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TWN
Info Service on WTO and Trade Issues (Feb12/06)
18 February 2012
Third World Network
WTO upholds ruling against China in raw materials dispute
Published in SUNS #7299 dated 1 February 2012
Geneva,
31 Jan (Kanaga Raja) -- The Appellate Body of the World Trade Organisation
(WTO) has upheld a previous panel ruling that had found that export
restraints imposed by China on certain raw materials were inconsistent
with its WTO obligations.
In a ruling issued on 30 January, the Appellate Body recommended that
the Dispute Settlement Body (DSB) request China to bring its measures
found - in this report and in the panel reports, as modified by this
report - to be inconsistent with China's Accession Protocol and the
GATT 1994, into conformity with China's obligations thereunder, such
that the "series of measures" do not operate to bring about
a WTO-inconsistent result.
In one of its main findings, the Appellate Body said that the panel
did not err in finding that there is no basis in China's Accession Protocol
to allow the application of Article XX of the GATT 1994 to China's obligations
in Paragraph 11.3 of China's Accession Protocol.
In a ruling issued on 5 July 2011, a dispute panel had found that China's
invocation of the General Exception provisions of GATT 1994 is limited
by the terms of Paragraph 11.3 of its Accession Protocol.
The panel had acknowledged that by this ruling, China is in a position
unlike that of most other WTO Members who are not prohibited from using
export duties, either via the terms of their respective accession protocols
or their membership of the WTO at the time of its inception.
However, based on the text of the protocol, the panel had said that
it can only assume that this was the intention of China and the WTO
Members when negotiating China's Accession Protocol. The situation created
by this provision taken in isolation may be perceived as imbalanced,
but the panel had said that it can find no legal basis in the Protocol
or otherwise to interpret Paragraph 11.3 of China's Accession Protocol
as permitting resort to Article XX of the GATT 1994. (See SUNS #7185
dated 7 July 2011 for details of the panel ruling.)
In a statement issued here by the Chinese Mission to the WTO, China
said that it welcomes that the Appellate Body supports China on several
important issues, and corrects part of the prior rulings of the panel,
including that the complainants' panel requests violated the relevant
provision of the Dispute Settlement Understanding (DSU).
According to the Chinese statement, the Appellate Body declares moot
and of no legal effect the panel findings in respect of claims concerning
export quota administration and allocation, export licensing requirements,
minimum export price requirement, and quota bidding. The Appellate Body
also found that the panel erred in interpreting Article XX(g) of the
GATT 1994.
However, said China, it deeply regrets that the Appellate Body upholds
some of the panel's conclusions, including the non-applicability of
Article XX of the GATT 1994 to a certain paragraph of China's Accession
Protocol.
"For the purpose of protecting the environment and exhaustible
natural resources, the Chinese government in the recent years reinforced
its administration on certain resource products, especially the ‘high-pollution,
high-energy-consuming and resource-dependent' products.
"China takes the view that the WTO rules, at the time of liberalizing
trade, allows a Member to take necessary means to realize its policy
objectives such as protection of the exhaustible resources and the environment.
A solution should be found by balancing different policy objectives.
China respects the rulings of the WTO, and will apply reasonable policies
to administer resource products in accordance with the WTO rules, so
as to realize sustainable development," said the statement.
In a press release issued on 30 January, US Trade Representative (USTR)
Ron Kirk said: "Today's report is a tremendous victory for the
United States - particularly its manufacturers and workers. The Obama
Administration will continue to ensure that China and every other country
play by the rules so that US workers and companies can compete and succeed
on a level playing field. During his State of the Union Address last
week, the President laid out a blueprint for an economy that's built
to last - an economy built with the renewed strength of American manufacturing.
Today's decision ensures that core manufacturing industries in this
country can get the materials they need to produce and compete on a
level playing field."
In a separate press release, also issued on 30 January, European Union
Trade Commissioner Karel De Gucht said: "This final ruling is a
great success in our efforts to ensure fair access to the much needed
raw materials for EU industry. Today's decision has confirmed that China's
export restrictions on these raw materials are incompatible with the
WTO rules. It sends a clear signal that such measures cannot be used
as a protectionist tool to boost domestic industry at the expense of
foreign competition."
"China now must comply by removing these export restrictions swiftly
and furthermore, I expect China to bring its overall export regime -
including for rare earths - in line with WTO rules," he added.
