WTO Dispute Settlement Mechanism(2)/刘成伟

Chapter Ⅱ
Causes of Action before the DSB:
Art. XXIII of the GATT 1994
OUTLINE
Section One    Right to Pursue a Proceeding under the WTO
I    The Concept of Nullification or Impairment   
II   The Standing Issue before the DSB
III   Lack of Possible Compensation
IV   Summary and Conclusions
Section Two    Causes of Action before the DSB in General
I    The Presumption in Violation Complaints
（i）Introduction
（ii）Practice under the GATT Jurisprudence
（iii）Rulings under the WTO Jurisprudence
（iv）A Summary
II   An Overview of Non-Violation Complaints
（i）Related Texts
（ii）Relationship between Arts. XXIII:1(a) and XXIII:1(b)
（iii）Underlying Purpose of Art. XXIII:1(b)
（iv）Non-violation Claims in the Context of Principles of Customary International Law
（v）Appropriate Attitudes as to Non-Violation Remedy
III  Presupposed Situation Complaints
Section Three   Establishment of Non-violation Complaints
I   Introduction
II  Application of a Measure: Scope of Measures Covered by Art. XXIII:1(b)
（i）Measures short of Legally Binding Obligations
（ii）Measures Falling under Other Provisions of the GATT 1994
（iii）Measures Concerning the Protection of Human Health
（iv）Measures Continuingly Applied
III  Existence of a Benefit: Protection of Legitimate Expectations
（i）Protection of Legitimate Expectations（PLE）
（ii）Non-foreseeability of Measures at Issue
（iii）Benefits in the Negotiations
（iv）Benefits under Successive Rounds
IV  Nullification or Impairment of Benefit: Causality
V   Summary and Conclusions
Section One
Right to Pursue a Proceeding under the WTO
I  The Concept of Nullification or Impairment   
Nullification or impairment is a most important concept developed in previous GATT dispute settlement system. It is incorporated into the GATT 1994 by the so-called incorporation clause (paragraph 1 of the GATT 1994) and goes on to operate as an important feature of the DSU under the WTO. Dispute settlement mechanism under the WTO continues to revolve around the concept of nullification or impairment. Art. 3.1 of the DSU requires Members to “affirm their adherence to the principles for the management of disputes heretofore applied under Articles XXII and XXIII of GATT 1947”.
According to Art. XXIII:1 of the GATT, a Member may have recourse to dispute settlement under the WTO when it considers that:
“... any benefit accruing to it directly or indirectly under this Agreement is being nullified or impaired or that the attainment of any objective of the Agreement is being impeded as the result of
（a）the failure of another contracting party [Member of the WTO] to carry out its obligations under this Agreement, or
（b）the application by another contracting party [Member of the WTO] of any measure, whether or not it conflicts with the provisions of this Agreement, or
（c）the existence of any other situation.”
As it implies, unlike that in many other dispute settlement procedures generally designed to resolve differences on the interpretation or application of the provisions under most international treaties, international responsibility in WTO law is not assessed only in terms of compliance with the specific provisions of the relevant agreements. Rather, it is the idea of nullification or impairment that determines whether rights to complain arise under the covered agreement.
Art. XXIII:1 suggests that legal considerations need not be the sole focus of a complaint under the DSU, and that the DSU procedures can be invoked for the settlement of any trade dispute arising from any governmental measure, whether legal or illegal, and that arising from any situation, whether attributable to a government or not. A member demonstrating that a measure or any other situation nullified or impaired their benefits accruing to the covered agreements is given redress even if there was no failure to carry out the obligations. What’s more, a benefit doesn’t need to accrue directly to the party; an indirect benefit is protected as well. It seems that the aim of Art. XXIII:1 is to ensure that the negotiated balance of concessions is maintained even in situations that cannot be foreseen and that can consequently not be defined.
In practice, it is demonstrated that panels and the Appellate Body have broadly defined nullification or impairment of a benefit. The equation of “nullification or impairment” with “upsetting the competitive relationship” established between members has been consistently used. However, as a result of the divergence between the text of the provisions and the practice under it, the actual scope and function of the concept of nullification or impairment is often misunderstood. It is helpful for the clarification of this concept to go further into the standing issue before the DSB.
II  The Standing Issue before the DSB
The term “standing” has not been explicitly embodied in the text of the DSU or in any other covered agreements. It is used here for the purpose of examining whether a party must demonstrate the existence of some interest concerned, as usually required in domestic judicial process, in launching a complaint before the DSB.
In EC-Bananas (DS27) 1, the Appellate Body does not accept that the need for a “legal interest” is implied in the DSU or in any other provision of the WTO Agreement when the EC queries the right of US to bring claims under the GATT 1994. During the appellate review, the Appellate Body agree with the Panel that, “neither Art. 3.3 nor 3.7 of the DSU nor any other provision of the DSU contains any explicit requirement that a Member must have a ‘legal interest’ as a prerequisite for requesting a panel”. As found by the Appellate Body, it is true that under Art. 4.11 of the DSU, a Member wishing to join in multiple consultations must have “a substantial trade interest”, and that under Art. 10.2 of the DSU, a third party must have “a substantial interest” in the matter before a panel. But neither of these provisions in the DSU, nor anything else in the WTO Agreement, provides a basis for asserting that parties to the dispute have to meet any similar standard.
The participants in this appeal also refer to certain judgments of the International Court of Justice and the Permanent Court of International Justice relating to whether there is a requirement, in international law, of a legal interest to bring a case. The Appellate Body can not read any of these judgments as establishing a general rule that in all international litigation a complaining party must have a “legal interest” in order to bring a case. Nor do they think that these judgments deny the need to consider the question of standing under the dispute settlement provisions of any multilateral treaty, by referring to the terms of that treaty. This leads the Appellate Body to examine Art. XXIII of the GATT 1994, which is the dispute settlement provision for disputes brought pursuant to GATT 1994.
After referring to the chapeau of Art. XXIII:1, the Appellate Body notes that of special importance for determining the issue of standing, are the words “f any Member should consider ...”. They think that this provision in Art. XXIII is consistent with Art. 3.7 of the DSU, which states that “efore bringing a case, a Member shall exercise its judgment as to whether action under these procedures would be fruitful”. Accordingly, the Appellate Body finds that “a Member has broad discretion in deciding whether to bring a case against another Member under the DSU. The language of Article XXIII:1 of the GATT 1994 and of Article 3.7 of the DSU suggest, furthermore, that a Member is expected to be largely self-regulating in deciding whether any such action would be ‘fruitful’”.
While in Korea-Dairy Products (DS98), regarding Korea's reference to the lack of economic interest of the EC, the Panel finds that under the DSU there is no requirement that parties must have an economic interest. Recalling some concerned findings in EC-Bananas, the Panel rules that they can’t read in the DSU any requirement for an “economic interest”. 2
III  Lack of Possible Compensation
As noted above, there is no requirement under the WTO for a “legal interest” or an “economic interest” for Members to invoke the DSU procedures for the settlement of any trade dispute. However, is the right to pursue a proceeding denied by the lack of any possible compensation?
In EC-Bananas (DS27)，EC resorts to arbitration under Art. 22.6 of the DSU. And the Arbitrators note that, inter alia, EC contends that especially with respect to trade in goods the nullification or impairment suffered by the United States is negligible or nil since there is no actual trade and little prospect for potential trade in bananas between the United States and the EC. In this respect, the Arbitrators recall the EC's argument in the original dispute that even if a Member not suffering nullification or impairment of WTO benefits in respect of bananas were allowed to raise a claim under the GATT, that Member would not have had an effective remedy under Art. 22 of the DSU. The Arbitrators also note the complainants' argument in the original dispute that Art. 3.8 of the DSU presupposes a finding of infringement prior to a consideration of the nullification or impairment issue, suggesting that even if no compensation were due, an infringement finding could be made.
The Arbitrators agree the complainants’ argument, and rule that, Art. XXIII:1 of the GATT 1994 and Art. 3.3 of the DSU do not establish a procedural requirement. As found by the Arbitrators, these provisions concern the initiation of a WTO dispute settlement proceeding where a Member considers benefits directly or indirectly accruing to it were nullified or impaired. Such an initial decision on whether or not to raise a complaint is necessarily the result of a subjective and strategic consideration from the individual perspective of a Member. However, a decision on whether the assertion of nullification or impairment by an individual Member will be warranted and justified in light of WTO law is a different decision, taken by a panel or the Appellate Body from the objective benchmark of the agreements covered by the WTO. Furthermore, the Arbitrators rule that the review of the level of nullification or impairment by Arbitrators from the objective benchmark foreseen by Art. 22 of the DSU is a separate process, independent from the finding of infringements of WTO rules by a panel or the Appellate Body. 3
IV  Summary and Conclusions
According to Art. XXIII:1 of the GATT 1994, if a WTO member means to get redress by invoking the DSU procedures for the settlement of any trade dispute arising from any governmental measure or any situation, it must demonstrate that such measures or situations resulted in a nullification or impairment of any benefits accruing to it directly or indirectly under the covered agreements. As noted above, the concept of nullification or impairment is viewed as a change upsetting the competitive relationship between members. And it is demonstrated by the WTO practice that the need for a “legal interest” or an “economic interest” cannot be implied in the DSU or in any other provisions of the WTO Agreement. A Member's potential interests in trade in goods or services and its interest in a determination of rights and obligations under the WTO Agreements are each sufficient to establish a right to pursue a WTO dispute settlement proceeding.
In fact, a crucial point is the balance of economic relations based on particular negotiated results in terms of rights and obligations rather than the actual trade flows. Over the last decades of GATT/WTO dispute settlement practice, it has become a truism of GATT/WTO jurisprudence that, lack of actual trade cannot be determinative for a finding that no violation of a provision occurred because it cannot be excluded that the absence of trade is the result of an illegal measure. In this respect, as next section will show, related closely to the standing issue, a presumption has been explicitly provided for in the Art. 3.8 of the DSU, pursuant to which nullification or impairment is presumed once a violation is established.
In short, a Member has broad discretion in deciding whether to bring a case against another Member under the DSU, and is expected to be largely self-regulating in deciding whether any such action would be fruitful. However, a Member's right to pursue a proceeding does not automatically imply that it is entitled to obtain any remedies available under the WTO.
【NOTE】:
1.See, in detail, WT/DS27/AB/R/132-135.
2.See, in detail, WT/DS98/R/7.13-7.14.
3.See, in detail, WT/DS27/ARB/6.9.
Section Two
Causes of Action before the DSB in General
Indeed, the concept of nullification or impairment under Art. XXIII:1 provides three causes of action before the DSB. Art. XXIII:1(a) involves so-called violation complaints arising from an alleged failure by a Member to carry out its obligations. In contrast, Art. XXIII:1(b) involves non-violation complaints, which do not require an allegation of a violation of an obligation. And Art. XXIII:1(c) covers what are commonly called situation complaints. However, there is no adequately specific test for any kind of the three causes of action in the DSU. Cases under the GATT/WTO imply that there are various applicable terms or essentials for the establishment of various complaints. And in this section generally, we will take an overview on the three causes of action.
I  The Presumption in Violation Complaints
（i）Introduction
During decades of experience, Art. XXIII:1(a) has formed the basis of almost all disputes under the GATT 1947 and the WTO Agreement. Dispute settlement under the GATT/WTO has always been dominated by violation complaints.
The concept of so-called violation complaints, developing from the provision of XXIII:1(a), refers to those complaints brought before the DSB by a WTO member when it thinks that any benefit accruing to it directly or indirectly under the covered agreement is being nullified or impaired as a result of the failure of another member of the WTO to carry out its obligations under that agreement. In 1960, the CONTRACTING PARTIES decided that a GATT-inconsistent measure was presumed to cause nullification or impairment and that it was up to the party complained against to demonstrate that this was not the case.1 This principle was assimilated in the dispute settlement procedures adopted at the end of the Tokyo Round, and is now reflected in Art. 3.8 of the DSU, which reads:
“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 means that there is normally a presumption that a breach of the rules has an adverse impact on other Members parties to that covered agreement, and in such cases, it shall be up to the Member against whom the complaint has been brought to rebut the charge.”
