chapter v
guidelines for interpretation
of the wto covered agreements
outline
i introduction
ii application of arts. 31, 32 of the vienna convention
iii wto rules on conflicts: effective interpretation
iv the status of legitimate expectations in interpretation
i introduction
according to art. 11 of the dsu, the panel's role is to “make an objective assessment of the matter before it, including an objective assessment of the facts of the case and the applicability and conformity with the relevant covered agreements”. in the previous chapter, we have examined the general standard of review labeled as “an objective assessment” regarding “the facts of the case”; clearly, for panels to fulfil appropriately their functions as designated in art. 11 of the dsu, it is also indiscerptible to make such an objective assessment of “the applicability and conformity with the relevant covered agreements”. therefore, the interpretation issue of the covered agreements arises. in this section, the author will scrutinize guidelines for interpretation applied under the wto jurisprudence.
to resolve a particular dispute, before addressing the parties' arguments in detail, it is clearly necessary and appropriate to clarify the general issues concerning the interpretation of the relevant provisions and their application to the parties' claims. however, the complex nature of the covered agreements has given rise to difficulties in interpretation.
as noted previously, gatt/wto jurisprudence should not be viewed in isolation from general principles developed in international law or most jurisdictions; and according to art. 3.2 of the dsu, panels are bound by the “customary rules of interpretation of public international law” in their examination of the covered agreements. a number of recent adopted reports have repeatedly referred, as interpretative guidelines, to “customary rules of interpretation of public international law” as embodied in the text of the 1969 vienna convention on the law of treaties (‘vienna convention’), especially in its arts. 31, 32. it is in accordance with these rules of treaty interpretation that panels or the appellate body have frequently examined the wto provisions at issue, on the basis of the ordinary meaning of the terms of those provisions in their context, in the light of the object and purpose of the covered agreements and the wto agreement. these vienna convention articles provide as follows:
“art. 31: general rule of interpretation
1. a treaty shall be interpreted in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose.
2. the context for the purpose of the interpretation of a treaty shall comprise, in addition to the text, including its preamble and annexes:
(a) any agreement relating to the treaty which was made between all the parties in connexion with the co
nclusion of the treaty;
(b) any instrument which was made by one or more parties in connexion with the conclusion of the treaty and accepted by the other parties as an instrument related to the treaty.
3. there shall be taken into account together with the context:
(a) any subsequent agreement between the parties regarding the interpretation of the treaty or the application of its provisions;
(b) any subsequent practice in the application of the treaty which establishes the agreement of the parties regarding its interpretation;
(c) any relevant rules of international law applicable in the relations between the parties.
4. a special meaning shall be given to a term if it is established that the parties so intended.
art. 32 supplementary means of interpretation
recourse may be had to supplementary means of interpretation, including the preparatory work of the treaty and the circumstances of its conclusion, in order to confirm the meaning resulting from the application of article 31, or to determine the meaning when the interpretation according to article 31:
(a) leaves the meaning ambiguous or obscure; or
(b) leads to a result which is manifestly absurd or unreasonable.”
ii application of arts. 31, 32 of the vienna convention
pursuant to art. 31.1 of the vienna convention, the duty of a treaty interpreter is to determine the meaning of a term in accordance with the ordinary meaning to be given to the term in its context and in light of the object and purpose of the treaty. as noted by the appellate body in its report on japan-alcoholic beverages (ds8/ds10/ds11), “article 31 of provides that the words of the treaty form the foundation for the interpretive process: ‘interpretation must be based above all upon the text of the treaty’. the provisions of the treaty are to be given their ordinary meaning in their context. the object and purpose of the treaty are also to be taken into account in determining the meaning of its provisions”. and in us – shrimps (ds58), the appellate body accordingly states: “a treaty interpreter must begin with, and focus upon, the text of the particular provision to be interpreted. it is in the words constituting that provision, read in their context, that the object and purpose of the states parties to the treaty must first be sought. where the meaning imparted by the text itself is equivocal or inconclusive, or where confirmation of the correctness of the reading of the text itself is desired, light from the object and purpose of the treaty as a whole may usefully be sought.”
