esettlementprovisionfordisputesbroughtpursuanttoGATT1994.
　　AfterreferringtothechapeauofArt.XXIII:1,theAppellateBodynotesthatofspecialimportancefordeterminingtheissueofstanding,arethewords“fanyMembershouldconsider...”.TheythinkthatthisprovisioninArt.XXIIIisconsistentwithArt.3.7oftheDSU,whichstatesthat“eforebringingacase,aMembershallexerciseitsjudgmentastowhetheractionundertheseprocedureswouldbefruitful”.Accordingly,theAppellateBodyfindsthat“aMemberhasbroaddiscretionindecidingwhethertobringacaseagainstanotherMemberundertheDSU.ThelanguageofArticleXXIII:1oftheGATT1994andofArticle3.7oftheDSUsuggest,furthermore,thataMemberisexpectedtobelargelyself-regulatingindecidingwhetheranysuchactionwouldbe‘fruitful’”.
　　WhileinKorea-DairyProducts(DS98),regardingKorea’sreferencetothelackofeconomicinterestoftheEC,thePanelfindsthatundertheDSUthereisnorequirementthatpartiesmusthaveaneconomicinterest.RecallingsomeconcernedfindingsinEC-Bananas,thePanelrulesthattheycan’treadintheDSUanyrequirementforan“economicinterest”.2
　　
　　IIILackofPossibleCompensation
　　Asnotedabove,thereisnorequirementundertheWTOfora“legalinterest”oran“economicinterest”forMemberstoinvoketheDSUproceduresforthesettlementofanytradedispute.However,istherighttopursueaproceedingdeniedbythelackofanypossiblecompensation?
　　InEC-Bananas(DS27)，ECresortstoarbitrationunderArt.22.6oftheDSU.AndtheArbitratorsnotethat,interalia,ECcontendsthatespeciallywithrespecttotradeingoodsthenullificationorimpairmentsufferedbytheUnitedStatesisnegligibleornilsincethereisnoactualtradeandlittleprospectforpotentialtradeinbananasbetweentheUnitedStatesandtheEC.Inthisrespect,theArbitratorsrecalltheEC’sargumentintheoriginaldisputethatevenifaMembernotsufferingnullificationorimpairmentofWTObenefitsinrespectofbananaswereallowedtoraiseaclaimundertheGATT,thatMemberwouldnothavehadaneffectiveremedyunderArt.22oftheDSU.TheArbitratorsalsonotethecomplainants’argumentintheoriginaldisputethatArt.3.8oftheDSUpresupposesafindingofinfringementpriortoaconsiderationofthenullificationorimpairmentissue,suggestingthatevenifnocompensationweredue,aninfringementfindingcouldbemade.
　　TheArbitratorsagreethecomplainants’argument,andrulethat,Art.XXIII:1oftheGATT1994andArt.3.3oftheDSUdonotestablishaproceduralrequirement.AsfoundbytheArbitrators,theseprovisionsconcerntheinitiationofaWTOdisputesettlementproceedingwhereaMemberconsidersbenefitsdirectlyorindirectlyaccruingtoitwerenullifiedorimpaired.SuchaninitialdecisiononwhetherornottoraiseacomplaintisnecessarilytheresultofasubjectiveandstrategicconsiderationfromtheindividualperspectiveofaMember.However,adecisiononwhethertheassertionofnullificationorimpairmentbyanindividualMemberwillbewarrantedandjustifiedinlightofWTOlawisadifferentdecision,takenbyapanelortheAppellateBodyfromtheobjectivebenchmarkoftheagreementscoveredbytheWTO.Furthermore,theArbitratorsrulethatthereviewofthelevelofnullificationorimpairmentbyArbitratorsfromtheobjectivebenchmarkforeseenbyArt.22oftheDSUisaseparateprocess,independentfromthefindingofinfringementsofWTOrulesbyapanelortheAppellateBody.3
　　
　　IVSummaryandConclusions
　　AccordingtoArt.XXIII:1oftheGATT1994,ifaWTOmembermeanstogetredressbyinvokingtheDSUproceduresforthesettlementofanytradedisputearisingfromanygovernmentalmeasureoranysituation,itmustdemonstratethatsuchmeasuresorsituationsresultedinanullificationorimpairmentofanybenefitsaccruingtoitdirectlyorindirectlyunderthecoveredagreements.Asnotedabove,theconceptofnullificationorimpairmentisviewedasachangeupsettingthecompetitiverelationshipbetweenmembers.AnditisdemonstratedbytheWTOpracticethattheneedfora“legalinterest”oran“economicinterest”cannotbeimpliedintheDSUorinanyotherprovisionsoftheWTOAgreement.AMember’spotentialinterestsintradeingoodsorservicesanditsinterestinadeterminationofrightsandobligationsundertheWTOAgreementsareeachsufficienttoestablisharighttopursueaWTOdisputesettlementproceeding.
　　Infact,acrucialpointisthebalanceofeconomicrelationsbasedonparticularnegotiatedresultsintermsofrightsandobligationsratherthantheactualtradeflows.OverthelastdecadesofGATT/WTOdisputesettlementpractice,ithasbecomeatruismofGATT/WTOjurisprudencethat,lackofactualtradecannotbedeterminativeforafindingthatnoviolationofaprovisionoccurredbecauseitcannotbeexcludedthattheabsenceoftradeistheresultofanillegalmeasure.Inthisrespect,asnextsectionwillshow,relatedcloselytothestandingissue,apresumptionhasbeenexplicitlyprovidedforintheArt.3.8oftheDSU,pursuanttowhichnullificationorimpairmentispresumedonceaviolationisestablished.
　　Inshort,aMemberhasbroaddiscretionindecidingwhethertobringacaseagainstanotherMemberundertheDSU,andisexpectedtobelargelyself-regulatingindecidingwhetheranysuchactionwouldbefruitful.However,aMember’srighttopursueaproceedingdoesnotautomaticallyimplythatitisentitledtoobtainanyremediesavailableundertheWTO.
　　
　　
　　【NOTE】:
　　1.    See,indetail,WT/DS27/AB/R/132-135.
　　2.    See,indetail,WT/DS98/R/7.13-7.14.
　　3.    See,indetail,WT/DS27/ARB/6.9.
　　
　　
　　
　　
　　
　　
　　SectionTwo
　　CausesofActionbeforetheDSBinGeneral
　　
　　Indeed,theconceptofnullificationorimpairmentunderArt.XXIII:1providesthreecausesofactionbeforetheDSB.Art.XXIII:1(a)involvesso-calledviolationcomplaintsarisingfromanallegedfailurebyaMembertocarryoutitsobligations.Incontrast,Art.XXIII:1(b)involvesnon-violationcomplaints,whichdonotrequireanallegationofaviolationofanobligation.AndArt.XXIII:1(c)coverswhatarecommonlycalledsituationcomplaints.However,thereisnoadequatelyspecifictestforanykindofthethreecausesofactionintheDSU.CasesundertheGATT/WTOimplythattherearevariousapplicabletermsoressentialsfortheestablishmentofvariouscomplaints.Andinthissectiongenerally,wewilltakeanoverviewonthethreecausesofaction.
　　
　　IThePresumptioninViolationComplaints
　　（i）Introduction
　　Duringdecadesofexperience,Art.XXIII:1(a)hasformedthebasisofalmostalldisputesundertheGATT1947andtheWTOAgreement.DisputesettlementundertheGATT/WTOhasalwaysbeendominatedbyviolationcomplaints.
　　Theconceptofso-calledviolationcomplaints,developingfromtheprovisionofXXIII:1(a),referstothosecomplaintsbroughtbeforetheDSBbyaWTOmemberwhenitthinksthatanybenefitaccruingtoitdirectlyorindirectlyunderthecoveredagreementisbeingnullifiedorimpairedasaresultofthefailureofanothermemberoftheWTOtocarryoutitsobligationsunderthatagreement.In1960,theCONTRACTINGPARTIESdecidedthataGATT-inconsistentmeasurewaspresumedtocausenullificationorimpairmentandthatitwasuptothepartycomplainedagainsttodemonstratethatthiswasnotthecase.1ThisprinciplewasassimilatedinthedisputesettlementproceduresadoptedattheendoftheTokyoRound,andisnowreflectedinArt.3.8oftheDSU,whichreads:
　　
　　“Incaseswherethereisaninfringementoftheobligationsassumedunderacoveredagreement,theactionisconsideredprimafacietoconstituteacaseofnullificationorimpairment.ThismeansthatthereisnormallyapresumptionthatabreachoftheruleshasanadverseimpactonotherMemberspartiestothatcoveredagreement,andinsuchcases,itshallbeuptotheMemberagainstwhomthecomplainthasbeenbroughttorebutthecharge.”
　　
　　Fromtheprovisionabove,wenotethatinviolationcomplaints,thereisanessentialconcept,i.e.a“presumption”whichmeansthat,theviolationofobligationsconstitutesaprimafaciecaseofnullificationorimpairment.Art.3.8oftheDSUsuggeststhatonceaninfringementorviolationoftheobligationsassumedunderacoveredagreementhasbeendemonstrated,apresumptionthattheviolationcausesnullificationorimpairmentisestablished.Atthesametime,thisprovisionseemstosuggestthatthepresumptionofnullificationorimpairmentisrebuttable.However,itisnotthecaseandastobeshownbelow,therehasbeennocaseofasuccessfulrebuttalofthepresumptioninthehistoryoftheGATT/WTO.
　　(ii)PracticeundertheGATTJurisprudence
　　Inanactionconcerningimportquotasonleather,Japanarguedthatsincethequotaswerenotfullyutilized,theydidnotrestraintrade,andconsequentlyhadnotcausedanullificationorimpairmentofbenefits.Thatpanelrejectedtheargumentonthegroundsthat:“Theexistenceofquantitativerestrictionsshouldbepresumedtocausenullificationorimpairmentnotonlybecauseofanyeffectithadonthevolumeoftradebutalsoforotherreasons,e.g.,itwouldleadtoincreasedtransactioncostsandwouldcreateuncertaintieswhichcouldaffectinvestmentplans.”2Thisrulingatleastindicatesthatademonstrationthatnoadversetradeimpacthasasyetoccurredisinsufficienttorebutthepresumption.
　　Andin1987,apanelontheUS-Superfundsummarizedthelegalsituationregardingthepresumptionofnullificationorimpairmentasfollows:“ThePanelexaminedhowtheCONTRATINGPARTIEShavereactedinpreviouscasestoclaimsthatameasureinconsistentwiththeGeneralAgreementhadnoadverseimpactandthereforedidnotnullifyorimpairbenefitsaccruingundertheGeneralAgreementtothecontractingpartythathadbroughtthecomplaint.ThePanelnotedthatsuchclaimshadbeenmadeinanumberofcasesbutthattherewasnocaseinthehistoryoftheGATTinwhichacontractingpartyhadsuccessfullyrebuttedthepresumption[…].ThePanelconcluded[…]that,whiletheCONTRACTINGPARTIEShadnotexplicitlydecidedwhetherthepresumptionthatillegalmeasurescausenullificationorimpairmentcouldberebutted,thepresumptionhadinpracticeoperatedasanirrefutablepresumption.”3
　　Asnotedabove,panelsundertheGATTcastdoubtontheideathatthepresumptionofnullificationorimpairmentmightberebuttableonthegroundthatthefailuretoobservetheobligationhadnoimpactontradeflows.BecauseoncethebenefitsaccruingunderthebasicGATTprovisionsgoverningimportcontrolshavebeendefinedintermsofconditionsofcompetitionratherthantradeflows,theideathatameasuremightbeinconsistentwithaprovisionoftheGATTprescribingcertainconditionsofcompetitionbutneverthelessnotimpairbenefitsaccruingunderitforlackofanytradeeffectsisnolongertenable.
　　(iii)RulingsundertheWTOJurisprudence
　　Inpractice,variouspanelsorthestandingAppellateBodyinmostcasesmakeapresumptionofnullificationorimpairmentundertheWTOdirectlyfromtheestablishmentofaviolation.Forexample,inEC-ComputerEquipment(DS62/DS67/DS68),thePanelrulesinitsreportthat,“nviewofourfindingthatthetarifftreatmentofLANequipmentbycustomsauthoritiesintheEuropeanCommunitiesviolatedArticleII:1ofGATT1994,wefindthatitisnotnecessarytoexaminethisadditionalclaimwithrespecttoLANequipment,excepttonotethattheinfringementofGATTrulesisconsideredprimafacietoconstituteacaseofnullificationorimpairmentunderArticle3.8oftheDSU”.4
　　AndinUS-1916Act(DS136),thePanelrulesas:“Wehavefoundthatthe1916ActassuchviolatesArticleVI:1andVI:2oftheGATT1994,aswellasArticles1,4and5.5oftheAnti-dumpingAgreement.Wealsoconcludedthat,bynotensuringtheconformityofthe1916Actwithitsobligationsasprovidedundertheabove-mentionedprovisions,theUnitedStatesviolatesArticleXVI:4oftheAgreementEstablishingtheWTO.SinceArticle3.8oftheDSUprovidesthat‘[I]ncaseswherethereisaninfringementoftheobligationsassumedunderacoveredagreement,theactionisconsideredprimafacietoconstituteacaseofnullificationorimpairment’andastheUnitedStateshasadducednoevidencetothecontrary,weconcludethatthe1916ActnullifiesorimpairsbenefitsaccruingtotheEuropeanCommunitiesundertheWTOAgreement”.5
　　Nevertheless,somepanelsandtheAppellateBodyhavealsosystematicallyrejectedasinsufficientthedemonstrationofanabsenceoftradeimpactinsomecases.Forexample,inEC-Bananas(DS27)6,ECattemptstorebutthepresumptionofnullificationorimpairmentwithrespecttothePanel’sfindingsofviolationsoftheGATT1994onthebasisthatUShaveneverexportedasinglebananatotheEuropeanCommunity,andtherefore,couldnotpossiblyhavesufferedanytradedamage.
　　TheAppellateBodynotesfirstlythattwopointshadbeenmadethatthePanelmaywellhadinmindinreachingitsconclusionsonnullificationorimpairment.OneisthattheUnitedStatesisaproducerofbananasandthatapotentialexportinterestbytheUnitedStatescouldn’tbeexcluded;theotheristhattheinternalmarketoftheUnitedStatesforbananascouldbeaffectedbytheECbananasregimeandbyitseffectsonworldsuppliesandworldpricesofbananas.TheAppellateBodydecidesthatthesearemattersrelevanttothequestionofthestandingoftheUnitedStatesundertheGATT1994.TheyareequallyrelevanttothequestionwhethertheEuropeanCommunitieshasrebuttedthepresumptionofnullificationorimpairment.