From the provision above, we note that in violation complaints, there is an essential concept, i.e. a “presumption” which means that, the violation of obligations constitutes a prima facie case of nullification or impairment. Art. 3.8 of the DSU suggests that once an infringement or violation of the obligations assumed under a covered agreement has been demonstrated, a presumption that the violation causes nullification or impairment is established. At the same time, this provision seems to suggest that the presumption of nullification or impairment is rebuttable. However, it is not the case and as to be shown below, there has been no case of a successful rebuttal of the presumption in the history of the GATT/WTO.
(ii) Practice under the GATT Jurisprudence
In an action concerning import quotas on leather, Japan argued that since the quotas were not fully utilized, they did not restrain trade, and consequently had not caused a nullification or impairment of benefits. That panel rejected the argument on the grounds that: “The existence of quantitative restrictions should be presumed to cause nullification or impairment not only because of any effect it had on the volume of trade but also for other reasons, e.g., it would lead to increased transaction costs and would create uncertainties which could affect investment plans.”2 This ruling at least indicates that a demonstration that no adverse trade impact has as yet occurred is insufficient to rebut the presumption.
And in 1987, a panel on the US-Superfund summarized the legal situation regarding the presumption of nullification or impairment as follows: “The Panel examined how the CONTRATING PARTIES have reacted in previous cases to claims that a measure inconsistent with the General Agreement had no adverse impact and therefore did not nullify or impair benefits accruing under the General Agreement to the contracting party that had brought the complaint. The Panel noted that such claims had been made in a number of cases but that there was no case in the history of the GATT in which a contracting party had successfully rebutted the presumption […]. The Panel concluded […] that, while the CONTRACTING PARTIES had not explicitly decided whether the presumption that illegal measures cause nullification or impairment could be rebutted, the presumption had in practice operated as an irrefutable presumption.”3
As noted above, panels under the GATT cast doubt on the idea that the presumption of nullification or impairment might be rebuttable on the ground that the failure to observe the obligation had no impact on trade flows. Because once the benefits accruing under the basic GATT provisions governing import controls have been defined in terms of conditions of competition rather than trade flows, the idea that a measure might be inconsistent with a provision of the GATT prescribing certain conditions of competition but nevertheless not impair benefits accruing under it for lack of any trade effects is no longer tenable.
(iii) Rulings under the WTO Jurisprudence
In practice, various panels or the standing Appellate Body in most cases make a presumption of nullification or impairment under the WTO directly from the establishment of a violation. For example, in EC-Computer Equipment (DS62/DS67/DS68), the Panel rules in its report that, “n view of our finding that the tariff treatment of LAN equipment by customs authorities in the European Communities violated Article II:1 of GATT 1994, we find that it is not necessary to examine this additional claim with respect to LAN equipment, except to note that the infringement of GATT rules is considered prima facie to constitute a case of nullification or impairment under Article 3.8 of the DSU”.4
And in US-1916 Act (DS136), the Panel rules as: “We have found that the 1916 Act as such violates Article VI:1 and VI:2 of the GATT 1994, as well as Articles 1, 4 and 5.5 of the Anti-dumping Agreement. We also concluded that, by not ensuring the conformity of the 1916 Act with its obligations as provided under the above-mentioned provisions, the United States violates Article XVI:4 of the Agreement Establishing the WTO. Since Article 3.8 of the DSU provides that ‘[I]n 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’ and as the United States has adduced no evidence to the contrary, we conclude that the 1916 Act nullifies or impairs benefits accruing to the European Communities under the WTO Agreement”.5
Nevertheless, some panels and the Appellate Body have also systematically rejected as insufficient the demonstration of an absence of trade impact in some cases. For example, in EC- Bananas (DS27) 6, EC attempts to rebut the presumption of nullification or impairment with respect to the Panel's findings of violations of the GATT 1994 on the basis that US have never exported a single banana to the European Community, and therefore, could not possibly have suffered any trade damage.
The Appellate Body notes firstly that two points had been made that the Panel may well had in mind in reaching its conclusions on nullification or impairment. One is that the United States is a producer of bananas and that a potential export interest by the United States couldn’t be excluded; the other is that the internal market of the United States for bananas could be affected by the EC bananas regime and by its effects on world supplies and world prices of bananas. The Appellate Body decides that these are matters relevant to the question of the standing of the United States under the GATT 1994. They are equally relevant to the question whether the European Communities has rebutted the presumption of nullification or impairment.
To go on with their analysis, the Appellate Body refer to the Panel Report on US-Superfund, to which the Panel in present case referred. In that case, the panel examined whether measures with “only an insignificant effect on the volume of exports do nullify or impair benefits under Article III:2”, and concluded (and in so doing, confirmed the views of previous panels) that: “Article III:2, first sentence, cannot be interpreted to protect expectations on export volumes; it protects expectations on the competitive relationship between imported and domestic products. A change in the competitive relationship contrary to that provision must consequently be regarded ipso facto as a nullification or impairment of benefits accruing under the General Agreement. A demonstration that a measure inconsistent with Article III:2, first sentence, has no or insignificant effects would therefore in the view of the Panel not be a sufficient demonstration that the benefits accruing under that provision had not been nullified or impaired even if such a rebuttal were in principle permitted”. The Appellate Body finds that the reasoning in US-Superfund applies equally in present case. For these reasons, the Appellate Body concludes that they find no legal basis on which to reverse the conclusions of the Panel.
（iv）A Summary
As to the concept of nullification or impairment in violation cases, there is a presumption suggesting that a violation constitute a prima facie case of nullification or impairment pursuant to Art. 3.8 of the DSU. And a prima facie case is where, in the absence of effective refutation by the defending party, a panel is required, as a matter of law, to rule in favor of the complaining party presenting the prima facie case. However, the presumption has in practice operated as an irrefutable presumption.
Over the last decades of GATT/WTO dispute settlement practice, the violation of obligations has been presumed to cause impairment and no contracting party or WTO member has been allowed to rebut successively that presumption. It has become a truism of GATT/WTO jurisprudence that, lack of actual trade cannot be determinative for a finding that no violation of a provision occurred because it cannot be excluded that the absence of trade is the result of an illegal measure. Therefore, in the case of violation complaints, the concept of nullification or impairment has not had any practical impact over the last years because of the existence of such a “presumption”.
Indeed, in a multilateral trade order that prescribes conditions of competition and therefore doesn’t guarantee trade results but trade opportunities or competitive relations between members, a change in the competitive relationship contrary to that provision must consequently be regarded ipso facto as a nullification or impairment of benefits accruing to Members.
II  An Overview of Non-Violation Complaints
（i）Related Texts
The use of different forms of complaints in Art. XXIII:1 suggests that the prohibition to nullify or impair benefits, i.e. favorable conditions of competition as to market access and on the market, cannot be fully secured by compliance with specific treaty obligations. And it is necessary to establish equitable remedies such as non-violation or situation remedies outside of the proper province of legal obligations.
Unique from generally offering the opportunity for parties to a treaty to request consultation and relief from measures undertaken by other parties, such relief in the WTO legal system distinguishes violation and non-violation claims, or legal and non-legal causes of action. Under Art. XXIII:1(b), a Member can bring a non-violation complaint when the negotiated balance of concessions between Members is upset by the application of a measure, whether or not this measure is inconsistent with the provisions of the covered agreement. The existence of a non-violation remedy under Art.XXIII:1(b) of the GATT 1994 requires Members of the WTO to adhere to the principles of the covered agreements, even if there are no rules forbidding the particular action taken. And the non-violation remedy is handled specifically in Art. 26.1 of the DSU which reads:
“1. Non-violation Complaints of the Type Described in Paragraph 1（b）of Article XXIII of GATT 1994
Where the provisions of paragraph 1(b) of Article XXIII of GATT 1994 are applicable to a covered agreement, a panel or the Appellate Body may only make rulings and recommendations where a party to the dispute considers that any benefit accruing to it directly or indirectly under the relevant covered agreement is being nullified or impaired or the attainment of any objective of that Agreement is being impeded as a result of the application by a Member of any measure, whether or not it conflicts with the provisions of that Agreement. Where and to the extent that such party considers and a panel or the Appellate Body determines that a case concerns a measure that does not conflict with the provisions of a covered agreement to which the provisions of paragraph 1(b) of Article XXIII of GATT 1994 are applicable, the procedures in this Understanding shall apply, subject to the following:
(a) the complaining party shall present a detailed justification in support of any complaint relating to a measure which does not conflict with the relevant covered agreement;
(b) where a measure has been found to nullify or impair benefits under, or impede the attainment of objectives, of the relevant covered agreement without violation thereof, there is no obligation to withdraw the measure. However, in such cases, the panel or the Appellate Body shall recommend that the Member concerned make a mutually satisfactory adjustment;
(c) notwithstanding the provisions of Article 21, the arbitration provided for in paragraph 3 of Article 21, upon request of either party, may include a determination of the level of benefits which have been nullified or impaired, and may also suggest ways and means of reaching a mutually satisfactory adjustment; such suggestions shall not be binding upon the parties to the dispute;
(d) notwithstanding the provisions of paragraph 1 of Article 22, compensation may be part of a mutually satisfactory adjustment as final settlement of the dispute.”
Although Art. XXIII:1(b) of the GATT 1994 remains as it was, Art. 26.1 of the DSU codifies several aspects of the case law developed under the GATT jurisprudence. For instance, Art. 26.1(a) clarifies the principle set out in case law, of the need to accompany a non-violation complaint with specific evidence of harm. Also, the Article concretizes the technically non-violation nature of the case. Art. 26.1(b) sets forth special rules both pertaining to the reversal of burden of proof and justification, and to remedies. These deviate from the addressing of these issues in violation complaints in Arts. 3.8 and 22 of the DSU. Foremost of those deviations is that non-violation findings do not oblige the Member concerned to withdraw a measure not inconsistent with the agreements, instead the obligation is limited to provide mutually satisfactory adjustments, usually by means of compensation. Furthermore, Arts. 26.1(c) and 26.1(d) set forth special rules pertaining to the arbitration and compensation in non-violation complaints.
    （ii）Relationship between Arts. XXIII:1(a) and XXIII:1(b)
In EC –Asbestos (DS135), it is the first occasion for the Appellate Body to examine Art. XXIII:1(b) of the GATT 1994. For this reason, the Appellate Body think there it necessary for them to make certain preliminary observations about the relationship between Arts. XXIII:1(a) and XXIII:1(b) of the GATT 1994.
In this respect, the Appellate Body rules that, “Article XXIII:1(a) sets forth a cause of action for a claim that a Member has failed to carry out one or more of its obligations under the GATT 1994. A claim under Article XXIII:1(a), therefore, lies when a Member is alleged to have acted inconsistently with a provision of the GATT 1994. Article XXIII:1(b) sets forth a separate cause of action for a claim that, through the application of a measure, a Member has ‘nullified or impaired’ ‘benefits’ accruing to another Member, ‘whether or not that measure conflicts with the provisions’ of the GATT 1994. Thus, it is not necessary, under Article XXIII:1(b), to establish that the measure involved is inconsistent with, or violates, a provision of the GATT 1994. Cases under Article XXIII:1(b) are, for this reason, sometimes described as ‘non-violation’ cases, though, the word ‘Non-violation’ does not appear in this provision.”7
（iii）Underlying Purpose of Art. XXIII:1(b)
Non-violation complaints are rooted in the GATT's origins as an agreement intended to protect the reciprocal tariff concessions negotiated among the contracting parties under Art. II of the GATT 1947. In the absence of substantive legal rules in many areas relating to international trade, the non-violation provision of Art. XXIII:1(b) was aimed at preventing contracting parties from using non-tariff barriers or other policy measures to negate the benefits of negotiated tariff concessions.
