Document: WT/DS315/R Page C-1 ANNEX C RESPONSES TO SUPPLEMENTARY QUESTIONS  POSED BY THE PANEL REGARDING SECTION III OF THE UNITED STATES SECOND ORAL STATEMENT Contents Page Annex C-1 Response of the European Communities to the Panel's Question No. 172 regarding Section III of the US Second Oral Statement C-2 Annex C-2 Responses of the United States to Supplementary Questions posed by
Document codes: WT/DS315/R
Complainant: U.S.
Respondent: EU
Third parties: Argentina, Australia, Brazil, China, Taiwan, Hong Kong, India, Japan, South Korea
Dispute stage: Appellate Body
Agreements cited: Art. X:3, X:1  GATT 1994

ANNEX C

RESPONSES TO SUPPLEMENTARY QUESTIONS POSED BY THE PANEL REGARDING
SECTION III OF THE UNITED STATES SECOND ORAL STATEMENT

Contents Page
Annex C-1 Response of the European Communities to the Panel's Question
No. 172 regarding Section III of the US Second Oral Statement
C-2
Annex C-2 Responses of the United States to Supplementary Questions posed by
the Panel regarding Section III of the US Second Oral Statement
C-19
Annex C-3 Responses of the European Communities to Supplementary Questions
posed by the Panel regarding Section III of the US Second Oral
Statement
C-31

ANNEX C-1

RESPONSE OF THE EUROPEAN COMMUNITIES
TO THE PANEL'S QUESTION NO. 172
REGARDING SECTION III OF THE UNITED STATES SECOND ORAL STATEMENT

(14 December 2005)

Question No. 172 (reply due on 14 December 2005). Please comment on Section III of the United
States' Oral Statement at the second substantive meeting, including any exhibits referred to in
that Section.

I. INTRODUCTION
1. In accordance with the Panel's ruling of 23 November 2005, as we ll as the amended time-
table communicated to the parties on 25 November 2005, the present submission presents the EC's
rebuttal to Section III of the US Opening Statemen t at the second meeting with the Panel (US Second
Oral Statement). This submission at the same time constitutes the EC's response to the Panel's
supplementary Question No. 172.
2. In this submission, the EC will first address so me procedural objections regarding the US
Second Oral Statement. Subsequently, the EC will respond in substance to the claims and arguments
contained in Section III of the US Second Oral Statement.
II. PROCEDURAL OBJECTIONS
3. In the present section, the EC will raise two pr ocedural issues regarding the US Second Oral
Statement. First, the evidence presented by th e United States with its Second Oral Statement is
inadmissible due to its belated presentation. Second, certain of the matters raised in Section III of the
US Second Oral Statement fall outside the Panel's terms of reference.
A.
THE EVIDENCE PRESENTED BY THE UNITED STATES IN ITS SECOND ORAL STATEMENT IS
INADMISSIBLE
4. At the hearing with the Panel on 22 November 2005, the EC has already orally objected to the
late submission of a substantial amount of new evidence with the US Second Oral Statement. The EC
acknowledges the Panel's ruling of 23 November 2005, and the decision to grant the EC additional
time to respond to the matters raised and eviden ce submitted in Section III of the US Second Oral
Statement.
5. However, the EC maintains its view that the litigation tactics employed by the United States
raise serious issues of due process and procedural fairness, as well as the orderly conduct of DSU
dispute settlement proceedings in general. These issues have only partially been addressed by the
Panel's rulings. Moreover, the implications of th e US conduct go beyond the present case. For this
reason, the EC wishes to restate, in the present submission, its views on this matter.
6. According to Article 12.1 DSU, the Panel proceed ings are in principle in accordance with the
working procedures contained in Appendix 3 to the DSU. It is true that these working procedures do
not establish specific time-limits for the presentati on of evidence. Moreover, the Panel may, in
consultation with the Parties to the dispute, adopt more specific procedures, and may also amend these
procedures in consultation with the parties.

7. This notwithstanding, as the Appellate Body has remarked in Argentina – Textiles and
Apparel, the working procedures contemplate two distinguishable stages in a proceeding before a
Panel, namely the stage of the first hearing, whic h should serve the presentation of the facts, and the
stage of the second hearing, which should serve the purpose of permitting rebuttals:1
It is also true, however, that the Working Procedures in Appendix 3
do contemplate two distinguishable stages in a proceeding before a
panel. Paragraphs 4 and 5 of the Working Procedures address the
first stage in the following terms:
4. Before the first substantiv e meeting of the Panel with
the parties, the parties to the dispute shall transmit to the
Panel written submissions in which they present the facts of
the case and their arguments.
5. At its first substantive meeting with the parties, the
panel shall ask the party which has brought the complaint to
present its case. Subsequently, and still at the same meeting,
the party against which the complaint has been brought shall
be asked to present its point of view.
The second stage of a panel proceeding is dealt with in paragraph 7
which states:
7. Formal rebuttals shall be made at a second
substantive meeting of the pa nel. The party complained
against shall have the right to take the floor first to be
followed by the complaining party. The parties shall submit,
prior to that meeting, written rebuttals to the panel.
Under the Working Procedures in Appendix 3, the complaining party
should set out its case in chief, including a full presentation of the
facts on the basis of submission of supporting evidence, during the
first stage. The second stage is generally designed to permit
"rebuttals" by each party of the arguments and evidence submitted by
the other parties.
8. In line with these general principles of DSU di spute settlement, paragraph 12 of the Panel's
working procedures contains the following rules on the submission of evidence:
Parties shall submit all factual evidence to the Panel no later than
during the first substantive meeting, except with respect to evidence
necessary for purposes of rebuttals, answers to questions or
comments made for purposes of rebutting answers provided by
others. Exceptions to this pro cedure will be granted upon a showing
of good cause. In such cases, th e other party shall be accorded a
period of time for comment, as appropriate.
9. With its Second Oral Statement, the US submitted 22 exhibits
 containing new factual
evidence. In large part, this evid ence related to matters which had not previously been raised in the

 1 Appellate Body Report, Argentina – Textiles and Apparel, para. 79.

submission of the parties.
2 The EC considers that this appr oach is not in accordance with the
requirements of due process and procedural fairness, as reflected in paragraph 12 of the Panel's
working procedures.
10. The evidence referred to in Section III of the US Second Oral Statement refers to alleged
instances of non-uniform application which have not before been raised by the United States, and
therefore constitute entirely new evidence. As the EC will subsequently show, some of this evidence
even relates to matters which are outside the Panel's terms of reference.
11. Even to the extent that the ev idence presented relates to cases of application which have been
previously discussed between the parties, notably the evidence referred to in Section V of the US
Second Oral Statement, it is not clear why th is evidence has not been presented in earlier
submissions.3 In this context, it must be noted that whether the late submission of evidence is
"necessary for the purposes of rebuttal" does not just de pend on whether it relates to a "rebuttal" of an
argument made earlier, but also whether it could have been introduced earlier.
12. The EC sees no good cause for the late submission of this evidence by the US. The evidence
contained in Section III refers to examples which in certain cases go several years back, and could
have been introduced by the United States with its First Written Submission. 4 The United States did
not even attempt to indicate why the above eviden ce was not accessible to it by the date of the first
substantive meeting, nor did the United States otherwise try to show good cause for the late
submission of the new evidence.5
13. The late submission of this new evidence is all the more unjustifiable given the strict refusal
of the United States to submit evidence in its earli er submissions. Indeed, when requested by the
Panel after the first hearing to provide evidence of further cases of non-uniform application, the US
uniformly refused to submit such evidence. 6 More strikingly still, in its Second Written Submission,
the US abstained completely from submitting any factual evidence whatsoever.
14. This conduct by the United States gives the st rong impression that the United States has been
deliberately withholding the evidence until the last po ssible stage, when the possibilities for the EC to
respond to it would be minimal. Such litigation tactics are not conducive to a proper conduct of
dispute settlement proceedings under the DSU.
15. The Panel's decision to grant the EC additiona l time to comment on Section III of the US
Second Oral Statement does not address these concerns. First, due to the late submission of this new
evidence by the US, the EC has to present a third submission in parallel to the answers of the Panel
and the comments on the US responses. Second, th e Panel's ruling only addresses Section III of the
Second Oral Statement, but not the additional evid ence referred to in other parts of the US Second

 2 The EC notes that in its ruling of 23 November, the Panel left open whether the evidence in question
constituted "new evidence" or "evidence that is necessary for the purposes of rebuttals".
 3 As regards the affidavit produced by the US in Exhibit US-79, the EC has already explained that this
evidence is deprived of all useful evidentiary value.
 4 On camcorders, cf. US Second Oral Statement, para. 26 et seq.; So ny Playstation, US Second Oral
Statement, para. 32 et seq. As regards the "DeBaer e-Presentation" (Exhibit US-59), as the EC will explain
below, this presentation has no evidentiary value whatsoever.
 5 In Canada – Wheat Exports and Grain Imports , para 6.140, the Panel rejected a scholarly article
submitted by the United States in an untimely manner, noting that the US did not even try indicating why the
above evidence was not accessible to it by the date of the first substantiv e meeting, nor did the United States
otherwise try to show good cause for the late submission of the new evidence. In pa rticular, it rejected the US
argument that this article served only as rebuttal.
 6 Cf. US Replies to Panel Question Nos. 14, 24 , and 33; cf. also EC Second Written Submission,
para. 45.

Oral Statement. Finally, the US approach has already had implications for the Panel's overall
timetable, and may have further implications.
16. The US approach is of general concern for th e WTO dispute settlement system. Panels have
to work within very narrow timeframes, which imposes a considerable burden on the parties, the
Panel and the Secretariat. Because of these constraints, it is important that the parties act in such a
way that assists the Panel in respecting its timetable, rather than obstructing it.
17. The US approach is particularly disturbing in the context of the present case. The US is
asking the Panel to make extremely sweeping findings , notably that the entire system of EC customs
administration is incompatible with Article X:3(a) GATT. It could have been expected that the
substance of the evidence, as well as the way in which it is presented, would measure up to the gravity
of the US claims and their implications. Howeve r, the opposite has been th e case. Whereas the EC
has participated constructively in the process, a nd already with its First Written Submission presented
a comprehensive description of its system of customs administration and judicial review in order to
provide the Panel with a solid factual basis, the US has approached this case as a game of litigation
tactics. The EC submits that such an approach is not conducive to allowing the Panel to proceed to an
objective evaluation of the facts as required by Article 11 DSU.
18. For these reasons, the EC maintains its view th at the evidence submitted by the US with its
Second Oral Statement is inadmissible.
B.
CERTAIN MATTERS RAISED BY THE UNITED ST ATES IN PART III OF ITS SECOND ORAL
STATEMENT ARE OUTSIDE THE PANEL'S TERMS OF REFERENCE
19. In Section III of its Second Oral Statement, th e US also raises an issue regarding the alleged
non-uniform application of Article 221(3) CCC, whic h concerns the period during which the customs
debt may be communicated to the debtor. 7 The EC submits that this matter is not within the Panel's
terms of reference.
1. The Panel may only examine the matters identified in the US Panel request
20. The present Panel has been established by the DSB with standard terms of reference in
accordance with Article 7.1 DSU. 8 Accordingly, the mandate of the Panel is to examine the matter
referred to it as identified in the Panel request of the United States.9
21. As the Appellate Body has confirmed in US – Carbon Steel, the Panel request forms the basis
of the Panel's terms of reference under Article 7.1 of the DSU:10
There are, therefore, two distinct requirements, namely identification
of the specific measures at issue , and the provision of a brief
summary of the legal basis of the complaint (or the claims).
Together, they comprise the "matter referred to the DSB", which
forms the basis for a panel's terms of reference under Article 7.1 of
the DSU.

