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G.1.1 Article I: Scope of application
— Measures affecting trade in
services. See also GATT 1994: Relationship between the GATT
1994 and the GATS (G.2.2) back to top
G.1.1.1 EC — Bananas III, para. 220
(WT/DS27/AB/R)
… we note that Article I:1 of the GATS provides that “[t]his
Agreement applies to measures by Members affecting trade in services”.
In our view, the use of the term “affecting” reflects the intent of
the drafters to give a broad reach to the GATS. The ordinary meaning of
the word “affecting” implies a measure that has “an effect on”,
which indicates a broad scope of application. This interpretation is
further reinforced by the conclusions of previous panels that the term
“affecting” in the context of Article III of the GATT is wider in
scope than such terms as “regulating” or “governing”. We also
note that Article I:3(b) of the GATS provides that “ ‘services’
includes any service in any sector except services
supplied in the exercise of governmental authority” (emphasis added),
and that Article XXVIII(b) of the GATS provides that the “ ‘supply
of a service’ includes the production, distribution, marketing, sale
and delivery of a service”. There is nothing at all in these
provisions to suggest a limited scope of application for the GATS. …
G.1.1.2 EC — Bananas III, para. 221
(WT/DS27/AB/R)
… the GATS applies to the supply of services. It provides, inter
alia, for both MFN treatment and national treatment for services and
service suppliers. Given the respective scope of application of the two
agreements, they may or may not overlap, depending on the nature of the
measures at issue. Certain measures could be found to fall exclusively
within the scope of the GATT 1994, when they affect trade in goods as
goods. Certain measures could be found to fall exclusively within the
scope of the GATS, when they affect the supply of services as services.
There is yet a third category of measures that could be found to fall
within the scope of both the GATT 1994 and the GATS. These are measures
that involve a service relating to a particular good or a service
supplied in conjunction with a particular good. In all such cases in
this third category, the measure in question could be scrutinized under
both the GATT 1994 and the GATS. However, while the same measure could
be scrutinized under both agreements, the specific aspects of that
measure examined under each agreement could be different. …
G.1.1.3 Canada — Autos,
paras. 151-152
(WT/DS139/AB/R, WT/DS142/AB/R)
… Similarly, here, the fundamental structure and logic of Article
I:1, in relation to the rest of the GATS, require that determination of
whether a measure is, in fact, covered by the GATS must be made before
the consistency of that measure with any substantive obligation of
the GATS can be assessed.
… We find, therefore, that the Panel should have inquired, as a
threshold question, into whether the measure is within the scope of the
GATS by examining whether the import duty exemption is a measure “affecting
trade in services” within the meaning of Article I. In failing to do
so, the Panel erred in its interpretative approach.
G.1.1.4 Canada — Autos, para. 155
(WT/DS139/AB/R, WT/DS142/AB/R)
With these treaty provisions in mind, we believe that at least two
key legal issues must be examined to determine whether a measure is one
“affecting trade in services”: first, whether there is “trade in
services” in the sense of Article I:2; and, second, whether the
measure in issue “affects” such trade in services within the meaning
of Article I:1.
G.1.1.5 Canada — Autos, para. 165
(WT/DS139/AB/R, WT/DS142/AB/R)
We do not consider this statement of the Panel to be a sufficient
basis for a legal finding that the import duty exemption “affects”
wholesale trade services of motor vehicles as services, or
wholesale trade service suppliers in their capacity as service
suppliers. The Panel failed to analyse the evidence on the record
relating to the provision of wholesale trade services of motor vehicles
in the Canadian market. It also failed to articulate what it understood
Article I:1 to require by the use of the term “affecting”. Having
interpreted Article I:1, the Panel should then have examined all the
relevant facts, including who supplies wholesale trade services
of motor vehicles through commercial presence in Canada, and how such
services are supplied. It is not enough to make assumptions. Finally,
the Panel should have applied its interpretation of “affecting trade
in services” to the facts it should have found.
G.1.1.6 Canada — Autos, para. 166
(WT/DS139/AB/R, WT/DS142/AB/R)
The European Communities and Japan may well be correct in their
assertions that the availability of the import duty exemption to certain
manufacturer beneficiaries of the United States established in Canada,
and the corresponding unavailability of this exemption to manufacturer
beneficiaries of Europe and of Japan established in Canada, has an
effect on the operations in Canada of wholesale trade service suppliers
of motor vehicles and, therefore, “affects” those wholesale trade
service suppliers in their capacity as service suppliers. However, the
Panel did not examine this issue. The Panel merely asserted its
conclusion, without explaining how or why it came to its conclusion.
This is not good enough.
G.1.1.7 Canada — Autos, para. 167
(WT/DS139/AB/R, WT/DS142/AB/R)
For these reasons, we believe that the Panel has failed to examine
whether the measure is one “affecting trade in services” as required
under Article I:1 of the GATS. The Panel did not show that the measure
at issue affects wholesale trade services of motor vehicles, as
services, or wholesale trade service suppliers of motor vehicles, in
their capacity as service suppliers. Nonetheless, we continue our
analysis of the issues raised on appeal under Article II:1, and examine
whether, in the terms of that provision, the measure accords treatment
“no less favourable” to like services and service suppliers of other
Members.
G.1.1.8 US — Gambling,
paras. 120-123
(WT/DS285/AB/R, WT/DS285/AB/R/Corr.1)
The question before us, therefore, is whether an alleged “total
prohibition” on the cross-border supply of gambling and betting
services constitutes a measure that may be challenged under the GATS.