The Panel in Japan-Film (DS44) 8 observes that the underlying purpose of Art. XXIII:1(b) was cogently explained by the panel on EEC-Oilseeds, which stated: “The idea underlying [the provisions of Article XXIII:1(b)] is that the improved competitive opportunities that can legitimately be expected from a tariff concession can be frustrated not only by measures proscribed by the General Agreement but also by measures consistent with that Agreement. In order to encourage contracting parties to make tariff concessions they must therefore be given a right of redress when a reciprocal concession is impaired by another contracting party as a result of the application of any measure, whether or not it conflicts with the General Agreement. [. . .] The Panel [on EEC - Oilseeds] considered that the main value of a tariff concession is that it provides an assurance of better market access through improved price competition. Contracting parties negotiate tariff concessions primarily to obtain that advantage. They must therefore be assumed to base their tariff negotiations on the expectation that the price effect of the tariff concessions will not be systematically offset. If no right of redress were given to them in such a case they would be reluctant to make tariff concessions and the General Agreement would no longer be useful as a legal framework for incorporating the results of trade negotiations.”
Clearly, the safeguarding of the process and the results of negotiating reciprocal tariff concessions under Article II of the GATT is fundamental to the balance of rights and obligations to which all WTO Members subscribed. The availability of calling for a dispute settlement procedure for non-violations is a device meant to ensure the integrity of the GATT/WTO system in the face of ever more complex methods of circumventing explicit tariff bindings and the prohibitions on non-tariff trade restraint instruments. A peaceful society, domestic or international, relies on cooperation, fairness and mutual trust. Thus, such reliance must not be jeopardized by an isolated application of strict law. As is confirmed by a review below on the context of non-violation remedy.
（iv）Non-violation Claims in the Context of Principles of Customary International Law
With regard to this issue, the Panel in Korea-Government Procurement (DS163) rules as follows:9
    “In our view, the non-violation remedy as it has developed in GATT/WTO jurisprudence should not be viewed in isolation from general principles of customary international law. As noted above, the basic premise is that Members should not take actions, even those consistent with the letter of the treaty, which might serve to undermine the reasonable expectations of negotiating partners. This has traditionally arisen in the context of actions which might undermine the value of negotiated tariff concessions. In our view, this is a further development of the principle of pacta sunt servanda in the context of Article XXIII:1(b) of the GATT 1947 and disputes that arose thereunder, and subsequently in the WTO Agreements, particularly in Article 26 of the DSU. The principle of pacta sunt servanda is expressed in Article 26 of the Vienna Convention in the following manner: ‘Every treaty in force is binding upon the parties to it and must be performed by them in good faith.’
It seems clear that good faith performance has been agreed by the WTO Members to include subsequent actions which might nullify or impair the benefits reasonably expected to accrue to other parties to the negotiations in question. The consistency of such an interpretation with the general principles of customary international law is confirmed by reference to the negotiating history of the Vienna Convention. According to the Report of the International Law Commission to the General Assembly, this issue was considered by the members negotiating the Convention in the following manner: ‘Some members felt that there would be advantage in also stating that a party must abstain from acts calculated to frustrate the object and purpose of the treaty. The Commission, however, considered that this was clearly implicit in the obligation to perform the treaty in good faith and preferred to state the pacta sunt servanda rule in as simple a form as possible.’
The non-violation doctrine goes further than just respect for the object and purpose of the treaty as expressed in its terminology. One must respect actual provisions (i.e., concessions) as far as their material effect on competitive opportunities is concerned. It is an extension of the good faith requirement in this sense.
We take note that Article 3.2 of the DSU requires that we seek within the context of a particular dispute to clarify the existing provisions of the WTO agreements in accordance with customary rules of interpretation of public international law. However, the relationship of the WTO Agreements to customary international law is broader than this. Customary international law applies generally to the economic relations between the WTO Members. Such international law applies to the extent that the WTO treaty agreements do not ‘contract out’ from it. To put it another way, to the extent there is no conflict or inconsistency, or an expression in a covered WTO agreement that implies differently, we are of the view that the customary rules of international law apply to the WTO treaties and to the process of treaty formation under the WTO.
As Korea has argued, non-violation is an exceptional concept within the WTO dispute settlement system. […] [As stated by the panel in Japan – Film, the non-violation nullification or impairment remedy should be approached with caution and treated as an exceptional concept.] Despite this caution, however, the panel in Japan - Film was of the view that the non-violation remedy had an important role - that of protecting the reasonable expectations of competitive opportunities through negotiated concessions.
In our view, these observations by previous panels are entirely in line with the concept of pacta sunt servanda. The vast majority of actions taken by Members which are consistent with the letter of their treaty obligations will also be consistent with the spirit. However, upon occasion, it may be the case that some actions, while permissible under one set of rules (e.g., the Agreement on Subsidies and Countervailing Measures is a commonly referenced example of rules in this regard), are not consistent with the spirit of other commitments such as those in negotiated Schedules. That is, such actions deny the competitive opportunities which are the reasonably expected effect of such commitments. […]”
（v）Appropriate Attitudes as to Non-violation Remedy
On the one hand, although the non-violation remedy is an important and accepted tool of GATT/WTO dispute settlement and has been “on the books” for more than 50 years, there have only been eleven cases, among which there is only one case is reviewed by the Appellate Body, in which panels or working parties have substantively considered Article XXIII:1(b) claims by the end of 2002. This suggests that both the GATT and the WTO have approached this remedy with caution and, indeed, have treated it as an exceptional instrument of dispute settlement. In fact, in this regard the two parties in many such cases have also confirmed that the non-violation nullification or impairment remedy should be approached with caution and be treated as an exceptional concept. One panel explained that, “[t]he reason for this caution is straightforward. Members negotiate the rules that they agree to follow and only exceptionally would expect to be challenged for actions not in contravention of those rules”.10
However, the Panel in Japan-Film (DS44) observes that, “[w]hile we consider that the Non-violation remedy should be approached with caution and should remain an exceptional remedy, each case should be examined on its own merits, bearing in mind the above-mentioned need to safeguard the process of negotiating reciprocal tariff concessions. Our role as a panel charged with examining claims under Article XXIII:1(b) is, therefore, to make an objective assessment of whether, in light of all the relevant facts and circumstances in the matter before us, particular measures taken by Japan have nullified or impaired benefits accruing to the United States within the meaning of Article XXIII:1(b)”.11 And in next section an insight is taken into those common elements that have been reviewed by the panels or the Appellate Body charged with examining claims under Art. XXIII:1(b).
On the other hand, the Non-violation remedy prescribed in Art. XXIII:1(b) has given rise to controversy. While numerous commentators, together with various panels or the Appellate Body, have referred to the non-violation language of Art. XXIII:1(b) as a clause to maintain the balance of interests among members; others characterize the idea of allowing for non-violation complaints as superfluous at best, condemning it as a “useless and dangerous construction”, and many lawyers are reluctant to accept the concept of non-violation as legitimate.
Indeed, one could consider non-violation complaints a necessary ingredient of a system that primarily serves as a forum for negotiations but fear that liberal usage of the provision will result in harassment complaints based more on domestic political concerns than on any true wrong-doing by the respondent member. In fact, past practices of the GATT/WTO develop an equitable branch of good faith doctrine, known as the protection of legitimate expectations（to be scrutinized in next section）, to avoid the abuse of non-violation remedy.
To sum up, “the availability of Article XXIII:1(b) complaints can operate as a moral hazard in the dispute settlement procedures. Panels that are faced with a politically difficult interpretative issue or are internally divided can be tempted to refer the complaining WTO member to its procedural rights under Article XXIII:1(b) rather than confirming its substantive rights. By adopting that approach they spare the party complained against of the opprobrium of illegality, open the door to a negotiated settlement between the parties to the dispute, and accord the complaining party the right to retaliate should no settlement be reached--a solution that can be attractive to a pragmatically minded member of a panel or the Appellate Body seeking to avoid a difficult legal issue”.12
III  Presupposed Situation Complaints
The GATT/WTO have never ruled that the existence of a situation as prescribed in Art. XXIII:1(c) give rise to a nullification or impairment. However, under the procedure set out in the DSU, the existence of such a situation-related dispute between WTO members is presupposed. As is stipulated in Article 26.2 of the DSU as:
“2.Complaints of the Type Described in Paragraph 1(c) of Article XXIII of GATT 1994
Where the provisions of paragraph 1(c) of Article XXIII of GATT 1994 are applicable to a covered agreement, a panel may only make rulings and recommendations where a party considers that any benefit accruing to it directly or indirectly under the relevant covered agreement is being nullified or impaired or the attainment of any objective of that Agreement is being impeded as a result of the existence of any situation other than those to which the provisions of paragraphs 1(a) and 1(b) of Article XXIII of GATT 1994 are applicable. Where and to the extent that such party considers and a panel determines that the matter is covered by this paragraph, the procedures of this Understanding shall apply only up to and including the point in the proceedings where the panel report has been circulated to the Members. The dispute settlement rules and procedures contained in the Decision of 12 April 1989 (BISD 36S/61-67) shall apply to consideration for adoption, and surveillance and implementation of recommendations and rulings. The following shall also apply:
(a)the complaining party shall present a detailed justification in support of any argument made with respect to issues covered under this paragraph;
(b)in cases involving matters covered by this paragraph, if a panel finds that cases also involve dispute settlement matters other than those covered by this paragraph, the panel shall circulate a report to the DSB addressing any such matters and a separate report on matters falling under this paragraph.”
There is no jurisprudence that illuminates the scope of Art. XXIII:1(c). However, two types of situations that could possibly fall under this provision can usefully be distinguished. First, situations of the kind that the drafters had in mind, namely a general depression, high unemployment, collapse of the price of a commodity and other emergencies in international economic relations that cannot be corrected by the action of a particular government; and, second, situations that are within the control of a particular government and therefore capable of being modified by that government. 13
In the first type of situation, Art. XXIII:1(c) has never been used for the purpose its drafters had in mind, namely to permit the Parties or Members to suspend the application of obligations under the GATT/WTO in response to an international economic emergency. In the case of an invocation of Art. XXIII:1(c) for this purpose, there is no complainant or respondent; there is merely a proposal to adjust obligations to respond to a situation that members are unable to prevent. For this reason, matters related to a situation might, according to Art. XXIII:2, be referred to the DSB without prior consultations with another member. The relevant passage states in Art. XXIII:2 that, “f no satisfactory adjustment is effected between the contracting parties concerned within a reasonable time, or if the difficulty is of the type described in paragraph 1(c) of this Article, the matter may be referred to the CONTRACTING PARTIES”.
However, under the procedures evolved under Art. 26.2 of the DSU, the existence of a respondent and prior consultations with that respondent seem to be presupposed. For the three causes of action before the DSB seem to be handled through investigations by members acting jointly. It therefore makes sense to combine the procedures for invocations of all three subparagraphs of Art. XXIII:1. Thus the procedures of the DSU don’t seem to effectively apply to Art. XXIII:1(c) invocations involving emergencies. International economic emergencies of the type the drafters had in mind can therefore not be meaningfully handled through the DSU procedures. The only procedure at members’ disposal would therefore now be the waiver procedure of Article Ⅸ:3 of the WTO Agreement.