 7 US Second Oral Statement, para. 27, para. 31. Th e US inaccurately refers to Article 221(3) CCC as a
provision "prescribing the period following importation during which a customs debt may be collected". As the
EC will show in the following section, this is not accurate.
 8 WT/DS315/9, para. 2.
 9 WT/DS315/8.
 10 Appellate Body Report, US – Carbon Steel , para. 125. Similarly, Appellate Body Report,
Guatemala – Cement I, para. 72.

22. Article 6.2 DSU sets out the following minimum requirements with which all Panel requests
must comply:
The request for the establishment of a panel shall be made in writing.
It shall indicate whether consultations were held, identify the specific
measures at issue and provide a brief summary of the legal basis of
the complaint sufficient to present the problem clearly.
23. In Korea – Dairy, the Appellate Body held that Article 6.2 of the DSU imposes four separate
requirements:
11
When parsed into its constituent pa rts, Article 6.2 may be seen to
impose the following requirements. The request must: (i) be in
writing; (ii) indicate whether consultations were held; (iii) identify
the specific measures at issue; and (iv) provide a brief summary of
the legal basis of the complaint sufficient to present the problem
clearly. In its fourth requirement, Article 6.2 demands only a
summary – and it may be a brief one – of the legal basis of the
complaint; but the summary must, in any event, be one that is
"sufficient to present the problem clearly". It is not enough, in other
words, that "the legal basis of the complaint" is summarily identified;
the identification must "present the problem clearly".
24. The objective and purpose of Article 6.2 of the DSU is to guarantee a minimum measure of
procedural fairness throughout the proceedings. This is of particular importance to the defendant,
who must rely on the Panel request in order to be gin preparing its defence. Similarly, WTO Members
who intend to participate as third parties must be info rmed of the subject-matter of the dispute. This
underlying rationale of Article 6.2 DSU has been explained by the Appellate Body in Thailand – H-
Beams:
12
Article 6.2 of the DSU calls for suffi cient clarity with respect to the
legal basis of the complaint, that is, with respect to the "claims" that
are being asserted by the complaining party. A defending party is
entitled to know what case it has to answer, and what violations have
been alleged so that it can begin preparing its defence. Likewise,
those Members of the WTO who intend to participate as third parties
in panel proceedings must be info rmed of the legal basis of the
complaint. This requirement of due process is fundamental to
ensuring a fair and orderly conduct of dispute settlement proceedings.
25. In EC – Bananas III, the Appellate Body has clarified that the claims which are set out in the
Panel request must be distinguished from the subsequent arguments of the parties in support of their
claim. Consequently, the Appellate Body has held that a faulty Panel request cannot be subsequently
"cured" by the written submission of the parties:
13
We do not agree with the Panel that "even if there was some
uncertainty whether the panel requ est had met the requirements of
Article 6.2, the first written submissions of the Complainants 'cured'

 11 Appellate Body Report, Korea –Dairy, para. 120.
 12 Appellate Body Report, Thailand – H-Beams, para. 88 (emphasis added). Similarly Appellate Body
 13 Appellate Body Report, EC – Bananas III, para. 143.

that uncertainty because their subm issions were sufficiently detailed
to present all the factual and legal issues clearly". Article 6.2 of the
DSU requires that the claims, but not the arguments, must all be
specified sufficiently in the request for the establishment of a panel in
order to allow the defending party and any third parties to know the
legal basis of the complaint. If a claim is not specified in the request
for the establishment of a panel, then a faulty request cannot be
subsequently "cured" by a complaining party's argumentation in its
first written submission to the panel or in any other submission or
statement made later in the panel proceeding.
26. As a consequence, the only basis on which to establish whether a Panel request is in
conformity with the requirements of Article 6.2 is the text of the request itself. This has been
confirmed by the Appellate Body in US – Carbon Steel:
14
As we have said previously, compliance with the requirements of
Article 6.2 must be demonstrated on the face of the request for the
establishment of a panel. Defects in the request for the establishment
of a panel cannot be "cured" in th e subsequent submissions of the
parties during the panel proceedings.
15 Nevertheless, in considering
the sufficiency of a panel request, submissions and statements made
during the course of the panel proceedings, in particular the first
written submission of the complaining party, may be consulted in
order to confirm the meaning of th e words used in the panel request
and as part of the assessment of wh ether the ability of the respondent
to defend itself was prejudiced.

16 Moreover, compliance with the
requirements of Article 6.2 must be determined on the merits of each
case, having considered the panel request as a whole, and in the light
of attendant circumstances.

2. The US claim regarding the non-uniform application of Article 221(3) CCC is not within
the Panel's terms of reference
27. According to the third paragraph of the US Pane l request, the US claims that there exists a
lack of uniformity of administration of EC customs law with respect to the following areas of EC
customs law:

• classification and valuation of goods;
• procedures for the classification and valuation of goods,
including the provision of binding classification and
valuation information to importers;
• procedures for the entry and release of goods, including
different certificate of origin requirements, different criteria
among member States for the physical inspection of goods,
different licensing requirements for importation of food

 14 Appellate Body Report, US – Carbon Steel, para. 127 (emphasis added).
 15 Ibid., para. 143.
 16 See, for example, Appellate Body Report, Korea – Dairy , para. 127; Appellate Body Report,
Thailand – H-Beams, para.95.

products, and different procedures for processing express
delivery shipments;
• procedures for auditing entry statements after goods are
released into the stream of commerce in the European
Communities;
• penalties and procedures regarding the imposition of
penalties for violation of customs rules; and
• record-keeping requirements.
28. The issue raised by the United States regarding the alleged non-uniform application of
Article 221(3) CCC does not concern any of these areas. Article 221 CCC is a provision which
concerns the communication of the customs debt to the debtor. Article 221 CCC is drafted as follows:
1. As soon as it has been entered in the accounts, the amount of
duty shall be communicated to the debtor in accordance with
appropriate procedures.
2. Where the amount of duty payable has been entered, for
guidance, in the customs declara tion, the customs authorities may
specify that it shall not be co mmunicated in accordance with
paragraph 1 unless the amount of duty indicated does not correspond
to the amount determined by the authorities.
 Without prejudice to the application of the second
subparagraph of Article 218(1), wher e use is made of the possibility
provided for in the preceding subpar agraph, release of the goods by
the customs authorities shall be equivalent to communication to the
debtor of the amount of duty entered in the accounts.
3. Communication to the debtor shall not take place after the
expiry of a period of three years from the date on which the customs
debt was incurred. This period sh all be suspended from the time an
appeal within the meaning of Artic le 243 is lodged, for the duration
of the appeal proceedings.
4. Where the customs debt is the resu lt of an act which, at the time it
was committed, was liable to give rise to criminal court proceedings,
the amount may, under the conditions set out in the provisions in
force, be communicated to the debt or after the expiry of the three-
year period referred to in paragraph 3.

29. Article 221 is contained in Title VII of the CCC, entitled "Customs Debt", and more
specifically in Chapter 3 thereof, dealing with the re covery of the amount of the customs debt. In this
context, Article 221 CCC establishes that the amount of duty must be communicated to the debtor.
Article 221(3) sets out a time limit of three years within which this communication of the debt may
occur, but provides that this period is suspended fo r the period of appeal proceedings. Article 221(4)
provides that where the customs debt is the result of an act which, at the time it was committed, was
liable to give rise to criminal court proceedings, the amount may, under the conditions set out in the
provisions in force, be communicated to the debtor af ter the expiry of the three-year period referred to
in paragraph 3.

30. The question of the post-clearance recovery of customs duties, and more specifically during
which period a customs duty may be communicated to the debtor, does not fall within any of the
issues raised in the US Panel request. It does not concern the classification or valuation of goods; it is
not a procedure for the entry and release of goods; it is not a procedure for auditing entry statements;
nor does it concern the imposition of penalties or record-keeping requirements.
31. The United States has submitted that the issues refe rred to in paragraph 3 of its Panel request
are merely "illustrations", and that its claim is related to the lack of uniform administration of "EC
customs law as a whole".
17 As the EC has already remarked in its Second Written Submission, 18 such
an interpretation of the US Panel request is not in accordance with the requirements of Article 6(2)
DSU. EC customs law is a vast body of law. It is therefore not sufficient for the description of the
"specific measure at issue" to simply refer to the "administration of EC customs law" as a whole.
32. The US has implicitly acknowledged this in th e third paragraph of its Panel request by
referring, to the specific issues where it claims a la ck of uniform administration exists. This listing
must have a useful purpose. In particular, it should allow the Panel to know which issues are
precisely within its terms of reference. Similarl y, it should allow the EC, as the defendant in the
present proceedings, to adequately prepare its de fence. Laying down a list of measures and then
vaguely refer to "including but not limited to" shoul d be considered a failed a ttempt to have an "open
ended" case. In the reading of the United States, it would be possible for a complainant to keep a
Panel request extremely vague, raise a few issues as "illustrations", and then bring a case regarding
completely different issues. Moreover, the US seems to believe that such issues can even be
introduced at the very last stage of the proceedings. Such "surprise tactics" are not compatible with
the due process requirements of Article 6(2) DSU.
33. The EC's interpretation finds further confir mation in the attendant circumstances of the
present case, and notably in the subsequent submissi ons of the US. Until its Second Oral Statement,
the US never referred to a problem of non-uni form application of Article 221 CCC. More
specifically, when asked by the Panel after the fi rst hearing to provide an exhaustive list of all
customs procedures19 challenged under Article X:3(a) GA TT, the US declined to do so. 20 If the US
believed that non-uniform applicati on of Article 221(3) CCC was part of its claims, it should have
raised this issue then.
34. The EC finds further confirmation of this in the US reply to the Panel's Question No. 124,
where the US lists a number of provisions in respect of which it claims to have established a lack of
uniform administration. 21 Significantly, this list does not include Article 221 CCC, nor any other
provision from Title VIII of the CCC. This implies that the United States either does not believe it
has established any claim regarding the non-uniform administration of Article 221 CCC, or it
concedes that this claim does not fall within the Panel's terms of reference.
35. For these reasons, the EC submits to the Pane l that the US claim regarding non-uniform
application of Article 221 (3) CCC does not fall within the Panel's terms of reference.

 17 Most recently, US Reply to Panel Question No. 124, para. 1-2. Cf. also US Reply to Panel Question
No. 3, para. 7.
 18 EC Second Written Submission, paras. 13-14.
 19 It is noted that post-clearance recovery of customs debt is not a "customs procedure" within the
meaning of Article 4 (16) CCC. However, the EC understands the Panel to have used the term in a wider sense.
 20 US Reply to Panel Question No. 6, para. 31.
 21 US Reply to Panel Question No. 124, para 4.