The dispute was brought against China separately by the United States,
the European Communities and Mexico with respect to China's restraints
on the export from China of various forms of bauxite, coke, fluorspar,
magnesium, manganese, silicon carbide, silicon metal, yellow phosphorus,
and zinc.
On 23 June 2009, the United States and the European Communities, and
on 21 August 2009, Mexico, had each requested consultations with China
with respect to China's restraints on the export from China of various
forms of bauxite, coke, fluorspar, magnesium, manganese, silicon carbide,
silicon metal, yellow phosphorus, and zinc.
At its meeting of 21 December 2009, the DSB had established a single
panel pursuant to the requests of the United States in document WT/DS394/7,
the European Communities in document WT/DS395/7 and Mexico in document
WT/DS398/6.
According to the Appellate Body report, China, as well as the United
States, the European Union and Mexico each appealed certain issues of
law and legal interpretations developed in the panel report.
The panel was established to consider complaints by the United States,
the European Union, and Mexico (the complainants) regarding the consistency
of certain measures imposed by China on the exportation of certain forms
of bauxite, coke, fluorspar, magnesium, manganese, silicon carbide,
silicon metal, yellow phosphorous, and zinc (the raw materials) with
the General Agreement on Tariffs and Trade 1994, the Protocol on the
Accession of the People's Republic of China, and the Report of the Working
Party on the Accession of China.
Before the panel, said the Appellate Body report, the complainants challenged
four types of restraints imposed by China on the exportation of the
raw materials: (i) export duties; (ii) export quotas; (iii) export licensing;
and (iv) minimum export price requirements. The complainants also challenged
certain aspects of China's allocation and administration of export quotas,
export licences, and minimum export prices, as well as the alleged non-publication
of certain export measures. The complainants alleged that these export
restraints were inconsistent with China's commitments under China's
Accession Protocol and China's Accession Working Party Report, and with
Articles VIII: 1(a), VIII: 4, X: 1, X: 3(a), and XI: 1 of the GATT 1994.
According to the Appellate Body report, the following issues were raised
on appeal by China:
(a) whether the panel erred in finding that Section III of the complainants'
panel requests complies with the requirement in Article 6.2 of the DSU
to "provide a brief summary of the legal basis of the complaint
sufficient to present the problem clearly";
(b) whether the panel acted inconsistently with Articles 7.1, 11, and
19.1 of the DSU by recommending that China bring its export duty and
export quota measures into conformity with its WTO obligations such
that the "series of measures" in force at the date of the
panel's establishment do not operate to bring about a WTO-inconsistent
result;
(c) whether the panel erred in finding that China may not have recourse
to the exceptions contained in Article XX of the GATT 1994 in order
to justify a violation of China's export duty commitments contained
in Paragraph 11.3 of China's Accession Protocol;
(d) whether the panel erred in its interpretation and application of
Article XI: 2(a) of the GATT 1994, and in its assessment of the matter
under Article 11 of the DSU, when it found that China's export quota
on refractory-grade bauxite is not "temporarily applied" to
prevent or relieve a "critical shortage";
(e) whether the panel erred by interpreting the phrase "made effective
in conjunction with" in Article XX(g) of the GATT 1994 to require
that the purpose of the export restriction be to ensure the effectiveness
of restrictions on domestic production and consumption;
(f) whether the panel erred in finding that China acts inconsistently
with Paragraphs 1.2 and 5.1 of China's Accession Protocol, read in combination
with Paragraphs 83 and 84 of China's Accession Working Party Report,
by requiring exporters to comply with prior export performance and minimum
registered capital requirements in order to obtain a quota allocation
of certain raw materials;
(g) whether the panel erred in its interpretation and application of
Article X: 3(a) of the GATT 1994, and acted inconsistently with its
obligations under Article 11 of the DSU, in finding that the administration
of the "operation capacity" criterion in Article 19 of China's
Export Quota Administration Measures is non-uniform and unreasonable;
and
(h) whether the panel erred in its interpretation and application of
Article XI: 1 of the GATT 1994, and acted inconsistently with Article
11 of the DSU, in finding that China's export licensing system is inconsistent
with China's WTO obligations, because it constitutes a restriction on
exportation.
The following issues were raised on appeal by the United States: (a)
if the Appellate Body reverses the panel's recommendations as requested
by China on appeal, then whether the panel erred, under Articles 6.2,
7.1, 11, and 19.1 of the DSU, in not making recommendations on the 2009
export quota and export duty measures that were annually recurring and
in effect at that time; and (b) whether the panel erred in finding that
China's imposition of a bid-winning price on the allocation of export
quotas on bauxite, fluorspar, and silicon carbide is not inconsistent
with Article VIII: 1(a) of the GATT 1994 or Paragraph 11.3 of China's
Accession Protocol.
