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Source(s) of the information:
Source(s) of the information:

Reports of the Panel

CASES CITED IN THESE REPORTS

Short TitleFull Case Title and Citation
Argentina – Textiles and Apparel Appellate Body Report, Argentina – Measures Affecting Imports of Footwear, Textiles, Apparel and Other Items, WT/DS56/AB/R and Corr.1, adopted 22 April 1998, DSR 1998:III, p. 1003
Argentina – Textiles and Apparel Panel Report, Argentina – Measures Affecting Imports of Footwear, Textiles, Apparel and Other Items, WT/DS56/R, adopted 22 April 1998, as modified by Appellate Body Report WT/DS56/AB/R, DSR 1998:III, p. 1033
Brazil – Retreaded Tyres Appellate Body Report, Brazil – Measures Affecting Imports of Retreaded Tyres, WT/DS332/AB/R, adopted 17 December 2007, DSR 2007:IV, p. 1527
Brazil – Retreaded Tyres Panel Report, Brazil – Measures Affecting Imports of Retreaded Tyres, WT/DS332/R, adopted 17 December 2007, as modified by Appellate Body Report WT/DS332/AB/R, DSR 2007:V, p. 1649
Canada – Aircraft Appellate Body Report, Canada – Measures Affecting the Export of Civilian Aircraft, WT/DS70/AB/R, adopted 20 August 1999, DSR 1999:III, p. 1377
Canada – Aircraft Panel Report, Canada – Measures Affecting the Export of Civilian Aircraft, WT/DS70/R, adopted 20 August 1999, upheld by Appellate Body Report WT/DS70/AB/R, DSR 1999:IV, p. 1443
Canada – Autos Appellate Body Report, Canada – Certain Measures Affecting the Automotive Industry, WT/DS139/AB/R, WT/DS142/AB/R, adopted 19 June 2000, DSR 2000:VI, p. 2985
Canada – Autos Panel Report, Canada – Certain Measures Affecting the Automotive Industry, WT/DS139/R, WT/DS142/R, adopted 19 June 2000, as modified by Appellate Body Report WT/DS139/AB/R, WT/DS142/AB/R, DSR 2000:VII, p. 3043
Canada – Wheat Exports and Grain Imports Appellate Body Report, Canada – Measures Relating to Exports of Wheat and Treatment of Imported Grain, WT/DS276/AB/R, adopted 27 September 2004, DSR 2004:VI, p. 2739
Canada – Wheat Exports and Grain Imports Panel Report, Canada – Measures Relating to Exports of Wheat and Treatment of Imported Grain, WT/DS276/R, adopted 27 September 2004, upheld by Appellate Body Report WT/DS276/AB/R, DSR 2004:VI, p. 2817
China – Publications and Audiovisual Products Appellate Body Report, China –Measures Affecting Trading Rights and Distribution Services for Certain Publications and Audiovisual Entertainment Products, WT/DS363/AB/R, adopted 19 January 2010, DSR 2010:I, p. 3
China – Publications and Audiovisual Products Panel Report, China –Measures Affecting Trading Rights and Distribution Services for Certain Publications and Audiovisual Entertainment Products, WT/DS363/R and Corr.1, adopted 19 January 2010, as modified by Appellate Body Report WT/DS363/AB/R, DSR 2010:II, p. 261
China – Raw Materials Appellate Body Reports, China – Measures Related to the Exportation of Various Raw Materials, WT/DS394/AB/R / WT/DS395/AB/R / WT/DS398/AB/R, adopted 22 February 2012
China – Raw Materials Panel Reports, China – Measures Related to the Exportation of Various Raw Materials, WT/DS394/R / WT/DS395/R / WT/DS398/R / and Corr.1, adopted 22 February 2012, as modified by Appellate Body Reports WT/DS394/AB/R / WT/DS395/AB/R / WT/DS398/AB/R
Colombia – Ports of Entry Panel Report, Colombia – Indicative Prices and Restrictions on Ports of Entry, WT/DS366/R and Corr.1, adopted 20 May 2009, DSR 2009:VI, p. 2535
EC – Approval and Marketing of Biotech Products Panel Reports, European Communities – Measures Affecting the Approval and Marketing of Biotech Products, WT/DS291/R / WT/DS292/R / WT/DS293/R, Add.1 to Add.9, and Corr.1, adopted 21 November 2006, DSR 2006:III, p. 847
EC – Asbestos Appellate Body Report, European Communities – Measures Affecting Asbestos and Asbestos‑Containing Products, WT/DS135/AB/R, adopted 5 April 2001, DSR 2001:VII, p. 3243
EC – Asbestos Panel Report, European Communities – Measures Affecting Asbestos and Asbestos‑Containing Products, WT/DS135/R and Add.1, adopted 5 April 2001, as modified by Appellate Body Report WT/DS135/AB/R, DSR 2001:VIII, p. 3305
EC – Bananas III Appellate Body Report, European Communities – Regime for the Importation, Sale and Distribution of Bananas, WT/DS27/AB/R, adopted 25 September 1997, DSR 1997:II, p. 591
EC – Bananas III (Ecuador) Panel Report, European Communities – Regime for the Importation, Sale and Distribution of Bananas, Complaint by Ecuador, WT/DS27/R/ECU, adopted 25 September 1997, as modified by Appellate Body Report WT/DS27/AB/R, DSR 1997:III, p. 1085
EC – Bananas III (Guatemala and Honduras) Panel Report, European Communities – Regime for the Importation, Sale and Distribution of Bananas, Complaint by Guatemala and Honduras, WT/DS27/R/GTM, WT/DS27/R/HND, adopted 25 September 1997, as modified by Appellate Body Report WT/DS27/AB/R, DSR 1997:II, p. 695
EC – Bananas III (Mexico) Panel Report, European Communities – Regime for the Importation, Sale and Distribution of Bananas, Complaint by Mexico, WT/DS27/R/MEX, adopted 25 September 1997, as modified by Appellate Body Report WT/DS27/AB/R, DSR 1997:II, p. 803
EC – Bananas III (US) Panel Report, European Communities – Regime for the Importation, Sale and Distribution of Bananas, Complaint by the United States, WT/DS27/R/USA, adopted 25 September 1997, as modified by Appellate Body Report WT/DS27/AB/R, DSR 1997:II, p. 943
EC – Sardines Appellate Body Report, European Communities – Trade Description of Sardines, WT/DS231/AB/R, adopted 23 October 2002, DSR 2002:VIII, p. 3359
EC – Sardines Panel Report, European Communities – Trade Description of Sardines, WT/DS231/R and Corr.1, adopted 23 October 2002, as modified by Appellate Body Report WT/DS231/AB/R, DSR 2002:VIII, p. 3451
EC – Tariff Preferences Panel Report, European Communities – Conditions for the Granting of Tariff Preferences to Developing Countries, WT/DS246/R, adopted 20 April 2004, as modified by Appellate Body Report WT/DS246/AB/R, DSR 2004:III, p. 1009
EC – Trademarks and Geographical Indications (Australia) Panel Report, European Communities – Protection of Trademarks and Geographical Indications for Agricultural Products and Foodstuffs, Complaint by Australia, WT/DS290/R, adopted 20 April 2005, DSR 2005:X, p. 4603
India – Autos Panel Report, India – Measures Affecting the Automotive Sector, WT/DS146/R, WT/DS175/R and Corr.1, adopted 5 April 2002, DSR 2002:V, p. 1827
Japan – Agricultural Products II Appellate Body Report, Japan – Measures Affecting Agricultural Products, WT/DS76/AB/R, adopted 19 March 1999, DSR 1999:I, p. 277
Japan – Agricultural Products II Panel Report, Japan – Measures Affecting Agricultural Products, WT/DS76/R, adopted 19 March 1999, as modified by Appellate Body Report WT/DS76/AB/R, DSR 1999:I, p. 315
Japan – Alcoholic Beverages II Appellate Body Report, Japan – Taxes on Alcoholic Beverages, WT/DS8/AB/R, WT/DS10/AB/R, WT/DS11/AB/R, adopted 1 November 1996, DSR 1996:I, p. 97
Japan – Alcoholic Beverages II Panel Report, Japan – Taxes on Alcoholic Beverages, WT/DS8/R, WT/DS10/R, WT/DS11/R, adopted 1 November 1996, as modified by Appellate Body Report WT/DS8/AB/R, WT/DS10/AB/R, WT/DS11/AB/R, DSR 1996:I, p. 125
Japan – Film Panel Report, Japan – Measures Affecting Consumer Photographic Film and Paper, WT/DS44/R, adopted 22 April 1998, DSR 1998:IV, p. 1179
Korea – Various Measures on Beef Appellate Body Report, Korea – Measures Affecting Imports of Fresh, Chilled and Frozen Beef, WT/DS161/AB/R, WT/DS169/AB/R, adopted 10 January 2001, DSR 2001:I, p. 5
Korea – Various Measures on Beef Panel Report, Korea – Measures Affecting Imports of Fresh, Chilled and Frozen Beef, WT/DS161/R, WT/DS169/R, adopted 10 January 2001, as modified by Appellate Body Report WT/DS161/AB/R, WT/DS169/AB/R, DSR 2001:I, p. 59
Thailand – Cigarettes (Philippines) Appellate Body Report, Thailand – Customs and Fiscal Measures on Cigarettes from the Philippines, WT/DS371/AB/R, adopted 15 July 2011, DSR 2011:IV, p. 2203
Thailand – Cigarettes (Philippines) Panel Report, Thailand – Customs and Fiscal Measures on Cigarettes from the Philippines, WT/DS371/R, adopted 15 July 2011, as modified by Appellate Body Report WT/DS371/AB/R, DSR 2011:IV, p. 2299
US – 1916 Act (EC) Panel Report, United States – Anti‑Dumping Act of 1916, Complaint by the European Communities, WT/DS136/R and Corr.1, adopted 26 September 2000, upheld by Appellate Body Report WT/DS136/AB/R, WT/DS162/AB/R, DSR 2000:X, p. 4593
US – Clove Cigarettes Appellate Body Report, United States – Measures Affecting the Production and Sale of Clove Cigarettes, WT/DS406/AB/R, adopted 24 April 2012
US – Clove Cigarettes Panel Report, United States – Measures Affecting the Production and Sale of Clove Cigarettes, WT/DS406/R, adopted 24 April 2012, as modified by Appellate Body Report WT/DS406/AB/R
US – Continued Zeroing Appellate Body Report, United States – Continued Existence and Application of Zeroing Methodology, WT/DS350/AB/R, adopted 19 February 2009, DSR 2009:III, p. 1291
US – Continued Zeroing Panel Report, United States – Continued Existence and Application of Zeroing Methodology, WT/DS350/R, adopted 19 February 2009, as modified as Appellate Body Report WT/DS350/AB/R, DSR 2009:III, p. 1481
US – COOL Appellate Body Reports, United States – Certain Country of Origin Labelling (COOL) Requirements, WT/DS384/AB/R / WT/DS386/AB/R, adopted 23 July 2012
US – COOL Panel Reports, United States – Certain Country of Origin Labelling (COOL) Requirements, WT/DS384/R / WT/DS386/R, adopted 23 July 2012, as modified by Appellate Body Reports WT/DS384/AB/R / WT/DS386/AB/R
US – Gambling Appellate Body Report, United States – Measures Affecting the Cross‑Border Supply of Gambling and Betting Services, WT/DS285/AB/R, adopted 20 April 2005, DSR 2005:XII, p. 5663 (Corr.1, DSR 2006:XII, p. 5475)
US – Gambling Panel Report, United States – Measures Affecting the Cross‑Border Supply of Gambling and Betting Services, WT/DS285/R, adopted 20 April 2005, as modified by Appellate Body Report WT/DS285/AB/R, DSR 2005:XII, p. 5797
US – Gasoline Appellate Body Report, United States – Standards for Reformulated and Conventional Gasoline, WT/DS2/AB/R, adopted 20 May 1996, DSR 1996:I, p. 3
US – Gasoline Panel Report, United States – Standards for Reformulated and Conventional Gasoline, WT/DS2/R, adopted 20 May 1996, as modified by Appellate Body Report WT/DS2/AB/R, DSR 1996:I, p. 29
US – Large Civil Aircraft (2nd complaint) Appellate Body Report, United States – Measures Affecting Trade in Large Civil Aircraft (Second Complaint), WT/DS353/AB/R, adopted 23 March 2012
US – Large Civil Aircraft (2nd complaint) Panel Report, United States – Measures Affecting Trade in Large Civil Aircraft (Second Complaint), WT/DS353/R, adopted 23 March 2012, as modified by Appellate Body Report WT/DS353/AB/R
US – Section 337 Tariff Act GATT Panel Report, United States Section 337 of the Tariff Act of 1930, L/6439, adopted 7 November 1989, BISD 36S/345
US – Shrimp Appellate Body Report, United States – Import Prohibition of Certain Shrimp and Shrimp Products, WT/DS58/AB/R, adopted 6 November 1998, DSR 1998:VII, p. 2755
US – Shrimp Panel Report, United States – Import Prohibition of Certain Shrimp and Shrimp Products, WT/DS58/R and Corr.1, adopted 6 November 1998, as modified by Appellate Body Report WT/DS58/AB/R, DSR 1998:VII, p. 2821
US – Shrimp (Article 21.5 – Malaysia) Appellate Body Report, United States – Import Prohibition of Certain Shrimp and Shrimp Products – Recourse to Article 21.5 of the DSU by Malaysia, WT/DS58/AB/RW, adopted 21 November 2001, DSR 2001:XIII, p. 6481
US – Shrimp (Article 21.5 – Malaysia) Panel Report, United States – Import Prohibition of Certain Shrimp and Shrimp Products – Recourse to Article 21.5 of the DSU by Malaysia, WT/DS58/RW, adopted 21 November 2001, upheld by Appellate Body Report WT/DS58/AB/RW, DSR 2001:XIII, p. 6529
US – Tuna II (Mexico) Appellate Body Report, United States – Measures Concerning the Importation, Marketing and Sale of Tuna and Tuna Products, WT/DS381/AB/R, adopted 13 June 2012
US – Tuna II (Mexico) Panel Report, United States – Measures Concerning the Importation, Marketing and Sale of Tuna and Tuna Products, WT/DS381/R, adopted 13 June 2012, as modified by Appellate Body Report WT/DS381/AB/R
US – Upland Cotton Appellate Body Report, United States – Subsidies on Upland Cotton, WT/DS267/AB/R, adopted 21 March 2005, DSR 2005:I, p. 3
US – Upland Cotton Panel Report, United States – Subsidies on Upland Cotton, WT/DS267/R, Corr.1, and Add.1 to Add.3, adopted 21 March 2005, as modified by Appellate Body Report WT/DS267/AB/R, DSR 2005:II, p. 299
US – Zeroing (EC) (Article 21.5 – EC) Appellate Body Report, United States – Laws, Regulations and Methodology for Calculating Dumping Margins ("Zeroing") – Recourse to Article 21.5 of the DSU by the European Communities, WT/DS294/AB/RW and Corr.1, adopted 11 June 2009, DSR 2009:VII, p. 2911
US – Zeroing (EC) (Article 21.5 – EC) Panel Report, United States – Laws, Regulations and Methodology for Calculating Dumping Margins ("Zeroing") – Recourse to Article 21.5 of the DSU by the European Communities, WT/DS294/RW, adopted 11 June 2009, as modified by Appellate Body Report WT/DS294/AB/RW, DSR 2009:VII, p. 3117

LIST OF FREQUENTLY CITED EXHIBITS

ExhibitShort TitleFull Title
JE-1 Basic Regulation Regulation (EC) No. 1007/2009 of the European Parliament and of the Council on trade in seal products, adopted on 16 September 2009
JE-2 Implementing Regulation Commission Regulation (EU) No. 737/2010 laying down detailed rules for the implementation of the Basic Regulation, adopted on 10 August 2010
JE-20 COWI 2008 Report COWI, Assessment of the Potential Impact of a Ban of Products Derived from Seal Species (April 2008)
JE-21 COWI 2010 Report COWI, Study on Implementing Measures for Trade in Seal Products, Final Report (January 2010)
JE-22 EFSA Scientific Opinion European Food Safety Authority ("EFSA"), Panel on Animal Health and Welfare, Scientific Opinion on Animal Welfare Aspects of the Killing and Skinning of Seals, The EFSA Journal (2007) 610, pp. 1‑122 (6 December 2007)
JE-24 NAMMCO Report (2009) NAMMCO Expert Group, Report on the Meeting on Best Practices in the Hunting and Killing of Seals (February 2009)
JE-31 VKM Scientific Opinion Norwegian Scientific Committee for Food Safety ("VKM"), Panel on Animal Health and Welfare, Scientific Opinion on Animal Welfare Aspects of the Killing and Skinning in the Norwegian Seal Hunt (8 October 2007)
CDA-33 IVWG Report (2005) Smith, B. et al., "Improving Humane Practice in the Canadian Harp Seal Hunt:A Report of the Independent Veterinarians’ Working Group on the Canadian Harp Seal Hunt" (August 2005)
CDA-34 Daoust (2012) Daoust, P-Y., and Caraguel, C., "The Canadian harp seal hunt: observations on the effectiveness of procedures to avoid poor animal welfare outcomes", Animal Welfare, vol. 21, pp. 445-455 (2012)
EU-31 Burdon (2001) Burdon, R.L. et al., "Veterinary report: Canadian commercial seal hunt, Prince Edward Island" (March 2001)
EU-32 Daoust (2002) Daoust, P.-Y., Crook, A., Bollinger, T.K., Campbell, K.G. and Wong G., "Animal Welfare and the harp seal hunt in Atlantic Canada", Canadian Veterinary Journal, vol. 43, pp. 687-694 (2002)
EU-34 Butterworth (2007) Butterworth, A. et al., "Welfare aspects of the Canadian seal hunt" (31 August 2007)
EU-36 Richardson (2007) Richardson, M., Inherently Inhumane (August 2007)
EU-37 Butterworth (2012) Butterworth A., Richardson M., "A Review of animal welfare implications of the commercial Canadian seal hunt",Marine Policy (2012)
EU-43 NOAH Report (2012) Martinsen, S., Sealing in Norway – Welfare Aspects, report for NOAH, (6 December 2012)

ABBREVIATIONS

AbbreviationDescription
3PCAP Third party conformity assessment
CAP Conformity assessment procedure(s)
CN Combined Nomenclature
DSB Dispute Settlement Body
DSU Understanding on Rules and Procedures Governing the Settlement of Disputes
EFSA European Food Safety Authority
EU Seal Regime The Basic Regulation and the Implementing Regulation combined together
GATT 1994 General Agreement on Tariffs and Trade 1994
IC Inuit or other indigenous communities
NGOs Non-governmental organizations
MFN Most-favoured nation
MRM Marine resource management
OIE Office International des Epizooties
PPMs Processes and production methods
SPS Agreement Agreement on the Application of Sanitary and Phytosanitary Measures
TBT Agreement Agreement on Technical Barriers to Trade
TAC Total allowable catch
Vienna Convention Vienna Convention on the Law of Treaties, Done at Vienna, 23 May 1969, 1155 UNTS 331; 8 International Legal Materials 679
WTO World Trade Organization

1 Introduction

1.1 Complaints by Canada and Norway

1.1.
On 2 November 2009, Canada requested consultations with the European Union1 pursuant to Article 4 of the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU), Article XXII of the General Agreement on Tariffs and Trade (GATT 1994), and Article 14.1 of the Agreement on Technical Barriers to Trade (TBT Agreement), with respect to the measures and claims set out below.2 On 18 October 2010, Canada requested supplementary consultations with the European Union.3
1.2.
On 5 November 2009, Norway requested consultations with the European Union pursuant to Article 4 of the DSU, Article XXII of the GATT 1994, Article 14 of the TBT Agreement, and Article 19 of the Agreement on Agriculture, with respect to the measures and claims set out below.4 On 20 November 2009, Canada requested, pursuant to Article 4.11 of the DSU, to join in the consultations requested by Norway on 5 November 2009.5 On 19 October 2010, Norway requested supplementary consultations with the European Union.6
1.3.
On 28 and 29 October 2010, respectively, Canada and Norway requested to join each other's supplementary consultations.7
1.4.
Consultations were held on 15 December 2009, and supplementary consultations were held on 1 December 2010. None of these consultations led to a mutually satisfactory resolution.8

1.2 Panel establishment and composition

1.5.
On 11 February and 14 March 2011, respectively, Canada and Norway requested the establishment of a panel pursuant to Article 6 of the DSU with standard terms of reference.9
1.6.
At its meeting on 25 March 2011, the Dispute Settlement Body (DSB) established a panel pursuant to the request of Canada in document WT/DS400/4, in accordance with Article 6 of the DSU.10 At its meeting on 21 April 2011, the DSB established a panel pursuant to the request of Norway in document WT/DS401/5, in accordance with Article 6 of the DSU, and agreed, as provided for in Article 9 of the DSU in respect of multiple complainants, that the panel established to examine the complaint by Canada would also examine the complaint by Norway.11
1.7.
The Panel's terms of reference are the following:

To examine, in the light of the relevant provisions of the covered agreements cited by the parties to the dispute, the matter referred to the DSB by Canada in document WT/DS400/4, and by Norway in document WT/DS401/5, and to make such findings as will assist the DSB in making the recommendations or in giving the rulings provided for in those agreements.12

1.8.
On 24 September 2012, Canada and Norway requested the Director-General to determine the composition of the panel, pursuant to Article 8.7 of the DSU.
1.9.
On 4 October 2012, the Director-General accordingly composed the Panel as follows:

Chairperson: Mr Luzius Wasescha

Members: Ms Elizabeth Chelliah

Ms Patricia Holmes

1.10.
Argentina, Canada (for WT/DS401), China, Colombia, Ecuador, Iceland, Japan, Mexico, Namibia (for WT/DS401), Norway (for WT/DS400), the Russian Federation13, and the United States notified their interest in participating in the Panel proceedings as third parties.

1.3 Panel proceedings

1.3.1 General

1.11.
After consultation with the parties, the Panel adopted its Working Procedures14 and timetable on 23 October 2012. Upon request of the parties, the Panel modified the timetable on 4 March 2013 and 8 May 2013.
1.12.
The Panel held a first substantive meeting with the parties on 18-20 February 2013. A session with the third parties took place on 19 February 2013. The Panel held a second substantive meeting with the parties on 29-30 April 2013.
1.13.
On 19 June 2013, the Panel issued the descriptive part of its Reports to the parties. The Panel issued its Interim Reports to the parties on 3 September 2013. The Panel issued its Final Reports to the parties on 8 October 2013.

1.3.2 Procedures for open hearings

1.14.
At the organizational meeting held on 15 October 2012, the parties requested and the Panel agreed that the substantive meetings with the Panel would be open to public viewing subject to additional procedures to ensure the security and orderly conduct of the proceedings. On 4 December 2012, the Panel submitted proposed additional working procedures to the parties for comment. After it had received comments from the parties, the Panel adopted on 20 December 2012 additional Working Procedures for its open hearings at the first and second substantive meetings of the Panel, providing for public viewing by means of simultaneous closed-circuit television broadcasting of the proceedings to a separate room.

1.3.3 Requests for enhanced third-party rights

1.15.
At the organizational meeting held on 15 October 2012, Canada made a request for enhanced third-party rights to allow third-party access to both substantive meetings and all written submissions. The European Union objected to Canada's request on the grounds that no third party had submitted such a request. After considering Canada's request and the views of the other parties, the Panel informed the parties on 23 October 2012 that it had decided to decline Canada's request. In reaching its decision, the Panel took particular note of the fact that Canada's request was made by a party to the dispute, and that no third party had made a request for enhanced rights. Furthermore, because the substantive meetings were to be open to public viewing and thus would serve to provide third-party access to the Panel's substantive meetings, the Panel did not consider it necessary to grant the enhanced third-party rights requested by Canada.
1.16.
Following the first substantive meeting with the parties on 18-20 February 2013, the Panel received on 6 March 2013 a request from Namibia "to participate in the second substantive meeting" in order to rebut comments made by the European Union at the first substantive meeting regarding the Namibian seal hunt. After consulting the parties on Namibia's request, the Panel informed Namibia that it had considered Namibia's request, taking into account Namibia's status as a developing country and the material on the record relating to Namibia, which included Namibia's third-party written submission, oral statement at the first substantive meeting and its written responses to the Panel's questions. On the basis of its review and in light of the parties' comments, the Panel decided that there was no need to provide Namibia with an opportunity for further rebuttal and therefore declined Namibia's request to participate in the second substantive meeting.

1.3.4 Amicus curiae submissions

1.17.
On 25 January 2013, the Panel received an unsolicited amicus curiae submission from a group of non-governmental organizations (NGOs).15 On 29 January 2013, the Panel notified the parties of the unsolicited amicus curiae submission and advised the parties that any amicus curiae submission it received would be immediately forwarded to the parties. The parties would be invited to provide their views on the admissibility and relevance of any amicus curiae submission either at the first or second substantive meeting. The Panel further informed the parties that any amicus curiae brief submitted to the Panel after the second substantive meeting would be automatically rejected, as the Panel was of the view that the consideration of any new information at that stage of the proceedings would risk causing undue delays.
1.18.
Subsequently, the Panel received four additional unsolicited amicus curiae submissions prior to the second substantive meeting with the parties.16
1.19.
During the first substantive meeting with the parties, the European Union indicated that it had incorporated the amicus curiae submission provided by the group of NGOs on 25 January 2013 as an integral part of its written submissions to the Panel.17

1.3.5 Preliminary ruling

1.20.
On 19 December 2012, the European Union filed a request for a preliminary ruling to remove two exhibits from the record. On 16 January 2013, both Canada and Norway responded to the European Union's preliminary ruling request. In addition, the United States provided comments on the European Union's request in its third-party written submission pursuant to the Panel's invitation to all third parties to do so.

1.3.6 Request under Article 13 of the DSU

1.22.
On 16 January 2013, the same day that the complainants provided their comments on the European Union's request for preliminary ruling, Norway requested the Panel to exercise its power under Article 13 of the DSU to seek copies of the two documents that were the object of the European Union's request for removal from the record. Further to the Panel's invitation, the Panel received on 8 February 2013 comments from the European Union and Canada on Norway's request, as well as third-party comments from the United States. On 8 April 2013, the Panel informed the parties that the Panel did not consider it necessary to seek the information requested by Norway. Consequently, the Panel denied Norway's request for the Panel to exercise its authority under Article 13 of the DSU and indicated that the Panel would provide the reasons for its decision in its Reports.19

2 Factual aspects

2.1 Measures at issue20

2.1.
The claims brought by Canada and Norway concern the European Union's measures relating to seal products.
2.2.
Canada submits that the measures at issue are the following21:

a. Regulation (EC) No. 1007/2009 of the European Parliament and of the Council, of 16 September 2009 on trade in seal products;

b. Regulation (EU) No 737/2010 laying down detailed rules for the implementation of Regulation (EC) No. 1007/2009 of the European Parliament and of the Council on trade in seal products; and

c. For each of the measures referred to above, any amendments, replacements, extensions, implementing measures or other related measures, administrative orders, directives, or customs guidelines including those issued by individual European Union member States.

