Common use of In EC Clause in Contracts

In EC. Poultry, Brazil argued on appeal that the Panel had erred in restricting Brazil's "comprehensive claim in relation to a violation of the general principle of transparency underlying the Licensing Agreement" to an analysis of Article 3.5(a) of the Licensing Agreement. Brazil's argument was that "the administration of import licences in such a way that the exporter does not know what trade rules apply is a breach of the fundamental objective of the Licensing Agreement." The Appellate Body, however, upheld the Panel's approach and the Panel's finding that the European Communities measure was not inconsistent with Article 3.5(a) of the Agreement: "Brazil's notice of appeal contained no reference to a general issue of transparency in relation to the Licensing Agreement. However, Brazil argued in its appellant's submission that the Panel erred in restricting Brazil's 'comprehensive claim in relation to a violation of the general principle of transparency underlying the Licensing Agreement' to an analysis of Article 3.5(a) of the Licensing Agreement. The contention of Brazil is that 'the administration of import licenses in such a way that the exporter does not know what trade rules apply is a breach of the fundamental objective of the Licensing Agreement'. Brazil argued before the Panel that 'underlying the Licensing Agreement was the principle of transparency.' Brazil submitted, in particular, that the European Communities was obliged under either Article 3.5(a)(iii) or (iv) of the Licensing Agreement to provide complete and relevant information on the distribution of licences among supplying countries and statistics on volumes and values. According to Brazil, the European Communities failed to fulfil this obligation. The Panel found that Brazil had not demonstrated that the European Communities had violated either 10 Appellate Body Report, Argentina – Import Measures, fn 598. 11 Appellate Body Report, Argentina – Import Measures, fn 711. 12 Panel Report, EC – Poultry, para. 264. 13 Panel Report, EC – Poultry, para. 265.

In EC. Poultry, Brazil argued on appeal that the Panel had erred in restricting Brazil's "comprehensive claim in relation to a violation of the general principle of transparency underlying the Licensing Agreement" to an analysis of Article 3.5(a) of the Licensing Agreement. Brazil's argument was that "the administration of import licences in such a way that the exporter does not know what trade rules apply is a breach of the fundamental objective of the Licensing Agreement." The Appellate Body, however, upheld the Panel's approach and the Panel's finding that the European Communities measure was not inconsistent with Article 3.5(a) had violated the prohibition of the Agreement: "Brazil's notice of appeal trade distortion contained no reference to a general issue of transparency in relation to the Licensing Agreement. However, Brazil argued in its appellant's submission that the Panel erred in restricting Brazil's 'comprehensive claim in relation to a violation of the general principle of transparency underlying the Licensing Agreement' to an analysis of Article 3.5(a) Articles 1.2 and 3.2 of the Licensing Agreement. The contention of Panel rejected Brazil's claim. On appeal, Brazil is that 'the administration of import licenses in such a way argued that the exporter does not know what trade rules apply is a breach Panel had failed to address or examine properly certain evidence, including evidence concerning Brazil's falling share of the fundamental objective poultry market in the European Communities, and had not examined whether this falling market share was caused by the introduction of the Licensing Agreement'European Communities licensing procedures for the tariff-rate quota for frozen poultry meat. The Appellate Body upheld the Panel. It noted that the EC Regulation at issue gave Brazil argued a 45 per cent share of the total tariff-rate quota (the same as Brazil's share of exports of the product to the EC during the preceding three years); because the licences were fully utilized, Brazil's share of the tariff-rate quota remained at 45 per cent and Brazil's volume of exports of the product to the EC had risen since imposition of the tariff rate quota.15 The Appellate Body found that Brazil had failed to establish a causal link between the decline in market share and other indicators, on the one hand, and the licensing requirements at issue, on the other: "Brazil has not, in our view, clearly explained, either before the Panel or before us, how the licensing procedure caused the decline in market share. Brazil has not offered any persuasive evidence that 'underlying the Licensing Agreement was the principle of transparency.' Brazil submittedits falling market share could, in particularthis particular case – with a constant percentage share of the tariff-rate quota, that full utilization of the European Communities was obliged under either Article 3.5(a)(iii) or (iv) tariff-rate quota and a growing total volume of exports – be viewed as constituting trade distortion attributable to the licensing procedure. In other words, Brazil has not proven a violation of the prohibition of trade distortion in Articles 1.2 and 3.2 of the Licensing Agreement to provide complete and relevant information on the distribution of licences among supplying countries and statistics on volumes and values. According to Brazil, by the European Communities failed to fulfil this obligationCommunities. The Panel found that Brazil had not demonstrated argues that the European Communities had violated either 10 Appellate Body ReportPanel did not consider a number of other arguments in its examination of the existence of trade distortion: that licences have been apportioned in non-economic quantities; that there have been frequent changes to the licensing rules; that licence entitlement has been based on export performance; and that there has been speculation in licences. These arguments, Argentina – Import Measureshowever, fn 598do not address the problem of establishing a causal relationship between imposition of the EC licensing procedure and the claimed trade distortion. 11 Appellate Body ReportEven if conceded arguendo, Argentina – Import Measures, fn 711. 12 Panel Report, EC – Poultry, para. 264. 13 Panel Report, EC – Poultry, para. 265these arguments do not provide proof of the essential element of causation.