　　Togoonwiththeiranalysis,theAppellateBodyrefertothePanelReportonUS-Superfund,towhichthePanelinpresentcasereferred.Inthatcase,thepanelexaminedwhethermeasureswith“onlyaninsignificanteffectonthevolumeofexportsdonullifyorimpairbenefitsunderArticleIII:2”,andconcluded(andinsodoing,confirmedtheviewsofpreviouspanels)that:“ArticleIII:2,firstsentence,cannotbeinterpretedtoprotectexpectationsonexportvolumes;itprotectsexpectationsonthecompetitiverelationshipbetweenimportedanddomesticproducts.AchangeinthecompetitiverelationshipcontrarytothatprovisionmustconsequentlyberegardedipsofactoasanullificationorimpairmentofbenefitsaccruingundertheGeneralAgreement.AdemonstrationthatameasureinconsistentwithArticleIII:2,firstsentence,hasnoorinsignificanteffectswouldthereforeintheviewofthePanelnotbeasufficientdemonstrationthatthebenefitsaccruingunderthatprovisionhadnotbeennullifiedorimpairedevenifsucharebuttalwereinprinciplepermitted”.TheAppellateBodyfindsthatthereasoninginUS-Superfundappliesequallyinpresentcase.Forthesereasons,theAppellateBodyconcludesthattheyfindnolegalbasisonwhichtoreversetheconclusionsofthePanel.
　　（iv）ASummary
　　Astotheconceptofnullificationorimpairmentinviolationcases,thereisapresumptionsuggestingthataviolationconstituteaprimafaciecaseofnullificationorimpairmentpursuanttoArt.3.8oftheDSU.Andaprimafaciecaseiswhere,intheabsenceofeffectiverefutationbythedefendingparty,apanelisrequired,asamatteroflaw,toruleinfavorofthecomplainingpartypresentingtheprimafaciecase.However,thepresumptionhasinpracticeoperatedasanirrefutablepresumption.
　　OverthelastdecadesofGATT/WTOdisputesettlementpractice,theviolationofobligationshasbeenpresumedtocauseimpairmentandnocontractingpartyorWTOmemberhasbeenallowedtorebutsuccessivelythatpresumption.IthasbecomeatruismofGATT/WTOjurisprudencethat,lackofactualtradecannotbedeterminativeforafindingthatnoviolationofaprovisionoccurredbecauseitcannotbeexcludedthattheabsenceoftradeistheresultofanillegalmeasure.Therefore,inthecaseofviolationcomplaints,theconceptofnullificationorimpairmenthasnothadanypracticalimpactoverthelastyearsbecauseoftheexistenceofsucha“presumption”.
　　Indeed,inamultilateraltradeorderthatprescribesconditionsofcompetitionandthereforedoesn’tguaranteetraderesultsbuttradeopportunitiesorcompetitiverelationsbetweenmembers,achangeinthecompetitiverelationshipcontrarytothatprovisionmustconsequentlyberegardedipsofactoasanullificationorimpairmentofbenefitsaccruingtoMembers.
　　
　　IIAnOverviewofNon-ViolationComplaints
　　（i）RelatedTexts
　　TheuseofdifferentformsofcomplaintsinArt.XXIII:1suggeststhattheprohibitiontonullifyorimpairbenefits,i.e.favorableconditionsofcompetitionastomarketaccessandonthemarket,cannotbefullysecuredbycompliancewithspecifictreatyobligations.Anditisnecessarytoestablishequitableremediessuchasnon-violationorsituationremediesoutsideoftheproperprovinceoflegalobligations.
　　Uniquefromgenerallyofferingtheopportunityforpartiestoatreatytorequestconsultationandrelieffrommeasuresundertakenbyotherparties,suchreliefintheWTOlegalsystemdistinguishesviolationandnon-violationclaims,orlegalandnon-legalcausesofaction.UnderArt.XXIII:1(b),aMembercanbringanon-violationcomplaintwhenthenegotiatedbalanceofconcessionsbetweenMembersisupsetbytheapplicationofameasure,whetherornotthismeasureisinconsistentwiththeprovisionsofthecoveredagreement.Theexistenceofanon-violationremedyunderArt.XXIII:1(b)oftheGATT1994requiresMembersoftheWTOtoadheretotheprinciplesofthecoveredagreements,eveniftherearenorulesforbiddingtheparticularactiontaken.Andthenon-violationremedyishandledspecificallyinArt.26.1oftheDSUwhichreads:
　　
　　“1.Non-violationComplaintsoftheTypeDescribedinParagraph1（b）ofArticleXXIIIofGATT1994
　　Wheretheprovisionsofparagraph1(b)ofArticleXXIIIofGATT1994areapplicabletoacoveredagreement,apanelortheAppellateBodymayonlymakerulingsandrecommendationswhereapartytothedisputeconsidersthatanybenefitaccruingtoitdirectlyorindirectlyundertherelevantcoveredagreementisbeingnullifiedorimpairedortheattainmentofanyobjectiveofthatAgreementisbeingimpededasaresultoftheapplicationbyaMemberofanymeasure,whetherornotitconflictswiththeprovisionsofthatAgreement.WhereandtotheextentthatsuchpartyconsidersandapanelortheAppellateBodydeterminesthatacaseconcernsameasurethatdoesnotconflictwiththeprovisionsofacoveredagreementtowhichtheprovisionsofparagraph1(b)ofArticleXXIIIofGATT1994areapplicable,theproceduresinthisUnderstandingshallapply,subjecttothefollowing:
　　(a)thecomplainingpartyshallpresentadetailedjustificationinsupportofanycomplaintrelatingtoameasurewhichdoesnotconflictwiththerelevantcoveredagreement;
　　(b)whereameasurehasbeenfoundtonullifyorimpairbenefitsunder,orimpedetheattainmentofobjectives,oftherelevantcoveredagreementwithoutviolationthereof,thereisnoobligationtowithdrawthemeasure.However,insuchcases,thepanelortheAppellateBodyshallrecommendthattheMemberconcernedmakeamutuallysatisfactoryadjustment;
　　(c)notwithstandingtheprovisionsofArticle21,thearbitrationprovidedforinparagraph3ofArticle21,uponrequestofeitherparty,mayincludeadeterminationofthelevelofbenefitswhichhavebeennullifiedorimpaired,andmayalsosuggestwaysandmeansofreachingamutuallysatisfactoryadjustment;suchsuggestionsshallnotbebindinguponthepartiestothedispute;
　　(d)notwithstandingtheprovisionsofparagraph1ofArticle22,compensationmaybepartofamutuallysatisfactoryadjustmentasfinalsettlementofthedispute.”
　　AlthoughArt.XXIII:1(b)oftheGATT1994remainsasitwas,Art.26.1oftheDSUcodifiesseveralaspectsofthecaselawdevelopedundertheGATTjurisprudence.Forinstance,Art.26.1(a)clarifiestheprinciplesetoutincaselaw,oftheneedtoaccompanyanon-violationcomplaintwithspecificevidenceofharm.Also,theArticleconcretizesthetechnicallynon-violationnatureofthecase.Art.26.1(b)setsforthspecialrulesbothpertainingtothereversalofburdenofproofandjustification,andtoremedies.ThesedeviatefromtheaddressingoftheseissuesinviolationcomplaintsinArts.3.8and22oftheDSU.Foremostofthosedeviationsisthatnon-violationfindingsdonotobligetheMemberconcernedtowithdrawameasurenotinconsistentwiththeagreements,insteadtheobligationislimitedtoprovidemutuallysatisfactoryadjustments,usuallybymeansofcompensation.Furthermore,Arts.26.1(c)and26.1(d)setforthspecialrulespertainingtothearbitrationandcompensationinnon-violationcomplaints.
　　（ii）RelationshipbetweenArts.XXIII:1(a)andXXIII:1(b)
　　InEC–Asbestos(DS135),itisthefirstoccasionfortheAppellateBodytoexamineArt.XXIII:1(b)oftheGATT1994.Forthisreason,theAppellateBodythinkthereitnecessaryforthemtomakecertainpreliminaryobservationsabouttherelationshipbetweenArts.XXIII:1(a)andXXIII:1(b)oftheGATT1994.
　　Inthisrespect,theAppellateBodyrulesthat,“ArticleXXIII:1(a)setsforthacauseofactionforaclaimthataMemberhasfailedtocarryoutoneormoreofitsobligationsundertheGATT1994.AclaimunderArticleXXIII:1(a),therefore,lieswhenaMemberisallegedtohaveactedinconsistentlywithaprovisionoftheGATT1994.ArticleXXIII:1(b)setsforthaseparatecauseofactionforaclaimthat,throughtheapplicationofameasure,aMemberhas‘nullifiedorimpaired’‘benefits’accruingtoanotherMember,‘whetherornotthatmeasureconflictswiththeprovisions’oftheGATT1994.Thus,itisnotnecessary,underArticleXXIII:1(b),toestablishthatthemeasureinvolvedisinconsistentwith,orviolates,aprovisionoftheGATT1994.CasesunderArticleXXIII:1(b)are,forthisreason,sometimesdescribedas‘non-violation’cases,though,theword‘Non-violation’doesnotappearinthisprovision.”7
　　（iii）UnderlyingPurposeofArt.XXIII:1(b)
　　Non-violationcomplaintsarerootedintheGATT’soriginsasanagreementintendedtoprotectthereciprocaltariffconcessionsnegotiatedamongthecontractingpartiesunderArt.IIoftheGATT1947.Intheabsenceofsubstantivelegalrulesinmanyareasrelatingtointernationaltrade,thenon-violationprovisionofArt.XXIII:1(b)wasaimedatpreventingcontractingpartiesfromusingnon-tariffbarriersorotherpolicymeasurestonegatethebenefitsofnegotiatedtariffconcessions.
　　ThePanelinJapan-Film(DS44)8observesthattheunderlyingpurposeofArt.XXIII:1(b)wascogentlyexplainedbythepanelonEEC-Oilseeds,whichstated:“Theideaunderlying[theprovisionsofArticleXXIII:1(b)]isthattheimprovedcompetitiveopportunitiesthatcanlegitimatelybeexpectedfromatariffconcessioncanbefrustratednotonlybymeasuresproscribedbytheGeneralAgreementbutalsobymeasuresconsistentwiththatAgreement.Inordertoencouragecontractingpartiestomaketariffconcessionstheymustthereforebegivenarightofredresswhenareciprocalconcessionisimpairedbyanothercontractingpartyasaresultoftheapplicationofanymeasure,whetherornotitconflictswiththeGeneralAgreement.[...]ThePanel[onEEC-Oilseeds]consideredthatthemainvalueofatariffconcessionisthatitprovidesanassuranceofbettermarketaccessthroughimprovedpricecompetition.Contractingpartiesnegotiatetariffconcessionsprimarilytoobtainthatadvantage.Theymustthereforebeassumedtobasetheirtariffnegotiationsontheexpectationthatthepriceeffectofthetariffconcessionswillnotbesystematicallyoffset.IfnorightofredressweregiventotheminsuchacasetheywouldbereluctanttomaketariffconcessionsandtheGeneralAgreementwouldnolongerbeusefulasalegalframeworkforincorporatingtheresultsoftradenegotiations.”
　　Clearly,thesafeguardingoftheprocessandtheresultsofnegotiatingreciprocaltariffconcessionsunderArticleIIoftheGATTisfundamentaltothebalanceofrightsandobligationstowhichallWTOMemberssubscribed.Theavailabilityofcallingforadisputesettlementprocedurefornon-violationsisadevicemeanttoensuretheintegrityoftheGATT/WTOsysteminthefaceofevermorecomplexmethodsofcircumventingexplicittariffbindingsandtheprohibitionsonnon-tarifftraderestraintinstruments.Apeacefulsociety,domesticorinternational,reliesoncooperation,fairnessandmutualtrust.Thus,suchreliancemustnotbejeopardizedbyanisolatedapplicationofstrictlaw.Asisconfirmedbyareviewbelowonthecontextofnon-violationremedy.
　　（iv）Non-violationClaimsintheContextofPrinciplesofCustomaryInternationalLaw
　　Withregardtothisissue,thePanelinKorea-GovernmentProcurement(DS163)rulesasfollows:9
　　“Inourview,thenon-violationremedyasithasdevelopedinGATT/WTOjurisprudenceshouldnotbeviewedinisolationfromgeneralprinciplesofcustomaryinternationallaw.Asnotedabove,thebasicpremiseisthatMembersshouldnottakeactions,eventhoseconsistentwiththeletterofthetreaty,whichmightservetounderminethereasonableexpectationsofnegotiatingpartners.Thishastraditionallyariseninthecontextofactionswhichmightunderminethevalueofnegotiatedtariffconcessions.Inourview,thisisafurtherdevelopmentoftheprincipleofpactasuntservandainthecontextofArticleXXIII:1(b)oftheGATT1947anddisputesthatarosethereunder,andsubsequentlyintheWTOAgreements,particularlyinArticle26oftheDSU.TheprincipleofpactasuntservandaisexpressedinArticle26oftheViennaConventioninthefollowingmanner:‘Everytreatyinforceisbindinguponthepartiestoitandmustbeperformedbythemingoodfaith.’
　　ItseemsclearthatgoodfaithperformancehasbeenagreedbytheWTOMemberstoincludesubsequentactionswhichmightnullifyorimpairthebenefitsreasonablyexpectedtoaccruetootherpartiestothenegotiationsinquestion.TheconsistencyofsuchaninterpretationwiththegeneralprinciplesofcustomaryinternationallawisconfirmedbyreferencetothenegotiatinghistoryoftheViennaConvention.AccordingtotheReportoftheInternationalLawCommissiontotheGeneralAssembly,thisissuewasconsideredbythemembersnegotiatingtheConventioninthefollowingmanner:‘Somemembersfeltthattherewouldbeadvantageinalsostatingthatapartymustabstainfromactscalculatedtofrustratetheobjectandpurposeofthetreaty.TheCommission,however,consideredthatthiswasclearlyimplicitintheobligationtoperformthetreatyingoodfaithandpreferredtostatethepactasuntservandaruleinassimpleaformaspossible.’
　　Thenon-violationdoctrinegoesfurtherthanjustrespectfortheobjectandpurposeofthetreatyasexpressedinitsterminology.Onemustrespectactualprovisions(i.e.,concessions)asfarastheirmaterialeffectoncompetitiveopportunitiesisconcerned.Itisanextensionofthegoodfaithrequirementinthissense.
　　WetakenotethatArticle3.2oftheDSUrequiresthatweseekwithinthecontextofaparticulardisputetoclarifytheexistingprovisionsoftheWTOagreementsinaccordancewithcustomaryrulesofinterpretationofpublicinternationallaw.However,therelationshipoftheWTOAgreementstocustomaryinternationallawisbroaderthanthis.CustomaryinternationallawappliesgenerallytotheeconomicrelationsbetweentheWTOMembers.SuchinternationallawappliestotheextentthattheWTOtreatyagreementsdonot‘contractout’fromit.Toputitanotherway,totheextentthereisnoconflictorinconsistency,oranexpressioninacoveredWTOagreementthatimpliesdifferently,weareoftheviewthatthecustomaryrulesofinternationallawapplytotheWTOtreatiesandtotheprocessoftreatyformationundertheWTO.
