UNITED STATES - IMPORT PROHIBITION OF
CERTAIN
SHRIMP AND SHRIMP PRODUCTS
Report of the Appellate Body
1. This
is an appeal by the United States from certain issues of law and legal interpretations
in the Panel Report, United States –
Import Prohibition of Certain Shrimp and Shrimp Products. Following a joint
request for consultations by India, Malaysia, Pakistan and Thailand on
8 October 1996, Malaysia and Thailand requested in a communication
dated 9 January 1997, and Pakistan asked in a communication dated 30 January
1997, that the Dispute Settlement Body (the "DSB") establish a panel
to examine their complaint regarding a prohibition imposed by the United States
on the importation of certain shrimp and shrimp products by Section 609 of
Public Law 101-162 ("Section 609") and associated regulations
and judicial rulings. On
25 February 1997, the DSB established two panels in accordance with these
requests and agreed that these panels would be consolidated into a single
Panel, pursuant to Article 9 of the Understanding
on Rules and Procedures Governing the Settlement of Disputes (the
"DSU"), with standard terms of reference.
On 10 April 1997, the DSB
established another panel with standard terms of reference in accordance with a
request made by India in a communication dated 25 February 1997, and agreed
that this third panel, too, would be merged into the earlier Panel established
on 25 February 1997. The Report rendered by the consolidated Panel was
circulated to the Members of the World Trade Organization
(the "WTO") on 15 May 1998.
2. The
relevant factual and regulatory aspects of this dispute are set out in the
Panel Report, in particular at paragraphs 2.1-2.16. Here, we outline the United States measure at stake before the
Panel and in these appellate proceedings.
The United States issued regulations in 1987 pursuant to the Endangered
Species Act of 1973 requiring all United States shrimp trawl vessels to use
approved Turtle Excluder Devices ("TEDs") or tow-time restrictions in
specified areas where there was a significant mortality of sea turtles in
shrimp harvesting. These regulations, which became fully effective
in 1990, were modified so as to require the use of approved TEDs at all
times and in all areas where there is a likelihood that shrimp trawling will
interact with sea turtles, with certain limited exceptions.
3. Section
609 was enacted on 21 November 1989.
Section 609(a) calls upon the United States Secretary of State, in
consultation with the Secretary of Commerce, inter alia, to "initiate negotiations as soon as possible for
the development of bilateral or multilateral agreements with other nations for
the protection and conservation of … sea turtles" and to "initiate negotiations
as soon as possible with all foreign governments which are engaged in, or which
have persons or companies engaged in, commercial fishing operations which, as
determined by the Secretary of Commerce, may affect adversely such species of
sea turtles, for the purpose of entering into bilateral and multilateral
treaties with such countries to protect such species of sea turtles; …
." Section 609(b)(1) imposed, not
later than 1 May 1991, an import ban on shrimp harvested with commercial
fishing technology which may adversely affect sea turtles. Section 609(b)(2) provides that the import
ban on shrimp will not apply to harvesting nations that are certified. Two kinds of annual certifications are
required for harvesting nations, details of which were further elaborated in
regulatory guidelines in 1991, 1993 and 1996: First, certification shall be granted to countries with a fishing
environment which does not pose a threat of the incidental taking of sea turtles
in the course of shrimp harvesting. According to the 1996 Guidelines, the
Department of State "shall certify any harvesting nation meeting the
following criteria without the need for action on the part of the government of
the harvesting nation: (a) Any harvesting nation without any of the relevant
species of sea turtles occurring in waters subject to its jurisdiction; (b) Any harvesting nation that
harvests shrimp exclusively by means that do not pose a threat to sea turtles, e.g., any nation that harvests shrimp
exclusively by artisanal means; or
(c) Any nation whose commercial shrimp
trawling operations take place exclusively in waters subject to its
jurisdiction in which sea turtles do not occur."
