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Complaint by Australia - Report of the Panel

TABLE OF CASES CITED IN THIS REPORT

Short TitleFull Case Title and Citation
Argentina – Footwear (EC) Appellate Body Report, Argentina – Safeguard Measures on Imports of Footwear, WT/DS121/AB/R, adopted 12 January 2000, DSR 2000:I, 515
Australia – Salmon Appellate Body Report, Australia – Measures Affecting Importation of Salmon, WT/DS18/AB/R, adopted 6 November 1998, DSR 1998:VIII, 3327
Brazil – Aircraft Appellate Body Report, Brazil – Export Financing Programme for Aircraft, WT/DS46/AB/R, adopted 20 August 1999, DSR 1999:III, 1161
Canada – Patent Term Appellate Body Report, Canada – Term of Patent Protection, WT/DS170/AB/R, adopted 12 October 2000, DSR 2000:X, 5093
Canada – Periodicals Appellate Body Report, Canada – Certain Measures Concerning Periodicals, WT/DS31/AB/R, adopted 30 July 1997, DSR 1997:I, 449
Canada – Pharmaceutical Patents Panel Report, Canada – Patent Protection of Pharmaceutical Products, WT/DS114/R, adopted 7 April 2000, DSR 2000:V, 2289
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, 3243
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, 591
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 the Appellate Body Report, WT/DS27/AB/R, DSR 1997:II, 943
EC – Hormones Appellate Body Report, EC Measures Concerning Meat and Meat Products (Hormones), WT/DS26/AB/R, WT/DS48/AB/R, adopted 13 February 1998, DSR 1998:I, 135
EC – Sardines Appellate Body Report, European Communities – Trade Description of Sardines, WT/DS231/AB/R, adopted 23 October 2002
EC – Tariff Preferences Appellate Body Report, European Communities – Conditions for the Granting of Tariff Preferences to Developing Countries, WT/DS246/AB/R, adopted 20 April 2004.
EEC – Parts and Components GATT Panel Report, European Economic Community – Regulation on Imports of Parts and Components, adopted 16 May 1990, BISD 37S/132
India – Patents (US) Appellate Body Report, India – Patent Protection for Pharmaceutical and Agricultural Chemical Products, WT/DS50/AB/R, adopted 16 January 1998, DSR 1998:I, 9
India – Patents (US) Panel Report, India – Patent Protection for Pharmaceutical and Agricultural Chemical Products – Complaint by the United States, WT/DS50/R, adopted 16 January 1998, as modified by the Appellate Body Report, WT/DS50/AB/R, DSR 1998:I, 41
India – Patents (EC) Panel Report, India – Patent Protection for Pharmaceutical and Agricultural Chemical Products – Complaint by the European Communities, WT/DS79/R, adopted 22 September 1998, DSR 1998:VI, 2661
Indonesia – Autos Panel Report, Indonesia – Certain Measures Affecting the Automobile Industry, WT/DS54/R, WT/DS55/R, WT/DS59/R, WT/DS64/R and Corr.1, 2, 3, and 4, adopted 23 July 1998, DSR 1998:VI, 2201
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, 97
Korea – Dairy Appellate Body Report, Korea – Definitive Safeguard Measure on Imports of Certain Dairy Products, WT/DS98/AB/R, adopted 12 January 2000, DSR 2000:I, 3
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, 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 the Appellate Body Report, WT/DS161/AB/R, WT/DS169/AB/R, DSR 2001:I, 59
Thailand – H-Beams Appellate Body Report, Thailand – Anti-Dumping Duties on Angles, Shapes and Sections of Iron or Non-Alloy Steel and H-Beams from Poland, WT/DS122/AB/R, adopted 5 April 2001, DSR 2001:VII, 2701
Turkey – Textiles Panel Report, Turkey – Restrictions on Imports of Textile and Clothing Products, WT/DS34/R, adopted 19 November 1999, as modified by the Appellate Body Report, WT/DS34/AB/R, DSR 1999:VI, 2363
US – 1916 Act Appellate Body Report, United States – Anti-Dumping Act of 1916, WT/DS136/AB/R, WT/DS162/AB/R, adopted 26 September 2000, DSR 2000:X, 4793
US – Carbon Steel Appellate Body Report, United States – Countervailing Duties on Certain Corrosion-Resistant Carbon Steel Flat Products from Germany, WT/DS213/AB/R and Corr.1, adopted 19 December 2002
US – Certain EC Products Appellate Body Report, United States – Import Measures on Certain Products from the European Communities, WT/DS165/AB/R, adopted 10 January 2001, DSR 2001:I, 373
US – Corrosion-Resistant Steel Sunset Review Appellate Body Report, United States – Sunset Review of Anti-Dumping Duties on Corrosion-Resistant Carbon Steel Flat Products from Japan, WT/DS244/AB/R, adopted 9 January 2004
US – FSC (Article 21.5 – EC) Appellate Body Report, United States – Tax Treatment for "Foreign Sales Corporations" – Recourse to Article 21.5 of the DSU by the European Communities, WT/DS108/AB/RW, adopted 29 January 2002
US – Gasoline Appellate Body Report, United States – Standards for Reformulated and Conventional Gasoline, WT/DS2/AB/R, adopted 20 May 1996, DSR 1996:I, 3
US – Section 110(5) Copyright Act Panel Report, United States – Section 110(5) of the US Copyright Act, WT/DS160/R, adopted 27 July 2000, DSR 2000:VIII, 3769
US – Section 211 Appropriations Act Appellate Body Report, United States – Section 211 Omnibus Appropriations Act of 1998, WT/DS176/AB/R, adopted 1 February 2002
US – Section 301 Trade Act Panel Report, United States – Sections 301-310 of the Trade Act of 1974, WT/DS152/R, adopted 27 January 2000, DSR 2000:II, 815
US – Section 337 GATT Panel Report, United States Section 337 of the Tariff Act of 1930, adopted 7 November 1989, BISD 36S/345

I. INTRODUCTION

1.1.
On 17 April 2003, Australia requested consultations1 with the European Communities 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 1994 ("GATT 1994"), Article 64 of the Agreement on Trade-Related Aspects of Intellectual Property Rights ("TRIPS Agreement") and Article 14 of the Agreement on Technical Barriers to Trade ("TBT Agreement") concerning the protection of trademarks and the registration and protection of geographical indications for foodstuffs and agricultural products in the European Communities. The request was circulated to Members on 23 April 2003 in document WT/DS290/1. Consultations were held on 27 May 2003 but did not lead to a resolution of the dispute.
1.2.
On 18 August 2003, Australia requested the Dispute Settlement Body ("DSB") to establish a panel pursuant to Articles 4.7 and 6 of the DSU, Article XXIII:2 of GATT 1994, Article 64 of the TRIPS Agreement and Article 14 of the TBT Agreement.2 At its meeting on 2 October 2003, the DSB established a single Panel pursuant to the requests of the United States in document WT/DS174/20 and Australia in document WT/DS290/18, in accordance with Article 9 of the DSU (WT/DSB/M/156)3. At that meeting, the parties to the dispute also agreed that the Panel should have standard terms of reference. The terms of reference are, therefore, the following:

"To examine, in the light of the relevant provisions of the covered agreements cited by the United States in document WT/DS174/20 and Australia in document WT/DS290/18, the matter referred to the DSB by the United States and Australia in those documents, and to make such findings as will assist the DSB in making the recommendations or in giving the rulings provided for in those agreements."

1.3.
On 13 February 2004, the United States and Australia requested the Director-General to determine the composition of the Panel, pursuant to paragraph 7 of Article 8 of the DSU.
1.4.
On 23 February 2004, the Director-General accordingly composed the Panel as follows:

Chair: Mr Miguel Rodríguez Mendoza

Members: Prof. Seung Wha Chang

Mr Peter Kam-fai Cheung

1.5.
Argentina, Australia (in respect of the United States' complaint), Brazil, Canada, China, Colombia, Guatemala, India, Mexico, New Zealand, the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu (hereinafter referred to as "Chinese Taipei"), Turkey and the United States (in respect of Australia's complaint) reserved their rights to participate in the Panel proceedings as third parties.
1.6.
The Panel met with the parties on 23-24 June 2004 and on 11-12 August 2004. It met with the third parties on 24 June 2004.
1.7.
The Panel submitted its interim report to the parties on 16 November 2004. The Panel submitted its final report to the parties on 21 December 2004.

II. FACTUAL ASPECTS

A. MEASURE AT ISSUE

2.1.
The measure at issue in this dispute is identified in Australia's request for establishment of a panel as Council Regulation (EEC) No. 2081/92 of 14 July 1992 on the protection of geographical indications and designations of origin for agricultural products and foodstuffs, any amendments thereto (including Council Regulation (EC) No. 692/2003 of 8 April 2003, published in the Official Journal of the European Union No. L99 of 17 April 2003), and related implementing and enforcement measures.

B. PROCEDURAL HISTORY

1. Preliminary ruling prior to the first written submissions

2.2.
On 24 February 2004, the day after the Panel was composed and prior to the organizational meeting, the European Communities requested that the Panel issue a preliminary ruling that the United States' and Australia's respective requests for establishment of a panel were inconsistent with the requirements of Article 6.2 of the DSU. The European Communities considered it appropriate that the Panel issue a preliminary ruling before the first written submissions of the parties were due.
2.3.
At the organizational meeting, the Panel sought the parties' views on appropriate procedures to deal with this request. The complainants did not object to filing written responses to the request for a preliminary ruling prior to their first written submissions but requested additional time for the filing of their first written submissions.
2.4.
On 8 March 2004, the Panel adopted its working procedures and timetable, which indicated a date for the United States and Australia to file written responses to the European Communities' request for a preliminary ruling. They submitted their responses accordingly.
2.5.
On 5 April 2004, the Panel issued a preliminary ruling, which is set out in full in Section VII:A of this report.
2.6.
On 20 April 2004, the European Communities sent a letter to the Panel expressing its regret at the Panel's ruling and "reserving its right to raise issues of law regarding the interpretation of Article 6.2 of the DSU before the Appellate Body". In its letter, the European Communities asked the Panel to clarify the status of its preliminary ruling of 5 April 2004, in particular whether such ruling would be incorporated into the Panel's final reports and whether the findings contained in the ruling would be an integral part of the final reports.
2.7.
On 23 April 2004, the Panel responded to the European Communities, advising that its preliminary ruling would be reflected in the Panel's final reports, as appropriate.
2.8.
On 26 April 2004, the European Communities sent a second letter to the Panel indicating that it had understood from the Panel's previous response that the findings contained in the preliminary ruling of 5 April 2004 would be incorporated into the Panel's final reports, and could, therefore, be appealed in the same way as any legal interpretation contained in these reports.
2.9.
On 28 April 2004, the Panel responded again to the European Communities, advising that it had taken note of the European Communities' letter of 26 April 2004 and reiterating that its preliminary ruling would be reflected in its final reports, as appropriate.

2. Request for extension of time

2.10.
On 9 March 2004, the European Communities requested that the Panel extend the period for it to submit its first written submission in view of the circumstances that (a) there were two cases brought by two complainants; (b) these cases did not appear to contain identical claims; and (c) these cases raised new and complex issues and involved a large number of claims. It also alleged that the timetable was unbalanced in favour of the complainants.
2.11.
On 16 March 2004, the United States and Australia each responded to the European Communities' request, disagreeing with its assertions but not objecting to an extension of the period for the European Communities to submit its first written submission, provided that such extension would not affect the timeframe structure of the remainder of the timetable.
2.12.
On 22 March 2004, the Panel revised its timetable, extending the time for the submission of the respondent's first written submission, without affecting the time between any of the subsequent steps as established in the original timetable.

3. Request for separate reports

2.13.
On 3 March 2004, after the conclusion of the Panel's organizational meeting, the European Communities filed a request pursuant to Article 9.2 of the DSU that the Panel submit separate reports on the present dispute. On 8 March 2004 the Panel acknowledged receipt of such request. The complainants did not comment on this request.
2.14.
On 23 April 2004, the Panel informed the parties that it would submit separate reports on this dispute, as requested by the European Communities.
2.15.
At the second substantive meeting with the parties on 11-12 August 2004, the Panel invited the parties to comment on the way in which the Panel should submit separate reports. The Panel took note of the parties' views and confirmed the following facts: (a) the complainants have made similar, but not identical claims in this dispute; (b) the complainants have made separate written submissions and separate oral statements and submitted separate responses to questions, although they did submit 16 common exhibits with their respective first written submissions; (c) the complainants have not collectively endorsed the arguments made in one another's submissions although Australia, in its first oral statement, expressly endorsed certain comments made by the United States4, and the United States, on occasions, cited information and arguments submitted by Australia in support of its arguments; and (d) although each complainant reserved its right to participate in the Panel proceedings as a third party in respect of the other's complaint, they did not exercise these rights. They both declined the opportunity given to them by the Panel to make a statement as a third party during the session with the third parties.

4. Request for factual information from the International Bureau of WIPO

2.16.
On 9 July 2004, the Panel sent a letter to the International Bureau of WIPO requesting its assistance in the form of any factual information available to it relevant to the interpretation of certain provisions of the Paris Convention for the Protection of Industrial Property.5 The parties were given the opportunity to comment.
2.17.
The International Bureau's reply was received by the Panel and the WTO Secretariat on 14 September 2004. The Panel gave the parties an opportunity to submit comments on the reply by 28 September 2004. The parties submitted their comments accordingly.6
2.18.
The factual information provided by the International Bureau consists of a note it prepared and five annexes containing excerpts from the Official Records of the various Diplomatic Conferences which adopted, amended or revised the provisions currently contained in Articles 2 and 3 of the Paris Convention (Stockholm Act of 1967)7.

III. PARTIES' REQUESTS FOR FINDINGS AND RECOMMENDATIONS

A. AUSTRALIA

3.1.
Australia requests that the Panel find that the measures at issue are inconsistent with the European Communities' obligations under:

(a) Articles 1.1, 1.3, 3.1, 16.1, 22.2, 24.5, 41.1, 41.2, 41.3, 42, and 65.1 of the TRIPS Agreement and Article 2.1 of the TRIPS Agreement, incorporating Articles 2(1) and 2(2), 10bis(1) and 10ter(1) of the Paris Convention (1967);8

(b) Article III:4 of GATT 1994;

(c) Articles 2.1 and 2.2 of the TBT Agreement; and

(d) Article XVI:4 of the WTO Agreement.

3.2.
Australia requests that the Panel recommend that the European Communities bring its measures into conformity with its obligations under the WTO Agreement, including in respect of the TRIPS Agreement, GATT 1994 and the TBT Agreement.

B. EUROPEAN COMMUNITIES

3.3.
The European Communities requests that the Panel:

(a) find that certain measures no longer in force or not yet adopted at the time the Panel was established, and Australia's claims "under Articles 43, 44, 45, 46, 47, 48, 49 of the TRIPS Agreement", under Article 2(2) of the Paris Convention (1967) and "under Article 4 of the Paris Convention (1967)" as incorporated by Article 2.1 of the TRIPS Agreement, are outside the Panel's terms of reference; and

(b) reject all claims within the Panel's terms of reference.

IV. ARGUMENTS OF THE PARTIES

4.1.
The arguments of the European Communities and Australia, as set out in their submissions (European Communities' request for a preliminary ruling; Australia's response to the European Communities' request for a preliminary ruling, first written submissions, written rebuttals, oral statements, responses to questions; comments on each other's responses; and comments on the factual information from the International Bureau of WIPO), are attached as Annexes A and B.

V. ARGUMENTS OF THE THIRD PARTIES

5.1.
The arguments of those third parties that made submissions to the Panel (first written submissions, oral statements and responses to questions) are summarized and attached as Annex C.

VI. INTERIM REVIEW

6.1.
On 16 November 2004, the Panel submitted its interim report to the parties. On 30 November 2004, Australia and the European Communities submitted written requests for review of precise aspects of the interim report. On 7 December 2004, Australia and the European Communities submitted written comments on each other's request for interim review.
6.2.
The Panel has modified aspects of its report in light of the parties' comments where it considered appropriate, as explained below. The Panel has also made certain revisions and technical corrections for the purposes of clarity and accuracy. References to paragraph numbers and footnotes in this Section VI refer to those in the interim report, except as otherwise noted.

Further comments on 5 April 2004 preliminary ruling

6.3.
The European Communities requests the deletion of paragraphs 7.3 to 7.7 as the conformity of a panel request with Article 6.2 of the DSU must be evaluated on the face of the panel request. In its view, the references to discussions that take place in other fora, such as the Council for TRIPS, are irrelevant for this purpose.
6.4.
Australiaresponds that nothing in the DSU precludes the Panel noting that subsequent events confirmed the correctness of a particular conclusion.
6.5.
The Panel recalls that the European Communities made a request for a preliminary ruling the day after the Panel was composed in which it alleged defects in the panel request and submitted that it was appropriate that the Panel issue a preliminary ruling before the first written submissions of the parties were due. The Panel issued a preliminary ruling accordingly, in which it found that those allegations were unfounded on the face of the panel request and on the basis of the facts available to it at that time. That preliminary ruling sets out part of the basic rationale for the Panel's findings and recommendation in this dispute. Accordingly, in the course of making an objective assessment of the facts, the Panel does not disregard probative evidence relevant to that ruling submitted later in the course of the proceeding, other than the references to what took place during the consultations, which were without prejudice to the rights of the European Communities and other parties in these proceedings, in accordance with Article 4.6 of the DSU. The Panel has modified the relevant paragraphs, numbered 7.3 to 7.9 of the final report, to elaborate on the reasons for their inclusion.

Other preliminary rulings

6.6.
Australiarequests that the Panel elaborate its reasoning in paragraphs 7.35 to 7.39 and 7.42 to 7.45 with a view to reconciling it with that of the Appellate Body in Korea – Various Measures on Beef. Australia asserts that at paragraph 88 of its report on that dispute, the Appellate Body held that a panel could validly examine a WTO provision not specified in the panel request for the purposes of determining the consistency of a measure with a provision that was specified in the panel request.
6.7.
As a general comment, the European Communities considers that the interim review stage should not serve as an occasion to restate major parts of a party's arguments, nor to relitigate substantial parts of the interim report. Accordingly, the European Communities indicates that it refrains from commenting on all but two of the numerous issues raised by Australia without implying its agreement to the others. Specifically, the European Communities asks the Panel to include the preliminary rulings in these paragraphs in its conclusions at paragraph 8.1.
6.8.
The Panel notes that paragraph 7.38, numbered 7.42 in the final report, already explains why the assertion of an inconsistency with Article 4 of the Paris Convention (1967) amounts to a claim, rather than an argument. That distinction is referred to in the passage which Australia cites in its interim review comments. The Panel has added further detail and quotations of language where Australia in effect asserted its claim and made consequential amendments. The Panel notes that paragraph 39 of the Panel's preliminary ruling set out at paragraph 7.2 of the report already explains the basis on which the Panel accepted that the claim under Article 41 of the TRIPS Agreement was within its terms of reference. The Panel did not rule that Article 41 was within the terms of reference in all respects. This situation is quite different from that of the claims and arguments in the case to which Australia refers.

Claims regarding the "EC measure as a whole"

6.9.
Australiacomments that, apart from one limited aspect relating to the regulatory committee, the Panel has not addressed its claim that the EC measure as a whole accords less favourable treatment to imported products bearing an EC-defined GI than to like domestic products bearing an EC-defined GI, contrary to Article III:4 of GATT 1994. It requests that the Panel address the claim and reflect its finding on the "EC measure as a whole" in the conclusions.
6.10.
The Panel notes that Australia made claims regarding the "EC measure as a whole" under both the TRIPS Agreement and GATT 1994. With respect to the claims under the TRIPS Agreement, Australia referred in paragraphs 195 to 205 of its first written submission to five aspects of the Regulation which the Panel dealt with separately in sub-sections B.2, B.1, E.5, B.3 and E.3 of the findings, respectively. With respect to the claims under Article III:4 of GATT 1994, Australia listed eight bullet points at paragraph 177 of its first written submission and referred to their cumulative effect at paragraph 178. The Panel dealt with the third to sixth points in sub-section B.1 of the findings, the seventh point in sub-section B.2 and the eighth point in sub-section B.4. The Panel has added paragraphs 7,274 and 7,275 of the final report to explain why it is unnecessary to consider further the first and second points or the cumulative effect, and revised paragraph 7.66, numbered 7.68 in the final report, with respect to the labelling requirement, which was not mentioned in the first written submission in support of this claim. As for the conclusions, the Panel specifically sought the parties' views on whether they sought separate rulings on the procedural aspects of the Regulation or a ruling on the Regulation as a whole, in Panel question No. 49. In its response, Australia requested "that the Panel's findings be sufficiently detailed so as to facilitate a positive solution to the current dispute". The Panel has identified specific aspects of the Regulation in its conclusions which it has found inconsistent with a covered agreement in order to enable the European Communities to implement the recommendation. The Panel has not added a separate conclusion on the measure as a whole as this would not facilitate a positive solution to this dispute.

Endorsement of arguments by co-complainant

6.11.
Australiarequests that the Panel amend paragraphs 7.67 to 7.75. It comments that it did endorse generally all U.S. arguments, and did not just purport or attempt to endorse the arguments. This is a separate issue from whether the Panel considered any arguments that arose from this general endorsement. Australia recalls that a panel is not bound to accept the arguments of any party and is free to develop its own legal reasoning. Where there is a single panel, but multiple complainants and multiple reports, a panel can use arguments put to it by either party in assessing common claims. In this context, Australia has the right – either on grounds of efficiency or by way of endorsing either similar or alternative arguments – to endorse, in general terms, arguments by the other complainant in this dispute.
6.12.
With respect to the timing of the general endorsement, Australia recalls the Appellate Body's comment in India – Patents (US) (at para. 88) that arguments – as distinct from claims – "are set out and progressively clarified in the first written submissions, the rebuttal submission and the first and second Panel meetings with the parties as a case proceeds" and asserts that, in this dispute, the timing of the general endorsement can be readily explained when the appropriate context is recalled. At the time of the first opening statement, Australia endorsed U.S. arguments relating to the European Communities' obligations concerning the overlapping claims that Australia and the United States had made with regard to national treatment (under the TRIPS Agreement and GATT 1994) and trademark rights. The rest of Australia's first opening statement covered mainly claims that had not been made by the United States, namely, claims under Article 22.2 of the TRIPS Agreement and under the TBT Agreement. Australia repeated this endorsement at the opening of the second panel hearing. During the second hearing, however, the European Communities sought to make much of the fact that the United States and Australia did not have exactly the same arguments and that this meant that the European Communities' arguments were correct. It was in seeking to reject the European Communities' attempt to make more of the different arguments by the complainants that Australia responded by clarifying that it endorsed all of the United States' arguments.
6.13.
Australia accepts that it could have made clearer that its general endorsement was on the basis of endorsing the United States' arguments as alternative arguments wherever these were inconsistent with Australian arguments. However, Australia maintains that any differences between the United States' and Australian arguments are not material to the matter before the Panel. For example, regardless of the interpretation of Article 24.5 of the TRIPS Agreement, both Australia and the United States agree that it does not provide the European Communities with an excuse for its breach of Article 16.1 of the TRIPS Agreement.
6.14.
Australia refers to the statement in paragraph 7.72 that the Panel (or the European Communities) should not have to sift through the United States or Australian arguments looking for any inconsistency in order to understand the Australian case (where it intersects with the general endorsement of the United States' arguments). The Panel's comments may indicate that it does not consider a careful sifting of all of the arguments put to it, including Australia's, to be a necessary and integral part of its role. As such a view would be clearly contrary to Article 11 of the DSU, Australia requests that the statement be amended or withdrawn.
6.15.
Australia refers to the statement at paragraph 7.74 and asserts that the Panel attributes, without evidence, certain motives to Australia and, as a consequence, impugns Australia's conduct. However, it asserts that the Panel's assessment of Australia's motives is wrong and requests that the statement be withdrawn. While the Panel is right to ensure that a respondent's due process rights are protected, Australia comments that it is also incumbent on the Panel to respect the rights of a complainant and to ensure a fair hearing for all parties to a dispute. The European Communities did not object to a single panel being established by the DSB. Further, the European Communities was given extra time to prepare its first written submission, notwithstanding the largely overlapping nature of the claims by both complainants. In the hearings, the European Communities was allowed to speak as long as it wished, to introduce irrelevant material late in the process, to continuously reiterate immaterial points, and to waste time by asking the complainants a large number of irrelevant questions. This hardly suggests that the European Communities has suffered in any way from the single panel considering, for both reports, all the arguments put to it by either of the complainants. Further, as the European Communities had ample opportunity to counter the United States' arguments, Australia's general endorsement of the United States' arguments did not increase the "case" the European Communities had to answer or that the Panel had to consider.
6.16.
The European Communities expresses regret that Australia, in its comments on paragraphs 7.72, 7.74 and 7.75, summarily dismisses arguments made by the European Communities as irrelevant or immaterial.
6.17.
The Panel agrees that a complainant can endorse a co-complainant's arguments. However, the Panel does not consider that Australia's comment in its closing statement at the second substantive meeting that "Australia endorses all of the arguments put forward by the United States" was a sufficient basis for the Panel to consider that Australia's arguments as presented earlier were modified, given that there were material differences between those arguments and no information was provided as to how they should be reconciled. Paragraphs 7.71 and 7.72 already explained this point but the Panel has expanded them into paragraphs 7.73 to 7.79 in the final report to illustrate the problem. The Panel has examined the parties' arguments in the course of its objective assessment under Article 11 of the DSU but it does not undertake tasks inconsistent with that function. The Panel has expanded paragraph 7.72, numbered 7.79 in the final report, for the avoidance of doubt.
6.18.
The Panel has been mindful of the due process rights of all parties in these proceedings. The European Communities' consent to the establishment of a single panel did not relieve Australia of its burden of making a prima facie case in support of all its claims.
6.19.
The Panel takes note of Australia's explanation of the surrounding circumstances. Paragraph 7.74 reflected the oral interventions at the second substantive meeting. If Australia intended to respond to the European Communities' emphasis of differences between the complainants' respective arguments, then the mere assertion that those differences were not material was ineffective, and the endorsement would have transformed differences between the complainants' cases into contradictions within Australia's own case. Australia's interim review comments do not present any circumstances that would justify the Panel taking a different approach but, rather, point out differences between the arguments Australia presented itself and those of the United States. Therefore, the Panel has retained the first and second sentences of paragraph 7.74, numbered 7.81 in the final report, but deleted the following discussion. The Panel has also corrected paragraph 2.15.

The phrase "[w]ithout prejudice to international agreements"

6.20.
The European Communities requests the deletion of paragraphs 7,132 to 7,137 because it did not argue that the application of Article 12 of the Regulation would prejudice "the EC's obligations under the TRIPS Agreement". It quotes paragraph 66 of its first written submission and paragraph 43 of its first oral statement and asserts that "[t]hese statements do not contain any indication that the EC consider that its obligations under the TRIPS Agreement would be prejudiced by the application of Article 12 of Regulation 2081/92. Rather, the reference to the obligation to provide protection for geographical indications was clearly intended as a reference to the obligation of other WTO Members to provide protection. This is also what the EC explained in response to the Panel's Question No. 94(b)." The European Communities agrees that it is true that it did not provide an explicit response to Panel question No. 20 but it asserts that it did, however, address this point in response to Panel question No. 94, in which it clarified that whereas the application of these conditions would not prejudice the European Communities' national treatment obligations under the TRIPS Agreement, it would prejudice its national treatment obligations under the GATT. Given this context, it comments that the Panel is wrong to read into the European Communities' submission a statement which the European Communities clearly did not make, and which contradicts the entire logic of the European Communities' submissions. In its view, by attempting to read admissions into the European Communities' submissions, the Panel effectively distorts these submissions. This is not compatible with the task of the Panel under Article 11 of the DSU, which is to make an objective assessment of the facts. The European Communities also requests the deletion of paragraph 7,247 for the same reason and because it is unnecessary to the legal analysis which precedes it.
6.21.
Australiaresponds that, in its view, the Panel's summation of the arguments put forward by the European Communities is accurate. Australia notes that the statements quoted by the European Communities from its first written submission, first oral statement and response to question No. 94, in fact concern what Australia has referred to in this dispute as "TRIPS-defined GIs" of which the "EC-defined GIs" covered by the Regulation are generally a subset. However, the dispute has not concerned the European Communities' implementation of its obligations under the TRIPS Agreement and GATT 1994 concerning TRIPS-defined GIs more generally, it has concerned the European Communities' implementation of its obligations in relation to EC-defined GIs. Australia suggests that the relevance of the European Communities' arguments might be better understood if the Panel were to recall the relevance of the distinction between a "TRIPS-defined GI" and an "EC-defined GI". At the same time, however, Australia is of the view that the Panel's analysis of the arguments put forward by the European Communities is entirely correct. Since the allegedly incorrect nature of the statements was the only basis on which the European Communities requested that paragraphs 7,132 to 7,137 be deleted and paragraph 7,247 be amended, Australia suggests that the paragraphs be retained.
6.22.
The Panel takes note of the parties' comments and has carefully reviewed the European Communities' submissions, statements and responses to questions in this dispute, and confirms the following facts: (a) the interim report is consistent with the European Communities' own detailed analysis of the phrase "[w]ithout prejudice to international agreements" in its rebuttal submission; and (b) the European Communities repeatedly emphasized the importance of its own obligations in the interpretation of the equivalence and reciprocity conditions but there is no clear explanation on the record of this dispute as to how the obligations of other WTO Members would render the equivalence and reciprocity conditions under the European Communities' own Regulation inapplicable and the Panel declines to speculate. Therefore, the Panel has expanded and revised, rather than deleted, the relevant paragraphs, numbered 7,139 to 7,145 in the final report, and deleted the other paragraph without affecting the preceding legal analysis.
6.23.
The Panel takes note that, although the European Communities has now requested the deletion of most consideration of its own arguments concerning the phrase "[w]ithout prejudice to international agreements", this point is important to its defence and those arguments have not been withdrawn. Therefore, the Panel considers it important to address them as part of its objective assessment of the matter before it, in accordance with its function under Article 11 of the DSU.

Specific definitions of "nationals"

6.24.
Australia comments that, in view of the Panel's ruling that it cannot be considered to have endorsed all of the United States' arguments in its closing statement at the second substantive meeting, Australia has not argued that the European Communities is a separate customs territory Member of the WTO within the meaning of footnote 1 to Article 1.3 of the TRIPS Agreement or that, as a consequence, a special regime to determine nationals applies. Notwithstanding that Australia has pointed to some seeming anomalies in the European Communities' responses to the United States' arguments on the issue in Australia's response to Panel question No. 104, Australia's views on the meaning of the term "national" are as set out in its response to Panel question No. 23 (and referred to in paragraph 7,146). It is not contested by Australia that the determination of which persons are EC nationals is generally a matter for determination by the European Communities under its own law.
6.25.
The Panel had observed that Australia's views on the meaning of "national", as reflected in the interim report, include references to persons who are domiciled or who have a real and effective industrial or commercial establishment in a separate customs territory Member of the WTO. Consequently, the Panel considered it necessary to address the applicability of that specific definition. However, in light of Australia's confirmation in its interim review comments that it did not argue that the European Communities is a separate customs territory Member of the WTO, the Panel has revised paragraph 7,194, numbered 7,201 in the final report, and deleted the reasoning regarding that issue.

Examination of applications for registration

6.26.
The European Communities requests the amendment of paragraph 7,307(b) to take account of the requirement in Article 12a(2)(a) of the Regulation that a third country must also transmit "a description of the legal provisions and the usage on the basis of which the designation of origin or the geographical indication is protected or established in the country", which is a question of the law of the third country not Community law. It also comments that paragraph 7,307 should explain how the European Communities can implement Article 24.9 of the TRIPS Agreement with respect to such questions of foreign law, taking into account that the complainants have stated that such questions can be of high complexity and have indicated their unwillingness or inability to cooperate on such issues.
6.27.
Australiabelieves that the Panel's statement at paragraph 7,307 is accurate. It does not preclude information concerning the domestic law of the country of origin being one of the criteria referred to in Article 12a(2)(a) of the Regulation. Consequently, Australia suggests that there is no need for any change to paragraph 7,317. While the Panel may choose to elaborate its reasoning in respect of the consequences of Article 24.9 of the TRIPS Agreement, Australia does not believe such elaboration is necessary to the resolution of the dispute.
6.28.
The Panel takes note of the European Communities' request and notes that the description of protection in the country of origin is already included in paragraph 7,307, numbered 7,303 in the final report, which is the logical place for it. The Panel considers it inappropriate to make further findings in the paragraph. The Panel's findings on transmission of applications already apply to all accompanying documents, including the description of protection in the country of origin. Further, this is an "as such" claim but Article 12a(2)(a) of the Regulation does not specify what form of description of protection in the country of origin would be acceptable, nor is there conclusive evidence on this point. In any event, Article 62 of the TRIPS Agreement would appear to be important in framing any recommendation on implementation, but it lies outside the Panel's terms of reference, as explained in paragraph 7,314 of the final report.
6.29.
The Panel has also replaced, where appropriate, the word "verification" in relation to applications for registration later in the report in order to be consistent with the use of the word "examination" used in the description of the application procedures and the consideration of the national treatment claim under the TRIPS Agreement.

Article 2.1 of the TBT Agreement

6.30.
Australiarequests that the Panel review the reasoning set out in paragraphs 7,475 to 7,484, and elaborate its reasoning for the first sentence of paragraph 7,469 and the last sentence of paragraph 7,471. It comments that the Panel's analysis of the "less favourable treatment" elements of this claim seems premised on a misunderstanding of the basis of Australia's claim, which is the fact that Article 12(2) of the Regulation mandates – in the specified circumstances – a labelling requirement for an imported product bearing a GI that is not similarly mandated for a domestically produced product bearing a GI. Further, that mandated differential treatment results in less favourable treatment for an imported product bearing a GI. Australia comments that, as the Panel noted, the challenge is made to the relevant provision "as such". Thus, the fact that the European Communities may have the discretion to impose the same labelling requirement on a domestically produced product in the specified circumstances does not overcome the inconsistency of the labelling requirement set out in Article 12(2) of the Regulation with the European Communities' national treatment obligation under the TBT Agreement. If the Panel concludes that some revisions are necessary, it requests that the Panel complete its analysis of this claim. On the issue of "like products", it requests the insertion in paragraph 7,471 of an example from its arguments.
6.31.
The European Communities opposes Australia's request regarding "like products". The example given is one on which no discussion has taken place, and this is an issue on which Australia has made no claims or arguments.
6.32.
Regarding marks of origin, the European Communities requests the deletion of point (b) of paragraph 7,469, with which it does not agree. The use of the words "made in" is not a specific requirement for a mark of origin in Article IX:1 of GATT 1994. It comments that it does not understand what is meant by the references in that paragraph to indication "in pictorial matter" nor by indication "alongside the GI" nor how this is relevant. Given the Panel's findings, it considers it unnecessary to reach a conclusion on this issue.
6.33.
The Panel notes that the interim report already explains why Australia's argument does not demonstrate any difference in treatment but has made an addition to paragraph 7,469 in the final report. The reasoning in the paragraphs identified by Australia forms the basis for the statements it references in paragraphs 7,465 and 7,467 and the Panel sees no need to elaborate. The Panel has also retained the factual point in the paragraph, numbered 7,461 in the final report, because it is appropriate to explain why the European Communities' defence concerning marks of origin appears to be irrelevant to the preceding legal analysis. However, it has modified the point.

