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WT/DS162/R/Add.1 Page 18

3.59

The United States contends that, likewise, the mandatory/nonmandatory distinction is consistent with the "security and predictability of the WTO system."  First, it is important to note that the "security and predictability of the WTO system" is not an obligation, but an objective of Article 3.2 of the Dispute Settlement Understanding.  Article 3.2 provides, in pertinent part, that: "The dispute settlement system of the WTO is a central element in providing security and predictability to the multilateral trading system."  Security and predictability are thus the objective which the DSU itself helps to achieve.  In other words, the substantive obligations in the text of the WTO Agreement and its annexes, enforced through the DSU, provide security and predictability.

3.60

In the view of the United States, to discard a fundamental principle of jurisprudence and create uncertainty as to the WTO consistency of an indeterminate number of domestic laws heretofore considered discretionary would seriously undermine the security and predictability of the WTO system.  As the Appellate Body noted in Japan Taxes on Alcoholic Beverages, "[a]dopted panel reports are an important part of the GATT acquis.  They are often considered by subsequent panels.  They create legitimate expectations among WTO members, and, therefore, should be taken into account where they are relevant to any dispute."56

3.61

The United States notes, finally, that, in Argentina - Footwear, the panel does no more than affirm that mandatory legislation is actionable.  The panel states, "GATT/WTO case law is clear that a mandatory measure can be brought before a panel, even if such an adopted measure is not yet in effect."57  The panel refers to "security and predictability" in the context of the aim of tariff bindings and Article II of the GATT 1994, which are not at issue in the present case.

E. ROLE OF THE PANEL IN THE PRESENT CASE

3.1

Japan recalls that Article 11 of the DSU requires panels to conduct an "objective assessment" of the facts of each dispute.  Panels have found that panels cannot meet this obligation if they defer to a Member's findings in this regard.58

3.2

Japan also notes the Appellate Body opinion in European Communities - Hormones, which makes clear that the existence and characteristics of domestic law are questions of fact that are "left to the discretion of a panel as a trier of facts".  In contrast, the "consistency or inconsistency of a given fact or set of facts" (the 1916 Act in the present case) with the requirements of a given treaty provision (relevant WTO Articles in the present case) would be a legal question.59

3.3

Japan recalls, furthermore, that, in India - Patents, the Appellate Body concluded that:

"It is clear that an examination of the relevant aspects of Indian municipal law […] is essential to determining whether India has complied with its obligations."60

56 Appellate Body Report on Japan Taxes on Alcoholic Beverages, adopted on 1 November 1996, WT/DS11/AB/R, p.14.  

57 Panel Report on Argentina Footwear, Op. Cit., para. 6.45.

58Japan refers to the Panel Report on Korea - Definitive Safeguard Measure on Imports of Certain Dairy Products, adopted on 12 January 2000, WT/DS98/R, para. 7.30 (hereinafter "Panel Report on Korea – Safeguards", where the Panel states as follows: "We consider that for the Panel to adopt a policy of total deference to the findings of the national authorities could not ensure an 'objective assessment' as foreseen by Article 11 of the DSU."

59 Japan refers to EC Measures Concerning Meat and Meat Products (Hormones), adopted on 13 February 1998, WT/DS26/AB/R, WT/DS48/AB/R,  para. 132 (hereinafter "Appellate Body Report on European Communities – Hormones").

60 Appellate Body Report on India—Patents, Op. Cit., para. 66.

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