2.3.
Canada refers to the Basic Regulation and the Implementing Regulation together as the "EU Seal Regime".
2.4.
Norway submits that the measures at issue are the following22:

a. Regulation (EC) No. 1007/2009 of the European Parliament and of the Council on trade in seal products, adopted on 16 September 2009 (the "Basic Regulation");

b. Commission Regulation (EU) No. 737/2010, laying down detailed rules for the implementation of the Basic Regulation, adopted on 10 August 2010 (the "Implementing Regulation");

c. Omissions to adopt adequate procedures for establishing that seal products conforming to the relevant conditions, set forth in exceptions in the EU seal regime, may be placed on the EU market; and

d. Any other related measures adopted by the EU or its member States that provide guidance on, amend, supplement, replace, and/or implement the rules set forth in the Basic Regulation and Implementing Regulation, whether adopted pursuant to these regulations or otherwise.

2.5.
Norway refers to the Basic Regulation and the Implementing Regulation together as the "EU Seal Regime".

2.2 Products at issue

2.6.
This dispute concerns products, either processed or unprocessed, deriving or obtained from seals, including meat, oil, blubber, organs, raw fur skins and tanned fur skins, as well as articles (such as clothing and accessories, and omega‑3 capsules) made from fur skins and oil.23
2.7.
In accordance with Article 3(3) of Regulation (EC) No. 1007/2009 of the European Parliament and of the Council, the EU Commission issued a "Technical Guidance Note Setting Out an Indicative List of the Codes of the Combined Nomenclature that May Cover Prohibited Seal Products" (Technical Guidance Note).24 The Technical Guidance Note includes products listed according to their Combined Nomenclature (CN) codes. In its foreword, the Note explains that only "those CN codes with the greatest likelihood of covering products subject to prohibition" are included therein, and those listed are indicative.25 For example, it includes the following sections of the CN codes:

· "live animals, animal products" (Section I);

· "animal or vegetable fats and oils and their cleavage products …" (Section III);

· "prepared foodstuffs, beverages, spirits and vinegar …" (Section IV);

· "products of the chemical or allied industries" (Section VI);

· "rawhides and skins, leather, fur skins and articles thereof; … handbags and similar containers" (Section VIII);

· "textiles and textile articles" (Section XI);

· "footwear, headgear …" (Section XII);

· "… precious metals, metals clad with precious metal, and articles thereof; imitation jewellery …" (Section XIV);

· "optical, photographic, …, medical or surgical instruments and apparatus; clocks and watches; musical instruments; parts and accessories thereof" (Section XVIII);

· "miscellaneous manufactured articles" (Section XX); and

· "works of art, collectors' pieces and antiques" (Section XXI).

3 Parties' requests for findings and recommendations

3.1 Canada

3.1.
Canada requests that the Panel find that the "EU Seal Regime":

a. is a technical regulation in the sense of Annex 1.1 of the TBT Agreement;

b. is inconsistent with the European Union's obligations under the TBT Agreement, in particular Articles 2.1, 2.2, 5.1.2, and 5.2.1;

c. is inconsistent with the European Union's obligations under the GATT 1994, in particular Articles I:1, III:4, and XI:1; and

d. is not justified by Article XX(a) or XX(b) of the GATT 1994.26

3.2.
Canada requests, pursuant to Article 19.1 of the DSU, that the Panel recommend to the DSB that it request the European Union to bring its measures into conformity with its obligations under the TBT Agreement and the GATT 1994.27
3.3.
In the event that the European Union's measures are not found to violate the European Union's obligations under the TBT Agreement or the GATT 1994, Canada requests that the Panel find that the EU Seal Regime has nullified and impaired benefits accruing to Canada in the sense of Article XXIII:1(b) of the GATT 1994, and that the Panel recommend to the DSB that it request the European Union to make a mutually satisfactory adjustment as required by Article 26.1 of the DSU.28

3.2 Norway

3.4.
Norway requests that the Panel find that the "EU Seal Regime":

a. violates Articles I:1, III:4 and XI:1 of the GATT 1994;

b. is not justified by Article XX(a) or (b) of the GATT 1994;

c. violates Article 4.2 of the Agreement on Agriculture;

d. is a technical regulation in the sense of Annex 1.1 of the TBT Agreement;

e. violates Articles 2.2, 5.1.2 and 5.2.1 of the TBT Agreement; and

f. nullifies or impairs benefits accruing to Norway in the sense of Article XXIII:1(b) of the GATT 1994, whether or not it conflicts with relevant provisions.29

3.5.
Norway therefore requests the Panel, pursuant to Article 19.1 of the DSU, to recommend that the DSB request that the European Union bring the EU Seal Regime into conformity with the European Union's obligations under the GATT 1994, the TBT Agreement and the Agreement on Agriculture.30
3.6.
If, and to the extent, that the Panel finds that the EU Seal Regime does not conflict with relevant WTO provisions, but nonetheless finds that the measures nullify or impair benefits accruing to Norway in the sense of Article XXIII:1(b) of the GATT 1994, Norway requests the Panel to recommend that the DSB request the European Union to make a mutually satisfactory adjustment as required by Article 26.1 of the DSU.31

3.3 European Union

3.7.
The European Union requests the Panel to reject all the claims submitted by Canada and Norway against the "EU Seal Regime".32

4 Arguments of the parties

4.1.
The arguments of the parties are reflected in their executive summaries, provided to the Panel in accordance with paragraph 19 of the Working Procedures adopted by the Panel (see Annexes B-1, B-2 and B-3).

5 Arguments of the third parties

5.1.
The arguments of Colombia, Iceland, Japan, Mexico, Namibia and the United States are reflected in their executive summaries, provided in accordance with paragraph 20 of the Working Procedures adopted by the Panel (see Annexes C-1, C-2, C-3, C-4, C-5, and C-6). Argentina, China, Ecuador and the Russian Federation did not submit written or oral arguments to the Panel.

6 Interim Review

6.1.
On 3 September 2013, the Panel submitted its Interim Panel Reports to the parties. On 17 September 2013, Canada, Norway, and the European Union each submitted written requests for the review of precise aspects of the Interim Reports. On 24 September 2013, Canada, Norway, and the European Union submitted comments on a number of requests for review presented by the other parties. None of the parties requested an interim review meeting.
6.2.
In accordance with Article 15.3 of the DSU, this section of the Panel Reports sets out the Panel's response to the arguments made at the interim review stage, providing explanations where necessary. The Panel has modified aspects of its reports in light of the parties' comments where it considered it appropriate to do so, as explained below. The Panel has also made certain technical and editorial corrections and revisions to the Interim Panel Reports for the purposes of clarity and accuracy. References to sections, paragraph numbers, and footnotes in this section relate to the Interim Panel Reports, except as otherwise noted.

6.1 General comments

Reference to "Greenland"

6.3.
The complainants observed that the Interim Reports variously refer to "Greenland", "Greenland (Denmark)", and "Denmark (Greenland)" and requested that the Panel follow a consistent approach. Specifically, Canada proposed that the Panel uniformly refer to "Greenland (Denmark)" in the Reports. For its part, the European Union noted that the term "Denmark (Greenland)" does not accurately describe the constitutional relationship between Denmark and Greenland and requested that "Greenland" be used instead.
6.4.
The Panel has used the term "Greenland" consistently throughout the Reports.

6.2 Preliminary question on commercial seal hunts (Section 7.3.2.3.2)

6.5.
Norway made both general and specific comments regarding the emphasis given to certain aspects of its hunting practices and regulations as well as practices in other seal hunts. Norway expressed concern with the Panel's portrayal and characterization of the risks of inhumane killing in seal hunts. In particular, Norway stated that evidence from the Norwegian hunt of "compliance with humane seal hunting … is omitted or downplayed" and that, conversely, aspects of other hunts "that demonstrate a failure to mitigate risks of inhumane killing … are underrepresented".33
6.6.
The Panel addresses below the parties' comments on section 7.3.2.3.2 of the Panel Reports, additionally addressing comments made with respect to similar subjects in other parts of the Reports where relevant to the Panel's review.

Use of the term "commercial hunts"

6.7.
Norway requested the Panel to review the nomenclature that it adopts to distinguish seal hunts conforming to the IC and MRM exceptions and those that do not. Norway argued that the use of the terms "commercial hunts" and "IC and MRM hunts" could be taken "to reflect a moral judgment with respect to the different hunts".34 Norway further argued that "the Panel's own findings demonstrate the falseness of the distinction created by the Panel between 'commercial' and the other types of hunts".35 Norway suggested that the Panel adopt neutral language to reflect the basis for its distinction, such as "non-conforming hunts", or the "Canadian East Coast hunt" and "Norwegian West Ice hunt". Canada suggested that the phrase "non-conforming hunts" be used instead of the term "commercial hunts".
6.8.
The European Union disagreed with this request and submitted that, based on the Panel's usage of terms in different parts of its analysis, the use of the term "commercial hunts" is not confusing.
6.9.
The Panel determined that "commercial hunts" are those having commercial profit (rather than direct use or consumption of seal products) as the sole or primary objective, along with various other factual characteristics described in section 7.3.2.3.2.2 of the Reports. The Panel further took note of evidence that such hunts are distinctly designated by a variety of sources as "commercial", including within Canada and Norway. Where appropriate and as relevant to its analysis, the Panel noted the existence of a commercial element in IC and MRM hunts. This does not negate other relevant factual characteristics of hunts that conform to the IC and MRM exceptions (such as the identity of the hunter or scale of the hunt). We therefore decline to revise the terminology used in these Reports to distinguish different seal hunts.

Paragraph 7.184

6.10.
Norway disputed the assertion that "relatively little information is provided regarding the actual seal hunting conducted in … sealing countries" other than Norway and Canada. Norway contended that substantial evidence is available dealing with seal hunting in Greenland, and requested that this evidence be noted and fully reflected by the Panel.
6.11.
The European Union considered that the referenced passage deals with scientific information concerning the animal welfare aspects of seal hunting. According to the European Union, the documents cited by Norway provide some limited information on certain aspects of seal hunting in Greenland, but the European Union maintained that there is "hardly any scientific evidence concerning the animal welfare outcomes of the IC hunts, including those conducted in Greenland".36
6.12.
The Panel recalls EFSA's observations that "[v]ery little robust information is available … on the efficacy of" different killing methods employed in seal hunts around the world37 and that "the vast majority of available data is from commercial hunts".38 The Panel observes that it was provided with a proportionally greater amount of information in the form of scientific and empirical studies on the Canadian and Norwegian hunts.39 Further, the Panel referred to available material on seal hunting in Greenland inter alia in the context of its assessment of the characteristics of IC hunts and the occurrence of struck and lost seals. In light of the parties' comments, the Panel made slight amendments to this paragraph for clarity.

Paragraph 7.188

6.13.
Canada requested that the Panel clarify if its conclusion in paragraph 7,188 is that the physical conditions of seal hunting are not only distinct from other wildlife hunts and the commercial slaughter of farmed animals, but also pose challenges that are not present in these other types of hunts. In particular, Canada inquired whether seal hunting is more challenging than other types of wildlife hunts because of the physical conditions in which it is carried out.
6.14.
The Panel addressed characteristics of the physical environment of seal hunts in connection with the risks of poor animal welfare arising in that specific context. The Panel also explained the limitations on comparing the risks of poor animal welfare in seal hunts, which have been examined in detail, to those in other wildlife hunts and commercial abattoirs. Therefore, the Panel considers further comparison to the killing of other animals to be unnecessary.

Paragraph 7.191

6.15.
Norway commented that other evidence indicating reasons for targeting the seal's head may be more fully reflected in this paragraph, including for purposes of effective stunning and preservation of pelt value. Canada took issue with the citation to the length of the limbs as a reason for targeting the seal's head.
6.16.
The reasons mentioned in paragraph 7,191 for targeting the seal's head are not exhaustive, and correspond to the distinct characteristics of seals. The targeting of the head for purposes of effective stunning and preservation of the value of skins is addressed elsewhere in the Reports where appropriate. The Panel slightly amended this paragraph to reflect the referenced material in light of the parties' comments.

Use of the term "clubbing instrument" (Paragraphs 7.193, footnote 262, 7.200, and 7.204)

6.17.
Norway requested that the Panel not use the term "clubbing instrument" to describe a wide category of tools including both simple clubs and the hakapik prescribed by Norwegian regulations for the effective stunning of seals. Norway considered that this term does not convey the different features, animal welfare implications, and regulatory treatment of distinct instruments to which it is applied. Accordingly, Norway requested the Panel to replace the term "clubbing instrument" with a more specific reference to the type of instrument to which the Panel refers.
6.18.
The Panel employed the term "clubbing" to refer to the physical act of striking, notwithstanding different dimensions and specific features of the tools used, in the same fashion that "shooting" is a general term for the action of employing a firearm, notwithstanding the use of rifles and ammunition of different power. The Panel therefore used the general designation "clubbing instrument" to address those tools with which the action of "clubbing" is carried out, without prejudice to the Panel's observation of the different features of hakapiks and clubs. Relevant sections (e.g. regarding the application of stunning methods) address factors and risks that pertain to the action of clubbing, including the use of hakapiks and slagkroks. The Panel made revisions to clarify that clubs are not permitted as a stunning instrument in Norway, and considers that further changes are not necessary.

Paragraphs 7.197-7.198 and 7.222

6.19.
Norway proposed noting that not all seal hunting occurs under regulatory conditions that require application of a humane killing method, specifically referring to the practice of trapping or netting in Greenland, and requested reference to its regulatory efforts to minimize poor animal welfare in seal hunts.
6.20.
The European Union argued that it has shown that neither Canada's nor Norway's regulations prescribe genuinely humane killing methods. Therefore, the European Union contended that the Panel should reject Norway's request.
6.21.
The Panel notes that, as indicated in the heading preceding paragraphs 7,197-7.198, this sub-section concerns the application of humane killing methods in seal hunts. Consistent with this focus, the Panel considered evidence relating to sealing regulations insofar as it provides insight into the conduct of seal hunts, especially regarding the challenges of applying humane killing methods and the risks of poor animal welfare. The Panel additionally points out that it addressed the history and framework of Norway’s seal hunting regulations under the organization and control of commercial seal hunts, which includes reference to Norway’s mandatory training of hunters and inspectors. The practice of trapping seals underwater in certain hunts as well as the implications of such practice for animal welfare have been noted in other parts of the Reports as appropriate. Therefore, the Panel does not consider additional references to this evidence to be necessary.

Paragraphs 7.216, 7.236, 7.268, 7.273, and 7.333

6.22.
Norway made various comments concerning hunting regulations and practices within Norway and elsewhere. Norway requested that the Panel include reference in paragraph 7,216 to the prohibition in its regulations of shooting seals in water, and further requested the Panel to clarify the link between shooting seals in open water and the struck and lost rates in the Greenlandic hunt. Norway also requested clarification of its regulatory scheme in paragraph 7,236, particularly the prohibitions against the use of clubs, nets, as well as the shooting of seals in water. Norway requested explicit reference in paragraph 7,268 to the animal welfare problems related to open water hunting and trapping and netting. Norway requested revision of paragraph 7,273, which it considered to imply that "the IC hunts described by the Panel are 'no different' than other seal hunts such as the Norwegian West Ice hunt".40 Norway also contended that the hunting methods used in the Norwegian and Canadian commercial hunts are not "similar", specifically citing its prohibition against the use of nets and shooting seals in water. Finally, Norway requested modification of paragraph 7,333 to reflect that clubs are prohibited in Norway.
6.23.
The European Union commented that the fact that Norway's regulations prohibit shooting seals in water does not imply that struck and lost is not a problem in the Norwegian hunt. The European Union added that shooting seals near water is not prohibited, and that the Panel should specify that shooting seals in water is allowed in Canada's commercial hunt. With respect to paragraph 7,273, the European Union considered that the difference highlighted by Norway is already mentioned and therefore no amendment is needed.
6.24.
The Panel explained its reference to and assessment of seal hunting regulations in connection with Norway's comments on paragraphs 7,197-7.198 and 7,222. In light of the parties' comments, the Panel added reference to the Norwegian prohibition on shooting seals in water in footnote 324 of the Panel Reports as well as a cross-reference in footnote 329 of the Panel Reports to the Panel's discussion of hunting methods in Greenland. The Panel has also modified paragraphs 7,236 and 7,333 to reflect the use of different instruments in different countries. Finally, the Panel does not consider revision to paragraph 7,273 to be necessary.

Footnote 308 to paragraph 7.216 (as well as footnote 259 to paragraph 7.196; footnote 304 to paragraph 7.214; and footnote 324 to paragraph 7.221)

6.25.
Norway requested that these references to the inspector's report in Appendix K of the NOAH Report (2012) be supplemented to mention that the referenced voyage "involved exceptional conduct" that resulted in criminal prosecutions.41 The European Union submitted that it rebutted Norway's assertion that the inspection report in question "involved exceptional conduct" and therefore called on the Panel to reject Norway's request.
6.26.
The Panel notes that Norway's comments concern footnote references to an inspection report from a Norwegian hunting expedition of the Kvitungen vessel. The principal statements to which each footnoted reference corresponds explain the nature of the reference being made. Thus, paragraph 7,216 states that "there are varying indications from sealing inspectors of the extent to which struck and lost is a problem in the Norwegian hunt", citing the inspection report in question along with the report of another sealing inspector. In the footnote to paragraph 7,196, the Kvitungen report is cited amongst several others after the statement that "[i]ndications from both participants in the hunts and veterinary experts recognize the heavy demands and difficult conditions of seal hunts". Similarly, in paragraphs 7,214 and 7,221, reference to the Kvitungen report corresponds to statements for which the report provides support and is made in conjunction with multiple other cited sources of evidence. Therefore, the Panel does not consider it necessary to supplement these references.

Footnote 317 to paragraph 7.218

6.27.
With respect to hooking/gaffing seals aboard vessels, Norway requested that the Panel refer to the specific conditions under which this practice may occur according to Norwegian regulations. Norway also requested inclusion of its explanation of the conclusion of the Ministry of Fisheries and Coastal Affairs referenced in this footnote.
6.28.
The European Union submitted that it had rebutted Norway's alleged motivation for not amending the provisions of its hunting regulations on the practices of hooking/gaffing seals. The European Union requested that, should the Panel accede to Norway's request, it also reflect the European Union's submissions in this regard.
6.29.
The Panel referred to the relevant conditions under which seals may be hooked aboard vessels prior to exsanguination under Norwegian regulations and made a minor amendment on the basis of Norway's comments. Further, the Panel referred to the conclusion of the Norwegian Ministry of Fisheries and Coastal Affairs to indicate the ultimate disposition of this matter. The Panel therefore does not find it necessary to revise this footnote.

Paragraphs 7.219-7.221

6.30.
Norway requested revision of these paragraphs to reflect "the distinct approach taken to monitoring under Norway's sealing regulations".42 Norway also requested reference to evidence that greater oversight leads to a lower likelihood of animal welfare problems. Finally, Norway requested replacement of the term "government inspector" in paragraph 7,220 with the term "independent veterinary inspector".
6.31.
The European Union argued that the inspectors on board Norwegian vessels are government employees who represent the Norwegian government and take direct orders from the Fisheries Directorate. According to the European Union, therefore, such inspectors cannot be considered "independent".
6.32.
The Panel added reference in these paragraphs regarding the animal welfare benefit of monitoring and enforcement as well as monitoring in Greenland. The Panel notes that these paragraphs primarily concern the feasibility and/or difficulty of monitoring and enforcement of the application of humane killing methods, and specifically draw upon evidence pertaining to the Norwegian hunt with added reference to the comments of Mr Danielsson. The Panel therefore does not consider further revision of these paragraphs to be necessary.
6.33.
Additionally, as a factual matter, inspectors are "government-mandated" and report to the Norwegian Directorate of Fisheries.43 Apart from its factual accuracy, the current wording conveys the authority of the inspector (as distinct from, for instance, an independent observer44). Therefore, no change was made in this respect.

6.3 Specific comments on other parts of the Reports

Paragraphs 7.154, 7.597, and 7.608

6.34.
The complainants requested the Panel to review paragraph 7,154 of the Interim Reports to note explicitly that the groups of products to be compared in Table 1 are those contained in cells C+H (all Canadian seal products), cells A+F (all domestic seal products) and cells D+I (all seal products from Greenland). Norway requested that appropriate references also be made to the cells in Table 1 in the context of the Panel's analysis of its claims under Articles I:1 and III:4 of the GATT 1994.
6.35.
Further to the complainants' comments, the Panel made modifications in paragraphs 7,154, 7,597, and 7,608 of its Reports.

Paragraphs 7.159, 7.161, and footnotes 195, 891

6.36.
The complainants noted that different figures were used in the Panel Reports to describe the proportion of seal products originating in Canada that could qualify under the IC exception. In particular, Canada requested the Panel to refer to its submissions and evidence referencing Canada's official statistical data. The European Union expressed reservations regarding the revision of the figures in the Interim Reports but did not object to the Panel adding a reference to Canada's submission to provide a more complete description of Canada's arguments.
6.37.
As the figures at issue relate to the proportion of IC hunts in Canada, the Panel modified the above-mentioned paragraphs and footnotes of its Reports to make specific reference to the data provided by Canada.

Paragraph 7.164

6.38.
Norway requested the Panel to complete its findings in paragraph 7,164 with additional evidence, in particular regarding how the IC requirements apply specifically to Greenland. The European Union requested the Panel to reject Norway's request because the conditions of the IC exception are origin-neutral and do not apply specifically to Greenland; it is therefore unnecessary for the Panel to make more factual findings on an issue that is not disputed by the European Union.
6.39.
The Panel notes that evidence on Greenland is referenced in a number of paragraphs of the Reports. Moreover, given our finding that all, or virtually all, seal products from Greenland may be eligible under the IC exception, we decline Norway's request to add references to evidence on Greenland in paragraph 7,164 of the Interim Reports.

Paragraph 7.275

6.40.
Norway suggested replacement of the word "can" with the word "do" in the third line of this paragraph. The European Union considered that using the verb "do" would convey the impression that all IC hunts, by definition, cause the pain and suffering referenced in paragraph 7,275. The European Union argued that the fact that some hunting methods used by Inuit communities are not consistent with humane killing methods does not mean that all IC hunts in every single case result in poor animal welfare.
6.41.
The Panel agrees with the European Union that Norway's suggested revision would alter the meaning of the sentence as currently phrased. The Panel therefore declines to make the requested change.

Paragraphs 7.358, 7.363, 7.366, 7.376, 7.421, and 7.629

6.42.
Norway made various comments relating to the characterization and summarization of its arguments, in particular with respect to the objective pursued by the EU Seal Regime.
6.43.
The Panel made modifications to paragraphs 7,363, 7,366, 7,421, and accompanying footnotes to reflect Norway's comments.

Paragraph 7.386

6.44.
Norway drew attention to recital (21) of the preamble of the Basic Regulation and requested reflection of the text of this recital in the Panel's analysis. The European Union submitted that the passage of recital (21) cited by Norway has a limited purpose of setting out the justification of the Basic Regulation in light of the principle of subsidiarity under EU law. According to the European Union, the recital does not purport to explain why the EU legislators chose the harmonizing measures provided in the Basic Regulation, rather than other possible harmonizing measures.
6.45.
The Panel notes that the objective of internal market harmonization is addressed in paragraph 7,371, as amended by the Panel in the course of the interim review. Therefore, the Panel does not consider further reference to this objective to be necessary.

Section 7.3.3.1.2 (paragraphs 7.372-7.411)

6.46.
Norway sought inclusion of a reference to the European General Court decision in Inuit Tapiriit Kanatami and others v. Commission with respect to the objective of the EU Seal Regime. The European Union considered this judgment of the European General Court to be of very limited relevance for this dispute and, in particular, with regard to the issue raised by Norway.
6.47.
In Inuit Tapiriit Kanatami and others v. Commission (Case T-526/10), the European General Court addressed claims as to the alleged "illegality" of the Basic Regulation under EU law. More particularly, the Court examined the sufficiency of the Basic Regulation's legal basis under a specific provision of EU law and whether the objective of the Basic Regulation was such that it could legitimately be adopted on the basis of that provision.45 Because the European General Court examined the objective of the Basic Regulation in the context of a substantively distinct inquiry with different claims and legal provisions at issue than those in the present case, the Panel declines to accept Norway's request.

Paragraphs 7.458 and 7.478

6.48.
Canada noted in its comments that the last sentences of paragraphs 7,458 and 7,478 were in its view contradictory. Canada requested the Panel to harmonize the two paragraphs and indicated its preference for the formulation in paragraph 7,458. The European Union argued that there is no contradiction between the sentence in 7,458 and the findings reported in paragraphs 7,459, 7,460, and 7,478.
6.49.
The Panel does not consider the statements in these paragraphs to be contradictory; the Panel made minor revisions to paragraph 7,458 for clarity.

Paragraphs 7.588-7.609 (Sections 7.4.2 and 7.4.3)

6.50.
Norway argued that the Panel's decision to address Canada's claim under Article 2.1 of the TBT Agreement before addressing the complainants' claims under Articles I:1 and III:4 of the GATT 1994 resulted in Norway's position being overlooked in both parts of the Reports. Specifically, Norway expressed concern regarding the Panel's treatment and disposition of its discrimination claims under Articles I:1 and III:4 of the GATT 1994 in view of the cross‑referencing made in paragraphs 7,594 and 7,597 to the Panel's analysis of Canada's claim under Article 2.1 of the TBT Agreement.
6.51.
The Panel added references to the arguments and evidence submitted by Norway in support of its claims under Articles I:1 and III:4 of the GATT 1994 in paragraphs 7,594 and 7,597 of the Reports, and deleted some of the cross-references to Section 7.3.2 of the Reports.

Other paragraphs and footnotes

6.52.
Finally, the Panel made a number of additional modifications to its Reports further to the comments by Canada46 and Norway47, in cases where the Panel considered that the proposed changes improved the clarity of the parties' arguments or the overall accuracy of the Reports.