more specifically, the panel in us-sections 301-310 (ds152) rules that: “text, context and object-and-purpose correspond to well established textual, systemic and teleological methodologies of treaty interpretation, all of which typically come into play when interpreting complex provisions in multilateral treaties. for pragmatic reasons the normal usage, and we will follow this usage, is to start the in
terpretation from the ordinary meaning of the ‘raw’ text of the relevant treaty provisions and then seek to construe it in its context and in the light of the treaty's object and purpose. however, the elements referred to in article 31 - text, context and object-and-purpose as well as good faith - are to be viewed as one holistic rule of interpretation rather than a sequence of separate tests to be applied in a hierarchical order. context and object-and-purpose may often appear simply to confirm an interpretation seemingly derived from the ‘raw’ text. in reality it is always some context, even if unstated, that determines which meaning is to be taken as ‘ordinary’ and frequently it is impossible to give meaning, even ‘ordinary meaning’, without looking also at object-and-purpose. as noted by the appellate body: ‘article 31 of the vienna convention provides that the words of the treaty form the foundation for the interpretive process: 'interpretation must be based above all upon the text of the treaty'’. it adds, however, that ‘[t]he provisions of the treaty are to be given their ordinary meaning in their context. the object and purpose of the treaty are also to be taken into account in determining the meaning of its provisions’.” 1
in sum, as noted by the panel in canada-automotive industry (ds139/ds142), “understanding of these rules of interpretation is that, even though the text of a term is the starting-point for any interpretation, the meaning of a term cannot be found exclusively in that text; in seeking the meaning of a term, we also have to take account of its context and to consider the text of the term in light of the object and purpose of the treaty. article 31 of the vienna convention explicitly refers to the ‘ordinary meaning to be given to the terms of the treaty in their [the terms'] context and in the light of its [the treaty's] object and purpose’. the three elements referred to in article 31 - text, context and object and purpose - are to be viewed as one integrated rule of interpretation rather than a sequence of separate tests to be applied in a hierarchical order. of course, context and object and purpose may simply confirm the textual meaning of a term. in many cases, however, it is impossible to give meaning, even ‘ordinary meaning’, without looking also at the context and/or object and purpose”. 2
with regard to art. 32 of the vienna convention, it is repeatedly ruled that, “[t]he application of these rules in article 31 of the vienna convention will usually allow a treaty interpreter to establish the meaning of a term. however, if after applying article 31 the meaning of the term remains ambiguous or obscure, or leads to a result which is manifestly absurd or unreasonable, article 32 allows a treaty interpreter to have recourse to ‘... supplementary means of interpretation, including the preparatory work of the treaty and the circumstances of its conclusion’. with regard to 'the circumstances of [the] conclusion' o
f a treaty, this permits, in appropriate cases, the examination of the historical background against which the treaty was negotiated.” 3
as a whole, under the wto jurisprudence, with regard to the dispute among the parties over the appropriate legal analysis to be applied, as general principles or guidelines of interpretation, it is often begun with art. 3.2 of the dsu. to go further, as noted by the panel in japan-alcoholic beverages, “the ‘customary rules of interpretation of public international law’ are those incorporated in the vienna convention on the law of treaties (vclt). gatt panels have previously interpreted the gatt in accordance with the vclt. the panel noted that article 3:2 dsu in fact codifies this previously-established practice”. consequently, “the panel concluded that the starting point of an interpretation of an international treaty, such as the general agreement on tariffs and trade 1994, in accordance with article 31 vclt, is the wording of the treaty. the wording should be interpreted in its context and in the light of the object and the purpose of the treaty as a whole and subsequent practice and agreements should be taken into account. recourse to supplementary means of interpretation should be made exceptionally only under the conditions specified in article 32 vclt”. 4
in short, it is may be the case that, it is generally considered that the fundamental rules of treaty interpretation set out in arts. 31 and 32 of the vienna convention have attained the status of rules of customary international law. in recent years, the jurisprudence of the appellate body and wto panels has become one of the richest sources from which to receive guidance on their application.
iii wto rules on conflicts: effective interpretation
the panel report on turkey-textile and clothing products (ds34) states concerning the conflicts issue that: 5
“as a general principle, wto obligations are cumulative and members must comply with all of them at all times unless there is a formal ‘conflict’ between them. this flows from the fact that the wto agreement is a ‘single undertaking’. on the definition of conflict, it should be noted that: ‘… a conflict of law-making treaties arises only where simultaneous compliance with the obligations of different instruments is impossible. ... there is no conflict if the obligations of one instrument are stricter than, but not incompatible with, those of another, or if it is possible to comply with the obligations of one instrument by refraining from exercising a privilege or discretion accorded by another’.
