in particular from the Dinter and Gausepohl judgements in which the ECJ confirmed the
consistent view in the European Communities that, in order to qualify as "salted" meat under heading
02.10, salting must be sufficient to ensure preservation.661
7.385 In response, Thailand submits that the ECJ itself has stated that an Additional Note "becomes
part of the heading to which it refers and has the same binding effect, whether it constitutes an
authentic interpretation of the [relevant] heading or supplements it." 662 Further, Thailand refers to the
ECJ judgement in Gijs van de Kolk-Douane Expéditeur BV , to submit that, in a situation of "conflict"
between an ECJ judgement and a subsequent EC Commission Regulation, the ECJ has made it clear
that the subsequent Regulation will prevail. 663 Thailand submits that, in that case, when the ECJ was
questioned as to whether its judgement in Dinter or the provisions of an Additional Note should
prevail (in particular, Additional Note 6(a) of the CN), the ECJ stated that the Additional Note should
prevail.664 Thailand submits that, by analogy, the judgement in the Gausepohl case was modified by
the provisions of Additional Note 7, which was in troduced into the CN through the enactment of
EC Regulation No. 535/94.665
7.386 The European Communities acknowledges that Additional Note 6(a) applies rather than the
Dinter judgement regarding the appropriate criterion to be used to identify whether or not meat is
"seasoned" for the purposes of Chapter 16 of the CN. 666 However, the European Communities
submits that, there is nothing to suggest that Add itional Note 6(a) reversed the ECJ's judgement in
Dinter.667 According to the European Communities, in Gijs van de Kolk-D ouane Expéditeur BV, the

656 Brazil's comments on the EC's reply to Panel question No. 112 referring to Exhibit EC-32;
Thailand's second written submission, para. 93.
657 Brazil's comments on the EC's reply to Panel question No. 112 referring to Exhibit EC-32.
658 Brazil's comments on the EC's reply to Panel question No. 112.
659 EC's reply to Panel question No. 41.
660 EC's reply to Panel question No. 113; EC's reply to Thailand question No. 1.
661 EC's oral statement at the first substantive meeting, paras. 34-38.
662 Thailand's oral statement at the second substantive meeting, para. 7 referring to Exhibit THA-31;
Thailand's second written submission, para. 80.
663 Thailand's oral statement at the second substantive meeting, para. 8.
664 Thailand's oral statement at the second substantive meeting, para. 7; Thailand's second written
submission, paras. 87-89.
665 Thailand's oral statement at the second substantive meeting, para. 10.
666 EC's reply to Panel question No. 115.
667 EC's oral statement at the second substantive meeting, para. 69.

ECJ considered that the Dinter judgement had been delivered in different circumstances to those
facing the ECJ when Gijs van de Kolk-D ouane Expéditeur BV was decided. In particular, an ISO
standard had been issued, which confirmed the obj ectivity of sensory testing, thereby rendering the
ECJ's criticism of such a method of testing in Dinter moot. The European Communities further
submits that the ECJ only upheld Additional Note 6( a) because it merely concerned the technical
means for an objective assessment of the characteristics of a product, but did not alter the scope of the
headings concerned. The European Communities argu es that, in contrast, the insertion of a criterion
that all meat products with a salt content exceed ing 1.2% can be considered as "salted" under
heading 02.10 even if such salting does not ensure preservation would significantly alter the scope of
heading 02.10 as consistently interpreted by the ECJ in Dinter and Gausepohl.
668
7.387 In response, Brazil submits that the Gausepohl judgement was also delivered in different
circumstances. In particular, at the time the ECJ decided the Gausepohl case, Additional Note 7 to
Chapter 2 of the CN, defining "salted meat" of heading 02.10, did not exist. Once that note was
inserted in the CN, a "different circumstance" wa s created that would, for example, affect any
judgement subsequent to Gausepohl regarding "salted meat" of heading 02.10.
669 Thailand submits
that the legal effects of the ECJ's judgment in Gausepohl were modified by the provisions of
Additional Note 7, which specified the criteria to be taken into account for the classification of
products under heading 02.10. 670 Thailand further submits that EC Regulation No. 535/94 does not
change the scope of the chapters, sections and h eadings of the HS nor the EC's CN nor the EC
Schedule. According to Thailand, that Regulation merely specifies the objective criteria to be taken
into account for classifying goods under heading 02.10. 671 Thailand further submits that EC
Regulation No. 535/94 has been enacted many times as an EC Council Regulation through the annual
issuance of the EC's CN.672
7.388 The European Communities submits that the relationship between judgements such as
Gausepohl, which interprets the CN, and a later EC Commission Regulation inserting an Additional
Note, is an issue of "hierarchy of norms" as opposed to a question of hierarchy between ECJ
judgements and EC Commission Regulations. 673 The European Communities explains that the
wording and structure of heading 02.10 compels a requirement of preservation as confirmed by the
ECJ in Gausepohl. The European Communities submits that, in Gausepohl, the ECJ confirmed the
scope of heading 02.10 in the CN (i.e. a C ouncil Regulation). According to the European
Communities, the later addition by the EC Commiss ion of Additional Note 7 through EC Regulation
No. 535/94 is a legal act which is inferior to th e CN. The European Communities submits that the
EC Commission is not entitled to modify, through an EC Commission Regulation, the content or the
scope of a tariff heading laid down in the CN (i .e. a Council Regulation implementing the HS).
Therefore, any EC Commission act must necessarily be read together at all times with the superior
norm (i.e. the CN) and its interpretation by the ECJ. According to the European Communities, to the
extent there was a conflict between the EC Commission act and the CN, the scope of heading 02.10 in
the CN as interpreted by the ECJ would prevail.
674 In addition, the European Communities submits
that EC Regulation No. 535/94 could not undo the ECJ's finding in the Gausepohl case because the
HS is an international conve ntion binding on the European Communities and precludes the

668 EC's reply to Panel question No. 114.
669 Brazil's comments on the EC's reply to Panel question No. 115.
670 Thailand's reply to Panel question No. 114.
671 Thailand's comments on the EC's reply to Panel question No. 114.
672 Thailand's comments on the EC's reply to Panel question No. 113.
673 EC's reply to Panel question No. 113.
674 EC's reply to Panel question No. 113; EC's reply to Panel question No. 114.