　　AsKoreahasargued,non-violationisanexceptionalconceptwithintheWTOdisputesettlementsystem.[…][AsstatedbythepanelinJapan–Film,thenon-violationnullificationorimpairmentremedyshouldbeapproachedwithcautionandtreatedasanexceptionalconcept.]Despitethiscaution,however,thepanelinJapan-Filmwasoftheviewthatthenon-violationremedyhadanimportantrole-thatofprotectingthereasonableexpectationsofcompetitiveopportunitiesthroughnegotiatedconcessions.
　　Inourview,theseobservationsbypreviouspanelsareentirelyinlinewiththeconceptofpactasuntservanda.ThevastmajorityofactionstakenbyMemberswhichareconsistentwiththeletteroftheirtreatyobligationswillalsobeconsistentwiththespirit.However,uponoccasion,itmaybethecasethatsomeactions,whilepermissibleunderonesetofrules(e.g.,theAgreementonSubsidiesandCountervailingMeasuresisacommonlyreferencedexampleofrulesinthisregard),arenotconsistentwiththespiritofothercommitmentssuchasthoseinnegotiatedSchedules.Thatis,suchactionsdenythecompetitiveopportunitieswhicharethereasonablyexpectedeffectofsuchcommitments.[…]”
　　（v）AppropriateAttitudesastoNon-violationRemedy
　　Ontheonehand,althoughthenon-violationremedyisanimportantandacceptedtoolofGATT/WTOdisputesettlementandhasbeen“onthebooks”formorethan50years,therehaveonlybeenelevencases,amongwhichthereisonlyonecaseisreviewedbytheAppellateBody,inwhichpanelsorworkingpartieshavesubstantivelyconsideredArticleXXIII:1(b)claimsbytheendof2002.ThissuggeststhatboththeGATTandtheWTOhaveapproachedthisremedywithcautionand,indeed,havetreateditasanexceptionalinstrumentofdisputesettlement.Infact,inthisregardthetwopartiesinmanysuchcaseshavealsoconfirmedthatthenon-violationnullificationorimpairmentremedyshouldbeapproachedwithcautionandbetreatedasanexceptionalconcept.Onepanelexplainedthat,“[t]hereasonforthiscautionisstraightforward.Membersnegotiatetherulesthattheyagreetofollowandonlyexceptionallywouldexpecttobechallengedforactionsnotincontraventionofthoserules”.10
　　However,thePanelinJapan-Film(DS44)observesthat,“[w]hileweconsiderthattheNon-violationremedyshouldbeapproachedwithcautionandshouldremainanexceptionalremedy,eachcaseshouldbeexaminedonitsownmerits,bearinginmindtheabove-mentionedneedtosafeguardtheprocessofnegotiatingreciprocaltariffconcessions.OurroleasapanelchargedwithexaminingclaimsunderArticleXXIII:1(b)is,therefore,tomakeanobjectiveassessmentofwhether,inlightofalltherelevantfactsandcircumstancesinthematterbeforeus,particularmeasurestakenbyJapanhavenullifiedorimpairedbenefitsaccruingtotheUnitedStateswithinthemeaningofArticleXXIII:1(b)”.11AndinnextsectionaninsightistakenintothosecommonelementsthathavebeenreviewedbythepanelsortheAppellateBodychargedwithexaminingclaimsunderArt.XXIII:1(b).
　　Ontheotherhand,theNon-violationremedyprescribedinArt.XXIII:1(b)hasgivenrisetocontroversy.Whilenumerouscommentators,togetherwithvariouspanelsortheAppellateBody,havereferredtothenon-violationlanguageofArt.XXIII:1(b)asaclausetomaintainthebalanceofinterestsamongmembers;otherscharacterizetheideaofallowingfornon-violationcomplaintsassuperfluousatbest,condemningitasa“uselessanddangerousconstruction”,andmanylawyersarereluctanttoaccepttheconceptofnon-violationaslegitimate.
　　Indeed,onecouldconsidernon-violationcomplaintsanecessaryingredientofasystemthatprimarilyservesasaforumfornegotiationsbutfearthatliberalusageoftheprovisionwillresultinharassmentcomplaintsbasedmoreondomesticpoliticalconcernsthanonanytruewrong-doingbytherespondentmember.Infact,pastpracticesoftheGATT/WTOdevelopanequitablebranchofgoodfaithdoctrine,knownastheprotectionoflegitimateexpectations（tobescrutinizedinnextsection）,toavoidtheabuseofnon-violationremedy.
　　Tosumup,“theavailabilityofArticleXXIII:1(b)complaintscanoperateasamoralhazardinthedisputesettlementprocedures.PanelsthatarefacedwithapoliticallydifficultinterpretativeissueorareinternallydividedcanbetemptedtoreferthecomplainingWTOmembertoitsproceduralrightsunderArticleXXIII:1(b)ratherthanconfirmingitssubstantiverights.Byadoptingthatapproachtheysparethepartycomplainedagainstoftheopprobriumofillegality,openthedoortoanegotiatedsettlementbetweenthepartiestothedispute,andaccordthecomplainingpartytherighttoretaliateshouldnosettlementbereached--asolutionthatcanbeattractivetoapragmaticallymindedmemberofapanelortheAppellateBodyseekingtoavoidadifficultlegalissue”.12
　　IIIPresupposedSituationComplaints
　　TheGATT/WTOhaveneverruledthattheexistenceofasituationasprescribedinArt.XXIII:1(c)giverisetoanullificationorimpairment.However,undertheproceduresetoutintheDSU,theexistenceofsuchasituation-relateddisputebetweenWTOmembersispresupposed.AsisstipulatedinArticle26.2oftheDSUas:
　　
　　“2.    ComplaintsoftheTypeDescribedinParagraph1(c)ofArticleXXIIIofGATT1994
　　Wheretheprovisionsofparagraph1(c)ofArticleXXIIIofGATT1994areapplicabletoacoveredagreement,apanelmayonlymakerulingsandrecommendationswhereapartyconsidersthatanybenefitaccruingtoitdirectlyorindirectlyundertherelevantcoveredagreementisbeingnullifiedorimpairedortheattainmentofanyobjectiveofthatAgreementisbeingimpededasaresultoftheexistenceofanysituationotherthanthosetowhichtheprovisionsofparagraphs1(a)and1(b)ofArticleXXIIIofGATT1994areapplicable.Whereandtotheextentthatsuchpartyconsidersandapaneldeterminesthatthematteriscoveredbythisparagraph,theproceduresofthisUnderstandingshallapplyonlyuptoandincludingthepointintheproceedingswherethepanelreporthasbeencirculatedtotheMembers.ThedisputesettlementrulesandprocedurescontainedintheDecisionof12April1989(BISD36S/61-67)shallapplytoconsiderationforadoption,andsurveillanceandimplementationofrecommendationsandrulings.Thefollowingshallalsoapply:
　　(a)    thecomplainingpartyshallpresentadetailedjustificationinsupportofanyargumentmadewithrespecttoissuescoveredunderthisparagraph;
　　(b)    incasesinvolvingmatterscoveredbythisparagraph,ifapanelfindsthatcasesalsoinvolvedisputesettlementmattersotherthanthosecoveredbythisparagraph,thepanelshallcirculateareporttotheDSBaddressinganysuchmattersandaseparatereportonmattersfallingunderthisparagraph.”
　　
　　ThereisnojurisprudencethatilluminatesthescopeofArt.XXIII:1(c).However,twotypesofsituationsthatcouldpossiblyfallunderthisprovisioncanusefullybedistinguished.First,situationsofthekindthatthedraftershadinmind,namelyageneraldepression,highunemployment,collapseofthepriceofacommodityandotheremergenciesininternationaleconomicrelationsthatcannotbecorrectedbytheactionofaparticulargovernment;and,second,situationsthatarewithinthecontrolofaparticulargovernmentandthereforecapableofbeingmodifiedbythatgovernment.13
　　Inthefirsttypeofsituation,Art.XXIII:1(c)hasneverbeenusedforthepurposeitsdraftershadinmind,namelytopermitthePartiesorMemberstosuspendtheapplicationofobligationsundertheGATT/WTOinresponsetoaninternationaleconomicemergency.InthecaseofaninvocationofArt.XXIII:1(c)forthispurpose,thereisnocomplainantorrespondent;thereismerelyaproposaltoadjustobligationstorespondtoasituationthatmembersareunabletoprevent.Forthisreason,mattersrelatedtoasituationmight,accordingtoArt.XXIII:2,bereferredtotheDSBwithoutpriorconsultationswithanothermember.TherelevantpassagestatesinArt.XXIII:2that,“fnosatisfactoryadjustmentiseffectedbetweenthecontractingpartiesconcernedwithinareasonabletime,orifthedifficultyisofthetypedescribedinparagraph1(c)ofthisArticle,themattermaybereferredtotheCONTRACTINGPARTIES”.
　　However,undertheproceduresevolvedunderArt.26.2oftheDSU,theexistenceofarespondentandpriorconsultationswiththatrespondentseemtobepresupposed.ForthethreecausesofactionbeforetheDSBseemtobehandledthroughinvestigationsbymembersactingjointly.ItthereforemakessensetocombinetheproceduresforinvocationsofallthreesubparagraphsofArt.XXIII:1.ThustheproceduresoftheDSUdon’tseemtoeffectivelyapplytoArt.XXIII:1(c)invocationsinvolvingemergencies.InternationaleconomicemergenciesofthetypethedraftershadinmindcanthereforenotbemeaningfullyhandledthroughtheDSUprocedures.Theonlyprocedureatmembers’disposalwouldthereforenowbethewaiverprocedureofArticleⅨ:3oftheWTOAgreement.
　　Astothesecondtypeofsituation,theonlysituationseffectivelycoveredbytheDSUarethosethatanidentifiableWTOmemberiscapableofcorrecting.BecauseArticle26.2oftheDSUstipulatesinrelevantas:“asaresultoftheexistenceofanysituationotherthanthosetowhichtheprovisionsofparagraphs1(a)and1(b)ofArticleXXIIIofGATT1994areapplicable”,ifthesituationisbroughtaboutbytheapplicationofameasurebyaWTOmember,ArticleXXIII:1(a)or(b)wouldapply.TherecoursetoArticleXXIII:1(c)isthereforeonlynecessaryifthesituationistheresultofafailureofaWTOmembertoapplyameasure.Whenexaminingsituationcomplaints,thepanelswouldthereforehavetodeterminenotonlywhethertherewasareasonableexpectationthatthesituationwouldnotoccurbutalsowhethertherewasareasonableexpectationthatthegovernmentwouldintervenetocorrectthissituation.
　　However,thereislittlecommonunderstandingamongWTOmembersastothecircumstancescallingforgovernmentinterventionintheeconomyandthereforeafindingthatareasonableexpectationthattherespondentwouldhaveintervenedtopreventsuchcircumstanceswouldbeverydifficulttomake.Nevertheless,thedraftersoftheWTOAgreementdidnotabandontheconceptofnullificationorimpairmentundersuchsituationsotherthanthosetowhichtheprovisionsofparagraphs1(a)and1(b)ofArticleXXIIIofGATT1994areapplicable.
　　
　　
　　
　　【NOTE】:
　　1.    See,indetail,BasicInstrumentsandSelectedDocuments(“BISD”),11S/99-100.
　　2.    See,indetail,BISD31S/113.
　　3.    See,indetail,BISD34S/156-158.
　　4.    See,WT/DS62/R;WT/DS67/R;WT/DS68/R/8.70.
　　5.    See,WT/DS136/R/6.227.
　　6.    See,indetail,WT/DS27/AB/R/249-254.
　　7.    See,indetail,WT/DS135/AB/R/185.
　　8.    See,indetail,WT/DS44/R/10.35.
　　9.    See,WT/DS163/R/7.93-7.99.
　　10.    See,indetail,WT/DS44/R/10.36.
　　11.    See,WT/DS44/R/10.37.
　　12.    See,FriederRoessler,‘TheConceptofNullificationandImpairmentintheLegalSystemoftheWorldTradeOrganization’,InternationalTradeLawandtheGATT/WTODisputeSettlementSystem(PetersmannEd.),KluwerLawInternational,London,1997,p.133.
　　13.    Supra.Note12,pp.139-140.
　　
　　
　　
　　
　　
　　
　　
　　
　　
　　
　　
　　
　　
　　
　　
　　
　　
　　SectionThree
　　EstablishmentofNon-ViolationComplaints
　　
　　IIntroduction
　　Asitsuggestsofthecorrespondingprovisions,themostsignificantdifferencebetweenviolationcomplaintsandnon-violationonesis,whiletheinfringementofanobligationunderthecoveredagreementsisconsideredprimafacietoconstituteacaseofnullificationorimpairmentbyestablishingaformalpresumption,suchapresumptiondoesnotexistinnon-violationcases.Withthelackofsuchapresumption,theestablishmentofanon-violationcomplaintputsmuchmoreburdenofproofonthesideofthecomplainant.
　　Inthisregard,thePanelinJapan–Film(DS44)summarizesthecommontestfornon-violationcasesinthefollowingmanner:“ThetextofArticleXXIII:1(b)establishesthreeelementsthatacomplainingpartymustdemonstrateinordertomakeoutacognizableclaimunderArticleXXIII:1(b):(1)applicationofameasurebyaWTOMember;(2)abenefitaccruingundertherelevantagreement;and(3)nullificationorimpairmentofthebenefitastheresultoftheapplicationofthemeasure.”1
　　WhileinKorea-GovernmentProcurement(DS163)thePaneladdsanotiondevelopedinallthesenon-violationcasesthat,thenullificationorimpairmentofthebenefitasaresultofthemeasuremustbecontrarytothereasonableexpectationsofthecomplainingpartyatthetimeoftheagreement.Therefore,thePaneltherefindsthatnormalnon-violationcasesinvolveanexaminationastowhetherthereare:(1)anapplicationofameasurebyaWTOMember;(2)abenefitaccruingundertherelevantagreement;and(3)nullificationorimpairmentofthebenefitduetotheapplicationofthemeasurethatcouldnothavebeenreasonablyexpectedbytheexportingMember.2Inthefollowingparagraphswewilltouchrespectivelyontheseelements.
　　
　　IIApplicationofaMeasure:ScopeofMeasuresCoveredbyArt.XXIII:1(b)
　　Inanalyzingtheelementsofanon-violationclaim,alogicalstartingpointistherequirementthattherebeanapplicationofameasurebyaWTOMember.Inthisregard,inmostcases,theissueisnotwhetherornotameasureinfactexists,butratherwhethersuchmeasureshavecontributedinawaytothenullificationorimpairmentofbenefitsaccruingtotheapplicantwithinthetermsofArt.XXIII:1(b).
