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Report of the Panel

WTO AND GATT CASES CITED IN THIS REPORT

Short TitleFull Case Title and Citation
Argentina – Hides and Leather Panel Report, Argentina – Measures Affecting the Export of Bovine Hides and Import of Finished Leather, WT/DS155/Rand Corr.1, adopted 16 February 2001, DSR 2001:V, p. 1779
Argentina – Import Measures Appellate Body Reports, Argentina – Measures Affecting the Importation of Goods, WT/DS438/AB/R / WT/DS444/AB/R / WT/DS445/AB/R, adopted 26 January 2015
Argentina – Textiles and Apparel Appellate Body Report, Argentina – Measures Affecting Imports of Footwear, Textiles, Apparel and Other Items, WT/DS56/AB/R and Corr.1, adopted 22 April 1998, DSR 1998:III, p. 1003
Argentina – Textiles and Apparel Panel Report, Argentina – Measures Affecting Imports of Footwear, Textiles, Apparel and Other Items, WT/DS56/R, adopted 22 April 1998, as modified by Appellate Body Report WT/DS56/AB/R, DSR 1998:III, p. 1033
Australia – Salmon Appellate Body Report, Australia – Measures Affecting Importation of Salmon, WT/DS18/AB/R, adopted 6 November 1998, DSR 1998:VIII, p. 3327
Brazil – Aircraft Appellate Body Report, Brazil – Export Financing Programme for Aircraft, WT/DS46/AB/R, adopted 20 August 1999, DSR 1999:III, p. 1161
Canada – Renewable Energy / Canada – Feed-in Tariff Program Panel Reports, Canada – Certain Measures Affecting the Renewable Energy Generation Sector / Canada – Measures Relating to the Feed-in Tariff Program, WT/DS412/R and Add.1 / WT/DS426/R and Add.1, adopted 24 May 2013, as modified by Appellate Body Reports WT/DS412/AB/R / WT/DS426/AB/R, DSR 2013:I, p. 237
Canada – Wheat Exports and Grain Imports Appellate Body Report, Canada – Measures Relating to Exports of Wheat and Treatment of Imported Grain, WT/DS276/AB/R, adopted 27 September 2004, DSR 2004:VI, p. 2739
Chile – Alcoholic Beverages Panel Report, Chile – Taxes on Alcoholic Beverages, WT/DS87/R, WT/DS110/R, adopted 12 January 2000, as modified by Appellate Body Report WT/DS87/AB/R, WT/DS110/AB/R, DSR 2000:I, p. 303
Chile – Price Band System Appellate Body Report, Chile – Price Band System and Safeguard Measures Relating to Certain Agricultural Products, WT/DS207/AB/R, adopted 23 October 2002, DSR 2002:VIII, p. 3045 (Corr.1, DSR 2006:XII, p. 5473)
China – Auto Parts Appellate Body Reports, China – Measures Affecting Imports of Automobile Parts, WT/DS339/AB/R / WT/DS340/AB/R / WT/DS342/AB/R, adopted 12 January 2009, DSR 2009:I, p. 3
China – Electronic Payment Services Panel Report, China – Certain Measures Affecting Electronic Payment Services, WT/DS413/R and Add.1, adopted 31 August 2012, DSR 2012:X, p. 5305
China – Publications and Audiovisual Products Panel Report, China –Measures Affecting Trading Rights and Distribution Services for Certain Publications and Audiovisual Entertainment Products, WT/DS363/R and Corr.1, adopted 19 January 2010, as modified by Appellate Body Report WT/DS363/AB/R, DSR 2010:II, p. 261
China – Raw Materials Appellate Body Reports, China – Measures Related to the Exportation of Various Raw Materials, WT/DS394/AB/R / WT/DS395/AB/R / WT/DS398/AB/R, adopted 22 February 2012, DSR 2012:VII, p. 3295
Colombia – Textiles Panel Report, Colombia – Measures Relating to the Importation of Textiles, Apparel and Footwear, WT/DS461/R and Add.1, circulated to WTO Members 27 November 2015 [appeal/adoption pending]
Dominican Republic – Import and Sale of Cigarettes Appellate Body Report, Dominican Republic – Measures Affecting the Importation and Internal Sale of Cigarettes, WT/DS302/AB/R, adopted 19 May 2005, DSR 2005:XV, p. 7367
EC – Approval and Marketing of Biotech Products Panel Reports, European Communities – Measures Affecting the Approval and Marketing of Biotech Products, WT/DS291/R, Add.1 to Add.9 and Corr.1 / WT/DS292/R, Add.1 to Add.9 and Corr.1 / WT/DS293/R, Add.1 to Add.9 and Corr.1, adopted 21 November 2006, DSR 2006:III, p. 847
EC – Bananas III Appellate Body Report, European Communities – Regime for the Importation, Sale and Distribution of Bananas, WT/DS27/AB/R, adopted 25 September 1997, DSR 1997:II, p. 591
EC – Chicken Cuts Appellate Body Report, EuropeanCommunities – Customs Classification of Frozen Boneless Chicken Cuts, WT/DS269/AB/R, WT/DS286/AB/R, adopted 27 September 2005, and Corr.1, DSR 2005:XIX, p. 9157
EC – Computer Equipment Appellate Body Report, European Communities – Customs Classification of Certain Computer Equipment, WT/DS62/AB/R, WT/DS67/AB/R, WT/DS68/AB/R, adopted 22 June 1998, DSR 1998:V, p. 1851
EC – Computer Equipment Panel Report, European Communities – Customs Classification of Certain Computer Equipment, WT/DS62/R, WT/DS67/R, WT/DS68/R, adopted 22 June 1998, as modified by Appellate Body Report WT/DS62/AB/R, WT/DS67/AB/R, WT/DS68/AB/R, DSR 1998:V, p. 1891
EC – Fasteners (China) Panel Report, European Communities – Definitive Anti-Dumping Measures on Certain Iron or Steel Fasteners from China, WT/DS397/R and Corr.1, adopted 28 July 2011, as modified by Appellate Body Report WT/DS397/AB/R, DSR 2011:VIII, p. 4289
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, p. 135
EC – IT Products Panel Reports, European Communities and its member States – Tariff Treatment of Certain Information Technology Products, WT/DS375/R / WT/DS376/R / WT/DS377/R, adopted 21 September 2010, DSR 2010:III, p. 933
EC – Selected Customs Matters Appellate Body Report, European Communities – Selected Customs Matters, WT/DS315/AB/R, adopted 11 December 2006, DSR 2006:IX, p. 3791
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, DSR 2004:III, p. 925
EC and certain member States – Large Civil Aircraft Appellate Body Report, European Communities and Certain Member States – Measures Affecting Trade in Large Civil Aircraft, WT/DS316/AB/R, adopted 1 June 2011, DSR 2011:I, p. 7
Japan – Alcoholic Beverages II Appellate Body Report, Japan – Taxes on Alcoholic Beverages, WT/DS8/AB/R, WT/DS10/AB/R, WT/DS11/AB/R, adopted 1 November 1996, DSR 1996:I, p. 97
Japan – Film Panel Report, Japan – Measures Affecting Consumer Photographic Film and Paper, WT/DS44/R, adopted 22 April 1998, DSR 1998:IV, p. 1179
Korea – Various Measures on Beef Appellate Body Report, Korea – Measures Affecting Imports of Fresh, Chilled and Frozen Beef, WT/DS161/AB/R, WT/DS169/AB/R, adopted 10 January 2001, DSR 2001:I, p. 5
Mexico – Anti-Dumping Measures on Rice Appellate Body Report, Mexico – Definitive Anti-Dumping Measures on Beef and Rice, Complaint with Respect to Rice, WT/DS295/AB/R, adopted 20 December 2005, DSR 2005:XXII, p. 10853
Mexico – Corn Syrup (Article 21.5 – US) Appellate Body Report, Mexico – Anti-Dumping Investigation of High Fructose Corn Syrup (HFCS) from the United States – Recourse to Article 21.5 of the DSUby the United States, WT/DS132/AB/RW, adopted 21 November 2001, DSR 2001:XIII, p. 6675
Mexico – Taxes on Soft Drinks Panel Report, Mexico – Tax Measures on Soft Drinks and Other Beverages, WT/DS308/R, adopted 24 March 2006, as modified by Appellate Body Report WT/DS308/AB/R, DSR 2006:I, p. 43
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, p. 2701
Ukraine – Passenger Cars Panel Report, Ukraine – Definitive Safeguard Measures on Certain Passenger Cars, WT/DS468/R and Add.1, adopted 20 July 2015
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, DSR 2002:IX, p. 3779
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, p. 373
US – COOL Panel Reports, United States – Certain Country of Origin Labelling (COOL) Requirements, WT/DS384/R / WT/DS386/R, adopted 23 July 2012, as modified by Appellate Body Reports WT/DS384/AB/R / WT/DS386/AB/R, DSR 2012:VI, p. 2745
US – Continued Zeroing Appellate Body Report, United States – Continued Existence and Application of Zeroing Methodology, WT/DS350/AB/R, adopted 19 February 2009, DSR 2009:III, p. 1291

ABBREVIATIONS

AbbreviationDescription
1980 Decision Decision of 26 March 1980 on Procedures for Modification and Rectification of Schedules of Tariff Concessions, L/4962, adopted by the Council, C/M/139
BCI Business Confidential Information
CCT Common Customs Tariff of the Eurasian Economic Union
Collins English Dictionary online Collins English Dictionary online, [http://www.collinsdictionary.com/dictionary/english]
Customs Valuation Agreement Agreement on Implementation of Article VII of the GATT 1994
DSB Dispute Settlement Body
Decision No. 9 Decision No. 9 of the Board of the Eurasian Economic Commission
Decision No. 47 Decision No. 47 of the Council of the Eurasian Economic Commission
Decision No. 52 Decision No. 52 of the Council of the Eurasian Economic Commission
Decision No. 54 of the Board Decision No. 54 of the Board of the Eurasian Economic Commission
Decision No. 54 of the Council Decision No. 54 of the Council of the Eurasian Economic Commission
Decision No. 77 Decision No. 77 of the Board of the Eurasian Economic Commission
Decision No. 85 Decision No. 85 of the Board of the Eurasian Economic Commission
Decision No. 103 Decision No. 103 of the Board of the Eurasian Economic Commission
DSU Understanding on Rules and Procedures Governing the Settlement of Disputes
EAEU Eurasian Economic Union
EAEU Treaty Treaty on the Eurasian Economic Union
EU European Union
EUR Euro
GATT 1994 General Agreement on Tariffs and Trade 1994
Oxford English Dictionary online Oxford English Dictionary online, [http://www.oed.com]
Paragraph 313 Paragraph 313 of the Report of the Working Party on the Accession of Russia, WT/ACC/RUS/70, WT/MIN(11)/2
Russia Russian Federation
Russia's Accession Protocol Protocol on the Accession of the Russian Federation, 17 December 2011, WT/MIN(11)/24, WT/L/839
Russia's Request for Rectification Communication from the Committee on Market Access, Rectification and Modification of Schedules, Schedule CLXV – The Russian Federation, 1 May 2015, G/MA/TAR/RS/406
Russia's Schedule Schedule CLXV – The Russian Federation, Annex I to the Protocol of Accession of the Russian Federation, circulated in WT/ACC/RUS/70/Ad.1
Russia's Working Party Report Report of the Working Party on the Accession of Russia, WT/ACC/RUS/70, WT/MIN(11)/2
SDV Systematic Duty Variation
Shorter Oxford English Dictionary New Shorter Oxford English Dictionary, 2007 (6th edition), Volumes 1 and 2
Vienna Convention Vienna Convention on the Law of Treaties, Done at Vienna, 23 May 1969, 1155 UNTS 331; 8 International Legal Materials 679
WTO World Trade Organization

1 INTRODUCTION

1.1 COMPLAINT BY THE EUROPEAN UNION

1.1.
On 31 October 2014, the European Union requested consultations with the Russian Federation (Russia) pursuant to Articles 1 and 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), and Article 19 of the Agreement on Implementation of Article VII of the GATT 1994 (Customs Valuation Agreement) with respect to the measures and claims set out below.1
1.2.
The following Members asked to join the consultations: Ukraine (on 6 November 2014)2; Japan (on 14 November 2014)3; the United States (on 14 November 2014)4; and Indonesia (on 14 November 2014).5 The DSB did not receive a notification from Russia accepting these requests.
1.3.
Consultations were held on 28 November 2014.6

1.2 PANEL ESTABLISHMENT AND COMPOSITION

1.4.
On 26 February 2015, the European Union requested the establishment of a panel pursuant to Article 6 of the DSU with standard terms of reference.7 At its meeting on 25 March 2015, the Dispute Settlement Body (DSB) established a panel pursuant to the request of the European Union in document WT/DS485/6, in accordance with Article 6 of the DSU.8
1.5.
The Panel's terms of reference are the following9:

To examine, in the light of the relevant provisions of the covered agreements cited by the parties to the dispute, the matter referred to the DSB by the European Union in document WT/DS485/6 and to make such findings as will assist the DSB in making the recommendations or in giving the rulings provided for in those agreements.

1.6.
On 8 June 2015, the European Union requested the Director-General to determine the composition of the panel, pursuant to Article 8.7 of the DSU. On 18 June 2015, the Director-General accordingly composed the Panel as follows10:

Chairperson: Mr Ronald Saborío Soto

Members: Mr Esteban Conejos, Jr.

Mr Gustavo Lunazzi

1.7.
Australia, Brazil, Canada, Chile, China, Colombia, India, Japan, the Republic of Korea, Moldova, Norway, Singapore, Ukraine, and the United States notified their interest in participating in the Panel proceedings as third parties.

1.3 PANEL PROCEEDINGS

1.3.1 General

1.8.
The Panel held its organizational meeting with the parties on 30 June 2015. After consultation with the parties, the Panel adopted its Working Procedures11 and timetable on 3 July 2015.
1.9.
The European Union filed its first written submission on 27 July 2015. Russia filed its first written submission on 24 August 2015. Third party submissions were received on 2 September 2015 from Australia, Canada, Colombia, Japan, Norway, Ukraine, and the United States.
1.10.
The Panel held a first substantive meeting with the parties from 15 to 16 September 2015. A session with the third parties took place on 16 September 2015.
1.11.
The parties filed their rebuttal submissions on 20 October 2015.
1.12.
The Panel held a second substantive meeting with the parties from 23 to 24 November 2015. On 22 December 2015, the Panel issued the Draft Descriptive Part of its Report to the parties. The Panel issued its Interim Report to the parties on 24 February 2016. The Panel issued its Final Report to the parties on 8 April 2016.

1.3.2 Working procedures on Business Confidential Information (BCI)

1.13.
On 30 June 2015, the European Union requested the Panel to adopt additional working procedures to protect any BCI that the parties might submit to it. In support of this request, the European Union provided a proposal for BCI procedures. On 3 July 2015, the Panel transmitted its own draft BCI procedures to the parties. On 8 July 2015, the European Union provided comments on the draft prepared by the Panel. In the light of these comments, the Panel on 14 July 2015 adopted Additional Working Procedures Concerning Business Confidential Information.12 Neither party submitted BCI to the Panel during the course of the proceedings.

1.3.3 Preliminary ruling

1.14.
On 24 August 2015, Russia submitted to the Panel a request for a preliminary ruling pursuant to Article 6.2 of the DSU. The European Union was given and used the opportunity to respond in writing to Russia's request on 3 September 2015. The parties were also advised that they could comment on Russia's request during their opening oral statements at the Panel's first substantive meeting with the parties. The Panel additionally advised the third parties that they could comment on Russia's request in their written submissions to the Panel, or in their oral statements at the third party session conducted in the context of the Panel's first substantive meeting. Taking into account Russia's request that the Panel issue a preliminary ruling prior to the first substantive meeting (which the Panel considered not to be feasible) and Russia's reiteration at the first substantive meeting that the Panel should rule on Russia's request as soon as possible, the Panel issued its conclusions on Russia's request for a preliminary ruling on 18 September 2015, shortly after the end of the first substantive meeting.
1.15.
The Panel issued its detailed reasons in support of its conclusions on 2 November 2015. On the same date, the Panel asked the parties whether they would object to early circulation of the detailed reasons to the Membership. On 5 November 2015, the European Union indicated that it would support early circulation. On the same date, however, Russia objected to circulation, indicating that its objection was without prejudice to Russia's general position on the issue of circulation of preliminary rulings to the Membership of the WTO, or to Russia's position on such circulation in any other ongoing or future dispute to which it is or may be a party or third party. Accordingly, the Panel advised the parties on 10 November 2015 that it would not circulate its detailed reasons prior to its Final Report.13

2 FACTUAL ASPECTS

2.1 THE MEASURES AT ISSUE

2.1.
The European Union challenges 12 measures related to Russia's tariff treatment of certain agricultural and manufacturing products.
2.2.
The first eleven measures are customs duties provided for in the Common Customs Tariff of the Eurasian Economic Community (CCT) in respect of the following tariff lines14:

a. 4810 22 900 0 (certain kinds of light-weighted coated paper)

b. 4810 29 300 0 (certain paper and paperboard products in rolls)

c. 4810 92 300 0 (certain multi-ply paper and paperboard products with only one outer layer bleached)

d. 4810 13 800 9 (certain paper and paperboard products in rolls)

e. 4810 19 900 0 (certain paper and paperboard products)

f. 4810 92 100 0 (certain multi-ply paper and paperboard products with each layer bleached)

g. 1511 90 190 2 (certain palm oil products in tare of capacity 20,000 kg or less)

h. 1511 90 900 2 (certain palm oil products in tare of capacity 20,000 kg or less)

i. 8418 10 200 1 (freezers refrigerators household type)

j. 8418 10 800 1 (freezers refrigerators household type)

k. 8418 21 800 0 (compression-type refrigerators of a capacity exceeding 340 litres)

2.3.
The European Union characterizes the twelfth measure at issue as "a more general measure consisting in systematic duty variations, to the extent that they result in the application of duties in excess of bound rates".15 This measure, which the European Union refers to as the "systematic duty variation" (SDV)16, consists in "systematically according certain clearly described types of tariff treatment that lead, in each individual instance of such tariff treatment, to duties being levied in excess of bound rates".17

3 PARTIES' REQUESTS FOR FINDINGS AND RECOMMENDATIONS

3.1.
The European Union requests that the Panel find that the measures at issue are, or were at the time of the Panel's establishment, inconsistent with Russia's obligations under Articles II:1 (a) and II:1(b) of the GATT 1994. The European Union further requests, pursuant to Article 19.1 of the DSU, that the Panel recommend that Russia bring its measures into conformity with its WTO obligations, to the extent that it has not already done so.
3.2.
Russia requests that the Panel find that the European Union's claims are outside the Panel's terms of reference. Additionally, Russia requests the Panel to find that the sixth, seventh, eighth, tenth, and eleventh measures challenged by the European Union have been amended or otherwise changed since the time of the Panel's establishment, and are now consistent with Russia's obligations under Article II:1(a) and (b) of the GATT 1994. Russia also requests the Panel to find that, in respect of the sixth to twelfth challenged measures, the European Union failed to provide sufficient evidence in support of its claims. Finally, in respect of the twelfth measure at issue, Russia requests the Panel to find that the European Union failed to specify the norms and laws establishing the measure and its precise content, or else to find that the European Union failed to establish that the measure exists and is inconsistent with Russia's obligations under Article II:1(a) and (b).18

4 ARGUMENTS OF THE PARTIES

4.1.
The arguments of the parties are reflected in their executive summaries, provided to the Panel in accordance with paragraph 19 of the Working Procedures adopted by the Panel (see Annexes C-1, C-2, C-3, and C-4).

