## Facts

- Brazil and Thailand challenged European Communities (EC) customs measures reclassifying frozen boneless salted chicken cuts for tariff purposes under the EC Combined Nomenclature implementing the EC’s GATT Schedule LXXX.
- The products were frozen boneless chicken cuts “deeply and homogeneously impregnated with salt” with total salt content not less than 1.2% by weight; the dispute was not limited to goods within any narrower salt-content range.
- Before the challenged measures, EC authorities generally classified the products under CN heading 0210 (salted meat), subject to an ad valorem duty (e.g., 15.4%).
- The challenged measures shifted classification to subheading 0207.41.10 (frozen boneless chicken cuts), subject to a specific duty (e.g., 102.4 €/100kg/net) and potential exposure to agricultural special safeguards.
- Measures included Commission Regulation (EC) No. 1223/2002 and Commission Decision 2003/97/EC; complainants also treated Regulations (EC) No. 1871/2003 and 2344/2003 as closely related implementing measures based on the same classification approach.
- A single WTO panel heard both complaints and found the EC measures inconsistent with GATT 1994 Article II:1; the EC appealed, and complainants filed other appeals.

## Issues

1. Whether the EC’s GATT Schedule LXXX, interpreted under customary treaty-interpretation rules, allowed the EC to classify the products under heading 0207 rather than heading 0210.
2. How Articles 31 and 32 of the Vienna Convention on the Law of Treaties (VCLT) and Harmonized System (HS) context (including Explanatory Notes and schedule structure) apply to the interpretation of tariff schedules.
3. Whether implementing regulations not expressly listed in the panel request could fall within the panel’s terms of reference as part of a closely related set of measures, consistent with due process.
4. How a WTO panel should ascertain and characterize the content and operation of EC law when determining what the challenged measures do.

## Decision

- The Appellate Body upheld the finding that the EC’s reclassification was inconsistent with the EC’s obligations under GATT 1994 Article II:1 because it resulted in duties in excess of the treatment due under the bound concession as properly interpreted.
- The Appellate Body endorsed interpreting tariff schedules under VCLT Articles 31–32, using HS nomenclature and the schedule’s structure as central context, and consulting supplementary materials (including prior practice and negotiating history) where appropriate.
- The Appellate Body upheld, with refinements, that closely related implementing measures could be treated as part of the measures at issue even if not individually named in the panel request, where they were sufficiently connected to the described measure and the respondent’s due process rights were preserved.
- The Appellate Body recommended that the Dispute Settlement Body request the EC to bring its measures into conformity with its WTO obligations.

## Legal Principles

- WTO Members’ tariff schedules are integral parts of GATT 1994 and must be interpreted according to customary rules of treaty interpretation reflected in VCLT Articles 31 and 32.
- Where a concession is expressed by reference to HS headings, the HS meaning and structure provide strong contextual guidance unless the schedule clearly indicates a different meaning.
- Classification choices that increase applied duties cannot be used to circumvent bound tariff concessions; applied treatment must remain within the obligations set by the schedule as properly interpreted.
- In WTO dispute settlement, domestic law is treated as fact; panels must examine the text, structure, and operation of the municipal measures to identify what the measures require and how they function.
- A panel request sets the terms of reference, but closely connected implementing measures may be examined when they fall within the essence of the described measure and the respondent has a fair opportunity to respond.

## Conclusion

The Appellate Body held that the EC’s tariff reclassification of deeply salted, frozen boneless chicken cuts improperly subjected the products to higher duties than permitted by the EC’s bound concessions under GATT Article II:1, and it clarified that tariff schedules must be interpreted under VCLT methodology with HS context, while permitting inclusion of closely related implementing measures when consistent with the panel request and due process.


European Cmtys.—Customs Classification of Frozen Boneless Chicken Cuts, WT/DS269, WT/DS286, AB-2005-5 (WTO App. Body Sept. 12, 2005)