Document: WT/DS315/R Page 154 V. ARGUMENTS OF THE THIRD PARTIES 44 5.1 The arguments of those third parties who made wr itten and/or oral statements to the Panel are summarized in this section.  The summaries are ba sed on the executive summaries submitted by those third parties.  Where a third party has provided written responses to questions posed by the Panel, these responses are set out in Annex A. (See list of Annexes at page xvi). A. THIRD PARTY WRITTEN SUBMISSION OF CHINA 5.2 China believes that it has substantial interest s in the matter before this panel whether European Communities' ("EC") administration of cu stoms law is in a uniform manner, as required by Article X:3(a) of the General Agreement on Tariffs and Trade 1994 ("the GATT 1994"), and the
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

V. ARGUMENTS OF THE THIRD PARTIES
44
5.1 The arguments of those third parties who made wr itten and/or oral statements to the Panel are
summarized in this section. The summaries are ba sed on the executive summaries submitted by those
third parties. Where a third party has provided written responses to questions posed by the Panel,
these responses are set out in Annex A. (See list of Annexes at page xvi).
A. THIRD PARTY WRITTEN SUBMISSION OF CHINA
5.2 China believes that it has substantial interest s in the matter before this panel whether
European Communities' ("EC") administration of cu stoms law is in a uniform manner, as required by
Article X:3(a) of the General Agreement on Tariffs and Trade 1994 ("the GATT 1994"), and the
requirements of prompt review and correction of ad ministrative actions relating to customs matters by
Article X:3(b) of the GATT 1994 have been met by the EC .
1. Issues relating to interpretation and application of Article X:3(a)
(a) The scope of application of Article X:3(a) of the GATT 1994
5.3 Article X:3(a) of GATT 1994 concerns the admi nistration of customs laws, not the customs
laws themselves. The EC seems concerned with whether Article X:3(a) GATT applies to the
administration of customs laws at the local level as well as at the central level.
5.4 Based on Article XXIV:12 of the GATT 1994 and the GATT Panel report in Canada – Gold
Coins, the EC drew its conclusion that "Article X:3( a) GATT does not require that customs laws be
regulated at the central level of each WTO Member"45.
5.5 Taking no position on this EC assertion, howev er, China does not think Article XXIV:12 of
the GATT 1994 and the GATT Panel report in Canada – Gold Coins are proper in supporting EC's
argument.
5.6 Article XXIV:12 requires that the provisions of GATT be observed by both the central
government and the regional or local authorities of a Contracting Party, and that the central
government take the responsibility for ensuring the ob servance of the provisions of GATT by its local
authorities. So, if there are any difficulties, enc ountered by the federal government of a Contracting
Party because of its particular administrative or le gal structures, in ensuring the observance of the
provisions of GATT by its local authorities, the federal government shall still seek such reasonable
measures as are available to it to secure the obser vance of the provisions of GATT by its local
authorities in accordance with Article XXIV:12 until th e actions or measures inconsistent with any
provisions of GATT by its local authorities are removed. The federal government of such a
Contracting Party shall compensate, because of such actions or measures by its local authorities, for
any nullified or impaired benefits accruing to ot her Contracting Parties under the provisions of the
GATT.
46

5.7 According to the GATT panel in Canada – Gold Coins , Article XXIV:12 applies to those
measures taken by the local level authority of contracting parties with federal regimes when
administering their laws or regulations of local level. 47 The present dispute does not concern a

44 The texts of the footnotes in sections V:A – V:I are the original texts of the footnotes in the third
parties' submissions.
46 GATT Panel Report, Canada – Gold Coins, para. 65.
47 GATT Panel Report, Canada – Gold Coins, para. 56.

measure taken by the local authority when administer ing their laws or regulations of local level, but
concerns whether the EC customs laws (i.e. laws of central level) can be administered by the EC
member States (i.e. local level authority) and whether such administration is in a uniform manner.
5.8 The GATT panel in Canada – Gold Coins further stated that Article XXIV:12 does not
change the scope of application of the provisions of the GATT. 48 China agrees with the EC that
"Article X:3(a) GATT does not prescribe the specific way in which WTO Members should administer
their customs laws"49. However, the obligation of uniform administration of customs laws should not
be varied.
(b) The meaning of "uniform" as used in Article X:3(a) of the GATT 1994
5.9 The ordinary meaning of "uniform", as relevant here, is "of one unchanging form, character,
or kind; that is or stays the same in different places or circumstances, or at different times"50.
5.10 The panel in Argentina – Hides and Leather stated: "Customs laws should not vary, that every
exporter and importer should be able to expect treatment of the sa me kind, in the same manner both
over time and in different places and with respect to other persons. Uniform administration requires
that Members ensure that their laws are applied consis tently and predictably. This is a requirement of
uniform administration of Customs laws and proce dures between individual shippers and even with
respect to the same person at different times and different places"51.
5.11 China considers that the interpretation clarified by the panel in Argentina – Hides and Leather
of the word "uniform" as used in Article X:3(a) is of the same substance w ith this ordinary meaning
of "uniform".
5.12 China believes that when addressing the meaning of the word "uniform" reference should be
made to the interpretation given by the panel in Argentina – Hides and Leather.
(c) The standard of uniformity required by Article X:3(a) of the GATT 1994
5.13 The EC argues that "Article X:3(a) GATT only lays down minimum standards" 52. The EC
referred to the Appellate Body report in US – Shrimp to support its argument. The paragraph referred
to by the EC of the Appellate Body report in US – Shrimp reads:
"It is also clear to us that Article X:3 of the GATT 1994 establishes certain minimum
standards for transparency and procedural fairn ess in the administration of trade
regulations which, in our view, are not met here. ……" 53 (emphasis added by China).
5.14 The minimum standards articulated by the Appellate Body are for transparency and
procedural fairness in the administration of trad e regulations, not for directly the uniformity
requirement of the administration of customs law.
5.15 The EC also referred to the Panel report in Argentina – Hides and Leather to support its
argument. However, the paragraphs referred to by the EC address the meaning of the word
"uniform", and do not directly concern the standard of the uniformity.

48 GATT Panel Report, Canada – Gold Coins, para. 63.
50 The New Shorter Oxford English Dictionary, Vol. II at 3488 (1993) (Exhibit US-4).
51 Panel Report, Argentina – Hides and Leather, WT/DS155/R, para. 11.83.
53 Appellate Body Report, US – Shrimp, para. 183.

2. Conclusion
5.16 China thanks the Panel to provide an opportunity to comment on the issues involved in this
proceedings, and hopes that its comments will prove to be helpful.
B.
THIRD PARTY WRITTEN SUBMISSION OF JAPAN
1. Introduction
5.17 Japan participates in this dispute based on its sy stemic interests in the correct interpretation
and application of Articles X:3(a) and (b) of th e General Agreement on Tariffs and Trade 1994 ("the
GATT 1994").
2. Consistency of the challenged measures with Article X:3(a) of the GATT
(a) The meaning of the term "uniform" administration in Article X:3(a) of the GATT 1994
5.18 As a premise, Japan agrees with the United States that the EC, as a Contracting Party, is
responsible for ensuring a uniform administra tion of customs matters throughout its territory 54, and
that the term "general application" in Article X:1 GATT would in EC's case mean the general
application within the EC as a whole.
5.19 The United States claims that the "EC's cust oms laws are administered by 25 different
authorities, among which divergences inevitably occur, and the EC does not provide for the systemic
reconciliation of such divergences."55 The United States elaborates that such divergences and the lack
of systemic reconciliation of the divergences occur in customs classification, customs valuation and
customs procedures of the EC member States.56
5.20 In determining the meaning of the term "unifo rm" required under Article X:3(a) GATT, it is
useful to first recall the Panel's finding in US – Hot-Rolled Steel. The Panel held that, for a Member's
measure to be inconsistent with GATT X:3(a) GATT, it would have to have a significant impact on the
overall administration of that Member's law and not simply on an impact on the outcome in the single
case in question. The Panel found:
While it is not inconceivable that a Member's actions in a single instance might be
evidence of lack of uniform, impartial, and reasonable admini stration of its laws,
regulations, decisions and rulings, we consider that the actions in question would have
to have a significant impact on the overall administration of the law, and not simply on
the outcome in the single case in question. Moreover, we consider it unlikely that such
a conclusion could be reached where actions in the single case in question were,
themselves, consistent with more specific obligations under other WTO Agreements.
 57
5.21 The panel's finding in Argentina – Hides and Leather is also relevant. The Panel found that:
We are of the view that this provision should not be read as a broad anti-
discrimination provision. We do not think this provision should be interpreted to
require all products be treated identically. That would be reading far too much into
this paragraph which focuses on the day to day application of Customs laws, rules

54 US First Written Submission, paras. 29 and 36.
56 US First Written Submission paras. 24-26, 40ff.
57 Panel Report, United States – Anti-Dumping Measures on Certain Hot-Rolled Steel Products from
Japan, WT/DS184/R, adopted 23 August 2001, para. 7.268.

and regulations. There are many varia tions in products which might require
differential treatment and we do not think th is provisions should be read as a general
invitation for a panel to make such distinctions.58
5.22 The GATT Panel in EEC – Dessert Apples , has also made a finding regarding Article X:3(a)
of the GATT that minimal differences do not constitute a breach thereof, as follows:59
The Panel further noted that the EEC Commission Regulations in question were
directly applicable in all of the ten me mber States concerned in a substantially
uniform manner, although there were some minor administrative variations, e.g.,
concerning the form in which licence applications could be made and the requirement
of pro-forma invoices. The Panel found that these differences were minimal and did
not in themselves establish a breach of Article X:3.
5.23 In light of the above findings as well as the co mplex nature and vast amount of imports that
customs authorities handle, Japan shares the EC's view that "Article X:3(a) lays down minimum
standards"
60 to ensure the impartial administration of tr ade related laws. The Panel should consider
the nature of customs administration which often times involve a vast number of imports and
numerous different products which are complicated to classify, reflecting realities such as the speed of
technological advances and the resulting production of new products. Therefore, the fact that
divergences between individual decisions of variou s customs authorities may exist in itself is not
inconsistent with Article X:3(a) of the GATT, as both the United States and the EC confirm.61 In this
context, it is necessary to analyze whether the a lleged divergences exist, as claimed by the United
States, and if so, whether such divergences exist to a degree that would be considered to be
inconsistent with Article X:3(a) GATT in light of the particular customs system as a whole.
(b) Article X:3(a) of the GATT does not prescribe the specific means a Member must employ in
order to ensure a uniform administration of customs laws; such uniformity should be
determined in respect of the particular customs system as a whole
5.24 In respect of the United States' claim that th e EC does not provide a systematic reconciliation
of divergences, Article X:3(a) GATT "do[es] not c oncern the customs laws themselves, but only their
administration"
62 and "does not prescribe the specific means a Member must employ in order to
ensure a uniform administration of customs laws", as stated by the EC. 63 This is also in line with
Japan's above-mentioned view that the issue is whether or not the r esults of applying a specific means
of a Member ensure a uniform administration as a whole.
5.25 While Japan hopes that, where appropriate, Members further harmonize their customs
administration within their respective territories in th e future, Japan is of the view that the specific
means to ensure a uniform administration of cust oms laws is one of the matters which should be
addressed through the Doha Negotiations on Trade F acilitation which aims "to clarify and improve
relevant aspects of Articles V, VIII and X of the GATT 1994…"
5.26 In respect of the BTI system or the functi on of the Customs Code Committee (CCC), it is
useful to recall that the BTI and the CCC are each i ndividual means that the EC provides to ensure a

58 Panel Report, Argentina – Measures Affecting the Export of Bovine Hides and Import of Finished
Leather, WT/DS155/R and Corr.1, adopted 16 February 2001, para. 11.84.
59 GATT Panel Report, EEC – Restrictions on Imports of Dessert Apples (L/6491-36S/93), adopted on
22 June 1989, para.12.30.

uniform administration of customs matters, and not each the only means. It is necessary to analyze
other means such as classification regulations, the HS explanatory notes and opinions, and the EC
explanatory notes to determine whether the EC's customs system as a whole ensures a uniform
administration consistent with Article X:3(a) GATT.
3. Consistency of the challenged measures with Article X:3(b) of the GATT
(a) The measure in question
5.27 The United States claims that the EC does not pr ovide tribunals or procedures for the prompt
review and correction of administrative actions relating to customs matters, as required by
Article X:3(b) GATT.
64 Japan agrees with the United States that as the EC is the responsible entity in
administering regulation of customs matters, the EC should provide tribunals or procedures for the
prompt review and correction.
5.28 The United States claims that the EC does not provide an opportunity to review and correct
administration of customs matters because, for example, the "Community Customs Code says little on
the question of appeal"
65 and "in fact, the time periods for first instance reviews conducted by
Member State customs authorities can vary widely…with the exception of courts of last resort,
referral of questions by Member State courts [to the ECJ] is discretionary."66
(b) The consistency of the challenged measure with Article X:3(b) of the GATT
5.29 In respect of the United States' challenge th at the EC does not provide an opportunity to
review and correct administration of customs matters due to a lack of a common appeals procedure,
Japan would like to point out that although a central court or procedure would likely ensure this result,
again, this may not be the only means to realize an opportunity to review and to correct by the EC,
especially in light of the principles of supremacy and of direct effect of Community law binding the
national courts of the EC's member States.
67 As explained by the EC, the national courts could
"assume the status of Community courts of general competence."68
5.30 Japan shares the view of the EC that Article X:3(b) of the GATT "does not require a central
court or procedure to appeal administrative deci sions in customs matters. There is no obligation
under the GATT for WTO Members to establish a c ourt similar to the United States Court of
International Trade."69
5.31 As each Member is obliged to administer in a uniform manner all its customs matters
pursuant to Article X:3(a) GATT, it is reasonable to deduce that the results of the tribunals or
procedures of a prompt review pursuant to Article X:3(b) GATT shall ensure uniform administration
of customs matters. However, this would be an issue of Article X:3(a) GATT.
5.32 In respect of the United States' challenge that "in fact, the time periods for first instance
reviews conducted by member State customs authorities can vary widely" 70, the EC refers to the
meaning of the word "prompt" as "without delay", while "delay" is "(a period of) time lost by inaction
or inability to proceed." 71 Japan agrees that the GATT does not provide any specific standard for a

64 US First Written Submission, Section V, sub-section D.
65 US First Written Submission, paras. 141-143.
66 US First Written Submission, paras. 146-149.
67 EC First Written Submission, Section III.A.3.
70 US First Written Submission, paras. 146-149.

"prompt" review and correction that should be taken, and refrains at this juncture from delving into
factual issues. However, if one sees two different systems within the EC – whereas in one member
State such review or correction can take up to one year, in another member State it is limited to 30
days – it seems to suggest that the former member State whose review or correction takes one year is
not providing a "prompt review or correction" in a reasonably short term.
4. Conclusion
5.33 As set out at the beginning, based on its system ic interests in the correct interpretation and
application of Articles X:3(a) and (b) of the GATT, Japan respectfully looks forward to the Panel's
deliberation on issues concerning these provisions brought forward by the United States in this
dispute.
C.
THIRD PARTY WRITTEN SUBMISSION OF THE REPUBLIC OF KOREA
1. Introduction
5.34 Korea believes that certain aspects of the EC's cu stoms system fails to be administered in an
uniform manner, as required by the relevant provisi ons of GATT 1994. Rather than reiterating all the
arguments, however, Korea will address in this submission certain critical issues.
2. Legal arguments
(a) The EC's non-uniform administration of laws and regulations concerning customs
classification, valuation and other procedures violate Article X:3(a) of GATT 1994
5.35 The key issue in this dispute is whether, ta ken together, the EC's customs system provides
uniformity in terms of administration of customs laws and regulations.
5.36 Korea does not dispute the fact that, by nature, customs laws and regulations involve
discretion on the part of customs authorities of WTO Members.72 Discretion, however, does not mean
that the Customs authorities have the flexibility to administer customs laws and regulations in a non-
uniform, partial or unreasonable manner. If such administration occurs, it is not an instance of
exercising discretion; rather it is simply a de viation from the explicit obligation imposed by
Article X:3(a) of GATT 1994.
5.37 In the area of customs control, the EC does ha ve "uniform" laws and regulations. However,
what Article X:3(a) requires and what the United States challenges here (and thus what causes Korea's
concern as a third party participant) are not the laws and regulations themselves. Rather, the core of
the challenge in this dispute is the fact that these EC laws and regulations are administered
individually by 25 member States in a non-uniform manner. The 25 member States have their own
customs authorities that administer customs laws an d regulations in a way they see fit, in terms of
classification, valuation and customs procedures.
5.38 Korea duly recognizes and respects the unique characteristics of the EC where all 25 member
States individually exercise their authorities in the customs area. The unique characteristics, however,
should not be referred to as a pretext to deviate from otherwise applicable WTO obligations, including
GATT 1994. As a Member of the WTO in its own ri ght, separate from its constituent member States,
the EC has an obligation to make sure there are mechanisms in place which produce the effect of a

72 EC First Written Submission, dated 16 August 2005, at 60 ("A further important point is that
Article X:3(a) [of] GATT does not prescribe the speci fic way in which WTO Members should administer
customs laws in a uniform manner").

uniform administration of its customs laws and regulations. Even if all its member States preserve
individual customs authorities under the constituent legal document, the EC, at least, should have
known that divergent customs regulations and prac tices among member States would be rampant, and
thus established a mechanism through which such divergent regulations and practices are harmonized
and reconciled.
5.39 From Korea's perspective, this problem caused by the EC's unique customs system will be
aggravated as time passes by. Given the continued technological development and advent of new or
hybrid products, customs control and regulation becomes increasingly complicated.
5.40 The EC's effort to downplay this widely know n confusion and incons istency simply falls
apart when one looks at what is happening "in the fi eld." Korea stresses that what is important in
examining Article X:3(a) is the reality foreign expor ters have to face at the border. The panel in
Argentina – Hides and Leather pointed out that "Article X:3(a) requires an examination of the 'real
effect' that a measure might have on traders operating in the commercial world."
73 Under the current
system of disarray in the EC, it is simply impossible for "[e]very exporter and importer…to expect
treatment of the same kind, in the same manner both over time and in different places…"
74
5.41 Particularly with respect to the classifica tion, the so-called Binding Tariff Information
("BTI") system of the EC simply further complicates the situation rather than alleviates the current
problem because of its non-universal binding effect and the possibility of 'BTI shopping'.
5.42 Having 25 different manners as to how customs laws and regulations are administered is by
no means "uniform" in the ordinary meaning of the term.75 Korea believes that "uniformity" is only to
be attained through an identical way of administ ration (or something comparable to such identical
administration) of customs laws and regulation throughout the entire territory of a WTO member; in
this case the territories of the 25 member States of the EC.76 No matter how the EC attempts to justify
it, the fact of the matter is the EC customs administration, as it currently stands, guarantees neither
consistency nor predictability in classification, valuation or other customs procedures. This is exactly
the situation the Argentina – Hides and Leather panel warned against.
77
5.43 Korean exporters have had to deal with each customs agency of each member State on an ad
hoc basis without any guarantee that other members of the EC would render the same or a similar
conclusion for the same or similar issue.
5.44 Taking all these into account, by failing to admi nister customs laws and regulations in a
"uniform" manner, the EC violates its obligation under Article X:3(a) of GATT 1994.
(b) EC judicial system's failure to provide a vi able mechanism to promptly review customs
related administrative actions violate Article X:3(b) of GATT 1994
5.45 In addition, a WTO Member is also obligated to provide an aggrieved trader with "prompt"
judicial review of an administrative decision rendere d by its customs authorities. It should be noted
that the obligation for a WTO Member is not simply to provide a review, but a "prompt" review. The
EC's judicial system, however, is far from providing a "prompt" judicial review with respect to
administrative decisions and actions by the customs au thorities of its member States. In fact, traders

73 Argentina – Measures Affecting the Export of Bovine Hides and the Import of Finished Leather ,
WT/DS155/R, Report of the Panel, adopted 16 February 2001 ("Argentina – Hides and Leather"), at para. 11.77
(emphasis added).
74 Argentina – Hides and Leather, at para. 11.83.
75 Article 31(1) of the Vienna Convention on the Law of Treaties.
76 Argentina – Hides and Leather, at para. 11.83.
77 Id.

are forced to deal with one more layer of compli cation due to the slow-moving, inconclusive judicial
review in the EC.
5.46 The unique characteristics and structural organiza tion of the EC should not be referred to as a
pretext to violate otherwise applicable provisions of GATT 1994.
5.47 As noted above, each EC member State opera tes its own customs agency, which renders
administrative decisions independent of each other. Needless to say, among EC member States there
is frequent discrepancy in customs administrative de cisions on the same issues. This discrepancy is
further complicated by yet another layer of divergence : the administrative decision is then appealed to
the courts of each member State, which has the aut hority to pronounce and apply the legal standard in
the customs issue being appealed, yet again independe nt of national courts of another member. As
such, each member State has wide discretion in con ducting judicial review of customs administrative
actions "in its own way." For example, there is no common rule for the timeframe of the review.78 As
a result, the judicial review by member States usually exacerbates the already laden confusion and
inconsistency caused by non-uniform administration of customs laws and regulations, as explained in
the Section 2(a) above, rather than provides reliable finality.
5.48 Only after going through the judicial review by national courts does a foreign trader have a
chance to pursue judicial review by an EC court that has jurisdiction in the entire EC territory: the
ECJ. In short, in the EC the traders have to go through one more process, and a lengthy one at that,
before they get a viable judicial review by an EC court than they would have to do with other WTO
members.
5.49 The EC argues that the ECJ fulfills its ob ligation under Article X:3(b) of GATT 1994.
79 But,
given the fact that an aggrieved trader can reach the ECJ only upon the comple tion of judicial review
at the member States, the ECJ is not a viable foru m that provides "prompt" review of the challenged
action. Furthermore, even if the ECJ renders its decision at long last, what basically follows from
such a decision is yet another "back and forth" be tween the ECJ and national courts rather than an
immediate finality of the dispute. 80 Under these circumstances, Korea does not believe that this is a
"prompt" judicial review.
5.50 The EC's effort to justify the situation by re peating the unique structural aspects of the EC
cannot be sustained either. 81 As a single economic entity, the EC, in its own right, assumes both
rights and obligations under the WTO as a single pack age. It cannot simply claim the benefit as a
single economic entity while disregarding obligations flowing from it, particularly so if such disregard
creates unreasonable burden on its trading partners.
5.51 In the light of the foregoing reasons, Korea subm its that the EC does not provide a judicial
forum for a prompt review of customs related admi nistrative actions, and thus violates its obligation
under Article X:3(b) of GATT 1994.
3. Conclusion
5.52 For the reasons set forth above, the EC fails to fulfill its obligation under Articles X:3(a) and
X:3(b) of GATT 1994. Korea respectfully submits th at the Panel should hold that the EC's customs
system as identified above is inconsistent with Articles X:3(a) and X:3(b) of GATT 1994.

78 US First Written Submission, at 106-107.
79 EC First Written Submission, at 127-128.
80 US First Written Submission, at 109-110.
81 See generally, EC First Written Submission, at Section III.

D.
THIRD PARTY WRITTEN SUBMISSION OF THE SEPARATE CUSTOMS TERRITORY OF TAIWAN ,
PENGHU, KINMEN AND MATSU
1. Introduction
5.53 The Separate Customs Territory of Taiw an, Penghu, Kinmen and Matsu welcomes the
opportunity to present its views in this dispute given its substantial systemic and trade interest in the
outcome of this case, and also given the fact that the European Communities (EC) is one of the major
trading powers in the world. As such, it is imperative that the EC, as a WTO Member in its own right,
adheres to the obligations of uniform administration of its customs laws and regulations as stated in
Article X:3(a) and (b) of GATT 1994, without exception.
2. Arguments
5.54 The Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu finds much of the
arguments by the EC to be either irrelevant or misleading, especially with regard to the
characterization of the arguments made by the United States. At the outset, it is important to point out
that the EC itself is a full Member of the WTO, and conducts its affairs as such, despite having 25
separate member States who are themselves Members of the WTO. Therefore, the EC, like any other
WTO Member, has the obligation to observe the rules set forth in Article X:3 of GATT 1994.
5.55 With regard to the interpretation of Article X: 3(a), the Separate Customs Territory of Taiwan,
Penghu, Kinmen and Matsu is puzzled by the deliberate effort of the EC to emphasize the reference to
the administration of laws, regulations, decisions and rulings, as if that were not the challenge brought
by the United States. We do not wish to dispute th at Article X:3(a) applies to the administration of
rather than the laws, regulations, decisions and ru lings themselves, and that the Appellate Body in EC
– Bananas has drawn precisely such a distinction. 82 However, this reading of Article X:3(a) does not
negate the fact that the EC, as a WTO Member, does have the obligation to administer its laws and
regulations in a uniform manner. This, in our view, is precisely what the United States claims that the
EC violates. The EC has not presented any relevant arguments to the contrary.
5.56 The EC suggests that the way it has administered its customs laws, regulations, decisions and
rulings is a result of its executive federalism, wh ich is a fundamental and legitimate constitutional
choice of government and should be afforded the same respect as those of the United States.83 Neither
the EC's constitutional choice nor that of the United St ates, in our view, seems to be relevant to this
dispute. The United States, in our view, is not challenging the structure of the EC's government, nor
is it seeking to interpret Article X:3(a) to require the formation of a single customs authority. It is true
that the WTO does not dictate how a Member should organize its government, much like
Article X:3(a) of GATT does not "prejudge the question of how the customs authorities in a WTO
Member are structured and organized," as the EC states.
84 However, it is equally true that the
structure and organization of a Member's government should not diminish in any way a Member's
obligations under the WTO. After all, the same gove rnment agreed to the set of obligations under the
WTO. Regardless of the constitutional choice by the EC, the issue in this case comes down to
whether the EC has fulfilled its obligations.
5.57 The EC also speculates that political considera tion to influence the D oha Round negotiations
on trade facilitation played into the decision by the United States to bring this dispute.
85 This, again,

82 European Communities – Regime for the Importation, Sale and Distribution of Bananas , Appellate
Body Report, WT/DS27/AB/R, para. 200.
84 Id., para. 252.
85 Id., paras. 229, 230.

is irrelevant, as speculation into the motivation behind a Member's decision to bring a challenge to the
WTO by the Panel is neither constructive nor relevant to resolving the dispute. The Panel is tasked to
decide whether the allegations of the United States are supported by the provisions of Article X:3(a)
and (b) of the GATT and the relevant facts. Thus, a decision in favour of the United States does not
mean that the Panel has yielded to political cons iderations, merely that the EC has not properly
adhered to its obligations under the relevant provisions.
5.58 The EC cites the Panel in Argentina – Hides and Leather and GATT Panel in EC – Dessert
Apples to support its argument that differential treatm ent and minor variations between EC member
States in the administration of customs laws do not constitute a breach of Article X:3(a) of the
GATT.
86 This is a mischaracterization of the precedents and the facts at issue. The quotation from
Argentina – Hides and Leather cited in the EC First Written Submission speaks to the "many
variations in products which might require differential treatment." 87 This is not the issue in the
current dispute. The current dispute concerns the same products that are required to be treated in a
"uniform…manner," in different ports of entry at di fferent times. The quotation, therefore, does not
support EC's argument.
5.59 Turning to EC – Dessert Apples , the "minor administrative variations" concerns the form in
which licence applications could be made and the requirement of pro-forma invoices. In the present
dispute, the differential treatments are the result of classification, valuation, and customs procedures.
The divergences in the areas of classifications, va luation and customs procedures (regarding penalties
and processing under customs control) go directly to the heart of the work of customs authorities,
have enormous impact on trade, and cannot be compared to the minor variations in the form of licence
applications and the requirement of pro-forma invoices mentioned in EC – Dessert Apples . Customs
classifications, valuations and procedures at issue in this dispute cannot be characterized as minor
administrative variations. If that were so, Article X:3(a) would be rendered completely meaningless.
5.60 On the sufficiency of eviden ce, the EC's argument that the United States has failed to
discharge its burden of proof is again without mer it. The United States cites "blackout drapery
lining"
88 and DVI and LCD 89 as examples to support its complaint about non-uniform administration
of EC customs classification law. On non-uniform administration of EC law on customs valuation,
the US cites the discussion by the EC Court of Auditors on different member States having taken
different positions on whether the costs of automobile repair that are covered by a seller's warranty
should be deducted from customs value.
90 In one illustration, the United States notes that different
member States of the EC have taken different pos itions on whether an importer is related to the non-
EC companies that manufacture its products and on how those products should be valued. 91 And with
regard to customs procedures, the United States cites a decision by the European Court of Justice that,
as a matter of EC law, different member States are entitled to impose, and do impose, different
sanctions.
92 Concerning the procedure known as "processing under customs control," the United
States points out that different member States apply these tests differently, which can have a
significant commercial impact. 93 As the United States demonstrates, the actual requirements that
users of "local clearance procedures" must meet vary significantly from member State to member

86 Id., paras. 232, 233.
87 Id., para. 232.
89 Id., para. 74.
90 See Court of Auditors, Special Report No 23/2000 concerning valuation of imported goods for
customs purposes (customs valuation), together with the Commission’s replies, reprinted in the Official Journal
of the European Communities C84, paras. 73-74 (14 March 2001) ("Court of Auditors Valuation Report")
(Exhibit US-14); US First Written Submission, paras. 78-96.
92 Id., para. 101.
93 Id., paras. 106-108.

State, with the process being significantly more burdensome in some member States than others.
94 As
illustrated above, the United States does not rely me rely on an argument that the EC's customs laws
being administered by 25 different author ities, among which divergences inevitably occur. 95 T h e
Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu believes that the United States has
sufficiently discharged its initial burden of proof. It is the EC who has so far failed to rebut the prima
facie case presented by the United States.
5.61 Finally, with regard to Article X:3(b), the provision requires Members to "maintain…judicial,
arbitral or administrative tribunals or procedures for the purpose…of the prompt review and
correction of administrative action relating to customs matters." (emphasis added). The EC argues
that it is possible to fulfill this requirement by ma intaining several tribunals, each of them covering a
part of the territory of the Member. 96 However, it is difficult to see how the stated purpose of prompt
review and correction of administrative action can be met unless the Member establishes a procedure
where the decisions and rulings of the tribunals ultimately have authority throughout the entire
territory of the Member. It is unclear how th e decisions and rulings of one tribunal on an
administrative action relating to customs matters in an EC member State can be accepted and
executed by the customs authority located within anot her EC member State. In addition, the length of
time it takes to obtain a decision or ruling by the various tribunals may vary a great deal among
different member States. It is also unclear how the EC can ensure the promptness of the review and
correction by the various tribunals located in different member States.
3. Conclusion
5.62 The Separate Customs Territory of Taiwan, Pe nghu, Kinmen and Matsu respectfully requests
that the Panel take the above views into careful consideration.
E.
THIRD PARTY ORAL STATEMENT OF ARGENTINA
1. Introduction
5.63 Argentina's attention focuses on the fact that in terpretation of Article X:3(b) establishes the
obligation to institute or mainta in functional tribunals or procedures for the object and purpose of
Article X:3 of the GATT 1994; in other words, to ensure the "prompt" review and uniform correction
of the trade regulations in the EC as a whole.
2. The link between subparagraph (b) and subpara graph (a) of Article X:3 of the GATT
1994
5.64 Argentina agrees with the United States that subparagraph (a) of Article X:3 is the immediate
and relevant context for interpreting the mean ing and scope of the obligation laid down in
subparagraph (b) of Article X:3 of the GATT 1994 as it is precisely within the context of the
obligation to apply trade regula tions in a uniform manner that each WTO Member's obligation to
institute or maintain tribunals or procedures for the purpose of reviewing or correcting trade
regulations is situated.
5.65 Argentina considers that – irrespective of the different nature that the obligations laid down in
subparagraphs (a) and (b) of Artic le X:3 of the GATT 1994 may have – there is a clear link between
them, inasmuch as Article X:3 as a whole should be read and interpreted as a coherent ensemble
without any internal contradictions so that complia nce with one obligation does not alter or diminish

94 Id., paras. 110-118.
95 Id., para. 20.

compliance with another (the principle of effectiven ess). It should also be borne in mind that, in
addition, this link arises from the fact that the legislator placed these obligations in different
subparagraphs of the same paragraph.
5.66 Consequently, according to subparagraph (a) of Article X:3, every WTO Member must apply
its laws, regulations, judicial decisions and admi nistrative provisions in a uniform impartial and
reasonable manner. Moreover, according to subpara graph (b) of Article X:3, every WTO Member
must institute judicial, arbitral or administrative procedures for reviewing or correcting administrative
action if it is applied in a non-uniform, partial or unreasonable manner. The procedures referred to in
subparagraph (b) of Article X: 3 should, therefore, ensure, inter alia, the uniform application of trade
regulations in accordance with subparagraph (a) of Article X:3 of the GATT 1994.
5.67 For the foregoing reasons, Argentina does not question the
sui generis nature of the EC nor
the fact that the WTO's Members retain a certain degree of discretion when complying with
obligations under Article X as a result of the specifi c wording of the Article. Nevertheless, Argentina
considers that this should not constitute an obst acle and – being a WTO Member distinct from the
member States belonging to it – the EC is subject to the obligations laid dow n in subparagraphs (a)
and (b) of Article X:3 and, as such, should institute or maintain tribunals or procedures for review and
correction that ensure uniform application of trade regulations throughout the EC.
3. "Promptness" as an obligation in Article X:3(b)
5.68 Argentina agrees with the parties to this dispute that the obligation laid down in
subparagraph (b) of Article X:3 of the GATT 1994 is not confined solely to instituting or maintaining
tribunals or procedures for reviewing or correcting administrative action but also means that these
procedures must be instituted in such a way as to allow " prompt" review and correction of decisions
by the customs authorities.
5.69 Argentina agrees with the EC regarding the mean ing of the term "prompt" namely that the
review or correction of the decision by the custom s authority should occur within a "reasonably short
period of time".
5.70 In order to determine when the period is "r easonably short", Article X:3 of the GATT 1994 is
primarily addressed to importers and exporters. Its object and purpose is to preserve certain
competitive situations, as pointed out by the Panel in the Argentina – Hides and Leather case.
5.71 Argentina therefore considers that Article X:3(b) is violated if the judicial, arbitral or
administrative procedures do not allow review or correction of administrative action within a
"reasonably short" period (promptly) so as to pr eserve the legitimate co mpetitive prospects of
exporters and importers.
5.72 Argentina wishes to emphasize that both paragraphs 1 and 3 of Article X of the GATT 1994
and WTO case law make exporters a nd importers the main beneficiarie s of the obligations laid down
in this Article.
5.73 Argentina therefore considers that the sui generis situation of the EC does not contradict the
fact that – as a WTO Member independently of the States making up the EC – according to
Article X:3(b), the European Communities should not only ensure that there are mechanisms for
review and correction but also that such review a nd correction of decisions by the customs authorities
of the EC member States as a whole should be "prompt".
5.74 In this regard, notwithstanding the degree of disc retion given by the EC to its member States
(as regards procedures for reviewing and correcting decisions by the customs authorities), the absence

of any specific reference in Community legislation to the time-limits for such reviews and correction
implies that the EC does not in any case guarantee to the other Members of the WTO that review and
correction will be "prompt" throughout the Co mmunity, as required by subparagraph (b) of
Article X:3.
F.
THIRD PARTY ORAL STATEMENT OF AUSTRALIA
5.75 Australia joined this dispute as a third party in view of its systemic interests in the questions
under consideration by the Panel. Australia therefore refrains at th is stage from taking a position on
the facts of this particular dispute.
5.76 The European Communities as a WTO Member in its own right has the obligation to comply
with Article X:3(a) of the GATT 1994 by ensuring its customs system operates in a uniform, impartial
and reasonable manner.
5.77 Australia agrees that Article X:3(a) is not prescriptive and is concerned with the
administration of customs laws and not the laws themselves. It is clear that WTO Members retain
discretion as to their administrative system provided it is uniform, impartial and reasonable.
5.78 Australia also acknowledges that, given the co mplex nature of customs systems, some
divergences may occur from time to time, but thes e should not be so widespread or frequent as to
render the customs administration inconsistent with Article X:3(a).
5.79 The question for the panel is whether the a lleged divergences resulting from the European
Communities' particular system (that is, reliance on the national systems of its member States) fall
into this category.
5.80 As with Article X:3(a), the European Communities as a WTO Member in its own right has an
obligation to comply with Article X:3(b) of the GATT 1994 by ensuring there exist tribunals or
procedures for prompt review and correction of administrative action relating to customs matters.
5.81 Australia would argue that Article X:3(b) is not a prescriptive Article and includes no
obligation to have a central court. However, Aust ralia does support the view that the decisions and
rulings of the review bodies should be applied consistently and be available equally throughout the
territory of the WTO Member. The question for the Panel is whether the European Communities'
system for review of customs matters achieves this result.
5.82 With regard to the requirement of prompt review, Australia would see it as desirable that the
timeframe for review should be reasonably comparab le from wherever review is sought within the
territory of the member. This prevents, among othe r things, traders from seeking review in the forum
they expect to produce the quickest outcome and co ntributes to a uniform approach (consistent with
Article X:3(a)).
G.
THIRD PARTY ORAL STATEMENT OF CHINA
1. The scope of application of Article X:3(a) of the GATT 1994
5.83 China considers that Article X:3(a) of GATT 1994 concerns the administration of customs
laws, not the customs laws themselves. The EC seems concerned with whether Article X:3(a) GATT
applies to the administration of customs laws at the local level as well as at the central level.

5.84 Based on Article XXIV:12 of the GATT 1994 and the GATT Panel report in Canada – Gold
Coins, the EC drew its conclusion that "Article X:3( a) GATT does not require that customs laws be
regulated at the central level of each WTO Member".
5.85 Taking no position on this EC assertion, howev er, China does not think Article XXIV:12 of
the GATT 1994 and the GATT Panel report in Canada – Gold Coins are proper in supporting the
EC's argument.
5.86 Article XXIV:12 requires that the provisions of GATT be observed by both the central
government and the regional or local authorities of a Contracting Party, and that the central
government take the responsibility for ensuring the ob servance of the provisions of GATT by its local
authorities. So, if there are any difficulties, enc ountered by the federal government of a Contracting
Party because of its particular administrative or le gal structures, in ensuring the observance of the
provisions of GATT by its local authorities, the federal government shall still seek such reasonable
measures as are available to it to secure the obser vance of the provisions of GATT by its local
authorities in accordance with Article XXIV:12 until th e actions or measures inconsistent with any
provisions of GATT by its local authorities are removed. The federal government of such a
Contracting Party shall compensate, because of such actions or measures by its local authorities, for
any nullified or impaired benefits accruing to ot her Contracting Parties under the provisions of the
GATT.
5.87 According to the GATT panel in Canada – Gold Coins , Article XXIV:12 applies to those
measures taken by the local authority of Contracti ng Parties with federal regimes when administering
their laws or regulations of local level. The present dispute does not concern a measure taken by the
local authority when administering their laws or re gulations of local level, but concerns whether the
EC customs laws (i.e. laws of central level) can be administered by only the EC member States (i.e.
local level authority) and whether such administration is in a uniform manner.
5.88 The GATT panel in Canada – Gold Coins further stated that Article XXIV:12 does not
change the scope of application of the provisions of the GATT. China agrees with the EC that
"Article X:3(a) GATT does not prescribe the specific way in which WTO Members should administer
their customs laws". However, the obligation of uniform administration of customs laws should not
be varied.
2. The meaning of "uniform" as used in Article X:3(a) of the GATT 1994
5.89 The ordinary meaning of "uniform", as relevant here, is "of one unchanging form, character,
or kind; that is or stays the same in different places or circumstances, or at different times."97
5.90 The panel in Argentina – Hides and Leather stated: "Customs laws should not vary, that every
exporter and importer should be able to expect treatment of the sa me kind, in the same manner both
over time and in different places and with respect to other persons. Uniform administration requires
that Members ensure that their laws are applied consis tently and predictably. This is a requirement of
uniform administration of Customs laws and proce dures between individual shippers and even with
respect to the same person at different times and different places."
5.91 China considers that the interpretation clarified by the panel in Argentina – Hides and Leather
of the word "uniform" as used in Article X:3(a) is of the same substance w ith this ordinary meaning
of "uniform".

97 The New Shorter Oxford English Dictionary, Vol. II at 3488 (1993) (Exhibit US-4).

5.92 China believes that when addressing the meaning of the word "uniform" reference should be
made to the interpretation given by the panel in Argentina – Hides and Leather.
3. The standard of uniformity required by Article X:3(a) of the GATT 1994
5.93 The EC argues that "Article X:3(a) GATT only lays down minimum standards". The EC
referred to the Appellate Body report in US – Shrimp to support its argument. The paragraph referred
to by the EC of the Appellate Body report in US – Shrimp reads:
"It is also clear to us that Article X:3 of the GATT 1994 establishes certain minimum
standards for transparency and procedural fairn ess in the administration of trade
regulations which, in our view, are not met here. ……" (emphasis added by China)
5.94 The minimum standards articulated by the Appellate Body are for transparency and
procedural fairness in the administration of trad e regulations, not for directly the uniformity
requirement of the administration of customs law.
5.95 The EC also referred to the Panel report in Argentina – Hides and Leather to support its
argument. However, the paragraphs referred to by the EC address the meaning of the word "uniform",
and do not directly concern the standard of the uniformity.
H.
THIRD PARTY ORAL STATEMENT OF JAPAN
1. Arguments relating to the consistency of the challenged measures with Article X:3(a) of
the GATT
5.96 Japan would like to add, as a basis for our argument that "Article X:3(a) lays down minimum
standards"98, the Appellate Body's finding in US – Shrimp that "[i]t is clear to us that Article X:3 of
the GATT 1994 establishes certain minimum standards for transparency and procedural fairness in the
administration of trade regulations" 99. China has pointed out that this finding does not directly
concern the requirement of uniformity. Article X:3(a) does not stipulate the "transparency and
procedural fairness" of administration, but rather the "uniform, impartial and reasonable manner" in
which trade regulations shall be impl emented. The Appellate Body in US – Shrimp , however,
characterized the requirements under Article X:3(a) as "transparency and procedural fairness." This is
indeed apparent from the meanings of the terms "uni form", "transparent" and "fair." "Uniformity" in
an administration would ensure an application whic h is of an unchanging form, character, or kind;
that is or stays the same in different places or circumstances, or at different times." 100. A "fair"
administration would be implemented in a "just, unbiased, equitable, impartial…" 101 manner. As
"transparency" is the "quality or condition of being transparent" 102, a "transparent" administration
would be "easily discerned; evident; …open" as we ll as "extrapolated from every occurrence of the
phenomenon; to which there are no exceptions" 103, "not subject to … more than one interpretation" 104.
An administration of regulations lacking "uniform ity" would in general terms be unjust, biased,

99 Appellate Body Report, United States – Import Prohibition of Certain Shrimp and Shrimp Products,
WT/DS58/AB/R, adopted 6 November 1998, para. 183.
100 Panel Report, Argentina – Measures Affecting the Export of Bovine Hides and Import of Finished
Leather, WT/DS155/R and Corr.1, adopted 16 February 2001, para. 11.80 (quoting The New Shorter Oxford
English Dictionary, Vol. II at 3488 (1993)).
101 The New Shorter Oxford English Dictionary, Vol. I at 907 (1993).
102 Id., at 3373.
103 Id.
104 Merriam-Webster Online Thesaurus:
 http://www.m-w.com/cgi-bin/thesaurus?book=Thesaurus&va=transparent&x=13&y=16.

inequitable, partial and opaque – in other words, unf air and nontransparent. Therefore, uniformity is
an element of a transparent and fair administration, or procedural fairness, and the above finding by
the Appellate Body would be relevant in interpre ting the uniformity required under Article X:3(a) of
the GATT.
5.97 Japan agrees with the statement of the Se parate Customs Territory of Taiwan, Penghu,
Kinmen and Matsu which had correctly pointed out that while the Panel in Argentina – Hides and
Leather determined that "many variations in products which might require differential treatment,[…]
[t]he current dispute concerns the same produ cts that are required to be treated in a
'uniform…manner'". 105 However, we view that this Panel's finding in Argentina – Hides and Leather
is still relevant to the present case. It demonstrat es that the scope and level of "uniformity" required
by Article X:3(a) of the GATT, which had been determined by the Panel in Argentina – Hides and
Leather to mean an administration applied in an unchanging form, character, or kind; that is or stays
the same in different places or circumstances, or at different times" 106, is subject to interpretation. It
also indicates that Article X:3(a) "focuses on the day to day application of Customs laws, rules and
regulation"107, providing a context in which this provision should be interpreted.
5.98 Japan agrees with the United States and other third parties that the EC, as a Contracting Party,
is responsible for ensuring a uniform administra tion of customs matters throughout its territory,
irrespective of the number of customs authorities within its territory. Japan al so agrees that a central
function within the government which has the prim ary responsibility to interpret trade regulations
such as those relating to customs classification or customs valuation is desirable. However,
Article X:3(a) of the GATT does not prescribe a sp ecific means a Member must employ, and such
specific means to ensure a uniform administration of customs laws is one of the matters which should
be addressed through the Doha Negotiations on Trad e Facilitation which aims "to clarify and improve
relevant aspects of Articles V, VIII and X of the GATT 1994…" 108. Japan would like to draw the
Panel's attention to the fact that it is because such means are not specifically provided under the
current GATT, that Japan has, together with Mo ngolia, Pakistan, Peru and the Separate Customs
Territory of Taiwan, Penghu, Kinmen and Matsu, made a proposal on this matter. 109 Therefore, the
issue before the Panel is whether the EC's administration of customs regulation as a whole ensures a
uniform administration consistent with Article X: 3(a) of the GATT, not whether the EC provides a
specific means to achieve uniformity.
5.99 Furthermore, even if divergences exist in light of the particular customs system as a whole,
the issue of whether the "degree" of such divergences is inconsistent with Article X:3(a) of the GATT
would arise. In regard to this point, Japan recalls the Panel's finding in US – Hot-Rolled Steel which
held that, for a Member's measure to be in consistent with Article X:3(a) of the GATT, "it would have to
have a significant impact on the overall administration of that Me mber's law as opposed to a mere
impact on the outcome in the individual case in question"
110. In addition, the panel in Argentina –
Hides and Leather pointed out that "Article X:3(a) requires an examination of the 'real effect' that a
measure might have on traders operating in the comme rcial world" and that the examination of such
real effect "can involve the examination of wh ether there is a possible impact on the competitive
situation"111. Therefore, if the Panel considers th e cases referred to by the United States as

105 Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu, Third Party Written
Submission, para. 6.
106 Supra footnote 100.
107 Supra footnote 100, para. 11.84.
109 TN/TF/W/8, page 5, TN/TF/W/8/Add.1.
110 Panel Report, United States – Anti-Dumping Measures on Certain Hot-Rolled Steel Products from
Japan, WT/DS184/R, adopted 23 August 2001, as modified by the Appellate Body Report, WT/DS184/AB/R,
para. 7.268.
111 Supra note 3, para. 11.77.

divergences, then further examination is necessary to determine whether the EC's administration lacks
uniformity to the "degree" that would be inconsis tent with Article X:3(a) of the GATT. Such a
determination should be based on whether the cases mentioned by the United States are individual
outcomes of the EC's customs administration, or evidences of the non-uniformity of the overall
administration of the EC's customs regulation that may have a significant impact on the competitive
situation.
I.
THIRD PARTY ORAL STATEMENT OF THE REPUBLIC OF KOREA
5.100 Korea supports the arguments raised by the Un ited States in its First Written Submission
dated 12 July 2005. Korea believes that certain asp ects of the EC's customs system in general and
laws and regulations in particul ar are inconsistent with the relevant provisions of GATT 1994. With
this in mind, Korea offers its position on the following issues.
1. The EC's non-uniform administration of laws and regulations concerning customs
classification, valuation and other procedures violate Article X:3(a) of GATT 1994
5.101 As a Member of the WTO in its own right, th e EC assumes the obligation to administer its
customs laws and regulations in a "uniform, impa rtial and reasonable manner" in accordance with
Article X:3(a) of GATT 1994. The EC, however, fails to abide by this important obligation. The EC
laws and regulations are administered individually and separately by the 25 member States in a non-
uniform manner. In terms of classification, valuation and customs procedures, the 25 member States
have their own customs authorities that administer customs laws and regulations in the way they see
fit. Like other traders from outside the bloc, Korean exporters have had to deal with these 25 different
customs authorities and their varying procedures for entry of the same or similar products into the EC.
5.102 Having 25 different manners of customs admini stration is by no means "uniform" in the
ordinary meaning of the term. Korea believes th at "uniformity" is only to be attained through
identical administration (or something comparable to such identical administration) of customs laws
and regulation throughout the entire territory of a WT O Member; in this case the territories of the 25
member States of the EC. No matter how the EC attemp ts to justify it, the fact of the matter is the EC
customs administration, as it currently stands, gua rantees neither consistenc y nor predictability in
classification, valuation or other customs pro cedures. This is exactly the situation the Argentina –
Hides and Leather panel warned against.
5.103 Korea duly recognizes and respects the unique characteristics of the EC where all 25 member
States individually exercise their authorities in the customs area. The unique characteristics, however,
should not become a pretext for deviating from ot herwise applicable WTO obligations, including
GATT 1994. Taking all these into account, by failing to administer customs laws and regulations in a
"uniform" manner, the EC violates its obligation under Article X:3(a) of GATT 1994.
2. The EC judicial system's failure to provide a viable mechanism to promptly review
customs related administrative actions violates Article X:3(b) of GATT 1994
5.104 Furthermore, each member State has wide discretion in conducting judicial reviews of
customs administrative actions "in its own way." For example, there is no common rule for the
timeframe of the review. As a result, the variety of approaches to judicial review by member States
exacerbates the already wide-spread confusion a nd inconsistency caused by customs agencies' non-
uniform administration of customs laws and regulations, as explained above.
5.105 Only after going through this lengthy, unpredic table and inconsistent judicial review by
national courts does a foreign trader have a chance to pursue judicial review by an EC court that has
jurisdiction in the entire EC territory: namely, th e ECJ. The EC argues that the ECJ fulfills its

obligation under Article X:3(b) of GATT 1994. Given the fact that an aggrieved trader can reach the
ECJ only upon the completion of a judicial review at the level of the member States, the ECJ is not a
viable forum for providing "prompt" review of the challenged action.
5.106 To provide a prompt review of customs d ecisions, the EC should have introduced and
maintained a judicial forum that has jurisdiction throughout the territory of the EC. The EC, however,
fails to provide a judicial forum for a prompt re view of customs related administrative actions, and
thus violates its obligation under Article X:3(b) of GATT 1994.
VI. INTERIM REVIEW
6.1 The Panel's Interim Report was issued to the parties on 10 February 2006. Pursuant to Article
15.2 of the DSU and paragraph 16 of the Panel' s Working Procedures, the United States and the
European Communities submitted written requests for review of the Interim Report on 24 February
2006. On 3 March 2006, the United States and th e European Communities submitted further written
comments on the comments that had been provided by the parties on 24 February 2006.
6.2 Pursuant to Article 15.3 of the DSU, this sec tion of the Panel Report contains the Panel's
response to the comments made by the parties in rela tion to the Interim Report, to the extent that an
explanation is necessary. The Panel has modified aspects of its report in light of the parties'
comments where it considered appropriate, as explained below. The Panel has also made certain
revisions and editorial corrections for the purposes of clarity and accuracy. References to sections,
paragraph numbers and footnotes in this Section VI relate to the Interim Report.
A.
NEW EVIDENCE REFERRED TO IN COMMENTS DURING THE INTERIM REVIEW STAGE
6.3 In its comments on the Interim Report, the European Communities referred to a number of
exhibits that it had not relied upon previously in the Panel proceedings. In particular, the European
Communities referred to: (a) Commission Regulati on (EC) No. 2171/2005 concerning the tariff
classification of certain LCD monitors (Exhibit EC-167); (b) Dutch Ministry of Finance,
Telefaxbericht BCPP 2006/389 M (Exhibit EC-168); (c) an extract from the EBTI database
concerning expired BTI DE M/2975/05-1 (Exhibit EC-169); (d) replies of customs authorities of
member States concerning the alleged requirement of prior approval for valuation on a basis other
than the last sale (Exhibit EC-170); (e) Greek Pr esidential decree No. 203 (Exhibit EC-171); and (f)
Opinion 1/94 of the ECJ concerning accession to the WTO (Exhibit EC-172).
6.4 The United States objected to the European Communities' reference to and reliance upon
Exhibits EC-167 – EC-172. More specifically, the United States submitted that the introduction of
new evidence during the interim review stage of th e Panel's proceedings is entirely impermissible and
the Panel should give no consideration to that ev idence. In support, the United States relied upon the
Appellate Body's decision in EC – Sardines, which the United States argued stands for the proposition
that, pursuant to Article 15 of the DSU, the inte rim review stage cannot include an assessment of new
and unanswered evidence.
6.5 The Panel notes that Article 15.2 of the DSU, which governs the interim review stage of
panel proceedings, provides in relevant part that:
"Following the expiration of the set period of time for receipt of comments from the
parties to the dispute, the panel shall issue an interim report to the parties, including
both the descriptive sections and the panel' s findings and conclusions. Within a
period of time set by the panel, a party ma y submit a written request for the panel to
review precise aspects of the interim report prior to circulation of the final report to
the Members. ..."

6.6 In the Panel's view, Article 15.2 of the DSU cl early indicates that the purpose of the interim
review stage of the Panel's proceedings is to revi ew "precise aspects" of the Interim Report that was
issued to parties on 10 February 2006. We consid er that the terms of Article 15.2 preclude us from
taking into consideration evidence which is not reflected in the Interim Report.
112 Therefore, the
Panel declines to consider Exhibits EC-167 – EC-172.
B. PANEL'S TERMS OF REFERENCE
1. Manner of administration
6.7 The United States requested the Panel to reconsider its finding in Section VII.B that the
"measure at issue" for the purposes of a claim unde r Article X:3(a) of the GATT 1994 is the "manner
of administration" of laws, regulations, decisions a nd rulings of the kind described in Article X:1 of
the GATT 1994.
6.8 The European Communities submitted that it agreed with th e Panel's analysis in Section
VII.B in this regard and that, therefore, the United States' request should be rejected.
6.9 The Panel has taken careful note of the arguments advanced by the United States but has
decided not to accept the United States' request. The Panel fully explained its reasoning for
concluding that, for the purposes of a claim under Article X:3(a) of the GATT 1994, the measure at
issue is the manner of administration that is alle gedly non-uniform, partial and/or unreasonable in
paragraphs 7.18 – 7.22. The Unite d States has not convinced the Panel that its reasoning should be
revised and, therefore, the Panel has retained these paragraphs in its Final Report.
2. Challenge of the EC system as a whole/overall
6.10 The United States questioned whether the Panel properly considered the United States'
request for establishment of a panel as a whole in Section VII.B when it concluded that its terms of
reference did not include the United States' challenge of the EC system of customs administration as a
whole or overall. The United States further submitted that a claim that a Member is in breach of a
WTO obligation in a request for establishment of a pa nel is sufficient to put that Member on notice as
to the obligation that has allegedly been violated and the measure at issue. According to the United
States, it is not necessary to specifically identify whethe r the challenge is "overall" or "as a whole" or,
rather, whether the challenge relates to specific instances of violation.
6.11 The European Communities submitted that the United States' request for reconsideration of
the Panel's analysis in Section VII.B should be rejected. According to the European Communities, the
Panel's approach is consistent with relevant Appellate Body jurisprudence, which merely requires that
requests for establishment of a panel be read as a whole.
6.12 The Panel notes that, in paragraphs 7.24 – 7.32 and 7.42 – 7.46, the Panel referred to and
discussed all relevant aspects of the United States' re quest for establishment of a panel. Further, in
paragraph 7.40, we emphasised that a challenge of a system as a whole or overall must meet the
important due process requirements contained in Article 6.2 of the DSU. We have modified
paragraph 7.46 to make it clear that, when consider ed as a whole, the various elements of the United
States' request for establishment of a panel preclude a challenge of the EC system of customs
administration overall or as a whole.

112 We find support for this view in the Appellate Body Report, EC – Sardines, para. 301.

3. Administration by "national customs authorities of EC member States" of "laws,
regulations, handbooks, manuals and administrative practices"
6.13 The United States requested the Panel to delete the re ference to administration by "national
customs authorities of EC member States" in paragraphs 7.25, 7.33, 7.50 and 7.55. The United States
submitted that, if this reference were to be re tained, it would create the false impression that
administration in the European Communities may be undertaken other than through the national
customs authorities. The United States also requested modification of paragraph 7.25 to make it clear
that it does not allege that the "laws, regulations, handbooks, manua ls, and administrative practices"
to which it refers in its request for establishment of a panel are themselves in violation of Article
X:3(a) of the GATT 1994 but, rather, that they evidence such violation.
6.14 The Panel has decided to retain the reference to administration by "national customs
authorities of EC member States" in paragr aphs 7.25, 7.33, 7.50 and 7.55 given that, inter alia, this
reference is drawn directly from the United States' own request for establishment of a panel. With
respect to the reference to "laws, regulations, handbooks, manuals, and admi nistrative practices", the
Panel has modified paragraph 7.25 to clarify that the United States' request for establishment of a
panel indicates that the specific forms of admi nistration "challenged" by the United States under
Article X:3(a) of the GATT 1994 include, inter alia , "laws, regulations, handbooks, manuals, and
administrative practices".
4. Temporal issues
(a) Expired measures or measures not yet in existence at the time of panel establishment
6.15 The United States requested deletion of the statement in the last sentence of paragraph 7.28
that measures that amend, implement or are related to the Community Customs Code, the
Implementing Regulation, the Common Customs Tariff or the TARIC are within the Panel's terms of
reference, "to the extent that they do not change the essence of the measures being amended or
implemented and/or do not change the essential natu re of the United States' case under Article X.3(a)
of the GATT 1994".
6.16 The European Communities submitted that it could accept the United States' request
provided that the Panel agreed to the European Communities' request regarding paragraphs 7.90 –
7.92. More specifically, the European Communities requested that these paragraphs be moved to the
section dealing with the Panel's terms of reference.
6.17 The Panel has decided to accede to the requests of both the United States and the European
Communities. In particular, we deleted the statemen t in the last sentence of paragraph 7.28 to which
the United States objected and we inserted paragraphs 7.90 – 7.92 in a new section entitled "Temporal
matters concerning the Panel's terms of reference" following the section dealing with "The measure(s)
at issue" in accordance with the European Communities' request.
6.18 The European Communities requested the Panel to reconsider its reasoning in
paragraph 7.91 regarding expire d measures and measures not yet in existence. The European
Communities argued that the test formulated by the Panel in those paragraphs was excessively wide.
In this regard, the European Comm unities noted that, pursuant to Artic le 3.7 of the DS U, the aim of
dispute settlement is to secure a positive solution to a dispute. However, the European Communities
argued that, with regard to measures no longer in exis tence at the time of establishment of a panel, the
responding Member cannot bring them into conform ity. Regarding measures that are not yet in
existence at the time of establishment of a pane l, the European Communities submitted that these
could not be "covered" by a request for establishment.

6.19 The United States submitted that the European Commun ities' request should be rejected.
The United States argued that evidence of instances of administration that pre-date or post-date
establishment of a panel remain relevant to a panel's analysis inasmuch as they provide context for the
examination of particular instances of alleged viol ations of Article X:3(a) of the GATT 1994. The
United States further argued that circumstances that lead to a particular manner of administration in
one instance may be the same circumstances affecting administration in other instances.
6.20 The Panel has carefully considered the parties' arguments regarding its reasoning in
paragraph 7.91 (which, as noted in paragraph 6.17 a bove, is now contained in the section dealing with
the Panel's terms of reference in the Final Report). At the outset, the Panel recalls its statement in
paragraph 7.91 that, as a general principle, a panel is competent to make findings and
recommendations on measures in existence at the time of establishment of a panel. In other words,
from a temporal perspective, the time of establishment of a panel is of critical importance because it is
at that time that the panel must focus its attenti on to determine whether or not a violation of the
covered agreements exists. We disagree with the United States' argument that evidence of instances
of administration that pre-date and post-date estab lishment of a panel remain relevant to a panel's
analysis insofar as the United States suggests that anything that occurs before or after the
establishment of panel, however remote in tem poral terms from panel establishment, may have a
bearing on a panel's analysis at the time of estab lishment. Rather, as the Panel clearly stated in
paragraph 7.91, expired measures may properly be the subject of findings and recommendations by a
panel only to the extent that they affect the operation of a covered agreement at the time of
establishment of a panel. Further, a request for establishment of a panel may be drafted in such a way
that anticipates measures not yet in existence at the time of panel establishment. As stated in
paragraph 7.91, the Panel considers that, in such cases, the "future" measures which have come into
existence since the establishment of a panel, may fall within the scope of a pa nel's terms of reference
only if they do not change the essential nature of the complaining Member's case as reflected in its
request for establishment of a panel . In light of the foregoing, the Panel does not consider it
necessary to modify its reasoning in paragraph 7.91.
(b) The temporal scope of "administration"
6.21 The European Communities requested the Panel to recons ider its reasoning in paragraph
7.92. In particular, the European Communities ar gued that the statement by the Panel in that
paragraph that the manner of administration may not have a clear starting point or ending point would
make it impossible for a responding Member found in violation of Article X:3(a) of the GATT 1994
to prove that the violation had ended.
6.22 The United States submitted that, given the interlinked nature of "administration", findings
about administration that pre-dates or post-dates th e establishment of a panel could well shed light on
administration that was indisputably in existen ce at the time of establishment. Additionally, the
United States noted that it does not object to the Panel's reasoning in paragraph 7.92 but suggests that
the Panel frame its reasoning not as a matter concerni ng the Panel's terms of re ference but, rather, as
context that will shed light on instances of administra tion that were indisputably in existence at the
time of panel establishment. The United States also argued that the findings about past instances of
non-uniform administration are evidence regarding the EC system of customs administration as a
whole.
6.23 The Panel has taken note of the parties' comments regarding paragraph 7.92. In light of those
comments, the Panel has decided to modify its re asoning in that paragraph (which, as noted in
paragraph 6.17 above, is now contai ned in the section dealing with the Panel's terms of reference in
the Final Report). The modifications make it clea r that the Panel does not wish to suggest that
administration that has occurred before or may occu r after the establishment of a panel may be the
subject of findings and recommendations of a panel in the context of a claim made under

Article X:3(a) of the GATT 1994. Rather, the nature of administration is such that it may not be
possible to clearly identify the point in time at wh ich the administration exists. As we stated in
paragraph 7.92, administration "may not have a clear starting point or end point. More particularly,
administration may be part of an ongoing series of interlinked acts or measures, which could thereby,
implicate acts or measures that no longer existed or did not exist at the time of establishment of the
panel." The Panel has amended paragraph 7.92 to clarify that administration may comprise a
continuum of steps and acts, some of which may pre-da te or post-date the step or act that forms part
of the administration that is considered by a pane l at the time of establishment of that panel. The
steps and acts pre-dating or post-dating the administra tion that is the subject of consideration may be
relevant to determining whether or not a violation of Article X:3(a) of the GATT 1994 exists at the
time of establishment of a panel.
6.24 By way of example, the Panel refers to paragra ph 7.294 of its Interim Report. In respect of
that paragraph, the European Communities argued that some of the evidence adduced by the United
States to prove divergent classification of LCD monitors entails measures that post-date establishment
of the Panel (namely, Exhibits US-76, 77 and 78) and that, therefore, they are outside the Panel's
terms of reference.
6.25 The United States countered that the European Commun ities' objections should be rejected
because they assume that the non-uniform administra tion evidenced by the exhibits in question only
came into existence when those documents were issued and not before. According to the United
States, the non-uniform administration reflected in those documents is simply a continuation of "an
ongoing series of interlinked acts or measures" that existed at the time of establishment of the Panel.
6.26 The Panel considers that it is clear from its reasoning in paragraph 7.294, particularly when
read in the light of paragraphs 7.91 – 7.92 and 7.29 5, that the Panel did not rely upon Exhibits US-76,
77 and 78 as proof of the existence of non-uniform administration at the time of the Panel's
establishment. Rather, the Panel made reference to those exhibits because they contained evidence of
the continuum of steps and acts comprising th e administration of the Common Customs Tariff
concerning the tariff classification of LCD monitors and illustrated that, at the time of establishment
of the Panel, the European Communities was not administering the Common Customs Tariff in a
uniform manner.
(c) "Currently"
6.27 The European Communities requested deletion of the word "currently" in paragraphs 7.207
and 7.448 and in the paragraphs containing conclusi ons drawn from the findings in those paragraphs.
The European Communities reasoned that the inclus ion of this word incorrectly suggests that a
distinction should be drawn between cases where there never was a violation under Article X:3(a) of
the GATT 1994 and cases where there once was a violation which has since been removed. The
European Communities also argued that the use of the word "currently" suggests that there is a risk of
recurrence of the violation in question.
6.28 The United States argued that the European Communities' requests should be rejected
because circumstances that lead to a particular ma nner of administration in one instance may be the
same circumstances affecting administration in other instances.
6.29 The Panel
 notes that, by using the term "currently " in those paragraphs, the Panel intends
merely to highlight that, at one point in time, th e act or measure in question amounted to non-uniform
administration within the meaning of Article X:3( a) of the GATT 1994 but that, at the time of
establishment of the Panel, such non-uniformity did not exist.

5. Retroactive recovery of customs duties
6.30 The European Communities requested deletion of paragra phs 7.375 – 7.385. According to
the European Communities, those paragraphs con cern the retroactive recovery of customs duties
following adoption of an explanatory note, which is not within the Panel's terms of reference.
6.31 The United States submitted that the European Commun ities' request should be rejected.
The United States noted that, if an EC customs authority views an explanatory note as a mere
clarification of the Common Customs Tariff and, therefore, applies it retrospectively, it is
administering the Common Customs Tariff differently from another EC customs authority that views
the note as being more akin to an amendment and only applies it prospectively. The United States
submitted that this cannot be understood as anything other than a divergence in administration of the
tariff classification rules in the European Communities.
6.32 The Panel considers that paragraph 7.381 makes it clear that, in paragraphs 7.375 – 7.385, the
Panel is dealing with alleged diffe rences in the interpretation and application of explanatory notes by
customs authorities in the member States (a matter which is clearly within the Panel's terms of
reference) rather than the retroactive recovery of customs duties. Therefore, the Panel sees no need to
delete paragraphs 7.375 – 7.385.
C.
INTERPRETATION OF ARTICLE X:3(A) OF THE GATT 1994
1. "Object and purpose"
6.33 The United States requested deletion of para graph 7.109. It argued that, with respect to the
reference to "object and purpose" in Article 31(1) of the Vienna Convention, WTO jurisprudence does
not indicate that an object and purpose of the WTO Agreement is to ensure security and predictability.
Rather, the reference to security and predictability in such jurisprudence derives from Article 3.2 of
the DSU, which concerns the aim of WTO dispute settlement.
6.34 The Panel considers that the architecture of the WT O system, which is a rules-based system,
implies that security and predictability is an obj ect and purpose of the WTO Agreement. In the
Panel's view, this is implicit in Article 3.2 of the DSU which states, inter alia , that "[t]he dispute
settlement system of the WTO is a central elemen t in providing security an d predictability to the
multilateral trading system". In our view, this provi sion indicates that security and predictability is an
object and purpose not only of the DSU but also of the entire multilateral trading system, of which the
DSU is a part. Nevertheless, since the Panel's findings in paragraph 7.109 are not essential for its
interpretation of the term "adminis ter" in Article X:3(a) of the GATT 1994, the Panel has decided to
delete paragraphs 7.108 – 7.109.
2. "Supplementary means of interpretation"
6.35 The United States requested the Panel to delete its re ference to the "factual context" under
Article 32 of the Vienna Convention as "supplementary means of interpretation" in paragraphs 7.131 –
7.136. The United States suggested that the Pa nel's discussion of the factual context should be
substituted for a discussion of the relationship between Articles X:3(a) and X:3(b) of the GATT 1994.
6.36 The European Communities submitted that the United States' request should be rejected. In
support, the European Communities referred to the Appellate Body's decision in the EC – Chicken
Cuts case, which its says confirms the inclusive nature of Article 32 of the Vienna Convention.
6.37 The Panel notes that the United States does not appear to dispute the Panel's reference to the
"factual context". Rather, its primary concern a ppears to be the legal basis upon which the Panel

made such reference. In this regard, the Panel r ecalls its observation in footnote 262 of the Interim
Report that, in the EC – Chicken Cuts case, the Appellate Body affirmed the panel's reliance upon the
"factual context" when interpreting the ordinary meaning of a treaty term pursuant to Article 31 of the
Vienna Convention. The Panel also stated in footnote 262 that the Appellate Body' approval of the
use of "factual context" under Article 31 of the Vienna Convention indicates that it may
alternatively/additionally be taken into consideration under Article 32 of the Vienna Convention. We
find support for this view in EC – Chicken Cuts , where the Appellate Body stated that: "We stress,
moreover, that Article 32 does not define exhaustiv ely the supplementary means of interpretation to
which an interpreter may have rec ourse. It states only that they include the preparatory work of the
treaty and the circumstances of its conclusion. Thus, an interpreter has a certain flexibility in
considering relevant supplementary means in a given case so as to assist in ascertaining the common
intentions of the parties."113 In the light of the foregoing, the Panel has decided not to delete reference
to the "factual context" under Article 32 of the Vienna Convention as "supplementary means of
interpretation" in paragraphs 7.131 – 7.136 but has amended footnote 262 to reflect additional support
for the Panel's approach.
6.38 Regarding the United States' suggestion that the Panel's discussion of the "factual context"
should be replaced with a discussion of the relations hip between Articles X:3(a) and X:3(b) of the
GATT 1994, the Panel notes that the United States ma de no reference to such a relationship when
demonstrating its claim under Article X:3(a) of th e GATT 1994. In any case, the Panel considers that
it is far from clear that the requirement to provide for prompt review and correction of administrative
decisions by domestic tribunals and procedures unde r Article X:3(b) of the GATT 1994 supports the
view that the obligation of uniformity in Artic le X:3(a) of the GATT 1994 should be interpreted
flexibly, as has been suggested by the United States in its comments.
3. "Minimum standards"
6.39 The United States requested the Panel to delete its re ference to "minimum standards of due
process" in paragraph 7.135. The United States re asoned that such a reference could be misread as
adding to the text of Article X:3(a) of the GATT 1994.
6.40 The Panel accepts that there is no explicit reference to "minimum standards of due process"
in Article X:3(a) of the GATT 1994. Nevertheless, th e Panel considers that such a notion is implicit
in Article X:3(a) of the GATT 1994 in light of th e immediate context of that provision, which was
considered by the Panel in paragraphs 7.126 – 7.130. Furthermore, the Panel recalls its observation in
footnote 264 that the Appellate Body stated in US – Shrimp that "[i]t is also clear to us that Article
X:3 of the GATT 1994 establishes certain minimum standards for transpar ency and procedural
fairness in the administration of trade regulations". 114 Therefore, the Panel declines to accept the
United States' request with respect to paragraph 7.135.
4. "Uniform"
(a) Nature of the challenge
6.41 The United States submitted that the Panel's discussion of the term "uniform" in paragraph
7.136 implies that different standa rds apply depending upon the scope of the challenge that is being
made under Article X:3(a) of the GATT 1994. The Un ited States argued that this could be misread to
imply that, for example, in the context of a na rrow challenge, the same product would need to be
classified under the same tariff heading by a Member , but that, in the contex t of a broader challenge,
the same product could be classified under different tariff headings and the Member's tariff

113 Appellate Body Report, EC – Chicken Cuts, para. 283.
114 Appellate Body Report, US – Shrimp, para. 183.

classification would be considered "uniform" for th e purposes of Article X:3(a) of the GATT. The
United States requested the Panel to clarify whether its finding is that the nature of the obligation of
uniform administration of measures would vary de pending on how broadly a Member has framed its
panel request.
6.42 The Panel considers that the response to the questi on in respect of which clarification is
sought by the United States is already provided in para graph 7.136. In particular, in that paragraph,
the Panel stated that the form, nature and scale of the alleged non-uniform administration and the
laws, regulations, judicial decisions and rulings that are allegedly being administered in a non-uniform
manner should be taken into consider ation when interpreting the term "uniform" in Article X:3(a) of
the GATT 1994 in the context of a particular case. The Panel further stated that the narrower the
challenge both in terms of the administration that is being challenged a nd the laws, regulations,
decisions and rulings which are alleged to be admi nistered in a non-uniform manner in a particular
case, the more demanding the requirement of uniformity. The broader and more wide-ranging the
challenge both in terms of the nature of administra tion that is being challenged and the specific laws,
regulations, decisions and rulings or provisions thereo f that are alleged to be administered in a non-
uniform manner in a particular case, a less exacti ng standard of uniformit y should be applied.
Accordingly, the Panel sees no reason to further clarify paragraph 7.136.
(b) "Reasonable period of time"
6.43 The United States requested the Panel to amend paragra ph 7.136 where the Panel states that,
for the purposes of Article X:3(a) of the GATT 1994, uniformity must be attained within a reasonable
period of time. The United States submitted that the obligation under Article X:3(a) of the GATT
1994 is to administer in a uniform manner curren tly. Further, the United States argued that the
reference to a "reasonable period of time" could be confused with the reference to the same term in
Article 21.3 of the DSU.
6.44 The European Communities argued that the United States ' request should be rejected.
According to the European Communities, the ob ligation of uniform administration under Article
X:3(a) of the GATT 1994 applies at all times, not just currently, but compliance with Article X:3(a) of
the GATT 1994 should be assessed at the time of the Panel's establishment. The European
Communities also argued that the context of paragr aph 7.136 makes it clear that the Panel is not
referring to a "reasonable period of time" for the purposes of Article 21.3 of the DSU.
6.45 The Panel has taken note of the parties comments and has decided to clarify paragraph 7.133
upon which the summary in paragraph 7.136 is based. Specifically, in order to avoid a finding of non-
uniform administration under Article X:3(a) of the GATT 1994, it must be clear at the time of
establishment of the panel that any non-uniformity that may have existed was remedied within a
period of time that is reasonable.
D.
PANEL'S OBSERVATIONS REGARDING THE EC SYSTEM OF CUSTOMS ADMINISTRATION
6.46 The European Communities agreed that its system of customs administration is relevant
context for the consideration of the United States' sp ecific claims of violation of Article X:3(a) of the
GATT 1994. Nevertheless, the European Communiti es requested that paragraphs 7.156 – 7.191,
describing relevant aspects of the EC system of customs administration be deleted. The European
Communities made similar but more specific comment s regarding paragraphs 7.165, 7.168, 7.169,
7.272 and 7.534. The European Communities argue d that those paragraphs overlap with the
description of the EC system in the Descriptive Pa rt of the Panel's report; they follow a different
structure to that adopted in the Descriptive Part, wh ich could lead to confusion; they contain errors;
and/or concern matters outside the Panel's terms of reference.

6.47 The United States submitted that the Panel should rej ect the European Communities' request
regarding paragraphs 7.156 – 7.191, 7.272 and 7.534. In this regard, the United States argued that the
discussion of the EC system in the Descriptive Part is inadequate because it is merely factual and does
not contain any analysis. Nevertheless, the United States submitted that all but the first sentence of
paragraph 7.535 (which is linked to paragraphs 7.156 – 7.191 and 7. 534) should be deleted given that
the text in question concerns matters outside the Panel's terms of reference.
6.48 The Panel has taken careful note of the parties' comments regarding paragraphs 7.156 –
7.191, 7.272 and 7.534 – 7.535. Th e Panel has decided to retain those paragraphs because, as stated
in paragraph 7.156, they explain the Panel's unde rstanding of certain aspects of the manner in which
the EC system of customs administration functions, which have been raised in the context of the
particular instances of violations of Article X:3(a) of the GATT 1994 alleged by the United States. In
the section of the Panel's report dealing with the pa rticular instances of alleged violations, we have
included cross-references to the general description of the EC system, which illustrates this point.
The Panel does not consider that any overlap betw een the description of the EC system of customs
administration in the Descriptive Part and in para graphs 7.156 – 7.191 and 7.534 – 7.535 leads to any
confusion. On the contrary, we consider that th e elaboration provided in paragraphs 7.156 – 7.191,
7.272 and 7.534 – 7.535 ensures that the reader has a clear and complete picture of the way the EC
system of customs administration works. In retaining paragraphs 7.156 – 7.191, 7.272 and 7.534 –
7.535, the Panel emphasizes that those paragraphs merely contain the Panel's observations about
aspects of the EC system that arise in the contex t of the particular instances of violations of
Article X:3(a) of the GATT 1994 alleged by the United States.
E.
SPECIFIC INSTANCES OF ALLEGED VIOLATION OF ARTICLE X:3(A) OF THE GATT 1994
1. Tariff classification of blackout drapery lining
6.49 The European Communities requested deletion of para graphs 7.265 – 7.276 because,
according to the European Communitie s, those paragraphs reflect a logical inconsistency. In this
regard, the European Communities implied that it is impossible to find that non-uniformity associated
with an administrative process is in violation of Article X:3(a) of the GATT 1994 unless the result of
the administrative process has also been found to be non-uniform in violation of that provision.
6.50 The United States submitted that the European Commun ities' request should be rejected.
The United States noted in this regard that the Pa nel did not find that the tariff classification of
blackout drapery lining was uniform in the European Communities. Rather, on the basis of the
evidence presented to it, the Panel found that it c ould not conclude that the products before the
various EC customs authorities were materially identical. The United States submitted that,
accordingly, that finding does not preclude a finding of non-uniform administration with respect to the
administrative process leading to the classification of blackout drapery lining.
6.51 The Panel has carefully considered the parties' comments and has decided not to delete
paragraphs 7.265 – 7.276. The Pane l recalls its finding in paragraph 7.264 that, on the basis of the
limited evidence before it, it could only assume that the products in question were not identical. It
was for that reason that the Panel was obliged to conclude that the tariff classification of the products
before the German customs authorities, on the one hand, and those before customs authorities of the
United Kingdom, Ireland, the Netherlands and Belgiu m, on the other, was not non-uniform for the
purposes of Article X:3(a) of the GATT 1994. In any case, the Panel considers that non-uniform
administrative processes may lead to a violation of Article X:3(a) of the GATT 1994 even though the
results of those processes are uniform. Indeed, the Panel is of the view that, irrespective of the
substantive outcome of an administrative process, non-uniformity in the process itself may have the
effect of dissuading traders from importing into a partic ular part of Member. In particular, this could

be the case where the administrative processes applied in one part of a Member are more burdensome
or onerous as compared to the administrative processes applied in another part of that Member.
6.52 The European Communities also requested amendment of paragraph 7.274 to the extent that
it indicates that the Main Customs Office of Bremen did not properly take into account classification
decisions by other customs authorities. The Europ ean Communities argued that such a statement is
not justified because the products that were the s ubject of classification by the Main Customs Office
of Bremen were different from the products that were the subject of classification by the customs
authorities of the United Kingdom, Ireland, the Netherlands and Belgium.
6.53 The United States submitted that the European Comm unities' request should be rejected
because it was based on a misunderstanding of the facts.
6.54 The Panel has considered the parties' comments and has decided not to modify paragraph
7.274. In the Panel's view, even if the Main Cust oms Office of Bremen considered that the products
in question were different, it shoul d have had regard to the classification decisions of other customs
authorities. It was incumbent upon the Main Custom s Office of Bremen to do so in light of the
numerous complaints made by the trader requesting reclassification and given that the Main Customs
Office of Bremen was aware of the existence of classification decisions of other customs authorities
for "comparable goods".
6.55 Additionally, the European Communities requested inclusion in paragraph 7.253 of a
reference to the statement made by the Hamburg ZPLA in the case of the Ornata protest, asking the
trader in question to provide "further information a nd receipts to show that identical merchandise was
treated differently in other EU countries".
6.56 The United States submitted that the European Comm unities' request should be rejected
because paragraph 7.253 merely contains a descripti on of the products that were the subject of
classification by the Hamburg ZPLA.
6.57 The Panel considers that it is not necessary to incl ude a reference in paragraph 7.253 to the
statement referred to by the European Communities b ecause the statement in question is already fully
excerpted in footnote 501.
6.58 The European Communities requested deletion from paragra ph 7.275 of the statement that
"the apparent failure on the part of the German customs authorities may have had an impact and may
continue to have an impact in the future upon th e tariff classification of blackout drapery lining in the
European Communities". The European Communities questioned the "impact" that the alleged failure
may have.
6.59 The United States submitted that the European Commun ities' request should be rejected.
According to the United States, the potential impact is clear. In particular, the United States argued
that, to the extent that traders can expect th e German customs authorities to administer EC
classification rules with respect to blackout drapery lining by using its own national interpretative aid
and by not seriously considering the decisions of ot her customs authorities, the exports of that trader
may be diverted.
6.60 In light of the parties' comments, the Panel has decided to clarify the nature of the impact that
it had in mind in paragraph 7.275.
6.61
 The European Communities requested deletion of the statement in paragraph 7.276 that the
EC system does not require German customs aut horities to make reference to the classification
decisions of other customs authorities. The Europ ean Communities noted that implementation of this

finding would require changes to the EC system of customs administration, which is a matter outside
the Panel's terms of reference.
6.62 The United States submitted that the European Commun ities' request should be rejected.
The United States reasoned that the Panel's findings should not be dictated by what the European
Communities consider it will or will not have to do for implementation purposes.
6.63 The Panel has carefully considered the parties' comments and has modified paragraph 7.276
to make it clear that the acts of the German cu stoms authorities regarding the administrative process
leading to the tariff classification of blackout drapery lining, rather than the EC system itself, resulted
in the Panel's finding of violation of Article X:3(a) of the GATT 1994.
2. Tariff classification of liquid crystal display flat monitors with digital video interface
6.64 The European Communities requested deletion of the statement in paragraph 7.294 that the
European Communities does not appear to disput e that, in 2004, a divergence in the tariff
classification of LCD monitors occurred. The Eu ropean Communities submitted that, while it has
recognised in its submissions that the classification of LCD monitors was a complex issue involving
the classification of numerous products, it has not recognised that there was any lack of uniformity in
its classification practice concerning LCD monitors at the time of the Panel's establishment.
6.65 The Panel acknowledges that the European Communities did not explicitly state in its
submissions that it agreed that divergence in ta riff classification of LCD monitors existed at the
relevant point in time. Nevertheless, the Panel considers that the European Communities implicitly
conceded the existence of such divergence in the various paragra phs of its submissions cited in
footnote 540. We have expanded this footnote to furt her substantiate this point. Further, in the same
footnote, we have elaborated on our discussion of the Press Release issued by Greenberg Traurig, 24
May 2005, contained in Exhibit US-29, which te nds to confirm that, in 2004, divergent tariff
classification of LCD monitors with DVI existed between, on the one hand, Dutch customs authorities
and, on the other hand, customs authorities in the other member States.
3. Revocation of BTI concerning candlesticks a nd preserved fruits and nuts in the context
of the Timmermans case
6.66 The European Communities requested that paragraphs 7. 347 – 7.360 be deleted because the
United States did not make a claim of non-uniform ity regarding candlesticks and preserved fruits and
nuts. Further, the European Communities submitted that these paragraphs should be deleted because
they concern the United States' challenge of the EC system of customs administration "as such", a
matter which is outside the Panel's terms of reference.
6.67 The United States submitted that it could accept the European Communities request provided
that paragraphs 7.357 and 7.358 are retained in Section VII.D.6(a).
6.68 In light of the parties' comments, the Panel
 has decided to delete paragraphs 7.347 – 7.360,
except for paragraphs 7.357 and 7.358 which have been retained in Section VII.D.6(a).
4. Penalties against infringements of EC customs legislation
6.69 The European Communities requested deletion of paragr aph 7.490 on the ground that the
United States did not allege a violation of Article X:3(a) of the GATT 1994 in the manner formulated
by the Panel in that paragraph. Further, the Eu ropean Communities argued that the Panel's statements
in these paragraphs are inconsistent with its r easoning that substantive penalty laws cannot be
regarded as acts of administration.