The DSU provides for the “prompt settlement” of situations where
Members consider that their benefits under the covered agreements “are
being impaired by measures taken by another Member”. Two
elements of this reference to “measures” that may be the subject of
dispute settlement are relevant. First, as the Appellate Body has
stated, a “nexus” must exist between the responding Member and the
“measure”, such that the “measure” — whether an act or
omission — must be “attributable” to that Member. Secondly, the
“measure” must be the source of the alleged impairment, which
is in turn the effect resulting from the existence or operation
of the “measure”.
Similarly [Article 4.2 of the DSU] contemplates that “measures”
themselves will “affect” the operation of a covered agreement.
Finally, we note that this distinction between measures and their
effects is also evident in the scope of application of the GATS, namely,
to “measures by Members affecting trade in services”.
We are therefore of the view that the DSU and the GATS focus on “measures”
as the subject of challenge in WTO dispute settlement. To the extent
that a Member’s complaint centres on the effects of an action taken by
another Member, that complaint must nevertheless be brought as a
challenge to the measure that is the source of the alleged
effects.
G.1.1.9 US — Gambling, para. 180
(WT/DS285/AB/R, WT/DS285/AB/R/Corr.1)
We move … to examine the context provided by the structure of the
GATS itself.… To us, the structure of the GATS necessarily
implies two things. First, because the GATS covers all services
except those supplied in the exercise of governmental authority, it
follows that a Member may schedule a specific commitment in respect of any
service. …
G.1.2 Schedules back to top
G.1.2.1 INTERPRETATION OF SCHEDULES
G.1.2.1.1 US — Gambling, para. 160
(WT/DS285/AB/R, WT/DS285/AB/R/Corr.1)
In the context of the GATS, Article XX:3 explicitly provides that
Members’ Schedules are an “integral part” of that agreement. Here,
too, the task of identifying the meaning of a concession in a GATS
Schedule, like the task of interpreting any other treaty text, involves
identifying the common intention of Members. … we
consider that the meaning of the United States’ GATS Schedule must be
determined according to the rules codified in Article 31 and, to the
extent appropriate, Article 32 of the Vienna Convention.
G.1.2.1.2 US — Gambling, para. 166
(WT/DS285/AB/R, WT/DS285/AB/R/Corr.1)
We have three reservations about the way in which the Panel
determined the ordinary meaning of the word “sporting” in the United
States’ Schedule. First, to the extent that the Panel’s reasoning
simply equates the “ordinary meaning” with the meaning of words as
defined in dictionaries, this is, in our view, too mechanical an
approach. Secondly, the Panel failed to have due regard to the fact that
its recourse to dictionaries revealed that gambling and betting can, at
least in some contexts, be one of the meanings of the word “sporting”.
Thirdly, the Panel failed to explain the basis for its recourse to the
meanings of the French and Spanish words “déportivos” and “sportifs”
in the light of the fact that the United States’ Schedule explicitly
states, in a cover note, that it “is authentic in English only”.
G.1.2.1.3 US — Gambling, para. 167
(WT/DS285/AB/R, WT/DS285/AB/R/Corr.1)
Overall, the Panel’s finding concerning the word “sporting” was
premature. In our view, the Panel should have taken note that, in the
abstract, the range of possible meanings of the word “sporting”
includes both the meaning claimed by Antigua and the meaning
claimed by the United States, and then continued its inquiry into which
of those meanings was to be attributed to the word as used in the
United States’ GATS Schedule.
G.1.2.1.4 China — Publications and Audiovisual Products, para.
362
(WT/DS363/AB/R)
The Panel considered the sector heading itself and found that the
meaning of the term “audiovisual” (“pertaining to both hearing and
vision”) suggested that services scheduled under this heading (such as
“Sound recording distribution services”), unless otherwise
specified, relate to the production, distribution, projection, or
broadcasting of content that is “sensed by the user through the
faculties of hearing or vision”. Such context does not, in itself,
rule out the possibility that China could have scheduled commitments
concerning services related only to physical products under such a
heading.
G.1.2.1.5 China — Publications and Audiovisual Products, para.
364
(WT/DS363/AB/R)
We observe that the reference to audiovisual “products” in the
scheduled market access limitation can encompass both physical and
non-physical sound recordings, because, as the Panel found, the term “product”
is used to refer to both tangible and intangible goods, as well as
services. Thus, China’s commitment on “Sound recording distribution
services” does not specify whether it is limited to the distribution
of physical goods, but it does include a market access limitation on the
distribution of audiovisual “products” that refers to both tangibles
and intangibles. Such commitment might have expressly indicated that it
relates only to the distribution of tapes, videocassettes, CDs, digital
video discs (“DVDs”), and/or other physical media, but it does not.
G.1.2.1.6 China — Publications and Audiovisual Products, para.
365
(WT/DS363/AB/R)
Regarding the reference to “motion pictures”, we observe that it
is not disputed that this term refers to non-physical content that can
be embedded in physical products. China’s mode 3 market access
commitment covers “audiovisual products”, excluding “motion
pictures”, thus implying that motion pictures would otherwise be
included within the category of audiovisual products. Moreover, China
undertakes an additional commitment on the importation of motion
pictures for theatrical release under the heading “Audiovisual
Services”. Therefore, we consider that the reference to motion
pictures under “Audiovisual Services” in China’s GATS Schedule
supports the view that the term “audiovisual products” is used to
refer to both tangible and intangible products and that the term “Sound
recording distribution services” also refers to both tangible and
intangible products. This also supports the view that this entry covers
the electronic distribution of sound recordings.
G.1.2.1.7 China — Publications and Audiovisual Products, para.