III. THE EXAMPLES OF NON-UNIFORM ADMINISTRATION IN SECTION III OF
THE US SECOND ORAL STATEMENT
36. In this section, the EC will proceed to rebut the substantive examples of alleged non-uniform
administration submitted by the United States in S ection III of its Second Oral Statement, i.e. the
Camcorder case, the Sony Playstation case, and th e Judgment of the ECJ in Intermodal Transports.
22
On this basis, the EC will add an overall conclu sion regarding the evidence presented by the US in
support of its claims under Article X:3(a) GATT.
A. CAMCORDERS
37. With respect to the classification of camcorde rs, the United States alleges that there is a
problem regarding the non-uniform administration of EC customs law in respect of the "retrospective
effect" of EC explanatory notes. 23 These allegations are unfounded. Moreover, the US allegations
seem to be primarily related to the issue of the post- clearance recovery of the customs debt, which, as
the EC has already shown,24 is not within the Panel's terms of reference.
38. The US has presented its reference to the camc orders case as a rebuttal to the EC's reference
to EC explanatory notes as a tool for securing uniform administration of EC classification rules. 25
However, it subsequently discusses the question as to whether member States, subsequent to the
adoption of an EC explanatory note, may reach back to collect additional duty on importations made
prior to the issuance of the explanatory note.26
39. This issue has nothing to do with the value of explanatory notes as tools for securing the
uniform administration of tariff classification rules. It goes without saying that an explanatory note
can be effective for the purposes of securing uni form tariff classification only once it has been
adopted. The question of what effect it may have for the collection of customs duties which relate to
importations which took place before the adoption of the explanatory note is a question which relates
to the post-clearance recovery of customs debt, which is an issue distinct from tariff classification.
40. The US has not shown that there has been any lack of uniformity as regards tariff
classification in the EC following the issuance of th e explanatory note submitted as Exhibit US-61.
The BTI issued by the Spanish au thorities submitted as Exhibit US-65 are all in full accordance with
EC classification rules. The US has not provided any evidence of any other member States having
classified Camcorders contrary to EC classification ru les. It has simply stated, without any further
supporting evidence or documentation, that "the Fr ench authority informed the company that it
intended to collect additional duty retroactively on certain camcorde rs, including cameras, that is,
models covered by the Spanish BTI".
27 It thus appears that the question addressed by the French
authorities was one of post-clearance recovery of cu stoms duties, and not one of tariff classification.

 22 The EC notes that two out of the three examples are drawn from a presentation made by Mr. Philippe
de Baere, whom the US describes as a "seasoned customs law practitioner" (US Second Oral Statement, para. 24
and Exhibit US-59). Mr. de Baere is Member of a Brusse ls law firm with an extensive practice in the field of
customs law, who frequently represents industry and tr aders against the EC customs authorities and institutions.
Mr. de Baere has also been involved personally in the two cases referred by the United States. The EC would
remark that it is not surprising that a practising trade lawyer would defend a position that serves the interests of
his clients. The EC considers, however, that a presentatio n by an interested attorney cannot be regarded as an
objective statement on the f acts. The evidential value of the de B aere presentation for the purposes of the
present dispute is therefore nil.
 23 US Second Oral Statement, para. 26 et seq.
 24 Above, Section II.B.

Moreover, the US does not provide any evidence as to when the importation in question took place,
and whether indeed they related to products corr esponding to those referre d described in the BTI
issued by the Spanish authorities.
41. Since the question is therefore not one regarding the uniform administration of tariff
classification rules, but rather of the post-clearance recovery of customs debts, the EC considers that
the issue is outside the Panel's terms of refere nce. The EC will therefore not respond to these
allegations in detail. The EC would note, however, that the substance of the US presentation of the
facts is so confused and incomplete that a meani ngful rebuttal at this stage anyways would be very
difficult, if not impossible. Moreover, the US h as not provided any information as to the concrete
circumstances of the cases in which recovery of th e customs duty was sought. For this reason, the EC
will limit itself hereafter to some general remarks.
42. First, the US has referred to a problem regard ing the uniform administration of Article 221(3)
CCC, which it describes as a provision "prescribing the period following importation during which a
customs debt may be collected".
28 However, this is not accura te. Article 221(3) CCC covers the
question of the post-clearance recovery of customs duties, including the issue of the effect of the post-
importation adoption of explanatory notes, only very partially. In fact, Article 221(3) addresses only
the period during which a customs debt may be communi cated to the debtor. In contrast, the question
of the substantive conditions under which the cust oms debt may be retroactively recovered is
addressed in Article 220 CCC, and in particular in Article 220(2)(a) thereof.
43. This confusion on the part of the US is further illustrated by the reference the US makes to an
administrative guideline issued by Germany which it claims illustrates its allegation of non-uniform
administration of Article 221 (3) CCC. 29 However, this administrative guideline does not refer to
Article 221 CCC, but to Articles 220 and 236 CCC. More over, contrary to what the US suggests, this
guideline is not a German invention, but is the tran sposition of a letter that had been addressed by the
European Commission in 1996 to the customs aut horities of all member States, including Germany. 30
There also exists an information paper elaborated by the services of the European Commission on the
application of Articles 220 (2) (b) CCC and 239 CCC, which provides further guidance to the member
States authorities.31
44. Second, the US claims that the only permitted exception to Article 221(3) CCC is the lodging
of an appeal, which suspends the three-y ear period for communicating the customs debt. 32 This is
equally incorrect. Another relevant exception is Article 221(4) CCC, accord ing to which, where the
customs debt is the result of an act which, at the time it was committed, was liable to give rise to
criminal court proceedings, the amount may, under the conditions set out in the provisions in force, be
communicated to the debtor after the expiry of the three-year period. As the Court of Justice has
clarified, the question as to whether an act may give raise to criminal proceedings is a question of
member States law, not of Community law. 33 Moreover, the length of the period during which the
debt can be communicated in the case envisaged in Article 221(4) CCC must equally be laid down in
member States' law. Any resulting differences are th us differences between legislation, not examples
of non-uniform administration.

29 US Second Oral Statement, para. 29 and Exhibit US-63.
30 As Exhibit EC-153, the EC attaches the letters addressed to Germany and the UK. But for the
addresses, both letters are identical.
31 Exhibit EC-154. The Paper is also available on the website of DG TAXUD
(http://europa.eu.int/comm/taxation_customs/resources/documents/customs/procedural_aspects/general/debt/gui
delines_en.pdf)
33 Case C-273/90, Meico-Fell, [1991] ECR I-5569, para 13 (Exhibit EC-155).

45. In conclusion, the camcorders case does not show any lack of uniformity in the EC's
classification practice. As regards the issue of post- clearance recovery of customs debt, this question
is outside the Panel's terms of reference.
B.
SONY PLAYSTATION2
46. In its Second Oral Statement, the US raises an alleged problem of non-uniform administration
relating to the classification of the Sony PlayStation2 (PS2). 34 However, the US presentation of the
facts is incomplete and misleading. While the US states that the UK proceedings demonstrate how
the ECJ's decision in Timmermans "can detract from rather than promote uniform administration",
35
the reliance on the case by the UK High Court of Jus tice to uphold an interpretation advanced by the
Court of First Instance (CFI) and other ke y Community institutions actually shows how Timmermans
can operate to promote uniformity.
47. Ultimately, a more detailed examination of the fa cts in that case is necessary to demonstrate
how the rule in Timmermans actually contributed to, rather than detracted from, a uniform
interpretation and application of Community law. That case involved an application by Sony Europe
Ltd. to the UK authorities for a BTI classifying its PS2. On its first application, the UK customs
authority classified it pursuant to CN 9504 1000, wh ich covers "video games of a kind used with a
television receiver", 36 because it concluded that the PS2 was not freely programmable. 37 T h i s
classification was confirmed on departmental review.38
48. Subsequently, the issue reached the EC Cust oms Code Committee (Nomenclature Section). 39
The Committee unanimously considered that PS2 indeed fell under the CN 9504 1000, but for
different reasons. In particular, while it consid ered that the PS2 was properly classified under
CN 9504 1000, it concluded that the device was freely programmable. Subsequently, the Commission
adopted, on 10 July 2001, a classification regul ation classifying the PS2 under heading 9504.
40
Relying on general rule 3(b), the regulation gave as a reason that "playing video games gives the
apparatus its essential character".
49. On appeal, the UK Tribunal annulled the decision of the UK authorities in light of the fact
that the legal basis underlying the denial of the requested BTI classification was incorrect. 41
Therefore, pending publication of the Commission regulation, Sony requested a new BTI and the UK
Commissioners issued a BTI classifying the PS2 under CN 8471 49 00 (covering automatic data
processing machines and parts thereof),
42 but making it clear that its classification would have to be
revoked when the classification regulation would enter into force. 43 Following the entry into force of
the Regulation, on 25 July 2001, the UK authority revoked the BTI and, in conformity with
Community law, the PS2 was classified under CN 9504 1000, the same classif ication as the original
BTI.44

 34 US Second Oral Statement, paras. 32-34.
 36 Exhibit EC-156.
 37 Exhibit US-70, para. 4.
 38 Exhibit US-70, para.4.
 39 Case T-243/01, Sony (Exhibit EC-24).
 40 Regulation 1400/2001, Exhibit EC-157.
 41 Exhibit US-70, para. 4.
 42 Exhibit EC-156.
 43 Exhibit US-70, paras. 5, 50-51.
 44 Exhibit US-70, para. 6.

50. Following the revocation of the BTI classifying the PS2 in 8471 49 90 00 , Sony challenged
the validity of the Regulation at the Court of First Instance. 45 In its judgment of 30 September 2003,
the CFI invalidated the Regulation. However, as regards the substantive classification, the CFI
explicitly confirmed that the article c ould be classified under heading 9504 1000. 46 Rather, it
determined that the reasons given for the classifi cation, namely reliance on General Interpretative
Rule 3(b), had been erroneous. 47 It also specifically noted that classification of the PS2 under
CN 9504 1000 could be properly based on the objective characteristics of the product.48 In particular,
the Court found that: 49
Such reasoning can also be applied to a case such as this one. Thus,
in the absence of a definition of "video games" for the purposes of
subheading 9504 10, it is appropriate to consider as video games any
products which are intended to be used, exclusively or mainly, for
playing video games, even though they might be used for other
purposes.
It is, moreover, undeniable that, both by the manner in which the
PlayStation2 is imported, sold and presented to the public and by the
way it is configured, it is intended to be used mainly for playing
video games, even though, as is apparent from the contested
regulation, it may also be used for other purposes, such as playing
video DVDs and audio CDs, in addition to automatic data processing.
51. Following this judgment, the UK customs aut horities in a letter dated 21 October 2003,
requested the advice of the European Commission on the classification of the Sony PS2. In response,
the Commission sent a letter to all EC customs au thorities (including the customs authorities of the
new member States) on 8 January 2004 which confirmed that on the basis of the judgment of the CFI,
the PS2 cannot be classified in heading 8471, but must be classified in heading 9504.
50
52. Following the CFI decision, Sony sought to have the BTI issued under CN 8471 49 90 00 by
the UK authorities before the entry into force of th e new classification regulation "revived". It is
worth noting that Sony did not apply for a new BTI, but merely attempted to "revive" the old BTI.
Accordingly, before the UK VAT and Duties Tribuna l, Sony concentrated its arguments exclusively
on the revival of the revoked BTI, and did not address the substantive classification issue. 51 The UK
Tribunal rejected Sony's appeal, and maintained the revocation of the BTI in force.52
53. On appeal, the UK High Court equally declined to revive the BTI for CN 8471 49 90 00. Its
reasons were based on Community objectives and principles. 53 In particular, on a more detailed
examination of the issue and taking account of, inter alia, the CFI decision, a Commission letter
advocating the CFI interpretation, the unanimous conclusions of the Customs Code Committee, and
other international organization interpretations following the decision – all of which classified it under
heading 9504 1000 54 – it was obvious to the UK High Court that the BTI classifying the PS2 under

 45 Exhibit US-70, para. 6.
 46 Exhibit EC-24, para. 119.
 47 Exhibit EC 24, para. 133.
 48 Exhibit EC-24, para. 110.
 49 Exhibit EC-24, paras. 111-112.
 50 Exhibit EC-158.
 51 Exhibit EC-159.
 52 Exhibit EC-159.
 53 See Exhibit US-70, para. 118.
 54 See Exhibit US-70, paras. 141-46.