　　（i）MeasuresshortofLegallyBindingObligations
　　AstheWTOAgreementisaninternationalagreement,inrespectofwhichonlynationalgovernmentsandseparatecustomsterritoriesaredirectlysubjecttoobligations,itfollowsbyimplicationthatthetermmeasureinArt.XXIII:1(b)andArt.26.1oftheDSU,aselsewhereintheWTOAgreement,refersonlytopoliciesoractionsofgovernments,notthoseofprivateparties.Butwhilethis“truth”maynotbeopentoquestion,therehavebeenanumberoftradedisputesinrelationtowhichpanelshavebeenfacedwithmakingsometimesdifficultjudgmentsastotheextenttowhichwhatappearontheirfacetobeprivateactionsmaynonethelessbeattributabletoagovernmentbecauseofsomegovernmentalconnectiontoorendorsementofthoseactions.Inthisrespect,GATT/WTOcasesdemonstratethatthefactthatanactionistakenbyprivatepartiesdoesnotruleoutthepossibilitythatitmaybedeemedtobegovernmentalifthereissufficientgovernmentinvolvementwithit.Inshort,theordinarymeaningofameasureinArt.XXIII:1(b)certainlyencompassesalaworregulationenactedbyagovernmentaccordingtoArt.XVI:4oftheWTOAgreement.Butitseemsbroaderthanthatandmayincludeothergovernmentalactionsshortoflegallyenforceableenactments.
　　InJapan-Film(DS44)3,thepartiesdisagreeonwhetherthemeasureatissue,referredtoas“administrativeguidance”byJapan,isameasureinthesenseofArt.XXIII:1(b).JapanarguesthatmeasuresforpurposesofArt.XXIII:1(b)musteitherprovidebenefitsorimposeobligations,andthattoimposeobligationsthemeasuremustbeagovernmentpolicyoractionwhichhasimposedlegallybindingobligationsorthesubstantiveequivalent.TheUSpositionisthatthetermmeasureinArt.XXIII:1(b)shouldnotbelimitedtoreferonlytolegallybindingobligationsortheirsubstantiveequivalent.Itarguesinfavorofamoreencompassingdefinitionoftheterm.
　　ThePanelrulesfirstlythatitisnotusefulforthemtotrytoplacespecificinstancesofadministrativeguidanceintoonegeneralcategoryoranother.4Theythinkitisnecessaryforthem,asitwasforGATTpanelsinthepast,toexamineeachalleged“measure”toseewhetherithastheparticularattributesrequiredofameasureforArt.XXIII:1(b)purposes.
　　Togoonwiththeiranalysis,thePanelreviewsGATTjurisprudence,particularlythePanelReportonJapan-Semi-conductors,inthatcase,thepanelfoundthatalthoughameasurewasnotmandatory,itcouldbeconsideredarestrictionsubjecttoArt.XI:1ofGATTbecause“sufficientincentivesordisincentivesexistedfornon-mandatorymeasurestotakeeffect...[and]theoperationofthemeasures...wasessentiallydependentonGovernmentactionorintervention[becauseinsuchacase]themeasureswouldbeoperatinginamannerequivalenttomandatoryrequirementssuchthatthedifferencebetweenthemeasuresandmandatoryrequirementswasonlyoneofformandnotofsubstance...”.ThePanelinpresentcaseconsidersthatthisrulingsuggeststhatwhereadministrativeguidancecreatedincentivesordisincentiveslargelydependentupongovernmentalactionforprivatepartiestoactinaparticularmanner,itisconsideredagovernmentalmeasure.5
　　RecallingthecriteriaappliedinJapan-Semi-conductors,i.e.,administrativeguidancemustcreateincentivesordisincentivestoactandcompliancewiththeguidancemustdependlargelyongovernmentalaction,fordeterminingwhetherornotaformallynon-bindingmeasureshouldbeassimilatedtoagovernmentalrestrictionunderArt.XI:1,thePanelinpresentcaseconsidersthatthesecriteriawouldcertainlyalsolendthemselvessatisfactorilytothedefinitionofthetermmeasureunderArt.XXIII:1(b).However,theyalsonotethatthereisnothinginJapan-Semi-conductorssuggestingthatthisincentives/disincentivestestshouldbeseenastheexclusivetestforcharacterizingformallynon-bindingmeasuresasgovernmental.ThePanelfinds,therefore,thatJapan-Semi-conductorsshouldnotbeseenassettingforththeexclusivetestorouterlimitofwhatmaybeconsideredtoconstituteameasureunderArt.XXIII:1(b).
　　Inshort,agovernmentpolicyoractionneednotnecessarilyhaveasubstantiallybindingorcompulsorynatureforittoentailalikelihoodofcompliancebyprivateactorsinawaysoastonullifyorimpairlegitimatelyexpectedbenefitswithinthepurviewofArt.XXIII:1(b).Indeed,itisclearthatnon-bindingactions,whichincludesufficientincentivesordisincentivesforprivatepartiestoactinaparticularmanner,canpotentiallyhaveadverseeffectsoncompetitiveconditionsofmarketaccess.Forexample,anumberofnon-violationcaseshaveinvolvedsubsidies,receiptofwhichrequiresonlyvoluntarycompliancewitheligibilitycriteria.Moreover,itisconceivable,incaseswherethereisahighdegreeofcooperationandcollaborationbetweengovernmentandbusiness,e.g.,wherethereissubstantialrelianceonadministrativeguidanceandothermoreinformalformsofgovernment-businesscooperation,thatevennon-binding,hortatorywordinginagovernmentstatementofpolicycouldhaveasimilareffectonprivateactorstoalegallybindingmeasureorregulatoryadministrativeguidance.
　　Consequently,thePanelrulesthattheyshouldbeopentoabroaddefinitionofthetermmeasureforpurposesofArt.XXIII:1(b).Thatistosay,itisnecessaryforthemtoexamineeachalleged“measure”,whetherabindinggovernmentactionoranon-bindinggovernmentactionwithaneffectsimilartoabindingone,toseewhetherithastheparticularattributesrequiredofameasureforArt.XXIII:1(b)purposes.ThePanelreachesthisconclusioninconsideringthepurposeofArt.XXIII:1(b),whichistoprotectthebalanceofconcessionsunderGATTbyprovidingameanstoredressgovernmentactionsnototherwiseregulatedbyGATTrulesthatnonethelessnullifyorimpairaMember’slegitimateexpectationsofbenefitsfromtariffnegotiations.Toachievethispurpose,asobservedbythePanel,itisimportantthatthekindsofgovernmentactionsconsideredtobemeasurescoveredbyArt.XXIII:1(b)shouldnotbedefinedinanundulyrestrictivemanner.Otherwise,thereistheriskofcases,inwhichgovernmentshavebeeninvolvedonewayoranotherinthenullificationorimpairmentofbenefits,whichwillnotberedressableunderArt.XXIII:1(b),therebypreventingtheachievementofitspurpose.Infact,itisdifficulttoestablishbright-linerulesinthisregard.
　　However,asstressedbythePanel,givingabroaddefinitiontomeasuredoesnotexpandthescopeoftheArt.XXIII:1(b)remedybecauseitremainsincumbentonthecomplainingMembertoclearlydemonstratehowthemeasureatissueresultsinorcausesnullificationorimpairmentofbenefits.Atthesametime,itmayalsobetruethatnoteveryutterancebyagovernmentofficialorstudypreparedbyanon-governmentalbodyattherequestofthegovernmentorwithsomedegreeofgovernmentsupportcanbeviewedasameasureofaMembergovernment.AtalleventstherespondingMember’sgovernmentisonlyresponsibleforwhatithasitselfcaused.Thus,thatpossibilitywillneedtobeexaminedonacase-by-casebasis.
　　（ii）MeasuresFallingunderOtherProvisionsoftheGATT1994
　　InEC–Asbestos(DS135),beforethePanel,Canadaclaimsthat,underArt.XXIII:1(b)oftheGATT1994,theapplicationofthemeasureatissuenullifiedorimpairedbenefitsaccruingtoCanada.TheEuropeanCommunitiesraisespreliminaryobjections,arguingontwogroundsthatthemeasurefalloutsidethescopeofapplicationofArt.XXIII:1(b).First,theEuropeanCommunitiescontendsthatArt.XXIII:1(b)appliesonlytomeasureswhichdoesnototherwisefallunderotherprovisionsoftheGATT1994.Second,theEuropeanCommunitiesarguesthat,whileitmaybepossibletohave“legitimateexpectations”inconnectionwithapurely“commercial”measure,itisnotpossibletoclaim“legitimateexpectations”withrespecttoameasuretakentoprotecthumanlifeorhealth,whichcanbejustifiedunderArt.XX(b)oftheGATT1994.6
　　Astothefirstpreliminaryobjection,thePanelfindsasfollows:7
　　“TheECseemtobelievethatthefactthatameasureis‘justified’onthebasisofArticleXXcreatesalegalsituationdifferent,ontheonehand,fromthesituationinwhichthemeasureviolatesaprovisionoftheGATT1994and,ontheother,fromthesituationinwhichthemeasuredoesnotfallundertheprovisionsoftheGATT1994.Insupportoftheirposition,theECciteapassagefromthePanelReportinJapan-FilmwhichmentionsthatArticleXXIII:1(b)provides‘themeanstoredressgovernmentactionsnototherwiseregulatedbyGATTrules…’.TheCommunitiesalsorefertotheintroductoryclauseofArticleXXwhichstatesthat‘nothinginthisAgreementshallbeconstruedtopreventtheadoptionorenforcementbyanycontractingpartyofmeasures’necessarytoprotecthumanlifeorhealth.
　　ThePanelrecalls,firstofall,thatboththepreambletoArticle26.1oftheUnderstandingandArticleXXIII:1(b)usethewords‘measure,whetherornotitconflictswiththeprovisions[oftheparticularagreement]’.Tobeginwith,itshouldbenotedthatthewordingofArticleXXIII:1(b)showsunequivocallythatthisprovisionappliesbothinsituationsinwhichameasureconflictsandinsituationsinwhichitdoesnotconflictwiththeprovisionsoftheGATT1994.Above,wefoundthatthetreatmentaccordedbytheDecreetochrysotileasbestosfibresviolatedArticleIII:4oftheGATT1994assuch,inasmuchastheseproductswerelikethesubstitutefibresmentionedbythepartiesandthetreatmentofproductscontainingchrysotileasbestosandproductscontainingthesubstitutefibresmentionedbythepartieswasdiscriminatory.Accordingly,theDecreeconflictswiththeprovisionsofArticleIII:4,inthesenseinwhichthatwordisusedinArticleXXIII:1(b).However,wenotethattheintroductoryclauseofArticleXXstatesthat‘nothinginthisAgreementshallbeconstruedtopreventtheadoptionorenforcementbyanycontractingpartyofmeasures’necessarytoprotecthumanlifeorhealth,whichmightsuggestthataprovisionconsistentwiththerequirementsofArticleXXnolongerconflictswithArticleIII:4,becauseArticleIII:4cannotbeconstruedaspreventingthiskindofmeasure.However,whetherameasurejustifiedonthebasisofArticleXXoftheGATT1994isconsideredstilltobeinconflictwithArticleIII:4orisconsiderednolongertoconflictwithArticleIII:4becausejustifiedunderArticleXX,underthetermsofArticleXXIII:1(b)thelattercontinuestobeapplicabletoit.
　　Wealsonote,firstly,thattheintroductoryclausetoArticleXX,towhichtheECrefer,concernstheadoptionorenforcementofmeasuresnecessarytoprotecthealth.TheapplicationofArticleXXIII:1(b)doesnotpreventeithertheadoptionortheenforcementoftheDecreeconcerned.Article26:1(b)stipulatesthatevenwhereameasurehasbeenfoundtonullifyorimpairbenefitsunder,orimpedetheattainmentofobjectives,oftheGATT1994withoutviolationthereof,thereisnoobligationtowithdrawthemeasure.Accordingly,thereisnocontradictionbetweentheinvocationofArticleXXandtheapplicationofArticleXXIII:1(b).However,thatArticlemustbeappliedinsuchawayastoprotectthebalanceofrightsanddutiesnegotiated.Accordingly,wedonotconsiderthatthetextofArticleXXIII:1(b)orthatofArticleXXor,finally,thatofArticle26.1oftheUnderstandingsupportstheEC’sinterpretation.
　　Secondly,wedonotconsiderthatthepassagefromtheJapan-FilmreportcitedbytheECsupportsitsinterpretationeither.Admittedly,thewordsusedbythepanel,takeninisolation,mightatfirstglanceappeartoconfirmtheEC’sposition,insofarasitrefersto‘governmentactionsnototherwiseregulatedbyGATTrules’.Theuseoftheword‘regulated’couldsignifythatthefieldofapplicationofArticleXXIII:1(b)coveredonlysituationsinwhichnoprovisionoftheGATTwasapplicable.Firstofall,itisouropinionthatthefactthatameasuredoesnotviolateArticleIII:4doesnotnecessarilymeanthatthelatterisnotapplicabletoit.ArticleIII:4appliestoanylaw,regulationorrequirementaffectingtheinternalsale,offeringforsale,purchase,transportation,distributionoruseofimportedproductsandlikeproductsofnationalorigin.Consequently,eveniftheEC’sinterpretationwerecorrect,itwouldnotapplyinthepresentcaseinsofarasArticleIII:4continuestobeapplicabletotheDecree.Next,itshouldbenotedthatthepanelinJapan-Filmrefers,inthefootnoteattheendofthesentencecitedbytheEEC,totheEEC-Oilseedsreportwhichstates,inparticular,that:
　　‘thePanelnotedthattheseprovisions,asconceivedbythedraftersandappliedbytheCONTRACTINGPARTIES,servemainlytoprotectthebalanceoftariffconcessions.TheideaunderlyingthemisthattheimprovedcompetitiveopportunitiesthatcanlegitimatelybeexpectedfromatariffconcessioncanbefrustratednotonlybymeasuresproscribedbytheGeneralAgreementbutalsobymeasuresconsistentwiththatAgreement’.
　　Weconsiderthata‘measurewhichisnototherwiseregulatedbyGATTrules’,thatistosaytowhichtheGATTdoesnotapply,is,afortiori,‘notinconflict’withtheGATTwithinthemeaningofArticleXXIII:1(b)or‘consistent’withinthemeaningoftheEEC-Oilseedsreport.Consequently,wefindthatthepassageintheJapan-FilmreportcitedbytheEC,farfromsupportingtheirposition,confirmstheopinionaccordingtowhichArticleXXIII:1(b)appliestoameasurewhetheritisconsistentwiththeGATTbecausetheGATTdoesnotapplytoitorisjustifiedbyArticleXX.
　　Forthesereasons,wedonotallowtheEC’sfirstargument.”
　　TheEuropeanCommunitiesappealsthePanel’sfindingsandconclusionsrelatingtothefirstpreliminaryobjections.AndthisisthefirstoccasionfortheAppellateBodytoexamineArticleXXIII:1(b)oftheGATT1994.
