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WT/DS162/R/Add.1 Page 14

3.38

The United States disagrees with Japan's contention that the 1916 Act is a "mandatory" measure because, if the requirements of the law are fulfilled, the court must impose a remedy.  This argument misses the point.  The relevant question for determining whether there is a WTO violation when a measure is challenged as such is: does the measure mandate a violation of any WTO obligations?  The question is not:  does the measure mandate the imposition of a remedy?  To answer the question of whether the measure mandates a violation of any WTO obligations, the Panel must ask:  what are the requirements of the law?  The United States has shown that the requirements of the l916 Act are subject to interpretation by the courts and that the courts have interpreted and applied the law as an antitrust statute.  In other words, the discretionary nature of the 1916 Act is found in how the elements of a violation of the 1916 Act can be interpreted, not in the remedy that must be imposed once such a violation has been established.  That is enough for the present Panel to find that the law is susceptible to an interpretation that is WTOconsistent.    

3.39

Japan considers that the United States attempts to mischaracterise its position as being that the 1916 Act is mandatory for purposes of the WTO simply because it "mandates the imposition of a remedy."  This statement does not reflect Japan's argument.  Japan's argument is that the question before the Panel is whether the measure mandates a violation of a WTO obligation.  The answer to this question is "yes".  The 1916 Act mandates the imposition of a remedy – a remedy that violates a WTO obligation.

3.40

The United States adds that Japan contradicts itself in arguing that the 1916 Act is a mandatory measure.  First, it argues that the 1916 Act is not susceptible of differing interpretations.  However, Japan also argues that the Zenith III court's interpretation is different and should be disregarded in favour of two recent preliminary district court opinions.  This argument just serves to underscore the point that the 1916 Act is susceptible to a range of interpretations and any differences between the Zenith III decision and the two preliminary decisions demonstrate how much discretion the courts retain in applying the law.   

3.41

With regard to the Charming Betsy doctrine, the United States notes that Japan's statement that it does not apply to the Uruguay Round Agreements is incorrect.  The Charming Betsy doctrine holds that, absent express congressional language to the contrary, statutes should not be interpreted to conflict with international obligations.  This timehonoured canon of statutory interpretation was first applied in Charming Betsy, wherein the Supreme Court explained:

"It has also been observed that an act of Congress ought never to be construed to violate the law of nations, if any other possible construction remains, and consequently, can never be construed to violate neutral rights, or to affect neutral commerce, further than is warranted by the law of nations as understood in this country."45

3.42

The United States points out that the Uruguay Round Agreements have been held to be international obligations for purposes of the Charming Betsy doctrine.46  In applying this doctrine, the court first must determine whether there is an express conflict between the US law and the international obligation.  If there is an express conflict, then US law prevails.  This is exactly what section 102(a)(1) of the URAA provides, and no more.  However, if there is no express conflict, then the court will apply the Charming Betsy doctrine to adopt an interpretation of the statute that is consistent with the international obligation.  Thus, the Charming Betsy doctrine is perfectly consistent with Section 102(a)(1) of the URAA.  For instance, in Federal Mogul, the court of appeals ascertained

45 Charming Betsy, Op. Cit., 2 L.Ed. 208 (1804).

46 The United States refers to Federal Mogul Corp. v. United States, 63 F.3d 1572, 1581 (Fed. Cir. 1995) (hereinafter "Federal Mogul").

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