4. Second,
certification shall be granted to harvesting nations that provide documentary
evidence of the adoption of a regulatory program governing the incidental
taking of sea turtles in the course of shrimp trawling that is comparable to
the United States program and
where the average rate of incidental taking of sea turtles by their vessels is
comparable to that of United States vessels. According to the 1996 Guidelines,
the Department of State assesses the regulatory program of the harvesting
nation and certification shall be made if the program includes: (i)
the required use of TEDs that are "comparable in effectiveness to
those used in the United States. Any
exceptions to this requirement must be comparable to those of the United States
program … "; and (ii)
"a credible enforcement effort that includes monitoring for
compliance and appropriate sanctions." The regulatory program may be in
the form of regulations, or may, in certain circumstances, take the form of a
voluntary arrangement between industry and government. Other measures that the
harvesting nation undertakes for the protection of sea turtles will also be
taken into account in making the comparability determination. The average
incidental take rate "will be deemed comparable if the harvesting nation
requires the use of TEDs in a manner comparable to that of the U.S. program … ."
5. The
1996 Guidelines provide that all shrimp imported into the United States must be
accompanied by a Shrimp Exporter's Declaration form attesting that the shrimp
was harvested either in the waters of a nation currently certified under
Section 609 or "under conditions that do not adversely affect sea
turtles", that is: (a) "Shrimp harvested in an aquaculture
facility in which the shrimp spend at least 30 days in ponds prior to being
harvested"; (b) "Shrimp harvested by commercial shrimp
trawl vessels using TEDs comparable in effectiveness to those required in the
United States"; (c) "Shrimp harvested exclusively by means
that do not involve the retrieval of fishing nets by mechanical devices or by
vessels using gear that, in accordance with the U.S. program … , would not
require TEDs"; and (d)
"Species of shrimp, such as the pandalid species, harvested in
areas where sea turtles do not occur." On 8 October 1996, the United
States Court of International Trade ruled that the 1996 Guidelines were in violation
of Section 609 in allowing the import of shrimp from non-certified countries if
accompanied by a Shrimp Exporter's Declaration form attesting that they were
caught with commercial fishing technology that did not adversely affect sea
turtles. A 25 November 1996 ruling of the United States Court of International
Trade clarified that shrimp harvested by manual methods which did not harm sea
turtles could still be imported from non-certified countries. On 4 June 1998,
the United States Court of Appeals for the Federal Circuit vacated the
decisions of the United States Court of International Trade of 8 October and
25 November 1996. In practice, however, exemption from the import ban
for TED-caught shrimp from non-certified countries remained unavailable while
this dispute was before the Panel and before us.
6. The
1991 Guidelines limited the geographical scope of the import ban imposed by
Section 609 to countries in the wider Caribbean/western Atlantic region,
and granted these countries a three-year phase-in period. The 1993 Guidelines maintained this
geographical limitation. On
29 December 1995, the United States Court of International Trade held that
the 1991 and 1993 Guidelines violated Section 609 by limiting its geographical
scope to shrimp harvested in the wider Caribbean/western Atlantic region, and
directed the Department of State to extend the ban worldwide not later
than 1 May 1996. On 10 April 1996, the United States Court of International
Trade refused a subsequent request by the Department of State to postpone the 1
May 1996 deadline. On 19 April 1996, the United States issued the
1996 Guidelines, extending Section 609 to shrimp harvested in all foreign countries effective
1 May 1996.
7. In
the Panel Report, the Panel reached the following conclusions:
In the light of
the findings above, we conclude that the import ban on shrimp and shrimp
products as applied by the United States on the basis of Section 609 of Public
Law 101-162 is not consistent with Article XI:1 of GATT 1994, and cannot be
justified under Article XX of GATT 1994.
and
made this recommendation:
The Panel recommends that the Dispute Settlement
Body request the United States to bring this measure into conformity with its
obligations under the WTO Agreement.
8.
On
13 July 1998, the United States notified the DSB of its decision to appeal
certain issues of law covered in the Panel Report and certain legal
interpretations developed by the Panel, pursuant to paragraph 4 of Article 16
of the DSU, and filed a notice of appeal with the Appellate Body pursuant to
Rule 20 of the Working Procedures for
Appellate Review. On 23 July 1998, the United
States filed an appellant's submission. On 7 August 1998, India, Pakistan
and Thailand ("Joint Appellees") filed a joint appellees' submission
and Malaysia filed a separate appellee's submission. On the same day, Australia, Ecuador, the European Communities, Hong
Kong, China, and Nigeria each filed separate third participants'
submissions. At the invitation of the Appellate Body, the United States, India,
Pakistan, Thailand and Malaysia filed additional submissions on certain issues
arising under Article XX(b) and Article XX(g) of the GATT 1994 on 17
August 1998. The oral hearing in the
appeal was held on 19-20 August 1998.
