9.1 Introduction
This edited volume reviews how different tribunals and legal systems have used public international law (PIL) principles of interpretation. The World Trade Organization (WTO) Dispute Settlement System (DSS) is governed both by general and specific rules of interpretation. Firstly, Article 3.2 of the DSU provides that the WTO provisions should be interpreted using customary rules of interpretation in PIL. Panels and the Appellate Body (AB) have applied the traditional tools of interpretation (including Articles 31–33 of the Vienna Convention on the Law of Treaties) against the backdrop of the WTO’s unique framework of agreements. Secondly, and more specifically, the Dispute Settlement Understanding (DSU) and the Marrakesh Agreement Establishing the World Trade Organization (WTO Agreement) refer explicitly to the need to consider the historical background of the WTO and its General Agreement on Tariffs and Trade (GATT) practices and decisions. For example, in Article 3.1 of the DSU, WTO Members affirm their adherence to the principles of management of disputes under Articles XXII and XXIII of the GATT 1947. Also, Article XVI of the WTO Agreement requires that the functioning of the WTO (including its dispute settlement system) be guided by the decisions, procedures, and customary practices of the GATT 1947.Footnote 1 The decisions, customary practices, and procedures of the contracting parties thus continue to remain relevant and have a guiding role.
A unique feature of the WTO treaty is that it comprises several agreements all of which bind WTO Members simultaneously and cumulatively (referred to as the ‘WTO covered agreements’) – this principle is known as the single undertaking – a concept that has both political and legal meanings and implications. To understand the complexity of implementing the WTO covered agreements as a Single Undertaking, it must be recalled that they were not negotiated in one coordinated effort, rather, in fifteen different working groups for each covered agreement’s text.Footnote 2 Towards the very end of the Uruguay Round, these texts were brought together and annexed to the WTO Agreement to form the Single Undertaking.Footnote 3 In a way, each covered agreement is like a small treaty: each agreement has their own Preamble and their own object and purpose.
To maintain coherence and reduce conflict within this Single Undertaking, the WTO DSS has engaged in horizontal cross-fertilisation of jurisprudence across agreements. Exactly how panels and the AB identify the ordinary meaning of provisions in their context and in light of the object and purpose of the WTO treaty will be the subject of the following discussion, noting first the nature of the WTO Single Undertaking in more detail. This chapter seeks to first trace the legal implications of the Single Undertaking on interpretations of provisions of the WTO covered agreements and thereafter elaborates on the manner in which the WTO DSS has employed the general rules of interpretation as per Articles 31, 32, and 33 of the Vienna Convention on the Law of Treaties (VCLT).
9.2 Single Undertaking
As explained earlier, although fifteen different working groups negotiated and finalised the text of each corresponding agreement,Footnote 4 it was agreed that no reservations would be possibleFootnote 5 and that all WTO Members were bound by all provisions of all covered agreements.Footnote 6 Thus, all covered agreements created obligations on Members, but there was no formal discussion or express indication on the hierarchy of WTO norms under the covered agreements and how the obligations created by each of these would interact.Footnote 7 This understanding of the WTO covered agreements as a Single Undertaking has significant implications on the interpretation of the provisions of these agreements, and in this section two aspects are explored: first, the cumulative and simultaneous application of all the provisions of the WTO covered agreements becomes an expression of the principle of effectiveness; and, secondly, the principle of Single Undertaking impacts the manner in which conflicts are defined under WTO Agreements and the manner in which they are resolved through treaty interpretation.
9.2.1 Cumulative and Simultaneous Application of All WTO Provisions
To briefly recount the jurisprudence of the WTO DSS relating to the implications of the WTO covered agreements forming a Single Undertaking, the Panel Report in Indonesia – Autos is a useful starting point. Indonesia was challenged for maintaining some local content requirements in its taxes, contrary to the Trade Related Investment Measures (TRIMS) and Subsidies and Countervailing Measures (SCM) Agreements. Indonesia invoked the right to maintain local content prohibitions during three years of transition under TRIMS without any specific notification. The Panel, however, concluded that because WTO Members must comply with all WTO provisions cumulatively and simultaneously, Indonesia was also obliged to comply with the provisions of the SCM Agreement, which allowed for transitional local content requirements only if they were fully notified to the WTO. Since Indonesia did not notify the WTO of its measures, Indonesia was considered to have violated the local content requirements of the SCM and the GATT Article III:4.
Later on, the AB in Korea – DairyFootnote 8 reiterated the cumulative and simultaneous application of the WTO Single Undertaking. This dispute dealt with the relationship between Article XIX of the GATT and the Agreement on Safeguards. The AB, confirming the decision of the panel, concluded that because of the WTO Single Undertaking, the provisions of the GATT and those of the Agreement on Safeguards must apply cumulatively and simultaneously. The AB recalled the following statement of the Panel:
It is now well established that the WTO Agreement is a ‘Single Undertaking’ and therefore all WTO obligations are generally cumulative, and Members must comply with all of them simultaneously.Footnote 9
Given that provisions of different covered agreements may have different, sometimes overlapping and even conflicting scopes, the AB concluded that the provisions of the WTO covered agreements must be interpreted harmoniously and the treaty should be read as a whole. As noted by the AB, this is a necessary implication of the principle of effectiveness, which, in the case of WTO covered agreements, relates to the provisions of the Single Undertaking cumulatively and simultaneously. The AB states that:
In light of the interpretive principle of effectiveness, it is the duty of any treaty interpreter to ‘read all applicable provisions of a treaty in a way that gives meaning to all of them, harmoniously.’ An important corollary of this principle is that a treaty should be interpreted as a whole, and, in particular, its sections and parts should be read as a whole …. Article II:2 of the WTO Agreement expressly manifests the intention of the Uruguay Round negotiators that the provisions of the WTO Agreement and the Multilateral Trade Agreements included in its Annexes 1, 2 and 3 must be read as a whole.Footnote 10
Indeed, the principle of the Single Undertaking has become a general principle of interpretation for the relationship between WTO covered agreements and provisions. The implication being that annexed agreements need to be viewed as a whole and interpreted harmoniously, cumulatively, and simultaneously as a single treaty.
Other instances in which two provisions from different agreements have been given cumulative and simultaneous effect include GATT and GATS provisions in the decisions of EC – Bananas III and Canada – Periodicals,240 GATT Article III and Article XIII of the Agreement on Safeguards in US – Line Pipe,242 Agreement on Agriculture and the SCM Agreement in US – Upland Cotton,Footnote 11 Article XIX of the GATT and the Agreement on Safeguards in Argentina – Footwear (EC),Footnote 12 and the GATT and Article XIII of the Agreement on Agriculture. The principle of effectiveness has been used by the AB to harmoniously apply different provisions of the WTO covered agreements.
