CYIL vol. 8 (2017)

CYIL 8 ȍ2017Ȏ

FROM TURKEY – TEXTILES

TO PERU – ADDITIONAL DUTY …

drinks and other beverages that used any sweetener other than cane sugar. 41 Such measure was adopted by Mexico within a NAFTA controversy in order to induce the United States to respect the Mexican interpretation of the NAFTA obligation concerning exports of Mexican sugar into the North-American market. Therefore, according to the defendant, the Mexican discriminatory taxation had to be considered within the NAFTA dispute settlement system, and not, instead, by the WTO judging bodies. The Appellate Body agreed with the United States legal reasoning. In the Mexico – Taxes on Soft Drinks case, it stated that “[t]he fact that a Member may initiate a WTO dispute whenever it considers that ‘any benefits accruing to [that Member] are being impaired by measures taken by another Member’ implies that that Member is entitled to a ruling by a WTO panel,” 42 and pointed out that “[a] decision by a panel to decline to exercise validly established jurisdiction would seem to ‘diminish’ the right of a complaining Member to ‘seek the redress of a violation of obligations’ within the meaning of Article 23 of the DSU, and to bring a dispute pursuant to Article 3.3 of the DSU.” 43 A margin of flexibility was nevertheless preserved by the permanent Tribunal, through an accurate choice of the words, in order to allow the WTO system to properly coordinate itself with RTA systems in circumstances of parallel proceedings. The Appellate Body thus underlined that in the Mexico – Taxes on Soft Drinks controversy a) the subject matter and the legal claims raised by the disputants before the NAFTA and before the WTO were not the same, b) “no NAFTA panel” has already “decided the ‘broader dispute’ to which Mexico ha[d] alluded,” and c) the Latin American country “ha[d] expressly stated” not to have exercised “the so-called ‘exclusion clause’ of Article 2005.6 of the NAFTA” pursuant to which “[o]nce dispute settlement procedures have been initiated under Article 2007 or dispute settlement proceedings have been initiated under the GATT, the forum selected shall be used to the exclusion of the other.” 44 The AB Members consequently concluded that they did not intend to “express any view on whether a legal impediment to the exercise of a panel’s jurisdiction would exist in the event that features such as those mentioned above were present,” 45 therefore leaving the door open to reconsider the strong assertion of the WTO authority should one or more of the above listed three circumstances be present. 6. Harmonizing the interpretation of RTAs and WTO substantive provisions: the Appellate Body in the Brazil – Retreaded Tyres case In the subsequent Brazil – Retreaded Tyres case, the Appellate Body showed to be ready to give attentive relevance to a previous arbitral award issued in the RTA system of the Southern Market, or Mercado Común del Sur (MERCOSUR). 46 The dispute was started by 41 For a detailed reconstruction of the Mexican discipline on soft drinks taxation see the reconstruction made by the Panel established for the inter-American dispute: Panel Report, Mexico – Tax Measures on Soft Drinks and Other Beverages , WT/DS308/R, adopted 24 March 2006, paras. 2.1-2.6.

42 Appellate Body Report, Mexico – Taxes on Soft Drinks , para. 52. 43 Appellate Body Report, Mexico – Taxes on Soft Drinks , para. 53. 44 Appellate Body Report, Mexico – Taxes on Soft Drinks , para. 54. 45 Ibid.

46 Appellate Body Report, Brazil – Measures Affecting Imports of Retreaded Tyres , WT/DS332/AB/R, adopted 17 December 2007. The MERCOSUR was set up by the 1991 Treaty of Asunción, whose contracting parties

489