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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.”
VSummary 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.
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