The June 7 AB report in DS461, examining a Colombian import tariff imposed against Panama allegedly to combat money laundering, ends on a rather peculiar note.
The AB
1. confirmed that Colombia’s “compound tariff” prima facie violates GATT Art. II;
2. reversed the Panel’s finding that the tariff is not designed to combat money laundering under GATT Article XX(a)/(d);
3. found, instead, that the tariff is so designed; but then
4. concluded that due to “a lack of sufficient clarity with respect to several key aspects of the ‘necessity’ analysis concerning [Colombia’s] defence … a proper weighing and balancing that could yield a conclusion that the measure is ‘necessary’ could not be conducted” (paras. 5.116 & 5.149) so that, as a result,
5. Colombia “has not demonstrated” that the tariff is “necessary” under either GATT Article XX(a) or (d) (paras. 5.117 & 5.150) and violates GATT Article II.
Bottom line: not enough clarity, so the respondent’s defense fails and the claimant wins (Colombia violates GATT Art. II).
Compare this to the AB Report just preceding this case, another complaint filed by Panama, against Argentina this time (DS453). There, the AB reversed the panel’s findings on “likeness” under GATS Articles II and XVII and then simply stopped, not “completing the analysis” (for one thing, because neither party explicitly requested it to do so). Similarly, in DS449, the so-called US – GPX case, the AB reversed the panel’s finding of compliance with GATT Article X but then (after 20 pages of trying to complete the analysis itself!) concludes that, for lack of clarity (facts, factual findings), it cannot complete the analysis.
Bottom line in those cases: not enough clarity, so the analysis cannot be completed and the claimant fails (findings that Argentina violates GATS are moot; no finding on whether the US violates GATT Article X).
So, even though the factual situation seems to be similar, if not the same (lack of clarity), in one scenario (where a defense is at stake), the AB relies on burden of proof to reject Colombia’s defense; in the other scenario (where a claim is at stake), the AB relies on “not completing the analysis” to reject the claim.
Could/should the AB in DS461, instead, have concluded that “we cannot complete the analysis” under GATT Article XX?
What would have been the difference?
- Presumably, since the analysis under GATT Article XX cannot be completed, the prima facie violation of GATT Article II cannot be confirmed; hence, Colombia wins (arguably, the same could have been true in case Colombia had simply asked for a reversal of the panel’s “not designed to” finding under GATT Article XX without asking for a subsequent “completion of the analysis”);
- Since no conclusive finding would then be made under GATT Article XX (the way no finding was made on GATS “likeness” in DS453 or GATT Article X violation in DS449), Panama could potentially re-file the case, for a more complete analysis and ultimate finding under GATT Article II cum XX (today, instead, the AB did conclusively find that Colombia’s measure is not justified under GATT Article XX, even though the AB itself admitted that an Article XX necessity analysis "could not be conducted", and this ruling would seem to carry the force of res judicata).
In this context, how to draw the line between “we cannot complete the analysis” and “you failed to discharge your burden of proof”? Is the AB's approach biased against defendants (lack of clarity under claims, leads to no finding; lack of clarity under defences, leads to a default violation?).
Remember, crucially, that in the Colombia case the AB did not say that its analysis under GATT Article XX “necessity” led it to conclude that the measure was not necessary; rather the AB said that “a proper weighing and balancing … could not be conducted” in the first place.