As to the second type of situation, the only situations effectively covered by the DSU are those that an identifiable WTO member is capable of correcting. Because Article 26.2 of the DSU stipulates in relevant as: “as a result of the existence of any situation other than those to which the provisions of paragraphs 1(a) and 1(b) of Article XXIII of GATT 1994 are applicable”, if the situation is brought about by the application of a measure by a WTO member, Article XXIII:1(a) or (b) would apply. The recourse to Article XXIII:1(c) is therefore only necessary if the situation is the result of a failure of a WTO member to apply a measure. When examining situation complaints, the panels would therefore have to determine not only whether there was a reasonable expectation that the situation would not occur but also whether there was a reasonable expectation that the government would intervene to correct this situation.
However, there is little common understanding among WTO members as to the circumstances calling for government intervention in the economy and therefore a finding that a reasonable expectation that the respondent would have intervened to prevent such circumstances would be very difficult to make. Nevertheless, the drafters of the WTO Agreement did not abandon the concept of nullification or impairment under such situations other than those to which the provisions of paragraphs 1(a) and 1(b) of Article XXIII of GATT 1994 are applicable.
【NOTE】:
1.See, in detail, Basic Instruments and Selected Documents (“BISD”), 11S/99-100.
2.See, in detail, BISD 31S/113.
3.See, in detail, BISD 34S/156-158.
4.See, WT/DS62/R; WT/DS67/R; WT/DS68/R/8.70.
5.See, WT/DS136/R/6.227.
6.See, in detail, WT/DS27/AB/R/249-254.
7.See, in detail, WT/DS135/AB/R/185.
8.See, in detail, WT/DS44/R/10.35.
9.See, WT/DS163/R/7.93-7.99.
10.See, in detail, WT/DS44/R/10.36.
11.See, WT/DS44/R/10.37.
12.See, Frieder Roessler, ‘The Concept of Nullification and Impairment in the Legal System of the World Trade Organization’, International Trade Law and the GATT/WTO Dispute Settlement System (Petersmann Ed.), Kluwer Law International, London, 1997, p. 133.
13.Supra. Note 12, pp. 139-140.
Section Three
Establishment of Non-Violation Complaints
I  Introduction
As it suggests of the corresponding provisions, the most significant difference between violation complaints and non-violation ones is, while the infringement of an obligation under the covered agreements is considered prima facie to constitute a case of nullification or impairment by establishing a formal presumption, such a presumption does not exist in non-violation cases. With the lack of such a presumption, the establishment of a non-violation complaint puts much more burden of proof on the side of the complainant.
In this regard, the Panel in Japan – Film (DS44) summarizes the common test for non-violation cases in the following manner: “The text of Article XXIII:1(b) establishes three elements that a complaining party must demonstrate in order to make out a cognizable claim under Article XXIII:1(b): (1) application of a measure by a WTO Member; (2) a benefit accruing under the relevant agreement; and (3) nullification or impairment of the benefit as the result of the application of the measure.”1
While in Korea-Government Procurement (DS163) the Panel adds a notion developed in all these non-violation cases that, the nullification or impairment of the benefit as a result of the measure must be contrary to the reasonable expectations of the complaining party at the time of the agreement. Therefore, the Panel there finds that normal non-violation cases involve an examination as to whether there are: (1) an application of a measure by a WTO Member; (2) a benefit accruing under the relevant agreement; and (3) nullification or impairment of the benefit due to the application of the measure that could not have been reasonably expected by the exporting Member.2 In the following paragraphs we will touch respectively on these elements.
II  Application of a Measure: Scope of Measures Covered by Art. XXIII:1(b)
In analyzing the elements of a non-violation claim, a logical starting point is the requirement that there be an application of a measure by a WTO Member. In this regard, in most cases, the issue is not whether or not a measure in fact exists, but rather whether such measures have contributed in a way to the nullification or impairment of benefits accruing to the applicant within the terms of Art. XXIII:1(b).
（i）Measures short of Legally Binding Obligations
As the WTO Agreement is an international agreement, in respect of which only national governments and separate customs territories are directly subject to obligations, it follows by implication that the term measure in Art. XXIII:1(b) and Art. 26.1 of the DSU, as elsewhere in the WTO Agreement, refers only to policies or actions of governments, not those of private parties. But while this “truth” may not be open to question, there have been a number of trade disputes in relation to which panels have been faced with making sometimes difficult judgments as to the extent to which what appear on their face to be private actions may nonetheless be attributable to a government because of some governmental connection to or endorsement of those actions. In this respect, GATT/WTO cases demonstrate that the fact that an action is taken by private parties does not rule out the possibility that it may be deemed to be governmental if there is sufficient government involvement with it. In short, the ordinary meaning of a measure in Art. XXIII:1(b) certainly encompasses a law or regulation enacted by a government according to Art. XVI:4 of the WTO Agreement. But it seems broader than that and may include other governmental actions short of legally enforceable enactments.
In Japan-Film (DS44)3, the parties disagree on whether the measure at issue, referred to as “administrative guidance” by Japan, is a measure in the sense of Art. XXIII:1(b). Japan argues that measures for purposes of Art. XXIII:1(b) must either provide benefits or impose obligations, and that to impose obligations the measure must be a government policy or action which has imposed legally binding obligations or the substantive equivalent. The US position is that the term measure in Art. XXIII:1(b) should not be limited to refer only to legally binding obligations or their substantive equivalent. It argues in favor of a more encompassing definition of the term.
The Panel rules firstly that it is not useful for them to try to place specific instances of administrative guidance into one general category or another.4 They think it is necessary for them, as it was for GATT panels in the past, to examine each alleged “measure” to see whether it has the particular attributes required of a measure for Art. XXIII:1(b) purposes.
To go on with their analysis, the Panel reviews GATT jurisprudence, particularly the Panel Report on Japan-Semi-conductors, in that case, the panel found that although a measure was not mandatory, it could be considered a restriction subject to Art. XI:1 of GATT because “sufficient incentives or disincentives existed for non-mandatory measures to take effect ... [and] the operation of the measures ... was essentially dependent on Government action or intervention [because in such a case] the measures would be operating in a manner equivalent to mandatory requirements such that the difference between the measures and mandatory requirements was only one of form and not of substance ...”. The Panel in present case considers that this ruling suggests that where administrative guidance created incentives or disincentives largely dependent upon governmental action for private parties to act in a particular manner, it is considered a governmental measure. 5
Recalling the criteria applied in Japan-Semi-conductors, i.e., administrative guidance must create incentives or disincentives to act and compliance with the guidance must depend largely on governmental action, for determining whether or not a formally non-binding measure should be assimilated to a governmental restriction under Art. XI:1, the Panel in present case considers that these criteria would certainly also lend themselves satisfactorily to the definition of the term measure under Art. XXIII:1(b). However, they also note that there is nothing in Japan-Semi-conductors suggesting that this incentives/disincentives test should be seen as the exclusive test for characterizing formally non-binding measures as governmental. The Panel finds, therefore, that Japan-Semi-conductors should not be seen as setting forth the exclusive test or outer limit of what may be considered to constitute a measure under Art. XXIII:1(b).
In short, a government policy or action need not necessarily have a substantially binding or compulsory nature for it to entail a likelihood of compliance by private actors in a way so as to nullify or impair legitimately expected benefits within the purview of Art. XXIII:1(b). Indeed, it is clear that non-binding actions, which include sufficient incentives or disincentives for private parties to act in a particular manner, can potentially have adverse effects on competitive conditions of market access. For example, a number of non-violation cases have involved subsidies, receipt of which requires only voluntary compliance with eligibility criteria. Moreover, it is conceivable, in cases where there is a high degree of cooperation and collaboration between government and business, e.g., where there is substantial reliance on administrative guidance and other more informal forms of government-business cooperation, that even non-binding, hortatory wording in a government statement of policy could have a similar effect on private actors to a legally binding measure or regulatory administrative guidance.
Consequently, the Panel rules that they should be open to a broad definition of the term measure for purposes of Art. XXIII:1(b). That is to say, it is necessary for them to examine each alleged “measure”, whether a binding government action or a non-binding government action with an effect similar to a binding one, to see whether it has the particular attributes required of a measure for Art. XXIII:1(b) purposes. The Panel reaches this conclusion in considering the purpose of Art. XXIII:1(b), which is to protect the balance of concessions under GATT by providing a means to redress government actions not otherwise regulated by GATT rules that nonetheless nullify or impair a Member's legitimate expectations of benefits from tariff negotiations. To achieve this purpose, as observed by the Panel, it is important that the kinds of government actions considered to be measures covered by Art. XXIII:1(b) should not be defined in an unduly restrictive manner. Otherwise, there is the risk of cases, in which governments have been involved one way or another in the nullification or impairment of benefits, which will not be redressable under Art. XXIII:1(b), thereby preventing the achievement of its purpose. In fact, it is difficult to establish bright-line rules in this regard.
However, as stressed by the Panel, giving a broad definition to measure does not expand the scope of the Art. XXIII:1(b) remedy because it remains incumbent on the complaining Member to clearly demonstrate how the measure at issue results in or causes nullification or impairment of benefits. At the same time, it may also be true that not every utterance by a government official or study prepared by a non-governmental body at the request of the government or with some degree of government support can be viewed as a measure of a Member government. At all events the responding Member's government is only responsible for what it has itself caused. Thus, that possibility will need to be examined on a case-by-case basis.
   （ii）Measures Falling under Other Provisions of the GATT 1994
In EC–Asbestos (DS135), before the Panel, Canada claims that, under Art. XXIII:1(b) of the GATT 1994, the application of the measure at issue nullified or impaired benefits accruing to Canada. The European Communities raises preliminary objections, arguing on two grounds that the measure fall outside the scope of application of Art. XXIII:1(b). First, the European Communities contends that Art. XXIII:1(b) applies only to measures which does not otherwise fall under other provisions of the GATT 1994. Second, the European Communities argues that, while it may be possible to have “legitimate expectations” in connection with a purely “commercial” measure, it is not possible to claim “legitimate expectations” with respect to a measure taken to protect human life or health, which can be justified under Art. XX(b) of the GATT 1994.6
As to the first preliminary objection, the Panel finds as follows:7
“The EC seem to believe that the fact that a measure is ‘justified’ on the basis of Article XX creates a legal situation different, on the one hand, from the situation in which the measure violates a provision of the GATT 1994 and, on the other, from the situation in which the measure does not fall under the provisions of the GATT 1994. In support of their position, the EC cite a passage from the Panel Report in Japan - Film which mentions that Article XXIII:1(b) provides ‘the means to redress government actions not otherwise regulated by GATT rules …’. The Communities also refer to the introductory clause of Article XX which states that ‘nothing in this Agreement shall be construed to prevent the adoption or enforcement by any contracting party of measures’ necessary to protect human life or health.
The Panel recalls, first of all, that both the preamble to Article 26.1 of the Understanding and Article XXIII:1(b) use the words ‘measure, whether or not it conflicts with the provisions [of the particular agreement]’. To begin with, it should be noted that the wording of Article XXIII:1(b) shows unequivocally that this provision applies both in situations in which a measure conflicts and in situations in which it does not conflict with the provisions of the GATT 1994. Above, we found that the treatment accorded by the Decree to chrysotile asbestos fibres violated Article III:4 of the GATT 1994 as such, in as much as these products were like the substitute fibres mentioned by the parties and the treatment of products containing chrysotile asbestos and products containing the substitute fibres mentioned by the parties was discriminatory. Accordingly, the Decree conflicts with the provisions of Article III:4, in the sense in which that word is used in Article XXIII:1(b). However, we note that the introductory clause of Article XX states that ‘nothing in this Agreement shall be construed to prevent the adoption or enforcement by any contracting party of measures’ necessary to protect human life or health, which might suggest that a provision consistent with the requirements of Article XX no longer conflicts with Article III:4, because Article III:4 cannot be construed as preventing this kind of measure. However, whether a measure justified on the basis of Article XX of the GATT 1994 is considered still to be in conflict with Article III:4 or is considered no longer to conflict with Article III:4 because justified under Article XX, under the terms of Article XXIII:1(b) the latter continues to be applicable to it.