Right to prevent the use of translations of registered GIs

6.34.
The European Communities considers that it would be useful to recall in paragraph 7,530, for the sake of completeness, that under Article 13(1)(b) of the Regulation, GI holders do have a negative right to prevent the use of the registered name or names in translation.
6.35.
The Panel has added a footnote to clarify the scope of the positive right to use a GI with respect to translations and has also clarified the importance of the fact that a trademark may continue to be used under Article 14(2) of the Regulation. However, the Panel declines to amend the referenced paragraph as requested because the protection granted by Article 13 of the Regulation is already addressed elsewhere and it has not been shown to what extent Article 13(1)(b) covers translations.

Exceptions in trademark legislation with respect to the use of GIs

6.36.
The European Communities comments that the assertion in paragraph 7,569 to the effect that the its trademark legislation provides no exceptions with respect to the use of geographical indications is factually incorrect, and refers to its response to Panel question No. 153 and, specifically, to Article 6.1(b) of the First Trademark Directive and Article 12(b) of the Community Trademark Regulation. Therefore, even where a trademark owner is allowed under the GI Regulation to enforce his rights under the First Trademark Directive or the Community Trademark Regulation with respect to the confusing use of a registered GI, he cannot prevent such use if it is "in accordance with honest practices in industrial or commercial matters".
6.37.
Australianotes that the European Communities' comment is premised on the basis that an "indication concerning the... geographical origin... of goods" necessarily includes a GI, which is not always the case. In any case, the European Communities' comment intersects with the issue raised by Australia concerning whether a TRIPS-defined GI – and thus an EC-defined GI – can be analogous to "a descriptive term" within the meaning of Article 17 of the TRIPS Agreement.
6.38.
The Panel takes note of the European Communities' factual correction and has deleted the paragraph.

Scope of a limited exception for GIs in translation

6.39.
The European Communities suggests a redraft of paragraph 7,668 for the following reasons: (a) lest it imply that the European Communities agrees with the last sentence of paragraph 7,666; (b) to include all the relevant limitations to the exception in Article 14(2) of the Regulation relied upon by the Panel including "what is undoubtedly the most crucial one, namely that the trademark owner maintains the right to prevent any confusing uses by all parties except the GI holders"; and (c) because a registration under the Regulation may specify more than one linguistic version of the geographical indication and the last part of the second sentence of paragraph 7,668 may suggest otherwise.
6.40.
Australiarequests that the argument attributed to it in the first sentence of paragraph 7,668 should be referenced or deleted. Should the Panel retain the paragraph, Australia notes that the suggested re-draft by the European Communities eliminates the final point of the second sentence that registration "does not cover the name where rendered differently in another language". In Australia's view, the Panel's finding on this point is an accurate summation of the European Communities' own description of the effect of registration of a term as a GI, and it cites various statements in the European Communities' submissions. Australia suggests that any redraft of the existing second sentence of the paragraph retain the point, given the arguments actually made by the European Communities.
6.41.
The Panel has taken careful note of the parties' comments and has amended the paragraph, numbered 7,659 in the final report, to track more closely the wording of the explanations in the European Communities' own submissions, and then made a finding on the basis of the terms of the legislation and those explanations. It has also deleted the reference to Australia, and added references in the succeeding paragraph and elsewhere to the limitation provided by certain directives which the European Communities explained during the proceeding.

Descriptive terms

6.42.
Australiarequests that the Panel elaborate its reasoning at paragraph 7,689 which assumes that a GI is analogous to a descriptive term within the meaning of the example in Article 17, taking account of the arguments put forward by the parties, including those made by Australia in relation to the design and architecture of the TRIPS Agreement.
6.43.
The Panel has revised this and the preceding paragraph for clarity and added a reference to certain directives which the European Communities explained during the proceeding that provide further explanation of the legitimacy of certain interests. However, further elaboration on descriptiveness is unnecessary given that the Panel has expressly recognized that GIs are intellectual property rights, has not found that GIs are purely descriptive terms, and has noted the express requirements in Article 2(2) of the Regulation that GIs registered under the Regulation must describe certain matters.

Comparison of exceptions provisions

6.44.
Australiarequests that paragraph 7,679 be substantially revised as it is not possible to consider differences in the language of the various provisos in isolation from the nature of the minimum standards for the intellectual property rights concerned.
6.45.
The Panel has interpreted Article 17 in light of the minimum standards of which it forms a part, and has noted differences from rights granted by other forms of intellectual property protection where appropriate elsewhere. The Panel considers an observation of how the text differs from analogous texts in the same agreement to be relevant and does not base its reasoning on that observation alone. The Panel has modified the paragraph, numbered 7,671, in light of the comment received.

Articles 10bis and 10ter of the Paris Convention (1967)

6.46.
Australiacomments that the reasoning as currently expressed in paragraphs 7,729 to 7,733 seems to indicate that a responding party's assertion that it does not understand a claim is of itself a sufficient defence to a claim. Australia requests that the Panel review the content of these paragraphs and make appropriate amendments. In Australia's view, the key issue is whether the Panel understood Australia's claim and arguments and, if it did not, the steps it took to undertake an objective assessment. Moreover, it asserts that when the European Communities said it could not understand the claim because it could not see how a situation could arise where there would be an act of unfair competition, that this indicated that the European Communities did understand the claim, but did not agree that a relevant circumstance could arise. This does not affect the relevant obligation under the TRIPS Agreement.
6.47.
The Panel takes note of Australia's comments and has expanded and revised the paragraphs, numbered 7,721 to 7,726 in the final report, to remove this impression and to clarify the full extent of the argumentation in support of this claim on which the Panel was called upon to make its assessment.

Individual registrations

6.48.
Australiarequests that the Panel elaborate its reasoning in paragraph 7,753. It seeks clarification whether Australia's failure to specify any individual registrations in respect of which it requires relief affected the Panel's conclusion, and whether the Panel exercises judicial economy concerning ongoing registrations.
6.49.
The Panel has reworded its existing reasoning in the paragraph numbered 7,750 in the final report. Australia's failure to specify any particular individual registration effected after the date of establishment of the Panel was relevant to the exercise of judicial economy on the preliminary ruling but not the conclusion on the claim, and this has been clarified in paragraph 7.26 for the avoidance of doubt.

Conclusions

6.50.
Australiaasks whether the Panel exercises judicial economy on the claims under Article 2(1) of the Paris Convention (1967), as incorporated by Article 2.1 of the TRIPS Agreement.
6.51.
The Panel has revised paragraph 7,252 to state its reasons for exercising judicial economy in relation to this provision, and reflected this in its conclusions in paragraph 8.1.

Suggestion by the Panel on a way to implement its recommendation

6.52.
Australiacomments that it may assist the resolution of the dispute if the Panel were not to make any recommendation on how the European Communities could bring its measure into conformity. In Australia's view, amending the Regulation to accord with the interpretation that the European Communities submitted to the Panel would not necessarily bring the measure into conformity, even with respect to the reciprocity and equivalence conditions. This is because the European Communities consistently argued that the reciprocity and equivalence conditions of the Regulation were not inconsistent with the European Communities' national treatment obligations under the TRIPS Agreement. In addition, Australia is concerned that a recommendation by the Panel in respect of just one finding could be seen to suggest that the Panel's other findings of inconsistency are of lesser importance.
6.53.
The European Communities expresses surprise at Australia's suggestion as it would appear that a clarification that the European Communities does not apply conditions of reciprocity and equivalence would remove the concern expressed by Australia regarding the protection of its GIs under the Regulation. As regards Australia's argument that "the EC consistently argued that the reciprocity and equivalence conditions of the Regulation were not inconsistent with the EC's national treatment obligations under the TRIPS Agreement", the European Communities recalls that it conceded that the application of such conditions would be incompatible with the GATT. Furthermore, the European Communities fails to see the relevance of Australia's comment in the context of the discussion of paragraph 8.5, which concerns an issue of implementation. Finally, as regards Australia's concern that certain of the Panel's findings should not be regarded as being of lesser importance than others, the European Communities fails to see why a suggestion made by a Panel in respect of one of its findings would indicate that this finding is more or less important than other findings. For these reasons, the European Communities requests that paragraph 8.5 not be deleted.
6.54.
The Panel has modified its suggestion in paragraph 8.5 but, on the basis of the European Communities' remarks on interim review, considers it helpful to retain it. This suggestion does not imply that the Panel's other findings of inconsistency are of lesser importance.

Other requests for review

6.55.
Australiaalso requested deletion of paragraphs 7.64, 7.65 and 7,357 and footnote 526, and modifications to paragraphs 7,194, 7,214, 7,439, 7,473, 7,515 to 7,523, 7,589, 7,621, 7,700 and 8.2 and footnotes 565 and 591. It also makes some clerical observations. The Panel has modified its report in light of those comments.
6.56.
The European Communities also requested modification of paragraphs 8.1 and 8.2. The Panel has modified those paragraphs and paragraph 7,758 in light of those comments.

VII. FINDINGS

A. PRELIMINARY ISSUES

1. Consistency of panel requests with Article 6.2 of the DSU

7.1.
On 24 February 2004, the day after the Panel was composed and prior to the organizational meeting, the European Communities submitted a detailed request that the Panel issue a preliminary ruling that the United States' and Australia's respective requests for establishment of a panel were inconsistent with the requirements of Article 6.2 of the DSU. In accordance with the Panel's timetable, the United States and Australia submitted responses to the European Communities' request for a preliminary ruling.
7.2.
On 5 April 2004, the Panel issued the following preliminary ruling.9

(a) Introduction

1. The European Communities is of the view that the requests for establishment of a panel in this matter do not meet the requirements of Article 6.2 of the DSU. It has requested that the Panel issue a preliminary ruling regarding this question.10

(...)11

3. Australia is of the view that its request for establishment of a panel fully complies with the requirements of Article 6.2 of the DSU. It submits that the substantive basis of the European Communities' request for a preliminary ruling should be denied in full.12

4. Article 6.2 of the DSU provides as follows:

"2. The request for the establishment of a panel shall be made in writing. It shall indicate whether consultations were held, identify the specific measures at issue and provide a brief summary of the legal basis of the complaint sufficient to present the problem clearly. In case the applicant requests the establishment of a panel with other than standard terms of reference, the written request shall include the proposed text of special terms of reference."

5. The European Communities alleges that the requests for establishment of a panel are inconsistent with the following requirements in Article 6.2:

(a) they fail to identify the specific measure at issue; and

(b) they do not provide a brief summary of the legal basis of the complaint sufficient to present the problem clearly.

6. The Panel will examine each of the requests for establishment of a panel as a whole on its face in the light of the parties' respective communications to the Panel to date and the relevant provisions of the covered agreements to assess its compliance with each of these requirements in the sections below.13

(...)14

(c) Australia's request for establishment of a panel15

(i) Identification of the specific measure at issue

23. Australia's request, in its fourth paragraph, identifies the following measures at issue:

"The measure at issue is Council Regulation (EEC) No. 2081/92 of 14 July 1992 on the protection of geographical indications and designations of origin for agricultural products and foodstuffs, any amendments thereto (including Council Regulation (EC) No. 692/2003 of 8 April 2003, published in the Official Journal of the European Union No. L99 of 17 April 2003), and related implementing and enforcement measures ('the EC measure'). The EC measure lays down and implements rules on the protection of designations of origin and geographical indications for agricultural products and foodstuffs, excluding wines and spirits."

Council Regulation (EEC) No. 2081/92 and any amendments thereto

24. Australia's request identifies a particular regulation by the name of the authority which adopted it, by its number, by its date of adoption and by its full title. It includes amendments of this regulation, including one amendment which is identified by the name of the authority which adopted it, by its number, by its date of adoption, by its full title and by the date and place of its publication. This is a specific measure,16 and the request has identified it. There is no doubt as to which specific measure is in issue, as the European Communities has itself demonstrated by annexing a consolidated text of the regulation to the request for a preliminary ruling.17

25. The European Communities argues that:

"The unspecific reference to Regulation 2081/92 made in the Panel requests does not permit the EC to understand which specific aspects among those covered by Regulation 2081/92 the complainants intend to raise in the context of the present proceedings." (italics added)

26. The Panel considers the ordinary meaning of the terms of the text in Article 6.2 of the DSU, read in their context and in the light of the object and purpose of the provision, to be quite clear. They require that a request for establishment of a panel "identify the specific measures at issue". They do not require the identification of the "specific aspects" of these "specific measures."

"related implementing and enforcement measures"

27. Australia's request identifies, in addition to the regulation and any amendments thereto, "related implementing and enforcement measures". This phrase expressly refers to measures which implement and enforce Regulation (EEC) No. 2081/92, as amended. The word "related" is not used in isolation in the request.

28. The Regulation as amended itself expressly provides for the taking of particular types of decisions and actions and the adoption of rules of procedure for applying the Regulation. For example, Article 6 provides for the Commission to verify that registration applications include all the requisite particulars and, if it concludes that the name qualifies for protection, to publish certain details and, if no objection is notified, the name is entered in a register or, if the Commission concludes that the name does not qualify for protection, to decide not to proceed with the publication. Article 11a provides that the Commission may cancel the registration of a name. Article 12 provides for decisions by the Commission as to whether a third country satisfies the equivalence conditions and offers the requisite guarantees. Article 12b provides for the Commission, if it concludes that a name the subject of a registration request sent by a third country satisfies the conditions for protection, to publish certain details or, if it concludes that the name does not satisfy the conditions for protection, to decide not to proceed with publication. Article 16 provides for detailed rules for applying the Regulation to be adopted.18 Those decisions, actions and rules, among others, implement the Regulation. The European Communities has indicated that the competent judicial and executive authorities enforce the Regulation.19 In the Panel's view, this does not imply that there is any uncertainty as to which measures taken by those authorities implement and enforce the Regulation and which do not. All of the Regulation's implementing and enforcement measures form a group of specific measures which, although they may be a large group, are identified by Australia's request for establishment of a panel.20

29. For these reasons, on the basis of the facts available to us, the Panel rules that Australia's request for establishment of a panel did not fail to identify the specific measures at issue in accordance with Article 6.2 of the DSU.

(ii) A brief summary of the legal basis of the complaint sufficient to present the problem clearly

30. Australia's request, in its fifth paragraph, sets out in eight bullet points alleged inconsistencies with the covered agreements, by providing narrative text quoting or paraphrasing treaty text accompanied by provisions of the covered agreements identified by number. The numbered provisions identify every article of every covered agreement at issue and, in most cases where there are paragraphs within an article, such paragraphs are identified.

31. The European Communities takes issue with Australia's reference to whether Regulation No. 2081/92 is a "technical regulation" within the meaning of Annex 1 to the TBT Agreement because the definition does not impose any obligations which could have been violated.21

32. The Panel notes that the definition of "technical regulation" per se is not an obligation but rather defines a term used in other provisions of the TBT Agreement set out in Australia's request. The reference to the definition actually presents the problem more, rather than less, clearly because it explains why Australia considers that the measures at issue are subject to the relevant obligations.

33. The European Communities also takes issue with the reference to Article 2 of the TRIPS Agreement (incorporating by reference Articles 10, 10bis and 10ter of the Paris Convention). It argues that Articles 10, 10bis and 10ter are "complex provisions" divided into various paragraphs, and imposing numerous distinct obligations.

34. Australia replies that, irrespective of the accuracy of the European Communities' portrayal of these provisions, its claim is that the measures at issue diminish the legal protection for trademarks under the TRIPS Agreement, contrary to all aspects of these cited provisions.22

35. The Panel considers that the mere listing of provisions of the relevant covered agreements may not satisfy the standard of Article 6.2 of the DSU, for instance, where the listed provisions establish multiple obligations rather than one single, distinct obligation.23 However, where the multiple obligations are closely related and interlinked, a reference to a common obligation in the specific listed provisions may be sufficient to meet the standard of Article 6.2 of the DSU under certain circumstances in a particular case.24

36. With these considerations in mind, the Panel now examines the articles to which the European Communities has referred in Australia's request for establishment of a panel. The Panel notes that, on their face, the provisions within each of these articles are interlinked and very closely related, and that the separate paragraphs do not necessarily create distinct obligations. In particular:

(a) Article 10 of the Paris Convention (1967) extends the application of the provisions of Article 9, which relates to seizure of goods, to false indications of source. The second paragraph of Article 10 sets out a deeming provision for the purposes of the first paragraph;

(b) Article 10bis of the Paris Convention (1967) sets out a single obligation in paragraph (1) regarding unfair competition which is clarified in, and therefore closely related to, paragraphs (2) and (3); and

(c) Article 10ter of the Paris Convention (1967) sets out in paragraph (1) an obligation regarding legal remedies to repress all the acts referred to in Articles 9, 10 and 10bis, and in paragraph (2) an obligation regarding action to repress the same acts by particular types of legal person.

37. The European Communities also takes issue with the reference to "Articles 41 and/or 42 of the TRIPS Agreement". It submits that Article 41 is a "complex provision" subdivided into a number of paragraphs, which contain a number of different obligations; that Article 42 comprises several sentences establishing distinct obligations; and that it "does not understand the 'and/or' which seems to indicate that Articles 41 and 42 of the TRIPS Agreement are somehow alternative obligations".25

38. Australia replies that its reference to the essential elements of the relevant provisions is sufficient in this dispute to shed light on the nature of the obligations at issue in relation to the specific measures at issue. It also states that, in accordance with common usage, the expression "and/or" applies to all of the provisions cited.26

39. The Panel makes the following observations:

(a) Article 41 of the TRIPS Agreement contains general obligations which relate to acts of infringement of intellectual property rights covered by this Agreement. The accompanying narrative text of Australia's request clarifies that this claim is made because the measure at issue allegedly "diminishes the legal protection for trademarks under the TRIPS Agreement". The general obligations in Article 41 relate to "enforcement procedures as specified in [Part III]". Certain of those enforcement procedures, namely under Article 42, are also raised which clarifies that the general obligations are the subject of a claim in relation to these procedures. In particular, Article 42 is entitled "fair and equitable procedures" which is the subject of an obligation in Article 41.2;

(b) Article 42 of the TRIPS Agreement contains closely related obligations concerning fair and equitable procedures. The accompanying narrative text clarifies that this claim is made in relation to "the legal protection for trademarks under the TRIPS Agreement". The requirements of each sentence in Article 42 are distinct but they all set out specific features of fair and equitable civil judicial procedures concerning the enforcement of intellectual property rights; and

(c) the use of the term "and/or" at the end of a series or list of items connected by commas is a standard means of indicating that all items in that series or list may apply cumulatively or separately.27 There is nothing in the context of Australia's request for the establishment of a panel that would indicate that it refers only to the last two items in the series. There is nothing which prevents a complainant making claims in the alternative. This puts the respondent on notice that the complainant effectively makes all these claims.

40. The European Communities further contends that it is entitled to know which provision or aspect of Regulation No. 2081/92 is supposed to violate certain obligations and in which way such a violation is deemed to occur. In the Panel's view, the European Communities is seeking the arguments, rather than just the claims, of Australia.28 That being said, the Panel wishes to assure the European Communities that it is fully entitled to know the arguments of Australia during the course of the proceedings. Those arguments must be set out and may be clarified in Australia's submissions.29 However, Article 6.2 of the DSU does not require those arguments to be set out in the request for establishment of a panel.30

41. The Panel notes that Article 6.2 of the DSU calls for sufficient clarity with respect to the legal basis of the complaint so as to enable a defending party to begin preparing its defence.31 Our examination of Australia's request for establishment of a panel as a whole, in the light of Australia's and the European Communities' respective communications to the Panel to date and the relevant provisions of the covered agreements, leads us to believe that the request for establishment of a panel was sufficiently clear for the European Communities to begin preparing its defence.

42. For these reasons, on the basis of the facts available to us, the Panel rules that Australia's request for establishment of a panel did not fail to provide a brief summary of the legal basis of the complaint sufficient to present the problem clearly in accordance with Article 6.2 of the DSU.

(d) Due process

43. The European Communities is also of the view that the "deficiencies" of the requests for establishment of a panel seriously prejudice its due process rights as a defending party, notably, to know the case it has to answer.32

44. The Panel recalls once again that Article 6.2 of the DSU calls for sufficient clarity with respect to the legal basis of the complaint so as to enable a defending party to begin preparing its defence.33 In this respect, the Panel has found that the complainants' requests for establishment of a panel were sufficiently clear for the European Communities to begin preparing its defence.34 Therefore, the Panel considers that it is not necessary to make a separate ruling on this issue, as presented by the European Communities in its request.35

45. The Panel is mindful of the due process rights of all parties in this proceeding. In this regard, it notes that the European Communities had a period of over four months after the establishment of the Panel prior to its constitution plus a period of over seven weeks prior to receipt of the complainants' first written submissions to begin preparing its case, and will have an additional period of four and a half weeks from receipt of the complainants' first written submissions to continue preparation of its own first written submission, which is in excess of the maximum period proposed in Appendix 3 to the DSU.

(e) Timeliness

46. The European Communities submitted its request for a preliminary ruling two days after the composition of the Panel. It also raised its concerns at the DSB meetings at which the requests for establishment of a panel were considered.36

47. The Panel therefore considers that the European Communities has raised its concerns in a timely manner.37

(f) Conclusion

48. In light of the foregoing, on the basis of the facts available to us, the Panel rules that the measures and claims in Australia's and the United States' respective requests for establishment of a panel did not fail to meet the requirements of Article 6.2 of the DSU that they identify the specific measures at issue and provide a brief summary of the legal basis of the complaint sufficient to present the problem clearly. [End of 5 April 2004 ruling]

7.3.
The Panel stated expressly that its 5 April 2004 preliminary ruling was based on the facts available to it at that time.38 In this final report, the Panel makes further findings on the sufficiency of the panel request, in light of submissions made later during the course of the panel proceeding. These submissions confirm the Panel's ruling as to the meaning of the words used in the panel request and the Panel's assessment that the ability of the respondent to defend itself was not prejudiced.39
7.4.
First, the Panel recalls that the European Communities argued, in its request for a preliminary ruling, that:

"The unspecific reference to Regulation 2081/92 made in the Panel requests does not permit the EC to understand which specific aspects among those covered by Regulation 2081/92 the complainants intend to raise in the context of the present proceedings."40

7.5.
The Panel ruled that Article 6.2 did not require the identification of the "specific aspects" of the specific measures at issue.41 In any event, after consulting the parties' first written submissions, it is clear that the reference to "Regulation No. 2081/92, as amended" in the request for establishment of a panel did identify certain specific aspects among those covered by the Regulation that the complainant later raised, as follows:

(a) Australia's principal claims concerning national treatment (considered in Section VII:B of this report) are based on the differences between the two sets of registration and objection procedures set out in Regulation (EEC) No. 2081/92 (the "Regulation") in Articles 5 through 7 and 12 through 12d, respectively.42 This is one of the principal features of the Regulation. It was clear from the request for establishment of a panel that the complainant intended to raise these aspects of the Regulation; and

(b) Australia's principal claim concerning the legal protection for trademarks (considered in Section VII:D of this report) is based on Article 14 of the Regulation. This provision is specifically devoted to that issue. It was clear from the request for establishment of a panel that the complainant intended to raise this article of the Regulation, as the European Communities itself confirmed in its request for a preliminary ruling.43

7.6.
Second, the Panel recalls that the European Communities submitted in its February 2004 request for a preliminary ruling that:

"In the present case, the ambiguity of the Panel request is such that the EC is, to this date, not sure of the case which the United States and Australia are bringing before the Panel. As a consequence, the EC has been seriously hampered in its efforts to prepare its defence."44

7.7.
Specifically, with respect to the national treatment claims, it submitted as follows:

"[T]he US claim is limited to a paraphrasing of the treaty language of [Article 3 TRIPS and Article III:4 GATT]. The US claim does not permit to understand which provision or aspect of Regulation 2081/92 is supposed to violate the national treatment principle, and in which way such a violation is deemed to occur"; and

"Like the US claims, Australia's claims [regarding inter alia national treatment under Article 3.1 TRIPS and Article III:4 GATT] are limited to the restatement of language already contained in treaty provisions, and therefore encounter the same objections."45

7.8.
The Panel's assessment was that the request for establishment of a panel was sufficiently clear for the European Communities to begin preparing its defence.46 After consulting the European Communities' first written submission, and information submitted by Australia, the Panel is now aware that prior to the date of the request for establishment of a panel, the European Communities had already presented in the Council for TRIPS in September 2002 a statement that responded specifically to the argument that national treatment under the TRIPS Agreement applied to geographical indications. In that statement, the European Communities quoted the texts of Article 3 of the TRIPS Agreement and Article III:4 of GATT 1994 and argued that "[t]hose entitled to rights under TRIPS are nationals". This is also an important defence set out in the European Communities' first written submission, in which it is argued that "[t]he conditions for the registration of geographical indications do not depend on nationality".47 This supports the Panel's assessment that the relevant wording of the request for establishment of a panel was sufficiently clear for the European Communities to begin preparing its defence of the first national treatment claim.48
7.9.
Third, the Panel notes that, in any event, Australia's other claims (considered in Section VII:E of this report), brought under the provisions discussed in paragraphs 36 and 39 of the preliminary ruling, were not pursued in such detail. The Panel has found no prima facie case or rejected all these claims. This confirms the Panel's assessment that no prejudice has been caused to the rights of the respondent by these claims.

2. Measures no longer in force at the date of establishment of the Panel

(a) Main arguments of the parties

7.10.
Australia challenges Council Regulation (EEC) No. 2081/9249, including not only the current version of that Regulation as in force as at the date of establishment of the Panel50 but also two prior versions of the Regulation as originally adopted in 1992 and as amended in 1997.51 Australia's claims refer variously to the current version and these two prior versions of the Regulation.
7.11.
The European Communities responds that Australia's request for establishment of a panel does not make it clear that Australia intends to challenge several versions of the same measure resulting from subsequent amendments made over time. It also submits that the measure at issue is the Regulation as in force at the time the Panel was established and that an analysis of historical versions is not useful for the purposes of settling the present dispute.52

(b) Consideration by the Panel

3. Measures adopted after the date of establishment of the Panel

(a) Main arguments of the parties

7.18.
Australiaand the United Statessubmitted, as an exhibit, a copy of Commission Regulation (EC) No. 2400/9660, which is effectively the register under Article 6 of Council Regulation (EEC) No. 2081/92. Individual designations of origin and geographical indications are added to the register by amending the Commission Regulation. The exhibit includes amendments made up until the time of the first written submissions in this proceeding, nine of which were adopted after the date of establishment of the Panel. Those nine amendments effected the registrations of 15 individual designations of origin and geographical indications.61
7.19.
Australia and the United States also submitted, as an exhibit, an unofficial consolidated version of Council Regulation (EEC) No. 2081/92, which included amendments published in the Official Journal of the European Communities up until the date of establishment of the Panel.62 The latest of these amendments is the Act of Accession of ten new EC member States. They also submitted, as an exhibit, an extract from that Act of Accession which provides for the registration of three Czech beer GIs under Article 17 of the Regulation.63
7.20.
Australiachallenges individual registrations effected under the Regulation and notes that registrations are "ongoing".64
7.21.
The European Communities responds that these measures did not yet exist at the time the Panel was established and are therefore outside the terms of reference. In particular, it submits that the Act of Accession was subject to ratification, which was not completed on the date of establishment of the Panel, and did not enter into force until 1 May 2004.65

(b) Main arguments of third parties

7.22.
Chinaargues that the wording of the request for establishment of a panel specified amendments to the Regulation and that, therefore, they are properly included in the Panel's terms of reference. The respondent received notice of the inclusion of amendments and had enough opportunity to respond to the complainant's case. It is irrelevant whether the amendments came into effect before or after the Panel was established.66

(c) Consideration by the Panel

7.23.
The Panel begins by noting that Council Regulation (EEC) No. 2081/92 (referred to in this report as the "Regulation") has not been amended in any relevant respects during this panel proceeding. It was last amended in April 2003, prior to the date of the request for establishment of a panel.
7.24.
The Panel's terms of reference include not only the Regulation, but also its "related implementing and enforcement measures". The Panel considers that this phrase in the request for establishment of a panel is broad enough to include individual registrations, for the reasons given in paragraph 28 of its preliminary ruling of 5 April 2004, and in paragraph 7.15 above. The individual GIs which are entered in the Register under Articles 6 and 17 of the Regulation are set out in Commission Regulations (EC) No. 2400/96 and No. 1107/96.67 New registrations take the form of amendments to these Commission Regulations. Certain individual registrations were effected after the date of establishment of the Panel and prior to the date of the complainants' first written submissions68, and registrations continue to be made after that date.
7.25.
Australia's challenge of the individual registrations includes those effected after the date of establishment of the Panel. Each of the individual registrations applies to a different GI, is used by different producers and/or processors and may, in turn, affect rights in different trademarks. They are distinct measures. Those effected after the date of establishment of the Panel have added to the implementing measures as they stood at that date, although they have not affected the essence of the implementing measures vis-à-vis other registrations as they stood at that date.69
7.26.
However, Australia has not sought particular relief in respect of individual registrations effected after the date of establishment of the Panel70, as opposed to those effected earlier, and the Panel has found no prima facie case in support of the claims in respect of individual registrations effected at any time.71 Therefore, the Panel does not consider it necessary to rule on whether the individual registrations effected after the date of establishment of the Panel fall within the terms of reference in order to secure a positive solution to this dispute.
7.27.
The Panel wishes to note that individual registrations effected after the date of the request for establishment of a panel can be among the best evidence of the way in which certain provisions of the Regulation itself, which are at issue, are interpreted and applied.72 The Panel therefore refers to them, as factual evidence, in the course of its assessment of the matter before it.73 References in this report to the "Regulation" refer to the basic Regulation rather than related and implementing measures, unless the context indicates otherwise.

4. Claims under Article 2(2) of the Paris Convention (1967), as incorporated by Article 2.1 of the TRIPS Agreement

(a) Main arguments of the parties

7.28.
Australia claims that the Regulation imposes on other WTO Member nationals a requirement as to domicile or establishment in the European Communities for the enjoyment of rights contrary to Article 2(1) and 2(2) of the Paris Convention (1967) as incorporated by Article 2.1 of the TRIPS Agreement.74 In its view, Article 2(2) is an integral aspect of the national treatment obligation under Article 2(1).75
7.29.
The European Communities responds that these claims are outside the Panel's terms of reference because they relate to Article 2(2) of the Paris Convention (1967) which was not explicitly mentioned in the request for establishment of a panel. Article 2(2) prohibits the imposition of requirements as to domicile or establishment and is therefore different from, and additional to, the obligations resulting from the national treatment provision of Article 2(1).76

(b) Consideration by the Panel

7.30.
The Panel notes that Australia's request for establishment of a panel adapts the text of the national treatment obligations in Article 3.1 of the TRIPS Agreement and Article III:4 of GATT 1994. Australia's request then cites by number both those articles as well as Article 2 of the TRIPS Agreement "incorporating by reference Article 2 of the Paris Convention (1967)".
7.31.
In its submissions to the Panel, Australia claims that certain aspects of the Regulation are inconsistent with both Article 2(1) and 2(2) of the Paris Convention (1967) as incorporated by Article 2.1 of the TRIPS Agreement. The issue for the Panel is whether the reference to national treatment and to Article 2 of the Paris Convention (1967) is sufficient to present the legal basis of the complaint under Article 2(1) and 2(2), or only Article 2(1).
7.32.
The Panel considers that the mere listing of provisions of the relevant covered agreements may not satisfy the standard of Article 6.2 of the DSU, for instance, where the listed provisions establish multiple obligations rather than one single, distinct obligation.77 However, where the multiple obligations are closely related and interlinked, a reference to a common obligation in the specific listed provisions should be sufficient to meet the standard of Article 6.2 of the DSU under certain circumstances in a particular case.78
7.33.
Paragraph 1 of Article 2 of the Paris Convention (1967) expresses a national treatment obligation. Paragraph 2 prohibits local domicile or establishment requirements as a condition for the enjoyment of any industrial property rights. The texts of paragraphs 1 and 2 are linked by the use of the conjunction "[h]owever" which indicates that paragraph 2 restricts the rule of paragraph 1. Paragraph 2 in effect provides that certain conditions may not be imposed on foreign nationals, even if they are imposed on a country's own nationals.79 Paragraph 3 also reserves or excepts certain conditions from the national treatment obligation, but by stating certain conditions which may be imposed on foreign nationals, even if they are not imposed on a country's own nationals. Read in context, all three paragraphs either establish a single obligation or are very closely related: paragraph 1 sets out an obligation to provide national treatment and paragraphs 2 and 3 limit that obligation.
7.34.
Therefore, in the Panel's view, the references in the request for establishment of a panel to national treatment and to Article 2 of the Paris Convention (1967), which does not specify particular paragraphs, as incorporated by Article 2.1 of the TRIPS Agreement, is sufficient to explain the legal basis of the complaints under both paragraphs 1 and 2 of Article 2. Accordingly, the Panel rules that the claims under Article 2(2) of the Paris Convention (1967), as incorporated by Article 2.1 of the TRIPS Agreement, are within the Panel's terms of reference.

