Faculteit Rechtsgeleerdheid Academiejaar 2009-2010

THE PROBLEM OF GATT/WTO LAW IN THE EUROPEAN

UNION LEGAL ORDER

Promotor: Prof. Dr. M. Maresceau

Commissaris: Prof. Dr. P. Van Elsuwege

Master in de Rechten Marieke Van Hoecke

20052327

2 Word of gratitude

Word of gratitude

Thanks to my father who has always encouraged, inspired, challenged and supported me.

Thanks to my friends and especially to Arno for taking my mind of this thesis when I needed

it the most. Thanks to professor Maresceau for passing on his passion for European law.

Ghent, May 2010.

3 <Table of Contents

Table of Contents Word of gratitude ...................................................................................................................... 2

Table of Contents ...................................................................................................................... 3

Introduction ............................................................................................................................... 6

A. GATT/WTO ...................................................................................................................... 7

I. A brief history: from international agreement to fully fletched international organisation .......................................................................................................................... 7

II. Two institutional aspects with specific relevance to the ECJ’s case law ...................... 8

§1. Dispute Settlement................................................................................................ 8

i. Evolution ............................................................................................................... 8

ii. Headlines and procedure of today’s dispute settlement system ......................... 10

ii.a. Procedure in the framework of the Dispute Settlement Body ..................... 11

ii.b. Implementation of the recommendation or ruling ....................................... 12

ii.c. The Banana Dispute: a striking example ..................................................... 14

ii. Possible future reforms of the dispute settlement system: Doha ......................... 18

ii.a. Weaknesses of the current system and proposals for improvement ............ 18

ii.a.a. Implementation ...................................................................................... 19

ii.a.b. Flexibility and member control ............................................................. 21

ii.b. Negotiating the DSU: a never-ending story ................................................ 22

§2. Agreement on establishing the World Trade Organization: art. IX and XVI ...... 23

i. Article IX WTO: Decision making .................................................................... 24

ii. Article XVI WTO: National law ........................................................................ 25

§3. Conclusion ........................................................................................................... 27

B. GATT/WTO law in the European Union’s legal order: a lack of direct effect ............... 28

I. The invocability of international agreements .............................................................. 28

II. The basics: from International Fruit Company to Van Parys ..................................... 30

§1. The GATT 1947 and the ECJ: .......................................................................... 30

i. Preliminary remark .............................................................................................. 30

ii. International Fruit Company ............................................................................... 31

iii. Fediol and Nakajima............................................................................................ 34

iii.a. Fediol .......................................................................................................... 34

iii.b. Nakajima .................................................................................................... 35

iv. Germany v. Council............................................................................................. 37

§2. The WTO Agreement in the EU’s legal order .................................................... 38

4 <Table of Contents

i. Hermès and T-Port .............................................................................................. 39

ii. Portugal v. Council .............................................................................................. 40

iii. Biret ..................................................................................................................... 43

iv. Van Parys ............................................................................................................ 45

v. FIAMM and Fedon .............................................................................................. 47

v.a. Judgments of the General Court ................................................................ 48

v.b. Judgment of the ECJ .................................................................................. 51

§3. Conclusion ........................................................................................................... 54

III. The interpretation of WTO law despite lack of direct effect .................................... 55

C. The ECJ and its GATT/WTO rulings: subject of towering discussions .......................... 57

I. An insiders point of view: the Advocates General ...................................................... 57

§1. The ECJ, the Advocates General and the GATT 1947: kindred spirits .............. 58

i. Advocate General Mayras: ahead of the ECJ in denying the GATT direct effect. . ............................................................................................................................. 58

ii. Advocate General Van Gerven on limited invocability in the absence of direct effect ............................................................................................................................ 59

iii. Advocate General Gulmann as advocate for a very restrictive approach ............ 62

§2. The WTO era: differences in opinion ................................................................. 64

i. Advocate General Cosmas: no new insights... yet .............................................. 64

ii. Advocate General Tesauro paved the way ......................................................... 65

iii. Advocate General Saggio in Portugal v Council: a stronghold under fire .......... 68

iv. Advocate General Alber in Omega and Biret ...................................................... 71

iv.a. Omega: changing the terms of debate ........................................................ 71

iv.b. Alber on the effect of DSB recommendations and rulings in Biret ............ 72

v. Advocate General Tizzano Van Parys ................................................................. 75

vi. Advocate General Maduro: firm but fair ............................................................. 77

vi.a. No direct effect of WTO law ...................................................................... 77

vi.b. Maduro on the principle of no-fault liability of the EU ............................. 78

§3. Conclusion .......................................................................................................... 81

II. Divergent perceptions and interpretations in legal doctrine ...................................... 82

§1. The relationship between GATT/WTO law and the EU legal order: an international law perspective ........................................................................................... 83

§2. The ECJ’s conservative approach: criticism and support ................................... 86

i. The ECJ’s reasoning: judicial self-restraint ......................................................... 86

5 <Table of Contents

i.a. The reciprocity argument ........................................................................... 86

i.b. The flexibility argument ............................................................................. 88

ii. Appreciation of the ECJ’s conclusion despite heavy criticism on its reasoning 91

ii.a. Direct actions by Member States ................................................................. 91

ii.b. The status of DSB decisions in an action for annulment pursuant to article 263 TFEU ................................................................................................................ 93

iii. Disagreement with both reasoning and conclusion ............................................. 95

iii.a. The status of DSB decisions in an action for damages pursuant to article 340 TFEU ................................................................................................................ 95

iii.b. No-fault Union liability: FIAMM ............................................................... 97

§3. Alternatives – indirect effect ............................................................................. 100

i. Nakajima en Fediol............................................................................................ 101

ii. Consistent interpretation .................................................................................... 103

iii. Muted dialogue .................................................................................................. 104

Conclusion ............................................................................................................................. 105

Abstract in Dutch................................................................................................................... 107

Bibliography .......................................................................................................................... 108

6 Introduction

The problem of GATT/WTO law in the European Union’s legal order

Introduction

“ A recommendation or a ruling of the DSB finding that the substantive rules contained in the

WTO agreements have not been complied with is, whatever the precise legal effect attaching

to such a recommendation or ruling, no more capable than those rules of conferring upon

individuals a right to rely thereon before the Community [Union] courts for the purpose of

having the legality of the conduct of the Community [Union] institutions reviewed.” 1

“In the light of all the foregoing considerations, it must be concluded that, as Community

[Union] law currently stands, no liability regime exists under which the Community [Union]

can incur liability for conduct falling within the sphere of its legislative competence in a

situation where any failure of such conduct to comply with the WTO agreements cannot be

relied upon before the Community [Union] courts.” 2

1. Until further notice this is the ECJ finishing point on the question whether GATT/WTO

law has direct effect in the European Union’s legal order. This is however a question that

rises above pure legal relevance, it is the reflection of an area of tension that grows stronger

as the integration of the EC continues: the interface between protecting and regulating the

European internal market and living up to international free trade standards. Only bearing in

mind this broader context, one can fully understand the legal issues that result from it.

2. The purpose of this dissertation is to provide a complete survey of the current situation

regarding the direct effect – or should one say the lack of direct effect – of WTO/GATT law

in the European Union. This will include an extensive review of the European Courts’ case

law, linked to a discerning analysis from the point of view of both doctrine and the advocates

general. This should allow us to place the issue in a broader context, and to formulate some

own thoughts on how to deal with the problem in the future.

1 ECJ joined cases C-120/06 and 121/06, Fabbrica italiana accumulatori motocarri Montecchio SpA (FIAMM) and others v Council and Commission, ECR 2008 I -0000, § 129. 2 Ibid. at § 176.

7 GATT/WTO

A. GATT/WTO

I. A brief history: from international agreement to fully fletched international

organisation

3. When looking at the early years of regulation of world trade, one cannot ignore the

difference in intention. The General Agreement on Tariffs and Trade 1947 (GATT 1947) was

merely meant to establish a legal mechanism for tariff negotiations and to create rules

preventing protectionist market behaviour by the Contracting Parties.3 Although this

initiative was without precedent, the ideas that lie at its fundaments can hardly be called

pioneering. The Most Favoured Nation principle had been used very widely on a bilateral

basis long before the GATT 1947 was drafted: movements liberalising trade had emerged in

Europe decades earlier.4 The value of this global start of institutionalisation lay in its inclusive

character: the US and many others participated, giving world trade a boost. The attempt to

establish an International Trade Organisation was at that moment a bridge too far.5 However,

through practice and several negotiation rounds, the GATT 1947 acquired ever more political

and legal power. One can easily refer to this expansion as stealthy institution-building. By the

end of the century, the GATT 1947 seemed to operate as an international organisation.

4. This evolution was formalised in the creation of the World Trade Organisation in 1994.

Yet, the merits of the Uruguay Negotiation Round reach way beyond this formalisation.

When negotiations started in 1986, world trade suffered from many diseases: the second oil

shock from 1979, inflation, recession and protectionism. Not to mention a rising concern over

globalisation and a ideological change towards the free market that would only come to full

vigour after 1989 and the fall of communism. These circumstances were the impetus for the

largest trade negotiations ever. It took seven and a half years, almost twice the original

3 Preface, General Agreement on Tariffs and Trade, Geneva, July 1986 (www.wto.org), G. Winham, “The evolution of the world trading system – the economic an policy context”, in D. BETHLEHEM, D. MCRAE, R. NEUFELD, I. VAN DAMME , (eds.), The Oxford Handbook of International Trade Law, New York, Oxford University Press, 2009, 14. 4 Ibid., eg. Cobden – Chevalier Treaty, January 1860. The Most Favoured Nation principle obliges a State, when it grants a trade advantage to another State, to grant equal trade advantages to all other States which towards it has a MFN obligation. 5 Pieter Jan Kuijper even refers to the non-establishment of the ITO as a ‘historical accident’, the only reason that the organization was not set up was a change in composition and mood in the United States’ Congress. P. J. Kuijper, “WTO Institutional Aspects” in BETHLEHEM, MCRAE, NEUFELD, VAN DAMME, (eds.), cited supra note 3, 81-82.

8 GATT/WTO

schedule. But the outcome was a remarkable achievement in every sense: bringing down

protectionist agricultural walls, creating rules for boosting trade in services and intellectual

property, etc....6 In sum, the WTO Agreements reshaped multilateral trade relationships. The

effect of globalisation on the negotiations cannot be underestimated: it pressed governments

to adopt more liberal trade policies and it redefined the world’s perception of international

trade. As one observer captured it: “The reality is that global companies competing in global

markets ultimately require global rules.”7

II. Two institutional aspects with specific relevance to the ECJ’s case law

§1. Dispute Settlement

5. The GATT Dispute Settlement System and also the system under the WTO have been

the main obstacles in obtaining direct effect in the European Union’s legal order.8 This

chapter will give a brief overview of the evolution of the dispute settlement system and its

current characteristics.

i. Evolution

6. Articles XXII and XXIII GATT 1947 give very little information about the procedures

that had to be applied in dispute settlement:

“ The Contracting Parties shall promptly investigate any matter so referred to them and

shall make appropriate recommendations to the contracting parties which they consider to

be concerned, or give a ruling on the matter, as appropriate (...). If the Contracting Parties

consider that the circumstances are serious enough to justify such action, they may

authorize a contracting party or parties to suspend the application to any other contracting

6 Agreement Establishing the World Trade Organization, Marrakesh, 15 April 1994 (www.wto.org) [WTO Agreement], Agreement on Trade related aspects of intellectual property rights, annex 1 C to the Agreement Establishing the World Trade Organization, Marrakesh, 15 April 1994 (www.wto.org) [TRIPS], General Agreement on Trade in Services 1994, annex 1 A to the Agreement Establishing the World Trade Organization, Marrakesh, 15 April 1994 (www.wto.org). [GATS]. 7 G. FEKETEKUTY, The New Trade Agenda, Paris 1992, OECD, 29 cited in WINHAM , cited supra note 3, 23. 8 See infra §§ 55 - 103.

9 GATT/WTO

party or parties of such concessions or other obligations under this Agreement as they

determine to be appropriate in the circumstances.”.9

7. In practice, these provisions were the basis for the following, at times far-reaching,

developments. At the beginning, in the late 40’s, disputes were generally solved through

diplomatic procedures. More specifically at semi-annual meetings of the Contracting Parties.

Later on this task would be delegated to a ‘working party’, in which each of the Contracting

Parties was represented.10 In 1955 this approach was fundamentally changed through the

creation of ‘panels’ of experts. This meant a shift in emphasis from diplomacy to a more

juridical procedure as disputes would be referred to three or five experts. This adjustment

survived and was formalised in1979 in an Understanding of the Tokyo Round: until today

almost all disputes are firstly referred to a panel.11 Through the years the procedure was

refined by GATT case law and subsequent negotiation rounds. The Tokyo round is a perfect

example, providing for a detailed description of the procedure.12

8. Another development originates in the dispute settlement practice itself; in order for a

panel report to be binding, the Council had to approve it by consensus. The obvious problem

here being consensus, which allowed the losing Contracting Party to block the consequences

of the panel report. Although the use of panels had considerably decreased the importance of

diplomacy, this consensus in the Council was the reason why - even until the late 1980’s –

dispute settlement under the GATT remained a diplomatic affair.13

9. Furthermore a variety of procedures in side agreements led to disputes about which

procedure to use. A Contracting Party could prevent the establishment of a panel. The

wordings of the Understanding were not detailed enough with respect to goals or procedures

and some Contracting Parties had tried to influence the decision by putting pressure on some

9 Art. XXIII General Agreement on Tariffs and Trade, Geneva, July 1986 (www.wto.org) 10 J. JACKSON, “The evolution of the World trading system – the Legal and institutional context” in BETHLEHEM, MCRAE, NEUFELD, VAN DAMME (eds.), cited supra note 3, 46. 11 Understanding Regarding Notification, Consultation, Dispute Settlement and Surveillance adopted on 28 November 1979 (BISD 26S/210), especially at §§ 10 -21. However, the Group Framework Committee, entrusted with this task, did not obtain its original goal – improve and modernise the dispute settlement system - due to strong opposition of the EC. 12 J. JACKSON, “Dispute Settlement and the WTO – Emerging Problems”, Journal of International Economic Law 1998, 334. 13 V. HUGHES, “Settlement of Disputes – The Institutional Dimension” in D. BETHLEHEM, D. MCRAE, R. NEUFELD, I. VAN DAMME , (eds.), cited supra note 3, 270.

10 GATT/WTO

of the panellists.14 Consequently the dispute settlement system was referred to as ‘more

responsive to the interests of the strong than the interests of the weak’.15

10. Clearly, a lot could be improved at the outset of the Uruguay Round. A first step

towards change was made during the Uruguay Round’s midterm session in 1989.16 However,

the major improvements in the dispute settlement system are the result of the Understanding

on Rules and Procedures Governing the Settlement of Disputes in World Trade Organization

(hereinafter DSU).17 The DSU was adopted as a part of the WTO Agreements and is still

operative. The merit of the DSU lies in the elimination of the possibility to block a procedure

and a degree of ‘automaticity’ created by several measures. If anything, the DSU must be

considered as the next step towards ‘judicialization’ of the GATT/WTO dispute settlement

procedure.18

ii. Headlines and procedure of today’s dispute settlement system

11. The current provisions on dispute settlement contrast sharply with the scarcity of the

GATT 1947. The DSU provides a comprehensive scenario of how a dispute must be settled.

It provides both structure and detail. Starting with the objectives as put forward by Article 3.2

DSU, namely ‘to provide security and predictability to the multilateral trading system’. In

order to do so, it lies within the power of the panels and the Appellate Body ‘to preserve the

rights and obligations of Members under the covered agreements’ and ‘to clarify the existing

provisions in those agreements’.19

14 JACKSON, cited supra note 10, 48.

15 R HUDEC, Enforcing International Trade Law: The Evolution of the Modern GATT Legal System, Salem, N.H., Butterworths, 1993, 353. 16 Improvements to the GATT Dispute Settlement Rules and procedures, L/6489 (12 April 1989), BISD 36S/61. 17 Understanding on Rules and Procedures Governing the Settlement of Disputes in World Trade Organization, annex 2 to the Agreement Establishing the World Trade Organization, Marrakesh, 15 April 1994 (www.wto.org) [DSU]. 18 A. YANOVICH and W. ZDOUC, “Procedural and Evidentiary Issues” in BETHLEHEM, MCRAE, NEUFELD, VAN DAMME , (eds.), cited supra note 3, 347. 19 Article 3.2 DSU.

11 GATT/WTO

ii.a. Procedure in the framework of the Dispute Settlement Body

12. Article 4 DSU et seq provide for the actual procedure, which is formally initiated by

the request for consultations. This consultation phase is intended to achieve a mutually

agreeable settlement. More particularly, it is through consultations that parties ‘exchange

information, assess the strengths and weaknesses of their respective cases, narrow the scope

of the differences between them and, in many cases reach a mutually agreeable solution’.20

Article 4 puts forward several formal requirements, e.g. the request must be made in writing.

This phase has proven to be very successful in the past: approximately half of the requests for

consultations are solved in this stage and do not need any further litigation.21

13. Nevertheless, if consultations are unsuccessful, the complaining party may request the

establishment of a panel.22 This request must be submitted to the Dispute Settlement Body

(DSB) and distributed to all WTO Members. The DSB can only by consensus decide not to

establish the panel, as opposed to the practice under GATT 47, which required a consensus to

establish the panel.23 Subsequently, the panel is composed at the suggestion of the WTO

Secretariat. The parties can only object for compelling reasons.24 After a panel is composed, it

must adopt working procedures. The DSU does not impose a compulsory and uniform panel

procedure. A model working procedure is provided in Annex 3 to the DSU, however each

panel may choose to adopt a different procedure after consulting the parties.25 When the

parties have filed written submissions and possibly rebuttal submissions, respectively

followed by a first and second meeting with the panel, the latter deliberates and drafts a

report. It is, however, quite noticeable that the parties can offer comments to the panel with

20 Article 4 DSU, Mexico – Corn Syrup (Article 21.5 – US), WT/DS132/AB/RW of 22 October 2001, § 54. 21 W. DAVEY , “Evaluating WTO dispute settlement: what results have been achieved through consultations and implementation of panel reports?” in Y. TANIGUCHI, A YANOVICH and J. BOHANES, (eds.), The WTO in the Twenty-first Century Dispute Settlement, Negotiations, and Regionalism in Asia, Cambridge, Cambridge University press, 2007, 98. 22 Article 6 DSU, again this article provides formal requirements. Panellists are subject to Rules of Conduct, adopted by the DSB. This code seeks to maintain integrity, impartiality and confidentiality of proceedings, Rules of Conduct for the Understanding on Rules and Procedures Governing the Settlement of Disputes, as adopted by the DSB on 3 December 1996, WT/DSB/RC/1 (11 December 1996). 23 Article 6.1 DSU. 24 Article 8.4 and 8.6 DSU. 25 Article 12.1 DSU.

12 GATT/WTO

respect to both the descriptive and the decisive parts of the report.26 In an appeal procedure

there is no such opportunity for the Member States.

14. Following this draft stage, the panel issues its final report. This report includes a

recommendation for the respondent Member to bring its measure into conformity with the

relevant WTO Agreement, when WTO-inconsistency has been established.27 Even though

the DSU only uses the word ‘recommendation’, this is a downright obligation to comply. The

panel may give suggestions as to how a Member should comply. These suggestions do not

bind the respondent Member, which can still freely choose its way of compliance. The panel

usually refrains from doing so, in order not to meddle in what Member States consider a

national affair.28 The report must be adopted by the DSB within 60 days after it has been

circulated to all WTO Members. As opposed to the practice under the GATT 1947, the final

report is adopted through reverse consensus, leading to a firmer degree of automaticity: the

DSB can only by consensus decide not to adopt the report, in the past a consensus was

necessary to adopt the report.

ii.b. Implementation of the recommendation or ruling

15. Unless one of the parties initiates an appeal, the respondent member has to ensure

‘prompt compliance with the ruling’.29 If immediate compliance is impossible, a reasonable

period of time is given to the Member concerned. The respondent Member then has to comply

within 20 days after the expiry of the implementation period.30 As to the determination of the

duration of this period, the DSU offers various possibilities.31 This flexibility is highly

characterising for this stage of implementation: Member States preserve a certain procedural

‘scope of manoeuvre’ to choose the most appropriate solution to a dispute.32 The same

procedure should be followed after the AB report has been adopted in a case on appeal.

26 Article 15 DSU. 27 Article 19 DSU. 28 A. ROSAS, “Implementation and Enforcement of WTO Dispute Settlement Findings: An EU Perspective”, Journal of International Economic Law 2001, 134. 29 Article 21.1 DSU. 30 Article 21.2 DSU. 31 Article 21.3 DSU. 32A. STEINBACH, “EC Liability for Non-compliance with Decisions of the WTO DSB: The Lack of Judicial Protection Persists”, Journal of World Trade 2009, 1055.

13 GATT/WTO

16. When a dispute arises about whether measures taken to comply suffice, the

complaining Member may take recourse to the DSB, preferably to the original panel. This

panel then examines whether the respondent Member’s measures are consistent with both the

DSB recommendation and the covered agreements.33

17. If the respondent Member has not taken sufficient action to fully comply with the

recommendations and rulings in the original proceedings, and if no agreement on

compensation has been reached, then the complaining Member may request authorization

from the DSB to adopt countermeasures pursuant to article 22.2 DSU.34 It should be

emphasised that this article also allows WTO Members in a dispute settlement procedure to

start negotiations when the respondent Member has failed to implement the recommendations

within the reasonable period of time. The parties should thus no later than the expiry of the

implementation period re-enter into negotiations to reach a mutually acceptable agreement on

compensation, before the complaining Member may enforce the recommendation by

imposing countermeasures.35 These countermeasures usually take form as suspension of

concession.

18. Article 22.3 and 22.4 DSU put forward the conditions to apply countermeasures: they

have to be applied in the same trade sector and they have to be equivalent to the level of

inconsistency by the other party. If it is not practicable to suspend concessions in the same

trade sector, the complaining may opt for cross-retaliatory measures: it may suspend

concessions in other sectors under the same WTO agreement. If this would not be effective

either, concessions may also be suspended under another WTO agreement. However, when

the respondent Member disagrees with the countermeasures, it can request an arbitration.36

19. Clearly, the possibilities for Member States to take recourse to negotiations are

numerous and spread throughout the dispute scenario, even at this final stage of

implementation the respondent Member can have resort to arbitration. This is in accordance

with the objectives of the dispute settlement system: a solution mutually acceptable to the

33 Article 21.5 DSU. 34 Article 22.2 DSU. 35 Only when the complaining Member States request negotiations, which is usually the case. 36 Article 22.6 DSU.

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parties in the dispute should be preferred.37 The DSU thus creates multiple opportunities for

the parties to take recourse to diplomatic means, even after the expiry of the implementation

period. However, the respondent Member ultimately has to implement the DSB decision. This

multitude of options is thus only a temporary luxury.

ii.c. The Banana Dispute: a striking example

20. The Banana Dispute is a classis example of this flexibility towards negotiations. The

dispute originates in the adoption of the Lomé Agreement of 1989 and the creation of the

European single market in bananas in 1993. 38 The EC extended its preferential regime

towards bananas coming from African, Caribbean and Pacific (ACP) states. This regime

inevitably affected other states in an adverse way, more specifically Latin American states

producing ‘dollar bananas’.39 Already in 1992, these States filed an action under the GATT

1947. In 1994 the panel report found the EC to be in breach of several GATT provisions,

amongst others the Most Favoured Nation principle. However, the system of reverse

consensus was not yet in place. This allowed the EC to block the adoption of the report.

21. Following the adoption of the WTO Agreement and the establishment of the DSB,

Ecuador, Guatemala, Honduras, Mexico and the United States requested consultations in

1995. In 1996, the complaining Members requested the establishment of a panel. The panel

report was issued in May 1997 and quickly followed by an Appellate Body Report in

September. The Appellate Body confirmed that the EC’s banana regime was in breach of

several WTO provisions. Consequently the EC and the complaining parties started

negotiations to determine ‘a reasonable period of time’ pursuant to Article 21.3 of the DSU.

By November 1997, the complaining parties requested an arbitrator to be appointed, as the

parties had failed to reach an agreement.40 The arbitrator granted the EC’s request of 15

months and 1 week.

37 Article 3.7 DSU. 38 Fourth ACP-EEC Convention signed at Lomé, 15 December 1989, O.J. L 229/3 of 17 August 1991, Council Regulation (EEC) 404/93 of 13 February 1993 on the common organization of the market in bananas, O.J. 1993, L 47/1. 39 Colombia, Costa Rica, Guatemala, Nicaragua and Venezuela. 40 EC – Regime for the Importation, Sale and Distribution of Bananas, Arbitration, Award of the Arbitrator, Said El-Naggar, WT/DS27/15 of 7 January 1998.

15 GATT/WTO

22. The EC adopted new measures in order to bring its banana regime into compliance

with its WTO obligations.41 The US, however, was not persuaded by the European efforts to

comply. At the end of the implementation period the US filed a request for the suspension of

concessions pursuant to article 22.2 of the DSU. The EC contended that no concessions could

be suspended as long as a panel had not assessed the conformity of its revised regime under

article 21.5 DSU [compliance], and certainly not as long as the matter had not been submitted

to arbitration pursuant to article 22.6 DSU [equivalence]. This uncertainty as regards the

exact order of succession of judicial steps to take is referred to as the sequencing problem,

which was discovered here in the Banana dispute. Eventually, the DSB granted part of the

EC’s request and referred the issue to arbitration in order to assess whether the US’ cross-

retaliatory measures were compliant to article 22.3 DSU and to determine whether these

measures were equivalent to the damage suffered by the United States pursuant to article 22.4

DSU [equivalence]. On 9 April 1999, the arbitration report was issued. The revised EC

regime was still considered to be of discriminatory nature.42 The arbitrators deemed the level

of suspension sought by the United States disproportionate ($520 million). In stead, they set

the level of nullification or impairment suffered by the United States at $191,4 million.43

Consequently, the United States requested the suspension of concessions in accordance with

the arbitration report.44 On 19 April 1999 the DSB granted the latter authorisation for the

requested suspension.

23. At the same time, the EC – as well as Ecuador – started proceedings pursuant to article

21.5 DSU to determine whether the revised banana regime was compliant with WTO

obligations [compliance]. Both panel reports were adopted on 12 April 1999.45 Following

these reports, Ecuador requested authorisation to suspend concessions up to $540 million by

virtue of article 22.2 DSU. Once again the EC requested arbitration concerning the level of

suspension [equivalence] under article 22.6 DSU. The latter’s request was granted. Ecuador’s

request was suspended until conclusion of the arbitration. The arbitrator’s report was issued in

41 Council Regulation (EC) 1637/98 of 20 July 1998 amending Regulation 404/93 on the common organization of the market in bananas, O.J. 1992, L 210/98. 42 EC – Regime for the Importation, Sale and Distribution of Bananas, Arbitration, Recourse to Article 22.6, WTO/DS27/ARB/RW of 9 April 1999 at §5.80. 43 Ibid. at §7.8. 44 Article 22.7 DSU. 45 EC – Regime for the Importation, Sale and Distribution of Bananas, Recourse to Article 21.5, WT/DS27/RWEEC (7-1433) of 12 April 1999 and EC – Regime for the Importation, Sale and Distribution of Bananas, Recourse to Article 21.5, WT/DS27/RW/ECU of 12 April 1999.

16 GATT/WTO

March 2000, the arbitrators estimated the level of nullification or impairment suffered by

Ecuador to be $201.6 million.46 Consequently, the DSB granted Ecuador’s request for

authorisation to suspend concessions.

24. The EC yet again faced a revision of its banana regime. By March 2001 the EC

reported to the DSB that the Council of the European Union had adopted Regulation (EC) No

216/2001 amending Regulation (EEC) No 404/93 on the common organisation of the market

in bananas. The regulation resolved to introduce a tariff only regime for imports of bananas

no later than 1 January 2006.47 As a transitional measure, the regulation put forward a regime

of three tariff quotas open to all imports irrespective of their origin. Imports from ACP-states,

however, could still enter duty free. Following these European legislative efforts, both the US

and Ecuador entered into negotiations with the EC. By June 2001 the parties reached an

agreement.48

25. However, it did not take long for the first cracks to appear in this brittle compromise.

The US nor Ecuador recognised this Understanding as a mutually satisfactory solution.49 By

the end of September, Ecuador had already formally voiced its displeasure regarding the

European Commission’s proposal for reforms in order to implement the agreements with the

United States and Ecuador.

26. Upon expiry of the January 2006 deadline, Ecuador requested consultations in

November 2006 and afterwards filed a request for the establishment of a panel in February

2007. Also the United States requested the establishment of a panel in order to assess the

compliance of the new European banana regime with the earlier DSB recommendations. In

2008 two panel reports were circulated to all WTO Members: the EU had failed to implement

46 EC – Regime for the Importation, Sale and Distribution of Bananas, Arbitration, Recourse to Article 22.6, WTO/DS27/ARB/RW of 24 March 2000. 47 Article 16 (1) of Council Regulation (EEC) 404/93 of 13 February 1993 on the common organization of the market in bananas, O.J. 1993, L 47/1 as amended by Council Regulation (EC) 216/2001 of 29 January 2001 amending Regulation 404/93 on the common organization of the market in bananas, O.J. 2001, L 31/2. 48 Understanding on Bananas between the EC and the US of 11 April 2001, and Understanding on Bananas between the EC and Ecuador of 30 April 2001, WT/DS27/58. 49 Article 3.5 DSU.

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the recommendations.50 The EC lodged an appeal, however once again without success: on 26

November 2008 the Appellate Body Report was circulated to all WTO Members.51 The AB

confirmed, albeit for different reasons, the WTO inconsistency of the European regime for

instance the duty free tariff quota for ACP States.52 These reports were adopted by the DSB in

December 2008. Only recently, in December 2009, the EU managed to settle its banana-

disputes with both the United States and the Latin American States through means of a

mutually agreed solution. Pursuant to this solution the EU will cut its import tariff on bananas

in eight stages, making the biggest cut first. In return, Latin American countries will not

demand further cuts in the framework of the Doha Round and they will also settle the legal

disputes pending against the EU at the WTO.53 As a consequence, the EU has also reached an

agreement with the US in which the US acknowledges the EU’s commitments to Latin

American suppliers and consequently agrees to definitively settle its dispute over bananas

with the EU.

27. This case shows the potential for ineffectiveness that lies within the WTO dispute

settlement system. It took 12 GATT and WTO Panel reports, Appellate Body reports,

arbitration and 2 understandings to settle this dispute. Despite almost twenty years of

litigation in the womb of the DSB, finally a mutually satisfactory solution was achieved

through negotiations and diplomatic means. It should be noted that in the end, their solution

entails what the AB had recommended all along. This shows that ultimately a Member cannot

decline to implement a DSB decision. Many may consider the European choice to face

retaliation rather than bring its legislation into compliance a reason to question the dispute

settlement system. However, in those years of dispute, a flourishing trade in bananas could

still develop by the grace of this system: it provided a framework of alternative measures,

such as retaliation and cross-retaliation, and by doing so prevented a trade impasse.54 It must

50 EC - Regime for the Importation, Sale and Distribution of Bananas - Second Recourse to Article 21.5 , WT/DS27/RW2/ECU of 7 April 2008 and EC - Regime for the Importation, Sale and Distribution of Bananas - Second Recourse to Article 21.5, WT/DS27/RW/USA of 19 May 2008. 51 EC - Regime for the Importation, Sale and Distribution of Bananas - Second Recourse to Article 21.5, WT/DS27/AB/RW/USA and WT/DS27/AB/RW2/ECU of 28 November 2008. 52 Ibid. at § 478. 53 General Council – Geneva Agreement on Trade in Bananas - Communication from Brazil,Colombia, Costa Rica, Ecuador, European Union, Guatemala, Honduras, Mexico, Nicaragua, Panama, Peru and the Bolivarian Republic of Venezuela, WT/L/784 of 15 December 2009, Brussels, 15 December 2009The EU-Latin America Bananas Agreement Questions and Answers 54 It should be noted that this banana trade impasse was prevented at the cost of other economic sectors which suffered from the retaliatory measures.