369
(WT/DS363/AB/R)
We agree with this reasoning of the Panel. The fact that the entry
“Videos, (… ) distribution services” applies to intangible
products represents relevant context suggesting that the entry “Sound
recording distribution services”, which is subject to the same market
access and national treatment limitations in the four modes of supply,
should also be interpreted as applying to intangible products. We note
that the entry “Videos, (… ) distribution services” includes “entertainment
software”, which is also a reference to content that can be
incorporated into physical products or transmitted electronically. In
our view, this provides further contextual support for interpreting “Sound
recording distribution services” as referring to content in both
physical and non-physical form, and thus extending to the electronic
distribution of sound recordings.
G.1.2.1.8 China — Publications and Audiovisual Products, para.
372
(WT/DS363/AB/R)
We therefore agree with the Panel’s observation that, had China’s
relevant entry “Sound recording distribution services” under “Audiovisual
Services” been intended to cover exclusively the distribution of
audiovisual products in physical form, “there would have been no need
to insert [this entry and the entry ‘Video (… ) distribution
services’] under a sector other than Distribution Services, where the
distribution of physical goods are generally covered in China’s
Schedule”. This alone does not demonstrate that this entry also covers
the electronic distribution of sound recordings. However, we recognize
the contextual relevance of the fact that the entry “Sound recording
distribution services” has been inscribed under the sector concerned
with audiovisual content, “Audiovisual Services”, as opposed to the
sector “Distribution Services”, which covers the distribution of
physical goods in China’s GATS Schedule. This, in our view, provides
contextual support for an interpretation of the entry “Sound recording
distribution services” as extending also to the distribution of
non-physical products.
G.1.2.1.9 China — Publications and Audiovisual Products, para.
374
(WT/DS363/AB/R)
We observe that the meaning of terms used in specific commitments
inscribed in Members’ Schedules is also informed by the rules in the
GATS itself that govern the scheduling of such commitments. Thus, in US
— Gambling, the Appellate Body examined “the context provided by
the structure of the GATS itself” in interpreting the relevant entry
in the United States’ GATS Schedule under Article 31 of the Vienna
Convention.
G.1.2.1.10 China — Publications and Audiovisual Products, para.
376
(WT/DS363/AB/R)
The provisions of the GATS itself, insofar as they concern the
scheduling of specific commitments, also provide relevant context for
the interpretation of specific commitments. Article I defines “trade
in services” as the supply of a service through the four modes of
supply. The GATS distinguishes four modes of supply, but does not
provide for further distinctions between forms of delivery. Article
XXVIII(b) of the GATS defines the “supply of a service” as including
“the production, distribution, marketing, sale and delivery of a
service”. Article XX of the GATS requires each Member to set out in a
Schedule the specific commitments it undertakes and to specify by sector
any limitations, conditions, or qualifications on market access and
national treatment, and any additional commitments. Members undertake
specific commitments in sectors or subsectors and according to the four
modes of supply. The GATS also allows Members to circumscribe the scope
of their commitments by qualifying the scope of sectors or subsectors
inscribed in the Schedule, by including or excluding modes of supply,
and by listing limitations, qualifications, or conditions on market
access and national treatment.
G.1.2.1.11 China — Publications and Audiovisual Products, para.
377
(WT/DS363/AB/R)
We observe that, unless a sector is included in a Schedule, it is not
subject to specific commitments. However, having included a sector or
subsector and having specified commitments for one or more modes of
supply in its Schedule, a Member undertakes to liberalize “the
production, distribution, marketing, sale and delivery” of the
service(s) falling within that sector or subsector and mode(s) of
supply, unless it has specified otherwise by inserting conditions,
limitations, or qualifications in the Schedule. This implies that, in
the absence of specific limitations, conditions, or qualifications, the
meaning of “Sound recording distribution services” is not limited to
the physical delivery of sound recordings. Rather, this entry would
encompass distribution in electronic form.
G.1.2.1.12 China — Publications and Audiovisual Products, para.
379
(WT/DS363/AB/R)
The definition of “supply of a service” in Article XXVIII(b) of
the GATS would not in itself exclude the possibility of drafting a
Schedule entry in a way that covers only the distribution of physical
goods. However, the interpretative question in this dispute is whether
China’s entry has been formulated in such a way. It is clear that the
term “distribution” as used in Article XXVIII(b) of the GATS refers
to the distribution of something intangible — services. We agree with
the Panel that this is relevant context in interpreting the meaning of
the term “distribution” in China’s entry “Sound recording
distribution services” in its GATS Schedule, and that Article XXVIII(b)
of the GATS lends support to an interpretation of the term “distribution”
in the relevant entry in China’s Schedule as covering the distribution
of both tangible and intangible products.
G.1.2.1.13 China — Publications and Audiovisual Products, para.
393
(WT/DS363/AB/R)
… At the same time, we observe that none of the objectives listed
in the GATS preamble provides specific guidance as to the correct
interpretation to be given to China’s GATS Schedule entry “Sound
recording distribution services”.
G.1.2.1.14 China — Publications and Audiovisual Products, para.
394
(WT/DS363/AB/R)
The principle of progressive liberalization is reflected in the
structure of the GATS, which contemplates that WTO Members undertake
specific commitments through successive rounds of multilateral
negotiations with a view to liberalizing their services markets
incrementally, rather than immediately and completely at the time of the
acceptance of the GATS. The scheduling of specific commitments by
service sectors and modes of supply represents another manifestation of
progressive liberalization. In making specific commitments, Members are
not required to liberalize fully the chosen sector, but may limit the
coverage to particular subsectors and modes of supply and maintain
limitations, conditions, or qualifications on market access and national
treatment, provided that they are inscribed in their Schedules. We do
not consider, however, that the principle of progressive liberalization
lends support to an interpretation that would constrain the scope and
coverage of specific commitments that have already been undertaken by
Members and by which they are bound.