5. Claim under Article 4 of the Paris Convention (1967), as incorporated by Article 2.1 of the TRIPS Agreement and, consequently, under Article 24.5 of the TRIPS Agreement

(a) Main arguments of the parties

7.35.
Australiaclaims that Article 14(1) of the Regulation does not afford the right of priority in respect of trademark applications required to be granted by Article 4 of the Paris Convention (1967), contrary to Article 24.5 of the TRIPS Agreement.80 In its view, the reference to Article 24.5 of the TRIPS Agreement in its request for establishment of a panel permits the Panel to examine the consistency of the Regulation with Article 4 of the Paris Convention (1967) and, indeed, that examination is necessary for such a determination.81 It argues that the obligation not to prejudice eligibility for the registration of a trademark is plain on a reading of Article 24.5 and, given the express obligation on the European Communities to comply with Article 4 of the Paris Convention (1967), it was clear that non-compliance with that provision would constitute prejudice to the eligibility for registration of a trademark. Article 6.2 of the DSU should not be interpreted and applied in such a way as to require that a complaining party must have fully developed its argumentation for a dispute before presenting its request for establishment of a panel.82
7.36.
The European Communities responds that this claim is outside the Panel's terms of reference because Australia's request for establishment of a panel did not refer to Article 4 of the Paris Convention (1967).83

(b) Consideration by the Panel

6. Claim under Article 41 in conjunction with Articles 43, 44, 45, 46, 48 and 49 of the TRIPS Agreement

(a) Main arguments of the parties

7.44.
Australia argues in its first written submission that the European Communities has not ensured that enforcement procedures as specified in Part III of the TRIPS Agreement are available under its law, contrary to Article 41.1 of the TRIPS Agreement, as a consequence of inter alia the fact that the Regulation does not grant the Consultative Committee the authority required by Articles 43, 44, 45, 46 and 48 of the TRIPS Agreement, and does not provide judicial authorities with the authority required by Articles 43, 44, 45, 46, 48 and 49.85 Australia submits that the reference to Article 41 of the TRIPS Agreement in its request for establishment of a panel permits the Panel to examine the consistency of the Regulation with Articles 43 to 49 respectively and, indeed, that such an examination is necessary for such a determination.86
7.45.
The European Communities responds that this amounts to a claim under Articles 43 to 49 of the TRIPS Agreement not mentioned in the request for establishment of a panel and is therefore outside the Panel's terms of reference. The reference to Article 41 in the request for establishment of a panel is not sufficient to specify Articles 43 to 49 and, more specifically, Article 41.1 is a purely introductory provision which does not create separate legal obligations.87

(b) Consideration by the Panel

7.46.
The Panel recalls that Article 6.2 of the DSU requires that a request for establishment of a panel shall "provide a brief summary of the legal basis of the complaint sufficient to present the problem clearly". This calls for sufficient clarity with respect to the legal basis of the complaint so as to enable a defending party to begin preparing its defence.88
7.47.
The Panel recalls that in its preliminary ruling dated 5 April 2004, reproduced above, it considered the relationship between Article 41, which is specifically identified in the request for establishment of a panel, and the enforcement procedures in Part III of the TRIPS Agreement, in particular, in Article 42, which is also specifically identified in that request. The Panel did not rule that Article 41 was clearly within the terms of reference in all respects. After consulting the parties' first written submissions, it is clear that the relevant references in the request for establishment of a panel did not identify all the claims that Australia subsequently raised. Australia's request for establishment of a panel does not refer to Articles 43, 44, 45, 46, 48 or 49 or the other provisions of Part III. The textual link in the TRIPS Agreement between Article 41 and the other articles of Part III is found in paragraph 1 of Article 41, which provides that "Members shall ensure that enforcement procedures as specified in this Part are available under their law...". Australia's request for establishment of a panel does not indicate which of these other enforcement procedures are at issue, does not cite this text, nor does it refer specifically to paragraph 1 of Article 41.
7.48.
The Panel considers that Article 41.1 imposes an obligation. The language of that provision is expressed in terms of what Members "shall" ensure and is not hortatory. The substance of the provision adds qualitative elements to the procedures specified in Part III through use of terms such as "effective", "expeditious" and "deterrent" and is not redundant. However, it was not possible for the European Communities to know from the request for establishment of a panel that the claim under Article 41 put in issue the procedures required under any of Articles 43 through 49. The inclusion of a claim in Australia's first written submission under Article 41 of the TRIPS Agreement in conjunction with Articles 43, 44, 45, 46, 48 and 49 took the European Communities by surprise and deprived it of the right to begin preparing its defence of this claim earlier.
7.49.
Therefore, in this respect, the request for establishment of a panel does not satisfy the requirement of Article 6.2 to "provide a brief summary of the legal basis of the complaint sufficient to present the problem clearly". Accordingly, the claim under Article 41 of the TRIPS Agreement in conjunction with Articles 43, 44, 45, 46, 48 and 49 is outside the Panel's terms of reference.
7.50.
In any event, the Panel rejects all of Australia's claims under Articles 41 and 42 of the TRIPS Agreement, for the reason given in paragraph 7,731 of this report, which applies with equal force to all grounds on which these claims were purportedly made.

7. Claim under Article 20 of the TRIPS Agreement

7.51.
Australiaincludes in its request for establishment of a panel a claim that the Regulation diminishes the legal protection of trademarks contrary to Article 20 of the TRIPS Agreement. It presents arguments in support of that claim in its first written submission.89
7.52.
The European Communities responds that the Regulation is not inconsistent with Article 20 of the TRIPS Agreement.90
7.53.
In its second oral statement, Australia withdrew its claim under Article 20 of the TRIPS Agreement.91 Therefore, the Panel does not consider this claim any further.

8. Claims under Article 4 of the TRIPS Agreement, Article I:1 of GATT 1994 and Article 2.1 of the TBT Agreement

7.54.
Australiaincludes in its request for establishment of a panel claims that the Regulation is inconsistent with the MFN treatment obligations in Article 4 of the TRIPS Agreement, Article I:1 of GATT 1994 and Article 2.1 of the TBT Agreement.
7.55.
In its first written submission, Australia "reserves the right" to pursue these claims in the event that the European Communities is applying protection under the Regulation to GIs from another WTO Member or begins to do so.92 Australia did not pursue these claims. Therefore, the Panel does not consider them any further.

9. Claim under Articles 1, 63.1 and 63.3 of the TRIPS Agreement

7.56.
Australiaincludes in its request for establishment of a panel a claim that the Regulation is not applied in a transparent manner contrary to Articles 1, 63.1 and 63.3 of the TRIPS Agreement.
7.57.
In its first written submission, Australia "reserves the right" to pursue the claim under Articles 63.1 and 63.3 in the event that the European Communities should in fact have in place criteria and/or guidelines for the purposes of making assessments and/or determinations under "various provisions" of the Regulation.93 Australia did not pursue the claim regarding transparency under Articles 1, 63.1 or 63.3 of the TRIPS Agreement. Therefore, the Panel does not consider it any further.

10. Claim regarding application procedures under the TRIPS Agreement

7.58.
The European Communities submits that Australia has not made a claim concerning the application procedures under the TRIPS Agreement but only under GATT 1994.94 It does not indicate the reasons for its view.
7.59.
Australiareplies that it makes its claim in relation to the application procedures under the TRIPS Agreement as well and refers to passages in its first written submission.95
7.60.
The Panel has reviewed the passages in Australia's first written submission, to which it refers. They appear under a heading which refers expressly to "national treatment" and specific national treatment provisions of the TRIPS Agreement. They include the following statements:

"198. However, non-EC nationals seeking to register, and thus protect, an EC-defined GI in respect of a geographical location in the territory of another WTO Member pursuant to Regulation No. 2081/92 are not able to apply directly to the EC (whether to the Commission or another Community level body) to register an EC-defined GI.

(...)

"205. Moreover, notwithstanding any outward appearance of symmetry of treatment, the EC measure accords non-EC nationals less favourable treatment than that accorded to EC nationals in respect of the registration of an EC-defined GI from another WTO Member and in respect of the enforcement of trademark rights concerning the proposed registration of an EC-defined GI. The fact that the EC and its Member States have legally defined rights and obligations in relation to each other and to EC Member State nationals makes the registration and objection processes for EC nationals fundamentally different to those for non-EC nationals. Few other WTO Member governments have such legally defined relationships affecting the maintenance and enforcement of an intellectual property right, a right expressly recognised as a private right by the TRIPS Agreement."

7.61.
The Panel considers that the claim in respect of the application procedures under the TRIPS Agreement, whilst it could have been expressed more clearly, does appear in these passages in Australia's first written submission. The references to persons seeking to register a GI, or the proposed registration of a GI, include the application procedures. The submission refers expressly to the lack of direct applications for non-EC nationals and the obligations of EC member States in the registration process, which are the basis for this claim. Any doubts which the European Communities had in this respect should have been dispelled by Australia's express confirmation in its first oral statement that it had made this argument in support of its claim that the measure as a whole does not accord national treatment to non-EC nationals. A respondent that chooses not to respond to a claim does so at its own risk.
7.62.
The European Communities has suffered no prejudice to its ability to defend itself, because it has responded to overlapping claims presented by Australia based on the same aspects of the application procedures under GATT 1994 and the opposition procedures based on the same obligation under the TRIPS Agreement, as well as the same claim as made by the United States based on the same aspects of the application procedures under GATT 1994.
7.63.
For these reasons, the Panel will consider this claim.96

11. Claim regarding the labelling requirement under GATT 1994

7.64.
Australiaclaimed in its first written submission that the labelling requirement in Article 12(2) of the Regulation was inconsistent with Article 2.1 of the TBT Agreement, but it did not claim at that time that it was inconsistent with Article III:4 of GATT 1994.97
7.65.
The European Communities responded to Australia's claim in its first written submission, arguing that Article 12(2) of the Regulation did not constitute a technical regulation within the meaning of Annex 1.1 of the TBT Agreement and was not otherwise incompatible with Article 2.1 of the TBT Agreement. It responded to the United States' claim that Article 12(2) was inconsistent with Article III:4 of GATT 1994 and noted that Australia did not make such a claim in this regard.98
7.66.
In its rebuttal, Australiasubmitted that, should the Panel consider that Article 12(2) of the Regulation did not constitute a technical regulation within the meaning of Annex 1.1 of the TBT Agreement, it nevertheless accorded treatment less favourable to imported products inconsistently with Article III:4 of GATT 1994.99
7.67.
In its second oral statement, the European Communities maintained that Australia had challenged Article 12(2) of the Regulation under Article 2.1 of the TBT Agreement and that the United States had challenged it under Article III:4 of GATT 1994.100
7.68.
The Panel notes that Australia only asks the Panel to address Article 12(2) of the Regulation under Article III:4 of GATT 1994 should the Panel consider that Article 12(2) does not constitute a technical regulation within the meaning of Annex 1.1 of the TBT Agreement. This premise has not been met and further consideration is therefore unnecessary.101

12. Endorsement of arguments by another complainant

7.69.
Australia, in its opening statement at the first substantive meeting with the Panel, formally endorsed certain comments made by the United States. These were "those comments concerning the rights required to be granted in respect of trademarks" and "the comments made by the United States concerning the EC's national treatment obligations under the TRIPS Agreement and GATT 1994". Australia also offered "additional comments" in its first oral statement.102
The Panel understands that these endorsements refer to comments made by the United States in its first opening oral statement. By virtue of these endorsements, the referenced comments of the United States form part of Australia's case. This was confirmed in Australia's opening statement at the second substantive meeting as follows:

"Our case in total would include of course all the material we have submitted to the Panel directly, or via endorsement of arguments made by the US in this dispute."103

7.71.
However, the next day, in its closing statement, the representative of Australia said the following:

"Australia endorses all of the arguments put forward by the United States. Where there are differences between the complainants, these are a result of different understandings of the flawed measure at issue in this dispute and, in any case, are not material differences."104

7.72.
The European Communities objected orally during the same meeting. It informed the Panel that it did not know which particular arguments Australia was endorsing because at times the United States' arguments contradicted Australia's arguments. Further, an overall endorsement did not respect its rights of defence.
7.73.
The Panel notes, by way of illustration, the following examples provided by the European Communities of differences between the arguments presented by Australia and the United States. First, Australia had argued as follows with respect to the interpretation of Article 24.5 of the TRIPS Agreement:

"[T]he right to use a trademark refers to the ongoing ability to use a trademark where rights to a trademark have been acquired through use in good faith."105

7.74.
In its closing statement, Australia said that it endorsed arguments which include the following:

"'[T]he right to use a trademark' is not specifically limited in the text to trademarks whose rights are acquired through use (although it would appear to include such trademarks). Rather the obligation not to prejudice the right to use a trademark – to harm or damage the permitted or forbidden activity associated with application of a trademark to its purpose – would include an obligation with respect both to registered and non-registered trademarks (...)"106

7.75.
Australia's endorsement in its closing statement does not enable the Panel to ascertain the case that Australia asks it to consider on this key point (considered in Section VII:D of this report).
7.76.
Second, when the Panel asked Australia whether it alleged that Article 12(2) of the Regulation provides any less favourable treatment to imported products besides labelling costs, Australia replied "No."107 In its closing statement, Australia said that it endorsed arguments which included the following:

"The requirement of Article 12(2) that GIs for imported products, but not for domestic products, must be accompanied by a clear and visible indication of country of origin on the label is not simply a labeling cost issue. This requirement provides less favorable treatment to non-EC nationals and products in part because the non-EC GI, unlike the EC GI, is being burdened by an additional labeling requirement that is in the nature of a qualifier that detracts from the value of the GI (...)"108

7.77.
Australia's endorsement in its closing statement does not enable the Panel to ascertain the case that Australia asks it to consider on this point (considered in Section VII:B of this report). By way of further illustration, the Panel notes that the United States has presented arguments in support of its MFN claims which Australia chose not to pursue after the establishment of the Panel (mentioned in Section VII:A of this report).
7.78.
Therefore, the Panel does not agree with Australia that there are no material differences between the complainants' respective cases. Australia's endorsement in its closing statement was sweeping and unlimited. More information was required in order to explain how it related to parts of Australia's case as presented prior to the end of the second substantive meeting with the Panel.
7.79.
The Panel has examined the parties' arguments in the course of its assessment of the matter before it. However, it is not part of the Panel's function to participate in making a party's case, as this would compromise its duty to make an objective assessment. The Panel should not have to sift Australia's and the United States' respective arguments and make an assessment of where there are possible contradictions, where there is possible support for a claim and where the United States' arguments are irrelevant to Australia's claims, simply in order to establish what case Australia wished to bring. Further, the European Communities, as the respondent, is entitled to know the case that it has to answer from each complainant. It is unable to know with certainty what Australia's case actually is in the final analysis, as regards the endorsement in the closing statement. Australia bore the responsibility to make its own case clear and, as regards the arguments covered by this endorsement, it has failed to discharge that responsibility.
7.80.
The lateness of this endorsement also raises an issue of due process. Whilst the overlapping nature of the claims presented by the two complainants is a particular feature of this dispute, a respondent may choose to defend certain arguments in support of one claim, but not others. After the enlargement of one complainant's case at the end of the second substantive meeting, the respondent may understandably wish to respond to certain arguments for the first time. However, at that stage, it only has the opportunity to respond to written questions and comment on the other parties' responses, which may provide insufficient opportunity to respond to those arguments. This could compromise the respondent's ability to defend itself against each complainant.
7.81.
There are no relevant specific circumstances in this proceeding to take into account. Australia had ample opportunity to make its case. It did not endorse all the United States' arguments earlier when it endorsed specific comments, either at the first substantive meeting or in its opening statement at the second substantive meeting.
7.82.
Accordingly, the Panel does not consider that Australia's statement that it endorsed all of the United States' arguments was a sufficient basis for the Panel to consider that Australia's arguments as presented earlier were modified. Nevertheless, the Panel accepts Australia's earlier endorsements of certain comments of the United States, as described in paragraphs 7.69-7.70above, and takes note of the referenced comments.

13. Exhibits containing legislation of other Members

7.83.
Australia requests that the Panel reject six exhibits submitted by the European Communities which consist of extracts of legislation of Australia and two third parties. This request is made on the grounds that the exhibits are allegedly not relevant.109
7.84.
The Panel does not consider it appropriate to remove these exhibits from the record. They form part of the respondent's submission. To the extent that they lack evidentiary worth, they will suffer from that defect and the Panel will disregard them.

14. Request by a third party for a suggestion on ways to implement a recommendation

7.85.
Mexicoconsiders that "cochineal" should be removed from the list of products covered by the Regulation set out in its Annex II. As a third party, Mexico does not submit this as a claim, but requests that the Panel make a suggestion to this effect pursuant to the second sentence of Article 19.1 of the DSU. Mexico argues that there is no requirement that a request for such a suggestion must be forwarded by one of the parties. If the Panel does not deem it appropriate to make such a specific suggestion, the same result would be achieved by a suggestion that the European Communities withdraw the Regulation.110
7.86.
The Panel takes note of Mexico's request. The issue of the product coverage of the Regulation is not challenged by the claims in this dispute and is therefore outside the Panel's terms of reference. However, Mexico's attention is drawn to Article 10.4 of the DSU.

15. Order of analysis of claims

7.88.
The Panel will consider the claims relevant to each aspect of the measure in turn. The following sections of the findings are organized as follows:

– Section B National treatment claims

– Section C Trade-restrictiveness claim

– Section D Trademark claims

– Section E Other claims

B. NATIONAL TREATMENT CLAIMS

1. Availability of protection

(a) Do the conditions in Article 12(1) of the Regulation apply to WTO Members?

(i) Main arguments of the parties112

7.89.
Australia claims that GIs (as defined in the Regulation) located in the territory of a WTO Members outside the European Union can only be registered under the Regulation if the Member government in whose territory the GI is located is able and willing to meet the conditions in Article 12(1), which require it to adopt a system for GI protection that is equivalent to that in the European Communities and provide reciprocal protection to products from the European Communities.113 It specifically endorses comments made by the United States in its first oral statement concerning the European Communities' national treatment obligations under the TRIPS Agreement and GATT 1994.114
7.90.
Australia argues that the European Communities had consistently led other WTO Members to believe that Article 12(1) of the Regulation applied to them. It argues that the European Communities' interpretation of the Regulation does not invalidate the meaning of the provisions submitted by Australia, and is not supported by the text of Articles 12 to 12d, which only distinguish between nationals of WTO Members and other third countries where the express language so provides. The Regulation would not be interpreted by the European Court of Justice in light of the European Communities' international obligations because it does not state that it is intended to implement a particular GATT 1947 or WTO obligation.115 Australia understands that the introductory phrase "[w]ithout prejudice to international agreements" was intended to allow for an international agreement – whether bilateral or plurilateral – to incorporate different conditions but it does not, and was not intended to, incorporate the European Communities' obligations under the WTO Agreement.116
7.91.
Australia argues that the Panel is not bound by the European Communities' interpretation of its own measure to any extent. The Panel's obligation is to appraise whether that interpretation is supported by the text of the Regulation, having regard to all relevant factors including the plain text of the relevant provisions, the European Communities' previous explanations of their meaning, its failure to explain inconsistencies in its new interpretation and the fact that the statements of EC representatives to the Panel do not create new legal obligations in Community law.117
7.92.
The European Communities responds that the conditions in Article 12(1) of the Regulation do not apply to geographical areas located in WTO Members. The introductory phrase of Article 12(1) provides that it applies "[w]ithout prejudice to international agreements" – which include the WTO agreements. This is made clear by the eighth recital of the April 2003 amending Regulation which took specific account of the provision of the TRIPS Agreement. WTO Members are obliged to provide protection to geographical indications in accordance with Section 3 of Part II and the general provisions and basic principles of the TRIPS Agreement. For this reason, Article 12(1) and 12(3) do not apply to WTO Members. Accordingly, the registration of GIs from other WTO Members is subject to exactly the same conditions as the registration of GIs from the European Communities.118
7.93.
The European Communities argues that the procedure under Article 12a of the Regulation is not limited to the cases covered by Article 12(3). The term "third country" in Articles 12 through 12d does or does not include WTO Members depending on the wording, context and objectives of each specific provision. The evidence of prior statements by Community officials does not contradict the European Communities' interpretation in this Panel proceeding and more recent statements support it. The statements made by the agents of the European Commission before the Panel commit and engage the European Communities but their intention is not to create new legal obligations in public international or in Community law. They are made on behalf of the European Communities as a whole and not only the Commission. Community legislation must, so far as possible, be interpreted in a manner that is consistent with international law, in particular where its provisions are intended specifically to give effect to an international agreement concluded by the Community, as indicated by the phrase "[w]ithout prejudice to international agreements". An interpretation that limited that phrase to bilateral agreements would largely deprive it of its useful value.119
7.94.
The European Communities does not consider that the Panel is "bound" by the EC's interpretation of its own measure. However, it submits that the Panel must take due account of the fact that the Regulation is a measure of EC domestic law and establish its meaning as a factual element. This means that: (1) the burden of proof is on the complainant to establish the meaning of the measure. Given that the claim in the present dispute is based on the measure per se and not as applied, the complainant must establish "beyond doubt" that the measure entails a violation; (2) in making an objective assessment of the facts and the interpretation of the measure, the Panel should be guided by the rules of interpretation customary in the EC's domestic legal order; and (3) it is the EC's authorities who must interpret and apply the measure and therefore its explanations must be given considerable deference.120

(ii) Main arguments of third parties

7.95.
Argentinaasserts that the conditions of equivalence and reciprocity apply to GIs located in all third countries. It is unconvinced by the European Communities' explanation of its measure. If its intention had been to distinguish between WTO Members and other third countries, it could have done so more explicitly.121
7.96.
Brazilasserts that the conditions of equivalence and reciprocity apply to GIs located in all third countries. It considers that the European Commission's interpretation of the phrase "without prejudice to international agreements" would not necessarily withstand scrutiny by a judicial body and is unlikely given that the provisions that refer to "third countries" would have been drafted with only a handful of non-WTO Members in mind. The reference in Article 12(2) indicates that third countries means all third countries outside the European Communities, although in Articles 12a(2) and 12d(1) it could mean non-WTO Members. The EC's interpretation could a contrario indicate a recognition that the equivalence and reciprocity conditions violate national treatment obligations in GATT 1994 and TRIPS.122
7.97.
Canadaconsiders that Article 12 of the Regulation, read in context with Articles 12a, 12b and 12d, cannot support the interpretation advanced by the European Communities. The ambiguous reference to "international agreements" is insufficient to counter the clear wording. There would not appear to be an alternative legal basis for filing applications for countries outside the European Communities besides Article 12 due to the wording of Article 12a(1). Articles 12b and 12d refer to "WTO Members" and "third countries" which suggests no differential application to "third countries" in Articles 12 and 12a. The European Communities indicated that Article 12 applied to all WTO Members in a statement in September 2002 to the Council for TRIPS.123
7.98.
Chinaargues that the European Communities' interpretation is not accompanied by any supporting evidence and that there is no regulatory language in the provisions to exclude expressly the application of these provisions to WTO Members. The preamble to the April 2003 amending Regulation refers specifically to WTO Members in relation to the right of objection, but does not exclude WTO Members from the equivalence and reciprocity conditions. Had the drafters intended that it should not apply, they would have inserted a clause to that effect in the preamble. The European Communities appears to have admitted that portions of Article 12, regarding product specifications and inspection, do apply to WTO Members.124
7.99.
Colombiasubmits that, if the European Communities' interpretation of "without prejudice to international agreements" is correct, the Panel should recommend that it modify its legislation in such a way that that phrase acquires the scope and meaning that are assigned to it in the EC's first written submission.125
7.100.
Mexicosubmits that the language of Article 12(1) of the Regulation is precise and unequivocal. Third countries must satisfy conditions of equivalence and reciprocity in order to receive the same protection as EC member States.126
7.101.
New Zealandsubmits that the European Communities' interpretation of Article 12(1) and (3) and the phrase "without prejudice to international agreements" is novel and does not withstand close scrutiny. It runs counter to the usual meaning of that phrase and effectively admits that requiring nationals of WTO Members to satisfy the procedures in Article 12(1) and (3) would be contrary to WTO obligations. It is inconsistent with the wording of the Regulation itself and, if Article 12(3) does not apply to WTO Members, then the application procedure in Article 12a would not either. This is the first time that this interpretation has been raised by the European Communities. The alternative interpretation adopted by the complainant is consistent with the wording of the Regulation.127
7.102.
Chinese Taipei asserts that the conditions of equivalence and reciprocity apply to GIs located in all third countries.128

(iii) Consideration by the Panel

7.103.
The first issue in this dispute concerns the conditions for registration of GIs under the Regulation. It is not disputed that a GI located outside the European Communities has never been registered nor the subject of an application made under the Regulation, and that no attempt has ever been made to file an application to register such a GI under the Regulation.129 Therefore, the provisions concerning the protection of such GIs have never been applied in a particular instance. However, Australia challenges this aspect of the Regulation "as such".
7.104.
The parties agree that the conditions set out in Article 12(1) of the Regulation do not apply to the protection of GIs located within the territory of the European Communities. They disagree as to whether they apply to the protection of GIs located in other WTO Members. Australia claims that they do so apply, and it is not disputed that the European Communities never made a clear statement that these conditions did not so apply prior to this panel proceeding. However, the European Communities responds in its submissions to the Panel that the conditions only apply to third countries that are not WTO Members.
7.105.
The European Communities' position, as expressed in its submissions to the Panel, has been welcomed in principle by the complainants and by two third parties.130 If Australia were satisfied with this position, it would provide a positive solution to many of the national treatment claims in this dispute. However, Australia is not persuaded that the European Communities would be able to implement the position that it has presented to the Panel in light of the terms of the Regulation on its face, allegedly prior inconsistent statements by the European Communities in the Council for TRIPS, the Commission's Guide to the Regulation and elsewhere, and inconsistent statements made during this Panel proceeding by the European Communities.131 Australia submits that only formal amendments of the provisions of the Regulation could ensure their interpretation in a manner consistent with the European Communities' obligations.132 Therefore, although the European Communities submits that the Regulation already is in conformity with its obligations, the Panel is obliged to proceed with its assessment of the national treatment claims based on Article 12(1) of the Regulation.
7.107.
Turning to the Regulation, the Panel notes that it applies to the registration of "designations of origin" and "geographical indications", as defined.135 For ease of reference, and without prejudice to their consistency with the definition of a geographical indication in Article 22.1 of the TRIPS Agreement, we shall refer to them both as "GIs" in this report, except where the context requires otherwise.
7.108.
Certain facts are agreed. The parties agree that the Regulation contains two sets of detailed procedures for the registration of GIs for agricultural products and foodstuffs. The first procedure, in Articles 5 through 7, applies to the names of geographical areas located in the European Communities.136 It has been part of the Regulation since its adoption in 1992, although it has been amended subsequently in certain respects. The second procedure, principally found in Articles 12a and 12b, applies to the names of geographical areas located in third countries outside the European Communities.137 It was inserted in the Regulation in April 2003. A third procedure for registration of GIs protected under the national law of EC member States was formerly available under Article 17, but was deleted in April 2003. A fourth possibility is registration by means of an international agreement, discussed below.
7.109.
The parties disagree as to whether the second of these procedures is subject to additional conditions found in Article 12(1) of the Regulation that do not apply to the first procedure. Article 12(1) provides as follows:

"1. Without prejudice to international agreements, this Regulation may apply to an agricultural product or foodstuff from a third country provided that:

- the third country is able to give guarantees identical or equivalent to those referred to in Article 4,

- the third country concerned has inspection arrangements and a right to objection equivalent to those laid down in this Regulation,

- the third country concerned is prepared to provide protection equivalent to that available in the Community to corresponding agricultural products or foodstuffs coming from the Community."

7.110.
Article 12 has been part of the Regulation since its adoption in 1992, although it was amended in April 2003 by the insertion of the requirement of a right of objection equivalent to those laid down in the Regulation, when Article 12(3) and Articles 12a through 12d, including the second procedure described above, were inserted. It is not in dispute that many WTO Members, including Australia, do not satisfy the conditions set out in Article 12(1).
7.111.
The factual issue for the Panel to decide is whether the conditions set out in Article 12(1) apply to the availability of protection for GIs located in WTO Members. In other words, the factual issue is whether the registration procedure in Articles 12a and 12b is available for GIs located in WTO Members that do not satisfy the conditions in Article 12(1).
7.112.
Australia presents two types of evidence. The first is the text of the Regulation and the second consists of the European Communities' own statements concerning the Regulation prior to, and during, this Panel proceeding.
7.113.
The Panel begins its analysis by reviewing the measure on its face.138 The procedure in Articles 12a and 12b of the Regulation begins with the filing of an application under paragraph 1 of Article 12a and continues with its initial examination under paragraph 2. The text of paragraph 1 begins "[i]n the case provided for in Article 12(3)", which immediately limits the availability of the procedure according to the terms of Article 12(3). The text of paragraph 2 of Article 12a begins "[i]f the third country referred to in paragraph 1 deems..." which confirms that this aspect of the procedure is limited in the same way as paragraph 1. Paragraph 1 of Article 12b sets out the next step in the same procedure and refers to the registration request sent by "the third country", which is the third country described in Article 12b(2).
7.114.
Article 12(3) of the Regulation provides as follows:

"3. The Commission shall examine, at the request of the country concerned, and in accordance with the procedure laid down in Article 15 whether a third country satisfies the equivalence conditions and offers guarantees within the meaning of paragraph 1 as a result of its national legislation. Where the Commission decision is in the affirmative, the procedure set out in Article 12a shall apply."

7.115.
The case provided for in this paragraph is clear: it refers to a third country which satisfies the conditions in Article 12(1). The initial clause of Article 12a, as confirmed by the chain of cross-references in Articles 12a(2) and 12b(1), therefore limits the procedure in Articles 12a and 12b to such third countries. No other provision in Article 12a or 12b indicates that that procedure is available for the registration of GIs located in a third country which does not satisfy the conditions in Article 12(1), even if it is a WTO Member. This is consistent with Article 12b(2), which provides for objections in the same procedure, and expressly distinguishes between a "Member State of the European Union or a WTO member" and "a third country meeting the equivalence conditions of Article 12(3)". The implication is that a WTO Member is not necessarily a third country meeting those conditions.139
7.116.
The only other provision in the Regulation which could indicate the possibility of registration of GIs located in a third country which does not satisfy the conditions in Article 12(1) is the introductory phrase of Article 12(1) itself, which prefaces the conditions with the clause "[w]ithout prejudice to international agreements". The European Communities concedes that the application of the conditions in Article 12(1) of the Regulation would prejudice its obligations under Article III:4 of GATT 1994 and submits to the Panel that, as a consequence, it would not apply those conditions to GIs located in WTO Members. Nevertheless, it does not follow that the procedure in Articles 12a and 12b is available for the registration of GIs located in WTO Members. That procedure is limited to third countries which satisfy the conditions in Article 12(1) and there is no other procedure in the Regulation available for WTO Members that do not satisfy those conditions. There is the possibility of protection pursuant to an international agreement, but no existing international agreement either incorporates the procedure under Articles 12a and 12b of the Regulation or contains an application and registration procedure for GIs located in all WTO Members. In particular, neither GATT 1994 nor the TRIPS Agreement contains any such procedure.
7.117.
Other provisions in the Regulation may also shed light on this issue. Article 12d(1), which provides a right of objection to registration of GIs located in the European Communities, distinguishes twice between persons from "a WTO Member country or a third country recognized under the procedure provided for in Article 12(3)".140 This expressly grants a right of objection to persons from WTO Members and is a further indication that where the Regulation refers to "a third country recognized under the procedure provided for in Article 12(3)" it does not include a WTO Member unless it has been recognized under that procedure.
7.118.
Four other provisions also refer to "a third country recognized under the procedure provided for in Article 12(3)" (or analogous terms) without referring to a WTO Member: Article 5(5) on registration of GIs that straddle the external border of the European Communities, Article 6(6) on homonymous GIs, Article 10(3) on inspection structures and Article 13(5) on the coexistence of registered and unregistered GIs. The European Communities' view of Article 10(3) is that it includes WTO Members141, and there seems to be no reason why the other three provisions should exclude WTO Members. These provisions seem to confirm that WTO Members are included in the term "third countries" and therefore require recognition under the procedure provided for in Article 12(3).
7.119.
The preamble of the Regulation, which has contained the conditions in Article 12(1) more or less in their current form since the original version was adopted in 1992, sets out its justification. The 19th recital reads as follows:

"Whereas provision should be made for trade with third countries offering equivalent guarantees for the issue and inspection of geographical indications or designations of origin granted on their territory;"142

7.120.
The phrase "equivalent guarantees for the issue and inspection" of GIs is a clear reference to the conditions in Article 12(1). There is no recital referring to the possibility of GIs located in any other third countries which do not satisfy these conditions.
7.121.
The preamble to the April 2003 amending Regulation, which modified Article 12 and inserted a detailed procedure for applications and objections from third countries in Articles 12a through 12d, sets out the justification for the amendments as follows:

"(8) The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement 1994, contained in Annex 1C to the Agreement establishing the World Trade Organisation contains detailed provisions on the existence, acquisition, scope, maintenance and enforcement of intellectual property rights.

(9) The protection provided by registration under Regulation (EEC) No 2081/92 is open to third countries' names by reciprocity and under equivalence conditions as provided for in Article 12 of that Regulation. That Article should be supplemented so as to guarantee that the Community registration procedure is available to the countries meeting those conditions.

(10) Article 7 of Regulation (EEC) No 2081/92 specifies how objections are to be made and dealt with. To satisfy the obligation resulting from Article 22 of the TRIPS Agreement it should be made clear that in this matter nationals of WTO member countries are covered by these arrangements and that the provisions in question apply without prejudice to international agreements, as provided for in Article 12 of the said Regulation. (...)"143

7.122.
Paragraph 8 recalls the subject-matter of the TRIPS Agreement without elaborating on its relevance to the Regulation. This clarifies the reference to Article 22 of the TRIPS Agreement in paragraph 10 but it is not clear whether it also relates to paragraph 9. In any event, on the European Communities' later interpretation, the TRIPS Agreement is not relevant to the WTO-consistency of the conditions provided for in Article 12, as referred to in paragraph 9. Rather, the European Communities submits that GATT 1994 ensures their WTO-consistency. GATT 1994 is not recited in the preamble.
7.123.
Paragraph 9 contains no qualifier referring to WTO Members, which appears to confirm the position that the conditions in Article 12(1) apply to the availability of protection of GIs located in third countries and that the registration procedure in Articles 12a and 12b is not available for GIs located in WTO Members that do not satisfy those conditions.
7.124.
Paragraph 10 includes the phrase "without prejudice to international agreements, as provided for in Article 12", but it only relates to the right of objection granted to WTO Members' nationals. This is a clear reference to Articles 12b(2) and 12d(1), which were inserted by the amending Regulation. It can be noted that they are the only two provisions in the current version of the Regulation that expressly refer to a "WTO Member", where they also distinguish a WTO Member from a third country recognized under Article 12(3).
7.125.
In the Panel's view, the meaning and content of these aspects of the Regulation, together with the amending Regulation, are sufficiently clear on their face for Australia to have discharged its burden of proof of establishing that, under the Regulation "as such", the availability of protection for GIs located in WTO Members is contingent upon satisfaction of the conditions set out in Article 12(1) and recognition by the Commission under Article 12(3).144
7.126.
There is no supporting evidence of the meaning of these aspects of the Regulation in the form of an interpretation of the relevant provisions by the European Court of Justice or any other domestic court.145 This is partly explained by the facts that no requests for registration of foreign GIs have been made under the Regulation and that Articles 12a through 12d were inserted only recently, in April 2003.
7.127.
Australia also presents evidence consisting of various statements by executive authorities of the European Communities which contain interpretations of the Regulation. The Panel considers that such statements can be useful as, objectively, a WTO Member is normally well placed to explain the meaning of its own domestic law.146 However, the usefulness of any particular statement will depend on its contents and the circumstances in which it was made. The Panel has weighed the evidence and considers that one statement in particular, in light of the clarity of its contents and the official capacity in which it was delivered, is highly relevant to the issue at hand.
7.128.
In a lengthy statement to the Council for TRIPS in September 2002 (prior to the insertion of Articles 12a through 12d), the European Communities specifically responded to the following view expressed by a group of Members, including Australia:

"[U]nder the current EC regulations, the EC does not appear to provide protection for non‑EC geographical indications (i.e., place names of other WTO Members), except on the basis of bilateral agreements, or if the EC has determined that a country has a system for geographical indications that is equivalent to the detailed system of the EC."147

7.129.
The European Communities introduced the relevant part of its response as follows:

"(...) I would like to address one issue that is raised regarding the fact that the EU register for GIs on foodstuffs does not allow the registration of foreign GI unless it is determined that a third country has an equivalent or reciprocal system of GI protection."148

7.130.
The Panel notes that the European Communities was emphatic at that time that registration systems should primarily be aimed at domestic GIs and it quoted the legislation of several other WTO Members which allegedly do not register foreign GIs without an international agreement.149 This statement by the European Communities in September 2002 to the Council for TRIPS therefore appears to support Australia's interpretation of the Regulation on its face.
7.131.
The European Communities argues that the interpretation set forth in its September 2002 statement to the Council for TRIPS "is not incompatible with the text of Regulation 2081/92 as in force at the time it was made or with the statements of the EC in the present case". In its view, its intention at that time was not primarily to explain the EC system for the protection of geographical indications and its statement did not take account of amendments made in April 2003.
7.132.
In the Panel's view, the European Communities' September 2002 statement was very clear in its interpretation of the relevant point of the Regulation. Further, nothing in the April 2003 amending Regulation appears to render that statement incompatible with the current version of the Regulation. In fact, the Panel's examination of the insertion of Article 12(3) and Articles 12a through 12d confirms that the conditions in Article 12(1) remain applicable on the same terms.
7.133.
Australia also refers to the explanation of the amendments given by the European Commission at the time it proposed them, in March 2002. The Panel considers that this evidence corroborates the previous statement because of the clarity of its contents and the capacity in which it was made. In a press release, the Commission explained that, in order to comply with the TRIPS Agreement, it proposed to extend the right of objection to certain other WTO Member country nationals and further stated:

"Beyond mere TRIPS consistency, the Commission proposes important amendments designed to promote the EU system of denominations of origin as a model to the rest of the world. The driving idea behind is the wish to improve protection of European quality products also outside the EU. As the EU cannot force non-EU countries to do so, they would be invited to do so on a 'reciprocal basis'. If a non-EU country introduced an 'equivalent system' including the right of objection for the EU and the commitment to protect EU names on their territory, the EU would offer a specific protection to register their products for the EU market."150

The references to a reciprocal basis and an equivalent system are clear references to the conditions in Article 12(1) of the Regulation.