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be emphasised that only a very small minority of all contentious cases reach this level of

litigation. So far only seven WTO cases have seen a request for authorisation to suspend

concessions.55

ii. Possible future reforms of the dispute settlement system: Doha

28. Despite its potential for ineffectiveness, the dispute settlement system is considered to

be the most successful feature of the WTO. Its accomplishments are numerous.56 When the

power-based negotiations hit rock bottom, the rule-oriented panels and Appellate Body often

hand a – temporary – solution. One could easily refer to the DSU as the jewel in the WTO-

crown.57 Then why change this winning team?

ii.a. Weaknesses of the current system and proposals for improvement

29. Despite all songs of praise, the DSU contends with some difficulties. The Banana

dispute revealed different problems with respect to implementation: the sequencing problem,

which has a serious impact on legal certainty and also with respect to countermeasures and

sanctions a lot of questions have arisen in the past. The DSU provides the respondent

Member with plenty opportunities to delay implementation. One could also seriously

question the effectiveness of countermeasures, especially the suspension of concessions,

which has a trade restrictive – rather than an enhancing - nature and comes at the dispense of

private companies. Other problems relate to the accessibility of the system, especially by

developing countries, the functioning of the panels and Appellate Body and various technical

clarifications. However, this paper will focus on implementation, as changes in this area could

55 The Banana dispute: both the US and Ecuador filed a request; EC – Measures Concerning Meat and Meat Products (Hormones), WT/DS26/ARB and WT/DS48/ARB of 16 January 1998: both Canada and the US filed a request; Brazil – Export Financing Programme for Aircraft, WT/DS46/ARB of 28 August 2000: request by Canada; US - Laws, regulations and methodology for calculating dumping margins (“zeroing”), WT/DS294/35 of 2 February 2010, request by EU; European Communities — Measures affecting the approval and marketing of biotech products, WT/DS291/39 of 21 January 2008 request by US; US — Continued Dumping and Subsidy Offset Act of 2000 (Byrd Amendment Case) , WT/DS217/38-43 and WTO/DS234/31-32 of 11 November 2004, request by the EC, Brazil, India, Japan, Korea, Canada, Mexico and Chile; US — Subsidies on Upland Cotton: authorization to impose countermeasures, WT/DS267/42 of 9 November 2009, request by Brazil. 56

JACKSON, cited supra note 10, 51; ROSAS, cited supra note 28, 132; W. WEISS, “Reforming the Dispute Settlement Understanding” in H. HOHMAN, (ed.), Agreeing and Implementing the Doha Round of the WTO, Cambridge, Cambridge University Press, 2008, 270. 57 A. TANCREDI, “EC Practice in the WTO: How Wide is the ‘Scope for Manoeuvre’?”, European Journal of International Law 2004, 939.

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have strong repercussions on the stance of the European Court of Justice.58 But this chapter

would be incomplete without touching upon on the question of flexibility and member control

over specific disputes.

ii.a.a. Implementation

30. With respect to implementation, the question at hand is the following: could future

reforms alter the DSU in such a way that the current flexibility towards implementation is

reduced? In order to answer that question, the proposals, currently on the negotiating table,

should be briefly examined.

31. Firstly, despite strict time tables, the overall duration of a contentious case can take

years. As the Banana dispute illustrates, the DSU is a flexible instrument in the hands of the

respondent Member searching for delay. In the meanwhile, the damage suffered by the

complaining Member mounts up. For instance, the average loss suffered by Ecuador during

the Banana dispute probably amounted to 832 million dollars.59 It is held against the current

system that it offers Members in breach of WTO obligations a ‘free ride’ to continue trade

restricting practices.60 WTO Members have proposed little structural reform to resolve this

problem. The EU proposed to shorten several time periods during the procedure.61 Mexico

suggested the application of provisional measures if the dispute was causing of threatening to

cause damage which would be difficult to repair.62 Despite their lack of vision, it should be

doubted whether these rather shallow proposals will find enough support throughout the

international community. A more fundamental change towards retroactive implementation

lies far beyond the reach of consensus: the WTO is still considered to be about trade and to

58 See infra §§ 72 - 86. 59 i.e. between the request for consultations and the expiry of the reasonable period of time, see E. Pérez Motta and M. Diego-Fernández, “If the DSU is “Working Reasonably Well”, Why does Everybody want to Change it?” in GEORGIEV, D. and VAN DER BORGHT, K. (eds.), Reform and development of the WTO dispute settlement system, London, Cameron May, 2006, 300 – 301. 60 S. HARBINSON, “Will State Emergency Measures trigger WTO disputes? What Prospects Exist for Reforming the Dispute Settlement System of the WTO – Professional Panellists, Retroactive, Remedies, Monetary Compensation?”, Journal of World Investment and Trade 2009, 779. 61 Dispute Settlement Body – Special Session - Contribution from the EC and its Member States to the improvement of the DSU, 13 March 2002, TN/DS/W/1, 9. 62 Dispute Settlement Body – Special Session – Amendments to the DSU proposed text by Mexico, 27 January 2003, TN/DS/W/40, 2-3.

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create market opportunities rather than to deal with liabilities and damages.63 Although the

prospect of withdrawal ex tunc, implying the payment of considerable amounts of financial

compensation, would certainly have a dissuasive effect on non-complying Members.

32. Secondly, with respect to the effectiveness of countermeasures, the unfavourable

features of the current system have been widely discussed. The remedies provided in the DSU

are not sufficient to induce compliance, especially when the respondent WTO Member is a

large, developed country and the complaining WTO Member is not. In that case the

respondent Member can easily buy off its violation.64 Whenever the Members concerned are

well matched, it becomes almost impossible to reach an agreement on the level of

compensation.65 On average retaliation by suspending concessions gets better results when it

comes to compliance. However, both the respondent and the complaining Member suffer

from the measures taken. On top of that, compensation nor retaliation is of any service to

developing countries, which often hold the weakest position in the dispute, given the small

size of their domestic market.

33. The most widely supported proposals build on the existing WTO system. For instance

the possibility of transferring an authorisation to retaliate to other WTO members. By doing

so, the flexibility towards implementation would only increase as the right to suspend

concessions would become negotiable.66 The benefits of financial compensation, as a

supplement to trade retaliation and trade compensation, have been widely recognised amongst

scholars, the most prominent feature of this system being its capability to provide equitable

reparation. Again, fundamental modifications which would render the system less negotiable

seem to be unattainable. Rosas rightly observes that “moving away from the

intergovernmental nature of the WTO ... is simply not feasible at the present stage of the

63United States – Import Measures on Certain Products from the European Communities, WT/DS/165/R of 19 April 2000at §6.83 and 6.106. 64 J.BOURGEOIS, “Sanctions and Countermeasures: Do the Remedies Make Sense?”, in D. GEORGIEV and K. VAN DER BORGHT, (eds.), Reform and development of the WTO dispute settlement system, London, Cameron May, 2006; for a more elaborate review see M. BRONCKERS AND N. VAN DEN

BROECK, “Financial Compensation in the WTO: Improving Remedies in WTO Dispute Settlement” in ibid. 65 For instance the US and the EU, resulting in long lasting trade disputes such as the Hormones and Bananas dispute. 66 Dispute Settlement Body – Special Session – Amendments to the DSU proposed text by Mexico, 27 January 2003, TN/DS/W/40 at 1, amending article 3.7 DSU.

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world trade system”.67 It is very unlikely that a solution that features a stronger panel report,

not only suggesting but imposing actual measures and fixing an amount for financial

compensation will ever be proposed, let alone adopted.

34. However, it should be noted that WTO law can also have effects without a formal

ruling or even without a case being brought before a WTO panel. Resorting to dispute

settlement is often very effectively used as a threat.68 Moreover, compliance with WTO law is

less likely in cases that involve a formal ruling than in cases that do not.69 This is not only due

to the success of the threat, but also because cases that involve a formal ruling mostly concern

highly sensitive trade issues, in which threats are not likely to have a successful effect.

ii.a.b. Flexibility and member control

35. Heavyweights such as the European Union and the United States have filed proposals

to increase flexibility and member control of the dispute settlement.70 The EU wants more

time and flexibility in the determination of the reasonable period of time pursuant to article

21.3 DSU and an opportunity for the complaining Member to withdraw its request for

consultations or for the establishment of a panel at any point in time before the circulation of

the final report. The US and Chile literally express their need to counter the quasi-automatic

adoption op panel reports, in their mutual proposal both States spell out the conditions for

Members to reject specific aspects of a panel report which they consider to go beyond what is

necessary to resolve the dispute or what might even be counter-productive.

67 A. ROSAS, “Implementation and Enforcement of WTO Dispute Settlement Findings: An EU Perspective”, Journal of International Economic Law 2001, 143. 68 S. PRINCEN, “EC Compliance with WTO Law: The Interplay of Law and Politics”, European Journal of International Law 2004, 557 and 572. 69 Study of M. L. BUSCH and E. REINHARDT, “Bargaining in the Shadow of the Law: Early Settlements in GATT/WTO Disputes”, Fordham International Law Journal 2000, 159. For instance with respect to the European Leghold Trap Regulation, the US successfully threatened the EU with a WTO case to induce the EU to change the import ban on fur. 70 Dispute Settlement Body – Special Session - Contribution from the EC and its Member States to the improvement of the DSU, 13 March 2002, TN/DS/W/1; Dispute Settlement Body – Special Session – Contribution from the EC and its Member States to the improvement and clarification of the WTO DSU, 23 January 2003, TN/DS/W/38, §11-14 and §23, Dispute Settlement Body – Special Session – Negotiations on Improvements and Clarifications of the DSU, Further Contribution of the US on Improving Flexibility and Member Control in WTO Dispute Settlement, 24 October 2005, TN/DS/W/82 and Dispute Settlement Body – Special Session – Flexibility and Member Control, Revised textual proposal by Chile and the US, 31 May 2007, TN/DS/W/89, introduction.

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ii.b. Negotiating the DSU: a never-ending story

36. The DSU has been subject to review from the very beginning in 1995. This is a result

of the fact that in 1994 the DSU was only provisionally adopted. The idea of binding and

compulsory dispute settlement nourished a distrust of the DSU, which led the Contracting

Parties to adopt a decision on the review of the DSU.71 This implied that the WTO Members

were to decide to continue, modify or terminate the DSU within 4 years after the entry into

force of the WTO Agreements. At the Seattle Ministerial Conference in 1999 the WTO

Members failed to reach an agreement on any improvements of the DSU. They did, however,

agree on not terminating the system. The mandate to terminate the DSU then expired and the

WTO Members decided to continue negotiations on improvements.72 These negotiations take

place during special sessions of the DSB. 73

37. As mentioned above, there are several proposals on the negotiating table. However,

after 10 years of negotiations a consensus is still out of reach. In 2004 the Members even

decided to continue negotiations without deadline.74 Several reasons have been put forward

for this deadlock. First, there is little enthusiasm for reform amongst the Members. This partly

mirrors an ‘if it ain’t broke, don’t fix it’ attitude. However, one should not forget that a

majority of the Members do not use the dispute settlement system at all. This creates a margin

and a fear for trade-offs; reforming the DSU could lead to undesirable requests of other

Members, especially developing countries: these are reluctant to use the DSU as they are

often the weakest party in the dispute and as a consequence they perceive a resort to dispute

settlement as a hostile act and a lack of capacity, since as discussed above the DSU still

favours the heavyweights.75

71 Ministerial Decision on the Application and Review of the Understanding on Rules and Procedures Governing the Settlement of Disputes, Trade Negotiations Committee, Marrakesh, 14 April 1994 (www.wto.org). 72 These negotiations are referred to as DSU reform, in order to distinguish them from the expired mandate to review and terminate the DSU. 73 For a brief outline of the negotiations one can consult following reports and their annexes, which set a very clear example of the negotiation process: Dispute Settlement Body - Special Session - Report by the Chairman, Ambassador Péter Balás, to the Trade Negotiations Committee, 6 June 2003, TN/DS/9, Dispute Settlement Body – Special Session – Report by the Chairman, Ambassador David Spencer to the Trade Negotiations Committee, 25 November 2005, TN/DS/14 and Dispute Settlement Body – Special Session – Report by the Chairman, Ambassador Ronald Saborío Soto to the Trade Negotiations Committee, 22 March 2010, TN/DS/24. 74 Doha Work Programme, Decision Adopted by the General Council, 1 August 2004, WT/L/579. 75 E. WHITE, “Reforming the Dispute Settlement System through Practice” in HOHMAN, cited supra note 56, 265.

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38. Secondly, one cannot underestimate the importance of the progress made in

negotiations about the further development of substantive WTO law, which is currently next

to none. This has indisputable repercussions on the DSU reform negotiations. The panels and

Appellate Body often interpret substantive WTO law when a provision needs clarification,

thus filling the gap left by the political negotiated decision-making processes in the WTO.

Amongst WTO Members a fear exists that too many gaps might be filled by an improved and

more efficient dispute settlement system, gaps which they would rather fill through decision-

making in order to stay in control.76

39. Thirdly, DSU reform is not the most pressing issue on the Doha-agenda given the

successful nature of the current system. Moreover, the negotiations on the DSU reform are

not even formally part of the single package of negotiations known as the Doha Development

Agenda. But this could just as well be an advantage given the lack of progress in the Doha

agenda.

§2. Agreement on establishing the World Trade Organization: art. IX and

XVI

40. Before elaborating on article IX and XVI (4), it is useful to briefly take a closer look at

the circumstances which led to the adoption of these provisions: at the start of the Uruguay

negotiations the institutional shortcomings of the GATT were well known. The weak decision

making structure being one of them.77 As Kuijper describes well the United States blocked a

fundamental change of the institutional structure of the GATT despite efforts of the EC and

Canada.78 Thus, the decision making structures of the WTO still cope with the heritage of the

GATT 1947.

76 WEISS, cited supra note 56, 271. 77 For a lucid overview of the GATT at that time see J. JACKSON, Restructuring the GATT System, New York, Council on Foreign Relations Press, 1990, 121 p. Review: P. D. EHRENHAFT in American Journal of International Law 1992, 230-233: Jackson argued for the establishment of a World Trade Organizaton. 78 P. J. KUIJPER, “WTO Institutional Aspects” in BETHLEHEM, MCRAE, NEUFELD, VAN DAMME (eds.), cited supra note 3, 83-84; G. PATTERSON and E. PATTERSON, “The Road from GATT to MTO” in

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i. Article IX WTO: Decision making

41. Even though article XXV (4) GATT 1947 puts forward voting as a primary rule, the

practice has proven otherwise since the late fifties: most decisions were taken on the basis of

consensus.79 This practice was formalised in Article IX of the WTO Agreement. Only when it

is impracticable to take a decision by consensus, the Members can take recourse to voting.

Apparently, Member States strongly prefer consensus, as only one decision has been made by

voting in the last 15 years: the accession of Ecuador in 1996.80 For interpretations and

waivers, however, the WTO Agreement explicitly provides for qualified majority voting as a

primary rule. Practice has shown again that Members prefer to adopt decisions by consensus:

since 1995, the General Council has taken decisions concerning waivers and interpretations

by consensus.81 Nevertheless, an important nuance should be made; for consensus decisions

the quorum is established when a simple majority of the Members is present.82 Thus the

conditions for consensus might sometimes be less difficult to fulfil, given that at key meetings

often a quarter of the WTO Membership is not present – making it impossible to take

decisions by qualified majority.83

42. So despite plenty occasions to decide by voting as provided for by article IX of the

WTO Agreement, the WTO Members incline to make as much decisions as possible through

consensus. This is in accordance with the strong practice that grew under the GATT 1947 and

the overall fear of creating an organisation too intrusive on sovereignty during the Uruguay

negotiations.84 This finding should be taken into account when assessing future developments

in the Doha negotiation round: if the WTO Members would ever formally renounce

consensus as primary rule, practice has proven to be a fabulous consensus safety net. This is,

however, highly unlikely. By the end of 2004, the Director-General of the WTO, Supachai

Minnesota Journal of Global Trade 1994, 53, for a comprehensive outline of the negotiations see T. STEWART, (ed.), The GATT Uruguay Round: a Negotiating history (1986-1994) – volume 4, Deventer, Kluwer, 1999, 935 p. 79 GATT Analytical Index: Guide to GATT Law and Practice (6th edition), Geneva 1995, 1097 and 1108. 80 General Council - Accession of Ecuador, WT/ACC/ECU/5 of 22 August 1996. 81 D. STEGER, “The Future of the WTO: The Case for Institutional Reform”, Journal of International Economic Law 2009, 810. 82 Rule 16 of the Rules of procedures for sessions of the ministerial conference and meetings of the general council, WT/L/161 of 25 July 1996. 83 J. JACKSON, “Dispute Settlement and the WTO – Emerging Problems”, Journal of International Economic Law 1998, 346; see blocking by US, supra § 40. 84 Ibid. at 345-346.

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Panitchpakdi at that time, issued a report assessing the institutional challenges faced by the

WTO.85 The conclusion with respect to the consensus system was not to switch to a voting

system. It did suggest to restrict veto power whenever a measure has very broad consensus

support. Also Jackson leans to this approach; in case a measure is supported by a critical mass

of countries, other opposing Members should refrain from blocking consensus.86 If such a

proposal were to come true, it would of course result in a higher degree of automaticity.

ii. Article XVI WTO: National law

43. With respect to national law article XVI (4) WTO puts forward:

“Each Member shall ensure the conformity of its laws, regulations and administrative

procedures with its obligations as provided in the annexed Agreements.” This provision

extends to all agreements and legal instruments in Annexes 1, 2 and 3 of the WTO

Agreement.87 Even though to some observers article XVI(4) WTO seems to be formulated

quite weak, WTO law usually has a strong impact on the legislative and regulatory conduct of

its Members. Two kinds of obligations can be distinguished with respect to the implications

on national law: substantive and systemic obligations. On the one hand, substantive

obligations set out a standards of treatment that must be accorded to goods, services or

intellectual property rights coming from another WTO Member. Systemic obligations, on the

other hand, deal with the relationship between national and WTO law. There are 4 categories

of systemic obligations, of which the most important one covers the obligation to implement

WTO commitments in the national legal order.

44. It is not clear how exactly Members must ensure conformity with both substantive as

systemic obligations. Bourgeois is even of the opinion that “from an international law point of

view this clause is superfluous”.88 Indeed, one might wonder what the added value of this

85 Report of the Consultative Board to the Director-General Supachai Panitchpakdi on the Future of the WTO: Addressing Institutional Challenges in the New Millenium, WTO, Geneva 2005 at §288-289. [Sutherland Report] 86 J. JACKSON, “The WTO ‘Constitution’ and Proposed Reforms: Seven ‘Mantras’ Revisited”, Journal of International Economic Law 2001, 74. 87 S. BHUIYAN , National Law in WTO Law – Effectiveness and Good Governance in the World Trading System, Cambridge, Cambridge University Press, 2007, 55. 88 J. BOURGEOIS, “The Uruguay Round of GATT: Some General Comments from an AC Standpoint” in N. EMILIOU and D. O’KEEFFE, (eds.), The European Union and World Trade Law After the GATT Uruguay Round, New York, Wiley, 1996, 84.

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provision is. However, when taking a step back, one can clearly see the value of this

provision. Under general public international law state parties to a treaty must not have

conforming laws. Article 26 of the Vienna Convention on the Law of Treaties merely

provides for the obligation to perform their treaty obligations in good faith and “a party may

not invoke the provisions of its internal law as justification for its failure to perform a

treaty”.89 Article VI (4) WTO arguably puts forward ‘more rigorous discipline’.90

45. But this article does not enable courts to review national laws on their consistency with

the WTO Agreements, as WTO Members have rarely accepted an obligation for domestic

courts to apply WTO rules at the request of private parties.91 Both the United States and the

European Union have expressed their reluctance towards granting WTO law direct effect in

their legal order.92 During the Uruguay Round negotiations Switzerland had proposed that

WTO should have direct effect, but this proposal was rejected by other WTO Members.93

This approach was also confirmed by a WTO panel, which explicitly stated its preference for

indirect effect of WTO law over direct effect.94 The general perception is that the WTO

Agreements create intergovernmental commitments dealing with market access, not rights

invokable by private individuals before domestic courts.95 Only a handful scholars take a

different stance: by (sometimes) giving private individuals the right to call upon WTO law,

WTO rules could be protected and enforced at national level by specific performance and

international disputes would – in their view - often be prevented.96

89 Article 26 and 27 Vienna Convention on the Law of Treaties, Vienna, 23 May 1969. [VCLT] 90 BHUIYAN , cited supra note 87, 58. 91 This issue can be just as well approached from a national/constitutional point of view, see infra §§ 176 - 181. 92 Recital 11 of the preamble of Council Decision (EC) 94/800 of 22 December 1994 concerning the conclusion on behalf of the European Community, as regards matters within its competence, of the agreements reached in the Uruguay Round multilateral negotiations (1986-1994), O.J. 1994, L 336/1 and Sec. 102 of the US Uruguay Rounds Agreement Act of 25 January 1995: “No State law, or the application of such a State law, may be declared invalid as to any person or circumstance on the ground that the provision or application is inconsistent with any of the Uruguay Round Agreements.” 93 F. SNYDER, “The Gatekeepers: the European courts and WTO law”, Common Market Law Review 2003, 335. 94 United States – Sections 301–310 of the Trade Act of 1974, WT/DS152/R of 22 December 1999 at § 7.79. 95 Sutherland report at § 269, E.U. PETERSMANN, “Multilevel Judicial Governance of International Trade requires a common conception of rule of law and justice”, Journal of International Economic Law 2007, 536. 96 J. JACKSON, “The legal meaning of a GATT Dispute Settlement report: Some reflections” in J. JACKSON, The Jurisprudence of GATT and the WTO: Insights into Treaty Law and Economic Relations, Cambridge, Cambridge University Press, 2000, 118 – 132 and E.U. PETERSMANN,

27 GATT/WTO

46. These findings yet once again tally with the general perception that the WTO Members

hold on to a member driven dynamic – where all power to make decisions lies with

governments and their representatives in stead of with domestic courts - in order not to create

an organization too intrusive on their sovereignty.

§3. Conclusion

47. The current WTO system has been a success. It has reshaped multilateral trade

relations in providing a framework that stimulates its Members to open up their markets.

However, the WTO does not aim at creating a global market. This would imply a too serious

intrusion on the sovereignty of the Members, for example there would have been much

stricter obligations as regards national law. Instead, the WTO is characterised by a system that

heavily leans on negotiations, politics and power. The DSU is widely recognised as being the

adjudicative and rule-oriented counterpart of the otherwise political and power-based WTO

system, more particularly the decision making. However, when assessing the WTO Dispute

Settlement System, it is hard not to see the traces of the ‘uneasy deficient relationship’

between politics and law. 97 The Uruguay negotiators settled for a compromise which featured

both diplomatic as judicial characteristics. The diplomatic and consensus procedures provided

for by the GATT were preserved in the consultations phase and in article 3.7, which sets forth

the aim of the dispute settlement mechanism: “... is to secure a positive solution to a dispute.

A solution mutually acceptable to the parties to a dispute and consistent with the covered

agreements is clearly to be preferred.”98 Conversely, the DSU also created a fully-fledged

two-tiered adjudicative phase. But the possibilities for Member States to take recourse to

negotiations still are numerous and spread throughout the dispute scenario. On top of that

panel reports still must be adopted by the DSB, a political body. Notwithstanding the progress

made concerning the reverse consensus, these characteristics call for a quasi-judicial

qualification of the DSU.99 When looking ahead, one certainly might expect some changes to

'Prevention and Settlement of Transatlantic Economic Disputes', in E.U. PETERSMANN and M. POLLACK (eds.), Transatlantic Economic Disputes: The EC, the US and the WTO (2003), 55. 97A. VON BOGDANDY, “Law and Politics in the WTO – Strategies to Cope with a Deficient Relationship”, Max Planck Yearbook of United Nations Law 2001, 609. 98 Article 22 and 23 GATT 1947. 99 Yet some observers consider the DSU system to be a non-judicial system, only from a formal point of view: given the need for adoption by the DSB. Adoption, so they claim, has become a mere

28 GATT/WTO law in the European Union’s legal order: a lack of direct effect

the DSU. It is rather doubtful when the reform will come through and if the DSU will be

further ‘judicialised’. After assessing the current negotiations, that seems highly unlikely.

WTO Members incline to propose small and technical modifications, rather than systemic and

fundamental change. What is more, proposals strengthening flexibility and Member control

are being pushed on the negotiating agenda. This tendency strengthens the impression that the

tension between politics and law is inherent to the system and that its tracks will not be

covered up anytime soon.

B. GATT/WTO law in the European Union’s legal order: a lack of direct effect

I. The invocability of international agreements

48. In dealing with the question of direct effect of GATT/WTO law in the European

Union’s legal order, it is necessary to give a brief outline of how the ECJ handles the

invocability of international agreements in general.

49. Pursuant to article 216 §2 TFEU (ex article 300 §7 TEC) agreements concluded by the

EU are binding upon the institutions of the EU and upon its Member States. This led the ECJ

to conclude that an international agreement forms an integral part of the Union’s legal order,

once it has entered into force, because these agreements must then be considered Union

acts.100 Whether an individual can invoke such an international agreement before a national

court to question the validity of Union law depends on whether the agreement in question has

direct effect.101 In the Kupferberg judgment the Court very clearly examines the direct effect

of a provision of the Free Trade Agreement concluded between the European Economic

Community and Portugal.102 In that case a German importer from Port wine invoked a

provision of the above mentioned agreement to challenge a German decision imposing

customs duties on the import of Port wine. The Court first established its jurisdiction to rule

formality: the law prevails under the new regime. R. LEAL-ARCAS, “The EU institutions and their modus operandi in the World trading system,” Columbia Journal of European Law 2006, 164-165. 100 ECJ case 181/73, Haegeman, ECR 1974, 449, § 5, ECJ case 104/81, Hauptzollamt Mainz/Kupferberg, ECR 1982, 3641, §11-14, ECJ case 270/80, Polydor/Harlequin, ECR 1982, 329, ECJ case 12/86, Demirel, ECR 1987, 3719, §7. 101 ECJ cases 21 to 24/72, International Fruit Company, ECR 1972, 1219, §8. 102 Kupferberg, cited supra note 100.

29 GATT/WTO law in the European Union’s legal order: a lack of direct effect

on this matter: according to the Court it had jurisdiction to do so only if the effect of the

agreement in the internal legal order of the parties is not settled in the agreement itself.103 The

Court then examined the intention of the Parties to the Free Trade Agreement and concluded

that they had not intended to preclude the agreement from having direct effect. In doing so, it

expressly referred to the lack of reciprocity in implementation, which did not oppose to their

conclusion regarding intention and direct effect.104

50. The Court proceeded to what is now known as its classical two-tier approach: it first

examined whether the invoked provision was unconditional and sufficiently precise to have

direct effect, i.e. whether the provision contained an obligation which does not require the

adoption of subsequent measures in order to implement it or give it effect. Secondly, the

Court analysed the wording, purpose and nature of the agreement itself in order to determine

whether the overall agreement contradicted the findings on the direct effect of the specific

provisions.105 The Court concluded that the provision had direct effect. It should be noted that

in Kupferberg no Union measure was challenged, quite the reverse, by granting direct effect

to the Free Trade Agreement the scope of Union law was indeed expanded at the cost of trade

restrictive domestic legislation. This rendered the Court more lenient towards granting direct

effect.106

51. In Demirel the Court clarified the conditions for direct effect as put forward by the

Kupferberg judgment by stating that “a provision in an agreement concluded by the

Community [Union] with non-member countries must be regarded as being directly

applicable when, regard being had to its wording and the purpose and nature of the agreement

itself, the provision contains a clear and precise obligation which is not subject, in its

implementation or effects, to the adoption of any subsequent measure.”107

103 Ibid. at § 17. 104 Ibid. at § 18-22. 105 M. MARESCEAU, Bilateral agreements concluded by the European community, Martinus Nijhoff Publishers, Leiden/Boston, 2006, 248. 106 G. BEBR, “Agreements concluded by the Community and Their Possible Direct Effect: From International Fruit Company to Kupferberg”, Common Market Law Review 1983, 35. 107 Demirel, cited supra note 100, §14.

30 GATT/WTO law in the European Union’s legal order: a lack of direct effect

II. The basics: from International Fruit Company to Van Parys

52. This chapter will focus on giving a full reflection of the leading cases in this area of

European law, without, albeit at first, putting forward an opinion. It is meant to provide the

reader with a comprehensive outline of the European case law on this matter.

§1. The GATT 1947 and the ECJ:

i. Preliminary remark

53. Before analysing the case law specifically relating to the direct effect of GATT 1947,

it is worth the effort to briefly discuss another landmark case in the European Union’s history.

For applying it to international agreements in Kupferberg and Demirel, the European Court of

Justice (ECJ) developed the concept of direct effect with respect to EEC Treaty provisions in

Van Gend & Loos.108 The ECJ established its competence to examine the direct effect of those

provisions given that such examination falls within the scope of ‘interpretation’.109 The Court

continued by first assessing the spirit and the general scheme of the EEC Treaty. Secondly it

examined whether the wordings of the specific provision were clear and unconditional, not

requiring any further implementation or other national legislative intervention. Later, the

Court has reversed the order of this two-tier approach by starting with the examination of the

specific provision.110 The ECJ finally concluded that ‘according to the spirit, the general

scheme and the wording of the Treaty, article 12 must be interpreted as producing direct

effects and creating individual rights which national courts must protect.’

54. As Eeckhout rightly observes, one should thus keep in mind that the concept of direct

effect was developed with respect to ‘internal’ Union law. Moreover, the concept has been

further developed by the ECJ as an instrument of judicial protection to protect the rights of

individuals.111 When dealing with international agreements, i.e. ‘external’ law, the analysis

starts from a different premises. In stead of describing the relationship between Union law

108 ECJ case 26/62, Van Gend en Loos/Nederlandse administratie der belastingen, ECR 1963, 1. 109 Ibid. 110 See supra §50. 111 ECJ Joined cases C-46/93 and C-48/93, Brasserie du Pêcheur, ECR 1996, I-1029, §20, J. WOUTERS

and D. VAN EECKHOUTTE, “Giving Effect to Customary International Law Through European Community Law” in J.M. PRINSSEN and A. SCHRAUWEN, (eds.) Direct effect: rethinking a classic of EC legal Doctrine, Groningen, Europa Law Publishing, 2002, 219.

31 GATT/WTO law in the European Union’s legal order: a lack of direct effect

and national law, the ECJ assesses how international law relates to Union law.112 This

difference in background might justify why the ECJ is unfavourable towards establishing that

the GATT/WTO Agreement has direct effect: granting direct effect to an international

agreement with a wide substantive scope of application undeniably has strong repercussions

on the effect of agreements in both the European and the Member States’ legal order.

Therefore, the direct effect of these agreements cannot be assessed in isolation from the

substance of the case.113

ii. International Fruit Company

55. The International Fruit Company judgment of 14 December 1972 is the starting point

for this abundantly discussed episode in the European Court’s case law.114 The case offers a

good image of how exactly the Court’s approach of GATT/WTO law was formed. As quoted

by Maresceau this is the mother of all later rulings by the Court on the direct effect of

international agreements, and therefore cannot be left out.115 The case concerned a

preliminary ruling referred to the European Court of Justice by a Dutch court, the College van

beroep voor het bedrijfsleven, questioning the validity of EEC regulations restricting the

import of apples in the light of article XI GATT 1947.116 If the ECJ would have declared the

regulations invalid, International Fruit Company and many other importers of fruits and

vegetables would have benefited from the right to free importation under the then applicable

Union law.

56. The ECJ first addressed the question whether the validity of a regulation also referred

to their validity under international law, or in other words, whether the validity of the

112 P. EECKHOUT, External Relations of the European Union, Legal and Constitutional Foundations, Oxford, Oxford University Press, 2005, 280. 113 MARESCEAU, cited supra note 105 at 248. 114 International Fruit Company, cited supra note 101. 115 MARESCEAU, cited supra note 105 at 247. 116Règlement (CEE) n° 459/70 de la Commission, du 11 mars 1970, arrêtant les mesures de sauvegarde applicables à l'importation des pommes de table, O.J. 1970, L57/20, Règlement (CEE) n° 565/70 de la Commission, du 25 mars 1970, relatif à la gestion du système de titres d'importation des pommes de table et modifiant le règlement (CEE) n° 459/70, O.J. 1970, L69/33, Règlement (CEE) n° 686/70 de la Commission, du 15 avril 1970, portant troisième modification du règlement (CEE) n 565/70 relatif à la gestion du système de titre d'importation des pommes de table et modifiant le règlement (CEE) n° 459/70, O.J. 1970, L84/21.