G.1.2.1.15 China — Publications and Audiovisual Products, para.
395
(WT/DS363/AB/R)
Neither are we persuaded that, if the Panel had based its analysis on
the meanings of the terms “sound recording” and “distribution”
at the time of China’s accession to the WTO — that is, 2001 — it
would have reached a different conclusion on the interpretation of the
entry “Sound recording distribution services” in China’s GATS
Schedule. The term “sound recording” can be used to refer to “recorded
content”, irrespective of how it is distributed. We have already
considered above that the GATS, which entered into force in 1995,
contemplates in Article XXVIII(b) the distribution of services — that
is, of intangibles. This lends support to interpreting the meaning of
“distribution” as applying to both tangible and intangible products,
and would equally have done so in 2001, and at the time the Panel
interpreted the entry “Sound recording distribution services” in
China’s GATS Schedule.
G.1.2.1.16 China — Publications and Audiovisual Products, para.
396 and footnote 705
(WT/DS363/AB/R)
More generally, we consider that the terms used in China’s GATS
Schedule (“sound recording” and “distribution”) are sufficiently
generic that what they apply to may change over time. In this respect,
we note that GATS Schedules, like the GATS itself and all WTO
agreements, constitute multilateral treaties with continuing obligations
that WTO Members entered into for an indefinite period of time,
regardless of whether they were original Members or acceded after
1995.705
G.1.2.1.17 China — Publications and Audiovisual Products, para.
397
(WT/DS363/AB/R)
We further note that interpreting the terms of GATS specific
commitments based on the notion that the ordinary meaning to be
attributed to those terms can only be the meaning that they had at the
time the Schedule was concluded would mean that very similar or
identically worded commitments could be given different meanings,
content, and coverage depending on the date of their adoption or the
date of a Member’s accession to the treaty. Such interpretation would
undermine the predictability, security, and clarity of GATS specific
commitments, which are undertaken through successive rounds of
negotiations, and which must be interpreted in accordance with customary
rules of interpretation of public international law.
G.1.2.2 RELEVANCE OF THE CENTRAL PRODUCT CLASSIFICATION (CPC),
SERVICES SECTORAL CLASSIFICATION LIST (W/120) AND SCHEDULING GUIDELINES
G.1.2.2.1 US — Gambling, para. 175
(WT/DS285/AB/R, WT/DS285/AB/R/Corr.1)
We note that Article 31(2) refers to the agreement or acceptance
of the parties. In this case, both W/120 and the 1993 Scheduling
Guidelines were drafted by the GATT Secretariat rather than the parties
to the negotiations. It may be true that, on its own, authorship by a
delegated body would not preclude specific documents from falling within
the scope of Article 31(2). However, we are not persuaded that in this
case the Panel could find W/120 and the 1993 Scheduling Guidelines to be
context. Such documents can be characterized as context only where there
is sufficient evidence of their constituting an “agreement relating to
the treaty” between the parties or of their “accept[ance by the
parties] as an instrument related to the treaty”.
G.1.2.2.2 US — Gambling, paras. 176, 178
(WT/DS285/AB/R, WT/DS285/AB/R/Corr.1)
We do not accept, as the Panel appears to have done, that, simply by
requesting the preparation and circulation of these documents and using
them in preparing their offers, the parties in the negotiations have
accepted them as agreements or instruments related to the treaty.
Indeed, there are indications to the contrary. As the United States
pointed out before the Panel, the United States and several other
parties to the negotiations clearly stated, at the time W/120 was
proposed, that, although Members were encouraged to follow the broad
structure of W/120, it was never meant to bind Members to the CPC
definitions, nor to any other “specific nomenclature”, and that “the
composition of the list was not a matter for negotiations”. Similarly,
the Explanatory Note that prefaces the Scheduling Guidelines itself
appears to contradict the Panel in this regard, as it expressly provides
that, although it is intended to assist “persons responsible for
scheduling commitments”, that assistance “should not be considered
as an authoritative legal interpretation of the GATS”.
…
… therefore, the Panel erred in categorizing W/120 and the 1993
Scheduling Guidelines as “context” for the interpretation of the
United States’ GATS Schedule. …
G.1.2.2.3 US — Gambling, para. 179
(WT/DS285/AB/R, WT/DS285/AB/R/Corr.1)
… the United States’ Schedule … makes no reference to CPC
codes. The Schedule does, however, refer to W/120 in two instances,
apparently in order to make clear that the United States’ commitment
corresponds to only part of a subsector listed in W/120. This
suggests that, at least for some of its entries, the United States also
expressly referred to W/120 in order to define the content of a
Schedule entry and, thereby, limit the scope of its specific
commitment. …
G.1.2.2.4 US — Gambling, para. 180
(WT/DS285/AB/R, WT/DS285/AB/R/Corr.1)
We move … to examine the context provided by the structure of the
GATS itself. … To us, the structure of the GATS necessarily
implies two things. First, because the GATS covers all services
except those supplied in the exercise of governmental authority, it
follows that a Member may schedule a specific commitment in respect of any
service. Secondly, because a Member’s obligations regarding a
particular service depend on the specific commitments that it has made
with respect to the sector or subsector within which that service falls,
a specific service cannot fall within two different sectors or
subsectors. In other words, the sectors and subsectors in a Member’s
Schedule must be mutually exclusive. In the context of the United States’
Schedule, this means that, notwithstanding the broad language used in
sector 10 — for example, “recreational services”, “sporting”,
and “entertainment services”
— gambling and betting services can only
fall
— if at all
— within one of those service
categories.