6.4 Additional documents submitted by the European Union with its comments on the Interim Reports

7 findings

7.1 Overview of the dispute

7.1.
This dispute concerns a 2009 European Union measure relating to the sale of seal products (EU Seal Regime). Under the measure, the placing of seal products on the market is prohibited in the European Union unless they satisfy certain conditions. One such condition applies to seal products obtained from seals hunted by Inuit or indigenous communities (IC condition). The other applies to seal products obtained from seals hunted for marine resource management (MRM condition). Travellers may also be able to bring seal products into the European Union in limited circumstances (Travellers condition). The Regime lays down specific requirements for all three conditions.
7.2.
Canada and Norway claim that the EU Seal Regime violates the European Union's various obligations under the GATT 1994 and the TBT Agreement. First, the complainants allege that the IC and MRM conditions of the EU Seal Regime violate the non-discrimination obligations under Articles I:1 and III:4 of the GATT 1994. Canada also presented a claim under Article 2.1 of the TBT Agreement with respect to the IC and MRM conditions. The complainants argue that the IC and MRM conditions accord seal products from Canada and Norway (imported products) treatment less favourable than that accorded to like seal products of domestic origin, mainly from Sweden and Finland (domestic products) as well as those of other foreign origin, particularly from Greenland (other foreign products). Second, the complainants argue that the EU Seal Regime creates an unnecessary obstacle to trade that is inconsistent with Article 2.2 of the TBT Agreement because it is more trade restrictive than necessary to fulfil a legitimate objective. Third, the complainants argue that certain procedural requirements under the EU Seal Regime violate the requirements for conformity assessment under Article 5 of the TBT Agreement. Fourth, the complainants claim that each of the IC, MRM, and Travellers conditions of the EU Seal Regime impose quantitative restrictions on trade inconsistently with Article XI:1 of the GATT 1994. Finally, the complainants submit that the application of the EU Seal Regime nullifies or impairs benefits accruing to them under the covered agreements within the meaning of Article XXIII:1(b) of the GATT 1994.
7.3.
The European Union asserts that the measure is fully consistent with its WTO obligations. The European Union claims that the EU Seal Regime is aimed at addressing public moral concerns on the welfare of seals. The EU Seal Regime is thus not based on conservation concerns. The complainants contest the objective of the measure as put forward by the European Union. According to the complainants, the measure pursues a multiplicity of objectives such as the protection of seal welfare; the protection of the social and economic interests of Inuit or indigenous communities; and the promotion of sustainable marine resource management. Based on its identified objective, the European Union argues that any inconsistencies of the measure under the GATT 1994 should be justified under the general exceptions provisions of the GATT 1994, namely Articles XX(a) and XX(b), because the measure is necessary to protect public morals (regarding the welfare of seals) and to protect seals' health, respectively. Further, the European Union argues that any distinction made under the EU Seal Regime, for instance a distinction based on the type and purpose of the hunt, is legitimate within the meaning of Article 2.1 of the TBT Agreement. The European Union also contends that no other measure can protect its public moral concerns on seals at the same level as does the current Regime.
7.4.
Factually, the parties debated extensively whether humane killing methods can be applied, monitored, and enforced in seal hunts. The European Union's justification of its measure is based on the premise that the application and enforcement of humane killing methods in seal hunting are not always feasible because of inter alia the unique environmental conditions in which the hunting takes place. The European Union asserts that due to the "inherent" inhumane nature of the hunts, particularly hunts conducted for commercial purposes, the European public is ethically and morally repelled by the presence on the EU market of seal products. Hence, a general ban as designed under the current measure is the only effective way to protect the public moral concerns. The complainants argue that humane killing methods can be properly enforced in seal hunts. Further, they underline that as the current measure does not condition market access on the humaneness with which seals are killed, seal products derived from seals killed inhumanely may be allowed on the EU market. This, in their view, proves that the current measure is not capable of protecting the welfare of seals. Both sides have submitted a voluminous amount of evidence, mostly based on scientific studies and expert statements, pertaining to whether the application and monitoring of humane killing methods can be enforced in seal hunting practices.
7.5.
Legally, the Panel is presented with the task of inter alia examining the obligations under, as well as the relationship between, the GATT 1994 and the TBT Agreement. In the current dispute, the two complainants brought claims under both agreements, namely Articles I:1, III:4, and XI:1 of the GATT 1994 as well as Articles 2.2, 5.1.2 and 5.2.1 of the TBT Agreement. Canada also brought a claim under Article 2.1 the TBT Agreement.
7.6.
These Reports are structured in the following order: (i) preliminary matters; (ii) the measure's qualification as a technical regulation; (iii) claims under the TBT Agreement; (iv) claims under the GATT 1994 and the Agreement on Agriculture; (v) non-violation claim under Article XXIII:1(b) of the GATT 1994; and (vi) our conclusions and recommendations.

7.2 Preliminary matters

7.2.1 Description of the measures at issue

7.7.
As described in the Factual Aspects section above, Canada and Norway are challenging the following two EU legal instruments in this dispute:

a. Regulation (EC) No. 1007/2009 of the European Parliament and of the Council of 16 September 2009 on trade in seal products, Official Journal of the European Union, L Series, No. 286 (31 October 2009)51; and

b. Commission Regulation (EU) No. 737/2010 of 10 August 2010 laying down detailed rules for the implementation of Regulation (EC) No. 1007/2009 of the European Parliament and of the Council on trade in seal products, Official Journal of the European Union, L Series, No. 216 (17 August 2010).52

7.8.
For the purpose of this dispute, the Panel will use the following terms: "the Basic Regulation" for Regulation (EC) No. 1007/2009, "the Implementing Regulation" for Commission Regulation (EU) No. 737/2010, and "the EU Seal Regime" for these two legal instruments combined together.53
7.9.
We briefly describe the contents of the two Regulations below.

7.2.1.1 The Basic Regulation

7.10.
The Basic Regulation consists of a preamble (21 recitals) and eight provisions ((1) "Subject matter"; (2) "Definitions"; (3) "Conditions for placing on the market"; (4) "Free movement"; (5) "Committee procedure"; (6) "Penalties and enforcement"; (7) "Reporting"; and (8) "Entry into force and application").
7.11.
The preamble of the Basic Regulation refers to inter alia concerns and observations on seal hunting as well as seal products resulting from such hunts. The Panel will examine specific parts of the preamble in the context of its examination of the parties' claims and arguments.
7.12.
Article 3 of the Basic Regulation lays down the rules regarding "conditions for placing on the market" of seal products:

Article 3

Conditions for placing on the market

1. The placing on the market of seal products shall be allowed only where the seal products result from hunts traditionally conducted by Inuit and other indigenous communities and contribute to their subsistence. These conditions shall apply at the time or point of import for imported products.

2. By way of derogation from paragraph 1:

(a) the import of seal products shall also be allowed where it is of an occasional nature and consists exclusively of goods for the personal use of travellers or their families. The nature and quantity of such goods shall not be such as to indicate that they are being imported for commercial reasons;

(b) the placing on the market of seal products shall also be allowed where the seal products result from by-products of hunting that is regulated by national law and conducted for the sole purpose of the sustainable management of marine resources. Such placing on the market shall be allowed only on a non-profit basis. The nature and quantity of the seal products shall not be such as to indicate that they are being placed on the market for commercial reasons.

The application of this paragraph shall not undermine the achievement of the objective of this Regulation.

7.13.
Article 3(1) of the Basic Regulation prescribes that the placing on the market of seal products is allowed "only where the seal products result from hunts traditionally conducted by Inuit and other indigenous communities and contribute to their subsistence" (IC hunts). The provision also states that for imported products, these conditions are applied at the time or point of import.
7.14.
Article 3(2) describes two situations where the condition set out in paragraph 1 does not apply: first, the import of seal products is allowed where it is of an occasional nature and consists exclusively of goods for the personal use of travellers or their families (Travellers imports); second, the placing on the market of seal products is allowed where the seal products result from by-products of hunting that is regulated by national law and conducted for the sole purpose of the sustainable management of marine resources (MRM hunts).
7.15.
Specific requirements for each of the three conditions for importing and/or placing seal products on the market are elaborated in the Implementing Regulation.

7.2.1.2 The Implementing Regulation

7.16.
The Implementing Regulation comprises a preamble (13 recitals) and twelve provisions.
7.17.
The preamble refers to the need to specify detailed requirements for the import and placing on the market of certain seal products and the principles to be applied in setting out procedures for adequate verification of compliance with such requirements, as well as for the control of attesting documents.
7.18.
Unlike the Basic Regulation, a specific title is not assigned to each of the provisions in the Implementing Regulation. The purpose of the Implementing Regulation is set forth in Article 1: to "lay [] down detailed rules for the placing on the market of seal products pursuant to Article 3" of the Basic Regulation.
7.19.
Articles 3, 4, and 5 of the Implementing Regulation address the specific requirements for each of the three conditions mentioned in Articles 3(1) and 3(2) of the Basic Regulation.
7.20.
Specifically, Article 3 sets out that, to fall under the IC hunts category, seal products must originate from seal hunts that satisfy the following three conditions:

a. seal hunts conducted by Inuit54 or other indigenous communities55 which have a tradition of seal hunting in the community and in the geographical region;

b. seal hunts the products of which are at least partly used, consumed or processed within the communities according to their traditions; and

c. seal hunts which contribute to the subsistence of the community.

7.21.
Article 4 sets out that, to fall under the Travellers imports category, one of the following three requirements must be fulfilled:

a. the seal products are either worn by the travellers, or carried or contained in their personal luggage;

b. the seal products are contained in the personal property of a natural person transferring his normal place of residence from a third country to the Union; or

c. the seal products are acquired on site in a third country by travellers and imported by those travellers at a later date, provided that … those travellers present to the customs authorities … the following documents:

i. a written notification of import; and

ii. a document giving evidence that the products were acquired in the third country concerned.

7.22.
Article 5 provides that, to fall under the MRM hunts category, seal products must originate from seal hunts that satisfy the following three conditions:

a. seal hunts conducted under a national or regional natural resources management plan which uses scientific population models of marine resources and applies the ecosystem-based approach;

b. seal hunts which does [sic] not exceed the total allowable catch quota established in accordance with the plan referred to in point (a); and

c. seal hunts the by-products of which are placed on the market in a non-systematic way on a non-profit basis.56

7.23.
Articles 3(2) and 5(2) require that, at the time of placing on the market pursuant to Articles 3(1) and 3(2)(b) of the Basic Regulation and Articles 3 and 5 of the Implementing Regulation (i.e. products resulting from IC and MRM hunts), the seal product be accompanied by the attesting document referred to in Article 7(1) of the Implementing Regulation.
7.24.
Articles 6 through 10 prescribe the procedural requirements that must be met to place seal products on the market. For a seal product to be placed on the market, it must be accompanied by an attesting document (Article 7) issued by a recognized body (Article 6). A reference to the attesting document number must be included in any further invoice (Article 7(4)). A model attesting document is attached as an annex to the Implementing Regulation.

7.2.2 Consideration of the measures at issue

7.2.2.1 Single or multiple measure(s)

7.25.
As noted above, the EU Seal Regime consists of the Basic Regulation and the Implementing Regulation. The Basic Regulation was adopted by the European Parliament and Council of the European Union on 16 September 2009; it sets forth the "conditions for placing on the market" of seal products. Pursuant to Article 3(4) of the Basic Regulation, the Implementing Regulation was subsequently adopted by the European Commission on 10 August 2010. The Implementing Regulation lays down the specific requirements necessary for implementing the rules in the Basic Regulation.
7.27.
Treating both the Basic and Implementing Regulations as a single measure does not mean that different aspects of the EU Seal Regime cannot be challenged under different provisions of the WTO covered agreements. In fact, we note that in presenting their claims that the EU Seal Regime is inconsistent with several provisions of the GATT 1994 and the TBT Agreement, the complainants focus at times on specific aspects of the EU Seal Regime and at other times on the EU Seal Regime as a whole.58

7.2.2.2 Characterization of the measure at issue

7.28.
Despite their common understanding that the EU Seal Regime should be treated as a single measure, the parties disagree on how the EU Seal Regime should be characterized for the purpose of this dispute. Briefly stated, the complainants argue that the EU Seal Regime provides for three sets of specific requirements concerning the importation and/or the placing on the market of seal products. The respondent submits that the EU Seal Regime consists of a general ban on seal products with certain exceptions.
7.29.
As it is important for the Panel to start its analysis with the proper understanding of the measure at issue, we now turn to the question of how the EU Seal Regime must be characterized.

7.2.2.2.1 Main arguments of the parties

7.2.2.2.1.1 Complainants

7.30.
Canadaargues that the EU Seal Regime should be viewed as setting out requirements concerning the importation of seal products.59 Article 3 of the Basic Regulation and Articles 3, 4, and 5 of the Implementing Regulation establish a comprehensive regime of conditions that is simultaneously restrictive and permissive and determines when seal products may be imported and placed on the market in the European Union, or are prevented from accessing it. According to Canada, these provisions, when read together based on their design, structure, and expected operation, lead to the conclusion that the EU Seal Regime is accurately described as "requirements concerning the importation of seal products".60 The texts of the Regulations do not support the characterization of the measure as a general ban with certain exceptions as the term "prohibition" or "ban" is not used.61
7.31.
Canada submits that the conditions under the EU Seal Regime are divided into three categories or sets of requirements: seal products derived from IC hunts; seal products derived from MRM hunts; and seal products imported as Travellers imports.62 Seal products that satisfy the conditions pertaining to the Travellers imports are eligible to be imported; in the case of IC hunts and MRM hunts, seal products are eligible to be imported and placed on the market. Seal products that do not fall within any of these categories are not eligible to be imported or placed on the market, although neither the Basic Regulation nor the Implementing Regulation states expressly that such products are prohibited from importation or from being placed on the market.
7.32.
Norway submits that the EU Seal Regime does not comprise a ban (on the sale or import of seal products) with separate exceptions.63 Rather, the Regulations combine permissive and prohibitive elements both formally and in substance, laying down three sets of market access conditions that constitute restrictive gateways for the sale and importation of seal products. Particularly, neither the Basic Regulation nor the Implementing Regulation contains the term "General Ban" as distinct from "exceptions".
7.33.
Norway submits that, in assessing whether a measure imposes a trade "restriction", neither the generality of a rule nor its association with an exception is important.64 Rather, what matters is whether a measure imposes conditions that, by nature or effect, place limits on trade.65 Hence, in characterizing a measure for purposes of WTO obligations addressing trade restrictions, a panel must ascertain whether a measure imposes a "limiting condition" and, if so, assess whether that condition is WTO-consistent. Each of the three requirements in the EU Seal Regime includes a series of specific requirements that place limits on EU market access with respect to both the placing on the market and the import of products. According to Norway, the subject matter of this dispute is these specific limiting conditions, which are the legal source of the market access restrictions on Norwegian seal products.
7.34.
In response to a question from the Panel on their understanding of the measure as described in their respective panel requests, the complainantssubmit that their position on the characterization of the measure does not substantively differ from that contained in the panel requests.66

7.2.2.2.1.2 Respondent

7.35.
The European Union argues that the EU Seal Regime should be considered as a "General Ban coupled with three exceptions".67 Article 3(1) of the Basic Regulation sets forth the "General Ban" on the placing on the market of seal products, applied at the point of importation in the case of imported products, together with the main exception (the IC exception) and two additional exceptions (the MRM exception and the Travellers' exception).
7.36.
The European Union argues that the complainants' proposition (i.e. three trade-restrictive requirements) is overly formalistic. From a logical point of view, the Basic Regulation's conditional authorization ("the placing on the market of seal products shall be allowed only where") has the same meaning as other propositions such as "the placing on the market of seal products shall not be allowed unless" or "the placing on the market of seal products shall be prohibited except where". The European Union also refers to the legislative history and the recitals of the Basic Regulation, which in its view confirm that the EU legislators sought to enact a general ban subject to certain exceptions.68
7.37.
The European Union asserts that the complainants' position is based on their belief that it allows them to claim that the EU Seal Regime makes no contribution to the overarching policy objective pursued by the European Union (addressing public moral concerns related to animal welfare). For the European Union, the complainants' argument is a "manifest non sequitur"69 in that it suggests that the EU Seal Regime as a whole makes no contribution to its stated objective because none of the three requirements (in reality, exceptions) contributes to the objective. The European Union maintains that there can be no question that the EU Seal Regime has the effect of prohibiting the placing on the market of seal products where none of the three so-called "requirements" is met.
7.38.
According to the European Union, the complainants' position is also at odds with the characterization of the measure included in the panel requests. If the EU Seal Regime did not provide for a ban subject to exceptions, but rather for three self-standing "requirements", both Norway's and Canada's panel requests were manifestly incorrect and deficient in that they failed to "present the problem clearly". Thus, were the Panel to decide that the EU Seal Regime cannot be characterized as a General Ban subject to three exceptions, the European Union requests the Panel to find that the complainants' panel requests do not meet the requirements of Article 6.2 of the DSU and to reject all the claims submitted by them.70

7.2.2.2.2 Analysis by the Panel

7.39.
We begin our examination of the measure with a consideration of the text of the Basic Regulation and the Implementing Regulation.
7.40.
Article 1 of the Basic Regulation, entitled "Subject matter", states that the Regulation "establishes harmonised rules concerning the placing on the market of seal products". Article 3, entitled "Conditions for placing on the market", starts with a paragraph prescribing that the placing on the market of seal products shall be allowed only where the seal products result from IC hunts. It also explains that the conditions in the first paragraph shall apply at the time or point of import for imported products.71 The wording of the first paragraph of Article 3 thus indicates that this is the only situation where seal products can be placed on the EU market.72
7.41.
The second paragraph of Article 3 begins with the phrase "by way of derogation from paragraph 1" and provides for two situations where derogation from paragraph 1 is allowed. First, the placing on the market of seal products on a non-profit basis is allowed where a seal product is derived from MRM hunts and is not being placed on the market for "commercial reasons" (Article 3(2)(b)).73 Second, the import by travellers of a seal product is allowed (Article 3(2)(a)) to the extent that it is not "for commercial reasons".74 The Regulations do not define the term "commercial reasons".75
7.42.
Based on the text of Article 3 of the Basic Regulation, therefore, we understand that the measure operates as follows:

· seal products derived from IC hunts may be imported and/or placed on the EU market;

· seal products derived from MRM hunts may be placed on the EU market when it is on a non‑profit basis and is not for commercial reasons; the text does not indicate whether the conditions also apply to imported products; and

· seal products for personal use of travellers or their families may be imported for non‑commercial reasons; however, the placing on the market of such products is prohibited.

7.43.
Therefore, although seal products of both Travellers imports and IC hunts, along with seal products allowed for transit and other commercial activities under the measure76, may be imported into the European Union (i.e. enter "the customs territory of the Community")77, only the products of IC hunts may also be placed on the EU market.
7.44.
Further, despite the absence of any reference to imported products, the complainants consider that, like in the case of seal products obtained from IC hunts, the conditions governing the placing on the market of seal products of MRM hunts also apply at the point or time of importation for seal products of foreign origin.78 The European Union has also confirmed that this is a correct understanding.79
7.45.
Overall, the practical implication of Article 3 is that seal products derived from hunts other than IC or MRM hunts cannot be imported and/or placed on the EU market. Canada and Norway claim, and the European Union does not dispute, that most of the seal products from Canada and Norway are derived from hunts that are not IC or MRM hunts as defined by the measure and are consequently prevented from accessing the EU market.80
7.46.
We note that the operative part of the Basic Regulation does not use words such as "prohibit" or "ban". Rather, as described in the preceding paragraphs, it prescribes the specific conditions under which the import or placing on the EU market of seal products is allowed. Nevertheless, the use of the word "only" in the first paragraph of Article 3, combined with the phrase "by way of derogation" in the second paragraph, signifies that the import and placing on the EU market of seal products are not allowed other than in the situation specified in the first paragraph, plus two further circumstances set out in the second paragraph of Article 3. In other words, having regard to the design and structure of the Basic Regulation, and in the light of the text of that Regulation, the measure effectively operates as a prohibition on seal products that do not meet the conditions under the measure.
7.48.
Several recitals in the preamble also address the economic and social interests of Inuit communities engaged in seal hunting and the desire to empower the Commission to define the three conditions as currently reflected in the Basic Regulation for the placing on the market or import of seal products. The preamble thus describes inter alia the circumstances leading to the adoption of the Basic Regulation, the general rule under the measure not to allow seal products, and the need to define the three conditions under which seal products are allowed.
7.49.
Turning to the Implementing Regulation, we note that it lays down detailed rules, including procedural requirements, for the placing on the market of seal products of both domestic and foreign origin under the three conditions specified in the Basic Regulation. Apart from that, the Implementing Regulation does not provide any further indication to assist us in understanding the character of the EU Seal Regime as a whole.
7.50.
Having examined the texts of the Basic Regulation and the Implementing Regulation, we also observe that the respective panel requests of the complainants describe the EU Seal Regime as the "trade ban"81 or "general prohibition"82 on the importation and sale of seal products, with certain exceptions. This suggests to us that the complainants understood the Regime to function as a ban with exceptions. For the complainants, regardless of the form of the Regime, it operates as a ban with respect to their seal products, while it does not operate as such with respect to other seal products, in particular those from the European Union and Greenland.83
7.51.
In their written submissions, both complainants emphasize that the EU Seal Regime combines permissive and prohibitive elements, laying down three sets of market access conditions that determine when seal products may or may not be imported and/or placed on the EU market.84 In other words, for the complainants, the EU Seal Regime essentially allows certain seal products and prohibits all other seal products. Canada asserts that although the EU Seal Regime is on its face framed as a measure governing the placement of seal products on the EU market, in practical terms it does little more than impede imports of seal products from Canada, Norway, and other WTO Members, while continuing to allow seal products from favoured exporting countries such as Greenland and domestic seal products.85 Similarly, Norway submits that it characterizes the measure in the same way the European Union did when notifying the Implementing Regulation, namely, the measure establishes three sets of requirements that specify conditions that must be fulfilled for seal products to be placed on the EU market. Norway notes that these "three sets of requirements simultaneously combine, both in form and in substance, the prohibitive and permissive elements of the measure".86
7.52.
Like the complainants, we also consider that it is the three conditions set out in Article 3 of the Basic Regulation that, taken together, both allow and prohibit the placing on the market of seal products. By allowing seal products only under a defined condition complemented by two derogations, the measure effectively prohibits all seal products that do not fit into the specifications of those three requirements. For imported products that do not meet the conditions for one of the three requirements, therefore, the measure as a whole effectively works as an import ban. The fact that the measure is phrased in a positive form does not change the substantive character of the measure as both prohibiting seal products and allowing them upon meeting certain specific conditions.
7.53.
Additionally, we observe that under the EU Seal Regime, seal products may also enter the territory of the Community in the following circumstances: (a) seal products may transit across the European Union; (b) seal products may be processed in the European Union for export under an inward processing scheme87, using seal inputs regardless of their source; and (c) seal products may be sold for export at EU auction houses. Therefore, in addition to the explicit exceptions enshrined in the Regulations (i.e. IC, MRM, and Travellers exceptions), the EU Seal Regime also creates implicitexceptions for seal products for transit, inward processing, and importation for auction and re‑export.88
7.54.
To the extent that the complainants' contention about the nature of the measure is related to their view that the measure cannot be described as a "general" ban as described by the European Union because certain seal products are allowed under the measure, we recall the Appellate Body's finding in EC-Asbestos that the measure in that dispute was nota total prohibition on asbestos fibres because it also included provisions that permitted the use of asbestos in certain situations.89 The Appellate Body stated further that to characterize the measure simply as a general prohibition, and to examine it as such, would overlook the complexities of the measure, which included both prohibitive and permissive elements. Similarly, given the exceptions under the EU Seal Regime, we do not consider the EU Seal Regime to constitute a "total" or "general" ban on seal products; rather, the Regime consists of both prohibitive and permissive components and should be examined as such.
7.55.
The measure would have been clearer in expressing its intended purpose and function as a ban on seal products if it had explicitly prohibited the import and placing on the EU market of seal products.90 However, insofar as we can discern the true character of the measure from its design, structure, and expected operation, we need not second-guess the precise reason why the measure was formulated in the present manner.
7.56.
The considerations above, taken together, demonstrate that the EU Seal Regime in its entirety operates as a ban on seal products, combined with an exception and two derogations, forming three conditions prescribed in Article 3 of the Basic Regulation (i.e. seal products obtained from IC hunts, MRM hunts, and those imported under the Travellers imports category). In this connection, for ease of reference, these Reports will refer to these three conditions using the following terms: the "IC hunts/category/exception/requirements" (for the condition in Article 3(1) of the Basic Regulation and Article 3 of the Implementing Regulation); the "MRM hunts/category/exception/requirements" (for the condition in Article 3(2)(b) of the Basic Regulation and Article 5 of the Implementing Regulation); and the "Travellers imports/category/exception/requirements" (for the condition in Article 3(2)(a) of the Basic Regulation and Article 4 of the Implementing Regulation).91

7.2.3 Order of analysis

7.2.3.1 Main arguments of the parties

7.57.
While acknowledging that panels should normally first examine the measure in relation to the agreement that deals specifically, and in detail, with the subject matter addressed by the measure at issue, the complainants suggest, for the reasons set out below, that it is open to the Panel to follow the sequence of claims and arguments set out in the complainants' first written submissions in this dispute.92
7.58.
Both complainants have presented their claims and arguments under the GATT 1994 first, followed by their claims and arguments under the TBT Agreement. Nothing in these claims and arguments would require the Panel to examine the complainants' claims and arguments under the TBT Agreement before it examines their claims and arguments under the GATT 1994. Thus, a panel may begin with the claims that are common to both parties, therefore examining the GATT 1994 first in this dispute.
7.59.
Moreover, Canada invites the Panel to examine the claims under the GATT 1994 first and, should it find that the EU Seal Regime violates Articles I:1 and III:4 of the GATT 1994 and that those violations cannot be justified under Article XX thereof, it may be possible for the Panel to exercise judicial economy with respect to Canada's claims under Article 2.1 of the TBT Agreement.93
7.60.
The European Union suggests that the Panel start its analysis with the claims under the TBT Agreement followed by those under the GATT 1994, leaving the analysis under the Agreement on Agriculture for last.94 The European Union does not consider that the Panel should take into account the difference in the scope of claims between the complainants in deciding the order of its analysis.95

7.2.3.2 Analysis by the Panel

7.61.
The complainants in this dispute raised claims under both the GATT 1994 and the TBT Agreement. Specifically, both complainants brought claims under Articles I:1, III:4, and XI:1 of the GATT 1994 and Articles 2.2, 5.1.2, and 5.2.1 of the TBT Agreement. Additionally, Canada presented a claim under Article 2.1 of the TBT Agreement, and Norway a claim under Article 4.2 of the Agreement on Agriculture.
7.62.
The complainants consider that, given the discrepancy in the scope of claims between the two complainants (i.e. Article 2.1 of the TBT Agreement invoked only by Canada), the Panel may wish to start with the GATT 1994 as this is the agreement under which most of the complainants' common claims are presented. Further, in their view, it could give the Panel the possibility to exercise judicial economy with respect to Canada's claim under Article 2.1 of the TBT Agreement.
7.64.
Here, the Panel is presented with no such mandatory sequence of analysis. We thus need to determine the order of our analysis by focusing on the "structure and logic" of the provisions at issue in this dispute. We are also mindful that it may be useful for panels to take account of the manner in which a claim is presented to them by a complainant Member.98 However, as the Appellate Body has clarified, a panel may also depart from the sequential order suggested by a complaining party.99
7.65.
First, turning to our analysis of the "structure and logic" of the provisions at issue, we recall the Appellate Body's statement in EC-Asbestos:

We observe that, although the TBT Agreement is intended to "further the objectives of GATT 1994", it does so through a specialized legal regime that applies solely to a limited class of measures. For these measures, the TBT Agreement imposes obligations on Members that seem to be different from, and additional to, the obligations imposed on Members under the GATT 1994.100 (emphasis original)

7.66.
We thus consider that if a measure at issue is found to fall within the scope of the TBT Agreement, it is reasonable for such measure to be examined first under the obligations set out in that agreement. In previous disputes where claims were made under two WTO agreements, panels usually addressed first the claim under the more specific and detailed agreement, in accordance with the guidance from the Appellate Body in EC – Bananas III.101 Following this guidance, in EC – Sardines where claims were made under both the GATT 1994 and the TBT Agreement, the panel considered that "if the [measure at issue] is a technical regulation, then the analysis under the TBT Agreement would precede any examination under the GATT 1994."102 The same approach was followed in all three recent TBT disputes: all three panels addressed non-discrimination claims under the TBT Agreement first, exercising judicial economy on the complainants' non-discrimination claims under the GATT 1994 where considered appropriate.103
7.69.
In light of the above, we do not consider that starting with the complainants' claims under the GATT 1994 would be the most logical or economical order of analysis under the circumstances of this dispute. We therefore consider it appropriate to start our analysis with the complainants' claims under the TBT Agreement, followed by those under the GATT 1994.
7.70.
Before turning to our examination of the claims made with respect to the EU Seal Regime, we address the preliminary matter of Norway's request to the Panel under Article 13 of the DSU.