32 GATT/WTO law in the European Union’s legal order: a lack of direct effect

regulations in casu could be assessed in the light of article XI GATT 1947, which provided

for a general prohibition on quantitative trade restrictions.117

57. In order to answer this question the ECJ first confirmed its jurisdiction with respect to

assessing the validity of Union acts even when the grounds on which this would be done were

rules of international law, as the jurisdiction of the Court cannot be limited by the grounds on

which the validity of those measures may be contested.118 The ECJ thus implicitly affirmed its

power to interpret international agreements. A particular rule of international law could serve

as a ground for validity control, only if the Union was bound by that particular provision of

international law. But the EC was not a party to the GATT 1947 at that time. Nevertheless,

the ECJ considered there were enough elements present to conclude that it was bound by the

GATT 1947: the Union had already assumed the functions inherent in the tariff and trade

policy, the Union had conducted tariff negotiations and the Member States had formally

conferred those powers on the Union through the setting up of the common external tariff. By

doing so, the Member States had expressed their wish to bind the Union by the GATT

1947.119 The ECJ did not state that the GATT 1947 was “an integral part of Community

[Union] law”, as opposed to later developments in its case law with respect to international

agreements.120

58. By stating that “before invalidity can be relied upon before a national court, that

provision of international law must also be capable of conferring rights on citizens of the

Community [Union] which they can invoke before the courts”, the ECJ then created a

preconditional link between the possibility of validity review in the light of international law

and the fact that the concerning provision of international law has direct effect.121 By doing so

the ECJ established a threshold, being direct effect, in order to protect the validity of Union

measures, as Bebr correctly indicates.122

117 International Fruit Company, cited supra note 101, §2, article XI GATT 1947, cited supra note 3. 118 Ibid. at §5. 119 Ibid. at §10-18. 120 Cf. supra, §49. 121 International Fruit Company, cited supra note 101, §8. 122 The other contracting parties were acting in practice as if the EC had formally succeeded its Member State to the GATT, the EC was treated as a contracting party. G. BEBR, “Agreements concluded by the Community and Their Possible Direct Effect: From International Fruit Company to Kupferberg”, Common Market Law Review 1983, 46 cited in G. ZONNEKEYN, “The direct effect of GATT in community law: from International Fruit Company to the Banana cases”, International Trade Law and

33 GATT/WTO law in the European Union’s legal order: a lack of direct effect

59. The Court then continued by examining whether article XI GATT 1947 was capable of

conferring rights, invokable before national courts, upon Union citizens. In accordance with

its reasoning in Van Gend & Loos, the Court started by assessing the spirit, the general

scheme and the terms of the GATT 1947 in general. According to the Court, the agreement

was “based on the principle of negotiations undertaken on the basis of ‘reciprocal and

mutually advantageous arrangements”.123 Emphasis was put on the high degree of flexibility

provided in the agreement, more particularly with respect to dispute settlement, emergency

actions and possibility for derogation.124 The ECJ concluded that the GATT as such was not

capable of conferring rights on citizens which they can invoke before the Courts. The Court

exclusively relied on the general character of the GATT 1947 in its assessment and came to

this conclusion without even examining the specific article XI GATT 1947. However, one

should not ignore the fact that in this judgment the ECJ also established the GATT 1947 to be

legally binding upon the European Union.

60. In a subsequent line of case law, the ECJ confirmed the International Fruit Company

judgment and persisted in denying the GATT 1947 direct effect.125 The reasoning of the Court

has been severely criticised both by advocate-generals as other observers as being incoherent

with its normal approach of international agreements in view of determining direct effect,

developed in Kupferberg and Demirel.126

Regulation 1996, 65. The other contracting parties were acting in practice as if the EC had formally succeeded its Member State to the GATT, the EC was treated as a contracting party. 123 International Fruit Company, cited supra note 114, §§ 21 – 26. 124 See supra §§6-10, Article XIX, XXII and XXIII GATT 1947, cited supra note 3. 125 ECJ Case 9/73, Carl Schluter v. Hauptzollamt Lorrach, ECR 1973, 1135, ECJ Case 126/78, Douaneagent der NV Nederlandse Spoorwegen v. Inspecteur der invoerrechten en accijnzen, ECR 1975, 1439, ECJ Case 266/81, Societa Italiana per l'Oleodotto Transalpino (SIOT) v. Ministero delle Finanze and others, ECR 1983, 731, ECJ joined cases 267-269/81, Amministrazione delle Finanze dello Stato v. Societa Petrolifera Italiane SpA (SPI) and SpA Michelin Italiana (SAMI) ECR 1983, 801. 126 See infra §§134 - 163; Opinion AG Tesauro in ECJ case C-53/96, Hermès International, ECR 1998, I-3603, Opinion AG Saggio in ECJ case C-149/96, Portugal v Council, ECR 1999, I-8395, KUILWIJK, K., J., The European Court of Justice and the GATT dilemma: public interest versus individual rights?, Ten Brink, Meppel, 1996, E.U. PETERSMANN, “Application of GATT by the Court of Justice of the European Communities”, Common Market Law Review 1983, 397-437, G. ZONNEKEYN, cited supra note 122; Contra: Kuijper argues that Kupferberg is outdated and therefore it is not an appropriate point of reference anymore; see infra note 166.

34 GATT/WTO law in the European Union’s legal order: a lack of direct effect

iii. Fediol and Nakajima

iii.a. Fediol

61. The criticism resulting from International Fruit Company and its successors called for

a revision of the strict approach by the Court of Justice. Indeed, the Fediol case offered an

opportunity to slightly nuance the International Fruit Company ruling as the case at hand

rather diverged from International Fruit Company.127 The Fédération de l'industrie de

l'huilerie de la CEE / EEC Seed Crushers' and Oil Processors' Federation (Fediol) brought a

direct action before the Court pursuant to article 263 TFEU (ex article 230 TEC). Fediol

challenged the validity of a Commission decision which rejected its complaint and request to

open an investigation for “illicit commercial practices”, in the light of the New Commercial

Policy Instrument Regulation.128 According to the latter, “illicit commercial practices” means

any international trade practice attributable to third countries which is incompatible with

international law or with the generally accepted rules.129 The references made to

“international law” and “generally accepted rules” undoubtedly alluded to the GATT 1947.130

62. The Court’s judgment reads as follows:

“It should be recalled that the Court has certainly held, on several occasions, that various

GATT provisions were not capable of conferring on citizens of the Community [Union]

rights which they can invoke before the courts. Nevertheless, it cannot be inferred from

those judgments that citizens may not, in proceedings before the Court, rely on the

provisions of GATT in order to obtain a ruling on whether conduct criticized in a

complaint lodged under Article 3 of Regulation No 2641/84 constitutes an illicit

commercial practice within the meaning of that regulation. The GATT provisions form part

of the rules of international law to which Article 2(1 ) of that regulation refers, as is borne

out by the second and fourth recitals in its preamble, read together .

It is also appropriate to note that the Court did indeed hold in the abovementioned

judgments of 12 December 1972 International Fruit Company, 24 October 1973 Schlueter

127 ECJ case 70/87, Fediol v. Commissie, ECR 1989, 1781. 128 Council Regulation (EEC) 2641/84 of 17 September 1984 on the strengthening of the common commercial policy with regard in particular to protection against illicit commercial practices, O.J. 1984, L 252; this is the predecessor of the current trade barriers regulation. 129 Ibid. article 2(1). 130 M. MARESCEAU, Bilateral agreements concluded by the European community, Leiden/Boston, Martinus Nijhoff publishers, 2006, 251.

35 GATT/WTO law in the European Union’s legal order: a lack of direct effect

and 16 March 1983 SPI and SAMI, that a particular feature of GATT is the broad

flexibility of its provisions, especially those concerning deviations from general rules,

measures which may be taken in cases of exceptional difficulty, and the settling of

differences between the contracting parties . That view does not, however, prevent the

Court from interpreting and applying the rules of GATT with reference to a given case, in

order to establish whether certain specific commercial practices should be considered

incompatible with those rules . The GATT provisions have an independent meaning which,

for the purposes of their application in specific cases, is to be determined by way of

interpretation .

Lastly, the fact that Article XXIII of GATT provides a special procedure for the

settlement of disputes between contracting parties is not such as to preclude its

interpretation by the Court . As the Court held in the judgment of 26 October 1982 in Case

104/81 Kupferberg (( 1982 )) ECR 3641, in the context of the joint committees which are

set up by free-trade agreements and given responsibility for the administration and proper

implementation of those agreements, the mere fact that the contracting parties have

established a special institutional framework for consultations and negotiations inter se in

relation to the implementation of the agreement is not in itself sufficient to exclude all

judicial application of that agreement.” 131

63. The Court thus accepts that reference to the GATT 1947 can be made in order to

challenge the legality of a Commission’s decision to the extent that a specific Union act refers

to international law, implicitly referring to the GATT 1947.

iii.b. Nakajima

64. The Fediol case is usually bracketed together with the Nakajima case.132 This is not

surprising as both cases show similar characteristics. Nakajima, a Japanese manufacturer of

typewriters and printers contested a Union act, more particularly the applicability of the

Union anti-dumping Regulation and requested that the specific regulation imposing a

definitive anti-dumping duty on imports of serial-impact dot-matrix printers originating in

131 Fediol, cited supra note 127, §§ 19 – 21. 132 ECJ case C-69/89, Nakajima v Council, ECR 1991, I-2069.

36 GATT/WTO law in the European Union’s legal order: a lack of direct effect

Japan would be declared void because of its alleged incompatibility with the GATT Anti-

Dumping Code.133

65. The Court smoothly avoided the controversial issue of direct effect by rephrasing

Nakajima’s claim. According to the Court, Nakajima was not relying on the direct effect of

the provisions of the GATT Anti Dumping Code.

“In making this plea in law, the applicant is in fact questioning, in an incidental manner

under Article 184 of the Treaty, the applicability of the new basic regulation by invoking

one of the grounds for review of legality referred to in Article 173 of the Treaty, namely

that of infringement of the Treaty or of any rule of law relating to its application.”134

“According to the second and third recitals in the preamble to the new basic regulation, it

was adopted in accordance with existing international obligations, in particular those

arising from Article VI of the General Agreement and from the Anti-Dumping Code. It

follows that the new basic regulation, which the applicant has called in question, was

adopted in order to comply with the international obligations of the Community [Union],

which, as the Court has consistently held, is therefore under an obligation to ensure

compliance with the General Agreement and its implementing measures (see the

judgments in Case 104/81 Hauptzollamt Mainz v Kupferberg [1982] ECR 3641, at

paragraph 11, and in Case 266/81 SIOT v Ministero delle Finanze and Others [1983] ECR

731, at paragraph 28). In those circumstances, it is necessary to examine whether the

Council went beyond the legal framework thus laid down, as Nakajima claims, and

whether, by adopting the disputed provision, it acted in breach of Article 2(4) and (6) of

the Anti-Dumping Code.135

The fact that the Union anti-dumping Regulation expressly referred to the GATT 1947 and

the Anti-Dumping Code allowed the Court to review the legality of this Union act to the

extent that this act referred to the GATT 1947. In this case the Union regulation was not in

breach of its international obligation under the GATT Anti-Dumping Code. The ECJ repeated

133 Council Regulation (EEC) 2423/88 of 11 July 1988 on protection against dumped or subsidized imports from countries not members of the European Economic Community, O.J. 1988, L 209/1, Council Regulation (EEC) 3651/88 of 23 November 1988 imposing a definitive anti-dumping duty on imports of serial-impact dot-matrix printers originating in Japan, O.J. 1988, L 317/33, 134 Nakajima, cited supra note 132, § 28. 135 Ibid. at § 30 – 32.

37 GATT/WTO law in the European Union’s legal order: a lack of direct effect

this exercise in for instance the Matsushita case and the Goldstar case.136 Both these cases

concerned the same Union anti-dumping regulation.137 However, the Court did not make any

reference no more to the issue of direct effect.

iv. Germany v. Council

66. After Fediol and Nakajima, questions arose whether the Court had created an opening

in its otherwise very strict rulings concerning the GATT 1947, more particularly in case of a

direct action before the Court. Moreover, the ruling of the Court was awaited for by many,

because of the possible implications of a combination of the Fediol and Nakajima rulings on

the lack of direct effect of GATT law. However, it did not take long for the Court to give a

strong signal that it would not change its International Fruit Company approach. In Germany

v. Council the Court confirmed its strict position regarding the requirement of direct effect

even with respect to direct actions for annulment introduced by Member States.138

67. In this particular episode in the Banana series of judgments, Germany, pursuant to

article 263 TFEU (ex article 230 TEC) directly challenged the validity of several provisions

of Council Regulation (EEC) No 404/93 of 13 February 1993 on the common organization of

the market in bananas in light of GATT 1947. Germany contended that Union acts should

comply with GATT rules in order to be valid, regardless of any question as to the direct effect

of GATT.139 The Court was not convinced and made no distinction as to whether a Member

State directly challenged the validity of a Union act or an individual challenged it before a

national court.140 In this respect a nuance must be made. In the case Netherlands v.

Parliament and Council , also known as the Biotechnology case, the Court partly renounced

its former case law regarding the requirement of direct effect for international agreements.141

With respect to the Rio de Janeiro Convention on Biological Diversity, the Court did not

require the Convention to have direct effect in order to allow a “review by the [European]

courts of compliance with the obligations incumbent on the Community [Union]as a party to

136 ECJ case C-105/90, Goldstar, ECR 1992, I-723, ECJ case C-175/87, Matsushita, ECR 1992, I-1478. 137 Cited supra note 133. 138 ECJ case C-280/93, Germany v Council, ECR. 1994, I-4973. 139 Ibid. at § 103. 140 Ibid. at § 109. 141 ECJ case C-373/98, Netherlands v Parliament en Council, ECR 2001, I – 7079

38 GATT/WTO law in the European Union’s legal order: a lack of direct effect

that agreement”.142 In that same judgment the Court declined to extend its reasoning to the

WTO agreement.143

68. In Germany v. Council the Court then continued by reiterating its well established case

law.144 And immediately clarified how the Fediol and Nakajima cases related to International

Fruit Company:

“The special features noted above show that the GATT rules are not unconditional and that

an obligation to recognize them as rules of international law which are directly applicable

in the domestic legal systems of the contracting parties cannot be based on the spirit,

general scheme or terms of GATT. In the absence of such an obligation following from

GATT itself, it is only if the Community [Union] intended to implement a particular

obligation entered into within the framework of GATT, or if the Community [Union] act

expressly refers to specific provisions of GATT, that the Court can review the lawfulness

of the Community [Union] act in question from the point of view of the GATT rules (see

Case 70/87 Fediol v Commission [1989] ECR 1781 and Case C-69/89 Nakajima v Council

[1991] ECR I-2069).”145

§2. The WTO Agreement in the EU’s legal order

69. A few months before the ruling of the Court in Germany v. Council, the EC and its

trade partners agreed on concluding the Uruguay Negotiation Round and signed the WTO

Agreement, which would come into effect that same year. The WTO Agreement was

believed to alter several features of the former GATT 1947 which had led the ECJ to deny the

General Agreement direct effect. Through several measures, the system had become more

rule-oriented, more institutionalized and the dispute settlement had changed fundamentally,

this was definitely considered as a major step forwards.146 Certainly with respect to the

dispute settlement the changes were striking: the DSU clamped down on the high degree of

flexibility which in the past gave leeway to negotiations and diplomatic solutions. Naturally,

142 Ibid. at §§ 52 - 54. 143 Infra 144 Ibid. at §§ 106 - 110. 145 Ibid. at §§ 110 – 111. 146 See supra §§ 4 - 19.

39 GATT/WTO law in the European Union’s legal order: a lack of direct effect

the Court’s assessment of the new agreement was awaited with suspense, a new ruling of the

ECJ was long-anticipated by many. However, in December 1995, the Court delivered its

judgment in the Chiquita Italia case, in which it recalled both International Fruit Company as

Germany v Council.147 The Court did not in any way take notice of those recent developments

in its assessment of the direct effect of GATT 1947.

i. Hermès and T-Port

70. Both in the Hermès case as in T-Port the Court carefully by-passed the issue of direct

effect.148 The T-Port case concerned a preliminary ruling pursuant to article 267 TFEU (ex

article 234 TEC) on the validity of Commission Regulation (EC) No 478/95 of 1 March 1995

and on the direct effect of the provisions of the General Agreement on Tariffs and Trade.149

More particularly the case dealt with post-clearance recovery of customs duties payable on

bananas imported from Ecuador in 1995. However, Ecuador was not a contracting party to the

GATT 1947 and was not yet a Member of the WTO at that time. Therefore the Court

concluded:

“It follows that neither GATT 1947, concluded before the entry into force of the Treaty,

nor GATT 1994 can be effectively relied on, in circumstances such as those of the present

cases, to preclude the application, under the first paragraph of Article 234 of the Treaty, of

provisions of Regulations Nos 404/93 and 478/95. The answer to the first question and

the second part of the second question must therefore be that the first paragraph of Article

234 of the Treaty must be interpreted as not applying to cases involving imports of

bananas from a third country which is not a party to an international agreement concluded

by Member States before the entry into force of the Treaty.”150

71. Likewise, in Hermès the Court circumvented the issue of direct effect. It was asked to

rule on a Dutch interim measure and more particularly whether that measure constituted a

147 ECJ case C-469/93, Chiquita Italia, ECR 1995, I-4533. 148 ECJ case C-53/96, Hermès International, ECR 1998, I-3603 and ECJ cases C-364/95 and C-365/95, T-Port GmbH & Co. v Hauptzollamt Hamburg-Jonas, ECR. 1998, I - 1023. 149 Commission Regulation (EC) 478/95 of 1 March 1995 on additional rules for the application of Council Regulation 404/93 as regards the tariff quota arrangement for imports of bananas into the Community and amending Regulation 1442/93, O.J. 1993, L 49/13 and General Agreement on Tariffs and Trade, annex 1A to the Agreement Establishing the World Trade Organization, Marrakesh, 15 April 1994 (www.wto.org). [GATT 1994] 150 T-Port, cited supra note, §§ 64 - 65.

40 GATT/WTO law in the European Union’s legal order: a lack of direct effect

provisional measure in the sense of article 50 TRIPS Agreement.151 The Court interpreted the

article in question without first assessing whether the TRIPS Agreement had direct effect, for

which it gave the following explanation152:

“It should be stressed at the outset that, although the issue of the direct effect of Article 50

of the TRIPs Agreement has been argued, the Court is not required to give a ruling on that

question, but only to answer the question of interpretation submitted to it by the national

court so as to enable that court to interpret Netherlands procedural rules in the light of that

article.”153

ii. Portugal v. Council

72. After T-Port and Hermès pressure was built on the Court to finally decide on this

matter and to reassess in the light of the new agreement the arguments it had put forward in

denying direct effect to the GATT 1947. Eventually, on 23 November 1999, the ECJ

delivered its judgment in Portugal v. Council.154 Portugal had filed an application pursuant to

article 263 TFEU (ex article 230 TEC) for annulment of Council Decision (EC) 96/386 of 26

February 1996 concerning the conclusion of Memoranda of Understanding between the

European Community and the Islamic Republic of Pakistan and between the European

Community and the Republic of India on arrangements in the area of market access for textile

products.155 The Council decision was challenged by Portugal on the basis of the Agreement

on Textiles and Clothing (`the ATC') and the Agreement on Import Licensing Procedures,

both agreements are part of Annex 1A to the Agreement establishing the WTO. Portugal

recalled the reasoning of the Court in Germany v Council, according to which the GATT

1947 rules can have direct effect when the adoption of the measures implementing obligations

assumed within the context of the GATT is in issue or where a Union measure refers

151 The Hermès case was also the first case where the ECJ interpreted a mixed agreement other than an association agreement,which was slightly controversial seeing the shared nature of the competence covering this area of law, Hermés, cited supra note 148, §§ 24 & 32. The Court confirmed its approach in ECJ case C-300/98 and C-392/98, Dior et al, ECR 2000, I – 11307 and ECJ case C-89/99, Schieving-Nijstad vof and Others v. Robert Groeneveld, ECR 2001, I-5851, For the interpretation of WTO law by the ECJ see infra §104. 152 Agreement on Trade related aspects of intellectual property rights, annex 1 C to the Agreement Establishing the World Trade Organization, Marrakesh, 15 April 1994 (www.wto.org). 153 Hermès, cited supra note 148, § 35. 154 ECJ case C-149/96, Portugal v Council, ECR 1999, I-8395. 155 Council Decision (EC) 96/386 of 26 February 1996 concerning the conclusion of Memoranda of Understanding between the European Community and the Islamic Republic of Pakistan and between the European Community and the Republic of India on arrangements in the area of market access for textile products, O.J. 1996, L 153/47.

41 GATT/WTO law in the European Union’s legal order: a lack of direct effect

expressly to specific provisions of the general agreement. Which, Portugal argued, was the

case:

“that is precisely the position in this case, which concerns the adoption of a measure - the

contested decision - approving the Memoranda of Understanding negotiated with India

and Pakistan following the conclusion of the Uruguay Round for the specific purpose of

applying the rules in GATT 1994 and the ATC.”156

Portugal argued that the WTO Agreements were significantly different from the GATT 1947,

in particular with regards to the radical changes made to the dispute settlement procedure.

Portugal also contended that the case did not raise the problem of direct effect: it concerned

the circumstances in which a Member State may rely on the WTO agreements before the

Court for the purpose of reviewing the legality of a Council measure. 157 This left the Court

not much space to by-pass this pressing issue once again, it had become almost impossible to

avoid the question of the effect of the new WTO Agreements.

73. The Court started by confirming its jurisdiction to rule on this matter, it reiterated its

previous Kupferberg reasoning: according to the Court it had jurisdiction to do so only if the

effect of the agreement in the internal legal order of the parties is not settled in the agreement

itself.158 Subsequently, the Court stated the following with respect to the WTO Agreements:

“While it is true that the WTO agreements, as the Portuguese Government observes, differ

significantly from the provisions of GATT 1947, in particular by reason of the

strengthening of the system of safeguards and the mechanism for resolving disputes, the

system resulting from those agreements nevertheless accords considerable importance to

negotiation between the parties.”159

For this purpose the Court referred to article 22.1 and 22.2 of the DSU. These articles allow

WTO Members in a dispute settlement procedure to start negotiations when the respondent

Member has failed to implement the recommendations within the reasonable period of

time.160 According to the Court the Member States’ executive and legislative organs would

have been deprived of their possibility to negotiate once a judicial organ would have refrained

156 Portugal v Council, cited supra note 154, § 28. 157 Ibid. at § 31 and § 32. 158 Ibid. at § 34, Kupferberg see supra §49. 159 Ibid. at § 36. 160 Ibid. at § 38 – 39.

42 GATT/WTO law in the European Union’s legal order: a lack of direct effect

from applying the rules of domestic law which are inconsistent with the WTO Agreements.161

The Court thereby concluded that

“the WTO agreements, interpreted in the light of their subject-matter and purpose, do not

determine the appropriate legal means of ensuring that they are applied in good faith in the

legal order of the contracting parties.”162

The Court continued by emphasising the specific nature of the WTO Agreements, namely the

fact that the agreements are based upon negotiations in order to enter into reciprocal and

mutually advantageous arrangements. According to the Court this characteristic distinguishes

the WTO from the agreements concluded between the – then still – Community and non-

member countries which introduce a certain asymmetry of obligations, or create special

relations of integration with the Union.163 In this respect the Court referred to other

Contracting Parties, which were and still are amongst the most important trade partners of the

Union. These Contracting Parties did not grant the WTO Agreements direct effect in their

internal legal order. However, according to the Court, the fact that the courts of one of the

parties consider that some of the provisions of the agreement concluded by the Union are of

direct application whereas the courts of the other party do not, is not in itself sufficient to

constitute a lack of reciprocity in the implementation of the agreement.

“However, the lack of reciprocity in that regard on the part of the Community's [Union]

trading partners, in relation to the WTO agreements which are based on `reciprocal and

mutually advantageous arrangements' and which must ipso facto be distinguished from

agreements concluded by the Community [Union], referred to in paragraph 42 of the

present judgment, may lead to disuniform application of the WTO rules.”164

74. The Court once more stated that it would deprive the executive and legislative organs

of the Union of their scope for manoeuvre in trade negotiations if it would decide that the

Union judicature needs to ensure that Union law complies with those WTO rules.165 Here, the

161 Ibid. at § 40. 162 Ibid. at § 41. 163 Ibid. at § 42. 164 Ibid. at § 44 – 45. This mentioning of the risk of ‘disuniform application of the WTO rules’ is in Von Bogdandy’s opinion the ECJ’s main concern. In his view the reciprocity argument is to be interconnected with the “principle of legal equality” and not with trade policy, see infra § 184; in detail see A VON BOGDANDY, “Legal equality, Legal Certainty, and Subsidiarity in Transnational Economic Law” in A. VON BOGDANDY, P. MAVROIDIS, Y. MÉNY (eds.), European Integration and International Co-ordination – Studies in Transnational Economic Law in Honour of Claus-Dieter Ehlermann, Nederland, Kluwer Law International, 2002, 30 et seq. 165 Ibid. at § 46.

43 GATT/WTO law in the European Union’s legal order: a lack of direct effect

Court puts a somewhat neutral gloss on this politically loaded argument: especially powerful

WTO members (such as the EU and the US) can disregard a DSB decision or force a political

solution that is not in conformity with the WTO rules either, in granting direct effect, the

Court would seriously restrict the EU’s scope for manoeuvre.166

75. And so the Court concluded that, having regard to their nature and structure, the WTO

Agreements were not in principle among the rules in the light of which the Court is to review

the legality of Community/Union measures.167 To that end the Court also referred to Decision

94/800 according to which `by its nature, the Agreement establishing the World Trade

Organisation, including the Annexes thereto, is not susceptible to being directly invoked in

Community or Member State courts'.168

76. The Court then examined whether this case could be dealt with under the

Fediol/Nakajima case law. According to the Court, the contested decision was not designed

to ensure the implementation in the Union legal order of a particular obligation assumed in

the context of the WTO, nor did it make express reference to any specific provisions of the

WTO agreements.

77. In Portugal v Council the ECJ confirmed its former case law denying direct effect of

WTO law, despite the opinion of AG Saggio which had strongly argued the opposite.169 In

doing so the Court repeatedly pointed at the room for negotiation in dispute settlement. Also

the argument of reciprocity was confirmed.

iii. Biret

78. After Portugal v Council the ECJ stood by its ruling in many other cases that were

brought before the Court.170 Although in some of those cases a new opportunity lent itself to

make a distinction and leave the door open for a new approach. In this context one cannot

166 See supra § 32 and P-J KUIJPER and M. BRONCKERS, “WTO law in the European Court of Justice”, Common Market Law Review 2005, 1351. 167 Ibid. at § 46 – 47. 168 Ibid. at § 48, Council Decision (EC) 94/800 of 22 December 1994 concerning the conclusion on behalf of the European Community, as regards matters within its competence, of the agreements reached in the Uruguay Round multilateral negotiations (1986-1994), O.J. 1994, L 336/1. 169 ECJ case C-149/96, Portugal v Council, Opinion Advocate General Saggio of 25 February 1999. For a commentary on the stance of the advocates general in this issue, see infra §§ 144 - 149. 170 See for example ECJ case C-307/99, OCT Fruchthandelsgesellschaft, ECR 2001, I – 3159.

44 GATT/WTO law in the European Union’s legal order: a lack of direct effect

ignore the Biret case.171 This case concerned an action for damages under article 268 TFEU

(ex article 235 TEC) and article 340 TFEU (ex article 288 of the EC) for compensation for

damage which Biret had allegedly suffered as a result of the prohibition on the importation

into the Union of beef and veal from farm animals to which certain substances with hormonal

action had been administered. Biret submitted that the retaining of Directives 81/602, 88/146

and 96/22 relating to the prohibition of the use of hormones in stockfarming were in breach

of the SPS Agreement, especially given the existence of a DSB decision recommending a

change in the EU’s hormones approach.172

79. In Biret the ECJ recognised that the argument pertaining to the effect of DSB decisions

is autonomous from that relating to the effect of WTO law.173 The ECJ left the door open in

respect of non contractual liability of the Union and the Courts’ legality review when the

DSB had already identified a breach of WTO law and the implementation period had

passed.174 The Court recalled the conditions for the Union to incur non-contractual liability

pursuant to article 340, §2 TFEU (ex article 288) namely the illegality of the Union

institutions’ conduct, actual damage and the existence of a causal link. 175

80. In order to assess whether these conditions were fulfilled, the ECJ had to establish the

possible impact of the application of WTO Dispute Settlement rulings adopted by the DSB.

More particularly whether a DSB ruling could be relied upon to determine the illegal

character of the Union institutions. This question was brought forward by Biret, but the Court

171 ECJ cases C-93/02 and C-94/02 P, Biret Internationa/Établissements Biret v Council, ECR 2003, I - 10497. 172 EC Council Directive 96/22 of 29 April 1996 concerning the prohibition on the use in stockfarming of certain substances having a hormonal or thyrostatic action and of ß-agonists, and repealing Directives 81/602/EEC, 88/146/EEC and 88/299/EEC, Agreement on the Application of Sanitary and Phytosanitary Measures, annex 1 A to the Agreement Establishing the World Trade Organization, Marrakesh, 15 April 1994 (www.wto.org). [SPS] 173 Biret, cited supra note 171 at §§ 55 – 58. 174 The judgment of the ECJ was also in legal doctrine perceived as having left the door “half open”, see A. VON BOGDANDY, “Legal Effects of World Trade Organization Decisions within European Union Law; A Contribution to the Theory of the Legal Acts of International Organizations and the Action for Damages Under Art. 288 (2) EC”, Journal of World Trade 2005, 45-66, G. ZONNEKEYN, “EC liability for the Non-Implementation of WTO Dispute Settlement Decisions – Advocate General Albers proposes a Copernican Revolution in the Case Law of the ECJ”, Journal of International Economic Law 2003, 761-769, EC liability for non-implementation of WTO dispute settlement decisions – are the dice cast?”, Journal of International Economic Law 2004, 483-490. 175 Biret, cited supra note 171 at §§ 51 – 53 and §§ 54 – 55 resp.

45 GATT/WTO law in the European Union’s legal order: a lack of direct effect

smoothly circumvented the issue stating that it could not rule on alleged damages suffered

before the expiry of the implementation period176:

“In that regard, the dispute settlement procedure which culminated in the DSB decision of

13 February 1998 was instigated in 1996. Since the Community [Union] had stated that it

intended to comply with its WTO obligations but that it needed a reasonable time to do so,

under Article 21(3) of the Understanding it was granted a period of 15 months for that

purpose, which expired on 13 May 1999.

Accordingly, for the period prior to 13 May 1999, the Community [Union] Courts cannot,

in any event, carry out a review of the legality of the Community [Union] measures in

question, particularly not in the context of an action for damages under Article 178 of the

Treaty, without rendering ineffective the grant of a reasonable period for compliance with

the DSB recommendations or rulings, as provided for in the dispute settlement system put

in place by the WTO agreements.”177

iv. Van Parys

81. Although the Court had skilfully avoided the question of DSB decisions in Biret, it

could no longer do so in the Van Parys case.178 The case concerned a preliminary ruling

referred by the Belgian “Raad van State” on the interpretation of Council Regulation (EEC)

No 404/93 of 13 February 1993 on the common organization of the market in bananas as

amended by Council Regulation (EC) 1637/98 of 20 July 1998 in the light of article I and

XIII of the GATT 1994.179 The main proceedings concerned the refusal by the BIRB to issue

Van Parys import licenses for the quantities of bananas originating in Ecuador and Panama it

had applied for.180 Van Parys contended that the regulations, on the basis of which the BIRB

had taken its decision, were unlawful in the light of the WTO rules.181

82. This case is thus situated in the heart of the Banana dispute. The European Union’s

revised banana regime had only just been found in breach of several WTO provisions by the

176 Biret was put into liquidation in 1995, which made it impossible for the company to have suffered any damage after 1May 1999. 177 Ibid. at § 64 – 65. 178 ECJ case C-377/02, Van Parys, ECR 2005, I – 1465. 179 Cited supra note 38 and 41, the preliminary referral concerned the validity of other regulations as well, see Van Parys, cited supra note 178 at § 1. 180 Belgisch Interventie- en Restitutiebureau / Belgian Intervention and Refund Board. 181 Van Parys, cited supra note 178 at § 35.