　　WhentheAppellateBodyturnstotheEuropeanCommunities’argumentthatArt.XXIII:1(b)doesnotapplytomeasuresfallingwithinthescopeofapplicationofotherprovisionsoftheGATT1994,theyrulethat:“[…]ThetextofArticleXXIII:1(b)stipulatesthataclaimunderthatprovisionariseswhena‘benefit’isbeing‘nullifiedorimpaired’throughthe‘application…ofanymeasure,whetherornotitconflictswiththeprovisionsofthisAgreement’.Thewordingoftheprovision,therefore,clearlystatesthataclaimmaysucceed,underArticleXXIII:1(b),evenifthemeasure‘conflicts’withsomesubstantiveprovisionsoftheGATT1994.Itfollowsthatameasuremay,atoneandthesametime,beinconsistentwith,orinbreachof,aprovisionoftheGATT1994and,nonetheless,giverisetoacauseofactionunderArticleXXIII:1(b).Ofcourse,ifameasure‘conflicts’withaprovisionoftheGATT1994,thatmeasuremustactuallyfallwithinthescopeofapplicationofthatprovisionoftheGATT1994.WeagreewiththePanelthatthisreadingofArticleXXIII:1(b)isconsistentwiththepanelreportsinJapan-FilmandEEC-Oilseeds,whichbothsupporttheviewthatArticleXXIII:1(b)appliestomeasureswhichsimultaneouslyfallwithinthescopeofapplicationofotherprovisionsoftheGATT1994.Accordingly,wedeclinetheEuropeanCommunities’firstgroundofappealunderArticleXXIII:1(b)oftheGATT1994.”8
　　（iii）MeasuresConcerningtheProtectionofHumanHealth
　　WithregardtotheEC’ssecondargumentinEC–Asbestos(DS135),thePanelrulesthat:9
　　“[…][W]enote,firstofall,thatneitherthetextofArticleXXIII:1(b)oftheGATT1994northatofArticle26:1oftheUnderstandingexpresslyincorporatestheseparationsuggestedbytheECbetweenmeasuresofapurelycommercialnatureandmeasuresdesignedtoprotecthumanhealth.Althoughthesearticlesrequiretheexistenceofameasure-whichneitherofthePartiesdisputes-theydonotdistinguishbetweendifferenttypesofmeasures.Wehavealsofound,onthebasisofArticleXX,thattheapplicationofthelatterdoesnotaprioriexcludetheapplicationofArticleXXIII:1(b).WethereforefindthatthetermsandthecontextofArticleXXIII:1(b)donotsupporttheinterpretationproposedbytheEC.
　　CanadacitesthepreparatoryworkontheGATT1947.OnthebasisofArticle32oftheViennaConvention,weconsiderthatitisnotnecessarytohaverecoursetothepreparatoryworkunless,inparticular,theinterpretationbasedonthecriteriaofArticle31leavesthemeaningofthetermsambiguousorobscureorleadstoamanifestlyabsurdorunreasonableresult.Suchisnotthecase.However,recoursetothepreparatoryworkalsomakesitpossibletoconfirmthemeaningresultingfromtheapplicationofArticle31.
　　Inthisrespect,wenotethattheECconsiderthatCanada’sreadingofthepreparatoryworkisselective.Accordingtothem,thepotentialproblemsofabuseandbadfaithtowhichCanadaalludesareadequatelycoveredbythechapeauofArticleXX.FortheEC,therecannotbetwosetsofprovisionswhichaddressthesameproblemtwice.
　　Althoughitisnotnecessarytotakeapositiononthecontentofthepreparatorywork,weconsiderthattheEC’sargumenttendstoconfusetwoaspects:thefirstisabuseresultingfromtheapplicationofameasurefallingwithinoneoftheparagraphsofArticleXX.IfameasurenecessarytoprotecthumanhealthisappliedinamannerthatconflictswiththeprovisionsoftheintroductoryclauseofArticleXX,themeasurewillstillbeinconflictwiththeprovisionsoftheGATTwhoseviolationArticleXXissupposedtojustify.ThisaspectisverydifferentfromthesituationinwhichameasureisperfectlyjustifiedinitselfinrelationtotheGATT(asinthecaseofameasurewhichsatisfiesalltheconditionsofArticleXX),butwhich,viewedinagivencontext,couldgiverisetoasituationofnullificationorimpairmentofabenefitunderatariffconcession.
　　Itremains,however,forustodiscusstheEC’sargumenttotheeffectthatthefundamentaldutytoprotecthumanhealthcannotbecompromisedorrestrictedbytheconceptofnon-violationnullification.Wemustbeginbyacknowledgingthatallthecasesexaminedbypanelssofarhaveconcernedsituationsinwhichthemeasureadoptedfollowingthenegotiationofaconcessionwaspurelycommercialinnature,generallyasubsidy,atariffpreferenceorameasurerelatingtoproductdistribution.Accordingly,wehavenoprecedentstoguideus.However,apreliminaryremark,similartothatmadeinparagraph8above,iscalledfor.AfindingbasedonArticleXXIII:1(b)oftheGATT1994andArticle26.1oftheUnderstandingneverresultsinanobligationnottoapplyortowithdrawthemeasureinquestion.TheMemberconcernedcanonlybeaskedtomake‘amutuallysatisfactoryadjustment’.Article26:1(b)alsospecifiesthatcompensationmaybepartofamutuallysatisfactoryadjustmentasfinalsettlementofthedispute.TheMemberadoptingapublichealthprotectionmeasureistotallyfreetocontinuetoapplythemeasureconcernedasitstandswhileofferinginexchangecompensationforthebenefitsnullifiedorimpaired.
　　ThePanelalsoconsiders,asdidthepanelinJapan-Film,thatnon-violationshouldbeapproachedwithcautionandtreatedasanexceptionalinstrumentofdisputesettlement.ItappearsthatMemberswhichhavenegotiatedasetofrightsandobligationswouldonlyexceptionallyexpecttobechallengedforactionsnotincontraventionofthoserightsorobligations.
　　Moreover,thePanelisoftheopinionthatevenifthejustificationofameasurebyArticleXXdoesnot,inprinciple,makeitimpossibletoinvokeArticleXXIII:1(b)inrelationtotheapplicationofthemeasurejustified,thesituationofameasurefallingunderArticleXXwithrespecttoArticleXXIII:1(b)cannotbequitethesameasthatofameasureconsistentwithanotherprovisionoftheGATT1994.ThisisbecauseArticleXX,whichisheaded‘GeneralExceptions’,isintended,inparticular,toensuretheprotectionofpublichealthor,asstatedbytheAppellateBodyinUnitedStates-Gasoline,to‘permitimportantStateinterests-includingtheprotectionofhumanhealth[…]tofindexpression’.ThePanelconsidersthatinacceptingtheWTOAgreementMembersalsoacceptapriori,throughtheintroductionofthesegeneralexceptions,thatMemberswillbeable,atsomepoint,tohaverecoursetotheseexceptions.Moreover,Membershaveattachedtotheuseoftheseexceptionsacertainnumberofconditionscontainedeitherinparagraphs(a)to(j)orintheintroductoryclauseofArticleXX.Theseconditionshavegenerallybeennarrowlyinterpreted.Theresultisthat(a)boththeintendedobjectiveoftheseexceptions(pursuitofinterestsrecognizedaprioriasbeingofgreaterimportancethanMembers’commercialinterests,sincetheycanoutweighthelatter)and(b)thespecificconditionsthatmustbesatisfiedbyMembersinvokingtheseexceptionsmeanthat,whilerecognizingthatArticleXXIII:1(b)appliestomeasuresthatfallunderArticleXX,wearejustifiedintreatingrecoursetoArticleXIII:1(b)asparticularlyexceptionalinrelationtomeasuresjustifiedbyArticleXX(b).
　　AllthisleadsthePaneltoconsiderthat,inpractice,evenifinaparticularcaseamutuallysatisfactoryadjustmentmaybemadeunderArticleXXIII:1(b),ingeneral,theriskofaneffectiveincreaseinthecostofmeasuresnecessarytoprotectpublichealthbecauseoftheapplicabilityofArticleXXIII:1(b)tomeasuresjustifiedunderArticleXXcanonlybeverymarginal.Infact,consideringthecriteriamentionedinthepreviousparagraph,veryfewmeasuresofthiskindcouldgiverisetotheapplicationofArticleXXIII:1(b).
　　ForthesereasonswedonotsubscribetotheinterpretationproposedbytheEuropeanCommunities.Accordingly,wewillcontinueourexaminationofthemeasureinthelightofArticleXIII:1(b)oftheGATT1994.”
　　TheEuropeanCommunitiescontendsthatthePanelerredinfindingthatArt.XXIII:1(b)appliedtomeasurespursuinghealthobjectives,ratherthancommercialones,andwhichcould,therefore,bejustifiedunderArt.XX(b)oftheGATT1994.Inthisrespect,theAppellateBodyfindsthat:10
　　“TheEuropeanCommunitiesalsocontendsthatthePanelerredinfindingthatArticleXXIII:1(b)appliestomeasureswhichpursuehealth,ratherthancommercial,objectivesandwhichcan,therefore,bejustifiedunderArticleXX(b)oftheGATT1994.Onceagain,welooktothetextofArticleXXIII:1(b),whichprovidesthat‘theapplicationbyanotherMemberofanymeasure’maygiverisetoacauseofactionunderthatprovision.Theuseoftheword‘any’suggeststhatmeasuresofalltypesmaygiverisetosuchacauseofaction.Thetextdoesnotdistinguishbetween,orexclude,certaintypesofmeasure.Clearly,therefore,thetextofArticleXXIII:1(b)contradictstheEuropeanCommunities’argumentthatcertaintypesofmeasure,namely,thosewithhealthobjectives,areexcludedfromthescopeofapplicationofArticleXXIII:1(b).
　　Inanyevent,anattempttodrawthedistinctionsuggestedbytheEuropeanCommunitiesbetweenso-calledhealthandcommercialmeasureswouldbeverydifficultinpractice.Bydefinition,measureswhichaffecttradeingoods,andwhicharesubjecttothedisciplinesoftheGATT1994,haveacommercialimpact.Atthesametime,thehealthobjectivesofmanymeasuresmaybeattainableonlybymeansofcommercialregulation.Thus,inpractice,cleardistinctionsbetweenhealthandcommercialmeasuresmaybeverydifficulttoestablish.Nordoweseemeritintheargumentthat,previously,only‘commercial’measureshavebeenthesubjectofArticleXXIII:1(b)claims,asthatdoesnotestablishthataclaimcannotbemadeunderArticleXXIII:1(b)regardinga‘non-commercial’measure.
　　AnimportantaspectoftheEuropeanCommunities’argumentisthataMembercannothavereasonableexpectationsofcontinuedmarketaccessforproductswhichareshowntoposeaseriousrisktohumanlifeorhealth.However,theparagraphsofthePanelReportappealedbytheEuropeanCommunitiesinvolveexclusivelythePanel’sfindingsonthethresholdissuesofthescopeofapplicationofArticleXXIII:1(b).ThisparticularargumentoftheEuropeanCommunities,importantasitis,simplydoesnotrelatetothosethresholdissues.Rather,theEuropeanCommunities’argumentrelatestothesubstanceofaclaimthathasbeendeterminedtofallwithinthescopeofapplicationofArticleXXIII:1(b)and,inparticular,concernstheissuewhethera‘benefit’hasbeen‘nullifiedorimpaired’byameasurerestrictingmarketaccessforproductsposingahealthrisk.Here,weemphasizethattheEuropeanCommunitiesdoesnotappealthePanel’sfindingsrelatingtothe‘nullificationorimpairment’ofa‘benefit’throughthefrustrationofreasonableexpectationsbyapplicationofthemeasureatissue.Wedonot,therefore,finditnecessarytoexaminetheEuropeanCommunities’argumentrelatingtoreasonableexpectations.
　　Forthesereasons,wedismisstheEuropeanCommunities’appealunderArticleXXIII:1(b)oftheGATT1994andupholdthePanel’sfindingthatArticleXXIII:1(b)appliestomeasureswhichfallwithinthescopeofapplicationofotherprovisionsoftheGATT1994andwhichpursuehealthobjectives.”
　　（iv）MeasuresAppliedContinuingly
　　GiventhatthetextofArt.XXIII:1(b)contemplatesnullificationorimpairmentinthepresenttense,causedbyapplicationofameasure,“whetherornotitconflicts”(alsointhepresenttense),theordinarymeaningofthisprovisionlimitsthenon-violationremedytomeasuresthatarecurrentlybeingapplied.Inonlyaverysmallnumberofcases,involvingveryparticularsituations,havepanelsproceededtoadjudicateclaimsinvolvingmeasureswhichnolongerexistorwhicharenotbeingappliedanylonger.Inthosecases,themeasureshavebeentypicallyappliedintheveryrecentpast.Forexample,inJapan-Film(DS44),thepartiesdisagreeastowhetherornotcertainofthe“measures”atissuearestillineffect.Inthisrespect,thePanelrulesthat:11
　　“[…]GiventhesignificanceoftheprincipleofcontinuedapplicationofmeasurestotheinterpretationofArticleXXIII:1(b),weshallneedtogiveparticularlycarefulanalysis--inexaminingtheindividual‘measures’--totheevidencerelatingtosuchallegedcontinuingadministrativeguidance.Atthisstage,sufficeittosaythatwedonotruleoutthepossibilitythatold‘measures’thatwereneverofficiallyrevokedmaycontinuetobeappliedthroughcontinuingadministrativeguidance.Similarly,evenifmeasureswereofficiallyrevoked,theunderlyingpoliciesmaycontinuetobeappliedthroughcontinuingadministrativeguidance.However,theburdenisontheUnitedStatestodemonstrateclearlythatsuchguidancedoesinfactexistandthatitiscurrentlynullifyingorimpairingbenefits.”
　　
　　IIIExistenceofaBenefit:ProtectionofLegitimateExpectations
　　（i）ProtectionofLegitimateExpectations（PLE）
　　Asdiscussedpreviously,itisruledthatthenon-violationremedyhasanimportantrole-thatofprotectingthereasonableexpectationsofcompetitiveopportunitiesthroughnegotiatedconcessions.
　　Inthisregard,thePanelinJapan-Film（DS44）rulesthat:“Thesecondrequiredelementwhichmustbeconsideredtoestablishacaseofnon-violationnullificationorimpairmentunderArticleXXIII:1(b)istheexistenceofabenefitaccruingtoaWTOMemberundertherelevantagreement(inthiscase,GATT1994).InallbutoneofthepastGATTcasesdealingwithArticleXXIII:1(b)claims,theclaimedbenefithasbeenthatoflegitimateexpectationsofimprovedmarket-accessopportunitiesarisingoutofrelevanttariffconcessions.ThissamesetofGATTprecedentssuggeststhatforexpectationstobelegitimate,theymusttakeintoaccountallmeasuresofthepartymakingtheconcessionthatcouldhavebeenreasonablyanticipatedatthetimeoftheconcession.Ofcourse,aswiththefirstelement(applicationofameasure),thecomplainingpartyhastheburdenofdemonstratingthe‘benefitaccruing’.”12AndthePanelgoesontoanalyze:13
　　“ThetextofArticleXXIII:1(b)simplyrefersto‘abenefitaccruing,directlyorindirectly,underthisAgreement’anddoesnotfurtherdefineorexplainwhatbenefitsarereferredto.PastGATTpanelreportshaveconsideredthatsuchbenefitsincludethosethataMemberreasonablyexpectstoobtainfromatariffnegotiation.