6.70 The United States submitted that the European Commun ities' request should be rejected.
The United States acknowledged that it did not frame its claim with respect to penalties in the manner
adopted by the Panel in paragraph 7.490. However, the United States argued that it is not the case
that the United States did not allege a violation in this regard. Further, the United States submitted
that there is no inconsistency between the Panel' s reasoning in para. 7.490 and the Panel's other
findings regarding penalties. According to the United States, the issue in para. 7.490 is not whether
individual penalty laws can be rega rded as acts of administration. Rather, the issue is whether the
Andrade decision and the EC Council Regulation in qu estion are EC customs laws susceptible to
administration within the meaning of Article X:3(a) of the GATT 1994.
6.71 The Panel has decided not to modify paragraph 7.490. First, the Panel notes that there is
nothing to prevent it from making observations, even if they are not based on allegations that were
specifically made by the parties during the Panel pro ceedings. Further, as stated in the first sentence
of paragraph 7.490, the Panel's observati ons in that paragraph relate to the application of the ECJ's
judicial decision in Jose Teodoro de Andrade v. Director da Alfândega de Leixões and EC Council
Resolution of 29 June 1995, on the effective uniform application of Community law and on the
penalties applicable for breaches of Community law in the internal market. The Panel's observations
do not concern substantive differences in laws, regulations or other measures.
F.
EC AND MEMBER STATE OBLIGATIONS
6.72 The European Communities requested amendment of paragraph 7.593 to make it clear that
the European Communities and not the member St ates have exclusive competence for matters
concerning the WTO Agreements regarding trade in goods.
6.73 The United States submitted that the European Communitie s' request should be rejected. In
support, the United States argued that, through its request, the European Communities introduces an
issue that was never discussed before in this dis pute, attempts to support its argument with evidence
that it adduced for the first time during the inte rim review stage and asks the Panel to make a
statement about the relative competence of the Eur opean Communities and its member States that has
implications that go well beyond this dispute and is wrong as a matter of law.
6.74 The Panel has taken careful note of the parties' comments and has decided not to accept the
European Communities' request regarding paragrap h 7.593. The Panel notes that the statement to
which the European Communities objects concerns the obligations of the European Communities and
its member States under the WTO agreements as a matter of international law . However, the
arguments made by the European Communities in support of the proposed amendment of paragraph
7.593 relate to the relative competence of the European Communities and its member States as a
matter of domestic law, which have no bearing on the statement in question.
G. OTHER REQUESTS FOR REVIEW
6.75 The United States and the European Commun ities requested certain changes to the
representation of their respective arguments in the following paragraphs of the Interim Report: 7.73,
7.98, 7.99, 7.115, 7.116, 7.119, 7.254, 7.280, 7.526, 7.546 and 7.595. The Panel accepted those
changes to the extent that they were consistent with what the parties stated in the various submissions
they made to the Panel during the Panel proceedings.
6.76 The United States and the European Communities requested modification or clarification of
the Panel's description of specific aspects associated with the EC system of customs administration in
the following paragraphs: 2.26, 2.33, 2.57, 2.72, 7.160, 7.166, 7.168, 7.181, 7.187, 7.299, 7.319, 7.343
and footnotes 306, 650. The Panel acceded to those requests to the extent that they were consistent
with the evidence that had been presented by the parties to the Panel during the Panel proceedings.

6.77 The European Communities requested changes to the English translations of certain exhibits
filed by the United States, the original language of which was German (namely, Exhibits US-23, US-
41 and US-50) in the following paragraphs: 7.251 and 7.253. The Panel accepted those changes to the
extent that they were faithful to the German version of the exhibits in question.
6.78 In the case of the following paragraphs, suggestio ns were made by one party and were not
objected to by the other party: 7.327, 7.329 – 7.346, 7.347 – 7.356, 7.360, 7.386 – 7.399, 7.402, 7.444,
8.1 (concerning the Panel's terms of reference), 8.1(a)(vii), (viii) and (xi), and 8.2. The Panel
accepted all such suggested changes.
6.79 In addition, the United States and/or the Eur opean Communities requested clarification of
certain factual matters in paragra phs 7.262 and 7.265. The Panel ma de the necessary clarifications to
those paragraphs.
VII. FINDINGS
A. ARTICLE X OF THE GATT 1994
7.1 Article X of the GATT 1994, entitled "Publicati on and Administration of Trade Regulations"
provides that:
"1. Laws, regulations, judicial decisions and administrative rulings of general
application, made effective by any contracting party, pertaining to the classification
or the valuation of products for customs purposes, or to rates of duty, taxes or other
charges, or to requirements, restrictions or prohibitions on imports or exports or on
the transfer of payments therefor, or affecting their sale, distribution, transportation,
insurance, warehousing inspection, exhibiti on, processing, mixing or other use, shall
be published promptly in such a manner as to enable governments and traders to
become acquainted with them. Agreements affecting international trade policy which
are in force between the government or a governmental agency of any contracting
party and the government or governmental agency of any other contracting party shall
also be published. The provisions of this paragraph shall not require any contracting
party to disclose confidential information which would impede law enforcement or
otherwise be contrary to the public inte rest or would prejudice the legitimate
commercial interests of particular enterprises, public or private.
2. No measure of general application take n by any contracting party effecting an
advance in a rate of duty or other charge on imports under an established and uniform
practice, or imposing a new or more burdensome requirement, restriction or
prohibition on imports, or on the transfer of payments therefor, shall be enforced
before such measure has been officially published.
3. (a) Each contracting party shall administer in a uniform, impartial and
reasonable manner all its laws, regulations , decisions and rulings of the kind
described in paragraph 1 of this Article.
 (b) Each contracting party shall maintain, or institute as soon as
practicable, judicial, arbitral or administrative tribunals or procedures for the purpose,
inter alia, of the prompt review and corr ection of administrative action relating to
customs matters. Such tribunals or proce dures shall be independent of the agencies
entrusted with administrative enforcement and their decisions shall be implemented
by, and shall govern the practice of, such ag encies unless an appeal is lodged with a
court or tribunal of superior jurisdiction w ithin the time prescribed for appeals to be

lodged by importers; Provided that the central administration of such agency may
take steps to obtain a review of the matter in another proceeding if there is good cause
to believe that the decision is inconsiste nt with established principles of law or the
actual facts.
 (c) The provisions of subparagraph (b) of this paragraph shall not require
the elimination or substitution of procedures in force in the territory of a contracting
party on the date of this Agreement wh ich in fact provide for an objective and
impartial review of administrative action even though such procedures are not fully or
formally independent of the agencies entrusted with administrative enforcement. Any
contracting party employing such procedures shall, upon request, furnish the
CONTRACTING PARTIES with full informa tion thereon in order that they may
determine whether such procedures c onform to the requirements of this
subparagraph."
7.2 In this dispute, the United States has made clai ms under Article X:3(a) and Article X:3(b) of
the GATT 1994. The Panel will address each of these claims in turn, following consideration of a
number of matters concerning the Pa nel's terms of references and procedural issues that have been
raised.
B.
THE PANEL'S TERMS OF REFERENCE
1. The measure(s) at issue
(a) Summary of the parties' arguments
7.3 The United States clarified in its first written submission that it is exclusively concerned with
the requirement of "uniform" administration contained in Article X:3(a) of the GATT 1994. 115 The
United States claims that the following measures are not being administered in a uniform way by the
European Communities in violation of Article X:3(a) of the GATT 1994: the "Community Customs
Code" contained in Council Regulation (EEC) No. 2913/92 of 12 October 1992; the "Implementing
Regulation" implementing the Community Customs Code contained in Commission
Regulation (EEC) No. 2454/93 of 2 July 1993; and the "Common Customs Tariff", which was
originally promulgated in Council Regulation (EEC ) No. 2658/87 but which is updated annually in
the EC Official Journal.
116 The United States explains that, while it is principally challenging these
three measures because they comprise the substance of EC customs laws, they are "supplemented" by
miscellaneous Commission regul ations and other measures. 117 The United States submits that these
supplementary measures pertain to specific products or groups of products in ways that elaborate on
provisions set forth in the three principal measures. According to the United States, because of their
specificity and the diverse range of issues covered, it would be impossible to identify all such
supplementary measures. Nevertheless, by way of example, the United States refers to Council
Regulation (EC) No. 493/2005 regarding the suspension of duties on a subset of LCD monitors.
118
The United States also refers to an explanat ory note to the Combined Nomenclature on the
classification of certain camcorders. 119 The United States submits that the three principal measures

115 United States' first written submission, footnote 15.
116 United States' first written submission, para. 3.
117 United States' replies to Panel question Nos. 3 and 128.
118 Exhibit US-28.
119 Explanatory Notes to the Combined Nomenclature of the European Communities, 13 July 2000,
p. 316 (Exhibit US-62).

and the supplementary measures are not administered in a uniform manner in violation of
Article X:3(a) of the GATT 1994.120
7.4 The European Communities argues that the laws and regula tions listed in the United States'
request for establishment of a panel are not the "mea sures at issue" for the United States' claims under
Article X:3(a) of the GATT 1994 within the meaning of Article 6.2 of the DSU. According to the
European Communities, it is clear from that request that the United States' claim relates to the manner
in which the European Communities administers the measures listed in the request, not to the
measures themselves. The European Communities su bmits that the enumeration of laws and other
measures in the request merely serves the purpo se of identifying the laws which the European
Communities allegedly fails to administer in a non-uniform manner.121
7.5 In response, the United States notes that it is not challenging the substance of the measures
mentioned in its request for establishment of a panel. 122 Rather, it is challenging the manner in which
EC customs law is administered. However, accordi ng to the United States, the manner in which the
European Communities administers its customs law may not itself be a "measure". Therefore, the
"specific measures at issue" for the purposes of Ar ticle 6.2 of the DSU are the laws, regulations,
decisions and rulings that make up EC cust oms law, although in some cases these are being
administered through laws and regulations which are themselves measures.123
7.6 The European Communities does not agree that the manner of administration of laws may
not itself be a measure. In this regard, the Eu ropean Communities submits that the Appellate Body
has confirmed that any act or omission attributable to a WTO Member can be a measure of that
Member for purposes of WTO dispute settlement. According to the European Communities, this
statement also applies to the administration of laws referred to in Article X:3(a) of the GATT 1994.
Whether a particular measure is challengeable in the WTO depends entirely on the substance of the
WTO obligation in question.
124 The European Communities argues that the identification of the
measure(s) at issue in the present dispute is pa rticularly necessary given the specific features of
Article X:3(a) of the GATT 1994. 125 The European Communities s ubmits that the United States'
suggestion that the "manner of administration" may not be a measure would lead to the absurd result
that non-compliance with Article X:3(a) of th e GATT 1994 could never be challenged under the
DSU.126 The European Communities also notes in this regard that the Appellate Body has confirmed
that Article X:3(a) of the GATT 1994 only relates to the administration of the laws and regulations
referred to in Article X:1 of the GATT 1994, not to the substance of those laws and regulations.127
(b) Analysis by the Panel
7.7 In the context of the United States' claim that the European Communities has violated
Article X:3(a) of the GATT 1994, the question has ari sen as to what the "measure(s) at issue" is under
Article 6.2 of the DSU for the purposes of a claim made pursuant to Article X:3(a) of the GATT 1994.
In particular, the Panel has been called upon to determine whether the measures at issue in this dispute
are the laws, regulations and other measures referred to in the United States' request for establishment

120 United States' reply to Panel question No. 128.
121 European Communities' second written submission, para. 7.
122 United States' replies to Panel question Nos. 1, 4 and 128.
123 United States' replies to Panel question Nos. 1 and 4.
124 European Communities' second written submission, para. 8 referring to Appellate Body Report, US
– Corrosion-Resistant Steel Sunset Review, para. 81.
125 European Communities' second written submission, para. 9 referring to Appellate Body Report, EC
– Bananas III, para. 200.
126 European Communities' second written submission, para. 10.
127 European Communities' second written submission, para. 9 referring to Appellate Body Report, EC
– Bananas III, para. 200.

of a panel as has been submitted by the United States or, rather, the manner of administration of the
EC customs system as has been submitted by the European Communities.
(i) Interpretation of the term "measures at issue" under Article 6.2 of the DSU
7.8 By way of background for the Panel's considera tion of the "measure(s) at issue" for the
purposes of a claim under Article X:3(a) of the GATT 1994, the Panel will first examine more
generally the meaning of the term "measures at issue", which appears in Article 6.2 of the DSU.
7.9 Article 6.2 of the DSU provides in relevant part that:
"The request for the establishment of a panel shall … identify the specific measures
at issue and provide a brief summary of the legal basis of the complaint sufficient to
present the problem clearly." (emphasis added)
7.10 In summary, Article 6.2 of the DSU contains tw o distinct requirements that must be fulfilled
in respect of a request for establishment of a panel: (1) the request must identify the specific measures
at issue; and (2) it must contain a brief summary of the legal basis of the complaint.
7.11 The "measure at issue" identified in a request for establishment of a panel plays a pivotal role
in a WTO dispute for a number of reasons.
7.12 First, the "measure at issue" together with the "legal basis of the complaint" comprise the
"matter referred to the DSB", whic h forms the basis for a panel's te rms of reference under Article 7.1
of the DSU.
128 In turn, a panel's terms of reference defi ne the scope of a dispute and serve the due
process objective of notifying the parties and third parties to a dispute of the nature of the
complainant's case.
129
7.13 Second, it is the "measure at issue" identified in the request for establishment of a panel that
must be brought into conformity in the event that that measure is found to be in violation of a WTO
obligation. This is evident, inter alia, from Article 19.1 of the DSU, which provides in relevant part
that:
"Where a panel or the Appellate Body concludes that a measure is inconsistent with a
covered agreement, it shall recommend that the Member concerned bring the measure
into conformity with that agreement." (emphasis added)
7.14 The Panel understands that there is an inter- linkage between the reference to the term
"measure" in Article 19.1 of the DSU and to the term "measures at issue" in Article 6.2 of the DSU.
In particular, a panel and the Appellate Body ma y only make recommendations under Article 19.1 of
the DSU with respect to a measure that has been specifically identified in the relevant request for
establishment of a panel in accordance with Article 6.2 of the DSU and which has been found to be
inconsistent with a WTO obligation.
7.15 Of relevance to the interpretation of the term "measure" in Article 6.2 of the DSU is the
following statement by the Appellate Body:

128 Appellate Body Report, US – Carbon Steel, para. 125.
129 Appellate Body Report, US – Carbon Steel, para. 126.

"In principle, any act or omission attributable to a WTO Member can be a measure of
that Member for purposes of dispute settlement proceedings.130 The acts or omissions
that are so attributable are, in the usual case, the acts or omissions of the organs of the
state, including those of the executive branch.131
In addition, in GATT and WTO dispute settle ment practice, panels have frequently
examined measures consisting not only of particular acts applied only to a specific
situation, but also of acts setting forth rules or norms that are intended to have general
and prospective application. 132 In other words, instruments of a Member containing
rules or norms could constitute a 'measure', irrespective of how or whether those rules
or norms are applied in a particular instance. This is so because the disciplines of the
GATT and the WTO, as well as the dispute se ttlement system, are intended to protect
not only existing trade but also the secur ity and predictability needed to conduct
future trade. This objective would be frustrated if instruments setting out rules or
norms inconsistent with a Member's obliga tions could not be brought before a panel
once they have been adopted and irrespective of any particular instance of application
of such rules or norms.
133 It would also lead to a multiplicity of litigation if
instruments embodying rules or norms could not be challenged as such, but only in
the instances of their application. Thus, allowing claims against measures, as such,
serves the purpose of preventing future disputes by allowing the root of WTO-
inconsistent behaviour to be eliminated."
134
7.16 Regarding the significance that should be attached, if any, to the term "at issue" in Article 6.2
of the DSU when referring to the specific measures that are required to be identified in a request for
establishment of a panel, the Panel notes that the ordi nary meaning of that term indicates that it refers
to what is being challenged by the complainant. 135 Therefore, we understand that the term "measure
at issue" in Article 6.2 of the DSU refers to the measure that is the subject of the challenge in a
particular dispute.
7.17 In the Panel's view, the term "measure at issue" in Article 6.2 of the DSU should be
interpreted in the light of the specific WTO obligation that is allegedly being violated by that measure
in a particular dispute. The Panel considers that such an approach is nece ssary because the "measure
at issue", which has been referred to in a requ est for establishment of a panel in accordance with
Article 6.2 of the DSU, will be the subject of a recommendation to be brought into conformity

130(original footnote) We need not consider, in this appeal, related issues such as the extent to which
the acts or omissions of regional or local governments, or even the actions of private entities, could be attributed
to a Member in particular circumstances.
131 ( original footnote ) Both specific determinations made by a Member's executive agencies and
regulations issued by its executive branch can constitute ac ts attributable to that Member. See, for example, the
Panel Report in US – DRAMS, where the measures referred to the panel included a USDOC determination in an
administrative review as well as a regulatory provision issued by USDOC.
132 ( original footnote ) See, for example Panel Report, US – Superfund ; Panel Report, US – Malt
Beverages; Panel Report, EEC – Parts and Components ; Panel Report, Thailand – Cigarettes; Panel Report,
US – Tobacco ; Panel Report, Argentina – Textiles and Apparel ; Panel Report, Canada – Aircraft ; Panel
Report, Turkey – Textiles ; Panel Report, US – FSC ; Panel Report, US – Section 301 Trade Act ; Panel
Report, US – 1916 Act (EC) ; Panel Report, US – 1916 Act (Japan) ; Panel Report, US – Hot-Rolled Steel ;
Panel Report, US – Export Restraints ; Panel Report, US – FSC (21.5 – EC) ; and Panel Report, Chile – Price
Band System. See also Appellate Body Report, US – Carbon Steel , paras. 156 and 157. See also Appellate
Body Report, US – 1916 Act, footnotes 34 and 35 to paras. 60 and 61, respectively.
133 (original footnote) Panel Report, US – Superfund, para. 5.2.2.
134 Appellate Body Report, US – Corrosion-Resistant Steel Sunset Review, paras. 81-82.
135 The New Shorter Oxford English Di ctionary defines "at issue" as "the position of parties of which
one affirms and the other denies a point": The New Shorter Oxford English Dictionary, 1993, p. 1428.

pursuant to Article 19.1 of the DSU by a panel and/or the Appellate Body, if that measure is found to
be in violation of a WTO obligation. The manne r in which the measure is to be brought into
conformity is clearly linked to the substance of the WTO obligation with which the measure in
question has been found to be inconsis tent. Therefore, the Panel considers that, at least in the context
of some claims, the substance of the WTO obliga tion with which a measure may have been found to
be inconsistent might have an impact upon the inte rpretation of the term "measures at issue" in
Article 6.2 of the DSU. Having said this, the Pa nel does not wish to sugg est that the distinct
requirements in Article 6.2 of the DSU to identify th e specific measures at issue and to provide a brief
summary of the legal basis of the complaint shoul d be merged and assessed as a single requirement.
On the contrary, these requirements serve different purposes. On the one hand, the requirement to
refer to the specific "measure at issue" in the request for establishment of a panel serves the purpose
of identifying the act or omission of a WTO Member that is being challenged, whereas the
requirement to provide a legal basis of the complaint indicates the legal benchmark or standard
against which the act or omission is to be assessed to determine WTO-inconsistency or otherwise.
While these are clearly distinct requirements that serve different purposes, they are, nevertheless,
interrelated such that the interpretation of one in the context of a particular dispute may help to inform
the interpretation of the other.
(ii) The "measure(s) at issue" for the purposes of a claim under Article X:3(a) of the GATT 1994
7.18 Bearing these general considerations in mind, th e Panel now turns to the question of what are
the "measure(s) at issue" for the purposes of a claim under Article X:3(a) of the GATT 1994? We
commence with an analysis of th e relevant aspects of Article X:3(a) of the GATT 1994 because, as
noted in paragraph 7.17 above, the term "measure at issue" in Article 6.2 of the DSU should be
interpreted in the light of the specific WTO obligation that is allegedly being violated by that measure.
7.19 Article X:3(a) of the GATT 1994 provides that:
"Each contracting party shall administer in a uniform, impartial and reasonable
manner all its laws, regulations, decisions and rulings of the kind described in
paragraph 1 of this Article."
7.20 In the Panel's view, the essential aspect of the obl igation contained in Article X:3(a) of the
GATT 1994 that has a bearing upon the interpretation of the term "measures at issue" in Article 6.2 of
the DSU for the purposes of a claim under Article X:3(a) of the GATT 1994 is the obligation to
"administer in a uniform, impartial and reasonable manner". The Panel considers that, in the light of
this essential aspect of the obligation contained in Ar ticle X:3(a) of the GATT 1994, when a violation
of Article X:3(a) of the GATT 1994 is being claimed, the relevant request for establishment of a panel
must identify the manner of administration that is allegedly non-uniform, partial and/or unreasonable.
7.21 In this regard, the Panel recalls that it is evid ent from Articles 6.2 and 19.1 of the DSU that it
is the "measure at issue" in the request for est ablishment of a panel that must be brought into
conformity in the event that that measure is found to be in violation of a WTO obligation. If a WTO
Member were found to be in violation of Article X:3(a) of the GATT 1994, this would mean that the
manner in which laws, regulations, decisions and/or ru lings of the kind described in Article X:1 of the
GATT 1994 are being administered by that Member is not uniform, impartial and/or reasonable. If, in
the light of such a violation, a panel or the A ppellate Body has recommended to the DSB that the
Member bring the measure in question into conf ormity, the Member would need to alter the manner
in which the relevant laws, regulations , decisions and/or rulings are being administered in order to
abide by that recommendation.
7.22
 While the "measure at issue" for the purposes of a claim under Article X:3(a) of the GATT
1994 is the manner of administration that is allegedl y non-uniform, partial and/or unreasonable, this

does not necessarily mean that the mere identificatio n of the manner of administration in a request for
establishment of a panel will meet the requirement in Article 6.2 of the DSU to identify the specific
measure at issue. In the Panel's view, what is necessary to meet the requirement of specificity in
Article 6.2 of the DSU will vary from case to case. In the following section of our report, we discuss,
inter alia , the specificity requirement under Article 6.2 of the DSU for the purposes of the present
dispute.
(iii) The "measure at issue" for the purposes of the United States' claim under Article X:3(a) of the
GATT 1994 in this dispute
7.23 The Panel will now consider the United States ' request for establishment of a panel as a
whole, to determine the specific measure(s) at issu e for the purposes of the United States' claim under
Article X:3(a) of the GATT 1994 in this dispute. In its request for establis hment of a panel, the
United States makes reference to the essential aspect of the obligation contained in Article X:3(a) of
the GATT 1994 set out in paragraph 7.20 above, namely , the manner of administration that allegedly
results in non-uniformity.136
 Manner of administration
7.24 In particular, the United States' request for establishment of a panel states in relevant part that:
"The United States considers 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.

Administration of [the measures set out in paragraph 7.26 below] in the European
Communities is carried out by the national customs authorities of EC member States.
Such administration takes numerous differ ent forms. The United States understands
that the myriad forms of administration of these measures include, but are not limited
to, laws, regulations, handboo ks, manuals, and administrative practices of customs
authorities of member States of the European Communities."137 (emphasis added)
7.25 The terms of the United States' request for estab lishment of a panel indicate that it challenges
the manner of administration of certain aspects of EC customs law. 138 The request clarifies that the
administration challenged by the United States is th at undertaken by the "national customs authorities
of EC member States". In addition, the request i ndicates that the specific forms of administration by
national customs authorities challenged by the United States under Article X:3(a) of the GATT 1994
include, inter alia, laws, regulations, handbooks, manuals, and administrative practices.
"Laws, regulations, decisions and rulings of the kind described in Article X:1 of the GATT 1994"

136 As noted previously, in footnote 15 of its first written submission, the United States clarified that, in
the context of the present dispute, it only claims that the manner of administration of the EC system of customs
administration is not "uniform" in violation of Article X:3(a) of the GATT 1994. The United States explicitly
stated that it does not take a position on whether or not the manner of administration of the EC system is
"impartial" or "unreasonable" within the meaning of Article X:3(a) of the GATT 1994.
137 WT/DS315/8, which is contained in Annex D of the Panel's report.
138 In its submissions to the Panel in these proceedings, the United States has confirmed that it is
challenging the manner of administration of the measures mentioned in its request for establishment of a panel
and not the substance of those measures: United States' replies to Panel question Nos. 1, 4 and 128.

7.26 Notably, the United States' request also refers to the "laws, regulations, decisions and rulings
of the kind described in Article X:1 of the GATT 1994", which the United States alleges are not being
administered in a uniform manner in violation of Article X:3(a) of the GATT 1994. In particular, the
United States' request for establishment of a panel states in relevant part that:
"For purposes of this request, the laws , regulations, decisions and rulings
(collectively, 'measures') that the European Communities fails to administer in such a
manner pertain to the classification and valu ation of products for customs purposes
and to requirements, restrictions or prohibitions on imports. The measures consist of:
• Council Regulation (EEC) No 2913/92 of 12 October 1992 establishing the
Community Customs Code, including all annexes thereto, as amended [the
'Community Customs Code'];
• Commission Regulation (EEC) No 2454/93 of 2 July 1993 laying down
provisions for the implementation of Council Regulation (EEC) No 2913/92
of 12 October 1992 establishing the Comm unity Customs Code, including all
annexes thereto, as amended [the 'Implementing Regulation'];
• Council Regulation (EEC) No 2658/87 of 23 July 1987 on the tariff and
statistical nomenclature and on the Common Customs Tariff, including all
annexes thereto, as amended [the 'Common Customs Tariff'];
• the Integrated Tariff of the European Communities established by virtue of
Article 2 of Council Regulation (EEC ) No 2658/87 of 23 July 1987 on the
tariff and statistical nomenclature and on the Common Customs Tariff,
including all annexes thereto, as amended [the 'TARIC']; and
• for each of the above laws and regul ations, all amendments, implementing
measures and other related measures."
139
7.27 In the Panel's view, the specificity requirement in Article 6.2 of the DSU requires the
inclusion of the "laws, regulations, decisions and ru lings of the kind described in [Article X:1 of the
GATT 1994]" alleged to be administered in a manner that is in violation of Article X:3(a) of the
GATT 1994 in the United States' request for establishment of a panel. In this regard, the Panel recalls
that the requirements in Article 6.2 of the DSU, including the obligation to specifically identify the
"measure at issue", serve the important due process objective of notifying the parties and third parties
to a dispute of the nature of the complainant's ca se. We consider that this due process objective
would not be fully achieved if a responding Memb er were only informed about the manner of
administration that allegedly results in non-unifor mity, partiality and/or unreasonableness but not the
laws, regulations, decisions or rulings that are alle gedly being administered in a manner contrary to
the requirements of Article X:3(a) of the GATT 1994.
7.28 The Panel also notes that the United States' requ est for establishment of a panel refers to all
"amendments, implementing measures and other related measures" for the Community Customs
Code, the Implementing Regulation, the Common Customs Tariff and the TARIC. This broad
language used by the United States indicates that measu res that amend, implement, or are related to
the Community Customs Code, the Implementing Regulation, the Common Customs Tariff or the
TARIC could be within our terms of reference.
140

139 WT/DS315/8, which is contained in Annex D of the Panel's report.
140 In this regard, see the Panel's analysis in paragraphs 7.36 – 7.37 below.

 Areas of customs administration
7.29 An issue that has arisen in the context of this dispute is whether Article 6.2 of the DSU, when
read in the light of Article X:3(a) of the GATT 1994, also requires identification of the specific areas
of customs administration in respect of which it is being alleged that Article X:3(a) of the GATT 1994
has been violated.
7.30 The Panel notes that, in this case, the United States has challenged the administration of the
Community Customs Code, the Implementing Regulation, the Common Customs Tariff, the TARIC
and related measures. These measures cumulativel y contain, literally, th ousands of different
provisions, they relate to a vast array of different customs areas, and may entail administration in a
multitude of diverse ways.
141 Consequently, we consider that, in the context of this dispute, the
specificity requirement in Article 6.2 of the DS U additionally requires the identification of the
customs areas in the context of which the obligati on contained in Article X:3(a) of the GATT 1994 is
alleged by the United States to be violated. In our view, without such additional specificity regarding
the customs areas at issue, the Eu ropean Communities would not have been accorded its due process
right to be informed of the nature of the United States' claim under Article X:3(a) of the GATT 1994.
7.31 In this regard, we note that, in EC – Computer Equipment , the Appellate Body addressed the
question of whether the measures at issue and th e products affected by those measures had been
identified with sufficient specificity for the purposes of Article 6.2 of the DSU. The Appellate Body
noted in that case that, even though "Article 6.2, does not explicitly require that the products to which
the 'specific measures at issue' apply be identified ... with respect to certain WTO obligations, in order
to identify 'the specific measures at issue' it may also be necessary to identify the products subject to
the measures in dispute".142 The Panel considers that, in the cont ext of this case, identification of the
areas of customs administration at issue is necessary to specifically identify the "measures at issue" in
the same way suggested by the Appellate Body in EC – Computer Equipment . In other words, the
areas of customs administration help to specifically identify the "measure at issue", namely, the
manner of administration.

141 The Community Customs Code (Exhibit US-5) comprises 253 articles and is divided into nine
Titles, dealing with the following topics – Title I: Gene ral Provisions; Title II: Factors on the basis of which
import duties or export duties and the other measures prescribed in respect of trade in goods are applied;
Title III: Provisions applicable to goods brought into the cu stoms territory of the Co mmunity until they are
assigned a customs-approved treatment or use; Title IV : Customs-approved treatment or use; Title V: Goods
leaving the customs territory of the Community; Title VI : Privileged operations; Title VII: Customs debt; Title
VIII: Appeals; Title IX: Final provisions.

The Implementing Regulation (Exhibit US-6) comprises 915 articles covering the following topics –
PART I: General Implementing Provisions
: Title I: General; Title II: Binding Information; Title III: Favourable
Tariff Treatment by reason of the nature of goods; Title IV: Origin of Goods; Title V: Customs Value; Title VI:
Introduction of Goods into the Customs Territory; Title VII: Customs Declarations – Normal Procedure; Title
VIII: Examination of the Goods, Findings of the Customs Office and other measures taken by the Customs
Office; Title IX: Simplified Procedures. PART II: Customs-approved Treatment of Use: Title I: Release for free
circulation; Title II: Customs Status of Goods and Transit; Title III: Customs Procedures with Economic Impact;
Title IV: Implementing Provisions relating to Export; T itle V: Other Customs-approved Treatments or Uses;
Title VI: Goods Leaving the Customs Territory of the Community. PART III: Privileged Operation : Title I:
Returned Goods. PART IV: Customs Debt : Title I: Security; Title II: Incurrence of the Debt; Title III:
Recovery of the Amount of the Customs Debt; Title IV : Repayment or Remission of Import or Export Duties.
PART IVA: Controls on the Use and/or Destination of Goods. PART V: Final Provisions.

The Common Customs Tariff consists of 21 sections, covering 99 chapters and includes more than
5000 tariff headings.

142 Appellate Body Report, EC – Computer Equipment, para. 67.

7.32 In this case, the United States' request for est ablishment of a panel specifically identifies the
following areas of customs administration:
• classification and valuation of goods;
• procedures for the classification a nd valuation of goods, including the
provision of binding classification and valuation information to importers;
• procedures for the entry and release of goods, including different certificate
of origin requirements, different criteria among member States for the
physical inspection of goods, different licensing requirements for importation
of food products, and different pr ocedures 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.
143
(iv) Summary
7.33 In the Panel's view, when read as a whole, the United States' request for establishment of a
panel indicates that the "specific measure at issue" in this dispute for the purposes of Article 6.2 of the
DSU is the manner of administration by the national customs authorities of the member States of the
Community Customs Code, the Implementing Regulation, the Common Customs Tariff, the TARIC
and related measures in the areas of customs ad ministration specifically identified in the United
States' request for establishment of a panel – na mely, the classification and valuation of goods,
procedures for the classification and valuation of goods, procedures for the entry and release of goods,
procedures for auditing entry statements after goods are released into free circulation, penalties and
procedures regarding the imposition of penalties for violation of customs rules and record-keeping
requirements. Therefore, pursuant to Article 7.1 of the DSU, under our terms of reference, we are
only authorized to consider the manner of admini stration by the national customs authorities of the
member States of the Community Customs C ode, the Implementing Regulation, the Common
Customs Tariff, the TARIC and related measures in the areas of customs administration specifically
identified in the United States' request for establishment of a panel.
2. Temporal matters concerning the Panel's terms of reference
(a) Summary of the parties' arguments
7.34 The European Communities submits that the Panel's terms of reference only include
measures that were in existence at the time the matter was referred to it by the DSB. Therefore,
according to the European Communities, the Pa nel cannot make findings on measures which no
longer existed at the time it was established nor on measures which were not yet in existence at the
time the Panel was established.
144

143 WT/DS315/8, which is contained in Annex D of the Panel's report.
144 European Communities' comments on the United States' reply to Panel question No. 124.

(b) Analysis by the Panel
7.35 The Panel notes that the European Communities ha s raised the issue of whether or not there
are any temporal limitations on the measures upon which the Panel may make findings in addressing
the United States' claim under Article X:3(a) of the GATT 1994. In particular, the European
Communities argues that the Panel's terms of refere nce only include measures in existence at the time
the matter was referred to it by the DSB. Theref ore, according to the European Communities, the
Panel cannot make findings on measures which no longer existed at the time it was established nor on
measures which were not yet in existence at that time it was established.
145
7.36 We understand that, as a general principle, a panel is competent to make findings and
recommendations on measures in existence at the time of establishment of the panel, assuming that
the request for establishment of a panel covers thos e measures. Nevertheless, a panel may also be
competent to make findings and make recommendations on measures that have expired or are not yet
in existence at the time of establishment, assuming again that the request covers those measures.
More specifically, we understand that, to the extent that expired measures affect the operation of a
covered agreement at the time of establishment of a panel, they may properly be the subject of
findings and recommendations by a panel, particul arly if such findings and recommendations are
necessary to secure a positive solution to the dispute. 146 Further, measures that are not in existence at
the time of establishment may be the subject of findings and recommendations by a panel when they
come into existence provided that they do not change the essential nature of the complaining
Member's case as reflected in its request for establishment of a panel.147
7.37 In the context of this dispute, the Panel recalls that the "specific measure at issue" in this
dispute comprises the manner of administration of the Community Customs Code, the Implementing
Regulation, the Common Customs Tariff, the TARIC and related measures. As will become evident
when the Panel interprets and applies Article X:3( a) of the GATT 1994 in the context of the specific
instances of violation alleged by the United States, the manner of administration in a particular case
may not have a clear starting point or end point. Mo re particularly, administration may be part of an
ongoing series of interlinked acts or measures, which could, thereby, implicate acts or measures that
no longer existed or did not exist at the time of establishment of the panel. In other words,
administration may comprise a continuum of steps and acts, some of which may pre-date or post-date
the step or act of administration that is considered by a panel at the time of establishment of that
panel.
148 In our view, the steps and acts of administration that pre-date or post-date the establishment
of a panel may be relevant to de termining whether or not a violati on of Article X:3(a) of the GATT
1994 exists at the time of establishment. The rele vance of these observations will become apparent
when we address the particular instances of alleged violation of Article X:3(a) of the GATT 1994 by
the European Communities later in our report.

145 European Communities' comments on the United States' reply to Panel question No. 124.
146 See, Appellate Body Report, US – Upland Cotton, para. 261; Appellate Body Report, Chile – Price
Band System, paras. 126 – 144; Appellate Body Report, EC – Chicken Cuts, para. 156.
147 See, Appellate Body Report, Chile – Price Band System, paras. 126 - 144.
148 In this regard, the Panel recalls that, as a general rule, panels are required to consider measures in
existence at the time of establishment of the panel.

3. The scope of the United States' challenge of the EC system of customs administration
under Article X:3(a) of the GATT 1994
(a) Summary of the parties' arguments
7.38 The United States submits that, with respect to its claim under Article X:3(a) of the GATT
1994, it is challenging the absence of uniformity in the administration of EC customs law overall.
149
The United States submits that its request for estab lishment of a panel indicates that its challenge
under Article X:3(a) of the GATT 1994 relates to the absence of uniformity of administration of EC
customs law overall and demonstrates that a challenge based on the administration of EC customs law
as a whole is within the Panel's terms of reference. More specifically, the United States explains that,
first, the request identifies the Community Cu stoms Code, the Implementing Regulation and the
Community Customs Tariff. In the United States' view, these are the principal elements of EC
customs law as a whole. The United States further s ubmits that, later in its request for establishment
of a panel, it makes clear that the lack of uniform administration that forms the basis for the United
States' complaint is "manifest in differences among member States in a number of areas, including but
not limited to" those that are enumerated. Accordin g to the United States, th ese aspects of its request
for establishment of a panel demonstrate that a ch allenge based on the administration of EC customs
law as a whole is within the Panel's terms of reference.
150 The United States further argues that, in its
various submissions, it described the problem of non-uniform administration in the European
Communities in systemic terms and then described how that problem manifests itself in the three
areas of tariff classification, customs valuation and customs procedures.
151
7.39 The European Communities argues that the United States has refused to identify the specific
aspects of EC customs administration under challenge. 152 According to the European Communities,
the measure at issue in the present dispute is th e administration of EC customs law in the areas
specifically referred to in the United States' request for establishment of a panel, as further refined in
the United States' first written submission, notabl y tariff classification, customs valuation, processing
under customs control, local clearance procedures and penalties. The European Communities submits
that these more limited terms of reference are confirmed by the title of the present dispute – " Selected
Customs Matters" (emphasis added). The European Communities concludes that the United States
cannot seek to include all customs matters in the Pa nel's terms of reference by challenging the EC
customs administration system as a whole. 153 The European Communities adds that such a wide
interpretation of the United States' request for estab lishment of a panel is not in accordance with the
requirements of Article 6.2 of the DSU, which re quires a sufficient identification of the specific
measures at issue. 154 The European Communities submits that it cannot be expected to defend itself
against nebulous charges of non-uniform administration pursuant to Article X:3(a) of the GATT 1994
in areas that the United States has not identified in its request for establishment of a panel and its first
written submission.
155
(b) Analysis by the Panel
7.40 In the context of this dispute, the Panel has been called upon to determine whether the United
States is entitled to challenge the EC system of customs administration overall or as a whole as has
been submitted by the United States or, rather, whether the United States is limited to making

149 United States' reply to Panel question No. 1.
150 United States' reply to Panel question No. 124.
151 United States' reply to Panel question No. 3.
152 European Communities' second written submission, para. 12.
153 European Communities' second written submission, para. 13.
154 European Communities' comments on the United States' reply to Panel question No. 124.
155 European Communities' second written submission, para. 14.

arguments with respect to the sp ecific customs areas that have been identified in its request for
establishment of a panel, as has been submitted by the European Communities.
7.41 Before addressing that specific question, th e Panel would like to make some general
comments regarding its terms of reference that would appear to bear upon that question.
7.42 First, a panel's terms of reference do not change over time and are not affected by the way in
which complaining Members advance their case. 156 As we have stated previously, a panel's terms of
reference are defined by the request for establishmen t of a panel. If a request is drafted in broad
terms, the panel's terms of reference will have corresponding breadth for the duration of the time for
which the panel is seized of a dispute. A complaining Member that argues its case at any point during
the panel proceedings in more limited terms than t hose provided for in its request for establishment of
a panel is not obliged to confine itself to those more limited terms for the remainder of the
proceedings before the Panel.
7.43 Second, the title of a case has no bearing upon the sc ope of a Panel's terms of reference. As
mentioned previously, a Panel's terms of reference are defined by the measures and the claims that
have been identified in the request for establishment of a panel. Neither Article 7 of the DSU, which
defines the panel's terms of reference, nor the lin ked requirements of Article 6.2 of the DSU, make
any reference to the title of the case.
157 Ultimately, the breadth or narrowness of a particular challenge
will be governed exclusively by the terms of the relevant request for establishment of a panel.
7.44 Turning now to the specific question we ha ve been called upon to address identified in
paragraph 7.40 above, there is nothing in the DS U nor in the other WTO Agreements that would
prevent a complaining Member from challenging a responding Member's system as a whole or
overall. Nevertheless, if a complaining Member wishes to make such a challenge, the request for
establishment of a panel in which the responding Member's system is challenged as a whole or overall
must meet the requirements of Article 6.2 of the DSU. Whether or not the requirements of Article 6.2
of the DSU have been fulfilled in an individual case will depend upon the particular request for
establishment of a panel and the relevant facts surrounding that case.
7.45 The United States has submitted that its challenge of the EC system of customs administration
as a whole or overall is evident from two aspects of its request for establishment of a panel. First, it
submits that the request identifies the Community Customs Code, the Impl ementing Regulation and
the Community Customs Tariff, which it argues are th e principal elements of EC customs law as a
whole. In other words, the United States submits that, since it has identified what it labels as the
"principal elements" of the EC system of customs administration in its request, by implication, it
challenges the EC system as a whole. Second, the United States submits that its request makes clear
that the lack of uniform administration that forms the basis of its claim under Article X:3(a) of the
GATT 1994 is "manifest in differences among member States in a number of areas, including but not
limited to " the areas specifically enumerated in th e request. The United States argues that the
inclusive language in its request indicates that th e whole EC system of customs administration is
implicated by its claim under Article X:3(a) of the GATT 1994.
7.46 In the Panel's view, pursuant to the terms of th e United States' request for establishment of a
panel, the United States is precluded from challenging the EC system of customs administration as a
whole or overall in this dispute. The Panel is of the view that, due to the wording and content of the

156 That is not to say, however, that a panel would be obliged to make findings and/or rulings and
recommendations with respect to all the measures and claims identified in a request for establishment of a panel.
On the contrary, the panel is vested with a discretion to only rule on those matters necessary to secure a positive
solution to a dispute: Appellate Body Report, US – Wool Shirts and Blouses, p. 19.
157 Further, the Panel notes that the title of a dispute usually originates from the WTO Secretariat.

United States' request, the Panel's terms of reference regarding the scope of the United States' claim
under Article X:3(a) of the GATT 1994 are restricted to the specific areas of customs administration
referred to in such request, which are set out in paragraph 7.32 above. Our reasoning is as follows.
7.47 First, the Panel considers that the references by the United States in its request for
establishment of a panel to the Community Cust oms Code, the Implementing Regulation and the
Community Customs Tariff cannot be considered in is olation from the reference in that request to a
number of areas of customs administration.
158 When these aspects of the United States' request for
establishment of a panel are read together, th ey indicate that the United States' claim under
Article X:3(a) of the GATT 1994 extends to some, but not all, areas of customs administration
covered by the Community Customs Code, th e Implementing Regulation and the Community
Customs Tariff.
7.48 Second, the Panel notes that the areas of customs administration listed in the United States'
request for establishment of a panel do not cover the entire spectrum of areas that comprise the totality
of the EC system of customs administration. The scope of the spectrum is evident from the contents
of the various measures referred to by the United States in its request – namely, the Community
Customs Code, the Implementing Regulation, the Common Customs Tariff, the TARIC and other
"related measures". Areas that are part of the EC system of customs administration but which have
not been referred to in the United States' request include transit procedures, customs debt, inward
processing, outward processing, exportation and re-exportation.
159 In the Panel's understanding, these
areas of the EC system of customs administration ar e not insignificant in terms of frequency of usage
and volume of trade affected. Therefore, th eir absence from the United States' request for
establishment of a panel is notable and supports th e Panel's finding in paragraph 7.46 above that, on
the basis of its request for establishment of a pa nel, the United States is precluded from challenging
the EC system of customs administration overall or as a whole under Article X:3(a) of the GATT
1994 in this dispute.
7.49 Finally, the Panel notes that the list of the areas of customs administration contained in the
United States' request for establishment of a pane l is preceded by the following text: "Lack of
uniform, impartial and reasonable administration of the above-identified measures is manifest in
differences among member States in a number of areas, including, but not limited to, the following ...".
We do not consider that the phrase "including, but not limited to" on its own has the legal effect of
incorporating into the Panel's terms of reference all areas of customs administration in the EC system

158 The Panel recalls its finding in paragraph 7.33 ab ove that the "specific measure at issue" in this
dispute for the purposes of Article 6.2 of the DSU is the manner of administration by the national customs
authorities of the member States of the Community Customs Code, the Implementing Regulation, the Common
Customs Tariff, the TARIC and related measures in the areas of customs administration specifically identified in
the United States' request for establishment of a panel. The Panel also notes that, by referring to various
elements of its request for establishment of a panel in support of its argument that the request relates to the EC
system of customs administration as a whole, the United States itself appears to advoc ate the approach that the
various aspects of the "measures at issue" for the purposes of a claim under Article X:3(a) of the GATT 1994
are to be considered together: United States' reply to Panel question No. 124.
159 "Transit procedures" are governed inter alia by Articles 54-55, 91-97 and 163-165 of the
Community Customs Code and Articles 309-495, 616-623 and 712-716 of the Implementing Regulation.
"Customs debt" is governed inter alia by Articles 189-242 of the Community Customs Code and Articles 857-
912 of the Implementing Regulation. "Inward processing" is governed by Articles 114-129 of the Community
Customs Code and Articles 275-276, 538-547, 549-649 and 829-839 of the Implementing Regulation.
"Outward processing" is governed inter alia by Articles 145-160 of the Community Customs Code and Articles
277 and 748-787 of the Implementing Regulation. "Exportation" is governed inter alia by Articles 161-162 of
the Community Customs Code and Articles 788-798 and 843-856 of the Implementing Regulation. "Re-
exportation" is governed inter alia by Article 182 of the Community Customs Code and Articles 841-842 of the
Implementing Regulation.

and not just those specifically identified in the Unite d States' request. In our view, if we were to
interpret that phrase as having the legal effect of including areas not specifically identified in the
request, such interpretation would undermine an important due process objective of the requirements
of Article 6.2 of the DSU – namely, to provide sufficient notice and information to the responding
party and third parties to a dispute of the nature of the complainant's case.160
7.50 In the light of the foregoing, after having considered the United States' request for
establishment of a panel as a whole, the Panel conc ludes that its terms of reference regarding the
United States' claim under Article X:3(a) of th e GATT 1994 do not include a challenge to the EC
system of customs administration overall or as a whole under Article X:3(a) of the GATT 1994.
Rather, as stated in paragraph 7.33 above, our te rms of reference are confined to the manner of
administration by the national customs authorities of the member States of the Community Customs
Code, the Implementing Regulation, the Common Customs Tariff, the TARIC and related measures in
the areas of customs administration specifically identified in the United States' request for
establishment of a panel.
4. The nature of the United States' challenge of the EC system of customs administration
under Article X:3(a) of the GATT 1994
(a) Summary of the parties' arguments
7.51 The United States submits that it challenges the design and structure of the EC system of
customs administration "as such". According to the United States, while it is tr ue that Article X:3(a)
of the GATT 1994 is concerned with administrati on, it is possible that a system of customs
administration "as such" will be in violation of Article X:3(a) of the GATT 1994 if it necessarily
results in non-uniform administration.
161 The United States submits that, in the case of the EC system
of customs administration, it is the absence of a crit ical feature from the design and structure of the
European Communities' system of customs admini stration that necessarily results in non-uniform
administration in breach of Article X:3(a) of the GATT 1994 – namely, a procedure or institution that
ensures that divergences of administration among th e customs authorities of the 25 member States do
not occur or that promptly reconciles such diverg ences as a matter of course when they do occur. In
the United States' view, the procedures and institu tions identified by the European Communities as
instrumental in achieving uniform administration in the European Communities cannot and do not
result in uniform administration of EC customs law by 25 independent, regionally limited customs
authorities. Rather, according to the United States, such procedures and institutions constitute a loose
network within which various responses to non-un iform administration may but need not necessarily
occur. The United States argues that since the EC system of customs administration lacks any
procedures or institutions to ensure that divergen ces do not occur or, when divergences come to light,
they will be reconciled promptly and as a matter of course, that system necessarily results in non-
uniform administration in breach of Article X:3(a) of the GATT 1994.
162 The United States submits
that this structural shortcoming in the EC system results in non-uniform administration with respect to
all areas of customs administration. The United States argues that, in each of these areas, the only
procedures or institutions that allegedly secure uniform administration are general, non-binding,
discretionary procedures and institutions, with the ex ception of review by national courts. However,
in the United States' view, review by national cour ts does not secure uniform administration given the
discretion that courts have in deciding whether or not to refer matters to the ECJ, the lack of an
obligation on the part of the customs authority in a given member State to follow the decisions of

160 Appellate Body Report, India – Patents (US), para. 90.
161 United States' reply to Panel question No. 173.
162 United States' reply to Panel question No. 126(a).

courts in other member States, and the lack of an y mechanism to inform the customs authorities in the
various member States of relevant customs decisions by courts in other member States.
163
7.52 The European Communities submits that the United States' request for establishment of a
panel only referred to the administration of EC custom s law as the measure at issue. According to the
European Communities, the United States did not ch allenge measures of general application which
constitute the EC system of customs administra tion. The European Communities submits that,
therefore, these general measures are not within the Panel's terms of reference. 164 The European
Communities also submits that, in cases where a law or regulation "mandates" a form of
administration that is not uniform, reasonable, or im partial, such law or regulation could be regarded
per se as a violation of Article X:3(a) of the GATT 1994. According to the European Communities, a
law or regulation will be "mandatory" if it does not leave the authorities any possibility to administer
the laws or regulations in question in a uniform, impartial, or reasonable manner. 165 However, the
European Communities submits that the specific de sign and structure of the European Communities'
system could become relevant under Article X:3(a) of the GATT 1994 only if it necessarily led to a
lack of uniformity.
166 In this regard, the European Commun ities recalls that whether or not the EC
system of customs administration ensures uniform administration must be evaluated on the basis of
the system as a whole and not on the basis of individual measures considered in isolation. 167 The
European Communities further submits that, whethe r the EC system of customs administration "as
such" leads to non-uniform administration is a qu estion of fact regardi ng the interpretation and
application of a large body of EC municipal law. The burden of proof to establish that such municipal
law is in violation of WTO obligations rest s with the United States as the complainant. 168 T h e
European Communities concludes that the United States has failed to s how that there are any features
in the EC system of customs administration whic h necessarily would lead to a lack of uniformity. 169
The European Communities explains that, in the European Communities, no law mandates non-
uniform administration of EC customs law. 170 On the contrary, according to the European
Communities, the EC system of customs administra tion contains numerous, interlocking mechanisms
which, together, provide a high degree of assurance fo r a uniform interpretation and application of EC
customs law.171
(b) Analysis by the Panel
7.53 Another question raised for the Panel's considera tion in the context of this dispute is whether
the United States is entitled to challenge "as such" the EC system of customs administration. In this
regard, the Panel notes that the United States has clearly submitted that it challenges the design and
structure of the EC system of customs administration "as such". 172 The European Communities
argues that the United States' challenge of the EC system of customs administration "as such" is
outside the Panel 's terms of reference.173

163 United States' reply to Panel question No. 126(b).
164 European Communities' reply to Panel question No. 173.
165 European Communities' reply to Panel question No. 154.
166 European Communities' oral statement at the second substantive meeting, para. 44; European
Communities' reply to Panel question No. 173.
167 European Communities' oral statement at the second substantive meeting, para. 45; European
Communities' comments on the United States' reply to Panel question No. 127.
168 European Communities' reply to Panel question No. 173.
169 European Communities' oral statement at the second substantive meeting, para. 64.
170 European Communities' reply to Panel question No. 154.
171 European Communities' oral statement at the second substantive meeting, para. 64.
172 United States' reply to Panel question No. 173.
173 European Communities' first written submission, para. 14; European Communities' reply to Panel
question No. 173.

7.54 By way of preliminary comment, the Panel notes that the United States implicitly challenges
"as such" the design and structure of the EC system of customs administration as a whole or overall .
This is evident, inter alia , from the fact that the United States submits that alleged structural
deficiencies in the EC system necessarily result in a violation of Article X:3(a) of the GATT in all
areas of customs administration in the European Communities. 174 The Panel recalls its findings in
paragraph 7.46 et seq above, that the United States is precluded from challenging the EC system of
customs administration as a whole or overall unde r Article X:3(a) of the GATT 1994 because, as
previously stated, such a challenge is outside our te rms of reference. Nevertheless, we also found in
paragraph 7.33 above that our terms of refere nce authorise us to consider the manner of
administration by the national customs authorities of the member States of the Community Customs
Code, the Implementing Regulation, the Common Customs Tariff, the TARIC and related measures in
the areas of customs administration specifically identified in the United States' request for
establishment of a panel. In the light of the fact that the United States has submitted that structural
deficiencies in the EC system necessarily result in a violation of Article X:3(a) of the GATT in all
areas of customs administration in the European Co mmunities, we will consider whether or not the
United States is entitled to make an "as such" challe nge with respect to the design and structure of the
EC system in the areas of customs administration th at have been specifically identified in the United
States' request for establishment of a panel.
7.55 The Panel notes first that a Member's legislation can be challenged "as such" as being in
violation of a WTO obligation.
175 There also appears to be support for the view that a system (and,
presumably, components thereof) can be challenged "as such", provided that the system comprises
rules or norms that are intended to have general and prospective application.176
7.56 The Panel again refers to the language of th e United States' request for establishment of a
panel to determine whether or not our terms of reference permit consideration of an "as such"
challenge with respect to the design and structur e of the EC system in the areas of customs
administration that have been specifically identified in the United States' request. We note in this
regard that, in US – Oil Country Tubular Goods Sunset Reviews, the Appellate Body stated that:
"... In our view, 'as such' challenges agai nst a Member's measures in WTO dispute
settlement proceedings are serious challeng es. By definition, an 'as such' claim
challenges laws, regulations, or other instru ments of a Member that have general and
prospective application, asserting that a Member's conduct – not only in a particular
instance that has occurred, but in future situations as well – will necessarily be
inconsistent with that Member's WTO ob ligations. In essence, complaining parties
bringing 'as such' challenges seek to prevent Members ex ante from engaging in
certain conduct. The implications of such challenges are obviously more far-reaching
than 'as applied' claims.
We also expect that measures subject to 'as such' challenges would normally have
undergone, under municipal law, thorough scrutiny through various deliberative
processes to ensure consistency with th e Member's international obligations,
including those found in the covered agreem ents, and that the enactment of such a
measure would implicitly reflect the conclusi on of that Member that the measure is
not inconsistent with those obligations. The presumption that WTO Members act in
good faith in the implementation of their WTO commitments is particularly apt in the
context of measures challenged 'as such'. We would therefore urge complaining

174 United States' reply to Panel question No. 126(b).
175 Appellate Body Report, US – 1916 Act, para. 75.
176 Appellate Body Report, US – Corrosion-Resistant Steel Sunset Review, paras. 81-82 set out above in
para. 7.15.

parties to be especially diligent in setting out 'as such' claims in their panel requests
as clearly as possible. In particular, we would expect that 'as such' claims state
unambiguously the specific measures of municipal law challenged by the
complaining party and the legal basis for the allegation that those measures are not
consistent with particular provisions of the covered agreements. Through such
straightforward presentations of 'as such' claims, panel requests should leave
respondent parties in little doubt that, notwithstanding their own considered views on
the WTO-consistency of their measures, a nother Member intends to challenge those
measures, as such, in WTO dispute settlement proceedings."
177
7.57 In the present case, the Panel considers that it is not clear from the United States' request for
establishment of a panel that it intended to challe nge the design and structure of aspects of the EC
system of customs administration "as such".
7.58 First, in the Panel's view, there is nothing in the text of the United States' request for
establishment of a panel that could be construed as clearly suggesting that the United States' challenge
under Article X:3(a) of the GATT 1994 relates to the design and structure of the EC system of
customs administration.
7.59 Second, the request for establishment of a panel s uggests that the United States is concerned
with the way in which administration is undertaken by member State customs authorities rather than
with the design and structure of the customs admini stration system at the EC level "as such". In
particular, the request starts by stating that "[t]he United States considers 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" (emphasis added). We note that the term "ma nner" is defined as "the way in which something
is done or happens; a method of action; a mode of procedure". 178 In our view, there is nothing in the
ordinary meaning of the term "manner" to suggest that it relates to the design and structure of
something. Rather, the ordinary meaning of that term suggests that it relates to application in practice.
7.60 In addition, when identifying the manner of admi nistration that is allegedly in violation of
Article X:3(a) of the GATT 1994, the request places emphasis on the actions of customs authorities of
the member States whereas, in contrast, there is no mention of actions taken and/or procedures and
institutions existing at the EC level, including the design and structure of the EC system of customs
administration. In particular, the request states that:
"Administration of these measures in the European Communities is carried out by the
national customs authorities of EC member States . Such administration takes
numerous different forms. The United States understands that the myriad forms of
administration of these measures include, but are not limited to, laws, regulations,
handbooks, manuals, and admini strative practices of customs authorities of member
States of the European Communities."
179 (emphasis added)
7.61 Third, we recall our finding in paragraph 7.20 above that the essential aspect of Article X:3(a)
of the GATT 1994 is the obligation to "administer in a uniform, impartial and reasonable manner".
By challenging the design and structure of the EC system of customs administration "as such" under
Article X:3(a) of the GATT 1994, the United States is effectively arguing that the design and structure

177 Appellate Body Report, US – Oil Country Tubular Goods Sunset Reviews, paras. 172-173.
178 The New Shorter Oxford English Dictionary, 1993, p. 1687.
179 WT/DS315/8, which is contained in Annex D of the Panel's report.

necessarily results in administration that is not uniform. 180 In other words, the United States is
arguing that it is not challenging specific instances of administration of laws, regulations, decisions or
rulings, at least, not exclusively. Rather, it is challenging the system, which is the institutional
framework and context within which specific acts of administration take place. In the Panel's view,
the United States' purported challenge of the design a nd structure of the EC system "as such" is not
obviously linked to the essence of the obligation c ontained in Article X:3(a) of the GATT 1994 –
namely, the obligation to administer in a uniform manner. In the light of the lack of obvious
connection between the United States' purported challenge of the EC system of customs
administration "as such" and this essential aspect of th e obligation contained in Article X:3(a) of the
GATT 1994, it was all the more necessary for the United States to have been clear about the nature of
its challenge in its request for establishment of a panel.
7.62 Finally, the Panel observes that the United States ' request for establishment of a panel makes
no explicit reference to the terms "as such" or per se. The Panel considers that, generally speaking,
the absence of these terms from a requ est for establishment of a panel, the significance of which is
well understood in WTO dispute settlement parlance, would not necessarily mean that a complaining
Member would be precluded from making an "as such" challenge, provided that the responding
Member is in no doubt that an "as such" challenge is intended.
181 However, for the reasons referred to
above, the Panel considers that th e United States' request for establishment of a panel did not make
clear that an "as such" challenge of the EC system of customs administration was being alleged.182
7.63 In the light of the foregoing factors taken in to tality, the Panel concludes that, on the basis of
the language and content of its request for establis hment of a panel, the United States is precluded
from making an "as such" challenge with respect to the design and structure of the EC system of
customs administration as a whole and also with resp ect to the design and structure of the EC system
in the areas of customs administration that have been specifically identifie d in the United States'
request. Nevertheless, pursuant to the terms of its request for establishment of a panel, the United
States is still entitled to claim that the admini stration of the Community Customs Code, the
Implementing Regulation, the Common Customs Ta riff and the TARIC and related measures in the
areas of customs administration specifically identifie d in the United States' request in particular
instances is in violation of Article X:3(a) of the GATT 1994. Indeed, the United States itself submits
that its claims are not confined to an "as such" ch allenge of the design and structure of the EC system
of customs administration. The United States explains that it has demonstrated in its submissions
specific examples of non-uniform administration within the context of the EC system.
183
5. Overall conclusions regarding the Panel's terms of reference
7.64 The Panel concludes that, for the reasons set fo rth above, its terms of reference authorise the
Panel to consider the manner of administration by the national customs authorities of the member
States of the Community Customs Code, the Implementing Regulation, the Common Customs Tariff,

180 Indeed, the United States explicitly argues as much in its reply to Panel question No. 126(a).
181 We recall in this regard that the panel request serves the important due process objective of
notifying the parties and third parties to a dispute of th e nature of the complainant's case. See paragraph 7.12
above.
182 Additionally, the Panel notes that the United States only clearly indicated its intention to make an
"as such" challenge regarding the design and structure of the EC system of customs administration at a late stage
in the Panel's proceedings, in response to a question posed by the Panel following the second substantive
meeting (namely, United States' reply to Panel question No. 173. See also the United States' reply to Panel
question No. 126). Prior to that stage of the Panel's proceedings, the United States made no explicit mention
that its challenge under Article X:3(a) of the GATT 1994 was an "as such" challenge. This tends to support the
view that, in its request for establishment of a panel, the United States did not intend to challenge the EC system
of customs administration "as such".
183 United States' reply to Panel question No. 126(b).

the TARIC and related measures in the areas of cu stoms administration specifically identified in the
United States' request for establishment of a panel. The Panel also concludes that, based on the
language and content of the Panel' s terms of reference, the Panel is precluded from considering "as
such" challenges of the design and structure of th e EC system of customs administration as a whole
and also the design and structure of the EC system in the areas of customs administration that have
been specifically identified in the United States' re quest for establishment of a panel. However, we
are authorized to examine particular cases or inst ances of administration of the Community Customs
Code, the Implementing Regulation, the Common Customs Tariff and the TARIC and related
measures in those areas of customs administration speci fically identified in the United States' request,
where such cases or instances have been presented a nd relied upon by the United States in the context
of this dispute. The Panel will examine each of t hose cases or instances later in its report after having
first considered a number of procedural issues a nd general matters concerni ng the interpretation and
application of Article X:3(a) of the GATT 1994.
C.
PROCEDURAL ISSUES
1. Admissibility of certain evidence
(a) Evidence contained in section III of the United States' oral statement at the second substantive
meeting
7.65 The issue of whether certain evidence relied upo n by the United States in the context of its
claim under Article X:3(a) of the GATT 1994 should be admitted by the Panel was raised by the
European Communities during the Panel's second subs tantive meeting with the parties, which took
place on 22 – 23 November 2005. In particular, on 22 November 2005, following presentation by the
United States of its oral statement at that substa ntive meeting, the European Communities argued that
evidence contained in section III of the United States' oral statement 184 constituted "new" evidence,
that it was submitted too late and that, therefore, it should be found to be inadmissible by the Panel.
The United States defended its reliance upon such ev idence on the basis that it constituted "evidence
necessary for the purposes of rebuttals" within the meaning of paragraph 12 of the Working
Procedures.185 The United States argued that, as such, the evidence had not been adduced too late.
7.66 On 23 November 2005, the Panel issued a letter to the parties indicating that it had decided to
admit the evidence in question. In particular, the Panel's letter stated the following:
"The Panel refers to a procedural issue raised orally by the European Communities on
22 November 2005 during the Panel's second substantive meeting with the parties. In
particular, the European Communities argued that evidence contained in exhibits to
section III of the United States' oral stat ement for the second substantive meeting
should be considered inadmissible by the Panel because paragraph 12 of the Panel's
Working Procedures prohibits the submission of 'new' factual evidence after the first
substantive meeting. The United States r esponds that the evidence in question is not
'new'. Rather, according to the United St ates, it constitutes 'evidence necessary for
purposes of rebuttals' within the meaning of paragraph 12 of the Working Procedures.
The Panel has carefully considered the partie s' arguments in light of paragraph 12 of
its Working Procedures and relevant provisions of the DSU. Without concluding
whether or not the evidence in question can be construed either as 'new' factual

184 Section III of the United States' oral statement is entitled "Recent Cases Confirm That Processes EC
Holds Out As Securing Uniform Administration Fail To Do So" and relates to the United States' claim under
Article X:3(a) of the GATT 1994.
185 The Panel's Working Procedures for this dispute are contained in Annex E of the Panel's report.

evidence or as evidence that is 'necessary for purposes of rebuttals' within the
meaning of paragraph 12 of the Working Pr ocedures, the Panel has decided to admit
the evidence referred to by the United States in section III of its oral statement for the
second substantive meeting. The Panel consid ers that it is authorized to admit the
evidence on the basis of the following. Paragraph 12 of the Working Procedures
provides that '[p]arties shall submit all f actual evidence to the Panel no later than
during the first substantive meeting, excep t with respect to evidence necessary for
purposes of rebuttals'. Article 12.1 of the DSU authorises a panel to decide to deviate
from the Working Procedures following consu ltation with the parties. Further,
Article 11 of the DSU requires the Panel to make an objective assessment of the facts.
We do not consider that we would be abidi ng by our duty in Article 11 of the DSU if
we were to rule as inadmissible evidence that may have a bearing on the Panel's
findings in this dispute.
In order to avoid any prejudice to the European Communities regarding the reference
by the United States to evidence in section III of its oral statement, the Panel has
decided to provide the European Commun ities with the right to comment on the
contents of section III of the United States' oral statement for the second substantive
meeting. ... The Panel reserves its right to pose questions to the United States and the
European Communities regarding the conten ts of section III, including the evidence
referred to therein and any comments made by the European Communities thereon.

The parties should note that the decision taken by the Panel in this communication
only relates to the admissibility of evidence referred to by the United States in section
III of its oral statement at the second substantive meeting. The decision has no
bearing on the weight, if any, that the Panel may ultimately attribute to such
evidence."
7.67 The Panel granted the European Communities a period of three weeks within which to
provide its comments, commencing on the date the United States made its oral statement at the second
substantive meeting in which it refe rred to the evidence in question.
186 Specifically, the European
Communities was granted until 14 December 2005 to provide its comments. In its comments, the
European Communities acknowledged that the worki ng procedures contained in Appendix 3 of the
DSU do not establish specific time lim its for the presentation of evidence.
187 T h e E u r o p e a n
Communities also acknowledged that the Panel may, in consultation with the parties to the dispute,
adopt more specific procedures than those contained in Appendix 3 of the DSU and/or may also
amend the procedures in consultation with the parties.
188 The European Communities argued that,
nevertheless, the submission by the United States of "new" factual evidence was not in accordance
with the requirements of due process and procedural fairness, as reflected in paragraph 12 of the
Panel's Working Procedures.189 More specifically, the European Communities argued that the United
States had not demonstrated any good cause for the late submission of the evidence, asserting that the
United States had abstained from filing supporting ev idence in its previous submissions and noting

186 The Panel provided the European Communities with the opportunity to comment through a question
posed by the Panel to the European Communities at the conclusion of the Panel's second substantive meeting
with the parties. In particular, in Panel question No. 172, the Panel requested the European Communities to
comment on section III of the United States' oral statement at the second substantive meeting, including any
exhibits referred to in that section.
187 European Communities' reply to Panel question No. 172, para. 6.
188 European Communities' reply to Panel question No. 172, para. 6.
189 European Communities' reply to Panel question No. 172, para. 9.

that the evidence referred to in section III of th e United States' oral statement dated back several
years.
190 The European Communities further submitted th at the Panel's decision to grant it additional
time to comment on section III did not address its due process concerns because it was required to
present a third submission containing comments on section III of the United States' oral statement at
the second substantive meeting in parallel to replying to the Pane l's questions following the second
substantive meeting and providing comments on the United States' replies to those questions.
191
7.68 On 15 December 2005, following receipt of th e European Communities' comments, the Panel
sent the parties a supplementary list of questions regarding section III of the United States' oral
statement at the second substantive meeting and th e European Communities' comments thereon. One
of those questions requested the United States to explain why it had not referred to the evidence
contained in section III prior to the Panel's second subs tantive meeting with the parties. In response,
the United States submitted that it only became aware of that ev idence through a presentation made
on 27 October 2005192 – that is, after the United States' second written submission had been filed. The
United States submitted that, in any event, the illust rative cases referred to in that presentation, which
were subsequently relied upon by the United States in section III of its oral statement at the second
substantive meeting, rebutted the European Comm unities' contention during the first stage of the
Panel's proceedings that the United States was basing its claims on theoretical scenarios. The United
States further submitted that that evidence highlight ed issues that had been developed during earlier
stages of this dispute and it also involved relativ ely recent events. The United States submitted that,
therefore, the evidence in questi on fell within the scope of para graph 12 of the Panel's Working
Procedures.193
7.69 As noted in paragraph 7.66 above, the Pane l decided on 23 November 2005 to admit the
evidence contained in section III of the United St ates' oral statement at the second substantive
meeting. Given that the parties have made add itional comments concerning the admissibility of such
evidence since that decision was taken, the Panel considers it necessary to affirm the decision to admit
that evidence. The Panel does not consider it n ecessary to decide whether the evidence in question
amounts to "new" factual evidence as submitted by the European Communities or evidence that is
"necessary for purposes of rebuttals" within the mean ing of paragraph 12 of the Working Procedures
as submitted by the United States. We hold this view because, as explained in our letter of 23
November 2005, regardless of the way in which that evidence is characterized, we have the authority
to admit it pursuant to Article 12.1 of the DSU and paragraph 12 of the Working Procedures.
7.70 In any case, the Panel feels compelled to adm it the evidence contained in section III of the
United States' oral statement at th e second substantive meeting in the light of Article 11 of the DSU.
Under that Article, we are obliged to make an objective assessment of, inter alia, the facts of the case.
As stated in our letter of 23 November 2005, we woul d not be abiding by our duty in Article 11 if we
were to ignore evidence that may have a bearing on our findings in this dispute. Furthermore, even if
the evidence in question could be construed as "n ew" evidence, the Panel provided the European
Communities with a period of three weeks to comme nt on that evidence, commencing on the date the
evidence in question was referred to by the United States. The period of three weeks was discussed
and agreed upon by the Panel and the pa rties at the second substantive meeting. 194 At that time, the
European Communities did not indicate to the Panel th at that period would be insufficient to allow it

190 European Communities' reply to Panel question No. 172, paras. 12-13.
191 European Communities' reply to Panel question No. 172, para. 15.
192 Philippe De Baere, "Coping with customs in the EU: The uniformity challenge: Judicial review of
customs decisions and implementing legislation", PowerPoint Presentation at ABA International Law Section,
27 October 2005 (Exhibit US-59).
193 United States' reply to Panel question No. 177.
194 In particular, this period was agreed upon during the closing phase of the Panel's second substantive
meeting with the parties.

to fully respond to the arguments made and eviden ce adduced in section III of the United States' oral
statement.
(b) Evidence relied upon by the United States in sec tions of its oral statement at the second
substantive meeting other than that contained in section III
7.71 In its comments on section III of the United Stat es' oral statement at the second substantive
meeting, which were filed on 14 December 2005, th e European Communities referred to "additional"
evidence relied upon by the United States in sections of its oral statement at the second substantive
meeting other than that contained in section III. 195 With respect to such "additional" evidence, the
European Communities stated that "it is not clear why this evidence has not been presented in earlier
submissions"196. In its supplementary list of questions regarding section III of the United States' oral
statement at the second substantive meeting sent to the parties on 15 December 2005, the Panel
requested the European Communiti es to clearly identify the "additional" evidence it was referring to
in the cited comment.197 In response, the European Communities referred to the evidence contained in
Exhibits US-73198, US-74199, US-75200, US-76201, US-77202, US-78203, US-79204 and US-80.205
7.72 The Panel has decided to admit what the Eu ropean Communities describes as "additional"
evidence contained in sections of the United States' oral statement at the second substantive meeting
other than section III. Our reasoning is as follows.
7.73 First, when the European Communities raised the issue of the admissibility of the "additional"
evidence, it did not clearly and specifically request the Panel to reject such evidence on the ground
that it constituted "new" evidence. 206 Rather, the European Communities merely noted that the
Panel's decision of 23 November 2005 to admit certain evidence only related to section III, but not to
"additional evidence referred to in other parts" of th e United States' oral statement made at the second
substantive meeting.207 Further, the European Communities me rely questioned why the evidence had
not been submitted earlier without explicitly requesting its rejection.

195 European Communities' reply to Panel question No. 172, para. 15.
196 European Communities' reply to Panel question No. 172, para. 11.
197 Panel question No. 182.
198 European Commission, External and intra-European Union trade, pp. 94-95, September 2005.
199 Edwin A. Vermulst, EC Customs Classification Rules: Should Ice Cream Melt? , 15 Mich. J. Int'l L.
1241, pp. 1314-15, 1994.
200 Letter from Mark MacGann, Director Genera l, EICTA, to Manuel Arnal Monreal, Director
International Affairs and Tariff Matters, European Commission, 2 September 2005.
201 HM Customs & Excise, Tariff Notice 13/04.
202 Douanerechten. Indeligen van bepaalde LCD monitoren in de gecombineerde nomenclatuur, No.
CPP2005/1372M, 8 July 2005 (original and unofficial English translation).
203 BTI DEM/2975/05-1 (start date of validity 19 July 2005).
204 Affidavit of Mark R. Berman, President and Chie f Executive Officer of Ro ckland Industries, Inc.,
10 November 2005.
205 Treaty of Nice, Amending the Treaty on European Union, the Treaties Establishing the European
Communities, and Certain Related Acts, reprinted in Official Journal of the European Communities, pp. C80/22
to C80/24 & C80/80, 10 March 2001.
206 In contrast, when referring to the evidence cont ained in section III of the United States' oral
statement at the second substantive meeting, the European Communities clearly stated that such evidence
constituted "new evidence". See, for example, Euro pean Communities' reply to Panel question No. 172,
para. 10. Further, the European Communities alleged that there was no good cause for the late submission of
evidence contained in section III of the United States' oral statement at the second substantive meeting but made
no reference to evidence contained in other sections of the United States' oral statement in making this
allegation: European Communities' reply to Panel question No. 172, para. 12.
207 European Communities' reply to Panel question No. 172, para. 15.

7.74 Second, even if the European Communities' co mments regarding the "additional" evidence
could be construed as a request to the Panel to re ject that evidence on the ground that it constitutes
"new" evidence, the Panel considers that the Eur opean Communities did not raise its objections to
such evidence early enough so as to allow the Panel to seek the United States' response, if the Panel
were to have considered it necessary. In this regard, the Panel notes that, at the second substantive
meeting, the European Communities did not rai se any concerns regarding the admissibility of
evidence contained in sections of the United States' or al statement other than section III. Nor did the
European Communities raise any concerns immediately thereafter. The first mention of the European
Communities' apparent concerns regarding the ad missibility of such evidence was made in its
comments on the evidence contained in section III of the United States' oral statement, three weeks
after the point in time when the so-called "additional" evidence was referred to by the United States at
the second substantive meeting. We consider that the European Communities should have raised its
concerns regarding the evidence other than that cont ained in section III earlier, rather than at a stage
when only one step remained before closure of the Panel's factual record.
208
7.75 Finally, the Panel recalls that, under Article 11 of the DSU, the Panel is obliged to make an
objective assessment of, inter alia, the facts of the case. We consider that, pursuant to that Article, we
are authorized to have regard to the evidence contained in Exhibits US-73, US-74, US-75, US-76, US-
77, US-78, US-79 and US-80 because it may have a bearing on our findings in this dispute regarding
the United States' claim under Article X:3(a) of the GATT 1994.
(c) Summary and conclusions
7.76 In summary, the Panel considers that, for the r easons set forth above, the evidence contained
in the United States' oral statement at the second substantive meeting, including but not limited to that
contained in section III of the statement, is admissibl e. The Panel considers that it is authorized to
admit such evidence pursuant to Article 12.1 of the DSU and paragraph 12 of the Working
Procedures. Furthermore, the Panel is of the view that the admission of such evidence is necessary in
the light of the Panel's obligation under Article 11 of the DSU to make an objective assessment of,
inter alia, the facts of the case. The Panel also consid ers that, with respect to the evidence contained
in section III of the United States' oral statement at the second substantive meeting, it ensured the
preservation of the due process rights of the Euro pean Communities by pr oviding the European
Communities with an opportunity to comment on th e evidence in question w ithin what the Panel
considers to be a reasonable amount of time.
209
2. Requests by the United States that the Panel exercise its discretion under Article 13 of
the DSU
7.77 As previously noted, in this dispute the United States makes claims, inter alia , under
Article X:3(a) of the GATT 1994. Specifically, the United States claims that the administration of EC
customs law is not uniform and is, therefore, in violation of Article X:3(a) of the GATT 1994.