CN 8471 49 90 00 was wrong and therefore, the applicant was not entitled to revive that BTI.
55 With
respect to the original revocation of the BTI classifying PS2 in CN 8471 49 90 00, the Court
concluded, based on Timmermans, that the national authorities were entitled to revoke the
classification as a separate action from the Regulati on and therefore the revocation of the BTI for
8471 49 90 00 stood in light of the fact that the rationale for revoking it remained applicable.
56
54. Ultimately, the US statement alluding to the fact that the High Court of Justice revoked the
BTI based on its "own re-evalu ation of the classification rules" 57 is highly misleading. The
revocation, on 25 July 2001, took place on account of the entry into force of an EC classification
regulation. Accordingly, rather than following its "own interpretation of classification rules", the UK
authority in fact duly applied Community law. The UK High Court upheld the validity of the
revocation with explicit reliance on the Timmermans judgment of the Court of Justice and on the basis
of clear evidence supporting the reasoning behind that revocation. 58 This is yet another illustration of
the fact that the Timmermans case law, rather than detract from uniformity, actually promotes it.
55. In addition, the US has also criticised the UK High Court for not having referred the question
to the ECJ. 59 This criticism is entirely unjustified. First of all, the High Court is not a court of last
instance, and therefore not obliged to refer questions to the ECJ. Second, as regards the substantive
classification issue, the issue had sufficiently been clarified through the judgment of the Court of First
Instance. Moreover, the supporting elements, su ch as the Commission's letter, the Committee's
opinion, and WCO opinions, all pointed in that same direction. 60 Presumably recognising this, Sony
had not even tried to directly argue the classifi cation question. Accordingly, the UK court was not
wrong to consider that the issue was sufficiently clear, and that it could decide the issue on its own.
56. In conclusion, the Sony PlayStation2 case is not a case of lack of uniformity in the EC's
system of tariff classification. Rather, it is a case where a "seasoned customs law practitioner", 61
through unprecedented legal contorti ons, has unsuccessfully tried to revive a BTI which would have
been contrary to the uniform classification practice in the EC. It speaks for the efficiency of the EC's
system that this attempt failed. In contrast, it is ironic that the US makes itself the advocate for
behaviour which would manifestly detract from the uniform application of EC law.
C. INTERMODAL TRANSPORT
57. The US presents the ECJ judgement in Intermodal Transports as leaving "broad discretion" to
the member States' courts whether or not they refer a question to the ECJ. 62 According to the US, this
discretion would reinforce divergences in Members States' administration of customs law.63
58. However, these two arguments rest on an incomplete and incorrect reading of the judgement.
59. Concerning the first argument (about discretion), the EC has already explained in its First
Written Submission, the different pos itions of national courts or tr ibunals depending on whether there
is or is not a judicial remedy under national law. 64

 55 Exhibit US-70, paras. 97 and 147.
 56 Exhibit US-70, paras. 132-33.
 58 Exhibit US-70, para. 118.
 60 Exhibit US-70, paras. 143-144.
61 Cf. US Second Oral Statement, para. 24.
 62 US Second Oral Statement, para. 37, in fine.
 63 Also in US Second Oral Statement, para. 37, in fine.

60. With respect to national courts or tribunals agai nst whose decisions there is a judicial remedy
under national law, they are entitled, but in principle not required, to refer a question to the Court of
Justice for a preliminary ruling on interpretation. 65 The rationale behind this rule is obviously that, in
case the court or tribunal decides not to refer the question, the decision of the court or tribunal can still
be appealed and that the obligation to refer will be upon the court or tribunal against whose decisions
there is not a judicial remedy under national law.
61. Indeed, in respect of national courts or tribuna ls against whose decisions there is no judicial
remedy under national law, the Court affirms again in Intermodal Transports that "the third paragraph
of Article 234 EC must, following settled case-law, be interpreted as meaning that such courts or
tribunals are required, where a question of Community law is raised before them, to comply with their
obligation to make a reference".
66
62. Intermodal Transport is precisely a case showing that this obligation is respected by the
highest national courts of tribunals. The "Hoge R aad" is the last instance in the Netherlands for
classification in customs matters and, when confronted with the classification of a vehicle, it referred
to the ECJ asking about the correct classification of the good in question. 67 The US makes no
reference to this issue in its Second Oral Statement.
63. Although there are exceptions to the obligation to refer, these exceptions are subject to strict
conditions, which were laid down by the ECJ in the Cilfit case.68 These exceptions are: 69
 - the question raised is irrelevant; or,
 - the Community provision in question has al ready been interpreted by the Court; or,
 - the correct application of Community law is so obvious as to leave no scope for any
reasonable doubt.
64. In relation to the latter criterion (no scope for any reasonable doubt), which has attracted the
US attention, the ECJ has repeated in Intermodal Transport that:
 70
[…] before the national court or tribunal comes to the conclusion that
the correct application of a provision of Community law is so
obvious that there is no scope for any reasonable doubt as to the
manner in which the question raised is to be resolved and therefore
refrains from submitting a question to the Court for a preliminary
ruling, it must in particular be convinced that the matter is equally
obvious to the courts of the other me mber States and to the Court of
Justice (Cilfit and Others, paragraph 16).
65. However, as already stated, the exceptions are subject to strict conditions. Generally
speaking, they "must be assessed in the light of the specific characteristics of Community law, the

65 The statement made by Mr. Vermulst in the article quoted by the US at para. 38 of its Second Oral
Statement refers particularly to the position of first instance national courts (Exhibit US-72). This article,
therefore, does not support the overa ll and exaggerated argument employed by the US in its Second Oral
Statement that there is a "broad di scretion" open to the member States' courts whether or not they refer a
question to the ECJ.
 66 At para. 33.
 67 At paras. 3 and 46-64.
 68 Case 283/81, Cilfit, [1982], ECR p. 3415 (Exhibit EC-160).
 69 At para. 33 in Intermodal Transport and, more in detail, at paras. 10-16 in Cilfit.
 70 Exhibit US-71, para. 39.

particular difficulties to which its interpretation gi ves rise and the risk of divergences in judicial
decisions within the Community".
71
66. The two first general conditions have already been developed by the ECJ in Cilfit:72
[…] it must be borne in mind that Community legislation is drafted in
several languages and that the diffe rent languages versions are all
equally authentic. An interpretation of a provision of Community
law thus involves a comparison of the different language versions.
It must also be borne in mind that, even where the different language
versions are entirely in accord with one another, that Community law
uses terminology which is peculiar to it. […].
Finally, every provision of Community law must be placed in its
context and interpreted in the light of the provisions of Community
law as a whole, regard being had to the objectives thereof and to its
state of evolution at the date on which the provision in question is to
be applied.
67. Moreover, Intermodal Transport adds that the exceptions to the obligation to refer must be
applied very strictly in tariff classification cases where a BTI has been issued to a third party by
another member State. The Court notes that:
 73
The fact that the customs authorities of another member State have
issued to a person not party to the dispute before such a court a BTI
for specific goods, which seems to reflect a different interpretation of
the CN headings from that which that court considers it must adopt in
respect of similar goods in question in that dispute, most certainly
must cause that court to take particular care
 in its assessment of
whether there is no reasonable doubt as to the correct application of
the CN, taking into account, in particular, of the three criteria cited in
the preceding paragraph" (emphasis added).
68. It is therefore, misleading to assert, as the US does, that Intermodal Transports "shows […]
the broad discretion that member State courts have to refer or not refer questions to the ECJ". 74 This
level of discretion is limited to na tional courts or tribunals against whose decisions there is a judicial
remedy under national law. In the case of national co urts or tribunals against whose decisions there is
no judicial remedy under national law, the general rule is that there is an obligation on them to refer,
with some very specific and limited exceptions, to the ECJ. These exceptions have been rendered
even stricter in the customs classification sector by Intermodal Transports.
69. Finally, with respect to the second argument presented by the US in its Second Oral
Statement, it is worth noting that, contrary to what the US claims, the Intermodal Transport case does
not demonstrate any absence of uniformity in the EC's tariff classification practice, but on the contrary
perfectly shows how preliminary rulings contribute to the EC uniform administration of its laws.

 71 Exhibit US-71, para. 33.
 72 Exhibit EC-160, paras. 18-20.
 74 US Second Oral Statement, para. 37, in fine.

70. Indeed, the ECJ has clarified in the judgm ent that heading 8709 of the Combined
Nomenclature must be interpreted as not covering th e vehicle in question. This means that, according
to the Timmermans case law, any BTI issued for that vehicl e at that heading by any national customs
authority must be revoked. 75 Moreover, due to the binding effects of preliminary rulings 76 and in the
absence of a change in the relevant classification rules, national customs authorities are not entitled to
classify that good under heading 8709 any longer.
71. In the actual case, the BTI issued by Finland on 14 May 1996 had expired, in accordance with
Article 12 (4) CCC, in May 2002, and had not been renewed. Accordingly, there was no issue of non-
uniform administration to be resolved. In contrast, had the Finnish BTI still been valid, or had it been
renewed, the Finnish authorities would then have revoked it in accordance with the Timmermans case
law.
72. In conclusion, contrary to the US submissions, the Intermodal case illustrates that the
preliminary reference procedure provides an effective tool for ensuring uniform tariff classification.
 77
D. OVERALL CONCLUSION REGARDING THE EVIDENCE PRESENTED BY THE UNITED STATES
UNDER ARTICLE X:3(A) GATT
73. Already in its closing remarks at the second hear ing of the Panel, the EC has pointed to the
lack of factual evidence supporting the US claims of non-uniform administration. 78 In the area of
tariff classification, 79 the US initially referred to two cases, in neither of which it succeeded in
establishing a lack of uniformity. In its second oral statement, the US has made a belated effort to
provide three further examples of alleged non-unifor mity. However, as the EC has shown, none of
these examples is an example of non-uniformity, and one of the cases is not even within the panel's
terms of reference. More ironically still, in cer tain cases and most notably the Sony PlayStation2
case, the US makes itself the advocate of behaviour th at would actually detract, rather than promote,
uniformity.
74. Throughout its submissions, the EC has stressed that it falls on the United States to prove that
the EC system entails a lack of uniform administra tion. In response to the Panel's Question No. 173,
the EC has also commented on the evidential requi rements to be fulfilled in order for it to be
established that the EC's system "as such" leads to a lack of uniform administration.
75. A useful point of reference for the present case remains the report of the Appellate Body in
US – Oil Country Tubular Goods from Mexico.
80 In this case, the Appellate Body reversed the Panel's
findings that the US Sunset Policy Bulletin as su ch violated the Anti-Dumping Agreement because it
considered that a sample of more than 20 cases of application taken out of over 200 cases submitted
by Mexico was not sufficient for an objective establishment of the facts.