　　ThefirstGATTreportanalysingArticleXXIII:1(b)wasthe1950ReportoftheWorkingPartyonAustralianSubsidyonAmmoniumSulphate.TheWorkingPartyfoundthatthewithdrawalbyAustraliaofawartimesubsidyonsodiumnitratefertilizerwhilemaintainingasubsidyonammoniumsulphatefertilizer,althoughnotinconsistentwithAustralia’sGATTobligations,nullifiedorimpairedbenefitsaccruingtoChileundertheGeneralAgreement.TheWorkingPartyagreedthatimpairmentwouldexistiftheAustralianaction‘whichresultedinupsettingthecompetitiverelationshipbetweensodiumnitrateandammoniumsulphatecouldnotreasonablyhavebeenanticipatedbytheChileanGovernment,takingintoconsiderationallpertinentcircumstancesandtheprovisionsoftheGeneralAgreement,atthetimeitnegotiatedfortheduty-freebindingonsodiumnitrate.TheworkingpartyconcludedthattheGovernmentofChilehadreasontoassume,duringthesenegotiations,thatthewar-timefertilizersubsidywouldnotberemovedfromsodiumnitratebeforeitwasremovedfromammoniumsulphate.[Reasonsomitted.]Forthesereasons,theworkingpartyalsoconcludedthattheAustralianactionshouldbeconsideredasrelatingtoabenefitaccruingtoChileundertheAgreement,andthatitwasthereforesubjecttotheprovisionsofArticleXXIII....TheinequalitycreatedandthetreatmentChilecouldhaveexpectedatthetimeofthenegotiation,aftertakingintoconsiderationallpertinentcircumstances,includingthecircumstancesmentionedabove,andtheprovisionsoftheGeneralAgreement,wereimportantelementsintheworkingparty’sconclusions’.
　　The1952PanelReportonGermany-Sardinesalsobasedanon-violationfindingonan‘actionoftheGermanGovernment,whichresultedinupsettingthecompetitiverelationshipbetween[differentmembersofthesamefishfamilythat]couldnotreasonablyhavebeenanticipatedbytheNorwegianGovernmentatthetimeitnegotiatedfortariffreductionson[fish]’.Insofinding,thepanelnotedthatNorway‘hadreasontoassume’thatthefishtheywereinterestedinwouldnotbetreatedlessfavourably.
　　TwoGATTstudygroupselaboratedtheseconceptsinthecontextofsubsidies,ineachcasefocusingonwhetherapartyhadreasonableexpectationsthatcertaintreatmentwouldcontinue.In1955,aworkingpartywrote:
　　‘Sofarasdomesticsubsidiesareconcerned,itwasagreedthatacontractingpartywhichhasnegotiatedaconcessionunderArticleIImaybeassumed,forthepurposeofArticleXXIII,tohaveareasonableexpectation,failingevidencetothecontrary,thatthevalueoftheconcessionwillnotbenullifiedorimpairedbythecontractingpartywhichgrantedtheconcessionbythesubsequentintroductionorincreaseofadomesticsubsidyontheproductconcerned’.
　　A1961report,citingtheforegoingparagraph,stated:
　　‘Inthisconnexionitwasnotedthattheexpression’reasonableexpectation’wasqualifiedbythewords’failingevidencetothecontrary’.BythisthePanelunderstandsthatthepresumptionisthatunlesssuchpertinentfactswereavailableatthetimethetariffconcessionwasnegotiated,itwasthenreasonablytobeexpectedthattheconcessionwouldnotbenullifiedorimpairedbytheintroductionorincreaseofadomesticsubsidy.’
　　The1990PanelReportonEEC-Oilseedsapproachedanon-violationcomplaintasfollows:
　　‘ThePanelexaminedwhetheritwasreasonablefortheUnitedStatestoexpectthattheCommunitywouldnotintroducesubsidyschemessystematicallycounteractingthepriceeffectofthetariffconcessions.
　　...
　　ThePaneldoesnotsharetheviewoftheCommunitythattherecognitionofthelegitimacyofsuchexpectationswouldamounttoare-writingoftherulesoftheGeneralAgreement.ThecontractingpartieshavedecidedthatafindingofimpairmentdoesnotauthorizethemtorequesttheimpairingcontractingpartytoremoveameasurenotinconsistentwiththeGeneralAgreement;suchafindingmerelyallowsthecontractingpartyfrustratedinitsexpectationtorequest,inaccordancewithArticleXXIII:2,anauthorizationtosuspendtheapplicationofconcessionsorotherobligationsundertheGeneralAgreement.Therecognitionofthelegitimacyofanexpectationthusessentiallymeanstherecognitionofthelegitimacyofsucharequest.TherecognitionofthelegitimacyofanexpectationrelatingtotheuseofproductionsubsidiesthereforeinnowaypreventsacontractingpartyfromusingproductionsubsidiesconsistentlywiththeGeneralAgreement;itmerelydelineatesthescopeoftheprotectionofanegotiatedbalanceofconcessions.ForthesereasonsthePanelfoundthattheUnitedStatesmaybeassumednottohaveanticipatedtheintroductionofsubsidieswhichprotectCommunityproducersofoilseedscompletelyfromthemovementofpricesforimportsandtherebypreventtariffconcessionsfromhavinganyimpactonthecompetitiverelationshipbetweendomesticandimportedoilseeds,andwhichhaveasoneconsequencethatalldomestically-producedoilseedsaredisposedofintheinternalmarketnotwithstandingtheavailabilityofimports’.
　　Assuggestedbythe1961report,inorderforexpectationsofabenefittobelegitimate,thechallengedmeasuresmustnothavebeenreasonablyanticipatedatthetimethetariffconcessionwasnegotiated.Ifthemeasureswereanticipated,aMembercouldnothavehadalegitimateexpectationofimprovedmarketaccesstotheextentoftheimpairmentcausedbythesemeasures.
　　Thus,underArticleXXIII:1(b),theUnitedStatesmayonlyclaimimpairmentofbenefitsrelatedtoimprovedmarketaccessconditionsflowingfromrelevanttariffconcessionsbyJapantotheextentthattheUnitedStatescouldnothavereasonablyanticipatedthatsuchbenefitswouldbeoffsetbythesubsequentapplicationofameasurebytheGovernmentofJapan.Inthecasebeforeus,thereisdisagreementbetweenthepartiesonthisissueofreasonableanticipationwithrespecttoeachandevery‘measure’claimedbytheUnitedStatestonullifyandimpairbenefitsaccruingtoitunderGATT.”
　　（ii）Non-foreseeabilityofMeasuresatIssue
　　Asnotedabove,forexpectationstobelegitimate,allmeasuresofthepartymakingtheconcessionthatcouldhavebeenreasonablyanticipatedatthetimeoftheconcessionmustbetakenintoaccount.Ofcourse,aswiththefirstelement(applicationofameasure),thecomplainingpartyhastheburdenofdemonstratingthe“benefitaccruing”.Inthecontext,therewouldbecertainlogicinmakingadistinctionbetweentheconceptoflegitimateexpectationofabenefitandthatofthereasonableforeseeabilityofameasure.Inparticular,theneedtoprovethatacomplained-ofmeasurewasobjectivelynon-foreseeableatthetimeofnegotiationsleadstoanimplicitrecognitionoflegitimacyoftheexpectationsascrucialtothedecisionofwhetherornotthestatecanclaimnullificationorimpairment.
　　Asnotedpreviously,aWTOmembermaybeassumed,forthepurposeofArt.XXIII,tohaveareasonableexpectation,failingevidencetothecontrary,thatthevalueoftheconcessionwillnotbenullifiedorimpairedbythememberwhichgrantedtheconcessionbythesubsequentintroductionorincreaseofadomesticmeasure.Andinthisconnexionitisnotedthattheexpression“reasonableexpectation”isqualifiedbythewords“failingevidencetothecontrary”.Bythisitsuggeststhatthepresumptionisthatunlesssuchpertinentfactswereavailableatthetimetheconcessionwasnegotiated,itisthenreasonablytobeexpectedthattheconcessionwouldnotbenullifiedorimpairedbytheintroductionorincreaseofadomesticmeasure.I.e.,thecomplainantcouldnothavereasonablyanticipatedthatitsbenefitswouldbeoffsetbythesubsequentapplicationofameasurebythecomplained-ofGovernment.Assuggested,inorderforexpectationsofabenefittobelegitimate,thechallengedmeasuresmustnothavebeenreasonablyanticipatedatthetimetheconcessionwasnegotiated.Ifthemeasureswereanticipated,aMembercouldnothavehadalegitimateexpectationofimprovedmarketaccesstotheextentoftheimpairmentcausedbythesemeasures.However,whatfactorsshouldbeconsideredtodeterminewhetheraMembershouldhavereasonablyanticipatedmeasuresthatitclaimsnullifiedorimpairedbenefits?Inthisregard,thePanelinJapan-Film（DS44）rulesinrelevantpart:14
　　“Anobviousstartingpointfordeterminingwhetherameasurewasreasonablyanticipatedistoconsiderwhetherthemeasurewasadoptedbeforeoraftertheconclusionoftherelevantroundoftariffnegotiations,whichistheapproachtakeninthe1961reportquotedabove.Thepartiesargue,however,thatthematterismuchmorecomplicatedthanthat.AccordingtotheUnitedStates,itwassimplyunawareofsome‘measures’thatpredatedtheconclusionoftherelevantroundoftariffnegotiationsduetotheirnontransparentnature.Inotherinstances,theUnitedStatesindicatesthatalthoughitwasawareoftheexistenceofthe‘measures’priortosuchconclusion,itdidnotknowandcouldnothaveknownoftheirsignificanceinrelationtoaccessofimportedfilmandpapertotheJapanesemarketatthetimeoftherelevanttariffnegotiations.Japan,incontrast,maintainsthattheUnitedStatesdidanticipateorshouldhaveanticipatedallofthealleged‘measures’.Inthisregard,itarguesthatexportingMembersshouldreasonablyanticipateGATT-consistentmeasurestakenbyanimportingMembertoimprovetheefficiencyofaparticularsectorofitseconomy,suchasthedistributionsector.
　　Weconsiderthattheissueofreasonableanticipationshouldbeapproachedinrespectofspecific‘measures’inlightofthefollowingguidelines.First,inthecaseofmeasuresshownbytheUnitedStatestohavebeenintroducedsubsequenttotheconclusionofthetariffnegotiationsatissue,itisourviewthattheUnitedStateshasraisedapresumptionthatitshouldnotbeheldtohaveanticipatedthesemeasuresanditisthenforJapantorebutthatpresumption.Sucharebuttalmightbemade,forexample,byestablishingthatthemeasureatissueissoclearlycontemplatedinanearliermeasurethattheUnitedStatesshouldbeheldtohaveanticipatedit.However,theremustbeaclearconnectionshown.Inourview,itisnotsufficienttoclaimthataspecificmeasureshouldhavebeenanticipatedbecauseitisconsistentwithoracontinuationofapastgeneralgovernmentpolicy.AsintheEEC-Oilseedscase,wedonotbelievethatitwouldbeappropriatetochargetheUnitedStateswithhavingreasonablyanticipatedallGATT-consistentmeasures,suchas‘measures’toimprovewhatJapandescribesastheinefficientJapanesedistributionsector.Indeed,ifaMemberwereheldtoanticipateallGATT-consistentmeasures,anon-violationclaimwouldnotbepossible.NordoweconsiderthatasageneralruletheUnitedStatesshouldhavereasonablyanticipatedJapanesemeasuresthataresimilartomeasuresinotherMembers’markets.Ineachsuchinstance,theissueofreasonableanticipationneedstobeaddressedonacase-by-casebasis.
　　Second,inthecaseofmeasuresshownbyJapantohavebeenintroducedpriortotheconclusionofthetariffnegotiationsatissue,itisourviewthatJapanhasraisedapresumptionthattheUnitedStatesshouldbeheldtohaveanticipatedthosemeasuresanditisfortheUnitedStatestorebutthatpresumption.Inthisconnection,itisourviewthattheUnitedStatesischargedwithknowledgeofJapanesegovernmentmeasuresasofthedateoftheirpublication.Werealizethatknowledgeofameasure’sexistenceisnotequivalenttounderstandingtheimpactofthemeasureonaspecificproductmarket.Forexample,avaguemeasurecouldbegivensubstancethroughenforcementpoliciesthatareinitiallyunexpectedorlaterchangedsignificantly.However,wheretheUnitedStatesclaimsthatitdidnotknowofameasure’srelevancetomarketaccessconditionsinrespectoffilmorpaper,wewouldexpecttheUnitedStatestoclearlydemonstratewhyinitiallyitcouldnothavereasonablyanticipatedtheeffectofanexistingmeasureonthefilmorpapermarketandwhenitdidrealizetheeffect.Suchashowingwillneedtobetiedtotherelevantpointsintime(i.e.,theconclusionsoftheKennedy,TokyoandUruguayRounds)inordertoassesstheextentoftheUnitedStates’legitimateexpectationsofbenefitsfromthesethreeRounds.AsimplestatementthataMember’smeasuresweresoopaqueandinformalthattheirimpactcouldnotbeassessedisnotsufficient.Whileitistruethatinmostpastnon-violationcases,onecouldeasilydiscernaclearlinkbetweenaproduct-specificactionandtheeffectonthetariffconcessionthatitallegedlyimpaired,onecanalsodiscernalinkbetweengeneralmeasuresaffectingtheinternalsaleanddistributionofproducts,suchasrulesonadvertisingandpremiums,andtariffconcessionsonproductsingeneral.”
　　（iii）BenefitsintheNegotiations
　　Asnotedpreviously,“theseobservations[concerningnon-violationcases]bypreviouspanelsareentirelyinlinewiththeconceptofpactasuntservanda”.However,oneoftheissuesthatarisesinKorea-GovernmentProcurement(DS163)iswhethertheconceptofnon-violationcanariseincontextsotherthanthetraditionalapproachrepresentedbypactasuntservanda.Can,forinstancethequestionoferrorintreatynegotiationbeaddressedunderArticle26oftheDSUandArticleXXII:2oftheGPA?Inthisrespect,thePanelrulesthattheyseenoreasonwhyitcouldnot.ThePanelfoundthatpartiestoatreatyhadanobligationtonegotiateingoodfaithjustastheymustimplementthetreatyingoodfaith.Andtheyruledinrelevantpartasfollows:15
　　“Thus,onthebasisoftheampleevidenceprovidedbybothpartiestothedispute,wewillreviewtheclaimofnullificationorimpairmentraisedbytheUnitedStateswithintheframeworkofprinciplesofinternationallawwhicharegenerallyapplicablenotonlytoperformanceoftreatiesbutalsototreatynegotiation.TodootherwisepotentiallywouldleaveagapintheapplicabilityofthelawgenerallytoWTOdisputesandweseenoevidenceinthelanguageoftheWTOAgreementsthatsuchagapwasintended.Ifthenon-violationremedyweredeemednottoprovideareliefforsuchproblemsashaveariseninthepresentcaseregardinggoodfaithanderrorinthenegotiationofGPAcommitments(andonemightadd,intariffandservicescommitmentsunderotherWTOAgreements),thennothingcouldbedoneaboutthemwithintheframeworkoftheWTOdisputesettlementmechanismifgeneralrulesofcustomaryinternationallawongoodfaithanderrorintreatynegotiationswererulednottobeapplicable.Aswasarguedabove,thatwouldnotbeinconformitywiththenormalrelationshipbetweeninternationallawandtreatylaworwiththeWTOAgreements.