208 In light of the European Communities' objections to the evidence contained in section III of the
United States' oral statement made at the second substan tive meeting, the Panel and the parties agreed upon the
steps that would occur to take account of those objections. The first step entailed the European Communities
making comments on evidence contained in section III of the United States' oral statement, which comments
were received on 14 December 2005. The final step enta iled responding to the Panel's questions on section III
of the United States' oral statement at the second substantive meeting and the European Communities' comments
thereon. The Panel's questions were sent to the par ties on 15 December 2005 and the parties' replies were
received on 22 December 2005.
209 In addition, the Panel notes that it received a letter dated 21 December 2005, entitled "DS315
Amicus Curiae". By letter dated 9 January 2006, the Pane l informed the parties to this dispute of its decision
not to admit the letter as part of the Panel's record because, inter alia, it was filed too late and its admission
would have unduly delayed the Panel's proceedings.

Following the Panel's first substantive meeting with the parties, the Panel posed a number of questions
to the United States requesting it to provide all rele vant statistical evidence and/or other information
to demonstrate the incidence of non-uniform ad ministration with respect to tariff classification 210,
customs valuation211 and customs procedures 212 in the context of the overall administration of the EC
customs regime. In response to the Panel's qu estions regarding tariff classification and customs
valuation, the United States first argued that the in formation sought by the Panel was not needed to
reach the conclusion that the Eu ropean Communities is not in compliance with its obligation of
uniform administration under Article X:3(a) of the GATT 1994. In the alternat ive, the United States
requested the Panel to exercise its discretion under Article 13 of the DSU because the European
Communities, rather than the United States, was likely to have the information sought.
7.78 Article 13 of the DSU provides that:
"1. Each panel shall have the right to seek information and technical advice from
any individual or body which it deems appropr iate. However, before a panel seeks
such information or advice from any individua l or body within the jurisdiction of a
Member it shall inform the authorities of that Member. A Member should respond
promptly and fully to any request by a panel for such information as the panel considers
necessary and appropriate. Confidential information which is provided shall not be
revealed without formal authorization from the individual, body, or authorities of the
Member providing the information.
2. Panels may seek information from any relevant source and may consult experts
to obtain their opinion on certain aspects of the matter. With respect to a factual issue
concerning a scientific or other technical matter raised by a party to a dispute, a panel
may request an advisory report in writing fro m an expert review group. Rules for the
establishment of such a group and its procedures are set forth in Appendix 4."
7.79 In the area of tariff classification , the United States requested the Panel to seek from the
European Communities a statistically significant sam ple of binding tariff information ("BTI") and
other classification decisions from various member States in order to determine the frequency of
divergent administration in that area pursuant to Article 13 of the DSU. 213 Additionally, the United
States requested the Panel to seek a copy of a 2003 study to which reference had been made in the
European Communities' draft Modernized Customs Code. 214 The United States submitted that it had
requested a copy of that study during consultations with the European Comm unities for this dispute
but that the European Communities refused to provide it. In making its request that the Panel exercise
its discretion under Article 13 of the DSU regarding the study referred to in the draft Modernized
Customs Code, the United States submitted that th e Panel should draw an adverse inference should
the European Communities refuse to provide it.215
7.80 In the customs valuation area, the United States requested the Panel to seek information from
the European Communities of the t ype that enabled the EC Court of Auditors to make the findings

210 Panel question No. 16.
211 Panel question No. 24.
212 Panel question No. 33.
213 United States' reply to Panel question No. 16.
214 United States' reply to Panel question No. 16. The draft Modernized Customs Code (European
Commission, Directorate-General for Taxation and Customs Union, TAXUD/458/2004 – Rev 4, Draft
Modernized Customs Code, 11 November 2004) is contained in Exhibit US-33. The study to which the United
States refers is mentioned on page 4 of Exhibit US-33. In particular, the draft Modernized Customs Code refers
to "[a]n external study in 2003 [which] has allowed the Commission to gain a clearer understanding of the
current situation in the Member States and of the potential costs and benefits".
215 United States' reply to Panel question No. 16.

contained in its report on customs valuation, Special Report No. 23/2000 pursuant to Article 13 of the
DSU.
216 In this regard, the United States noted that, in evaluating the incidence of non-uniform
administration with respect to valuation rules, the EC Court of Auditors had had access to "documents
handled in the Customs Valuation Committee, cu stoms authority valuation audit files, written
valuation rulings, decisions of appeal tribunals and the actual customs declarations" for more than 200
companies and groups of companies.217
7.81 In response, the European Communities submitte d that the United States' requests that the
Panel exercise its discretion pursuant to Article 13 of the DSU should be rejected because they
amounted to an attempt by the United States to rid its elf of its burden to make a prima facie case and,
therefore, went considerably beyond the functions of a panel under Article 13 of the DSU. The
European Communities also submitted that it is not cr edible for the United States to claim, on the one
hand, that there is widespread non-uniform administration of EC customs law in violation of
Article X:3(a) of the GATT 1994, but that it does not have any evidence to support this claim, and
that the European Communities should provide the information requested.
218 In response specifically
to the United States' request concerning the EC C ourt of Auditors report, the European Communities
submitted that it would not be practicable to comply if the Panel were to make such a request.
According to the European Comm unities, the EC Court of Audito rs' Special Report No. 23/2000 was
based on audit visits that took place on the premises of the Commission and the customs
administrations of 12 member States in 1999 – 2000.
219 The European Commu nities submitted that,
whatever information the EC Court of Auditors may have collected at that time is in the possession of
the EC Court of Auditors only. In addition, such information would reflect the situation in 1999 –
2000, but not the situation today.220
7.82 At the second substantive meeting with the parties, the Panel stated that, at that stage, it did
not intend to exercise its discretion under Article 13 of the DSU. The Panel noted that, when the
United States made its requests that the Panel ex ercise its discretion pursuant to Article 13 of the
DSU, the United States submitted that it "does not belie ve that the [requested] information at issue is
necessary for the Panel to find that the EC is not in compliance with its obligation of uniform
administration".221
7.83 The Panel affirms the decision it took at the second substantive meeting not to exercise its
discretion under Article 13 of the DSU because, since the Panel took that decision, the United States
has not made any additional arguments to the effect that the requested information is necessary. In
fact, the United States has repeatedly submitted to the Panel, both before the second substantive
meeting and subsequently, that it has proved that the European Communities is in violation of
Article X:3(a) of the GATT 1994 222, even in the absence of the evidence it requests pursuant to
Article 13 of the DSU. Accordingly, since the United States – being the party that requested the Panel

216 United States' reply to Panel question No. 24 referring to Court of Auditors, Special Report No.
23/2000 concerning valuation of imported goods for customs purposes (customs valuation), together with the
Commission's replies, 14 March 2001 contained in Exhibit US-14.
217 United States' reply to Panel question No. 24 referring to Court of Auditors, Special Report No.
23/2000 concerning valuation of imported goods for customs purposes (customs valuation), together with the
Commission's replies, 14 March 2001, para. 10 (Exhibit US-14).
218 European Communities' second written submission, paras. 48-50.
219 Court of Auditors, Special Report No 23/2000 concerning valuation of imported goods for customs
purposes (customs valuation), together with the Commission's replies, 14 March 2001, paras. 9-10 (Exhibit
US-14).
220 European Communities' second written submission, para. 155.
221 United States' replies to Panel question Nos. 16, 24 and 33.
222 United States' reply to Panel question Nos. 16, 24, 33, 124, 126(b), 173 and 179; United States' oral
statement at the second substantiv e meeting, paras. 4 and 6; United States' comments on the European
Communities' reply to Panel question No. 173.

to exercise its discretion under Article 13 of the DS U – does not consider that the information it
suggests should be sought from the European Commun ities is necessary for the Panel to find that the
European Communities is not in compliance with its obligation under Article X:3(a) of the GATT
1994, the Panel does not see any compelling reason to exercise its discretion under Article 13 of the
DSU to request that information. The Panel's d ecision not to exercise its discretion under Article 13
of the DSU dispenses with the need to address the United States' argument that adverse inferences
should be drawn if the European Communities were to have refused to provide a copy of the study
referred to in the draft Modernized Customs Code despite a request by the Panel for its production.223
D. CLAIMS UNDER ARTICLE X:3(A) OF THE GATT 1994
1. Article X:3(a) of the GATT 1994
7.84 Article X:3(a) of the GATT 1994 provides that:
"Each contracting party shall administer in a uniform, impartial and reasonable
manner all its laws, regulations, decisions and rulings of the kind described in
paragraph 1 of this Article."
2. Findings requested by the United States under Article X:3(a) of the GATT 1994
(a) Summary of the parties' arguments
7.85 The United States submits that, with respect to its claim under Article X:3(a) of the GATT
1994, it is exclusively concerned with the requirement of "uniform" administration. 224 The United
States notes that the principal finding it is asking the Panel to make is that the EC system of customs
administration as a whole is inconsistent with the obligation of uniform administration under
Article X:3(a) of the GATT 1994. The United States considers that such a finding does not preclude
findings of non-uniform administration regarding the specific areas of customs administration to
which it has referred in its submissions to substantiate its claim of violation of Article X:3(a) of the
GATT 1994 by the European Communities. Accord ing to the United States, while findings on
specific areas of customs administration in the Eu ropean Communities are not necessary to make the
finding requested with respect to the EC system of customs administration as a whole, they would
tend to support the finding requested by the United St ates that the EC system overall is in violation of
Article X:3(a) of the GATT 1994.225
7.86 The United States submits that th e evidence it has presented suppor ts subsidiary findings that
the European Communities fails to meet its obliga tion of uniform administration under Article X:3(a)
of the GATT 1994 with respect to administration:
(a) in the area of tariff classification, of the Common Customs Tariff;
(b) in the area of customs valuation, of:
(i) Article 32(1)(c) of the Community Cust oms Code regarding the treatment of
royalty payments for customs valuation purposes;

223 United States' reply to Panel question No. 16.
224 United States' first written submission, footnote 15.
225 United States' reply to Panel question No. 124.

(ii) Article 147 of the Implementing Regulation regarding customs valuation on a
basis other than the last sale that led to the introduction of a good into the
customs territory of the European Communities;
(iii) Article 29 of the Community Customs Code and Article 143(1)(e) of the
Implementing Regulation regarding circumstances under which parties are to
be treated as "related" for customs valuation purposes;
(c) in the area of customs procedures, of:
(i) the valuation provisions contained in the Community Customs Code (Articles
28 – 36) and the Implementing Regula tion (Articles 141 – 181a and Annexes
23 –29), to the extent that different member State authorities employ different
audit procedures with respect to prod ucts following their release for free
circulation
226;
(ii) all classification and valuation provisions in the Common Customs Tariff, the
Community Customs Code and the Implementing Regulation, to the extent
that different member State authorities have at their disposal different
penalties to ensure compliance with those provisions;
(iii) Article 133 of the Community Customs Code and Articles 502(3) and 552 of
the Implementing Regulation regarding assessment of the economic
conditions for allowing processing under customs control;
(iv) Articles 263-267 of the Implementing Regulation regarding local clearance
procedures; and
(d) Article 221 of the Community Customs Code regarding the period following the
incurrence of a customs debt during which liability for the debt may be
communicated to the debtor and the suspension of that period during the pendency of
an appeal.
227
7.87 The United States notes that it is challenging non-uniformity in the administration of EC
customs law under Article X:3(a) of the GATT 1994. According to the United States, that law is
administered principally by authorities located in each of the European Communities' 25 member
States. The United States notes that, therefore, it is the administration of EC customs law by the
authorities located in each of the 25 member States th at is the focus of the United States' claim under
Article X:3(a) of the GATT 1994. However, the United States also notes that decisions and actions
taken by the EC Commission and other EC institutions play a role in the administration of EC
customs law. In particular, the United States submits that they are relevant to the United States' claim
under Article X:3(a) of the GATT 1994 inasmuch as such institutions do not step in to ensure uniform
administration among the customs authorities locate d throughout the territory of the European
Communities.228
7.88 In response, regarding the United States' claim th at it is challenging the administration of the
EC system of customs administration as a whole, the European Communities submits that such a

226 The United States made it clear that its allegations concerning audit procedures related to products
following their release for free circulation in United St ates' first written submission, para. 96 and the United
States' reply to Panel question No. 28.
227 United States' replies to Panel question Nos. 124 and 179.
228 United States' reply to Panel question No. 125.

wide interpretation of the United States' request fo r establishment of a panel is not in accordance with
the requirements of Article 6.2 of the DSU, which requires identification of the specific measures at
issue. The European Communities also submits th at the Panel's terms of reference regarding the
United States' claim under Article X:3(a) of the GATT 1994 only cover the areas of customs
administration specifically enumerated in the United States' request for establishment of a panel.
(b) Analysis by the Panel
7.89 During the course of the Panel's proceedings, the United States requested the Panel to make a
finding that the EC system of customs administration as a whole is inconsistent with Article X:3(a) of
the GATT 1994. The United States also requested th e Panel to make "subsidiary" findings regarding
the specific areas of customs administration to whic h the United States has referred in its submissions
to substantiate its claim of violation of Ar ticle X:3(a) of the GATT 1994 by the European
Communities. Finally, the United States requests findings regarding administration of EC customs
law by customs authorities in the 25 member St ates of the European Communities but notes that
decisions and actions taken by the EC Commission a nd other EC institutions may be relevant to the
Panel's findings to the extent that those institutions do not intervene to ensure uniform administration
among the 25 member States.
229
7.90 The Panel recalls that its terms of reference in this dispute are governed by the United States'
request for establishment of a panel. The Panel is only authorized to make findings, conclusions and
recommendations with respect to matters within its terms of reference.
7.91 Regarding the United States' request for a finding that the EC system of customs
administration as a whole is inconsistent with Article X:3(a) of the GATT 1994, the Panel refers to its
finding in paragraph 7.50 above that the United States' challenge of the EC system of customs
administration as a whole or overall is outside the Pane l's terms of reference. Accordingly, the Panel
is not authorized to make any findings, conclusi ons and recommendations regarding the EC system of
customs administration as a whole.
7.92 With respect to the United States' request for "s ubsidiary" findings in respect of particular
areas of customs administration, the Panel recalls its finding in paragraph 7.33 above that its terms of
reference relate to the manner of administrati on of the Community Customs Code, the Implementing
Regulation, the Common Customs Tariff, the TARI C and related measures in the areas of customs
administration specifically identified in the Unite d States' request for establishment of a panel –
namely, the classification and valuation of goods, procedures for the classification and valuation of
goods, procedures for the entry and release of goods, procedures for auditing entry statements after
goods are released into free circulation, penalties and procedures regarding the imposition of penalties
for violation of customs rules and record-keeping requ irements. Therefore, the Panel is authorized to
make findings with respect to the manner of ad ministration of the Community Customs Code, the
Implementing Regulation, the Common Customs Tariff, the TARIC and related measures with respect
to the areas of customs administration specifically identified in the Unit ed States' request for
establishment of a panel.
7.93 We recall our finding in paragraph 7.63 above that the United States is precluded from
making an "as such" challenge with respect to the de sign and structure of the EC system in the areas
of customs administration that have been specifica lly identified in the Unit ed States' request for
establishment of a panel. Nevertheless, as previously stated, we are authorized to make findings with
respect to particular instances of alleged violations of Article X:3(a) of the GATT 1994 regarding the
administration of the Community Customs Code, the Implementing Regulation, the Common
Customs Tariff and the TARIC and related measures in the areas of customs administration

229 United States' replies to Panel question Nos. 124 and 125.

specifically identified in the Unite d States' request. Accordingly, in the succeeding section of our
report, we will address the particular instances of al leged violations of Article X:3(a) of the GATT
1994.
3. Interpretation of Article X:3(a) of the GATT 1994
7.94 Before considering the particular instances of violation of Article X:3(a) of the GATT 1994
alleged by the United States, the Panel will first e xplain its interpretation of the relevant terms of
Article X:3(a) of the GATT 1994.
(a) Interpretation of "administer"
(i) Summary of the parties' arguments
 Ordinary meaning

7.95 The United States submits that the ordinary meaning of "administer" that is relevant to the
use of that term in Article X:3(a) of the GATT 199 4 is to "carry on or execute (an office, affairs,
etc.)".230 The United States submits that a Member does not administer its law in a uniform manner if
identical products or identical transactions recei ve different treatment in different geographical
regions and the Member provides no mechanism for the systematic reconciliation of such
differences.231 The United States explains that, by its reference to "treatment" in this context, it means
the application to a particular good or a particul ar transaction of laws, regulations, decisions and
rulings of the kind described in Article X:1 of th e GATT 1994. For example, according to the United
States, when a customs authority applies a measure of general application – such as a classification
rule of interpretation – to a particular good an d thereby determines the good's classification and the
corresponding duty owed, it accords "treatment" to that good.232
7.96 The European Communities submits that the term "administer" relates to the execution of
something. In the case of Article X:3(a) of the GATT 1994, "administration" relates to the laws,
regulations, decision and rulings of general applicat ion referred to in Article X:1 of the GATT 1994.
In other words, in the context of Article X:3(a) of the GATT 1994, to "administer" means to execute
general laws and regulations, i.e. to apply them in concrete cases. The European Communities
submits that this interpretation is confirmed by the French and Spanish texts, which use the terms
"appliquera" and "aplicará", both of which can be tran slated as "shall apply". Therefore, according to
the European Communities, the Fren ch and Spanish texts confirm that Article X:3(a) of the GATT
1994 is concerned with the application of the general laws and regulations referred to in Article X:1 of
the GATT 1994. 233 The European Communities further subm its that Article X:3(a) of the GATT
1994 exists to provide certain mi nimum standards of predictabilit y for traders. Accordingly,
Article X:3(a) of the GATT 1994 is primarily concer ned with the administrative outcomes affecting
traders, and not with laws and procedures as such . The European Communities submits that, only to
the extent that a particular procedure results necessar ily and inevitably in a violation of Article X:3(a)
of the GATT 1994, could such a procedure itself be said to be in violation of this provision.234

230 United States' first written submission, para. 34 referring to The New Shorter Oxford English
Dictionary, 1993, p. 28 (Exhibit US-3).
231 United States' first written submission, para. 20.
232 United States' reply to Panel question No. 7.
233 European Communities' reply to Panel question No. 109.
234 European Communities' reply to Panel question No. 94.

Substance versus administration
7.97 Referring to comments made by the Appellate Body in EC – Bananas III , the European
Communities submits that the requirements of Article X:3(a) of the GATT 1994 do not concern the
customs laws themselves, but only the administration of those laws. 235 According to the European
Communities, this means that Article X:3(a) of the GATT 1994 does not require harmonization of
laws within a Member where, for instance, different legal regimes are applicable within different parts
of the territory of a WTO Member.236
7.98 In response, the United States submits that the line the European Communities draws
between substance and administration would rende r Article X:3(a) of the GATT 1994 meaningless.
The United States argues more specifically that, by characterizing all laws, regulations, and rules
pertaining to customs matters as substantive measures, the European Communities would put all laws,
regulations and rules that are instruments of customs administration beyond the reach of the
disciplines Members have agreed to in Article X:3 of the GATT 1994.
237
 Forms of administration
7.99 The United States submits that Article X:3(a) of the GATT 1994 requires uniformity of
administration and is indifferent to the various forms that administration may take. 238 The United
States submits that Article X:3(a) of the GATT 1994 applies to administrative procedures applicable
to traders, such as penalty and audit procedures, inasmuch as those procedures evidence non-uniform
administration of laws, regulations, decisions, and ruli ngs of the type described in Article X:1 of the
GATT 1994. 239 According to the United States, Article X:3(a) of the GATT 1994 also applies to
substantive decisions and the results of administrativ e processes that affect traders, such as particular
decisions with respect to classification and valuation. 240 The United States submits that any decision
by a member State customs authority that applies a measure of general application to a particular good
or transaction may amount to "administration" with in the meaning of Article X:3(a) of the GATT
1994. Where substantive decisions differ from one member State to another, this is evidence of a lack
of uniform administration of the laws at issue.241
7.100 The United States further submits that customs laws may be administered through instruments
which are themselves laws.242 In the United States' view, the laws, regulations, judicial decisions and
administrative rulings of general application refe rred to in Article X:1 of the GATT 1994 are the
objects of administration under Article X:3(a) of the GATT 1994. That is, they are the measures
being administered. According to the United States, in principle, any of these measures is capable of
being administered through tools that are th emselves laws, regulations or other measures.
243 T h e
United States submits that such tools which take th e form of laws, regulations or other measures and
which are administrative in nature are examined under Article X:3(a) of the GATT 1994 for their
substance. In contrast, administration which takes the form of laws, regulations or other measures
that are not administrative in nature is examined under Article X:3(a) of the GATT 1994 not for their
substance but to see whether they are be ing administered in a uniform manner. 244 The United States

235 European Communities' first written submission, para. 216 referring to Appellate Body Report,
EC – Bananas III, para. 200.
236 European Communities' first written submission, para. 217.
237 United States' oral statement at the first substantive meeting, para. 23.
238 United States' replies to Panel question Nos. 93 and 94.
239 United States' reply to Panel question No. 90.
240 United States' reply to Panel question No. 94.
241 United States' reply to Panel question No. 12.
242 United States' oral statement at the first substantive meeting, para. 21.
243 United States' reply to Panel question No. 93.
244 United States' reply to Panel question No. 90.

explains that, where the substance of measures that administer customs laws differs from region to
region, logically, administration of the customs laws is non-uniform in violation of Article X:3(a) of
the GATT 1994.
245
7.101 The European Communities recalls that the term to "admin ister" in Article X:3(a) of the
GATT 1994 is defined as to "execute" or to "apply" , which means that Article X:3(a) of the GATT
1994 applies to the execution in concrete cases of the laws, regulations, decisions and rulings of
general application referred to in Article X:1 of the GATT 1994. According to the European
Communities, a law is itself of general application, and itself needs to be executed or applied.
Accordingly, it cannot be said that such a law "exe cutes" or "applies" another law. The European
Communities submits that arguing that a law can it self constitute "administration" of a law would
undermine the clear distinction between the admi nistration of laws and the laws themselves. 246 The
European Communities adds that, since the laws, re gulations, judicial decisions and administrative
rulings referred to in Article X of the GATT 1994 all have in common that they must be "of general
application", they cannot be said to be executed or applied by another law which is equally of general
application.247
(ii) Analysis by the Panel
7.102 The United States' claim under Article X:3(a) of the GATT 1994 raises the question of the
scope of the term "administer" in that Article. Some particular questions the Panel has been called
upon to address in the context of this dispute are: Do es the term "administer" relate to the application
of laws, regulations, decisions and rulings in particular cases? If so, does it concern the manner in
which administrative processes are conducted? Does it al so extend to the substantive results of those
processes? Does the term "administer" cover measur es that are themselves in the form of laws and
regulations? In interpreting Article X:3(a) of the GATT 1994 to address these questions, among
others, the Panel will undertake its analysis pursuant to Articles 31 and 32 of the Vienna Convention
on the Law of Treaties (Vienna Convention).
 Ordinary meaning
7.103 Article 31(1) of the Vienna Convention indicates that a treaty provision must be interpreted in
accordance with its ordinary meaning. Regarding the ordinary meani ng of the term "administer", the
verb is defined as to "carry on or execute (an of fice, affairs etc.)" and to "execute or dispense
(justice)"248. In turn, the term "execute" is defined as " carry out, put into effect (a plan, purpose,
command, sentence, law, will)". 249 The noun "administration" is defined as "the action of
administering something (a sacrament, justice, re medies, an oath etc.) to another" and "the
management of public affairs; government"250.
7.104 The definition of the term "administer" when read in conjunction with the definition of the
term "execute" suggests that, in the context of Ar ticle X:3(a) of the GATT 1994, "administer" refers
to any action that puts into practical effect the rele vant laws, regulations, decisions and/or rulings of
the kind described in Article X:1 of the GATT 1994. In the Panel's view, this indicates that the term
covers the application of laws, regulations, decisions and ru lings in particular cases because the
application of a law etc. in a particular case necessarily involves giving practical effect to that law etc.

245 United States' reply to Panel question No. 133.
246 European Communities' reply to Panel question No. 93(a).
247 European Communities' reply to Panel question No. 93(b).
248 The New Shorter Oxford English Dictionary, 1993, p. 28.
249 The New Shorter Oxford English Dictionary, 1993, p. 877.
250 The New Shorter Oxford English Dictionary, 1993, p. 28.

7.105 In the Panel's view, the application of a law in a particular case encompasses the
administrative process 251 entailed in that application, becau se the administrative process represents
the series of steps, actions or events that are taken or occur in pursuance of what is required by the law
in question. In addition, we consider that the application of a law in a particular case encompasses the
results of administrative processes. We hold this view because the results of administrative processes
are the final manifestation of the application of a law in a particular case. Furthermore, the results of
administrative processes are, by definition, the prod uct of administrative processes which, as we have
already said, would seem to fall within the scope of the ordinary meaning of the term "administer".
7.106 However, the Panel notes that there would appear to be nothing in the ordinary meaning of
the term "administer" that would suggest that it covers laws and regulations as such. On the contrary,
the relevant dictionary definitions indicate that the term "administer" refers to positive action or steps
taken to put into effect measures such as laws and regulations, but not th e laws and regulations
themselves, which merely exist without effect until they are actually applied in practice.
 Context
7.107 Article 31(1) of the Vienna Convention indicates that a treaty provision must be interpreted in
its context. As for the relevant context for the interpretation of Article X:3(a) of the GATT 1994,
notably, it is contained in Article X of th e GATT 1994, which is entitled "Publication and
Administration of Trade Regulations". The title as well as the content of the various provisions of
Article X of the GATT 1994 indicate that that Article, at least in part, is aimed at ensuring that due
process is accorded to traders when they import or e xport. In this regard, we note that Article X:1 of
the GATT 1994 requires that customs laws, regulations etc. should be published "in such a manner as
to enable governments and traders to become acqua inted with them". Article X:2 of the GATT 1994
prohibits the enforcement of a customs law "before such measure has been officially published".
Article X:3(b) of the GATT 1994 requires the establishment of bodies or procedures for the "review
and correction of administrative action relating to customs matters". This due process theme, which
would appear to be reflected in each of sub-pa ragraphs of Article X of the GATT 1994, has been
referred to by the Appellate Body when interpreting that Article.
252
7.108 The due process theme underlying Article X of the GATT 1994 suggests that the aim of
Article X:3(a) of the GATT 1994 is to ensure that traders are treated fairly and consistently when
seeking to import from or export to a particular WTO Member.253 This, in turn, suggests to us that the
term "administer" in Article X:3( a) of the GATT 1994 relates to the application of laws in particular
cases and, particularly, to administrative processes and their results , since the application of the
obligation of uniformity (and, for that matter, the obligations of reasonableness and impartiality) to
such processes and their results pursuant to Article X:3(a) of the GATT 1994, helps to ensure that
traders are treated fairly and consistently. It is unclear whether the due process objective underlying

251 In this regard, we note that the term "process" is defined, inter alia , as a continuous series of
actions, events or changes; a course of action, a procedure; esp. a continuous and regular action or succession of
actions occurring or performed in a definite manner: The New Shorter Oxford English Dictionary , 1993,
p. 2364.
252 In particular, the Appellate Body referred to the fundamental importan ce of the transparency
standards contained in Article X of the GATT 1994 and stated that that Article has due process dimensions:
Appellate Body Report, US – Underwear, pp 20-21. In addition, the Appellate Body has stated that "[i]t is clear
to us that Article X:3 of the GATT 1994 establishes cer tain minimum standards of tr ansparency and procedural
fairness in the administration of trade regulations.": Appellate Body Report, US - Shrimp , para. 183. With
respect to the latter case, the Panel notes that the mean ing of the "minimum standards" referred to by the
Appellate Body is discussed in paragraph 7.134 below.
253 This interpretation appears to be reflected in the statement made by the panel in Argentina – Hides
and Leather that "[u]niform administration requires that Members ensure that their laws are applied consistently
and predictably." (emphasis added): Panel Report, Argentina – Hides and Leather, para. 11.83.

Article X of the GATT 1994 also indicates that the te rm "administer" in Article X:3(a) of the GATT
1994 also relates to laws and regulations as such . Presumably, the publication of laws (which is
required under Article X:1 of the GATT 1994) coupl ed with an obligation to ensure uniform,
reasonable and impartial application of such laws and regulations would suffice to meet the due
process objective underlying Article X of the GATT 1994. Therefore, it is not clear that it should be
inferred from this objective that Arti cle X:3(a) of the GATT 1994 requires laws and regulations
themselves to also be uniform, reasonable and impartial.
 Interpretation of Spanish and French ve rsions of Article X:3(a) of the GATT 1994

7.109 The final clause of the WTO Agreement indicat es that, for that Agreement, of which the
GATT 1994 is a part, the English, French and Spanish texts are authentic.
7.110 Article X:3(a) of the French version of the GATT 1994 provides that:
"Chaque partie contractante appliquera d'une manière uniforme, impartiale et
raisonnable, tous les règlements, lois, décisions judiciaires et administratives visés au
7.111 Article X:3(a) of the Spanish version of the GATT 1994 provides that:
"Cada parte contratante aplicará de manera uniforme, imparcial y razonable sus leyes,
reglamentos, decisiones judiciales y disposic iones administrativas a que se refiere el
párrafo 1 de este artículo."
7.112 The Panel understands that the te rms "appliquera" and "aplicará" in the French and Spanish
versions of Article X:3(a) of the GATT 1994 respectively are synonymous with the term "shall apply"
in English.
254 Therefore, it is the Panel's view that the use of the terms "appliquera" and "aplicará" in
the French and Spanish versions of Article X:3( a) of the GATT 1994 respectively tends to confirm
that Article X:3(a) of the GATT relates to the appli cation of laws, regulations, etc. but not to the laws
and regulations as such.
 Summary and conclusions
7.113 In summary, the interpretative material th e Panel is entitled to rely upon under the Vienna
Convention in interpreting the term "administer" in Article X:3(a) of the GATT 1994 indicates that
that term relates to the application of laws and regulations, including administrative processes and
their results, but not to laws and regulations as such. In this regard, we note that this view tends to be
supported by statements made by pa nels and the Appellate Body in other cases, which have stressed
that Article X:3(a) of the GATT is not concerned with the substance of laws, regulations, decisions
and rulings themselves but, rather, with their administration.255 In other words, these statements tend
to support the view that Article X:3(a) of the GA TT 1994 does not concern what a particular law says
(i.e. its substance) but, instead, concerns the way the law is applied in practice (i.e. the way in which it
is administered).
7.114 The Panel recalls the United States' argument th at laws or regulations that may be construed
as "tools of administration" or "administrative in nature" may be examined under Article X:3(a) of the

254 "Aplicar" is defined, inter alia, as "to apply": Collins Spanish Dictionary, 1985, p.41. "Appliquer" is
defined, inter alia, as "to apply": Robert & Collins Senior, 2002, p. 49. We note that, in turn, the term "apply" is
defined as "to put use with a particular subject matter <apply the law to the facts>": Black's Law Dictionary ,
1999, p. 96.
255 See, for example, Appellate Body Report, EC – Bananas III, para. 200.

GATT 1994 for their substance to determine whether or not they evidence non-uniform administration
of laws, regulations or other measures whereas other laws and regulations (that is, those that cannot be
considered as "tools of administration" or "a dministrative in nature") are examined under
Article X:3(a) of the GATT 1994 to determine whet her they are being administered in a uniform
fashion.256 However, the Panel is not persuaded by this contention. Our reasons are as follows.
7.115 First, the Panel considers that the interpretation put forward by the United States would blur a
distinction which the Panel considers is demanded by the text of Article X:3(a) of the GATT 1994. In
particular, in our view, the text of Article X:3( a) of the GATT 1994 effectively requires a distinction
to be drawn between, on the one hand, the instrume nts being administered (i.e. laws, regulations,
decisions and rulings of the kind described in Artic le X:1 of the GATT 1994) and, on the other hand,
the acts of administration of those laws, regulations , judicial decisions and administrative rulings.
However, according to the United States, laws and regulations that are "tools of administration" or
"administrative in nature" are evidence of non-unifo rm administration of laws, regulations, judicial
decisions and administrative rulings of the kind described in Article X:1 of the GATT 1994 because
they put into effect those laws, regulations, decisions and rulings, but they may also simultaneously be
laws and regulations of the kind described in Article X:1 of the GATT 1994. In our view, the text of
Article X:3(a) of the GATT 1994 does not contemplat e the possibility that laws and regulations can
simultaneously qualify as laws, regulations, judicial decisi ons and administrative rulings of the kind
described in Article X:1 of the GATT 1994 and as acts of administration within the meaning of
Article X:3(a) of the GATT 1994.
7.116 In this regard, the Panel recalls that th e obligation of uniform administration under
Article X:3(a) of the GATT 1994 relates to "laws, regulations, decisions and rulings of the kind
described in [Article X:1 of the GATT 1994]". In turn, Article X:1 of the GATT 1994 refers to
"[l]aws, regulations, judicial d ecisions and administrative rulings of general application " (emphasis
added). The ordinary meaning of the term "gener al", which is of releva nce in the context of
Article X:1 of the GATT 1994, is: "Not specifically lim ited in application; related to a whole class of
objects, cases, occasions, etc.; (of a rule, law etc.) true for all or nearly all cases coming under its
terms."
257 The ordinary meaning of the term "app lication" of relevance for the purposes of
Article X:1 of the GATT 1994 is: "The bringing of a general or figurative statement, a theory,
principle, etc., to bear upon a matter." 258 The Panel understands that, therefore, the "[l]aws,
regulations, judicial decisions and administrative rulings of general application " described in
Article X:1 of the GATT 1994 are laws, regulations, j udicial decisions and administrative rulings that
apply to a range of situations or cases, rather th an being limited in their scope of application.
Accordingly, the "laws, regulations, decisions and ru lings of the kind described in [Article X:1 of the
GATT 1994]" to which Article X:3(a) of the GA TT 1994 refers are laws, regulations, judicial
decisions and administrative rulings that apply to a range of situations or cases, rather than being
limited in their scope of application.
7.117 Second, the Panel notes that the United States' inte rpretation suggests that, when applied to
what the United States describes as laws or regulations that are "tools of administration" or
"administrative in nature", the obligation to admini ster in a uniform manner under Article X:3(a) of
the GATT 1994 means that the substance of those laws or regulations may be considered. In other
words, the United States submits that, pursuant to the obligation of uniform administration under
Article X:3(a) of the GATT 1994, the substance of laws or regulations that are "tools of
administration" or "administrative in nature" must be uniform (i.e. the same) throughout the territory
of a WTO Member. In the Panel's view, the interpretation put forward by the United States would

256 In this regard, the Panel notes that the United States relies upon comments made by the panel in
Argentina – Hides and Leather, paras. 11.69-11.72.
257 The New Shorter Oxford English Dictionary, p. 1073.
258 The New Shorter Oxford English Dictionary, p. 100.

render redundant in Article X:3(a) of the GATT 1994 eith er the term "administer" or the reference to
"laws, regulations, decisions and rulings of the kind described in [Article X:1 of the GATT 1994]", at
least with respect to laws and regulations the Un ited States labels as "tools of administration" or
"administrative in nature". More specifically, su ch an interpretation would mean that, in essence,
"laws, regulations, decisions and rulings of the kind described in [Article X:1 of the GATT 1994]"
that are "tools of administration" or "administrativ e in nature" must be uniform or that "tools of
administration" which are laws or regulations (regard less of whether or not they are laws, regulations,
decisions and rulings of the kind described in Ar ticle X:1 of the GATT 1994) must be uniform. We
note that, such an interpretation, which in the first alternative effectively reads out the term
"administer" from Article X:3(a) of the GATT 1994 and in the second alternative effectively reads out
the reference to "laws, regulations, decisions and ru lings of the kind described in [Article X:1 of the
GATT 1994]" (at least, with respect to laws, regula tions, decisions or rulings that are "tools of
administration" or "administrative in nature"), is precluded by the principle of effective treaty
interpretation, which requires us to give meaning and effect to all the terms of Article X:3(a) of the
GATT 1994.
259
7.118 Third, according to the United States, all laws and regulations, whether "tools of
administration" or "administrative in nature" or ot herwise, are subject to the obligation of uniform
administration under Article X:3(a) of the GATT 1994. However, in the United States' view, those
that qualify as "tools of administration" or "a dministrative in nature" are examined under
Article X:3(a) of the GATT 1994 for their substance as evidence of non-uniform administration of the
laws, regulations or other measures that they put in to effect whereas those that do not so qualify are
examined under Article X:3(a) of the GATT 1994 to determine whether or not they are being
administered in a uniform fashion. In the Panel's vi ew, there is no textual support in Article X:3(a) of
the GATT 1994 for this two-track, differential approach.
7.119 Therefore, in the light of the foregoing, the Panel confirms its conclusion that the term
"administer" in Article X:3(a) of the GATT 1994 rela tes to the application of laws and regulations,
including administrative processes and their results but not to laws and regulations as such.
(b) Interpretation of "uniform"
(i) Summary of the parties' arguments
7.120 The United States submits that the ordinary meaning of the term "uniform" that is relevant to
the use of that term in Article X:3(a) of th e GATT 1994 is "of one unchanging form, character, or
kind; that is or stays the same in different places or circumstances, or at different times."
260 T h e
United States argues that the obligation of uniform administration under Article X:3(a) of the GATT
1994 requires uniform administration across the terr itory of a WTO Member. The United States
submits that a Member does not administer its la w in a uniform manner if identical products or
identical transactions receive different treatment in different geographical regions of that Member and
the Member provides no mechanism for the systematic reconciliation of such differences.261
7.121 The European Communities submits that it agrees with the definition of the term "uniform"
as "of one unchanging form, character, or kind; that is or stays the same in different places or

259 The Appellate Body in US – Gasoline stated that one of the corolla ries of the "general rule of
interpretation" in Article 31 of the Vienna Convention is that "interpretation must give meaning and effect to all
the terms of a treaty," and that an interpreter must not "adopt a reading that would result in reducing whole
clauses or paragraphs of a treaty to redundancy or inutility.": Appellate Body Report, US – Gasoline, p. 23.
260 United States' first written submission, paras. 34 and 35, referring to The New Shorter Oxford
English Dictionary, 1993, p. 3488 (Exhibit US-4) and relying upon the panel report in Argentina – Hides and
Leather, para. 11.80.
261 United States' first written submission, para. 20.

circumstances, or at different times". The Euro pean Communities further submits that identical
standards must apply to the requirement of uniform ity over time, across the territory, or as between
individuals.262
(ii) Analysis by the Panel
7.122 The Panel has been called upon to determine the test that should be a pplied in determining
whether or not the obligation of "uniform" admini stration in Article X:3(a) of the GATT 1994 has
been violated. In determining what is meant by the term "uniform" in the context of Article X:3(a) of
the GATT 1994, the Panel will undertake its anal ysis pursuant to Articles 31 and 32 of the Vienna
Convention.
 Ordinary meaning
7.123 Regarding the ordinary meaning of the term "uniform", a WTO panel has noted that the
dictionary defines the term "uniform" as "of one uncha nging form, character, or kind; that is or stays
the same in different places or circumstances, or at different times." 263 This definition, which has
been relied upon by both the United States and th e European Communities and was supported by a
number of third parties to this dispute, i ndicates, that the term "uniform" requires, inter alia ,
geographic uniformity. 264 In other words, according to this definition, administration should be
uniform in different places within a particular WT O Member pursuant to Article X:3(a) of the GATT
1994. The Panel sees no reason to disagree with this interpretation.
7.124 As for the standard that should be applied in determining whether or not administration is
"uniform" in a particular case, the use of the term "the same" in the definition relied upon by the panel
cited in the previous paragraph suggests that admi nistration should be absolutely and instantaneously
identical, when such administration concerns the same facts. However, the Panel notes that the term
"uniform" has also been defined as "conforming to one standard, rule, or pa ttern; alike, similar". 265
This definition appears to imply a less exacting sta ndard of uniformity than the former, requiring that
the same rules be applied but not necessarily that th e results of administration be identical. We now
turn to the context for the interpretation of the te rm "uniformity" in Article X:3(a) of the GATT 1994
to determine which, if either, of these two interp retations of the standard of uniformity is more
appropriate for the purposes of Article X:3(a) of the GATT 1994.
 Context
7.125 The Panel will first consider the immediate context of the term "uniform", namely the other
terms that appear in Article X:3(a) of the GATT 1994. The Panel recalls that Article X:3(a) of the
GATT 1994 requires Members, inter alia , to "administer" in a uniform manner all their "laws,
regulations, decisions and rulings of the kind described in Article X:1". It is clear from the terms of
Article X:3(a) of the GATT 1994 that the uniformity obligation is intrinsically tied to the meaning of
"administer" and to the "laws, regulations, decisions and rulings of the kind described in Article X:1
of the GATT 1994".
7.126 The Panel found in paragraph 7.113 above that the term "administer" in Article X:3(a) of the
GATT 1994 relates to the application of laws and regulations, including administrative processes and

262 European Communities' reply to Panel question No. 151 referring to Panel Report, Argentina –
Hides and Leather, para. 11.80.
263 Panel Report, Argentina – Hides and Leather, para. 11.83.
264 The Panel notes that, in the context of this dispute, it has only been called upon to address issues of
alleged geographical non-uniformity. Therefore, the Panel will restrict its interpretation of the term
"uniformity" to this aspect of the term.
265 The New Shorter Oxford English Dictionary, 1993, p. 3488.

their results but not to laws and regulations as su ch. The Panel understands that the specific form,
nature and scale of administration that may be at issue in a dispute concerning the application of
Article X:3(a) of the GATT 1994 may vary from case to case. In particular, one case may involve
administration concerning a specific, self-contained administrative process whereas another case may
involve the administration of an entire system. The Panel considers that, therefore, in order to
interpret the term "uniform" in a particular case invol ving an alleged violation of Article X:3(a) of the
GATT 1994, it is necessary to first clarify the administ ration that is being challenged in a particular
case.
7.127 Similarly, the Panel is of the view that, in orde r to interpret the term "uniform" in a particular
case, it is necessary to clarify "laws, regulations, decisions and rulings of the kind described in
[Article X:1 of the GATT 1994]", which are allegedl y being administered in a non-uniform manner in
violation of Article X:3(a) of the GATT 1994. At one end of the spectrum, it may be the case that a
challenge under Article X:3(a) of the GATT 1994 relates to the administration of a single, specific
legislative provision. At the other end of the sp ectrum, a challenge under Article X:3(a) of the GATT
1994 may relate to the administration of a vast body of legislative provisions. There are numerous
possibilities between these two extremes of the spectrum.
7.128 It is evident from the foregoing that the form, nature and scale of administration
266 that may
be at issue in a dispute concerning the applicati on of Article X:3(a) of the GATT 1994, both in terms
of the type of administration and the legislativ e framework within which the administration in
question is occurring, may vary greatly from case to case. Given the range of possibilities in this
regard, the Panel does not consider it possible to define a single concept of "uniformity" that would
apply across the board. Indeed, in the Panel's vi ew, the form, nature and scale of the alleged non-
uniform administration and the laws, regulations, decisions and rulings that are allegedly being
administered in a non-uniform manner should be take n into consideration when interpreting the term
"uniform" in Article X:3(a) of the GATT 1994 in the context of a particular case.
7.129 The Panel considers that the narrower the challenge both in terms of the administration that is
being challenged and the laws, regulations, decisions and rulings which are alleged to be administered
in a non-uniform manner in a particular case, the mo re demanding the requirement of uniformity. On
the other hand, the broader and more wide-ranging the challenge both in terms of the nature of
administration that is being challenged and the sp ecific laws, regulations, d ecisions and rulings or
provisions thereof that are alleged to be administered in a non-uniform manner in a particular case, a
less exacting standard of uniformity should be applied.
 Supplementary means of interpretation

7.130 In the Panel's view, the approach set out in pa ragraph 7.129 above, which entails a notion of
uniformity, the threshold for which differs depending upon the form, nature and scale of the challenge
under Article X:3(a) of the GATT 1994 in question, is warranted by reference to the factual context,
which, in our view, may be taken into c onsideration pursuant to Article 32 of the Vienna Convention
as supplementary means of interpretation.267

266 When we refer to the "scale of administration" he re and elsewhere in our report, we mean the scale
of the particular act or acts of admini stration that are the subject of challe nge under Article X:3(a) of the GATT
1994. We do not mean the scale of a system of administration that exists in a particular WTO Member.
267 We note that the panel in EC – Chicken Cuts relied upon "factual context" when interpreting the
ordinary meaning of the term "salted" in the European Communities' GATT Schedule: Panel Report, EC –
Chicken Cuts, para. 7.105. On appeal, the European Communities challenged the panel's reliance upon the so-
called "factual context". The Appellate Body upheld the pa nel's analysis stating that "... we would agree with
the European Communities that there is no reference in the Vienna Convention to "factual context" as a separate
analytical step under Article 31. Ne vertheless, we do not believe that the Panel was incorrect to consider

7.131 In particular, the Panel considers that, if we were to interpret Article X:3(a) of the GATT
1994 to impose a requirement of absolute uniformit y – that is, uniformity in every case where the
facts are identical, which is suggested by one inte rpretation of the ordinary meaning of the term
"uniform" – this would lead to a result which is unre asonable. In this regard, the Panel notes that the
practical reality of many systems of customs administration is that they involve millions of acts of
administration every year. The Panel does not consider that it is practically viable to achieve absolute
uniformity in each and every case involving identical facts, particularly in the context of large
Members across whose borders many products are being imported and exported every day and where
there are many customs officials involved.
7.132 The Panel considers that the factual context also indicates that the interpretation of the term
"uniform" in Article X:3(a) of the GATT 1994 does not necessarily entail instantaneous uniformity,
which could be inferred from one interpretation of the ordinary meaning of the term "uniform". In our
view, interpreting Article X:3(a) of the GATT 1994 to impose an obligation of instantaneous
uniformity would lead to an unreasonable result si nce achieving such instantaneous uniformity would
not always be practically feasible in respect of many systems of customs administration. We consider
that, rather, uniformity must be attained within a period of time that is reasonable. The Panel
considers that, in order to avoid a finding of non- uniform administration under Article X:3(a) of the
GATT 1994, it must be clear at the time of establishment of the panel that any non-uniformity that
may have existed was remedied within a period of ti me that is reasonable. In our view, what is
reasonable will depend upon the form, nature and scale of the administration at issue. It will also
depend upon the complexity of the factual and legal issues raised by the act of administration that is
being challenged.
7.133 In our view, in no case can non-uniform administra tion persist for indefinite periods of time
as this would effectively render redundant the term "uniform" in Article X:3(a) of the GATT 1994,
which would be contrary to the principle of effective treaty interpretation.
268 Furthermore, such an
interpretation would be inconsiste nt with our obligation under the Vienna Convention to interpret
Article X:3(a) of the GATT 1994 in good faith.
7.134 In all cases, regardless of the form, nature a nd scale of administration at issue, the Panel
considers that administration should not fall below certain minimum standards of due process, which
encompass notions such as notice, tr ansparency, fairness and equity. 269 In the Panel's view, such

elements such as the 'products covere d by the concession contained in heading 02.10', 'flavour, texture, [and]
other physical properties' of the products falling under heading 02.10, and 'preservation' when interpreting the
term 'salted' as it appears in heading 02.10. The Pa nel's consideration of these elements under 'ordinary
meaning' of the term 'salted' complemented its analysis of the dictionary definitions of that term. In any event,
even if we were to agree with the European Communitie s that these elements are not to be considered under
'ordinary meaning', they certainly could be considered under 'context'.": Appellate Body Report, EC – Chicken
Cuts, para. 176. In the Panel's view, the Appellate Body' approval of the use of the "factual context" under
Article 31 of the Vienna Convention indicates that it may alternatively/additionally be taken into consideration
under Article 32 of the Vienna Convention. We find support for this view in EC – Chicken Cuts , where the
Appellate Body stated that: "We st ress, moreover, that Article 32 does not define exhaustively the
supplementary means of interpretation to which an interp reter may have recourse. It states only that they
include the preparatory work of the treaty and the circumstan ces of its conclusion. Thus, an interpreter has a
certain flexibility in considering relevant supplementary means in a given case so as to assist in ascertaining the
common intentions of the parties.": Appellate Body Report, EC – Chicken Cuts, para. 283.
268 In this regard, we recall that in US – Gasoline, the Appellate Body stated that one of the corollaries
of the "general rule of interpretation" in Article 31 of the Vienna Convention is that "interpretation must give
meaning and effect to all the terms of a treaty," and th at an interpreter must not "adopt a reading that would
result in reducing whole clauses or paragraphs of a tr eaty to redundancy or inutility.": Appellate Body Report,
US – Gasoline, p. 23.
269 We note in this regard that, in US – Shrimp, the Appellate Body stated that:

standards derive from the broader due process context of Article X:3(a) of the GATT 1994, which has
been discussed above in paragraphs 7.107 – 7.108.
 Summary and conclusions

7.135 In summary, the interpretative material upon wh ich the Panel is entitled to rely under the
Vienna Convention in interpreting the term "uniform" in Article X:3(a) of the GATT 1994 indicates
that that term covers, inter alia , geographic uniformity. In other words, administration should be
uniform in different places within a particular WT O Member. Further, the Panel considers that the
form, nature and scale of the alleged non-uniform ad ministration and the laws, regulations, judicial
decisions and rulings that are allegedly being admi nistered in a non-uniform manner should be taken
into consideration when interpreting the term " uniform" in Article X:3(a) of the GATT 1994 in the
context of a particular case. The Panel considers that the narrower the challenge both in terms of the
administration that is being challenged and the la ws, regulations, decisions and rulings which are
alleged to be administered in a non-uniform manne r in a particular case, the more demanding the
requirement of uniformity. The broader and more wide-ranging the challenge both in terms of the
nature of administration that is being challenge d and the specific laws, regulations, decisions and
rulings or provisions thereof that are alleged to be administered in a non-uniform manner in a
particular case, a less exacting standard of uniform ity should be applied. The Panel also considers
that the interpretation of the term "uniform" in Article X:3(a) of the GATT 1994 does not necessarily
entail instantaneous uniformity. Rather, uniformity must be attained within a period of time that is
reasonable. What is reasonable will depend upon th e form, nature and scale of the administration at
issue as well as the complexity of the factual and legal issues raised by the act of administration that is
being challenged. It is the Panel's view that, in all cases, regardless of the form, nature and scope of
administration at issue, administration should not fall below certain minimum standards of due
process, which encompass notions such as notice, transparency, fairness and equity.
4. Relevance of Article XXIV:12 of the GATT 1994 for the interpretation of Article X:3(a)
of the GATT 1994 in the context of this dispute
(a) Summary of the parties' arguments
7.136 The European Communities submits that the reality of the United States' claim under
Article X:3(a) of the GATT 1994 is that it is effectively seeking to require the European Communities

"It appears to us that, ef fectively, exporting Members applying fo r certification whose applications are
rejected are denied basic fairness and due process, and are discriminated against, vis-à-vis those Members which
are granted certification.
The provisions of Article X:3 of the GATT 1994 bear upon this matter. In our view, Section 609 falls
within the 'laws, regulations, judicial decisions and administrative rulings of general application' described in
Article X:1. Inasmuch as there are due process requirem ents generally for measures that are otherwise imposed
in compliance with WTO obligations, it is only reasonable that rigorous compliance with the fundamental
requirements of due process should be required in the application and administration of a measure which
purports to be an exception to the treaty obligations of the Member imposing the measure and which effectively
results in a suspension pro hac vice of the treaty rights of other Members.
It is also clear to us that Article X:3 of the GATT 1994 establishes certain minimum standards for
transparency and procedural fairness in the administration of trade regulations which, in our view, are not met
here. The non-transparent and ex parte nature of the internal governmental procedures applied by the competent
officials in the Office of Marine Conservation, the Department of State, and the United States National Marine
Fisheries Service throughout the certification processes un der Section 609, as well as the fact that countries
whose applications are denied do not receive formal notice of such deni al, nor of the reasons for the denial, and
the fact, too, that there is no formal legal procedure for review of, or appeal from, a denial of an application, are
all contrary to the spirit, if not the letter, of Article X:3 of the GATT 1994." (emphasis added): Appellate Body
Report, US – Shrimp, paras. 181 - 183.

to establish a central customs agency.270 The European Communities argues that Article X:3(a) of the
GATT 1994 does not prescribe the ways in which a WT O Member must implement its customs laws,
including the question of through what authorities or administration customs laws are administered.
According to the European Communities, Article X:3(a) of the GATT 1994 in no way excludes that,
in a federal or quasi-federal state or entity, custom s laws could be administered by authorities at the
sub-federal level.271 In support, the European Communities refers to Article XXIV:12 of the GATT
1994, which provides that "[e]ach contracting party shall take such reasonable measures as may be
available to it to ensure observance of the provisi ons of this Agreement by the regional and local
governments and authorities within its territories". 272 The European Communities notes that the
GATT panel in Canada – Gold Coins found that Article XXIV:12 of the GATT 1994 has the
"function of allowing federal States to accede to th e General Agreement without having to change the
federal distribution of competence". The Eur opean Communities submits that, accordingly, any
interpretation of Article X:3(a) of the GATT 1994 that would affect the internal distribution of
competence is incompatible with Article XXIV:12 of the GATT 1994.273
7.137 In response, the United States clarifies that the United States has never insisted that the
European Communities must create an EC custom s agency and an EC customs court and must
harmonize member States' laws. The United States simply argues that the European Communities,
like other WTO Members, must administer its customs laws in a manner consistent with
Article X:3(a) of the GATT 1994.
274 The United States submits that Article XXIV:12 of the GATT
1994 concerns "the observance of the Genera l Agreement by regional and local government
authorities." According to the United States, in c ontrast, this dispute does not concern the observance
of an obligation under the GATT 1994 by regional and local government authorities but, rather, by the
European Communities itself. The Un ited States argues that, therefore, this case is distinguishable
from Canada – Gold Coins , which involved a provincial governme nt of Canada adopting a measure
for the raising of provincial revenue – a power th at Canada's constitution vested exclusively in the
provincial legislature – in a manner that put Canada in breach of its obligation under Article III of the
GATT 1994.275 Additionally, the United States notes that, if the European Communities has sought to
invoke Article XXIV:12 of the GATT 1994 as a defence, this entails a burden to demonstrate that
lapses in the uniform administration of EC cu stoms law concern matters "which the central
government cannot control under the c onstitutional distribution of powers". 276 According to the
United States, if the European Communities is arguing that it is not able to control the administration
of customs law by the customs authorities in the me mber States under its constitutional distribution of
powers, this reinforces the point that the Europ ean Communities is not meeting its obligation to
administer its customs law uniformly under Article X:3(a) of the GATT 1994.277
7.138 The European Communities responds that Article XXIV:12 of the GATT 1994 must have a
useful meaning. In the context of Article XXIV: 12 of the GATT 1994, it must be considered whether
the WTO Member in question has regional or local governments and authorities within its territories
which have responsibilities for implementing the provisions of the GATT. According to the European
Communities, if it does, the Member in questio n must take "reasonable measures" to ensure
compliance.278 The European Communities argues that, in order to determine what is a "reasonable

270 European Communities' second written submission, para. 30.
271 European Communities' first written submission, para. 252.
272 European Communities' first written submission paras. 220-221.
273 European Communities' first written submission pa ras. 220-221, referring to GATT Panel Report,
Canada – Gold Coins, para. 58.
274 United States' comments on the European Communities' reply to Panel question No. 158.
275 United States' comments on the European Communities' reply to Panel question No. 158.
276 GATT Panel Report, United States – Measures Affec ting Alcoholic and Malt Beverages ,
BISD 39S/206, para. 5.79 (adopted 19 June 1992).
277 United States' comments on the European Communities' reply to Panel question No. 158.
278 European Communities' comments on the United States' reply to Panel question No. 176.

measure", the panel in Canada – Gold Coins held that "the consequences of [...] non-observance [of
the provisions of the GATT] by the local government for trade relations with other contracting parties
are to be weighed against the domestic difficulties of securing observance".
279
7.139 The United States submits that, even if Article XXIV :12 of the GATT 1994 were relevant to
this dispute, it would not excuse the European Communities from its obligation under Article X:3(a)
of the GATT 1994 or in any way affect its obligatio n under that Article. In this regard, the United
States refers to paragraph 13 of the Understanding on the Interpretation of Article XXIV of the GATT
1994 which, according to the United States, makes cl ear that "[e]ach Member is fully responsible
under GATT 1994 for the observance of all provisions of GATT 1994... ." That is, in the United
States' view, Article XXIV:12 of the GATT 1994 im poses an obligation on Members with federal
structures to take "reasonable measures" to "ensure observance" by local or regional governments of a
Member’s obligations but does not alter the content of any GATT 1994 obligation for such Members.
Further, according to the United States, even wher e observance of WTO obligations by regional or
local governments is at issue, paragraph 14 of th e Understanding on Article XXIV and Article 22.9 of
the DSU provide that "[t]he provisions of Articles XXII and XXIII of GATT 1994 as elaborated and
applied by the [DSU]" and "[t]he provisions of the covered agreements and [the DSU]," respectively,
"relating to compensation and suspension of concessi ons or other obligations apply in cases where it
has not been possible to secure such observance." The United States submits that, therefore, even if,
pursuant to Article XXIV:12 of the GATT 1994, th e European Communities' only obligation under
Article X:3(a) of the GATT 1994 was to take "reas onable measures" to secure uniform administration
of EC customs law, its failure to actually admini ster its customs law in a uniform manner would not
excuse it from relevant provisions on compensation and suspension of concessions.
280
(b) Analysis by the Panel
7.140 The Panel notes that, in the context of this di spute, the United States argues that the European
Communities has breached its obligation under Artic le X:3(a) of the GATT 1994 by virtue of its
failure to administer EC customs law in a uniform manner. 281 The United States acknowledges that
the administration of EC customs law is carried out by the customs authorities in the member States
but submits that, to the extent that the European Communities does not control the administration by
those customs authorities to ensure uniform administ ration, the European Communities is in violation
of Article X:3(a) of the GATT 1994.282
7.141 By way of preliminary comment, the Panel notes that the terms of Article X:3(a) of the GATT
1994 simply require Members to administer laws, regulations, decisions and rulings of the kind
described in Article X:1 in a manner that is, inter alia, uniform. Article X:3(a) of the GATT 1994
does not prescribe how uniform administration must be achieved. Therefore, the Panel considers that
Article X:3(a) of the GATT 1994 vests discretion in Members to determine how to achieve uniform
administration, including the nature and level of en tities that are charged with administration and the
tools that are put in place to achieve uniform admini stration. Accordingly, the Panel considers that
there is nothing in Article X:3(a) of the GATT 1994 to prevent the Eur opean Communities from
administering its customs laws through, inter alia , customs authorities of its constituent member
States.283

279 GATT Panel Report, Canada – Gold Coins, para. 69.
280 United States' comments on the European Communities' reply to Panel question No. 158.
281 United States' comments on the European Communities' reply to Panel question No. 158.
282 United States' comments on the European Communities' reply to Panel question No. 158.
283 The Panel notes that, in the context of this dispute, the United States has not challenged as such the
fact that the European Communities administers its customs laws through, inter alia, customs authorities of its
constituent member States.

7.142 The question has arisen in this dispute as to whether or not Article XXIV:12 of the GATT
1994 has the effect of limiting the European Commun ities' obligations under Article X:3(a) of the
GATT 1994 so that it is only required to take "reas onable measures" to ensure uniform administration
by the customs authorities of the member States.284 Article XXIV:12 of GATT 1994 provides that:
"Each contracting party shall take such reas onable measures as may be available to it
to ensure observance of the provisions of this Agreement by the regional and local
governments and authorities within its territories."
7.143 The Understanding on the Interpretation of Article XXIV of GATT 1994 ("the
Understanding"), which is part of the GATT 1994 285 and which was agreed upon during the Uruguay
Round negotiations, provides the following with respect to Article XXIV:12 of the GATT 1994:
"Each Member is fully responsible under GATT 1994 for the observance of all
provisions of GATT 1994, and shall take such reasonable measures as may be
available to it to ensure such observan ce by regional and local governments and
authorities within its territory.
The provisions of Articles XXII and XXIII of GATT 1994 as elaborated and applied
by the Dispute Settlement Understanding ma y be invoked in respect of measures
affecting its observance taken by regional or local governments or authorities within
the territory of a Member. When the Di spute Settlement Body has ruled that a
provision of GATT 1994 has not been observe d, the responsible Member shall take
such reasonable measures as may be availabl e to it to ensure its observance. The
provisions relating to compensation and suspension of concessions or other
obligations apply in cases where it has not been possible to secure such observance.
Each Member undertakes to accord sympathetic consideration to and afford adequate
opportunity for consultation regarding any representations made by another Member
concerning measures affecting the operation of GATT 1994 taken within the territory
of the former."
7.144 The Panel notes that Article XXIV:12 of the GATT 1994 is drafted as a positive obligation
rather than as a defence. More sp ecifically, the use of the word "shall"
286 in Article XXIV:12 of the
GATT 1994 indicates that that Article imposes an obligation on Members to take all reasonable
measures to ensure that local authorities comply w ith WTO obligations. This would tend to indicate
that Article XXIV:12 of the GA TT 1994 cannot be relied upon to attenua te nor to derogate from the
provisions of the GATT 1994 (including Article X:3(a) of the GATT 1994), to which
Article XXIV:12 of the GATT 1994 refers. The Understanding supports the view that
Article XXIV:12 of the GATT 1994 imposes a pos itive obligation rather than attenuating or
derogating from the provisions of the GATT 1994. Speci fically, it states that "[e]ach Member is fully
responsible under GATT 1994 for the observance of all provisions of GATT 1994", suggesting that
Article XXIV:12 of the GATT 1994 does not protect Me mbers from being found in violation of their
WTO obligations.287 In addition, we note that the Unders tanding clearly states that, when the DSB

284 See, for example, European Communities' comment s on the United States' reply to Panel question
No. 176 and United States' comments on the European Communities' reply to Panel question No. 158.
285 See Article 1(c) of the GATT 1994.
286 Black's Law Dictionary defines the term "shall" as "has a duty to; more broadly, is required to.":
Black's Law Dictionary, 1999, p. 1379.
287 Further support for the view that Article XX IV:12 of the GATT 1994 does not attenuate nor
derogate from the provisions of the GATT 1994, including Article X:3(a) of the GATT 1994 derives from
Article XVI:4 of the WTO Agreement. Article XVI:4 of the WTO Agreement provides that: "Each Member
shall ensure the conformity of its laws, regulations an d administrative procedures with its obligations as

has ruled that a provision of GATT 1994 has not been observed by regional or local governments or
authorities of a WTO Member, "the provisions relating to compensation and suspension of
concessions or other obligations apply in cases wh ere it has not been possible to secure such
observance".
7.145 In the light of the foregoing, it is the Pane l's view that, irrespective of whether or not
Article XXIV:12 of the GATT 1994 is appli cable in the context of this dispute
288, that Article does
not constitute an exception nor a derogation from the obligation of uniform administration in
Article X:3(a) of the GATT 1994. Therefore, Article XXIV:12 of the GATT 1994 has no impact
upon our examination of the United States' claims under Article X:3(a) of the GATT 1994.
5. Burden of proof
(a) Summary of parties' arguments
7.146 The United States submits that, under Article X:3(a) of the GATT 1994, it is necessary to
examine the real effect that a measure might ha ve on traders operating in the commercial world.
289.
According to the United States, this is evident fro m the context of Article X:3(a) of the GATT 1994,
which includes in Article X:1 of the GATT 1994 an obligation to promptly publish certain customs
measures and in Article X:3(b) of the GATT 1994 an obligation to provide fora for prompt review and
correction of customs decisions, both of which plai nly are oriented to facilitating the operations of
traders.290
7.147 The European Communities agrees that the effect of administration on traders is a relevant
consideration in the interpretation of Article X:3( a) of the GATT 1994. According to the European
Communities, this means that the treatment which a trader can expect to receive from the customs
authorities of a WTO Member should be reasonably pr edictable. This does not mean that individual
instances of administrative error, which can be corrected through administrative and judicial
mechanisms provided by a WTO Member's system, can be regarded as constituting a violation of
Article X:3(a) of the GATT 1994. The European Communities submits that, rather, the effect on
traders should be demonstrable th rough adequate evidence. The Eu ropean Communities also submits
that measures which entail no relevant difference in treatment between traders cannot be held to
constitute a violation of Article X:3(a) of the GATT 1994. 291 The European Communities also
considers that there is no requirement to show trade damage in order to prove a violation of
Article X:3(a) of the GATT 1994. Rather, the ques tion to be addressed is whether the complainant
has suffered nullification and impairment within the meaning of Article XXIII of the GATT 1994.
According to the European Communities, it follows from Article 3.8 of the DSU that, where there is
an infringement of the obligations under the cove red agreements, this is normally presumed to

provided in the annexed Agreements." We understand that Article XVI:4 of the WTO Agreement establishes a
clear obligation for all WTO Members to ensure the co nformity of its laws, regulations and administrative
procedures with their obligations under the covered Agreements, including the GATT 1994. See Appellate
288 In this regard, the Panel recalls that the Unite d States has suggested that Article XXIV:12 is
inapplicable in the context of this dispute: United States' comments on the European Communities' reply to
Panel question No. 158. The Panel notes that it does not need to take a position on whether or not the member
States of the European Communities qualify as "regiona l and local governments or authorities" within the
meaning of Article XXIV:12 of the GATT 1994.
289 United States' first written submission, para. 117 referring to Panel Report, Argentina – Hides and
Leather, para. 11.77.
290 United States' first written submission, para. 117 referring to Panel Report, Argentina – Hides and
Leather, para. 11.76.
291 European Communities' reply to Panel question No. 174.

constitute a case of nullification and impairment. However, this presumption can be rebutted by the
Member complained against.292
7.148 In response, the United States submits that an examination of the real effect that a measure
might have on traders is not confined to an examin ation of whether traders in similar situations are
required to pay different customs duties but includes consideration of the possible impact on the
competitive situation. The United States submits that, therefore, in determining whether
Article X:3(a) of the GATT 1994 has been viol ated, a panel should ask not whether one WTO
Member has been treated differently from other WTO Members. Rather, it should ask whether traders
have been treated differently based, for example, on the part of the Member's territory through which
they import their goods. If the manner in which a Member administers its customs law might
encourage a trader to prefer importation through one region rather than another, this would be
probative of non-uniform administration, in breach of Article X:3(a) of the GATT 1994. 293 T h e
United States submits that benefits accruing to the United States are nullified or impaired if traders are
effectively compelled to alter shipping patterns or incur additional costs as a result of non-uniform
administration in violation of Article X:3(a) of the GATT 1994.294
7.149 The European Communities submits that a minimal threshold applies under Article X:3(a)
of the GATT 1994, which implies that a variation in administrative practice must have a significant
impact on the administration of customs laws in orde r to constitute a breach of Article X:3(a) of the
GATT 1994.295 According to the European Communities, this minimum threshold reflects the fact
that Article X:3(a) of the GATT 1994 does not require uniformity for its own sake but, rather, intends
to protect the interests of traders. 296 In support, the European Comm unities refers to the Appellate
Body's comments in EC – Poultry which, according to the Europ ean Communities, indicate that
individual instances of administration are not probative for a violation of Article X:3(a) of the GATT
1994.297 Further, the European Communities submits that the panel's comments in US – Hot Rolled
Steel indicate that a pattern of decision-making is needed for the purposes of Article X:3(a) of the
GATT 1994.298 The European Communities argues that such an interpretation of Article X:3(a) of the
GATT 1994 is particularly necessary given that custom s authorities have to operate in complex and
rapidly changing circumstances, to which they consta ntly need to adapt. Moreover, according to the
European Communities, customs administration is a complex system, whose outcomes are determined
by many factors, not all of which are attributable to the Member in question.299
7.150 In response, the United States submits that the European Co mmunities urges on the Panel a
relative view of Article X:3(a) of the GATT 1994 wh ich requires an assessment of the particularities
of the system of customs administration in question. 300 The United States also argues that, while the
text of Article X:3(a) of the GATT 1994 refers to administration in a "uniform manner", it does not
refer to a "pattern of non-uniform" administration. 301 Further, the United States argues that the
European Communities' contention that non-uniformity is impermissible only when it amounts to a

292 European Communities' reply to Panel question No. 175.
293 United States' replies to Panel question Nos. 174 and 175.
294 United States' comments on the European Communities' reply to Panel question No. 175.
295 European Communities' oral statement at the firs t substantive meeting, para. 25 referring to GATT
Panel Report, EEC – Dessert Apples, para. 12.30.
296 European Communities' reply to Panel question No. 46.
297 European Communities' first written submission, para. 239 referring to Appellate Body Report,
EC – Poultry, paras. 111 and 113.
298 European Communities' first written submi ssion, para. 240 referring to Panel Report, US – Hot
Rolled Steel , para. 7.268; European Communities' oral statement at the first substantive meeting, para. 26;
European Communities' oral statement at the second substantive meeting, para. 28.
299 European Communities' oral statement at the first substantive meeting, para. 26.
300 United States' second written submission, para. 12.
301 United States' second written submission, para. 28.

pattern of non-uniformity is misplaced because it dr aws this proposition from two reports that are not
on point. First, with respect to the Appellate Body's report in EC – Poultry, the United States submits
that the relevant issue there was not the meaning of uniform administration under Article X:3(a) of the
GATT 1994 but, rather, whether or not Article X of the GATT 1994 applies to a particular import
licence issued with respect to a particular shipment.
302 The United States submits that, similarly, the
European Communities relies upon a singl e sentence in the panel report in US – Hot-Rolled Steel .303
According to the United States, the panel in th at case was not referring to a pattern as a generic
requirement for making out a claim under Article X: 3(a) of the GATT 194, but a pattern that might
have enabled the panel to determine whether the particular application of the anti-dumping law at
issue in that case was uniform or not. 304 The United States contends that the claim at issue in the
present dispute is very different from the claim Japan was making in US – Hot-Rolled Steel . The
United States submits that it is not arguing that a particular application of EC customs law represents
non-uniform administration. Rather, it is arguing that the EC system of customs administration as a
whole does not result in the uniform administration that Article X:3(a) of the GATT 1994 requires.
305
(b) Analysis by the Panel
7.151 The Panel considers that the burden of proof for the purposes of the United States' claim
under Article X:3(a) of the GATT 1994 is closely linke d to the Panel's interpretation of the terms of
that Article. Of particular relevance to the burden proof in the context of this dispute is the Panel's
finding in paragraph 7.135 above that a notion of uniformity applies in the context of Article X:3(a) of
the GATT 1994, the threshold for which differs de pending upon the nature of the challenge in
question. Such a notion of the term "uniform" would appear to entail a different burden of proof
corresponding to the form, nature and scale of the administration that is being challenged under
Article X:3(a) of the GATT 1994 in a particular case . As the Panel stated in paragraph 7.135 above,
the narrower the challenge, the higher the degree of uniformity required; the broader the challenge,
the less exacting the standard of uniformity to be applied.
7.152 With respect to this dispute, the Panel recalls its finding in paragraph 7.64 above that its terms
of reference authorise the Panel to consider th e manner of administration by the national customs
authorities of the member States of the Community Customs Code, the Implementing Regulation, the
Common Customs Tariff, the TARIC and related measures in the areas of customs administration
specifically identified in the United States' request for establishment of a panel. Pursuant to the
Panel's terms of reference, the Panel is precluded from considering "as such" challenges of the design
and structure of the EC system of customs administration, including challenges of the design and
structure of the EC system in the areas of custom s administration specifically identified in the United
States' request for establishment of a panel. Howe ver, we are authorized to consider particular
instances of administration of the Community Customs Code, the Implementing Regulation, the
Common Customs Tariff and the TARIC and related measures in the areas of customs administration
specifically identified in the United States' request in particular instances which have been relied upon
by the United States in the context of this dispute.
7.153 In the light of our terms of re ference, for the purposes of reso lving this dispute, the Panel
considers that it is only necessary to determine the bur den of proof applicable for particular instances
of administration of the Community Customs Code, the Implementing Regulation, the Common
Customs Tariff and the TARIC and related measures in the areas of customs administration
specifically identified in the United States' request , which have been relied upon by the United States
in the context of this dispute. In the Panel's view , as will be explained in further detail below, such

302 United States' oral statement at the first substantive meeting, paras. 17-19.
303 United States' second written submission, para. 33.
304 United States' second written submission, para. 35.
305 United States' second written submission, paras. 36-38.

instances constitute narrow challenges when considered in the context of the EC system of customs
administration as a whole. Therefore, in the Panel's view, a high degree of uniformity should apply in
the context of such instances.
7.154 We do not consider it necessary to determine precisely how demanding the requirement of
uniformity should be in this regard. The Panel c onsiders that this will depend upon the circumstances
surrounding the particular instance of alleged non-uniform administration. In deciding whether or not
the standard has been met in a particular instance, the Panel considers it necessary to bear in mind the
minimum standards of due process that underlie Article X:3(a) of the GATT 1994.
306 I t i s a l s o
necessary to ensure that the threshold is not set so high that Article X:3(a) of the GATT 1994 could
never be violated as this is clearly not what the dr afters of Article X:3(a) of the GATT 1994 intended.
In addition, it is the Panel's view that a viol ation of Article X:3(a) of the GATT 1994 will be
demonstrated if the non-uniform administration in question results in an actual or possible future
adverse impact on the trading environment.307
6. Specific alleged violations of Article X:3(a) of the GATT 1994
7.155 In this section of the Panel's report, the Pane l will address the particular instances of alleged
violations of Article X:3(a) of the GATT 1994 regarding the administration of the Community
Customs Code, the Implementing Regulation, the Common Customs Tariff, the TARIC and related
measures in the areas of customs administration specifically identified in the United States' request for
establishment of a panel. Before doing so, howev er, the Panel considers it necessary to explain its
understanding of certain aspects of the manner in which the EC system of customs administration
functions because this is important context for the ex amination of the particular instances of alleged
violations of Article X:3(a) of the GATT 1994 in resp ect of which such aspects have been raised. To
the extent necessary, the Panel will consider other aspects of the EC system of customs administration
when examining the particular instances of alleged violations of Article X:3(a) of the GATT 1994.
(a) Relevant aspects of the EC system of customs administration
(i) Administration by customs authorities in the EC member States
7.156 The Panel has been informed by the European Communities that the administration of EC
customs law is primarily the r esponsibility of the member States.
308 The Panel understands that EC
customs law is directly applicable in the member St ates, which means that such law must be fully and
uniformly applied in all the member States. 309 Moreover, the European Communities has informed
the Panel that the customs authorities of the member State authorities must apply EC customs law in
accordance with all available guidance regarding its proper meaning, including the EC Treaty and the
case law of the ECJ.310

306 See paragraph 7.134 above.
307 We note in this regard that Article 3.8 of th e DSU provides that: "In cases where there is an
infringement of the obligations assumed under a covered agreement, the action is considered prima facie to
constitute a case of nullification or impairment. This me ans that there is normally a presumption that a breach
of the rule has an adverse impact on other Members partie s [sic] to that covered agreement, and in such cases, it
shall be up to the other Member against whom the complaint has been brought to rebut the charge".
308 European Communities' reply to Panel question No. 146.
309 Case 106/77, Simmenthal II, [1978] ECR 629 (Exhibit EC-5).
310 European Communities' reply to Panel question No. 77.

(ii) Institutions and mechanisms involved in the administration of the EC customs laws
 Institutions and mechanisms applicable gene rally in all areas of customs administration
311
 Customs Code Committee
7.157 The European Communities identifies the Cu stoms Code Committee as an important
institution that helps to ensure uniform admi nistration of EC customs law among the customs
authorities of the member States.
312 As noted in paragraph 2.51 above in the factual aspects of the
Panel's report, the Customs Code Committee is es tablished by Articles 247a(1) and 248a(1) of the
Community Customs Code. The Customs Code Co mmittee is composed of representatives from each
member State and is chaired by a representative of the Commission. Article 249 of the Community
Customs Code states that the Customs Code Commi ttee has the authority to examine any question
concerning customs legislation which is raised by its chairperson, either on his or her own initiative or
at the request of a member State's representative. A similar provision is found in Article 8 of
Regulation No. 2658/87 establishing the Common Customs Tariff, according to which the Committee
may examine any matter referred to it by its chairper son, either on his or her own initiative or at the
request of a representative of a member State, concerning the Combined Nomenclature or the TARIC.
The European Communities notes that the total numbe r of meetings of the Customs Code Committee
was 77 in 2002 (with 113 ½ days of meetings), 47 in 2003 (with 77 ½ days of meetings) and 85 in
2004 (with 118 ½ days of meetings).
313
7.158 The Panel understands that, in practice, th e Customs Code Committee gives opinions on
amendments to the Community Customs Code or implementing measures proposed by the
Commission; examines questions concerning the interpretation of customs provisions or definitions of
terms used in customs legislation; and exerci ses powers granted by virtue of specific customs
legislation. More particularly, in the tariff classification area , the Panel has been informed by the
European Communities that the Customs Code Comm ittee is frequently asked to provide opinions on
measures proposed by the Commission which will secure a uniform application of the Common
Customs Tariff, such as classification regulations and EC explanatory notes. In addition, the
Committee may adopt opinions on specific issues of tariff classification. 314 In the customs valuation
area, the Panel has been informed by the European Communities that the Customs Code Committee
will consider divergence in the application of EC customs law on customs valuation which is brought
before it by the Commission or a member State. 315 After such consideration, the Customs Code
Committee may issue opinions, which may take the fo rm of conclusions or commentaries on the rules
on customs valuation.316 Additionally, the Commission will consult the Customs Code Committee on
draft amendments to the valuation rules contained in the Implementing Regulation.317

311 The Panel notes that, in addition to the institutions and mechanisms dealt with below, the European
Communities referred to budg etary and financial control mechanisms in place in the European Communities,
which it argues helps to achieve uniform administration of EC customs law by the customs authorities of the
member States: European Communities' first written s ubmission, para. 158. These budgetary and financial
control mechanisms are dealt with in paragraph 2.33 above.
312 European Communities' first written submission, para. 85.
313 European Communities' reply to Panel question No. 58(c). The European Communities also refers
to Exhibit EC-103, which contains an overview of the number of meetings per section of the Customs Code
Committee.
314 European Communities' reply to Panel question No. 58(i)(iii).
315 European Communities' reply to Panel question No. 58(j)(ii).
316 These conclusions and commentaries are contained in Compendium of Customs Valuation Texts of
eth Customs Code Committee, 2 December 2004 (Exhibit EC-37).
317 European Communities' reply to Panel question No. 58(j)(iii).