We also note, firstly, that the introductory clause to Article XX, to which the EC refer, concerns the adoption or enforcement of measures necessary to protect health. The application of Article XXIII:1(b) does not prevent either the adoption or the enforcement of the Decree concerned. Article 26:1(b) stipulates that even where a measure has been found to nullify or impair benefits under, or impede the attainment of objectives, of the GATT 1994 without violation thereof, there is no obligation to withdraw the measure. Accordingly, there is no contradiction between the invocation of Article XX and the application of Article XXIII:1(b). However, that Article must be applied in such a way as to protect the balance of rights and duties negotiated. Accordingly, we do not consider that the text of Article XXIII:1(b) or that of Article XX or, finally, that of Article 26.1 of the Understanding supports the EC's interpretation.
Secondly, we do not consider that the passage from the Japan - Film report cited by the EC supports its interpretation either. Admittedly, the words used by the panel, taken in isolation, might at first glance appear to confirm the EC's position, insofar as it refers to ‘government actions not otherwise regulated by GATT rules’. The use of the word ‘regulated’ could signify that the field of application of Article XXIII:1(b) covered only situations in which no provision of the GATT was applicable. First of all, it is our opinion that the fact that a measure does not violate Article III:4 does not necessarily mean that the latter is not applicable to it. Article III:4 applies to any law, regulation or requirement affecting the internal sale, offering for sale, purchase, transportation, distribution or use of imported products and like products of national origin. Consequently, even if the EC's interpretation were correct, it would not apply in the present case insofar as Article III:4 continues to be applicable to the Decree. Next, it should be noted that the panel in Japan - Film refers, in the footnote at the end of the sentence cited by the EEC, to the EEC - Oilseeds report which states, in particular, that:
‘the Panel noted that these provisions, as conceived by the drafters and applied by the CONTRACTING PARTIES, serve mainly to protect the balance of tariff concessions. The idea underlying them is that the improved competitive opportunities that can legitimately be expected from a tariff concession can be frustrated not only by measures proscribed by the General Agreement but also by measures consistent with that Agreement’.
We consider that a ‘measure which is not otherwise regulated by GATT rules’, that is to say to which the GATT does not apply, is, a fortiori, ‘not in conflict’ with the GATT within the meaning of Article XXIII:1(b) or ‘consistent’ within the meaning of the EEC - Oilseeds report. Consequently, we find that the passage in the Japan - Film report cited by the EC, far from supporting their position, confirms the opinion according to which Article XXIII:1(b) applies to a measure whether it is consistent with the GATT because the GATT does not apply to it or is justified by Article XX.
For these reasons, we do not allow the EC's first argument.”
The European Communities appeals the Panel's findings and conclusions relating to the first preliminary objections. And this is the first occasion for the Appellate Body to examine Article XXIII:1(b) of the GATT 1994.
When the Appellate Body turns to the European Communities' argument that Art. XXIII:1(b) does not apply to measures falling within the scope of application of other provisions of the GATT 1994, they rule that: “[…] The text of Article XXIII:1(b) stipulates that a claim under that provision arises when a ‘benefit’ is being ‘nullified or impaired’ through the ‘application … of any measure, whether or not it conflicts with the provisions of this Agreement’. The wording of the provision, therefore, clearly states that a claim may succeed, under Article XXIII:1(b), even if the measure ‘conflicts’ with some substantive provisions of the GATT 1994. It follows that a measure may, at one and the same time, be inconsistent with, or in breach of, a provision of the GATT 1994 and, nonetheless, give rise to a cause of action under Article XXIII:1(b). Of course, if a measure ‘conflicts’ with a provision of the GATT 1994, that measure must actually fall within the scope of application of that provision of the GATT 1994. We agree with the Panel that this reading of Article XXIII:1(b) is consistent with the panel reports in Japan - Film and EEC - Oilseeds, which both support the view that Article XXIII:1(b) applies to measures which simultaneously fall within the scope of application of other provisions of the GATT 1994. Accordingly, we decline the European Communities' first ground of appeal under Article XXIII:1(b) of the GATT 1994. ” 8
    （iii）Measures Concerning the Protection of Human Health
With regard to the EC's second argument in EC–Asbestos (DS135), the Panel rules that:9
“[…] [W]e note, first of all, that neither the text of Article XXIII:1(b) of the GATT 1994 nor that of Article 26:1 of the Understanding expressly incorporates the separation suggested by the EC between measures of a purely commercial nature and measures designed to protect human health. Although these articles require the existence of a measure - which neither of the Parties disputes - they do not distinguish between different types of measures. We have also found, on the basis of Article XX, that the application of the latter does not a priori exclude the application of Article XXIII:1(b). We therefore find that the terms and the context of Article XXIII:1(b) do not support the interpretation proposed by the EC.
Canada cites the preparatory work on the GATT 1947. On the basis of Article 32 of the Vienna Convention, we consider that it is not necessary to have recourse to the preparatory work unless, in particular, the interpretation based on the criteria of Article 31 leaves the meaning of the terms ambiguous or obscure or leads to a manifestly absurd or unreasonable result. Such is not the case. However, recourse to the preparatory work also makes it possible to confirm the meaning resulting from the application of Article 31.
In this respect, we note that the EC consider that Canada's reading of the preparatory work is selective. According to them, the potential problems of abuse and bad faith to which Canada alludes are adequately covered by the chapeau of Article XX. For the EC, there cannot be two sets of provisions which address the same problem twice.
Although it is not necessary to take a position on the content of the preparatory work, we consider that the EC's argument tends to confuse two aspects: the first is abuse resulting from the application of a measure falling within one of the paragraphs of Article XX. If a measure necessary to protect human health is applied in a manner that conflicts with the provisions of the introductory clause of Article XX, the measure will still be in conflict with the provisions of the GATT whose violation Article XX is supposed to justify. This aspect is very different from the situation in which a measure is perfectly justified in itself in relation to the GATT (as in the case of a measure which satisfies all the conditions of Article XX), but which, viewed in a given context, could give rise to a situation of nullification or impairment of a benefit under a tariff concession.
It remains, however, for us to discuss the EC's argument to the effect that the fundamental duty to protect human health cannot be compromised or restricted by the concept of non-violation nullification. We must begin by acknowledging that all the cases examined by panels so far have concerned situations in which the measure adopted following the negotiation of a concession was purely commercial in nature, generally a subsidy, a tariff preference or a measure relating to product distribution. Accordingly, we have no precedents to guide us. However, a preliminary remark, similar to that made in paragraph 8 above, is called for. A finding based on Article XXIII:1(b) of the GATT 1994 and Article 26.1 of the Understanding never results in an obligation not to apply or to withdraw the measure in question. The Member concerned can only be asked to make ‘a mutually satisfactory adjustment’. Article 26:1(b) also specifies that compensation may be part of a mutually satisfactory adjustment as final settlement of the dispute. The Member adopting a public health protection measure is totally free to continue to apply the measure concerned as it stands while offering in exchange compensation for the benefits nullified or impaired.
The Panel also considers, as did the panel in Japan - Film, that non-violation should be approached with caution and treated as an exceptional instrument of dispute settlement. It appears that Members which have negotiated a set of rights and obligations would only exceptionally expect to be challenged for actions not in contravention of those rights or obligations.
Moreover, the Panel is of the opinion that even if the justification of a measure by Article XX does not, in principle, make it impossible to invoke Article XXIII:1(b) in relation to the application of the measure justified, the situation of a measure falling under Article XX with respect to Article XXIII:1(b) cannot be quite the same as that of a measure consistent with another provision of the GATT 1994. This is because Article XX, which is headed ‘General Exceptions’, is intended, in particular, to ensure the protection of public health or, as stated by the Appellate Body in United States - Gasoline, to ‘permit important State interests - including the protection of human health […] to find expression’. The Panel considers that in accepting the WTO Agreement Members also accept a priori, through the introduction of these general exceptions, that Members will be able, at some point, to have recourse to these exceptions. Moreover, Members have attached to the use of these exceptions a certain number of conditions contained either in paragraphs (a) to (j) or in the introductory clause of Article XX. These conditions have generally been narrowly interpreted. The result is that (a)both the intended objective of these exceptions (pursuit of interests recognized a priori as being of greater importance than Members' commercial interests, since they can outweigh the latter) and (b)the specific conditions that must be satisfied by Members invoking these exceptions mean that, while recognizing that Article XXIII:1(b) applies to measures that fall under Article XX, we are justified in treating recourse to Article XIII:1(b) as particularly exceptional in relation to measures justified by Article XX(b).
All this leads the Panel to consider that, in practice, even if in a particular case a mutually satisfactory adjustment may be made under Article XXIII:1(b), in general, the risk of an effective increase in the cost of measures necessary to protect public health because of the applicability of Article XXIII:1(b) to measures justified under Article XX can only be very marginal. In fact, considering the criteria mentioned in the previous paragraph, very few measures of this kind could give rise to the application of Article XXIII:1(b).
For these reasons we do not subscribe to the interpretation proposed by the European Communities. Accordingly, we will continue our examination of the measure in the light of Article XIII:1(b) of the GATT 1994.”
The European Communities contends that the Panel erred in finding that Art. XXIII:1(b) applied to measures pursuing health objectives, rather than commercial ones, and which could, therefore, be justified under Art. XX(b) of the GATT 1994. In this respect, the Appellate Body finds that:10
“The European Communities also contends that the Panel erred in finding that Article XXIII:1(b) applies to measures which pursue health, rather than commercial, objectives and which can, therefore, be justified under Article XX(b) of the GATT 1994. Once again, we look to the text of Article XXIII:1(b), which provides that ‘the application by another Member of any measure’ may give rise to a cause of action under that provision. The use of the word ‘any’ suggests that measures of all types may give rise to such a cause of action. The text does not distinguish between, or exclude, certain types of measure. Clearly, therefore, the text of Article XXIII:1(b) contradicts the European Communities' argument that certain types of measure, namely, those with health objectives, are excluded from the scope of application of Article XXIII:1(b).
In any event, an attempt to draw the distinction suggested by the European Communities between so-called health and commercial measures would be very difficult in practice. By definition, measures which affect trade in goods, and which are subject to the disciplines of the GATT 1994, have a commercial impact. At the same time, the health objectives of many measures may be attainable only by means of commercial regulation. Thus, in practice, clear distinctions between health and commercial measures may be very difficult to establish. Nor do we see merit in the argument that, previously, only ‘commercial’ measures have been the subject of Article XXIII:1(b) claims, as that does not establish that a claim cannot be made under Article XXIII:1(b) regarding a ‘non-commercial’ measure.
An important aspect of the European Communities' argument is that a Member cannot have reasonable expectations of continued market access for products which are shown to pose a serious risk to human life or health. However, the paragraphs of the Panel Report appealed by the European Communities involve exclusively the Panel's findings on the threshold issues of the scope of application of Article XXIII:1(b). This particular argument of the European Communities, important as it is, simply does not relate to those threshold issues. Rather, the European Communities' argument relates to the substance of a claim that has been determined to fall within the scope of application of Article XXIII:1(b) and, in particular, concerns the issue whether a ‘benefit’ has been ‘nullified or impaired’ by a measure restricting market access for products posing a health risk. Here, we emphasize that the European Communities does not appeal the Panel's findings relating to the ‘nullification or impairment’ of a ‘benefit’ through the frustration of reasonable expectations by application of the measure at issue. We do not, therefore, find it necessary to examine the European Communities' argument relating to reasonable expectations.