 75 EC First Written Submission, para. 326 et seq. and EC Second Written Submission, para. 99.
 76 EC Reply to Question No. 73, paras. 131 and 132, and Question No. 163, para. 67.
 77 It is worth noting that this is also supported by the article by Mr. Vermulst only very selectively
quoted by the US in para. 38 of its Second Oral Statement. Right after th e passage quoted by the US,
Mr. Vermulst states as follows: "Evidently, the ECJ is th erefore prepared to thoroughly delve into this area of
EC trade law. [...] An explanation for this difference might be that a co rrect uniform customs classification is
one of the pillars of a successful customs union." (Exhibit US-72, p. 21).
 78 EC Closing Statement, paras. 19-20.
 79 In the area of customs valuation, the evidentiary basis of the US claim is completely missing, since
the US claims seem to be almost entirely based on su ppositions and extrapolations from the 2000 Report of the
EC Court of Auditors.
 80 EC Reply to Panel Question No. 173, para. 98.

76. In the present case, the US asks the Panel to come to a finding that the EC's entire system of
customs administration is incompatible with Article X:3(a) GATT. It asks the Panel to come to this
result on the basis of less than a handful of cases which the US has itself selected. It is submitted that
such a small and highly selective sample is not a sufficient basis for evaluating whether the EC's
system, or individual components thereof, are compa tible with Article X:3(a) GATT. This result is
even more compelling when it is noted that out of the handful of cases selected by the US, not a single
one actually shows a lack of uniformity in the EC's system of customs administration.
77. Overall, the EC therefore submits that the US has failed to establish that there is a lack of
uniformity in the administration of EC customs law in the areas referred to in its Panel request.
IV. CONCLUSION
78. For the above reasons, the EC reiterates the conclusion stated in its First Written Submission.

ANNEX C-2

RESPONSES OF THE UNITED STATES
TO SUPPLEMENTARY QUESTIONS POSED BY THE PANEL
REGARDING SECTION III OF THE US SECOND ORAL STATEMENT

QUESTIONS FOR THE UNITED STATES

177. Please explain why the United States did not refer to evidence contained in Section III of
its Oral Statement at the second substantive meeting, prior to the second substantive meeting?

The United States became aware of the illustrative cases referred to in Section III of its Oral
Statement at the second substantive meeting through the presentation by Mr. Philippe De Baere at an
27 October 2005, American Bar Association symposium.
1 The United States called attention to those
illustrative cases because they help ed to rebut specific arguments the EC had made in prior
submissions, and because, more generally, they refu ted the EC's contention that the United States was
basing its claims on "theoretical" scenarios.2

As the United States became aware of instances of non-uniform administration, it identified
particular cases that highlighted issues that had been developed at earlier stages in the dispute and that
would aid the Panel in examining those issues. Not surprisingly, in identifying examples of the non-
uniform administration of EC customs law, the Un ited States focused, in particular, on information
from businesses and their representatives who actually have had direct experience with the EC's
customs administration system. Obtaining informat ion from such sources has not always been easy,
as persons who have to deal with the Commission and with the EC's 25 independent, geographically
limited customs offices on a routin e basis often (and understandably) are reluctant to openly criticize
the EC system. As the EC's pointed critique of Mr. De Baere's presentation in its response to the
Panel's Question No. 172 shows, those concerns are not unfounded.3

1 See US Second Oral Statement, para. 24 et seq.; Philippe De Baere, Coping with customs in the EU:
The uniformity challenge: Judicial review of customs decisions and implementing legislation , Presentation at
ABA International Law Section (27 October 2005) (Exh. US-5 9). As points of reference, it should be recalled
that the US First Written Submission was filed on 12 July 2005, and the US Oral Statement at the first Panel
meeting was delivered on 14 September 2005.
2 See EC First Written Submission, para. 314; see also id. , paras. 244-46; EC First Oral Statement,
paras. 28-29; EC Second Written Submission, paras. 45, 54.
3 Additional Submission of the European Communities in Rebuttal of Section III of the US Second
Oral Statement, para. 36 n.22 (14 December 2005) (" EC Additional Submission"). Paradoxically, the EC
asserts that statements by the very persons who are harmed by the non-uniform administration of EC customs
law (or their representatives) are not credible b ecause they are supposedly self-interested. See id.; EC Closing
Statement at Second Panel Meeting, para. 16 (asserting that affidavit by Chairman of Rockland Industries has
"no probative value whatsoever"). The United States finds this assertion puzzling. The persons whose
statements are at issue have absolutely nothing to gain from openly recounting their direct experiences with the
non-uniform administration of EC customs law. If anything, critical statements by persons with direct
knowledge of non-uniform administration of EC customs law are contrary to their self-interest, as such
statements might be perceived as prejudicial to their ongoing relations with EC institutions and with the EC's 25
independent, geographically limited customs offices. The only self-interest that companies and lawyers have in
coming forward is their interest in improving the EC system of customs administration so as to avoid future
problems. Finally, the United States notes a glaring inconsistency between the EC's critique of the statements of
persons with direct knowledge of the non-uniform administration of EC customs law as not credible, on the one
hand, and its (erroneous) assertion that there is an absence of evidence of nullification and impairment, on the
other, (see EC Second Oral Statement, para. 54), given that some of the strongest evidence of nullification and
impairment are statements of persons who have been harmed by the EC's non-uniform administration of its
customs laws.

The illustrative cases discussed in Section III of the US Oral Statement at the second
substantive meeting all involve relatively recent ev ents. This helps to explain the timing of the
discussion of those cases in this dispute and c ontradicts the EC's groundless accusation that "the
United States has been deliberately withholding the evidence until the last possible stage."
4 F o r
example, in the camcorders case, it was only in No vember 2005 that the customs authority in France
informed the French importer that it intended to co llect additional duties on past imports of certain
camcorder models, notwithstanding BTI issued to th e French company's Spanis h affiliate classifying
those models under heading 8525.40.91.5 In the Sony PlayStation2 case, it was only at the end of July
2005 that the UK High Court of Justice issued its d ecision declining to refer to the ECJ a question
concerning the extent of a customs aut hority's power and (following the ECJ's Timmermans decision)
affirming the power of that authority to keep BT I revoked notwithstanding the annulment of the EC
regulation that had led to its revocation in the first place. 6 Finally, the ECJ's decision in Intermodal
Transports (Exhibit US-71) was not issued until mid-September 2005 (in fact, at the same time the
first substantive meeting in the present dispute was taking place).

Moreover, the illustrative cases that the United Stat es discussed all rebut particular arguments
the EC had made in previous submissions. The EC has asserted that explanatory notes, BTI, and ECJ
decisions issued under the preliminary reference pr ocedure all serve as important instruments to
ensure the uniform administration of EC customs law. 7 The illustrative cases the United States
discussed at the second Panel meeting help to rebut the EC's argument with respect to each of those
instruments.

The camcorders case, for example, showed the non-uniformity of administration resulting
from issuance of an explanatory note, with some me mber States revisiting the classification of past
imports in light of the note (and, accordingly, co llecting additional duty) and others giving the note
prospective effect only.
8 The case also showed an important limitation of BTI as a supposed tool of
ensuring uniform administration. Thus, in an audit of a company in France, the customs authority was
able to disregard the classification of goods set fort h in BTI issued to an affiliated company by the
customs authority in Spain. 9 Finally, the case showed an important limitation on ECJ decisions as
tools that allegedly could ensure uniform admini stration. Thus, France's highest court simply
declined to refer a question to the ECJ (concer ning the circumstances under which the three-year
period for communication of the customs debt to the debtor provided for in the Community Customs
Code may be suspended), notwithstanding diverg ence in administration among different customs
authorities in the EC.10

The Sony PlayStation2 case is another illustra tive case that serves to rebut two arguments
advanced by the EC. The EC has tried to argue that the ECJ's Timmermans decision of January 2004,

4 EC Additional Submission, para. 14.
5 See US Second Oral Statement, para. 30.
6 See US Second Oral Statement, paras. 33-34.
7 See, e.g. , EC Second Written Submission, paras. 93-104, 244; EC Replies to 1 st Panel Questions,
paras. 55, 71, 175.
8 See US Second Oral Statement, paras. 27-29. Th e EC attempts to dismiss the relevance of the
camcorder case by arguing that it does not relate to "explanatory notes as tools for securing the uniform
administration of tariff classification rules." EC Add itional Submission, para. 39. Rather, in its view, the
illustration relates to the effect of explanatory notes on the post-clearance recovery of customs debt. What the
EC obscures by parsing the illustration in this way is the basic point that different customs authorities in the EC
give different effect to these instruments, which undermines the suggestion that they "secure" uniform
administration.
9 See US Second Oral Statement, para. 30.
10 See US Second Oral Statement, para. 31.

promotes rather than detracts from uniform administration.11 Timmermans is the decision that permits
each of the EC's 25 independent, geographically limited customs offices to revoke or amend BTI on
its own initiative and regardless of the effect that ot her customs offices in the EC have given to that
BTI. The United States rebutted the EC's characterization of Timmermans as a uniformity-promoting
decision by, among other things, calling attention to the Sony PlayStation2 case. 12 T h e S o n y
PlayStation2 case also helps rebut the EC's portrayal of the preliminary reference mechanism as a tool
that allegedly could ensure uniform administration, given the adherence of member State courts (such
as the UK court in this case) to the EC Advocate- General's call for self-restraint in use of that
mechanism in the customs area, as set forth in his opinion in Wiener.13

Finally, the Intermodal Transports decision also helps to rebut the EC's portrayal of the utility
of the preliminary reference mechanism as a tool to ensure uniform administration. If the preliminary
reference mechanism truly served as a tool to ensure uniform admi nistration, an obvious case for use
of that tool would be one in which a member State court was made aware of divergent classification
of the product at issue by the customs authority in another member State. Indeed, the EC Commission
itself evidently made that argum ent (unsuccessfully) to the ECJ.
14 Nevertheless, the ECJ found that
even this circumstance does not compel use of the mechanism, if the member State court believes the
correct classification to be "so obvious as to leave no scope for any reasonable doubt".15

In sum, each of the illustrativ e cases discussed in Section III of the US Oral Statement at the
second Panel meeting helped to rebut arguments the EC had made in its prior submissions. Far from
engaging in "a game of litigation tactics", 16 the United States used the illu strative cases in Section III
of its oral statement precisely as contemplated by paragraph 12 of the Panel's working procedures –
i.e. "for purposes of rebuttals". Its introduction of re buttal evidence at this stage in the proceeding is
not at all remarkable in WTO dispute settlement. In deed, in this very proceeding, the EC introduced
six new exhibits in connection with its commen ts on the US answers to the Panel's questions
following the second Panel meeting. Given that two of those exhibits (Exhibits. EC-161 and EC-162)
relate to US customs administration, which is not even at issue in this dispute, it is difficult to see how
they meet the standard of being "necessary for the purposes of rebuttal". In other disputes, as well,
the EC commonly has introduced evidence (ostensibly for rebutta l purposes) at the second Panel
meeting or later.17