7.159 It is apparent that not all matters entailing divergence in the administration of EC customs law
between the customs authorities of the member States are brought before the Customs Code
Committee for its consideration. 318 Moreover, the Committee may consider matters only if raised by
the chairperson of the Committee or at the request of the member States' representatives. 319 T h e
European Communities has stressed that the Customs Code Committee will not substitute itself for
the individual customs authorities nor the competent courts of the member States in pending cases
and, therefore, it will not usually examine individual cases. 320 Even in cases where matters are
brought before the Customs Code Committee, the European Communities has acknowledged that,
under the Rules of Procedure of the Customs Code Committee, there is no specific provision
bestowing the Commission with the power to ask cu stoms authorities of the member States to provide
specific information.321 Furthermore, in such cases, difficulties in coming to an agreement and delays
may occur due, inter alia to the fact that the Committee is composed of representatives from each
member State322 and that decisions are determined by means of a qualified majority vote.323
7.160 In addition, it is notable that the opinions of the Customs Code Committee are not legally
binding on the customs authorities of the member States. 324 As stated by the European Communities
itself, the Customs Code Committee does not have th e authority to take decisions with respect to
customs matters. Rather, the Customs Code Commi ttee merely assists the competent EC institutions
in the context of the management or regulat ory procedures foreseen under the Customs Code
Committee.325 However, even in this capacity, it is unclear whether the opinions and

318 In the EC Court of Auditors Special Report No. 23/2000 concerning valuation of imported goods for
customs purposes dated 14 March 2001, the EC Court of Auditors stated that "[m]any complex subject matters
within the valuation area are not brought before the Valuation Committee.": EC Court of Auditors Special
Report No 23/2000 concerning valuation of imported goods for customs purposes, 14 March 2001, para. 29
(Exhibit US-14).
319 Article 249 of the Community Customs Code provides that: "The Committee may examine any
question concerning customs legislation which is raised by its chairman, either on his own initiative or at the
request of a Member State's representative." (Exhibit US-5).
320 European Communities' replies to Panel question Nos. 58(j)(i) and 58(j)(v).
321 European Communities' reply to Panel question No. 58(j)(v). The European Communities refers to
Article 10 of the EC Treaty in this regard, which is dealt with below in paragraph 7.161 et seq.
322 In the EC Court of Auditors Special Report No. 23/2000 concerning valuation of imported goods for
customs purposes dated 14 March 2001, the EC Cour t of Auditors stated that: "Although the Valuation
Committee offers a platform for the Member States to es tablish a common approach to similar individual cases,
inevitably, with 15 different customs authorities, progre ss towards achieving consensus is slow. The Valuation
Committee frequently becomes entrenched in details an d disagreements between the representatives of the
Member States"": EC Court of Auditors Special Report No 23/2000 concerning valuation of imported goods for
customs purposes, 14 March 2001, para. 26 (Exhibit US-14). In addition, the EC Court of Auditors notes that
"the Valuation Committee is too cumbersome a vehicle to achieve the Commission objectives": EC Court of
Auditors Special Report No 23/2000 concerning valuation of imported goods for customs purposes, 14 March
2001, para. 29 (Exhibit US-14). Further, in a statement made by the Head of Customs Legislation Unit,
European Commission in June 2004, Michael Lux noted that "organising a majority decision [of the Customs
Code Committee] will be more difficult, since one will have to negotiate with 25 – instead of 15 – Member
States. With so many members, the chairing of meetings will have to be firm to obtain any results at all.": EU
enlargement and customs law: What will change?, Taxud/463/2004, Rev. 1, 14 June 2004, p. 4 (Exhibit US-15).
In addition, in the context of this dispute, the European Communities has acknowledged that there are no
specific time limits for how long a matter can remain on the agenda of the Customs Code Committee: European
Communities' reply to Panel question No. 159(a).
323 Article 6 of the Rules of Procedures of the Customs Code Committee, 5 December 2001 (Exhibit
US-9).
324 Joined Cases 69 and 70/76, Dittmeyer, [1977] ECR 231 (Exhibit EC-31).
325 European Communities' first written submission, para. 266. See paragraphs 2.20 – 2.21 above,
where the regulatory and management procedures are described.

recommendations made by the Customs Code Committ ee to the EC institutions can be enforced.
326
Therefore, in the light of the foregoing, it would appear that the Customs Code Committee has limited
power to impose uniform administration of EC customs law on customs authorities of the member
States.
327
 Article 10 of the EC Treaty
7.161 The European Communities submits that the "dut y of cooperation" contained in Article 10 of
the EC Treaty makes an important contribution to the uniform administration of EC customs law by
the customs authorities of the member States.328
7.162 Article 10 of the EC Treaty provides that:
"Member States shall take all appropriate me asures, whether general or particular, to
ensure fulfilment of the obligations arisi ng out of this Treaty or resulting from action
taken by the institutions of the Community. They shall facilitate the achievement of
the Community's tasks.
They shall abstain from any measure which could jeopardise the attainment of the
objectives of this Treaty."
7.163 According to the European Communities, the " duty of cooperation" in Article 10 of the EC
Treaty is legally binding and directly applicable in all member States. The European Communities
submits that, therefore, the obligation contained in Article 10 of the EC Treaty must be respected by
member States' authorities in the administration of EC customs law. The European Communities also
submits that, where a member State infringes the duty of cooperation, this constitutes an infringement
of the EC Treaty, against which the European Commission can bring infringement proceedings
pursuant to Article 226 of the EC Treaty.329
7.164 Notably, Article 10 of the EC Treaty does not prescribe the "appropriate measures" which the
member States (including customs authorities of the me mber States) must take to ensure fulfilment of
their obligations under EC law, including EC custom s law. Further, the European Communities has
only referred to a handful of cases in which Artic le 10 of the EC Treaty was invoked as a basis for
ensuring uniform administration of EC customs law among the customs authorities of the member

326 In the EC Court of Auditors Special Report No. 23/2000 concerning valuation of imported goods for
customs purposes dated 14 March 2001, the EC Court of Auditors stated that "the Commission has not the
authority to enforce the results of the Valuation Commi ttee's work": EC Court of A uditors Special Report No
23/2000 concerning valuation of imported goods for customs purposes, 14 March 2001, para. 29 (Exhibit US-
14).
327 In the EC Court of Auditors Special Report No. 23/2000 concerning valuation of imported goods for
customs purposes dated 14 March 2001, the EC Court of Auditors stated that: "The Commission uses the
[Valuation section of the Customs Code Committee] to try to achieve its objective of ensuring that the valuation
rules are applied correctly and in a uniform manner but has no powers to direct Member States to adopt a
particular interpretation of the customs valuation legislation. The Commission views its mission as to
encourage any form of convergence of practice between the administrations represented in the Valuation
Committee, and has to rely on discussion, persuasion and encouragement as the means of achieving common
treatment of identical problems in Member States.": EC Court of Auditors Special Report No 23/2000
concerning valuation of imported goods for customs purposes, 14 March 2001, para. 26 (Exhibit US-14).
328 European Communities' reply to Panel question No. 58(l).
329 European Communities' reply to Panel question No. 147. Infringement proceedings under, inter
alia, Article 226 of the EC Treaty are discussed in paragraphs 7.169 – 7.170 below.

States.330 Therefore, the Panel observes that the extent to which Article 10 of the EC Treaty
contributes to the uniform administration of EC customs law is unclear.
 Preliminary reference system
7.165 According to Article 234 of the EC Treaty, na tional courts of the member States may refer
any question regarding the interpretation of EC law to the ECJ. The European Communities has
informed the Panel that national cour ts or tribunals against whose decisions there is a judicial remedy
under national law, are entitled, but in principle no t required, to refer a question to the ECJ for a
preliminary ruling. Subject to certain exceptions, member States' courts against whose decisions there
is no judicial remedy under national law are obliged to refer such questions to the ECJ.
331
7.166 The European Communities submits that the main objective of the ECJ preliminary reference
system provided for under Article 234 of the EC Treaty is to guarantee the uniform interpretation and
application of EC law, including EC customs law, throughout the member States. The European
Communities further submits that it is through prel iminary rulings issued by the ECJ, which are
binding on all courts of the member States, that divergences within and between the member States
can be avoided and the effective application of Community law be assured.332
7.167 The Panel notes that the preliminary referenc e system only becomes operational when two
cumulative conditions have been satisfied. The firs t condition is that a trader disgruntled by the
decision of a customs authority in a member State must appeal to a national court of the member State
in question. Given the cost and time implicated by such an appeal, it is unclear whether traders will
resort to such an option in all cases in which no n-uniform application of EC customs law among the
customs authorities of the member States becomes apparent. Notably, a trader is not authorized under
EC law to proceed directly to the ECJ for a pr eliminary ruling. The second condition is that the
national court to whom the trader has appealed must be obliged to or must decide to refer the matter to
the ECJ for a preliminary ruling. Even in cases where a national court is technically obliged to refer a
matter to the ECJ for a preliminary ruling 333, there are exceptions to this obligation. In particular, a
national court is not obliged to refer a matter to the ECJ for a preliminary ruling when: the question
raised is irrelevant; the provision of EC law in qu estion has already been interpreted by the ECJ; or
the correct application of EC law is so obvious as to leave no scope for any reasonable doubt.334
7.168 The European Communities provided the Panel with statistics concerning the use of the
preliminary reference system in the context of the administration of EC customs law, including in the
specific areas of custom administration listed in the United States' request for establishment of a
panel. The European Communities explains that th e total number of preliminary rulings requested by

330 In particular, in the tariff classification area , the European Communities refers to Case C-206/03,
Commissioners of Customs & Excise v. SmithKline Beecham , Order of the Court of 19 January 2005 (not yet
reported) (Exhibit EC-142) and to Case C-453/00, Kühne & Heitz v. Productschap voor Pluimvee en Eieren
[2004] ECR I-837 (Exhibit EC-61). In the area of customs procedures (and, specifically, with respect to the
imposition of penalties in the context of violations of EC customs law), the European Communities refers to
Case C-213/99 José Teodoro de Andrade v. Director da Alfândega de Leixoes, de Andrade [2000] ECR I-11083
(Exhibit US-31), Case C-91/02 Hannle + Hofstetter Internationale Spedition v. Fianzlandesdirektion für Wien,
Niederosterreich Judgment of 16 October 2003 (not yet reported) (Exhibit EC-143), Case C-36/94 Siesse v.
Director da Alfândega de Alcântara , Siesse [1995] ECR I-3573 (Exhibit EC-40), Case 68/88 Commission v.
Greece 1989 [ECR] 2965 (Exhibit EC-38).
331 European Communities' first written submission, para. 95.
332 European Communities' first written submission, para. 185.
333 That is, because there is no j udicial remedy under national law fro m the national court or where a
national court considers that an act of a Community institution is invalid.
334 Case C-495/03 Intermodal Transports BV v. Staastsecretaris van Financiën , 15 September 2005,
para. 33 (Exhibit US-71) and Case 283/81, Cilfit, [1982], ECR 3415, paras. 10-16 (Exhibit EC-160).

member State courts during the period 1995 – 2005 was 2,314, of which 249 concerned customs
administration. The European Communities notes that, of the 249 requests for preliminary ruling in
the area of customs administration, 55 related to tariff classification, 9 related to customs valuation
and 162 concerned customs procedures.
335 The Panel notes that the use of the preliminary reference
system to secure uniform administration by the cu stoms authorities of the member States in the area
of customs administration during the period of 1995 – 2005 appears low, especially in the light of the
European Communities assertion that literally milli ons of customs decisions are taken by customs
authorities in the member States each year in the European Communities.336
 Infringement proceedings
7.169 "Infringement proceedings" may be instituted before the ECJ against member States for
failure to fulfil an obligation under EC law pursu ant to Articles 226-228 of the EC Treaty. The
European Communities submits that infringement proceedings against authorities of the member
States play an important role in ensuring uniform administration among customs authorities of the
member States of EC customs law.
337
7.170 The European Communities notes that, since 1995, 83 infringement proceedings have been
commenced by the EC Commission against the member States concerning the administration of
customs law.338 Of those 83 cases, 2 cases related to tariff classification, 1 case related to customs
valuation and 44 cases related to customs procedures. 339 The Panel notes that the use of infringement
proceedings to secure uniform administration by th e customs authorities of the member States in the
area of customs administration during the period of 1995 – 2000 appears low, especially in the light of
the European Communities assertion that literally millions of customs decisions are taken each year in
the European Communities.
340
 The European Ombudsman
7.171 The European Communities subm its that the European Ombuds man is a mechanism that
contributes to the uniform administration of EC customs law by the customs authorities of the
member States.
341
7.172 The Panel considers that the extent to wh ich the European Ombudsman is effective in
ensuring uniform administration among the customs au thorities of the member States of EC customs
law is unclear in the light of the following facts. First, it is apparent that the European Ombudsman's
jurisdiction is limited to consideration of comp laints of maladministration on the part of the
institutions and bodies of the European Union. 342 Therefore, it would appear that the European
Ombudsman cannot investigate complaints against cu stoms authorities in the member States for the
non-uniform application of EC customs law. Second, since 1999, the European Ombudsman has
issued only four decisions on matters of customs administration. In one case, the European
Ombudsman made a critical remark. In tw o cases, the European Ombudsman found no
maladministration. In a further case, the complaint was withdrawn, so that the European Ombudsman

335 European Communities' reply to Panel question No. 162.
336 European Communities' closing statement at the second substantive meeting, para. 20.
337 European Communities' first written submission, para. 46; European Communities' second written
submission, para. 172; European Communities' oral statement at the second substantive meeting, para. 49.
338 European Communities' reply to United States' question No. 1.
339 European Communities' reply to Panel question No. 164.
340 European Communities' closing statement at the second substantive meeting, para. 20.
341 European Communities' first written submission, para. 50; European Communities' second written
submission, para. 167.
342 The European Ombudsman at a Glance, p. 2 (Exhibit US-82).

did not take a decision on the substance of the complaint. 343 The Panel notes that the use of the
European Ombudsman to secure uniform administra tion by the customs authorities of the member
States in the area of customs administration since 1999 appears low, especially in the light of the
European Communities assertion that literally millions of customs decisions are taken each year in the
European Communities.344
 Complaints to the EC Commission
7.173 The European Communities submits that any individual with a concern regarding the
administration of customs matters can bring the issu e to the attention of the EC Commission, which
will consider the matter and respond in accordance with the Commission's Code of Conduct.345
7.174 The European Communities has informed the Panel that, during the period of 1996 – 2004,
over 17,000 letters were received by the EC Commission from private bodies and operators on
customs matters. The European Communities noted that it was not possible to determine the number
of letters that concerned the areas of tariff classification, customs valuation and customs procedures,
but was willing to provide the Panel with a re presentative table for the period of 2002 – 2005.
346
Further, the European Communities informed the Pane l that it was not feasible to explain the reaction
and/or action taken by the Commission in each of the cases and the time taken by the Commission to
respond.347
 Restrictions on the adoption of national measures by customs authorities of the
 member States
7.175 The European Communities submits that na tional measures implemented by customs
authorities of the member States (including national practices and provisions) must strictly respect EC
law and may otherwise be set aside by the courts. 348 Nevertheless, the European Communities itself
submits that a member State may act to supplement provisions contained in EC law if it is explicitly
authorized to do so
349, or if a specific issue is not covered by EC law. 350 Moreover, the European
Communities submits that member States' authoriti es are not prevented from issuing administrative
guidelines or other non-binding documents for administrative purposes, although the ECJ has
indicated that such measures cannot derogate in any way from the application of EC law by the
customs authorities and the courts. 351 More specifically, the ECJ has stated that national authorities
cannot issue binding guidelines for the interpretation of EC law. Accordingly, the interpretation of

343 European Communities' reply to Panel question No. 165 referring to the Reebok case (Exhibit
US-52).
344 European Communities' closing statement at the second substantive meeting, para. 20.
345 European Communities' first written submission, para. 275 referring to Commission communication
to the European Parliament and the European Ombudsman on relations with the complainant in respect of
infringements of Community law, 10 October 2002 (Exhibit EC-11) and to Rules of Procedure of the
Commission, 8 December 2000 (Exhibit EC-12).
346 European Communities' reply to Panel question No. 166 referring to Tables of correspondence 2002
– 2005, DG TAXUD (Exhibit EC-149).
347 European Communities' reply to Panel question No. 166.
348 European Communities' reply to Panel question No. 78 referring to Case 230/78, Eridania-
349 The European Communities clarif ies that the authorisation does not necessarily have to be
"explicit"; it is sufficient if it follows from the text of the Community legislation.
350 European Communities' reply to Panel question No. 78; European Communities' reply to Panel
question No. 157.
351 European Communities' reply to Panel question No. 157.

EC law by national administrations and courts must be guided exclusively by the text of EC law, and
all contrary provisions or guidelines of national origin must be set aside.
352
7.176 The European Communities notes that, in areas th at are not regulated by EC law, member
States are free to legislate and to administer their own laws. The European Communities
acknowledges that there are no mechanisms in place at the EC level to ensure a uniform interpretation
and application of the laws of member States in such areas. However, the European Communities
submits that, in such areas, the member States may still be required to respect certain principles of EC
law, including Article 10 of the EC Treaty discussed in paragraph 7.161 et seq above and ECJ
jurisprudence.353
 Consultations and mutual assistance between member State customs authorities
7.177 The European Communities has acknowledged that there is no general obligation contained in
EC customs law requiring the customs authorities of the member States to consult other customs
authorities of other member States before making cu stoms decisions, although obligations of mutual
consultation may arise in specific situations, for inst ance in the context of the issuance of BTI, which
is discussed in more detail in paragraph 7.181 below.354 Further, Council Regulation (EC) No. 515/97
on mutual assistance between th e administrative authorities of th e member States and cooperation
between the latter and the Commission seeks to ensure the correct application of, inter alia , EC
customs law. 355 The European Communities explains that, under Regulation No. 515/97, member
States have the general right to request relevant information from other member States, on either
persons or transactions involving imports of goods, from other administrations. Member States also
have the obligation to provide assistance (including communication of all information in their
possession) where they consider it useful for ensuri ng compliance with customs legislation, or where
breaches (actual or potential) of customs legislation arise.356
 Best practice guidelines
7.178 Article 4 of Decision No. 253/2003/EC of th e European Parliament and the Council of
11 February 2003 adopting an action programme for cu stoms in the Community refers to the need,
inter alia to identify, develop and apply best worki ng practices, especially in the areas of post-
clearance audit control, risk analysis and simplif ied procedures; to improve the standardization and
simplification of customs procedures, systems and controls; to improve the coordination of and co-
operation between laboratories carrying out analysis for customs purposes in order to ensure, in
particular, a uniform and unambiguous tariff classifi cation throughout the European Union; and to
develop common training measures and the organisati onal framework for customs training that would
respond to the needs arising from programme actions. The European Communities refers to a list of
programme actions which fall into the above-mentioned categories.
357 The European Communities
also submits that the Community and its member States have undertaken a series of actions to

352 European Communities' reply to Panel question No. 78.
353 European Communities' reply to Panel question No. 85.
354 The European Communities submits that examples would include the following provisions: single
authorisation for end-use (Article 292 [2] of the Implementing Regulation); customs procedures with economic
impact (Article 500 of the Implementing Regulation); regular shipping service (Articles 313a-313b of the
Implementing Regulation); proof of Community status by authorized consignor (Article 324e of the
Implementing Regulation); simplified transit procedure for air transport - level 2 (Article 445 of the
Implementing Regulation); simplified transit procedure for sea transport - level 2 (Article 448 of the
Implementing Regulation): European Communities' reply to Panel question No. 79.
355 Exhibit EC-42.
356 European Communities' reply to Panel question No. 149.
357 Exhibit EC-117.

improve working practices.358 In the area of tariff classification, the European Communities refers to
the EBTI guidelines as a form of best working practice guidelines. 359 Regarding the best practice
guidelines that exist in the area of customs valuation , the European Communities refers to the
Compendium of Customs Valuation texts 360, which is regularly updated, and into which all relevant
conclusion and commentaries are integrated. 361 Regarding best working practice guidelines in the
customs procedure area (audit following release for circulation, penalties for infringements of EC
customs legislation, processing under customs contro l and local clearance procedures), the European
Communities refers to a Risk Analysis Guide issued to Member States in 1998 362; a Standard Risk
Management Framework issued in 2002 363; the Customs Audit Guide 364; and Council Resolution of
29 June 1995 on the effective and uniform applicati on of Community law and on the penalties
applicable for breaches of Community law in the internal market.365
Institutions and mechanisms applicable in specific areas of customs administration referred to
in the United States' request for establishment of a panel
 Tariff classification
7.179 The European Communities notes that the administ ration of EC rules in the area of tariff
classification is, in principle, the responsibility of the customs authorities of the member States.
However, according to the European Communities, there are a number of tools to ensure uniform
administration by the customs authorities of the me mber States, including classification regulations,
explanatory notes to the Common Customs Tariff, opinions of the Customs Code Committee and BTI.
These tools are explained in the factual aspects of the Panel's report in paragraphs 2.37 – 2.48 above.
7.180 The European Communities submits that, wh en there is disagreement among customs
authorities of the member States regarding tariff classification, the customs authorities concerned
should consult with one another. Nevertheless, the European Communities acknowledges that the
customs authorities of the member States are not obliged to consult with one another.
366 T h e
European Communities also submits that, if the disagreement persists, the matter must be raised with
the Customs Code Committee. However, as noted above in paragraph 7.159, the Customs Code
Committee may consider matters only if raised by the chairperson of the Committee or a member
State representative.367 Furthermore, as submitted by the European Communities itself, the Customs
Code Committee will not usually examine individual cases of divergent application of EC customs
law, including in the area of tariff classification. 368 Moreover, the Panel recalls that the opinions of
the Customs Code Committee are not legally binding. 369 Additionally, the Panel notes that EC
customs law does not appear to make provision for the situation where a customs authority of a
member State refuses to consult with a customs authority of another member State regarding
disagreements concerning the tariff classification of a particular good.

358 European Communities' reply to Panel question No. 83.
359 European Communities' reply to Panel question No. 167 referring to Exhibit EC-32. These
guidelines are discussed in more detail in paragraph 7.181 below.
360 This Compendium, which is contained in Exhibit EC-37, is discussed in more detail in
paragraph 7.186 et seq below.
361 European Communities' reply to Panel question No. 167.
362 Exhibit EC-150.
363 Exhibit EC-151.
364 Exhibit EC-90.
365 European Communities' reply to Panel question No. 167 referring to Exhibit EC-41.
366 European Communities' reply to Panel question No. 56.
367 Article 249 of the Community Customs Code.
368 European Communities' replies to Panel question Nos. 58(j)(i) and 58(j)(v).
369 Joined Cases 69 and 70/76, Dittmeyer, [1977] ECR 231 (Exhibit EC-31).

7.181 With respect to the issuance of BTI by th e customs authorities of the member States,
Article 8(1) of the Implementing Regulation provides that a copy of the application for BTI and a
copy of BTI notified to the applicant must be transmitted to the EC Commission, which are then
stored in a central database run by the EC Commission – namely, the EBTI database. According to
the administrative guidelines issued by the Commi ssion on the EBTI system, the EBTI database
should be consulted by customs authorities prior to the issuance of BTI in cases where there is a doubt
regarding the correct classification, or where different headings merit consideration.
370 N o t a b l y ,
however, the European Communities acknowledges th at the administrative guidelines on the EBTI
system are not legally binding and, therefore, ther e is no obligation on the part of customs authorities
of the member States to consult the EB TI database when they classify a good. 371 The European
Communities submits that, nevertheless, in the admini stration of EC customs law, all member States
are bound by the duty of cooperation contained in Article 10 of the EC Treaty according to which
member States must use all tools available to ensure the proper and uniform administration of EC
customs law, including the EBTI system.
372 Moreover, the European Communities explains that
customs authorities of the member States are not oblig ed to consult the EBTI database because, in the
majority of cases, the classification of goods is unprobl ematic. Therefore, according to the European
Communities, it would be dispropor tionate and result in a consider able slowing-down of customs
procedures, to require consultation of the EB TI database in each and every case involving a
classification of goods by customs authorities of the member States. 373 The European Communities
further explains that the purpose of BTI is primar ily to provide holders w ith a measure of legal
certainty as regards the tariff classification of goods throughout the European Communities, rather
than to ensure uniform administration of EC rules in the area of tariff classification.374
7.182 Concerning the revocation of BTI, the Panel understands that, in the context of the EC system
of customs administration, such revocation is not imposed on other customs authorities operating
within the context of the same system and there is no obligation to inform other customs authorities of
the decision to revoke BTI. 375 For example, cases may arise wher e a customs authority of a member
State considers that its interpretation of a particul ar tariff heading is erroneous and decides to revoke
BTI that was issued in accordance with its former interpretation. The Panel observes that, if the
system of customs administration does not provide for uniform application of the revocation and/or
does not oblige the revoking customs authority to cons ult and/or to notify other customs authorities of
the decision to revoke, the customs authorities in other member States may continue classifying under
the heading formerly used by the revoking customs authority.
376

370 Administrative Guidelines on the European Bi nding Tariff Information (EBTI) System and its
Operation, 28 October 2004, p. 7 (Exhibit EC-32).
371 European Communities' reply to US question No. 3 following the first substantive meeting.
372 European Communities' reply to Panel question No. 55. Article 10 of the EC Treaty is discussed
above in paragraph 7.161 et seq.
373 European Communities' reply to US question No. 3 following the first substantive meeting.
374 According to the European Communities, this ob jective can be deduced from numerous provisions
of Community law concerning the granting and effect of binding tariff information, in particular Article 12 of
the Community Customs Code and Articles 5, 10, and 11 of the Implementing Regulation: European
Communities' reply to Panel question No. 50.
375 The Panel understands that, under EC customs law, there is no provision that provides that the
revocation of BTI is immediately binding on the customs authorities of all member States. Furthermore, we
understand that there is no specific provision in EC cu stoms law requiring the transmission of the revocation of
BTI by customs authorities of the member States to the Commission.
376 Indeed, the Advocate General in the decision in Timmermans Transport & Logistics BV v.
Inspecteur der Belastingdienst Douanedistrict Roosendaal and Hoogenboom Production Ltd v. Inspecteur der
Belastingdienst Douanedistrict Rotterdam pointed out the risks of non-uniform administration in such a
scenario, stating that:

 Customs valuation
7.183 The European Communities submits that the administration of EC rules in the area of customs
valuation is primarily the responsibility of the customs authorities of the member States. 377 However,
according to the European Communities, there are a number of tools to ensure uniform administration
by the customs authorities of the member States , including amendments to EC rules regarding
customs valuation, opinions of the Customs C ode Committee and the Compendium of Customs
Valuation texts. These tools are explained in the factual aspects of the Panel's report in paragraphs
2.49 – 2.56 above.
7.184 The European Communities submits that, where a need for further detailed rules on valuation
exists, the EC Commission may, in accordance with the procedure of Article 247 of the Community
Customs Code, amend the valuation rules cont ained in the Implementing Regulation, which
amendments will be legally binding in all member States.378
7.185 With respect to the utility of opinions of the Customs Code Committee to achieve uniform
administration by the customs authorities of the me mber States in the customs valuation area, the
European Communities notes that the Custom s Code Committee may adopt guidelines and
conclusions on questions of customs valuation wherever necessary. 379 In this regard, the Panel recalls

"[T]he view may be taken that BTI must be revoked where the customs authorities have actually made
an error (i.e. one established as such rather than one which they merely claim to have committed) in the
interpretation of the customs nomenclature and, therefore, in the tariff classification of the goods covered by the
BTI in question. ...
However, I do not share the opinion ... that custom s authorities are entitled to revoke BTI in cases
where they take the view at their own discretion (i.e. on the basis of their assessment alone) that they have made
an error in the interpretation of the customs nomenclature and in the correspon ding tariff classification. After
all, such revocation is not necessarily justified because the error in question has not necessarily been established
as such. Furthermore, the possibility of revoking BTI in this way is not readily compatible either with the
objective of the uniform application of the customs nomenclature or with the objective of legal certainty pursued
by the introduction of BTI.
As regards the objective of the uniform application of the customs nomenclature, I consider that, while
a Commission decision ordering the revocation of BTI is necessarily aimed at, and has the effect of ensuring the
correct and uniform applica tion of the customs nomenclature, the same cannot be said of the practice whereby
the customs authorities decide at their own discretion to revoke BTI which they have issued following a change
in their own interpretation of the relevant nomenclature, even though, in so doing, the authorities in question
may be motivated by the desire to align their interpretation with that given by other customs authorities.
After all, it should be borne in mind that, unlike the Commission, the customs authorities issuing BTI
do not necessarily have an overview of all the BTI noti ces issued by all the other customs authorities within the
Community in respect of identical or similar goods.
In my opinion, where customs authorities consider that they have made an error in the interpretation of
the customs nomenclature when issuing BTI, they should notify the Commission to that effect in order to ensure
that it is indeed an error such as to justify revocation of the BTI in question. Only a mechanism such as this
would be capable of ensuring that the customs nomenclatur e is applied correctly, or at least uniformly. In my
view, the need for customs authorities to notify the Commission in this way follows both from the objectives of
legal certainty and the uniform application of the cust oms nomenclature pursued through the introduction of
BTI, and from the obligation incumbent on Member States, under Article 10 EC, to cooperate dutifully with the
Community institutions.": Timmermans Transport & Logistics BV v. Inspecteur der Belastingdienst -
Douanedistrict Roosendaal and Hoogenboom Production Ltd v. Inspecteur der Belastingdienst - Douanedistrict
Rotterdam, Opinion of the Advocate General, Cases C-133/02 and C-134/02, 2004 ECR I-01125, 11 September
2003, paras. 58-62 (Exhibit US-21).
377 European Communities' reply to Panel question No. 146.
378 European Communities' first written submission, para. 128.
379 European Communities' reply to Panel question No. 146.

that the opinions of the Customs Code Committee are not legally binding on the customs authorities
of the member States.
380
7.186 The European Communities also notes that th e Commission has issued a Compendium of
Customs Valuation texts. This Compendium c ontains commentaries prepared and conclusions
reached by the Customs Code Committee on specific issues of customs valuation. In addition, it
contains excerpts from relevant judgments of the ECJ on valuation issues, as well as indices of other
relevant texts. 381 However, the Panel understands that the commentaries contained in the
Compendium of Customs Valuation texts have no le gal status and, therefore, do not have binding
effect.382 Furthermore, as far as the Panel is aware, EC customs law does not oblige customs
authorities of the member States to make referen ce to the Compendium when making decisions on
customs valuation matters.
7.187 The Panel also understands that, in the area of customs valuation, there is no obligation under
EC law to consult when there is disagreement among customs authorities of the member States
regarding customs valuation in a particular situati on. The European Communities refers to what it
labels as a "best practice guide", dealing with the exchange of information between member States in
relation, inter alia , to valuation decisions. 383 The Panel notes that the document to which the
European Communities refers is a report of th e Customs 2002 Project Group "to examine possible
working tools to assist information exchange in customs valuation matters", which was set up in
response to the EC Court of Auditors Special Report No. 23/2000 concerning valuation of imported
goods for customs purposes. 384 The report of the Customs 2002 Project Group notes that current
informal bilateral contacts among customs authoritie s of the member States work well regarding the
exchange of customs valuation information but states that this situation could be usefully
complemented by a more formalized system available to all administrations. 385 As far as the Panel is
aware, such a system has not yet been implemented in the European Communities.
 Customs procedures
7.188 Concerning customs procedures, the European Communities submits that the conduct of
processing under customs control, local clearance proc edure, customs audits and the administration of
penalty provisions are the responsibility of the customs authorities of the member States authorities.
386
7.189 The Panel notes that Article 250 of the Community Customs Code provides that, where a
customs procedure is used in several member States, the decisions, measures and documents issued by
one member State shall have the same legal eff ects in other member States as such decisions,
measures taken and documents issued by each of those member States.

380 Joined Cases 69 and 70/76, Dittmeyer, [1977] ECR 231 (Exhibit EC-31).
381 European Communities' first written submission, para. 130 referring to the Compendium of
Customs Valuation texts of the Customs Code Committee, 2 December 2004 (Exhibit EC-37).
382 Indeed, the version of the Compendium availabl e on the Internet states that: "[T]he present
compendium has no legal status. It has been prepared primarily for Member States administrations but can be
circulated to all interested parties": http://ec.europa.eu/comm/taxation_customs/resources/documents/
ccut.en.pdf referred to by the European Communities in paragraph 130 of its first written submission.
383 European Communities' reply to Panel question No. 149 referring to Final report, Customs 2002
Project Group to examine possible working tools to assist information exchange in customs valuation matters,
21 November 2002 (Exhibit EC-144).
384 Exhibit US-14.
385 Final report, Customs 2002 Project Group to examine possible working tools to assist information
exchange in customs valuation matters, 21 November 2002, p. 7 (Exhibit EC-144).
386 European Communities' reply to Panel question No. 146.

7.190 The Panel understands that, in the area of customs procedures, there is no obligation under EC
law to consult when there is disagreement among cu stoms authorities of the member States regarding
customs procedures in a particular situation. The European Communities submits, and the United
States has not contested, that, with respect to local clearance procedure and processing under customs
control, where such a procedure involves more than one member State, exchange of information is
practised among customs authorities of the member States.387
General observations regarding the institu tions and mechanisms involved in the
administration of the EC customs laws
7.191 The European Communities submits that whether or not a lack of uniformity exists in a
particular system of customs administration can only be determined on the basis of all relevant facts,
which necessarily includes a consideration of all the features of the customs system in question. 388
The European Communities contends that, in the contex t of its system of customs administration, it is
not appropriate to consider a small number of inst ruments in isolation, ignoring the wider range of
instruments that contribute to the uniform interpretation and application of EC customs law. 389 In this
regard, the Panel notes that, in its consideration of the EC system of customs administration as a
whole, the Panel found the system complicated and, at times, opaque and confusing. We can imagine
that the difficulties we encountered in our e fforts to understand the EC system of customs
administration would be multiplied manifold for trader s in general and small traders in particular who
are trying to import into the European Communities.
7.192 The Panel will now consider the particular instances of alleged violations of Article X:3(a) of
the GATT 1994 regarding the administration of the Community Customs Code, the Implementing
Regulation, the Common Customs Tariff, the TARIC and related measures. More particularly, the
Panel will consider the United States' allegati ons of: non-uniform administration of the Common
Customs Tariff in the area of tariff classification; non-uniform administration of the Community
Customs Code and the Implementing Regulation in the area of customs valuation; non-uniform
administration of the Community Customs Code and the Implementing Regulation in the area of
customs procedures; and non-uniform administrati on regarding Article 221(3) of the Community
Customs Code.
(b) Allegations of non-uniform administration of the Common Customs Tariff in the area of tariff
classification
(i) Tariff classification of network cards for personal computers
 Summary of the parties' arguments

7.193 The United States submits that the case of Peacock AG v. Hauptzollamt Paderborn describes
divergence in classification of network cards for personal computers between Denmark, Netherlands,
and the United Kingdom, on the one hand, and Germany, on the other.
390 The United States notes
that, in the context of that case, the Advocate Ge neral observed that "customs authorities of various

387 European Communities' reply to Panel question No. 149.
388 European Communities' oral statement at the second substantive meeting, para. 10.
389 European Communities' first written submission, para. 260.
390 United States' first written submission, footnote 33 referring to Case C-339/98, Peacock AG v.
Hauptzollamt Paderborn, Opinion of the Advocate General, 2000 ECR I-08947, 28 October 1999, paras. 7-8
(Exhibit US-17).

Community Member States issued conflicting BTIs classifying items of LAN equipment variously
under headings 8471, 8473 and 8517 [of the Common Customs Tariff]".
391
7.194 In response, the European Communities notes that the Peacock case relates to importations
of network cards for personal computers before 1995. In 1995, the European Communities adopted
Regulation No. 1165/95 foreseeing the classification of the network cards in question under heading
8517 (electrical apparatus for line telegraphy). 392 However, Regulation No. 1165/95 did not apply to
importations that took place before its entry into force. 393 Further, the European Communities
submits that the classification of network cards for personal computers by the German customs
authorities which came to light in the Peacock case was appealed in a competent court in Germany,
which referred the question to the ECJ for a prelim inary ruling. By judgment of 19 October 2000, the
ECJ decided that the classification by the German authorities had been erroneous, and that the
products in question had to be classified under heading 8471 (automatic data-processing machines and
parts thereof).
394 The European Communities submits that, in a further ruling, the ECJ confirmed this
interpretation and decided that Regulation No. 1165/95 was invalid.395
7.195 The United States notes in response that, even though the divergence in classification of
network cards for personal computers may have been resolved through litigation that ultimately led to
an ECJ decision, this does not rebut evidence of non-uniform administration because non-uniform
administration existed and, moreover, was allowed to persist for years. The United States notes in this
regard that the divergence in network cards fo r personal computers occurred in 1995 but was not
resolved until five years later, when the ECJ rendered a decision in 2000.
396
7.196 The European Communities argues that BTI is only binding against the holder of the BTI
and is not binding against other persons. 397 Further, the European Communities submits that what is
significant is not that a divergence may occur but, ra ther, that it is addressed and removed once it
occurs. According to the European Communities, this is precisely wh at happened in the context of
the Peacock case.398 In addition, the European Communities s ubmits that the correct classification of
network equipment is a complex technical question with which many customs authorities have had to
come to terms. 399 In this regard, the European Commun ities notes that the classification of network
equipment has also led to a WTO dispute between the European Communities and the United States
concerning the correct classification of LAN equipment (including network cards).
400

391 United States' comments on the European Communities' reply to Panel question No. 161 referring to
Case C-339/98, Peacock AG v. Hauptzollamt Paderborn, Opinion of the Advocate General, 2000 ECR I-08947,
28 October 1999, para. 15 (Exhibit US-17).
392 Commission Regulation No. 1165/95 of 23 May 1995 concerning the classification of certain goods
in the Combined Nomenclature (Exhibit EC-135).
393 European Communities' second written submission, para. 134.
394 Case C-339/98, Peacock, [2000] ECR I-8497, 19 October 2000 (Exhibit EC-87).
395 European Communities' second written submission, para. 135 referring to Case C-463/98, Cabletron
System Ltd v The Revenue Commissioners [2001] ECR I-3495, 10 May 2001 (Exhibit EC-136).
396 United States' reply to Panel question No. 20; United States' oral statement at the second substantive
meeting, para. 21.
397 European Communities' reply to Panel question No. 161 referring to Case C-495/03, Intermodal
Transports BV v. Staastsecretaris van Financiën , 15 September 2005, not yet reported, para. 27 (Exhibit US-
71).
398 European Communities' second written submission, para. 136.
399 Case C-339/98, Peacock AG v. Hauptzollamt Paderborn, Opinion of the Advocate General, 2000
ECR I-08947, 28 October 1999, para. 11 et seq. (Exhibit US-17).
400 European Communities' second written submission, para. 137 referring to Appellate Body Report
and Panel Reports, EC – Computer Equipment.

 Analysis by the Panel
7.197 The Panel notes that the United States challe nges an alleged divergence in the tariff
classification of network cards for personal com puters among customs authorities of the member
States of the European Communities.401
7.198 In the Panel's view, the tariff classification of a product, such as network cards for personal
computers, constitutes an act of administration within the meaning of Article X:3(a) of the GATT
1994. This act of administration is a matter within the Panel's terms of refe rence since it amounts to
an instance of administration of the Common Customs Tariff in the tariff classification area.402
7.199 With respect to the question of whether or not the tariff classification of network cards for
personal computers is "uniform" within the meani ng of Article X:3(a) of the GATT 1994, the Panel
recalls its finding in paragraph 7.135 abov e that geographic uniformity is required under
Article X:3(a) of the GATT 1994. That is, administration should be uniform in different places within
a particular WTO Member. The Panel also recalls its finding in paragraph 7.135 above that the form,
nature and scale of the alleged non-uniform admi nistration and the laws, regulations, judicial
decisions and rulings that are allegedly being admi nistered in a non-uniform manner should be taken
into consideration when interpreting the term " uniform" in Article X:3(a) of the GATT 1994. The
Panel considers that the United States' challenge w ith respect to the tariff classification of network
cards for personal computers is narrow in nature. It involves the interpretation of only a few tariff
headings in the Common Customs Tariff to determin e the classification of a single product – namely,
network cards for personal computers. Therefore, given the narrowness of this challenge, the Panel
considers that a high degree of uniformity is required for the purposes of Article X:3(a) of the GATT
1994. We now turn to the facts to determine whet her or not this high degree of uniformity has been
achieved with respect to the tariff classification of network cards for personal computers.
7.200 The Panel notes that, in support of the United Stat es' allegation of the existence of divergent
tariff classification of network cards for pers onal computers among the member States of the
European Communities, it relies upon the following explanation of the factual background of the main
proceedings of the case before the ECJ in Peacock AG v. Hauptzollamt Paderborn , which is
contained in the Advocate General's opinion:
"According to the order for references, Peacock AG (the applicant), a German
company, imported large quantities of network cards from the United States of
America and other non-member countries be tween July 1990 and May 1995, having
them cleared through customs under CN subheading 8473 3000 as electronic circuits,
for use solely as parts for computers falli ng under heading 8471 (cards). In 1993, the
applicant and two of its subsidiaries re ceived binding customs tariff information
(BTIs) from the Danish, Netherlands and United Kingdom customs authorities, to the
effect that such network cards were to be classified under heading 8473 of the CN.
The Hauptzollamt (Principal Customs Offi ce) Paderborn (the defendant), however,
subsequently issued amendment notices a nd claimed the extra customs duty which
should have been paid had the goods been cl assified under what it considered to be
the correct CN heading, namely 8517. Th e applicant challenged both those notices
and the group customs declarations which it had made in compliance with them. By

401 United States' first written submission, footnote 33 referring to Case C-339/98, Peacock AG v.
Hauptzollamt Paderborn, Opinion of the Advocate General, 2000 ECR I-08947, 28 October 1999, paras. 7-8
(Exhibit US-17).
402 For information on EC institutions and mechanisms applicable in the tariff classification area, see
paragraphs 7.179 – 7.182 above.

decision of 11 September 1995 the defendant rejected the objections as unfounded,
holding that network cards were to be classified under heading 8517."
403
7.201 The facts as contained in the Advocate General' s opinion do indicate the existence at one
point in time of differences in tariff classification between, on the one hand, the German customs
authorities (who classified the product in questio n under heading 8517) and, on the other hand,
Danish, Dutch and UK customs authorities (who classified it under heading 8473). The Panel notes
that the European Communities has not cont ested the existence of such differences.
404 In the light of
the foregoing, the Panel considers that, sometime during the period 1990 – 1995, the European
Communities was not administering the Common Customs Tariff concerning the tariff classification
of network cards for personal computers in a uniform manner in violation of Article X:3(a) of the
GATT 1994.
7.202 Nevertheless, the Panel is of the view that th e efforts taken by EC institutions to reconcile
such differences need to be taken into consideration for the purposes of this dispute. In the year 2000,
following the reference by the German national cour t to the ECJ for a preliminary ruling in the
Peacock case, the ECJ concluded that the products in question were to be classified under heading
8471 – that is, under a heading that had not been th e basis for classification neither by the German
customs authorities nor by the Danish, Dutch and UK customs authorities.
405
7.203 Notably, the importations that gave rise to the ECJ's preliminary ruling in the Peacock case
occurred between 1990 and 1995. 406 They took place before adoption of Commission
Regulation (EC) No. 1165/ 95 of 23 May 1995, according to which certain products were classified
under sub-heading 8517 82 90. 407 The products classified under heading 8517 pursuant to
Regulation No. 1165/95 were apparently identical to the products at issue in the Peacock case.408
7.204 Given that the importations at issue in the Peacock case pre-dated the adoption of
Regulation No. 1165/95, Regulation No. 1165/95 was not at issue in that case. 409 Nevertheless, in the
light of the apparent inconsistency between, on th e one hand, the classification of network cards for
personal computers under heading 8471 by the ECJ in its 2000 preliminary ruling in the Peacock case
and, on the other hand, in Regul ation No. 1165/95, which classified the products under heading 8517,
the ECJ ruled the latter Regulation legally i nvalid in a preliminary ruling in the case of Cabletron
Systems Ltd v The Revenue Commissioners .410 In the Cabletron case, the ECJ specifically took note

403 Case C-339/98, Peacock AG v. Hauptzollamt Paderborn, Opinion of the Advocate General, 2000
ECR I-08947, 28 October 1999, paras. 7 - 8 (Exhibit US-17).
404 European Communities' second written submission, paras. 134-137.
405 Case C-339/98, Peacock, [2000] ECR I-8497, 19 October 2000 (Exhibit EC-87).
406 At paragraph 3, the Advocate General states that the goods with which the main proceedings are
concerned were imported between 1990 and 1995: Case C-339/98, Peacock AG v. Hauptzollamt Paderborn,
Opinion of the Advocate General, 2000 ECR I-08947, 28 October 1999 (Exhibit US-17).
407 In particular, Regulation No. 1165/95 classified the following products under sub-heading
8517 82 90: "An adapter card for incorporation in cable linked digital automatic data-processing (ADP)
machines enabling the exchange of data over a local area network (LAN) without using a modem)". (Exhibit
EC-135).
408 This is evident from paragraph 6 of Case C-339/98, Peacock AG v. Hauptzollamt Paderborn ,
Opinion of the Advocate General, 2000 ECR I-08947, 28 October 1999 (Exhibit US-17).
409 Indeed, as noted by the Advocate General in his opinion, "[t]he national court has not sought a
ruling on the validity of Regulation No. 1165/95, which came into force after the importations with which the
main proceedings are concerned, but has expressed the view that a ruling that the network cards were to be
classified under heading 8473 would indirectly entail its invalidity in so far as it classified them elsewhere":
Case C-339/98, Opinion of the Advocate General, 2000 ECR I-08947, para. 9 (28 October 1999) (Exhibit
US-17).
410 Case C-463/98, Cabletron System Ltd v The Revenue Commissioners , [2001] ECR I-3495, 10 May
2001 (Exhibit EC-136).

of its ruling in the Peacock case 411 and stated that "[t]he Commission [in drafting Regulation No.
1165/95] ought to have realised, in the light of the wording of headings No 8471 and No 8517, read in
conjunction with the explanatory notes, as worded wh en those regulations were adopted, that it was
wrong to classify those types of network equipmen t under heading No 8517. ... [they] must be
classified under heading No. 8471 of the Combined Nomenclature".412
7.205 In summary, on the basis of the evidence that h as been submitted to the Panel in the context
of this dispute, divergence in tariff classificati on of network cards for personal computers existed
between 1990 and 1995. Such divergence came to the attention of an EC institution – namely, the
ECJ – through a request for preliminary ruling in the Peacock case in the year 2000. In its
preliminary ruling in the Peacock case as well as in a preliminary ruling issued in the year 2001 in the
Cabletron case, the ECJ clarified the correct classification of the network cards for personal
computers. The Panel understands that a preliminary ruling issued by the ECJ is binding on the
national court hearing the case in which the ruling is given.
413 Further, we understand from the
European Communities that a prelim inary ruling issued by the ECJ, including those issued in the
context of the Peacock and Cabletron cases, are binding on all courts of the member States. 414 The
Panel has not been provided with any evidence to indicate that divergence in tariff classification of
network cards for personal computers among member States persisted following the issuance of the
ECJ's preliminary rulings in the Peacock and Cabletron cases.
7.206 In the light of the foregoing, th e Panel concludes that differences in administration did appear
to exist in the tariff classification of the products in question between, on the one hand, the German
customs authorities and, on the other hand, Danish, Dutch and UK customs authorities between 1990
and 1995. The Panel considers that, during th at period, the European Communities was not
administering the Common Customs Tariff concerning the tariff classification of network cards for
personal computers in a uniform manner in violati on of Article X:3(a) of the GATT 1994. However,
the non-uniform administration in question occurred mo re than 10 years ago. Therefore, we do not
consider that the differences in question demons trate that the European Communities currently
administers the Common Customs Tariff non-uniformly with respect to the tariff classification of
network cards for personal computers. In this rega rd, we recall our finding in paragraph 7.36 above
that, as a general principle, a panel is competent to consider measures in existence at the time of
establishment of the panel but a panel may also be co mpetent to consider measures that had expired at
the time of establishment to the exte nt that such expired measures affect the operation of a covered
agreement at that time. In this case, the Panel has no evidence before it to indicate that the differences
in tariff classification of network cards for pers onal computers that existed between 1990 and 1995
persist and/or continue to have effect today. On the contrary, the Panel understands that, once the
differences in question were brought to the attention of EC institutions through the Peacock and
Cabletron cases, such differences were resolved.
7.207 The Panel concludes that the tariff classifica tion of network cards for personal computers
does not currently amount to non-uniform administrati on within the meaning of Article X:3(a) of the
GATT 1994. Therefore, the Panel finds no violation of Article X:3(a) of the GATT 1994 with respect
to the tariff classification of network cards for personal computers.

411 Case C-463/98, Cabletron System Ltd v The Revenue Commissioners , [2001] ECR I-3495, 10 May
412 Case C-463/98, Cabletron System Ltd v The Revenue Commissioners [2001] ECR I-3495, 10 May
2001, paras. 1 and 2 (Exhibit EC-136).
413 Case 29/68, Milchkontor v Hauptzollamt Saarbrücken, [1969] ECR 165 (Exhibit EC-59).
414 European Communities' reply to Panel question No. 163.

(ii) Tariff classification of drip irrigation products
 Summary of the parties' arguments

7.208 The United States refers to a case in which customs au thorities in France and Spain differed
over whether a drip irrigation product should be cl assified as an irrigation system or as a pipe. 415 The
United States explains that French customs authoriti es issued BTI for the product in question in 1999,
classifying it as an irrigation system under tariff h eading 8424 of the Common Customs Tariff, which
carried an ad valorem duty rate of 1.7%. In December 2000, when an importer of the same product
attempted to import the product through Spain, th e Spanish customs authorities disregarded the
French BTI and classified the product as a pipe, under tariff heading 3717 of the Common Customs
Tariff, which carried an ad valorem duty rate of 6.4%.
416
7.209 In response, the European Communities clarifies that BTI was i ssued by French customs
authorities on 6 July 1999 for a Roberts Irriga tion Product (Ro-Drip) under CN code 8424 81 10,
which covers water appliances. On 9 February 2001, Spanish customs au thorities issued BTI in
which it classified the same product under CN code 3917 32 99. According to the European
Communities, the issue of divergent BTI was discu ssed by the Tariff and Statistical Nomenclature
Section of the Customs Code Committee. The issue was resolved by adoption of Commission
Regulation (EC) No. 763/2002 of 3 May 2002, wh ich classified the product under heading 3917 32
99.417 Consequently, France revoked and replaced the previously issued BTI.418
7.210 The United States responds that, even though the divergence in classification of drip
irrigation products may have been resolved through the adoption of a regulation, this does not rebut
evidence of non-uniform administration, because non-uniform administration existed and, moreover,
was allowed to persist for a year and a half. 419 Specifically, the United States submits that the
divergence in classification of the drip irrigati on product occurred in February 2001 and was not
resolved until 15 months later, in May 2002. Du ring that time, the divergence effectively compelled
the exporter to modify its shipping practices, sending its product to France rather than Spain.420
7.211 The European Communities responds that BTI is binding only against the holder of the BTI
and is not binding against other persons. 421 According to the European Communities, the BTI issued
by France and Spain were not issued for the sam e holders. Further, the European Communities
submits that what is significant is not that a dive rgence in tariff classification may occur but, rather,
that it is addressed and removed once it occurs. 422 According to the European Communities, this is
precisely what happened in the case of drip irriga tion products. Once the divergent BTI had been
detected, the case was promptly addressed and resolved within a period of time that is reasonable.
The European Communities submits that a period of less than 15 months between the issuance of the
divergent BTI to the adoption of the classification regulation does not constitute an excessively long
period for definitively resolving a complex classification issue.423

415 United States' first written submission, footnote 33.
416 United States' reply to Panel question No. 15.
417 Commission Regulation (EC) No. 763/2002 of 3 May 2002 concerning the classification of certain
goods in the Combined Nomenclature (Exhibit EC-88).
418 European Communities' second written submission, para. 142.
419 United States' replies to Panel question Nos. 15 and 20.
420 United States' oral statement at the second substantive meeting, para. 21.
421 European Communities' reply to Panel question No. 161 referring to Case C-495/03, Intermodal
Transports BV v. Staatssecretaris van Financiën , 15 September 2005, not yet reported, para. 27
(Exhibit US-71).
422 European Communities' second written submission, para. 143.
423 European Communities' second written submission, para. 143.

 Analysis by the Panel
7.212 The Panel notes that the United States challenges divergence in the tariff classification of drip
irrigation products among customs authorities of the member States of the European Communities.424
7.213 In the Panel's view, the tariff classification of a product, including drip irrigations products,
constitutes an act of administration within the mean ing of Article X:3(a) of the GATT 1994. This act
of administration is a matter within the Panel's te rms of reference since it amounts to an instance of
administration of the Common Customs Tariff in the tariff classification area.425
7.214 With respect to the question of whether or not the tariff classification of drip irrigation
products is "uniform" within the meaning of Artic le X:3(a) of the GATT 1994, the Panel recalls its
finding in paragraph 7.135 above th at geographic uniformity is requi red under Article X:3(a) of the
GATT 1994. That is, administration should be uniform in different places within a particular WTO
Member. The Panel also recalls its finding in para graph 7.135 above that th e form, nature and scale
of the alleged non-uniform administration and the laws, regulations, judicial decisions and rulings that
are allegedly being administered in a non-uniform manner should be taken in to consideration when
interpreting the term "uniform" in Article X:3(a) of the GATT 1994. The Panel considers that the
United States' challenge with respect to the tariff class ification of drip irrigation products is narrow in
nature. It involves the interpretation of only a fe w tariff headings in the Common Customs Tariff to
determine the classification of a single product – name ly, drip irrigation products. Therefore, given
the narrowness of this challenge, th e Panel considers that a high degree of uniformity is required for
the purposes of Article X:3(a) of the GATT 1994. We now turn to the facts to determine whether or
not this high degree of uniformity has been achieve d with respect to the tariff classification of drip
irrigation products.
7.215 The Panel notes that the United States has not provided any evidence to support its allegation
of divergence in the tariff classification of drip irrigation products. Rather, it merely asserts the
existence of a difference between French and Sp anish BTI for drip irrigation products in its
submissions.426 Nevertheless, the Panel is willing to accept th is assertion in light of the fact that the
European Communities does not dispute the existence of divergence in this regard.427
7.216 On the basis of the European Communities' explanation of the facts 428, the divergence in tariff
classification of drip irrigation products occurred between 1999 and 2001. In particular, the French
customs authorities classified drip irrigation pro ducts under sub-heading 8424 81 10 of the Common
Customs Tariff in BTI that was issued in July 1999 whereas the Spanish customs authorities classified
the products under sub-heading 3917 32 99 of the Comm on Customs Tariff in BT I that was issued in
February 2001. In Commission Regulation (EC) No. 763/2002 of 3 May 2002, drip irrigation
products were classified under sub-heading 3917 32 99. 429 The Panel has not been provided with any
evidence indicating that the divergence in tariff classification of drip irrigation products among
member States persisted following the adoption of Regulation No. 763/2002.

424 United States' first written submission, footnote 33.
425 For information on EC institutions and mechanisms applicable in the tariff classification area, see
paragraphs 7.179 – 7.182 above.
426 United States' first written submission, footnote 33; United States' reply to Panel question No. 15.
427 European Communities' second written submission, paras. 142-143.
428 This explanation largely correspond s to the United States' description of the facts. In any case, the
Panel notes that neither party provided the Panel with evid ence to enable it to verify which version of the facts
was correct.
429 Commission Regulation (EC) No 763/2002 of 3 May 2002 concerning the classification of certain
goods in the Combined Nomenclature (Exhibit EC-88).

7.217 In the light of the foregoing facts, the Panel concludes that the tariff classification of drip
irrigation products does not amount to non-uniform administration in violation of Article X:3(a) of the
GATT 1994. On the basis of the parties' description of the facts, it would appear that differences
existed in classification of the products in ques tion between, on the one hand, the French customs
authorities and, on the other hand, Spanish customs authorities. However, the evidence submitted to
the Panel in this dispute indicates that those di fferences existed during a re latively short period of
time, namely between early 2001 and mid-2002. Furt her, the differences in question occurred some
time ago. Therefore, even if such difference s qualify as instances of geographical non-uniformity
within the meaning of Article X:3(a) of the GA TT 1994, we do not consider that such differences
demonstrate that the European Communities curre ntly administers the Common Customs Tariff non-
uniformly with respect to the tariff classification of drip irrigation products. In this regard, we recall
our finding in paragraph 7.36 above that, as a gene ral principle, a panel is competent to consider
measures in existence at the time of establishment of the panel but a panel may also be competent to
consider measures that had expired at the time of establishment to the extent that such expired
measures affect the operation of a covered agreemen t at that time. Moreover, we have not been
provided with any evidence to suggest that the di fferences in administration regarding the tariff
classification of drip irrigation products that existed between 2001 and 2002 persist and/or continue to
have effect today. On the contrary, the Panel unde rstands that the differences have been resolved
through adoption of Regulation No. 763/2002 of 3 May 2002.
7.218 The Panel concludes that the tariff classifica tion of drip irrigation products does not amount
to non-uniform administration within the meaning of Article X:3(a) of the GATT 1994. Therefore,
the Panel finds no violation of Article X:3(a) of the GATT 1994 with respect to the tariff
classification of drip irrigation products.
(iii) Tariff classification of unisex articles or shorts
 Summary of the parties' arguments

7.219 The United States argues that, in response to a recen t survey among the membership of a
trade association consisting of importers of produc ts into the European Communities, respondents
observed that "[u]nisex-articles or shorts have different classifications in Italy and Spain to those in
Germany". According to the United States, becau se of this divergence in classification among the
member States, these articles have to be imported via Germany, which causes additional costs.430
7.220 In response, the European Communities submits that the so-called "survey" relied upon by
the United States is based on a comment from a single, unidentified company in the context of a trade
association questionnaire of March 2005 and is no t supported by any additional evidence. The
European Communities submits that, therefore, it is impossible to ascertain the precise nature of the
products concerned, nor to identify the tariff classification issues that might be involved.
Accordingly, the European Communities considers th at the statement cited by the United States does
not provide any evidence of a lack of unifor mity in classification practice in the European
Communities with respect to unisex articles or shorts.
431

430 United States' first written submission, para. 76 referring to Foreign Trade Association,
Questionnaire on the topic "Trade Facilitation": Facilitation of Trade in WTO States, March 2005, response to
question 1.4, (Exhibit US-30).
431 European Communities' second written submission, para. 133.

 Analysis by the Panel
7.221 The Panel notes that the United States challeng es divergence in the tariff classification of
unisex articles or shorts among customs authori ties of the member States of the European
Communities.432
7.222 In the Panel's view, the tariff classification of a product, including unisex articles or shorts,
constitutes an act of administration within the mean ing of Article X:3(a) of the GATT 1994. This act
of administration is a matter within the Panel's te rms of reference since it amounts to an instance of
administration of the Common Customs Tariff in the tariff classification area.433
7.223 With respect to the question of whether or not the tariff classification of unisex articles or
shorts is "uniform" within the meaning of Artic le X:3(a) of the GATT 1994, the Panel recalls its
finding in paragraph 7.135 above th at geographic uniformity is requi red under Article X:3(a) of the
GATT 1994. That is, administration should be uniform in different places within a particular WTO
Member. The Panel also recalls its finding in para graph 7.135 above that th e form, nature and scale
of the alleged non-uniform administration and the laws, regulations, judicial decisions and rulings that
are allegedly being administered in a non-uniform manner should be taken in to consideration when
interpreting the term "uniform" in Article X:3(a) of the GATT 1994. The Panel considers that the
United States' challenge with respect to the tariff clas sification of unisex articles or shorts is narrow in
nature. It involves the interpretation of only a fe w tariff headings in the Common Customs Tariff to
determine the classification of a single product – namely, unisex articles or shorts. Therefore, given
the narrowness of this challenge, th e Panel considers that a high degree of uniformity is required for
the purposes of Article X:3(a) of the GATT 1994. We now turn to the facts to determine whether or
not this high degree of uniformity has been achieved with respect to the tariff classification of unisex
articles or shorts.
7.224 The Panel does not consider that the evidence relied upon by the United States demonstrates
the existence of non-uniform administration within the meaning of Article X:3(a) of the GATT 1994
for the following reasons.
7.225 First, the only evidence relied upon by the United States is the March 2005 report of the
Foreign Trade Association regarding a questionnair e on the topic of "Trade Facilitation": Facilitation
of Trade in WTO States.
434 We do not consider that this re port, on its own, constitutes probative
evidence for the purposes of a claim under Article X:3(a) of the GATT 1994 given that it merely
contains a sample of comments made by individual traders in response to questions posed in the
questionnaire. The extent to which those comments ar e representative of concerns held by all traders
seeking to import products into the European Comm unities is unclear. Indeed, the opening paragraph
of the Foreign Trade Association's report itself stat es that "[t]he Trade Facilitation Questionnaire was
sent to 70 FTA member companies. 20 answ ers reached the FTA ... The following represents
quotations from the answers. Although the [quotati ons] do not always fully comply with the political
consensus among all members, they highlight the practical problems Europ ean traders, especially
importers, face at borders".

432 United States' first written submission, para. 76 referring to Foreign Trade Association,
Questionnaire on the topic "Trade Facilitation": Facilitation of Trade in WTO States, March 2005, response to
question 1.4, (Exhibit US-30).
433 For information on EC institutions and mechanisms applicable in the tariff classification area, see
paragraphs 7.179 – 7.182 above.
434 Foreign Trade Association, Questionnaire on the topic "Trade Facilitation": Facilitation of Trade in
WTO States, March 2005 (Exhibit US-30).

7.226 Second, the Panel is not convinced that the para graph of the Foreign Trade Association's
report cited by the United States in support of its allegations proves that a lack of uniform
administration on the part of the European Communities in violation of Article X:3(a) of the GATT
1994 has occurred with respect to unisex articles or shorts. In our view, if anything, the cited
paragraph suggests that the alleged differences in the tariff classification of unisex articles or shorts
are linked to a lack of clarity in the releva nt tariff heading(s) of the Harmonized System.
435 In this
regard, we note that the comment upon which the United States relies reads as follows:
"The classification of garments causes in general many problems. For example:
Unisex-articles or shorts have different clas sifications in Italy and Spain to those in
Germany. These articles have to be im ported via Germany which causes additional
costs. The HS-Code should be simplified (one category for all clothes above waist
and one for all clothes below waist)."436 (emphasis added)
7.227 Finally, even if the Foreign Trade Association's re port could be read as indicating differences
regarding the classification of unisex articles or shorts among the customs authorities of the member
States, without any additional supporting evidence, it is impossible for the Panel to know whether or
not such differences exist despite identity in the products being classified or, rather, because the
products are not the same.
7.228 The Panel concludes that the United States h as not proved that the tariff classification of
unisex articles or shorts amounts to non-uniform admi nistration within the meaning of Article X:3(a)
of the GATT 1994.
(iv) Tariff classification of blackout drapery lining
 Summary of the parties' arguments
 Evidence of divergence in classification
7.229 The United States submits that the blackout drapery lining case is a glaring example of non-
uniform administration of the Common Customs Tariff in the context of which no EC institution has
stepped in to cure the non-uniformity.
437 Specifically, the United States notes that, in BTI issued from
1999 to 2002, customs authorities in the United Kingdom, Ireland, and the Netherlands and,
subsequently, in Belgium, classified similar drap ery linings under tariff heading 5907 of the Common
Customs Tariff ("Textile fabrics otherwise impregna ted, coated or covered; painted canvas being
theatrical scenery, studio back-cloths or the like" ). However, during this same period, customs
authorities in Germany classified the product under tariff heading 3921 of the Common Customs
Tariff ("Other plates, sheets, film, foil and strip, of plastics"). The United States submits that, after
almost five years of various requests by importers for review by different branches of the German
customs authority, the Main Customs Office of Bremen issued a decision in September 2004, finding
that imports of the product in question in Octobe r and November 1999 were properly classified under
heading 3921.
438 According to the United States, the Ge rman customs authority acknowledged the
existence of BTI for comparable goods but made no effort to explain why it was declining to follow

435 The European Communities is a signatory to the HS Convention. Therefore, pursuant to Article 3.1
of the HS Convention, the European Communities is obliged to use the HS headings and subheadings at the 6-
digit level. The European Communities does, however , have flexibility to add headings and subheadings
beyond the 6-digit level.
436 Foreign Trade Association, Questionnaire on the topic "Trade Facilitation": Facilitation of Trade in
WTO States, March 2005, para. 1.4 (Exhibit US-30).
437 United States' reply to Panel question No. 4.
438 United States' first written submission, para. 66.

the classification decisions reflected in that BTI. 439 Nor did it attempt to reconcile its classification
decision with the classification decisions reflected in BTI issued by other member States' customs
authorities. Moreover, according to the United St ates, the German customs authority relied on a
rationale that is not compelled by the Common Customs Tariff.440
7.230 The European Communities argues that the present case does not concern the question of
the heading under which a particular product should properly have been classified but, rather, the
question of uniformity of administration of EC classification rules.441
 Goods in question the same?
7.231 The European Communities submits that the products descri bed in the decision of the Main
Customs Office Bremen were not identical to the products described in the BTI issued by customs
authorities in the United Kingdom, Ireland, and the Ne therlands, since the former were not flocked
with textile flock, while the products in the BTI are described as having been flocked. On the basis of
these product descriptions, the products had to be classified differently.
442 According to the European
Communities, the presence of a layer of textile flock is an important criterion for determining
whether, under Chapter Note 2(a)(5) to Chapter 59 of the Common Customs Tariff, the textile fabric
is used for reinforcement purposes only whic h, in turn, could affect classification. 443 Therefore,
according to the European Communities, the differe nce in tariff classification referred to by the
United States is not a lack of uniformity but, rather , the result of a correct application of the Common
Customs Tariff.444 The European Communities also submits th at, even if a mistake had occurred in
the factual appraisal of the products, this does not mean that there is a lack of uniformity in the
application of EC customs law in violation of Artic le X:3(a) of the GATT 1994. In particular, if the
importer felt that the German customs authorities had erred in their appraisal of the good in question,
he could have appealed the decision of the Main Customs Office of Bremen before the Bremen Tax
Court. According to the European Communities, if the importer has chosen not to appeal, then this
cannot be used to claim a lack of uniformity in the EC system of customs classification. The
European Communities adds that neither the importer nor the producer have ever brought the issue of
classification of blackout drapery lining to the attention of the European Commission.445
7.232 The United States responds that it is not correct that the product before the German
authorities was not flocked. According to the United States, as a matter of fact, the determination of
the Main Customs Office of Hamburg upon which th e Main Customs Office of Bremen relied found
the product to contain "flocking with individual fibers." 446 The United States submits that the Main
Customs Office of Bremen did not find an absence of flocking per se but, rather, that flocking did not
constitute a distinct layer in the product at issue. What was relevant to the Main Customs Office of
Bremen was the existence of plastic in the coati ng, regardless of whether textile flocking or other
elements were mixed into that coating. The Un ited States argues that the fact that the German

439 Hauptzollamt Bremen, Letter Decision to Bautex-Stoffe GmbH regarding classification of blackout
drapery lining, 22 September 2004 (original and English translation) (Exhibit US-23).
440 United States' reply to Panel question No. 4.
441 European Communities' second written submission, para. 116.
442 European Communities' second written submission, para. 117.
443 European Communities' first written submission, para. 337.
444 European Communities' second written submission, para. 117.
445 European Communities' first written submission, para. 340.
446 United States' reply to Panel question No. 17(a) referring to Letter from Main Customs Office
Hamburg-Waltershof to ORNATA GmbH, 29 July 1998 (original and English translation), p. 1 (Exhibit US-50).

customs authority took this approach, contrary to the approach taken by other member State
authorities, is confirmed by the letter from the Main Customs Office of Hamburg.
447
7.233 In response, the European Communities submits that the letter of the Main Customs Office
Hamburg relied upon by the United States relates to an administrative appeal introduced by a
company called Ornata GmbH. According to the Eu ropean Communities, it does not appear that that
appeal is in any way related to the administrativ e appeal introduced by Bautex-Stoffe GmbH, which
was the subject of the decision of the Main Cust oms Office Bremen. Nor does it indicate that the
Main Customs Office of Bremen relied on the letter of the Main Customs Office of Hamburg.448
7.234 The United States responds that the letter from the Main Customs Office of Bremen and the
letter from the Main Customs Office of Hamburg both concern blackout drapery lining produced by
Rockland Industries. The Main Customs Office of Bremen decided to exclude Rockland Industries'
product from classification under tariff heading 5907 on a ground evidently not applied by other EC
customs authorities – that is, on the ground that the product had plastic in its coating, regardless of
whether textile flocking or other elem ents were mixed into that coating. 449 The United States further
submits that the European Communities erroneously calls into question whether the lining produced
by Rockland Industries at issue in the decision by the Main Customs Office of Bremen, which was
classified under tariff heading 3921, was materially identical to lining that other member States had
classified under heading 5907. In support, the United States submits that Rockland Industries'
President and Chief Executive Officer attests unde r oath that: "All coated products produced by
Rockland incorporate textile flocking as part of th e coating process. Rockland has never produced a
coated product that does not incorporate textile flocking. ... Textile flocking is required to prevent the
fabric from sticking together."450
7.235 In response, the European Communities submits that an affidavit by the Chairman of
Rockland Industries, the producer of blackout drapery lining, is a statement by a person with a clear
interest in the classification of blackout drapery lining and, therefore, has no probative value.
Moreover, the affidavit does not concern the ques tion of whether the products before the EC
authorities were in fact identical. 451 More specifically, while the affidavit indicates that the product
which was the subject of the decision by the Ma in Customs Office of Bremen was produced by
Rockland Industries, it provides no answer as to whet her the products for which the BTI were issued
by the Dutch, Irish and UK authorities were also products of Rockland Industries.452 Rather, it merely
contains an assurance that Rockland Industries h as never produced any product that is not flocked. 453
The European Communities adds that, in order to de termine the correct classification of the product,
the question is not whether the product incorporates textile flocking as part of the coating process but,
rather, whether there is a layer of textile flocking vi sible to the naked eye. According to the European
Communities, this is not a question that can be an swered through an affidavit sworn by the President
of the producer of the good.454

447 United States' oral statement at the second subs tantive meeting, para. 62 referring to Letter from
Main Customs Office Hamburg-Waltershof to ORNATA GmbH, 29 July 1998 (original and English translation)
(Exhibit US-50).
448 European Communities' second written submission, para. 108.
449 United States' reply to Panel question No. 137(a).
450 United States' oral statement at the second substa ntive meeting, para. 61 referring to Affidavit of
Mark R. Berman, President and Ch ief Executive Officer of Rockland Industries, Inc., 10 November 2005
(Exhibit US-79).
451 European Communities' closing statement at the second substantive meeting, para. 16.
452 European Communities' comments on the United States' reply to Panel question No. 137(a).
453 European Communities' closing statement at the second substantive meeting, para. 16.
454 European Communities' comments on the United States' reply to Panel question No. 137(a).

 Explanatory Note to sub-heading 5907 of the Harmonized System
7.236 The United States refers to the explanatory not e accompanying heading 5907 of the
Harmonized System, which provides, inter alia, that "[t]he fabrics c overed [under subheading 5907]
include ... [f]abric, the surface of which is coated with glue (rubber glue or other), plastics, rubber or
other materials and sprinkled with a fine layer of other material such as ... textile flock or dust to
produce imitation suedes. ...".455 The United States submits that, in the light of that explanatory note,
for classification purposes, the relative density of the flocking is not a material point of distinction.
According to the United States, customs authoriti es of member States other than Germany have
classified blackout drapery lining under heading 5907 in cases where the flocking on the products
surface was found to be "sparsely applied".
456 The United States submits that, in contrast, the Main
Customs Office of Bremen stated that "[a]ssignment of the goods to class 5907 could only be
considered if, in accordance with the label of that class: 'other webs,' the goods were not plastic-
coated as per class 3921."457
7.237 The European Communities responds that it is wrong to say that the decision of the Main
Customs Office of Bremen is incompatible with the explanatory note to heading 5907 of the
Harmonized System. According to the European Communities, explanatory note (G)(1) to heading
5907 provides that the fabrics covered include "fabri c, the surface of which is coated with glue
(rubber glue or other), plastics, rubber or other ma terials and sprinkled with a fine layer of other
materials such as (1) textile flock or dust to produce imitation suèdes".458 The European Communities
submits that, therefore, the presence of textile flock or dust was a relevant criterion for the
classification under heading 5907. The decision of the Main Customs Office of Bremen took account
of this factor by noting the absence of a layer of textile flock. Since the product was not flocked, it
could not be classified under heading 5907.459
 German interpretative aid
7.238 The United States submits that the Hamburg Customs Office relied upon an interpretive aid
particular to Germany and not uniformly used by member State customs authorities in applying the
Common Customs Tariff to coated textile fabrics, such as blackout drapery lining. The United States
submits that the aid in question directed the customs authority to consider the density of the product's
fibre. According to the United States, the Main Customs Office of Bremen plainly relied on the
findings of the Hamburg Customs Office and, moreov er, expressly referred to the fact that "[t]he web
is not fine", an apparent allusion to the finding of the Main Customs Office of Hamburg based on the
interpretive aid.
460
7.239 In response, the European Communities submits that the aid in question was referred to only
by the Main Customs Office of Hamburg, not by the Main Customs Office of Bremen, which decided
the appeal. 461 Further, according to the European Commun ities, the text contains nothing which is
contrary to EC law. In particular, the criterion th at the web is not fine was developed in analogy to

455 United States' reply to Panel question No. 17(a) referring to Harmonized System Explanatory Note,
subheading 5907 (Exhibit US-48).
456 United States' reply to Panel question No. 17(a) referring to BTI UK103424227 (Exhibit US-51).
457 United States' reply to Panel question No. 17(a) referring to Hauptzollamt Bremen, Letter Decision
to Bautex-Stoffe GmbH, 22 September 2004 (original and English translation) (Exhibit US-23). The Panel
notes that the English translation of the decision of Main Customs Office of Bremen submitted by the United
States refers to heading 3921 whereas the German version of the decision refers to heading 5903.
458 Harmonized System Explanatory Note, subheading 5907 (Exhibit US-48; Exhibit EC-127).
459 European Communities' second written submission, para. 111.
460 United States' reply to Panel question No. 17(a) referring to Hauptzollamt Bremen, Letter Decision
to Bautex-Stoffe GmbH, 22 September 2004 (original and English translation) (Exhibit US-23).
461 European Communities' first written submission, para. 342.

another EC classification regulation and is a relevant factor to determine whether the textile fabric is
present merely for reinforcing purposes.
462 The European Communities also submits that the text in
question is purely an interpretative aid prepared for administrative purposes which does not have the
force of law and does not derogate from EC law. In this regard, the European Communities argues
that the ECJ has clarified that handbooks, guidance or other compilations prepared by member States
have no legally binding character in EC law.463
7.240 The United States submits in response that the EC classification regulation with respect to
which the European Communities ar gues the German interpretative aid was developed by way of
analogy is a regulation pertaining to the classifi cation of ski trousers, which are classifiable under
Chapter 62 of the Common Customs Tariff. 464 The United States submits that the interpretative rules
referred to in that regulation are relevant to classi fication of an apparel item, but make no sense when
applied for a product such as blackout drapery lining. The particular aspect of the ski trousers rule on
which the German authority relied in this case was th e tightness of the weave of the fabric. However,
according to the United States, Note 2(a) to Ch apter 59 of the Common Customs Tariff expressly
makes that criterion irrelevant to the classification of coated fabrics. In particular, it states that
heading 5903 applies to "textile fabrics, impregna ted, coated, covered or laminated with plastics,
whatever the weight per square meter and whatever the nature of the plastic material. ..." 465 T h e
United States explains that, having ruled out classi fication of the blackout drapery lining in question
under heading 5907, apparently based on its view that the existence of plastic in the coating precluded
such classification, the German customs authority then looked to a German interpretive aid. The
United States submits that the German customs auth ority relied on it in a way that turned out to be
determinative.466
7.241 The European Communities submits that the United States' criticism of the reference to a
classification regulation concerning a type of ski trousers is unwarranted. Commission
Regulation (EC) No. 1458/97 concerned the classifi cation of garments under heading 6210, which
covers "garments made up of fabrics of heading 5602, 5603, 5903, 5906 or 5907".
467 The European
Communities submits that, implicitly, the classifi cation regulation in que stion concerned the
classification of the fabric out of which garments are made. That regulation implicitly required
application of Note 2(a)(5) to Chapter 59 of th e Common Customs Tariff to determine whether the
fabric serves merely reinforcing purposes. The European Communities submits that it was in this
context that the Main Customs Office of Hamburg took into account the "tight weave" of the fabric.468
The European Communities submits that the weight referred to in the chapeau of Note 2(a) to Chapter
59 is the weight of the entire product – that is, the fabric as impregnate d, coated, covered or
laminated. The Main Customs Office of Bremen did not consider the weight of the product, but rather
the density of the web of the polyester fabric, which is only a part of the product. 469 The European
Communities submits that, according to Note (2)(a)(5 ) to Chapter 59 of the Common Customs Tariff,
heading 5903 does not apply to plates, sheets, or st rips of cellular plastics, combined with textile
fabric, where the textile fabric is present merely for reinforcing purposes. For the application of
heading 5903, it is, therefore, necessary to determin e whether the textile fabric is present merely for

462 European Communities' first written submission, para. 343 referring to Commission
Regulation (EC) No. 1458/97 concerning the classification of certain goods in the Combined Nomenclature
(Exhibit EC-78).
463 European Communities' first written submissi on, para. 344 referring to Case C-161/88, Friedrich
Binder, [1989] ECR 2415, 12 July 1989, para. 19 (Exhibit EC-79).
464 Commission Regulation (EC) No. 1458/97 concerning the classification of certain goods in the
Combined Nomenclature (Exhibit EC-78).
465 United States' reply to Panel question No. 17(a).
466 United States' oral statement at the second substantive meeting, para. 63.
467 Excerpt of heading 6210 of the Common Customs Tariff (Exhibit EC-132).
468 European Communities' second written submission, para. 113.
469 European Communities' second written submission, para. 115.

reinforcing purposes and, consequently, the question whether the web was fine is a relevant criterion
for establishing whether it is present for reinforcement purposes or not.470
7.242 In response, the United States submits that the notes pertaining to Chapter 39 of the Common
Customs Tariff make no reference to density of weave as a relevant criterion, and the notes to
Chapter 59 expressly provide that classification under that chapter is to be determined regardless of
weight per square meter. The European Commun ities asserts without basis that the reference to
weight per square meter is different from density of weave. In fact, however, weight per square meter
necessarily is a function of density of weave.471
 Compatibility with WCO opinion
7.243 The United States submits that, in October 2004, the Secretariat of the World Customs
Organization (WCO) issued an opinion agreeing th at the product in question should be classified
under heading 5907 of the Harmonized System.
472 According to the United States, shortly thereafter,
Belgian customs authorities issued a decision classi fying blackout drapery lining under heading 5907.
However, the German decision remains unchanged.473
7.244 In response, the European Communities submits that the WCO opinion is irrelevant. The
European Communities notes that the opinion states th at "the visible outer layer consists of cotton
flocking which completely covers the acrylic ce llular plastic". According to the European
Communities, this does not correspond to the descrip tion of the product before the German customs
authorities. The European Communities also notes that the opinion is purely the opinion of an official
of the WCO, which does not have any legall y binding status under the Harmonized System
Convention. Moreover, if the United States believed there was a dispute concerning the application of
the Harmonized System Convention, it could su bmit this dispute to the Harmonised System
Committee in accordance with Article 10 of the HS Convention but has not done so as yet.474
 Analysis by the Panel
 G e n e r a l
7.245 The Panel notes that the United States challeng es divergence in the tariff classification of
blackout drapery lining among customs authoriti es of the member Stat es of the European
Communities.
475
7.246 In the Panel's view, the tariff classification of a product, including blackout drapery lining,
constitutes an act of administration within the mean ing of Article X:3(a) of the GATT 1994. This act
of administration is a matter within the Panel's te rms of reference since it amounts to an instance of
administration of the Common Customs Tariff in the tariff classification area.476
7.247 With respect to the question of whether or not the tariff classification of blackout drapery
lining is "uniform" within the meaning of Article X:3(a) of the GATT 1994, the Panel recalls its

470 European Communities' second written submission, para. 112.
471 United States' oral statement at the second substantive meeting, para. 64.
472 Letter from Mr. Chriticles Mwansa, Director, Wo rld Customs Organization, Tariff and Trade
Affairs Directorate, to Mr. Myles B. Harmon, Director, Office of Regulations and Rulings, U.S. Customs and
Border Protection, 26 October 2004 (Exhibit US-24).
473 United States' first written submission, para. 68.
474 European Communities' first written submission, para. 341.
475 United States' first written submission, para. 66.
476 For information on EC institutions and mechanisms applicable in the tariff classification area, see
paragraphs 7.179 – 7.182 above.

finding in paragraph 7.135 above th at geographic uniformity is requi red under Article X:3(a) of the
GATT 1994. That is, administration should be uniform in different places within a particular WTO
Member. The Panel also recalls its finding in para graph 7.125 above that th e form, nature and scale
of the alleged non-uniform administration and the laws, regulations, judicial decisions and rulings that
are allegedly being administered in a non-uniform manner should be taken in to consideration when
interpreting the term "uniform" in Article X:3(a) of the GATT 1994. The Panel considers that the
United States' challenge with respect to the tariff cl assification of blackout drapery lining is narrow in
nature. It involves the interpretation of only a fe w tariff headings in the Common Customs Tariff to
determine the classification of a single product – namely, blackout drapery lining. Therefore, given
the narrowness of this challenge, th e Panel considers that a high degree of uniformity is required for
the purposes of Article X:3(a) of the GATT 1994. We now turn to the facts to determine whether or
not this high degree of uniformity has been achie ved with respect to the tariff classification of
blackout drapery lining.
 Evidence relied upon by the United States to prove the existence of divergence in the
 tariff classification of blackout drapery lining
7.248 The United States alleges the existence of di vergence in tariff classification of blackout
drapery lining from 1999 to 2002 between, on th e one hand, customs authorities in the United
Kingdom, Ireland, and the Netherlands and, subsequen tly, in Belgium, who classified the product in
question under tariff heading 5907 of the Common Customs Tariff (which covers "Textile fabrics
otherwise impregnated, coated or covered; painted canvas being theatri cal scenery, studio back-cloths
or the like") and, on the other hand, customs aut horities in Germany, who classified the product in
question under heading 3921 of the Common Customs Tariff (which covers "Other plates, sheets,
film, foil and strip, of plastics").
7.249 To support its allegation the United States refers to a number of BTI notices issued for
blackout drapery lining by customs authorities in the United Kingdom (dated 17 March 1999, 12 June
1999 and 22 December 1999), in Ireland (dated 1 April 1999) and in the Netherlands (dated 13
February 2002).
477 Each BTI relied upon by the United St ates classifies the product under heading
5907. The descriptions of the products in each of those BTI are set out immediately below:
BTI issued by UK customs authority dated 17 March 1999
"Thermal curtain lining; also known as blackout material. Consisting of a plain
weave fabric of 50% polyester and 50% cotton fibres. Visibly coated on one side
only with a layer of acrylic foam. Textile flock then appears to have been sparesly
[sic] applied to the top of this coating givi ng it a slightly raised or brushed effect.
Used in such places as hotels etc to darken and block out sunlight in rooms where the
sun is a problem. The fabric may also be applied to the back of existing
transparent/translucent curtains; as lining ma terial; giving the same net result.
Similar in appearance to the fabric used in photographic studios etc."
BTI issued by UK customs authority dated 12 June 1999
"Plain weave fabric 70% Polyester 30% Cotton. Visibly coated on one side only.
Textile flock has been applied giving the fabr ic a slightly raised or brushed effect.
Used as a blackout material"
BTI issued by UK customs authority dated 22 December 1999

477 BTI issued from 1999 through 2002 by customs authorities in the United Kingdom, Ireland, and the
Netherlands (Exhibit US-22).