For these reasons, we dismiss the European Communities' appeal under Article XXIII:1(b) of the GATT 1994 and uphold the Panel's finding that Article XXIII:1(b) applies to measures which fall within the scope of application of other provisions of the GATT 1994 and which pursue health objectives. ”
（iv）Measures Applied Continuingly
Given that the text of Art. XXIII:1(b) contemplates nullification or impairment in the present tense, caused by application of a measure, “whether or not it conflicts” (also in the present tense), the ordinary meaning of this provision limits the non-violation remedy to measures that are currently being applied. In only a very small number of cases, involving very particular situations, have panels proceeded to adjudicate claims involving measures which no longer exist or which are not being applied any longer. In those cases, the measures have been typically applied in the very recent past. For example, in Japan-Film (DS44), the parties disagree as to whether or not certain of the “measures” at issue are still in effect. In this respect, the Panel rules that:11
“[…] Given the significance of the principle of continued application of measures to the interpretation of Article XXIII:1(b), we shall need to give particularly careful analysis -- in examining the individual ‘measures’--to the evidence relating to such alleged continuing administrative guidance. At this stage, suffice it to say that we do not rule out the possibility that old ‘measures’ that were never officially revoked may continue to be applied through continuing administrative guidance. Similarly, even if measures were officially revoked, the underlying policies may continue to be applied through continuing administrative guidance. However, the burden is on the United States to demonstrate clearly that such guidance does in fact exist and that it is currently nullifying or impairing benefits.”
III  Existence of a Benefit: Protection of Legitimate Expectations
（i）Protection of Legitimate Expectations（PLE）
As discussed previously, it is ruled that the non-violation remedy has an important role - that of protecting the reasonable expectations of competitive opportunities through negotiated concessions.
In this regard, the Panel in Japan - Film（DS44）rules that: “The second required element which must be considered to establish a case of non-violation nullification or impairment under Article XXIII:1(b) is the existence of a benefit accruing to a WTO Member under the relevant agreement (in this case, GATT 1994). In all but one of the past GATT cases dealing with Article XXIII:1(b) claims, the claimed benefit has been that of legitimate expectations of improved market-access opportunities arising out of relevant tariff concessions. This same set of GATT precedents suggests that for expectations to be legitimate, they must take into account all measures of the party making the concession that could have been reasonably anticipated at the time of the concession. Of course, as with the first element (application of a measure), the complaining party has the burden of demonstrating the ‘benefit accruing’.”12 And the Panel goes on to analyze:13
“The text of Article XXIII:1(b) simply refers to ‘a benefit accruing, directly or indirectly, under this Agreement’ and does not further define or explain what benefits are referred to. Past GATT panel reports have considered that such benefits include those that a Member reasonably expects to obtain from a tariff negotiation.
The first GATT report analysing Article XXIII:1(b) was the 1950 Report of the Working Party on Australian Subsidy on Ammonium Sulphate. The Working Party found that the withdrawal by Australia of a wartime subsidy on sodium nitrate fertilizer while maintaining a subsidy on ammonium sulphate fertilizer, although not inconsistent with Australia's GATT obligations, nullified or impaired benefits accruing to Chile under the General Agreement. The Working Party agreed that impairment would exist if the Australian action ‘which resulted in upsetting the competitive relationship between sodium nitrate and ammonium sulphate could not reasonably have been anticipated by the Chilean Government, taking into consideration all pertinent circumstances and the provisions of the General Agreement, at the time it negotiated for the duty-free binding on sodium nitrate. The working party concluded that the Government of Chile had reason to assume, during these negotiations, that the war-time fertilizer subsidy would not be removed from sodium nitrate before it was removed from ammonium sulphate. [Reasons omitted.] For these reasons, the working party also concluded that the Australian action should be considered as relating to a benefit accruing to Chile under the Agreement, and that it was therefore subject to the provisions of Article XXIII. ... The inequality created and the treatment Chile could have expected at the time of the negotiation, after taking into consideration all pertinent circumstances, including the circumstances mentioned above, and the provisions of the General Agreement, were important elements in the working party's conclusions’.
The 1952 Panel Report on Germany - Sardines also based a non-violation finding on an ‘action of the German Government, which resulted in upsetting the competitive relationship between [different members of the same fish family that] could not reasonably have been anticipated by the Norwegian Government at the time it negotiated for tariff reductions on [fish]’. In so finding, the panel noted that Norway ‘had reason to assume’ that the fish they were interested in would not be treated less favourably.
Two GATT study groups elaborated these concepts in the context of subsidies, in each case focusing on whether a party had reasonable expectations that certain treatment would continue. In 1955, a working party wrote:
‘So far as domestic subsidies are concerned, it was agreed that a contracting party which has negotiated a concession under Article II may be assumed, for the purpose of Article XXIII, to have a reasonable expectation, failing evidence to the contrary, that the value of the concession will not be nullified or impaired by the contracting party which granted the concession by the subsequent introduction or increase of a domestic subsidy on the product concerned’.
A 1961 report, citing the foregoing paragraph, stated:
‘In this connexion it was noted that the expression 'reasonable expectation' was qualified by the words 'failing evidence to the contrary'. By this the Panel understands that the presumption is that unless such pertinent facts were available at the time the tariff concession was negotiated, it was then reasonably to be expected that the concession would not be nullified or impaired by the introduction or increase of a domestic subsidy.’
The 1990 Panel Report on EEC - Oilseeds approached a non-violation complaint as follows:
‘The Panel examined whether it was reasonable for the United States to expect that the Community would not introduce subsidy schemes systematically counteracting the price effect of the tariff concessions.
. . .
The Panel does not share the view of the Community that the recognition of the legitimacy of such expectations would amount to a re-writing of the rules of the General Agreement. The contracting parties have decided that a finding of impairment does not authorize them to request the impairing contracting party to remove a measure not inconsistent with the General Agreement; such a finding merely allows the contracting party frustrated in its expectation to request, in accordance with Article XXIII:2, an authorization to suspend the application of concessions or other obligations under the General Agreement. The recognition of the legitimacy of an expectation thus essentially means the recognition of the legitimacy of such a request. The recognition of the legitimacy of an expectation relating to the use of production subsidies therefore in no way prevents a contracting party from using production subsidies consistently with the General Agreement; it merely delineates the scope of the protection of a negotiated balance of concessions. For these reasons the Panel found that the United States may be assumed not to have anticipated the introduction of subsidies which protect Community producers of oilseeds completely from the movement of prices for imports and thereby prevent tariff concessions from having any impact on the competitive relationship between domestic and imported oilseeds, and which have as one consequence that all domestically-produced oilseeds are disposed of in the internal market notwithstanding the availability of imports’.
As suggested by the 1961 report, in order for expectations of a benefit to be legitimate, the challenged measures must not have been reasonably anticipated at the time the tariff concession was negotiated. If the measures were anticipated, a Member could not have had a legitimate expectation of improved market access to the extent of the impairment caused by these measures.
Thus, under Article XXIII:1(b), the United States may only claim impairment of benefits related to improved market access conditions flowing from relevant tariff concessions by Japan to the extent that the United States could not have reasonably anticipated that such benefits would be offset by the subsequent application of a measure by the Government of Japan. In the case before us, there is disagreement between the parties on this issue of reasonable anticipation with respect to each and every ‘measure’ claimed by the United States to nullify and impair benefits accruing to it under GATT.”
（ii）Non-foreseeability of Measures at Issue
    As noted above, for expectations to be legitimate, all measures of the party making the concession that could have been reasonably anticipated at the time of the concession must be taken into account. Of course, as with the first element (application of a measure), the complaining party has the burden of demonstrating the “benefit accruing”. In the context, there would be certain logic in making a distinction between the concept of legitimate expectation of a benefit and that of the reasonable foreseeability of a measure. In particular, the need to prove that a complained-of measure was objectively non-foreseeable at the time of negotiations leads to an implicit recognition of legitimacy of the expectations as crucial to the decision of whether or not the state can claim nullification or impairment.
    As noted previously, a WTO member may be assumed, for the purpose of Art. XXIII, to have a reasonable expectation, failing evidence to the contrary, that the value of the concession will not be nullified or impaired by the member which granted the concession by the subsequent introduction or increase of a domestic measure. And in this connexion it is noted that the expression “reasonable expectation” is qualified by the words “failing evidence to the contrary”. By this it suggests that the presumption is that unless such pertinent facts were available at the time the concession was negotiated, it is then reasonably to be expected that the concession would not be nullified or impaired by the introduction or increase of a domestic measure. I.e., the complainant could not have reasonably anticipated that its benefits would be offset by the subsequent application of a measure by the complained-of Government. As suggested, in order for expectations of a benefit to be legitimate, the challenged measures must not have been reasonably anticipated at the time the concession was negotiated. If the measures were anticipated, a Member could not have had a legitimate expectation of improved market access to the extent of the impairment caused by these measures. However, what factors should be considered to determine whether a Member should have reasonably anticipated measures that it claims nullified or impaired benefits? In this regard, the Panel in Japan-Film（DS44）rules in relevant part:14
“An obvious starting point for determining whether a measure was reasonably anticipated is to consider whether the measure was adopted before or after the conclusion of the relevant round of tariff negotiations, which is the approach taken in the 1961 report quoted above. The parties argue, however, that the matter is much more complicated than that. According to the United States, it was simply unaware of some ‘measures’ that predated the conclusion of the relevant round of tariff negotiations due to their nontransparent nature. In other instances, the United States indicates that although it was aware of the existence of the ‘measures’ prior to such conclusion, it did not know and could not have known of their significance in relation to access of imported film and paper to the Japanese market at the time of the relevant tariff negotiations. Japan, in contrast, maintains that the United States did anticipate or should have anticipated all of the alleged ‘measures’. In this regard, it argues that exporting Members should reasonably anticipate GATT-consistent measures taken by an importing Member to improve the efficiency of a particular sector of its economy, such as the distribution sector.
We consider that the issue of reasonable anticipation should be approached in respect of specific ‘measures’ in light of the following guidelines. First, in the case of measures shown by the United States to have been introduced subsequent to the conclusion of the tariff negotiations at issue, it is our view that the United States has raised a presumption that it should not be held to have anticipated these measures and it is then for Japan to rebut that presumption. Such a rebuttal might be made, for example, by establishing that the measure at issue is so clearly contemplated in an earlier measure that the United States should be held to have anticipated it. However, there must be a clear connection shown. In our view, it is not sufficient to claim that a specific measure should have been anticipated because it is consistent with or a continuation of a past general government policy. As in the EEC - Oilseeds case, we do not believe that it would be appropriate to charge the United States with having reasonably anticipated all GATT-consistent measures, such as ‘measures’ to improve what Japan describes as the inefficient Japanese distribution sector. Indeed, if a Member were held to anticipate all GATT-consistent measures, a non-violation claim would not be possible. Nor do we consider that as a general rule the United States should have reasonably anticipated Japanese measures that are similar to measures in other Members' markets. In each such instance, the issue of reasonable anticipation needs to be addressed on a case-by-case basis.
Second, in the case of measures shown by Japan to have been introduced prior to the conclusion of the tariff negotiations at issue, it is our view that Japan has raised a presumption that the United States should be held to have anticipated those measures and it is for the United States to rebut that presumption. In this connection, it is our view that the United States is charged with knowledge of Japanese government measures as of the date of their publication. We realize that knowledge of a measure's existence is not equivalent to understanding the impact of the measure on a specific product market. For example, a vague measure could be given substance through enforcement policies that are initially unexpected or later changed significantly. However, where the United States claims that it did not know of a measure's relevance to market access conditions in respect of film or paper, we would expect the United States to clearly demonstrate why initially it could not have reasonably anticipated the effect of an existing measure on the film or paper market and when it did realize the effect. Such a showing will need to be tied to the relevant points in time (i.e., the conclusions of the Kennedy, Tokyo and Uruguay Rounds) in order to assess the extent of the United States' legitimate expectations of benefits from these three Rounds. A simple statement that a Member's measures were so opaque and informal that their impact could not be assessed is not sufficient. While it is true that in most past non-violation cases, one could easily discern a clear link between a product-specific action and the effect on the tariff concession that it allegedly impaired, one can also discern a link between general measures affecting the internal sale and distribution of products, such as rules on advertising and premiums, and tariff concessions on products in general.”