A corollary to the application of the principle of effectiveness in the context of the WTO Single Undertaking is that no provision of the treaty should be made a ‘nullity’.Footnote 13 The AB in US – Gasoline found that the principle of effectiveness went hand in hand with the general rule of interpretation under the VCLT. This finding was made in the context of the GATT where the AB held that Article XX (an exception to GATT obligations such as national treatment) does not call for the application of the same standards as Article III of the GATT (dealing with national treatment). The AB cautioned against reading WTO covered agreements in such a manner that would reduce paragraphs or clauses of a treaty to redundancy or inutility.Footnote 14 They referred principally to the general rule of interpretation in Article 31(1) of the VCLT and noted that the Panel Report failed to take adequate account of the words actually used by Article XX in its several paragraphs. This approach has been followed in Brazil – Desiccated Coconut, where it was held that Article VI of the GATT could not be interpreted in a manner that nullifies transitional rights of developing countries under the SCM Agreement.Footnote 15 Similarly, in Turkey – Textiles, it was held that the right to enter into regional trade agreements (RTAs) under Article XXIV of the GATT could not be made a nullity through the interpretation of other GATT provisions.Footnote 16
9.2.2 Narrow Definition of Conflicts and Harmonious Interpretation
The principle of Single Undertaking also influences how potential conflicts inter se between WTO covered agreements are viewed. The guiding rule here is that there is a presumption against conflicts within the WTO Single Undertaking. This section explores how the WTO DSS has been influenced by the principle of Single Undertaking when resolving conflicts, by firstly, adopting a narrow definition of conflict while interpreting WTO covered agreements, and secondly, the manner in which they are resolved through treaty interpretation.
The General Interpretative Note to Annex 1A to the WTO Agreement (the ‘General Interpretative Note’) provides that:
[i]n the event of conflict between a provision of the General Agreement on Tariffs and Trade 1994 and a provision of another agreement in Annex 1A to the Agreement establishing the World Trade Organization (referred to in the agreements in Annex 1A as the ‘WTO Agreement’), the provision of the other agreement shall prevail to the extent of the conflict.
The other agreements in Annex 1A include, inter alia, the Agreement on Sanitary and Phytosanitary Measures and the Agreement on Technical Barriers to Trade. Thus, the latter Agreements prevail over the more general GATT in the event of conflict. However, the manner in which potential conflicts have been resolved by the WTO DSS is more nuanced than a straightforward application of the General Interpretative note and warrants further examination.
Before proceeding to examine the WTO DSS jurisprudence on this, it is also necessary to recount the practice under general international law. In general international law, ‘conflict’Footnote 17 is a rather specific and narrow concept. One possible definition is as stated below:
[T]echnically speaking, there is a conflict when two (or more) treaty instruments contain obligations which cannot be complied with simultaneously …. Not every such divergence constitutes a conflict, however …. Incompatibility of contents is an essential condition of conflict.Footnote 18
Now, coming to the WTO context, a narrow definition of conflict was adopted by the Panel in EC – Bananas III. The Panel found that any conflict between WTO obligations that would warrant one obligation prevailing over another only refers to instances in which there are mutually exclusive obligations or when a rule in one agreement prohibits what is explicitly permitted by a rule in another agreement.Footnote 19 This approach was confirmed by the AB in Guatemala – Cement,Footnote 20 where it held that the mere existence of provisions addressing the same issue would not warrant a finding that one provision prevails over the other. In this dispute, the panel had found that Article 17.3 of the Anti-dumping Agreement (ADA), which provided for consultations, replaced the rules and procedures of the DSU. The AB found that this interpretation was incorrect as there was no conflict between the provisions of the ADA and the DSU, as consultations under the DSU and the ADA were not mutually exclusive.Footnote 21
Subsequently, in US – Hot Rolled Steel from Japan, the AB supported again a narrow definition of ‘conflict’ and stated that ‘there is no conflict between Article 17.6(i) of the ADA and Article 11 of the DSU’Footnote 22 and ‘we see Article 17.6(ii) as supplementing, rather than replacing, the DSU, and Article 11 in particular’.Footnote 23 The strict conflict approach was also followed by the Indonesia – Autos Panel, which referred to the definition of conflict in general public international law and noted that the incompatibility of treaty provisions is essential to a finding of conflict, divergence alone is not sufficient.Footnote 24
In US – Upland Cotton, the AB expanded the definition of conflict by providing three instances in which the Agreement on Agriculture would prevail over the SCM Agreement. These included an explicit carveout from the SCM Agreement, a situation wherein a Member could not comply with obligations under both agreements simultaneously and when the Agreement on Agriculture expressly authorised a measure prohibited under the SCM Agreement.Footnote 25 The AB recalled that all covered agreements form a part of the Single Undertaking and that Members are bound by all obligations contained therein. It was thus the duty of the adjudicator to read all applicable provisions harmoniously so as to give effect to all of them. The AB held that the application of Article 3.1(b) of the SCM Agreement could not be excluded for the purpose of domestic support subsidies in the Agreement on Agriculture as nothing to this effect was stated in the latter.Footnote 26
Therefore, the WTO DSS is seen to have avoided the necessity of finding a conflict between the provisions of various covered agreements under the Single Undertaking, by adopting a narrow definition of conflict. This implied a harmonious construction of two provisions, instead of applying the principle of conflict resolution captured in General Interpretative Note to Annex 1A.
The General Interpretative Note to Annex IA of the WTO Agreement can be considered an expression of the lex specialis derogat legi generali principle. It posits that special law derogates from general law. This legal maxim does not appear in the VCLT but has been referred to in decisions of the International Court of Justice, learned commentators, and decisions of WTO DSS.Footnote 27 The rule of lex specialis helps deal with situations in which there is a general rule and a special rule, both of which cannot be read harmoniously.Footnote 28 In such a situation, the special rule would prevail. However, the implications of lex specialis are still subject to discussion: the special rule could supersede or cancel out the general rule; or lex specialis could be used as a principle of interpretation that does not allow for the general rule to be superseded, rather, the specific provision is taken out of the scope of the general rule.Footnote 29
The use of the principle by Panel and AB decisions are informative of its use as a principle of interpretation.Footnote 30 In EC – Bananas III, the AB Report demonstrated how the relative specificity of an agreement can be used to resolve a situation of conflict. Whenever GATT and another agreement in Annex 1A to the WTO Agreement appear to apply to a measure, the measure should be examined on the basis of the agreement that ‘deals specifically, and in detail’, with measures of that kind.Footnote 31
Therefore, as may be seen from the above section, the principle of Single Undertaking impacts the manner in which conflicts are defined under WTO Agreements and the manner in which they are resolved through treaty interpretation.
The next section examines the application of customary rules of interpretation by WTO DSS in more detail.
9.3 Application of Customary Rules of Interpretation under VCLT – Article 31
The discussion focuses on Article 31 of the VCLT, which requires treaty terms to be interpreted in their context and in light of the object and purpose of the treaty. The AB, very early in US – Gasoline, recognised that the general rule of interpretation under Article 31 of the VCLT has attained the status of customary international law.Footnote 32 The uniqueness of the WTO framework and the implications of the Single Undertaking discussed above also inform the application of Article 31 of the VCLT to WTO covered agreements. Panels and the AB have had to move across WTO covered agreements in search of context and object and purpose of provisions, as the covered agreements are a ‘Single Undertaking’ and interpreted as one treaty. Accordingly, the practice of WTO dispute settlement has been to use Article 31 to facilitate cross-fertilisation across agreements and increase coherence within the Single Undertaking.
Article 3.2 of the DSU requires the WTO DSS to clarify existing provisions of covered agreements in accordance with ‘customary rules of interpretation under public international law’.Footnote 33 Rules of treaty interpretation thus play a significant role in the WTO system as adjudicators have been given the task of clarifying the rights and obligations of WTO Members without adding to them or diminishing them.
All Members seem to agree that customary rules of treaty interpretation refer to rules in the VCLT, namely, those contained in Articles 31–33. Accordingly, this section examines the application of the general rule of interpretation.