5 ARGUMENTS OF THE THIRD PARTIES

5.1.
The arguments of Australia, Brazil, Canada, Chile, Colombia, Japan, Norway, Ukraine, and the United States are reflected in their executive summaries, provided in accordance with paragraph 20 of the Working Procedures adopted by the Panel (see Annexes D-1, D‑2, D‑3, D‑4, D‑5, D‑6, D-7, D-8, and D-9).

6 INTERIM REVIEW

6.1.
On 24 February 2016, the Panel issued its Interim Report to the parties. On 9 March 2016, the European Union and Russia each submitted written requests for the Panel to review aspects of the Interim Report. On 23 March 2016, the European Union and Russia submitted comments on each other's requests for review. Neither party requested an interim review meeting.
6.2.
In accordance with Article 15.3 of the DSU, this section of the Panel Report sets out the Panel's response to the parties' requests made at the interim review stage.
6.3.
In addition to the changes indicated below that the Panel made in response to the parties' requests for substantive modifications, the Panel corrected typographical errors and other non-substantive editorial clarifications in the Report, including those identified by the parties.

6.1 GENERAL INTERPRETATIVE ISSUES ARISING UNDER ARTICLE II:1(B), FIRST SENTENCE, OF THE GATT 1994

6.4.
Regarding paragraph 7.14, the European Union requests that the Panel add a reference to Russia's arguments in respect of (a) the definition of an ordinary customs duty in the jurisprudence of the Appellate Body, and (b) the evidence required to establish an inconsistency with Article II:1(b), first sentence.
6.5.
The Panel does not consider it necessary to refer to the arguments of Russia that the European Union has identified in the context of paragraph 7.14. That paragraph, and section 7.2 of the Report more generally, is not intended to provide a comprehensive overview of all issues relating to the interpretation of Article II:1(b), first sentence. Rather, it addresses certain specific legal issues raised by the parties. Accordingly, we do not think it is necessary to recall the arguments mentioned by the European Union in paragraph 7.14. We do note, however, that issue (b) is discussed three paragraphs down in paragraph 7.17. Similarly, issue (a) is dealt with in paragraph 7.93. In the light of these considerations, we made no change in response to the European Union's comment.

6.2 CLAIMS CONCERNING APPLIED AD VALOREM DUTY RATES THAT ALLEGEDLY EXCEED BOUND AD VALOREM DUTY RATES (THE FIRST TO SIXTH MEASURES)

6.6.
Regarding paragraphs 7.34 and 7,129, the European Union notes that it has not argued that a temporary duty reduction in itself violates Article II:1(a). Rather, it has challenged the temporary duty reduction in light of the fact that the measure foresaw future tariff treatment in excess of the bound duty rate. The European Union requests that the Panel modify paragraphs 7.34 and 7,129 to reflect this. The European Union also notes that the Panel correctly characterized its relevant claim at paragraph 7,130.
6.7.
The Panel made appropriate changes to paragraphs 7.34, 7,129, and 8.1(c)(iii).
6.8.
Regarding paragraphs 7.42 to 7.43, the European Union requests the Panel to reflect certain arguments in its response to Panel question number 123.
6.9.
The Panel made appropriate changes to paragraph 7.43. Regarding paragraph 7.46, the European Union requests the Panel to omit or qualify the fourth sentence. The European Union notes that it addressed both the fact that Russia's customs duties are prescribed by the CCT and the fact that Russian customs authorities are required to, and do in fact, levy those duties in individual import transactions. The European Union also suggests that the Panel refer to a presumption that Russian customs authorities are legally required to apply the duties contained in the CCT in each and every individual import transaction. In the European Union's view, the presumption would better captured by the verb "impose" than the verb "apply". Additionally, the European Union requests that, for greater clarity, the paragraph be modified to take into account certain statements by Russia in its responses to Panel question numbers 34 and 52. According to the European Union, these responses indicate that the adoption of customs duties applied by Russia is in the hands of the EAEU.
6.10.
The Panel deleted the fourth sentence of the paragraph. However, for the sake of consistency with the rest of the findings, we do not find it appropriate to use the verb "impose" instead of "apply". Also, paragraph 7.46 already makes clear that the European Union challenges duty rates that Russian customs authorities are legally required to apply. Finally, we see no need to add to paragraph 7.46 by referring to elements of the identified statements of Russia. We also note that paragraph 7.42 already makes a related point.
6.11.
Regarding paragraph 7.53, the European Union requests the Panel to add a reference to Russia's statements that the Vienna Convention on the Law of Treaties (Vienna Convention) and the Decision of 26 March 1980 on Procedures for Modification and Rectification of Schedules of Tariff Concessions (1980 Decision) apply cumulatively, and that Article 79 of the Vienna Convention constitutes a rule of customary international law.
6.12.
The Panel made appropriate changes to paragraphs 7.52 and 7.53.
6.13.
Regarding paragraphs 7.80, 7,100, 7,101, 7,119, 7,174, 7,175, 7,198, 7,215, 7,261 and 7,262, as well as footnotes 290, 295, 296 and 343, the European Union requests that, since Russia may have more than one customs authority, the term "customs authority" in these paragraphs and footnotes be changed to "customs authorities".
6.14.
Russia objects to the European Union's request. According to Russia, Russia has one customs authority – the "Federal Customs Service". Russia points out that that term is used in paragraph 306 of Russia's Working Party Report.
6.15.
The Panel retained the references to "customs authority" in its Report. However, we wish to clarify that this term is used generally to refer to the authority or authorities in Russia responsible for the application to imports of customs duties provided for in the CCT.
6.16.
Regarding paragraph 7,100, the European Union submits that Russia's customs authorities are not and were not at liberty to modify the rates of customs duties, but are and were required to apply the duties provided for in the CCT. The European Union therefore requests that the paragraph in question state that customs authorities were required to "apply" a duty rate as from 1 January 2016, rather than that they were required to "increase" the duty rate as from 1 January 2016.
6.17.
Russia agrees with the European Union that its customs authority is not, and was not, at liberty to modify the duty rates. In this connection, Russia again refers to paragraph 306 of its Working Party Report. Russia therefore asks the Panel to take into account the European Union's comment.
6.18.
The Panel made appropriate changes to paragraph 7,100.
6.19.
Regarding paragraph 7,107, the European Union requests that the Panel clarify that Russia proposed that the Panel should follow the approach taken by the panel in EC – IT Products only with respect to the sixth measure's conformity with the first sentence of Article II:1(b).
6.20.
The Panel made appropriate changes to paragraph 7,107.
6.21.
Regarding paragraph 7,114, the European Union requests the Panel to clarify the cross-reference, by replacing the reference to section 7.3.2.3 with a reference to specific paragraphs of the Report.
6.22.
The Panel made appropriate changes to paragraph 7,114.

6.3 CLAIMS CONCERNING APPLIED COMBINED DUTY RATES THAT ALLEGEDLY EXCEED BOUND DUTY RATES (THE SEVENTH TO ELEVENTH MEASURES AT ISSUE)

6.23.
Regarding paragraph 7,161, the European Union states that it has not characterised the seventh and eighth measures as measures that have expired, but rather has stated that those measures ceased to apply as from 1 September 2015 and were not replaced by another duty. The European Union therefore requests the Panel to clarify the wording of that paragraph.
6.24.
The Panel made appropriate changes to paragraph 7,161.
6.25.
Regarding paragraphs 7,168 to 7,169, as well as other relevant paragraphs in the same section, the European Union requests that they be modified to make reference to an argument put forward by Russia. According to the European Union, Russia argues that to establish an inconsistency of the relevant combined applied duties with Article II:1(b), the complaining party should provide evidence of application of duties in excess of the bound rates for a particular price range related to the products in question, because certain products may in practice be traded in price ranges in which duties would not exceed bound rates.
6.26.
The Panel considers that this argument by Russia is addressed by its findings in section 7.2 on general interpretative issues. We fail to see the connection between Russia's argument regarding how to demonstrate inconsistency with Article II:1(b), first sentence, and paragraphs 7,168 and 7,169, which concern the issue of the precise measure on which we should make findings. We therefore made no change to the section that contains paragraphs 7,168 and 7,169. However, we modified paragraphs 7.14 and 7.17, which are part of section 7.2, to reflect Russia's argument.
6.27.
Regarding paragraph 7,175, the European Union states that it has not argued that Russia never applied a cap for any tariff line, at any point in the past. The European Union requests the Panel to clarify the paragraph accordingly.
6.28.
The Panel made appropriate changes to paragraph 7,175.
6.29.
Regarding paragraph 7,187, the European Union requests that the Panel explicitly refer to Russia's argument in paragraph 33 of Russia's second written submission that paragraph 313 of Russia's Working Party Report informs the content of Russia's obligations under Article II:1.
6.30.
The Panel made appropriate changes to paragraph 7,187, as well as a corresponding change to paragraph 7,183.
6.31.
Regarding the final sentence of paragraph 7,194, the European Union requests the Panel to clarify that it is making an observation concerning the explicit wording of paragraph 313.
6.32.
The Panel made appropriate changes to paragraph 7,194.
6.33.
Regarding paragraph 7,198, the European Union notes that paragraph 313 of Russia's Working Party Report aims to ensure that the specific element of an applied combined duty does not exceed the ad valorem element of that same duty for the average customs value calculated over three years, rather than seeking to ensure that the same amount of duty is levied, in every particular transaction or on average. The European Union requests the Panel to clarify its statement in paragraph 7,198 accordingly.
6.34.
The Panel made appropriate changes at paragraph 7,198, as well as corresponding changes to paragraphs 7,197 and 7,200.
6.35.
Regarding paragraph 7,202, the European Union requests the Panel to insert specific language concerning the applicability of Article II:1(b) even in the absence of actual import transactions and a reference to the Panel's analysis at paragraphs 7.15 to 7.17 of the Report.
6.36.
The Panel made appropriate changes to paragraph 7,202, including to footnote 271.
6.37.
Regarding the first two sentences of paragraph 7,205, the European Union notes that Russia in its responses to Panel question numbers 70, 90 and 97(c) explicitly confirmed the Panel's understanding. The European Union requests the Panel to make reference to those statements.
6.38.
The Panel added a reference to Russia's statements to footnote 260, which contain the Panel's summary of Russia's arguments on this issue.
6.39.
Regarding footnote 272, the European Union requests the Panel to replace the words "based on" with "in conformity with", in order to avoid giving the impression that the Customs Valuation Agreement forms the basis of the Panel's reasoning in this section.
6.40.
The Panel made appropriate changes to footnote 272.
6.41.
Regarding paragraph 7,215, the European Union requests that the word "above" be replaced with the words "in excess of".
6.42.
The Panel notes that its use of the word "above" in paragraph 7,215 is consistent with its general use of this term throughout the Report. We also note that we have used the expression "in excess of" in our conclusions sections. We therefore made no change in response to the European Union's comment.
6.43.
Regarding paragraphs 7,215 and 7,217, the European Union requests a modification to these paragraphs and other related paragraphs. According to the European Union, the Panel should repeat or make reference to the more general finding in paragraphs 7,168 and 7,169, as well as parts of paragraph 7,171, that the design and structure of an applied duty in the form of "x% but not less than y per unit of measurement", where the bound duty is simply "x%", indicates inconsistency with Article II:1(b).
6.44.
Russia objects to the European Union's request. According to Russia, the Panel's findings in paragraphs 7,215 and 7,217 cannot be considered as a general finding that the design and structure of a duty in the form "x%, but not less than y per unit of measurement", where the bound duty is x%, indicates inconsistency with Article II:1(b). Rather, Russia considers that these paragraphs only concern the ninth measure at issue, because the value of "y" in respect of the ninth measure was the same before and after that measure was amended.
6.45.
The Panel notes that paragraphs 7,168, 7,169, and 7,171 of the Panel's Report do not make any "general findings" regarding the consistency of a duty rate of a particular design or structure. Those particular paragraphs do not find that the duties are inconsistent merely by virtue of their design or structure. Those paragraphs rather concern whether the Panel should consider the measure at issue as it existed at the time of the Panel's establishment or as amended.. Paragraphs 7,168 to 7,169 indicate only that the design and structure of the relevant applied duty rate did not change following amendment. Paragraph 7,171, when read in full, indicates that in deciding which precise measure to rule on, we did not rely solely on the design and structure of the measure, but rather looked at the precise values assigned to the ad valorem element of the duty rate during the relevant periods. Indeed, the Panel only made findings regarding the measures' consistency later in the Report, after examining in detail the evidence submitted by the parties. We therefore made no change to paragraphs 7,215 or 7,217 in response to the European Union's request.
6.46.
Regarding paragraph 7,216 and other related paragraphs in the Report, the European Union requests that these paragraphs be modified to take account of the European Union's statements in paragraphs 85 and 87 of its first written submission that the break-even price can be determined mathematically, and paragraph 58 of its second written submission, stating that an applied duty expressed as "x% but not less than y per unit of measurement" will exceed a bound rate expressed as "x%" for every customs value below "y divided by x%", as long as there is no additional mechanism like a ceiling.
6.47.
The Panel notes that footnote 245 of its Report already reflects relevant statements by the European Union. Nevertheless, we made appropriate changes to clarify paragraphs 7,216, 7,219 and 7,265.
6.48.
Regarding Figures 1 to 4 in paragraphs 7,216, 7,220, 7,264 and 7,265, the European Union requests the Panel to indicate the break-even price on the lower axis, given that, in its view, all the other relevant values on the lower axis are provided, and the Figures were clearly drawn up on the basis of a certain value for the break-even prices.
6.49.
The Panel does not accept the European Union's assertion regarding the basis for preparing the Figures. Nevertheless, as Figures 1 to 4 in paragraphs 7,216, 7,220, 7,264 and 7,265 could be simplified further without losing their illustrative value, we did so.
6.50.
Regarding paragraphs 7,222 and 7,267, the European Union states that the Panel is required to examine all evidence submitted to it, and therefore requests the Panel to replace the words "to have regard to" with the words "base our reasoning on".
6.51.
The Panel made appropriate changes at paragraph 7,222, as well as a corresponding change at paragraph 7,267.

6.4 CLAIMS CONCERNING THE TWELFTH MEASURE ("SYSTEMATIC DUTY VARIATION")

6.52.
Regarding paragraph 7,357, Russia requests the Panel to reflect argumentation set out in Russia's opening statement at the second meeting of the Panel. Russia proposes wording to that effect.
6.53.
The European Union objects to Russia's request. According to the European Union, Russia's proposed modifications are not relevant since none of them concern the issue of a "significant number" of tariff lines.
6.54.
The Panel considers that some of the arguments indicated in Russia's request are relevant to the issue identified at paragraph 7,357. Accordingly, we made appropriate changes to paragraph 7,357.
6.55.
Regarding paragraph 7,372, Russia requests the Panel to reflect its responses to Question Nos. 106 and 107. Russia proposes wording to that effect.
6.56.
The European Union objects to Russia's request. According to the European Union, Russia's proposed modifications would diminish the clarity of the Panel's Report.
6.57.
The Panel considers that some of the arguments indicated in Russia's request are relevant to the discussion already reflected at paragraph 7,372. Accordingly, we made appropriate changes to that paragraph.
6.58.
Regarding paragraph 7,395, Russia requests the Panel to reflect its argumentation set forth in its opening and closing statements at the second meeting of the Panel, as well as in its comments on the European Union's response to Question No. 117. Russia proposes wording to that effect.
6.59.
The European Union objects to Russia's request. According to the European Union, the arguments indicated in Russia's request are not significantly different from those mentioned in the footnote accompanying paragraph 7,395, and in any event do not warrant the conclusion that they go to the question of whether the SDV could be said to be "general".
6.60.
The Panel considers that some of the arguments indicated in Russia's request are relevant to the issue identified at paragraph 7,395. Accordingly, we made appropriate changes to paragraph 7,395, and deleted the accompanying footnote because it was no longer necessary in view of the change.
6.61.
Regarding paragraph 7,408, the European Union states that the Report in other sections recognizes and analyses the relationship of the duties contained in the Illustrative List to the European Union's claims related to the Systematic Duty Variation (SDV). According to the European Union, it is therefore incorrect to say that those duties "do not relate to specific measures at issue covered by the panel request". The European Union further states that if the phrase were to refer to something other than the SDV, it would seem out of place and unnecessary for the Panel's reasoning with respect to its conclusion on the SDV. The European Union therefore requests that this sentence be omitted.
6.62.
Russia objects to the European Union's request. In Russia's view, the sentence in question correctly reflects the fact that the European Union challenged the SDV as a single measure, but did not challenge the individual duties that constitute the SDV. According to Russia, the Panel made the necessary findings to secure a positive solution to the dispute.
6.63.
The Panel deleted the relevant sentence at paragraph 7,408, as it was not essential.

7 FINDINGS

7.1 OVERVIEW OF CLAIMS

7.1.
In its request for the establishment of a panel, the European Union identifies 12 measures at issue, claiming that each of these 12 measures is inconsistent with Article II:1(a) and (b), first sentence, of the GATT 1994.19
7.2.
Article II:1(a) and (b), first sentence, state in relevant part that:

(a) Each contracting party shall accord to the commerce of the other contracting parties treatment no less favourable than that provided for in the appropriate Part of the appropriate Schedule annexed to this Agreement.

(b) The products described in Part I of the Schedule relating to any contracting party, which are the products of territories of other contracting parties, shall, on their importation into the territory to which the Schedule relates, and subject to the terms, conditions or qualifications set forth in that Schedule, be exempt from ordinary customs duties in excess of those set forth and provided therein.

7.3.
The first 11 challenged measures consist of customs duties required to be applied by Russia concerning 11 distinct tariff lines:

Challenged measureTariff lineProduct category
The first measure 4810 22 900 0 Paper and paperboard products
The second measure 4810 29 300 0 Paper and paperboard products
The third measure 4810 92 300 0 Paper and paperboard products
The fourth measure 4810 13 800 9 Paper and paperboard products
The fifth measure 4810 19 900 0 Paper and paperboard products
The sixth measure 4810 92 100 0 Palm oil and its fractions
The seventh measure 1511 90 190 2 Palm oil and its fractions
The eighth measure 1511 90 990 2 Palm oil and its fractions
The ninth measure 8418 10 200 1 Combined refrigerator-freezers
The tenth measure 8418 10 800 1 Combined refrigerator-freezers
The eleventh measure 8418 21 100 0 Refrigerators

7.4.
In addition, the European Union challenges as the twelfth measure an alleged unwritten measure that it terms the "Systematic Duty Variation" (SDV).
7.5.
The European Union's 12 claims20 can be grouped into three categories:

a. The first to sixth claims all relate to applied ad valorem dutyrates allegedly in excess of bound ad valorem dutyrates;

b. The seventh to eleventh claims all relate to applied combined duty rates allegedly in excess of bound duty rates:

i. The seventh to ninth claims all relate to applied combined duty rates allegedly in excess of bound ad valorem duty rates;

ii. The tenth and eleventh claims both relate to applied combined duty rates allegedly in excess of bound combined duty rates; and

c. The twelfth claim relates to the SDV, which allegedly results in an unspecified number of applied combined duty rates in excess of bound duty rates.