46 GATT/WTO law in the European Union’s legal order: a lack of direct effect

WTO Appellate Body, the US had been granted authorisation to suspend concessions and also

in the proceedings with Ecuador a similar outcome was to be expected.182

83. In its assessment, the Court started by extensively quoting provisions from the WTO

Agreement, the GATT 1994 and the DSU.183 The Court then recalled its previous case law

relating to the WTO.184 Consequently, the Court established that the undertaking to comply

with the WTO rules, as a consequence of the DSB decision, did not constitute an exception

falling under the Fediol / Nakajima case law:

“ the Community [Union] did not intend to assume a particular obligation in the context of

the WTO, capable of justifying an exception to the impossibility of relying on the WTO

rules before the Community [Union] Courts and enabling the Community [Union] Courts

to exercise judicial review of the relevant Community [Union] provisions in the light of

those rules.”185

For this purpose the Court extensively referred to the fact that

“ the WTO dispute settlement system nevertheless accords considerable importance to

negotiation between the parties, even where there is a decision of the DSB holding that the

measures adopted by a member are incompatible with the WTO rules.”186

84. Among other reasons, the Court again referred to article 22.2 DSU, which allows WTO

Members in a dispute settlement procedure to start negotiations when the respondent Member

has failed to implement the recommendations within the reasonable period of time with a

view to agreeing compensation.187 For these reasons, according to the Court, it was clear that

it would deprive the executive and legislative organs of the Union of their scope for

manoeuvre if it would decide that the Union judicature needed to ensure that Union law

complies with those WTO rules.188 Even after the expiry of the implementation period, such a

review in the light of the WTO rules would have an ‘undermining’ effect on the Union’s

attempt to reach a mutually acceptable solution.189

182 For a more elaborate review of the Banana dispute, see supra §§ 20 - 27. 183 Van Parys, cited supra note 178 at §§ 3 – 9. 184 Ibid. at §§ 39 – 40. 185 Ibid. at § 41. 186 Ibid. at § 42. 187 Ibid. at § 45, see also Portugal v Council, cited supra note 154 at §§ 38 – 39. 188 Ibid. at § 48. 189 Ibid. at § 51.

47 GATT/WTO law in the European Union’s legal order: a lack of direct effect

85. Although the Court had left the door open in the Biret judgment with respect to the

expiry of the implementation period, in the Van Parys judgment the ECJ seemed to have

closed that door once again. In the Court’s opinion, the expiry of the time-limit does not

imply that the Union had exhausted the possibilities under the DSU of finding a solution to

the dispute.190

86. Furthermore, the Court reiterated its reciprocity argument, stressing the fact that the

most important commercial partners of the Union had concluded that the WTO Agreements

were not among the rules that have been granted direct effect.191 The Court thus declined to

adopt the claim of the applicant in stating that the existence of DSB reports does not change

the rule as it stands even until today.

v. FIAMM and Fedon

87. Recently, in FIAMM the ECJ has locked the door it had previously closed in Van

Parys.192 More particularly, the case concerned a claim for compensation pursuant to article

268 TFEU and the second paragraph of article 340 TFEU (ex article 288 TEC). The

complainants, exporters of industrial batteries (FIAMM) and spectacle cases and associated

accessories (Fedon) claimed to have suffered of the increased customs duty levied by the US

on imports of their products.193 FIAMM claimed to have suffered EUR 10.8 million and

Fedon EUR 2.3 million. The suspension of these tariff concessions was authorised by the

DSB, which had previously found the Union regime governing the import of bananas

incompatible with WTO law.

190 Ibid. 191 Ibid. at § 53. 192 ECJ joined cases C-120/06 and 121/06, Fabbrica italiana accumulatori motocarri Montecchio SpA (FIAMM), Fedon & Figli and others v Council and Commission, ECR 2008, I -0000. In fact, six different cases were brought before the General Court, which delivered six judgments on 14 December 2005. The FIAMM and Fedon judgments lend themselves best to use as reference in this examination: all six judgments are worded in a similar way, except for the alleged damage which was the highest for FIAMM and the fact that the ECJ has judged in FIAMM and Fedon on appeal. For the other judgments see CFI cases T-151/00, Le Laboratoire du Bain v Council and Commission, ECR 2005, II-00023,T-301/00, Groupe Fremaux SA and Palais Royal Inc. v Council and Commission, ECR 2005, II-00025, T-320/00, CD Cartondruck AD v Council and Commission, ECR 2005, II-00027. 193 By decision of 19 April 1999, the DSB authorised the US to levy customs duty amounting up to USD 191.4 million per year, cited supra note 42. Consequently, the US imposed ad valorem import duty at a rate 100 per cent on various products (for instance bath preparations, handbags, wallets, paperboard boxes, bed linen, batteries, coffee makers), see Notice of the USTR of April 19, 1999, 64 Fed. Reg. 19, 209 (1999).

48 GATT/WTO law in the European Union’s legal order: a lack of direct effect

v.a. Judgments of the General Court

88. Before the General Court, both FIAMM and Fedon argued that the failure of the

Council and the Commission to adopt amendments to the Union banana regime in order to

bring it into conformity with the WTO Agreements within the time-limit fixed by the DSB

constituted a breach of the principle of pacta sunt servanda, of the principles of the protection

of legitimate expectations and of legal certainty, of their rights to property and pursuit of an

economic activity and of the principle of proper administration and therefore the Union had

incurred non-contractual liability by reason of the unlawful conduct of its institutions. In the

alternative, FIAMM and Fedon claimed, that the Union had incurred non-contractual liability

even in the absence of unlawful conduct of its institutions.194 The complainants had thus

supported their claims by various legal arguments, not exclusively on the infringement of

WTO law.

89. The General Court (GC) dismissed their claims in so far as they were founded on the

regime governing non-contractual liability for unlawful conduct.195 Such liability can only be

established when the following conditions are satisfied: the institutions’ conduct must be

unlawful, actual damage must have been suffered and there must have been a causal link

between the conduct and the damage.196 To this end the Court first examined to what extent it

could rely on WTO rules in assessing the legality of the Union’s conduct. Firstly, the Court

rejected the applicants’ reasoning that the principle pacta sunt servanda would compel the

Court to find the Union’s conduct illegal in view of its WTO obligations, since the WTO

Agreements are not in principle, given their nature and structure, among the rules in the light

of which the Union Courts review the legality of action by Union institutions.197 The General

Court then continued by reiterating the classic arguments developed by the ECJ in denying

WTO law direct effect: reciprocity, the importance of negotiations and the possibility of

deprival of the legislative and executive organs of their scope of manoeuvre in negotiations.198

194 GC case T-69/00, FIAMM and FIAMM Technologies v Council and Commission , ECR 2005, II-05393, §§ 69, 92 – 95 and CFI case T-135/01, Giorgio Fedon & Figli S.p.A., Fedon S.r.l. and Fedon America USA Inc. V Council and Commission, ECR 2005, II-00029, §§ 63, 85 – 88. 195 Ibid. at §§ 84 – 150 (FIAMM) and §§ 77 – 143 (Fedon). 196ECJ Case 26/81 Oleifici Mediterranei v EEC, ECR 1982, I-3057, §16, GC Case T-175/94 International Procurement Services v Commission, ECR 1996, II-729, § 44, CFI Case T-336/94 Efisol v Commission, ECR 1996, II-1343, § 30. 197 Ibid. at §§ 109 – 110 and §§ 102 – 103 resp. 198 Ibid. at §§ 111 – 113 and §§ 104 – 106 resp.

49 GATT/WTO law in the European Union’s legal order: a lack of direct effect

Therefore, the GC concluded that the Union could not incur non-contractual liability by

reason of any infringement of the WTO rules.

90. Secondly, the GC examined whether the Fediol or Nakajima exceptions were

applicable in this case. The GC found that there was no intention to implement a specific

obligation assumed within the WTO. For this purpose the GC, clearly inspired by the Van

Parys judgment, extensively referred to the variety of implementation methods, and

particularly to the considerable importance that is still accorded to negotiation, even after the

expiry of the implementation period.199

91. Subsequently the GC addressed the other arguments put forward by the complainants

based on the principles of the protection of legitimate expectations and of legal certainty, on

infringement of the right to property and to pursuit of an economic activity and, finally, on

failure to observe the principle of proper administration. The GC concluded that all of these

arguments rested on the premise that the conduct of which the Council and Commission were

accused was contrary to WTO law.200

92. So, after having ruled out the possibility of unlawful conduct and by that also the

Union’s liability for such conduct, the GC was willing to look into the option of non-

contractual liability even in the absence of unlawful conduct. The GC briefly recalled case

law relating to such liability:

“Where as in the present case, it has not been established that conduct attributed to the

Community [Union] institutions is unlawful, that does not mean that undertakings which,

as a category of economic operators, are required to bear a disproportionate part of the

burden resulting from a restriction of access to export markets can in no circumstances

obtain compensation by virtue of the Community’s non-contractual liability.”201

“When damage is caused by conduct of the Community [Union] institution not shown to

be unlawful, the Community [Union] can incur non-contractual liability if the conditions

as to sustaining actual damage, to the causal link between that damage and the conduct of

199 Ibid. at §§ 121 – 132 and §§ 114 – 125 resp. 200 Ibid. at §146 and § 139 resp. 201 Ibid. at §157 and § 150 resp. To this effect the GC referred to the De Boer Buizen judgment, ECJ Case 81/86, De Boer Buizen v Council and Commission, ECR 1987, I-3677, §17.

50 GATT/WTO law in the European Union’s legal order: a lack of direct effect

the Community [Union] institution and to the unusual and special nature of the damage in

question are all met.”202

To support its reasoning, the GC also referred to the existence of non-contractual liability in

the absence of unlawful action in national laws.203

93. Clearly inspired by the Dorsch case, the GC set out to examine whether FIAMM had

suffered actual damage, whether there was a causal link between damage and the conduct of

the Union institutions and whether the damage was of a unusual and special nature. Due to

the trade retaliation measures, FIAMM had been forced to relocate production units. By doing

so, the company had been able to reduce to a minimum the damage caused by the increased

import duty. FIAMM had only suffered monetary losses, given the relocation. However it had

not suffered loss of US market share: no sales volumes were lost.204 The GC concluded that

FIAMM had indeed suffered actual damage.

94. With respect to the causal link, the GC’s judgment was equally positive. According to

established case law this requires ‘a sufficiently direct causal nexus’ , which in the Court’s

view, was present between the damage and the conduct of the Union institutions. Even taken

into account the unilateral decision of the US to increase customs duty on the import of those

specific products and not to re-enter into negotiations.205

95. The GC, however, did not recognise the damage as being unusual of nature. In order to

meet this requirement, the damage would have had to exceed the limits of the economic risks

inherent to operating in the sector concerned.206 In this view, the GC did not consider the

damage to exceed the economic risks:

“Nevertheless, the possibility, which has come about in the present case, of tariff

concessions being suspended as provided for by the WTO agreements is among the

vicissitudes inherent in the current system of international trade. Accordingly, the risk of

202 Ibid. at § 160 and § 153 resp., to this effect the GC referred to ECJ Case C-237/89 P, Dorsch Consult v Council, ECR 2000, I-4549, §19. 203 Ibid. at § 159 and § 152 resp. 204 THIES, A., “ Cases T-69/00, FIAMM and FIAMM Technologies, T-151/00, Le Laboratoire du Bain, T-301/00, Remaux, T-320/00, CD Cartondruck AG, T-383/00, Beamblow Ltd and T-135/01, Giorgio Fedon & Figli S.p.A., Fedon S.r.l. and Fedon America USA Inc., Judgments of 14 December 2005, Grand Chamber of the Court of First Instance, nyr.”, Common Market Law Review 2006, 1153. 205 FIAMM, cited supra note 194, §177 – 191. The GC referred to ECJ Joined Cases 64/76, 113/76, 167/78, 239/78, 27/79, 28/79 and 45/79 Dumortier and Others v Council, ECR 1979, I-3091. 206 Ibid. at § 202, Dorsch cited supra note 202.

51 GATT/WTO law in the European Union’s legal order: a lack of direct effect

this vicissitude has to be borne by every operator who decides to sell his products on the

market of one of the WTO members.”207

“In addition, it is clear from Article 22(3)(b) and (c) of the DSU, an international

instrument which was publicised appropriately so as to ensure that Community [Union]

operators were aware of it, that the complaining member of the WTO may seek to suspend

concessions or other obligations in sectors other than that in which the panel or Appellate

Body has found a violation by the member concerned, whether under the same agreement

or another WTO agreement.”208

96. The Court did not examine whether the damage was of a special nature, as such an

examination had become unnecessary considering it had already established that the damage

was not unusual. Subsequently the GC concluded that there was no non-contractual liability

even in the absence of unlawful conduct of the Union’s institutions.

v.b. Judgment of the ECJ

97. The ECJ confirmed the judgment of the CFI, in so far as it denied FIAMM and Fedon

the right to compensation. The ECJ dismissed the claims that the judgment under appeal

would have lacked reasoning, would have been unfounded and would have been

insufficiently explained.209 The ECJ also confirmed that with respect to non-contractual

liability for unlawful conduct of Union institutions the GC had not erred in law. It reiterated

its reciprocity and flexibility arguments. Moreover, the Court did not agree with FIAMM and

Fedon that a distinction should be made between the direct effect of the WTO rules and the

direct effect of a decision of the DSB.

“A DSB decision (...) cannot in principle be fundamentally distinguished from the

substantive rules which convey such obligations an by reference to which such a review is

carried out, at least when it is a question of determining whether or not an infringement of

those rules or that decision can be relied upon before the Community [Union] courts for

the purpose of reviewing the legality of the conduct of the Community [Union]

institutions. A recommendation or ruling of the DSB (...) is no more capable than the

substantive rules contained in the WTO Agreements of conferring upon individuals a right

207 Ibid. at § 205. 208 Ibid. at § 207. 209 FIAMM, cited supra note 192, § 104.

52 GATT/WTO law in the European Union’s legal order: a lack of direct effect

to rely thereon before the Community [Union] courts for the purpose of having the

legality of the conduct of the Community [Union] institutions reviewed.”210

98. More importantly, the ECJ judged that the GC did err in law with respect to the

question of non-contractual liability in the absence of unlawful conduct. According to the ECJ

the GC could not deduce from prior case law relating to non-contractual liability that the ECJ

had established a regime of non-contractual liability in the absence of unlawful conduct.

Indeed, the ECJ had established the conditions for such a no-fault liability. However, the

Court emphasised that it had done so only in a hypothetical way. 211 The Court then examined

whether such a liability could be derived from the second paragraph of article 340 TFEU (ex

article 288 TEC). Accordingly, the latter is only an expression of the general principle

familiar to the legal systems of the Member States that an unlawful act or omission gives rise

to an obligation to make good the damage that was caused.212 With respect to liability for

legislative activity, the Court ruled, principles differ from one Member State to another.

However, legislative activity in the field of economic policy usually has a special status

requiring exceptional circumstances in order for that Member State to incur liability.

Therefore, the Court concluded that the Union

“cannot incur liability on account of a legislative measure which involves choices of

economic policy unless a sufficiently serious breach of a superior rule of law for the

protection of the individual has occurred.”213

The idea behind this reasoning is not to hinder the legislative function by the prospect of

actions for damages and the fact that this function enjoys a wide discretion, which creates a

very high, if not impossible, threshold for liability: the Union can incur liability only when

the institutions concerned have manifestly and gravely disregarded the limits on the exercise

of their powers.214 The Court concluded that

“as Community [Union] law currently stands, no liability regime exists under which the

Community [Union] can incur liability for conduct falling within the sphere of its

legislative competence in a situation where any failure of such conduct to comply with the

WTO agreements cannot be relied upon before the Community [Union] courts. In the case

210 Ibid. at § 128 – 129. 211 Ibid. at § 168 – 169. 212 Ibid. at § 170, to this end the ECJ referred to ECJ Joined cases C-46/93 and C-48/93, Brasserie du Pêcheur, ECR 1996, I-1029, § 28 – 29. 213 Ibid. at § 172. 214 Ibid. at § 174.

53 GATT/WTO law in the European Union’s legal order: a lack of direct effect

in point, the conduct which the appellants allege to have caused them damage comes

within the context of establishment of a common organisation of the market and clearly

falls within the sphere of legislative activity of the Community [Union] legislature.”215

99. The ECJ was not requested to assess the question of a right to compensation due to

breach of individual general principles of EU law, since that issue did not make part of the

appellants’ submissions. However, the ECJ briefly clarified its position on the right to

property and the freedom to pursue a trade or profession, being fundamental rights that form

an integral part of the general principles of law in what is called an obiter dictum.216

According to the Court these rights do not constitute absolute prerogatives and may be

restricted, particularly in the context of the common market on the condition that those

restrictions in fact correspond to objectives of a general interest pursued by the Union and

that they do not amount to a disproportionate and intolerable interference which would

infringe upon the very substance of the rights guaranteed.217 The Court found that such an

interference could give rise to non-contractual Union liability.218 However, with respect to

this case, the Court emphasised that an economic operator, such as FIAMM, cannot claim a

right to property in a market share which he held at a given time. A market share is a

momentary economic position in the Court’s view, therefore it is constantly exposed to

changing circumstances and the risks that come with those changes. One of these risks is that

a certain State can suspend concessions in the framework of the settling of a trade dispute

within the WTO.219

100. Where the GC had still recognised the existence of a general non – contractual liability

regime in the absence of unlawful conduct, establishing FIAMM’s actual damage and a causal

link with the European Union’s banana regime, the ECJ once more made clear it had no

intention in giving WTO law any effect within the Union. However, one should not look at

this judgment from that single point of view. The findings of the ECJ in its obiter dictum with

respect to general principles imply a potential right to compensation where no provision has

been made for compensation of disproportionate and intolerable infringements of such

215 Ibid. at § 176 – 177. 216 As put forward by the complainants in the proceedings at first instance, see supra § 91. 217 FIAMM, cited supra note 192, § 183. 218 Ibid. at § 184. 219 Ibid. at § 185 – 186.

54 GATT/WTO law in the European Union’s legal order: a lack of direct effect

fundamental rights.220 Still, the question arises whether the FIAMM judgment is a missed

opportunity or rather a tricky situation the ECJ managed well.221

§3. Conclusion

101. The ECJ has set out the limits to WTO law from the very beginning. In International

Fruit Company, the Court laid the foundations for decades of highly restrictive case law,

reciprocity and flexibility being the keywords in denying direct effect to both the GATT 1947

and the WTO. The Court has developed its stance towards GATT/WTO law in three distinct

but overlapping phases222: first, with respect to the effect of GATT/WTO on the EU legal

order, second, the relationship between WTO law and the individual and third, the role of

WTO law in the relationship between the EU and its Member States.

102. In good tradition, the ECJ also developed exceptions to its principle. In that same

tradition, the ECJ gave a very restrictive interpretation to both Fediol and Nakajima, as

opposed to its interpretation of the principle which reaches very far. In its latest ruling on

WTO law, FIAMM, the ECJ decided that no liability could be incurred due to non-

implementation of a DSB decision, not even liability in the absence of unlawful conduct. The

future will tell whether FIAMM is only a provisional finishing point.

103. It can be concluded that, even though the questions relating to direct effect of

GATT/WTO law have gradually shifted in substance, the Court has not adapted to that

shift.223 On the contrary, it has continuously fallen back on the arguments developed in its

early GATT cases. Clearly, there are other interests, political and economic, that the Court

has taken into account. It has been confronted with the reality of the global market, which

unfortunately is not a legal reality. This discrepancy is very well reflected in the case law, the

Court has found a way of coping with the political implications of its legal rulings: it has

demonstrated a great sense of judicial deference to both Council and Commission. Unlike the

legal context, these political and economic considerations might not have changed that much

in the past decades, which explains the conservative tone of the Court.

220 A. THIES, “The impact of general principles of EC law on its liability regime towards retaliation victims after FIAMM”, European Law Review 2009, 900. 221 See infra §§ 205 - 217. 222 SNYDER, cited supra note 93, 362. 223 By shifts one should understand the changes from GATT 1947 to WTO 1994, from direct effect of a GATT provision to direct effect of a DSB ruling, from a validity issue to a liability issue.

55 GATT/WTO law in the European Union’s legal order: a lack of direct effect

III. The interpretation of WTO law despite lack of direct effect

104. Although the ECJ has consistently refused to grant the GATT 1947 and the WTO

Agreement direct effect, it has from time to time given a substantive interpretation on certain

provisions. Given the fact that such interpretation often takes place in a grey zone between

direct effect and non-invocability and that such an interpretation can result in de facto direct

effect of the GATT 1947 or WTO Agreement, this chapter aims at addressing the Court’s

interpretation practice. But since this paper deals with the issue of direct effect, it will do so

only briefly.224

105. In International Fruit Company the ECJ had already confirmed its jurisdiction with

respect to interpreting the GATT 1947 and later also with respect to the WTO Agreement.225

Both the ECJ and the GC have interpreted provisions of the WTO Agreement.226 In Italy v

Council the ECJ interpreted article XXIV(6) GATT 1994. 227 But it should be stressed that the

Court did so in order to decline an Italian claim to annul a Council Regulation, in other words

the Court did so in favour of Union law.

106. Also in the Hermès case, the ECJ interpreted substantive WTO law, more particularly

article 50 of the TRIPS Agreement. Since intellectual property is a shared competence, the

Court first established its jurisdiction to interpret that specific provision based on the

observation that the WTO Agreement was concluded by the Union and ratified by the

Member States without any allocation between them of their respective obligations towards

the other contracting parties.228 The Court continued by stating

224 On this issue, see the Opinion of Advocate General Van Gerven in Fediol: “since provisions of foreign law - which are introduced in a limited way into a particular legal order by a rule of private international law and are declared to be applicable - are amenable to interpretation by the courts of that legal order, how much more must this apply to international provisions, such as the GATT provisions, which are binding on the Community and hence directly form part of and are applied within one' s own legal order?”; see infra §§ 117 - 121. 225 See infra § 57. 226 Cases in which the GC has interpreted WTO law, more particularly the Anti-Dumping Agreement: Case T-213/97, Eurocoton and others v Council, ECR 1997, II-1609 and Case T-48/96, Acme Industry Co. Ltd. v Council, ECR 1999, II-3089. 227 ECJ case C-352/96, Italy v Council, ECR 1998, I-6937. 228 In Opinion 1/94 the ECJ held that the Union and its Member States are jointly competent to conclude TRIPS, ECJ Opinion 1/94 on the Competence of the Community to conclude international agreements concerning services and the protection of intellectual property, ECR 1994, I – 5276.

56 GATT/WTO law in the European Union’s legal order: a lack of direct effect

“in order to forestall future differences of interpretation, the provision should be

interpreted uniformly, whatever the circumstances in which it is to apply”.229

107. The Court concluded in that case that a measure whose purpose is to put an end to

alleged infringements of a trade-mark right and which is adopted in the course of a procedure

distinguished by certain features should be considered as a ‘provisional measure’ within the

meaning of Article 50 of the TRIPS Agreement. The Court came to this conclusion after

extensively examining article 50 of the TRIPS Agreement.230 Although this case had little to

none direct impact on the validity of Union law, the Court interpreted that particular provision

in such a way that an obligation was created for Hermès on the basis of the TRIPS

Agreement.231

108. The Court repeated its approach in Dior and Groeneveld.232 Unlike the Hermès case,

Dior concerned a matter in which the Union had not legislated yet. The Court interpreted the

concept of “intellectual property right” as put forward in the TRIPS Agreement. However, the

Court first explicitly denied the TRIPS Agreement direct effect in the EU’s legal order.

Except for matters that fall within the competence of the Member States, who are free to

make their own choice on granting direct effect. In Groeneveld, the Court applied its Hermès

ruling with respect to the same issue relating to trademarks and article 50 (6) of the TRIPS

Agreement.

109. In several other cases the ECJ and the GC have used WTO law as aid in interpreting

Union law. Especially in cases that concern antidumping.233 By some, this particular line of

case law is used as an argument to support legality control of Union law in the light of WTO

law. However, an analysis of these cases would exceed the subject of this paper.

229Hermès, cited supra note 148 at § 32. 230 Ibid. at §§ 34 – 43. 231 Ibid. at § 19 in conjunction with § 45. 232 Cited supra note 151. 233 See ECJ case C-150/95 Portugal v Commission, ECR 1997, I-5863; ECJ case C-296/00, Prefetto Provincia die Cuneo v Silvano Carbone, ECR 2002, I – 4657;CFI joined cases T-33 and 34/98, Petrotub SA and Republica SA v Council, ECR 1999, II-3837; ECJ case C-76/00, Petrotub SA and Republica SA v Council, ECR 2003, I-79; ECJ case C-245/02, Anheuser-Busch v Budvar, ECR 2004, I-1089; for a clarifying overview see F. SNYDER, cited supra note 93, 320 – 325 and A. ROSAS, “The European Court of Justice in Context: Forms and Patterns of Judicial Dialogue”, European Journal of Legal Studies 2007, www.ejls.eu.

57 The ECJ and its GATT/WTO rulings: subject of towering discussions

C. The ECJ and its GATT/WTO rulings: subject of towering discussions

110. The above mentioned case law has been widely discussed in legal doctrine. This

chapter will aim at creating structure and a clear overview of how this case law is perceived,

in order to fully understand it. When assessing the ECJ’s approach in this issue, one should

first define the questions in view of which one is to assess. Is the argumentation of the ECJ –

in denying direct effect – tenable? More specifically given the changes in the system of WTO

dispute settlement? Should the ECJ search for alternative arguments? Taken into account the

fact that the DSU is probably at the end of its judicialization process. Is there a possibility to

look for a firmer legal foundation of the political/economic motives of the ECJ’s case law?

What about the two ‘exceptions’ on the lack of direct effect? Are they really exceptions? Is it

realistic to think they can be applied without any problem? What are the legal effects of WTO

DSB decisions within EU law? Was the FIAMM judgment a missed opportunity or rather a

tricky situation the ECJ managed well? In this context: would it even be possible to grant

compensations to victims of retaliatory measures taken by the EU trade partners as a

consequence of a DSB ruling?234

111. Secondly, one should also determine one’s position before taking up such an

examination. More particularly, this paper will first re-asses the Courts approach from an

insider’s point of view: through the eyes of the advocates general. However, an analysis from

a doctrine point of view cannot be lacking and will therefore immediately follow the first part.

I. An insiders point of view: the Advocates General

112. The Advocates General have always been a driving force behind the changes in the

ECJ’s case law and the Court has for its part always been a driving force behind further

integration of the European Union. Moreover, while the Court generally (but not always)

restricts its judgments to the bare minimum, Advocates General predominantly make an

elaborate analysis of the case-law in order to ensure consistency and clarity.235 Therefore it is

indispensable to look at the issue of direct effect of GATT/WTO law from this angle.

234 These questions clearly relate to what can be called a sensu stricto approach of the ECJ’s case law, the starting point of the analysing exercise still being the same one as the Court uses. See infra §§ 210 - 229 for a reflection on alternative approaches. 235 C. RITTER, “A New Look at the Role and Impact of Advocates General – Collectively and Individually”, Columbia Journal of European Law 2006, 759.

58 The ECJ and its GATT/WTO rulings: subject of towering discussions

113. Given the fact that the previous chapter discussed the relevant cases in a chronologic

order and given the conclusions made from that analysis, the chronological approach also

seems to be the most adequate point to start from when analysing the Advocates’ General

stance with respect to direct effect of GATT/WTO law. Furthermore, in reviewing the

opinions one can clearly distinguish two periods: the first period runs up to the mid 1990’s

and is characterised by a high degree of resemblance between the Advocates General’s

approach and the approach of the Court. The second period on the other hand is characterised

by increasing differences in opinion between the Court and the Advocates General and

amongst the Advocates General themselves.

§1. The ECJ, the Advocates General and the GATT 1947: kindred spirits

i. Advocate General Mayras: ahead of the ECJ in denying the GATT direct

effect.

114. No better judgment to start from than International Fruit Company.236 In this case, the

ECJ had meticulously followed the reasoning of Advocate General Mayras.237 Reference can

be made to the reasoning of the Court in chapter ii. International Fruit Company.238 The

Court, however, declined to explicitly use the concept of direct effect, while AG Mayras did

not. The AG referred to direct effect as being the same as conferring rights.239 Moreover, AG

Mayras elaborated on the concept by distinguishing direct effect of international agreements

from direct effect of Union law. It should, however, be mentioned that AG Mayras also

formulated a hypothesis with respect to a direct action: if article XI of the GATT 1947 had

been of direct effect in the Union’s legal order, Member States would have had the

opportunity to question the regulation concerned in the light of article XI of the GATT 1947.

It remains unclear what AG Mayras intended. It could have been a subtle hint at the Court,

expressing the idea of giving GATT law effect in a direct procedure. It could have been a

simple extension to direct actions of his reasoning with respect to preliminary rulings:

236 International Fruit Company, cited supra note 101. 237 Opinion of Advocate General Mayras in International Fruit Company in M. MARESCEAU, “Advocaten-general over inroepbaarheid van de GATT/WTO en de zienswijze van het Hof van Justitie van de Europese Gemeenschappen” in H. COUSY, E. DIRIX , S. STIJNS, J. STUYCK, and D. VAN GERVEN, (eds.), Liber Amicorum Van Gerven, Mechelen, Kluwer, 2000, 282. 238 See supra §§ 55 - 60. 239 Opinion of Advocate General Mayras in International Fruit Company, cited supra note 101, 1235.

59 The ECJ and its GATT/WTO rulings: subject of towering discussions

expressing the condition of direct effect for GATT law to be a standard of review.240 Or it

could have been another argument supporting his position that the GATT 1947 did not have

direct effect. Because if it had, the Dutch government could have filed an action pursuant to

article 263 TFEU (ex article 230 TEC).

115. When AG Trabucchi had to give his opinion in the Bresciani case only a few years

later, he made some clear observations on the use of international law in the Union. 241 More

particularly with respect to the International Fruit Company ruling, AG Trabucchi supported

the ECJ. In his view, the ECJ had been right to refuse to automatically extend the direct effect

concept to international law. Because this concept had been developed with respect to the

relationship between internal Union law and national law.242

ii. Advocate General Van Gerven on limited invocability in the absence of

direct effect

116. Next in line was the Fediol case, which differed from International Fruit Company on

many levels and for that reason created an opportunity for the Court and the Advocates

General to re-adjust their stance in this discussion. Fediol challenged a Commission decision

in the light of a Union regulation which made reference to international law and generally

accepted rules. These references undoubtedly alluded to the GATT 1947.243 Advocate

General Van Gerven delivered his opinion on 7 March 1989.244

117. AG Van Gerven does not find it necessary to consider the question whether the GATT

1947 has direct effect in the Union’s legal order. However, he does devote an impressing

footnote on the issue, starting from a basic distinction between applicability and direct effect

of international provisions.245 In his view, a provision of international law can be directly or

indirectly applicable in the European Union’s legal order without having direct effect. A

provision is directly applicable where it forms a part of the domestic legal order directly

without the need for transposition. A provision is indirectly applicable where it must be

240 MARESCEAU, cited supra note 237, 285. 241 ECJ case 87/75, Conceria Daniele Bresciani v Amministrazione Italiana delle Finanze, ECR 1976, 00129. 242 Opinion of Advocate General Trabucchi in Bresciani, cited supra note 241 at § 5. 243 see supra §§ 61 - 65. 244 Opinion of Advocate General Van Gerven in Fediol, cited supra note 127. 245 Ibid. at footnote 8.