EC Commission from altering the subject-matter of th e tariff headings which have been defined on
the basis of the HS.675
7.389 In response, Brazil submits that the European Communitie s' argument that Additional Note 7
to Chapter 2, inserted in the CN by means of EC Regulation No. 535/94 could not alter heading 02.10
as it is found in the HS and, therefore, must be read in the context of the long-term preservation
structure of Chapter 2 of the HS is misleading. In particular, Brazil submits that the argument
assumes that long-term preservation is what defin es the structure of Chapter 2 and the processes of
heading 02.10 of the HS, a view that Brazil does not subscribe to. 676 Brazil submits that, in
Gausepohl, the ECJ was requested to construe EEC Regulation No. 2658/87 establishing the
European Communities' CN pursuant to Article 177 of the EEC Treaty. 677 Brazil submits that,
according to EEC Regulation No. 2658/87, the EC Commission can adopt a Regulation that inserts an
Additional Note in a Chapter of the CN, such as EC Regulation No. 535/94. 678 According to Brazil,
when the ECJ in Gausepohl was asked to construe the CN, "long- term preservation" was neither part
of the CN nor the HS. 679 Brazil submits that, therefore, the ECJ in the Gausepohl case did not
confirm the scope of heading 02.10 in the CN sin ce confirmation implies validation of something that
already existed. Brazil submits that EC Regulati on No. 535/94 is in perfect harmony with what is
provided under heading 02.10 of the CN. Brazil furt her submits that, while the ECJ has the authority
to interpret an act of the EC Council, such as th e CN, it does not have the authority to interpret the
HS.680
 Analysis by the Panel
7.390 The first question for determination by th e Panel is whether the ECJ judgements, Dinter and
Gausepohl, qualify as "circumstances of conclusion" of the EC Schedule within the meaning of
Article 32 of the Vienna Convention. The Panel considers that there are two elements associated with
this question as it relates to the Dinter and Gausepohl judgements. The first is whether, as a
theoretical matter, court judgements can be consid ered under Article 32. The second is whether the
timing of issuance of the ECJ judgements at issue, and more particularly the Dinter judgement,
necessarily disqualifies it from consideration under Article 32.
7.391 Regarding the question of whether or not court judgements can be considered as
"circumstances of conclusion" under Article 32 of the Vienna Convention , the Panel recalls that, in
EC – Computer Equipment , the Appellate Body explicitly st ated that the importing Member's
classification practice during the Uruguay Round and that Member's "legislation" that was applicable
at that time should have been taken into consider ation under Article 32. As has been noted by the
parties in this case, the issue arises as to whether th e Appellate Body's list is exhaustive or, rather, is
merely linked to the particular facts of that case, implying that other unlisted items may also qualify.
The Appellate Body's report tends to indicate that the latter interpretation is the valid one – that is, the
Appellate Body was merely making a pronouncement on the basis of the facts that were available to it
in that case rather than seeking to provide an exhaustive list of items qualifying as "circumstances of
conclusion" in all cases. This would suggest that a valid distinction cannot be drawn between, on the
one hand, EC legislation and, on the other hand, ECJ judgements for the purposes of Article 32 of the

675 EC's oral statement at the first substantive meeting, paras. 34-38; EC's reply to Panel question
No. 41.
676 Brazil's oral statement at the s econd substantive meeting. para. 57; Brazil's comments on the EC's
reply to Panel question No. 93.
677 Exhibit BRA-23, Article 1.1 of Regulation No. 2658/87.
678 Exhibit BRA-6.
679 Brazil's comments on the EC's reply to Panel question No. 113.
680 Brazil's comments on the EC's reply to Panel question No. 113.