The following issue was raised on appeal by the European Union: (a)
if the Appellate Body reverses the panel's recommendations as requested
by China on appeal, and rejects the relevant other appeals submitted
by the United States and Mexico, then whether the panel erred in finding
that the European Union requested the panel not to make any findings
and recommendations on the 2010 "replacement measures" and
thereby narrowed the panel's terms of reference.
The following issues were raised on appeal by Mexico: (a) if the Appellate
Body reverses the panel's recommendations as requested by China on appeal,
then whether the panel erred, under Articles 6.2, 7.1, 11, and 19.1
of the DSU, in not making recommendations on the 2009 export quota and
export duty measures that were annually recurring and in effect at that
time; and (b) whether the panel erred in its interpretation and application
of Article X: 3(a) of the GATT 1994, and acted inconsistently with Article
11 of the DSU, in finding that the participation of China's Chamber
of Commerce of Metals, Minerals and Chemicals Importers and Exporters
(the CCCMC) in China's export quota allocation process is not partial
or unreasonable.
The Appellate Body began by examining China's appeal of the panel's
finding that Section III of the complainants' panel requests, entitled
"Additional Restraints Imposed on Exportation", identifies
the measures and claims at issue in a manner sufficient to present the
problem clearly, as required under Article 6.2 of the DSU.
(Article 6.2 of the DSU provides, in relevant part: The request for
the establishment of a panel shall be made in writing. It shall indicate
whether consultations were held, identify the specific measures at issue
and provide a brief summary of the legal basis of the complaint sufficient
to present the problem clearly.)
The Appellate Body said it has explained that Article 6.2 of the DSU
serves a pivotal function in WTO dispute settlement and sets out two
key requirements that a complainant must satisfy in its panel request,
namely, the "identification of the specific measures at issue,
and the provision of a brief summary of the legal basis of the complaint
(or the claims)". Together, these two elements constitute the "matter
referred to the DSB", so that, if either of them is not properly
identified, the matter would not be within the panel's terms of reference.
Fulfilment of these requirements, therefore, is "not a mere formality".
The identification of the specific measures at issue and the provision
of "a brief summary of the legal basis of the complaint sufficient
to present the problem clearly" are therefore central to defining
the scope of the dispute to be addressed by the panel, it added.
Noting that China does not contest that Section III of the panel requests
identifies the challenged measures with sufficient specificity to comply
with Article 6.2 of the DSU, the Appellate Body said that rather, at
issue here is whether Section III provides "a brief summary of
the legal basis of the complaint sufficient to present the problem clearly".
"Based on our reading of the complainants' panel requests in the
present case, it is not clear which allegations of error pertain to
which particular measure or set of measures identified in the panel
requests. Furthermore, it is unclear whether each of the listed measures
relates to one specific allegation described in the narrative paragraphs,
or to several or even all of these allegations, and whether each of
the listed measures allegedly violates one specific provision of the
covered agreements, or several of them."
As the Appellate Body has explained, a claim must be presented in a
manner that presents the problem clearly within the meaning of Article
6.2. "We do not consider this to have been the case here, where
Section III of the complainants' panel requests refers generically to
‘Additional Restraints Imposed on Exportation' and raises multiple problems
stemming from several different obligations arising under various provisions
of the GATT 1994, China's Accession Protocol, and China's Accession
Working Party Report. Neither the titles of the measures nor the narrative
paragraphs reveal the different groups of measures that are alleged
to act collectively to cause each of the various violations, or whether
certain of the measures is considered to act alone in causing a violation
of one or more of the obligations."
In the light of the failure to provide sufficiently clear linkages between
the broad range of obligations contained in Articles VIII: 1(a), VIII:
4, X: 1, X: 3(a), and XI: 1 of the GATT 1994, Paragraphs 2(A)2, 5.1,
5.2, and 8.2 of Part I of China's Accession Protocol, and Paragraphs
83, 84, 162, and 165 of China's Accession Working Party Report, and
the challenged measures, the Appellate Body said that it does not consider
that Section III of the complainants' panel requests satisfies the requirement
in Article 6.2 of the DSU to provide "a brief summary of the legal
basis of the complaint sufficient to present the problem clearly".