The participants and third participants presented oral arguments and
responded to questions put to them by the Members of the Division hearing the
appeal.
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9. The
issues raised in this appeal by the appellant, the United States, are the
following:
(a) whether
the Panel erred in finding that accepting non-requested information from
non-governmental sources would be incompatible with the provisions of the DSU
as currently applied; and
(b) whether the Panel erred in finding that the measure at issue
constitutes unjustifiable discrimination between countries where the same
conditions prevail and thus is not within the scope of measures permitted under
Article XX of the GATT 1994.
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Article 13
Right
to Seek Information
1. Each
panel shall have the right to seek information and technical advice from any
individual or body which it deems appropriate. However, before a panel seeks such information or advice from any
individual or body within the jurisdiction of a Member it shall inform the authorities
of that Member. A Member should respond
promptly and fully to any request by a panel for such information as the panel
considers necessary and appropriate.
Confidential information which is provided shall not be revealed without
formal authorization from the individual, body, or authorities of the
Member providing the information.
2. Panels may seek information from any
relevant source and may consult experts to obtain their opinion on certain
aspects of the matter. With respect to
a factual issue concerning a scientific or other technical matter raised by a
party to a dispute, a panel may request an advisory report in writing from an
expert review group. Rules for the
establishment of such a group and its procedures are set forth in Appendix
4.(emphasis added)
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10. Article
XX of the GATT 1994 reads, in its relevant parts:
Article XX
General Exceptions
Subject to the
requirement that such measures are not applied in a manner which would
constitute a means of arbitrary or unjustifiable discrimination between
countries where the same conditions prevail, or a disguised restriction on
international trade, nothing in this Agreement shall be construed to prevent
the adoption or enforcement by any Member of measures:
…
(b) necessary to protect
human, animal or plant life or health;
…
(g) relating to the conservation of
exhaustible natural resources if such measures are made effective in
conjunction with restrictions on domestic production or consumption;
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11. In
United States - Gasoline, we
enunciated the appropriate method for applying Article XX of the GATT 1994:
In order that the justifying
protection of Article XX may be extended to it, the measure at issue must
not only come under one or another of the particular exceptions -- paragraphs
(a) to (j) -- listed under Article XX;
it must also satisfy the requirements imposed by the opening clauses of
Article XX. The analysis is, in other words,
two-tiered: first, provisional justification
by reason of characterization of the measure under XX(g); second, further appraisal of the same
measure under the introductory clauses of Article XX. (emphasis added)
12. The
sequence of steps indicated above in the analysis of a claim of justification
under Article XX reflects, not inadvertence or random choice, but rather
the fundamental structure and logic of Article XX. The Panel appears to suggest, albeit indirectly, that following
the indicated sequence of steps, or the inverse thereof, does not make any
difference. To the Panel, reversing the
sequence set out in United States -
Gasoline "seems equally appropriate." We do not agree.
13. The
task of interpreting the chapeau so as to prevent the abuse or misuse of the
specific exemptions provided for in Article XX is rendered very difficult, if
indeed it remains possible at all, where the interpreter (like the Panel in
this case) has not first identified and examined the specific exception
threatened with abuse. The standards
established in the chapeau are, moreover, necessarily broad in scope and
reach: the prohibition of the application of a measure "in a
manner which would constitute a means of arbitrary or unjustifiable
discrimination between countries where the same conditions prevail" or
"a disguised restriction
on international trade."(emphasis added)
When applied in a particular case, the actual contours and contents of
these standards will vary as the kind of measure under examination varies. What is appropriately characterizable as
"arbitrary discrimination" or "unjustifiable
discrimination", or as a "disguised restriction on international
trade" in respect of one category of measures, need not be so with respect
to another group or type of measures.
The standard of "arbitrary discrimination", for example, under
the chapeau may be different for a measure that purports to be necessary to
protect public morals than for one relating to the products of prison labour.