Vienna Convention.
681 Accordingly, the Panel considers that court judgements, such as the Dinter and
Gausepohl judgements, may be considered under Article 32 of the Vienna Convention.
7.392 With respect to the timing of the ECJ judgements, we recall that Brazil and Thailand have
submitted that the Dinter judgement should not be considered by the Panel under Article 32 of the
Vienna Convention because it was issued in 1983, prior to the launch of the Uruguay Round. 682 We
recall our conclusion in paragraph 7. 344 above that, in theory, there is no temporal limitation on what
may qualify as "circumstances of conclusion" under Article 32 and that "relevance" is the more
appropriate criterion for determining such qualification. We also stated in that paragraph that there
may be some correlation between the timing of an even t, act or other instrument and its relevance to
the treaty in question and that the fact that Article 32 of the Vienna Convention refers to
"circumstances of conclusion" indicates that the event, act or other instrument in question must be
temporally proximate to the conclusion of a treaty in order for it to be taken into account for the
interpretation of that treaty under Article 32.
7.393 Contrary to what has been argued by Brazil and Thailand, it is our view that the fact that the
Dinter judgement was issued in 1983 does not, in itself, suggest that it is temporally too remote from
the conclusion of the EC Schedule to have influenced (or, at least, had the possibility of influencing)
the conclusion of the heading at issue in this dispute. We say this in light of the fact that, as far as we
are aware, except for the aspects that were d ealt with in Additional Note 6(a) to the CN 683, the Dinter
judgement remained applicable during the Uruguay Round negotiations. Nevertheless, we note that,
in the Dinter judgement, the ECJ was called upon to examine the scope of heading 16.02 of the CN,
dealing with seasoned meat. In the process of such an examination, the ECJ made general comments
regarding Chapter 2 of the CN insofar as it relates to poultry. We do not consider that these general
comments on their own render the Dinter judgement "relevant" to the specific aspects of the ultimate
treaty text in issue, that is, the concession contai ned in heading 02.10 of the EC Schedule. For these
reasons, the Panel will not consider the Dinter judgement, including the Advocate-General's opinion
in that case, in our interpretation of the concessi on contained in heading 02. 10 of the EC Schedule
pursuant to Article 32 of the Vienna Convention.
7.394 As for the Gausepohl judgement, unlike the Dinter judgement, it did concern the
interpretation of heading 02.10 of the CN, corres ponding to the specific heading at issue in this
dispute. Therefore, we consider it "relevant" to th e specific aspects of the ultimate treaty text in issue
in this case, namely the concession contained in head ing 02.10 of the EC Schedule. Further, on the
basis of information provided to us by the Europ ean Communities in this dispute, we note that the
judgement was publicly available upon issuance, that is in May, 1993. 684 Accordingly, in our view,
the WTO Membership may be considered to have had constructive knowledge of that judgement at
the time the EC Schedule was concluded on 15 Ap ril 1994. Therefore, we conclude that the
Gausepohl judgement qualifies as "circumstances of conclu sion" within the meaning of Article 32 of
the Vienna Convention.
7.395 The second question for determination by the Panel is the impact of the Gausepohl judgement
on the interpretation of the concession contained in h eading 02.10 of the EC Schedule. We refer to
the key elements of the judgement immediately below.

681 This conclusion would seem to be particularly valid in relation to the present case where the ECJ
judgements in question interpret EC legislation. In our view, it would be an odd situation if such legislation
could be considered under Article 32 of the Vienna Convention but not court judgements, which interpret that
legislation.
682 Brazil's second written submission, para. 84; Thailand's reply to Panel question No. 75.
683 We deal with Additional Note 6(a) to the CN in more detail below in paragraph 7.403 but note here
that this Note was introduced into the CN through the enactment of Commission Regulation (EEC) No. 3678/83
of 23 December 1983, which is contained in Exhibit THA-34.
684 See Exhibit EC-35.

7.396 We note that the summary of the ECJ's judgement in the Gausepohl case states that:
"Heading 0210 of [the Combined Nomenclatu re]... must be interpreted as meaning
that meat of bovine animals may be classified under that heading as salted meat only
if it has been deeply and evenly impregnate d with salt in all its parts for the purposes
of long-term preservation so that it has a minimum total salt-content of 1.2% by
weight."
685
7.397 Referring to headings 02.01, 02.02 and 02.10, the ECJ stated that it was clear from the
scheme of Chapter 2 that, "for tariff classification pur poses, the meat covered by it is either fresh or
chilled meat of bovine animals or meat that has undergone one of the various processes required for
long-term preservation". 686 The ECJ stated that it follows that "meat of bovine animals to which a
quantity of salt has been added merely for the purpo se of transportation cannot be regarded as salted
for the purposes of heading 0210". 687 The ECJ relied upon an Explanatory Note to tariff subheadings
0210.11.11 and 0210.11.19 for confirmation of that view. The ECJ acknowledged that the
Explanatory Note was not legally bi nding and related to swine meat but stated that, nevertheless, it
provided a useful indication as to the minimum objec tive criteria required for meat of bovine animals
to be classified as "salted".
688 Regarding the salt content that is to be regarded as a minimum
percentage for meat to be classified under heading 02 .10, the ECJ stated that "[t]he documents before
the Court show that various different figures have been adopted by the authorities of the Member
States. They do however suggest that the mini mum total salt content required for the long-term
preservation of meat may be set at 1.2% by weight."689
7.398 The Panel notes that the ECJ's judgement in Gausepohl clearly recognizes the principle of
long-term preservation with respect to heading 02.10 of the CN. However, we consider that there are
certain ambiguities concerning the meaning and effect of the Gausepohl judgement that are important
for the purposes of the present case. First, it is uncle ar to the Panel whether the key findings made by
the ECJ set out above in paragraph 7.396, which refer explicitly to bovine meat, are applicable only to
bovine meat or, rather, apply more broadly to meat in general, including poultry. Secondly, it is
unclear to the Panel whether the 1.2% salt conten t referred to by the ECJ in its judgement is a
minimum salt content below which meat can be as sumed not to be salted for the purposes of heading
02.10 or, rather, is a minimum salt content above which meat will be salted for the purposes of
heading 02.10. Thirdly, it is unclear from the judgement whether the 1.2% minimum salt content
referred to in that judgement is a "lowest common denominator" minimum that applies to all meats or,
rather, only applies to bovine meat. Finally, while th e ECJ states in its judgement that salting must be
used "as a method of preserving meat of bovine animals for a longer period [than for the purpose of
transportation]", indicating that the period of long- term preservation must exceed the period required
to transport the product in question, the ECJ does not provide any additional guidance in this regard.
7.399 In summary, we understand the ECJ's judgement in the Gausepohl case to mean that bovine
meat that has been deeply and homogeneously impr egnated with salt and has a minimum salt content
of 1.2% by weight will be covered by heading 02 .10 of the EC Schedule. Even if the judgement
could be construed as applying mo re broadly to poultry, we have not been persuaded that the
judgement indicates that the minimum salt content of 1.2% varies from meat to meat nor that the 1.2%