60 The ECJ and its GATT/WTO rulings: subject of towering discussions

declared to be applicable by means of a provision of one' s own legal order. Direct effect, on

the other hand, means that individuals can derive from a provision subjective rights. Whether

an international provision has direct effect is dependent primarily on the type and purpose of

the relevant provision itself, not solely on whether it needs transposition. Of course this can

be an element in assessing the type and purpose of the relevant provision, with respect to the

GATT 1947 this meant assessing its spirit, general scheme and terms. This led to the

conclusion that it had no direct effect. However, the Court found that the GATT 1947 does

bind the Union and forms an integral part of the Union legal order. So, in AG Van Gerven’s

opinion, the GATT 1947 is directly applicable. A provision which does not have direct effect

per se may, in Van Gerven’s view,

“none the less be transformed within a particular legal order, by a rule of that legal order,

into a rule having direct effect, a rule which can be invoked by individuals. For instance,

GATT provisions which are taken over in a Community [Union] regulation or to which a

Community [Union] regulation refers and from which individuals may therefore to a

greater or lesser extent derive rights pursuant to and within the limits of that regulation.”246

118. All this shows that AG Van Gerven does not refrain from confirming the International

Fruit Company ruling. As in his view the GATT 1947 has no direct effect in the European

Union, not even on the basis of a general reference such as the one made in the New

Commercial Policy Instrument Regulation.247

“Individuals can invoke GATT 1947 provisions within the Community solely to the extent

that, explicitly or implicitly, that effect can be inferred from the Community rule referring

to those provisions.”

The question arises what this right to invoke actually implies. According to Van Gerven such

a right would allow individuals to ask the Commission - by means of a right to lodge a

complaint - to interpret and apply the GATT 1947 provisions in a certain way. Even though

the GATT 1947 has no direct effect and the Commission has a very extensive power of

interpretation due to weak references in the regulation, this does not prevent the Court from

supervising the Commission’s interpretation. Seeing that it lies still within the duty of the

Court to interpret legislative or treaty provisions as soon as the provisions become applicable

in their particular legal order (directly or indirectly, by transposition or by reference),

246 Ibid. 247 Ibid. at §10.

61 The ECJ and its GATT/WTO rulings: subject of towering discussions

regardless as to whether these provisions have direct effect.248 In Van Gerven’s opinion, the

GATT 1947 should be applied as a ‘yardstick’ for interpretation.249

119. Van Gerven is aware of the implications such reasoning could entail. Certainly in

combination with the conclusions made in his footnote. He first recognizes that, in following

his reasoning,

“any international or foreign provision which is directly applicable or is made applicable

by transposition obtains ipso facto within that legal order a certain direct effect in the

sense that it can be invoked by individuals in any event as an interpretative criterion but

also, it appears to me, as a criteria for assessing the validity of inferior norms or

measures.”250

120. Subsequently, he sets the limits to the Court’s power to interpret and by doing so he

also sets the limits to possible implications of his own reasoning. Namely, with respect to the

GATT

“the Court cannot deliver interpretative judgments which are binding outside the

Community [Union], since it is not responsible vis-à-vis the other parties to the GATT for

ensuring the uniform interpretation of GATT provisions . The Court should therefore

avoid broad interpretations of GATT provisions which go further than normal, in

particular teleological, methods of interpretation if they cannot be based on explicit or

implicit consensus between the parties to the GATT.”251

121. It is also up to the Court to supervise whether the Commission does not exceed its

scope of interpretation, which makes the Commission’s power to interpret GATT provisions

subject to judicial review by the Court. As Maresceau rightly observes, the judicial review by

the Court remains closely intertwined with its own power to interpret. Foremost, the judicial

review is a delicate balancing exercise, weighing the Commission’s power to interpret on the

one hand and the Court’s power to review within the limits set out by Van Gerven on the

other hand.252

248 Ibid. at § 12. 249 Ibid. at § 13. 250 Ibid. at footnote 8. 251 Ibid. at § 14. 252 MARESCEAU, cited supra note 237, 288.

62 The ECJ and its GATT/WTO rulings: subject of towering discussions

122. Nakajima, like Fediol, eventually did not raise much problems relating to the

interpretation of the GATT 1947.253 The fact that the Union anti-dumping Regulation

expressly referred to the GATT 1947 and the Anti-Dumping Code allowed the Court and

Advocate General Lenz to circumvent the question of direct effect.

iii. Advocate General Gulmann as advocate for a very restrictive approach

123. As already mentioned above, the succession of Fediol and Nakajima had given rise to

speculations concerning a possible change in the Court’s approach with respect to the GATT

1947.254 All the more so because the International Fruit Company ruling had become subject

to severe criticism.255 In Germany v Council the Court definitely put an end to those

speculations and confirmed its previous stance.256 Previously, on 8 June 1994 Advocate

General Gulmann had delivered his opinion.

124. Gulmann did not favour the idea of giving provisions of the GATT 1947 direct effect.

Before examining the question of direct effect, he made a preliminary observation which was

clearly inspired by reasons of trade policy.257

“However, such an acceptance [of direct effect] might also mean a perceptible change in

the possibilities for the competent institutions of the Community [Union] to safeguard the

Community's [Union’s] interests within the legal framework laid down in GATT. In my

view the Court should not come to a decision on the question at issue here without serious

consideration of the views expressed by the Council and the Commission. It is moreover

natural to take as the point of departure the Court's consistent case-law to the effect that

GATT does not have direct effect.”258

125. With respect to the speculations on the Fediol/Nakajima case law, Gulmann contended

that in Nakajima the Court had not accepted in general that obligations under GATT might be

253 Also in Fediol the potential for difficulties relating to the boundaries of interpretation by the Court was not substantiated. However, a true liability was created by AG Van Gerven. This risk surfaced in Germany v Council, where the Court was asked to enter a slippery slope of law combined with trade politics. See infra § 66 - 69. 254 See supra § 66. 255 See infra § 183 et seq. 256 Germany v Council, cited supra note 138. 257 Whereas Advocates General normally take a purely legal stance in search of the best legal solution, see RITTER, cited supra note 235, 760. 258 Opinion of Advocate General Gulmann in Germany v Council, cited supra note 138 at § 131 – 132.

63 The ECJ and its GATT/WTO rulings: subject of towering discussions

invoked in an application under article 263 TFEU (ex article 230 TEC) in the absence of

direct effect. And that the Court was probably correct in recognising that it cannot be

immediately concluded from the fact that a provision does not have direct effect that it may

not be relied upon in an application for a declaration of invalidity under 263 TFEU. This

gives the impression that Gulmann considered the Fediol/Nakajima rulings as already

overstepping the mark.

126. Still in Gulmann’s opinion it is possible that an agreement may be invoked in the

context of an application under article 263 TFEU (ex article 230 TEC) in spite of the fact

does it does not have direct effect. But,

“the position may also be that the reasons leading to the finding that the agreement does

not have direct effect are of such a nature as in addition to prevent the agreement from

forming part of the legal basis for the Court' s review of legality. That is the position, in

my opinion, as far as GATT is concerned. It is therefore necessary to reproduce the

reasons on which the Court based its finding that GATT did not have direct effect.”259

127. Gulmann condemned the criticism on the Court’s flexibility argument, just like he

turned down the direct effect favourable argument of positive developments in the dispute

settlement system. His position was that it was still to a large extent left to the contracting

parties to solve their disputes by negotiation. For that reason the GATT 1947 could not be

directly invoked in an application for a declaration of invalidity under article 263 TFEU (ex

article 230 TEC). Only if there were special grounds – i.e. references to the relevant GATT

rules - for subjecting the legal acts adopted by the institutions to such a review, the Court

could review the legality of a Union act in the light of the GATT. This was the case in Fediol

and Nakajima, but the facts in Germany v Council did not satisfy that condition in Gulmann’s

view.

128. It is clear that at this point in time, the ECJ’s case law had not yet been questioned by

the Advocates General. On the contrary, in cases like Germany v. Council, the Advocate

General even gave the impression that he did not consider the Court’s rulings restrictive

enough.

259 Ibid. at §§ 137 – 138.

64 The ECJ and its GATT/WTO rulings: subject of towering discussions

§2. The WTO era: differences in opinion

129. With the arrival of the WTO Agreement, the first suggestions by Advocates General to

alter the Court’s restrictive approach emerged. As mentioned above, a new ruling of the ECJ

was long-anticipated by many.260 The Court had had several chances to take up this pressing

issue, but had smoothly circumvented the subject at every occasion.

i. Advocate General Cosmas: no new insights... yet

130. In the Affish case, a preliminary ruling, the Court did not rule on the SPS Agreement,

since the referring national Court had not asked the Court to do so.261 However, in his opinion

of 10 December 1996, Advocate General Cosmas did take up the question of the direct effect

of the SPS Agreement, being an Annex to the WTO Agreement.262

131. Cosmas reiterated the conditions for obtaining direct effect as developed by the Court

in its case law relating to the GATT 1947. In light of these conditions, Cosmas considers the

provisions of both the WTO Agreement and GATT 1994 to be still characterised

“by great flexibility, which means that they cannot be regarded as having direct effect and

that an individual is not entitled to rely on them before the national courts. This applies

with respect to the possibility of derogation and the measures to be taken when confronted

with exceptional difficulties as well as to the provisions on the settlement of disputes

between the contracting parties.”

132. Cosmas then continued by referring to several provisions of both the WTO Agreement

and the SPS Agreement to show that the provisions called upon by Affish were not

sufficiently clear and specific and that they required further implementation.263 He also

referred to the preamble of Council Decision 94/800 concerning the conclusion of the WTO

Agreement, which clearly states that by its nature, the WTO Agreement is not susceptible to

being directly invoked in Union or Member State courts'. Although the preamble was not

binding, in Cosmas’ view this was a reflection of

260 See supra § 69. 261 ECJ case C-183/95, Affish BV v Rijksdienst voor de keuring van Vee en Vlees, ECR 1997, I-04315. 262 Cited supra note 172. 263 Opinion of Advocate General Cosmas in Affish, cited supra note 261 at §§ 120 – 126.

65 The ECJ and its GATT/WTO rulings: subject of towering discussions

“the fact that the weighty reasons which led the Court to hold that no direct effect could be

conferred on the GATT 1947 (104) have not ceased to apply with the conclusion of the

GATT 1994 and the WTO Agreement.” 264

133. For a first review of the WTO Agreement, Cosmas’ assessment did not reveal any new

insights. Quite on the contrary, his opinion was strongly inspired by the case law relating to

the GATT 1947. However, he did take the effort of examining to what extent the Commission

decision in question was contrary to Articles 2 and 5 of the SPS Agreement. For reasons of

completeness, in case the Court would grant direct effect to the WTO Agreement after all. He

concluded that the Commission decision was not incompatible with the SPS Agreement.

ii. Advocate General Tesauro paved the way

134. Although in Hermès the ECJ skipped the question of direct effect and immediately

proceeded to interpreting the TRIPS Agreement, Advocate General Tesauro did not. He

delivered his opinion on 13 November 1997, nearly a year after Cosmas had extrapolated the

reasoning of the Court concerning the GATT 1947 to the WTO Agreement.

135. Advocate General Tesauro began with confirming the ECJ’s jurisdiction to interpret the

TRIPS Agreement. Tesauro then set out to assess the WTO Agreements in order to ascertain

up to what point and to what extent the situation had changed in view of the provisions of the

WTO Agreements, including the TRIPS Agreement. Unlike the Court, he considered this

issue of preliminary importance to the case: if the TRIPS Agreement would not be directly

effective, it would become inapplicable to the case.265

136. In his assessment, Tesauro first looked at the preamble of Council Decision 94/800

concerning the conclusion of the WTO Agreement which precludes the WTO Agreements

from having direct effect. He contended that this recital may not prevent the Court from

concluding that the WTO Agreements do have direct effect. After all, when the EU and other

contracting parties to an international agreement do not agree on the effect that agreement

will have in their internal legal order – which is the case with respect to the WTO Agreements

264 Ibid. at § 127. 265 Opinion of Advocate General Tesauro in Hermès, cited supra note 126 at §8 and § 22.

66 The ECJ and its GATT/WTO rulings: subject of towering discussions

- , it is up to the ECJ to settle that question and not up to the Council. So according to Tesauro

no conclusions can be made from the preamble of Council Decision 94/800, as opposed to

Cosmas who used the preamble as an argument in denying direct effect.266

137. Very quickly it becomes clear that Tesauro is determined to look at the issue from an

unbiased position. While keeping an open mind, Tesauro evaluated the Court’s long

established case law and came to some surprising conclusions as regards the WTO. More

particularly as regards the characteristics of the GATT 1947, he states that these are not very

different from those of other agreements, which the Court had granted direct effect

“Despite the flexibility of some of their provisions and the element of negotiation involved

in the mechanism for the settlement of disputes. (...) Nor do I find the provisions of GATT

that have been brought to the Court's attention less clear, precise and unconditional than

other provisions of agreements to which the Court has, with deliberate generosity,

attributed direct effect. Therefore no difference should be made between the provisions of

GATT 1947 and the provisions of the WTO agreements, in that there is no perceptible

difference between the latter provisions and all the other provisions of agreements to

which the Court has attributed direct effect.” 267

138. However, taking into account the Court’s stubbornness, Tesauro put forward the

reasons for the Court to re-assess its case law. He contends that the WTO has indeed

profoundly changed those features of the GATT 1947 the Court considered decisive in

denying direct effect. Namely, as to the flexibility supposedly characterising the GATT

1947, the system has undergone a radical change. The system of waivers and exceptions

has been firmly embanked.268 As regards the dispute settlement system Tesauro spoke of a

true ‘Copernican innovation’ in referring to the elimination of the blocking possibilities by

the respondent state.269 With respect to the system of compensatory measures, Tesauro

contended that this is a purely provisional measure, not a method of settling disputes and

that it does not encourage the defaulting party to persist indefinitely in its failure to

comply.270 Tesauro concluded that

266 Ibid. at § 23 – 24. 267 Ibid. at § 27, Tesauro referred to the Kupferberg ruling, see supra §§ 48 - 51. 268 Ibid. at § 29(1). 269 Ibid. 270 Ibid. at § 29(2).

67 The ECJ and its GATT/WTO rulings: subject of towering discussions

“the situation has changed vis-à-vis GATT 1947 and that the Court's objections hitherto

must be considered obsolete in the context of the WTO. It should therefore be possible in

future for individuals to invoke compliance with the appropriate provisions of the WTO

agreements, including the TRIPs Agreement, before the courts.”271

139. However, Tesauro stated, one must no go lightly about the reciprocity argument. The

US, Canada and Japan (the EU’s most important trading partners) refuse to recognise the

WTO Agreements as having direct effect. Logically, this argument ought not to have any

effect on the decision about granting direct effect. But, granting direct effect in the absence of

reciprocity would have serious consequences, since doing so would place Union traders at a

disadvantage compared with their foreign competitors.272

“While the foreign trades would be able to invoke provisions in their favour directly

before the courts of the Member States, Community [Union] traders would be unable to do

likewise in the States that refused to recognise that the provisions of the WTO agreements

may have direct effect.”273

140. The fact that Tesauro explicitly referred to this trade policy related argument is

remarkable, the Opinions of Advocates General are not usually coloured by political

considerations. Once again, this shows that the issue of direct effect of WTO law rises above

pure legal relevance, that it is situated at the interface between law, economics and politics.

141. Tesauro, in an effort to approach this matter from a legal perspective, then examined

whether direct effect is conditional upon reciprocity. He first reiterates the Court’s case law

relating to reciprocity of international agreements and made the following observations.274

Reciprocity is not so much about whether the agreement has direct effect in the legal order of

the other contracting parties, what is important is that a reciprocity exists in the

implementation of the agreement and the legal means used to reach that goal are less

271 Ibid. at § 30. 272 Ibid. at § 31. 273 Ibid. 274 Tesauro referred to Mengozzi, who would become AG himself in 2006, who argues that direct effect is conditional upon reciprocity. P. MENGOZZI, `Les droits des citoyens de l'Union européenne et l'applicabilité directe des accords de Marrakech', in Revue du marché unique européeen 1994, 171.

68 The ECJ and its GATT/WTO rulings: subject of towering discussions

decisive.275 Following that reasoning, the absence of direct effect would only be decisive

when it would lead to the absence of reciprocity in the implementation as a whole.

142. As regards the WTO Agreements, this means that reciprocity should exist in both

negotiations and in the performance of the agreement. Tesauro indicated that an absence of

direct effect would definitely lead to an imbalance in the fulfilment of the commitments

undertaken in the framework of the WTO. In his view, such an impact would be of the

greatest importance. However, it certainly will not always be easy to assess whether the

absence of direct effect results in an imbalance in reciprocity.

143. Tesauro concluded by firmly recommending to the Court to alter its reasoning:

“I consider that it would certainly be more correct to link recognition of direct effect with

the principle of reciprocity in the implementation of the agreement than to repeat formulas

that were perfectly acceptable in the context of GATT 1947 but are no longer relevant in

the context of the WTO Agreement and it would merely lend weight to the already

widespread view that this is a political, not a legal, solution.”276

iii. Advocate General Saggio in Portugal v Council: a stronghold under fire

144. Tesauro’s opinion may without a doubt be referred to as ‘refreshing’. Saggio’s opinion,

or should one say ‘plea’, certainly surpasses such a statement. When looking at his opinion in

Portugal v Council, one cannot ignore the heavy criticism on the Court’s case law.277

145. Saggio frequently used the word ‘surprising’ when referring to the Court’s case law on

the subject. Having regard to the actual content of his opinion, Saggio definitely made an

effort to put a gloss on the message he was carrying. Saggio pointed out that

275 Ibid. at § 33. Tesauro refers to both the Kupferberg as Bresciani the judments, cited supra note 100 and 241 in the latter the Court found that an imbalance between the obligations assumed by the EU towards its contracting parties, which was inherent in the special nature of the Yaoundé Convention, did not prevent recognition by the EU that some of its provisions have a direct effect (§ 22 – 23). In Kupferberg the Court held that the fact that the courts of one of the parties consider that certain of the stipulations in the agreement are of direct application whereas the courts of the other do not recognise such direct application is not in itself such as to constitute a lack of reciprocity in the implementation of the agreement (§ 18). 276 Ibid. at §35. 277 Opinion of Advocate General Saggio in Portugal v Council, cited supra note 126.

69 The ECJ and its GATT/WTO rulings: subject of towering discussions

“in principle, the right to review the legality of a Community [Union] act does not depend

on whether the rules invoked as a criterion for determining the legality of that act have

direct effect, in cases where it is claimed that the Community [Union] act infringes rules of

international law other than the GATT. (21) What is even more surprising is the

conclusion that privileged persons, such as Member States, may not invoke the provisions

of the GATT as a criterion of legality in direct actions brought under Article 173 of the

Treaty.”278

146. He thus very explicitly questioned the fact that the Court also imposed the condition of

direct effect in respect of a legality review requested by a Member State pursuant to article

263 TFEU (ex article 230 TEC). In fact, Saggio distinguished between the ‘invocability’ and

the direct effect. For this purpose, Saggio contended that an international agreement, by virtue

of its clear, precise and unconditional terms, can in principle constitute a criterion of legality

for Union acts, thus referring to invocability and not to direct effect. However, in Saggio’s

view, such an international agreement is only capable of conferring rights on individuals if it

shows implicitly from the general context of the agreement that its provisions may be invoked

before the courts.279

147. Saggio then proceeded to analysing the WTO and to what extent it had changed in

comparison with the GATT 1947. He recognised that the WTO features a more balanced and

stable structure than that of the organisation established through practice during the GATT

1947 era. Moreover, the Advocate General emphasised that many provisions of the WTO

Agreements create unconditional obligations and prohibitions, that the dispute settlement

system has indeed become much more compulsory, that the statement in the preamble of

Council Decision 94/800 is ‘simply a policy statement and, as such, cannot affect the

jurisdiction of either Community [Union] or national courts to interpret and apply the rules in

the WTO Agreements.’280

148. With respect to the reciprocity argument, Saggio contended that statements by other

contracting states concerning the effect of the WTO do not affect the effect within the EU’s

legal order. Conversely, the fact that there are no adequate instruments for imposing sanctions

278 Ibid. at § 18. 279 Ibid. 280 Ibid at § 19 -20.

70 The ECJ and its GATT/WTO rulings: subject of towering discussions

when a WTO Member State does not comply with the Agreements could be a strong

argument for “the proposition that the WTO rules are not binding because of the reciprocal

nature of obligations undertaken in an international context.”. However, in this context,

Saggio referred to the principle of inadimplenti non est adimplendum, which justifies the

suspension or even extinction of the agreement when another contracting party does not

comply with material obligations.281 So, in Saggio’s view, such a breach justifies a suspension

of the WTO Agreement and precludes application of the WTO provisions by the judiciary.282

Hence, this option would intercept an imbalance in reciprocity, that resulted from a lack of

direct effect in other WTO Members’ legal order. Finally Saggio, in an answer to an

argument of the Council, decided that the DSU does not limit the jurisdiction of the ECJ.283

149. Saggio concluded that “where a Member State has brought a direct action under Article

173 of the Treaty challenging an act of the Council, the applicant's wish to invoke the WTO

Agreements is in no way inadmissible.” However, he also limited the consequences of his

reasoning in explaining that

“Even if this may cause the Community [Union] to be held to be in breach of international

law, the Court, which has the duty to ensure respect of the independence of the

Community [Union] legal order, may not apply provisions that require the institutions to

act in a manner that is inconsistent with the proper functioning and the objectives of the

Treaty.”

This inconsistency flows from a breach of Union primary law and general principles which

have assumed the nature of constitutional rules. So, Member States must be able to invoke the

WTO Agreements in a direct action questioning the legality of a Union act, but the Court

should not review that particular act in the light of WTO provisions if that act has assumed a

constitutional nature in the Union’s legal order. As already explained above, the Court did not

follow Saggio’s opinion and made a firm statement in confirming its former case law in a

WTO context.284

281 Article 60 VCLT, cited supra note 89; Maresceau is rather sceptic about this solution, he rightly doubts the feasibility in practice, see MARESCEAU, cited supra note 237, 297. 282 Opinion Advocate General Saggio, cited supra note 126 at §21. 283 Ibid. at §23. 284 See supra at §§ 72 - 77.

71 The ECJ and its GATT/WTO rulings: subject of towering discussions

iv. Advocate General Alber in Omega and Biret

iv.a. Omega: changing the terms of debate

150. Before dealing with that other landmark case, Van Parys, it is worth going through the

Opinions of Advocate General Alber in the Omega and Biret rulings.285 Omega concerned a

reference for a preliminary ruling about Regulation 925/1999 concerning noise emissions of

airplanes, more particularly whether this regulation infringed the Agreement on Technical

Barriers to Trade.286 As regards the direct effect of WTO law, Alber sided with the Court in

putting forward the negotiations and flexibility as the most important reasons not to grant

direct effect to the WTO Agreements.287

151. However, Alber’s opinion is innovating as it approached the issue of direct effect from

a WTO perspective in stead of an EU perspective. More particularly, Alber stated that

“direct reliance on rules of WTO law as against measures taken by WTO members appears

inappropriate from the point of view of WTO law as well, however. Regardless of their

wording, all provisions of WTO law are subject to a general reservation which accords the

States concerned various possibilities of reacting to a breach. It is therefore not for the

Court but for the WTO, or the members of the WTO, to ensure that WTO law is observed

in the legal systems concerned. Direct effect of WTO rules is clearly not part of their

legislative content. Such content may not be ascribed, at Community [Union] level, to

WTO law in its original form but at most in the form of transposition measures. (...) Direct

effect of WTO law in the legal systems of the WTO members cannot, on the other hand,

sensibly be brought about unilaterally by individual legal systems, but only at WTO

level.”288

By doing so, in Snyder’s opinion, Alber made two original contributions to the debate. First,

he simply pulled open the debate beyond the ambit of the EU. Secondly, Alber suggested that

285 ECJ cases C-27/00 and C-122/00, Omega Air et al, ECR 2003, I – 2569, Snyder considers this opinion as having altered the terms of the direct effect debate, SNYDER, cited supra note 233 at 329. 286 Council Regulation (EC) 925/99 of 29 April 1999 on the registration and operation within the Community of certain types of civil subsonic jet aeroplanes which have been modified and recertificated as meeting the standards of volume I, Part II, Chapter 3 of Annex 16 to the Convention on International Civil Aviation, third edition (July 1993), O.J. 1999, L 115/47, Agreement on Technical Barriers to Trade, annex 1 A to the Agreement Establishing the World Trade Organization, Marrakesh, 15 April 1994 (www.wto.org). [TBT] 287 Opinion Advocate General Alber in Omega, cited supra note 285 at §§ 92 - 93. 288 Ibid. at § 94 – 95.

72 The ECJ and its GATT/WTO rulings: subject of towering discussions

the decision as to grant WTO law direct effect or not, belongs to the international community

and can therefore not be taken on a unilateral basis.289

152. So, by changing his point of view and stressing the need for multilateralism, Alber

seemed to have created a legally founded reasoning for the reciprocity argument, without

ignoring the political context.290 However, one should not lose sight of other important

observations made in those two defining paragraphs. As an alternative to the lack of direct

effect, Alber expressed his preference for transposition measures, which clearly refers to the

Fediol and Nakajima case law. On top of that, he also implicitly confirmed the relationship

between the Court on the one hand and the Commission and Council on the other hand, as

previously defined by the Court in Portugal v Council: the Council and Commission play the

‘dominant roles’ in the field of international trade law and it is not up to the Court to deprive

them of their scope of manoeuvre, by deciding on its own what effect must be given to WTO

law.

iv.b. Alber on the effect of DSB recommendations and rulings in Biret

153. Surprisingly, Alber takes a different stance in the Biret case.291 However, Biret

concerned an action for damages for damage suffered due to the Union’s hormone regime

which was found to be in breach of the SPS Agreement by a DSB decision, while Omega

dealt with the preliminary question whether a regulation was in breach of the TBT

Agreement. In Alber’s view, this comes down to the following difference: recognising the

direct applicability of WTO law as a basis for a claim for damages does not have the same

impact as recognising it in the framework of validity review. Recognising the direct effect of

WTO law in Biret would not imply that Biret would be able to “call for the ban on the

importation of meat treated with hormones to be lifted, thereby ending the Community

[Union] legislature's task of health and consumer protection.”292

289 SNYDER, cited supra note 233 , 330 – 331. 290 Whether this is a well- or ill-founded argument remains to be seen. 291 Biret, cited supra note 171. 292 Opinion of Advocate General Alber in Biret, cited supra note 171 at § 94. Mind how Alber uses the concepts of direct applicability and direct effect for the same concept, while Van Gerven had so meticulously distinguished between those two terms.

73 The ECJ and its GATT/WTO rulings: subject of towering discussions

154. In order to come to his conclusion, Alber first examined whether DSB decisions could

have effect in the Union’s legal order and if so, to what extent. He observed that once a DSB

recommendation or ruling has been adopted, the respondent Member no longer disposes of

any discretion as to whether to comply with it. It must simply do so "unconditionally" and

"immediately".293 Ultimately, a Member cannot decline to fulfil its obligations under the

WTO agreements. Alber stated that non-compliance with a DSB recommendation or ruling is

not a lawful commercial policy option. Therefore, the legislative and executive bodies of the

EU do not have any discretion that could be deprived by the Court. Alber firmly advised the

Court to

“support the principle of legality by recognising that DSB recommendations and rulings

are binding and that an individual may rely on them in an action for damages after the

expiry of the reasonable period of time allowed to comply with the DSB recommendation

or ruling.”294

155. Moreover, Alber found that Biret may rely on Articles 3 and 5 of the SPS Agreement

embodied in the DSB recommendations of 13 February 1998, because the Union had not

implemented the recommendations within the above-mentioned implementation period.295

Alber gave the impression that it did not matter whether or not the actual damage had been

suffered after the expiry of the implementation period. Instead, he contended that the

implementation period must have expired at the moment of the proceedings before the

European Courts (Biret had filed an action for damages in 2000). For this purpose, Alber

drew a parallel between Biret and Francovich, which concerned the liability for damage

suffered because of the non-implemenation of a directive.296 However, as mentioned above,

the ECJ did not follow him in this reasoning.297

156. The Advocate General also referred to the freedom of trade as a fundamental right or

the freedom to pursue an economic activity as a general principle of Union law. In his view,

it would be unfair to deny a citizen a right to claim damages in a situation where the Union

has been in continued breach of WTO law and thereby reduces the citizen’s fundamental

293 Ibid. at § 83. 294 Ibid. at § 86. 295 Ibid. at § 120. 296 Ibid. at §§ 104 – 109, ECJ Joined Cases C-6/90 and C-9/90, Francovich and Others v Italy, ECR 1991, I-5357 297 See supra at § 80, nor did the Court, in any event, reject Advocate General Alber’s view.

74 The ECJ and its GATT/WTO rulings: subject of towering discussions

rights.298 This argument leans very much to an allegation of a lack of judicial protection, an

argument that will be brought forward more explicitly by Advocate General Maduro in

FIAMM.299

157. Alber also took the effort of addressing the reciprocity argument. He rightly confirmed

that this actually is a policy issue, ‘decked out in the legal trappings of a ‘principle of

reciprocity’.300 This is remarkable, as only years before, Alber himself had decked out this

political consideration in a legal argumentation. In this context Alber emphasised that in the

framework of the DSU “the possibility of negotiations arises only when both parties to the

dispute agree as to the continued existence” of the breach of WTO law.301 Given the Court’s

reasoning that a lack of reciprocity due to recognising direct effect, would render the Union in

a weaker position during negotiations in a particular trade dispute, Alber suggested that this

argument is not relevant when one of the parties, be it the EU or another WTO Member, does

not agree on the continued existence of the breach of WTO law. Moreover, he contended that

the Union’s trading position would not be weakened in case of continued incompliance.

Because in such situation the complaining party may initiate a dispute settlement procedure

and demand compliance with the DSB ruling. So, Alber argued that the EU would still retain

the possibility to start dispute settlement proceedings against other WTO Members which

continue to infringe WTO rules.

158. Alber eventually came to the conclusion that

“the issue is the basis for a possible claim for monetary damages against the Community

[Union] or the competent Community [Union] bodies which have failed to implement the

DSB recommendation or ruling within the period of time prescribed by the WTO.

Recognition of the direct applicability of WTO law embodied in DSB recommendations or

rulings does not therefore mean that meat treated with hormones can be imported into the

Community [Union].

It must consequently be concluded that the Court will not reduce the discretion enjoyed by

the legislative and executive bodies of the Community [Union] in implementing DSB

recommendations if, in the case at issue, it holds that WTO law should apply after the

298 Ibid. at § 92. 299 See infra §167. 300 Ibid. at § 102. 301 Ibid.

75 The ECJ and its GATT/WTO rulings: subject of towering discussions

expiry of the period of time allowed to comply with the DSB recommendations of 13

February 1998.”302

159. Even though Omega and Biret start from a different premises, one cannot overlook the

fundamental change in Alber’s reasoning. However, the fact that a case concerns a claim for

damages instead of invalidity tips the scales for several other observers too.303

v. Advocate General Tizzano Van Parys

160. In Van Parys the ECJ did no longer avoid the question of the effect of DSB rulings

after the expiry of the implementation period: the expiry of the time-limit did not imply that

the Union had exhausted the possibilities under the DSU of finding a solution to the dispute.

Furthermore, the ECJ once again reconfirmed its reciprocity argument.304 In its reasoning the

ECJ did not follow the Opinion of Advocate General Tizzano.305

161. Tizzano started by briefly reiterating the Court’s rulings in Portugal v Council and

Netherlands v Parliament and Council, in which the Court strongly confirmed its previous

ruling. Tizzano explicitly stated that he would not consider judgments delivered before the

establishment of the WTO.306 Tizzano then turned to the DSU, he gave an outline of the main

characteristics of the system and reiterated the Biret judgment. In doing so, Tizzano paid

particular attention to the Opinion of Advocate General Alber. Moreover, Tizzano practically

copied the relevant passages relating to reciprocity and the effect of DSB ruling from Alber’s

opinion in Biret. Tizzano concluded by expressing his consent:

“I have nothing to add to the Advocate General’s ample arguments except to say that I

agree with them. I too take the view, on the basis of the considerations thus far adduced,

that in a ‘Community [Union] governed by law’ DSB decisions must be considered as a

criterion of the legality of Community measures and that the Court consequently should

not, on grounds of doubtful legal merit, give clear approval to legal arguments that would

lead to the opposite conclusion.”307

302 Ibid. at §§ 94 – 95. 303 See infra §§ 202 - 209. 304 See supra §§ 81 - 86. 305 Opinion of Advocate General Tizzano in Van Parys, cited supra note 178. 306 Ibid. at §§ 37 – 45. 307 Ibid. at § 73.