this principle, also referred to by japan in its third party submission, is in conformity with the public international law presumption against conflicts which was applied by the appellate body in canada - periodicals and in ec - bananas iii, when dealing with potential overlapping coverage of gatt 1994 and gats, and by the panel in indonesia - autos, in respect of the provisions of article ii
i of gatt, the trims agreement and the scm agreement. in guatemala - cement, the appellate body when discussing the possibility of conflicts between the provisions of the anti-dumping agreement and the dsu, stated: ‘a special or additional provision should only be found to prevail over a provision of the dsu in a situation where adherence to the one provision will lead to a violation of the other provision, that is, in the case of a conflict between them’.
we recall the panel's finding in indonesia - autos, a dispute where indonesia was arguing that the measures under examination were subsidies and therefore the scm agreement being lex specialis, was the only ‘applicable law’ (to the exclusion of other wto provisions): ‘14.28 in considering indonesia's defence that there is a general conflict between the provisions of the scm agreement and those of article iii of gatt, and consequently that the scm agreement is the only applicable law, we recall first that in public international law there is a presumption against conflict. this presumption is especially relevant in the wto context since all wto agreements, including gatt 1994 which was modified by understandings when judged necessary, were negotiated at the same time, by the same members and in the same forum. in this context we recall the principle of effective interpretation pursuant to which all provisions of a treaty (and in the wto system all agreements) must be given meaning, using the ordinary meaning of words.’
in light of this general principle, we will consider whether article xxiv authorizes measures which articles xi and xiii of gatt and article 2.4 of the atc otherwise prohibit. in view of the presumption against conflicts, as recognized by panels and the appellate body, we bear in mind that to the extent possible, any interpretation of these provisions that would lead to a conflict between them should be avoided.”
it is clearly implied by the ruling above that, in the wto system, any interpretation of the covered agreements that would lead to a conflict between them should be avoided. in this respect, as to wto rules of conflicts, in the context that all wto agreements were negotiated “at the same time, by the same members and in the same forum”, the principle of effective interpretation is recalled. what a principle is it?
as ruled by the panel in japan-alcoholic beverage (ds8/ds10/ds11), effective interpretation is a principle “whereby all provisions of a treaty must be, to the extent possible, given their full meaning so that parties to such a treaty can enforce their rights and obligations effectively…. this principle of interpretation prevents [the panel] from reaching a conclusion on the claims … or the defense …, or on the related provisions invoked by the parties, that would lead to a denial of either party's rights or obligations.” 6 this ruling is upheld by the appellate body when ruling that, “[a] fundamental tenet of treaty interpretation flowing from the ge
neral rule of interpretation set out in article 31 is the principle of effectiveness (ut res magis valeat quam pereat). in united states - standards for reformulated and conventional gasoline, we noted that ‘[o]ne of the corollaries of the ‘general rule of interpretation’ in the vienna convention is that interpretation must give meaning and effect to all the terms of the treaty. an interpreter is not free to adopt a reading that would result in reducing whole clauses or paragraphs of a treaty to redundancy or inutility’.” 7
it is clear that the application of the principle of effective interpretation is consistent with art. 3.2 of the dsu, which states that ‘the dsb cannot add to or diminish the rights and obligations provided in the covered agreements’. as a matter of fact, it may be the case that in nearly all instances, the ordinary meaning of the terms of the actual description in a covered agreement accurately reflects and exhausts the content of the expectations on improved competitive relationship. it is clearly the case that most descriptions are to be treated with the utmost care to maintain their integrity precisely because, on their face, they normally constitute the most concrete, tangible and reliable evidence of commitments made.
iv the status of legitimate expectations in interpretation
the principle of good faith prohibits any conduct of parties to an agreement that aims at nullification or impairment of the proper meaning and purpose of the agreement. however, does good faith interpretation under art. 31 of the vienna convention require, as ruled by a panel, the protection of so-called legitimate expectations? in this respect, the appellate body in india-patent protection (ds50) rules: 8
“although the panel states that it is merely applying a ‘well-established gatt principle’, the panel's reasoning does not accurately reflect gatt/wto practice. in developing its interpretative principle, the panel merges, and thereby confuses, two different concepts from previous gatt practice. one is the concept of protecting the expectations of contracting parties as to the competitive relationship between their products and the products of other contracting parties. this is a concept that was developed in the context of violation complaints involving articles iii and xi, brought under article xxiii:1(a), of the gatt 1947. the other is the concept of the protection of the reasonable expectations of contracting parties relating to market access concessions. this is a concept that was developed in the context of non-violation complaints brought under article xxiii:1(b) of the gatt.
