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WT/DS162/R/Add.1 Page 7

gave Thai officials the authority to implement discriminatory tax rates, this did not render the statute mandatory.  The panel concluded that "the possibility that the Tobacco Act might be applied contrary to Article III:2 was, by itself, not sufficient to make it inconsistent with the General Agreement."17

3.5

The United States recalls, finally, that in United States – Tobacco, a case of which the facts more closely resemble those in the present dispute, the panel found that a law did not mandate GATTinconsistent action where the language of that law was susceptible of a range of meanings, including ones permitting GATTconsistent action.  The panel examined the question of whether a statute requiring that "comparable" inspection fees be assessed for imported and domestic tobacco mandated that these fees had to be identical for each, without respect to differences in inspection costs.  If so, the statute would be inconsistent with Article VIII:1(a) of the GATT 1947, which prohibits the imposition of fees in excess of services rendered.18  The United States argued that the term "comparable" need not be interpreted to mean "identical", and that the law did not preclude a fee structure commensurate with the cost of services rendered.19  The panel agreed with the United States:

"[T]he Panel noted that there was no clear interpretation on the meaning of the term "comparable" as used in the 1993 legislative amendment.  It appeared to the Panel that the term "comparable", including the ordinary meaning thereof, was susceptible of a range of meanings.  The Panel considered that this range of meanings could encompass the interpretation advanced by the United States in this proceeding, an interpretation which could potentially enable USDA to comply with the obligation of Article VIII:1(a) not to impose fees in excess of the cost of services rendered, while at the same time meeting the comparability requirement of [the U.S. law]."20

3.6

The Panel therefore found that the complaining party had "not demonstrated that [the US law] could not be applied in a manner ensuring that fees charged for inspecting tobacco were not in excess of the cost of services rendered."21

3.7

The United States submits that the distinction in GATT 1947/WTO jurisprudence between discretionary and mandatory legislation is not based upon a particular provision of any WTO agreement or upon which branch of government enforces the law, nor is it limited in its application to a particular WTO provision.  In the cases discussed above, for example, this distinction was applied in both the Article III and Article VIII context.  This distinction is a general principle developed by panels that most likely has its origin in the presumption against conflicts between national and international law.  It is both general international practice and that of the United States that statutory language is to be interpreted so as to avoid conflicts with international obligations.  There is thus a presumption against a conflict between international and national law.  In general,

"[a]lthough national courts must apply national laws even if they conflict with international law, there is a presumption against the existence of such a conflict.  As international law is based upon the common consent of the different states, it is improbable that a state would intentionally enact a rule conflicting with international law.  A rule of national law which ostensibly seems to conflict with international law must, therefore, if possible always be so interpreted as to avoid such conflict."22

17 Ibid., para. 86.  The United States further notes that the panel found, at para. 88, that the actual implementation of the tax rates through regulations was also consistent with Thailand's obligations, since these rates were nondiscriminatory.

18 Ibid., para. 118.

19 Ibid., para. 122.

20 Ibid., para. 123.

21 Ibid. (emphasis added by the United States)

22 Oppenheim’s International Law, 9th ed., pp. 8182 (footnote omitted).

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