Claims of Error by the United States – Appellant

1. Article 2.1 of the TBT Agreement

17. The United States requests the Appellate Body to reverse the Panel's finding that the COOL measure is inconsistent with Article 2.1 of the TBT Agreement with regard to muscle cuts of meat, in particular the finding that the measure accords less favourable treatment to imported livestock than domestic livestock. The United States argues that the Panel's finding was based on “a faulty and unprecedented legal test” for the assessment of less favourable treatment and on a failure to make an objective assessment of facts related to segregation, commingling, and the price differential in the US livestock market.

18. The United States submits that, in order to determine whether a measure accords less favourable treatment to imported products under Article 2.1 of the TBT Agreement, the Panel should have followed past Appellate Body and panel reports in Thailand – Cigarettes (Philippines), Korea – Various Measures on Beef, and Dominican Republic – Import and Sale of Cigarettes. According to the United States, these reports generally focused on: (i) “whether the measure itself treats imported products differently and less favorably than domestic like products on the basis of their origin”; and (ii) “to the extent that there are adverse effects on imported products, whether these effects are attributable to the measure itself or are based on external non-origin related factors, such as pre-existing market conditions and the independent actions of private market actors.”

Claims and Order of Analysis

1. The complainants' claims

7.1 The complainants present their respective claims under the two sentences of Article III:2 of GATT 1994 differently. The European Union generally starts its argumentation with the first sentence of Article III:2. It articulates its claim under the second sentence as an alternative, in the event that it does not succeed, either partially or totally, in its claim under the first sentence. Indeed, in its first submission, the European Union explains that:

7.2 In contrast, the United States presents its claims under each of the two sentences as independent claims; it specifically requests findings that would cover all distilled spirits under both the first and the second sentences of Article III:2.

7.3 The Philippines generally responds to the complainants’ arguments under Article III:2 by starting with the first sentence. The Philippines submits that each of the two sentences of Article III:2 establishes independent and distinct obligations and, consequently, a separate and distinct analysis is required for each.

184. In this section, we address both the Philippines' appeal and the European Union's other appeal regarding Article III:2, second sentence, of the GATT 1994. We begin with the other appeal of the European Union.

European Union's Other Appeal

185. The European Union claims that the Panel erred in characterizing its claim under Article III:2, second sentence, of the GATT 1994 as made in the “alternative”290 to its claim under the first sentence of Article III:2. According to the European Union, by failing to address its claim under Article III:2, second sentence, the Panel acted inconsistently with Articles 7.1, 7.2, and 11 of the DSU. Moreover, to the extent that the Panel's failure to address the European Union's claim under Article III:2, second sentence, constituted application of the principle of judicial economy, the European Union submits that the Panel exercised “false” judicial economy in violation of Articles 3.7 and 21.1 of the DSU. The European Union requests the Appellate Body: to reverse the Panel's characterization of its claim under the second sentence of Article III:2 as “alternative” to its claim under the first sentence thereof; to complete the legal analysis; and to find that the Philippines has acted inconsistently with Article III:2, second sentence, of the GATT 1994.

186. The Philippines does not contest the specific claim raised by the European Union in its other appeal.