14. The
consequences of the interpretative approach adopted by the Panel are apparent
in its findings. The Panel formulated a
broad standard and a test for appraising measures sought to be justified under
the chapeau; it is a standard or a test
that finds no basis either in the text of the chapeau or in that of either of the
two specific exceptions claimed by the United States. The Panel, in effect, constructed an a priori test that purports to define a category of measures which,
ratione materiae, fall outside the
justifying protection of Article XX's chapeau. In the present case, the Panel
found that the United States measure at stake fell within that class of
excluded measures because Section 609 conditions access to the domestic
shrimp market of the United States on the adoption by exporting countries of
certain conservation policies prescribed by the United States. It appears to us, however, that conditioning
access to a Member's domestic market on whether exporting Members comply with,
or adopt, a policy or policies unilaterally prescribed by the importing Member
may, to some degree, be a common aspect of measures falling within the scope of
one or another of the exceptions (a) to (j) of Article XX. Paragraphs (a) to (j) comprise measures that
are recognized as exceptions to substantive obligations established in
the GATT 1994, because the domestic policies embodied in such measures
have been recognized as important and legitimate in character. It is not necessary to assume that requiring
from exporting countries compliance with, or adoption of, certain policies
(although covered in principle by one or another of the exceptions) prescribed
by the importing country, renders a measure a
priori incapable of justification under Article XX. Such an interpretation renders most, if not
all, of the specific exceptions of Article XX inutile, a result abhorrent
to the principles of interpretation we are bound to apply.
15. We
hold that the findings of the Panel quoted in paragraph 112 above, and the
interpretative analysis embodied therein, constitute error in legal
interpretation and accordingly reverse them.
Having
reversed the Panel's legal conclusion that the United States measure at issue
"is not within the scope of measures permitted under the chapeau of
Article XX" , we believe that it is our duty and our responsibility
to complete the legal analysis in this case in order to determine whether
Section 609 qualifies for justification under Article XX.
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16. In
claiming justification for its measure, the United States primarily invokes
Article XX(g). Justification under
Article XX(b) is claimed only in the alternative; that is, the United States suggests that we
should look at Article XX(b) only if we find that Section 609 does
not fall within the ambit of Article XX(g). We proceed, therefore, to the
first tier of the analysis of Section 609 and to our consideration of
whether it may be characterized as provisionally justified under the terms of
Article XX(g).
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17. We
are not convinced by these arguments.
Textually, Article XX(g) is not
limited to the conservation of "mineral" or "non-living"
natural resources. The complainants'
principal argument is rooted in the notion that "living" natural
resources are "renewable" and therefore cannot be "exhaustible"
natural resources. We do not believe
that "exhaustible" natural resources and "renewable"
natural resources are mutually exclusive.
One lesson that modern biological sciences teach us is that living
species, though in principle, capable of reproduction and, in that sense, "renewable",
are in certain circumstances indeed susceptible of depletion, exhaustion and
extinction, frequently because of human activities. Living resources are just as "finite" as petroleum,
iron ore and other non-living resources.
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18. Given
the recent acknowledgement by the international community of the importance of
concerted bilateral or multilateral action to protect living natural resources,
and recalling the explicit recognition by WTO Members of the objective of
sustainable development in the preamble of the WTO Agreement, we believe it is too late in the day to suppose that
Article XX(g) of the GATT 1994 may be read as referring only to the
conservation of exhaustible mineral or other non-living natural resources. Moreover, two adopted GATT 1947 panel
reports previously found fish to be an "exhaustible natural resource"
within the meaning of Article XX(g). We hold that, in line with the principle
of effectiveness in treaty interpretation, measures to conserve exhaustible
natural resources, whether living or non-living, may fall within
Article XX(g).
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19. The
actual application of the measure,
through the implementation of the 1996 Guidelines and the regulatory practice
of administrators, requires other WTO
Members to adopt a regulatory program that is not merely comparable, but rather essentially
the same, as that applied to the United States shrimp trawl vessels. Thus, the effect of the application of
Section 609 is to establish a rigid and unbending standard by which United
States officials determine whether or not countries will be certified, thus granting
or refusing other countries the right to export shrimp to the United States.