The general rule of interpretation contained in Article 31(1) of the VCLT posits that:
[a] treaty shall be interpreted in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose.
In its first decision, the AB held that the GATT cannot be read in clinical isolation and will have to be interpreted by applying the customary rules of interpretation.Footnote 34 This decision explicitly identified Article 31 of the VCLT as a customary rule of treaty interpretation and thus applicable when interpreting the GATT and other covered agreements.Footnote 35 The crux of the interpretative exercise involves three interrelated elements. The ordinary meaning of a treaty term is discerned using dictionaries and the grammatical construction of the provision, while taking into account the context in which a treaty term is placed and its object and purpose. This exercise is not carried out in distinct steps but is done holistically by the interpreter with each element influencing the other.Footnote 36
9.3.1 Good Faith
Good faith is a recognised general principle of law, a principle of interpretation and it is also explicitly mentioned in the DSU.Footnote 37 The principle of good faith informs the application of Article 31(1) of the VCLT and the use of a treaty term’s context and relevant object and purpose discussed above.Footnote 38 The AB has recognised this role of good faith in the application of treaties and at times combined it with the principle of abus de droit.Footnote 39 In US – Shrimp, for instance, the AB held that the Chapeau of Article XX of the GATT, which requires Members to apply measures that derogate from GATT obligations in a manner that is not arbitrary or a disguised restriction on trade, was an expression of good faith.
The chapeau of Article XX is, in fact, but one expression of the principle of good faith. This principle, at once a general principle of law and a general principle of international law, controls the exercise of rights by states. One application of this general principle, the application widely known as the doctrine of abus de droit, prohibits the abusive exercise of a state’s rights and enjoins that whenever the assertion of a right ‘impinges on the field covered by [a] treaty obligation, it must be exercised bona fide, that is to say, reasonably’. An abusive exercise by a Member of its own treaty right thus results in a breach of the treaty rights of the other Members, as well as, a violation of the treaty obligation of the Member so acting. Having said this, our task here is to interpret the language of the chapeau, seeking additional interpretative guidance, as appropriate, from the general principles of international law.Footnote 40 Good faith interpretation of treaty obligations became one of the central issues in Russia – Traffic in Transit wherein the Panel found that the discretion of a Member to designate particular concerns as an ‘essential security interest’ was limited by their obligation to interpret and apply the security exception in good faith.Footnote 41
9.3.2 Ordinary Meaning and the Use of Dictionaries
In EC – Asbestos, the AB referred to a dictionary, as a starting point for determining the meaning of the word ‘like’, which appears in Article III.4 of the GATT. The AB was, however, quick to note that questions regarding what product characteristics were important to assess likeness could not be answered by simply looking at the dictionary meaning.Footnote 42 The adjudicator also had to make a judgment with regard to the degree of likeness required under Article III and to the perspective from which this likeness was to be ascertained (consumers or producers).Footnote 43 To answer these questions, the AB turned to the context of Article III.4, thus applying the general rule of interpretation.
There are rare occasions in which the AB has considered the dictionary meaning, or definition, to be conclusive or sufficient in interpreting a term.Footnote 44 In Brazil – Aircraft (Article 21.5 – Canada), the AB referred to the ordinary meaning of the term ‘withdraw’ under Article 4.7 of the SCM Agreement on whether Brazil had complied with the recommendation of the DSB to withdraw the subsidy in question. The AB referred to the Oxford Concise Dictionary and Black’s Law Dictionary, concluding that the ordinary meaning of withdraw was the ‘removal’ or ‘taking away’ of a subsidy. However, it may be possible that the AB relied on contextual elements without mentioning them in the Report to arrive at the ordinary meaning in this case.Footnote 45
9.3.3 Context
9.3.3.1 Immediate Context – within the Covered Agreement
The search for context by WTO panels and the AB is not restricted to the covered agreement in which a relevant provision is found. Recalling that obligations of the Single Undertaking fall simultaneously and cumulatively on Members, this discussion examines how panels and the AB have identified context in the Single Undertaking framework.
The AB has considered the provisions within the immediate vicinity of a treaty term as its context. In US – Shrimp, for instance, the AB faulted a panel’s findings because they did not reflect the immediate context of sub-paragraph (g) of Article XX, which was the Chapeau of Article XX. In US – Clove Cigarettes, AB used the context provided by Article 2.2 of the Technical Barriers to Trade (TBT) Agreement to find that not all obstacles to international trade are prohibited under Article 2.1. In other instances, panels and the AB have moved across WTO covered agreements when searching for the context and object and purpose required to interpret a provision. The AB used this approach when it had the occasion to examine the meaning of the term ‘like’ in Article III.4 of GATT for the first time.Footnote 46 In interpreting the term, the AB held that ‘like’ under GATT may not have the identical meaning as the same term used in other covered agreements. But these covered agreements would nonetheless be relevant context in interpreting the term under Article III.4 of the GATT. This is further elaborated below.
9.3.3.2 Context across WTO Covered Agreements
The search for context by the WTO adjudicators is indicative of a holistic approach to interpreting the Single Undertaking recognising the need to maintain coherence between the obligations of the various covered agreements. As mentioned above, the AB has noted that the term like products was used in several WTO covered agreements such as the GATT, the SCM Agreement, the ADA, the Agreement on Safeguards, etc. Likeness was thus a key concept used across WTO disciplines. In some agreements, the meaning attributable to the term was specific and expressed in clear terms in the agreement. For instance, Article 2.6 of the ADA states that the term ‘like product’ should be interpreted to mean identical products throughout the Agreement and in the event that such product does not exist, like products would be those products that are not alike in all respects but still have characteristics that closely resemble each other. However, in most covered agreements, no such specific definition exists. Accordingly, the AB held that the term ‘like products’ should be interpreted in light of the context and the object and purpose of the provision in which it is found and the object and purpose of the relevant covered agreement. This means that the same term may have different scope, different components across different agreements.Footnote 47
The AB decision in US – Clove Cigarettes is a valuable illustration of how context is found within the relevant covered agreement and other WTO covered agreements. In this dispute, the operation of the WTO covered agreements as a single treaty and their collective relevance in the interpretation of treaty provisions was noted by the AB. It recalled its decision in EC – Asbestos, which identified the context of a provision as the terms within the covered agreement in question and similar terms in other covered agreements.Footnote 48
The AB used Article III.4 of the GATT and its jurisprudence as context for interpreting the meaning of ‘like’ products under Article 2.1 of the TBT and identifying the balance between rights and obligations contained within the article. The US had appealed the panel’s finding that clove and menthol cigarettes were like products. The US argued that clove and menthol cigarettes are not like products because clove cigarettes were disproportionally smoked by young smokers whereas menthol cigarettes are smoked evenly by both young and adult smokers.Footnote 49 The US submissions thus emphasised that not all consumers were willing to substitute clove and menthol cigarettes to the same degree (youth, for instance, had a stronger preference for clove cigarettes). The AB found that it was not necessary to show that a product was substitutable for all consumers in order to establish that they were alike.