7.6.
The Panel notes that the parties in this dispute have used the term "combined" duty rates as it is used in the Working Party Report on Russia's Accession (Russia's Working Party Report), to refer to duty rates sometimes described as "mixed" duty rates.21 Paragraph 311 of Russia's Working Party Report explains that "combined (mixed) duties [a]re expressed in terms of alternative rates, one as an ad valorem rate and the other as a specific rate that serve[s] as a minimum rate of duty".22 Such duties take the form "x% but not less than y per unit". For the purposes of this Report, we also use the term "combined" duty rates to refer to combined duties that include an additional ad valorem element. These duties take the form "z%; or x% but not less than y per unit; whichever is the lower". In respect of all 12 claims, the European Union requests the Panel to find that Russia is or was required to apply duty rates in excess of the relevant bound duty rates in Russia's Schedule of Concessions (Schedule)23, and that Russia therefore acted inconsistently with Article II:1(b), first sentence. The European Union additionally requests the Panel to find as a consequence that Russia has also acted inconsistently with Article II:1(a), by according to imports from other Members treatment less favourable than that provided for in its Schedule. The European Union challenges all 12 measures as such, and not as applied.24
7.7.
In respect of the sixth measure, the European Union has made two distinct claims. The first claim concerns the ad valorem duty rate that was provided for at the time of the Panel's establishment, but which was to become effective only on 1 January 2016. The European Union requests that in respect of the duty rate to be applied as of 1 January 2016, the Panel make a finding of inconsistency with Article II:1(b), first sentence, and consequently Article II:1(a). The European Union's second claim concerns the temporary reduction of the applied duty rate to the level of the bound duty rate. This reduced duty rate was allegedly in force at the time of the Panel's establishment. The European Union requests the Panel to find that at the time of the Panel's establishment Russia was required to act inconsistently with Article II:1(a) because it only temporarily reduced the applied duty rate to the level of the bound duty rate.
7.8.
As noted in paragraph 1.14 above, Russia submitted a request for a preliminary ruling pursuant to Article 6.2 of the DSU. Russia challenged a number of aspects of the European Union's panel request. Russia requested the Panel to find that all of the European Union's claims were outside the Panel's terms of reference.25 The Panel's preliminary ruling is contained in Annex A-1 of this Report, and forms an integral part of the present findings. As indicated therein, we concluded that none of the claims or measures identified by European Union in its panel request falls outside the Panel's terms of reference.
7.9.
As regards the merits of the European Union's claims, Russia initially requested that the Panel reject all of the European Union's claims in this dispute. Subsequently, Russia requested only that the Panel reject the European Union's claims in respect of the sixth to twelfth measures at issue.26
7.10.
The Panel will address the European Union's claims in three separate parts, consistent with the three categories described in paragraph 7.5 above. We shall first address the European Union's claims in respect of applied27ad valorem duty rates allegedly in excess of bound duty rates (the first to sixth measures); second, we address the European Union's claims in respect of applied combined duty rates allegedly in excess of bound duty rates (the seventh to eleventh measures); and third, we address the European Union's claim in respect of the SDV (the twelfth measure).

7.2 GENERAL INTERPRETATIVE ISSUES ARISING UNDER ARTICLE II:1(B), FIRST SENTENCE, OF THE GATT 1994

7.11.
As all 12 of the challenged measures are claimed to be in breach of Article II:1(b), first sentence, we will address as a preliminary matter two general interpretative issues that arise in the context of Article II:1(b), first sentence.
7.12.
First, the European Union argues that because Article II:1 protects competitive opportunities of imported products and not trade flows as such, a finding of inconsistency with Article II:1 does not hinge upon the actual effects of the contested measure in the marketplace.28 The European Union also notes that Appellate Body jurisprudence indicates that a finding of inconsistency under Article II:1(b), first sentence, can result directly from the structure and design of an applied customs duty.29 Therefore, according to the European Union, all that is required to ground a finding of inconsistency with Article II:1 is the existence of ordinary customs duties that are in excess of those provided in the relevant schedule.30
7.13.
Second, the European Union notes that the phrase "in excess of" not only appears in Article II:1(b), first sentence, but also in Article III:2, first sentence, of the GATT 199431, where it has been interpreted as prohibiting even the smallest amount of excess, and is not conditional on a trade effects test, qualified by a de minimis standard, or contingent on showing evidence of actual transactions in which taxes or duties were applied "in excess".32 The European Union argues that Article II:1(b), first sentence, similarly applies to duties that are in excess of bound duty rates even when the margin by which they exceed those duty rates is small, even when they exceed those duty rates only with respect to some categories of transactions, and even when it cannot be positively established that actual transactions have already taken place.33
7.14.
Russia submits that the European Union has failed to explain "why this analogy [to Article III:2] is … appropriate". In Russia's view, the European Union's interpretation is merely an "unsubstantiated assertion".34 Thus, Russia argues, the European Union has failed to meet its burden of proof. Russia additionally argues in respect of evidence of actual import transactions that where a complaining party alleges that an applied duty rate exceeds the bound duty rate only within a certain price range, the complaining party should provide evidence of the actual application of duties in excess of the bound rates because the relevant products may in practice be traded in price ranges in which the applied duties would not exceed the bound rates.35
7.15.
The Panel first addresses the issue of whether, in a dispute involving as such claims, a finding of inconsistency with Article II:1(b), first sentence, is conditional on evidence of actual import transactions concerning products falling within the relevant tariff lines, or on a "trade effects" test (that is to say, evidence of adverse trade effects resulting from the challenged measures).
7.16.
With respect to evidence of actual import transactions, we note that in Colombia – Textiles36, the responding party argued that the complaining party had not established a prima facie case because it had not "provided any evidence to show 'that apparel and footwear [we]re being imported at prices which violated the levels bound by [the responding party].'"37 The panel in that dispute stated that:

[I]n Argentina – Textiles and Apparel, in reaching a finding of inconsistency with Article II:1 of the GATT 1994, the panel and the Appellate Body based themselves on the "very nature" (in the words of the panel) or the "structure and design" (in the words of the Appellate Body) of the measure at issue. The empirical evidence on the application of the measure examined by the Panel [in Argentina – Textiles and Apparel] did not constitute indispensable evidence for its analysis but rather served to confirm the previous conclusions regarding the "nature" of the measure.

In the context of [Colombia – Textiles], … Decree No. 456 is sufficient in itself to conduct an analysis of whether Panama has established a prima facie case that the compound tariff is inconsistent with Article II:1(a) and Article II:1(b), first sentence, of the GATT 1994.38

7.17.
We see no reason to follow a different approachin respect of this issue. Thus, we will conduct our analysis on the basis that a finding of inconsistency under Article II:1(b), first sentence, does not require a complaining party to demonstrate the existence of actual transactions concerning products falling within the alleged tariff lines. It follows that a complaining party also does not need to demonstrate the existence of actual transactions involving relevant products that fall within particular price ranges. Indeed, we note that prices may change over time. Therefore, we do not consider that the absence of evidence of actual transactions in a given price range proves that transactions in that price range would or could never exist.
7.21.
On the second issue, whether Article II:1(b), first sentence, permits an applied duty rate to exceed the relevant bound duty rate up to a de minimis level, we recall that Article II:1(b), first sentence, prohibits the imposition of ordinary customs duties "in excess" of those set forth in a Schedule.45 The Appellate Body stated in this respect that "[a] tariff binding in a Member's Schedule provides an upper limit on the amount of duty that may be imposed, and a Member is permitted to impose a duty that is less than that provided for in its Schedule."46 Similarly, the panel in EC – IT Products stated that "if we were to determine that the applied duty rate exceeds the bound duty rate, then … the application of customs duties would be 'in excess' of those provided for in the EC Schedule".47 While these statements do not explicitly address the issue of a de minimis exception, they equally do not suggest that Members may exceed the bound duty rates even minimally. A more specific inquiry is therefore in order.
7.22.
The dictionary definition of the noun "excess" is "[t]he amount by which one number or quantity exceeds another".48 More specifically, "in excess of" means "more than".49 Thus, as a textual matter, a particular number or quantity is "in excess of" another number or quantity if it is greater, regardless of the extent to which it is greater.
7.23.
Looking at the context of Article II:1(b), first sentence, we note that Article III:2, first sentence, of the GATT 1994 is cast in very similar terms and in fact uses the phrase "in excess of":

The products of the territory of any contracting party imported into the territory of any other contracting party shall not be subject … to internal taxes or other internal charges of any kind in excess of those applied … to like domestic products (emphasis added).

7.24.
The Appellate Body has interpreted this provision to mean that:

Even the smallest amount of "excess" is too much. The prohibition of discriminatory taxes in Article III:2, first sentence, is not conditional on a "trade effects test" nor is it qualified by a de minimis standard.50

7.25.
Russia effectively asks us to take no notice of this statement concerning Article III:2, first sentence, in our interpretative analysis under Article II:1(b), first sentence. Indisputably, these are two different provisions with different scopes of application. Article III:2, first sentence, concerns internal taxes applied to imported goods, whereas Article II:1(b), first sentence, relates to customs duties applied to imports at the border. However, both Articles II:1(b) and III:2 concern the imposition of charges on products, and both provisions require an assessment of whether an imposed charge "exceeds" another charge (the customs duty set forth in a Member's schedule or the internal tax applied to like domestic products). Moreover, both customs duties and internal taxes can, from an economic perspective, be used as instruments to afford protection to domestic production. Taking into account the Appellate Body's interpretation o in respect of Article III:2, first sentence, it would be incongruous if an internal tax could not be used to provide even the slightest degree of protection to domestic "like" products under Article III:2, first sentence, but additional protection could be provided to such products through the application of a duty rate that slightly exceeds the bound duty rate.
7.26.
In view of the aforementioned substantial similarities between Articles II:1(b), first sentence, and III:2, first sentence, it appears to us that the Appellate Body's interpretation of the identical phrase "in excess of" in Article III:2, first sentence, is relevant to the interpretation of Article II:1(b), first sentence, and that these two provisions should be interpreted harmoniously. We observe in addition that this being an interpretative issue, we do not agree with Russia that it was for the European Union to prove the legal correctness of its reliance on jurisprudence concerning Article III:2, first sentence.51
7.27.
We turn, finally, to the object and purpose of the GATT 1994, which the Appellate Body has stated is "to preserve the value of tariff concessions negotiated by a Member with its trading partners, and bound in that Member's Schedule".52 The Appellate Body has further explained that "the security and predictability of 'the reciprocal and mutually advantageous arrangements directed to the substantial reduction of tariffs and other barriers to trade' is an object and purpose of the WTO Agreement, generally, as well as of the GATT 1994".53 In our view, a de minimis exception to the obligation not to exceed tariff bindings, far from preserving the value of tariff concessions, would allow importing Members to diminish their value, however slightly. Such an exception would also detract from the security and predictability of tariff concessions inasmuch as it would then be unclear ex ante precisely what tariff treatment would be accorded to imports.
7.28.
In the light of the text, context, and object and purpose of Article II:1(b) first sentence, we find that Article II:1(b), first sentence, admits of no de minimis exception. Consequently, an importing Member in our view must not exceed a tariff binding, even if the extent of the excess is only minimal.
7.29.
As an additional but separate matter, it is useful to address in this section one additional interpretative issue arising in respect of Article II:1(b), first sentence, even though it is relevant only to the claims concerning the seventh to eleventh measures. In that context, the European Union has argued that under Article III:2, first sentence, Members may not balance more favourable treatment of imported products in some instances against less favourable treatment of the same imported products in other instances.54 The European Union argues that this interpretation applies equally in the context of Article II:1.
7.30.
Russia has not contested this particular argument. However, we recall Russia's general concerns regarding the appropriateness of transposing jurisprudence concerning Article III:2 to Article II:1.55
7.31.
We note in this regard that according to the panel in Argentina – Hides and Leather:

The mere fact that, under certain circumstances, imports are taxed at a lower rate than internal sales is not sufficient to exclude a violation of Article III:2, first sentence, in accordance with the well-established principle that more favourable treatment of imports in certain instances may not be balanced against less favourable treatment of imports in other cases.56

7.32.
Moreover, we find relevant the following observation by the Appellate Body, which refers specifically to the imposition of customs duties in excess of a bound duty rate:

There is no indication in previous Appellate Body Reports addressing the Anti-Dumping Agreement or in the Harmonized System to indicate that levying tariffs in excess of a bound rate on the importation of a product could be "offset" or justified by levying tariffs below the bound rate on another importation of that product.57

7.33.
In this respect, we recall that Article II:1(b), first sentence, is not subject to a de minimis exception. Logically, this finding must also cover a minor (or major) departure from a bound duty rate in respect of particular import transactions even if accompanied or followed by application of a symmetrically lower duty rate in respect of other import transactions. We consider that the reasoning we have developed above in paragraphs 7.21 to 7.28 applies with equal force to the interpretative issue at hand. We therefore find that Article II:1(b), first sentence, prohibits duties imposed in excess of a bound duty, even if these duties are balanced or offset (at the same time or later) by duties imposed on identical products that are below the bound duty.

7.3 CLAIMS CONCERNING APPLIED AD VALOREM DUTY RATES THAT ALLEGEDLY EXCEED BOUND AD VALOREM DUTY RATES (THE FIRST TO SIXTH MEASURES)

7.34.
The Panel now turns to assess the European Union's first set of claims, which concern the first to sixth measures at issue. The European Union claims that the ad valorem dutyrates that the CCT requires Russia to apply in respect of these measures are in excess of the bound ad valorem dutyrates contained in Russia's Schedule. According to the European Union, the measures are therefore inconsistent as such with Article II:1(b), first sentence, of the GATT 1994, and consequently Article II:1(a) of the GATT 1994. As mentioned above58, the sixth measure involves a temporary reduction of the applied duty rate. According to the European Union, this temporary duty reduction also renders the sixth measure independently inconsistent as such with Article II:1(a) of the GATT 1994, as the measure at the same time provides for a future duty rate that exceeds the bound duty rate. We therefore address the first to fifth measures together, before addressing the sixth measure separately.

7.3.1 Claims concerning the first to fifth measures

7.35.
We first turn to the European Union's claims concerning the first to fifth measures at issue, which concern ad valorem duty rates required to be applied by Russia in respect of tariff lines 4810 22 900 0, 4810 29 300 0, 4810 92 300 0, 4810 19 900 0, and 4810 13 800 9.
7.36.
The European Union claims that the duty rates required to be applied by Russia in respect of these tariff lines are in excess of the relevant bound duty rates, and that is the first to fifth measures are therefore inconsistent as such with Article II:1(b), first sentence, and consequently inconsistent as such with Article II:1(a), of the GATT 1994.59
7.37.
Russia initially suggested that the relevant bound duty rates inscribed in its Schedule reflect errors, and that it attempted to correct those errors in its Schedule. According to Russia, the European Union did not act in good faith by objecting to this attempt.60 Subsequently, Russia stated that it was not raising this as a defence.61 Russia did not put forward additional arguments specific to these claims of the European Union.
7.38.
The Panel will proceed by describing the measures and applied duty rates at issue, before assessing the consistency of the challenged measures under Article II:1.

7.3.1.1 Measures and applied duty rates at issue

7.39.
According to the European Union, Russia imposes an ad valorem duty rate of 15% for products imported under tariff lines 4810 22 900 0 and 4810 92 300 0, as required by the CCT as amended by Decision No. 54 of the Board of the Eurasian Economic Commission (Decision No. 54). Additionally, according to the European Union, Russia imposes an ad valorem duty rate of 10% for products imported under tariff lines 4810 29 300 0, 4810 13 800 9, and 4810 19 900 0, as required by the CCT as amended by Decision No. 9 of the Board of the Eurasian Economic Commission (Decision No. 9) and Decision No. 77 of the Board of the Eurasian Economic Commission (Decision No. 77).62
7.40.
Russia has not specifically contested that it imposes these duty rates as required by the CCT.
7.41.
The Panel notes that there is no dispute between the parties as to the ad valorem duty rates required to be applied by Russia in respect of the first five measures. Based on the evidence presented, we find that the relevant applied duty rates are as follows:

Challenged measureTariff lineRussia's applied duty rate
The first measure 4810 22 900 0 15%63
The second measure 4810 29 300 0 10%64
The third measure 4810 92 300 0 15%65
The fourth measure 4810 13 800 9 10%66
The fifth measure 4810 19 900 0 10%67

7.42.
In respect of these measures, we also observe that they were not adopted by Russia, but by the Eurasian Economic Union (EAEU), an international organization of which Russia is a member state.
7.43.
The European Union argues that Russia is responsible for the challenged measures because Russia committed in its Working Party Report to ensure that measures adopted by the EAEU would be aligned with Russia's WTO obligations. The European Union refers to various provisions of Russia's Working Party Report in support of this assertion. According to the European Union, the EAEU is a customs union and, in its view, the panel report in Turkey – Textiles stands for the proposition that the members of a customs union may be held responsible in WTO dispute settlement for acts of that customs union, at least in certain circumstances. In the European Union's view, the fact that the legal instruments pursuant to which the types of tariff treatment at issue in this dispute are accorded were adopted by the bodies of the EAEU does not mean that the measures at issue are not Russia's measures, within the meaning of Article 3.3 of the DSU. The European Union states that the CCT is Russia's customs tariff. The European Union additionally notes that Russia has treated the challenged measures as if they were its own measures, and has not denied that it actually applies duty rates enacted by the EAEU or that this happens pursuant to legal instruments enacted by bodies of the EAEU.68
7.44.
Russia has not commented on this issue.
7.45.
In considering this issue, the Panel first notes Russia's Working Party Report, which indicates that Russia is obliged both under general international law and its domestic law to apply the duty rates contained in the CCT.69 We further note the evidence submitted by the European Union, which includes a number of customs declarations concerning specific import transactions, including transactions under the tariff lines at issue in this dispute. These customs declarations demonstrate that, for the relevant tariff lines, Russia has applied the duty rates set forth in the CCT.70 Customs declarations have been presented in support of the first to fifth and seventh to eleventh measures.
7.46.
It is clear to us that the act of applying the duty rates (i.e. the levying of duties at the time of importation) is directly attributable to Russia. However, as we have indicated, the European Union challenges the measures at issue "as such", independently of any act of application. More specifically, it challenges duty rates that Russia is required by the CCT to apply. Nevertheless, the aforementioned two elements, i.e. Russia's international and domestic law obligations in respect of the CCT and Russia's demonstrated conduct in respect of duty rates contained in the CCT, in our view justify a presumption that Russia applies the duty rates contained in the CCT that are at issue in this dispute. In our view, the relevant CCT requirements are attributable to Russia, insofar as, on the evidence before us, it can be presumed that the CCT requirements will lead to the relevant duty rates being applied by Russia. Russia has not sought to rebut that presumption. Nor has Russia otherwise contested the European Union's assertion that the challenged measures are attributable to Russia. In fact, Russia has asked the Panel to consider some of the measures as subsequently amended by the EAEU, and to make positive findings that these amended measures are consistent with Russia's WTO obligations.71 In asking the Panel to find that the measures at issue are consistent with its WTO obligations, Russia seems to us to rely on amended duty rates that the CCT requires Russia to apply, in an attempt to demonstrate Russia's compliance with its WTO obligations.
7.47.
In the light of the foregoing, we proceed with our analysis of the first to fifth measures on the basis that the CCT requirements establishing the duty rates applicable to the tariff lines at issue are attributable to Russia.