Other specific policies and measures that an exporting country may have adopted
for the protection and conservation of sea turtles are not taken into account,
in practice, by the administrators making the comparability determination.
20. We
understand that the United States also applies a uniform standard throughout
its territory, regardless of the particular conditions existing in certain
parts of the country. The United States
requires the use of approved TEDs at all times by domestic, commercial shrimp
trawl vessels operating in waters where there is any likelihood that they may
interact with sea turtles, regardless of the actual incidence of sea turtles in
those waters, the species of those sea turtles, or other differences or
disparities that may exist in different parts of the United States. It may be quite acceptable for a government,
in adopting and implementing a domestic policy, to adopt a single standard
applicable to all its citizens throughout that country. However, it is not acceptable, in
international trade relations, for one WTO Member to use an economic embargo to
require other Members to adopt
essentially the same comprehensive regulatory program, to achieve a certain
policy goal, as that in force within that Member's territory, without taking into consideration
different conditions which may occur in the territories of those other Members.
21. Furthermore,
when this dispute was before the Panel and before us, the United States did not
permit imports of shrimp harvested by commercial shrimp trawl vessels using
TEDs comparable in effectiveness to those required in the United States if
those shrimp originated in waters of countries not certified under Section 609.
In other words, shrimp caught using methods identical to those employed in the United
States have been excluded from the United States market solely because they
have been caught in waters of countries
that have not been certified by the United States. The resulting situation is difficult to
reconcile with the declared policy objective of protecting and conserving sea
turtles. This suggests to us that this
measure, in its application, is more concerned with effectively influencing WTO
Members to adopt essentially the same comprehensive regulatory regime as that
applied by the United States to its domestic shrimp trawlers, even though many
of those Members may be differently situated.
We believe that discrimination results not only when countries in which
the same conditions prevail are differently treated, but also when the
application of the measure at issue does not allow for any inquiry into the
appropriateness of the regulatory program for the conditions prevailing in
those exporting countries.
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22. The
Inter-American Convention thus provides convincing demonstration that an
alternative course of action was reasonably open to the United States for
securing the legitimate policy goal of its measure, a course of action other
than the unilateral and non-consensual procedures of the import prohibition
under Section 609. It is relevant
to observe that an import prohibition is, ordinarily, the heaviest
"weapon" in a Member's armoury of trade measures. The record does not, however, show that
serious efforts were made by the United States to negotiate similar agreements
with any other country or group of countries before (and, as far as the record
shows, after) Section 609 was enforced on a world-wide basis on
1 May 1996. Finally, the
record also does not show that the appellant, the United States, attempted to
have recourse to such international mechanisms as exist to achieve cooperative
efforts to protect and conserve sea turtles before imposing the import ban.
23. Clearly,
the United States negotiated seriously with some, but not with other Members
(including the appellees), that export shrimp to the United States. The effect is plainly discriminatory and, in
our view, unjustifiable. The
unjustifiable nature of this discrimination emerges clearly when we consider
the cumulative effects of the failure of the United States to pursue negotiations
for establishing consensual means of protection and conservation of the living
marine resources here involved, notwithstanding the explicit statutory
direction in Section 609 itself to initiate negotiations as soon as
possible for the development of bilateral and multilateral agreements. The principal
consequence of this failure may be seen in the resulting unilateralism evident
in the application of Section 609.
As we have emphasized earlier, the policies relating to the necessity
for use of particular kinds of TEDs in various maritime areas, and the
operating details of these policies, are all shaped by the Department of State,
without the participation of the exporting Members. The system and processes of certification are established and
administered by the United States agencies alone. The decision-making involved in the grant, denial or withdrawal
of certification to the exporting Members, is, accordingly, also
unilateral. The unilateral character of
the application of Section 609 heightens the disruptive and discriminatory
influence of the import prohibition and underscores its unjustifiability.
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24. When
the foregoing differences in the means of application of Section 609 to
various shrimp exporting countries are considered in their cumulative effect,
we find, and so hold, that those differences in treatment constitute
"unjustifiable discrimination" between exporting countries desiring
certification in order to gain access to the United States shrimp market within
the meaning of the chapeau of Article XX.