In reaching its conclusion on likeness, the AB referred to its decision in Philippines – Distilled Spirits,Footnote 50 which discussed the second sentence of Article III.2 where like products are defined as products that are directly competitive or substitutable. The AB held that the interpretation of like products under Article III.2 would be relevant for the purpose of Article III.4 of the GATT and Article 2.1 of the TBT Agreement because a competitive relationship between products is determinative of likeness in each of these provisions. Though young smokers preferred clove cigarettes, for those who were starting to smoke, menthol and clove cigarettes were preferred as they both masked the otherwise harsh taste of tobacco. For the AB, the interchangeability of these cigarettes among young smokers was sufficient to establish their likeness for the purpose of Article 2.1.Footnote 51
After examining the meaning of likeness under Article 2.1 of the TBT Agreement and its application to clove and menthol cigarettes, the AB turned to the interpretation of Article 2.2 of the TBT and its interaction with Article 2.1. Specifically, the AB sought to understand the extent to which Article 2.1 permitted discrimination for the purpose of achieving legitimate regulatory objectives. Article 2.2 requires that technical regulations be put in place by Members only to achieve legitimate objectives, that they are not applied in a manner so as to cause arbitrary discrimination, and any regulations should not be more trade restrictive than necessary to achieve the objective of the regulation. The AB used Article 2.2 as context for Article 2.1, which allowed it to interpret the latter as not prohibiting all technical regulations that are obstacles to international trade. The AB used the principle of effectiveness and found that a strict reading to Article 2.1, which prevented all differentiation between like imported and domestic products, would amount to depriving Article 2.2 of the TBT Agreement of its effet utile.Footnote 52 Article 2.2, which provides the context for Article 2.1, suggests that obstacles to international trade would be permitted insofar as they are not found to be ‘unnecessary’. Therefore, if any prohibition on international trade was sufficient to establish a violation of Article 2.1, it would deprive Article 2.2 of its effet utile.
In order to interpret whether the US regulations banning clove cigarettes conferred less favourable treatment to products of foreign origin under Article 2.1 of the TBT Agreement, the parties and the AB found it useful to turn to Article III.4 of the GATT. On the issue of regulatory distinctions, the AB referred to EC – Asbestos, which held that regulatory distinctions that afford protection to domestic production would accord treatment less favourable to like imported products.Footnote 53 The requirement to accord treatment no less favourable was interpreted broadly under the GATT, and the AB followed this position for Article 2.1 of the TBT Agreement as well. However, it found the need to temper this requirement because of the specific context of the TBT Agreement, especially as evident from the Preamble of the agreement.
Therefore, context as a tool of interpretation by the WTO DSS has seen the employment of provisions that are both within the Agreement in question, as well as other Agreements that are part of the WTO covered agreements. This is a direct consequence of the principle of Single Undertaking.
9.3.3.3 Preambular Language as Context
Preambular language has been an important source of context in several decisions of the AB.Footnote 54 Of note is the decision in US – Shrimp, which used preambular language to give a contemporaneous interpretation of Article XX of the GATT. As mentioned above, Article XX is the exceptions clause of the GATT and allows Members to derogate from their market access and other obligations of the GATT to meet certain policy objectives. Any measures enacted under Article XX must not be applied in an arbitrary or discriminatory manner or be a disguised restriction to trade. The policy objectives for which Article XX may be invoked are provided in the text of the provision. These objectives include the protection of public morals; human, plant, and animal life and health; conservation of gold and silver reserves; and measures relating to prison labour. The dispute in US – Shrimp concerned Article XX(g), which refers to measures relating to the conservation of exhaustible natural resources if such measures are in conjunction with domestic production and consumption.
The United States had invoked this exception to defend a measure that banned the import of shrimp that was caught without using Turtle Excluder Devices (TEDs). TEDs were designed to allow turtles to swim out of shrimp nets instead of getting caught in them and suffering from injury or suffocating. One of the arguments of the complaining parties (India, Pakistan, and Thailand) was that exhaustible natural resources referred to non-living, non-renewable natural resources. Their interpretation of Article XX(g) was based on arguments made by delegations when the provision was being negotiated. The complaining parties posited that exhaustible natural resources referred to substances such as minerals and other non-biological natural resources.Footnote 55 The AB was not persuaded by this reasoning and referred to the text and context of Article XX(g) to determine its meaning.
The AB noted that half a century had passed between the drafting of Article XX(g) and the dispute. During the Uruguay round that established the WTO, there was a chance to modify Article XX(g) but this did not occur. However, the WTO Agreement was adopted in this round along with its Preamble that referred to the objective of sustainable development.Footnote 56 The use of the phrase sustainable development in the Preamble of the WTO Agreement prompted the AB to interpret Article XX(g) in a more fluid and contemporaneous manner. The meaning of exhaustible natural resources would not remain static and tied to the understanding of the term fifty years ago. The United Nations Convention of the Law of the Sea (UNCLOS), for instance, defines natural resources as both living and non-living. Taking a cue from the international community, which acknowledges the need to protect living natural resources and the recognition of the objective of sustainable development, the AB held that turtles were exhaustible natural resources, the protection of which would be a legitimate policy objective under Article XX(g).
As this preambular language reflects the intentions of negotiators of the WTO Agreement, we believe it must add colour, texture and shading to our interpretation of the agreements annexed to the WTO Agreement, in this case, the GATT 1994.Footnote 57
Once identified, the context of a provision has been used to breathe life into it and inform new interpretations of it. In US – Shrimp, the value of the WTO Agreement’s preambular language guided the interpretive efforts of the AB helping it arrive at a contemporaneous meaning for Article XX(g).
Turning once again to US – Clove Cigarettes, the dispute serves as another example of the use of Preambular language as context. The sixth recital of the Preamble of the TBT Agreement recognises that Members should not be prevented from taking measures that are necessary to prevent deceptive practices; protect animal, plant, and human life or health; and decide the appropriate levels of protection it wants to afford to each of these concerns. The prohibition contained under Article 2.1 thus needs to be balanced with Members’ right to regulate as enshrined in the Preamble and under Article 2.2. The AB noted that unlike the GATT, which explicitly allows for derogations from Article III (and other Articles of the GATT) through Article XX, the TBT Agreement does not contain a provision containing exceptions. Nonetheless, the AB found that the balance struck by the TBT Agreement between trade liberalisation and Members’ right to regulate, found in Article 2.1 itself, was not principally different from the balance struck by the GATT through the introduction of Article XX.Footnote 58 AB decisions in US – COOLFootnote 59 and US – Tuna II (Mexico)Footnote 60 also follow this approach and used Article III.4 of GATT as relevant context for interpreting Article 2.1 of TBT.
9.3.4 Object and Purpose of Covered Agreements and/or Specific Provisions
The object and purpose of a treaty refers to the teleology or the mission of a treaty.Footnote 61 The concept itself is an evolving one and can only be defined in general terms if one is not referring to a specific treaty.Footnote 62 The phrase ‘object and purpose’ under Article 31 of the VCLT is understood as referring to the object and purpose of the treaty as a whole and not to individual provisions of a treaty.Footnote 63 Panels and the AB have often used the object and purpose of a provision in addition to the treaty to shed light on the ordinary meaning of a provision.Footnote 64
When deciding what the phrase ‘based on’ under Article 5.1 of the Agreement on the Application of Sanitary and Phytosanitary Measures (SPS Agreement) meant, the AB referred in EC – Hormones to the object and purpose of the provision to find that the phrase required an objective relationship between sanitary and phytosanitary measures (SPS measures) and the risk assessment of the persisting situation.Footnote 65
We believe that ‘based on’ is appropriately taken to refer to a certain objective relationship between two elements, that is to say, to an objective situation that persists and is observable between an SPS measure and a risk assessment. Such a reference is certainly embraced in the ordinary meaning of the words ‘based on’ and, when considered in context and in the light of the object and purpose of Article 5.1 of the SPS Agreement, may be seen to be more appropriate than ‘taking into account’.Footnote 66
In EC – Hormones, the AB held that while the European Communities had a right to establish a higher level of protection, it was bound to comply with the requirements of Article 5.1 of the SPS Agreement such as taking into account risk assessment techniques developed by relevant international organisations.Footnote 67 In arriving at this conclusion, the AB referred to the object and purpose of the SPS Agreement as a whole and of Article 3 in particular. Article 3.1 of the SPS Agreement requires Members to base their SPS measures on international standards, guidelines, and recommendations. The thrust of this paragraph under Article 3 is to promote harmonisation. If Members decide to take SPS measures that conform to international standards (thus implying a closer link than measures that are ‘based on’ international standards as under Article 3.1), they benefit from a rebuttable presumption that these measures conform to the SPS Agreement. Under Article 3.3 of the SPS Agreement, Members have the right to introduce measures that achieve a higher level of sanitary and phytosanitary protection than what would be achieved by measures based on international standards.