7.2.4 Norway's request under Article 13 of the DSU

7.71.
As described in Section 1, on 16 January 2013, Norway submitted a request for the Panel to exercise its authority under Article 13 of the DSU to seek copies of two legal opinions of the Legal Service of the Council of the European Union (the Opinions). These were also the documents at issue in the European Union's request for a preliminary ruling.104 In its letter of 8 April 2013, the Panel informed the parties of its decision to deny Norway's request. As indicated in the letter, we are providing the reasons for our decision in these Reports.105
7.72.
In its request, Norway contends that the legal opinions would "help complete the record"106 in that publicly available material on the record refers to the Opinions and the original documents would allow the Panel to confirm attributed statements and provide proper context. Norway also argues that it is "fair"107 to request the Opinions from the European Union because it is not seeking public disclosure but rather disclosure within confidential WTO proceedings.108 In addition, Norway asserts that the Opinions are in the possession of the European Union and that "the most reasonable means available to the Panel"109 to access these documents would be to request them from the European Union. Finally, Norway contends that disclosure of the Opinions is necessary to ensure due process and proper adjudication of Norway's claims. Norway primarily claims that the Opinions are "evidence of certain facts relevant to Norway's claims"110 and therefore are not being relied upon for their legal conclusions.
7.73.
The European Union responds that the Council of the European Union had not authorized disclosure of the Opinions, and therefore persons or entities in possession of the Opinions had obtained them unlawfully.111 Further, the European Union argues that the Opinions are not necessary for the proper adjudication of the dispute because the Council Legal Service, which prepared the Opinions, lacks both the authority and capacity to make factual findings. Although Norway portrays the Opinions as constituting factual evidence, the European Union counters that all factual material is derivative of information supplied to the Council Legal Service and already on the record before the Panel. Beyond this, the issues for which Norway cites factual relevance are in reality issues of legal characterization and conclusion rather than factual matters. The European Union also contends that it would be "unfair" to request the Opinions as it "could be required to take position against the legal advice received in confidence from one of its legal services"112, which could risk undermining its right to a fair hearing.
7.74.
Canada considers that Norway's request for information is well-founded and that "the designation or classification of that information as confidential by the party in possession of it is not a barrier to the Panel requesting it".113
7.75.
Further to the Panel's invitation for comments from third parties, the United States emphasizes that a panel should not use its authority under Article 13 of the DSU to make a party's prima facie case and considers that Norway's statements regarding the Opinions' factual relevance to its claims would raise questions in this regard.114 The United States also notes the very sensitive issues implicated by Norway's request, such as the relevance of domestic law and evidentiary status, and that under the present circumstances believes it neither necessary nor appropriate to address arguments or make findings on such issues.115
7.76.
Article 13 of the DSU provides in relevant part:

Article 13: Right to Seek Information

1. Each panel shall have the right to seek information and technical advice from any individual or body which it deems appropriate. However, before a panel seeks such information or advice from any individual or body within the jurisdiction of a Member it shall inform the authorities of that Member. A Member should respond promptly and fully to any request by a panel for such information as the panel considers necessary and appropriate. Confidential information which is provided shall not be revealed without formal authorization from the individual, body, or authorities of the Member providing the information.

2. Panels may seek information from any relevant source …

7.77.
The Appellate Body has interpreted Article 13 of the DSU as "a grant of discretionary authority" for panels that enables them to seek information from any source, including from a Member who is party to a dispute.116 Moreover, "a panel is vested with ample and extensive discretionary authority to determine when it needs information and what information it needs".117 Thus, the exercise of authority under Article 13 of the DSU is to be made with regard to the particular facts and circumstances of each case, including "what information is needed to complete the record, whose possession it lies within, what other reasonable means might be used to procure it, why it has not been produced, whether it is fair to request the party in possession of the information to submit it, and whether the information or evidence in question is likely to be necessary to ensure due process and a proper adjudication of the relevant claim(s)".118
7.78.
In assessing Norway's request, therefore, the Panel considered Norway's request in the light of the Appellate Body's guidance, finding particularly relevant in this case the considerations of the need for the requested information for the Panel's assessment of the matter before it and the consistency with due process for all parties.
7.80.
As to due process, we observed in our preliminary ruling that the complainants had agreed to withdraw the exhibits at issue and that their due process rights would not be affected by the removal of the exhibits from the record. We further determined that the complainants would have an opportunity to provide replacement evidence.121 Norway specifically referred to its due process concerns when it requested that the Panel allow replacement of the evidence it had agreed to withdraw and "an opportunity to address the resulting incomplete sentences and paragraphs in its submission".122 In our preliminary ruling, therefore, we invited the complainants to provide "a brief explanation of [the replacement exhibits'] relevance to the complainants' arguments, referring to the relevant paragraphs in their respective first written submissions".123 Pursuant to this invitation, Norway filed its replacement exhibits and explanation of their relevance with cross-references to its first written submission. We therefore considered that Norway had been "permitted to make its case before the Panel"124 and that the requirements of due process had been fully satisfied.
7.81.
In light of the above, we did not consider the circumstances of Norway's request to warrant the exercise of authority under Article 13 of the DSU and thus decided to deny Norway's request.

7.3 Claims under the TBT Agreement

7.82.
In this section, the Panel examines the complainants' claims under the TBT Agreement. Both Canada and Norway presented claims under Articles 2.2, 5.1.2, and 5.2.1. Additionally, Canada presented a claim under Article 2.1.
7.83.
Before considering the complainants' claims under the TBT Agreement, the Panel must first determine whether the EU Seal Regime constitutes a "technical regulation" within the meaning of Annex 1:1 of the TBT Agreement and thus falls within the scope of the Agreement.

7.3.1 Whether the EU Seal Regime is a technical regulation within the meaning of the TBT Agreement

7.84.
The term "technical regulation" is defined in Annex 1.1 of the TBT Agreement as follows:

Document which lays down product characteristics or their related processes and production methods, including the applicable administrative provisions, with which compliance is mandatory. It may also include or deal exclusively with terminology, symbols, packaging, marking or labelling requirements as they apply to a product, process or production method. (explanatory note omitted)

7.85.
Based on this definition, the Appellate Body has developed a three-tier test to establish whether a document qualifies as a technical regulation:

[There are] three criteria that a document must meet to fall within the definition of 'technical regulation' in the TBT Agreement.First, the document must apply to an identifiable product or group of products. The identifiable product or group of products need not, however, be expressly identified in the document. Second, the document must lay down one or more characteristics of the product. These product characteristics may be intrinsic, or they may be related to the product. They may be prescribed or imposed in either a positive or a negative form. Third, compliance with the product characteristics must be mandatory. … [T]hese three criteria are derived from the wording of the definition in Annex 1.1.125 (emphasis original)

7.86.
The parties do not contest that the EU Seal Regime meets the first and third criteria of the definition, i.e. that it applies to an identifiable group of products and that compliance with the measure is mandatory. The parties disagree, however, on the second criterion of the definition, namely whether the EU Seal Regime "lays down product characteristics or their related processes and production methods [(PPMs)], including applicable administrative provisions".
7.87.
The criteria of the definition are cumulative, and there is no particular order of analysis that we need to follow in assessing whether the EU Seal Regime is a technical regulation.126 Accordingly, we start our analysis with the second criterion of the definition, which is the main issue of contention as to whether the measure at issue qualifies as a technical regulation. We then address the two other elements of the three-tier test that are not disputed by the parties.

7.3.1.1 Whether the EU Seal Regime lays down one or more characteristics of the products or their related PPMs, including applicable administrative provisions

7.3.1.1.1 Main arguments of the parties

7.3.1.1.1.1 Complainants

7.88.
The complainants argue that the EU Seal Regime lays down product characteristics in both positive and negative form. If a product meets the requirements of the IC, MRM, or Travellers categories (i.e. the exceptions), it may possess the characteristic of containing seal. Conversely, if the product does not meet such requirements, then it may not contain seal.127 In determining whether the EU Seal Regime lays down product characteristics, it is not necessary for the exceptions themselves to prescribe product characteristics. In the complainants' view, the issue is whether the exceptions, combined with other elements of the measure, lay down product characteristics.128
7.89.
The complainants further argue that because products falling within one of the three categories must satisfy certain administrative requirements set out in the Implementing Regulation in order to be placed on the European Union market, the EU Seal Regime also sets forth "applicable administrative provisions" within the meaning of Annex 1.1 of the TBT Agreement.129
7.90.
As an alternative to the argument that the measure lays down product characteristics, Norway argues that the EU Seal Regime prescribes related PPMs within the meaning of Annex 1.1. Based on the ordinary meaning of the terms of the definition130, Norway asserts that a PPM is laid down through the IC and MRM exceptions.131 In particular, with respect to the IC category, Norway argues that the IC requirements prescribe a "process" involving a particular course of action (a traditional hunt by specified persons) with a defined end (the production of seal products for community subsistence). Regarding the MRM category, Norway argues that the measure imposes a particular course of action relating to the purpose of the hunt (sustainable marine resource management); the way in which the hunt is conducted (regulated at national level pursuant to a resource management plan); and the way in which the seal products are marketed (not-for-profit, non-commercial nature and quantity). Furthermore, the action also has a defined end (the sale of MRM by-products).132
7.91.
Canada argues for its part that the identity of the producers of a product could be a relevant factor in the identification of a PPM. In particular, Canada notes that "certain elements of the Inuit Communities category could be characterized as processes or production methods".133

7.3.1.1.1.2 Respondent

7.92.
The European Union contests that the EU Seal Regime lays down product characteristics pursuant to the definition set out in Annex 1.1.134 The European Union first argues that the EU Seal Regime prohibits the placing on the market of products which consist exclusively of seal, such as "pure" seal meat, oil, blubber, organs and fur skins, whether processed or not.135 The European Union asserts that this prohibition under the EU Seal Regime is similar to the prohibition of asbestos fibres "as such" in the measure at issue in EC – Asbestos, which the Appellate Body found did not constitute a technical regulation.
7.93.
As regards products containing seal and other ingredients ("mixed" products), the European Union argues that it would be inappropriate for the Panel to limit its analysis to the fact that the EU Seal Regime lays down intrinsic characteristics in the negative form, by providing that all products may not contain seal. The determination of whether the EU Seal Regime lays down product characteristics should also take into account the exceptions, because it is the permissive elements, together with the prohibition, that determine the situations where seal products may be placed on the European Union market.136
7.94.
According to the European Union, what is decisive for the characterization of the EU Seal Regime is that none of the three exceptions lays down product characteristics. The IC exception concerns the type of hunters, the traditions of their communities, and the purpose of the hunt, but not the intrinsic or related features of the products, such as their composition or presentation.137 The MRM exception imposes requirements relating to the size of the hunt, the intensity and purpose of the hunt, and the marketing conditions of the products. In the European Union's view, none of these conditions sets out intrinsic or related features of the products.138 The European Union argues that the EU Seal Regime differs in that sense from the measure in EC ‑ Asbestos, where the exceptions themselves referred to particular characteristics intrinsic to the product.139
7.95.
With respect to the question whether the EU Seal Regime prescribes applicable administrative provisions, the European Union contends that Annex 1.1 addresses only those administrative provisions that apply to "product characteristics or their related PPMs". Given that the procedural requirements set out in the Implementing Regulation are not related to any product characteristics or their related PPMs, such provisions, according to the European Union, do not constitute "applicable administrative provisions" within the meaning of Annex 1.1.140
7.96.
Finally, the European Union argues that the EU Seal Regime does not regulate any PPMs.141 The European Union contends that the measure does not set out methods for the production of seal products, compliance with which would allow their placing on the market. The ban, together with the exceptions, allows the placing on the market of seal products depending on the purpose of the hunt, which has nothing to do with methods for the production of seal products.142 According to the European Union, to include the purpose of production within the meaning of "PPM" would improperly stretch the limit of the concept of "product characteristics and related PPMs".143

7.3.1.1.2 Analysis by the Panel

7.3.1.1.2.1 Aspects of the EU Seal Regime to be examined

7.97.
The parties agree in principle that in determining whether the EU Seal Regime qualifies as a technical regulation, the Panel should consider the measure "as a whole".144 However, the parties disagree on whether both the prohibition and the exceptions under the Regime must individually lay down product characteristics or their related PPMs in order for the measure to qualify as a technical regulation.
7.98.
The complainants contend that the exceptions per se do not have to lay down product characteristics or their related PPMs, as long as the measure as a whole, i.e. through one of its components, meets the criterion. The European Union submits that a measure cannot be characterized as laying down product characteristics on the basis of its prohibitive element alone. If the measure contains not only a ban but also exceptions, these permissive elements should also be taken into account in determining whether the measure as a whole qualifies as a technical regulation.145
7.99.
We recall that, in EC – Asbestos, the Appellate Body emphasized that the measure should be examined as a whole "taking into account, as appropriate, the prohibitive and the permissive elements that are part of it".146 Based on that premise, the Appellate Body examined both the prohibitive and permissive aspects of the measure in that dispute and found:

Viewing the measure as an integrated whole, we see that it lays down characteristics for all products that might contain asbestos, and we see also that it lays down the 'applicable administrative provisions' for certain products containing chrysotile asbestos fibres which are excluded from the prohibitions in the measure. For these reasons, we conclude that the measure constitutes a technical regulation under the TBT Agreement.147

7.100.
In our view, the Appellate Body's analysis of the measure at issue in EC – Asbestos does not suggest that for a measure consisting of a ban and certain exceptions to qualify as a technical regulation, both the prohibition and the exceptions must individually lay down product characteristics or their related PPMs.
7.101.
A panel may have to examine different components of a measure separately in order to make a holistic analysis of the measure's legal character. However, the final decision on the character of the measure must be based on the measure as a whole, "taking into account, as appropriate, the prohibitive and permissive elements that are part of it".148
7.102.
With these considerations in mind, we proceed to examine the prohibitive and permissive aspects of the EU Seal Regime with a view to determining whether the EU Seal Regime, taken as a whole, lays down product characteristics or their related PPMs within the meaning of Annex 1.1.

7.3.1.1.2.2 Whether the EU Seal Regime lays down product characteristics or their related PPMs, including applicable administrative provisions

7.103.
The Appellate Body defined the term "characteristics" in EC – Asbestos as "any objectively definable 'features', 'qualities', 'attributes', or other 'distinguishing mark' of a product".149 Such "characteristics" include not only features and qualities that are intrinsic to the product itself, but also related characteristics, "such as the means of identification, the presentation and the appearance of a product".150 The meaning of the phrase "their related PPMs" has not yet been examined in a WTO dispute.
7.104.
In EC – Asbestos, the Appellate Body found that the prohibition on asbestos fibres as such did not, in itself, lay down any "characteristics" because it simply banned asbestos fibres in their natural state.151 The prohibition on asbestos‑containing products, however, was found to lay down a product characteristic in the negative form by requiring that all products must not contain asbestos.
7.105.
As noted above, the EU Seal Regime prohibits all seal products, whether they are made exclusively of seal or contain seal as an input. The Regime makes an exception with regard to the import and/or placing on the market of seal products in three situations, namely when they result from IC hunts, MRM hunts, or in the case of Travellers imports.152 The Implementing Regulation sets out the specific requirements that seal products must fulfil in each of these three situations.
7.106.
Based on the text of the Regulations, and in light of the reasoning of the Appellate Body in EC – Asbestos, we believe that the prohibition on seal‑containing products under the EU Seal Regime lays down a product characteristic in the negative form by requiring that all products not contain seal.153
7.107.
Further, the Appellate Body considered that, through its exceptions, the measure in EC ‑ Asbestos set out the "'applicable administrative provisions, with which compliance is mandatory' for products with certain objective 'characteristics'".154 On this question, the Appellate Body relied on the panel's finding that the marketing criteria applying to products falling under the exceptions "relate to the characteristics of one or more given products or processes or production methods relating to them".155 According to these criteria, products containing chrysotile asbestos could be marketed provided that there was no substitute fibre available (i) that presented less occupational health risk to workers than chrysotile fibre; and (ii) that met all technical guarantees of safety appropriate to the use. The panel noted that such requirements had to be read in conjunction with administrative provisions requiring a statement and supporting documents to attest that the criteria of the exceptions were satisfied.
7.108.
Similarly, we find that the EU Seal Regime sets out, through its exceptions, the "applicable administrative provisions with which compliance is mandatory" for products with certain objective "characteristics". First, the exceptions define the scope of the prohibition in the EU Seal Regime, albeit implicitly. Second, the nature of the exceptions is to allow products containing seal on the EU market, subject to compliance with strict administrative requirements. Finally, the scope of the exceptions is determined under the Regime based on a set of criteria.
7.109.
Specifically, in order to fall under the IC or MRM exceptions, products containing seal must meet inter alia the following criteria relating to seal hunts from which the seals used as their input are derived: the identity of the hunter (Inuit or indigenous); the type of hunt (traditional Inuit hunts); the purpose of the hunt (subsistence or marine resource management); and the way in which the products are marketed (non‑systematically and on a non-profit basis).156 Any person wishing to import and/or place seal products on the market under these exceptions must have such products certified by a recognized body as meeting the necessary criteria under each exception. Furthermore, the products must be accompanied by an attesting document at the time of placing on the market.157 In addition, with respect to the particular unit of seal products for which it is issued, the attesting document indicates whether the products result from hunts conducted by Inuit or other indigenous communities, or from hunts for the sustainable management of marine resources.158
7.110.
The criteria under the exceptions thus identify the seal products that are allowed to be placed on the European Union market. They do so by defining the categories of seal that can be used as an input for such products; only seals obtained from the specific type of hunter and/or the qualifying hunts may be used in making final products. These criteria in our view constitute "objectively definable features" of the seal products that are allowed to be placed on the EU market and consequently lay down particular "characteristics" of the final products. Therefore, as was the case in EC – Asbestos, the exceptions under the EU Seal Regime identify a group of products with particular "characteristics" through a narrowly defined set of criteria.
7.111.
In sum, the EU Seal Regime considered as a whole lays down characteristics for all products that might contain seal. The Regime also lays down the applicable administrative provisions for certain products containing seal inputs that are exempted from the prohibition under the measure.
7.112.
We recall that in order to meet this criterion of the definition of technical regulation under Annex 1.1 of the TBT Agreement, the complainants must prove that the document lays down either "product characteristics" or "their related PPMs". Since we have found that the measure as a whole lays down product characteristics within the meaning of Annex 1.1 of the TBT Agreement, we do not find it necessary to examine whether the EU Seal Regime also lays down PPMs.

7.3.1.2 Whether the EU Seal Regime applies to an identifiable product or group of products

7.113.
The parties do not contest that the EU Seal Regime applies to anidentifiablegroup of products. The Regime determines whether products may or may not contain seal, depending on whether they meet the conditions of the IC, MRM, or Travellers imports exceptions.159 The range of products covered by the European Union's measure is identifiable by virtue of the presence or absence of the characteristic of being derived or manufactured from, or of containing, seal.
7.115.
We note that in EC – Asbestos, the measure at issue also prescribed a characteristic that effectively applied to all products, namely that they must not contain asbestos. Although the prohibition applied to a large group of products which could not be determined from the terms of the measure itself, the Appellate Body found that the measure applied to an "identifiable" group of products. Like the measure in EC –Asbestos, the prohibition under the EU Seal Regime applies to an identifiable group of products by prescribing that all products may not contain seal.162
7.116.
In addition, we note that numerous product categories to which the EU Seal Regime applies were identified in the European Commission's Technical Guidance Note.163 In our view, this list of products, albeit indicative, is further evidence that the EU Seal Regime applies to an identifiable group of products.164
7.117.
In light of the above, the Panel considers that the EU Seal Regime applies to an "identifiable group of products" in accordance with Annex 1.1 to the TBT Agreement.165

7.3.1.3 Whether compliance with the EU Seal Regime is mandatory

7.118.
The Appellate Body in EC – Asbestos clarified the concept of "mandatory" under Annex 1.1 as follows:

A "technical regulation" must … regulate the "characteristics" of products in a binding or compulsory fashion. It follows that, with respect to products, a "technical regulation" has the effect of prescribing or imposing one or more "characteristics" – "features", "qualities", "attributes", or other "distinguishing mark".166 (emphasis original)

7.119.
The Appellate Body also found that enforceability through the application of sanctions indicated mandatory compliance.167
7.120.
As we stated above in the section on Preliminary Matters, the combined effect of the Basic and Implementing Regulations is to prohibit seal products from the European Union market, except in cases where the products meet the conditions prescribed in Article 3 of the Basic Regulation and Articles 3 and 5 of the Implementing Regulation. These conditions are compulsory from the point of view of seal products being placed on the market; unless these conditions are met, seal products are denied access to the EU market.
7.121.
We further note that the Basic Regulation contains language of a mandatory nature. For example, Article 3(1) provides that "[t]he placing on the market of seal products shall be allowed only where …".168 By way of derogation from Article 3(1), Article 3(2) also sets out circumstances where the placing on the market of seal products "shall be allowed". The use of the words "shall" and "shall only" in the above-mentioned provisions indicate that the terms of the provisions are obligatory. Several provisions of the Implementing Regulation contain similar wording of a mandatory nature.169
7.122.
The European Union's Regime is also supported by enforcement measures, as penalties may apply in case of infringement of the regulation. In particular, under Article 6 of the Basic Regulation, "[EU] Member States shall lay down the rules on penalties applicable to infringements of [the] Regulation".170
7.123.
Finally, we note that both the Basic and Implementing Regulations state that "[the] Regulation shall be binding in its entirety and directly applicable in all Member States." The Appellate Body in EC – Sardines interpreted similar wording contained in the measure at issue in that case as meaning that compliance with the regulation was mandatory.171
7.124.
In light of these considerations, the Panel is of the view that the EU Seal Regime is mandatory within the meaning of the definition in Annex 1.1 of the TBT Agreement.
7.125.
Based on our analysis of the three criteria set out in Annex 1.1 of the TBT Agreement, we find that the EU Seal Regime is a document which "lays down product characteristics … including the applicable administrative provisions, with which compliance is mandatory". Accordingly, the EU Seal Regime constitutes a technical regulation within the meaning of Annex 1.1 of the TBT Agreement.

7.3.2 Canada's claim under Article 2.1172

7.126.
We recall our finding in the previous section that the EU Seal Regime is a technical regulation within the meaning of Annex 1.1 of the TBT Agreement. As such, the EU Seal Regime is subject to the obligations set forth in Article 2.1 of the TBT Agreement.
7.127.
Article 2.1 of the TBT Agreement provides that:

With respect to their central government bodies … Members shall ensure that in respect of technical regulations, products imported from the territory of any Member shall be accorded treatment no less favourable than that accorded to like products of national origin and to like products originating in any other country.

7.128.
We note that Article 2.1 contains a most‑favoured-nation (MFN) and a national treatment obligation. In the present dispute, Canada makes claims in respect of both obligations. With respect to the MFN treatment obligation, Canada contends that the EU Seal Regime gives less favourable treatment to Canadian imports of seal products than to like seal products originating from Greenland. Regarding the national treatment obligation, Canada argues that the EU Seal Regime gives less favourable treatment to its imports of seal products as compared to the treatment accorded to like domestic products.
7.129.
In order to establish that the EU Seal Regime is inconsistent with Article 2.1 of the TBT Agreement, Canada must demonstrate the following: (a) the imported and domestic/other foreign products at issue are like products; and (b) the treatment accorded to imported products is less favourable than that accorded to like domestic and/or other foreign products (less favourable treatment).173
7.130.
The Appellate Body explained the meaning of the term "less favourable treatment" under Article 2.1 of the TBT Agreement as follows: "[A] panel examining a claim of violation under Article 2.1 should seek to ascertain whether the technical regulation at issue modifies the conditions of competition in the market of the regulating Member to the detriment of the group of imported products vis-à-vis the group of like domestic products".174 The Appellate Body added that "[h]owever … the context and object and purpose of the TBT Agreement weigh in favour of interpreting the "treatment no less favourable" requirement of Article 2.1 as not prohibiting detrimental impact on imports that stems exclusively from a legitimate regulatory distinction".175
7.131.
Accordingly, once imported and domestic/other foreign products are found to be like, two elements must be examined to determine whether the measure at issue accords imported products less favourable treatment than that accorded to like domestic/other foreign products: (a) whether the measure causes a detrimental impact on competitive opportunities for the group of imported products vis‑à‑vis the group of domestic/other foreign products; and (b) whether the detrimental impact on imports, if found to exist, stems exclusively from a legitimate regulatory distinction rather than reflecting discrimination against the group of imported products.176
7.132.
In sum, to determine whether the EU Seal Regime violates the MFN and national treatment obligations under Article 2.1 of the TBT Agreement, we need to examine the following three elements:

a. whether the imported and domestic/other foreign seal products are like products;

b. whether the EU Seal Regime causes a detrimental impact on competitive opportunities for the group of imported seal products vis-à-vis the group of domestic/other foreign seal products; and

c. whether the detrimental impact on imports, if found to exist, stems exclusively from a legitimate regulatory distinction rather than reflecting discrimination against the group of imported products.