in the context of violation complaints made under article xxiii:1(a), it is true that panels examining claims under articles iii and xi of the gatt have frequently stated that the purpose of these articles is to protect the expectations of members concerning the competitive relationship between imported and domestic products, as opposed to expectatio
ns concerning trade volumes. however, this statement is often made after a panel has found a violation of, for example, article iii or article xi that establishes a prima facie case of nullification or impairment. at that point in its reasoning, the panel is examining whether the defending party has been able to rebut the charge of nullification or impairment. it is in this context that panels have referred to the expectations of members concerning the conditions of competition.
the doctrine of protecting the ‘reasonable expectations’ of contracting parties developed in the context of ‘non-violation’ complaints brought under article xxiii:1(b) of the gatt 1947. some of the rules and procedures concerning ‘non-violation’ cases have been codified in article 26.1 of the dsu. ‘non-violation’ complaints are rooted in the gatt's origins as an agreement intended to protect the reciprocal tariff concessions negotiated among the contracting parties under article ii. in the absence of substantive legal rules in many areas relating to international trade, the ‘non-violation’ provision of article xxiii:1(b) was aimed at preventing contracting parties from using non-tariff barriers or other policy measures to negate the benefits of negotiated tariff concessions. under article xxiii:1(b) of the gatt 1994, a member can bring a ‘non-violation’ complaint when the negotiated balance of concessions between members is upset by the application of a measure, whether or not this measure is inconsistent with the provisions of the covered agreement. the ultimate goal is not the withdrawal of the measure concerned, but rather achieving a mutually satisfactory adjustment, usually by means of compensation.
[…]
with this customary rule of interpretation [article 31 of the vienna convention] in mind, the panel stated that: ‘in our view, good faith interpretation requires the protection of legitimate expectations derived from the protection of intellectual property rights provided for in the agreement.’
the panel misapplies article 31 of the vienna convention. the panel misunderstands the concept of legitimate expectations in the context of the customary rules of interpretation of public international law. the legitimate expectations of the parties to a treaty are reflected in the language of the treaty itself. 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 of interpretation neither require nor condone the imputation into a treaty of words that are not there or the importation into a treaty of concepts that were not intended.
in united states - standards for reformulated and conventional gasoline, we set out the proper approach to be applied in interpreting the wto agreement in accordance with the rules in article 31 of the vienna convention. these r
ules must be respected and applied in interpreting the trips agreement or any other covered agreement. the panel in this case has created its own interpretative principle, which is consistent with neither the customary rules of interpretation of public international law nor established gatt/wto practice. both panels and the appellate body must be guided by the rules of treaty interpretation set out in the vienna convention, and must not add to or diminish rights and obligations provided in the wto agreement.
this conclusion is dictated by two separate and very specific provisions of the dsu. article 3.2 of the dsu provides that the dispute settlement system of the wto: ‘... serves to preserve the rights and obligations of the members under the covered agreements, and to clarify the existing provisions of those agreements in accordance with customary rules of interpretation of public international law. recommendations and rulings of the dsb cannot add to or diminish the rights and obligations provided in the covered agreements.’ furthermore, article 19.2 of the dsu provides: ‘in accordance with paragraph 2 of article 3, in their findings and recommendations, the panel and appellate body cannot add to or diminish the rights and obligations provided in the covered agreements.’
these provisions speak for themselves. unquestionably, both panels and the appellate body are bound by them.”
the ruling developed in india-patent is repeatedly applied by the appellate body, e.g. in ec-computer equipment (ds62/ds67/ds68), where the european communities submits that the panel erred in considering that the “legitimate expectations” of an exporting member. with regard to this appeal, the appellate body rules in pertinent part: 9
“we disagree with the panel's conclusion that the meaning of a tariff concession in a member's schedule may be determined in the light of the ‘legitimate expectations’ of an exporting member. first, we fail to see the relevance of the eec - oilseeds panel report with respect to the interpretation of a member's schedule in the context of a violation complaint made under article xxiii:1(a) of the gatt 1994. the eec - oilseeds panel report dealt with a non-violation complaint under article xxiii:1(b) of the gatt 1994, and is not legally relevant to the case before us. article xxiii:1 of the gatt 1994 provides for three legally-distinct causes of action on which a member may base a complaint; it distinguishes between so-called violation complaints, non-violation complaints and situation complaints under paragraphs (a), (b) and (c). the concept of ‘reasonable expectations’, which the panel refers to as ‘legitimate expectations’, is a concept that was developed in the context of non-violation complaints. as we stated in india - patents, for the panel to use this concept in the context of a violation complaint ‘melds the legally-distinct bases for “violation” and “non-violation” complaints under article xxiii of the gatt 1994 into o
ne uniform cause of action’, and is not in accordance with established gatt practice.