With respect to object and purpose of the provision, the object and purpose of Article 3 was identified as promoting the harmonisation of SPS measures while recognising and safeguarding Members’ right to regulate and protect the life and health of their people.Footnote 68 The SPS Agreement attempted to strike a balance between the promotion of international trade and the protection of the life and health of human beings. Considering this, Article 5.1 was an important countervailing force to Article 3. The two had to be read in conjunction with each other.Footnote 69
One implication of the teleological approach in the context of the WTO covered agreements is that the object and purpose of ostensibly similar provisions allows for their varied interpretation and application. The ordinary meaning of a provision requires an examination of the provision’s context and object and purpose, and this extends to exceptions as well. In US-Shrimp, the panel report had found that the WTO Agreement emphasises multilateralismFootnote 70 and used this to hold that Article XX of the GATT, when read in light of the context and object and purpose of the GATT and the WTO Agreement, would not accommodate unilateral measures.Footnote 71 The AB found that the panel had erred in arriving at this conclusion. The panel’s error was attributed to its interpretative approach and incomplete identification of the relevant object and purpose. For the AB, the panel had improperly ignored the object and purpose of the Chapeau of Article XX during its interpretative exercise. The AB took issue with the panel’s exclusive focus on the object and purpose of the GATT as a whole and the WTO Agreement. The panel found that the object and purpose of the Chapeau of Article XX was the prevention of abuse of exceptions under Article XX. This, however, did not result in an a priori prohibition of unilateral measures.Footnote 72 To the contrary, the AB found that unilateral measures fell within the scope of the sub-paragraphs of Article XX as long as they could be linked to the policy objectives and meet the requirements of the Chapeau of Article XX.Footnote 73 Similarly, in US – Gasoline, the AB had held that though Article XX of the GATT conferred a legal right, to be exercised in a manner that did not frustrate legal obligations of a Member under the WTO Agreement.Footnote 74
9.3.4.1 Interpretation of Justifications – Use of Object and Purpose and Rebalancing Burden of Proof
In the context of exceptions, the burden of proof falls on the defendant to justify their invocation of the exception once the complaining party has fulfilled the burden of showing the violation of the general rule.Footnote 75 Under Article XX of the GATT, for instance, it is for the responding party invoking the exception to show that the design of the measure falls under one of the sub-paragraphs of Article XX and that it passes the Chapeau test. There are some types of exceptions that offer a contrasting example, where the burden of proof is rebalanced and shifted towards the complaining party. This is not to say that the defending party no longer has the burden of justifying the invocation of a defence; but in the cases discussed below, the AB has required the complainant to do more before the burden of proof falls on the defendant.
In EC – Hormones, the AB found that Article 3 of the SPS agreement and its sub-paragraphs, though characterised as an exception, were qualitatively different from Article XX of the GATT.Footnote 76 The AB held that Article 3.3 of the SPS Agreement conferred an autonomous right on Members to adopt their own levels of protection or measures that achieve a level of protection that goes beyond international standards. It was emphasised that characterising a provision as an exception would not automatically warrant a stricter or narrower interpretation of that provision. The interpretation of an exception would also require an adjudicator to arrive at its ordinary meaning in light of its context and the object and purpose of the treaty.Footnote 77 A similar interpretation was adopted with reference to the interaction between Article 2.2 and Article 5.7 of the SPS Agreement.Footnote 78
Subsequently, in EC – Sardines, the AB found that its decision in EC – Hormones, which clarified the burden of proof under arts 3.1 and 3.3 of the SPS Agreement, would be relevant to a case involving Article 2.4 of the TBT Agreement as well. Though the provisions at issue in EC – Hormones and EC – Sardines were found in different covered agreements (SPS and TBT, respectively), the AB in EC – Sardines used the conceptual similarity of these provisions to maintain a consistent approach to their interpretation.Footnote 79 Article 2.4 of the TBT Agreement requires Members to base their technical regulations on international standards except when these standards would be ineffective or inefficient for the fulfilment of the objective pursued by the Member. The AB in EC – Sardines used Articles 3.1 and 3.3 as context, holding that like those articles under the SPS Agreement, Members’ ability to deviate from international standards as a basis for measures under Article 2.4 of the TBT Agreement was not an exception. Rather, it was a right given to Members, and a complaining party would bear the burden of showing that international standards are in fact inappropriate for fulfilling the objective of the responding Member.Footnote 80 Accordingly, it was for the complainant to show that a technical regulation is not based on an international standard and that international standards are adequate to fulfil the legitimate objectives of the responding member.Footnote 81
The AB referred to its jurisprudence on Article XX of the GATT while interpreting Article XIV of the GATS in US – Gambling. Article XIV is analogous to Article XX and follows a similar structure (enumeration of policy objectives in sub-paragraph with an overarching requirement for measures not to be discriminatory or operate as a disguised restriction to trade in the Chapeau). The GATS, concluded in 1994, is a more recent agreement compared to the GATT. However, the AB used a consistent interpretive approach to both agreements. In US – Gambling, the AB reiterated that the exceptions provision under Articles XX and XIV gave Members the right to set their own desired level of protection with relation to the policy objectives enumerated in the exceptions. While the responding Member had to demonstrate the necessity of the measure, it was for the complaining party to demonstrate the existence of alternative measures, if any. These measures proposed by the complaining party would be considered alternatives only if they were equally feasible for the responding member, did not impose an undue burden, and achieved the level of protection set by the responding Member. The treatment of exceptions under the GATS and the GATT is a valuable example of cross-fertilisation between agreements and the AB’s attempt to maintain internal coherence.
The Enabling Clause and special and differential treatment provisions are also examples of how exceptions are treated differently depending on their object and purpose. The Enabling Clause allows developed country Members to give enhanced market access to products from developing country Members. It is thus an exception to Article I.1 of GATT that requires that Members accord to all Members, immediately and unconditionally, the same level of treatment without favouring one Member over others. Despite being characterised as an exception, the general rule for allocation of burden of proof used for exceptions does not strictly apply to the Enabling Clause. In EC – Tariff Preferences, the AB noted the special and fundamental nature of the Enabling Clause to the WTO DSS. Pursuant to its important role, the AB held that a complaining party had to do more than simply allege inconsistency of a measure with Article I.1 of GATT, it has also to explain why the challenged measure is also inconsistent with the provisions of the Enabling Clause.Footnote 82 Specifically, a complaining Member alleging a violation of the Enabling Clause would have to explain which conditions of the Enabling Clause were not met by the provider of the special and differential treatment. It is only upon such identification that the burden of proof would switch to the defending party.
