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such, whereas legislation which merely gave the discretion to the executive authority [...] to act inconsistently with the General Agreement could not be challenged as such; only the actual application of such legislation inconsistent with the General Agreement could be subject to challenge"[citation omitted]."10
According to the United States, this settled distinction between mandatory and discretionary legislation was the basis for the panel's decision in EEC ‑ Regulation on Imports of Parts and Components.11 In that case, the panel found that "the mere existence" of the anti‑circumvention provision of the European Communities' anti‑dumping legislation was not inconsistent with the European Communities' GATT 1947 obligations, even though the European Communities had taken GATT‑inconsistent measures under that provision.12 The panel based its finding on its conclusion that the anti‑circumvention provision "does not mandate the imposition of duties or other measures by the EEC Commission and Council; it merely authorizes the Commission and the Council to take certain actions."13
The United States notes that, in applying the discretionary‑mandatory distinction, panels have even found that legislation explicitly directing action inconsistent with GATT 1947 principles does not mandate inconsistent action so long as it provides the possibility for authorities to avoid such action. For example, in United States ‑ Taxes on Petroleum and Certain Imported Substances.14 The Superfund Act required importers to supply sufficient information regarding the chemical inputs of taxable substances to enable the tax authorities to determine the amount of tax to be imposed; otherwise, a penalty tax would be imposed in the amount of five percent ad valorem or a different rate to be prescribed in regulations by the Secretary of the Treasury by a different methodology. The regulations in question had not yet been issued. Nevertheless, the panel concluded:
"[W]hether [the regulations] will eliminate the need to impose the penalty tax and whether they will establish complete equivalence between domestic and imported products, as required by Article III:2, first sentence, remain open questions. From the perspective of the overall objectives of the General Agreement it is regrettable that the Superfund Act explicitly directs the United States tax authorities to impose a tax inconsistent with the national treatment principle but, since the Superfund Act also gives them the possibility to avoid the need to impose that tax by issuing regulations, the existence of the penalty rate provisions as such does not constitute a violation of the United States obligations under the General Agreement."15
The United States points out that, similarly, in Thailand ‑ Restrictions on Importation of and Internal Taxes on Cigarettes16 the panel examined Thailand's Tobacco Act, which established a higher ceiling tax rate for imported cigarettes than for domestic cigarettes. While the Act explicitly
10 Panel Report on Canada ‑ Measures Affecting the Export of Civilian Aircraft, adopted on 20 August 1999, WT/DS70/R, para. 9.124 (hereinafter "Panel Report on Canada – Aircraft"), citing the Panel Report on United States ‑‑ Measures Affecting the Importation, Internal Sale and Use of Tobacco, adopted on 4 October 1994, BISD 41S/131, para. 118 (hereinafter "United States – Tobacco").
11 Panel Report on EEC ‑ Regulation on Imports of Parts and Components, adopted on 16 May 1990, BISD 37S/132 (hereinafter "EEC – Parts and Components").
12 Ibid., paras. 5.9, 5.21, 5.25‑5.26.
13 Ibid., para. 5.25.
14 Panel Report on United States ‑ Taxes on Petroleum and Certain Imported Substances, adopted on 17 June 1987, BISD 34S/136 (hereinafter "United States – Superfund").
15 Ibid., para. 5.2.9.
16 Panel Report on Thailand ‑ Restrictions on Importation of and Internal Taxes on Cigarettes, adopted on 7 November 1990, BISD 37S/200 (hereinafter "Thailand - Cigarettes").