7.134.
In its submissions to the Panel, the European Communities rejects that interpretation and submits that, due to the introductory phrase of Article 12(1) of the Regulation, "[w]ithout prejudice to international agreements", the conditions in Article 12(1) do not apply to the availability of protection for GIs located in WTO Members. It refers to a statement it made to the Council for TRIPS in June 2004 in the days before the first substantive meeting of this Panel151 and a second edition of the Commission's Guide to the Regulation published in August 2004 in the days prior to the second substantive meeting of this Panel.152 It advises that "[t]he guide was not prepared in connection with the Panel proceedings".153
7.135.
The Panel recalls its reasoning in paragraph 7,116 above, and reiterates its view that, even if the phrase "[w]ithout prejudice to international agreements" had the effect of subjecting the conditions in Article 12(1) to the terms of GATT 1994 or the TRIPS Agreement, those agreements do not contain a procedure for applications and registration for GIs located in all WTO Members. WTO Members would still have to satisfy the conditions in Article 12(1) in order for their GIs to gain access to the procedure in Articles 12a and 12b.
7.136.
The European Communities admits that this would be a "nonsensical result".154 However, it is unable to provide a satisfactory explanation as to how this result could be avoided in light of the wording of Article 12a, which begins "[i]n the case provided for in Article 12(3)". The European Communities points out that Article 12(3) refers to the conditions in Article 12(1) and since, in its view, those conditions do not apply to WTO Members, the procedure in Article 12(3) and the reference in Article 12a do not apply to them either.155
7.137.
The Panel agrees that Article 12(3) provides for a Commission decision on whether a third country satisfies the conditions in Article 12(1) and accepts that, if those conditions do not apply to a third country, there would be no relevant decision under Article 12(3). Yet this does not alter the text of Article 12a which applies "[i]n the case provided for in Article 12(3)". Article 12a does not appear, on its face, to apply to the registration of a GI located in a third country, including a WTO Member, which is not recognized under Article 12(3). For these reasons, the Panel is not persuaded that the European Communities' interpretation is correct.
7.138.
It is not necessary for the purposes of this dispute to determine which are the precise international agreements covered by the phrase "[w]ithout prejudice to international agreements". It suffices to note that there is a plausible alternative interpretation that it refers to bilateral agreements under which the European Communities would protect specific GIs.156 The European Communities does not exclude this, but argues that there is no reason why only such specific agreements should be covered.157 There are currently no such bilateral agreements for agricultural products and foodstuffs, although one has been foreshadowed in a joint declaration with Switzerland.158
7.139.
In any event, the Panel is not persuaded by the European Communities' explanations during this Panel proceeding of the phrase "[w]ithout prejudice to international agreements" as used in Article 12(1) of the Regulation. At the first substantive meeting, in support of its first defence, it provided the following explanation of that phrase:

"(...) Such international agreements include the WTO Agreements. This is made clear by the 8th recital of Regulation 692/2003, which amended the procedures for the registration of non-EC geographical indications, and in this context took specific account of the provisions of the TRIPS.

"WTO Members are obliged to provide protection to geographical indications in accordance with Section 3 of Part II and the general provisions and basic principles of the TRIPS Agreement. For this reason, Article 12 (1) and (3) of Regulation 2081/92 do not apply to WTO Members. (...)"159

7.140.
This explanation was also reflected in a June 2004 statement that the European Communities made to the Council for TRIPS160 and the August 2004 edition of the Commission's Guide to the Regulation161.
7.141.
At the same time, the European Communities' second defence was that the conditions in Article 12(1) of the Regulation were not inconsistent with the national treatment obligations in the TRIPS Agreement, essentially because they discriminate according to the location of GIs and not according to the nationality of persons with rights in relation to GIs.162
7.142.
It was not clear how these two defences could be reconciled. If the first defence implied that the conditions did not apply because they would prejudice the European Communities' national treatment obligations under the TRIPS Agreement, it would have contradicted the second defence that these conditions were not inconsistent with the national treatment obligations in the TRIPS Agreement. The Panel sought clarification from the European Communities by posing the question "does the EC contest that equivalence and reciprocity conditions such as those under Article 12(1) and (3) of Regulation (EC) No. 2081/92, if applied to other WTO Members, would be inconsistent with the national treatment obligations in the TRIPS Agreement and/or Article III:4 of the GATT 1994?". The European Communities declined to give a specific answer to the Panel's question and concluded as follows:

"As regards the specific conditions contained in Article 12 (1) of Regulation 2081/92, the EC has already confirmed that it does not apply these to WTO Members. For this reason, the EC considers that the question whether these conditions are inconsistent with the national treatment obligations of the TRIPS Agreement and the GATT does not arise."163

7.143.
Australia then submitted that the European Communities had impliedly admitted that the conditions in Article 12(1) of the Regulation were contrary to WTO obligations.164
7.144.
The Panel again sought clarification at the second substantive meeting, by asking which precise obligations under an international agreement would be prejudiced by the application of the specific conditions in Article 12(1) of the Regulation to WTO Members. The European Communities responded that it was its obligations under Article III:4 of GATT 1994, but not Article 3.1 of the TRIPS Agreement, because the Regulation did not involve any discrimination between nationals. It later confirmed this in writing.165 Therefore, to the extent that the European Communities' explanation of the phrase "[w]ithout prejudice to international agreements" as used in Article 12(1) of the Regulation relies on the TRIPS Agreement, the European Communities has expressly denied that the phrase refers to its own obligations and the Panel does not consider that possible explanation further.166
7.145.
At this time, the European Communities' explanation of the phrase "[w]ithout prejudice to international agreements" as used in Article 12(1) of the Regulation relies on GATT 1994. In light of the European Communities' analysis that this phrase ensures that "should a conflict between the two acts or provisions occur, then the act or provision to which the 'without prejudice' reference is made prevails"167, it is clear that this explanation depends on the view that the equivalence and reciprocity conditions are inconsistent with the European Communities' obligations under Article III:4 of GATT 1994. However, this is difficult to reconcile with the European Communities' earlier view that the question whether these conditions are inconsistent with the national treatment obligations of GATT does not arise, quoted at paragraph 7,142 above. It was also omitted from the earlier explanation that the conditions did not apply because of obligations under the TRIPS Agreement, quoted at paragraph 7,139 above. Further, the evidence submitted by the European Communities provides no additional support for this explanation, as the amending Regulation recites the TRIPS Agreement but not GATT 1994, and the evidence identified at paragraph 7,140 above also reflects the explanation quoted at paragraph 7,139 above.
7.146.
For all these reasons, the Panel is not persuaded by the European Communities' explanations of the phrase "[w]ithout prejudice to international agreements" as used in Article 12(1) of the Regulation.
7.147.
The Panel takes note that there are various executive authorities involved in the implementation of the Regulation, including representatives of EC member States. Article 15 of the Regulation provides for a regulatory procedure under which the Commission shall be assisted by a regulatory committee composed of the representatives of the EC member States and chaired by the representative of the Commission, who does not vote.168
7.148.
The European Communities' delegation to this panel proceeding confirms that the submissions made by agents of the European Commission before the Panel commit and engage the European Communities.169 It also indicates that Community laws are generally not executed through authorities at Community level but rather through recourse to the authorities of its member States which, in such a situation, "act de facto as organs of the Community, for which the Community would be responsible under WTO law and international law in general".170 The Panel accepts this explanation of what amounts to the European Communities' domestic constitutional arrangements and accepts that the submissions of the European Communities' delegation to this panel proceeding are made on behalf of all the executive authorities of the European Communities.171
7.149.
The parties have presented evidence with respect to the approach that would be taken by the European Court of Justice if the executive authorities registered a GI that was not the subject of an international agreement and that was located in a third country that did not satisfy the conditions in Article 12(1) of the Regulation. The European Communities submits that, according to the settled case law of the European Court of Justice:

"Community legislation must, so far as possible, be interpreted in a manner that is consistent with international law, in particular where its provisions are intended specifically to give effect to an international agreement concluded by the Community."172

7.150.
The Panel is not persuaded that it is possible to interpret the relevant aspects of the Regulation in the manner advanced by the European Communities in these proceedings, for the reasons already given. The Panel also notes that the basic Regulation does not indicate that its provisions are intended specifically to give effect to any international agreement concluded by the Community. Whilst the April 2003 amending Regulation recites the TRIPS Agreement, it would only seem to do so to justify extending the right of objection to nationals of WTO Members. In any case, the European Communities' later explanation is that the interpretation must take account of GATT 1994, which is not mentioned at all, rather than the TRIPS Agreement.
7.151.
Article 11 of the DSU requires that "a panel should make an objective assessment of the matter before it, including an objective assessment of the facts of the case...". In our view, our duty to make an objective assessment prohibits us from accepting the interpretation of the applicability of the conditions in Article 12(1) of the Regulation presented by the European Communities in this proceeding, for the reasons set out above.
7.152.
Therefore, the Panel concludes that Australia has made a prima facie case that the equivalence and reciprocity conditions in Article 12(1) of the Regulation apply to the availability of protection for GIs located in third countries, including WTO Members. In other words, the registration procedure in Articles 12a and 12b is not available for GIs located in third countries, including WTO Members, that do not satisfy the conditions in Article 12(1). The European Communities has not succeeded in rebutting that case.
7.153.
The Panel wishes to note that it has evaluated the European Communities' interpretation of the applicability of the equivalence and reciprocity conditions and not found it reflected in the text of the Regulation. Had this interpretation been reflected in the text of the Regulation, the Panel could have reached a different conclusion which would have rendered it unnecessary to continue with an examination of the consistency of those conditions with the provisions of the covered agreements.

(b) National treatment under the TRIPS Agreement

(i) Main arguments of the parties

7.154.
Australia claims that the Regulation is inconsistent with Article 3.1 of the TRIPS Agreement and Article 2(1) of the Paris Convention (1967), as incorporated by Article 2.1 of the TRIPS Agreement, because it imposes conditions of reciprocity and equivalence on the availability of protection. Unless the WTO Member government in whose territory the geographical location at issue is situated is able and willing to meet the equivalence and reciprocity conditions, non-EC nationals are not able to access the rights available to EC nationals, including the advantages of registration.173 Australia, at the first substantive meeting, expressly endorsed the comments made by the United States concerning the EC's national treatment obligations under the TRIPS Agreement.174
7.155.
Australia argues that at least one right at issue in this dispute is the right to obtain registration. Under the Regulation, a non-EC national seeking to register a GI for an area located outside the EU is treated less favourably than an EC national seeking to register a GI for an area located within the EU. It is not necessary to make assumptions about the population of other categories of nationals and the location of their rights.175 In its view, a national for the purposes of the TRIPS Agreement, in the case of a natural person, is a person who possesses the nationality of a state in accordance with that state's laws or a person who is domiciled or who has a real and effective industrial or commercial establishment in a separate customs territory, as a proxy for the ordinary notion of nationality. In the case of a legal person, it is a person who is domiciled or who is established in the Member in accordance with whose laws nationality is claimed.176
7.156.
Australia considers that less favourable treatment under Article 3.1 of the TRIPS Agreement does not preclude formally different treatment, and could include disadvantages or costs, whereas Article 2(1) of the Paris Convention (1967) requires the granting of the same advantages.177 It argues that the perceived advantages of registration under the Regulation include protection against a registered name becoming generic, broad-ranging protection, including even against evocation of a registered GI, as well as ex officio Community-wide protection.178
7.157.
Australia refers to the jurisprudence on Article III:4 of GATT 1994 and considers that "treatment no less favourable" in Article 3.1 of the TRIPS Agreement could be examined in terms of whether the effect of a measure is to modify the conditions of competition in the EC market to the detriment of nationals of other WTO Members with regard to the protection of intellectual property.179 The effect of the Regulation at issue in this dispute is to accord less favourable treatment to non-EC nationals because the additional requirements for GIs located outside the EC overwhelmingly apply to non-EC nationals, given the reality that persons with an interest in securing the registration of the name of a geographical area will almost always be nationals of the Member in which that geographical area is located.180
7.158.
Australia considers that an overarching exceptions provision analogous to Article XX of GATT 1994 was unnecessary in the TRIPS Agreement and is irrelevant to the assessment of de facto discrimination under that agreement because there were pre-existing multilateral intellectual property conventions already in place; Members may take account of legitimate public policy objectives as recognized in Articles 7 and 8 but then must apply them in accordance with national treatment and MFN treatment; specific exceptions exist in the TRIPS Agreement for separate categories of intellectual property rights.181
7.159.
Australia also claims that the Regulation imposes a requirement of establishment in the EC inconsistently with Article 2(2) of the Paris Convention (1967).182
7.160.
The European Communities responds that this claim must fail. Its first defence is that it does not, in fact, apply the conditions in Article 12(1) of the Regulation to geographical areas located in WTO Members. That defence has been considered in the previous sub-section.
7.161.
The European Communities does not contest that national treatment under the TRIPS Agreement applies to more extensive protection granted in respect of intellectual property rights addressed in the TRIPS Agreement.183
7.162.
The European Communities argues that the conditions in Article 12(1) of the Regulation do not depend on nationality. The Regulation sets out two procedures for registration: one for geographical areas located within the European Communities and one for those located outside the European Communities. Whether the geographical area is located within or outside the European Communities is in no way linked to the question of the nationality of the producers concerned.184 This may concern the origin of the product but has nothing to do with the nationality of the producer, which is simply of no relevance for the registration of the GI.185 There are no legal requirements which ensure that applicants for GIs for geographical areas located in the European Communities are always, or usually, EC nationals.186 There is no reason why a foreign national cannot produce products in accordance with a product specification in a GI registration located in the European Communities, and there are examples of foreign companies which have invested in the European Communities in this way.187 If an applicant or user sets up a legal entity in the geographical area, that is simply a practical consequence of the fact that products must be produced in accordance with product specifications.188 Nationality is determined by the laws of each State and is not simply a matter of domicile or establishment, which is highlighted by the specific rules in Article 3 of the Paris Convention (1967) and footnote 1 to the TRIPS Agreement which would otherwise be unnecessary.189 The European Communities is not a "separate customs territory" within the meaning of footnote 1 to the TRIPS Agreement.190 The meaning of "interested parties" in Article 10(2) of the Paris Convention (1967) is inapplicable in Article 22 of the TRIPS Agreement.191 Nationality is not linked to the points of attachment but must be given a uniform meaning for all intellectual property rights.192 The Regulation does not require any comparison of nationals because it does not contain any discrimination on the basis of nationality.193
7.163.
The European Communities argues that the existence of different procedures which apply according to location of geographical areas is not sufficient to show less favourable treatment but rather there must be a substantive difference between those provisions which entails less favourable treatment. A measure would have to modify the conditions regarding the protection of intellectual property rights within the meaning of the TRIPS Agreement to the detriment of foreign nationals.194
7.164.
The European Communities argues that the jurisprudence on Article III:2 of GATT 1994 is not relevant to the present dispute because of differences between paragraphs 2 and 4 of Article III and between Article III and Article 3.1 of the TRIPS Agreement. There is no general concept of discrimination common to all WTO agreements. There has never been a de facto application of Article 3.1 and the concept of conditions of competition is not easily transposable to the TRIPS Agreement. Whilst it may be possible under certain circumstances that measures which are neutral on their face accord less favourable treatment to nationals, the Panel should take account of the following: (1) the present case relates primarily to the origin of goods which is already dealt with more appropriately in the context of Article III:4 of GATT 1994, not the TRIPS Agreement; (2) de facto discrimination is a notion closely related to preventing circumvention of national treatment obligations, which does not exist when the specific issue is dealt with in other national treatment provisions, such as those of GATT; and (3) the national treatment provisions of GATT and the TRIPS Agreement should not systematically overlap. In addition, the TRIPS Agreement does not contain any provision corresponding to Article XX of GATT 1994 and it would not seem appropriate for a measure justified on the basis of Article XX to be found incompatible with the covered agreements on the basis of a de facto application of TRIPS national treatment.195

(ii) Main arguments of third parties

7.165.
Brazilsubmits that the equivalence and reciprocity conditions in the Regulation are inconsistent with national treatment under Article 3.1 of the TRIPS Agreement. In most cases under the Regulation, discrimination according to geographical areas is discrimination between nationals.196
7.166.
Canadasubmits that the equivalence and reciprocity conditions in the Regulation are inconsistent with national treatment under Articles 2.1 and 3.1 of the TRIPS Agreement. Discrimination on the basis of geographical area discriminates on the basis of nationality because of the "simple and incontestable" reality that EC nationals are likely to register for protection of GIs located in the European Communities and non-EC nationals are likely to register for protection of GIs located outside the European Communities. The explicit requirement that the physical production of a good that qualifies for a GI take place in the area indicated by the GI, means that an applicant for a GI located in the European Communities will, in all probability be a national of an EC member State. The treatment of "nationals" under the TRIPS Agreement extends de jure to geographical area.197
7.167.
China considers that "nationals" within the meaning of the TRIPS Agreement includes natural persons who are domiciled, or legal persons who have a real and effective industrial and commercial establishment, in that Member.198
7.168.
Colombiaconsiders that any distinction that in any way identifies the GIs of the European Communities clearly entails a violation of national treatment obligations.199
7.169.
India considers that the only valid interpretation of "treatment with regard to the protection " in Article 3.1 of the TRIPS Agreement is that no less favourable treatment to nationals of other WTO Members cannot be provided unless no less favourable treatment is also provided to the GIs for which they apply, whether located in the European Communities or in other WTO Members. The only available exceptions are found in Article 3.2.200
7.170.
Mexicoconsiders that the equivalence and reciprocity conditions prevent nationals of other WTO Members enjoying the protection afforded by the Regulation, which is contrary to the national treatment principle in Article 3.1 of the TRIPS Agreement.201
7.171.
New Zealandsubmits that the term "nationals" clearly has a geographical connotation in the context of the TRIPS Agreement. Article 3 of the Paris Convention (1967) sets out a criterion for eligibility for protection to which the definition of "nationals" in Article 1.3 of the TRIPS Agreement refers. Footnote 1 to Article 1.3 of the TRIPS Agreement provides further support. The definition of an applicant in the Regulation includes persons according to their location. The most favourable treatment accorded to EC nationals should be compared with that received by WTO Member nationals. "Less favourable treatment" requires not only a difference in applicable laws but some disadvantage as a result of that difference. At worst, the difference means that the benefits of registration are entirely unavailable. At best, it means that other WTO Member nationals are subject to "extra hurdles" and disadvantaged. As a result, they do not have the same opportunities to protect their GIs through registration as do EC nationals. The individual's right to apply for protection is conditioned on factors over which the applicant has no control. The advantages granted by registration include those under Article 13 and, according to the preamble, higher incomes.202
7.172.
Chinese Taipei submits that the equivalence and reciprocity conditions violate the national treatment obligation in Article 3.1 of the TRIPS Agreement and Article 2(1) of the Paris Convention (1967). It recalls that national treatment under the TRIPS Agreement applies to "nationals" and that the European Communities compares EC nationals and non-EC nationals with GIs located in the European Communities. It treats them completely independently of EC nationals and non-EC nationals with GIs located outside the European Communities. This essentially is an argument that the European Communities can establish a separate set of rules for, and discriminate against, non-EC GIs as it wishes. Chinese Taipei submits that the Panel should examine whether any person, whether an EC or a non-EC national, with a GI, whether located in the European Communities or outside the European Communities, receives treatment less favourable than that accorded to an EC national with a GI located in the European Communities. Footnote 1 to the TRIPS Agreement applies to the European Communities as a separate customs territory.203

(iii) Consideration by the Panel

National treatment obligations in the TRIPS Agreement
7.173.
These claims are made under two national treatment obligations: one found in Article 3 of the TRIPS Agreement, which forms part of the text of that agreement, and the other found elsewhere, in Article 2 of the Paris Convention (1967) as incorporated by Article 2.1 of the TRIPS Agreement. The Panel will first consider the claim under Article 3 of the TRIPS Agreement.
7.174.
Article 3.1 of the TRIPS Agreement provides as follows:

"1. Each Member shall accord to the nationals of other Members treatment no less favourable than that it accords to its own nationals with regard to the protection of intellectual property, subject to the exceptions already provided in, respectively, the Paris Convention (1967), the Berne Convention (1971), the Rome Convention or the Treaty on Intellectual Property in Respect of Integrated Circuits...." [footnote 3 omitted]

7.175.
Two elements must be satisfied to establish an inconsistency with this obligation: (1) the measure at issue must apply with regard to the protection of intellectual property; and (2) the nationals of other Members must be accorded "less favourable" treatment than the Member's own nationals. The Panel will address each of these elements in turn. The parties do not agree on the meaning of "nationals" for the purposes of this claim. The Panel will therefore address that issue in the course of its consideration of the second element of this claim.

Protection of intellectual property

7.176.
The national treatment obligation in Article 3 of the TRIPS Agreement applies "with regard to the protection of intellectual property". Footnote 3 provides an inclusive definition of the term "protection" as used in Articles 3 and 4. It reads as follows:

"For the purposes of Articles 3 and 4, 'protection' shall include matters affecting the availability, acquisition, scope, maintenance and enforcement of intellectual property rights as well as those matters affecting the use of intellectual property rights specifically addressed in this Agreement."

7.177.
Article 1.2 explains the term "intellectual property":

"2. For the purposes of this Agreement, the term 'intellectual property' refers to all categories of intellectual property that are the subject of Sections 1 through 7 of Part II."

7.178.
Turning to the Regulation, Article 12(1) refers to how the Regulation "may apply", which is a reference to the availability of intellectual property rights in relation to "designations of origin" and "geographical indications", as defined in the Regulation. It is not disputed that "designations of origin" and "geographical indications", as defined in the Regulation, fall within the category of "geographical indications", the subject of Section 3 of Part II, and therefore part of a category of intellectual property within the meaning of Article 1.2 of the TRIPS Agreement.
7.179.
Therefore, this claim concerns the "protection" of intellectual property, as clarified in footnote 3 to the TRIPS Agreement, within the scope of the national treatment obligation in Article 3 of that Agreement.
7.180.
It is not necessary to show that the Regulation implements the minimum standards in Part II of the TRIPS Agreement for the purposes of these claims. National treatment is required with regard to the protection of intellectual property, even where measures provide a higher level of protection.

Less favourable treatment accorded to the nationals of other Members

Less favourable treatment

7.241.
The European Communities argues that the interpretation of the national treatment obligations in the TRIPS Agreement and GATT 1994 should not lead to "systematic overlap" between them.
7.242.
The Panel notes that the demonstration of less favourable treatment under each agreement remains a distinct exercise since national treatment under Article 3.1 of the TRIPS Agreement ensures effective equality of opportunities for nationals with regard to the protection of intellectual property rights, whereas national treatment under GATT 1994 ensures equality of conditions of competition between products.241
7.243.
The European Communities also argues that one must take account of the absence in the TRIPS Agreement of a general exceptions provision analogous to Article XX of GATT 1994.
7.245.
More specifically, the Panel notes that Article 8 of the TRIPS Agreement sets out the principles of that agreement. Article 8.1 provides as follows:

"1. Members may, in formulating or amending their laws and regulations, adopt measures necessary to protect public health and nutrition, and to promote the public interest in sectors of vital importance to their socio-economic and technological development, provided that such measures are consistent with the provisions of this Agreement."

7.246.
These principles reflect the fact that the agreement does not generally provide for the grant of positive rights to exploit or use certain subject matter, but rather provides for the grant of negative rights to prevent certain acts. This fundamental feature of intellectual property protection inherently grants Members freedom to pursue legitimate public policy objectives since many measures to attain those public policy objectives lie outside the scope of intellectual property rights and do not require an exception under the TRIPS Agreement.
7.247.
The scope of the national treatment obligation in Article 3.1 of the TRIPS Agreement also differs from that of the national treatment obligation in Article III:4 of GATT 1994, as it is subject to certain exceptions in Articles 3.1, 3.2 and 5, one of which is inspired by the language of Article XX of GATT 1994.244 There is also a series of specific exceptions in the provisions relating to the minimum standards in Part II of the TRIPS Agreement and Part VII contains a provision on security exceptions analogous to Article XXI of GATT 1994, but none on general exceptions.
7.248.
For all these reasons, in the Panel's view, the fact that a general exceptions provision analogous to Article XX of GATT 1994 was not included in the TRIPS Agreement has no impact on its analysis of Article 3.1.

Conclusion with respect to Article 3.1 of the TRIPS Agreement

7.249.
Therefore, the Panel concludes that, with respect to the equivalence and reciprocity conditions, as applicable to the availability of GI protection, the Regulation accords treatment to the nationals of other Members less favourable than that it accords to the European Communities' own nationals, inconsistently with Article 3.1 of the TRIPS Agreement.

Article 2 of the Paris Convention (1967)

7.250.
Australia also makes claims under the national treatment obligation set out in Article 2 of the Paris Convention (1967). These claims are made under paragraphs 1 and 2 of that article, which provide as follows:

(1) Nationals of any country of the Union shall, as regards the protection of industrial property, enjoy in all the other countries of the Union the advantages that their respective laws now grant, or may hereafter grant, to nationals; all without prejudice to the rights specially provided for by this Convention. Consequently, they shall have the same protection as the latter, and the same legal remedy against any infringement of their rights, provided that the conditions and formalities imposed upon nationals are complied with.

(2) However, no requirement as to domicile or establishment in the country where protection is claimed may be imposed upon nationals of countries of the Union for the enjoyment of any industrial property rights.

7.251.
The text refers to the "countries of the Union" for the purposes of identifying States which bear the obligation to accord national treatment under that provision. However, Article 2.1 of the TRIPS Agreement obliges WTO Members to comply with Articles 1 through 12, and Article 19, of that Convention.245 Therefore, as a WTO Member, the European Communities owes obligations under Article 2 of the Paris Convention (1967), as incorporated by Article 2.1 of the TRIPS Agreement.
7.252.
With respect to the claim under paragraph 1 of Article 2 of the Paris Convention (1967), as incorporated by Article 2.1 of the TRIPS Agreement, the Panel observes that, unlike Article 3.1 of the TRIPS Agreement, Article 2(1) of the Paris Convention (1967) refers to "the advantages that... laws now grant, or may hereafter grant" and not to "no less favourable" treatment. Therefore, the Panel has not actually reached a conclusion on this claim. However, further findings on this claim would not provide any additional contribution to a positive solution to this dispute and are therefore unnecessary.
7.253.
With respect to the claim under paragraph 2 of Article 2 of the Paris Convention (1967), as incorporated by Article 2.1 of the TRIPS Agreement, the Panel does not consider that the Regulation contains a requirement of domicile or establishment.246 We have found that the design and structure of the Regulation will operate to ensure that persons who use a protected GI, located in the European Communities, will have a domicile or establishment within the territory of the European Communities. We have also found that the availability of protection for GIs located in third countries, including WTO Members, is dependent on whether the third country in which the GI is located satisfies the conditions of equivalence or reciprocity or enters into an international agreement with the European Communities. It is irrelevant to the protection of a GI located in a third country whether or not the person who seeks protection has a domicile or establishment in the European Communities.
7.254.
Therefore, the Panel concludes that, with respect to the availability of protection, the Regulation does not impose a requirement as to domicile or establishment inconsistently with Article 2(2) of the Paris Convention (1967), as incorporated by Article 2.1 of the TRIPS Agreement.

(c) National treatment under GATT 1994

(i) Main arguments of the parties

7.255.
Australiaclaims the Regulation is inconsistent with Article III:4 of GATT 1994 because it imposes conditions of reciprocity and equivalence on the availability of protection. The agricultural products and foodstuffs from the European Communities and from third countries for which GIs may be registered under the Regulation are like products in the sense of Article III:4. The reciprocity condition in Article 12(1) of the Regulation refers to protection of "corresponding products" from the European Communities which encompasses, at least, like products.247 It argues that the Regulation is a measure affecting the internal sale and/or offering for sale of imported products because imported products can only benefit from the Community-wide protection under the Regulation and/or the esteem purportedly attached where they are registered, and imported products may not bear a registered GI even if it is the common name for a product in the country of origin and/or in the course of trade.248
7.256.
Australia argues that the Regulation accords less favourable treatment to imported products because it imposes distinct additional requirements of equivalence and reciprocity for registration to which domestic products are not subject. Those additional requirements significantly modify the conditions of competition for imported products because if another WTO Member is not willing and able to satisfy them, GIs from that Member are unable to be registered and protected for products imported from that Member into the EC market.249
7.257.
The European Communities responds that the Regulation is fully compatible with Article III:4 of GATT 1994. It does not contest that products from the European Communities and from third countries falling under the scope of the Regulation may be like products, although it stresses that this alone does not preclude the European Communities from applying the conditions for registration to individual GIs.250 It does not contest that the Regulation is a measure affecting the internal sale of products.251
7.258.
The European Communities argues that the Regulation does not accord less favourable treatment to imported products because it does not apply the conditions in Article 12(1) to the registration of GIs from other WTO Members.252 It concedes that the application of those conditions would prejudice its obligations under Article III:4 of GATT 1994.253

(ii) Main arguments of third parties

7.259.
Brazilargues the GATT– and WTO– underlying principle of national treatment would be completely voided of any meaning if it were made conditional on requirements of reciprocity and adoption of equivalent legislation.254
7.260.
Chinaargues that the different treatment accorded to GIs by the Regulation will amount to less favourable treatment if it is found to modify the conditions of competition under which like imported and EC products compete in the EC market to the disadvantage of imported products.255
7.261.
New Zealand considers that the complainant has demonstrated all three elements constituting a violation of Article III:4 of GATT 1994. The only issue under debate is whether the Regulation confers "less favourable treatment" on imported products. As the same phrase is used in Article 3.1 of the TRIPS Agreement, all arguments raised in relation to that claim apply equally here.256

(iii) Consideration by the Panel

7.262.
The Panel notes that the European Communities concedes that the conditions of equivalence and reciprocity in Article 12(1) of the Regulation, if applied to WTO Members, are inconsistent with Article III:4 of GATT 1994.257 Given that the Panel has found that the Regulation "as such" imposes those conditions on the registration of GIs located in other WTO Members, there is no longer any defence before the Panel to the claim that, in this respect, the Regulation is inconsistent with Article III:4 of GATT 1994. It suffices to recall below that the essential elements of an inconsistency with Article III:4 are all met in this claim. These are that the imported and domestic products at issue are "like products"; that the measure at issue is a "law, regulation, or requirement affecting their internal sale, offering for sale, purchase, transportation, distribution, or use"; and that the imported products are accorded "less favourable" treatment than that accorded to like domestic products.258
7.263.
The Regulation sets down requirements concerning the use of certain names in the presentation for sale of agricultural products and foodstuffs.259 It is therefore a law or regulation affecting the internal sale and offering for sale of products within the meaning of Article III:4 of GATT 1994. This is not altered by the fact that the Regulation is also an intellectual property measure covered by the TRIPS Agreement since GATT 1994 and the TRIPS Agreement apply cumulatively.260
7.264.
The Regulation links the protection of the name of a product to the territory of a particular country.261 In the case of "designations of origin", as defined in Article 2 of the Regulation, this is the place of production, processing and preparation of the product and, in the case of "geographical indications", as defined in Article 2 of the Regulation, this is the place of production, processing and/or preparation. It is not disputed that in most cases these criteria are sufficient to confer origin on the products. Given that the Panel has found that the protection of names of products from other WTO Members is contingent on satisfaction of certain conditions of equivalence and reciprocity that do not apply to the names of products from the European Communities, the Regulation formally discriminates between imported products and products of European Communities origin within the meaning of Article III:4 of GATT 1994.
7.265.
The Regulation applies to the names of a wide class of products described in Article 1(1), which refers to the large number of agricultural products intended for human consumption referred to in Annex 1 to the EC Treaty as well as 13 additional types of agricultural products and foodstuffs listed in the annexes to the Regulation. The European Communities does not contest that there are, among this group, "like products" among the imported products and products of European Communities origin. The European Communities and other WTO Members produce the same types of covered agricultural products and foodstuffs with GIs that may be eligible for protection. Article 13(1)(a) of the Regulation provides that protection is provided against use of a name in respect of products "comparable to the products registered under that name". It is axiomatic that one must compare apples with apples and oranges with oranges. In this dispute, it is not contested that Tasmanian apples may be like pommes de Savoie262 and Florida citrus may be like cítricos valencianos263 for the purposes of Article III:4 of GATT 1994.
7.266.
In our analysis of the question of "less favourable treatment", we follow the approach of the Appellate Body in Korea – Various Measures on Beef and US – FSC (Article 21.5 – EC) that this standard should be assessed under Article III:4 of GATT 1994 by examining whether the measures at issue modify the conditions of competition between domestic and imported products in the relevant market to the detriment of imported products. This examination must closely scrutinize the "fundamental thrust and effect of the measure itself" founded on a careful analysis of the contested measure and of its implications in the marketplace.264
7.267.
The Regulation provides in Article 13 that registered GIs shall be protected against certain commercial uses and other practices. Registration provides the legal means to prevent the sale and offering for sale of products, including competitive products, where they use, imitate or evoke a registered GI, which is a substantive advantage conferred on products that comply with the GI registration. Registration does not grant a right to exclude competition, or deny the possibility of sale without a registered GI but, where products, including competitive products, bear an indication that falls within the protection granted by registration, they may be removed from sale. This is a substantive advantage that affects the conditions of competition of the relevant products.
7.268.
The declared purposes of the Regulation set out in its preamble include the following, which links GIs to demand for products:

"Whereas, moreover, it has been observed in recent years that consumers are tending to attach greater importance to the quality of foodstuffs rather than to quantity; whereas this quest for specific products generates a growing demand for agricultural products or foodstuffs with an identifiable geographical origin;"

7.269.
Agricultural products and foodstuffs from the European Communities may obtain this advantage where they satisfy the eligibility criteria in the Regulation. Like products imported from WTO Members that the Commission has not decided meet the equivalence and reciprocity conditions in Article 12(1) of the Regulation – which is all of them – are not able to obtain that advantage and, hence, are accorded less favourable treatment. Products from WTO Members which can satisfy the equivalence and reciprocity conditions in Article 12(1) still face an "extra hurdle" in obtaining the advantage of registration since the Commission must decide that their country of origin meets those conditions – a step which is not required of like products from the European Communities. This is also less favourable treatment.
7.270.
The European Communities does not contest that these are benefits of protection under the Regulation. It refers to the right to use the designation and logo under Article 8 and the possibility of excluding others from use of the GI under Article 13.265
7.271.
The Panel also notes that there is the possibility that a WTO Member could conclude an international agreement with the European Communities for the protection of specific GIs for its agricultural products and foodstuffs. It is not in dispute that this possibility would provide less favourable treatment to imported agricultural products and foodstuffs than the procedure for the registration of GIs provides for agricultural products and foodstuffs from the European Communities.
7.272.
Therefore, the Panel concludes that, with respect to the equivalence and reciprocity conditions, as applicable to the availability of protection, the Regulation accords less favourable treatment to imported products, inconsistently with Article III:4 of GATT 1994.266
7.273.
The European Communities has not asserted that, with respect to the availability of protection, the Regulation is justified by Article XX(d) of GATT 1994.267
7.274.
Australia argues that less favourable treatment is accorded by the European Communities' "inability to state clearly" what is required by Article 12 of the Regulation, or to state the decision-making criteria that would govern the assessments required to be made under Article 12 of the Regulation.268 However, the Panel notes that, given the European Communities' defence that it did not apply the conditions in Article 12 to WTO Members, there was little discussion of what precisely is required by those conditions. In view of the Panel's conclusion, it is unnecessary to consider this issue further.
7.275.
Australia also argues that the disadvantage accorded by the Regulation to imported products bearing a GI located in another Member is "cumulative", by reference to the equivalence and reciprocity conditions, the application procedures, the regulatory committee (considered below) and the two factors in paragraph 7,274.269 However, given that Australia did not elaborate on how the cumulative effect of these aspects of the Regulation allegedly accords less favourable treatment distinct from that accorded by each of them separately, the Panel does not consider it necessary to consider this issue further.