[…]
third, we agree with the panel that the security and predictability of ‘the reciprocal and mutually advantageous arrangements directed to the substantial reduction of tariffs and other barriers to trade’ is an object and purpose of the wto agreement, generally, as well as of the gatt 1994. however, we disagree with the panel that the maintenance of the security and predictability of tariff concessions allows the interpretation of a concession in the light of the ‘legitimate expectations’ of exporting members, i.e., their subjective views as to what the agreement reached during tariff negotiations was. the security and predictability of tariff concessions would be seriously undermined if the concessions in members' schedules were to be interpreted on the basis of the subjective views of certain exporting members alone. article ii:1 of the gatt 1994 ensures the maintenance of the security and predictability of tariff concessions by requiring that members not accord treatment less favourable to the commerce of other members than that provided for in their schedules.
furthermore, we do not agree with the panel that interpreting the meaning of a concession in a member's schedule in the light of the ‘legitimate expectations’ of exporting members is consistent with the principle of good faith interpretation under article 31 of the vienna convention. recently, in india - patents, the panel stated that good faith interpretation under article 31 required ‘the protection of legitimate expectations’. we found that the panel had misapplied article 31 of the vienna convention and stated that: ‘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 of interpretation neither require nor condone the imputation into a treaty of words that are not there or the importation into a treaty of concepts that were not intended.’
the purpose of treaty interpretation under article 31 of the vienna convention is to ascertain the common intentions of the parties. these common intentions cannot be ascertained on the basis of the subjective and unilaterally determined ‘expectations’ of one of the parties to a treaty. tariff concessions provided for in a member's schedule -- the interpretation of which is at issue here -- are reciprocal and result from a mutually-advantageous negotiation between importing and exporting members. a schedule is made an integral part of the gatt 1994 by article ii:7 of the gatt 1994. therefore, the concessions provided for in that schedule are part of the terms of the treaty. as such, the only rules which may be applied in interpreting the meaning of a concession are the general rules of treaty interpretation set out in the vienna convention.
>the application of these rules in article 31 of the vienna convention will usually allow a treaty interpreter to establish the meaning of a term. however, if after applying article 31 the meaning of the term remains ambiguous or obscure, or leads to a result which is manifestly absurd or unreasonable, article 32 allows a treaty interpreter to have recourse to: ‘... supplementary means of interpretation, including the preparatory work of the treaty and the circumstances of its conclusion.’ with regard to ‘the circumstances of [the] conclusion’ of a treaty, this permits, in appropriate cases, the examination of the historical background against which the treaty was negotiated.”
in sum, the legitimate expectations of the parties to a treaty are reflected in the language of the treaty itself. 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 art. 31 of the vienna convention. but these principles of interpretation neither require nor condone the imputation into a treaty of words that are not there or the importation into a treaty of concepts that were not intended. as general principles of interpretation, the words of the treaty form the foundation for the interpretive process: “interpretation must be based above all upon the text of the treaty”. in consistence with such guidelines for interpretation as well as established gatt/wto practice, both panels and the appellate body should not create their own interpretative principles isolating from the rules of treaty interpretation set out in the vienna convention, and must not add to or diminish rights and obligations provided in the wto agreement.
in a word, the application of these rules in art. 31 of the vienna convention will usually allow a treaty interpreter to establish the meaning of a term, even if after applying art. 31 the meaning of the term remains ambiguous or obscure, or leads to a result which is manifestly absurd or unreasonable, art. 32 allows a treaty interpreter to have recourse to “supplementary means of interpretation, including the preparatory work of the treaty and the circumstances of its conclusion”.
【note】:
1. see, wt/ds152/r/7.22.
2. see, wt/ds139/r; wt/ds142/r/10.12.
3. see, e.g., wt/ds62/ab/r, wt/ds67/ab/r, wt/ds68/ab/r/86; wt/ds176/r/8.16; wt/ds192/r/7.20.
4. see, in detail, wt/ds8/r; wt/ds10/r; wt/ds11/r/6.7; 6.9.
5. see, wt/ds34/r/9.92-9.95.
6. see, wt/ds8/r; wt/ds10/r; wt/ds11/r/9.96.
7. see, wt/ds8/ab/r; wt/ds10/ab/r; wt/ds11/ab/r/d.
8. see, wt/ds50/ab/r/36-41; 44-47.
9. see, wt/ds62/ab/r; wt/ds67/ab/r; wt/ds68/ab/r/80; 82-84; 86.