Consequently, the Appellate Body found that the panel erred under Article
6.2 of the DSU in making findings regarding claims allegedly identified
in Section III of the complainants' panel requests. "We therefore
declare moot and of no legal effect the Panel's findings in paragraphs
8.4(a)-(d), 8.11(a)-(e), and 8.18(a)-(d) in respect of claims concerning
export quota administration and allocation; paragraphs 8.5(a)-(b), 8.12(a)-(b),
and 8.19(a)-(b) in respect of claims concerning export licensing requirements;
paragraphs 8.6(a)-(b), 8.13(a)-(b), and 8.20(a)-(b) in respect of claims
concerning a minimum export price requirement; and paragraphs
8.4(e) and 8.18(e) of the Panel Reports in respect of claims concerning
fees and formalities in connection with exportation."
On China's appeal regarding the panel's recommendations resting on the
proposition that the panel made recommendations on a "series of
measures" that extends into the future and includes the 2010 measures,
the Appellate Body said it does not consider that the panel erred in
recommending that the DSB request China "to bring its measures
into conformity with its WTO obligations such that the 'series of measures'
does not operate to bring about a WTO-inconsistent result".
"Nor do we consider the Panel to have made a recommendation on
a matter that was not before it. Accordingly, we do not agree with China
that the Panel acted inconsistently with its obligations under Article
7.1 of the DSU. In sum, therefore, we find that the Panel did not err
in recommending, in paragraphs 8.8, 8.15, and 8.22 of the Panel Reports,
that China bring its export duty and export quota measures into conformity
with its WTO obligations such that the ‘series of measures' do not operate
to bring about a WTO-inconsistent result."
The Appellate Body went on to address China's claim that Article XX
of the GATT 1994 is available as a defence to China in relation to export
duties found to be inconsistent with China's obligations under Paragraph
11.3 of China's Accession Protocol.
According to the Appellate Body report, for the panel, the language
in Paragraph 11.3, together with the "omission of general references
to the WTO Agreement or to the GATT 1994", suggest that WTO Members
did not intend to incorporate the defences available under Article XX
into Paragraph 11.3. The panel also found no support in the provisions
of China's Accession Working Party Report for the proposition that China
could invoke Article XX of the GATT 1994 to justify violations of Paragraph
11.3 of China's Accession Protocol.
Regarding the context provided by the provisions of the other WTO agreements,
the panel noted that there are no general exceptions in the WTO Agreement,
and that each of the covered agreements provides its own "set of
exceptions or flexibilities" applicable to the specific commitments
in each agreement. Referring to Article XX of the GATT 1994, the panel
considered that the reference to "this Agreement" a priori
suggests that the exceptions therein relate only to the GATT 1994. Noting
that, in several instances, provisions of Article XX have been incorporated
into other WTO agreements by cross-reference, the panel observed that,
since no such language is found in Paragraph 11.3 of China's Accession
Protocol, Article XX could not be intended to apply to Paragraph 11.3.
The panel concluded that the defences of Article XX of the GATT 1994
are not available to justify violations of the obligations contained
in Paragraph 11.3 of China's Accession Protocol.
According to the Appellate Body, China alleges various errors in the
panel's analysis and requests the Appellate Body to reverse the panel's
finding that China may not seek to justify export duties pursuant to
Article XX of the GATT 1994 that were found to be inconsistent with
its commitment to eliminate export duties under Paragraph 11.3 of its
Accession Protocol. China further requests the Appellate Body to find
that Article XX is available to China to justify such measures. China
contends, in particular, that the panel erred in determining that there
is "no textual basis" in China's Accession Protocol for it
to invoke Article XX in defence of a claim under Paragraph 11.3. In
China's view, the panel's finding that Paragraph 11.3 excludes recourse
to Article XX of the GATT 1994 was based on the panel's erroneous assumption
that the absence of language expressly granting the right to regulate
trade in a manner consistent with Article XX means that China and other
Members intended to deprive China of that right. Moreover, China argues
that WTO Members have an "inherent right" to regulate trade,
"including using export duties to promote non-trade interests".
(Paragraph 11.3 of China's Accession Protocol provides that: China shall
eliminate all taxes and charges applied to exports unless specifically
provided for in Annex 6 of this Protocol or applied in conformity with
the provisions of Article VIII of the GATT 1994.)