2. Application procedures

(a) Description of application procedures under Articles 5 and 12a of the Regulation

7.276.
The parties agree on the features of the application procedures under the Regulation. There are separate provisions setting out the procedures for applications for registration of GIs which apply according to the location of the GI.270 Article 5 applies where it is located in an EC member State. Article 12a applies where the GI is located in a third country.
7.277.
Article 5(4) and 5(5) provide, relevantly, as follows:

"4. The application shall be sent to the Member State in which the geographical area is located.

5. The Member State shall check that the application is justified and shall forward the application, including the product specification referred to in Article 4 and other documents on which it has based its decision, to the Commission, if it considers that it satisfies the requirements of this Regulation. [...]"

7.278.
Article 12a(1) and 12a(2) provide, relevantly, as follows:

"1. In the case provided for in Article 12(3), if a group or a natural or legal person as referred to in Article 5(1) and (2) in a third country wishes to have a name registered under this Regulation it shall send a registration application to the authorities in the country in which the geographical area is located. [...]

2. If the third country referred to in paragraph 1 deems the requirements of this Regulation to be satisfied it shall transmit the registration application to the Commission accompanied by:

(a) a description of the legal provisions and the usage on the basis of which the designation of origin or the geographical indication is protected or established in the country,

(b) a declaration that the structures provided for in Article 10 are established on its territory, and

(c) other documents on which it has based its assessment."

7.279.
After an application is forwarded by an EC member State or a third country, Articles 6(1) and 12b(1) of the Regulation oblige the Commission to verify whether the registration application includes all the requisite particulars and satisfies the conditions for protection. There are differences in the drafting of Articles 6(1) and 12b(1) which relate, respectively, to applications forwarded by EC member States and those transmitted by third countries which Australia has not put in issue.

(b) National treatment under the TRIPS Agreement

(i) Main arguments of the parties

7.280.
Australia claims that the Regulation is inconsistent with Article 3.1 of the TRIPS Agreement and Article 2 of the Paris Convention (1967), as incorporated by Article 2.1 of the TRIPS Agreement, because non-EC nationals seeking to register a GI located in the territory of another WTO Member are not able to apply for registration directly to the European Communities – whether to the Commission or another Community-level body. Articles 12(3) and 12a of the Regulation, read together, require that another WTO Member in which the GI is located pre-approve every application.271 The European Communities has an obligation to provide the means for intellectual property right holders to exercise their rights without intervention by another government.272
7.281.
Australia argues that the legally defined rights and obligations between the European Communities and EC member States and EC member State nationals makes the registration process for EC nationals fundamentally different for non-EC nationals.273 Australia adopts Canada's portrayal of the issues concerning the relationship between WTO Members, the European Communities, the EC member States and nationals. If the subject matter of this dispute lies within the exclusive competence of the European Communities, not EC member States, then any functions carried out by EC member States in implementing the Regulation are carried out as sub-national units of the European Communities. Any outward appearance of symmetry of treatment therefore masks a fundamentally different situation.274 Australia would transmit an application for registration to the Commission if it became aware of one from within Australia, but it could not state positively that it could meet the equivalence and reciprocity conditions.275
7.282.
Australia also claims that the Regulation imposes a requirement of establishment in the European Communities inconsistently with Article 2(2) of the Paris Convention (1967).276
7.283.
The European Communities responds that this claim must fail. Its first defence is that the application procedures do not apply to nationality but according to the location of geographical areas. That defence has been considered above.
7.284.
The European Communities argues that the application procedures do not accord less favourable treatment because the role of third country governments corresponds exactly to that of EC member States. The transmission of applications by governments in fact ensures equal treatment.277 The authorities of third countries and EC member States are best placed to evaluate whether a GI fulfils the conditions for protection, which requires familiarity with a host of factors and may require knowledge of the market conditions in the country of origin. The evaluation of whether a GI is protected in the country of origin requires the implication of the authorities of the third country. Verification in a third country calls for respect for its sovereignty. Involvement of third country authorities facilitates cooperation during the registration process and should be of practical benefit to the applicant.278
7.285.
The European Communities argues that the verification and transmission of an application are not overly burdensome for another WTO Member. Another WTO Member cannot invoke its own unwillingness to cooperate in the registration process in order to demonstrate a national treatment violation on the part of the EC.279 There are many examples of international cooperation between governments in the protection of private rights including, in the field of intellectual property protection, such as the Madrid Protocol, the Lisbon Agreement and Article 6quinquiesA(1) of the Paris Convention, and in the fields of certificates of origin, technical standards, conformity assessment, transport, fisheries and judicial cooperation. These examples illustrate that in an increasingly interdependent world, the effective protection of individual rights in cross-border situations inevitably engenders a need for cross-border cooperation.280
7.286.
The European Communities does not want to impose obligations on third countries, but the protection of GIs located in the territory of third countries depends on their cooperation. This is partially mandated by the definition of a GI in Article 22.1 of the TRIPS Agreement, which requires verification of whether certain characteristics of a good are essentially attributable to its geographical origin. This is an obligation for all Members and should normally facilitate the examination of whether the name fulfils the criteria in the Regulation. The description of how a GI is protected in its country of origin reflects the provision in Article 24.9 of the TRIPS Agreement. Even where there is no specific registration system in the country of origin, that is still a TRIPS requirement for the European Communities and a matter of foreign law.281 The transmission of the application by the same government is not a significant extra burden.282

(ii) Main arguments of third parties

7.287.
Argentina, Brazil, India, Mexico, New Zealand and Chinese Taipei all inform the Panel that they are not aware of any person ever having attempted to file with their respective authorities an application for registration under the Regulation.283
7.288.
Argentinaexpresses uncertainty regarding the consistency of the application procedures with the characterization of intellectual property rights under the TRIPS Agreement, in that they require States to manage the registration of a GI instead of right holders who are private persons.284
7.289.
Brazil argues that the application procedures require WTO Members to "pre-approve" applications before they forward them to the European Commission, which is a striking violation of the national treatment obligation in Article 3.1 of the TRIPS Agreement for two reasons: (1) this is an additional procedure for other WTO Members; and (2) the approval process must be conducted according to EC law, not the law of the other WTO Member.285
7.290.
Chinaargues that the provisions on verification and publication do not afford clarity. The procedures for EC member States and third countries are in parallel but are not the same in substance. The provisions on verification by, and transmission to, the Commission differ between the procedures which suggests that third countries must satisfy more than an EC member State.
7.291.
Colombiaexpresses uncertainty as to whether the country of origin must in all cases provide a declaration under Article 12a(2) with a description of the legal provisions under which the GI is protected. This is, in practice, a condition which entails an evaluation of the system of GI protection in the country of origin contrary to Article 1.1 of the TRIPS Agreement.286
7.292.
Mexicorefers to cochineal as a practical example of the way in which Mexican producers would be required to go through specific procedures which EC nationals are not.287
7.293.
New Zealandsubmits that, although the requirement to submit all applications through government applies equally to applications from EC member States and other WTO Member nationals, its effect is to disadvantage nationals from other WTO Members. EC nationals have an enforceable right that applications that satisfy the requirements of the Regulation are forwarded to the Commission. Submission of an application via an EC member State is essentially a formality. Other WTO Member nationals have no such enforceable right.288

(iii) Consideration by the Panel

7.294.
These claims are made under the national treatment obligations in Article 3.1 of the TRIPS Agreement and Article 2 of the Paris Convention (1967), as incorporated by Article 2.1 of the TRIPS Agreement. The Panel will first consider the claim under Article 3.1 of the TRIPS Agreement.
7.295.
The Panel recalls that two elements must be satisfied to establish an inconsistency with this obligation: (1) the measure at issue must apply with regard to the protection of intellectual property; and (2) the nationals of other Members must be accorded "less favourable" treatment than the Member's own nationals. The Panel will address each of these elements in turn.

Protection of intellectual property

7.296.
This claim concerns procedures for filing and examination of applications for registration of "designations of origin" and "geographical indications", as defined in the Regulation. They are referred to in this report, for the sake of brevity, as "application procedures".
7.297.
The Panel recalls that the national treatment obligation in Article 3 of the TRIPS Agreement applies to the treatment accorded by a Member "with regard to the protection of intellectual property". Footnote 3 provides an inclusive definition of the term "protection" as used in Articles 3 and 4. It reads as follows:

"For the purposes of Articles 3 and 4, 'protection' shall include matters affecting the availability, acquisition, scope, maintenance and enforcement of intellectual property rights as well as those matters affecting the use of intellectual property rights specifically addressed in this Agreement."

7.298.
Turning to the Regulation, procedures for the filing and examination of applications for registration are matters affecting the acquisition of intellectual property rights in relation to "designations of origin and "geographical indications", as defined in the Regulation. It is not disputed that "designations of origin" and "geographical indications", as defined in the Regulation, are a subset of "geographical indications", the subject of Section 3 of Part II, and therefore part of a category of intellectual property within the meaning of Article 1.2 of the TRIPS Agreement.
7.299.
Therefore, this claim concerns the "protection" of intellectual property, as clarified in footnote 3 to the TRIPS Agreement, within the scope of the national treatment obligation in Article 3.1 of that Agreement.

Less favourable treatment accorded to the nationals of other Members

7.300.
The Panel recalls its findings:

(a) at paragraphs 7,221 to 7,239 as to the treatment accorded to the "nationals of other Members" under the Regulation by its treatment according to the location of GIs; and

(b) at paragraph 7,184 that under Article 3.1 of the TRIPS Agreement we must examine the "effective equality of opportunities" with regard to the protection of intellectual property rights and, at paragraph 7,187 that in this examination we will focus on the "fundamental thrust and effect" of the Regulation.

7.301.
The parties and third parties who responded to the Panel's question on this point all reported that they were not aware of any application for the registration of a name of an area located in a third country outside the European Communities ever having been filed with the authorities of a third country.289 However, Australia challenges the Regulation, in this respect, "as such".
7.302.
Australia claims that the treatment accorded under the application procedures in Article 12a(1) and (2) is less favourable treatment than that accorded under the applications procedures in Article 5(4) and (5). There is an apparent equivalence in the drafting of these provisions but the question is whether this would imply a modification of the effective equality of opportunities with regard to the protection of intellectual property.
7.303.
The Panel notes that the initial steps in the application procedures can be broken down as follows.

(a) as a first step, all applicants are required to submit their application to the authorities in the country in which the geographical area is located. These will be authorities of an EC member State or a third country, depending on the case;

(b) as a second step, the authorities who receive an application consider whether the application is justified or satisfies the requirements of the Regulation. This involves a detailed examination of the application in accordance with the criteria in the European Communities' Regulation, not the domestic law of the country where the application is filed; and

(c) as a third step, if the authorities who receive an application consider that the application is justified or satisfies the requirements of the Regulation, they forward or transmit it to the Commission. If the application concerns a geographical area located outside the European Communities, the authorities must also transmit a description of the protection of the GI in its country of origin, as well as a declaration concerning inspection structures.290

7.304.
We recall the European Communities' explanation of its domestic constitutional arrangements, set out at paragraph 7,148, that Community laws are generally not executed through authorities at Community level but rather through recourse to the authorities of its member States which, in such a situation, "act de facto as organs of the Community, for which the Community would be responsible under WTO law and international law in general".291 It follows that any application relating to a geographical area located in an EC member State is filed directly with a "de facto organ of the Community" which also carries out the initial examination. An application relating to a geographical area located in a third country cannot be filed directly, but must be filed with a foreign government. This is a formal difference in treatment.
7.305.
Further, Article 5 of the Regulation provides for application procedures for GIs located in the European Communities. Paragraph 6 provides as follows:

"6. Member States shall introduce the laws, regulations and administrative provisions necessary to comply with this Article."

7.306.
An EC member State has an obligation to establish application procedures for the purposes of the Regulation. Under Community law, an EC member State has an obligation to examine an application and decide whether it is justified and, if it is justified, to forward it to the Commission. A group or person who submits an application in an EC member State may enforce these obligations through recourse to judicial procedures based on the Regulation. In contrast, a third country government has no obligation under Community law or any other law to examine an application or to transmit it or any other document to the Commission. A group or person who submits an application in a third country has no right to such treatment.
7.307.
Therefore, applicants for GIs that refer to geographical areas located in third countries do not have a right in the application procedures that is provided to applicants for GIs that refer to geographical areas located in the European Communities. Applicants in third countries face an "extra hurdle" in ensuring that the authorities in those countries carry out the functions reserved to them under the Regulation, which applicants in EC member States do not face. Consequently, certain applications and requisite supporting documents may not be examined or transmitted. Each of these considerations significantly reduces the opportunities available to the nationals of other WTO Members in the acquisition of rights under the Regulation below those available to the European Communities' own nationals.
7.308.
The European Communities submits that that "[t]he Regulation does not require anything that would be outside the scope of any WTO Member with a normally functioning government".292 The Panel notes that, whilst a normally functioning government might have the capacity to carry out the first and third steps, it cannot be assumed that it would have the capacity to carry out the examination according to EC law required by the second step. WTO Members have no obligation to implement a system of protection for geographical indications comparable to that of the European Communities and there is no reason to believe that they would nevertheless have the capacity to carry out examinations of technical issues that involve interpretations of EC law. In this regard, we note that one third party in this Panel proceeding indicates that its authorities would be devoid of legal competence to perform this analysis.293 Whilst a WTO Member that provided equivalent protection under its domestic law might presumably have the technical capacity, if not the legal competence, to perform this analysis, the provision of such protection forms part of the conditions under Article 12(1) of the Regulation. We have found that requirement, as a precondition to the availability of GI protection, to be inconsistent with the national treatment obligations in the TRIPS Agreement and GATT 1994.
7.311.
The Panel notes that the European Commission does not have the discretion to ensure that applications for GIs that refer to geographical areas located in third countries receive no less favourable treatment than those located in the European Communities because it has structured the Regulation in such a way that certain functions are completely outside its control.
7.312.
The European Communities drew the Panel's attention to many examples of international cooperation in the protection of private rights, including in the field of intellectual property protection.294 The Panel notes that under two of them, the Patent Cooperation Treaty and the Madrid Protocol, the possibility of filing an application with an office in the applicant's own country does not prevent the applicant filing an application directly in the another country. The Panel certainly does not intend to discourage international cooperation. However, in each of these examples, cooperation is provided in the framework of treaties in which contracting parties have voluntarily agreed to participate. In contrast, the Regulation is a domestic law adopted by one Member.
7.313.
The Panel also confirms that nothing in these findings purports to diminish the rights of Members under Article 24.9 of the TRIPS Agreement, which provides, in essence, that there is no obligation under this Agreement to protect geographical indications which are not protected in their country of origin.295
7.314.
The Panel further confirms that the European Communities is entitled, under Article 62.1 of the TRIPS Agreement, to require that applicants comply with reasonable procedures and formalities that are consistent with the Agreement in order to prove that they meet the conditions of protection. However, Article 62 is outside the Panel's terms of reference.
7.315.
The Panel recalls its finding at paragraph 7,248 that the fact that a general exceptions provision analogous to Article XX of GATT 1994 was not included in the TRIPS Agreement has no impact on its analysis of Article 3.1.
7.316.
For the above reasons, the Panel concludes that, with respect to the application procedures, insofar as they require examination and transmission of applications by governments, the Regulation accords other WTO Member nationals less favourable treatment than it accords the European Communities' own nationals, inconsistently with Article 3.1 of the TRIPS Agreement.
7.317.
In view of that conclusion, it is unnecessary to consider the consistency of the Regulation, with respect to the application procedures, with Article 2(1) of the Paris Convention (1967), as incorporated by Article 2.1 of the TRIPS Agreement. With respect to Article 2(2) of the Paris Convention (1967), the Panel recalls its finding at paragraph 7,251 and, for the same reasons, concludes that, with respect to the application procedures, the Regulation does not impose a requirement of domicile or establishment inconsistently with that provision, as incorporated by Article 2.1 of the TRIPS Agreement.

(c) National treatment under GATT 1994

(i) Main arguments of the parties

7.318.
Australiaclaims that the Regulation is inconsistent with Article III:4 of GATT 1994 because it requires the WTO Member in whose territory a geographical area is located to pre-approve each and every application for registration. This is a distinct and additional requirement imposed on products imported into the European Communities which significantly modifies the conditions of competition for imported products vis-à-vis domestic like products in the EC market. Any outward appearance of symmetry of treatment therefore masks a fundamentally different situation, for the reasons given earlier.296
7.319.
Australia argues that the relevant aspects of the application procedures are not justified under Article XX(d) of GATT 1994. They do not satisfy the "necessary" test in paragraph (d) because, as in Korea – Various Measures on Beef, alternative measures are reasonably available. The European Communities could leave it to the applicant to provide the required information and/or it could ask for the cooperation of another WTO Member government after an application has been filed should such cooperation be necessary to enable an application to be assessed. They do not satisfy the chapeau of Article XX because if the term is already registered, the applicant could provide a registration certificate as readily as the third country government. As in US – Shrimp, the Regulation requires other WTO Members to adopt a regulatory framework that is not merely comparable but essentially the same.297
7.320.
The European Communities responds that this claim must fail. It reiterates its arguments that the application procedures provide equal treatment, not less favourable treatment.298
7.321.
The European Communities asserts that verification and transmission of applications by the government of the home country of the GI is justified by Article XX(d) of GATT 1994.299 It argues that this is necessary to secure compliance with the Regulation itself, in particular, the definition of a GI, the product specifications, protection in the country of origin, establishment of the inspection structures and the requirement that only products that comply with a specification bear the PDO and PGI indications. It argues that the cooperation of the home government is indispensable for the implementation of the Regulation which, in particular, requires the evaluation of factual and legal questions which only the home country of the GI is in a position to carry out. These requirements for cooperation do not go beyond what is necessary for the implementation of the Regulation. The requirement of transmission follows naturally from the required intergovernmental cooperation and is not particularly burdensome for WTO Members. Article XX(d) does not exclude that the measures and the laws and regulations with which they secure compliance may be part of the same legal act. In addition, there is nothing which limits measures which secure compliance to ex post enforcement and excludes safeguards in the registration process. The Regulation is not inconsistent with GATT 1994 because it implements an obligation under Article 22 of the TRIPS Agreement and a higher level of protection permitted by Article 1.1. It is applied in a manner consistent with the chapeau of Article XX.300
7.322.
The European Communities argues that, with respect to verification that the GI is protected in its country of origin, verification requires knowledge of local factors that typically only the country of origin will have and which may also require on-site checks. Submission of a registration certificate authenticated by the country of origin would normally provide sufficient evidence that the indication is protected in the country of origin. However, it is not an option for those Members which do not have a specific register, such as Australia. Verification by third country governments is particularly necessary where they do not have a specific register as evaluation of protection in the country of origin may be more difficult. It is not credible that the Australian government would not be better qualified than the right holder or the European Communities. Transmission of applications by third country governments is an integral part of the application procedure and should not be viewed in isolation. It has no significant impact on trade in goods. It makes no difference whether the European Communities asks for cooperation from a third country government before or after an application is filed.301

(ii) Main arguments by third parties

7.323.
Argentina, Brazil, India, Mexicoand Chinese Taipei inform the Panel that direct applications to register GIs located in third countries are possible under their respective national legislation.302
7.324.
Brazilargues that the application procedures require WTO Members to "pre-approve" applications before they forward them to the European Commission, which is a striking violation of the national treatment obligation in Article 3.1 of the TRIPS Agreement.303
7.325.
New Zealandconsiders that, as the same phrase "less favourable treatment" is used in Article III:4 as in Article 3.1 of the TRIPS Agreement, all arguments raised under that claim apply equally here. New Zealand does not consider that the measure can be justified as "necessary" within the meaning of Article XX(d) of GATT 1994. The Commission conducts its own six-month investigation of an application so that it is not necessary for applications to be passed through a third country government filter.304

(iii) Consideration by the Panel

7.326.
This claim concerns procedures for applications for registration under the Regulation. The Panel recalls its findings:

(a) at paragraph 7,263, that the Regulation is a law or regulation affecting the internal sale and offering for sale of products within the meaning of Article III:4 of GATT 1994;

(b) at paragraph 7,264 that the Regulation links the protection of the name of a product to the territory of a particular country and formally discriminates between imported products and products of European Communities origin within the meaning of Article III:4 of GATT 1994;

(c) at paragraph 7,265 that the European Communities does not contest that there are, among the group of products covered by the Regulation, "like products" among the imported products and products of European Communities origin;

(d) at paragraph 7,266, that under Article III:4 of GATT 1994 we must examine whether the measure modifies the conditions of competition between domestic and imported products and that in this examination we will focus on the "fundamental thrust and effect of the measure itself"; and

(e) at paragraphs 7,267 to 7,269 on the substantive advantage provided under Article 13 of the Regulation that affects the conditions of competition of the relevant products;

(f) at paragraphs 7,303 to 7,307 concerning the differences between the application procedures for GIs that refer to geographical areas located in EC member States and those located in third countries. These differences can result in some applications from third countries, including WTO Members, not being transmitted to the Commission; and

(g) at paragraph 7,311 that the European Communities has no discretion in the implementation of the Regulation to ensure that all applications from third countries are transmitted to the Commission.

7.327.
A failure to transmit an application would entail non-registration of GIs, which would lead to failure of the products from those third countries to obtain the benefits of registration set out in Article 13 of the Regulation. Therefore, the Panel concludes that, with respect to the application procedures, insofar as they require examination and transmission of applications by governments, the Regulation accords less favourable treatment to imported products than domestic products, inconsistently with Article III:4 of GATT 1994.
7.328.
The European Communities asserts that these procedures are justified by Article XX(d) of GATT 1994. As the party invoking this affirmative defence, the European Communities bears the burden of proof that the conditions of the defence are met.
7.329.
Article XX provides exceptions for certain measures. The "measures" which the European Communities needs to justify at this point are the requirements of examination and transmission of applications for registration by governments under the Regulation. These apply to applications from both EC member States and third countries. However, it does not need to justify the less favourable treatment which denies applicants for GIs located in third countries the opportunity to file direct applications.305
7.330.
Paragraph (d) of Article XX refers to "measures" falling within the following description:

"(d) necessary to secure compliance with laws or regulations which are not inconsistent with the provisions of this Agreement, including those relating to customs enforcement, the enforcement of monopolies operated under paragraph 4 of Article II and Article XVII, the protection of patents, trade marks and copyrights, and the prevention of deceptive practices;"

7.331.
The Panel takes note that paragraph (d) refers to laws or regulations, including those relating to "the protection of patents, trade marks and copyrights, and the prevention of deceptive practices". The Regulation provides for the protection of GIs and is an analogous law or regulation, as the European Communities points out.306 However, the term "laws or regulations" is qualified by the phrase "not inconsistent with the provisions of this Agreement".
7.332.
The European Communities argues that the requirements of examination and transmission of applications by governments secure compliance with the Regulation.307 However, the Panel has found that the Regulation itself is inconsistent with the provisions of GATT 1994 for the reasons set out in this report. Therefore, the Regulation is not a law or regulation within the meaning of paragraph (d). In response to questions, the European Communities argued that these requirements secure compliance with a provision within the Regulation. However, if that provision could itself be a law or regulation within the meaning of paragraph (d), the European Communities did not demonstrate that it was "not inconsistent" with GATT 1994.308
7.333.
The Panel also notes the use of the term "necessary" in paragraph (d) of Article XX. We recall the clarification of that term provided by the Appellate Body in Korea – Various Measures on Beef, as follows:

"We believe that, as used in the context of Article XX(d), the reach of the word 'necessary' is not limited to that which is 'indispensable' or 'of absolute necessity' or 'inevitable'. Measures which are indispensable or of absolute necessity or inevitable to secure compliance certainly fulfil the requirements of Article XX(d). But other measures, too, may fall within the ambit of this exception. As used in Article XX(d), the term 'necessary' refers, in our view, to a range of degrees of necessity. At one end of this continuum lies 'necessary' understood as 'indispensable'; at the other end, is 'necessary' taken to mean as 'making a contribution to'. We consider that a 'necessary' measure is, in this continuum, located significantly closer to the pole of 'indispensable' than to the opposite pole of simply 'making a contribution to'." [footnote omitted]309

7.334.
The Appellate Body summed up its approach to the determination of whether a measure which is not "indispensable" may nevertheless be "necessary" within the meaning of Article XX(d) as a process of weighing and balancing a series of factors. It approved the approach of the GATT Panel in US – Section 337 as a way in which to apply this process as follows:

"In our view, the weighing and balancing process we have outlined is comprehended in the determination of whether a WTO-consistent alternative measure which the Member concerned could 'reasonably be expected to employ' is available, or whether a less WTO-inconsistent measure is 'reasonably available'."310

7.335.
The Panel will follow this approach.
7.336.
Australia argues that the European Communities could reasonably be expected to allow applicants to file applications directly with its authorities without prior verification by third country governments, and that this is WTO-consistent. Many other WTO Members employ such a procedure.311 It is not disputed that such a procedure would be WTO-consistent.
7.337.
The European Communities submits that the cooperation of the government of the country where the GI is located is indispensable because the registration of GIs requires the evaluation of factual and legal questions which "only the home country of the GI is in a position to carry out".312
7.338.
The Panel observes that Articles 6(2) and 12b(1) of the Regulation provide that the Commission makes the decision on whether the conditions are satisfied so as to warrant publication. It is not clear why an additional examination of the conditions by other governments is also required. Nor is it clear that a third country government is even able to conduct an examination according to the requirements, not of its own law, but of an EC Regulation. The European Communities has not explained why physical proximity or potential knowledge of certain questions in the country of origin implies a capacity to assess matters of EC law. Therefore, it is not clear to what extent examination by governments, including third country governments, contributes to securing compliance with the conditions for registration.
7.339.
With respect to factual and legal questions that, as part of the examination, can be verified in the country of origin, the European Communities does not explain why the Regulation does not permit applicants to provide objective and impartial evidence that may verify their applications nor does it explain why the Commission cannot seek consent to carry out its own verifications. In its responses to the Panel's questions, the European Communities indicates that "typically" only the country of origin has the required knowledge of local factors and that verification "may" require on-site checks which the Commission cannot carry out in third countries without express consent.313 The Panel considers that these responses constitute an admission that, in some cases, verification by third country governments is not necessary and that, if it sought and obtained consent, the Commission could conduct verifications itself. The European Communities has not demonstrated the factual premise of its defence that only the government of the country of origin is in a position to carry out the evaluation of these factual and legal questions. Therefore, the Panel does not need to consider further the requirement of examination by governments.
7.340.
With respect to the transmission of applications, the European Communities is unable to explain why a procedure permitting applicants to file applications directly with its competent authorities would not permit an examination of whether an application for a GI in another WTO Member complies with the conditions in the Regulation. It submitted that transmission of applications by governments should not be viewed in isolation. Given that it has not established that examination by governments, including third country governments, is necessary, it has not established that transmission by them is necessary either.
7.341.
Therefore, the Panel considers that the European Communities has not discharged its burden of proving that examination and transmission of applications by governments are covered by paragraph (d) of Article XX. It is therefore unnecessary to consider the chapeau of Article XX.
7.342.
For these reasons, the Panel concludes that, with respect to the application procedures, insofar as they require examination and transmission of applications by governments, the Regulation accords less favourable treatment to imported products inconsistently with Article III:4 of GATT 1994, and these requirements are not justified by Article XX(d).

3. Objection procedures

(a) Description of objection procedures under Articles 7, 12b and 12d of the Regulation

7.343.
The parties agree on most features of the objection procedures under the Regulation. There are separate provisions setting out the procedures for objections to applications for registration of GIs which apply according to the location of the geographical area and the location of the person who wishes to file an objection. Article 7 applies where the geographical area and the person who wishes to file an objection are both located in EC member States. Article 12b applies where the geographical area is located in a third country. Article 12d applies where the geographical area is located in an EC member State and the person who wishes to file an objection is located in a third country.
7.344.
Article 7(1) and 7(3) provide as follows:

"1. Within six months of the date of publication in the Official Journal of the European Communities referred to in Article 6(2), any Member State may object to the registration.

3. Any legitimately concerned natural or legal person may object to the proposed registration by sending a duly substantiated statement to the competent authority of the Member State in which he resides or is established. The competent authority shall take the necessary measures to consider these comments or objection within the deadline laid down."

7.345.
Article 12b(2) provides, relevantly, as follows:

"2. Within six months of the date of publication as provided for in paragraph 1(a), any natural or legal person with a legitimate interest may object to the application published in accordance with paragraph 1(a) on the following terms:

(a) where the objection comes from a Member State of the European Union or a WTO Member, Article 7(1), (2) and (3) or Article 12d respectively shall apply;

(b) where the objection comes from a third country meeting the equivalence conditions of Article 12(3), a duly substantiated statement of objection shall be addressed to the country in which the abovementioned natural or legal person resides or is established, which shall forward it to the Commission."

7.346.
Article 12d(1) provides, relevantly, as follows:

"1. Within six months of the date of the notice in the Official Journal of the European Union specified in Article 6(2) relating to a registration application submitted by a Member State, any natural or legal person that has a legitimate interest and is from a WTO member country or a third country recognised under the procedure provided for in Article 12(3) may object to the proposed registration by sending a duly substantiated statement to the country in which it resides or is established, which shall transmit it, made out or translated into a Community language, to the Commission."

7.347.
Article 7(4) sets out the grounds for admission of objections. Articles 12b(3) and 12d(2) provide that the Commission shall examine the admissibility of objections in accordance with the criteria laid down in Article 7(4).

(b) National treatment under the TRIPS Agreement

(i) Main arguments of the parties

7.348.
Australiaclaims that the Regulation is inconsistent with Article 3.1 of the TRIPS Agreement and Article 2 of the Paris Convention (1967), as incorporated by Article 2.1 of the TRIPS Agreement, because the objection procedures accord less favourable treatment to non-EC nationals.314
7.349.
Australia argues that a non-EC national resident or established in a third country has no direct means to object to registration but must lodge an objection through the government of the WTO Member in which that person resides or is established.315 That government is responsible for verification and transmission of the objection. Australia argues that, with respect to objection procedures, as with respect to application procedures, the legally defined rights and obligations between the European Communities and EC member States and EC member State nationals makes the registration process for EC nationals fundamentally different for non-EC nationals.316 Any outward appearance of symmetry of treatment therefore masks a fundamentally different situation.317
7.350.
Australia submits that Article 12d of the Regulation limits the persons who may file objections to those resident or established in a country that satisfies the conditions of equivalence and reciprocity.318
7.351.
Australia argues that certain individual registrations, which remain in force, were effected under the simplified procedure in Article 17 of the Regulation prior to its deletion in April 2003, without granting a right of objection to WTO Member nationals.319 It refers to the Bayerisches Bier registration (considered in Section VII:D below) and argues that there was a mechanism available to at least some EC trademark right holders to make their objections known.320
7.352.
Australia also claims that the measure at issue is inconsistent with national treatment obligations under the TRIPS Agreement because certain individual registrations, which remain in force, were effected under Article 6 of the Regulation prior to its amendment by the insertion of Article 12d in April 2003, without granting a right of objection to WTO Member nationals.321 This claim is dealt with in Section VII:E of this report under the heading "individual registrations".322
7.353.
The European Communities responds that these claims must fail. The verification and transmission of an objection by a third country should not be particularly burdensome and does not amount to an "extra hurdle" for third country residents. A third country is not required to conduct a substantive verification under Article 7(4) the Regulation – which is clear from the wording of Article12d(2) that indicates that the criteria must be assessed in relation to the territory of the Community. Rather, the third country verifies whether the person objecting is indeed resident or established there. It could also be useful to have an official contact point if questions arise concerning the territory of the third country, it should be beneficial to the person objecting to deal directly with an authority in the third country and, if the objection is admissible, the third country is to be consulted before the Commission takes its decision on registration.323
7.354.
The European Communities argues that Article 12d grants a right of objection to persons from WTO Members because the phrase "recognised under the procedure provided for in Article 12(3)" only applies to other third countries. The conditions of equivalence and reciprocity do not apply to WTO Members' right to object. Otherwise, the specific reference to "WTO Members" would be meaningless. This is also clear in Article 12b(2).324 It also argues that Article 12d does not discriminate according to nationality but according to residence or establishment. It cannot simply be assumed that the reference to "nationals" in Article 3.1 of the TRIPS Agreement and Article 2 of the Paris Convention (1967) also applies to persons who are domiciled or established abroad, regardless of their nationality.325

(ii) Main arguments of third parties

7.355.
Argentina, India, Mexico, New Zealandand Chinese Taipei all inform the Panel that they are not aware of any person ever having attempted to file with their respective authorities an objection to registration under the Regulation.326
7.356.
Brazil considers that the requirement to file objections with the country in which the objector resides or is established is an "unnecessarily complicated or costly" procedure in breach of Article 41.2 of the TRIPS Agreement. Brazil sees no necessity that would justify preventing private parties forwarding objections directly to the European Commission as many countries, including Brazil, allow for direct access for foreigners to object.327
7.357.
Mexico argues that the Regulation is inconsistent with national treatment because it imposes conditions of reciprocity and prevents third country nationals filing objections directly with European authorities. Non-EC WTO Member nationals have an additional burden to involve their national authorities and delegate to them the objection process. Mexico refers to cochineal as a practical example of the way in which Mexican producers would be required to go through specific procedures which EC nationals are not.328
7.358.
New Zealandargues that the objection procedure can potentially result in an application for registration not proceeding. Not having the right to object is a loss of a valuable right of a producer to protect its intellectual property rights. Objections under the Regulation are subject to equivalence and reciprocity requirements: the distinction between WTO Members and other third countries in Article 12d(1) could have been made clear by inserting a comma or other words. Objections must also be submitted through governments. At worst, the benefits of the right to object are entirely unavailable to third country producers. As a result, the system virtually guarantees that no objections will be received from WTO Member nationals to applications for registration of GIs.329

(iii) Consideration by the Panel

7.359.
These claims concern procedures for filing and examination of objections to applications for registration of "designations of origin" and "geographical indications", as defined in the Regulation. They are referred to in this report, for the sake of brevity, as "opposition procedures".
7.360.
These claims relate to two separate issues: (1) regarding verification and transmission of objections by governments; and (2) regarding equivalence and reciprocity conditions.330 The Panel will address these issues in turn.