"Textile fabric constructed of textile flock with a layer of cellular plastic and a knitted
textile backing. 71.3% foam (PU/PVC); 16.6% polyester; 12.1% viscose"
BTI issued by Irish customs authority dated 1 April 1999
"Thermal curtain lining (blackout curtain lining), plain weave fabric of 50% polyester
and 50% cotton, visibly coated on one side with a layer of acrylic foam. Textile flock
has then been applied on top of this coating."
BTI issued by Dutch customs authority dated 13 February 2002
"Fabric of 100% cottons covertly with low acrylic resin polymers, on which a layer
has been textielvezeltjes introduced (flock). The fabric is provided on roles [sic] of
approximately 50 meters length, packs in plastic and by 4 roles [sic] in a hamper
box."
7.250 In addition, with respect to the tariff classificati on of blackout drapery lining in Belgium, it is
evident from a decision issued by the Hamburg ZPLA 478, aspects of which are excerpted in
paragraph 7.252 below, that certain products im ported into Belgium by Rockland Industries were
classified by the Belgian customs authorities under heading 5907. 479 An affidavit of Mr Mark
Berman, Chief Executive Officer of Rockland Industries, states in relevant part that:
"6. All coated products produced by Rock land incorporate textile flocking as part
of the coating process. Rockland has neve r produced a coated product that does not
incorporate textile flocking.
7. Textile flocking is required to prev ent the fabric from sticking together."480
7.251 The United States contrasts the tariff classificati on of blackout drapery lining by the customs
authorities in the United Kingdom, Ireland, the Nether lands and Belgium with certain decisions and
opinions issued by German customs authorities. In particular, the United States refers to an expert
opinion issued by the Main Customs Office of Brem en to Bautex-Stoffe GmbH ("Bautex") dated 29
September 2004. 481 In that expert opinion, the Main Customs Office of Bremen found that certain
products that had been imported into Germany by Bautex in October and November 1999 had been

478 The Panel understands that the acronym ZPLA can be translated in English as "Testing and Training
Establishment for Technical Customs Matters". The body referred to by the Panel in its findings as the
"Hamburg ZPLA" is referred to by the parties variously as the "Hamburg Customs Office", the "Main Customs
Office of Hamburg" and the "Hamburg ZPLA".
479 Letter from Oberfinanzdirektion Hamburg to HZA Bremen regarding Protest of Bautex-Stoffe
GmbH, 3 February 2003 (original and English translation) (Exhibit US-41). Further, in a letter from Marc De
Schutter, Federal Government Services, Financial Section, Administration of Border Police and Import Taxes,
Western Board to Inspector of Border Police and Import Taxes in Antwerp - C.T.D.A.I., 26 November 2004,
(original and English translation) (Exhibit US-25), it is ev ident that "tissue" with "a covering surface of non-
cellular synthetic material which contains filler material s (titanium dioxide and silicates), which are covered at
its surface with body hair" were classified by Belgian customs authorities under tariff heading 5907.
480 Affidavit of Mark R. Berman, President and Chie f Executive Officer of Ro ckland Industries, Inc.,
10 November 2005, paras. 6 - 7 (Exhibit US-79). The Panel notes the European Communities' objections to this
affidavit on the ground that it constitutes a statement by a person with a clear interest in the classification of
blackout drapery lining and, th erefore, has no probative value: Europe an Communities' closing statement at the
second substantive meeting, para. 16. Nevertheless, the Panel considers that the affidavit contains evidence that
contributes constructively to our duty under Article 11 of the DSU to conduct an objective assessment of the
matter before us.
481 The Panel notes that the European Communities characterises this expert opinion of the Main
Customs Office of Bremen as a "decision": European Communities' first written submission, para. 333.

properly classified under heading 3921.
482 The Main Customs Office of Bremen's expert opinion
states in relevant part that:483
"According to the classification opinion of the Hamburg ZPLA as well as three
supplementary opinions on the matter, the goods in question consist of rolls of a
white fabric made of polyester, coated on one side with acrylate. The fabric is not
dense and not further treated. The plastic coating consists of cellular plastic. The
fabric and the coating are of approximately the same thickness. The fabric is to be
considered as no more than an underlay. The imported goods are covered by heading
3921.
According to the classification opinion, a ha rdened oil-based coating is not present.
The surface is not covered with a thin layer of textile flock. The fabric is not dense,
and is uniform in color. The fabric serves only as a reinforcement.
Classification of the goods under heading 590 7 could only be considered if, in
accordance with the wording of that headi ng, "other textile fabrics ... ", the goods
were not plastic-coated as required by heading 5903. The fact that the plastic coating
has been treated with flame retardant and th e like does not change the fact that the
plastic coating exists. Therefore, cla ssification under heading 5907 is excluded.
Given that the plastic coating has a cellular structure, it is excluded from
classification under heading 5903 and should be classified under heading 3921.
As cellular plastic sheets made of other plastics, the imported goods are to be
assigned code number 3921 1900 990. The legal grounds for this classification are to
be found in Note 2(a)(5) to Chapter 59 of the Customs Tariff.
The Main Customs Office of Bremen is c onvinced of the correctness of the Hamburg
ZPLA's findings regarding the material composition of the goods.
Numerous other binding customs decisions [BTI] have been handed down for
comparable goods (darkening material)."
7.252 In reaching its conclusion that the products in question should be classified under heading
3921, the Main Customs Office of Bremen relied, inter alia , on a decision issued by the Hamburg
ZPLA dated 3 February 2003 regarding a "protest" filed by Bautex.
484 The decision of the Hamburg
ZPLA (the "Bautex decision issued by the Hamburg ZPLA") states in relevant part that:

482 Hauptzollamt Bremen, Letter Decision to Bautex-Stoffe GmbH regarding classification of blackout
drapery lining, 29 September 2004 (Exhibit US-23).
483 The Panel notes that it found the United States' translation into English of various exhibits that were
originally in German difficult to understand and, at times , incorrect. Therefore, in its findings, the Panel relies
upon its own unofficial translations of Exhibits US-23, 41 and 50. Nevertheless, the Panel considers that
differences between, on the one hand, the United States' translations of Exhibits US-23, 41 and 50 and, on the
other hand, the Panel's translations of those exhibits do not affect the substance of the Panel's findings regarding
the tariff classification of blackout drapery lining.
484 Letter from Oberfinanzdirektion Hamburg to HZA Bremen regarding Protest of Bautex-Stoffe
GmbH, 3 February 2003 (original and English translation) (Exhibit US-41). It is apparent from the decision of
the Main Customs Office of Bremen that the opinion of the Hamburg ZPLA was relied upon by the Main
Customs Office of Bremen, in addition to "three supplementary opinions on the same matter": Hauptzollamt
Bremen, Letter Decision to Bautex-Stoffe GmbH regarding classification of blackout drapery lining,
29 September 2004 (Exhibit US-23).

"According to the expert opinion, the coating does not consist of hardened oil; the IR-
spectrum, however, indicates traces of oil and polyallylesters are present in the
extract. The main ingredient of the coating, however, is likely to be acrylate,
according to the IR-spectrum. ...
There is a series of vZTA
485 regarding various darkening materials ... in which the
cellular plastic was coated with a synthe tic layer, which shows a little flocking and
which corresponds to the merchandise in question. Among these, vZTA 55/03
provides a good basis for comparison b ecause the applicant submitted the same
documents as Bautex-Stoffe GmbH in its protest filing. I am referring to the letters of
the Belgian Customs Office a ccording to which a product of the company Rockland
Industries was classified under sub-heading 5907 000 90. This use of the same
documents for classification in all cases strengt hens the suspicion that the documents
do not necessarily match the merchandise...
An important difference lies in the fact that , in the case of vZTA 55/03, the fabric is
dense whereas the fabric is not dense in the merchandise under consideration. ...
Because the product in question consists of a cellular plastic, I adhere to my
suggested opinion that [sub-heading] 3921 19 is appropriate."
7.253 The affidavit of Mr Mark Berman, Chief Executive Officer of Rockland Industries, referred to
in paragraph 7.250 above, stated that the products th at were the subject of the classification in the
expert opinion of the Main Customs Office of Brem en and in the Bautex decision issued by Hamburg
ZPLA were identical in all material respects to those that were the subject of a 1998 classification
letter by the Hamburg ZPLA concerning a "protest" filed by Ornata GmbH (the "Ornata letter issued
by the Hamburg ZPLA").
486 In the Ornata letter issued by the Hamburg ZPLA, 487 the products in
question were described in the following terms:
"According to ZPLA's findings, the tested merchandise shows under magnification on
the surface isolated fibres; a cohesive layer is not present. A coating of the fabric
with a thin layer of flock is not present. Because the surface treatment (flocking with
individual fibres) is not visible to the naked eye, classification of the merchandise
under heading 5907 is out of the question according to Chapter 59, Note 5 (a) and (c).

In this particular case, ZPLA determined the following composition of the
merchandise: a white
 fabric made out of polyester/cotton, which is on one side
covered with cellular plastic (and flock fibres) with the layer built up – white fabric
(0.20 mm thickness) – white/black/white cellular plastic layers made from
polyacrylate with additives (0.20 mm thickness) – flock. The spun fabric is not dense
and is not further processed. According to the above-mentioned definition, the white
fabric is merely a base for reinforcement purposes. The merchandise is therefore
excluded from heading 5903, according to Note 2(a)(5) to Chapter 59 and should be
classified under Chapter 39.

485 The Panel understands that the German acron ym "vZTA" corresponds to the English acronym
"BTI".
486 Affidavit of Mark R. Berman, President and Chie f Executive Officer of Ro ckland Industries, Inc.,
10 November 2005 (Exhibit US-79).
487 Letter from Main Customs Office Hamburg-Walters hof to ORNATA GmbH in response to protest
regarding classification, 29 July 1998 (Exhibit US-50).

According to your opinion, as expressed in your letter ..., a coating of the
merchandise with flock dust is visible with the naked eye, whereas ZPLA determined
that flock dust fibers were only visible under magnification

The expression "visible with the naked eye" means, according to established
jurisprudence that the impregnation, coati ng or covering of the fabric has to be
directly visible in a simple visual examination ...
Because a magnifier (aid) is necessary for the determination of flock dust fibres,
therefore, the covering of the fabric with flock dust is not visible to the naked eye .
According to the objective features and characteristics, as specified by the wording of
the tariff headings in the Common Customs Tariff and the sections or chapter notes,
classification under heading 5907 is therefore not possible ..." (emphasis in original)
7.254 The European Communities argues that the produc ts classified, on the one hand, by customs
authorities in the United Kingdom, Ireland, the Nether lands and Belgium and, on the other hand, by
customs authorities in Germany, were not identical in relevant respects and, therefore, had to be
classified differently. 488 In addressing this argument, the Panel notes that its task here is not to
determine the correct classification under the Common Customs Tariff of the products being
considered by, on the one hand, customs authorities in the United Kingdom, Ireland, the Netherlands
and Belgium and, on the other hand, customs authorities in Germany. Rather, our task is to determine
whether the divergence in tariff classification with respect to those products demonstrates non-
uniform administration within the meaning of Artic le X:3(a) of the GATT 1994. In undertaking this
task, we will focus on determining whether or not there was any objectively justifiable basis upon
which the German customs authorities considered that the products, the subject of classification by the
customs authorities in United Kingdom, Ireland, the Netherlands and Belgium, were different from
the products that were the subject of classification by the German customs authorities. If not, this
would tend to indicate the existence of non-uniform ad ministration in violation of Article X:3(a) of
the GATT 1994.
 Physical characteristics of the products that were the subject of classification by on
 the one hand, customs authorities in the United Kingdom, Ireland, the Netherlands
 and Belgium and, on the other hand, customs authorities in Germany
7.255 Regarding the products that were the subject of classification by the customs authorities in
United Kingdom, Ireland, the Netherlands and Belgium, the Panel notes that the BTI submitted by the
United States indicates that the products classifi ed by the customs authorities in the United Kingdom,
Ireland and the Netherlands are all textile products covered with a layer of flocking.
489 Further, when
read in conjunction with the affidavit of Mr Mark Berman, Chief Executive Officer of Rockland
Industries, the relevant decision of the Hamburg ZPLA indicates that the products classified by the
customs authorities in Belgium were all textile products incorporating textile flocking.490

488 See, for example, European Communities' sec ond written submission, pa ra. 117 and European
Communities' closing statement at the second substantive meeting, para. 16.
489 See paragraph 7.249 above.
490 See paragraph 7.250 above. In the Harmonized Sy stem (heading 5603) "textile flock" is defined as
consisting of textile fibres not exceeding 5 mm in length (silk, wool, cotton, man-made fibres, etc.). It is
obtained as waste during various finishing operations and, in particular, from the shearing of velvets. It is also
produced by cutting textile tow or fibres. Textile dust is obtained as waste, or by grinding textile fibres to a
powder. Textile flock and dust fall in this heading even if bleached or dyed or if the fibres have been artificially
curled.

7.256 With respect to the products classified by the German customs authority, the Panel notes that
the only evidence provided that casts light on the phy sical characteristics of those products are the
expert opinion of the Main Customs Office of Bremen 491, the Bautex decision issued by the Hamburg
ZPLA492, the Ornata letter issued by the Hamburg ZPLA 493 and the affidavit of Mr Mark Berman,
Chief Executive Officer of Rockland Industries, concerning products manufactured by Rockland
Industries.494
7.257 It is evident from the excerpts of the expert opinion of the Main Customs Office of Bremen
set out in paragraph 7.251 above, that, unlike th e customs authorities in the United Kingdom, Ireland,
the Netherlands and Belgium, the Main Customs Of fice of Bremen did not characterize the products
as textile products. Rather, the products were de scribed as "cellular plastic sheets". The Main
Customs Office of Bremen explained that the produ cts also possessed a fabric component but that
such component "is to be considered as no more than underlay" and "serves only as a reinforcement".
7.258 Like the expert opinion of the Main Customs Office of Bremen, the Bautex decision issued by
the Hamburg ZPLA also appeared to characterize the products in question as a plastic. In particular,
in its decision set out in paragraph 7.252 above , the Hamburg ZPLA described the product as being
predominantly an "acrylate"495 and consisting of a "cellular plastic". The Hamburg ZPLA appeared to
acknowledge the presence of textile elements. For example, the Hamburg ZPLA referred to "traces of
... polyallylesters" and "a little flocking". However, the Hamburg ZPLA considered that the fabric in
question was not "dense" enough to warrant classifi cation of the product under heading 5907 (i.e. as a
textile product).
7.259 According to the Ornata letter issued by the Hamburg ZPLA set out in paragraph 7.253
above, the products that were the subject of classifi cation were considered flocked, thus sharing an
important feature in common with the products the s ubject of classification by the customs authorities
in the United Kingdom, Ireland, the Netherlands and Belgium. However, unlike the customs
authorities in the United Kingdom, Ireland, the Netherlands and Belgium, the Hamburg ZPLA
considered that such flocking was not sufficient so as to warrant classification under heading 5907
because the "flock dust fibres" were not "visible to the naked eye". The Hamburg ZPLA further
stated that the fabric component of the product in question was "merely a base for reinforcement
purposes".
7.260 It is apparent that the products that were the subject of classification in the expert opinion by
the Main Customs Office of Bremen and in the Ba utex decision issued by the Hamburg ZPLA were
produced by Rockland Industries and were identical. 496 It is less clear whether the products that were
the subject of classification by the Main Customs O ffice of Bremen and in the Bautex decision issued

491 Hauptzollamt Bremen, Letter Decision to Bautex-Stoffe GmbH regarding classification of blackout
drapery lining, 29 September 2004 (Exhibit US-23).
492 Letter from Oberfinanzdirektion Hamburg to HZA Bremen regarding Protest of Bautex-Stoffe
GmbH, 3 February 2003 (original and English translation) (Exhibit US-41).
493 Letter from Main Customs Office Hamburg-Walters hof to ORNATA GmbH in response to protest
regarding classification. 29 July 1998 (Exhibit US-50).
494 Affidavit of Mark R. Berman, President and Chie f Executive Officer of Ro ckland Industries, Inc.,
10 November 2005, paras. 6 – 7 (Exhibit US-79).
495 The term "acrylate" is defined as "a salt or ester of acrylic acid": The New Shorter Oxford English
Dictionary, 1993, p. 21.
496 The decision issued by the Main Customs Office of Bremen specifi cally notes that the products the
subject of classification were manufactured by Rockla nd Industries: Hauptzollamt Bremen, Letter Decision to
Bautex-Stoffe GmbH regarding classification of blackout drapery lining, 29 September 2004 (Exhibit US-23).
As noted in paragraph 7.252 above, in reaching its decision that the products in question should be classified
under heading 3921, the Main Customs Office of Bremen relied, inter alia, on the Bautex decision issued by the
Hamburg ZPLA.

by the Hamburg ZPLA were identical with the products that were the subject of classification in the
Ornata letter issued by the Hamburg ZPLA. In this regard, we recall that, in his affidavit, Mr Mark
Berman states that the product that was the subject of classification in the Ornata letter issued by the
Hamburg ZPLA was "identical in all material respects to the product sold to [Bautex] by
Rockland".
497 The United States has not submitted any evidence to support Mr Berman's assertion
that the products that were the subject of classifi cation in the Ornata letter issued by the Hamburg
ZPLA were "identical in all material respects" with those that were the subject of classification by the
Main Customs Office of Bremen and in the Bautex decision issued by the Hamburg ZPLA. In this
regard, the Panel notes that Mr Berman's appraisal of what is material may be different from the
matters that are relevant for the purposes of determ ining whether or not the tariff classification of
blackout drapery lining in the European Communities amounts to non-uniform administration in
violation of Article X:3(a) of the GATT 1994.
7.261 In any event, the Panel notes that the three d ecisions by the German customs authorities did
not consider that the textile/fabric/flocking compon ents of the products that were the subject of
classification were significant and/or visible to the nake d eye. This would appear to contrast with the
physical characteristics of the products that were the subject of classification by the customs
authorities in the United Kingdom, Ireland, the Netherla nds and Belgium. In this regard, the Panel
recalls that the United States has referred to an a ffidavit of Mr Mark Berman, Chief Executive Officer
of the company whose products were the subject of classification by the Main Customs Office of
Bremen and the Hamburg ZPLA in respect of the Bautex decision. 498 The Panel acknowledges that
that affidavit indicates that the products that were the subject of classification by those two German
customs authorities were "coated products" incor porating "textile flocking". However, as was
submitted by the European Communities during the Panel's proceedings 499, the affidavit does not
address the question of whether the products before the customs authorities in the United Kingdom,
Ireland, the Netherlands and Belgium were, in fact, id entical to the products that were the subject of
classification by the German customs authorities. Indeed, the Panel has not been provided with any
evidence that proves that the products in question were, in fact, identical.
7.262 With regard to the opinion of the WCO Secret ariat referred to by the United States in which
the WCO Secretariat suggested that the products th at were the subject of classification there were
classifiable under heading 5907 (i.e. different from the heading relied upon by the German customs
authorities),
500 the Panel notes that there is no compelling evidence in that opinion to indicate that the
products the subject of the WCO Secretariat's opini on had the same key physical characteristics as
those possessed by the products that were the su bject of classification by the German customs
authorities. In particular, the WCO Secretariat described the products in question as follows:
"[T]he product at issue would appear to be woven fabric made from 70% polyester
and 30% cotton, which is coated on one side , in a three-pass operation, with a three-
layer foam mixture of clay, titanium dioxide, carbon black, flame retardant, acrylic
and textile flock. The layer closest to the woven fabric is an acrylic cellular plastic.
The middle layer is composed mainly of titanium dioxide with carbon black. The
outer layer is composed of an acrylic cellu lar plastic with cotton flocking fibers. The

497 Affidavit of Mark R. Berman, President and Chie f Executive Officer of Ro ckland Industries, Inc.,
10 November 2005, para. 8 (Exhibit US-79).
498 Affidavit of Mark R. Berman, President and Chie f Executive Officer of Ro ckland Industries, Inc.,
10 November 2005 (Exhibit US-79).
499 European Communities' closing statement at the second substantive meeting, para. 16.
500 Letter from M. Chriticles Mwansa, Director, World Customs Organization, Tariff and Trade Affairs
Directorate, to M. Myles B. Harmon, Director, Office of Regulations and Rulings, U.S. Customs and Border
Protection regarding classification of blackout drapery lining (26 October 2004) (Exhibit US-24).

woven fabric, which is used to make bl ackout drapery lining, accounts for 24.7% of
the weight of the blackout lining, and the coating for 75.3%.

[I]t could be argued that the product at issu e, consisting of a textile fabric which is
neither figured nor worked, and which is uniformly dyed and coated with cellular
plastic, should be classified in heading 39.21 by virtue of Note 2(a)(5) to Chapter 59.
However, judging by the information submitte d and the sample supplied, this product
is not merely a textile fabric laminated w ith cellular plastic. It also incorporates a
middle layer composed mainly of titanium dioxide and carbon black, and in addition
the visible
 outer layer consists of cotton flocki ng which completely covers the acrylic
cellular plastic.

[I]t is the titanium dioxide and the car bon black which confer on this product its
blackout properties, while the cotton floc king covers the external surface of the
fabric, preventing the layer of acrylic pl astic from sticking and giving the fabric a
hand similar to that of a suede fabric.
The Secretariat shares your Administrati on's view that the significance of these
additional layers cannot be ignored, given th e use which will be made of this textile
product (manufacture of linings for blackout curtains).
The Secretariat can also agree with you that the product at issue can be likened to a
coated fabric of the kind described on page 1036 of the Explanatory Notes under item
(g)(1), and as a result the Secretariat woul d tend to classify it in heading 59.07 by
application of Interpretative Rule 1."
7.263 It would appear that the products under cons ideration by the WCO Secretariat comprised
textile fabric laminated with cellu lar plastic. Further, the product in question included a visible outer
layer consisting of cotton flocking, which completely covered the acrylic cellular plastic. As noted
previously, the products that were the subject of classification by the Main Customs Office of Bremen
and in the Bautex decision issued by Hamburg ZPLA were characterised as predominantly plastic
rather than textile, which arguably, distinguish them from the products under consideration by the
WCO Secretariat. Further, the pr oducts that were the subject of cl assification in the Ornata letter
issued by the Hamburg ZPLA were characterised as possessing "flock dust fibres" which were not
"visible to the naked eye". Again, the absence of a visible layer of textile flocking arguably
distinguish them from the products under considerat ion by the WCO Secretariat. Indeed, while not
binding, the WCO Secretariat opinion appears to suggest that, in the absence of a visible outer layer of
cotton flocking completely covering the acrylic cellu lar plastic (which apparently characterised the
products the subject of the WCO Secretariat's classi fication opinion), the products would have been
classifiable under heading 3921.
7.264 On the basis of the limited evidence before th e Panel, the Panel can only assume that the
products that were the subject of classification by the Main Customs Office of Bremen, in the Bautex
decision issued by the Hamburg ZPLA and in the Ornata letter issued by Hamburg ZPLA, were not
identical to those that were the subject of clas sification by the customs authorities in the United
Kingdom, Ireland, the Netherlands and Belgium. Th is indicates to the Panel that there was an
objectively justifiable basis upon which the German customs authorities considered that the products
that were the subject of classification by the cu stoms authorities in the United Kingdom, Ireland, the

Netherlands and Belgium were different from the pr oducts that were the subject of classification by
the German customs authorities.
7.265 Therefore, the Panel does not consider that the divergent decisions regarding the tariff
classification by, on the one hand, the German customs authorities and, on the other hand, the customs
authorities in the United Kingdom, Ireland, the Ne therlands and Belgium amounts to non-uniform
administration in violation of Article X:3(a) of the GATT 1994. As stated previously, we consider
that, on the basis of the limited evidence before th e Panel, there was an objective factual basis that
justifies the decision by the German customs aut horities to classify the product in question in a
manner differently from the customs authorities in the United Kingdom, Ireland, the Netherlands and
Belgium. Nevertheless, the Panel notes that the United States has also implicitly challenged the
administrative process that led to divergent classification decisions regarding blackout drapery
lining.
501 We consider that process immediately below.
 Administrative process leading to tariff classification decisions for the product in
 question by German customs authorities
7.266 The Panel recalls its finding that the term "a dminister" in Article X:3(a) of the GATT 1994
relates to the application of laws and regulations , including administrative processes. In the Panel's
view, the administrative process leading to a ta riff classification decision, such as the tariff
classification of blackout drapery lining, constitutes an act of administration within the meaning of
Article X:3(a) of the GATT 1994. Further, it amounts to an instance of administration of the
Common Customs Tariff in the tariff classification area, a matter that is within the Panel's terms of
reference.
 German interpretative aid
7.267 In the Panel's view, a system of customs administration which allows or, at least, does not
prevent customs authorities from unilaterally relying upon interpretative aids in carrying out their
functions, which are not provided for in the binding rules applicable to all customs authorities, such as
in the European Communities, could lead to non-unif orm administration in violation of Article X:3(a)
of the GATT 1994 in certain circumstances.
7.268 The Bautex decision issued by the Ham burg ZPLA makes explicit reference to an
interpretative aid that was particular to Germany.
502 In particular, that decision refers to a note to
Chapter 59 of the Tariff entitled "Erl. Zu Kap. 59 NEH Rz. 02.0 ff". 503 Notably, the interpretative aid
sets out criteria, which are aimed at determining wh ether or not the textile component of a product is
present merely for reinforcing purposes in accord ance with Note 2(a)(5) to Chapter 59 of the
Common Customs Tariff. The interpretative aid states, inter alia, that, in determining whether or not
the textile component of a product is present mere ly for reinforcing purposes, it is necessary to
consider whether the fabric in question is "tightly woven". This criterion appears to have been relied
upon by the German customs authorities in each of the three decisions with which we have been
provided.
7.269 In particular, as previously noted, the Bautex decision issued by the Hamburg ZPLA makes
explicit reference to an interpretative aid that was particular to Germany and then proceeds to state

501 United States' first written submission, paras. 71 – 72.
502 The European Communities does not dispute that the Bautex decision issued by the Hamburg ZPLA
was based, at least in part, on an interpretative aid that was particular to Germany: European Communities' first
written submission, para. 343.
503 This note is contained in "National Decisions and Indications accompanying Chapter 59 of the
German Tariff Schedule" (original and English translation) (Exhibit US-43).

that "the fabric is not dense in the merchandise under consideration". 504 In other words, the Hamburg
ZPLA appeared to correlate the criterion of "tightly woven" in the German interpretative aid with the
criterion of density of the fabric. This criterion of density was also relied upon by the Main Customs
Office of Bremen505 and by the Hamburg ZPLA in respect of the opinion concerning Ornata506.
7.270 Notably, the interpretative aid relied upon by the German customs authorities in each of these
cases is not contained in the relevant chapters of the Common Customs Tariff, namely Chapters 39
and 59. 507 The European Communities submits that the fabric density criterion was developed
pursuant to Commission Regulation (EC) No. 1458/97. 508 As the European Communities itself
explains, that regulation concerned the classification of garments. The Panel considers it difficult to
reconcile the fact that a product that was consider ed as predominantly plastic by two of the German
customs authorities in question (i.e. the Main Cust oms Office of Bremen and the Hamburg ZPLA in
respect of the Bautex decision) would be classified by those customs authorities based on an
interpretative aid developed in analogy to a regula tion concerning textile products. Moreover, even if
the fabric density criterion amounted to what the European Communities describes as a "purely
interpretative aid prepared for administrative purpo ses which does not in any way have force of law,
and does not derogate from Community law"
509, the Panel notes that the criterion appears to have
played a critical role for the German customs aut horities in deciding how to classify the products in
question.510
7.271 The Panel has not been provided with any eviden ce to indicate that any other member States
are relying upon an aid akin to that used by the Ge rman customs authorities with respect to the tariff
classification of blackout drapery lining. Further, the interpretative aid relied upon by the German
customs authorities is not contained in the rele vant chapters of the Common Customs Tariff. 511
Additionally, the German interpretative aid apparently has in the past and may continue in the future
to have an impact upon the tariff classification of blackout drapery lining in the European
Communities. These factors demonstrate that th e German customs authorities' reliance upon the
interpretative aid in question amounts to non-uniform ad ministration in violation of Article X:3(a) of
the GATT 1994.
 Tariff classification decisions in other member States
7.272 By way of observation, a customs administration system which does not require reference by
customs authorities to decisions taken by other cu stoms authorities operating within the same system

504 See paragraph 7.252 above.
505 In particular, the Main Customs Office of Bremen states that "[t] he fabric is not dense". See
paragraph 7.251 above.
506 The Ornata decision issued by the Hamburg ZPLA stat es that: "[t[he spun fabric is not dense": See
paragraph 7.253 above.
507 In this regard, see paragraphs 7.175 – 7.176 above.
508 Commission Regulation (EC) No. 1458/97 concerning the classification of certain goods in the
Combined Nomenclature (Exhibit EC-78).
509 European Communities' first written submission, para. 344 referring to Exhibit EC-79, para. 19.
510 In this respect, the Panel notes that the European Communities submits that member States' customs
authorities are not prevented from issuing administrative guidelines or other non-binding documents for
administrative purposes. However, the ECJ has confirmed that such measures cannot derogate in any way from
the application of EC law: European Communities' reply to Panel question No. 157.
511 In this regard, the Panel notes that the European Communities submits that member States can only
act to supplement provisions contained in EC law if they have been specifically auth orized to do so or if a
specific issue is not covered by EC law: European Communities' reply to Panel question No. 157. In the case
of the tariff classification of blackout drapery lining, the Panel notes that this appears to be covered by the
Common Customs Tariff. Further, the Panel has not been provided with an y evidence to indicate that member
States have been specifically authorized to supplement the Common Customs Tariff with respect to the tariff
classification of blackout drapery lining.

and/or cooperation between customs authorities before customs decisions are taken, such as in the
European Communities, could lead to non-uniform admi nistration in violation of Article X:3(a) of the
GATT 1994 in certain circumstances.
512
7.273 In the present case, the Panel also notes that , while the Main Customs Office of Bremen
acknowledged the existence of "numerous binding cu stoms tariff decisions ... handed down regarding
comparable goods"513, without any explanation, it went on to state that it "sees no reason to vacate the
contested Notice of Change to Tax". Similarly in the Bautex decision issued by the Hamburg ZPLA,
the German customs authority referred to a classifi cation decision by Belgian customs authority but
distinguished it on the basis that "[t]he use of the same documents for classification in all cases
strengthens the suspicion that the documents do not necessarily match the merchandise."514
7.274 The Panel is of the view that the failure on the part of the Main Customs Office of Bremen to
take into account "numerous binding customs tari ff decisions ... handed down regarding comparable
goods" or, at a minimum, to explain why they were deemed irrelevant to the classification at hand is
not consistent with the obligation of uniform administration in Article X:3(a) of the GATT 1994. The
Panel considers that it was all the more incumb ent upon the Main Customs Office of Bremen to
provide such explanations in the light of the fact that Bautex-Stoffe GmbH – the company requesting
review of the classification of products before th e Main Customs Office of Bremen – objected on
numerous occasions to the classification of the produ cts under heading 3921 on the ground that the
goods consisted of a fabric comprising polyester and wool, coated with acrylic and flocked with
cotton fibers515 and because the Main Customs Office of Bremen was clearly aware of the existence of
classification decisions by other customs authorities for "comparable goods". For the same reasons,
the Panel considers that it was not appropriate fo r the German customs authority in the Bautex
decision issued by the Hamburg ZPLA to have dism issed the tariff classification by Belgian customs
authorities on the basis of a mere "suspicion" th at the documents filed for classification of those
products by the Belgian customs authorities did not correspond to the products themselves.516
7.275 Indeed, it is possible that, had the German cust oms authorities' consideration of classification
decisions for blackout drapery lining issued by customs authorities in other member States gone
beyond the merely superficial reference that their respective decisions evidence, the classification of
the products before the German customs author ities might not have been different from the
classification of the products before the customs authorities in United Kingdom, Ireland, the
Netherlands and Belgium. In the Panel's view, th e apparent failure on the part of German customs
authorities to seriously consider classification deci sions for blackout drapery lining of other customs

512 In this regard, see paragraph 7.177 above,
513 Hauptzollamt Bremen, Letter Decision to Bautex-Stoffe GmbH, Sep. 22, 2004 (original and English
translation) ("Bautex-Stoffe Decision") (Exhibit US-23).
514 Letter from Oberfinanzdirektion Hamburg to HZA Bremen regarding Protest of Bautex-Stoffe
GmbH, 3 February 2003 (original and English translation) (Exhibit US-41).
515 This is evident from page 2 of Hauptzollamt Br emen, Letter Decision to Bautex-Stoffe GmbH, 22
September 2004 (original and English translation) ("Ba utex-Stoffe Decision") (Exhibit US-23) which refers to
letters dated 2 May 2001, 25 August 2001, 22 August 2002 and 14 May 2003.
516 With respect to its letter concerning Ornata, the Hamburg ZPLA states that: "In your protest letter of
18/12/1997 you mention that a number of fundamental decisions were taken by the EU finance authorities in
Brussels with reference to merchandise under code 5907 0090 900. May I request you to inform me of the
document numbers and dates of the decisions, if they are known to you. If you have further information and
receipts to show that identical mercha ndise was treated differently in othe r EU countries (i.e . a classification
other than heading 3921), please send me the documents, in order to clarify this situation.": Letter from Main
Customs Office Hamburg-Waltershof to ORNATA GmbH in response to protest regarding classification (29
July 1998), p. 2 (Exhibit US-50). The Panel has not b een provided with any evidence to suggest that the
documentation for identical merchandise requested by the Hamburg ZPLA was not provided and/or that such
documentation was not taken into account by the Hamburg ZPLA.

authorities may have had an impact and may continue to have an impact in the future upon trade in
blackout drapery lining in the European Communities.517 These factors demonstrate that the treatment
by the German customs authorities of classification decisions for blackout drapery lining issued by
other customs authorities amounts to non-uniform administration in violation of Article X:3(a) of the
GATT 1994.
 Conclusion
7.276 In conclusion, the Panel considers that the administrative process leading to the tariff
classification of blackout drapery lining amounts to non-uniform administration within the meaning of
Article X:3(a) of the GATT 1994. The Panel cons iders that the acts of non-uniform administration
which occurred between 1999 and 2002 with respect to the tariff classification of blackout drapery
lining continue to have potential effect. In particular, German customs authorities may rely upon an
interpretative aid particular to Germany in decidi ng how to classify blackout drapery lining whereas,
apparently, customs authorities in other member Stat es do not rely upon the same aid. Furthermore,
German customs authorities are not obliged to make reference to the decisions of other customs
authorities when classifying blackout drapery lining, ev en in cases where there is a possibility that the
products the subject of those decisions are the same or similar. Therefore, the Panel finds a violation
of Article X:3(a) of the GATT 1994 with respect to the tariff classification of blackout drapery lining.
(v) Tariff classification of liquid crystal display flat monitors with digital video interface
 Summary of the parties' arguments

 Evidence of divergence in classification
7.277 The United States refers to a case involving BTI for the classification of liquid crystal
display (LCD) flat monitors with digital video interface (DVI). The United States notes that, until
2004, member State customs authorities had consistently classified LCD flat monitors with DVI as
"computer monitors" under heading 8471 of the Common Customs Tariff ("Automatic data
processing machines and units thereof ..."). The United States submits that, however, in 2004,
customs authorities in the Netherlands began classify ing the goods as "video monitors" under heading
8528 of the Common Customs Tariff ("Reception apparatus for television, whether or not
incorporating radio-broadcast receivers or sound or video recording or reproducing apparatus; video
monitors and video projectors"). The United Stat es submits that this matter was brought to the
attention of the Customs Code Committee. Acco rding to the United States, the Customs Code
Committee did not definitively resolve the classi fication question. Instead, in March 2005, the
Council of the European Union issued a regulation temporarily resolving the matter for some of the
monitors at issue (i.e. monitors with a diagonal m easurement of 19 inches or less and an aspect ratio
of 4:3 or 5:4). However, the United States submits that that regulation merely suspends duties on this
subset of monitors until 31 December 2006 and, meanwhile, leaves unresolved the classification of
monitors with a diagonal measurement greater than 19 inches, which at least one member State (i.e.
the Netherlands) continues to classify as video monitors.
518 According to the United States, products
above the size threshold defined in the Council re gulation remain subject to duties depending on the
classification assigned by customs authorities in different member States.519

517 For example, the impact might be trade diversion to member States other than Germany because of
the administrative processes applied by at least some cu stoms authorities in Germany with respect to the tariff
classification of blackout drapery lining.
518 United States' first written submission, para. 74 referring to Council Regulation (EC) No. 493/2005
of 16 March 2005 (Exhibit US-28).
519 United States' reply to Panel question No. 4.

7.278 The European Communities responds that the correct classification of the monitors at issue
is a relatively recent question, which has arisen due to the increasing convergence of information
technology and consumer electronics. Many LCD m onitors, by virtue of their design and technical
characteristics, can serve both as a computer mo nitor and as a video monitor. The European
Communities submits that it is, therefore, difficult for customs authorities to establish on an objective
basis the precise purpose for which a particular monitor is intended.
520 The European Communities
also notes that there are a large number of different types of LCD monitors on the market that differ in
various aspects, including size, the interfaces they possess, the signals they can process, and general
design. According to the European Communities, to the extent that such features may have an impact
on their use, differences between different types of monitors may also need to be taken into
account.
521 The European Communities submits that the evidence referred to by the United States in
support of its claims does not show that there is a problem of non-uniform administration contrary to
Article X:3(a) of the GATT 1994, but rather that there is an issue in the process of resolution. In this
regard, the European Communities submits that the cl assification of the relevant monitors is an issue
which is currently under review , and relevant measures will be submitted to the Customs Code
Committee in the near future.
522
 Measures taken by the European Comm unities to resolve the divergence in
 classification
7.279 The European Communities notes that Council Regulation (EC) No. 493/2005 of 16 March
2005 temporarily suspends, until 31 December 2006, the duties for video monitors with a diagonal
screen measurement of 48.5 cm or less and with an aspect ratio of 4:3 or 5:4. 523 The European
Communities explains that the purpose of this measure is to provide certainty about tariff treatment to
the concerned importers for a transitional period of time. This suspension was limited to those
monitors which, on account of their size, are more lik ely to serve as computer monitors than larger
monitors. The adoption of a temporary duty susp ension was preferred to a classification regulation
because, according to the European Communities, it allows further observation of the technological
and commercial developments in this segment of the market. 524 The European Communities explains
that, from a practical perspective, the suspension of the duties fulfils exactly the same purpose as that
of a classification regulation. It assures traders that, regardless of whether the goods fall under
headings 8471 or 8528, their goods will receive the same tariff treatment. The European
Communities notes that the relevant industry associ ation has characterised Regulation No. 493/2005
as "a very important suspension request which, wh en adopted as proposed, will benefit all importers
of such products".
525 The European Communities submits that, before the expiration of the
suspensive measure, EC institutions will review the situation and adopt any necessary measures.526
7.280 The United States submits that faced with the problem of divergent classification, the
European Communities merely adopted a regulation that temporarily suspends duties on certain LCD
monitors with DVI regardless of their classification. The United States notes that the temporary duty
suspension only applies to monitors below a specified size threshold. Monitors above that threshold
continue to be subject to divergent classif ication from member State to member State. 527 The United
States also questions whether adoption of a Council regulation to deal temporarily with a subset of

520 European Communities' first written submission, para. 349.
521 European Communities' first written submission, para. 350.
522 European Communities' closing statement at the second substantive meeting, para. 15.
523 European Communities' first written submission, para. 356 referring to Council Regulation (EC)
No 493/2005 of 16 March 2005 (Exhibit US-28).
524 European Communities' first written submission, para. 357.
525 European Communities' first written submission, para. 358 referring to Exhibit EC-84.
526 European Communities' first written submission, para. 357.
527 United States' reply to Panel question No. 17(b).

LCD monitors rather than a classification regul ation, approved by the Customs Code Committee
amounts to uniform administration within the meaning of Article X:3(a) of the GATT 1994.
According to the United States, a duty suspension regulation is very different from a classification
regulation. One is a temporary policy solution, wh ile the other is a definitive determination of a
technical issue. In the United States' view, th e ability of the Council to adopt a duty suspension
regulation does not demonstrate the system's abilit y to achieve uniformity when it comes to the
administration of classification rules. Indeed, the ve ry fact that the question of classification remains
unresolved shows an inability of the syst em to achieve uniformity in this area.
528 The United States
submits that, therefore, since the suspension regula tion applies only to monitors below a certain size
threshold, that it does not actually resolve the unde rlying classification question, for monitors above
the size threshold, a state of non-uniformity with serious financial consequences remains. 529
According to the United States, traders organize th eir business affairs with a long-term view, and in
making their shipping decisions, they are likely to take account of which customs authorities will
accord the more favourable tariff treatment after the temporary regulation expires.
530
7.281 The European Communities submits that the United States seems to insinuate that the
European Communities chose Regulation No. 493/2005 in order to somehow circumvent the Customs
Code Committee. The European Communities disputes this, arguing that the adoption of
Regulation No. 493/2005 required a qualified majority of the member States in the Council, just as a
favourable opinion of the Committee in management or regulatory procedure does. Rather, the
instrument of a Council Regulation was chosen b ecause this seemed better adapted to the specific
circumstances of the case.
531 The European Communities adds that it has adopted another relevant
measure, namely Regulation No. 6 34/2005, which classifies LCD monito rs of a particular type under
heading 8528. Currently, the Co mmission keeps monitoring the situation, and may adopt further
classification regulations for LCD monitors or ot her appropriate measures as and when the need
arises.532
7.282 The European Communities also submits that the reference to the long-term planning on the
part of traders is irrelevant for the purposes of Article X:3(a) of the GATT 1994. The European
Communities submits that Article X:3(a) of the GATT 1994 requires uniform administration; it does
not prohibit legislative changes nor does it protect expectations of traders regarding the continuation
of certain measures. Accordingly, the question of what measures the European Communities will
adopt after the expiration of Regulation No. 493/2005 in order to ensure uniform administration is not
prejudged by Article X:3(a) of the GATT 1994.
533 The European Communities also argues that the
fact that Regulation No. 493/2005 is only valid until 31 December 2006 does not reduce its value for
ensuring uniform tariff treatment throughout the Eu ropean Communities presently. Moreover, before
the expiration of the measure, the European Co mmunities will examine the situation and will adopt
the measures which are necessary. The European Communities submits that the United States cannot
build an allegation of non-uniform administrati on on the mere speculation that the European
Communities might fail to take certain measures in the future. 534 Therefore, according to the
European Communities, it is irrelevant whether a ny provision compels the European Communities to
take the necessary measures after the expiration of Regulation No. 493/2005.535

528 United States' reply to Panel question No. 4.
529 United States' oral statement at the second substantive meeting, para. 53.
530 United States' reply to Panel question No. 137(b).
531 European Communities' first written submission, para. 360.
532 European Communities' first written submission, para. 361 referring to Exhibit EC-85.
533 European Communities' comments on the United States' reply to Panel question No. 137(b).
534 European Communities' second written submission, para. 122; European Communities' comments
on the United States' reply to Panel question No. 137(b).
535 European Communities' comments on the United States' reply to Panel question No. 137(b)

7.283 The European Communities also argues that the United States is wrong to claim that
Regulation No. 493/2005 fails to ensure uniform administration because the measure concerns the
suspension of a duty rate, rather th an the classification of a product. In this regard, the European
Communities notes that Article X:3(a) of the GATT 1994 does not require uniform administration for
its own sake, but rather in order to ensure uniform conditions of treatment for traders. Accordingly,
Article X:3(a) of the GATT 1994 can be held to be violated only where a variation of practice in fact
has a significant impact on traders. In the case of LCD monitors, due to Regulation No. 493/2005, for
the monitors covered by the regulation, there is no difference in tariff duties between monitors
classified under heading 8471 and those classified unde r heading 8528, since the tariff rate for both
will be 0%. Nor are there any other relevant differences in treatment. Accordingly, even if there were
differences in tariff classification for the monitors at issue, this would have no impact on traders. The
European Communities explains that this is wh y the trading community was in fact strongly
supportive of the measure.
536 In addition, the European Communities considers that, even if the Panel
were to hold that there was an incompatibility with Article X:3(a) of the GATT 1994, this
incompatibility could not be held to constitute nullif ication or impairment of any benefit accruing to
the United States under Article X:3(a) of the GATT 1994. In the case of LCD monitors, the tariff
treatment for the monitors covered by Regulation No. 493/2005 is uniform and the duty rate is 0%.
Therefore, the presumption of nullification and impairment established by Article 3.8 of the DSU
would have to be considered as rebutted in the present case.
537
7.284 In response, the United States submits that the implication that the trading community is
satisfied by the measures taken by the European Co mmunities so far regarding the tariff classification
of LCD monitors is belied by recent statements fro m the industry concerned with this classification
question. Specifically, in a September 2005 lette r to the Commission's Director for International
Affairs and Tariff Matters, the indus try association that has focused on this matter ("EICTA") stated
that: "[w]ithout such clarification [of the classifica tion of monitors above the size threshold set forth
in the duty suspension regulation], the industry is faced with an unacceptable situation were [sic]
various Member States are applying classification rules in an inconsistent manner, causing
competitive disadvantage for some importers and making the consequences of sourcing and routing
decisions almost impossible to predict". 538 Further, as recently as 6 December 2005, EICTA advised
the Commission of its profound concerns regarding this matter. According to the United States,
EICTA noted not only its substantive disagreement with the Commission's proposed regulation, but
also its dismay at the Commission's lack of cons ultation with the trade associ ation, including its lack
of response to the association's 2 September 2005 letter on this matter.
539
7.285 In response, the European Communities submits that, in its letter, EICTA specifically calls
on the Commission to postpone the discussion of the classification regulation. The European
Communities question how postponement of a measure th at will contribute to uniform administration,
supports the United States' submission that the Eu ropean Communities is not doing enough to ensure
uniform administration. With reference to EICT A's letter, the European Communities submits that
this, together with a number of other measures 540, are outside the Panel's terms of reference. Finally,
the European Communities submits that, on the b asis of ongoing consultations with the customs
authorities of the member States as well as with concerned industry, the EC Commission has prepared

536 European Communities' second written submission, para. 123 referring to letter containing industry
response to Regulation No. 493/2005 concerning LCD Video Monitors, 16 November 2004 (Exhibit EC-84).
537 European Communities' second written submission, para. 124.
538 United States' oral statement at the second subs tantive meeting, para. 53 referring to Letter from
Mark MacGann, Director General, EICTA, to Manuel Ar nal Monreal, Director International Affairs and Tariff
Matters, European Commission, 2 September 2005, p. 1 (Exhibit US-75).
539 United States' reply to Panel question No. 137(b) referring to See Letter from Mark MacGann,
Director General, EICTA, to Manuel Arnal Monreal, Director International Affairs and Tariff Matters, European
Commission, 6 December 2005 (Exhibit US-81).
540 Specifically, the European Communities refers to Exhibits US 75-78.

a draft classification regulation regarding LCD mon itors. This measure will be submitted for the
opinion of the Customs Code Committee at its meeting of 16 December 2005.541
 Opinion of the Customs Code Committee
7.286 The European Communities submits that the Customs Code Committee was seized of the
issue of the classification of LCD monitors for the first time in April 2004 and has reviewed the
situation at regular intervals ever since. Sin ce the classification issue requires technical input from
industry, the Committee has, in accordance with Article 9 of its Rules of Procedure, heard
representatives of the industry.
542 The European Communities notes that, at its 346 th meeting of 30
June – 2 July 2004, the Customs Code Committee concluded that "unless an importer can demonstrate
that a monitor is only to be used with an ADP m achine (heading 8471) or to be used as an indicator
panel (heading 8531), it has to be classified under heading 8528". 543 On the basis of the foregoing,
the European Communities submits that the United States' allegations that the Netherlands wrongly
classifies LCD monitors as video monitors is misplaced since, in principle, such a classification is in
line with the Common Customs Tariff, as confirmed by the Customs Code Committee.544
7.287 In response, the United States submits that by characterizing the Dutch classification as "in
line" with the Common Customs Tariff, the Eur opean Communities suggests that more than one
classification may be "in line". According to the Un ited States, where more than one classification is
"in line" with the Common Customs Tariff, the European Communities does not provide a mechanism
for systematically reconciling different classifications adopted by different member State authorities.
The United States adds that the Customs Code Committee conclusion with which the Dutch
classification supposedly is "in line" is not itself in line with the relevant Chapter Note from the
Common Customs Tariff. Specifically, the Committe e's conclusion would prohibit a monitor from
being classified as a computer monitor under tariff heading 8471 unless an importer can demonstrate
that it is "only to be used with an ADP machine"
545 – a computer machine. However, according to the
United States, under the relevant chapter notes, a m onitor may be classified as a computer monitor if
"it is of a kind solely or principally used in an automatic data-processing system".546
7.288 The United States also notes that Regulation No. 634/2005 classifying monitors of a
particular type under heading 8528, states that "[c]lassification under subheading 8471 60 is excluded,
as the monitor is not of a kind solely or principa lly used in an automated data processing system.
...".547 The United States observes that the regulati on applied the sole or principal use test, as
indicated in Note 5 to Chapter 84 of the Common Cu stoms Tariff. By contrast, the conclusion of the
Customs Code Committee is that an importer must demonstrate that "a monitor is only to be used with
an ADP machine" in order to have it classified unde r heading 8471. According to the United States,
the Customs Code Committee's conclusion, which abandons the sole or principal use test set out in the
Common Customs Tariff in favour of a sole use test, detracts from rather than promotes uniformity.
In the view of the United States, member State authorities are now confronted with two conflicting

541 European Communities' comments on the United States' reply to Panel question No. 137(b)
referring to proposed new regulation on LCD monitors, 29 November 2005,(Exhibit EC-163) and Agenda for
Customs Code Committee, 21 November 2005 (Exhibit EC-164).
542 European Communities' first written submission, para. 352.
543 European Communities' first written submission, para. 353.
544 European Communities' first written submission, para. 354.
545 European Communities' first written submission, para. 353.
546 United States' oral statement at the first substan tive meeting, para. 28; United States' reply to Panel
question No. 4 referring to Commission Regulation No. 1810/2004 of 7 September 2004 amending Annex I to
Council Regulation (EEC) No 2658/87 on the tariff and statistical nomenclature and on the Common Customs
Tariff, 30 October 2004 at 504 (Chapter 84, note 5(B)(a)) (emphasis added). (Exhibit US-46).
547 Commission Regulation (EC) No. 634/2005 of 26 April 2005 concerning the classification of
certain goods in the Combined Nomenclature (Exhibit EC-85).

tests for classifying LCD monitors with DVI for ADP machines – the sole or pr incipal use test in the
Common Customs Tariff chapter notes or the sole use test in the Customs Code Committee's
conclusion.
548
7.289 The European Communities responds that the Customs Code Committee reached its
conclusion on the basis of several presentations by the industry concerned. On this basis, the
Committee concluded that industry had not succeeded in presenting any criteria on which principal
use could be established. 549 The European Communities adds that it does not understand what
purpose conclusions of the Customs Code Committee could have if it should be limited to restating
the language of the Combined Nomenclature. Acco rding to the European Communities, in order to
provide for a uniform application of the Commo n Customs Tariff, it must be possible for the
Committee to reach, on the basis of the facts avai lable, and acting in conformity with the Common
Customs Tariff, specific conclusions concerning the cl assification of particular goods. It is in this
way that the Committee can and does contribute to the uniform classification of goods throughout the
European Communities.
550
7.290 In counter-response, the United States submits that the Customs Code Committee's
conclusions have put member State authorities in th e quandary of having to decide what weight to
give the conclusions in view of an apparently co nflicting chapter note, namely Note 5 to Chapter 84
of the Common Customs Tariff. 551 The United States submits that this quandary is evidenced by
different approaches taken by member State authoriti es. For example, in a tariff notice issued in
2004, the UK customs authority, evidently follo wing the Customs Code Committee's conclusion,
stated that "from October 2004, LCD/TFT Monitors that incorporate a DVI connector are to be
classified in Combined Nomenclature (CN) code 8528 21 90". 552 Thus, according to the United
States, the United Kingdom appears to be followi ng the opinion of the Customs Code Committee and
classifying all such monitors under heading 8528, regard less of sole or principal use. In the case of
the Netherlands, the United States submits that it has abandoned the guidance of the Customs Code
Committee for fear of adverse commercial impact a nd is now applying its own set of criteria for
deciding whether to classify monitors under heading 8528 and 8471. Specifically, in a decree of July
2005, the Dutch customs authority explained that, since April 2004, it had been classifying LCD
monitors with DVI under tariff heading 8528, in view of a Commission regulation concerning plasma
monitors. It then went on to state that: "[n]ot all member states are following this policy. The result
is a diverted flow of business, which is harmfu l to the competitiveness of Dutch industry in the
logistics and services sector. For this reason, the Netherlands is making the policy as regards
classification of certain LCDs in the Combined Nomenclature more precise".
553 Accordingly, the
decree set forth criteria that the Netherlands follows as of 22 November 2004 for determining whether
LCD monitors with DVI should be classified under heading 8471 or heading 8528. These criteria,
which cover a number of factors, including how a good is presented in brochures, are evidently
unique to the Netherlands, appearing in no EC regula tion or even in EC guidance. Moreover, despite
the Customs Code Committee's conclusion, the Ge rman authority appears to have continued
classifying LCD monitors with DVI under heading 8471, even where they are principally though not
solely for use with computers.554

548 United States' reply to Panel question No. 17(b).
549 European Communities' second written submission, para. 127.
550 European Communities' second written submission, para. 128.
551 United States' oral statement at the second substantive meeting, para. 54.
552 HM Customs & Excise, Tariff Notice 13/04 (Exhibit US-76).
553 Douanerechten. Indeling van bepaalde LCD m onitoren in de gecombineerde nomenclatuur, No.
CPP2005/1372M, 8 July 2005, (original and unofficial English translation) (Exhibit US-77).
554 United States' reply to Panel question No. 137(b) referring to BTI DEM/2975/05-1 (start date of
validity 19 July 2005) (Exhibit US-78).

 Analysis by the Panel
7.291 The Panel notes that the United States challeng es divergence in the tariff classification of
LCD monitors with DVI among customs authoriti es of the member States of the European
Communities.555
7.292 In the Panel's view, the tariff classification of a product, including of LCD monitors with
DVI, constitutes an act of administration within th e meaning of Article X:3(a) of the GATT 1994.
This act of administration is a matter within the Panel's terms of reference since it amounts to an
instance of administration of the Common Customs Tariff in the tariff classification area.556
7.293 With respect to the question of whether or not the tariff classification of LCD monitors with
DVI is "uniform" within the meaning of Article X:3(a) of the GATT 1994, the Panel recalls its
finding in paragraph 7.135 above th at geographic uniformity is requi red under Article X:3(a) of the
GATT 1994. That is, administration should be uniform in different places within a particular WTO
Member. The Panel also recalls its finding in para graph 7.135 above that th e form, nature and scale
of the alleged non-uniform administration and the laws, regulations, judicial decisions and rulings that
are allegedly being administered in a non-uniform manner should be taken in to consideration when
interpreting the term "uniform" in Article X:3(a) of the GATT 1994. The Panel considers that the
United States' challenge with respect to the tariff classification of LCD monitors with DVI is narrow
in nature. It involves the interpretation of only a few tariff headings in the Common Customs Tariff
to determine the classification of a single product – namely, of LCD monitors with DVI. Therefore,
given the narrowness of this challenge, the Panel considers that a high degree of uniformity is
required for the purposes of Article X:3(a) of the GA TT 1994. We now turn to the facts to determine
whether or not this high degree of uniformity has been achieved with respect to the tariff classification
of LCD monitors with DVI.
7.294 The Panel notes that the European Communities does not appear to dispute that, in 2004, a
divergence in the tariff classifi cation of LCD monitors with DVI among customs authorities of the
member States occurred, namely that customs au thorities in the Netherlands classified LCD flat
monitors with DVI "video monitors" under head ing 8528 ("Reception apparatus for television,
whether or not incorporating radio-broadcast rece ivers or sound or video recording or reproducing
apparatus; video monitors and video projectors") whereas customs authorities in other member States
classified such LCD monitors as "computer mo nitors" under heading 8471 ("Automatic data
processing machines and units thereof ...").
557 Further, the European Communities itself has noted

555 United States' first written submission, para. 74 referring to Council Regulation (EC) No. 493/2005
of 16 March 2005 (Exhibit US-28).
556 For information on EC institutions and mechanisms applicable in the tariff classification area, see
paragraphs 7.179 – 7.182 above.
557 European Communities' first written submission, para. 349; European Communities closing
statement at the second substantive meeting, para. 15; European Communities' comments on the United States'
reply to Panel question No. 137(b). For example, in its closing statement at the second substantive meeting, the
European Communities stated that "these recent developments do not show that there is a problem of non-
uniform application contrary to Article X:3(a) GATT, but rather that there is an issue which is currently under
review...": European Communities closing statement at the second substantive meeting, para. 15. Divergent
tariff classification of LCD monitors with DVI between, on the one hand, Dutch customs authorities and, on the
other hand, customs authorities in the other member States, tends to be supported by a press release entitled
"Additional tax assessments again reveal the Netherlands to be the odd one out in the EU", which states that
"[t]he Dutch Customs authorities have completely unexpectedly introduced importation criteria – newly
published in November 2004 – and levies on LCD monitors with retrospective effect on all such products which
were imported through the Netherlands by importers and logistical service providers in the period from 2002 –
2004. ... This situation is in marked contrast to th e other EU countries, which have not issued additional
assessments.": Press Release issued by Greenberg Traurig, 24 May 2005 (Exhibit US-29).

that many LCD monitors, by virtue of their design and technical characteristics, can serve both as a
computer monitor and as a video monitor.
558 In these proceedings, the European Communities has
not submitted that the divergence in tariff classificati on is limited to a subset of LCD monitors that
can serve both as a computer monitor and as a video monitor.
7.295 The European Communities does submit, howev er, that the divergence in the tariff
classification of LCD monitors with DVI among cust oms authorities of the member States has been
the subject of past and ongoing action on the part of the European Comm unities to resolve the
divergence.559 After appraising all the relevant evidence be fore us, we are of the view that the action
taken by the European Communities since 2004 when the existence of non-uniform administration
became apparent has not had the effect of rectifyi ng the divergence in the tariff classification of LCD
monitors with DVI among customs authorities of the member States.560 Our reasoning is as follows.
7.296 First, by the European Communities' own admission, Council Regulation (EC) No. 493/2005
of 16 March 2005, which was enac ted in response to the divergence in tariff classification of LCD
monitors with DVI, only applies to video monitors with a diagonal screen measurement of 48.5 cm or
less and with an aspect ratio of 4:3 or 5:4. 561 The Regulation explains the rationale for the limited
scope of its application in the preamble as follows: "Trade data indicate that currently monitors using
liquid crystal display technology, with a diagonal measurement of the screen of 48,5 cm or less and a
screen aspect ratio of 4:3 or 5:4, are mainly used as output units of automatic data-processing
machines. However, such monitors are frequently also capable of reproducing video images from a
source other than an automatic data-processing mach ine and therefore do not meet the condition of
being solely or principally for use with such machines".
562 In other words, the Regulation limits its
scope of application to monitors with a diagonal screen measurement of 48.5 cm or less and with an
aspect ratio of 4:3 or 5:4 because, according to the Regulation, monitors with those features are
mainly used as output units of automatic da ta-processing machines and are also capable of
reproducing video images from a source other than an automatic data-processing machine. The Panel
has not been provided with evidence to suggest that monitors falling outside the scope of the
Regulation (because they do not have a diagonal scr een measurement of 48.5 cm or less and do not
have an aspect ratio of 4:3 or 5:4) would not al so be used as outputs of automatic data-processing
machines as well as reproducing video images from a source other than an automatic data-processing
machine. In fact, to the contrary, the Europ ean Communities itself has submitted that many LCD
monitors, by virtue of their design and technical characteristics, can serve both as a computer monitor
and as a video monitor.
563 Moreover, the preamble to Regulation No. 493/2005 states that:
"[T]he convergence of information technol ogy, consumer electronics industries and
new technologies has created a situation wh ere it is becoming impossible, when
classifying monitors, to determine, by reference to simple technical characteristics,
the main purpose of a particular monitor. It follows from the case law of the Court of

558 European Communities' first written submission, para. 349.
559 European Communities' first written submission, para. 361 referring to Commission
Regulation No. 634/2005 (Exhibit EC-85); European Communities' closing statement at the second substantive
meeting, para. 15; European Communities' comments on the United States' reply to Panel question No. 137(b)
referring to proposed new regulation on LCD monitors, 29 November 2005,(Exhibit EC-163) and Agenda for
Customs Code Committee, 21 November 2005 (Exhibit EC-164).
560 The Panel notes that the action taken by the European Communities to address the divergence in the
tariff classification of LCD m onitors with DVI is not part of the "measure at issue" for the purposes of the
United States' claim under Article X:3(a) of the GATT 1994. Rather, such action is relevant evidence to
determine whether or not the divergence in the tariff classification of LCD monitors with DVI among customs
authorities of the member States, which has not been disputed by the European Communities, has been resolved.
561 Council Regulation (EC) No. 493/2005 of 16 March 2005 (Exhibit US-28).
562 Council Regulation (EC) No. 493/2005 of 16 March 2005, 3rd preamble (Exhibit US-28).
563 European Communities' first written submission, para. 349.

Justice of the European Communities that classification cannot be based on actual
use. The correct classification of individua l products is to be based on objective and
quantifiable data. It is currently not feasible to establish unambiguous criteria
meeting this requirement."
564
Therefore, while Regulation No. 493/2005 may have remedied the divergence in tariff classification
with respect to those monitors falling within the sc ope of the Regulation, it would not have the same
effect with respect to monitors that fall outside the scope of the Regulation.565

7.297 Second, Regulation No. 493/2005 indicates that the duty suspension applies to LCD monitors
with DVI which are "classifiable under CN code 8528 21 90".
566 In other words, Regulation No.
493/2005 only applies to products that qualify under heading 8528. Accordingly, this
Regulation would not be applicable and, therefore, would not be helpful in resolving the divergence in
tariff classification in cas es where it is unclear whether an LC D monitor should be classified under
heading 8528 or, rather, under heading 8471. Such cases would appear to be at the core of the United
States' allegation that tariff classification of LCD monitors with DVI diverges among customs
authorities of the member States.
7.298 Third, the Panel notes the European Communities' statement that it has adopted another
relevant measure – namely, Commission Regulatio n (EC) No. 634/2005 of 26 April 2005 – which
classifies LCD monitors of a particular type under heading 8528. 567 This Regulation would appear to
assist in resolving the ambiguity regarding whether a product should be classified under heading 8528
or, rather, under heading 8471. In particular, Regulation No. 634/2005 indicates that the classification
of LCD monitors under heading 8528 is limited to "a colour monitor of the liquid crystal device
(LCD) type with a diagonal measurement of the sc reen of 38,1 cm (15") and overall dimensions of
30,5 (W) x 22.9 (H) x 8.9 (D) cm". The Regulati on also stipulates that "the product must display
signals received from various sources, such as an automatic data-processing machine, a closed circuit
television system, a DVD player or a camcorder" in order for the monitor to be classifiable under
heading 8528. The Regulation further clarifies that: "Classification under subheading 8471 60 is
excluded, as the monitor is not of a kind solely or principally used in an automatic data-processing
system (see Note 5 to Chapter 84) in view of its capabilities to display signals from various
sources".568
7.299 The Panel considers that the steps that Re gulation No. 634/2005 may have made towards
resolving the divergent classification of LCD monitors could be undermined when read in light of the
opinion of the Customs Code Committee taken at its 346 th meeting of 30 June – 2 July 2004,
especially in light of the fact that, as a matter of practice, representatives of member State customs
authorities participate in the Customs Code Committee decision-making process and the same
customs authorities apply Regulation No. 634/2005. 569 In particular, the Customs Code Committee
opined that "unless an importer can demonstrate that a monitor is only to be used with an ADP

564 Council Regulation (EC) No. 493/2005 of 16 March 2005, 2nd preamble (Exhibit US-28).
565 The Panel notes that, here, it is not addressing the administration of Council Regulation (EC)
No. 493/2005 of 16 March 2005 for the purposes of the United States' claim under Article X:3(a) of the GATT
1994. Rather, we are considering that Regulation to dete rmine whether or not it indicates that the divergence in
tariff classification of LCD monitors with DVI, which became apparent in 2004, has been resolved.
566 Council Regulation (EC) No. 493/2005 of 16 March 2005, 4th preamble (Exhibit US-28).
567 Exhibit EC-85.
568 Commission Regulation No. 634/2005 of 26 April 2005, Annex, para. 4 (Exhibit EC-85). The Panel
notes that, here, it is not addressing the administration of Commission Regulation No. 634/2005 for the purposes
of the United States' claim under Article X:3(a) of the GATT 1994. Rather, we are considering that
Regulation to determine whether or not it indicates that the divergence in tariff classification of LCD monitors
with DVI, which became apparent in 2004, has been resolved.
569 In this regard, see paragraphs 7.157 – 7.160 above.

machine (heading 8471) or to be used as an indicat or panel (heading 8531), it has to be classified
under heading 8528".
570 In other words, the Customs Code Committee's opinion requires that a
monitor must only be used with an ADP machine in order fo r it to be classifiable under heading 8471.
This statement contrasts with the formulation used in Regulation No. 634/2005 which implicitly states
that heading 8471 60 only applies to monitors of a kind solely or principally used (not only used) in
an automatic data-processing system. 571 This difference in formulation used in Regulation No.
634/2005 on the one hand and by the Customs Code Committee on the other could well have
significant practical effects. We note in this regard the European Communities' submission that
opinions of the Customs Code Committee play an impor tant role in the uniform administration of the
Common Customs Tariff and that member State cust oms authorities attach some importance to those
opinions.572
7.300 Fourth, the Panel has evidence that customs authorities of the member States do not appear to
have a clear idea of the practical effect of th e various measures existing at the Community level
regarding the tariff classification of LCD monitors with DVI. For example, in Tariff Notice 13/04,
which, apparently, was issued following issuance of the opinion of the Customs Code Committee, the
UK customs authority, stated that "from Octobe r 2004, LCD/TFT Monitors that incorporate a DVI
connector are to be classified in Combined Nomenclature (CN) code 8528 21 90".
573 This tends to
suggest that the UK customs author ities considered that monitors that did not incorporate DVI would
not be classifiable under heading 8528 and, presu mably, would, therefore, be classifiable under
heading 8471. In other words, the UK authorities a ppear to have adopted the approach indicated by
the Customs Code Committee.
7.301 More recently and subsequent to the coming in to force of Regulation No. 634/2005, in a
decree of 8 July 2005 concerning the classificati on of certain LCD monitors, the Dutch customs
authorities stated that:
"In accordance with Regulation (EC) nu mber 754/2004 of 23 April 2004 (published
in OJL 118), the European Commission has cl assified plasma-monitors with a screen
diameter of 42 inches accompanied by a DVI connection, within heading 8528.
The Customs committee, tariff and statistical nomenclature section, work instruments
sector (329th meeting of 15 December 2003), by qualified majority agreed on advice
to be given on the above-mentioned Regul ation. Since then, The Netherlands,
supported by the European Commission, has put forth the policy that LCD monitors
which meet the requirements of the Regulati on, are to be classified in heading 8528.
Not all member states are following this po licy. The result is a diverted flow of

570 The relevant excerpt of the minutes of the Customs Code Committee's 346 th meeting of 30 June-
2 July 2004 meeting is set out in paragraph 353 of the European Communities' first written submission.
571 The formulation used in Regulation No. 634/2005 is based on Note 5 to Chapter 84 of the Common
Customs Tariff.
572 For example, the European Communities notes that opinions of the Customs Code Committee are
not legally binding but further notes that, as stated by the ECJ in Joined Cases 69 and 70/76, Dittmeyer v
Hauptzollamt Hamburg - Waltershof (Exhibit EC-31), they constitute an important means of ensuring the
uniform application of the common customs tariff and, as such, may be considered as a valid aid to the
interpretation of the tariff. The European Communities further notes that member States' customs authorities are
not legally bound by the opinions of the Customs Code Committee. However, they are bound by the duty of
cooperation contained in Article 10 of the EC Treaty, which includes an obligation to contribute to the uniform
application of Community law. For this reason, member States are bound to give due weight to interpretations
of EC customs law set out in opinions of the Customs Code Committee. The European Communities adds that,
from a practical point of view, opinions of the Commi ttee typically reflect a common approach agreed by all
member States: European Communities' reply to Panel question No. 58(l).
573 HM Customs & Excise, Tariff Notice 13/04 (Exhibit US-76).

business, which is harmful to the competitiv eness of Dutch industry in the logistics
and services sector. For this reason, The Netherlands is making the policy as regards
classification of certain LCDs in the Combined Nomenclature more precise."
574
 The decree goes on to list criteria for the classi fication of LCD monitors, a number of which
do not appear in any of the instruments existing at the Community level.575

7.302 Further, in BTI dated 19 July 2005, the German customs authority appears to have continued
classifying LCD monitors with DVI under heading 8471, even where they are principally though not
solely for use with computers.576
7.303 Moreover, there appears to be some confusi on among participants in the industry regarding
the tariff classification of LCD monitors with DVI. In particular, in a letter dated 2 September 2005
to the Commission's Director for International A ffairs and Tariff Matters, the industry association
dealing with LCD monitors ("EICTA") stated that "[w]ithout ... clarification [of the classification of
LCD monitors], the industry is faced with an unaccep table situation were [sic] various Member States
are applying classification rules in an inconsistent manner, causing competitive disadvantage for some
importers and making the consequences of sourci ng and routing decisions almost impossible to
predict".
577 Further, by letter dated 6 December 2005, EICTA advised the EC Commission of its
concerns regarding the enactment of a Regula tion concerning the classification of goods under
headings 8471 and 8528, which had not been enact ed at the time the letter was sent to the EC
Commission.578
7.304 On the basis of the evidence submitted to it, it is the Panel's view that the action taken by the
European Communities has not had the effect of rectifying the divergence in the tariff classification of
LCD monitors with DVI among customs authorities of the member States, the existence of which
divergence since 2004 has not been disputed by th e European Communities. In this regard, the
evidence indicates that the ongoing existence of diverg ent tariff classification has had and is likely to

574 Douanerechten. Indeling van bepaalde LCD m onitoren in de gecombineerde nomenclatuur, No.
CPP2005/1372M (8 July 2005) (original and unofficial English translation) para. 1 (Exhibit US-77).
575 The Dutch decree refers to the following criteria:
"- no other connection other than a VGA and/or DVI connection (the presence of an audio connection
is allowed);
- a screen diameter not greater than 20 inches (51centimeters) with screen measurements (height/width)
of approximately 3:4 (thus no "widescreen");
- the absence of a remote control/absence of an infra-red sensor on the monitor;
- the absence of an instrument whic h allows choice of channels or points to the use of the monitor as a
television;
- no provision (covered by a metal plate or by other norms – ("slot-in type") allowing the monitor to be
used as a video-monitor ("tariff engineering");
- the opportunity to place the screen in varying positions (adjust height, tilt forwards/backwards, turn in
90 degree angle (portrait/landscape)."
576 United States' reply to Panel question No. 137(b) referring to BTI DEM/2975/05-1 (start date of
validity 19 July 2005) (Exhibit US-78). The BTI indicates that the product that was classified by the German
customs authorities was an LCD monitor with a 20,1" display screen with a network cable for connection with
ADP machines, of a kind mainly used for ADP processing.
577 United States' oral statement at the second subs tantive meeting, para. 53 referring to letter from
Mark MacGann, Director General, EICTA, to Manuel Ar nal Monreal, Director International Affairs and Tariff
Matters, European Commission, p. 1, 2 September 2005 (Exhibit US-75).
578 United States' reply to Panel question No. 137(b) referring to letter from Mark MacGann, Director
General, EICTA, to Manuel Arnal Monreal, Director International Affairs and Tariff Matters, European
Commission, 6 December 2005 (Exhibit US-81).

continue to have an adverse impact on the trading environment
579, until the divergen ce is resolved.
The Panel considers that the precise manner in whic h such divergence is resolved is not a matter for
its consideration. Nor is it a matter that is dict ated by Article X:3(a) of the GATT 1994. However,
the tools and mechanisms should be effective in re moving the divergent tariff classification, which in
our view, did not occur despite the various steps taken by the European Co mmunities to resolve the
divergence in tariff classification of LCD monitors with DVI.
7.305 In conclusion, the Panel considers that the tariff classification of LCD monitors with DVI
amounts to non-uniform administration within the meaning of Article X:3(a) of the GATT 1994. The
Panel considers that measures adopted by the Europ ean Communities so far have not had the effect of
removing divergence in tariff classification of such monitors which became evident in 2004.
580
Therefore, the Panel finds a violation of Article X:3(a) of the GATT 1994 with respect to the tariff
classification of LCD monitors with DVI.
(vi) Treatment of BTI in member States other than the issuing member State
 Summary of the parties' arguments
7.306 The United States notes that the Community Customs Code provides for the issuance by
member State customs authorities of advance rulings in the form of BTI, which informs traders of the
classification that will be assigned to particular goods on importation. 581 The United States further
notes that Article 11 of the Implementing Regulation states that BTI issued by the authorities of one
member State is "binding on the competent aut horities of all the member States under the same
conditions"
582 but submits that, in reality, member Stat es do not always treat BTI issued by other
member States as binding. 583 More particularly, the United States argues that BTI from one member
State does not bind another member State to classify similar or identical goods imported by a person
other than the holder of the BTI in the same way, with the result that the same product can be
classified under different tariff classifications, and be subject to different tariff treatment, from one
member State to another.
584 In support, the United States submits that, in a recent survey among the
membership of a trade association consisting of importers of products into the European
Communities, companies observed that "[b]inding ta riff information from German authorities is still
not accepted by other EU countries, especially Greece and Portugal."585
7.307 In response, the European Communities contests the existence of any problem regarding the
recognition of BTI from Germany in other member States. The European Communities argues that

579 The impact on the trading environment is evident, inter alia, from the evidence referred to by the
Panel in paragraphs 7.300 – 7.303. The Panel considers that the fact that traders may be subject to the same
duty (or, for that matter, no duty) whether the LCD monitors they are importing into the European Communities
are classified under heading 8471 or 8528 does not detract from our conclusion that the trading environment has
been affected as a result of the divergent tariff classification.
580 The Panel notes the existence of a draft Regulation concerning the classification of LCD monitors
contained in Exhibit EC-163. However, at the time the Panel issued its Interim Report to the parties, the Panel
had not been provided with evidence to indicate that that draft regulation had the effect of removing divergence
in tariff classification of such monitors which became evident in 2004.
581 United States' first written submission, para. 22.
582 Commission Regulation (EEC) No. 2454/93 of 2 July 1993 laying down provisions for the
implementation of Council Regulation (EEC) No. 2913/92 of 12 October 1992 establishing the Community
Customs Code, Article 11 (Exhibit US-6).
583 United States' first written submission, para. 47.
584 United States' first written submission, para. 22.
585 United States' first written submission, para. 76 referring to Foreign Trade Association,
Questionnaire on the topic "Trade Facilitation": Facilitation of Trade in WTO States, March 2005, response to
question 1.4 (Exhibit US-30).

the so-called "survey" relied upon by the Unite d States is based on a comment from a single
unidentified company in the context of a trade association questionnaire of March 2005 and is not
supported by any additional evidence. Accordingly, it is impossible to verify the accuracy of the
statement. The European Communities further submits that, even if an importer claims that BTI was
not accepted, this might reflect a range of problems of an entirely different kind, for instance a lack of
identity of the products imported with those described in the BTI. Moreover, if a customs authority
fails to recognize BTI issued by another member St ate, the importer can obtain judicial review or
inform the EC Commission. However, the European Communities submits that it is not aware of this
having occurred.586
7.308 The United States submits that the case of Peacock AG v. Hauptzollamt Paderborn describes
divergence in classification of network cards for personal computers between Denmark, Netherlands,
and United Kingdom, on the one hand, and Germany, on the other.587 According to the United States,
the Peacock case illustrates that one or more member States did not treat BTI issued by other member
States as binding588
7.309 The European Communities argues that BTI is only binding against the holder of the BTI
and is not binding against other persons. 589 Further, the European Communities submits that what is
significant is not that a divergence may occur but, ra ther, that it is addressed and removed once it
occurs. According to the European Communities, this is precisely wh at happened in the context of
the Peacock case.590
7.310 The United States refers to divergence in classifica tion of drip irrigation products. The
United States explains that French customs authoriti es issued BTI for the product in question in 1999,
classifying it as an irrigation system under tariff h eading 8424 of the Common Customs Tariff, which
carried an ad valorem duty rate of 1.7%. In December 2000, when an importer of the same product
attempted to import the product through Spain, th e Spanish customs authorities disregarded the
French BTI and classified the product as a pipe, under tariff heading 3717 of the Common Customs
Tariff, which carried an ad valorem duty rate of 6.4%.
591 According to the United States, this case
illustrates that one or more member States did not treat as binding BTI issued by other member
States.592
7.311 The European Communities responds that BTI is binding only against the holder of the BTI
and is not binding against other persons. 593 According to the European Communities, the BTI issued
by customs authorities in France and Spain for the drip irrigation products were not issued for the
same holders. Further, the Eur opean Communities submits that what is significant is not that a

586 European Communities' second written submission, para. 95.
587 United States' first written submission, footnote 33 referring to Case C-339/98, Peacock AG v.
Hauptzollamt Paderborn, Opinion of the Advocate General, 2000 ECR I-08947, 28 October 1999, paras. 7-8
(Exhibit US-17).
588 United States' reply to Panel question No. 20; United States' oral statement at the second substantive
meeting, para. 21.
589 European Communities' reply to Panel question No. 161 referring to Case C-495/03, Intermodal
Transports BV v. Staastsecretaris van Financiën , 15 September 2005, not yet reported, para. 27
(Exhibit US-71).
590 European Communities' second written submission, para. 136.
591 United States' reply to Panel question No. 14.
592 United States' reply to Panel question No. 20.
593 European Communities' reply to Panel question No. 161 referring to Case C-495/03, Intermodal
Transports BV v. Staastsecretaris van Financiën , 15 September 2005, not yet reported, para. 27 (Exhibit US-
71).

divergence in tariff classification may occur but, rather, that it is addressed and removed once it
occurs.
594
7.312 The United States refers to the Camcorders case and submits that, following amendment of
an explanatory note regarding camcorders in June 2004, the Spanish customs authority issued BTI
classifying 19 camcorder models produced by a particular company under sub-heading 8525 40 91.595
The French affiliate of the holder of the BTI info rmed the customs authority in France of the BTI's
existence during the course of an audit by that o ffice. Nevertheless, according to the United States,
the French customs authority 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.596 The United States submits that while the context in
which this matter emerged involved the post-clearance recovery of duties, nevertheless, determining
the amount of duties to be recovered first requires a determination of classification.597
7.313 In response, the European Communities submits that the BTI issued by the Spanish
authorities for camcorders are in full accordance with EC classification rules. According to the
European Communities, the United States has not pr ovided any evidence of any other member States
having classified camcorders contrary to EC cl assification rules. Moreover, according to the
European Communities, the United States does not provide any evidence on when the importation
into France took place and whether indeed they re lated to products corresponding to those described
in the BTI issued by the Spanish authorities. Fu rther, the European Communities submits that it
appears that the question addressed by the French authorities was one of post-clearance recovery of
customs duties, and not one of tariff classification. 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 European Communities considers that the issue is outside the Panel's terms of
reference.598
7.314 The United States refers to the report of the panel in the dispute EC – Chicken Cuts . The
United States notes that at issue there was whether a certain product should be classified under tariff
heading 0210 or 0207 of the Common Customs Tariff . The complaining parties relied on issuance of
BTI by several member States consistently classify ing the product under headin g 0210. In response,
the European Communities asserted that "this inte rpretation was not followed in other EC customs
offices".599
7.315 The European Communities submits that there was no di fference of interpretation nor
application of EC classification rules in the context of the EC – Chicken Cuts case. Further, the
European Communities' statement related only to "int erpretation". Nowhere in the panel's report in
EC – Chicken Cuts was the European Communities reporte d as having said that BTI was not
recognized when presented by the holder. Accord ingly, in the European Communities' view, the
statement quoted by the United States is not pertinent.600

594 European Communities' second written submission, para. 143 referring to United States' reply to
Panel question No. 2, para 4.
595 BTI issued by Spanish customs authority classifying camcorders under sub-heading 8525 40 91,
with start date of validity in June 2004 (Exhibit US-65).
596 United States' oral statement at the second substantive meeting, para. 30.
597 United States' reply to Panel question No. 180.
598 European Communities' reply to Panel question No. 172, para. 37.
599 Panel Report, EC – Chicken Cuts, para. 7.260.
600 European Communities' second written submission, para. 96.