7.3.1.2 Consistency with Article II:1(b), first sentence, of the GATT 1994

7.48.
The European Union claims that the first to fifth measures are inconsistent with Article II:1(b), first sentence, and consequently Article II:1(a). Given that the European Union's claim under Article II:1(a) is a consequential claim, we commence our analysis with the claim under Article II:1(b), first sentence. The Appellate Body and previous panels have followed this approach where the imposition of a customs duty was challenged under both Article II:1(a) and (b), first sentence, since the language of Article II:1(b), first sentence, "is more specific and germane".72
7.49.
To determine, as Article II:1(b), first sentence, requires, whether a product has been subject to ordinary customs duties "in excess of those set forth and provided" in Russia's Schedule, it is first necessary to ascertain the relevant bound duty rates. Next, we must examine whether the challenged measures impose applied duty rates "in excess" of the bound duty rates, resulting in the imposition of duties in excess of those provided in the Schedule, and are therefore inconsistent with Article II:1(b), first sentence.

7.3.1.2.1 Relevant bound duty rates

7.50.
The European Union contends that the bound ad valorem duty rate in Russia's Schedule is 5% for all five tariff lines at issue.73 The European Union points out in this respect that after the establishment of this Panel, Russia initiated a procedure for a formal rectification and modification of its Schedule, including the bound duty rates for these five tariff lines, based on alleged errors in the Schedule that was annexed to its Protocol of Accession74, evidenced, in Russia's view, by discrepancies between the Schedule and the bilateral agreements signed by Russia and certain Members prior to Russia's accession. In the European Union's view, Russia's proposed modification can have no bearing on the claims before the Panel, because the European Union objected to Russia's request for modification, and consequently the authentic text of the Schedule remained unchanged.75
7.51.
The European Union also submits that, in any event, no such alleged error occurred. The European Union points out that Russia's Draft Schedule was prepared and submitted by Russia, ultimately verified by Russia and the other Members, and became Russia's Schedule as of the date of accession. The European Union considers that no error was made in the process of compiling Russia's Schedule, and if any error was made, it could only be attributed to Russia itself. In the European Union's view, to permit Russia to amend its Schedule in the context of a dispute would diminish the value and certainty of Members' concessions, thus not only contravening the basic objectives of the GATT 1994, but also diminishing the rights and obligations provided in the covered agreements, an act expressly prohibited by Article 3.2 of the DSU.76
7.53.
In responses to subsequent questions from the Panel, Russia indicated that it was not challenging the European Union's objection to the request for rectification of its Schedule. Russia indicated that its statements on this issue were "for information purposes only, and reflect[] the reaction to the questions raised by the European Union in its First Written Submission".82 Additionally, Russia stated that, in its view, Article 79 of the Vienna Convention establishes general rules for correction of errors, and that such general rules may be applied cumulatively with, and may clarify, the provisions of the 1980 Decision.83 Nevertheless, Russia stated that "[t]he current concessions of Russia are reflected in 'Schedule CLXV'."84
7.55.
Furthermore, we note that under Article 79 of the Vienna Convention, a treaty error can be corrected either following an agreement between the signatory states and the contracting states as to the existence of an error (under the first paragraph of Article 79), or in the absence of an objection to a proposed correction of an error that has been notified by a treaty depositary (under the second paragraph).88 In the light of Russia's position that "[t]he current concessions of Russia are reflected in 'Schedule CLXV'", and bearing in mind that Russia has not invoked Article 79 in this case but refers to it only for information, it seems to us that there is no need for us to examine whether Article 79 applies in this dispute or whether it could be applied cumulatively with the 1980 Decision. We observe in any event that, even if it did apply, as indicated above, both the European Union and Japan objected to Russia's proposed rectification. In these circumstances, we see no basis on which the alleged error in Russia's Schedule could be considered to have been corrected under either paragraph of Article 79. On the basis of the foregoing, we find that there has been no change to the relevant bound duty rates contained in Russia's current Schedule.
7.56.
In the light of the above, we find that the duty rates are 5% in respect of all five tariff lines corresponding to the first to fifth measures at issue.89

7.3.1.2.2 Comparison of applied and bound duty rates

7.57.
The European Union argues that Russia is required to apply a duty rate of 15% in respect of the first and third measures, and of 10% in respect of the second, fourth, and fifth measures. The European Union notes that the bound ad valorem duty rate is 5% for all five tariff lines. According to the European Union, products falling under these five tariff lines are therefore subject to ordinary customs duties in excess of those provided in Russia's Schedule, which is inconsistent with Article II:1(b), first sentence.90
7.58.
Russia did not specifically contest that its applied duty rates exceed the corresponding bound duty rates in respect of the first to fifth measures.91
7.59.
The Panel notes that in the case of the first to fifth measures, for which the applied and bound duty rates are both expressed in ad valorem terms, the determination of whether Russia has imposed excessive customs duties is straightforward.92
7.60.
As explained in sections 7.3.1.1 and 7.3.1.2.1 above, the relevant applied and bound duty rates are as follows:

Tariff lineRussia's applied duty rateRussia's bound duty rate93
4810 22 900 0 15%94 5%
4810 29 300 0 10%95 5%
4810 92 300 0 15%96 5%
4810 13 800 9 10%97 5%
4810 19 900 0 10%98 5%

7.61.
A direct comparison of Russia's applied and bound ad valorem duty rates in respect of the first to fifth measures at issue indicates that for each measure, Russia has imposed ordinary customs duties higher than those set forth and provided in its Schedule.99

7.3.1.2.3 Conclusion

7.62.
For the reasons set out above, the Panel finds that for each of the first five measures (namely the duties required to be applied by Russia in respect of tariff lines 4810 22 900 0, 4810 29 300 0, 4810 92 300 0, 4810 13 800 9, 4810 19 900 0), the applied ad valorem duty rate is higher than the bound ad valorem duty rate contained in Russia's Schedule, resulting in the imposition of ordinary customs duties in excess of those set forth and provided in Russia's Schedule. We therefore conclude that Russia is required to apply duties in excess of those set forth in its Schedule, contrary to Article II:1(b), first sentence.

7.3.1.3 Consistency with Article II:1(a) of the GATT 1994

7.63.
Turning now to the European Union's claim under Article II:1(a), the European Union argues that Article II:1(b), first sentence, prohibits a specific kind of practice that will always be inconsistent with Article II:1(a). The European Union argues that while paragraph 1(a) prohibits less favourable treatment of imports than that provided for in a Member's Schedule, paragraph 1(b), first sentence, prohibits the imposition of ordinary customs duties in excess of those provided in the Schedule. According to the European Union, if a customs duty is levied on a product in excess of that provided in a Member's Schedule, this adversely affects the conditions of competition for that product, meaning that there is less favourable treatment.100 The European Union maintains that since Russia is required to impose duties in excess of those provided in its Schedule, contrary to Article II:1(b), first sentence, it is also acting inconsistently with Article II:1(a).101
7.64.
Russia did not provide a specific response to this claim of the European Union.
7.65.
The Panel recalls the statement of the Appellate Body that:

[T]he principle of judicial economy "allows a panel to refrain from making multiple findings that the same measure is inconsistent with various provisions when a single, or a certain number of findings of inconsistency, would suffice to resolve the dispute". Thus, panels need address only those claims "which must be addressed in order to resolve the matter in issue in the dispute", and panels "may refrain from ruling on every claim as long as it does not lead to a 'partial resolution of the matter'." Nonetheless, the Appellate Body has cautioned that "[t]o provide only a partial resolution of the matter at issue would be false judicial economy", and that "[a] panel has to address those claims on which a finding is necessary in order to enable the DSB to make sufficiently precise recommendations and rulings so as to allow for prompt compliance by a Member with those recommendations and rulings 'in order to ensure effective resolution of disputes to the benefit of all Members".102

7.66.
We have concluded in section 7.3.1.2.3 above that Russia is required to apply duties in excess of those set forth in its Schedule, contrary to Article II:1(b), first sentence. In the light of this, we see no need, for the purpose of resolving this dispute, to make additional findings as to whether, as a consequence of that conclusion, Russia is also acting inconsistently with Article II:1(a).103 We therefore exercise judicial economy and decline to make findings with respect to this claim.

7.3.2 Claims concerning the sixth measure

7.67.
The Panel now turns to claims concerning the sixth measure at issue, namely an ad valorem duty rate required to be applied by Russia in respect of tariff line 4810 92 100 0. To recall, the European Union's claims concerning the sixth measure are different from, and more complex to assess, than those concerning the first to fifth measures.
7.68.
The European Union claims that, at the time of the Panel's establishment, Russia was required to apply a duty rate in respect of tariff line 4810 92 100 0 that was inconsistent with its obligations under Article II:1(a) and (b), first sentence, of the GATT 1994. According to the European Union, at the time of the Panel's establishment, the CCT provided for a 15% duty rate for tariff line 4810 92 100 0, but the duty regime in existence at the time temporarily reduced the duty rate of 15% to 5%. The European Union contends that on 1 January 2016 the temporary duty reduction was to be discontinued and the duty rate was to revert to 15%. The European Union submits that at the time of the Panel's establishment the sixth measure was inconsistent with Article II:1(a) and (b), first sentence, in two ways. First, the European Union claims that a temporary reduction of the duty rate "cannot sufficiently guarantee compliance" with Article II:1(a), at least when duties will be levied in excess of bound rates as soon as the period of reduction ends.104 In the European Union's view, the temporary duty reduction at issue accorded treatment less favourable than that provided for in Russia's Schedule to imports of the European Union. Second, the European Union submits that Russia's tariff treatment of products under tariff line 4810 92 100 0 was inconsistent as such with Article II:1(b), first sentence, and consequently inconsistent as such with Article II:1(a), because it consisted in the application of a duty rate higher than the bound duty rate provided in Russia's Schedule, resulting in the imposition of ordinary customs duties in excess of those provided in Russia's Schedule.105
7.69.
Russia argues in respect of the European Union's claim under Article II:1(b), first sentence, that the European Union has not proven the existence of the measure. In Russia's view, the allegedly WTO-inconsistent rate of 15% has never actually been applied to products imported under tariff line 4810 92 100 0. Russia submits that, accordingly, the measure described by the European Union "simply does not exist", and the Panel should therefore refrain from ruling on it. Alternatively, Russia argues that the Panel should make findings on the measure as amended by Decision No. 85 of the Board of the Eurasian Economic Commission (Decision No. 85).106 Regarding the European Union's claim under Article II:1(a), Russia contests the European Union's proposed legal standard for assessing the temporary duty reduction and questions whether the European Union has met its burden of proof.107
7.70.
The Panel will first address the measure and applied duty rate at issue before turning to the preliminary issues raised by Russia. Thereafter, we will address the European Union's claim under Article II:1(b), first sentence, and consequential claim under Article II:1(a), before turning to the European Union's independent claim under Article II:1(a).

7.3.2.1 Measure and applied duty rate at issue

7.71.
According to the European Union, at the time of the Panel's establishment, Russia imposed an ad valorem duty rate of 15% for products imported under tariff line 4810 92 100 0, as required by the CCT as amended by Decision No. 77 of the Board of the Eurasian Economic Commission (Decision No. 77).108 Nevertheless, as also noted by the European Union, footnote 14C of Decision No. 77 provided for a temporary reduction of the ad valorem duty rate to 5%, between 20 April 2013 and 31 December 2015 inclusive.109 The European Union accepts that the duty rate required to be applied by Russia at the time of the Panel's establishment was therefore equal to the bound duty rate of 5%. However, the European Union highlights that at the time of the Panel's establishment, the CCT, as amended by Decision No. 77, required a duty rate of 15% to be levied as of 1 January 2016.110 The European Union requests the Panel to make findings on the sixth measure from the "vantage point" of the Panel's establishment.111
7.72.
Russia does not contest the European Union's description of the relevant duty rate provided for at the time of the Panel's establishment.
7.73.
The Panel notes that there is no dispute between the parties as to the duty rate applied by Russia on the date of the Panel's establishment, as contained in the CCT as amended by Decision No. 77.112 Based on the evidence presented, we find that the applied duty rate for the sixth measure on the date of the Panel's establishment was as follows:

Challenged measureTariff lineRussia's applied duty rate at date of Panel's establishment
The sixth measure 4810 92 100 0 5% (until 31 December 2015); 15% (from 1 January 2016)113

7.3.2.1.1 Relevant measure on which to make findings

7.74.
Regarding the measure at issue, we must address, in addition, whether the sixth measure actually existed at the time of the Panel's establishment, and if so, whether we should make findings on the measure as it existed at the time of the Panel's establishment or on the measure in its amended form.
7.75.
Russia argues, due to footnote 14C of Decision No. 77, which set a duty rate of 5% until 31 December 2015, the sixth measure at issue was never applied in a manner inconsistent with Russia's Schedule. Russia argues that by virtue of the temporary duty reduction and Decision No. 85, the sixth measure as described by the European Union "simply does not exist".114 Russia therefore requests the Panel to find that the sixth measure is WTO-consistent, or "alternatively" to consider the sixth measure in its "amended" form and make a finding that the measure is consistent with Russia's obligations under Article II:1.115 Russia notes in this respect that Decision No. 85 of the Board of the Eurasian Economic Commission116 established a "constant duty of 5%" as of 1 September 2015.117
7.76.
The European Union does not dispute that the current applied duty rate contained in the CCT, as amended by Decision No. 85, is 5%, as from 1 September 2015.118 The European Union insists, however, that at the time of the Panel's establishment, both the future applied duty rate (15%) and the temporarily reduced rate itself (5%) existed and were contained in a binding legal instrument. In the European Union's view, the fact that a permanent rate of duty is not applied until a certain predefined future date cannot mean that such duty rate does not exist, or even that it is not in force. Rather, the European Union argues, such a duty rate is in force even though it will only be applied as of a future date.119
7.77.
Additionally, the European Union submits that it is asking the Panel to adopt findings on the sixth measure as it existed at the time, or from the "vantage point", of the Panel's establishment.120 The European Union argues that Decision No. 85 cannot affect the terms of reference of the Panel. According to the European Union, the European Union is entitled, at a minimum, to a finding that the measure as it existed at the time of the Panel's establishment was inconsistent with Article II:1.121
7.78.
The Panel notes that the parties disagree over, first, whether or not the sixth measure at issue existed at the time of the Panel's establishment, and second whether, even if the measure did exist, the Panel should make findings on the measure as amended by Decision No. 85, or as it existed at the time of the Panel's establishment. We address these issues in that order.
7.79.
We note that Decision No. 77, which was in force at the time of the Panel's establishment, states that "the Board of the Eurasian Economic Commission has decided as follows: … a) from 1 September 2014: … to establish import customs duty rates from the Customs Union Common Customs Tariff pursuant to Annex No 3".122 Annex No. 3 sets a duty rate of 15% for tariff line 4810 92 100 0.123 Significantly, however, footnote 14C, concerning tariff line 4810 92 100 0, states that "Import customs duty at the rate of 5% of the customs value is applied from 20.04.2013 to 31.12.2015 inclusive."124 Thus, Decision No. 77 sets out a rule establishing a permanent duty rate of 15% for tariff line 4810 92 100 0, and a footnote that temporarily reduces that duty rate to 5%.
7.80.
It is clear to us from the legal structure of Decision No. 77 – a general rule establishing a permanent duty rate and an accompanying footnote establishing a temporary, lower duty rate – that on the date of the Panel's establishment, Russia's customs authority was required to apply the temporary duty rate of 5%, and was required to apply the duty rate of 15% as from 1 January 2016. Thus, the rule requiring the future applied duty rate (15%) was in force on the date of the Panel's establishment, even though that rate had not yet been applied.
7.81.
On this basis, we find that the measure challenged by the European Union (namely the duty rate of 15% required to be applied as from 1 January 2016) was in existence on the date of the Panel's establishment.125 We are unable to agree with Russia that a measure in force on the date of the Panel's establishment "does not exist" simply because it will be implemented at a later time.
7.82.
We now turn to the question of whether the Panel should nevertheless make findings only in respect of the measure "in its amended form", as requested by Russia.126 We note that Decision No. 77 amended the CCT. Decision No. 85 came into effect on 1 September 2015, during the Panel proceedings.127 It likewise amends the CCT, but does not include any explicit reference to Decision No. 77. It therefore would not appear to either amend or formally repeal Decision No. 77 as such. As Russia confirmed that the duty rate has been 5% as from 1 September 2015, we understand that Decision No. 85 takes precedence over Decision No. 77 in respect of amending the CCT.128
7.85.
Nevertheless, we note that, according to the Appellate Body, panels must take into account relevant amendments and other relevant developments if and when they make recommendations under Article 19 of the DSU.134 The Appellate Body has explained in this regard that "[i]n general, in cases where the measure at issue consists of a law or regulation that has been repealed during the panel proceedings, it would seem there would be no need for a panel to make a recommendation in order to resolve the dispute."135 Although Decision No. 77 does not appear to have been formally repealed, the relevant applied duty rate has been amended by Decision No85. We will take appropriate account of this change in making any recommendations under Article 19.

7.3.2.2 Preliminary issues

7.86.
Before turning to examine the consistency of the sixth measure with Article II:1(a) and (b), first sentence, it is useful to deal with a number of preliminary issues concerning that measure.