G.1.2.2.5 US
— Gambling, para. 181
(WT/DS285/AB/R, WT/DS285/AB/R/Corr.1)
… Article 22.3(f) of the DSU provides that, for purposes of
suspending concessions, “sector’ means … (ii) with respect to
services, a principal sector as identified in the current ‘Services
Sectoral Classification List’ which identifies such sectors”. A
footnote adds that “[t]he list in document MTN.GNS/W/120 identifies
eleven sectors.” This reference confirms the relevance of W/120 to the
task of identifying service sectors in GATS Schedules, but does not
appear to assist in the task of ascertaining within which subsector of
a Member’s Schedule a specific service falls.
G.1.2.2.6 US — Gambling, para. 182
(WT/DS285/AB/R, WT/DS285/AB/R/Corr.1)
… other Members’ Schedules constitute relevant context for the
interpretation of subsector 10.D of the United States’ Schedule. …
At the same time, as the Panel rightly acknowledged, use of other
Members’ Schedules as context must be tempered by the recognition that
“[e]ach Schedule has its own intrinsic logic, which is different from
the US Schedule.”
G.1.2.2.7 US — Gambling, para. 183
(WT/DS285/AB/R, WT/DS285/AB/R/Corr.1)
… the United States’ Schedule, like the Schedules of nearly all
Members, generally follows the structure, and adopts the language, of
W/120. These structural and linguistic similarities lead us to conclude,
contrary to the United States submission, that the absence of references
to CPC codes does not mean that words used in the United States’
Schedule must have a different meaning and scope than the same
words used in the Schedules of other Members.
G.1.2.2.8 US — Gambling, para. 186
(WT/DS285/AB/R, WT/DS285/AB/R/Corr.1)
… we find it significant that the entries made by many Members in
sector 10 of their Schedules contain text additional to the text found
in the headings and sub-headings used by the United States (and used in
W/120). Such Members disaggregated their entries beyond the five
subsectors identified in W/120 as falling within sector 10. There is a
broad range of ways in which this was accomplished. … This
context indicates that Members seeking to distinguish the commitments
they were making regarding gambling and betting services from other
commitments they were making in subsector 10.D used specific language
and/or CPC codes to indicate this distinction. …
G.1.2.2.9 US — Gambling,
paras. 192-193
(WT/DS285/AB/R, WT/DS285/AB/R/Corr.1)
… in order for “practice” within the meaning of Article
31(3)(b) to be established: (i) there must be a common, consistent,
discernible pattern of acts or pronouncements; and (ii) those
acts or pronouncements must imply agreement on the interpretation
of the relevant provision.
… Although the 2001 Guidelines were explicitly adopted by the
Council for Trade in Services, this was in the context of the
negotiation of future commitments and in order to assist in the
preparation of offers and requests in respect of such commitments. As
such, they do not constitute evidence of Members’ understanding
regarding the interpretation of existing commitments.
Furthermore, as the United States emphasized before the Panel, in its
Decision adopting the 2001 Guidelines, the Council for Trade in Services
explicitly stated that they were to be “nonbinding” and “shall not
modify any rights or obligations of the Members under the GATS”.
Accordingly, we do not consider that the 2001 Guidelines, in and of
themselves, constitute “subsequent practice” within the meaning of
Article 31(3)(b) of the Vienna Convention.
G.1.2.2.10 US
— Gambling, paras. 196-197
(WT/DS285/AB/R, WT/DS285/AB/R/Corr.1)
… this appeal does not raise the question whether W/120 and
the 1993 Scheduling Guidelines constitute “supplementary means of
interpretation, including the preparatory work of the treaty and the
circumstances of its conclusion”. Both participants agree that they
do, and we see no reason to disagree.
… a proper interpretation pursuant to the principles codified in
Article 31 of the Vienna Convention does not yield a clear
meaning as to the scope of the commitment made by the United States in
the entry “Other recreational services (except sporting)”.
Accordingly, it is appropriate to have recourse to the supplemental
means of interpretation identified in Article 32 of the Vienna
Convention. These means include W/120, the 1993 Scheduling
Guidelines, and a cover note attached to drafts of the United States’
Schedule.
G.1.2.2.11 US
— Gambling, paras. 199-200
(WT/DS285/AB/R, WT/DS285/AB/R/Corr.1)
… W/120 does not, however, contain any explicit indication of: (i)
whether the reference to Group 964 necessarily incorporates a reference
to each and every sub-category of Group 964 within the CPC; or
(ii) how W/120 relates to the GATS Schedules of individual Members.
… W/120 sets out a much more aggregated classification list than
the one found in the CPC. … the CPC’s level of disaggregation
was one of the very reasons it was selected as a basis for a sectoral
classification list. As the CPC is a decimal system, a reference to an
aggregate category must be understood as a reference to all of the
constituent parts of that category. …
G.1.2.2.12 US
— Gambling, paras. 203-207
(WT/DS285/AB/R, WT/DS285/AB/R/Corr.1)
The Scheduling Guidelines thus underline the importance of using a
common format and terminology in scheduling, and express a clear
preference for parties to use W/120 and the CPC classifications in their
Schedules. At the same time, the Guidelines make clear that parties
wanting to use their own subsectoral classification or definitions
— that is, to disaggregate in a way that diverges from W/120 and/or the
CPC
— were to do so in a “sufficiently detailed” way “to avoid
any ambiguity as to the scope of the commitment”. The example given in
the Scheduling Guidelines illustrates how to make a positive commitment
with respect to a discrete service that is more disaggregated than a
service subsector identified in W/120. It is reasonable to assume that
the parties to the negotiations expected the same technique to be
applied to exclude a discrete service from the scope of a
commitment, when the commitment is made in a subsector identified in
W/120 and the excluded service is more disaggregated than that subsector.