In the light of the extensive requirements set forth in the Enabling Clause … a complaining party cannot, in good faith, ignore those provisions and must, in its request for the establishment of a panel, identify them and thereby ‘notif[y] the parties and third parties of the nature of [its] case’. For the failure of such a complaining party to raise the relevant provisions of the Enabling Clause would place an unwarranted burden on the responding party.Footnote 83
The AB adopted a similar line of reasoning when interpreting Article 27.4 of the SPS Agreement in Brazil – Aircraft. Article 27 is a special and differential treatment provision under the SCM Agreement and allows developing country Members to maintain export subsidies that are required for their development needs. Article 27.4 contains certain conditions that developing country Members need to fulfil in order to avail of the special and differential treatment under Article 27; for instance, developing country Members need to phase out export subsidies in a progressive manner and not increase their level of export subsidies. The AB found that the conditions under Article 27.4 are ‘positive obligations’ and not ‘affirmative defences’.Footnote 84 Accordingly, the burden of proof falls on the complaining party to demonstrate that any of the conditions set out in Article 27.4 have not been complied with by a developing country Member.Footnote 85
Therefore, as may be seen from the above cases, the interpretation of a provision as a positive right, as opposed to an affirmative defence, determines the burden of proof applicable in a present case.
9.3.5 Agreement at the Time of Conclusion of the Treaty – Article 31(2) of the VCLT
Article 31(2) of the VCLT elaborates on two sources of ‘context’ for the purposes of interpretation of a treaty. It refers to any agreement relating to the treaty that was made between all the parties in connection with the conclusion of the treaty and any instrument made by one or more parties in connection with the conclusion of the treaty and accepted by other parties as an instrument related to the treaty. In EC – Computer Equipment, the AB noted that the Panel erred in not considering the International Convention on the Harmonized Commodity Description and Coding System, and its Explanatory Notes, in interpreting the terms of Schedule LXXX. Although they did not explicitly refer to these as falling within the scope of Article 31(2), they do note that the EC and the United States were parties to the Harmonized System during the Uruguay Rounds implying that this could be within the scope of agreement at the time of conclusion of the treaty.Footnote 86
As noted by the AB in China – Auto Parts, this context is relevant for a treaty interpreter to the extent that it may shed light on the interpretative issue to be resolved. It is not just sufficient that the agreement or instrument fall within the scope of Article 31(2). The AB narrows the scope of Article 31(2) further by stating that the agreement or instrument must have some pertinence to the language being interpreted that renders it capable of helping the interpreter determine the meaning of such language. In China – Auto Parts, while it was accepted that the Harmonized System is apt to shed light on the meaning of terms used in the WTO Members’ Schedule of Concessions, it was stated that it does not automatically imply that it is also context relevant for the interpretative question faced by the Panel.Footnote 87 The interpretative task of the Panel was the assessment of the respective scope of application of ‘ordinary customs duties’ in the first sentence of Article II:1(b) and ‘internal charges’ in Article III:2 of the GATT. Therefore, the Harmonized System was not considered context relevant for such interpretative exercise.
In EC – Chicken Cuts, the AB noted that the Harmonized System would be such relevant context for the interpretation of the EC Schedule. The interpretative task was of the term ‘salted’ in heading 02.10 of the EC Schedule. The broader context includes the other headings in Chapter 2 of the EC Schedule, other WTO Member Schedules, as well as the Harmonized System, although not formally a part of the WTO Agreement.Footnote 88
On the substantive requirements under Article 31(2), the AB in US – Gambling found that the W/120 and the 1993 Scheduling Guidelines did not constitute sufficient context for the interpretation of the United States’ GATS Schedule. It was noted that the parties in the negotiations had not accepted them as agreements or instruments related to the treaty. The AB has also excluded from the scope of Article 31(2), jurisprudence of the WTO DSS,Footnote 89 and the Tokyo Round Subsidies Code, which was a predecessor agreement.Footnote 90
9.3.6 Subsequent Agreement, Subsequent Practice, and Relevant Rules of International Law – Article 31(3) of the VCLT
9.3.6.1 Subsequent Agreement Regarding Interpretation or Application of its Provisions
Article IX:2 of the WTO Agreement sets out specific requirements for decisions that may be taken by the Ministerial Conference or the General Council to adopt interpretations of provisions of the WTO covered agreements. However, these are exclusively intended to clarify the meaning of existing provisions and should not be used to undermine the amendment provisions under Article X. The AB in EC – Bananas III has noted that a multilateral interpretation pursuant to Article IX:2 is akin to a subsequent agreement recognised under Article 31(3)(a) of the VCLT on the interpretation of the concerned agreements.Footnote 91 However, the AB in US – Clove Cigarettes emphasised that Article IX:2 of the WTO Agreement, and Article 31(3)(a) of the VCLT have different functions and have different legal effects.Footnote 92 In order to fall within the scope of Article 31(3)(a), it is necessary to look at the substance, rather than the form of the agreement. Therefore, the AB found that a decision adopted by Members at the Doha Ministerial Conference may constitute a ‘subsequent agreement’ on the interpretation of the term ‘reasonable interval’ in Article 2.12 of the TBT Agreement, under Article 31(3)(a) of the VCLT.Footnote 93 The AB in US – Tuna II held that the TBT Committee Decision on international standards is a ‘subsequent agreement’ for the purpose of Article 31(3)(a) since it was adopted subsequent to the conclusion of the TBT Agreement by consensus and with the objective of clarifying the application of the TBT Agreement.Footnote 94
9.3.6.2 Subsequent Practice Establishing Agreement Regarding Its Interpretation
In establishing ‘practice’ within the meaning of Article 31(3)(b) of the VCLT, the AB in US – Gambling identified two necessary elements: (i) that there must be a common, consistent, discernible pattern of acts or pronouncements; and (ii) those acts or pronouncements must imply agreement on the interpretation of the relevant provision. In the said case, speaking of the 2001 Guidelines adopted by the Council for Trade in Services, it was concluded that this could not constitute subsequent practice for the interpretation of the GATS as this was in the context of negotiation of future commitments. Therefore, such Guidelines could not constitute an agreement regarding Members’ interpretation of existing commitments.Footnote 95
Now, coming to the question of how many parties need to undertake a ‘practice’ to satisfy the threshold of Article 31(3)(b), the AB in EC – Chicken Cuts provides guidance. While clarifying that it would be possible to establish a common intention of all the parties, even if the practice has not been undertaken by all the parties, the AB was interpreting the tariff commitments in the WTO Schedule of the European Communities. However, the AB disagreed with the Panel that the practice of one Member alone could establish subsequent practice as per Article 31(3)(b). There was a need to establish an agreement of all the Members, even those that had not engaged in the said practice. The mere lack of reaction or protest to a practice by one Member, although sufficient in some cases, cannot in all cases be sufficient to establish agreement with the interpretation of the Member.Footnote 96
It is also necessary to recall the caution advocated by the AB in Japan – Alcoholic Beverages II in relying on ‘subsequent practice’ for purposes of interpretation, stating that it must not lead to interference with the ‘exclusive authority’ of the Ministerial Conference and the General Council to adopt interpretations of WTO covered agreements that are binding on all Members as per Article IX:2 of the WTO Agreement.Footnote 97
9.3.6.3 Relevant Rules of International Law Applicable in the Relations Between the Parties
There are three elements to be established in order to fall within the scope of Article 31(3)(c) of the VCLT: the principle must be a ‘rule of international law’, the rule must be ‘relevant’, and lastly, such rule must be applicable in the relations between the parties. Regarding the first two of these criteria, the AB in US – Anti Dumping and Countervailing Duties elaborated that:
First, the reference to ‘rules of international law’ corresponds to the sources of international law in Article 38(1) of the Statute of the International Court of Justice and thus includes customary rules of international law as well as general principles of law. Second, in order to be relevant, such rules must concern the same subject matter as the treaty terms being interpreted.Footnote 98
Now, coming to the final element of Article 31(3)(c), the parties to which the rule is relevant, there is still uncertainty as to the threshold to be satisfied. This becomes important as the relevant rule can be a rule of customary international law, that is generally applicable to all parties, or a treaty rule, that may be applicable only to certain parties. The question that arises is whether the term ‘the parties’ refers to the parties to a present dispute, or whether it means parties to the WTO Agreement as a whole.