7.3.2.2.1 Duty "actually applied" to the product at issue "on [its] importation"

7.87.
The first issue we consider is Russia's argument that a duty only constitutes an "ordinary customs duty" on which a Panel may make findings under Article II:1(b), first sentence, if it is actually applied to a product on its importation.
7.88.
Russia argues that a duty is a "duty" within the meaning of Article II:1(b), first sentence, only if it is or was actually applied to products at the moment of their importation.136 In support of its position, Russia refers to the Appellate Body report in Australia – Salmon. According to Russia, the Appellate Body in that dispute determined that a measure must be "actually applied" to the product at issue.137 In addition, Russia points to Article II:1(b), first sentence, itself, which provides that products must not "on their importation" be subject to duties in excess of those set forth in a Member's Schedule.138 Russia infers from this that the duty to be examined by the Panel under Article II:1(b), first sentence, is the duty that is imposed on goods at the moment of importation, "should such importation happen".139 Russia maintains that, since the duty rate of 15% was never and will never be applied (given that Decision No. 85 provides for a constant duty rate of 5%), the sixth measure as challenged by the European Union under Article II:1(b), first sentence, does not constitute a measure on which the Panel can rule. Moreover, Russia submits that should there be imports of the product at issue from the European Union, they would be subject to a duty that is fully consistent with Russia's tariff commitments.140
7.89.
The European Union argues that the Appellate Body in Australia – Salmon stated that the measure at issue, because it was defined in terms of a specific product at issue, could not include a rule that applies to a different product. The European Union asserts that this issue has nothing to do with the question of whether the consistency of a measure can be determined by a panel before that measure has been applied in practice.141
7.90.
The Panel notes that the Appellate Body in Australia – Salmon stated in relevant part that "the measure at issue in this dispute can only be the measure which is actually applied to the product at issue".142 The Appellate Body went on to state that:

The product at issue is fresh, chilled or frozen salmon and the SPS measure applicable to fresh, chilled or frozen salmon is the import prohibition set forth in QP86A. The heat-treatment requirement provided for in the 1988 Conditions applies only to smoked salmon and salmon roe, not to fresh, chilled or frozen salmon.143

7.91.
It is therefore clear to us that the Appellate Body's reference to "actual application", as relied upon by Russia, concerned the question of whether the product at issue in that dispute was within the product scope of the challenged measure. In other words, the issue was whether the challenged measure was actually applied – or as the Appellate Body also said in the second statement quoted above, was "applicable" – to the products at issue (rather than different products), and not whether that measure applied to those products at the time of their importation.144
7.92.
In respect of the measure at issue, we have determined that it was clear, from the vantage point of the date of the Panel's establishment, that as from 1 January 2016, the duty rate applicable to a product falling within tariff line 4810 92 100 0 was to be 15%.145 Furthermore, as we have pointed out above, a complaining party need not provide evidence of actual import transactions to substantiate a claim that the imposition of a duty rate is inconsistent with Article II:1 as such.146 It follows from this proposition that a panel can make findings in respect of a duty rate even if, on the date of the panel's establishment, the challenged duty rate has not yet been "actually applied" on the importation of the relevant product. For these reasons, we are unable to accept Russia's contention that the Appellate Body report in Australia – Salmon supports the conclusion that the sixth measure, insofar as it provided for the future duty rate of 15%, was not a measure on which the Panel can make findings.
7.93.
As for the phrase "on their importation" in Article II:1(b), first sentence, we agree with Russia that Article II:1(b), first sentence, applies to duties imposed on products "on their importation". Russia argues that the duty rate that was required to be imposed under Decision No77 is not a duty rate subject to Article II:1(b), first sentence, because it never was and never will be actually applied "on the importation" of the relevant product. Russia argues that it will instead apply the duty rate imposed under Decision No. 85. In considering this argument, we recall, as an initial matter, that we are assessing the situation as it existed on the date of the Panel's establishment. At that time, Decision No. 85 did not exist, and the duty rate that was to be applied on the importation of the relevant product from 1 January 2016 was 15%. Although Decision No. 85 subsequently amended that duty rate, on the date of the Panel's establishment, the CCT, as amended by Decision No. 77, provided for a rate concerning a "duty" to be applied as from 1 January 2016 "on the importation" of the relevant product.147 In other words, Decision No77 concerned a "duty" within the meaning of Article II:1(b), first sentence, that was to be applied in the future. Decision No. 85 did not exist at the time of the Panel's establishment, and therefore is not relevant to an assessment of the measure as it existed at that time. We therefore consider that the sixth measure concerns an "ordinary customs duty" within the meaning of Article II:1(b), first sentence.

7.3.2.2.2 Future application of the challenged duty rate

7.94.
We now turn to consider whether the Panel can make findings in respect of the applied duty rate of 15%, even though at the time of the Panel's establishment that rate was to be applied only in the future, namely on 1 January 2016.
7.95.
In the European Union's view, nothing prevents the Panel from making a finding of inconsistency in relation to the future imposition of duties in excess of bound duties. According to the European Union, the duty rate to be applied on 1 January 2016 was already required by the CCT, as amended by Decision No. 77, which existed on the date of the Panel's establishment. The European Union notes that the GATT panel in US – Superfund found it permissible to challenge a mandatory measure that is not yet in force, at least where the entry into force is automatic at a future date and does not depend on further legislative action. The European Union argues that a duty may consequently violate Article II:1 "regardless of whether it was ever levied".148 Therefore, the European Union submits, the Panel "can (in procedural terms) and should (in substantive terms)"149 find that Russia has acted inconsistently with Article II:1(b), first sentence, and consequently with Article II:1(a), by providing for the application, as of a future date, of duties in excess of those provided for in its Schedule.150
7.96.
Russia responds that accepting the European Union's approach would "result in a possibility for any future panels to determine that any measure that is presently consistent with the WTO agreement is actually inconsistent with it if it is modified in [a] WTO-inconsistent manner".151 Such a finding would, according to Russia, be tantamount to finding that an applied duty rate that is equal to a Member's bound rate is nevertheless "inconsistent now, if it is levied in excess [of] bound rates in the future".152
7.97.
The European Union counters that it is not challenging the "mere possibility" that Russia might act inconsistently with Article II:1(b), first sentence. Rather, the European Union explains that it is challenging the measure as it actually existed at the time of the Panel's establishment. According to the European Union, the future developments referred to by Russia (i.e. the application as from 1 January 2016 of a duty rate of 15%) were neither hypothetical nor separate from the challenged measure. Rather, the challenged measure prescribed a particular kind of tariff treatment as of a future date.153
7.98.
As an initial matter, the Panel recalls that, as discussed in paragraphs 7.15 to 7.17 and 7.20 above, a complaining party need not demonstrate the existence of "actual" imports to substantiate a claim that the imposition of a customs duty as such is inconsistent with Article II:1. We therefore see no basis on which to exclude from dispute settlement proceedings a measure that is in force, but which has yet to be applied.
7.99.
We further recall that, according to the Appellate Body, rules or norms of general and prospective application that "mandate" particular action can be found, as such, to be WTO-inconsistent.154 Decision No. 77 in our view sets forth a duty rate of general and prospective application insofar as it specifies a duty rate applicable to all import transactions under the relevant tariff line. That being the case, we proceed to examine whether Decision No. 77 mandates the imposition of that duty rate in the future.
7.100.
The dictionary defines the term "mandatory" as "[o]f the nature of, pertaining to, or conveying a command or mandate" or "[o]f an action: obligatory in consequences of a command, compulsory".155 Thus, a mandatory legal provision is one that makes it compulsory to take certain action, i.e. it requires that the action be taken. We have already determined above that, on the date of the Panel's establishment, Decision No. 77 required Russia's customs authority to apply an increased duty rate of 15% as from 1 January 2016. There is no language in Decision No. 77 that vests "discretionary authority" in Russia's customs authority regarding whether to apply the 15% duty rate.156 The increase in the duty rate was definitive, and was expressed as occurring automatically and by virtue of the measure itself, without any need for implementing or other intervening action. The fact that the EAEU could, and in fact did, pass a new Decision modifying the duty rate for the tariff line in question does not demonstrate that the future applied duty rate at issue, as provided for at the time of the Panel's establishment, was discretionary. To the contrary, the adoption of the new decision would appear to confirm that Decision No. 77 did not confer any discretion on Russia's customs authority to apply the lower duty rate of 5% beyond 31 December 2015. Indeed, but for the adoption of Decision No. 85, the applied duty rate as from 1 January 2016 would have been 15%.
7.101.
We therefore find that the sixth measure was mandatory insofar as Russia's customs authority was, at the time of the Panel's establishment, required to apply a duty rate of 15% as from 1 January 2016.
7.102.
We next address whether, despite being mandatory, the sixth measure cannot be found to be WTO-inconsistent because the mandatory action (i.e. the application of the 15% duty rate as from 1 January 2016) lay in the future. This issue has been addressed in two previous panel reports, including an adopted GATT panel report.157 The GATT panel in US – Superfund found, in the context of Article III:2 of the GATT 1947, that "existing legislation" that "mandates" GATT-inconsistent action could be found to be inconsistent even if "administrative acts implementing it" had not yet been undertaken.158 Similarly, the WTO panel in Chile – Alcoholic Beverages made findings in the context of Article III:2 on a measure that had "been enacted but not [yet] implemented".159 Addressing that measure, the panel observed that there appeared "to be no discretion allowed in its enforcement … The law [wa]s certain and definitive".160 We also find it instructive to recall once more the Appellate Body's observation that:

[T]he disciplines of the GATT and the WTO, as well as the dispute settlement system, are intended to protect not only existing trade but also the security and predictability needed to conduct future trade. This objective would be frustrated if instruments setting out rules or norms inconsistent with a Member's obligations could not be brought before a panel once they have been adopted and irrespective of any particular instance of application of such rules or norms.161

7.104.
Applying this to the sixth measure, it follows that we can make findings on whether the future applied duty rate of 15%, required by the CCT as amended by Decision No. 77 to be imposed from 1 January 2016, would have resulted in duties that were inconsistent with Article II:1(b), first sentence. Moreover, in our view, we can make findings in respect of the future applied duty rate even if the rate required to be applied at the time of the Panel's establishment was no higher than the relevant bound duty rate. There is nothing illogical about saying that a measure raises no issue of WTO-consistency insofar as its current applied rate is concerned, but does raise an issue of WTO-consistency insofar as its mandatory future applied rate is concerned.
7.105.
We therefore consider that we can make findings on whether the future duty rate of 15% required by the CCT as amended by Decision No. 77 would have been inconsistent with Article II:1(b), first sentence, even taking into account that that duty rate was to be applied only some nine months after the Panel's establishment.

7.3.2.2.3 Temporary duty reduction

7.106.
We now turn to examine whether the temporary reduction of the duty rate to 5% could eliminate a possible finding of inconsistency in respect of the future applied duty rate of 15%.
7.107.
Russia argues that in EC – IT Products the panel correctly found no inconsistency with Article II:1(b), first sentence, because the measure at issue, a WTO-inconsistent duty rate, had been temporarily suspended.165 In Russia's view, footnote 14C in Decision No. 77 likewise acts as a temporary duty suspension, and for this reason the Panel should follow the approach taken in EC – IT Products in this respect.166
7.108.
The European Union responds by noting that the panel in EC – IT Products limited itself to findings on a situation in which a duty suspension is in force. The European Union asserts that the sixth measure would violate Article II:1(b), first sentence, and therefore also Article II:1(a), as soon as the duty begins to be levied at a rate of 15%. The European Union sees no reason why a panel could not make a prospective finding of such a violation, from the vantage point of its time of establishment. Specifically, the European Union considers that a thorough reading of the panel report in EC – IT Products fully supports the proposition that a temporarily suspended or reduced duty that is otherwise in excess would be inconsistent with Article II:1 upon the automatic expiry of the suspension.167
7.109.
The Panel understands Russia to be arguing that a temporary duty reduction can "eliminate" any inconsistency with Article II:1(b), first sentence, by lowering the actually applied duty rate to a WTO-consistent level.168 In considering this argument, we recall that, according to the panel in EC – IT Products,the measures at issue in that dispute imposed duties in excess of those set forth in the Schedule, but the inconsistency with Article II:1(b), first sentence, was eliminated through a temporary duty suspension lowering the applied duty rate to the level of the duty rate bound in the relevant Schedule.169 The panel stated that:

It must be borne in mind that Council Regulation No. 179/2009 that is currently in effect, suspends the application of duties on certain displays … To the extent that Council Regulation No. 179/2009 suspends duties levied on products that the European Communities is obliged to provide duty-free treatment for … neither [of the measures at issue] actually imposes duties in excess of those set forth in the EC Schedule. Accordingly, the duty suspension eliminates the inconsistency with the European Communities' obligations under Article II:1(b). In other words, but for the duty suspension, the measures at issue are inconsistent with Article II:1(b) of the GATT 1994.170

7.110.
The panel in EC – IT Products was not requested by the complaining parties to make findings in respect of any mandatory duty rate to be applied in the future, after the end of the period of suspension.171 Rather, the findings of the panel in EC – IT Products were directed to the duty rates applied during the period of suspension.172 Furthermore, the panel explained that "to the extent the duty suspension were not applicable … or if the suspension measure were to be repealed or annulled", then the measure would result in duties being levied in a manner inconsistent with Article II:1(b), first sentence.173 This suggests that, in the panel's view, the duty rates that would have applied, if and when the duty suspension ended, were the underlying permanent duty rates, and their application would have resulted in duties being levied in excess of bound duties, inconsistently with Article II:1(b), first sentence.
7.111.
On this basis, it appears to us that the panel in EC – IT Products was concerned with a duty rate applied during the period of suspension, whereas we are concerned with a duty rate to be applied following the expiry of the period of duty reduction introduced in footnote 14C of Decision No. 77. Therefore, the approach taken by the panel in EC – IT Products is in our view not directly relevant to our assessment of the future applied rate at issue in our dispute. Nor do we consider that this approach precludes any finding of consistency or inconsistency in respect of a mandatory future applied duty rate.

7.3.2.3 Consistency with Article II:1(b), first sentence, of the GATT 1994

7.112.
Turning now to assess the consistency of the sixth measure with Article II:1, as stated above, we find it appropriate to first address the European Union's claims under Article II:1(b), first sentence, and the alleged consequential inconsistency with Article II:1(a), before turning to the European Union's independent claim under Article II:1(a).174 We also note in this respect that the European Union has presented all of its claims concerning other measures in this order, stating that in the light of the Appellate Body's comments in Argentina – Textiles and Apparel, the "analysis should begin with and focus on" Article II:1(b), first sentence.175
7.113.
The European Union claims that the sixth measure, as it existed at the time of the Panel's establishment, was inconsistent with Article II:1(b), first sentence, because it subjected products imported under tariff line 4810 92 100 0 to duties in excess of the bound duties as of 1 January 2016.
7.114.
Russia rejects the European Union's claim for the reasons described in the Panel's summaries of Russia's arguments in section 7.3.2.2 above.
7.115.
The Panel has already rejected Russia's arguments in section 7.3.2.2 above. Notably, we found that we can make findings on whether the mandatory future applied duty rate of 15% resulted in the application of duties that were inconsistent with Article II:1(b), first sentence. We therefore proceed directly to a comparison of the applied and bound duty rates.

7.3.2.3.1 Comparison of applied and bound duty rates

7.116.
The European Union argues that, at the time of the Panel's establishment, Russia's mandatory future applied duty rate was 15%, whereas the bound ad valorem duty rate was 5%. According to the European Union, products falling under the relevant tariff line are therefore subject to duties in excess of those in Russia's Schedule, contrary to Article II:1(b), first sentence.176
7.117.
Russia does not specifically contest that the mandatory future applied duty rate exceeds the corresponding bound duty rate in respect of the sixth measure.177
7.118.
The Panel recalls that the determination of whether Russia has imposed excessive duties is straightforward when the applied and bound duty rates are both expressed in ad valorem terms.178 Comparing the relevant applied and bound duty rates, we note that there is no dispute between the parties regarding the bound duty rate, which is 5%.179 Thus, the relevant applied and bound duty rates are as follows:

Tariff lineRussia's applied duty rate provided for at date of Panel's establishmentRussia's bound duty rate180
4810 92 100 0 5% (until 31 December 2015); 15% (from 1 January 2016)181 5%

7.119.
A direct comparison of Russia's future applied ad valorem duty rate and its bound ad valorem duty rate indicates that, on the date of the Panel's establishment, Russia's customs authority was required, as of 1 January 2016, to impose duties higher than those set forth and provided in its Schedule.

7.3.2.3.2 Conclusion

7.120.
For the reasons set out above, the Panel finds that the sixth measure (namely the mandatory future application of a duty rate of 15%, concerning tariff line 4810 92 100 0) is a measure that existed on the date of establishment of the Panel. That measure mandates the imposition from 1 January 2016 of an ad valorem duty rate higher than the bound ad valorem duty rate contained in Russia's Schedule, requiring the imposition of ordinary customs duties in excess of those set forth and provided in Russia's Schedule. Therefore, we conclude that, in respect of the sixth measure as it existed at the time of the Panel's establishment, Russia was required to apply duties in excess of those set forth in its Schedule, contrary to Article II:1(b), first sentence.

7.3.2.3.3 Nullification or impairment of benefits

7.121.
Article 3.8 of the DSU provides that:

In cases where there is an infringement of the obligations assumed under a covered agreement, the action is considered prima facie to constitute a case of nullification or impairment. This means that there is normally a presumption that a breach of the rules has an adverse impact on other Members parties to that covered agreement, and in such cases, it shall be up to the Member against whom the complaint has been brought to rebut the charge.

7.122.
Russia argues that the duty rate of 15%, which was mandated to be applied as from 1 January 2016, was never actually applied, inter alia, because of the adoption of Decision No. 85, which imposed a duty rate of 5%. Russia recalls statements by the Appellate Body to the effect that dispute settlement necessarily concerns situations in which a measure nullifies or impairs benefits.182 In Russia's view, the European Union has failed to provide evidence that the challenged measure nullified or impaired benefits accruing to the European Union.183
7.123.
The European Union responds that it is not making a "non-violation" claim under Article XXIII:1(b) of the GATT 1994, and is therefore not required to separately show how the measure at issue impairs the benefits accruing to it. According to the European Union, the violation of the covered agreements is, in itself, impairing the benefits accruing to the European Union as well as other Members. Thus, in the European Union's view, once the violation is established, no further evidence of the impairment of benefits is required.184
7.124.
The Panel observes that under the terms of Article 3.8, since we have found a breach of the obligation contained in Article II:1(b), first sentence, there is "normally" a presumption that that breach has an adverse impact on the European Union and other Members. We do not consider the mere fact that the breach in respect of the sixth measure arises from the mandatory future application of a specified duty rate to be sufficient to displace the "normal" presumption of adverse impact.185 Nor has Russia advanced any argument to persuade us otherwise.
7.126.
In the light of the foregoing, the Panel concludes that its finding of inconsistency under Article II:1(b), first sentence, creates a presumption of nullification or impairment of the European Union's benefits, and that Russia has not rebutted that presumption.

7.3.2.4 Consistency with Article II:1(a) of the GATT 1994 (consequential claim)

7.127.
The European Union requested that in the event the Panel finds that Russia acted inconsistently with Article II:1(b), first sentence, of the GATT 1994, the Panel make a consequential finding of inconsistency under Article II:1(a) of the GATT 1994.186
7.128.
The Panel sees no need, for the purpose of resolving this dispute, to make additional findings regarding whether as a consequence of a finding of inconsistency under Article II:1(b), first sentence, Russia also acted inconsistently with Article II:1(a). We therefore exercise judicial economy and decline to make findings with respect to this claim.

