WTO Finds Against EU In Dispute Over Customs Classification

by Ulrika Lomas, for LawAndTax-News.com, Brussels

15 November 2006

The World Trade Organisation's Appellate Body on Monday issued a report confirming that the European Union (EU) has failed to administer in a uniform manner its rules on the customs classification of liquid crystal display monitors.

The report upheld a June 16, 2006 finding by a WTO dispute settlement panel. Additionally, the Appellate Body agreed with the United States that that panel erred in declining to consider the broader question of whether the EU’s system of customs administration as a whole is inconsistent with WTO rules requiring the uniform administration of customs laws.

The United States had claimed that the administration of EU customs law by 25 different agencies (one for each of the EU’s Member States), coupled with a lack of any procedures or mechanisms to reconcile the divergences that inevitably occur on important matters including classification and valuation, was a violation of the EU’s obligation to administer its customs laws in a uniform manner.

Deputy US Trade Representative John Veroneau made the following statement following the release of the Appellate Body report:

“Today’s Appellate Body report reinforces that the EU is subject to the same rules as other WTO Members. The EU’s internal decisions about how to organize itself do not excuse it from or diminish its obligations to other WTO Members. Like every other WTO Member, the EU must administer its customs law uniformly across its territory. Today’s report confirms the panel’s finding that the EU does not do so when it comes to the classification of LCD monitors."

“We would have preferred the original panel to have made a broader finding about the EU’s system as a whole. In that regard, we are pleased that in today’s report, the Appellate Body reversed the panel’s decision to limit its findings to particular instances of administration of EU customs law. The EU’s administration of its rules on LCD monitors is indicative of how the system as a whole operates. Had the panel considered the EU system as a whole, it should have reached that conclusion."

However, he concluded:

“The United States welcomes the Appellate Body’s report and looks forward to the EU’s compliance with its findings.”

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