685 Exhibit EC-14: Gausepohl-Fleisch GmbH v Oberfinanzdirektion Hamburg , ECR [1993], p. I -3047
and p. I -3066, para. 16.
686 Exhibit EC-14: Gausepohl-Fleisch GmbH v Oberfinanzdirektion Hamburg, ECR [1993], p. I -3066,
para. 10.
687 Exhibit EC-14: Gausepohl-Fleisch GmbH v Oberfinanzdirektion Hamburg, ECR [1993], p. I -3066,
para. 11.
688 Exhibit EC-14: Gausepohl-Fleisch GmbH v Oberfinanzdirektion Hamburg, ECR [1993], p. I -3067,
para. 12.
689 Exhibit EC-14: Gausepohl-Fleisch GmbH v Oberfinanzdirektion Hamburg, ECR [1993], p. I -3067,
paras. 13-14.

salt content is merely a minimum above which it is possible that meat qualifies under heading 02.10,
presumably subject to meeting other conditions.
7.400 We consider that our understanding of the ECJ's judgement in Gausepohl as far as it concerns
the concession at issue in this case is consistent w ith other evidence available to us. As noted above,
we have evidence to indicate that, during the period of 1996 - 2002, EC customs authorities
considered that the products at issue – frozen boneless chicken cuts deeply and homogeneously
impregnated with salt, with a salt content between 1. 2% – 3% salt – qualified as "salted" products for
the purposes of heading 02.10 of the EC Schedule.
690
7.401 Further, we refer to the minutes of the mee ting of the EC Customs Code Committee dated
25 January 2002, which state in relevant part that:
"Additional Note 7 of Chapter 2 [introdu ced by EC Regulation No. 535/94] was
introduced with a view to respecting the [ Gausepohl judgement]. The judgement
ruled the following:
'Heading 0210 of [the Combined Nomenclature]... must be
interpreted as meaning that meat of bovine animals may be classified
under that heading as salted meat only if it has been deeply and
evenly impregnated with salt in all its parts for the purposes of long-
term preservation so that it has a minimum total salt content of 1.2%
by weight.'
However, Additional Note 7 to Chapter 2 introduced then into the Combined
Nomenclature does not copy the writing of this reflect [sic] this judgement
completely. In the afore-mentioned note re ference was made to any kind of meat and
not only to meat of bovine animal; in add ition the criterion of salting for the purpose
of long-term preservation has not been introduced into [Additional Note 7 to
Chapter 2]."
691
As noted previously, the minutes indicate that the principle of long-term preservation was excluded
from the definition of "salted" in EC Regulation No. 535/94. They also tend to indicate that the
Gausepohl judgement only related to bovine meat wh ereas EC Regulation No. 535/94 applies more
generally to all meat.
7.402 Even if the ambiguities concerning the meaning and effect of the Gausepohl judgement
concerning the concession at issue in this dispute referred to above in para graph 7.398 did not exist,
we consider that, in any event, at the time of conc lusion of the EC Schedule, the relevant aspects of
the Gausepohl judgement had been superseded through the enactment of EC Regulation No. 535/94.
We explain our reasons for this conclusion immediately below.
7.403 The Panel accepts the European Communities' explanation that, as a general principle, ECJ
judgements take precedence over EC Regulations in the event of conflict between the two. 692
However, we also note that the EC has acknowledged that the introduction of Additional Note 6(a) of
the CN through enactment of an EC Commission Regulation 693 meant that an important aspect of the
judgement delivered by the ECJ in Dinter – that is, the criterion used to identify whether or not meat

690 We again refer to our conclusions regarding EC classification practice regarding the products at
issue during 1996-2002 in paragraph 7.303.
691 Exhibit THA-22.
692 EC's reply to Thailand's question No. 1 following the first substantive meeting.
693 Namely, Commission Regulation (EEC) No. 3678/83 of 23 December 1983, which is contained in
Exhibit THA-34.

is "seasoned" for the purposes of Chapter 16 of th e CN – was replaced by the criterion contained in
Additional Note 6(a). 694 We have not seen any compelling reason why EC Regulation No. 535/94,
which resulted in the introduction of Additional Note 7 of the CN, could not have superseded the
Gausepohl judgement in a similar way. In fact, we ha ve evidence before us indicating that this is
what occurred.
7.404 First, as previously noted, EC Regulation No . 535/94 inserted into the CN an Additional
Note, namely Additional Note 7. We note that Article 1(2)(c) of the CN provides that the CN shall be
comprised of "additional section or chapter notes and footnotes relating to CN subheadings". Further,
the ECJ has made it clear that Additional Notes become part of the headings to which they relate and
have binding effect. 695 Therefore, we understand that Additi onal Note 7 became part of the CN. .
Accordingly, even if the ECJ's interpretation of heading 02.10 of the CN in the Gausepohl judgement
may be considered to have acquired the status of a norm at the same level as the CN as has been
asserted by the European Communities, in our view, it is clear that Additional Note 7, which was
introduced by EC Regulation No. 535/94 and continued in force until its replacement through the
enactment of EC Regulation No. 1871/2003, also had that status. Secondly, EC Regulation No.
535/94 was enacted following issuance of the Gausepohl judgement. This suggests that EC
Regulation No. 535/94 should be read in isolati on from that judgement. More particularly, we
understand that the European Communities replaced the relevant aspects of the Gausepohl judgement
(whether possessing the status of a CN norm or othe rwise) through an amendment to the CN itself,
which was accomplished through the subsequent en actment of EC Regulation No. 535/94. Thirdly,
the minutes of a meeting of the EC Customs Code Committee dated 25 January 2002 suggest that the
EC Commission consciously did not include a re ference to long-term preservation in enacting
EC Regulation No. 535/94.
696 This suggestion appears to be confirmed by the minutes of a
subsequent meeting of the EC Customs Code Co mmittee that took place in February 2002, which
state that the Committee considered it necessary to amend Additional Note 7 to Chapter 2 "to
introduce the condition of 'long-term preservation"'. 697 The Panel questions why it would be
necessary to make such an amendment if the pr inciple of long-term preservation reflected in
Gausepohl applied in any event.
7.405 In conclusion, the Panel considers that the aspects of the Gausepohl judgement that are
relevant to this case were superseded through the enactment of EC Regulation No. 535/94. Therefore,
in the Panel's view, our interpretation of the concession contained in heading 02.10 of the EC
Schedule is not affected by the Gausepohl judgement.
EC Explanatory Notes
 Arguments of the parties
7.406 The European Communities points to a 1981 Explanatory Note to heading 02.06 of the EC
Common Customs Tariff and a 1983 Explanatory Note for subheadings 0210.11.31 and 0210.11.39 of
the EC Common Customs Tariff, which, it submits, fo rm part of the European Communities' practice,
to be considered under Article 32 of the Vienna Convention as "circumstances of conclusion" of its