7.133.
We examine these elements in turn.

7.3.2.1 Like products

7.134.
The first element of Article 2.1 of the TBT Agreement that we examine is whether imported seal products are like domestic and/or other foreign seal products at issue.177
7.135.
According to the Appellate Body, the interpretation of the concept of "likeness" in Article 2.1 of the TBT Agreement entails the following considerations:

The interpretation of the concept of "likeness" in Article 2.1 has to be based on the text of that provision as read in the context of the TBT Agreement and of Article III:4 of the GATT 1994, which also contains a similarly worded national treatment obligation that applies to laws, regulations, and requirements including technical regulations. … [T]he determination of likeness under Article 2.1 of the TBT Agreement, as well as Article III:4 of the GATT 1994, is a determination about the nature and extent of a competitive relationship between and among the products at issue. To the extent that they are relevant to the examination of certain "likeness" criteria and are reflected in the products' competitive relationship, regulatory concerns underlying technical regulations may play a role in the determination of likeness.178 (emphasis added)

7.136.
We thus assess the likeness of products based on inter alia the following criteria: (a) the properties, nature, and quality of the products; (b) the end-uses of the products; (c) consumers' tastes and habits; and (d) the tariff classification of the products.179 As emphasized by the Appellate Body in EC – Asbestos, these four criteria provide a framework for analysing the likeness of particular products on a case-by-case basis and are meant to serve as tools to assist in the task of sorting and examining the relevant evidence.
7.137.
The complainants' claims in this dispute relate to the treatment of seal products in general. As noted above, the EU Seal Regime covers a broad range of products falling under different chapters of the Combined Nomenclature.180 The dispute between the parties is based on the distinction made between seal products that are prohibited under the EU Seal Regime (non‑conforming) and seal products that are allowed because they meet the specific requirements under the exceptions (conforming).
7.138.
We recall that the complainants argue that conforming and non‑conforming seal products are like. The European Union does not contest that all seal products are like products, irrespective of the distinction drawn in the measure between non-conforming and conforming products.
7.139.
The Panel shares the parties' view181 that the type or purpose of the seal hunt does not affect in any way the final product's physical characteristics, end-use, or tariff classification. As regards the criterion of consumers' tastes and habits, the complainants presented evidence to demonstrate that, prior to the EU Seal Regime, consumers did not make any distinction between seal products based on the type or purpose of the hunt.182 This evidence consists of statements by manufacturers and producers of seal products who maintain that the quality of the product, rather than the type or purpose of the hunt, was the main factor for consumers' choice. We note that the European Union has not contested this evidence.
7.140.
Based on the above, we conclude that conforming and non‑conforming seal products are like products within the meaning of Article 2.1 of the TBT Agreement.

7.3.2.2 Whether the EU Seal Regime causes a detrimental impact on imported products

7.3.2.2.1 Main argument of the parties

7.3.2.2.1.1 Canada

7.141.
Canada claims that the EU Seal Regime de facto discriminates against the group of Canadian imports of seal products. Canada argues that a determination as to whether there has been less favourable treatment entails comparing the entire universe of like products (including both conforming and non‑conforming seal products), as opposed to making a "category‑to‑category" comparison within the group of like products (i.ecomparing conforming to conforming, and non-conforming to non-conforming seal products), as suggested by the European Union.183
7.142.
According to Canada, the purpose and scale of the hunt or the ethnic identity of the hunter are irrelevant for the purpose of establishing whether a measure accords less favourable treatment to certain products.184 In Canada's view, to be able to justify differences in treatment between sub‑groups of like products on such a basis would eliminate the possibility of finding de facto discrimination.185 The main element that needs to be taken into account is whether the EU Seal Regime affects the conditions of competition to the detriment of Canadian seal products.186
7.143.
Canada maintains that in the case of the IC exception, the conditions that must be satisfied effectively permit all seal products from Greenland to be placed on the market and to circulate freely between European Union member States.187 At the same time, the conditions exclude the "vast majority" of Canadian seal products from the EU market because the commercial harvest from which the products are derived does not meet the requirements under the IC exception.188 Canada argues that the "design, structure and expected operation" of the IC exception indicate that the Regime will have a detrimental impact on the competitive opportunities of Canadian seal products as compared to their like counterparts from Greenland.189 The fact that there is equal treatment granted to Inuit seal products from Canada and Greenland does not change the fact that there is discrimination against nearly all Canadian seal products.190
7.144.
Similarly, regarding the MRM exception, Canada submits that the Regime effectively allows domestic seal products from Sweden, Finland, and possibly the United Kingdom to be placed on the EU market while excluding virtually all Canadian seal products.191 Through its requirements, the MRM exception conditions market access on the basis of whether seal products are derived or manufactured from seals culled under specific types of marine management programs. Canada asserts that the requirement to adopt an "ecosystem-based approach" for the management plan will likely operate to exclude Canadian seal products from the market because Canadian hunts are based on the sustainability of seal populations and not the eco‑system.192 Furthermore, the "non‑systematic" and "non‑profit" requirements will prevent Canadian imports of seal products from being placed on the Community market because the east coast harvest in Canada is conducted based on a "fixed plan or system", on a yearly basis and for the specific purpose of commercial gain.193 In contrast, according to Canada, "the design, structure, and expected operation of the category indicate that EU seal products are likely to meet those conditions".194

7.3.2.2.1.2 European Union

7.145.
The European Union does not consider that conforming and non‑conforming seal products should be compared for the purpose of assessing whether the EU Seal Regime has a detrimental impact on Canadian imports. For the European Union, conforming and non-conforming seal products are in "different situations". Therefore, the two groups of products cannot be compared to establish whether the measure has detrimentally affected the conditions of competition of Canadian seal products.195 According to the European Union, the analysis must be undertaken within each category of the group of like products, namely by comparing conforming to conforming and non-conforming to non-conforming seal products. Under the EU Seal Regime, products of all origin falling within the same category are treated equally in terms of their access to, or prohibition to access the EU market.196
7.146.
For the European Union, the fact that most of Canada's seal products cannot be placed on its market, while most of the like domestic or other foreign products can be placed on the EU market, is insufficient to establish the existence of a detrimental impact on Canadian seal products.197 When the treatment granted to the group of Canadian imports of seal products as a whole is compared to the treatment granted to the entire group of like products from domestic/other origin, there is no alteration of the aggregate competitive opportunities of Canadian seal products as compared to seal products of domestic or other origin.198
7.147.
With regard to the IC exceptionin particular, the European Union argues that non-Inuit seal products from Canada and Inuit seal products from Greenland are in "different situations" because the two types of hunts differ in respect of their purpose (subsistence on the one hand, profit on the other hand), their intensity, and the moral perception of the EU public.199 The European Union further argues that Canadian Inuit seal products are treated in the same manner under the EU Seal Regime as Greenlandic Inuit seal products.200 The fact that the portion of Greenlandic seal products falling under the IC exception is greater than the portion of Canadian seal products qualifying under the same exception does not make the EU Seal Regime discriminatory per se.201 Moreover, Canada's allegation that the IC exception benefits Greenlandic seal products is unfounded, as not all seal products originating in Greenland will automatically be covered under the IC exception.202

7.3.2.2.2 Analysis by the Panel

7.150.
The "universe" of products covered in this dispute, as agreed by the parties, is reflected in Table 1 below.

Table 1: Group of like seal products

DistinctionDomestic Seal ProductsNorwegian Seal ProductsCanadian Seal ProductsOther Foreign Seal Products
Greenland Other
Non-conforming A B C D E
Conforming (IC and MRM hunts) F G H I J

7.151.
We recall that while the parties agree in principle that all seal products are like, they disagree on the groups of like products to compare for the purpose of determining whether the EU Seal Regime is consistent with Article 2.1 of the TBT Agreement.
7.152.
Canada is of the view that the entire group of imported seal products (including conforming and non-conforming products) should be compared to the entire group of domestic and/or Greenlandic seal products. The European Union considers that the treatment granted under the EU Seal Regime to conforming and non-conforming seal products cannot be compared because these products are in "different situations".
7.153.
We note that the question of the groups of products to be compared was also addressed in US – Clove Cigarettes. In analysing Indonesia's claim under Article 2.1 of the TBT Agreement, the Appellate Body compared clove cigarettes (the imported product subject to the ban) and menthol cigarettes (the domestic product exempted from the ban). The fact that certain non-clove cigarettes from Indonesia were exempted from the ban was not considered relevant to Indonesia's claim that the competitive opportunities for its clove cigarettes, comprising the "vast majority" of Indonesia's exports to the United States, were being negatively affected vis‑à‑vis menthol cigarettes from the United States, comprising the "vast majority" of like domestic cigarettes in the United States.208
7.154.
Thus, contrary to the European Union's position, the Appellate Body's approach suggests that the group of imported products should be compared with the group of domestic or other origin products. Thus, for the purpose of considering Canada's claim under Article 2.1 and with reference to Table 1 above, Canada's seal products (cells C+H), the vast majority of which are non‑conforming products, are to be compared to domestic seal products (cells A+F) and to Greenlandic seal products (cells D+I) respectively. That is so even if a small percentage of seal products from Canada may still be eligible to qualify for placement on the EU market under one of the exceptions.
7.155.
With this in mind, we turn to the question of whether the EU Seal Regime causes a detrimental impact on competitive opportunities for the group of Canadian imported products vis‑à‑vis the group of other imported or domestic like seal products.
7.156.
The Appellate Body confirmed that this question requires consideration of the totality of the facts and circumstances before the panel, and an assessment of the implications for competitive conditions discernible from the design, structure, and expected operation of the measure. Furthermore, the examination of the measure's impact on the market need not be based on the actual effects of the contested measure in the market place.209
7.157.
For the purpose of our analysis, we must therefore assess the "design, structure, and expected operation" of the EU Seal Regime, as well as any other relevant features of the market, which may include the particular characteristics of the industry at issue, the relative market shares in a given industry, consumer preferences, as well as historical trade patterns.210
7.158.
We recall that under the EU Seal Regime, only seal products that meet the requirements under the IC or MRM exceptions may be placed on the EU market. The prohibition against placing on the market applies to all seal products other than those that satisfy the IC and MRM requirements.
7.159.
Considered in light of the specific requirements of the IC and MRM categories, the majority of seals hunted in Canada would not qualify under the exceptions. Canada argues that the prohibition under the EU Seal Regime was specifically targeted at the Canadian non-conforming seal hunt, from which some 95 per cent of all Canadian seal products derive.211 The evidence referenced by Canada suggests that the EU legislation on seals was in fact primarily aimed at excluding seal products resulting from the non-conforming seal hunt in Canada.212 This is not disputed by the European Union.
7.160.
We note that Canada relies on a study conducted at the request of the European Commission in 2010 by COWI, a Danish Consulting Group (COWI 2010 Report), which concludes that only a minority of Canadian seal products are expected to qualify under the IC exception.213 In contrast, the Report finds that the Greenlandic hunt is likely to meet the IC requirements.214
7.161.
Relevant data before us also demonstrate that most if not all of Greenlandic seal products are expected to conform to the requirements under the IC exception, as compared to roughly 5% in Canada, where only a small portion of the overall seal harvest is hunted by Inuit communities.215 Therefore, the share of the total production that would not be eligible to be placed on the market under the IC exception is relatively high (i.e. some 95%) for Canada, whereas most if not all of Greenland's seal products are eligible.216
7.162.
The European Union asserts that seal products from Canada could be eligible for placement on the market under the IC exception, although no entity in Canada has yet made any request to be added to the list of recognized bodies.217 The European Union further contends that it has engaged in "multiple efforts" to assist the Inuit in Canada to benefit from the IC exception.218 Canada does not deny the fact that some of its Inuit seal products could in principle qualify under the IC exception. Canada argues, however, that placing these products directly on the market may be difficult for the Inuit because they have limited access to the distribution networks, processing facilities, and marketing opportunities needed to export their seal products to the European Union.219
7.163.
However, as observed above, the Appellate Body in US – Clove Cigarettes clarified that the fact that a small group of imported products was exempted from the ban in question was not considered relevant when assessing the ban's overall impact on the vast majority of imported products vis-à-vis the majority of like domestic products. Likewise, the possibility that some of Canada's Inuit seal products could enter the EU market does not change the fact that the vast majority of Canada's seal products are in fact excluded from the same market on the basis that they derive from a "non-conforming" seal hunt.
7.164.
We note that Greenland's Department of Fisheries, Hunting and Agriculture was recently recognized for the purpose of Article 6 of the Implementing Regulation.220 As such, Greenland is entitled to deliver attesting documents for the placing on the EU market of Greenlandic seal products. In light of this fact, and taking into account the arguments of the parties, we believe that all, or virtually all, seal products from Greenland are eligible to access the EU market under the IC exception, while the majority of like products produced by Canada do not conform to the requirements of the IC exception and thus are ineligible to benefit under the EU Seal Regime.
7.165.
With regard to the MRM exception, Canada further argues that the requirements a priori exclude virtually all of its seal products. In particular, Canadian seal products would not be eligible under the MRM exception because they derive from seal hunts that take place on a "systematic" and organised basis. Furthermore, sealing is a commercial activity in Canada and therefore the hunt could not qualify under the non-profit requirement. In addition, although the seal hunt in Canada is based on sustainability principles, it does not follow an "ecosystem-based approach" as required under the MRM exception.
7.166.
The European Union notes that, currently, seal products from Sweden accompanied by the relevant document in accordance with Article 5(2) of the Implementing Regulation can be placed on the market under the MRM exception.221
7.167.
The evidence submitted by the complainants suggests that while European Union seal products are likely to benefit from the MRM exception, Canadian seal products are not expected to benefit from the same market access opportunities under the EU Seal Regime.222 A study conducted by COWI in 2008 (COWI 2008 Report) found that a complete prohibition on the placing on the market of seal skins and products derived therefrom would have only a minor economic impact on EU member States.223 This finding was based on the assumption that the transit of seal skins and other products would continue to take place under the EU Seal Regime.224 Conversely, the COWI 2008 Report concludes that the economic impact of the measure would be more significant for non‑EU sealing states, such as Canada and Norway225, based on the importance of the EU market and the fact that the size of the hunt is much larger in these countries.226
7.168.
We observe that the volume of seal products derived from seal hunts covered or potentially covered by the MRM exception is limited.227 Currently, only entities from Sweden are certified as recognized bodies entitled to deliver attesting documents for placing seal products on the EU market.228 In the Panel's view, however, the limited impact of the exception is not relevant to assessing whether the MRM exception negatively affects the competitive opportunities for imported products vis-à-vis like domestic products on the EU market. Even if the MRM exception concerns only a small number of seal products, most of the European Union's seal products are potentially eligible for placement on the EU market under this exception, while virtually all Canadian seal products are not. In light of the above, the Panel considers that the requirements under the IC and MRM exceptions were designed, structured, and expected to operate so as to exclude seal products deriving from the majority of Canadian seal hunts, which are not IC or MRM hunts, from being placed on the EU market. In other words, by virtue of its design, the measure excludes all but a very small percentage of potential products from Canada, while at the same time permitting the majority or all of like products from certain EU members.
7.169.
As a final observation, we address the European Union's position that the treatment granted under the EU Seal Regime to conforming and non-conforming seal products cannot be compared, because these products are in "different situations" with regard to the type of hunt from which each category of products are derived. We note that despite its position on this particular point, the European Union considers that conforming and non-conforming seal products are "like". Based on the examination of the "nature and extent of the competitive relationship between the products in the [EU] market", we found that Canada's seal products are "like" seal products of Greenlandic and EU origin.229 In our view, because the two groups of products were found to be "like", such products can be compared for the purpose of determining the implications of the measure on their competitive relationship on the EU market. We are not persuaded by the European Union's assertion that products found to be "like" may not be compared for the purpose of determining whether one group of products are negatively affected in terms of their competitiveness on the market against another group. In our view, the European Union's argument that conforming and non‑conforming seal products are in "different situations" is relevant to the justification of the regulatory distinction under the EU Seal Regime. As such, this argument can be more appropriately assessed in the context of our subsequent analysis of whether any detrimental impact caused by the measure to the imported products reflects discrimination against such products.
7.170.
On the basis of our examination of the design, structure, and expected operation of the EU Seal Regime, as well as evidence relating to other relevant features of the market, the Panel finds that the Regime has a detrimental impact on the competitive opportunities of Canadian imported products vis‑à‑vis Greenlandic imported and EU domestic products. Next, we turn to the question of whether such detrimental impact caused by the EU Seal Regime results in according less favourable treatment to the imported seal products in violation of Article 2.1 of the TBT Agreement.

7.3.2.3 Whether the detrimental impact caused by the EU Seal Regime "stems exclusively from legitimate regulatory distinctions"

7.171.
We recall the Appellate Body's explanation that the "treatment no less favourable" requirement of Article 2.1 should not be interpreted as prohibiting detrimental impacts on competitive opportunities for imports in cases where such detrimental impact on imports stems exclusively from legitimate regulatory distinctions rather than reflecting discrimination against imported products.230
7.172.
Regarding how to assess whether a detrimental impact on imports stems exclusively from legitimate regulatory distinctions, the Appellate Body stated:

[S]ome technical regulations that have a de facto detrimental impact on imports may not be inconsistent with Article 2.1 when such impact stems exclusively from a legitimate regulatory distinction. In contrast, where a regulatory distinction is not designed and applied in an even‑handed manner — because, for example, it is designed or applied in a manner that constitutes a means of arbitrary or unjustifiable discrimination — that distinction cannot be considered "legitimate", and thus the detrimental impact will reflect discrimination prohibited under Article 2.1. In assessing even‑handedness, a panel must "carefully scrutinize the particular circumstances of the case, that is, the design, architecture, revealing structure, operation, and application of the technical regulation at issue.231

7.173.
We recall that we have found that the IC and MRM exceptions cause a detrimental impact on competitive conditions for Canada's seal products imported on the EU market. In light of the Appellate Body's guidance on the obligations under Article 2.1 of the TBT Agreement, we proceed to examine whether the European Union has established that such detrimental impact stems exclusively from legitimate regulatory distinctions.232 As part of that analysis, we will also evaluate whether the regulatory distinctions are designed and applied in an even‑handed manner and thus do not reflect discrimination against Canadian seal products.
7.174.
Our examination of this question entails an analysis of two main questions: (a) first, what are the relevant regulatory distinctions under the EU Seal Regime; and (b) second, are such regulatory distinctions "legitimate".233 We address these questions in turn.

7.3.2.3.1 "Regulatory distinctions" drawn under the EU Seal Regime

7.175.
The EU Seal Regime distinguishes between seal products that conform to the IC or the MRM requirements under the exceptions (conforming products)234, on the one hand, and those that do not conform to these requirements (non-conforming products), on the other hand.235 Specific requirements for the exceptions are set out in Article 3 of the Basic Regulation and Articles 3 and 5 of the Implementing Regulation; only those products satisfying the IC or MRM requirements under these provisions are allowed on the EU market.236
7.176.
As indicated in the text of the concerned provisions, and as observed in the section on the definition of a technical regulation237, the distinction between conforming and non-conforming products is based on specific criteria relating to seal hunts from which seals are derived and used as inputs in the final products. These criteria include the identity of the hunter (Inuit or indigenous); the type of hunt (traditional Inuit hunts238); the purpose of the hunt (subsistence or marine resource management); and the way in which the products are marketed (non-systematically and on a non-profit basis). The criteria at issue thus do not contain any requirements concerning specific hunting methods.
7.177.
Accordingly, the regulatory distinction drawn by the measure is linked to seal hunts; a particular category of the hunt from which a seal is derived determines whether a certain product containing seal is conforming or non-conforming under the measure. Put simply, products with seal inputs derived from IC or MRM hunts as defined under the measure are allowed, whereas products with seal inputs derived from any other hunts are prohibited. The regulatory distinction that the European Union must justify is therefore that between IC and MRM hunts and hunts that are not IC or MRM hunts.
7.178.
The European Union asserts that this distinction is based on the purpose of the hunt from which seal inputs used in a given product are derived.239 Products from hunts allegedly conducted for "non-commercial" purposes, namely IC and MRM hunts, are allowed, and products from hunts that are "commercial" in nature are prohibited. The European Union contends that these two types of hunts (non-commercial and commercial) present different moral considerations and different levels of animal welfare risks in seal hunting.240 Canada disagrees with the European Union, arguing that the distinction drawn by the European Union between "commercial" and "non‑commercial" hunts is not legitimate. According to Canada, seal welfare concerns exist equally in all seal hunts, irrespective of the type and purpose of the hunt. Further, the purported distinction between commercial and non-commercial seal hunting is illusory because all seal hunts have commercial dimensions.241
7.179.
Given the parties' positions, we must determine whether the distinction between IC and MRM hunts, on the one hand, and commercial hunts, on the other hand, is legitimate and does not reflect discrimination against imported seal products derived from non-IC and non-MRM hunts. In this regard, we are mindful that the parties contest whether the purposes of these hunts can be characterized as "non-commercial" and "commercial" as such. For ease of reference in these Reports, and without prejudice to our ultimate view on the question, we will use the term "commercial hunts" for hunts other than IC or MRM hunts. For the so-called "non-commercial hunts" as referenced by the European Union to indicate IC and MRM hunts, we will use the specific terms "IC hunts" and "MRM hunts".
7.180.
We will begin our analysis with factual aspects of commercial hunts as it is the main distinction drawn by the measure against both IC and MRM hunts. We will then evaluate the specific distinction between commercial hunts and IC hunts and that between commercial seal hunts and MRM hunts to determine whether the respective distinctions are "legitimate" within the meaning of Article 2.1 of the TBT Agreement.

7.3.2.3.2 Preliminary question on commercial seal hunts

7.181.
Throughout the proceedings, the parties debated extensively the characteristics of commercial seal hunts.242
7.182.
In essence, the European Union asserts that seal hunting is inherently inhumane and raises moral concerns especially when the hunting is conducted for commercial purposes. Further, the profit‑oriented nature of the hunt increases the risk that seals may be killed inhumanely. Based on inter alia scientific opinions, the European Union takes the position that a humane killing method cannot be applied effectively and consistently in the circumstances of commercial seal hunts, which constitute the majority of seal hunts in Canada and Norway.243
7.183.
The complainants emphasize the equal presence of a commercial component in all types of seal hunting. On that premise, they assert that the distinction between commercial and other types of hunts has no relevance to animal welfare outcomes in seal hunting. Further, they contest whether there are "inherent obstacles" in seal hunts to the application of humane killing methods and monitoring and enforcement of regulations.244
7.184.
In this section, to make an objective assessment of factual assertions advanced by the parties regarding commercial seal hunts, we examine all factual evidence, including scientific opinions and video recordings, submitted by the parties regarding seal hunting.245 In our review of the evidence before us, we have given due consideration to the arguments of the parties regarding the reliability and credibility of various sources. Specifically, in assessing the evidence in its entirety, we have taken into account inter alia analytical and empirical rigor; relevant expertise of the authors; and the purpose and/or mandate of the studies, statements, and reports submitted to the Panel. The majority of this evidence concerns hunts conducted in Canada and Norway; relatively little scientific or empirical information is provided regarding the actual animal welfare outcomes in hunting conducted in other sealing countries.246 We also note that in support of their respective positions, the parties have extensively cited the findings and conclusions of the Scientific Opinion of the European Food Safety Authority (EFSA Scientific Opinion) on the animal welfare aspects of the killing and skinning of seals.247 The reliability and accuracy of the EFSA Scientific Opinion has not been challenged by any party. Based on the entirety of such evidence, therefore, we will assess the characteristics of seal hunting in general and subsequently the alleged characteristics of commercial seal hunting in particular.

7.3.2.3.2.1 Characteristics of seal hunting in general

7.185.
The alleged unique conditions in seal hunting include the physical environment of the hunts, characteristics of seals, and the application of killing methods in seal hunting. We examine these conditions in turn.