In our view, the requisite clarity as to the scope of a commitment
could not have been achieved through mere omission of CPC codes,
particularly where a specific sector of a Member’s Schedule, such as
sector 10 of the United States’ Schedule, follows the structure of
W/120 in all other respects, and adopts precisely the same
terminology as used in W/120. … W/120 and the 1993 Scheduling
Guidelines were prepared and circulated … for the express purpose of
assisting those parties in the preparation of their offers. These
documents undoubtedly served, too, to assist parties in reviewing and
evaluating the offers made by others. They provided a common language
and structure which, although not obligatory, was widely used and relied
upon. In such circumstances, and in the light of the specific guidance
provided in the 1993 Scheduling Guidelines, it is reasonable to assume
that parties to the negotiations examining a sector of a Schedule that
tracked so closely the language of the same sector in W/120 would
— absent a clear indication to the contrary
— have expected the sector
to have the same coverage as the corresponding W/120 sector. This is
another way of stating that, as the Panel observed, “unless otherwise
indicated in the Schedule, Members were assumed to have relied on W/120
and the corresponding CPC references”.
Accordingly, the above excerpt from the 1993 Scheduling Guidelines,
together with the linguistic similarities between the two subsectors,
provide strong support for interpreting subsector 10.D of the United
States’ Schedule as corresponding to subsector 10.D of W/120,
notwithstanding the absence of CPC codes in the United States’
Schedule. …
… another element of the preparatory work of the GATS suggests that
the United States itself understood the Scheduling Guidelines in this
way and sought to comply with them in the drafting of its GATS Schedule.
Several drafts of the United States’ Schedule included [a] cover note
[which confirms] …
… that the United States used W/120 and sought to follow the 1993
Scheduling Guidelines. …
Article XIV. See General Exceptions: Article XIV of GATS
(G.4)
G.1.3 Article XVI
— Market access
back to top
G.1.3.1 GENERAL
G.1.3.1.1 US
— Gambling, para. 214
(WT/DS285/AB/R, WT/DS285/AB/R/Corr.1)
Article XVI of the GATS sets out specific obligations for Members
that apply insofar as a Member has undertaken “specific market access
commitments” in its Schedule. The first paragraph of Article XVI
obliges Members to accord services and service suppliers of other
Members “no less favourable treatment than that provided for under the
terms, limitations and conditions agreed and specified in its Schedule”.
The second paragraph of Article XVI defines, in six sub-paragraphs,
measures that a Member, having undertaken a specific commitment, is not
to adopt or maintain, “unless otherwise specified in its Schedule”.
The first four sub-paragraphs concern quantitative limitations on market
access; the fifth sub-paragraph covers measures that restrict or require
specific types of legal entity or joint venture through which a service
supplier may supply a service; and the sixth sub-paragraph identifies
limitations on the participation of foreign capital.
G.1.3.1.2 US — Gambling, para. 215
(WT/DS285/AB/R, WT/DS285/AB/R/Corr.1)
… the relevant entry for mode 1 supply in the market access column
of subsector 10.D of the United States’ Schedule reads “None”. In
other words, the United States has undertaken to provide full market
access, within the meaning of Article XVI, in respect of the services
included within the scope of its subsector 10.D commitment. …
G.1.3.2 ARTICLE XVI:1 — RELATION TO PARAGRAPH 2
G.1.3.2.1 US
— Gambling, para. 256
(WT/DS285/AB/R, WT/DS285/AB/R/Corr.1)
Antigua conditionally appeals [the Panel’s finding that the
restrictions on market access that are covered by Article XVI are only
those listed in paragraph 2 of this Article]. … Having upheld
the Panel’s interpretation of sub-paragraphs (a) and (c) of Article
XVI:2 and dismissed this ground of the United States’ appeal, it
follows that the condition on which this aspect of Antigua’s appeal is
made is not satisfied, and we need not consider it further. We
thus leave the issue of the relationship between the first and second
paragraphs of Article XVI to another day.
G.1.3.3 ARTICLE XVI:2 — CHEPEAU
G.1.3.3.1 US
— Gambling, para. 233
(WT/DS285/AB/R, WT/DS285/AB/R/Corr.1)
… the chapeau to Article XVI:2 … contemplates circumstances in
which a Member’s Schedule includes a commitment to allow market
access, and points out that the function of the sub-paragraphs in
Article XVI:2 is to define certain limitations that are prohibited
unless specifically entered in the Member’s Schedule. Plainly, the
drafters of sub-paragraph (a) had in mind limitations that would impose
a maximum limit of above zero. Similarly, Article II:1(b) of the
GATT 1994 prohibits Members from imposing duties “in excess of” the
bound duty rate. Such bound duty rate will usually be above zero.
Yet this does not mean that Article II:1(b) does not also refer to bound
rates set at zero.
G.1.3.3.2 China — Publications and Audiovisual Products, para.
387
(WT/DS363/AB/R)
As we have considered above, while certain elements of context
clearly support the Panel’s interpretation of “Sound recording
distribution services” as extending to the electronic distribution of
sound recordings, other elements considered by the Panel are consistent
with or do not contradict such an interpretation of the scope of this
commitment. On balance, we are persuaded that the analysis of a number
of contextual elements supports the interpretation of China’s
commitment on “Sound recording distribution services” as including
the electronic distribution of sound recordings.