694 EC's reply to Panel question No. 115.
695 Case 38-75, Douaneagent der NV Nederlandse Spoorwegen v Inspecteur der invoerrchten en
accijnzen, 19 November 1975, ECR [1975], page 01439, at para. 10 contained in Exhibit THA-31.
696 See paragraph 7.401 above where aspects of these minutes have been excerpted.
697 The minutes of a meeting that took place in Janu ary 2002 (contained in Exhibit THA-22) state that:
"Additional Note 7 to Chapter 2 of the CN (which was introduced/amended by Regulation 535/94) 'does not
copy the writing of this reflect this [ Gausepohl] judgement [ sic] completely. ... in addition the criterion of
salting for the purpose of long-term preservation has not been introduced.'" The minutes of a meeting that took
place in February 2002 indicate that the Committee agreed to: "Study the possibility to amend Additional Note 7
to Chapter 2 to ... introduce the condition 'long-term preservation' as reflected in [the Gausepohl judgement]".

Schedule.
698 The European Communities submits that th ese Notes indicate that, at the time of the
Uruguay Round, the notion of preservation was intrinsic to the European Communities' understanding
of the meats in heading 02.10. According to the European Communities, that the specific Notes refer
to pigmeat is irrelevant for the purposes of this dis pute given that they incontrovertibly show that the
European Communities interpreted the term "salte d" at the time of the Uruguay Round as referring to
salting for preservation, irrespective of the specific product the Notes concerned. 699 The European
Communities further submits that, had EC Regula tion No. 535/94 meant that preservation was not
needed in order to qualify as "salted" under headi ng 02.10, one would logically have expected the
modification and/or removal of the European Comm unities' Explanatory Notes, which referred to the
concept of preservation. However, this was not the case. The European Communities submits that,
therefore, the concept of preservation was vital for the interpretation of heading 02.10 during and at
the end of the Uruguay Round.700
7.407 In response, Brazil and Thailand consider that the Explanatory Notes to the CN cannot be
considered under Article 32 of the Vienna Convention because they existed prior to the launch of the
Uruguay Round.701 In addition, Brazil submits that the Explanatory Notes cannot be considered under
Article 32 of the Vienna Convention given the limited list of items falling within that Article as
identified by the Appellate Body in EC – Computer Equipment. Brazil further submits that a Member
is not required to know another Member's entire set of non-binding instruments, such as Explanatory
Notes to the CN, at the time of tariff negotiations.
702
7.408 In addition, Brazil and Thailand submit that the Explanatory Notes to the CN are not legally
binding instruments and the ECJ itself has on oc casion considered their content not to be in
accordance with actual provisions of the CN. 703 Brazil and Thailand also submit that Additional
Notes, such as Additional Note 7 to Chapter 2, which was incorporated into the CN through the
enactment of EC Regulation No. 535/94, take a higher position than Explanatory Notes in the
hierarchy of EC classification rules. 704 Therefore, according to Thailand, if the Additional Note
contains a clear rule, the Explanatory Notes cannot modify its meaning .705 Further, Brazil and
Thailand argue that the Explanatory Notes pointed to by the European Communities do not relate to
heading 02.10 nor to subheading 0210.90.20 nor to the products at issue. 706 More particularly,
Thailand submits that they relate to swine meat, namely hams and shoulders and they, therefore,
cannot be applied by analogy to poultry meat falling under subheading 0210.90.20. 707 Thailand

698 EC's reply to Panel question No. 75.
699 EC's reply to Thailand's question No. 2 following the first substantive meeting.
700 EC's oral statement at the first substantive meeting, paras. 34-38.
701 Brazil's second written submission, para. 83; Thailand's reply to Panel question No. 75.
702 Brazil's reply to Panel question No. 75.
703 Brazil's reply to Panel question No. 75; Brazil's or al statement at the second substantive meeting.
para. 55; Thailand's oral statement at the first substa ntive meeting, paras. 30-34; Thailand's second written
submission, para. 82 referring to "EC Customs Classification Rules: Should Ice Cream Melt?", Michigan
Journal of International Law , (1994), Vol. 15, No. 4 contained in Exhibit THA-18, page 1284. and
Case C-130/02, Krings GmbH V Oberfinanzdirektion Nürnberg , 4 March 2004 [not yet reported], para. 28
contained in Exhibit THA-32.
704 Brazil's second written submission, para. 83; Tha iland's oral statement at the first substantive
meeting, paras. 30-34; Thailand's second written submission, para. 83.
705 Thailand's oral statement at the first substantive meeting, paras. 30-34; Thailand's second written
submission, paras. 82-83 referring to Case 149-73, Otto Witt KG v Hauptzollamt Hamburg-Ericus, 12 December
1973, ECR [1973] page 01587, para. 3 contained in Exhibit THA-33.
706 Brazil's oral statement at the first substantiv e meeting, para. 66; Thailand's second written
submission, para. 82.
707 Thailand's second written submission, para. 92.