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25. We
next consider whether Section 609 has been applied in a manner
constituting "arbitrary discrimination between countries where the same
conditions prevail". We have
already observed that Section 609, in its application, imposes a single,
rigid and unbending requirement that countries applying for certification under
Section 609(b)(2)(A) and (B) adopt a comprehensive regulatory program that is
essentially the same as the United States' program, without inquiring into the
appropriateness of that program for the conditions prevailing in the exporting
countries. Furthermore, there is little or no flexibility in how officials make
the determination for certification pursuant to these provisions. In our view,
this rigidity and inflexibility also constitute "arbitrary
discrimination" within the meaning of the chapeau.
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26. It
is also clear to us that Article X:3 of the GATT 1994 establishes certain
minimum standards for transparency and procedural fairness in the
administration of trade regulations which, in our view, are not met here. The non-transparent and ex parte nature of the internal governmental procedures applied by
the competent officials in the Office of Marine Conservation, the Department of
State, and the United States National Marine Fisheries Service throughout the
certification processes under Section 609, as well as the fact that countries
whose applications are denied do not receive formal notice of such denial, nor
of the reasons for the denial, and the fact, too, that there is no formal legal
procedure for review of, or appeal from, a denial of an application, are all
contrary to the spirit, if not the letter, of Article X:3 of the GATT 1994.
27. We
find, accordingly, that the United States measure is applied in a manner which
amounts to a means not just of "unjustifiable discrimination", but
also of "arbitrary discrimination" between countries where the same
conditions prevail, contrary to the requirements of the chapeau of
Article XX. The measure,
therefore, is not entitled to the justifying protection of Article XX of
the GATT 1994. Having made this
finding, it is not necessary for us to examine also whether the United States
measure is applied in a manner that constitutes a "disguised restriction
on international trade" under the chapeau of Article XX.
28. In
reaching these conclusions, we wish to underscore what we have not decided in this appeal. We have not
decided that the protection and preservation of the environment is of no
significance to the Members of the WTO.
Clearly, it is. We have not decided that the sovereign nations
that are Members of the WTO cannot adopt effective measures to protect
endangered species, such as sea turtles. Clearly, they can and should. And we have not decided that sovereign states should not act together
bilaterally, plurilaterally or multilaterally, either within the WTO or in
other international fora, to protect endangered species or to otherwise protect
the environment. Clearly, they should
and do.
29. What
we have decided in this appeal is
simply this: although the measure of
the United States in dispute in this appeal serves an environmental objective
that is recognized as legitimate under paragraph (g) of Article XX of the GATT
1994, this measure has been applied by the United States in a manner which
constitutes arbitrary and unjustifiable discrimination between Members of the
WTO, contrary to the requirements of the chapeau of Article XX. For all of the specific reasons outlined in
this Report, this measure does not qualify for the exemption that Article XX of
the GATT 1994 affords to measures which serve certain recognized, legitimate
environmental purposes but which, at the same time, are not applied in a manner
that constitutes a means of arbitrary or unjustifiable discrimination between
countries where the same conditions prevail or a disguised restriction on
international trade. As we emphasized
in United States – Gasoline, WTO
Members are free to adopt their own policies aimed at protecting the
environment as long as, in so doing, they fulfill their obligations and respect
the rights of other Members under the WTO
Agreement.
30. For
the reasons set out in this Report, the Appellate Body:
(a) reverses the Panel's finding that accepting non-requested
information from non-governmental sources is incompatible with the provisions
of the DSU;
(b) reverses the Panel's finding that the United States measure
at issue is not within the scope of measures permitted under the chapeau of
Article XX of the GATT 1994, and
(c) concludes
that the United States measure, while qualifying for provisional justification
under Article XX(g), fails to meet the requirements of the chapeau of Article
XX, and, therefore, is not justified under Article XX of the GATT 1994.
31. The
Appellate Body recommends that the
DSB request the United States to bring its measure found in the Panel Report to
be inconsistent with Article XI of the GATT 1994, and found in this
Report to be not justified under Article XX of the GATT 1994, into conformity with the obligations of the
United States under that Agreement.
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