11 See, e.g., EC Second Written Submission, para. 99; EC Replies to 1st Panel Questions, para. 30.
12 The issue in that case was what an individual cu stoms authority has the power to do, in light of
Timmermans, following the annulment of a classification regulation with EC -wide effect. Specifically, the
question was the status of BTI that the authority had revoked on the basis of the now-annulled regulation. Must
the authority restore the BTI (an action that, in theory, might promote uniform classification of the good at issue,
albeit under a heading different from that in the now-annulled regulation)? Or, may the authority keep the BTI
revoked, relying on new, independent reasons for doing so, rather than on the existence of the now-annulled
regulation? Citing Timmermans, the UK High Court found that the customs authority in the UK could keep the
BTI revoked, relying on new, independent reasons. The United States submits that the PlayStation2 case
demonstrates that even where an EC customs office ha s issued BTI, supposedly bringing a limited degree of
uniformity to the classification of the good co ncerned (at least for the holder of the BTI), Timmermans
empowers the customs office to modify or revoke the BTI for its own, independent reasons, in a way that
completely undermines uniform administration.
13 See US Second Oral Statement, paras. 33-34.
14See Intermodal Transports BV v. Staatssecretaris van Financiën , Case C-495/03, para. 35
(15 September 2005) (referring to argument by the Commission) (Exhibit US-71) ("Intermodal Transports").
15 Intermodal Transports, paras. 33, 45 (Exhibit US-71).
16 EC Additional Submission, para. 17.
17 In the dispute EC – Protection of Trademarks and Geographical Indications for Agricultural
Products and Foodstuffs (DS174 and DS290), the EC introduced 31 new exhibits, totaling 108 pages, in
connection with its answers to questions following the second substantive meeting with the panel. In that same
dispute, the EC filed an additional five exhibits, totaling 93 pages, in connection with its comments on the
complainants' answers to questions. Although that dispute concerned EC measures, some of the exhibits the EC

178. In paragraph 19 et seq of the European Communities' reply to Panel Question No. 172,
the European Communities submits that Article 221(3) of the Community Customs Code does
not concern any of the areas of customs administra tion referred to in the United States' request
for establishment of panel. Please comment.

The EC's assertion that Article 221(3) of the Community Customs Code ("CCC") does not
concern any of the areas of customs administration referred to in the US panel request appears to
confuse the claims made by the United States with arguments advanced in support of those claims. It
is well established that, under Article 6.2 of the DSU, a panel request must set forth the claims of the
complaining party, but need not set forth its arguments.
18

The claims of the United States with respect to GATT 1994 Article X:3(a) are set forth
clearly and with specificity in the first paragra ph of its panel request (WT/DS315/8). There, the
United States claims that "the manner in which the European Communities ("EC") administers its
laws, regulations, decisions and rulings of the kind described in Article X:1 of the General Agreement
on Tariffs and Trade 1994 ("GATT 1994") is not uniform, impartial and reasonable, and therefore is
inconsistent with Article X:3(a) of the GATT 1994". The panel request then goes on to identify
precisely the laws, regulation, decisions, and rulings of the kind described in Article X:1 of the GATT
1994 that the EC fails to administer in the manner required by Article X:3(a). The very first measure
identified is the CCC, of which Article 221(3) plainly forms a part.

The third paragraph of the panel request lists examples of some important ways in which the
lack of uniform administration of EC customs law mani fests itself. That this is not an exhaustive list
is plain from the introductory phrase "including but not limited to". In its reply to the Panel's
Question No. 172, the EC argues that this phrase shoul d not be read to encompass the area of customs
administration related to CCC Article 221(3) (i.e. communication of the customs debt).
19

In making this argument, the EC is treating the il lustrations set forth in the third paragraph of
the panel request as if they were the US claims , as opposed to examples that demonstrate the US
claim that the EC is breaching GATT 1994 Article X: 3(a) by failing to administer its customs laws
uniformly. While the phrase "including but not limited to" may be inadequate to include in a dispute
measures or agreement provisions not expressly listed in the panel request20, its use in connection with
a summary of arguments in support of a claim does not affect the right of the complaining party to
make other arguments throughout a dispute.21

submitted at that stage of the proceeding concerned agre ements to which the EC is not party (i.e. the North
American Free Trade Agreement) and municipal la w of the complaining parties. In the dispute EC – Trade
Description of Sardines , the EC even attempted to introduce new ev idence at the interim review stage of the
panel proceeding. See Appellate Body Report, European Communities – Trade Description of Sardines ,
WT/DS231/AB/R, para. 301 (adopted 23 October 2002). The Appellate Body concluded that the interim review
stage was not an appropriate time to submit further (alleged) rebuttal evidence.
18 See, e.g. , Appellate Body Report, Korea – Definitive Safeguard Measure on Imports of Certain
Dairy Products , WT/DS98/AB/R, para. 125 (adopted 12 January 2000); Appellate Body Report, European
Communities – Regime for the Importation, Sale and Distribution of Bananas , WT/DS27/AB/R, para. 141
(adopted 25 September 1997); Appellate Body Report, Brazil – Measures Affecting Desiccated Coconut ,
WT/DS22/AB/R, p. 22 (adopted 20 March 1997).
19 EC Additional Submission, para. 32.
20 Cf. Appellate Body Report, India – Patent Protection for Pharmaceutical and Agricultural Chemical
Products, WT/DS50/AB/R, para. 90 (adopted 16 January 1998).
21 See, e.g. , Appellate Body Report, European Communities – Regime for the Importation, Sale and
Distribution of Bananas , WT/DS27/AB/R, para. 141 (adopted 25 September 1997) ("[T]here is a significant
difference between the claims identified in the request for the establishment of a panel, which establish the
panel's terms of reference under Article 7 of the DSU, and the arguments supporting those claims, which are set

The United States discussed CCC Article 221(3) – a provision of a measure identified in the
US panel request as not being administered by the EC in a uniform manner – in its Oral Statement at
the second Panel meeting as part of a rebuttal of th e EC assertion that certain instruments – i.e.
explanatory notes, BTI, and ECJ judgments – ensure uniform administration. As noted in response to
Question No. 177, above, the divergent administra tion of Article 221(3) in the camcorders case
highlights that these tools do not ensure uniform administration. Thus, for example, although
different EC customs offices take different appr oaches to circumstances warranting suspension of the
three-year period for communication of the customs debt provided for in Article 221(3) – a clear
example that the EC fails to administer its customs laws uniformly – at least one member State court
of last resort has consistently declined to refer to the ECJ a question that might lead to resolution of
that divergence.
22 Under the EC system of customs law administration, the existence of such a
divergence within the EC does not itself compel a member State court to refer a question to the ECJ.

The United States was not required to refer to th is argument in its panel request. All that it
was required to do (as relevant here) was to "ide ntify the specific measures at issue and provide a
brief summary of the legal basis of the compla int sufficient to present the problem clearly" 23, which is
what it did, and more.

179. In paragraph 34 of the European Communities' reply to Panel Question No. 172, the
European Communities notes that the list of instances of non-uniform administration contained
in the United States' reply to Panel Question No. 124 does not refer to Article 221 of the
Community Customs Code. Please comm ent, indicating the significance, if any, that should be
attached to the European Communities' observation.

No significance should be attached to the lack of a reference to CCC Article 221 in the US
answer to Question No. 124. In particular, contra ry to what the EC asserts, it does not reflect an
acknowledgment either that the United States has fa iled to show non-uniform administration by the
EC of Article 221 or that non-uniform administratio n of Article 221 falls outside the Panel's terms of
reference.

Question No. 124 did not ask the United States to list every illustration supporting its claim
that the EC's failure to administer its custom s laws uniformly breaches the EC's obligation under
GATT 1994 Article X:3(a). Rather, the Unite d States understood Question No. 124 to seek
confirmation that the principal finding requested by the United States is a finding that the EC is in
breach of its obligation under Article X:3(a) as a result of the absence of uniformity in the
administration of EC customs laws as a whole. The United States confirmed that this is the principal
finding that it seeks with respect to its Article X:3( a) claim. In its response to Question No. 124 and
in its responses to other questions (notably, Qu estion No. 126), the United States showed that un-
rebutted evidence of the design and structure of the EC's system of customs administration supports
that finding. The United States then added (in its response to Question 124) that evidence of non-
uniform administration in specific areas corroborates the finding that non-uniform administration
necessarily results from the design and structure of the EC's system. As noted, the United States
listed areas of non-uniform administration demonstrated by the evidence.

Article 221 is a further example to those in the list. Like the other ex amples set forth in the
list, the evidence plainly shows that Article 221 is administered in a non-uniform manner, contrary to

out and progressively clarified in the first written submi ssions, the rebuttal submissions and the first and second
panel meetings with the parties.").
23 DSU, Article 6.2.

Article X:3(a). As discussed in the US Oral Statement at the second Panel meeting, CCC
Article 221(3) prescribes a three-year period followi ng the incurrence of a customs debt during which
liability for the debt may be communicated to the debtor.
24 It also provides for suspension of the
three-year period during the pendency of an appeal. It does not provide any other circumstance under
which the three-year period may be suspended. Nevertheless, the EC customs office in France has
taken the position (since confirmed by an amendment to the French customs code) that the three-year
period may be suspended by the institution of any administrative proceeding (procès-verbal)
investigating a possible customs infraction, even if that proceeding does not result in the imposition of
any penalty against the debtor. 25 Customs authorities in other parts of the EC do not take the same
position. That is, they do not administer CCC Article 221(3) in the same manner as the customs
authority in France.

In fact, the EC effectively c oncedes that Article 221 is admini stered in a non-uniform manner
(albeit for reasons different from those discussed by the United States) and, therefore, would have
been an appropriate illustration to include in the US response to Question No. 124. The EC points out
that under paragraph 4 of Article 221, liability for a customs debt may be communicated to the debtor
after the three-year period set out in paragraph 3, "[w]here the customs debt is the result of an act
which, at the time it was committed, was liable to give rise to criminal court proceedings." It explains
that each member State may decide for itself what constitutes an act liable to give rise to criminal
court proceedings, as well as "the length of the pe riod during which the debt can be communicated"
where the customs debt is the result of such an act. 26 Thus, if a given act resulting in a customs debt
(for example, negligent mis-classification of merc handise) is subject only to administrative penalties
in one member State, but is subject to criminal pe nalties in another, the customs authority in the first
member State is subject to the three-year limitation on communication of the customs debt, while the
customs authority in the second member State is subject only to the limitation (if any) set forth in its
national law.
27 This is a clear example of how the EC, through its customs offices in the different
member States, fails to administer its customs law uniformly.