7.3.2.5 Consistency of the sixth measure with Article II:1(a) of the GATT 1994 (independent claim)

7.129.
We turn now to the European Union's additional claim that the sixth measure is inconsistent as such with Article II:1(a) of the GATT 1994 because it provides for a temporary duty reduction and at the same time establishes a future duty rate that exceeds the bound duty rate. We note as an initial matter that this claim differs from the European Union's claim of a consequential inconsistency under Article II:1(a) resulting from a finding of inconsistency under Article II:1(b), first sentence. By contrast, this independent claim addresses a different aspect of the measure – namely the temporary nature of the 5% duty rate required to be applied by Russia prior to 1 January 2016 – and we therefore do not consider it appropriate to exercise judicial economy on this claim.
7.130.
The European Union submits that, at the time of the Panel's establishment the sixth measure provided for a rate of duty in excess of the relevant bound rate, but temporarily reduced that duty. The European Union argues that such temporary duty reductions cannot sufficiently guarantee compliance with Article II:1(a), at least when it is clear from the outset that duties will continue to be levied in excess of bound duty rates as soon as the period of the temporary reduction ends. Comparing the facts of the present case to those at issue in EC – IT Products, the European Union submits that the sixth measure, even during the period of duty reduction, was inconsistent with Article II:1(a) because it was "insufficiently foreseeable to traders in the marketplace".187 In the European Union's view, this lack of foreseeability "creates deleterious effects on competition, and therefore less favourable treatment in the meaning of Article II:1(a), even though the current applied rate is not in excess of bound levels".188 It does this, according to the European Union, because "envisaging a future duty in excess of bound rates is likely to restrict trade even before the higher duty becomes applicable".189 In the European Union's view, exporters might scale down their existing operations in anticipation of a higher duty, or refrain from expanding their production capacity or developing commercial relationships with importers and distributers. In sum, the European Union argues that by only temporarily applying tariff treatment within the limits prescribed by its Schedule, and providing at the same time for a future duty that exceeds the bound rate, Russia, at the time of the Panel's establishment, accorded to imports treatment less favourable than that provided for in its Schedule.190
7.131.
Russia responds that nothing in the WTO Agreement prohibits a Member from applying duties on a temporary basis, provided that the duty is consistent with the WTO Agreement. According to Russia, while Article II:1 requires WTO Members to levy duties in conformity with their schedules, nothing in that Article refers to the character of the duties applied.191
7.132.
Russia further argues that the European Union's claim effectively introduces new tests for a measure's consistency with Article II:1(a). In Russia's view, the European Union's references to "sufficient guarantees of compliance with Article II" and "measures being sufficiently foreseeable to traders in the marketplace", among others, are intended to show that the sixth measure, which is otherwise consistent with Russia's commitments, in fact violates Article II:1(a). However, according to Russia, the European Union has failed to provide any justification for its position that these tests are present in Article II:1(a) or relevant in the present case.192
7.133.
Russia submits, finally, that the European Union has failed to provide any evidence of trade uncertainty related to the existence of a temporary duty. Indeed, according to Russia, it is difficult to reconcile the European Union's claim in respect of unpredictability for traders with the certainty expressed by the European Union, in the context of its claim under Article II:1(b), first sentence, that as of 1 January 2016 the temporary duty rate of 5% would be replaced by a permanent duty rate of 15%. In Russia's view, the European Union should "make a choice: whether the measure is predictable or unpredictable".193 In sum, Russia's position is that there is no evidence that, in respect of the sixth measure, goods from the European Union have ever been subject to treatment less favourable than that provided for in Russia's Schedule.194
7.134.
The Panel notes that the European Union's claim under Article II:1(a) of the GATT 1994 is based on reasoning developed in the unappealed panel report in EC – IT Products. It is therefore useful to recall at the outset that panel's pertinent findings before considering whether they shed light on the European Union's claim concerning the sixth measure at issue.
7.135.
In EC – IT Products, the panel found that certain duty measures of the European Communities were inconsistent with Article II:1(b), first sentence, but that the application by the European Communities of a temporary "duty suspension"195 "eliminate[d] that inconsistency" to the extent of the suspension.196 The panel then turned to consider whether the duty suspension also eliminated the consequential inconsistency with Article II:1(a) that would otherwise follow from a finding of inconsistency with Article II:1(b), first sentence.
7.136.
In this respect, the panel first noted that the temporary duty suspension had been published on 31 March 2009, but was applied retroactively for the period January to March 2009. The suspension was set to expire on 31 December 2010. The suspension at issue was the third in a succession of duty suspensions applicable to the relevant products. The first suspension was published on 31 March 2005 with effect from 1 January 2005 through 31 December 2006. The second was published on 19 March 2007 with effect from 1 January that year. The third suspension – the one in force at the time the EC – IT Products panel was established – enlarged the scope of application of the previous suspensions. Based on the foregoing, the panel observed that the duty suspension regime put in place by the European Communities had been renewed biennially, with each suspension set to expire without automatic renewal. Prior suspensions had been extended only pursuant to formal action taken by the EC Council. The panel also noted that all three suspensions had applied retroactively during the period January to March of the relevant years.197
7.137.
The panel then proceeded to observe that although a suspension on imports had been formally in effect for at least five years, the suspension was temporary in nature, and was subject to formal extension or amendment. Additionally, the measures implementing the duty suspension did not set out any specific conditions under which it could have been withdrawn or otherwise not renewed. Thus, according to the panel, "the duty suspension in force at any particular time may expire, be repealed, or be amended to increase or decrease coverage."198
7.138.
Finally, the panel noted that unlike the tariff treatment under the duty suspension regime, the tariff treatment accorded under the European Communities' Common Customs Tariff was not contingent on renewal or extension. The panel found this distinction to be significant, because "continuous tariff treatment provides foreseeability for traders operating in the marketplace".199 Additionally, the tariff treatment provided in the European Communities' Common Customs Tariff was prospective, whereas the duty suspension regime had been applied retroactively on a number of occasions. On the basis of these considerations, the panel found that "the duty suspension measure does not eliminate the inconsistency with Article II:1(a) because there remains the potential of deleterious effects on competition".200
7.139.
Two points are worth highlighting in relation to this finding. First, the panel did not find that the European Communities' use of a temporary duty suspension was, in itself, inconsistent with Article II:1(a). It found rather that the use of a temporary duty suspension did not "eliminate" the inconsistency with Article II:1(b), first sentence, caused by a different measure imposing WTO-inconsistent duties. Thus, we do not read the panel's finding as suggesting that the duty suspension itself gave rise to an independent breach of Article II:1(a), but only that it failed to "eliminate" the consequential breach of that provision caused by the WTO-inconsistent duties.
7.140.
Second, the panel's finding that the duty suspension did not "eliminate" the consequential inconsistency with Article II:1(a) was based on a careful analysis of the features of the challenged measure as a whole, including the offending duties and the temporary duty suspension.201 Particularly important, in the panel's view, were the following facts: (a) the duty suspension regime had been in place for a total of five years, yet there was no certainty that the suspension in force at the time would be renewed upon the termination of a given suspension period; (b) the individual suspensions provided no information concerning the conditions under which the suspension would be terminated or otherwise not renewed; and (c) each individual suspension had terminated in December of a given year and been renewed only in March of the following year, with retroactive effect from January of the same year. These features were central to the panel's finding that the temporary duty suspension did not eliminate the potential for deleterious effects on competition caused by WTO-inconsistent duties. These features made it difficult to predict, in advance, whether the duty suspension "would expire, be repealed, or be amended", and thus gave rise to a lack of "foreseeability for traders operating in the marketplace".202
7.141.
Turning to the European Union's claim, the European Union argues that the temporary duty reduction applied in respect of the sixth measure "creates deleterious effects on competition, and therefore less favourable treatment in the meaning of Article II:1(a)".203 The European Union therefore asks the Panel to find that "[b]y making tariff treatment within the limits prescribed by its Schedule temporary and providing at the same time for a future duty that exceeds the bound rate, Russia has accorded less favourable treatment than that provided for in its Schedule".204 In considering this argument, we recall that, as we explained above, the panel in EC – IT Products did not find that the duty suspension in that case was itself inconsistent with Article II:1(a). We therefore do not agree with the European Union that "[a] lack of 'foreseeability for traders operating in the marketplace' was mentioned by the panel in EC – IT Products as a reason for the finding of less favourable treatment".205 The panel's finding of less favourable treatment was linked to, and stemmed from, the WTO-inconsistent duties themselves.
7.142.
In addition, we consider that the temporary duty reduction at issue in the present case is significantly different from the temporary duty suspension at issue in EC – IT Products. In the first place, in the case of the sixth measure we are not dealing with a duty suspension. The sixth measure does not raise the issue of whether the applied rate in force at the time of the Panel's establishment could eliminate an inconsistency arising from another rate in force at the same time. Only the 5% duty rate was being applied by Russia at the time.
7.143.
Moreover, unlike in EC – IT Products, there is no indication in the present case that the temporary duty reduction either had been or could have been renewed or extended. To the contrary, pursuant to footnote 14C of Decision No. 77, the temporary reduction was to terminate on 31 December 2015, with the applicable duty rate reverting to 15% on 1 January 2016.206 There is nothing in the text of that Decision to suggest that the duty reduction could either have been extended beyond 31 December 2015 or terminated prior to 31 December 2015. Therefore, we see no basis on which to find that there was any uncertainty as to whether the duty reduction would be extended or when it would terminate. The footnote itself indicates that it would apply only until 31 December 2015.
7.144.
Finally, and again as distinct from the measure at issue in EC – IT Products, Decision No77, which provides for the duty reduction at issue here, was exclusively prospective in application.
7.145.
In our view, therefore, it was foreseeable for traders in the marketplace that, until 31 December 2015, goods imported under the relevant tariff line would be subject to an ad valorem duty rate of 5%, but that from 1 January 2016 they would be subject to an ad valorem duty rate of 15%. Thus, we find that the temporary duty reduction at issue in this case did not reduce foreseeability for traders in the marketplace regarding the applicable tariff treatment. Indeed, we have relied precisely on the foreseeability of the duty rate reverting to 15% on 1 January 2016 to support our conclusion that at the time of the Panel's establishment the sixth measure was inconsistent with Article II:1(b), first sentence.
7.146.
As regards the European Union's argument that "envisaging a future duty in excess of bound rates is likely to restrict trade even before the higher duty becomes applicable"207, we consider that any such effect would not be the result of the temporary application of a duty rate of 5%.208 Rather, any such effect would be the result of the application from 1 January 2016 of the duty rate of 15%. The findings we have made above under Article II:1(b), first sentence, concerning the duty rate of 15% are in our view sufficient to address the European Union's argument.
7.147.
We turn, finally, to examine the European Union's argument that, in the light of the panel report in EC – IT Products, a temporary duty reduction does not "sufficiently guarantee" compliance with Article II:1, and therefore creates deleterious effects on competition, at least when it is clear from the outset that duties will continue to be levied in excess of bound duty rates as soon as the period of the temporary reduction ends.209 We note as an initial matter that the panel in EC – IT Products pointed out that the European Union "sets forth its tariff bindings in the EC Schedule pursuant to annual amendments to the autonomous duty rate in the CCT".210 It observed in this context that duty treatment cannot be guaranteed in an absolute sense.211 We agree with this observation. The European Union questions, however, whether the temporary duty reduction at issue in our dispute "sufficiently" guarantees compliance.
7.148.
In our view, the panel report in EC – IT Products does not stand for the proposition that a temporary duty provides insufficient guarantees of compliance, and is therefore inconsistent with Article II:1(a), whenever it is clear at the time the temporary duty is in force that it will later be replaced by a duty that exceeds the tariff binding. The panel report in EC – IT Products indicates only that a lack of continuous tariff treatment may lead to a lack of foreseeability.212 We have already determined, however, that the temporary duty reduction at issue in the present dispute did not give rise to a lack of foreseeability, noting, inter alia, that it was prospective and had not been retroactively applied. Moreover, the European Union has not identified any other aspect of the sixth measure that in its view suggests that the temporary duty reduction provides insufficient guarantees of compliance with Article II:1. We thus reject this contention by the European Union.

7.3.2.5.1 Conclusion

7.149.
For the reasons set out above, the Panel finds that the European Union has not demonstrated that the temporary duty rate of 5% required to be applied by Russia at the time of the Panel's establishment created deleterious effects on competition due to either a lack of foreseeability or insufficient guarantees of compliance with Article II:1. We therefore conclude that the European Union has not established that the sixth measure accords to imports treatment less favourable than that provided in the Schedule, contrary to Article II:1(a) and independently of any finding of inconsistency under Article II:1(b), first sentence.

7.4 CLAIMS CONCERNING APPLIED COMBINED DUTY RATES THAT ALLEGEDLY EXCEED BOUND DUTY RATES (THE SEVENTH TO ELEVENTH MEASURES AT ISSUE)

7.150.
The Panel now turns to the European Union's second set of claims, which concern the seventh to eleventh measures at issue. The European Union claims that the combineddutyrates that the CCT requires Russia to apply in respect of these measures are in excess of the bound dutyrates contained in Russia's Schedule. According to the European Union, the measures are therefore inconsistent as such with Article II:1(b), first sentence, of the GATT 1994, and consequently Article II:1(a) of the GATT 1994.
7.151.
We recall that the seventh to ninth measures at issue are combined duties allegedly required to be applied in excess of ad valorem bound duty rates, while the tenth and eleventh measures are combined duties allegedly required to be applied in excess of combined duty rates. In recognition of this distinction, we deal with the two groups of claims separately, beginning with the claims concerning the seventh to ninth measures.

7.4.1 Claims concerning the seventh to ninth measures

7.152.
We turn first to the European Union's claims in respect of the duty rates required to be applied by Russia in respect of tariff lines 1511 90 190 2 (the seventh measure), 1511 90 990 2 (the eighth measure), and 8418 10 200 1 (the ninth measure). The European Union claims that Russia is required to apply duties on goods falling within these tariff lines that are inconsistent with Article II:1(b), first sentence, of the GATT 1994, and consequently Article II:1(a) of the GATT 1994.

7.4.1.1 Measures and applied rates at issue

7.153.
The European Union argues that, in respect of goods falling under the seventh, eighth, and ninth measures, the structure and design of the duties required to be applied by Russia result in duties being levied in excess of bound rates with respect to a certain range of import prices.213
7.154.
The European Union argues that, at the time of the Panel's establishment, Decision No. 52 of the Council of the Eurasian Economic Commission imposed an ad valorem duty rate of 3% for goods imported under tariff lines 1511 90 190 2 (the seventh measure) and 1511 90 990 2 (the eighth measure). Nevertheless, as also noted by the European Union, footnote 13C of Decision No52 subjected goods imported under these tariff lines to a duty rate of 3%, but not less than 0.09 EUR/kg214, between 1 August 2014 and 31 August 2015. The European Union accepts that the duty rate required to be applied by Russia in respect of these tariff lines reverted to an ad valorem rate of 3% on 1 September 2015.215
7.155.
The European Union further argues that, at the time of the Panel's establishment, the CCT, as amended by Decision No. 103 of the Board of the Eurasian Economic Commission216 and Decision No. 52 of the Council of the Eurasian Economic Commission217, imposed a combined duty rate of "16.7%, but not less than 0.13 EUR/l"218 for goods imported under tariff line 8418 10 200 1 (the ninth measure). However, as also noted by the European Union, Decision No. 54 of the Council of the Eurasian Economic Commission219, which entered into force on 20 September 2015220, imposed a new duty rate of "15%, but not less than 0.13 EUR/l".
7.156.
Russia does not contest the European Union's description of these three measures at issue.
7.157.
The Panel notes that there is no dispute between the parties as to the duty rates required to be applied by Russia in respect of the seventh to ninth measures, either at the time of the Panel's establishment or subsequently.221 Based on the evidence presented, we find that the duty rates required to be applied by Russia in respect of the seventh, eighth, and ninth measures, on the date of the Panel's establishment and currently, are as follows:

MeasureTariff lineRussia's applied duty rate provided for at date of Panel's establishmentRussia's current applied rate
The seventh measure 1511 90 190 2 3%, but not less than 0.09 EUR/kg222 3% as of 1 September 2015223
The eighth measure 1511 90 990 2 3%, but not less than 0.09 EUR/kg224 3% as of 1 September 2015225
The ninth measure 8418 10 200 1 16.7%, but not less than 0.13 EUR/l226 15% but not less than 0.13 EUR/l, as of 20 September 2015227

7.4.1.1.1 "Expired" and amended measures

7.158.
At this point, we find it useful to deal with two issues that have arisen concerning the identity and susceptibility to challenge of the seventh, eighth, and ninth measures. The first issue concerns the question of whether the seventh and eighth measures, which Russia claims have "expired" during these proceedings, nevertheless constitute measures on which the Panel may make findings. The second issue concerns the way in which the Panel should deal with the ninth measure, which was amended during the course of the proceedings.

7.4.1.1.1.1 Whether the seventh and eighth measures have "expired"

7.159.
The first issue we need to consider is whether the seventh and eighth measures have "expired", and what consequences would follow if they have.
7.160.
Russia argues that the European Union's panel request brings within the scope of the Panel's jurisdiction "any amendments, replacements, extensions, implementing measures" or other measures "related" to the challenged measures.228 Russia therefore requests the Panel to decide on Russia's measures, including the seventh and eighth measures, as they have actually been applied during the course of the proceedings. According to Russia, the challenged duty rates in respect of tariff lines 1511 90 190 2 and 1511 90 990 2 expired on 31 August 2015, and were in each case replaced with an ad valorem rate of 3%, which is exactly the same as the corresponding duty rates in Russia's Schedule. Consequently, in Russia's view the Panel should not consider the duty rates challenged by the European Union, as they did not have legal effect after 1 September 2015 and therefore their examination would not assist the Panel in securing a positive solution to the dispute. According to Russia, the fact that the duty rates for these two tariff lines have been brought into conformity with Russia's Schedule means that the Panel "has no measure at issue to rule on".229 Russia therefore asks the Panel to dismiss the European Union's claims.230
7.161.
According to the European Union, the Panel's terms of reference were set at the time of its establishment, and the Panel should therefore make findings with respect to the measures as in force on that date. The European Union has clarified, however, that it does not seek recommendations under Article 19 of the DSU with respect to measures that have ceased to apply, including the seventh and eighth measures.231
7.162.
The Panel recalls its discussion, in the context of the sixth measure at issue, of the legal implications of a change made subsequent to a panel's establishment that affects a challenged measure.232 As we explained, a measure that is modified subsequent to a panel's establishment does not, simply by virtue of that modification, cease to be a measure for the purposes of WTO dispute settlement. Even if an allegedly WTO-inconsistent measure is brought into conformity during the course of the proceedings, a panel may still be required, pursuant to its terms of reference and Article 11 of the DSU, to make findings in respect of the measure as it existed at the time of the panel's establishment233, at least where the complaining party has not requested the panel to consider the measure as subsequently changed. The fact that a measure has been brought into conformity with the covered agreements subsequent to a panel's establishment may, however, have implications for what recommendations, if any, a panel decides to make.234
7.163.
Applying these principles to the facts before us, we cannot agree with Russia that the seventh and eighth measures as they existed at the time of the Panel's establishment do not constitute measures on which we may make findings. We note in this respect that the European Union has only requested that we make findings on those measures as they existed at that time.235 Accordingly, both our terms of reference and Article 11 of the DSU, which requires us to make an "objective assessment of the matter", compel us to examine the WTO-consistency of these measures as they existed at the time the Panel was established. It would not be appropriate, in the absence of a specific request from the European Union, for us to examine the seventh and eighth measures in their current form ("as they are currently applied"236, to use Russia's words) rather than as they existed at the time of the Panel's establishment. However, we will take appropriate account of any relevant changes made to the measures at issue when making our recommendations (if any).