The Appellate Body noted that except for yellow phosphorus, none of
the raw materials at issue in this dispute is listed in Annex 6 of China's
Accession Protocol. It said that Paragraph 11.3 requires China to eliminate
taxes and charges applied to exports unless such taxes and charges are
"specifically provided for in Annex 6" of China's Accession
Protocol. Annex 6 in turn "specifically provides for" maximum
export duty levels on 84 listed products. The Note to Annex 6 clarifies
that the maximum rates set out in Annex 6 "will not be exceeded"
and that China will "not increase the presently applied rates,
except under exceptional circumstances". The Note therefore indicates
that China may increase the "presently applied rates" on the
84 products listed in Annex 6 to levels that remain within the maximum
levels listed in the Annex.
"We find it difficult to see how this language could be read as
indicating that China can have recourse to the provisions of Article
XX of the GATT 1994 in order to justify imposition of export duties
on products that are not listed in Annex 6 or the imposition of export
duties on listed products in excess of the maximum levels set forth
in Annex 6," said the Appellate Body. It further noted that the
third sentence of the Note to Annex 6 refers to the "exceptional
circumstances" described in the second sentence of that provision,
stating that, "[i]f such circumstances occurred, China would consult
with affected members prior to increasing applied tariffs with a view
to finding a mutually acceptable solution."
"This language further supports our view that the ‘exceptional
circumstances' referred to in the Note to Annex 6 are ones that, if
shown to exist would allow China to increase applied tariffs up to the
maximum tariff levels set out in Annex 6 for the products listed. We
therefore see nothing in the Note to Annex 6 suggesting that China could
invoke Article XX of the GATT 1994 to justify the imposition of export
duties that China had committed to eliminate under Paragraph 11.3 of
China's Accession Protocol."
China also recalls that, before the panel, the European Union claimed
that China violated its obligations under Annex 6 by failing to consult
with affected Members prior to the imposition of export duties on particular
forms of bauxite, coke, fluorspar, magnesium, manganese, silicon metal,
and zinc, none of which are among the 84 products listed in Annex 6.
The Appellate Body saw nothing in the Note to Annex 6 that would allow
China to: (i) impose export duties on products not listed in Annex 6;
or (ii) increase the applied export duties on the 84 products listed
in Annex 6, in a situation where "exceptional circumstances"
have not "occurred". It therefore disagreed with the panel
to the extent it found that China's failure to consult with other WTO
affected Members prior to the imposition of export duties on raw materials
not listed in Annex 6 is inconsistent with its obligations under Annex
6. The imposition of these export duties is inconsistent with Paragraph
11.3 of China's Accession Protocol, and because the raw materials at
issue are not listed in Annex 6, the consultation requirements contained
in the Note to Annex 6 are not applicable.
The Appellate Body turned next to examine the relevance of the reference
to Article VIII of the GATT 1994 in Paragraph 11.3 of China's Accession
Protocol. China asserts that the reference to Article VIII in Paragraph
11.3 confirms the availability of Article XX of the GATT 1994.
Article VIII provides, in relevant part, as follows: All fees and charges
of whatever character (other than import and export duties and other
than taxes within the purview of Article III) imposed 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.
In the Appellate Body's view, as export duties are outside the scope
of Article VIII, the question of conformity or consistency with this
Article does not arise. Consequently, the fact that Article XX may be
invoked to justify those fees and charges regulated under Article VIII
does not mean that it can also be invoked to justify export duties,
which are not regulated under Article VIII.
As noted by the panel, "the language in Paragraph 11.3 expressly
refers to Article VIII, but leaves out reference to other provisions
of the GATT 1994, such as Article XX." Moreover, there is no language
in Paragraph 11.3 similar to that found in Paragraph 5.1 of China's
Accession Protocol - "[w]ithout prejudice to China's right to regulate
trade in a manner consistent with the WTO Agreement" - which was
interpreted by the Appellate Body in China - Publications and Audiovisual
Products.
"In our view, this suggests that China may not have recourse to
Article XX to justify a breach of its commitment to eliminate export
duties under Paragraph 11.3 of China's Accession Protocol."
Having examined the text of Paragraph 11.3 of China's Accession Protocol,
the Appellate Body turned to examine the context of that provision.
It noted that Paragraph 11.1 of China's Accession Protocol provides
that "China shall ensure that customs fees or charges applied or
administered by national or sub-national authorities, shall be in conformity
with the GATT 1994". Paragraph 11.2 further stipulates that "China
shall ensure that internal taxes and charges, including value-added
taxes, applied or administered by national or sub-national authorities
shall be in conformity with the GATT 1994." Both of these provisions
contain the obligation to ensure that certain fees, taxes or charges
are "in conformity with the GATT 1994".