submits that the normal practice in the European Communities is not to apply provisions of one
Explanatory Note to another, unless the Note states that it shall apply mutatis mutandis.
708
7.409 The European Communities also refers to an Explanatory Note of December 1994 to
subheadings 0210.11.11 and 0210.11 .19 of the CN. The European Communities submits that the
importance of the Note lies in the fact that it assu mes the existence of the principle of long-term
preservation with respect to heading 02.10.709
7.410 Brazil and Thailand submit that the Explanatory Note in question relates to salted meat of
domestic swine and not to all "salted meat" of head ing 02.10 and that, therefore, it cannot be applied
to poultry meat. 710 According to Brazil, had the Eur opean Communities desired to apply the
provisions on salted meat of domestic swine to a ll meat covered under heading 02.10 it would have
done so through a general Explanatory Note to heading 02.10 rather than through an Explanatory
Note to a particular subheading.711
 Analysis by the Panel
7.411 The first question for determination by the Pane l is whether Explanatory Notes to the CN and
to its predecessor, the Common Customs Tariff, qua lify as "circumstances of conclusion" of the EC
Schedule within the meaning of Article 32 of the Vienna Convention. For the reasons referred to in
paragraph 7.391 above, the Panel does not consider that the fact that the Explanatory Notes were not
explicitly mentioned by the Appellate Body in EC – Computer Equipment as a source under Article
32 means that such Notes cannot be taken into acc ount under that Article. In our view, since the
Explanatory Notes are considered in interpreting the CN, even if they are not, strictly speaking, part of
the CN, they could qualify under Article 32 of the Vienna Convention.
7.412 However, even if these Explanatory Notes qua lify for consideration under Article 32 of the
Vienna Convention whether as "circumstances of conclu sion" in the case of the 1981 and 1983
Explanatory Notes or more generally under Article 32 in the case of the December 1994 Explanatory
Note, we note that they appear to be non-binding. 712 The ECJ has also stated that, while Explanatory
Notes may play an important interpretative role in cases of uncertainty, they cannot amend provisions
of the CN.713 In contrast, the ECJ has made it clear that Additional Notes become part of the headings
to which they relate and have binding effect. 714 On the basis of the foregoing, we understand that
Additional Notes to the CN take precedence over Explanatory Notes in the hierarchy of EC
classification rules. Therefore, we consider that , to the extent that there was any inconsistency
between the Explanatory Notes in question a nd EC Regulation No. 535/94, which introduced
Additional Note 7, Additional Note 7 would prevail.
7.413 The Panel recalls its finding in paragraph 7.3 69 that, according to EC Regulation No. 535/94,
if any meat is deeply and homogeneously impregna ted with salt and has a minimum salt content of
1.2% by weight, it will meet the requirements of that Regulation and will qualify as "salted" meat
under the concession contained in heading 02.10 of th e EC Schedule. We do not consider that the
notion of long-term preservation is reflected in that Regulation. Therefore, even if the Explanatory

708 Thailand's reply to Panel question No. 75; Thailand's second written submission, para. 92.
709 EC's oral statement at the second substantive meeting, para. 70.
710 Brazil's second written submission, para. 93; Thailand's second written submission, para. 92.
711 Brazil's second written submission, para. 94.
712 This is apparent from Article 1(2)(c) of th e CN, which provides that the CN comprises, inter alia,
"preliminary provisions, additional section or chapter notes and footnotes relating to CN subheadings". No
mention is made of Explanatory Notes in Article 1(2)(c) of the CN.
713 Case 149-73, Otto Witt KG v Hauptzollamt Hamburg-Ericus , 12 December 1973, ECR [1973]
page 01587, para. 3 contained in Exhibit THA-33.
714 Case 38-75, Douaneagent der NV Nederlandse Spoorwegen v Inspecteur der invoerrchten en
accijnzen, 19 November 1975, ECR [1975], page 01439, at para. 10 contained in Exhibit THA-31.