 Analysis by the Panel
7.316 The Panel notes that the essence of the United States challenge under Article X:3(a) of the
GATT 1994 here is that customs authorities of the me mber States do not always treat BTI issued by
customs authorities of other member States as binding.601
7.317 In the Panel's view, the treatment of BTI issu ed by customs authorities constitutes an act of
administration within the meaning of Article X:3(a) of the GATT 1994. This act of administration is
a matter within the Panel's terms of reference since it amounts to an instance of administration of the
Common Customs Tariff in the tariff classification area.602
7.318 The context for the United States' challenge is Article 12(2) of the Community Customs
Code, which provides that:
Binding tariff information ... shall be binding on the customs authorities as against the
holder of the information only in respect of the tariff classification ... of goods.
7.319 Article 11 of the Implementing Regulation is also relevant. It provides that:
"Binding tariff information supplied by the customs authorities of a Member State
since 1 January 1991 shall become binding on the competent authorities of all the
Member States under the same conditions."603
7.320 As a starting point, the Panel notes that its task in this dispute is to determine whether or not
Article X:3(a) of the GATT 1994 has been violated by the European Communities, not to determine
the consistency or otherwise of EC acts with EC customs law. Having said that, the Panel can see that
the failure on the part of customs authorities of member States to accept BTI issued by customs
authorities in other member States when that BTI is presented by the holder in contravention of
Article 12(2) of the Community Customs Code a nd Article 11 of the Impl ementing Regulation could
simultaneously lead to non-uniform administration in violation of Article X:3(a) of the GATT 1994.
In particular, if a customs authority of a member State refuses to acknowle dge and treat as binding
BTI issued by a customs authority of another memb er State for a product that is identical in all
material respects to that which is the subject of th e BTI when such BTI is in voked by the holder and,
instead, classifies the product differently, this will necessarily result in non-uniform administration of
the Common Customs Tariff in violation of Article X:3(a) of the GATT 1994. Nevertheless, the
Panel notes that it has not been provided with sufficient evidence to prove that non-uniform
administration in violation of Article X:3(a) of the GATT 1994 has occurred regarding the treatment
of BTI in member States other than the issuing me mber State in the specific instances relied upon by
the United States.
7.321 In particular, in support of its allegation that customs authorities of the member States do not
always treat BTI issued by customs authorities of other member States as binding in violation of
Article X:3(a) of the GATT 1994, the United States relies first upon the March 2005 report of the
Foreign Trade Association regarding a questionnair e on the topic of "Trade Facilitation": Facilitation
of Trade in WTO States.
604 More specifically, the United St ates relies upon the following statement

601 United States' first written submission, para. 47.
602 For information on EC institutions and mechanisms applicable in the tariff classification area, see
paragraphs 7.179 – 7.182 above.
603 Commission Regulation (EEC) No. 2454/93 of 2 July 1993 laying down provisions for the
implementation of Council Regulation (EEC) No. 2913/92 of 12 October 1992 establishing the Community
Customs Code, Article 11 (Exhibit US-6).
604 Foreign Trade Association, Questionnaire on the topic "Trade Facilitation": Facilitation of Trade in
WTO States, March 2005 (Exhibit US-30).

made by one trader, which is contained in th e report: "Binding tariff information from German
authorities is still not accepted by other EU countries, especially Greece and Portugal."
605 The Panel
does not consider that this statement on its ow n constitutes probative evidence to support the United
States' allegation given that it is simply a single, anecdotal comment made by one trader in response
to questions posed in the questionnaire and is not supported by any factual evidence. The opening
paragraph of the Foreign Trade Association's re port itself states that "[t]he Trade Facilitation
Questionnaire was sent to 70 FTA member companies. 20 answers reached the FTA ... The following
represents quotations from the answers. Although th e [quotations] do not always fully comply with
the political consensus among all members, they highl ight the practical problems European traders,
especially importers, face at borders". Further, w ith respect to the specific statement relied upon by
the United States, the Panel notes that it is very br oad and general. It does not identify the products
covered by the German BTI that is allegedly not being accepted elsewhere, particularly in Greece and
Portugal. Nor does the statement indicate the period during which the German BTI was not accepted
by customs authorities in other member States. Finally, the statement does not indicate whether or not
BTI issued by German customs authorities that was not accepted by customs authorities in Greece and
Portugal was invoked by the holder of the German BTI.
7.322 By way of additional support for its allegation that customs authorities of the member States
do not always treat BTI issued by customs authorities of other member States as binding in violation
of Article X:3(a) of the GATT 1994, the United St ates relies upon an alleged failure by German
customs authorities to treat as binding BTI issued by customs authorities in Denmark, Netherlands,
and United Kingdom for network cards for personal computers.
606 The United States makes
additional allegations regarding tariff classification for this product, which are dealt with in detail in
paragraph 7.193 et seq above. We note in that discussion that the facts indicate the existence of
differences in tariff classification for network cards for personal computers between, on the one hand,
the German customs authorities (who classified the product in question under heading 8517 of the
Common Customs Tariff) and, on the other hand, Danish, Dutch and UK customs authorities (who
classified it under heading 8473 of the Common Custom s Tariff) at one point in time, the existence of
which differences has not been cont ested by the Eur opean Communities.607 Nevertheless, the Panel
notes that it has not been presented with any eviden ce to indicate that German customs authorities
refused to accept the classification by Danish, Du tch and UK customs authorities. Therefore, the
Panel considers that there is no reason to deviate from our conclusion in paragraph 7.207 above that
the tariff classification of network cards for personal computers does not currently amount to non-
uniform administration within the meaning of Article X:3(a) of the GATT 1994.
7.323 The United States also relies upon an alleged failure by Spanish customs authorities to treat as
binding BTI issued by French customs authorities for drip irrigation products. The United States
makes additional allegations regarding tariff classifi cation for this product, which are dealt with in
detail in paragraph 7.208 et seq above. We note in that discussion that the United States has not
provided any evidence to support its allegation of differences in the tariff classification of drip
irrigation products between customs authorities of the member States but that we are willing to accept
its assertion in this regard in light of the fact that the European Communities does not dispute the
existence of differences in this regard. Neverthe less, the Panel notes that it has not been presented
with any evidence to indicate that Spanish customs authorities refused to accept the classification by
French customs authorities. Therefore, the Panel co nsiders that there is no reason to deviate from our
conclusion in paragraph 7. 218 above that the tariff classification of drip irrigation products does not
amount to non-uniform administration within the meaning of Article X:3(a) of the GATT 1994.

605 Foreign Trade Association, Questionnaire on the topic "Trade Facilitation": Facilitation of Trade in
WTO States, March 2005, para. 1.4 (Exhibit US-30).
606 In particular, the United States refers to Case C-339/98, Peacock AG v. Hauptzollamt Paderborn,
Opinion of the Advocate General, 2000 ECR I-08947, 28 October 1999, paras. 7 - 8 (Exhibit US-17).
607 See paragraph 7.201 above.

7.324 The United States also relies upon th e circumstances surrounding the Camcorders case, in
which an explanatory note relati ng to camcorders was amended. 608 The United States submits that
BTI issued by Spanish customs authorities follo wing the amendment was not accepted by French
customs authorities even though the application for BTI before the French authorities was made by
the French affiliate of the company that had secu red BTI from the Spanish authorities and despite the
fact that the Spanish BTI had been brought to the at tention of the French authorities. The Panel notes
that, in support of its allegation that French authorities refused to accept BTI issued by Spanish
authorities in the context of the Camcorders case, the United States has provided copies of the BTI
issued by the Spanis h customs authorities. 609 However, it has provided no evidence of BTI and/or
classification decisions issued by the French customs authorities. Nor has the United States submitted
any evidence to prove that the French customs authorities were made aware of the Spanish BTI before
classifying the products in question. Therefore, th e Panel considers that the United States has not
proved that the Camcorders case supports the United States' allegation that customs authorities of
member States do not always treat BTI issued by customs authorities of other member States as
binding.
7.325 The United States also refers to a statement made by the European Communities during the
panel proceedings in the EC – Chicken Cuts case. In particular, the United States submits that, in
those proceedings, the European Communities asserted that the interpretation contained in BTI issued
by customs authorities in several member States concerning the classification of certain chicken
products consistently classifying the product under heading 0210 of the Combined Nomenclature was
not followed by other EC customs offices.610
7.326 First, the Panel notes that, on the basis of the panel's report in that case, the European
Communities did not assert that BTI issued by cust oms authorities in certain member States had not
been accepted in other member States. Rather, the European Communities submitted that the
interpretation that the product in question shou ld be classified under heading 0210 of the Common
Customs Tariff had not been followed by certain customs offices in the European Communities.611
7.327 Second, despite the statements made by the Eur opean Communities in that case suggesting
the existence of divergent tariff classification regard ing the product in questio n, the panel noted that
the European Communities had not produced BTI of instances where the produ cts at issue had been
classified under a heading other than heading 0210. 612 In other words, the panel did not find any
evidence of divergent tariff classification regarding the product in question. Moreover, on the basis of
the contents of the panel's report in that case, ther e would appear to have been no evidence before the
panel to indicate that BTI issued by customs au thorities in certain member States had not been
accepted in other member States.
7.328 The Panel notes that, in the context of the United States' allegation that the tariff classification
of blackout drapery lining is non-uniform in violation of Article X:3(a) of the GATT 1994, the United
States alleged that the German customs authorities acknowledged the existence of BTI for comparable

608 This case is discussed by the Panel again in paragraph 7.348 et seq below.
609 Exhibit US-65.
610 Specifically, the United States relies upon the panel's summary of the European Communities' in
that case contained in Panel Report, EC – Chicken Cuts, para. 7.260.
611 According to the Panel Report in EC – Chicken Cuts , the European Communities accepted that a
number of BTIs were issued by EC member State cu stoms authorities (principally Hamburg in Germany,
Rotterdam in the Netherlands and various offices in the United Kingdom), which classified the products at issue
under subheading 0210.90. The European Communities further accepted that, given the commercial importance
of some of the customs offices – namely, Hamburg and Rotterdam – substantial trade entered the European
Communities under this incorrect interpretation. Howe ver, the European Communities submitted that this
interpretation was not followed in other EC customs offices: Panel Report, EC – Chicken Cuts, para. 7.260.
612 Panel Report, EC – Chicken Cuts, para. 7.270.

goods but made no effort to explain why it was declining to follow the classification decisions
reflected in that BTI.
613 The Panel recalls its finding in paragraph 7.265 above that there would
appear to have been an objective factual basis justifying the decision by the German customs
authorities to classify the products in question differently from those being classified by other customs
authorities in the European Communities. In tu rn, this would explain why the German customs
authorities did not treat as binding BTI issued in other member States.
614 In addition, there is no
indication that any BTI which was brought to the attention of the German customs authorities was
invoked by the holder.
7.329 In the light of the foregoing, the Panel concl udes that the United States has not proved that
customs authorities in the member States have fa iled to treat as binding BTI issued by customs
authorities in other member States and that such failure amounts to non-uniform administration within
the meaning of Article X:3(a) of the GATT 1994.
(vii) Refusal to withdraw revocation of BTI concerni ng Sony PlayStations2 in the context of the
Sony PlayStation2 case
 Summary of the parties' arguments
7.330 The United States refers to a case involving the tariff classification of the Sony PlayStation2
(PS2). The United States submits that the UK cust oms authority issued BTI for that good and then
revoked it based on an EC Commission regulation a dopting a different classification for the good.
When that regulation was annulled by the EC Court of First Instance, rather th an restore the BTI, the
authority maintained the revocation based on ne w, national grounds only weeks after the ECJ's
decision in the Timmermans case.615 The United States submits that, prior to the ECJ's judgment in
the Timmermans case which was issued in January 2004, the customs authority in the United
Kingdom evidently believed that it was required to restore the BTI following the annulment of the
regulation in question and that, in view of the Advocate General's opinion in the Timmermans case
issued in September 2003, it could not amend the BT I based on its own, independent reinterpretation
of the applicable classification rules. Howeve r, following the judgement by the ECJ in the
Timmermans case, the UK customs authority was free to ma intain the revocation of the BTI, not on
the basis of the EC regulation that had been annulle d, but on the basis of its own reinterpretation of
the applicable classification rules. According to the United States, whether or not the BTI correctly
classified the PS2, the Sony PlayStation2 case stands for the broader proposition that, in accordance
with the ECJ's judgement in the Timmermans case, each of the European Communities' 25
independent, geographically limited customs offices has the power to depart from a path of uniform
administration of the classification rules based on its own reconsideration of those rules.
616
7.331 In response, the European Communities submits the United States' allegation that the UK
High Court of Justice revoked the BTI based on its own re-evaluation of the classification rules in the
PS2 case is misleading. The revocation took place b ecause of the entry into force of an EC

613 Hauptzollamt Bremen, Letter Decision to Bautex-Stoffe GmbH regarding classification of blackout
drapery lining, 22 September 2004 (original and English translation), p. 1 (Exhibit US-23).
614 Nevertheless, the Panel recalls its findings in para graphs 7.272 – 7.275 above that the failure on the
part of the German customs authorities to have regard to classification decisions of customs authorities in other
member States or at a minimum, to explain why they were deemed irrelevant to the classification at hand is not
consistent with the obligation of uniform administration in Article X:3(a) of the GATT 1994. The Panel also
considered that the dismissal by another German customs authority of the tariff classification by Belgian
customs authorities on the basis of a mere "suspicion" that the documents filed for classification of those
products by the Belgian customs authorities did not correspond to the products themselves was not consistent
with Article X:3(a) of the GATT 1994.
615 United States' oral statement at the second substantive meeting, para. 33.
616 United States' reply to Panel question No. 184.

classification regulation. Accordingly, rather than following its own interpretation of classification
rules, the UK High Court of Justice in fact duly a pplied Community law. According to the European
Communities, the UK High Court of Justice upheld the validity of the revocation with explicit
reliance on the ECJ's judgement in the Timmermans case and on the basis of clear evidence
supporting the reasoning behind that revocation.617
 Analysis by the Panel
7.332 The Panel notes that the essence of the Unite d States' challenge with respect to the Sony
PlayStation2 case ( PS2 case) is that customs authorities of th e member States are able to refuse to
withdraw revocation of BTI even though such a refusal deviates from uniform administration.618
7.333 The Panel recalls its finding in paragraph 7.64 above that, on the basis of its request for
establishment of a panel, the United States is pr ecluded from making an "as such" challenge with
respect to the design and structure of the EC syst em of customs administration as a whole and also
with respect to the design and structure of the EC system in the areas of customs administration that
have been specifically identified in the United States ' request. In the context of the specific allegation
made by the United States that customs authoriti es of the member States are able to refuse to
withdraw revocation of BTI even though such a refusal deviates from uniform administration, the
Panel considers that this is a matter outside our te rms of reference because it concerns the structural
aspects associated with the EC syst em of customs administration. Nevertheless, the Panel considers
that, on the basis of the United States' request for estab lishment of a panel, the United States is able to
claim and the Panel is authorized to consider whet her or not there is evidence to indicate that the
refusal to withdraw revocation of BTI regarding PS2 in the context of the PS2 case by the UK
customs authorities resulted in non-uniform administra tion in violation of Article X:3(a) of the GATT
1994. In this regard, the Panel notes that the refusal to withdraw revocation of BTI constitutes an act
of administration within the meaning of Article X:3( a) of the GATT 1994. This act of administration
is a matter within the Panel's terms of reference since it amounts to an instance of administration of
the Common Customs Tariff in the tariff classification area.619
7.334 The relevant facts are set out in the judgeme nt of the UK High Court of Justice, Chancery
Division in the case of Sony Computer Entertainment Europe Limited v the Commissioners of
Customs and Excise .620 Specifically, on 28 August 2000, Sony applied to the UK customs authority
for BTI for certain PS2 models under tariff heading 8471 of the Common Customs Tariff. On 19
October 2000, the UK customs authority issued BTI classifying the PS2 under heading 9504 of the
Common Customs Tariff rather than under headin g 8471 of the Common Customs Tariff. The UK
customs authority explained that the basis for the decision was that the product was not considered to
be freely programmable and, therefore, did not meet the criteria of Note 5( A)(a)(2) to Chapter 84 of
the Common Customs Tariff. Accordingly, the prod uct could not be classified under heading 8471.
The UK customs authority noted that the classification under heading 9504 was justified inter alia on
the basis of Commission Regulation (EC) No. 1508/2000 for a set of electronic devices consisting of a
video game console.
7.335 On 22 November 2000, Sony requested a formal departmental review of the decision of 19
October 2000 by the UK customs authority to classi fy the PS2 under heading 9504 rather than under

617 European Communities' reply to Panel question No. 172, para. 54 referring to Sony Computer
Entertainment Europe Ltd. v. Commissioners of Customs and Excise , Judgment of the High Court of Justice,
Chancery Division, EWHC 1644 (Ch), para. 118 (Exhibit US-70).
618 United States' reply to Panel question No. 184.
619 For information on EC institutions and mechanisms applicable in the tariff classification area, see
paragraphs 7.179 – 7.182 above.
620 Sony Computer Entertainment Europe Ltd. v. Commissioners of Customs and Excise , Judgment of
the High Court of Justice, Chancery Division, EWHC 1644 (Ch), (Exhibit US-70).

8471. By letter dated 5 January 2001, the decision to classify the PS2 under heading 9504 was upheld
following the departmental review. The decision wa s also confirmed by the Tariff and Nomenclature
Section of the Customs Code Committee during its meeting of 26 – 27 February 2001. By letter dated
29 March 2001, Sony was informed of the Comm ittee's decision and was notified that a draft
regulation classifying the products in question under heading 9504 was being prepared. The
justification in the draft regulation for the clas sification of PS2 under heading 9504 was as follows:
"Of the various functions (incl uding playing video games, playb ack of CD audio, DVD video,
automatic data processing etc.) playing video games gives the apparatus its essential character and
determines classification under heading 9504 as a game console".
621
7.336 Prior to adoption of the draft regulation, Sony appealed to the UK VAT and Duties Tribunal
against the decision issued following the department al review, contained in the letter of 5 January
2001. This appeal was allowed. In allowing th e appeal, the Tribunal noted that the UK customs
authority's decision had been based on the fact that the PS2 was not "freely programmable" and,
therefore, that it did not meet the criteria for coverage under heading 8471 in accordance with
Note 5(A)(a)(2) to Chapter 84. The departmental review had upheld this ra tionale. The Tribunal to
which Sony appealed found that the basis for the decision of the UK customs authority (and for the
subsequent departmental review) was invalid in light of the fact that the draft regulation classified PS2
under heading 9504 for different reasons. The Tribuna l concluded that, therefore, the UK customs
authority's decision could not stand.
7.337 Following the Tribunal's decision allowing Sony's appeal, Sony requested the UK customs
authority to issue new BTI classifying PS2 under tari ff heading 8471. By lette r dated 12 June 2001,
Sony's request was granted but was made subject to the qualification that, following publication of the
draft regulation which would classify PS2 under h eading 9504, the BTI issued classifying PS2 under
heading 8471 would be revoked.
7.338 On 10 July 2001, the draft regulation was adopted as Commission Regulation (EC) No.
1400/2001.622 Pursuant to Article 1 of that Regulation, when read in conjunction with the Annex to
that Regulation, PS2 was classified under heading 9504. Accordingly, on 25 July 2001, the UK
customs authority wrote to Sony revoking the BTI which had classified PS2 under heading 8471. On
6 September 2001, Sony requested departmental re view of the decision to revoke the BTI on the
ground that the Regulation which provoked the revocation (i.e. Regulation No. 1400/2001) was
illegal. Further, on 3 October 2001, Sony lodge d an application with the ECJ to annul the
Regulation No. 1400/2001 under Article 230 of the EC Treaty. On 30 September 2003, the Court of
First Instance annulled the Regulation finding that , although PS2 could be classified under heading
9504, the explanation of the legal basis for classifi cation of PS2 under heading 9504 pursuant to the
Regulation was wrong.623
7.339 Following the annulment of Regulation No. 1400/2001, the UK customs authority sought
advice from the Directorate-General, Taxation and Customs Union regarding the status of the BTI that
had classified PS2 under heading 8471. The Direct orate-General's response, contained in a letter
dated 8 January 2004 and circulated to the custom s authorities of all current and future member
States, stated that in the light of the CFI's findi ngs that the PS2 could not be classified under heading
8471 and that it could be classified in heading 9504 , the EC Commission's view was that the PS2 was
still correctly classifiable under heading 9504. On or about 1 May 2004, the WCO adopted a
classification opinion which classified the PS2 under heading 9504.

621 The draft regulation was subsequently adopted as Commission Regulation (EC) No. 1400/2001 of
10 July 2001 (Exhibit EC-157).
622 Commission Regulation (EC) No. 1400/2001 of 10 July 2001 (Exhibit EC-157).
623 CFI Judgement: Sony Computer Entertainment Europe Ltd. v. Commission of the European
Communities, Case T-243/01, 30 September 2003, paras. 120-128 (Exhibit US-12).

7.340 The Panel can see that the circumstances surrounding the PS2 case could have resulted in
non-uniform administration in violation of Article X:3(a) of the GATT 1994. Specifically, in the
context of that case, the UK customs authority re fused to withdraw the revocation of BTI classifying
PS2 under heading 8471 even though Regulation No. 1400/2001, which had triggered the revocation,
had been annulled. The UK customs authority refused to do so on the ground that Regulation No.
1400/2001 had been found invalid not because the clas sification of PS2 under heading 9504 had been
incorrect in the Regulation but because the explana tion of the legal basis for the classification under
the Regulation was wrong. It is conceivable th at other customs authorities in the European
Communities could have adopted an approach other th an that adopted by the UK customs authorities.
In particular, they could have decided to ho nour BTI classifying the PS2 under heading 8471 given
that the Regulation classifying the product under heading 9504 had been annulled. Alternatively, they
could have decided to withdraw re vocations of BTI that had classified PS2 under heading 8471. Had
either of these possibilities even tuated, the Panel considers that a situation of non-uniform
administration in violation of Article X:3(a) of the GATT 1994 would have resulted. In particular,
while the UK authority classified the product under heading 9504, the other customs authorities would
have classified the product under heading 8471. This scenario is possible in the context of the EC
system of customs administration because it does not provide for uniform withdrawal of revocations
of BTI. Nor does the system impose an obligatio n on member State customs authorities to consult
with and/or notify other customs authorities of decisions to withdraw revocations of BTI.
624
7.341 Nevertheless, the Panel notes that it has not been provided with any evidence to indicate that
divergent tariff classification among member States occurred following the refusal by the UK customs
authority to withdraw its revocation of BTI classifying PS2 under heading 8471. Indeed, the only
evidence submitted by the United States regarding classification of PS2 are the judgements of the UK
High Court of Justice
625 and the CFI 626 concerning the PS2 case. The Panel considers that these
judgements on their own do not prove that divergent tariff classification among member States
occurred following the refusal by the UK customs authority to withdraw its revocation of BTI
classifying PS2 under heading 8471.
7.342 The Panel also considers that the circumstances surrounding the PS2 case could have resulted
in non-uniform administration in violation of Article X:3(a) of the GATT 1994 in another respect. In
particular, by letter dated 12 June 2001, the UK customs authorities decided to grant Sony BTI
classifying PS2 under heading 8471 even though the UK authorities knew that the adoption of
Regulation No. 1400/2001 was imminent and that that Regulation would have the effect of classifying
the PS2 under heading 9504.
627 When the UK customs authorities issued BTI classifying PS2 under
heading 8471 to Sony, it made it clear that the BTI would be revoked once Regulation No. 1400/2001
had been adopted. However, in the meantime, it is quite possible that other customs authorities
classified PS2 under heading 9504 knowing that, ev entually, Regulation No. 1400/2001 would apply
to PS2 and would require classification under heading 9504. Nevertheless, as previously noted, the
Panel has not been provided w ith any evidence to indicate that divergent classification among
member States occurred following the issuance by the UK customs authority of BTI classifying PS2
under heading 8471.

624 The Panel understands that, under EC customs law, there is no provision that provides that the
withdrawal of revocation of BTI is immediately binding on the customs authorities of all member States.
Furthermore, we understand that there is no specific provision in EC customs law requiring the transmission of
the withdrawal of revocation of BTI by customs authorities of the member States to the Commission.
625 Sony Computer Entertainment Europe Ltd. v. Commissioners of Customs and Excise , Judgment of
the High Court of Justice, Chancery Division, [2005] EWHC 1644 (Ch), 27 July 2005 (Exhibit US-70).
626 CFI Judgement: Sony Computer Entertainment Europe Ltd. v. Commission of the European
Communities, Case T-243/01, 30 September 2003 (Exhibit US-12).
627 We note in this regard that, even the European Communities stated in its submissions to the Panel
that "even though the BTI in question should not have been issued, this was a unique case due to the very
specific circumstances of the case.": European Communities' reply to Panel question No. 184.

7.343 The Panel concludes that the United States has not proved that the failure to withdraw the
revocation of BTI by the UK customs authorities with respect to the tariff classification of PS2 in the
context of the PS2 case amounts to non-uniform administration within the meaning of Article X:3(a)
of the GATT 1994.
(viii) Interpretation and application of an amendment to an explanatory note concerning
camcorders in the Camcorders case
 Summary of the parties' arguments

7.344 The United States submits that a presentation made by Mr De Baere, an EC customs law
practitioner, points out that the consequences of an explanatory note may vary from member State to
member State. In some member States, an expl anatory note may be treated the same as a regulation
and given prospective effect only. In other member States, an explanatory note may be treated as a
clarification of the state of the law and given retrospective effect. 628 By way of example, the United
States refers to a case involving the classification of video camera recorders ("camcorders"). The
United States explains that at issue in that case was whether certain camcorders should be classified
under tariff heading 8525 40 91 of the Common Cust oms Tariff (attracting a 4.9% tariff) or under
tariff heading 8525 40 99 of the Common Customs Tariff (attracting a 14% tariff).629
7.345 The United States notes that a camcorder qualifies under heading 8525 40 91 if it is "[o]nly
able to record sound and images taken by the tele vision camera" whereas "other" camcorders qualify
under heading 8525 40 99. The United States submits that, in July 2001, the Commission adopted an
amendment to an earlier explanatory note covering heading 8525 40 99. The amendment provided
that heading 8525 40 99 includes "'camcorders' in which the video input is obstructed by a plate, or in
another way, or in which the video interface can be subsequently activated as video input by means of
software."
630 The United States submits that, pursuant to the amended explanatory note, if a
camcorder was susceptible to certain modifications, it should be classified under heading 8525 40 99,
even if at the time of importation it appeared to be classifiable under heading 8525 40 91.631
7.346 The United States argues that, in view of the amended explanatory note, two member States
(namely, France and Spain) reached back to colle ct additional duty on certain camcorders imported
prior to the amendment that had been classified unde r heading 8525 40 91. That is, in view of the
explanatory note, customs authorities in those member States revised the classification of merchandise
that had already been imported and collected add itional customs duties accordingly. By contrast,
customs authorities in other member States refra ined from giving retrospective effect to the
explanatory note because, in their view, the note e ffectively established a new substantive rule – that
is, it made susceptibility of camcorders to modifica tion of use following importation a criterion for
their classification. The United States submits th at this was evidenced, for example, by the
announcement of the explanatory 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".
632 Thus,

628 United States' oral statement at the second substantive meeting, para. 26 referring to Exhibit US-59.
629 United States' oral statement at the second substantive meeting, para. 27 referring to Commission
Regulation No. 1810/2004 of 7 September 2004 amending Annex I to Council Regulation (EEC) No. 2658/87
on the tariff and statistical nomenclature and the Common Customs Tariff, 30 October 2004, p. 573
(Exhibit US-60).
630 Uniform Application of the Combined Nomenclature (CN), Official Journal of the European
Communities, 6 July 2001, p. C 190/10 (Exhibit US-61). Ex planatory Notes to the Co mbined Nomenclature of
the European Communities, Official Journal of the European Communities, 13 July 2000, p. 316
(Exhibit US-62).
631 United States' oral statement at the second substantive meeting, para. 28.
632 HM Customs & Excise, Tariff Notice 19/01, July 2001 (Exhibit US-63). Vorschriftensammlung
Bundesfinanzverwaltung, VSF-Nachrichten N 46 2003, sec. I(3) 5 August 2003, (German customs notice on

according to the United States, different EC custom s offices applied the amended explanatory note to
the same situation differently, demonstrating that the European Communities fails to administer its
customs law uniformly in violation of Article X:3(a) of the GATT 1994.633
7.347 In response, the European Communities submits that the United States has presented its
reference to the Camcorders case as a rebuttal to the European Communities' argument that EC
explanatory notes are a tool for securing unif orm administration of EC classification rules. 634
However, according to the European Communities, the United States discus ses that case to address
the question of 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. According to European Communities, this i ssue has nothing to do with the value of explanatory
notes as tools for securing the uniform administration of tariff classification rules. Further, according
to the European Communities, the United States ha s not shown that there has been any lack of
uniformity as regards tariff classification in the European Communities following the issuance of the
explanatory note in question.
635
 Analysis by the Panel
7.348 The Panel notes that the essence of the United States' challenge in the context of the
Camcorders case appears to be that the way in which an amendment to an explanatory note to the
Common Customs Tariff concerning camcorders was interpreted and applied varied from member
State to member State. Specifically, in the context of the Camcorders case, the United States submits
that, in some member States – namely, the Unite d Kingdom and Germany – the explanatory note was
treated as equivalent to a regulation and given pros pective effect only. In other member States –
namely, France and Spain, the expl anatory note was treated as merely a clarification of the law and
given retrospective effect.636
7.349 In the Panel's view, the interpretation and appli cation of amendments to explanatory notes to
the Common Customs Tariff by the customs authori ties of the member States constitutes an act of
administration within the meaning of Article X:3(a) of the GATT 1994. This act of administration is
a matter within the Panel's terms of reference since it amounts to an instance of administration of the
Common Customs Tariff in the tariff classification area.637
7.350 The Panel can see that differences in the inte rpretation and applicati on of amendments to
explanatory notes to the Common Customs Tariff among the member States could result in non-
uniform administration in violation of Article X:3(a) of the GATT 1994. In particular, such
differences could result in the imposition of duty treatme nt to importers of identical products that is
not the same in different member States. For exam ple, if one member State decides to treat an
amendment to an explanatory notes as a mere clarifi cation of the law and, therefore, retrospectively
applies the amendment, this could mean that impor ters who had imported produc ts into that member
State prior to the amendment of th e explanatory note would be liable for duty that is retrospectively

application of the EC provisions on reimbursement/remission and recovery of import duties, together with
unofficial English translation) (Exhibit US-64).
633 United States' oral statement at the second substantive meeting, para. 29.
634 In particular, the European Communities submitted that, in considering the EC system of customs
administration in the tariff classification area, it was necessary to consider all relevant features of the EC system,
including EC explanatory notes: European Communities' first written submission, paras. 262, 291 and 292;
European Communities' oral statement at the first substantive meeting, paras. 38-39.
635 European Communities' reply to Panel question No. 172, paras. 38-39.
636 United States' oral statement at the second substantive meeting, paras. 26-27.
637 At a minimum, the Panel considers that amendments to explanatory notes to the Common Customs
Tariff are "related measures" to the Common Customs Tari ff. In this regard, see paragraph 7.28 above. See
also paragraphs 7.175 – 7.176 above.

being claimed. If, on the other hand, another member State decides to treat the amendment as akin to
a substantive classification regulation and, therefore, applies it only prospectively, this would mean
that importers who had imported pr oducts into that member State prior to the amendment of the
explanatory note would not be retrospectively liable for duty. In the Panel's view, in the context of
the EC system of customs administration, the absence of an obligation imposed upon the member
States to treat the explanatory note in the same way, could amount to an instance of non-uniform
administration in violation of Article X:3(a) of the GATT 1994.
638 Nevertheless, the Panel notes that
it has not been provided with evidence to prove that non-uniform administration regarding the
interpretation and application of the amended explanatory notes concerning camcorders actually
occurred in the context of the Camcorders case.
7.351 In particular, the United States relies primarily upon a PowerPoint presentation made by Mr
De Baere, an EC customs law practitioner.
639 According to the United States, that presentation points
out that the consequences of an explanatory note may vary from member State to member State. 640
However, the only comment in the presentation that appears relevant to divergent interpretation and
application of explanatory notes (and, presumably, amendments thereto) is that, with respect to
camcorders, "Member States interpret the retrospec tive effect of the Explanatory Note differently
(France and Spain)".641 The Panel notes that the bullet point in Mr De Baere's presentation containing
this statement makes no reference to any supporting factual material.
7.352 Relying upon the statement in Mr De Baere's pr esentation, the United States seeks to contrast
the interpretation and application of the amendment to the explanatory note concerning camcorders in,
on the one hand, France and Spain with, on the other hand, the interpretation and application of the
same amendment in the United Kingdom and Germany. The United States does so by referring to a
UK tariff notice 642 and to a German notice. 643 However, notably, the Panel has not been provided
with any evidence regarding the treatment of the relevant amended explanatory note in France and
Spain.644 In the absence of such evidence, the Panel considers that it is impossible to draw any
conclusions regarding the existence of non-unifor m administration of the amended explanatory notes

638 We note in this regard that, according to Article 9(1)(a) of Regulation No. 2658/87, the Commission
may issue explanatory notes to the Combined Nomenclature. Explanatory notes to the CN are not legally
binding, and cannot amend the CN. However, the ECJ has repeatedly acknowledged that explanatory notes are
an important aid in the interpretation of the CN: Case C-396/02, DFDS, judgment of 16 September 2004 (not
yet published), para. 28 (Exhibit EC-25); Case C-259/97, Clees, [1998] ECR I-8127, para. 12 (Exhibit EC-29).
639 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 (Exhibit US-59).
640 United States' oral statement at the second substantive meeting, para. 26 referring to 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 (Exhibit US-59).
641 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, page 14 (Exhibit US-59).
642 HM Customs & Excise, Tariff Notice 19/01, July 2001 (Exhibit US-63).
643 Vorschriftensammlung Bundesfinanzverwaltung, VSF Nachrichten 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 translation) (Exhibit US-64).
644 The explanatory note in question was amended by notice dated 6 July 2001 (Uniform Application of
the Combined Nomenclature, 6 July 2001, p. C 190/10 (Exhibit US-61). That explanatory note concerned the
interpretation of sub-heading 8525 40 99. The Panel notes that it has been provided with copies of BTI
classifying products under tariff heading 8525 40 91, issued by Spanish customs authorities in 2004 (Exhibit
US-65). However, we have not been provided with any evidence to indicate that French and Spanish customs
authorities applied the amended explanatory note to retrospectively classify products under sub-heading
8525 40 99 imported before July 2001.

as between customs authorities in France and Spain on the one hand and those in United Kingdom and
Germany on the other.
7.353 Moreover, in the Panel's view, the eviden ce submitted regarding the interpretation and
application of the amended explanatory note in the United Kingdom and Germany does not clearly
prove that those two member States treat the explan atory note as akin to a substantive classification
regulation and, therefore, prospectively apply th e amendment, as has been submitted by the United
States. Specifically, the UK tariff notice merely states that the amended explanatory note "does
involve a change in practice for the United Kingdom". However, it does not contain any evidence as
to whether or not the amendment will be given pr ospective or retrospective effect. The German
notice constitutes an instruction from the federal finan ce administration. It appears to contain general
statements regarding the recovery of import duties in cases where, inter alia, explanatory notes are
amended. In this regard, the German notice states that: "To the extent that changes to the Explanatory
Notes do not constitute changes of the content they ma y be applied retroactively, i.e. also to imports
prior to their entry into force. In other cases wher e, for instance, the chang es to the HS Explanatory
Notes constitute a compromise in substance or a fundamental position without a conclusive character,
they only apply for the future regarding the classification in the Combined Nomenclature."645 In other
words, the German notice tends to indicate that amen dments to explanatory notes may be given either
retroactive or prospective effect, depending upon th e nature of the change. It does not, however,
indicate that the amendment to the explanatory note at issue in the Camcorders case should be treated
prospectively, as has been contended by the United States. In fact, the German notice contains no
mention whatsoever of how the explanatory note at issue in the Camcorders case should be treated.
7.354 Following consideration of the evidence submitte d by the United States as a whole, the Panel
concludes that the United States has not proved that the interpretation and application of the amended
explanatory note to the Common Customs Tariff concerning camcorders in the context of the
Camcorders case was divergent among the member States in violation of Article X:3(a) of the GATT
1994.
(ix) Summary and conclusions
7.355 In summary, the Panel finds that, with respect to the United States' allegations of non-uniform
administration of the Common Customs Tariff in the area of tariff classification:
(a) During 1990 – 1995, the European Communities was not administering the Common
Customs Tariff regarding the tariff classification of network cards for personal
computers in a uniform manner in violation of Article X:3(a) of the GATT 1994.
However, the tariff classification of netw ork cards for personal computers does not
currently amount to non-uniform administration within the meaning of Article X:3(a)
of the GATT 1994. Therefore, the Panel finds no violation of Article X:3(a) of the
GATT 1994 with respect to the tariff classification of network cards for personal
computers.
(b) The tariff classification of drip irrigation products does not amount to non-uniform
administration within the meaning of Artic le X:3(a) of the GATT 1994. Therefore,
the Panel finds no violation of Article X: 3(a) of the GATT 1994 with respect to the
tariff classification of drip irrigation products.

645 Vorschriftensammlung Bundesfinanzverwaltung, VSF Nachrichten 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 translation), p. 2 (Exhibit US-64).

(c) The United States has not proved that the tariff classification of unisex articles or
shorts amounts to non-uniform administration within the meaning of Article X:3(a) of
the GATT 1994.
(d) The administrative process l eading to the tariff classification of blackout drapery
lining amounts to non-uniform administration within the meaning of Article X:3(a) of
the GATT 1994. Therefore, the Panel finds a violation of Article X:3(a) of the GATT
1994 with respect to the tariff classification of blackout drapery lining.
(e) The tariff classification of liquid crystal di splay monitors with digital video interface
amounts to non-uniform administration within the meaning of Article X:3(a) of the
GATT 1994. Therefore, the Panel finds a violation of Article X:3(a) of the GATT
1994 with respect to the tariff classification of liquid crystal display monitors with
digital video interface.
(f) The United States has not proved that custom s authorities in the member States have
failed to treat as binding BTI issued by customs authorities in other member States
and that such failure amounts to non-unifor m administration within the meaning of
Article X:3(a) of the GATT 1994.
(g) The United States has not proved that the re fusal to withdraw the revocation of BTI
by the UK customs authorities with respect to the tariff classification of the Sony
PlayStation2 in the context of the Sony PlayStation2 case amounts to non-uniform
administration within the meaning of Article X:3(a) of the GATT 1994.
(h) The United States has not proved that the interpretation and application of the
amended explanatory notes to the Common Customs Tariff concerning camcorders in
the context of the Camcorders case amounts to non-uniform administration in
violation of Article X:3(a) of the GATT 1994.
(c) Allegations of non-uniform administration of the Community Customs Code and the
Implementing Regulation in the area of customs valuation
(i) Royalty payments
 Summary of the parties' arguments

7.356 The United States notes that the EC Court of Auditors found in its report that, in a number of
cases, different member States apportioned royalties differently to the customs value of identical
goods imported by the same company. The United Stat es submits that the Court found that, in the
cases identified, the member States involved either did not bring the disparate treatment to the
attention of the Customs Code Committee, or that the matter was not examined by the Committee.646
7.357 In response, the European Communities notes that the treatment of royalties is regulated by
Article 32(1)(c) of the Community Customs Code. The European Communities submits that it is not
correct to state that different member States appor tioned royalties differently to the customs value of
identical goods imported by the same company sin ce the examples referred to by the Court of
Auditors mostly involved different subsidia ries established in various member States. 647 T h e
European Communities adds that, following the repo rt of the EC Court of Auditors, the Commission

646 United States' first written submission, para. 86 re ferring to Court of Auditors Valuation Report,
paras. 58-61 (Exhibit US-14).
647 European Communities' first written submission, para. 392.

together with the Customs Code Committee worked through the cases examined by the Court of
Auditors in order to clarify the issues and establis h whether there had been a lack of uniformity.
According to the European Communities, in most ca ses, it was confirmed that the questions involved
were purely factual issues concerning the establishmen t of the conditions of Article 32(1)(c) of the
Community Customs Code. The European Commun ities argues that, since no systematic lack of
uniformity was found, it was concluded that no amen dment to the Community Customs Code nor the
Implementing Regulation was required.648
7.358 The United States submits that, even if the European Communities' assertions were correct,
they still would not rebut the broader findings of the Court of Auditors report. For example, the Court
of Auditors found "weaknesses" in the European Communities' administration of customs valuation
rules to include, among others, "the absence of common control standards and working practices";
"the absence of common treatment of traders with operations in several member States"; and "the
absence of Community law provisions allowing th e establishment of Community-wide valuation
decisions."
649
 Analysis by the Panel
7.359 The Panel notes that, in essence, the United St ates alleges differences between customs
authorities in the member States regarding the manner in which royalties are apportioned to the
customs value of identical goods imported by the same company. 650 In its submissions, the United
States indicated that it specifically challenges th e administration in the European Communities of
Article 32(1)(c) of the Community Customs Code re garding the treatment of royalty payments for
customs valuation purposes.651
7.360 In the Panel's view, the manner in which royalties are apportioned to the customs value of
identical goods imported by the same company c onstitutes an act of administration within the
meaning of Article X:3(a) of the GATT 1994. This act of administration is a matter within the Panel's
terms of reference since it amounts to an instan ce of administration of Article 32(1)(c) of the
Community Customs Code in the customs valuation area.652
7.361 With respect to the question of whether or not the manner in which royalties are apportioned
to the customs value of identical goods imported by customs authorities in the member States is
"uniform" within the meaning of Article X:3(a) of the GATT 1994, the Panel recalls its finding in
paragraph 7.135 above that geographic uniformity is required under Article X:3(a) of the GATT 1994.
That is, administration should be uniform in diffe rent places within a particular WTO Member. The
Panel also recalls its finding in pa ragraph 7.135 above that the form , nature and scale of the alleged
non-uniform administration and the laws, regulations, j udicial decisions and rulings that are allegedly
being administered in a non-uniform manner should be taken into consideration when interpreting the
term "uniform" in Article X:3(a) of the GATT 1994. The Panel considers that the United States'
challenge with respect to manner in which royalties are apportioned to the customs value of identical
goods imported by the same company is narrow in nature. It involves the application of a single
provision of the Community Customs Code – namely, Article 32(1)(c). Therefore, given the
narrowness of this challenge, the Panel considers th at a high degree of uniformity is required for the
purposes of Article X:3(a) of the GATT 1994. We now turn to the facts to determine whether or not

648 European Communities' first written submission, para. 393.
649 United States' reply to Panel question No. 137(c) referring to Court of Auditors Valuation Report,
para. 86 (Exhibit US-14).
650 United States' first written submission, para. 86 re ferring to Court of Auditors Valuation Report,
paras. 58-61 (Exhibit US-14).
651 United States' reply to Panel question No. 124.
652 In this regard, see paragraphs 7.183 – 7.187 above.

this high degree of uniformity has been achieved w ith respect to the manner in which royalties are
apportioned to the customs value.
7.362 Article 32(1)(c) of the Community Customs Code provides that:
"In determining the customs value under Article 29 [of the Community Customs
Code], there shall be added to the price actually paid or payable for the imported
goods:

(c) Royalties and licence fees related to the goods being valued that the buyer
must pay, either directly or indirectly, as a condition of sale of the goods being
valued, to the extent that such royalties a nd fees are not included in the price actually
paid or payable."
7.363 The only evidence upon which the United Stat es relies in support of its claim that
Article 32(1)(c) of the Community Customs Code is not being administered in a uniform manner in
violation of Article X:3(a) of the GATT 1994 is contained in the EC Court of Auditors Special Report
No. 23/2000 concerning valuation of imported goods for customs purposes dated 14 March 2001.
653
We consider each of the relevant aspects of the report in turn.
7.364 First, the EC Court of Auditor's report makes general comments regarding the administration
of the royalty provisions in EC customs law:
"Royalties and licence fees may be included in the invoice price of imported goods or
shown separately on the invoice as an addition to the basic price. They may also be
calculated yearly as a percentage of the total value of sales of imported goods. ...

The Commission has invested considerable effort to ensure uniform application of the
rules. Even so the Court found several cases of apparently different treatment
between the Member States. Given the present diversity of control methods within
the customs union this is not surprising."
654
7.365 In the Panel's view, while the excerpt of the EC Court of Auditor's report set out in the
preceding paragraph indicates the existence of "di fferent treatment" in the context of EC customs
rules regarding royalties, it does not provide any de tail of the nature of the different treatment.

653 By way of background, the Panel notes that EC Court of Auditors' report states that:
"The audit conducted by the EC Court of Audito rs took place at the Commi ssion and in all member
States except the three that joined the Union on 1 January 1995 (Austria, Finland and Sweden). Visits were also
made to the World Trade Organisation and the World Customs Organisation.
The audit included an examination of documents handled in the Commission Valuation Committee,
customs authority valuation audit files, written valuatio n rulings, decisions of appeal tribunals and the actual
customs declarations. Files and documentation concerning customs valuation procedures for more than 200
companies and groups of companies were examined.
In order to select its sample the Court used a predetermined list of the 50 most important trading
companies worldwide, combined with lists, obtained in e ach Member State visited, of the 50 most important
companies in terms of customs duties established.": EC Court of Auditors Special Report No 23/2000
concerning valuation of imported goods for customs purposes, 14 March 2001, paras. 9-11 (Exhibit US-14).
654 EC Court of Auditors Special Report No 23/2000 concerning valuation of imported goods for
customs purposes, 14 March 2001, paras. 55-57 (Exhibit US-14).

Therefore, in the Panel's view, these statements on their own are an insufficient basis upon which to
infer that the "different treatment" in question co rresponds to non-uniform administration within the
meaning of Article X:3(a) of the GATT 1994.
7.366 Second, the EC Court of Auditor's report refers to the payment by a particular company of
customs duties on royalties in some member States but, apparently, not in others. Specifically, the
report states:
"In one case, the customs authority of the Member State where the headquarters of
the company was based considered that three different transaction situations might
apply for customs valuation purposes. A ll of them were legal and in some cases
royalties and other payments would be incl uded in the customs valuation. If the
analysis of this customs authority is co rrect it is quite likely that the customs
valuation of the imports by the company in six of the seven Member States examined
by the Court are incorrect. In 1997 th e company concerned paid more than 43
million euro in customs duties in these sev en Member States. Uplifts for royalties
applied by the different national customs ra nged from 0% to 10% of the value of the
imported goods."
655
7.367 The Panel notes that the EC Court of Aud itor's statement excerpted in the preceding
paragraph refers to "three different transactions" e ngaged in by the company in question, some of
which apparently entailed the payment of customs duties on royalties. The excerpt refers to the
existence of errors in appraising these transactions on the part of a number of member States but there
is insufficient information in the report for us to conclude that such errors resulted in non-uniform
administration in violation of Article X:3(a) of the GATT 1994. The last sentence of the excerpt
states that uplifts for royalties "applied by the di fferent national customs" payable by the company in
question "ranged from 0% to 10%". The Panel consid ers that, when read in context, this statement
does not necessarily indicate non-uniform administration within the meaning of Article X:3(a) of the
GATT 1994 given that it is unclear whether or not the different amounts of uplifts for royalties
corresponded to the fact that materially different transactions were implicated, which could be
inferred from the first sentence of the excerpt.
7.368 Third, the EC Court of Auditor's report refers to another instance in which a particular
company paid customs duties on royalties in some member States but, apparently, not in others.
Specifically, the report states:
"In another case the majority of a company's Community imports passed through a
distribution centre in one Member State. Th e customs authority in that Member State
decided that none of the royalty payments made by the company formed part of the
customs value. The Court found that in five of the Member States to which the
importer had previously imported, the cu stoms authorities had charged duty on at
least part of the royalty and other additional payments by the importer.
In this case some Member States had exchanged information. However, even taking
into account the different solutions and th e extended timescale involved, the Member
States authorities clearly had difficulties in accepting that the principal valuation
questions were the same. The company paid over 33 million euro in customs duty in
1998. Notwithstanding its declared objectiv e of maintaining equivalent conditions

655 EC Court of Auditors Special Report No 23/2000 concerning valuation of imported goods for
customs purposes, 14 March 2001, para. 58 (Exhibit US-14).

for operators in the Member States ... the Commission did not examine the valuation
treatment of this company."
656
7.369 The Panel notes that the excerpt of the EC Cour t of Auditor's report set out in the preceding
paragraph does tend to indicate the existence of diffe rences in treatment of royalty payments for the
purposes of customs valuation as between the member States. In particular, the report refers to the
fact that the customs authority in one member State decided that royalty payments made by a
particular importer did not form part of the cu stoms value whereas the customs authorities in five
other member States to which the importer had previ ously imported, did include royalty payments as
part of the customs value. However, the questi on arises as to whether or not the transactions in
question were, in fact, identical.
7.370 Regarding the question of whether or not the tran sactions in question were, in fact, identical,
the report notes that customs authorities of one memb er State decided that royalty payments made by
a particular company did not form part of the customs value but it was clear that, in the case of that
member State, the imports were passed through a distribution centre. The report does not indicate that
the imports into other member States, where custom s authorities decided that royalty payments made
by a particular company did form part of the customs value, we re also passed through a distribution
centre. Therefore, it is impossible to know whethe r or not the transactions in question were, in fact,
identical. In summary, the Panel considers that the EC Court of Auditor's report does not contain
sufficient information to know whether or not the "di fferent treatment" in the context of EC customs
rules regarding royalties constituted non-uniform admini stration in violation of Article X:3(a) of the
GATT 1994.657
7.371 The Panel concludes that the United States has not proved that differences between member
States regarding the manner in which royalties are apportioned to the customs value of identical goods
imported by the same company exist that amount to non-uniform administration of Article 32(1)(c) of
the Community Customs Code within the meaning of Article X:3(a) of the GATT 1994.
(ii) Valuation on a basis other than the transaction of the last sale (or "successive sale")
 Summary of the parties' arguments

7.372 According to the United States , the EC Court of Auditors found in its report that, with
respect to the application of the rule that allows imported goods, in certain cases, to be valued on a
basis other than the transaction of the last sale which led to the introduction of the goods into the
customs territory of the European Communities, authorities in some member States required importers
to obtain prior approval for valuation on a basis ot her than the transaction value of the last sale,

656 EC Court of Auditors Special Report No 23/2000 concerning valuation of imported goods for
customs purposes, 14 March 2001, para. 60 (Exhibit US-14).
657 The Panel notes in this regard that the purpose of the EC Court of Auditor's report was not to
ascertain the existence or otherwise of non-uniform administration within the meaning of Article X:3(a) of the
GATT 1994. Rather, paragraph 12 of the report notes that: "The general objective of the audit was to examine
the accuracy and consistency of the valuation for customs purposes of goods imported into the European union.
The audit sought to establish: (a) how international rules on customs valuation have been incorporated into
Community legislation; (b) what steps the Commission or Member States take to ensure proper application of
Community rules on customs valuation and what control procedures the customs authorities of the Member
States have put in place to comply w ith the requirements of Community le gislation; (c) to what extent the
Community legislation is applied consistently to imports, in particular to imports by companies with operations
in more than one Member State." : EC Court of Auditors Special Report No 23/2000 concerning valuation of
imported goods for customs purposes, 14 March 2001 (Exhibit US-14).

whereas authorities in other member States imposed no such requirement. 658 The United States also
submits that it is significant not only that some EC customs authorities administer Article 147(1) of
the Implementing Regulation by imposing a form of pr ior approval, while others do not, but also that
the prior approval obtained from an EC customs authority in one region has no binding force in other
parts of the territory of the European Communities.
659
7.373 In response, the European Communities submits that the conditions under which a sale
other than the last sale may be used as the basi s for establishing the transaction value are set out in
Article 147 of the Implementing Regulation.660 The European Communities submits that, whereas the
United States claims that the EC Court of Audito rs "found that authorities in some member States
required importers to obtain prior approval for valuation on a basis other than the transaction value of
the last sale", the Court of Auditors merely stated that " in practice , some customs authorities do
impose a form of prior approval ". The European Communities s ubmits that, contrary to the
impression created by the United States, there is no form of legal requirement of prior approval in
order to be able to rely on an earlier sale. 661 Moreover, given the potential complexity of the issue
involved, it is not unreasonable for a customs author ity to encourage traders who want to rely on the
possibility of establishing the transaction value on the b asis of an earlier sale to have this issue settled
in advance. The European Commun ities submits that, in any event, it considers that such a practice
constitutes a minor variation in administrative practice, which does not amount to a lack of uniformity
incompatible with Article X:3(a) of the GATT 1994.662
7.374 The United States submits that there is no distinction between legally requiring importers to
obtain prior approval and in practice imposing a form of prior approval. 663 Further, the United States
disputes that the differences in questions regarding the administration of Article 147(1) of the
Implementing Regulation represent a "minor variation." The United States submits that, from the
trader's point of view, if it must obtain prior approval in order to base customs value on a sale other
than the last sale, this would be relevant in d eciding where to enter its goods into the European
Communities. In this regard, the United States subm its that there is no basis for the proposition that
Article X:3(a) of the GATT 1994 is breached only by non-uniform administration that affects the
ultimate customs debt owed by the trader but not by non-uniform administration that affects the
burden borne or risk faced by the trader.
664
7.375 The European Communities submits that, on the basis of a survey of the practices of the
customs authorities of all member States, it can conf irm that no member State, neither in law nor in
practice, imposes a requirement of prior approval with respect to the conditions under which a sale
other than the last sale may be used as the basi s for establishing the transaction value for customs
valuation purposes. According to the European Communities, the Un ited States has not provided any
evidence to the contrary.665

658 United States' first written submission, para. 87 re ferring to Court of Auditors Valuation Report,
para. 64 (Exhibit US-14).
659 United States' reply to Panel question No. 137(d).
660 European Communities' first written submission, para. 394.
661 European Communities' first written submission, para. 395.
662 European Communities' first written submission, para. 396.
663 United States' reply to Panel question No. 137(d) referring to European Communities' first written
submission, paras. 394-396.
664 United States' reply to Panel question No. 137(d) referring to Panel Report, Argentina – Hides and
Leather, paras. 11.91-11.93.
665 European Communities' comments on the United States' reply to Panel question No. 137(d).

 Analysis by the Panel

7.376 The Panel notes that the United States challenges the administration of Article 147(1) of the
Implementing Regulation. Specifically, the United States alleges that, in some member States,
importers are practically required to obtain prio r approval for valuation on a basis other than the
transaction value of the last sale (also known as "s uccessive sale"), whereas authorities in other
member States impose no such requirement. 666 In addition, according to the United States, the prior
approval obtained from a customs authority in one member State has no binding force elsewhere in
the European Communities.
667
7.377 In the Panel's view, the imposition of requirements regarding approval for valuation on a basis
other than the transaction value of the last sale cons titutes an act of administration within the meaning
of Article X:3(a) of the GATT 1994. This act of admi nistration is a matter within the Panel's terms of
reference since it amounts to an instance of admini stration of the Article 147(1) of the Implementing
Regulation in the customs valuation area.668
7.378 With respect to the question of whether or not the imposition of requirements regarding
approval for valuation on a basis other than the trans action value of the last sale in the member States
is "uniform" within the meaning of Article X:3(a) of the GATT 1994, the Panel recalls its finding in
paragraph 7.135 above that geographic uniformity is required under Article X:3(a) of the GATT 1994.
That is, administration should be uniform in diffe rent places within a particular WTO Member. The
Panel also recalls its finding in pa ragraph 7.135 above that the form , nature and scale of the alleged
non-uniform administration and the laws, regulations, j udicial decisions and rulings that are allegedly
being administered in a non-uniform manner should be taken into consideration when interpreting the
term "uniform" in Article X:3(a) of the GATT 1994. The Panel considers that the United States'
challenge with respect to the imposition of require ments regarding approval for valuation on a basis
other than the transaction value of the last sale is narrow in nature. It involves the application of a
single provision of the Implementing Regulation – namely, Article 147(1) of the Implementing
Regulation. Therefore, given the narrowness of this challenge, the Panel considers that a high degree
of uniformity is required for the purposes of Articl e X:3(a) of the GATT 1994. We now turn to the
facts to determine whether or not this high degree of uniformity has been achieved with respect to the
administration of Article 147(1) of the Impl ementing Regulation rega rding the imposition of
requirements regarding approval for valuation on a b asis other than the transaction value of the last
sale.
7.379 Article 147(1) of the Implementing Regulation provides in relevant part that:
"1. For the purposes of Article 29 of the Code, the fact that the goods which are
the subject of a sale are declared for free circulation shall be regarded as adequate
indication that they were sold for export to the customs territory of the Community.
In the case of successive sales before valuati on, only the last sale, which led to the
introduction of the goods into the customs territory of the Community, or a sale
taking place in the customs territory of the Community before entry for free
circulation of the goods shall constitute such indication.
Where a price is declared which relates to a sale taking place before the last sale on
the basis of which the goods were introdu ced into the customs territory of the
Community, it must be demonstrated to the satisfaction of the customs authorities that
this sale of goods took place for export to the customs territory in question."

666 United States' first written submission, para. 87.
667 United States' reply to Panel question No. 137(d).
668 In this regard, see paragraphs 7.183 – 7187 above.

7.380 The only evidence upon which the United Stat es relies in support of its claim that
Article 147(1) of the Implementing Regulation is not being administered in a uniform manner in
violation of Article X:3(a) of the GATT 1994 is contained in the EC Court of Auditors Special Report
No. 23/2000 concerning valuation of imported goods for customs purposes dated 14 March 2001.
7.381 The relevant section of the Court's report states that:
"The Court was unable to identify the full ex tent to which importers use or seek to
use the successive sales provision. One reason for this is that, in order to apply to
successive sales provision, unlike some other customs provisions, there is no legal
requirement for an importer to obtain prior permission or authorisation. However, the
Court found that, in practice, some customs authorities do impose a form of prior
approval even though this has no basis in Community law. As in other aspects of
customs valuation the Court found varia tions in the extent to which customs
authorities allow the use of the provision or consult with each other. The Court has
established that certain importers use the successive sales provision in one or more
Member States but not in others and has drawn some significant examples of
inconsistency to the attention of the Commission."
669
7.382 The Panel notes that, in the section of the EC Court of Auditor's report excerpted in the
preceding paragraph, the Court noted the existence of a "practice" on the part of customs authorities to
impose a form of prior approval with respect to the successive sales provision of EC customs law,
namely Article 147(1) of the Implementing Regulation. The Court specifically noted that such a
practice has no basis in Community law and is not being followed in other member States. During the
course of the Panel's proceedings, the European Co mmunities submitted that, on the basis of a survey
of the practices of the customs authorities of all me mber States, no member State, neither in law nor
in practice, imposes a requirement of prior approval with respect to the conditions under which a sale
other than the last sale may be used as the basi s for establishing the transaction value for customs
valuation purposes.
670 However, at the time the Panel issued its Interim Report to the parties, the
European Communities had not submitted any evidence to substantiate its assertion in this regard. 671
Further, at that time, the Panel had not been provi ded with any evidence that would suggest that the
practice engaged in by some customs authorities of imposing a form of prior approval that had been
identified by the EC Court of Auditors in its report had since been remedied in the European
Communities. The Panel considers that evidence clearly indicating the imposition of a requirement
by member States, whether in practice and/or as a matter of law, that is not justified by the terms of
EC law and which is not being applied in other member States, such as that contained in the EC Court
of Auditors' report regarding the successive sales provi sion, necessarily falls foul of the obligation of
uniform administration in Article X:3(a) of the GATT 1994.
7.383 Therefore, the Panel concludes that the admini stration of Article 147(1) of the Implementing
Regulation in the European Communities is non-uniform in violation of Article X:3(a) of the GATT
1994 to the extent that customs authorities in so me member States impose a form of prior approval
with respect to the successive sales provision, which is inconsistent with EC customs laws, whereas
customs authorities in other member States do not. Th e Panel notes in this regard that the practice of
imposing a form of prior approval with respect to the successive sales provision results in an actual or

669 EC Court of Auditors Special Report No 23/2000 concerning valuation of imported goods for
customs purposes, 14 March 2001, para. 64 (Exhibit US-14).
670 European Communities' comments on the United States' reply to Panel question No. 137(d).
671 The Panel considers that it was incumbent upon the European Communities to submit such evidence
in the light of aspects of the EC Court of Auditor's report referred to in paragraph 7.383 above, which tend to
call the European Communities assertion in this regard into question.

possible adverse impact on the trading environment in that it might affect the member State into
which a trader decides to import.
7.384 With regard to the United States' allegation th at the European Communities has also violated
Article X:3(a) of the GATT 1994 because the prior approval obtained from a customs authority in one
member State has no binding force elsewhere in th e European Communities, the Panel notes that the
United States has provided no evidence to substantiate this allegation. Therefore, we consider that the
United States has not met its burden to make a prima facie case that the administration of
Article 147(1) of the Implementing Regulation is non- uniform in violation of Article X:3(a) of the
GATT 1994 because the prior approval obtained from a customs authority in one member State has
no binding force elsewhere in the European Communities.
7.385 In the light of the foregoing, the Panel finds that, the imposition by customs authorities in
some member States of a form of prior approval with respect to the successive sales provision, which
is inconsistent with EC customs laws and whic h is not imposed by customs authorities in other
member States means that the European Communities does not administer its customs law concerning
successive sales – in particular, Article 147(1) of the Implementing Regulation – in a uniform manner
in violation of Article X:3(a) of the GATT 1994.
(iii) Vehicle repair costs covered under warranty
 Summary of the parties' arguments

7.386 The United States submits that the EC Court of Auditors notes in its report that different
member States have taken different positions on whether the costs of automobile repair covered by a
seller's warranty should be deducted from the customs value. 672 According to the United States, in at
least one member State – namely, Germany – the Court found that customs authorities reduced the
customs value of imported vehicles by the value of repairs undertaken in the territory of the European
Communities and reimbursed by the foreign seller. Other member States – in particular, Italy, the
Netherlands, and the United Kingdom – declined re quests for similar customs value reductions. The
United States submits that the Court observed that the Commission had been aware of differential
treatment among member States for at least ten years and had not taken any steps to reconcile the
difference.
673
7.387 In response, as a preliminary matter, the European Communities notes that the EC Court of
Auditors' report confirms that the Commission had not been aware of differential treatment among
member States for 10 years. The Court merely re ferred to the German valuation practice, which it –
contrary to the Commission – considered unjus tified, as having been known for ten years.
674 T h e
European Communities submits that when, through the report of the Court of Auditors, it became
apparent that differences existed between member States in the treatment of repair cost covered by a
warranty, the Commission, after careful examination of the issue and due consultation of the Customs
Code Committee, adopted Commission Regulation (EC) No. 444/2002 of 11 March 2002, which
introduced an amended version of Article 145 in to the Implementing Regulation and specifically
addresses the issue raised in the Court of Auditor's report.
675 According to the European
Communities, with this amendment, the issue of wa rranties has been sufficien tly clarified, and the

672 United States' first written submission, para. 25 referring to Court of Auditors, Special Report
No. 23/2000 concerning valuation of imported goods for customs purposes (customs valuation), together with
the Commission's replies, paras. 73-74, 14 March 2001 (Exhibit US-14).
673 United States' first written submission, para. 88 re ferring to Court of Auditors Valuation Report,
paras. 73-74 (Exhibit US-14).
674 European Communities' first written submission, footnote 194.
675 European Communities' first written submission, pa ra. 397 referring to Exhibit EC-89 and Exhibit
EC-37, pp. 14-19.

uniform application of EC valuation law is secured. In the view of the European Communities, the
example shows that the European Communities is pe rfectly capable of detecting and correcting non-
uniform practices, if they arise. 676 Further, the European Commun ities notes that, on a complex issue
of customs valuation, the European Communities itself detected the problem, and took the necessary
measures to correct it. Accordingly, rather than showing any failure in the European Communities'
system, the example of repair costs under warranty shows that the EC system of customs
administration functions properly.677
7.388 In response, the United States submits that, as the EC Court of Auditors report explains, the
Commission was first made aware of inconsistent me mber State practice in this area in a 1990 report.
The fact that an instance of non-uniform administra tion first called to the Commission's attention in
1990 was resolved by a regulation adopted in 2002 hardly demonstrates that the system works in a
manner consistent with the obligation of uniform administration in Article X:3(a) of the GATT
1994.678 Further, the United States submits that, while the regulation cited by the European
Communities does appear to address the issue of treatm ent of repair costs covered by warranty, what
is remarkable is that it took the European Communities 12 years to resolve this matter. 679 According
to the United States, a system that leads to resolution of non-uniformity of administration 12 years
after it is brought to the attention of the relevant authority hardly satisfies the requirement of uniform
administration in Article X:3(a) of the GATT 1994.680
 Analysis by the Panel
7.389 The Panel notes that, when th e United States listed the "s ubsidiary findings" requested
regarding the specific areas of customs administ ration it alleges are being administered by the
European Communities in a non-uniform manner in violation of Article X:3(a) of the GATT 1994, the
United States did not make mention of the European Communities' administration of valuation rules
in cases involving vehicle repair costs covered under warranty.
681 Nevertheless, elsewhere in its
submissions, the United States did allege differenc es among member States regarding whether or not
the costs of automobile repair covered by a se ller's warranty should be deducted from the customs
value.682 In light of these allegations, the Panel considers it necessary to address them.
7.390 The Panel notes that the United States challeng es alleged differences in approaches taken by
customs authorities in the member States regarding whether or not the costs of automobile repair
covered by a seller's wa rranty should be deducted from the customs value. 683 The Panel understands
that, in alleging differences among member States as to whether or not the costs of vehicle repair
covered by a seller's warranty should be deducted from the customs value, the United States is
implicitly challenging the administration of Article 29(3)(a) of the Community Customs Code.
7.391 In the Panel's view, the deduction (or not) of th e costs of vehicle repair covered by a seller's
warranty constitutes an act of administration within the meaning of Article X:3(a) of the GATT 1994.
This act of administration is a matter within the Panel's terms of reference since it amounts to an

676 European Communities' first written submission, para. 398.
677 European Communities' second written submission, para. 156.
678 United States' reply to Panel question No. 4.
679 Court of Auditors Valuation Report, paras. 73-74 (Exhibit US-14).
680 United States' reply to Panel question No. 25.
681 United States' reply to Panel question No. 124.
682 See, for example, United States' first written submission, paras. 88 - 89.
683 United States' first written submission, para. 25 referring to Court of Auditors, Special Report
No. 23/2000 concerning valuation of imported goods for customs purposes (customs valuation), together with
the Commission's replies, paras. 73-74, 14 March 2001 (Exhibit US-14).

instance of administration of the Article 29(3)(a) of the Community Customs Code in the customs
valuation area.
684
7.392 With respect to the question of whether or not the deduction (or not) of the costs of vehicle
repair covered by a seller's warr anty in the member States is "uniform" within the meaning of
Article X:3(a) of the GATT 1994, the Panel reca lls its finding in paragraph 7.135 above that
geographic uniformity is required under Article X: 3(a) of the GATT 1994. That is, administration
should be uniform in different places within a part icular WTO Member. The Panel also recalls its
finding in paragraph 7.135 above that the form , nature and scale of the alleged non-uniform
administration and the laws, regulations, judicial decisions and rulings that are allegedly being
administered in a non-uniform manner should be take n into consideration when interpreting the term
"uniform" in Article X:3(a) of the GATT 1994. Th e Panel considers that the United States' challenge
with respect to the deduction (or not) of the costs of vehicle repair covered by a seller's warranty is
narrow in nature. It involves the application of a single provision of the Community Customs Code –
namely, Article 29(3)(a) of the Community Customs Code. Therefore, given the narrowness of this
challenge, the Panel considers that a high degr ee of uniformity is required for the purposes of
Article X:3(a) of the GATT 1994. We now turn to the facts to determine whether or not this high
degree of uniformity has been achieved with respect to the administration of Article 29(3)(a) of the
Community Customs Code concerning the deduction (or no t) of the costs of vehicle repair covered by
a seller's warranty in the member States.
7.393 Article 29(3)(a) of the Community Customs Code provides that:
"The price actually paid or payable is the total payment made or to be made by the
buyer to or for the benefit of the seller for the imported goods and includes all
payments made or to be made as a condition of sale of the imported goods by the
buyer to the seller or by the buyer to a third party to satisfy an obligation of the seller.
The payment need not necessarily take the form of a transfer of money. Payment
may be made by way of letters of credit or negotiable instrument and may be made
directly or indirectly."
7.394 The only evidence upon which the United Stat es relies in support of its claim that
Article 29(3)(a) of the Community Customs Code is not being administered in a uniform manner in
violation of Article X:3(a) of the GATT 1994 is contained in the EC Court of Auditors Special Report
No. 23/2000 concerning valuation of imported goods for customs purposes dated 14 March 2001. We
consider each of the relevant aspects of that report in turn.
7.395 First, the EC Court of Auditor's report makes general comments regarding the administration
of EC customs law with respect to the costs of vehicle repair covered by a seller's warranty:
"Manufacturers often give a guarantee or warranty with their products. Such
guarantees mean that if the goods are later shown not to be in accordance with the
sale specification the buyer will be compensated. ...
The treatment of manufacturer's guarantees for imported cars is a prime example of
an area where the individual customs authorities of the Member States apply different
interpretations of Community legislation."
685

684 In this regard, see paragraphs 7.183 – 7.187 above.
685 EC Court of Auditors Special Report No 23/2000 concerning valuation of imported goods for
customs purposes, 14 March 2001, paras. 71-72 (Exhibit US-14).

7.396 In the Panel's view, while the excerpt of the EC Court of Auditor's report set out in the
preceding paragraph indicates the existence of "different interpretations" in the context of EC customs
rules regarding the costs of vehicle repair covered by a seller's warranty, it does not provide any detail
of the nature of the different interpretations nor of the practical consequences of such different
interpretations. Therefore, in the Panel's view, th ese statements on their own are an insufficient basis
upon which to infer that the "different interp retations" in question correspond to non-uniform
administration within the meaning of Article X:3(a) of the GATT 1994 regarding the treatment of the
costs of vehicle repair covered by a seller's warranty for the purposes of customs valuation.
7.397 Second, the EC Court of Auditor's report refers specifically to differences among member
States regarding whether or not they grant customs value reductions for the costs of vehicle repair
covered by a seller's warranty. In particular, the report states:
"In its annual report on the financial year 1990, the Court drew the Commission's
attention to the practice of the German customs authority of granting value reductions
on imports of motor vehicles against repair costs covered under warranty
arrangements. The Court considered th at these reductions were outside the
provisions of Community law in force at that time. Ten years later, similar value
reductions are still being applied by the German customs authority. The Court
continues to consider this procedure as not conforming to the provisions of
Community law.
Similar situations are treated differently in other Member States. The customs
authorities of three Member States (Italy, the Netherlands, the United Kingdom) have
refused similar claims from importers of motor vehicles. The different approaches of
Member States' customs administrations to this question may be one of the elements
leading to trade diversion inside the Community.
This is a clear indication of the lack of cohesion within the customs union, and one
which may have resulted in losses of own resources. Regardless of any ultimate
revision of the regulations, the fact remains that for over 10 years a practice of
rebates, unchallenged by the Commission, has existed."
686
7.398 The Panel notes that, in the sections of the EC Court of Auditor's report excerpted in the
preceding paragraph, the Court noted the existence of "different" treatment among the member States
regarding "similar situations" in re lation to the treatment of costs of vehicle repair covered by a
seller's warranty. Specifically, the Court notes that , whereas German customs authorities had granted
reductions in imports of vehicles subject to repair costs covered under warranty, customs authorities
in Italy, the Netherlands and the United Kingdom ha d failed to do so in similar situations. In the
Panel's view, these findings of the EC Court of Audi tors tend to indicate the existence of non-uniform
administration within the meaning of Article X: 3(a) of the GATT 1994 regarding the treatment of
costs of vehicle repair covered by a seller's warran ty. Indeed, in the context of this dispute, the
European Communities does not dispute that the di fferent treatment in question amounted to non-
uniform administration.687
7.399 In the light of the foregoing, the Panel consider s that, at the time the EC Court of Auditors
prepared its report – namely, in 2001 – the Europ ean Communities was not administering its customs
law concerning vehicle repair costs covered under warranty in a uniform manner in violation of

686 EC Court of Auditors Special Report No 23/2000 concerning valuation of imported goods for
customs purposes, 14 March 2001, paras. 73-75 (Exhibit US-14).
687 European Communities' first written submission, para. 398; European Communities' second written
submission, para. 156.

Article X:3(a) of the GATT 1994. The Panel is of the view that this instance of non-uniform
administration is all the more noteworthy in light of the fact that the Court of Auditors had already
prepared a report noting the same instance of non-uniform administration more than ten years earlier
in 1990.
688 The Panel understands that, as in the case of the 2001 report, the EC Commission received
a copy of the EC Court of Auditor's 1990 report and was provided with the opportunity to make
comments thereon.689
7.400 The Panel notes that it was only after receivi ng critical comments in two consecutive reports
by the EC Court of Auditors, which were separate d by a period of ten years, that the Commission
finally took action to remedy non-uniform admini stration regarding the treatment of the costs of
vehicle repair covered by a selle r's warranty. Specifically, in 2002, the EC Commission adopted
Commission Regulation (EC) No. 444/2002 of 11 March 2002. 690 That Regulation had the effect,
inter alia , of amending Article 145 of the Implementi ng Regulation. Following the amendment,
Article 145(2) of the Implementing Regulation provided that and continues to provide that:
"After release of the goods for free circulati on, an adjustment made by the seller, to
the benefit of the buyer, of the price actually paid or payable for the goods may be
taken into consideration for the determin ation of the customs value in accordance
with Article 29 of the Code, if it is dem onstrated to the satisfaction of the customs
authorities that:
(a) the goods were defective at the mome nt referred to by Article 67 of the Code;
(b) the seller made the adjustment in performance of a warranty obligation
provided for in the contract of sale, concl uded before release for free circulation of
the goods;
(c) the defective nature of the goods has not already been taken into account in
the relevant sales contract."
7.401 The United States acknowledges that Regulation No . 44/2002 had the effect of resolving the
non-uniform administration regarding the treatment of the costs of vehicle repair covered by a seller's
warranty for the purposes of customs valuation.691 Indeed, the Panel understands that the non-uniform
administration concerning such costs that had ex isted at least between 1990 and 2001, was finally
removed in 2002. There is no evidence before th e Panel that would suggest that the non-uniform
administration has re-emerged since then.
7.402 In the light of the foregoing, the Panel conc ludes that, in 2001, the European Communities
was not administering Article 29(3)(a) of the Co mmunity Customs Code regarding the costs of
vehicle repair covered by a seller's warranty in a un iform manner in violation of Article X:3(a) of the
GATT 1994. However, this violation was remedied in 2002 through the enactment of Regulation No.
44/2002.
7.403 The Panel concludes that the European Co mmunities is not currently administering
Article 29(3)(a) of the Community Customs Code concerning vehicle repair costs covered under
warranty in a manner that is non-uniform within th e meaning of Article X:3(a) of the GATT 1994.

688 The Court of Auditors' Annual Report concerning the financial year 1990, Chapter 2,
paragraph 2.52(a) (OJ C 324, 13.12.1991) referred to in EC Court of Auditors Special Report No 23/2000
concerning valuation of imported goods for customs purposes, 14 March 2001, paras. 73-75 (Exhibit US-14).
689 The Panel notes that the EC Court of Auditors Special Report No 23/2000 contains a section
containing "The Commission's Replies" pp. 13 - 18 (Exhibit US-14).
690 Commission Regulation No. 444/2002 of 11 March 2002 (Exhibit EC-89).
691 United States' reply to Panel question No. 4.