G.1.3.3.3 China — Publications and Audiovisual Products, para.
388
(WT/DS363/AB/R)
We further note that the Panel did not regard any of the specific
elements it reviewed under Article 31 of the Vienna Convention as
in and of itself “conclusive” as to the question of whether “Sound
recording distribution services” should be interpreted as encompassing
electronic distribution. Rather, the Panel was careful to distinguish
among: elements that support such an interpretation; elements that are
consistent with the interpretation; and elements that offer no guidance.
In this regard, we consider that China’s claim, that each of the
interpretative elements reviewed by the Panel is “inconclusive” with
respect to the interpretation of “Sound recording distribution
services”, overlooks the nature of the interpretative exercise to be
undertaken under Article 31 of the Vienna Convention.
G.1.3.4 ARTICLE XVI:2(A) — “LIMITATIONS ON THE NUMBER OF SERVICE
SUPPLIERS”
G.1.3.4.1 US
— Gambling, para. 225
(WT/DS285/AB/R, WT/DS285/AB/R/Corr.1)
Article XVI:2(a) … refers to restrictions “on the number of
service suppliers”, as well as to “numerical quotas”. These
words reflect that the focus of Article XVI:2(a) is on limitations
relating to numbers or, put differently, to quantitative limitations.
G.1.3.4.2 US — Gambling, para. 226
(WT/DS285/AB/R, WT/DS285/AB/R/Corr.1)
… dictionary definitions … suggest a degree of ambiguity as to
the scope of the word “form”. For example, “form” covers both
the mode in which a thing “exists”, as well as the mode in which it
“manifests itself”. This suggests a broad meaning for the term “form”.
G.1.3.4.3 US — Gambling, para. 227
(WT/DS285/AB/R, WT/DS285/AB/R/Corr.1)
The words “in the form of” in sub-paragraph (a) relate to all
four of the limitations identified in that provision. It follows, in our
view, that the four types of limitations, themselves, impart meaning to
“in the form of”. … a “numerical quota” within Article
XVI:2(a) appears to mean a quantitative limit on the number of service
suppliers. The fact that the word “numerical” encompasses things
which “have the characteristics of a number” suggests that
limitations “in the form of a numerical quota” would encompass
limitations which, even if not in themselves a number, have the
characteristics of a number. Because zero is quantitative in
nature, it can, in our view, be deemed to have the “characteristics of”
a number — that is, to be “numerical”.
G.1.3.4.4 US
— Gambling, paras. 230-231
(WT/DS285/AB/R, WT/DS285/AB/R/Corr.1)
… [the definitions of a “monopoly supplier of a service” in
Article XXVII(h) and of “exclusive service suppliers” in Article
VIII:5] suggest that the reference, in Article XVI:2(a), to limitations
on the number of service suppliers “in the form of monopolies and
exclusive service suppliers” should be read to include limitations
that are in form or in effect, monopolies or exclusive service
suppliers.
… it is not clear that “limitations on the number of service
suppliers … in the form of … the requirements of an economic needs
test” must take a particular “form”. Thus, this fourth type of
limitation, too, suggests that the words “in the form of” must not
be interpreted as prescribing a rigid mechanical formula.
G.1.3.4.5 US
— Gambling, para. 232
(WT/DS285/AB/R, WT/DS285/AB/R/Corr.1)
This is not to say that the words “in the form of” should be
ignored or replaced by the words “that have the effect of”. Yet, at
the same time, they cannot be read in isolation. Rather, when viewed as
a whole, the text of sub-paragraph (a) supports the view that the words
“in the form of” must be read in conjunction with the words that
precede them — “limitations on the number of service
suppliers”
— as well as the words that follow them, including the
words “numerical quotas” (emphasis added). Read in this way,
it is clear that the thrust of sub-paragraph (a) is not on the form of
limitations, but on their numerical, or quantitative,
nature.
G.1.3.4.6 US
— Gambling, paras. 236-238
(WT/DS285/AB/R, WT/DS285/AB/R/Corr.1)
… examination of the words of Article XVI:2(a) read in their
context and in the light of the object and purpose of the GATS suggests
that the words “in the form of” do not impose the type of precisely
defined constraint that the United States suggests. Yet certain
ambiguities about the meaning of the provision remain. The Panel, at
this stage of its analysis, observed that any suggestion that the “form”
requirement must be strictly interpreted to refer only to
limitations “explicitly couched in numerical terms” leads to “absurdity”.
In either circumstance, this is an appropriate case in which to have
recourse to supplementary means of interpretation, such as preparatory
work.
… the 1993 Scheduling Guidelines … setout an example of the type
of limitation that falls within the scope of sub-paragraph (a) of
Article XVI:2 … That example is: “nationality requirements for
suppliers of services (equivalent to zero quota)”. This example
confirms the view that measures equivalent to a zero quota fall within
the scope of Article XVI:2(a).
… limitations amounting to a zero quota are quantitative
limitations and fall within the scope of Article XVI:2(a).