Notes relied upon by the European Communities may be considered to reflect the principle that
salting under heading 02.10 is for the purposes of preservation, as the European Communities asserts
they do on the basis of the terms of the CN and ECJ jurisprudence, the Panel understands that
Additional Note 7, which does not reflect this principle, takes precedence. Therefore, we will
disregard those Explanatory Notes in our interpre tation of the concession cont ained in heading 02.10
of the EC Schedule.
Other Additional Notes
 Arguments of the parties
7.414 Thailand notes that, in 1983, prior to the launch of the Uruguay Round, the European
Communities introduced Additional Note 6(c) to the CN [later renumbered as Additional Note 6(b)]
which stated that: "However, products falling within subheadings 02.06….to which seasoning has
been added during the process of preparation continues to fall within the said subheadings provided
that the addition of seasoning has not changed th eir character of product falling within heading
02.06." According to Thailand, this Additional Note was included in the EC Common Customs Tariff
from 1983 and has remained (albeit with slightly m odified wording) in the European Communities'
CN until today. According to Thailand, the content of the Additional Note is relevant to demonstrate
that the European Communities has consistently considered that products falling under heading 02.10
are subject to a process of preparation, from before the launch of the Uruguay Round to the present
day.
715 Thailand submits that, if the European Communities had not specifically omitted the
requirement that products had to be salted to en sure their preservation from Additional Note 7,
Additional Note 7 would have been contradictory with Additional Note 6(b).716
7.415 The European Communities notes that, prior to the Uruguay Round, its nomenclature was
based on the CCCN and the European Communities w as bound to observe its terms. The European
Communities submits that heading 02.06 of the CCCN effectively contains the same wording as HS
heading 02.10, and both of them enshrine the pr inciple of preservation. The European Communities
argues that the same CCCN-based nomenclature had been in use in the European Communities since
1960 if not earlier. Consequently the principle of long-term preservation was well-entrenched in the
European Communities and confirmed as early as 1983 in the ECJ's judgement in the Dinter case.
According to the European Co mmunities, any other measures could have only restated the
preservation requirement but not modified it.717
 Analysis by the Panel
7.416 Thailand refers to Additional Note 6(c) in an attempt to refute the assertion that the European
Communities has consistently held the belief that heading 02.10 (being the successor to heading 02.06
to which the Note refers) entailed the notion of preservation. Given our conclusions in
paragraph 7.413 above, we do not consider it necessary to address Thailand's arguments in this regard.
Classification practice prior to 1994
Arguments of the parties
7.417 The European Communities submits that the United States and probably other WTO
Members considered that the term "salted" in heading 02.10 referred to salting for preservation. 718

715 Thailand's second written submission, paras. 90-91; Thailand's oral statement at the second
substantive meeting. paras. 11 and 26.
716 Thailand's oral statement at the second substantive meeting, para. 12.
717 EC's reply to Panel question No. 109 referring to Exhibit EC-34.
718 EC's second written submission, para. 6.

With regard to the United States, the European Communities refers to a US customs ruling of
November 1993 dealing with fresh and frozen meat to which 3% salt had been added by means of
tumbling. According to the European Commun ities, the ruling found that the product fell under
headings 02.01 or 02.02 (depending on whethe r it was fresh or frozen) rather than under
heading 02.10. In support of the decision, the cu stoms authorities cited the Explanatory Note in the
European Communities' CN requiring that the peri od of preservation "must considerably exceed the
time required for transportation".719
7.418 With respect to the ruling cited by the European Communities, the United States notes that
US customs authorities described the product at issu e there as "similar to fresh beef sprinkled and
packed in salt," whereas the products at issue in this case are described as "deeply and evenly
impregnated" with salt. The United States submits that it is not clear how similar the products at issue
in that ruling are to the products at issue in this dispute.720
7.419 Brazil and Thailand also submit that the products at issue in the 1993 United States' customs
ruling was boneless beef sprinkled with 3% salt, wh ereas the products at issue in this dispute are
chicken cuts deeply and homogeneously impregnated with salt of 1.2% or more by weight. Brazil and
Thailand submit that, given the products at issue in the US customs ruling we re prepared differently
from the products at issue in this dispute, th e ruling provides no guidance for this dispute. 721 Brazil
submits that, therefore, the 1993 US customs classification ruling does not qualify as "classification
practice" of other countries within the meaning of the "circumstances of [the] conclusion" of the
EC Schedule. Brazil also submits that there are several other classification rulings by US customs
authorities that place frozen, smoked and/or cured pork meat under heading 02.10. According to
Brazil, although smoked or cured, the meat also had to be frozen to ensure preservation of the product
and, yet, it was still classified under heading 02.10.
722 Thailand submits that, in any event, the Panel
is being asked to determine the European Comm unities' obligations under its Schedule. Thailand
argues that, therefore, the US Schedule is not relevant.723
7.420 The European Communities submits that the US customs ruling of November 1993
explicitly described the tumbling pr ocess used to absorb the salt fo r the meat in question. The
European Communities recalls that, despite being subj ected to this process, the meat was described in
the ruling as "similar to fresh beef sprinkled and pa cked in salt". The Eur opean Communities further
recalls that the meat was classified alongside fresh and frozen beef under headings corresponding to
heading 02.07, and not under heading 02.10. The European Communities notes that the products at
issue in this case had likewise gone through a tumbli ng or equivalent injection process resulting in a
salt content of 1.2% – 3 %. The European Comm unities further notes that it was meat resulting from
this process that the ruling described as "similar to fresh beef sprinkled and packed in salt."724
Analysis by the Panel
7.421 The Panel recalls that, in EC – Computer Equipment , the Appellate Body indicated that
Members' classification practices during the Uruguay Round negotiations are part of the
"circumstances of conclusion" of the WTO Agreement and may be used as a supplementary means of
interpretation under Article 32 of the Vienna Convention. The Appellate Body also indicated that it is
most useful to examine the classification practice of all WTO Members. However, in this case, the
Panel has been provided with limited evidence of classification practice from one WTO member –

719 EC's oral statement at the first substantive meeting, para. 33.
720 US reply to Panel question No. 86.
721 Brazil's oral statement at the second substan tive meeting, para. 71; Thailand's second written
submission, paras. 54-55.
722 Brazil's oral statement at the second substantive meeting, para. 71 referring to Exhibit BRA-39.
723 Thailand's oral statement at the second substantive meeting, paras. 30-31.
724 EC's oral statement at the second substantive meeting, para. 74.

