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United States - Restrictions on Imports of Cotton and Man-made Fibre Underwear
4. Analysis of the Appellate Body Report
The U.S. did not appeal the Panel's decision. Rather, Costa Rica
appealed on the narrow issue of retroactivity of the U.S. measure. Costa Rica
claimed that the Panel erred in finding that the U.S. measure could have legal
effect prior to the date it is permitted to be imposed under article 6.10 of
the ATC. Article 6.10 of the ATC, it will be recalled, allows the imposition of
transitional safeguards measures within 30 days after the expiration of the
60-day consultation period.
Costa Rica referred to the GATT decision on Chilean Apples15 and to article XIII of GATT to argue that such
measures cannot be applied retroactively. The Appellate Body examined article
6.10 of the ATC, article X of GATT and article XIII of GATT.
The Appellate Body agreed with the Panel that article 6.10 is silent on
the issue of retroactivity, but disagreed that article 6.10 fails substantively
to address this issue. Thus, the Appellate Body relied on an interpretation of
article 6.10, rather than seeking a governing principle in article X or XIII of
GATT. The Appellate Body focused on the wording of article 6.10, which only
grants permission to "apply" a transitional safeguard measure after the
expiration of the 60-day consultation period. The Appellate Body stated that
the normal meaning of "apply" is to "put into operation."16 Furthermore, in order to give effect to the
60-day waiting period and the 30-day "window" to put transitional safeguards
into effect, the Appellate Body argues, it is necessary to limit the meaning of
"apply" to prospective application. While this author finds the latter argument
less than persuasive, as it may be appropriate to distinguish between the time
for making a final determination of application of measures, and the period for
which the measures apply, there is another available argument. Article 6.10
permits the transitional safeguard measures to be applied "by date of import or
date of export." This language would have little meaning if measures could be
applied retroactively, and the principle of effectiveness would therefore argue
that prospective application was intended.
The Appellate Body also refers to the MFA's specific authorization of
retroactive application of safeguards measures; in light of the careful
negotiation of the ATC, the best implication to be drawn from the exclusion of
this language in the ATC is that the parties intended to end the practice of
retroactive application.
Finally, the Appellate Body refers to the mandate in article 6.1 of the
ATC to apply transitional safeguards measures "as sparingly as possible."
Retroactive application would not be consistent with this mandate.
The Appellate Body thus concludes that article 6.10 itself prohibits
retroactive application. On this basis, it had no need to evaluate the
application of articles XIII or X of GATT.
15
European Economic Community--Restrictions on Imports of Dessert Apples:
Complaint by Chile, adopted 22 June 1989, BISD 36S/93, p. 132. See also
European Economic Community--Restrictions on Imports of Apples:
Complaint by the United States, adopted 22 June 1989, BISD 36S/135, p.
166.
16
Appellate Body Report, p. 13.
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