Verification and transmission

7.361.
These claims are made under the national treatment obligations in Article 3.1 of the TRIPS Agreement and Article 2 of the Paris Convention (1967), as incorporated by Article 2.1 of the TRIPS Agreement. The Panel will first consider the claim under Article 3.1 of the TRIPS Agreement.
7.362.
The Panel recalls that two elements must be satisfied to establish an inconsistency with this obligation. (1) the measure at issue must apply with regard to the protection of intellectual property; and (2) the nationals of other Members must be accorded "less favourable" treatment than the Member's own nationals. The Panel will address each of these elements in turn.

Protection of intellectual property

7.363.
The Panel recalls that the national treatment obligation in Article 3 of the TRIPS Agreement applies to the treatment accorded by a Member "with regard to the protection of intellectual property". Footnote 3 provides an inclusive definition of the term "protection" as used in Articles 3 and 4:

"For the purposes of Articles 3 and 4, 'protection' shall include matters affecting the availability, acquisition, scope, maintenance and enforcement of intellectual property rights as well as those matters affecting the use of intellectual property rights specifically addressed in this Agreement."

7.364.
The Panel recalls its finding at paragraph 7,299 that procedures for the filing and examination of applications for registration are matters affecting the acquisition of intellectual property rights, within the scope of "protection" of intellectual property as clarified in footnote 3 of the TRIPS Agreement. Procedures for objections to such applications are related to the procedures for acquisition, as recognized in the fourth paragraph of Article 62 (which uses the word "opposition") and the title of that article. Hence, opposition procedures are also matters "affecting" the acquisition of intellectual property rights which concern the "protection" of intellectual property, as clarified in footnote 3 to the TRIPS Agreement. It is not disputed that "designations of origin" and "geographical indications", as defined in the Regulation, are a subset of geographical indications, the subject of Section 3 of Part II, and therefore part of a category of intellectual property within the meaning of Article 1.2 of the TRIPS Agreement. Therefore, the objection procedures are subject to the national treatment obligation in Article 3.1 of that Agreement.

Less favourable treatment accorded to the nationals of other Members

7.365.
Australia claims that the procedures relating to verification and transmission of objections are inconsistent with the national treatment obligations under the TRIPS Agreement.
7.366.
The Panel notes that, unlike the application procedures, the objection procedures do not concern the location of the geographical area to which the GI refers. Rather, they refer to the place where the objector resides or is established. The Panel recalls its findings at paragraphs 7,221 to 7,239 and considers, for the same reasons a fortiori,that the treatment accorded by the Regulation to persons resident or established in certain countries will, objectively, translate into treatment of persons with the nationality of those countries.
7.367.
The Panel notes once again that the close link between nationality, on the one hand, and residence and establishment, on the other, appears to be recognized in the Regulation itself. Articles 12b(2)(a) and 12d(1) of the Regulation accord a right of objection to persons, which the European Communities confirms refers to persons resident or established outside the European Communities regardless of their nationality.331 Yet the April 2003 amending Regulation, which inserted these provisions, explained that Article 12d granted the right of objection to the nationals of other WTO Members.332
7.368.
The Panel recalls its finding at paragraph 7,184 that under Article 3.1 of the TRIPS Agreement we must examine the "effective equality of opportunities" with regard to the protection of intellectual property rights and at paragraph 7,187 that in this examination we will focus on the "fundamental thrust and effect" of the Regulation.
7.369.
The parties and third parties who responded to the Panel's question on this point all reported that they were not aware of any objections to registration of GIs under the Regulation ever having been filed with the authorities of a third country.333 However, Australia challenges the Regulation, in this respect, "as such".
7.370.
Australia claims that the treatment accorded under the objection procedures in Articles 12b(2) and 12d(1) is less favourable treatment than that accorded under Article 7(3). There is an apparent equivalence in the drafting of these provisions but the question is whether this would imply a modification of the effective equality of opportunities with regard to the protection of intellectual property.
7.371.
The Panel notes that the initial steps in the procedures for objections by private persons can be broken down as follows:

(a) as a first step, all objectors are required to submit their objection to the authorities in the country in which they reside or are established. These will be authorities of an EC member State or a third country, depending on the case; and

(b) as a second step, the authorities who receive an objection verify certain formal matters334 and forward or transmit it to the Commission.

7.372.
We recall the European Communities' explanation of what amounts to its domestic constitutional arrangements, set out at paragraph 7,148, that Community laws are generally not executed through authorities at Community level but rather through recourse to the authorities of its member States which, in such a situation, "act de facto as organs of the Community, for which the Community would be responsible under WTO law and international law in general".335 It follows that any objection from a person in an EC member State is filed directly with a "de facto organ of the Community". An objection from a person in a third country cannot be filed directly, but must be filed with a foreign government. This is a formal difference in treatment.
7.373.
An EC member State has an obligation under Community law to verify an objection and forward it to the Commission. A group or person who submits an objection in an EC member State may enforce these obligations through recourse to judicial procedures based on the Regulation. In contrast, a third country government has no obligation under Community law or any other law to receive an objection or to transmit it to the Commission. A group or person who submits an objection in a third country has no right to such treatment.
7.374.
Therefore, persons resident or established in third countries, including other WTO Members, who wish to object to applications for registration under the Regulation do not have a right in the objection procedures that is provided to persons in the European Communities. Objectors in third countries face an "extra hurdle" in ensuring that the authorities in those countries carry out the functions reserved to them under the Regulation, which objectors in EC member States do not face. Consequently, certain objections may not be verified or transmitted. Each of these considerations significantly reduces the opportunities available to other WTO Member nationals in matters affecting the acquisition of rights under the Regulation compared with those available to EC nationals. For this reason, the Regulation accords nationals of other WTO Members "less favourable treatment" within the meaning of Article 3.1 of the TRIPS Agreement.
7.375.
The European Communities submits that the requirement that statements of objection be transmitted by the country where the person is resident or established is not an unreasonable condition and that, if there is no objective reason for the third country government to refuse to cooperate, it is not the European Communities' rules which create an "extra hurdle" for third country residents.336 The Panel recalls its finding at paragraph 7,309 that the obligation to accord national treatment with respect to a measure of the European Communities is the obligation of the European Communities. For the reason set out in paragraph 7,310 in relation to application procedures, the Panel considers that the European Communities has failed to accord no less favourable treatment itself to the nationals of other Members.
7.376.
The Panel confirms that the European Communities is entitled, under Article 62.4 of the TRIPS Agreement, to provide for procedures for objections that comply with the general principles in paragraphs 2 and 3 of Article 41. However, Article 62 is outside the Panel's terms of reference.
7.377.
The Panel recalls its finding at paragraph 7,248 that the fact that a general exceptions provision along the lines of Article XX of GATT 1994 was not included in the TRIPS Agreement has no impact on its analysis of Article 3.1.
7.378.
Therefore, the Panel concludes that, with respect to the objection procedures, insofar as they require the verification and transmission of objections by governments, the Regulation accords less favourable treatment to the nationals of other Members, inconsistently with Article 3.1 of the TRIPS Agreement.

Article 2 of the Paris Convention (1967)

7.379.
In view of the conclusion at paragraph 7,378 with respect to the objection procedures, insofar as they require the verification and transmission of objections by governments, it is unnecessary to consider their consistency with Article 2(1) of the Paris Convention (1967), as incorporated by Article 2.1 of the TRIPS Agreement.
7.380.
The Panel recalls its finding at paragraph 7,253 and, for the same reasons, concludes that, with respect to the opposition procedures, the Regulation does not impose a requirement of domicile or establishment inconsistently with Article 2(2) of the Paris Convention (1967), as incorporated by Article 2.1 of the TRIPS Agreement.

Equivalence and reciprocity conditions

7.381.
Australia claims that the right to file an objection under Article 12d(1) of the Regulation is limited to countries that satisfy the equivalence and reciprocity conditions in Article 12(1) based on a reading of the phrase "a WTO member country or a third country recognised under the procedure provided for in Article 12(3)" as if it read "a WTO member country recognised under the procedure provided for in Article 12(3) or a third country recognised under the procedure provided for in Article 12(3)". It is necessary for the Panel to make an objective assessment of the meaning of that phrase in this provision, although solely for the purpose of determining the European Communities' compliance with its WTO obligations.337
7.382.
The Panel observes that this claim is based entirely on the absence of a comma. A reading of the text of Article 12d(1), set out in full at paragraph 7,346 shows that if there were a comma after the words "a WTO member country", it would be clear that it was separate from the following words "or a third country recognised under the procedure provided for in Article 12(3)". However, in the Panel's view, even without a comma, it is unlikely that the phrase "recognised under the procedure provided for in Article 12(3)" refers to both a "WTO member country" and a "third country" in this context. If that were the correct reading, then there would be no need to specify a "WTO member country" separately because, outside the European Communities, a "WTO member country" is necessarily a third country. There would be no need to refer specifically to a "WTO member country" if it was not distinguished in some way from any other third country. The difference must be that a third country is only included if it is recognized under the procedure provided for in Article 12(3) so that, consequently, this phrase would not apply to a "WTO member country". Indeed, the fact that there is no need for a WTO Member to obtain recognition under Article 12(3) for its residents to object seems to be precisely the reason that it is included.
7.383.
This is consistent with the fact that Article 12b(2), in which the format is clearer, creates a right of objection for WTO Member and other third country nationals but clearly indicates that recognition under the procedure in Article 12(3) does not apply to WTO Members in this respect. Further confirmation is provided by the recitals to the April 2003 amending Regulation which explained the justification for the insertion of the right of objection in Articles 12b and 12d in terms of WTO Members, but limited the explanation of the equivalence and reciprocity conditions to the issue of protection provided by registration to foreign names.338
7.384.
The European Communities confirms that the Panel's interpretation of this aspect of the Regulation is correct and submits undisputed evidence that since the entry into force of Article 12d(1), the publications of all applications for registration of a geographical indication specifically refer to the possibility for residents from WTO countries to object to the application.339
7.385.
Therefore, based on this understanding of Article 12d(1) of the Regulation, the Panel concludes that with respect to the equivalence and reciprocity conditions, as allegedly applicable to objections, Australia has not made a prima facie case in support of its claims under Article 3.1 of the TRIPS Agreement or Article 2(1) of the Paris Convention (1967) as incorporated by Article 2.1 of the TRIPS Agreement.

Summary of conclusions regarding objection procedures

7.386.
In summary:

(a) with respect to the objection procedures, insofar as they require the verification and transmission of objections by governments, the Regulation accords the nationals of other Members less favourable treatment than the European Communities' own nationals inconsistently with Article 3.1 of the TRIPS Agreement;

(b) with respect to the objection procedures, the Regulation does not impose a requirement of domicile or establishment inconsistently with Article 2(2) of the Paris Convention (1967) as incorporated by Article 2.1 of the TRIPS Agreement; and

(c) Australia has not made a prima facie case in support of its claims with respect to the equivalence and reciprocity conditions, as allegedly applicable to the objection procedures.

4. Regulatory committee

(a) Description of procedure laid down in Article 15 of the Regulation

7.387.
The Regulation provides that certain decisions shall be taken by the European Commission "in accordance with the procedure laid down in Article 15". These include decisions not to proceed with registration of a GI under Articles 6(5) and 12b(1)(b); decisions whether or not to proceed with registration of a GI where an objection is admissible under Articles 7(5)(b)340, 12b(3) and 12d(3); decisions to cancel registration of a GI under Article 11a; and decisions whether a third country satisfies the equivalence and reciprocity conditions under Article 12(3).341 The Regulation provides that the Commission may ask the committee provided for in Article 15 for its opinion prior to taking certain other decisions. These include decisions to proceed with registration of a GI located in a third country under Article 12b(1)(a) and decisions to register a homonym of an already registered GI under Article 6(6).342
7.388.
Article 15 of the Regulation provides, relevantly, as follows:

"1. The Commission shall be assisted by a committee.

2. Where reference is made to this Article, Articles 5 and 7 of Decision 1999/468/EC shall apply. (...)"

7.389.
Decision 1999/468/EC (the so-called "Comitology Decision") lays down the procedures for the exercise of implementing powers conferred on the Commission.343 Article 5 of that Decision sets out a regulatory procedure which provides that the Commission shall be assisted by a regulatory committee composed of the representatives of the EC member States and chaired by the representative of the Commission, who does not vote. The representative of the Commission shall submit to the committee a draft of the measures to be taken. The committee shall deliver its opinion on the draft within a time-limit by qualified majority voting. The Commission shall adopt the measures envisaged if they are in accordance with the opinion of the committee. If the measures are not in accordance with the opinion of the committee, or if no opinion is delivered, the Commission shall, without delay, submit to the Council a proposal relating to the measures to be taken and shall inform the European Parliament. The Council may act by qualified majority on the proposal within three months. If the Council indicates by qualified majority that it opposes the proposal, the Commission shall re-examine it. If the Council neither adopts the proposed measure nor indicates its opposition within three months, the Commission shall adopt the proposed measure.344

(b) National treatment under the TRIPS Agreement

(i) Main arguments of the parties

7.390.
Australiaargues that the Regulation is inconsistent with Article 3.1 of the TRIPS Agreement and Article 2.1 of the TRIPS Agreement (incorporating Article 2 of the Paris Convention (1967)) because "a non-EC national trademark right holder does not have a national representative on the Committee to speak for its interests". It set out the procedure that is established under Article 15.345
7.391.
The European Communities responds that this claim is manifestly unfounded. The decision-maker is the Commission, or exceptionally the Council. The Committee merely assists the Commission but does not take decisions itself. EC member State representatives on the Committee do not speak for particular right holders, but represent the respective EC member State.346 Australia has not provided arguments to substantiate its claim.347

(ii) Main arguments of third parties

7.392.
Chinanotes the procedure under Article 15 and that the committee is composed only of representatives of EC member States. This procedure for the resolution of possible disputes on publication is available to names from WTO Members, but the process does not invite WTO Members to participate.348

(iii) Consideration by the Panel

7.393.
These claims are made under the national treatment obligations in Article 3.1 of the TRIPS Agreement and Article 2 of the Paris Convention (1967), as incorporated by Article 2.1 of the TRIPS Agreement. The Panel can consider these claims together.
7.394.
The parties agree that the regulatory procedure established under Article 15 of the Regulation is as described above. The procedure under Article 15 has been applied to the consideration of particular applications to register GIs located within the European Communities where there was an admissible objection from an EC member State. In several cases the Commission's draft measures were not in accordance with the opinion of the Committee and therefore had to be submitted to the Council of Ministers. In most of these cases the Council did not act and the Commission then adopted the measures.349 The Council adopted the measures itself in the cases of "Bayerisches Bier", "Aceto Balsamico tradizionale di Modena" and "Aceto Balsamico tradizionale di Reggio Emilia".350
7.395.
The Panel notes that this regulatory procedure, which is set out in Article 5 of the Comitology Decision, appears to be a standard procedure for the exercise of implementing powers conferred on the European Commission under Community law. However, in the context of this Regulation, the standard regulatory procedure operates in conjunction with the application and objection procedures, which require the EC member States to examine and transmit applications and objections to the Commission.
7.396.
Australia's claims rest on the premise that the representatives of the EC member States on the regulatory committee act as representatives of groups who submit an application for registration of a GI located in their respective territories, of persons who wish to object who are resident or established in their respective territories, and of interests in products the subject of an application for registration of a GI located in their respective territories.
7.397.
The Panel notes that the regulatory committee must be consulted in cases where the Commission proposes to register a GI and there is an admissible objection. In these cases, the representatives of both the EC member State that forwarded the application and the EC member State that objects participate in the Committee's consideration of the matter, as well as in any action taken by the Council of Ministers. However, according to Article 5(5), the EC member State which transmitted the application has already decided that the application satisfies the requirements of the Regulation and, according to Article 7, the EC member State that objects has already taken the view that there are grounds to do so.
7.398.
The Panel notes that the Regulation refers to both persons and EC member States, as well as third countries. With respect to applicants, Article 5 of the Regulation refers to an applicant group but an EC member State checks and forwards the application and, thereafter, the Commission communicates with the "Member State concerned". With respect to objections, Article 7(1) grants only the EC member States the right to raise objections to registration before the Commission, whilst Article 7(3) provides that any legitimately concerned natural or legal person may object to the proposed registration by sending its statement to the EC member State in which he resides or is established. Where an objection is acknowledged to be admissible within the meaning of Article 7(4), Article 7(5) provides that the Commission is to ask the "Member States concerned" to seek agreement among themselves: it makes no provision for any intervention by individuals.351 Articles 6(1), 9 and 11 also refer to the "Member State(s) concerned" in the procedures under the Regulation.352
7.399.
The Panel recalls that it has already accepted the European Communities' explanation that Community laws are generally not executed through authorities at Community level but rather through recourse to the authorities of its member States which, in such a situation, "act de facto as organs of the Community, for which the Community would be responsible under WTO law and international law in general".353 We note its explanation that:

"When fulfilling their functions under Regulation 2081/92, a Member State is in no way identified with the applicant or the person raising the objection. In verifying the applications or statements of objection, the Member State must correctly, impartially and objectively apply the terms of the Regulation. Similarly, when exercising its role in the Committee, the Member States must be guided by the terms of the Regulation, and not act as a representative of any individual applicant or objecting person."354

7.400.
The Panel does not consider that these features of the Regulation "as such" compel any different treatment of different GIs. Under the national treatment obligations of the TRIPS Agreement, evidence is required that, in the application of these procedures, the authorities cannot, do not or will not apply the Regulation in the same way to the nationals of other Members and the European Communities' own nationals. Australia has not provided any such evidence.
7.401.
Further, Australia's references to procedural fairness, due process and/or transparency in the regulatory committee's decision-making process do not appear to relate to the national treatment obligations, but rather other provisions of the TRIPS Agreement.
7.402.
Accordingly, the Panel concludes that Australia has not made a prima faciecase in support of its claims with respect to the regulatory committee under Article 3.1 of the TRIPS Agreement and Article 2(1) of the Paris Convention (1967), as incorporated by Article 2.1 of the TRIPS Agreement.

(c) National treatment under GATT 1994

(i) Main arguments of the parties

7.403.
Australia argues that the Regulation is inconsistent with Article III:4 of GATT 1994 because the outcome of applications for registration are determined through a process, that is, the Committee of EC member State representatives, "in which there is no representative or advocate for the registration of a GI for an imported product and no requirement for procedural fairness, due process and/or transparency concerning that Committee's decision-making process".355
7.404.
The European Communities responds that Australia's claim to have a representative on the Committee is not reasonable. The public authorities of a WTO Member must be presumed to administer their duties properly and fairly. This is independent of the nationality of the civil servants and employees working for such authorities. There are no "EC representatives" in the public authorities and agencies of Australia.356

(ii) Consideration by the Panel

7.405.
The Panel notes that this claim, like those claims in respect of the regulatory committee brought under the TRIPS Agreement, rests on the premise that the representatives of the EC member States on the regulatory committee act as representatives of groups who submit an application for registration of a GI located in their respective territories, of persons who wish to object who are resident or established in their respective territories, and of interests in products the subject of an application for registration of a GI located in their respective territories.
7.406.
The Panel recalls its finding at paragraph 7,400 that the relevant features of the Regulation "as such" do not compel any different treatment of different GIs. Under the national treatment obligation in Article III:4 of GATT 1994, evidence is required that, in the application of these procedures, the authorities cannot, do not or will not apply the Regulation in the same way to imported products and EC products and that this accords less favourable treatment. Australia has not provided any such evidence. Accordingly, the Panel concludes that Australia has not made a prima facie case in support of its claim with respect to the regulatory committee under Article III:4 of GATT 1994.

5. Labelling requirement

(a) Factual aspects of the labelling requirement in Article 12(2) of the Regulation

(i) Text of Article 12(2) of the Regulation

7.407.
This claim concerns a labelling requirement in the second indent of Article 12(2) of the Regulation. The parties disagree sharply on the meaning and scope of this provision, read in its context. Therefore, the Panel will begin by quoting Article 12(2) in full before turning to the factual arguments of the parties.

"2. If a protected name of a third country is identical to a Community protected name, registration shall be granted with due regard for local and traditional usage and the practical risks of confusion.

Use of such names shall be authorized only if the country of origin of the product is clearly and visibly indicated on the label."

(ii) Main arguments of the parties

7.408.
Australiaclaims that this labelling requirement applies to the use of GIs from other WTO Members so that use of a GI on a product from another WTO Member can be authorized only if it meets this labelling requirement.357
7.409.
Australia does not consider that Article 12(2) of the Regulation can apply to the registration of both EC and third country GIs in view of its actual text which expressly relates to a situation where the later registered GI is "a protected name of a third country". As long as it is drafted in that form, the European Communities is not bound to apply the interpretation that it has offered, and the European Court of Justice would enforce the specific terms of the Regulation.358 Australia also argues that the European Communities' explanation of the country of origin labelling requirement in Article 12(2) is not supported by the actual text of Article 12(2), particularly when read together with Article 6(6), which applies to the registration of a GI located in the European Communities.359
7.410.
Australia submits that the meaning of "such names" is unclear but understands that it refers to a third country GI protected in that third country and which is identical to a prior GI on the EC register. It submits that the meaning of "protected name of a third country" is ambiguous but, given the context, it assumes that it refers to a third country GI protected in that third country.360 Later, it argues that the term "Community protected name" refers to a GI already on the register whether from the European Communities or a third country.361
7.411.
Australia argues that "clearly and visibly indicated" means that the label must be noticeably evident in the same field of vision as the GI and the GI symbol.362
7.412.
The European Communities responds that the second subparagraph of Article 12(2) only applies to the GIs in the situation referred to in its first subparagraph. It only applies in cases of homonyms and not to third country names in general.363 It confirms that there have been no cases in which this provision has been applied in practice.364
7.413.
The European Communities argues that "such names" in the second subparagraph refers to both "a protected name of a third country" and a "Community protected name", so that the requirement to indicate the country of origin can apply to both the third country name and the Community name. In practice, this would mean that whichever indication is registered later would normally be required to indicate the country of origin.365 In both these terms, "protected" means, in principle, "protected under Regulation 2081/92" but "the provision also applies where protection is sought for a protected name from a third country". "Community protected name" covers only protected names of geographical areas located in the EC.366 Article 12(2) covers both a situation where a third country GI is a homonym of an EC GI already on the register, as well as an EC GI which is a homonym of a third country GI already on the register.367 "Such names" is written in the plural which clearly indicates that the requirement can relate to both the EC and third country GIs.368 Nothing in the wording of the provision prevents it applying to GIs from both third countries and the EC.369 Even if "Community protected name" referred to EC and third country names already on the register, "protected name of a third country" should be interpreted to include names protected in a third country, whether or not from the European Communities or a third country.370 In the EC's view, Article 12(2) has no specific link with Article 12(1).371
7.414.
The European Communities argues that, in cases of homonymous GIs from the European Communities, the last indent of Article 6(6) also requires a clear distinction in practice between them which would normally, in practice, require the indication of the country of origin.372 The only reason why the last indent of Article 6(6) does not explicitly require the indication of the country of origin is that this provision deals with a wider set of conflicts than Article 12(2).373 There is no difference between the word "homonymous" in Article 6(6) and "identical" in Article 12(2) as the English definitions of those words are synonymous and the French and Spanish versions use the same term in both provisions.374 Article 6(6) deals with a wider set of conflicts than Article 12(2), such as homonyms from within the European Communities, homonyms from within the same third country or different third countries.375 Article 6(6) simply refers to "protected names" from the European Communities and a third country, without specifying which of these is the one the subject of an application and which is already on the register.376
7.415.
The European Communities argues that "clearly and visibly indicated" must be evaluated in each specific case from the point of view of what a normally attentive consumer can easily notice and not be induced in error as to the origin of the product.377

(iii) Consideration by the Panel

7.416.
The Panel begins by noting that the second indent of Article 12(2) of the Regulation expressly sets out a requirement that concerns what is indicated on "the label" of a product. Therefore, for the sake of brevity, the Panel refers to it as "the labelling requirement".378 The labelling requirement has not been applied in practice. However, Australia challenges this aspect of the Regulation "as such".
7.417.
The meaning of the various terms in the second indent of Article 12(2) is essential to a resolution of this claim. Therefore, it is necessary for the Panel to make an objective assessment of the meaning of this provision, although solely for the purpose of determining the European Communities' compliance with its WTO obligations.379
7.418.
The parties disagree on the scope of the labelling requirement. Australia does not exclude that it may apply to all GIs from third countries, like the wider context in Article 12, which applies to all GIs from third countries that satisfy the conditions in paragraph 1 and are recognized as equivalent under paragraph 3. The European Communities responds that it applies only to identical or homonymous GIs, consistent with the immediate context in paragraph 2 of Article 12.
7.419.
The Panel observes that the scope of the labelling requirement is indicated by its subject: "[u]se of such names". "Such" is a demonstrative adjective that refers to something previously specified, which expressly requires an examination of the context. The context indicates that "such names" refers to the subject of the previous indent, which is eligible GIs from third countries that are identical to a Community protected name. This is confirmed by the content of the two indents: the first refers to practical risks of confusion, and the second imposes a requirement that a detail be clearly and visibly indicated, which appears to be a specific requirement that addresses the more general consideration in the first. Whilst it is possible to look back further in the context and read the phrase "[u]se of such names" as referring to the names or GIs in the preceding paragraph 1, such a reading is, in our view, constrained. We note that the position of paragraph 2 near the beginning of Articles 12 through 12d might suggest that it is a more general provision, but its position can perhaps be explained by the fact that it is one of the two original provisions on GIs from third countries that predate the insertion of Articles 12(3) and 12a through 12d. The European Communities has confirmed that "such names" refers to the previous indent, which covers only identical GIs. On the basis of the text of the provision, which has not been applied, the Panel agrees.
7.420.
Even though Australia understands that the provision only refers to "identical" GIs380, the parties disagree on the meaning of "such names". Australia assumes from the context that it refers to the subject of the previous indent, which is "a protected name of a third country" that is identical to a Community protected name. The European Communities responds that it refers not only to "a protected name of a third country" which is identical, but also to the "Community protected name" with which it is identical.
7.421.
The Panel considers, once again, that, "such names" refers to the subject of the previous indent, which is eligible GIs from third countries that are identical to a Community protected name. Although the term "a Community protected name" also appears in the previous indent, its registration is not in issue. It appears that the first indent relates only to the registration of GIs from a third country. The second indent attaches a condition to that registration which, logically, only applies to the use of GIs from a third country.
7.422.
This reading is confirmed by the wider context in Articles 12 through 12b which relates only to the registration of GIs from third countries. The registration of GIs located within the European Communities is dealt with in Articles 5 through 7. A provision permitting objections to such registrations from persons in third countries was inserted in Article 12d in April 2003. It would be a very special reading if the second indent of Article 12(2) were the sole provision in the scheme of Articles 12 through 12b that attached a condition to registration of GIs located within the European Communities, which is unlikely, given that context. The Panel takes note that the term "such names" is in the plural, unlike "a protected name of a third country" which is in the singular. However, the qualifier "such names" is linked to "the product" which is in the singular, so that the plural form is not determinative of the issue before us.
7.423.
Therefore, the Panel concludes that Article 12(2), including the labelling requirement in the second indent, refers only to the registration and use of a GI from a third country that is identical to a "Community protected name." It appears that this refers to a GI that is already registered under the Regulation, as no party has suggested a reason why it would matter for this requirement where the prior GI was located, as long as it was identical.
7.424.
The Panel also notes that the first indent of Article 12(2) contains language almost identical to that found in Article 6(6) of the Regulation. Both refer to registration of names "with due regard for local and traditional usage and the actual risk [or practical risks] of confusion". However, Article 6(6) applies to an application to register a GI located within the European Communities which "concerns a homonym of an already registered name from the European Union or a third country recognised in accordance with the procedure in Article 12(3)". Unlike the second indent of Article 12(2), the last tiret of Article 6(6) sets out the following requirement:

"[T]he use of a registered homonymous name shall be subject to there being a clear distinction in practice between the homonym registered subsequently and the name already on the register, having regard to the need to treat the producers concerned in an equitable manner and not to mislead consumers."

7.425.
The Panel will revert to the parallel in the construction of the requirements in Articles 12(2) and 6(6) in its consideration of this claim.

(b) National treatment under the TBT Agreement

(i) Main arguments of the parties

7.426.
Australiaclaims that the Regulation is inconsistent with Article 2.1 of the TBT Agreement because the labelling requirement in Article 12(2) accords less favourable treatment to imported products.381 Firstly, it argues that the labelling requirement in Article 12(2) of the Regulation falls within the definition of a "technical regulation" in Annex 1.1 of the TBT Agreement.
7.427.
Australia argues that the Regulation applies to an "identifiable group of products" within the meaning of Annex 1.1 of the TBT Agreement because Article 12(2) applies to agricultural products and foodstuffs for which GI protection is sought where the GI is identical to a GI already on the EC register. These are not expressly identified in the Regulation but they are identifiable.382 Although it applies to GIs, these exist with regard to specific agricultural products or foodstuffs for which the homonymous GIs have been registered.383
7.428.
Australia argues that the Regulation lays down "product characteristics or their related processes" within the meaning of the definition in Annex 1.1 of the TBT Agreement, in that it sets out a specific labelling requirement. It provides that the use of GIs from other WTO Members will only be authorized "if the country of origin of the product is clearly and visibly indicated on the label." To that extent, the Regulation is a document which "include[s ]... labelling requirements as they apply to a product" within the meaning of a technical regulation as defined in Annex 1.1 of the TBT Agreement. If this requirement was not considered to relate to a product, it would render the concept of a label meaningless. The words "as they apply to" refer to a product, as opposed to the characteristics of a product. In any case, the origin of a product is inextricably linked to that product by virtue of the definitions of a "designation of origin" and "geographical indication" in Article 2(2) of the Regulation and inherently involves a product. Australia does not argue that "origin" is product characteristic, but that the labelling requirement itself is a product characteristic.384
7.429.
Australia argues that the labelling requirement is "mandatory" within the meaning of Annex 1.1 of the TBT Agreement because Article 12(2) uses the term "shall". Australia does not dispute that it is not a precondition for the marketing of a product in the European Communities. However, it is mandatory for trading an imported product in the European Communities with a GI in the same competitive conditions as those afforded to a domestic product in the European Communities with a GI. An imported product does not benefit from the protection against unauthorized use provided by registration, nor from the reputation of superior quality engendered by registration.385
7.430.
Australia submits that the labelling requirement concerns both imported and domestic products that are "like" within the meaning of Article 2.1 of the TBT Agreement. It is sufficient for the Panel to consider the issues in the context of a general presumption of likeness. GIs are intellectual property rights and do not affect the analysis of likeness of the underlying products. Products bearing a GI from an area that straddles the external border of the European Communities could be exactly the same although some would be imported. Further, GI protection under the Regulation concerns unfair competition between products which normally involves a high degree of similarity or likeness. Jurisprudence on Article III:4 of GATT 1994 can be looked to for clarification of the national treatment obligation in Article 2.1 of the TBT Agreement.386
7.431.
Australia claims that Article 12(2) provides different treatment to imported products because Article 6(6) does not mandate that corresponding domestic products bear a country of origin label.387 It alleges that this is less favourable treatment because "there are likely to be situations" where the labelling requirement modifies the conditions of competition to the detriment of imported products.388 Specifically, it creates costs of additional labelling or re-labelling. It does not allege that it accords any other less favourable treatment. It accepts that in some cases existing labels may, coincidentally, satisfy the labelling requirement. However, where a different, or additional, label is required to be produced and attached to a product, this will create extra expense that can be expected to modify the conditions of competition to the detriment of producers of the imported product.389 The appropriate standard for determining less favourable treatment is that whether the measure modifies the conditions of competition in the relevant market to the detriment of imported products.390 The European Communities bears the burden of proving that Article XX of GATT 1994 has any significance in the context of the TBT Agreement but it has not presented any supporting arguments.391
7.432.
Australia accepts that, if the European Communities were to interpret Article 12(2) of the Regulation according to whichever GI was registered later, that this could be expected to overcome its inconsistency with Article 2.1 of the TBT Agreement.392 However, in the situation covered by Article 12(2) which is the subject of its claim, Article 6(6) of the Regulation has no relevance.393 It refers to Article 6(6) only in relation to the factual issue of the proper interpretation of Article 12(2).394
7.434.
Australia argues that the labelling requirement mandates a means of distinguishing an imported product, rather than functioning as a mark of origin per se. Even if it is a mark of origin, Article 12(2) is the means by which the Regulation compulsorily differentiates between GIs on imported and domestic products. Article IX:1 of GATT 1994 is silent on the issue of national treatment and marks of origin. However, even if excludes the application of Article III of GATT 1994, it does not exclude the application of Article 2.1 of the TBT Agreement if the measure is a "technical regulation". Further, even if Article 2.1 did conflict with Article IX, Article 2.1 would prevail in accordance with the General Interpretative Note to Annex 1A to the WTO Agreement.397
7.436.
The European Communities argues that Article 12(2) does not apply to identifiable products within the meaning of Annex 1.1 because the Regulation itself does not allow one to identify the products which might be affected by the requirement to indicate the country of origin.400
7.438.
The European Communities argues that Article 12(2) is not mandatory within the meaning of Annex 1.1 because the possibility to apply for GI protection is a right, not an obligation. GI registration is voluntary and not a precondition for the marketing of products.403
7.439.
The European Communities argues that Australia has failed to establish that products bearing homonymous GIs from the European Communities covered by Article 6(6) and a product from a third country covered by Article 12(2) would be "like". The comparable situation under Article 6(6) is that of two homonymous GIs from the European Communities, not one from the European Communities and one from a third country. It is therefore unnecessary to resolve the meaning of "like products" in Article 2.1 of the TBT Agreement.404
7.440.
The European Communities argues that Article 12(2) does not accord less favourable treatment because it applies in a non-discriminatory fashion to European Communities and third country GIs. The requirement applies to homonyms from the European Communities and a third country and will be a condition for the registration of the GI for which protection is sought later. Article 6(6) does not explicitly require the indication of a country of origin because it deals with a wider set of conflicts, in particular, homonyms from the same EC member State, where the country of origin would not make a "clear distinction" in practice". It could also deal with other conflicts not resolved by Article 12(2) such as homonyms from the same third country, or different third countries.405 An indication of the country of origin of the later registered GI avoids practical risks of confusion because, typically, the prior registered GI will have been marketed longer under that GI and be known by consumers. It also takes into account the fact that the prior registration cannot easily be amended.406 Imported products would not necessarily have to be re-labelled as the country of origin may already be clearly and visibly indicated on the label. Existing marks of origin may be sufficient. The affixation of an additional label clearly and visibly indicating the country of origin would also be sufficient.407 The legitimate regulatory objectives of the Member concerned must be taken into account in the application of both Article 2.1 and 2.2 of the TBT Agreement. Alternatively, the Panel would have to consider whether Article XX of GATT 1994 is applicable within the context of the TBT Agreement.408
7.441.
The European Communities argues that the requirement under Article 12(2) is a mark of origin covered by Article IX of GATT 1994, which excludes national treatment obligations. It is not possible to distinguish marks of origin which fall under the TBT Agreement and those which do not. There is no textual basis for distinguishing general origin marking requirements and those which cover only specific products. If Article 12(2) was considered a technical regulation, Article 2.1 of the TBT Agreement could not apply to origin marking requirements lest it render Article IX:1 useless.409 The European Communities does not argue that there is a conflict, but rather that Article IX:1 and Article 2.1 should be interpreted in a harmonious way that gives meaning to both of them.410 Finally, Article 1.2 of the Agreement on Rules of Origin deals inter alia with Article IX on marks of origin but makes no mention of the TBT Agreement, which would be hard to explain if the TBT Agreement applied to marks of origin.411

(ii) Main arguments of third parties

7.442.
New Zealandsupports the arguments of Australia in its first written submission that the Regulation is inconsistent with Article 2.1 of the TBT Agreement.412

(iii) Consideration by the Panel

7.443.
This claim concerns Article 12(2) of the Regulation "as such".413 Article 2.1 provides as follows:

"2.1 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."