Physical environment

7.186.
The parties do not dispute that the physical environments in which seals live and are hunted can, in certain respects, be distinguished from those existing in the hunting of other wildlife or in the commercial slaughter of farmed animals.248 The parties' disagreement concerns whether the prevalence of such conditions amount to inherent obstacles to humane killing.249
7.187.
The Panelnotes that various seal species are found throughout the world along the coasts of polar, sub-polar, and temperate regions.250 The seal hunts to which the specific physical conditions at issue may be ascribed are those occurring within or near Arctic and sub-Arctic regions, particularly in the Arctic and northern Atlantic Oceans as well as the Barents, White, and Greenland Seas.251 In these regions, seals must be hunted in their marine habitats among varying ice formations, which can create attendant conditions of seal hunting such as variable winds, ocean swells and waves, and low/freezing temperatures.252 This therefore distinguishes the physical environment of seal hunts from that of terrestrial wildlife hunts253 or commercial slaughterhouses.254 Further, we observe that deterioration of ice conditions in sealing regions has been observed in recent years255 and that the volatility of ice conditions may impact the working environment for sealers.256
7.188.
By contrast, certain conditions such as the visibility afforded by the wide open habitat and the manoeuvrability of boats in open ice formations have been suggested to present possible advantages in seal hunting.257 The evidence taken as a whole, however, indicates that the physical conditions of seal hunting are distinct from those present in the hunting of other wildlife or in the commercial slaughter of farmed animals and pose certain additional challenges in seal hunting. Further, the parties agree that the environmental conditions of the Canadian and Norwegian seal hunts are similar in respect of factors influencing the conduct and humaneness of the hunt.258

Characteristics of seals

7.189.
The European Union argues that seals have certain unique features enabling them to stay under water for long periods and that, as a result, seals may experience suffering "peculiar to that species".259
7.190.
The Panelobserves that seals have special anatomical and physiological adaptations as compared to other animals, such as the ability to withstand poor levels of oxygenation over extended periods of time.260 This has been understood by some to create potential for prolonged life and comparatively prolonged suffering, raising concerns as to the application of 'conventional' slaughter processes to seals.261 As a result of these adaptations seals may continue to prolonged display activity while unconscious and even after death, though this characteristic is not limited to seals and is observed in other animals following acute trauma to the brain.262 At the same time, it has been pointed out that the adaptations of seals do not have any effect on killing times for tools causing extensive brain damage (even if they may affect post-stunning or post-mortem reactions).263
7.191.
Although "seals conform to the general mammalian [anatomical] pattern" in terms of their skeleton and internal organs, it has been noted that "compared to terrestrial animals of the same size the seal's body is characteristically torpedo-shaped, the limbs are short and there is a lack of external landmarks on its torso".264 In terms of behaviour, seals may move when or even after they are shot or hit by a hakapik posing a challenge to sealers.265 However, seals have been regarded by some as relatively docile compared to other hunting targets.266

Methods for hunting seals

Humane killing methods in seal hunting

7.192.
The parties acknowledge generally accepted principles of humane killing, described by EFSA as "the act of killing an animal that reduces as much as possible unnecessary pain, distress and suffering i.e. that causes no avoidable pain, distress, fear or other suffering".267 Based on such principles, the parties agree that a three-step killing method is the commonly recognized benchmark for the humane killing of seals.268 This method consists of (a) effective stunning that results in loss of consciousness; (b) checking to ensure loss of consciousness269; and (c) effective bleeding out. These three steps are described below.
7.193.
EFSA and other scientific studies explain that the most commonly applied methods of stunning involve targeting the seal's head with either firearm or clubbing instrument to render it irreversibly unconscious.270 The principal tools used for this purpose are: hand-held striking instruments such as a hakapik (consisting of a wooden handle with a metal ferrule at one end that has a slightly bent spike on one side and a blunt projection on the other)271 or club272; and firearms.273 It may entail multiple shots/blows either to ensure that the seal has been effectively stunned or to cure any previously unsuccessful attempt.274
7.194.
After stunning, the next step requires checking to ensure that the seal is in fact unconscious and insensible to pain. Two generally recognized methods for checking loss of consciousness are "blinking tests" to check corneal reflex and skull palpation to assess physical brain damage. There are certain challenges associated with this step, such as those posed by the physical conditions of seal hunts and neurophysiological features of seals.275
7.195.
Bleeding (or exsanguination) is to be performed on an effectively stunned and checked seal so as to terminate blood flow to the brain and ensure death at the time the seal is skinned.276 In some instances where the seal is killed by the application of stunning, bleeding can be a precautionary step rather than the primary means of killing.277
7.196.
Furthermore, there is considerable evidence to show that the effectiveness of the method used to kill seals is at least partially dependent on the abilities and competence of sealers. For instance, EFSA explained that for any given killing method "the best practice for that method" would involve a competent person with well-maintained equipment278 and that differing observations between studies of seal hunts might be accounted for by "individual differences in sealer behaviour and competence".279

Application of humane killing methods in seal hunting

7.197.
The European Union argues that, although it could be possible in theory to prescribe a humane method for killing seals, in practice the unique conditions in which seal hunting takes place make it impossible to apply and enforce any such method in an effective and consistent manner.280 The complainants submit that the conditions in which seal hunts occur do not create inherent obstacles to humane killing and that, in fact, seals are killed humanely in their respective hunts.281
7.198.
The Panelexamines, based on the evidence before it, the parties' arguments concerning the application of generally recognized humane killing methods at each step of the seal killing process.

Stunning (clubbing282 or shooting)

7.199.
The parties contest whether the physical environment and conditions in which seal hunting occurs form an inherent obstacle to accurate and effective stunning.283
7.200.
The Panelfirst recalls that the most commonly applied stunning methods in seal hunts involve targeting the seal's head with either firearm or clubbing instrument to render it irreversibly unconscious. The evidence before us shows that physical conditions can affect the choice of instrument as well as the manner in which the stunning takes place.284 EFSA, for example, notes that more solid ice accumulation can facilitate the application of short-range tools such as hakapiks, whereas more unstable and sparse ice formations will favour the use of stunning from longer ranges with firearms.285 In light of the observed deterioration of ice conditions in recent hunts, EFSA concludes that the use of rifles is likely to continue to dominate and even to increase if the poor ice conditions persist.286
7.201.
Against this backdrop, we proceed to examine the degree to which stunning methods in seal hunts can be effectively and consistently applied.
7.202.
Regarding the effectiveness of firearms for stunning, the main risk is "the targeted animal being hit with insufficient force and/or accuracy to cause instantaneous death or unconsciousness, and possibly escaping wounded".287 Contributing factors to this risk include firing from excessive distance and unstable platforms (e.g. by the relative motion of the boat and of the ice floe on which the seal is resting). Multiple scientific reports have explicitly correlated the accuracy (and thus effectiveness) of firearms with such environmental factors and the small size of the target (head and upper neck).288
7.203.
At the same time, there is evidence of means employed to enable effective stunning with firearms and to mitigate the risks of inaccurate shooting. For example, the use of optical sights with magnifying lenses on modern rifles can serve to enhance accuracy at the shooting distances relevant for seal hunting.289 Additionally, several sources stress the destructive power of various firearms and ammunition used for stunning that can help ensure that struck animals will be rendered unconscious.290 Finally, there are also suggestions that hunters may exercise their judgment to refrain from attempting to stun seals when poor conditions pose a risk of ineffective stunning.291
7.204.
With respect to what EFSA terms "physical methods" of stunning, namely by striking with a hakapik or other clubbing instrument, there is also evidence detailing the circumstances in which such methods may result in ineffective stunning. As with firearms, an effective stun will largely depend on the accuracy and force of the blow, which in turn can be affected by the stability of the platform, the balance of the hunter, and the hunter's position relative to a potentially moving seal.292 On the other hand, there are indications of the suitability and effectiveness of the hakapik on younger seals due to their relatively weaker skulls and lesser reaction to human intrusion.293
7.205.
We note that the parties have made specific arguments as to the practice of inflicting multiple blows and/or firing multiple shots on a targeted seal during the stunning process.294 On this matter, we do not consider that the infliction of multiple blows or repeated shots is per se unacceptable in terms of animal welfare, given that this practice may be precautionary and not necessarily a consequence of ineffective stunning.295 As a remedial action for an ineffective first stunning attempt, multiple blows or shots could be consistent with humane killing principles to the degree they were performed accurately and rapidly. At the same time, we observe that attempts at re-stunning (particularly with firearms) may pose the same challenges to accurate and effective stunning as in the original instance, but with the possibility of additional obstacles from the motions of a struck seal and the difficulty of determining whether re-application of stunning is required.296
7.206.
The European Union has described the difficulties of effective stunning as part of the inherent obstacles to humane killing in seal hunts. Although the complainants also accept the possibility of ineffective stunning in seal hunts, they dispute the prevalence of its occurrence and implications for the general characterization of the humaneness of methods applied in seal hunts.297 In this regard, EFSA observes that there is a generally a limited amount of data available on animal welfare in seal hunts, including with respect to effective stunning298, and that existing data may give rise to conflicting conclusions, "i.e. uncertainty is high in data interpretation".299 Having due regard for these limitations, our review of available evidence confirms that inaccurate and ineffective stunning by both hakapik and firearms does occur and that seal hunting poses inevitable risks that some seals will not be instantly and effectively stunned.300
7.207.
There is some evidence in the form of data samples and sealing inspector observations that indicate potentially high rates of accurate stunning.301 Though this may serve as empirical confirmation that humane stunning can be carried out in some instances, it does not contradict the existence of risks of ineffective stunning and thus poor animal welfare.302 It is also not clear that the studies claimed to reflect high levels of animal welfare can be conclusively generalized, as they may lack "adequate sampling that is representative of the entire hunt with respect to sample size and sampling design".303 However, even if such data could be extrapolated to the entire hunt, a poor welfare rate of 5% (as found in the most robust data sample of Daoust (2012) with the greatest continuity of evidence) would still reflect a risk of inhumane killing in seal hunts that, depending on the scale of the hunt, could represent the suffering of a large number of seals. Furthermore, there are studies showing potentially less accurate and effective applications of stunning methods304, and accounts given by seal hunt participants likewise demonstrate a certain level of risk and inaccuracy in stunning.305

Checking

7.208.
There is disagreement among experts about the most appropriate method for checking seals to ensure irreversible loss of consciousness. The two principal methods are a corneal reflex "blink test"306 and palpation of the seal's skull.307 While the loss of a blink reflex can indicate loss of consciousness, there have been concerns about its reliability and the difficulty of interpreting seals' reflexes. Skull palpation directly examines the physical damage to the seal's skull and brain, but has drawn concern that consciousness (and therefore sensibility to pain) may persist despite severe damage.308
7.209.
The parties specifically dispute the feasibility of determining the consciousness of seals from a distance when hunted with firearms.309 There is evidence showing that a successful stun can be associated with complete immobility as well as with seizures of varying intensity resulting in a "swimming reflex".310 Furthermore, there is evidence that an unsuccessful stun can be indicated by both continued movement (especially coordinated or "directed" movements) as well as immobility from "fear-induced paralysis".311 Observations have been made that some potentially distinguishing features between these various states would make checking unconsciousness in seals plausible.312 Nevertheless, there is a general recognition that the neurophysiological responses of seals to physical trauma do pose a challenge to the assessment of consciousness, particularly since forms of both movement and immobility can be consistent with either effective or ineffective stunning.313
7.210.
In the event of a gunshot powerful enough to destroy a seal's head, it would be possible to verify death by visual inspection.314 However, even following extensive brain damage seals may "on rare occasions display some coordinated activity, if those parts of the brainstem that are responsible for basal control of breathing and/or motor activity remain intact".315

Bleeding

7.211.
There does not seem to be any dispute that, as an isolated step, bleeding out can be performed effectively in seal hunts. However, the main concerns regarding bleeding out relate to it being performed expeditiously after successful completion of the preceding steps, i.e. on a dead or irreversibly unconscious seal.316

Areas of concern in the application of humane killing methods in seal hunting

Delay

7.212.
The European Union has argued that when seals are shot from a distance it may take extended periods of time for sealers to manoeuvre their vessels into place to retrieve the animals.317 The complainants have argued inter alia that the issue of delay is often irrelevant as shooting seals serves as a combined "stun/kill" method for a majority of seals such that there is no subsequent suffering.318
7.213.
Several sources emphasize that for the three-step method to be an effective and humane way of killing seals, each step must be completed and pursued in immediate (or at least rapid) succession for any given seal.319 We note that there is some divergence as to what degree of delay between steps can still be consistent with humane killing.320 While not being in a position to decide based on the evidence presented to us a discrete minimum lapse of time between completion of the steps of the three-step method for a kill to be regarded as humane, we observe that delay between steps in the killing method can lead to prolonged suffering in seals and enhance the magnitude of poor welfare outcomes.321
7.214.
Regarding actual delays in the killing process in seal hunts, evidence indicates that delays between steps in the killing process are an occurrence in seal hunts and that such delays can be attributable to pervasive characteristics of the hunts, including the physical conditions and the instruments used.322 Evidence specifically confirms that the likelihood of delay is greater when a firearm is the stunning instrument used because of the distance between the sealer and the seal.323

Struck and lost

7.215.
Seals that are wounded and escape beneath the surface of the water are known as "struck and lost". Seals that are struck and lost can die shortly after escaping or survive with injuries that can profoundly affect their continued survival in the wild. There is evidence (including video recordings) showing that instances of "struck and lost" do take place as a part of seal hunting and that shooting seals in open water can contribute to its occurrence.324 Moreover, as concluded by EFSA, "struck and lost rates will also vary with the skill of the hunter and other variables, such as weather conditions."325
7.216.
We note that the available information from different sealing countries, while confirming struck and lost seals, suggests that the actual rates may not be the same. The Canadian government currently estimates a 5% struck and lost rate in the commercial seal hunt, which in many years may be tens of thousands of seals.326 Empirical data from Norway are generally scarce327, and there are varying indications from sealing inspectors of the extent to which struck and lost is a problem in the Norwegian hunt.328 In Greenland, authorities have explained that the hunting of harp seals occurs "exclusively" from small boats with rifles and that the "shooting of seals at substantial distances is the cause of most hunting losses".329 However, because the hunt is conducted year-round, the loss rate varies according to the fat content of seals during different seasons and the salinity of different hunt localities.330 The government of Greenland has reported results from a questionnaire survey showing that 34 per cent of hunters report struck and lost as an ordinary catch when reporting their annual harvest.331

Hooking/gaffing conscious seals

7.217.
Physical conditions and concerns for sealers' safety may demand that the seal be hooked onto the boat if it cannot be checked on the ice.332 This may have potentially severe negative impacts on animal welfare if a seal is conscious and sensible to pain during this process. In recognition of this, EFSA has recommended that "[u]nless they are in the water, [seals] should not be moved, i.e. gaffed, hauled or moved from the position they have come to rest, until it has been confirmed that they are dead or irreversibly unconscious, or have been bled-out."333 Nonetheless, there are many reports and recorded instances of hooking/gaffing of potentially conscious seals in the evidence.334
7.218.
The parties dispute the extent to which hooking/gaffing of conscious seals presents a problem in terms of animal welfare.335 The parties agree, however, that in actual hunts seals are recovered onto vessels with the use of hooks and gaffs336, which is consistent with the possibility of unstable ice conditions (so as to preclude performance of the three steps on ice) and the concomitant increase in the use of firearms. We find compelling evidence to show that the possibility of retrieving seals by hook/gaff is important to the feasibility of commercial seal hunting in Canada337 and Norway338. Furthermore, given the difficulties of assessing the consciousness of the seal and the challenges of re-stunning by firearm, there is a possibility that some seals will be conscious when hooked or gaffed leading to severe negative consequences for animal welfare.339

Monitoring and enforcement of the application of humane killing methods in seal hunting

7.219.
Both Canada and Norway have adopted regulations pertaining to the method for killing seals and for monitoring and enforcing such regulations, and provide for certain monitoring resources and activities for the purpose of achieving compliance with seal hunting regulations.340
7.220.
There is evidence indicating that monitoring and enforcement of humane killing standards in seal hunts can be beneficial from an animal welfare perspective341 but is challenging due to a variety of factors. In particular, the scale of a seal hunt and the large territory over which it can be dispersed contribute to the difficulties of monitoring and enforcing requirements related to humane killing.342 We take note of the fact that there may be different situations with respect to monitoring and enforcement in the seal hunts of different countries. For example, the Canadian hunt is carried out by a considerably greater number of vessels operating in different locations, and many of the regulatory resources are either land-based or confined to a limited number of DFO vessels and helicopter(s).343 The Norwegian hunt is typically conducted with a smaller number of vessels and requires the presence of a government inspector to be on board.344 By way of comparison, in the Greenlandic hunt, conducted by a combination of full-time and part-time hunters year-round and in many locations along the Greenlandic coast, there is some provision for monitoring by wildlife officers.345
7.221.
Nonetheless, we consider there to be difficulties of monitoring and enforcement (as commented upon in the context of each hunt) that exist in seal hunting generally notwithstanding specific differences in the manner of hunting and monitoring. Apart from the scale and large territory of the hunt, additional factors include the constraints of surveillance resources/personnel as well as overall difficulties in sealers' application of regulatory requirements under the actual circumstances of seal hunting.346

Overall assessment

7.222.
Based on the examination of all available evidence in the record, the Panel finds that the circumstances and conditions of seal hunts present certain specific challenges to the humane killing of seals. Such challenges result in a risk in any given seal hunt that the targeted animals may suffer poor animal welfare outcomes of varying intensity and duration.
7.223.
Specifically, there are characteristics of the physical environment of seal hunting that affect the way seals are stunned and that can impact the degree of effectiveness of stunning attempts. We have also noted that attempts to strike or shoot a targeted seal more than once may not ameliorate the risks of ineffective stunning. Combined with the difficulties of assessing the consciousness of seals, seal hunting can present delays in carrying out the killing process and may pose specific animal welfare problems for seals that are struck and lost as well as for seals that are gaffed and hauled onto a sealing vessel while conscious.
7.224.
The challenge of reconciling the requirements of humane killing with the practical risks and difficulties of seal hunting, together with the potentially large territory of the hunt, poses an obstacle to monitoring and enforcement of the application of humane killing methods. Our assessment of the evidence taken together indicates that these risks to seal welfare are present in seal hunts in general.

7.3.2.3.2.2 Characteristics of commercial seal hunting

7.225.
The European Union refers to commercial seal hunts as hunts conducted "for commercial purposes, where seals are killed primarily or exclusively in order to make a profit out of the skins, oil and other products from the hunted seals".347 Apart from the motive to make profits, according to the European Union, this commercial purpose is reflected in other characteristics of the hunt, such as its size (usually large-scale involving tens or hundreds of thousands of seals); intensity (systematic, competitive, and over a short timeframe); and the end-use of the derived products.348 The European Union argues that these conditions characterizing commercial seal hunts therefore distinguish commercial seal hunts from IC and MRM hunts.349
7.226.
Canada and Norway do not contest that the majority of seal hunting conducted in Canada and Norway are commercial hunts with the motive to make profits. Canada and Norway contend however that their commercial hunts are strictly regulated, conducted in a humane manner, and sustainable.350 They further contest that their hunts can be distinguishable from IC and MRM hunts based on the purpose of the hunt as asserted by the European Union: Canada and Norway emphasize the equal presence of a commercial component in all types of seal hunting. We address the parties' arguments on this question in the subsequent section.

Factual aspects of commercial seal hunting

Identity of the hunter

7.227.
Most commercial sealers in Canada are fisherman for whom the seal hunt supplements the income from fisheries.351 There is some conflicting evidence as to the economic significance of sealing to the Canadian coastal communities where the majority of the hunt occurs.352
7.228.
The participants in the Norwegian commercial seal hunt mainly come from communities in northern Norway.353 Norway states that seal hunting contributes to the sustainability of the settlements and workplaces of coastal communities.354

Purpose of the hunt

7.229.
Commercial gain is recognized as one of the main reasons for which seals are killed.355 As noted by EFSA, the rationale for a particular hunt can however include one or more purposes. For example, a commercial seal hunt may generate some products that are consumed or used within the sealers' community while products sold commercially provide income for the livelihood of sealers.356 While noting the possible overlap of purposes, EFSA maintains a distinction between "subsistence hunts" and "commercial hunts", for example when referring to data availability "as the vast majority of available data is from commercial hunts".357
7.230.
Nevertheless, information before us confirms that a "commercial hunt" has commercial profit (rather than direct use or consumption of seal products) as its sole or primary objective.358

Scale of the hunt

7.231.
The size of commercial seal hunts appears to be characterized by a large number of seals killed. There is, however, evidence of differences between commercial hunts in the exact amount of seals killed as well as potentially large fluctuations of seals killed over time for a given commercial hunt. For example, the Canadian harp seal hunt over the past decade has harvested a peak of roughly 365,000 seals, which has declined to just over 40,000 seals in 2011. The Norwegian hunt involved between 15,000 and 20,000 seals prior to the adoption of the EU Seal Regime, but has since fluctuated between approximately 1,000 and 10,000 seals harvested.359
7.232.
Canada has been reported to annually issue around 15,000 seal hunting licenses, though a significantly smaller portion may actually be used.360 In previous years, between 1,500 and 2,200 boats participated in the hunt annually361, although this number has been reduced more recently.362
7.233.
In Norway, the commercial seal hunt is typically carried out by a relatively small number of larger vessels (approximately 60 meters long).363 In recent years, usually two to four ships have participated in the annual hunt in the West Ice, each with a crew of 13 to 15 people.364

Seal hunting period

7.234.
Under Canadian regulations, the season for the commercial hunt of harp and hooded seals in the Front is generally from November 15 to May 15. The specific timing of the hunt can depend on the movement and condition of ice floes, and the majority of the hunt occurs between late-March to mid-May365 beginning around the third week of March in the southern Gulf of St.Lawrence and around the second week of April in the Front.366
7.235.
The Norwegian commercial seal hunt is divided between the "East Ice" and "West Ice" hunts with seasons from April 10 to June 30 and March 23 to May 15 respectively.367 Further, the period of the hunt is determined on the basis of breeding and moulting times of harp seals so as to ensure compliance with the ban on hunting un-weaned pups.368

Hunting methods

7.236.
According to sealing regulations in each country, the permitted hunting tools include hakapiks in both Canada and Norway (as well as clubs in Canada) of specified dimensions as well as firearms of specified power and ammunition. The use of nets is not allowed in the Canadian and Norwegian commercial seal hunts.369

Organization and control of the hunt

7.237.
Both Canada and Norway maintain a licensing system for seal hunting that determines conditions of participation in the hunt.370 In addition, both Canada and Norway establish annual total allowable catch (TAC) quotas, both of which administer these quotas through regional allocations for the various geographic areas of the commercial seal hunt.371 Finally, there are regulations in Canada and Norway imposing requirements on the manner in which the seal hunt is conducted and dealing with the qualifications and training of sealers.372
7.238.
The Canadian commercial seal hunt is carried out by small vessels (less than 35') and "longliners" (35'-65'), and larger vessels may only participate as collector vessels. Smaller vessels may have a crew of 2-5 sealers and generally land daily to offload their catches, while longliner vessels carry larger crews and tend to stay out for a few days at a time.373
7.239.
The Norwegian commercial seal hunt is carried out by registered ocean-going vessels found suitable and equipped for seal hunting.374 The particular manner in which the Norwegian commercial seal hunt is conducted requires the use of large vessels that can operate with equipment and provisions for several weeks at a time.375

Use of products derived from the hunt

7.240.
Evidence shows that commercial hunts are primarily directed toward the sale of seal products such as skins, blubber or oil, and meat. Historically, seal skins and furs have been the primary commodity sold commercially.376
7.242.
With respect to the commercial purpose of the hunt and its relation to the seals killed, Canada states that the pelts of beaters (a weaned harp seal of 3 weeks to 3 months old that has moulted its white lanugo fur) are of higher quality and have greater value in the marketplace.380

Application of humane killing methods in commercial seal hunting

7.243.
We recall our conclusion above that seal hunts in general pose various risks to the welfare of seals, including the risks of ineffective stunning, delays in the killing process, struck and lost seals, and the hooking of conscious seals.
7.244.
In this section, we have examined evidence of the competitive nature of commercial hunts, including how the competitive pressures in the seal hunt may have changed over time. In particular, the allocation of quotas, in combination with the specific time window for hunts381, has been noted to place pressures on sealers to the potential detriment of animal welfare.382 In a similar vein, there is evidence that hunts with commercial profit as their sole or primary objective operate with the incentive to kill more seals in order to maximize profit.383 By contrast, commercial considerations have also been asserted to promote humane practices in seal hunting on the grounds that sealers may want to kill seals efficiently and thus preserve pelt quality by only targeting the seal's head.384 As noted, commercial hunts are also conducted in accordance with licensing schemes and sealing regulations which determine inter alia who may participate in the hunt and when it occurs.
7.245.
Based on the evidence presented before us, therefore, we find that to the extent that commercial motives lead to killing a greater number of seals in hunts conducted within a limited period of time, this may additionally contribute to subjecting seals to the animal welfare risks identified above with respect to seal hunts in general.