Therefore, the Panel finds no violation of Artic le X:3(a) of the GATT 1994 with respect to the
administration of Article 29(3)(a) of the Community Customs Code concerning vehicle repair costs
covered under warranty.
(iv) Relationship between EC importer and non-EC manufacturers
 Summary of the parties' arguments
7.404 The United States argues that different member States have taken different positions on
whether an importer is related to non-EC companie s that manufacture its products and, accordingly,
on how those products should be valued. 692 By way of example, the United States refers to a case
involving Reebok International Limited ("RIL"), whic h contracts with various suppliers outside the
European Communities to manufacture shoes that ar e then imported and sold to customers in the
European Communities. 693 As for whether RIL's contracts with non-EC manufacturers establish a
control relationship affecting the price at which the shoes are sold for ex port to the European
Communities that should be taken into account in cu stoms valuation, the United States notes that the
Spanish customs authorities found that RIL's c ontracts with non-EC manufacturers established a
control relationship vis-à- vis those suppliers. Th e relevant aspects of the contracts considered
significant by the Spanish customs authorities rela ted to quality approval, pricing conditions, and
restrictions on delivery conditions. However, the cont racts did not allow RIL to direct or restrain the
management or activities of its suppliers. The United States submits that other member State customs
authorities did not consider the contracts to have established a control relationship between RIL and
its non-EC manufacturers.
694 According to the United States, RIL is in the process of appealing the
valuation decisions of the Spanish customs authoriti es – a process that has already taken years and is
expected to take even longer. The United States submits that coping with these inconsistencies has
added costs to RIL's operations that would not be necessary if EC customs law were administered
uniformly.695
7.405 The United States explains that its claims with respect to this issue are based on a narrative
account by the importer at issue. The United Stat es notes that, due to concerns relating to the
pendency of litigation over the matter at issue and the commercial sensitivity of the information that
supporting documentation would contain, the importer declined to provide documentation at this time.
However, according to the United States, its claims are substantiated in a decision of the European
Ombudsman.696 The United States argues that that deci sion reveals how the Commission dealt with
the company's complaint when it was brought to the Commission's attention in September 2000.
According to the United States, rather than refe r the matter to the Customs Code Committee, the
Commission replied three months later "that the interpretation issues raised by the complainant were a
matter for the national customs authorities, and that [the Commission] has no responsibility to
undertake a detailed examination of very specific i ndividual cases, this being the task of national
administrations."697 When the company expressly requested referral to the Committee a year later, the
Commission "rejected the idea." 698 The company renewed its request in January 2002 and, over two
years later, still had not received a reply from the Commission. The United States notes that the
Ombudsman's decision indicates that, following a m eeting between agents for the company and
officials of the Commission's Directorate for Taxation and Customs Union in May 2004, the

692 United States' first written submission, para. 25.
693 United States' first written submission, para. 90.
694 United States' first written submission, para. 91.
695 United States' first written submission, para. 92.
696 Exhibit US-52.
697 Decision of the European Ombudsman on complaint 128/2004/OV against the European
Commission, p. 2, 2 June 2004 (Exhibit US-52).
698 Decision of the European Ombudsman on complaint 128/2004/OV against the European
Commission, p. 2. 2 June 2004 (Exhibit US-52).

complainant stated that "he no longer wished to pursue the complaint".
699 However, according to the
United States, it does not indicate that the underlying lack of un iformity was resolved. The fact that
the company is continuing to pursue its appeal thr ough the Spanish courts indicates that, in fact, it has
not been resolved.700
7.406 In response, the European Communities submits that the United States cannot justify its
failure to discharge its burden of proof on the basi s of the refusal of the importer in question to
provide the necessary evidence.701 Further, with respect to the decision by the European Ombudsman
on a complaint by an individual importer, the European Communities confirms that the complaint was
made on behalf of Reebok, which claimed th at the European Commission was not properly
discharging its responsibilities in respect of the administration of customs valuation law.
702 T h e
European Communities notes that, however, the Ombuds man did not take a decision on the substance
of the complaint. Rather, the complainant withdrew the complaint indicating that he "was satisfied
with the position the Commission had adopted on the matter and with its proposal to look into
pending problematic issues".703
7.407 The European Communities also submits that the facts as set out in the Ombudsman's
decision are not presented entirely correctly. Notabl y, the United States refers to a quotation from a
letter of the European Commission of 20 December 2000, in which the Commission is supposed to
have stated "that the interpretation issues raised by the complainant were a matter for the national
customs authorities". According to the European Communities, this quotation is not correct. In its
letter of 20 December 2000, the Commission stat ed the following (emphasis added): "The application
of this criterion [of Article 143(1)(e) Implementing Regulation] in individual cases is of course a
matter for national administrations and the Comm ission Services could only express an opinion if a
detailed file on all aspects of the case was to be forwarded by the customs services in question.
However, our services do not, in general, have a r esponsibility to undertake a detailed examination of
very specific cases, this being the task of the national administrations." 704 The European
Communities considers that this statement correctly reflects the division of competences between the
European Commission and the customs authorities of the member States, the latter of which are
competent for the application of customs law in individual cases. According to the European
Communities, it is neither possible nor appropriate for the Commission to substitute itself for the
competent authority simply because, in an individual case of application, a trader is not satisfied with
an approach taken by the customs authority. 705 The European Communities notes that, nevertheless,
the Commission is responsible for monitoring and en suring the correct and uniform interpretation and
application of EC customs law. This was exp licitly acknowledged in the fo llowing paragraph of the
letter: "On the other hand, cases involving the proven divergence of valuation treatment of a company
at EC level, or a clear mis-application or mi s-interpretation of EC law, can be notified and
consideration can then be given to appr opriate action by the Commission Services". 706 According to
the European Communities, in the case in question, at the time in question, Reebok had not submitted
to the European Commission any ev idence that showed an incorrect application of EC law or a
divergence in the application of EC law. Acco rdingly, the Commission did not see any need to
intervene in the specific pending case.707

699 Decision of the European Ombudsman on complaint 128/2004/OV against the European
Commission, p. 4, 2 June 2004 (Exhibit US-52).
700 United States' reply to Panel question No. 26.
701 European Communities' second written submission, para. 162.
702 European Communities' second written submission, para. 165.
703 European Communities' second written submission, para. 166 referring to Exhibit US-52, p. 4.
704 Exhibit EC-138.
705 European Communities' second written submission, paras. 168-169.
706 European Communities' second written submission, para. 170.
707 European Communities' second written submission, para. 171.

7.408 The European Communities also argues that the valuation dispute between Reebok and the
Spanish customs authorities is a complex valuation dispute concerning the assessment of whether RIL
controls certain of its suppliers. According to the European Communities, the Commission has kept
this case, which is currently pending before the Sp anish tribunals, under close review, and has also
discussed it in the Customs Code Committee. Howe ver, neither the European Commission nor the
Customs Code Committee are a substitute for the normal appeals mechanisms before the national
courts. In addition, RIL has not, in fact, submitted a formal complaint to the European Commission in
this matter.708 The European Communities explains that the Valuation Section of the Customs Code
Committee examined the issue of the applica tion of Article 143(1)(e) of the Implementing
Regulation (dealing with related parties) by Spanish customs authorities but did not establish any
incompatibility with EC law or lack of uniformity. 709 The European Communities further explains
that, during the meetings of the Customs Code Committee on 1 October and 20 December 2004, the
delegates' view was that the facts tended to show that the parties were related, as was previously
concluded by the Spanish authorities. The Europ ean Communities adds that, since similar cases had
been raised by two other member States, it was considered that, in 2005, further work was desirable in
this context. It was also recalled that, since similar cases had come in for attention, and these relate to
manufacturing and processing operations which have become significant in trade and economy terms,
the Commission decided to carry further the work on the basis of a working group of the Committee.
In August 2005, Reebok submitted, at the Commission' s request, material indicating that there could
be a divergent approach among member States. Th e European Communities not es that this material
will now be looked at and the working group will begi n to meet and work shortly. The European
Communities submits that it is intended that the wo rking group will produce concrete outputs which
will address both the general interp retation and application of Arti cle 143(1)(e) of the Implementing
Regulation, and the specific elements which have been the subject of disagreement between the
customs authorities in Spain and the firm in question.
710 The European Communities submits that,
overall, it does not see that the Reebok case provides an y support for the allegation that the European
Communities fails to administer is customs valuation rules in a uniform manner.711
 Analysis by the Panel
7.409 The Panel notes that the United States challenges the administration of Article 29 of the
Community Customs Code and Article 143(1)(e) of the Implementing Regulation, which concern the
circumstances in which parties are to be treated as "related" for customs valuation purposes. In
particular, the United States argues that different me mber States have taken different positions on
whether an importer is related to non-EC companie s that manufacture its products and, accordingly,
on how those products should be valued.712
7.410 In the Panel's view, the treatment (or not) of parties as "related" for the purposes of customs
valuation constitutes an act of administration within the meaning of Article X:3(a) of the GATT 1994.
This act of administration is a matter within the Panel's terms of reference since it amounts to an
instance of administration of Article 29 of the Co mmunity Customs Code and Article 143(1)(e) of the
Implementing Regulation in the customs valuation area.713
7.411 With respect to the question of whether the treat ment (or not) of parties as "related" in the
member States is "uniform" within the meaning of Article X:3(a) of the GATT 1994, the Panel recalls

708 European Communities' oral statement at the first substantive meeting, para. 46.
709 European Communities' first written submission, para. 407.
710 European Communities' first written submission, para. 407; European Communities' reply to Panel
question No. 62.
711 European Communities' first written submission, para. 410.
712 United States' first written submission, para. 25.
713 In this regard, see paragraphs 7.183 – 7.187 above.

its finding in paragraph 7.135 above that geographic uniformity is required under Article X:3(a) of the
GATT 1994. That is, administration should be uniform in different places within a particular WTO
Member. The Panel also recalls its finding in para graph 7.135 above that th e form, nature and scale
of the alleged non-uniform administration and the laws, regulations, judicial decisions and rulings that
are allegedly being administered in a non-uniform manner should be taken in to consideration when
interpreting the term "uniform" in Article X:3(a) of the GATT 1994. The Panel considers that the
United States' challenge with respect to the treatme nt (or not) of parties as "related" for customs
valuation purposes is narrow in nature. It invol ves the application of a single provision of the
Community Customs Code and a single provision of the Implementing Regulation – namely,
Article 29 of the Community Customs Code and Ar ticle 143(1)(e) of the Implementing Regulation.
Therefore, given the narrowness of this challenge, the Panel considers that a high degree of uniformity
is required for the purposes of Article X:3(a) of the GATT 1994. We now turn to the facts to
determine whether or not this high degree of uni formity has been achieved with respect to the
treatment (or not) of parties as "related".
7.412 Article 29 of the Community Customs Code provides in relevant part that:
"1. The customs value of imported goods sh all be the transaction value, that is,
the price actually paid or payable for the goods when sold for export to the customs
territory of the Community, adjusted, where necessary, in accordance with Articles
32 and 33, provided:

(d) that the buyer and seller are not related, or, where the buyer and seller are
related, that the transaction value is acceptable for customs purposes under
paragraph 2.
2.(a) In determining whether the transacti on value is acceptable for the purposes of
paragraph 1, the fact that the buyer and the seller are related shall not in itself
be sufficient grounds for regarding the transaction value as unacceptable.
Where necessary, the ci rcumstances surrounding the sale shall be examined
and the transaction value shall be accep ted provided that the relationship did
not influence the price. If, in the li ght of information provided by the
declarant or otherwise, the customs authorities have grounds for considering
that the relationship influenced the price, they shall communicate their
grounds to the declarant and he shall be given a reasonable opportunity to
respond. If the declarant so requests, the communication of the grounds shall
be in writing.
(b) In a sale between related persons, th e transaction value shall be accepted and
the goods valued in accordance with paragraph 1 wherever the declarant
demonstrates that such value closely approximates to one of the following
occurring at or about the same time:
 (i) the transaction value in sales, between buyers and sellers who are not
related in any particular case, of identical or similar goods for export
to the Community;
 (ii) the customs value of identical or similar goods, as determined under
Article 30 (2) (c);

 (iii) the customs value of identical or similar goods, as determined under
Article 30 (2) (d).
 In applying the foregoing tests, due a ccount shall be taken of demonstrated
differences in commercial levels, quantity levels, the elements enumerated in
Article 32 and costs incurred by the selle r in sales in which he and the buyer
are not related and where such costs ar e not incurred by the seller in sales in
which he and the buyer are related."
7.413 Article 143(1)(e) of the Implementing Regulation provides that persons shall be deemed to be
related only if one of them directly or indirectly controls the other.
7.414 To support its allegation that Article 29 of the Community Customs Code and
Article 143(1)(e) of the Implementing Regulation ar e being administered in a non-uniform manner in
violation of Article X:3(a) of the GATT 1994, the United States refers to a case involving Reebok
International Limited ("RIL"). According to the United States, Spanish customs authorities found that
RIL's contracts with non-EC manufacturer s established a control relationship vis-à-vis those suppliers
whereas other member State authorities did not cons ider the contracts to have established a control
relationship between RIL and its non-EC manufacturers.
7.415 The United States explains that its claims with respect to the administration of Article 29 of
the Community Customs Code and Article 143(1)(e) of the Implementing Regulation issue are based
on a narrative account by RIL because, due to concerns relating to the pendency of litigation over the
matter at issue in this dispute and the commerc ial sensitivity of the information that supporting
documentation would contain, RIL declined to provide documentation. Apart from its narrative
account of RIL's experiences, the United States also relies upon a decision of the European
Ombudsman concerning a complaint by RIL. 714 The United States argues that the decision reveals
how the Commission dealt with the RIL's comp laint when it was brought to the Commission's
attention in September 2000. According to the United States, the European Ombudsman's decision
does not indicate that the underlying lack of uniformity was resolved.
7.416 The Panel's appraisal of the Ombudsman's letter is that it does not, on its own, prove the
existence of non-uniform administration of Article 29 of the Community Customs Code and
Article 143(1)(e) of the Implementing Regulation in violation of Article X:3(a) of the GATT 1994.
715
The Ombudsman's letter notes RIL's complaint that "Co mmunity legislation is not interpreted in the
same way in different Member States, such as th e Netherlands and Spain". However, apart from
making this observation on RIL's complaint, th e Ombudsman did not make any factual findings
regarding the uniformity or lack thereof among member States with respect to the question of whether
or not parties are related for the purposes of Article 29 of the Community Customs Code and
Article 143(1)(e) of the Implementing Regulation. In fact, the Panel has no objective evidence before
it to prove the existence or otherwise of non-uniform administration in this regard. Moreover, in light
of the fact that the European Communities has c ontested the existence of non-uniform administration
in this respect,
716 the Panel does not consider it appropriate to make any inferences solely on the basis
of the United States' narrative account.
7.417 With respect to the United States' more gene ral comments regarding the manner in which the
European Communities' handled RIL's complaint of alleged non-uniform administration, the Panel
considers that these comments might be relevant for a claim of unreasonable or partial administration
of EC customs law under Article X:3(a) of the GATT 1994, which claim the United States has not

714 Exhibit US-52.
715 With regard to the European Ombudsman, see paragraphs 7.171 – 7.172 above.
716 European Communities' second written submission, para. 163.

made in the context of this dispute.
717 However, the Panel considers that such comments are not
relevant for a claim of non-uniform administration under Article X:3(a) of the GATT 1994.
7.418 Accordingly, the Panel concludes that the United States has not proved that the manner of
administration of Article 29 of the Community Customs Code and Article 143(1)(e) of the
Implementing Regulation concerning the circumstances in which parties are to be treated as "related"
for customs valuation purposes is non-uniform among the member States within the meaning of
Article X:3(a) of the GATT 1994.
(v) Summary and conclusions
7.419 In summary, the Panel finds that, with respect to the United States' allegations of non-uniform
administration of the Community Customs Code and the Implementing Regulation in the area of
customs valuation:
(a) The United States has not proved that differences between member States regarding
the manner in which royalties are apportione d to the customs value of identical goods
imported by the same company exist that amount to non-uniform administration of
Article 32(1)(c) of the Community Customs Code within the meaning of
Article X:3(a) of the GATT 1994.
(b) The imposition by customs authorities in some member States of a form of prior
approval with respect to the successive sales provision, which is inconsistent with EC
customs laws and which is not imposed by customs authorities in other member
States means that the Eur opean Communities does not administer its customs law
concerning successive sales – in particular, Article 147(1) of the Implementing
Regulation – in a uniform manner in violation of Article X:3(a) of the GATT 1994.
(c) In 2001, the European Communities was not administering Article 29(3)(a) of the
Community Customs Code regarding the costs of vehicle repair covered by a seller's
warranty in a uniform manner in violati on of Article X:3(a) of the GATT 1994.
However, the European Communities is not currently administering Article 29(3)(a)
of the Community Customs Code concer ning vehicle repair costs covered under
warranty in a manner that is non-uniform with in the meaning of Article X:3(a) of the
GATT 1994. Therefore, the Panel finds no vi olation of Article X:3(a) of the GATT
1994 with respect to the administration of Article 29(3)(a) of the Community
Customs Code concerning vehicle repair costs covered under warranty.
(d) The United States has not proved that the ma nner of administration of Article 29 of
the Community Customs Code and Article 143(1)(e) of the Implementing
Regulation concerning the circumstances in which parties are to be treated as
"related" for customs valuation purposes is non-uniform among the member States
within the meaning of Article X:3(a) of the GATT 1994.

717 The Panel recalls that the United States clarified in its first submission that it is exclusively
concerned with the requirement of uniform administra tion under Article X:3(a) of the GATT 1994: United
States' first written submission, footnote 15.

(d) Allegations of non-uniform administration of the Community Customs Code and the
Implementing Regulation in the area of customs procedures
(i) Audit following release for free circulation
 Summary of the parties' arguments
7.420 The United States notes that audit procedures are procedures for verifying importers'
statements with respect to classification, valuation and origin of goods. 718 The United States submits
that the EC Court of Auditors found in its report th at different member State authorities take different
approaches to valuation audits following the release of products into free circulation, with important
consequences for importers. 719 According to the United States, in the case of at least one member
State, the Court found that the customs authorities l ack the right to perform post-importation audits at
all, except in cases of fraud. The United States as serts that, even among States in which authorities
are permitted to perform post-importation aud its, the Court found differences among working
procedures with the consequence that "individual customs authorities are reluctant to accept each
other's decisions". 720 The United States also notes that, in its report, the EC Court of Auditors
observed that authorities in Belgium and the Netherlands routinely provide the importer with a written
valuation decision at the conclusion of each audit, which are binding for five years, thus providing the
importer with a degree of legal certainty similar to BTI. 721 According to the United States, by
contrast, the Court found that "[c]ertain member States only issue such decisions when there are
specific adjustments that have to be made (Fran ce, Ireland, Portugal, the United Kingdom). Others
rarely make such written decisions (Denmark, Spain, Italy, Luxembourg). In Germany, the valuation
decision does not exist as a separate written document. However, the detailed report that is given to
the importer after an audit will normally contain the substance of a valuation decision".722
7.421 In response, the European Communities submits that questions of auditing are not part of
customs procedures and, therefore, do not concern the administration of customs laws as such. 723 The
European Communities submits that, in any event, under Article 78(2) of the Community Customs
Code, every member State may proceed to all necessary verifications in order to satisfy themselves of
the accuracy of the particulars contained in the customs declaration. According to the European
Communities, this includes all questions regarding the value of the goods. 724 The European
Communities also argues that it does not believe th at Article X:3(a) of the GATT 1994 can require
complete certainty for traders concerning questions of auditing. On the contrary, a certain degree of
uncertainty as to when and under which conditions an audit will be carried out is in the interests of
sound control and must be accepted by traders as pa rt of a customs compliance policy. In addition,
the European Communities submits that any administ rative differences that might still exist are minor
in nature, and do not amount to a viola tion of Article X:3(a) of the GATT 1994. 725 The European

718 United States' reply to Panel question No. 4.
719 United States' first written submission, para. 96.
720 United States' first written submission, para. 97 referring to EC Court of Auditors Valuation Report,
paras. 33 and 37 (Exhibit US-14).
721 United States' first written submission, para. 98.
722 United States' first written submission, para. 99 referring to EC Court of Auditors Valuation Report,
para. 46 (Exhibit US-14).
723 In this regard, the European Communities notes that Article 4(16) of the Community Customs Code
defines a "customs procedure" as any of the following: release for free circulation; transit; customs
warehousing; inward processing; processing under customs control; temporary admission; outward processing;
and exportation: European Communities' reply to Panel question No. 64(a). The European Communities further
submits that post-release audits are not considered as "customs procedur es" because they are not one of the
procedures referred to in Article 4(16) of the Community Customs Code.
724 European Communities' second written submission, para. 157.
725 European Communities' first written submission, para. 400.

Communities further notes that the member State refe rred to by the Court of Auditors in which the
customs authorities lack the right to perform post-importation audits except in cases of fraud was
Greece. In 2000, Greece established a service with powers to conduct post-clearance audits. Finally,
the European Communities submits that the Commission in conjunction with the member States has
recently finalized a Community Customs Audit Guide.
726 According to the European Communities,
this Guide ensures uniform audit practice across the European Communities.727
7.422 The United States disputes the European Communities' argument that audits are not part of
customs procedures. According to the United St ates, the specific sense in which the European
Communities uses the term "customs procedure" for the purposes of the Community Customs Code
has no bearing on whether audits are customs pro cedures (in the ordinary sense of that term) for
administering the Code. 728 The United States argues that, in any event, whether or not auditing is
characterized as a customs procedure, audits are pl ainly tools for administering EC customs laws.
According to the United States, to the extent th at different member States use different audit
procedures, they administer the underlying law differently. 729 The United States argues that, flowing
from the ordinary meaning of "administer", audit procedures put EC customs laws into effect by
verifying and enforcing compliance with those laws . It is through the tools of audit procedures,
among others, that member State authorities "execute" or "carry out" EC customs laws. 730 The United
States argues that the administration of EC custom s laws depends in large part on the actions of
traders themselves. Given the millions of declara tions submitted to member State customs authorities
each year, it would be impossible for the authorities to thoroughly inspect every shipment or verify
the contents of every declaration before clearance. It is for this reason that tools for verifying and
enforcing compliance with the customs laws are critical to "carrying out" or "putting into effect" those
laws. Compliance with those laws is secured throug h traders' knowledge that the representations they
make to the customs authorities ultimately are subj ect to verification and enforcement through audits
and penalties. 731 The United States also submits that, given that the Community Customs Audit
Guide was only recently finalized and, in any even t, given that it is merely intended as an aid to
member States, rather than a binding obligation on them, there is no basis for the assertion that it
ensures a uniform practice acr oss the European Communities. 732 Finally, regarding the European
Communities' dismissal of differences among member States in this area as "minor in nature", the
United States submits that, whereas some member St ates provide traders with legal certainty as to
how specified transactions will be treated going forward, others do not.733
7.423 The European Communities submits that it does not believe that Article X:3(a) of the
GATT 1994 requires harmonization of the relevant rul es of general administrative law of the member
States which govern audit procedures. 734 In addition, the European Communities submits that
Article 78(2) of the Community Customs Code gives customs authorities the power to conduct post-
clearance inspections and audits. All member States have the necessary audit capacities, and are
guided by the Community Customs Audit Guide. The European Communities submits that it does not
believe that audit provisions as such are among the laws enumerated in Article X:1 of the GATT 1994
since Article X:1 only covers those laws and regulati ons which pertain to the matters referred to in

726 Community Customs Audit Guide (Exhibit EC-90).
727 European Communities' second written submission, para. 158.
728 United States' second written submission, para. 83.
729 United States' reply to Panel question No. 28.
730 United States' second written submission, paras. 79-80.
731 United States' second written submission, para. 81.
732 United States' oral statement at the second substantive meeting, para. 68.
733 United States' oral statement at the first substantive meeting, para. 55.
734 European Communities' first written submission, para. 401.

this provision. 735 In any event, the basic provisions exist at the EC level, not at the member State
level, and a uniform audit practice is ensured throughout the European Communities.736
7.424 The United States responds that tools of administrati on need not necessarily qualify as laws
of general application within the meaning of Article X:1 of the GATT 1994. For the purposes of
Article X:3(a) of the GATT 1994, it is the object of administration – the thing being administered – as
opposed to the provision doing the administering, that must be a law of general application within the
meaning of Article X:1. This is evident from th e grammatical structure of Article X:3(a) of the
GATT 1994, in which the phrase "laws, regulations, d ecisions and rulings of the kind described in
paragraph 1 of this Article" is the object of the phrase "shall administer in a uniform, impartial and
reasonable manner."
737
 Analysis by the Panel
7.425 The Panel notes that, in essence, the United Stat es challenges the fact that different member
States take different approaches to audits followi ng the release of products into free circulation. 738 In
support, the United States relies upon the EC Court of Auditors report, which it asserts, referred to
differences among member States regarding the existence of the right of customs authorities to
conduct post-importation audits and also rega rding the working procedures adopted among the
customs authorities that do have the right to conduct post-importation audits.739
7.426 With respect to its allegations concerning di vergence in audit procedures among the member
States, the United States does not specifically identify the provisions of EC customs laws it claims are
being administered in a non-uniform fashion. Ra ther, the United States submits that it challenges the
manner of administration of "the valuation provis ions contained in the Community Customs Code
(Articles 28 – 36) and the Implementing Regulation (Articles 141 – 181a and Annexes 23 –29), to the
extent that different member State authorities employ different audit procedures" 740. Nevertheless, in
the Panel's understanding, the only provision of the various instruments identified in the United States'
request for establishment of a panel which it alle ges are being administered in a non-uniform manner
and which concerns audit procedures following release for free circulation is Article 78(2) of the
Community Customs Code.
7.427 In the Panel's view, the conduct (or not) of post-importation audits and the working
procedures adopted among the customs authorities regarding post-importation audits constitute acts of
administration within the meaning of Article X:3(a) of the GATT 1994. These acts of administration
are matters within the Panel's terms of reference si nce they amount to instances of administration of
Article 78(2) of the Community Customs Code with respect to procedures for the entry and release of
goods.
7.428 Article 78(2) of the Community Customs Code provides that:
"The customs authorities may, after rel easing the goods and in order to satisfy
themselves as to the accuracy of the particul ars contained in the declaration, inspect
the commercial documents and data relati ng to the import or export operations in
respect of the goods concerned or to sub sequent commercial operations involving
those goods. Such inspections may be carried out at the premises of the declarant, of

735 European Communities' comments on the United States' reply to Panel question No. 138.
736 European Communities' reply to Panel question No. 168(c).
737 United States' reply to Panel question No. 129.
738 United States' first written submission, para. 96.
739 United States' first written submission, paras. 97 – 99 referring to EC Court of Auditors Valuation
Report, paras. 33, 37 and 46 (Exhibit US-14).
740 United States' replies to Panel question Nos. 124 and 179.

any other person directly or indirectly i nvolved in the said operations in a business
capacity or of any other person in posses sion of the said document and data for
business purposes. Those authorities may also examine the goods where it is still
possible for them to be produced."
7.429 By way of general observation, the Panel notes that Article 78(2) of the Community Customs
Code is discretionary rather than prescriptive in nature. More specifically, Article 78(2) of the
Community Customs Code empowers customs authoriti es to conduct audits following the release of
goods for free circulation but does not oblige them to do so. Further, Article 78(2) of the Community
Customs Code does not impose any conditions on th e manner in which audits are to be conducted
other than to provide that the purpose of audits is to satisfy customs authorities of the accuracy of the
particulars contained in the customs declaration. In satisfying itself of the accuracy of the particulars
contained in the customs declaration, the customs au thority is authorized under Article 78(2) of the
Community Customs Code to "inspect the commercia l documents and data relating to the import or
export operations in respect of the goods concerned or to subsequent commercial operations involving
those goods". The Panel considers that the discre tionary nature of Article 78(2) of the Community
Customs Code is notable because it reflects a policy decision on the part of the legislator to provide
administrators with a certain degree of freedom in the application of that provision.
7.430 The Panel notes that the ordinary meaning of the terms of Article X:3(a) of the GATT 1994
does not indicate that Article X:3(a) of the GATT 1994 requires laws to be prescriptive rather than
discretionary. As the Panel has noted in paragra ph 7.20 above, the essential aspect Article X:3(a) of
the GATT is the obligation to "administer in a uni form, impartial and reasonable manner". The Panel
recalls its findings in paragra ph 7.113 above that Article X:3(a) of the GATT 1994 does not concern
what a particular law says (i.e. its substance) but , instead, concerns the way the law is applied in
practice (i.e. the way in which it is administered). Therefore, the Panel considers that Article X:3(a)
of the GATT 1994 does not dictate whether or not a provision regulating a particular matter of
customs administration should be drafted in prescriptive rather than discretionary terms.
741

741 In this regard, the Panel notes that the context of Article X:3(a) of the GATT 1994 could arguably
be interpreted as suggesting that Article X:3(a) of th e GATT 1994 is not aimed at harmonising WTO Members'
customs laws by, inter alia, requiring prescriptive provisions to regula te customs matters. In fact, while the
provisions of Article VIII of the GATT 1994 could be viewed as being aimed at, inter alia, harmonization of
certain internal customs matters, notably, the relevant la nguage used in Article VIII of the GATT 1994 is quite
distinct from that used in Article X:3(a) of the GATT 1994. In particular, Article VIII of the GATT 1994,
which, in general terms, covers certain import and export-related fees and formalities, provides in relevant part
that:
"1. (a) All fees and charges of whatever character (other than import and export duties and
other than taxes within the purview of Article III) impo sed by contracting parties on or in connection with
importation or exportation shall be limited in amount to the approximate cost of services rendered and shall not
represent an indirect protection to domestic products or a taxation of imports or exports for fiscal purposes.
(b) The contracting parties recognize the need for reducing the number and diversity of fees and
charges referred to in subparagraph (a).
(c) The contracting parties also recognize the need fo r minimizing the incidence and complexity
of import and export formalities and for decreasing and simplifying import and export documentation
requirements.*
2. A contracting party shall, upon request by another contracting party or by the
CONTRACTING PARTIES, review the operation of its laws and regulations in the light of the provisions of
this Article.
3. No contracting party shall impose substantial penalties for minor breaches of customs
regulations or procedural requirements. In particular, no penalty in respect of any omission or mistake in
customs documentation which is easily rectifiable and obviously made without fraudulent intent or gross
negligence shall be greater than necessary to serve merely as a warning.

7.431 The Panel notes that, by definition, discretionary provisions may be applied in different ways,
which may or may not produce different substantiv e results. The Panel considers that, if such
differences in application were to be inte rpreted as amounting to instances of non-uniform
administration in violation of Article X:3(a) of the GATT 1994, this would mean that the application
of many discretionary provisions would be in vi olation of Article X:3(a) of the GATT 1994. The
Panel is of the view that the drafters of Article X:3(a) of the GATT 1994 could not have intended this
result because there may be a justifiable rationale for the existence of discretion in such cases.
Nevertheless, while the Panel considers that dive rgences resulting from the exercise of discretion in
the law being administered do not necessarily fall f oul of Article X:3(a) of the GATT 1994, the Panel
does consider that there are certain limits im plicit in Article X:3(a) of the GATT 1994 that
circumscribe the types of provisions that may be c ouched in discretionary terms and that may have an
impact upon the way in which discretion is exercised in particular cases. In particular, the Panel
recalls its findings in paragraphs 7.107 and 7. 108 above that the due process theme underlying
Article X of the GATT 1994 suggests that the aim of Article X:3(a) of the GATT is to ensure that
traders are treated fairly and consistently when se eking to import from or export to a particular WTO
Member. The Panel also considers that an object and purpose of the WTO Agreement is to ensure
security and predictability in the trading environment.
742 In the Panel's view, the existence and

4. The provisions of this Article shall extend to fees, charges, formalities and requirements
imposed by governmental authorities in connection with importation and exportation, including those relating
to:
(a) consular transactions, such as consular invoices and certificates;
(b) quantitative restrictions;
(c) licensing;
(d) exchange control;
(e) statistical services;
(f) documents, documentation and certification;
(g) analysis and inspection; and
(h) quarantine, sanitation and fumigation."

742 The preamble of the WTO Agreement specifies that one of the purposes of the Agreement is to
"expand[] ... trade in goods and services." It also states that Members should contribute to such expansion "by
entering into reciprocal and mutually advantageous arrangements directed to the substantial reduction of tariffs
and other barriers to trade." In EC – Computer Equipment, the Appellate Body stated that: "[T]he security and
predictability of 'the reciprocal and mutually advantageous arrangements directed to the substantial reduction of
tariffs and other barriers to trade' is an object and purpose of the WTO Agreement, generally, as well as of the
GATT 1994.": Appellate Body Report, EC – Computer Equipment, para. 82. This view was recently affirmed
by the Appellate Body in Appellate Body Report, EC – Chicken Cuts, para. 243. The objective of security and
predictability was also referred to by the Appellate Body in the context of Article III of the GATT 1994 (dealing
with national treatment). In particular, in Japan – Alcoholic Beverages II, the Appellate Body stated that: "Our
interpretation of Article III is faithful to the 'customary rules of interpretation of public international law'. WTO
rules are reliable, comprehensible and enforceable. WTO ru les are not so rigid or so inflexible as not to leave
room for reasoned judgements in confronting the endless and ever-changing ebb and flow of real facts in real
cases in the real world. They will serve the multilateral tr ading system best if they are interpreted with that in
mind. In that way, we will achieve the 'security and pr edictability' sought for the multilateral trading system by
the Members of the WTO through the establishment of the dispute settlement system.": Appellate Body Report,
Japan – Alcoholic Beverages II, pp. 29-31. Finally, the objective of security and predictability has been referred
to in the context of the DSU. In particular, in US – Section 301 Trade Act , the panel examin ed the European
Communities' argument that Section 301 was inconsistent with Article 23 of the DSU ("Strengthening of the
Multilateral System") as well as various articles of GATT 1994. In its examination, the panel discussed the
importance of the concept of "security and predictability" and stated: "Providing security and predictability to
the multilateral trading system is another central object and purpose of the system which could be instrumental
to achieving the broad objectives of the Preamble. Of all WTO disciplines, the DSU is one of the most
important instruments to protect the security and predic tability of the multilateral trading system and through it
that of the market-place and its different operators. DSU provisions must, thus, be interpreted in the light of this
object and purpose and in a manner which would most effectively enhance it. In this respect we are referring

exercise of discretion should not unduly compromise the underlying due process objective of
Article X:3(a) of the GATT 1994. Nor should they render the trading environment insecure and
unpredictable without just cause.
7.432 The Panel takes note of the European Commun ities' argument that a certain degree of
uncertainty as to when and under which conditions an audit will be carried out is in the interest of
sound control and must be accepted by traders as part of a customs compliance policy.
743 The Panel
notes that the United States has not disputed the s uggested rationale for the existence of discretion
under Article 78(2) of the Community Customs Code put forward by the European Communities.
The Panel has no reason to ques tion this suggested rationale. 744 Further, the Panel notes that the
Community Customs Audit Guide 745, which sets out a framework for post clearance and audit based
controls, helps to ensure that the due process rights of traders are not unduly compromised.746
7.433 In support of its allegation of non-uniform administration with respect to audit procedures, the
United States points to a statement made in the EC Court of Auditors Special Report No. 23/2000
concerning valuation of imported goods for cu stoms purposes dated 14 March 2001 that customs
authorities in at least one member State (appare ntly, Greece) lacked the right to perform post-
importation audits whereas, implicitly, customs au thorities in other member States possessed that
right. The Panel understands that both the approach adopted by Greece at the time the EC Court of
Auditors' report was prepared on the one hand and th at adopted in the other member States would be
consistent with Article 78(2) of the Community Customs Code given that, as noted previously,
Article 78(2) authorises member State customs authorities to conduct audits but does not oblige them
to do so. The United States also relies upon statements by the EC Court of Auditors in its report to
the effect that some member States (Belgium and the Netherlands) routinely provide the importer with
a written binding valuation decisions at the conclusion of each audit, others only issue such decisions
when there are specific adjustments that have to be made (France, Ireland, Portugal, the United
Kingdom), yet others rarely make such written deci sions (Denmark, Spain, Italy, Luxembourg) and,
finally, in Germany, the valuation decision does not exist as a separate written document. Again, the
Panel would merely note that Article 78(2) of the Community Customs Code contains no
requirements concerning the action to be taken by customs authorities following conclusion of an
audit. In particular, Article 78(2) of the Comm unity Customs Code does not impose an obligation to
prepare written decisions following an audit. Nor does Article 78(2) of the Community Customs
Code preclude the issuance of such decisions. Ther efore, it would appear that the various approaches
taken by the member States regarding the issuance of written decisions are all consistent with the
terms of Article 78(2) of the Community Customs Code.
7.434 By way of summary, the Panel recalls that Article X:3(a) of the GATT 1994 does not dictate
whether or not a provision regulating a particular matter of customs administration should be drafted
in prescriptive rather than discretionary terms. The Panel further recalls that divergences resulting
from the exercise of discretion in the law being administered do not necessarily fall foul of
Article X:3(a) of the GATT 1994 provided that th e existence and exercise of discretion do not unduly
compromise the underlying due process objective of Article X:3(a) of the GATT 1994 and do not
render the trading environment insecure and unpredic table without just cause. In light of these
findings and given that the Panel has no reason to question the rationale indicated by the European

not only to preambular language but also to positive law provisions in the DSU itself.": Panel Report, US –
Section 301 Trade Act, para. 7.75.
743 European Communities' first written submission, para. 400.
744 Indeed, the Panel does not consider that it is in a position to second-guess policy choices made by
legislators in the European Communities.
745 The Community Customs Audit Guide is contained in Exhibit EC-90. In this regard, see paragraph
7.178 above.
746 European Communities' first written submission, para. 400 referring to Exhibit EC-90.

Communities for the existence of discretion in Ar ticle 78(2) of the Community Customs Code, the
Panel finds no violation of Article X:3(a) of the GATT 1994 with respect to the manner of
administration of the audit procedure requirement s in the European Communities by the member
States applicable to goods following their release for fr ee circulation, in particular Article 78(2) of the
Community Customs Code.747
(ii) Penalties against infringements of EC customs legislation
 Summary of the parties' arguments
7.435 The United States submits that, in the area of penalties for EC customs law violations, it is
well recognized that, as a matter of EC law, differe nt member States are entitled to impose, and do
impose, different sanctions. The United States notes that the EC Commission itself has acknowledged
that "[s]pecific offences may be considered in one Member State as a serious criminal act possibly
leading to imprisonment, whilst in another Member State the same act may only lead to a small – or
even no – fine".748 Further, the United States submits that th is area of divergence is one that has been
noted by the ECJ on a number of occasions. By way of example, the United States refers to the ECJ's
decision in Jose Teodoro de Andrade v. Director da Alfândega de Leixões, where the Court stated that
"[a]s regards customs offences, the Court has pointed out that in the absence of harmonization of the
Community legislation in that field, the member States are empowered to choose the penalties which
seem appropriate to them".749
7.436 The European Communities submits that the United Stat es' claim regarding penalties for
violations of customs laws must be rejected because penalty provisions are not covered by
Article X:3(a) of the GATT 1994, because Article X:3(a) does not require the harmonization of
member States' penalty provisions and because EC law ensures a sufficient degree of uniformity of
member States' penalty provisions. 750 Further, the European Communities submits that penalty
provisions, which provide for a sanction in the case of a violation of a provision of customs laws, are
not themselves customs laws 751 and that, therefore, they are not covered by Article X:3(a) of the
GATT 1994.752 More specifically, the European Communiti es submits that penalties for violations of
customs laws are not among the matters referred to in Article X:1 of the GATT 1994. The European
Communities further submits that it cannot be consider ed that penalties for violations of customs laws
necessarily "pertain to" the classification or the valuation of products, or to rates of duties.753
7.437 The European Communities also submits that member States' laws which contain penalty
provisions are themselves laws of general applicat ion. Accordingly, even if these laws fell under
Article X:1 of the GATT 1994, it would be the administration of those laws to which Article X:3(a) of
the GATT 1994 applies. The European Communiti es submits that alleged differences between
member States' penalty provisions to which the United States has referred are not differences in
administration but, rather, differences between differe nt legislative measures applicable in different

747 In light of this conclusion, the Panel does not consider it necessary to determine whether or not
audits following the release of goods for free circulation are properly categorised as "customs procedures".
748 United States' second written submission, para. 72 referring to European Commission, Directorate-
General for Taxation and Customs Union, TAXUD/447/2004 Rev 2, An Explanatory Introduction to the
modernized Customs Code, p. 13, 24 February 2005 (Exhibit US-32).
749 United States' first written subm ission, para. 100 referring to Jose Teodoro de Andrade v. Director
da Alfândega de Leixões, Case C-213/99, ECR I-11083 7 December 2000, paras. 4, 18-20. (Exhibit US-31).
750 European Communities' second written submission, para. 189.
751 European Communities' first written submission, para. 431.
752 European Communities' first written submission, para. 429; European Communities' oral statement
at the first substantive meeting, para. 52.
753 European Communities' reply to Panel question No. 119; European Communities' oral statement at

territories. That a particular topic may be regulated differently in different parts of the territory of a
WTO Member has nothing to do with non-uniform administration.
754 The European Communities
submits that, since Article X:3(a) of the GATT 1994 only concerns the administration of customs
laws and not the substance of the customs laws themselves, Article X:3(a) of the GATT 1994 does
not require the harmonization of member States ' penalty provisions. The European Communities
argues that, therefore, Article X:3(a) of the GATT 1994 does not create an obligation to harmonise
laws which may exist within a WTO Member at the s ub-federal level. It merely requires that such
laws be administered uniformly within the territory in which they apply. 755 The European
Communities further submits that the penalties applicab le for violations of EC customs laws are set
out in the national laws of the member States, which must respect the principles set out by
Community law. Accordingly, it is not the administration of penalty provisions which varies within
the European Communities; it is th e laws themselves which are differe nt, albeit within the limits set
by Community law. 756 The European Communities concludes that the United States has not shown
that the administration of those penalty provisions varies within the member States that have adopted
them. Rather, according to the European Communiti es, the United States is effectively requiring a
harmonization of penalty provisions within the Eu ropean Communities but Article X:3(a) of the
GATT 1994 provides no legal basis for such a claim.
757
7.438 The United States submits that the European Communitie s' argument ignores the distinction
between the laws that a member State administers and the tools for administering those laws. It
assumes, without foundation, that because penalty pr ovisions take the form of laws they can only
themselves be administered, and not also serve as tools of administration of other laws. However,
according to the United States, to the extent that penal laws are tools of administration of customs
laws and cause the administration of customs laws to be uniform or non-uniform, Article X:3(a) of the
GATT 1994 applies to such laws. 758 The United States argues that, flowing from the ordinary
meaning of "administer", member States' penalty provisions put EC customs laws into effect by
verifying and enforcing compliance with those laws. It is through the tools of penalty provisions,
among others, that member State authorities "execute" or "carry out" EC customs laws. 759 The United
States notes that its arguments are directed at laws and regulations at the sub-federal level that are
used to verify and enforce complia nce with laws and regulations prescribed at the federal level; they
are not directed at the vast body of laws and regula tions at the sub-federal level that have nothing to
do with verification and enforcement of compliance w ith other laws and regulations or that concern
only verification and enforcement of compliance with other sub-federal laws and regulations. 760 The
United States also submits that th e European Communities' argument that differences in penalty laws
are differences of substance rather than differences of administration mistakenly assumes that a law
(or other measure) cannot be administrative in nature . In the United States' view, penalty laws are
administrative in nature, inasmuch as they pr esume the existence of other laws and prescribe
consequences for the violation of those laws.
761
7.439 The European Communities responds that it does not agree that a penalty provision puts
into effect or carries out the substantive rule the violation of which it is intended to sanction. For
instance, a provision which provides for the impositi on of a sanction for the failure to declare a good
does not "carry out" or "put into effect" the provision which imposes the obligation to declare the

754 European Communities' oral statement at the second substantive meeting, para. 69.
755 European Communities' first written submission, para. 434; European Communities' oral statement
at the first substantive meeting, para. 53.
756 European Communities' first written submission, para. 435; European Communities' oral statement
at the first substantive meeting, para. 53.
757 European Communities' first written submission, para. 436.
758 United States' reply to Panel question No. 32.
759 United States' second written submission, paras. 79-80.
760 United States' second written submission, para. 7.
761 United States' replies to Panel question Nos. 4 and 32.

good. The penalty provision itself needs to be carried out through an administrative or judicial act
imposing the sanction. It is this latter act which can be regarded as executing the prohibition, and thus
constitutes "administration". In contrast, th e penalty provision complements the substantive
provision, but does not itself put it into effect. 762 According to the European Communities, penalty
provisions and substantive provisions are both meas ures of general application which complement
one another. That the former exists at the member States level and the latter at the EC level does not
mean that the former administers the latter. 763 The European Communities also notes that it does not
contest that penalty provisions are relevant tools for ensuring uniform administ ration of customs law.
However, the fact that penalty provisions are t ools for the uniform administration of customs laws
does not mean that they are themselves laws or regulations pertaining to the matters enumerated in
Article X:1 of the GATT 1994, in particular tariff classification, customs valuation, or rates of duty.764
The European Communities submits that Article X:3(a) of the GATT 1994 requires the uniform
administration only of the laws and regulations re ferred to in Article X:1 of the GATT 1994. If
penalty provisions are merely "tools" to ensure a uniform administration of those laws, then penalty
provisions as such do not fall within the scope of Article X:3(a) of the GATT 1994. 765 Further,
according to the European Communitie s, the United States has not shown that the fact that penalty
provisions are contained in laws of the Member St ates leads in any way to a non-uniformity in the
administration of the laws covered by Article X: 1 of the GATT 1994, in particular laws regarding
tariff classification, customs valuation, and rates of duty. In addition, the European Communities
submits that it is not correct to assume that differenc es in penalties would necessarily lead to a lack of
uniformity in the application of the provisions the violation of which is sanctioned. Such a
consequence would result only if sanctions were not dissuasive or effective. If, on the contrary,
sanctions are dissuasive and effective, then it must be assumed that the related substantive provisions
will be respected, regardless of differences in the level of sanctions applicable.766
7.440 The European Communities further submits that, even if Article X:3(a) of the GATT 1994
were considered to apply to the question of harm onization of penalty provisions, EC law provides for
a sufficient level of harmonization in this respect. 767 In this regard, the European Communities
submits that the ECJ has developed clear guidelines for penalty provisions for violations of EC
customs law, which must, in particular, be effec tive, proportionate, and dissuasive, and that these
principles have also been confirmed by the Council of the European Union. 768 The European
Communities considers that these general requi rements are sufficient for securing a uniform
application of EC customs laws, in accordance with Article X:3(a) of the GATT 1994. According to
the European Communities, the Un ited States has not provided any evidence demonstrating that the
absence of a full harmonization of penalty provisions in the EC leads to any lack of uniformity in the
application of EC laws in areas referred to by Article X:1 of the GATT 1994. 769 In addition, the
European Communities submits that the ECJ in Jose Teodoro de Andrade v. Director da Alfândega
de Leixões emphasised that member States cannot act freely when laying down penalty provisions, but
must ensure that the penalty is effective, propor tionate and dissuasive. The European Communities
explains that, in other words, member States are limited in two directions. They cannot lay down
penalties that are excessively severe and, therefore, violate the principle of proportionality. On the
other hand, they cannot lay down penalties which are so lenient that they have no dissuasive effect
and, therefore, do not ensure the effective a pplication of Community law. The European

762 European Communities' oral statement at the second substantive meeting, para. 71.
763 European Communities' oral statement at the second substantive meeting, para. 72.
764 European Communities' second written submission, para. 192.
765 European Communities' second written submission, para. 193.
766 European Communities' second written submission, para. 209.
767 European Communities first written submission, paras. 429 and 437; European Communities' oral
statement at the first substantive meeting, para. 54.
768 European Communities' first written submission, para. 438.
769 European Communities' oral statement at the second substantive meeting, para. 79.

Communities adds that these fundamental principl es are sufficient to ensure uniformity in the
application of customs laws, confirmed by Artic le VIII:3 of the GATT 1994, which specifically
addresses the issue of sanctions for violations of customs regulations and which merely provides for
certain minimum standards of proportionality.
770
7.441 In response, the United States submits that the fundamental principles to which the European
Communities refers are very general principles, which permit a wide range of member State practices.
The United States notes that the European Commun ities itself acknowledges that specific offences
may be considered in one member State as a serious criminal act possibly leading to imprisonment,
whilst in another member State the same act may only lead to a small – or even no – fine. According
to the United States, the European Communities ca nnot suggest that it discharges its obligation of
uniform administration where the applicable lega l doctrines permit such dramatic divergences in
administration. According to the United States, accepting that argument would effectively render
Article X:3(a) of the GATT 1994 meaningless.
771
 Analysis by the Panel
7.442 The Panel notes that the essence of the United Stat es' challenge is that, in the area of penalties
for EC customs law violations, different member States are entitled to impose, and do impose,
different sanctions. 772 The United States submits that penal laws are tools of administration of EC
customs laws and, to the extent that they are different among member States, they result in non-
uniform administration of customs laws in violation of Article X:3(a) of the GATT 1994.
773
7.443 There are no provisions in the Community Customs Code nor in the Implementing
Regulation that define offences at the EC level and identify the consequences of such offences (e.g. in
the form of penalties). 774 As a result, the nature and level of such penalties are determined by the
national laws of the member States. This fact was noted in the customs administration area by the
ECJ in Jose Teodoro de Andrade v. Director da Alfândega de Leixões . In that case, the ECJ stated
that "[a]s regards customs offences, the Court has poi nted out that in the absence of harmonization of
the Community legislation in that field, the me mber States are empowered to choose the penalties
which seem appropriate to them."775
7.444 In the light of the foregoing, the question for the Panel's consideration is whether penalty laws
can be viewed as "tools" that administer EC customs law and, if so, whether substantive differences in
such tools among the member States – the existence of which is not disputed between the parties –
mean that administration of EC customs laws is non- uniform within the meaning of Article X:3(a) of
the GATT 1994. In this regard, the Pane l recalls its finding in paragraph 7.114 et seq that the term
"administer" refers to the application of laws and regulations, including administrative processes and
their results but not to laws and regulations as such. Accordingly, it is the Panel's view that, for the
purposes of Article X:3(a) of the GATT 1994, the subs tantive content of penalty laws of the member
States used to enforce EC customs law cannot be viewed as acts of administration with respect to
laws, regulations, decisions and rulings covered by Article X:1 of the GATT. Therefore, substantive
differences in penalty laws between member Stat es cannot be considered to be in violation of

770 European Communities' first written submission, paras. 441-442.
771 United States' oral statement at the first substantive meeting, para. 52 referring to European
Commission, Directorate-General for Taxation and Customs Union, TAXUD/447/2004 Rev 2, An Explanatory
Introduction to the Modernized Customs Code, p. 13, 24 February 2005). (Exhibit US-32).
772 United States' first written submission, para. 26.
773 United States' oral statement at the first substantiv e meeting, para. 50;. United States' reply to Panel
question No. 32.
774 In this regard, see paragraphs 7.175 – 7.176.
775 Jose Teodoro de Andrade v. Director da Alfândega de Leixões , Case C-213/99, ECR I-11083
7 December 2000, para. 20 (Exhibit US-31).

Article X:3(a) of the GATT 1994. Therefore, the Pa nel finds no violation of Article X:3(a) of the
GATT 1994 with respect to the substantive differences in penalty laws between member States.776
7.445 The Panel does wish to note, however, that while the Panel is of the view that substantive
differences in penalty laws between member Stat es cannot be considered to be in violation of
Article X:3(a) of the GATT 1994, nevertheless, di fferences in the way member States have applied
the judicial decision issued by the ECJ in Jose Teodoro de Andrade v. Director da Alfândega de
Leixões, which requires that infringements of EC law are penalized through measures that make the
penalty effective, proportionate and dissuasive, could, in theory, be considered to be in violation of
Article X:3(a) of the GATT 1994. In this regard, the Panel notes that judicial decisions of the kind
issued by the ECJ in the Andrade case fall within the scope of "laws, regulations, decisions and
rulings of the kind described in [Article X:1 of the GATT 1994]". Further, the ECJ's decision in the
Andrade case was confirmed in EC Council Resolution of 29 June 1995 on the effective uniform
application of Community law and on the penalties applicable for br eaches of Community law in the
internal market.777 In the Panel's view, this Council Resolution also falls within the scope of "laws,
regulations, decisions and rulings of the kind descr ibed in [Article X:1 of the GATT 1994]". The
Panel considers that the acknowledgement by the European Communities in the context of this
dispute of substantive differences in penalty laws among member States could indicate that the
judicial decision issued by the ECJ in Jose Teodoro de Andrade v. Director da Alfândega de Leixões
and EC Council Resolution of 29 June 1995 on the e ffective uniform application of Community law
and on the penalties applicable for breaches of Comm unity law in the internal market are not being
administered in a uniform manner by the member States in violation of Article X:3(a) of the GATT
1994. However, the Panel will not seek to determin e whether or not the manner of administration by
the member States of the judicial decision issued by the ECJ in Jose Teodoro de Andrade v. Director
da Alfândega de Leixões and EC Council Resolution of 29 June 1995 on the effective uniform
application of Community law and on the penalties applicable for br eaches of Community law in the
internal market is actually in violation of Ar ticle X:3(a) of the GATT 1994 given that the United
States did not allege a violation of Article X:3(a) of the GATT 1994 in this regard.
(iii) Processing under customs control
 Summary of the parties' arguments
7.446 The United States notes that "processing under customs c ontrol" allows duty to be assessed
on a product that is imported into the European Co mmunities once it has been further processed in the
European Communities following importation rather than imposing duties on the imported product
itself. According to the United States, in the Eur opean Communities, eligibility to use this procedure
is determined according to an "economi c conditions" assessment set out in EC law. 778 The United
States submits that, under Annex 76 of the Implem enting Regulation, the "economic conditions" are
deemed to be fulfilled for certain goods and opera tions but for all other goods and operations, an
assessment of the economic conditions must be made on a case-by-case basis by the customs
authorities of the member State in which an application is made.779

776 In light of this conclusion, the Panel does not consider it necessary to determine whether or not
penalty laws are properly categorised as "customs procedures", which was questioned by the European
Communities in footnote 127 of its first written submission.
777 Exhibit EC-41. In particular, the Council Resolutio n requests the member St ates to "take action to
ensure that, when Community acts are tr ansposed into national legislation, Community law is duly applied with
the same effectiveness and thoroughness as national law and that, in any event, the penalty provisions adopted
are effective, proportionate and dissuasive".
778 United States' first written submission, paras. 27 and 103.
779 United States' first written submission, para. 104 referring to Article 552(1) of the Implementing
Regulation (Exhibit US-6).

7.447 The United States argues that, although the assessment of whether or not the "economic
conditions" have been fulfilled in a given case enta ils an EC-wide assessment, EC customs law makes
no provision for uniform application of that asse ssment throughout the European Communities. The
United States argues that different member States apply the tests differently, which can have a
significant commercial impact.
780 In this regard, the United States notes that Article 502(3) of the
Implementing Regulation states that "the exam ination shall establish whether the use of non-
Community sources enables processing activities to be created or maintained in the Community".
The United States submits that at least one member State's authorities appear to apply tests that go
beyond this basic guideline. 781 The United States argues in par ticular that, in the United Kingdom,
authorities require an importer to show not only that "the use of non-Community sources enables
processing activities to be created or maintained in the Community" as provided by Article 502(3),
but also that the proposed processing will not "har m[ ] the essential interests of Community producers
of similar goods." 782 The United States submits that, in contrast, the substance of French law
implementing relevant provisions of EC customs law identifies a one-prong economic effects test for
deciding whether to permit processing under customs control. 783 The United States submits that, in
essence, French regulations simply require an importer to satisfy the condition set out in
Article 502(3) of the Implementing Regulation and, therefore, do not impose the additional test of
demonstrating the absence of harm to competitors in the European Communities that is contained in
UK law. 784 Therefore, applicants to the French custom s authority are not told that the information
they provide must also show that the proposed processing activity will not adversely affect the
essential interests of Community producers of similar goo ds. Nor are they told the types of evidence
applicants should provide to satisfy the second prong to the economic test.785
7.448 According to the United States, a straightfo rward comparison between the French guidance
and the UK guidance demonstrates that France and the United Kingdom are administering Article 133
of the Community Customs Code and Articles 502( 3) and 552 of the Implementing Regulation non-
uniformly. The United States clarifies that it h as not made any arguments with respect to the
application of the French law. According to the United States, this is not necessary because French
law and the UK law – both tools for the administration of the EC law – are facially divergent.
786
According to the United States, the fact that differe nt member States explicitly apply different tests,
with at least one member State requiring affirma tive evidence of the absence of harm to competitors
in the European Communities and others simply re quiring evidence of the creat ion or maintenance of
processing within the European Communities, is stark evidence of a lack of uniformity in
administration.787 The United States submits that, therefore, the application of each of those laws will
necessarily diverge from each other.788
7.449 In response, the European Communities argues that the French and UK documents referred
to in the United States' arguments do not constitute "l aw". Their nature is simply that of guidance,
which must always be interpreted in line with EC law. The European Communities submits that,

780 United States' first written submission, para. 27.
781 United States' first written submission, para. 105.
782 United States' first written submission, para. 106 referring to HM Customs & Excise, Notice 237,
"Processing Under Customs Control (PCC)", June 2003 (Exhibit US-34).
783 Bulletin officiel des douanes no. 6527, 31 August 2001, para. 83 (as modified by BOD no. 6609,
4 November 2004) (Exhibit US-35).
784 United States' first written submission, para. 107.
785 United States' reply to Panel question No. 140.
786 United States' reply to Panel question No. 139.
787 United States' first written submission, para. 107.
788 United States' reply to Panel question No. 139.

therefore, the United States challenges what it cons iders to be a divergence between the French and
the UK guidance concerning processing under customs control.789
7.450 The United States submits in response that, under the Community Customs Code and the
Implementing Regulation, customs authorities must make an "economic conditions" assessment to
determine whether certain applications for processi ng under customs control should be granted. The
manner in which different member State authorities ad minister that measure of general application is
sometimes set forth in manuals or bulletins or other member State-specific documents. These
documents explain how member States administer the EC regulations on processing under customs
control and, therefore, serve an administrative f unction. That is, they prescribe how other laws –
certain articles of the Community Customs Code and the Implementing Regulation – will be carried
out. The United States submits that, to the extent that different member States' manuals or bulletins
prescribe different means of carrying out the releva nt EC rules, they evidence non-uniformity in the
administration of those rules. According to the Un ited States, non-uniformity in the application of the
economic conditions test by different member State authorities is evident in the substance of manuals
and bulletins that prescribe how the test is to be carried out in different member States.
790
7.451 The European Communities argues that Article 133(e) of the Community Customs Code
restricts authorisation for processing under control to cases "where the necessary conditions for the
procedure to help create or maintain a processi ng activity in the Commun ity without adversely
affecting the essential interests of Community prod ucers of similar goods (economic conditions) are
fulfilled". According to the European Comm unities, Article 502(3) of the Implementing
Regulation repeats the first part of the sentence, which must be considered as an abbreviated reference
to the requirements laid down in Article 133(e) of the Community Customs Code. The European
Communities submits that the situation could not be otherwise considering that the Implementing
Regulation, which has been adopted by the Co mmission, is implementing legislation and cannot
modify the requirements laid down by the Community Customs Code. 791 The European Communities
submits that, furthermore, the French "Bulletin offici el des douanes" also refers to the test relating to
the absence of harm to competito rs in the European Communities. 792 The European Communities
submits that the second subparagra ph in paragraphs 78 and 79 of the French guidance underline the
obligation upon the requesting party to provide in formation on the lack of adverse effects on the
essential interests of Community producers of similar goods.793
7.452 The European Communities concludes that ther e is no divergence between the French and
UK documents and that, therefore, it is for the Un ited States to prove the existence of divergent
application of the conditions for processing under cu stoms control. According to the European
Communities, the United States has submitted no such proof. 794 The European Communities submits
that, in the absence of any evidence demonstrating that the French authorities follow a constant
practice deviating from Article 133(e) of the Comm unity Customs Code, the United States has failed
to prove the existence of a pattern of non-uniform administration in relation to the processing under
customs control procedure.795
7.453 The United States responds that the mention of absence of harm to competitors in the French
customs bulletin is simply an introductory pa raphrase of certain provisions from the Community

789 European Communities' comments on the United States' reply to Panel question No. 139.
790 United States' reply to Panel question No. 27.
791 European Communities' first written submission, para. 413.
792 European Communities' first written submission, para. 415 referring to Bulletin officiel des douanes
no. 6527 at para. 78, 31 August 2001, p. 17 (as modified by BOD no. 6609, 4 November 2004) (Exhibit US-35).
793 European Communities' comments on the United States' reply to Panel question No. 140.
794 European Communities' comments on the United States' reply to Panel question No. 139.
795 European Communities' second written submission, para. 183.

Customs Code. After the introduction, the bulletin specifies that the economic conditions test will be
carried out according to the modalities set forth thereafter ("il s'effectue selon les modalités définies
ci-après"). The relevant modality makes no reference to harm to Community producers.
796
7.454 The European Communities argues in response that the Unite d States' criticism is based on
an isolated and incorrect interpretation of the Fren ch guidance, which has to be interpreted in the
context of the EC legislation. The guidance refers to the economic conditions required to obtain an
authorisation to process under customs control in the same way as Article 502(3) of the Implementing
Regulation – namely, by using an abbreviation of th e requirements laid down in Article 133(e) of the
Community Custom Code. The French authorities re quire the same kind of information as the United
Kingdom: the information needed to assess whether "the necessary conditions for the procedure to
help create or maintain a processing activity in the Community without adversely affecting the
essential interests of Community producers of si milar goods (economic conditions) are fulfilled". 797
The European Communities submits that this interpretation is s upported by paragraph 78 of the
French guidance, which, within Chapter III "Examina tion of economic conditions", plays the role of a
chapeau to Section I, where paragraph 83 is locat ed. Paragraph 78 provides that: "Articles 117-c,
133-e, and 148-c of the Community Customs Code sti pulate that the granting of an authorization for
inward processing, outward processing, or processing under customs control must not adversely affect
the essential interests of Community producer s of goods comparable to those used." 798 The European
Communities submits that paragraph 78 is more th an simply an introductory paraphrase of certain
provisions from the Community Customs Code. This paragraph reminds, for Section I as a whole,
that the absence of adverse effects on the essen tial interests of Community producers is a general
economic condition that is common to the thre e customs procedures therein covered (inward
processing, outward processing and processing under customs control), as it is clearly laid down in
Articles 117 (c), 148(c) and 133(e) of the Community Customs Code, respectively.
799
 Analysis by the Panel
7.455 The Panel notes that the United States challeng es substantive divergence in guidance between
France and the United Kingdom regarding the admi nistration of provisions of EC customs law
concerning processing under customs control. 800 The United States explains that such substantive
divergences in such guidance n ecessarily result in divergent application of EC customs law in this
area by French and UK customs authorities.801
7.456 The law concerning processing under customs control which the United States alleges is
being administered in a non-uniform fashion exists at the EC level. In particular, the United States
challenges the manner of administration of Article 133 of the Community Customs Code and Articles
502(3) and 552 of the Implementing Regulation re garding assessment of the economic conditions for
allowing processing under customs control.802
7.457 In the Panel's view, the application of EC law regarding processing under customs control
constitutes an act of administration within the mean ing of Article X:3(a) of the GATT 1994. This act
of administration is a matter within the Panel's te rms of reference since it amounts to an instance of

796 United States' reply to Panel question No. 4.
797 European Communities' second written submission, para. 178.
798 European Communities' second written submission, para. 179 referring to Exhibit US-35.
799 European Communities' second written submission, para. 180.
800 United States' oral statement at the second substantive meeting, para. 75.
801 United States' reply to Panel question No. 139.
802 United States' replies to Panel question Nos. 124 and 139.

administration of the Article 133 of the Community Customs Code and Articles 502(3) and 552 of the
Implementing Regulation with respect to procedures for the entry and release of goods.803
7.458 With respect to the question of whether or not the application of EC law regarding processing
under customs control in the member States is "unifo rm" within the meaning of Article X:3(a) of the
GATT 1994, the Panel recalls its finding in paragr aph 7.135 above that geographic uniformity is
required under Article X:3(a) of the GATT 1994. That is, administration should be uniform in
different places within a particular WTO Member. The Panel also recalls its finding in paragraph
7.135 above that the form, nature and scale of th e alleged non-uniform administration and the laws,
regulations, judicial decisions and rulings that ar e allegedly being administered in a non-uniform
manner should be taken into consider ation when interpreting the term "uniform" in Article X:3(a) of
the GATT 1994. The Panel considers that the United St ates' challenge with respect to the application
of EC law regarding processing under customs control is narrow in nature. It involves the application
of a few provisions of the Community Customs Code and the Implementi ng Regulation – namely,
Article 133 of the Community Customs Code and Articles 502(3) and 552 of the Implementing
Regulation. Therefore, given the narrowness of this challenge, the Panel considers that a high degree
of uniformity is required for the purposes of Articl e X:3(a) of the GATT 1994. We now turn to the
facts to determine whether or not this high degree of uniformity has been achieved with respect to the
application of EC law regarding processing under customs control.
7.459 In summary, Article 133(e) of the Community Customs Code provides that, before granting
authorization for processing under customs control pursuant to Article 85 of the Community Customs
Code, customs authorities must examine the econo mic consequences of the use of the processing
under customs control procedures to determine whet her or not the procedure helps to create or
maintain a processing activity in the European Co mmunities without adversely affecting the essential
interests of EC producers of similar goods. Artic le 502(3) of the Implem enting Regulation provides
that, in respect of processing under customs cont rol arrangements, the examination shall establish
whether the use of non-Community sources enables processing activities to be created or maintained
in the Community. Article 552 and Part A of Annex 76 of the Implementing Regulation set out the
cases in which the economic conditions are deemed to be fulfilled so that, in those cases, an
examination of the economic conditions is not ne cessary. For the types of goods and operations
mentioned in Part B of Annex 76 of the Implemen ting Regulation and those not covered by Part A of
that Annex, the examination of the economic conditi ons must take place at Community level, through
the relevant Committee procedure. For the types of goods and operations not mentioned in Annex 76
of the Implementing Regulation, pursuant to Articles 502(1) and 552(1) of the Implementing
Regulation, the examination of the economic conditi ons shall take place at national level. When
examinations take place at the national level, me mber States must communicate to the Commission
relevant information in accordance with Article 522 of the Implementing Regulation. Furthermore,
pursuant to Articles 503 and 504 of the Implementing Regulation, if a member State objects to an
authorization issued or if the customs authorities con cerned wish to consult before or after issuing an
authorization, an examination of the economic condition may take place at Community level.
7.460 In the context of the United States' allegations of non-uniform administration of EC law
regarding processing under customs control, the Pane l understands that the act(s) of administration
which the United States challenges is the manner in which the French and UK customs authorities
apply EC customs law. In support of its challe nge, the United States relies upon guidance issued by
the French and UK customs authorities respectivel y concerning the administration of EC law on
processing under customs control. According to the United States, the divergence in the contents of
the French and UK guidance necessarily means that the manner in which the French and UK customs
authorities implement or put into effect EC cu stoms law will be non-uniform in violation of
Article X:3(a) of the GATT 1994.

803 In this regard, see paragraphs 7.188 – 7.190 above.

7.461 To demonstrate the manner of administrati on by the UK customs authorities, the United
States refers to HM Customs & Excise Notic e 237, entitled "Processing under Customs Control
(PCC)" dated June 2003. The introduction states th at the purpose of the Notice is to explain the
procedure pertaining to processing under customs control.
804 The Notice explains that the law on
processing under customs control and other custom s procedures is contained in the Community
Customs Code and the Implementing Regulation. 805 Additionally, the Notice states in capitals and
bold that "Nothing In This Notice Overrides The Law" and subsequently that "this notice is not the
law".
806 The Notice also states that:
"The DTI/DEFRA will use the evidence provided to establish whether the use of non-
Community goods enables processing activities to be created or maintained in the
Community without harming the essential interests of Community producers of
similar goods. There are therefore two asp ects to the economic test and you must
provide evidence to show both the impact upon your business and the impact upon
any other community producers of the imported goods. ..."
807
7.462 Regarding the manner of administration by the French customs authorities, the United States
refers to Bulletin officiel des douanes no. 6527 da ted 31 August 2001. The cover page of the Bulletin
notes certain documentary references – namely, the Community Customs Code and the Implementing
Regulation.
808 The first paragraph of the chapter of Bu lletin dealing with the "economic conditions"
test (namely, Chapter III) also makes specific referen ce to relevant provisions of EC law, including
Article 133(e) of the Community Customs Code, which concerns processing under customs control.809
Regarding the requirements applicable under the econom ic conditions test for all customs procedures
to which the test applies, the first paragraph of Chapter III provides that: "Articles 117-c, 133-e, and
148-c of the Community Customs Code stipulate that the granting of an authorization for inward
processing, outward processing, or processing under customs control must not adversely affect the
essential interests of Community producers of goods comparable to those used."
810 A latter paragraph
in Chapter III, which exclusively concerns pro cessing under customs control, provides that: ""With
regard to processing under customs control, block 10 of the model request must be completed with
information showing that use of this customs regi me will create or maintain a processing activity in
the Community (goods and operations not mentioned in of Annex 76, Part A of the IPC)."811
7.463 In the Panel's view, when read as a whole, the UK and French documents providing guidance
regarding processing under customs control contain th e same two substantive requirements that are
mentioned in Article 133(e) of the Community Cust oms Code – namely, a requirement to determine
whether or not the processing under customs contro l procedure helps to create or maintain a
processing activity in the European Communities and a requirement to determine whether or not the

804 HM Customs & Excise, Notice 237, "Processing Under Customs Control (PCC)", June 2003,
para. 1.1 (Exhibit US-34).
805 HM Customs & Excise, Notice 237, "Processing Under Customs Control (PCC)", June 2003,
para. 1.4 (Exhibit US-34).
806 HM Customs & Excise, Notice 237, "Processing Under Customs Control (PCC)", June 2003,
para. 1.4 (Exhibit US-34).
807 HM Customs & Excise, Notice 237, "Processing Under Customs Control (PCC)", June 2003,
808 Bulletin officiel des douanes no. 6527, 31 August 2001, p. 1 (as modified by BOD no. 6609, 4
November 2004) (Exhibit US-35).
809 Bulletin officiel des douanes no. 6527, 31 August 2001, para. 78, p. 17 (as modified by BOD no.
6609, 4 November 2004) (Exhibit US-35).
810 Bulletin officiel des douanes no. 6527, 31 August 2001, para. 78, p. 17 (as modified by BOD no.
6609, 4 November 2004) (Exhibit US-35).
811 Bulletin officiel des douanes no. 6527, 31 August 2001, para. 83, p. 19 (as modified by BOD no.
6609, 4 November 2004) (Exhibit US-35).

essential interests of EC producers of similar goods are being affected. In particular, this is evident
from the excerpt of the UK guidance set out in para graph 7.461 above, which e xplicitly refers to the
fact that the customs authority to whom an app lication for processing under customs control has been
made will establish whether the use of non-Comm unity goods enables processing activities to be
created or maintained in the Community wit hout harming the essential interests of Community
producers of similar goods. Similarly, in the case of the French guidance, one paragraph of the
Bulletin, which applies globally to all procedures to which an "economic conditions" test applies (of
which processing under customs control is one), specifi cally refers to the need to determine whether
or not the essential interests of EC producers of si milar goods are being affected. Subsequently, in a
paragraph that deals exclusively with processing unde r customs control, a reference is made to the
requirement that the procedure must help to creat e or maintain a processing activity in the European
Communities. Furthermore, as is evident from paragraphs 7.461 – 7.462 above, both the UK and
French documents providing guidance make reference to the governing EC law. The Panel considers
that anyone reading and/or applying the UK and French guidance documents would understand that
those documents should be read in the light of the relevant aspects of EC law upon which they are
based, including Article 133(e) of the Community Customs Code, to which the French guidance
makes explicit reference.
7.464 In the light of the foregoing, the Panel cons iders that the United States has not proved the
existence of a substantive divergence in French and UK guidance regarding the administration of
provisions of EC customs law governing processing unde r customs control. Furthermore, the United
States has provided no evidence that the manner in which the French and UK customs authorities
actually apply such guidance results in practice is non-uniform within the meaning of Article X:3(a)
of the GATT 1994.
7.465 Accordingly, the Panel concludes that the United States has not proved that the manner of
administration of Article 133 of the Community Customs Code and Articles 502(3) and 552 of the
Implementing Regulation regarding processing under customs control is non-uniform among the
member States in violation of Article X:3(a) of the GATT 1994.
(iv) Local clearance procedures
 Summary of the parties' arguments
7.466 The United States notes that "local clearance pro cedures" include procedures whereby
importers may cause goods to enter into free circul ation in the European Communities at their place
of business, rather than presenting goods for inspecti on by the customs authorities. According to the
United States, the actual requirements that users of this procedure must meet vary significantly from
member State to member State, with the pro cess being significantly more burdensome in some
member States than others. 812 The United States argues that serious differences do, in fact, exist and
their very existence illustrates lack of uniform ity in the administration of EC customs law. 813 The
United States submits that different member Stat es administer the local clearance procedures
differently, including with respect to involvement of customs authorities prior to release of goods,
post-release requirements, and document retention requirements.814
7.467 The United States refers to the following table to illustrate the differences:815

812 United States' first written submission, paras. 28 and 110.
813 United States' first written submission, para. 117.
814 United States' reply to Panel question No. 30.
815 This table is contained in paragraph 116 of the United States' first written submission.

Member
State
Requirements
prior
to release
Customs
involvement
prior to release
Requirements
after release
Document
retention
requirements
United
Kingdom
Manifest data
provided to
customs
electronically
without
modification.
None. Supplementary
data on
classification,
valuation, origin
transmitted to
customs
electronically.
Importer must
retain supporting
documents for 4
years.
France Manifest data
supplemented
with
classification,
valuation and
other data and
registered in
importer's
inventory system;
importer informs
customs of initial
declaration.
May inspect
within specified
time period prior
to release.
Supplementary
data, including
supporting
documents – DV1
valuation form,
invoices,
certificates –
provided to
customs in hard
copy.

Germany Manifest data
transmitted to
customs,
including
translation of
goods' description
into German;
initial declaration,
including
classification,
valuation and
origin
information, made
to customs.
May inspect
within specified
time period prior
to release.
Supplementary
data, including
supporting
documents – DV1
valuation form,
invoices,
certifications –
provided to
customs.
Importer must
retain supporting
documents for 6
years.
Italy Manifest data
transmitted to
customs.
May inspect
within 1 hour.
Supplementary
declaration
transmitted
electronically; no
DV1 valuation
form required.
Importer must
retain supporting
documents for 5
years.
Netherlands Initial declaration
made through
entry into
importer's
inventory system;
contents of initial
declaration
negotiated locally.
May inspect
within specified
time prior to
release.
DV1 valuation
form transmitted
electronically.
Certain
documents (e.g.,
licenses and
certificates
showing
entitlement to
Importer must
retain supporting
documents for 10
years.

Member
State
Requirements
prior
to release
Customs
involvement
prior to release
Requirements
after release
Document
retention
requirements
preferential tariff
treatment)
required with
supplementary
declaration, but
not invoices or
airwaybills.

7.468 The European Communities submits that the United States does not provide a single exhibit
to illustrate and support its claim, which rende rs it impossible for the European Communities to
defend itself and does not allow the Panel to veri fy whether or not the United States' claim is
substantiated. Further, it is clear that the Unite d States has misunderstood the different steps in the
process followed when goods are import ed through this procedure. In addition, the United States'
description of the procedure and of the documents retention requirements contains fundamental
errors.816 Therefore, according to the Europ ean Communities, the claim of non-uniform
administration under Article X:3(a) of the GATT w ith respect to local clearance procedures is not
sustained.817
7.469 In relation to customs involvement prior to re lease, the European Communities submits that
the fact that, at the frontier, anti-smuggling and ad missibility checks are made electronically does not
mean that there is no involvement of customs. Moreover, if the goods do not fulfil these checks, there
will be a customs action, such as a physical check and seizure. The European Communities submits
that it is, therefore, wrong to state that there is no customs involvement prior to release in the United
Kingdom.
818 Taking the United Kingdom and France as representative examples in relation to
inspection of goods by the customs authorities pr ior to release, according to the European
Communities, there is no contradiction between th e practices in these two member States. In both
cases, customs officials may or may not inspect goods prior to release.819
7.470 Concerning the requirements prior to release in the framework of the local clearance
procedures, the European Communities submits that it is not the shipping manifest data itself which is
provided but a simplified declaration containing certain data, where the trader has to insert a reference
number.820 The European Communities adds that the use of both electronic clearance systems and
paper-based systems is possible. The European Communities submits that, as far as local clearance
procedures are concerned, detailed Community ru les for paper-based clearance can be found in
Articles 263 to 267 of the Implementing Regulation. Where the clearance system used is electronic,
additional rules are applicable and can be found in Articles 4(a) – (c) and Articles 222-224 of the
same Regulation.
821 As regards supporting document requirements, the European Communities
submits that all member States apply identical rules and that the issue raised by the United States
concerning the valuation form "DV1" again stem s from a confusion: all member States allow
operators having regular trade flows with the same suppliers to submit only once the relevant DV1
together with the initial application to benefit from local clearance procedures.822

816 European Communities' oral statement at the first substantive meeting, para. 49.
817 European Communities' oral statement at the first substantive meeting, para. 49.
818 European Communities' first written submission, para. 423.
819 European Communities' second written submission, para. 186.
820 European Communities' first written submission, para. 422.
821 European Communities' first written submission, para. 424.
822 European Communities' first written submission, para. 425.

7.471 In relation to the document retention requireme nts, the European Communities submits that
the information provided by the United States re garding the Netherlands is wrong: the retention
period is 7 years since 1 July 1998, under Article 8 (3) of the Douanewet (Customs Act). The
European Communities submits that, besides, Ar ticle 16(1) of the Community Customs Code
provides that the requisite documents shall be retained for a minimum period of three years, but leaves
member States the possibility to stipulate longe r periods taking into account their general
administrative and fiscal needs and practices. The European Communities argues that the resulting
time-frame differences between the four member St ates for which the United States submits evidence
(from 4 to 7 years) are not fundamental. In this regard, the European Co mmunities reiterates that
Article X:3(a) of the GATT 1994 concerns the admini stration of customs laws, not the customs laws
themselves and this provision does not impose an ob ligation to harmonise legislation within a WTO
member. The existing time-frame differences fo r document retention between some EC member
States pertain to the content of customs law, not to their administration. Therefore, according to the
European Communities, these differences do not come within the scope of Article X:3(a) of the
GATT 1994.
823 In addition, the European Communities argues that, in light of the GATT panel in
EEC – Dessert Apples , any such differences are not substantial in nature and do not entail a lack of
uniformity in the application of customs laws c ontrary to Article X:3(a) of the GATT 1994. The
European Communities considers, therefore, that th e United States' claim under Article X:3(a) of the
GATT 1994 is not founded in relation to local clearance procedures.824
7.472 The United States submits that the European Commun ities' statements regarding local
clearance procedures identify the outer parameters in which different customs authorities in the
European Communities must operate. The United St ates submits that, while it does not dispute the
European Communities' characterization of what t hose outer parameters are, it does contend that
different customs authorities in the European Comm unities administer the local clearance procedures
differently within those parameters.825
 Analysis by the Panel
7.473 The Panel notes that the essence of the United States' challenge with respect to local clearance
procedures is that the actual requirements users of this procedure must meet vary significantly from
member State to member State, with the pro cess being significantly more burdensome in some
member States than in others. 826 The United States submits that such differences regarding the
requirements imposed by customs authorities of th e European Communities in the context of local
clearance procedures amount to non-uniform administration of Articles 263 – 267 of the
Implementing Regulation.
7.474 In the Panel's view, the imposition of require ments regarding local clearance procedures
constitutes an act of administration within the mean ing of Article X:3(a) of the GATT 1994. This act
of administration is a matter within the Panel's te rms of reference since it amounts to an instance of
administration of Articles 263 – 267 of the Implementing Regulation with respect to procedures for
the entry and release of goods.827
7.475 Regarding the question of whether or not the imposition of requirements for local clearance
procedures is "uniform" within the meaning of Artic le X:3(a) of the GATT 1994, the Panel recalls its
finding in paragraph 7.135 above th at geographic uniformity is requi red under Article X:3(a) of the
GATT 1994. That is, administration should be uniform in different places within a particular WTO

823 European Communities' first written submission, para. 426.
824 European Communities' first written submission, paras. 427 – 428.
825 United States' reply to Panel question No. 137(e).
826 United States' first written submission, paras. 28 and 110.
827 In this regard, see paragraphs 7.188 – 7.190 above.