（iii）Benefits in the Negotiations
As noted previously, “these observations [concerning non-violation cases] by previous panels are entirely in line with the concept of pacta sunt servanda”. However, one of the issues that arises in Korea-Government Procurement (DS163) is whether the concept of non-violation can arise in contexts other than the traditional approach represented by pacta sunt servanda. Can, for instance the question of error in treaty negotiation be addressed under Article 26 of the DSU and Article XXII:2 of the GPA? In this respect, the Panel rules that they see no reason why it could not. The Panel found that parties to a treaty had an obligation to negotiate in good faith just as they must implement the treaty in good faith. And they ruled in relevant part as follows:15
“Thus, on the basis of the ample evidence provided by both parties to the dispute, we will review the claim of nullification or impairment raised by the United States within the framework of principles of international law which are generally applicable not only to performance of treaties but also to treaty negotiation. To do otherwise potentially would leave a gap in the applicability of the law generally to WTO disputes and we see no evidence in the language of the WTO Agreements that such a gap was intended. If the non-violation remedy were deemed not to provide a relief for such problems as have arisen in the present case regarding good faith and error in the negotiation of GPA commitments (and one might add, in tariff and services commitments under other WTO Agreements), then nothing could be done about them within the framework of the WTO dispute settlement mechanism if general rules of customary international law on good faith and error in treaty negotiations were ruled not to be applicable. As was argued above, that would not be in conformity with the normal relationship between international law and treaty law or with the WTO Agreements.
If non-violation represents an extension of the good faith requirements in the implementation of a treaty and can also be applied to good faith and error in negotiations under the GPA, and we think it can, then the special remedies for non-violation contained in DSU Article 26 should also be applied rather than the traditional remedies of treaty law which are not apposite to the situation of the GPA.”
(iv) Benefits under Successive Rounds
In Japan-Film, the question of legitimate expectations of benefits accruing to the United States is complicated by the fact that the United States was claiming to have expectations of improved market access benefits in respect of four different products (each under a different tariff line), granted during three successive rounds of multilateral trade negotiations. The United States claims to have reasonable expectations of benefits accruing to it under Art. XXIII:1(b) as the result of tariff concessions granted by Japan on black and white film and paper during the Kennedy Round (1967), on colour and black and white film and paper during the Tokyo Round (1979) and on colour and black and white film and paper during the Uruguay Round (1994). Japan argues that the reasonable expectations of the United States must be limited to those existing in 1994 at the conclusion of the Uruguay Round in that these latter expectations reflected a new balance and global reassessment of the value of market access concessions, replacing any reasonable expectations that might have arisen under prior tariff negotiations.
One of the general issues raised by the particular case of Japan-Film (DS44) is that, may the benefits legitimately expected by a Member derive from successive rounds of tariff negotiations? In this respect, the Panel rules as follows: 16
“Two provisions of GATT 1994 (sub-paragraphs (b)(i) and (d) of paragraph 1) appear to us to be relevant to the resolution of this matter. The text of GATT 1994 provides in relevant part: […]
As referenced in the quoted text -- also known as the GATT 1994 incorporation clause -- GATT 1994 incorporates both ‘protocols and certifications relating to tariff concessions’ under paragraph 1(b)(i) and ‘the Marrakesh Protocol to GATT 1994’ under paragraph 1(d). The ordinary meaning of the text of paragraphs 1(b)(i) and 1(d) of GATT 1994, read together, clearly suggests that all protocols relating to tariff concessions, both those predating the Uruguay Round and the Marrakesh Protocol to GATT 1994, are incorporated into GATT 1994 and continue to have legal existence under the WTO Agreement.
Japan appears to argue that the Schedules annexed to the Marrakesh Protocol prevail as a later agreement over Schedules that entered into force under GATT 1947. In our view, such an interpretation would only make sense if the Marrakesh Protocol, referred to in paragraph 1(d) of GATT 1994, were viewed as later in time than the protocols referred to in paragraph 1(b)(i) thereof, and then, only to the extent of any conflict between tariff concessions annexed to the Marrakesh Protocol and the concessions in the other tariff protocols incorporated in GATT 1994. We consider that, as argued by the United States, Article 30 of the Vienna Convention, which is designed to resolve conflicts between provisions of successive treaties on the same subject matter, is not applicable to the situation at hand because there is nothing inherently incompatible -- in conflict -- between the earlier and later agreed tariff concessions. Such a conflict would only seem to exist if the subsequent concessions were less favourable than prior concessions, which is not the situation in this case. Where tariff concessions have been progressively improved, the benefits -- expectations of improved market access -- accruing directly or indirectly under different tariff concession protocols incorporated in GATT 1994 can be read in harmony. This approach is in accordance with general principles of legal interpretation which, as the Appellate Body reiterated in US - Gasoline, teach that one should endeavour to give legal effect to all elements of a treaty and not reduce them to redundancy or inutility.
The conclusion that benefits accruing from concessions granted during successive rounds of tariff negotiations may separately give rise to reasonable expectations of improved market access is consistent with past panel reports. The panel in EEC - Canned Fruit found that the United States had a reasonable expectation arising from the EEC's 1974 tariff concessions pursuant to Article XXIV:6 negotiations and 1979 Tokyo Round tariff concessions (even though the panel separately found that the United States could have anticipated certain subsidies in respect of the Tokyo Round tariff concessions). And the EEC - Oilseeds panel found that the United States had a reasonable expectation arising from the EEC's 1962 Dillon Round tariff concessions. As the United States points out, these findings would not have been possible if subsequent multilateral tariff agreements or enlargement agreements were deemed to extinguish wholesale the tariff concessions in prior tariff schedules.
The following quotation from the EEC - Oilseeds panel report appears to us to be particularly on point:
‘In these circumstances, the partners of the Community in the successive renegotiations under Article XXIV:6 could legitimately assume, in the absence of any indications to the contrary, that the offer to continue a tariff commitment by the Community was an offer not to change the balance of concessions previously attained. The Panel noted that nothing in the material submitted to it indicated that the Community had made it clear to its negotiating partners that the withdrawal and reinstitution of the tariff concessions for oilseeds as part of the withdrawal of the whole of the Community Schedule meant that the Community was seeking a new balance of concessions with respect to these items. There is in particular no evidence that the Community, in the context of these negotiations, offered to compensate its negotiating partners for any impairment of the tariff concessions through production subsidies or that it accepted compensatory tariff withdrawals by its negotiating partners to take into account any such impairment. The balance of concessions negotiated in 1962 in respect of oilseeds was thus not altered in the successive Article XXIV:6 negotiations. The Panel therefore found that the benefits accruing to the United States under the oilseed tariff concessions resulting from the Article XXIV:6 negotiations of 1986/87 include the protection of reasonable expectations the United States had when these concessions were initially negotiated in 1962’.
The fact that the EEC - Oilseeds case (and the unadopted EEC - Canned Fruit case as well) dealt with renegotiation of tariff concessions under Article XXIV:6 as opposed to Article XXVIII or Article XXVIIIbis does not, in our view, undermine the relevance of the above finding to the case at hand. This is because the Article XXIV:6 procedure is simply a means permitting a WTO Member, which has entered into a customs union and which proposes to increase a rate of duty above bound levels, to modify or withdraw that concession under the procedures of Article XXVIII. The panel in EEC - Oilseeds found that there was, effectively, no modification or withdrawal of tariff concessions under Article XXIV:6 -- and no new balance of concessions achieved, i.e., ‘the balance of concessions negotiated in 1962 ... was not altered’ -- even though the tariff bindings on oilseeds had been withdrawn and reinstated intact.
We note that Article XXVIII may be invoked under specifically defined circumstances to modify or withdraw concessions. And, as noted above, Article XXIV:6 permits Members which have entered into customs unions to modify or withdraw those concessions under the procedures of Article XXVIII. Article XXVIIIbis, in contrast, which provides a legal basis for Members to reduce and bind tariffs on a mutually advantageous (i.e. multilateral) basis, as a general rule does not provide a means to modify or withdraw tariff concessions.
We consider, therefore, that reasonable expectations may in principle be said to continue to exist with respect to tariff concessions given by Japan on film and paper in successive rounds of Article XXVIIIbis negotiations. Nevertheless, the establishment of a case based on expectations from rounds concluded 18 or 30 years ago may be difficult. The United States must show that those expectations, as well as its more recent ones, are currently nullified or impaired.”
IV  Nullification or Impairment of Benefit: Causality
As noted above, panels and the Appellate Body have broadly defined nullification or impairment of a benefit. However, panels further develop this concept that they adhere to a narrow view of what circumstances could bring about a nullification as: “the cases in which non-violation complaints were accepted…concerned very specific circumstances…They concerned situations of a perceived de facto withdrawal of a tariff concession because of an unexpected alteration of the conditions of competition”.
Conglomerating the actual wording of (b) and (c) of Art. XXIII:1, the panels acknowledge that this change in the balance can be brought about either by an action or by a non-action. Further, although not tested, dicta suggests that an impairment need not be limited to the disadvantaging of a complaining party, it may also include actions or non-actions that result in a benefit to the responding party, especially when the responding party is not a original negotiating party. One could infer that it is the unjust benefit that is causing the impairment and not the unjustified harm from the action that is a possible basis of an impairment claim. However, causality may be one of the more factually complex areas of examination. In this connection, in the three prior Non-violation cases where panels found that the complaining parties had failed to provide a detailed justification to support their claims, the issue turned primarily on the lack of evidence of causality. We will explore some aspects general as to the causality in the following paragraphs.
In Japan-Film (DS44), the Panel rules in pertinent part as:17
“The third required element of a non-violation claim under Article XXIII:1(b) is that the benefit accruing to the WTO Member (e.g., improved market access from tariff concessions) is nullified or impaired as the result of the application of a measure by another WTO Member. In other words, it must be demonstrated that the competitive position of the imported products subject to and benefitting from a relevant market access (tariff) concession is being upset by (‘nullified or impaired ... as the result of’) the application of a measure not reasonably anticipated. The equation of ‘nullification or impairment" with "upsetting the competitive relationship’ established between domestic and imported products as a result of tariff concessions has been consistently used by GATT panels examining non-violation complaints. For example, the EEC - Oilseeds panel, in describing its findings, stated that it had "found ... that the subsidies concerned had impaired the tariff concession because they upset the competitive relationship between domestic and imported oilseeds, not because of any effect on trade flows". The same language was used in the Australian Subsidy and Germany - Sardines cases. Thus, in this case, it is up to the United States to prove that the governmental measures that it cites have upset the competitive relationship between domestic and imported photographic film and paper in Japan to the detriment of imports. In other words, the United States must show a clear correlation between the measures and the adverse effect on the relevant competitive relationships.
We consider that this third element -- causality -- may be one of the more factually complex areas of our examination. In this connection, we note that in the three prior non-violation cases in which panels found that the complaining parties had failed to provide a detailed justification to support their claims, the issue turned primarily on the lack of evidence of causality. Four issues related to causation merit general discussion. First, the question of the degree of causation that must be shown -- ‘but for’ or less. Second, the relevance of the origin-neutral nature of a measure to causation of nullification or impairment. Third, the relevance of intent to causality. And fourth, the extent to which measures may be considered collectively in an analysis of causation.