7.3.2.3.3 Whether the distinction between commercial hunts and IC hunts is legitimate

7.3.2.3.3.1 Main arguments of the parties

Complainant (Canada)385

7.246.
Canada argues that the detrimental impact of the EU Seal Regime on Canadian seal products through the IC exception is not related exclusively to a "legitimate regulatory distinction".386 To determine whether the detrimental effect on Canadian imports stems from a legitimate regulatory distinction, Canada suggests that the Panel take into account the following factors: first, whether the regulatory distinction at issue is necessary in order to achieve the objectives of the measure; second, whether there is a rational connection between the regulatory distinction and the objectives of the measure in that if there is no rational connection, then the distinction is arbitrary and therefore not legitimate; and, third, whether the evidence shows that the distinction is intended to discriminate against imports as this would undermine the "legitimacy" of the regulatory distinction.387
7.247.
Canada argues that the regulatory distinction between seal products derived from Inuit hunts and those derived from non‑Inuit hunts in no way contributes to the advancement of the EU Seal Regime's animal welfare objective.388 The cultural heritage or ethnicity of the hunters is not a legitimate regulatory distinction because it is unrelated to the central objective of the EU Seal Regime of responding to concerns about animal welfare.389 Canada points out that the European Union is not imposing any animal welfare requirements on Inuit from Greenland, and refers to evidence suggesting that a significant number of seals in Greenland are killed inhumanely, i.e. in a manner likely to lead to avoidable pain or suffering.390
7.248.
Furthermore, Canada argues that, to the extent that seal products derived from hunts in Canada and in Greenland exhibit the same characteristics, they should be afforded the same treatment from a regulatory standpoint.391 Canada contends that there are significant similarities between the historical and socio-economic contexts of seal hunting in Canada and Greenland. According to Canada, in both cases, the practice of sealing is deeply rooted in the culture and tradition of the communities where the hunt takes place; the by-products of seal hunts are not only marketed outside of the country or territory but are also consumed and used in the local economy; seal hunting provides much needed employment in areas where there are otherwise not many opportunities for employment; and seal hunting is a vital and essential source of income for the community. Canada posits further that the Greenlandic seal hunt has also a significant commercial aspect and is "very sophisticated, extensive, well-organized, well-marketed, and international in scope".392 In this respect, Canada argues, the Greenlandic seal hunt is very similar to the Canadian east coast seal harvest.393
7.249.
For Canada, given these similarities between the hunt in Canada and Greenland, the regulatory distinction under the EU Seal Regime is not even-handed, and therefore not "legitimate".394 Canada asserts that the regulatory distinction arbitrarily and unjustifiably discriminates against the vast majority of Canadian seal products395 and observes that except for the condition relating to the 'indigenous' status of the hunter, the Canadian seal hunt meets all of the conditions under the IC exception. Canada maintains that the distinction in the IC category is thus fundamentally one between permitted and prohibited seal products based on the "indigenous" status of the harvester.396
7.250.
Finally, Canada observes that since the adoption of the EU Seal Regime in 2009, Greenland has now surpassed Canada to have the world's largest seal harvest.397

Respondent (European Union)

7.251.
The European Union submits that the "regulatory distinction" under the EU Seal Regime between IC hunts and commercial hunts is "legitimate" because (a) it is based on a legitimate objective, and (b) it is designed and applied in an even-handed manner.398
7.252.
The European Union asserts that if the objective of the IC exception is found to be legitimate, then a fortiori, the regulatory distinction should also be considered "legitimate".399 On this basis, the European Union highlights the importance of seal hunting for the subsistence, cultural identity, and social cohesion of Inuit and indigenous communities.400 Furthermore, the European Union notes that the sale of seal skins, an important by-product of the hunts, serves to cover the hunting expenses incurred by Inuit and indigenous communities.401
7.253.
Further, the European Union submits that the IC distinction is neither "rationally disconnected" from nor does it "undermine" the objective pursued by the EU Seal Regime.402 For the European Union, when assessing the moral implications of seal hunting it is both legitimate and appropriate to take into account the purpose of each type of hunt. The European Union contends that traditional hunts conducted for subsistence purposes do not raise the same moral concerns as commercial hunts conducted solely for the purpose of obtaining products, such as fur, to be used in manufacturing inessential goods.
7.254.
The European Union argues that, in light of the "unique" situation in which Inuit and indigenous communities find themselves, it would have been "morally wrong" for the EU legislator to prohibit the placing on the market of seal products resulting from the hunts traditionally conducted by those communities.403 In essence, for the European Union, seal hunts conducted for the subsistence of Inuit and indigenous communities benefit from an "inherent legitimacy" that "overrides the general concerns over the killing methods for purely commercial motives".404 The European Union stresses that its regulatory approach on seal products, in particular regarding the IC exception, is in line with a consistent body of international law echoing the legitimacy of protecting the interests of Inuit and indigenous communities, and that the European Union is bound by these international legal instruments.405
7.255.
According to the European Union, the IC exception is designed and applied in an even‑handed manner406; it is "calibrated" and does not go beyond what it is necessary to achieve its purpose.407 Moreover, the European Union maintains that the IC exception is not discriminatory because it is equally available with regard to all hunts conducted by indigenous communities, including the Canadian Inuit.408

7.3.2.3.3.2 Analysis by the Panel

7.256.
In this section, we address the question of whether the distinction drawn by the EU Seal Regime between commercial hunts and IC hunts, and consequently between products derived from each category of hunts, is legitimate within the meaning of Article 2.1 of the TBT Agreement.409
7.257.
We recall the Appellate Body's explanation that the "legitimacy" of the regulatory distinctions drawn by a measure must be analysed in light of the objective of the measure and based on inter alia the particular circumstances of the dispute, including the measure's design, architecture, structure, operation, and application of the measure.410 The Appellate Body further explained that where a regulatory distinction is not designed and applied in an even‑handed manner — because, for example, it is designed or applied in a manner that constitutes a means of arbitrary or unjustifiable discrimination — that distinction cannot be considered "legitimate".411
7.259.
The guidance provided by the Appellate Body regarding an analysis of the requirements under Article 2.1 of the TBT Agreement and the chapeau of Article XX of the GATT 1994 therefore suggests that the legitimacy of the regulatory distinction between commercial hunts and IC hunts should be determined by examining the following questions: first, is the distinction rationally connected to the objective of the EU Seal Regime; second, if not, is there any cause or rationale that can justify the distinction (i.e. "explain the existence of the distinction") despite the absence of the connection to the objective of the Regime415, taking into account the particular circumstances of the current dispute; and, third, is the distinction concerned, as reflected in the measure, "designed or applied in a manner that constitutes arbitrary or unjustifiable discrimination" such that it lacks "even-handedness".416
7.260.
We examine these questions in turn.

Whether the IC distinction is connected to the objective of the EU Seal Regime

Characteristics of IC hunts

Identity of the hunter

7.261.
The EU Seal Regime defines "Inuit" as "indigenous members of the Inuit homeland, namely those arctic and subarctic areas where, presently or traditionally, Inuit have aboriginal rights and interests, recognised by Inuit as being members of their people and includes Inupiat, Yupik (Alaska), Inuit, Inuvialuit (Canada), Kalaallit (Greenland417) and Yupik (Russia)"418; and "other indigenous communities" as "communities in independent countries who are regarded as indigenous on account of their descent from the populations which inhabited the country, or a geographical region to which the country belongs, at the time of conquest or colonisation or the establishment of present State boundaries and who, irrespective of their legal status, retain some or all of their own social, economic, cultural and political institutions".419
7.262.
The complainants do not contest the definition of "Inuit" or "other indigenous communities" as stipulated in the EU Seal Regime.

Purpose of the hunt

7.263.
Seal hunting by Inuit or other indigenous communities appears to largely serve two purposes: first, for their own use and consumption as part of their culture and tradition420; and second, albeit to varying degrees depending on the Inuit or indigenous community concerned, for the exchange of by-products of seals such as seal skins either through barter for other goods, or sale on the market to generate income.421 In some cases, and particularly in the case of Greenland, seal products such as skins obtained from Inuit hunters may also be traded in international markets.422
7.264.
We address below the parties' specific arguments concerning the purpose of IC hunts in the context of our analysis of the European Union's justification for the distinction between commercial hunts and IC hunts.

Scale of the hunt

7.265.
Inuit or members of other indigenous communities hunt seals mostly on an individual basis using small boats or using sledge dogs and catching a few seals at a time.423
7.266.
Although relatively little information on the number of seals hunted by Inuit or indigenous communities other than Greenland has been submitted to us, available data suggest potentially wide variation in the scale of different Inuit hunts. For example, the annual average catch of harp, ringed, and hooded seals in Greenland is reported to be approximately 164,000 seals.424 COWI provides various data showing a "harvest of as many as 1,600 animals" by Alaskan Aleuts and indigenous populations and 35,000 (predominantly ring) seals annually hunted in Nunavut in Canada.425

Seal hunting period

7.267.
In contrast to commercial hunts, which were noted to occur during limited time periods within established seasons, IC hunts are typically conducted throughout the year.426

Hunting methods

7.268.
Inuit communities use both traditional methods/tools (e.g. harpoons, kayaks, dog sleds) as well as more modern equipment (e.g. rifles, boats, snowmobiles).427 Evidence also shows that methods such as "trapping and netting" are used in IC hunts.428 The COWI 2010 Report explains in this regard that the notion of "hunts traditionally conducted" referred to in Article 3.1 of the Basic Regulation can be defined as "hunts that are part of the cultural tradition of a given community located in a specific geographical area"429, and does not indicate "hunts conducted traditionally, i.e. in a traditional manner". Based on information concerning Greenland, the use of rifles from boats in "open water hunting" or trapping and netting appear to be the main hunting methods for Greenlandic Inuit.430

Organization and control of the hunt

7.269.
IC hunts take place mostly on an individual basis and Inuit hunters are not usually subject to monitoring or enforcement of sealing regulations in their hunts.431
7.270.
However, we observe that Greenland requires a full time hunter to have a licence to qualify for selling the skins to the tannery Great Greenland A/S.432 According to a document published by the Government of Greenland, a large number of hunters use "the possibility to sell skins to the tannery in total a couple of months a year".433

Use of products derived from the hunt

7.271.
Inuit and other indigenous communities use all parts of the hunted seals. They consume seal meat as an essential part of their diet and use seal skins and other parts of seals for a variety of purposes as part of their culture and tradition.434 As noted above, Inuit and other indigenous communities also sell by-products of the hunted seals, mostly seal skins, to markets.435

Connection between the IC distinction and the objective of the EU Seal Regime

7.272.
Based on our examination of the evidence pertaining to IC hunts described above, we have determined that there are certain characteristics that are unique to IC hunts436, namely: they are conducted by Inuit and indigenous communities with a tradition of seal hunting dating back thousands of years437; they are normally carried out on an individual basis using small boats; and they take place throughout the year. In addition, by-products of the hunted seals are usually used and consumed by the community and, depending on the Inuit or indigenous community concerned, also sold on the market to generate income.438
7.273.
We recall our assessment above that the circumstances and conditions of seal hunts present certain challenges to effecting humane killing of seals and that there is a risk in any given seal hunt that the targeted animals may suffer poor animal welfare outcomes of varying intensity and duration.439 IC hunts are no different; they are conducted in a similar physical environment often using similar hunting methods as described above. Thus, similar challenges to effecting humane killing of seals exist in IC hunts. Further, evidence shows that hunting methods used by Inuit or indigenous communities such as "trapping and netting" are not consistent with humane killing methods.440
7.274.
As discussed in detail in section 7.3.3.1 below, the objective of the EU Seal Regime is to address the moral concerns of the EU public with regard to the welfare of seals. Specifically, the EU public moral concerns as described by the European Union are two-fold. They include: (a) the incidence of inhumane killing of seals; and (b) EU citizens' individual and collective participation as consumers in, and their exposure to, the economic activity which sustains the market for seal products derived from inhumane hunts. As part of our analysis in section 7.3.3.1, we also found that the EU public concerns on seal welfare relate to seal hunting in general and are not confined to any particular type of hunts.
7.275.
Given that the same animal welfare concerns as those arising from seal hunting in general also exist in IC hunts, and considering the evidence showing the use by Inuit hunters of methods such as "trapping and netting", we find that IC hunts can cause the very pain and suffering for seals that the EU public is concerned about. Accordingly, the IC distinction does not bear a rational relationship to the objective of addressing the moral concerns of the EU public on seal welfare.441

Whether the cause or rationale put forward by the European Union for the distinction between commercial and IC hunts is justifiable

7.278.
We understand the European Union's justification of the distinction between commercial and IC hunts to rest on two premises. First, if the objective of the IC exception is found to be legitimate, then, a fortiori, the regulatory distinction should also be considered "legitimate".445 Second, highlighting the alleged uniqueness of IC hunts, the European Union argues that IC hunts, which are conducted for the "subsistence" of Inuit and indigenous communities, benefit from an "inherent legitimacy" that "overrides the general concerns over the killing methods for purely commercial motives".446 According to the European Union, therefore, the purpose of the hunt distinguishes IC hunts from commercial hunts and justifies any risk of suffering inflicted upon seals as a result of the hunts conducted by those communities.447 The European Union explains further that, because the subsistence of the Inuit and other indigenous communities and the preservation of their cultural identity provide benefits to humans, from a moral point of view, this outweighs the risk of suffering inflicted upon seals as a result of the hunts conducted by those communities.
7.279.
First, we are not persuaded by the European Union’s premise that a distinction in treatment is justified on the basis of the legitimacy of the objective of the distinction itself, in this case the IC exception. We do not read the Appellate Body guidance on Article 2.1 to support this interpretation. Under Article 2.1 of the TBT Agreement, the inquiry, according to the Appellate Body, is whether the detrimental impact caused by a measure stems from a legitimate regulatory distinction drawn in the measure. If it does, then the detrimental impact is justified and will not offend the non-discrimination obligation under Article 2.1. The analysis of determining the legitimacy of a regulatory distinction is not, as the European Union suggests, simply whether there is a legitimate objective, for example, within the meaning of Article 2.2. In our view, the existence of a legitimate objective will not automatically imbue the discrimination under Article 2.1 with legitimacy; were that to be the case, one would simply need to assess whether the detrimental impact stems from a "legitimate" objective. Even if the objective of the IC exception were separately examined and found to be a "legitimate" policy objective within the meaning of Article 2.2, that alone would not necessarily lead to establishing the legitimacy of drawing the distinction – as opposed to the legitimacy of a certain policy objective per se – between commercial and IC hunts through the IC exception within the meaning of Article 2.1. The objective of the IC exception is an element that may be examined as part of the "cause" or "rationale" put forward by the European Union to seek to justify the IC distinction. But it is not determinative of the issue of the legitimacy of the regulatory distinction.
7.280.
Next, based on the alleged uniqueness of IC hunts, in particular the "subsistence" purpose of IC hunts, the European Union argues that IC hunts are justifiably distinguishable from commercial hunts conducted primarily or exclusively for commercial purposes.448 According to the European Union, the regulatory distinction made by the EU Seal Regime between conforming and non-conforming seal products is primarily based on the "purpose" of the hunt from which a given product was derived; the term "purpose" is used to refer to the principal aim of the hunt in question, i.e. the primary reason why the seal in question is killed. The purpose of the hunt is also reflected in other characteristics of the hunt, such as its size, intensity or end-use of the products, which together constitute a "type".449
7.281.
Canada does not contest the unique characteristics of IC hunts. In fact, Canada acknowledges that, regardless of hunting methods, the Inuit hunt itself is traditional and a fundamental element of Inuit culture and society.450 For example, Canada states that the purpose of the Canadian Inuit hunt today is not materially different from the hunt 1,000 years ago, although the emergence of a monetized society and new technologies has caused the Canadian Inuit to commercialize some output to generate income.451 Canada however disagrees with the European Union on whether the purpose of IC hunts ("subsistence" purpose) and the purpose of commercial hunts ("primarily or exclusively commercial reasons") can strictly be distinguishable as asserted by the European Union. Canada argues that the "subsistence" purpose of IC hunts can equally be used to describe the Canadian east coast seal hunt (commercial hunts).452
7.282.
To assess the issue of whether the alleged difference in the purpose of the hunt constitutes a justifiable rationale or cause for the distinction in question, despite its disconnection from the objective of the measure, we must examine two questions: first, whether, and, if so, how, the purpose of IC hunts differs from the purpose of commercial hunts; and, second, whether any distinction found in the purpose of the hunt justifies the distinction drawn under the measure between commercial and IC hunts.

Whether the purpose of IC hunts differs from the purpose of commercial hunts

7.283.
The term "subsistence"453 is not defined in the EU Seal Regime. A dictionary definition of the term provides inter alia the following: "the action or condition of subsisting or of supporting life, the provision of food etc", "means of supporting life; livelihood", "a bare or minimal level of existence; an income providing this", or "food supply, provisions".454 Dictionary definitions thus suggest that subsistence is closely linked to the notion of providing food or income to support life or livelihood.455
7.284.
We observe that EFSA also correlates the subsistence purpose of the hunt to the identity of the hunter: "the term 'subsistence hunt' is often used to describe a hunt where the seal is killed by an aboriginal for personal consumption".456 Indeed, the European Union acknowledges that the distinction for hunts conducted for "subsistence purposes" relates specifically to hunts "where seals are killed primarily in order to contribute to the subsistence of Inuit and other indigenous communities".457
7.285.
Information submitted to the Panel confirms that certain Inuit or indigenous communities also sell by-products, mostly seal skins, of their hunts on the market. The extent of such commercial transactions seems to vary, however, depending on the particular Inuit or indigenous community concerned (e.g. bartering with other goods, placing meat or skins on the local market, or selling skins for international markets).458 For example, based on the information in the COWI 2010 Report, the current hunt in Alaska by Aleut takes place purely for subsistence, with most products consumed locally, or shipped to Aleut communities outside Alaska. The same is true for Inuit in Russia; "the majority of seals that are hunted by Inuit or indigenous communities are not industrialised, but consist of small-scale hunts serving as input to the daily life of these communities …".459 As regards Canadian Inuit, most of the seal products are consumed locally by Canadian Inuit themselves and only one third of sealskins end up on the market.460 In Greenland, where 90 per cent of the population are Inuit, half of the skins are consumed locally, and the other half are traded in and exported from Greenland.461
7.286.
The European Union agrees that qualifying IC hunts may "have a commercial dimension".462 According to the European Union, if this were not the case, the IC exception would have served no purpose under the EU Seal Regime. The European Union explains that part of the cultural heritage of seal hunting involves bartering the outputs for necessary goods. It also maintains that, now that bartering is rarely practised, that cultural heritage is continued through placing the products on the market and then using the proceeds to buy necessary goods and finance the cost of conducting seal hunting.
7.287.
To us, the commercial aspect of IC hunts resembles the purpose of commercial hunts, which is to earn income (and make profits) by selling by-products of the hunted seals. Further, in our view, this commercial aspect of IC hunts is related more to their need to adjust to modern society rather than to continuing their cultural heritage of bartering. The European Union has not explained their position that the commercial aspect of IC hunts is merely a modern version of bartering.
7.288.
Nevertheless, based on the definition of the term "subsistence" as well as the evidence concerning Inuit and indigenous communities with a tradition of seal hunting, we consider that the subsistence purpose of IC hunts encompasses not only direct use and consumption of by-products of the hunted seals as part of their culture and tradition, but also a commercial component, to the extent that Inuit or indigenous communities also exchange some by-products of the hunted seals for economic gain. As observed by EFSA, a particular hunt may have one or several purposes.463 Unlike commercial hunts, however, most Inuit and indigenous communities do not appear to hunt seals for the sole or primary purpose of selling them on the market. Rather, seal hunting is a manifestation of a way of living for Inuit and indigenous communities and is an activity that defines them as Inuit.464 The commercial aspect of IC hunts is thus not the same in its extent as that associated with commercial hunts.
7.289.
In conclusion, while IC hunts may also have a commercial aspect, we are persuaded that the subsistence aspect of IC hunts, combined with the identity of the hunter as Inuit, has significance for their culture and tradition as well as for their livelihood.465 To that extent, the primary purpose of IC hunts is distinguishable from that of commercial hunts.466

Whether the difference in purpose between commercial and IC hunts justifies the distinction drawn under the measure between these two hunts

7.290.
Having determined that there is no rational connection between the objective of the EU Seal Regime as a whole and the distinction between commercial and IC hunts, in essence because the IC hunts pose at least the same risks to the animal welfare of seals as the commercial hunts, we then examined whether the distinction could nevertheless be justified. The first element of this analysis involved a consideration of whether the primary purpose of the IC hunts could be distinguished from the primary purpose of the commercial hunts. In this we determined that the purpose of the two hunts were distinguishable. The second element of the examination involves an analysis of whether this difference in purpose justifies the IC distinction.
7.291.
In this regard, we recall the Appellate Body's statement that:

the task of interpreting [the chapeau of Article XX of the GATT 1994] is essentially the "delicate one of locating and marking out a line of equilibrium between the right of a Member to invoke an exception under Article XX and the right of other Members under varying substantive provisions … of the GATT 1994. … This line of equilibrium is not fixed and unchanging and moves "as the kind and the shape of the measures at stake vary and as the facts making up specific cases differ."467 (emphasis added)

7.292.
The European Union points out that the protection of the economic and social interests of Inuit or indigenous communities is recognized at the international level as illustrated, for example, in the United Nations Declaration on the Rights of Indigenous Peoples (UN Declaration)468 and in the ILO Convention concerning Indigenous and Tribal Peoples in Independent Countries (ILO Convention).469
7.293.
Further, the recognition of the interests of Inuit or indigenous communities is also reflected in the legislative history of the EU Seal Regime as well as in Canadian sealing regulations. The legislative history of the EU Seal Regime and other measures with respect to seal hunting show that the interests of the Inuit have consistently been addressed and/or taken into account in the form of exceptions. For example, the 1983 Directive banning imports of skins of whitecoat pups of harp seals and of pups of hooded seals (blue-backs) was limited to "only apply to products not resulting from traditional hunting by the Inuit people".470 In addition, the 2006 Declaration of the European Parliament prompting the legislative process of the EU Seal Regime contemplated that the final regulation "should not have an impact on traditional Inuit seal hunting".471
7.294.
Canada also exempts Inuit from certain provisions of its sealing regulations.472 Further, Canada acknowledges the conflicting interests at issue between seal welfare and the interests of Inuit and other indigenous communities engaged in seal hunting. For example, Canada notes that "the onus is not on the complainants to offer solutions to enable Greenlandic sealers to improve animal welfare standards without putting at risk the subsistence of the Inuit and the preservation of their cultural identity."473 We also observe Inuit exceptions in similar measures adopted by other WTO Members on trade in products derived from marine mammals.474
7.296.
Although we agree with Canada that a cause or rationale for a certain distinction may not be justifiable if such cause or rationale is not connected to the main objective of the measure, we are mindful that the justifiability of a specific cause or rationale provided for a given distinction must be examined on a case-by-case basis.476 In the circumstances of this dispute, the interests to be balanced against the objective of the measure at issue are grounded in the importance, recognized broadly in national and international instruments, of the need to preserve Inuit culture and tradition and to sustain their livelihood, particularly in relation to the significance of seal hunting in Inuit communities.
7.297.
Further, the factual circumstances of this dispute can be differentiated from those of a previous dispute where a rationale or cause for a certain exception or regulatory distinction was not found justifiable. In US – Clove Cigarettes, the United States explained the distinction at issue (i.e. allowing menthol cigarettes while prohibiting clove cigarettes) was based on the alleged risks (namely health care costs and black market smuggling) arising from withdrawal symptoms that would afflict menthol smokers. The Appellate Body did not find this reason persuasive enough to justify the distinction between prohibited (clove cigarettes) and permitted (menthol cigarettes) products which were found to be "like" and presented the same health risks for smokers. We also note that in Brazil – Retreaded Tyres, certain imports of retreaded tyres were excluded from the scope of the ban on the grounds that the MERCOSUR arbitral tribunal made a ruling to that effect (i.e. to respect trade rules under the MERCOSUR). The Appellate Body found the exception arbitrary and unjustifiable due to the lack of any rational connection to the objective of the ban (i.e. environmental purposes), and the rationale for the exception, namely the MERCOSUR ruling was not considered by the Appellate Body sufficient to justify the exception in the face of the rational disconnection to environmental purposes.
7.298.
Unlike the situations in US – Clove Cigarettes or Brazil – Retreaded Tyres, the cause or rationale for the exception granted under the EU Seal Regime to products derived from IC hunts is justifiable despite the rational disconnection to protecting seal welfare477, because it is founded on the unique interests of Inuit and indigenous communities, which are and have been recognized broadly, as discussed above. Additionally, as noted above, evidence shows that Inuit interests have always been raised as an important consideration when adopting a regulation relating to seal products, including the current measure.478 Under these circumstances, we are persuaded that the protection of Inuit interests justifies the distinction between commercial and IC hunts. We thus consider that the European Union has explained sufficiently the basis for distinguishing IC hunts from commercial hunts through the IC exception.
7.299.
Before turning to our conclusion on the justifiability of the rationale given by the European Union for the distinction between IC and commercial hunts, we recall the European Union’s reference to the alleged moral concerns of the EU public concerning the economic and social interests of Inuit and indigenous communities. According to the European Union, the "standard of the EU public's morality" requires examining in each case whether the suffering inflicted upon animals is outweighed by the benefits to humans (such as Inuit and other indigenous communities) or to other animals.479 Although we found based on available evidence that the EU public had moral concerns on seal welfare in general, we did not consider that the evidence before us supports the European Union’s position that the EU public attributes a higher moral value to the protection of Inuit interests as compared to seal welfare.480 Nor are we presented with evidence establishing the precise scope of the "basic morality" of EU citizens as claimed by the European Union.481
7.301.
We next proceed to examine whether this distinction between commercial and IC hunts, as reflected in the EU Seal Regime through the IC exception, is designed and applied in an even-handed manner.483

Whether the distinction between commercial and IC hunts, as reflected in the IC exception of the EU Seal Regime, is designed and applied in an even-handed manner

7.302.
The IC exception is embodied in Article 3(1) of the Basic Regulation. It provides that "the placing on the market of seal products shall be allowed only where the seal products result from hunts traditionally conducted by Inuit and other indigenous communities and contribute to their subsistence. These conditions shall apply at the time or point of import for imported products".
7.303.
To implement this provision, Article 3(1) of the Implementing Regulation sets out that, to fall under the IC hunts category, seal products must originate from seal hunts that satisfy the following three conditions:

a. seal hunts conducted by Inuit or other indigenous communities which have a tradition of seal hunting in the community and in the geographical region;

b. seal hunts the products of which are at least partly used, consumed or processed within the communities according to their traditions; and

c. seal hunts which contribute to the subsistence of the community.

