Oral Statement by Australia
4 September 2008, Geneva
Presiding Member, Members of the Division:
1. Thank you
for the opportunity to present Australia’s further views
in this appeal. The appeal raises important questions
about the characterisation of ‘ordinary customs
duties’ and ‘other duties or charges’ in GATT
Article II:1(b), and the relationship between GATT Articles
II:1(b), II:2(a) and III:2.
2. At the
outset, we note that the Panel found that the United States
failed to establish that India’s ‘Additional
Duty’ (AD) and ‘Such Additional Duty’ (SUAD)
charges were inconsistent with Article II:1 of GATT 1994.
In so doing, Australia submits that the Panel made a number of
significant errors. One such error is the Panel’s
characterisation of ‘ordinary customs duties’ and
‘other duties and charges’ as being only those charges which inherently discriminate against imports. As
Australia states in its written submission, this
characterisation is not found in the ordinary meaning of the
language of Article II:1 in its context, nor is it supported by
previous jurisprudence or a practical examination of the
possible consequences of such an interpretation.
3. In its
analysis the Panel should have looked at a charge’s
overall design, application and structure in determining
whether it was an ordinary customs duty or other duties or
charges for the purposes of Article II:1(b), an approach that
was suggested by the Appellate Body in the Chile –
Price Band cases.
Panel’s second error, which is central to this dispute,
concerns the allocation of the burden of proof. Australia
submits the Panel erred in finding that Article II:2 is not an
exception or ‘affirmative defence’ to the other
provisions of Article II. Australia argues that Article
II:2 establishes a series of exceptions or ‘affirmative
defences’ to the general principle set out in Article
II:1. Thus, the burden of proof should fall on the party
that seeks to rely on those exceptions or defences. In
our view, the Panel incorrectly allocated the burden of proof
under Article II:2 to the complaining party, therefore
requiring it to demonstrate that a measure inconsistent with
Article II:1 is not also consistent with Article II:2.
Japan, Australia is of the view that to impose on the
complaining party the burden of proving a negative is at odds
with the principle of ‘fair, prompt and effective
resolution of disputes’. Further, it is not logical
that a complaining party should be made to disprove a range of
negatives which may or may not provide the justification for
the responding party imposing border charges in excess of those
bound in a tariff schedule.
6. Moving on
to the specific requirements of Article II:2(a), Australia
submits that this Article establishes a two part test. To
be consistent with Article II:2(a), a charge must be both
‘equivalent’ to an internal tax and imposed
consistently with the provisions of Article III:2.
Neither part of the test is severable or able to be read to the
exclusion of the other part.
does not support either the United States’ or the
European Communities’ interpretation of
‘equivalent’ for the purposes of Article
Whilst Australia agrees that there is an unseverable
relationship between Articles II and III, this does not mean
that ‘equivalent’ has the same meaning as
‘imposed consistently with the provisions of paragraph 2
of Article III’. If followed, both approaches would
have the affect of rendering meaningless the term
‘equivalent’ and could lead to legitimate charges
on imports levied consistently with Article III:2 being held to
be WTO-inconsistent. Australia also submits that there is no
inherent conflict in requiring a party seeking to rely on the
Article II:2(a) defence to establish consistency with Article
III:2 as part of that defence and requiring a party alleging a
separate breach of Article III:2 to establish the elements of
meaning of ‘equivalent’, as the Panel rightly
points out, should be interpreted as requiring an investigation as to
whether the purpose or function of the border charge is
directly related to an internal tax on a like domestic
9. If the United States were found to have made a prima facie case that India’s charges violated Article II:1, then the
Panel should have required India to adduce sufficient evidence
to support its assertion, or defence, that its charges did in
fact satisfy the Article II:2(a) requirements. Proving
this assertion should have also included a thorough
investigation of compliance with the provisions of Article
III:2 by the Panel.
10. Australia notes the
argument raised by the United States, that many of the internal taxes
and charges that India claims are adjusted for at the border
are also levied domestically on sales of United States wine as
value-added or consumption taxes. This practice, if
sufficiently demonstrated by the evidence on the record, would
clearly be taxing imports twice and thus in breach of Article
III:2 and hence Article II:2(a).
India’s Customs Tariff Act directs AD and SUAD be
calculated at the highest (excise) rate in certain
circumstances. This could result in charges in excess of the
internal taxes and charges levied on like domestic products, at
least in some parts of the territory of India. This
should have been explored further by the Panel in any
determination of consistency with Articles II:2(a) and
12. In its investigation
of Article III:2 consistency as part of its consideration of
Article II:2(a), the Panel further erred in not drawing the
appropriate inferences from India’s refusal to answer
questions relating to its taxation system. Australia considers that
answering such questions should have formed a significant part
of India’s justification for its measures under Article
13. Australia also notes
that the United States has requested in the alternative that,
should the Appellate Body find that the Indian charges are
internal taxes or otherwise subject to Article III, then it
complete the analysis under Article III:2. Australia sees no basis
for this claim given the Panel’s findings based on the
United States evidence.
14. Finally, Australia
does not agree with India that the Panel’s concluding
remarks were in breach of Article 3, 11 and 19 of the Dispute
Settlement Understanding (DSU). As noted by the European
Communities, the Panel’s remarks did not constitute an
examination or comment on the consistency of India’s
charges if amended and do not impose any obligation or burden
on India in contravention of Article 19 of the DSU.
Thank you again for the opportunity to address you here
 See Chile – Price Band System, Report of the
Appellate Body, WT/DS207/AB/R, paragraphs 264-288; and Chile – Price Band System 21.5,
paragraphs 149; 164-172; 190-226. See also the Third
Participant’s Submission of Australia, paragraph 7.
Participant Submission of Japan, paragraph 24.
Participant Submission of the European Communities, paragraph
11 and Appellant Submission of the United States, paragraph
Participant’s Submission of Australia, paragraph
Report, paragraphs 7.186 and 7.187.
 Appellant Submission of the United States, paragraphs
Written Submission by India (Panel Stage), paragraph 14 and
Report, paragraph 7.271 (and see footnotes 310 and 313).
 Appellant Submission of the United States, paragraph 184.
Report, paragraph 7.407.
Participant Submission of the European Communities, paragraph
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