As to the first issue, the United States argues that it need not show that the measures in issue are a ‘but for’ cause of impairment of market-access conditions for imported film and paper, but that it need only demonstrate that these measures are ‘a’ cause of such distortion. Japan argues that a clear linkage between the measure at issue and the alleged nullification or impairment must be proved by the complaining party in order to establish the necessary causal connection. Specifically, Japan states that the issue is whether the complaining party has provided a ‘detailed justification’ in support of its claim that a measure has caused nullification or impairment. In our view, Japan should be responsible for what is caused by measures attributable to the Japanese Government as opposed, for example, to what is caused by restrictive business conduct attributable to private economic actors. At this stage of the proceeding, the issue is whether such a measure has caused nullification or impairment, i.e., whether it has made more than a de minimis contribution to nullification or impairment.
In respect of the second issue, Japan argues that all of the accused ‘measures’ are neutral as to origin of the goods, none of them distinguishing between the imported and domestic products concerned, and that there is accordingly no causal connection between the alleged ‘measures’, individually or collectively, and any unfavourable competitive conditions for imported film and paper. The United States responds that the ‘measures’ at issue have had a disparate impact on imported products in their application, thereby upsetting competitive conditions of market access for imported film and paper. In our view, even in the absence of de jure discrimination (measures which on their face discriminate as to origin), it may be possible for the United States to show de facto discrimination (measures which have a disparate impact on imports). However, in such circumstances, the complaining party is called upon to make a detailed showing of any claimed disproportionate impact on imports resulting from the origin-neutral measure. And, the burden of demonstrating such impact may be significantly more difficult where the relationship between the measure and the product is questionable.
We note that WTO/GATT case law on the issue of de facto discrimination is reasonably well-developed, both in regard to the principle of most-favoured-nation treatment under GATT Article I and in regard to that of national treatment under GATT Article III. The consistent focus of GATT and WTO panels on ensuring effective equality of competitive opportunities between imported products from different countries and between imported and domestic products has been confirmed by the Appellate Body in its reports on Japan - Alcoholic Beverages and most recently in Bananas III, with respect to both GATT and GATS non-discrimination rules. We consider that despite the fact that these past cases dealt with GATT provisions other than Article XXIII:1(b), the reasoning contained therein appears to be equally applicable in addressing the question of de facto discrimination with respect to claims of non-violation nullification or impairment, subject, of course, to the caveat, that in an Article XXIII:1(b) case the issue is not whether equality of competitive conditions exists but whether the relative conditions of competition which existed between domestic and foreign products as a consequence of the relevant tariff concessions have been upset.
The third issue is the relevance of intent to causality. The parties disagree in many cases whether the intent behind a specific measure is to limit imports or to promote an unrelated policy goal. From our reading of the measures and consideration of the parties' arguments, it is apparent that there may have been more than one reason motivating the adoption of measures. We note, however, that Article XXIII:1(b) does not require a proof of intent of nullification or impairment of benefits by a government adopting a measure. What matters for purposes of establishing causality is the impact of a measure, i.e. whether it upsets competitive relationships. Nonetheless, intent may not be irrelevant. In our view, if a measure that appears on its face to be origin-neutral in its effect on domestic and imported products is nevertheless shown to have been intended to restrict imports, we may be more inclined to find a causal relationship in specific cases, bearing in mind that intent is not determinative where it in fact exists. It remains for the complaining party to show that the specific measure it challenges does in fact nullify or impair benefits within the meaning of Article XXIII:1(b).
Finally, as for the US position that the Panel should examine the impact of the measures in combination as well as individually (a position contested by Japan), we do not reject the possibility of such an impact. It is not without logic that a measure, when analyzed in isolation, may have only very limited impact on competitive conditions in a market, but may have a more significant impact on such conditions when seen in the context of -- in combination with -- a larger set of measures. Notwithstanding the logic of this theoretical argument, however, we are sensitive to the fact that the technique of engaging in a combined assessment of measures so as to determine causation is subject to potential abuse and therefore must be approached with caution and circumscribed as necessary.
For the sake of a complete analysis of the US claims, we will examine each alleged ‘measure’ in light of each of the three elements of a non-violation claim. Thus, even if we find an alleged ‘measure’ is not a measure for purposes of Article XXIII:1(b), we will continue with an analysis of the other two elements. Similarly, even if we find that a measure should have been reasonably anticipated, we will nevertheless carry through with the causality analysis.”
V  Summary and Conclusions
Operating as a device meant to ensure the integrity and longevity of the GATT/WTO system in the face of ever more complex methods of circumventing explicit tariff bindings and the prohibitions on non-tariff trade restraint instruments, the existence of a non-violation remedy under Art. XXIII:1(b) of the GATT 1994 requires WTO Members to adhere to the principles of the Agreements, even if there are no rules forbidding the particular action taken. Although non-violation remedy should be approached with caution and should remain an exceptional remedy, each case should be examined on its own merits, bearing in mind the need to safeguard the improved competitive opportunities that can legitimately be expected but which can be frustrated by measures textually consistent with the covered Agreement.
With regard to the establishment of a Non-violation claim, as summarized by a panel, normal non-violation cases involve an examination as to whether there are: (1) an application of a measure by a WTO Member; (2) a benefit accruing under the relevant agreement; and (3) nullification or impairment of the benefit due to the application of the measure that could not have been reasonably expected by the exporting Member.
(1) As to the application of a measure, the term “measure” in Art. XXIII:1(b) and Art. 26.1 of the DSU, as elsewhere in the WTO Agreements, refers only to policies or actions of attributable to governments, not those of private parties. However, in this regard, it is important to approach the issue of whether the “measures” in dispute are private or attributable to the Government with particular care, sensitive to the possibility that at times it may not be possible to distinguish with great precision a bright-line test of a measure and that possibility will need to be examined on a case-by-case basis. In practice, panels under the GATT/WTO have often taken an expansive view of what constitutes a measure, bearing in mind that the applicant must, in any event, demonstrate that the measure does in fact result in nullification or impairment of expected benefits.
Furthermore, Art. XXIII:1(b) applies to measures which simultaneously falls within the scope of application of other provisions of the GATT 1994. Also, the use of the word “any” in Art. XXIII:1(b) suggests that measures of all types may give rise to such a cause of action. In practice, in any event, an attempt to draw the distinction between various types of measures would be very difficult. Art. XXIII:1(b) must be applied in such a way as to protect the balance of rights and duties negotiated. However, in any event, it remains incumbent on the complaining Member to clearly demonstrate how the measure at issue results in or causes nullification or impairment of benefits.
(2) As to the existence of a benefit, with the lack of such a presumption as established in a violation complaint, there is something special for the definition of such a generally broadly interpreted “benefit” in non-violation complaints, i.e. the PLE.
    PLE is an extension of the good faith requirement in this sense. Specifically, the non-foreseeabiliy is on point, which suggests that for expectations to be legitimate, crucial to the decision of nullification or impairment, a complained-of measure must be proved objectively non-foreseeable at the time of negotiations. In this respect, the matter is much more complicated needing addressing on a case-by-case basis, than to consider whether the measure was adopted before or after the conclusion of the negotiations.
    On the one hand, in the case of measures demonstrated to be introduced subsequent to the conclusion, the complainant raises a presumption that it should not be held to have anticipated these measures and it is then for the respondent to rebut that presumption. Importantly, such a presumption may be rebutted, different from the actually non-rebuttable presumption in violation complaints. However, such rebuttal must bear a clear connection, it is not sufficient to claim the anticipation of measures on the basis of the consistence with or a continuation of a past general measure, nor is it appropriate to charge the complainant with the anticipation just because of the consistence of measures with the covered agreement or similarity to measures in other Members' markets.
    On the other hand, when the measure shown to be prior to the conclusion, the respondent raises a presumption that the complainant should be held to have anticipated those measures and it is for the complainant to rebut that presumption. Such a rebuttal may be established by showing that the short time period between this particular measure's publication and the formal conclusion makes it unrealistic to have an opportunity to reopen negotiations even if it had anticipated the possible adverse impact of the measures. To the extent that knowledge of a measure's existence is not equivalent to understanding the impact of the measure on a specific product market, where the complainant claims that it did not know of the underlying impact of the disputed measures, it must therefore clearly demonstrate why initially it could not have reasonably anticipated the effect of an existing measure and when it did realize the effect. A simple statement that a Member's measures were so opaque and informal is inadequate.
As to the benefits under successive rounds, where tariff concessions have been progressively improved, the benefits -- expectations of improved market access -- accruing directly or indirectly under different tariff concession protocols incorporated in GATT 1994 can be read in harmony.
As to the benefits in negotiations, claims of nullification or impairment should be reviewed within the framework generally applicable both to the WTO treaties and to the process of treaty formation under the WTO, because of the obligation that members have to negotiate in good faith just as they do in implementing and the principles of customary international law, i.e. pacta sunt servanda with extended applicability not only to performance of treaties but also to treaty negotiation.
(3) As to the causality between measures and nullification or impairment, it must be demonstrated that the competitive position is being upset by the application of a measure not reasonably anticipated. And such a change in the balance can be brought about either by an action or by a non-action.
To sum up, significantly different from violation complaints, with the lack of a formal presumption, the establishment of a non-violation complaint puts much more burden of proof on the side of the complainant. The role of panels charged with examining claims under Art. XXIII:1(b) is to make an objective assessment of whether, in light of all the relevant facts and circumstances in the matter before them, particular measures taken by the respondent have nullified or impaired benefits accruing to the complainant within the meaning of Art. XXIII:1(b), i.e., to determine whether the complainant has demonstrated the competitive position is being upset by the application of a measure not reasonably anticipated.
【NOTE】:
1.See, WT/DS44/R/10.41.
2.See, in detail, WT/DS163/R/7.85-7.86.
3.See, in detail, WT/DS44/R/10.43-10.56.
4.In Japan, it is accepted that the government sometimes acts through what is referred to as administrative guidance. In such a case, the company receiving guidance from the Government of Japan may not be legally bound to act in accordance with it, but compliance may be expected in light of the power of the government and a system of government incentives and disincentives arising from the wide array of government activities and involvement in the Japanese economy. As noted by the parties, administrative guidance in Japan takes various forms. Japan, for example, refers in this case to what it called “regulatory administrative guidance”, which it concedes effective substitutes for formal government action. It also refers to “promotional administrative guidance”, where companies are urged to do things that are in their interest to do in any event. And in Japan's view, this sort of guidance (“promotional administrative guidance”) should not be assimilated to a measure in the sense of Art. XXIII:1(b).
5.While in Japan-Restrictions on Imports of Certain Agricultural Products, the panel found that the informal administrative guidance used by the Japanese Government to restrict production of certain agricultural products could be considered to be a governmental measure within the meaning of GATT Art. XI:2 because it emanated from the government and was effective in the Japanese context. Specifically as regards the method used to enforce certain measures, the panel found that: “the practice of ‘administrative guidance’ played an important role. Considering that this practice is a traditional tool of Japanese Government policy based on consensus and peer pressure, the Panel decided to base its judgments on the effectiveness of the measures in spite of the initial lack of transparency”. In line with this observation, the Panel in present case considers that their analysis of the alleged “measures” must proceed in a manner that is sensitive to the context in which these governmental actions were taken and the effect they had on private actors.
6.See, in detail, WT/DS135/R/8.254-8.259.
7.See, WT/DS135/R/8.260-8.265.
8.See, WT/DS135/AB/R/187.
9.See, WT/DS135/R/8.266-8.274.
10.See, WT/DS135/AB/R/188-191.
11.See, WT/DS44/R/10.59.
12.See, WT/DS44/R/10.61.
13.See, WT/DS44/R/10.72-10.77.
14.See, WT/DS44/R/10.78-10.81.
15.See, WT/DS163/R/7.101-7.102.
16.See, WT/DS44/R/10.64-10.70.
17.See, WT/DS44/R/10.82-10.89.