7.304.
Canada submits that with respect to Greenland in particular and its qualification under the IC exception, Greenland's commercialization of output is considerably more extensive and organized than Inuit elsewhere, with a large-scale commercial enterprise (Great Greenland A/S), significant capital investment, such as processing and manufacturing facilities, and sophisticated distribution channels. Greenland's production volume and value dwarfs the commercialized output of Canada's Inuit; whereas commercial sale of sealskins by Nunavut Inuit is clearly a mere adjunct to the more central purpose of the Canadian Inuit hunt, which is subsistence, Greenlandic Inuit are major commercial operators and conduct the largest commercial seal hunt in the world since 2009.484 In that sense, according to Canada, the hunts occurring in Greenland and in Canada both have strong commercial elements. Therefore, the artificial distinction created by the European Union by virtue of IC hunts has no basis and is simply unjustified.485
7.305.
At the outset, we observe that Canada does not contest the status of Greenland as Inuit. Rather, Canada’s argument is focused on the fact that compared to other Inuit and indigenous communities practising seal hunts, the Greenlandic seal hunts practically have a commercial aspect that closely resembles that of commercial hunts. This, according to Canada, demonstrates the arbitrariness in the design and application of the distinction between commercial and IC hunts as reflected in the IC exception under the measure.
7.306.
We observe that since the introduction of the EU Seal Regime in 2010, Greenland has been the only Inuit community that has applied for and obtained the benefits of the IC exception under the measure. Although such fact alone is not sufficient to establish arbitrariness in the design or application of the IC exception, it may be an indication that a certain inherent flaw in the design and structure of the IC exception prevents other potentially qualifying Inuit and indigenous communities from benefiting from the exception. Against this background, we examine whether the IC exception is designed or applied such that only Greenland can de facto benefit from the exception.
7.307.
Based on a variety of considerations, we considered above that the "subsistence" purpose of IC hunts includes the need to preserve the culture and tradition of Inuit and indigenous communities and to sustain their livelihood. We found that this purpose of IC hunts, combined with the identity of the hunter as Inuit, distinguishes IC hunts from that of commercial hunts.
7.308.
Based on the text, we consider that the requirements of the IC exception are generally linked to the characteristics of IC hunts as discussed above, particularly in terms of the identity of the hunter with a tradition of seal hunting, the use of by-products from the hunted seals, and the contribution of the hunts to the subsistence of the community. The scope and meaning of the "subsistence" criterion under the requirements, however, is not defined under the measure.486 Regardless, the parties do not dispute that all of the communities mentioned in the illustrative list of Inuit and indigenous communities under the Basic Regulation, including from Canada’s Nunavut and from Greenland, would potentially qualify under the measure.487
7.309.
Having regard to the actual application of the IC requirements, particularly the commercial aspect of the subsistence criterion, the information before us indicates that, compared to IC hunts in Canada, Alaska, or Russia where most of the hunted seals are used for personal use, over 50 per cent of the hunted seals in Greenland are sold to the tannery of Great Greenland A/S. The tannery, Great Greenland A/S, is owned by the Government of Greenland and is equipped with a modern facility using state of the art technology in the processing of sealskins.488 In fact, the tannery of Great Greenland A/S is currently claimed to be "one of the world's leading in producing high quality furs and leather from sealskins".489 Seals in Greenland are hunted by paid, full time seal hunters (2,100 over the last five years) and paid, leisure time hunters (5,500).490 It is also noted that since 2009 a hunter requires a licence as a full time hunter in order to qualify for selling the skins to the tannery Great Greenland A/S.
7.310.
Based on available data, we further observe that the number of seals caught annually in Greenland has always been over 163,000 for the period of 1993-2009. Half of these skins are normally traded, and it is reported that Greenland has stored around 300,000 sealskins since the introduction of the EU Seal Regime.491 By contrast, in the case of Nunavut in Canada, "in 2006, over 6,000 sealskins were exported". The volume of seals hunted and traded in Greenland is thus comparable to that of commercial (rather than IC) hunts in Canada492, and much larger than other Inuit or indigenous communities that may potentially qualify under the IC exception. Although the scale of the hunt per se is not a determinative in distinguishing IC hunts from commercial hunts, we recall that the large scale of the hunt was highlighted as one of the factors characterizing commercial hunts.493
7.311.
We also take insight from the following statement in "Management and Utilization of Seals in Greenland":

Previously, ringed seal was the most important species in relation to food supply and income, without any doubt. However, the demand from the fur industry has now made it more attractive to hunt harp seals since Greenlandic hunters in some years were offered a slightly better price for sealskins from harp seals compared to sealskins form ringed seals, as prizes [sic] are fixed while the skins are subsidized by the Government of Greenland. The increasing numbers of harp seals have also played an important role in the choice of hunting method.494

7.312.
The processing of, and trade in, seal products are also integrated among Greenland, Canada, and Norway.495 For instance, when the supply of sealskins from local hunters were low due to weather conditions, the tannery of Great Greenland A/S found it necessary to import raw sealskins from Canada to make the best possible use of the capacity at the tannery, and thus also be able to continue to offer local Inuit hunters reasonable prices for their sealskins.
7.313.
The factors considered above, namely the level of development in the commercial aspect of Greenlandic seal hunts; the volume of sealskins traded in Greenland; and the integrated nature of the seal product industries in Greenland, Canada, and Norway, indicate that the purpose of seal hunts in Greenland has characteristics that are closely related to that of commercial hunts. Although we recognize that about half of the hunted seals are also used for personal purposes in Greenland and form an important part of their culture and tradition as Inuit, the degree of the commercial aspect of their hunts is comparable to that of the commercial hunts. Greenlandic seal hunts are thus the most commercialized among any other Inuit or indigenous communities. The Government of Greenland itself acknowledges that "Greenland is a country of contrasts. We have culture and tradition that go 4000 years back in time. The Greenlandic society is also part of the modern and developing world today".496 Hunting of seals for Greenland therefore is now a "mixed economy, with subsistence and monetary elements coexisting".497
7.314.
As noted above, no other Inuit or indigenous communities, potentially eligible for the IC requirements, have applied for the IC exception since the introduction of the EU Seal Regime. For example, with respect to Inuit seal hunts in Canada, Canada explained that due to the reliance of the Canadian Inuit on the marketing channel provided by commercial hunts for the sale of their products, and given the limited volume of products derived from Canadian Inuit hunts, it is not cost effective under the current circumstances to segregate Inuit products from other products. We also observed that seals hunted by Inuit or indigenous communities in Russia or Alaska are almost entirely used for personal use and consumption. Therefore, based on available evidence, among a small number of Inuit and indigenous communities that may potentially satisfy the specific requirements of the IC exception, Inuit in Greenland and Canada are the most likely, if not the only, beneficiaries under the measure. Given the factual circumstances of the Inuit and indigenous communities in Canada as explained above, however, currently, Greenland, with the most commercialized of IC hunts, is in factthe only beneficiary of the IC exception.
7.315.
The legislative history of the EU Seal Regime suggests that this is not merely an incidental effect of the application of the measure. We observe that prior to the crafting of the specific requirements of the IC exception in the Implementing Regulation, seal hunts in Greenland were considered to be the only Inuit hunts that could benefit from the IC exception. In fact, the COWI Reports anticipated that no other Inuit and indigenous communities would be able to benefit from the IC exception "as only Greenland will be able to make the investments needed to make use of exemptions" and "the scale of the Canadian hunt is too small and not as centrally organized as that in Greenland".498 Canada also explains that it is not economically feasible for Canadian Inuit to develop their own processing and distribution chains, given that the Inuit have relied on synergies with southern producers; as those networks may no longer be viable because of the EU Seal Regime, considerable investment would be needed to develop a new processing and distribution centre.499
7.316.
Moreover, in the actual operation of the IC exception, Danish customs authorities processed imports based on certificates issued by the Greenlandic authorities prior to the Greenlandic entity obtaining recognized body status within the meaning of the Implementing Regulation.500 The European Union explains that Danish customs authorities proceeded in that manner "based on [their] interpretation of the Implementing Regulation whereby the issuance of attesting documents complying with the Implementing Regulation would also be allowed during the application process for recognized body status and not only once the process has been completed".
7.318.
The European Union argues that any effects derived from the fact that operators in one country (like Canada) choose not apply for the IC exception cannot be attributed to the EU Seal Regime. In our view, this argument fails to take into account that the absence of the even-handedness in the design and application of the distinction between commercial and IC hunts is linked to the fact that the IC exception, as currently designed and applied under the measure, is not equally available to all Inuit or indigenous communities. Only those in Greenland have been able to benefit from it and this, in our view, is directly attributable to the regime itself and not to the actions of the operators in countries like Canada.
7.319.
In light of the above, we conclude that although the distinction between commercial and IC hunts based on the purpose of the hunt is justifiable having regard to the explanations given by the European Union concerning the benefits to Inuit or indigenous communities, it is not designed and applied in an even-handed manner. Therefore, we find that the IC exception of the EU Seal Regime is inconsistent with the European Union's obligations under Article 2.1 of the TBT Agreement as the European Union has failed to demonstrate that the detrimental impact caused by the IC exception on Canadian seal products stems exclusively from a legitimate distinction.

7.3.2.3.4 Whether the distinction between commercial hunts and MRM hunts is legitimate

7.3.2.3.4.1 Main arguments by the parties

Complainant (Canada)

7.320.
Canada argues that the EU Seal Regime draws an arbitrary distinction between commercial and MRM hunts by imposing conditions that are unrelated to the Regime's underlying policy objectives.501 For Canada, the commercial purpose of the hunt has no bearing on whether seals are killed humanely.502 Canada argues that the distinction between commercial and MRM hunts under the EU Seal Regime is "illusory" because MRM hunts are motivated primarily if not exclusively by commercial gain.503 In particular, Canada notes that the MRM exception only eliminates profit-making at the hunt level while allowing profit-making through the processing, manufacturing and retailing of seal products.504
7.321.
Canada observes that the EU Seal Regime does not draw any distinction between seal products on the basis of animal welfare criteria.505 Therefore, seal products placed on the EU market under the MRM exception may still contain seal that suffered pain and distress at the time of killing.506 For Canada, such a result is counterproductive to achieving the objective of protecting seal welfare.507 In addition, Canada argues that the seal hunters' inability to sell seal products for profit may encourage hunting methods that run counter to positive animal welfare outcomes.508
7.322.
Moreover, Canada argues that the alleged moral basis for the MRM exception rests on an unfounded and speculative assumption that marine resource management hunters are more likely to meet animal welfare standards if they have a commercial incentive to recover their costs.509 According to Canada, the European Union has provided no evidence in support of this argument showing: (a) that hunters were complying with animal welfare standards prior to the EU Seal Regime510; (b) that eliminating the MRM category would result in more suffering for seals culled in such circumstances511; or (c) that seal culls in EU member States are conducted in a manner consistent with the animal welfare standards that the European Union accuses Canada of failing to apply.512
7.323.
In addition, Canada claims that the MRM exception is not applied even-handedly, and that the conditions under the exception are arbitrary and unjustifiable.513 In particular, the small-scale, non‑systematic and non‑profit requirements of the MRM category effectively prevent the placement on the EU market of seal products from countries such as Canada, where seals are also harvested in sustainable numbers in accordance with a marine resource management plan.514 The conditions under the MRM exception are thus unrelated to the objective of sustainable marine resource management515, and to the central objective of the EU Seal Regime of addressing concerns relating to seal welfare.516 The regulatory distinction thus arbitrarily favours marine management programmes involving small populations of seals, such as those of Sweden, Finland and the United Kingdom.517 Canada claims that the European Union's willingness to accommodate the interests of its member States while "completely ignor[ing]" the interests of other WTO Members is "plainly discriminatory" and "unjustifiable".518

Respondent (European Union)

7.324.
The European Union explains that the MRM exception was intended to exempt from the ban seal products deriving from small-scale, occasional hunts conducted with the purpose of managing marine resources.519 According to the European Union, such hunts are conducted in several countries within and outside the European Union territory.520 The European Union argues that the conditions in which MRM hunts take place are in principle more favourable to the humane killing of seals than the commercial hunt.521 For instance, the commercial nature of the hunt creates an incentive for hunters to kill as many seals as possible over a short period of time, thereby potentially disregarding the manner in which the seals are killed; this is not the case for MRM hunts which target specifically seals that pose a threat to fish stocks or fishing equipment.522
7.325.
The European Union recognizes that there is also a commercial dimension present in the MRM hunts.523 However, the European Union explains that if hunters were not permitted to recoup their costs by placing on the market seal products derived from MRM hunts, they would be more likely to resort to inappropriate killing methods; such an outcome could compromise the objective of protecting seal welfare.524 In this regard, the European Union asserts that the MRM exception is rationally connected to the overall objective of the EU Seal Regime.525 Moreover, in the European Union's view, prohibiting the marketing of products derived from MRM hunts would not contribute to reducing the suffering of seals because these hunts would continue to take place in any event.526
7.326.
The European Union notes that the MRM exception addresses the longstanding moral concerns of the EU public with regard to the presence on the EU market of seal products by permitting the placing on the market of certain "morally acceptable" seal products in view of the type and purpose of the hunt from which they derive.527 According to the European Union, although the MRM exception is not subject to compliance with animal welfare requirements, the benefits arising from the placing on the market of products deriving from these hunts, for humans and other animals outweigh the risk of suffering being inflicted upon seals.528 To the extent that the EU Seal Regime would permit the placing on the market of seal products deriving from seals hunted inhumanely, it would still be in accordance with the EU's standard of morality that the Regime seeks to uphold.529
7.327.
Finally, the European Union argues that the MRM exception is designed and applied in an even-handed manner.530 The conditions set out under the MRM exception are essentially aimed at avoiding a potential circumvention of the ban on trade in seal products.531 Also, the fact that the MRM exception allows profit-making at the downstream level does not show a lack of even‑handedness; the exception aims at affecting the conduct of the hunter by eliminating the incentives to kill seals in an inhumane manner. The fact that other manufacturers or processors down the line can make a profit does not affect the hunter's behaviour when hunting seals.532

7.3.2.3.4.2 Analysis by the Panel

7.328.
We turn to examine whether the distinction drawn by the measure between commercial and MRM hunts, and consequently between products derived from each category of hunt, is legitimate within the meaning of Article 2.1 of the TBT Agreement. As we did in connection with the IC exception, we assess the legitimacy of the regulatory distinction between commercial hunts and MRM hunts by examining the following questions: first, is the distinction rationally connected to the objective of the EU Seal Regime; second, if not, is there any cause or rationale that can justify the distinction (i.e. "explain the existence of the distinction") despite the absence of the rationale connection to the objective of the Regime533, taking into account the particular circumstances of the current dispute; and, third, is the distinction concerned, as reflected in the measure, "designed or applied in a manner that constitutes arbitrary or unjustifiable discrimination" such that it lacks "even-handedness".534

Whether the MRM distinction is rationally connected to the objective of the EU Seal Regime

Characteristics of MRM hunts535

Identity of the hunter

7.329.
MRM hunts are conducted essentially on a voluntary basis by fishermen whose fish stocks or fishing equipment are endangered by individual seals, or by the seal population in a particular area.536 To proceed with a marine resource management hunt, a special licence or permission from the local authorities is normally required.537

Purpose of the hunt

7.330.
The European Union notes that while compliance with a resource management plan is one of the conditions under the MRM exception, the exception is not aimed at promoting a better management of marine resources; the European Union uses other instruments to achieve this purpose.538 Rather, the MRM exception takes into account that, alongside large-scale hunts carried out mainly for commercial purposes, there are also small-scale hunts conducted on an occasional basis for the purpose of ensuring that individual seals are eliminated for pest control ("nuisance seals"), or that seals are killed because according to scientific studies their population in a particular area poses a threat to fisheries and/or the ecosystem (seal culling).539

Scale of the hunt

7.331.
All sealing countries with the exception of Greenland conduct their seal hunt on the basis of marine resource management plans based on scientifically established TAC.540 The complainants claim that their commercial seal hunt is fully consistent with the objective of sustainable marine resource management and takes place within the limits of their respective TAC.541 One of the main distinguishing factors between MRM hunts and other types of hunts is the size of the hunt.542 The COWI 2010 Report indicates that small‑scale hunts for marine resource management purposes are conducted in Sweden543, Finland544, and Scotland.545 Nuisance seal hunts are also conducted in Canada.546

Seal hunting period

7.332.
The hunting period varies depending on the range country and the type of seals hunted. For instance, in Sweden and Finland, the Grey and Baltic ringed seals may be hunted with a licence during their respective hunting seasons. The hunting season in Sweden runs from 16 April to 31 December; in Finland, seal hunts of grey seals are carried out from 16 April to 31 December, while ringed seals are hunted from 16 April to 31 December and 1 September to 15 October.547 In the United Kingdom (Scotland), the season extends from 1 September to 31 December for grey seals and from 1 June to 31 August for harbour seals.548 There are annual "closed" seasons set for grey and common seals corresponding to the breeding period of both species; outside of the closed seasons, no licence is required to remove seals.549 In Canada, nuisance seal hunts generally take place during the open season pursuant to the Marine Mammal Regulations550; however, licences may also be delivered during the closed season.551

Hunting methods

7.333.
The hunting methods used for MRM hunts are generally similar to the methods used in commercial hunts. In Sweden, for instance, the seal hunt is conducted only with firearms.552 In Finland and the United Kingdom (Scotland), the main weapons are firearms553 but other killing methods may also be used, such as harpoons, clubs, spears, traps, hooks or nets.554 In Canada and Norway, hakapiks (as well as clubs in Canada) may be used in addition to firearms.555

Organization and control of the hunt

7.334.
While MRM hunts are not monitored per se, most range countries that conduct seal hunts on a small scale exercise control over the hunts through a licensing scheme.556 For instance, in the case of Sweden, quotas of seals to be felled are decided by the Swedish Environmental Protection Agency and set specifically on an annual basis for each county. There are areas within the counties where no hunting is allowed. To hunt seals in a particular area, the hunters will have to seek permission by applying to the County Administrative Board in the county where they intend to conduct the hunt. Permission will be granted provided the quota level has not been reached. For this purpose, the Swedish Coast Guard keeps a daily record. Hunters must contact the Swedish Coast Guard at the end of each day to report the result of their hunt. The County Administrative Board receives daily reports from the Swedish Coast Guards who, in addition to keeping track of daily catch, also patrol the waters.557 In Canada, nuisance seal hunts are also subject to strict conditions, including compliance with the animal welfare requirements imposed under the Marine Mammal Regulations.558

Use of products derived from the hunt

7.335.
Seals killed in the context of MRM hunts are normally used on a private basis or sold in the local community.559 This is the case, for instance, for products derived from seal hunts in Sweden where the skin and meat are generally used by the hunter himself or sold on the local market.560 The European Union notes that the by-product of MRM hunts that may end up on commercial markets would be a small amount of fur skin.561 In Canada, seals harvested under the authority of a Nuisance Seal Licence cannot not be sold, bartered or traded.

Connection between the MRM distinction and the objective of the EU Seal Regime

7.336.
Based on the description above, MRM hunts are characterized by the fact that they are conducted occasionally on a small scale, primarily for sustainable marine resource management, particularly for controlling nuisance seals and seal culling.
7.337.
The evidence shows that MRM hunts, though much smaller in scale than commercial hunts, also give rise to concerns regarding seal welfare that are present in seal hunting in general.562 Although there is limited evidence on the animal welfare outcomes of the seal hunt in countries that engage in small-scale hunts, such as Sweden and Finland563, based on the evidence presented to the Panel, it would seem that seal hunts conducted in EU member States are not subject to onerous animal welfare requirements.
7.338.
For instance, according to the COWI 2008 Report, seal hunting regulations in Sweden and Finland do not require hunters to apply the three-step method of humane killing. COWI reports that in Sweden, it is unclear how well monitored the hunt is due to the relative scarcity of inspectors564; in the case of Finland, hunters are largely self‑regulated, and it is unclear whether there is any independent monitoring of the seal hunt. Therefore, there is no way of ensuring that MRM hunts are conducted in accordance with the objective of addressing the EU public concerns on seal welfare.565 In this connection, we find it speculative that the possibility for the hunters to recover the costs of the hunt through the placing on the market of seal products under the MRM exception encourages more responsible behaviour on the part of the hunter with respect to the welfare of seals.
7.339.
Finally, we do not consider that the limited scope of MRM hunts and the small volume of potential trade concerned by this exception as such are relevant factors in our assessment of whether the distinction in question is rationally connected to the objective of the measure.566 We find support for this view in the Appellate Body's consideration in Brazil – Retreaded Tyres: the fact that only a small amount of products were imported under the MERCOSUR exception did not affect the finding that the exception was rationally disconnected from the objective of the measure at issue.567
7.340.
For the foregoing reasons, we find that the MRM distinction is not rationally connected to the objective of addressing the EU public moral concerns on seal welfare. According to the European Union, however, the purpose of the hunt, which distinguishes MRM hunts from commercial hunts, combined with its small scale and occasional occurrences, justifies any risk of suffering inflicted upon seals as a result of such hunts. We next examine whether the European Union's explanation justifies the MRM distinction.

Whether the cause or rationale put forward by the European Union for the distinction between commercial and MRM hunts is justifiable

7.341.
In addressing the argument by the European Union, we first examine the purpose of MRM hunts, specifically controlling nuisance seals and seal culling, compared to that of commercial hunts. We then address the question of whether any distinction found between the purpose of the MRM hunts and the purpose of commercial hunts is justified despite the lack of a rational connection to the objective of the EU Seal Regime as a whole.
7.342.
We note that the complainants do not challenge the objective of sustainable marine resource management as such.568 In fact, the complainants contend that their seal hunts are fully consistent with sustainable marine resource management principles and take place within the limits of their respective TAC.569 Moreover, the European Union has confirmed that the exception is not aimed at promoting a better management of marine resources as it has other instruments it uses for that purpose. The complainants argue however that the distinction between MRM and commercial hunts based on their purpose is illusory because MRM hunts also have a commercial purpose.570 Canada notes that MRM hunts are motivated primarily if not exclusively by commercial gain, for instance to support a thriving fishery or to prevent the destruction of fishing gear, all of which are used in a commercial venture. Canada further argues that the killing of seals during resource management culls is also a means to generate income.571
7.343.
As mentioned previously, the commercial seal hunt is characterized inter alia by the competitive pressure on hunters to kill as many seals as possible in a limited period of time. In the case of MRM hunts, the motivation of the hunter is not primarily linked to the exploitation of seals as a natural resource; rather, it is aimed at mitigating the damage caused by seals and is incidental to the conduct of another fishing activity. To that extent, we agree with the complainants that there is a commercial dimension to seal hunts conducted for the purpose of managing marine resources. The evidence before the Panel further shows that the costs associated with damage caused by seals can be significant in some cases.572 Therefore, while the hunter cannot place seal products on the EU market for profit under the MRM exception, there is nevertheless an economic incentive for fishermen or seal hunters to conduct an MRM hunt. Further, while the MRM exception aims to eliminate profit at the hunt level, it still allows profit-making at the downstream level.
7.344.
While we recognize that MRM hunts take place on an occasional basis, and on a much smaller scale than commercial hunts, and that the primary means to generate income for those conducting MRM hunts is not seal hunting itself, in light of the considerations above, we are not convinced that the purpose of MRM hunts and the purpose of commercial hunts are of a different character or nature. Furthermore, the difference that might be found between the commercial aspects of an MRM and a commercial hunt is, in our view, not sufficient to justify the lack of a rational connection between the distinction in question and the objective of addressing the EU public moral concerns on seal welfare.
7.345.
Finally, the European Union argues that the placing on the EU market of seal products derived from MRM hunts conforms with the "EU's standard of morality" because the potential suffering of seals is outweighed by the benefits accruing to other animals. However, as noted above, the evidence adduced by the European Union on the EU public's moral concerns regarding seal welfare does not clearly establish that the concerns of EU citizens vary according to the type of hunt.573
7.346.
In conclusion, we do not find that the rationale put forward by the European Union based on the purpose of MRM hunts, combined with their small scale and occasional occurrences, justifies the MRM distinction in the absence of a rational connection to the objective of the EU Seal Regime concerning seal welfare.
7.347.
Therefore, we conclude that the European Union has failed to establish that a detrimental impact caused by the MRM exception on Canadian seal products vis-à-vis the like EU domestic products stems exclusively from a legitimate regulatory distinction. Nevertheless, for completeness, we turn to consider the design and application of the regulatory distinction between MRM and commercial hunts under the EU Seal Regime.

Whether the distinction between commercial and MRM hunts, as reflected in the MRM exception of the EU Seal Regime, is designed and applied in an even-handed manner

7.348.
We recall the specific requirements of the MRM exception as set out in Article 5(1) of the Implementing Regulation: (a) seal hunts conducted under a national or regional natural resources management plan which uses scientific population models of marine resources and applies the ecosystem-based approach; (b) seal hunts which do not exceed the total allowable catch quota established in accordance with the plan referred to in point (a); and (c) seal hunt by-products of which are placed on the market in a non-systematic way on a non-profit basis.574
7.349.
We note that currently only Sweden has entities registered as recognized bodies entitled to deliver attesting documents permitting the placing on the market of seal products under the MRM exception.575
7.350.
According to Canada, the legislative history of the EU Seal Regime is proof that the MRM exception was designed to "fit the reality" of the seal hunt in EU member States.576 Canada refers to debates in the Committee on Agriculture and Rural Development of the European Parliament577, as well as comments by Sweden and Finland on the need to exempt from the ban seal products deriving from small-scale hunts conducted for marine resource management purposes.578 Canada argues that "the requirements that became the [MRM] category and its purpose as described by the EU in this dispute incorporate the exact elements set out by Sweden, i.eallowing market access for seal products originating from states with 'small scale' 'statutory controlled hunting' with the 'purpose to reduce damages from fisheries', and which is 'done in accordance with a management plan'."579
7.351.
In this regard, the Panel notes the conclusions of COWI (2010) that seal products from Sweden, Finland, and possibly the United Kingdom would likely qualify under the MRM exception, while seal products from Canada and Norway would not.580 In particular, the Report notes that seal hunts in Finland and Sweden do not take place on a "commercial basis" and seal products deriving from these hunts are not placed on the market "in a repetitive way".581 In addition, most by‑products resulting from the hunts are sold "on a private basis" in the local community.582 Thus, the non‑systematic and non-profit requirements of the MRM exception effectively rule out the eligibility of products from any type of sustainable marine management hunt other than the hunting of individual nuisance seals.583 The conclusions of COWI seem to be corroborated by the legislative history of the EU Seal Regime, which suggests that the MRM exception was designed with the situation of EU member States in mind.584
7.352.
Therefore, we conclude based on the considerations above that the MRM exception is not designed in an even-handed manner.
7.353.
For the above reasons, we find that the MRM exception of the EU Seal Regime is inconsistent with the European Union's obligations under Article 2.1 of the TBT Agreement as the European Union has failed to demonstrate that the detrimental impact caused by the MRM exception under the EU Seal Regime on Canadian imports of seal products stems exclusively from a legitimate regulatory distinction within the meaning of Article 2.1 of the TBT Agreement.

7.3.3 Article 2.2

7.354.
Article 2.2 of the TBT Agreement provides:

Members shall ensure that technical regulations are not prepared, adopted or applied with a view to or with the effect of creating unnecessary obstacles to international trade. For this purpose, technical regulations shall not be more trade-restrictive than necessary to fulfil a legitimate objective, taking account of the risks non-fulfilment would create. Such legitimate objectives are, inter alia: national security requirements; the prevention of deceptive practices; protection of human health or safety, animal or plant life or health, or the environment. In assessing such risks, relevant elements of consideration are, inter alia: available scientific and technical information, related processing technology or intended end-uses of products.

7.355.
Article 2.2 can be parsed into several different elements: "legitimate objective"; "fulfilment"; "not … more trade-restrictive than necessary"; and "taking account of the risks non-fulfilment would create".585 Based on these elements, the Appellate Body has described how a panel should assess a claim under Article 2.2 as follows:

[A] panel must assess what a Member seeks to achieve by means of a technical regulation. … Subsequently, the analysis must turn to the question of whether a particular objective is legitimate …

In sum, … an assessment of whether a technical regulation is "more trade-restrictive than necessary" within the meaning of Article 2.2 of the TBT Agreement involves an evaluation of a number of factors. A panel should begin by considering factors that include: (i) the degree of contribution made by the measure to the legitimate objective at issue; (ii) the trade-restrictiveness of the measure; and (iii) the nature of the risks at issue and the gravity of consequences that would arise from non-fulfilment of the objective(s) pursued by the Member through the measure. In most cases, a comparison of the challenged measure and possible alternative measures should be undertaken …586

7.356.
The Appellate Body stated that all these factors provide the basis for the determination of what is to be considered "necessary" in the sense of Article 2.2 of the TBT Agreement in a particular case.587 With this legal framework in mind, we begin our examination of the complainants' claim under Article 2.2 with an inquiry into the objective of the EU Seal Regime.

7.3.3.1 Identification of the objective(s) pursued through the EU Seal Regime

7.3.3.1.1 Main arguments of the parties

7.3.3.1.1.1 Complainants

7.3.3.1.1.2 Respondent

7.3.3.1.2 Analysis by the Panel