This is not the case for Paragraph 11.3, said the Appellate Body. It
also noted that Paragraph 11.1 refers to "customs fees and or charges"
in general and Paragraph 11.2 refers in turn to "internal taxes
and charges", while Paragraph 11.3 refers specifically to the elimination
of "taxes and charges applied to exports".
"Given the references to the GATT 1994 in Paragraphs 11.1 and 11.2,
and the differences in the subject matter and nature of the obligations
covered by these provisions, we consider that the absence of a reference
to the GATT 1994 in Paragraph 11.3 further supports our interpretation
that China may not have recourse to Article XX to justify a breach of
its commitment to eliminate export duties under Paragraph 11.3. Moreover,
as China's obligation to eliminate export duties arises exclusively
from China's Accession Protocol, and not from the GATT 1994, we consider
it reasonable to assume that, had there been a common intention to provide
access to Article XX of the GATT 1994 in this respect, language to that
effect would have been included in Paragraph 11.3 or elsewhere in China's
Accession Protocol."
Following some further analysis, the Appellate Body concluded that it
had, in accordance with Article 3.2 of the DSU, applied the customary
rules of interpretation of public international law as codified in the
Vienna Convention in a holistic manner to ascertain whether China may
have recourse to the provisions of Article XX of the GATT 1994 to justify
export duties that are found to be inconsistent with Paragraph 11.3
of China's Accession Protocol.
"As we have found, a proper interpretation of Paragraph 11.3 of
China's Accession Protocol does not make available to China the exceptions
under Article XX of the GATT 1994. Consequently, we find that the Panel
did not err, in paragraph 7.159 of the Panel Reports, in finding that
‘there is no basis in China's Accession Protocol to allow the application
of Article XX of the GATT 1994 to China's obligations in Paragraph 11.3
of the Accession Protocol.' We therefore uphold the Panel's conclusion,
in paragraphs 8.2(b), 8.9(b), and 8.16(b) of the Panel Reports, that
China may not seek to justify the application of export duties to certain
forms of fluorspar pursuant to Article XX(g) of the GATT 1994 and the
Panel's conclusion, in paragraphs 8.2(c), 8.9(c), and 8.16(c) of the
Panel Reports, that China may not seek to justify the application of
export duties to certain forms of magnesium, manganese and zinc pursuant
to Article XX(b) of the GATT 1994."
On China's appeal of the panel's finding that China had not demonstrated
that its export quota on refractory-grade bauxite was "temporarily
applied", within the meaning of Article XI: 2(a) of the GATT 1994,
to either prevent or relieve a "critical shortage", the Appellate
Body upheld the panel's conclusion that China did not demonstrate that
its export quota on refractory-grade bauxite was "temporarily applied",
within the meaning of Article XI: 2(a) of the GATT 1994, to either prevent
or relieve a "critical shortage", and it dismissed China's
allegation that the panel acted inconsistently with its duty to conduct
an objective assessment of the matter as required by Article 11 of the
DSU.
The Appellate Body also addressed China's allegation that the panel
erred in interpreting the phrase "made effective in conjunction
with" in Article XX(g) to mean that restrictions on domestic production
or consumption must "be applied jointly with the challenged export
restrictions", and that "the purpose of those export restrictions
must be to ensure the effectiveness of those domestic restrictions".
The Appellate Body said that it saw nothing in the text of Article XX(g)
to suggest that, in addition to being "made effective in conjunction
with restrictions on domestic production or consumption", a trade
restriction must be aimed at ensuring the effectiveness of domestic
restrictions, as the panel found.
Instead, it had found above that Article XX(g) permits trade measures
relating to the conservation of exhaustible natural resources if such
trade measures work together with restrictions on domestic production
or consumption, which operate so as to conserve an exhaustible natural
resource.
"Based on the foregoing, we find that the Panel erred in interpreting
the phrase ‘made effective in conjunction with' in Article XX(g) of
the GATT 1994 to require a separate showing that the purpose of the
challenged measure must be to make effective restrictions on domestic
production or consumption. Accordingly, we reverse this interpretation
by the Panel in paragraph 7.397 of the Panel Reports."
The Appellate Body went on to issue three separate findings and conclusions,
one each for the three complainants. +
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