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WT/DS162/R/Add.1 Page 122

some discretionary action.  These legal effects are contrary to the provisions invoked by the European Communities in the present case.  In both cases courts are required to take measures.


The European Communities submits that, contrary to what the United States pretends, there is no basis even under the old GATT 1947 to defend legislation which is on its face GATT-inconsistent on the ground that courts might one day interpret it in a GATT-consistent manner.  The only GATT 1947 case in which there is any reference to interpretation is United States - Tobacco which the United States claims is particularly pertinent to the present dispute.  


According to the European Communities, the United States – Tobacco case involved a situation in which domestic legislation was incomplete.392  There was a requirement to promulgate fees for the inspection of imported tobacco at a level "comparable" to that for domestic tobacco but at the same time power to adjust the level of fees for the inspection of domestic tobacco.  The Panel therefore understandably held that there was no basis to hold that the administration in fixing the level of fees for imported tobacco would do so at a level inconsistent with Article VIII:1(a) of the GATT 1947 – in other words, that at such stage there was no mandatory legislation inconsistent with the GATT 1947.  In the present case, there is of course no power for the US administration to complete or amend the 1916 Act, in particular so as to make it compatible with the WTO.  All the requirements are already laid down in the 1916 Act.

(c) The content of the obligation laid down in Article XVI:4 of the WTO Agreement


The European Communities submits that Article XVI:4 of the WTO Agreement lays down a new and additional obligation in the framework of the multilateral trading system.  It imposes a positive obligation to ensure the conformity of a Member's domestic laws, regulations and administrative procedures with its WTO obligations.  As a result of this obligation, in cases where pre-existing domestic legislation may be inconsistent with new WTO obligations, including those arising under Article VI of the GATT 1994, and Articles 1, 2.1, 2.2, 3, 4 and 5.5 of the AntiDumping Agreement, a Member was required to amend its domestic legislation so as to avoid any conflict as from 1 January 1995.


The European Communities notes that the new principle governing the relationship between domestic laws, regulations and administrative procedures that is embodied in Article XVI:4 of the WTO Agreement is a fundamental one.393  Because it is laid down in the basic agreement of the system, it covers the whole set of the annexed agreements, whether or not they may contain specific expressions of the same principle.  Furthermore, by virtue of Article XVI:3 it is a superior rule to provisions in the annexed agreements.  


In the view of the European Communities, Article XVI:4 applies over and above similar obligations under general public international law as enshrined in Article 26 and 27 of the Vienna Convention on the Law of Treaties.  The Vienna Convention on the Law of Treaties codifies the customary principle of good faith implementation of international treaty obligations (Article 26) and spells out a negative obligation, i.e. to refrain from invoking domestic law in order to justify any departure from an international obligation undertaken by a State  (Article 27).  The obligation

392 The European Communities refers to United States – Tobacco, paras. 114–118.

393 The European Communities refers to the Report of the Arbitrator on Japan - Taxes on Alcoholic Beverages, Arbitration under Article 21(3)(c) of the DSU, 14 February 1997, WT/DS11/13, para. 9, where it is stated at para. 9 that "[a]s a general and fundamental obligation imposed on all WTO Members, Article XVI:4 of the Marrakesh Agreement Establishing the World Trade Organization (the "WTO Agreement") requires that each Member shall ensure the conformity of its laws, regulations and administrative procedures with its obligations as provided in the WTO Agreement."

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