G.1.3.5 ARTICLE XVI:2(C) — “LIMITATIONS ON THE TOTAL NUMBER OF
SERVICE OPERATIONS”
G.1.3.5.1 US
— Gambling, para. 245
(WT/DS285/AB/R, WT/DS285/AB/R/Corr.1)
… we are not persuaded that the key to the interpretation of this
particular provision is to be found in a careful dissection of the use
of commas within its grammatical structure. Regardless of which language
version is analysed, and of the implications of comma placement (or lack
thereof), all three language versions are grammatically
ambiguous. All three can arguably be read as identifying two limitations
on the total number of service operations or on the total quantity of
service output. All three can also arguably be read as identifying three
limitations on the total number of service operations or on the
total quantity of service output. The mere presence or absence of a
comma in Article XVI:2(c) is not determinative of the issue before us.
G.1.3.5.2 US — Gambling, para. 246
(WT/DS285/AB/R, WT/DS285/AB/R/Corr.1)
We find it more useful, and appropriate, to look to the language of
the provision itself for its meaning. Looking at the provision
generally, we see that the first clause of sub-paragraph (c) deals with
the target of the limitations covered by that provision. There
are two such types of limitations: on the number of service operations;
and on the quantity of service output. Both are quantitative in
nature. The second part of the provision provides more detail as to the type
of limitations — relating to those service operations or output
— that fall within sub-paragraph (c). These are: “designated
numerical units in the form of quotas or the requirement of an economic
needs test”. The second part of the provision clearly modifies the
first part of the provision (service operations, service output). Yet
certain elements of the second part apply differently to the two
elements of the first part. For example, in its ordinary sense, the term
“numerical units” is more naturally used to refer to “output”
than to “operations”.
G.1.3.5.3 US
— Gambling, para. 247
(WT/DS285/AB/R, WT/DS285/AB/R/Corr.1)
In our view, by combining, in sub-paragraph (c), the elements of the
first clause of Article XVI:2(c) and the elements in the second part of
the provision, the parties to the negotiations sought to ensure that
their provision covered certain types of limitations, but did not feel
the need to clearly demarcate the scope of each such element. On the
contrary, there is scope for overlap between such elements: between
limitations on the number of service operations and limitations on the
quantity of service output, for example, or between limitations in the
form of quotas and limitations in the form of an economic needs test.
That sub-paragraph (c) applies in respect of all four modes of supply
under the GATS also suggests the limitations covered there under cannot
take a single form, nor be constrained in a formulaic manner.
Nonetheless, all types of limitations in sub-paragraph (c) are
quantitative in nature, and all restrict market access. For these
reasons, we are of the view that, even if sub-paragraph (c) is
read as referring to only two types of limitations, as contended
by the United States, it does not follow that sub-paragraph (c) would
not catch a measure equivalent to a zero quota.
G.1.3.5.4 US — Gambling, para. 248
(WT/DS285/AB/R, WT/DS285/AB/R/Corr.1)
… we consider it useful to resort to supplementary means of
interpretation. The market access obligations set forth in Article XVI
were intended to be obligations in respect of quantitative, or
“quantitative-type”, measures. The difficulties faced by the
negotiating parties concerned not whether Article XVI covered
quantitative measures — for it was clear that it did
— but rather
how to “know where the line should be drawn between quantitative and
qualitative measures”.
G.1.3.5.5 US
— Gambling, para. 250
(WT/DS285/AB/R, WT/DS285/AB/R/Corr.1)
The strict interpretation of Article XVI:2(c) advanced by the United
States would imply that only limitations that contain an express
reference to numbered units could fall within the scope of that
provision. Under such an interpretation, sub-paragraph (c) could not
cover, for example, a limitation expressed as a percentage or described
using words such as “a majority”. It is neither necessary nor
appropriate for us to draw, in the abstract, the line between
quantitative and qualitative measures, and we do not do so here. Yet we
are satisfied that a prohibition on the supply of services in respect of
which a full market access commitment has been undertaken is a
quantitative limitation on the supply of such services.
G.1.3.6 ARTICLE XVI:2 — MEASURES DIRECTED AT CONSUMERS
G.1.3.6.1 US
— Gambling, paras. 253-254
(WT/DS285/AB/R, WT/DS285/AB/R/Corr.1)
Antigua also appeals the Panel’s findings that certain measures
that prohibit consumers from purchasing cross-border gambling
services are not caught by either sub-paragraph (a) or sub-paragraph (c)
of Article XVI:2. The Panel applied its analysis of these provisions to
find that four state laws directed at persons who engage in gambling
— that is, to consumers of gambling services as opposed to suppliers
of gambling services
— had not been shown to be inconsistent with
the United States’ market access commitments.
… Having held that the Panel was not entitled to make findings on any
of the eight state laws, including with respect to the four state
laws directed at consumers rather than suppliers of
gambling services, we need not, in resolving this appeal, consider the
merits of Antigua’s appeal of the Panel’s findings with respect to
restrictions on service consumers as opposed to service suppliers.
Article II. See MFN Treatment, Article II of the GATS
(M.2.2)
Article XVII. See National Treatment, Article XVII of the GATS
(N.1.13)
705. We consider such reading of the terms in China’s GATS Schedule
to be consistent with the approach taken in US
— Shrimp, where
the Appellate Body interpreted the term “exhaustible natural resources”
in Article XX(g) of the GATT 1994 (Appellate Body Report, US —
Shrimp, paras. 129 and 130). back to text
We observe that the International Court of Justice, in Costa Rica
v. Nicaragua, found that the term “comercio” (“commerce”),
contained in an 1858 “Treaty of Limits” between Costa Rica and
Nicaragua, should be interpreted as referring to both trade in goods and
trade in services, even if, at the time of the conclusion of the treaty,
such term was used to refer only to trade in goods (International Court
of Justice, Judgment, Case concerning the Dispute regarding
Navigational and Related Rights (Costa Rica v. Nicaragua), 13 July
2009).
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