namely the United States – during the Uruguay Round negotiations. Such evidence concerns products
other than those at issue in this dispute. The Pa nel does not consider that this limited evidence has
any probative value regarding the interpretation of the concession cont ained in heading 02.10 of the
EC Schedule for the purposes of this dispute and, therefore, it will be disregarded.
7.422 The Panel notes that we have dealt with classification practice after 1994 in section
VII.G.3(c)(i) above as "subsequent pr actice" under Article 31(3)(b) of the Vienna Convention. Even
if such practice does not qualify as "subsequent prac tice" under Article 31(3)(b), we consider that it
may, nevertheless, be taken into consideration under Article 32 of the Vienna Convention.
725 If so,
our conclusions regarding the relevance of subsequent practice for the interpretation of the concession
contained in heading 02.10 of the EC Schedule apply equally here.
(iii) Summary and conclusions regarding "supplementary means"
7.423 The Panel recalls that, following its analysis of the concession contained in heading 02.10 of
the EC Schedule pursuant to Article 31 of the Vienna Convention , the Panel concluded that the
products at issue appeared to be covered by th at concession. The Panel sought to confirm that
conclusion through a reference to supplementary means of interpretation of the concession in question
pursuant to Article 32 of the Vienna Convention . We considered EC Regulation No. 535/94, the
Dinter and Gausepohl ECJ judgements, EC Explanatory Notes, an EC Additional Note and
classification practice prior to the conclusion of the EC Schedule. In the Panel's view, the relevant
aspects of the supplementary means of interpretati on, most particularly, EC Regulation No. 535/94,
indicate that meat that has been deeply and homogeneously impregnated with salt and has a minimum
salt content of 1.2% by weight would qualify as "salted" meat under the concession contained in
heading 02.10 of the EC Schedule. Therefore, th e Panel concludes that the supplementary means of
interpretation considered under Article 32 of the Vienna Convention confirm the preliminary
conclusions we reached in paragra phs 7.331 and 7.332 above followi ng an analysis under Article 31
of the Vienna Convention.
(h) Conclusion regarding the meaning of the term " salted" in the concession contained in heading
02.10 of the EC Schedule
7.424 In light of the analysis of the term "salted" in the concession contained in heading 02.10 of the
EC Schedule pursuant to Articles 31 and 32 of the Vienna Convention, the Panel concludes that that
term includes frozen boneless salted chicken cuts that have been deeply and homogeneously
impregnated with salt, with a salt content of 1.2% or more.726

725 Ian Sinclair states that: "It should of course be stressed that paragraph 3(b) of Article 31 of the
Convention does not cover subsequent practice in general, but only a specific form of subsequent practice – that
is to say, concordant subsequent practice common to all the parties. Subsequent practice which does not fall
within this narrow definition may nonetheless constitute a supplementary means of interpre tation within the
meaning of Article 32 of the Convention". Ian Sinclair, The Vienna Convention on the Law of Treaties ,
Manchester University Press, 2
nd edition (1984) p. 138.
726 The EC does not appear to dispute that the products at issue contain a minimum of 1.2% salt and are
deeply and homogeneously impregnated with salt in all parts. However, the EC submits that the products at
issue do not meet the criteria set out in EC Regulation No. 535/94 because that Regulation sets a minimum salt
content below which it cannot be considered that a product is salted for preservation: EC's reply to Panel
question No. 93. As noted above in paragraph 7.368, the Panel does not consider that EC Regulation 535/94
sets a minimum salt content below which it cannot be consid ered that a product is salted for preservation. This
view appears to be supported by EC classification practice, according to which the products at issue were
classified under heading 02.10 during 1996-2002.

(i) Conclusions regarding the application of Article II of the GATT 1994 in this case
7.425 The Panel recalls that, in paragraph 7.79 above, we stated that, if we were to conclude that the
products at issue are covered by the concession cont ained in heading 02.10 of the EC Schedule, there
is no question that the treatment accorded to t hose products under the measures at issue is less
favourable than that provided for in the EC Sche dule because undisputed pricing data indicates that
the duty levied on the products at issue can and has exceeded 15.4% ad valorem, being the bound
duty rate for products covered by heading 02.10.
7.426 It is the Panel's view that the products at i ssue are covered by the concession contained in
heading 02.10 of the EC Schedule. Therefore, su ch products are entitled to treatment provided for by
that concession. Since the products at issue are not being accorded such treatment, the European
Communities is in violation of Article II:1(a) and Article II:1(b) of the GATT 1994.
7.427 In reaching this conclusion, the Panel recalls that a fundamental object and purpose of the
WTO Agreement and the GATT 1994 is that the security and predictability of reciprocal and mutually
advantageous arrangements must be preserved. In the Panel's view, a Member's unilateral intention
regarding the meaning to be ascribed to a concessi on that Member has made in the context of WTO
multilateral trade negotiations cannot prevail over the common intentions of all WTO Members as
determined through an analysis undertaken pursuant to Articles 31 and 32 of the Vienna Convention.
VIII. CONCLUSIONS AND RECOMMENDATION
8.1 The Panel concludes that:
(a) Frozen boneless chicken cuts that have been impregnated with salt, with a salt content
of 1.2% - 3% (the products at issue) are covered by the concession contained in
heading 02.10 of the EC Schedule;
(b) EC Regulation No. 1223/2002 and EC Deci sion 2003/97/EC result in the imposition
of customs duties on the products at issue th at are in excess of the duties provided for
in respect of the concession contained in heading 02.10 of the EC Schedule; and
(c) Accordingly, the European Communities has acted inconsistently with the
requirements of Articles II:1(a) and II:1(b) of the GATT 1994 and, thus, nullified or
impaired benefits accruing to Brazil.
8.2 Therefore, the Panel recommends that the Dispute Settlement Body request the European
Communities to bring EC Regulation No. 1223/2002 and EC Decision 2003/97/EC into conformity
with its obligations under the GATT 1994.