7.4.1.1.1.2 Whether the Panel should consider the ninth measure as amended

7.164.
The second issue facing us is whether the Panel should consider the ninth measure at issue as it existed at the time of the Panel's establishment, as it existed from 1 to 20 September 2015, or as amended from 20 September 2015.
7.165.
Both parties recognize that Russia's bound rate fell on 1 September 2015. They also agree that the ninth measure was amended during the course of these proceedings, and that that amendment entered into effect on 20 September 2015.237 However, according to the European Union, the measure remains inconsistent with Russia's obligations under Article II:1(b), first sentence. Thus, according to the European Union, the ninth measure as amended continues to result in the imposition of customs duties in excess of those provided for in Russia's Schedule.
7.166.
In the light of these developments, the European Union asks the Panel to make findings concerning the ninth measure as it existed (i) at the time of the Panel's establishment; (ii) between 1 and 20 September 2015, during which time the extent of the measure's inconsistency was, according to the European Union, "aggravated"238; and (iii) as amended, from 20 September 2015 onwards.239
7.167.
Russia has not responded specifically to this aspect of the European Union's request for findings. Nevertheless, in the Panel's view, the extensive findings requested by the European Union may not be necessary in order to secure a positive solution to this dispute, for the following reasons.
7.168.
Addressing first the European Union's first and third requests (i.e. that the Panel make findings on the ninth measure both as it existed at the time of the Panel's establishment and as amended from 20 September 2015), we note that the nature of the inconsistency alleged to have existed at the time of the Panel's establishment is essentially the same as that alleged to exist following the measure's amendment as of 20 September 2015. Specifically, both claims concern the requirement to apply a duty rate expressed as "x%, but not less than y per unit of measurement" in respect of products imported under a tariff line bound simply as x% (that is, in ad valorem terms). It is only the numerical value of "x" (as it figures in both the applied and bound duty rates) that has changed during the course of these proceedings.240
7.170.
We turn, finally, to the European Union's second request (i.e. that the Panel make findings concerning the ninth measure as it existed between 1 and 20 September 2015). According to the European Union, until 31 August 2015, the relevant bound duty rate was 16.7%. On 1 September 2015, in accordance with Russia's Schedule, the bound duty rate was lowered to 15%. However, until 20 September 2015, Russia was required to subject goods imported under this tariff line to an applied duty rate of "16.7%, but not less than 0.13 EUR/l". The European Union thus argues that between 1 and 20 September 2015, Russia's alleged breach of Article II:1(b), first sentence, was aggravated because, although the bound duty rate with which Russia had to comply had dropped (from 16.7% to 15%), the duty rate required to be applied by Russia remained the same. Therefore, in the European Union's view, from 1 to 20 September 2015, even the ad valorem element of the combined applied duty rate (16.7%) exceeded the bound duty rate (15%).241
7.171.
It appears to us that the European Union's descriptions of both the change in the bound duty rate and the absence of a change in the duty rate required to be applied by Russia from 1 to 20 September 2015 are correct. Russia has not argued otherwise. Nevertheless, in our view additional findings on the measure as it existed during the period 1 to 20 September 2015 may not be necessary to resolve this dispute. If we were to find that the ninth measure as amended, the ad valorem element of which is currently equal to Russia's bound ad valorem duty rate, is inconsistent with Article II:1(b), first sentence, then it would follow a fortiori that the ninth measure would have been WTO-inconsistent during the period 1 to 20 September 2015, when even the ad valorem element of the ninth measure (16.7%) was higher than the relevant bound duty rate (15%). In such circumstances, we do not believe that additional findings would be necessary to secure a positive solution of this dispute. In contrast, if we were to find that the ninth measure as amended is not inconsistent with Article II:1(b), first sentence, it may be necessary to consider the measure as it existed from 1 to 20 September 2015 in order to ensure that we do not leave gaps in our analysis. Accordingly, we will return to the ninth measure as it existed from 1 to 20 September 2015 only if we conclude that the ninth measure as amended is not inconsistent with Article II:1(b), first sentence.
7.172.
In sum, in these findings we will consider the seventh and eighth measures as they existed at the time of the Panel's establishment. In contrast, in the light of the European Union's request, we will consider the ninth measure as amended from 20 September 2015. However, if we conclude that the ninth measure as amended is not inconsistent with Russia's obligations under Article II:1(b), first sentence, we will return to that measure as it existed during the period 1 to 20 September 2015.

7.4.1.2 Consistency with Article II:1(b), first sentence, of the GATT 1994

7.173.
Turning now to assess the consistency of the seventh, eighth, and ninth measures with Article II:1 of the GATT 1994, the Panel finds it appropriate, for the reasons given above242, to first address the European Union's claims under Article II:1(b), first sentence, before turning to the European Union's consequential claim under Article II:1(a).
7.174.
According to the European Union, the seventh, eighth, and ninth measures at issue are inconsistent with Article II:1(b), first sentence. This is so, in the European Union's view, because in respect of tariff lines 1511 90 190 2, 1511 90 990 2, and 8418 10 200 1, Russia is required to apply a combined duty (pursuant to which the customs authority, in respect of every import of the affected goods, calculates and chooses the higher of either an ad valorem duty or a specific duty), whereas its Schedule provides for a straightforward ad valorem bound duty rate. It does so, in the European Union's view, in a way that necessarily results in the application of duties in excess of bound duty rates for some categories of transactions.243
7.175.
The European Union notes that although the application of a type of duty other than that provided for in a Member's schedule is not, in itself, inconsistent with Article II:1, such variation will give rise to an inconsistency to the extent that it results in ordinary customs duties being levied in excess of those provided in the schedule. In the European Union's view, "simple arithmetic"244 shows that, in respect of the seventh, eighth, and ninth measures, there is a break-even price or customs value – expressed in relation to the weight or volume of the affected imported goods – below which the ad valorem equivalent of the specific element of the applied combined duty will inevitably exceed Russia's bound ad valorem duty.245 Additionally, and as noted above, the European Union argues, in respect of the ninth measure, that from 1 to 20 September 2015 (after Russia's bound duty rate fell, but before the applied duty rate was reduced), even the ad valorem element of the applied duty rate (16.7%) exceeded the bound rate (15%). Because, during this period, the combined duty required the customs authority to select the higher of two values, the minimum duty required to be levied in all cases was 16.7%. This meant that, in respect of the ninth measure, the applied duty rate exceeded the bound rate with regard to all rather than just some customs values.246 According to the European Union, Russia did not, either at the time of the Panel's establishment or subsequently, apply any kind of cap or ceiling mechanism that would have prevented it from levying duties in excess of bound rates.247
7.176.
The European Union adds that, as a matter of law, the fact that a duty is designed in a way that makes individual violations merely possible, in a given price range, suffices to show a violation of Article II:1. The European Union emphasizes, however, that its arguments are not "purely hypothetical".248 To demonstrate this, the European Union submitted a series of customs declarations that in its view make it "abundantly clear"249 that the application of the specific elements of the combined duties results in duties being levied in excess of bound rates, sometimes "dramatically"250 so.251
7.177.
Russia argues that the European Union's claims in respect of the seventh to ninth measures are essentially about the structure and design of the applied duties, rather than the duties themselves. In Russia's view, the mere fact that a Member applies a type of duty other than that provided for in its schedule is not inconsistent with Article II:1. Rather, to successfully challenge a customs duty under Article II:1, a complaining Member has additionally to prove that the customs duty collected is in excess of the bound rate.252 Moreover, in Russia's view, the European Union's claims are legally flawed because nothing in the covered agreements requires a Member to use a legislative ceiling or cap when they apply customs duties.253 Additionally, Russia argues that the European Union's claims must fail because they do not take account of paragraph 313 of Russia's Working Party Report, which, in its view, contains a methodology that must be used when assessing the consistency of an applied combined duty with Article II:1.254
7.178.
The Panel will, first of all, consider Russia's characterization of the European Union's claims in respect of the seventh to ninth measures.

7.4.1.2.1 Duty type/structure variation

7.179.
As noted above, Russia argues that the European Union's claims in respect of the seventh to ninth measures are essentially about the structure and design of the applied duties, rather than the duties themselves, and that Article II:1 does not prohibit it from applying a type or structure of duty other than that provided for in its Schedule.
7.180.
The Panel notes that, according to the Appellate Body, "the application of a type of duty different from the type provided for in a Member's Schedule is inconsistent with Article II:1(b), first sentence, of the GATT 1994 to the extent that it results in ordinary customs duties being levied in excess of those provided for in that Member's Schedule".255 Therefore, we agree with the parties that the mere use by a Member of a duty type or structure that differs from the duty type or structure used in that Member's Schedule is not, in itself, inconsistent with Article II:1. What matters is whether the particular duty that is applied exceeds that set forth in a Member's Schedule.
7.181.
In our view, however, the European Union's claims do not arise from the mere fact that Russia is required to apply combined duties in respect of tariff lines with a bound rate expressed in ad valorem terms. Rather, the European Union's concern is that certain duties applied by Russia lead, in some circumstances, to the levying of ordinary customs duties in excess of those provided for in Russia's Schedule. As we understand it, the European Union uses the terms "structure and design" in the context of explaininghow and why the combined duties at issue result, in its view, in the imposition of customs duties in excess of Russia's bound duty rates.The European Union's claim is that the seventh to ninth measures are inconsistent with Article II:1(b), first sentence, not simply because their structure or design differs from the type, structure or design of the corresponding bound rates in Russia's Schedule, but rather because their type, structure and design result in the imposition of customs duties in excess of those set forth in Russia's Schedule.

7.4.1.2.2 Methodology for comparison of applied and bound duty rates

7.182.
Having addressed the nature of the European Union's claims, we now turn to consider the European Union's claim that the seventh to ninth measures lead (or led, at the time of the Panel's establishment) to the imposition of customs duties in excess of those provided in Russia's Schedule.
7.183.
We begin this part of our analysis by observing that Russia contests the methodology used by the European Union to compare the applied and bound rates. According to Russia, the European Union's approach is flawed because it does not take account of the methodology in paragraph 313 of Russia's Working Party Report. According to Russia, this methodology is to be used when calculating the ad valorem equivalent of the specific element of a combined applied duty. In Russia's view, the European Union cannot, as a legal matter, establish that Russia applies specific duties in excess of bound ad valorem duties contrary to Article II:1(b), first sentence, unless it submits evidence conforming to the methodological specifications of paragraph 313.256
7.184.
The European Union disagrees with Russia, arguing that paragraph 313 is not relevant to an analysis under Article II:1(b), first sentence.257
7.185.
The Panel notes that Russia's arguments concerning paragraph 313 raise the question of how we should compare the relevant applied and bound duty rates for the purposes of assessing the consistency of the seventh, eighth, and ninth measures with Article II:1(b), first sentence. This issue is logically prior to the issue of whether the European Union has shown that the measures are in fact inconsistent. Accordingly, we will initially consider whether paragraph 313 is relevant to our assessment of the European Union's claims, and in particular whether it provides for a methodology that must be used in calculating the ad valorem equivalent of the specific element of a combined duty.

7.4.1.2.2.1 Relevance of Paragraph 313 of Russia's Working Party Report

7.186.
Paragraph 313 of Russia's Working Party Report provides:

As a result of these negotiations, the representative of the Russian Federation confirmed that for goods subject to a combined duty (for example, in the form of 5 per cent, but not less than 2 €/kg), it would be ensured, whether by the Russian Federation or the competent bodies of the CU [customs union], that the ad valorem equivalent of the specific duty rate for each tariff line, calculated based on the average customs value, would be no higher than the alternative ad valorem duty rate for that tariff line in the Schedule of the Russian Federation in accordance with the following provisions:

- On an annual basis, it would be determined, whether by the Russian Federation or by the competent bodies of the CU, whether it was necessary to reduce the applied specific duty rate to ensure that it was no higher than the applied ad valorem duty rate;

- This calculation would be done two months before the end of each calendar year, beginning in the first calendar year after the date of the accession of the Russian Federation;

- Data for the calculations would be from a three-year period, determined by taking trade data from a recent five-year representative period and excluding data for years with the highest and lowest trade for that period;

- Data on trade with countries or territories with which the Russian Federation had a Customs Union or free trade agreement would be excluded from the calculation; and

- Data would be drawn from the Official Customs Statistics of the Russian Federation notified to the WTO Integrated Database (IDB) unless such data was unavailable. In such case, IDB and COMTRADE data would be used.

The Russian Federation would inform Members of the results of these calculations on a tariff line basis and, if the results showed that it was necessary to reduce the specific duty rate alternative, this reduction would be made and would go into effect automatically, beginning on 1 January of the year following the calculation. In no case would the applied duty (whether expressed in ad valorem or specific terms and whether determined by the Russian Federation or the competent bodies of the CU) exceed the bound rate of the combined duty. If, after reductions based on the annual re-calculation and changed circumstances, the specific duty rate alternative became significantly lower than ad valorem alternative rate of duty, the Russian Federation reserved the right to modify permanently the form of the duty to a purely ad valorem duty, at a level that complied with the binding for the relevant tariff line. The Working Party took note of these commitments.

7.187.
In Russia's view, paragraph 313 "informs the content of Russia's obligations under Article II:1", and in particular is a "necessary mechanism"258 for the calculation of the ad valorem equivalent of the specific element of a combined duty. According to Russia, as a result of paragraph 313, individual customs declarations cannot serve as evidence that the ad valorem equivalent of an applied specific duty rate is in excess of the corresponding ad valorem bound duty rate. Rather, to establish that the specific element of a combined duty has been applied in excess of an ad valorem bound rate, a complaining party would, in Russia's view, need to "submit evidence based on data from a three-year period and average customs value".259 According to Russia, as the European Union's evidence does not meet these requirements, it cannot be considered to have established a prima facie case that the seventh to ninth measures are WTO‑inconsistent.260
7.188.
The European Union counters that paragraph 313 only concerns goods subject to a combined duty in Russia's Schedule. In the European Union's view, paragraph 313 does not concern goods for which the Schedule provides an ad valorem rate and to which Russia nevertheless applies a combined duty. Thus, according to the European Union, paragraph 313 is not relevant to the seventh to ninth measures.261
7.189.
The European Union further argues that, in any event, paragraph 313 concerns the relationship between the specific element and the ad valorem element of a single combined duty. According to the European Union, the purpose of the paragraph is to ensure that the specific element of such a combined duty does not exceed the ad valorem element of that same duty for the average customs value. If, after performing the calculation in paragraph 313, it appears that the specific element leads to a higher duty onaverage, then paragraph 313 would require Russia to further reduce the applied specific element below its bound level. In this sense, paragraph 313 imposes obligations on Russia that are distinct from, and additional to, those contained in Article II:1 and Russia's Schedule. Paragraph 313 does not set out a way of interpreting, changing, or limiting Russia's obligations under Article II:1. In the European Union's view, accepting Russia's interpretation of paragraph 313 would make Article II:1(b), first sentence, practically meaningless as far as Russia is concerned, because it would allow Russia to freely exceed its tariff bindings as long as it did so only some of the time, compensating the duties it levies in excess by imposing others below bound rates.262
7.190.
The question before the Panel is whether paragraph 313 sets forth a methodology through which the ad valorem equivalent of the specific element of a combined duty rate must be calculated. If that were the case, the European Union's claims concerning the seventh to ninth measures would need to be supported by evidence that takes this methodology into account.
7.191.
Before examining the text of paragraph 313, it is useful to further explain the significance of this issue for the current proceedings. In respect of the seventh, eighth, and ninth measures at issue, the corresponding bound rates are expressed in straightforward ad valorem terms. The CCT, however, requires the application of combined duties. To recall, the term "combined duty", as it has been used in these proceedings, refers to a duty that consists of at least one ad valorem alternative rate combined with a minimum specific alternative rate.263 Where, in a given import transaction, the ad valorem alternative rate, if it were applied, would yield an amount of duty per unit of measurement that is less than the amount that the specific alternative rate would yield, the CCT requires application of the specific alternative duty rate.264
7.192.
In cases where a bound duty rate is expressed in ad valorem terms but the corresponding applied duty is expressed in specific terms, the question arises how to compare the former with the latter for the purpose of determining compliance with Article II:1(b), first sentence. The Appellate Body has explained in this respect that "for any specific duty, there is an ad valorem equivalent deduced from the ratio of the absolute amount collected to the price of the imported product".265 In other words, the comparison can be facilitated by converting the specific duty into a percentage of the customs value of the imported product, and comparing that percentage with the ad valorem bound duty rate.266
7.193.
In Russia's view, paragraph 313 sets out a methodology that must be followed for a legally valid comparison between a bound ad valorem duty rate and the specific element of an applied combined duty rate to be calculated. As explained above, according to Russia the conversion and comparison must be conducted as envisaged in paragraph 313, that is to say, in respect of the "average customs value" of a particular product, and on the basis of data "from a three-year period, determined by taking trade data from a recent five-year representative period and excluding data for years with the highest and lowest trade for that period".267
7.194.
We begin our assessment by looking closely at the content of paragraph 313. We note that, pursuant to paragraph 2 of Russia's Accession Protocol and paragraph 1450 of its Working Party Report, paragraph 313 is an integral part of the WTO Agreement. However, we observe that paragraph 313 is silent on the nature of its relationship, if any, with Article II:1(b), first sentence. Paragraph 313 therefore neither expressly precludes nor expressly endorses Russia's interpretation.
7.195.
We next observe that both Article II:1(b), first sentence, and paragraph 313 are concerned with, or may involve, comparisons of duties or duty rates. In particular, both provisions may, as in the case of combined applied duties of the kind at issue here, require calculation of the ad valorem equivalent of a specific duty or rate, and the comparison of that ad valorem equivalent with another duty or rate. However, the two provisions are significantly different when it comes to the issues of what precisely is to be compared, and for what purpose.
7.196.
As its terms make clear, Article II:1(b), first sentence, calls for a comparison between the "customs duties … set forth and provided" for in a Member's Schedule, on the one hand, and the customs duties levied on goods "on their importation into the territory to which the Schedule relates", on the other hand.268 The relevant comparison under Article II:1(b), first sentence, is thus between a bound duty or duty rate and an applied duty or duty rate. The purpose of this comparison is, as the text makes clear, to determine whether imports have been "exempt[ed] from ordinary customs duties in excess of those" provided for in the Schedule.
7.197.
Paragraph 313 calls for a different comparison. The first sub-paragraph indicates the overall concern of the provision, which is to ensure that "the ad valorem equivalent of the specific duty rate for each tariff line, calculated based on the average customs value, would be no higher than the alternative ad valorem duty rate for that tariff line in the Schedule of the Russian Federation". The way in which this is to be ensured is elaborated in the tirets of that sub-paragraph. In particular, the first tiret of the sub-paragraph translates the overall concern into a specific obligation: on an annual basis, Russia or the competent bodies of the Customs Union (and now the EAEU) must determine "whether it [is] necessary to reduce the applied specific duty rate to ensure that it [i]s no higher than the applied ad valorem dutyrate".
7.198.
This tiret makes clear that the relevant comparison under paragraph 313 is between the two alternative elements – ad valorem and specific – of a single combined applied duty. Thus, paragraph 313 is not concerned with the relationship between Russia's applied and bound duties; rather, its purpose is to ensure that if Russia's customs authority applies the specific element of a combined applied duty, the ad valorem equivalent of the specific duty rate, determined on the basis of the average customs value, does not exceed the corresponding alternative ad valorem duty rate.
7.199.
Turning to relevant context, the immediately preceding paragraph 312 in our view further elucidates the different purpose of the mechanism in paragraph 313. It provides, in relevant part:

In response to comments of some Members that, combined (mixed) and specific rates should be replaced by ad valorem duties upon the accession of the Russian Federation, in order to increase transparency and reduce distortions in trade, the representative of the Russian Federation noted that the CCT ensured a similar effective rate for the ad valorem and specific alternatives of combined rates.