76 The ECJ and its GATT/WTO rulings: subject of towering discussions

162. The Advocate General then applied Alber’s reasoning to the Van Parys case and

concluded that the Union’s new banana regime was invalid “inasmuch as it is inconsistent

with the WTO rules as established by the DSB on 25 September 1997 and confirmed by the

same body on 6 May 1999.”308 It should be mentioned here that Tizzano does not just copy

Alber’s reasoning, he takes it one step further: Alber developed his reasoning with respect to

a claim for damages, which he clearly considered to be fundamentally different from a

legality review.309 Tizzano extended Alber’s reasoning to a case of pure validity review.

163. Although he considered it encouraging that in Biret, the Court had identified the

question of the effect of DSB decisions and the compatibility of the contested Union

measures with those decisions as a distinct and separate problem, Tizzano anticipated another

direct effect unfavourable ruling and developed an alternative argument, since the Court had

shown to be reluctant to grant direct effect to a DSB ruling.310 More particularly, the

Advocate General asserted that the Union had adopted the new banana regime in order to

implement the DSB rulings. It follows, according to Tizzano, that the measures taken to

implement the DSB recommendations fell within the scope of the Nakajima exception.311

What’s more, the Union legislature intended to implement a ‘particular obligation’ assumed

in the context of the WTO.312 To this end, Tizzano referred to the preamble of Regulation

1637/98, amending Regulation 404/93, which states that ‘the Community’s [Union’s]

international commitments under the [WTO] … should be met’ and to a declaration made on

behalf of the Commission in answer to a parliamentary question saying that, the Union

implemented the recommendations of the World Trade Organisation (WTO) dispute

settlement body of 25 September 1997 in the bananas case by taking the necessary measures

to bring the Community [Union] banana regime into conformity with WTO rules’.313 Also the

simple sequence of events was an indication that those regulations were intended to

implement the DSB decision.314

308 Ibid. at §§ 79 – 83. 309 See supra 153 310 Ibid. at §§ 75 – 77. 311 Ibid. at §§ 105 -107. 312 Tizzano referred to the judgment in Italy v Council. In which the Court further defined the scope of the exception created in the Nakajima through the concept of ‘a particular obligation’. Cited supra note 227. 313 Ibid. at §§ 100 – 101. 314 The banana regime had been amended by the end of the implementation period granted to the Union to comply with the DSB decision of 25 September 1997. And, most significantly, Article 2 of regulation 1637/98 provided that it was to apply from 1 January 1999, the precise date on which the

77 The ECJ and its GATT/WTO rulings: subject of towering discussions

vi. Advocate General Maduro: firm but fair

164. On appeal brought by FIAMM and Fedon, the ECJ has blown the whistle on the GC.

Conversely, Advocate General Maduro very convincingly confirmed the existence of a

liability principle in the absence of unlawful conduct.

vi.a. No direct effect of WTO law

165. Before further analysing Maduro’s stance on such a liability principle, one should first

take a look at Maduro’s findings as regards the direct effect of the WTO Agreements. First of

all, Maduro sided with the ECJ in stating that it is “easy to see that the requirement for an

international agreement to have a direct effect is necessary whatever the type of action and

the status of the applicant, and whether the dispute has been brought before national courts or

before the Community [Union] courts.”315 Secondly, after extensively explaining the

difference – in both scope and concept – between the direct effect of Union law and the direct

effect of international agreements, Maduro resolved to use different terms to describe them in

the future. More particularly, to speak of “the possibility of relying on international

agreements” in stead of ‘direct effect’.316 Thirdly, with respect to the “possibility of relying on

the WTO Agreements” Maduro confirmed the case law of the Court in every possible way. It

would therefore be superfluous to elaborate on this issue. However, a few matters should be

highlighted.

166. First, it is remarkable that Maduro introduced another new expression, i.e. political

freedom. He concluded that accepting a review of the legality of the conduct of the Union

institutions going beyond the Fediol and Nakajima exceptions “in the light of the WTO rules

which the DSB had found to have been infringed by the Union” would severely jeopardise the

political freedom of the Union in the framework of a WTO dispute.317 Secondly, in Maduro’s

view, the financial burden created by the recognition of a fault-based liability would

period of 15 months and one week, granted by the DSB for the Community to comply with that decision, expired. 315 Opinion of Advocate General Maduro in FIAMM, cited supra note 192 at §30. See also AG Saggio’s opinion in Portugal v Council, who strongly criticizes this condition of direct effect in direct actions by Member States, see supra at §§ 145 - 146. 316 Ibid. at § 31. 317 Ibid. at § 35, 49 and 52.

78 The ECJ and its GATT/WTO rulings: subject of towering discussions

“force the political organs of the Community [Union] to eliminate the measure held

incompatible with the WTO rules and hence restrict the freedom of conduct they are

permitted by the legal order of the WTO, since all undertakings affected either by the

Community [Union] measure that is incompatible with the WTO rules or by the retaliatory

measures the opportunity to bring actions and obtain compensation for the entire damage

they have suffered.”318

It becomes very clear that Maduro, unlike most other Advocate Generals, is not afraid of

using policy arguments in order to resolve this issue. This once again proves that direct effect

of WTO law is in fact a matter of trade policy, rather than a matter of law.

vi.b. Maduro on the principle of no-fault liability of the EU

167. Since, in his view, it is not possible to review the legality of Union conduct in the light

of WTO rules and DSB decisions, it is only logical that no liability for unlawful conduct can

be established in this conduct.319 However, Maduro’s merit lies in his assessment of the

principle of liability of the Union in the absence of fault.320 The Advocate General made an

elaborate study of the concept. He began with examining the scope of article 340 TFEU (ex

article 288 of the EC), more particularly what exactly the expression ‘the general principles

common to the laws of the Member States’ entails as regards the principle of no – fault

liability. In his view

“a mathematical logic of the lowest common denominator would lead to the establishment

of a regime for Community [Union] liability in which the victims of damage attributable to

the institutions would have only a very slim chance of obtaining compensation.” 321

Moreover, one must instead identify the most appropriate legal solution in the context of, and

for the needs of, the Union legal system. From this follows, according to Maduro, that

“the Court has the task of drawing on the legal traditions of the Member States in order to

find an answer to similar legal questions arising under Community [Union] law that both

318 Ibid. at § 50. 319 As opposed to Alber, who briefly touches upon this issue in his opinion in the Biret case in which he compares the liability for non-implementation of DSB recommendations with liability arising from failure to implement directives. See §§ 106 – 110 and §§ 120 – 125 of his opinion, cited supra note 171. 320 Ibid. at §§ 53 – 83. 321 Ibid. at § 55 and note 59, for this purpose Maduro referred to the opinion of AG Roemer who also rejected the application of the ‘rule of the lowest limit’ that would result if it were decided to adopt only rules existing in all the Member States (Opinion in ECJ Case 5/71, Zuckerfabrik Schöppenstedt v Council, ECR 1971, I - 975). Roemer emphasised the importance of evaluative comparative law.

79 The ECJ and its GATT/WTO rulings: subject of towering discussions

respects those traditions and is appropriate to the context of the Community [Union] legal

order. From that point of view, even a solution adopted by a minority may be preferred if

it best meets the requirements of the Community system.”322

Maduro then emphasised that the decisive question is whether the recognised principle is

most suitable for the requirements of the Union legal order. In his view, the answer to this

question is affirmative, since the recognition of a principle of no-fault liability would “offset

the severity of the conditions for the incurring of fault-based Union liability”.323 That is even

more so in the case of WTO rules, because individuals are unable to rely un them to plead the

unlawfulness of the conduct of the Union institutions:

“In the absence of the enshrinement of the principle of no-fault Community [Union]

liability, even those who, as a result of the unlawful conduct, have suffered particularly

serious damage would be deprived of all judicial protection.”324

168. Besides the most eminent argument of judicial protection, Maduro also referred to good

governance and the fact that in recognising such a principle the Union would have a choice to

decide whether the costs, resulting from retaliation measures, “must be borne solely by the

undertakings affected by such measures or distributed over society in general”. For this

purpose, he also referred to both French and German administrative law. More specifically to

the notion of the equality of citizens in bearing public burden, which means that

“it is normal that citizens must bear the burdens resulting from public activity without

compensation, but if, in the general interest, the public authorities cause particularly

serious damage to certain individuals and to them alone, the result is a burden that does

not normally fall on them and which must give rise to compensation.”325

Maduro concluded that enshrining in Union law a principle of no-fault Union liability would

advance the case-law from potential to settled, from the era of uncertainties to that of

solutions.326

169. Maduro then set out to define the scope of such a no-fault liability. First, he broadened

the scope from liability in the absence of fault to a regime of absolute liability regardless of

fault. This implies that acts that are unlawful but do not constitute a sufficiently serious

322 Ibid. 323 Ibid. at § 57. 324 Ibid. at § 58. 325 Ibid. at §§ 62 – 63. 326 Ibid. at § 61.

80 The ECJ and its GATT/WTO rulings: subject of towering discussions

infringement would also fall under this concept. Furthermore, both the failure to legislate and

legislative conduct can trigger this liability. However, in order not to disregard the principle

of reciprocity, only Union citizens may rely on this system, no economic operators from third

countries. 327

170. As regards the conditions for no-fault Union liability, the Advocate General confirmed

the three conditions laid down by the GC, being actual damage, causal link and an unusual

and special nature of the damage. However, with respect to the unusual and special nature of

the damage, Maduro considered it necessary to show that the damage is serious or grave in

order to be considered unusual. Otherwise

“the damage would not verge on expropriation that cannot be left uncompensated in view

of the protection that must be given to the right to property. That does not mean that the

damage must be equivalent to total and definitive loss of ownership, but it must

nevertheless entail sufficiently serious harm to the attributes of the right to property.”328

Maduro defined ‘special’ as damage that “affects a particular category of economic operators

with disproportionate severity by comparison with other operators.”329

171. Maduro concluded by observing that in any event the GC was wrong to rule that the

damage of FIAMM was not unusual in that it did not exceed the limits of the economic risks

inherent in their exporting activities. On the contrary, a risk cannot be considered inherent in

operating in the sector concerned

“where there is no link between the act or conduct [by the Union institutions] causing the

damage and the economic sector in which the undertakings suffering the damage operate.

In the absence of such a link, the damage cannot be regarded as the manifestation of a

normal commercial risk against which a prudent operator could and should have protected

himself.”330

According to Maduro, no such link could be established between the Union’s banana regime

and the economic activity of trade in spectacle cases.

327 Ibid. at §§ 64 – 70. 328 Ibid. at § 76. Besides the requirement for ‘serious’ damage, it also remains necessary that the damage exceeds the limits of the economic risks inherent in operating in the sector concerned. See also supra §§ 92 - 96. 329 Ibid. at § 77. 330 Ibid. at § 82.

81 The ECJ and its GATT/WTO rulings: subject of towering discussions

§3. Conclusion

172. When looking at the issue of direct effect through the eyes of the Advocates General,

one sees a varied landscape, which renders it quite difficult to give an answer to the questions

put forward at the start of this chapter. However, what strikes one most is probably the impact

of the establishment of the WTO. As opposed to its impact on the rulings of the ECJ, this has

been a true watershed for the Advocates General. In the GATT 1947 era, everyone agreed

that the GATT could not have direct effect. Although every Advocate General did so on his

own terms. For instance, Van Gerven concentrated on the indirect effect, which he favoured,

and the Court’s competences in this view. Gulmann on the other hand exhibited great

scepticism, even in view of the Fediol and Nakajima exceptions. However, these differences

in approach are nothing compared to the heavy disagreement evoked by the establishment of

the WTO. Even though Advocates General have addressed the issue of the effect of WTO law

in many other cases, it is already very clear from the few opinions discussed above that the

effect of WTO law is a hard nut to crack. But, all opinions do in a way voice criticism on the

ECJ’s conservative approach. This gives the impression that at least the argumentation of the

ECJ is probably no longer tenable, given the changes in the system of WTO dispute

settlement. Tesauro recommended the Court to alter its reasoning since the reciprocity

argument was the only remaining and valid one. In his view, the WTO Agreement had

provided profound change as regards the flexibility and the DSB.331 Saggio did not even agree

with the reciprocity argument in Portugal v Council, in his view the lack of reciprocity

(resulting from direct effect) could be counterbalanced by the principle of inadimpleti non est

adimplendum. On top of that, he expressed severe criticism. The condition of direct effect

should not be imposed in cases of direct actions by Member States. He also referred to the

major changes resulting from the WTO Agreement. Alber’s stance in this issue is twofold.332

Namely, he finds that recognising the direct effect of WTO law as a basis for a claim for

damages does not have the same impact as recognising it in the framework of validity review.

In the context of a claim for damages, Alber asserted that WTO law embodied in a DSB

decision may indeed play its role. Tizzano sided with Alber, not with the ECJ, on the subject

of the effect of DSB decisions in Van Parys. So with respect to the effect of DSB rulings, the

situation is definitely even more pressing. A valid alternative in this matter could be to apply

331 Tesauro spoke of a true Copernican innovation. See supra §§ 137- 142. 332 See supra §§ 150 - 163.

82 The ECJ and its GATT/WTO rulings: subject of towering discussions

Nakajima, as suggested by Tizzano. Or through the recognition of a no-fault liability as

proposed by Maduro.

173. The Advocates General clearly have had their hands full in assessing the effect of

WTO law. The issue of reciprocity has proven to be a steep hill to climb: the opinions of the

Advocates General are not usually coloured by political considerations. This shows that the

discrepancy between the legal reality and the political and economic reality has been a real

challenge for the Advocates General as well. This is another confirmation that it is impossible

to resolve the question of the effect of WTO law without considering the implications on

trade policy. Moreover, a firmer legal foundation of the political/economic motives of the

ECJ’s case law seems out of reach.

174. However, if one looks at this tangle of arguments and nuances, one might also

distinguish the no-fault liability as put forward by Advocate General Maduro as the greatest

common denominator. Maduro, as opposed to Tizzano and Alber, is not favourable to

assessing the legality of Union law in the light of WTO provisions, not even for the sole

purpose of establishing non-contractual Union liability for unlawful conduct. Maduro’s

assessment of the WTO Agreement probably is amongst the most conservative of all

Advocates General, but even Maduro is aware of the problem that is being created in the area

of judicial protection. For this reason, he is probably right in proposing a principle of no-fault

liability since this would mean “to advance from the era of uncertainties to that of solutions”.

This proposal will be most likely supported by the other Advocates General, given their

observations on the effect of WTO law in the opinions reviewed above.

II. Divergent perceptions and interpretations in legal doctrine

175. A bright analysis of legal doctrine on this subject is quite a challenging task,

considering that the analyst quickly finds himself faced with a panoply of different

approaches and solutions. This chapter aims at creating a certain degree of structure in and

understanding of this panoply in order to make a correct assessment of the ECJ’s case law and

to make a valuable proposition as regards the future direction of the ECJ.

83 The ECJ and its GATT/WTO rulings: subject of towering discussions

§1. The relationship between GATT/WTO law and the EU legal order: an international

law perspective

176. Of all three ‘stages’ to discuss, the relationship between GATT/WWTO law and the

EU legal order is probably the most abstract one. That relationship is governed by the

principles usually governing the relationship between international law and domestic law (in

this case Union and national law), which is primarily defined by constitutional law and thus

differs from State to State. Generally, a State’s constitution opts for monism or dualism. In

the first instance, international law becomes part of the national legal order without formal

transformation. Under dualism, all international law has to be enacted in the form of domestic

law before it becomes part of the national legal order. Monism is referred to as a pragmatic

approach, favouring international law, while dualism protects sovereignty and the supremacy

of the legislative institutions over the executive and judicial institutions.333

177. This also counts for the relationship between WTO law and the EU legal order. In

assessing the relationship with international law, the ECJ has applied both monism and

dualism.334 From the case law above, it is clear that in case of GATT/WTO law, the ECJ has a

pronounced preference for dualism as opposed to the monist approach it has displayed with

respect to other international agreements.335

178. In this context, it is worth the effort of briefly explaining two adjacent concepts:

namely pluralism and constitutionalism. Pluralism emphasises on separate and distinct legal

orders, like dualism. But pluralism focuses on the plurality of diverse normative systems, as

opposed to dualism, which only deals with the relationship between national and international

law. Similarly, constitutionalism resembles monism in its assumption of a single integrated

legal system. Pluralism stands on the value of diversity in different national and international

legal orders, constitutionalism seeks coherence and common grounds between these

333 EECKHOUT, cited supra note 112, 277, F. G. JACOBS, The effect of treaties in Domestic law, Londen,

Sweet & Maxwell, 1987, introduction, S. BESSON, “European Legal Pluralism after Kadi”, European Constitutional Law Review 2009, 246. 334 For an analysis of the oscillations between monist and dualist interpretations of the ECJ jurisprudence, see JAN KLABBERS, “International Law in Community Law: the Law and Politics of Direct Effect”, Yearbook of European Law 2002, 263. 335 EECKHOUT, cited supra note 112, 302 et seq.

84 The ECJ and its GATT/WTO rulings: subject of towering discussions

systems.336 Looking at the issue of GATT/WTO law through constitutionalist eyes, one sees

an advocacy for direct effect.

179. Only a handful of scholars supports the idea of giving full direct effect to GATT/WTO

law. One of them is a strong constitutionalist and direct effect adept: Petersmann.

Petersmann’s view on world trade, which is a very liberal one, automatically results in a plea

for direct effect. He is clearly inspired by Adam Smith and his ‘invisible hand’, he poses that

economic welfare and equality of freedoms of citizens require the legal protection of equal

freedoms and property rights of citizens through certain legal guarantees and judicial

protection of their individual rights.337 Granting direct effect to GATT/WTO law would, in

his view, probably be one of the legally most effective and economically most efficient means

to achieve that objective. This way WTO rules could be protected and enforced at national

level by specific performance and international disputes would often be prevented.

Petersmann even takes it one step further by stating that GATT/WTO law can effectively

serve as a “third line of constitutional entrenchement” of legal guarantees for non-

discriminatory foreign trade competition. In his view GATT/WTO law could serve as a

“constitutional constraint” on the far-reaching, discriminatory trade policy powers of the

Council and Commission.338 Petersmann constitutional insights are inspired by Hayek,

another classic liberal economist/philosopher who proposes an international constitutionalism

that limits political powers through internationally judicially enforceable and directly

effective “global integration law” protecting economic freedoms and rights.339 However,

Petersmann does not disregard the reality, being a very conservative approach of the ECJ.

Even when direct effect is not an option, judges are “constitutional guardians” and can still

336 G. DE BURCA, “The European Court of Justice and the international legal order after Kadi”, Harvard International Law Journal 2010, 31 et seq. 337 E.U. PETERSMANN, Constitutional functions and constitutional problems of international economic law, Switzerland, University Press Fribourg, 1991, 49 – 62 and E.U. PETERSMANN, cited supra note 96, 13 – 17. See also supra § 45. 338 Petersmann on constitutional problems of international economic law, cited supra note 337, 439 -440. 339 Hayek’s most known publications are considered classics in modern day economics, a.o. F. V. HAYEK, The road to Serfdorm, London, George Routledge & Sons, 1944, 265 p and Law, Legislation & Liberty: a new statement of the liberal principles of justice and political economy, Chicago, University of Chicago Press, 1973, 3 volumes.

85 The ECJ and its GATT/WTO rulings: subject of towering discussions

“prevent and settle international economic disputes by interpreting domestic laws in

conformity with international legal obligations”.340

180. Up till some level, also Jackson leans towards this approach: in his view GATT/WTO

law should be enforced through specific performance, more particularly that GATT/WTO law

should be directly applicable, and at times even directly effective, in the legal orders of the

WTO Members.341 However, although Jackson’s opinion is very authoritive, one should not

qualify it as the WTO standpoint. Greatly divergent opinions can be expected from that

quarter: Ehlerman, a former member of the AB, is confident that recognising direct effect of

WTO law would damage the WTO itself. This would lead to increasingly aggressive

complaints by Members to compensate for having granted direct effect, which would then

further strengthen panels and the AB at the cost of the political organs of the WTO.342

Trachtman argues that the lack of direct effect provides a political filter, which was formerly

provided by the requirement for consensus in order to adopt panel decisions.343

181. Cottier developes a new theory of direct effect, a theory characterised by a lack of

general statements, a theory most abstracted from the abstract and therefore very contrary to

the above mentioned approach through general concepts of monism, dualism,

constitutionalism. He criticises the Court’s approach in only assessing the normative quality

of a WTO provision: whether it is sufficiently precise for judicial application. In stead, the

question is whether “a court, in the context and under the facts of the particular case, is

provided with sufficient guidelines and criteria to hand down a rationally motivated

decision”.344

340 PETERSMANN, E-U., “Judging Jugdes: from ‘Principal-Agent Theory’ to ‘Constitutional Justice’ in Mulitlevel ‘Judical Governance’ of Economic Cooperation Among Citizens”, Journal of International Economic Law 2008, 873 and 877. 341 JACKSON, cited supra note 96. 342 EHLERMANN, D., “Some personal experiences as member of the Appellate Body of the WTO”, Policy Paper RSC No. 02/9, Robert Schuman Centre for Advanced Studies, EUI, Florence, 41 – 42 and “Part II: WTO Dispute Settlement: Insight from Practitioner – Reflections on the AB of the WTO”, Journal of International Economic Law 2003, 704. 343 J. TRACHTMAN, “Bananas, Direct Effect and Compliance”, European Journal of International Law 1999, 660. 344 COTTIER, cited supra note 351.

86 The ECJ and its GATT/WTO rulings: subject of towering discussions

§2. The ECJ’s conservative approach: criticism and support

182. However, this paper focuses on the effect of WTO law from a European law

perspective. Thus, so much for an ‘exotic’ view on the subject. From a European law

perspective, just as little observers plead for the full direct effect of GATT/WTO law in the

European Union.345 All the more observers have voiced criticism on the ECJ’s reasoning or

conservative approach in recent cases involving liability or direct action by a Member

State.346 But most observers are aware of the delicacy of the issue and handle it with a sense

of circumspection. This chapter shall first address the criticism on the ECJ’s current main

arguments in denying direct effect, namely reciprocity and flexibility. However, it is one

thing to criticise the reasoning, since the reasoning is important. Yet it is another thing to take

issue with the ECJ’s ultimate conclusion, which several observers are less inclined to do.

Consequently, the second chapter shall look in to the reactions to the ECJ’s conclusions with

respect to questions of liability, DSB decisions and direct actions by Member States.

i. The ECJ’s reasoning: judicial self-restraint

i.a. The reciprocity argument

183. A great deal of the criticism on the ECJ’s reasoning is voiced with respect to the

reciprocity and flexibility arguments. The reciprocity argument has been a hot topic in the

direct effect debate, probably because of its essential value in the rulings of the Court. Several

observers have criticised the reciprocity argument as being not convincing within the context

of international law. The general objective of many international agreements is to create

mutual benefits to the parties, then why this becomes an issue when assessing the WTO

agreements remains a question not answered by the Court. 347

184. Although most observers do not consider reciprocity a valuable legal argument, their

stance on the political value for the Court left aside, it is worth looking into the ones that do

consider it valuable. Zonnekeyn contends that the recognition of direct effect in the context of

345 e.g. S. GRILLER, ., “Judicial Enforceability of WTO law In the European Union: Annotation to Case C-146/96, Portugal v Council”, Journal of International Law 2000, 454 et seq. 346 See infra §§ 183 et seq.; e.g. P. EECKHOUT, “Judicial Enforcement of WTO Law in the EU – Some further reflections”, Journal of International Economic Law 2002, 101. 347MARESCEAU, cited supra note 105, 259; E-U PETERSMANN, cited supra note 125 at 426; R.

UERPMANN-WITTZACK, “The Constitutional Role of Multilateral Treaty Systems”, in A. VON

BOGDANDY, A. & J. BAST, (eds.), Principles of European constitutional law, Oxford, Hart Publishing, 2006, 157.

87 The ECJ and its GATT/WTO rulings: subject of towering discussions

GATT/WTO would indeed impair reciprocity in its application because most of the other

contracting parties do not recognise direct effect of GATT.348 But more recently, Zonnekeyn

condemned the Court’s reasoning in Portugal v Council as being “an assault to the trias

politica principle”.349 Von Bogdandy’s account on the subject is quite remarkable. In his

view, the reciprocity argument is derived from the principle of legal equality. Accordingly,

this shows from the outset of the ECJ in Portugal v Council to safeguard uniform application

of EC law throughout the Union. Direct effect of WTO law would definitely lead to a

disuniform application of the WTO rules and therefore jeopardise legal equality between

economic operators acting under different municipal legal orders.350 Even with respect to

actions for damages, Von Bogdandy emphasises that the reciprocity argument is by no means

political.

185. When going to extremes, one should as well consider Cottier, who recognises the issue

of reciprocity and foists far-reaching implications upon it: he is convinced that the issue of

direct effect in the EU legal order cannot be solved on a European level, given the multilateral

character of the world trade system.351 Cottier recognises the reality of what he calls the

“political economy” and the implications of the direct effect debate on the allocation of

powers between the EU institutions. He proposes to integrate WTO law in domestic fora step

by step and on a reciprocal basis, by means of introducing minimal standards of direct effect

into the world trading system through negotiations. This proposal is in accordance with the

observations made by AG Alber in his opinion in Omega.352

186. Eeckhout takes a similar stand on the nature of the reciprocity argument, which he

considers only a useful leg up to the actual argument, namely the impact of direct effect on

the EU's political institutions.353 Eeckhout rightly observes that this argument touches upon

the constitutional relations between judiciary, the executive and the legislative. Also Tancredi

qualifies the problem of direct effect as being essentially a matter of balance of power among

348 ZONNEKEYN, cited supra note 122. 349 G. ZONNEKEYN, “The status of the WTO agreements in the EC legal order after the Portuguese Textiles Case”, International Trade Law and Regulation 2000, 45. 350 VON BOGDANDY, cited supra note 164, 52 – 53, see also supra § 73. 351 T. COTTIER, “A theory of Direct Effect in Global Law” in A.VON BOGDANDY, P. MAVROIDIS, Y. MÉNY, (eds.), European Integration and International Co-ordination – Studies in Transnational Economic Law in Honour of Claus-Dieter Ehlermann, Nederland, Kluwer Law International, 2002, 109. 352 See supra §§ 151 - 152. 353 EECKHOUT, cited supra note 346, 94 – 96.

88 The ECJ and its GATT/WTO rulings: subject of towering discussions

the EU institutions.354 Eeckhout recognises the judicial policy making, but does not criticise

it. “Whether pro or contra direct effect, the Court could not avoid reaching a decision on

grounds other than judicial policy. Any formal legal reasoning could only serve to dress (and

disguise?) the judicial decision”.355 Neither Alemanno criticises the Court’s view, in his

opinion reciprocity is a very powerful argument.356 Bronckers does not agree, in his view the

Court follows the policy and institutional structure of other WTO Members too

subserviently.357 More specifically in the case of a direct action by a Member State,

challenging the legality of a Union measure, these political considerations may not put so

much weight in the balance.358

187. Many observers rightly indicate the constitutional weight of this subject. Kuijper puts

forward that it is “no longer tenable to see the Court as having exclusive authority when it

comes to the question of direct effect”.359 He predicts that tensions between the Court and the

legislative power will only increase due to the movement of democratic legitimisation of the

legislative power.

188. Indeed, WTO law has profound implications on the EU constitution. Direct effect

would greatly empower the judiciary, at the cost of the powers of both the legislative and

executive. However, in this case the ECJ restrains itself from performing judicial review. But

even without granting direct effect, WTO law has started to reshape the relations between the

Union and its Member States through the case law of the ECJ putting forward the alternatives

of consistent interpretation, clear reference (Fediol) and transposition (Nakajima).360 It is

clear now that the question of direct effect is a question of balance of power. However, the

question arises whether this is automatically the case.

i.b. The flexibility argument

354 TANCREDI, cited supra note 57, 942. 355 EECKHOUT, cited supra note 346, 96. 356 ALEMANNO, A., “Judicial Enforcement of the WTO Hormones Ruling within the European Community: toward EC Liability for the Non-Implementation of WTO Dispute Settlement Decisions?”, Harvard International Law Journal 2004, 551. 357 BRONCKERS, cited supra note 166, 1351, 1354. 358 See infra §§ 194 - 196. 359 KUIJPER, cited supra note 166, 1321. 360 On those alternatives see infra §§ 218 - 229 , SNYDER, cited supra note 93, 367.

89 The ECJ and its GATT/WTO rulings: subject of towering discussions

189. The ECJ presupposes a certain degree of power to be balanced, it argues that a certain

scope for manoeuvre exists for the executive and legislative institutions of the Union.

However, certain observers argue that there is no such scope for manoeuvre after a DSB

decision has been issued. So when entering the area of institutional implications, the

argument of flexibility should be reviewed as well: the Court reasons that due to an imbalance

in reciprocity, created by direct effect, the Court would tie the hands of the other Union

institutions and thereby deprive them of their scope for manoeuvre.361 This scope for

manoeuvre is in the Court’s view the result of the flexibility of the WTO Agreement and the

DSU. Since negotiations still play a significant role in the dispute settlement system, WTO

obligations are still not unconditional and therefore not suitable to be granted direct effect.

The question arises whether these WTO obligations are indeed not unconditional?

190. With respect to the WTO Agreement, one could easily argue that a large scope for

manoeuvre exists. 362 However, with respect to trade disputes in which the AB has already

given a ruling, the Court is accused of giving an erroneous interpretation of the DSU rules

governing the implementation phase of the procedure.363 Bronckers even appraises the DSU

as being much more developed than the dispute settlement systems of other treaties, which

the Court did hold to have direct effect.364 Jackson argues that the obligation to comply with

WTO rules can be inferred from the language used in the DSU.365 However, the Court

considered compensation and toleration of retaliation suitable alternatives to full and

immediate compliance. These alleged alternatives are negotiable, so by recognising them as

fully fledged definitive solutions, the Court created room for negotiations and scope for

manoeuvre. But, Tancredi rightly observes that although de iure such negotiations should not

take place or should not be of the kind to have an influence on the Court’s reasoning, de facto

WTO Members re-enter into negotiations with a view to reaching a settlement, initially only

temporary (but often “provisoire qui dure”).366 Moreover, WTO Members tend to make

agreements that do not necessarily comply with the WTO Agreement, so called derogatory

361 Portugal v Council, cited supra note 154 at § 46, Van Parys, cited supra note 178 at § 48, FIAMM, cited supra note 192 at § 119. 362 See supra §§ 18 - 27; EECKHOUT, cited supra note 346. 363 On the implementation phase of the dispute settlement system, see supra § 14. TANCREDI, cited supra note 57, 945. 364 BRONCKERS, cited supra note 166, 1344. 365 J. JACKSON, "The WTO Dispute Settlement Understanding--misunderstandings on the Nature of a Legal Obligation", in J. CAMERON and K. CAMPBELL (eds.), Dispute Resolution in the WTO , London, Cameron & May, 1998, 69-74, 73. 366 Ibid. at 944.

90 The ECJ and its GATT/WTO rulings: subject of towering discussions

agreements. So, Tancredi observes that the actual issue in determining the scope for

manoeuvre of the EU is to analyse the nature of the legal obligations arising from both WTO

substantive norms and DSB rulings.