　　Ifnon-violationrepresentsanextensionofthegoodfaithrequirementsintheimplementationofatreatyandcanalsobeappliedtogoodfaithanderrorinnegotiationsundertheGPA,andwethinkitcan,thenthespecialremediesfornon-violationcontainedinDSUArticle26shouldalsobeappliedratherthanthetraditionalremediesoftreatylawwhicharenotappositetothesituationoftheGPA.”
　　(iv)BenefitsunderSuccessiveRounds
　　InJapan-Film,thequestionoflegitimateexpectationsofbenefitsaccruingtotheUnitedStatesiscomplicatedbythefactthattheUnitedStateswasclaimingtohaveexpectationsofimprovedmarketaccessbenefitsinrespectoffourdifferentproducts(eachunderadifferenttariffline),grantedduringthreesuccessiveroundsofmultilateraltradenegotiations.TheUnitedStatesclaimstohavereasonableexpectationsofbenefitsaccruingtoitunderArt.XXIII:1(b)astheresultoftariffconcessionsgrantedbyJapanonblackandwhitefilmandpaperduringtheKennedyRound(1967),oncolourandblackandwhitefilmandpaperduringtheTokyoRound(1979)andoncolourandblackandwhitefilmandpaperduringtheUruguayRound(1994).JapanarguesthatthereasonableexpectationsoftheUnitedStatesmustbelimitedtothoseexistingin1994attheconclusionoftheUruguayRoundinthattheselatterexpectationsreflectedanewbalanceandglobalreassessmentofthevalueofmarketaccessconcessions,replacinganyreasonableexpectationsthatmighthavearisenunderpriortariffnegotiations.
　　OneofthegeneralissuesraisedbytheparticularcaseofJapan-Film(DS44)isthat,maythebenefitslegitimatelyexpectedbyaMemberderivefromsuccessiveroundsoftariffnegotiations?Inthisrespect,thePanelrulesasfollows:16
　　“TwoprovisionsofGATT1994(sub-paragraphs(b)(i)and(d)ofparagraph1)appeartoustoberelevanttotheresolutionofthismatter.ThetextofGATT1994providesinrelevantpart:[…]
　　Asreferencedinthequotedtext--alsoknownastheGATT1994incorporationclause--GATT1994incorporatesboth‘protocolsandcertificationsrelatingtotariffconcessions’underparagraph1(b)(i)and‘theMarrakeshProtocoltoGATT1994’underparagraph1(d).Theordinarymeaningofthetextofparagraphs1(b)(i)and1(d)ofGATT1994,readtogether,clearlysuggeststhatallprotocolsrelatingtotariffconcessions,boththosepredatingtheUruguayRoundandtheMarrakeshProtocoltoGATT1994,areincorporatedintoGATT1994andcontinuetohavelegalexistenceundertheWTOAgreement.
　　JapanappearstoarguethattheSchedulesannexedtotheMarrakeshProtocolprevailasalateragreementoverSchedulesthatenteredintoforceunderGATT1947.Inourview,suchaninterpretationwouldonlymakesenseiftheMarrakeshProtocol,referredtoinparagraph1(d)ofGATT1994,wereviewedaslaterintimethantheprotocolsreferredtoinparagraph1(b)(i)thereof,andthen,onlytotheextentofanyconflictbetweentariffconcessionsannexedtotheMarrakeshProtocolandtheconcessionsintheothertariffprotocolsincorporatedinGATT1994.Weconsiderthat,asarguedbytheUnitedStates,Article30oftheViennaConvention,whichisdesignedtoresolveconflictsbetweenprovisionsofsuccessivetreatiesonthesamesubjectmatter,isnotapplicabletothesituationathandbecausethereisnothinginherentlyincompatible--inconflict--betweentheearlierandlateragreedtariffconcessions.Suchaconflictwouldonlyseemtoexistifthesubsequentconcessionswerelessfavourablethanpriorconcessions,whichisnotthesituationinthiscase.Wheretariffconcessionshavebeenprogressivelyimproved,thebenefits--expectationsofimprovedmarketaccess--accruingdirectlyorindirectlyunderdifferenttariffconcessionprotocolsincorporatedinGATT1994canbereadinharmony.Thisapproachisinaccordancewithgeneralprinciplesoflegalinterpretationwhich,astheAppellateBodyreiteratedinUS-Gasoline,teachthatoneshouldendeavourtogivelegaleffecttoallelementsofatreatyandnotreducethemtoredundancyorinutility.
　　Theconclusionthatbenefitsaccruingfromconcessionsgrantedduringsuccessiveroundsoftariffnegotiationsmayseparatelygiverisetoreasonableexpectationsofimprovedmarketaccessisconsistentwithpastpanelreports.ThepanelinEEC-CannedFruitfoundthattheUnitedStateshadareasonableexpectationarisingfromtheEEC’s1974tariffconcessionspursuanttoArticleXXIV:6negotiationsand1979TokyoRoundtariffconcessions(eventhoughthepanelseparatelyfoundthattheUnitedStatescouldhaveanticipatedcertainsubsidiesinrespectoftheTokyoRoundtariffconcessions).AndtheEEC-OilseedspanelfoundthattheUnitedStateshadareasonableexpectationarisingfromtheEEC’s1962DillonRoundtariffconcessions.AstheUnitedStatespointsout,thesefindingswouldnothavebeenpossibleifsubsequentmultilateraltariffagreementsorenlargementagreementsweredeemedtoextinguishwholesalethetariffconcessionsinpriortariffschedules.
　　ThefollowingquotationfromtheEEC-Oilseedspanelreportappearstoustobeparticularlyonpoint:
　　‘Inthesecircumstances,thepartnersoftheCommunityinthesuccessiverenegotiationsunderArticleXXIV:6couldlegitimatelyassume,intheabsenceofanyindicationstothecontrary,thattheoffertocontinueatariffcommitmentbytheCommunitywasanoffernottochangethebalanceofconcessionspreviouslyattained.ThePanelnotedthatnothinginthematerialsubmittedtoitindicatedthattheCommunityhadmadeitcleartoitsnegotiatingpartnersthatthewithdrawalandreinstitutionofthetariffconcessionsforoilseedsaspartofthewithdrawalofthewholeoftheCommunitySchedulemeantthattheCommunitywasseekinganewbalanceofconcessionswithrespecttotheseitems.ThereisinparticularnoevidencethattheCommunity,inthecontextofthesenegotiations,offeredtocompensateitsnegotiatingpartnersforanyimpairmentofthetariffconcessionsthroughproductionsubsidiesorthatitacceptedcompensatorytariffwithdrawalsbyitsnegotiatingpartnerstotakeintoaccountanysuchimpairment.Thebalanceofconcessionsnegotiatedin1962inrespectofoilseedswasthusnotalteredinthesuccessiveArticleXXIV:6negotiations.ThePanelthereforefoundthatthebenefitsaccruingtotheUnitedStatesundertheoilseedtariffconcessionsresultingfromtheArticleXXIV:6negotiationsof1986/87includetheprotectionofreasonableexpectationstheUnitedStateshadwhentheseconcessionswereinitiallynegotiatedin1962’.
　　ThefactthattheEEC-Oilseedscase(andtheunadoptedEEC-CannedFruitcaseaswell)dealtwithrenegotiationoftariffconcessionsunderArticleXXIV:6asopposedtoArticleXXVIIIorArticleXXVIIIbisdoesnot,inourview,underminetherelevanceoftheabovefindingtothecaseathand.ThisisbecausetheArticleXXIV:6procedureissimplyameanspermittingaWTOMember,whichhasenteredintoacustomsunionandwhichproposestoincreasearateofdutyaboveboundlevels,tomodifyorwithdrawthatconcessionundertheproceduresofArticleXXVIII.ThepanelinEEC-Oilseedsfoundthattherewas,effectively,nomodificationorwithdrawaloftariffconcessionsunderArticleXXIV:6--andnonewbalanceofconcessionsachieved,i.e.,‘thebalanceofconcessionsnegotiatedin1962...wasnotaltered’--eventhoughthetariffbindingsonoilseedshadbeenwithdrawnandreinstatedintact.
　　WenotethatArticleXXVIIImaybeinvokedunderspecificallydefinedcircumstancestomodifyorwithdrawconcessions.And,asnotedabove,ArticleXXIV:6permitsMemberswhichhaveenteredintocustomsunionstomodifyorwithdrawthoseconcessionsundertheproceduresofArticleXXVIII.ArticleXXVIIIbis,incontrast,whichprovidesalegalbasisforMemberstoreduceandbindtariffsonamutuallyadvantageous(i.e.multilateral)basis,asageneralruledoesnotprovideameanstomodifyorwithdrawtariffconcessions.
　　Weconsider,therefore,thatreasonableexpectationsmayinprinciplebesaidtocontinuetoexistwithrespecttotariffconcessionsgivenbyJapanonfilmandpaperinsuccessiveroundsofArticleXXVIIIbisnegotiations.Nevertheless,theestablishmentofacasebasedonexpectationsfromroundsconcluded18or30yearsagomaybedifficult.TheUnitedStatesmustshowthatthoseexpectations,aswellasitsmorerecentones,arecurrentlynullifiedorimpaired.”
　　
　　IVNullificationorImpairmentofBenefit:Causality
　　Asnotedabove,panelsandtheAppellateBodyhavebroadlydefinednullificationorimpairmentofabenefit.However,panelsfurtherdevelopthisconceptthattheyadheretoanarrowviewofwhatcircumstancescouldbringaboutanullificationas:“thecasesinwhichnon-violationcomplaintswereaccepted…concernedveryspecificcircumstances…Theyconcernedsituationsofaperceiveddefactowithdrawalofatariffconcessionbecauseofanunexpectedalterationoftheconditionsofcompetition”.
　　Conglomeratingtheactualwordingof(b)and(c)ofArt.XXIII:1,thepanelsacknowledgethatthischangeinthebalancecanbebroughtabouteitherbyanactionorbyanon-action.Further,althoughnottested,dictasuggeststhatanimpairmentneednotbelimitedtothedisadvantagingofacomplainingparty,itmayalsoincludeactionsornon-actionsthatresultinabenefittotherespondingparty,especiallywhentherespondingpartyisnotaoriginalnegotiatingparty.Onecouldinferthatitistheunjustbenefitthatiscausingtheimpairmentandnottheunjustifiedharmfromtheactionthatisapossiblebasisofanimpairmentclaim.However,causalitymaybeoneofthemorefactuallycomplexareasofexamination.Inthisconnection,inthethreepriorNon-violationcaseswherepanelsfoundthatthecomplainingpartieshadfailedtoprovideadetailedjustificationtosupporttheirclaims,theissueturnedprimarilyonthelackofevidenceofcausality.Wewillexploresomeaspectsgeneralastothecausalityinthefollowingparagraphs.
　　InJapan-Film(DS44),thePanelrulesinpertinentpartas:17
　　“Thethirdrequiredelementofanon-violationclaimunderArticleXXIII:1(b)isthatthebenefitaccruingtotheWTOMember(e.g.,improvedmarketaccessfromtariffconcessions)isnullifiedorimpairedastheresultoftheapplicationofameasurebyanotherWTOMember.Inotherwords,itmustbedemonstratedthatthecompetitivepositionoftheimportedproductssubjecttoandbenefittingfromarelevantmarketaccess(tariff)concessionisbeingupsetby(‘nullifiedorimpaired...astheresultof’)theapplicationofameasurenotreasonablyanticipated.Theequationof‘nullificationorimpairmentwithupsettingthecompetitiverelationship’establishedbetweendomesticandimportedproductsasaresultoftariffconcessionshasbeenconsistentlyusedbyGATTpanelsexaminingnon-violationcomplaints.Forexample,theEEC-Oilseedspanel,indescribingitsfindings,statedthatithadfound...thatthesubsidiesconcernedhadimpairedthetariffconcessionbecausetheyupsetthecompetitiverelationshipbetweendomesticandimportedoilseeds,notbecauseofanyeffectontradeflows.ThesamelanguagewasusedintheAustralianSubsidyandGermany-Sardinescases.Thus,inthiscase,itisuptotheUnitedStatestoprovethatthegovernmentalmeasuresthatitciteshaveupsetthecompetitiverelationshipbetweendomesticandimportedphotographicfilmandpaperinJapantothedetrimentofimports.Inotherwords,theUnitedStatesmustshowaclearcorrelationbetweenthemeasuresandtheadverseeffectontherelevantcompetitiverelationships.
　　Weconsiderthatthisthirdelement--causality--maybeoneofthemorefactuallycomplexareasofourexamination.Inthisconnection,wenotethatinthethreepriornon-violationcasesinwhichpanelsfoundthatthecomplainingpartieshadfailedtoprovideadetailedjustificationtosupporttheirclaims,theissueturnedprimarilyonthelackofevidenceofcausality.Fourissuesrelatedtocausationmeritgeneraldiscussion.First,thequestionofthedegreeofcausationthatmustbeshown--‘butfor’orless.Second,therelevanceoftheorigin-neutralnatureofameasuretocausationofnullificationorimpairment.Third,therelevanceofintenttocausality.Andfourth,theextenttowhichmeasuresmaybeconsideredcollectivelyinananalysisofcausation.
　　Astothefirstissue,theUnitedStatesarguesthatitneednotshowthatthemeasuresinissuearea‘butfor’causeofimpairmentofmarket-accessconditionsforimportedfilmandpaper,butthatitneedonlydemonstratethatthesemeasuresare‘a’causeofsuchdistortion.Japanarguesthataclearlinkagebetweenthemeasureatissueandtheallegednullificationorimpairmentmustbeprovedbythecomplainingpartyinordertoestablishthenecessarycausalconnection.Specifically,Japanstatesthattheissueiswhetherthecomplainingpartyhasprovideda‘detailedjustification’insupportofitsclaimthatameasurehascausednullificationorimpairment.Inourview,JapanshouldberesponsibleforwhatiscausedbymeasuresattributabletotheJapaneseGovernmentasopposed,forexample,towhatiscausedbyrestrictivebusinessconductattributabletoprivateeconomicactors.Atthisstageoftheproceeding,theissueiswhethersuchameasurehascausednullificationorimpairment,i.e.,whetherithasmademorethanademinimiscontributiontonullificationorimpairment.