7.200.
It is instructive that this paragraph contains, in fine, the phrase "the ad valorem and specific alternatives of combined rates". (second emphasis added) To us, this provides additional confirmation that paragraph 313 calls for a comparison between two elements of a single combined applied duty, and not a comparison between a combined applied duty and a corresponding bound duty.269
7.201.
In our view, not only the what and the why of the comparisons called for under Article II:1(b), first sentence, and paragraph 313 are different, but also the how. As we have mentioned above, for goods subject to a combined applied duty, paragraph 313 instructs that the ad valorem equivalent of a specific duty rate be calculated on the basis of the average customs value of a particular product. This calculation is to be done using data from a three-year period, which in turn is to be determined by taking trade data from a recent five-year representative period and excluding data for years with the highest and lowest trade for that period. So calculated, the ad valorem equivalent must then be compared to the alternative ad valorem element of the applied combined duty rate.
7.202.
In contrast, Article II:1(b), first sentence, calls for a simple comparison between the bound duty rate and the actually applied or applicable duty rate. In the case of combined applied duties, it may be necessary to calculate the ad valorem equivalent of a specific element in order to compare it with a bound ad valorem rate.270 But nothing in the text of Article II:1(b), first sentence, suggests that this calculation must or even can be based on the average customs value of imports of the good concerned, or on data from a three-year period. The text of Article II:1(b) states, broadly, that "products … shall, on their importation … be exempt from ordinary customs duties in excess of those set forth and provided" in a Member's Schedule. This unqualified language, together with the considerations we set out above271, suggests to us that the obligation in Article II:1(b), first sentence, applies to each and every import transaction. Thus, the duties applied or applicable in respect of each and every import transaction must comply with the upper limit imposed by Article II:1(b), and not only some average duty calculated on the basis of a series of import transactions.
7.203.
In sum, while both paragraph 313 and Article II:1(b), first sentence, require comparisons, there are significant differences between the two provisions in terms of what is to be compared, how the comparison is to be undertaken, and the purpose for which the comparison is made. These significant differences indicate to us that paragraph 313 does not, as Russia suggests, prescribe or authorize a methodology to be applied when calculating ad valorem equivalents as part of an analysis under Article II:1(b), first sentence. We find no support for this view in paragraph 313. Moreover, the text of Article II:1(b), first sentence, and other considerations suggest to us that the calculation of an ad valorem equivalent under that provision is to be based on the specific duty applied or applicable to a good vis-à-vis its customs value.272
7.204.
As an additional consideration, we have difficulty accepting Russia's interpretation of paragraph 313 because of its implications. Accepting Russia's interpretation would mean that Russia could subject some imports to duties in excess of bound rates, provided that, at the end of the relevant three-year period, the duty applied in respect of the average customs value was in conformity with the relevant bound rate. In other words, Russia could exceed its tariff bindings in some transactions, provided that, over time, it levied duties below bound rates in others. We have found above, however, that Article II:1(b), first sentence, does not permit such balancing.273 In our view, it would not be appropriate to endorse an interpretation of paragraph 313 that would result in such a major departure from the requirements of Article II:1(b), first sentence, as we understand it, without a very clear indication that this was indeed what the negotiators intended. We have been unable to find any such indication.
7.205.
Additionally, accepting Russia's interpretation of paragraph 313 would effectively make it impossible for a Member to promptly challenge individual instances of application of a combined duty in excess of the bound duty set forth in Russia's Schedule. This is because compliance with Article II:1(b), first sentence, would need to be ensured only in respect of an average customs value calculated on the basis of data from a three-year period. Here again, in the absence of a clear indication to the contrary, it is highly doubtful, in our view, that the negotiators of paragraph 313 intended to limit the ability of Members exporting goods to Russia to promptly challenge individual instances of application of a combined duty.
7.206.
In sum, we consider that paragraph 313 is not relevant to the analysis of an applied combined duty that allegedly results in the imposition of duties in excess of those provided for in Russia's Schedule. More particularly, we consider that no recourse needs to, or can, be had to paragraph 313 when calculating the ad valorem equivalent of the specific element of an applied combined duty rate to determine whether that applied combined duty is in excess of the corresponding ad valorem duty set forth in Russia's Schedule. As this is precisely the analysis that must be performed in assessing the consistency of the seventh to ninth measures with Article II:1(b), first sentence, paragraph 313 will not be considered further in our analysis of these measures. Having found that paragraph 313 is not relevant to our assessment of the claims concerning the seventh to ninth measures, we do not find it necessary to determine in addition whether, as the European Union argues, paragraph 313 establishes an additional obligation on Russia only in situations where both the applied and the bound duties are expressed in combined terms.

7.4.1.2.3 Comparison of applied and bound duty rates

7.207.
We have already set out our understanding of the relevant applied duty rates in respect of the seventh to ninth measures. We can therefore turn to consider whether those applied rates lead to the imposition of duties in excess of those set forth in Russia's Schedule. To undertake this analysis, we once again need to compare the duty rates required to be applied by Russia, on the one hand, and the bound duty rates provided for in Russia's Schedule, on the other. We recall that, for the reasons given above274, we will examine the seventh and eighth measures as they existed at the time of the Panel's establishment. Conversely, in respect of the ninth measure, we will focus on the measure as it currently exists following an amendment that entered into force on 20 September 2015. We will consider the ninth measure as it existed during the period 1 to 20 September 2015 only if we conclude that the measure as amended is not WTO‑inconsistent.
7.208.
In respect of the seventh and eighth measures, we find, based on the evidence presented, that the applied and bound duty rates at the time of the Panel's establishment were as follows:

Tariff lineRussia's applied duty rate provided for at date of Panel's establishmentRussia's bound duty rate275
1511 90 190 2 3%, but not less than 0.09 EUR/kg276 3%
1511 90 990 2 3%, but not less than 0.09 EUR/kg277 3%

7.209.
In respect of the ninth measure, we understand, based on the evidence presented, that the applied and bound rates, as of 20 September 2015, are as follows:

Tariff lineRussia's current applied duty rateRussia's bound duty rate278
8418 10 200 1 15%, but not less than 0.13 EUR/l279 15%

7.210.
In respect of the seventh, eighth, and ninth measures, we cannot simply compare the applied and bound duty rates, as we did for the first to sixth measures. Rather, we need to consider how the applied combined duty rates operate before we can determine whether they lead to the imposition of duties in excess of Russia's bound rates.
7.211.
In this connection, the Appellate Body has observed that "for any specific duty, there is an ad valorem equivalent deduced from the ratio of the absolute amount collected to the price of the imported product".280 When the duty in question consists of a specific duty and the level bound in the Member's Schedule is expressed in ad valorem terms, it is possible to calculate a "break-even" price for which the ad valorem equivalent of the specific duty at issue is equal to the bound ad valorem level. Any import price below that break-even price will cause the ad valorem equivalent of the specific duty to exceed the bound ad valorem level, whereas any import price above the break-even price will result in the ad valorem equivalent of the specific duty being lower than the bound ad valorem level.281
7.212.
This holds true also in the case of the seventh to ninth measures, where (i) the relevant applied rate is expressed in combined terms, consisting of two alternative elements, a specific one and an ad valorem one, and (ii) the bound rate is expressed in ad valorem terms.282 In these cases, the duty structure itself indicates in which transactions the specific element is to be applied. Where the specific element is applied, it is possible to calculate a break-even price. Imports priced below that break-even price will be subject to a specific duty whose ad valorem equivalent exceeds the corresponding bound ad valorem rate.
7.213.
The European Union explained its understanding of the structure, design, and architecture of the seventh, eighth, and ninth measures. It also presented arithmetical calculations in an attempt to show how the application of the relevant combined duties results, for import transactions at or below a specified customs value (that is, the break-even price discussed above), in the imposition of customs duties in excess of those provided for in Russia's Schedule. Additionally, it submitted actual customs declarations that, in its view, confirm that customs duties have, in fact, been levied in excess of bound rates in respect of the tariff lines affected by the seventh, eighth, and ninth measures.283
7.214.
Russia has not challenged the accuracy of the European Union's mathematical explanations; it only challenged the methodology underlying the European Union's calculations as failing to take account of paragraph 313 of Russia's Working Party Report. Nevertheless, it is, as noted by the panel in Colombia – Textiles, the responsibility of a panel to "review" the submitted "arithmetical calculations and verify whether they are of value in resolving this dispute".284 Accordingly, we now turn to consider the European Union's arithmetical arguments in more detail.
7.215.
We begin with the seventh and eighth measures. The European Union argues that these measures, as they existed at the time the Panel was established, required Russia to apply the specific element of the combined duty whenever the customs value (expressed as a unit price285) of an import was less than 3 EUR/kg. According to the European Union, this resulted in an applied duty above the bound level. In support of this contention, the European Union presents a calculation using a hypothetical good with a customs value equal to 2.90 EUR/kg. In reviewing this calculation, we recall that, at the time the Panel was established, the bound duty rate in respect of the seventh and eight measures was 3%, while the applied duty rate in respect of both measures was "3%, but not less than 0.09 EUR/kg".286 Thus, assuming that 1 kilogram of palm oil were imported under either tariff line 1511 90 190 2 or 1511 90 990 2, at a customs value of EUR 2.90, under the ad valorem element (namely 3%) of the applied combined rate, the duty levied would be 0,087 EUR/kg.287 Since 0,087 EUR/kg is less than the alternative minimum specific duty rate of "0.09 EUR/kg", Russia's customs authority would need to apply the alternative specific element, namely "not less than 0.09 EUR/kg". Therefore, the applied specific duty rate would be 0.09 EUR/kg. In the present example, for a hypothetical good weighing 1 kilogram, the resulting applied duty would therefore be exactly EUR 0.09. As we have explained above, the ad valorem equivalent of an applied specific duty rate is calculated by dividing the amount of duty levied by the total customs value of the good at issue (thereby yielding the percentage of the customs value that the duty levied represents).288 In this example, EUR 0.09 (the duty levied) divided by EUR 2.90 (the customs value of 1 kilogram of palm oil) yields an ad valorem equivalent of 3.1%. As indicated, Russia's Schedule requires that it not impose a duty at a rate higher than 3%. Evidently, an applied ad valorem equivalent duty rate of 3.1% would be higher than the bound rate of 3%.289 It is clear from this example that any time the customs value of the good is equal to or less than 2.90 EUR/kg290, the specific element of the applied combined duty rate would necessarilybe applied.
7.216.
The European Union asserts that the lowest customs value for which the applied duty rate would equal the bound duty rate (the "break-even price") is 3 EUR/kg, not 2.90 EUR/kg. According to the European Union, for goods with customs values below that alleged break-even price Russia was required to apply duties in excess of those provided in its Schedule. We agree with the European Union that a specific break-even price could be mathematically determined. However, the European Union did not provide Russia and the Panel with the worked mathematical reasoning supporting its determination of the break-even price. In these circumstances, and bearing in mind the proper allocation of the burden of proof in WTO dispute settlement291, we do not find it appropriate to determine the break-even price ourselves. Because the European Union has not provided its calculations in support of the specific break-even price that it has identified, we are not in a position to review these calculations with a view to confirming whether a good valued at 3 EUR/kg would or would not be subject to duties higher than those provided for in Russia's Schedule. We are satisfied, however, that the European Union has demonstrated that for goods valued at or less than 2.90 EUR/kg, the application of the minimum specific duty rate of 0.09 EUR/kg would necessarily result in an ad valorem equivalent duty rate of more than 3%, i.e. a duty rate higher than the bound rate. Accordingly, we find, in respect of the seventh and eighth measures, that so long as the customs value of a good falling within the relevant tariff lines was equal to or less than a certain customs value – and the customs value for which we have been able to confirm this is 2.90 EUR/kg – the ad valorem equivalent of the specific element of the applied combined duty rate would inevitably have been higher than the bound ad valorem duty rate, resulting in applied duties higher than the bound duty. This finding is represented graphically in Figure 1 below.

Figure 1

[SEE IMAGE IN SOURCE DOCUMENT]

7.217.
We turn, next, to the ninth measure as amended. The European Union initially provided a mathematical example for the ninth measure as it existed at the time of the Panel's establishment. As discussed in paragraph 7,166 above, following amendment of the measure, the European Union requested findings on the measure as it existed at the time of the Panel's establishment, as it existed from 1 to 20 September 2015, and as amended after 20 September 2015.292 As noted in paragraph 7,172 above, the Panel decided to make findings on the measure as amended after 20 September 2015.
7.218.
We note that the European Union has not presented mathematical explanations for the measure as amended. We recall in this regard that the amendment occurred during these proceedings. The European Union states, however, that "[t]he inconsistency with Article II:1(b) … remains, for the very same reasons as with the duties that were in force when the Panel was established. The 'break-even' customs value below which duties would be imposed in excess is now different, but can still be clearly established".293 In considering this argument, we note that the structure and design of the measure as amended is identical to that of the measure as it existed at the time of the Panel's establishment. In both instances the bound duty rate is in ad valorem form, while the applied combined duty rate comprises both an ad valorem element and a specific element. Moreover, in both instances the bound duty rate is numerically equal to the ad valorem element of the applied combined duty rate.294 Given this, and lacking specific calculations for the ninth measure as amended, we will first review the European Union's calculations in respect of the measure as it existed at the time of the Panel's establishment. If these calculations concerning the ninth measure as it existed at that time confirm the European Union's argument that below a customs value identified by the European Union the ad valorem equivalent of the applied combined duty rate would inevitably have been higher than the bound ad valorem duty rate, we will examine whether the same can be said of the measure as amended in respect of that same customs value.
7.219.
The European Union argued in respect of the measure as it existed at the time of the Panel's establishment, that below a break-even customs value of 0.77 EUR/l, the specific element of the combined duty would be applied, resulting in a duty levied above the bound level. As with the seventh and eight measures, the European Union did not provide to Russia and the Panel its worked mathematical reasoning in respect of this break-even price, but did provide calculations in respect of a hypothetical good, in this instance a good with a customs value of 0.76 EUR/l. Although we agree with the European Union that a specific break-even price could be mathematically determined for the ninth measure as amended, we do not find it appropriate, in the absence of specific calculations by the European Union, to determine the break-even price ourselves. We have, however, reviewed the calculations that the European Union did provide using the same analysis that we undertook in respect of the seventh and eighth measures. We are satisfied that under the ninth measure as it existed at the time of the Panel's establishment, the European Union has demonstrated that so long as the customs value of a good falling within the relevant tariff line was equal to or less than 0.76 EUR/l, the ad valorem equivalent of the specific element of the applied combined duty rate would inevitably have been higher than the bound ad valorem duty rate, resulting in applied duties higher than the bound duty.295
7.220.
Turning to the measure as amended, we have applied the European Union's calculations and reasoning for the ninth measure as it existed at the time of the Panel's establishment to the ninth measure as amended, again using a hypothetical good with a customs value equivalent to 0.76 EUR/l (the customs value that was identified by the European Union). This calculation confirms, and we therefore find, in respect of the ninth measure as amended, that so long as the customs value of a good falling within the relevant tariff line is equal to or less than 0.76 EUR/l, the ad valorem equivalent of the specific element of the applied combined duty ratewill inevitably be higher than the bound ad valorem duty rate, resulting in applied duties higher than the bound duty.296 This finding is represented graphically in Figure 2 below.

Figure 2

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7.221.
In sum, in respect of the seventh and eighth measures as they existed at the time of the Panel's establishment, and for the ninth measure as amended from 20 September 2015, the European Union has identified specific customs values at or below which imports were or will be subject to the specific duty rate alternative of a combined duty, whose ad valorem equivalent was or is higher than the corresponding ad valorem duty rate in Russia's Schedule.
7.222.
As we have explained above, the consistency of a measure with Article II:1(b), first sentence, can be determined on the basis of the "structure and design" of that measure.297 For the reasons already given in respect of the first to fifth measures, there is no need for a complaining party to show that a particular measure has, in any given instance, actually led to the imposition of customs duties in excess of bound levels. Accordingly, we do not consider it necessary to base our findings on the Declarations of Goods and Supplementary Lists to those Declarations of Goods submitted by the European Union in Exhibits EU-12, EU-13, EU-14, EU-16, EU-17, and EU-18.
7.223.
Additionally, we note that the application of a duty may be inconsistent with Article II:1(b), first sentence, even where it does not lead to duties being levied above bound levels in every transaction, but only "with respect to a certain range of import prices".298 Therefore, the fact that, in respect of the seventh, eighth, and ninth measures, the European Union has demonstrated that Russia's duties would have been higher than bound levels whenever the customs value was at or fell below a certain level is sufficient to make a prima facie case of inconsistency with Article II:1(b), first sentence.

7.4.1.3 Ceiling mechanism

7.224.
Before concluding our analysis of the seventh, eighth, and ninth measures, we need to address Russia's argument concerning the alleged lack of a ceiling mechanism.
7.225.
According to the European Union, Russia provides for no mechanism that would prevent the ad valorem equivalents of the applied combined duties at issue from exceeding the level of Russia's bound duties.299 In the European Union's view, in the absence of a ceiling mechanism, goods imported under the relevant tariff lines will be subject to duties exceeding those provided for in Russia's Schedule.300
7.226.
Russia submits that the European Union's claims are unfounded because nothing in the WTO Agreement requires Members to apply a mechanism such as a ceiling or cap, nor has such an obligation been adopted by the WTO General Council or Ministerial Conference. In Russia's view, the Appellate Body has stated that the use of a mechanism such as a ceiling or cap is a possibility, but not an obligation.301
7.227.
The European Union responds by asserting that it is not challenging the absence of a ceiling mechanism as being in itself WTO-inconsistent. According to the European Union, the absence of any mechanism that would ensure that the ad valorem equivalents of the specific element of the applied combined duty rates do not surpass the bound ad valorem rates is a part of the design and structure of the measures. In the European Union's view, it is precisely because there is no ceiling mechanism that the seventh, eighth, and ninth measures inevitably lead to the levying of duties in excess of bound levels whenever the customs value falls below a certain threshold.302
7.228.
The Panel begins by considering the European Union's argument concerning the absence of a duty ceiling or cap that would prevent Russia from levying duties higher than those provided for in its Schedule. The European Union has indicated that, to its knowledge, Russia applies no such ceiling mechanism. The European Union has also argued that it cannot be expected to positively demonstrate the absence of something.303 We note that Russia has introduced no evidence suggesting that such a ceiling or cap exists. Thus, there is no evidence on record that Russia has put in place a ceiling or cap that would prevent such duties from being applied.
7.229.
With respect to Russia's argument that nothing in the WTO Agreement requires Members to apply a mechanism such as a ceiling or cap, we recall that we have already found, in our preliminary ruling, that the European Union is not challenging the absence of a ceiling mechanism in itself. As we explained there, we understand the European Union's references to the absence of a ceiling mechanism as an element of the European Union's description of the overall design and structure of the seventh, eighth, and ninth measures, or as a part of the European Union's explanation of how and why these measures lead, in respect of some transactions, to the imposition of customs duties in excess of those provided for in Russia's Schedule.304 In our view, the European Union's point is simply to acknowledge that Russia could, in principle, have ensured that the seventh, eighth, and ninth measures at issue never result in the imposition of duties above the levels provided for in Russia's Schedule, by developing and implementing a kind of ceiling or cap.305 Therefore, as the European Union has claimed no breach by Russia of some asserted requirement to put in place a ceiling mechanism, we reject Russia's argument that the European Union's claims are unfounded because there is no requirement under Article II:1(b), first sentence, to use a ceiling mechanism.

7.4.1.4 Conclusion

7.230.
We have found above that, in relation to the seventh and eighth measures as they existed at the time the Panel was established, the duties required to be applied by Russia were higher than bound levels for imports at or below specified break-even prices (customs values). We have also noted that there is no evidence that Russia applied a ceiling or cap that would prevent such duties from being applied. Therefore, we conclude that, in respect of the seventh and eighth measures as they existed at the time of the Panel's establishment, Russia was required in in some instances to apply duties in excess of those set forth in its Schedule, contrary to Article II:1(b), first sentence.
7.231.
We have also found tha