191. In this context, Steinbach argues that the DSU indeed imposes the definitive obligation

to ensure the implementation of the ruling within twenty days after the expiry of the

implementation period. This is a downright obligation to comply. However, the losing party

still has a scope for manoeuvre as to how it will implement the obligation.367 Therefore, he

does not consider WTO law embodied in a DSB decision unconditional. But the majority of

the doctrine does consider these obligations absolutely binding. Accordingly, compensation

and retaliation are no methods of settling disputes, but only instruments to put pressure on the

respondent Member and to avoid that other WTO Members would suffer damage as a

consequence of the failure to comply.368 Following this reasoning, WTO law embodied in a

DSB decision ís unconditional.

192. Tancredi takes his analysis one step further, since this traditional approach does not

incorporate the practice of post AB rulings negotiations and derogatory agreements. He

concludes that the obligations resulting from a DSB decision probably are not cogent.369 This

means that these do not qualify as ius cogens. As a consequence, such derogative agreements

should be considered unlawful but valid. Since these agreements are valid, transparency is of

the highest importance, so as to inform and enable other WTO Members to file a complaint

against the unlawful agreement. It seems that, in Tancredi’s view, such agreements do not fall

under the scope for manoeuvre. There is only a slight scope for manoeuvre, situated in

between ‘conformity’ and ‘compatibility’.370

367 STEINBACH, cited supra note 32, 945 et seq., C. TIMMERMANS, “The Implementation of the Uruguay Round by the EC” in J. BOURGEOIS, F. BERROD, E. GIPPINI-FOURNIER, (eds.), The Uruguay Round Results – A European Lawyer’s perspective, Brussels, European Interuniversity Press, 1995, 504. 368 GRILLER, cited supra note 345, 441, ZONNEKEYN, G, “The status of WTO law in the community legal order: some comments in the light of the Portuguese Textiles Case”, European Law Review 2000, 293 and VAN DEN BROECK, N., “Legal Persuation, Political Realism and Legitimacy: the European Court’s Recent Treatment of the Effect of WTO Agreements in the EC Legal Order, Journal of International Economic Law 2001, 439, P. MENGOZZI, “La Cour de justice et l'applicabilité des règles de l'OMC en droit communautaire à la lumière de l'affaire « Portugal c. Conseil », Revue du Droit de l’Union Européenne 2000, 517. 369 See also Opinion of AG Mischo in ECJ case C-104/97 P., Atlanta AG v Council and Commission, ECR 1999, I-6983. 370 TANCREDI, cited supra note 57, 960.

91 The ECJ and its GATT/WTO rulings: subject of towering discussions

193. From the above, one should conclude that Tancredi is right in observing that indeed a

slight scope for manoeuvre exists. This implies that the DSU does provide a slight degree of

flexibility after the adoption of an AB ruling. However, this does not imply that a DSB

decision is not unconditional. Indeed, there is a scope for manoeuvre, but the ECJ would not

deprive the executive and legislative of that scope by assessing the legality of a Union

measure in the light of a DSB decision, for that illegality has already been established by that

decision. The scope for manoeuvre does not extend so far as to allow the Union to negotiate a

settlement that is not compatible and therefore unlawful. In this respect mention should be

made of the recently resolved banana dispute, which triggered a great deal of cases

concerning direct effect. Eventually, the scope of manoeuvre of the executive and legislative

institutions of the EU turned out to be quite small: the solution that closed the dispute holds

major obligations for the EU with respect to its tariffs, the US and Latin American States on

the other hand are only obliged to settle legal disputes concerning bananas pending against

the EU at the WTO. Would that outcome have been less favourable (if possible) for the EU if

the Court had ruled on the validity of the banana regime?

ii. Appreciation of the ECJ’s conclusion despite heavy criticism on its reasoning

ii.a. Direct actions by Member States

194. The fact that the ECJ has not distinguished between individual complainants and

Member States in its case law relating to the effect of GATT/WTO law, ran into a great deal

of misunderstanding.371 After all, direct effect relates to the question whether an individual

can call upon certain rights before domestic courts. Then why impose direct effect as a

condition for the invocability of GATT/WTO law in the review of legality of a Union act by a

Member State? Also AG Saggio had recommended to make the distinction between direct

effect and the invocability of an international agreement.372 But the Court has already in

International Fruit Company created a preconditional link between these two distinct

concepts: in order to be invokable in a validity review the concerning provision of

371 EGLI, P., KOKOTT, J., OXMAN , B., “EC – WTO Agreements – Effect of International Agreements in European Community Law – Ability of individuals and Member States to rely on WTO Agreements”, American Journal of International Law 2000, 744; WOUTERS and VAN EECKHOUTTE, cited supra note 111; Wouters observes that in Portugal v Council, the ECJ is careful not to refer to ‘direct effect’, despite the continuing reference to Kupferberg. 372 See supra §146.

92 The ECJ and its GATT/WTO rulings: subject of towering discussions

international law should have direct effect.373 By doing so the ECJ established a threshold,

being direct effect, in order to protect the validity of Union measures, as Bebr correctly

indicates.374 Yet this ‘technique’ becomes more questionable when Member States file an

action for validity review and the link with direct effect, namely the individual, disappears.

195. Bronckers heavily criticises the ECJ’s reasoning, he refers to this issue as a ‘black hole

for EU Member States”. In his opinion, the Court should have taken more into account the

fact that the Member States play a different role in the constitutional architecture of the Union

than individuals. Member States should be considered ‘privileged applicants’.375 Both

Bronckers and Bourgeouis argue that they should have the same possibility as the Union

institutions to have the Court determine a violation of WTO law by the institutions.376 All the

more so because they are still contracting parties to the WTO and therefore carry international

responsibility for the correct application of WTO obligations by the Union.377 On top of that,

the Member States are bound by a duty of cooperation, which means that EU Member States

among each other “are not allowed to hang out their dirty washing” in a WTO framework.378

Bronckers argues that this calls for an “internal outlet” through which these disagreements

between Member States and EU institutions can be solved within the Union.379 However,

Bronckers recently expressed a more nuanced view to the case law, which has since Portugal

v Council provided alternatives for Member States.380

196. Certainly, the criticism voiced on this specific subject is justified. But once again, one

should be extremely cautious in granting direct effect to the WTO, a multilateral trade

373 International Fruit Company, cited supra note 101, §8. 374 BEBR, cited supra note 122. 375 Also Saggio referred to the Member States as ‘privileged persons’, see supra §145 - 146. 376 J. BOURGEOUIS, “The European Court of Justice and the WTO: Problems and Challenges”, in J. WEILER, (ed.), The EU, the WTO and NAFTA: Towards a Common Law of Internatioanl Trade?, Oxford, Oxford University Press, 2001, 71, 112 – 113. The Court ruled in 1996 that the Commission could bring an action against a Member State for infringement of EC rules implementing the GATT 1947 in ECJ case C-61/94, Commission v Germany, ECR 1996, I-3989. 377 BRONCKERS, cited supra note 166, 1349; for this purpose Bronckers also refers to U. EVERLING, “Will Europe Slip on Bananas? The Bananas Judgment of the Court of Justice and National Courts”, Common Market Law Review1996, 423. 378 ECJ Opinion 1/94 on the Competence of the Community to conclude international agreements concerning services and the protection of intellectual property, ECR 1994, I – 5276, §§ 108 – 109. 379 Ibid. at 1350. 380 M. BRONCKERS, “From direct effect to muted dialogue: Recent developments in the European Courts’ Case Law on the WTO and Beyond”, Journal of International Economic Law 2008, 885-898; See infra §§

93 The ECJ and its GATT/WTO rulings: subject of towering discussions

organisation with a very pervasive scope in which negotiations and power still are very

determining. Once again, it comes down to criticism on the reasoning: the Court should

disconnect direct effect and invocability as regards cases brought before it by Member States.

This could enable the Member States to invoke WTO law. However, the intrinsic qualities of

the WTO provision concerned would be taken into account in the legality test itself.

Therefore, the ECJ would still have the opportunity to rule on the clear, precise and

unconditional nature of the provision, and thus to develop new arguments or old ones relating

to the flexibility and the reciprocity of the WTO. Wouters and Van Eeckhoutte rightly argue

that this would be coherent with the ECJ’s case law regarding other international agreements

and customary international law, i.e. the Biotechnology case and Racke.381

ii.b. The status of DSB decisions in an action for annulment pursuant to article 263

TFEU

197. The question of the effect of DSB decisions is twofold and is independent from the

question of the effect of WTO law.382 One should distinguish between calling upon a DSB

decision in the framework of a damages action, like in Biret, and calling upon a DSB decision

in the framework of a validity review of a Union measure, like in Van Parys. The latter will

be discussed below. DSB Decisions in damages actions will be discussed in the next chapter

relating to Union Liability.383

198. Kuijper does not seem to agree with the ECJ on the fact that the effect of a DSB

decision is a question independent from the question of the effect of WTO law. He argues that

a DSB decision, being a quasi-judicial decision, cannot fundamentally change the character of

a WTO rule. In assessing the DSB decision, the whole WTO should be taken into

consideration, including the absence of direct effect.384

199. Di Gianni and Antonini argue that it is justified to deny DSB decisions direct effect in

actions seeking a declaration of invalidity of Union law, since it would go against the

381 See supra § 67, cited supra note 141; ECJ case C-192/96, Racke, ECR 1998, I-3655; WOUTERS and VAN EECKHOUTTE, cited supra note 111, 225 et seq. 382 See supra § 79. 383 See infra § 202 et seq. 384 KUIJPER, cited supra note 166, 1335.

94 The ECJ and its GATT/WTO rulings: subject of towering discussions

reciprocity and flexibility characterising the WTO Agreement.385 Also Steinbach does not

favour the direct effect of DSB decisions in actions seeking validity review, he argues that a

DSB decision is not unconditional, on the contrary it leaves the EU leeway in choosing how it

will reach a WTO compatible solution even beyond the expiry of the implementation

period.386

200. This discussion comes down to whether to support the reciprocity and flexibility

argument, namely whether there is still scope for manoeuvre for the other EU institutions.387

From the chapter above it seemed that especially with respect to situations in which the AB

has established the incompatibility with WTO law and the implementation period had

expired, the scope for manoeuvre has been substantially reduced. For an assessment of the

reader is being referred to the chapter on reciprocity and flexibility. However, once more it

becomes apparent that although several authors do not agree with the reasoning of the Court,

they can appreciate the conclusion of the Court in not granting direct effect to DSB decisions

in cases of validity review, since this would imply that the Court would have to annul the

Union measure concerned.388

201. With respect to direct actions by Member States challenging the validity of a Union

measure in the light of a DSB decision, the same remarks should be made as in the previous

chapter. Direct effect should not be required in order for Member States to challenge a Union

measure in the light of a DSB decision.

385 F. DI GIANNI and R. ANTONINI, “DSB decisions and direct effect of WTO law: Should the EC courts be more flexible when the flexibility of the WTO system has come to an end”, Journal of World Trade 2006, 789 et seq. 386 STEINBACH, cited supra note 32, 1056. 387 See supra §§ 183 - 193. 388 Eeckhout argued otherwise that some type of direct effect could be given to adopted panel and Appellate Body reports, from the perspective that that would not amount to wholesale direct effect in P. EECKHOUT, “Domestic legal status of the WTO Agreement: Interconnecting legal systems”, Common Market Law Review 1997, 53 – 55. However, more recently he adopted a slightly mitigated approach by advocating for alternatives such as consistent interpretation and the Nakajima exception.

95 The ECJ and its GATT/WTO rulings: subject of towering discussions

iii. Disagreement with both reasoning and conclusion

iii.a. The status of DSB decisions in an action for damages pursuant to article 340

TFEU

202. With respect to damages, Eeckhout rightly observes and reflects the general tenor

amongst legal scholars that “full direct effect and supremacy - the imperial gowns of

constitutionalism - are clearly undesirable, but complete municipal judicial blindness for

WTO law would be just as inappropriate”.389 Several authors agree with AG Alber in Biret

that recognition of the direct applicability of WTO law embodied in DSB recommendations

or rulings does not therefore mean that the Union measure concerned would be annulled. And

consequently that the Court will not reduce the discretion enjoyed by the legislative and

executive bodies of the Union in granting compensation for the damages suffered by the

complainants.390

203. Alemanno observes that the costs of non-compliance are borne mainly by private

companies. Consequently he argues that allowing individuals to rely on DSB decisions in an

action for damages would result in a better balance between the interests of Member States

and their private business operators. Granting direct effect in damages claims would not

prevent the EU from refusing to conform. It would thus not deprive the executive and

legislative of what little scope for manoeuvre they have left after a DSB decision.391

Steinbach similarly and rightly argues that the prospect of an action for damages is

reconcilable with the binding and unconditional obligation to implement the DSB decision,

such a prospect would not affect the alleged scope of manoeuvre regarding different ways to

implement.392 Moreover, based on the liability doctrine developed in Francovich, he argues

that direct effect should not be a compulsory element once the implementation period has

expired in order to establish an action for compensation.393

389 DI GIANNI and ANTONINI, cited supra note 385, 791; EECKHOUT, cited supra note 346 at § 7. 390 See supra §§ 153 - 159; STEINBACH, cited supra note 32, 1056 et seq; 391 ALEMANNO, cited supra note 356, 560. 392 STEINBACH, cited supra note 32, 1057. 393 Ibid. at 1060; ECJ Joined Cases C-6/90 and C-9/90, Francovich and Others v Italy, ECR 1991, I-5357.

96 The ECJ and its GATT/WTO rulings: subject of towering discussions

204. Kuijper, on the other hand, argues against this possibility for the same reasons stated

above with respect to the effect of DSB decisions in view of validity review.394 Moreover, he

considers it “somewhat absurd” to award compensation to individuals in a system like the

WTO, where in principle no compensation is awarded between Members.

205. Thies provides a refreshing view on this issue after a discerning analysis of the FIAMM

judgment. She argues to divide the Union conduct into three different categories. The first one

is the original legislation, found to be non-compliant with WTO law, the second kind of

conduct is the omission to implement fully the DSB ruling, including the deliberate choice to

accept retaliatory measures and thirdly, the Union’s omission to create an internal mechanism

to balance economic loss suffered by private companies.395 In this view, the existence of a

DSB decision and retaliatory measures becomes essential to acquiring compensation for

damage suffered due to the EU’s conduct in a trade dispute. Thies takes into consideration the

ECJ’s conservative approach and rightly indicates that no compensation can be granted for

the first category of conduct, since doing so would undermine the ECJ’s stance in the general

denial of direct effect of the WTO Agreement. More particularly, doing so would interfere

with the scope for manoeuvre. The difference between the first and second category comes

down to the fact that a DSB decision is autonomous from the WTO Agreement.396 It just

approaches the situation from a different – internal - angle, namely how does the EU respond?

206. Thies analysis really makes a difference since it focuses on developing a fully-fletched

alternative to direct effect. She tests the Union conduct against general principles, an

argument also developed by FIAMM. More particularly, she tests whether the deliberate

omission to implement a DSB ruling and consequently face retaliatory measures in

combination with a lack of internal mechanism to balance the economic loss infringes upon

certain general principles being the right to property and the right to pursue an economic

activity, the principle of legitimate expectations and the right to non-discrimination. In sum,

Thies concluded that especially the right to non-discrimination, or in other words the general

principle of equality of public burden, might play a more important role in view of full

judicial protection, because the EU accepts to let only some of its traders bear the costs of an

394 See supra § 198. 395 A. THIES, “The impact of general principles of EC law on its liability regime towards retaliation victims after FIAMM”, European Law Review 2009, 897. 396 This is established by the ECJ, see supra § 79.

97 The ECJ and its GATT/WTO rulings: subject of towering discussions

international dispute. It could in itself be the basis for a legal obligation of the Union

institutions to provide compensation alongside their acceptance of retaliatory measures.397

207. A same kind of reasoning can be found in AG Maduro’s opinion in FIAMM with

respect to the notion of the equality of citizens in bearing public burden in the context of no-

fault liability.398 Thies’ train of thoughts certainly has potential in unravelling this heavily

debated issue. It would, however, go beyond the scope of this dissertation to go deeper into

this subject.

208. Another approach could be to qualify the Union measures adopted in the light of a DSB

decision under the Nakajima exception. Also AG Tizzano proposed this solution, he argued

that the Union legislature intended to implement a ‘particular obligation’ assumed in the

context of the WTO, being the recommendations adopted by the panel or AB.399 Also

Eeckhout considers this a valid alternative, he refers the ‘implementation principle’.

However, at the time of Eeckhout’s writing, the ECJ had not yet ruled out this proposal in

Van Parys. Demey rightly observes that even though the situation in Van Parys seemed at

first sight to warrant a clear application of the Nakajima principle, the ECJ found a way out

by referring to the possibility for WTO members to come to a negotiated solution.400 One

might indeed wonder whether this judgment renders the Nakajima exception unworkable, and

consequently whether it still has a future?

209. It is clear now that several proposals have been made by both advocats for direct effect

and more sceptical minds to allow individual complainants to bring an action for damages

before the Courts. From this one should conclude that both the reasoning and the conclusion

made by the Court fail to gain approval in legal doctrine.

iii.b. No-fault Union liability: FIAMM

210. Before FIAMM, the ECJ had not pronounced itself on the acknowledgement of a

principle of no-fault Union liability. The ECJ had – hypothetically – established the

397 THIES, cited supra note 395, 900 – 901, 913. 398 See supra § 168. 399 Tizzano referred to the judgment in Italy v Council. In which the Court further defined the scope of the exception created in the Nakajima through the concept of ‘a particular obligation’. Cited supra note 227. 400 D. DE MEY, “The Effect of WTO Dispute Settlement Rulings in the EC Legal Order: Reviewing Van Parys v Belgische Interventie- en Restitutiebureau”, German Law Journal 2005, 1032.

98 The ECJ and its GATT/WTO rulings: subject of towering discussions

conditions for such a liability, if it ever was to become acknowledged, being actual damage of

a unuasual and special nature and direct causal link.401 When briefly looking back to the

Advocates General, the principle of no-fault liability as put forward by AG Maduro in

FIAMM was the greatest common denominator.402 When looking at legal doctrine, there has

been a high degree of agreement on not to grant full direct effect to the WTO and also a

certain degree of agreement not to grant direct effect to DSB decisions in an action for

legality review. The heavily criticised reasoning of the ECJ left aside of course. With respect

to direct effect of DSB decisions in the framework of an action for damages, opinions are

divided. There certainly is an increase in scholars advocating for Union liability for unlawful

conduct, the unlawful conduct being the non-implementation of a DSB decision in

combination with the acceptance of retaliatory measures. Now the question arises whether

Union liability in the absence of unlawful conduct is a more feasible solution to the problem

in that more observers would agree on it? Or in other words is the FIAMM judgment a missed

opportunity or rather a tricky situation the ECJ managed well?

211. Article 340, § 2 TFEU (ex article 288, §2 TEC) puts forward that the general principles

common to the Member States form the basis for the right to compensation. The ECJ did not

thoroughly examine the status of a principle of no-fault liability among the Member States. It

simply ruled that principles differ from one Member State to another, focusing on the

limitations to Member States’ principles, i.e. legislative discretion. From which it then

concluded that no liability in the absence of unlawful conduct existed on the EU level,

without satisfactorily reviewing the GC’s and the AG’s approach. Both the GC and AG

Maduro recognised such a principle and referred to the existence of non-contractual liability

in the absence of unlawful action in national laws.403 But neither of them have profoundly

examined the situation in the Member States. In Maduro’s view, a Union liability should meet

the specific needs of the EU legal system by using domestic law for guidance only, which in

this case certainly calls for no-fault liability in order to “offset the severity of the conditions

for the incurring of fault-based Union liability”.404

401 Dorsch Consult, cited supra note 202, for an overview of these conditions see supra §§ 91 – 92. 402 See supra §§ 173 - 174. 403 FIAMM (GC), cited supra note 194 at § 159 and § 152 resp; Maduro, see supra § 167. 404 Ibid. at § 57.

99 The ECJ and its GATT/WTO rulings: subject of towering discussions

212. No-fault liability exists in several Member States, albeit in different forms and under

different conditions. However, it would go beyond the scope of this dissertation to examine

the current state of such a principle among the EU Member States. Kuijper observes that a

certain of no-fault liability, more particularly the principle of equality of citizens in bearing

public burden, exists in only a small number of Member States, namely Germany, France, the

Netherlands and Belgium.405 Thies adds that in Germany as well as in Spain, such a principle

is based on the protection of the right to property.406 She rightly observes that in each of those

Member States general principles, which are already recognised as individual general

principles of Union law, lie at the roots of the liability principle.407 She blames the ECJ for

not addressing this issue as it should have done. In Thies opinion, the principle of equality for

public burden could justify an independent liability regime, according to which a right to

compensation arises if Union conduct caused unusual and special damage for some.

213. Kuijper doubts whether there is enough common ground in the legal systems of the

Member States to adopt such a principle at the Union level. He argues that it is probably a

bridge too far to apply the principle of equality of public burden for the first time at the Union

level in the field of external relations. But despite his doubts regarding the feasibility, also

with respect to the conditions of causal link and unusual nature, Kuijper is convinced that the

legislature should “seriously consider allowing compensation under this principle for certain

well-defined groups of individuals”.408 Mind ‘the legislature’ and not the judiciary. Also

Thies considers it unlikely that the ECJ will in the near future alter its reasoning and

conclusion reached in FIAMM.

214. Clearly inspired by Maduro, Thies puts forward three reasons to illustrate the potential

role of the no-fault liability principle in the context of international trade disputes. First, the

fact that it would provide a means of judicial protection for retaliation victims. Second, the

fact that it would not affect the political scope of manoeuvre, while still enabling courts to

grant compensation. She argues that the impact would be purely financial and that it would be

limited due to the condition of unusual and special damage. And third, it would increase good

governance since it would make both the public and the Union institutions more aware of the

consequences of their policy choices. This would lead to a transparent political process which

405 KUIJPER, cited supra note 166, 1340. 406 THIES, cited supra note 220, 907. 407 Ibid. 408 KUIJPER, cited supra note 166, 1341.

100 The ECJ and its GATT/WTO rulings: subject of towering discussions

should be preferred over “leaving it to the power of lobbying within the Union system when

deciding on continuation”.409 Also Von Bogdandy, a true direct effect sceptic, emphasises the

advantages of this “soft solution”. While extending the action for damages to unlawful

conduct based on a DSB decision brought about too much drawbacks, he argues that no-fault

liability would make way for “equity considerations”.410

215. If such a principle would become recognised by the ECJ, observers expressed their

concerns as regards the willingness of the ECJ towards the conditions for such a no-fault

liability, being actual damage of unusual and special nature and causal link. The ECJ did not

make a full assessment of these conditions in FIAMM, however it did not fail to mention that

“a market share constitutes only a momentary economic position, exposed to the risks of

changing circumstances”. In this view and especially with regard to the requirement of the

unusual nature of the damage, which the ECJ seems to allude to, it is recommendable to look

at the opinion of AG Maduro discussed above, who rightly argues that these requirements,

could indeed be fulfilled.411 Also Thies and Bronckers agree: business operators based in the

EU need not take into account a persistent breach of international law by the EU when

calculating their business risk.412

216. It is held against the ECJ that it once again displays judicial self-restraint in order not to

hinder the legislative by the prospect of actions for damages. Indeed, the Court probably took

it one step too far and definitely missed an opportunity here, since it could have provided an

equitable solution to retaliation victims without having to deal with the issue of direct effect

of GATT/WTO law. The question arises whether it will change its rulings in the near future?

§3. Alternatives – indirect effect

217. The indirect effect of GATT/WTO law falls outside the scope of this thesis. However,

at the moment, it seems to be the only way in which the ECJ is willing to grant effect to

GATT/WTO law. As correctly noted by Bronckers: “As long as a private litigant does not

challenge the legality of EC measures on the basis of WTO law, the European courts show

409 THIES, cited supra note 220, 909. 410 VON BOGDANDY, cited supra note 174, 65. 411 See supra §§ 170 - 171. 412 BRONCKERS, cited supra note 380, 893; THIES, cited supra note 220, 909.

101 The ECJ and its GATT/WTO rulings: subject of towering discussions

themselves quite willing to interpret EC measures as much as possible in conformity with

WTO law.”413 Therefore, before coming to a final conclusion, it is necessary to briefly look

into these forms of indirect effect.

i. Nakajima en Fediol

218. Both Fediol and Nakajima have nothing to do with direct effect, in stead they are great

examples of how GATT/WTO law can influence Union law through indirect effect.414

Therefore these have not been discussed in the chapter above, but will be discussed here

together with the doctrine of consistent interpretation below. These exceptions allegedly

provide direct effect where the EU intended to implement a particular obligation assumed in

the context of the GATT/WTO (Nakajima) or where a Union measure refers expressly to

precise provisions of the GATT/WTO (Fediol).

219. When discussing Fediol and Nakajima, the question as to why arises automatically.

Here we have always been left in the dark by the Court. A possible reading is that the Court

considered that the executive and legislative had already exercised their scope of manoeuvre.

Or simply that the Court attempts to strike some balance between lack of direct effect and

respect for the EU’s international commitments.415 Looking at the history of application of the

principles, the latter is probably true: the ECJ’s interpretation of the principle has been

lacking underlying rationale. The ECJ has been so restrictive in applying Nakajima, it has

lead some observers to rightly question whether this exception still has a future.416

220. Similarly to the discussion on direct effect, opinions tend to differ when it comes to the

future of Fediol and Nakajima. Certain observers have valued these exceptions and consider

they will be of major importance in the future.417 However, more recently the Court has

adopted some discouraging judgments in this area of law, of which Van Parys is probably the

most eminent one. This led other observers to voice severe criticism on the case-law.418

413 M. BRONCKERS, “Private Appeals to WTO Law: An Update”, Journal of World Trade 2008, 245. 414 See infra §§222 415 EECKHOUT, cited supra note 346, 105. 416 See supra § 208, more particularly the fact that the ECJ denied to recognise that by adopting a new banana regime the EU had intended to implement a particular obligation flowing from the DSB decision which recommended the EU to bring its banana regime into compatibility with the WTO. 417 EECKHOUT, cited supra note, 109; G. ZONNEKEYN, “EC liability for non-implementation of WTO dispute settlement decisions – are the dice cast?”, Journal of International Economic Law 2004, 483. 418 Kuijper

102 The ECJ and its GATT/WTO rulings: subject of towering discussions

221. First and foremost, with respect to Nakajima, several observers disagree with the fact

that the Court maintains that DSB decisions do not create any legal obligation and

consequently that Nakajima does not apply where it is very clear that the EU did intend to

implement a particular obligation.419 Secondly, it is not clear what exactly the Court means by

‘particular obligation’.420 Thirdly, the formulation “intended to implement” is considered by

some to put too many emphasis on the intention of the EU institutions and too little on the

actual legal obligations of the EU. The Court puts forward a subjective criterion in stead of an

objective one.421

222. With respect to the very nature of the Nakajima exception, Kuijper rightly argues that

this has nothing to do with giving direct effect to GATT/WTO law under special

circumstances.422 Indeed, the technique used by the Court much more resembles consistent

interpretation. After analysing Petrotub in which the ECJ has applied Nakajima, Kuijper

concludes that the future of the Nakajima exception lies in a special species of consistent

interpretation.423 This reasoning consequently does away with the idea that the Nakajima

exception could indeed be solution to the question of the effect of DSB decisions. A has

already been confirmed by the ECJ in Van Parys, and thus in its turn confirms Kuijper’s

observations with respect to the future of the Nakajima exception.

223. Although it should be mentioned here that Nakajima is in theory perceived as being

different from consistent interpretation in that it may be relied upon in cases of conflict

between a Union measure and GATT/WTO law. Whilst consistent interpretation can never

lead to a contra legem interpretation of the Union measure.424

224. Fediol has been rarely applied by the Court, and mainly in cases related to the Trade

Barriers Regulation. Yet again, this exception has far less to do with direct effect as expected.

419 DE MEY, cited supra note 400, 1032 ; EGLI, P., “EC – EC Compliance with Rulings of WTO Dispute Settlement Body in Bananas Dispute – Effect of WTO Agreements and Dispute Settlement Rulings in EC Law – Standing to Challenge EC Legislation as Inconsistent with WTO Agreements and Rulings – Van Parys”, American Journal of International Law 2005,453; SNYDER, 347. 420 EECKHOUT, 105; SNYDER, cited supra note 93, 347. 421 SNYDER, 347; G. ZONNEKEYN, “The latest on indirect effect of WTO law in the EC legal order: The Nakajima case law misjudged?”, Journal of International Law 2001, 602. 422 KUIJPER, cited supra note 166, 1325. 423 ECJ case C-76/00, Petrotub SA and Republica SA v Council, ECR 2003, I-79. 424 See infra §§226 - 228.

103 The ECJ and its GATT/WTO rulings: subject of towering discussions

The Trade Barriers Regulation provides a right for individuals to lodge complaints against the

commercial practices of third countries.425 The complaint must be submitted with the

Commission and the latter must decide on whether the commercial practices concerned are

compatible with the WTO. When a complainant is not satisfied by the Commission’s decision

and brings a case before the Union Courts, than the question is whether the Commission has

exceeded its discretion in economic matters regarding the interpretation of WTO law when

dealing with a complaint. The Court will thus simply interpret WTO law. If the Court comes

to the conclusion that the Commission did exceed its discretion, then the Trade Barriers

Regulation is violated. For that reason, not because of non-conformity with WTO law, the

Commission decision was left aside.426

225. From the above it follows that indeed Fediol and Nakajima are no real exceptions to

the lack of direct effect of GATT/WTO law. On the contrary, they are confirmations of the

dualist approach of the ECJ in matters of GATT/WTO law.427 Nonetheless, one should not

underestimate the value of these exceptions, which lies in their application as interpretation

tools. The ECJ should thus in the future clarify the modalities under which these techniques

can be applied.

ii. Consistent interpretation

226. Essentially the doctrine of consistent interpretation comes down to interpreting Union

law as far as possible in conformity with GATT/WTO law. This technique has proven to be

efficient and less delicate than direct effect. Consequently, the ECJ has been less reluctant to

apply consistent interpretation, for instance in Hermès.428 However, there are some downsides

to the concept. Consistent interpretation requires first of all the existence of Union legislation.

425 Article 3 and 4 of Council Regulation (EC) 94/3286 of 22 December 1994 laying down Community procedures in the field of the common commercial policy in order to ensure the exercise of the Community's rights under international trade rules, in particular those established under the auspices of the World Trade Organization, O.J. 1994, L 349/71. 426 EECKHOUT, cited supra note 112, 318; KUIJPER, cited supra note 166, 1324. 427 UERPMANN-WITTZACK, cited supra note 347, 163. 428 See supra §§ 106 - 108, examples of other cases: ECJ case C-245/02, Anheuser-Busch v Budvar, ECR 2004, I-1089; ECJ joined cases C-477/05 and 448/05, Thomson Multimedia & Veste France v Administration des Douanes, ECR 2007, I-2049.

104 The ECJ and its GATT/WTO rulings: subject of towering discussions

Furthermore, this legislation must be sufficiently flexible, in other words the legislation must

lend itself to interpretation. There may not be a manifest conflict between WTO law and the

legislation to be interpreted.429

227. One might wonder whether it is because of these limitations that the ECJ is much more

willing to take this instrument at hand? After all, one of the largest limitations to the doctrine

of consistent interpretation is indeed that the legislator remains master of the effect of WTO

law in the EU. Or as Trachtman argues: it provides a ‘political filter’ while at the same time

allowing a certain degree of indirect effect of GATT/WTO law.430 This is in accordance with

the conclusions made above, namely that the ECJ has displayed judicial self-restraint in order

not to hinder the legislative and executive institutions of the Union.

