World Trade

Organization

 

                                                                                                                       WT/DS276/AB/R

                                                                                                                         30 August 2004

 

 

canada – Measures relating to exports of

wheat and treatment of imported grain

 

 

 

AB-2004-3

 

 

 

Introduction.

 

    The United States and Canada each appeals certain issues of law and legal interpretations developed in the Panel Reports,  Canada – Measures Relating to Exports of Wheat and Treatment of Imported Grain  (the "Panel Report"). On 6 March 2003, the United States requested the establishment of a panel to consider a complaint against Canada with regard to two categories of measures:  one concerning the export of wheat by the Canadian Wheat Board (the "CWB");  and the other involving the treatment accorded by Canada to imports of grain. Specifically, the United States asserted that:  (i) the Canadian Wheat Board Export Regime (the "CWB Export Regime") is inconsistent with Canada's obligations under
Article XVII:1 of the  General Agreement on Tariffs and Trade 1994  (the "GATT 1994");  and (ii) certain measures relating to Canada's bulk grain handling system and to the transportation of grain by rail in Canada are inconsistent with Canada's obligations under Article III:4 of the GATT 1994 and Article 2 of the  Agreement on Trade-Related Investment Measures  (the "TRIMs Agreement "). The Panel (the "March Panel") was established by the DSB on 31 March 2003.

 

    The Panel Report was circulated to the Members of the WTO on 6 April 2004.  The July Panel found that:

[t]he United States has failed to establish its claim that Canada has breached its obligations under Article XVII:1 of the GATT 1994 because the CWB Export Regime necessarily results in the CWB making export sales that are not in accordance with the principles of subparagraphs (a) or (b) of Article XVII:1.

 In addition, the March and July Panels found Section 57(c) of the  Canada Grain Act, Section 56(1) of the  Canada Grain Regulations, and Sections 150(1) and (2) of the  Canada Transportation Act  to be inconsistent with Article III:4 of the GATT 1994.  The March and July Panels exercised judicial economy with respect to the United States' claims against these measures under Article 2 of the  TRIMs Agreement.  Finally, the March and July Panels found that the United States failed to establish its claim that Section 87 of the  Canada Grain Act  is inconsistent with Article III:4 of the GATT 1994 and Article 2 of the  TRIMs Agreement.

The March and July Panels accordingly recommended that:

... the Dispute Settlement Body request Canada to bring the relevant measures into conformity with its obligations under the GATT 1994. (footnote omitted)

 

Issues Raised in This Appeal

The following issues are raised in this appeal:

(a)                whether the July Panel erred in not considering the "proper" relationship between subparagraphs (a) and (b) of Article XVII:1 of the GATT 1994 and in proceeding to examine the consistency of the CWB Export Regime with Article XVII:1(b) without first having found a breach of Article XVII:1(a);

(b)                whether the July Panel erred in its interpretation of subparagraph (b) of Article XVII:1 and, specifically, in its interpretation of the phrase "solely in accordance with commercial considerations" in the first clause of that provision, and of the term "enterprise whether the July Panel failed to examine the CWB Export Regime in its entirety;

(c)                whether the July Panel failed to discharge properly its duties under Article 11 of the DSU by disregarding evidence submitted by the United States in relation to the CWB's legal framework;  and

(d)                whether the March Panel erred in refusing to dismiss Canada's request for a preliminary ruling under Article 6.2 of the DSU on the grounds that the request was not raised in a timely manner.

(e)                whether the March Panel erred in refusing to dismiss Canada's request for a preliminary ruling under Article 6.2 of the DSU on the grounds that the request was not raised in a timely manner.

    Findings and Conclusions

2.                   For the reasons set out in this Report, the Appellate Body:

(a)                (i)         finds that the July Panel did not err in not considering the "proper" relationship between subparagraphs (a) and (b) of Article XVII:1 of the GATT 1994;  and, therefore, declines Canada's request to find that the Panel erred by examining the consistency of the CWB Export Regime with Article XVII:1(b) without first having found a breach of Article XVII:1(a);

(ii)        finds no error in the July Panel's interpretation, in paragraph 6.94 of the Panel Report, of the phrase "solely in accordance with commercial considerations" in the first clause of Article XVII:1(b), nor in the Panel's interpretation, in paragraphs 6.72 and 6.73 of its Report, of the term "enterprises" in the second clause of that provision;

(iii)       finds that the July Panel did not fail to examine the CWB Export Regime in its entirety;

(iv)       finds that the July Panel did not disregard evidence submitted by the United States in relation to the CWB's legal framework and, therefore, did not act inconsistently with its duty under Article 11 of the DSU to make an objective assessment of the facts of the case;  and consequently

(v)        upholds the July Panel's finding, in paragraphs 6.151 and 7.4(a) of the Panel Report, that the United States failed to establish its claim that Canada is in breach of its obligations under Article XVII:1 of the GATT 1994;  and

(b)                upholds the March Panel's finding, in subparagraph 64 of paragraph 6.10 of the Panel Report, refusing to dismiss Canada's request for a preliminary ruling under Article 6.2 of the DSU on the ground that it was not raised in a timely manner and, consequently, also upholds the March Panel's conclusion, in subparagraph 32 of paragraph 6.10 of the Panel Report, that with respect to the claim under Article XVII of the GATT 1994, the United States' request for establishment of a panel failed to satisfy the requirement of Article 6.2 of the DSU to "identify the specific measures at issue".

3.                   As the Panel's findings of inconsistency under Article III:4 of the GATT 1994 were not appealed, it is not for us to make any recommendation regarding those findings.  Given that we have upheld the Panel's findings that the United States failed to establish that Canada has acted inconsistently with its obligations under Article XVII:1 of the GATT 1994, we do not make any additional recommendation to the DSB pursuant to Article 19.1 of the DSU.