Member. The Panel also recalls its finding in para graph 7.135 above that th e form, nature and scale
of the alleged non-uniform administration and the laws, regulations, judicial decisions and rulings that
are allegedly being administered in a non-uniform manner should be taken in to consideration when
interpreting the term "uniform" in Article X:3(a) of the GATT 1994. The Panel considers that the
United States' challenge with respect to the im position of requirements regarding local clearance
procedures is narrow in nature. It involves the a pplication of a few provisions of the Implementing
Regulation – namely, Articles 263 – 267 of the Impl ementing Regulation. Therefore, given the
narrowness of this challenge, the Panel considers th at a high degree of uniformity is required for the
purposes of Article X:3(a) of the GATT 1994. We now turn to the facts to determine whether or not
this high degree of uniformity has been achieved with respect to the imposition of requirements
regarding local clearance procedures.
7.476 In support of its allegations of non-uniformity in violation of Article X:3(a) of the GATT
1994, the United States relies on a table which, it su bmits, proves the existence of differences among
the member States in the context of local clearan ce procedures regarding requirements imposed prior
to release, customs involvement prior to release, requirements imposed after release and document
retention requirements. The Panel notes that the Un ited States has not submitt ed any factual material
to support what are, in essence, nothing more th an assertions contained in the table of alleged
differences upon which the United States relies.
7.477 Therefore, the Panel concludes that the United States has not proved that differences between
member States exist regarding the actual requireme nts users of the local clearance procedures must
meet between the member States. Consequently, the United States has not proved that Articles 263 –
267 of the Implementing Regulation are administer ed in a non-uniform manner in violation of
Article X:3(a) of the GATT 1994.
(v) Summary and conclusions
7.478 In summary, the Panel finds that, with respect to the United States' allegations of non-uniform
administration of the Community Customs Code and the Implementing Regulation in the area of
customs procedures:
(a) The Panel finds no violation of Article X:3(a) of the GATT 1994 with respect to the
manner of administration of Article 78(2) of the Community Customs Code regarding
the requirements imposed for audit procedures
828 following the release of products for
free circulation in the European Communities.
(b) The Panel finds no violation of Article X:3(a) of the GATT 1994 with respect to the
substantive differences in penalty laws829 between the member States.
(c) The United States has not proved that the ma nner of administration of Article 133 of
the Community Customs Code and Articles 502(3) and 552 of the Implementing
Regulation regarding processing under customs control is non-uniform in violation of
Article X:3(a) of the GATT 1994.

828 The Panel recalls its conclusion in footnote 747 above that the Panel does not consider it necessary
to determine whether or not audits following the release of goods for free circulation are properly categorised as
"customs procedures".
829 The Panel recalls its conclusion in footnote 776 above that the Panel does not consider it necessary
to determine whether or not penalty laws are properly categorised as "customs procedures".

(d) The United States has not proved that the administration of Articles 263 – 267 of the
Implementing Regulation regarding local clearance procedures is non-uniform in
violation of Article X:3(a) of the GATT 1994.
(e) Allegations of non-uniform administration re garding Article 221(3) of the Community
Customs Code
(i) Summary of the parties' arguments
7.479 The United States submits that Article 221(3) of the Community Customs Code prescribes a
three-year period following the incurrence of a cu stoms debt during which liability for the debt may
be communicated to the debtor. It also provides for suspension of the three-year period during the
pendency of an appeal. The United States argues that Article 221(3) of the Community Customs
Code does not provide any other circumstance under which the three-year period may be
suspended.
830 According to the United States, the cust oms offices of the 25 member States are each
responsible for administering those rules but they administer those rules differently. The United
States submits that the French customs authorities have taken the position that the three-year period
may be suspended by the institution of any admini strative proceeding (procès-verbal) investigating a
possible customs infraction, even if that proceed ing does not result in the imposition of any penalty
against the debtor. According to the United States, despite divergence with other customs authorities
in other parts of the European Communities, France 's highest court (the Cour de Cassation) has
declined to refer to the ECJ the question of this rule's consistency with EC law. 831 The United States
submits that the Camcorders case illustrates the non-uniform administration of Article 221(3) of the
Community Customs Code. Specifically, in the cont ext of that case, the French customs authorities
take the view that the amended explanatory note to the Common Customs Tariff can be applied to
imports pre-dating the note but, additionally, unlike cu stoms offices in other parts of the European
Communities, French customs authorities take the view that the note can be applied to imports even if
the customs debt attributable to those imports arose more than three years in the past. Thus, according
to the United States, the camcorders importer in France remains vulnerable for additional duty
collections on imports made in 199 9, even though customs offices in other parts of the European
Communities would consider such additional collecti on to be time-barred. The United States argues
that, therefore, in the context of the Camcorders case, France's unique inte rpretation of Article 221(3)
of the Community Customs Code leaves the impor ter vulnerable to additional duty collections on
imports that occurred six years ago, even though ot her member States would consider such additional
collection to be barred.832
7.480 The European Communities submits that the application of Article 221(3) of the
Community Customs Code, which, according to the European Communities, concerns the period
during which a customs debt may be communicated to the debtor, is not within the Panel's terms of
reference because it does not fall within the scope of customs areas listed in the United States' request
for establishment of a panel. The European Commun ities adds that the United States did not raise the
alleged non-uniform application of Article 221(3) of the Community Customs Code until the Panel's
second substantive meeting with the parties. Fu rther, in a reply to a question from the Panel 833, the
United States lists a number of provisions in respect of which it claims to have established a lack of
uniform administration but does not include Article 221 of the Community Customs Code. According
to the European Communities, th is implies that the United States either does not believe it has

830 United States' reply to Panel question No. 179.
831 United States' comments on European Communities' reply to Panel question No. 146 referring
Judgment of the Cour de Cassation, Case No. 143, 13 June 2001, pp. 439-40 (Exhibit US-67); Judgment of the
Cour de Cassation, Case No. 144, 13 June 2001, p. 448 (Exhibit US-68).
832 United States' oral statement at the second substantive meeting, para. 31.
833 Panel question No. 124.

established its case regarding the non-uniform ad ministration of Article 221 of the Community
Customs Code or it concedes that this claim does not fall within the Panel's terms of reference.834
7.481 In response, the United States accepts that Article 221(3) of the Community Customs Code
concerns the period during which a customs debt ma y be communicated. However, the United States
disagrees with the implication that this has nothi ng to do with collection of the customs debt.
According to the United States, the period during which the customs debt may be communicated to
the debtor is obviously essential to collection of the debt. The United States clarifies that, if the
period for such communication has expired, then so has the possibility of collecting any debt not
previously communicated.
835 The United States also submit s that the European Communities'
assertion that Article 221(3) of the Community Customs Code does not concern any of the areas of
customs administration referred to in the United States' request for establishment of a panel appears to
confuse the claims made by the United States with arguments advanced by it in support of those
claims. According to the United States, its clai ms under Article X:3(a) of the GATT are set out
clearly and with specificity in the first paragraph of its panel request. There, the United States claims
that "the manner in which the European Commun ities ('EC') administers its laws, regulations,
decisions and rulings of the kind described in Ar ticle 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 request then goes on to identify precisely the laws,
regulation, decisions, and rulings of the kind described in Article X:1 the United States alleges the
European Communities to have failed to administ er in the manner required by Article X:3(a),
including the Community Customs Code. The Un ited States submits that Article 221(3) of the
Community Customs Code forms a part of the Co mmunity Customs Code. Further, the subject-
matter of Article 221(3) of the Community Customs Code falls within the illustrative, non-exhaustive
list of customs areas contained in the United States ' request. The United States adds that it discussed
Article 221(3) of the Community Customs Code in its oral statement at the Panel's second substantive
meeting.836
7.482 The European Communities also submits that Article 221(3) of the Community Customs
Code only addresses the period during which a customs debt may be communicated to the debtor. In
contrast, the question of the substantive conditions under which the customs debt may be retroactively
recovered is addressed in Article 220 of the Comm unity Customs Code. Moreover, the European
Communities submits that it is incorrect to state th at the only permitted exception to Article 221(3) of
the Community Customs Code is the lodging of an appeal, which suspends the three-year period for
communicating the customs debt. Another relevant exception is Article 221(4) of the Community
Customs Code, according 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 co mmunicated to the debtor after the expiry of the
three-year period. The European Communities notes that the ECJ has clarified that the question as to
whether an act may give raise to criminal proceedings is a question of member States' law, not of
Community law.
837
(ii) Analysis by the Panel
7.483 A preliminary question for the Panel's considera tion is whether or not Article 221(3) of the
Community Customs Code falls within the Panel's te rms of reference. According to the European

834 European Communities' reply to Panel question No. 172; European Communities' comments on the
United States' reply to Panel question No. 124.
835 United States' reply to Panel question No. 180, footnote 31.
836 United States' reply to Panel question No. 178.
837 European Communities' reply to Panel question No. 172, para. 42 referring to Case C-273/90,
Meico-Fell, [1991] ECR I-5569, para 13 (Exhibit EC-155).

Communities, Article 221(3) of the Community Cu stoms Code, which concerns the period during
which a customs debt may be communicated to the debt or, is not within the Panel's terms of reference
because it does not fall within the scope of customs areas listed in he Unit ed States' request for
establishment of a panel. The United States accepts that Article 221(3) of the Community Customs
Code concerns the period during which a customs debt may be collected but submits that it is within
the Panel's terms of reference since it forms a part of the Community Customs Code, which is listed in
the United States' request for establishment of a pane l and the subject-matter of Article 221(3) of the
Community Customs Code falls within the illustrativ e, non-exhaustive list of customs areas contained
in the United States' request.
7.484 The Panel recalls its finding in paragraph 7.33 above that, under our terms of reference, we
are only authorized to consider the manner of administration by the national customs authorities of the
member States of the Community Customs C ode, the Implementing Regulation, the Common
Customs Tariff, the TARIC and related measures in the areas of customs administration specifically
identified in the United States' request for establis hment of a panel – namely, the classification and
valuation of goods, procedures for the classification and valuation of goods, procedures for the entry
and release of goods, procedures for auditing entr y statements after goods are released into free
circulation, penalties and procedures regarding th e imposition of penalties for violation of customs
rules and record-keeping requirements. While it is cl ear that Article 221(3) is contained in one of the
measures identified in the United States' request that are allegedly not being administered in a uniform
manner in violation of Article X:3(a) of the GATT 1994 – namely, the Community Customs Code – it
is also necessary to determine whether or not th e subject-matter of Article 221(3) of the Community
Customs Code is covered by the areas of customs administration specifically identified in that request.
We turn, therefore, to the terms of Article 221 of the Community Customs Code.
7.485 Article 221 of the Community Customs Code is found in Chapter 3 of the Community
Customs Code, which is entitled "Recovery of the am ount of the Customs Debt". More particularly,
Article 221 is found in Section 1 of Chapter 3, which is entitled "Entry in the accounts and
communication of the amount of duty to the debtor." Article 221 provides that:
"1. As soon as it has been entered in th e 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 declaration, the customs author ities may specify that it shall not be
communicated 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 th e second paragraph of Article 218(1), where
use is made of the possibility provided fo r in the preceding subparagraph, 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
shall be suspended from the time an appeal within the meaning of Article 243 is
lodged, for the duration of the appeal proceedings.
4. 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 referred to in paragraph 3."

7.486 In the Panel's view, Article 221 of the Comm unity Customs Code, including Article 221(3),
relates to the recovery of and communication of customs debt. This is evident from the ordinary
meaning of the terms of Article 221 as well as the context in which that Article is found such as the
title of the Chapter and Section in which it is contained.
7.487 The Panel considers that Article 221 of the Community Customs Code, including
Article 221(3), is not covered by any of the areas of customs administration specifically identified in
the United States' request for establishment of a panel. In particular, the ordinary meaning of those
areas does not appear to encompass the recovery and communication of customs debts.
838 Therefore,
we conclude that Article 221(3) of the Community Customs Code is outside our terms of reference
with regard to the United States' claim that the administration of that provision violates Article X:3(a)
of the GATT 1994. More specifically, the United Stat es is precluded from arguing in this dispute that
the manner of administration of Article 221(3) of the Community Customs Code is in violation of
Article X:3(a) of the GATT 1994. However, this does not mean that the United States is prevented
from relying upon the manner of administration of Article 221(3) of the Community Customs Code to
the extent that it is relevant to the United Stat es' claim that measures in the areas of customs
administration that have been specifically identifie d in its request for establishment of a panel (such
as, tariff classification) are being administered in a manner that is in violation of Article X:3(a) of the
GATT 1994.
839
(f) Overall observations regarding the United Stat es' allegations of non-uniform administration
under Article X:3(a) of the GATT 1994
7.488 The Panel recalls the United States' argument that , the absence of a procedure or institution in
the European Communities to ensure that di vergences of administration among the customs
authorities of the 25 member States do not occur or that promptly reconcile such divergences as a
matter of course when they occur, necessarily resu lts in non-uniform administration in breach of
Article X:3(a) of the GATT 1994.840 The Panel further recalls that the United States argued that these
structural shortcoming result in non-uniform administration with respect to all areas of the EC system
of customs administration.841
7.489 In paragraphs 7.156 – 7.192 a bove, the Panel explained its understanding of the manner in
which the EC system of customs administration functions. The Panel recalls that it provided that
explanation because it considers that such unde rstanding provides important context for the
examination of the particular instances of alleged violations of Article X:3(a) of the GATT 1994,
which the Panel has been called upon to examine in the context of this dispute. In that explanation,

838 In this regard we note that the Dictionary of International Trade, 2000, defines the areas of customs
administration specifically identified in the United States' request for establishment of a panel as follows:
"Classification" is defined as "the categorization of me rchandise" (page 40). "Valuation" is defined as "the
appraisal of the worth of imported goods by customs officials for the purpose of determining the amount of duty
payable in the importing country" (page 201). "Entry" is defined as "the process of, and documentation required
for securing the release of imported merchandise" (page 72 ). "Audit" is defined as "a formal examination of
records or documents" (page 20). "Penalties" is defined as the "charges assessed or action taken by customs in
response to a violation of a customs-enforced regulation or law" (page 154). The m eaning of the term "record-
keeping" is self-explanatory. In addition, the World Customs Organization Glossary of International Customs
Terms defines "release" as "action by the Customs to permit goods undergoing clear ance to be placed at the
disposal of the persons concerned".
839 The Panel notes in this regard that the United States relied upon Article 221(3) of the Community
Customs Code with respect to its allegation that the way in which an amendment to an explanatory note to the
Common Customs Tariff concerning camcorders was interpreted and applied varied from member State to
member State: See paragraph 7.344 et seq above.
840 United States' reply to Panel question No. 126(a).
841 United States' reply to Panel question No. 126(b).

the Panel considered each of the institutions and mechanisms referred to by the European
Communities as playing an instrumental role in achieving uniform administration of EC customs law
by the customs authorities of the me mber States. In its explanation, the Panel observed that certain
features associated with a number of those ins titutions and mechanisms would not necessarily
enhance uniform administration of EC customs law by the customs authorities of the member States
and, at worst, might even cause non-uniform administration.
7.490 Nevertheless, the Panel is not authorized to make any findings on those institutions and
mechanisms given that, as stated above in paragra ph 7.64, the Panel's terms of reference preclude it
from considering "as such" challenges of the desi gn and structure of the EC system of customs
administration, including components thereof. Howeve r, even if the Panel were authorized to make
such findings, the Panel notes that the United States did not demonstrate that the design and structure
of the EC system of customs administration, in cluding components thereof necessarily result in a
violation of Article X:3(a) of the GATT 1994. Rather, the United States referred to a number of
apparently random instances of alleged violati on of Article X:3(a) of the GATT 1994, without
demonstrating to us that those examples are symp tomatic and representative of underlying structural
deficiencies in the EC system of customs administ ration. Moreover, the Panel recalls that the United
States only proved to the Panel that Article X:3(a) of the GATT 1994 had actually been violated in
three of the various instances of alleged violation of Article X:3(a) of the GATT 1994 to which it had
referred in support of its claims.
E.
CLAIMS UNDER ARTICLE X:3(B) OF THE GATT 1994
1. Article X:3(b) of the GATT 1994
7.491 Article X:3(b) of the GATT 1994 provides that:
"Each contracting party shall maintain, or institute as soon as practicable, judicial,
arbitral or administrative tribunals or procedures for the purpose, inter alia , of the
prompt review and correction of administ rative action relating to customs matters.
Such tribunals or procedures shall be i ndependent of the agencies entrusted with
administrative enforcement and their decisi ons shall be implemented by, and shall
govern the practice of, such agencies unless an appeal is lodged with a court or
tribunal of superior jurisdiction within the time prescribed for appeals to be lodged by
importers; Provided that the central administration of such agency may take steps to
obtain a review of the matter in another proceeding if there is good cause to believe
that the decision is inconsistent with established principles of law or the actual facts."
2. Findings requested by the United States under Article X:3(b) of the GATT 1994
(a) Summary of the parties' arguments
7.492 The United States submits that Article X:3(b) of the GATT 1994 requires the European
Communities as a WTO Member to have in place certain "judicial, arbitral or administrative tribunals
or procedures." It then defines certain qualities that these tribunals or procedures must have. The
United States clarifies that, in the present dispute, its claim relates to the requirement under
Article X:3(b) of the GATT 1994 that the decisions of the tribunals or procedures required by that
Article "govern the practice of" the agencies entr usted with administrative enforcement "unless an
appeal is lodged with a court or tribunal of superior jurisdiction within the time prescribed for appeals
to be lodged by importers."
842 In particular, the United States submits that the European Communities

842 United States' second written submission, paras. 102-109; United States' reply to Panel question
No. 141.

does not fulfil its obligation under Article X:3(b) of the GATT 1994 because each of the multiple
review tribunals it provides renders decisions that govern the practice only of a subset of agencies
entrusted with administrative enforcement within a particular region in the European Communities
but does not "govern the practice" of the European Communities' agencies in other member States.843
7.493 The European Communities notes that it understands that the United States' claims under
Article X:3(b) of the GATT 1994 do not concern the material scope of the control exercised by review
tribunals or procedures under Article X:3(b) of the GATT 1994 nor the purpose of such review. The
European Communities submits that, in its understanding, the United States' claim under
Article X:3(b) of the GATT 1994 focuses on the natu re of the review to be conducted under that
Article.844 More specifically, the Eur opean Communities submits that the United States' claims under
Article X:3(b) of the GATT 1994 exclusively relate to the requirement that tribunals or procedures
must govern the practice of the agencies entrusted with administrative enforcement.845
(b) Analysis by the Panel
7.494 The Panel notes that, in its request for establis hment of a panel, the United States made its
claim under Article X:3(b) of the GATT 1994 in the following terms:
"... the European Communities has failed to maintain, or institute as soon as
practicable, judicial, arbitral or administrative tribunals or procedures for the purpose,
inter alia , of the prompt review and correcti on of administrative action relating to
customs matters. The above-identified meas ures, including in particular Articles 243
through 246 of the Code, expressly provide that EC member States are responsible
for the implementation of procedures for appeals from decisions by member State
customs authorities. Accordingly, the ability to obtain review of a customs decision
by a tribunal of the European Communities does not arise until after an importer or
other interested party has pursued review through national administrative and/or
judicial tribunals. For this reason, the European Communities is in breach of
Article X:3(b) of the GATT 1994."
846
7.495 In a reply to a question posed by the Panel, the United States made it clear that its claim under
Article X:3(b) of the GATT 1994 was confined to the allegation that the decisions of the tribunals or
procedures in the European Communities do not "gov ern the practice of" all the "agencies entrusted
with administrative enforcement" in the European Communities in violation of Article X:3(b) of the
GATT 1994. More specifically, the United States alle ges in the context of this dispute that the
tribunals or procedures provided by individual me mber States for the review and correction of
administrative action do not satisfy the European Co mmunities' obligation under Article X:3(b) of the
GATT 1994 because the decisions of such tribunals or procedures have effect only within the
respective member States and not on EC agen cies throughout the territory of the European
Communities.847
7.496 In light of the United States' clarification of its claim under Article X:3(b) of the GATT 1994
in its reply to a question posed by the Panel, the Panel will confine its analysis to the question of
whether or not Article X:3(b) of the GATT 1994 re quires that the decisions of the tribunals or
procedures for the review and correction of admini strative action relating to customs matters govern
the practice of all the agencies entrusted with administrative enforcement throughout the territory of a

843 United States' second written submission, para. 102.
844 European Communities' second written submission, para. 215.
845 European Communities' comment on the United States' reply to Panel question No. 141.
846 WT/DS315/8, which is contained in Annex D of the Panel's report.
847 United States' reply to Panel question No. 35.

particular Member, as has been asserted by the Un ited States. For the purposes of resolving this
dispute, the Panel will also consider whether or not the tribunals and procedures provided in the
European Communities for the review and correcti on of administrative action fulfil the European
Communities' obligation under Article X:3(b) of the GATT 1994 in this regard.
848
3. Interpretation of Article X:3(b) of the GATT 1994
(a) Summary of the parties' arguments
(i) Relevant features of review bodies
7.497 The United States submits that it is "administrative" ac tion that must be eligible for prompt
review and correction under Article X:3(b) of th e GATT 1994. The United States submits that this
suggests that the obligation of prompt review and correction under Article X:3(b) of the GATT 1994
applies to the first tribunal or procedure that a Member provides for the purpose of review and
correction. The United States submits that this interpretation is supporte d by the reference in
Article X:3(b) of the GATT 1994 to appeals to a "court or tribunal of superior jurisdiction within the
time prescribed for appeals to be lodged by importers."
849
7.498 Similarly, the European Communities submits that the review established by Article X:3(b)
of the GATT 1994 only pertains to first instance review. 850 The European Communities reasons that,
therefore, to require uniformity at the first in stance would necessarily imply the establishment of a
central court of first instance with jurisdiction over the whole territory of any WTO Member.
According to the European Co mmunities, this conclusion finds no support in the wording of
Article X:3(b) of the GATT 1994.851
7.499 The European Communities also notes that Article X:3(b) of the GATT 1994 provides that
tribunals or procedures ensuring the prompt review and correction of administrative action on customs
matters must be independent of the agencies entrusted with administrative enforcement. According to
the European Communities, provided that first inst ance administrative review fulfils the requirement
of independence, such review may be considered consistent with the obligation to ensure prompt
review and correction of administrative action contained in Article X:3(b) of the GATT 1994. 852 The
European Communities submits that the requirement of independence in Article X:3(b) of the GATT
1994 imposes an external separation between the tribunals or procedures and the agencies.853
(ii) Geographical coverage and substantive effect of decisions of review bodies
 General
7.500 The United States submits that the relevant context for the interpretation of Article X:3(b) of
the GATT 1994 includes the immediately preceding subparagraph, namely Article X:3(a) of the
GATT 1994. The United States notes that that sub-pa ragraph calls for the "uniform, impartial, and
reasonable" administration of customs laws. The Un ited States submits that, therefore, when read in
the light of Article X:3(a) of the GATT 1994, Article X:3(b) of the GATT 1994 means that the

848 The Panel notes that it does not consider it necessary to determine whether or not the review
provided in the European Communities in fulfilment of Article X:3(b) of the GATT 1994 is "prompt" within the
meaning of that Article in order to resolve this dispute: United States' replies to Panel question Nos. 40, 142 and
144.
849 United States' reply to Panel question No. 121.
850 European Communities' second written submission, para. 225.
851 European Communities' second written submission, para. 225.
852 European Communities' reply to Panel question No. 121.
853 European Communities' second written submission, para. 218.

decisions of the tribunals or procedures must provide for the review and correction of customs matters
for the European Communities as a whole, not just within limited geographi cal regions within the
European Communities. 854 More particularly, the United States submits that it is inconsistent with
Article X:3(b) of the GATT 1994 to require a trader who had received adverse customs decisions in
different member States, each at odds with the prev ailing interpretation of EC customs law in other
member States, to pursue separate appeals in each of those States.855
 Significance of the term "shall govern the practice of"
7.501 The United States argues that the second sentence of Article X:3(b) of the GATT 1994
provides that the tribunals or procedures provided by a Member "shall be independent of the agencies
entrusted with administrative enforcement a nd their decisions shall be implemented by, and shall
govern the practice of, such agencies. ..." According to the United States, the phrase "shall govern the
practice of such agencies" requires that all enforc ement agencies of a Member follow the reviewing
tribunal's decisions. 856 The United States adds that the " govern the practice" requirement in
Article X:3(b) of the GATT 1994 means that decisions by review bodies must control the way
agencies administer customs laws.
857 In support, the United States submits that the ordinary meaning
of the term "govern" in the context of Article X:3(b) of the GATT 1994 is "[c]ontrol, influence,
regulate, or determine" or "[c]onstitute a law, rule, standard, or principle for." 858 The United States
submits that, accordingly, the distinct "govern the practice" requirement in Article X:3(b) of the
GATT 1994 looks beyond the simple implementation of a decision in the case at hand and requires
that the decision "control, influence, regulate or de termine" the practice of or "constitute a law, rule,
standard, or principle for" "the agencies entruste d with administrative enforcement" of the customs
laws going forward. 859 The United States further argues that, if Article X:3(b) of the GATT 1994,
unlike Article X:3(a) of the GATT 1994, is not con cerned with questions of uniformity, there would
be no need for Article X:3(b) of the GATT to speci fy that the decisions of review tribunals must
"govern the practice of" the agencies entrusted with administrative enforcement. It would suffice
simply to require the provision of tribunals or pr ocedures whose decisions are "implemented by" the
agencies entrusted with administrative enforcement.860
7.502 In response, the European Communities submits that it considers that the reference to the
term "govern" in Article X:3(b) of the GATT 1994 indicates that it is aimed at securing a fair
implementation of tribunal decisions in administrative law matters.
861 According to the European
Communities, if the term "govern" were to be inte rpreted to mean "control, regulate, determine,
constitute a law, rule, standard or principle for", the decisions of first instance tribunals would be
considered as having binding effect, contrary to a co mmon element that is shared by most of the civil
law and common law legal systems – namely, that only high level or last instance tribunals take
decisions that are considered as binding and, therefore, a general source of law.
862 The European
Communities submits that the United States' interp retation imposes very fa r-reaching obligations for
all WTO Members, which do not correspond to the legal traditions of most WTO Members of both
civil law or roman-germanic law and the common law families. 863 According to the European
Communities, the decisions of a first instance tri bunal are only binding for the specific cases decided

854 United States' first written submission, para. 138.
855 United States' first written submission, paras. 134 and 139.
856 United States' reply to Panel question No.35.
857 United States' oral statement at the second substantive meeting, para. 88.
858The New Shorter Oxford English Dictionary, 1993, pp. 1122-1123.
859 United States' second written submission, para. 104.
860 United States' second written submission, para. 103.
861 European Communities' oral statement at the second substantive meeting, para. 93 and European
862 European Communities' oral statement at the second substantive meeting, para. 94.
863 European Communities' closing statement at the second substantive meeting, para. 30.

by the same tribunal and, therefore, they are not an instrument ensuring uniform administration. The
European Communities submits that a decision of a first instance review body plays the role of
guidance to other first instance review bodies. Thus, the ordinary meaning of "govern" would be
"influence".
864
 Significance of the reference to "the agencies"
7.503 The United States argues that it is " the agencies entrusted with administrative enforcement"
whose practice is required to be governed by the decisions of review tribunals or procedures under
Article X:3(b) of the GATT 1994. According to th e United States, that requirement is not fulfilled
where the decisions of review tribunals or pr ocedures govern the practice of only some of the
agencies entrusted with administrativ e enforcement. Rather, for the practice of "the agencies" to be
governed by the decisions of review tribunals, those decisions must govern "the agencies" throughout
the Member's territory. 865 The United States submits that this understanding is reinforced by the
context provided by Article X:3(a) of the GATT 1994. In particular, where the decisions of review
tribunals govern the practice of the agencies entruste d with administrative enfo rcement, they become
part of the agencies' administration of the Memb er's customs laws in future cases. Since the
Member's customs laws must be ad ministered in a uniform manner, the decisions of review tribunals
must govern the practice of "the agencies" throughout its territory. If they govern the practice of only
some of the agencies then, by definition, the admini stration of the Member's laws will not be uniform;
different interpretations of the Member's laws will govern the practice of different agencies within the
Member's territory.866
7.504 The European Communities responds that the use of the term "the agencies" in
Article X:3(b) of the GATT 1994 does not mean that those agencies are all the agencies throughout
the WTO Member's territory. According to the Euro pean Communities, "the agencies" must be read
in context with the term to which it relates – that is , "tribunals", which are tribunals of first instance.
The European Communities submits that, therefore, "the agencies" must be understood as "the
agencies" whose decisions are re viewed by these tribunals of first instance. The European
Communities adds that "the agencies" are those es tablished in each of its member States, not the
agencies established in the other member States.867
Significance of the reference to the right to seek review by "the central administration of such
agency"
7.505 The United States submits that further evidence for the proposition that the review and
correction provided for pursuant to Article X:3(b) of the GATT 1994 must result in decisions that
govern the administration of a Member's customs laws throughout its territory is the proviso in the
second sentence of that Article, which states that " the central administration of such agency may take
steps to obtain a review of the matter in another proceeding if there is good cause to believe that the
decision is inconsistent with established principles of law or the actual facts." According to the
United States, the proviso contemplates "the central administration" challenging a tribunal's decision
collaterally – that is, "in another proceeding" – when the central administration determines that "the
decision is inconsistent with established principles of law or the actual facts." In the United States'
view, that possibility only makes sen se if the decision in the origin al proceeding has effect outside
that proceeding. If the decision's effects were c onfined to the proceeding in which it was rendered,
there would be no need or basis for a collateral challenge. 868 The United States submits that, where a

864 European Communities' oral statement at the second substantive meeting, para. 95.
865 United States' second written submission, para. 106.
866 United States' second written submission, para. 107.
867 European Communities' oral statement at the second substantive meeting, para. 97.
868 United States' second written submission, para. 113.

Member has no "central administration" (as is th e case in the European Co mmunities), the possibility
set out in the proviso would appear not to exist. However, according to the United States, that simply
means that, in the unusual situation of a Member without a central administration, the various regional
customs authorities would have to take other steps to ensure that the decisions of review tribunals
"govern the practice of" "the agencies en trusted with administrative enforcement" and that the
Member continues to administer its customs laws in a uniform manner.869
7.506 In response, the European Communities submits that the possibility for the central
administration of a customs agency to request review is not established to rectify the effects of the
original decision in the practice of the agencies but to provide a remedy, based on limited grounds,
against a decision that is no more challengeable through ordinary means because it is time-barred. 870
According to the European Commun ities, this is clear from the structure of Article X:3(b) of the
GATT 1994. Specifically, the proviso refers to the tim e limits for appeals contained in the previous
phrase in sub-paragraph (b), not to the "govern th e practice" requirement, which is placed in the
second phrase of the second sentence of that sub-paragraph. 871 In addition, the European
Communities contends that the fact that the proviso is not intended to rectify the effects of the original
decision in the practice of the agencies also derives fr om the nature of this type of exceptional review.
When the review is based on a lack of consistency with established principles of law, its purpose is to
protect the cornerstones of a legal system, with a view to eliminating conflicts with the case-law of
the highest courts, which are responsible for refining those principles of law. When the review is
based on a lack of consistency with the actual fact s, its purpose is to annul a judicial decision on
discovery of facts that were unknown to the cour t and to the party claiming the revision when the
decision was given. According to the European Communities, neither of these two grounds of review
is linked to the eventual effects of a first inst ance judicial decision on the practice of the customs
agencies.872
 Legal relationship between Articles X:3(a) and X:3(b) of the GATT 1994
7.507 The United States argues that Article X:3(b) of the GATT 1994 must be read in light of the
obligation of uniform administration in Article X: 3(a) of the GATT 1994. The United States submits
that, accordingly, where review leads to decisions wh ose effect is limited to particular regions within
a Member's territory, such review is inconsistent with Article X:3(b) of the GATT 1994.873
7.508 The European Communities submits that sub-paragraphs (a ) and (b) of Article X:3 of the
GATT 1994 lay down different obligations: one of uni form administration, the other on remedies.
According to the European Communities, from a le gal point of view, Article X:3 of the GATT 1994
does not make any link between sub-paragraphs (a) and (b), which should, therefore, be considered as
separate obligations. 874 First, sub-paragraph (b) does not make any reference to sub-paragraph (a),
unlike sub-paragraph (c), which cont ains an explicit link to sub-paragr aph (b). Further, Article X:3
GATT 1994 is not introduced by a chapeau to indicate that the two sub-paragra phs are linked so that
one has to be interpreted in light of the other. 875 The European Communities adds that the fact that
sub-paragraphs (a) and (b) are both contained in Article X:3 of the GATT 1994 does not mean that
they should be interpreted in such as way as to blur the distinction between the obligations which they
contain. Obviously, the two provisions must be in terpreted in a harmonious way, taking into account
their respective object and purpose. However, this does not mean that obligations from one provision

869 United States' second written submission, para. 115.
870 European Communities' oral statement at the second substantive meeting, para. 106.
871 European Communities' oral statement at the second substantive meeting, para. 107.
872 European Communities' oral statement at the second substantive meeting, para. 108.
873 United States' second written submission, para. 99.
874 European Communities' first written submission, para. 461.
875 European Communities' second written submission, para. 223.

can simply be imported into the other. The Eu ropean Communities submits that, in particular,
Article X:3(a) of the GATT 1994 does not concern the administration of laws concerning the judicial
procedure and judicial organisation, since such laws are not among those referred to in Article X:1 of
the GATT 1994.
876
7.509 In response, the United States contends that the European Communities is wrong to assert
that Article X:3 of the GATT 1994 does not make any link between sub-paragraphs (a) and (b). The
United States submits that the second sentence of sub- paragraph (b) expressly states that the decisions
of the tribunals or procedures maintained or ins tituted in accordance with that sub-paragraph "shall
govern the practice of" "the agencies entrusted with administrative enforcement". According to the
United States, the link derives from the fact that admi nistrative enforcement, in turn, is the subject of
sub-paragraph (a).877
7.510 The European Communities responds that it considers th at the term "administrative
enforcement" in Article X:3(b) of the GATT 1994 does not establish a link between sub-paragraphs
(a) and (b). In the European Communities' view, Article X:3(b) of the GATT 1994 refers to "agencies
entrusted with administrative enforcement" to iden tify the agencies that are subject to prompt review,
and from which the tribunals or procedures must be independent.878
7.511 The United States submits that the European Communities itself argues that review of
administrative actions by courts and uniform administ ration are inherently intertwined, such that the
former, in its view, is a key tool for achieving the latter. 879 More specifically, the United States
submits that a theme repeated throughout the Euro pean Communities' submissions is that appeals of
customs decisions to national courts, coupled with the possibility of national courts making
preliminary references to the ECJ, constitutes a critical instrument of ensuring uniform administration
of customs law. The United States submits that that position supports inte rpreting the obligation to
provide reviews of customs decisions under Arti cle X:3(b) of the GATT 1994 in light of the
obligation to administer customs laws uniformly under Article X:3(a) of the GATT 1994.880
7.512 In response, the European Communities argues that the fact that the European Communities
has conceded that Articles X:3(a) and X:3(b) of the GATT 1994 must be interpreted in an harmonious
way does not mean that the Eur opean Communities agrees to an in terpretation that transforms
Article X:3 of the GATT 1994 into a "totum revolut um" provision, where the various obligations in
that Article are merged, with the unwarranted con sequence that the obligation to grant independent
review and correction of customs administrative deci sions at first instance level is absorbed by the
obligation to ensure uniform administration of the legislation. 881 The European Communities submits
that the relevant context for the interpretati on of Article X:3(a) of the GATT 1994 is not
Article X:3(b) of the GATT 1994, but Article X:1 of the GATT 1994, to which Article X:3(a) of the
GATT 1994 makes a specific reference. The Europ ean Communities notes that Article X:1 of the
GATT 1994 includes "judicial decisions of general application" among the instruments to be
administered uniformly in accordance with Artic le X:3(a) of the GATT 1994. According to the
European Communities, this eviden ces that Article X of the GATT 1994 covers two types of judicial
decisions: those of general application, whose unifo rm administration is required under Article X:3(a)
of the GATT 1994 and those adopted by first instance review courts, where uniform administration
through all the WTO Member is not required. According to the European Communities, this

876 European Communities reply to Panel question No. 87.
877 United States' oral statement at the first substantive meeting, para. 59.
878 European Communities' Reply to Panel question No. 87
879 United States' oral statement at the first substantive meeting, para 58, referring to the European
880 United States' oral statement at the first substantive meeting, para. 58.
881 European Communities' oral statement at the second substantive meeting, para. 100.

contextual interpretation explains why there is no link between sub-para graphs (a) and (b) in
Article X:3 of the GATT 1994.882
 Significance of the reference to "tri bunals" and "procedures" in the plural
7.513 The European Communities submits that Article X:3(b) of the GATT 1994 merely requires
WTO Members to ensure that administrative decisions in customs matters are reviewed promptly by
an independent tribunal or th rough an independent procedure. 883 According to the European
Communities, this is supported by the literal and mu lti-linguistic interpretation of Article X:3(b) of
the GATT 1994.884 More specifically, the European Communities submits that, under Article X:3(b)
of the GATT 1994, WTO members are obliged to have "tribunals or procedures" not "a tribunal" or "a
procedure". According to the European Commun ities, the French and Spanish versions of the
provision also use the equivalent terms in plural. This clearly allows the WTO Members to have
several tribunals, each of them covering a part of its geography and being competent for the review of
the administrative decisions taken by their respective customs offices.885
7.514 In response, the United States submits that the use of the plural form in Article X:3(b) of the
GATT 1994 could indicate the permissibility of multiple fora for review of customs decisions for
different types of review and/or by different types of review bodies, but it does not follow logically
that separate and independent fora may be provided for each of several different regions within a
Member's territory. 886 The United States submits that it is not inconceivable that a WTO Member
could provide several review tribunals or procedures, each covering a different part of its geography,
in a manner consistent with Article X:3(b) of th e GATT 1994. In the United States' view, what is
important is that the decisions of these tribunals be given effect for the Member's agencies as a whole,
so as to govern the practice of th e Member's agencies entrusted with administrative enforcement of
customs laws and not engender non-uniform enforcem ent. The United States submits that this might
be accomplished where a Member has a single, centra lized customs agency, required to give effect
throughout the Member's territory to the decisions of any tribunals reviewing its actions. However,
according to the United States, where review tribunals cover particular agencies and there is no other
mechanism to give effect to the decisions of i ndividual tribunals for the remaining agencies, the
geographical fragmentation of review is inconsistent with Article X:3(b) of the GATT 1994.887
7.515 The European Communities submits that the United States' interpretation of the use of the
plural in Article X:3(b) of the GATT 1994 can perfectly live together with the one proffered by the
European Communities. According to the European Communities, the use of the plural form may
indicate that a WTO Member is entitled to maintain geographically limited tri bunals and it may also
indicate that a WTO Member is allowed to maintain multiple fora for review of customs decisions.
888
 Decisions
7.516 The United States submits that the terms of Article X:3(b) of the GATT 1994 plainly provide
that the decisions rendered by review tribuna ls or procedures must meet two independent
requirements. Specifically, they must be implemen ted by the agencies entrusted with administrative
enforcement, and they must govern the practice of those agencies. For decisions to govern the
practice of the agencies entrusted with administra tive enforcement, they must be given effect beyond

882 European Communities' comments on the United States' reply to Panel question No. 142.
883 European Communities' oral statement at the first substantive meeting, para. 57.
884 European Communities' first written submission, para. 452.
885 European Communities' first written submission, para. 454.
886 United States' oral statement at the first substan tive meeting, para. 60; United States' reply to Panel
question No. 38.
887 United States' reply to Panel question No. 38.
888 European Communities' second written submission, para. 232.

simple implementation of the order in the case at hand.
889 The United States submits that whether
"decisions" in Article X:3(b) of the GATT 1994 is understood to have a narrower meaning according
to which they are limited to the final mandate or order or a broader meaning that encompasses the
review body's reasoning, that does not affect the "gove rn the practice" requirement. That is, even in a
legal system in which a decision is understood as pe rtaining only to the court's mandate or order and
not to its reasons, Article X:3(b) of the GA TT 1994 still requires that the decision both be
implemented by and govern the practice of the agencies entrus ted with administrative enforcement.
In the view of the United States, it does not make a difference whether a given Member's legal system
treats a "decision" as consisting of only the cour t's order or mandate, or including the court's
reasons.890
7.517 The European Communities submits that the United States fails to give a proper meaning to
the term "decision" in Article X:3(b) of the GATT 1994. The "decision" of a tribunal in a particular
case must be distinguished from the reasoning which led it to this decision. For instance, if a tribunal
decides on an action for the annulment of a decision of the customs authorities, then the decision will
be to annul the decision or not. If the decision is to annul, then this decision will govern the practice
of the agency. In contrast, there is no basis in Article X:3(a) of the GATT 1994 for assuming that all
questions of interpretation which the tribunal may have considered in the course of its reasoning
equally become binding on the agency. According to the European Communities, this would give a
role to judicial precedent that would go far beyond the practice of numerous WTO Members which do
not have a legal system based on case law.
891 The European Communities cl arifies that this does not
imply that the decisions of a tribunal of first instance, including the reasoning contained in the
tribunal's judgement, do not produce any effects in the EC system. According to the European
Communities, such reasoning will constitute relevant judicial practice, which will be taken into
account by the customs agencies. Moreover, if a cu stoms agency or a court in a member State does
not share the interpretation of the EC legislation given by a court of another member State, it will take
the initiatives that are appropriate given its respective position in the system: the customs agency shall
consult and discuss the issue with the Commission and the other member States, the court in another
member State will or shall refer to the ECJ.892
(b) Analysis by the Panel
7.518 The Panel recalls that, in order to resolve th is dispute, the Panel needs only to address the
question of whether or not Article X:3(b) of th e GATT 1994 requires the decisions of the judicial,
arbitral or administrative tribunals or procedures for the review and correction of administrative action
relating to customs matters to govern the practice of all the agencies entrusted with administrative
enforcement throughout the territory of a particular Member, as has been asserted by the United
States. The Panel will interpret the various terms contained in Article X:3(b) of the GATT 1994 that
would appear to have a bearing on this question. In so doing, the Panel will use as its legal
framework Articles 31 and 32 of the Vienna Convention.
 Ordinary meaning
 "Independent"
7.519 The Panel recalls that the first sentence of Article X:3(b) of the GATT 1994 requires WTO
Members to maintain or institute judicial, arbitral or administrative tribunals or procedures for the
purpose of the prompt review and correction of administrative action relating to customs matters. The

889 United States' second written submission, paras. 104-106.
890 United States' reply to Panel question No. 142.
891 European Communities' oral statement at the second substantive meeting, para. 98.
892 European Communities' oral statement at the second substantive meeting, para. 99.

second sentence of Article X:3(b) of the GATT 1994 goes on to provide that such tribunals or
procedures must "be independent of the agencies entrusted with ad ministrative enforcement". In the
Panel's understanding, when read in the light of the qualification contained in the second sentence of
Article X:3(b) of the GATT 1994, it is clear that the tribunals or procedures for the prompt review and
correction of administrative action required by the first sentence of that Article must be "independent"
of the agencies whose administrative action is the subject of review.
7.520 The Panel notes that the term "independent" is defined as "not subject to the control or
influence of another; not associated with another (often larger) entity". 893 On the basis of the ordinary
meaning of the term "independent", the Panel understands that the judicial, arbitral or administrative
tribunals or procedures for the review and correc tion of administrative action relating to customs
matters under Article X:3(b) of the GATT 1994 must be free of control or influence from the
administrative agencies who se decisions are the subject of review . More specifically, we understand
that such tribunals and procedures must have th e ability to conduct the review provided for under
Article X:3(b) of the GATT 1994 with freedom in institutional and practical terms from interference
by the agencies whose decisions are being reviewed.894
 Level of review
7.521 Regarding the level of review of administrative action to be provided under Article X:3(b) of
the GATT 1994, the Panel notes that the terms of Article X:3(b) of the GATT 1994 indicate that the
review required under Article X:3(b) of the GATT 1994 need not necessarily be the last instance
review to which an administrative decision is subject because the decisions of tribunals and
procedures that undertake the review demanded by Article X:3(b) of the GATT 1994 may be the
subject of a further appeal. In this regard, th e Panel notes that Article X:3(b) of the GATT 1994
requires that the decisions of judicial, arbitral or administrative tribunals and procedures for the
prompt review and correction of administrative acti on must "govern the practice of [administrative]
agencies unless an appeal is lodged with a court or tribunal of superior jurisdiction " (emphasis
added). In our view, this indicates that Article X:3(b) of the GATT 1994 contemplates the possibility
that there may be appeals to bodies of "superior ju risdiction" from the decisions of the tribunals and
procedures that provide the review required under Article X:3(b) of the GATT 1994. Moreover, the
Panel notes that Article X:3(b) of the GATT 1994 refers to the possibility that the "central
administration of such agency may take steps to obtain a review of the matter in another proceeding if
there is good cause to believe that the decision is inconsistent with established principles of law or the
actual facts". In the Panel's view, the possibility th at the central administration of an agency whose
administrative action is the subject of review ma y seek further review of that action in another
proceeding confirms the view that the review antic ipated by Article X:3(b) of the GATT 1994 is not
necessarily the last instance review to which the administrative action in question may be subject.
7.522 The Panel also notes that both parties to this di spute are of the view that that provision relates
to first instance review.
895 Article X:3(b) of the GATT 1994 applies to review by the tribunals or

893 Black's Law Dictionary, 1999, p. 774.
894 The Panel understands that, in some WTO Members, administrative action relating to customs
matters may be reviewed by the same administrative authority that originally took the action. For example, two
of the third parties to this dispute – namely, Japan and Chinese Tapei – indicated that administrative action may
first be reviewed by the same administrative authority that took the action originally: Japan's reply to Panel
question No. 105 and Chinese Taipei's reply to Panel question No. 105. Such review would not qualify under
Article X:3(b) of the GATT 1994 because, in such cases, the reviewing body is not independent of the
administrative authority whose decision is the subject of review.
895 United States' reply to Panel question No. 121; European Communities' second written submission,
para. 225. The Panel understands first instance review to mean review by the first body or procedure to consider
a decision after that decision has been taken. By defi nition, we understand that first instance review may be the
subject of subsequent review by higher level review bodies or procedures.

procedures that are "independent" of the agencies whose administrative action is the subject of
review. This indicates that Article X:3(b) of the GATT 1994 applies to first instance review by
tribunals and procedures that are independent from the administering authority that took the
administrative action that is the subject of review.
 "Tribunals or procedures"
7.523 The parties have raised the question in this dis pute of the significance that should be attached,
if any, to the fact that Article X:3(b) of the GATT 1994 refers to judicial, arbitral or administrative
"tribunals" and "procedures" in the plural in all three authentic versions of the GATT 1994.
7.524 The Panel notes that the obligation to maintain or institute "tribunals or procedures" in the
plural is imposed upon the "contracting party" in the singular. This suggests to the Panel that
Article X:3(b) of the GATT 1994 does not oblige a Member to set up a single tribunal or procedure
for the review of all administrative action. Fu rther, in the Panel's view, this indicates that
Article X:3(b) of the GATT 1994 expressly contemplates the possibility that there may be multiple
tribunals or procedures in place in a single WTO Member for the review of administrative action.
7.525 The existence of the possibility under Article X:3(b) of the GATT 1994 that there may be
multiple review tribunals or procedures in place in a single WTO Member for the review of
administrative action may be explained in a number of different ways. One possible explanation
could be that the various review tribunals or pr ocedures maintained or instituted in a WTO Member
have different areas of substantive competence. Ot her possible explanations could be that the various
tribunals or procedures have responsibility for diffe rent geographical areas and/or for administrative
action emanating from different administrative bodies.
896 In the Panel's view, the use of the plural
when referring to the tribunals and procedures to which Article X:3(b) of the GATT 1994 relates does
not clearly indicate which, if any, of these possible explanations is the appr opriate interpretation of
Article X:3(b) of the GATT 1994.
 "Such agencies"
7.526 Article X:3(b) of the GATT 1994 provides that the decisions of judicial, arbitral or
administrative tribunals and procedures should "govern the practice, of such agencies " (emphasis
added). The question has arisen in the context of this dispute as to the significance, if any, that should
be ascribed to the reference to "such agencies" in the plural in Article X:3(b) of the GATT 1994.
7.527 One possible interpretation is that the use of the plural when referring to "agencies" in
Article X:3(b) of the GATT 1994 merely flows from th e fact that the review tribunals and procedures
required under Article X:3(b) of the GATT 1994 are also referred to in the plural. To recall, the
second sentence of Article X:3(b) of the GATT 1994 pr ovides that: "Such tribunals or procedures ...
shall govern the practice of, such agencies". Further, the Panel notes that the use of the plural to refer
to administrative agencies in th e second sentence of Article X:3(b) of the GATT 1994 contrasts with
the reference to agencies in the singular in the proviso at the end of that Article. In particular, the
proviso in Article X:3(b) of the GATT 1994 states that: " Provided that the central administration of
such agency may take steps to obtain review of the matter in another proceeding ..." (emphasis
added).
7.528 The Panel considers that it is difficult to know what significance should be attached, if any, to
the reference to agencies in the plural in the second sentence of Article X:3(b) of the GATT 1994,

896 In fact, the United States itself submits that a WTO Member could provide several review tribunals
or procedures, each covering a different part of its geography, in a manner co nsistent with Article X:3(b) of the
GATT 1994: United States' reply to Panel question No. 38.

especially in light of the reference to the same term in the singular in the proviso to that Article.
Nevertheless, the Panel is of the view that it is clear from the terms of Article X:3(b) of the GATT
1994 that the decisions of judicial, arbitral or administrative tribunals and procedures for the prompt
review and correction of administrative action must govern the practice of the agency whose action
was the subject of review by a tribunal or procedure in a particular case.
 "Govern the practice of"
7.529 Article X:3(b) of the GATT 1994 requires that "tribunals or procedures [for the review and
correction of administrative action relating to custom s matters] shall be independent of the agencies
entrusted with administrative enforcement and th eir decisions shall be implemented by, and shall
govern the practice of, such agencies" (emphasis added). Regarding the ordinary meaning of the term
"govern", the Panel notes that it is defined as "contro l, influence, regulate, or determine (a person,
another's action, the course or issue of events)".
897 When considered in the light of this definition, it
would appear that the term "govern" in Article X: 3(b) of the GATT 1994 means that the decisions of
judicial, arbitral or administrative tribunals and procedures, established for the review of
administrative action relating to customs matters, must have binding effect.
7.530 The Panel recalls its conclusion in paragraph 7.528 that, under Article X:3(b) of the GATT
1994, the decisions of judicial, arbitral or admi nistrative tribunals and procedures for the prompt
review and correction of administrative action must govern the practice of the agency whose action
was the subject of review by a tribunal or pro cedure in a particular case. Accordingly, when
considered in the light of the ordinary meaning of the term "govern", the Panel understands that the
decisions of tribunals or procedures for the review and correction of administrative action relating to
customs matters must bind the administrative agency whose action is the subject of review pursuant to
Article X:3(b) of the GATT 1994.
7.531 Moreover, it is the Panel's view that the ordina ry meaning of the term "govern" when read in
conjunction with the term "practice"
898 in Article X:3(b) of the GATT 1994 implies a prospective
notion. More specifically, the Panel understands that the binding effect of a decision of a tribunal or
procedure for the review and correction of administ rative action means that the administrative agency
whose action was the subject of review by a tribuna l or procedure pursuant to Article X:3(b) of the
GATT 1994 is bound by that decision with respect to the specific factual situation that was the subject
of the review but also with respect to identical factual situations that may arise in the future
concerning identical legal issues.899

897 The New Shorter Oxford English Dictionary, 1993, p. 1122.
898 The Panel notes that the Appellate Body's interpretation of the term "practice" in the context of the
reference to "subsequent practice" under Article 31.3(c) of the Vienna Convention in Japan – Alcoholic
Beverages II would appear to be relevant in this regard. In particular, the Appellate Body stated that "practice"
entails the following features: "a 'concordant, common and consistent' sequence of acts or pronouncements
which is sufficient to establish a discernible pattern...": Appellate Body Report, Japan – Alcoholic Beverages II,
p. 13.
899 The Panel notes that Article X:3(b) of the GATT 19 94 also provides that th e decisions of tribunals
and procedures for the review and correction of administrative action "shall be implemented by" administrative
agencies. In the Panel's view, this means that, in addition to being bound to follow a decision of a tribunal or
procedure for the review and correction of administra tive action (which flows from the term "govern" in
Article X:3(b) of the GATT 1994), the administrative agency is also obliged to apply the decision in practice, in
accordance with the requirement to "implement" such decisions in Article X:3(b) of the GATT 1994.

 Context

 Legal relationship between Articles X:3(a) and X:3(b) of the GATT 1994
7.532 The Panel has been called upon to determine the relationship, if any, between Articles X:3(b)
and X:3(a) of the GATT 1994, for the purposes of th e interpretation of Article X:3(b) of the GATT
1994.
7.533 The Panel notes that Article X:3(b) of the GATT 1994 itself does not contain an express
textual link between that Article and the obligation of uniform administration in Article X:3(a) of the
GATT 1994. In this regard, Article X:3(b) of th e GATT 1994 contrasts with Article X:3(c) of the
GATT 1994, which, like Article X:3(b) of the GATT, is contained in Article X of the GATT, but
which explicitly cross-refers to Article X:3(b).900
7.534 In considering whether or not a link between Articles X:3(a) and X:3(b) of the GATT 1994
can be inferred, the Panel notes that in India – Patents , the Appellate Body stated that the principles
of treaty interpretation in the Vienna Convention "neither require nor condone the imputation into a
treaty of words that are not there or the importa tion into a treaty of concepts that were not
intended."901 Given the absence of an express reference to Article X:3(a) of the GATT 1994 in
Article X:3(b) of the GATT 1994, which contrast s with the explicit cross-reference between
Articles X:3(b) and X:3(c) of the GATT 1994, the Panel considers that it is not possible to infer that
the drafters of the GATT intended that the obliga tion to provide tribunals or procedures for the
purpose of the prompt review and correction of administrative action relating to customs matters
under Article X:3(b) of the GATT 1994 is to be read as simultaneously requiring uniform
administration in accordance with Article X:3(a) of the GATT 1994. Indeed, such an interpretation
would amount to merging different requirements that are currently contained in separate sub-
paragraphs of Article X of the GATT 1994.
7.535 Nevertheless, the Panel does not wish to suggest that Articles X:3(a) and X:3(b) of the GATT
1994 are completely unrelated. In fact, we consider that they are related in the same way that each
and every provision of the WTO Agreements is related. More specifically, we consider each
provision of the WTO Agreements must be interp reted and applied in a manner that is harmonious
with the interpretation and application of othe r provisions of the WTO Agreements. The Panel
considers that, in practical terms, this means th at the various provisions of the WTO Agreements
should not be interpreted and app lied in a manner that would undermin e and/or circumvent any other
provision of the WTO Agreements.
902

900 Article X:3(c) of the GATT 1994 provides that: "The provisions of subparagraph (b) of this
paragraph shall not require the elimination or substitution of procedures in force in the territory of a contracting
party on the date of this Agreement which in fact provide for an objective and impartial review of administrative
action even though such procedures are not fully or formally independent of the agencies entrusted with
administrative enforcement. Any contr acting party employing such procedures shall, upon request, furnish the
CONTRACTING PARTIES with full information thereon in order that they may determine whether such
procedures conform to the requirements of this subparagraph."
901 Appellate Body Report, India – Patents (US) , para. 45. Similarly, in interpreting the relationship
between various provisions of the SCM Agreement, the Appellate Body stated that "we attach significance to
the absence of any textual link between Article 21.3 reviews and the de minimis standard set forth in
Article 11.9.": Appellate Body Report, US – Carbon Steel, para. 69.
902 In this regard, the Panel notes that, in Argentina – Footwear (EC) , the Appellate Body stated that
the provisions of the WTO Agreements "are all provisi ons of one treaty, the WTO Agreement. They entered
into force as part of that treaty at the same time. They apply equally and are equally binding on all WTO
Members.... a treaty interpreter must read all applicable provisions of a treaty in a way that gives meaning to all
of them, harmoniously.": Appellate Body Report, Argentina – Footwear (EC), para 81.

 Article X of the GATT 1994
7.536 In addition, the Panel recalls its observati on in the context of its interpretation of
Article X:3(a) of the GATT 1994 in paragraphs 7.107 and 7.108 above th at a due process theme
underlies Article X of the GATT 1994. In the Panel' s view, this theme suggests that an aim of the
review provided for under Article X:3(b) of the GATT 1994 is to ensure that a trader who has been
adversely affected by a decision of an administra tive agency has the ability to have that adverse
decision reviewed by a tribunal or procedure that is independent from the agency that originally took
the adverse decision.
 Overall summary and conclusions
7.537 In the Panel's view, neither the ordinary meaning of the various terms of Article X:3(b) of the
GATT 1994 nor the legal context for the interpretati on of Article X:3(b) of the GATT 1994 provide a
clear answer to the specific question the Panel has been called upon to address – namely, whether
Article X:3(b) of the GATT 1994 requires the decisions of the judicial, arbitral or administrative
tribunals or procedures for the review and correc tion of administrative action relating to customs
matters to govern the practice of all the agencies entrusted with administrative enforcement
throughout the territory of a particular Member.
7.538 Having said that, the Panel considers that th e interpretation of the relevant terms of
Article X:3(b) of the GATT 1994 does clearly indicate that the decisions of the review tribunals and
procedures required under Article X:3(b) of the GATT 1994 may be the subject of an appeal. Further,
the Panel recalls the parties' understanding that Article X:3(b) of the GATT 1994 relates to first
instance review.
903 In this regard, the Panel does not consider that it would be reasonable to infer that
first instance independent review tribunals and bodies, whose jurisdiction in most legal systems is
normally limited in substantive and geographical terms, should have the authority to bind all agencies
entrusted with administrative enforcement throughou t the territory of a Member. Further, the Panel
recalls that the due process theme that underlies Article X of the GATT 1994, in which Article X:3(b)
of the GATT 1994 is contained, indicates that Article X:3(b) of the GATT 1994 exists to ensure that a
trader who has been adversely affected by a deci sion of an administrative agency has the ability to
have that adverse decision reviewed. In the Pane l's view, to require decisions issued by judicial,
arbitral or administrative tribunals or procedures pursuant to Article X:3(b) of the GATT 1994 to
apply and have effect throughout the territory of a Member would go beyond what is demanded by
this due process objective.
7.539 The factors set out in the preceding paragraph, taken in conjunction, in cline us to conclude
that Article X:3(b) of the GATT 1994 does not necess arily mean that the decisions of the judicial,
arbitral or administrative tribunals or procedures for the review and correction of administrative action
relating to customs matters must govern the practice of all the agencies entrusted with administrative
enforcement throughout the territory of a particular Member.
4. Specific alleged violations of Article X:3(b) of the GATT 1994
(a) Summary of the parties' arguments
7.540 The United States submits that, under Article X:3(b) of the GATT 1994, it is the WTO
Member (as opposed to regional subdivisions of the Member) that has an obligation to provide
tribunals or procedures for the prompt review a nd correction of administrative action relating to
customs matters. The United States further submits that the decisions of such tribunals or procedures

903 United States' reply to Panel question No. 121; European Communities' second written submission,
para. 225.

must govern the practice of that Memb er's agencies – that is, in the c ontext of this case, the European
Communities' agencies, as a whole, not just i ndividual member States' agencies – and that the
Member's agencies must implement those decisions.
904
7.541 The United States also submits that the provisi on of tribunals or procedures by individual
member States within the European Communitie s does not satisfy the European Communities'
obligation under Article X:3(b) of the GATT 1994, as the decisions of these tribunals or procedures
have effect only within the respective memb er States and not on EC agencies generally. 905 M o r e
specifically, the United States submits that the Eu ropean Communities does not fulfil its obligation
under Article X:3(b) of the GATT 1994 because each of the multiple review tribunals it provides
renders decisions that govern the practice only of a subset of agencies entrusted with administrative
enforcement within a particular region in th e European Communities but does not "govern the
practice" of the European Communities' agencies in another member State. 906 The United States
submits that, given that the ECJ is not set up to be an EC customs court, what is left is a patchwork of
member State customs authorities whose work is reviewed by member State courts, with no EC
tribunal nor procedure providing prompt review an d correction of customs decisions in a way that
would bring about uniformity in the administration of EC customs law.
907
7.542 The European Communities argues that the United States has focused entirely on the
absence of an EC customs court. 908 According to the European Communities, Article X:3(b) of the
GATT 1994 is neutral as to the means which WTO Memb ers employ for ensuring prompt review. In
other words, that provision does not prescribe the specific bodies or instruments, structure and time
periods which WTO Members should use to ensure prompt review of customs decisions. 909 T h e
European Communities submits that the Appellate Body's interpretation of Article X of the GATT
1994 in EC – Poultry and EC – Bananas III further supports the view that that Article does not
impose any specific structure for the review system. 910 The European Co mmunities argues that,
moreover, the panel in EC – Trademarks and Geographical Indications (US) confirmed that the
European Communities may comply with its obligation under Article X:3(b) of the GATT 1994
through the courts of its member States. 911 According to the Europ ean Communities, where the
tribunals of the member States provide judicial review of decisions taken by the member States'
customs authorities, they act as organs of the European Communities, through which the European
Communities discharges its obligations under Article X:3(b) of the GATT 1994.
912
7.543 In response, the United States contends that the European Communities appears to reason
that, if the individual member States are complying with their obligations under Article X:3(b) of the
GATT 1994, then the European Communities is n ecessarily complying with its obligation under
Article X:3(b) of the GATT 1994. However, the fa ct that the same tribunal may be considered, as a
matter of internal EC law, as both a member State tribunal and an EC tribunal does not mean that it
meets the requirements of Article X:3(b) of the GATT 1994 with respect to both the European
Communities and the member States' obligations. The United States concludes that, as a matter of EC
law, a tribunal may serve a dual function as both a member State tribunal and an EC tribunal.
However, this does not mean that it also sa tisfies both the member State's obligation under
Article X:3(b) of the GATT 1994 and the European Communities' obligation under Article X:3(b) of

904 United States' reply to Panel question No. 35.
905 United States' reply to Panel question No. 35.
906 United States' second written submission, para. 102.
907 United States' first written submission, para. 153.
908 European Communities' oral statement at the second substantive meeting, para. 5.
909 European Communities' oral statement at the first substantive meeting, para. 62.
910 European Communities' first written submission, para. 455.
911 European Communities' first written submission, para. 456.
912 European Communities' oral statement at the firs t substantive meeting, para. 70 referring to Panel
Report, EC – Geographical Indications and Trademarks (US), para. 7.725.

the GATT 1994. 913 The United States clarifies that its comp laint in this dispute is not about the
review bodies provided by each of the member States. The United States has not argued, for example,
that review at the member State level breaches memb er States' obligations under Article X:3(b) of the
GATT 1994. Rather, the thrust of the United States' cl aim is that existing review at the member State
level alone lacks features that would enable it to satisfy the European Communities' obligations under
Article X:3(b) of the GATT 1994.
914 In particular, the United States submits that the appellate
mechanism in each member State is different, and the decisions of each member State's courts apply
only in the territory of that member State.915 The United States submits that this arrangement does not
meet the European Communities' obligation under Article X:3(b) of the GATT 1994.916
7.544 In response, the European Communities notes that decisions of the member States' customs
authorities, which are based on EC law, are reviewed by the national courts and tribunals acting as the
ordinary judges for EC law. Customs decisions a dopted by the EC institutions are reviewed by the
ECJ (and, in some cases, by the Court of First Instan ce) through direct actions or preliminary rulings
on validity. The European Communities submits that there is, therefore, a complete system of judicial
protection in place. 917 The European Communities submits that, further, in the European
Communities, the review of customs decisions current ly takes place as part of the general system for
review of administrative decisions in the field of administrative law or tax law. 918 According to the
European Communities, Article X:3(b) of the GATT 1994 does not require a central court or
procedure to appeal administrativ e decisions in customs matters.
919 The European Communities also
notes that, with respect to direct appeals to the Cour t of First Instance and to the ECJ, there is no prior
administrative review of administrative decision ad opted by the EC institutions on customs matters.
Pursuant to Article 230(5) of the EC treaty, an ac tion for annulment must be brought directly to the
relevant Court within two months from the no tification or the publication of the challenged
decision.920 With respect to the Court of First In stance and the ECJ, the European Communities
submits that, pursuant to the second paragraph of Article 230 of the EC Treaty, the grounds of
illegality which parties may plead in an action for a nnulment are lack of competence, infringement of
an essential procedural requirement, infringement of th e Treaty or of any rule of law relating to its
application or misuse of powers.921
7.545 With respect to review by the ECJ pursuan t to Article 230 of the EC Treaty, the United
States submits that Article 230 of the EC Treaty pertains to review by the ECJ of the legality of acts
adopted by EC institutions, including the Commission and Council. The United States notes that, in
the context of the present dispute, the United Stat es has not raised any issue with respect to ECJ
review pursuant to Article 230 of the EC Treaty.
922
(b) Analysis by the Panel
7.546 The main question for the Panel's considera tion here is whether or not the European
Communities is fulfilling its obligati ons under Article X:3(b) of the GATT 1994. In this regard, the
Panel recalls that the United States alleges that d ecisions of the tribunals or procedures in the
European Communities do not "govern the practice of" all the "agencies entrusted with administrative

913 United States' comments on the European Communities' reply to Panel question No. 169.
914 United States' reply to Panel question No. 142.
915 United States' first written submission, para. 133.
916 United States' oral statement at the first substantive meeting, paras. 62 - 64.
917 European Communities' first written submission, para. 465.
918 European Communities' oral statement at the first substantive meeting, para. 61.
919 European Communities' first written submission, para. 465.
920 European Communities' reply to Panel question No. 70(a).
921 European Communities' reply to Panel question No. 71(a) and (b).
922 United States' reply to Panel question No. 143.

enforcement" in the European Communities in violation of Article X:3(b) of the GATT 1994.
923 The
Panel also notes that the United States exclusivel y argues that the European Communities is in
violation of Article X:3(b) of the GATT 1994; it do es not claim that the individual member States of
the European Communities are also in violation of Ar ticle X:3(b) of the GATT 1994. In addition, the
United States does not challenge the review of acts jointly adopted by the European Parliament and
the Council, the European Commission and the Europ ean Central Bank, or by the Council itself or the
Parliament where the act is intended to produce legal effects vis-à-vis third parties pursuant to
Article 230 of the EC Treaty.924
(i) Discharge of the European Communities' obligation under Article X:3(b) of the GATT 1994
7.547 A preliminary issue that has arisen with respect to the United States' cl aim that the European
Communities is in violation of Article X:3( b) of the GATT 1994 is whether the European
Communities is able to discharge its obligations under that provision through the member States. In
particular, the United States argues that the provision of judicial, arbitral or administrative tribunals or
procedures for the review and correction of administ rative action by individual member States within
the European Communities does not satisfy the European Communities' obligation under
Article X:3(b) of the GATT 1994.
7.548 The Panel notes that the European Communities is a Member of the WTO.
925 In addition, all
the constituent member States of the European Co mmunities are Members of the WTO. The member
States were either founding Members of the GATT 926; they acceded to the GATT 927; or they have
since acceded to the WTO 928. Therefore, it would appear that the European Communities as well as
its constituent member States concurrently bear th e obligations contained in the WTO Agreements,
including those contained in Article X:3(b) of th e GATT 1994. However, the Panel recalls that the
United States exclusively argues that the European Communities is in violation of Article X:3(b) of
the GATT 1994; it does not claim that the member States of the European Communities are also in
violation of Article X:3(b) of the GATT 1994. Ther efore, the Panel will confine its attention to the
question of whether or not the European Communities is in violation of Article X:3(b) of the GATT
1994.
7.549 In this regard, the Panel recalls that the EC Treaty establishes a common commercial policy
which, according to Article 133(1) of the EC Treaty, is based on uniform principles, particularly with
regard to changes in tariff rates, the conclusion of tariff and trade agreements, the achievement of
uniformity in measures of liberalization, export polic y, and measures to protect trade such as those to

923 United States' reply to Panel question No. 35.
924 United States' oral statement at the second subs tantive meeting, para. 85; United States' closing
statement at the second substantive meeting, paras. 8-9.
925 Articles IX, XI and XIV of the WTO Agreement recognise the European Communities as a WTO
member. Article IX:1 of the WTO Agreement provides inter alia that: "Where the European Communities
exercise their right to vote, they shall have a number of votes equal to the number of their member States".
Article XI:1 of the WTO Agreement provides that: "The contracting parties to GATT 1947 as of the date of
entry into force of this agreemen t, and the European Communities, wh ich accept this Agreement and the
Multilateral Trade agreements and for which Schedules of Concessions and Commitments are annexed to
GATT 1994 and for which Schedules of Specific Commitments are annexed to GATS shall become original
Members of the WTO." Article XIV:1 of the WTO Agreement provides that: "This Agreement shall be open
for acceptance, by signature or otherwise, by co ntracting parties to GATT 1947, and the European
Communities, which are eligible to become original Members of the WTO in accordance with Article XI of this
Agreement."
926 Belgium, France, Luxembourg, the Netherlands and the United Kingdom.
927 Austria, Cyprus, Czech Republic , Denmark, Finland, Germany, Greece, Hungary, Ireland, Italy,
Malta, Poland, Portugal, Slovak Republic, Spain and Sweden.
928 Estonia, Latvia, Lithuania, Slovenia.

be taken in the event of dumping or subsidies. The ECJ has confirmed that the customs union and the
common commercial policy, which includes admini stration of customs matters, fall within the
exclusive competence of the European Communities. 929 One of the main instruments comprising the
legislative framework for customs administration in the European Communities is the Community
Customs Code, which covers, inter alia, review of decisions on customs matters.
7.550 The European Communities has informed the Pane l that, where the tribunals of the member
States provide review of decisions taken by the memb er States' customs authorities, they act as organs
of the European Communities 930 and that the consideration of the member State courts as bodies
entrusted with the ordinary application of EC law is based on the existence of the preliminary
reference procedure to the ECJ and on the basic principles of primacy of EC law and direct effect. 931
We find support for this view in Article 243 of the Community Customs Code, which provides in
relevant part that:
1. Any person shall have the right to appeal against decisions taken by the
customs authorities which relate to the app lication of customs legislation, and which
concern him directly and individually.

The appeal must be lodged in the Member St ate where the decision has been taken or
applied for.
2. The right of appeal may be exercised:
(a) initially before the customs authorities designated for that purpose by the
Member States;
(b) subsequently, before an independent body, which may be a judicial authority
or an equivalent specialized body, according to the provisions in force in the Member
States.
7.551 The Panel understands that Article 243 of the Community Customs Code requires review of
customs decisions to be undertaken, initially, by the customs authorities designated for that purpose
by the member States and subsequently, before an independent body, which may be a judicial
authority or an equivalent specialized body, according to the provisions in force in the member States.
7.552 It is the Panel's view that the European Co mmunities may comply with its obligations under
Article X:3(b) of the GATT 1994 through organs in its member States. We cons ider that this follows
from the fact that Article X:3(b) of the GATT 1994 does not contain any requirements regarding the
institutional structure of the review mechanism requi red by that Article other than the requirement
that the review be undertaken by judicial, arbitral or administrative tribunals.
932

929 Opinion 1/75, Local Cost Standard, [1975] ECR 1355 (Exhibit EC-13).
930 European Communities' oral statement at the first substantive meeting, para. 70.
931 European Communities' reply to Panel question No. 169.
932 The Panel considers that this also follows from Article 4 of the Draft Articles on Responsibility of
States for Internationally Wrongful Acts, which provides that:
"1. The conduct of any State organ shall be considered as an act of that State under international
law, whether the organ exercises legislative, executiv e, judicial or any other functions, whatever position it
holds in the organization of the State, and whatever its character as an organ of the central government or of a
territorial unit of the State.

7.553 In the light of the foregoing, the Panel conclud es that the authorities in the member States –
including customs authorities designated for that purpose by the member States and independent
bodies, such as a judicial authority or an equivalent specialized body – act as organs of the European
Communities when they review and correct administrative action taken pursuant to EC customs law.
(ii) Review of administrative action relating to customs matters by autho rities in the member
States
7.554 The United States challenges review by member State authorities under Article X:3(b) of the
GATT 1994 on the ground that the decisions of such authorities only have effect within the respective
member States. Indeed, there appears to be no di spute between the parties that this is a fact.
933
However, the Panel recalls that, in paragraph 7.539 above, it found that the decisions of tribunals or
procedures established or maintained pursuant to Article X:3(b) of the GATT 1994 need not
necessarily govern the practice of all the agencies entrusted with administrative enforcement
throughout the territory of a particular Member, as has been asserted by the United States. Therefore,
in the context of this dispute, the Panel consid ers that the European Communities does not violate
Article X:3(b) of the GATT 1994 merely because the decisions regarding review of administration
action relating to customs matters, which are take n by authorities in the member States acting as
organs of the European Communities, do not apply and have effect throughout the territory of the
European Communities.
7.555 On the basis of the explanations provided by the European Commun ities, which have not
been disputed by the United States, we understa nd that, pursuant to Article 243(2)(b) of the
Community Customs Code, member States have in place independent, administrative bodies and/or
judicial bodies that perform the function of review ing and correcting administrative action relating to
customs matters. Specifically, th e European Communities has indicat ed that, in the case of Spain,
Italy, Ireland and Denmark, administrative review is carried out by a body that is independent of the
agencies entrusted with administrative enforcement. 934 The European Communities has also
submitted that the courts of all member States revi ew and correct the legality of the administrative
decisions relating to customs matters.935
(iii) Summary and conclusions
7.556 In summary, the Panel considers that, for the purposes of its obligations under Article X:3(b)
of the GATT 1994, the authorities in the member States – namely, independent administrative and
judicial bodies – act as organs of the Europ ean Communities when they review and correct
administrative action taken pursuant to EC customs law. As a matter of fact, decisions of such
member State authorities only have effect within th e respective member States. However, the Panel
considers that the European Communities does not violate Article X:3(b) of the GATT 1994 merely
because the decisions regarding review of administration action relating to customs matters, which are
taken by authorities in the member States acting as organs of the European Communities, do not apply
to all agencies in the European Communities and do not have effect throughout the territory of the
European Communities. The Panel recalls that the United States does not allege inconsistency with
any other aspect of Article X:3(b) of the GATT 1994. Therefore, the Panel concludes that the
European Communities is not in violation of Article X:3(b) of the GATT 1994.

2. An organ includes any person or entity which has that status in accordance with the internal
law of the State."
933 Indeed, the European Communities appears to acknowledge as much in European Communities'
first written submission, para. 454; European Communities' second written submission, para 99; European
934 European Communities' reply to Panel question No. 69(b).
935 European Communities' reply to Panel question No. 69(a).

VIII. CONCLUSIONS AND RECOMMENDATIONS
8.1 The Panel concludes that:
(a) With respect to the Panel's terms of refe rence in the context of the United States'
claim under Article X:3(a) of the GATT 1994:
(i) The Panel's terms of reference authori se the Panel to consider the manner of
administration by the national customs authorities of the member States of
the Community Customs Code, the Implementing Regulation, the Common
Customs Tariff, the TARIC and related measures in the areas of customs
administration specifically identified in the United States' request for
establishment of a panel.
(ii) Article 221 of the Community Customs Code, including Article 221(3), is not
covered by any of the areas of customs administration specifically identified
in the United States' request for establishment of a panel. Therefore,
Article 221(3) of the Community Custom s Code is outside the Panel's terms
of reference.
(iii) Under its terms of reference, the Pa nel is precluded from considering "as
such" challenges of the design and structure of the EC system of customs
administration as a whole and also the design and structure of the EC system
in the areas of customs administration that have been specifically identified in
the United States' request for establishment of a panel.
(b) With respect to the United States' claim of non-uniform administration of the
Common Customs Tariff in the area of tariff classification in violation of
Article X:3(a) of the GATT 1994:
(i) The European Communities is not currently administering the Common
Customs Tariff regarding the tariff classification of network cards for
personal computers in a manner that is non-uniform in violation of
Article X:3(a) of the GATT 1994. Therefore, the Panel finds no violation of
Article X:3(a) of the GATT 1994 with r espect to the tariff classification of
network cards for personal computers.
(ii) The tariff classification of drip irrigation products does not amount to non-
uniform administration within the meaning of Article X:3(a) of the GATT
1994. Therefore, the Panel finds no violation of Article X:3(a) of the GATT
1994 with respect to the tariff classification of drip irrigation products.
(iii) The United States has not proved that the tariff classification of unisex
articles or shorts amounts to non-uniform administration within the meaning
of Article X:3(a) of the GATT 1994.
(iv) The administrative process leading to the tariff classification of blackout
drapery lining amounts to non-uniform administration within the meaning of
Article X:3(a) of the GATT 1994. Therefore, the Panel finds a violation of
Article X:3(a) of the GATT 1994 with r espect to the tariff classification of
blackout drapery lining.

(v) The tariff classification of liquid crystal display monitors with digital video
interface amounts to non-uniform administration within the meaning of
Article X:3(a) of the GATT 1994. Therefore, the Panel finds a violation of
Article X:3(a) of the GATT 1994 with r espect to the tariff classification of
liquid crystal display monitors with digital video interface.
(vi) The United States has not proved that customs authorities in the member
States have failed to treat as binding BTI issued by customs authorities in
other member States and that such failure amounts to non-uniform
administration within the meaning of Article X:3(a) of the GATT 1994.
(vii) The United States has not proved that th e refusal to withdraw the revocation
of BTI by the UK customs authorities w ith respect to the tariff classification
of Sony PlayStation2 in the context of the Sony PlayStation2 case amounts to
non-uniform administration within the meaning of Article X:3(a) of the
GATT 1994.
(viii) The United States has not proved that the interpretation and application of the
amended explanatory notes to the Common Custom Tariff concerning
camcorders in the context of the Camcorders case amounts to non-uniform
administration in violation of Article X:3(a) of the GATT 1994.
(c) With respect to the United States' allegations of non-uniform administration of the
Community Customs Code and the Implementing Regulation in the area of customs
valuation in violation of Article X:3(a) of the GATT 1994:
(i) The United States has not proved that differences between member States
regarding the manner in which royalties are apportioned to the customs value
of identical goods imported by the same company exist that amount to non-
uniform administration of Article 32(1)(c) of the Community Customs Code
within the meaning of Article X:3(a) of the GATT 1994.
(ii) The imposition by customs authorities in some member States of a form of
prior approval with respect to the successive sales provision, which is
inconsistent with EC customs laws and which is not imposed by customs
authorities in other member States means that the European Communities
does not administer its customs law concerning successive sales – in
particular, Article 147(1) of the Im plementing Regulation – in a uniform
manner in violation of Article X:3(a) of the GATT 1994.
(iii) The European Communities is not curren tly administering Article 29(3)(a) of
the Community Customs Code concerni ng vehicle repair costs covered under
warranty in a manner that violates the uniformity obligation in Article X:3(a)
of the GATT 1994. Therefore, the Panel finds no violation of Article X:3(a)
of the GATT 1994 with respect to the administration of Article 29(3)(a) of
the Community Customs Code concerni ng vehicle repair costs covered under
warranty.
(iv) The United States has not proved that the manner of administration of
Article 29 of the Community Customs Code and Article 143(1)(e) of the
Implementing Regulation concerning the circumstances in which parties are
to be treated as "related" for customs valuation purposes is non-uniform

among the member States within the mean ing of Article X:3(a) of the GATT
1994.
(d) With respect to the United States' allegations of non-uniform administration of the
Community Customs Code and the Implementing Regulation in the area of customs
procedures in violation of Article X:3(a) of the GATT 1994:
(i) The Panel finds no violation of Article X:3(a) of the GATT 1994 with respect
to the manner of administration of Article 78(2) of the Community Customs
Code regarding the requirements impo sed for audit procedures following the
release of products for free circulation in the European Communities.
(ii) The Panel finds no violation of Article X:3(a) of the GATT 1994 with respect
to the substantive differences in penalty laws between member States.
(iii) The United States has not proved that the manner of administration of
Article 133 of the Community Customs Code and Articles 502(3) and 552 of
the Implementing Regulation regarding processing under customs control is
non-uniform in violation of Article X:3(a) of the GATT 1994.
(iv) The United States has not proved that the administration of Articles 263 –
267 of the Implementing Regulation rega rding local clearance procedures is
non-uniform in violation of Article X:3(a) of the GATT 1994.
(e) With respect to the United States' claim of violation of the obligation to provide
prompt review and correction of administra tive action relating to customs matter in
Article X:3(b) of the GATT 1994, the Panel finds no violation.
8.2 Therefore, the Panel concludes that the European Communities has acted inconsistently with
the requirements of Articles X:3(a) of the GATT 1994 and, thus, nullified or impaired benefits
accruing to the United States. Accordingly, the Panel recommends that the Dispute Settlement Body
request the European Communities to bring itself into conformity with respect to:
(a) the administration of the Common Custom Tariff regarding the administrative
process leading to the tariff classification of blackout drapery lining;
(b) the administration of the Common Customs Tariff regarding the tariff classification
of liquid crystal display monitors with digital video interface;
(c) the administration of Article 147(1) of the Implementing Regulation regarding the
imposition by customs authorities in some member States of a form of prior approval
with respect to the successive sales provision in the context of customs valuation.