180. In paragraph 42 of the European Communities' reply to Panel Question No. 172, the
European Communities submits that the United States uses the Camcorders example to
illustrate alleged non-uniform administration wi th respect to the period following importation
during which a customs debt may be collected. Is this characterization of the United States'
allegations correct? If not, please specifically ex plain how the United States' arguments in this
regard should be characterized

The EC's characterization of the purpose for which the United States used the camcorders
example is not correct. The United States used the camcorders example to illustrate four distinct

24 See US Second Oral Statement, para. 31.
25 See, e.g., Judgment of the Cour de Cassation, Case No. 143, June 13, 2001, pp. 439-40 (Exhibit US-
67) (upholding suspension of 3-year period for the Saga Méditerranée company, even though the company had
been discharged of liability under penal law); Judgment of the Cour de Cassation, Case No. 144, 13 June 2001,
p. 448 (Exhibit US-68) (upholding suspension of 3-year period for the Saupiquet company and its customs
agents, even though they had been discharged of liability under penal law).
26 EC Additional Submission, para. 44.
27 It should be noted that this is yet another way in which the different penalties available in each of the
EC member States evidence n on-uniform administration of EC customs law. It is not necessary that a penalty
actually be imposed for this non-uniform administration to manifest itself. The only predicate for avoiding the
three-year limitation in CCC Article 221(3) is that the act resulting in the customs debt "was liable to give rise to
criminal court proceedings", not that it actually did give rise to criminal court proceedings. Thus, even in the
hypothetical case in which customs authorities in two diff erent member States treated an identical infraction in
the same way and declined to impose any penalty at a ll, the fact that the aut hority in one member State could
have treated the infraction as a criminal matter while th e other could not means that the first is expressly
permitted to enlarge the period for communication of the customs debt while the second is not.

points. First, the example illustrates that, contrary to the EC's argument, explanatory notes are not
effective tools for ensuring the uniform administrati on of EC customs law. This is demonstrated by
the fact that customs authorities in at least two member States (France and Spain) decided to give
retrospective effect to the camcorders explanator y note (Exhibit US-61). That is, in view of the
explanatory note, they revised the classification of merchandise that had already been imported, and
they collected additional customs duties accordingly. By contrast, customs authorities in other
member States refrained from giving retrospective effect to the explanatory note because the note
effectively established a new substantive rule (i.e. it made susceptibility of camcorders to
modification of use following importation a criterion for their classification). This was evidenced, for
example, by the announcement of the explanator y note by the customs authority in the United
Kingdom, in which it indicated that the note "does involve a change in practice for [the] United
Kingdom".28 Thus, different EC customs offices took the same explanatory note and applied it to the
same situation differently, demonstrating that the EC fails to administer its customs law uniformly.

Second, the camcorders example illustrates that, contrary to the EC's argument, BTI is not an
effective tool of ensuring uniform administration of classification rules. In this case, one EC customs
office (in Spain) had issued BTI classifying 19 camcorder models (Exhibit US-65). The French
affiliate of the holder of the BTI informed anot her EC customs office (in France) of the BTI's
existence during the course of an audit by that offi ce. Nevertheless, the EC customs office in France
informed the company that it intended not to follow the classification set forth in the BTI, but instead,
to collect duty based on its own determination of the correct classification of the camcorder models at
issue. The EC incorrectly characterizes this as a " question . . . of post-clearance recovery of customs
duties, and not one of tariff classification".
29 It is true that the context in which this matter emerged
involved the post-clearance recovery of duties. However, determining the amount of duties to be
recovered requires a determination of classification. The EC readily acknowledges that "[t]he BTI
issued by the Spanish authorities submitted as Exhi bit US-65 are all in full accordance with EC
classification rules." 30 It is, therefore, all the more surp rising that a second EC customs office has

28HM Customs & Excise, Tariff Notice 19/01 (July 2001) (Exh. US-63); see also
Vorschriftensammlung Bundesfinanzverwaltung, VSF-Nachri chten N 46 2003, sec. I(3) (5 August 2003)
(German customs notice on application of the EC provisions on reimbursement/remission and recovery of
import duties, together with unofficial English transla tion) (Exhibit US-64) (noting that where an explanatory
note effectuates a change in substance it will not be applie d retroactively). In its reply to the Panel's Question
No. 172, the EC misstates the purpose for which the United States referred to the administrative guideline issued
by Germany and set forth in Exhibit US-64. Contrary to the EC's assertion ( see EC Additional Submission,
para. 43), the United States cited this guideline not to illustrate a point regarding CCC Article 221, but rather, to
underscore the divergence in the treatment of explanat ory notes between certain cu stoms offices (notably, in
France and Spain), on the one hand, and other customs offices (notably, in Germany and the United Kingdom),
on the other.
Moreover, the United States calls the Panel's attention to the exhibit (EC-153) that the EC introduced to
show that the German guideline was in fact "the transposition of a letter that had been addressed by the
European Commission in 1996 to the customs authorities of all Member States". EC Additional Submission,
para. 43. First, the letter set forth in Exhibit EC-153 says nothing about the effects of explanatory notes. It is
addressed, instead, to the im pact of tariff classification regulations on the recovery of customs duties. Second,
the letter does discuss the situation in which, prior to issuance of a tariff classification regulation, some
importers had paid duty on the merchandise at issue equa l to the amount they would have had to pay under the
new regulation, while others paid less. It states that "[t]he principles of legal certainty and legitimate
expectations cannot be invoked by tr aders who, in the case of disparities in application by different customs
offices in the Community, have paid the same amount of duties as they would under the new regulation". Letter
from James Currie to Mrs. V.P.M. Strachan CB, p. 2 (Exhibit EC-153). In other words, where classification
rules have been administered in a non-uniform way, such that importers into some member States have paid
higher duties than importers of materially identical goods into other member States, the EC acknowledges that a
new classification regulation will not cure that non-uniformity.
29 EC Additional Submission, para. 40.
 30 EC Additional Submission, para. 40.

indicated its intent not to follow the classification se t forth in that BTI. Its decision not to do so
illustrates that BTI does not ensure uniform administration of EC customs law by the EC's 25
independent, geographically limited customs offices.

Third, the camcorders example illustrates the non-uniform administration of CCC
Article 221(3), as discussed in response to Questi on No. 179, above. Not only does the EC customs
office in France take the position (unlike customs offi ces in other parts of the EC) that the camcorders
explanatory note can be applied to imports pre-da ting the note but, additionally, it takes the position
(also unlike customs offices in other parts of the EC ) that the note can be applied to imports even if
the customs debt attributable to those imports aros e more than three years in the past. Thus, the
camcorders importer in France remains vulnerable fo r additional duty collectio ns on imports made in
1999, even though customs offices in other parts of th e EC would consider such additional collection
to be time-barred.
31

Finally, the camcorders example illustrates that, contrary to the EC's argument, the
mechanism for the preliminary reference of questions to the ECJ does not effectively ensure uniform
administration of EC customs law. This aspect of the camcorders example is linked to the non-
uniform administration of CCC Article 221(3). If the preliminary reference mechanism were an
effective tool for curing situations in which the EC is not administering its customs laws uniformly,
then one would expect that tool to be used preci sely where a member State court is confronted with
stark evidence of non-uniform administration – e.g., where the EC customs office in France treats the
institution of an administrative investigation as suspending the three-year period set forth in
Article 221(3), while other EC customs offices do not . Yet, as the United States has shown, even
France's highest court has consistently refused to refer this question to the ECJ, notwithstanding the
clear divergence in administration in different regions of the EC.
32

181. With respect to the arguments made by th e United States in paragraph 31 of its Oral
Statement at the second substantive meeting, plea se clearly identify the type(s) of non-uniform
administration being alleged.

In paragraph 31 of its Oral Statement at th e second substantive meeting, the United States
alleges that the EC fails to administer Article 221( 3) of the CCC in a uniform manner. That article
states that "[c]ommunication to the debtor shall not take place after the expiry of a period of three
years from the date on which the customs debt was incurred". It identifies only one circumstance
under which the three-year period may be suspended: the lodging of an appeal. Nevertheless, one EC
customs office (in France) administers Article 221( 3) by suspending the three-year period upon the
institution of any administrative proceeding (p rocès-verbal) investigating a possible customs
infraction, regardless of whether a customs penalty ev er is imposed against a party being investigated.
Other EC customs offices do not administer Article 221( 3) in this manner. That is, they do not treat
the three-year period provided for in Article 221(3) as suspended upon the initiation of any
administrative proceeding (procès-verbal) investiga ting a possible customs infraction. Thus, as the

31In its Oral Statement at the second Panel meeting, the United States descri bed this aspect of the
camcorders example as non-uniform administration with respect to "the period following importation during
which a customs debt may be collected. " In its response to Question No. 172, the EC clarifies that
Article 221(3) concerns "the period during which a customs debt may be communicated to the debtor". The
United States agrees with this statem ent of the subject of Article 221(3). However, the United States disagrees
with the implication that this has nothing to do with collection of the customs debt. The period during which the
customs debt may be communicated to the debtor is obviously essential to collection of the debt. For, if the
period for such communication has expired, then so has the possibility of collecting any debt not previously
communicated.

camcorders example shows, a camcorders importer in one part of the EC (France) remains vulnerable
in 2005 for additional duty collections on imports made in 1999, even though EC customs offices in
other parts of the EC would consider such additio nal collection to be time-barred. Therefore, the
administration of Article 221(3) is a glaring example of non-uniform administration of EC customs
law in breach of GATT 1994 Article X:3(a).
33

Separately, also in paragraph 31 of its Oral Statement at the second substantive meeting, the
United States called attention to the refusal of Fran ce's highest court to refer to the ECJ the question
of whether an administrative investigation may suspend the three-year period under Article 221(3).
The United States submitted that wh ere the highest court of a member State can decline to refer a
question to the ECJ, even in the face of clear ev idence that the EC customs office in that member
State is administering EC customs law differently than the EC customs offices in other member
States, this rebuts the EC's assertion that the preliminary reference mechanism ensures uniform
administration.

QUESTION FOR BOTH PARTIES

184. With respect to paragraph 49 of the Euro pean Communities' reply to Panel Question
No. 172, could the act of issuance of binding tariff information that is not, at the time of
issuance, inconsistent with EC customs law but which, to the knowledge of the issuing authority,
will certainly become inconsistent with such law (e.g., once an inconsistent regulation comes into
effect) be evidence supporting an allegation of non-uniform administration within the meaning
of Article X:3(a)? If so, please explain making reference to the terms of Article X:3(a).

In answering Question No. 184, it is important to distinguish between the hypothetical
situation the question posits, the known facts of th e Sony PlayStation2 ("PS2") case, and the broader
significance of the PS2 case. First, as to the hypothe tical the question posits, it is indeed possible that
BTI issued by one EC customs office classifying a good one way, where the customs office knows
that an EC-wide regulation classifying the good diffe rently is forthcoming, could be evidence
supporting an allegation of non-uniform administration within the meaning of GATT 1994
Article X:3(a). Article X:3(a) requires a Memb er to "administer in a uniform, impartial and
reasonable manner all its laws, regulations, decisions and rulings of the kind d escribed in paragraph 1
of this Article". It is undisputed that EC cl assification rules (the subject of BTI) are laws or
regulations of the kind described in paragraph 1 of Article X. Further, the ordinary meaning of
"administer", as relevant here, is, "carry on or execute (an office, affairs, etc.)".
34 The ordinary
meaning of "uniform", as relevant here, is, "[o]f one unchanging form, character, or kind; that is or
stays the same in different places or circumstances, or at different times". 35 By issuing BTI, an EC
customs office "administers" the EC's classification ru les within the ordinary meaning of that term.
That is, through BTI, an EC customs office de termines the Common Customs Tariff heading under
which a particular good is to be classified by applying general rules on interpretation of the Tariff.