228. This probably also explains why those who otherwise oppose direct effect of WTO

law, support this approach. Several observers argue that this technique has the potential to

become a highly effective means of judicially enforcing GATT/WTO law in the EU legal

order. Moreover it should be “the prime inroad” of WTO law in national and regional law.431

Snyder observes that consistent interpretation is also consistent with what he calls the WTO’s

own conception of itself, referring to United States – Sections 301–310 of the Trade Act of

1974.432

iii. Muted dialogue

229. Bronckers argues that a reference to WTO law can still be useful if one runs against the

limitations of consistent interpretation. He argues that although the ECJ explicitly refuses to

review a certain Union measure in the light of WTO law, that does not imply that the ECJ is

not influenced by WTO law in rendering its judgment. Bronckers refers to two cases in which

the ECJ explicitly refused to formally take into account WTO law, but from which it is very

429 N. NEUWAHL, “Individuals and the GATT: Direct effect and the General Agreement on Tariffs and Trade in Community Law” in N. EMILIOU and D. O’KEEFFE, (eds.), The European Union and World Trade Law After the GATT Uruguay Round, New York, Wiley, 1996, 322 – 323; SNYDER, cited supra note 93, 363. 430 TRACHTMAN, cited supra note 343, 660. 431 T. COTTIER, and K. SCHEFER , “ The relationship between World Trade Organization, national and regional law”, Journal of International Economic Law 1998, 89- 91; GRILLER , cited supra note 345, 468; WITTZACK, cited supra note 347; 432 SNYDER, cited supra note 93, 365.

105 Conclusion

clear that the ECJ in fact was deliberately influenced by WTO law.433 In this context,

Bronckers argues for a ‘muted dialogue’, he advises complainants to refer to relevant WTO

rules without directly invoking them in order not to engage the ECJ in a principle debate on

direct effect.434

Conclusion

230. Extensive review of the ECJ’s case law shows that the effect of GATT/WTO law

within the EU is a hard nut to crack, the ECJ has not yet succeeded to adopt a satisfying

solution. Otherwise at the forefront of European integration, the ECJ definitely succeeded in

shielding the European legal order from GATT/WTO law and the irreversible and probably

damaging consequences of direct effect. This wariness originates in the very nature of the

WTO Agreement, which is a multilateral trade organisation with a very pervasive and ever

expanding scope of application. Although the DSU introduced a quasi-judicial and rule-

oriented mechanism for dispute settlement, the WTO remains a power-based organisation that

favours stronger Member States over weaker. Granting wholesale direct effect to

GATT/WTO law would considerably harm the EU’s position in relation to its major trading

partners. This is an economic and political reality, which forces itself upon the ECJ. The latter

has clearly struggled with finding a legal solution to this issue of trade policy. For that reason,

legal scholars have severely criticised the main arguments put forward by the Court,

flexibility and reciprocity. Although they often do appreciate the restrictive approach

displayed by the Court. However, it shows from extensive review of both the opinions of the

AG’s and legal doctrine that in recent cases the ECJ has overstepped the mark. With respect

to direct actions by Member States, the condition of direct effect as put forward in Portugal v

Council has been seriously questioned as well as the effect of DSB decisions after the expiry

of the implementation period as established in Van Parys and FIAMM. With respect to the

latter, it is held against the ECJ that it displays a too high degree of judicial self-restraint in

order not to hinder the legislative and executive in their scope for manoeuvre. Indeed, the

Court probably took it one step too far and definitely missed an opportunity in FIAMM, since

it could have provided an equitable solution to retaliation victims without having to deal with

433 ECJ case C-310/06, FTS International v Belastingsdienst – Douane West, ECR 2007, I-6749; ECJ case C-351/04, Ikea v Commissioners of Customs & Excise, ECR 2007, I-7723. 434 BRONCKERS, cited supra note 380, 890.

106 Conclusion

the issue of direct effect of GATT/WTO law and more importantly without interfering with

the alleged scope for manoeuvre of the other EU institutions.

231. Several observers have shown to be quite optimistic about Fediol, Nakajima and the

doctrine of consistent interpretation and their potential for judicial enforcement of WTO law,

but one should notice that Van Parys has definitely created questions with respect to how

exactly Nakajima is perceived by the ECJ. Although these alternatives to direct effect,

especially consistent interpretation, have proven to be effective, recent cases have shown a

vacuum in legal protection. More particularly, FIAMM, uncovered an already suspected lack

of judicial protection, namely the fact that retaliation victims have no ground to claim

damages against the EU institutions who deliberately accepted these retaliatory measures. The

ECJ should resolve this departing from an internal angle, namely the infringement of general

principles inherent to the EU legal order, as opposed to departing from a WTO angle. The

latter clearly and rightly deters the ECJ, forcing it to issue conservative judgments. The

internal angle would definitely allow for an equitable solution for retaliation victims without

piercing the protective shield the ECJ has so meticulously built. Namely, the establishment of

a right to compensation for retaliation victims on the basis of no-fault EU liability. As regards

the complainants, be it private individuals or Member States, it should be clear now that it is

more advantageous not to engage the ECJ in a principled debate on the direct effect of

GATT/WTO law: the ECJ has proven that it does not go lightly about the international

obligations that rest on the EU. Therefore, the Court will take into account GATT/WTO law

as much as possible, meaning as long as it does not endanger the European integration.

107 Abstract in Dutch

Abstract in Dutch Nederlandstalige toelichting435

Deze masterproef behandelt het effect van GATT/WTO recht in de rechtsorde van de EU,

meer bepaald over het gebrek aan directe werking. De schrijver behandelt achtereenvolgens

de WTO en meer bepaalt het mechanisme voor geschillenbeslechting, de belangrijkste

arresten van het Hof van Justitie met betrekking tot deze materie, de meest relevante

Conclusies van de Advocaten Generaal bij het Hof en ten slotte biedt deze masterproef een

overzicht op de relevante rechtsleer.

Na onderzoek van zowel rechtspraak en rechtsleer blijkt zeer duidelijk dat het Hof van Justitie

het zeer moeilijk heeft met de handelspolitieke implicaties van het debat. Dit manifesteert

zich door zeer conservatieve arresten, waarin het Hof weigert GATT/WTO recht enige

uitwerking te geven binnen de EU. Vanuit de rechtsleer, en zelfs door Advocaten Generaal,

zijn al verscheidene voorstellen gedaan om deze stringent rechtspraak enigszins te

versoepelen. Deze masterproef behandelt nauwkeurig het merendeel van de gemaakte

voorstellen. De meest haalbare piste lijkt voorlopig om een regime van niet-contractuele

aansprakelijkheid van de EU wegens rechtmatige uitoefening van haar activiteiten op te

richten, gezien het feit dat men het bestaan van een dergelijke aansprakelijkheid kan

vaststellen zonder EU maatregelen te moeten toetsen aan GATT/WTO recht.

435 Voor een werkelijk besluit, zie Conclusion, supra §§ 230 - 231.

108 Bibliography

Bibliography

Legislation

European Union

- Primary legislation

Treaty on the European Union, 26 February 2001, O.J. C 325 of 24 December 2002.

Treaty establishing the European Community, O.J. C 321 E of 29 December 2006.

Treaty of Lisbon amending the Treaty on European Union and the Treaty establishing the European Community, signed at Lisbon, 13 December 2007, O.J. C 306 of 17 December 2007.

Consolidated versions of the Treaty on European Union and the Treaty on the Functioning of the European Union, O.J. C 115 of 9 may 2008.

Fourth ACP-EEC Convention signed at Lomé, 15 December 1989, O.J. L 229/3 of 17 August 1991.

- Secondary legislation

Verordening (EEG) nr. 459/70 van de Commissie van 11 maart 1970 houdende vaststelling van vrijwaringsmaatregelen voor de invoer van tafelappelen, OJ 1970, L 57/20.(no English version).

Verordening (EEG) nr. 565/70 van de Commissie van 25 maart 1970 betreffende het beheer van het stelsel van invoervergunningen voor tafelappelen en houdende wijziging van Verordening (EEG) nr. 459/70 , O.J. 1970, L69.

Verordening (EEG) nr. 686/70 van de Commissie van 15 april 1970 houdende derde wijziging van Verordening (EEG) nr. 565/70 betreffende het beheer van het stelsel van invoervergunningen voor tafelappelen en houdende wijziging van Verordening (EEG) nr. 459/70, O.J. 1970, L84.

Council Regulation (EEC) 2641/84 of 17 September 1984 on the strengthening of the common commercial policy with regard in particular to protection against illicit commercial practices, O.J. 1984, L 252.

109 Bibliography

Council Regulation (EEC) 2423/88 of 11 July 1988 on protection against dumped or subsidized imports from countries not members of the European Economic Community, O.J. 1988, L 209/1.

Council Regulation (EEC) 3651/88 of 23 November 1988 imposing a definitive anti-dumping duty on imports of serial-impact dot-matrix printers originating in Japan, O.J. 1988, L 317/33.

Council Decision (EC) 94/800 of 22 December 1994 concerning the conclusion on behalf of the European Community, as regards matters within its competence, of the agreements reached in the Uruguay Round multilateral negotiations (1986-1994), O.J. 1994, L 336/1.

Council Regulation (EC) 94/3286 of 22 December 1994 laying down Community procedures in the field of the common commercial policy in order to ensure the exercise of the Community's rights under international trade rules, in particular those established under the auspices of the World Trade Organization, O.J. 1994, L 349/71.

Council Decision (EC) 96/386 of 26 February 1996 concerning the conclusion of Memoranda of Understanding between the European Community and the Islamic Republic of Pakistan and between the European Community and the Republic of India on arrangements in the area of market access for textile products, O.J. 1996, L 153/47.

Bananas [legislation relevant for case study FIAMM, Van Parys et al.]

Council Regulation (EEC) 404/93 of 13 February 1993 on the common organization of the market in bananas, O.J. 1993, L 47/1.

Council Regulation (EC) 3290/94 of 22 December 1994 on the adjustments and transitional arrangements required in the agriculture sector in order to implement the agreements concluded during the Uruguay Round of multilateral trade negotiations, O.J. 1994, L 349/23.

Commission Regulation (EC) 478/95 of 1 March 1995 on additional rules for the application of Council Regulation 404/93 as regards the tariff quota arrangement for imports of bananas into the Community and amending Regulation 1442/93, O.J. 1993, L 49/13.

Council Regulation (EC) 925/99 of 29 April 1999 on the registration and operation within the Community of certain types of civil subsonic jet aeroplanes which have been modified and recertificated as meeting the standards of volume I, Part II, Chapter 3 of Annex 16 to the Convention on International Civil Aviation, third edition (July 1993), O.J. 1999, L 115/47.

Council Regulation (EC) 1637/98 of 20 July 1998 amending Regulation 04/93 on the common organization of the market in bananas, O.J. 1992, L 210/98.

Council Regulation (EC) 216/2001 of 29 January 2001 amending Regulation 404/93 on the common organization of the market in bananas, O.J. 2001, L 31/2.

110 Bibliography

Council Regulation (EC) 2587/2001 of 19 December 2001 amending Regulation 404/93 on the common organization of the market in bananas, O.J. 2001, L 345/13.

World Trade Organization

- Primary Agreements

General Agreement on Tariffs and Trade, Geneva, July 1986 (www.wto.org).

Agreement Establishing the World Trade Organization, Marrakesh, 15 April 1994 (www.wto.org).

Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994, annex 1 A to the Agreement Establishing the World Trade Organization, Marrakesh, 15 April 1994 (www.wto.org). [Anti-Dumping Code]

Agreement on Technical Barriers to Trade, annex 1 A to the Agreement Establishing the World Trade Organization, Marrakesh, 15 April 1994 (www.wto.org). [TBT]

General Agreement on Trade in Services 1994, annex 1 A to the Agreement Establishing the World Trade Organization, Marrakesh, 15 April 1994 (www.wto.org). [GATS]

Agreement on the Application of Sanitary and Phytosanitary Measures, annex 1 A to the Agreement Establishing the World Trade Organization, Marrakesh, 15 April 1994 (www.wto.org). [SPS]

Agreement on Trade related aspects of intellectual property rights, annex 1 C to the Agreement Establishing the World Trade Organization, Marrakesh, 15 April 1994 (www.wto.org). [TRIPS]

Understanding on Rules and Procedures Governing the Settlement of Disputes in World Trade Organization, annex 2 to the Agreement Establishing the World Trade Organization, Marrakesh, 15 April 1994 (www.wto.org). [DSU]

Ministerial Decision on the Application and Review of the Understanding on Rules and Procedures Governing the Settlement of Disputes, Trade Negotiations Committee, Marrakesh, 14 April 1994 (www.wto.org).

- Other relevant rules and decisions enacted within the framework of the WTO

Rules of procedures for sessions of the ministerial conference and meetings of the general council, WT/L/161 of 25 July 1996.

111 Bibliography

Rules of Conduct for the Understanding on Rules and Procedures Governing the Settlement of Disputes, 3 December 1996, WT/DSB/RC/1 (www.wto.org). [Rules of Conduct]

General Council - Accession of Ecuador, WT/ACC/ECU/5 of 22 August 1996.

Dispute Settlement Body - Special Session - Report by the Chairman, Ambassador Péter Balás, to the Trade Negotiations Committee, TN/DS/9 of 6 June 2003.

Dispute Settlement Body – Special Session – Report by the Chairman, Ambassador David Spencer to the Trade Negotiations Committee, TN/DS/14 of 25 November 2005

Dispute Settlement Body – Special Session – Contribution from the EC and its Member States to the improvement and clarification of the WTO DSU, TN/DS/W/38 of 23 January 2003.

Doha Work Programme, Decision Adopted by the General Council, WT/L/579 of 1 August 2004.

Report of the Consultative Board to the Director-General Supachai Panitchpakdi on the Future of the WTO: Addressing Institutional Challenges in the New Millenium, WTO, Geneva 2005 at §288-289. [Sutherland Report]

GATT Analytical Index: Guide to GATT Law and Practice (6th edition), Geneva 1995 (www.wto.org).

Case Law

European Court of Justice

- General Principles

ECJ case 26/62, Van Gend en Loos/Nederlandse administratie der belastingen, ECR 1963, 1.

ECJ case 6/64, Costa/E.N.E.L., ECR 1964, 1203.

ECJ case 57/65, Lütticke GmbH/Hauptzollamt von Saarlouis, ECR 1966, 205.

ECJ case 270/80, Polydor/Harlequin, ECR 1982, 329.

ECJ case 104/81, Hauptzollamt Mainz/Kupferberg, ECR 1982, 3641.

ECJ case 314/85, Foto-Frost/Hauptzollamt, ECR 1987, 4199.

ECJ Joined cases C-46/93 and C-48/93, Brasserie du Pêcheur, ECR 1996, I-1029.

112 Bibliography

- Relation between international law and Union law, in particular GATT/WTO law

ECJ cases 21 to 24/72, International Fruit Company, ECR 1972, 1219.

ECJ case 92/71, Interfoods, ECR 1972, 231.

ECJ case 9/73, Carl Schluter v. Hauptzollamt Lorrach, ECR 1973, 1135.

ECJ case 181/73, Haegeman, ECR 1974, 449.

ECJ case 126/78, Douaneagent der NV Nederlandse Spoorwegen v. Inspecteur der invoerrechten en accijnzen, ECR 1975, 1439.

ECJ case 87/75, Conceria Daniele Bresciani v Amministrazione Italiana delle Finanze, ECR 1976, 00129.

ECJ case 266/81, Societa Italiana per l'Oleodotto Transalpino (SIOT) v. Ministero delle Finanze and others, ECR 1983, 731.

ECJ joined cases 267-269/81, Amministrazione delle Finanze dello Stato v. Societa Petrolifera Italiane SpA (SPI) and SpA Michelin Italiana (SAMI) ECR 1983, 801.

ECJ case 12/86, Demirel, ECR 1987, 3719.

ECJ case 70/87, Fediol v. Commissie, ECR 1989, 1781.

ECJ case C-69/89, Nakajima v Council, ECR 1991, I-2069.

ECJ case C-105/90, Goldstar, ECR 1992, I-723.

ECJ case C-175/87, Matsushita, ECR 1992, I-1478.

ECJ case C-280/93, Germany v Council, ECR. 1994, I-4973.

ECJ case C-469/93, Chiquita Italia, ECR 1995, I-4533.

ECJ case C-70/94, Werner Industrie-Ausüstungen, ECR 1995, I-3189.

ECJ case C-83/94, Leifer et al, ECR 1995, I-3231.

ECJ case C-61/94, Commission v Germany, ECR 1996, I-3989

113 Bibliography

ECJ case C-150/95, Portugal v Commission, ECR 1997, I-5863.

ECJ case C-183/95, Affish BV v Rijksdienst voor de keuring van Vee en Vlees, ECR 1997, I-04315.

ECJ cases C-364/95 and C-365/95, T-Port, ECR. 1998, I - 1023.

ECJ case C-53/96, Hermès International, ECR 1998, I-3603.

ECJ case C-192/96, Racke, ECR 1998, I-3655.

ECJ case C-352/96, Italy v Council, ECR 1998, I-6937.

ECJ case C-104/97 P., Atlanta AG v Council and Commission, ECR 1999, I-6983.

ECJ case C-149/96, Portugal v Council, ECR 1999, I-8395.

ECJ case C-104/97 P, Atlanta AG and others v European Community, ECR 1999, I – 6983.

ECJ case C-300/98 and C-392/98, Dior et al, ECR 2000, I - 11307.

ECJ case C-177/96, Kloosterboer Rotterdam BV v Minister van Landbouw, Natuurbeheer en Visserij, ECR 2001, I-5659.

ECJ case C-89/99, Schieving-Nijstad vof and Others v. Robert Groeneveld, ECR 2001, I-5851.

ECJ case C-373/98, Netherlands v Parliament en Council, ECR 2001, I – 7079.

ECJ case C-307/99, OCT Fruchthandelsgesellschaft, ECR 2001, I - 3159.

ECJ case C-296/00, Prefetto Provincia die Cuneo v Silvano Carbone, ECR 2002, I – 4657.

ECJ case C-76/00, Petrotub SA and Republica SA v Council, ECR 2003, I-79.

ECJ cases C-27/00 and C-122/00, Omega Air et al, ECR 2003, I - 2569.

ECJ case C-93/02 P, Biret International v Council, ECR 2003, I - 10497.

ECJ case C-94/02 P, Établissements Biret v Council, ECR 2003, I - 10565.

ECJ case C-245/02, Anheuser-Busch v Budvar, ECR 2004, I-1089.

ECJ case C-377/02, Van Parys, ECR 2005, I – 1465.

114 Bibliography

ECJ joined cases C-477/05 and 448/05, Thomson Multimedia & Veste France v Administration des Douanes, ECR 2007, I-2049.

ECJ case C-310/06, FTS International v Belastingsdienst – Douane West, ECR 2007, I-6749.

ECJ case C-351/04, Ikea v Commissioners of Customs & Excise, ECR 2007, I-7723.

ECJ joined cases C-120/06 and 121/06, Fabbrica italiana accumulatori motocarri Montecchio SpA (FIAMM) and others v Council and Commission, ECR 2008, I -0000.

ECJ Opinion 1/94 on the Competence of the Community to conclude international agreements concerning services and the protection of intellectual property, ECR 1994, I – 5276.

- Union Liability

ECJ Case 5/71, Zuckerfabrik Schöppenstedt v Council, ECR 1971, I - 975

ECJ Case 81/86, De Boer Buizen v Council and Commission, ECR 1987, I-3677.

ECJ Joined Cases 64/76, 113/76, 167/78, 239/78, 27/79, 28/79 and 45/79 Dumortier and Others v Council, ECR 1979, I-3091.

ECJ Case 26/81, Oleifici Mediterranei v EEC, ECR 1982, I-3057.

ECJ Joined Cases C-6/90 and C-9/90, Francovich and Others v Italy, ECR 1991, I-5357.

ECJ Case C-237/89 P, Dorsch Consult v Council, ECR 2000, I-4549.

European Court of First Instance

GC Case T-175/94, International Procurement Services v Commission, ECR 1996, II-729, § 44. (liability)

GC joined cases T-33 and 34/98, Petrotub SA and Republica SA v Council, ECR 1999, II-3837.

GC Case T-336/94, Efisol v Commission, ECR 1996, II-1343, § 30.(liability)

GC Case T-213/97, Eurocoton and others v Council, ECR 1997, II-1609.

GC Case T-48/96, Acme Industry Co. Ltd. v Council, ECR 1999, II-3089.

GC case T-188/99, Euroalliages v Commission, ECR 2000, II-1758.

115 Bibliography

GC case T-69/00, FIAMM and FIAMM Technologies v Council and Commission , ECR 2005, II-05393.

GC case T-151/00, Le Laboratoire du Bain v Council and Commission, ECR 2005, II-00023.

GC case T-301/00, Groupe Fremaux SA and Palais Royal Inc. v Council and Commission, ECR 2005, II-00025.

GC case T-320/00, CD Cartondruck AD v Council and Commission, ECR 2005, II-00027.

GC case T-135/01, Giorgio Fedon & Figli S.p.A., Fedon S.r.l. and Fedon America USA Inc. V Council and Commission, ECR 2005, II-00029.

WTO Dispute Settlement

EC – Regime for the Importation, Sale and Distribution of Bananas, Arbitration, Award of the Arbitrator, Said El-Naggar, WT/DS27/15 of 7 January 1998.

EC – Regime for the Importation, Sale and Distribution of Bananas, Recourse to Article 21.5, WT/DS27/RW/EEC of 12 April 1999.

EC – Regime for the Importation, Sale and Distribution of Bananas, Arbitration, Recourse to Article 22.6, WTO/DS27/ARB/RW of 9 April 1999.

EC – Regime for the Importation, Sale and Distribution of Bananas, Recourse to Article 21.5, WT/DS27/RW/ECU of 12 April 1999 and WT/DS27/ARB/ECU of 24 March 2000.

EC - Regime for the Importation, Sale and Distribution of Bananas - Second Recourse to Article 21.5, WT/DS27/AB/RW/USA and WT/DS27/AB/RW2/ECU of 28 November 2008.

EC – Measures Concerning Meat and Meat Products (Hormones), WT/DS26/ARB of 16 January 1998.

EC – Measures Concerning Meat and Meat Products (Hormones), WT/DS48/AB/R of 16 January 1998.

Brazil – Export Financing Programme for Aircraft, WT/DS46/ARB of 28 August 2000.

Mexico – Corn Syrup (Article 21.5 – US), WT/DS132/AB/RW of 22 October 2001.

United States – Import Prohibition of certain shrimp and shrimp products, WT/DS58/AB/R of 12 October 1998.

116 Bibliography

United States – Sections 301–310 of the Trade Act of 1974, WT/DS152/R of 22 December 1999.

United States – Import Measures on Certain Products from the European Communities, , WT/DS/165/R of 19 April 2000

United States – Import Measures on certain products from the European Communities, WTO/DS165/AB/R of 11 December 2000.

Doctrine

Books

BHUIYAN , S., National Law in WTO Law – Effectiveness and Good Governance in the World Trading System, Cambridge, Cambridge University Press, 2007, 316p.

BETHLEHEM, D., MCRAE, D., NEUFELD, R., VAN DAMME , I., (eds.), The Oxford Handbook of International Trade Law, New York, Oxford University Press, 2009, 801p.

BOURGEOIS, J., BERROD, F., GIPPINI-FOURNIER, E., (eds.), The Uruguay Round Results – A European Lawyer’s perspective, Brussels, European Interuniversity Press, 1995, 541 p.

CAMERON, J., and CAMPBELL, K., (eds.), Dispute Resolution in the WTO , London, Cameron & May, 1998, 421 p.

COUSY, H., DIRIX , E., STIJNS, S., STUYCK, J. and VAN GERVEN, D. (eds.), Liber Amicorum Van Gerven, Mechelen, Kluwer, 2000, 600 p.

DASHWOOD, A. & MARESCEAU, M. (eds.), Law & Practice of EU External Relations: Salient Features of a Changing Landscape, Cambridge, Cambridge University Press, 2008, 484 p.

DE BÚRCA, G. en SCOTT, J. (eds.), The EU and the WTO: legal and constitutional issues, Oxford, Hart Publishing, 2001, 332 p.

DIDIER, P., Les principaux accords de l’ OMC et leur transposition dans la Communauté Européenne, Brussel, Bruylant, 1997, 646p.

EECKHOUT, P., External Relations of the European Union, Legal and Constitutional Foundations, Oxford, Oxford University Press, 2005, 490 p.

EMILIOU , N. and O’KEEFFE, D. (eds.), The European Union and World Trade Law After the GATT Uruguay Round, New York, Wiley, 1996, 390 p.

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HOEKMAN, B. and MAVROIDIS, P., The world trade organization: law, economics and politics, New York, Routledge, 2007, 143 p.

HOHMAN, H. (ed.), Agreeing and Implementing the Doha Round of the WTO, Cambridge, Cambridge University Press, 2008, 504 p.

HUDEC, H., Enforcing International Trade Law: The Evolution of the Modern GATT Legal System, Salem, N.H., Butterworths 1993,

JACKSON, H., J., Restructuring the GATT System, New York, Council on Foreign Relations Press, 1990, 121 p.

JACKSON, H.,J., The Jurisprudence of GATT and the WTO: insights on treaty law and economic legislation, Cambridge, Cambridge University Press, 2000, 497 p.

JACOBS, F., G., The effect of treaties in Domestic law, Londen, Sweet & Maxwell, 1987, 288 p.

KELLY , T., The Impact of the WTO – The environment, Public Health and Sovereignty, Cheltenham, Edward Elgar Publishing, 2007, 220 p.

KRONENBERGER, V., EN KAPTEYN, P.,J.,G. (eds.), The European Union and the international legal order : discord or harmony?, The Hague, T.M.C. Asser Press, 2001, 640 p.

KUILWIJK , K., J., The European Court of Justice and the GATT dilemma: public interest versus individual rights?, Ten Brink, Meppel, 1996, 372p.

LOWENFELD, A., International Economic Law, Oxford, Oxford University Press, 2008, 956 p.

MARESCEAU, M., Bilateral agreements concluded by the European community, Leiden/Boston, Martinus Nijhoff publishers, 2006, 451 p.

MATSUSHITA, M., SCHOENBAUM, T., MAVROIDIS, P., The World Trade Organization: law, practice and policy, Oxford, Oxford University Press, 2006, 989 p.

PETERSMANN, E.U., Constitutional functions and constitutional problems of international economic law, Switzerland, University Press Fribourg, 1991, 463 p.

PETERSMANN, E.U., and M. POLLACK (eds), Transatlantic Economic Disputes: The EC, the US and the WTO, 2003, 606 p.

PRINSSEN, J.M. en SCHRAUWEN, A., Direct effect: rethinking a classic of EC legal Doctrine, Groningen, Europa Law Publishing, 2002, 320 p.

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TANIGUCHI, Y. , YANOVICH, A. and BOHANES, J. (eds.), The WTO in the Twenty-first Century: Dispute Settlement, Negotiations, and Regionalism in Asia, Cambridge, Cambridge University press, 2007, 568 p.

VON BOGDANDY, A. & BAST, J. (eds.), Principles of European constitutional law, Oxford, Hart Publishing, 2006, 833 p.

VON BOGDANDY, A., MAVROIDIS, P., MÉNY, Y. (eds.), European Integration and International Co-ordination – Studies in Transnational Economic Law in Honour of Claus-Dieter Ehlermann, Nederland, Kluwer Law International, 2002, 516 p.

WEILER, J., H., J., (ed.), The EU, the WTO and NAFTA: Towards a Common Law of Internatioanl Trade?, Oxford, Oxford University Press, 2001, 238.

Journals

ALEMANNO, A., “Judicial Enforcement of the WTO Hormones Ruling within the European Community: toward EC Liability for the Non-Implementation of WTO Dispute Settlement Decisions?”, Harvard International Law Journal 2004, 547 – 561.

BESSON, S., “European Legal Pluralism after Kadi”, European Constitutional Law Review 2009, 237 – 264.

BUSCH, M. L. AND REINHARDT, E., “Bargaining in the Shadow of the Law: Early Settlements in GATT/WTO Disputes”, Fordham International Law Journal 2000, 158 – 172.

BRONCKERS, M., “Private Appeals to WTO Law: An Update”, Journal of World Trade 2008, 245.

BRONCKERS, M., “From direct effect to muted dialogue: Recent developments in the European Courts’ Case Law on the WTO and Beyond”, Journal of International Economic Law 2008, 885-898.

BRONCKERS, M., “The Effect of the WTO in European Court Litigation”, Texas International Law Journal 2005, 443.

COLLINS, D., “Efficient Breach, Reliance and Contract Remedies at the WTO”, Journal of World Trade 2009, 225-244.

COTTIER, T., “Dispute Settlement in the World Trade Organization: Characteristics and Structural Implications for the European Union”, Common Market Law Review 1998, 325.

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COTTIER, T. and K. SCHEFER , “ The relationship between World Trade Organization, national and regional law”, Journal of International Economic Law 1998, 83 – 122.

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DE MEY, D., “The Effect of WTO Dispute Settlement Rulings in the EC Legal Order: Reviewing Van Parys v Belgische Interventie- en Restitutiebureau”, German Law Journal

2005, 1025 – 1032.

DI GIANNI , F., ANTONINI, R., “DSB decisions and direct effect of WTO law: Should the EC courts be more flexible when the flexibility of the WTO system has come to an end”, Journal of World Trade 2006, 777-793.

EECKHOUT, P., “Domestic legal status of the WTO Agreement: Interconnecting legal systems”, Common Market Law Review 1997, 11-58.

EECKHOUT, P., “Judicial Enforcement of WTO Law in the EU – Some further reflections”, Journal of International Economic Law 2002, 91-110.

EGLI, P., KOKOTT, J., OXMAN , B., “EC – WTO Agreements – Effect of International Agreements in European Community Law – Ability of individuals and Member States to rely on WTO Agreements”, American Journal of International Law 2000, 740 – 745.

EGLI, P., “EC – EC Compliance with Rulings of WTO Dispute Settlement Body in Bananas Dispute – Effect of WTO Agreements and Dispute Settlement Rulings in EC Law – Standing to Challenge EC

Legislation as Inconsistent with WTO Agreements and Rulings – Van Parys”, American Journal of International Law 2005, 449 – 454.

EHLERMANN, D., “Some personal experiences as member of the Appellate Body of the WTO”, Policy Paper RSC No. 02/9, Robert Schuman Centre for Advanced Studies, EUI, Florence.

EHLERMANN, D., “Part II: WTO Dispute Settlement: Insight from Practitioner – Reflections on the AB of the WTO”, Journal of International Economic Law 2003, 695 – 708.

EVERLING, “Will Europe Slip on Bananas? The Bananas Judgment of the Court of Justice and National Courts”, Common Market Law Review1996, 401 – 437.

GRILLER, S., “Judicial Enforceability of WTO law In the European Union: Annotation to Case C-146/96, Portugal v Council”, Journal of International Law 2000,

JACKSON, J., H., “Dispute Settlement and the WTO – Emerging Problems”, Journal of International Economic Law 1998, 329 – 351.

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JACKSON, J., H., “The WTO ‘Constitution’ and Proposed Reforms: Seven ‘Mantras’ Revisited”, Journal of International Economic Law 2001, 74.

KADDOUS, “The Biret Cases: an open door to EC liability for non-implementation of WTO dispute settlement decision?”, European Law Reporter 2004, 54.

KLABBERS, J., “Internatonal Law in Community Law: The Law and Politics of Direct Effect”, Yearbook of European Law 2002, 263.

KUIJPER, P. J., BRONCKERS, M., “WTO law in the European Court of Justice”, Common Market Law Review. 2005, 1313-1355.

LEAL-ARCAS, R., “The EU Institutions and their Modus Operandi in the World Trading System”, Columbia Journal of European Law 2006, 125-197.

MENGOZZI, P., “La Cour de justice et l'applicabilité des règles de l'OMC en droit communautaire à la lumière de l'affaire ‘Portugal c. Conseil’”, Revue du Droit de l’Union Européenne 2000, 509 – 522.

MAVROIDIS, P., “Remedies in the WTO Legal System: Between a rock and a hard place”, European Journal of International Law 2000, 763-813.

NI CHAOIMH , E., “Trading in Precaution – A Comparative Study of the Precautionary Jurisprudence of the European Court and the WTO’s Adjudicating Body”, Legal Issues of Economic Integration 2006, 139-165.

PATTERSON, G. and PATTERSON, E., “The Road from GATT to MTO”, Minnesota Journal of Global Trade 1994, 35 - 59.

PETERSMANN, E-U., Application of GATT by the Court of Justice of the European Communities”, Common Market Law Review 1983, 397-437.

PETERSMANN, E-U., “Multilevel Judicial Governance of International Trade requires a common conception of rule of law and justice”, Journal of International Economic Law 2007, 529-551.

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