7.445.
The threshold issue for the Panel to decide is whether the requirement in Article 12(2) of the Regulation is a "technical regulation" within the meaning of the TBT Agreement. If it is not, then Article 2.1 of the TBT Agreement will not be applicable. Annex 1.1 of that agreement provides as follows:

"For the purpose of this Agreement, however, the following definitions shall apply:

1.Technical regulation

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]

7.446.
The parties refer to the two elements that appear in the text of this definition, namely that a technical regulation is a "[d]ocument which lays down product characteristics or their related processes and production methods, including the applicable administrative provisions" and "with which compliance is mandatory", as well as to the issue that a technical regulation must be applicable to an identifiable product or group of products, explained by the Appellate Body in EC – Asbestos and EC – Sardines.414 The Panel will address these in turn.
7.460.
The European Communities argues that this labelling requirement cannot be subject to the national treatment obligation in Article 2.1 of the TBT Agreement due to the terms of Article IX of GATT 1994 on marks of origin.
7.461.
The Panel considers it unnecessary to reach a definitive view on this issue, in view of its findings below on "less favourable treatment". It suffices for the purposes of this dispute to note that the definition of a "technical regulation" in Annex 1.1 and the preamble to the TBT Agreement specifically include "marking and labelling requirements" without any indication that marks of origin are excluded.421 Article 1.4 and 1.5 specifically exclude certain purchasing specifications addressed in the Agreement on Government Procurement and sanitary and phytosanitary measures as defined in the SPS Agreement, but there is no express exclusion for marks of origin.422 In any event, it has not been shown that Article 12(2) of the Regulation is, in fact, a requirement to display a mark of origin.423
7.462.
The Panel also recalls the views of the Appellate Body in EC – Asbestos and EC – Sardines that, when examining whether a measure is a technical regulation, "the proper legal character of the measure at issue cannot be determined unless the measure is examined as a whole".424 The second indent of Article 12(2) is a small part of the Regulation which applies in a narrow circumstance. Clearly, the Regulation is an intellectual property measure but the parties do not ask the Panel to take a position on whether the product specifications required under Article 4(2) are technical regulations and the inspection structures required under Article 10 are conformity assessment procedures within the meaning of the TBT Agreement.425 The characterization of the whole measure is therefore a complex issue on which there has been little argument and which the Panel considers unnecessary to decide for the purposes of this claim.

Like products

7.463.
Article 2.1 of the TBT Agreement refers to "products imported from the territory of any Member" and inter alia "like products of national origin". An essential element of a claim under Article 2.1 is the existence of like products. Australia submits that it is sufficient for the Panel to consider the issues in the context of "a general presumption of likeness". The European Communities contests the likeness of products within the meaning of Article 2.1 of the TBT Agreement. The Panel considers it unnecessary to reach any view on this issue, in view of the findings below on "less favourable treatment".

Less favourable treatment

C. TRADE-RESTRICTIVENESS CLAIM

1. Inspection structures

(a) Description of inspection structures (Articles 4.2(g), 10 and 12a of the Regulation)

7.477.
The condition in Article 12(1) of the Regulation that a "third country... has inspection arrangements... equivalent to those laid down in this Regulation" was considered earlier as one of the equivalence and reciprocity conditions. That is a per-country condition. The condition at issue here concerns the inspection structures required by Article 10 of the Regulation under the procedures for registration of individual GIs. This is, allegedly, a per-product requirement.
7.478.
The Panel continues its examination in respect of these particular requirements, bearing in mind the aim of the dispute settlement mechanism, which is to secure a positive solution to a dispute429, and the views of the Appellate Body in Australia – Salmon on the principle of judicial economy.430 Were the Panel not to examine the claim with respect to the inspection structures requirements within the application procedures, its conclusion on the inspection structures condition in Article 12(1) would not enable the DSB to make sufficiently precise recommendations and rulings so as to allow for prompt compliance in order to ensure effective resolution of this dispute.
7.479.
An application for registration of a GI must be accompanied by certain documents. The first is the product specification. Article 5(3) provides as follows with respect to an application to register a GI located within the European Communities:

"3. The application for registration shall include the product specification referred to in Article 4."

7.480.
Article 12a(1) of the Regulation provides as follows with respect to applications to register GIs located in third countries:

"1. Applications must be accompanied by the specification referred to in Article 4 for each name."

7.481.
With respect to the specification, Article 4 provides as follows:

"1. To be eligible to use a protected designation of origin (PDO) or a protected geographical indication (PGI) an agricultural product or foodstuff must comply with a specification.

2. The product specification shall include at least: (...)

(g) details of the inspection structures provided for in Article 10;"

7.482.
A specification refers to a particular product and the list of items that Article 4 requires to be included in a product specification all appear to be product-specific.
7.483.
Applications to register GIs located in third countries must also be accompanied by a declaration by a third country government. Article 12a(2)(b) of the Regulation provides for a third country to transmit to the Commission an application to register a GI located in its territory accompanied by:

"(b) a declaration that the structures provided for in Article 10 are established on its territory."

7.484.
This declaration is not required of an EC member State when it transmits to the Commission an application to register a GI located within the European Communities. However, EC member States have an obligation under Article 10 itself to ensure that inspection structures are in place. The European Communities confirms that the requirements are the same for EC member States and third countries.431
7.485.
Article 10(1) explains that the function of inspection structures is "to ensure that agricultural products and foodstuffs bearing a protected name meet the requirements laid down in the specifications". Article 10(2) provides that an "inspection structure" may comprise one or more "designated inspection authorities and/or private bodies approved for that purpose" by the EC member State. Article 10(3) lays down requirements regarding the characteristics and duties of the inspection authorities and/or private bodies but not the product-specific requirements which appear in product specifications. We highlight the requirements for inspection authorities under Article 10(3) which are relevant to the claims below.
7.486.
The characteristics of the inspection authorities and/or private bodies include the following:

"Designated inspection authorities and/or approved private bodies must offer adequate guarantees of objectivity and impartiality with regard to all producers or processors subject to their control and have permanently at their disposal the qualified staff and resources necessary to carry out inspection of agricultural products and foodstuffs bearing a protected name."

7.487.
The inspection authorities and/or private bodies may outsource certain functions as follows:

"If an inspection structure uses the services of another body for some inspections, that body must offer the same guarantees. In that event, the designated inspection authorities and/or approved private bodies shall, however, continue to be responsible vis-à-vis the Member State for all inspections."

7.488.
The applicable standards for private bodies are described as follows:

"As from 1 January 1998, in order to be approved by the Member States for the purpose of this Regulation, private bodies must fulfil the requirements laid down in standard EN 45011 of 26 June 1989.

The standard or the applicable version of standard EN 45011, whose requirements private bodies must fulfil for approval purposes, shall be established or amended in accordance with the procedure laid down in Article 15.

The equivalent standard or the applicable version of the equivalent standard in the case of third countries recognised pursuant to Article 12(3), whose requirements private bodies must fulfil for approval purposes, shall be established or amended in accordance with the procedure laid down in Article 15."

7.489.
Standard EN 45011 sets out "General requirements for bodies operating product certification systems". It specifies general requirements that a third party operating a product certification system shall meet if it is to be recognized as competent and reliable. These include requirements relating to the certification body itself and its personnel; changes in the certification requirements; applications for, evaluation of, and decisions on, certification; surveillance; use of licences, certificates and marks of conformity; and complaints to suppliers. It applies for EC member States although the European Communities has not yet established the standard or the applicable version of that standard on the basis of Article 10(3) of the Regulation.
7.490.
Standard EN 45011 is a European standard that takes over the text of ISO/IEC Guide 65:1996 prepared by the ISO Committee on Conformity Assessment (CASCO). The European Communities has not established an equivalent standard in the case of third countries, but the European Communities informs the Panel that ISO/IEC Guide 65:1996 is an example of such an equivalent international standard.432
7.491.
The responsibilities of governments are set out in Article 10(1) and (2).433 Governments must ensure that inspection structures are in place by designating a public inspection authority and/or approving a private inspection body and then notify them to the Commission. Where the government designates a public inspection authority, it carries out inspections itself. Where the government approves a private inspection body, it must ascertain that the private body is capable of fulfilling its functions in accordance with Article 10(1) and meets the requirements of Article 10(3), set out above. The basic criterion for the approval process is that the private body can effectively ensure that products comply with a specification. After designation and/or approval, the government is responsible for continued monitoring that an approved private body continues to meet the requirements.434

(b) Trade-restrictiveness under the TBT Agreement

(i) Main arguments of the parties

7.492.
Australiaclaims that the inspection structures required by Articles 4, 10 and 12(1) of the Regulation are inconsistent with Article 2.2 of the TBT Agreement. Article 10 requires that EC member States have in place these inspection structures. Article 12a(2)(b) requires that other WTO Members provide a declaration that the structures provided for in Article 10 are established in its territory.435
7.493.
Australia argues that the Regulation is a "technical regulation" within the definition in Annex 1.1 of the TBT Agreement because Articles 10 and 4 (in particular Article 4.2(g)) together require inspection structures to check that products using a GI comply with the product specifications in the GI registration. Article 4.2(b) and (e) provide that product specifications include "product characteristics". The process of checking compliance with the specifications is a regular sequence of actions, i.e. a process, and falls within the meaning of "product characteristics or their related processes".436
7.494.
Australia does not take a position on whether the definitions of "technical regulation" and "standard" and the definition of a "conformity assessment procedure" in Annex 1 are necessarily mutually exclusive, but agrees that a conformity assessment procedure requires at the very least a separate technical regulation or standard against which products are to be assessed.437 Australia submits that it is irrelevant to this claim whether or not the Regulation is an intellectual property measure and also subject to another WTO covered agreement.438
7.495.
Australia argues that the inspection structure requirements are mandatory for products that use a registered GI. Therefore, they are mandatory for trading an imported product in the same competitive conditions as those afforded to a domestic product that uses a registered GI. Australia does not dispute that inspection structures, and GI registration, are not a precondition for the marketing of a product in the EC.439
7.496.
Australia does not contest that the Regulation could pursue legitimate objectives or that it is capable of generally fulfilling those legitimate objectives.440 It argues that the Regulation is more trade restrictive than necessary to fulfil its legitimate objective, taking account of the risks non-fulfilment would create, contrary to Article 2.2 of the TBT Agreement. Its claim is based on the allegation that the Regulation imposes an "absolute requirement" for an EC model inspection structure as a condition for the registration of a GI, irrespective of the circumstances in the Member in which the GI is located or of the circumstances of the trade in the relevant products.441
7.497.
Australia argues that the Regulation mandates the type of structure or design for inspection that other WTO Members must have in place. Such a requirement cannot be necessary to fulfil the Regulation's legitimate objective unless the European Communities had determined that no other systems in any WTO Member would in any circumstances provide the same degree of assurance as its own system.442 Inspection structures in a WTO Member where the good is produced is meaningless where the unauthorized use involving goods from a third country WTO Member occurs in the European Communities.443
7.498.
Australia does not contest that inspection structures may be required with respect to a specific product for which protection is sought or that some type of compliance verification mechanism may be necessary in most cases. Nor does it consider that government involvement is necessarily problematic.444 It challenges the fact that the Regulation dictates specific design features: Article 10(3) provides that an inspection structure must have permanently have at its disposal the necessary qualified staff, yet temporary staff may be all that is necessary to provide the required level of assurance445; Article 10 does not allow for the possibility that inspection structures might be unnecessary446; Article 12a(2)(b) requires a declaration as to the structures provided for in Article 10, which excludes alternative measures that are not inspection structures at all, such as systems of laws. However, Australia does not challenge these specific elements, rather it challenges the fact that the Article 10-type inspection structure is imposed on other WTO Members regardless of their existing inspection structures or other systems that would perform the same function.447
7.499.
Australia argues that alternative measures can achieve the EC's legitimate objectives with the same degree of effectiveness, such as laws against misleading and deceptive commercial practices enforced by an investigating authority, which may operate in conjunction with food labelling laws enforced by a food authority. These authorities could ensure that products comply with their specifications and address any risks created by non-fulfilment. Further alternative measures include the tort of passing off, industry certifications, self-regulation by producers and consumer protection mechanisms.448
7.500.
The European Communities responds that none of these provisions are a "technical regulation" within the meaning of the TBT Agreement. Article 4 does not lay down product characteristics for specific products. These characteristics are contained in the application for registration. Article 4 simply sets out the requirements with which a product specification must comply in order to permit GI registration. The product characteristics are contained in an individual GI application.449 Inspection structures are not "related processes" within the definition of a technical regulation in Annex 1.1 of the TBT Agreement because they are not related to the product characteristics and, if they were, then all conformity assessment procedures would be technical regulations which would lead to a systematic overlap between the various provisions of the TBT Agreement.450
7.501.
The European Communities submits that the purpose of Article 4.2(g) in conjunction with Article 10 is to ensure conformity with the product specification, not to lay down product characteristics. The TBT Agreement makes a clear distinction between technical regulations and standards in Articles 2 to 4 and procedures to assess conformity with them in Articles 5 to 9. The dividing line between them is perfectly clear in the definitions in Annex 1. This claim does not fall within Article 2 but appears to fall within Articles 5 to 9 of the TBT Agreement.451 The inspection structure requirements are not a technical regulation. They cannot be both a technical regulation and a conformity assessment procedure.452 It does not contest that a conformity assessment procedure assesses conformity with a technical regulation or a standard as defined in Annex 1.3 of the TBT Agreement but does not consider it necessary for the Panel to decide whether the inspection structures are indeed conformity assessment procedures. It does not contend that the general requirement that a GI must correspond to certain product specifications constitutes a technical regulation since it is merely a condition for the grant of an intellectual property right. A different question would be whether individual product specifications for individual GIs would be technical regulations but that is an issue which the Panel does not need to address.453
7.502.
The European Communities argues that Articles 4 and 10 are not mandatory because GI protection is voluntary. It is not a precondition for placing products on the market.454
7.503.
The European Communities argues that the existence of inspection structures is not more trade-restrictive than necessary because it is only required with respect to the specific product for which protection is sought; it does not determine the specific design of the inspection structures; and they are necessary to achieve the legitimate objectives of the Regulation. Unfair competition laws might be adequate to implement GI protection under Article 22.2 of the TRIPS Agreement but Article 1.1 allows Members to implement more extensive protection. This discretion under Article 1.1 cannot be limited on the basis of Article 2.2 of the TBT Agreement.455 The European Communities refers to its arguments on this point in relation to the claim under national treatment obligations of the TRIPS Agreement.456
7.504.
The European Communities refers to the conformity assessment procedures foreseen in Article 6 of the TBT Agreement. Nothing in that agreement obliges Members simply to accept conformity assessment carried out by bodies of another Member. While Article 6.1 of the TBT Agreement stipulates that Members ensure, whenever possible, that they accept the results of conformity assessment procedures in other Members, this only applies when certain conditions are fulfilled. Article 6.3 encourages Members to enter into negotiations for the mutual recognition of conformity assessment procedures. Article 6.4 encourages Members to permit participation of conformity assessment bodies located in the territories of other Members in their conformity assessment procedures but it is not a legal obligation to permit such participation. Australia has concluded a mutual recognition agreement which permits bodies designated by those countries to carry out conformity assessment with respect to EC standards and vice versa.457 Australia has failed to explain why government involvement in designation of inspection bodies is problematic.458

(ii) Main arguments of third parties

7.505.
New Zealandsupports the arguments of Australia in its first written submission that the Regulation is inconsistent with Article 2.2 of the TBT Agreement.459

(iii) Consideration by the Panel

7.506.
This claim is made under Article 2.2 of the TBT Agreement, which provides as follows:

"2.2 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."

7.507.
The threshold issue for the Panel to decide is whether the inspection structures requirements under Article 10 of the Regulation, read together with the product specifications of Article 4 of the Regulation, are a "technical regulation" within the meaning of the TBT Agreement. We note, once again, that the definition of that term in Annex 1.1 provides as follows:

"For the purpose of this Agreement, however, the following definitions shall apply:

1. Technical regulation

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]

7.509.
Australia claims that the inspection structures requirements lay down a "process" which is related to an identifiable group of products. Whilst it appears that the specification for a particular product described in Article 4 must lay down product characteristics and related production methods, Australia has not pursued a claim in respect of product specifications except insofar as they relate to the inspection structures requirements.
7.511.
Inspections of particular product specifications, in a general sense, may correspond to this definition. However, the context of the term "technical regulation" in Annex 1 shows that it is one of a suite of definitions that includes "standard" and "conformity assessment procedures". The terms "technical regulations" and "standards" themselves form part of the definition of the term "conformity assessment procedures", which is defined as follows:

"3.Conformity assessment procedures

Any procedure used, directly or indirectly, to determine that relevant requirements in technical regulations or standards are fulfilled.

Explanatory note

Conformity assessment procedures include, inter alia, procedures for sampling, testing and inspection; evaluation, verification and assurance of conformity; registration, accreditation and approval as well as their combinations."

7.512.
This definition shows that "conformity assessment procedures" assess conformity with "technical regulations" and "standards". This suggests that they are not only distinct from one other, but mutually exclusive. Whilst a single measure can combine both a technical regulation and a procedure to assess conformity with that technical regulation, it would be an odd result if a conformity assessment procedure could fall within the definition of a technical regulation as well.
7.513.
The object and purpose of the TBT Agreement is, in large part, disclosed by the two main groups of substantive provisions that it contains: one that relates to technical regulations and standards in Articles 2 to 4, and another that relates to conformity assessment procedures in Articles 5 to 9. It is also reflected in the preamble, of which the fifth recital, and also the third and fourth recitals, draw this distinction.462 If the Panel were to embed measures subject to Articles 5 to 9 in the definition of a technical regulation and thereby subject them to the technical regulations provisions in Articles 2 to 4 as well, it would lead to an unreasonable result. In this respect, we note that the explanatory note refers to "procedures for... inspection" as an example of conformity assessment procedures. This suggests that a procedure for inspection is not a technical regulation.
7.514.
Turning to the Regulation, the Panel notes that the inspection structures provided for in Article 10 of the Regulation do not set out "a continuous series of actions, events or changes" or a "course of action, a procedure" within the ordinary meaning set out at paragraph 7,510 above. It does not set out the steps that are to be undertaken to ensure compliance with a product specification, such as with the product specifications contained in Article 4 of the Regulation. Rather, it merely sets out the requirements for the design of inspection authorities and private bodies. It does not deal with the process by which these inspection authorities and private bodies are to conduct their inspections once they are established. Further, these inspection structures may be excluded a priori from the definition of a "technical regulation" under the TBT Agreement, in view of the context of that definition and the object and purpose of the Agreement, as explained at paragraphs 7,511 to 7,513 above. However, it is unnecessary to consider this issue further for the purposes of this dispute.

D. TRADEMARK CLAIMS

1. The relationship between GIs and prior trademarks

(a) Introduction

7.516.
Australiaclaims that the Regulation is inconsistent with Article 16.1 of the TRIPS Agreement because it denies the owner of a registered trademark the exclusive right to prevent uses of GIs which would result in a likelihood of confusion with a prior trademark.463 Its claim does not concern conflicts involving the future acquisition of trademark rights and GIs.464
7.517.
The European Communities responds that this claim is unfounded for several reasons: (1) Article 14(3) of the Regulation, in fact, prevents the registration of GIs, use of which would result in a likelihood of confusion with a prior trademark; (2) Article 24.5 of the TRIPS Agreement provides for the "coexistence" of GIs and prior trademarks; (3) Article 24.3 of the TRIPS Agreement requires the European Communities to maintain "coexistence"; and (4) in any event, Article 14(2) of the Regulation would be justified as a limited exception under Article 17 of the TRIPS Agreement.465
7.518.
For the sake of brevity, the Panel uses the term "coexistence" in this report to refer to a legal regime under which a GI and a trademark can both be used concurrently to some extent even though the use of one or both of them would otherwise infringe the rights conferred by the other. The use of this term does not imply any view on whether such a regime is justified.
7.519.
The Panel will begin its examination of this claim by describing Article 14(2) of the Regulation and how the Regulation can, in principle, limit the right of the owner of a trademark subject to Article 14(2) against the use of a GI. We will then assess whether Article 14(3) of the Regulation prevents a situation from occurring in which a trademark would be subject to Article 14(2). If Article 14(3) cannot prevent that situation from occurring, we will proceed to examine whether Article 16.1 of the TRIPS Agreement requires Members to make available to trademark owners the right to prevent confusing uses of signs, even where the signs are used as GIs. If it does, we will consider whether Article 24.5 provides authority to limit that right and, if Article 24.5 does not, conclude our examination by assessing whether Article 17 or Article 24.3 of the TRIPS Agreement permits or requires the European Communities to limit that right with respect to uses of signs used as GIs.

(b) Description of Article 14(2) of the Regulation

7.520.
Article 13 of the Regulation sets out the protection conferred by registration of a GI under the Regulation. Paragraph 1 provides for the prevention of certain uses of the GI and other practices. These are negative rights to prevent, essentially, uses which are misleading as to the origin of a product or otherwise unfair.
7.521.
Under the European Communities' domestic law, it is considered that the Regulation impliedly grants the positive right to use the GI in accordance with the product specification and other terms of its registration to the exclusion of any other sign. The European Communities explains, and Australia does not contest, that under the European Communities' domestic law, this positive right is implicit in several provisions, including Article 4(1), which refers to eligibility to use a protected designation of origin or a protected geographical indication; Article 8, which provides that the indications PDO and PGI and equivalent national indications may appear only on agricultural products and foodstuffs that comply with the Regulation; and Article 13(1)(a) which provides protection for registered names against direct or indirect commercial use on certain conditions. Without this positive right, in the European Communities' view, the protection granted by Article 13 would be "meaningless". Accordingly, under the European Communities' domestic law, that positive right prevails over the rights of trademark owners to prevent the use of a sign that infringes trademarks.466
7.522.
A registered GI may be used together with other signs or as part of a combination of signs but the registration does not confer a positive right to use any such other signs or combination of signs or to use the name in any linguistic versions not entered in the register.467 Therefore, the registration does not affect the right of trademark owners to exercise their rights with respect to such uses.468
7.523.
Article 14 of the Regulation governs the relationship of GIs and trademarks under Community law. Paragraph 1 deals with later trademarks. It provides for the refusal of trademark applications where use of the trademark would infringe the rights in a GI already registered under the Regulation. This, in effect, ensures that a registered GI prevails over a later trademark.
7.524.
Paragraph 2 of Article 14 deals with prior trademarks. It provides as follows:

"2. With due regard to Community law, a trademark the use of which engenders one of the situations indicated in Article 13 and which has been applied for, registered, or established by use, if that possibility is provided for by the legislation concerned, in good faith within the territory of the Community, before either the date of protection in the country of origin or the date of submission to the Commission of the application for registration of the designation of origin or geographical indication, may continue to be used notwithstanding the registration of a designation of origin or geographical indication, provided that no grounds for its invalidity or revocation exist as specified by Council Directive 89/194/EEC of 21 December 1998 to approximate the laws of the Member States relating to trade marks and/or Council Regulation (EC) No 40/94 of 20 December 1993 on the Community trade mark." [footnotes omitted]

7.525.
This is an exception to Article 13, as it provides for the continued use of a prior trademark even though use of that trademark would conflict with the rights conferred by registration of a GI under the Regulation. It prevents the exercise of rights conferred by registration of a GI against the continued use of that particular prior trademark and is an express recognition that, in principle, a GI and a trademark can coexist under Community law. It is intended to implement Article 24.5 of the TRIPS Agreement.469
7.526.
Article 14(2) only applies:

(a) with respect to the GI, where a particular indication satisfies the conditions for protection, including the definitions of a "designation of origin" or a "geographical indication", and is not subject to refusal on any grounds, including those in paragraph 3 of Article 14 (discussed below);

(b) with respect to the trademark, where a particular sign has already been applied for, registered, or established by use in good faith and there are no grounds for its invalidity or revocation; and

(c) where use of that trademark would infringe the GI registration.

7.527.
The scope of Article 14(2) is confined temporally to those trademarks applied for, registered or established by use either before the GI is protected in its country of origin or before the date of submission to the Commission of an application for GI registration.
7.528.
The text of Article 14(2) begins with the introductory phrase "[w]ith due regard to Community law". This refers, among other things, to the Community Trademark Regulation and the First Trademark Directive470, both of which provide that trademark registration confers the right to prevent "all third parties" from certain uses of "any sign", including uses where there exists a likelihood of confusion.471 This corresponds to the right provided for in Article 16.1 of the TRIPS Agreement.
7.529.
However, Article 159 of the Community Trademark Regulation, as amended472, provides as follows:

"This Regulation shall not affect Council Regulation (EEC) No. 2081/92 on the protection of geographical indications and designations of origin for agricultural products and foodstuffs of 14 July 1992, and in particular Article 14 thereof." [original footnote omitted]

7.530.
This ensures that the rights conferred by a trademark registration against "all third parties" and uses of "any sign" do not prevail over a third party using a registered GI in accordance with its registration. It does not limit the rights conferred by a trademark registration against any other third party.473 The same applies to trademarks protected under the national laws of the EC member States: due to the principle of the primacy of Community legislation, a trademark owner's rights cannot prevail over a third party using a GI registered under the Regulation in accordance with its registration. The rights conferred by a trademark registration against other third parties are not affected.
7.531.
Accordingly, the trademark owner's right provided by trademark legislation in the implementation of Article 16.1 of the TRIPS Agreement, in principle, cannot be exercised against a person who uses a registered GI in accordance with its registration where the trademark is subject to Article 14(2) of the Regulation.
7.532.
The phrase "[w]ith due regard to Community law" also refers to other legislation, such as labelling and misleading advertising legislation, which qualify the right to continue use of a trademark under Article 14(2). Conversely, the same legislation allows persons, including trademark owners, to take action against certain uses of a registered GI which are not covered by the GI registration.474
7.533.
Paragraph 3 of Article 14 provides as follows:

"3. A designation of origin or geographical indication shall not be registered where, in the light of a trade mark's reputation and renown and the length of time it has been used, registration is liable to mislead the consumer as to the true identity of the product."

7.534.
This is a condition for the registration of a GI, as it provides for the refusal of registration of a GI that is liable to mislead the consumer as to the true identity of the product in light of certain factors relevant to a prior trademark. This, in effect, provides that a prior trademark may prevail over a later application for GI registration under certain conditions.
7.535.
The European Communities argues that Article 14(3) of the Regulation, together with the criteria for registrability of trademarks applied under EC law, prevent the registration of a GI, use of which would result in a likelihood of confusion with a prior trademark. Australia disagrees. The Panel will consider this factual issue below.

(c) Article 14(3) of the Regulation

(i) Main arguments of the parties

7.536.
Australiaargues that Article 14(3) of the Regulation does not concern use that is liable to "confuse" but rather concerns use that is liable to "mislead". "Misleading" is a stricter evidentiary standard than "confusing". The ordinary meaning of "confusing" is "perplexing, bewildering". Although the two words can be synonyms, the context of "mislead" in Article 22.2 and 22.3 of the TRIPS Agreement refers to misleading use which positively provokes an error on the part of a consumer. The standard of confusing established by Article 16.1 is a separate standard. The wording, context and aim of Article 14(3) of the Regulation confirm that its use of "misleading" is similar to that in Article 22.2 and 22.3 of the TRIPS Agreement. Therefore, the express terms of Article 14(3) do not exclude registration of GIs whose use would be confusing but not necessarily misleading.475 If this were not so, the reference in Article 14(2) to grounds for revocation of a trademark in the Community Trademark Regulation and Trademark Directive would be meaningless because those grounds include liability to "mislead the public... as to... geographical origin" and are distinguished from the exclusive right to prevent use where there exists a "likelihood of confusion". The reference to revocation imports that differentiation into the Regulation.476 The word "confusion" is used in Articles 6.6, 7.5(b), 12.2, 12b(3) and 12d(3) of the Regulation in the sense of wondering about the source of the good, but the word "misleading" is used in Articles 3.2, 6.6, 13.1(c), 13.1(d) and 14.3 in the sense of an action which positively provokes an error on the part of the consumer.477
7.537.
Australia argues that Article 14(3) requires consideration of a trademark's reputation, renown and the length of time it has been used, which are not required by Article 16.1 of the TRIPS Agreement. Trademark owners cannot exercise their rights against GIs where their use would be misleading for other reasons. Trademarks that do not meet the tests expressly established by Article 14(3) of the Regulation cannot be protected by the right provided for in Article 16.1 of the TRIPS Agreement.478
7.538.
Australia notes that the right provided for in Article 16.1 of the TRIPS Agreement refers to where "such use would result in a likelihood of confusion". It argues that this implies that there is, or is intended to be, active use of a trademark and that the right encompasses pre-emptive action. The way in which the trademark rights have been acquired does not affect the assessment as it is the prospective use of the second sign that is in issue. Reputation is not a prerequisite and it is possible to cause confusion with a registered trademark even where it has little use and no reputation. The right to prevent confusing use applies both at the time of the application for registration of the later trademark or GI and at later stages of use, including in the case of changed circumstances which would result in a likelihood of confusion on the basis of a likelihood of confusion.479
7.539.
Australia argues that the only instance in which Article 14(3) has been applied shows that there was no consideration of the issue whether registration of the GI "Bayerisches Bier" would constitute confusing use in relation to the prior trademark "BAVARIA".480 In response to a question from the Panel, Australia argued that the registered GIs "Bayerisches Bier", "Budejovické pivo" and "Gorgonzola" could be used in accordance with their respective registrations in a way that results in a likelihood of confusion with particular trademarks.481
7.540.
Australia argues that the protection provided by the Regulation, in particular Article 13.1, makes clear that the owner of a registered trademark would not be able to prevent "confusingly similar or identical use of a sign for similar or identical goods". The right of a trademark owner to initiate an infringement action on the grounds that a GI as used is different from the GI as registered depends on the circumstances of the case. Trademarks registered in particular EC member States only, could still enjoy reputation in other EC member States. The European Communities has not explained how owners of those trademarks would have standing to initiate legal action under labelling, misleading advertising or unfair competition laws.482
7.541.
Australia notes that Article 7(4) of the Regulation provides that an objection is admissible if it "shows that the registration of the name proposed would jeopardize the existence... of a mark". This refers to a threat to the very being of the mark which is a far more rigorous standard than a likelihood of confusion. This is also true of the French and Spanish versions of the Regulation.483
7.542.
Australia denies the allegation that it is requesting a remedy against GI rights that it does not provide with respect to trademark rights under its own law. It submits that the Panel should not consider the provisions of the trademark laws of other Members in isolation. For example, whilst Australia's trademark law excepts certain actions from infringing an earlier trademark right, it applies only where the prior right holder expressly consented to the coexistence or failed to prevent the acquisition of the later trademark right.484
7.543.
The European Communities argues that, as a factual matter, the risk of registration of a GI confusingly similar to a prior trademark is very limited due to the criteria for registrability of trademarks applied under EC law. Moreover, Article 14(3) of the Regulation, if properly interpreted, is sufficient to prevent the registration of any confusing GIs.485 The complainant bears the burden of proving that its interpretation of Article 14(3) is the only reasonable one and that the European Communities' interpretation is not reasonable or that the provision is being applied in a manner which results in the registration of confusing GIs.486
7.544.
The European Communities argues that the criteria for the registrability of trademarks limit a priori the possibility of conflicts between GIs and earlier trademarks. Geographical names are primarily non-distinctive and, as such, are not apt for registration as trademarks. Their use may also be deceptive insofar as they are used for goods that do not originate in the location that they designate. Under EC law, they may only be registered as a trademark where the geographical name is not currently associated, and it can reasonably be assumed that it will not be associated in the future, with the product concerned; or where the name has acquired distinctiveness through use.487
7.545.
The European Commission considers that the criteria listed in Article 14(3) of the Regulation are not exhaustive, so that other relevant criteria may be taken into account in order to assess whether the registration of the GI will result in a likelihood of confusion, such as the similarity between the signs or between the goods concerned. The likelihood of confusion will depend to a large extent on the degree of distinctiveness which the trademark has acquired through use. A trademark consisting of a GI, which has never been used or has no reputation or renown, should not have been registered in the first place because it would lack the required distinctiveness.488 The length of time a trademark has been used does not limit Article 14(3) to cases where the trademark has been used for a long time as it is conceivable that a trademark which has been used for a relatively short period of time may have become strongly distinctive through other means, e.g. publicity.489 It asserts that Australia bears the burden of proving that the EC's interpretation of "misleading" is less reasonable or that it is impossible to interpret "misleading" consistently with Article 16.1. One of the ordinary meanings of "misleading" is "confusing".490
7.546.
The European Communities informs the Panel that the only instance in which Article 14(3) has been applied was the registration of "Bayerisches Bier" as a GI. There was no suggestion that this decision was based on the fact that the trademarks concerned were not famous enough or had not been used for long enough. The complainants have not identified an example of a GI which gives rise to a likelihood of confusion with an earlier trademark. Registration covers only the term in the specification and not its translations into other languages unless the term is the same in translation. The three Czech beer GIs also contain a unique endorsement that they apply "without prejudice to any beer trademark or other rights existing in the European Union on the date of accession".491
7.547.
The European Communities argues that Article 14(3) requires the EC authorities to refuse registrations and does not allow for a margin of discretion. It can be invoked before the courts after registration of a GI, including in trademark infringement proceedings brought against a user of a GI. This applies to registrations under the ordinary procedure in Article 6 or the "fast-track" procedure in Article 17. A trademark owner may raise the invalidity of the measure before the courts under the preliminary ruling procedure in Article 234 of the EC Treaty. Depending on the factual circumstances of each case, a trademark owner may also have standing to bring an action in annulment under Article 230 of the EC Treaty, if a GI registration were considered to affect adversely specific substantive trademark rights. A two-month time limit applies to the action in annulment and, in specific circumstances, may also apply to the preliminary ruling procedure.492 Under both procedures, judicial review is available on points of fact and law. The cancellation procedure is set out in Article 11a of the Regulation and the grounds mentioned in Articles 11 and 11a are exhaustive.493
7.548.
The European Communities notes that Article 7(4) of the Regulation provides that an objection is admissible if it "shows that the registration of the name proposed would jeopardize the existence... of a mark". It argues that this language is broad enough to encompass any instance of likelihood of confusion with any mark. Logically, Article 14(3) must permit registration to be refused in such cases. Article 7(5)(b) refers expressly to a decision having regard to the "likelihood of confusion".494
7.549.
The European Communities argues that Community law provides the means to prevent use of a registered GI in a confusing manner. Failure to comply with the product specifications in the registration may lead to cancellation. The right conferred by registration does not extend to other names or signs not in the registration. Registration does not cover translations. A presentation of a GI in a mutilated or deformed manner may be deemed different from the registered sign and not protected. Use of a GI is subject to the Community directives on labelling, presentation and advertising of foodstuffs and on misleading advertising and the EC member States' unfair competition laws.495
7.550.
The European Communities argues that few, if any, Members provide a remedy to prevent confusing use of a registered trademark without first obtaining cancellation, invalidation or revocation of the trademark registration. In the same way, Community law does not provide a remedy to prevent use of a registered GI on the grounds that it is confusing, although the trademark owner may request a judicial ruling that the GI registration is invalid on those grounds.496