　　Inrespectofthesecondissue,Japanarguesthatalloftheaccused‘measures’areneutralastooriginofthegoods,noneofthemdistinguishingbetweentheimportedanddomesticproductsconcerned,andthatthereisaccordinglynocausalconnectionbetweenthealleged‘measures’,individuallyorcollectively,andanyunfavourablecompetitiveconditionsforimportedfilmandpaper.TheUnitedStatesrespondsthatthe‘measures’atissuehavehadadisparateimpactonimportedproductsintheirapplication,therebyupsettingcompetitiveconditionsofmarketaccessforimportedfilmandpaper.Inourview,evenintheabsenceofdejurediscrimination(measureswhichontheirfacediscriminateastoorigin),itmaybepossiblefortheUnitedStatestoshowdefactodiscrimination(measureswhichhaveadisparateimpactonimports).However,insuchcircumstances,thecomplainingpartyiscalledupontomakeadetailedshowingofanyclaimeddisproportionateimpactonimportsresultingfromtheorigin-neutralmeasure.And,theburdenofdemonstratingsuchimpactmaybesignificantlymoredifficultwheretherelationshipbetweenthemeasureandtheproductisquestionable.
　　WenotethatWTO/GATTcaselawontheissueofdefactodiscriminationisreasonablywell-developed,bothinregardtotheprincipleofmost-favoured-nationtreatmentunderGATTArticleIandinregardtothatofnationaltreatmentunderGATTArticleIII.TheconsistentfocusofGATTandWTOpanelsonensuringeffectiveequalityofcompetitiveopportunitiesbetweenimportedproductsfromdifferentcountriesandbetweenimportedanddomesticproductshasbeenconfirmedbytheAppellateBodyinitsreportsonJapan-AlcoholicBeveragesandmostrecentlyinBananasIII,withrespecttobothGATTandGATSnon-discriminationrules.WeconsiderthatdespitethefactthatthesepastcasesdealtwithGATTprovisionsotherthanArticleXXIII:1(b),thereasoningcontainedthereinappearstobeequallyapplicableinaddressingthequestionofdefactodiscriminationwithrespecttoclaimsofnon-violationnullificationorimpairment,subject,ofcourse,tothecaveat,thatinanArticleXXIII:1(b)casetheissueisnotwhetherequalityofcompetitiveconditionsexistsbutwhethertherelativeconditionsofcompetitionwhichexistedbetweendomesticandforeignproductsasaconsequenceoftherelevanttariffconcessionshavebeenupset.
　　Thethirdissueistherelevanceofintenttocausality.Thepartiesdisagreeinmanycaseswhethertheintentbehindaspecificmeasureistolimitimportsortopromoteanunrelatedpolicygoal.Fromourreadingofthemeasuresandconsiderationoftheparties’arguments,itisapparentthattheremayhavebeenmorethanonereasonmotivatingtheadoptionofmeasures.Wenote,however,thatArticleXXIII:1(b)doesnotrequireaproofofintentofnullificationorimpairmentofbenefitsbyagovernmentadoptingameasure.Whatmattersforpurposesofestablishingcausalityistheimpactofameasure,i.e.whetheritupsetscompetitiverelationships.Nonetheless,intentmaynotbeirrelevant.Inourview,ifameasurethatappearsonitsfacetobeorigin-neutralinitseffectondomesticandimportedproductsisneverthelessshowntohavebeenintendedtorestrictimports,wemaybemoreinclinedtofindacausalrelationshipinspecificcases,bearinginmindthatintentisnotdeterminativewhereitinfactexists.ItremainsforthecomplainingpartytoshowthatthespecificmeasureitchallengesdoesinfactnullifyorimpairbenefitswithinthemeaningofArticleXXIII:1(b).
　　Finally,asfortheUSpositionthatthePanelshouldexaminetheimpactofthemeasuresincombinationaswellasindividually(apositioncontestedbyJapan),wedonotrejectthepossibilityofsuchanimpact.Itisnotwithoutlogicthatameasure,whenanalyzedinisolation,mayhaveonlyverylimitedimpactoncompetitiveconditionsinamarket,butmayhaveamoresignificantimpactonsuchconditionswhenseeninthecontextof--incombinationwith--alargersetofmeasures.Notwithstandingthelogicofthistheoreticalargument,however,wearesensitivetothefactthatthetechniqueofengaginginacombinedassessmentofmeasuressoastodeterminecausationissubjecttopotentialabuseandthereforemustbeapproachedwithcautionandcircumscribedasnecessary.
　　ForthesakeofacompleteanalysisoftheUSclaims,wewillexamineeachalleged‘measure’inlightofeachofthethreeelementsofanon-violationclaim.Thus,evenifwefindanalleged‘measure’isnotameasureforpurposesofArticleXXIII:1(b),wewillcontinuewithananalysisoftheothertwoelements.Similarly,evenifwefindthatameasureshouldhavebeenreasonablyanticipated,wewillneverthelesscarrythroughwiththecausalityanalysis.”
　　VSummaryandConclusions
　　OperatingasadevicemeanttoensuretheintegrityandlongevityoftheGATT/WTOsysteminthefaceofevermorecomplexmethodsofcircumventingexplicittariffbindingsandtheprohibitionsonnon-tarifftraderestraintinstruments,theexistenceofanon-violationremedyunderArt.XXIII:1(b)oftheGATT1994requiresWTOMemberstoadheretotheprinciplesoftheAgreements,eveniftherearenorulesforbiddingtheparticularactiontaken.Althoughnon-violationremedyshouldbeapproachedwithcautionandshouldremainanexceptionalremedy,eachcaseshouldbeexaminedonitsownmerits,bearinginmindtheneedtosafeguardtheimprovedcompetitiveopportunitiesthatcanlegitimatelybeexpectedbutwhichcanbefrustratedbymeasurestextuallyconsistentwiththecoveredAgreement.
　　WithregardtotheestablishmentofaNon-violationclaim,assummarizedbyapanel,normalnon-violationcasesinvolveanexaminationastowhetherthereare:(1)anapplicationofameasurebyaWTOMember;(2)abenefitaccruingundertherelevantagreement;and(3)nullificationorimpairmentofthebenefitduetotheapplicationofthemeasurethatcouldnothavebeenreasonablyexpectedbytheexportingMember.
　　(1)Astotheapplicationofameasure,theterm“measure”inArt.XXIII:1(b)andArt.26.1oftheDSU,aselsewhereintheWTOAgreements,refersonlytopoliciesoractionsofattributabletogovernments,notthoseofprivateparties.However,inthisregard,itisimportanttoapproachtheissueofwhetherthe“measures”indisputeareprivateorattributabletotheGovernmentwithparticularcare,sensitivetothepossibilitythatattimesitmaynotbepossibletodistinguishwithgreatprecisionabright-linetestofameasureandthatpossibilitywillneedtobeexaminedonacase-by-casebasis.Inpractice,panelsundertheGATT/WTOhaveoftentakenanexpansiveviewofwhatconstitutesameasure,bearinginmindthattheapplicantmust,inanyevent,demonstratethatthemeasuredoesinfactresultinnullificationorimpairmentofexpectedbenefits.
　　Furthermore,Art.XXIII:1(b)appliestomeasureswhichsimultaneouslyfallswithinthescopeofapplicationofotherprovisionsoftheGATT1994.Also,theuseoftheword“any”inArt.XXIII:1(b)suggeststhatmeasuresofalltypesmaygiverisetosuchacauseofaction.Inpractice,inanyevent,anattempttodrawthedistinctionbetweenvarioustypesofmeasureswouldbeverydifficult.Art.XXIII:1(b)mustbeappliedinsuchawayastoprotectthebalanceofrightsanddutiesnegotiated.However,inanyevent,itremainsincumbentonthecomplainingMembertoclearlydemonstratehowthemeasureatissueresultsinorcausesnullificationorimpairmentofbenefits.
　　(2)Astotheexistenceofabenefit,withthelackofsuchapresumptionasestablishedinaviolationcomplaint,thereissomethingspecialforthedefinitionofsuchagenerallybroadlyinterpreted“benefit”innon-violationcomplaints,i.e.thePLE.
　　PLEisanextensionofthegoodfaithrequirementinthissense.Specifically,thenon-foreseeabiliyisonpoint,whichsuggeststhatforexpectationstobelegitimate,crucialtothedecisionofnullificationorimpairment,acomplained-ofmeasuremustbeprovedobjectivelynon-foreseeableatthetimeofnegotiations.Inthisrespect,thematterismuchmorecomplicatedneedingaddressingonacase-by-casebasis,thantoconsiderwhetherthemeasurewasadoptedbeforeoraftertheconclusionofthenegotiations.
　　Ontheonehand,inthecaseofmeasuresdemonstratedtobeintroducedsubsequenttotheconclusion,thecomplainantraisesapresumptionthatitshouldnotbeheldtohaveanticipatedthesemeasuresanditisthenfortherespondenttorebutthatpresumption.Importantly,suchapresumptionmayberebutted,differentfromtheactuallynon-rebuttablepresumptioninviolationcomplaints.However,suchrebuttalmustbearaclearconnection,itisnotsufficienttoclaimtheanticipationofmeasuresonthebasisoftheconsistencewithoracontinuationofapastgeneralmeasure,norisitappropriatetochargethecomplainantwiththeanticipationjustbecauseoftheconsistenceofmeasureswiththecoveredagreementorsimilaritytomeasuresinotherMembers’markets.
　　Ontheotherhand,whenthemeasureshowntobepriortotheconclusion,therespondentraisesapresumptionthatthecomplainantshouldbeheldtohaveanticipatedthosemeasuresanditisforthecomplainanttorebutthatpresumption.Sucharebuttalmaybeestablishedbyshowingthattheshorttimeperiodbetweenthisparticularmeasure’spublicationandtheformalconclusionmakesitunrealistictohaveanopportunitytoreopennegotiationsevenifithadanticipatedthepossibleadverseimpactofthemeasures.Totheextentthatknowledgeofameasure’sexistenceisnotequivalenttounderstandingtheimpactofthemeasureonaspecificproductmarket,wherethecomplainantclaimsthatitdidnotknowoftheunderlyingimpactofthedisputedmeasures,itmustthereforeclearlydemonstratewhyinitiallyitcouldnothavereasonablyanticipatedtheeffectofanexistingmeasureandwhenitdidrealizetheeffect.AsimplestatementthataMember’smeasuresweresoopaqueandinformalisinadequate.
　　Astothebenefitsundersuccessiverounds,wheretariffconcessionshavebeenprogressivelyimproved,thebenefits--expectationsofimprovedmarketaccess--accruingdirectlyorindirectlyunderdifferenttariffconcessionprotocolsincorporatedinGATT1994canbereadinharmony.
　　Astothebenefitsinnegotiations,claimsofnullificationorimpairmentshouldbereviewedwithintheframeworkgenerallyapplicablebothtotheWTOtreatiesandtotheprocessoftreatyformationundertheWTO,becauseoftheobligationthatmembershavetonegotiateingoodfaithjustastheydoinimplementingandtheprinciplesofcustomaryinternationallaw,i.e.pactasuntservandawithextendedapplicabilitynotonlytoperformanceoftreatiesbutalsototreatynegotiation.
　　(3)Astothecausalitybetweenmeasuresandnullificationorimpairment,itmustbedemonstratedthatthecompetitivepositionisbeingupsetbytheapplicationofameasurenotreasonablyanticipated.Andsuchachangeinthebalancecanbebroughtabouteitherbyanactionorbyanon-action.
　　Tosumup,significantlydifferentfromviolationcomplaints,withthelackofaformalpresumption,theestablishmentofanon-violationcomplaintputsmuchmoreburdenofproofonthesideofthecomplainant.TheroleofpanelschargedwithexaminingclaimsunderArt.XXIII:1(b)istomakeanobjectiveassessmentofwhether,inlightofalltherelevantfactsandcircumstancesinthematterbeforethem,particularmeasurestakenbytherespondenthavenullifiedorimpairedbenefitsaccruingtothecomplainantwithinthemeaningofArt.XXIII:1(b),i.e.,todeterminewhetherthecomplainanthasdemonstratedthecompetitivepositionisbeingupsetbytheapplicationofameasurenotreasonablyanticipated.
　　
　　
　　
　　
　　
　　
　　
　　
　　
　　
　　
　　
　　
　　
　　
　　
　　
　　
　　
　　【NOTE】:
　　1.    See,WT/DS44/R/10.41.
　　2.    See,indetail,WT/DS163/R/7.85-7.86.
　　3.    See,indetail,WT/DS44/R/10.43-10.56.
　　4.    InJapan,itisacceptedthatthegovernmentsometimesactsthroughwhatisreferredtoasadministrativeguidance.Insuchacase,thecompanyreceivingguidancefromtheGovernmentofJapanmaynotbelegallyboundtoactinaccordancewithit,butcompliancemaybeexpectedinlightofthepowerofthegovernmentandasystemofgovernmentincentivesanddisincentivesarisingfromthewidearrayofgovernmentactivitiesandinvolvementintheJapaneseeconomy.Asnotedbytheparties,administrativeguidanceinJapantakesvariousforms.Japan,forexample,refersinthiscasetowhatitcalled“regulatoryadministrativeguidance”,whichitconcedeseffectivesubstitutesforformalgovernmentaction.Italsorefersto“promotionaladministrativeguidance”,wherecompaniesareurgedtodothingsthatareintheirinteresttodoinanyevent.AndinJapan’sview,thissortofguidance(“promotionaladministrativeguidance”)shouldnotbeassimilatedtoameasureinthesenseofArt.XXIII:1(b).
　　5.    WhileinJapan-RestrictionsonImportsofCertainAgriculturalProducts,thepanelfoundthattheinformaladministrativeguidanceusedbytheJapaneseGovernmenttorestrictproductionofcertainagriculturalproductscouldbeconsideredtobeagovernmentalmeasurewithinthemeaningofGATTArt.XI:2becauseitemanatedfromthegovernmentandwaseffectiveintheJapanesecontext.Specificallyasregardsthemethodusedtoenforcecertainmeasures,thepanelfoundthat:“thepracticeof‘administrativeguidance’playedanimportantrole.ConsideringthatthispracticeisatraditionaltoolofJapaneseGovernmentpolicybasedonconsensusandpeerpressure,thePaneldecidedtobaseitsjudgmentsontheeffectivenessofthemeasuresinspiteoftheinitiallackoftransparency”.Inlinewiththisobservation,thePanelinpresentcaseconsidersthattheiranalysisofthealleged“measures”mustproceedinamannerthatissensitivetothecontextinwhichthesegovernmentalactionsweretakenandtheeffecttheyhadonprivateactors.
　　6.    See,indetail,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.
　　
　　
　　


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