The European Communities in EC – Biotech argued that the WTO covered agreements must be interpreted and applied by reference to relevant rules of international law arising outside the WTO context, as reflected in international agreements and declarations. They argued that the 1992 Convention on Biological Diversity and the 2000 Cartagena Protocol on Biosafety to the Convention on Biological Diversity fall within the scope of Article 31(3)(c) of the VCLT for the purposes of interpretation of the SPS Agreement, TBT Agreement, and GATT 1994. The Panel makes the following observations about the threshold requirements under Article 31(3)(c):
Furthermore, and importantly, Article 31(3)(c) indicates that it is only those rules of international law which are ‘applicable in the relations between the parties’ that are to be taken into account in interpreting a treaty. This limitation gives rise to the question of what is meant by the term ‘the parties’. In considering this issue, we note that Article 31(3)(c) does not refer to ‘one or more parties’. Nor does it refer to ‘the parties to a dispute’. We further note that Article 2.1(g) of the Vienna Convention defines the meaning of the term ‘party’ for the purposes of the Vienna Convention. Thus, ‘party’ means ‘a State which has consented to be bound by the treaty and for which the treaty is in force’. It may be inferred from these elements that the rules of international law applicable in the relations between ‘the parties’ are the rules of international law applicable in the relations between the States which have consented to be bound by the treaty which is being interpreted, and for which that treaty is in force. This understanding of the term ‘the parties’ leads logically to the view that the rules of international law to be taken into account in interpreting the WTO agreements at issue in this dispute are those which are applicable in the relations between the WTO Members.Footnote 99
The Panel therefore concluded in favour of a narrow interpretation of this clauseFootnote 100 because all WTO Members, including some parties to the dispute, were not parties to the Convention on Biological Diversity and the Biosafety Protocol. However, given that even the more liberal requirement was not satisfied, as the disputing parties were not all parties to the Convention on Biological Diversity and the Biosafety Protocol, the Panel in effect refused to consider if the term ‘the parties’ in Article 31(3)(c) of the VCLT was a reference to all the parties to treaties.
Later, the AB in EC – Aircrafts noted that in a multilateral context like the WTO, a balance is required to be struck between the individual WTO Member’s international obligations and ensuring a harmonious approach to interpretation of WTO law among all WTO Members.Footnote 101 This AB report suggests a move away from a purely conservative approach. However, in this case, the AB did not proceed to settle this issue as the second requirement under Article 31(3)(c) relating to relevance of the rule was not satisfied. Therefore, the AB has yet to conclusively pronounce on this issue, and it is presently under consideration by the ILC study group on fragmentation of international law and stands unresolved.Footnote 102
At this juncture, it is also necessary to explain a peculiarity of the WTO DSS with respect to application of rules and interpretation of rules. This is particularly important in the context of understanding the relationship between WTO covered agreements and general international law. The mandate of the WTO DSS, through Panels and the AB, is to determine whether the provision of WTO covered agreementsFootnote 103 have been violated. The provisions of the DSU governing the terms of reference to Panels,Footnote 104 on function of Panels,Footnote 105 and recommendations of Panels and ABFootnote 106 limit in various ways the applicable law before the WTO DSS. In all these instances, the applicable law is restricted to WTO covered agreements, and the WTO DSS can only apply these WTO rules in any given dispute.Footnote 107 However, this restriction does not imply clinical isolation of the WTO rules from the rest of international law.Footnote 108 This restriction is precisely what makes Article 31(3)(c) of the VCLT an important tool in the interpretation of WTO covered agreements: It is an entry point for the relationship between WTO rules and public international law and a mechanism to promote coherence in international law. This makes the scope of Article 31(3)(c) and the interpretation of the term ‘the parties’ a critical determinant in allowing Panels and the AB to use non-WTO rules. If a strict and narrow interpretation of this term is adopted, to mean all WTO Members, this detracts from allowing Members to comply cumulatively and simultaneously with all their international obligations.
In this regard, an important consideration to be kept in mind with respect to the WTO Agreement is that the membership includes customs territories having full autonomy of its trade policies. However, other treaties do not include such actors within the scope of their membership. If a narrow interpretative approach is adopted to determine the scope of ‘parties’ in Article 31(3)(c) as meaning all the parties to the treaty, it would restrict the possibility of taking into account various other international agreements that may be relevant for the interpretative exercise and to promote coherence.
9.4 Supplementary Means of Interpretation and Treaties Authenticated in Multiple Languages
Articles 32 and 33 of the VCLT are considered customary international law along with Article 31, which has been the subject of discussion thus far.Footnote 109 When there are any gaps or ambiguity that persist regarding the meaning of a treaty term after the application of Article 31, the VCLT provides for further rules of interpretation under Articles 32 and 33. Recourse to supplementary means of interpretation under Article 32 can be used to confirm the meaning resulting from the application of Article 31 or to clarify it. Supplementary means of interpretation can be used when the meaning of a treaty term after the application of Article 31 is ambiguous or obscure or leads to a result that is manifestly absurd or unreasonable.Footnote 110 Article 33 of the VCLT is pertinent in the context of the WTO as the texts of the covered agreements have been authenticated in three languages – English, French, and Spanish. According to Article 33 of the VCLT, the texts in each of these languages would be authoritative.
9.4.1 Article 32 – Supplementary Means of Interpretation
The VCLT mentions preparatory work and circumstances under which the treaty was concluded as supplementary means of interpretation. The AB has emphasised that Article 32 does not provide an exhaustive list and that an interpreter retains flexibility when considering sources that may shed light on the common intention of parties.Footnote 111 In EC – IT Products, the panel held that HS2007 (Harmonized System)Footnote 112 could be a supplementary means of interpretation though it was concluded after the covered agreements and does not constitute preparatory work.Footnote 113 The panel noted that HS Codes are subject to evolution and if a current HS Code reflects the intention of parties at the time of concluding the treaty, it would serve as a supplementary means of interpretation.Footnote 114 The panel ultimately did not rely on HS2007 in this dispute as it found that the updated HS code did not reflect the common intention of parties when the treaty was concluded.