(ii) Main arguments of third parties

7.551.
Argentina, Brazil, India and Mexico indicated, in response to a question from the Panel, that they were not aware of any GIs registered under the Regulation that were identical or confusingly similar to a trademark owned by their respective nationals and protected in the European Communities.497
7.552.
Brazil argues that Article 16.1 of the TRIPS Agreement deals with trademarks in general and not only with those referred to in the narrow terms of Article 14(3) of the Regulation, which refers to the trademark's reputation, renown, and the length of time it has been used, and its liability to mislead the consumer as to the true identity of the product.498
7.553.
New Zealandargues that Article 14(3) conditions the rights of a prior registered trademark owner on certain factors, such as reputation, renown and length of time of use, for which there is no basis in Article 16.1 of the TRIPS Agreement.499
7.554.
Chinese Taipei argues that Article 14(3) of the Regulation only prevents the registration of a trademark if it fulfils the conditions of reputation, renown and length of time of use. This provision negates the right granted to trademark owners pursuant to Article 16.1 of the TRIPS Agreement.500

(iii) Consideration by the Panel

7.555.
Australia does not take issue in this dispute with trademark rights acquired after a GI is registered. Therefore, there is no need to consider Article 14(1) of the Regulation. Moreover, it does not take issue in this dispute with the dates for establishing which trademarks are considered earlier than a GI under Article 14(2) of the Regulation. Therefore, there is no need to consider that issue either.
7.556.
Australia challenges coexistence under the Regulation "as such". It relies on the fact that Article 14(2) of the Regulation, on its face, can apply to certain trademarks and, when it does, the Regulation will limit the right of the owner of such a trademark against the use of a GI.501
7.557.
The parties largely agree on the factual implications, in principle, of the application of Article 14(2). It allows the continued use of a trademark on certain conditions but, at the same time, the Regulation confers a positive right to use a GI which prevents the owner of a trademark from exercising the right conferred by that trademark against a person who uses a registered GI in accordance with its registration. The particular right of a trademark owner at issue is the right to prevent uses of a sign that would result in a likelihood of confusion, which is discussed in paragraphs 7,598 to 7,603 below.
7.558.
The European Communities' first defence is that Article 14(3) can prevent the registration of any GI which would subject a prior trademark to Article 14(2), where the GI could be used in a manner that would result in a likelihood of confusion. This is a factual issue for the Panel to decide. This involves matters of interpretation of an EC Regulation which forms part of the European Communities' domestic law. It is necessary for the Panel to make an objective assessment of the meaning of this provision, although solely for the purpose of determining the European Communities' compliance with its WTO obligations.502
7.559.
As a preliminary remark, the Panel does not consider that this defence is necessarily contradicted by the European Communities' other defences that it is fully entitled and even required under the TRIPS Agreement to apply its coexistence regime, regardless of whether a GI would otherwise infringe the rights in a prior trademark. However, given that this is the European Communities' view of its rights and obligations under the TRIPS Agreement, it would seem coincidental if Article 14(3) of the Regulation could operate in a way that a GI would never, in fact, otherwise infringe the rights in a prior trademark.
7.560.
Turning to the text of Article 14(3) of the Regulation, the Panel's first observation is that Article 14(3) requires GI registration to be refused where it would be "liable to mislead the consumer as to the true identity of the product". This is limited to liability to mislead as to a single issue, and not with respect to anything else.
7.561.
The Panel's second observation is that Article 14(3) specifically prohibits GI registration "in light of a trade mark's reputation and renown and the length of time it has been used". It is clear that these factors must all be taken into account in the application of Article 14(3). It is difficult to imagine how Article 14(3) could be applied without some consideration of the similarity of the signs and goods as well.503 However, even if these factors are not exhaustive, and even if they do not require strong reputation, wide renown and long use, they indicate that the scope of Article 14(3) is limited to a subset of trademarks which, as a minimum, excludes trademarks with no reputation, renown or use. Otherwise, Article 14(3) does not prevent the registration of a GI, on the basis that its use would affect any prior trademark outside that subset.
7.562.
The Panel's third observation on the text of Article 14(3) is that it does not refer to use (of the GI), or to likelihood or to confusion, when other provisions of the Regulation do. Articles 7(5)(b), 12b(3) and 12d(3) permit refusal of a GI registration "having regard to" or "taking account of" factors including the "actual likelihood of confusion" and the "actual risk of confusion".504 This indicates that the standard in Article 14(3) that registration would "mislead the consumer as to the true identity of the product" is intended to apply in a narrower set of circumstances than the trademark owner's right to prevent use that would result in a likelihood of confusion.505
7.563.
For these reasons, the Panel considers that Australia has made a prima facie case that Article 14(3) of the Regulation cannot prevent all situations from occurring in which Article 14(2) would, in fact, limit the rights of a trademark owner.
7.564.
Consistent with this view, it can be noted that the European Communities specifically rejected a proposal by a Committee of the European Parliament to amend Article 14(2) so as to subject it to the trademark owners' rights when Article 14 was amended in April 2003.506 This at least suggests that Article 14(3) was considered different from a blanket protection of trademark rights.
7.565.
The European Communities has submitted that Australia's interpretation of Article 14(3) would conflict with Article 7(4), which provides that a statement of objection shall be admissible inter alia if it shows that the proposed GI registration would jeopardize the existence of a mark. It asserts that this language encompasses any instance of likelihood of confusion between the proposed GI and a prior trademark.507 It has not explained why the text does not set forth the likelihood of confusion standard, when the following provision of the Regulation in Article 7(5)(b) does. The contrast is marked. Article 7(5)(b) sets out a procedure to reach agreement in cases where an objection is admissible, which appears to indicate that it contains a lower standard than the ground for objection in Article 7(4).
7.566.
The European Communities has submitted that the criteria for registrability of a trademark limit a priori the risk of GIs being confused with a prior trademark, but it does not submit that they completely eliminate this risk. The evidence shows that signs eligible for protection as GIs can and have been registered as trademarks in the Community.508 The European Communities has not shown that the criteria for registrability of trademarks can anticipate adequately a situation in which a GI could be used in a way that results in a likelihood of confusion with a trademark, wherever Article 14(3) of the Regulation does not provide for refusal of registration of a GI. Those criteria and Article 14(3) would have to offset each other in every case. However, Article 14(2) and (3) apply to trademarks that are already protected. They cannot apply to signs which do not satisfy the trademark registrability criteria, either because they are geographical names or for whatever other reason, and have been refused registration, are subject to invalidation or are otherwise unprotected. These signs are filtered out before Article 14 of the GI Regulation comes into play. Given that Article 14(3) applies to a subset of protected trademarks, those to which it does not apply have by definition already satisfied the trademark registrability criteria.
7.567.
There is also the question of how Article 14(3) can protect a trademark owner's right to prevent uses which occur subsequent to GI registration. In response to a question from the Panel as to whether Article 14(3) could be invoked if use of the GI would otherwise infringe the trademark subsequent to GI registration, the European Communities submitted that it could.509 The parties then made various submissions on this point, based on which the Panel makes the following observations:

(a) the Regulation does not refer to invalidation under Article 14(3). It sets out cancellation procedures in Articles 11 and 11a, the grounds for which do not appear to relate to improper application of Article 14(3). If invalidation procedures are possible, it would be as a matter of general Community law under the EC Treaty;

(b) Article 230 of the EC Treaty provides a procedure for a direct challenge to the validity of a Community measure before the Court of First Instance of the European Communities on the condition that the applicant "is directly and individually concerned" by the measure. It is not submitted by any party that all trademark owners can satisfy that condition. Further, this procedure is subject to a two-month time limit which could render it unavailable to certain trademark owners who did satisfy that condition510;

(c) Article 234 of the EC Treaty provides a procedure for an indirect challenge to a Community measure under which a court of an EC member State can refer a question to the European Court of Justice for a preliminary ruling. This procedure could be invoked in a trademark infringement proceeding to obtain invalidation of a GI registration. It is not clear in what circumstances this procedure is available to a trademark owner who could have invoked the Article 230 procedure. The procedure under Article 234 would only be available where the court of the EC member State considered the question of validity of the GI necessary to resolve the trademark infringement action. In any case, the decision not to refuse a registration under Article 14(3) of the Regulation would be interpreted in the preliminary ruling as at the time of that decision, and not at the time of the subsequent allegedly infringing use511; and

(d) Article 14(3) is apparently not mandatory in all cases as three GIs registered in accordance with the terms of an Act of Accession to the European Union cannot be invalidated on the basis of Article 14(3).512

7.568.
In light of these observations, the Panel considers that there is no evidence to show that it is possible to seek invalidation of a GI registration under Article 14(3) in all cases in which use of a GI would otherwise infringe a prior trademark. In those cases where it is not possible, it would be necessary for the owner of a prior trademark to be able to anticipate, at the time of the proposed GI registration, all subsequent uses of the proposed GI that would result in a likelihood of confusion. There is no reason to believe that this is possible. The evidence submitted to the Panel shows that GI registrations under the Regulation simply refer to names without limiting the way in which they are used.
7.569.
The European Communities has submitted that the food labelling and misleading advertising directives and unfair competition laws of the EC member States also prevent confusing uses. We understand, and the European Communities does not deny, that this is only possible where the use is not in accordance with the GI registration. In any event, the scope of the directives is narrower than that of the GI Regulation and the standards which they apply are different from the right of a trademark owner to prevent use which would result in a likelihood of confusion, for the following reasons:

(a) the food labelling directive only applies to the labelling of foodstuffs to be delivered as such to the ultimate consumer and certain aspects relating to the presentation and advertising thereof. It provides that "labelling and methods used must not be such as could mislead the purchaser to a material degree, particularly... as to the characteristics of the foodstuff and, in particular, as to its nature, identity, properties, composition, quantity, durability, origin or provenance, method of manufacture or production"513; and

(b) the misleading advertising directive applies to "any advertising which in any way, including presentation, deceives or is likely to deceive the persons to whom it is addressed or whom it reaches and which, by reason of its deceptive nature is likely to affect their economic behaviour or which, for those reasons, injures or is likely to injure a competitor".514

7.570.
The unfair competition laws of the EC member States apply subject to the terms of registration under the Regulation, due to the primacy of Community law. It is not clear to what extent these laws apply in addition to the Regulation but, to the extent that they do, they use various standards, some of which require deception, which is narrower than confusion, and some of which appear only to apply the misleading standard which is embodied in the Regulation itself.515
7.571.
Australia also refers to some specific cases in which the Regulation has been applied in support of its claim, as set out in the following paragraphs.
7.572.
Article 14(3) of the Regulation has only been applied once. This was the case of "Bayerisches Bier", which was registered as a protected geographical indication in 2001 subject to the proviso that the use of certain prior trademarks, for example, BAVARIA and HØKER BAJER, was permitted to continue under Article 14(2). The GI refers to a beer and the trademarks are registered in respect of beer. The GI and the trademarks are, respectively, the words "Bavaria" or "Bavarian Beer" rendered in the German, English and Danish languages. Upon its registration, the EC Council concluded that the GI would not mislead the public as to the identity of the product, which is the standard embodied in Article 14(3) of the Regulation.516
7.573.
Australia alleges that the GI "Bayerisches Bier" could be used in a manner that would result in a likelihood of confusion with these prior trademarks.517 In response to a direct question from the Panel, the European Communities did not deny this specific allegation. It only responded that "in principle" a name registered following the assessment required by Article 14(3) "should not give rise to confusion when used subsequently" and submitted that "in practice" this may happen only when the registered name is used together with other signs or as part of a combination of signs. This was a conspicuous choice of words because in the same response it commented in detail on two other specific cases which it considered irrelevant to the dispute.518
7.574.
Australia also alleges that three Czech beer GIs, "Budĕjovické pivo", "Českobudĕjovické pivo" and "Budĕjovický mĕšt’anský var" could be used in a manner that would result in a likelihood of confusion with the prior trademarks BUDWEISER and BUD, registered in respect of beer.519 In response to a direct question from the Panel, the European Communities did not deny that these GIs could be used in a manner that would result in a likelihood of confusion with these prior trademarks. Instead, it pointed to an endorsement on the three GI registrations that they apply "without prejudice to any beer trademark or other rights existing in the European Union on the date of accession".520 This might imply that it accepts a likelihood of confusion, but considers that there are other means besides Article 14(3) to deal with that.
7.575.
There appears to be an inconsistency between the European Communities' position that Article 14(3) of the Regulation, in practice, prevents the registration of GIs, use of which would result in a likelihood of confusion with a prior trademark, and its decision to avoid contesting that there may be circumstances in which the four specific GIs referred to above could be used which would not result in such a likelihood of confusion with these specific prior trademarks.
7.576.
For the above reasons, the Panel considers that the European Communities has not rebutted Australia's prima facie case that Article 14(3) of the Regulation cannot prevent all situations from occurring in which a trademark would be subject to Article 14(2) and, hence, in which the Regulation would limit the rights of the owner of such a trademark.
7.577.
The Panel will now proceed to examine whether the TRIPS Agreement requires Members to make available to trademark owners rights against signs when they are used as GIs.

(d) Relationship between protection of GIs and prior trademarks under the TRIPS Agreement

(i) Main arguments of the parties

7.578.
Australiaargues that nothing in the TRIPS Agreement justifies a failure to grant the right provided for in Article 16.1. Had the negotiators intended to permit Members to act inconsistently with this obligation, they would have said so explicitly. Article 17 is an express exception to trademarks and nothing in Section 3 of Part II on GI protection could be interpreted in such a way as to create an exception to trademarks.521
7.579.
Australia does not argue that trademarks must prevail over later GIs.522 Rather, it argues that Article 24.5, together with Articles 22.3 and 23.2, defines the boundaries of the range of possible actions open to a Member to implement GI protection in relation to trademarks.523 Article 24.5 does not require or permit any negation or other limitation of the trademark owner's right under Article 16.1.524 It can only be an exception to the provisions of Section 3 on GI protection in view of its location and title.525 It also creates a positive right that specified trademark rights cannot be adversely affected.526
7.580.
Australia argues that the "validity of the registration of a trademark" refers to the ongoing legality of the good faith registration of a trademark. The legal bundle of rights contained in a validly registered trademark includes the exclusive right to prevent confusing use granted under Article 16.1. Measures adopted to implement GI protection cannot undermine that exclusive right. The "right to use a trademark" refers to the ongoing ability to use a trademark to which rights have been acquired through use. Measures adopted to implement GI protection cannot adversely affect such rights.527 Whatever may have been intended by the phrase the "right to use a trademark", it is separate from, and additional to, the exclusive right to prevent confusing uses required under Article 16.1.528 It is not required under Section 2 of Part II.529 Article 24.5 does not refer to the "exclusive" right to use a trademark because trademark rights acquired through use are not always exclusive.530
7.581.
Australia argues that there is no conflict between Articles 16.1 and 22. With respect to Article 22.2, the only relevance of Article 22.2(a) to trademark rights would be in the context of acquisition of new trademark rights.531 With respect to Article 22.3, for example, Australian trademark law expressly provides that registration of a trademark may be opposed if it contains or consists of a false GI.532
7.582.
Australia argues that a complaining party bears the burden of proof where it alleges a breach of obligations pursuant to Article 24.5 but a responding party bears the burden of proof where it relies on Article 24.5 to excuse or justify a measure's inconsistency with another provision. Article 24.5 does not alter the scope of Article 16.1 but confirms the continued applicability of the rights granted under Article 16.1 in the circumstances covered by Article 24.5.533
7.583.
The European Communities responds that this claim is unfounded.534 The TRIPS Agreement recognizes trademarks and GIs as intellectual property rights on the same level, and confers no superiority to trademarks over GIs. The provisions of Section 3 of Part II on GI protection are not "exceptions" to the provision of Article 16.1 on trademark rights. The criteria for registrability of trademarks limit a priori the possibility of conflicts between GIs and trademarks but conflicts may arise. Article 16.1 does not address this issue. Rather, the boundary between GIs and trademarks is defined by Article 24.5 which provides for coexistence with earlier trademarks. Article 24.5 must be read with Articles 22.3 and 23.2 which also provide protection to GIs vis-à-vis trademarks.535 Section 2 of Part II cannot be applied without having regard to Section 3.536
7.584.
The European Communities argues that Article 24.5 has two implications: (1) with respect to grandfathered trademarks (or applications): (a) Members are not allowed to prejudice the validity of the registration (or the eligibility of the application or the right to use the trademark), but (b) Members may prejudice other rights of the trademark owner, including in particular the right to prevent others from using the sign of which the trademark consists; and (2) with respect to other trademarks (or applications), Members may prejudice any right.537
7.585.
The European Communities argues that the ordinary meaning of the word "prejudice" used in all three official versions includes the notion of "judge beforehand" but only the word in the English version includes the notion of "cause injury, damage or harm".538 The phrase "validity of the registration" does not necessarily imply that the registration must confer exclusive rights vis-à-vis all third parties. The fact that the owner cannot prevent use of the same or a similar sign by the GI right holder does not mean that the registration is set aside. The phrase "the right to use a trademark" refers to the basic right of the trademark owner to use the trademark, whether it has been acquired through registration or use.539 It is the right to use a sign, which is different from the right to prevent others from using the same or a similar sign. If that right were inherent in the term "validity of the registration", it would have been superfluous to refer to the "right to use a trademark" as well. If that right had been intended, the drafters would have referred to the "exclusive right to use a trademark". If that right were inherently exclusive, it would have been superfluous to provide in Article 16.1 that the owners of trademarks shall have exclusive rights. The drafting history shows that the Brussels Draft referred to the continued use of a GI as a trademark, which envisaged coexistence, in a separate provision from the predecessor to Article 24.5. Its transfer to Article 24.5 in the final version did not alter its meaning or purpose.540
7.586.
The European Communities argues that Article 24.5 is drafted in mandatory terms and imposes self-standing obligations which go beyond those in Section 2 of Part II. This may be illustrated by the case of a Member which provides for the refusal or invalidation of registration of a trademark in terms broader than those in Article 22.3, or which prohibits the use of any trademark acquired by use in terms broader than those in Article 22.2. Both would be consistent with Section 2 of Part II but Article 24.5 would prevent either applying to prior trademarks. This would be an obligation arising exclusively under Article 24.5.541
7.587.
The European Communities argues that if Article 24.5 did not allow coexistence, the protection of GIs provided under Section 3 of Part II would become pointless whenever there is a grandfathered trademark. The phrase "measures adopted to implement this Section" assumes that Members will continue to protect GIs notwithstanding the existence of grandfathered trademarks. Coexistence may not be a perfect solution to resolve conflicts between different types of intellectual property rights but there is no such perfect solution.542 It is not an unusual solution, since coexistence is envisaged in Articles 23.2 (with respect to a GI and a trademark that is not misleading), 23.3, 24.3 (where pre-existing protection provided for coexistence) 24.4 and 16.1 (vis-à-vis existing prior rights).543 Article 24.5 embodies a compromise. The European Communities and other participants agreed to make it mandatory on the understanding that the trademark owners would have the right to use the trademark but not the right to exclude use by GI right holders.544
7.588.
The European Communities argues that there is no "conflict" between Articles 16.1 and 22.3 but that there is a potential "conflict" between Articles 16.1 and 22.2(a), and possibly 23.1. Article 22.2 confers on GI right holders the right to prevent certain uses of trademarks, which may conflict with the right of the trademark owner under Article 16.1 to prevent certain uses of signs. The simultaneous exercise of both rights would lead to a situation where neither the trademark owner nor the GI right holders could use the sign in question. Neither would be able to fulfil its purpose. This conflict is resolved by Articles 22.3, 23.2 and 24.5.545
7.589.
The European Communities argues that only the object and purpose of the treaty as a whole is relevant to the general rule of treaty interpretation. To the extent that the exclusivity of a trademark is an object and purpose of the TRIPS Agreement, it submits that exclusivity is as essential to a GI or even more essential, because the choice of a GI is not arbitrary, unlike a trademark, and the establishment of a GI takes longer than a trademark.546
7.590.
The European Communities argues that the complainant bears the burden of proof that a measure falls within the scope of the obligations provided in Article 16.1. Article 24.5 is not an exception but defines the boundary between the obligations in Article 16.1 and a Member's right to implement GI protection. It does not provide an exemption from an obligation but places a limit on the measures that Members must or may take when implementing GI protection under Section 3 of Part II. It confers a right to use a trademark, a right which owners of trademarks acquired through use do not have under Article 16.1 because rights the basis of use are optional under Article 16.1. It notes that Australia cited Article 24.5 in its request for establishment of a panel and makes a claim under that provision in its first written submission.547

(ii) Main arguments of third parties

7.591.
Argentinaargues that coexistence is inconsistent with Articles 16.1 and 22.3 of the TRIPS Agreement. Article 24.5 sets out a cut-off date different from the one in the Regulation and does not provide for the possibility of limiting the trademark owner's right as the Regulation does. Article 24.4 determines the boundaries for alternatives available to Members in the implementation of measures relating to GI protection and its link to trademarks.548
7.592.
Brazilargues GIs which are identical to trademarks are likely to create confusion and, consequently, may affect the value of trademarks. Article 16.1 of the TRIPS Agreement provides for a right that covers the use of any sign, and not only that of a trademark, which might cause confusion. The possibility of coexistence between a trademark and a GI is only acceptable in terms of Articles 24.5 and 16.1, read in conjunction, which mean that the use of a GI and the need to protect it must not be at the expense of both trademark owners and consumers, which may undermine the value of a trademark contrary to the "exclusive rights" of a trademark owner under Article 16.1.549
7.593.
Colombiaargues that, under the TRIPS Agreement, no form of protection is superior to another. Therefore, the Regulation cannot deny the right of the trademark owner under Article 16.1 of the TRIPS Agreement. Such denial constitutes a clear violation of WTO obligations.550
7.594.
Mexicoargues that the exclusive right in Article 16.1 of the TRIPS Agreement is severely nullified by Article 14(2) of the Regulation as it permits coexistence between a prior registered trademark and a later GI. The European Communities' explanation that coexistence is not the perfect solution is an inadequate justification but a recognition of inconsistency. By ignoring the "first in time, first in right" rule, the Regulation not only contravenes Article 24.5 of the TRIPS Agreement but also a recognized general principle of law.551
7.595.
New Zealandargues that Article 16.1 of the TRIPS Agreement provides for a right against "all third parties". Despite an appearance of conflict between the rights in Articles 16.1 and 22.2, each must be read to the fullest extent permissible without conflicting with the other. Article 24.5 is a provision that resolves conflict by compromising this exclusivity, but in all other cases, the rights provided for in Articles 16.1 and 22.2 must both be upheld. Article 14(2) of the Regulation excludes users of a registered GI from the scope of "all third parties" against whom a trademark owner should be able to exercise rights, and is inconsistent with Article 16.1.552
7.596.
Chinese Taipei argues that Articles 16.1 and 22.2 of the TRIPS Agreement must be given their full scope in a manner that would not cause conflict. The Regulation creates precisely such a conflict, rendering Article 16.1 inutile, as the right of trademark owners under that article is negated by coexistence under Article 14(2) of the Regulation. The result is the creation of a hierarchy in which GIs have a superior status than trademarks, which is not contemplated by the TRIPS Agreement.553

(iii) Consideration by the Panel

7.597.
The Panel will now proceed to examine whether the TRIPS Agreement requires Members to make available to trademark owners rights against the use of GIs. This involves two steps: first, we examine the right of trademark owners provided for in Article 16.1 of the TRIPS Agreement and then we continue by examining whether Article 24.5 provides authority to limit that right.

Article 16.1 of the TRIPS Agreement

7.598.
Part II of the TRIPS Agreement contains minimum standards concerning the availability, scope and use of intellectual property rights. The first seven Sections contain standards relating to categories of intellectual property rights. Each Section sets out, as a minimum, the subject matter which is eligible for protection, the scope of the rights conferred by the relevant category of intellectual property and permitted exceptions to those rights.
7.599.
Although each of the Sections in Part II provides for a different category of intellectual property, at times they refer to one another554, as certain subject matter may be eligible for protection by more than one category of intellectual property. This is particularly apparent in the case of trademarks and GIs, both of which are, in general terms, forms of distinctive signs. The potential for overlap is expressly confirmed by Articles 22.3 and 23.2, which provide for the refusal or invalidation of the registration of a trademark which contains or consists of a GI.555
7.600.
Section 2 of Part II provides for the category of trademarks. Article 15.1 sets out the definition of the subject matter which is capable of constituting a trademark. These are signs that satisfy certain criteria. Article 16.1 sets out a right which must be conferred on the owner of a registered trademark, and which may also be acquired on the basis of use, as follows:

"1. The owner of a registered trademark shall have the exclusive right to prevent all third parties not having the owner's consent from using in the course of trade identical or similar signs for goods or services which are identical or similar to those in respect of which the trademark is registered where such use would result in a likelihood of confusion. In case of the use of an identical sign for identical goods or services, a likelihood of confusion shall be presumed. The rights described above shall not prejudice any existing prior rights, nor shall they affect the possibility of Members making rights available on the basis of use."

7.601.
The right which must be conferred on the owner of a registered trademark is set out in the first sentence of the text. There are certain limitations on that right which relate to use in the course of trade, the signs, the goods or services for which the signs are used and those with respect to which they are registered and the likelihood of confusion. The ordinary meaning of the text indicates that, basically, this right applies to use in the course of trade of identical or similar signs, on identical or similar goods, where such use would result in a likelihood of confusion. It does not specifically exclude use of signs protected as GIs.
7.602.
The text of Article 16.1 stipulates that the right for which it provides is an "exclusive" right. This must signify more than the fact that it is a right to "exclude" others, since that notion is already captured in the use of the word "prevent". Rather, it indicates that this right belongs to the owner of the registered trademark alone, who may exercise it to prevent certain uses by "all third parties" not having the owner's consent. The last sentence provides for an exception to that right, which is that it shall not prejudice any existing prior rights. Otherwise, the text of Article 16.1 is unqualified.
7.603.
Other exceptions to the right under Article 16.1 are provided for in Article 17 and possibly elsewhere in the TRIPS Agreement. However, there is no implied limitation vis-à-vis GIs in the text of Article 16.1 on the exclusive right which Members must make available to the owner of a registered trademark. That right may be exercised against a third party not having the owner's consent on the same terms, whether or not the third party uses the sign in accordance with GI protection, subject to any applicable exception.

Article 24.5 of the TRIPS Agreement

7.604.
The parties have referred to Article 24.5 of the TRIPS Agreement. This appears in Section 3 of Part II, which provides for the category of GIs.556 Article 24.5 provides as follows:

"5. Where a trademark has been applied for or registered in good faith, or where rights to a trademark have been acquired through use in good faith either:

(a) before the date of application of these provisions in that Member as defined in Part VI; or

(b) before the geographical indication is protected in its country of origin;

measures adopted to implement this Section shall not prejudice eligibility for or the validity of the registration of a trademark, or the right to use a trademark, on the basis that such a trademark is identical with, or similar to, a geographical indication."

7.605.
The Panel must interpret this provision, like all other provisions of the covered agreements relevant to this dispute, in accordance with the customary rules of interpretation of public international law, as required by Article 3.2 of the DSU. For present purposes, this means the general rule of treaty interpretation contained in Article 31 of the Vienna Convention on the Law of Treaties. This requires an interpretation in good faith in accordance with the ordinary meaning to be given to the terms in their context and in the light of the object and purpose of the agreement. Recourse may be had to supplementary means of interpretation in accordance with Article 32 of that Convention.557
7.606.
Commencing with the terms of the provision, we observe that Article 24.5 consists of a single sentence, of which the subject is "measures adopted to implement this Section". Article 24.5 appears in Section 3 of Part II of the TRIPS Agreement. Therefore, the reference to "this Section" is a reference to Section 3.
7.607.
The principal verb in Article 24.5 is "shall not prejudice". There are various definitions of the verb "prejudice" used in the three authentic language versions of the TRIPS Agreement.558 The ordinary meaning of the verb "prejudice" in English can be defined as "affect adversely or unfavourably; injure or impair the validity of (a right, claim, etc.)". The latter part of this definition appears particularly apposite in this context since it refers to a right or claim, and the objects of the verb in Article 24.5 are legal rights. However, the European Communities emphasizes that the verbs used in the French and Spanish versions, préjuger and prejuzgar respectively, correspond to the modern English verb "prejudge". The Panel notes that this is an archaic sense of the English verb "prejudice" now analogous to its use in the phrase "without prejudice". Other usages of the English verb "prejudice" in the TRIPS Agreement outside Article 24 have been rendered differently in the French and Spanish versions, which are equally authentic559, to capture the sense of adverse effect or injury, so that that sense should not be read into Article 24.5. Nevertheless, the essence of all these definitions is that the provision does not affect certain other rights. The Panel's task in this dispute is to determine the applicability of Article 24.5. For that purpose, it suffices to note that the verb "shall not prejudice" denotes that the measures that are the subject of that provision shall not affect certain other rights.
7.608.
The Panel notes that the word "prejudice" is relatively common in all three versions of the TRIPS Agreement and the phrase "shall not prejudice" or "shall in no way prejudice" occurs three other times in the English version, including once in another exception in Article 24, and once in relation to prior rights in Article 16.1 itself.560 Read in context, "prejudice" simply appears to be a word which the drafters used to indicate that a particular measure shall not affect certain other rights, including prior rights.
7.609.
The objects of the principal verb in Article 24.5 are "the eligibility for or the validity of the registration of a trademark" and "the right to use a trademark". The context indicates the relevance of these rights in Article 24.5. The choice of words "the eligibility for or the validity of the registration of a trademark" reflects the fact that these are the aspects of trademark protection which might otherwise be prejudiced by the obligations to "refuse or invalidate the registration of a trademark" and that "registration of a trademark... shall be refused or invalidated" in Articles 22.3 and 23.2. In the same way, the choice of the words "the right to use a trademark" reflects the fact that this is the aspect of trademark protection which would otherwise be prejudiced by the obligations to provide the legal means to prevent certain uses in Articles 22.2 and 23.1.561
7.610.
The European Communities asserts that the words "the right to use a trademark" provide for an additional positive right to use a trademark. However, in the Panel's view, the verb "shall not prejudice" is not capable of supporting this interpretation. It does not provide for the conferral of new rights on trademark owners or GI holders, but provides that the specifically mentioned rights shall not be affected by the measures that are the subject of the provision. If the drafters had intended to grant a positive right, they would have used positive language. Indeed, Article 14(2) of the Regulation (which was adopted prior to the end of the TRIPS negotiations) expressly provides that "a trademark... may continue to be used" under certain conditions. In contrast, there is no language in Article 24.5 of the TRIPS Agreement which would provide for the conferral of a right to use a trademark. Instead, it is a saving provision which ensures that "the right to use a trademark" is not prejudiced, or affected, by measures adopted to implement Section 3 of Part II. Irrespective of how the right to use a trademark arises, there is no obligation under Article 24.5 to confer it.562
7.611.
Even if the TRIPS Agreement does not expressly provide for a "right to use a trademark" elsewhere, this does not mean that a provision that measures "shall not prejudice" that right provides for it instead. The right to use a trademark is a right that Members may provide under national law.563 This is the right saved by Article 24.5 where it provides that certain measures "shall not prejudice... the right to use a trademark".564
7.612.
The context in other paragraphs of Article 24 confirms the Panel's interpretation of "the eligibility for or the validity of the registration of a trademark" and "the right to use a trademark", as used in paragraph 5. Other exceptions in that article also refer to the implications of these two types of protection. Paragraph 4 refers to "continued and similar use of a particular [GI]... identifying wines and spirits"; paragraph 7 refers to "any request made under this Section in connection with the use or registration of a trademark"; and paragraph 8 refers to "the right of any person to use, in the course of trade, that person's name".
7.613.
There is no reason to limit the "right to use a trademark" to trademarks acquired through use due to the optical symmetry between, on the one hand, the passive subjects of the first relative clause: "a trademark applied for... in good faith", "a trademark... registered in good faith" and "rights to a trademark... acquired through use in good faith" and, on the other hand, the active objects of the principal verb: "eligibility for... the registration of a trademark", "the validity of the registration of a trademark" and "the right to use a trademark". The operative parallel is between the rights which shall not be prejudiced and the types of GI protection which would otherwise prejudice them.
7.614.
Therefore, according to their ordinary meaning read in context, the terms "shall not prejudice", "the eligibility for or the validity of the registration of a trademark" and "the right to use a trademark" as used in paragraph 5 of Article 24 indicate the creation of exceptions to the obligations to provide two types of GI protection in Section 3. Both these types of protection could otherwise affect the rights identified in paragraph 5. Indeed, the refusal or invalidation of the registration of a trademark has no other function but to extinguish the eligibility for or the validity of the registration of a trademark. Paragraph 5 ensures that each of these types of protection shall not affect those rights.
7.615.
Accordingly, the Panel considers that Article 24.5 creates an exception to GI protection - as reflected in the title of Article 24.
7.616.
Both parties submit that Article 24.5 implies certain things. Australia argues that the term "validity of the registration" impliedly refers to all the rights which flow from registration, including the right to prevent uses that would result in a likelihood of confusion. In contrast, the European Communities argues that the use of the more specific language in Article 24.5 in fact implies a limitation on the trademark owner's right to exclude use.565
7.617.
As to Australia's argument, the Panel notes the contrast between the use of the specific terms "eligibility for or the validity of the registration" in Article 24.5, rather than simply "existing prior rights", which is the language used in the last sentence of Article 16.1. The use of language such as "existing prior rights" would have clearly preserved the right to prevent certain uses without any need for implication. The more specific language used in Article 24.5 does not, which suggests that Article 24.5 does not impliedly preserve that right. However, this does not mean that Article 24.5 authorizes Members to prejudice that right. Members may prejudice that right if there is another provision that obliges or permits them to do so.
7.618.
As to the European Communities' argument, the Panel co