WT/DS162/R/Add.1 Page 17
In reply to the same question, the United States submits that Article XVI:4 did not affect the distinction between mandatory and non‑mandatory measures that existed under GATT 1947 jurisprudence and continues to exist under WTO practice. Article XVI:4 provides an overarching statement in the WTO Agreement, applicable to all annexed agreements and not just the GATT 1994, that no measures are grandfathered. Article XVI:4 imposed an obligation on Members to review whether existing laws, regulations and administrative procedures did, in fact, conform to the Members' WTO obligations, and where those laws did not, to bring them into conformity. Article XVI:4 thus served to remove any doubt that may have existed in its absence that all measures must be brought into conformity as from 1 January 1995.
In response to a follow-up question of the Panel regarding the relationship between the GATT 1947/WTO practice in respect of mandatory/non-mandatory legislation and the GATT 1947/WTO practice concerning the protection of expectations of the contracting parties/Members as to the competitive relationship between their products51 and the "security and predictability of the WTO system"52, Japan notes first of all that it does not see the relevance of this question to this dispute. As made most clear in Paragraph 5.2.2 of United States - Superfund, the issue of protection of expectations versus the need to prove actual trade effects arose in the context of "mandatory" legislation. Japan does not see the relevance of this question to this dispute. In any event, Japan considers that and the obligation to ensure the conformity of US laws set out in Article XVI:4 of the WTO Agreement and Article 18.4 of the Anti‑Dumping Agreement, rather than the mandatory/discretionary dichotomy applicable to the GATT 1947, applies in the present dispute.
Japan is of the view, moreover, that even if the mandatory/discretionary dichotomy were to apply, the 1916 Act is mandatory. It requires action inconsistent with US WTO obligations.
The United States, in its response to the same question of the Panel, submits, first, that it is important to note that the panel in United States – Superfund refers to the objective of the "protection of the expectations of contracting parties as to the competitive relationship between products" in the context of two specific provisions, Article III and Article XI of the GATT 1947. The panel reasoned that "that objective could not be attained if contracting parties could not challenge existing legislation mandating actions at variance with the General Agreement until the administrative acts implementing it had actually been applied to their trade."53 Obviously, the panel considered that the concepts were compatible because it based its conclusion that mandatory legislation is actionable even if not yet in effect in part on helping to achieve that objective.
The United States considers that, similarly, in more general terms, the mandatory/non‑mandatory distinction is consistent with the "legitimate expectations of parties." The Appellate Body explained in India ‑ Patents that "the legitimate expectations of the parties to a treaty are reflected in the language of the treaty itself."54 Thus,
"[…] the duty of a treaty interpreter is to examine the words of the treaty to determine the intentions of the parties. This should be done in accordance with the principles of treaty interpretation set out in Article 31 of the Vienna Convention. But these principles neither require nor condone the imputation of a treaty of words that are not there or the importation into a treaty of concepts that were not intended."55
51 The Panel refers to, e.g., United States – Superfund and the Panel Report on Japanese Measures on Import of Leather, adopted on 15/16 May 1984, BISD 31S/113.
52 The Panel refers to, e.g., the Panel Report on Argentina – Measures Affecting Imports of Footwear, Textiles, Apparel and Other Items, adopted on 22 April 1998, WT/DS56/R (hereinafter "Panel Report on Argentina – Footwear").
53 United States – Superfund, Op. Cit., para. 5.2.2.
54 Appellate Body Report on India ‑ Patents, Op. Cit., para. 45.