The question then is whether administration of the classification rules through BTI stays the
same in different places under the scenario posited. If the classification set forth in BTI issued by one

33 As noted in response to Question No. 179, above, the EC's response to Question No. 172 highlights
an additional way in which CCC Article 221 is administ ered in a non-uniform manner. Specifically, with
respect to paragraph 4 of Article 221, the length of the period during which the customs debt may be
communicated to the debtor may vary from customs office to customs office within th e EC in the circumstance
where a customs office determines (according to its own, national criteria) that an act resulting in a customs debt
is an act that "may give rise to criminal proceedings" (regardless of whether it actually does give rise to criminal
proceed
ings). EC Additional Submission, para. 44 (emphasis added).
34 The New Shorter Oxford English Dictionary, Vol. I at 28 (1993) (Exhibit US-3).
35 The New Shorter Oxford English Dictionary, Vol. II at 3488 (1993) (Exhibit US-4).

EC customs office "will certainly become incons istent with [EC customs] law (e.g., once an
inconsistent regulation comes into effect)," one mu st consider what has prompted adoption of the
forthcoming inconsistent re gulation. Notably, it is quite possibl e that other EC customs offices have
been classifying the good at issue in the manner set forth in the anticipated regulation, and that these
EC customs offices urged adoption of an EC-wide regul ation in view of the inconsistent action by the
EC customs office whose BTI is in question. This possibility is supported by the critical role that the
Customs Code Committee plays in the process of adopting classification regulations
36, and the fact
that the Committee consists of representatives of all 25 EC member States. Put another way, if the
anticipated regulation classified the good at issue in a manner contrary to the classification applied in
several member States, it would seem difficult to generate Committee support for the regulation,
which would necessitate referral of the regulation to the Council of the European Union (which
ultimately could reject the regulation).
37 If, in fact, development of the EC regulation reflects the
emergence of a plurality view among EC customs offices on how the good at issue should be
classified, then the issuance of inconsistent BT I by a single EC customs office would demonstrate
administration of the classification rules through BTI that is different in different places – i.e. that is
not "uniform" within the ordinary meaning of that term as used in Article X:3(a).

Having said this, it is not clear from the facts of the PS2 case as laid out in the judgments of
the EC Court of First Instance (Exhibit US-12) and the UK High Court of Justice (Exhibit US-70)
whether EC customs offices other than the EC customs office in the United Kingdom had had
occasion to classify the PS2 prior to issuance of the Commission regulation.
38

Finally, and most fundamentally, the foregoing response should not be confused with the
broader significance of the PS2 case and the rationale for discussing it in the US Oral Statement at the
second Panel meeting. The main point to be gleaned from the PS2 case does not concern the correct
classification of the PS2. Contrary to the EC's a ssertion, the United States is not making itself "the
advocate for behaviour which would manifestly de tract from the uniform application of EC law." 39 It

36 See EC First Written Submission, para. 92; EC Replies to 2 nd Panel Questions, para. 61 (adoption of
classification regulations requires consultation of the Committee).
37 See Council Decision 1999/468/EC, laying down the procedures for the exercise of implementing
powers conferred on the Commission, Article 4 (settin g forth the "management procedure," which is the
procedure applicable to adoption of classification regulations) (Exhibit US-10).
38 The judgment of the Court of Firs t Instance does observe, howeve r, that "[i]t [was] common ground
amongst the parties that, at the time the contested regula tion was adopted, that BTI [i.e. the BTI issued by the
customs office in the United Kingdom] was the only one classifying the PlayStationR2 under heading 8471."
Sony Computer Entertainment Europe Ltd. v. Commission of the European Communities , Case T-243/01,
para. 68 (Court of First Instance of the European Communities, 30 September 2003) (Exhibit US-12).
It also is not clear that the cl assification set forth in the UK BTI was consistent with EC law even
before issuance of the Commission regulation. The decision by the EC customs office in the United Kingdom to
classify the PS2 under Tariff heading 8471.49.00 was based on the view that the determinative issue in its
classification was whether it was freely programmable. While the Customs Code Committee found that it was
freely programmable, it supported a regu lation specifying a different classification, based on the view that this
characteristic was not determinative. See Sony Computer Entertainment Europe Ltd. v. Commission of the
European Communities, Case T-243/01, paras. 23-24 (Court of First Instance of the European Communities,
30 September 2003) (Exhibit US-12) (indicating that basis for classification in 12 June 2001 was that PS2 was
capable of being freely programmed); Sony Computer Entertainment Europe Ltd. v. Commissioners of Customs
and Excise , Judgment of the High Court of Justice, Chancery Division, [2005] EWHC 1644 (Ch), para. 99
(27 July 2005) (Exhibit US-70) (summarizing argument of customs authority, in which it is noted that "a
unanimous [EC] Nomenclature Committee recognised at its meetings in April and May 2001" that classification
of the PS2 under heading 8471 "was incorrect").
The United States calls attention to the foregoing aspects of the PlayStation2 case in the interest of
clarity. However, these aspects do not affect the answer to the Panel's Question, as discussed above.
39 EC Additional Submission, para. 56.

is not arguing that the June 2001 BTI issued by the customs office in the United Kingdom should
have been restored upon annulment of the EC classification regulation because the BTI classified the
PS2 correctly.

Rather, the broader significance of the PS2 case, and hence the reason for discussing it at the
second Panel meeting, is that it demonstrates th e power of each of the EC's 25 independent,
geographically limited customs offices to depart fro m a course of uniform administration on its own
initiative. The issuance of BTI in June 2001 classifying the PS2 under Tariff heading 8471 was an act
that, at least under the EC's view of BTI, s hould have led to uniform administration of the
classification rules with respect to that product. The issuance of an EC regulation in July 2001 was an
act that should have continued uniform administration of the classification rules with respect to the
PS2, albeit under a different Tariff heading (9504, in stead of 8471). Consistent with continuity of
uniform administration, the June 2001 BTI was revoked as a result of the regulation's entering into
force.

When the EC regulation was annulled by the September 2003 Court of First Instance
judgment, one might have expected the June 2001 BTI to be restored, which (again, under the EC's
view of BTI) would have continued the uniformity of administration of the classification rules with
respect to the PS2. In fact, prior to the ECJ's January 2004 judgment in Timmermans, the customs
authority in the United Kingdom evidently believed that it was required to restore the BTI, and that, in
view of the Advocate-General's September 2003 opinion in Timmermans, it could not amend the BTI
based on its own, independent reinterpretation of the applicable classification rules.
40

However, following the Timmermans judgment, the customs authority in the United Kingdom
was free to keep the BTI revoked, not on the basis of the EC regulation (which, of course, had been
annulled), but now on the basis of its own reinterpretation of the applicable classification rules. It was
thus able to interrupt the series of actions that, in theory, had provided for uniform classification of the
PS2 since June 2001. Whether or not the BTI correc tly classified the PS2, this case stands for the
broader proposition that, under Timmermans, each of the EC's 25 indepe ndent, geographically limited
customs offices has the power to depart from a path of theoretically uniform administration of the
classification rules based on its own reconsideration of those rules.

That proposition has a significance that is not limited to the facts of the PS2 case. It
demonstrates that, contrary to the EC's argument, BTI does not ensure uniform administration of EC
classification rules. It was for this reason that the United States discussed the PS2 case at the second
Panel meeting. The United States emphasizes this poin t to avoid any confusion between the first part
of its response to the Panel's question, which c oncerns one aspect of the PS2 case, and the more
general significance of the PS2 case.

In short, the PS2 example (like the other exam ples discussed in part III of the US Oral
Statement at the second Panel meeting) confirms the main point of the U.S. claim with respect to
GATT 1994 Article X:3(a): The design and structure of the EC's system of customs administration
necessarily results in the non-uniform administration of EC customs law, in breach of Article X:3(a).
In particular, the fact that the EC administers its customs laws through 25 independent, regionally

40 Sony Computer Entertainment Europe Ltd. v. Commissioners of Customs and Excise , Judgment of
the High Court of Justice, Chancery Division, [2005] EWHC 1644 (Ch), paras. 68-69 (27 July 2005)
(Exhibit US-70); see also US First Written Submission, paras. 63-64 (discussing Advocate-General's opinion in
Timmermans).

limited offices, without any institution or procedure that ensures that divergences of administration do
not occur or that promptly reconciles them as a matter of course when they do occur, necessarily
results in non-uniform administration in breach of GATT 1994 Article X:3(a). Neither BTI, nor
explanatory notes, nor the ECJ preliminary reference procedure alters this conclusion.

ANNEX C-3

RESPONSES OF THE EUROPEAN COMMUNITIES
TO SUPPLEMENTARY QUESTIONS POSED BY THE PANEL
REGARDING SECTION III OF THE US SECOND ORAL STATEMENT

QUESTIONS FOR THE EUROPEAN COMMUNITIES

182. With reference to paragraph 15 of the Eu ropean Communities' reply to Panel Question
No. 172, please clearly identify the "additional evidence referred to in other parts of the US
Second Oral Statement" which the European Communities categorises as "new evidence".
 The EC refers to Exhibits US-73 to US-80.
183. With respect to paragraphs 47 and 48 of the European Communities' reply to Panel
Question No. 172, please clarify where the crite rion of "freely programmable" (which was
referred to by both the UK authorities when Sony first requested classification of the product in
question as well as subsequently by the Customs Code Committee) comes from?
 The criterion is based on Note 5 (A) to CN Chapter 84, which defines, for the purposes of
heading 8471, an "automatic data processing machine" as follows (Exhibit US-46, emphasis added):

For the purposes of heading 84.71, the expression " automatic data
processing machines " means :
(a) Digital machines, capable of
(1) storing the processing program or programs and at
least the data immediately necessary for the
execution of the program;
(2) being freely programmed
 in accordance with the
requirements of the user;
(3) performing arithmetical computations specified by
the user; and,
(4) executing, without human intervention, a processing
program which requires them to modify their
execution, by logical decision during the processing
run;
(b) Analogue machines capable of simulating mathematical
models and comprising at least : analogue elements, control
elements and programming elements;
(c) Hybrid machines consisting of either a digital machine with
analogue elements or an analogue machine with digital
elements.

QUESTION FOR BOTH PARTIES

184. With respect to paragraph 49 of the Euro pean Communities' reply to Panel Question
No. 172, could the act of issuance of binding tariff information that is not, at the time of
issuance, inconsistent with EC customs law but which, to the knowledge of the issuing authority,
will certainly become inconsistent with such law (e .g. once an inconsistent regulation comes into
effect) be evidence supporting an allegation of non-uniform administration within the meaning
of Article X:3(a)? If so, please explain making reference to the terms of Article X:3(a).
 No. The fact that BTI is issued and late r revoked as such does not constitute evidence of non-
uniform administration. The fact that at the ti me the BTI was issued, it may have been foreseeable
that the BTI would later have to be revoked does not alter this assessment.

 As regards the specific instance referred to in paragraph 49 of the EC's Additional
Submission, it should be noted that the UK author ities issued the BTI under heading 8471 49 00 in
reaction to a judgment which had annulled an earlier BTI issued under heading 9504 1000.

 In addition, it should be noted that the BTI t hus issued applied only for a short time, and did
not lead to any non-uniform administration. Moreover, it was promptly revoked when the
Commission classification regulation entered into for ce. Accordingly, the BTI in question cannot be
regarded as evidence of a lack of uniformity.

 Moreover, even though the BTI in question shoul d not have been issued, this was a unique
case due to the very specific circumstances of the case. An isolated and temporary problem cannot be
regarded as evidence of a pattern of non-uniformity in the EC's system of customs administration. In
contrast, what is worrying is that the United Stat es is now supporting a party which is seeking to
revive the effects of the BTI in question, and is thus advocating a situation which could effectively
lead to a situation of non-uniform administration.
1