Supplementary means of interpretation have been used on several other occasions to confirm the meaning of treaty terms. In Canada – Dairy and US – Gambling, the AB used supplementary means to clarify the meaning of entries in the goods and services schedules of Canada and the US, respectively. The supplementary means used in Canada – Dairy were the circumstances surrounding the conclusion of the treaty, namely negotiations between Canada and the US on reciprocal market access. Scheduling Guidelines were used as a supplementary means in US – Gambling.Footnote 115 In the context of preparatory work, the AB has been cautious while giving weight to the negotiating history of a provision because there is no official record of negotiations for the WTO.Footnote 116
When considering circumstances of the conclusion of a treaty as a supplemental means of interpretation, the value of unilateral practices of Members has often come up.Footnote 117 With respect to practices relating to tariff classifications, the AB has held that the practice of one Member would have limited value but would not be wholly irrelevant. In EC – Computers, the AB found that the panel had erred by not considering the tariff classification practice of the US.Footnote 118 In EC – Chicken Cuts, the AB broadened the scope of things that could be considered ‘circumstances of the conclusion’ of a treaty to include consistent classification practice of customs authorities, legislations’ and judgemnts of domestic courts.Footnote 119 Dispute settlement reports have consulted a variety of sources under Article 32 of the VCLT. However, panels and the AB have been cautious when discerning a common interest from the negotiating history of the WTO as there is no official record.Footnote 120
9.4.2 Article 33 – Treaties Authenticated in Two or More Languages
The last paragraph of the WTO Agreement unequivocally states that the English, French, and Spanish language versions of the treaty are authentic. When a treaty is authentic in more than one language, the presumption is that the provisions of all treaty texts have the same meaning and reflect the common intention of parties.Footnote 121 The Spanish and French versions of the GATT were used by the AB to explain the meaning of ‘like’ products under Article III:4,Footnote 122 when deciding between two meanings that could be ascribed to the preposition ‘under’ in Article X:2 of the GATT. Specifically, the AB was examining whether ‘under’ qualified the phrase ‘rate of duty’. After referring to the French and Spanish versions, which used the phrase ‘en vertu de’ and ‘en virtud de’ (which translates in English as ‘by virtue of’), the AB concluded that ‘under’ could not qualify the phrase ‘rate of duty’ as this would not be a possible construction in the Spanish and French versions.Footnote 123 The AB thus opted for an interpretation that was reconcilable with the other two versions.Footnote 124 The Panel in United States – Origin Marking (Hong Kong, China) refered to the texts in all three authenticated languages to find that not every tension or difference in international relations is an ‘emergency in international relations’. The situation has to represent a breakdown or near breakdown of international relations.Footnote 125
Despite the covered agreements being authentic in three languages, Members will often designate only one or two of these languages as authentic for the purpose of their Schedules. Argentina’s Schedule for specific commitments in Services is authentic only in Spanish.Footnote 126 Similarly, the Schedule of Concessions for goods of Canada was authenticated only in English and French at the conclusion of the Uruguay Round.Footnote 127 The latest version of the Schedule, however, is authentic only in English.Footnote 128 Following this practice, the Accession Protocol of Russia explicitly states that the protocol itself is authentic in the three official languages; however, the Schedule annexed is authentic only in English.Footnote 129
One should also note that the negotiations during the Uruguay Rounds took place in English and the agreements were translated into French and Spanish before being authenticated. Thus, there is no formal hierarchy of languages in the WTO, and one may say that the WTO Agreement prohibits such a hierarchy. However, the question of whether, in practice, the authentic texts operate with a hierarchy is one worth exploring. Van Damme, for instance, posits that the AB has often failed to respond to Members contentions that are based on comparisons between texts of converted agreements in the three languages.Footnote 130 It would be interesting to see how claims made by a WTO Member relying on the French or Spanish text as the primary treaty text would be interpreted in light of the English text, before a WTO DSS body.
9.5 Other Principles Applicable to Treaty Interpretation in the WTO Context
While the VCLT codified some of the relevant customary rules of treaty interpretation, they are not exhaustive. There are several uncodified principles of treaty interpretation that Panels and the AB have resorted to. The AB in US – Gasoline held that the principle of effectiveness is one of the corollaries of the general rule of interpretation under the VCLT. An interpreter should, in light of good faith and the object and purpose of the treaty,Footnote 131 give meaning and effect to all the terms of the treatyFootnote 132 harmoniously.Footnote 133 The principle of evolutionary interpretation was used by the AB in US – Shrimp while holding that the term ‘natural resources’ in Article XX(g) of the GATT is not static and should be interpreted in light of ‘contemporary concerns of the community of nations’.Footnote 134 In factual situations where two laws apply simultaneously, Panels and the AB have used the lex specialis doctrine to apply the one that applies specifically to the factual situation over the general one.Footnote 135
9.6 Interpretation v. Application
Panels under the WTO DSS are, under their terms of reference, restricted from applying any legal instrument other than the covered agreements in examining a dispute referred to them.Footnote 136 Pursuant to Article 19 of the DSU, a Panel or AB can only make a finding and recommendations on the challenged measure’s alleged inconsistency with a covered agreement.Footnote 137 No finding or recommendation can be made with respect to any legal instrument that is not a covered agreement.Footnote 138
In Peru – Agricultural Products, the AB held that Members cannot enter into an agreement to maintain WTO-inconsistent measures. While Peru relied on Article 41 of the VCLT (agreements to modify multilateral treaties between certain of the parties only) to justify such WTO-inconsistent measures, the AB held that specific provisions on amendments, waivers, or exceptions for RTAs under the WTO covered agreements would prevail over the general provision in the VCLT.Footnote 139
However, this does not mean that non-WTO covered agreements have no role to play in WTO dispute settlement process. As stated by the AB in US – Gasoline, WTO covered agreements should not be interpreted in clinical isolation. As discussed herein above, the customary rules of interpretation may cause the interpretation of WTO provisions to be altered and influenced by other international rights and obligations. Article 31(3)(c) of the VCLT can be particularly important in this regard.Footnote 140
9.7 Conclusion
The WTO dispute settlement system, through panels and the AB, has used the tools and principles of treaty interpretation to maintain an internal coherence between the various WTO covered agreements. The peculiarities of the WTO rules must be kept in mind while understanding the manner in which the WTO DSS employs customary rules of interpretation, specifically relating to the principle of the Single Undertaking.
The process of horizontal cross-fertilisation between agreements during the interpretative exercise has contributed to reducing conflict in the interpretation of similar provisions. By prioritising the principle of effective interpretation, the AB has ensured that Members’ rights continue to be recognised in contemporaneous circumstances which may not have been foreseen by GATT negotiators (for instance, the interpretation of exhaustible natural resources in US – Shrimp). That context is found across various provisions of the WTO covered agreements and in the immediate surrounding words of the treaty term in question and this has allowed dispute settlement reports to maintain consistency without compromising on the specific purpose of provisions in different WTO covered agreements. For instance, when deciding on issues relating to burden of proof for provisions framed as exceptions, the AB used the context and object and purpose of these provisions to identify how burden of proof should be allocated. Likewise, in EC – Tariff Preferences, the AB found the Enabling Clause was an exception but one of a different shade given its objective to encourage non-most-favored-nation (non-MFN) treatment for developing countries by developed countries. The use of the customary rules of interpretation has thus facilitated the coherent application of WTO covered agreements, which have myriad rules but no formal normative hierarchy that informs their application. Further, they hold the potential, through provisions like Article 31(3)(c) of the VCLT, to avoid clinical isolation of the WTO rules and promote coherence between WTO rules and international law.
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